TAP GLOBAL GROUP PLC (TAP) — Investment Research Note

Executive summary

Tap Global is an AIM-listed regulated digital-finance app (Gibraltar-licensed) that lets ~400k registered users trade 70+ cryptocurrencies, spend via a Mastercard-linked wallet, and — as of late 2025 — hold GBP/EUR IBAN accounts via Moorwand and open banking rails via tell.money 2026-03 H1. The trajectory across the period is: FY24 collapse (£18.2m loss driven by £15.9m goodwill impairment on the Tap acquisition), FY25 recovery to first positive adjusted EBITDA (£0.41m on £3.48m revenue), then H1 26 relapse to EBITDA loss as crypto market softened and legal/compliance costs jumped 35% 2026-03 H1; 2026-01 FY25. The single most important valuation point today is that this is a sub-scale, highly volume-dependent crypto broker whose economics still swing with Bitcoin, whose cash has fallen to £433k, and whose "AI middleware" mention is marketing — the business is not an AI beneficiary in any meaningful sense.

Fair value estimate

• Fair value range: 0.8p – 1.8p per share → implied market cap £6m – £13m
• Mid: ~1.3p / ~£10m market cap
• Absolute upside vs. 1.10p: ~18% at mid, range from -27% to +64%

Methodology — triangulation of three approaches given weak earnings anchor:

1. Revenue multiple: TTM revenue ~£3.4m (H2 25 £1.68m + H1 26 £1.67m). At 2–4x P/Sales for a small, volatile crypto broker → £7–14m.
2. Adjusted EBITDA multiple: FY25 adjusted EBITDA of £0.41m at 15–25x = £6–10m. But H1 26 slipped back to an EBITDA loss, so this anchor is fragile.
3. NAV / balance-sheet check: Net equity £2.43m at Dec 25 + post-period XTP token acquisition (~£1.4m fair value at US$1.8m) + 6.14 BTC. Backstop of maybe £4–5m of tangible value.

Latest disclosed market cap £8.2m sits inside the range — this is a fair-to-slightly-cheap call, not a bargain, and the range is wide because the earnings power is unproven.

Sector context

Classified as Financial Services / Financials (ICB), which is correct but understates the business — this is a crypto broker/fintech, not a bank or insurer. Quality is well below typical listed financials: sub-scale, no diversified revenue, historically loss-making, thin capital base, related-party governance issues. Listed peers include Coinbase (COIN, US), Robinhood (HOOD, US) and Argo Blockchain (ARB, UK) — all vastly larger with more diversified revenue. Closer comps at the AIM/micro-cap end would be Mode Global Holdings (delisted after struggles) and other small-cap crypto/fintech shells.

Investment thesis (3 bullets)

• Genuine regulated infrastructure at low absolute EV: Tap holds a GFSC DLT licence in Gibraltar, VASP registration in Bulgaria (positioning for MiCA grandfathering), an approved Mastercard programme in Europe, and post-period Moorwand IBANs — an unusually broad regulatory stack for an £8m-cap business. B2B monetisation (Bitcoin-Treasury-as-a-Service, Cards-as-a-Service, corporate accounts with £75k initial ARR run-rate) is starting to convert this stack into recurring revenue 2026-01 FY25; 2026-03 H1.
• Aligned, locked-in founder-led ownership: CEO/founder Arsen Torosian owns ~59% and management have entered a voluntary 3-year lock-in covering ~63% of issued share capital 2026-03 H1. Combined with £1.04m director's loan already funding working capital, the incentive structure limits short-term dilution risk.
• Operational leverage if crypto cycles turn: With gross margin at 75% and a broadly fixed cost base of ~£3.9m annualised, a return to the Q1 FY26 £991k/quarter run-rate (or better) drops most incremental revenue through to EBITDA. Q1 FY26 delivered 40% YoY growth 2025-11 Q1 update; a sustained crypto up-cycle would materially move the P&L.

