Moving in the right direction
Monitise Plc's (LONDON:MONI) 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.
FY15 trading update – moving in the right direction
Monitise expects to report FY15 revenues in the range £88-90m, compared to guidance of £90-100m and our forecast of £90.5m. Although not quantified, the company confirmed that the EBITDA loss reduced in H2 versus H1. Guidance was for an FY15 EBITDA loss of £40-50m (our forecast £49m; H115 £30.8m). Gross cash at year end was £89m (versus our £98m net cash forecast). The company continues to expect to achieve EBITDA profitability for FY16 (our forecast +£2.4m). We leave our forecasts unchanged, pending preliminary results on 9 September. As part of the business review process, the company is focused on improving the profitability of the customised platform business, which is used by the majority of the existing customer base. The company is also working on driving new business onto its standardised cloud platform – since its April launch, Monitise has signed up a regional US bank and the Santander (MADRID:SAN) JV to use the platform.
New JV with Santander
Last week, Monitise announced that it had entered into a 50/50 joint venture with Santander to launch a fintech builder later in the year. The JV will aim to invest in, build and scale fintech businesses with the potential to redefine and support financial services globally. Monitise has committed to invest capital of up to £10m in the JV over two years, dependent on the businesses found to invest in. Monitise recognised a multi-million pound licence fee in H215 from the JV and expects to earn revenues from providing services to the companies supported by the JV.
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