NEXI S.P.A.

Good afternoon. This is the Coruscall Conference Operator. Welcome and thank you for joining the NEXI First Quarter 2020 Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, let's turn the conference over to Mr. Paolo Bertoluzzo, CEO of Nexi. Please go ahead, sir.

Good afternoon or good morning if you are back in the U.S. and welcome to our close quarter results for 2020. I'm here with Bernardo Mingrone, our CFO, and Stefania Mantegaz, Judge for Investor Relations as usual, and we have a few other colleagues here. on the call in case we need to report for any more detailed questions. Today we will basically cover three topics. I will start by giving you an update on the COVID-19 situation here in Italy and most importantly what we see in terms of volume evolution with some sector-by-sector evidence as well. Then I will lend the floor to Bernardo, who will cover the results for the first quarter that we had somehow anticipated a couple of weeks back. And finally, we'll come back with some closing remarks on how we see 2020 going forward. And then I will leave the floor for Q&A. Let me start with the Executive Summit to make sure that it can give you a comprehensive view of what is happening here. So let's start with COVID-19. You know, Italy has gone through a pretty strict lockdown, one of the strictest in the Western countries, and it started earlier than in other places. The good news is that from May 4th, we entered in what is called Phase 2 with some reopenings, and I will tell you more about that. Second, as a company, since day number one, our total focus and commitment has been in ensuring business continuity, efficiency, security, as always, at the same time, safeguarding the health and safety of our colleagues inside and outside the company. We did do whatever we could to also help the country through initiatives to support consumers, merchants, institutions more in general. As you know, our business model is only partially affected by these current situations, at least in the short term, because our revenues are more than 50% related to the installed basins, therefore not directly impacted by the volume contraction in the short term. And our cost base is now viable, semi-viable, for about 38%. When it comes to volumes, and you'll see graphs later on, we had a good start of the year in line with the closing of 2019. with volumes going ahead in growth at about 5%. Then we saw a contraction throughout the month of March, which closed around minus 33%. And the situation in the latter part of March and throughout April, it stabilized around minus 45%, bumping up and down depending on the week because of the lockdown measures. I will comment more in detail on the trends on the different sectors and what we've seen in commerce that has been resisting actually better with some, I believe, positive signals on certain merchant categories. We will also comment what we've seen over the last seven days rolling for which we have detailed visibility. This is the week, the rolling week from the 2nd to the 8th of May where we saw some change in trajectory. with some recovery starting, I would say, a little bit across sectors, but it's really early, early days to draw any final conclusion here. On top of this, we've been, since the very beginning, observing customer behaviors and customer needs evolution, and we already shaped our plans to take this into account in our growth initiatives. When it comes to results, The first quarter of 2020 has been broadly in line with the first quarter of last year. EBITDA has been actually a bit ahead of that with 3.9% growth, while revenue has been marginally down minus 0.5%. We did continue to implement our key initiatives across the different areas of the business, investment services and solutions. As you can imagine, we've been accelerating that as much as we could, our e-commerce proposition for larger merchants, but also for SMEs, launching remote payment-dedicated services for the smaller merchants and entry-level offers to support the new merchants that were entering into the digital payment space. On-campus digital payments, we continue to push in particular on the most digital products, and we did also try to support customers by educating them in using our products to buy online throughout the crisis. Digital banking solutions really continue with our plans, and we also launched Nexi Open Ecosystem. This is our open banking ecosystem, and that includes partnerships with about 20 fintechs and technology companies, including Microsoft, Plug & Play, and others. Cost went down 4.8% thanks, obviously, to the impact of the volume reduction, but also to the continued work we're doing on efficiency. They're closing the quarter with a strong cash position with a leverage that is around 2.8 at the end of the quarter. We are also providing, and Bernardo will comment more about this, the performer financials for the Intesa San Paolo merchants acquiring the business acquisition, including these components, the revenues in the quarter will be up 1% and it will be up 6.3%. Finally, while it is very difficult, I would say impossible, to have a realistic, reliable projection for the revenues for the rest of the year for that part that is retrieved by the volumes, that 50%, we already started to implement a cash cost reduction program of about $100 million plus, while remaining absolutely