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Earthport looks to DLT as first half losses double

15 February 2018  |  14163 views  |  4 Globe

Cross-border payments network Earthport is betting on a market upturn driven by distributed ledger technology after reporting a doubling of losses for the six month period ended 31 December 2017.

The company, which is currently seeking a new CEO and CFO, is reporting a nine percent decline in gross margins over the first six months as expenses grew and losses rose to £3.2 million, £1.7 million up on the equivalent period the year before. T

The unaudited trading update follows revised guidance issued by the Earthport in December that warned of a 10-15% drop in anticipated revenue for the financial year ending 30 June 2018. A stalling in contract negotiations and implementations and a five percent hit from the loss of an unidentified client were blamed for the roadbump.

Earthport is reporting a strong pipeline but is operating in a market undergoing significant transformation as advances in real-time payments and emerging technologies shake up the sector.

Anticipating the coming upheavals, the company in 2016 introduced a 'Distributed Ledger Hub' offering a single API to connect banks to Ripple's financial network when processing cross-border payments.

In today's update, Earthport says further announcements in the blockchain space are imminent.

"The emerging focus on new technologies such as distributed ledger highlights the strategic nature of Earthport’s assets, which will be key to the ability of these technologies to provide delivery of cross-border payments," says the firm. "The first of our initiatives in distributed ledger is expected to go live with a global bank in this half."
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Comments: (4)

A Finextra member
A Finextra member 15 February, 2018, 10:40

There are so many agile newtech players, targeting significantly lower risk merchants in this space today.  Earthport have a mountain to climb....  IMHOP this is shades of Monetise....  Will it end the same way, with a US Centric White Knight coming to the rescue?    Doubtful....... Monetise had assets that could be applied to Fiserv's domestic US banking population.      Earthport is a very different beast competing with SWIFT, Ripple, Ebury, Transferwise and many, many others.

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A Finextra member
A Finextra member 15 February, 2018, 19:10

Earthport is not competing with SWIFT, Ripple, Ebury, Transferwise. Earthport is a complementary gateway for payments with many options. Earthport is connected to all the delivery channels such as ACH, SWIFT, Ripple. Also, Transferwise is a client of Earthport.  

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A Finextra member
A Finextra member 16 February, 2018, 10:57

Gateways dont usually lose money on 'bad' clients unless they are a bit more than a gateway.   It will be interesting to see how long Ripple and Transferwise need Earthport... More importantly  costs need to be controlled and margins enhanced....   I hope Earthport can turn this around.. They have been in the game a long time. They should have reached the sunlit uplands by now! 

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A Finextra member
A Finextra member 16 February, 2018, 12:03

What I find strange is that Earthport have what appears to be a compelling service for which there is a demand (every large bank I talk to wants some kind of cloud-based, pay-as-you-use-it, access to clearing services in countries where they don't have the scale to do it themselves) yet seems to persistently unable to find a profitable niche for themselves. I don't see DLT being their saviour...that is arguably far easier to integrate to than domestic clearing schemes.

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