Aug 12, 2019

AIM-listed, mobile payments provider, Mi-Pay, has provided a somewhat pessimistic trading update, ahead of the release of its half-year results on 25 September. A deterioration in the economy, coupled with uncertainties around PSD2 (see: Regulator considers 2 year delay to SCA deadline ) have prompted fears of a slowdown in the second half, whilst the loss of a major client also looms. Management at the Bagshot based FinTech, indicated that performance during the first six months of 2019 had been broadly in line with expectations with revenues rising by 6% to £1.7m. Gross profit margins remained strong at 63% and administrative expenses stable. H1 EBITDA indicated that Mi-Pay more or less broke even during the period ended 30 June, compared to a £0.1m loss at the same point last year. Mi-Pay announced that it had successfully renewed 2 major contracts, which between them accounted for 43% of the company’s revenue in 2018. However, the company also revealed that one of its major longstanding clients, looks set to terminate its relationship with Mi-Pay at short-notice. The departure of this mobile network operator after 12 years, would see Mi-Pay lose around 13% of its annual revenues (approximately £0.5m). Mi-Pay has enjoyed a general upturn in its fortunes of late (see: Mi-Pay results reveal continued improvement ) and the latest news heralds more challenging times ahead. Regardless of any deterioration in the external market conditions, the news highlights how much MiPay’s revenues are concentrated amongst a small number of clients. This is sometimes unavoidable, but always a business risk and management will no doubt be cutting its cloth accordingly to reduce the impact, should the termination come to pass.