QuickFee Limited (QFE) Earnings Call Transcript & Summary

Okay. It's past 10 a.m., so I think we'll make a start. Good morning, everyone, and welcome to the results call for QuickFee Limited for the 6 months ended 31 December 2021. [Operator Instructions] So without any further ado, I'm delighted to have Eric Lookhoff, CEO of QuickFee; and Simon Yeandle, CFO of QuickFee, here this morning to walk through the results.

Thank you, Eric. Good morning. I'm delighted to present QuickFee's fiscal year 2022 first half operating results. H1 was a period of stronger performance from QuickFee with continued growth in the U.S. in both payments and lending and lending in Australia continuing its recovery. We ended the half with momentum, achieving record Q2 results in our U.S. core professional services segment. Revenue for the half was up 5% and gross profit up 6%. We're now seeing a return to pre-COVID-19 lending levels but with accelerated payments volume and larger transaction sizes, which positions QuickFee well for heading into the second half. Our core professional services business saw a record PayNow total transaction values of 48% to USD 423 million. Financing volume was up 4% to $8.2 million for H1, though up 19% in Q2, showing increased momentum. As a sign of improving post-COVID economic recovery, we saw average order values increase as well, up 9% for PayNow and up 12% for financing. Lending volumes in Australia continued its recovery of 30% to AUD 17.3 million for H1. Our buy now, pay later offering continues to build momentum with solid growth in our independent sales organization, or ISO distribution model, merchant sign-ups and a growing backlog of processing volume. We increased our addressable market to 150,000-plus merchants by signing distribution partnerships with 128 independent sales organizations. I'll speak more to this important go-to-market strategy further in the presentation. Merchant sign-ups in the U.S. reached 946, up 64% from June '21 and 295 in Australia, up 26%. Our annualized processing backlog, which represents leading 12-month volume and revenue expectations based on the existing portfolio behavior continues to build. BNPL backlog volume was up to AUD 6.1 million at the end of H1, up 33% from June, with revenue at AUD 0.6 million, up 50%, demonstrating an increase in yield. We anticipate that this momentum will accelerate into the remainder of FY '22 and well into FY '23, becoming a material part of the QuickFee business. During the first half of the fiscal year, we were pleased to sign a long-term franchise agreement with Jim's Group, which enables 4,500 franchisees to offer payment plans powered by QuickFee for home services in Australia. In addition to growing top line revenue, there's been a concerted effort to begin extracting benefits from the operating leverage in the business. Shifting to the ISO channel model for BNPL allowed us to reduce direct sales resources at the end of H1. And completion of our proprietary system in H2 paves the way for reduced spending and technology over the course of fiscal year '23. We were delighted as well to finalize a new funding deal with Northleaf Capital Partners, which delivers a USD 70 million equivalent multicurrency receivables facility to fund future growth. These changes, combined with growth in our core professional services segment, quickly expanding BNPL segment and low-risk, low-cost loan book sets a foundation for QuickFee to accelerate its path to profitability. We'll move to Slide 3. What began in 2009 as a vertically focused leading -- lending solution, expanded with the addition of bank transfer and credit card acceptance, leading to the U.S. market expansion in 2016, where we have a dominant and growing position within the enterprise accounting space, with 34% of the top 400 firms and 25% of the top 100 firms as actively engaged clients. After our IPO in 2019 under our successful navigation of the COVID-19 pandemic, we have leveraged shipping market dynamics to catalyze and accelerate our emergence as a full-service payments company. That's where we sit today. Next slide. We have organized our focus on QuickFee into 2 primary market segments, professional services and buy now, pay later solutions. Although these focus areas require different go-to-market strategies to be successful, both complementary -- provide complementary and synergistic consumption of our payment platform and back-office capabilities to scale. Next slide. So in professional services, this industry remains our growth -- primary growth engine in both Australia and U.S., and I'll share more on the positive results in each region. In the U.S., we saw exceptional year-over-year growth in payments as well as the beginnings of a rebound in lending. U.S. payments for H1 was up 48% and lending up 4%. Active customers increased to 116,000, up 38%, while active merchants increased 564, up 24%. These signal increasing scale as volume grew faster than customers, which grew faster than merchants. So we're seeing improved year-over-year utilization of our core payments and lending gateway. Next slide. In Australia, we saw a steady recovery during H1 as financing grew 30% to AUD 17.3 million and payments grew 13% to AUD 26 million. With active customers growing 10% and active merchants around 5%, we saw a similar increase in