The right time to establish itself as a software provider
The right time to establish itself as a software providerEARNINGS/SALES RELEASES
Not immune to the COVID-19 crisis, Keyware nevertheless boosted the revenues of its software division, within which the EasyOrder application was a success during the lockdown period. The payment terminals and authorisations segments should face further headwinds during the year (and especially in Q2), which finally confirms that the company’s transformation into a software developer has come at the right time.
FACT
Q1 FY20 key financials
Revenue down by 10.7% to €4,185k
EBITDA down by 20% to €804k with an EBITDA margin of 19.2%
Net profit down by 44% to €206k
ANALYSIS
The lockdown as an opportunity for EasyOrder
The Q1 FY20 revenue decline (-10.7% to €504k) was mainly driven by the payment terminals segment (-17.2% to €1,654k), which saw a fewer number of newly-signed contracts as an obvious consequence of the lockdown measures from mid-March. SWAPS and renewals were, however, in line with those of Q1 FY19. Consequently, the authorisations segment reported a 9.6% revenue decline to €1,754k due to lower commissions.
However, the group has managed to take advantage of the sanitary crisis through its software segment (+1.8% to €835k) which was pushed up by the EasyOrder payment application. Digitalisation of orders and payments has been reinforced during the lockdown and is expected to continue to develop as a direct consequence of changing consumer habits.
All in all, Keyware continues its transformation from purely a terminal provider to a fully-fledged software developer, to the benefit of the top-line results. The share of the software segment has grown to 20% (from 17.5% yoy), while the payment terminals segment now represents 39.5% (vs. 42.6% yoy) and the authorisations segment 41.9% of the group’s total activity.
COVID-19 impact
Keyware has estimated a €275k loss in revenue as a result of the COVID-19 pandemic, mainly due to payment terminals. Cost savings in purchases (from terminals) have been estimated at €45k, while personnel costs were down by €69k.
Finally, the impacts from the pandemic to the Q1 FY20 EBITDA and Q1 FY20 net profit are €-161k and €-136k, respectively.
We expect that Q2 FY20 should be relatively worse, as Q1 was only impacted from mid-March. Enterprises and merchants resumed their activities in the week of 4 May 2020 and 11 May 2020, respectively.
IMPACT
We will integrate the Q1 figures and revise our estimates to integrate the COVID-19 impact. The payment terminals and authorisations divisions are expected to experience significant headwinds during the year, while we believe that this crisis will strengthen the software division and boost the segment’s revenue.
Keyware Technologies NV. Keyware Technologies NV is a Belgium-based independent network service provider that offers electronic payment solutions. It is engaged in the: personalization, programming, installation, maintenance, rental and sale of fixed, portable and mobile payment terminals; implementation of payment transactions using Visa, MasterCard, Maestro, Amex, V-Pay, and JCB, among others; payment services for electronic-commerce and mobile-commerce; solutions for loyalty cards, as well as development and management of its payment transaction platform. The Company operates in two segments: Payment Terminals, engaged in the rental of terminals, the sale of payment terminals, installation of payment terminals, revenues related helpdesk and revenues relating to on-site interventions, as well as Payment Authorization, engaged in income related payment transactions and authorization services, transaction management for third parties, as well as loyalty processing and analysis services, among others.
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