In an unsurprising move, Monitise, the UK mobile payments company, has issued its third revenue warning in a year and appointed advisers to consider a sale of the business, as it struggles with a painful change to its business model.
The lossmaking technology group said on Thursday it expected revenues for 2015 to be
flat at £90m-£100m, rather than growing 25% to £119m, as it had originally projected.
Monitise makes money by selling mobile banking software, but has been shifting its approach from working on one-off app development projects to becoming a financial services “platform” that banks and others customers can use – according to the FT.
As a result, it said its software licence revenue would almost halve in the first six months of 2015 to £4.4m, while the subscription and transaction revenues for its platform would grow by just 8% to £16.2m.
Monitise reiterated that it expected to be profitable in 2016, but also disclosed that it had appointed Moelis & Company to conduct a “review of all strategic options to maximise value for shareholders”.
News of a possible sale of the business caps a tumultuous year for the UK group, which was once a high-flying stock on London’s Alternative Investment Market, before losing 80% of its value in the past 12 months. Its shares were trading down 15% on Thursday morning at 17p.
Part of the problem for Monitise, according to analysts, is that as banks and financial services institutions now regard mobile technology as a core part of their businesses, and are bringing more work in-house. This makes them less willing to delegate it to third parties such as Monitise.
Last year, the company appointed Elizabeth Buse, a former Visa Inc executive, as co-chief executive alongside founder Alastair Lukies. It also signed a partnership with IBM to try to access Big Blue’s corporate client base, which also involved transferring 200 staff to the US tech group.
In November, Visa — one of the group’s long-time backers — had revealed plans to sell its stake in the company, but Monitise later announced deals that brought in Santander, Telefónica and MasterCard as major shareholders.
On Wednesday, the company said the number of registered end-users on its platform, a key metric for the new business model, grew by 9% to 33m between June and December last year.
Its gross cash at the end of the year was £129m.