iSignthis admits GPTV calculations based on estimates, shares halted

iSignthis shares are still suspended with no indication when it will return to trade. Its reporting of revenue and GPTV have been questioned.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

iSignthis Ltd (ASX: ISX) shares are still in a trading halt imposed by regulators on the back of concerns over compliance with its continuous disclosure obligations and financial reporting among other things. 

The stock has now been suspended for nearly a month and generally the longer a company is involuntarily suspended the gloomier the picture becomes.

Regulatory worries

There are a couple of core issues regulators appear to have with the reporting of the 'paydentity' company.

First up is the admission that ISX 'contract service fee revenues' between June 2018 to December 2018 across Australia, the Netherlands, and Cyprus fell from $5 million to $1.09 million.

According to today's update the huge drop off is explicable by ISX suddenly losing clients in the CFD, FX trading and other financial services space. 

However, previous media reports have picked up on a report from self-styled financial watchdog Ownership Matters that questioned how iSignthis marginally met revenue targets that released huge amounts of share options for management.

GPTV

The ASX's compliance team also questioned how iSignthis calculated its gross processing transaction volume (GPTV) figures from contracted clients between January through June 2018. The regulator also queried how iSignthis defined a "contracted" client.

Worryingly for shareholders iSignthis admitted the explosive GPTV growth numbers were only based on estimates provided by 'contracted' clients. It also stated it only used the estimates for inclusion in its GPTV reporting where it assessed the estimates were "plausible". 

Between October 2018 and September 2019 the iSignthis share price went from just 11 cents to $1.76 with its reporting of explosive monthly GPTV growth fuelling the rise.

Now it's known the GPTV figures are based on estimates it brings into question a lot of the company's credibility over its reporting. 

In today's release to the ASX a number of other queries from the regulator are answered that relate to the accuracy of iSignthis's prior reporting and client base. 

What happens now?

According to today's release iSignthis responded to the ASX's compliance team on October 25 to meet the October 26 deadline imposed. However, the stock is still suspended and if it does not return to trade this week it suggests the regulator is still not satisfied. 

Given the issues around this business and high valuation I'd suggest giving iSignthis shares a wide berth. 

Should you invest $1,000 in Air New Zealand Limited right now?

Before you buy Air New Zealand Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Air New Zealand Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 6 March 2025

Motley Fool contributor Tom Richardson owns shares of Dicker Data Limited.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Opinions

ASX shares are on sale! What are you buying?

Stocks are being hit hard. There are opportunities everywhere.

Read more »

Warren Buffett
Share Market News

What Warren Buffett would say about investing in ASX shares right now

Here are some pearls of wisdom from Warren Buffett.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Broker Notes

Bell Potter names the best ASX 200 stocks to buy in April

The broker is feeling bullish on these names this month. Let's find out why.

Read more »

woman holding 'hiring' sign in shop
Share Market News

Why is tonight's US jobs report so significant for global markets?

With Liberation Day in the rearview mirror, global equity markets will be looking towards tonight's US jobs data.

Read more »

Five young people sit in a row having fun and interacting with their mobile phones.
Share Gainers

5 ASX 200 shares rocketing higher in this month's falling market

A handful of ASX 200 shares managed to fly higher this past month. But how?

Read more »

Man looking happy and excited as he looks at his mobile phone.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Shot of a young businesswoman looking stressed out while working in an office.
Share Fallers

Why Amotiv, Breville, Life360, and Woodside shares are tumbling today

These shares are having a rough finish to the week. But why?

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why Ansell, Capricorn Metals, Orthocell, and Sonic Healthcare shares are charging higher

These shares are ending the week on a positive note. But why?

Read more »