Cirralto (ASX:CRO) share price slides 8% on quarterly update

A robust quarter wasn't enough to entice investors today.

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The Cirralto Ltd (ASX: CRO) share price has finished the day 8% in the red to close at 5.8 cents apiece.

Cirralto shares were off to a rocky start from the get-go today as the transaction services business released its Q1 FY22 activities and cash flow reports.

Here are the details.

Cirralto share price slides despite 40% revenue growth in Q1

Key investment highlights from Cirralto's Q1 report include:

  • 157% increase in cash receipts to A$396k for the quarter, compared to Q1 FY20
  • Revenue growth of 41% for Q1 FY22 compared to Q4 FY21 when including all cash receipts
  • 36% average quarter on quarter growth over the past 7 quarters
  • $19.0 million cash or cash equivalents as of 30 September 2021; plus $2.05 million in net loan receivables.
  • Q1 FY22 net operating cash outflows of $2.705 million
  • Annualised FY22 revenue forecasts a growth of 114% from the year prior.

What happened in Q1 for Cirralto?

The Cirralto share price slumped despite the company's growth efforts this quarter.

Across the quarter, the company grew its revenue by 41% compared to the year prior. This trajectory equates to an average 36% growth in revenue over the past seven quarters, according to the company.

Cirralto's revenue growth is underscored by consistent customer growth which the company feels will deliver a "projected annual revenue growth from the prior financial year (FY21) of 114%" by annualising first-quarter sales.

The company also appointed Neu Capital as lead advisor for the "establishment of a securitisation style debt warehouse structure".

Cirralto intends to use this collateralised debt structure to support its lending and payment demand that can amount to $100 million per month.

The company's board consequently approved a $10 million capital outlay to "cornerstone [its] debt warehouse, which is expected to grow to $100 million in the coming quarters".

Aside from this, the company also finalised the acquisition of Sydney based fintech company Invigo Pty Ltd.

It has now completed the integration of Invigo's core business services into its wider company structure.

Continuing on the acquisition front, Cirralto also advised it executed a binding share sale agreement to buy software development house Greenshoots Technology in Q1.

During the quarter, the company also leveraged its relationship with Microsoft Corporation in the build of "new scalable cloud native microservices with CPU paid for on-demand".

Effectively, these developments enable Cirralto to process higher payment volumes with its integration partners, such as Mastercard and Fiserv.

In addition, the company finished the quarter with $19 million in cash and equivalents on its balance sheet.

What did management say?

Speaking on the company's progress this quarter, Cirralto managing director Adam Floate said:

The start of the financial year has been very pleasing as we have seen the strategies seeded in the past few years bear fruit. Digesting the Invigo acquisition and launching the BNPL solutions are formative and highlight the next chapter in a very exciting future. The company continues to be focused on growth by both expanding market segments and geographies with the acquisition of strategic customers and by innovating with business models that leverage our ability to manage a value chain through sales, invoicing, lending and payment.

Cirralto share price snapshot

The Cirralto share price has climbed 32% in the past 12 months, after rallying 53% this year to date.

At its current share price, Cirralto has a market capitalisation of $168 million.

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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