This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk03: be expanding from country to country, growing not only in one market, but many markets around the world. They may need additional functionality for pay-ins, they may need payer functionality, they may need more alternative payment methods, or they may need to simplify their technology stack. Whichever is the need, our customers end up requiring additional capabilities and consuming more of our flexible offering. And that's what's really powerful. It's what drives our strong net dollar retention rate. Our experience shows that as we add and deliver more solutions to our customers, it enables us to create relationships and grow with them. And that's what our business is all about, helping our customers connect with theirs. It's a foundation of our land and expand strategy. A perfect example of this is our recent work with longstanding customer Entain and their BenMGN partnership in which Nuvei assisted them with their pay-in and payout functionality in North America. And we see many such opportunities like this ahead. To the time of our IPO last year, we talked about having an under-distributed business model, which has been an area of investment focus. We've accelerated investments originally scheduled for 2022 into 2021, expanding our commercial teams globally. Today, our commercial team has more than doubled from the first half of last year, and we're extremely pleased with the talent that we brought on board. The team is making real contribution, and there's a lot of momentum, which is both very exciting and an important flexion point. We manage our commercial teams by having regionally vertically focused salespeople that are in country, in time zone, and in language, supported by a team of local solution engineers, integration specialists, and account managers. This white glove service is crucial to building relationships with our customers given the complexity and importance of the problems we are solving for them and the sophistication and capabilities of our industry-leading technology, which is unmatched in our opinion. The conversations with customers we're having today are so powerful because we're not just talking about simply helping them with acquiring. We're talking about helping them with our vast solution set that is purpose-built specifically for their verticals and their geographies. In our opinion, we're only one of the few industry participants capable of this. Alongside our investment in direct sales is our increased investment in marketing, account management, and corporate development. Enhancing our brand awareness is translating to increasing and more frequent engagements with large growing enterprise customers we wouldn't have spoken to within the past. Our pipeline has never been deeper and the team is engaging with really the who's who in the verticals in which we operate and we're starting to see the results with our recently announced wins. We have a lot of momentum that's building and it's very exciting to see what's happening across all our geographies and further strengthen LATAM with the addition of payment TANs. I'm really proud of what the team is doing. Our success is built on our reputation, our delivery, and our focus. We expect more good things to come. Turning out to technology innovation, this year's third quarter was without exception the most significant quarter for solution deployment, offering meaningful opportunities, including TAN expansion, growing discussions with customers, and servicing new geographies. Let me highlight five key innovations for this quarter. First, we launched Card Issuing in Europe, a brand new line of business that further expands our product offering and solution capabilities to our customers in the region and presents an exciting incremental market opportunity for future growth. Second, we launched Visa Direct and MasterCard sent payouts in North America, further expanding and enhancing our suite of real-time payment options, fully reconciled and net settled to the customer. Our payout offering is integrated into the flow of funds, meaning we offer net settlement to the customer after reconciling the funds collected, paying the disbursements, and subsequently net settling the customer. This is critically important in simplifying customer operations when considering the multiple types of pay-ins and the complexity associated with driving instant or near-instant payouts so our customers create stronger relationships with their customers. Today, we offer one of the industry's most robust suites of digital payout options in both North America and Europe. Third, we've added more than 50 new alternative payment methods since the beginning of the year, increasing our portfolio of alternative payment methods to more than 500 at the end of the third quarter of 2021, allowing our customers to operate in more countries and accept more forms of regionally familiar and preferred digital payment methods in order to drive higher conversion rates. Fourth, our platform is fully live, supporting US online gaming, an incredible team effort. Today, we offer the most comprehensive payment acceptance, payouts, alternative pay methods, and integrations for U.S. online gaming and sports betting operators. Many of you heard me talk about crawl, walk, run. We're definitely walking now. It's still early innings, though we recently announced some exciting wins, including BetMGM, 888, Sports Illustrated Sportsbook, Carousel Group, among several others. Finally, we made the investments to continue scaling our technology to offer no latency, minimal downtime, and burstable capacity to support our customers' future growth. In the third quarter, we achieved record transactions per second of 325 compared to our previous record of 222. Turning now to M&A, we completed three acquisitions in the third quarter, including the Zuma, Simplex, and PaymentTest. While not currently material to our results, each of these early-stage companies has significant capabilities and momentum adding exciting breadth of products and expanding both region and market opportunities for New Day. As a brief reminder, Azuma enhances and expands New Day's portfolio of North American payment options with instant bank-to-bank payments for pay-ins and payouts and real-time payments for accelerated withdrawals. allowing our customers to provide their customers with instant and immediate payouts into the bank accounts 24-7, 365. Mizuma is seeing exceptional momentum with monthly bond growth for September up 25% over August. Combined with Nuvei, Mizuma is an integral part of our North American payment offering, and we're excited to see momentum there continue. Simplex extends Nuvei's capabilities to offer bespoke fraud prevention, and risk management tools backed by proven artificial intelligence technology, resulting in higher conversion rates and better liquidity, simplifying instant fiat purchases for cryptocurrencies, NFTs, and decentralized finance providers. We are prioritizing Simplex as a risk as a service and intend on offering our expanded solutions to all our existing customers. Similarly, we are introducing all the new base product solutions and capabilities to Simplex customers. And payment as, further increases our total addressable market by significantly expanding and strengthening our presence in Latin America. Hence, our regional processing capabilities enables us to support additional local payment methods and ensures we are well positioned to service new and existing global customers in this fast-growing region for online commerce. What's important to recognize about our M&A strategies is our focus on strengthening and broadening our product suite by adding unique and valuable capabilities to our already extensive solution offering for our customers that are relevant to their industries while also looking for regional market expansion opportunities, further extending our leadership position. Let me highlight that we have an exceptionally strong balance sheet allowing for flexibility as we explore future opportunities. With respect to global concerns over supply chain constraints, we haven't seen nor do we expect to have any impact on our business. Our customers and verticals are predominantly digital and as such are insulated from the recent supply chain constraints. For our physical good customers, we see wallet share expansion offsetting any potential slowdown. Given the solid results and the momentum we are seeing quarter to date, the depth of our sales pipeline, acceleration of investments and distribution, introduction of new product capabilities, and expansion to new geographies, we are raising our financial outlook for 2021. We are also reiterating our medium and long-term targets previously provided. Before I turn the call over to Dave, I'll repeat how incredibly pleased we are with our results, driven by the execution of our strategy. We're extremely well positioned as a company for the opportunity ahead. We believe it's early days and we're still very much on the ground floor. As always, I want to recognize and thank all my colleagues who contribute to our success each and every day. I also want to wish you and your families the very best as we approach the upcoming holiday season. With that, I'll now turn over to Dave to discuss the financials and our updated financial outlook for 2021.
