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June Quarter Revenue Estimates

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    I thought I would start a new thread to discuss some estimates on what revenue to expect from Q2 (June).

    We have some information to work with, in particular MSF relating to EU card processing that was provided as part of the AGM Preso in May.

    There is some guesswork involved but I will use fairly conservative figures.

    The MSF derived from card acquiring is at this point in time clearly the largest revenue stream of ISX. Along with this comes card processing fees per transaction. Top line revenue from acquiring (MDR) will actually be a bit higher as it is inclusive of card scheme interchange fee but I'll just concentrate on MSF for analysis here.

    Other revenue streams are EMA deposit/withdrawal fees, KYC fee, FX fees, licencing fees associated with Probanx/BBS.

    Merchant Service Fee revenue  - Gross profit revenue after COGS (Interchange) has been removed.

    We know the MSF for April was approx $1.02mil. We also know that this was from approx 150,000 transactions that month.

    We have not been told the MSF for May but part way into May we were provided an estimate of 250,000 transactions for the month of May.

    Given the growth trajectory of the graphs in the AGM preso, some of the smaller numbers are difficult to make out but basically for the months of Feb, March and April I cross checked the MSF with the transaction volume for each month. I divided the MSF by the transaction volume to work out the average MSF received by ISX per transaction.

    This worked out to be $8 for February, $7.15 for March and $6.80 for April.

    As the number of transactions has increased the average MSF has reduced a bit. The average MSF per transaction will move around based on a number of different variables such as different MSF being achieved from different merchants, the average transaction size for different merchants and the make up of the merchant base. IE the larger portion of the total of ISX' transactions that are attributable to a merchant the more that one merchant will influence the overall per transaction MSF average.

    So with those sort of variables it is hard to be confident what the average MSF per transaction was for May. GPTV on weekly run rate ticked up very nicely in the first week of May so this may suggest a newly integrated larger merchant/s had been on boarded. If they were larger then an assumption can be made that they would have negotiated a lower MSF. So that being the case I have assigned a $6 average MSF per transaction to the month of May to be conservative and without further information to work with I have maintained that for the month of June. I have estimated that transaction volumes have continued to increase into June but to be conservative have reduced the rate of growth and have arrived at 300,000 transactions for the month of June.

    So based on these assumptions I have come to the following gross profit from MSF for the quarter.

    April: $1.02mil
    May: $1.50mil
    June: $1.80mil

    Total MSF - $4.32mil - note that top line revenue (MDR) will be slightly higher with interchange on top.


    Card processing fees

    In addition to the above, ISX also receive a per transaction fee as well. I believe this has been quoted as being between 15c-30c (Euro) but to be conservative I'll stick to the lower number of 15c and just treat it as AU cents.

    April: $22.5k (150,000 transactions  -actual)
    May: $37.5k (250,000 transactions - company est.)
    June: $45k (300,000 transactions - my est.)

    Total Card processing fees: $105k

    MSF + Card processing total = $4.425 mil

    Other revenue streams

    The company has provided less detail/numbers on other revenue streams such as number of charged KYCs, FX fees, EMA deposits, licencing fees. We have been advised that BBS/Probanx combined had a EBIT contribution of $286k in Q1. Obviously that number is after operating costs so top line revenue would be somewhat higher. It is also unclear whether that is expected again in the June Q.

    I expect the EMAs to start contributing nicely to revenue as merchants look to use these accounts and deposit custodial funds. I think we will find EMA growth will lag MSF growth but we will hopefully have started to achieve some meaningful EMA deposit fees in the June Q.

    Again there is speculation here as we don't have a lot to work with but I think these other revenue streams combined would have brought in around $400-$500k for the Q. This in particular is a very loose figure and could be wildly inaccurate.

    In total this bring us to an estimate of $4.925mil for the June Quarter. Once top line rev is factored back in (as some figures above are gross profit/EBIT figures) I think that actually the $5mil mark may have been broken. Obviously actual cash receipts will also vary a bit depending on timing of payments, though given most revenue is derived from MSF and ISX now controlling its own Tier 1 network, I don't foresee cash lagging revenue very much.

    Lets see if I'm close!

    What are others estimates/thoughts?
 
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