PayPoint H2 Earnings Call Highlights

Key Points

• PayPoint posted record annual results, with underlying pre-tax profit up to GBP 69 million, underlying EBITDA at GBP 92 million, and net revenue rising to GBP 190.8 million. The company also increased its final dividend 2% and returned more than GBP 90 million to shareholders through buybacks and dividends.
• Growth was mixed across divisions: Shopping and Payments/Banking grew, Love2shop posted stronger profit and revenue, while E-commerce declined due to new commercial terms. Management highlighted progress in key initiatives such as BankLocal, Royal Mail Shop, and Collect+.
• PayPoint is reorganizing into four business units to support a target of 5% to 8% annual net revenue growth and improve accountability. Management said the business remains confident it will exceed fiscal 2026 underlying profit in the current year, with results expected in line with market forecasts.

PayPoint LON: PAY reported record underlying pre-tax profit for the year ended March 31, 2026, as management said the payments and retail services group had made progress on several growth initiatives while beginning a reorganization aimed at improving transparency and accelerating revenue growth.

Chief Executive Nick Wiles told investors that underlying profit before tax rose to GBP 69 million for the year, while underlying EBITDA increased to GBP 92 million. Net revenue rose to GBP 190.8 million, and the company returned more than GBP 90 million to shareholders through share buybacks, a special dividend and ordinary dividends.

Wiles said the results showed “further resilience” in the second half and the year as a whole, and represented “a strong response” to headwinds the company had flagged at its interim results in November. PayPoint also increased its final dividend by 2% to GBP 0.20 per share.

Revenue Growth Led by Shopping, Payments and Love2shop

Chief Financial Officer Rob Harding said group net revenue increased 1.7% from GBP 187.7 million a year earlier. Total costs rose 1.8% to GBP 121.8 million, resulting in underlying profit of GBP 69 million, up 1.5% year over year.

By segment, Harding said PayPoint profits fell to GBP 51.1 million from GBP 53.4 million, while Love2shop profits rose to GBP 17.9 million from GBP 14.6 million. Statutory profit after adjusting items was GBP 55.5 million. Adjusting items totaled GBP 13.5 million, including GBP 7.1 million of exceptional costs, GBP 1.2 million of movements on convertible loan notes and other investments, and GBP 5.2 million of amortization of acquired intangibles.

Harding said diluted underlying earnings per share rose 6.5% to GBP 0.736, supported by profits and the ongoing share buyback program.

The company reported mixed divisional performance:

• Shopping net revenue rose 1.7% to GBP 66.3 million, as growth in service fee income offset lower revenues in card payments, ATMs and counter cash.
• E-commerce revenue fell 4.9% to GBP 15.6 million, with higher transaction volumes more than offset by new commercial terms with InPost and Yodel.
• Payments and Banking revenue increased 1.8%, helped by double-digit growth in digital and a full-year contribution from OBConnect, offsetting a 10% decline in legacy cash bill payments.
• Love2shop revenue rose 3.5% to GBP 53.5 million, while billings increased 5% to GBP 385.8 million, driven by Love2shop Business and growth in physical card distribution.

BankLocal, Royal Mail and Collect+ Highlight Growth Initiatives

Wiles said PayPoint had made “strong progress” across three key growth levers during the year, including the launch of PayPoint BankLocal with Lloyds Bank and Nationwide, the launch of Royal Mail Shop and Royal Mail’s strategic investment in Collect+.

In shopping, Wiles said the company continued to grow its retailer network and expand service fee revenue by offering retailers more commission-generating opportunities and community services. PayPoint BankLocal, which enables consumer cash deposits through app-based and chip-and-PIN methods, is now live with Lloyds and Nationwide, and Wiles said the company expects more banks to follow during the year. He said early adoption was encouraging, with the deposit run rate already exceeding GBP 3 million per week and growing quickly.

In e-commerce, Wiles said the first half had been strong for parcel volumes and net revenue, but the second half was a period of consolidation. Management is focused on accelerating the Royal Mail partnership, embedding the reset commercial relationship with the combined InPost-Yodel business, developing carrier growth plans and investing in the Collect+ network.

