Supply@ME Capital plc (LSE:SYME) cut its revenue projection for the current year as first revenues from certain contracts are now expected to be recognised from 2022 onwards.
The fintech platform in August pencilled-in revenues of £3.8mln-£4.9mln for the 2021 calendar year.
This was based on its pipeline of inventory funding streams via its proprietary Inventory Monetisation (IM) service. This enables manufacturing and trading businesses to improve their working capital position by selling inventory while still keeping it on consignment.
Directors still expect a first contract with an initial inventory funder to be finalised prior to 31 December 2021 but that the first IM transactions from this and two others are now expected to be completed and the majority of revenues now recognised from next year onwards.
Group revenues for 2021 is now expected to be in the range of £0.5mln-£0.8mln, with two other inventory funders also expected to generate first revenues in 2022.
The first inventory funder, an Italian fintech bank, has chosen to take advantage of the SACE Guarantee Italia government scheme in selecting the initial portfolio of companies for the first IM transaction.
“This has resulted in some delays in identifying eligible companies, with a SACE guarantee available to them, and packaging the first portfolio for monetisation,” SYME said.
“This portfolio, which together will form the inaugural IM transaction, is also smaller than previously anticipated, both in terms of the number of client companies and the value of inventory to be monetised at the stage. As such, the revised revenues expected to be recognised in the current financial year will reflect these factors.”
A second inventory funder included in previous guidance has now proposed to use SYME’s platform in a white label business model and pay licences and multi-annual servicing fees.
While this will result in a delay, it is expected to “open up greater access to the SYME platform for other self-funders and new revenue generation opportunities for the group”, with future revenues projected to be generated from during 2022.
A third inventory funder included in the previous guidance has recently proposed to focus first on the UK market, with negotiations over a dedicated term sheet underway and a first IM transaction expected in 2022.
SYME chief executive Alessandro Zamboni said: "Naturally, we eagerly anticipate the completion of the first Inventory Monetisation transactions and the revenue associated with this. We are committed to providing bespoke solutions that align the requirements of our high-quality funders with our portfolio of client companies.
“The completion of our first monetisation and the lessons learned in its achievement will allow for a smoother process for the future as we scale up.
“While expected revenues for the upcoming reporting period will be significantly different as a result, this represents a delay to our projected revenue stream, rather than lost opportunities.
“Our White Label initiative, in particular, is a complex process with many moving parts and is one, we believe, that must be focused on accuracy rather than speed. Importantly, the board expects this first agreement to serve as a template for future White Label opportunities, paving the way for future growth, translating into greater value for our shareholders and confirming our multi-business line FinTech strategy."