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IODM Ltd
Investor Insight
Operating in a rapidly expanding fintech industry, IODM is well-positioned to leverage the increasing demand for accounts receivable automation, particularly in medium to large ERP companies.
Overview
IODM (ASX:IOD) is a cloud-based working capital management software solution designed to automate and streamline the accounts receivable function for universities, commercial companies and other enterprises. This platform helps organizations efficiently communicate with their clients, debtors or students, facilitating the collection of payments while reducing manual processes. By integrating with an organization’s existing accounting systems, IODM aims to improve cash flow management and optimize working capital.
One of IODM’s key strengths is its ability to manage complex billing cycles, often associated with international payments. This feature makes it especially appealing to institutions with significant cross-border transactions, such as universities with international students. As of 2024, ten UK universities have implemented IODM’s platform, and the company is working to expand its presence in other regions, including North America, Asia and Europe.
IODM’s strategic partnerships, such as with Convera, have allowed it to penetrate the university market in the UK and European Union (EU). The initial success in these markets has set the stage for broader international expansion, highlighting the platform's scalability and potential to become a global leader in accounts receivable solutions.
From an investment perspective, IODM presents an attractive opportunity due to its strong growth potential and international scalability. Operating in a rapidly expanding industry, IODM is well-positioned to capitalize on the increasing demand for accounts receivable automation, particularly in markets that involve high volumes of cross-border transactions. The platform is highly scalable, which allows IODM to expand into new regions and industries with minimal additional costs, making the business model highly efficient with a great degree of operational leverage.
IODM’s financial performance reflects this potential, with cash receipts for fiscal year 2024 at AU$2.05 million, marking a 70 percent increase over the previous year. This impressive growth is driven by the company’s ability to secure recurring revenue streams through its flexible pricing models.
Depending on the client, IODM utilizes either a revenue share model or a license-based model. In the education sector, revenue is primarily generated through a percentage of payments processed via foreign exchange providers like Convera. For enterprise clients, IODM typically charges an annual license fee for access to the platform. This combination of recurring and performance-based revenue streams ensures a steady financial foundation for continued growth, making IODM a compelling investment opportunity.
Company Highlights
- IODM is a cloud-based accounts receivable communications platform designed to automate and streamline cash collection processes within the terms of trade.
- The platform seamlessly integrates with ERP systems like Oracle, SAP, Microsoft Dynamics and Xero, reducing the need for manual invoicing and follow-ups.
- IODM targets medium to large companies and can handle seamlessly those with multiple divisions with multiple reporting functions
- IODM has been successful in universities and enterprises, with a focus on managing complex billing cycles and cross-border payments.
- The company is already used by ten UK universities, with plans to expand into North America, Asia and Greater Europe.
- IODM operates with a scalable revenue model, combining revenue share and license-based pricing to cater to different customer segments.
Key Product
IODM Connect illustration
IODM Connect
IODM’s flagship product, IODM Connect, is an intelligent accounts receivable platform that enables businesses to automate invoice reminders, payment collections, and cash allocation processes. The platform integrates seamlessly with major enterprise resource planning (ERP) systems such as Oracle, SAP, Microsoft Dynamics and Xero, allowing organizations to adopt the solution without significant disruption to their existing financial workflows.
One of the primary advantages of IODM Connect is its ability to automate many of the time-consuming tasks involved in accounts receivable management. For example, the platform can send automated reminders to customers when payments are due, reducing the need for manual follow-ups and improving the efficiency of cash collection.
In addition to its automation capabilities, IODM Connect offers advanced cash allocation and reconciliation features. These features enable businesses to match payments to invoices more accurately, reducing the risk of errors and ensuring that accounts are balanced in a timely manner. This is particularly important for organizations that manage high volumes of transactions or deal with cross-border payments, where the complexity of reconciling different currencies and payment methods can be a major challenge. IODM Connect simplifies this process, allowing businesses to focus on their core operations rather than the intricacies of accounts receivable.
