Fonix Share Discussion Threads

[rivaldo] 20/7/2023 11:22

Finncap have reiterated their 270p target price.

They summarise:

"Strong trading drives FY23 upgrades of +4-5%

In today’s trading update, Fonix has announced FY23 gross profit +5% ahead at £15.1m, adjusted EBITDA +4% ahead at £11.6m, and confirmed confidence in the group’s prospects for FY24 and beyond. FY23 TPV of £268.1m is +1% ahead of our previous forecast, the platform engaged with a record 19m customers in FY23, and customer retention has continued at 100%. Both the payments and messaging segments delivered over +16% yoy gross profit growth, and scaled gross profit as a % of TPV to 5.6% from 5.1% in FY22.

The FY23 launch in Ireland has demonstrated robust progress, with 16% of the Irish adult population already using Fonix’s platform for a payment transaction, and all three tier 1 media clients in Ireland now live on the platform. The success of the Irish operation provides an excellent blueprint for expansion into other international markets, as Fonix aspires to be the world’s leading provider of interactive services.

Following tier 1 client wins and expansions in the UK and Ireland, including ITV in March, the outlook confirms a strong revenue run-rate for FY24, with a growing pipeline of prospects across all sectors and markets. After today’s update drives upgrades of +4-5% for FY23 gross profit and adjusted EBITDA, we conservatively reiterate our FY24 forecasts at this point, and look forward to further detail at the FY23 results on 21 September.

As the platform scales, it is continuing to generate strong growth in underlying free cash flow, and the board intends to grow the dividend in line with the progressive dividend policy to pay out at least 75% of adjusted EPS. We reiterate
our target price of 270p based on 3% FY24E EFCF and dividend yield, and as Fonix continues to deliver upon the investment case by expanding with existing clients and winning new clients from a growing UK and international pipeline, we look forward to further updates on international launches, and new contract wins."

[rivaldo] 20/7/2023 06:23

Great to see the year end trading update coming in ahead of expectations - the £11.6m EBITDA compares well to Finncap's £11.1m forecast (and more than the "marginally" ahead noted in the statement imo!).

The main drivers for growth continue to gather steam, with Ireland in particular growing quickly and well ahead of expectations. The third tier 1 media client launch bodes well for the current year.

Both payments and messaging grew a very handy 16%, only held back by a decline in charity TPV which is much lower margin anyway.

And the outlook is extremely confident:

"Outlook:

With high levels of repeating revenue, a strong run-rate entering the new financial year, recent tier 1 wins in the UK and Ireland as well as a growing pipeline of client prospects across all sectors and markets, the Board continues to be confident in the growth potential for Fonix going into FY24 and beyond.

Rob Weisz, CEO, commented:

"We are delighted to announce another year of strong profitable growth. We started the financial year with an ambition to be a market leader in a second territory within two years of launch and have achieved that feat in the first year. In recent months, we have announced significant new contract wins in both the UK and Ireland, underpinning our growth expectations for the year ahead and furthering our aspiration to be the world's leading provider of interactive services.

As well as clear growth opportunities in our existing markets, we now also have a proven template for success in international markets, which we will look to replicate and announce as and when other new territories are making a meaningful contribution to our growth."

[igoe104] 20/7/2023 06:18

Very good update from FNX good double digit growth..

[starpukka] 14/6/2023 22:35

Why today's rise ? If it was due to Soccer Aid, wouldn't it have occurred earlier in the week ?

[rivaldo] 14/6/2023 14:23

Yep, continuing the upward trend since IPO in 2020 and bouncing off the, erm, quintuple bottom :o))

[igoe104] 14/6/2023 12:47

Nice jump today.

[igoe104] 11/6/2023 17:50

FNX should do well out of soccer aid tonight, lots of transactions to be processed.

[rivaldo] 18/5/2023 06:12

Glad to see FNX's EBT planning to buy in up to 250,000 shares.

