ASX stock of the day: Smartpay share price jumps 18% on FY20 results

The Smartpay Holdings Ltd (ASX: SMP) share price is up 18% today after the EFTPOS provider released its FY20 results.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Smartpay Holdings Ltd (ASX: SMP) share price is up 18% today after the EFTPOS provider released its FY20 results. Smartpay saw a 34% increase in revenue over the year as a result of strong growth in Australia. 

What does Smartpay do? 

Smartpay is the largest independently owned and operated EFTPOS provider in Australasia. Having operating in Australia for nearly 10 years, Smartpay has supplied over 35,000 EFTPOS machines to over 25,000 merchants across Australia and New Zealand. 

Smartpay offers merchants a flat rate for MasterCard, Visa, Alipay, and WeChat pay transactions. Terminal rental fees are waived when merchants process a sufficient value of transactions each month. Merchants are offered a choice of flat rates or automated surcharging so they know charges to expect. 

What did Smartpay report?

Smartpay reported full year revenue of $28.3 million, a 34% increase on FY19. The key driver of revenue growth was strong growth in Australian acquiring revenues, which grew by 275% to $9.5 million. This was a result of a significant increase in the Australian terminal fleet, which grew from 2,200 at the start of the period to more than 4,600 at 31 March 2020. 

Monthly acquiring revenues grew from $0.5 million a month to $1 million a month (pre-COVID). In addition to growth in terminal and transaction numbers, Smartpay also saw a steady increase in gross margin per terminal as it refined its pricing and product mix through the year. 

Earnings before interest tax depreciation and amortisation (EBITDA) grew 15% in FY20 to $7.4 million. The lower EBITDA growth rate compared to revenue represents the investment of additional resources into the Australian business. The company reported a loss after tax of $4.4 million, which was largely attributable to non-cash costs related to the valuation of convertible notes on issue. 

What's next for Smartpay?

Smartpay reports that the cash impacts of COVID-19 have been largely offset thanks to government assistance packages and reductions in its cost base. Transaction volumes have recovered as restrictions have eased and are back to around 95% of pre-COVID levels in Australia. 

The proposed sale of Smartpay's NZ business was terminated as a result of COVID-19, leaving the company without the expected capital inflow. As a result, Smartpay conducted a capital raise last month. Funds will be used to pursue the company's growth strategy and significantly reduce debt. Smartpay is expecting a strong performance in the remaining 3 quarters of the financial year. 

Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Oil industry worker climbing up metal construction and smiling.
Energy Shares

ASX 200 energy shares lead the market as US trade deals fuel optimism

ASX energy shares lifted 3.94% as more US trade deals led to improved market sentiment.

Read more »

A female ASX investor looks through a magnifying glass that enlarges her eye and holds her hand to her face with her mouth open as if looking at something of great interest or surprise.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Broker Notes

These ASX 200 shares could rise 50% to 60%

Brokers believe these shares could deliver big returns for investors.

Read more »

A girl is handed an oversized ice cream cone with lots of different flavours.
Best Shares

8 ASX All Ords shares that tripled in value in FY25

Just 8 out of the 500 companies making up the ASX All Ords achieved share price growth of 200% or…

Read more »

Broker written in white with a man drawing a yellow underline.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Woman with a scared look has hands on her face.
Broker Notes

Bapcor shares fell more than 30% yesterday. Should investors buy in the dip?

Is this a value opportunity?

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Broker Notes

Broker raises price targets on 2 ASX 200 shares to buy

Ord Minnett has just upped its 12-month share price targets on 2 buy-rated ASX 200 stocks.

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX All Ords stock just rocketed 34% on strong earnings growth

Investors just sent this ASX All Ords stock surging 34%. Here’s what’s happening.

Read more »