Network International adjusts mid-term guidance as it integrates DPO
Network International Holdings
393.40p
16:40 25/04/24
Network International updated the market on its near- and medium-term outlook on Wednesday morning, leaving its 2021 financial guidance unchanged.
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The FTSE 250 company said that, for 2022, it was now anticipating revenue growth of between 27% and 29% year-on-year, including an expected 12-month contribution from the just-completed acquisition of DPO.
Its underlying EBITDA margin was expected to be “broadly flat”, including the mix impact of DPO and its Saudi Arabia market entry.
Capital expenditure was pencilled in at up to $55m for 2022, including core business capex, DPO, the remaining investment to enable the company’s market entry in Saudi Arabia, and completion of the separation of shared services from Emirates NBD.
Looking further ahead, Network said it was accelerating its medium-long term revenue outlook to at least a 20% compound annual growth rate, which was ahead of its prior low-mid teens guidance.
The company’s group underlying EBITDA margin would return to between 45% and 50% over time, supported by operating leverage in the core business, with margin contributions from DPO and Saudi Arabia increasing.
Capital expenditure was anticipated to be between 8% and 10% of revenue, which the board described as being “at the higher end” of its range in earlier years.
The directors said there was the potential for further growth opportunities, which would deliver incremental revenue and EBITDA to guidance, while requiring further investment.
At the same time on Wednesday, Network confirmed that it had completed the acquisition of DPO, which had continued to trade ahead of its expectations, and was already EBITDA profitable.
The company said DPO’s first half revenue came in at $12.4m, making for growth of 54% year-on-year, or 35% at constant currency.
It said the acquisition consideration represented a multiple of around 11x expected 2021 revenue.
The integration and delivery of synergies were already in progress, the board said, with Network’s existing customer TymeBank signing an online payments facilitation agreement with DPO to support its customers accepting online payments.
DPO Pay, a “quick and cost-effective” online payments solution for small to medium enterprises, would be launching “soon” for Network's UAE merchants.
The board said it was still expecting a double-digit return on capital employed from the acquisition within three years of completion.
“DPO brings direct-to-merchant payment services in 21 new markets, pivots our business to the fastest growing online segment, adds technology and expertise beyond card rails and brings a substantial pool of talented colleagues who will further enhance our capabilities,” said chief executive officer Nandan Mer.
“This acquisition is a significant milestone on our journey to becoming the fastest-growing and most innovative customer centric payments company in the Middle East and Africa.”
At 0852 BST, shares in Network International were up 0.72% at 361.9p.