Spenda Limited ($SPX)

Okay. Thanks, everybody, for joining us today. We've got Corrie Hassan, the current CEO of Spenda over today; and Karim Razak, the Executive Chairman, joining us to give us an update on the March or Q3 quarterly. I'm going to hand over to Corrie to take us through that quarterly via this presentation. We'll be doing some Q&A at the end of the presentation. We've had quite a few questions. So we'll be covering, as mentioned, the pre-submitted questions. But Corrie, over to you. Thanks.

Thanks, Rich. Hi, everyone. So, thank you for joining today. Firstly, a huge apology for postponing yesterday. It's not something that we really wanted to do. But as you may have seen this morning, there has been a major transaction that's just been finalized, and it was really important for that announcement to go out so that we could talk to that today and sort of take you through what's happened there. I'll talk a little bit more about that during the presentation. So, I'll just kick off by giving a brief update for the last quarter. I feel like we've reached a real inflection point now as a business. We're operating fundamentally at a higher speed. We're starting to transition more into a high-intensity sales and marketing execution model. And it's definitely a big jump, which is really good to see. That was the plan, and that's we're heading in the right direction. Cost savings have remained a firm focus. So, we finished the quarter at about $4.3 million per annum. Last quarter was $3.85 million. So, another jump in cost savings, which is great as at the end of March. Strategy remains consistent and clear. I tend to just always show this slide to reiterate the strategy whenever I can, just to ensure that everyone is very clear on our products, and they can see that we are remaining focused and consistent on our core strategy, which is Spenda Pay, Spenda Retail and Spenda Ledger. We have a quick look at the quarterly results. So, payment volumes, they were up compared to the comparable quarter last year. However, they were down compared to the previous quarter. That simply is seasonality. January is a pretty flat month for most industries, as you know. So just analyzing those 3 months, Jan, Feb, March, most of all of the downturn is in Jan and then it bounced back February and March as expected. So, this will just return to normal and the growth should continue for this next quarter. And same for the cash receipts. They were down about 13% from last quarter. But again, that full 13% was equated to January. So back to normal for this next quarter, and we should continue to see that positive trend continue to grow. So, dipping into our products where are we now? So, Spenda Pay, we delivered that this quarter, which was really exciting. So that's the new combined Swiss Statement and Spenda Pay offering, and that's been received really positively in the market. As I explained at the previous quarter, the first cab of the rank was to start converting existing Capricorn members using Swiss Statement. So, this quarter saw that trial roll up to that first tranche, and we had a really strong uptake. It was about -- we went out with 50 customers to start with, and we are continuing to scale these members over the next quarter. So out of that 50%, 90% upgraded, 30% are starting to transact, which is really positive. So now we've sort of proven that we can start to scale quicker for this next quarter and already I'm seeing those numbers escalate. Yes. So, as I mentioned, we have now really validated and concluded the validation. So, our marketing team are starting to activate the planned automated comms, the conversion-led landing pages and starting to drive that volume. So, you can see in this slide the existing opportunity just with our cornerstone customer here, $1.5 million per month. And then on to the bigger SME market, obviously, there's a lot of opportunity there. Again, in the background, our marketing team are also working on a structured growth engine ready to deploy when Spenda is ready to expand beyond our immediate customer to the next stage. And that's when we really expect to see the numbers hockey stick from there. Spenda Retail, momentum is finally starting to happen here. I've been analyzing why it was going a little slower than I was hoping, but it's a real large enterprise-grade product. So engagements with each new store does tend to surface additional requirements that ultimately strengthen the solution and ensure it will scale effectively across the network, but it does mean it's more of a discovery-led approach in the early rollout phase and then it starts to sort of gain momentum once you've sort of started to deal with 10, 15, 20 stores, and you've captured all of those requirements, which I'm finding now starting to come to fruition. So, we've got a pretty good blueprint now on all of the requirements for that product, and it's now starting to gain the momentum that we were hoping for, which is exciting. This month, we are attending the Car Court conference. That happens every 2 years, and we do expect to see a big uplift on the back of that conference. We've got a good team going over and pretty much every single member does attend that conference every 2 years. So hopefully, we will see some acceleration on the back of that. We are seeing some leads come in naturally now from other verticals. So that is something that we are now planning to expand and our sales team are starting to look at the next vertical that we can start to work with. Okay. So, most of you will have seen this morning's announcement. So, we have been working on a transaction. That's a really great outcome both for Spenda and for APG. So, I guess this transaction is the completion of a broader strategic reset, and it brings a further massive 45% cost reduction across the whole business. So that would leave us with GBP 7 million per annum cost savings. It moves us into more of a licensing type of arrangement, which is a much more efficient structure for Spenda at this stage. So, if we break down what the transaction is, it's simply a sale of a noncore piece of Spenda technology that's been sold to APG. The team that are running that technology are also moving over to APG. It means there'll be a cash injection into the business of GBP 1.8 billion, which will obviously assist Spenda's cash flow in the near term. And it also means an immediate staff and infrastructure saving of GBP 2.7 million per annum. All staff entitlements or exit costs around the transaction are covered by APG. So that GBP 1.8 million is the amount that remains in the business and can be utilized for Spenda's cash flow. So along with that transaction, I will be exiting Spenda very soon. It's just being finalized now, but it's highly likely that I will also be moving over to APG to focus on lending. The lending does remain a huge important part of Spenda strategy, as I've talked about in the past. So, I will continue to work very closely with Karim. Spenda is a major partner of APG. There's a very close relationship there. So, as part of this transaction, Spenda will deliver the APG supply chain lending product to its customers via Spenda Pay. So it's a really good fit for both parties. So, my background, as you know, is 30 years in lending. So, this is a really good fit for me and my operational experience. And now that Spenda is moving into a high-intensity sales phase, Karim is probably better placed to lead Spenda through to the next phase. Karim and I will continue to work really closely together as partners to drive business across both businesses. I would like to say, I guess, there is nothing weird going on here. This is a joint decision and a transaction that we're all very happy with and really makes sense for the future of Spenda and for us. So yes, we are excited to have concluded the transaction so quickly. It's been a good process. Do you have anything to add here, Karim?

