These are the same issues I struggle with as well. There is never going to be some bit of data that will give us the ability to with analysis give a numerical output of what the likely marketshare outcome will be. At the end of the day it is a bit of a realistic gut feel informed by recent run rates. At the end of the day I sorta get to that 15-20% range as well. Sure they could get more if they went into loss making mode (would be loathe to see that) or even on just a pure status quo / pari passu basis but at some point you have to imagine a more robust competitive response comes into play.
The 250k available terminals is a BOE by the company...roughly 1m terminals in the market and realistically 25% that can be penetrated (the big corporate retailers are not the target market). At September 2022 there were 966k eftpos terminals registered with Auspay but those as I understand are only those deployed by providers with an ADI (ie mostly banks) and won't include players like Smartpay and Block.
Like Madamswear, long term I'm weary of technology risk. I'm hopeful that the technology is more of an evolution and SMP evolves with it. As at the end of the day a retailer needs an interface that can accept multiple forms of payment and can in a few seconds securely transmit the data back (with full PCI compliance) back to the card network & issuer (or equivalent for other forms of payment), provide the critically surety that the funds are good and its okay to release the product, then settle the transaction. When I initially started looking at smartpay I was concerned it was just a credit card business (which to be fair may have some residual tailwinds from contactless payments and move from cash) but got more comfort it could accept QR and digital wallets which in turn facilitate things like bnpl.
The release of the android proposition should put the company in good stead in the near term.
I'd imagine the physical nature of the interface will change from the traditional terminal (and we can see that happening as they get slicker) to something that more closely resembles a tablet and I see no reason why SMP can't participate in that. There are multiple versions and generations of terminals out there in the SMP fleet already.
For my own personal valuation purposes I run a 15 year model - with a DCF and then a return model based on a multiple of EBIT in 5 years discounted back to NPV...the later is far higher because I'm a wuss in my extended forecasts...I wanted to see what happens if you assume growth, then stability, then annual reductions in terminals coupled with a commiserate negative terminal growth rate. I prefer the multiple of EBIT as its more market based but I wanted to have a sense check given the inherent risk in a technology / payments business. At the end of the day, even removing technology risk, payments can be disrupted by a new or clever idea - indeed SMP is a disrupter with its clever smartcharge solution.
SMP Price at posting:
$1.22 Sentiment: None Disclosure: Held
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