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spk10: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Nuvei Corporation's first quarter 2022 earnings call. As a reminder, this conference call is being recorded. I'll now turn the conference over to Anthony Gerstein, Vice President and Head of Investor Relations for Nuvei. Please go ahead, sir.
spk16: Thank you, Operator, and good morning, everyone, and thank you for joining us. With me today are Philip Fair, Chair and CEO, and David Schwartz, CFO. As a reminder, this conference call is being recorded and webcast and is copyrighted property of New Bay. Any rebroadcast of this information in whole or in part without written consent of New Bay is prohibited. This morning, New Bay issued a press release announcing financial results for the three-month period ended March 31, 2022. The release as well as an accompanying presentation is available in the investor relations section of the company's website, nuvea.com, under events and presentations. During this call, we may make certain forward-looking statements within the meaning of the applicable securities laws. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements of the business or developments in Nuvea's industry could differ materially from the anticipated results, performance achievements, and developments expressed or implied by such forward-looking statements. Information about these factors that could cause actual results to differ materially from anticipated results or performance can be found in new base filings with the Canadian Securities Regulatory Authority and on the company's website. Our discussion today will include non-IFRS measures including adjusted EBITDA, adjusted net income, adjusted net income per share, and free cash flow. Management believes non-IFRS results are useful in order to enhance our understanding of our ongoing performance, but they are not a supplement to and should not be considered in isolation from or as a substitute for IFRS financial measures. Reconciliation of these measures to IFRS measures is available on our earnings release and MD&A. We'll open up the call to your questions after our prepared remarks. With that, I'd like to now turn the call over to Phil.
spk02: Thanks, Anthony, and thank you, everyone, for joining our call today. It's good to once again be sharing our progress with you following our inaugural Capital Markets Day back in March, where we had the opportunity to meet many of you in person. We're off to a strong start in 2022, delivering results ahead of our financial outlook, driven by the successful execution of our growth strategies. For the quarter, Total volume increased 42% to $29.2 billion, revenue increased 43% to $214.5 million, and adjusted EBITDA increased 40% to $91.6 million. Organic revenue growth, which excludes revenue from acquisitions completed in the trailing 12-month period, increased 32%. What's important to note is these excellent results include a revenue headwind of approximately $7 million from unfavorable changes in foreign exchange rates year over year. As a company, we are just getting started as our TAMs are large and growing with so much white space in each of our focus verticals and current geographies, as well as significant opportunities in our underpenetrated global geographies in North America, LATAM, and APAC for future growth. Looking at revenue by region in the first quarter, EMEA, North America, LATAM, and APAC represented 58%, 38%, 3%, and 1% of revenue, respectively. From a growth perspective, EMEA, North America, LATAM, and APAC increased by 73%, 13%, 25%, and 64%, respectively. We're experiencing sequential growth quarter-over-quarter of more than 100% in APAC and 6% in North America. It is worth reminding you that while our global e-commerce channel is the largest channel in EBA, LATAM, and APAC, it remains subscale in North America. As you know, we are making investments there, and the transformation in North America is well underway. For Perspective North America e-commerce direct revenue increased 71% to 27 million in this year's first quarter from last year's first quarter, and now represents approximately a third of the total North American revenue. As I will highlight in a minute, we see enormous opportunity converging in North America with recent customer wins and expansions, which will contribute to our growth in the upcoming quarters. Overall, The prospects for our business remain strong and we are well positioned for sustainable and profitable growth. Turning to new customers, the first quarter was notable for the number of new customer wins and increasing wallet share gains we achieved with existing customers. As you recall, growing with existing customers drives the majority of our in-year growth. while the onboarding of new customers contributes to our future growth as those relationships scale over time and open doors to further opportunities going forward as we help them grow their businesses globally. Meanwhile, our robust pipeline gives us good visibility for the year. Looking at our high growth focus verticals, in gaming, we're executing and on plan with our strategy for North America as the market continues to evolve, signing new flagship customers, including FanDuel, The Score, North Star Gaming, Hard Rock, and Desert Diamond. We also added the province of Ontario, the newest market to open in North America. We also expanded wallet share, adding further capabilities and geographic support with existing gaming customers like DraftKings, BetMGM, 888, Leo Vegas, Intane, Kazen Gaming, Betson, and WPlay. As you can see, Nuve is now integrated and supporting really the who's who of the industry and has made meaningful progress essentially with all the leading online gaming operators in North America as well as globally. It's really important to remember that each state and product is an additional implementation which creates ample opportunity to go state to state, country to country, and product solution to product solution, helping our customers grow. In travel, We added new customers, including international hotel operator Celina, supporting them globally in EMEA, LATAM, and North America with local payments and a vast number of capabilities. Luxury tour operator Scott Dunn, which we won through an RFP in the first quarter. Despigar, the largest online travel company in LATAM with operations in more than 20 countries and started using Nuve in Colombia in the first quarter. And wholesale travel company Dita Travel, a leading wholesaler and travel industry out of Asia. We also expanded support with existing customers, including Israeli national carrier El Al, which expanded our contract to support payments in North America and Israel, and BSP processing, online travel and leisure retail at lastminute.com, and we also expanded our partnership with Universal Air Travel Plan, UATP, by enabling payment services globally. In digital goods and services, we added Cabify, a leading ride-hailing company in LATAM, which started using Nuvei in Chile. Aircash, their first Croatian fintech, offering a digital wallet for money transfers, and Cellbrite, a global digital intelligence company. We also increased wallet share with Rappi, an on-demand delivery leader in LATAM, providing more of our solution offering in the region. In online retail, we accelerated new customer wins announcing agreements with Wix, global marketplace Sheen, and of course, the hot glue. And at the same time, we've expanded existing customer relationships with Ux, Net-a-Porter, Valentino, and Canadian online retailer, Hatley. In online and social video gaming, we added fast-growing video games marketplace, Anita, an expanded wallet share with Wargaming, and digital video game distributor, Valve. In digital assets, we added several new customers, including cryptocurrency exchange, Crypto.com, and Pionex, as well as several NFT exchanges and marketplaces, including Ulti Arena, Ixfin, and Maxar. We've also partnered with Ledger, the leading hardware wallet provider to enable direct on-ramps with the leading fiat funding options Nuve supports, allowing Ledger users to purchase cryptocurrencies through our vast supported payment rails. And in financial services, we added Da Vivienda, one of the largest banks in Colombia, which launched Portal de Pagos, a platform powered by Nuve, process collection and payments for more than 5,000 of their customers in Colombia. In addition, we also signed a payment orchestration agreement with one of the largest