Finseta plc (LON:FIN), a foreign exchange and payments solutions company offering multi-currency accounts to businesses and individuals through its proprietary technology platform, has announced its final results for the year ended 31 December 2024. In addition, the Group gives notices of its annual general meeting and the publication of its annual report and accounts.
Financial Highlights
· Underlying1 revenue grew by 26% to £11.3m (2023: £8.9m) and reported revenue increased by 19% to £11.4m (2023: £9.6m)
· Gross margin improved to 65.7% (2023: 63.4%)
· Adjusted2 EBITDA of £2.0m (2023: £1.7m), an increase of 18%
· Profit before tax of £1.4m (2023: £1.3m)
· Cash generated from operations of £2.2m (2023: £2.0m)
· Cash and cash equivalents at 31 December 2024 were £2.6m (31 December 2023: £2.3m); net cash increased to £0.6m (31 December 2023: £0.2m)
Operational Highlights
· Growth in active customers3 to 1,059 (2023: 906); and completed strategic transition to wholly direct sales
· New counterparty partnerships established to broaden the number of currencies and countries where the Group can transact – now able to pay out to over 165 countries in 150 currencies
· Received regulatory approval to provide payments services in Canada and, post year end, the United Arab Emirates (“UAE”)
· Signed agreement with Mastercard and, post year end, launched corporate card scheme
· Implemented multiple platform enhancements, including introduction of mass payments feature
Current Trading and Outlook
· The Group has made a strong start to trading in the current financial year, driven by continued growth in active customers
· As 2025 progresses, the Group’s new product offerings – in particular, the corporate card scheme and mass payments – as well as the Group’s operations in Dubai and Canada, are expected to make an increasing contribution to revenue
· As a result, the Group is on track to report significant revenue growth for 2025, in line with the Board’s expectations
· In the medium term, the Group’s key strategic initiatives are set to substantially accelerate sales growth and increase profitability
James Hickman, CEO of Finseta, said: “2024 has been a landmark year for the business. We have continued to deliver strong growth while successfully executing on our strategy. We expanded our product offering – most notably with the launch of the Finseta Corporate Card and mass payments feature – and our geographical footprint with the receipt of regulatory approval to provide payments services in Canada and, post year end, the United Arab Emirates. These new initiatives have already commenced generating revenue, which we expect to ramp in the second half of 2025 and beyond. We have made a strong start to the new financial year, with continued growth in the number of active customers, and with the foundations of our business having been further enhanced, the Board remains confident in our ability to deliver sustained value for our shareholders. We look forward to reporting on our progress.”
Operational Review
This has been a milestone year for Finseta as the Group progressed several significant strategic initiatives while continuing to deliver strong growth. The Group has expanded its offering, its sales team and its introducer network, resulting in an increased number of active customers. This enabled the Group to achieve growth in all key financial metrics in 2024. At the same time, the agreement with Mastercard, establishing a presence in Canada and adopting ‘Finseta’ as the new company name have strengthened the business and its ability to deliver value.
Performance
The Group delivered another year of significant growth in revenue in 2024. Underlying1 revenue increased by 26% to £11.3m (2023: £8.9m) and reported revenue grew by 19% to £11.4m (2023: £9.6m). This growth was driven by an increase in active customers to 1,059 (2023: 906)3, reflecting the expansion of the sales team and introducer network and the Group’s sustained focus on providing an exceptional level of service to its corporate and high net worth individual (“HNWI”) clients.
The transition to only serving clients directly was completed, with all revenue being generated by direct clients during the year (2023: 95%). By client type, there was an increase in revenue generated by both private clients (primarily HNWIs) and corporate accounts. The proportion of total revenue accounted for by private clients was 59% (2023: 64%) with corporate accounts contributing 40% (2023: 34%). In respect of the majority of private client revenue, while the underlying transaction is with an individual, the relationship is via a corporate that provides services to the individual. In addition, the Group received £100k (2023: £220k) in revenue, accounting for 1% of total revenue (2023: 2%), as the final income generated under a licencing agreement with the acquirers of Avila House, a former subsidiary.
Strategic execution
Finseta’s growth strategy continues to be founded on the three pillars of product, geography and people – and the Group made considerable progress on all three in 2024. This contributed to its growth during the year, but also strengthens the drivers of growth for the years to come.
Product
A core element of the Group’s strategy is to establish a global payments network that will enable clients to be able to pay in from, and pay out to, any jurisdiction (subject to regulatory restrictions) in any currency and via any payment method. While it is still relatively early days, a number of milestones in advancing towards this goal were achieved during the year.
