This article first appeared on GuruFocus .
-
Revenue:$206.8 million, down 6% on FY25.
-
Customer Revenue:$150 million, down 4%.
-
Interest Revenue:Declined 11% to $56.7 million.
-
Underlying EBITDA:$48.3 million, down 18%.
-
Net Overheads:$104.1 million, down 3%.
-
Net Loss After Tax (Continuing Operations):$19.7 million, improved from a $53 million loss in the prior year.
-
Cash at Year-End:$37.8 million, down $21.6 million.
-
Europe Revenue:Down 14% to $65.4 million in customer revenue.
-
Asia Pacific Revenue:Up 8% to $56.5 million; customer revenue up 14% to $47.6 million.
-
North America Customer Revenue:Down 2% to $37.1 million.
-
Underlying Operating Cash Flow:$47.8 million.
-
FY27 Underlying EBITDA Guidance:$50 million to $54 million.
Release Date: August 17, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
EML Payments Ltd ( EMCHF ) has largely completed its restructuring program, refreshing 51 senior positions and establishing a global operations center that delivers 35% cost savings.
-
The company's new business pipeline remains strong at $109 million in annualized revenue, with approximately $50 million in the final tender or decision phase.
-
Renewal performance is solid, with nine of the top 30 contracts renewed in the last 12 months, including three of the top five, reflecting improved operational performance and relationship management.
-
The new mobility solution, developed with partner Tendren, is advancing well and is expected to launch commercially by mid-calendar year 2027, targeting a large and growing market.
-
The company forecasts pro forma free cash flow of $30 million to $35 million in FY28, as legacy one-off outflows and major Arlo project investments fall away.
-
Underlying operating cash flow was strong at $47.8 million, demonstrating solid cash conversion despite a challenging earnings year.
Negative Points
-
EML Payments Ltd ( EMCHF )'s financial performance in FY26 missed expectations, with underlying EBITDA declining 18% to $48.3 million and revenue down 6%.
-
The company experienced slower-than-anticipated onboarding of new customers and softer trading in parts of the northern hemisphere in the second half, impacting revenue pull-through.
-
Activation challenges with a key payment infrastructure partner in Australia have persisted and are growing, causing delays in program launches.
-
The company's cash balance decreased by $21.6 million during the year, impacted by outflows for legacy matters, including a class action settlement and restructuring costs.
-
The timeline for the Arlo platform migration has extended, with non-recurring expenditure forecast at $15.7 million in FY27, delaying the realization of expected overhead savings.
-
Europe experienced a 14% revenue decline, with customer revenue down 16%, reflecting the non-recurrence of certain programs and softer trading across two large customers.
Q & A Highlights
Q: What is the expected FY27 cash flow base, and what are the key moving parts that will fall away in FY28 to achieve the projected $30 million to $35 million free cash flow? A: Stuart Will (CFO) explained that FY27 will continue to see significant investment in Project Arlo (approximately $17 million) and cash outflows of about $19 million from liabilities already recorded on the books. These are the two largest components impacting the guided EBITDA of $50 million to $54 million. Additionally, there is interest expense of $8 million to $8.5 million and other capital projects. Essentially, cash generated in FY27 will largely be utilized by these outflows, with no expected borrowing drawdown or material improvement in net debt. The path to the FY28 pro forma free cash flow of $30 million to $35 million is clear once these non-recurring items roll off.
Q: How confident are you that there are no more "surprises" or legacy issues lurking in the business, and what signs can investors look for in FY27? A: Anthony Hynes (Executive Chairman) stated that as best they can tell, they have bottomed out on legacy issues after significant heavy lifting. He acknowledged the caveat that "we don't know what we don't know," but emphasized that they have world-class people in key roles and have done an incredible amount of assessment to uncover and fix all genuinely knowable issues. He pointed to their willingness to discuss a return to free cash flow as a positive signal that they believe they have solved for all key issues.
