Nexi Spa Azioni Ordinarie

Good afternoon. This is the Call School Conference Operator. Welcome and thank you for joining the NEXE Full Year 2021 Preliminary Financial 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, I would like to turn the conference over to Mr. Paolo Bertoluzzo, CEO of Nexi. Please go ahead, sir.

Thank you and good morning to everyone joining this call. Welcome to our results call for fourth quarter 2021 and most importantly for full year results for last year. As usual, I'm here with Bernardo Mingrone, our CFO. Stefania Mantegazza leading our investor relations team and a few other colleagues that may help us to address any specific issues and questions that you may have. The structure of the presentation today is very much in line with the past. We'll give you a quick update on what we see in terms of volume dynamics as we basically follow the evolution of the various COVID waves. Then we'll move into results. We will give you an update on our integration and transformation initiatives. And most importantly, at the end, we will also share with you the new ambition for 2022 for the new group, including also SIA. So please always remember that when we talk about results for 2021, we talk about NEXE plus NETS. Instead, when we talk about guidance and our ambition for next year, we're talking about the new perimeter, NEXI plus NET plus SIA, given the fact that at the end of last year, we've closed the merger with SIA as well. We will probably go pretty fast in the presentation. We believe it is quite self-explanatory so that we can leave more time for your questions. So let me start with the volumes. Let me start with the key messages of the day. Three key messages for today. First message, continued volume growth, I would say, especially in Italy, but also with positive trends also in the other geographies, despite the Omnicom variant that came in December, basically were affecting Italy. some geographies in earlier than December. We've seen and we are now seeing double-digit growth in Italy in the second half of January. So there is more recent trend as we start to exit slowly, but hopefully in a consistent way from these latest COVID variants as well. So we see compared to pre-COVID levels, so to compare to 2019 more than double digit growth in Italy driven by a very solid growth in basic consumption and Italian cars growing anywhere in between 25 and 30%. We also see continued positive volume growth in the Nordics in the fourth quarter with actually basic consumption growing above 30% compared to pre-COVID. Germany is actually still recovering, but a slower space due to the larger exposure that we have in terms of volumes to travel. Even here, basic consumption is actually growing double-digit nicely, anywhere in between 25% and 30%. SMEs seem to continue to accelerate faster than larger merchants, which is a positive for our economics. And across all geographies, we continue to see a strong acceleration from cash to digital payments growth. in the sectors in the industry that are less affected by COVID. So, first message, continued volume growth despite the arrival of the Omicron variant. Second key message, strong financial performance in the fourth quarter and for the full year. Revenues were up 11% in the fourth quarter and 10% for the full year, 11% for the fourth quarter despite we were not expecting actually the fourth quarter the Omnicom variant coming in in November, December. Strong revenue growth, in particular in merchant services and solutions, with both Nexia Nets growing about 13% in the quarter and 11% for the full year. E-commerce continues to perform strongly at about 29% growth versus last year. EBITDA, 12% plus, plus 20% in the quarter, and also in the year with continuing margin expansion. This year, there is a 1% point margin expansion across the new entity. Third key message, we continue to progress in creating the new company, the European Paytech Leader. As you know, we have closed the deal, the merger, next year, at the end of 2021. As you can see in one of the attachments, we've seen a very strong performance in the year from SIA standalone, basically in line with the performance of Nexi and NET. Our work in integrating the companies and driving the synergies on the back of it continues and we confirm that in 2022 we plan to deliver about €100 million of cash synergies. Last but not least, I will talk more about this as we go forward. Strong progress on the ESG front. It is more and more important for our future, as it should be for any other company, with actually strong progress, very well witnessed by strong improvements in the ratings. Standard and Poor Global at 68 plus 7 points versus last year. CDP, A minus versus C last year. So strong progress positioning our company in the top quartile of the industry and we'll continue to push for more. So all in, we are delivering the ambition that we had anticipated in July on the new perimeter and which is already higher than what we had anticipated committed to at the beginning of the year, despite the arrival of the Omicron variant. And for the new year, assuming that we will come back to a normal situation as far as COVID is concerned from the beginning of the second quarter across all geographies, we expect to have revenues growing anywhere between 7% and 9% with actually merchant services, and this is very important, growing double digits, with EBITDA growing anywhere between 13% and 16%, very well supported by continuing effects of our operating leverage and the positive impact of the synergies that I've mentioned, although a good part of the synergies, we decided to reinvest them in accelerating future growth on our highest growth opportunities in particular I would say Germany and e-commerce. Now let me jump into volumes and I go directly to page five. Here you see as usual the dynamic that we observe on the merchant side of the business. Again all these numbers, the recent numbers compares ourselves still to 2019 to be able to give you a constant benchmark. that is the relevant one. Here you see that in Italy, we had a bit of a slowdown at the end of last year and the beginning of January as well due to the lockdowns, but more in general due to the fact that I think across most of the countries, almost 10% of the population was either infected or actually in quarantine because of contacts with infected people. The good thing is that as the situation started to improve, you see that the second half of the month, we were actually as a total 20% growth versus 2019, which is the highest performance since the beginning of COVID, and with a nice 26% on Italian cars, while international travelers coming to Italy are unfortunately still weaker, even if at levels that are much better compared to the ones of the previous waves. If we go to the next page, as usual, you have the split across the three macro categories. And here again, you see a super strong acceleration of the basic services categories from groceries to general retail to pharmacies, utilities, and so on and so forth, growing nicely at around 40% over the last month, basically. You also see that in the latter part of January, also the other two categories, high impact and discretionary consumption, came back into positive. These two categories are also very much affected by the weakness of international travel. If you look at these two categories for Italian cars only, they're already actually growing double digit at around 10% each one of them. If we now move to the next page, we extend the picture to the other key geographies for us, the Nordics and the Dutch region. Again, here you see that both of them have been affected by the new variant effects across December and January. However, good news for both situations is that we really see a super strong growth in the basic consumption sectors with actually the Nordics growing above 40% in January which again is a great signal of a much further potential that is also in the Nordics despite the very high penetration that is already present there and also in Germany in January we've seen a 27% growth in the in the basic sectors with groceries growing actually even more than 40%. As always, I want to remind everybody that the overall volume dynamic in Germany in particular is affected by the fact that there is, in terms of volumes, a high weight for the impact sectors, the travel sectors in particular, that as you can imagine are very much affected by the COVID situation. Moving to page eight, here we give you, as usual, a snapshot of some of the sectors that have been particularly stronger in terms of volume growth, always compared to 2019. I will not go through all of them, but you see many, many sectors growing, not only double digit, but in the 30s, in the 40s, In some cases, above 60%, 70%. I just want to underline one sector that is gross. Gross is an important sector across all geographies and I think is also one that is very telling when it comes to cash to digital payments conversion and is one that is not affected by COVID. 