A GlobalData analysis of companies in the cards & payments industry has shed light on which companies are diversifying their revenue streams, and which are concentrating their activities in particular geographic areas or sectors.
GlobalData’s analysis of company filings shows that PT Bank Negara Indonesia (Persero) Tbk has been doing more than any other major player in the sector to spread its revenues out geographically, according to a GlobalData analysis of 32 key companies for whom such data is available.
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By GlobalDataThe concentration of PT Bank Negara Indonesia (Persero) Tbk’s revenue distribution across product categories fell by 30.5%, compared to a median decrease of 1.8% for other firms in the sector.
The corporation saw its largest revenue growth between 2018 and 2020 in Asia, which grew from 0.74% of the company’s revenues to 1.31%.
The table below shows how the ten largest companies in the cards & payments industry are performing with regards to diversification.
LendingTree Inc has led in the race to diversify earnings across different product categories.
The concentration of the company's geographic revenue distribution fell by 81.5% between 2018 and 2020, compared to a median decrease of 2.9% for other firms in the sector.
The largest share of LendingTree Inc's revenue comes from insurance, which accounted for 30.2% of the firm's global earnings in 2020.
Who is failing to diversify?
Not all major cards & payments firms have been successfully diversifying their revenue streams, however.
EVO Payments, Inc has seen its revenues increasingly concentrated in particular geographic regions.
The concentration of the company's geographic revenue distribution rose by 88% between 2018 and 2020, compared to a median decrease of 1.8% for other firms in the sector.
The corporation saw its largest revenue growth between 2018 and 2020 in Europe, which grew from 37.45% of the company's revenues to 33.73%.
The largest share of EVO Payments, Inc's revenue comes from the Americas, which accounted for 56.7% of the firm's global earnings in 2020.
The concentration of Commerce Bancshares Inc's revenue distribution across product categories rose by 39.5%, compared to a median decrease of 2.9% for other firms in the sector.
The largest share of Commerce Bancshares Inc's revenue comes from commercial activities, which accounted for 41.9% of the firm's global earnings in 2020.
Revenue diversification is the key to security
This analysis is based on GlobalData's database of over 8,000 of the world's leading companies, with a combined market capitalisation of $102 trillion and over 140 million employees.
Based on data included in company filings, GlobalData calculated the normalised standard deviation of each company's revenue streams.
The standard deviation is a statistic frequently used to measure how spread out a distribution of numbers is. The data is normalised in order to ensure so that the size of a company's revenue stream does not bias the results.
A lower standard deviation means that a company's revenues are more evenly spread between different revenue streams.
Since all companies divide their revenues differently, these standard deviations can't be directly compared. Instead, GlobalData analysed the direction of change for each company between 2018 and 2020.
The analysis sheds light on how different companies in the cards & payments industry are hedging against risks.
The supply chain distruptions caused by the Covid-19 pandemic have shown the importance of geographic diversification of revenues. Lockdowns, which have often been targeted at specific sectors, have similarly demonstrated the value of maintaining a diverse product offering.
Among all companies examined by GlobalData, geographic revenue concentration fell by an average of 0.5% between 2018 and 2020, compared to an average decrease of 1.78% for the cards & payments industry.
Product revenue concentration among all companies examined rose by a median of 1%, compared to an average decrease of 2.9% for the cards & payments industry.