Thanks, Corrie. No, probably just a quick thank you to Corrie for taking over during a very difficult time for the company and a very critical and important time. And I think we all do have Corrie to thank for this last period, getting the business to a point where I can come in and do the thing that I do best, which is scaling. But Corrie has really brought the business to a point where it's capable of doing that. So, thank you very much for that, Corrie. And I think as a shareholder myself and all the shareholders do owe you that. Thanks.

Thanks, Karim. So, what does this transaction mean? It does, again, even more simplify the business. It makes it more focused on our 3 core products, and we'll just obviously continue on our journey with Spenda Pay, Spenda Retail and Spenda Ledger with a much more -- or more efficient cost base, much lower. We also have some additional changes around the leadership. So [indiscernible] has joined the Board. You would have seen an announcement relating to that. So, he's currently a CEO. He leads a privately owned group of businesses. And he scaled that business from a small operation into a huge group of businesses with about 300 staff. So, his expertise is around scaling as well, so which is a great fit. His experience is a great fit for Spenda. He needs to do a lot of change management, a lot of restructuring experience, and he's also really hands on as well, which is really good to see. He's giving a lot of time to Spenda, even though he's got a few other initiatives. So he's available daily and certainly involved in -- heavily involved actually in moving the business forward, which is great. We had a change. So, James Matthews, who's our marketing expert, initially did join the Board, but now he's really moved into an executive level so he can drive marketing across the business. I've already seen a lot of change around marketing. There's so many good things happening that you'll start to see that come out now as the product is ready to start to scale. You'll see a lot more marketing, a lot more Spenda will appear a lot more in your everyday lives. In addition to that, we have taken on Subi. He's jumped straight in. He's already getting a lot of traction. He's helping with the retail rollout. He's starting to get a broader pipeline. He's very well connected. So he will be responsible for our go-to-market strategy as our business development manager. He's got 6 years sales experience, and a big chunk of it is actually in SaaS. So he's a really good fit. And yes, slotted right in and starting to get really early traction, which is good. So forward-looking. The plan remains robust and strong with a much more lower cost base. Healthier pipeline, healthier cost base, product ready, now we need to scale. For the next 3 months, I'll probably hand to Karim here actually just to give a quick overview of the plan for the next 3 months.

Yes. So for the next quarter, as I said, Corrie has brought us to this position now where we're able to move from Phase 1 to Phase 2 smoothly. And Phase 2 is going to be largely our existing group of pipeline. The pipeline that we currently have now, we need to continue to roll out to. Subi and James from the sales and marketing perspective have hit the ground running. And behind the scenes, a lot has changed and a lot has happened. The business had a couple of decades of legacy stuff that we had to change and had to repair some things as well. So, there is a lot before you can just make a change in a few weeks. So those changes have happened now, and this quarter will be largely Phase 2 before we move into Phase 3, which is a broader market. But we don't really want to divert our focus too early on to the broader market when we have an existing pipeline with our key customers that we still haven't actually finished delivering to. So that is our focus for now. And also, obviously, the restructure that we've just done and cost cutting, which has been a huge part of the last 6, 7 months. And as you guys could see, the numbers speak for themselves in terms of how much we've cut. And interestingly enough, you'll all be pleased to know that none of that actually is going to affect our scaling in Phase 2. So, it's terrific news that we've been able to execute this. And again, thanks, Corrie, for the last 8 months or so in getting us to this place. Yes, it's not going to affect anything. If anything, we're probably going to progress faster now as a tighter team with less layers and things move quicker when you've got that much less people.

Now move to some questions.

Thanks, Corrie. Thanks again for everyone submitting your questions ahead of the webinar. Quite a few of them have been answered by the presentation that's just been done by both Corrie and Karim. However, there are a couple that I believe is important that the company answers. So, the first one is why is Capricorn Society members uptake of Spenda taking so long? What is the problem? Is one issue of refusal of members just letting go of the old manual procedures they are comfortable in? Is it the same with Capricorn store owners? Corrie, it's probably best I think you answer that one.

