EML share price leaps 11% on results and share buyback

EML posts earnings today.

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Key points

  • EML shares have lifted from the open today 
  • The move comes following the release of the company's FY22 results 
  • The EML share price is down nearly 70% over the past 12 months 

The EML Payments Ltd (ASX: EML) share price is surging higher from the open today following the release of its FY22 results and annual report. At the time of writing, EML is trading up 10.85% at $1.175.

EML also announced an on-market buyback program of up to $20 million after it entered into a sale agreement for the investment in Interchecks Technologies, Inc.

EML share price lunges forward on FY22 results

Key takeouts from the period include:

  • Record revenue of $234.1 million, up 21% on prior corresponding period (PCP)
  • Gross debit volume of $80.2 billion, up 308% on PCP and a record
  • Gross profit margin of 68%, up 1% on the year prior
  • Underlying EBITDA of $51.2 million, a decrease of 4% on PCP
  • Group Underlying net profit after tax (NPAT) of $32.1 million, down 1% from last year's result
  • Announced $20 million buyback program

What else happened last period for EML?

Whilst it was a strong period of growth in revenue and gross debit volume for the company, it wasn't as rosy further down the income statement.

The group's earnings before interest, tax, depreciation and amortisation (EBITDA) and NPAT both contracted in the single digits respectively.

This is important, as EML explains that EBITDA "is used as the most appropriate measure of assessing the performance of the group."

EML also booked $23.5 million in account maintenance fees for European accounts that have been active for greater than 12 months.

Underlying overheads also widened by 41% to $108 million, up from $77 million the year prior.

As a result, this performance underlines a strategic review that's set to be be driven by EML's newly
appointed CEO, Emma Shand, the release says.

Management commentary

Speaking on the announcement, Shand said:

My early conversations with key stakeholders have been very constructive and helpful in shaping my immediate focus. It validates to me that whilst we have a strong base it is time for a proactive strategic review of all aspects of the business.

From what I have already learned, I am highly enthusiastic about EML's growth and value potential. However, we won't successfully deliver improved value of those opportunities for our shareholders, if we don't take a good hard look at how best to set our operating structure and align our capabilities, systems and processes to execute effectively for growth.

We have already taken some early steps to improve operating focus, elevate a culture of regulatory compliance to support sustainable growth and in optimising balance sheet strength.

The EML share price is down nearly 70% over the past 12 months. 

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended EML Payments. The Motley Fool Australia has positions in and has recommended EML Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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