iSignthis: The next great Australian IT company

(Ed note: published Feb 2018). The iSignthis Ltd (ASX:ISX) half yearly report that was released to the market today looks to be full of positive surprises, and further confirms the view that ISX is one of the most exciting globally focussed, emerging IT companies listed on the ASX.

While revenue for 1HFY18 remains modest at A$827k, it is the growth trajectory of the business that truly excites us. ISX reported a 100% increase in revenue in the December quarter, which appears to us to represent the inflection point in the business and a harbinger of further large growth rates in future periods. Today’s half year report did not disappoint, with the company raising formal guidance for March quarter revenue growth from 30% Q-on-Q to now 50% Q-on-Q. 

ISX appears ideally positioned to continue to win customers in this region and the rest of the world

The growth is just beginning 

It’s worth pausing for a moment to understand why this might be just the beginning for ISX’s growth path.  ISX listed a few years back after developing patented intellectual property that allows Know Your Client (KYC) verification to be conducted in real time. This vastly simplifies and automates the customer onboarding process. ISX calls this SaaS based product “Paydentity”. Paydentity saves customers time and money in fulfilling their requirements, and vastly reduces credit card fraud for online merchants and other online focussed business models.  Paydentity is ISX’s “trojan horse” product, that has allowed the Company to offer related payment processing, settlement and payment authentication services under the “ISXPay” product name. 

Multiple revenue drivers now underpin the business and should lead to sustained top line growth

Given global regulations that greatly increase the level of KYC required for onboarding new customers, ISX appears ideally positioned to continue to win customers in this region and the rest of the world.  Any new customer wins will be in addition to the >A$400m of contracted payments processing and settlements they are currently handling (which at the Company’s stated margin of 1% should generate >A$4m in annualised revenue).

With settlements revenue representing only 65% of ISX’s revenue in the 1HFY18, it appears that multiple revenue drivers now underpin the business, which should lead to sustained top line growth, and ultimately meaningful profits. This may see ISX emerge as one of the next great Australian IT companies.

Regal has, or is likely to have in the future, a position in the securities which are mentioned in this article.