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Mi-Pay Group plc* (MPAY.L, 1.65p/£0.8m) Proposed disposal and cancellation of trading (18.12.19) | Audioboom plc* (BOOM.L, 207.5p/£29.1m) Appointment: CEO appointment formalised (20.12.19)
Mi-Pay Group Audioboom Group PLC
Interims from Mi-Pay Group, an established provider of digital payment and payment fraud managed services to Tier 1 mobile operators and digital content vendors, saw 7% revenue growth, a small improvement in gross margin and good cost control. As a result, the business was essentially EBITDA break-even in H1. Fully management payments grew 15% to £58.1m and a 64% increase in its direct managed fraud service to £29.2m. As this latter service has matured, fraud levels have reduced materially improving gross margins. Mi-Pay continues to have sector-leading levels of payment success and fraud management and indemnifies its customers. As a result, it can charge higher rates than traditional payment solutions. Extensions have been signed with two of its largest (43% of FY18 revenue) but it is losing its second largest client (13%). This, coupled with the uncertainty around the new PSD2 regulations and general economic climate, means H2 is likely to be similar to H1 but we leave our forecast under review at this stage.
Mi-Pay Group
Mi-Pay Group plc* (MPAY.L, 12.25p/£5.6m) Finals: Move into H2 profit; renewals provide visibility (24.04.19) | Mirada plc* (MIRA.L, 0.825p/£7.3m) Pre-close: substantial FY19 growth and positive outlook (29.04.19)
Mi-Pay Group Mirada PLC
Finals from Mi-Pay Group, an established provider of digital payment and payment fraud managed service to Tier 1 mobile operators and digital content vendors, were in line with forecasts and January’s trading update. The 9.4% increase in revenue to £3.3m included a maiden £0.3m contribution from its Fraud Services business and the combination of increased gross profit (+£0.1m) and lower operating costs (down £0.3m) resulted in the operating loss reducing £0.4m to £0.2m and the company was profitable in H2. Mi-Pay processed more than £100m in fully managed payment transactions for the first time and indemnified £44m of payments against fraud - this is opening a new revenue stream. Mi-Pay was successfully integrated into 3 Ireland’s new infrastructure during the year and the acquired O2 customer base was transferred onto MiPay. Since period end, Mi-Pay has signed extensions with clients that represented 43% of FY18 revenue providing forward revenue visibility. We maintain our fair value of 17.8p/share, a 51% upside.
ECSC Group plc* (ECSC.L, 92.5p/£8.4m) Contract wins: Further Managed Service success (16.04.19) | Mi-Pay Group plc* (MPAY.L, 11.75p/£5.4m) Contract extension: Largest customer extended (18.04.19) | Starcom plc* (STAR.L, 1.275p/£3.7m) Placing (18.04.19) | Mobile Tornado Group plc* (MBT.L, 5.25p/£18.3m) Finals: Success of new Capex model (17.04.19) | CAP-XX Ltd* (CPX.L, 4.35p/£14.1m) Trading update: Progress on numerous fronts (16.04.19)
MPAY TRAC MBT CPX E3C
Mi-Pay Group plc* (MPAY.L, 9.7p/£4.4m) Pre-close FY18 trading update: Shift to digital (30.01.19) | Gfinity plc* (GFIN.L, 5.7p/£20.7m) Contract win: 2019 Call of Duty World League event (04.02.19) | Newmark Security plc* (NWT.L, 0.9p/£4.2m) Interims: Positive performance in Electronic Division (31.01.19) | Starcom* (STAR.L, 1.5p/£4.4m) Trading update and receipt of funds (31.01.19)
MPAY GFIN NWT TRAC
Mi-Pay is an established provider of digital payment and payment fraud managed services to Tier 1 mobile operators and digital content vendors. It offers incremental value-added services including the management of multiple connection methods, the delivery of the payments experience and the security of client data. Mi-Pay has sector-leading levels of payment success and fraud identification and management and indemnifies its customers against fraud. It charges higher fees compared with traditional payment companies as its deeper solution offering is layered on top of core payment solutions. Today’s in-line pre-close demonstrates further revenue growth and a move into EBITDA profit in H2. We are trimming our FY19 revenue growth assumptions (by c. 10%) given the current uncertain macro outlook but still expect Mi-Pay to achieve stronger growth rates going forward as the platform and client base are now established. The current share price fails to reflect the strength of the existing offering or the growth potential as e-commerce and digital channels become core to customer engagement. We set a fair value of 17.8p/share, an 84% upside.
