PayPoint has said it remains on track to meet full-year market expectations after delivering what it described as a solid first-quarter performance, despite lower group revenue against a strong comparative period.
Group net revenue fell 6.4 per cent to £39.5 million in the three months to 30 June, with declines across Network Services, Merchant Services and Love2shop partially offset by growth in Digital Payments & Open Banking.
Network Services, the division most closely linked to the convenience retail sector, recorded net revenue of £21.6 million, down 6.5 per cent from a year earlier. The company said the decline reflected the continued rebasing of its parcels business following the new commercial agreement with InPost, although growing volumes from Royal Mail and other carriers are continuing to build.
PayPoint said its recent business reorganisation has already begun delivering improvements in retailer engagement. Analysis of its new Retail Performance Manager model showed increased retailer visits, stronger revenue from Retailer Rewards, Cards and BankLocal, a 63 per cent reduction in call waiting times at the Retail Service Hub and a greater focus on increasing revenue per retailer. Retail Technology and Services revenue grew 6.2 per cent during the quarter, while Digital Content & Engagement increased 17.3 per cent, supported by campaigns including SPAR's “Win With Every Goal”.
Chief executive Nick Wiles said the group's underlying performance was in line with expectations despite challenging market conditions.
“We have had a busy start to the year and, in the first quarter, achieved our primary objective of implementing the changes arising from our business reorganisation,” he said.
“Our underlying business performance for the quarter was consistent with our expectations and, against a strong prior year comparator, has established a solid platform for the year ahead. This performance was delivered against the backdrop of a trading environment that remained challenging, with subdued consumer activity and confidence alongside a weak overall economy.”
Wiles added that the company continues to expect a stronger weighting of performance in the second half of the financial year, driven by new business wins and seasonal trading.
Elsewhere, Digital Payments & Open Banking increased net revenue by 4.1 per cent to £3.2 million, supported by a 9.0 per cent rise in transaction volumes and the acquisition of Aperidata in June, which strengthens the group's Open Banking capabilities.
Merchant Services revenue declined 6.1 per cent to £7.7 million as PayPoint continued its planned shift towards serving higher-value merchants, although Merchant Rentals and Business Finance both recorded growth.
Love2shop reported net revenue of £7.0 million, down 9.8 per cent due to the timing of revenue recognition. However, billings rose strongly to £44.9 million from £38.4 million a year earlier, with the business tracking 12 per cent ahead of the prior year. The company also highlighted strong retail performance, with in-store billings up 108 per cent following additional distribution through Boots and Asda Express. July's “Thank You Teacher” campaign delivered particularly strong results, with cards sold up 103 per cent and sales value increasing 97 per cent year on year.