From the CEO

From the CEO - Q4 2021

The demands from our customers continue to speak in our favour. During the fourth quarter our order bookings were record high. Local presence, delivery capability, innovation, and security are just a few examples of where we stand strong with good confidence. At Westpay we ended 2021 with some well-deserved tailwind, and I am looking forward to continue with our execution into the new year. Our strategy is anchored, with full focus on scalability and growth.

During the fourth quarter, there is continued proof of our business model and market relevance. My team is doing amazing work taking care of our customers. Thanks to this effort, we finished the quarter with revenues at 15,8 MSEK, an increase with 13 % compared to the same period last year. Our two other KPIs - gross margin and recurring revenue - remain at their highest levels. As our quarterly growth continues, these facts alone send a good signal to our customers and partners, and boost our self-confidence internally.

Our costs increased somewhat during the period. This is largely due to bottled-up needs after running a very tight ship during the pandemic period. We also experienced an increase in our landing costs since the pandemic effects are driving up shipping costs. At the end of the year, we decided to write down the stock value as a one-time action. There is a result impact but no cash flow effect. However, smart spending continues. Every cost or investment not being short-term critical to our business and operations, is postponed or cancelled.

Noteworthy is our record high order bookings at the end of the period. The short story is that on the world market, there is a global shortage of semi- conductors and other critical electronic components. By addressing this situation proactively, we have managed to secure availability and delivery capacity for 2022 and beyond. As a result, Westpay received orders from multiple key customers, for card payment infrastructure and related services. The Total Contracted Value (TCV) of these orders during the first three years amounts to 40 MSEK. Deliveries will all be made during 2022.

We continue to attract new customers and partners. Kicks, Paytrim, and BRP are three examples of strong cases we have signed during the quarter. Three very different companies with unique requirements, but they all have in common the search for a payment solution that helps them increase the user experience in their overall

offerings. Flexibility, future-proof, and reliability are just a few objectives where we have met their demands.

Summing up, this year has really been two-faced. It started out in dark colours but ended in a more positive spirit. The pandemic period is characterized by high uncertainty and our customers’ willingness to invest has been at a low point. We have used this time to sharpen our offerings and our operations. As a result we have made important progress during 2021, which I’d like to highlight. Technology-wise, everything we said that we would achieve is now enabled for our customers. Our Swipe2Pay technology, which facilitates alternative payment methods (e.g. Swish), is ready and will extend our business model. As a part thereof, Klarna’s payment offerings were integrated and put into production at the end of the year. With our SaaS like offering, an increasing portion of our future growth will come from recurring and transaction revenues. A side effect, worth to keep in mind, is that our gross margin from these revenue sources is significantly higher compared to system sales. As I see it, we now have an excellent opportunity, supported by our position in the market, to take the next step in our journey in becoming a leading payment solution provider in the markets we serve.

In some areas, we need to expand the Westpay team to strengthen our resources and meet higher demands. Thus we are recruiting actively. Moving forward, we have a strong setup and a thorough understanding of the customers’ pains. Simplicity is a key enabler for the customer, and we are continuously making it easier, faster, and more secure to consume our payment services. Looking ahead, I am confident that Westpay’s ability to add significant value for our customers, will be to our advantage as we turn the chapter and progress into 2022.

Best regards/ Sten Karlsson, CEO at Westpay AB

Publicerad februari 23, 2022

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