Diginex (DGNX) announced their FY2025 annual results this morning, and I just couldn’t let it pass by without making a couple of comments.
Yes, I know the borrow on the shares is just horrible, and even if you do manage to beg, borrow, or steal the odd shares here or there from your prime broker, the negative rebate is most likely simply ridiculous.
Nevertheless, the company has some plans that may actually improve that situation (though perhaps not fast enough to make that 800% negative rebate palatable), so perhaps it’s not a total waste of your time to at least keep the ticker somewhere on one of your screens.
Revenues
First, about their claim that “revenues for the fiscal year ended March 31, 2025, increased 57% to $2.0 million driven primarily by an increase in software subscriptions and license fees.”
Would it surprise anyone if a last-minute Malaysian “licensing” arrangement was responsible for almost half of their revenues?
And would it also surprise you if over 60% of their overall FY2025 revenues were booked in the final month of the year?
Of course not.
And yet, that’s exactly what happened. A scant 14 days prior to the end of their fiscal year, the company inks a $900k licensing deal with some Malaysian business.
“On March 17, 2025, Diginex entered into a strategic relationship agreement (the “Aikya Agreement”) with Aikya Business Solution Private Limited (“Aikya”), a leading AI and big data technology company with around 2.5 million users. Pursuant to the Aikya Agreement, Aikya agrees to launch Diginex’s award-winning ESG reporting platform, diginexESG, in Malaysia with an upfront license fee tranche. This collaboration aims to empower Malaysian businesses to enhance ESG transparency, streamline compliance, and drive sustainable finance initiatives in alignment with Malaysia’s sustainability goals. A copy of the Licensed Software Agreement and the Maintenance and Services Agreement between the Company and Aikya are attached hereto as Exhibit 4.19.”
Without that last-minute deal, of course, the company would have announced a year over year revenue DECLINE rather than the 57% increase they stated in their press release.
And how do we know they booked over $1.2M of their paltry $2M of revenues in the last month?
Accounts Receivables
As you can see from the age of their receivables, that $900k one-off was not the only contract that just barely made it in under the FY2025 deadline. There’s an additional $300k that they printed in the final month of the fiscal year.
Any bets on whether or not they get paid on these last-minute deals? It must surely be some savvy organizations simply getting out in front of Trump’s “Liberation Day” announcements, right?
Merger Mania
They announced a couple of acquisitions, the first on May 27th of something called Matter DK ApS for $13M, and the second on June 5th when they announced buying Resulticks of Singapore for a cool $2B (that was at a $72 share price).
Both announcements include 12-18 month lock-ups on the shares, and the Resulticks announcement includes $100M in cash which will come from some unknown location (the company only had $3M in IPO cash remaining on their balance sheet at the end of March) along with earn-outs on an additional $500M subject to hitting at least $100M in EBITDA for FY2026 and scaling up from there. If this site is accurate, that may just be a bit of a stretch.
So the company doing ESG compliance is spending $2BN and $13M on another couple of companies doing ESG, all during a period of time when ESG is increasingly finding itself out of favor, even with the previously big backers from some of the fund industry’s biggest players (Blackrock, etc…), so essentially doubling down on what may prove to be an irretrievably broken practice.
Massive stock-split heading your way
On the ballot for the company’s July 28th annual meeting is a vote on whether or not the company should do a forward 8-1 split of their ordinary shares.
Back when AAPL for trading for like $700 a share I believe they did a rather large 7-1 stock split, or perhaps GOOGL trading for like $2,000 a share and doing a 20-1 stock split makes some sense, but an 8-1 for a $60 stock? What the world really needs is greater access to a $2M annual revenue company trading for a now-$7.50 per share.
Tight control of the float, onerous lockups on acquisition partners, and now a massive stock split to try and juice the shares.
Sounds legit.