utilization. As mentioned earlier, operating the Jim's Pay Plan provides a large addressable market for our payment plans which has been implemented and we began delivering initial volumes in Q3. Important to note is that our merchant bank lending solution remains a very low-risk product for QuickFee, made even more profitable with our recently expanded lower-cost multicurrency facility with Northleaf Capital Partners. Next slide. We continue to develop and expand our payment gateway integrations with practice management solutions. During H1, we expanded this market by signing an agreement to integrate with Wolters Kluwer's CCH Axcess, which hosts 65% of the U.S. enterprise accounting market. These integrations further strengthened our high merchant retention and drive greater utilization in payments and lending volume. Our intelligent invoicing solution called Connect completed beta release in H1 and is being rolled out to new and existing accounting firms in H2. Additionally, we signed an agreement with bank bill payment provider, BillGO, which upon integration in H2 creates up to $1 million of additional process and volume per month. Our strategy to continue dominating the professional services space is threefold: Increase our U.S. market share through further penetration of accounting firm alliances, made possible through a return to conference event travel in the U.S.; increase our share of total firm volume through deeper practice management system integrations with our core Connect product; and facilitate and benefit from the industry-wide shifts toward digital invoice. Next slide. So buy now, pay later. Our buy now, pay later journey began just over a year ago with the launch of our first installment products, secured by the consumer's credit card authorization through a partnership with Splitit. Over the past year, we've improved upon this initial version, greatly expanding its usability, marketability and profitability. BNPL solutions are not one-size-fits-all for merchants or consumers. The QuickFee BNPL solution leverages the existing available credit line on a consumer's part, which secures our credit risk through a pre-authorization against an existing limit. Because the consumer's spending limit is preauthorized to be -- predetermined by their card issuing bank, we can bypass consumer underwriting, speeding the checkout and providing the added benefit of not issuing new credit or taking credit losses. This also means BNPL payments are guaranteed, so there are no customer late payments and as such, no need for late payment fees. And any chargeback risk is backed by the merchant. By focusing on the nondiscretionary services sector, including automotive, education, health care, recruiting and home services, we experienced much higher average order values than other BNPL providers serving the online e-commerce retail sector and again with minimal credit risk. Next slide. So winning with this product in the U.S. requires an understanding of how differently merchant payment services are distributed in the region, not directly through banks as in Australia or other countries, but largely through private independent sales organizations or ISOs. As well, we need a model to acquire merchants directly, taking advantage of the increased market awareness for buy now, pay later. At the beginning of H1, through partnerships with SALIX Data and BlueSnap, we began development of our online merchant direct application. And so the platform launched in production in September. This is the backbone we created with fully automated underwriting and onboarding capability, complete with a full suite of risk management tools, allowing QuickFee the back-office platform to acquire markets at scale. Merchant Direct accounted for 33% of new merchant approvals in H1 and provides a scalable infrastructure to support our ISO distribution change. In September, we formally launched that faster-growing go-to-market strategy, leveraging the ISO market to distribute our buy now, pay later solution to service-based merchants in the U.S. With 128 ISO partners signed in H1, we've begun creating an addressable market of over 150,000 potential merchants. In this strategy, ISO partners are first signed, implemented which is a 1- to 6-month process depending on the depth of integration and trained. Subsequent merchant acquisition is then followed by activation, utilization and ultimately processing volume and of course revenue. So it's important to understand there's a lag time between ISO sign-up and merchant volume. We will continue to report on this in our quarterly trading updates. In the U.S., BNPL total transaction values grew 120% for H1 over H2 fiscal year '21. While merchant sign-ups grew 64% to 946. In Australia, TTV grew 33%, while merchant sign-ups grew 26%. Important to note here is the growth potential of the Jim's Pay Plan BNPL solution, which began implementation in H2. In all, we have developed a low-risk, high-yield, high-transaction buy now, pay later solution differentiated through unique consumer benefits and leveraging an already scaled and mature U.S. distribution channel. I'll now turn it over to Chief Financial Officer, Simon Yeandle, to walk through the unit economics of the BNPL portfolio and how we measure the evaluation of that as well as our first half financial highlights. Simon?

