To be frank, I had higher expectations for our revenue in Q1. That was before anyone knew that the third wave of the pandemic was coming. But there are solid parts in our business model that remains intact. Important key performance indicators such as gross margin and recurring revenue continue to speak in our favour. Both reached record levels with a gross margin exceeding 70 % and continued growth of recurring revenues in absolute numbers. We are surely prepared for profitable growth once restrictions in our society are removed.
As I have repeatedly communicated, we expanded our business model and go-to-market strategy some time ago. Since then, we have signed several POS partners. By integrating these partners, we remove any obstacles for their customers (merchants) to start consuming our payment solution in a plug-and-play manner. We now know that this strategy works. Lekia, Elon, Panini, Sushi Yama are just a few examples of brands that, thanks to our ecosystem of POS Partners, choose Westpay.
Our efforts in other Nordic countries continue to deliver results. Over the past months we have signed several new POS Partners that will bring out our solution to the market. Some of them have a really big market presence. We are experiencing good timing from a competitive point of view. The ongoing market consolidation has created somewhat of a vacuum in the market. For our new POS Partners we manage to fill this gap by being trusted as a local and competent partner. Our ambition stays the same: we will work towards becoming the leading payment solution provider in the Nordics. Our key strategy is to stay relevant and maintain presence, quality, and flexibility.
South Africa remains an important part of our business. Recently we became the first provider deploying an Oracle integrated payment solution for on-premise payments in South Africa. This was a long awaited and key milestone, and also an important message to all the hotels and restaurants in South Africa. As you can imagine, this is something we are addressing.
In the past, we relied on one main revenue stream. System sales partly supported with recurring revenues. Our strategy in this area is also changing. Last year, we added rental as a flavour parallel to system sales, which will have an impact on our recurring revenues. On top of that, alternative payment methods are emerging. With our role in the payment ecosystem, we are well positioned to generate revenues from processing these alternative payments. Among others, with Swish we are starting to see small but noticeable revenue numbers that are transaction based. This development will continue, and I believe that transaction revenues increasingly will become an integral part of our business model.
I am confident about our strategy and tactics. Our reach is getting bigger, and our brand awareness continues to grow. We continue to do what we do best: attract customers and take care of the ones we have.
As you can see, standing still is not our modus operandum. Regardless how the pandemic situation unfolds, we continue our efforts knowing that we have the right people, solution, and go-to-market strategy. Patience and focus will take us where we want to be. In the lead.
Best regards/ Sten Karlsson, CEO at Westpay AB
Published maj 5, 2021