Worldpay’s (WPY) name may not have changed since its recent £9bn merger with US payments giant Vantiv, but its sales prospects certainly have. Both entities reported solid trading last year, but growth is expected to accelerate in 2018 after their combination.
Taken separately, the old Worldpay business achieved net revenue growth of 7 per cent to £317m for the three months to December 2017, and 9 per cent for the full year. Vantiv, meanwhile, saw net revenues rise 13 per cent to $569m (£411m) and 11 per cent over the same periods.
The newly formed behemoth expects net revenue to step up during the first quarter, to somewhere between $825m and $840m, or 76ȼ and 79ȼ a share. That's up from Vantiv's 68ȼ net income a share in 2017. Meanwhile, the full-year outlook for 2018 looks equally strong, with net revenue expectations ranging somewhere between $3.8bn and $3.89bn, or 366ȼ and 376ȼ. At the upper end, that's a 12 per cent increase on Vantiv’s trading a year earlier. It's also 6 per cent ahead of Barclays' 2018 forecast, which has been upgraded to 375ȼ.
Back in August 2017, we learnt that the combined group would pursue revenue opportunities in three specific areas: adding Worldpay’s global e-commerce capabilities to Vantiv’s existing US e-commerce business; transferring Vantiv’s payments technology expertise to Worldpay’s global merchant base; and expanding into new vertical markets.
Beyond the improved top line, we were also told to expect significant cost savings. Vantiv cited annual recurring pre-tax cost synergies in the region of $200m, with a view to these being realised by the end of the third year post-merger. For analysts at Barclays this is a conservative estimate “given Vantiv’s history of M&A execution”.