processors in Mexico. As you can see, the momentum in new client wins across all focus verticals is accelerating. As we discussed in our last earnings call, we recently launched a dynamic new global marketing campaign, the largest in the company's history, highlighted by our distinctive brand refresh. The campaign is designed to strengthen and support our brand awareness and lead generation by leveraging all channels to make an impact across our verticals and geographies. Because of the macro environment, we prudently deferred some of the planned marketing spend for Q1 into Q2. We're now on track, and those who haven't seen the company's rebrand, I encourage you to visit our corporate website to get a flavor. There are many exciting things to come. You will start to see some of the bigger elements of the advertising campaign on leading media outlets over the coming weeks. I'm really excited about the overall program. This is the first time we've undertaken a marketing campaign of this scale, and I look forward to sharing the results with you throughout the year. Now, turning to product innovation highlights. As a technology company, we continuously invest in product in order to drive more feature functionality with our modern and scalable solution stack. Adding innovative product capabilities always expands our tab and creates opportunities to expand wallet share with our customers. Most recently, we announced real-time deposits in the United States using the RTP network, the first in the industry to do so. Like with real-time withdrawals, which again, we were the first to offer last year, real-time deposits are game changers, enhancing the experience and proving market credibility and trust between customer and a merchant. Furthermore, It reduces fraud and lowers insufficient fund risk to the merchant. While relevant to all our verticals, real-time deposits are immediately advantageous to our online gaming customers in the United States as in-play betting occurs in real-time during live sporting events and players need to fund their accounts instantly and safely. As we stated before with respect to RTP and bank account-based payments and real-time payments, we believe there's a significant opportunity for growth as this is an increasing popular and accepted payment method allowing customers to purchase as simply as using a credit card and to receive both pay-ins and payouts instantly into their bank accounts 24-7, 365. With respect to adding to our capabilities in the first quarter, we added multiple new alternate payment methods, increasing our portfolio of alternate payment methods to over 550. expanding access, and allowing customers to accept more forms of regionally familiar and preferred digital payment methods. Specifically, in Europe, we added online-offline voucher solutions for customers in Romania, Greece, Cyprus, and Italy. In Asia, we enabled several local card payments and APNs in South Korea and added several essential payment methods such as net banking, Paytm, RuPay, PhonePeace, as well as other eWallet solutions in India. In Africa, we began offering bank transfers, vouchers, mobile money, local car payments, and eWallet solutions in Kenya, Rwanda, Nigeria, Ghana, Tanzania, Uganda, and Zambia. And in LATAM, we implemented our own direct integrations rather than using third parties to several APMs, including Pix and Boleto in Brazil, resulting in significantly higher conversion rates for our customers. And finally, we implemented UnionPay globally under our own acquiring license. In digital assets and cryptocurrency solutions, we launched in North America with localized payment acceptance, payout functionality, providing liquidity, risk management, KYC, risk scoring, and zero chargeback guarantee capabilities. We're really excited about what's happening with digital assets, and we believe we're well positioned for the industry with a seat at the table with our technology and growing list of customers as the industry continues to evolve. As of March 31st, the company supported 136 coins and 97 fiat currencies. In travel, we expanded our footprint, adding enhanced connectivity to BSP, which stands for Billing and Settlement Plan, a system designed to facilitate and simplify the selling, reporting, and remitting procedures of IATA-accredited passenger agents. BSP is a central point through which data and funds flow between travel agents and airlines. Rather than agents having individual relationships with each airline, all information is consolidated through BSP, and Nuvei can now process and accept payment of BSP through networks like UATP. Although travel remains our smallest vertical, it's having these types of capabilities that will help us grow especially as the category recovers. I'd like now to shift gears and talk about Nuvei's unique financial profiles. From a financial perspective, our consistent revenue growth, profitability, low capex yields exceptional cash flow generation. And when combined with our strong balance sheet, gives us incredible flexibility with respect to capital allocation and ample opportunity to create your other value. For the quarter, we generated free cash flow of nearly $83 million. Previously, we have discussed our disciplined approach towards capital allocation for continued growth. and outline the multiple alternatives we have at our disposal to drive shareholder value. This includes investing in organic growth, pursuing inorganic opportunities, and managing our capital structure, focusing on governance and stewardship of capital. With respect to organic growth, we continue to invest in the business for future growth. This includes our investment in product, people, and our recent marketing campaigns. When it comes to inorganic growth, you'll recall that M&A remains one of our key growth pillars focusing on capabilities, geography, and scale. However, we maintain a disciplined approach and have never subscribed to revenue without profitability model. In other words, we don't do financial engineering to simply buy short-term growth. We do believe, however, that our position, strength of our balance sheet, and cash flow generation affords us tremendous opportunities to pursue acquisitions. While to date we have focused mostly on smaller tuck-ins, the current backdrop of the market and compression of valuations is making for a really interesting environment, both for private and public companies, and we're ready and looking to execute on potential transformational deals in the future. Finally, with respect to capital structure, we have purchased approximately 1.6 million shares as part of the previously announced share buyback plan we communicated in March. For a total consideration of $99 million, as of April 30th, 2022. Looking at our priorities for 2022, our areas of focus are continuously expanding our commercial teams globally, expanding our geographic footprint as we look to continue growing at APAC, LATAM, and MENA, accelerating our global gaming footprint in which we believe we are the industry leader, building out a cart issuing product capabilities, enhancing our marketplace and platform capabilities, launching omni-channel capabilities in certain markets, offering single API, tokenization, and reporting to simplify multi-channel operations, and monetizing our banking-as-a-service solutions in EMEA. As you can see, we never sit still and we're constantly evolving to support the needs of our customers as they continue to grow globally. Before I turn the call over to Dave, who will provide more details on the financials, We're maintaining our full year outlook for 2022 and reiterating our medium and long-term targets previously provided, despite the current FX headwind and macro environment. Finally, I want to welcome all approximately 100 new teammates who join us in the first quarter from around the world. We're excited to have you part of the new bait team, which totaled 1,468 at March 31st. As usual, I also want to recognize all the fabulous and hard work of all our employees who contribute to the new wave success each and every day. In keeping with our recently implemented policy that each time we beat our outlook, our employees receive an additional two and a half days of vacation. You guys are rock stars and I'm grateful for your dedication and contribution to our mutual success. In closing, I'll reiterate how pleased I am with our results and the progress we're making across the entire company. With that, I'll now turn it over to Dave to discuss the financials.
