Monitise encouraged by talks despite wider losses, as buyers circle

17th Feb 2015 07:24

Although losses nearly trebled in the first half, mobile banking and payments group Monitise reiterated its confidence in turning profitable next year and said it had "constructive discussions with market-leading players interested in our business".The AIM-listed company, which is carrying out a comprehensive strategic review after recently warnings on profits, has reportedly met with several prospective buyers in the US last week.Payment technology giant FIS, an existing Monitise client, is one of several potential suitors, according to Sky News, with others to have expressed interest including Oracle and IBM.On Tuesday the company reported a loss of £30.8m on an earnings before interest, tax, depreciation and amortisation (EBITDA) basis for the six months to 31 December, compared with a £10.2m loss the year before.Group revenues declined 9% year-on-year to £42.4m as a result of lower licence revenues as the company shifted to a subscription-based business model last year to make it easier for clients to adopt its services.The gross margin dropped sharply to 57% from 73% the year before due to an expected change in the revenue mix, while operating costs jumped to £55m from £44.1 on the back of increased headcount following recent acquisitions.Cash holdings stood at £128.3m at period end, boosted by an aggregate net investment of £47.6m in the company from long-term agreements with Santander, Telefónica and MasterCard in November.Monitise, which plans to launch its first mobile money services on the new cloud-based Monitise Central Platform (MCP) in April 2015, said results for its first half reflect a "period of transition".The business is moving away from large upfront licence revenue or new large-scale development and integration led projects, but has yet to benefit from the release of its new platform and associated subscription revenue."Monitise is focusing on transitioning to a subscription based model and an evolved product architecture which will enable the group to scale more rapidly," the company explained.Monitise expects subscription revenue growth to accelerate next following the MCP launch."As we focus on the second half, the momentum we are seeing in transforming our business also reinforces our confidence in becoming EBITDA profitable in [the financial year ending 2016]," said chairman Peter Ayliffe.He added that the strategic review has "led to many constructive discussions with market-leading players interested in our business and the role we play in the industry".