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kensington

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21/06/17

16:03

Post #: 25410027
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Originally posted by hotmix87 ↑

Research update

iSignthis (ISX) $0.14
Recommendation: BUY
Analyst: Martyn Jacobs Tel: 03 9242 4172

Event

ISX has announced it has established a cross listing of its existing shares on the Frankfurt Stock Exchange (FSE). This means that Australian investors will face competition from Pan European investors for the one pool of shares. There is no dilution and no capital raising involved.

ISX has also provided its first transaction data, providing the number of transactions over the past four quarters, with 4QFY17 yet to be finalized. It shows that transaction flows are escalating from a currently limited client base, and which should expand significantly over the course of CY17. Transactions are currently c460k / qtr and have hit c1m transactions in total. We expect most of this is currently through Coinify, but its share of the transaction flows should reduce substantially as other existing clients begin to ramp up, not to mention the impact of new clients that go live.

This data has been independently verified by Google Analytics that is contained in the announcement, which shows that session times for each transaction is c5&1/2 minutes with c98.5% success rate. This independently certifies the principle claim of ISX that it’s system can identify verify and process transactions in quick time and significantly faster than any other option available to merchants across multiple international jurisdictions.

The map provided in the announcement is a google analytics map illustrating the global reach of the ISX platform. The last three months of data shows that this very early stage business is already generating transactions on each continent and through most countries. This should be understood as a remarkable achievement and illustrates the scale and leverage its system offers investors.

ISX has also indicated on page 18 of the presentation that it can solve for both payment data protection as well as personal data protection. Under the General Data Protection Regulations (GDPR). Privacy Commissioners across the EU can fine merchants for data breaches of cEUR10m. Should we start to see such fines being publicized, it would serve to bring greater attention to ISX’s solution offering. This is separate from any breaches under the Anti-Money Laundering Directive (AMLD).

Impact

The Australian market has to date struggled to grasp the magnitude of the platform and connectivity that ISX is building. The cross listing on the FSE should enable Pan European investors to participate in ISX shares and assist in enhancing the depth of understanding of the ISX business by the whole investment community. As with the ASX listing, this move should also expose ISX to the market to aid the development of its business and expose the market to ISX as a potential business solution.

Transaction flows are still in their infancy but the greater transparency will provide a benchmark with which to assess the performance of ISX in future periods. The improved transparency should also be seen as a sign of confidence by ISX in its prospects and future trajectory.

Even at this early stage, the google analytics data is highly significant and should enable the market to begin to extrapolate current transaction flows into future estimates.

We estimate that data for 4QFY17 suggests annualized recurring revenue is up to $0.5m, which excludes one-off and integration fees. While it is still in its infancy, we expect transaction flows to rapidly increase from here

We expect Google’s global reach map to be disclosed in future periods and show deeper penetration across the various jurisdictions, and this would independently verify the transaction flow experienced at ISX. In time Google data should prove highly significant for the market understanding of ISX’s performance

While our FY18 forecasts imply a hockey stick type escalation, confidence is growing that this may be achieved, and we expect further announcements over the next quarter to support that forecast.

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That's a fantastic plug for ISX...this is a hold LT
ISX Price at posting: 14.5¢ Sentiment: Buy Disclosure: Held
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0 Great analysis

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