Covid-19 flattens revenues at Network International

Digital payments specialist Network International said first-quarter revenues were flat after the Covid-19 pandemic dented consumer spending patterns.

Updating on trading, the London-listed firm said that prior to the outbreak, the “positive momentum” witnessed in 2019 and carried on into 2020.

“However, the pandemic has impacted consumer spending patterns. As a result, during the first quarter, total revenues were broadly flat compared with the prior year," he said.

“This represented good performance across the majority of the period, a slowdown in tourism-related spending from mid-February, and a significant impact to trading in the last few weeks in March, linked to social distancing and lockdown measures across nearly all the markets in which we operate, and the closure of Dubai International Airport.”

Network International’s core markets are the Middle East and Africa.

Following the lockdown, Network International’s Merchant Solutions unit saw total processed volumes (TPV) and revenue slump by around 60%. The Issuer Solutions division saw revenues decline between 10% and 15%.

Simon Haslam, chief executive, said: “The speed of the Covid-19 pandemic has impacted individuals and businesses across the board and our focus is on supporting our colleagues, customers and the communities in which we operate.

“While our business is seeing a significant impact from the downturn in consumer spending, some positive trends have emerged. In particular, e-commerce and supermarket retail have flourish, and in line with WHO recommendations to go cash free, we are already seeing an increase in contactless payments and a rising demand for digital and online translation acceptance.

“I am confident that the long-term fundamentals remain strong.”

Rahim Karim, analyst at Liberum, noting the 60% decline in Merchant Solutions TPV, said: “Although this decline is larger than we had assumed in our analysis [50%], it is worth noting that Issuer Solutions business has fared much better.

“We remain extremely confident in the group’s ability to emerge out of this crisis in a strong financial position and take advantage of the attractive structural growth opportunities available to it.”

Liberum has a ‘buy’ recommendation on the FTSE 250 stock, which was trading 5% lower at 427.8p by 1215 BST.