Thank you, Eric, and good morning, everyone. As Eric mentioned, we are keen to explain to everyone how internally we measure the progress of our buy now, pay later product. And the key measure is one we use what's called the run rate backlog. This represents what QuickFee's current buy now, pay later merchant cohort is expected to generate over a future 12-month period based on the existing number of merchants today and known conversion rates to calculate the theoretical future lending volume and revenue based on today's run rate. We'll talk through how we actually calculate that shortly. But you can see on this top left chart, it has grown from AUD 4.6 million at 30 June 2021 to AUD 6.1 million at 31 December 2021. And so the numbers there are split between the U.S. and Australia. On the right, number of signed merchants. As Eric mentioned, 946,000 at the end of December. And you can see the steady growth in merchants in the U.S. and also in Australia. And underneath, the number of independent sales organizations and the growth there. And as Eric mentioned, we have yet to see the conversion of that ISO growth into signed merchants. Bottom left is a chart of transaction velocity, which is how many transactions are currently transacting merchant processes on average per month. And that is, again, growing as merchants become more engaged and use the product more. So over on Slide 12, we'll talk about how we calculate that backlog number. It's a combination of several key KPIs in our buy now, pay later business. The first step in calculating this takes the actual number of merchants already signed up and using existing conversion rates across the whole portfolio, extrapolates out what we expect our existing cohort to generate in the next 12 months based on the existing behavior of those current merchants. So in the second column, United States, we had 946 merchants that signed up at 31 December, and we expect those 946 merchants to generate USD 3.6 million of revenue in the next 12 months based on current behaviors. The detailed steps within that are that we multiply the 948 -- 946 merchants by the activation rate, which means 20% of the 946 are activated and used the product at least once. Then 35% of those active merchants transacted in December, that's the engagement rate. And on average, those 35% processed 1.9 transactions a month at an average transaction size of $2,388. So by multiplying all those together and then multiplying by 12 gives us an expected 12 months volume number. We then convert that volume to revenue and the revenue has 3 components. Firstly, the fee to the merchant, which is currently averaging 5.05%, but the range of fees to the merchant range from 4.99% to 6.99% generally. The second component of revenue is the credit card surcharge currently 3% in most U.S. states. And the third component is a monthly minimum fee of $9.95 per month for all merchants. That's a top-up if a merchant isn't getting billed that amount. So in summary, 946 signed up merchants are expected to deliver $358,518 of revenue in the next 12 months, assuming those behavioral metrics about to stay constant. And there's potential for us to increase all those conversion metrics with improved customer success and account management activities. So while merchant numbers is the one input that we expect to grow the fastest, there is potential upside with all these other multipliers. We have teams focused on every one of those as well, not just the merchant numbers. So as Eric mentioned, we are showing steady backlog growth each quarter. And there is a lag between ISO sign ups and merchant conversion, but that is steadily increasing as the backlog grows. And as the chart before showed, our global volume backlog grew 33% in the half year from AUD 4.6 million at June to AUD 6.1 million at 31 December. And our global revenue backlog grew 50% to AUD 0.6 million from AUD 0.4 million at 30 June. Now on to the half year financials and the profit and loss on Slide 14. Interest revenue for the half year declined to AUD 200,000 despite lending growth in both markets. And the reason for that was driven mainly by 2 factors. Firstly, the 12-month impact of last financial year's lending declined in Australia, which has an impact on the first half of this year. And secondly, some shorter loan terms on average that we've seen in the U.S. over FY '21 and the impact as those run off into the first half of FY '22. Revenue from our PayNow product was up 21% or AUD 400,000. With interest expense down $300,000 and surplus cash was used to reduce borrowings, net income grew 13% to AUD 4.4 million. Cost of sales increased 43% to AUD 1 million. And that is -- that line is mainly comprised of 3 things: firstly, expenses to operate our online payments platform for ACH, EFT and card processing; secondly, interchange fees for credit card processing; and thirdly, credit checks and underwriting expenses, including staff and software, which Eric will touch on later. So gross profit was up 6% to AUD 3.4 million. And then looking at operating expenses in general, we made most of our step-change investments in the growth of the business and acquisitions of senior talent in the second half of FY '21, so from January to June last year, in our corporate marketing functions, and we grew our new customer and merchant acquisition team substantially. So this half year's expenses compares to H1 FY '21, which is pre that substantial lift in cost base. So after building out our team, we did conduct a moderate reduction in force effective 1 December 2021 which eliminated 10 positions, which were redundant as we pivoted away from the direct sales model for buy now,, pay later to the more scalable ISO distribution strategy in the U.S. and the franchise opportunities in Australia that Eric's mentioned. While our product development expenses increased by $1.3 million to $2.8 million, we do expect to see a step down in this expense line as we complete the remaining development of our proprietary processing platform, QUBE. And product development expenses generally consists of both employees and offshore contractors such as product managers, project managers, front and back-end developers and database engineers to weather software costs to run that function. So expenses were up across all lines in the half year versus the July to December 2022 period. However, we do expect a reduction in cash burn for the rest of FY '22 and FY '23 and remain sufficiently well capitalized into FY '23. Adjusted EBITDA was down AUD 4.5 million to negative AUD 7.1 million. And the adjusted EBITDA definition is the usual definition of EBITDA but deducting the interest expense on our loan book borrowings, which is the second line in that P&L. And this interest expense is one of our core operating costs. So to profile a meaningful operating number, we're required to call EBITDA adjusted once we've taken interest off it. So our loss after tax was AUD 7.3 million, down from a loss of AUD 2.9 million in H1 FY '21. As Eric mentioned, our low credit risk business model continues to protect us from heavy bad debts on both our traditional lending product and our buy now, pay later product. Total bad debt write-offs are averaging 0.15% of lending, that's certainly one of the lowest in the sector. So over on Slide 15. Our balance sheet remains strong with AUD 17 million of net current assets, albeit with reduced cash of AUD 11.6 million bound from June 2021. Loan receivables growth of 8% reflects the swing back to lending growth we've seen in the half year. Our new Northleaf Capital facility now gives us AUD 52.8 million of liquidity plus growth capacity before the optional accordion. And we're going to leverage that facility as our loan books show the continued growth we expect in both markets. I'll now pass back to Eric to talk about our technology and operations.