focused on implementing our growth initiatives, our growth oriented investment. As you know, we have suspended our guidance a couple of weeks back, and as I said, we implemented these initiatives on cost and capex to minimize the impact on EBITDA and cash flow for the year. Let me now move to page five and start a little bit of an overview of what we see on the COVID-19 crisis evolution. Here on this chart, we try to simplify as much as possible the evolution of the situation from the FDI of people point of view. Here we are mapping with the gray line the active positive numbers per day in Italy since the beginning of the crisis. In the blue line we are mapping the number of Italians that are in intensive care across Italy. Here you see that both lines did accelerate throughout the first part of March, but then as the measures went into place at the beginning of March, and the lockdown measures went in place at the beginning of March, and went into place progressively throughout the country, you see that the acceleration curve is slowing down, and both curves reach the peak between the end of March and the second part of April. Now, the active cases of the positive are currently in the country are about 82,000. This is from yesterday, which is about 20% down from a peak that happened on the 19th of April of about 110,000. Most importantly, I personally believe this is the most relevant indicator because it talks about, not only about the number of cases, but also about the density And how difficult these cases are, if you look at the blue line with the number of people that are in intensive care, this curve, this peak at 4,000 at the beginning of April and is now, since yesterday, below the 1,000 cases with a reduction of 75%, showing that not only we have less new positive cases and more people are getting out and becoming negative to the virus, but also the new cases are of a different level of severity. As far as the Phase 2 is concerned, this Phase 2 started in Italy Monday last week on the 4th of May. As you can see in the boxes on the right, it started with the reopening of manufacturing, industrial production, business-to-business activities, and food delivery also for restaurants and bars, where you can also pick up your on food or drinks and eat them at home on the move. We also have some reopening of parks and visit to relatives who are allowed within your same region. In about a week, on the 18th, we should have the reopening of the other retail businesses, just as a reminder, groceries and food stores, as well as pharmacies and other high emergency businesses were already open. On the 18th of May, we'll have the opening on the rest of the retail, including museums and exhibitions. Obviously, there will be a list of measures that you can imagine in space to make sure this is done with strict control on the health and safety of the people visiting the stores, but also people working for the stores. On the 1st of June, the current plan is on the 1st of June also to reopen bars and restaurants and barbershops and beauty centers that as you can imagine, are the most difficult ones to be reopened. There is now discussion within the country, in the government, with the regions about the possibility to anticipate, in certain cases, the reopening of some of these categories earlier in May. Across this crisis and also today, the government has taken action to try and soften the impact on the country with a specific focus on enterprises, small enterprises in particular, I would say, that went under pressure because of the lockdown. But they also did put in place measures to support employment, to support families, to support the people that were the most exposed to the crisis. In mid-March, we had a decree that is called Cura Italia, which means care Italy. Then there was a second one at the beginning of April called Liquidita, which means liquidity. The focus was to provide liquidity and funding to enterprises, in particular small enterprises. The government is now discussing a newer decree that should come alive at some point over the next few days. It's called Relauncho, which basically means, obviously, relaunch. according to declarations across these three degrees, the government is basically putting 75 billion euros to support, as I said, families, employment companies, and they're also trying to leverage, to apply leverage and use a part of the money to allow the banking system to provide about 900 billion euros of funding and liquidity to to the economy. Everybody, as we speak, is very, very busy to make sure that these decisions go into place, and more importantly, they are effective and money arrives to citizens and to companies in our country. Moving to page six, as you can imagine, since the very beginning of the crisis, we put in place a task force under my personal supervision and the rest of the executive committee. The task force has been working on a daily basis to make sure that we work combining business continuity but also our colleagues in cooperation with the key institutions in our country. As far as people safety is concerned, we were able to basically put, after a few days, 95% plus of our colleagues working from home, working from remote, including customer care. We were in the country one of the first ones to put also customer care colleagues to enable them to work effectively from home, although