Will Novatti Group Limited be able to enhance its ongoing revenue growth?

Team Veye | 09 Apr 2020 ASX - NOV
Will Novatti Group Limited be able to enhance its ongoing revenue growth?

Novatti Group Limited (ASX: NOV)

Acquisition of Emersion Extends Capabilities and Recurring Revenue

Novatti Group Limited (ASX: NOV) (Novatti or Company), a leading digital banking and payments company, on 2 April 2020 announced that it will significantly extend its core payments business with the acquisition of Emersion, a leading business process integration, and payments platform.

(Chart source: TradingView)

Highlights

  • Emersion is a leading business process integration platform 
  • Acquisition extends Novatti’s capability offering and strengthens core payments business 
  • Brings profitable business, with recurring revenue and loyal customer base  
  • Emersion’s revenue base likely to be steady or growing in negative global economic scenarios 
  • Continued growth during the COVID-19 pandemic as Emersion’s customers benefit from automation and cloud hosting of their own billing and payment services 
  • Potential to continue the growth of the customer base as a drive to cloud based services

 

Emerson integrates diverse business applications, such as subscription billing, payments, and provisioning, into existing business platforms, such as Customer Relationship Management software. By creating a one-stop-shop application, it drives efficiency in the business process, saving customer time and energy.c(Data Source – Company Reports)

 

 

Veye’s Take

The acquisition will benefit Novatti by Strengthening its product capabilities including providing multiple payment functions. Emersion has developed a loyal customer base including utility, telecommunications, and managed service provider companies, across Australia, New Zealand, and Singapore. The quality of its product is highlighted by its partnerships with leading international software platforms, including Salesforce, Xero, and ConnectWise. Emersion had revenue of more than $1.7 million in FY2019, with more than 80 percent of this being recurring. It is cash flow positive and had an EBITDA for FY2019 of $300,000. Emersion's business has also shown continued growth through the current COVID-19 pandemic with revenue greater than $500k in Q3 FY20. It also enhances Novatti’s ongoing revenue growth. The stock has formed a very flat base and is moving up. The short-term chart suggests that it is holding the trend line and can have the potential of significant upside above its strong resistance strong at $0.15. Veye recommends a "Buy" on “Novatti Group Limited” at the current price of $0.13

 

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