Currencies & countries
The Group continued to expand its global payments network by establishing new counterparty partnerships. This enabled the Group to broaden the number of currencies and countries where it can transact, as well as expanding the business sectors it can serve. The Group can now pay out to over 165 countries in 150 currencies compared with over 150 countries and 58 currencies this time last year.
Payment method
The Group made significant progress during the year towards expanding its payment method offering with the signing of a long-term agreement with Mastercard to launch a corporate card scheme. The Finseta Corporate Card, which was launched post year end, is available to businesses as virtual or physical cards, has multi-currency capability and can be used in over 210 countries. This new offering will provide the Group with an additional, high-margin, repeatable revenue stream from business customers and will expand its addressable target market. The Group has commenced generating initial revenues from the corporate card scheme from existing customers, which it expects to ramp in the second half of 2025.
The introduction of a corporate card scheme is a key element of the Group’s strategy to diversify its product offering. As a customer-first business, Finseta aims to remove all barriers to expenditure – enabling customers to make payments wherever, whenever and however they want. This additional offering enhances the service that the Group can provide to its existing customers and expands its target market to corporates where the primary requirement is a corporate card scheme.
Service
Finseta continued to undertake development work to enhance the functionality of its platform, which will further improve clients’ experience. This included improving the customer onboarding process, which has decreased onboarding times. The Group implemented real-time transaction monitoring utilising artificial intelligence to allow it to scale and create efficiencies, which is particularly relevant for card payments where the number of transactions are much higher and more instantaneous than in the regular payments business. In the second half of the year, the Group introduced a mass payments feature, which enables clients to make up to 1,000 multi-currency, multi-market payments in a single transaction. This feature has been well received – making an initial contribution to 2024 revenue – with the number of clients using it continuing to increase.
A key differentiator of the Group’s offer at Finseta is the high level of personalised service provided to clients, along with the experience of the team and the strength of the Group’s compliance capabilities. The Group’s Finseta Solutions offering, which was established in 2023 and is specifically focused on providing solutions to clients with more complex needs and which require a higher level of service, made good progress during the year. The Group has added further counterparty capability to this new offering and has also added further resource as the number of customers and partners has continued to grow.
Geography
A core pillar of the Group’s strategy is geography – that is, expanding the Group’s capabilities to enable clients to transact to and from anywhere in the world (subject to regulatory restrictions). This includes through establishing further counterparty relationships, as noted above, as well as expanding Finseta’s own geographical footprint and regulatory capabilities.
A significant milestone was achieved when Finseta was awarded a Money Services Business (“MSB”) licence from the Financial Transactions and Reports Analysis Centre of Canada, which enables it to operate a payments company in Canada and provide payments services to Canadian businesses and individuals. With the Group having previously received enquiries in Canada for its services through its existing network, the establishment of a regulated business will allow Finseta to fully pursue such opportunities while leveraging local payment rails to benefit from faster, more efficient transaction processing and lowering transaction costs. Following the receipt of the MSB licence, the Group commenced the process of establishing a full-service office, which was launched post year end, to provide clients in Canada with the high-touch service-led approach that is core to the Finseta offering.
During the year, the Group continued to progress through the approval process with the Dubai Financial Services Authority and was granted, post year end, a Category 3D licence that authorises Finseta to provide payment services within the UAE. This will enable the Group to significantly expand its existing activities in the UAE by now being able to service corporate and professional clients as well as to benefit from local payment rails. Dubai is one of the world’s top financial centres and represents a significant opportunity for Finseta. The Group’s introducer-led go-to-market approach is also particularly well-suited to this business environment with international professional services and advisory firms having a substantial presence. The potential of this market is significant and we are investing in our UAE business to take advantage of this growth opportunity.
The Group also continued to make progress with the regulatory approval process in other jurisdictions where it can leverage opportunities through its existing network and thereby maximise the Group’s resources.
People
As a high-touch, service-led business, the strength of Finseta’s people is crucial. The Group continued to invest in its workforce with a fundamental contribution to its growth during the year being the enhancement of the sales team. The Group also expanded the Finseta Solutions team and appointed a Country Manager for Canada. Finseta understands that the strength of its business is also the strength of its people and, as such, remains committed to continuing to foster excellence in its workforce as it looks to continue to expand its headcount through 2025.
With client acquisition being predominantly introducer-led, relationships are key to Finseta’s ongoing growth. Accordingly, the Group continued to expand and deepen its network of introducers in order to continue to increase its client base and diversify payment flows across a broader range of currencies.
Financial Review
2024 was another year of strong trading performance for Finseta, with growth achieved across all key financial metrics.
