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
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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