Prospa posts 1H23 profit despite increased investment

In its continued commitment to improve the ‘all-in-one business account’ that “drives lifetime value,” ASX-listed Prospa has outlined a range of ‘next steps’ after posting a 1H23 profit despite already increased investment.

The lender has outlined its future pathway, nominating a slew of updates and innovations, such as an overdraft launch; foreign exchange facility; accounting integration and invoicing; bill pay; expense management; plus “marketing and channel-engagement activity”.

Prospa co-founder and chief executive Greg Moshal said: “I’m pleased by Prospa’s strong momentum, which is underpinned by our mission to be the financial partner of choice to small businesses in Australia and New Zealand.

“We have continued to invest in our products and technology so our customers have simple, stress-free, and seamless financial management tools, and they can focus on what they do best.

“Despite this increased investment, Prospa still posted an EBITDA profit for the half.

“The impacts of inflation, rising rates and a tight labour market have increased uncertainty in the operating environments for many small businesses.

“We are seeing stress in some of our lower risk grades and have revised our commercial credit risk assessment policies in line with these changing conditions.

“Notwithstanding the macro environment and tightening credit, we continue to grow our business by meeting customer demand, building out our product road map and applying a strong focus on our portfolio management settings.”

Half-yearly results hit the mark

In its latest 1H23 results, business lender Prospa recorded a 35.1 per cent hike (1H22: $314.9 million) in first half-year loan originations, taking the total to $425.5 million.

Further group financial results for the half year ended 31 December 2022 included: Prospa revenue having reached $135.3 million, a 72.4 per cent increase on pcp (1H22: $78.5 million).

Active customers grew to 19,900, an increase of around 1,900 from the previous quarter (1Q23), while operating cash flow increased to $47.0 million, up a significant 98.0 per cent from pcp (1H22: $23.7 million).

Additionally, closing gross loans increased to $855.8 million, up 66.3 per cent on prior corresponding period (pcp).

In terms of its New Zealand operations, it rose to 18.2 per cent of closing gross loans from 16.3 per cent at FY22.

Brokers key to Prospa distribution channel

Prospa co-founder and chief revenue officer Beau Bertoli explained to The Adviser how integral brokers were as the lender moves forward: “Prospa’s partners played an integral role in our strong top-line results for 1H23, with total originations of $425.5 million up 35.1 per cent on pcp.

“The broker market continues to be a key distribution channel for Prospa, especially in new customer acquisition, with 54.6 per cent YoY growth for 1H23.”

He added that there was no doubt many small businesses are operating in a challenging environment currently.

YouGov recently surveyed more than 500 small-business owners and leaders in Australia about their plans for 2023, in research commissioned by Prospa. 

While 84 per cent said they expect challenges this year, 69 per cent rated the overall health of their business as good in the current environment — a testament to the resilience of small-business owners in Australia, he outlined.

The research also found demand for funding is strong, he added.

“More than a quarter of small business owners told us they plan to access external funding in 2023, with 69 per cent using it to cover increasing expenses, 64 per cent funding growth and 34 per cent hiring and training staff,” Mr Bertoli explained.

“These are challenges that we can help brokers find solutions for, to help their clients make business happen.”

Broker numbers holding steady

In terms of broker numbers using Prospa and any trends and changes noted in the rising rate environment, the company confirmed it has seen an increase in the number of brokers settling — up 32.8 per cent YoY for 1H23.

As Mr Bertoli assessed: “Prospa will continue to highly value the broker channel and support mortgage brokers diversifying into business lending and transacting with Prospa more often.

“The 32 per cent YoY growth in the mortgage broker segment reflects the work of brokers to diversify their businesses, as well as the work of our expanded network of local BDMs — a decisioning engine that allows brokers to assist their clients to make business happen quickly and responsibly, and a product suite that supports brokers to build ongoing valuable relationships with their client base.”

[Related: Prospa flags ‘opportunity’ for brokers to help SMEs]