Finseta Plc (90W.F) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Finseta Plc Investor Presentation. [Operator Instructions]. Before we begin, as usual, we would 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 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 what we do at Finseta, we provide digital multicurrency accounts to both businesses and individuals. That's backed up by a premium service through our team of account managers. And we do all this through our own proprietary technology platform 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 the world that ultimately enables us to pay in, pay out in 150 currencies. We can send to 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. We've invested over the years in our compliance and our regulatory process. And ultimately, that means that we can onboard customers that ultimately are underserved by traditional methods. In terms of 2025, we set ourselves some pretty bold strategic targets, which we've delivered against all of those. We've successfully diversified our revenue through both geographic and also through vertical and B2B, B2C side of things as well. And we'll come on to show particularly 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 sort of midsized businesses. We certainly exited the year in a strong position, and we were accelerating our growth. And really, that is on the back of, as I say, the product set that we've built and a lot of the strategic investment that we made in 2025. I'll hand over to Judy now just for a high-level look at the numbers.

Thanks, James. Yes. So everything I'm saying here is as we released in our trading update last week, as you can appreciate that, that's kind of unaudited and obviously only selected metrics. So there is limited kind of information I can give to you more -- much more than what we've already put in that trading update. But just to recap, in 2025, we delivered revenue of GBP 12.4 million -- that's 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 H2 as we updated the market that we expected. However, 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 corporate, as James already said, up 54% year-over-year and now in 2025, representing 50% of our -- 57% of our overall revenue. As you may recall that's an inversion of kind of the 60-40 split that we've historically seen more recently, we've been 60% high net worth. Now we're more 60% corporate. So really, really pleasing that growth there. And I think, honestly, with some of the product enhancements that we delivered in H2, we're really well positioned to continue to accelerate there. That has had a slight impact -- an impact on our gross margin. So that's down roughly 5 percentage points year-over-year to approximately 61%. In general, our corporate business has a slightly lower margin. And so that revenue mix is really what's driving that year-over-year change. Cost-wise, as we always kind of badged 2025 was an investment year. That was particularly the case in H2 as we accelerated our investment in -- particularly in Dubai. So 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 Dubai in 2025. But as I say that kind of investment -- pre-signaled investment has meant that we had an impact on profitability. We did just return a positive number on adjusted EBITDA for the year. But as we head into 2026, we will be looking to accelerate that significantly. We finished the year with cash of GBP 1.5 million. 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 GBP 1.1 million of investments into our tech during 2025. Again, particularly as we look at the staging of some of these, one of the counterparties we integrated with only literally came online at the very end of last year. So really well positioned to accelerate and deliver growth in 2026. We do expect to return to cash flow generation in the second half of the coming year as a result of those investments and the accelerated top line growth. One further note just on cash flow 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 31st of December 2028. So effectively a 2 and a bit year extension. As part of that, Rob did convert GBP 200,000 of the principal into equity at a share price of 19p. So we obviously presignaled last time we had an update 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 our growth projects. 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 2025. We as part of that regulatory approval in Dubai, you must get local banking offices, et cetera. I'm delighted that we've actually got a very strong Tier 1 bank partner in the region, a local bank. We've now gone fully operational with that local bank. We've integrated, connected our systems. And therefore, we're able to offer exactly the same service that we do here in the U.K., i.e., digital multicurrency accounts to people in Dubai and businesses in Dubai. As Judy mentioned, we had 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 were actually budgeted for 7. So you can see we've actually sort of accelerated our investment in the region. There is a real, real opportunity in the UAE. Ultimately, the provision of a digital multicurrency account is being very, very well received. There's a few nuances and additions to the product that we've actually made, one of which is called managers checks. So ultimately, we -- which is used actually to complete property purchases. That's something we can also do. So a significant benefit to our partners and our introducers, particularly on the property side. So we're really, really pleased with that. In Canada, we have 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. Canada was always going to be a smaller operation. And obviously, as a relatively small business, we've really got to focus where our investment goes. So consequently, you'll see Dubai sort of a much larger entity. We've continued to focus on our global banking network and introduce the network, and we continue to grow that out ultimately for the benefit of efficiencies and also for our customer base. Ultimately, we're building what our customers demand and what they -- to really meet their ongoing requirements. In terms of product and service, we launched our corporate card, and we are targeting sort of particular verticals for that. It's -- just to remind people, it's a commercial card, so business only. And we're targeting marine aviation initially, we will be going beyond that and targeting other verticals. But it is 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 digital payments’ platform as well. We implemented U.K. agency banking through Barclays in Q3, which was not a small amount of work, it has to be said, but gives us significant advantages. Not only are we now connected directly to the fast payments network here in the U.K. ultimately, it enables us to have a Finseta sort code and ultimately gives us a lot more flexibility and efficiencies within the payment rails. On the platform itself, we've made some significant advancements. We've redeveloped the client front end to make it far more user-friendly, ultimately to modernize it, to make it more intuitive. We've made some significant enhancements, particularly as I mentioned at the outset around the corporate offering. And specifically, a few examples of that are bespoke authorizations, client approvals. So ultimately allowing a lot more personalization per company ultimately on the way they want to make their payments. So particularly around the authorization is very important for larger companies. And ultimately, it will allow us to then attract a bigger or larger customer. One final piece 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 are continuing to build out counterparty relationships, so payment partners effectively and banking partners. And that will also continue to ultimately for the benefit of the customer as well. So in short there, we've improved the B2B offering. We're certainly improving 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 corporate or business customer. So in summary, 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 2026, we expect to return to profitability. Dubai is going to be a significant part of that for certain. And we believe 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. But also, I think the conversion of part of that into stock just gives a -- gives people confidence and certainly 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 delivering the numbers set out and delivering long-term shareholder value. With that, I think 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. [Operator Instructions]. James, Judy, as you can see that 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 would be great.

