Hello everyone,
I've taken a position back up in ISX, smaller that the one I previously held as I was heavily overweight in ISX and have directed some of that money elsewhere. Like I've said before, I am conservative and heavily focused on risk management. That isn't a necessarily a reflection of ISX but rather my own personal disposition to investing. Anyway...
I thought I'd add my 2c to today's announcement.
It is by all accounts a very impressive step up in GPTV processing for the month of Sept. of approximately $158mil ($1900m/12months) processed. It is consistent with previous commentary of this CY growth being heavily backended and is very much exponential in nature.
When comparing to my previous numbers, I had the GPTV and MSF% levers out of whack so to speak but the gross profit outcome is trending consistently with what I had expected. Essentially I was not allowing for as greater increase in GPTV but was being too generous with the MSF% that would be achieved. Management continue to state they are targeting an MSF average of 125bps and I think when crunching number, that is what should be used for the time being.
Based on today's announcement they are achieved around 125bps MSF on the GPTV from September.
I suspect that the sudden increase in GPTV aligning with the sudden drop in MSF being achieved is due, in part, to some large Australian based merchants being onboarded.
I say this because their Australian network is still operating under a "Tier2/3" system, so MSF being achieved in AU is likely to be less than 100bps, possibly quite a bit less in some instances. The positive with this though is that, like the situation previously in EU, once the AU infrastructure is in place and ISX has direct "Tier 1" network, they will be able to achieve similarly healthy MSF margins to those enjoyed in the EU. ISX are essentially concerning themselves with a land grab in AU at the moment whilst finalising the build out of their own infrastructure.
As mentioned before, another factor is that some merchants may also be larger and able to negotiate better rates and as such there is a lower MSF contribution.
So essentially my view is that the GPTV growth is very impressive and by all accounts, it has continued to grow at an exponential rate and there is no suggestion that this will change. If I'm accurate in that a good tick of the GPTV growth has come from AU, then we will see the associated volume from those merchants have a positive influence on the MSF margin down the track and in turn the EBIT line.
A good portion of this growth is more so hitting at the top line right now but down the track will transfer through more and more to the bottom line.
I won't be posting as often going forward as it appears I can be a bit of a polarising character here! I have posted my buying and selling in ISX previously but won't be going forward. In the case of the recent selling, I did post here to genuinely give others a heads up as I saw significant short term volatility.
For those concerned about ISX's merchant customer base, do some digging on LinkedIn connections or even website referral flow of isignthis.com through using similarweb.com and you will be able to identify some strong business customers such as Betsson Group (MC $1bil AU) listed on the Nasdaq Nordic exchange (BETS-B). Or an example of a reputable FX merchant in the AU market is FP Markets.
Anyway, I'll take a bit more of a back seat and will chime in every now and then to add my bit but I'll leave it to others to drive the day to day chat.
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