Vectron Systems - Evolving the business model
Vectron saw a continuation of the weak demand environment for its point-of-sale (POS) solutions in H119, although revenues have improved every quarter since the trough in Q318 and management expects regulatory tailwinds to boost demand from Q4. More digital services partnerships were signed in H1 and the company launched a bundled POS system/digital services offering in June as part of its plan to shift to a digital business model and build a base of recurring revenues.
13 Sep 19
Vectron Systems - Digital services partnerships on track
Although a slowdown in demand for Vectron’s traditional point-of-sale (POS) systems had a negative effect on revenue growth and profitability in FY18, the company has made good progress in extending its offering into the digital domain. By supporting Vectron POS owners to offer loyalty and online services, partnerships with DeutschlandCard (DC) and Metro promise to deliver recurring revenues once the schemes are launched.
14 May 19
Vectron Systems - Shift in digital services strategy
Vectron has had a turbulent first half as it works to diversify its business into digital services. Several management changes have seen the company return to founder control. To develop its digital marketing services, the company has chosen to use an existing loyalty platform via a partnership with DeutschlandCard, revised its relationship with Coca-Cola and entered into a pilot project with the digital arm of Metro. Regulation is likely to reinvigorate POS system sales in FY19 with longer term growth dependent on the successful uptake of digital services.
13 Sep 18
Evolving the business
FY17 results reflected the declining impact of regulatory changes on demand in Germany. International sales continued to grow in FY17 and the company saw good demand for its Duratec product line. Vectron’s push into marketing services is progressing well: bonVito is close to profitability and the new GetHappy app is currently being trialled in Leipzig. We view the full launch and then uptake of the app as the key drivers of the share price.
16 May 18
Solid H1; GetHappy launch set for FY18
Vectron Systems continues to benefit from regulatory tailwinds, achieving revenue growth of 26% in H117 after the 30% growth reported in FY16. This translated to operating margin expansion of 6.7 percentage points year-on-year to 14.9%. The company expects the new GetHappy app to be launched in FY18; this has the potential to provide significant upside to Vectron’s earnings. We do not believe that this is currently factored into consensus forecasts although the share price reflects some level of success for GetHappy in our view.
08 Sep 17
Cashing in on online opportunity
Vectron’s core point of sale (POS) business generated strong growth in revenues and earnings in FY16, and should continue to benefit from several growth drivers in the short to medium term. With adoption by 2-3% of its customer base, Vectron’s existing online marketing solution, bonVito, is close to breaking even. The recently announced partnership with Coca-Cola to support its GetHappy loyalty app has the potential to add high-margin recurring revenues from the end of FY17.
23 May 17