Worldline has reported strong growth in revenue and profits for H2 2022 as its Merchant Services division wins new customers and delivers on acquisition synergies.
Total group sales rose 15% in Q4 to €1.186bn. Excluding acquisitions and currency effects, revenue was up 11%. Worldline only releases profit numbers for half years. In H2 22, total OMDA (operating margin before depreciation and amortisation) rose 25% to €664m.
Worldline’s future is quite clearly now tied to Merchant Services, which accounts for 70% of group sales and 78% of profits. Performance at the two smaller divisions has been much less exciting. Financial Services grew sales just 4% although management is very proud of a new multi-market issuer processing deal with ING Bank. Mobility services, including mass transit ticketing, saw revenue grow only +1%.
In contrast, Merchant Services numbers all pointed in the right direction. Payment volume rose 16% to €173bn, revenue was up 20% to €835m and profits (OMDA) rose 42% to €517m. Margins expanded 5ppts to 31% “reflecting the widespread and rapid shift towards digital payments as well as the Group’s strong positioning following the acquisition of Ingenico.“
Bottom line performance has been helped by the impressive realisation of synergies from the Ingenico and SIX acquisitions. Worldline claims €60m annual savings already realised from Ingenico with a further €40m to come in 2023 from this and other acquisitions. The fourth and final year of the SIX integration plans has been completed with over €110m annual synergies delivered.
Merchant count rose 7% year on year to 1.245m split between 1.06m POS merchants and 185,000 web shops. Excluding recent acquisitions, Worldline has gained 200,000 merchants since the end of December 2020. Annualised processed volume per merchant rose 8% to €277K and revenue per merchant was up 15% to €1,335.
Marc-Henri Desportes, deputy CEO, said: “We build the best comprehensive payment stack by combining progressively the best assets of all our acquisitions, connecting them and migrating our volumes to reach scale, efficiency and the best product features.”
Management provided some detail on its Merchant Services strategy which focuses on leveraging Worldline’s consolidated acceptance/acquiring platforms to win enterprise clients, continued geographical expansion, normally in alliance with local banks that have good SME distribution, and on adding additional product capability through acquisition.
Enterprise sales are reported very strong as potential clients warm to the unified set of capabilities presented by the Worldline brand as highlighted by this chart from the results deck. Desportes went on: “We have now the best and most competitive offer on the European market for demanding high-volume retailers…these customers need a simple, unified commerce solution… we could beat the best international players who were tendering against us.”
Management is particularly pleased with wins at Lufthansa, for its travel hub solution which includes multi-acquiring, and a “full omni-channel offering” at Monoprix including self-checkout and online mobile payments.
Moving to SMEs, roughly 50% of European merchant acquiring is still controlled by banks, many of whom do not have the scale or technological capacity to provide modern payment acceptance propositions. In the past year, Worldline has concluded several good bank partnerships:
- Italy – purchase of 80% of Axepta, which brings 5% of the Italian market, and a strategic partnership with BNL. The latter aims to sell Worldline products through BNL’s extensive distribution network. Worldline has also announced plans to buy the merchant acquiring activities of Banco Desio, adding a further €2bn payment volume.
- Greece – acquisition of Eurobank Merchant Acquiring with 21% market share and 190,000 POS terminals
- Australia – launch of a JV with ANZ Bank, bringing 20% market share and €75bn volume
Wordline has also concluded two product acquisitions. To gain access to marketplace/ platform capability, it purchased 40% of Online Payment Platform (OPP), a Dutch PSP. And to strengthen its micro-merchant proposition, Worldline took a majority stake in Softpos.eu, a leading Polish softpos vendor. This is the technology on which “Worldine Tap on Mobile” is based.
With FIS demerging Worldpay, analysts asked whether Worldine would participate in any mega-mergers. Gilles Grapinet, CEO, said he was focused on more manageable corporate activity. “We are more interested into the size of the distribution channel than the financial magnitude of the transaction.. We believe the best way … is to expand the size of the distribution for Worldline, much more than onboarding any sizable, new payment platform that would generate massive integration effort and costs for a few years’ time.”