nexi

1H 2020 Results Presentation

July 30th, 2020

Disclaimer

  • This Presentation may contain written and oral "forward-looking statements", which includes all statements that do not relate solely to historical or current facts and which are therefore inherently uncertain. All forward-looking statements rely on a number of assumptions, expectations, projections and provisional data concerning future events and are subject to a number of uncertainties and other factors, many of which are outside the control of Nexi Group (the "Company"). There are a variety of factors that may cause actual results and performance to be materially different from the explicit or implicit contents of any forward-looking statements and thus, such forward-looking statements are not a reliable indicator of future performance. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law. The information and opinions contained in this Presentation are provided as at the date hereof and are subject to change without notice. Neither this Presentation nor any part of it nor the fact of its distribution may form the basis of, or be relied on or in connection with, any contract or investment decision.
  • The information, statements and opinions contained in this Presentation are for information purposes only and do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to purchase or subscribe for securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments. None of the securities referred to herein have been, or will be, registered under the U.S. Securities Act of 1933, as amended, or the securities laws of any state or other jurisdiction of the United States or in Australia, Canada or Japan or any other jurisdiction where such an offer or solicitation would be unlawful (the "Other Countries"), and there will be no public offer of any such securities in the United States. This Presentation does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States or the Other Countries.
  • Pursuant the consolidated law on financial intermediation of 24 February 1998 (article 154-bis, paragraph 2) Enrico Marchini, in his capacity as manager responsible for the preparation of the Company's financial reports declares that the accounting information contained in this Presentation reflects Nexi Group's documented results, financial accounts and accounting records.
  • Neither the Company nor any of its representatives, directors or employees accept any liability whatsoever in connection with this Presentation or any of its contents or in relation to any loss arising from its use or from any reliance placed upon it.

2

Executive Summary

Covid-19 update

  • Covid-19health situation in Italy currently under control, with around 200-300 new positives per day and less than 50 people still in intensive care across the Country
  • After ~2 months of lockdown in Italy, one of the strictest in Western Countries, Phase 3 started in June with gradual return to "normality". International travel recently reopened with some Country-specific restrictions
  • 1H20 Transaction volumes (acquiring + issuing) at 186 €B, -16.9% y/y with a gradual recovery across all components from May 2020. Travel/tourism and International travelers contribution still behind last year although gradually recovering
  • Acquiring volumes in the last week rolling (13th-19th July) at -9%y/y with a strong recovery across categories1. Acquiring volumes on
    Italian cards now back to pre-Covid levels, while foreign cards still very much behind but recovering

Progressive reopening of commercial activities with transacting merchants now similar to pre-Covid and 2019 levels

E-commerce strong acceleration net of high impact consumption sectors (e.g. travel/tourism related sectors and restaurants): +35% y/y in 1H20 and +43% y/y in 2Q201. Overall 1H20 performance less impacted by Covid-19compared to physical sales (-2.8%y/y transaction value)

  • Early signals of acceleration of the structural shift from cash to digital payments

Note: (1) Data include International schemes only for Nexi Payments, International and national schemes for MePS

3

Executive Summary

1H20 results highlights

  • ISP merchant book deal successfully completed on June 30th
  • EBITDA at 261.8 €M, -3.9%y/y including organic contribution from ISP merchant acquiring book. On a standalone basis EBITDA at 214.2 €M, -8.0% y/y
  • Revenues at 478.7 €M, -6.3%y/y including organic contribution from ISP merchant acquiring book. On a standalone basis Revenues at 427.7 €M, -8.5% y/y

Key business update

  • Merchant Services & Solutions (51% of Revenues): commercial activity going back to pre-Covid levels, new "NexiGo" proposition to support SMEs' sales digitalization across channels, accelerated pipeline of large merchants omnichannel projects and step up on e- commerce gateway activations
  • Cards and Digital Payments (38% of Revenues): commercial activities from banks gradually recovering, acceleration of banks interest on International Debit and continued progress on YAP mobile payment app
  • Digital Banking Solutions (11% of Revenues): Nexi Open ecosystem proposition fully launched, banks go-to-market progressing; continued roll out of new higher value advanced self banking and digital corporate banking solutions
  • Costs -9.1%y/y including organic contribution from ISP merchant acquiring book thanks to the 100+ €M cash cost containment plan well in execution and the continued focus on efficiency
  • 1H20 Net financial Debt/EBITDA 4.0x pro-forma for ISP merchant acquiring book, 2.9x on a standalone basis

Financial guidance

Financial guidance conservatively suspended in April 2020

Assuming continued path of recovery at current trajectory, possible return to revenue growth by year-end

  • Ambition to grow EBITDA vs 2019 including organic ISP book contribution (broadly in line without), with FY2020 EBITDA close to ~600 €M; expected growth in EBITDA - Capex vs 2019 with and without ISP. Strong cash position confirmed

4

Covid-19 emergency now under control.

