Global e-payments in the fast lane, PAX’s net profit surges over 40%
Integration of Android terminal and SaaS application platform creates new growth momentum
PAX Global Technology Limited (“PAX” or the “Company” or the “Group”, HKSE stock code: 00327.HK), is pleased to announce the audited annual results for the year ended 31 December 2020.
In 2020, the COVID-19 pandemic brought unprecedented challenges to almost every country in the world. The economic environment and consumption pattern have entered a "new normal", reshaping the traditional payment market landscape. As countries implemented strict control measures, people have been using less cash while contactless payment has quickly become the preferred payment method for consumers. The global E-payment terminal industry is moving into a fast lane, and PAX is working more closely with banks and payment service providers around the world. Leveraging on its strong sales network and excellent payment products, the Group seized the growth opportunities and recorded a 14.7% year-on-year (YoY) growth in revenue to HK$ 5,650.6 million in 2020. PAX demonstrated strong enterprise-wide resilience and business competence and continued to achieve a 44.6% growth of profit for the year. The Group's gross profit margin increased to 41.4% from 39.5% in 2019. Basic earnings per share was HK$0.828 (2019: HK$0.567). The Board of Directors has recommended to declare a final dividend of HK$0.10 per ordinary share.
Combination of payment terminal and SaaS platform offers merchants and payment service providers a competitive advantage
Over the past few years, the Group has been investing in product innovation, focusing on the development of next-generation payment terminal solutions, which have turned the challenging year of 2020 into a surging growth opportunity. The SaaS cloud application platform PAXSTORE now being a boosting force for PAX's smart payment terminals. PAXSTORE has reached over 2 million terminals in more than 80 countries worldwide, providing merchants with 4,000 innovative value-added applications, covering ordering, ticketing, membership management, inventory management, marketing and tax refunds, etc. PAXSTORE can also be connected to other brands of Android terminals and is available to legacy terminals.
Mr. Jack LU, Chief Executive Officer of PAX, stated, “Whether large chain retailers and small or medium-sized merchants, everyone is accelerating to embrace new technologies and adopt e-business to keep pace with market developments. Through PAXSTORE, our integrated solutions can meet market needs and provide value-added services. We will continue to keep pace with technological developments and changing market needs, strengthen investment in research and development of innovative solutions, upgrade our Android smart payment products, and continuously improve the PAXSTORE platform.”
PAX's Android terminal sales grew significantly in the second half of 2020 compared to the first half. Android solutions accounted for over 30% of the Group's total revenue in 2020. PAX’s full range of Android SmartPOS, SmartECR, SmartKiosk models and unattended solutions cater to the diverse needs of integrated multilane retailers (supermarkets and chain stores), small and medium-sized merchants and the self-service sector. The Android terminal plays a critical role by supporting NFC contactless and QR code payment methods, and is integrated with the SaaS cloud platform PAXSTORE to demonstrate high compatibility and scalability, giving merchants and payment service providers a competitive advantage. With the all-in-one Android smart payment terminal, merchants can analyze consumer behavior, create automated marketing campaigns and manage inventory, enhancing the efficiency of business management and marketing promotion. Payment service providers can manage the terminal network in real time and provide new value-added applications to merchants.
Governments’ uplift for contactless payment transaction limits accelerates deployment of Android terminals
Governments’ uplift of transaction limits for contactless payment has further accelerated customers the shift from cash to e-payment methods such as NFC and QR codes, which has become an irreversible trend. PAX has been expanding its international footprint and its percentage of overseas market sales further increased to 94.3% in 2020. The Group's strong growth in overseas markets continued in 2020, with total turnover increasing by 17.6% to HK$ 5,327.2 million (2019: HK$4,528.6 million). Sales in the United States and Canada (USCA) and Europe, the Middle East and Africa (EMEA) were the most impressive, with the growth of over 46.9% and 36.8% respectively.
Latin America and the Commonwealth of Independent States (LACIS)
Brazil continued to be a key market for PAX in the region in 2020, with high growth in financial technology and keen demand for next-generation smart payment terminals. Benefiting from various strategic partnerships and an extensive Android product line, PAX has remained at the forefront of the Brazilian e-payment terminal market. The Android Smart Terminal A50 and A930 achieved significant sales growth during the year.