65% growth in Italy, 37% growth in the Nordics, 42% growth in DAX. So very good. continued acceleration of the shift for digital payments. So this is it in terms of volumes. Happy to take questions when we come to our Q&A session. Let me now move to results, page 10. Let me start with the bigger picture, total group. And again, here the perimeter is NEXE plus NETS. For the year, plus 10% of revenues, actually plus 11.1% in the quarter with a nice acceleration in the quarter. EBITDA plus 12%, 12.1% in the year plus 11.6% in the quarter for the full year, a one percentage point margin expansion. Moving to the individual business units, and here I try to give you, as we normally do at half-year and full-year results, a bit of color of what is happening in terms of the business activities as well. When it comes to merchant services and solutions, We spent a good amount of time on this topic in our last results call, so I will go a bit quicker here. Let me just mention a few relevant points. SMEs represent 59% of the revenues in the merchant services space. They continue to progress well, 13% volume growth. compared to the same in the last quarter to compare to the same quarter in 2019. We continue to see good traction, good acceleration in Germany with our all-in SmartPay digital proposition for SMEs as well as we continue to see a very good traction for our new-to-cards proposition with the mobile POS in Italy. Now this proposition represents around 20% of the front book and last but not least let me also mention the fact that we are continuously expanding the contribution of our complementary channels across geographies but in particular in Italy where actually complementary channels contribution grew by three times in 2021 compared to 2020 and we will continue to push in that direction as some of the new customers are actually shopping through different channels and not necessarily directly from the banks. For the second area, e-commerce, 23% of our revenues with the progress, I would say, across the board, with the progress with our PSP propositions, acceptance propositions, I would say, across Germany, the Nordics, and Italy as well, with a growth of 50% of new gateway activations across compared to pre-COVID levels. We also continue to expand the capabilities that we have on the product side. And in parallel to the PSP efforts, as you know, we are also very focused on the account-to-account alternative and method solutions where we own very nice assets in Poland and in Finland that are doing really well. But at the same time, we integrate more and more in our acceptance solutions, third-party solutions, third-party account-to-account solutions like, for example, Bancomat Pay in Italy. Last but not least, we continue to see a very strong performance of our own buy-now-pay-later solution of rate pay in Germany, but at the same time, also here, we are extending our portfolio of partnerships to be able to offer to our merchant customers alternative solutions. by now plethora of solutions across all geographies. Last but not least, the larger merchants, the larger omnichannel merchants that represent about 9% of the total revenues in merchant services and therefore about 4% of the total for the company. Again, here we continue to see good performance, especially in industries where we focus, such as, for example, food retail. In here, we continue to win or renew against both traditional players competition, but also the newer competitors that are coming into the space. At the same time, the other thing that I want to underline is that we're progressing our sales plans as a new group to be able not only to respond to new tenders cross-border, but also to start upselling to customers that we have in one geography that are not yet our customers in the other geography. And there is a nice pipeline being developed in that space. So moving to the numbers, page 12, in the quarter in merchant services, we did grow 13.3%. And this is an acceleration in a year that we are closing at plus 11.4%. You also find here some data on volume dynamics versus 2020, but I will let you read them. And therefore, let me jump to the next business unit, page 13, cards and digital payments. Again, business update here. Here the business, for your memory, is about two-thirds of revenues in Italy and about a third of it in the Nordics and in the rest of Europe. In Italy, we see good traction of our credit proposition with the licensing banks, also supported by a good performance from our installment solution, from our binomial later solutions that is available as an option on our credit cards. We have also launched the credit premium product that is receiving a very, very good support from the banks and good traction in the market. As far as debit is concerned, international debit is continuously progressing well. We did add 1.5 million cards in the year compared to the year before. Volumes are growing almost 30% in the year and almost 40% in the fourth quarter. Again, we also launched the premium product in this space and we see a good traction for that one as well. In parallel, As you know, we're also serving the banks and the customers of the banks on the national debit proposition on Bancomat, where we've seen a good volume progression. But most importantly, especially now with the combination we see, we're actually partnering with Bancomat to help Bancomat and the banks develop the next generation platform and solution and offering for the Italian market. Last but not least, I think it's just a nice little point. contactless up 80% to 84% of transaction compared to 66% pre-COVID levels, and actually mobile payments growing more than 100% in the year, actually 123% over the previous quarter. In the Nordics, we're also making good progress. The issuer business in the Nordics is now completely reshaped, 97%. of the revenues have been that were with legacy contracts have now been renegotiated and in parallel there is a lot of activity happening to drive future growth in terms of new customer wins and pipeline in the nordics but most importantly across the rest of europe together with that expanding the existing relationship with more value-added services and propositions, such as, for example, car management, account management services, and with a new effort now ongoing in upselling the NAICSI Italian reacher proposition, the licensing proposition or components of it, like, for example, customer value management to the customer base of the banks. Results here as well, page 14. In the quarter, we did grow 8.2% revenues that is up compared to the previous quarter, and we are closing the year at a nice 7.4%. Here, actually, you have a little bit of two different profiles of performance. ETH has been growing double digits in the year and in the quarter, while actually in the Nordics, we are still affected by the effects of the renegotiation that I've mentioned and in particular one single client renegotiation that is limiting the growth in the region. Moving to the third business unit, digital banking and corporate solutions, key business update, good progress I would say across the board. In business-to-business corporate payments, strong growth of instant payments, volumes much, much higher, four times higher than what it was in 2021. Digital corporate banking proposition progressing well as well with a customer-based growth of about 5%, and the expansion of our partnership with CBI that is de facto the banking association, Italian multi-bank infrastructure here. We were already partners and we've shown basically the modernization of the current platform into a more innovative one serving both corporate and public administration. Open banking is small in absolute terms, but as you see from the numbers here, also good progress with volumes growing 80%. in the year with a good acceleration in the latter part of the year. Self-banking, some new sales with new customers in particular in the area of value-added services, but also continued transition from traditional ATMs to advanced ATMs that are for us a richer proposition. And last but not least, the Nordics e-security and digitization businesses In the Nordics, we have launched and we're now ramping up the new electronic ID platform that we've developed basically for the country. Here, the entire country in Denmark is actually using NET services here. This has been launched in October, and we are now actually seizing the legacy platform, the EAD legacy platform from October. At the same time, in parallel, we have the digitization services growing double digit and continue to grow strongly across the board. Numbers again here in the quarter, this business unit grew 6.2%, 9.8% in the year. Now, let me... Before going into cost and ending over to Bernardo, take the country view on page 17. Italy grew in the quarter 9.3%, 11.3% for the year. The DAC region and Poland, 26% in the quarter, 20% in the year. Nordics, 6% in the quarter, 3% in the year, and therefore a good acceleration in the latter part of the year. South and Eastern Europe grew 14.8% in the quarter, 7.9% in the year. Now, let me hand over to Bernardo, and I will come back for conclusions. Thanks, Paolo.

