According to a recent report from ResearchAndMarkets, the Global FinTech Market was valued at $7.3 trillion in 2020 and is projected to grow at a CAGR of 26.87% between now and 2026. Fintech stocks such as Square (NYSE:SQ), Paypal (NASDAQ:PYPL), Green Dot (NASDAQ: GDOT), MercadoLibre (NASDAQ:MELI) are taking centerstage.
Rising popularity for digital payments, increased investments in technology-based solutions, supportive government regulations, increased adoption of IOT devices are expected to positively influence the Global FinTech Market in the coming years.
As volatility picks up across the market, leading growth themes are on sale, offering investors an opportunity to get involved in areas of the market capable of capturing outsized upside potential.
AXXA is an interesting opportunity in that context.
Who is AXXA
Exxe Group Inc (OTCMKTS:AXXA) is a publicly traded FinTech company that operates at the nexus of Private Equity, Venture Capital, and Distressed Debt. The Company seeks to acquire controlling equity interests in undervalued assets. Once an asset is acquired, Exxe takes an active role by providing both capital and structured financing, as well as operational management expertise.
Since 2018 Exxe Group has successfully executed 28 acquisitions across several industries.
Exxe has four operating segments: Real Estate, FinTech, Digital & Diversified Technologies, and Agribusiness. Exxe’s diversified asset base includes majority controlling interests in multiple entities across a wide range of industries and countries, as well as minority interests in selected startups.
Real Estate has a diversified collection of commercial real estate assets including hotels, mortgages, rental properties, and undeveloped land located in Germany, Switzerland, Eastern Europe, and the United States and Canada.
FinTech includes Blockchain, e-Commerce platforms, Cryptocurrency Exchange and fiat Foreign Exchange (Forex) platforms, and Venture Capital. The Venture Capital assets include a range of early-stage potentially disruptive, high growth assets. These assets are generally illiquid, generate little to no current revenue, and the assets may undergo internal restructurings to establish fresh base valuations. Holdings in this class also have the potential to grow their assets and revenues with well above-average returns.
Digital & Diversified Technologies includes a diversified range of software and hardware assets. Software assets include, but are not limited to, Artificial Intelligence (AI), digital community assets, and media assets. Hardware assets include, but are not limited to, auto parts manufacturing equipment, car engine repair tooling, robotics, and waterway dredging machinery.
Agribusiness assets span a range of activities centered around farming, storage and transportation. These investments allow the Company to finance growing crops such as barley, wheat, corn, sunflower seeds, and hemp in fields and shipping those crops to wholesale markets around the world.
This includes financing, trading, processing, storage, testing, and logistics.
Performance Jump. The company recently announced its three-month and six-month results for the period ended September 30, 2021, including news that it generated record quarterly results for both revenue and net income for the period. Revenue for 1Q22 was $13,279,551 as compared with $8,154,139 for the same period a year ago, and $11,022,713 for 1Q22 which ended just ninety days earlier. As noted in the table above, revenue increased by 62.9% year-over-year and 20.5% sequentially. Net income was $2,894,289 versus $1,249,894 last year and $1,831,875 in 1Q22. The substantial year-over-year and sequential changes in net income were 131.5% and 58%, respectively.
For the six-month period, revenue grew by 68% to $24,302,264, up from $14,460,418, while net income jumped by 83% to $4,726,164, up from $2,582,241.
The Company enjoyed a big rise in gross profit and gross profit margin. Gross profit grew by over 146% to $5.9M versus $2.4M in 2Q21, which resulted in a gross profit margin of 45.1% versus 29.8%. While operating expenses also grew dramatically to reflect the increase in revenue, operating margin of over 25% percent compared with the 19% margin for the year-ago period. It should be noted that operating margins of 25% or greater are typically associated with firms largely engaged in fintech, online, and health care businesses, which is a clear management emphasis. Thus, Exxe believes that these enhanced gross profit and operating performances could continue, given the migration and evolution of Exxe’s key assets toward a digital, online focus. In general, this performance also demonstrates that the Company’s private equity business model is effective while surpassing internal expectations.
