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EML Payments (ASX:EML) - Group CEO, Tom Cregan - The Market Herald
Group CEO, Tom Cregan
Source: The Australian
  • Payment service provider EML Payments (EML) says it will deliver a solid full-year result for the 2020 financial year, despite the pandemic
  • In March, EML's revenue was up 20 per cent compared to the same time in 2019, reaching $87.1 million
  • Additionally, its gross profit margin rose from 73.7 per cent to 75.9 per cent against this time last year
  • Meanwhile, the company’s earnings before interest, tax, depreciation, and amortisation (EBITDA) grew by 24 per cent over the prior corresponding period
  • Despite the growth, EML's retail malls segment continued to struggle in April due to the closures, however, the company's salary packaging business and its online gaming sector performed well
  • As a result, the company says it is well-positioned to weather a COVID-19 economic storm if trading conditions take longer than expected to improve
  • EML also announced its Chairman, Peter Martin, intends to sell between 300,000 and 400,000 shares, which represent a small portion of his shareholding in EML
  • EML is up 13.1 per cent on the market this morning, selling shares for $3.72 each

Payment service provider EML Payments (EML) says it will deliver a solid full-year result for the 2020 financial year, despite the pandemic.

In March, EML's revenue was up 20 per cent compared to the same time in 2019, reaching $87.1 million.

Additionally, the company's gross profit margin rose from 73.7 per cent to 75.9 per cent, while its earnings before interest, tax, depreciation and amortisation (EBITDA) grew to 24 per cent to $27 million.

April trading

EML's retail malls segment continued to struggle in April due to the closures. Despite this, however, EML's salary packaging business and its online gaming sector performed well.

For April, in the gift and incentive (G&I) segment, gross debit volume (GDV) was down 53 per cent to $341 million, compared to $681.8 million on the previous year.

As a result, the company says it is well-positioned to weather a COVID-19 economic storm if trading conditions take longer than expected to improve.

At the end of April, EML Payments $125 million in cash. The company is also expecting its gift cards sales from 12 months ago will also strengthen its balance sheet.

EML is expecting to see a gradual opening of malls in various countries from May onwards.

Update on PFS Purchase

Last year, the company recently purchased Prepaid Financial Services (PFS).

PFS is a European provider of white-label payments and banking-as-a service technology. This purchase will make EML one of the largest global fintech enablers.

"This is an exciting time for the combined EML and PFS businesses. We are very pleased to see great collaboration between the sales, marketing and business development teams as we look to cross-sell our respective solutions," the company said.

EML has started a number of integration projects, which are expected to be completed over the next two years.

Additionally, the company is anticipating the pandemic will increase the take-up of digital payment.

Business update

ControlPay

EML's ControlPay tool allows companies to facilitate finance to consumers through its digital cards, which can be accessed on smartphones.

In the buy now, pay later (BNPL) sector, the company has launched a pilot program with Zip and received approval to launch Scalapay, which is the company's first BNPL customer in Europe.

In April, the company also signed a contract with Sezzle to launch in the North American market.

Salary packaging

EML says its total salary packaging benefit accounts have increased to 228,000, which is up from 187,000 in December 2019.

EML has successfully launched with the New South Wales of Ministry of Health, with the rollout expected to be completed by the end of this current financial year. In the meantime, EML is continuing the rollout of new accounts with Smart Group.

The company also recently signed a contract with the ACT Government Health Department for 3000 salary packaging accounts.

Fintech and digital banking

Since the start of this year, the company has signed 15 contracts with multiple fintech and digital banking companies, who are now using its payment solutions.

Gaming

Gross debit volume (GDV) in the gaming industry has been on the rise, despite the postponed sporting events, as customers are shifting their betting to horse racing and e-sports.

Gifts and incentives

Meanwhile, as the GDV in mall gift cards has decreased, EML has seen an increase in its incentive gift card programs, using its PAYS technology.

The company's PAYS technology is a digital gift card which is delivered directly to a mobile device.

Director sells shares

EML also announced its Chairman, Peter Martin, intends to sell between 300,000 and 400,000 shares, which represent a small portion of his shareholding in EML.

Peter is a long-term investor in EML and holds 7,718,992 fully paid ordinary shares.

EML told the market that given his stage in life, his family commitments, and other needs, he is likely to sell some shares each year.

EML is up 13.1 per cent on the market this morning, selling shares for $3.72 each at 11:32 am AEST.


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