Real potential is in emerging markets
WHEN I first met Alastair Lukies back in 2009, things were not looking good for his company, the mobile payments provider Monitise. The firm’s share price was languishing at 5p, way below its IPO price of 21.25p, and it was operating in not one but two troubled sectors: tech and financial services. To make matters worse, it was quoted on the then-beleaguered Aim market. Lukies, a former rugby pro, was unfazed, believing that mobile banking would hit the tipping point round about now. As it happens, he was right.
Yesterday, the firm upgraded its full-year revenue guidance by 21 per cent to £34m. That is more than double the £14m it pulled in in 2011 and over five times its 2010 haul of £6m. It is a blistering pace of revenue growth, which has helped it narrow its ebitda loss from £7.5m in the first half of 2011 to £6.9m this time round. Its target to break even in cash terms by the end of 2013 no longer looks so distant. Analysts at Evolution expect profits of £8m in 2014.
This is all the product of years of painstaking work, which saw Monitise build partnerships with the likes of Visa and VocaLink, the operator of the UK cash-machine network. It also had to convince investors and the authorities that its security was bank grade. The good news is that while all this heavy lifting was pretty arduous, it means the barriers to entry are now quite high.
It is the US that is now driving revenue growth, but the exciting thing about this company has always been its ability to conquer young emerging markets. These countries are likely to skip internet banking (due to patchy connectivity) and go straight for mobile banking.
The shares still look like a good punt, but the returns on offer will be nothing compared to the killing that those who stood by Lukies in the dark days of 2009 stand to make.
david.crow@cityam.com