Yes. Thanks, Rich. No, I'd say there definitely isn't a problem. The one thing I've definitely learned is that technology never runs as fast as you think it's going to run, but everything is actually going really well. The -- I guess, the sample part of customers for Capricorn has gone really well. So, it's really just testing, adjusting and making sure before you scale, everything is working really well. So, I would definitely start to see that scale. And as I mentioned before, once we get into, I guess, general population or gen-pop, whatever you want to call it, and that's when it's really going to scale from there. So yes, just steadily releasing and scaling at the right time is really important. And I think we've got that right. I think I did explain with retail. That has taken a bit longer, mainly because we're discovering new requirements as we go store by store, but we've captured almost hopefully, all of that now. We've got a really good blueprint from here to scale that up. So yes, no, I think you will start to see some numbers escalate very soon.

Thanks, Corrie. The next question we have is, you haven't made it clear yet why our Spenda doing a share consolidation. So, this is something that was put to the AGM this morning, which from my understanding has gone through. I might just answer this given that's been talked to previously, but the consolidation obviously is going ahead. I think given the current share price, the Board thought it was appropriate and to align it with, I guess, the transition that's going on within the business at the moment as well. So given that the business is changing somewhat and where the share price sits at the moment, we thought it was an appropriate time to do a consolidation. Karim, if you got anything else you want to add on to that one?

I mean shareholders are always wanting to know, I guess, why we're doing things like that. And there's never usually a straightforward answer because no one knows exactly what's going to happen, but the business has currently gone through a huge change -- and with a refresh like this, it's probably the best time to do something like this and the share price being where it is, as Rich said. But do we know exactly what's going to happen? Well, the answer is no. But we're doing our best, and we're doing what we think is best. And the plan that we have, we plan to execute. And we believe that this is what shareholders would want and not want us to just horse around and look left and right every 2 seconds. We're trying to stay focused and do what we think is best, committing to a plan and hope that things work out the way we want it to work. But as you can see, we are doing what we've said we were going to do with $7 million a year in annualized cost savings. So massive, massive changes have happened in such a short period while we're still expanding with sales and growth and marketing. So that's kind of what I'll say there to the consolidation topic. Hopefully, it works out the way we want it to work out, guys.

Thanks, Karim. The next question I've got is investors will promise more communication and visibility. This hasn't been the case. Why? Corrie, I might hand that one over to you.

Yes. No, it hasn't been the case, and I do apologize for that. That was the intention or that was certainly my intention. But this transaction on the horizon has kind of diverted a lot of attention to that. And it's a bit of a, I guess, a game changer as well. So, we really needed that to conclude -- to move into, I guess, a normal rhythm moving forward. So, I'm sure Karim will pick that up in terms of delivering a more robust communication channel to the shareholders moving forward.

Thanks, Corrie. Next question, so retail, 5 stores onboarded is a good start. When will you start to convert to --- and when will this start to convert to revenue?

I think the number is you want 10 to 15 on, and it will start to convert really quickly. So, the numbers around that, there's an implementation fee and then an ongoing SaaS fee. The SaaS fee is $500 per store per month, and then there's an implementation fee that can range between $5,000 and $10,000. So that will start to escalate after 10 stores. And I believe very quickly, so in the next -- definitely in the next 6 months.

Thanks, Corrie. The next question I've got is, as a significant investor, I'm concerned about the impact of Adrian's previous misleading guidance on shareholder investment. Please provide a clear update on the company's financial position and confirm whether profitability is expected by the end of the financial year. If not, what does that revised outlook look like? Corrie, I might get you to answer this one.

Yes. Look, the last 6 months have been about repairing history, I suppose. And we've done a lot of work. A lot of that repairing has been done. And we're good to go. So, it's about scaling now and delivering on those numbers. So, the numbers have changed significantly with this transaction and with some other cost savings. So, to be honest, I think the next quarter will be able to sort of give a more robust answer in terms of cash flow positive, but the cost base really makes that happen or makes that very likely. That's what I would say.

The final question I have is, as of today, with Corrie and Andy leaving, will be looking for -- will we be looking at employing another CEO or CTO? Or will the roles be filled in-house, therefore, saving us more cash? I suppose, Corrie, could you answer that, but I guess it goes to Karim as well.

Yes. So no, we won't be replacing those roles. Karim will be leading the business, so there won't be a new CEO. So, costs will -- these will be part of the cost savings. And Dave Wood will be covering CPO or Chief Product Officer and Chief Technology Officer, a dual role there, too. So, there won't be a replacement.

Great. That covers the questions that we had submitted previously. And so I appreciate everyone taking the time. Of course, if you have any follow-up questions, feel free to submit them through the investor portal, and we'll endeavor to get back to you as soon as we can. There's been a lot of change happened since. So we're very excited to see what happens next. But thanks, everyone, for your time. And thanks to Corrie and Karim.

Thanks, everyone.