Finseta (LSE:FIN) — 2025 Full Year Trading Update

0:01 Good morning, ladies and gentlemen, and welcome to the FINSETA PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and will publish our responses where it's appropriate to do so on the Investor Meet company platform. Before we begin, as usual, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from FINSETA PLC. James, good morning, sir. Good morning, and thank you. So just as a quick reminder of of of what we do at FINSETA, we provide digital multi account multicurrency accounts to both businesses and individuals.

0:56 That's backed up by premium service through our team of account managers. And we do all this through our own proprietary technology platform that that we've built and continue to build out in terms of product suite. We have a full payments network and that's backed up by a wide range of banking partnerships across across the world that ultimately enables us to pay in, payout in a 150 currencies. We can send to a 165 countries for our customers, and, ultimately, that gives us speed and efficiency across the globe. We're able to onboard customers from a wide range of verticals and jurisdictions, particularly those with complex needs and requirements.

1:48 We've invested over the years in in our compliance now regulatory process. And, ultimately, that means that we can onboard customers that that ultimately are underserved by traditional methods. In terms of 2025, we we set ourselves some pretty bold strategic targets, which we've delivered against all of those. We've successfully diversified our revenue through through both geographic and also through vertical and b to b, b to c side of things as well. And we'll come on to to show, particularly the the the business to business side has actually been extremely successful and just shows the way we're building our products and the product mix actually really does appeal to to sort of mid sized businesses.

2:43 We we certainly exited the year in a in a strong position, and we were accelerating our growth. And really that is is on the back of, as I say, the the product set that we built and a lot of the strategic investment that we made in 2025. I'll hand over to Judy now just for a for a high level look at the numbers. Thanks, James. Yeah. So everything I'm saying here is as we released in our training update last week, as you can appreciate that that's kind of unaudited and, obviously, only selected metrics. So there there is limited kind of information I can give to you more, you know, much more than what what we've already put in that trading update. But just to recap, in 2025, we delivered revenue of 12,400,000.

3:30 That's a year over year growth of 9%. We saw both an increase in customers, to 1,101 and also revenue per customer. As we already kind of highlighted during the year, we were experiencing some softness in our high net worth individual business as a result of some of the macro impacts, particularly around FX rates driven by Trump tariffs. That did recover slightly during h h two as we as we updated the market that we expected. However, it it it certainly had an impact curtailed our year over year growth. On the flip side of that, one area where we demonstrated exceptional growth is in that corporates, as James already said, up 54% year over year, and, now, in 2025 representing 50% of our 57% of our overall revenue.

4:32 As as you may recall, that that's a that's an inversion of the of kind of the the sixty forty split that we've historically seen more more more recently. We've been 60% high net worth. Now we're more 60% corporates. So really, really pleasing that growth there. And I think, honestly, you know, with with some of the product enhancements that we delivered in h two, you know, we're really well positioned to continue to accelerate there. That has had a a slight impact well, an impact on our gross margin. So that's down roughly five percentage points year over year to approximately 61%. In general, our our corporate business has has a a slightly lower margin, and so that revenue mix is is really what's driving that year over year change.

5:24 Cost wise, as we always kind of badged, hey, 2025 was an investment year. That was particularly the case in h two as we accelerated our investment in particularly in Dubai. So, you know, we became regulated there in April, saw really strong early growth, and decided to kind of invest ahead of our initial expectations given that early signs of growth. And we're really, really pleased with that overall performance of of Dubai in in 2025. But as I say, that that kind of investment pre pre signaled investment has meant that that we had an impact on profitability. We did just return a positive number on on adjusted EBITDA for the year. But as as we head into 2026, we'll we will be looking to accelerate that significantly.

6:18 We finished the year with cash of 1,500,000. So in addition to the trading, we also invested heavily in our capital expenditure, particularly on the product side, which James will come on to in a minute. So 1,100,000 of investments into our tech during 2025. Again, particularly as as we look at the staging of some of these, you know, one of the counterparties we integrated with only literally came online at the very end of last year. So really well positioned to to to accelerate and deliver growth in 2026. We we do expect to return to cash flow generation in the second half as a in the second half of the coming year as a result of those investments and the accelerated top line growth.

