Identitii signs agreement to provide Overlay+ platform to Mastercard’s global network

Australian software company Identitii (ASX: ID8) has signed a five-year agreement with global credit giant Mastercard for the licencing of its Overlay+ intelligent information exchange platform.

Under the terms of the agreement, Identitii will have the opportunity to sell the blockchain-powered Overlay+ to Mastercard’s business network worldwide.

The platform is designed to ensure the secure sharing of financial documents and transaction information in real-time, providing an auditable and tamper-proof record of activity from any data source.

The agreement is for an initial five-year term and will automatically renew for one-year periods until terminated by either party.

Existing relationship

Identitii chief executive officer John Rayment said the agreement builds on a relationship held with Mastercard since 2018, when Identitii entered the corporation’s Start Path start-up engagement program.

“This agreement is the first step of a process in which we will agree specific statements of work outlining how Overlay+ will be used to address particular [business] needs for Mastercard,” he said.

“We look forward to providing an update on specific projects in due course.”

Mr Rayment said the company would not be able to confirm the exact materiality of the agreement, as activity and revenue is yet to be determined through the statements of work.

Peer-to-peer communication

Born out of Identitii’s foundation product Serra, Overlay+ enables peer-to-peer communication of any type of data or documents between parties and regulators.

It facilitates the secure sharing of structured or unstructured settlement data along with clearing, remittance and regulatory reporting information, creating a permissioned audit trail of activity for each transaction.

The product introduces functionality and customer experience enhancements for banks and corporates, and uses Identitii’s tokenisation approach to enable visibility into transaction level detail for compliance and faster settlement of exceptions.

June quarter results

The Mastercard agreement follows a steady June quarter for Identitii, despite the global impacts of COVID-19.

Cash receipts of $183,000 were down 62% from $478,000 recorded in the previous quarter, primarily due to short-term delays in professional services contracts impacted by the pandemic.

Cash outflows from operating activities hit $1.39 million, but included $154,000 in one-off cost reduction expenses, meaning the ‘like-for-like’ cash outflow of $1.24 million was down 14% from $1.45 million for the previous period.

In the same way, ‘like-for-like’ outflows were down 45% on the first quarter’s $2.27 million and 42% on the second quarter’s $2.16 million.

Identitii benefitted from federal and state government stimulus packages offered to businesses impacted by COVID-19 including JobKeeper, Cashflow Boost and deferment of all taxation payments until September.

Entitlement issue

Identitii announced a shareholder entitlement issue in May to raise $1.9 million from 85% of existing employees (excluding directors).

It raised an additional $1.9 million through the placement of residual shortfall shares to investors and employees.

The added funds have extended Identitii’s runway and allowed for the closure of ongoing commercial discussions and a renewed focus on sales activities.

Customer support

Mr Rayment said despite a short-term delay to some contract work during COVID-19, the company’s multiple customer engagements continue to progress well.

“We continue to support our customers through this time and see increased opportunity for Overlay+ to be sold to financial institutions,” he said.

“The platform’s key value proposition is that it helps improve the processing, reconciliation and reporting of financial transactions without costly major system upgrades.

“We believe the current crisis only increases the value we can deliver to organisations.”