You might expect an 89% hike in transaction volumes and 64% jump in their combined value, to 'more than $11bn,' would have a dramatic impact on Earthport (EPO:AIM) losses. It has, but not as you might expect.
The global payments platform saw operating losses more than double to $£10.4m last year to 30 June as the cost of admin and development of the platform (extra functionality) ate through piles of cash. More than £13m last year, compared to £2.9m in the previous 12-months.
The company is banging the drum again today about hitting the breakeven mark in the fourth quarter of the new year, to 30 June 2017, and first ever profits beyond. But investors have heard this before. In August 2015 analysts at broker Panmure Gordon had forecasts in the market anticipating Earthport to post a 75% jump in revenues to £35 million. This, investors were told, would spark a £6.6 million pre-tax profit.
A scan of today's numbers show just how far short the company has fallen. Revenue of £22.8m, up 18% but way down on past growth rates, and a pre-tax loss of £7.2m. 15-months ago the shares were still trading in a 40p to 45p range, they are not any more, and the market's scepticism of a quick profits breakthrough is made tangible in the shares 3%-plus decline today to 15.75p.
'Earthport has proved that it can scale new customers quickly as well as extracting significant volume increases from existing customers,' say N+s Singer analysts today. 'With multiple catalysts on the horizon and a strong start to the year already achieved, we believe the group is very well-placed to gain a significant share of the vast cross-border payments market.'
But for all the talk of new financial institutions signing up to use the platform, and the vast transaction volumes that this supposedly implies, Earthport has still to demonstrate that it can generate any profit.
