Smartpay warns on Aussie taxi market, revenues recover

Listed payment terminal supplierSmartpay Holdings has warned it is experiencing a decline in both existing and anticipated growth in the Australian taxi market due to the continual disruption of the industry.

The company had supplied terminals to taxi drivers in Australia through Live Taxi Epay but ended this in December 2014 to try and target the market directly. This led to a profit collapse in its first half result of 2015, published this time last year.

Yesterday's first half numbers show that while revenues and profit have risen on 2015, they remain below 2014 when it supplied about 7000 terminals through Live Taxi Epay.

Smartpay had revenues of $10.7 million in the six months to the end of September, up 8% on 2015's $9.9 million. Revenue was $11.7 million in the same period in 2014. Net profit after tax was $500,000, compared to $143,000 for the same period a year earlier. The first half results in 2014 saw net profit after tax of $1.38 million.

In notes to the accounts, the company says that increased regulatory disruption had affected some of its customers in the Australian taxi market. "This has resulted in both lower revenues and lowered our expectation of growth from this segment," it added.

"Recent events including a possible regulation change in the Queensland market has led us to adopt a more cautious approach and hence more conservative expectations of the growth of this vertical. We remain committed to the sector," Smartpay says.

Among recent disruptions in the taxi industry, Uber began ride-sharing operations in Australia in April 2014 with Deloitte estimating it was capturing 14.5 million rides a year, which the consultancy said was a conservative assumption.

Smartpay gave full-year guidance of revenue between $21.5-22.5 million, earnings before interest, taxation, depreciation and amortisation between $9.5-10 million, and net profit of $1.7-2.2 million. That compares to revenues of $20.4 million in the 2015 year, ebitda of $8.1 million and net profit of $200,000.

In the 2014 year, revenue was $22.9 million, ebitda was $9.7 million and net profit was $1.7 million.

Away from the taxi business, the company has focused on growing its retail terminal business, having launched the new D-series multi-function terminals, with a sale to a mid-tier Australian bank.

Net debt rose to $24.8 million from $23.9 million due to the cost of upgrading the New Zealand terminal base, software development costs and growth in the number of retail terminals issued in Australia.

In a separate statement emailed to media, the company says older versions of eftpos terminals were due to be retired from service at the end of April next year, with the changeover meaning they would no longer work. The upgrade will mean much more support for contactless cards, with Smartpay estimating 20,000-40,000 retailers will be affected.

Shares in Smartpay Holdings were unchanged at 16c. They've risen 23% since the start of the year.

(BusinessDesk)