Thank you, Simon. To the next slide. So during the first half, we continue to advance our proprietary payments platform we call QUBE toward completion. Our migration of merchants for ACH and card processing has begun in Q3 with completion targeted by Q4. This will be followed by migration of our lending and financing business in the U.S. as well. Our Merchant Direct platform I mentioned earlier, provides expanded risk management and provide monitoring capabilities. Additionally, our merchant experience was improved through easier-to-navigate customer portals. With our intelligent invoicing solution, Connect, now moving into market and the platform migration nearing completion, we anticipate our technology investment to taper down substantially into and over FY '23. Operationally, the processes put in place to manage buy now, pay later for underwriting, verification and validation not only allow our back office to further scale, but also provide a faster merchant onboarding experience, improved compliance and increased lead conversion. Go to the next slide. Next one. So outlook and priorities. We're pleased with the strong H1 FY '22 performance and momentum we have entering the second half of the financial year across the business. In professional services segment, we will continue to benefit from and be a catalyst for the shift to digital invoicing payments. We will continue to increase our U.S. market share through further penetration of accounting from alliances and associations and increase our share of total firm volume through deeper practice management system integrations. In the BNPL segment, we are focused on scaling up the production of our ISO partners to generate an increased merchant acquisition while continuing to sign up new ISOs, which further increases our addressable market. This strategy helps us scale quickly in a cost-effective manner, and we expect to continue our trajectory of growing the portfolio of existing and annualized processing volume and revenue. After successfully navigating a challenging period as a result of government stimulus measures, H1 FY '22 demonstrated that QuickFee indeed has a robust business model is now accelerating its path to profitability. Next slide. So in conclusion, we have a strong core business model, high customer retention and increasing organic growth. We are well positioned with the right talent and right strategies to execute and have identified the correct product market fit for our solutions. We will continue to deepen our customer relationships in ways which accelerate volume and revenue growth. And we believe the digital transformations to invoicing and payment acceptance in the professional services sector and fast-growing BNPL marketplace are still very young in their respective evolutions. I'd like to recognize and thank our employees for their unending commitment to our clients and to each other during a calendar year of substantial change. Additionally, I'm grateful for the consistent support of our Board of Directors and for their counsel. And lastly, incredibly thankful to our shareholders for your support and trusted investment. I look forward to delivering on QuickFee's many opportunities into the future. I'll turn it over to Eric.