Mi-Pay, a provider of mobile payment and payment fraud management services to Tier 1 Mobile Network Operators (MNOs) and digital content providers, has reported interims with a further 11% growth in the total value of payment transactions to £50.2m as well as direct fraud management of an additional £17.8m - a new product stream that has considerable revenue potential. Mi-Pay has sector-leading payment success rates and fraud levels, indemnifies its customers against fraud and hence can charge 3x to 5x the rates compared with traditional payment companies. We expect Mi-Pay to break-even in H2 before moving into sustained profit and is sufficiently funded. The value of Mi-Pay’s existing offering and the growth potential is not reflected in the current price.
Following the comprehensive trading update in early March today’s FY17 results hold few surprises. Revenue of £3.1m (FY16: £3.3m) is in line with forecasts that were revised at the time of the trading update and reflect the slower build out of revenue from key new customers. Gross profit of £2.0m (FY16: £2.1m) is also in line with forecasts that increased 7% in March due to a stronger than expected performance in margin. Last month’s placing to raise c.£300k underpinned the strength of the balance sheet that had £2.9m of net cash at the period end. Operationally, the business is moving in the right direction with annuity Transaction Services revenue increasing and the restructuring announced in March reducing the cost base. Forecasts continue to assume Mi-Pay will achieve profitability at the EBITDA level in FY18E.
Mi-Pay PLC has released an encouraging update this morning, confirming trading for 2017E was broadly in line with expectations. The company has also announced a number of board changes and a successful £510k placing which will raise £260k of new cash before expenses, to be invested in the company’s fraud platform and used for working capital purposes. The company continues to make good progress operationally, following the board changes and placing, the balance sheet is robust and operating model is now leaner. We remain confident that the company will achieve profitability at the EBITDA level in 2018E.
Mi-Pay has released an encouraging set of interim results this morning, leaving the company well positioned to meet FY17 forecasts that were updated at the time of the trading statement (3rd August). Benefits from investment made to date are now beginning to materialize with a significant new contract win from an existing client, a new contract win in the Philippines and a trial with a European client to deliver the company’s first “fraud as a service” solution delivered during the period. The balance sheet remains robust with cash balances of £3.7m, this morning’s announcement underpins revenue forecasts, with progress in the Philippines and the company now achieving significant operational milestones in its progress towards profitability.
Mi-Pay has announced a significant new contract with an existing client. The contract is for an initial three-year period and was won in a competitive process against the joint incumbent provider. This secures existing revenues and will generate substantial growth in payment transaction value. Over the contract period it is expected to have a cumulative impact on annualised transaction volumes of c. €100m. Putting this in context, total transaction volumes in FY16 for this client amounted to €25m. We take the opportunity to de-risk forecasts, providing a much higher degree of certainty with regards FY18 and FY19 revenue estimates. However, the new financial terms of the contract, relative to the current situation with the client, mean there is a shortterm impact to profitability as volumes build during the life of the contract. Despite this, the announcement should be viewed positively as it highlights Mi-Pay’s ability to win important large competitive tenders and positions it well to win further similar contracts and the increased scale this contract brings will enable Mi-Pay to become increasing efficient in the delivery of its services to all its clients. A conservative approach has been taken to forecasts factoring in today’s contract win relative to unsecured revenue.
Mi-Pay has announced a good set of FY16 results this morning delivering £3.3m of revenue, in line with the trading update released 30 January. The group has delivered a solid trading performance with underlying revenue increasing 8.8% to £3.3m (FY15: £3.0m), with healthy growth in transaction services (+13.7%) held back by an expected weaker performance in professional services (-5.8%). Gross profit was ahead of expectations driven by a c.810 bps improvement in gross margins to 64.2% (2015: 56.1%) delivering gross profit of £2.1m (2015: £1.7m). Despite the encouraging trading performance in FY16, ongoing consolidation in the company’s end markets and continued sluggish growth in APAC means we revise FY17E forecasts.
Mi-Pay has released an encouraging trading statement this morning confirming FY16 revenue will be in line with ZC estimates at £3.3m (FY15: £3.0m). The yoy growth of 10% is ahead of the 5.7% reported in the interim results in late September 2016. The improvement in revenue has been driven by a c. 28% increase in transaction values processed that reached £83.0m, up from £65.0m in FY15. The net cash position of £3.5m is in line with the previous year and ahead of our £3.0m forecast. We view this positively as it provides increasing confidence that the business has the necessary cash resources to fund its self through to profitability. FY16 results, scheduled to be released on the 5th April, will provide more detail as to the underlying make-up of the performance. The group remains will positioned to deliver on its strategy and today’s statement provides confidence that our challenging growth assumption in FY17 can be met should growth in Asia come through strongly.