spk17: Thanks, Phil, and good morning, everyone. We had a solid first quarter and are pleased with our performance. We were ahead of the top of the range of our outlook for the quarter in all three of our key metrics, total volume, revenue, and adjusted EBITDA. Total volume increased year over year by 42% to $29.2 billion. Revenue increased by 43%, $214.5 million, above the high end of our outlook range of between $208 and $214 million. Revenue in the quarter was unfavorably impacted by changes in foreign exchange rates by approximately $7 million. Organic revenue, which excludes revenue attributable to acquired businesses for a period of 12 months following our acquisition, and excluding revenue attributable to divested businesses, grew 32%. Gross margin in the first quarter was 78% compared to 82% in the first quarter of 2021. The change in gross margin compared to last year is primarily as a result of the inclusion of certain acquisitions which have a higher associated cost of revenue. As we've stated in the past, our focus is on meeting the needs of our customers and driving incremental gross profit dollars through our land and expand approach. In terms of gross profit for the quarter, we generated $168 million, which represents more than a $44 million increase as compared to the prior year period. Selling, general, and administrative expenses increased by $58 million as a result of both organic and inorganic growth. The largest contributor to the increase in SG&A was share-based payments, which increased by $33 million, primarily due to awards to employees who joined us as part of the four acquisitions we completed last year and other employee grants in last year's fourth quarter and late in the first quarter of this year. Employee compensation, other than share-based payments, increased by $17 million. The increase year over year mainly reflects higher headcount, both from organic and acquisition growth, including those in direct sales and account management to drive future growth and execute on our strategies. Our acquisitions also resulted in an increase in headcount, employee compensation, and acquisition-related compensation. Adjusted EBITDA increased by 40% in the quarter to $91.6 million as compared to the outlook range we previously provided of between $82 and $85 million. Some of the outperformance relative to the Q1 outlook is related to our marketing spend, which results from some of the spend being deferred from the first quarter into the second quarter. Adjusted EBITDA margin was 43% in the quarter compared to 44% in the prior year period. Net finance costs was $7.1 million compared to over $2.5 million in last year's first quarter, mainly due to increased interest costs, as well as the recognition of more than $2 million in change in fair value of the share purchase liability relating to the automatic share purchase plan, which we implemented in March. Income tax expense in the quarter was $8.6 million. This translates into an effective tax rate well above the Canadian parent statutory tax rate of 26.5%, mainly due to share-based payments of $37 million recognized in Q1 2022 that are non-deductible for tax purposes in certain jurisdictions. Excluding the unfavorable impact of non-deductible share-based expense, The effective tax rate for Q1 would have been approximately 18% and consistent with our past disclosure. Net income for the quarter was $4.5 million or $0.02 per diluted share compared to $27.8 million or $0.19 per share in the first quarter of 2021. As I mentioned earlier, this year's first quarter included $33 million increase in share-based expense, which on its own represented approximately $0.22 per diluted share. Adjusted net income was $69 million or $0.46 per diluted share compared to $51 million or $0.35 per diluted share in the first quarter of 2021. Looking at our balance sheet and liquidity for the quarter, our cash position and cash generation remain strong. Cash flow from operating activities for the three-month period was $66 million compared to $53 million for the comparable prior period. Free cash flow which we define as adjusted EBITDA of capital expenditures, increased to $83 million for the three-month period, representing free cash flow conversion of just over 90%. As Phil stated, we have a unique financial profile, which gives us flexibility with respect to capital allocation. As such, we continue to invest in the business both organically and through M&A, while remaining disciplined in managing our capital structure appropriately. As part of our capital allocation approach, we also implemented a normal course issuer bid in March, which authorized us to buy back up to 6.6 million shares. Up to the end of April, we have purchased approximately 1.6 million shares at an average price of $63.04 per share for total consideration of $99 million. As at March 31st, 2022, we had cash of nearly $735 million. In addition, we had term debt of $500 million, resulting in a net cash position of $235 million, with access to an additional $385 million available under our revolving credit facility. In addition, our leverage remains low. Turning now to our financial outlook for the second quarter and full year 2022, and I'll refer you to our forward-looking information disclosure in our press release and MD&A. For the second quarter, we expect total volume of between $29 and $30 billion, revenue of between $217 and $223 million, and adjusted EBITDA of between $88 and $91 million. For the full year 2022, we are maintaining our previously announced outlook of total volume of between $127 and $132 billion, Revenue of between $940 and $980 million, and adjusted EBITDA of between $407 and $425 million. The outlook, specifically the adjusted EBITDA, reflects our strategy to continue to invest in our business, such as in distribution, technology, and more recently, in marketing. Our outlook also takes into consideration recent unfavorable movements in foreign exchange rates, and takes a cautious approach to new customer activations. We're very pleased with our Q1 results, and with that, we're now happy to answer your questions. Operator, please open the lines for Q&A.
spk10: Thank you. Ladies and gentlemen, at this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A 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. or participants using speaker equipment. It may be necessary to pick up your handset before pressing the start keys. In the interest of time, we ask that you each keep to one question and one follow-up. Thank you. Our first question comes from the line of Sanjay Sakrani with KBW. Please proceed with your question.
spk03: Thanks. Good morning and good results. Phil, you mentioned a few times or a couple of times just the macro being a little bit choppy here. Could you just talk about the downside risk to your growth, given some of the verticals you might have or discretionary and spend?
spk02: Yeah, thanks, Sanjay. Good morning. Great question. You know, when we look at our current momentum, we look at quarter to date, we're pretty pleased with what we've been seeing across our current customer base. And we've been accelerating new client wins, and it's really about new client onboards and timing of new client onboards. So we feel there's upside. Naturally, it's always going to be dependent on when clients launch. But overall, from a macro perspective, when we kind of unpack it, the conflict in Europe has had minimal impact to us. We did have in the first quarter some smaller impact from Omicron as there were certain lockdowns in Canada versus in North America, which impacted our small business portfolio in Canada. But overall, from the momentum that we're seeing in the business, When we're looking at the core verticals, wallet share expansion globally with our current clients, we're really pleased with the momentum.
