In our recent predictions for Financial Services, see here, we highlighted the importance of Mobile as a means of generating growth across the sector. We see Monitise as a key participant in this move. It has assiduously built a network of partnerships across the mobile stage and its “Bank Anywhere, Pay Anyone and Buy Anything” platform is widely seen as a leader in a crowded and rapidly changing competitive landscape.
On New Year’s Eve, Monitise announced another Mobile Money partnership with an (as yet unnamed) UK bank, to generate “several” million pounds over the next five years, with the Monitise team designing, building and managing the services portfolio.
Our full year results comment in September, see here, discussed the different business models used by Monitise and their effect on the timing of returns. Deals with non-bank partners are generally product licence sales (19% of 2013 revenue) and bring forward both revenue and profit. Deals with banks, as in this latest example, include a revenue share element on transactions across Monitise’s web of relationships. This potentially offers the greater prize, but delays the receipt of cash and the move into profit.
The Monitise management are re-iterating their forecast of 50% revenue growth and gross margins of over 70% (they were 76% last year). Monitise is still spending heavily to build its market position, its US and UK businesses are profitable and the management are confident that their growth plans are funded. Although we are not yet confident about a move into the black at the EBITDA level this year, Monitise has a strong long term position and some additional patience in terms of the move to profit will probably be rewarded.