IT will take three more years before digital solutions provider Voyager Innovations Inc. sees its bottom line turn black, even after years of cash burn to shift the Filipino consumer behavior in favor of digital finance.
Manuel V. Pangilinan, who chairs Voyager’s parent company PLDT Inc., said the company will break even in terms of earnings before interests, taxes, depreciation and amortization (Ebitda) by 2023, buoyed mainly by its enterprise business and supported by its consumer unit.
“It’s in several stages. I think in terms of positive gross margins, I think the enterprise part of Voyager will come in positive gross profit first, and then consumer. Then, come 2023 it will break even totally as a company,” he said in an interview.
Voyager has several businesses under its belt. It operates an enterprise business that provides payment solutions to companies of varying sizes, including big corporates, such as McDonald’s.
Its consumer business, on the other hand, is led by PayMaya, a digital wallet solution that allows users to pay for both physical and digital transactions. Both verticals make money by charging merchant discount rates, which in layman’s term is a fee corresponding to a small portion of the total transaction volume.
“By 2024, the Ebitda will be in the order of P3.6 billion to P3.7 billion,” Pangilinan said.
Still, the company has a long way to go before reaching this, and Pangilinan admitted that the company will still be burning cash to migrate more Filipinos and corporations to digital finance.
This, he said, would entail a fresh round of capital funding. Already, the latest $215-million capital infusion—made in 2018 by Tencent Holdings Inc., the operator of Chinese super app WeChat, investment firm Kohlberg Kravis Roberts & Co. (KKR), and World Bank’s International Finance Corp. and IFC Emerging Asia Fund—seems to be at the tail end of its shelf life.
Today, the company is looking for new investors to fund the expansion of Voyager. Although it is now in the process of negotiating with potential investors, the question of profitability slightly hinders the group from securing a deal or two.
“I think they are still in process. I think we are finding it harder to get investors,” Pangilinan said. “I think the universe has become tougher in terms of their own requirements for the turnaround, so I think we are at the final stages of negotiating on agreeing with the final investors.”
With funding requirements for its “new phase of expansion,” Voyager may be drawing interim funding from its four investors.
“The demands for cash are still there as per schedule, so we are delayed in terms of getting the final list of investors to agree on the valuations and the amounts that they would invest. So we’ve decided, before they run out of cash which is probably by the middle of the year, by June, before they hit the wall, we will provide the interim financing among ourselves,” Pangilinan said.
He did not specifically state how much cash Voyager needs for the year, but said the current investors should be ready to provide “whatever they need.”
The final list of investors and their corresponding investments should be released within two to three months, he added.
With the new investors expected to come in sometime in the first half, the share of the current investors in Voyager is expected to thin. PLDT currently holds the majority of the shareholdings in Voyager at around 48 percent. Once the new investors have been onboarded, the Filipino telco’s share in Voyager may shrink further to as low as 35 percent.