eTranzact Forecasts N1.35bn Q3 Profit After H1 Earnings Slip 19%

Electronic payment solutions provider eTranzact International Plc has projected a return to stronger earnings in the third quarter of 2026, forecasting a profit after tax of N1.35 billion, despite reporting weaker half-year results as rising operating expenses eroded profitability.

The company, in its earnings forecast approved by the Board on July 29, 2026, expects to generate N6.61 billion in revenue during the third quarter ending September 30, 2026, translating to a projected profit before tax of N1.93 billion and profit after tax of N1.35 billion.

The outlook comes after eTranzact posted a 19.1 per cent decline in half-year profit after tax to N1.22 billion, compared with N1.51 billion recorded in the corresponding period of 2025. Profit before tax also fell 19.1 per cent to N1.75 billion from N2.16 billion a year earlier.

Although revenue grew strongly during the first six months of the year, profitability came under pressure from higher administrative expenses.

Revenue rose 22.6 per cent to N16.28 billion, up from N13.28 billion in the corresponding period of last year, reflecting continued expansion in transaction volumes and digital payment activities.

However, administrative expenses increased sharply to N4.81 billion, representing a 22 per cent increase over the N3.94 billion recorded in the first half of 2025.

The higher cost base offset gains from revenue growth, resulting in operating profit declining 23.2 per cent to N1.59 billion from N2.07 billion.

The company’s gross profit nevertheless improved to N6.78 billion, compared with N6.44 billion a year earlier, while investment income rose nearly 59 per cent to N156.79 million, providing additional support to earnings. Selling and marketing expenses moderated to N376.69 million from N427.57 million.

An analysis of the balance sheet suggests the company remained financially stable despite the earnings slowdown.

Total equity increased to N17.41 billion from N16.19 billion at the end of 2025, supported by retained earnings which grew to N5.44 billion. Total liabilities declined significantly to N21.60 billion from N29.95 billion, while long-term borrowings reduced to N110.24 million following continued loan repayments.

Cash and cash equivalents, however, fell to N23.69 billion from N31.65 billion at year-end, reflecting increased working capital requirements and capital expenditure during the period. Operating cash flow also turned negative, with net cash used in operating activities amounting to N6.86 billion in the first half.

The company also continued investing in its infrastructure, spending N1.23 billion on property, plant and equipment during the period as part of ongoing capacity expansion.

Looking ahead, management expects operating performance to strengthen in the third quarter.

The earnings forecast indicates projected revenue of N6.61 billion, gross profit of N4.83 billion, operating profit of N2.17 billion, profit before tax of N1.93 billion, and profit after tax of N1.35 billion.

If achieved, the projected quarterly earnings would exceed the N1.22 billion generated during the entire first half of the year, signalling management’s confidence in improved business momentum during the second half of 2026.