Specialist
Former Senior Executive from Ingenico Group SA
Agenda
- Operating environment for POS solutions providers – coronavirus impact and end market challenges in retail and restaurants
- Pricing environment and replacement cycle across regions
- Competitive landscape, including Square (NYSE: SQ), Clover, Verifone, Ingenico (PAR: ING), Pax (HKG: 0327) and others – potential winners and losers
- Outlook for H2 2020 and beyond, including potential M&A
Questions
1.
Could you share an overview of the operating environment for Verifone, Ingenico and peers in the POS solutions industry, highlighting notable key trends or drivers?
2.
What potential near-term scenarios do you think could develop as a result of the coronavirus? Do you think the pre-existing challenges in the retail end market could be exacerbated? Do you have any commentary on the broader coronavirus impact on Verifone, Ingenico and peers?
3.
What decline in terminal shipments would you estimate, accounting for the second wave of EMV [Europay, Mastercard, Visa], changes in the replacement cycle, and the coronavirus impact? Would you expect a 20% decline? Could the decline be prolonged? How might volumes shape up?
4.
What overall top-line hit do you think key players can expect? Moody’s estimated Verifone FY20 revenue would decline only by mid-single digits. Is that too generous a prediction?
5.
You suggested that revenue isn’t as threatened as margins. How would you assess the typical margins across hardware and software or services, what pressure is on them, and how do you expect them to develop in the near term?
6.
Could you quantify how pricing and margins might develop over the next one, three and five years?
7.
How do you expect the competitive landscape to evolve? You alluded to the rise of more integrated solutions and the emergence of challengers such as Square, but there are difficulties from the coronavirus – Toast, for example, has had to lay off half its workforce. Do you think might drive less well-capitalised peers out of the market?
8.
Would you expect smaller players with less broad product portfolios to potentially fall out of the market, or could there be a wave of consolidation?
9.
Could you elaborate on your comments that the Ingenico and Worldline deal might challenge Ingenico because of its customer base?
10.
What are your expectations for the tech-focused comps such as Clover or Square who have recently made inroads? How do you expect the market to shape up subsequently?
11.
It’s been around two years since the leveraged buyout of Verifone, and the company has been undertaking a restructuring, particularly of its costs. Have you noted any changes in the business mindset? What would you say are its future prospects?
12.
You mentioned you expect strategic and financial sponsors to be actively acquisitive over the next couple of quarters or even years. Are there any attractive acquisition targets or up-and-comers you would highlight?
13.
ou sized the hardware market as potentially USD 20bn, but software has potentially USD 1tn. How might that software opportunity shape up, and which players are well-positioned to win in that market?
14.
How do you think the market may develop over the next six months and next one, three and five years and beyond? Who would you expect to be potential winners and losers?
15.
Is there anything you find commonly misunderstood by the investment community, or any commentary from management or industry analysts you would question?
