REG - CAB Payments Hldgs - Update on Q3 Trading and Outlook

Cab Payments HoldingsAnnouncement

24/10/2023 07:00

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RNS Number : 0877R  CAB Payments Holdings PLC  24 October 2023

CAB Payments Holdings PLC

24 October 2023

 

CAB Payments Holdings plc

 

("CAB Payments", the "Company" or the "Group")

 

Update on Q3 Trading and Outlook

 

CAB Payments, a market leader in business-to-business cross-border payments
and foreign exchange, specialising in hard-to-reach markets, provides the
following update on performance since June 2023, current trading, and the
outlook for the rest of 2023.

As detailed at the first half results on 13 September 2023, the business saw a
sequential third quarter (Q3) improvement, including an acceleration in the
core business, following specific headwinds faced in the second quarter
(Q2).  Total Group revenue in Q3 was 10% above that in Q2, and at the end of
September 2023 was £105.5 million year-to-date (2022: £67.4 million).  Core
FX and Payments revenue excluding contribution from the Naira was 45% ahead of
the same nine-month period in 2022.

In recent weeks, the Company has seen a number of changes to the market
conditions in some of its key currency corridors, on top of the ongoing
uncertainties surrounding the Naira, which are impacting both volumes and
margins; most notably, the Central African franc (XAF) and West African franc
(XOF).  At the present time, these market conditions are compressing margins
and reducing trading volume.  These challenges are recent but continuing, and
coincide with the traditionally strong fourth quarter (Q4) for both of these
corridors; it is unclear when and to what extent conditions in these markets
may improve.  Based on the revenue run rate to this point in Q4, the Company
now expects Group revenue for 2023 to be at least 20% ahead of the prior year
(2022: £109.4 million); this is around 17% below previously issued
guidance.  This assumes no further changes to these core markets, and any
material improvements here could result in a higher Group outturn.

The Company will be seeking opportunities to lessen the impact on Group
profitability in 2023 through cost reduction measures and efficiencies, but
any actions will be tempered by its ongoing confidence in the medium-term
potential of the business.  Therefore, the Company anticipates that the
majority of any revenue impact will flow through to the bottom line.

Medium-Term Outlook

To this point in 2023, the Company has signed 74 new customers and is
confident these customers will deliver good growth into the future.  However,
should the current market conditions persist in some of our key currency
corridors, as described above, the softer exit rate from 2023 could result in
2024 revenue growth falling below the medium-term potential.

The Company remains confident in its ability to continue to deliver strong
growth over the medium-to-long-term by executing on the strategy it has
outlined.  The market in which the Company operates is undergoing a
structural shift from incumbent providers to specialists such as CAB
Payments.  The Company is executing on its plans to take advantage of this
shift by investing in and expanding its already strong network of partners,
liquidity providers and nostro accounts across a range of markets.  This
includes further developing its technology solution, expanding its product
offering and extending its geographic reach in order to broaden and grow its
customer base.  As previously detailed, the Company is working on a range of
initiatives which should provide significant growth opportunities in the
coming years.

Initiatives include:

-       a regulatory licence application in The Netherlands, which will
open up a substantial new sales channel across the EU;

-       a US representative office licence, which will enable sales to
the very deep national and regional bank market;

-       significant technology upgrades, which would enable an expansion
of the Company's capabilities and product set, substantially increasing
commercial opportunities;

-       the longer-term potential to become a US Dollar clearing
institution, which could greatly increase volumes into emerging markets.

While the Company is disappointed with recent market volumes, CAB Payments
remains confident that the trends within the business-to-business cross-border
FX and Payments market continue to be supportive.  The Company has a
well-managed cost base and focused investment plans, remains highly profitable
and continues to generate significant free cash flow, which will be used to
invest in the business and reward shareholders going forward.

The Company will provide another update at the time of its 2023 Full Year
results in 2024.

The Company will host a Call for Investors and Analysts this morning (24
October 2023) at 8.30am UK Time.  Please pre-register for conference call
here.
(https://services.choruscall.ca/DiamondPassRegistration/register?confirmationNumber=10022690&linkSecurityString=1a52a8ca20)

Upon registering, you will receive a calendar booking by email with dial-in
details and your unique PIN. This process will bypass the operator and avoid
the queue. Registration will remain open until the end of the conference call.

 This announcement contains inside information for the purposes of article 7 of
 the Market Abuse Regulation (EU) 596/2014 as amended by regulation 11 of the
 Market Abuse (Amendment) (EU Exit) Regulations 2019/310. With the publication
 of this announcement, this information is now considered to be in the public
 domain.

 For further information, please contact:

 CAB Payments Holdings plc

 Michael Goldfarb

 Kieran McKinney

 investorrelations@cabpayments.com (mailto:investorrelations@cabpayments.com)

 www.cabpayments.com (http://www.cabpayments.com/)

 J.P. Morgan
 Cazenove                                                                           +44
 (0) 207 742 4000

 (Joint Corporate Broker to CAB Payments)

 Alia Malik

 James Summer

 Barclays Bank
 PLC

 (Joint Corporate Broker to CAB
 Payments)                                        +44
 (0) 207 623 2323

 Stuart Jempson

 James Woolf

 Canaccord Genuity
 Limited                                                                  +44
 (0) 207 523 8000

 (Joint Corporate Broker to CAB Payments)

 Emma Gabriel

 Harry Rees

 FTI
 Consulting

 (Public Relations Adviser to CAB Payments)

 Ed Bridges - Edward.Bridges@fticonsulting.com
 (mailto:Edward.Bridges@fticonsulting.com)
                                      +44
 (0) 7768 216 607

 Katie Bell   - Katherine.Bell@fticonsulting.com
 (mailto:Katherine.Bell@fticonsulting.com)
                  +44 (0) 7976 870 961

 

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