Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Nexi SpA (NEXXY, Financial) reported a revenue growth of 5.9% in the first half of 2024, with merchant solutions revenues up 7%.
- EBITDA grew by 8% in the first half, with an EBITDA margin expansion of close to 100 basis points.
- The company generated EUR383 million in excess cash in the first half, up more than 40% compared to last year.
- Nexi SpA (NEXXY) has accelerated its efficiency and cost synergies delivery, which will become more visible in the second half of the year.
- The company is progressing with its deleveraging strategy, reducing net debt-to-EBITDA to 2.8 times as of June 2024.
Negative Points
- The macroeconomic environment in Europe remains challenging, which could impact future performance.
- National schemes volumes are under pressure, particularly in Italy, affecting overall volume growth.
- The company faces ongoing inflationary pressures and higher volumes, which could impact cost management.
- There is uncertainty regarding the completion of the Sabadell deal, which could affect Nexi SpA (NEXXY)'s expansion strategy in Spain.
- The company has significant severance costs, with EUR70 million to EUR75 million expected to be cash outflows in 2024.
Q & A Highlights
Q: Should we think of the $700 million reiteration as conservative? Or are there some negatives that we should expect to flow through in the 2H?
A: We stand in a good position to deliver our guidance. The working capital point I made is something which will stick. We will have a better second half compared to the first half with regards to working capital. There is seasonality, which helps us offset this with higher EBITDA contribution in the second half.
Q: Can you talk a little bit about how Computop fits in the broader portfolio of assets, particularly in Germany?
A: Germany and DACH more broadly is a key growth engine. We are investing into the most modern propositions, ISV partnerships, and our partner integration platform. Computop is a strategic partnership, not just for German market access but also for leveraging their technology in other geographies.
Q: Can you provide a trading update on how July is going, considering the new flow of consumption in Europe slowing down?
A: July volumes are not the strongest ever but not bad either. Especially international schemes are showing high single-digit growth in places like Italy or DACH. The Nordics are a bit softer. We are not betting on a recovery of the economy but are not planning a worsening either.
Q: Can you provide an update on Sabadell? If you don't succeed in closing the deal, will this imply a halt in your penetration strategy in the Spanish area?
A: We have received all necessary authorizations to close. The relationship with Sabadell is fantastic, and we continue to prepare for a potential launch together. There is no Sabadell contribution in our 2024 numbers or cash deployment approach for the second half of the year.
Q: Do you expect to see any impact from the slowdown in the overall European markets on your sales?
A: Yes, the European economy is not doing great, but it's all factored into our results and guidance. Our revenues are driven by a number of factors, not just volumes. We focus on SME merchants, national lockers, and more valuable products, which helps maintain resilience.
Q: Can you speak to the EUR50 million loss after tax from assets held for sale? Is this primarily from rate pay?
A: Yes, that item is primarily rate pay. We took a significant restructuring charge earlier this year to manage the business in such a way that it burns as little cash as possible. We expect to return to breakeven during the end of next year.
Q: What were the main drivers behind the take rate evolution in H1? What do you expect for the coming quarters?
A: Our take rates are broadly stable, if not improving, due to value management reprices, more value propositions, new products and services, and a volume mix moving more into SMEs and international schemes.
Q: Can you provide more details on the dividend/buyback program in the coming years?
A: We have taken a structural decision to return capital to shareholders while reducing leverage. The mix and method (buybacks or dividends) will be discussed when we communicate next year's guidance.
Q: Can you provide more color on the sensitivity of free cash flow and EBITDA on revenues?
A: We always take action to protect profitability and cash generation, managing unexpected external factors. We grew EBITDA during the COVID year despite significant volume drops, demonstrating our focus on protecting profitability and future growth.
Q: Can you talk about the focus on disposal of non-core assets in digital banking solutions?
A: We prefer not to give details but are having a number of conversations. The challenge is that these businesses are not necessarily self-contained, requiring time to carve them out and prepare for potential processes.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