7:05 One further note just on on cash flow and and and capital structure in general. As you may recall in November, we announced to the market that we had successfully renegotiated the terms of the loan note held by Robert O'Brien. So that was originally due for repayment in July 2026. That's now been extended to repayment on the 12/31/2028. So effectively, a a two and a bit year extension. As part of that, Rob did convert 200 k of of the principal in into equity at a share price of 19 p. So we obviously presignaled last time. We we had an update that that we were expecting that to be renegotiated. I think everyone on the board was very pleased with that outcome, giving us flexibility to continue to invest in in in our growth growth projects.

7:58 I'll hand back to James. Great. Thank you. So in a little bit more detail, you may remember our strategy relatively simple product and geography, and I'd like to sort of point out some of the strategic successes that we've made on both of those. So first of all, geographic. In Dubai, we were approved. We got formal regulatory approval in early twenty twenty five. We as part of that regulatory approval in Dubai, you must get local banking offices, etcetera. I'm delighted that we've actually got a a a very strong tier one bank partner in the region, a local local bank.

8:44 We've now gone fully operational with that local bank. We've we've integrated, connected our systems, and therefore, we're able to offer exactly the same service that we do here in The UK, I. E, digital multi currency accounts to to people in Dubai and businesses in Dubai. As Judy mentioned, we had some some some significant early success there, which really gave us confidence to invest further. And in fact, we are in number of people there, 15. We wish we were actually budgeted for seven. So you can see we've actually sort of accelerated our investment in the region. There is a real real opportunity in in The UAE.

9:32 Ultimately, the provision of a digital multi currency account is being very, very well received. There's a few nuances and additional additions to the product that we've actually made, one of which is called manager's checks. So ultimately, we which is used actually to to complete property purchases. That's something we can also do. So a significant benefit to our to our partners and our introducers, particularly on the property side. So we're really, really pleased with that. In Canada, we've now got a full service office including local banking. Again, we've integrated with a local bank there, so which we're very pleased with. We're growing our partner network.

10:20 Canada was always going to be a smaller operation. And obviously, as a as a as a relatively small business, we've really got to focus where our where our investment goes. So so consequently, you'll see Dubai sort of a much larger entity. We've continued to focus on our our global banking network and and introduce a network, and we continue to grow that out ultimately for the benefit of efficiencies and also for our customer base. Ultimately, we're we're building what what our customers demand and and what they're to really meet their ongoing requirements. In in terms of product and service, we launched our corporate card, and we are targeting sort of particular verticals for that. It's a just to remind people, it's a commercial card, so business only.

11:15 And we're targeting marine aviation initially. We will be going beyond that and and targeting other other verticals. But it but it is a a very good fit for the product and ultimately enables us to onboard aviation and marine companies, not only for the card, but also for the for the digital payments platform as well. We we implemented UK agency banking through Barclays at in in q three, which was not a small amount of work, it has to be said, but gives us significant advantages. Not only we now connected directly to the fast payments network here in The UK, Ultimately, it enables us to have a FINSETA sort code and ultimately gives gives us a lot more flexibility and efficiencies within within the payment rails.

12:13 On the platform itself, we've made some significant advancements. We've we've redeveloped the the client front end to make it far more user friendly, ultimately, modernize it, to make it more intuitive. We've made some significant enhancements, particularly as I mentioned at the outset around the the the corporate offering. And specifically, a few examples of that are bespoke authorizations, client approvals. So ultimately, allowing a lot more personalization per per company ultimately on the way they want to make their payments. So particularly around the authorization is very important for for for larger companies, and ultimately, it will allow us to then attract a bigger or or or larger customer.

