PAX Global Technology Limited (“PAX” or the “Company” or the “Group”, HKSE stock code: 00327.HK), one of the world’s leading providers of electronic payment terminal (“E-payment terminal”) solutions and related services, is pleased to announce unaudited interim financial results for the six months ended 30th June 2020 (the “Period”).
The Covid-19 pandemic began sweeping across the globe in early 2020, bringing with it unprecedented economic impact and challenges to every country in the world. One of the immediate effects was the dramatic decrease in the use of hard cash, combined with a surge in the adoption of contactless electronic payments at the point of sale, manifesting itself both by an increase in the ‘floor limit’ for contactless payments in developed markets, as well as greater payment terminal roll-out by acquiring banks in emerging markets to merchant locations.
Consumer perceptions of the comparative cleanliness of PIN entry on a physical keypad (typically made of metal or plastic) versus PIN-on-Glass, which is considered more hygienic, has created further momentum in the adoption of PAX’s new-generation Android payment terminals.
Thanks to the Company’s well-established global sales network and cutting-edge payment products, PAX maintained solid business momentum worldwide. In the first half of 2020, revenues grew by 7.4% to HK$2,540.8 million, a record high interim performance compared to previous years, proving yet again PAX’s strong core competitiveness and risk-resistance capability.
Driven by the increase in sales proportion of Android products (vs. traditional devices) and the depreciation of the Renminbi, PAX’s gross profit margin increased from 38.6% in the corresponding period last year to 41.6%. Profit attributable to the owners of the Company was HK$ 384.1 million, an increase of 18% compared to the same period in 2019. The basic earnings per share was HK$ 35.3 cents (1H 2019: HK$ 29.6 cents). The Board of Directors of the Company has resolved to declare an interim dividend of HK$ 0.07 per ordinary share.
“Visa and Mastercard both reported a significant increase in the use of NFC contactless payments globally, which is in turn contributing to surging demand for new-generation contactless payment terminals. We believe the Covid-19 pandemic is accelerating the widespread adoption of electronic payments and enabling a faster transition towards more cashless societies. The global electronic payment terminal industry will continue to see exciting development opportunities.” - Mr. Jack LU, Chief Executive Officer of PAX
As one of the leading global suppliers of E-payment Terminals solutions, PAX is committed to expanding its global footprint and strengthening its brand recognition. Leading Acquiring Banks and Payment Service Providers (PSPs) around the world are using, and continue to switch to using PAX Technology solutions. During the period, revenue from overseas markets increased significantly by 7.9% to HK$ 2,381.2 million (1H 2019: HK$ 2,206.9 million), now representing 93.7% of total Group revenue. Particularly impressive performance came from the APAC and USCA regions, with over 46% and 35% growth respectively. The revenue contribution from PAX Technology’s new-generation smart (Android-based) payment terminals also continued to increase, accounting for more than 25% of total Group revenue.
The Group’s industry-leading SaaS cloud-based application platform, PAXSTORE, continues to be an exciting driving force behind the overall success of PAX sales globally. PAXSTORE offers an advanced terminal estate management solution to Acquiring Banks and PSPs, with a state-of-the-art appstore platform which enables the distribution of innovative value-added applications to merchants, along with cutting-edge customer relationship management (CRM) and data analysis tools. There are currently over 100 independent PAXSTORE marketplaces being run worldwide.
Europe, Middle East and Africa (EMEA)
In Europe, the Middle East and Africa, the Group continues to win new customers and expand market share in multiple merchant segments, with sales growing by 16.8% year on year. The A-series, E-series, IM-series and SK-series products are in high demand, driven by the technological advantages offered by connectivity to the Group’s PAXSTORE SaaS cloud-based application platform.
Investments in Europe are also paying off handsomely. Many leading Acquiring Banks and PSPs across Europe are engaged with PAX in current and planned rollouts of new-generation Android-based SmartPOS, SmartECR and SmartKiosk solutions.