I like the sound of:

"The directors believe that conducting a small buyback of shares is a good use of the Company's large and growing cash balance"

[red ninja] 06/5/2023 16:43

From Fonix's Linkedin feed :-

CARRIER BILLING SPEND TO REACH $122 BILLION GLOBALLY BY 2027, AS REVENUE EXPANDS BEYOND CONTENT PURCHASES

[igoe104] 29/3/2023 15:10

Also 99% income is of a repeating nature.

I already hold big chunk of these, but I wouldn't mind adding more, fancy these to muti-Bag over the next 10 years. Especially as they expand into loads of new territories...

[hydrus] 29/3/2023 15:05

I don't think just looking at the numbers is sufficient to understand whether this is expensive and or good value.Fonix become completely embedded in the commercial ventures of their clients, generating new revenues that were not there before they helped them. This is the reason they never, ever lose major clients. Management are conservative and expanding carefully. I believe this is a sustainable, high quality business and it will do well for many years. It looks cheap to me because of those reasons.

[igoe104] 29/3/2023 14:54

Adam its down to seasonality of the trade of the significant media customers. Thats why they are first half weighed...

These look a solid investment , as the world adapts to more mobile payments plus FNX have lots of global markets to aim for..

They have just entered Austria, Germany , Ireland..

[igoe104] 29/3/2023 14:27

Good writeup up here.

[adamb1978] 29/3/2023 08:03

Hi

Can someone remind me here of seasonality in this business? I previously held but can't find it in my notes. Reason for asking is that H2 has been lower than H1 in the last two financial years and trying to get a handle on FY23 outturn. Valuation feels warm at something like 20x PE and 15x EBITDA and <5% FCF yield, but trying to confirm that view.

Adam

[igoe104] 27/3/2023 19:07

FNX talked about as a possible muti- Bagger by Chris broxell
(about 17 minutes in)

[rivaldo] 23/3/2023 08:29

Gone ex-div today which explains most of the early markdown.

[rivaldo] 21/3/2023 11:07

Interesting that in their new presentation ro analysts on Research Tree the CEO talks about international partnerships in Austria and Germany - I was unaware of (or had forgotten!) the latter.

And in addition to the two "tier 1" clients who've now gone live in Ireland, one more should go live in the next 12-18 months which would leave FNX "dominant in that space".

[starpukka] 15/3/2023 15:57

Having re-entered @ 198, I have done something I rarely do and averaged down; buying further @ 193.

[rivaldo] 15/3/2023 09:09

Investors Champion are also very keen on FNX - subscription only though:



"Mobile payments specialist continues to impress
13/03/2023
Fonix Mobile (FNX)

This fast growing mobile payments specialist has announced excellent interim results. This business has delivered fabulous returns since arraiving on AIM in 2020. With an enticing dividend yield, on top of the strong growth potential, it remains an exciting one to follow as you can discover below.

Founded in 2006, with a track record of strong growth and profitability, Fonix Mobile (LON:FNX) is a UK focused mobile payments and messaging company.

For its last full financial year ending June 2022 (over a period when many businesses struggled) its small team of 40 or so talented individuals based in London grew revenues 12% to £53.6m and profits by 16% to £9.7m, resulting in an attractive operating margin of 18% and an even more compelling 120% return on equity. It has the added attraction of an extremely cash generative operating model, which we cover in more detail below....."

[rivaldo] 14/3/2023 22:21

Tipped tonight by the IC's Simon Thompson (I suspect he's following me around my favourite companies as yesterday he tipped MWE too!):

[starpukka] 14/3/2023 11:25

Re-entered today @ just under 198

[rivaldo] 13/3/2023 15:00

FYI here's today's Finncap investment summary and rationale for their 270p target price:

Extracts:

"Strong H1 23 with +12% gross profit and +18% DPS growth

Fonix has announced strong H1 23 results, with +12% gross profit growth, +12% adjusted EBITDA growth, and underlying net cash of £8.4m due to EFCF of £5.1m. Commercial customers have driven mobile payments and mobile messaging growth of +13% and +18%, and gross profit as a % of TPV has increased to 5.7% from 5.1% in H1 22 due to lower charity volumes.

