Worldline - comment - 26Q3

Worldline beat our expectations yesterday, as Q326 figures reveal solid growth of 3.1% in both segments. Even Financial Services is up 1.6% YoY. EBITDA is some estimated €17m ahead, around €277m (no lease disclosure). The company confirmed its full year guidance (did not raise it) as October volumes showed a slight contraction. "Nothing to be majorly worried about", but it is the one new data point that could push Q4 revenue toward the lower end of flat guidance rather than marginally positive. Also, some churn expected for Q3 will only occur in Q4. Management framed that as normalisation, rather than incremental. Note that the €160m Axepta put is not covered in the guidance. If Worldline needs to acquire the remainder this year, then the year-end leverage guidance of <2x (company calculation) should tighten. MeTS deferred compensation costs should be matched by approx. €50m in deferred compensation received over the net 2.5 years, so net cash flows are expected to broadly match. In total, the results are better than expected. The company only gives a light update in Q1 and Q3.