Finseta (LSE:FIN) — 2026 Interim Results

0:00 Good morning. Welcome to the FINSETA PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions encouraged could be submitted at any time via the q and a tab situated on the right hand corner of your screen. Please just simply type in your questions and press send. Before we begin, I'd like to submit the following poll, and I'd like to hand you over to James Hickman, CEO. Good morning, sir. Good morning, and thank you. Right. We'll just dive straight into it. Just as a reminder, FINSETA, we have built a complete financial ecosystem to support businesses and individuals with all their payment requirements. A little bit of history on the business. We've transitioned over the last couple of years away from a one dimensional FX business predominantly focused on individuals to a much more specialized payments business focused on providing account based solutions for larger corporate clients with more complex needs.

1:01 We've done this through our proprietary platform, which we've built out, which ultimately enables us to provide customers exactly what they need. So we're not reliant on third parties. We've also built out a very strong banking network infrastructure and a very strong compliance and regulatory framework, which allows us to onboard customers with more complex requirements. We do this all backed by professional expert service provided by account managers. So not only do our clients get very good technology platform and banking infrastructure, but also a personalized service, which really sets us apart from from some of our competitors.

1:49 On the go straight into sort of twenty twenty six h one. From the strategy, you can see b to b growth very much growing from 75% sorry, up to 75% of the mix. A couple of years ago, just as a reminder, this was much more like 25%. So we've made significant strides in in that area in the b to b focus. We're increasing our active user numbers, and you can see there that this is validating not only the system, but also the strategy. And we're we've increased our margin slightly up to 66%, our gross margin.

2:38 Part of the strategy has been very much to diversify. The Dubai office had a significant jump in revenue to two up 224% year on year. Some we have no doubt had some challenges in in the first half of the year. It it certainly primarily the the macroeconomic headwinds that that ultimately have affected a lot of businesses. Sales cycles have definitely been extended. Now whilst we're onboarding customers, customers are doing less than we would like and less than expected, and ultimately is suppressing demand in the in the short term. We did have a an interruption on a particular currency corridor, which we have now resolved and we expect to go live in the next few month or so.

3:36 But, again, it's sort of testament to our to our strength and depth in terms of in terms of our banking infrastructure that we can ultimately adapt and move very quickly to replace. I'll hand over to Andrew for the for the financials now. Yeah. Good morning, everyone. I'll just highlight some of the key financials for the period. In terms of revenue, we're reporting revenue of 5,400,000. As James mentioned, this does incorporate and reflect our our corporate customer focus with corporate customers now representing 74% of our total revenue with the remainder being high high net worth individuals. And we believe we believe corporate source revenue is is higher quality and more more repeatable revenue streams.

4:25 In terms of our Dubai office, revenue has grown significantly over the period. And whilst group revenue overall has declined year on year, this growth in the Dubai office does reflect that our strategic repositioning has continued in line with plans. James just talked about our our active customers, which have increased by 26% year on year. But, overall, we do believe that revenue does reflect some of the temporary adverse impacts of general macroeconomic headwinds, and we are seeing slightly longer sales cycles than anticipated in our target markets, which we do think might shift some of our revenue into the second half of the year. Just focusing on gross margin. We are also pleasingly seeing a an increase in our gross margin from sixty three three percent to 66%.

5:12 We do believe this this reflects our improved quality in our revenue streams, and it also does incorporate some refinements to our sales commission structures that we made during the period. And lastly, just talking about EBITDA in terms of our key headlines, we have reported an EBITDA loss of 1,000,000 for the period. This does reflect the suppressed revenue I've just referred to, but also incorporates our expense base, which is in line with expectations and does reflect the recent investment that we've made in the business. I'll just go on to talking about our, old James. Is this is this the right version? If you go if you go sorry. Yeah. There we go. There you go.

6:13 We're just going to so sorry. The slide the slide didn't order to to expect it. I'll briefly talk around a bit more detail of our of our revenue mix, and and what what are the components of our revenue. As referred to, we have grown our Dubai operation, which has grown by, which has show showing revenue growth of 224% year on year, which is very pleasing to see. In terms of our corporate sector, it's up by, our corporate sector revenue is up by 19% year on year, now reflecting the 74% tote of total revenues we've as we've referred to, and active customers are up by 26%. So whilst we are seeing that, with the growth in in in in our in our active customers but a reduction in our revenue, the average average revenue per customer is down, we do think that some of our newly acquired customers are still ramping up their volumes with us.

7:06 And as James referred to, the revenue does reflect the fact that we did see a pause in our a temporary pause in in a currency corridor, which we've now rectified and expect to bring revenue back on stream over the course of twenty of of second half of the year. And just lastly, I'll cover a bit more around our expense base. Our expense base, reflects the fact that we have invested in the business over the course of 2025 and 2026. The biggest investment in our expense base has been in our staff. Well, in particular, we've invested in growing out our Dubai operation, investing in our sales teams, and investments with our back office functions such as compliance, technical, and our settlements team.

