Worldline Earnings: Lowered Full-Year Guidance Disappoints

Worldline reported first-half results in line with consensus estimates collected by the payment provider, but a revised guidance to the downside for the full year did disappoint. Revenue increased 2% to EUR 2.3 billion as merchant services (up 3.2%) more than offset another decline in financial services (down 1.5%). Merchant terminations still affected the first half of the year without which growth at the merchant services segment would have come in at 6.2%. More worryingly, Worldline saw a decline in merchant services volume growth in the second quarter after a promising first quarter. The payment provider cited soft consumer spending in Europe as the culprit with a particularly weak June. While management highlighted during the call that July is showing a recovery already ahead of second-quarter growth, guidance was lowered nonetheless for the full year. Worldline now expects 2% to 3% organic revenue growth versus at least 3% previously and adjusted EBITDA between EUR 1.13 billion and EUR 1.17 billion versus at least EUR 1.17 billion previously. As we digest the results and revisit our model, we may adjust our fair value estimate, although our assumptions for the full year currently still sit within updated guidance. Our marrow economic moat rating and Very High Uncertainty Rating are unchanged.