Mi-Pay has released an encouraging set of interim results this morning, leaving the company well positioned to meet FY16 forecasts that were updated at the time of the trading statement (3rd August). Benefits from investment made in previous periods are now being demonstrated in the company’s performance with improved margin dynamics, reduced administrative expenses and a healthy cash position. The company is well financed having sufficient cash resources to fund itself until FY19 (assuming an unlikely scenario of there being no improvement from current rate of cash burn) and is well positioned to deliver on its strategy of delivering outsourced online payment solutions to the mobile operators.
Mi-Pay have released a trading update this morning showing good progress in improving efficiencies across the business. The group has seen improvements in gross margins and lower operating costs but somewhat disappointing revenue growth. Importantly the company continues to make good progress in moving towards generating positive monthly cash flow. The cash position was ahead of management expectations at £3.4m.
Mi – Pay has announced a good set of FY15 results morning showing significant operational development. The group has delivered a good trading performance with underlying revenue increasing 25.9% to £3.0m (FY14:£2.4m), with both transaction services (+12.6%) and professional services(13.8%) showing underlying YoY growth. Importantly revenue was in line expectations while Gross Profit was ahead due to an 11% improvement in margin. The group’s strong underlying trading performance has been driven by the reorganisation of the business, increased investment in the platform and cost reductions implemented in 2014. The business remains on track to become cash flow positive in FY16 and forecasts for FY16 and FY17 unchanged off the back of these encouraging results.
Following on from the good interim results, Mi-Pay has confirmed that trading was on course to hit FY15 forecasts. Revenue of £3.0m shows an increase of 11% (FY14: £2.7m) with both Transaction Services and Professional Services showing underlying YoY growth. The operational and financial performance in FY15 marks a turning point with the business well placed to achieve management’s stated intention of achieving positive trading cash flow in FY16. This is despite the contribution from the legacy contract lost in FY13 falling out of forecasts and shows a maturing of the business model. Today’s statement combined with the positive H1 performance, with gross and operating margins improving leading to a materially improved £0.8m operating loss for the period, provides confidence that our PBT forecast of -£1.3m has been met. We leave forecasts unchanged ahead of the final results announcement due on the 13th April 2016.
There has been some tremendous work done ay Mi-Pay. Six months ago the management had set itself some big targets with regards to driving the margins (gross and operating) and they have now achieved everything they set out to do; and arguably more.
Trading in the first half of the year indicates that Mi-Pay is on course to hit FY15 forecasts. Underlying revenue of £1.4m shows an increase of 32.5% (HY14: £1.1m) with both Transaction Services and Professional Services showing good YoY growth. Importantly, today’s results indicate that the business has recovered from the loss of a single large contract in FY13 and will show absolute growth for the year. The positive operational performance has combined with an improvement in the financial performance with gross and operating margins improving leading to a materially improved £0.8m operating loss for the period (HY14: £1.5m). We leave forecasts unchanged but acknowledge the increased level of confidence in achieving FY15 forecasts and management’s stated aim of achieving positive trading cash flow in 2016.
Following on just a few weeks post the AGM statement (26th May) Mi-Pay has confirmed that trading was in line with management expectations for the last few weeks of the half year. It should not come as a surprise as FY14 results (29th April) followed by the AGM statement both reaffirmed that trading had remained solid. Nevertheless, it is reassuring considering it has been a busy time for the management with important contracts in the UK underway and the fund raising in March. The additional funds are important for the business to be able to invest, particularly in Asia, to underpin future growth but it is reassuring that management’s focus has not been diverted away from the day to day running of the business during the process.
Coming just five weeks after FY14 results were released the reaffirmation that trading is in line with management’s expectations should not be a surprise but is very welcome as we are almost five months through the year. FY14 was a busy year for Mi-Pay completing the reverse takeover of AIM cash shell raising £4.3m. This was followed by a secondary raising in March of this year. The additional funds negate any short term funding concerns and will allow investment into exciting growth areas of the business, notably Asia. As a result, the focus in FY15 and FY16 is on seamless execution of strategy to hit market forecasts. Today’s statement is reassuring on this front and provides greater expectation that the business will achieve its aim of turning cash flow positive during FY16 and profitable for the year in FY17.
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