13:04 One final piece that that that we're very pleased with. Through the efficiencies, we've actually increased our processing speed by over 60% now. So we're making significant inroads, and you may remember actually our onboarding times, the last time we updated actually significantly improved as well. So ongoing, we're making significant improvements on the platform. And we're continuing to build out counterparty relationships, so so payment partners effectively and banking partners, and and that will also continue to to ultimately for the benefit of the customer as well. So in short there, you know, we've improved the the b to b offering. We're certainly improving the the the high net worth offering as well. But certainly, a lot of the stuff we've done in 2025, particularly the sort of latter end of 2025, very much based around the the the corporate or business customer.

14:05 So in summary, we've we've we've grown revenue. We've particularly on the corporate side, which we're really, really pleased with, we've hit all of our strategic objectives, particularly around the geographies and the product. We've invested, ultimately, investing for the future. As Judy mentioned, 2026, particularly second half of twenty twenty six, we we expect to return to profitability. Dubai is going to be a significant part of that for certain, and we believe, you know, that has a very, very bright future. We've also secured the loan note extension ultimately to support the balance sheet and to give us more runway.

14:53 But, also, I think the the conversion of part of that into stock just gives a gives people confidence and certainly, you know, the belief internally is this is a business that is long term sustainable and has a very good future. And we remain as a board confident of of delivering the numbers set out and delivering long term shareholder value. With that, I think we'll we'll take questions, I believe. Perfect. James, Judy, if I may just jump back in there. Thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab that's situated on the right hand corner of your screen. But just while the team take a few moments to review those questions that have been submitted already, I'd just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A, can all be accessed via your investor dashboard.

15:51 James, Judy, as you can see there, we have received a number of questions throughout your presentation this morning. And thank you to all of those for submitting their questions. But guys, if I may just hand back to you to read out those questions and give your responses where appropriate. And if I pick up from you at the end, that'd be great. Thank you. So, Judy, you why don't I leave you to read the questions? Sure. Yep. Yep. There's a a question here about, I guess, long term shareholder value with, you know, with the share price decline we've seen in in h h two. What are your plans to to manage the share price? I think, you know, I'll initially say that, James, obviously, that you you you can add to it. But I think, you know, in general, I think there there was a a bit of a a reaction to our our our kind of macro driven headwinds that we experienced on on the high net worth individual business, meaning we we, you know, we did come in or we did reset expectations during 2025.

16:57 We have, notwithstanding that, shown exceptional growth on the corporates and and as James has already outlined, delivered all of our kind of strategic targets during 2025. So I think what what we can do is is is really just deliver on those numbers that we've set for 2026 because we always flag that 2025 is an investment year, and you would see that kind of return and and inflection really in in 2026. So I I think it obviously, it's incumbent upon us to deliver on on those promises. And yeah. James, anything further to add? Yeah. I mean, I think there's a few things here. As a as a as a business and and within our control, ultimately, I think the numbers, we need to let them do the talking for us. I think the shares will be rerated as as the market confirms that that we are delivering, not not only on the strategic direction, but also on the numbers as well. I think from a sort of a sector point of view, the the the sector as a whole is is probably fairly unloved. I think small companies anyway, but particularly within the within the the the world of fintech, you know, there there hasn't been, particularly from an institutional point of view, that much interest in it.

18:23 Ultimately, we are now, I think, the only payments firm listed on the stock exchange, so which can be a very lonely place to be, but ultimately also, know, represents significant opportunities. So I I I do think there's sort of two elements to this. There's obviously what we can deliver as a company, but also market perception as well. But, ultimately, I do believe once once we we you know, in our next update and we're able to set out further strategic progress plus numbers, I think that that will definitely assist. Yep. Kind of leading on from that, how confident are you in hitting the 2026 expectations? Do you wanna take that, James, initially? Yeah. I mean, we're we're we're of the firm belief that everything that we're doing from a from a strategic point of view will deliver those numbers. Otherwise, we wouldn't be doing it.