Key risks (3 bullets)

• Very weak balance sheet + burn: Cash £433k at Dec 25, down 47% in six months, with H1 26 operating cash outflow of £132k and continued capex on intangibles. Going-concern language has appeared in prior audits 2026-01 FY25. Any further crypto downturn or delayed B2B ramp likely triggers a dilutive placing.
• Related-party governance concerns: The 3bn XTP token acquisition from CEO-controlled Tap N Go "at nil cost" 2026-03 acquisition RNS, the £1.04m director's loan, and the October 2025 £150k GFSC regulatory settlement for AML/SAR failures 2026-01 FY25 event note together paint a picture that will limit institutional interest.
• Structural revenue volatility & regulatory drag: Revenue is dominated by crypto trading commissions — H1 26 revenue fell 6.9% YoY once market conditions softened after October 2025 2026-03 H1. Operating expenses simultaneously rose 35% on legal/compliance costs. The US business (Zero Hash) is being wound down. XTP token as balance-sheet asset introduces further mark-to-market volatility.

Operating leverage

Fixed-cost share is meaningful for a business this small: annualised opex ~£3.9m against £1.67m half-year revenue means the fixed base is roughly 2x current run-rate revenue. Gross margin held at 75%+ 2026-03 H1, so incremental revenue theoretically converts at a very attractive rate — a swing back to £4–5m annualised revenue (only ~20% above trailing) could plausibly add £0.75–1.5m to EBITDA, which is large relative to the current £8m cap. However, the leverage is asymmetric: opex is rising even as revenue slipped (legal/professional +£246k YoY in H1 26 alone), and compliance investment for MiCA is unlikely to be one-off. The "Bitcoin Treasury as a Service" and Cards-as-a-Service B2B lines could be genuinely operating-leveraged if they scale — they use the existing regulated platform — but the numbers so far (£75k ARR from 25 clients) are very early. This is real but modest operating leverage, not the SaaS-network-effect kind the strategy targets.

Value-trap signals

• Repeated goodwill impairments (£15.9m FY24 + £4.7m FY25) suggesting the 2023 acquisition price was too high
• Related-party transactions with CEO-controlled entities (XTP token acquisition, director's loan)
• Regulatory settlement with the GFSC over historical AML/SAR failures
• Prior going-concern uncertainty language
• Revenue substantially tied to a single volatile asset class (crypto trading volumes)
• Heavy dependence on one-off "other income" items (Bitfinex clawback £0.42m, £0.44m post-period inactivity fees) to flatter results
• Founder holds 59% but also lends money to the company at unspecified/interest-free terms
• Historical dilution: shares issued at 2p in Feb 2025, warrants outstanding at 8p (expired Jan 26) — cap table has been active

Earnings vs. expectations

The filings do not disclose external analyst consensus. Management guidance is largely qualitative. Judged against management's own directional signals: H1 25 was ahead (record H1 revenues, first positive EBITDA), FY25 delivered "materially EBITDA positive" as promised in the September 2025 trading update, and Q1 FY26 exceeded prior comparables. However, H1 26 revenue fell 6.9% YoY despite management's confident tone entering the period — a material disappointment for a growth story, disguised somewhat by post-period inactivity-fee revenue not booked in H1. Pattern: management commentary is consistently upbeat; delivery is choppy and highly dependent on crypto market conditions.

Conviction

Conviction: 2 (low).

• Anchoring the estimate: audited FY25 accounts + interim H1 26 give a clear revenue and cost base; regulated licence stack gives some floor value; balance sheet is transparent.
• Limiting conviction: revenue is fundamentally driven by exogenous crypto volumes I cannot forecast; the earnings track record is short (one adjusted-EBITDA-positive year, already relapsed); related-party transactions and small-cap governance risks make any multiple-based valuation subjective. The fair value range is wide because the business is genuinely uncertain, not because I've been lazy.