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In our view, Monitise’s H1 17 results demonstrate the benefits of management’s ongoing transformation programme. EBITDA profitability was sustained, and accompanied by cash outflow more than halving vs H1 16A. With gross cash at £27.3m, the group’s financial position remains strong. Initial FINkit sales are under “active discussion” and ongoing regulatory initiatives (CMA, PSD2) give further grounds for optimism in the outlook.
Monitise
Mobile money specialist Monitise has released full year results to June 2016 in line with guidance from the mid July update and consistent with the outlook given at the half year, with the company achieving EBITDA breakeven and substantially lower cash spend in the second half following significant rationalisation. For the full year, EBITDA losses halved to £19.6m on revenues down 25% to £67.6m, whilst the statement contained a cautiously positive outlook, noting traction on the new FINKit bank-grade PaaS platform. Whilst the outlook remains uncertain, a significant cash balance (£42m) and a much lower cost base at least mean that the company is far better placed than this time last year.
Monitise’s Trading Update for the period to June 30 reveals a strong H2 financial performance. In line with previous guidance, revenues were stable compared to H1, and the group reported positive EBITDA. Cash outflows were significantly reduced vs comparable periods, and the group saw initial revenues from the FINK it platform. Management commentary that the transition from legacy products to FINK it will make for a decline in revenues in FY17 versus FY16 is consistent with our (unchanged) earnings estimates.
Although Monitise’s recent history has been somewhat turbulent, we believe the outlook is increasingly bright. The new management team (CEO, COO) has re-focussed the business on six key product lines and re-energised the organisation, having made significant reductions to the ongoing cost base and capital expenditure requirements. In this note we provide detail on some of the key measures undertaken to improve business performance.
Mobile money specialist Monitise has announced H1 2016 results in line with the January trading update. Turnover fell 21%, primarily reflecting lower licence revenues. More positively, the period saw significant reductions in opex and capex. Management re-iterated guidance of EBITDA profitability in the second half of FY 2016 and the company being sufficiently funded through to cash breakeven.
Monitise has suffered the classic shortfall in revenues often seen in the transition from custom software to SaaS provider. Restructuring the business to lower the cost base and focus sales on the cloud platform should enable the company to reach EBITDA break-even in H216. Our forecast for a return to revenue growth in FY17 is dependent on adoption of the cloud platform, and will be the key driver of share price upside from this point.
Mobile money specialist Monitise has reported FY14/15 results. In-line with guidance, but towards the lower end of the range, EBITDA losses were up 33% to £41.8m on revenues down 6% to £89.7m. The company has also made several significant write-downs, and announced a change of CEO. However, H2 saw improvements in both margins and free cash flow. In our view Monitise remains on track for EBITDA profitability in the second half of FY15/16, with a much more focussed strategy now in place.
Visa Europe (VE) has notified Monitise that it intends to reduce its 5.3% stake in the company over time. VE and Monitise will continue to work together until March 2016, and will assess opportunities to work together on an ongoing basis. If the relationship continues after that date, we would expect a shift from the customised platform approach to Monitise’s new cloud platform. We make no changes to our estimates.
Monitise’s FY15 trading update confirmed that the company made progress in reducing its cost base and cash outflows in H2, and continues to target EBITDA profitability in FY16. The business review process is ongoing, focused on improving the profitability of the custom platform business used by existing customers, while driving new business onto the standardised cloud-based platform.
Mobile money specialist Monitise has released a year end update highlighting revenues of £88-90m (versus £90-100m guidance) for FY2015E and materially improved second half EBITDA losses and cash spend. The company also maintained guidance for EBITDA profitability in FY2016E. Monitise has also flagged the very different prospects, resource requirements and management needs of its new (higher-margin) SaaS and its established customised platforms.
Mobile money specialist Monitise has concluded its strategic review with the decision to remain independent. A number of expressions of interest were received; however valuation, complexity and timing proved the sticking points. The company will become more focussed on key geographies and products. In addition, Elizabeth Buse is to become sole CEO. Management has largely re-iterated existing guidance, demonstrating confidence in the growth outlook.
Mobile money specialist Monitise has announced H1 2015 results in line with the January trading update. Turnover fell 9%, reflecting ongoing declines in licence revenues as the business transitions to new revenue models. The EBITDA loss grew to £30.8m, reflecting a 16pp decline in Development and Integration gross margin, and a 25% increase in OPEX, primarily due to recent acquisitions. More positively, a number of KPIs saw improvement, notably a 50% YoY increase in transaction value.
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