PayPoint slumps as it pushes out £100m EBITDA forecast

(Sharecast News) - PayPoint shares were sliding on Wednesday morning, after it reported a pressured first half as disruption in its parcels network and slower-than-anticipated growth in its obconnect open-banking unit delayed progress toward its £100m underlying EBITDA target.

The FTSE 250 company said the milestone, previously expected to be reached this year, would now take longer, although full-year underlying EBITDA was still expected to be ahead of last year and broadly in line with market forecasts.

Underlying EBITDA slipped 0.5% to £37.3m in the six months ended 30 September, largely due to the timing of revenue recognition in the Love2shop division, with the impact expected to reverse in the second half.

Underlying profit before tax fell 4.5% to £25.7m.

Revenue rose 6.7% to £144.1m, but net revenue grew only marginally to £84.7m.

Profit before tax dropped 13.9% to £19.9m, while diluted underlying earnings per share declined 2.6% to 26.7p.

Net corporate debt decreased 3.2% to £84m.

The board raised the interim dividend 2.1% to 19.8p.

Chief executive Nick Wiles said two issues had weighed on performance.

The harmonisation of InPost and Yodel's networks following their merger caused "significant disruption" to service levels and parcel volumes across the Collect+ estate during the second quarter, compounded by less favourable commercial terms under the new three-year contract.

Several stores experienced missed collections or were temporarily switched off the network, although PayPoint said the disruption has now reduced following operational interventions and that reactivated sites were seeing improved stability.

Additionally, obconnect continued to build its business pipeline, but the pace of monetisation has been slower than planned, delaying the expected contribution from open-banking services.

Despite the challenges, parcel activity remained strong.

Collect+ transactions grew 20% to 74.3m, reflecting continued expansion of the Royal Mail partnership.

Royal Mail's parent, IDS, completed a £43.9m strategic investment in Collect+ in September, taking a 49% stake and beginning a phased rebrand of around 8,000 locations.

More than 3,000 sites already carry the Royal Mail Shop fascia, with plans to roll out over-the-counter postage services and self-service kiosks across the network by the end of 2026.

In the shopping division, net revenue edged up 0.6% to £33.1m, supported by an 8.4% rise in service fee income and continued expansion of the PayPoint One and Mini estate to 20,389 sites.

Card payments revenue declined 3% to £16.1m as processed value across merchant estates fell 4.4% to £3.4bn.

PayPoint cited improved profitability per merchant and stronger Telesales performance, alongside early benefits from a renewed approach to churn and field operations.

E-commerce revenue rose 7.5% to £8.6m, reflecting the increase in parcel volumes and expansion of the Collect+ network to 14,274 sites.

PayPoint said it had taken proactive measures to stabilise the parcels platform, including priority routing for high-volume retailers, dedicated pickup-drop-off routes and enhanced communication with affected stores.

Payments and banking net revenue rose 4.4% to £26m, driven by MultiPay growth and further open-banking wins.

The BankLocal initiative with Lloyds Banking Group launched in August and processed over £10m of deposits by mid-November, with functionality extended to card-based deposits across 3,000 sites in September.

A second major bank was expected to go live later than planned in the fourth quarter.

The Love2shop division saw net revenue decline 9.6% to £17m due to changes in revenue recognition, though underlying performance remained solid.

Billings rose 5.8% to £70.9m, while MBL processed value nearly doubled to £81.2m.

PayPoint highlighted continued momentum in its InComm partnership, with physical gift card sales up 43.5% year-on-year and further distribution gains ahead of the peak season.

Wiles said the group remained focused on cost discipline, execution of major growth projects and operational agility as it enters a key trading period.

He added that confidence in long-term opportunities supports enhanced shareholder returns this year, with more than £90m expected to be distributed through the ordinary dividend, buybacks and a special dividend.

At 1053 GMT, shares in PayPoint were down 15.57% at 547.63p.

Reporting by Josh White for Sharecast.com.