As earnings season continues, QuickFee Ltd [ASX:QFE] was one of the latest to share its financial position — laying bear all its achievements and failures for the past six months.
And for the most part, the result was pretty positive, with growth in almost all the right areas.
The only caveat was a fairly substantial increase in their net loss. A consequence of their ever-growing, but ever-costly endeavours.
Unfortunately for QuickFee, this may have been their downfall. With the market punishing them for a result that clearly failed to meet expectations. Seeing the QFE share price fall by 9% in today’s trading.
Slow growth hurts QFE’s bottom line
As I said, the good news is that QuickFee is growing its revenues and gross profit. Both of which rose by 22% and 39% respectively.
The bad news though, is that this wasn’t enough to offset the bottom-line result. With their net loss blowing out to $2.8 million. An 89% increase from the same period last year.
In this regard, whatever efforts the company is spending money on, it clearly isn’t doing enough to increase sales. At least, not recently.
Whether or not we’ll see better future returns is unclear. Because as QuickFee state, the ‘challenging’ environment of 2020 — with governments handing out free money — has impinged on their flexible financing model.
However, in better news, the company’s efforts in the US are paying off. With a 182% growth (albeit from a low base) in transaction value from American clients. A promising sign that they may be able to capture more market share in future.
As management notes:
‘The growing level of adoption of online payments within the US professional services market continues to provide tail winds for our growth, and our new QuickFee Instalments platform provides access to a wide range of new service verticals outside of professional services.
‘We are actively testing the QuickFee Instalments platform across multiple new services industry verticals, with QuickFee now able [to] help customers access the advice and services they need from any service provider.’
So, long term there is at least still plenty of hope. Whether it will pan out as QuickFee anticipates though, well, we’ll only know once it happens.
Outlook for QFE share price
What does this all mean for the QFE share price then? Well, as can be seen with today’s reaction, shareholders are already expecting growth. And a lot more of it.
Therefore, the adoption in the US needs to pan out, otherwise QuickFee could find itself in the hole. Potentially spending millions on a venture that may yield fruitless returns.
The sooner the better too.
Fortunately, their hefty cash stockpile ($30.5 million) should help on this front. Giving them plenty of leeway to spend money on improvements to drum up more sales.
Because while I’m sure investors can stomach having capital in a company that is unprofitable, what they want to see is revenue growth. Just like some of the more well-known fintech stocks have managed to deliver.
So, the future of QuickFee’s share price likely all depends on said revenue growth. A key metric for this trendy fintech sector.
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