Keep an eye on GoldMoney’s ARPU, says Mackie

Mackie Research Capital analyst Nikhil Thadani says there is one metric he will be watching more closely than any other when GoldMoney (GoldMoney Stock Quote, Chart, News: TSXV:XAU) reports its fourth quarter results, and that is Average Revenue Per User (ARPU).

On Monday, June 20, GoldMoney will report its Q4 and fiscal 2016 results. The company will host a conference call the same day to discuss the results.

Thadani thinks GoldMoney is a compelling partnership or acquisition opportunity for an established financial institution, because the company is getting traction on its platform. The analyst expects GoldMoney will generate ARPU of more than $0.67 in the fourth quarter, versus $0.42 in its third quarter.

“The most important Q4 metric, in our view, is likely to be the BitGold ARPU (Average Revenue Per User), which should be strong as XAU’s monthly Key Performance Indicators (KPIs) from Jan through Mar were better than we expected from a transactional perspective,” says Thadani. “Overall, we expect non IFRS Q4 revenue of ~$1.5 mln or +6% q/q. We define non IFRS revenue as margin on sales i.e. net revenue + fee revenue, which we believe is a better indicator of operational traction as it excludes changes in XAU’s metal inventory. We expect Q4 Customer Acquisition Cost (CAC) of ~$11/user in Q4 vs. ~$6.50/user in Q3. We suspect global macro concerns at the start of 2016 could have reduced CAC although the company seemed to have increased TV advertisements in the early part of the year, which would increase CAC.”

In a research update to clients today, Thadani maintained his “Speculative Buy” rating and one-year price target of $7.00 on GoldMoney, implying a return of 30 per cent at the time of publication.