“Prospa has achieved a phenomenal result during the first half of FY22, with record-breaking metrics across our loan book, originations, and revenue,” said Greg Moshal, Prospa co-founder and CEO.
The ASX-listed online lender posted half-yearly originations of $315.1 million, up 75% on the prior corresponding period (pcp). The strong momentum in loan generations was underpinned by the Credit Decision Engine, continued efforts of the team, and the significant uptake of the Prospa Small Business Loan product attaining originations of $242 million, the company said. Prospa’s revolving facility, the Line of Credit, contributed $73.0 million, up 164% on pcp, to total originations.
Significant momentum also continued in Prospa’s NZ operations, with originations of $50.4 million, up 110% on pcp. This reflected the strong ongoing demand from SMEs as the economy continues to open post country’s lockdown period. Soon, Prospa will launch its Line of Credit product in the region.
Revenue (before transaction costs) increased 41% on pcp to $78.5 million, driven by strong performance in originations, delivering higher average gross loans. Revenue has returned to pre-pandemic performance with portfolio yield increasing to 34.3%, compared to 32.5% in 1H21.
Meanwhile, closing gross loans reached a record-breaking $514.6 million, up 51% on pcp. Average gross loans also reached a record $454.5 million, up 33% on pcp. The active customer base also continued to grow, increasing to 13,200.
Prospa’s funding platform is stronger than ever with funding rates at 5.5%, a slight increase from 1H21’s 5.4%. The company’s inaugural $200 million term asset-backed securitization, the first ABS of its kind in Australia, was issued and priced in September. This is expected to provide reductions in total cost of funds over future periods.
Prospa currently has $580.7 million in available third-party facilities ($105.1 million in available undrawn facilities) and holds $110.5 million of cash ($62.4 million is unrestricted).
Employee and operating expenses as a proportion of revenue reduced to 48%, compared to 59.9% in 2H21, while loan impairment expense for the half was $14.7 million, up 35% on pcp, with 46% of overall impairment expense driven by loan book growth.
Net bad debt expenses represent 6.6% of average gross loans (annualised) as of Dec. 31, compared to 9.8% on Dec. 31, 2020.
As a result of the strong growth and active cost management, Prospa reported a record half EBITDA of $9.6 million for the half-year, up 134% on pcp.
“Prospa continues to build momentum to further strengthen the business, while executing on its strategy to provide small businesses with a range of digital solutions to further address leading cashflow management challenges,” Moshal said. “With the successful launch of Prospa Plus Business Loans in October 2021, the company is proud to report a significant initial response from new and existing customers. Additionally, Australia’s first All-in-One Business Account is also well underway in preparation for launch to broaden our appeal by enabling small businesses to grow, run and pay.”
Moshal said the results reflect the company’s capability to scale its lending solutions and deliver pioneering digital solutions that will simplify cashflow management solutions to achieve its “bold ambition to be indispensable to small businesses.”