If we move across the room to everyone, also from me. Page 18, starting on costs. As you can see, the costs in the year, as we've discussed in the past, were influenced by, I'd say, two, broadly speaking, two large effects. One on HR costs, which is The spring back, let's say, of variable compensation accruals and payments in NEXE compared to 2020. And the other one is the impact of volume. So 2020 was a year in which we exercised our discretion in trying to reduce costs as much as possible. And the cost contained in planning of 100 million euros, which reduced costs in 2020, shifting part of this expense to 2022. And we have the spring back now. this year and hence the growth in costs. Within the quarter, we have this effect. It's actually slightly distorted by, you know, specific items in December. In the quarter and the fourth quarter, it tends to be a little funny with regards to costs, the way certain things happen towards year end. But essentially, what we've tried to do is normalize the performance in terms of costs, and we've given you an idea on the right. The way we look at it is that basically costs were more or less flat in the year. We've seen HR costs come slightly down and that is the benefit of the early benefit from the Nexi Nets integration of some HR synergies which we've had. Whereas with regards to operating costs, they've increased approximately 2% on a like-for-like basis and overall I would say flat, which is historically what our trend has been, broadly speaking, at Nexi. Moving on to slide 19, again on CapEx we should remember that we had this cash containment program in 2020 which shifted We suspended certain activities in 2020, which didn't mean we weren't going to do them. We just happened to do them in 2022 compared to 2020. It was roughly, I'd say, approximately €20 million at the time. So if we adjust for that, the performance year-on-year, or not the performance, but the percentage of CAPEX over revenues is roughly flat, around 14% in both years. If we look at the increase in ordinary CAPEX, which runs at about 10% of revenues, Just the growth in revenues for the year suggests that €188 million would grow by approximately €20 million. If you add the other €20 million of CAPEX, which was shifted one year to the next, you get to the figure for 2021. With regards to the transformation CAPEX, it should be said that Nexi and NETS were both going through their own transformation journeys before the merger was announced. NEXE was further down the line, NETS was a little further behind and 2021 was a significant transformation year for NETS with Centurion Transaction where they disposed of their A2A business to MasterCard plus the divisionalization of the company which drove most of the transformation spend on a standalone basis. We've listed a number of the items here on the right which are the ones you're used to so I won't go through them. What we've done on slide number 20 is give you a view and these are numbers which also include SIA so the starting point for 2021 aggregates also SIA and remember the SIA transaction actually closed on 31st of December so what we've done is a pro forma from 2021 and you see total capex of around 15% of revenues SIA has a slightly higher capex intensity than NETS or NEXI and the overall capex spend for the combined group is approximately 430 million euros which approximately 300 million euros ordinary capex and 130 transformation so what we're saying is that we have approximately on top of the run rate 10% of revenues capex which includes also the purchase of terminals POS and ATM terminals we are going to spend approximately 300 million euros between 2022 and 2025 on both the completion of the transformation of the three companies so those projects for instance at the NEXE level I would quote the core acquiring platform on SIA. There's a lot of work being done on the new issuing platform, exactly. NETS was completing the UNI platform. So completion of those projects plus the integration of NETS and SIA into NEXI, the sum of all of this will involve approximately 300 million euros of CAPEX being deployed over the next three, four years. And as you can see, if you work the numbers out from the guidance we've given, approximately... 10% of revenues for 2022 is approximately €330 million, and 16% of revenues takes you to €530 million, so approximately €200 million of that €300 million will be spent during the course of 2022, which is going to be the peak year in terms of CAPEX spend for the enlarged group. Moving on to slide 21, we also have transformation costs which are not CAPEX, so OPEX, they flow through our P&L, we classify them below EBITDA because they are non-recurring in nature. Obviously, to the extent we continue doing M&A, we will have some of these items here. As in the past, we see significant reduction almost immediately after the M&A. This was true for NEXI in the past. It was true for NETS. And we believe this will hold true going forward. And we'll speak to that with regards to the guidance. But overall, we have a reduction of 25% in transformation costs from 2020 to 2021. That takes us to 170 million euros. In addition to that, we incurred approximately 57 million euros to set up the integration of NETS and SIA. You see that on the table on the right. And then we had advisory costs for the two M&A transactions involving NEXI, the Centurion deal, which was the sale by NETS to MasterCard of their A2A business and a number of other smaller M&A deals. Advisors of all kinds, their investment banks, accountants, lawyers, et cetera, cost 100 million euros of spend. We have a recurring non-cash item, which is the LTI, paid by Nexus Group to our executive management and larger population. And then we have this year in 2021 an accrual with regards to the likely payment to Intesa of an earn-out related to the acquisition of the merchant book, which we announced a year and a half ago, and performance of this book has been such a better-than-planned to warrant this accrual, which is clearly good news because it's performing even better than our own or the seller's expectations, as a matter of fact. We then have a legacy IPO cost, which is borne by Mercury UK on the far right here, 28 million euros, which is non-cash and paid by Mercury as has happened in the past. And by the way, that is the last we'll see of that. On page 22, we can see how our normalized operating cash flow is strong at 78% in terms of cash conversion. Page 23, we look at leverage and we're landing at three times leverage if you include the SIA net debt, given that we close at the end of the year, and the SIA EBITDA and synergies, so pretty much where we expect it to be given the guidance we've given in the past. If you look at it without the synergies, it's 3.6 times. I would highlight how we were upgraded by S&P during the course of the year, and hopefully this is a virtuous path to further upgrades we hope to have in the future. From an overall indebtedness perspective, I think we are reasonably happy with where we stand with regards to