you can imagine the tools and security measures that are normal into this case. Today, on a daily basis, out of a 2,000 people population in the company, we have about 20, 30 people per day that have to come through some offices or sites because there is no other alternative, but the number is really, really limited, and obviously they do it with all the necessary protection measures. As far as business continuity is concerned, our services across all different areas function regularly as well as usually even better than usual in some cases across the country. We maintain our service levels in some cases improved and actually It's interesting to see that capital NPS across various areas has been resisting well and in many cases improving as well. So this is what we've done to keep the business up and running. It's most important to provide continuity of our services, even how essential they are for the functioning of the society and of the economy. Now that we have started phase two, we will remain active. the current mode of operation for some time given the fact that the company is operating quite effectively from remote and I believe this will also allow other companies that need to have people going to work and therefore using public transportation to do it more safely as we keep our people in the current mode of operations for a bit more time. Moving to page seven, once we put our business well in control from the business continuity point of view and our people safe. We did do whatever we could also to support the country around a list of customer and social initiatives, having in mind in particular the smaller merchants. Here on this page you see some examples. I will not go through all of them, but obviously we did put a special effort in helping the businesses that were shut down physically even the smaller ones, to operate from remote with products such as Nexi Pay by Link that allows smaller merchants without a website to sell online simply sending, sorry, to sell from remote simply sending via WhatsApp, SMS, and email a link to their customers that then could pay with their digital payments. Or, for example, we did push education campaigns to cardholders to help them to buy online, even if they were not, let's say, highly experienced in buying online. On the other side, as you can imagine, we work with institutions to implement some of the measures that they decided. A big example is what we've done through our open banking platform, enabling a real-time bank data check to help the government push subsidies through Nexi together with the banks. And last but not least, we also promoted a collection for a donation for the creation of a COVID-19 hospital here in Milan with the support of employees, the customers, and management of the company. So this is about it in terms of it's like the more business continuity and other type of initiative to support the country. Now, let's move closer to Nexi. And before I talk about the volume dynamics that we've seen over the last couple of months and we currently see, let me before I do it remind everybody what is the impact of what is happening out there on Nexi business and economic model. Here on the left, you see the breakdown of our revenues. As a reminder, more than 50% of our revenues are driven by the install base, number of merchants, number of customers, number of posts, number of carts, number of IPMs. And while a bit less than 50% are driven by volumes. Here you see the breakdown across our three business lines. 36%, 59%, and 91% are the percentages of variable revenues. REVENUES ASSOCIATED TO VOLUMES FOR THE THREE DIFFERENT BUSINESS AREAS. NOW, WHEN IT COMES TO THE IMPACT WE ARE SEEING, OBVIOUSLY ON THE STORED BASE REVENUES, WE DON'T SEE AND WE DON'T EXPECT ANY MATERIAL IMPACT IN THE SHORT TERM. WE ARE CLEARLY MONITORING VERY CLOSELY THE RESOLUTION TO CONFIRM WHAT WE EXPECT TO BE A LIMITED IMPACT IN THE LONG TERM DUE TO the natural slowdown of new customer acquisition and new installations and potential SME distress. And clearly, it is also partially not in the medium-long-run margin, but potentially affected also by the replacing of certain projects, for example, new product launches or similar type of activities. When it comes to volume-driven revenues, obviously, we see a direct impact from volume contraction. On the right, you see instead the breakdown of our cost base. 60% of our costs are broadly fixed, while 38% are somehow viable, semi-viable, and therefore driven either by the volume of transactions or the level of activities, such as, for example, customer care activities, installation activities, viable compensations, and so on. And out of these, 38%, 20% is, in fact, fully viable because it has to do with external processing. Now, Moving to page 9, what have we seen since the beginning of our crisis in terms of volumes? Here, the numbers that you see on this page and the lines represent our acquiring volumes. We have taken the data that we see more dynamically and more precisely. which are the data for informational schemes for a part of the business and full data, including information schemes for another part of the business. Here, basically, what you see is that we had a good start of the year, around 5%, 6%, 7% year-on-year growth. That's the blue line that includes physical transactions, online transactions, also cash transactions from ATMs. And