PagoNxt – strong volume growth, losses narrow

With commentary focusing on Santander’s loan quality and bad debt provisions, investors paid little attention to PagoNxt’s performance within the Spanish bank’s Q3 results. That’s a shame because Santander’s move to consolidate all its payment assets in a single, ring-fenced organisation with a new brand is a bold strategic move. And one that other European banks may follow.

Within the PagoNxt umbrella, GetNet is the largest business unit and includes the merchant acquiring assets in Europe and Latin America. PagoNxt’s other three divisions are international trade (comprising OneTrade and Ebury) delivering specialist trade finance and FX support to cross-border business, Payments Hub which consolidates Santander’s in-house wholesale payments capability and Super Digital, a “financial marketplace for the economic inclusion of the underbanked.” The proliferation of brands is confusing for customers and would benefit from rationalisation.

GetNet is the division which most interests us at Business of Payments. PagoNxt bought Wirecard’s platform from the administrators in 2020 to provide Getnet’s core technology and has been aggressively hiring a heavyweight European management team to make the most of the new asset. It’s too early to know whether this bet has paid off – platform migration is a notoriously tricky business – but the purchase does allow PagoNxt to win at buzzord bingo. We can only admire its “global, cloud-native, data-driven… connected, retail-time, flexible and highly scalable technology platform that is fully cloud and API-based…”

Few new business or product details were given with the Q3 results, but all trends seem positive. 

Total payment volume was €42.4bn, up 33% compared to the same period last year. Active merchants were up 7% to 1.27m. It’s a consistent trend that payment volume is growing faster than the merchant count, indicating that Getnet is paying attention to the quality of its customers. Volume per merchant grew 25% year on year in Q3 to an annualised €134,000.

Getnet Europe continues to outperform. Payment volume was up 42% in the first nine months (at constant currencies) mainly driven by the Spanish market “which displayed a strong performance across all industries.” Management say it has opened three new European markets in the quarter, supporting its goal of becoming a leading pan-European acquirer able to compete with Worldline, Nexi, Adyen and Elavon. Elsewhere, payment volume was up 35% in Mexico and 18% in Brazil.

Overall, for the PagoNxt group as whole, revenue was up 78% in Q3 to €257m. With operating expenses rising a little slower (up 56%), net operating losses narrowed to €24m from €36m a year earlier. 

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