Ann: Appendix 4C - 3Q FY19, page-266

So for those of you here that can only bring themselves to read positive and happy things and generally like getting round with blinkers on, I thought I'd put together an censored compilation of only positive/neutral things I've said in the last few days.

Print it off, hang it up on your wall and read it every morning and be sure, whatever you do, not to be open to any other possibilities.

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If all is cleared then great as the business is performing well and it returns to being a compelling buy as they just turned in a solid 4C.
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Some basic numbers to work off:

H2 required EBIT of $11mil (excl non cash items) to offset H1 EBIT of ($0.3m) and result in $10.7m EBIT for full year.

I agree it is reasonable to suggest EBIT for Q3 was $2mil - in line with underlying free cashflow and leaves $9mil EBIT to be acheived for Q4.

Revenue - $23mil
COGS - $11.5mil (50% GP margin)
= Gross profit of $11.5mil

minus $2.75mil fixed operating costs.

= EBIT $8.75mil.

So receipts in that $23-$24mil range will be required. Possibly less needed if ecosystem margin improves from current 52% from more contribution from EMAs as revs from that stream will mostly go straight to the GP line.
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If the company is given the all clear by ASIC and responds well again to this next round of queries from the ASX, then it will have cleared all the rumours and will be a compelling buy.
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As for what has happened since suspension:

I thought the initial line of questioning by ASX post suspension missed the mark and the company responded well.

The quarterly was solid, with underlying FCF of $2mil. I was expecting $3mil so all the more work to be done in Q4 but there is a significant runway of merchants to be onboarded.

The current business performance is robust and progressing well.

If all turns out fine and ISX are cleared then happy days I'll be the first in line to back the truck up.
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Using the 9 months to date you come out with a 52% Gross profit margin based on the 4C cashflow numbers. This is a guide only IMO but one that is still helpful.

There are different products/sub-products that will have stronger/weaker gross margin.

For example, EMA inflows fees charged at 100bps average would have very low/negligible COGS and they basically fully hit the GP line.

Whereas, card payments naturally have something closer to that 50% Gross profit margin. Where you may have a card payment charged at 300bps as top line rev (cash receipts) but then breaks down to 150bps (MSF/Gross Profit) and 150bps COGS - being interchange, card scheme fees or collectively regonised as Product Manufacturing and Operating Costs on the 4C cashflow statement.

EMA inflow is increasing faster than cards on % growth in the Ecosystem at the moment, evidenced by the over 100% increase QoQ of client funds held.

If EMA inflow/outflow continues to increase at a fast rate and makes up more of the whole ecosystem GPTV, then you will also see ecosystem GP margin increase above the current 9 month average of 52%.

The range of around $23-25mil in receipts for Q4 seems about right for ISX to meet guidance. It will be a big ask. GPTV runrate by the end of December will need to be something like $4-$5bil depending on how Oct/Nov go.

The positive slant is that even if they miss guidance by a small amount the growth will have been so heavily backended this year that it won't matter. If they pull in $20mil+ receipts in Q4 after $8mil this Q it will still be very good.
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Correct.

You can then further reverse engineer using the GPTV figure for the last three months to get 'an idea' of what GPTV should look like in Oct, Nov, Dec to see if they are on track for guidance.

Remember GPTV is now being reported as 'ecosystem'. So inclusive of various sources of revenue, including EMA money moving in/out of the ecosystem.
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Back of the coaster:

ISX will need to bring in $22-24mil in cash receipts in Q4 to be in the range of guidance.

They will need to generate EBIT of around $9mil for Q4 to hit full year guidance.
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You are on the right track.

You need to remember that you are using cashflow movements from the 4C so that means the timing of cash in/out does not necessarily correlate with revenue.

The reason that prod manufacturing/operating cost were higher relative to cash receipts compared to the ratio in Q2 is explained in the preso. There was a delay in interchange payment to Visa from earlier quarters that was made in Q3

Product manufacturing/operating costs in the 4C is primarily representative of interchange and associated costs of goods sold (COGS) of card processing for ISX. Broadly speaking (there are variables) it is fair to say an increase in prod manufacturing/operating costs is indicative that cash receipts will make a relative increase too.

You are better off calculating the ratio of cash receipts to prod manufacturing/operating costs from the full 9 months of FY19 to develop a ratio to then extrapolate out possible receipts for Q4. This will iron out the bumps in cash in/out from Q to Q and give a more accurate ratio to work off. It won't be exact, as receipts is inclusive of revenue from other sources (Probanx etc) but it will be close, as card processing makes up by far the majority of receipts.
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That's the last I'll be posting on the ISX HC forums.

As I have repeatedly said, if ISX are cleared of wrongdoing then the stock, in my view, remains a compelling buy and will have come through a level of scrutiny most listed companies have not had to deal with.

Best of luck to all holders.