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).
We initiated coverage on December 2018 with an additional note on July 2019. Below is an update.
July 30 - Signs Multi-billion-Dollar Media Company. Selected ARC® to automate its invoice-to-cash process.
Aug. 7 - Announces Q2 2019 Financial Results. "I'm pleased to announce that VersaPay continued its strong growth for a third consecutive quarter, with total revenues increasing 88% year-over-year to $2.18 million," said Craig O'Neill, CEO of VersaPay. "Our new ARC sales of $0.92 million and professional services sales of $0.42 million in the quarter resulted in an increase to the subscription and professional services backlog to $1.18 million and $0.83 million, respectively. We expect the bulk of this backlog will translate to revenue in the coming one to two quarters."
Aug. 19 - To Co-Present With Clients at InFocus 2019
Sept. 4 - to Host Investor Forum - Tuesday, September 24, 2019. The forum will include presentations from Craig O'Neill, VersaPay's CEO and guests including presenters from Mastercard, US Bank, RBC, and selected clients.
Sept. 12 - Further Enhances Client-Centric Focus With New Organization Structure - to better position the company to scale its client-facing operations as growth of its client base continues to accelerate.
Sept. 16 - To Present at MasterCard Commercial Customer Event. VPY will participate on a panel to discuss Mastercard Track™ Business Payment Service, Mastercard's strategy to re-invent the $125 trillion global B2B payments ecosysytem and VersaPay's role in helping Mastercard bring Track BPS to market in 2020.
Sept 25 - Shares The Podium With Customers And Partners At Investor Forum. During his presentation Mr. O'Neill announced that VersaPay had just signed a new partnership agreement with US Bank. The deal leverages the respective strengths of the two companies to offer AR automation to US Bank's commercial real estate customer portfolio. Additionally, there were four key themes that arose from the event. 1) Era of customer centric AR, 2) B2B digital payments are taking over from checks, and 3) AR Automation opportunity is increasing daily:
Oct. 1 - Adds Another Large US Distribution Company to Growing Client List. The Client is a distributor of heating, air conditioning, refrigeration equipment and supplies.
Oct. 9 - Selected by IT Services Company to Provide AR Solution. An IT services provider within the financial services sector (the "Client") to implement ARC®.
Oct. 16 - Signs Supply Chain Company. North American supply chain solutions provider (the "Client") with more than 500 operating locations and 60,000 carriers. The Client recently acquired a company that has been using VersaPay ARCÒ for more than two years, and their experience has been so positive that they recommended the solution.
Oct. 24 - Signs Global Manufacturer and Distributor of Beverages and Snack Foods.
Oct. 30 - Signs Agreement With Samtec To Provide Customer-Centric AR Solution. Samtec (almost 1B revenue), a large U.S. electronics manufacturer and distribut0r.
Nov. 5 - Closes $4 Million Credit Facility with National Bank. The Facility is secured by assets of VersaPay and its US subsidiary, which primarily consists of intellectual property and accounts receivable. The proceeds of the Facility will be used for general corporate and working capital purposes. Pricing is set at the Prime Rate plus 2.0% per annum for the Facility, and contains customary financial and restrictive covenants.
Nov. 12 - Announces Dream Office REIT as Newest CRE Client
Nov. 13 - Present at the Citi 2019 Financial Technology Conference
Nov. 27 - Announces Q3 2019 Financial Results. Revenue up by $1.06 million to $ 2.23 million year over year (Q3 2018: $1.17 million). Operating expenses for Q3 2019 increased by $0.47 million to $4.28 million (Q3 2018: $3.81 million), an increase of 12% year over year. Loss of 2,5M vs. 2.85M YoY, YTD, loss of 8.8M vs. 9.1M. Subscription backlog to $1.57 million, and annual recurring revenue, including subscription backlog to over $9.38 million
Dec. 13- Great Hill Partners Makes All Cash Offer to Acquire VersaPay Corporation. Under the terms of the Arrangement Agreement, each VersaPay shareholder will receive cash consideration of C$2.70 for each share held valuing VersaPay's total equity at approximately C$126 million on a fully diluted basis.
Today's announcement is a confirmation of our belief that VPY.V was an acquisition target (see our last note).
Factors that were instrumental at achieving this transaction were 1) a unique product mix (ARC), 2) the ability to penetrate multiple verticals (Commercial Real Estate, Logistics, Manufacturers, Food and Beverages, Financial, etc). 3) Strategic partnership with Master Card among others. 4) its ability to obtain financing on excellent terms ( $4 Million Credit Facility with National Bank - Prime Rate plus 2.0% per annum) and 5) an increasing financial performance over time culminating in the last earning (Q3 2019). Off course, this is rather an oversimplification because the company has been at since its inception in 2006 and IPO in 2010. Hence, it did not happen overnight.
Of note, the coverage VPY.V received from the Brokerages in the last six months is telling. A total of four brokerage that we know covered it: Cormark ($2.65), Eight Capital ($4.00). Raymond James ($3.75), and PI Financial ($2.25).
Looking at the charts, Q3 earnings were definitely a catalyst with volume increasing consecutively for three days culminating to 2.5M on December 1st 2019. Since then R1 was tested with some volatility but the end results is history.
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