The net sales during Q2 came in almost exactly as our estimate and showed a decline of 32% on an annual basis. On a sequential basis, the net sales rose 15%, this was the second quarter in a row with q/q growth. Digging deeper into the figures; it looks like the recurring revenue during the quarter rose 40%+ compared to last year while the sales of systems decline roughly at the same rate. The drop-in system sales were expected due to the earlier discussed product shifts within both Card terminals and Self-service. The increase in recurring revenue is an effect of the growing base of Card and Self-service terminals deployed. We model a relatively steep ramp-up in System sales during H2'19. Currently, we have not seen that many announced orders with delivery during the period. We will likely trim our full-year projections slightly.
The gross profit margin was five percentage points below our projections, driven likely by a higher share of Cash Equipment sales than we thought. G&A and Staff expenses were also slightly higher then we had expected, something we will look into further.
The plans for an upcoming share issue are, as expected, restated. The board plans to resolve on a rights issue during Q3'19 with the intended issue size is SEK 25-30m. No further details were presented in the report. In our experience; a known capital need, and coming funding most often lead to a more cautious approach from new and potential investors.
In July Westpay announced two new long-term contracts; one with Max Burgers and the other one with Open. It's great that Westpay can retain these key customers. In terms of annual run-rate, we believe it's close to previous commitments Westpay has had with Open and MAX Burgers.
As communicated earlier, Westpay have entered a partnership agreement with Loomis where will offer their payment solutions to the Cash handling giant. To our understanding, Loomis offers cash related services so POS terminals would be a new business for them, at least in most of their markets. It's hard for us to have a view of the potential of the new deal, but we find that's it's a testament of Westpay's competitive payment offering.
The following is a comment from Loomis CEO (translated by us, find original comment here):
"This is the first concrete step. Where it leads we can only speculate, but it is very exciting. We have talked a lot about our strategy of looking at being able to consolidate other means of payment, and this gives us the conditions for that. To be able to tell a merchant that we collect all payments (cash and cards) and make sure they get into the customer's bank account. It's very much in their minds, but this is the first step in that direction, "says Loomis CEO Patrik Andersson to the News Agency Direct.
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