Theres no other way of putting it,Monitise(LSE: MONI) has had a terrible 2014. The company has failed to meet its targets, reported larger than expectedlosses and warned on growth.
But its not all doom and gloom. Indeed, Monitise has also signed some transformational deals during 2014, which should support future growth.
For example, the firm has inked a transformational deal with blue-chip giantIBM, as well as several smaller deals with the likes ofVodafone,Virgin Money,Telefonica,SantanderandMasterCard. And althoughVisahas dumped its stake in the mobile money company,American billionaire and respected investor,Leon Cooperman has continued to praise the companys progress and remains invested.
So all in all, 2014 has been somewhat of a consolidation year for Monitise.
Still, after breaking a string of promises this year, Monitises management needs to regain the trust of its investors. The only way the company will be able to do this is by meeting its own targets.
More importantly, Monitise needs to show that it can stand on its own two feet. In particular, the company needs to be able to sustain itself without constantly asking the market, and its larger investors for more cash.
The most recent fund raising, at the end of November, came in form of a placing to raise49.2m in aggregate. According to forecasts, this additional cash shouldprovide Monitise with enough liquidity to keep it going until 2016, when management expects the company to report its first profit on an earnings before interest tax amortisation and depreciation, or EBITDA basis.
So Monitise has cash, partners, and targets but trust is still an issue and this is why 2015 will be a make-or-break year for the company.
If Monitise can hit its self-imposed targets during 2015, namely 25%revenue growth year-on-year and capex estimated at 35-45m, while remaining on course to become EBITDA profitable during 2016, then investors might start to trust the group again.
On the other hand, if Monitise misses its targets, asks investors for more cash, or re-adjusts long-term targets, then investors are likely to turn their back on the company for good over the long-term, by 2018, Monitise is targeting200m registered users at 2.50 average revenue per user; an EBITDA margin of at least 30%; and a sustainable gross margin above 70%.
The bottom line
Overall, Monitise needs to prove during 2015 that it can be trusted and is making progress towards its long-term goals. Anymore disappointments will seriously dent the companys prospects.
That said, the company does have potential, so if youre willing to take the risk, Monitise could be a good bet.
Nevertheless, I strongly recommend that you do your own research before making any trading decision and Monitise may not fit your own personal risk profile. To help you assess the company, our top analysts have put togetherthis new report from The Motley Fool.
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