Nexi S.p.a. · MIL:NEXI
Nexi — H1 2020 Earnings Presentation
33 slides from Nexi's earnings presentation, Jul 30, 2020
Slide 1: 1H 2020 Results Presentation
nexi 1H 2020 Results Presentation July 30th, 2020 1
Slide 2: Disclaimer
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,
Slide 3: Executive Summary: Covid-19 update
Executive Summary Covid-19 update Covid-19 health 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 star
Slide 4: Executive Summary: 1H20 results highlights
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 orga
Slide 5: Covid-19 emergency now under control. Phase 3 started in June
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” 18-Ma
Slide 6: Transaction volumes recovering after the easing of lockdown measures
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% -4.1% -2.2% 0.0% -2.8% -4.4% -12.0% -9.2% -9.0% -8.5% -10.4% -13.8% -10.3% -10.2% -12.3% -6.5% -10.0% -8.9% -9.9% -9.4% -13.0% -18.0% -10.7
Slide 7: Acquiring volumes recovery driven by Italian Cards
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 Foreign Cards Total 7% 6% 10 2% 2% 1% 1% 2% 6% -2% -1% 0 1% -1% -6% 5% -10 -1% -8% -24% -22% -9%
Slide 8: Volume recovery across categories; E-commerce acceleration
Volume recovery across categories starting from May after the easing of lockdown measures. E-commerce acceleration outside travel and tourism Acquiring volumes by category1 Product category % change Y/Y Jan + Feb March April May June Last week rolling 2 Basic consumption 15% 13% 11% 13% 14% 14% +18%
Slide 9: SME volume share back to pre-Covid situation
SME volume share back to pre-Covid situation, broadly in line with 2019 Acquiring volumes – Large merchants vs SME Large merchants SME Physical volumes 48% 45% 44% 62% 47% 45% 50% 52% 55% 56% 63% 38% Pre-Covid Lockdown Last week Corresponding rolling1 2019 week1 E-commerce volumes 53% 55% 50% 37% 72
Slide 10: Progressive recovery of transacting merchants
Progressive recovery of transacting merchants across all categories, now similar to 2019 levels Weekly transacting merchants – Y/Y trend Basic consumption Generic/discretionary consumption High-impact consumption Total 9% 9% 9% 9% 10% 7% 8% 6% 7% 10 3% 1% -1% 1% 3% -3% -3% -4% -4% -3% -2% 0 1% -3% -
Slide 11: Consumer habits: acceleration of digital payments
Consumer habits: acceleration of digital payments in less affected categories Acceleration in digital payments volumes: Digital payments volumes for Italian consumer cards specific industries trend (y/y last four weeks rolling)1 net of high impact consumption2 y/y Pre-Covid Basic consumption Generic
Slide 12: 1H Business update: commercial activities back to more normal levels
1H Business update: commercial activities back to more normal levels with Covid-19 related accelerations Merchant Services & Solutions Cards & Digital Payments Digital Banking Solutions Commercial activity going back to “normal” pre- Commercial activities from banks gradually Progress on advan
Slide 13: Closing of ISP Merchant Book deal successfully executed
Closing of ISP Merchant Book deal successfully executed at the end of 2Q, despite Covid-19 emergency Key components of the transaction Key 2020 P&L Figures1: Incremental economics for Nexi Transaction completed on June 30th, 2020 with clean EU Antitrust approval €M Revenues: EBITDA: Net Income:
Slide 14: Focus on 1H20 Results
Focus on 1H20 Results od N VAL
Slide 15: Resilient business model with 50+% revenues not impacted by volumes
Resilient business model with 50+% revenues not impacted by volumes and 38% variable and semi-variable costs Revenues breakdown1 Operating costs breakdown1 Volume driven revenues Installed-base driven revenues Variable costs Fixed costs 9% 20% external processing 41% 64% 48% 52% 91% 38% 59% 62% 36%
Slide 16: Net Revenues affected by Covid-19 lockdown in 2Q; ISP contribution
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 Nexi standalone Margin – incl. ISP contribution ISP contribution ISP contribution 53% 55% -6.3% -3.9%
Slide 17: Merchant Services & Solutions: ~40% of revenues not impacted
Merchant Services & Solutions: ~40% of revenues not impacted by Covid-19 Net Revenues (€M) Managed Transactions (#M) Key Highlights Nexi standalone 51%1 ISP contribution International Schemes -17.2% Managed transactions and Value of managed transactions affected by -8.7% -18.9% extensive lockdown
