EML Payments (ASX:EML) investors who have held shares for the last 5 years have lost 90% of their money and today capped off that long-term decline. In April 2021, the company hit all time highs, but the CBI regulatory shock that came in May of that year changed everything. Since then, the company has promised to turn things around, and there were times it appeared to be delivering, but those hopes were eventually dashed. How did things get to this point, and what is next?
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EML Payments’ past (ASX:EML) up to 2021
EML Payments was founded in Brisbane in 2003. It has software that provides payment services and user experience services to banks, corporates, fintechs, government and other private industries. Its speciality is enabling salary packaging card spending and it has a significant market presence in enabling non-bank digital lending disbursement and government disbursements for stimulus and other disaster relief.
By 2021, the company had operations in 28 countries and had nearly 500 staff. EML was on track to record $20bn in transactions (Gross Debit Volume or GDV), operated in 28 countries and was EBITDA and NPAT positive – making $28.1m and $13.2m respectively. Then, things took a turn for the worse all thanks to regulatory issues in Ireland and a profit downgrade.
The CBI Downgrade: The Moment That Changed the Company’s Life
In May of 2021, the Central Bank of Ireland raised “significant regulatory concerns” about PCSIL, EML’s Irish subsidiary responsible for a large portion of its European prepaid programmes. The market had priced EML as a high‑growth fintech with global scalability; instead, it discovered a business facing regulatory scrutiny in its most important geography.
The share price fell roughly 45% in a single session, collapsing from around $5 to the low $3s. In our view, this was the moment the market stopped treating EML as a growth compounder and started treating it as a regulatory-risk story. Could the company have recovered from this if everything else went right? Possibly. But not only did not everything go right…in fact, everything else went wrong.
The 18 Months Afterwards: A Leadership Change, Drift and Changing Expectations
Following the initial shock, EML spent months updating the market on remediation plans, onboarding restrictions and compliance costs. Each update reinforced the idea that the regulatory issues were structural rather than temporary. The share price drifted through the $2s and into the $1s as investors recalibrated their expectations for growth, margins and capital intensity.
Then came May 2022. EML downgraded guidance, citing margin compression, slower European onboarding and higher compliance costs. The stock fell another 20–30% over several sessions, sliding toward the $1.00–$1.20 range. By this point, the market was no longer giving EML the benefit of the doubt.
Between August and November 2022, long‑time CEO Tom Cregan departed, followed by board changes and a strategic review. Leadership transitions are rarely easy, but in a company already battling regulatory headwinds, the timing amplified uncertainty. Shares fell another 15–25%, trading consistently below $1 for the first time in years.
Investors began asking the obvious question: if the regulatory issues were manageable, why was the CEO leaving? And if the strategy was sound, why did it need a review? The market answered those questions pessimistically.
2023-25: Fatigue, Margin Pressure And Program Losses
In early 2023, the CBI imposed formal growth caps on PCSIL, limiting EML’s ability to onboard new programs. This effectively capped the scalability of the European business — the very engine that once justified EML’s premium valuation.
Later that year, EML announced major impairments to the Sentenial/Nuapay acquisition and flagged ongoing operational challenges. Shares fell into the $0.50–$0.60 range. In our view, this was the moment the market concluded that EML’s earnings base had permanently reset lower.
The company could have ended things by accepting takeover offers from Bain and Nuvei Corp but it did not do so. In November 2023, 2 and a half years after initial Irish regulatory concerns, the company told investors it couldn’t satisfy the regulators, and that its card services unit was losing $20 million a year.
Through 2024 and 2025, EML continued to report subdued revenue, elevated compliance spending and slow progress on remediation. Several program losses and weaker guidance reinforced the view that the business was struggling to regain momentum. Shares drifted into the $0.20–$0.40 range as investor fatigue set in.
Consider that in 2024, Chairman Luke Bortoli (a former Afterpay executive) left after reports spent over $100,000 in personal expenses on a credit card, believing there directors approved to do this in lieu of receiving director fees. In a company with less controversy this would have been more than a footnote.
Honestly, this was the least of investor worries. By this stage, the question was no longer “when will EML recover?” but “what does a sustainable earnings base even look like?” At each AGM, the company has told investors it had a large TAM (Total Addressable Market). Last time we wrote about EML in late 2024, EML boasted that it had a TAM of $716bn in single use gift cards and $1.06tn in General Purpose Reloadable cards (including digital wallets). Respectively, these markets were forecast to grow at a CAGR of 17% and 19%. But it is little use to have a big TAM if you cannot tackle it.
2026: More of the same
This morning’s announcement fitted neatly into the broader pattern. EML revised its FY26 underlying EBITDA guidance from $58–60m to $47–50m. The reasons were straightforward: program implementations expected to go live this year will now occur later, reducing FY26 revenue; and northern hemisphere trading has been significantly weaker than forecast, reflecting softer consumer demand and macro uncertainty.
The company emphasised that the implementation delays are timing‑related rather than lost opportunities, and that strategic initiatives such as Project Arlo and the global mobility solution remain on track. Operating expenses are well managed, and EML continues to secure new business, including $2.5m in forecast annual revenue since the interim result.
But the market has heard variations of this message before. When a company has issued multiple downgrades over several years, even timing‑related issues are interpreted through a lens of scepticism.
So What Might Be Next?
In our view, the next phase of EML’s story hinges on three questions.
First, can the company stabilise earnings? The FY26 downgrade is not catastrophic, but it reinforces the need for consistent execution. If EML can deliver a clean FY27 without regulatory surprises, program delays or impairments, the market may begin to rebuild confidence.
Second, can Europe return to growth? The northern hemisphere weakness highlighted today is concerning because Europe was once EML’s growth engine. Strengthening commercial leadership, as the company noted, is necessary — but will it be sufficient? We believe investors will want to see tangible evidence of program launches, revenue traction and margin recovery.
Third, does strategic optionality still exist? EML has hinted at portfolio reshaping and higher‑margin focus areas. Could asset sales, partnerships or a more radical restructuring unlock value? Possibly. But the company must first demonstrate operational stability before the market will price in optionality.
Conclusion
In our view, the most realistic near‑term outcome is a period of consolidation rather than acceleration. EML is not broken, but it is bruised. The business still has valuable capabilities, long‑standing customer relationships and a global footprint. What it lacks is momentum — and momentum is what the market will need to see before re‑rating the stock.
If EML can deliver a clean year, execute on delayed programs and show that Europe can stabilise, today’s valuation may ultimately prove too pessimistic. But until then, the burden of proof sits firmly with the company.