spk04: Thanks, Bill, and good morning, everyone. We are pleased to report another strong quarter. Our performance continues to be driven by our team's focus on executing on our strategy. For the third quarter, total volume increased by 88% over the same period of last year to $21.6 billion. We are very pleased with the growth across all four regions. North America and EMEA, which represent 95% of our volume, we experienced strong growth of 118% and 62% respectively. Both of these regions also represent meaningful growth opportunities for us due to their market size and TAM expansion in our verticals. In the emerging markets of Latin America and Asia Pacific, volume grew 93% and 140% respectively. However, these regions represent significant opportunity for us on a combined basis as they account for only $1 billion of total volume for the quarter, which is less than 5% of our total volume. With the addition of Paymentes, we now have a meaningful beachhead within Latin America, which we expect to further fuel our growth in the region. The strong total volume performance in the quarter resulted in revenue growth of 96% to $184 million. As we have noted previously, total volume and revenue may grow at different rates, depending on the relative mixes within each. We are focused on solving the needs of our customers. Ultimately, this drives additional volume on our platform, resulting in incremental gross profit dollars. Due to the scalability and leverage in our operating model, This provides for the potential for increased profitability. Gross margin in the third quarter was 79.2% compared to 81.9% in the third quarter of 2020. The change in gross margin is as a result of the inclusion of certain acquisitions which have a higher associated cost of revenue. The increase in selling, general, and administrative expenses is as a result of both inorganic and organic growth. We continue to invest in the business, including in distribution and technology. We believe these investments will continue to drive our growth. Adjusted EBITDA increased by 97% in the third quarter to $80.9 million. Adjusted EBITDA margin was 44% in the quarter compared to 43.7% in the prior year period. Net finance costs decreased by $95 million, primarily as a result of $83 million in non-cash finance costs in Q3 of 2020, resulting from the IPO in September last year, as well as the reduction in debt since that time. Net income for the quarter was $28 million, or 19 cents per diluted share, compared to a net loss of $78 million, or 88 cents per share, in the third quarter of 2020. Adjusted net income was $62 million, or $0.42 per diluted share, compared to $16.5 million, or $0.17 per diluted share, in 2020. Our cash position and cash generation remain strong. Operating cash flow for the nine-month period was $202 million, compared to $49 million for the comparable prior period. As of September 30, 2021, We had cash of $289 million, while amounts outstanding under our credit facilities was $512 million. Our balance sheet remains solid and does not reflect the impact from our US IPO on October 6th, which resulted in net proceeds to the company of $411 million. Furthermore, our $385 million revolving credit facility remains undrawn, providing us with flexibility as it relates to our M&A strategy. I will now discuss our financial outlook for the fourth quarter and full year 2021 and will refer you to our forward-looking information disclosure in our Q3 earnings press release and our MD&A. For the fourth quarter, we expect total volume of between $25.5 and $26.5 billion, revenue of between $204 and $210 million and adjusted EBITDA of between 86 and $90 million. And based on our performance for the three and nine month periods ended September 30th, 2021, as well as continued momentum in the business, we are raising our full year outlook and now expect total volume of between 90 and $91 billion, revenue of between 717 and $723 million, and adjusted EBITDA of between $312 and $316 million. The updated financial outlook for both the fourth quarter and full year include the recent acquisitions of Mizuma, Simplex, and Paymentez from their respective acquisition dates. As Phil mentioned earlier, while not currently material to our results, each of these early stage companies adds to our solution set and expands regional and market opportunities for us. The outlook, specifically the adjusted EBITDA, reflects our strategy to accelerate our investments in distribution, marketing, innovation, technology, as well as the infrastructure resulting from the acquisition of Mizuma. We are also reiterating the medium and long-term growth targets we disclosed last quarter of total volume and revenue growth in excess of 30% annually in the medium term and adjusted EBITDA margin greater than 50% over the longer term. We're very excited about the remainder of this year and what lies ahead for Nuve. We're now happy to answer your questions. Operator, please open the lines for Q&A.