our capital base. We have a strong component of fixed rate indebtedness, so in an environment of increasing rates that gives us comfort, we also have a pretty well-balanced split of instruments out there, including equity-linked bonds and not only fixed floating rate notes. Um, page 24 is, um, let's say just, uh, we're, we're, we're, uh, benchmarking ourselves, the actual performance against what the ambition was, which we announced, uh, in the summer at the end of July. Um, and the, the, the summary of this is that notwithstanding the, the, the very, the cold, the Omicron variant, which, uh, which, uh, hit us in Europe, uh, towards the end of 2021, we still managed to deliver, on expectations and on guidance. So we delivered 10% revenue growth. EBITDA, which was in the range 11% to 13%, which we guided to with a margin accretion in 2021 of 1% point compared to 2020. If you look at it, I think more correctly over the two years, so normalizing for the strangeness of 2020 given COVID, we have a three percentage point accretion, which is roughly 150 basis points per annum, which is roughly what we were accreting EBITDA margin in the past. As I mentioned earlier, CapEx is broadly stable around 14% once we normalize for the underspend in 2020. And the truth is in 2021, we have upfronted as much CapEx spend as possible to make sure that we deliver the synergies from the integrations of nets and see as quickly as we can. And in terms of leverage, I've just spoken through that. Just a word with regards to the fourth quarter performance, which was not only was the full year, I'd say, in line with our expectations, but the fourth quarter was also in line with the consensus IR had circulated before with, if I look at EBITDA, for instance, the EBITDA for the fourth quarter was actually on that front. Slide 26 gives you an overview of where we, the work streams we put in place in terms of integration. I'll just highlight how the day one organization was in place, day one, as it says, for both NETS and SIA. We really hit the ground running and had used the time before effective dates of the mergers in order to do so. Procurement has structured a number of work streams and initiatives aimed at capturing the lower hanging fruit with regards to negotiations and renegotiations with suppliers and supplier consolidations, which will underpin at least part or a significant part of the synergies we expect for 2022, which we have highlighted B2B approximately 100 million euros in terms of cash synergies, so both OPEX and CAPEX. And from the revenues, on the revenues front, we have a commercial plan in place, which is actively marketing and cross-selling across driver fees the products of the enlarged group. Slide 27 just summarizes what we already said. We expect to generate approximately 100 million euros of cash synergies in 2022. This is up from just 18 in 2021. The run rating of this, of the OPEX front at least, is approximately 20 million more. So at the end of 2022, we will have in the bag approximately 18 million of the 320 million cash synergies, or 125 if you include the OPEX. So As I said, the point being that a lot of work went into this during the course of 2021 in order to be able to upfront as much as possible in 2022. Slide 29 gives you a picture of the group including SIA. So compared to what we've seen so far now that we have SIA on board from 1st of January and the guidance that Paolo gave you is on the enlarged group including SIA, not only NexieNets. We have a well-balanced mix both in terms of businesses with... Merchant services continuing to weigh for approximately half of our business, and 20% of that is e-commerce, which is obviously high growth and an attractive sector to be in. A third of it is cards and digital payments, and the rest being digital banking and corporate solutions. More than half of our business is in Italy, which is structurally advantageous given the overall underpenetration of the Italian market. We have greater exposure to volume growth thanks to the deals primarily with NETS, which increases that component to approximately two-thirds. So two-thirds of our revenues grow with the rising tide of digital payments, and we have greater operating leverage in the past with approximately three-quarters of our cost base being fixed and therefore allowing us to translate growth in revenues into growth in EBITDA. If we look at the revenue performance as an enlarged group, CS performance on the top line was very similar to NexiNet, so no wonder that overall revenues grow 10% if you include Net, so just north of €3 billion. The EBITDA margin accretion is slightly better. CS EBITDA growth in 2021 was very high, close to 18, just north of 18%, and that helps us grow as an enlarged group of 13.6%. So if we looked at it year-on-year growth in the setup where now the group grew 13.6% in terms of EBITDA and the margin accretion was 200 basis points if you look at it from an EBITDA margin perspective. For the various divisions, we have a similar picture to one painted earlier by Paolo, so 12% growth, more or less, in terms of merchant services, close to 9% in digital, in card and digital payments, and just shy of 8% on digital banking and corporate solutions. The geographic mix also doesn't change hugely once we put in SIA. Italy grows at 11%. The Nordics is not impacted by the merger with SIA. DAC in Poland adds SIA's businesses in Germany, which are primarily issue processing, and therefore, not particularly exposed to e-commerce as a net as assets and therefore that reduces or dilutes that growth a little, whereas it increases at least in Europe and other with the benefit of some of the payments assets and businesses SIA has outside of Italy and outside of Germany and Nordics which increase that growth from about 8% pre-SIA to about 11% pre-SIA. So let me close before handing the floor over back to Paolo with the reiteration of of our guidance for the enlarged nexi nets sia group and this is for full year revenue growth which will lie between seven and nine percent uh with double digit growth in merchant services and solutions uh we expect our ebitda to grow in the range of 13 to 16 percent and we have an ebitda margin expansion of approximately two percentage points this would have been higher i said we have approximately 60 million euros of EBITDA synergies in the year. We're going to be reinvesting. That's approximately two percentage points of EBITDA growth that will be reinvested in our business, in particular in e-commerce, and we're already doing so, and in Germany in order to secure structure or longer-term growth. CapEx, ordinary CapEx, hover around 8% to 10%, including the terminals, as in the past. And then we have that 300 million euros of additional transformation integration CapEx, which we expect to deploy in by 2025, approximately 200 million of this in 2022. And finally, on leverage, we expect to close the year on an organic basis at around 2.5 times leverage. That said, I would pass the floor over to Paolo for closing remarks and then open it to Tuna.