Phase 3 started in June with gradual return to "normality"

Evolution of Active Positives and Intensive Care Cases in Italy

"Phase 2 and 3" Key Dates

"Cura Italia"

"Liquidità"

Start of

"Rilancio"

Start of

Government

Government

"Phase 2"

Government

"Phase 3"

Decree

Decree

Decree

120,000

10,000

108,257

9,000

100,000

Moving across regions is

allowed again; Italy

8,000

reopens to EU travellers

80,000

7,000

(#)

Commercial activities

Extra-EU travels

progressively

are allowed

6,000

Units

60,000

Lockdown across

reopened

5,000

all Italy

4,068

4,000

40,000

3,000

20,000

2,000

12,248

1,000

48

0

0

24-Feb

9-Mar

23-Mar

6-Apr

20-Apr

4-May

18-May

1-Jun

15-Jun

29-Jun

13-Jul

22-Jul

18-May

Re-opening of retail businesses and restaurants with certain restrictions

3-June

Free travel across Italian regions

allowed again.

Reopening to EU travellers

15-June (Phase 3)

Travel across EU frontiers reopened. Reopening of entertainment activities with certain restrictions

1-July

Extra-EU travel allowed with Country-

specific restrictions

New additional 25 €B economy

support government package under approval. 209 €B EU recovery fund support decided

Total Active Positives (lhs)

Intensive Care (rhs)

Publicly available information.

5

Transaction volumes recovering after the easing of lockdown measures

Total Acquiring and Issuing volumes - 7-days rolling % change Y/Y

10.0% 7.5%

6.3%

6.6%

3.5%

0.0%

-4.1%

-2.2%

-

2.8%

-4.4%

-12.0%

-9.2%

-10.4%

-13.8%

-10.3%

-10.2%

-9.0%

-8.5%

-10.0%

-12.3%

-8.9%

-6.5%

-9.9%

-18.0%

-9.4%

-13.0%

-10.7%

-20.0%

-23.0%

-

23.2%

-12.7%

-15.6%

-27.0%

-16.6%

-22.9%

-30.0%

-33.1%

-40.0%

-35.8%

-29.2%

-39.4%

-40.5%

-41.8%

-

37.6%

-40.0%

-47.4%

-48.3%

-46.6%

-45.4%

-44.2%

-50.0%

-47.2%

-50.9%

-52.4%

-51.5%

-53.3%

-54.1%

-60.0%

5-117-139-1511-1713-1915-21

17-2319-2521-27

23-2925-227-4

29-62-84-106-128-1410-1612-1814-2016-2218-2420-2622-28

24-3026-128-330-51-73-95-117-139-1511-1713-1915-2117-2319-2521-2723-29

3-95-117-139-1511-1713-1915-2117-2319-2521-2723-2925-3127-229-431-62-84-10

6-128-1410-1612-18

14-2016-2218-24

20-2622-2824-30

10-1612-1813-19

1-73-9

25-127-329-51-7

26-228-430-62-84-10

6-128-14

FEBRUARY

MARCH

APRIL

MAY

JUNE

JULY

Covid-19 lockdown in Italy

Note: Data include International schemes only for Nexi Payments, International and national schemes for MePS

6

Acquiring volumes recovery driven by Italian Cards, now back to pre-Covid levels; Foreign Cards still negative but recovering

Acquiring volumes - Italian Cards vs Foreign Cards - Y/Y trend

Italian Cards

10 7%

6%

0

5%

-10

Foreign Cards

Total

2%

2%

1%-1%

-1%

-6%

6%

-2%1% 1% 2% -1%

-20

-30

-40

-50

-60

-8%-24%

-26%

-22%

-12%

-14%

-15%

-35%

-40%

-38%

-30%-43%

-43%

-43%

-32%

-49%

-36%

-49%

-49%

-44%

-47%

-49%

-49%

-54%

-56%

-19% -17% -14%-13% -11% -14%

-9%

-70

-80

-90

-100

-77%

-91%

-91%

-89%

-87%

-88%

-93%-94%-95%

-95%-95% -94%

-85%-83%

-75%

-80%

-72%

-63%

-69%

17-23

24-1

2-8

9-1516-2223-2930-56-1213-1920-2630-67-1312-1819-2525-31

2-88-1415-2122-2829-56-1213-19

FEBRUARY

MARCH

APRIL

MAY

2019

monthly weight

12%

12%

15%

16%

Foreign Cards

on total volumes

JUNEJULY

18%21%

Note: Data include International schemes only for Nexi Payments, International and national schemes for MePS

7

Volume recovery across categories starting from May after the easing of lockdown measures. E-commerce acceleration outside travel and tourism

Acquiring volumes by category1

44% for

37% for

E-commerceE-commerce

31%

35%

36%

in July

2019

34% 19% for E-commerce

Basic consumption

Groceries, medical retail, utilities and services (e.g. insurance, bank services)

Generic/discretionary consumption

Clothing, household, other non-alimentary retail and other services (e.g. laundries, beauty)

High-impact consumption

Hotels and restaurants, travel and transports, entertainment, etc.

