How Did Novatti Turn a $3.8M Profit Despite a 42% Revenue Drop?
Novatti Group Limited has reported a striking turnaround to a $3.8 million profit in the first half of 2026, despite a 42% drop in revenue. The fintech’s strategic divestments and reclassification of its AUDC investment signal a pivotal shift in its growth trajectory.
- 42.1% revenue decline to $14.57 million due to exit from low-margin services
- Profit after tax jumps 290% to $3.84 million, reversing prior loss
- Underlying EBITDA loss narrows by 21.5%, reflecting operational improvements
- Loss of control over AUDC leads to reclassification as associate with 47% stake
- Secured $1 million growth funding via share placement; divested Emersion Services
Profit Turnaround Amid Revenue Contraction
Novatti Group Limited has delivered a remarkable financial turnaround for the half-year ended 31 December 2025, posting a profit after tax of $3.84 million compared to a loss of $2.02 million in the prior corresponding period. This profit surge comes despite a significant 42.1% decline in revenue to $14.57 million, primarily driven by the company’s deliberate exit from a low-margin overseas service as part of its broader strategy to enhance profitability and cash flow.
The fintech’s underlying EBITDA loss improved by 21.5%, narrowing from a $2.23 million loss to $1.48 million, signalling progress in operational efficiency and cost control. Novatti’s net asset position strengthened to $2.42 million, reversing a net liabilities position of $879,000 six months earlier, while cash reserves stood at a healthy $3.7 million at period end.
Strategic Divestments and Investment Reclassification
During the half, Novatti divested its wholly owned subsidiary Emersion Services Pty Ltd for $500,000, marking a step in simplifying its business and focusing on core payments operations. Additionally, the company lost control over AUDC Pty Ltd following a board composition change, leading to the deconsolidation of AUDC and reclassification of its 47% retained interest as an investment in associate, valued at $7 million. This shift reflects Novatti’s evolving investment strategy and the maturation of AUDC, which recently secured an Australian Financial Services Licence post-period.
The company also secured $1 million in growth funding through a share placement to Australian Wealth Advisors Group Ltd and its subsidiary Armytage Private, underpinning its pivot back to growth. This capital injection supports Novatti’s ongoing turnaround initiatives, including rationalising low-profitability services and expanding its Payments AU/NZ business, which showed encouraging commercial traction with new contracts and market expansion into New Zealand.
Challenges and Outlook
Despite these positive developments, Novatti faces material uncertainties. The group reported a net current liability position of $14.3 million and modest net cash outflows from operating activities, prompting the auditor to highlight going concern risks. Furthermore, Novatti is defending a legal claim in Malaysia related to a prior acquisition, with a provision maintained for the potential liability.
Management remains focused on its turnaround strategy, emphasising operational simplification, margin improvement, and balance sheet strengthening. The company’s ability to sustain momentum in its core payments segment and manage contingent risks will be critical as it navigates the next phase of growth.
Bottom Line?
Novatti’s financial rebound is promising but shadowed by ongoing liabilities and legal risks, setting the stage for a cautious watch on its next moves.
Questions in the middle?
- How will Novatti manage its net current liabilities and maintain going concern status?
- What impact will AUDC’s dilution and operational performance have on Novatti’s future earnings?
- How might the legal claim in Malaysia affect Novatti’s financial position and investor confidence?
