I believe that OLB Group, Inc. (OLB, Financial) is one of the most promising fintech players in the market. The company provides cloud-based omnicommerce and payment approval solutions to small and medium sized businesses (SMBs). Its offerings have helped many small merchants, particularly within the retail space, weather the Covid-19 storm.
While OLB Group’s revenues were hit on account of limited transactions taking place as a result of the pandemic, the company is already on the path to recovery. A large portion of the company’s client base includes restaurants and bars, which have almost completely re-opened and are witnessing increasing footfalls. The company also recently announced the acquisition of a merchant portfolio and NFT (non-fungible token) solutions.
Merchant portfolio acquisition
As per OLB’s recent press release, the company has continued its strategy of acquiring merchant portfolios, and its latest acquisition is a particularly high-value portfolio of merchants with a history of generating an annual payment volume of over $300 million. The OLB Group is expected to provide its SecurePay Payment Gateway to process payments for these merchants over and above its analytics offerings. These merchants should be able to use trader dashboard and the other point-of-sale solutions in the OmniSoft cloud-based business management platform of the company.
They can accept payments through Apple (AAPL, Financial) Pay, Google (GOOG, Financial)(GOOGL, Financial) Pay, PayPal (PYPL, Financial), cryptocurrency wallets and other digital payment applications. OLB’s payment technology also enables contactless near-field communication (NFC) transactions to utilize NFC-supported cards and mobile devices at point-of-sale terminals set with NFC readers.
Moreover, OLB’s platform provides data-driven insights into customer ordering and browsing patterns, inventory as well as predictive analysis and business processes regarding consumer responses. This is why smaller merchants are happily adopting its solution. This recent portfolio acquisition is expected to ensure a minimum additional revenue of $13 million to add to the company’s existing top-line and an incremental Ebitda of $3.6 million as per the press release. The management would also be looking to cross sell its e-commerce solutions to these merchants to maximize the transaction flow.
Support for NFT transactions
The need for secure methods of payment in order to buy and sell properties with minimal risk of fraud associated with duplicating barcodes or QR codes has resulted in the rapid adoption of digital ticketing. Peer-to-peer transactions are on the rise as a result of the digital ticketing process becoming more and more popular. The OLB Group is looking to use its technology to provide solutions that can make these transactions flexible and secure for buyers as well as sellers.
In a recent press release, the management announced that its SecurePay payment gateway will support the sale or transfer of digital assets by utilizing the latest NFT technology. This technology is built on the Ethereum platform that typically deals with token generation and their redemption, association with an asset, as well as the transfer of registered ownership. The transfer of ownership of any asset through the NFT process is assured through a blockchain ledger that mostly prevents impostors from selling similar tickets twice or multiple times. OLB is also expecting that clients using this secure NFT process may also end up using its payment processing options on SecurePay and generating revenues for the company. This could become a source of additional revenue assuming the increased adoption of the NFT process in real estate transactions in the coming future.
OLB witnessed some tough times on account of the pandemic-induced disruptions in the SMB space, but the company should be able to bounce back in its coming quarters. The new merchant portfolio acquisition is expected to give a major boost to the top-line in 2021.
As we can see in the above chart, OLB Group’s stock has been volatile so far this year, but I believe that the worst is behind the company. The stock is currently trading at a price-book ratio of 3.5 and an enterprise-value-to-revenue multiple of 4.3, and both of these are significantly below the average for the fintech industry and well below larger peers like Square (SQ, Financial) and Shopify (SHOP, Financial).