Mobile money network Monitise (MONI:AIM) is tapping the market's current optimism after asking investors to support a fresh funding call. The company pulled off a £109 million placing last night (24 Mar) and there was clearly a strong appetite, including US credit card giant Mastercard (MA:NYSE), adding to its long-standing relationship with Visa (V:NYSE). At 68p, the 160 million new shares being issued were priced at a modest 1.2% discount to last night's 68.75p close, although it is worth noting that the stock was trading as high as 80p just last month.


Today's announcement includes the usual big numbers. Monitise flags up $71 billion of payments processed over its network on an annualised basis, up from $31 billion a year ago, and sees an extra $3.4 billion worth ready to 'go live' over the coming weeks. It also mentions 28 million registered users worldwide, eight million more than a year ago.

MONITISE - Comparison Line Chart (Rebased to first)

Two areas stand out. First, Monitise wants to streamline its various platforms and technologies into a seamless and standardised whole that makes it easy for banks, retailers and mobile network operators (MNOs) to switch on. Second, and more important, is the company's shift in revenue strategy, away from licences and upfront fees to a user-based subscriptions model.


The short-term effect of that will be Monitise carrying more of the infrastructure set-up expenses as new clients sign-on. On the flip-side, that should also make switching on to Monitise's network faster, easier and, vitally, cheaper for new clients at the start.


As transaction volumes build Monitise will skim a percentage too. It's the favoured model of most of the specialist mobile money and marketing businesses that continue to emerge, including Bango (BGO:AIM) and Earthport (EPO:AIM), for example, the latter one of our Plays of the Week from December.


This all looks very sensible and could bring long-term benefits. Monitise hopes to take its 28 million registered users to circa 200 million by 2018. But don't be surprised if this draws sceptical scoffs from some quarters.


A profits breakthrough will again be delayed, with Monitise now aiming for breakeven at the earnings before interest, tax, depreciation and amortisation (EBITDA) level in the year to June 2016. But considering that the shares have jumped more than 120% in the past year, and have risen from just 20p since we first pitched Monitise as a Play (see below - click on image to enlarge) almost exactly three years ago, investors seem happy to continue supporting the mobile money land grab, putting profit considerations to one side.



Issue Date: 25 Mar 2014