First half revenue increased 19% (CCY1) y/y to USD 239 million, supported by a 33%(CCY1) rise. in the total value of consumer payments processed by merchant customers (TPV).
• Strong trading in the UAE driven by growing consumer confidence and an increase in tourism,
with UAE domestic consumer payments processed by merchants5 up 28% y/y and international
payments6up 53% y/y
• Underlying EBITDA grew 23% to USD 94 million reflecting strong revenue growth and cost
control
• Significant new business wins with SME sign-ups in May increasing 80% y/y and the addition of
major new customers including Talabat and Al Fujairah National Insurance Company
• Three new customer wins in Saudi Arabia including Alinma Bank, one of the region’s top five banks
• Good reception for recently launched merchant services in Egypt, having signed over 700
merchants Group Financial Summary (USD‘000) H1 2023 H1 2022 y/y change
Total revenue 239,290 205,032 16.7% (19% ccy1)
Merchant Services 111,355 85,673 30.0% (33% ccy1) Outsourced Payment Services 125,990 117,926 6.8% (9% ccy1)
Other revenue 1,945 1,433 35.7%
Underlying EBITDA2 94,009 76,216 23.3%
Underlying EBITDA margin2 39.3% 37.2% 210bps
Profit for the period 34,916 31,997 9.1%
Underlying free cash flow2 65,364 39,975 63.5%
Cash flow from operating activities 107,199 90,604 18.3%
Leverage3 0.6x 0.7x (FY22) (0.1)x
1. Ccy – Constant currency terms. 2. This is an Alternative Performance Measure (APM), financial definitions and further details on financial disclosures are available in the
company’s regulated RNS on the London Stock Exchange. 3. Leverage ratio computation and reconciliations are available in the company’s regulated RNS on the London Stock
Exchange. 4. TPV: Total Processed Volumes – the aggregate monetary volume of purchases processed by the Group within its Merchant Services business line. 5. Domestic TPV
represents spending from consumers domiciled in the region. 6. International TPV represents consumer spending by overseas visitors.
Network International Holdings Plc (LSE:NETW) (“Network” or the “Company”) today announced its interim financial results for the half year ended 30 June 2023.
Nandan Mer, Chief Executive Officer, commented:
“Network saw another good trading period, delivering 19% constant currency revenue growth in the first half of the year.
Our performance continues to be supported by the acceleration of digital payments growth across key markets but is also evidence of our successful strategic execution, competitive services and product offering.
Performance in our home market of the UAE has been particularly good, where we have seen consistent market share gains in direct-to-merchant services through 2022 and into 2023, supported by our continued focus on high growth strategic areas such as SME, online and hospitality.
We have made good progress in new market opportunities, having secured another three new financial institutions in the Kingdom of Saudi Arabia and signed over 700 merchants since our direct-to-merchant service was launched in Egypt earlier this year.
Whilst overall Africa performance was slower on the back of tough macro-economic
conditions, we have recently deployed on-soil technology capabilities in South Africa, positioning Network to better serve customers locally and providing excellent foundations for future growth. We remain encouraged
Classification – Public by performance across the Group and I thank our colleagues for their expertise and delivery of such good results.”
Strong financial performance Revenue for the first half of 2023 increased 17% (19% in constant currency) to USD 239 million compared to the same period last year, driven by stellar performance in the UAE and Jordan, with Merchant Services
up 30% (33% in constant currency) and Outsourced Payment Services up 7% (9% in constant currency).
The domestic consumers and international visitors, increasing 28% and 53% year on year respectively, reflecting the
UAE’s resilient domestic consumer spending and strong influx of tourists in addition to the strength of Network International’s competitive offering. Across the group, which includes African markets, the total value of consumer payments processed with merchants grew 31% (33% in constant currency) year on year, supported by Network International’s strategic focus on the high growth SME, online and hospitalty sectors.
Underlying EBITDA increased 23% to USD 94 million in H1 2023, compared to the same period last year,supporting a healthy margin of 39%, up 210bps year on year. This reflects Network’s strong revenue performance and cost control, whilst it continued to invest in its product capabilities and future growth.
Profit for the period was USD 35 million, up 9% year on year, as the company’s strong underlying EBITDA growth was slightly offset by higher net interest expense due to rising market interest rates and a higher effective tax rate due to growing profits across Africa. Consequently, Network International generated robust underlying free cashflow of USD 65 million, up 64% year on year.
New business momentum maintained with major KSA FI wins.
Major merchant sign ups and strong SME performance:
Network International continued to attract a significant number of key account and SME merchants, with major new wins during the period including Talabat and Al Fujairah National Insurance Company.
The company’s ongoing focus on the SME segment continues to pay off, delivering significant year on year growth in SME signings in the UAE, with sign-ups in the month of May accelerating substantially, up 80% year on year. The company’s success was supported by additional investments in its sales team and the launch of new capabilities including its fully digital onboarding process and sector specific solutions.
Financial institution (FI) wins:
Network secured eight new customers across acquirer and issuer processing. It also continues to rapidly expand its customer base in Saudi Arabia signing three new financial institutions, including Alinma Bank, one of the region’s top five FIs. Since entering the Kingdom in 2022, Network has quickly grown its customer base of processing customers to a total of nine.
Strong reception for merchant services in Egypt Having successfully launched direct-to-merchant services in Egypt at the start of the year, Network’s offering continues to receive a strong reception, having secured over 700 merchants, including Tradeline, who are
Apple’s authorized resellers in the first half of the year. The entry into direct-to-merchant services in Egypt represents a significant revenue opportunity, building on Network’s already well-established presence as a processing services provider in the country.
Classification – Public:
Forward Looking Statements This announcement contains certain forward-looking statements with respect to the financial condition, results or operation and businesses of Network International Holdings Plc. Such statements and forecasts by their nature involve risks and uncertainty because they relate to future events and circumstances. There are a
number of other factors that may cause actual results, performance or achievements, or industry results, to be materially different from those projected in the forward- looking statements.
These factors include general economic and business conditions; changes in technology; timing or delay in signing, commencement, implementation and performance of programmes, or the delivery of products or services under them; industry; relationships with customers; competition; and ability to attract personnel.You are cautioned not to rely on these forward-looking statements, which speak only as of the date of this announcement. We undertake no obligation to update or revise any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances.
