Contactless payments have emerged as an essential solution for many companies across the globe, allowing them to boost their business whilst simultaneously ensuring safety to combat the coronavirus pandemic. Additionally, the virus spread has accelerated a structural shift in demand towards digital commerce, as many companies moved their offering online to mitigate the impact of non-physical store movement. RS2 was no exception, as it also benefitted from the speedy shift towards e-commerce triggered by the pandemic.

As indicated in our previous writings, over the past years, RS2 has shifted its principal focus from the original licensing solution towards the processing and merchant solutions. Inevitably, this change in strategy has altered the Group’s overall revenue generation model from one that is highly dependent on one-time licensing fee, to one which is mainly characterised by ongoing and recurring revenue based on the number and value of transactions processed.

Clearly, RS2’s strategy to expand further its business and the recent preference shares offering was part of its strategy to also tap other geographical regions, amongst others. Notwithstanding the lower-than-expected participation, management reiterated the Group’s projections provided to investors at IPO stage.

In addition, management further noted that in view of RS2’s healthy project pipeline and the recent on-boarding of a number of large clients, as at Q1-2021, the Group exceeded budgeted expectations within some of its business segments.

To this extent, management confirmed that through internally generated fund, in addition to the preference shares proceeds, the Group is confident to continue on its current growth trajectory and deliver on the previously announced IPO projections.

More specifically, apart from the fact that RS2’s FY20 revenue increased by 6.7 per cent over IPO projections, these results also incorporate €2m in revenue from its new merchant solutions business segment, following the acquisition of Kalicom in January 2020.

When compared to IPO expectations, the Group’s 2020 financial performance was also characterised by an elevated level of operating expenditure, with management attributing this to the Group’s international expansion strategy as well as an impairment loss on contract on a specific project which is currently on hold. In view of the aforementioned improvement in revenue, RS2 reported a negative EBTIDA of circa €1.4m compared to the estimated figure of negative €1.9m.

A very positive development for the Group was the announcement that it has been granted an EMI licence by the BaFIN, the German Financial Supervisory Authority. As an EMI institution, the Group will be able to provide direct acquiring and issuing services to merchants, and will be offering such services as from the second half of 2021. RS2 further reported that the intention of the Group will be on the German market, and eventually pass-porting the licence to other European countries at a later stage.

In conclusion, we believe that the payments industry will continue to be an important proposition for the global economy not only in rebooting the economy but also as a long-term trend. Moreover, as the importance and dependence of cashless payments is visibly growing on a global level, we believe that habitual changes will continue to rely on the support provided by technology-oriented companies. To this extent, we expect to possibly continue seeing additional growth in the payments industry. In this regard, we remain constructive on RS2 and its growth potential in the coming years.

This article was issued by Andrew Fenech, research analyst at Calamatta Cuschieri. For more information visit The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice.