Monitise Plc (MONI) Making Progress Despite Expected Revenue Miss: BTIG

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Monitise Plc (MONI)  released a trading update for the 2015 fiscal year, providing the fourth warning about revenue since the beginning of last year. However, the estimated miss wasn’t as bad as the previous ones were, and the company seems to be on track to hit its target of becoming profitability in EBITDA by fiscal 2016, believe analysts at BTIG.

Monitise Plc (MONI)  updates expectations

This morning Monitise Plc updated its fiscal 2015 revenue guidance to a range of between £88 million to £90 million. The company’s previous guidance was for revenue of between £90 million and £100 million. Management said they cut guidance mostly because of timing because they were still in talks for deals they expect to close in the next few weeks.

They did reiterate their goal of becoming EBITDA profitable sometime in fiscal 2016, which ends June 30, 2016. They also said that EBITDA for the second half of this year should be much better from the loss of £31 million Monitise posted in the first half of this year. Further, they expect to break even in EBITDA within the next few months, even if revenue growth is only modest.

Monitise transitions to subscriptions

The big problem Monitise is currently dealing with is the transition to a business model based on subscriptions. That transition has been underway since March 2014. In a report dated July 6, analysts Mark Palmer and Giuliano Bologna said the fact that the revenue miss this time is not as bad as previous misses suggests that Monitise’s business is stabilizing.

CEO Elizabeth Buse has made the company more focused on cost discipline. She has also turned marketing toward a simpler set of products on the standard Monitise Central Platform, which was launched in April and is based on API.

Still Buy-rated on Monitise

As of June 30, Monitise had £88.6 million in cash, a decline from the £129.1 million the company had on its balance sheet at the end of December. Despite that decline, however, the BTIG team noted that the cash burn rate has fallen in the second half of this year compared to the first half. They think the company’s cash balance will be “more than sufficient” to see it through the ongoing transition.

As a result, they reiterated their Buy rating and 52p price target on Monitise. Shares of Monitise declined 2.93% to £9.95 per share during regular trading hours on Monday.

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