spk03: Thanks. And my follow-up is on North America. When I look at that revenue growth, it slowed to, I think, 13% this quarter, and it was much higher, probably 47% last quarter. I know you mentioned e-com, which is about third. Growth was strong there. But maybe you could just touch on what drove that deceleration and your expectations for the rest of the year.
spk02: Yeah, no, I mean, North America, what we're all witnessing is the transformation of our North American business. So we see the growth of our digital business, specifically augmented with the client wins across our key verticals in North America. So really exciting what's happening in North America today. We feel Omni, as we launched that in the second half of the year, will expand our tab again in North America, and that will impact a lot of our small business and card present capabilities. And then naturally from a comparison, both quarter over quarter and year over year, small business was impacted in our portfolio, predominantly because we have high exposure to Canada. Around 35-40% of our SMB portfolio is in Canada. And we did have some lockdowns for the first three weeks of January.
spk03: Okay, so you don't expect that to persist as the lockdowns subside?
spk02: No, we don't, but what you end up seeing is our business is dramatically focused on our global e-commerce business. Certainly our SMB we support, but the vectors of growth, Sanjay for Nuve, is our global digital business. Okay, great.
spk00: Thank you.
spk10: Thank you. Our next question comes from George Mihalos with Cowan. Please proceed with your question.
spk20: Great. Let me add my congrats on the strong results, guys, especially in the environment that we're in right now. I guess, first question, David, two points of clarification. Can you just help us think about the cadence of the marketing spend throughout the course of the year? You said it's going to be elevated, obviously, in QQ, but how maybe we should be thinking about that coming through the course of the year? And then just the second quarter revenue growth. If I'm not mistaken, that's going to be the toughest comp for crypto, I believe. throughout the course of the year. Maybe kind of talk a little bit about how you're thinking about the comparison to Q, and then I would think the acceleration again in third quarter and beyond.
spk17: Hey, George. Good morning, and thank you. In terms of marketing spend, what we outlined in the past was that the marketing spend for the year, it's about a $20 million investment we're making for the year. As I mentioned in my prepared remarks earlier, We did defer some of that spend out of Q1 and into Q2. Overall, we're really excited about the campaign and the program that's been put together by our team. And you've seen a little bit of it, George, in terms of the rebranding, but there's more to come. And I think you'll be really pleased. We are so far from what we've seen, so we're excited about it. So that will kind of play out into Q2 and into the rest of the year. We'll still maintain that spend that we're planning, but you'll see it. you know, layer added to Q2. And I think that's part of what, you know, you see in, you know, reflective in our, in our Q2 EBITDA. And then in terms of revenue growth, I mean, look, we're, you know, from a, from a 2022 perspective, you know, the 30 to 35% organic revenue growth. That's, that's what, you know, that's we're very comfortable with that. That's what our plan is. We're, you know, reiterating our full year, our full year outlook and, And, again, there is, you know, in Q1 we did see some headwinds as it relates to revenue with respect to FX. From an outlook perspective, we did obviously take that into consideration both for Q2 and for the rest of the year. And so that's certainly something that we've considered in the outlook.
spk20: Okay. And then just a quick follow-up, Phil. I think you – you know, when you were talking about – Looking for M&A, I think you used the term transformational. I'm just curious, should we be thinking that you're on the lookout for larger scale acquisitions, different functionality, more omni-channel or anything like that? Can you just sort of help us think through what Nuve is working through on the M&A pipeline? Thank you.
spk02: Yeah, great question, George. You know what's amazing about Nuve is because we go far beyond acquiring And we have so many different modules that each of those modules are their own product and their own TAM and their own capabilities to our customers. Our net is really wide, and we've been looking at some really interesting opportunities to help our customers in terms of connecting better, converting better, and running their business. But from a size perspective, so we go across multi-solution stacks. We go across multiple geographies as well. And from a size perspective, we have real flexibility. So we think this plays into Nuve's strengths. If you look at the backdrop, George, there's plenty of companies that rush to be public companies that shouldn't be public companies. We think those are real opportunities for Nuve, and there's plenty of high-growth companies that can leverage Nuve's balance sheet to accelerate their continued growth and to provide greater value to our customers. So we're engaged with really interesting conversations across typically the scale opportunities and geographic opportunities or the capability opportunities. It's just that these happen to be larger opportunities which we think is really compelling in playing to new baseline.
spk20: Appreciate the caller. Congrats, guys.
spk02: Thanks, George.
spk10: Thank you. Our next question comes from the line of Jason Kupferberg with Bank of America. Please proceed with your question.
spk09: Hey, guys. This is Cassie. I'm for Jason. And apologies if I missed this, but I just wanted to confirm, because you guys talked a lot about the incremental FX headwinds. So how much is exactly baked into 2022 and 2Q relative to the 7 million and 1Q? Just trying to figure out, you know, you're maintaining your guidance, but there's more FX headwinds. So maybe that's actually adding maybe a point or two to growth there. Just trying to figure out how much incremental FX is being absorbed in it. Thank you.
spk17: Yeah. Hey, good morning. Yeah. So from an FX perspective, basically what we did for both for Q2 and for the rest of the year is we, you know, we looked at Of course, there were step-downs right throughout the first quarter. We saw a step-down specifically as it relates to, let's say, the Euro versus the US dollar. We saw step-downs starting really kind of end of March or into March. And then again, we saw another step-down recently into the beginning of May. So from an outlook perspective, we considered basically where we're at with current rates and what those step-downs look like recently. Of course, it's hard to know exactly where the rates are going to go, of course, but we basically took the, you know, the current rates and use those as, um, uh, in our consideration for outlook for both Q2 and for the rest of the year.
spk09: Okay. Got it. And you know, QQ guy kind of implies minimal quarter over quarter acceleration. relative to 1Q. I just wanted to know, is that due to like FX or seasonality or, you know, any other factors we should be aware of? And what are some of the drivers of the, maybe like the more backend loaded, like the bigger ramp up in 2H relative to the first half of the year in terms of top line? Thank you.
