Network International Reports Strong H1 2022 Results With Revenue up 31% And Profit Increasing 113% Reflecting Strong Trading and Strategic Delivery

Network International Holdings Plc (LSE:NETW) (“Network” or the “Company”) today announced its interim financial results for the half year ended 30 June 2022. 

Strong financial performance

Revenue for the period was up 31.1% to USD 205.0 million compared to the same period last year, with broad-based improvement across all regions and a USD 15 million contribution from newly acquired DPO Group. Revenues in the Middle East and Africa increased 21.5% and 55.8% respectively. The UAE, the company’s largest market, saw high growth in merchant payments processed from domestic consumers at 20% year on year, and payments from international visitors growing 92% year on year. 

Underlying EBITDA increased 26.2% to USD 76.2 million in H1 2022, compared to the same period last year, supporting a healthy margin of 37.2%, up 190bps 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 32 million, up 113% year on year, driven by EBITDA growth, a USD 2.2 million gain on the previously announced disposal of its subsidiary Mercury, as well as a benefit from foreign exchange translation movements. 

Given Network’s healthy balance sheet and strong cash generation capabilities, with USD 81 million generated in underlying free cashflow for the twelve months to the 30 June 2022, the company announced its intention to commence a share buyback programme of up to USD100 million. The program enables the company to return value to its shareholders, whilst also retaining sufficient capital and balance sheet flexibility to invest in other growth opportunities.

Nandan Mer, Chief Executive Officer, commented:

“We are encouraged by the continued progress of our growth strategy, with another strong trading period delivering 31% y/y revenue growth. This is supported by the acceleration of digital payments growth across our markets, successful strategic execution and share gains in our home market of the UAE. Our market entry into the Kingdom of Saudi Arabia is also progressing well, having secured a second new customer this year. We also see an opportunity to return excess cash to shareholders through a share buyback programme, whilst retaining our existing flexibility to take advantage of additional growth opportunities which may arise. Overall, our performance in the first half underpins our outlook and guidance for the year ahead, which is reconfirmed. Whilst we remain conscious of rising global macroeconomic and inflationary pressures, we continue to see steady trading in our major markets.”  

Record pace of new business wins 

Merchant signups at record rates:

We have had a record period for new merchant sign ups, driven by the company’s focus on SMEs and innovative offerings such as automated onboarding, low cost ‘Tap on Phone’ payment acceptance and web-store services associated with ‘DPO Pay’. The company’s key new merchant wins during the period included Talabat and Marriot Amman in Jordan.  

Financial institution (FI) wins:

Network secured nine new customers in the period including Alain Finance PJSC, its first non-banking FI customer in the UAE. 

New payment method plus more data insights for merchants, ‘Fintech in a box’ traction in Jordan

Jordan contributed 11% of the total Middle East revenue during the period ended 30 June 2022. Network’s Jordan business contributed to the onboarding of new large merchants with Talabat and Marriot Amman, and was the first to offer Buy Now, Pay Later (BNPL) for merchants in Jordan in partnership with Zoodpay.  It also brought more more data insights to merchants in Jordan through the SmartView report, providing SMEs with in-depth actionable information on their business. Moreover, ‘Fintech in a box’ gained traction domestically, with Network supporting the issuance of cards and undertaking processing for fintechs. 

Another customer secured in KSA, confident in new wins in the coming months

Network continues to make strong inroads in the Kingdom of Saudi Arabia. The Company signed two financial institutions for Issuer Solutions processing services during the first half, demonstrating the attractiveness of its offering in the Kingdom. The company remains committed to building its business in KSA having fully completed its in-country technology deployment and established connectivities with domestic and international card schemes. Network’s pipeline of prospective clients continues to grow, instilling confidence in Network’s ability to attract new wins over the coming months. The Kingdom, a dynamic payments market, represents a cUSD50 million revenue opportunity for Network in the medium-long term.

Direct-to-merchant services to launch in Egypt soon

Egypt is a long established and successful processing services market for Network, where it will soon be launching direct-to-merchant payment services, focusing on the SME market segment. The deployment of the technology stack is complete and the Company expects merchant payment services to go live in the second half of 2022. Egypt is an exciting growth opportunity for Network, with the revenue opportunity expected to build from 2023 onwards.

Outlook for FY 2022 reconfirmed

Whilst Network is mindful of global macroeconomic challenges, its major markets continue to see solid trading conditions. Given the solid performance seen in the first half, financial guidance for the full year is reconfirmed, where we expect Group revenue growth of 27-29% y/y, with modest EBITDA margin expansion.