you see that January, February were progressing well. And then when the crisis started to hit, you see that progressively throughout March, the year-on-year growth rate went down to around 45%, 60% reduction year over year. That did continue basically until last week. We have decided that to highlight also the data from the last seven rolling days that are available to us and you see them on the far right of this chart with the blue line. And these data refer to the seven days that go from the 2nd to the 8th of May. This week is a bit of a special week because you have two days, the weekend days that are still in the previous lockdown measures and the five days of the working days that are instead into the what we call phase two mode already. And here what we can observe is that it seems to be some recovery starting with last week rolling, seeing a reduction of volumes on an earlier basis going more around the 30% in the 30% space. And we'll give you more detail in a moment around the underlying dynamics by sector. As far as online is concerned, I always want to remind everybody that online for us represents about 70% of our volumes here. You see that online did resist well or better to the crisis situation. However, it's important to notice the fact that online is also affected a lot by travel and tourism, which is a category that is highly intensive. in terms of online purchasing, and therefore it's important to look at these numbers by category. But the key message is volume is going down gradually in the first part of March, stabilizing around minus 50%, starting to see some possible recovery in the last few days as the summer reopening is starting. Page 10 is a bit of a busy page, so sorry about that, but we are trying to provide you as much evidence as we have on what is happening here. In this page, we try to go one level down in terms of categories, and as you can imagine here, under these numbers, we have billions of details that we are trying to summarize to make sure that it's understandable. On the left, you see the breakdown of the using terms of categories. The merchant categories, and here we're looking at acquiring volumes in basically three buckets. What we call the basic consumption, the light blue bucket, where we basically put groceries, maybe car retail, utilities, services, things that were kind of open or in any case that people need to continue throughout the crisis. That represents about 35% of our total sales. It's a 37% for e-commerce only. The second bucket is what we call genetic and discretionary consumption, such as, for example, clothing, household products, and other more discretionary services. These represent about 34% of total sales and about 19% for e-commerce. The last one of these, the category that we call the high-impact consumption, where we're grouping everything that has to do with hotels, restaurants, travel, tourism, transportation, entertainment, cinemas, all of this. And clearly, this is the category that is most impacted. And as you see, this category accounts for 31% of our total sales, which is the smallest. However, for the commerce channel, this is 44%, so it's the most important category. On the right, we're giving you the year-on-year growth rate for each one of these blocks for the month of January plus February, March, April, and the last week rolling that I remind you is from the 2nd to the 8th of May. And we are also trying to provide you the space between physical and e-commerce to give you as much insight as possible on this one. To be clear, we don't commit to report everything like this going forward because we believe it will just be not helpful, but now it's probably helpful for you to understand and therefore we're providing this detail. You can see that on basic consumption, basically we saw the continuation of the structural growth we've always seen. You see the numbers, 15%, 15%, 10%. Last week it was particularly positive, I don't believe there is anything particularly significant here because these were the shops that were open. And here you start to see that e-commerce was already growing nicely, 27% year-on-year. it actually did accelerate from March and April 30%, 40%. The second category, the generic discretionary consumption category, here you see that this category was hit because A, the shops were closed, and B, e-commerce, that there is a smaller impact in this category, but however, e-commerce was not really functioning at best. because you know very well that when demand on e-commerce did grow immediately, delivery chains, delivery systems went under pressure, and therefore merchants could not guarantee the delivery, the timely delivery as normal. And that's the reason why you see that now from the normal growth of e-commerce, As a combination of all these elements, this category was also growing 6%, went down from minus 62, minus 77% with e-commerce also suffering in the beginning, but then recovering very well as the delivery systems were improved and the situation was improving more in general. Therefore, see that in this category, while physical went down minus 65, minus 81%, actually e-commerce did double speed from 25 down to maybe then 47%. As far as high-impact consumption is concerned here, you see this is where the effect has been very visible and very strong, 10% growing to begin with, and then minus 68, minus 89, with both physical