Product category% change Y/Y

Jan + Feb

March

April

May

June

Last week rolling

2

Basic consumption

15%

13%

11%

13%

14%

14%

+18% on

of which Physical

15%

12%

9%

12%

11%

11%

Italian Cards

of which E-commerce

27%

31%

42%

29%

55%

45%

Generic/discretionary consumption

6%

-62%

-77%

-33%

-11%

-10%

+2% on

of which Physical

5%

-65%

-81%

-37%

-13%

-12%

Italian Cards

of which E-commerce

25%

8%

47%

47%

51%

36%

High-impact consumption

10%

-68%

-89%

-70%

-46%

-28%

-6% on

of which Physical

10%

-67%

-89%

-69%

-46%

-29%

Italian Cards

of which E-commerce

10%

-75%

-90%

-81%

-42%

-19%

Total

11%

-35%

-48%

-27%

-14%

-9%

+6% on

of which Physical

10%

-36%

-50%

-28%

-15%

-10%

Italian Cards

of which E-commerce

19%

-21%

-17%

-14%

7%

15%

2020 Acquiring volumes: split between Physical and E-commerce

Jan + Feb

March

April

May

June

Last week rolling2

Physical

93%

92%

90%

92%

92%

93%

E-commerce

7%

8%

10%

8%

8%

7%

Data include International schemes only for Nexi Payments, International and national schemes for MePS

8

Note: (1) Category weight % (2019) calculated on Italian and Foreign cards Acquiring trx volumes. (2) Week 13th - 19th July

SME volume share back to pre-Covid situation, broadly in line with 2019

Acquiring volumes - Large merchants vs SME

Large merchants

SME

50%

47%

45%

63%

50%

53%

55%

37%

Pre-Covid

Lockdown

Last week

Corresponding

rolling1

2019 week1

Physical volumes

48%

62%

45%

44%

52%

38%

55%

56%

Pre-Covid

Lockdown

Last week

Corresponding

rolling1

2019 week1

E-commerce volumes

72%

71%

73%

75%

28%

29%

27%

25%

Pre-Covid

Lockdown

Last week

Corresponding

rolling1

2019 week1

Data include International schemes only for Nexi Payments, International and national schemes for MePS

9

Note: (1) Week 13th - 19th July 2020

Progressive recovery of transacting merchants across all categories, now similar to 2019 levels

Weekly transacting merchants - Y/Y trend

Basic consumption

10 9% 7% 8%

1%

0 1%-1%-3% -3%

-2%

-6%

-10

-5%

-7%

-20

-30

-40

-50

-60

-70

-80

-90

17-2324-12-8

Generic/discretionary consumption

High-impact consumption

Total

3%

3%

6%

1%

-3%

-4%

-7%

-9%

-8%

-10%

-12%

-18%

-19%

-20%

-13%

-9%

-14%

-22%

-28%

-28%

-19%

-32%

-32%

-21%

-23%

-34%

-26%

-46%

-42%

-31%

-39%

-51%

-58%

-56%

-61%

-65%

-53%

-67%

-66%

-56%

-68%

-68%

-69%

-71%

-72%

-76%

-77%

-80%

-78%

-70%

-80%

-79%

-78%

-76%

-83%

-81%

9-1516-22

23-2930-56-12

13-1920-26

27-3

4-1011-17

18-2425-31

1-78-14

7%

9%

9%

9%

10%

-6%

-5%

-4%

-3%

-2%

-4%

-4%

-3%

-7%

-5%

-11% -9%-8% -14%

-17%

15-2122-2829-56-1213-19

FEBRUARY

MARCH

APRIL

MAY

JUNE

JULY

Perimeter: Nexi Payments - Licensing, Referral and Direct models

10

Consumer habits: acceleration of digital payments in less affected categories

Acceleration in digital payments volumes:

specific industries trend (y/y last four weeks rolling)1

y/y Pre-Covid

additional p.p. growth - last four weeks rolling

Digital payments volumes for Italian consumer cards

net of high impact consumption1

Basic consumption

Generic/discretionary consumption

Total

40

Dentists

Doctors/Vets

Florists and nursieries

Garden items

Constructions

Hardware stores/Tools

Electronics

Home furnitures

+7 +51%

+6 +51%

+22 +39%

+10 +31%

+15

+30%

+27

+29%

+19

+19%

+9+17%

30

25%

19%

19%

23%

17%

13%

12%

20

17%

10

8%

13%

14%

0

4%

3%

-10

1%

0%

2%

-20

-10%

-30

-22%

-25%

-40

-50

-60

-56%

-70

-80

-72%

-90

-100

January February

March

April

May

June

Last week

Household appliances +15+14%

rolling3

Note: (1) Acquiring volumes. Data include International schemes only for Nexi Payments, International and national schemes for MePS. Last four weeks: from week 22th - 28st June to week 13th - 19th July. (2) Acquiring volumes - Nexi Payments.

11

(3) Week 13th - 19th July 2020

1H Business update: commercial activities back to more normal levels with Covid-19 related accelerations

Merchant Services & Solutions

  • Commercial activity going back to "normal" pre-
    Covid levels
  • Growth of POS installations after the slowdown experienced during lockdown (+23% y/y in June)
  • Strong mPOS demand for small/micro merchants
  • Launch of new "NexiGo" proposition to support SMEs' sales digitalization, packaging omnichannel acceptance, Pay-by-linkand e-/socialcommerce capabilities
  • Accelerated pipeline of large merchants omnichannel projects
  • Step up on E-commerce with gateway activations (x2 2Q20 vs 2Q19, x9 including Pay-by-link)
  • Nexi Business app reaching almost 50% penetration on enabled merchants (+60% y/y active users in June 2020)

Cards & Digital Payments

  • Commercial activities from banks gradually recovering, also supported by Nexi specific campaigns
  • Renewed bank interest on International Debit as a mass market ecommerce-enabled product
  • Continued evolution on National Debit digital capabilities; Next generation platform tender ongoing
  • Strong demand for commercial cards and corporate payments products
  • Continued 'natural organic growth' on YAP mobile payment app (no marketing push in the quarter), now at ca. 850k enrolled clients
  • Acceleration of digital onboarding/digital issuing projects for banks
  • Extension of no-PIN contactless limits from 25€ to 50€ - live from 2021

Digital Banking Solutions

  • Progress on advanced ATMs (+4.2% 2Q20 vs 2Q19). Continued New ATM front-endrollout, with new customer wins
  • Continued growth of Digital Corporate Banking installed workstations (+6.8% 2Q20 vs 2Q19)
  • Instant Payments progress continuing despite lockdown, with new relevant players adopting Nexi platform
  • Nexi Open ecosystem proposition fully launched, banks go-to-marketprogressing. CBI
    Globe open banking gateway activity-based accelerated
  • Robust commercial pipeline for innovative corporate payments solutions (insurance, utilities,..)

12

Closing of ISP Merchant Book deal successfully executed at the end of 2Q, despite Covid-19 emergency

Key components of the transaction

  • Transaction completed on June 30th, 2020 with clean EU Antitrust approval
  • ~180k merchants and ~€68bn of transaction volumes in 2019
  • Marketing and distribution agreement for merchant acquiring. Extension of remaining existing processing contract related to issuing and ATM acquiring services until 2044
  • 1 €B cash consideration (plus potential earn-out payable in 2025)
  • Implied multiples: 10.5x EV/EBITDA 2020E, 16.4x P/E 2020E
  • 60+ €M cash flows generated by the acquiring book in 1H20 and transferred to Nexi

A strategic transaction

Enhanced platform and positioning in the acquiring segment

Greater coverage of the acquiring value chain and enhanced ability to drive further innovation and value for merchants

Increased scale with diversification of revenue streams

Value enhancing transaction with cash EPS accretion in the high teens from 2020E

Deepening of partnership across businesses with the largest bank in Italy

Key 2020 P&L Figures1: Incremental economics for Nexi

€M

Revenues:

EBITDA:

Net Income:

~106

~95

~61 2

Nexi Net Revenues Mix 20203

Other

Merchant Services

+5p.p.

& Solutions

~54%

~49%

Nexi

Nexi Pro Forma

Merchant Services & Solutions Net Revenues Mix 20203

Other

Referral /

+23p.p.

Direct Acquiring

~49%

~26%

Nexi

Nexi Pro Forma

Note: (1) 2020 Pro-forma. (2) For illustrative purposes, target earnings figure before any potential impacts from financing or any non-recurring items associated with the transaction. (3) Source: Company information and Nexi consensus estimates as of

13

December 2019.