Revenue for the 12 months to 31 December 2024 grew by 19% to £11.4m (2023: £9.6m). On an underlying basis1, revenue for FY 2024 increased by 26% to £11.3m compared with £8.9m for the previous year. This growth was primarily a result of an increase in active customers, reflecting the expansion of the Group’s sales team and introducer network.
Gross margin improved to 65.7% (2023: 63.4%), which primarily reflects the strategic decision to offboard the historic white label business in prior years. The improvement in gross margin combined with the increased revenue resulted in a 21% increase in gross profit to £7.5m (2023: £6.2m).
Operating expenses were £6.3m in 2024 compared with £5.1m for the previous year. This primarily relates to additional sales team hires as the business invests for future growth, increased performance-related bonuses commensurate with the Group’s performance and higher depreciation as a result of the Group’s move to a new leased corporate premises in the second half of 2023. There was also an increase in marketing expenses to support the Group’s rebrand to ‘Finseta’; travel expenses in support of the Group’s strategic geographic expansion; and licensing costs to support further enhancements to the Group’s onboarding and transaction monitoring capabilities.
The Group recognised other operating income of £0.3m (2023: £0.4m). This comprised £0.2m (2023: £0.4m) of interest based on client cash balances (see note 3 to the financial statements) and £0.1m (2023: £nil) from the reversal of a provision for the final earn-out payment related to the acquisition of Capital Currencies.
Thanks to the strong operating performance, there was an increase in adjusted EBITDA to £2.0m (2023: £1.7m) and in profit from operations to £1.7m (2023: £1.4m). Adjusted EBITDA is stated after the add-back of other operating income, share-based compensation, profit from the disposal of a subsidiary, transaction costs and non-cash based accounting adjustments in respect of the Group’s corporate premises (see the statement of comprehensive income for further detail).
Profit before tax was £1.4m in 2024 compared with £1.3m for 2023. Tax expense for the year was £395k compared with a tax credit of £843k in the prior year which primarily arose due to the recognition of an £818k deferred tax asset in 2023 relating to tax losses following the Group’s transition to profitability. As a result, net profit was £1.1m (2023: £2.1m).
Basic earnings per share were 1.74 pence (2023: 3.77 pence). On a fully diluted basis, earnings per share were 1.66 pence (2023: 3.76 pence). This reflects an increase in the weighted average number of ordinary shares (due to an issuance of shares during 2023) and in outstanding share options combined with the lower net profit as described above.
Cash generated from operations was £2.2m (2023: £2.0m) based on the strong trading performance. Cash used in investment activities was £1.3m (2023: £0.2m), which primarily consists of the continued investment in developing the Group’s proprietary platform, including development of supporting infrastructure for the corporate card scheme. Cash used in financing activities was £0.6m compared with £0.1m in 2023, reflecting lease payments associated with the move to the new corporate premises as well as the settlement of loan notes and deferred consideration.
As at 31 December 2024, cash and cash equivalents were £2.6m (31 December 2023: £2.3m), with net cash of £0.6m4 (31 December 2023: £0.2m).
Outlook
The Group has made a strong start to trading in the new financial year, driven by continued growth in active customers. As Finseta progresses through 2025, the new product offerings – in particular, the corporate card scheme and mass payments – as well as the Group’s operations in Dubai and Canada, are expected to make an increasing contribution to revenue. As a result, the Group is on track to report significant revenue growth for 2025, in line with the Board’s expectations.
Looking further ahead, the Group’s key strategic initiatives are set to substantially accelerate sales growth and increase profitability in the medium term. While the priority is to scale up these operations, the Group is also continuing to pursue its strategy to further expand its regulatory capabilities and enhance the service offering. With the strong foundations that have already been established, the Board is confident that these actions will deliver sustainable growth and generate value for shareholders.
Notice of AGM and Publication of Annual Report
The Company gives notice that its AGM will be held at 11.00am BST on 12 June 2025 at the office of Gracechurch Group, 48 Gracechurch Street, London, EC3V OEJ.
The Notice of AGM, along with the Company’s annual report and accounts for the year ended 31 December 2024 (together, the “Documents”), have been published on the Company’s website at: https://investors.finseta.com/document-centre/. The Documents, along with a form of proxy, will be posted to those shareholders who have elected to receive physical copies over the coming week.
Notes
1 Defined as total revenue excluding revenue generated by the Group’s historic white label business in 2023 and licencing revenue under an exceptional agreement in 2023 and 2024
2 Adjusted to exclude other operating income, share-based compensation, profit from the disposal of a subsidiary and transaction costs, and the rental cost of the Group’s corporate premises (see the Financial Review for further detail)
3 Defined as customers who traded through Finseta during the 12-month periods to 31 December 2024 and 31 December 2023 respectively
4 Defined as cash and cash equivalents less loan notes