spk08: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start keys. One moment please while we poll for questions. And our first question comes from the line of George Mihalos with Cohen. Please proceed with your question. Hello, George, are you there on the line? Your line is live if you're there. Not sure if you're on mute. Okay, if George is not on the line, I believe we can just go ahead with the next question. Our next question comes from the line of Sanjay Sakrani with KPW. Please proceed with your question.
spk05: Thanks. Good morning, and congratulations on the listing. I guess my first question is the organic growth. Obviously, you guys have been doing quite well there, tracking well above the 30 percent long-term targets. Can you just talk about how the M&A strategy is sort of feeding into the organic growth, if any, and I understand the newer deals are going to help, and then how well you're set up in the future to sort of outdo those expectations as we've seen prior. Thanks.
spk03: Good morning, guys. Yeah, thank you. So on a performer basis, we saw 54% growth in the quarter. When you unpack our M&A strategy, we've been very clear to always look at how do we enhance our capabilities? How do we grow our geographic presence? And how do we add scale into the markets that were subscale? And we have executed on that. When you look at the acquisitions that we closed this quarter, Mizuma, which we've talked about in the previous quarter, the bank to bank payment opportunity that we expand from a acceptance capability to our customers, we think is critical in terms of wallet share opportunity, in terms of flexibility, as well as offering to our customers. While it's early stage, we believe Mizuma will play an important part to our U.S. growth story. The same is true for Simplex. When you look at Simplex's risk as a service, it expands our solution stack and our capabilities to our customers, which today they may be using a Riskified or a Forwarder or other where we can provide greater capabilities to them through the single integration. And then turning over to Paymentez, a wonderful team in LATAM where we felt subscale, great leadership that we've added and really focused on building out our merchant record opportunities and expanding throughout the region. So all of them today are early stage, but we believe for the upcoming years they give us a wonderful platform for continued organic growth.
spk05: Got it. And then when we think about any potential M&A going forward, can you give us a sense of sort of what the flavor is for some of the high priorities that you're looking to add to your arsenal in terms of products? And then David, just one quick clarification question on the revenue guidance range at that midpoint. It seems like none of the deals that you guys closed is very incremental, materially incremental. Is that fair? So we should think about that organic, the revenue guidance range is organic? Thanks.
spk03: Yeah, I'll take the first one, Dave. On M&A side, important for you guys to appreciate, we're not solving growth issues with our M&A strategy. We're really looking at capabilities to help our customers connect better with their customers and And that is driving us. We look at regions today, very pleased with what we are doing in Europe, Americas, and Latin. We believe we're subscale at APAC, so certainly has some geographic opportunities for us there. But in reality, with our strong balance sheet and the profile of our business, we have tremendous optionality. And we want to remain entrepreneurial, and we want to really follow our customers into the regions that are important to them. But we will continue focusing on really enhancing that wallet share expansion opportunity, and that will drive our M&A strategy if needed and if at all.
spk04: Hey, Sanjay, on your second question, I think that's right. I mean, the way to think about it, and Phil talked about, these are really early-stage acquisitions. So from a contribution perspective, they're still in kind of the early stages. And, you know, the 54% organic growth that Phil mentioned I think is a good data point. I think I'd also point you to, you know, the medium-term growth targets of 30%. That's also a good data point. So I think that brings it. The acquisitions really, for the most part, provide capabilities that will, you know, be very interesting in the near term as we kind of integrate those businesses into ours. And then they also open up, you know, other markets. So from a TAM perspective, it really helps as well from a geographic TAM perspective.
spk05: Great. Thank you. Thank you.
spk08: And our next question comes from the line of George Mihalos with Collin. Please proceed with your question.
spk14: Hey, good morning, guys. Apologies. I got disconnected. A lot of good stuff here that you went over. I guess first question, you know, Phil, when you look overall, you know, some of your peers have talked about, you know, some slowing, some have attributed uncertainty to the supply chain, which sounds like it's not a real big issue for you. Can you just talk a little bit about your confidence? What sort of reinforces this view that you're going to be able to outperform relative to some of your peers that are seeing these issues? And maybe somewhat related to that, you've been very successful incorporating more and more APMs, different payment methods and the like. As we hear about, you know, potentially additional new payment methods coming to market, I guess, you know, account to account is not necessarily new, certainly not in Europe. But as you have other peers or competitors looking to roll out new payment systems, does that give you any pause? Do you think that would have any impact to your business? Or is it just as simple as, again, you just enabling another payment tender?