commerce and e-commerce suffering in a very similar way because at the end of the day, here you're in a situation where people were not booking or paying hotels, airlines, restaurants, and alike. So in total, you see what the effect has been from an 11% growth year-on-year, now went down minus 35%, minus 48%, and you see the split between physical and e-commerce. But actually, when you look at e-commerce, you see that actually e-commerce has been accelerating a lot into the basic consumption, the general discretionary consumption categories, and then the total was then affected by the very negative impact on the travel and tourism areas. One last focus on the last week rolling, that again I remind you is from the 2nd to the 8th of May, and I really believe these numbers have to be taken with a lot of caution because you know that in our industry there are a lot of daily effects and technical effects that may change or reshape the dynamics in unexpected ways. But we felt it was, in any case, interesting to share them, also because they go, all of them, in the same direction. Therefore, this gives us confidence that this might be a bit more robust. You see that overall, on the total, you had a little bit of recovery from a minus 40% to a minus 35%. with most of the recovery happening into the physical commerce. And you see that this recovery has happened quite similarly across all the different categories. So you saw not only some acceleration in the basic consumption, but also some recovery happening in the generic discretionary consumption and in the high impact consumption as well. Still very negative impact with a good 10 to 20 percentage points improvement across categories. Again, we are monitoring this on a daily basis. We hope this will be confirmed going forward, but I believe we should just take it as a data point without drawing too many conclusions on the topic. Finally, before I leave the floor to Bernardo to cover results, and we can go back on Q&A on these topics, as you can imagine, since the very beginning, we've been observing customer behaviors and somehow analyzing the evolution of customer needs throughout the crisis. We are convinced that there are certain behaviors that we have been seeing over the last couple of months that we remain because they don't represent new behaviors. They just represent an acceleration of structural underlying trends that were already very visible, but maybe they were moving a bit slower. And here, what you're seeing is, therefore, an acceleration. Based on this, we are already reshaping our product plans, accelerating or intensifying our effort on certain activities here. I'm not going to go through all the pages because you can read it yourself, but clearly, as you can imagine, what we are observing in terms of behaviors is that obviously, as far as the merchants are concerned, everybody is trying to go omnichannel, and not just the large ones that were already going in that direction. We saw a strong increase in volume in that space, but also the midsize merchants. They now see omnichannel as the only way to run their business. SMEs were particularly active, and that's where we're putting a lot of focus. Consumers did obviously intensify their activities online, but also they become more active more interested in understanding how they could run their digital payments from apps and from online. As well, digital banking solution, a lot of interest in these to be payments as checks, for example, or decreasing, and importantly, we could not use checks, or, for example, banks and corporates were trying to digitalize their services faster. Across the board, we also saw a growing accelerated interest from the banks digitizing their processes and their products as fast as they could with clearly an omni-channel focus. On the bottom of the page, you see some of the initiatives that have been accelerating and where we're intensifying investments from, for example, omni-channel proposition in accession to middle-archive corporates to, for example, tracking partnerships to store platforms to help SMEs to go online very rapidly in a very simple and cost-efficient way with e-commerce in a box type of solutions, mobile POS acceleration, Pay by Link and MD4, cash and digital payments, similar type of activities and growing interest for everything that can support a more digital life. And I would say on digital banking solutions, a similar type of moves. Clearly, everything that you see on this page was already well in our plans. For us, it was just a matter of accelerating or attaining certain activities, but we are convinced that overall he's confirming the secular growth of our industry in our country in particular. I would stop here on this topic and happy to go to questions later on. Bernardo, I leave the floor to you as well. Thanks Paolo. Good afternoon everyone. We're in slide 13 where we start with revenues. I'll try and be quick in this section because this was largely summarized in our trading state, trading update back in April in order to leave more time for Q&A. So starting with revenues, group revenues, as you see we closed the quarter slightly down year on year, 0.5% down year on year. Our trading update highlighted how we were expecting 220 million euros of revenues We closed the quarter at 225, slightly better than that. With regards to EBITDA, even there we had made reference