Fonix Share Discussion Threads

[lammylover] 24/9/2024 12:53

Covered by Simon Thompson again this morning in Investors Chronicle

"Fonix's international expansion presents a repeat buying opportunity"

Simon Thompson: A mobile payment technology group delivering double-digit growth looks set fair as it taps into more overseas markets
Fonix's international expansion presents a repeat buying opportunity.


"Mobile payment technology group Fonix Mobile (FNX:232p) flagged up its record annual results in a pre-close trading update when the directors upgraded their earnings guidance. House broker Cavendish pushed through mid-single-digit earnings upgrades at the time (‘Fonix’s earnings upgrade cycle is far from over’, 22 July 2024).

Founded in 2006, Fonix’s core activity is offering a mobile payments service that enables merchants to charge customers for products or services (mobile ticketing, gaming, parking, dating, charity donations), turning the mobile device into a cash register while offering convenience for consumers. The London-based group has a blue-chip client base heavily weighted towards the media sector, the segment accounting for nearly 80 per cent of last year’s gross profit of £17.9mn.

The double-digit increase in transaction volumes processed in the 12-month trading period was driven by a combination of domestic growth and international expansion. Fonix has successfully cracked the Republic of Ireland, having launched services less than 24 months ago with Bauer Ireland, RTÉ (Ireland's National Television and Radio Broadcaster) and Wireless Radio Ireland, along with several smaller clients in the country. For instance, Fonix’s live broadcaster voting services support Eurovision voting across both the UK and Ireland, along with RTE’s telephony voting services.

The customer-led roll-out in Ireland is being used as a blueprint for low-risk expansion into other well-regulated overseas territories. Expansion into the Portuguese market is imminent, having been initiated by one of the group’s multinational media clients with a strong presence in the country. Fonix has developed a robust pipeline of potential clients across both TV and radio broadcasters and plans to start processing transactions in Portugal ahead of the Christmas trading period. The international segment accounts for 12 per cent of group gross profit, a weighting that can only increase as more overseas markets are targeted.

Total payments volume up 13 per cent to £303mn
Annual revenue up 17 per cent to £76mn
Full-year pre-tax profits up 27 per cent to £14mn
21 per cent higher earnings per share (EPS) of 10.8p
Dividend per share hiked 14 per cent to 8.3p
Mobile payment technology group Fonix Mobile (FNX:232p) flagged up its record annual results in a pre-close trading update when the directors upgraded their earnings guidance. House broker Cavendish pushed through mid-single-digit earnings upgrades at the time (‘Fonix’s earnings upgrade cycle is far from over’, 22 July 2024).

Founded in 2006, Fonix’s core activity is offering a mobile payments service that enables merchants to charge customers for products or services (mobile ticketing, gaming, parking, dating, charity donations), turning the mobile device into a cash register while offering convenience for consumers. The London-based group has a blue-chip client base heavily weighted towards the media sector, the segment accounting for nearly 80 per cent of last year’s gross profit of £17.9mn.

The double-digit increase in transaction volumes processed in the 12-month trading period was driven by a combination of domestic growth and international expansion. Fonix has successfully cracked the Republic of Ireland, having launched services less than 24 months ago with Bauer Ireland, RTÉ (Ireland's National Television and Radio Broadcaster) and Wireless Radio Ireland, along with several smaller clients in the country. For instance, Fonix’s live broadcaster voting services support Eurovision voting across both the UK and Ireland, along with RTE’s telephony voting services.

The customer-led roll-out in Ireland is being used as a blueprint for low-risk expansion into other well-regulated overseas territories. Expansion into the Portuguese market is imminent, having been initiated by one of the group’s multinational media clients with a strong presence in the country. Fonix has developed a robust pipeline of potential clients across both TV and radio broadcasters and plans to start processing transactions in Portugal ahead of the Christmas trading period. The international segment accounts for 12 per cent of group gross profit, a weighting that can only increase as more overseas markets are targeted.

High operational gearing

The other major benefit of scaling up international operations is that Fonix has a relatively fixed cost base and a highly scalable technology platform, so it benefits from high operational leverage in a positive revenue cycle.

In fact, more than 80 per cent of incremental gross profit earned in the 12-month trading period dropped through to operating profit. Moreover, the low capital requirements of the business mean the group is a prodigious cash generator. Underlying cash, which excludes cash held on behalf of customers increased a fifth to £11.3mn, and that’s after making £2mn of share buybacks in April 2024 and paying out £7.5mn in dividends. Interest income trebled to £1.1mn in the period, too.