The Vision. The company recently put out a release outlining its vision, business and financial targets, and upcoming milestones.
Exxe has enjoyed substantial revenue and shareholder’s equity growth since the beginning of fiscal 2020, despite the extended COVID-19 crisis. In the past two years, revenue has jumped from $3.8M to $24.3M for the first six months of 2020 through the first six months of 2022, a more than five-fold rise. During this period, net income has leapt from roughly $259,000 for the first six months of fiscal 2Q20 to $4.7M for the corresponding period in fiscal 2022. Shareholder’s equity has increased from $116.2M to $156.5M – a 35% jump.
Based on the success of the company’s private equity approach, management seeks to record revenue of $49M-$53M in revenue for fiscal 2022, with 15-20% net margins. Given the planned evolution of its business model going forward, the company is targeting $100M in revenue and $20M in net income for the fiscal year ending in March 2023. In addition, management noted that it seeks to accelerate the value of its shareholder’s equity via public company spin-offs of outperforming assets, the sale of underperforming assets, and the addition of new acquisitions.
Dr. Eduard Nazmiev, Exxe Group Chairman commented on the Company’s vision. “Since inception, Exxe Group has executed around two dozen deals and LOIs for majority-stake acquisitions in global businesses representing fixed assets and operating businesses in industries across the spectrum. Exxe’s recent successes have been driven by the successful migration and conversion to new digital strategies for our businesses, including bricks and mortar, which optimize the supply chain and execution. This approach has proven to lead us toward consistently high growth rates.”
Additional Notes and Guidance. That release was clarified the following day in a piece that noted its revenue and net margin targets for the period ending in March of 2023, roughly 16 months out, were $100M, with net margins of 15-20%.
As noted in that communication, Exxe has enjoyed substantial revenue and net income growth in the current FY22 fiscal year, ending in March 2022. Against this backdrop, management is targeting record revenue and net income for the current year of $49M-$53M and a net margin of 15-20%.
Based on current and projected trends of key business lines, it continues to target outsized growth from current business and prospective acquisitions.
Despite the company’s stunning financial growth and performance, and its strong outlook, shares have been sliding, recently recording new multi-month lows. While it remains up on the year for 2021, the stock is down nearly 90% from its highs this year as short interest builds and bears feast on the company’s shares.
This could be setting up a short squeeze opportunity for new speculative money. To wit: on all but 2 days over the past month of action, over 40% of all transactions in AXXA shares have been driving by short side bets. That’s a recipe for a possible squeeze if ever there was one.
Exxe Group Inc (OTCMKTS:AXXA) is a publicly traded FinTech company that operates at the nexus of Private Equity, Venture Capital, and Distressed Debt.
The Company seeks to acquire controlling equity interests in undervalued assets. Once an asset is acquired, Exxe takes an active role by providing both capital and structured financing, as well as operational management expertise.
- AXXA is an emerging potential leader in the red-hot fintech space that has outlined a plan to power revenues into the nine-figure zone
- AXXA is making real money, with trailing revs already coming in at $43.7M.
- AXXA is starting to see major topline growth, with quarterly y/y revs increasing at 63%.
- AXXA is trading with a deep value discount and high short interest, suggesting that recognition of its positive catalysts could power a panic among its bear contingency, leading to outsized upside action.
- AXXA is coming off an RSI trough under 40, pointing to a massively oversold stock now heading back the other way.
AXXA represents a deep value opportunity with verifiable growth in play for interested speculators looking for outsized upside potential.
The company has been expanding rapidly through both organic and strategic strategies in the fintech space, and recent results suggest that its model is starting to pay off even as the stock gets heavily shorted while the company builds its vision with tangible results.
In one of the most powerful bull markets in stock market history, AXXA has been left behind despite the company’s potent model and manifestly growing success.
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