Nuvei Corporation

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to New Bay Corporation's fourth quarter 2022 earnings call. As a reminder, this conference call is being recorded. I'll now turn the call over to Chris Mamone, head of investor relations. Please go ahead, Mr. Mamone.

Thank you, operator, and thanks to everyone for joining us this morning. With us today are Philip Thayer, chair and CEO, and David Schwartz, CFO. As a reminder, this conference call is being recorded and webcast and is copyrighted property of Nuve. Reprodcast of this information in whole or in part without written consent of Nuve is prohibited. Earlier this morning, Nuve issued a press release announcing financial results for the three-month and full-year period ending December 31, 2022. The release, as well as an accompanying supplemental slide deck, is available in the events section of our investor relations website, investors.nuve.com. During this call, we may make certain forward-looking statements within the meaning of the applicable securities law. Such forward-looking statements involve risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of a business or development in New Bay's industry to differ materially from 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 Bay's filings with the Canadian Securities Regulatory Authority and on the company's website. Our discussions today will include non-IFRS measures, including adjusted DPDA, adjusted net income, and adjusted net income per share. Management believes non-IFRS results are useful in order to enhance our understanding and our ongoing performance, And they are not a supplement to and should be and should not be considered in isolation from a substitute for IFRS financial measures. Registration of these measures to IFRS measures is available in our earnings release and MDNA. We'll open up the call for your questions after our prepared remarks. During that portion of the call, in order to get to as many people in queue within the allotted time, we ask that you limit to one question and one follow-up. And with that, I'd like to now turn the call over to Phil.

Thank you, Chris, and a warm welcome to you as a new member of the Nuve team. I'd like to start by thanking our more than 2,000 colleagues around the world for their relentless effort and commitment to supporting our customers and driving the success of our business. 2022 was an exceptional year for Nuve, and I'm so incredibly proud of everything we accomplished together. It's so early days, and we are still very much on the ground floor. We remain heads-down focused, executing on our strategic initiatives, investing in the business, and expanding our use cases, all the while maintaining both our just-debit down margin and enviable free cash flow profile throughout the year, which, in our opinion, is class-leading within the broader Hygro FinTech landscape. I'll share some insight here later in my prepared remarks to help you frame our fourth quarter and full-year performance. Today, Nuvei enables leading discretionary and non-discretionary use cases, supporting online retail, e-commerce, marketplaces, online gaming, video and social games, financial services, travel, B2B goods and services, healthcare, faith-based and nonprofit, education, government, and utilities. And naturally, we fully intend on continuing to scale and expect to add more use cases as we continue growing both organically and inorganically. We've totally transformed the business from both a vertical and a distribution perspective, substantially expanding our time to now include global e-commerce, integrated payments, and B2B, with a lot of white space for continued growth globally. With all of this, we've maintained our differentiating and compelling financial profile, which features a unique combination of growth, profitability, low capex, and high free cash regeneration. In February, we completed the acquisition of Paya, and as a reminder of the strategic rationale for the transaction, first, it enhances our ability to grow our footprint in integrated payment markets, which is one of the largest and most attractive opportunities in payments. Second, it diversifies Nuve's business geographically, giving us a much bigger scale in North America with entry into new, large, under-penetrated, non-cyclical vertical markets and significantly augment our existing distribution. Third, it significantly expands NuBase presence into the large and under-penetrated B2B payments market. Fourth, it accelerates our existing growth strategy, which is driven by product innovation, geographic expansion, growth within our existing customers, as well as the acquisition of new customers. In addition, the transaction spans our M&A scope to include ISVs, B2B, and proprietary software opportunities. And fifth and finally, the combination reinforces our differentiated and compelling financial profile. The integration with Pi is going to plan, and while early, we have identified several incremental use cases with the potential to drive some very compelling revenue synergies. We're off to an excellent start, and the acquisition is accreted in the first year, so we're really excited about what Pi delivers to you today in 2023 and beyond. As we think about the year ahead, it's really a continuation of all the things that got us here. Being focused on our strategy, transforming the business, and pursuing the opportunities we have in front of us to further grow the platform. We will continue our disciplined approach to hiring and investing in the business as appropriate. As stated, we've never pursued growth at all costs. We'll also continue to allocate excess capital to shareholders in efficient ways, similarly to how we prioritized share buybacks last year, repurchasing approximately 5% of our public float. Turning now to our financial results, total volume for the fourth quarter was the highest it's ever been in any previous quarter, driven by broad-based strength across our platform and exceeded $40 billion, increasing 28% on a reported basis and 33% on a currency-to-currency basis over the prior year's fourth quarter. Revenue for the fourth quarter was $220 million. Revenue at constant currency of $233 million grew by 10% and was towards the high end of our outlook range. Most importantly, fourth quarter revenue on a constant currency basis, excluding digital assets and cryptocurrencies, grew 26%. It is our hope that this additional disclosure helps you appreciate and frame the momentum of the business. Taking it one step further, that 26% growth rate means that we face approximately $35 million of revenue headwinds in the quarter, which is comprised of $12 million from changes in foreign exchange rates and $23 million from digital assets and cryptocurrencies on a constant currency basis. And remember that because we are an at-scale platform, the majority of those dollars flow to the bottom line. So the fact that we generate just an EBITDA of $86 million with a 39% margin in the quarter reflects our outstanding performance. Looking at the full year results, total volume of $128 million increased 34% on a reported basis and 39% on a constant currency basis, reflecting our rapidly growing market share. Revenue increased 16% to $843 million, or 22% growth on a constant currency basis. Adjusted EBITDA increased 11% to $351 million, and free cash flow increased to $303 million. We are really pleased with our results and are motivated and encouraged as we execute forward with strong momentum exiting Q4 and entering 2023. Taking a closer look to our results by region, in North America, revenue grew 17% and 12% respectively in the fourth quarter of the full year. It is worth highlighting that for the first time, our e-commerce direct channel in North America represented our largest distribution channel in the region. and grew 65% compared to last year's fourth quarter and increased 54% for the year. We've made great progress here and continue to invest in both senior talent and distribution as we focus on establishing a leadership position in this region. In EMEA, revenue declined by 9% for the quarter but increased 18% for the year. results in Q4 were mainly due to the negative impact and fluctuations of foreign exchange, as well as the volatility in digital assets and cryptocurrencies. Remember that the majority of that exposure originates from European operators. In LaTown, we continue to see our business accelerating rapidly, driven by our investments in the region, with significant new business and wallet share expansion from current customers expanding into those countries. As a result, revenue increased 90% and 45%, respectively, in the fourth quarter of the year. In APAC, Revenue grew up by 107% for the quarter and 36% for the year as we're scaling our acquiring capabilities in Singapore and Hong Kong and starting to see real momentum. More recently, we launched in Australia, which is an exciting new market for Nuve and one in which we've already attracted significant customer interest for our solutions. So our momentum in both LATAM and APAC is strong and it is our objective to accelerate by expanding our geographies in those regions. Turning now to operating trends for the fourth quarter. Notably, we saw some of the largest volume days in our company's history, including intervals of processing more than 500 transactions per second as we supported our customers during peak periods in the quarter, such as Black Friday and Cyber Monday. These were record-level activities for New Way and represent approximately two times previous transaction-per-second peaks. What's exciting about these record activity levels is that we're seeing real momentum from our accelerated position in new verticals as we scale, and this additional exposure creates a steadier baseline that helps us to offset historical seasonality. Double-clicking for the quarter, we saw online retail grow 253%, travel by 81%, online gaming by 39%, and video and social games by 38%. Beyond these verticals, our growth was widespread, except for digital assets and cryptocurrencies, which for the fourth quarter was down approximately 58% compared to last year's same quarter, with indications that it has bottomed and stabilized. Whether or not that turns out to be the case, it's important to reiterate that this vertical is no longer material to NewBank, given all the great work we've done further diversifying the business and growing organically and inorganically. Based on the fourth quarter revenue from digital assets and cryptocurrencies, We expect this vertical's contribution to revenue will continue to decline and only represent approximately 5% going forward. Moving on now to updates on our go-to-market efforts. We've made amazing progress over the past two years investing in our brand, growing our global direct sales team, and increasing our distribution across all regions, ensuring that both we and our technology are local and accessible in language and in time zone to our customers with presence around the world. We've enhanced our commercial organization structure, established our sales enablement team, and created a dedicated strategic accounts group focused on target accounts across all verticals of focus. And combined, these initiatives are helping us drive greater productivity. I'm really pleased with the progress we've made, and naturally our plan is to push further and harder to demonstrate our capabilities around the world. Our capabilities gives us the right to win our fair share of new business, and we're winning as you've no doubt seen. To help frame the momentum in the business and our advancements in our go-to-market, new business revenue, excluding digital assets and cryptocurrencies, increased 23% in this year's fourth quarter. And we're really winning the who's who in our verticals, including enterprise-level customers last year, like FanDuel, Sheen, Epic Games, OnBuy, Lottomatica, Le Pen et Bleu, Air Transat, Unibet Italy, Turkish Airlines, Virgin Atlantic, Radisson Hotel Group, DraftKings in Ontario, WestJet, Rappi, and more recently Vitex, amongst many others. These new customer wins along with a deep and growing pipeline are a great indication that our investments are yielding excellent results. Paya as well has reported continued