This is a pivotal year for VersaPay, says Haywood

VersaPay’s (VersaPay Stock Quote, Chart, News: TSXV:VPY) transition from it legacy business to a cloud-based future will pass important milestones in 2015, says Haywood analyst Massimo Voci.

Yesterday, VersaPay reported its Q4 and fiscal 2014 results. In the fourth quarter, the company posted an EBITDA loss of $800,000 on revenue of $1.2-million.

“We continue to focus our attention on rolling out our ARC solution offering, and we are very pleased with our progress in this regard,” said CEO Craig O’Neill. “We are confident ARC will become an industry leader in the business-to-business integrated payments space, providing businesses of all sizes with a cloud-based approach to managing accounts receivable with their customers. As a result, we expect ARC to become a larger percentage of our overall revenues compared to POS merchant services moving forward. In addition, we expect the recurring revenues from ARC will provide VersaPay with a more predictable cash flow stream and improved margins in the future.”

Voci says the company’s Q4 and fiscal 2014 was in line with his expectations. He notes that the company made an accounting change that it voluntarily change its accounting policy to report its POS Merchant Services revenue on a net basis instead of a gross basis. Had the company not voluntarily changed its revenue presentation, its 2014 topline would have come in at $18.7-million, says Voci, in line with the analyst’s expectation of $18.8-million.

Voci believes important milestones are on the horizon for the company.

“We believe 2015 is a pivotal year for VersaPay, as its first customers are now in the process of going live and on-boarding their own customers on to ARC. While 2014 saw VersaPay commercialize ARC and build out its expertise integrating with customers and their varying accounting systems, we believe 2015 will be an invaluable year for VersaPay in terms of its revenue growth and its customers, and customers’ customer, begin using ARC in a meaningful way in 2016 and beyond.

Voci today maintained his “Buy” rating and one year target of $1.70 on VersaPay, implying a return of 14% at the time of publication.