Tio Network’s Cloud-Based Silver Lining

TIO Networks’ cloud-based biller platform has faced some rough times of late with declining revenues. But it’s recent acquisition of Globex Financial Services appears to offer a much-needed silver lining to its plans for growth and improved margins. Go inside its latest earnings report.

Cloud-based bill-payment solutions provider TIO Networks has experienced recent drops in quarterly revenue, yet company officials remain confident the company has turned the corner, aided by a recent major business acquisition.

During the fiscal second quarter ended Jan. 31, TIO experienced a return to organic growth in its core transaction business, and the company completed a deal that resulted in 100 percent ownership in Globex Financial Solutions Inc., thus expanding the company’s U.S. footprint and service offerings.

However, even with one month’s worth of revenues from Globex during the quarter, revenues were still down 1.8 percent from the same quarter in 2013, to $9.99 million from $10.17 million. The company also experienced a net loss of $172,744, whereas it earned a $16,288 profit a year earlier.

TIO completed its acquisition of Globex, and its Globex Express Money Orders Inc. business, on Jan. 1, adding more billers to its business. Geographically, the acquisition greatly strengthened TIO’s presence in the Mid-Atlantic and Southeastern United States by adding key billers and over 3,000 additional transaction locations to TIO’s growing national network, the company said. In 2013, the combined company processed approximately 34 million bill payments and money-order transactions worth more than $4 billion.

Though Globex didn’t help TIO boost revenue year over year, it did help the company increase revenue from the previous quarter ended Oct. 31, 2013, when the company earned $8.26 million.

“In January 2014 alone, revenue was $4.4 million, an increase of 31 percent over January 2013,” the company said in its earnings announcement.

Excluding Globex, TIO’s core transaction business returned to organic growth, with transaction volume rising 9.7 percent sequentially and by 4.4 percent year over year, the company said.  Gross margin increased to 29.2 percent from 22.1 percent a year earlier, attributable to high transaction margins from TIO’s core business and the addition of Globex’s high-margin revenues, the company said.

“We are very excited about the return to growth in our core business and the successful completion of our accretive acquisition of Globex,” Hamed Shahbazi, TIO chairman and CEO, said in the earnings announcement. “With over 3,000 retail locations in the U.S. processing millions of walk-in payment transactions every month, Globex has significantly increased our size and scale.”

More specifically, the company added 3,405 locations inorganically in the Globex deal, plus 1,093 organically. As of the end of January, the company had more than 65,000 location end points active and available for bill-payment processing. The company’s branded wallet finished the quarter with users up 38 percent from the previous quarter, surpassing the 160,000 mark, the company said.

To further help the company prepaid for growth, TIO announced last week the implementation of the SAP Business All-in-One solution. The new SAP solution gives TIO access to best practices from global leaders to benchmark processes and to help realize efficiencies across the organization, the company said in the product announcement.

In January, Core Innovation Capital I, L.P., acquired 8.6 million common shares of TIO Networks, representing approximately 15.5% of TIO's issued and outstanding common shares.



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