CAB Payments, a London-based fintech firm, faced a significant profit decline in the first half of 2024 due to challenging currency conditions.
- The company’s pretax profit fell to £13.7 million, marking a 43% decrease from the same period last year.
- Earnings per share dropped to 4p, with adjusted EBITDA experiencing a dramatic reduction from £40 million to £18.7 million.
- Currency policy changes in Nigeria notably impacted revenues, contributing to a sharp decline in share prices.
- Despite a 22% fall in gross income, transaction volumes increased, with strategic restructuring underway.
In the first half of 2024, CAB Payments reported a notable decrease in profits, primarily attributed to adverse currency movements. The fintech company, which is publicly traded on the London Stock Exchange, revealed that its pretax profit plummeted to £13.7 million, reflecting a stark 43% decrease compared to the previous year. This downturn has resulted in earnings per share diminishing from 6.1p to 4p, alongside a substantial plunge in adjusted EBITDA from £40 million to £18.7 million, with the adjusted EBITDA margin shrinking from 55.7% to 33.5%.
The decline in CAB Payments’ financial performance can be largely linked to currency policy shifts by the Nigerian central bank, which have had severe repercussions on revenue streams and subsequently led to a significant reduction in share value, now 64% lower than during its initial public offering. The firm, operating predominantly in FX and cross-border payments for ‘hard-to-reach markets’, also witnessed a 22% fall in gross income, totalling £55.7 million.
Despite these financial setbacks, CAB Payments reported a 4% growth in transaction volume, amounting to £17.6 billion, contrasting with an estimated 5% decline in market-wide payment flows across Sub-Saharan Africa, its primary operating region. The company cites an 11% income increase post-adjustment for previously identified dislocations connected to the Nigerian Naira and Central and West African Franc interventions.
CEO Neeraj Kapur has expressed a cautiously optimistic outlook despite the challenging conditions. Kapur noted that the company’s first-half results remained resilient amid “exceptional prior year” results, and anticipates that the firm will demonstrate growth across a broader spectrum of currency corridors, although total gross income may be slightly below the previous year.
To address these economic challenges, CAB Payments has embarked on a strategic overhaul, introducing what they describe as an “updated, more execution-focused strategy”. The company has bolstered its leadership team with new key appointments, including roles such as global head of sales and head of payments, aiming to lay the foundation for sustainable growth through focused investments in network, clients, platform, and innovation.
CAB Payments is navigating financial headwinds with strategic adaptations and leadership enhancements to stabilise and grow its operations.
