PayPoint on track to deliver record full-year profits

(Sharecast News) - PayPoint said in an update on Wednesday that it made significant progress in the third quarter and remained on track to deliver record profits for the year, despite subdued consumer spending and a challenging market backdrop. For the three months ended 31 December, group net revenue edged down 0.5% to £52.7m from £53m a year earlier.

Performance varied across divisions, with the shopping division flat at £16.1m, e-commerce revenue rising 2.4% to £4.2m, payments and banking up 2.1% to £14.3m, and Love2shop revenue falling 3.2% to £18.1m.

Chief executive Nick Wiles said the quarter demonstrated the resilience of the group's core businesses.

"PayPoint continues to be an entrepreneurial, agile business and the progress delivered in our third quarter results further demonstrates these attributes alongside the resilience of our core businesses, with a strong performance from our peak seasonal trading businesses," he said.

He added that the results were achieved "against a continued background of subdued consumer spending and a challenging market environment," while reiterating that the group remains on track to meet full-year expectations.

PayPoint reported a record quarter for its parcels business, with transactions up 6.7% year on year to 38.2 million, supported by recovering Yodel and InPost volumes and the continued rollout of its Royal Mail partnership across the Collect+ network.

Wiles said the group had "successfully navigated the operational disruption experienced earlier in the year to deliver a record peak performance in our parcels business," adding that the Royal Mail Shop branding and in-store postage services were continuing to gain momentum.

Within shopping, service fee net revenue rose 7.3% to £5.9m, driven by further growth in PayPoint One and Mini sites, which increased to 20,492 by the end of December.

Card payments net revenue slipped 2.6% to £7.6m, while card processed value declined 6.8% to £1.6bn, reflecting weaker-than-anticipated consumer spending.

Business finance delivered a strong quarter, with revenue up 54% and more than £10.5m lent to SMEs through the group's partnership with YouLend.

In payments and banking, digital net revenue increased 18.2% to £5.3m, while cash net revenue fell 9.0% to £6.9m.

The group reported continued growth in its MultiPay platform and progress in local banking services, with more than £24m of consumer deposits for Lloyds Banking Group processed since launch in August, and over £205m of deposits processed in the quarter through its established neobank service.

Love2shop delivered strong seasonal billings growth, with Love2shop Business billings up 5.2% to £74.9m and InComm Payments billings surging to £6.1m from £1.8m a year earlier.

Park Christmas Savings billings were broadly flat at £163.2m, in line with expectations.

As at 31 December, net corporate debt stood at £131.3m, up from £97.4m at the end of March, reflecting lower cash balances of £0.4m and loans and borrowings of £131.7m.

The board reiterated its commitment to shareholder returns, having declared an interim dividend of 19.8p per share in November, payable in two equal instalments in December and March.

PayPoint said it was continuing to execute its extended share buyback programme, targeting returns of at least £30m per annum through to March 2028.

As at 26 January, the group had repurchased 2.77 million shares for £17.2m.

Looking ahead, Wiles said "in the closing quarter, we are focused on finishing strongly and delivering record profits for the year, ensuring the foundations and plans are in place to build on this performance in the 2027 financial year."

At 0923 GMT, shares in PayPoint were up 10.96% at 555.91p.

Reporting by Josh White for Sharecast.com.