Worldline Earnings: Goodwill Impairment Brings Loss; 2024 a Year of Refocusing

Worldline reported a EUR 817 million loss for 2023 after taking a EUR 1.147 billion goodwill impairment related predominantly to lower valuations in the merchant acquiring segment. Excluding the noncash impairment, performance was within expectations. Revenue for the full year grew 6% and adjusted EBITDA remained virtually flat. The second half of the year saw a material slowdown in growth with the merchant services segment standing out negatively. Worldline pointed toward the discontinuation of merchant relationships related to its revised risk policy, macroeconomic weakness expressed in lower consumption hitting volume growth, and disadvantageous pricing actions driving merely 2.7% organic growth in merchant services in the fourth quarter. These dynamics are likely to continue into first-half 2024. Given the operational weakness and its depressed valuation, we expect that Worldline will likely remain the target of interested parties over the coming months. We maintain our EUR 28.90 per-share fair value estimate and narrow moat rating.