Malta-headquartered RS2 Group reported €1.4 million in pre-tax profit during 2023, a decrease of 19.1 per cent from figures in 2022 (€1.8 million), as it continues to accelerate its global expansion.

RS2, formerly RS2 Software, is a leading provider of omni and multichannel payment software and end-to-end payment solutions for both issuers and acquirers on a single payment platform for banks, large financial institutions, integrated software vendors and other entities.

The financial results were revealed in the group’s Annual Report for the financial year ended 31st December 2023, published on Tuesday. In the report, the group also provided updates on its different subsidiaries, including RS2 Smart Processing Limited, RS2 Software Inc., RS2 Software LAC LTDA, RS2 Software APAC Inc., RS2 Germany GmbH, and RS2 Merchant Services Europe GmbH, among others.

During the year, RS2 Group recorded €39.7 million in revenue, representing an increase of 5.7 per cent from the €37.5 million registered in 2022. The majority of this total was generated through the provision of processing solutions, with this accounting for 62.8 per cent of revenue for 2023. RS2 Software Inc., which serves as the group’s US arm with specific focus on the provision of managed services in North America, recorded €17.2 million in revenue (2022: €14.7 million).

The group’s cost of sales decreased marginally, going down from €25.7 million in 2022 to €24.9 million in 2023. This was also the case for administrative expenses, amounting to €10.3 million during the reporting period. The group paid out a total of €22.9 million in wages and salaries and €1.7 million in Directors’ emoluments.

One of the primary factors in the group’s drop in profitability is the €586,363 exchange rate loss on operating activities registered in 2023. In 2022, the group had recorded gains of €1.5 million in this regard.

Additionally, finance costs for 2023 amounted to €306,297, substantially higher than the €82,503 recorded in the previous year.

As at the end of 2023, the group’s total assets amounted to €49.4 million (2022: €43.4 million), while its current assets exceeded its current liabilities by €41,111. The Board of Directors did not recommend the payment of a final dividend for the year, stating that its growth strategy “requires further investment in infrastructure and business development.”

RS2 Group’s Directors stated that the group has made “strong progress” and executed its key strategic priorities at a “steady pace,” with 2023 being a year where it remained focused on growing and expanding its managed services business, while accelerating its global expansion.

During the year, RS2 Group secured a major processing outsourcing agreement with one of the largest acquirers in the US, thus securing another tier one bank under its enterprise managed services. The group’s US subsidiary has also strived to increase its client base and enhance its strategy, the Directors stated.

Additionally, RS2 Smart Processing has continued to increase its transaction processing volumes through new and existing customers, while also working to standardise its product and service offering in a bid to improve “time-to-market and profitability,” enabling RS2 Group to also offer services to smaller clients.

In Asia Pacific (APAC), the group developed InstaPay, a real-time online local scheme that will allow the offering of services to banks in the market through their own developed mobile application for fund transfers, bill payments, and other banking services.

RS2 Chairman Mario Schembri / RS2

In his statement in the report, Chairman Mario Schembri said that “2023 may be considered as being a pivotal year for RS2.” Referring to the US outsourcing agreement, he remarked that it is a “milestone achievement” that follows the “fruition and continued execution of the group’s growth strategy.”

“During the year, the group continued to execute its strategy of expanding its client base and increase its product offering in different markets throughout Europe, Middle East, North America, Latin America, and APAC,” he affirmed.

Mr Schembri thanked RS2’s team members across all regions for their commitment and dedication, while also expressing gratitude towards CEO Radi Abd El Haj, “who has worked tirelessly to execute the group’s strategy.” He also thanked the Board of Directors for their support throughout 2023.

From his part, Mr El Haj noted that after a series of “demanding years” that were marked by exceptional market circumstances, RS2 Group closed 2023 “on a positive trajectory.” He commented that the aforementioned expansion milestones “highlight RS2’s resilience and effective long-term planning, made achievable through the commitment of a dedicated global team, management, and Board of Directors.”

RS2 CEO Radi Abd El Haj / RS2

He said that the past few years have been characterised by a global economic slowdown brought by the effects of the COVID-19 pandemic and the Russian invasion of Ukraine, prompting a period of slow growth and heightened inflation. However, while in previous years customers opted to postpone projects or minimise investments, RS2 is witnessing a “notable increase in client inquiries and demands, indicating a positive shift in the business landscape.”

Mr El Haj noted that RS2 and its subsidiaries have continued to broaden their business across regions and lines of operation throughout 2023, “evolving from licencing to processing, and now also to acquiring business in Europe.”

“The payments industry is constantly evolving and 2023 is shaping up to be a year of significant innovation and change with focus on making payments more convenient, secure, and personalised for consumers,” he continued.

Mr El Haj said that business is expected to “ramp up with a stronger pipeline, gearing up for the coming year,” which together with the launch of a number of new products for RS2 Group, will result in a “successful 2024 and beyond.”

He also proceeded to thank RS2 Group’s global team, management, the Board of Directors, and shareholders for their support.