Ford Equity International Rating and Forecast Report

Ford Equity International Research Reports cover 60 countries with over 30,000 stocks traded on international exchanges. A proprietary quantitative system compares each company to its peers on proven measures of business value, growth characteristics, and investor behavior. Ford's three recommendation ratings buy, hold and sell, represent each stock’s return potential relative to its own country market.. The rating reports which are generated each week, include the fundamental details behind...

Update: Termination of coverage

Edison Investment Research is terminating coverage on Monitise (MONI). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant.

Update: Business resized; fully focused on cloud platform

Monitise has suffered the classic shortfall in revenues often seen in the transition from custom software to SaaS provider. Restructuring the business to lower the cost base and focus sales on the cloud platform should enable the company to reach EBITDA break-even in H216. Our forecast for a return to revenue growth in FY17 is dependent on adoption of the cloud platform, and will be the key driver of share price upside from this point.

Flash note: Visa Europe reducing stake

Visa Europe (VE) has notified Monitise that it intends to reduce its 5.3% stake in the company over time. VE and Monitise will continue to work together until March 2016, and will assess opportunities to work together on an ongoing basis. If the relationship continues after that date, we would expect a shift from the customised platform approach to Monitise’s new cloud platform. We make no changes to our estimates.

Update: Moving in the right direction

Monitise’s FY15 trading update confirmed that the company made progress in reducing its cost base and cash outflows in H2, and continues to target EBITDA profitability in FY16. The business review process is ongoing, focused on improving the profitability of the custom platform business used by existing customers, while driving new business onto the standardised cloud-based platform.

Update: Reintroducing forecasts

Monitise has concluded its strategic review and decided to proceed as an independent company, with management focused on streamlining the product offering and reducing the cost base. With FY15 and FY16 financial targets maintained, we reintroduce forecasts that show Monitise moving to positive EBITDA in FY16. Our forecasts depend on the successful introduction and customer adoption of the MCP, driving user numbers and subscription revenues, accelerating the transition to a recurring revenue-driv...

Flash note: Strategic review complete; back to business

The strategic review is complete and the company has decided to move forward as an independent company. As a result of the review, the company is making changes to management and further streamlining operations to accelerate the path to profitability. If the company can achieve its reiterated EBITDA and capex targets for FY15 and FY16, it should have sufficient funds to reach break-even and beyond.

Institutional Comment: Daily comment

Update: Addressing the growth opportunity

At its capital markets day, Monitise outlined its growth strategy, highlighting its position as an enabler of mobile money services in an increasingly noisy and fragmented market. Addressing concerns about the company’s ability to meet longer-term targets, management outlined the path to growth in both the user base and the ARPU. As part of this, the imminent launch of the new cloud-based platform provides the technical basis to support an acceleration in user numbers.

Institutional Comment: Daily comment

Flash note: Partners make strategic investments

Monitise has announced that it is in discussions to expand its commercial agreements with Santander, Telefónica and MasterCard. The strategic partners will invest a total of £49m in Monitise (7.6% of enlarged share capital) to support platform development and roll-out. Increasing interest in and support for the company’s open platform from large players in three key verticals is encouraging, and the additional investment provides further comfort that the company’s FY18 targets can be achie...

Update: Visa Inc assessing stake

Visa Inc has announced it may reduce its 5.5% stake in the company and intends to reduce its reliance on external developers once the current contract with Monitise has run its course by mid-2016. Monitise has reiterated both its near-term and longer-term guidance, implying it had not been expecting a material contribution from Visa Inc after FY16. While the potential future loss of Visa Inc as a customer highlights the risk of customers taking development in-house, recent new customer signings,...

Update: Growth targets confirmed

Monitise reported FY14 results in line with its recent trading update and reiterated targets for FY15 and the longer term. The recently expanded IBM alliance provides an important sales channel and gives Monitise access to global resources to implement new contracts – this should support the company on its path to achieving FY18 registered user and ARPU targets. Widespread adoption of Monitise’s technology for m-banking and m-commerce services, primarily by financial institutions, is the key...

Flash note: Expanding the IBM alliance

Monitise has announced a multi-year strategic global alliance with IBM, building on the existing relationship originally announced last year. With the advantage of IBM’s global sales force marketing Monitise’s solutions, and greater technological integration between the two companies, we see scope for faster adoption of Monitise’s technology by its financial services institution target market.

Update: Growing pains

In the transition to a subscription-based business model, short-term revenues have come under pressure. With a strong balance sheet behind it, the company decided to hold firm on contract negotiations to sign up deals with longer-term subscription revenue potential. While this affects our FY14 forecasts and has a marginal impact on FY15 forecasts, the company is seeing high levels of interest in its technology and is confident it can meet its long-term targets. Until break-even is reached, evide...

Update: M-commerce content acquisition

Monitise has acquired marketing content businesses from UK-based Markco Media Ltd for up to £55m in equity, bringing the company a content delivery platform with a global network of 60,000 brands and retailers. This should integrate well with Monitise’s Buy Anything m-commerce offering, providing Monitise customers with content for their end customers.