Focus on 1H20 Results

Resilient business model with 50+% revenues not impacted by volumes and 38% variable and semi-variable costs

Revenues breakdown1

Volume driven revenues

Installed-base driven revenues

9%

41%

64%

48%

52%

91%

59%

36%

Merchant Services &

Cards & Digital

Digital Banking

Solutions

Payments

Solutions

  • Installed Base Driven revenues are subscription-like and linked to n. of POS terminals, n. of merchants, managed cards, n. of ATMs, etc.
    • No material expected impacts in the short term.
    • Closely monitoring the evolution to confirm the expected limited medium/long term impact due to POS installation slowdown and SMEs potential distress
    • Possible rephasing of certain projects
  • Volume Driven revenues driven by n. of transactions and value of transactions
    • Direct impact from volume contraction due to Covid-19

Operating costs breakdown1

Variable costs

Fixed costs

20% external

processing

38%

62%

  • Variable costs linked to:
    • Volumes of transactions (e.g. external and internal processing)
    • Level of activities (e.g. variable compensation, external contact center, POS and ATM management, operations,..);
  • Fixed costs

(e.g. personnel, running IT costs, g&a,..)

Note: (1) Based on 2019 data

15

Net Revenues affected by Covid-19 lockdown measures in 2Q. Strong organic ISP deal contribution and cash cost containment plan support to EBITDA margin

Net Revenues (€M)

EBITDA (€M)

Nexi standalone ISP contribution

-13.1%

-6.3%

510.9

43.6 478.7 51.0

-8.5%

Nexi standalone

ISP contribution

-13.2%

Margin - incl. ISP contribution

53%

55%

-3.9%

272.5 261.8

39.6

47.7

-8.0%

264.3 23.5 229.7

27.3

-16.0%

240.8 202.4

467.3

427.7

143.7

21.5 124.8

25.6

-18.9%

122.3

99.2

232.9 214.2

2Q19

2Q20

1H19

1H20

2Q19

2Q20

1H19

1H20

16

Merchant Services & Solutions: ~40% of revenues not impacted by Covid-19

Net Revenues (€M)

Nexi standalone

51%1

ISP contribution

-8.7%

Merchant

267.2

243.9

Services &

43.6

Solutions

51.0

-18.3%

-13.7%

140.9

23.5

115.1

223.6

27.3

192.9

-25.3%

117.5

87.8

2Q19

2Q20

1H19

1H20

Managed Transactions (#M)

International

Schemes -17.2%

-18.9%

1,676

1,359

1H19 1H20

Value of Managed Transactions (€B)

International

-21.3%

Schemes

123.2

-20.1%

98.4

1H19

1H20

Key Highlights

  • Managed transactions and Value of managed transactions affected by extensive lockdown measures. Progressive recovery starting from May
  • E-commerceperformance well supported by non travel/tourism related sectors (+35% y/y in 1H20 and +43% y/y in 2Q20)2; overall 1H20 performance less impacted by Covid-19 compared to physical sales (-2.8% y/y transaction value)
  • Net Revenues affected by volume mix more skewed towards large merchants than SMEs during lockdown and weak contribution from International travellers.

Note: (1) Contribution to total 1H Group Revenues, including ISP deal. (2) Data include International schemes only for Nexi Payments, International and national schemes for MePS

17

Cards & Digital Payments: ~60% of revenues not impacted by Covid-19

38%1

Cards &

Digital

Payments

Net Revenues (€M)

Managed Transactions (#M)

International

-5.3%

Schemes

-9.2%

1,260

1,144

-4.1%

187.9

180.1

1H19

1H20

-7.7%

Value of Managed Transactions (€B)

International

-12.0%

94.8

87.5

Schemes

100.7

-13.1%

87.5

2Q19

2Q20

1H19

1H20

1H19

1H20

Key Highlights

  • Managed transactions and Value of managed transactions affected by extensive lockdown measures. Progressive recovery starting from May
  • Managed transactions on international schemes back to growth in June 2020
  • Continued push on international debit, with increasing cards stock and Value of managed transactions (+10% y/y in June)
  • Net Revenues affected by lower domestic travellers spending extra EU and lower commercial cards volumes

Note: (1) Contribution to total 1H Group Revenues, including ISP deal

18

Digital Banking Solutions: marginally impacted by Covid-19 lockdown

Net Revenues (€M)

11%1

-2.3%

55.9

54.6

Digital

Banking

Solutions

-5.2%

28.5

27.0

2Q19

2Q20

1H19

1H20

Key Highlights

  • 2Q performance mainly affected by phasing of certain low margin banks-related projects. Expected return to growth in 2H
  • Continued roll out of new higher value advanced self banking products/solutions and continued growth of advanced ATMs
  • Completed the first wave of the new advanced Digital Corporate Banking platform with partner banks. Live with mobile app
  • Nexi Open ecosystem proposition fully launched, banks go-to-market progressing