spk02: Yeah, great question. I think the biggest impact for, if you look at Q2, is FX as we've taken that into consideration. If you take a look back at Q1, out of the $214.5 million of revenue, there was a $7 million FX headwind, right? So that brings us into the low to 20s. So exceptional performance in Q1. As Dave mentioned, we took the lowest rate of FX, and it did have multiple step-downs throughout the quarter. So we took the lowest one to be conservative, and then we straight-lined that throughout the remaining of the year. So you guys could appreciate that that is a pretty significant increase headwind in the second quarter. So pretty excited about the buildup. So if you normalize it for FX, we're really excited about Q2. And what continues to accelerate throughout the business is really the new client activation, the pace of new clients. So the performance of the business has just been really, really strong. The engagement with the who's who across all of our key verticals. And we're really excited about the transformation in the different regions. We're seeing acceleration in LATAM. We're seeing really meaningful acceleration in North America. These were the two new TAMs that have come on board last year and we're making appropriate investments across our Asia footprint. So I think the biggest element for Q2 for everyone to appreciate is FX and it does move around. That is why it came a little bit lower than Street. But if you normalize it, it's very impressive in terms of the momentum of the business in the first quarter and that's continuing. And I'd highlight the momentum that we've been seeing quarter to date has been also really compelling.
spk09: Thanks for taking my questions, guys.
spk10: Thank you. Our next question comes from the line of Will Nance with Goldman Sachs. Please proceed with your question.
spk04: Hey, guys. Good morning. Nice results. Phil, I wanted to follow up on the earlier question on you guys looking a little bit harder at transformational acquisitions. I think you guys have been really clear on the acquisition strategy in the past focused on capabilities, geographies, and scale. I just When you talk about transformational acquisitions, I think back to the one that you guys did with Safe Charge, taking a North American SMB-focused business and adding global e-com acquiring. When you look at the business today, what do you feel like is missing that you think could be solved through transformational acquisition? Could you talk about, of the three different reasons that you guys look to do M&A, what would drive a more transformational acquisition?
spk02: You know, Will, great question. So for us, the three reasons are always the primary ones, geography, capability, and scale. If you look at transformational M&A, for example, for us, it's to accelerate opportunities like card issuing. We think there's a significant opportunity in our current customer base to monetize and add to our payout business with card issuing. But the same is true, really, with all the modules that we offer, Will. We think as risk as a service, or if you think of our payment orchestration, in certain regions or certain capabilities would be additive to us. So we're taking a key look across the sphere. The big two, I would tell you, is geographic expansion and capabilities and really scaling some of the solution stack that we currently have where that's in the pipeline for us to launch. So it's quite a wide web, and I think that puts us in a pretty unique position.
spk04: Got it. Super helpful. Appreciate the details. And then just a follow-up question. You know, you guys are obviously reiterating the guidance and you've had a pretty solid string of announcements here on adding new partners and capabilities with crypto companies. Could you help us kind of piece apart what you guys are seeing from a macro perspective on the crypto part of the business and then maybe help us kind of pull that apart from, you know, the momentum you guys are seeing from adding new clients?
spk02: Yeah, so, I mean, we've always been clear that we think digital and a crypto strategy is critical for payment companies, specifically as the industry continues evolving. What's fascinating, Will, is how fast the industry has changed, right? It's been alive for two or three years, really, when you think about it, and how fast it's changed. You know, we think that there's opportunities to expand and enhance our payout business, for example, with our crypto capabilities, and there's multiple levers for continued growth. What we did do and what we are executing on actually is As we see slowdown in our current portfolio, which was fully considered in the outlook for this year, we are cross-selling these merchant opportunities in our new geographies, and that is allowing us to remain relatively flattish in the current vertical revenue for us. So we're really excited about the execution. And then thereafter, we've been adding capabilities and signing more partners and cross-selling our solution stack with both our simplex for onboarding, expanding coin capabilities, and then naturally geographies. We're just launching North America with LATAM in the pipeline as well. So we like where we sit within the industry. We think there's a lot more to do from a product roadmap. There's infrastructure capabilities. There's custodial capabilities. There's a lot of things that we think are vectors for growth that we're going to continue executing on. And I think the biggest thing is to separate crypto from, you know, just, you know, buying a digital asset from a speculative perspective, but really utilizing the digital asset and the blockchain to help, you know, transform payments as we know it. And we think we're on the ground floor. So really exciting things happening within that vertical.
spk04: Got it. Appreciate all the details. Thanks for taking my questions this morning.
spk02: Thanks, Will.
spk10: Thank you. Our next question comes from the line with JP Morgan. Please proceed with your question.
spk13: Thanks so much. It's good to be on the call. I wanted to ask on all the logo additions you talked about, can you comment on how many of these are for core acquiring versus other modules? And it looks like a lot of these logos also show up at your competitors. I'm just curious if you could maybe define a little bit more how you're taking wallet share and in what areas. Thanks.
spk02: We want to take more wallet share, but all kidding aside, what you end up seeing from a from a logo perspective, is Nuve's flexible stack allows us to enter the relationship, really whatever is appropriate for the merchant at the time of onboarding. And that's, I think, to really highlight our uniqueness is if it's for a single alternative payment method, if it's for payment orchestration, or if it's for local acquiring in one particular market, it allows us to pull a chair and grow with our customers. And that's really one of our unique attributes. And so as we enter the relationship with some of these logos, like, you know, last year we were doing with Rappi, for example, only Gateway. Today we're doing payouts. It allows you to continue growing with customers into more profitable and more capabilities. And there is no one-size-fits-all. So, for example, you know, we enter the relationship as is appropriate for them for the time of onboarding. And that's what's so fun is, you know, opportunities beyond onboarding typically are larger than when the client onboarded. And I think that is something that is super compelling when we look at what we've added so far this year. If we look at North American gaming or if we look at what happened in LATAM or some of the big wins that we're doing in other of our core verticals, it's really just creating the relationship and a platform for continued growth.
spk13: Great. That's helpful to hear. Just my quick follow-up. I know a lot of folks asked, Will, Sanjay, and George and others asked about the consumer and and discretionary spend and crypto. But I think it sounds like you're, you're capturing a lot of that in your thinking for the year, but you did mention a cautious approach to customer activations, I think is what I wrote down. So does that mean you're thinking that backlog conversion potentially could slow? Maybe that's a little bit new. I just want to make sure I understood the addition there. Thanks.
spk02: No, it's really just getting in. So what we found was really interesting, right? Is a lot of folks, um, utilize European back office. So, for example, it was very interesting to us to see how many people had their payments and software development teams out of Ukraine. And that caused a delay for certain people to actually execute on their integration with Nuve. So that's what we mean by activation. If you're scheduled to go live in the first quarter, but that slips into the second or third, it has an impact. So we're really focused on not only signing these great logos, but getting them live and getting them live as quickly as possible. And we're all hands-on doing that with our current customers. So we've taken a cautious approach to saying, when do they come on? Naturally, the amount of business that was signed is significant. In fact, it's the most significant in the company's history. And it's a matter for us now to execute on getting those customers live with the feature functionality that we know they want at the end.