Thank you, Bernardo. Let me just move to page 35, which is the one that I started with, and I will simply reiterate the key messages here. So, Volume-wise, we're seeing the continued recovery despite the challenges of Omicron at the very end of last year. The recent trends, as we're also exiting from this new variant, are actually very encouraging. Also, terms of shift from cash to digital payments in the year, strong performance in line with with our own guidance, I would say, with market consensus as well, with strong growth actually in merchant services and solutions in the last quarter and across the year. Good progress message in creating our new company, completed the combination with SEAD that has been also performing very well and now moving into the execution on our synergy and transformation plans. Again, ambition for the new year, assuming we come back to normal at the beginning of next quarter, revenue 7% to 9% growth year-over-year, and EBITDA 13% to 16% reinvesting part of the synergies into future even stronger growth. Let me stop there, and very happy to have your questions coming.

Excuse me, this is the Classical Conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. To remove yourself from the question queue, please press star and 2. 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 Hannes Leitner with UBS. Please go ahead.

Yes, congrats to the results. Thanks for giving the guidance. Maybe you can drill down a little bit into the different subsidiaries and the different groups and then maybe also in the regions. I think you gave a sense on just the merchant service part, but it would be very helpful. And then the second element is maybe on the cost synergy extraction. You talked about the 60 million. I think I remember at Q1 last year, you were very confident that you can overachieve the synergy target. So maybe you can talk there a little bit about potential upside from that, and then maybe also around the phasing of the synergy targets. Are there some low-hanging fruits in terms of headcount reduction or processes, etc.?

Hi, Enes. So thank you for the two questions. I'll leave the second to Bernardo. Let me just comment on the first one that As you know, we do not give specific guidance by business unit and definitely not by geographies, but just to give you a simple flavor, as you can imagine, we are guiding for 7% to 9% for total revenues with double-digit growth in merchant services. These double-digit growth in merchant services are is supposed to come quite homogeneously across the various geographies. So that's, if you like, I think a key theme for us for the year. When it comes to the other two divisions, clearly if you just run the math here, you understand that the other two regions combined are more in the mid-single-digit space, which is also due to specific events in the year. And again, here now we expect to see a continued strong growth, I would say, in cash and digital payments in Italy with the Nordics slowly recovering from the impact of the renegotiation. That's the picture that I will give you for, if you like, at least as a flavor. Bernardo?

