Nexi Group Announces H1 2024 Financial Results

 The Board of Directors of Nexi S.p.A. have approved the Group’s consolidated financial results as of June 30th 2024. “In an evolving competitive context, we have continued our journey of revenue and margin growth, significantly increasing the cash generation, even net of growth investments in the business. This accelerated cash generation allows us to further reduce debt and leverage and, at the same time, to accelerate the return of capital to our shareholders, anticipating  the conclusion of the 18 months share buy-back program, launched in May, by the end of  2024 – commented Paolo Bertoluzzo, CEO of Nexi Group. “In the first half of the year, we further strengthened the company's growth potential. We accelerated the development of direct sales channels in Italy and partnerships with major software players across all  geographies, while further strengthening our offerings for merchants with increasingly  advanced digital solutions, such as the launch of Apple Tap to Pay in Italy and Germany,  the enhancement of our e-commerce offerings with Computop in Germany, and the  acceptance of Bancomat Pay for Amazon in Italy. At the same time, we also accelerated  our efficiency initiatives and the delivery of synergies, creating additional opportunities to  improve margins and invest in the future of our company.” Key consolidated financial managerial results1  In 1H24 the Group delivered revenues at € 1,660.5 million, +5.9% versus 1H23, and EBITDA  at € 827.1 million, +8.0% versus 1H23. The EBITDA margin was at 50%, up by 97 basis points  compared to 1H23, also thanks to the acceleration of efficiencies and synergies delivery on the back of Group integration. In 2Q24 revenues reached € 878.9 million, +5.8% versus 2Q23, and EBITDA was at € 465.4 million, +7.5% versus 2Q23, with EBITDA margin at 53%, up by 84 basis points compared  to 2Q23. Nexi Group’s operating businesses delivered the following results in 1H24:

• Merchant Solutions, representing approximately 57% of Group's total revenues,  reported revenues of € 942.8 million, +7.0% Y/Y, with eCommerce growing double digit. In 1H24, 9,537 million transactions were processed, +8.7% Y/Y, with value of  processed transactions at € 407.2 billion, +3.8% Y/Y. In 1H24 international schemes  sales volume growth has continued, especially in Italy, DACH region and Poland,  while total volume growth was impacted by lower margin national schemes  volumes. Furthermore, during the semester, SMEs acquiring volumes continued to  grow driven by customer base expansion2, particularly in Italy, DACH region and  Poland.

In 2Q24, Merchant Solutions revenues reached € 505.0 million, +7.2% Y/Y.

• Issuing Solutions, representing approximately 32% of Group's total revenues,  reported revenues of € 539.4 million in 1H24, +5.1% Y/Y. The growth was  supported by international schemes volume growth and also by the anticipation of  specific projects and initiatives, although less than last year. In 1H24, 9,940 million transactions were processed, +8.3% Y/Y, with value of processed transactions at €  437.5 billion, +4.6% Y/Y.In 2Q24, Issuing Solutions revenues reached € 281.8 million, +5.0% Y/Y.
• Digital Banking Solutions, representing approximately 11% of Group's total  revenues, in 1H24 reported revenues of € 178.3 million, +2.4% Y/Y.

In 2Q24, Digital Banking Solutions reached € 92.0 million of revenues, +0.7% Y/Y,  supported by volumes despite lower projects than last year during the same period. In 1H24, Total Costs were at € 833.4 million, up by 3.9% Y/Y while in the quarter were at €  413.5 million, +3.9% versus 2Q23. The operating leverage, the ongoing cost actions and  the delivery of synergies have limited the cost growth, notwithstanding volume, business  growth and inflationary pressure. Total Capex3 were at € 196 million in 1H24, equal to 12% of net revenues, strongly  decreasing from € 230 million in 1H23, down 15.0%. Y/Y. Continued strong reduction of transformation and integration costs at € 36.8 million in  1H24, down 32% versus 1H23; non-recurring items below EBITDA at € 188.7 million in 1H24, including non-recurring costs related to the severance announced this year (€ 134.8  million, of which ~€ 31 million represents the cash-out in the period). Normalised net profit4 in 1H24 was € 300.6 million, up by 3.4% Y/Y. During the first semester of 2024, the excess cash generation5 increased to € 383.4 million,  +42% Y/Y. The accelerating cash generation resulting from the compound of growth, operating  leverage and cash leverage allows to allocate capital to reduce debt and materially return  capital to shareholders at the same time. In particular, regarding debt and leverage reduction, the Group has a well-balanced debt  profile in terms of maturities and mix and € ~1.3 billion of 2024-25 debt maturities are  going to be fully paid down with existing cash. Furthermore, the Group target leverage is  expected at ~2.0x-2.5x EBITDA by 2026 after further capital return to shareholders. In the  first semester, € ~220 million of debt maturities have already been reimbursed. The strong accelerated cash generation enables structural return of capital to shareholders  and the Group expects to allocate a material share of excess cash to shareholders on an  ongoing basis, either via share buy-backs or dividends, depending on market conditions. A  € 500 million share buy-back 18-months program has been launched in May 2024 and has  now been accelerated to complete the program in 2024. In the semester, € ~118 million  of share buy-back has been executed. On M&A, the Group confirms a selective approach in identifying value accretive  acquisitions of merchant books and/or strategic product/tech capabilities, while focusing  on the disposal of non-core DBS businesses. In the first semester, Sparkasse merchant book acquisition has been closed and the sale of Nordic eID business is expected to be  closed during the summer of 2024. In the first semester the Net Financial Debt was down to € 5,001 million, while the Net  Financial Debt / EBITDA ratio was down to 2.8x, 2.7x pre share buy-back effect. The  weighted average debt maturity is ~2.7 years with an average pre-tax cash cost of debt, slightly reduced at ~2.80%. 2024 Guidance  For 2024, considering the persistent complex macro outlook, Nexi confirms the following  targets:

• Net revenues: Mid-single digit Y/Y growth;
• EBITDA: Mid-to-high single digit Y/Y growth, with margin expansion of 100 bps+;  • Excess cash generation: More than € 700 million;
• Net leverage: decreasing to below 2.9x including announced M&A and share buy back effects, (~2.6x on organic basis).

Significant subsequent events  Nexi informs that the Ordinary and Extraordinary shareholders’ meeting will be called for  September 12th, 2024 to resolve upon the confirmation of Mr. Luca Velussi as Director and  an amendment to the company by-laws. * * *  Pursuant to paragraph 2 of article 154 bis of the Consolidated Finance Act, the  undersigned, Enrico Marchini, in his capacity as the manager in charge of preparing Nexi’s  financial reports, declares that the accounting information contained in this press release  corresponds to the accounting documents, books and records of Nexi S.p.A.. Reported results under review by PricewaterhouseCoopers that will release limited revision.  

1 2023 and 2024 pro-forma normalised managerial data at constant scope and FX (average 2024 budget FX) 2 # of POS terminals

3 Managerial figure.

4 Net profit to which non-recurring items and D&A customer contracts are added back net of taxes.

5 Operating cash flow generation after cash interest expenses and other cash items (cash taxes, IFRS 16 and other)