spk13: Got it. Thanks for clarifying, Phil. Thank you. Pleasure.
spk10: Thank you. Our next question comes from the line of Todd Copeland with CIBC. Please proceed with your question.
spk19: Great. Thank you and good morning. Just following up on that last question, Phil, you talked about activations moving out a little bit off the most business you've signed in the company's history. How many quarters do you see that playing out over, meaning the elevated onboarding? Just walk us through the rhythm of that. Thanks a lot.
spk02: You know, Todd, it's about our expansion that we've done in our distribution channels. So they're all connected, right? So we feel we're really still on the ground floor. Our sales force is about 100 FTE. Our objective is to continue expanding that by a multiple. So we're still heavily investing into that. This year, we're going to augment the sale capabilities with marketing, both digital and associated. We're attending 60-plus different conferences to assist them. So we are being extremely relevant in our core verticals with the investments that we're doing. And I think we can sustain this because the time is large and our solution stack is vast. So we're pretty excited about what we see ahead of us. We're just scratching the surface in some of our markets, and there's a lot more to do.
spk19: Okay. And then just following up on gaming, you've had a lot of customer and state approvals. You've talked about this is a building year. Just update us your thoughts. And when you see it, gaming and regular gaming in the U.S. becoming more material to your results. Thanks a lot.
spk02: Yeah, thanks. I'm so proud of my team. You know, we came in here with heads down. working on integrations, working on platform integrations, building relationships across the board. And we opted to take a really conservative approach saying, hey, guys, we think we're going to be a meaningful player as we are in other parts of the world. And the execution has just been really, really good. I'm super, super proud of our leadership. Today we're integrated and connected with a who's who. And something that we want to highlight is that, you know, you may get a particular product with a particular operator with whatever suits their need at that particular time. but it opens doors for other conversations and other opportunities and other things that we can do for them. And we're just seeing that now. So, you know, from launching the province of Ontario with both card acquiring alternative payment methods, all the solution stacks that we offer, integrating to the gaming operators and platforms and using, you know, that platform to cross sell into North America is pretty meaningful. So I like where we sit today. Naturally we're making progress. We're making progress with the who's who of the industry and, It's a testament and success breeds success. So as we gain and gain more and more momentum, we think we can be accelerating the wallet share expansion with our customers. So we're still heads down, Todd. We think that we are now clearly running. We're seeing real opportunities. We're live. We're operating. We're processing. We're driving, not just acquiring the payouts. We're doing, you know, all forms of open banking capabilities and gateway capabilities. So it's looking very, very good for us.
spk19: Great. Thanks a lot, Phil.
spk10: Thank you. Our next question comes from the line of Andrew Bell with SMBC NECO Securities. Please proceed with your question.
spk12: Hey, guys, and thanks for taking the question. Just want to touch upon the take rate dynamics in the second quarter. I mean, I fully appreciate the FX impact on the revenue line. However, the volume looks like it came in pretty much in line with our model. So maybe help us think through, is there something in the year-over-year comp that we should be considering and understanding that you know, take rates are an output, but any color would be appreciated. Hey, Andrew, it's David.
spk17: So yeah, like we said in the past, take rate essentially is an output. We're focused on really driving the gross profit dollars. What I would say though, maybe just to kind of give you some color around it, you know, think about sequentially, it's a sequential increase from Q4. Q4, we're about 67 basis points and Q1 about 73. So it is an increase over Q4 and you recall that, you know, that Q4 number had some seasonality in it. Um, we talked about that at Q4, you know, really around the, you know, the government and charity sector that we have, which has, you know, higher transaction size, but, you know, basically a fixed fee for, for many of those transactions. Uh, and so that's kind of, you know, what, what you see in terms of the, the, the swing from Q4 to Q1 and some of the seasonality impacts that, that happens. But again, it's, we're, we're very much focused on driving the gross profit, gross profit dollars, um, And look, as we add product and capability, you know, the take rate will, you know, will also kind of move around. So it's really for us about driving that incremental gross profit dollars. And, you know, we had, you know, sequentially about a 3% increase on gross profit dollars and year over year about a 36% increase in gross profit dollars. So that's really the focus.
spk12: Definitely a fair point. I mean, thinking about products that could be added into the platform over time, you know, card issuing seems like a natural extension to what Nuve can offer to clients. So maybe you could just provide us an update on when you kind of think Nuve's card issuing platform could potentially start rolling out in a meaningful way and longer-term reach scale.
spk02: Yeah, great question, Andrew. I mean, we're working diligently on it. I think we're now implementing – you know, an extra handful of customers in Europe. We have a lot on the road around that. It'll be a 2023 opportunity to be meaningful, but this year we're going to continue scaling it. It is an avenue that we will look to accelerate with M&A as we think card issuing from an overall offering to our customers, enhancing our payout business and driving 100% approval ratios and allowing them to create loyalty with their customers is very meaningful and something that we want to accelerate on. But When you look at our priorities across, they're all meaningful priorities, and we think they all have real expansion opportunities with our current customers, and that's really what drives it.
spk12: Appreciate it, Phil.
spk10: Thank you. Our next question comes from the line of Joseph Baffey with Canaccord Genuity. Please proceed with your question.
spk01: Hey guys, let me add my congrats also on solid results here. I know, Phil, you mentioned you've got your single global license for union pay. I was wondering what that may mean for the business here as that card network is quite important globally.
spk02: Yeah, Joe, great question. I think all payment mediums are critical. So from an acquiring standpoint, we have the four core. We've added union pay. In certain parts of the world, JCP and others are also as critical. So our objective is to have every form of card acquiring capability through our platform. Union pay is something that is a wallet share expansion opportunity with our current customers, and we're going to continue driving that forward.
spk01: Okay, great. And then I know... you can lead with almost any of your solutions or modules, let's say, and I know you, you're, you've rolled out your real time capability. Can you lead with real time or do you need to have other modules attached to it? And, and how do you, how do you use that strategically? Thanks.