Even allowing for increased capital spend in the current year, and lower finance income as interest rates fall, the group is still forecast to generate free cash flow of £10.1mn (10.1p), a sum that comfortably covers house broker Cavendish’s payout estimate of 8.8p, which underpins a 3.6 per cent prospective dividend yield. This is based on a conservative-looking pre-tax profit estimate of £14.3mn, which offers ample scope for upgrades as the new financial year progresses.

Admittedly, Fonix’s progress has not gone unnoticed as the shares have delivered an 84 per cent total return since I initiated coverage and now trade on a price/earnings (PE) ratio of 21 (Alpha Research: Bargain opportunity to play the mobile payments boom’, IC, 5 August 2021). However, management’s track record is mightily impressive and the international growth strategy is being executed well, so it’s a price worth paying. Cavendish’s 300p target price is not unreasonable and recent profit-taking is a repeat buying opportunity. Buy.

[kirkie001] 24/9/2024 11:47

Hi Bamboo - the rolling RNS news link that shows the last 5 RNS's or so.... Cheers! ;)

[rivaldo] 24/9/2024 10:52

Cavendish have retained their 300p price target, and have slightly increased their EPS and dividend forecasts for this year to 10.9p EPS and 8.8p respectively, describing them as conservative. I'm all for underpromising and overdelivering, but I suspect the EPS forecast is rather overdoing it.

They summarise:

"Following excellent progress through FY24, we look forward to updates on international launches, new contract wins, the January trading update, and potential additional shareholder returns from surplus cash."

"A robust investment case –

As we explain from p3, Fonix is focused upon leveraging its highly scalable, cloud-based platform to expand with existing clients and win new clients as mobile
payments continue to scale. The structural strength of the platform is demonstrated by no churn from major customers, and it is diligently expanding its market-leading technology outside of the UK when led by existing clients, including becoming the market leader for interactive services in Ireland less than one year after FY23 launch.

We expect that any upside to our conservative forecasts would benefit from strong operational gearing through to EFCF, which would be returned to shareholders
through the progressive dividend policy and potential additional shareholder returns."

[bamboo2] 24/9/2024 09:46

Hi MJ, this problem with the live chart indicators has occurred before [on the IPO thread], but I can't remember how I cured it. I'll look into it. Unless anyone else has any bright ideas?

[melton john] 24/9/2024 09:30

Bamboo, I use macd chart all the time on Stocko and they show the signal lagging the macd rather than leading as your Advfn chart does. As the signal is the 9day MA of the MACD it makes perfect sense that it should lag. Do you think ADVFN have it wrong?

[johndoe23] 24/9/2024 09:22

Added. Can't buy any size either...

[rivaldo] 24/9/2024 08:40

Bamboo, please can you also tick the box for the fundamentals (market cap etc) in the header post. Ta.

[bamboo2] 24/9/2024 08:33

Hi Kirkie, do you mean a rolling rns 'news' link, or a link direct to the latest figures?

[kirkie001] 24/9/2024 08:31

Bamboo - can you add the RNS links into the header for the thread, please? TIA!

[johndoe23] 24/9/2024 08:11

Flat thus far this market is crazy

[bamboo2] 24/9/2024 07:51

Final Results for the year ended 30 June 2024 (the "Year")

Strong trading momentum continues with significant growth in key markets and an expanded commercial offering

Operational Highlights

· Strong growth in gross profits of 18.5%, which management considers to be the business' most important performance metric, driven by growth in the media sector and increases in enterprise messaging.

· The total payment volume ("TPV") processed in the Year grew by 13.1% to £303.3m (FY23: £268.1m).

· For the first time, the Company facilitated payment transactions via Apple Pay, Google Pay, PayPal and bank card as part of an expanded business strategy including the development of online payment portals.

· Fonix's commercial business segments of payments and messaging have each grown by at least 16% in the Year, in line with expectations. The business maintains a robust pipeline of prospects going into the next financial year.

· Overseas markets represented approximately 12% of gross profits for the year.

· Significant investment in new product features in the Year, including live broadcaster voting, online payment portals, new payment integrations, new mobile network operator connections and advanced campaign scheduling.

· Selected to support Eurovision as voting partner for the first time, managing voting for Eurovision 2024 across two territories - the UK and Republic of Ireland.

· Robust, scalable platform with 23m (FY23: 19m) unique mobile users interactions with Fonix's services in the Year, with 100% platform uptime as in previous years.5

· Fonix continues to maintain high client retention.

· Increased dividend inline with progressive dividend policy.

The Board expects to publish its Annual Report for the year ending 30 June 2024 on the Company's website on Friday 25 October 2024. The Annual General Meeting is scheduled to take place on Tuesday 19 November 2024.

