Wirecard Boosts 2025 Profit Outlook on Growth, SoftBank Deal

(Bloomberg) -- Wirecard AG raised its long-term forecasts, saying it expects operating profit to climb to more than 3.8 billion euros ($4.2 billion) in 2025 on growth in online payments and partnerships with the likes of SoftBank Group Corp.

That’s a boost of about 15% from a previous prediction for earnings before interest, taxes, depreciation and amortization. Yet investors weren’t fully convinced by the projections, which included sales growth that outpaced profitability increases. Wirecard fell 3.2% as of 11:25 a.m. in Frankfurt.

The longevity of the outlook means it could be more of a “mirage” than a vision, said Neil Campling, an analyst at Mirabaud.

“Not even perhaps the greatest enabler of Fintech, Visa, has the confidence to give more than one year outlook,” Campling, who has been rating Wirecard “sell” for months, said in an emailed note.

Wirecard is moving on from a series of Financial Times reports on suspicions of fraud at some units in Asia caused the firm’s shares to whipsaw earlier this year. The stock has since recovered as Wirecard formed a $1 billion partnership with Japan’s SoftBank in April, won clients including home-improvement retailer Leroy Merlin in Brazil and African airline Royal Air Maroc, and raised its 2019 outlook in August.

“In addition to ongoing success with smaller and medium-sized customers and business partners, the increased focus on large companies will lead to a significant increase in transaction volumes -- while at the same time realizing profitable economies of scale,” Wirecard said in a statement released ahead of an investor meeting in New York later Tuesday.

Wirecard said it plans to “greatly expand” its global footprint and expects digital payments to increase as retailers get to know their customers better when they pay digitally, and shoppers benefit from added services such as credit and insurance. The company now targets transaction volumes of more than 810 billion euros in 2025, up from a previous forecast of 710 billion euros, and increased its sales forecast by 20% to more than 12 billion euros.

SoftBank said in April it would invest $1 billion via convertible bonds into Wirecard, opening up its portfolio of startups to pen their own deals with the payments company. Wirecard is already developing new finance products with Auto1 Group, the used-car-sales platform backed by SoftBank.

--With assistance from Elisabeth Behrmann.

To contact the reporter on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net

To contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, Andrew Blackman

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