As per various announcements, banks are not interested in awarding contracts of 100-150 ATM blocks anymore. They're looking to outsource larger contracts of 500+ to be executed within 6-12 months.
Every 500 ATM contract requires approximately $10M in CAPEX. Having this cash on the balance sheet is crucial for such typical contracts. ATMs require 6-12 months to reach full maturity and payback.
So if we break this down, AUD $10 million is required per each block of 500 ATM contract, which equals approximately AUD $20k per ATM before payback (AUD $10M / 500 ATMs = AUD $20k).
At an average of AUD $0.15c per transaction, the company would require approximately 133,333 transactions per ATM per 6-12 months just to break even, BUT, that is only for the 6-12 months, as after that each ATM would have reached their full maturity and payback would begin.
133,333 x AUD $0.15c x 500 = AUD $10M.
Let's work the breakdown out per 6 months, then 12 months.
6 months
AUD $20,000 / AUD $0.15c = 133,333 transactions per ATM per 6 months.
133,333 transactions per ATM / 182.5 days (or 6 months) = approximately 731 transactions per day / per ATM.
731 transactions per day x AUD $0.15c = AUD $109.65 per day.
AUD $109.65 x 182.50 days = AUD $20,011.
Therefore, to cover CAPEX of AUD $10M within 6 months, each ATM needs to bring in approximately AUD $109.65 per day.
AUD $109.65 per day x 182.50 days = AUD $20,011 x 500 ATMs = little over AUD $10M.
12 months
AUD $20,000 / AUD $0.15c = 133,333 transactions per ATM per 12 months.
133,333 transactions per ATM / 365 days (or 12 months) = approximately 366 transactions per day / per ATM.
366 transactions per day x AUD $0.15c = AUD $54.75 per day.
AUD $54.90 x 365 days = AUD $20,038.
Therefore, to cover CAPEX of AUD $10M within 12 months, each ATM needs to bring in approximately AUD $54.90 per day.
AUD $54.90 per day x 365 days = AUD $20,038 x 500 ATMs = little over AUD $10M.
Here's where it gets interesting...
TSI India almost reached 40 million ATM transaction volume growth first half year (i.e. in six months for H1 2015) on 1500 FULLY MATURE ATMs.
40,000,000 transactions / 1500 ATMs = 26,666 transactions per ATM per 182.5 days or (6 months).
Now how many transactions does that equal per day per ATM?
26,666 transactions per ATM / 182.50 days = 146 transactions per day per ATM.
146 transactions per day x AUD $0.15c = AUD $21.90 per day.
AUD $21.90 x 182.50 days = AUD $3,996.75 per ATM every 6 months.
Note, CAPEX of AUD $10M on these fully mature ATMs have already been covered. Revenue coming into the business equals approximately AUD $4,000 per ATM per 6 months.
AUD $4,000 per ATM x 1500 = AUD $6M, which is what the highlighted revenue figure was in the Operational Update dated 02/12/2014/.
Therefore on a 12 month projection, that would equal approximately AUD $12M in revenue coming into the business PER YEAR on 1500 ATMs.
Sure, that's not net profit coming through the business, but with more ATMs soon to be online and fully mature, that figure is only going to increase in recurring revenue.
This is why business relationships, reputation, cash, timing, contracts, sourcing the right sites, cost cutting and improving metrics is everything in this business and this company is certainly on the right path.
This business model has me extremely excited and why I'm finding it incredibly challenging to stop buying more of these at these ludicrous levels.