Note: (1) Contribution to total 1H Group Revenues, including ISP deal

19

Strong costs reduction in the quarter to mitigate the financial impact of Covid-19

Personnel Costs Operating Costs

Total Costs (€M)

-8.9% Y/Y

-9.1%

on a standalone

basis

238.5

216.8

Key Highlights

Decrease in total costs (-21.7 €M) mainly driven by:

well progression on the announced 100+ €M

cash cost containment plan

continued focus on efficiency

85.4

Y/Y

early impacts from implementation of IT

strategy

-13.0%

120.6

Q/Q

104.9

43.0

38.9

-9.6%

77.5

66.0

-14.9%

153.1

79.5

-6.9%

137.3

-10.3%

Limited credit risk exposure (1H20 LLPs: 2.1 €M acquiring and 2.4 €M issuing, not Covid-19related)

  • Merchant Services & Solutions:

Diversified exposure across sectors and no direct exposure to riskier sectors (e.g. airlines)

  • Cards & Digital Payments:

Credit risk limited to direct issuing model (~48k cards, equal to ~0.1% of Group total cards) and corporate cards

2Q19

2Q20

1H19 1H20

20

Well progressing on 100+ €M cash cost containment plan to mitigate EBITDA and cash flow impact. 27% already delivered in 1H

% % realized in 1H20

27%

Cost containment plan

100+

€M

Volume-base costs

Discretionary spending

55%

  • Personnel expenses (variable compensation, other related costs)
  • Processing: reduction in line with volume trends
  • External contact center calls

Operating Expenses

  • Hiring
  • Consulting expenses
  • Internal and external events, travels, etc..
  • Voluntary waiver by Top management of their 2020 short term variable compensation

Transformation Costs

46%

Capex

In 2H20

Postponement of few

Postponement of non strategic

activities:

project spending (e.g. IT

YAP development

systems optimization)

Limited re-phasing of IT strategy

Other transformation

Postponement of real-estate

projects

investments

Confirmed continued focus and investments on key initiatives to drive future growth and efficiency

21

Continued investments to support quality, innovation and IT transformation

Capital Expenditure (€M)

FY19 Total Capex: 167€M

FY20 Current Plan

Total Capex: 125-135 €M

% of 1H19 net revenues

% of 1H20 net revenues

+6%

11%

62

13%

59

5%

22

5%

26

32

40

6%

8%

1H19

1H20

Transformation

Ordinary

Capex

Capex

Ongoing investments (1H 2020): key examples

Transformation Capex

22

Extraordinary Innovation:

  • Open Banking Gateway & Corporate Banking
  • Next generation omni-channel payment gateway

Next Generation Platform:

  • Network infrastructure completion
  • New GT POS Platform completion
  • New CRM and channel management platforms
  • New Acquiring Core Platform - 1st release
  • New Data Lake infrastructure & analytics

Ordinary Capex

40

Continuous Innovation and Delivery:

  • Digital properties evolution
  • SMEs digitalization
  • POS ecosystem evolution
  • Cards and digital payments new VAS
  • Banks migrations/integrations
  • PSD2 compliance, AML & GDPR

Running and Maintenance/ Quality/ Security:

  • Cyber security continuous improvement
  • Hardware upgrade/refresh
  • Acquisition & Enterprise software licences agreement
  • Facility investments and other assets

POS and ATM purchase

Capex on total revenues including ISP merchant book

22

IT strategy progress now above 60%. ~120 €M expected to completion

Capital Expenditure (€M)

Transformation Capex progress

53% 62%

June 2020

Transformation Capex for Extraordinary Innovation and Next Generation Platform deployment

~62% program spend completed to date

Total capex

16%

6%

~120 €M expected to complete (H2 2020 - c.2023)

  • ~15 IT projects

Transformation capex

Ordinary capex

~ 120 €M

10%

8-10% of net revenues

2016

2017

2018

2019

2020

2021

2022

2023

% Capex in % of net revenues

For illustrative purposes only. Capex on total revenues including ISP merchant book

23

Transformation Costs down by 59% Y/Y in 1H20

Transformation Costs (€M)

Bridge from 1H 2020 Transformation Costs to Reported non recurring items (€M)

-59%

25.8

10.6

1H19

1H20

-10.6

17.2

8.8

-36.7

5.9

-42.5

1H20

ISP transaction

Others incl.