spk03: Yeah. Morning, George. Great questions. I think from a growth perspective, you have to really unpack our solution stack. And what gives us confidence really are the tools that we built and the pace of innovation that we're driving through. and how we're assisting our customers and that allows us when we look at pipeline, we look at conversions, we look at market expansion from our current customers and how we're bringing them from country to country, that drives quite a bit of confidence in our execution and hence the results that we're seeing today and the updated outlook for Q4. So we're really comfortable in where we are. We think the additions that we've made in the business, be it risk as a service, strengthening LATAM, you know, expanding a merchant record product capability in LATAM, which would be really important to simplify our customers from entering the market. And then certainly Mazuma for direct banking, fully integrated and within the cycle of card payments, debit card payments, direct bank to bank, guaranteed or not, or ACH, fully reconciled, managing payouts, and driving those capabilities is what sets us apart. And I can't comment on our peers, but I believe our focus on verticals mean that we're creating bespoke technology for our customers is what really sets us apart as well. We're not selling and helping merchants sell teacups and helping online gaming. We're really focused on our seven verticals and we are leaders within those verticals and we think that is the right strategy. When it comes back to payment methods, it's a very interesting question because payment methods are naturally changing. Our ethos is to help our customers connect with their customers and so we will always have every relevant payment method for the country That is a medium that is familiar so that the customer, when he wants to purchase from one of our customers, sees what he knows and he recognizes to streamline that purchase. And so when you look at, you know, be it SIPA, which we just announced, or real-time payments that we just announced in Europe as part of our Q4 launches, we're always going to be making sure that everything that is relevant, any form of connecting with our customers, customers will be provided within that single integration. But more important to that, is that we unify the experience. And that's very critical, guys. When you think about all the complexities, they pay differently, they reconcile differently, they pay in different currencies. From our merchant's operating standpoint, we streamline that so it's as if accepting any form of payment, really. You know, credit, debit, ACH, alternative payment method. Really, the entire experience for them from the back office is fully reconciled. And we think that is the most important part to making sure that they focus on what's important for them, their business.
spk14: Okay, that's great, Collin. I really appreciate that. Obviously, we're getting questions around that. And then, David, very quickly, I know you guys obviously don't manage to a revenue yield and the like, but that was higher than what we had modeled in the quarter. Just curious what drove that. Is it the inclusion of Simplex? And it looks like Simplex contributed a little over $3 million, $3.5 million or so in the quarter, say, over a month. Is that a good –
spk04: number to kind of extrapolate for uh for a full quarter kind of you know getting you almost a 10 or 11 million dollars a quarter yeah hey george um i think that uh on the simplex question on the last question yeah i think that's a fair representation um of kind of where you know where the business is at but obviously brings a lot of capabilities and opportunity for growth in the future in terms of yield and take rate you know like we've said in the past It's not a focus of ours. I think really what it comes down to is execution on our strategy. I'd say that's really kind of what I would point to. But it's going to, as you've seen, there's going to be fluctuations. Some quarters it may be up, some quarters it may be down from a take rate perspective. It's really about the mix of volume and offering. To the extent that we add, you know, Phil talked about earlier in the prepared remarks, he talked about This is a very significant quarter in terms of innovation and deployment from a technology perspective. As we can continue to innovate and expand our solution set, that potentially drives take rate on either new volume or existing volume. It really depends on where it all comes from. At the end of the day, what we've said, and it's true, we're really out there to solve the needs of the merchant. Our platform is of a certain scale and has that operating leverage. It drives gross profit dollars, and those gross profit dollars can drive EBITDA dollars as well. That being said, we continue to invest in our business, whether it's marketing and technology and direct sales. Those are some of the key focuses right now. So hopefully that gives you a bit of color and answers your question, George.
spk14: That's great. Nice job, guys. Thanks.
spk04: Thanks, George.
spk08: And our next question comes from the line of Bob Napoli with William Blair. Please proceed with your question.
spk16: Good morning, Phil, David, Anthony. Congratulations, strong results on the U.S. listing. The crawl, walk, run, Phil, it seems like you're gathering speed from the crawl to the walk to the run in U.S. sports betting. I'd love a little more color. You've got a lot of wins. there and what you think that, uh, opportunity, you know, kind of the momentum you have going into 22 and 23 and how important that is to contributing, you know, it can contribute to a long-term growth.
spk03: Yeah. Thanks Bob. You know, we've, we've always taken a cautious approach on us gaming. I want to first congratulate our team for what was achieved this past quarter, just a monumental delivery of product to enable gaming. And that has allowed us to engage really with the who's who across the board from current customers that are looking to expand, from clients that are operating, that are looking at their entire payment ecosystem, and more importantly, in terms of the flexibility of our product offering and the fully integrated experience on multiple forms of pay-in, reconciled, and payouts. I believe we have a very, very strong offering for U.S. gaming, and that's why we're walking today We've had some significant successes this quarter, Q4, that we're seeing some very interesting momentum in. But from our perspective, U.S. Gaming will remain not quite material in 2022. We think we'll see an inflection point in 2023. But most importantly, though, we are live, we're executing, and we are engaged today with the who's who in U.S. Gaming. So really pleased with where we sit right now. Thank you. Appreciate that.
spk16: Just on monthly, it seems like a number of payment companies had slowdown in September and then seemed to reaccelerate in October. Have you seen similar trends? How did October look versus September? And then just my last question on card issuing, I thought the new product line was pretty interesting and the thoughts around the opportunities and card issuing.