success across their partner ecosystem, including more than a dozen new signings in the fourth quarter. New business launches and activations have driven strength within its focus verticals with particular momentum in government. And our early engagement with Paya partners has been excellent in terms of keen understanding about the global go-to-market opportunities in front of us. Moving on now to our product and technology. We are a global technology company with more than 550 engineers. We're passionate about innovation, never standing still, and as a result, continuously investing in product in order to drive more feature functionality within our platform. Our right to win is powered by our technology stack that goes far beyond acquiring, helping our customers connect with their customers in any currency, country, or payment methodology, all via single integration. This flexibility allows our customers to onboard with us, select the appropriate module a la carte that best fulfills the need at the time of onboarding, and grow with us by expanding solutions, geographic reach, and payment mediums as their own business evolves. Our platform operates freely as a gateway, a payment orchestration layer, or full processor depending on region of operation and customer requirements. This flexibility allows us to prioritize global expansion by entering markets as either a paying facilitator via VIN sponsorship or full licensing and self-sponsorship, all in a seamless experience for our customers. In North America, we have historically used third-party processors to clear and settle transactions on our behalf, which is known as back-end processing. But in the fourth quarter, our journey to enable our platform accelerated with a successful pilot to authorize and clear transactions as we do in all other regions. Some of the immediate benefits upon project completion will include driving significant efficiencies, enhancing transaction approval rates, simplifying global reporting, enhancing transaction interchange qualifications, streamline customer experience, facilitate reconciliation, and drive an overall reduction in cost, thereby enhancing our margins. As for the longer-term structural benefits, we will control the entire global roadmap with the ability to accelerate the pace of new product innovation and further distance ourselves from peers as one of the few truly global payment enablers. As you can appreciate, this is another major milestone which we expect to complete over the next 18 months. In addition, we launched more than 150 platformer product releases in 2022. Selected launches in the fourth quarter include expanding our alternative payment methods, now supporting 603 methods available to our customers, end-to-end local card acceptance, clearing and settlement for Visa and MasterCard Australia via our own licensing and processing, in-country direct acquiring in Belgium for local card network Bancontact, acquiring services for American-sponsored cardholders in the Canadian gaming market, And these are just a few examples of recent product launches. So a lot of great momentum which continues to set us apart from our competitors. And remember that each new product solution expands our TAM and offers us an incremental platform to grow with our customers as we remain focused on relentlessly helping them execute on their own growth initiatives. Just as importantly, with each new product launch, we increase the gap relative to both new and subscale entrants into our ecosystem. As we look to the year ahead, we think it's helpful to revisit the main building blocks of our growth algorithm. The first building block is that we grow with existing customers and now B2B and integrated payment partners by adding new geographies and new capabilities along with leveraging our customers' own growth vectors. The second building block is a compounding effect of the previous year's new business cohort, which drives a greater contribution the following year. To better illustrate this dynamic, for each of the past three new business cohorts, Revenues more than doubled from those vintages in year two. The third building block is new in-year business, which as I just highlighted, has been accelerating. And the fourth building block is inorganic via strategic M&A. With that framework in mind, we're already off to an excellent start to the year with a strong January and February. It's noteworthy that February average daily volume were above January and results for the first week of March are encouraging. In addition to this early momentum, we're not seeing a slowdown and remain on schedule with our pipeline conversions and new merchant implementations. With respect to the integration with Paya, I'm very pleased with what I've seen so far. While it's early, we are motivated by the revenue synergies and have found incremental use cases for our technology beyond our original expectation. As I've mentioned previously, we continue to invest in the business and our priorities for 2023 are investing in our commercial, technology, and product teams as appropriate, launching in five new geographies, and scaling our open banking, embedded finance, and unified commerce offerings. Finally, turning to capital allocation for 2023, aside from debt repayment and continuing to be opportunistic with strategic M&A, we'll prioritize our excess cash towards share buybacks. Turning to our outlook for the year, we expect revenue of between $1.22 billion and $1.26 billion for reported growth of between 45% and 50%. Unpacking this further, we expect Nubase organic growth rate excluding digital assets and cryptocurrencies to be between 23% and 28%. And thinking about our growth cadence, remember that we are lapping a strong crypto comparable in the first half of the year, so we anticipate that our growth will accelerate in the second half of the year. Before handing it over to Dave to cover more details about our financials and our outlook, I'd like to formally welcome our new colleagues from PIA, and once again, thank and congratulate all our new big colleagues for an exceptional year. With that, I'll turn the call over to Dave.