Strong revenue growth in-line with guidance1
- Expected FY22 Group revenue of USD 438m, up 27%1 y/y or 29%1 y/y excluding currency translation impacts. Continued margin expansion with u.EBITDA anticipated to be in line with market expectations2.
- Revenue growth quoted based on 2021 revenue of USD345m, excluding the three-month contribution from DPO, as per company guidance. 2. Company compiled consensus average for 2022 underlying EBITDA of USD179m. Financials are subject to audit and final figures will be published with 2022 preliminary results on 9th March 2023.
Merchant Solutions growth acceleration vs pre-pandemic during Q4, driven by the UAE
- Q4 direct-to-merchant Total Processed Volume (TPV) in Jordan and the UAE up 23% y/y, with domestic TPV up 21% y/y (38% vs. 2019) and international TPV up 28% y/y (34% vs. 2019).
- DPO Q4 TPV growth of 25% y/y in constant FX, which whilst strong, has been impacted by more challenging macroeconomic conditions and underlying market growth in South Africa.
- Successfully launched direct-to-merchant services in Egypt, with the first SME merchants onboarded and transacting through Network’s point-of-sale terminals.
- Growth momentum supported by focus and execution in strategic growth areas, with online TPV (excl. Government/Airlines) up 40% y/y and SME TPV up 47% y/y.
Issuer Solutions delivered another year of growth
- Overall FY Issuer Solutions grew 12% y/y, although Q4 revenue was flat y/y, impacted by the delayed signing of some new business streams and non-recurring revenues in the prior year.
- Five new financial institution wins in the quarter, securing 18 in the year, in addition to the renewal of a ten-year contract with one of Egypt’s largest private banks.
- Two new processing customers in the Kingdom of Saudi Arabia, further underpinning this new market entry and bringing customer portfolio to six in total.
Nandan Mer, Chief Executive Officer, commented:
“We ended 2022 in a position of strength, having set out a refreshed strategy and delivering on several key commitments, including revenue growth acceleration and financial results in-line with guidance. In the merchant business we saw a record number of wins alongside new capability launches. The successful acquisition of DPO in Africa has doubled our e-commerce merchant revenues, added alternative payment capabilities and accelerated SME signings across the Group. In the processing business we saw strong full year revenue growth as a result of new customer wins and the accelerated transition to digital payments across all our markets. We have also launched a number of new revenue growth opportunities; including processing services in Saudi Arabia where we are live with a number of customers, merchant payments in Egypt and commercial payment services in the region. Looking ahead we continue to see a high growth outlook, supported by structural market expansion and continued strategic delivery.”
Merchant Solutions business line review
Merchant Solutions momentum reflects strategic progress and strong underlying market growth
Jordan and the UAE: Overall TPV continued to deliver growth ahead of expectations, with exceptionally strong growth vs pre-pandemic levels. Domestic TPV (which represents spending from consumers domiciled in the region) was up 21% y/y (38% vs. Q4 2019), supported by the structural growth in digital transactions and broader economic conditions. International TPV (which represents consumer spending by overseas visitors) was up 28% y/y (34% vs. Q4 2019), supported by the seasonally higher inflow of tourists and sporting events in the region such as the FIFA World Cup. Trends across strategic focus segments was also very strong in the final quarter of the year, with Q4 online TPV (excluding Government & airline TPV) growing 40% y/y and SME volumes up 47% y/y.
Africa (DPO Group): DPO saw Q4 TPV up 12% y/y or 25% in constant FX. Whilst growth in markets outside of South Africa remains strong, South Africa is experiencing challenging macro-economic conditions driven by an unreliable energy supply, high unemployment, and rising interest rates. This has negatively impacted consumer spend.
DPO’s new capabilities continuing to diversify merchant reach across sectors
Network saw continued growth in customers at DPO, with notable new wins in the period including Guess and Footgear in South Africa, alongside Forever Living and Jubilee Life Insurance in other African markets. DPO’s payment capabilities have been integrated with Skidata, a car parking systems and solutions provider operating across Africa, allowing car park operators in shopping malls and hotels to accept payments through DPO. Similarly, DPO has partnered and integrated its systems with Amadeus, an online travel inventory management and booking platform, to enable more travel agents across Africa to accept online payments.
Egypt direct-to-merchant services now live
Network has launched direct-to-merchant payment services in Egypt following the approval of its Payment Facilitator and Payment Services License, with the first SME merchants onboarded and transacting through Network’s point-of-sale terminals. Focus is on building out and training the local sales team, with a healthy merchant pipeline in place. As previously highlighted, direct-to-merchant services is a new revenue opportunity, which Network expects to build during 2023.
Strong momentum in merchant signings
New merchant signings reached record levels in 2022. Q4 saw significant wins across SME and key enterprise segments, including Lincoln Investment Group, Wane by Somiya and the Fujairah Government. As previously highlighted, the acceleration in new merchant wins has been supported by the launch of new digital capabilities, including self-service and digital onboarding for UAE merchants, with APIs accelerating the integration of new capabilities and value-added services.
Issuer Solutions business line review
Five new financial institutions wins, totaling 18 in the year
Network secured five new financial institutions during Q4, including Pivot Bank in East Africa for the issuance of debit cards, and two new institutions in Jordan; Ila Bank Jordan and the Royal Hashemite Court. Services with Arab Jordan Investment Bank were expanded to issue, host and process the Group’s new prepaid virtual card, providing their banking customers with easy and seamless methods to pay for goods and services. Several contracts were also extended, including a five-year renewal with Dubai Financial Market and two contracts in Egypt, extending Network’s relationship with QNB Al-Ahli for a further ten years, to provide one of the region’s largest private banks with processing services; and with Attijariwafa Bank Egypt for a further three years.
Revenue growth impacted by timing of new business revenue streams
Issuer Solutions full year revenue growth of 12% y/y saw supportive dynamics across new business signings, credentials hosted and transaction levels. Whilst Q4 revenue was flat y/y, growth in the period was impacted by a number of unrelated factors, the timing of which coalesced in the final quarter. Financial institutions chose not to renew particular services or card portfolios, alongside the presence of non-recurring (or one-off) revenue streams in the prior year. Whilst this is typical throughout the year, Network also experienced the delayed signing of some new business revenue streams and longer lead times to onboard signed customers towards the end of the year, which would normally have offset the factors mentioned above.
Network continues to make good progress in the Kingdom of Saudi Arabia with two fintech processing customer wins during Q4, bringing the number of customers in the region to six in total. This provides a further underpin to Network’s medium-long term USD 50 million revenue target. The initial investment capex to deliver processing in the region is also complete. Network remains encouraged by the opportunity in the region, where it has a healthy customer pipeline in place, with operations now PCI PIN certified and compliant with a global payment’s security standard.
-Ends-
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