Record profit for EML Payments despite mall gift card slowdown

Record profit for EML Payments despite mall gift card slowdown

Brisbane-based prepaid card solutions provider EML Payments (ASX: EML) has achieved record results in FY20, with buoyant growth in its reloadable cards and North American virtual account numbers businesses. 

Net profit after tax and amortisation (NPATA) rose 17 per cent to $24 million, while the revenue increase was greater still at 25 per cent to reach $121.6 million.

At the start of the year EML rolled out its solutions with the USA's biggest shopping centre operator, but pandemic-associated shutdowns worldwide led to a 90 per cent drop in mall gift card volumes in April.

"We launched our program with Simon Malls in the USA in January 2020, only to have Covid put a halt to in-store sales," says EML, led by CEO Tom Cregan.

"Whilst Simon malls are open, gift card sales will remain impacted until service desk attendants to facilitate sales return to all malls."

These cards fall under EML's gift and incentive (G&I) segment, which despite the odds managed to lift sales by 3 per cent to $68.2 million, maintaining its place is the largest contributor to revenue.

"In the G&I segment it's pleasing that we signed 10 incentive partner contracts who will utilise our mobile PAYS technology," the company said.

"Incentive programs will be a key platform for growth in this segment whilst we wait for volume in our malls gift card programs to rebound."

The company's North American virtual account numbers (VANs) part of EML's operations, providing solutions for businesses to better manage payments to suppliers, shone in FY20 despite economic uncertainty.

Out of the $13.9 billion in gross debit volume (GDV) processed by EML, $8.47 billion came from VANS, representing a 62 per cent jump driven by organic growth in existing customers.

VANs revenue growth of 66 per cent to $10.7 million was achieved despite negative impacts in the last quarter as social distancing and lockdown measures reduced spending from health industry clients. 

The acquisition of Prepaid Financial Services (Ireland) Limited (PFS) contributed $1.25 billion in the last quarter, going towards the group's general purpose reloadable (GPR) segment where GDV was up 54 per cent at $4.2 billion, also lifted by salary package and gaming and disbursement programs.

The addition of PFS also meant the GPR had the fastest revenue growth at 75 per cent, reaching $41.9 million.

"In our GPR segment we signed more than 2 dozen contracts across our Banking-as-a-Service, ControlPay, Disbursements and Salary-as-a-Service verticals," the group said.

"In the ControlPay vertical we made meaningful progress with contracts signed with Sezzle in the USA and Laybuy in the UK and Australia, ensuring that by the end of the calendar year we should be supporting Buy Now Pay Later providers in all of our regions.

"Salary Packaging in Australia has continued to be a driver of GDV and revenue growth, with an increase of 58,000 accounts during the financial year, with 67,000 accounts remaining to be transitioned under our agreement with Smartgroup."

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