spk03: Sure. Yeah, from a volume standpoint, it was the opposite for us. We saw a softer July with an uptick in August and September and certainly continued momentum into October as well as, you know, month of November. You know, from a volume perspective, it's really exciting to see what's happening across our portfolio. You know, in the quarter, There are two integrations on ACH side that slipped into Q4, which have since activated. So we're very comfortable with what we see on the volume and the momentum. For card issuing, there's a lot of platforms for us around card issuing. So it's still early innings. We have less than 100,000 cards issued. So we're starting that process today. It's predominantly Europe, but obviously we have a roadmap to bring that into all of our markets. And most importantly, it allows us to offer merchants flexibility with respect to expanding our payout business, simplifying and boosting costs for the pay-in and creating relationships with these customers across key verticals. So we're actually really excited about what card issuing does from a product offering perspective and the uniqueness that we think will create. And then if you take it one level higher, all your pay-ins, all your risk management, all your transaction authentication, enhanced authorizations, as well as all your payouts and card issuing we've become a really sticky vendor to our customers and a critical vendor that allows us to help them focus on what's important to them growing their business. So we think card issuing is an important aspect. It's obviously very early for us, but we'll start gaining momentum. Predominantly, it'll be probably more meaningful in 23, but we'll start seeing some momentum in 22. Great.
spk16: Thank you. Appreciate it, Phil.
spk08: Thanks, Bob. And our next question comes from the line of Jason Kupferberg with Bank of America. Please proceed with your question.
spk02: Thanks, guys. Good morning. I just wanted to start by asking about the push into Latin America and how much of that is focused on building a cross-border business in that region versus any kind of domestic acquiring. And on the cross-border side, do you see the opportunity more to bring your existing merchants into the region or to actually win new global merchants who perhaps are using a different provider currently for their LATAM payments?
spk03: Hey, Jason, great question. for us we when you look at latam it's the same for every geography you know the first element that drives us is how do we help our customers enter or operate within that market so first naturally is taking our customers that are born elsewhere entering you know as as we look at payment des now we also have feet on the ground which allows us to engage with clients that are in market and last time obviously every every country has different you know turn payment method requirements and different issues around how merchants accept and how they transfer funds from country to country. So it will be in market. And then lastly, it's going to be LATAM out, meaning helping some of these amazing companies that we service now, be it RAPI or CABI and others within the region as they seek to expand outside of LATAM. I think the biggest element for us in LATAM is the merchant of record product, you know, that some of our peers do very well. We think that is going to be critical in terms of simplifying the complexity of operating in LATAM. be it from tax considerations or repatriation considerations. And we think it's going to be an important push for us to continue developing in the region.
spk02: Okay. Thanks for that. And then I just wanted to ask a follow-up on payment volume in the quarter. I think it came in kind of near the lower end of the guidance range. I was just curious if there were any call-outs there. I think you had mentioned in answering a previous question some slippage in ACH activations, a couple of integrations there into Q4, so I don't know if that was a factor or anything from a vertical perspective.
spk03: Yeah, that actually is the exact factor. There is some expected integrations which slipped from August to October 1st, so they have since gone live, and that was the rationale for a slightly lower volume, but overall we're really pleased with Q3. Okay, just a timing issue then. Okay, terrific. Thanks, guys. Thanks, Jason.
spk08: And our next question comes from the line of Joseph Fafi with Canaccord. Please proceed with your question.
spk07: Hey, guys. Good morning. Nice results. Just wanted to drill down just a little bit more on Simplex and risk as a service relative to exactly what Simplex is bringing versus what you had before, and then how Simplex perhaps helps on the gaming side versus some of the other vertical markets and then just one quick follow up.
spk03: Good morning, Joe. Yeah, happy to. If you, if you look back at simplex today, they bridge the Fiat world to the digital asset world. Um, so their risk as a service and guarantee, um, effectively underwrites, um, the customer purchase guarantees the funds. So there could be instant delivery of any digital asset, which is really important. We can think about the frictions between a Fiat and receiving a digital lesson in real time, which could be handled with fraud. And they do a fantastic job, really second to none from a profile perspective, a conversion perspective, and from an ease of use perspective. So really excited of what they've had. They've been predominantly focused on digital asset. From our perspective, you know, this risk engine is probably one of the best that we've seen. And we are building it out as risk as it's risk so we can offer to our customers across every vertical, you know, the ability to score transactions and the ability for us to assume risk on those transactions should that be the desire. It's going to be across the board, not just for gaming, it'll be across the board as another value-added solution that our customers may choose to use from the bank.
spk07: That's great. And then just on the organic growth, can you just update us on, which is still just really impressive, Where, you know, just maybe a little bit of a breakdown there between just kind of core payment volume growth with existing customers versus, you know, add-ons of new functionality into the base versus kind of brand new logos. Thanks a lot.
spk03: Yeah. We really do love Joe Kiss, right? So for us, we love to keep it simple and, We see momentum across the board eventually because our performance is driven by our customers. A significant portion of the growth comes from expanding relationships with our customers and expanding geography or capabilities, which we are truly focused on, and connecting the customer with their product roadmap so that we can adhere to where they're going, what they need, and how to help them do so. So that is part of the fabric of the organization. From a new logo perspective, we've been making meaningful investments and highlighted that through my pair of remarks. But the deepest pipeline, the most active discussions that we've had across the board are really the who, the to, and the verticals that we operate in. And both of them are showing tremendous momentum. Highlighting new logos is we sign them in a year. In most of our history, when you sign a customer, it typically takes several months for them to activate to go live. So you really see the benefits of what you do this year. You garden in-year. You see the benefits next year. When you look at what we sign is being implemented and the depth of the conversation we're having today, really excited about continued profile for organic growth.
spk07: Great. Thanks a lot, Phil.
