The expansion question

Fonix (LSE:FNX) shareholders gather for the company's Annual General Meeting on 18 November 2026, and the main strategic question hanging over the meeting is how quickly the London mobile payments specialist can turn its European build-out into meaningful profit.

On those disclosures, continental Europe remains a small but faster-growing slice of the business. Gross Profit from markets outside the UK reached £2.7m, about 13% of the group total, and rose 16%, while the UK contributed £18.3m, up 12%.

About the company

Fonix is a London-based mobile payments and messaging company. Its core service lets consumers pay for services, donations and competition entries through their mobile phone bill, and it also runs messaging services for broadcasters, charities and digital businesses. Because most of its activity is tied to media clients, results depend on the Volume of televised competitions and charity appeals.

What Fonix does

Fonix lets consumers pay for services, donations and competition entries by charging them to their mobile phone bill, and runs messaging services for broadcasters, charities and other digital businesses. Media clients account for more than 80% of activity, and the company counts large UK broadcasters and charity appeals among its customers.

Where the year left the business

Revenue for the year rose 15% to £83.3m and gross profit, the measure management treats as its main indicator, increased 12.9% to £21.0m. Adjusted EBITDA grew 11.0% to £16.2m and adjusted profit before tax climbed 8.4% to £15.5m. Total payment volume processed was £303m, up 8%.

Costs are currently rising faster than profit. Adjusted operating expenses increased about 20% to £4.9m, reflecting hiring for France, development and legal work, and higher hosting charges.

Alongside geographic expansion, Fonix is broadening its product set. It has launched CompsPortal, a central platform for running media competitions, is trialling RichMessaging, an interactive service based on the RCS messaging standard, and is rolling out PayFlex, which offers card or wallet payment when a phone-bill charge fails.

The European roadmap

LSE:FNX is live in the UK, Ireland, where it launched in 2022, and Portugal, which went live in September 2025. Switzerland followed in March 2026. France is described as being in its entry phase, with a Legal entity established and work with mobile operators and regulators under way. Network connectivity has been completed for an undisclosed sixth market, with launch targeted by the end of the current financial year.

Management expects France to generate Revenue by the end of the year to June 2027 and has set a target of reaching break-even roughly 18 months after revenue begins. Independent analysis cited by the company sizes French consumer spending on these services at about €100m a year, against £250m to £300m in the UK. That comparison suggests France could add scale, but from a smaller base than Fonix enjoys at home.

Risks to the plan

Entering a new country depends on agreements with mobile network operators and regulatory clearance, both of which can take longer than planned. LSE:FNX's Earnings remain concentrated in the UK and in media clients, so a weaker broadcast competition market would hit results more than any overseas gain could offset in the near term. Management has also cautioned that growth in the current year may not reach double digits.

What the financial figures show

Revenue of £83.3m with gross profit of £21.0m implies that gross profit is about 25% of revenue, which reflects the pass-through of payments to mobile operators and other parties. This is why management treats gross profit as its main indicator. Adjusted EBITDA of £16.2m against gross profit of £21.0m means about 77% of gross profit converted to EBITDA, a high level that shows the lean cost base. Total payment volume of £303m, up 8%, grew more slowly than revenue at 15%, which suggests that revenue gains came from more than volume alone.

The cost base and the Investment phase

Adjusted operating expenses rose about 20% to £4.9m, outpacing the 12.9% rise in gross profit. In an expansion phase this is expected, because staff, legal work and technology are needed before revenue arrives. The caution that growth in the current year may not reach double digits indicates that management expects the investment to continue weighing on profit before France and the sixth market contribute.

The break-even target of about 18 months after French revenue begins gives a timeline. If revenue starts by the end of the year to June 2027, break-even would arrive around the end of 2028, so losses in France are likely to last into that period.

Comparing the markets

The French market is estimated at about €100m a year, compared with £250m to £300m in the UK. On those figures France is roughly a third of the size of the UK, which provides a ceiling on what the company could achieve there. Markets outside the UK already provided £2.7m of gross profit, so the foreign contribution is not new, though it remains small beside £18.3m from the UK.

Growth of 16% outside the UK, against 12% in the UK, indicates that the European Business is expanding faster from a smaller base.

The AGM and dividends

The final Dividend of 6.20p, against 5.90p, rises about 5%. Together with the interim payment, the total of 9.30p implies an Interim Dividend of 3.10p. Dates for shareholders are the ex-dividend date of 19 November, the Record Date of 20 November and the payment date of 30 November.

Regulation and operator relationships

Charging a purchase to a mobile phone bill depends on agreements with mobile network operators and on compliance with the rules of each country. In every new market, the company must establish those relationships and meet local regulatory requirements before it can launch. That is why the timetable for France is described as an entry phase, and why revenue is expected only by the end of the year to June 2027.

Once a market is live, the volumes depend on the services customers choose to offer, which in this business are mainly media competitions and charity appeals.

Dates for shareholders

The meeting on 18 November will consider a final dividend of 6.20p per share, up from 5.90p, taking the ordinary total for the year to 9.30p. If approved, shares go ex-dividend on 19 November, with a record date of 20 November and payment on 30 November.