This week: Adyen, Euronet, Flywire, dLocal, MoneyGram, Payoneer, PayPal, Paysafe, Visa, Western Union, Wise, Worldline 
Sign up yourself here.
View this email in your browser
Weekly insights from the world’s leading cross-border payments data provider, read by thousands of leading organisations globally. Proudly independent. Thank you for sharing.
We bring earnings season to a close by looking at the highest valued public companies in the sector across the globe. The range of value is astounding – more than 100x difference for the core multiple metric of market value / revenue.

Adyen, dLocal and Paysafe all reported results and we cover those off too.

A reminder as well for many of you to complete our analyst briefing by 31 August to be considered in our upcoming Leaders vs Challengers map.

Finally, our letter is taking a few weeks break and we'll see you back in September.

Valuations · dlocal · Adyen · Paysafe · news · context · archive

The highest valued companies

As we wrap up Q2 earnings season, we thought we'd take a step back and look at which public companies have the highest valuation multiples in the sector.

The core trends are clear:

  1. Growth, not profits, is the primary value lever.
  2. But if you can profitably grow, that's a super premium.
  3. Industry drivers matter. Those operating in traditional remittances are mostly at the lower end (a slow growth sector), digital payments is in the middle and ecommerce payment providers are largely near the top.
  4. Recency of public debut plays a role. Half of the top eight listed on the public markets in the past year, often using each other as comps.
Are you Leader or Challenger? Brief our Analyst team by August 31st.
For more background articles and context on valuations see the context section at the end of this letter

Valuations · dlocal · Adyen · Paysafe · news · context · archive

dLocal's first public quarter

Emerging markets-focused B2B ecommerce platform dLocal released its first public earnings quarter this past week with what CEO Seba Kanovich described as its “best quarter ever”.

Company Performance
The company, which connects global merchants to emerging market customers across Latin America, Africa and Asia, saw 319% year-on-year growth in total payments volume, passing $1bn for the first time to reach $1.5bn. This follows an already strong Q1 2021, where the company saw 139% growth in TPV. 

Revenues also saw 186% growth to $59m, while adjusted EBITDA margin reached 44%, up slightly on Q2 2020’s 40%. 

Much of this growth came from existing customers, with dLocal seeing its net revenue retention rate (NRR), which is calculated from the dollar revenues earned from existing merchants, growing by 196% compared to Q2 2020. This passes the already strong NRR of Q1 21, 186%, and FY 20, 159%. However, the company also onboarded more than 10 new clients in the quarter, who were responsible for $19m of revenue.

Meanwhile, dLocal has also widened its market, adding four countries in H1 21, including Vietnam, Malaysia and Guatemala in Q2, meaning the countries served now top 30. 

The big questions
Key to dLocal’s opportunity is that it is driving revenue for many digital companies riding the ecommerce wave, which has been particularly strong in emerging markets. It now has the obvious challenge that having grown under the radar for a number of years, its excellent numbers are now front and center and very public (no pun intended). In return though, the company can look to gain profile to grow its customer base.

Two thirds of the company's business is payouts, one third pay-ins. As the company expands to more geographic markets, what competition will it encounter outside of its strong-hold of Latin America? What pricing will it offer to retain its customers?

dLocal's take rate for this past quarter is an amazing 406bp. This industry-high take rate is like waiving a giant flag at the competition. dLocal's take rates have been volatile (from 593bp in Q2 2020 but closer to today's rates back in 2019). The open question is: what is the steady-state take rate dLocal can stabilise growth at before take rates then steadily decline, as customers grow and move onto low-priced tiers? Adyen (see section below) operates in mainly developed markets and squeezes out a take rate at 21bp. Payoneer, with plenty of emerging markets exposure, is at 82bp.  

As long as dLocal can drive meaningful marginal revenue for its customers (lower fraud, higher acceptance rates), it will have an edge against the competition and encounter less price sensitivity from its customers. The company remains bullish over the 12-18 months and investors currently agree – the stock is up c.40% since it released its Q2 earnings.  

How are ecommerce players competing on pricing?
For more background articles and context on dLocal, see the context section at the end of this letter

Valuations · dlocal · Adyen · Paysafe · news · context · archive

Adyen's growth run continues

dLocal has often said it wants to be like Adyen. The good news is that fellow payment processor Adyen published H1 2021 results that showed a continued strong run buoyed by pandemic-accelerated digitisation. 

The company saw processed volume increase 67% year-on-year to €216bn, while net revenue increased by 46% year-on-year to reach €445m. This is different from revenue as reported by dLocal, as it also accounts for the costs incurred from both financial institutions and goods sold. 

Over 80% of the revenue growth experienced by Adyen was from existing merchants, with the company seeing churn of below 1%. However, it has also onboarded a number of high-profile new customers, including Airbnb and LVMH.

