Earthport Share Discussion Threads

[isaready] 31/10/2016 16:12

Culford - no problem. Yes I know about the warrants, something S chose to ignore. Actually SS slated epo and BoA saying the fixed fee, once it ended would suddenly show epo had no business model with falling revenue. Quite the opposite.

[chadders] 31/10/2016 09:49

Culford, thanks for the info. Since the results there seems to be a much more positive sentiment and I think due entirely to a closer correlation between management expectations and delivery.

Isa, good man, enjoy the ride.

[culford] 31/10/2016 09:29

Isa
No don't work at BoA - this is what EPO said at their capital markets day and repeated at recent analysts meeting. BoA have sent representatives to EPO investor meetings before and have warrants in EPO. They clearly saw the benefit that this integration, which is expected next month, would have for EPO's business. Not long to wait now.....

[isaready] 31/10/2016 08:54

Chadders, I agree I shall stop.

Culford , thanks for this. 20 people. So you're saying they've been busy integrating into their systems. Sorry, where in the public domain does it say 20 people. Can I assume you work at boa and know the project.

[culford] 29/10/2016 09:51

isaready
they have been getting BoA new business for past couple of years but were not getting their huge book of existing business. 20 people have been installing EPO into BoA systems to do existing business which should be a significant pick up when it starts coming through. this is expected in november.

[chadders] 29/10/2016 08:39

Isa,
I reckon things are on the up. Don't fall into the trap of thinking it won't be an up and down journey from here because it's likely to be.
Management has learnt a lesson methinks and they have to (and I believe they will do) deliver break even Q4.
I'd cut back on the name calling as well because the Troll (I consider this an accurate descriptor) is much better suited to it than you matey.

[isaready] 28/10/2016 13:09

culford,

question:

They had/have a contract with BoAML. They were doing activity with them already, yes/no?

So when you say specifics, I have to ask, what are you referring too?

[culford] 28/10/2016 13:02

These are headed back to >40p - the contract with BoAML likely to be switched on from next month which should accelerate transaction growth that is already running at 90%.................

[isaready] 28/10/2016 12:41

and wow, someone managed to buy 3 million at 16.5p. There is a positive for every negative sheepshag.

I see you have resisted to apologise how you were wrong with the results and the fund raising. shame on you.

[silkstag] 28/10/2016 12:20

Wow someone just managed to sell 3m @16.5p after those results. Score!

[isaready] 28/10/2016 12:09

looks like SS has gone quiet, wishing for the oh so great news release to thump the share price to 4p. seems nothing happened SS and the bad news is in the price. Your 4p may come in 12 months if they do not grow revenue and are no where near the profit levels.

It looks like we are at the bottom for now.

[isaready] 28/10/2016 12:09

looks like SS has gone quiet, wishing for the oh so great news release to thump the share price to 4p. seems nothing happened SS and the bad news is in the price. Your 4p may come in 12 months if they do not grow revenue and are no where near the profit levels.

It looks like we are at the bottom for now.

[isaready] 27/10/2016 14:16

yes that's right SS, look, news out, and BANG to 4p. You muppet you.

[isaready] 27/10/2016 12:48

Caradog, we can sit here and praise SS tripe all day long. The price never fell because of her tripe, it fell because, there was a 5 million issue and the profits were delayed. Simple.

If I say, she will fall over one day, she, sure enough over the next tens years will fall over. It's not rocket science is it, the conditions are so wide it's easy to be right. If I said she will fall over next week, now that requires more thought and credibility. SS never does that.

You sold out for the right reasons, you read the news, didn't like it and got out.

Now, bads news has come and gone, there is an uptrend, so one can assume you have purchased once again.

[isaready] 27/10/2016 11:43

The trend is up, bad news is in the price, now os the time to buy, simple as that .

[isaready] 27/10/2016 08:56

looks like the impending crash to 4p, fundraising will not happen sheepshag.

[isaready] 26/10/2016 20:55

I am waiting for sheshag to say something.

