Why the iSignthis share price is now up 700% in a year

iSignthis half year revenue of $7.4m on a market cap of $1.49b.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The iSignthis Ltd (ASX: ISX) share price climbed 12% to a record high of $1.36 yesterday and is now up 700% from just 17 cents this time last year.

That makes the returns from other growth stock favourites such as Afterpay Touch Group (ASX: APT) or Pro Medicus Ltd (ASX: PME) look pathetic.

Incredibly with around 1.09 billion shares issued iSignthis now has a market value around $1.48 billion. The company has dual listings in Australia and Germany. 

So what's driving iSignthis higher?

The company provides a know your client (KYC) platform that helps payment processors verify a user's ID to meet the anti-money laundering obligations imposed on payment or money transfer businesses by regulators around the world.

Recently for example Afterpay has made headlines due to Australia's AML regulator AUSTRAC demanding an audit of its client ID verification procedures.

More generally any 'AML regulated' merchant that accepts card payments could potentially use iSignthis's products to help it meet regulatory obligations.

It also reports that it provides "payment processing, card acquiring, settlement, IBAN accounts, SEPA transfers and deposit-taking E-Money services."

iSignthis reports on a calendar year basis and for the six months ending June 30, 2019 it reported a statutory loss of $0.7 million on operating revenues of just $7.5 million, but it is forecasting positive EBIT for FY 2019 of $7.7 million.

It also had an actual annualised monthly GPTV (gross processing transaction value) of $830m as at July 31 2019. At at July 2019 it reported it had cash on hand around $13 million. 

It's basing the forecast for a big turnaround on some new agreements signed including with the Asia Pacific-based subsidiary of payments giant Visa Inc and as other operational metrics pick up speed.

I must admit to not knowing a great deal about this business, but its valuation of $1.4 billion looks eye-wateringly high compared to its trailing financials or FY 2019 EBIT forecasts. 

As such you can definitely count me out as a buyer of iSignthis shares.

I'd prefer to buy a business such as MNF Group Ltd (ASX: MNF). It just reported a full year profit of $15.9 million on revenue of $73.6 million. And the market cap is just $373 million, around one-fifth of iSignthis's value! 

Tom Richardson owns shares of AFTERPAY T FPO, MNF Group Limited, and Pro Medicus Ltd.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended MNF Group Limited and Pro Medicus Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Opinions

2 ASX shares I have been buying in 2024!

I’m a believer in the long-term outlook of these stocks.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »