Monitise Plc (MONI)
ISR viewMonitise is leading the way in the provision of mobile banking services in the UK and, through partnerships with key leading financial players and retailers, looks likely to replicate that success in other markets. The valuation is relatively high, but is reflective of the company’s strategic potential.
Monitise signs five year strategic mobile money agreement with FIS
Monitise Plc | Published on 16/12/2011Hot on the heels of its upbeat trading update on Wednesday 14th December, mobile money specialist Monitise has announced a formal five-year, multi-million dollar strategic agreement with FIS, opening up new routes to market for Monitise. The agreement follows Monitise’s acquisition of FIS’s 51% stake in their Monitise Americas JV in October, under which FIS became a 3.3% shareholder in Monitise.
Under this new five-year licensing, development and services agreement, FIS and Monitise have created a joint development team to leverage Monitise’s technology to provide mobile banking products for FIS’s clients. FIS (or Fidelity National Information Services) is a $7.6bn NYSE listed company specialising in financial services technology and products, operating in 300 geographic markets.
FIS and Monitise are well known to each other, after FIS acquired Monitise’s major US partner Metavante in April 2009. Monitise bought out FIS’s 51% stake in their Monitise Americas JV in late October for $15m in Monitise shares, which both resulted in FIS becoming a 3.3% shareholder in Monitise as well as providing a cleaner basis for the two companies to work together going forward, which is reflected in today’s announcement.
This is another positive development for Monitise, and highlights the company’s ability to attract major strategic partners and investors. First, we understand that the deal is worth a minimum of $10m to Monitise over the five years, but as the experience with Visa International and RBS shows, there is scope for considerable upside. Second, it gives Monitise an enhanced presence in FIS’s core US market, where the company has yet to achieve the same penetration as in the UK. Third, it also appears to represent an additional route to market for Monitise, compared with its existing in-house work for major financial clients (eg Visa International, Visa Europe and RBS) and its role in service JVs (eg the recently launched Mobile Money Network with Best Buy Europe/Carphone Warehouse and Charles Dunstone).
Market forecasts for Monitise are unlikely to move after today’s announcement, given the revenue upgrades following Wednesday’s positive trading statement (H1 FY12 revenues above expectations at £15m compared with £14m for the whole of FY11). However, this agreement helps to underpin forecasts of strong revenue growth (we forecast £32.8m this year and £46.3m for FY12/13), and supports our view of Monitise as a key holding for anyone wanting exposure to the fast growing world of mobile money.