From the CEO
As you can imagine, this report will be in a context where Corona plays the leading role. We entered 2020 with a small but noticeable tailwind. Since our last interim report, the world has changed completely, and this basically overnight. We have had to adjust our playbook, and radically change our tactic to face this new, dramatic challenge on our society.
At Westpay, in addition to our employees’ business partners’ and stakeholders’ safety and wellbeing, our top priority is financial endurance. This will continue to be our top priority for as long as Corona has a significant impact on our industry. We have a baseline of recurring revenue, providing some stability. But as you can imagine, a situation like this claim for more actions.
These actions basically boil down to two vital efforts: smart spending and measures that build endurance. We had already started this work by having implemented several tight cost control actions. In addition, starting on the 1st of April 2020, Westpay implemented a short-time work allowance for all employees. The reduced working time is 40 %. Also, other cost saving measures have been made and certain investments not being critical to the current operations are postponed.
Fortunately we responded quickly to this situation and as a result, we have boosted our endurance significantly. Since it is impossible to know how long this situation will last, we are basing every new decision on the assumption that Corona will have a significant negative impact for at least the remainder of 2020.
Summarizing the first quarter fo 2020 from a financial point of view, we have managed to protect our business well. Our ambition was a lot higher, but given the circumstances, we delivered well.
Our revenue Q1 2020 was up 10 % compared to the same period previous year. Once more we have reached top levels regarding recurring revenue and gross margin. These accomplishments again validate the strength of our business model. I remain confident that we are on the right path, even if the pre-Corona plan was to speed things up.
In a crisis like this, we need to be at our best. Inspired by others, we thought of what we could do at Westpay to minimize the negative impact of Corona. One business that is struggling, more than other, is the restaurant segment. That’s why we decided to offer restaurants, that have the pressing need to reinvent the way they serve their guests, a three months mobile payment solution free of charge. With our solution, they can take their business outside of the restaurant and still get paid safely and securely. Perfect for take-away and home delivery.
Even if our roadmap sees some minor changes due to Corona, we still have some amazing and innovative offerings that will see daylight during 2020. First up was Payment Application as Service (PAaS). With PaaS, our customers can create their own applications on top of our payment application. Now they can finally brand and boost the payment situation with almost anything. This is a game-changer for our customers and for us. And since our solution is based on Android, our customers will not have any problem finding people that can bring their imagination to life.
So, as you can see, we are adjusting our business to the current demands. We have a great roadmap ahead of us, but we need to accept that everything will take more time due to Corona. And that is why we have financial endurance as our top business priority. But in true Westpay pioneering spirit, we turn this challenge into an opportunity that will eventually speak to our favor.
Sten Karlsson, CEO Westpay AB