1H20 Nexi non

IPO costs

1H20 Reported

Transformation

related costs

Covid-19

recurring items

sustained

non recurring

costs

related costs

by Financial

items

Sponsors1

Note: (1) Nexi shares granted by Advent/Bain/Clessidra to >400 employees as part of the IPO process. Full cost born by Advent/Bain/Clessidra with neutralization for Nexi flowing through Equity, not P&L

24

Normalized Net Profit at 101.2 €M including ISP merchant acquiring book contribution, down by 14% Y/Y

€M

261.8

84.3

10.6 €M Transformation Costs

27.7

31.9 €M Others

Y/Y organic

performance

42.5

-14%

13.1

101.2

43.0

42.5

64.2

18.3

10.7

1H20 EBITDA

D&A

Interest

Non recurring

Cash Taxes

Reported Net

D&A

Interest

Non-recurring

Taxes

Normalized

incl. ISP

Expenses

items

& Minorities Profit incl. ISP

customer

Expenses

items

Net Profit

contribution

contribution

contracts

incl. ISP

contribution

25

Cash Flow conversion at 77% including ISP merchant acquiring book contribution

€M

Cash Flow Conversion 1

77%

261.8

39.9

20.1

31.3

56.0

201.8

114.5

1H20 EBITDA incl.

Ordinary Capex

Change in WC

Normalized

Normalized Cash

Normalized

Normalized Free

ISP contribution

Operating Cash Flow

Interest Expenses

Cash Taxes2

Cash Flow incl.

incl. ISP contribution

ISP contribution

Note: (1) Cash Flow Conversion defined as Normalized Operating Cash Flow (excluding transformation capex, D&A of customer contracts, transformation costs and other non recurring items) as % of EBITDA

26

(2) Related to 1H20 normalized pre-tax profit

Strong cash position. Net Financial Debt / EBITDA temporarily affected by Covid-19

Net Financial Debt (€M)

June 20

June 20

June 19

Dec 19

Mar 20

incl. ISP

Standalone

contribution

Gross Financial Debt

1,845

1,840

1,843

1,838

2,741

Cash

(231)

(248)

(307)

(297)

(316)

Cash Equivalents

1

(92)

(123)

(116)

(118)

(118)

Net Financial Debt

1,523

1,470

1,420

1,423

2,307

Net Financial Debt / EBITDA (€M)

3.3x

4.0x

2.9x

2.8x

2.9x

LTM 2Q19

FY19

LTM 1Q20

LTM 2Q20

LTM 2Q20

Standalone

incl. ISP

contribution

EBITDA (€M)

463

503

507

484

576

Key Highlights

Acquisition of the merchant acquiring business of ISP successfully financed by:

  • 500 €M equity-linked bond placed in April 2020 (maturity April 2027) and 466.5 €M term loan, granted on June 30th 2020 by a pool of banks (maturity June 2025), which replaced the original 1 €B bridge loan
  • Nexi's own cash for the difference

Current Debt structure also includes:

  • 1 €B Term Loan due 2024
  • 825 €M Fixed-Rate Note due 2024
  • Other residual debt (mainly IFRS 16)

Nexi benefits of an undrawn 350 €M Revolving Credit Facility, committed to 2024, that further supports its liquidity profile

Weighted average pre-tax cash coupon per annum stable at 1.9%, still well below 3.8% post reorganization in July 2018 and 3.1% post IPO

Note: (1) Visa preferred shares held by the Company, VISA Europe deferred compensation (until Q1 2019) and Oasi post closing adjustments (until YE19)

27

2020 Guidance suspended. Ambition to grow EBITDA and EBITDA - Capex vs

2019, including ISP book organic contribution

Previous Guidance1: suspended

2020 Ambition

Net Revenues

EBITDA

Non-recurring

Items

Capex

Capital Structure

&

Capital Allocation

5-7% annual net revenue growth over medium term, targeting higher end of the range

  • 13-16%annual EBITDA growth over medium term
  • Continued strong operating leverage

Rapid further decrease of non-recurring items affecting reported

EBITDA

  • 8-10%ordinary capex as % of net revenues over long term
  • Transformation capex on top of ordinary capex of 142 €M cumulative (2020 - c.2023)
  • Organic de-leveraging with target net debt of ~2.0-2.5x EBITDA over medium to long term
  • Progressive moderate dividend policy, targeting pay-out ratio of 20-30% of distributable profits in medium to long term
  • 2020 volume-driven revenues depending on speed of recovery and dynamics by sector
    • Possible return to revenue growth by year-endassuming continued path of recovery at current trajectory
  • 100+ €M cash cost (Opex/Capex) containment plan to mitigate the impact on EBITDA and cash flow targeting:
    • EBITDA growth vs 2019 including organic ISP book contribution, broadly in line without. FY2020 EBITDA close to ~600 €M.
    • Material growth in EBITDA - Capex with and without ISP contribution
  • Strong cash position

Note: (1) ISP transaction not included

28

Q&A

Annex

P&L

Including organic contribution from ISP

1H19

1H20

Δ% vs. 1H19

2Q19

2Q20

Δ% vs.