7:57 Overall, we believe that this investment in our staff is central to delivering our future strategy. Okay, James. Back over to you, please. Thank you. So a little bit about the the highlights oh, sorry, the the strategy and and where we are today. So, ultimately, we've made significant progress on the shift from consumer to business, which which was very much highlighted specifically around repeatable revenue and much more visible revenue streams. So, for example, historically, very much reliant on sort of FX transactional revenue, whereas actually now providing an account based solution, we can actually charge monthly fees, inbound fees, outbound fees, etcetera. So not totally reliant on FX transactions, which is very, very important as the business grow as the business grows.

9:00 We've invested significantly in our our banking and sort of banking infrastructure and technology platform. And, ultimately, again, this allows us to connect very seamlessly into other banking providers, into other counterparties. Historically, API connectivity has been difficult, but we've completely revamped the platform modern technology to allow us ultimately to to to streamline that. And, typically, we could we can integrate within a period between three and six weeks, which makes a significant impact, particularly when we're seeing new revenue streams in new regions. We now have a diversified geographic portfolio of business and also a diversified portfolio vertically.

9:55 Dubai, as you've seen, revenue increasing significantly, And we we are extremely positive on the region despite the the sort of macroeconomic environment at which which continues. Longer term, we are we are very positive on the region in terms of potential growth. We focus very much on higher margin business. Ultimately, it is you know, payments is a competitive market. We very much invested in areas where we know we can maintain margin, and particularly around the regulatory and compliance piece, that's very, very important to make sure that the business operates in a regulatory compliant fashion, both not only here and in The UK.

10:45 And and one of the things in Dubai, for example, we got an extension of our permissions to allow us it's called retail endorsement to allow us to to ultimately deal with all all customers. So we we make sure that we that we operate in a regulatory compliant fashion. And and lastly, the board still remains very confident in the medium term that this strategy will deliver significant value for shareholders. And with that, I will open it up for questions. Perfect. Thank you for updating investors today. Could I please just remind investors to submit your questions just by using the q and a sub situated on the right hand corner of your screen? If And you reference a recording of today's presentation, it will be available on the investment company platform shortly after the meeting has ended. Guys, as you can see, we have received a number of questions during today's presentation.

11:40 So, James, if I could just hand back to you at this point to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end. Sure. Thank you. Yeah. We've got quite a lot of questions, so I'll just try and rattle through them. Appreciate we haven't got that much time. First one, does targeting more complex corporate customers require materially higher onboarding or compliance cost, and how does that affect customer acquisition payback? Very good question. Yes. The more complex customers do require more eyes on. So, ultimately, we have the expertise in house. Having said that, the more complex customers should and will deliver much higher longer term revenue streams. So in terms of the investment in doing that, it is worth it.

12:27 We we have internally embedded a number of compliance sort of external compliance systems to allow us as much as possible to operate a straight through model. Now the onboarding piece is is obviously where you've gotta be very careful and make sure you're weeding out the bad actors. So that, to a degree, there there is some manual intervention. But, ultimately, we still onboard even complex cases between twenty four and forty eight hours. So we're significantly ahead of our competition there. The next one, probably one for you, Andrew. Given the revised full year '26 outlook, continued investment requirements that get what gave the board sufficient confidence in liquidity to re repay the £250,000 of short term working capital facility on the September 9?

13:27 And does the board anticipate requiring additional external capital before reaching sustainable positive free cash flow? Yeah. In terms of the short term working capital facility that we have, we have that ring fenced separately, and so we we manage that very tightly such that we know that we do have sufficient liquidity to to to repay that at at its at its expiry date. So there's no concern on that particular facility. In in in terms of our, you know, our own internal forecast, we do believe that we will be in a position to, you know, to to generate positive free cash flows in a in a in a in a inappropriate period of time, such that we're not overly concerned about the liquidity position of the business.

14:23 Next one. Shaw forecasts approximately 15,000,000 revenue in full year '27, at which point the business approaches adjusted EBITDA breakeven. Gives the board confidence that the existing cost base and infrastructure can support that level of revenue without a commensurate increase in operating cost? I'll I'll answer the first bit of that. Ultimately, the business, as I said before, over the last two years, has invested significantly in its infrastructure, in its operating base, ultimately, to try and streamline as as many of the processes and procedures as possible. And therefore, we can layer on additional transactional volume at at no cost.

