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Credit Clear's share price could rise on ambitious market expansion

Credit Clear is confident its market share will triple in size on the back of its ability to effectively integrate fintech innovations into debt collection operations.

Source: Bloomberg

ASX-listed fintech company Credit Clear could see its share price rise on ambitions to expand market share in its home territory of Australia.

The digital invoicing firm has just unveiled plans to triple its market share in Australia over the next three years, projecting a sharp rise in earnings on these ambitions.

Credit Clear releases three-year growth plan

Credit Clear's three-year growth strategy involves expanding its market penetration rate in the Australian debt collection sector from 1.4% at present to around 4 - 5% by the end of the period.

With the debt collection sector in Australia worth around $2.5 billion, Credit Clear expects this growth in market share to lift revenue to $100 million per annum.

According to Credit Clear's company presentation at its annual general meeting (AGM), this revenue expansion will drive growth in EBITDA to $25 - 30 million per annum.

Credit Clear CEO Andrew Smith said to Stockhead that its established position as a technological leader in the market will help to achieve these growth ambitions.

'The first part of the plan is organic growth,' he said. 'I think we are in a very strong position in terms of having a leading technology in this sector, which will underpin our organic growth.'

Smith said that Credit Clear will also seek to drive growth in market share by targeting larger clients such as ASX 100 companies and 'tier one' government authorities.

'Our next target would be the NRMAs and the IAGs of the world,' Smith said.

'We need to demonstrate case studies in other markets like the federal government for example, where there are large volumes of outstanding debt that are well publicised.'

Credit Clear currently has a revenue run rate of $35.7 million from around 1,000 active clients and is adding clients at a clip of around 30 each month. The company was both operationally profitable and cash flow positive in the first quarter of the 2023 financial year.

Competition could dwindle as debt collection consolidates

Credit Clear believes that trends in the Australian debt collection sector favour its ambitions to expand market share.

According to Credit Clear's AGM presentation, the debt collection industry in Australia has undergone consolidation in the wake of a wave of M&A activity, leaving it with fewer competitors.

Debt purchasers are vying for a shrinking pool of available assets, while companies are less inclined to sell debt than they were before the Covid pandemic.

Credit Clear also believes it will have an advantage compared to sector peers, as a fintech platform whose entire business is based upon the application of in-house innovations.

According to Credit Clear, contingent debt collection providers have 'struggled with integrating technology and their own internal operational issues.'

At the same time, digital-only providers have also struggled, because 'clients do not want stand-alone digital services.'

Credit Clear claims its fintech innovations are unique

Credit Clear bills itself as a 'technology-enabled communications platform helping businesses drive smart, faster and more innovative financial outcomes by changing the way people manage their repayments.'

The company claims to have created a new and unique category of fintech innovation - 'RepayTech' - which involves the digitisation and customisation of the invoicing process to facilitate client repayments.

In addition to digitisation, Credit Clear's platform also employs advanced features such as artificial intelligence and behavioural data to further improve repayment rates.

According to Credit Clear, a recent test involving the use of artificial intelligence helped to drive a 35% uplift for a major toll road operator.

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