Monitise Trading Update

Monitise has just issued a trading update following the Group’s recently closed financial year end to 30 June 2014. The update in full can be read here.

• Full-year 2014 revenue is expected to be between £95-97m, or growth of 31%-33% year on year.
• Revenue growth was lower than previous guidance of approximately 40% due to a faster shift than originally anticipated to the new subscription-based business model.
• There were a small number of larger contracts that either have been or are being negotiated on a longer term subscription basis. They were previously expected to be signed before the year end with a large up-front licence component. Had this occurred, Monitise would have exceeded guidance revenue for the year. Monitise took the decision to favour longer-term subscription revenue over shorter-term licence income with sub-optimal subsequent revenue, facilitated by Monitise’s strong balance sheet.
• In terms of guidance, Monitise expects FY 2015 revenue growth of at least 25%.
• Longer term guidance is unchanged, namely:
  1. FY 2016 is expected to be EBITDA profitable and to see stronger revenue growth.
  2. By FY 2018 Monitise continues to target 200m registered end-users generating an ARPU of £2.50, a sustainable gross margin above 70% and an EBITDA margin of at least 30%.
• This link to the Group’s strategy update in March 2014, may provide additional useful background.
• The move to a subscription model is now a well-trodden path in the software world and when Monitise announced it, with the fundraise, in March this year, the Group also lowered its revenue growth guidance for 2014, as is usual in these transition periods.
• There are a number of operational metrics in today’s trading update that may be of interest.
  1. For example, transactions on the Monitise platform have grown on an annualised basis to 4bn per year. Money moved and paid on the Monitise platform is now at a $88bn per year run rate, compared with $40bn a year ago.
  2. Over 60m people are using Monitise software on their mobile phones today. This comprises more than 30m who are registered Bank-Pay-Buy platform customers, that’s up 2m since Monitise reported its February user base, plus another 30m downloads of apps built by the Monitise Create and Monitise MEA divisions, the Grapple Mobile and Pozitron businesses that were acquired during the financial year.

The full trading update is available via the news section of www.monitise.com.