I have read over the announcement a few times and looked at annual and half yearly reports to see how revenue is recognised and whether the costs associated with providing settlement services are recognised as an expense.
From what I can see expenses associated with settlement services are not recognised.
That therefore suggests to me that revenue figures already have that cost factored in. IE they don't actually have an expense outflow rather they just receive a different basis point percentage depending on what suppliers they are using. So what we were discussing earlier re: revenue still being high but margins softening is not entirely accurate. At least not when it comes to the performance shares milestones. Revenue from settlement services is being recognised with "expenses" already substituted.
I believe the most recent average basis point percentage was 100bps for settlement services.
I am thinking that due to the ongoing technical issues of having to funnel some settlement services through higher cost suppliers (ie they are getting a lower basis point percentage as revenue) they are finding it difficulty to provide an accurate guidance figure for the quarter. So they have chosen not to provide guidance at all rather than provide a figure that could be wildly inaccurate (which previous guidances have been).
If what I suspect is the case, they could have communicated this far more clearly.
I still think revenue is growing QoQ they just can't provide an accurate figure at this stage.
Once we add in some of the revenue generated from the new transactional service stream I am still thinking it will be $2m+ revenue this quarter.
ISX Price at posting:
16.5¢ Sentiment: Buy Disclosure: Held
