Why did EML Payments (EML) shares crash
EML -29.68%: shares in the payments technology business slumped to 3-month lows today on some softer-than-expected comments at their AGM. The company has been working to refocus the business on their profitable Australian and UK operations, but the ghosts of its past continue to plague its outlook. The PCSIL business in Ireland has been under growth restrictions for the last few years due to money laundering breaches with remediation works still ongoing and weighing on cash flow. EML is also trying to offload Sentinel, an open banking brand they acquired in 2021. A number of preliminary bids have been received, it is likely to see cents on the dollar compared to the €70m acquisition price, though a deal here would likely be a positive.
On a more positive front, EML maintained FY23 guidance of EBITDA between $52-58m, up 40-56% on FY23, a range which is ~25% above current consensus expectations. Year-to-date (YTD) revenue is up 39% and EBITDA is up 129%, tracking well vs guidance. Unfortunately, this was overshadowed by continuing uncertainty regarding the PCSIL business and the continuing cash drag as a result of the regulatory burden.