Yeah, so on costs, we remain bullish on doing more than the target. We'd set 320 as the target in terms of cost synergies plus some one-off CAPEX synergies, but then revised that upwards, saying we saw at least 10% upside, if not more, on that 320 number and the truth is there's probably even more. The point that we made in the past was that we didn't see any benefit in revising upwards these numbers given that they're likely going to materialize in a timeframe which is beyond people's interest, frankly speaking. A lot of these synergies come from closing down systems, platforms, rationalizing the group structure which take years to be done. What we have identified, that 320 million euros, is a set of synergies which we believe we can deliver mostly by 2024. We said 90% plus of the cost synergies by then, and most of them will be done shortly thereafter. So a timeframe which is within sight, I would say. And a significant portion of them, as you've seen in 2022, if you look at the run rating of this, we have approximately 80 million of synergies. of cost, essentially cost synergies or P&L synergies already in 2022, secured in 2022 on a run rate basis. Out of 270 in total, so that's a third of them in the first year of the merger. The good news I think is that through these mergers and the complexity, frankly speaking, that we need to work on, we have, I would say, a large bucket of synergies to draw on in coming years in order to absorb the incremental costs from incremental growth by taking out redundancies and overlaps in terms of our existing cost base.

Okay, great. And maybe just to follow up on yesterday's Bloomberg article around your rate pay by now, pay later business, maybe you can give us a little bit of a flavor in terms of the performance in 2021. I think 2022, 2020, They saw 22% transaction growth and I think their revenues were around 60 million or something. So maybe you can give us an update on rate pay.

Arne, thank you for the question. We were obviously expecting that this is coming on the first of you, which is absolutely normal and welcome. Listen, as you know, we don't comment on market rumors or specific situations and so on and so forth. Let me just reiterate two messages that I think we shared in the past as well. Number one, we continuously review the portfolio of our businesses. We've done it in the past when we started the Nexi journey back in four or five years ago, and while we are known for what we bought, we should never forget that we also sold actually 12 assets of relatively small size, but we sold assets that actually we also loved, but they were not simply strategic for the mission of the company, for the future of the company. So we'll continue to do so. Obviously, now we are combining a new group that is very large with a variety of businesses. As you can imagine, we have already started a review of the portfolio of businesses along the same lines. And we believe this is just good practice. The second message when it comes to rate pay, rate pay is a great business. It's a business that we love. It's a business that is led by a very excellent team with a great CEO that is Nina. They're performing very well in the year. I think their growth on the top line has been around 60%, 70%. And by the way, I think this is good to underline it, they're also profitable, which is not always obvious for buy now, pay later businesses. So amazing work being done. by the team there. As you can imagine on this type of business, the strategy review that in the context of the portfolio, we are thinking are we the right owners for this asset given the fact that at the end of the day for us as partner for merchants on acceptance solutions, it is important to be able to offer almost all or in many cases many buy now, pay later solutions and at the same time for RedPay to continue to be successful and grow at its full potential, it's important to have access and be offered by also other PSPs and not just Nexus. So that's the way we look at it. But again, it's a great asset that we like a lot.

Okay. Congrats and good luck for this year. Thank you.

The next question is from Josh Levin with Autonomous. Please go ahead.

Hi, good afternoon. I have two questions. On your last call, you talked about market share and how Audion was taking some e-com share in Italy. What are you seeing now in the competitive landscape and who is taking share across all of your geographies? And then to what extent do you have market share gains or losses baked into your 2022 guidance? Thank you.

Hi, Josh. Thank you for the question. I think that in terms of market dynamics, we didn't see any real change compared to our last call. I guess you're referring more precisely on what is happening in merchant services. Let me just quickly go through what we see in the SME space. The competition that we see at the moment is coming mainly from the players that are coming with lighter solutions. SMAP is the easiest name to be used there. And that's a competition more on the front book normally with lower value customers. We are also competitive there, as you understood. We have accelerated a lot in selling our mobile POS products. propositions in that space and that now represents 20% of the front book. So no real change there as we are strengthening our own efforts and propositions. When it comes to e-commerce, you've seen our performance that I think is a good performance in terms of growth. This is true, I would say, across most of geographies, in particular, in Italy where we see a great potential for future growth against here, no major new news. Here we are strengthening our efforts both on the propositional side but also on the go-to market and as I said before, we are clearly over-investing in e-commerce across the group. When it comes to large merchants, I want to remind everybody that we represent about 4% of the total revenues of the group. We continue to see the same competitive dynamic. At the end of the day, we have a couple of international players that are active across the various geographies. And here maybe let me stop for one more moment because I think you're referring to the conference call that yesterday one of our competitors had when they talked about an Italian merchant, an Italian brand in the luxury space. Let me make a few comments here. Well, let me make a few comments because I think it's a great example of the dynamics that we see in the market and is also, to be honest with you, a great representation on what our strategy in this space is. Number one, I really believe Adyen is a great company. They're having a very strong success in a very specific segment of the market. And again, the type of competition that we see, at least for now, is really on a very global brand with an important e-commerce component and with global integrated CRM systems. This is a very specific segment where they're very successful, and we really respect that. That's not the segment where we want to compete going forward. That's not our priority while actually large retailers with national regional footprint with omni-channel needs with a strong physical presence that's really where we want to compete because that's where we believe we can deploy the best of who we are. That is a combination of our scale in offering innovative solutions but also our local presence and our local entrenchment to be able to help the merchants in market across the board. Now, coming back to that specific example that was mentioned, I think the net impact of that to us, if acquired by them, is actually positive. I think the net revenues that we have with that merchant in Italy, I think they're around minus 30,000 euros. Now, while instead, and therefore, I think it's consistent with... with the dynamics that I've just explained, luxury, global. When it comes to other dynamics in the market, only in the last few months, we had three different situations where we've been competing either with Adyen or Stripe, but I would say in particular Adyen or Stripe in the retail space for mass market retail, supermarkets and stuff like that, either Italian but also international and actually in the three cases we won. Why? Simply because for these merchants, the local presence, the local entrenchment, the ability to integrate with what is relevant in terms of systems in the market is probably, at least for now, more important. So I think it's a good example of how we see the future in that space as well. Thank you.

