ONFIDO LTD
Company number 07479524 · Monitor this company
This analysis was written by an AI from the company's public filings. It may contain errors or omissions and is not financial or professional advice.
Credit Analysis: ONFIDO LTD
1. Credit Opinion: CONDITIONAL
Reasoning: Onfido Ltd presents a classic venture-backed growth company profile with strong liquidity but persistent operating losses. The company holds £4.9M in cash and benefits from parent company backing (Onfido Holdings Limited and Data Card International Limited each owning >75%), providing an implicit support mechanism. However, accumulated losses have escalated from (£2.6M) to (£8.3M), the income statement is unavailable under small company exemptions, and the business model is clearly cash-burning. Any credit facility should be conditional upon parent company guarantees and ongoing equity funding confirmation.
2. Financial Strength
Balance Sheet Summary (2016):
| Metric | 2016 | 2015 | Movement |
|---|---|---|---|
| Total Assets | £6,991,103 | £1,062,068 | +558% |
| Net Assets | £5,258,820 | £886,285 | +494% |
| Cash | £4,943,797 | £558,122 | +785% |
| Retained Losses | (£8,259,414) | (£2,578,953) | Deteriorating |
| Share Premium | £13,482,538 | £3,465,217 | +290% |
Key Observations:
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Equity-Funded, Not Earnings-Funded: The £10M increase in share premium demonstrates significant equity injection during 2016. Net asset growth is entirely attributable to capital raises rather than retained profits.
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Accumulated Losses Deepening: Retained losses grew by £5.7M in the year, indicating substantial operating cash burn. Without visibility of the P&L (exempt under small company regime), the precise loss trajectory is opaque.
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Tangible Net Worth: Positive at £5.3M, but heavily reliant on share premium reserves rather than earned capital.
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Subsidiary Status: The company is an audit-exempt subsidiary, with both Onfido Holdings Limited and Data Card International Limited holding >75% shareholding and voting rights, plus director appointment rights. This provides comfort around parental support but also means Onfido Ltd is not the ultimate decision-maker for its capital structure.
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Capital Employed: Minimal leverage — no long-term creditors in 2016 (down from £20K in 2015). The balance sheet is equity-financed rather than debt-financed, which limits immediate credit risk but also indicates the company may not be an experienced borrower.
3. Cash Flow Assessment
Liquidity Position:
| Metric | 2016 | 2015 |
|---|---|---|
| Current Assets | £6,819,301 | £973,310 |
| Current Liabilities | £1,732,283 | £155,783 |
| Net Current Assets | £5,087,018 | £817,527 |
| Current Ratio | 3.94x | 6.25x |
| Cash as % of Current Assets | 72.5% | 57.4% |
Working Capital Analysis:
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Strong Short-Term Liquidity: The current ratio of 3.94x provides ample headroom. Cash represents 72.5% of current assets, meaning the company can service near-term obligations without relying on debtor collections.
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Debtors Growing Rapidly: Trade debtors increased from £415K to £1,876K (+352%), significantly outpacing any visible revenue metric. This warrants investigation — it may indicate revenue growth, but could also signal collection issues or extended payment terms to win business.
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Cash Burn Visibility: The going concern note explicitly states the company "incurred losses during the year" but that cash balances plus additional share capital raised are sufficient. This confirms the business is not self-sustaining from operations.
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Cash Conversion Concern: Without a cash flow statement, we cannot assess operating cash flows. The increase in debtors alongside rising losses suggests working capital may be consuming rather than generating cash.
Estimated Monthly Burn Rate: - Retained losses increased by approximately £5.7M over the year - Employee headcount grew from 37 to 94 (154% increase) - Monthly burn estimated at £475K-£500K, suggesting current cash provides approximately 10 months of runway absent further funding
4. Monitoring Points
| Priority | Metric | Rationale |
|---|---|---|
| Critical | Confirmation of continued parent company funding | Business model is loss-making; parental support is the primary credit backstop |
| Critical | Monthly cash position and burn rate | At estimated burn rates, liquidity could deteriorate rapidly without further equity injection |
| High | Debtor days / collection performance | 352% increase in debtors requires validation — are terms being extended to secure revenue? |
| High | Revenue visibility and growth trajectory | No P&L filed; need management accounts to assess revenue progression |
| Medium | Employee headcount trends | Rapid hiring (37→94) drives cost base; any reversal could signal funding constraints |
| Medium | Intercompany balances and transactions | Parent/subsidiary relationships may include intercompany loans or trading that affects true liquidity |
| Low | Fixed asset additions | £142K of additions in 2016 is modest relative to cash position; monitor for significant capex commitments |
Additional Considerations
Sector Context: The SIC code (80100 - Private Security Activities) appears inconsistent with the company's actual operations as an identity verification technology platform. The website description references KYC/AML compliance and fraud detection, suggesting a fintech/regtech business model. This sector typically features high growth but high burn rates.
Corporate Structure Complexity: Multiple PSC entries including Data Card International Limited (a Delaware-domiciled entity, likely the ultimate parent following Entrust Datacard's acquisition of Onfido) and Onfido Holdings Limited create a multi-layered structure. Credit assessment should consider the strength and creditworthiness of the ultimate parent.
Director Changes: Current officers (Kurt Brian Ishaug, Lisa Jeanne Tibbits) differ from those signing the 2016 accounts (E. Jubbawy, H. Kassai, E.C. Archambeau, M.T.G. Baret, L.A. Tretikov, J.S. Sage), indicating significant board turnover consistent with acquisition/ownership changes.