Slide 18: Cards & Digital Payments: ~60% of revenues not impacted
Cards & Digital Payments: ~60% of revenues not impacted by Covid-19 Net Revenues (€M) Managed Transactions (#M) Key Highlights International 38%1 Schemes -5.3% Managed transactions and Value of managed transactions affected by -9.2% 1,260 extensive lockdown measures. 1,144 Progressive recovery sta
Slide 19: Digital Banking Solutions: marginally impacted by Covid-19
Digital Banking Solutions: marginally impacted by Covid-19 lockdown Net Revenues (€M) Key Highlights 11%1 2Q performance mainly affected by phasing of certain low margin banks-related projects. Expected -2.3% return to growth in 2H 55.9 54.6 Digital Continued roll out of new higher value advance
Slide 20: Strong costs reduction in the quarter
Strong costs reduction in the quarter to mitigate the financial impact of Covid-19 Total Costs (€M) Key Highlights -8.9% Y/Y Personnel Costs on a standalone Decrease in total costs (-21.7 €M) mainly driven by: Operating Costs -9.1% basis well progression on the announced 100+ €M 238.5 cash cost co
Slide 21: Progress on 100+ €M cash cost containment plan
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% 100+ Cost containment plan €M Volume-base costs Discretionary spending 55% Operating Expenses Transformation Costs 46% Capex In 2H20 Personnel expens
Slide 22: Continued investments in quality, innovation and IT transformation
Continued investments to support quality, innovation and IT transformation Capital Expenditure (€M) Ongoing investments (1H 2020): key examples FY19 Total Capex: 167€M FY20 Current Plan Transformation Capex 22 Total Capex: 125-135 €M Extraordinary Innovation: Open Banking Gateway & Corporate Banki
Slide 23: IT strategy progress now above 60%
IT strategy progress now above 60%. ~120 €M expected to completion Capital Expenditure (€M) Transformation Capex progress 53% 62% Transformation Capex for Extraordinary Innovation and Next Generation Platform deployment June 2020 ~62% program spend completed to date ~120 €M expected to complete
Slide 24: Transformation Costs down by 59% Y/Y in 1H20
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 17.2 10.6 8.8 -36.7 5.9 1H19 1H20 -42.5 1H20 ISP transaction Others incl. 1H20 Nexi non IPO costs 1H20 Reported Transformation related
Slide 25: Normalized Net Profit at 101.2 €M including ISP contribution
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 Y/Y organic 27.7 31.9 €M Others performance 42.5 -14% 13.1 101.2 42.5 43.0 64.2 18.3 10.7 1H20 EBITDA D&A Interest Non recurring Cash Taxes Reported Net D&
Slide 26: Cash Flow conversion at 77% including ISP contribution
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 Expense
Slide 27: Strong cash position; Net Financial Debt / EBITDA
Strong cash position. Net Financial Debt / EBITDA temporarily affected by Covid-19 Net Financial Debt (€M) Key Highlights June 20 Acquisition of the merchant acquiring business of ISP June 20 successfully financed by: June 19 Dec 19 Mar 20 incl. ISP Standalone 500 €M equity-linked bond placed in A
Slide 28: 2020 Guidance suspended; 2020 Ambition
2020 Guidance suspended. Ambition to grow EBITDA and EBITDA - Capex vs 2019, including ISP book organic contribution Previous Guidance1: suspended 2020 Ambition 2020 volume-driven revenues depending on speed of 5-7% annual net revenue growth over medium term, targeting recovery and dynamics by sec
Slide 29: Q&A
Q&A 29
Slide 30: Annex
Annex 30
Slide 31: P&L: including ISP contribution and Nexi standalone
P&L Including organic contribution from ISP Nexi standalone Δ% vs. Δ% vs. 1H19 1H20 Δ% vs. 1H19 2Q19 2Q20 1H19 1H20 Δ% vs. 1H19 2Q19 2Q20 €M 2Q19 €M 2Q19 Merchant Services & Solutions 267.2 243.9 -8.7% 140.9 115.1 -18.3% Merchant Services & Solutions 223.6 192.9 -13.7% 117.5 87.8 -25.3% Cards & Digi
Slide 32: Reported P&L vs Normalized P&L
Reported P&L vs Normalized P&L ISP merchant Normalized Reported Normalized Delta Reported vs Normalized Delta book 1H20 1H20 1H20 €M contribution incl. ISP D&A: D&A customer contracts Merchant Services & Solutions 192.9 192.9 51.0 243.9 Interests & financing costs: ~3 €M interest expenses on ISP Car
Slide 33: Investor Relations
Investor Relations investor.relations@nexi.it Stefania Mantegazza stefania.mantegazza@nexi.it 33