Thanks, Eric and Simon. [Operator Instructions] So one here just to kick things off here. Just in regards to the buy now, pay later rollout. Obviously, really strong momentum in the rollout, but still relatively small and immaterial to the overall, I guess, financial results. So I guess, how should investors think about the longer-term contribution of the buy now, pay later segment to QuickFee's earnings?

There's a couple of ways we look at that internally. So one is how quickly we're replacing or displacing the traditional financing mode. So the buy now, pay later existing volume is already replacing roughly 15% to 18% of our historical lending volume, right? It's doing so with a product that has a higher velocity of capital term, right? So there's roughly a 90-day borrowing term on the -- in the lending term on the BNPL solution versus about 10 months on the traditional lending. So we're turning that cost of capital through the income statement 3x faster than we do in our traditional lending product. And we've displaced 15% to roughly 18%, depending on the current month, of our historical financing volumes. So what took us 6 years in the U.S., for example, to build up, right, has taken 6 months to replace about 20% of the app with much faster growth on the BNPL volume and penetration and what we're seeing in traditional lending. So that's the way that we tend to think of it internally. Given that we're not making long-term new predictions on some of the BNPL backlog, we'll let the numbers speak for themselves.

Thanks, Eric. A question on the ISO. So obviously, it's still relatively early days. But are there any early observations that you can call out from this sales program from the ISOs on the buy now pay later segment?

Yes, the interesting thing with the ISOs is it's really becoming a more deeply integrated partner with the ISOs go-to-market strategy, right? And the more we're able to do that, the faster and the more robust we're going to see the merchant application flow coming through the ISOs. We've begun seeing an increase already in the actual payment volume we're processing, right? The BNPL volume coming from that channel has already grown over the last couple of months. And so those are the early signs that give you confidence that the strategy is working. The other is how those ISOs are organized in the United States. So they're geographically organized. There's a Western states, a Midwest, a Northeast and a Southeast part of the country. So there's essentially 4 major annual events conferences where all of those ISOs, all those merchant acquirers are attending. As an example of the Western states, which was last October in Dallas, Texas, we spoke on a panel of buy now, pay later, myself and members from Cross River Bank and from Open Pay. And we were -- the response to that from the ISO community there was extremely positive. I mean, we've signed up 40, 50 of the ISOs just coming from that one event, for example. Now if you look at what's happening coming up here in April, the Northeast Acquirers Conference is being hosted in Philadelphia. And again, I'm speaking on a panel on buy now, pay later at that event with ChargeAfter, with Mastercard and some other large players. And so -- and we've already been receiving -- we've already received unsolicited invitations for the Southeast conference that's coming up later in the year in Atlanta, Georgia. So my point is just saying that our -- the solution that we've designed and built to be distributed through a very mature, very well-established distribution model for payment services in the U.S., we're the only ones that are doing that. We're becoming more synonymous with that solution to that market fit. And we believe that will only continue to further strengthen the strategy that we've decided to employ.

Great. A couple of questions coming through on the PayNow business, but I'll just put one last one on the buy now, pay later business. Are there any specific verticals that you're targeting in the buy now, pay later space?

Yes. So our buy now, pay later solution is very much oriented to service businesses. So we want to stay positioned in that higher ticket, nondiscretionary purchase decision and providing a consumer the ability to gain leverage on their existing credit line essentially with additional time to pay. And by staying in that segment, we're seeing average -- the average order values that you saw on the screen that run the 2,400 -- 2,300 to 2,500 range, are roughly 10 to, say, 15x what you would experience in online e-commerce retail. So in -- within that services segment, we like automotive, we like home services, education, health care and more notably, recruiting is doing really well there also. So those tend to be some of the, call it, the top 5 half dozen or so. They are very large markets within the services sector, but they fit the product market solution that we develop.

Makes sense. So just on the PayNow business, a question here is, what were the main drivers for the strong growth in the PayNow business? And then looking forward, do you expect the current growth rate to be continued?