spk08: And our next question comes from the line of Paul Treiber with RBC Capital Markets. Please proceed with your question.
spk15: Thanks very much and good morning. I'd like to speak about the philosophy around press releases and customer wins. It seems like the company has been more active in press releases and customer wins. The philosophy, did that change or are you seeing a higher frequency of customer wins at the moment?
spk03: Great question, Paul. Actually, a little bit of both. We've always been head down on executing. I think marketing and positioning has been an area that the company lacked. We welcome the chief marketing officer and we are making investments across the board in marketing. You'll see the pace, a refresh of our brand, the pace of marketing, making sure that we are top of mind and strengthening our brand awareness for our salespeople as they continue expanding the geographies that we operate in.
spk15: a little bit of both uh i'm certainly in an area that we uh we are going to be making additional investments in q4 and in 2022. that's helpful to know the um just in regards to the salesforce expansion in your and your sales pipeline can you speak to the trend that you've seen in win rates particularly as you know the sales force has ramped up you know become more familiar with your your target customers and your value proposition
spk03: Yeah, great question. I think it's more important to take it one step further from win rates is that you engage with customers and some conversations could last years, Paul, and some conversations could last weeks, really just depends on where they are. And so the way we end up looking at it is obviously what is closing in a particular quarter and what are the needs and discussions for particular customers. So we focus on large established customers, meaning that we are often replacing or coming next to another payment provider. And so it always depends on what the need is and what country they're going into and what they're looking at from a solution standpoint. So it's not just a win or loss. It's a discussion. And that probability of close changes depending on the roadmap of where that customer is. For example, I'm entering the United States in October. Oh no, it's going to be next November. That is not a loss. That's just a dependent on when that customer goes live. So that's the first element. The second element is we actually build it by revenue metrics per body. And it takes, it takes between six and nine months from the onboarding to start seeing positive momentum in each individual, uh, folks that we have around the world. We are at that point right now. So it's exciting to see, um, you know, the expansion of the pipeline and the conversation that we're having and, and really the productivity of the workforce. And I think that's what excites us quite a bit of what we're seeing, um, in, in all the geographies that we're operating to the conversations and productivity. and the presentations that we're doing. So like what we see, we're kind of in that first year inflection point, and I highlight in the prepared remarks it's an important inflection point because really of, you know, the time that the sales force has been active and the opportunity they're assigned to present themselves.
spk15: Okay. Thanks for taking my questions. Thanks, Paul.
spk08: Our next question comes from the line of Paul Steep with Scotia Capital. Please proceed with your question.
spk12: Great. Morning. Just a quick clarification on some of the investment commentary and what's baked into Q4. David, maybe you could talk a little bit about how much this is you accelerating the plan or pulling forward investments you were going to make next year based on what you've already seen with customer wins. And then I've got one very quick follow-up.
spk04: Hey, Paul. Good morning. Look, consistent with what we've said in the past, we're seeing really strong momentum in execution on our plan. And so what we decided last quarter was to pull forward some of the investments that we had planned for 2022 with respect to direct sales and other areas. Marketing is a new addition in terms of the investments that we're planning to start implementing more so in the fourth quarter of this year. So it's really no significant change, I'd say, other than a bit more focus on marketing as we have our chief marketing officer join. We're really excited to have him on board. So that's, you know, that would be the only, I guess, incremental consistent with, you know, what we've said in the past as well from, you know, how that translates to an EBITDA margin. You know, we're still in this quarter, we're at 44%. That's, you know, the right range. And that's kind of what we're providing outlook to for Q4. So very consistent overall with the past. But we will, you know, continue to take the incremental dollars we're seeing from a top line perspective and reinvest it back in the business, you know, to capitalize on the success that we're seeing.
spk12: And then, not to pull us too far forward, but we're going to lap some exceptionally strong organic growth that you printed in Q4 of 1 and 2 of this year. I think Phil's comments gave us good sense for the mix and some of what you're assuming out of the supply chain. Is there anything we should think about just in terms of ramp-up of these new customers or sort of variability that we want to be aware of as we lap some of those comps? Thanks, guys.
spk04: I don't think there's anything specific, Paul, to point to. There's certainly ramp up time for customers, but that's normal. That hasn't changed or elongated in any way. In fact, we're getting better at it, if anything. And then the other part is as well on the direct sales team. Phil just mentioned on the previous questions around the six to nine month ramp up to get direct sales going. But yeah, we're very excited with the momentum we're seeing. We're very excited about the white space that we have in front of us. Some of the increase in TAM, you think about payment as in Latin America and what that does there. Although small today, we see a lot of opportunity. And then some of the capabilities provided to us through the other acquisitions, Simplex, Mizuma, there's a nice opportunity ahead of us, both from a capability perspective, but as well from a geographic perspective.
spk12: Thank you.
spk08: Our next question comes from the line of Timmy Giotto with Credit Suisse. Please proceed with your question.
spk10: Great. Thank you. Thanks for taking the question. I want to spend a little bit of time related to slide nine in the slide deck, which is you released a month or so back with some great new logos that I don't believe you had previously disclosed before that. And I'm sure investors are taking note of many of those brands on there. But it kind of brings up another question. I think we've covered a lot of the modeling stuff on the call. Maybe we could just talk a little bit about just sort of reeducating in terms of the share with some of these customers and bringing it to life. These types of customers, these big brand names that we know, are they often working with numerous local and regional merchant acquirers, maybe a few of your more global competitors as well? And when you're winning these logos, Is the RFP process opened up for maybe a certain region or a certain product? Maybe just bring it to life in terms of how you win these logos. And then related to that, I know it's really hard to get to, but on an aggregate basis, could you just directionally talk about how penetrated you might be within this space?
