Harmoney records first profit of $7.2m
24 July 2019
Harmoney, the largest online lending marketplace in Australasia, has ended its fourth full year of operation in profit for the first time.
The fintech leader, which was founded and is headquartered in New Zealand, recorded a profit of $7.2 million as at the end of FY March 2019, compared to a $1.8 million loss last year.
Harmoney joint CEO Neil Roberts says the profit is a benchmark moment in the Group’s short, but successful history.
“The result is a huge testament to the whole Harmoney team. We’re all highly focused and committed to expanding the scope of what’s possible in personal finance products. That commitment and this result underpin our position as a Kiwi business success story; a stable, strong innovative business already demonstrating sustainable growth and primed to scale up.”
In compiling its results for the year, the Group applied accounting standards NZ IFRS 15 and NZ IAS 12 which impacted the profit result.
The Harmoney Group has disrupted the digital lending market in Australasia, having originated more than $1.2 billion in loan volume via 59,000 loans, across Australia and New Zealand. The company marked $1bn in loans in New Zealand alone in February 2019 and hit the landmark of $100m in loans in Australia during the past financial year.
The fintech business is also a major employer of highly skilled, highly paid workers with a 44-strong engineering, data science and product team and has created a total of 115 full-time jobs.
Roberts says beyond the Group’s crossing into profitability, the two major milestones for the business in the past financial year were the launch of a $50m securitisation facility and crossing the $100m mark for loans in Australia, in just two years.
“That first $100 million is the hardest. To hit that mark in the highly competitive Australian market in less than two years is very satisfying, and proves our model is transferrable.”
Harmoney is also currently undertaking a capital raise which will further help grow the business in Australia.
Harmoney’s R&D spend remains strong at $7.2m for the financial year, with an additional $3.8m on other technology related costs.
“Our level of technology investment not only allows us to keep pushing innovation and automation around financial products for consumers, it’s enabling us to create highly-skilled jobs, in New Zealand.
“The financial services sector is facing an unprecedented level of job disruption driven by new technology. As Harmoney goes from strength to strength we are proud to be creating jobs that will withstand that tidal wave of change.”
Harmoney CFO Simon Ward says, “The proof is in the numbers, and we are proud to be showing profit within just four years of operation.
“We are very pleased with the direction and performance of the platform, particularly in relation to the securitisation programme late in 2018.
“Though the full financial potential of that programme won’t be realised in the results until the end of this financial year, it is already proving its success and is helping set the platform up for a strong, stable future.
“This first profit result is a confirmation of the strength of our business model and all our previous work building a sustainable, healthy and innovative business. We’re excited for what the result allows us to do in continuing to develop and improve personal finance products for consumers. That is our focus.”
- The Group moved from loss to profit in 2018-19, recording a profit of $7.2 million and revenue of $32.8m for the financial year ended 31 March 2019. This represents a 25.2% increase on 2018 revenue.
- A total of $11m investment in R&D and additional technology related costs.
- Without the application of NZ IAS 12 Harmoney recorded a before tax loss of $233,000, up 87% on a $1.8m recorded the previous year.
- Debt consolidation remains the largest reason for taking out a Harmoney loan reported by borrowers, followed by home improvements.
- Almost 50% of borrowers are homeowners.
- Realised annual return (this is the return after realised credit losses and Harmoney fees but before taxation) for retail lenders was 12.32% at 31March 2019.
- The Group earned $1m in total interest income via the securitisation programme, which is replacing funding from other wholesale investors.
- The volume of loans facilitated has increased in New Zealand and Australia by 15% ($400m in 2019 vs $348m in 2018):
- Total loan volume via the platform to-date has reached nearly $1.2b.
- Marketing spend increased from $8.1m to $10.3m, signifying consistent investment in Australia, where Harmoney is now the largest online non-bank lender.
- In Australia, Harmoney’s borrower base increased from 1,748 in the last reporting year to 3823 by 31 March 2019 and is continuing to grow.
- Interest paid to lenders increased 29% to $62m in 2019, compared with $48m in 2018 (and $35m in 2017).
- Total interest paid to lenders via the platform to-date has reached $165m
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Harmoney is an online direct personal lender that operates across Australia and New Zealand providing customers with unsecured personal loans that are easy to access, competitively priced (using risk-adjusted interest rates) and accessed 100% online.
Harmoney’s purpose is to help people achieve their goals through financial products that are fair, friendly, and simple to use.
Harmoney’s proprietary digital lending platform, Stellare™, facilitates its personalised loan product with applications processed and loans typically funded within 24 hours of acceptance by the customer. Stellare™ applies a customer’s individual circumstance to its data-driven, machine learning credit scorecard to deliver automated credit decisioning and accurate risk-based pricing.
- Harmoney provides risk based priced unsecured personal loans of up to $70,000 for three or five year periods to customers across Australia and NZ
- Its direct-to-consumer and automated loan approval system is underpinned by Harmoney’s scalable Stellare™ proprietary technology platform
- A large percentage of Harmoney’s originations come from 3R™ (repeat) customers
- Harmoney is comprised of a team of ~80 full-time employees across Australia and New Zealand, over half of whom comprise engineering, data science and product professionals
- Harmoney is funded by a number of sources including two “Big-4” bank warehouse programs across Australia and New Zealand and a facility from M&G Investments