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LONDON (Alliance News) - Monitise PLC Monday said its pretax loss widened in its last full year, as the mobile payments company continues to shift its business model and increase its importance in the mobile banking, payments and commerce industry.
In a statement, Monitise, which counts Royal Bank of Scotland Group PLC, Lloyds Banking Group PLC and HSBC Holdings PLC as some of its customers, said it made a GBP63.4 million pretax loss in the year ended June 30, compared with a GBP51.1 million pretax loss in the prior year. Its loss before interest, tax, depreciation and amortisation widened to GBP31.4 million from GBP19.3 million, driven by investment in product and sales in particular in the second half of the year, as Monitise moved to accelerate user growth.
Monitise said revenue grew at the lower end of the 31%-33% range it guided when it reduced its forecast from 40% in a July 8 trading update. Overall, revenue increased by 31% to GBP95.1 million, with UK revenue up by 54% to GBP57.8 million and Americas revenue down by 9%.
Monitise previously had put the slower-than-expected revenue growth to a faster move to a subscription model, with lower up-front revenue, from product licence fees and professional services activities. The acceleration of that shift was announced to the market alongside a GBP109.0 million placing with partner MasterCard Inc and other institutional investors. Monitise Monday said its relationship with MasterCard continues to develop, with "a number of initiatives" in the pipeline.
Gross margin fell to 69% from 76% due to lower development and integration margin, with the decline a result of some large contracts where bulk price commitments were made on development work. Monitise said development and integration margin fell to 43% from 55%. "Barring other very large contract work, we anticipate that the development and integration gross margin in the medium term will be sustained at around 50%," Monitise said.
Monitise reaffirmed previous revenue guidance for the current financial year, expecting growth of at least 25%. It wants to become EBITDA profitable in the following financial year. Longer-term, Monitise said it aims to have 200.0 million registered users at GBP2.50 average revenue each for 2018, as well as an EBITDA margin of at least 30% and a sustainable gross margin above 70%.
The mobile payments company also said it has entered a new mobile banking strategic partnership with Santander, following on from the companies' collaboration on the launch of Yaap, the bank's Spanish mobile commerce joint venture with CaixaBank and Telefónica.
Monitise also said it will Monday connect to IBM hosting facilities based in North Carolina, and said the cloud-based bank-grade infrastructure will improve its ability to serve global processors, banks and mobile network operators from a US-based hub. It will initially target North and Central America, as well as South American markets such as Brazil. The news comes after the two companies last month signed a partnership agreement.
"Monitise has a clear core purpose: To help consumers bank anywhere, pay anyone and buy anything from their mobiles. It has developed capabilities and a positioning in a fast-moving marketplace, which gives it key competitive advantages that will enable us to deliver our long-term growth goals. The decision taken this year to transition Monitise to a product-led subscription-based business is a key step in enabling the Group to leverage its core strengths and help us deliver our ambitious growth plans," Chairman Peter Ayliffe said in a statement.
Monitise said it is also continuing to consider a move to a main London Stock Exchange listing.
Monitise shares were Monday quoted down 3.6% at 44.85 pence.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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