EML share price soars 8% after reporting record revenue for FY20

The EML Payments Ltd (ASX: EML) share price surged more than 8% in early trade after the company released its financial report for FY20. The EML share price has since pulled back slightly and is trading for $3.43 at the time of writing.

How has EML performed in FY20?

Earlier today EML released its annual report and results for FY20.

The company’s report was highlighted by record revenue for the financial year of $121.6 million, a 25% increase from the year prior. Record revenue helped fuel a 17% surge in EML’s net profit after tax and amortisation (NPAT) for FY20 of $24.0 million.

Other highlights from the company’s report included a 10% increase in earnings before interest, taxes, depreciation and amortisation (EBITDA) for FY20. EML also noted a 57% surge in gross debit volume (GDV) of $13.9 billion, indicating growing demand for the company’s services.

For FY20, the company’s underlying operating cash inflows surged 63% on the year prior to $35.8 million. EML also completed a $264.8 million upfront acquisition of Irish payments group Prepaid Financial Services (PFS) during the financial year.

Despite the headline figures, on a statutory basis EML reported a net loss of $5.8 million for FY20. The company cited the unprecedented challenges of the COVID-19 pandemic as having an impact.

EML’s management noted that prior to the pandemic the company was performing strongly. The company’s gift and incentive segment contributed approximately 65% to group revenue in the first half of FY20. According to EML, gift and incentive GDV declined by 26% in March, 53% in April and 39% in May, with signs of recovery in June.

EML also noted that the company $118.4 million cash on hand and will not be paying a final dividend.

What is the outlook for EML?

EML Payments is an Australian fintech company that provides the technology solutions for payouts, gifts, rewards and supplier payments. The company has a large presence in Australia, North America and Europe, issuing mobile, virtual and physical card solutions.

In its investor presentation, EML highlighted that the company continues to sign new contract with customers in each segment. Despite hints of a recovery, the company expects impacts of the COVID-19 pandemic to continue into 2021.

The company has cited various headwinds including lower foot traffic in retail centres and social distancing measures to impact retail sales. As a result, EML has refreshed its strategy in order to drive growth over the next 3 years.

In order to fuel growth, EML has launched its ‘Project Accelerator’ strategy, which is designed to expand the company’s presence in the tech space. EML also cited its strong capital position which will help the company withstand further impacts of the pandemic.

Foolish takeaway

At the time of writing, the EML share price is trading more than 4% higher for the day. Shares in the company were up more than 8% earlier after hitting an intraday high of $3.55. The EML share price is trading more than 25% lower in 2020.

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Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Emerchants Limited. The Motley Fool Australia has recommended Emerchants Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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