2Q19

€M

Merchant Services & Solutions

267.2

243.9

-8.7%

140.9

115.1

-18.3%

Cards & Digital Payments

187.9

180.1

-4.1%

94.8

87.5

-7.7%

Digital Banking Solutions

55.9

54.6

-2.3%

28.5

27.0

-5.2%

Operating revenue

510.9

478.7

-6.3%

264.3

229.7

-13.1%

Personnel & related expenses

(85.4)

(79.5)

-6.9%

(43.0)

(38.9)

-9.6%

Operating Costs

(153.1)

(137.3)

-10.3%

(77.5)

(66.0)

-14.9%

Total Costs

(238.5)

(216.8)

-9.1%

(120.6)

(104.9)

-13.0%

EBITDA

272.5

261.8

-3.9%

143.7

124.8

-13.2%

D&A

(52.8)

(66.1)

+25.1%

Interests & financing costs

(38.4)

(38.4)

+0.0%

Normalized Pre-tax Profit

181.2

157.3

-13.2%

Income taxes

(63.3)

(55.4)

-12.5%

Minorities

(0.3)

(0.8)

n.m.

Normalized Net Profit

117.6

101.2

-14.0%

Nexi standalone

1H19

1H20

Δ% vs. 1H19

2Q19

2Q20

Δ% vs.

2Q19

€M

Merchant Services & Solutions

223.6

192.9

-13.7%

117.5

87.8

-25.3%

Cards & Digital Payments

187.9

180.1

-4.1%

94.8

87.5

-7.7%

Digital Banking Solutions

55.9

54.6

-2.3%

28.5

27.0

-5.2%

Operating revenue

467.3

427.7

-8.5%

240.8

202.4

-16.0%

Personnel & related expenses

(84.1)

(78.3)

-7.0%

(42.4)

(38.3)

-9.8%

Operating Costs

(150.3)

(135.2)

-10.1%

(76.1)

(64.9)

-14.8%

Total Costs

(234.5)

(213.5)

-8.9%

(118.6)

(103.1)

-13.0%

EBITDA

232.9

214.2

-8.0%

122.3

99.2

-18.9%

D&A

(52.8)

(66.1)

+25.1%

Interests & financing costs

(32.8)

(20.8)

-36.7%

Normalized Pre-tax Profit

147.3

127.3

-13.5%

Income taxes

(51.5)

(43.9)

-14.9%

Minorities

(0.0)

(0.4)

n.m.

Normalized Net Profit

95.7

83.0

-13.3%

Methodological note

  • Including organic contribution from ISP: reported P&L excluding one-offs and including ISP merchant acquiring book and assuming the
    current debt structure since January 1st, 2020. Delta y/y: organic delta, i.e. including ISP contribution also in 2019
  • Nexi standalone: reported P&L excluding one-offs

31

Reported P&L vs Normalized P&L

Reported

Normalized

ISP merchant

Normalized

Delta

book

1H20

1H20

1H20

€M

contribution

incl. ISP

Merchant Services & Solutions

192.9

192.9

51.0

243.9

Cards & Digital Payments

180.1

180.1

180.1

Digital Banking Solutions

54.6

54.6

54.6

Revenues

427.7

427.7

51.0

478.7

Personnel & related expenses

(78.3)

(78.3)

(1.3)

(79.5)

Operating Costs

(135.2)

(135.2)

(2.1)

(137.3)

Total Costs

(213.5)

(213.5)

(3.3)

(216.8)

EBITDA

214.2

214.2

47.7

261.8

D&A

(84.3)

18.3

(66.1)

(66.1)

Interests & financing costs

(27.7)

7.0

(20.8)

(17.7)

(38.4)

Non recurring items

(42.5)

42.5

-

-

Pre-tax Profit

59.6

67.7

127.3

30.0

157.3

Income taxes

(26.5)

(17.4)

(43.9)

(11.5)

(55.4)

Minorities

(0.4)

(0.4)

(0.3)

(0.8)

Net Profit

32.6

50.4

83.0

18.2

101.2

Transformation costs

1

(10.6)

(10.6)

(10.6)

Delta Reported vs Normalized

D&A: D&A customer contracts

Interests & financing costs: ~3 €M interest expenses on ISP

convertible bond (April-June) and ~4 €M bridge facility

Non recurring items: detailed bridge on slide 24

Note: (1) Transformation costs included in Reported Non recurring items

32

Investor Relations

investor.relations@nexi.it

Stefania Mantegazza

stefania.mantegazza@nexi.it

Attachments

  • Original document
  • Permalink

Disclaimer

Nexi S.p.A. published this content on 30 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 July 2020 11:45:18 UTC