Change Financial Accelerates Revenue Growth 53% in Q2 FY25, Exits US Market

• Q2 FY25 revenue up 53% to US$3.5 million
• PaaS revenue increased 29% quarter-on-quarter, now 76% of FY25 YTD revenue
• 66,000+ active cards on Vertexon PaaS platform with new Oceania client onboarded
• Strategic exit from US market underway to reduce costs and improve profitability
• Cash holdings of US$3.5 million with no debt, supporting operational scaling

Strong Revenue Growth Driven by PaaS Expansion

Change Financial Limited (ASX: CCA) has delivered a compelling performance in the second quarter of fiscal year 2025, reporting a 53% increase in revenue to US$3.5 million compared to the prior corresponding period. This growth is largely attributed to the scaling of its Payments as a Service (PaaS) platform, Vertexon, which now accounts for 76% of the company’s year-to-date revenue, underscoring the shift towards recurring income streams.

The company’s PaaS platform continues to gain traction, with over 66,000 active cards in circulation, marking a 9.5% increase quarter-on-quarter. This growth is bolstered by the onboarding of a new fintech client in Oceania, a personal wealth management platform with over 500,000 customers across New Zealand and Australia, signaling strong market acceptance and pipeline momentum.

Strategic Withdrawal from US Market to Enhance Profitability

In a decisive move, Change Financial has progressed the exit of its loss-making US operations, citing regulatory challenges that hindered sustainable growth. The wind-down is expected to be completed by the end of January 2025, with the US segment contributing minimal revenue (US$70,000 in FY24) but incurring significant operating costs (US$1.6 million in FY24). This exit is anticipated to substantially reduce overheads from the second half of FY25, improving operating leverage and driving a material uplift in EBITDA and cash flow.

CEO Tony Sheehan emphasized that this strategic pivot allows the company to concentrate resources on its core Australian and New Zealand markets, as well as its PaySim testing services, positioning Change for profitable growth and operational efficiency.

Financial Position and Outlook

Change Financial ended the quarter with a healthy cash balance of US$3.5 million and no debt, supported by an additional US$0.9 million in cash-backed security guarantees. Despite currency headwinds from a weakening Australian and New Zealand dollar against the US dollar, the company’s cash receipts from customers doubled year-on-year to US$3.7 million, reflecting strong collection efficiency and revenue quality.

Looking ahead, Change remains on track to exceed its FY25 revenue growth target of over 30% and achieve its maiden EBITDA positive year. The company plans to leverage its growing sales pipeline, particularly in Oceania and Southeast Asia, while driving operational efficiencies to sustain top and bottom-line momentum.

Building a Recurring Revenue Base

The shift towards recurring revenue is a critical theme in Change’s business model evolution. With 76% of FY25 YTD revenue derived from recurring streams such as PaaS transaction fees and support and maintenance contracts, the company is establishing a more predictable and scalable revenue foundation. This transition is expected to continue as PaaS adoption broadens and new client projects ramp up.

Additionally, professional services and licence sales contributed one-off revenues during the quarter, with ongoing projects poised to generate further income as clients expand their product offerings.

Bottom Line?

Change Financial’s strategic refocus and PaaS momentum set the stage for stronger profitability and market leadership in Australasia.

Questions in the middle?

• How will the full exit from the US market impact Change’s cost structure and EBITDA in H2 FY25?
• What is the timeline and revenue potential for the new debit card launch with the Oceania fintech client?
• How sustainable is the current growth rate in PaaS revenue amid increasing transaction volumes and competition?