Of course, it wasnt all bad news: Monitise announced that it will launch a cloud-based version of its Mobile Money platform in April, and said that it has signed a letter of intent with a major European financial institution to roll out Monitise digital banking in several countries.
Both initiatives could generate new growth, and the firm also said that positive discussions with market-leading players are taking place as part of its strategic review, which could lead to a sale of the business.
Monitises favoured measure of profit is earnings before interest, tax, depreciation and amortisation, or EBITDA.
The firms EBITDA loss tripled to 30.8m during the first half, compared to a 10.2m loss reported for the same period last year.
The main element of the increased loss was capital expenditure, which rose from 9.1m to 25.9m to help accelerate the conversion of the firms technology into marketable products.
Wheres the cash?
Revenue fell by 8.8% to 42.4m, compared to the same period last year, despite Monitise reporting a 49% increase in the value of payments initiated via Monitise technology, which rose to $101bn on an annualised basis.
Monitise also appears to be struggling to collect payments from its customers promptly: according to todays accounts, Monitise now has to wait an average of 378 days for its bills to be paid, up from 142 days at the end of last year.
These changes could be linked to Monitises changing business model, but Im always concerned when I see sales falling and debtors rising, as it often causes cash flow problems.
Monitise is maintaining guidance for full-year sales of 90-100m and an EBITDA loss of 40-50m this year, with an EBITDA profit expected in 2015/16.
In my view, todays figures dont add much credibility to this guidance revenues will need to rise and spending will need to fall if Monitise is to have any chance of hitting these targets.
Is Monitise a buy?
Monitise is essentially a specialist software developer. Stripping out the firms 129m cash balance, the business is valued at 380m around four times sales despite continuing to lose money.
In my view this is too much, and I rate Monitise as a sell.
Better buys elsewhere
Monitise shares peaked at 80p, early in 2014. Smart investors sold, locking in a 325% profit in just three years.
I don’t believe that gains of this size will be repeated with Monitise — but they will be with other small, upcoming stocks.
If you’d like an insight into the investment strategy required to capture these gains in your own portfolio, I’d urge you to take a look at “10 Steps To Making A Million In The Markets“.
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