[culford] 26/10/2016 15:08

They were near to break even a few years ago, but after raising c£30m i believe from Oppenheimer and others, decided to go for international growth, particularly in Asia. This has caused costs to rise substantially. Growth has been good and they did the same number of transactions in Q1 to September 2016 (2.3m) as in whole year to June 14 - i.e a 4 fold increase in just over 2 years. They are now forecasting c50 million transactions or 6 fold growth in five years time, which is very achievable at anything like current growth levels. The break even Q4 is the 3 months to June 2017 - not too far away now....

[isaready] 26/10/2016 12:18

Culford, I agree, if the meet their targets. It's been slow though, maybe they have readjusted the offering, the clients etc and now are on an upwards trend.

Only time will tell, but if the interims are showing improvement, we will be able to predict if they will be close to breakeven in Dec 2017. That's a promise they have made a good few times, though, it looks promising indeed.

[culford] 26/10/2016 12:03

The capital markets day presentation is very useful analysis:


The company is expecting to grow at 40-50% per annum long term.
If we take the mid point of its forecasts, in 5 years its revenues will be 50m transactions at c£2.5 = £125m. Its gross margin should be c£90m and its net profit c£37.5m. A low capex, fast growing, high margin business would be on more than 20x in current markets, or £750m or 10x the current valuation. That implies a discount rate of c60% which seems way to high for a business that has proved its model, added significant clients in 4 different market sectors and whose Q1 transactions at 2.3m were more than for the whole of the 2013/4 financial year.

A more realistic discount rate would be 30%, which would equate to a £200m market cap now, or c45p per share rising to 58p this time next year. If the company meets its targets as set out in the presentation below, this is where its shares should re rate to.

[culford] 26/10/2016 11:28

Quick sense check:

The overheads were £25.8, including £2.9m of amortisation - giving a cash overhead of £22.9m. The gross margin is 70%, so to reach cash break even the revenues need to be running at £22.9m/70% = £32.7m.
That is revenues up £32.7m/£22.8m or 43%.

Transaction numbers grew at 91% in Q1 2016/17 to 2.3m, but revenues only grew at 34%. This seems to be a combination of falling professional income (down 33% last year) and declining revenue per transaction (down from £4.7 to £3.1 last year).

If revenue per transaction is to be £2-£3 long term, as per their capital markets day presentation, then transactions need to grow to 10.9m - 16.3m for company to reach cash break even.

A growth of 91% for full year would be 12.5m transactions, in bottom half of this range. 91% is equivalent to 17.5% per quarter - which would take Q2 to 2.7m, Q3 to 3.2m and Q4 to 3.7m transactions. Q4 annualised would be 14.8m transactions which would be breakeven if revenue per transaction was £2.2.

All in all their forecast of cash break even by Q4 looks credible.

If revenues for year grew at 34% to £30.5m - then gross margin at 70% should be at £21.4m, meaning the cash operating loss in 2016/7 would be (£22.9m-£;21.4m = £1.5m). This should mean that their £14m cash reserve should easily get them through to cash break even and profitability, even with further capex.

All in all Earthport should look very strong by this time next year and the issue will turn back to what is the right price for a fast growing global payments business with recurring revenues and 70% gross margins?

[caradog] 26/10/2016 10:07

Chadders
You may well take exception to the way SS expresses his/her opinion, and although he/she has overestimated the loss, he/she is not far out.
In the past, the company has been careful to reassure investors that the small negative effects of "unrealised fair value adjustments" should be ignored, as they are unlikely to be actually realised (see note 12). No such reassurance is given this year about the whopping plus 8 million adjustment. Strip this out and you have a loss of 16 million. Admittedly, this does include the exceptional 5 million Baydonhill loss. Even so, a very poor performance.
At the heart of the concern is the poor growth. Revenue increased 18% during the year, compared to a 90% increase in cost of sales and 29% increased in administration costs. It seems that growth in revenue is not following the growth in number of customers, i.e. existing clients are not putting more busines EPO's way. The chairman and CEO allude to this, with both saying that EPO needs to concentrate on "harvesting" or "leveraging" existing relationships.
At this stage of its development, Earthport should not be seeing growth in revenue lagging way behind growth in costs.
If it can't attract growing revenue from existing clients, then I don't see a future for the business, as the competition won't be standing still.