PXP revenues hit hard by Brexit & Wirecard fallout, UK & US operations show promise

Brexit and the Wirecard scandal have dealt a heavy blow to PXP Financial’s 2021 revenues, as the group lost a significant number of EEA clients. The firm, which provides acquiring, processing, and gateway services, experienced a 39% decrease in turnover, dropping to €30.8m according to full year accounts deposited at UK Companies House.

PXP Group has its roots in high-risk merchants, dating back to its inception as the in-house gateway at bWin, the Austrian gambling behemoth. With its acquisition of UK-based Servbase, PXP also has a solid point-of-sale (POS) capability in Europe, and North America. The company’s CEO, Kamran Hedjri, led the spin-out from bWin.

As a result of Brexit, PXP was no longer able to serve EEA merchants with its UK Payment Institution license. The company transferred its clients to a Lithuanian eMoney institution affiliated with its parent company, Senjo Group. However, Senjo Group was embroiled in the Wirecard scandal and is currently under investigation by Singaporean authorities. PXP’s Lithuanian partner was also shuttered by local officials after being accused of aiding Wirecard’s COO, Jan Marsalek, in siphoning off €100m from his employer just prior to its collapse.

Consequently, PXP has a new owner, the American investor Omar Chohan, and was obliged to relinquish its EEA customers. According to management, the firm has regained EEA access through a new partner in Austria, potentially Dimoco Payments.

Despite the loss of €20m in annual revenues, it seems that PXP’s lost customers were small and unprofitable. Payment volumes decreased by only 9% and gross profit actually increased by 3%, rising to €20m. Away from the EEA, the UK business had a strong year, with sales growing by 15% to €11m. Management also reported positive progress in PXP’s US operations, which now holds a Money Transmitter license in New Jersey.

Administrative expenses rose by 8% to €24m, but staff costs were kept under control, declining by 6% as the employee count decreased slightly to 185. Nevertheless, operating losses widened from €2.8m in 2020 to €3.5m in 2021, bringing accumulated losses to €57m.

PXP shows signs of exiting a very difficult period but it will take a long time to rebuild the European merchant base lost in the fallout from Brexit and Wirecard.