Only a decade ago, EML payments didn’t exist, and many consumers may still not know the business name today despite using their products.
In just eight short years, the company has grown from a business worth $3 million to a global empire worth $100 million. In this episode, we spoke to Tom Cregan, CEO of EML Payments and client of Pitcher Partners, who shares how the company has grown and the lessons he learned along the way. Leading EML Payments is a key priority for Tom and, as you’ll hear in this episode, it shows the crossover between business and personal learnings, both of which form a key part of our focus on working with Tom as a personal client.
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About EML Payments
EML Payments is a financial payments technology business specialising in prepaid or stored value products. The company provides gift cards and reloadable debit cards to banks, retailers and other customer-focused corporations. The business also focuses on salary packaging cards and is now a key provider in the sports betting and gaming industry. EML Payments’ sports betting and gaming industry developments have been a large part of its recent growth.
The journey to growth: diversifying the customer base and going international
When Tom was appointed to the role of CEO in 2012, 90 per cent of EML Payments’ revenue was coming from one customer in one country. It exposed the business to a lot of risk, and it wasn’t the makings of a business that would still be profitable, let alone operational, in a few years. One of Tom’s epiphanies came not long after becoming CEO when, at a conference, the speaker said people typically don’t get excited about payments. Unless the product and company are unique, people will continue with their current provider. This is difficult in payments where the products and systems are typically the same. Without the ability to differentiate too much on product, businesses need to think about acquiring customers – it becomes a volume business, which Tom realised would drive the company’s growth.
Rethinking customer acquisition
Customer acquisition in direct-to-consumer businesses is typically expensive. To continue growing the business and diversify its customer base, the leadership team decided to capitalise on building business-to-business relationships based on companies that already serve many customers. The company established strong foundations for growth by focusing on B2B growth in niches, where EML Payments’ products are aligned. This is how the business’s expansion into the sporting and wagering industry happened, and Tom sums up it perfectly:
“Have the attitude of just being prepared to run with it. If you dismiss things too quickly, you’ll miss it”.
Balancing organic growth and growth through acquisition
In 2019, 50% of the company’s earnings growth was organic, which the company defines as customers they’ve had for more than a year. Coupled with this organic growth is a measured and focused growth through acquisition strategy.
Acquisitions have helped the company expand internationally, with recent acquisitions in the United States and Canada, the United Kingdom and Europe. When part of a company’s growth strategy is through acquisition, you need a defined view of sales opportunities and what the company is looking to achieve. For example, in 2019, EML Payments looked at more than 30 deals and went ahead with two. Highlighting the importance of proper due diligence, Tom said, “The greatest way to blow up money is to fall in love with acquisition opportunities”.
Financials and operations are important, but culture is critical too. An entrepreneur who runs an acquiring company will be seeing their entrepreneurial journey come to an end. It’s important to spend time with these business owners and leaders to get a sense of whether the company and its leaders and management will be a long-term fit post-transaction.
Managing and quantifying growth
In a company growing exponentially, it’s important to think about growth in absolute terms, and Tom delves into this in the podcast. For example, EML Payments’ profit margin has been 75 per cent for eight years, while their EBITDA margin is 33 per cent. This means that for every 1 million of revenue the company secures, the company adds $330,000 to its cash flow through earnings.
Give people trust and autonomy, and employ multi-skilled people
As the business has grown, Tom has empowered people across the business, recalling that trust and autonomy are critical components in building a strong workplace culture. With EML Payment’s growth, leaders and other people across the business are trusted to run their business units. This autonomy and trust are particularly important in acquiring overseas companies – you need to let these companies continue with the culture that’s working for them.
Early-stage businesses often struggle to balance tight cash flow with investing in the best talent the businesses can afford. For that reason, talented multi-taskers can be invaluable to an early stage business and can be instrumental in the company for many years to come.
Maintain perspective, especially in a public company
Share prices of public companies can fluctuate often. In the early days, Tom recalled he put too much emphasis on the company’s share price. It’s important to remember that, despite the share price being a perception of value, business leaders need to focus on showing up every day, making sure people contribute to the company’s long-term vision and cutting through the detractors. In short, have faith in the vision and business strategy, and don’t get distracted by market noise.
to listen to the podcast and learn more about the two lightbulb moments that changed EML Payments and how Tom has navigated the business’s astronomical growth.
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