Brazil simplified

June 17, 2019

Following feedback on the complexity of the page we published on Sunday, we present some simple points to demonstrate how large MCA Brazil could be in an extreme scenario, giving Wirecard management the full benefit of the doubt.

If management statements are correct, Wirecard has at least €96M of cash that cannot be accounted for. This can easily be resolved with clear disclosure from Wirecard as to where the money is:

  • How big is MCA in Brazil?
  • How big is MCA in Turkey?
  • How big is MCA in Asia?
  • How big is MCA in Europe?
  • Wirecard total America and Africa revenue was €176M in 2018.
    • Management stated that North American growth was "very strong" in 2018 in May 2019. A 5% growth rate drives Wirecard North America revs of €131M, growing from €125M in 2017.
    • Wirecard Africa generated €7M in 2017, and we assume Africa did not grow in 2018 to benefit Brazil. Any growth implies Brazil revenues are smaller.
  • This leaves €38M of revenues for Brazil in 2018.
  • Wirecard CEO stated that revenue "take rates" in Brazil can be 7-8% for small merchants and lower for large merchants; taking 5% as a blended rate.
  • Wirecard CEO stated MCA in Brazil are one-month loans, therefore the maximum loaned out at any time is 1 month of total payment volume.
  • Wirecard CEO also stated MCA has lent €400M to merchants "mainly in Brazil" and "small part in Europe and small part in Asia".

Putting these statements together:

(unless stated)
America and Africa Revenue176A 
North America Revenue131B 
Africa Revenue7C 
Brazil Revenue38D= (A - B - C) 
Take Rate5%E 
2018 TPV760F= (D / E) 
Monthly TPV63G= (F / 12) 
Maximum MCA = Monthly TPV63H= G
Total MCA stated by Wirecard400I 
Brazil Percentage of MCA40%J 
Brazil MCA160K= (I x J) 
Difference-97L= (K - H) 

Mapping out these numbers, Brazil MCA cannot be bigger than €63M. Yet substantially more cash has disappeared from the balance sheet based on management statements. If not in Brazil, we once again ask, where is the money?

With more realistic estimates in place, we think MCA in Brazil is closer to €20M, making the missing cash €140M. If you want to make your own assumptions, please see our prior analysis on Brazil for more detail.

Show Brazil in detail

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