spk03: Good questions. I think, Tim, it's very much all of the above. It really just depends. I think when you look at it from a foundation perspective, these customers are typically operating regionally. They outgrow the regional provider, and then they look at how can a company like Anuve help me globally? And I think that's the entrance of where we come in. We compete mostly with the regionals that cannot service their customers. What's differentiating from our integrations versus some of our global peers is that we're able to dismantle the payment flow and drive a bespoke integration that makes sense. Meaning that we can still, they can enable our technology, but they can use the regional provider if they have cash management or other relationships with that particular regional provider. And then they can use us around the world. I think when you end up looking at global e-commerce, most large customers have a two or three acquire strategy and They pick them based on either region, if it's right for them, or globally. And we've seen kind of all of the above. And do they go through RFP processes? The bulk of them go through RFP processes, yes. And when you think about winning these logos, the interesting thing about Nuve in terms of our landing span is we may come in to help them on a very small part of the relationship. We may help them for alternative payment methods. We may help them with risk management or gateway. And that allows us to grow with them over time. And that is exactly what we do. If you look at kind of our structure from onboarding, relationship management, we hear two things, right? Obviously, if we're gatewaying, we'll see the volume. And then anecdotally to the payment managers, we get a sense of how penetrated we are. And we, right, if you look at our growth, really comes from aligning the product roadmap, growing with our particular customers and expanding wallet share. And what's fun for us, and I think this is really the biggest point, is because, you know, there's a lot of white space and we are now expanding our sales momentum, many of these logos have started smaller with us and have grown with us. And so there's more upside for us in most of these logos than there would be for others where they're at risk at loss and we're at, you know, opportunity for gain. And that's why the product, right, the capabilities that we bring and the fact that we're highly differentiated from most of the global enablers, we think that puts us in a good position to be able to expand the wallet share with these customers over time.
spk10: Okay, excellent. Thanks a lot, Phil. It's really helpful. A follow-up, and this is just more mechanical. I'm not asking for the numbers related to it, but we often get this question from investors, and the answer is different depending on the merchant. It's depending on the merchant acquirer and how they price things. Sometimes things are bundled, and it kind of comes out in the wash. But for a buy now, pay later button on one of your merchant's websites for where that does exist, Are you charging a gateway-like fee on top of that, maybe a little bit of a markup? Is there a spread that you can put on top? Is it blended as part of a broader pricing strategy for that client? In other words, what are the mechanics for earning a fee on a buy now, pay later transaction on one of your merchants' websites?
spk03: Right. So if you, if you look at it, um, we've integrated Klarna and I think we have, uh, we have one other that we've launched. Um, it's not a hundred percent material for the verticals that we operate in. Meaning you're not going to buy now, pay later on a gaming operator or social game. Um, it is probably more relevant for, um, you know, goods and travel, but from our perspective, we integrate it. Um, it depends on the economics that we have with the vendor. Sometimes we receive a commission back to their vendor, but most of the time we just connect. Um, we built the workflow in our cashier. and we may receive a transaction fee for it. So it's not material.
spk10: All right. Thanks a lot for that call. I really appreciate it.
spk08: Thanks, Tim. Our next question comes from the line of John Davis with Raymond James. Please proceed with your question.
spk09: Hey, thanks. Good morning, guys. So I just want to talk a little bit about the investment. You've highlighted several times how you've pulled forward investments from next year into this year. But I, you know, assume that you will continue to pull forward investments in 23 into 22, you know, yet you continue to kind of have upside to the margin. Every quarter you've given the 50% plus, and I'm not looking for a timeline on that, but should we expect the margin to continue to kind of be around these levels, you know, maybe in the more medium term as you continue to pull forward those investments for growth?
spk03: It depends, John, on the marketing spend. That's why we want to give you guys, really look at the outlook. I think for us, below 40% as we continue expanding our spend in both sales, corporate account management, and marketing, we feel technology, we're comfortable with the investments that we've made. It really just depends on that spend. We are under-marketed, guys, as we have been under-distributed. We think that's a wonderful opportunity to build a brand out. So I would guide you back to what we've put out there, low 40s, you know, post-investment period for it to scale up over the longer term to 50 plus.
spk09: Okay, great. And then just one quick one on M&A. You guys have done, you know, a handful of these kind of more tuck-in deals that give you capabilities or get you into a new geography. But just wondering if you'd talk a little bit about the willingness to do maybe something larger and, you know, maybe comments on the pipeline. Are you looking at things larger? Has pricing been something that or valuation has been something that's turned you off. Just curious kind of update there on the willingness to do something bigger.