Outlook

The Board remains confident in Fonix's growth potential for FY25 and beyond, supported by high levels of recurring revenue with a strong run-rate, an expanded commercial offering, and significant opportunities for further international expansion.

[rivaldo] 24/9/2024 07:40

Excellent results and a very confident outlook. Plus an 8.3p dividend and an £11m+ cash pile. And many avenues for growth going forward.

Note in particular:

"We have already made strong progress in identifying several promising international markets, which we are now beginning to explore further."

Today's big reveal of Portugal sounds extremely promising with its pipeline of clients and "significant growth potential":

"Our strategy for international expansion remains client-driven, as demonstrated by our imminent expansion into the Portuguese market, which was initiated following a request from one of our multinational media clients with a strong presence there. By collaborating with local partners, we have subsequently successfully developed a robust pipeline of potential clients in Portugal across both TV and radio broadcasters. We are confident that this market offers significant growth potential for the business in the coming years and our current expectation is a similar growth trajectory to our Irish business."

[lauders] 24/9/2024 07:18

Portugal is the new international country.

With imminent new network operator connectivity in Portugal, significant new customer prospects and increased dominance in the markets it operates, the board looks to the future with much confidence.

[johndoe23] 24/9/2024 07:12

Cracking results

[mr dexy] 20/9/2024 11:47

Hi All,

I thought the trading update was very good.... so hopefully the results reflect that.

This from the trading update stuck in my mind :

"The board continues to review options for the return of surplus cash to shareholders following the share buy-back in April 2024."

Regards to all.


Mr D

[johndoe23] 20/9/2024 10:18

Nice to see an uptick this morning. Expecting results to be very solid.

[tonytaxi] 20/9/2024 09:21

That seems to be a good contract with Just Giving. Does anybody know the % commission FNX would charge?

[philly cheesesteak] 19/9/2024 11:45

The results on Tuesday should be a catalyst. The 22nd July TU notified that gross profit and earnings were ahead of expectations, shares responded by jumping to 260p, before being shut down by the early August volatility. Since then they have been rangebound around the 200DMA.

Further, after the release of the March interims shares ran from 242p to 290p in a few days.

This is a wonderfully simple business model which is starting to really benefit from it's growing scale. News on international expansion is exciting and has the potential to take it to the next level.

I'd also add that FY25 forecasts currently look light given FY24 revenue has seen incremental growth of around £11m YoY to £76.1m. Cavendish currently have £81.1m pencilled in for next year, which seems primed to be upgraded, especially in light of said international expansion -

"Looking ahead, we are making steady progress on our plans to enter a new territory in mainland Europe, with several TV and radio broadcasters lined up to trial services once we launch in the region. We are optimistic about starting to transact in this new market during FY25 and we hope to be able to give further details at the full results in September."

[johndoe23] 19/9/2024 10:48

Share price range bound for a while, needs something

[lauders] 19/9/2024 09:06

Hope this new thread and the latest news mark the beginning of a major lift in the share price over the coming months. Look forward to the results next week.

[rivaldo] 19/9/2024 07:11

Cheers igoe104, good news. This could be pretty rewarding for FNX as JustGiving have 20,000 charity partners and raised £550m last year.

[bamboo2] 18/9/2024 20:16

New thread with charts in header etc

[bamboo2] 18/9/2024 20:12

Fonix and JustGiving partner to introduce SMS donations to thousands of UK charities

18/09/2024

We’re thrilled to unveil our new strategic partnership with JustGiving, the UK’s leading online fundraising platform. This collaboration is set to transform charitable giving by integrating seamless SMS donation technology, making it easier than ever for individuals to support causes they care about.

Fonix and JustGiving are joining forces to offer donors a quick and secure way to contribute through mobile payments. Thanks to Fonix’s advanced technology, JustGiving users can now make donations directly via SMS – no credit or debit card needed – whether they’re at home or on the go.

This partnership not only streamlines the donation process for supporters but also equips charities with a powerful new tool to connect with donors and boost their fundraising efforts. By incorporating SMS donations, charities can broaden their reach and significantly enhance their impact.

The potential here is huge: according to the Annual Market Review for Phone-Paid Services 2023–2024, in 2023 alone, £38.6 million was raised through phone-based donations in the UK. Since 2014, Fonix has helped process a staggering £333 million in SMS donations. Offering this capability to JustGiving’s 20,000 UK charity partners represents an opportunity for those numbers to climb even higher.

This partnership arrives at a momentous time, as JustGiving reported a record-breaking £550 million raised for nearly 20,000 UK charities in 2023, along with more than 950,000 fundraising pages set up – a 9% increase from the previous year.

With Fonix and JustGiving both committed to advancing charitable giving, we can’t wait to see the incredible impact this partnership will have on the future of donations!