Merchant services continues to fuel growth at Worldine which reported Q2 revenue rising by 8% to €1.172bn. Giles Grabinet, CEO, said the result was “supported by a solid double-digit performance in Merchant Services, confirming, in particular, our enhanced competitive positioning resulting from our continued successful integration of the former Ingenico.”
Merchant services revenue increased 13% to €849m driven by “strong double digit growth” in Commercial Acquiring with positive performance in Switzerland, Benelux and Germany bolstered by “a good start” to the new business lines in Italy and Greece. Payment acceptance, which includes gateways and terminals, scored “good double digit growth” in revenue led by the continued recovery of online sales in travel-related verticals. However, there was a “soft performance” in digital services despite a “good level of activity” in Turkey and Benelux.
While Merchant Services prospers, Worldline’s two smaller divisions seem stuck in the doldrums. Financial Services revenue was flat at €236m and Mobility turnover fell 8% to €87m.
OMDA, Worldine’s preferred measure of profitability which is roughly equivalent to EBITDA, was up 11%. Again, this was driven by merchant services which grew OMDA 13% to €399m although margins fell very slightly to 25%. Operating leverage and delivery of synergies outweighed higher costs.
After taking into account €244m of exceptional items including €133m to amortise past acquisitions and €70m of post-acquisition costs, operating income was roughly flat at €120m for H1.
Turning to the details of the Merchant Services performance, acquiring volume was €120bn in Q2, up 49% on same quarter of 2022. Excluding the recently acquired ANZ, Axepta and Eurobank portfolios, organic volume grew a more modest 10% in H1 with online (+15%) outperforming instore (+7%). The incremental volume from the acquisitions seems to be less profitable than the existing business. The extra €73bn processed in H1 yielded an incremental €229m revenue, reducing the take rate 21bps to 0.73%.
Merchant count rose 7% to 1.39m excluding ANZ. The customer base includes 1.2m instore customers (up 7%) but just 190K webshops (up 5%). Worldline says it is now averaging 7K net new merchants each month “despite some repricing actions.“
Management reported a number of product updates, client wins and new partnerships with the Q2 results.
Evonity, the Belgian manufacturer of electronic vehicle (EV) fast charging points, has become the first customer of Worldline’s EV Charging Payments Suite. EV charging is quite a complicated payment process and needs to be delivered with a consistent customer experience across all continental European markets. Worldine’s proposition includes a PINpad integrated into the charging station as well as pre-authorisation, incremental authorisation and online reversals.
Other client wins include Blizzard and Valve in the gaming vertical and SNCB (Belgian railways) for a “global one-stop shop payment solution” including all channels and domestic, international and alternative payment schemes. Key partnerships include VTEX, an enterprise eCommerce platform and travelplanbooker.com. Worldline claims its distribution now reaches 15% of European retailers and this makes it an increasingly attractive partner for ISVs.
Worldline’s strategy is to expand its geographical reach through partnerships and/or acquisitions of retail banks’ merchant services businesses. The closure of the Banco Desio deal in Q2 brings 15,000 merchants and €2bn volume in Italy. This is a bolt-on to Worldline’s existing operations and bulks up its presence in a market which is still 50% cash and has plenty of room for growth. Worldline plans to start migrating the merchants to its own systems shortly. Banco Desio will distribute Worldline product through 250 branches.
Looking ahead, management gave an update on the proposed joint venture with Credit Agricole in France which would give Worldline access to continental Europe’s largest payment market. Credit Agricole will provide distribution of Worldline product through 36 regional banks and 16,000 banking advisors. The deal is expected to close in Q4 with revenue starting to flow in 2025.
Worldine has been paying down debt, leaving it the fire power to make more portfolio acquisitions in Europe. Giles Grapinet said: “many banks are driving strategic reviews of their payment portfolios, particularly in the Merchant Services space fully cognizant that the market has been transforming and they need really to do serious things to adapt to this new reality.”