Q: Can you clarify the customer conversion process and whether the client delays and challenges experienced in the second half are now resolved? A: Anthony Hynes (Executive Chairman) distinguished between pipeline-to-contract conversion, which is on target, and contract-to-implementation, which faces three hurdles. The first hurdle, internal EML issues, is no longer a problem. The second, client readiness and capability, is outside their control and will always ebb and flow. The third, partner dependencies (e.g., a key payment infrastructure partner in Australia), has had a growing impact, extending timelines from three to four months. While they have solved for the issues they can control, the other two remain in the hands of customers and partners.
Q: The pipeline sits at $109 million versus a previous target of $125 million. Is this below expectations, or is the delta due to recent wins being removed from the pipeline? A: Anthony Hynes (Executive Chairman) clarified that the delta is more about recent wins being taken out of the pipeline rather than a decline in performance. The pipeline is growing, and conversion from pipeline to contract is as strong as hoped. He noted that new commercial leadership appointments in APAC and Europe are already showing positive results, with the APAC hire in particular contributing to uplift.
Q: Regarding the $50 million in pipeline opportunities close to tender or final decision, how competitive are these, and what is the timeline for potential announcements? A: Anthony Hynes (Executive Chairman) stated that the $50 million is a mix of opportunities in tender and contract phases, and they feel good about the next 60 days. While many significant customers prefer not to have announcements made about them due to their own competitive spaces, the improved quality of people and pipeline management is starting to show fruits. He emphasized that the real focus is on solving the contract-to-implementation timeline, particularly in Australia where a partner dependency is causing delays.
Q: Can you provide details on the two top-30 clients that did not renew, and how are FY27 renewal conversations progressing? A: Anthony Hynes (Executive Chairman) explained that both non-renewing customers were relatively small (approximately $1 million to $2 million each). One closed its program entirely, and the other moved to self-issuing, which is easier in Australia due to different licensing rules where schemes are responsible for licensing rather than regulators. He does not view this as a systemic threat, noting it's the first program closure since he joined. He also added that upcoming stored value changes in Australia will make self-issuing harder, increasing confidence this is a one-off.
Q: What is the go-to-market strategy for the new mobility product, and how significant can this opportunity become for EML over the next five years? A: Anthony Hynes (Executive Chairman) expressed strong enthusiasm, stating that mobility could become a segment of their reporting, indicating its potential scale. The solution is largely software-driven and doesn't necessarily require EML to be in the money flow. It solves industry problems by moving from closed-loop fuel cards to a digital-first, open-loop offering with unrivaled integration with four core controllers. The capability enables customizable reporting for fleet managers and offers for cardholders, such as directing drivers to specific service stations for discounts. He noted exciting engagement in multiple markets and that EML will enter new markets for this product.
Q: Can you elaborate on the FY26 financial performance and the key drivers behind the revenue decline? A: Stuart Will (CFO) detailed that FY26 revenue was impacted by three key headwinds: the non-recurrence of $10.8 million in FY25 customer revenue from previously terminated programs in runoff mode, foreign exchange movements, and lower interest revenue from global cash rate reductions. The European business also experienced softer trading across two large customers in the second half, though trading has stabilized. Excluding these factors, the underlying portfolio grew by 3.8%, demonstrating resilience. Net overheads decreased by $3.5 million due to strong cost discipline.
Q: What is the status of Project Arlo, and what are the updated timelines and investment requirements? A: Anthony Hynes (Executive Chairman) reported that Arlo is advancing at pace through the build phase, with an initial pilot deployed in the UK and testing underway, including client testing. UK migration will commence in FY27, with Australia deployment planned for mid-next calendar year. Due to an updated view of migration time and core functionality (including mobility and bringing external vendor capabilities in-house), the timeline has extended. Non-recurring expenditure is forecast at approximately $15.7 million in FY27, $2.4 million in FY28, and $1 million in FY29. The plan reaffirms not less than $12 million in annualized overhead savings on full deployment.
Q: What is the FY27 guidance, and what are the key priorities for the year? A: Anthony Hynes (Executive Chairman) provided guidance for underlying EBITDA in
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
