PAX Technology 2023 Financial Results

PAX Global Technology Limited (HKSE stock code 00327.HK), one of the world’s leading providers of electronic payment terminal solutions and related services, is pleased to announce the audited annual results for the year ended 31 December 2023.

The world economy’s path to recovery faced various challenges in 2023, including high inflation rates and currency exchange fluctuations, which led to increased prudence by PAX Technology’s global customers when it came to deployments of payment terminal solutions. Although this impacted overall Group revenue, PAX responded by focusing on high margin products & markets, as well as cost control strategies resulting from RMB depreciation, all of which enabled the Group’s gross profit margin to climb to 44.6%.

Sales revenues of US$ 858 million were achieved in 2023, generating net profit of US$ 149 million, representing a net profit margin of 17.4%. The Board recommended a final dividend of HK$ 0.23 per ordinary share for the year ended 31 December 2023.

Mr. Jack Lu, Chief Executive Officer of PAX, commented on the results by saying:

“As part of our corporate spirit of continuous innovation and dedication to the pursuit of excellence, PAX places a strong focus on merchants and consumers, striving to deliver exceptional payment experiences worldwide. To maximise the full potential of Android smart payment solutions, the Group is poised to further strengthen the MAXSTORE ecosystem, and investments in a new portfolio of EPOS solutions.”

New corporate headquarters

As the Group’s global business continued to grow, and with an ever increasing workforce, PAX inaugurated a new US$ 46 million state-of-the-art corporate headquarters in January 2024 in Shenzhen (China).

Delivering intelligent value to customers worldwide

PAX continues to be recognized as a leader in the international payment terminal industry. Since launching Android-based smart payment terminals in 2016, the Group has actively promoted solutions featuring intelligent payment & business process management, helping Acquiring Banks & Payment Service Providers (PSPs) - and the millions of merchants they serve - to enhance their agility in navigating market dynamics. In 2023, sales of Android SmartPOS payment terminals grew to over 50% of total Group revenue.

Share of Android SmartPOS shipments compared to overall product shipments

As Payment Card Industry PIN Transaction Security (“PCI PTS”) 4.0 and 5.0 certifications are set to expire in 2024 and 2026, market demand is expected to gradually shift toward deployment of payment devices with PCI PTS 6.0 certification. In order to capture these device replacement opportunities, PAX launched a range of Android smart payment solutions, including the A920 MAX, A930 RTX, and the IP67-rated Android PDA A6650 models, all of which are PCI PTS 6.0 certified.

Since the launch of PAX SaaS solutions, there has been a growing adoption by Acquiring Banks, PSPs and payment system integrators worldwide. In 2023, some US$ 13 million in revenue was generated from SaaS solutions (including the popular MAXSTORE platform). As of 31 December 2023, over 11 million devices were connected to MAXSTORE, providing merchants with a diverse array of software applications and - for the PSPs who utilize the platform - a suite of innovative, cost-saving, value-added operational services.

A new EPOS portfolio

Recognizing the increasing demand for integrated business solutions across retail, catering, and hospitality segments, the Group implemented a new business strategy which explores opportunities within the EPOS market segment. The Elys Series of Android-based EPOS products – which seamlessly interconnect and collaborate between in-store EPOS devices - leverages the Group’s competitive R&D edge in Android smart payment terminal technology, and is proving popular with customers. Indeed, in 2023 the Elys Series won the prestigious German Red Dot Product Design Award and iF Design Award.

PCI SSC Advisory Board

PAX was elected to the Advisory Board of the Payment Card Industry Security Standards Council (PCI SSC) in 2023, the first Asian payment terminal vendor to take up such a role.

Europe, the Middle East and Africa (EMEA)

In the EMEA region, performance was mixed across different sub-regions. In Europe, demand for PAX solutions grew in Spain and France - where PAX Android SmartPOS devices now support the FRv6 payment application, compliant with the national payment association Groupement des Cartes Bancaires (GIE CB). Demand remained solid in Italy and the United Kingdom, while weakening somewhat in Germany.

In the Middle East, surging demand for cutting-edge financial technology, helped Group sales increase in Egypt, the UAE, and Kuwait, while a longer-than-expected sales cycle in Saudi Arabia resulted in a temporary revenue drop, although a gradual uptick in market demand is expected in the second half of this year. In Sub-Saharan Africa, Nigeria and South Africa remain key markets for PAX. In the latter, particularly, appreciation for our product portfolio and the benefits of MAXSTORE is growing.

Latin America and the Commonwealth of Independent States (LACIS)

PAX continues to retain a market share of c. 50% in Brazil, a payment market which underwent rapid development in recent years, creating high levels of payment terminal penetration, and resulting in a slowdown of PAX revenues in 2023, offsetting the strong growth of other South American markets.

PAX has been actively pursuing new opportunities across the region, strengthening relationships with its network of channel partners and the PSPs they serve. During 2023, the Group achieved record-high sales in Mexico, Chile, and Argentina, key driving forces for PAX in Latin America.

Asia Pacific (APAC)

During 2023, the Group continued to expand its presence across the Asia Pacific region, with excellent sales growth in Japan, Indonesia, and the Philippines. Longer-than-expected sales cycles in India resulted in a sales slow-down, offsetting growth of other markets in the APAC region.

A rise in the number of tourists visiting Japan has helped drive market demand for cashless solutions, fostering swift adoption of the PAX A920 model by local Acquiring Banks and PSPs. In 2023, Group sales in doubled in Japan, reaching a record high.

PAX has consistently increased investments in Southeast Asia, which yielded positive results during 2023. In Indonesia, the Group continued its high-growth momentum by securing bulk orders from multiple Acquiring Banks, achieving record-high sales, while in the Philippines PAX experienced a sales-surge of over 400%.

In Australia and New Zealand, PAX has become the preferred terminal provider for the leading PSPs. The Group accelerated certification projects and successfully secured new customer wins in 2023, including Virgin Australia and A2B Australia (the Australian taxi payment solutions company).

The United States of America and Canada (USCA)

PAX continued to strengthen its ties with Independent Sales Organisations (“ISOs”) and financial institutions across North America during 2023. As the market now also moves toward Android product offerings, as in the rest of the world, PAX Technology’s brand recognition is on the rise in the USA and Canada. During the year, the Elys Series was launched - innovative EPOS solutions specifically tailored for retail and catering, which featuring cutting-edge software and high-quality hardware.

PAX is dedicated to expanding its Independent Software Vendor (“ISV”) alliances, with a focus on crafting customised solutions for vertical industries that deliver unique value propositions to customers. The synergy between MAXSTORE and Android products is stronger than ever, propelling growth in both the shipment of Android products and the number of connected devices on the MAXSTORE platform across North America.

Mr. Jack Lu, Chief Executive Officer of PAX, concluded by saying: “Electronic payment systems remain an indispensable element of the future digital economy, as countries across the globe transition to becoming cashless societies. According to various sources, the global payment terminal market is expected to reach circa US$ 30 billion by 2030, a compound annual growth rate of 9.5%, which emphasizes the positive long-term prospects for our payment terminal industry.”