Today, Network International, the top platform for enabling digital trade in Africa and the Middle East, released its preliminary financial results for the fiscal year that ended on December 31, 2022. The company recorded overall revenue of USD 438.4 million, an increase of 24.5% over the prior year, driven primarily by the outstanding success of its Merchant Solutions Services segment, which saw a 41.4% increase in sales year over year. Due to the company’s mostly fixed cost base, underlying Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) climbed to USD 178.6 million, sustaining margin expansion of 240 basis points to 40.7%. As a result of the company’s strong EBITDA performance, net profit for the year increased by 41.6% year over year to USD 80.1 million.
In January 2023, Network added direct-to-merchant payment services to its successful acquirer and issuer processing business, which currently serves over 20 FIs. The company wants to duplicate its success in the UAE by concentrating on the SME market. The $100 million share buyback programme for the corporation is anticipated to be finished in 2023. Repurchases were USD 40.6 million in 2022, USD c.13 million thus far this year, and USD c.47 million remain.
Growth in merchant services of 41.4% and record signups
Revenue from Network’s Merchant Services division climbed dramatically to USD 183 million in 2022, up 41.4% from the previous year. Proforma TPV for Africa (DPO Group) rose 29.6% year over year in constant Currency. Although macroeconomic factors had an impact on growth in South Africa, growth in markets outside of South Africa is still robust. The strategic emphasis areas of the Network see strong growth, with Online TPV and SME TPV significantly rising by 39% and 41%, respectively, as a record number of new merchants were signed by the Network, especially in the SME sector. The introduction of digital onboarding, low-cost mobile phone app payment acceptance, and the web-store builder connected with its “DPO Pay” package all helped to promote this noteworthy accomplishment. Additionally, the business keeps luring in new, substantial clients, like Western Union, Talabat, Audemars Piguet, Anantara, and Taj Tower Hotel Group.
13.3% growth in outsourced payment services driven by cross-selling and new customer acquisition
With the launch of new APIs facilitating the automation of customer onboarding, Network’s Outsourced Payment Services revenue climbed 13.3% year over year to USD 243 million in 2022. This growth was aided by the inclusion of 18 new financial institution (FI) clients. Also, the business renewed six significant ongoing contracts and increased customer portfolios through successful cross-selling. As a result, transaction volumes rose 32.1% year over year and the number of credentials maintained rose by 8.4%.
Outlook and financial projections for 2023
While its core countries quickly move to digital payments at a speed noticeably faster than more developed economies, Network maintains a bullish view for the year. Constant currency revenue growth in 2023 is anticipated to be in the mid teens by the corporation, with somewhat higher EBITDA margins than in 2022.
2023 outlook and financial guidance
Group Financial Summary
| Group Financial Summary (USD‘000) | 2022 | 2021 | y/y change |
| Total revenue | 438,371 | 352,245 | 24.5% |
| Merchant Services2 | 183,347 | 129,670 | 41.4% |
| Outsourced Payment Services | 242,510 | 214,082 | 13.3% |
| Other revenue | 12,514 | 8,493 | 47.3% |
| Underlying EBITDA | 178,603 | 143,477 | 24.5% |
| Underlying EBITDA margin | 40.7% | 38.3% | 240bps |
| Profit for the year | 80,104 | 56,558 | 41.6% |
| Underlying free cash flow | 81,927 | 61,908 | 32.3% |
| Cash flow from operating activities | 119,202 | 51,656 | 130.8% |
| Leverage | 0.7x | 0.9x | (0.2)x |
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Nandan Mer, Chief Executive Officer, commented: “We accelerated revenue growth to 24.5% y/y in 2022, having also achieved margin expansion whilst investing in new opportunities. This is the result of our revitalised strategic approach which is creating a more agile and effective business, supported by strong economic growth across our markets and continued acceleration towards digital payments. We delivered several critical initiatives, including our market entry to Saudi Arabia, merchant payment services in Egypt and the launch of commercial payment services. We expanded our suite of value-added services, providing a range of new solutions for merchants and financial institutions; and have doubled the Group’s e-commerce revenues through the integration and growth of DPO Group. We remain excited about the growth potential in Africa and will soon deploy our best of breed technology platform on-soil in a number of countries, enhancing our competitive positioning and unlocking additional revenue pools. Cash generation was strong, which has supported shareholder returns through the launch of a USD 100 million share buyback programme, whilst retaining our flexibility to take advantage of additional growth or acquisition opportunities. We thank our colleagues and customers for their support and delivery of such a strong outcome. The year ahead holds many growth opportunities, supported by our scale, capabilities, people and trusted brand.”
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