Smartpay forecasts second year of earnings decline

Smartpay Holdings, the listed payment terminal supplier, expects earnings to decline for a second year as it rebuilds its Australian taxi business after losing a key customer.

Earnings before interest, tax, depreciation and amortisation will probably decline to between $8 million to $8.5 million in the current financial year, from $9.2 million in the year ended March 30, the company said in presentation notes for its annual meeting in Auckland today.

Smartpay said it’s starting this financial year on the back foot, after ending its largest Australian wholesale taxi contract at the end of December, which had contributed nine months of revenue and profit last financial year. While its Australian market entry has been slower than expected, it says it’s on track to replace the lost income this year after launching its own Australian TaxiPOS taxi payments business in February.

“The current year starts from a lower base without this income,” the company said. “Our replacement taxi business is growing well and is expected to ultimately replace and exceed the revenue from the lost contract.”

Smartpay shares slipped 3 percent to 16 cents and have dropped 17.5 percent so far this year.

Smartpay says it has 1,300 deployed taxi terminals in Australia, 1,000 of which are active and earning revenue, with the remaining 300 expected to become active shortly. It needs about 3,000 terminals to replace revenue from its previous contract. It currently has about 6 percent market share, where it competes with larger rival Cabcharge.

Across Australia, the company has 6,500 terminals compared with 35,000 in New Zealand, it said.

The company said it has “a number” of corporate, merger and acquisition opportunities under consideration.

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