EML Payments forging ahead after Covid-induced declines

EML Payments has highlighted a robust sales pipeline and told investors volumes are bouncing back from COVID-19 induced declines.

EML Payments boss Tom Cregan. Picture: Annette Dew

EML Payments has highlighted a robust sales pipeline and told investors volumes are bouncing back from COVID-19 induced declines.

In a trading update on Wednesday, the Brisbane-based payments solutions group said first quarter earnings before interest, tax, depreciation and amortisation printed at $10m, up from $3.2m in the same period a year earlier.

The $1.3bn company, which has operations across 28 countries, provides digital banking and payments services, prepaid cards and digital gift cards.

The update said EML was benefiting from improved first quarter trading conditions and chief executive Tom Cregan noted that had extended into the first two weeks of October.

He sees plenty of scope for the group to grow and pick up market share in markets including the US and Europe and the United Kingdom. That includes benefiting from a shift to open banking – which allows consumers more control of their data – in markets including in Australia.

“A lot of the focus is on winning deals and expanding our presence,” Mr Cregan said in an interview.

He said he expected that open banking regimes would be “quite revolutionary” in payments and banking markets over the medium to long term.

“We’ll be in there organically and through acquisition and investment … This will be a 10 year change that will be very sizeable.”

The quarterly update showed gross dollar volume printed at $4.85bn in the first three months of the financial year. EML also said profit would be skewed 52 per cent to the second half of the year.

Group overheads were tracking at the “top end” of guidance.

The company outlined a robust sales pipeline and expectations of adding $5bn of gross dollar volume in the next three to four years.

But investors shrugged off the update and EML shares fell 2.4 per cent to close at $3.61 on Wednesday, bucking a 0.1 per cent gain in the S&P/ASX200.

The gift and incentives payments and cards division saw a rebound in first quarter gross dollar volumes, but they remained 11 per cent lower than the same quarter a year earlier. Government and banking as a service volumes buoyed the general purpose reloadable card division, while the virtual account numbers unit saw volumes return to pre-pandemic levels.

Group earnings before interest, tax, depreciation and amortisation rose 10 per cent to $32.5m last financial year.

EML’s quarterly update coincided with Transport for NSW announcing a tie-up with MasterCard for a trial of a digital Opal card later this year.

MasterCard, in partnership with EML and Commonwealth Bank, was awarded the contract following a competitive tender.

As COVID-19 was gripping global markets early this year, EML recut a deal to buy Ireland’s Prepaid Financial Services which is a banking-as-a-service and digital group. The new terms included a discounted upfront payment of $252m.

The company has an eight-year agreement with salary-packaging firm Smart Group.