nexi, the Italian paytech company, has achieved its financial objectives for 2022 and confirms the 2023 Guidance. The group led by Paolo Bertoluzzo recorded in 2022 revenues for €3,3 billion, up 7,1% on 2021 (+7,8% year-on-year, excluding Ratepay).
Ebitda was 1,61 billion (+14,2%) equal to an Ebitda margin of 49%, up by 311 basis points (+3,11%) compared to 2021. The useful normalized was 693,2 million, equal to a earning per share of 0,53 euro, up by +15% on an annual basis.
The title a business square, after three days of increases and after a jump of 2% at the opening, it moved into negative territory. In the late morning, it was 7,81 euros, down by 0,98%. The stock is up 6,5% year-to-date, but down 23% from a year ago
Bertoluzzo: “Solid and profitable growth, with exceptional evolution of margins”
“2022 has confirmed itself as another year of solid and profitable growth in all our businesses and in the various geographical areas, registering an exceptional margin evolution and an acceleration of cash flow generation, despite the complex macroeconomic situation” commented the CEO Paolo Bertoluzzo. “We have also made great progress in the dintegration and transformation of the Nexi Group, with investments in technology, skills and innovation, while strengthening our business portfolio through targeted acquisitions and divestments.
On the front of investments, the 2022 Capex was 527 million, equal to 16% of revenues. In particular, 173 million concern transformation and integration initiatives and 354 million investments for the ordinary innovation of products and services, for the maintenance of quality and safety standards and for purchases of POS and ATMs, says the company's note.
A further deleveraging is expected
However, the reduction path seems slower than expected financial leverage. As at 31 December 2022, the group's net operating financial position was 5,396 billion and the ratio to EBITDA was 3,3 times. The pro-forma financial leverage which instead includes the run-rate synergies stands at approximately 2,9x, in line with the plan. Excess cash generation is estimated at "at least 600 million" and net financial leverage is expected to decrease to 3 times EBITDA at the end of 2023 including the acquisition of the Sabadell merchant book whose closing is expected in the fourth quarter of financial year (approximately 2,7% including run-rate synergies”).
In the first 2 months of 2023 transactions up by 17%
Just in fourth quarter in 2022, revenues amounted to 879,5 million euros, up 4% compared to the same period a year earlier (+5,9% y/y excluding Ratepay). EBITDA amounted to €451,6 million, up by 8,7% compared to 4Q21, and the EBITDA Margin reached 51%. Nexi also reported that in first two months of the year there has been an acceleration of the transaction volumes, thanks also to government measures regarding the adoption of POS, quantified at +17% compared to the same period a year ago.
The guidance for 2023 is to be considered a "floor"
Nexi confirms the Guidance 2023 in line with the medium-long term ambition presented at the last Capital Markets Day with revenues at over 7% growth over the year, an EBITDA at over 10% growth over the year and a net financial leverage at around 3.0x , EBITDA to earnings per share normalized to over 10% year over year growth.
Guidance on revenues and ebitda is lower compared to the internal plan of the group but it is “to be considered as the low end of a range” Bertoluzzo told analysts, specifying that management preferred not to provide a range, given themacroeconomic uncertainty, and adding that the values of the guidance are to be considered a "floor" for the progress of the year. On the occasion of the Capital Markets Day last September, Nexi had forecast for the period 2021-25 an average annual growth in revenues of around 9% and a gross operating margin up 14%. “Let's start the 2023 determined to grow further in all geographies, further increasing margins and cash generation” added Bertoluzzo. “At the same time, we will continue to be very rigorous incapital allocation, further focusing and strengthening our portfolio to accelerate growth, as evidenced by the strategic partnership we just signed with Banco Sabadell which will allow us to enter a particularly attractive market like that Spanish".
In 2023 two options for the use of cash: M&A and buyback or dividend
Regarding the use of the cash generated, Bertoluzzo responding to analysts during the presentation of the results said that in 2023 there are mostly two options: M&A and buyback or dividend. The options for the truth would be three, says the CEO: "we have the option ofM&A, and the focus is on a pipeline of small-medium situations, the second is debt repayment, but in 2023 we have no debt to repay, and the third option is to redistribute cash to shareholders through buyback or dividend. If I think of 2023, we have the first and third options in mind".
The purchase of the Spanish Sabadell
Last month Nexi and Banco Sabadell have signed an agreement for a long-term partnership in the Spanish market. The transaction provides for the acquisition by Nexi of 80% of the merchant acquiring business of Sabadell, following its spin-off into PayComet, a company wholly owned by Sabadell and an already authorized payment institution, for an upfront cash consideration of $280 million, reflecting an Enterprise Value of $350 million for 100%, the company says. Nexi will finance the operation entirely through the cash resources available. There is also an exclusive distribution agreement with an initial term of 10 years, with two potential renewals of an additional 5 years each. At the end
of the transaction, Nexi will acquire over 380.000 merchants and approximately 48 billion in transaction volumes in December 2022. The merchant acquiring business is expected to generate an EBITDA of approximately 30 million based on 2023 data, with an implied 2023E EV/EBITDA of about 11,5x. “Entering Spain is very strategic for us” said the CEO “the Spanish market is large and has good economic potential. Card penetration is around 38%, in line with the average of our portfolio, the market is dominated by SMEs with an acceleration of e-commerce dynamics and the payment system distribution market is still dominated by banks. So it is a market quite similar to the Italian one”.
The UniCredit case
During the call with analysts, Bertoluzzo explained that they have been implemented cash synergies from integration for 110 million euros, over 10 million euros more than the initial target for 2022.
Furthermore, the activity of M&A further increases focus on core markets and strategic growth initiatives, with nine M&A deals closed since January 2022 (five acquisitions and four divestitures). When asked by an analyst for comment on rumors of a possible joint venture with Unicredit on payment activities, the CEO replied that the assessments on the evolution of the payment strategy by institutions is "typical of most large banks" and added: Nexi "has conversations with other banks, even outside Italy ”. “Nexi already has relationships with Unicredit and a contract that extends this relationship until 2037 which forms the basis of our relationship, added Bertoluzzo: Nexi "is happy to have conversations but the basis of this relationship is a long-term contract that is in progress".