During the period, PAX obtained the European Union’s ATEX (Atmospheres Explosible) certification on the IM30 Android-based Outdoor Payment Terminal (OPT) model, often used in high-risk environments such as petroleum forecourts. The influential UK Finance body granted Common.Secc (CSEC) certification on a number of PAX A-series devices, including the new A30 Android multilane terminal, which will enable PAX to properly target, for the first time, the region’s Tier 1 and Tier 2 multilane retailers. A useful Covid-19 contact tracing app for the UK’s NHS (National Health Service) was also rolled out on PAX Android terminals in partnership with application development company Smart Volution.
Across Africa and the Middle East, efforts by governments to further develop their electronic payment infrastructure, together with the shift toward more modern Android terminal solutions for merchants, have continued to drive demand for PAX solutions.
Asia Pacific (APAC)
The electronic payment market in the Asia Pacific region is flourishing, driven by ongoing economic growth, the rise of emerging markets, and the efforts of payment institutions in promoting cashless economies. Despite the Covid-19 pandemic, PAX maintained strong growth momentum across this region, increasing sales revenues by 46.6%.
With Digital Transformation accelerating across the retail, catering and other merchant segments in Asia Pacific, rising market demand is ongoing for PAX’s Android payment terminals, considered an indispensable infrastructure piece in the provision of the latest payment technologies and suites of innovative value-added applications.
In Japan and India, PAX has succeeded in expanding rapidly thanks to strategic cooperation with leading Acquiring Banks and PSPs. The Group continues to strengthen its business across Southeast Asia by working with mainstream Acquiring Banks and Financial Institutions in countries such as Indonesia, Malaysia, Thailand and the Philippines, speeding up the deployment of integrated Android smart payment solutions to merchants in sectors such as quick service restaurants, convenience stores, supermarkets and retail chains.
Latin America and the Commonwealth of Independent States (LACIS)
In Latin America and the CIS countries, Brazil continues to be the key market for PAX, where the electronic transaction business of local merchant acquirers continues to boom, driving demand for electronic payment terminals. PAX has entered into strategic partnerships with many of these financial institutions.
United States of America and Canada (USCA)
As the leading provider of new-generation terminal solutions in the United States, the Group successfully entered into strategic partnerships with mainstream payment processing companies to deploy PAX’s innovative Android products through an extensive network of Independent Sales Organizations (ISOs).
During the first half of 2020, PAX Android terminals won the “2020 Visa U.S. Qualified Tap to Pay Point of Sale Program Award”. In response to the ongoing Covid-19 pandemic, PAX partnered with AxiaMed, the industry leader in healthcare payment technology, to provide healthcare institutions with Android payment terminal solutions that support NFC contactless payments to handle patient transactions in a more hygienic and convenient way.
From early 2019, the Group has been making strategic and structural changes to its China business, with increasing focus on serving reputable and financially solid customers. This initiative has provided positive results in terms of strengthened risk assessment and management processes within the Group’s China division, as well as enhanced operational cost-effectiveness.
In the first half of 2020, the Group’s business in China stabilized, where reputable Acquiring Banks and PSPs continue to deploy PAX Android smart products. This strategic adjustment initiative has proven to be beneficial to the Group in maintaining its competitive advantage in the Chinese market in the long run and bringing new impetus to the sustainable development of the China business.
Mr. Jack LU, Chief Executive Officer of PAX, commented: “The first half of 2020 proved that the role our industry plays in the world today is more important than ever. Acquiring Banks and Payment Service Providers provide key infrastructure and services to billions of people currently struggling with the Covid-19 pandemic, and thanks to the shared efforts with PAX, we are all helping improve transactional convenience in a secure and safe manner. During this period, PAX focused on strengthening our close working relationships, albeit mostly remotely, with many Acquiring Banks, Processors and Payment Service Providers around the world. We are delighted to have helped in facilitating the faster adoption of contactless payments and cleaner electronic transactions for merchants and consumers alike. Looking ahead, as the Covid-19 pandemic continues to shape new lifestyles in terms of social behaviour and consumption habits, we are seeing many new opportunities emerging on the road toward cashless societies. We believe that market demand for our advanced payment terminal solutions will continue to be very strong during and beyond the current pandemic. We will do so by continuing to invest and partner with our global channel partners, Acquiring Banks, PSPs and the millions of merchants they serve worldwide, with a view to further expanding our sales pipeline and exploring new market segments. As always, PAX is committed to creating greater value for our shareholders.”
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