to it in our trading statement with EBITDA expected to be in excess of 110 million euros for the quarter. We closed at 115, so slightly better than that. This is a 4% growth year-on-year, which basically reflects a strong start to the year of January and February with strong volumes and strong performance both in the revenues and the cost side. and then March, which suffered increasingly throughout the month of the lockdown, which progressively spread from the north of Italy to the rest of the country, as Paolo has described in his section earlier on. Overall, the margin still increased from 49% to 51%. The revenues lost with volumes are, I would say, higher margin revenues, so the impact was significant on the margin. It would have been higher than that. but as we expect things to improve, we should go back to the earlier kind of pace of improvement of the EBITDA margin. On slide 14, we start looking at the various divisions in our usual breakdown, starting from merchant services and solutions. Just to remind us, Paolo highlighted earlier how roughly half of our revenues are volume driven, roughly half of them are are install-based driven. In merchant services and solutions, this is roughly 40%, which is install-based and 60% volume-driven. This has been such that in terms of the impact from the foreign volumes, it was mitigated by the install-based component and revenues were down 0.9% in the quarter of €105.1 million. The performance in the quarter was, again, strong in the first two months of the year, weaker in March, sustained by international scheme growth. Domestic debit was weaker. We've seen, as Paolo commented on, stronger growth in e-commerce, which was less impacted by COVID-19, less impacted, obviously, in physical sales, and in those sectors which were not impacted by the lockdown. So, for instance, travel or hotel and et cetera, we've had... very strong acceleration, as we have commented on earlier. We have focused our attention on, as we have in the past, on new partnerships that are aimed at accelerating e-commerce for SMEs. There are a few examples of these here, and on launching new products which enable merchants to tap the online market, such as Pay-by-Link, or indeed for micro-merchants with the Next You Welcome package, which we discussed a few moments ago. Cards and digital payments shows a similar picture to merchant services and solutions. Here, the percentage of volume-driven revenues, we're on slide 15, is slightly higher than it is in merchant services. We have volume-driven revenues of about 40% and 60% being install-based driven by card management fees and the likes. Revenues were down 0.4%, so again, similar impact on the cards as we had in merchant services. Even here, we have volume growth, stronger international schemes than it is in domestic debit. We see the benefit here in terms of our cards being transacted on overall global e-commerce players, which we don't see in the acquiring side. Think of an Amazon of this world or a Netflix and so on and so forth. We still make money on those merchants through our card business, although we don't see the volumes in the acquiring side, and hence the Reduction in volumes here is slightly lower than we saw on merchant services. In general, our initiative in the mobile payment space with YAP has performed well, notwithstanding the circumstances, and we launched a number of campaigns aimed at stimulating digital payments under COVID, which helped sustain the performance in the quarter. Digital banking solutions, this is the division which is less impacted, I would say, by by COVID, given that the revenues are predominantly install-based driven, so ATM machines, digital corporate banking workstations, and the likes. Again, growth in the quarter, year-on-year, close to 1% growth, slowed down by the impact COVID has had on most of our clients, our banking clients. Nonetheless, a quarter in which we have managed to register growth, and we have, more importantly, launched our Nexi Open platform, platform, which Paolo described earlier. Moving on to costs, we made reference to the fact that approximately 20% of our cost base is directly linked to volume. So in the first quarter, it's fair to say that you have seen through the March numbers or in the first quarter, a reduction in cost, which was primarily driven by the lower volumes we experienced in March. We'll talk about our cost containment initiatives later on, but we have the benefit of this in one out of the three months of the quarter, and this helped us reduce costs overall by 4.8%. There are some other automatic adjustments to our cost base which come with lower volumes and lower revenues, such as variable compensation, but this is pretty much the extent of the cost cutting which happened in the first quarter. We have both personnel costs down 4% and the non-personnel costs down 2%. 