Insights

EML (ASX:EML) share price plunges 8% after reporting record results

The ASX-listed payments solutions company’s share price is down this morning…
The post EML (ASX:EML) share price plunges 8% after reporting record results appeared first on The Motley Fool Australia. –

The EML Payments Ltd (ASX: EML) share price has taken a hit in early morning trading after the payment solutions provider reported its full-year results for the FY21 after market close yesterday.

The EML share price is sitting at $3.25 in early trading, an 8.19% drop on Tuesday’s closing price of $3.54. This adds to 1.4% fall during Tuesday’s trading session.

EML share price in focus after record year

The EML share price drop comes after the company reported the following key results:

Group gross debit volume (GDV) up 42% to $19.7 billion.
Record revenue of $194.2 million, an increase of 60% on FY20.
Record underlying group earnings before interest, tax, depreciation, and amortisation (EBITDA) of $53.5 million, up 65%.
Gross profit margins of 67%, down from 73% in FY20 due to a shift in business segments.
New business GDV pipeline of $10.5 billion, with more than 300 prospects.
Costs and provisions totalling $11.4 million in FY21 in relation to the Central Bank of Ireland regulatory investigation.

What happened in FY21 for EML Payments?

It will be interesting to see whether the EML share price rebounds during the day after the company announced a record year, with growth across most financial metrics.

Possibly EML’s most important metric, GDV, increased 42% on the prior year to $19.7 billion. The bulk of this growth was delivered by the company’s general purpose reloadable (GPR) segment, with an increase of 130% to $9.7 billion.

While organic growth at EML was reasonable, a substantial portion of it was via its Prepaid Financial Services (PFS) acquisition. For example, PFS contributed $6.4 billion to the GPR segment during the financial period.

Meanwhile, continued challenging conditions as a result of lockdowns during the period impacted the company’s gift and incentive (G&I) segment. Specifically, gross debit volume fell 6% to $1.1 billion in FY21.

The increased GDV also helped EML to achieve record group revenue in FY21. Growth in salary packaging and gaming programs assisted in the $194.2 million of revenue — representing an increase of 60%.

EML derived 58% of this revenue from its higher-margin GPR segment, demonstrating the company’s commitment to generate the majority of its revenue from the more profitable business.

Throughout the year, EML signed 121 new clients, 70% of which came from its new growth verticals in GPR programs.

The company said, “We believe the growing demand for embedded, innovative and highly configurable payment solutions will drive further growth for the next 5 – 10 years.” Examples of new deals in the last year include Quid, Laybuy, Humm, and Coinjar.

What did management say?

Commenting on the result, EML Payments Non-Executive Chairman Peter Martin said:

At the end of the year, we were supporting programs in 27 countries. Approximately 60% of our global revenue comes from Europe, over 25% from North America and the balance from Australia. Over 80% of our revenues are recurring which provides a very strong underlying platform for growth.

Additionally, regarding further acquisition opportunities, Mr Martin said:

Further major opportunistic acquisitions to expand our global reach or capabilities are unlikely in the next 12 months. During the next financial year, management will be focused on bedding down the PFS remediation plan and the Sentenial acquisition. However, small investments through our Accelerator strategy are being considered.

What’s next for EML Payments?

Heading into FY22, the company holds more than 300 prospects. These potential growth drivers hold an estimated value of $10.5 billion in GDV.

At the same time, ASX-listed EML Payments will be working closely with the Central Bank of Ireland. In the company’s annual report, it notes CBI investigated aspects of its PFS Ireland Limited business including governance, resourcing, reporting, risk methodologies, and capital adequacy.

A remediation plan has been put together by the company and provided to CBI. As per the plan, EML intends to complete most of the remediation efforts by the end of this calendar year, with the remainder to be done by the end of March 2022.

Finally, the group provided guidance ranges for FY22 for various metrics, these include:

Gross Debit Volume of $93 billion to $100 billion ( with recently acquired Sentenial expected to generate $69 to $74 billion of this)
Revenue of $220 million to $255 million
Underlying EBITDA of $58 million to $65 million
Operating cash flow of 80% to 90% of EBITDA

EML Payments share price snapshot

Prior to today, the EML Payments share price had gained 8.3% during the past 12 months. For comparison, the S&P/ASX 200 Index (ASX: XJO) returned 22.7% over the same time period.

Based on its current share price, EML Payments has a market capitalisation of $1.28 billion.

The post EML (ASX:EML) share price plunges 8% after reporting record results appeared first on The Motley Fool Australia.

Should you invest $1,000 in EML Payments right now?

Before you consider EML Payments, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and EML Payments wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

When was the worst ever day on the EML (ASX:EML) share price chart?
Why the EML (ASX:EML) share price is gaining today
What’s going on with the EML Payments (ASX:EML) share price?
ASX 200 midday update: GUD results, Woodside update, ANZ appointment

EML (ASX:EML) share price up 5% on Tuesday

Motley Fool contributor Mitchell Lawler owns shares of EML Payments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended EML Payments. The Motley Fool Australia owns shares of and has recommended EML Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!