CAB Payments: Fintech’s earnings hit by currency policy shifts after disastrous London float

Fintech CAB Payments’ earnings have been hit by “unforeseen central bank interventions” as the firm looks to draw a line under a year which saw it become one of London’s biggest stock market flops.

The Sutton-based money transfer outfit’s pretax profit fell 14 per cent year-on-year to £23.9m in 2023. The firm’s earnings per share dropped to 10p from 14p.

The news sent CAB Payments’ shares down as much as 11 per cent on Tuesday morning.

It comes after a bruising year for the fintech, which floated to much fanfare last July at a valuation of £800m.

However, the firm fired out a profit warning just months later after it was caught up in a major foreign currency policy shift from the Nigerian central bank, leading it to downgrade its revenue guidance by 17 per cent. Shares collapsed and still trade at around a third of their float value.

“While we recognise the business did not deliver as we had anticipated in the second half of the year, it was still in absolute and relative terms a good performance, with healthy growth in income and profit, and sets the group up well for further growth in 2024 and beyond,” CAB Payments said on Tuesday.

Gross income rose 25 per cent to £137.1m, while CAB Payments’ adjusted earnings before tax (EBITDA) came in 17 per cent higher at £64.6m.

However, its adjusted EBITDA margin fell to 47 per cent from 50 per cent as “unforeseen central bank interventions” drove the rate of cost growth higher than the rate of income growth. It said this was largely driven down due to IPO-related costs.

The firm noted “some weakness in the second half of the year, particularly in the fourth quarter” due to policy shifts in two key currencies, with income for the latter six months coming in at £65.3m compared to £71.8m in the first half.

Its income from the Nigerian Naira dropped to £18m in 2023 from £27.5m in 2022.

CAB Payments’ total active clients rose to 509 from 256 last year, while banking partners rose to 331 from 287.

The company announced last month that chief executive Bhairav Trivedi, who led CAB Payments through its IPO, would step down and hand over to Neeraj Kapur after the publication of its results, with Trivedi staying on as an advisor.

Trivedi said on Tuesday: “Clients choose CAB Payments due to the strength of its banking and technology network, its robust compliance culture, and the breadth of its global banking partner relationships.

“We are in the final stages of the application process for our EU licence and continue to expect our US licence to be granted in the second half of this year.

“These licences will open up significant additional sales channels for CAB Payments among high-quality development organisations and remittance providers, who move considerable sums into our key markets, and will also place salespeople close to major market banks in both geographies.”