And the second question about how much share gain or loss is baked into guidance?

Listen, we don't make specific assumptions in terms of share or loss. I think that, broadly speaking, we are more or less, if you just take the envelope of all markets, all geographies and so on and so forth, I think we are broadly in line with what we expect the growth of the market to be in the coming years. And then I'm sure that instead, if you look at individual geographies, We clearly have the markets where we are attackers and we want to grow and we will grow. I could mention Germany, I could mention Switzerland, I could mention Poland and others. There are instead markets where we are already very, very strong and clearly we are sure that to begin with we consolidate our positions. Italy is an easy example. The Nordics, Denmark, Norway would be other easy examples. So it's actually a portfolio thing. We are broadly in line with the market. Thank you very much.

The next question is from James Goodman with Barclays. Please go ahead.

Good afternoon. Thank you. A couple from me then, please. Just firstly, maybe stepping back and thinking about the sustainable level of profit growth of the business. I guess touching on the reinvestment of synergies point and except maybe this is more a topic for a CMD but we're quite used to the 13 to 16 percent EBITDA growth the business gave at IPO you know he's called out 60 million of P&L synergies coming through this year I think he also guided to revenue synergies and having an EBITDA impact as well that are starting to come through so I guess my question is if know how should we think about you balancing reinvestment of those synergies you've talked to coming through over the coming years with the underlying profit growth of the business and should we be thinking about an acceleration of ebitda because of the benefit of a higher proportion of synergies in in the outer years or should we think about it more in balance and keeping you in that ipo range and then if i could just ask another question on the the balance sheet efficiency of the business I think when I look at your pro forma modeling now, the interest rate cost is a little higher than I anticipated. And that's largely because of the amount of gross debt versus the net debt. And you're running with over two billion of cash, I think, on the balance sheet. So is there a plan to refinance that? How much can the business run with in terms of gross cash? Thank you.

Hi, James. So this is Paolo. I let Bernardo take the second question. The first one, as you rightly said, this is a longer-term type of outlook. It's something that we would leave for later in the year when we will have a capital markets day and we spend more time together and we'll give you a broader overview of the strategy and the outlook as well. I think the comment I can make for 2022 is that we're actually investing a large part of the synergies in accelerating growth, as I said, in particular in e-commerce and Germany, because we believe it's the right thing to be done given the revenue growth potential that we have there. Going forward, we expect the synergies to kick in at stronger levels, as you have heard from Bernardo. I mean, we have promised 300-plus cash synergies, and we said that in the longer term, we believe we have even more. And, therefore, that will kick in. I don't believe we will... and it's going to continue to expand the overinvestment because this is the first year of push. Probably next year is going to be similar to that, but mid-long term, I would expect that the combination of these to create further margin accretion and therefore a potential acceleration, but further acceleration of EBITDA. But again, let's leave it for the conversation on mid-long-term guidance when we get there later in the year.

I'm pretty happy with where we are today. The next refinancing deadline is in 2024, so we have a couple of years to monitor markets and take advantage of any window of opportunity to tap them if need be. But just on the point of gross leverage driving the cost, yes. And just bear in mind that we paid down approximately 800 million euros of CIA debt just after the close of the year. So what you see there, the 7 billion-odd gross of indebtedness went down by close to a billion euros at the beginning of January when we actually closed CIA. So everything was shut on the 31st of December. We financed that on the 3rd of January, I think it was. And then going forward, we'll just monitor, as we have in the past, the market and see if there's a window which is conducive to trying to, again, extend, reduce the cost of debt, even though we need to wait for our cost of credit to come down thanks to the credit rating and the markets are moving in a different direction. So it's a difficult balancing act. But right now, we don't need to do anything to keep the cost where it is, which is good news.

That's helpful. Thank you both.

The next question is from Sebastian Stavrovich with Kepler Chevrolet. Please go ahead.

Hello everyone and thanks for taking the question. On the e-commerce business, it has been once again very strong in Q4. I guess you mentioned 30% growth more or less. You had also strong growth from BNPL and also account to account. I was wondering, is this a sustainable growth trend that you can keep in the coming quarters? Because some peers in the U.S. was blaming a kind of slowdown in the e-commerce market for the coming quarters. It would be interesting to have your view on the trends on e-commerce. And restated from Red Pay, which is growing very fast, what is the underlying growth of the rest of the e-commerce business? That is the first question. And the second one is on Italy specifically and digitalization of payment. What is happening there? What is the cap penetration today? And is there any specific, I would say, measure from the government to stimulate the adoption of electric payments for the coming months? Thank you.

