The mobile payments industry is one of the fastest growing sectors of the tech industry and investors are clamouring to get their hands on well-run, cash generative, mobile payment processors.
A key factor
Optimal and Monitise are both being held back by their managements. For example, Monitise’s management has consistently misled shareholders and abused investor trust since coming to market. A continual stream of broken promises, dilution and missed targets have erased investor trust and management’s credibility.
Additionally, Monitise’s key management figures have done nothing but sell their shares in the company since 2010. Alastair Lukies CEO of Monitise has sold around 17m shares in the mobile money company since 2010, but hasn’t made a single purchase.
Similarly, Lee Cameron, deputy CEO has sold around 5m shares since 2011. In total, since 2010 Monitise’s executive management team has sold a net volume of 37m shares.
Optimal’s management team has also been dumping stock at an alarming rate since 2012. Moreover, there were some serious issues raised last year, when CEO Joel Leonoff handed over 1.5m shares to Equities First Holdings LLC as part of a personal finance deal, but failed to notify shareholders of the correct deal terms. A few months after this transaction, the company’s finance chief walked out the door.
And reading through employee reviews of the company, it’s pretty easy to see that Optimal’s management is holding the company back. “A lack of vision“, “poor middle management” and “lack of communication” are all concerns raised by employees.
Employees seem to be even more distressed by Monitise’s management. Some have openly complained that management’s poor leadership has driven the company into the ground.
Don’t give up
Nevertheless, the two companies are far from complete failures. In fact, Optimal and Monetise both have great business models and have already won over hundreds of clients and thousands of customers.
Monitise for example has built relationships with some of the biggest banks in the world, as well as corporate giants such as IBM, Telefónica and MasterCard. Meanwhile, Optimal’s NETBANX has signed up over 300 merchants to its network.
Further, Optimal is highly cash generative, has a strong balance sheet and the group’s trading updates have been nothing short of impressive. For the year ended 31 December 2014 Optimal is expecting to report revenue growth of 44% and profit after tax that is “materially ahead of expectations”.
Still, without management teams that are able to push the two companies forward, Optimal and Monitise will both continue to struggle.
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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK owns shares of Monitise. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.