IODM Connect customisable features
The platform is also highly scalable and customizable, making it suitable for businesses of all sizes and industries. As organizations grow, they can easily add new divisions, jurisdictions, and payment methods to the system without the need for a major overhaul. This scalability, combined with the ability to integrate with third-party payment platforms, enhances IODM Connect’s value proposition by allowing businesses to manage both domestic and international payments efficiently. Overall, IODM Connect provides a comprehensive solution for automating and optimizing accounts receivable processes, helping businesses improve cash flow, reduce operational costs, and streamline financial management.
Target Market: Universities and Enterprise Clients
IODM primarily targets universities and large enterprises that deal with complicated billing cycles, often involving cross-border transactions. The education sector, in particular, has emerged as a key focus, with IODM assisting universities in managing payments from international students. The system is designed to streamline invoicing, manage payment reminders, and handle multiple currencies and languages, which is essential for institutions with students from various countries.
As of September 30, 2024, IODM had onboarded ten universities in the UK, including prominent names like the London School of Economics and Coventry University, with an additional 18 universities in the onboarding process. This represents a substantial portion of the UK’s higher education market, where one in four students are international, contributing to a total market size of approximately 679,000 students. IODM’s immediate target is to service around 242,000 of these international students, capitalizing on the growing demand for efficient payment management.
The rising number of international students in regions like Europe, North America and Australia is a major driver for IODM’s growth. With 2.1 million international students across the US and Canada, and over 679,000 in the UK alone, IODM is aiming to tap into a substantialglobal market.
Universities face challenges in managing tuition fees, accommodation charges, and other associated payments from international students, especially in the wake of fluctuating exchange rates and cross-border transaction complexities. IODM’s platform simplifies these processes, making it easier for universities to manage their cash flow while reducing administrative burdens.
Strategic Partnerships
IODM has secured key global partnerships that have accelerated its growth. In the education sector, the company has partnered with Convera, formerly Western Union Business Solutions, to manage cross-border payments efficiently. This partnership has been instrumental in expanding IODM’s reach in the UK and EU, allowing universities to process payments seamlessly through the Convera platform.
In addition to Convera, IODM has entered a partnership with Corpay, (NYSE:CPAY), which specializes in cross-border payments for North American enterprise clients. This partnership opens new opportunities for IODM in sectors such as manufacturing and global logistics.
These strategic partnerships enable IODM to scale globally without the need for large regional sales teams, leveraging existing client relationships to accelerate growth.
Market Drivers
The demand for IODM’s platform is being driven by several key factors, particularly in the education sector and among enterprises managing international transactions. One of the most significant drivers is the rising number of international students, especially in regions like Europe, North America and Australia. Universities are increasingly seeking efficient solutions to manage the complexities of cross-border payments, which often involve fluctuating exchange rates and varied payment timelines. This creates a strong need for platforms like IODM that can simplify and streamline these processes.
Additionally, with the cost of doing business rising due to inflation and increasing interest rates, universities and enterprises are under pressure to improve their cash flow management. Collecting payments in a timely and efficient manner is becoming more critical, making accounts receivable automation a key priority for organizations looking to maintain financial stability. The economic environment is forcing institutions to focus on cash collection as a means of optimizing their operations, and IODM’s platform addresses this need by automating many manual processes, reducing errors and accelerating payment collection.
Management Team
Mark Reilly - Chief Executive Officer
Mark Reilly is a chartered accountant with over 30 years of experience in the banking and finance sectors, particularly in advisory roles. Before joining IODM, he worked at Coopers & Lybrand (now PwC) in insolvency, and later founded his own accounting practice. Reilly has held director positions at Black Star Petroleum, Harvest Minerals, and Ochre Group. His expertise lies in advising organizations of all sizes on growth strategies, corporate restructuring and valuations.
Petrina Halsall - Chief Operating Officer
Petrina Halsall joined the company in 2023 and brings a wealth of information technology experience. She has worked in critical IT roles across the FMCG, automotive, transport, logistics and public sectors. Notably, she served as head of IT for the Victorian Department of Treasury and held leadership positions at GUD Holdings for seven years. Her extensive background in managing business-critical infrastructure and certified security makes her a key asset for IODM’s operational efficiency.
James Burke - Chief Technology Officer
James Burke has extensive experience in overseeing complex technological infrastructures and security systems. Before joining IODM, Burke held roles that focused on critical infrastructure management in various sectors. His leadership and technical skills in IT security have played a crucial role in developing and maintaining the robust technological infrastructure at IODM, helping the company achieve scalable growth.
