Beforepay Faces Rising Defaults as It Expands Loan Offerings
Beforepay Group has reported a strong Q2 FY25 with record revenue exceeding $10 million and a growing active user base, while introducing its new Personal Loan product.
- Quarterly revenue exceeds $10 million with NPBT of $1.1 million
- Record active users reach 257,627, up 3% quarter-on-quarter
- Launch of phased rollout for Personal Loan product
- Operating expenses reduced to $3.6 million from prior quarter
- Carrington Labs completes US client software implementation
Strong Financial Performance in Q2 FY25
Beforepay Group Limited (ASX: B4P) has delivered a robust financial performance for the quarter ended 31 December 2024, surpassing $10 million in quarterly revenue for the first time. The company reported a net profit before tax (NPBT) of $1.1 million and an EBITDA of $2.4 million, underscoring its continued growth trajectory in the competitive fintech landscape.
The company’s Pay Advance business saw higher quarterly advances of $205.6 million, a 13% increase year-on-year, despite a seasonal uptick in net defaults to 1.75%. This resulted in a net transaction margin of $4.8 million, slightly up from $4.4 million in the same quarter last year.
User Growth and Cost Efficiency
Active users hit a new record of 257,627, marking a 3% increase from the previous quarter. Customer acquisition costs remained stable at $40 per user, reflecting efficient marketing spend amid expansion. Notably, operating expenses decreased significantly to $3.6 million from $5.3 million in Q1 FY25, aided by a one-off non-cash adjustment in the prior quarter.
Strategic Product Expansion: Personal Loans
In a strategic move to diversify its product suite, Beforepay launched its Personal Loan offering during Q2 FY25. This product provides customers access to larger loan amounts over longer terms compared to the traditional Pay Advance product. The company is adopting a phased rollout approach to monitor risk trends and optimize its credit models over time, signaling a cautious but confident expansion into broader lending services.
Carrington Labs and International Growth
Beforepay’s enterprise software division, Carrington Labs, completed a fully implemented solution for a US-based client in the quarter. This milestone highlights the company’s growing footprint in the international fintech software market. Looking ahead, Beforepay plans to increase investment in Carrington Labs, including hiring a dedicated salesperson in the United States, which is expected to raise the cost base in upcoming quarters.
Balance Sheet and Funding Position
The company maintains a strong balance sheet with $18.3 million in cash on hand and $35.6 million in equity as of the end of Q2 FY25. It has drawn $38.5 million from its $55 million secured debt facility, leaving $16.5 million undrawn. The recent cash outflows primarily funded growth in the loan book during the holiday period, reflecting operational scaling rather than liquidity concerns.
CEO Jamie Twiss expressed confidence in the company’s trajectory, noting the strong profit outcomes and promising early results from the Personal Loan product. The company’s strategic balance of growth, risk management, and product innovation positions it well for the evolving fintech landscape.
Bottom Line?
Beforepay’s Q2 momentum sets the stage for cautious expansion, with new products and international growth shaping its next phase.
Questions in the middle?
- How will the Personal Loan product impact credit risk and profitability over the next quarters?
- What are the growth prospects and revenue contribution expected from Carrington Labs’ US expansion?
- Will rising net defaults pressure margins or prompt adjustments in underwriting standards?
