INGENICO : Double digit growth at the end of September. 2016 objectives confirmed

Revenue

Performance in the first nine months

In the first nine months of 2016, revenue totaled €1.703 billion, representing a 6% increase on a reported basis, including a negative foreign exchange impact of €64 million. Total revenue included €1.172 billion generated by the Payment Terminals business and €531 million generated by Payment Services.

On a comparable basis revenue growth was 10% higher than in the prior-year period, a result that included a 10% increase in Payment Terminals and a 9% increase in Payment Services.

The strong growth achieved since the start of the year in Europe was driven by Ingenico Group's multi-local footprint and high-quality customer service. It also reflects the Group's ability to take advantage of regulatory change in mature markets. In Asia-Pacific, growth was particularly strong in Australia, where the new Telium Tetra range was successfully launched, and in China, where Ingenico Group has continued to enjoy high volume. In contrast, Brazil's unfavorable macro-economic conditions heavily affected business volumes in Latin America. In North America, as indicated in early September, Ingenico Group was confronted with a sudden decline in demand for its products, due to relaxation of the deadline for EMV migration. Finally, investments in the ePayments division over the last few months has led to strong sales momentum driven in particular by implementation of the contract with Alipay.

Performance in the third quarter

In the third quarter of 2016, revenue totaled €570 million, representing a 4% increase on a reported basis, including a negative foreign exchange impact of €14 million. Total revenue included €384 million generated by the Terminals business and €186 million generated by Payment Services.

On a comparable basis revenue growth was 7% higher than in the third quarter of 2015, a result that included a 2% increase in Payment Terminals and an 18% increase in Payment Services.

Compared with Q3 2015, the various divisions performed as follows on a like-for-like basis and at constant exchange rates:

• Europe-Africa (+22%): Sales activity was quite brisk once again in the United Kingdom and in the Nordic countries. The replacement cycle for PCI V1 terminals was still strong, highlighting Ingenico Group's ability to take full advantage of the opportunities created by favorable regulatory change in mature markets. In France, growth remained solid, thanks to the high quality of the Group's product range and customer service. In Eastern Europe, Ingenico Group increased its market share during the quarter. The strategy initiated several years ago to establish a presence in Greece enabled the Group to profit from the vigorous demand created by legislation promoting electronic payment. In Russia, sales doubled once again, driven by high-quality execution of the Sberbank contract.
  At the same time, Payment Services continued to trend upwards. Transaction volume grew in Germany and on the Axis platform.
  
• Asia-Pacific and Middle East (+12%): Sales are dynamic in China, where online-offline convergence is bringing an important additional source of growth. Successful Telium Tetra deployment in Australia was a further driver of third-quarter sales.
  In Turkey, the Group still has a large pipeline of orders and growth is in line with expectations.
  
• Latin America (-24%): As anticipated, Ingenico Group was impacted by the unfavorable macro-economic situation in Brazil, with lower volumes orders from most acquirers. The Group continued to gain market shares in Mexico, specifically in the retail segment, and started to deliver Telium Tetra terminals to one of the main acquirers. Performance remained solid throughout the rest of the region.
  
• North America (-31%): The US market was heavily impacted by EMV policy change. The resulting slowdown in EMV migration has masked the market share gains recorded by the Group in the hospitality and retail businesses. In Canada, Ingenico Group delivered a solid performance, driven by replacement of some acquirers' installed base.
  
• ePayments (+22%): Operational performance was outstanding in the third quarter. The stability of its platforms and enhanced service support allowed the ePayments division to deliver strong growth.
  The migration of the entire customer base to the new front office was successfully carried out. Ingenico Group's platform meets the most demanding standards.
  Growth was accelerated by particularly high flows from certain key customers, and it benefited from a favorable basis of comparison.

Outlook

The Group maintains its full-year objectives for organic revenue growth in 2016 at 7% or above, as well as for EBITDA margin, which is expected to be at 20% or above.

Regarding the coming quarters, the trends observed today are as follows:
In Europe-Africa, after three quarters of particularly successful growth, the Group expects a slowdown in the PCI V1 replacement cycle.
Asia-Pacific and Middle East Region should continue to grow driven by countries which the Group has recently entered.
In Latin America, sales declines are expected to stabilize progressively.
In North America, activity will be further affected by unfavorable comparatives in Q4 of this year and at the start of next year. However market share gains are expected in new segments in the US. The ePayments division should maintain a good level of growth.

Conference call

A conference call to discuss Ingenico Group's Q3 2016 revenue will be held on October 26, 2016 at 6.00 p.m., Paris time. Dial-in numbers:
01 70 99 32 12 (French domestic), +1 646 934 6795 (for the United States) and +44 (0)20 7162 0177 (international) with the conference code: 960278.