XTMIF: How can customers say no to XTM’s digital employee payment solution when it’s free?
By Lisa Thompson
READ THE FULL XTMIF RESEARCH REPORT
➢ It’s not often that you come across a product that is offered free to customers and saves them time and effort. XTM Today™ does just that for employers who are under increasing pressure to provide access to earned wages to their employees for bonuses and payoffs. the Today’s program primarily generates revenue from a reduction in interchange fees that card issuers charge merchants, making the decision for employers to sign up a no-brainer.
➢ Today is a SaaS solution that provides employers with software and a payment platform to calculate and pay out bonuses and earnings to its employees in an easier and faster way. Rather than stuffing envelopes with cash, employers are paying electronically, offering employees payment to their free mobile wallets through which they can transfer money, pay bills and shop in-store or online with their VISA or MasterCard debit cards. This saves the employer time and effort while giving employees the ability to immediately pay their earnings as well as the app to track those earnings and expenses.
➢ XTM XTMIF Gross Dollar Value (GDV) loads have increased over 600% in the past 11 months and added 230% more new customers this quarter compared to Q4 2020. It currently has approximately 50,000 customer employees using its wallet/application and its Visa/Mastercard solution.
➢ Revenue generated in Canada was impacted by the country’s COVID dining restrictions, although the business took advantage of the hospitality downtime to sign the majority of Canada’s restaurant groups. About 50% of the company’s Canadian revenue comes from restaurants in Ontario, where operations have been significantly cut by the government. XTM is working to reduce its dependence on this geographic region and Canada, and is focusing on sales in the United States. When Canada reopens, sales are expected to soar.
➢ In November XTM announced that it is now a partnership with The Bancorp TBBK as its issuing bank in the United States. The Bancorp is the largest volume issuer of prepaid cards and represents more than $300 billion in annual processing volume with more than 150 million active accounts in distribution in the United States. This allowed XTM to enter the US market with a prepaid VISA card.
➢ In the first quarter, it plans to roll out a cash-back program which is currently in a pilot phase with 1,500 Today members and plans to roll out a fully integrated point-of-sale tip pooling module that will be offered for a monthly fee per location, adding additional revenue streams.
➢ The company plans to develop internally and by acquisition. Ultimately, he hopes to provide services such as payroll processing as well as a fully integrated restaurant management platform that meets the unique needs of the vertical hospitality industry.
➢ The company has a fully diluted enterprise value of US$43 million (C$55 million) and trades at an EV/2022 sales ratio of 4.6x. This compares to peers trading at 5.3x. If earnings double and multiples stay the same, the stock could grow more than 100% by 2023.
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