adminShares of Worldline were cut in half on Wednesday after the Paris-listed payments company sharply cut its guidance, blaming a deteriorating environment in Germany.
Worldline said it is now expecting 6% to 7% growth in organic sales for the year, after 7.7% growth through the first nine months, after previously forecasting 8% to 10% growth this year.
Worldline also cut its free cash flow guidance, now seeing a conversion of 30% to 35%, from 46% to 48% previously. Its margin guidance now calls for a decline of about 150 basis points, vs. a previous forecast of a rise of more than 100 basis points. It also scrapped its 2024 guidance.
CEO Gilles Grapinet said the current economic situation is generating an accelerated shift in consumer behavior, from discretionary to non-discretionary spending, which penalizes both growth and profitability.
Skanda Amarnath, executive director of Employ America, said Worldline’s profit warning fits with the depressed reading of eurozone consumer confidence that also was released this week. He says it suggests the U.S. economy will decelerate after a strong third quarter.
It also terminated some merchant relationships, and moved forward its cost-cutting plan called Power24, as the company forecast revenue to re-accelerate in 2024. Analysts at Stifel said the revenue guidance implies that consensus profit guidance would be revised down by around 15% to 17%.
Worldline shares
WLN,
dropped 57%, and have skidded 73% over the last year.
Adyen
ADYEN,
another payments firm, saw its shares slump by 11%.
In premarket trade, Block shares
SQ,
fell 4%, and PayPal Holding
PYPL,
fell 3%.
“Worldline’s warning of a ‘macroeconomic deterioration’ in core geographies
like Germany is hurting the entire fintech sector pre-market,” said Mizuho analysts led by Dan Dolev, who added the U.S.-listed companies get very little revenue from Europe, and that Visa characterized the region as resilient.
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