15:09 So, ultimately, more and more customers are now using the platform. The transactional flow is very much straight through a straight through process now. We we've, as I say, invested very much on technology to to try and ensure that ultimately we can build transactional revenue and transactional volume without increasing the cost base. Is there anything you wanted to add, Andrew, on that one? No. I I I I I think that's what I tried to get across in in my in my slides earlier that, you know, we've got our expense base set up to be able to deliver our future strategy, and it's not the other way around where we'll need to increase our cost to deliver our strategy. It's already in place, and therefore, we expect to be able to incorporate that revenue without significant, you know, incremental cost being being incurred.

16:09 Next question. If the corporate mix continues to increase, should we expect gross margin to continue expanding, or does the margin benefit from mix eventually plateau? Good question. Yes. I think it does plateau. Ultimately, I think at around this level, I think, is where we we would expect. And in fact, given the nature of of some of the transactions, I. E, they've been smaller, which do attract slightly higher margin, as business confidence returns and and volumes increase, then we would probably anticipate that yeah. We we would definitely anticipate that leveling off. So I would say sort of to mark people's cards, 66% is probably around where we're aiming at in the in the medium longer term.

17:02 I don't know whether you would you would add anything to that, Andrew. No. I agree, James. I agree. We wouldn't expect it to continue to rise significantly. I think we're you know, that that that's kind of the sort of level we've seen this this this this half year. Next question. How did how did you grow active customer numbers? Where did they come from? And how are they different from previous customers? So so previous customers, as I mentioned, certainly, know, over the last few years have been very much high net worth individuals, property transactions. So tended to be a one off or or, you know, possibly, you know, two two transactions, whereas corporate transactions tend to be very much more repeat.

17:53 And, ultimately, as we get a a our corporate base increases, the the revenue opportunities also increase as well. We we get our customers typically, we've always operated an introducer model, and that continues. Most of our customers come through a a very strong pipeline of introducers that ultimately we have very few direct sales people to to companies. Everything comes through typically introduces in certain verticals. Next question.

18:50 How does revenue per customer differ between between newly acquired customers and customers who have been active for more than twelve months? Do you want to take that one, Andrew? Yeah. I I think, you know, typically, for new corporate customers, it might take them a little while to to ramp up to a steady state, I guess, volume volume of transactions they they put through us. So I think that's one one key factor. I I think also, you know, though those that have been with us for twelve twelve months, you know, if if if some of those are high net worth individuals, they might just transact if every now and then but still be deemed to be an active customer in terms of the definition of an active customer. So but I think what we will see over time is that corporate revenue mix will will ultimately contribute to to an increase in in average revenue per per customer as they as they fully fully ramp on. And, you know, our our corporate mix between high net worth oh, sorry. Our revenue mix between high net worth individuals and corporates does does continue with the with the trend that is occurring at the moment.

20:00 And and final question, which is not dissimilar, Active customers increased 26%, yet total revenue declined. What evidence are you seeing since June that revenue per customer is recovering, and how should investors distinguish a temporary macro macroeconomic reduction in activity from a structural structural change in the economics of the newer corporate customer cohort. Ultimately, when we're onboarding customers, we know exactly what what transactional revenue they do. We're targeting them specifically on that, so ultimately, to have a a lifetime value to the business. We we know that some of their volumes are down due to to macroeconomic or partly due to macroeconomic circumstances.

20:54 How do we know that thing things will change? Ultimately, we we have a very strong visibility of pipeline. We've we've guided the market where we think, you know, conservatively and appropriately, ultimately. So we we would be, you know, fully expect that the the the customer base will will deliver what we have said to the market. The the the the key thing for us now is to build on that and ultimately, you know, increase the number of active customers month on month and making sure that, you know, the strategy continues to deliver that, and ultimately, revenue will come. If we've got active customers, revenue will come.

21:41 So we are obviously closely monitoring that. We we have sales KPIs, etcetera. But, you know, we we are confident that that the the the new customer cohort, as mentioned, will deliver significant and more visible revenue in the longer term. Perfect. Thank you, James and Andrew, for updating investors today. But just before we ask investors to share their feedback, which you know is particularly important to the company, James, if I may, could I please just ask you for some closing comments? Of course. So, you know, over the last few years, we've invested significantly into the business. We believe that we're in a very strong position to really capitalize on payments generally.

22:30 You know, we have all the technology. We hold have all the banking infrastructure. The payments world has definitely changed and is changing. Companies' requirements are are changing. We believe we're adaptable. We have the technology to adapt for our customers' requirements. And, ultimately, we have a very good product go to market fit in in everything that we've developed, and particularly within the the verticals that we're targeting. So the more complex requirements and very much, you know, as a financial solutions business, it's very much our mission to provide solutions to the companies we we we target.

23:16 So overall, I would say, you know, yes, there's been challenges for sure, but we believe that we are very well set up for the future and to deliver significant long term value for shareholders. Perfect. Could I please ask investors not to close this session? It should now be automatically redirected to provide your feedback. On behalf of the management team of FINSETA PLC, we would like to thank you for attending today's presentation, and good morning to