spk03: Yeah, I think the answer is yes. I mean, we have a really strong balance sheet, John, that gives us a tremendous amount of flexibility. I think what's different for us than some of the peers is that we're not solving for growth issues. We just want to help our customers and be leaders in the verticals. So if we find an amazing business that operates within verticals of interest, predominantly digital for us, Um, that, that is a creative to us, uh, that, that has similar culture and opportunity for us to continue driving value for our customers. The answer is yes, we'd be willing. Um, we, we have focused more on capability just because we have so much momentum. And we are looking to make sure that we create a unique offering. And if you look at where we sit today and you look back to where we were one year ago, right, we've truly, you know, differentiate our product capabilities with the acquisitions that we've made. We're really, really pleased with what we found. And we want to continue that as well. So, you know, the short answer is we don't have to do anything. We have a really, really strong balance sheet. If we find something that is exceptional, we would be interested in learning more about it. Otherwise, we have plenty of flexibility.
spk09: Okay. Appreciate all the color. Thanks, guys.
spk03: Thanks, John.
spk08: Our next question comes from the line of Todd Copeland with CIBC. Please proceed with your question.
spk11: Great. Good morning, everyone. My question was also focused on the enterprise success you've had so far. I thought it was notable you called it out last quarter. You clearly talked a lot about it today. Phil, I'm wondering if you can talk about where some of those share gains are coming from and any color on the market share Nuve is taking and who it's coming from. Thanks a lot.
spk03: Todd, great question. I think at the end of the day, you have to really look at what we're offering. So the share can come that we're able to provide a more holistic solution. They may be coming from new products and services. It may be coming from geography. We compete really heavily with regional players, and certainly there's a handful of global players, but we do think we're the leaders in the verticals that we operate in. And when you end up looking at the verticals that we operate in, there is a tendency now more than ever to go from market to market, geography to geography, and those customers themselves are seeing really interesting tailwinds. And if you put it all together, you have expansion of TAM in our customers' verticals, expansion of TAM because of the products and services that we're offering, expansion of our revenue profile with our customers as we're adding more geographies, And I think the fact that we're winning more all comes together in terms of what you're seeing in our results.
spk11: Thanks, Phil.
spk03: Pleasure. Thanks, Tom.
spk08: Our next question comes from the line of James Fotheringham with Bank of Montreal. Please proceed with your question.
spk13: Great. Thanks. Most of my questions have been asked and answered, but just one more. I wanted to know the impact of these acquisitions on your outlook for the take rate. And I realize you don't manage to take rate, and I realize we might be talking on the margin, but if you take these acquisitions in aggregate and in isolation, are they accretive to your go-forward take rate? Thanks.
spk03: James, you can't piece them apart like that. And that's something that we've always been stressing is that we come to emergence with total solutions. And if you want to look at, for example, Mizuma today for U.S. gaming operators, and really every opportunity in the U.S., where our peers are targeting acquiring only, or they're doing payouts only, or they're doing ACH guarantee only, or they're doing direct bank-to-bank only, Nuve comes with a holistic solution, being able to price, singly price on all, meaning that we replace four or five different vendors, and that's excluding all of our other value-added services. So you cannot look at them individually, you have to look at them combined. And I think that's really the powerful of the product offering. When it comes back to take rates, today in Zuma and payment tents have lower take rates.
spk13: Thanks so much, Phil.
spk03: Thank you.
spk08: All right, next question. The question comes from the line of Richard Saywood, National Bank. Please proceed with your question.
spk06: Yes, thanks. So you talked about some markets of opportunity from a geographic perspective, LATAM, Africa, and Middle East, and clearly LATAM seems like a focus right now. So when you think about the mid-term targets that you've put out there, how much of a role do these international markets play in that growth here?
spk03: We look at it from a bottoms-up, from a merchant perspective. Certainly we think our position in LATAM is to strengthens our capabilities and allows us to expand our wallet share with our customers. We have been under-penetrated in LATAM, so that has been our first strengthening move with Paymentes. We are under-penetrated in APAC, and certainly Africa and MENA are new regions completely for us. So we'll continue focusing on building out organically now with the acceleration of Paymentes, the three markets that we have. And Richard, you have to think about what's happening within our own customers. And so When you look at, for example, social games, APAC is very, very important. When you look at online gaming, APAC is not important. And so there's just a contrast between them. However, you think about U.S. issuing licenses, you think about Mexico, Colombia, Argentina has issued three licenses for gaming operators, Brazil is expected. In the new year, we have Ontario in Canada. So you have to break it down by vertical that drives our geographic expansion interest. And we think last time was certainly a very good mix for our current customers, something that we will develop. And next on the line will be strengthening our position and impact.
spk06: Okay, great. Thank you.
spk08: And our next question comes from the line of Andrew Bosch with SMBC NECO Securities. Please proceed with your question.
spk01: Hey, guys. Thanks for taking my question, and congratulations on a sound set of results in the U.S. listing here. Just a housekeeping question. The growth in Europe, you know, while 60% is obviously quite strong, a little bit slower than what we were anticipating. So maybe if you guys wanted to call out anything on the ground there that you're seeing that kind of led to that.
spk03: Actually, the growth in Europe has been very strong. I think what you're doing is you're comparing it over COVID here where certain things have pushed back from last year. But momentum in Europe is, for us, very strong.
spk01: Thanks.
spk08: And we have reached the end of the question and answer session. I'll now turn the call back over to Philip Fair for closing remarks.
spk03: Thank you, everybody. I really enjoyed spending time with you today. I really appreciate the questions, taking the opportunity to wish you all happy holidays, and I look forward to speaking to you soon.
spk08: And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Disclaimer