Graham Smith – Head of Operations UK and North America
Graham Smith has over six years of experience in the financial services industry. Prior to joining IODM, he worked at Western Union Business Solutions in various roles, including regional manager for channels and partnerships. Smith’s expertise in managing partnerships and expanding business into new regions is central to IODM’s continued growth in these key international markets.
IODM Q1 FY25 Quarterly Activities Report and Appendix 4C
Q1 FY25 highlights:
- Cash receipts of A$482k, +14.2% versus previous corresponding period (“pcp”);
- UK cash receipts +88% versus pcp to A$292k, driven by new commercial agreement with Convera for UK education business;
- Four additional universities implemented in the UK, making a total of nine
- Increasing number of USA and Canadian universities requesting and receiving formal presentations of the IODM solution;
- Continued engagement in respect of international licencing of the IODM solution;
- Fortification of the Australian and New Zealand business with the appointment of a new Head of Sales and complemented by an increase in sales team personnel; and
- Completed a $1.7m capital raising to institutional and sophisticated investors to enlarge sales teams both domestically and internationally.
Quarterly cash receipts in Q1 FY25 of A$482k represented an increase of 14.2% vs pcp. The revenue result accorded with Company budgeting for the Quarter given the seasonal decline in international revenues (as to which refer below).
Net cash operating outflows to $1.062m, 30.9% over pcp, driven by an increase in the Company’s sales division and supported by the successful capital raising ($1.7m).
Figure 1: IODM Quarterly Cash Receipts
UK Education Business
A strong contributor to cash receipts during the Quarter was the UK with and 88% increase on pcp to $292k. The result affirms that the re-negotiated UK educational licencing agreement (refer ASX Announcement 5 February 2024) procured an immediate positive impact on the Company in terms of revenue uplift as well as elevated recognition and speed of IODM solution rollout within the UK education sector.
At Quarter end the Company had a total of nine on-boarded universities with four implemented during the Quarter (refer 3 July 2024 ASX Announcement for further details).
Pleasingly, the IODM platform has been fully commissioned in all nine universities and the Company is primed to take advantage of the UK academic year billing cycle which commenced in September 2024. IODM’s revenue from the university sector is primarily derived from the student deposit, tuition and accommodation payments. Of the new universities on-boarded during the Quarter, the largest (in terms of international students and potential revenue to IODM) is the University of Sunderland, however – due to timing of on-boarding – provided minimal (three days) contribution to the Quarter.
As already detailed, the cash receipts and revenue observed during 1Q FY25 were both consistent with budgeting given the seasonal “quiet” period for student payments leading up to the commencement of the new academic year. Notwithstanding the forgoing, the 88% increase in cash receipts over pcp (to $282k) is a direct consequence of:
- The increased quantum of on-boarded universities; together with
- The renegotiated licencing arrangement with Convera which – amongst other advantages – is includes a guaranteed minimum payment regime.
Whereas the Convera revenue share arrangement in respect of the UK education sector has assisted the Company in both revenue and speed of university penetration, the benefits of the joint enterprise is equally attractive to Convera as evidenced by the University of Sutherland, previously a key customer of a Convera competitor, converting to the Convera payment platforms as a direct result of the IODM pipeline via a joint proposal.
Domestic Business
As previously disclosed to the market, the company raised funds, in part, to execute upon growth opportunities and initiatives which includes expanding the sales force globally.
As a result, the company has appointed Ashley (“Ash”) Clayton as head of domestic sales. Ash has over 18 years’ experience in software sales solutions and is a proven leader in his field. His experience includes enterprise software solution sales, presales and go to market across multiple regions. Mr Clayton has commenced expanding the sales desk with a recent key appointment.
As a result of the reinvigorated domestic sales team, the Company has witnessed an immediate increase in the number of enterprise companies seeking out the IODM solution and requesting presentations and contract proposals. The Company anticipates an elevated number and accelerated rate of domestic signings going forward.
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This article includes content from IODM Ltd, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
IODM Ltd Investor Kit
- Corporate info
- Insights
- Growth strategies
- Upcoming projects