Weaver Fintech, shedding old skin, passes R1bn profit

Since its founding as the retailer HomeChoice International 40 years ago, Weaver Fintech (which rebranded in July last year) has, against all expectations, bloomed into a pioneering fintech business. It’s an intriguing evolution – from catalogue-based blanket-seller to digital credit hub – but one that has been unbelievably profitable.

“We weren’t a bricks-and-mortar or branch-based lender when we decided to become digital,” says Weaver Fintech CEO Sean Wibberley. “We were telephonic, selling at a distance, using data and data mining, and then morphing that naturally into digital, which really wasn’t a big hop for us.”

The company has left behind catalogues and call centres and is now focused on digital payments, insurance and loans. It got ahead of the curve in 2021 by entering the “buy now, pay later” (BNPL) business, and has been on the up ever since.

“I’m delighted with the results we’ve achieved. It’s been a milestone year for us,” says CFO Paul Burnett. Revenue shot up by 23% to R5.5bn, and the company crossed the R1bn threshold in profit for the first time, with profit before tax up 43%. Headline earnings came to R5.52 per share for the year ended December, and Weaver has hiked the dividend 36% to 132c.

This milestone was driven “almost entirely” by its fintech business, which contributed 93% to the total profit before tax. In fact, the numbers would have been better without the traditional retail side of the business, where HomeChoice made an operating loss of R144m thanks to a chunky R244m impairment charge.

Its share price jumped more than 9% on Tuesday, though closed only 1.5% up. Still, Weaver’s stock has rallied a cool 123% over the past year.

The proof is in the platform

The company made a “structured shift towards digital payments” in the past year, following not just local trends but global ones as people rely more and more on their phones to conduct everyday financial transactions.

This shift has made Weaver Fintech the number one BNPL provider in South Africa, and the company expects a 35% growth in digital wallets this year. In the past year, the fintech business attracted 1.5-million new customers, most of whom are young, tech-savvy women (70% of its customer base is female) looking for flexible payment providers or lenders.

Once they come into Weaver’s net, the company uses data to cross-sell insurance or personal loans to them. According to the results, a single-product customer generates an average yearly revenue of R1,176. That jumps to R13,229 by the time a customer has three products. At five products a customer is generating more than R18,000 in annual revenue. It’s a far cry from selling bedsheets and blankets.

Importantly, adds Burnett: “We have very low-cost acquisition of customers and very high retention.”

Then there’s the merchant B2B business, where almost 3,500 merchants have been onboarded to various fintech platforms. These include big names such as Takealot and Shoprite, which have helped bring customers to Weaver’s platforms such as PayJustNow and PayStretch. In total, the business has more than 4-million individual customers.

Welcome to the AI age

Weaver Fintech is determined to stay ahead of the game not just in the digital payments world, but in the field of AI too.

“I think every department in the business uses AI. I use it daily,” Wibberley says. It helps the business with a multitude of tasks, such as reviewing commentary, comparing trends with overseas competitors, finding bugs and issues, and processing documents.

“Operationally, we use it to get feedback from customers on email or text, and it integrates that feedback and provides prompts for customers, so it makes them more efficient,” says Wibberley. On top of that, developers use it to code faster.

Wibberley thinks South African businesses are fairly tuned in to the world of AI and know how to best use it to optimise business performance. “I think we’re going to, if anything, lag only two or three months behind what’s going on at the cutting edge,” he tells Currency.

Of course, there is the very real chance of an AI-led jobs apocalypse. Wibberley points to how previous technological advances helped make labour more efficient, which then naturally created new fields of work.

“But with AI, it’s the white-collar jobs that are being disintermediated, right? So instead of having five [developers], you could theoretically have one who is really good at AI coding. And so there are genuine concerns about what this means for white-collar workers,” he says.

All about the ecosystem

In the meantime, the company is building on the notion of an “ecosystem”.

“Customers want convenience, a single place they can go to and trust,” explains Wibberley. In the long term, this means combining their various services into one platform and adding new services that customers might have previously gone elsewhere to find.

For example, Weaver is going to roll out a data and airtime service and have its own network in a few months’ time. “We’re not pretending to compete with Vodacom and MTN, but we’re able to offer discounted use of data and airtime, which our customers use because they’re part of our ecosystem,” Wibberley explains.

“I think, over time, ecosystems are going to become the powerhouses,” he says. “They’ll consolidate and dominate, because it becomes cheaper and easier for customers and merchants to aggregate around a few ecosystems rather than lots of disparate ones.”

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