spk02: Great question, Joe. Actually we can lead with any one of our modules. So it just, just depends on where the appetite and the requirements for the customer is. You know, when you think about U.S. gaming in particular, and I found this to be an interesting learning curve, is out of all of our offerings, Joe, acquiring was the least interesting to many of the gaming companies. It's fascinating when you think about that. But, you know, we weren't solving new solutions from a gaming perspective, but we were absolutely solving the new solutions from, you know, the gross and net settlement capability and instant payouts and more payment mediums and consolidate that in the offerings. So every market and every region and every appetite is different, what we found. But in North America, it gives us the flexibility of engaging with the customers as to what's right for them at the time and then expand from there.
spk01: Great. Thanks very much.
spk10: Thank you. Our next question comes from the line of Robert Napoli with William Blair. Please proceed with your question.
spk18: Thank you. Good morning, Phil and Dave, and nice job. on the quarter. Uh, just wanted to follow up, I guess, on the, uh, the amount of wins that you guys, uh, had this quarter, you know, obviously sports betting stood out, uh, but just really broadly, uh, is there any way to quantify kind of the ARR that you've added relative to historical levels? Uh, and you know, what's, uh, if there's been any change in your, your win rates, if you would.
spk02: First of all, uh, I love hearing your voice. So I'm happy that you're on this call. In terms of talking about wins, yes, really good momentum that we're seeing across the board. I can't give you the profitability per customer, but we're really excited about what we've been seeing across all of our verticals. It is the most successful onboarding quarter that we've had. And it's normal, right, if you think about it, because we've been We've been expanding our distribution channel and focused on building regional support for our core vertical. So this is all part of the plan. We've been winning and expanding WalletShare. We think that there's more momentum to be had, but we really like what we're seeing in ultimately the two new TAMs that we've added, but also our core TAM in Europe for where we started building up the sales channel and opportunity that we see across Asia as well. So there is a really deep pool that we're just scratching the surface. And that's why at Capital Markets Day, And ultimately, the feeling internally in New Bay is we're really just getting started.
spk18: Great. So I guess we're running, crawl, walk, run on the gaming side. So we should be running by the end of the year, it seems.
spk02: We are running now, right? And we're running in not just the gaming vertical, but we're running in all the regions that we're operating in.
spk18: Thank you. And then just to follow up on... a couple of areas that you've highlighted. So open banking, banking as a service, fraud. It just seems like there are so many opportunities around those markets and so many ways to go after those businesses. Any thoughts on which of those areas, how you want to attack open banking? Fraud, there must be hundreds of interesting smaller companies to build a solution on your fraud strategy? I guess open banking and fraud would be helpful.
spk02: Yeah, I think you're alluding to it, right? Is M&A there? I think the answer is yes, right? Are there scenarios that we're doing internally? So for open banking and our banking as a service, we're embedding our banking within the merchant application. So when merchants auto board with Nuve, they'll have a Nuve bank account provided in Europe. And that gives them access to weekend settlements and other opportunities that we can provide to them that will be beneficial. On the fraud standpoint, we have done a lot of work internally with our amazing data architects that came on board with Simplex and finding ways to improve authorization rates and analyzing between where we orchestrate payments, where we process on our own, and how we drive that value over and how we augment that. So really, these are all vectors of continued growth as the business just gets better and better. Thank you. Appreciate it. I'm surprised to hear you on the call, but I'm glad you're here.
spk10: Thank you. Our next question comes from the line of Timothy Chodo with Credit Suisse. Please proceed with your question.
spk07: Great. Thank you. Good morning. On the 100 FTE number that you mentioned and all the new wins on slide eight, really impressive, and also the brand marketing coming up, it all seems very supportive of the new customer component of your growth algorithm. Maybe just given that backdrop, you could provide a little bit of context around how we should think about the new customer component within the 30% medium-term outlook?
spk02: Great question, Tim. It's all embedded into the outlook. So when we build our outlook and the rolling forecast, we do it by merchant, so we're pretty specific. We look at what we sign in the year, and that is driven by FTE and region and vertical, and we build it from there. And it's always building blocks, Tim, right? So what you see in year is always a fraction of what you end up seeing in the outer year. So this year is certainly building. We're excited about these customers going live, but it creates that springboard for 2023. So every in-year is more gardening. The faster we get accounts approved, the faster we see revenue in-year, and I mean accounts onboarded. And as those accounts start developing and expanding wallet share for us, it gives us a really great continued platform for growth in 2023.
spk07: Great. Thank you for taking the question. Thanks, Dan.
spk10: Thank you. Our next question comes from the line of John Davis with Raymond James. Please proceed with your question.
spk11: Hey, good morning, guys. A lot's been talked about on the guide, but Phil just really wanted to put a finer point on it. So is it fair to say that 2Q Rev Guide is in line with your initial expectations, excluding FX and maybe some go lives? In other words, you're seeing no slowdown in the business.
spk02: Exactly that. And we tried to make sure that that was clear. The biggest impact in Q2 is just FX and FX we've updated from taking a conservative approach in the lowest rate that we saw in the beginning of May. But otherwise, if you look at the outstanding achievement in Q1 normalized for FX, that momentum is continuing and we're seeing really good momentum in the business.
spk11: Okay. So in other words, momentum in the business is actually offsetting any push and go live. So it really is just FX.
spk02: Correct.
spk11: Okay. And then, Phil, bigger picture question. You know, noticed a pretty meaningful tone change when you talk about M&A and even threw the word out, transformational. You know, what's driving that? Is it we're far enough beyond safe charge? The balance sheet's been healthy for a while. Is evaluations coming in? Just curious what's driving that tone change.
spk02: I think that's a great question, John. So I think one is bandwidth. You know, we've integrated the historical acquisitions. We now have capacity and capability. I think that's the first one. We're always very cautious of doing the right thing. And it's never about engineering. It's about building platforms for long-term growth. I think the second thing is the health of our balance sheet and our profile. And really, I think the world has changed, right? Growth and revenue at all costs without being profitable, I think is out the window and the backdrop that we're seeing today. And we think that opens up opportunity for us. We are hungry. We have capability. We see some great businesses out there, and we're now in line to execute on them. So I think really those are the big items. The great thing for us, John, is we don't have to do anything. We have such a great, powerful expansion opportunity for Nuve across our core verticals, but we do think that they'll opportunity present themselves, and we intend on looking for them.
spk06: Okay. Thanks, guys.
spk02: Thanks, John.
spk10: Thank you. Our next question comes from the line of Ashwin Shrivakar with Citi. Please proceed with your question.
