Tuesday, 22 May 2018 10:03

Paypal buys small-biz friendly iZettle for 'significantly expanded global omnichannel platform'

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Expanding its offering in 12 markets and adding in-store capabilities in 11 markets, iZettle's small business commerce platform "advances PayPal’s mission to help small businesses grow and thrive in the global digital economy".

Paypal has announced its agreement to buy iZettle, a "leading small business commerce platform in Europe and Latin America", for US$2.2 billion.

It says the acquisition "significantly expands PayPal’s in-store presence, strengthening PayPal’s platform to help millions of small businesses around the world grow and thrive in an omnichannel retail environment".

PayPal president and chief executive Dan Schulman said: "Small businesses are the engine of the global economy and we are continuing to expand our platform to help them compete and win online, in-store and via mobile.

“iZettle and PayPal are a strategic fit, with a shared mission, values and culture – and complementary product offerings and geographies. In today's digital world, consumers want to be able to buy when, where and how they want. With nearly half a million merchants on their platform, Jacob de Geer and his team add best-in-class capabilities and talent that will expand PayPal’s market opportunity to be a global one-stop solution for omnichannel commerce.”

We're told this combination "brings together iZettle’s in-store expertise, recognised brand and digital marketing strength with PayPal’s global scale, mobile and online payments leadership, and trusted brand reputation".

Upon closing, PayPal says it will gain "in-store capabilities in the following 11 markets: Brazil, Denmark, Finland, France, Germany, Italy, Mexico, the Netherlands, Norway, Spain and Sweden".

"PayPal also gains near-term in-store expansion opportunities into other existing PayPal markets, and acceleration of omnichannel commerce solutions in Australia, the UK and the US."

iZettle chief executive Jacob de Geer said: “Combining our assets and expertise with a global industry leader like PayPal allows us to deliver even more value to small businesses to help them succeed in a world of giants.

“The combination of iZettle and PayPal will provide tremendous benefits to our merchants who will have access to an even wider range of tools to help them get paid, sell smarter and grow.”

iZettle said it "expects to generate gross revenues of approximately US$165 million in 2018, with approximately US$6 billion of total payment volume (TPV) expected to be processed on its platform. The company has grown its revenues at a CAGR of approximately 60% from 2015 to 2017. iZettle expects to reach EBITDA profitability by 2020 on a standalone basis".

Once the acquisition closes, de Geer will "continue to lead iZettle, which will operate as an integral part of PayPal’s merchant services offering, reporting to PayPal’s chief operating officer Bill Ready".

"iZettle’s experienced management team, who have a demonstrated track record of scaling at pace, will continue running the business, ensuring continuity for customers, employees and partners. Upon closing, iZettle will become the European center of excellence for PayPal’s in-store product and services offerings.

"The transaction is expected to be approximately US$0.01 dilutive to PayPal’s previously communicated full year 2018 non-GAAP EPS. The transaction is expected to close in the third quarter of 2018. The completion of this transaction is subject to customary closing conditions, including regulatory approvals. The two companies will continue to operate independently until close."

A slide presentation with an overview of the transaction can be accessed through the company’s Investor Relations website here

PayPal also notes that it will "host an Investor Day on 24 May in San Francisco, and management will provide additional details related to the transaction". A live webcast will be available here starting at 8:30am PDT.

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Alex Zaharov-Reutt

One of Australia’s best-known technology journalists and consumer tech experts, Alex has appeared in his capacity as technology expert on all of Australia’s free-to-air and pay TV networks on all the major news and current affairs programs, on commercial and public radio, and technology, lifestyle and reality TV shows. Visit Alex at Twitter here.

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