DNA Payments reports 12% revenue growth, keeps buying ISOs

DNA Payments reported revenues up 12% in 2021 according to documents filed at Companies House. The company is a very well funded London-based payments roll-up which has, so far, swallowed eight businesses.

DNA was founded by two Kazakh bankers, Nurlan Zhagiparov and Arif Babayev. It received £100m investment from Alchemy Partners in 2021 to build “one of the largest independent, vertically integrated omnichannel payments companies in the UK and EU.” DNA claims 100.000 acceptance points (terminals or checkout pages), 65.000 customers and £11 bn transaction value processed annually. DNA expects to be the “4th largest payment provider in the UK by close of 2022” although it’s not clear which metric would be used to judge.

DNA’s technology is based on the acquisition of Optomany, an omni-channel payment gateway with a strong relationship with PAX, which was purchased for a bargain price of £2.5m in 2019. 123 Send, a leader in short-term rental of payment terminals also came as part of the deal. Since then, DNA has been busy acquiring many more businesses, mainly small UK ISOs. 

Logically, the business plan must be to boost these ISO’s profitability by centralising operating expenses, migrating customers to the Optomany product and boosting new business through modern sales and marketing. This could be a rewarding strategy but, with £100m investment in the bank, the founders will very likely have bigger ideas.

There are now eight businesses under the DNA umbrella. In 2021 the company bought Active Merchant Services, a Barclaycard ISO for £3.1m and EFT Solutions, for £2.6m. After year-end, DNA acquired First Payment Merchant Services, a Barclaycard ISO, and Card Cutters, which works with AIBMS and EVO. The group also includes Zash, a small Swedish ePOS vendor whose software it hopes to cross-sell to its small merchant customers. 

These eight businesses are all still trading but the Group has also created a DNA Payments brand to sell more complex solutions direct to larger merchants. It is having some success. Here’s a good case study from an EV charging business which needed a joined up solution of in-app and contactless payments.

Total revenue for DNA Group in 2021 was up 12% at £11.7m. The take rate of just c.10bps reflects that, despite strong omni-channel capabilities, DNA is still heavily dependent on the sale and leasing of payment terminals. These accounted for 74% of turnover.

Gross profit was up 15% at £6.6m with margins up very slightly to 56.3%.

Administrative expenses grew 90% to £14.9m as staff numbers expanded from 84 to 143. 

EBITDA losses rose from £0.6m to £6.9m and total loss before tax was £8.9m. Accumulated losses now stand at £12.8m.