So there's a handful of drivers on PayNow. And so the enterprise professional services space, particularly U.S. accounting space is still very much in the early stages of its own digital transformation from paper-based invoicing to digital invoicing. And that was accelerated with COVID over the last 18 months or so through the pandemic as the ability to produce paper invoicing had to move online. And as a result of that, the customers of the merchants who we serve then shifted from paper check payment, right, to more electronic payment. And we saw that more heavily move towards payments and necessary lending. So the stimulus effect came in. There wasn't as much need to borrow, right? And so there was just still as much need to pay because the invoicing still happens. And so we saw a shift towards card payment, towards ACH payments, both of which are very high-yielding payment solutions in the United States, very different than, say, bank transfers, EFT processing in Australia. There's really not much money in it. In the U.S. business, that can be a very high-yield business. We've seen historically a 37% -- excuse me, a 37 basis point yield on that volume. So you had a shift to digital invoicing. You had a shift from borrowing to paying in full that was happening. And really, the third is just the seasonality of the enterprise accounting space in the United States, where the long -- you tend to see your customer once a year, maybe you see them twice a year, depending on your audit calendar, right, depending on their tax filing calendar. So the longer you have merchants who are on our platform for full years, the more we see the year-over-year growth effect of their customer base. And so the fact that we have a very high retention portfolio of professional service firms, the longer that they -- the more tenured that they are, right, the more we see all of their volume over the prior year, and that is just accelerated by the other 2 drivers that I mentioned earlier.

Thanks, Eric. [Operator Instructions] One now maybe for you, Simon, just look to talk about an inflationary environment and more specifically interest rates potentially going up. Do you have a view on how, if at all, that will affect the QuickFee business?

Yes. Thanks, Eric. That's a great question. I'll probably talk about the financing business first. We have found that the product is reasonably inelastic to any price movements either up or down. And we believe that is generally due to the simplicity. It's very, very easy for a client of an accounting and law firm to take out a loan. And generally, unless they're quite a sophisticated borrower or larger business, they generally wouldn't then go and compare that with alternative lending or borrowing financing solutions. If they do, and of course, if interest rates are going up, they're going to be charged more from those alternative ones as well. We have pretty healthy APRs and can certainly afford to move those up and down in order to maximize any opportunity in any competitive threat if there was one there. So that in itself gives us quite a bit of headroom in terms of the ability to play with our prices if we need to. But I don't see any real impact to our lending business through that. On the buy now, pay later space, similarly, merchants are, we find, reasonably immune to any price range, whether it's 4.99%, 6.99%. The service business is already in a less margin driven. So -- and our retail business would probably find a raise from 5% to 6%, 7% % as a fee. We're eating to their margins. Our services business are probably less susceptible to that. And again, the APR on our BNPL product is far in excess of the lending product as well. So we've got plenty of margin there if we were -- or we wanted to become more competitive. But as I say, we're reasonably immune from any of that kind of price tension.

Eric, just to add on that in real-life example. Beginning of calendar year '21, we were -- or at the end of fiscal year '21 would have been, so it would have been sort of the Q4 '21, we did increase borrowing rates on the lending solution in the U.S. And because there was -- it was evidence that -- there was an inelasticity there that we could improve margins, and we did. And we've had a very nice stick rate to that, that won't show up in the loan book until the loans mature and we see more of that because it's on a go-forward basis, right? So there's real-life evidence where we've been able to manage pricing more recently with our ACH yield as well. It's a very healthy yield and there's opportunity there to -- even with competitive pressures to continue to become more profitable in the existing book of business.

Thanks, Simon and Eric. You have probably covered off a little bit of the questions, but there's a couple of questions just coming through on pathway to profitability and cash flow positive and then also cash balance and comfort around your current cash balance and balance sheet. So maybe just some comments on both of those 2 topics.

Yes, we've got plenty of headroom in terms of facility, and we do expect lending to grow, which will -- that lend book growth where we able to leverage the facility. So we do remain well funded. Cash burn is something we are very, very focused on. And path to profitability is in absolutely paramount for our Board and management. At this point, we're looking to reduce cash burn on a pretty much monthly basis, month-to-month. So by -- as we exit FY '23 into FY '24, we're really targeting to try and be cash flow positive on a month sort of run rate basis by then. So there is headroom there, and we are very focused on cost containment.

Yes. And Eric, I'd say -- I would say there's more upside to accelerate that than necessarily downside that might delay it.

Got it. Thank you. A question here just around the ISO sign-up and merchant conversion around, is there anything that can be done to speed this up, I guess, to get to that inflection point a lot quicker?