5% and more cost cutting in the future in order to offset the negative effect of volumes on our revenues and preserve cash flow and profitability. One word on credit risk. Obviously, for acquirers, credit risk tends to be an area of concern for investors, for acquirers themselves, obviously. Given the nature of our business and our underwriting policies in terms of the risks we're willing to underwrite as acquirers, Fortunately, our credit risk exposure to sectors such as travel, aviation, and the likes is limited, and therefore, to date, we can say that we have this limited exposure, which isn't particularly concerning at this stage. In the first quarter, I would say there was one non-COVID-related event in January, which led to a default, similarly to what we have in any given year. As I said, it wasn't COVID-related. It was actually related to corporate card businesses provisioned adequately in the quarter. But we don't expect this to be materially different in the future, particularly if the government initiatives, which Paolo was highlighting earlier, are as effective as we hope they are. Slide 18 gives us an overview of our overall net debt. Clearly, it's more important to focus on We will be in the future rather than where we are in March, given that March is in the quarter. The quarter is not a runway quarter, given that COVID only impacted us for one out of the three months in the quarter. However, we generated net cash of approximately €60 million, and this helped reduce net financial debt to €1.42 billion, with an overall leverage level of 2.8 times This is very far from the 5.75 times leverage, which is the only covenant we really worry about, which would give term loan lenders the option, if they chose to, to recall their term loan, the $1 billion term loan. And as I said, we don't expect to be anywhere close to that anytime soon. We also issued the convertible bond back in April, given the public disclosure. This has allowed us to further strengthen our liquidity position and positions us very well to complete the funding of the Intesa acquisition in due course, given that we are fully covered for it thanks to the bridge facility, which takes us to the end of next year. Slide 19, I think, gives you one of the most interesting pieces of news compared to the trading update we published in April, which is the pro forma number for NEXE if we had closed the Intesa acquisition on the 1st of January, for instance. This is the economic nature of the agreement. We take full economics of this book from the 1st of January and we will perform our numbers once we close the transaction in the summer starting from the 1st of January. We have given you a preview of what the quarter would have been if closing had occurred. You can see that revenues would have actually increased by 1% year-on-year and EBITDA would have increased slightly more at 6.3% year-on-year thanks to the fact that part of the volume effect on the merchant book would be compensated by the protection mechanism we negotiated with the seller, which allows us to offset part of this underperformance with their distribution fees. I mentioned the convertible bond, so I won't spend any more time on that, and I'll hand the floor back to Paolo to wrap up. Thank you, Bernardo. Let me wrap up to share with you how we see 2020 going forward. I'm on page 20. As you can imagine, it will have a strong, reliable view on the rest of the year as far as the variable component of our revenues that 50% is concerned. This will depend on the length of the crisis that maybe is now clearer, but it will also very much depend on the speed and the nature of the recovery in the rest of the year. As you can imagine, we are considering multiple scenarios for our own internal planning purposes, but none of them is, as we speak, reliable enough to be used as a reference, as a new reference. On the same time, despite the fact that revenue scenarios are not yet completely clear, we have decided to take immediate action on the cash cost base across all elements, across obviously the volume-based costs that are naturally affected by the evolution of volumes, but also throughout the more discretionary spending categories such as the other operating expenses the capital expenditure and the rest of the transformation costs. The AUC is an example. Obviously, we are replacing hiring, consulting expenses in terms of travel sales, top management in myself and top management in this site to waive voluntarily. Today, our short-term variable pay for the 2020 on CapEx, we are postponing less strategic projects and replacing part of our IT strategy, postponing less strategic investment transformation costs, we are doing a few other things. So, in general, an important intervention to minimize the impact on EBITDA and cash legislation for the year, but I want to be clear, we will continue to invest and spend our effort and the money necessary to push the key initiatives that are in our plans, not only for the year, but for the coming years to drive future growth and continue to make our business more and more efficient. Page 21 is just, if you wish, a summary. On the left, you see our previous guidance. It is now suspended. We confirm it is, for the moment, suspended. Again, our quick considerations in line with what you just said. Now 2020 volume driven revenues will depend on the duration of the peak and the speed of recovery. We are implementing this 100 plus million cash cost plan to mitigate the impact on the data and cash flow while continuing to focus and invest on our key initiatives for growth and efficiency and we're sitting on a strong cash position. I would stop here and we are ready, I believe, to take questions.

Excuse me, this is the Coruscant Conference Operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and 1 at this time. The first question is from James Goodman with Barclays. Please go ahead, sir.