In Payments and Banking, Wiles pointed to growth in digital payments and open banking, strengthening in sectors such as housing and a broader opportunity to cross-sell payment services within the existing client base. He said OBConnect delivered the stronger second-half performance the company had anticipated.

Reorganization Aims to Support 5% to 8% Net Revenue Growth

A major focus of the call was PayPoint’s reorganization into four business units: Network Services, Digital Payments and Open Banking, Love2shop and Merchant Services. Wiles described the restructuring as “a major inflection point” intended to create a simpler, more accountable structure and support the company’s target of 5% to 8% annual net revenue growth.

Wiles said the new structure would create clearer strategies for each business unit, improve delivery of growth projects, and support targeted investment in sales, marketing, product development, data analytics and AI. He said the company would balance investment in higher-growth opportunities with managing mature and legacy activities for value and cash generation.

In Network Services, PayPoint is reorganizing its retailer field operations into four primary regions and 36 sub-regions, with field, retail services and finance teams integrated regionally. Wiles said this should improve real-time retailer support, increase revenue per store, widen product penetration and improve compliance.

In Digital Payments and Open Banking, the company is bringing together MultiPay, OBConnect and AperiData onto a single technology platform under one management structure. Wiles said the business combines digital payments, open banking, direct debit, cash, data sharing and real-time credit reference capabilities, and could become PayPoint’s fastest-growing business.

In Merchant Services, Wiles said the company had “fundamentally reset” its strategy, shifting toward higher-value merchants, mid-market opportunities and improved profitability rather than pure estate growth. He said merchant rentals and business finance are also targeting growth through partnerships, including FreedomPay and NewLend.

Cash Flow, Debt and Capital Returns

Harding said PayPoint generated GBP 17.4 million of cash during the year, up GBP 1.4 million from the prior year, after adjustments for items including depreciation and amortization, share-based payments and working capital. He said a working capital outflow was largely related to payment timing to suppliers and is expected to unwind in fiscal 2027.

Year-end net debt was GBP 132.5 million. Harding said cash outflows included GBP 17.1 million of tax paid, GBP 22.6 million of capital expenditure, a GBP 10.4 million exceptional payment related to the Utilita settlement and a GBP 1.5 million one-off pension contribution.

PayPoint returned more than GBP 90 million to shareholders during the year. Harding said the company has returned GBP 45 million so far through its buyback, with a further GBP 30 million planned for fiscal 2027 and fiscal 2028. The aggregate buyback is expected to total GBP 105 million, alongside a share consolidation targeting an overall reduction in issued shares of about 30% from the start of the buyback in July 2024 through the end of fiscal 2028.

Management Confident on Current-Year Outlook

Wiles said PayPoint remains confident it will exceed the underlying profits achieved in fiscal 2026 in the current year, with results expected to be in line with market expectations. He noted that profit may be slightly more weighted toward the second half compared with fiscal 2026 as the business implements organizational changes.

During the question-and-answer session, Michael Donnelly of Investec asked about PayPoint’s competitive positioning in open banking and digital payments. Wiles said the company’s existing customer base across housing, utilities, local and central government, and charities was a key advantage. He added that investment in sales and marketing should help the company upsell broader payment capabilities into existing clients and build its new business pipeline.

Asked about early benefits from the reorganization, Wiles said it was still early but that the business had been energized by clearer groupings and accountability. He said the new regional retail structure should help PayPoint respond more quickly to retailer issues identified in the field.

Wiles said PayPoint expects to host a capital markets day in the second half of the year, potentially in the fourth quarter of the calendar year.

About PayPoint LON: PAY

PayPoint plc engages in the provision of payments and banking, shopping, and e-commerce services and products in the United Kingdom. The company operates through two segments: PayPoint and Love2shop. The PayPoint segment provides card payment services to retailers, including leased payment devices; EPoS; ATM cash machines; SIM cards sales; receipt advertising; bill payment services and cash top-ups to individual consumers; parcel delivery and collection services; retailer service fees solutions; and digital payment services, as well as cash through to digital services.

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