PagoNxt projects 2025 growth despite one-time losses in H1 24
Santander’s PagoNxt has reported its H1 2024 results, with solid top-line numbers that speak to the division’s ongoing growth.
Total revenue increased 11.7% YoY to €583m (c.$633m) in H1, meaning PagoNxt is comfortably on course to achieve its second €1bn+ revenue year after it passed the milestone for the first time in 2023. It has also seen its H1 EBITDA margin climb by 8.9 percentage points YoY to reach 20.1%.
The brand has also seen an outsized rise in open market revenue, which increased 54% YoY to reach €131m in H1 2024. This is revenue that is achieved from customers outside of the pre-existing Santander ecosystem and is a key strategic priority at present. It now accounts for 22% of all PagoNxt revenue.
PagoNxt has also seen a slight increase in its overall contribution to its parent company; in H1 24 it accounted for 1.9% of Santander revenue, up from 1.8% in H1 23 and 1.6% in H1 22. It has also reduced its cost-per-transaction, seeing a -10% reduction YoY to 3.7c.
Meanwhile, although PagoNxt made some strategic decisions this half that contributed to significant one-off losses, the brand’s move to reporting alongside Santander’s Cards segment as the wider Payments division meant much of this was offset by performances in the Cards segment.
PagoNxt continues to target 2025 revenue growth of around 30%, which would put its H1 2025 revenue at around €758m and give an EBITDA margin of c.30%.
PagoNxt sees H1 rise in losses as Cards drive Payments growth
PagoNxt is now arranged as three business verticals: Getnet, which provides online and in-store merchant payments; PagoNxt payments, which includes the A2A payment and processing-focused Payments Hub and international corporate payments-focused OneTrade; and Ebury, which focuses on SME cross-border payments.
It is also now reported as part of Santander’s Payments division, which also includes its Cards segment. The motive behind this is to own both sides of the value chain of both card payments and account payments.
In terms of revenue, PagoNxt generally makes up around 20-25% of the Payments segment, with Cards accounting for the rest.
However, while Cards has been a consistent source of profit for the Payments division and Santander more widely, PagoNxt has delivered a loss in most quarters as the company continues to prioritise growth.
While profit from Cards was enough to deliver underlying attributable profit for Payments in H1 2024 overall, of €49m, in Q2 2024 specifically the division saw a loss as a result of a sharp uptick in losses from PagoNxt. This was the result of a number of strategic moves that saw the company discontinue its merchant platform in Germany as well as close its Superdigital brand in Latin America, the latter of which reflected a shift to using common platforms across the Santander Group.
This approach follows the previous closure of the consumer-focused PagoFX brand, which the company shuttered in late 2021.
Excluding the write-downs, Payments saw profits increase 30% YoY in H1 2024.
PagoNxt increases net interest income
The Payments segment has also seen an increase in net interest income (NII) of 7% in Q2 2024 to €651m, and while the majority of this is from Cards, a small but growing amount is from PagoNxt.
The brand saw its share of Payments NII grow from 3% to 5% between Q2 2023 and Q2 2024, while PagoNxt NII saw a YoY increase of 150% in Q1 2024 and 88% in Q2 2024 to €25m and €32m respectively.
This is likely to be a reflection of the small but growing number of customer deposits held by PagoNxt. While in June 2023 these totalled €600m, in June 2024 they had reached €994m.
Ebury grows customers ahead of potential London IPO
Turning to PagoNxt’s SME-focused cross-border payments brand Ebury, while the company did not break out many numbers, it did report a 23% YoY rise in customers in H1 2024 to 23,000.
It also said that the company was continuing to expand through the development of vertical-specific solutions such as mass payments, which were in particular helping to aid expansion into emerging markets such as South Africa. It has also expanded Ebury’s product suite, including FX risk management solutions and online capabilities.
However, earlier this week it was reported that Ebury had appointed Goldman Sachs to begin work on a £2bn IPO on the London Stock Exchange. While there was no direct mention of this in the documentation released by Santander this quarter, Santander Group Chief Financial Officer José García Cantera did respond to a question about the news in Santander’s earnings call, where he described the company as “contemplating an IPO in Ebury”.
“We are looking at all types of alternatives to maximise the capital,” he said. “This is one of them. That doesn’t necessarily mean that this will be executed.”
Getnet grows TPV, transactions
Meanwhile, Getnet has seen a focus on consolidation, as reflected in the discontinuing of its merchant platform in Germany as well as an increased focus on Latin America.
In H1 2024, Getnet saw its total payment volume increase 12% on a constant basis to €107.6bn, while the number of transactions grew 7% YoY to reach 4.8bn.
PagoNxt Payments sees transaction surge
PagoNxt Payments also saw the company make gains on its accounts-to-accounts payments processing-focused Payments Hub, which is ultimately intended to be deployed to support both the Santander Group and open market customers. Here, the goal is an “industry-leading cost per transaction combined with value-added services”.
In reflection of the fact that this is still ramping up, the company reported a significant increase in transactions during the half-year. While in 2023 the brand’s transactions totalled 79 million, in H1 2024 alone it has already reached around five times this, at 405 million. The brand is also still on a significant growth trajectory, with transactions in Q2 2024 being 57% higher than those in Q1 2024.
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