From the CEO

We enable payments - globally

From the CEO

Our performance in the fourth quarter was unsatisfactory. Sales remained lower due to shifts in product generations and delays on international markets. The operating result dropped significantly. On the positive side, our gross margin continued to increase, reaching 61 % (+3 p.p.) for the full 2018. It is a strong indicator on the strategic capacity of our business model. The immediate priority is to expand sales activities while also maintaining a stable liquidity situation.

Our strategic focus on enabling payments globally, through innovations and a solid business foundation based on long-term customer and partner alliances, remains unchanged. Persistently we broaden our business scope and advance our technology portfolio. During 2018 and in the beginning of 2019 we have completed several important business achievements. We have signed contracts with premiere international acquirers Elavon and Wirecard, launched CARBON – our brand-new payment terminal solution, signed contract with Cirralto in Australia, started the introduction of new revenue boosting self-service concepts with Max Burgers, and been appointed by Oracle as strategic payment partner, just to mention a few. In addition, we have an established, loyal and long-term customer base on several international markets including Europe and South Africa.

Together with the progress in important certification and interconnection projects, all these achievements create great competitive assets supporting our continued growth.

We have signed an agreement with Wirecard, the global innovation leader for digital financial technology, forming a long-term partnership to bring world-class digital payment services and solutions to merchant customers across the Nordics, further Europe and South Africa. In this cooperation, the two companies will provide merchants with state-of-the-art payment solutions for cashless, so-called card present, on-site transactions. In particular, the focus will be on delivering digital payment solutions for customers in the hospitality and retail sectors as well as supporting automated self-service applications in retail, hospitality and travel. I am very excited about partnering with Wirecard and supporting their vision of making payments as quick and convenient as possible for end-consumers globally.

On the technology and product side two achievements stand out. One is the introduction of CARBON, where Westpay brings a completely new payment experience to the market. Following the market release, all required certification for Europe has been completed, pilots have been put in operation and we are now preparing for volume shipments during the first half of 2019.

The other is the certification according to the highest PCI security standard, which strengthens our position within the payment industry. We have been approved compliant with the Payment Card Industry Personal Identification Number (PCI PIN) Security Requirements. PCI PIN is the third major certification obtained by Westpay, after already being certified for PCI Data Security Standard (PCI DSS) and PCI Payment Application Data Security Standard (PCI PA-DSS). This new certification permits Westpay to move into new areas such as managing card payment applications on Android and iOS driven consumer devices. Many of Westpay’s resellers and their customers will also benefit from reduced PCI scope and associated costs. Being PCI PIN approved makes Westpay even more independent from card acquiring banks, and will make integrations to new acquirers and processors all over the world both quicker and easier.

Interesting developments in the payments market continues. The acceptance of contactless payments increases rapidly. On several markets it overtakes chip-and-pin for in-store transactions. In my view this is about convenience and reducing the parts of the shopping experience that customers find irritating like queuing and waiting to pay. However, plastic card remain king as mobile payments such as Apple and Samsung Pay still fail to hit big in volume. A recent survey shows that consumers perceive a higher degree of security with plastic cards compared to the digital equivalent in the mobile phone. For Westpay as an infrastructure supplier it is important to remain payment method independent and make sure we can enable any of the variants requested by the market.

The ongoing product generation shift and the delays in certification on the markets in South Africa and Sri Lanka continued to put pressure on our revenues for the fourth quarter, pushing them forward into 2019. The opportunities are not lost but postponed. Due to the reduction of the revenues, the operating result dropped significantly. It was also impacted by reservations for doubtful receivables which is a consequence of our strict policy to make reservations for overdue payments, regardless if they are doubtful or not. These reservations are continuously dissolved as payments are made, thus having a positive result bearing. In 2018 we have also completed all our key recruitments for the foreseeable future, why we are staffed for growth.

I want to thank all employees, customers and shareholders for the commitment and dedication during a challenging 2018. Our purpose of Growing Together remains intact for the coming years and I look forward to advancing further towards our targets during 2019. I am confident that we are well positioned with the right business focus, team size and technology offerings to extend our five-year historic growth journey well into the future. My ambition during 2019 is to continue the intensive work with technology investments and keep our sales activity at the highest level.