The payments industry is expected to maintain its positive momentum following the accelerated pace which was triggered by the pandemic. In addition, the industry will also be crucial in rebooting the global economy once the COVID-19 pandemic situation edges closer to normality. More importantly, the current fast-emerging digital payment systems, together with the companies providing such service, continue to enjoy high-level trust from the general public.

Notably, RS2 Software plc’s (RS2) diversified business profile together with its stable contracted revenues enabled the Group to mitigate the implications brought about by the pandemic, namely the delay of certain projects with new clients. Nonetheless, the company managed to ride the bandwagon of the accelerated pace in terms of shift from the traditional payment gateways, as coronavirus restrictions aided strongly the e-commerce space.

RS2 generated €18.3m as per latest 2021 interim results, illustrating an overall significant improvement of approximately 70 per cent on a comparable basis (H120: €10.8m). Indeed, management reported that the main drivers for such growth in revenue is attributable to a surge in business across all of RS2’s operating segments.

Additionally, while licensing revenue increased by 49.1 per cent over H1-20, RS2’s processing solutions revenue increased to €8.6m during H121 (H120: €4.3m). Imperatively, merchant solutions revenue, a new business segment which the Group has recently embarked on, also improved by 45.9 per cent over H1-20 and amounted to €0.9m (H1-20: €0.6m).

Geographically, Europe and North America, remained the largest contributors towards the Group’s revenue, with revenues generated in these regions amounted to €7.6m (H1-20: €6.5m) and €8.2m (H1-20: €2.9m) respectively. In addition, the most notable improvements were recorded in RS2’s North American processing business division, with revenues amounting to circa €5.9m during H1-21, reflecting an overall improvement of €3m or 106.6 per cent over the comparable period last year.

Evidently, the improvement in revenue is reflective of the Group’s investment in prior years, whereby over recent years, RS2 has been on-boarding large clients within the managed services business division as well as adding new markets to its existing customer portfolio, with a special focus on the North American operations. Moreover recently the acquiring business, was also another revenue stream which the company increased its capex pace.

On the expenditure front, total operating expenditure, which is primarily composed of cost of goods sold, marketing and promotional expenses, administrative expenses and other expenses, amounted to €15.2m during H1-21 (H1-20: €13.7m). In its interim results, the Group also accounted for provisions amounting circa €0.9m.

Notwithstanding this increase in operating expenses, which mainly have been triggered through the continued growth prospects of the Group, RS2 registered an overall improvement in operating profit, as the Group’s operating expenditure increased at a slower pace than the growth in revenue during H1-21.

Excluding depreciation and amortisation charges, EBITDA improved to €3.9m during H1-21 (H1-20: circa negative €2m), translating into an EBITDA margin of 21.2 per cent. In addition, the Group’s interest expense amounted to approximately €0.2m during H1-21, from €12k in the comparable period last year.

In conclusion, as the importance and dependence of cashless payments is visibly growing in notion on a global level, we believe that this habitual change will continue to rely on the support provided by technology oriented companies. To this extent, we remain optimistic on the growth ability of the industry going forward, which in turn remains a catalyst for RS2, as the company should continue to benefit from the sector’s positive momentum.

Disclaimer: 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.