Worldline Q2 Results Negative On Revenue Miss And Guidance Cut

Rating: BBB-

Credit negative report on the organic growth miss and cut in guidance though stable leverage and intact FCF guidance are worth noting. Would expect a move wider in spreads on this given the sensitivity of the name.

• Q2 revenue +1.7% YoY organically (vs. BBG consensus of 1.9% organic); growth led by Merchant Services at +2.6% and weighed upon by Financial Services at -1.5% which was impacted by an “earlier-than-budgeted re-insourcing of certain contracts”.
• H1 Adj-EBITDA -0.9% YoY (+1.2% vs. BBG consensus) as profitability in Merchant decreased on planned merchant terminations which wasn’t fully offset by improved margins in Financials and Mobility segments. Adj-EBITDA margin decreased from 23.1% for H123 to 22.5%.
• EUR 82mn H1 FCF -64.5% YoY mainly reflecting Power24 strategic plan costs, CapEx of EUR 160mn (though this is in line with FY trajectory apparently) and WC normalistion.
• Leverage of 1.5x from 1.6x at both FY23 and H123
• Guidance cut; organic growth of c.2% to c.3% from “at least 3%”, adj-EBITDA of c.€1.13bn to c.€1.17bn from “at least €1.17bn” though FCF guidance of c.€230mn was maintained.