RS2 Software’s business expected to ‘ramp up’ in 2023, says CEO

RS2 Software plc CEO Radi Abd El Haj has stated that the payment solutions provider’s business is set to “ramp up” during 2023 after a stagnation in investment in 2022 brought about by macroeconomic challenges.

His comments came from the group’s Annual Report for 2022, which was released on Friday, in which it reported a pre-tax profit of €1.8 million during the year, a significant drop from 2021’s €6.4 million. This was largely a result of a surge in cost of sales, which rose by 18.2 per cent from 2021’s €21.7 million to €25.7 million. Administrative expenses were also on the rise, going up to €10.3 million in 2022 (2021: €8.5 million).

The group’s total equity contracted from €25.4 million in 2021 to €24.2 million in 2022. The Board of Directors did not recommend any final dividends for the year ending 31st December 2022, as it continues to seek “further investment in infrastructure and business development”.

“Despite a challenging economic environment, 2022 has proven to be a year of continued execution of strategy, growth, and resilience to remain on track to achieve the group’s long-term targets,” Mr El Haj stated.

He remarked that this was possible through the group’s team, management, and Board of Directors, who all reacted “very quickly” to new challenges and adapted to the lessons learnt during the “turmoil from the COVID-19 pandemic, solidifying the group’s more robust organisation for any turbulence ahead”.

Turning to the financial results more directly, he noted that they indicate a “stable top line” when compared to the prior year, despite current market conditions.

“Together with the repercussions resulting from the COVID-19 pandemic, the Russian invasion of Ukraine has magnified the slowdown in the global economy, which entered a period of feeble growth and elevated inflation. This affected the group’s results for the year by way of customers delaying projects or stretching investments to bare minimum,” he continued.

He remarked that a “significant stagnation in investment was noted mid-year in 2022”, leading the group to apply counter measures, prompting it to start seeing “positive ramp up in the top line and bottom line” over the final few months of the year.

Throughout 2022, RS2 Software executed a number of milestones with the aim of increasing its customer base and diversifying its global business across various regions, including the obtaining of an EMI licence by the German regulator BaFin, which Mr El Haj states is “crucial” for the execution of the group’s strategy of diversifying its service offering. He added that the group’s subsidiary, RS2 Financial Services, achieved a “pivotal milestone” by obtaining its principle membership from VISA and MasterCard, allowing it to start the migration of its merchant portfolio residing in RS2 Zahlungssysteme GmbH to its own licence.

The group has also continued to increase its customer base and regional expansion in LATAM, adding the likes of Mexico, Chile and Peru to its operational markets. Mr El Haj explained that in these markets, the group is offering “transaction processing services to Payment Service Providers (PSPs), banks and financial institutions that provide acquiring services to online merchants, as well as stores and shops”.

In North America, RS2 Software “continued to ramp up its client base” through the Independent Sales Organisations, while also enhancing its strategy. This was also coupled with extensions to services in the Asia Pacific region, primarily to Singapore and Australia.

“The group has made strong progress and executed its key strategic priorities at a steady pace,” Mr El Haj said, before adding that this will put RS2 Software at a strong position to “increase the pace of its growth into 2023 and beyond”.

“In 2022, the group remained focused on its strategy of growing and expanding its Managed Services business and accelerating its global expansion, as well as commencing its Direct Merchant Acquiring and Issuing Services in Europe,” he added.

Over the course of the year, the group continued to expand its outsourcing business through its subsidiary RS2 Smart Processing Limited by increasing the number of services offered to existing customers, “enabling them to enter new markets and consolidating their global business”. He explained that at the same time, direct services will also be offered to merchants primarily in Europe “with the intention of following them internationally utilising the global Acquiring and Issuing platform capabilities”.

Mr El Haj also remarked that RS2 Software’s technology team has spent the last two years working on the redesign of its systems by “selecting the right technologies to best support” customers and colleagues across the globe, “both from a technology and a delivery perspective”.

Looking ahead, he noted that the group will continue to “focus on implementing and delivering its strategy around its main business pillars”. In terms of its managed services business, Mr El Haj said that this is being done by “continuing to build on its global expansion servicing ISVs and Payfacs”, including adding more enterprise clients, such as tier one banks and financial institutions, “which would require building a private cloud and running their operations”. He added that the group aims to increase the issuing processing business in markets where its acquiring services are already provided.

“The group also plans to invest further in its infrastructure to strengthen the technology and complete the product offering in order to play a more active role in the digitalisation of the whole customer journey, to offer omnichannel solutions and to go beyond traditional payment solutions,” Mr El Haj continued.

He also revealed that the group is also “exploring some merger and acquisition activities” in order to increase its merchant portfolio.

“Business is expected to ramp up with a stronger pipeline, gearing up for the coming year, which, together with the launch of several exciting new products for the group, including merchant reconciliation modules, merchant and partner portals and tokenisation for issuing services, amongst others, will lead the group to a successful 2023 and beyond,” Mr El Haj said.

He concluded by thanking RS2 Software’s global team in Europe, the United States, Asia Pacific and the Middle East for their “dedication, loyalty and continuous outstanding support, which has translated into RS2’s success”, together with the support shown by management and the Board of Directors.

RS2 Software is a company that provides a cloud services platform for payments, with the goal to remove any technical barriers that make the integration or management of payment services complex.

Social image: RS2 Software plc