Yes. There's -- it's an area that we're really heavily focused on, right, which is driving merchant activations, merchant application flow from the ISO channels. Each of these ISOs are very unique. You have anyone that runs from someone that might have 5,000 merchants to someone who has 100,000 merchants, right? So there's a variety of each. And each has a different level of engagement. So the way that we've organized internally is essentially around, if you think of category management, for example, of being able to distribute product through a brick-and-mortar retailer, right? You're really managing and getting in with everything from how the product is placed, priced, to the buying behaviors of their customers as well, right? So all of that has to match up. So each of them being somewhat unique. The larger players, there's more depth of integration. They provide more opportunity, but they take a bit longer to onboard and see merchant flow from. That said, we are seeing increased application flow from our ISO channels. We're seeing increased processing volume month-over-month from the ISO channel. It's very young, but first, you have to build an addressable market, which we really didn't begin doing until the beginning of the half when we made the shift from more of a traditional direct sales model, which is what could be sort of new and had worked so well and has worked so well on our enterprise payment to the Enterprise Professional Services group, right? It's a different strategy that we need to deploy for our buy now pay later solution. And then frankly, that's part of why I'm here and the team that we brought on board over the last 12 months, and we're here to execute on that.

Thanks, Eric. Just 2 final questions. One just come through around the share price. Obviously, the share price has come back over time. And the question is, what initiatives is QuickFee taking to restore shareholder value?

So there's a few things. The first is we have to focus on executing into our strategy and producing results. If we produce the results, the share price should follow. The direction that we're in, the momentum that we have, both in terms of volume growth, we're becoming more profitable on the volume at the same time as well as reducing expenses at the same time and increasing sort of the margin per processing dollar, right, also at the same time. So if you looked at the unit economics of your volume is growing faster than your base and you're getting more utilization, you're able to increase the profit that you make on each processing dollar as well as reducing your fixed costs, sort of your non cost of sales, non cost of acquisitions via the completion of our technology investment, all of those things are moving the business in the right direction as fast as we're able. How that translates back into the share price is more of an investor evaluation of our performance. What I would say is if you look at sort of the line we drew back in mid-October when we were moving our Investor Day, we've shifted it out about 30 days, Eric, right, if I draw a line from October '18 to present, right, would be nice if our share price has been appreciating. Since then -- it has not depreciated since then. And if I compare that to October '18, the present for other Australia traded buy now pay, later solutions, right, I like our investment relative to how those others have turned out.

I would add, Eric, that we do acknowledge that lack of broker coverage and independent research doesn't help, and that is something we are pushing very, very hard. We are talking to many, many brokers at the moment in order to get them to ideally cover the stock. So we can have some independent research there that will drive demand.

Okay. Thanks, Eric and Simon. So just one last one. Just thinking forward, you obviously covered off the outlook and priorities. But just in terms of the key focus for the next 6 months and what investors should be looking out for?

Yes. I'd say, over the next 6 months, we should be looking towards a few things. So one is the continued migration on our technology platform. Because the success of that paves the way for additional taper down on that side of the investment that all brings an acceleration of profitability. So that's important. I think another is seeing those ISOs on the buy now, pay later channel continue to produce merchant application volume, that's going to be a key indicator for us. The others are how we grow and the speed at which we grow that buy now, pay later backlog because that factors in, as Simon mentioned earlier, both our merchant growth as well as how well we're converting those merchants and that caused an acquisition into activations, engagement, transaction velocity and average order value. So the speed at which that backlog grows, I think is going to be a very key measure. It's a measure we look at every single day, right, and how well that grows and we look at the pace of that growth. And really executing on those individual measures that informed the product of that backlog. So that's going to be the other one to keep a close eye on for us internally. And then I'd say the other is how well we are continuing to penetrate and grow the enterprise professional services space, particularly in the United States, where right now, between now and April 15, the traditional individual tax season. So that market space is heads down, very, very busy, right? When they get to the other side of mid-April, then the sort of the window to continue to penetrate and grow that space really opens up again. And so we look forward in the next 6 months. That would be another area that we'd be looking for measurable progress.

All right. Thank you, Eric and Simon. So I think that, that concludes the presentation. Thank you both very much for your time. Thank you for all of those that have dialed in and listened in to the presentation. I will now hand back to you, Eric, just to close things out.

Thanks, Eric. So there's a lot to be proud of for what we accomplished over the first half. That said, we have a pretty insatiable appetite for progress and improvement. We're incredibly focused on executing against our strategy, producing the kind of results that we have the ability and the potential to achieve. So that's really what our focus is. I appreciate the time. I appreciate all the investor interest and certainly look forward to continuing to produce new market updates that move the needle. Thank you, all.