spk14: Hi, Phil. Hi, David. I guess the first question I have is kind of look at the outlook, and you guys have talked a lot about what brings 2Q down into the 20s, I guess, organically, maybe the teens. but the re-acceleration and the visibility into that, because the back half does imply back to the low 30s, right? So is that, you mentioned, Phil, you do the modeling, I guess, based on client by client. Is that visibility coming from client conversations, or is there a macro assumption that you embedded? Could you talk a little bit more about that re-acceleration in the second half?
spk02: Yeah, certainly. I think, look, the only deceleration that we've seen in Q2 would have been FX. But based on timing of client activations that we're having visibility, we're seeing now the momentum within the business, which we are ahead of our expectations just in terms of April and May. So we're pretty confident. So Q2 at the current pace, excluding the FX headwinds, would have been significantly ahead of consensus. We were pretty pleased with what Q2 is shaping out towards being, and then actually the amount of new business that we'll continue building upon in Q3 and Q4. I think there's one thing that maybe I should highlight for everyone here, because we may have missed that. There's also the World Cup this year, as you guys know, right? And so the World Cup is going to be a meaningful opportunity for New Beto, which is And this year in particular, just because of teams that are qualified in Q4. So our progress in gaming will have a nice springboard for us as the years continue shaping up.
spk14: Understood. And then, you know, I just want to revisit that pretty healthy ad in employee count. Is that mostly in sales? And then the related question is, So definitionally, are your commission expenses primarily third party? So if you're adding direct sales, we should kind of see a flip within your SG&A commission expense goes down as a percent of net rails and employee comp goes up. Is that how to look at it?
spk02: Yes, exactly that. So, you know, Ashton, we had a slide in Dave's section of Capital Markets Day where how EBITDA margins were going to expand. And one of the things that we highlighted, as we continue expanding the direct sales force, third-party commission expenses will continue decreasing. So, yes, that's exactly correct. Got it. Okay. Thank you. Thank you.
spk10: Thank you. Our next question comes from Paul Treber with RBC Capital Markets. Please proceed with your question.
spk08: Good morning, and thanks for squeezing me in. Just a quick follow-up question just to clarify your comments on crypto. So you mentioned that crypto revenue would remain flattish in the vertical. I think that's what you said. But then also, you know, previously you said that 2022 would be down 50%. Is that more of the 50%? Is that more the industry? Or can you just help bridge those two comments, please?
spk02: Yeah, it just we're seeing crypto prices down. We have, you know, our objective and what we're working towards naturally with new ads and vertical expansions. We believe the vertical for New Bay will be flattish from a revenue perspective. We are seeing, naturally, shifts in the space with crypto prices down. But from a new base standpoint, the strategy and exactly what we're executing towards is expanding the wallet share with our current customers in our new regions. We have done that successfully. And with that, we're keeping the crypto vertical flattish for the remaining of the year.
spk08: Okay, thank you. That makes sense.
spk02: Thanks, Paul.
spk10: Thank you. Our next question comes from the line of Matt Cole with Autonomous Research. Please proceed with your question.
spk05: Hey, guys. Thanks for squeezing me in as well. Kind of just like one on the macro. If you guys think about your verticals and your clients within gaming, crypto, financial services, you could argue that they benefited from shelter in place. So I'm just thinking like when you think about your full year guidance, How do you bake in a decent amount of conservatism there?
spk02: Great question. So for us, we always look at week to week. What's interesting is when we started looking at crypto bumps for us and kind of power laying that forward, our verticals in one end benefited from them for certain, but the wallet share expansion that we had and the geographic expansion that we're having within all of those core verticals has dramatically outweighed any of the benefits that they've seen from a pandemic perspective. So we really like what we're coming back to. I mean, as a case in point, some of our largest gaming clients from a momentum from the top 10 perspective within Nuve are new clients that we've onboarded in North America. So the expansion of geographies is really, really important in all of our core verticals and wallet share expansion is also really important. And that's why We've always highlighted that we've gone from mainland Europe. We've doubled the TAM by coming into North America. We've expanded our TAM again into LATAM. We're cross-selling within our current base of opportunities as the significant amount of growth for Nuve comes from our existing customers, and we're executing on that. And as we add geographies, it adds to our TAMs, and as we add product capabilities, it adds to our solution stack as well. So you can't take one item in a vacuum and create a general blush for Nuve and is our product mix has also expanded dramatically, which is also really important. Our solution offering per region has also expanded, and actually our regional footprint has expanded as well. So all of those combined, pretty comfortable with all of our core verticals and the growth that we see in them.
spk05: Super helpful, Phil. Thanks.
spk10: Thank you. Thank you. Our final question this morning comes from the line of Andrew Hummel with West Park Capital. Please proceed with your question.
spk06: Hey, guys. Thanks for squeezing me in as well. Just a quick follow-up on the expense line, particularly as you guys are bringing on a number of new employees on the direct sales side. Have you guys factored in a meaningful increase in an employee comp just based on some of the inflation figures we're seeing this year? Just talk to what you have built in and if you've recognized that you have to absorb incrementally to what you built into the initial expectations for the year. All right, thanks.
spk17: Hey, good morning, Andrew. It's David. Yeah, certainly when we provide our outlook for the full year, we took that into consideration. The inflation fears and factors were kind of starting to stir a few months ago, so we certainly took that into account. Again, looked at it again as we reiterate our full year now. The other thing that I'd point out and you'd see this too, is in our share-based compensation. Like that's, that's part of how we compensate our employees. And you have seen that, you know, tick up over the quarters. Um, we do make sure that our, all of our employees are aligned with, with shareholders. And so we do, uh, we have, and we'll continue to grant them all, um, share-based compensation. So long-term incentive plan. And so that's part of it too. And, and that helps, you know, from a, uh, from an inflation perspective as well to just make sure, you know, we of course align all of our compensation, um, across the board. We don't look at just one component, but that's part of the overall compensation approach that we have is share-based compensation. And you have seen that tick up. And, of course, we factored, you know, considered that as well for the rest of the year, even though it doesn't affect necessarily our adjusted EBITDA.
spk10: Thank you. Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Gerstein for any final comments.
spk15: Thanks, everyone, for participating. As you know, we're always here to follow up if you have any questions, so please feel free to reach out. Have a great day, and we look forward to speaking with you in the future. Thanks.
spk10: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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