VersaPay Corp. (VPY.V) provides cloud-based invoice-to-cash solutions which enables businesses to get paid faster, to streamline financial operations, and to reduce costs. The company specialize in accounts receivable and collections management by providing clients with a self-serve platform to view invoices online, collaborate on inquiries and disputes, as well as facilitate secure online payments (EFT/ACH and credit card).
Total Addressable Market
Gartner's recent Magic Quadrant for Cloud Core Financial Management Suite (FMS) for midsize, larger and global enterprise had some interesting insights. In the strategic planning assumption it is noted: a) Through 2021, the majority of system integrators and resellers of core financial management suites will have insufficient knowledge of the functionality in current releases, due to the speed with which software vendors introduce new products. b) By 2023, 50% of all new midsize core financial management application projects and 25% of large and global ones will be cloud based.
Moreover, it was also reported that: The market for core financial management suites has been static for many years. However, over the last 12 to 18 months, cloud core financial management suites have matured to an extent that they have disrupted this static market. We expect SaaS FMS deployment to outpace all other forms of deployment, with a 2018 to 2022 CAGR of 20%, and revenue representing 35% ($6.8 B).
This aligns with VPY.V's estimate of $5B.
More on VPY.V
VPY.V has two main products: ARC and Payport. ARC can be summed up in three steps: 1. deliver invoices electronically, 2. track and manage commitment and, 3. accept payment (PCI compliant). In addition, ARC automatically reconciles payments and account information through integrations with a wide range of ERPs and accounting software providers. PayPort allow clients to send and receive funds electronically.
VPY.V has grown revenues very rapidly in the past 2 years. It reports having 48 clients, (10 are enterprise). The client list include Brookfield, Intuit, MNP, Livingston and Orkin. In addition, VPY.V has a white label deal with Royal Bank of Canada (RBC) and has been endorsed by two large accounting firms.
Here's an update on the company's activities for the last six months:
June 18 - Addition of a Top Accounting Firm to Growing Client List. "This is the second major accounting firm to recognize the value ARC provides in driving meaningful business improvements.
July 10 - Signs Boston Properties to ARC Platform. Boston Properties is a self-administered and self-managed real estate investment trust (REIT).
Jul. 24 - Inks Deal With Large US Distributor. Major distributor (the "Client") has selected VersaPay ARC as its AR and collections management solution for its U.S. and Canadian operations. replacing its existing collections management solution - ARC will automate the end-to-end invoice-to-cash process for over 0.20M invoices per month delivered in 3 languages across North America.
Aug. 14 - Launches New Mobile App for its accounts receivable platform. ARC, to make access from anywhere, anytime even easier end customers can view invoices, payments and credits, set up their wallet, and pay invoices easily and securely from their mobile device.
Aug. 28 - Q2 2018 Earnings - Total Revenue for Q2 2018 increased by 80.1% to $1.14M vs. $0.63M in Q2 2017.
Total comprehensive loss for Q2 2018 was ($3.69)M, compared to ($1.95)M for Q2 2017.
Total operating expense for Q2 2018 increased by 96% to $4.5M, compared to $2.3M for the three-months ended June 30, 2017. As at June 30, 2018, the Company had cash on hand of $9.9M compared to $15.83M at December 31, 2017.
Sept. 18 - Adds Second Large US Distributor in 2 Months. $1 Billion US distributor to the list of enterprise companies that have selected ARC as their invoice-to-cash solution Issuing approximately 0.14M invoices monthly.
Sept. 26 - Announces $8 Million Bought Deal Public Offering of Common Shares. A total of 4.5M shares at a price of $1.75 per Common Share. The net proceeds will used to further sales and marketing efforts, to continue to expand US presence, research and development with respect to the cash application features and for general corporate and working capital purposes. The Offering is expected to close on or about October 18, 2018.
Oct. 18 - Closing of $9.2 Million Bought Deal Financing. A total of 5.25M shares at a price of $1.75 per Common Share. The Offering was underwritten by Raymond James Ltd. on behalf of a syndicate of underwriters that included Haywood Securities Inc. and PI Financial Corp.
Nov. 1 - Adds J.J. Haines. The Largest Flooring Distribution Company In The U.S. It is the third new distribution client in the past few months.
Nov. 13 - Signs Ideal Supply as Newest Distribution Client. An Ontario electric supply distributor and NAPA's largest independent auto parts distributor. It has a large inventory of wholesale industrial, safety and electrical supplies, generators, new energy, automation and data services
Nov. 27 - Q3 2018 Earnings. Total Revenue for Q3 2018 increased by 46% to $1.14M vs. $0.78M in Q3 2017. Total comprehensive loss for Q3 2018 was ($2.95)M, compared to ($2.19)M for Q3 2017. Total operating expense for Q3 2018 increased by 37% to $3.81M vs. $2.78M in 2017.
Nov. 30 - Grant Stock Options: 0.5M shares at an exercise price of $1.19, and will expire on November 30, 2023.
While there has been a significant sell-off since the Q2 earnings, the successful bought deal ($1.75) created additional pressure. The Q3 earnings (which were flat from Q2), and the options granted at $1.19 did not help. Nor did the subsequent large insider purchases. Adding to the mix rough market conditions, the end of year tax loss sales, VPY.V finds itself is in the middle of a perfect storm. However, the chart shows rising accumulation of late.
One the ask, market pundits believe that VPY.V will not grow as effortlessly as in the past. On the bid, buyers believe that the company is well positioned to sustain negative market forces as account receivables will be a top priority for many organizations in the upcoming business cycle.
The result is that VPY.V is technically oversold.
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