Mobile money company, Monitise (LSE: MONI) announced its preliminary results for the year ended 30 June 2014 today, which showed continued growth across the company’s operations. However, the market did not take the news well and Monitise’s shares have fallen around 4% in early trade.
Monitise revealed today that group revenue had expanded 31%, to £95.1m over the past year, while the value of transfers and payments by customers across its platforms more than doubled, jumping 120% to $88bn.
That being said, the company reported a group earnings before interest, taxes, depreciation and amortization, or EBITDA loss of £31.4m, compared to last year’s EBITDA loss of £19.3m.
Further, the group’s adjusted loss jumped by more than £10m, to £43.7m, from the loss of £32.8m reported during the same period last year. On an unadjusted basis, group statutory loss after tax was £60.1m, once again worse than last year’s reported loss of £51.3m.
Commenting on the results, Monitise co-CEO Alastair Lukies said:
“This past year was an important and transformational period for Monitise. Our underlying performance reflects the proactive and bold steps we have taken to transition to a product-led subscription-based business operating in the global mobile banking, payments and commerce industry.”
Outlook
Monitise’s full-year update may have disappointed some investors but for long-term holders, today’s news release contained a number of impressive statements and targets.
For example, after announcing a global alliance with IBM several weeks ago, Monitise today announced a strategic partnership with Santander, to develop and deploy a series of mobile banking innovations.
In addition, management reiterated Monitise’s long-term strategy. Specifically, management is targeting revenue growth of at least 25% during 2015 and the group is still on target for becoming EBITDA profitable by 2016.
By 2018, management is targeting 200m registered users, an EBITDA margin of at least 30% and a gross margin above 70%. Average revenue per user is expected to hit £2.50 by 2018.
Doubts remain
Unfortunately, after issuing two profit warnings earlier this year, Monitise became one of the UK’s most shorted stocks. And it seems as if the market is betting that Monitise will slip up again. According to data supplied by Markit, there is still a strong short interest in Monitise’s shares.
The group’s earlier profit warnings saw management reduce revenue growth guidance from 50% to 40%, then down to the low 30s. As a result, management warned that the group would make a loss of between £32m and £36m, against market forecasts of £28m.
However, the group said the shortfall was due to two large contracts being delayed as Monitise moves from selling its technology via an upfront licensing fee, to a subscription model. Monitise had chosen to defer revenue rather than sign poor deals, great news for long-term holders.
Long-term play
So, despite short-term headwinds, Monitise could be a great long-term buy, if the group hits its own lofty growth targets. Nevertheless, I strongly recommend that you do your own research before making any trading decision and Monitise may not fit your own personal risk profile.
