After reporting a loss of A$5.8 million in the year to June, as it worked to get on top of a series of acquisition related costs, EML Payments has gone further into deficit with a loss of $23.8 million for the six months to December 2020.
Revenue was up 59 per cent to $94.3 million, compared with the previous corresponding period, and EBITDA was up 42 per cent to $28 million.
Gross debit volume – spending using its products – increased from $6.6 billion in the December half 2019 to $10.2 billion in the latest half.
But a doubling of depreciation and amortisation expenses related to acquisitions, a three-fold increase in finance costs, and a charge to increase the expected contingent payable on an earn-out tipped the company into loss.
In 2019, EML acquired Flex-e-Card Ltd – a gift cards business that trades as flex-e-card and flex-e-vouchers. It also acquired the 25.1 per cent of Irish payment card company PerfectCard DAC it did not already own.
Last year, it acquired European payments company Prepaid Financial Services (Ireland) Ltd, a provider of white label payments and banking-as-a-service technology.
EML said the PFS acquisition would make it one of the world’s leading prepaid payments providers and a leading fintech enabler in open banking, and that it would add digital banking and multi-currency offerings to its product suite.
The company operates in 28 countries. Its business segments include gift and incentive cards, general purpose reloadable cards and virtual account numbers. The biggest business is the general purpose reloadable segment, which accounts for 57.1 per cent of revenue.
Revenue from gifts and incentives fell 13 per cent as lockdowns hit shopping centre traffic around the world.
A key metric for the company is revenue conversion - the ratio of revenue to gross debit volume. As the business has grown and its business mix has changed, revenue conversion has fallen.
It fell from 108 bps in 2018/19 to 88 bps in 2019/20 but recovered to 93 bps in the December half.