Looking regionally, North America was the biggest driver of growth, seeing an 80% year-on-year climb. It now accounts for 22% of Adyen’s net revenue. The Netherlands-headquartered company has also increased its licensing footprint as part of its efforts to grow globally, gaining a branch license in the US and acquiring capabilities in both the UAE and Japan. 

Adyen attributes much of its success to the growing digitisation of commerce and the continued shift away from cash, although this does not mean entirely to ecommerce. The company reported strong growth in both its online and bricks-and-mortar businesses, with point-of-sale processed volume doubling to reach €22.8bn – 11% of the company’s overall processed volume. Travel, meanwhile, remains impacted by the pandemic, although the company did report a return to pre-pandemic levels towards the end of the quarter due to the start of reopening in North America and Europe.

Despite growing revenue and volume, Adyen’s take rate has been steadily dropping, and is now 20.6bp, compared to 23.6bp in H1 2020. The company (as with dLocal) describes this as a “natural consequence” of its business model, which focuses on generating incremental net revenue and onboarding volume at scale. 

How does Adyen compete on cross-border pricing?
For more background articles and context on Adyen, see the context section at the end of this letter

Valuations · dlocal · Adyen · Paysafe · news · context · archive

Paysafe stays on track

Payments platform Paysafe also announced its results recently, reporting a 13% increase in revenue to $384m and a 41% increase in total payment volume. Adjusted EBITDA, meanwhile, increased by 8% to $118.8m.

This quarter saw Paysafe achieve profitability, with net income of $6.5m, compared to a net loss of $15.9m in Q2 2020. However, the overall first half of 2021 still saw a loss of $54m. This profitability was helped by a number of transformation initiatives, including $17m of cost savings in H1, with a further $13m targeted by the end of 2021.

Growth this quarter was in particular driven by momentum in the company’s North American iGaming division, which saw 48% revenue growth, as well as its digital commerce verticals, including digital goods, cryptocurrency and financial services. Paysafe also expanded its cryptocurrency capabilities this quarter with the addition of 22 digital curries to its Skrill digital wallet. This helped the company see 16% growth in its digital wallet segment, which was also helped by favourable foreign currency movement.

Paysafe has also announced the acquisition of two Latin American open banking solutions, PagoEfectivo and SafetyPay, both of which are set to help its continued expansion. 

Paysafe is on track to achieve its 2021 target of $1.5-1.6bn revenue – a 9-10% increase on FY 2020 – with an EBITDA margin of around 32%. It also expects gross profit of between $930-970m for FY 2021.

Sign up to our newsletter to get the latest industry updates
For more background articles and context on Paysafe, see the context section at the end of this letter

Valuations · dlocal · Adyen · Paysafe · news · context · archive

On our radar this week:
Curated by FXC Intelligence's Team
WorldRemit rebrands to Zepz
WorldRemit has announced it is rebranding to Zepz following a $293m Series E raise. It will keep WorldRemit and Sendwave as operational brands.
PayPal rolls out UK crypto service
PayPal has expanded its cryptocurrency service to allow British users to buy, hold and sell digital currencies. However, crypto payments are not yet supported. 
Wise opens up to US investors
The LSE-listed fintech is opening up an ADR listing for US investors. The new offering is expected to start trading in early September. 
OPay raises $400m
Nigeria's OPay, which is responsible for one of the country's leading payment services, has raised $400m in a round valuing it at $2bn, led by SoftBank.

Valuations · dlocal · Adyen · Paysafe · news · context · archive

Additional research by FXC Intelligence on this week's topics

Valuations: Stripe valuation challenges established payment processors (here); Q2’s biggest cross-border payments funding and market listings (here); Breaking down Wise: A teardown of its direct listing financials (here)
dLocal: dLocal shows profitability in run up to IPO (here); dLocal becomes the first unicorn in Uruguay (here)
Adyen: The future of crypto payment enablement (here); What smart investors in cross-border payments think (here)
Paysafe: Q1 2021 earnings roundup: Paysafe and Ebix (here); Paysafe surprises with SPAC merger (here)
Was our newsletter forwarded to you? Sign up here

Valuations · dlocal · Adyen · Paysafe · news · context · archive

Missed the last few weeks?

Growing Payoneer in the Changing Landscape of Global Ecommerce: CEO Scott Galit in Conversation with Daniel Webber (here)
Flywire’s Plans for Growth as a Public Company: CEO Mike Massaro in Conversation with Daniel Webber (here)
Intermex’s Omnichannel Strategy: CEO Robert Lisy in conversation with Daniel Webber (here)
Access our previous articles here
Stay healthy and stay safe,

Copyright © 2021 FXC Intelligence Ltd, All rights reserved.

London Washington DC

Subscribe to this newsletter

Want to change how you receive these emails?
You can update your preferences or unsubscribe from this list