19:15 You know, like any business, you've gotta manage growth carefully, but we believe that we have all the ingredients and the foundations to make an extremely successful payments business. Yeah. I I think, you know, one thing that obviously as as shareholders in terms of financials, don't get to see the the kind of the timing of when things are hitting. But as I mentioned, you know, in my update, we had one one of our counterparty integrations coming online literally at the year end. We've got another that will that will be fully integrated at the end of q one. And these are not vanity projects as we always say. They are always done with a clear market identified, clear need. So really, you know, as they they're cascading, the launch of those are cascading and the opportunities there. So we really have all of the tools to to go and execute on these numbers.

20:08 And and as James said, that as a board, we're we're we're supremely confident in delivering on them. Thank you for the update. Where do you see the business in three to five years' time, size, and services? Ultimately, in terms of services, you know, we are what we're building out is a full service digital multi currency account or multi asset account, actually. The the the service, you know, and target segments won't necessarily change. We continue to serve businesses and high net worth individuals, and we did there's no intention to move away from that at all. Now the business mix, as we've seen in 2025, and we've I'm sure we will see in 2026, will change.

20:59 So it is becoming slightly more b to b focused. That's for sure. And and our product offering and development is is obviously assisting that. But in terms of sticking to our knitting as it were, that's you know, we will continue to be a a payments business very much focused on multi currency and digital accounts. In terms of size, you know, we've got some some some big ambitions as a business, as in a board as a board. We see significant opportunities across the globe, actually, not not just even in the regions that we're in, but across the globe. We feel like we're very well positioned to to take advantage of those and and, you know, very difficult to predict size, etcetera.

21:53 But but, genuinely, within, you know, three three to five years, we we should be, certainly within five years, doing 75,000,000 in revenue. Yep. It's kind of you you've touched on it already, but is there any expectation to see the corporate corporate part of the business continue to grow its share with the launched product card, etcetera, or you strive to keep it roughly within the 60 to 40 range. So as James has hinted up, I think we will see it nudge up again slightly. I think there are there are a couple of dynamics at at play. Obviously, with Dubai, there is also a strong individual focus with the the property market market out there, but I think you you will see it continue to nudge up. And and I think that was a planned move on on our port on our part whilst we, as you may recall, you know, our primary route to market being through that introducer led network.

22:52 We've always seen that as recurring revenue, but I think there's always some, you know, inevitable inevitable market perception of a of a high net worth business not not not necessarily having recurring revenue. So I think, you know, that's been a clear, you know, strategic move to to diversify the revenue stream, and you and you will see it nudge up again this year, I would say. And I I think it's worth also pointing out in terms of the the the focus from a from a b to b point of view, whilst margins are slightly less, what what is more positive is obviously the repeat nature of the business and the more visible revenue lines and the and the more visible revenue streams. So so whilst, yes, absolutely take on that it's slightly lower margin, actually, what it does do is is create far more repetitive business and long term business, which which certainly is an area that we're excited about.

23:52 Thanks, James. Just looking through the questions here, and I think the majority of them we've answered now or are the usual plants about direct purchases. So maybe shall I hand back to Jake at at this point? Absolutely, guys. Thank you very much for being so generous of your time there, addressing all of those questions that came in from investors this morning. And of course, if there are any further questions that do come through, we'll make these available to you after the presentation. But, James, perhaps before really now, just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and to the company. If I could please just ask you for a few closing comments just to wrap up with, that'd be great. Yeah. Absolutely. So so ultimately, summary, in 2025, you know, we've made strategic significant strategic pro progress against our goals.

24:43 We've particularly around the geographies and and specifically in in Dubai where we're now a full service business and have a full service offering. The the mix of of b to b, b to c revenue, I think, you know, the the progress in in terms of our product offering for businesses is significant and will have a significant impact in in the coming years. We believe that our product set, our technology is gonna is we're at a pivotal point now and we've built the foundations for a very, very successful sustainable pay payments business. We we believe that this year will be significant in terms of revenue as well with with all parts of the business growing.

25:32 So we're very, very excited about the future. Perfect, James. That's great. And thank you once again for updating investors this morning. Could I please ask investors not to close this session as you will now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of FINSETA PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all. Thank you. Thank you.