So Judy, why don't I leave you to read the questions...

Yes. There's a question here about, I guess, long-term shareholder value with the share price decline we've seen in H2. What are your plans to manage the share price? I think I'll initially say that, James, obviously, you can add to it. But I think in general, I think there was a bit of a reaction to our kind of macro-driven headwinds that we experienced on the high net worth individual business, meaning we did come in or we did reset expectations during 2025. We have, notwithstanding that, shown exceptional growth on the corporates. And as James has already outlined, delivered all of our kind of strategic targets during 2025. So I think what we can do is really just deliver on those numbers that we've set for 2026 because we always flagged that 2025 was an investment year, and you would see that kind of return and inflection really in 2026. So I think obviously, it's incumbent upon us to deliver on those promises. And yes, James, anything further to add?

Yes. I mean I think there's a few things here. As a business and within our control, ultimately, I think the numbers we need to let them do the talking for us. And I think the shares will be rerated as the market confirms that we are delivering not only on the strategic direction, but also on the numbers as well. I think from a sort of sector point of view, the sector as a whole is probably fairly unloved, I think small companies anyway, but particularly within the world of fintech, there hasn't been, particularly from an institutional point of view, that much interest in it. 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 represents significant opportunities. So I do think there's sort of 2 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 we -- in our next update, and we're able to set out further strategic progress plus numbers, I think that will definitely assist.

Kind of leading on from that, how confident are you in hitting the 2026 expectations? Do you want to take that, James, initially?

Yes. I mean we're of the firm belief that everything that we're doing from a strategic point of view will deliver those numbers. Otherwise, we wouldn't be doing it. Like any business, you've got to manage growth carefully, but we believe that we have all the ingredients and the foundations to make an extremely successful payments business.

Yes. I think one thing that, obviously, as shareholders in terms of financials, you don't get to see the kind of the timing of when things are hitting. But as I mentioned in my update, we had one of our counterparty integrations coming online literally at the year-end. We've got another that will be fully integrated at the end of Q1. And these are not vanity projects as we always say, they are always done with a clear market identified clear need. So really, as they're cascading -- the launch of those are cascading and the opportunities there. So we really have all of the tools to go and execute on these numbers. And as James said, as a Board, we're supremely confident in delivering on them. Thank you for the update. Where do you see the business in 3 to 5 years' time size and services?

Ultimately, in terms of services, we are -- what we're building out is a full-service digital multicurrency account or multi-asset account actually. The service and target segments won't necessarily change. We continue to serve businesses and high net worth individuals, and we -- there's no intention to move away from that at all. Now the business mix, as we've seen in 2025, and I'm sure we will see in 2026, will change. So it is becoming slightly more B2B focused. That's for sure. And our product offering and development is obviously assisting that. But in terms of sticking to our knitting as it were, that's -- we will continue to be a payments business, very much focused on multicurrency and digital accounts. In terms of size, we've got some big ambitions as a business as a Board. We see significant opportunities across the globe, actually, not just even in the regions that we're in, but across the globe. We feel like we're very well positioned to take advantage of those and very difficult to predict size, et cetera. But genuinely, within 3 to 5 years, we should be -- certainly within 5 years, doing GBP 75 million in revenue.

It's kind of -- you've touched on it already, but is there any expectation to see the corporate part of the business continue to grow its share with the launched product card, et cetera, or you strive to keep it roughly within the 60% to 40% range? As James has hinted up, I think we will see it nudge up again slightly. I think there are a couple of dynamics at play. Obviously, with Dubai, there is also a strong individual focus with the property market out there, but I think you will see it continue to nudge up. And I think that was a planned move on our part whilst we -- as you may recall, our primary route to market being through that introducer-led network, we've always seen that as recurring revenue, but I think there's always some inevitable market perception of the high net worth business, not necessarily having recurring revenue. So I think that's been a clear strategic move to diversify the revenue stream, and you will see it nudge up again this year, I would say.

And I think it's worth also pointing out in terms of the focus from a B2B point of view, whilst margins are slightly less, what is more positive is obviously the repeat nature of the business and the more visible revenue lines and the more visible revenue streams. So whilst, yes, absolutely take on that it's slightly lower margin, actually, what it does do is create far more repetitive business and long-term business, which certainly is an area that we're excited about.

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 I hand back to Jake at this point?

Absolutely, guys. Thank you very much for being so generous with your time there and 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 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 would be great.

Yes, absolutely. So ultimately, in summary, in 2025, we've made significant strategic progress against our goals. We've -- particularly around the geographies and specifically in Dubai, where we're now a full-service business and have a full-service offering. The mix of B2B, B2C revenue, I think the progress in terms of our product offering for businesses is significant and will have a significant impact in the coming years. We believe that our product set, our technology is going to -- we're at a pivotal point now, and we've built the foundations for a very, very successful sustainable payments business. We believe that this year will be significant in terms of revenue as well with all parts of the business growing. 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'll 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 take a few moments to complete, but I'm sure it will 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.