Small Cap Breakfast

Ferrum Crescent (FCR.L) |FitbugHoldings*(FITB.L) | Tristel (TSTL.L) | EmpyreanEnergy (EME.L) | StatPro Group (SOG.L) | Global Invacom Group (GINV.L) | Monitise (MONI.L) | Koovs (KOOV.L) | IronRidge Resources (IRR.L) | BOS Global (BOS.L)

Visible benefits from restructuring

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.

FY16 results confirm solid progress made

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-

Strong H2 financial performance

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) earni

Moving towards profitability

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.

H1 2016 results in line

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.

Technology Review - FinTech: The Second Mouse Gets the Cheese...

The FinTech market is a vast and still largely uncharted ocean of opportunity. Trillions of dollars move around hundreds of countries every day; and that is just between banks, never mind individual customer transactions. The banking systems that facilitate this activity are by and large 30 to 40 years old and have evolved from multiple systems developed in many different countries. The opportunities to improve the systems are equally as vast as the market, though by necessity it will be a proce

Business resized; fully focused on cloud platform

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.

Signs of green shoots?

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 reducing stake

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.

Technology Review - Hunting the next unicorn

UK Technology Company Sophos (SOPH) launched on the LSE with a frenzy of investments that raised total gross proceeds of £352 million, valuing the company at £1 billion towards the tail end of June 2015 on a historical revenue multiple of 3.53x. Over the past decade, the UK digital technology industry has been considered by some as also-rans on the global stage, overshadowed and looking enviously at our American counterparts' domination of the industry, nevertheless we have spawned some success

Moving in the right direction

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.

EBITDA and cash spend improving

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.

EBITDA and cash spend improving

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.

Filtronic - LEO liftoff: SpaceX strategic agreement and $20m order

Just 15 months after winning its first order in the Low Earth Orbit (LEO) satellite communications market, Filtronic has announced a 5-year strategic partnership with SpaceX which includes an initial $19.7m (£15.8m) E-band amplifier production order for delivery in FY25. As a result, we upgrade our FY24/FY25 forecasts and lift our target price to 57.4p (was 37.5p), equivalent to 74% upside. Although this is the first time SpaceX’s Starlink has been named as a Filtronic customer, this is now the

Morning Note – 24 April 2024

Filtronic - Agreement with SpaceX drives upgrades

Filtronic has signed a strategic partnership and commercial agreement with SpaceX which includes a production order worth £15.8m and warrants that could be exercised for up to 10% of existing share capital. Filtronic announced its first orders from SpaceX in January 2023, although the customer was unnamed at that point. Since then, SpaceX has placed orders totalling $43m (including yesterday’s order) for products to support the build out of its Starlink low Earth orbit (LEO) satellite constellat

Hybridan Small Cap Feast - 24 April 24

24th April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi

CyanConnode (CYAN LN) - FY24 update: revenue materially ahead

CyanConnode exceeded FY24 revenue expectations and has high visibility into FY25, supported by strong deliveries and a growing backlog respectively.

Hybridan Research: Sector Review: Artificial intelligence in UK cybersecurity: the human uplift 17/04/2024

Artificial intelligence (AI) is a double-edged sword in cybersecurity. Whilst new AI models, architectures, and innovations are emerging to protect the security posture of organisations, attackers are also benefiting from deepfakes, sophisticated phishing, and automation of malicious codes. To ensure the impact of AI on cybersecurity to be a net-positive, we need to pit good AI against bad AI. Point solutions enhanced with machine learning: Global cybersecurity has been built with point soluti

SRT Marine Systems - FY24 update: revenue forecasts pushed out for new June YE

SRT Marine Systems has reported a change of year end from 12-months to March 2024 to 15-months to June 2024, with revenue forecasts extended by three months for both new year ends, and an encouraging operational update. The company is concerned that government related paperwork on two existing CG projects (SEA and ME) may not be completed in time for a March invoice and risks falling into the next quarter. In one jurisdiction where there a number of new project prospects, the company must meet s

Filtronic - Backlog supports strong growth from H224

Filtronic’s recent investment and focus on high-performance radio frequency (RF) design and manufacturing is starting to pay off, with recent new customer wins, development contracts and volume production orders boosting the order backlog. H124 results do not reflect this recent success: revenue was essentially flat and investment in sales and engineering reduced EBITDA. However, the strong backlog gives management confidence that revenue and profit will exceed consensus estimates for FY24 and F

Morning Note – 21 December 2023

Calnex Solutions - FY24 trading update – marking time

Calnex has released a pre-close trading update for the year to March 2024, indicating that revenue would be £16.3m, c£0.7m below our forecast, partly due to the timing of orders at the end of the period. Group trading has been impacted by the well-documented, continuing challenges in the Telecoms sector which have seen delayed project timings leading to corresponding delays in customer spending. Administrative costs are being controlled and are focussed on maintaining R&D. Calnex remains confide

BATM+ (BVC, House Stock at 18p) - New client Edgility contract

Filtronic - H1/24 Riding the EM-waves across land, sea and space

Filtronic has reported results in-line with management expectations for H1/24, and now expects to perform ahead of our forecasts for FY24E and FY25E in terms of revenue and profit. We are raising our revenue forecasts for FY24E and FY25E by 14.6% and 6.2% respectively, and our EBITDA forecasts by 85.2% and 28.0% respectively. The increase in expectation is driven by a strong recent acceleration in order flow, including a £7.8m order announced today. In this report we present a detailed review of

Hybridan Small Cap Feast - 06 Feb 24

6th February 2024 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment obje

Thunderclap in British telecoms

FY23 revenues and EBITDA were in line with expectations. The major news was that BT plans to shed more than 40% of staff. At the end of the decade the EBITDA could reach £11bn with the massive restructuring announced and capex could return to €3.5bn per year. EBITDA less capex could be multiplied by 2.5 and therefore also the dividend. This could value BT at 385 pence at that time. We maintain our opinion at Add on the stock.

A fairly safe long term buy and hold

A decent Q1 performance despite the expected headwinds from cost-of-living pressure and cost inflation. The group is clearly a fairly safe long-term buy and hold. BT plans to shed more than 40% of staff by the end of the decade. In parallel it is further accelerating its FTTP deployment with high capex. But at the end of this phase EBITDA-capex could be multiplied by 2.5. Speculation could also again reignite as Drahi’s empire (owning 24.5% of BT) is being shaken by corruption cases.