Revenue growth for CAB Payments decelerates in 2023 due to foreign exchange influences
CAB Payments: A Year of Mixed Results and Change
In a year marked by changes in market conditions and revised revenue growth forecasts, CAB Payments, a leading player in the digital FX and cross-border payment solutions sector, reported a 25% increase in revenues to £137.1m in 2023. However, the company's profit before tax decreased by 14% compared to the prior year, at £37.6m.
The company's client base includes remittance companies, international development organizations, and financial institutions in both emerging and major markets. In 2023, CAB Payments added 83 new clients, of which 42 generated income and 41 are expected to trade in 2024. The company increased its number of banking partners by 16% to 331 and its number of payment partners by 17%.
Despite the growth, the reported figures may not have fully satisfied investors. The company's stock price fell over 72% in the immediate wake of the financial results announcement. The decline in CAB Payments' share price in 2023 was largely driven by the withdrawal of takeover talks by U.S. rival StoneX Group, which caused the shares to plunge as much as 20% in one day in August 2023. Additionally, CAB Payments was noted as one of the least successful IPOs of 2023, with shares falling about 80%, indicating poor market reception and investor sentiment possibly due to broader challenges in their sector or company-specific issues.
However, the company's financial performance shows solid revenue and profitability. For the trailing twelve months (TTM) ending in 2024, CAB Payments reported the following key financial metrics:
- Revenue: £91.04 million
- Earnings (Net Profit): £14.21 million
- Gross Profit: £91.28 million
- Net Profit Margin: 15.61%
- Gross Margin: Approximately 100%, indicating very low cost of revenue (only £241,000)
The adjusted EBITDA for CAB Payments rose by 17% to £64.6m.
In terms of leadership, Bhairav Trivedi, the CEO of CAB Payments, is stepping down this month. No specific reason was given for his departure. Neeraj Kapur, former CFO of Vanquis Banking Group, is replacing Trivedi as the CEO of CAB Payments. The change in CEO will take place this month.
The company's stock price has since been recovering but is still significantly down from last July. The latest earnings saw CAB Payments' share price fall by over 9% on the day of announcement. Despite the challenges, CAB Payments continues to serve a diverse set of clients globally, including banks, fintech companies, supranationals, and governments. The company's product offerings suggest an emphasis on expanding digital and automated cross-border payments solutions, although no concrete growth statistics are reported.
[1] Source: The Guardian, "CAB Payments share price plunges as StoneX takeover talks collapse", August 2023. [2] Source: CAB Payments Annual Report 2023.
- In light of the company's financial results, some investors may be questioning the long-term prospects of CAB Payments, as the stock price has dropped significantly despite solid revenue and profitability, indicating a potential lack of investor confidence in the business sector or specific company issues.
- CAB Payments, facing a challenging year with a drop in share price and the departure of their CEO, is now focusing on expanding its digital and automated cross-border payment solutions, possibly as a strategy to regain investor confidence and growth in the finance and investing industries.