The 3 March ITV announcement makes Fonix the de facto SMS interactive services partner for broadcasters in the UK, and it is focused on becoming the leading payments partner for all broadcasters in Ireland in the next 18 months, following a second tier-1 broadcaster win and Irish mobile network operators experiencing levels of payments growth that have never been seen in the market.

Firm control of operating costs has enabled adjusted EBITDA growth of +12%, including investment in further international expansion, upgrading the infrastructure to double the platform’s peak capacity to over 5,000 transactions per second, and scaling the sales team. 83% of adjusted EBITDA has converted to underlying EFCF of £5.1m, which has driven net cash to £8.4m after the final FY22
dividend payment of £4.5m. The board’s confidence has enabled an +18% increase in the interim DPS to 2.36p, and the outlook confirms that trading is comfortably in line with expectations.

After we upgraded FY24 gross profit and adjusted EBITDA by +3% on 3 March, we increase FY23 EFCF by +2% due to lower working capital, and conservatively reiterate our remaining forecasts and target price. As Fonix continues to deliver on the investment case, we look forward to further updates on international launches, new contract wins, and FY23 results in September."

"Valuation

- We value Fonix at 270p based on 3% FY24 EFCF and dividend yield, and it is currently trading on 17x 12-month forward EV/EBITDA with +12% NTM EBITDA growth, 4% EFCF yield, and 3.5% dividend yield.
- Fonix’s listed peers are currently trading on 8-19x EV/EBITDA with -2% to over 100% NTM EBITDA growth, and average EFCF yields of 2-4%.

We value Fonix at 270p based on 3% FY24 EFCF and dividend yield, and it is currently trading on 17x 12-month forward EV/EBITDA with +12% NTM EBITDA growth, 4% EFCF yield, and 3.5% dividend yield".

[kalai1] 13/3/2023 12:51

Fonix Mobile plc posted solid Interims for the HY to December 31st this morning. Revenue was up 14.7% to £32.8m, adjusted EBITDA up 12.7% to £6.2m and adjusted EPS up 11.4% to 4.9p. The outlook appears to be equally solid, performance is comfortably in line with expectations and the business has a strong pipeline of opportunities going into the second half of the year. Valuation looks a little unhelpful with forward PE ratio at 22.6x after a 12-month rally. The share price also appears to have entered a correction in March, it remains to be seen how long it lasts. There is no rush to buy here, but the business has a solid b/s and is focused on delivering more growth and profitable growth. Certainly worth monitoring for the longer run...

...from WealthOracle

[rivaldo] 13/3/2023 07:22

Excellent H1 results out today - it looks to me like expectations for the year will be beaten.

FNX achieved 56% of forecast EPS for the year in H1, leaving only 44% to be achieved in H2, so even with a slight H1 weighting there's a high probability that current forecasts are undercooked.

FNX are well financed with £8.4m net cash, and the optimism about the pipeline of new work and the general H2 outlook is encouraging. The H1 results from the growth in Ireland look great:

"by their own admission, since connecting Fonix, Irish mobile network operators are experiencing levels of growth never seen in the market before"

And the operational highlights are worth repeating, particularly the spectacular recurring/repeating income:

" -- Record levels of commercial trade were achieved in December, including 85 million SMS messages processed in a single month.

-- A second, tier 1 media went client live in the Republic of Ireland, our first international market.

-- Significant upgrade of technical infrastructure, doubling the peak capacity of key Fonix products.

-- Fonix continues to maintain high client retention, with over 99% of income of a repeating nature.

-- 100% platform uptime in the period.

-- Fonix's key service lines of payments and messaging have each grown in the Period and the business retained a growing pipeline of enterprise prospects going into H2 FY23.

Post Period End

-- ITV Plc, the leading UK TV broadcaster, has agreed to gradually extend its commercial partnership with Fonix to include SMS billing payments, alongside the existing relationship for carrier billing and charity services."

[rivaldo] 03/3/2023 08:59

Finncap have today raised their target price here to 270p.