The Group further expanded its presence in other markets with the deployment of PAX terminals in Russia, Argentina and Mexico. The largest acquirer in Ukraine partnered with the Group to launch a face recognition payment service, using the PAX A930 Android terminal for authentication, allowing consumers to pay in stores without having to bring cash, credit cards or smartphones.
Europe, the Middle East and Africa (EMEA)
Robust sales growth in Europe, the Middle East and Africa, up 36.8% year-over-year. Since March 2020, several European countries have increased the contactless payment limits in response to changing consumer payment patterns under the pandemic. Keen demand for Android terminal sales resulted in strong sales growth in Italy and Eastern Europe. Other markets such as the UK, Scandinavia, Spain, France and Turkey began to accelerate the deployment of Android terminals.
In response to the spread of Covid-19, PAX partnered with a UK retail solutions software company to trace customer contact history through its Android terminals to support the NHS detection and traceability scheme.
In the Middle East and Africa, customer shift to PAX's Android payment solutions was on the rise, with strong growth in shipments to Egypt, Nigeria, Saudi Arabia and other Gulf Cooperation Council (GCC) countries. In the second half of 2020, the Group increased its market exposure in South Africa, with most of the major acquiring banks there designating PAX as a new supplier.
Asia Pacific (excluding mainland China) (APAC)
In 2020, the pandemic has accelerated the adoption of smart e-payment terminals supporting contactless payments and value-added applications in the retail, restaurant and other industries in Asia-Pacific.
In India, the demand for Android payment products continued to increase, and PAX strengthened its partnership with the leading acquirers and institutions in the country to gain further market share. In Japan, the Group deployed e-payment terminals for chain convenience stores, theme parks and financial institutions.
In Southeast Asia, where e-payments are flourishing, PAX seized the huge growth potential and partnered with leading acquirers and payment service providers to rapidly deploy smart payment solutions in Indonesia, the Philippines, Malaysia, Thailand and Vietnam.
The United States of America and Canada (USCA)
The Group has entered a strategic partnership with a major U.S. payment processing company to deploy more of its innovative Android smart terminal products through a nationwide network of independent sales organizations ("ISOs"). Sales of the A920, PAX's flagship Android smart product, increased more than 100% in 2020 compared to 2019. In addition to growing revenue contribution from payment service providers and the ISOs network, PAX's solutions are now being adopted by more top-tier retailers and fast-food chains in the US.
The Group partnered with a U.S. payment service provider, to comply with the April 2021 mandate to upgrade payment terminals of accepting EMV payments at filling stations in the U.S., driving further sales growth for PAX’s self-service product line. In response to the COVID-19 pandemic, PAX partnered with AxiaMed, an industry leader in healthcare payment technology, to provide healthcare institutions with NFC contactless-enabled Android payment terminal solutions to handle patient payment in a more hygienic and convenient way.
In 2020, revenue generated from China decreased by 18.6% to HK$ 323.4 million. The Group kept optimizing the resource allocation of its China business, focusing on serving reputable and financially sound customers, and improved the gross margin of its domestic business. PAX will intensify its cooperation with reputable acquiring banks and payment service providers in China to accelerate the deployment of the Group's Android products.
Mr. Jack LU, Chief Executive Officer of PAX, commented, “Looking ahead, the global e-payment market is entering a period of rapid growth as consumers ramp up their adoption of contactless e-payments. Major banks and acquirers around the world are expected to step up their efforts to prepare for the recovery of the retail and restaurant markets, and merchants are accelerating their adoption of Android payment terminals to maintain business flexibility, which is expected to continue to show strong demand growth for terminals. With our global scale, we will work closely with our channel partners, acquiring banks, payment service providers and merchants to deepen our existing market share and explore new potential markets. At the same time, the Group will keep exploring promising M&A and investment projects in the payments sector. Through the expansion of diversified solutions and innovative payment-related technologies, the Group will further gain global market share and enhance its competitiveness. PAX's payment terminals provide consumers and merchants with a more secure and convenient payment experience. With its diversified solutions and extensive sales network, PAX is ready to embrace the huge market opportunities of a cashless society.”