Earthport losses widen in 'challenging' year

Cross-border payment network Earthport issued an unaudited trading update for the fiscal year ended 30 June on Wednesday, reporting a 5.3% improvement in revenue to £31.9m.

The AIM-traded firm said its adjusted gross margin decreased by 1.2 percentage points to 67.1%, which it put down to network delivery costs and its business mix.

Administrative expenses increased by around 9.1% to £28.8m, representing 90% of revenues, up from 87%.

The company’s adjusted EBITDA loss widened by £1.9m to £4.8m.

Its cash balance at 30 June amounted to £28.3m, compared to £11.9m at the end of the 2017 financial year, with the latest figure including net proceeds of £24m raised in October.

“2018 has proven to be a challenging year for Earthport, with delays in implementation of client contracts and a change at one of the group's leading e-commerce clients announced in December 2017,” the board explained in its statement.

“Despite this, revenue grew by 5.3%, with approximately 10.5 million transactions undertaken on the Earthport platform with a transactional value of $16.9bn.

“The adjusted gross margin decreased to 67.1%, due to network delivery costs, geographical mix of transactions and the associated differences in transaction price per corridor, in line with management's expectations.”

Earthport said that during the financial year, it had continued to invest in its sales and relationship management teams to support its expanding network and clients, which now covered 88 countries - a 35% increase in international routes during the year.

As stated in its interim report, the board said its focus had been on delivering improvements to the group's cost base and operational efficiency and, as a result of its continuing investment, the adjusted EBITDA loss for the year increased by £1.9m, which was below what had been previously expected.

“In March, Earthport announced that its wholly owned subsidiary, Earthport North America, received a New York state money transmitter licence.

“Management is in the process of developing a plan for new commercial opportunities and expansion of this offering to capture commercial opportunities in New York state in relation to FX services.

“The group continues to work towards acquiring additional state licences enabling further expansion in the United States.”