Hi, Sébastien. This is Paolo. Listen, first question. Let me try to put it this way. As you have understood today, the growth is very well sustained by the Buy Now, Pay Later and also the owned account-to-account products that we have in some of our geographies. We're obviously very happy with that, but actually most of the effort we're doing right now and we see good progress there is actually to rebalance this growth and having a and having more contribution from, if you like, the more traditional PSP and acquiring propositions. The dynamics in different geographies are very different. We are seeing in that space pretty strong growth. In Italy, a bit lighter in the Nordics, and we are starting to accelerate in Germany, continuously performing well in Poland. That's if you like the full picture. But as I said, going forward, that's going to be a key element in terms of our priorities. When it comes to digital payments transition in Italy, I mean, you've seen yourself some of the numbers that we're serving in a different sector. So we see that continuing. And therefore, we remain very, very positive for the outlook. And again, it's easier to talk about Italy because we are here. We know the market much better. But I'm also very impressed by what we're seeing in the Nordics and in DAC when it comes to to the basic consumption sectors. I was making the example of groceries because at the end of the day, it's something that is not affected by COVID. So I remain very positive, definitely in Italy, but I would say more in general. I think a key question that is out there is how rapidly the travel sector that is important in terms of overall weight is depending on the market conditions. from, I would say, I'm talking about the high-impact sectors, depending on the market, is anywhere in between a fourth to almost half in Germany of the volumes, not the revenues, but the volumes. I think it's going to be very important to see how that recovers with what type of travelers and so on and so forth. When it comes to the measures, I would say there is nothing new in the sense that As you may remember, the current government a few months ago, they did decide not to renew the one most visible measure that was the cashback measure, while at the same time, they did decide to do two or three things that are, we believe, really positive to support digital payments. Basically, they are giving the possibility to the merchants to deduct from their taxes 100% of the commissions that they pay for, I think, this year or next year. They remember when it's for two years. Similarly, they allow them to deduct from their taxes the cost of renting a terminal with the associated services again, I think, for a couple of years. And more recently, You may remember that in Italy it is mandatory to have a terminal and accept digital payments. It's mandatory for merchants, but there is no fine if you don't do it. And the government has decided a few weeks back to instead put in place fines, not from this year, but actually from next year onwards. to allow merchants to basically comply in a more rigorous way. All that said, I think that the evolution that we see is driven not necessarily by these measures or by the risk of fines and so on and so forth, but more and more by the clarity and the real understanding of the merchants that accepting digital payments is much better for their business because it's more efficient than cash, it's better than cash, it's more secure than cash, And I think there is more and more understanding of this. Also in Italy, it's already very, very clear in many other geographies. So I would believe that the output remains very positive.

Thank you. The next question is from Mohamed Mouawalla with Goldman Sachs. Please go ahead.

Great, thank you. Afternoon, Paolo Bernardo. Hope you're well. I had a couple from my end. Firstly, Paolo, when you think of the sort of 7% to 9% revenue growth for the year, can you perhaps just walk us through the kind of assumptions, particularly around the kind of pace of reopening and what you're baking in? I know last year you had put in some optionality around sort of travel and given us a sense of the potential kind of upside with travel and tourism rebounding. And related to that, could you also talk us through perhaps the cadence of how this growth should shape out over the quarters of this year? And I appreciate a lot of moving parts here with the different subsidiaries. The second one was for Bernardo. You know, you obviously talked about your kind of ambition to exceed on synergies. But on the investments that you're making, can you talk us through the phasing of that? Is that going to be more front-loaded? And do you have a bit more kind of discretion around how those come through? And could you specifically detail around e-commerce what investments you are specifically making? Thank you very much.

Hi, Mo, and we're actually, I hope you're the same. Thank you for the question. So let me split them slightly differently from the way you have asked them. So what is underneath the 79% guidance we're giving for the year? I think a short way of putting it is actually the following. We basically assume that the world will go back to almost normal from the second quarter this year. which means that we go back to the trajectory that was already starting before Omicron came. And therefore, we're actually projecting a strong growth across the various geographies from the second quarter, at least in basic services, at least in recreational services as well. The one area that is affected is clearly the travel sector. I think here the jury is out to understand how rapidly it will come back. And, by the way, with what type of mix, because clearly we understand that probably tourism may come back faster, and we've seen it in the summer in Italy, than business travel, and business travel may be coming back at a softer level structurally compared to the past. My personal point of view, by the way, is that over time, tourism will come back stronger and stronger. and we probably rebalance a potential structural softness of business, at least in geographies that are tourism intensive, such as, for example, Southern Europe. Said that, but just to give you a flavor of what is underneath, if I take Italy with respect, and you've seen that international travelers coming here are now minus 35% compared to pre-COVID levels or something like that. Basically, we expect these to more or less continue even softening, but softening in the quarter this year, in the first quarter, and then basically coming back to positive from second quarter. Then from there onwards, we're not expecting a massive growth. And again, we remain maybe in this specific case a bit conservative because we really need to see how it develops in terms of business travelers' versus tourists, but again, we expect also this one to come back to positive from the second quarter, which, by the way, is what happened at some point in the summer last year. So this is based on evidence that we had from the past. Let me hand over to Bernardo, and then I'll come back to comment on your question on the areas of investment for e-commerce.

I think Paul, you covered a lot of the first question on the... In terms of the volumes which drive a large proportion of our revenues, we saw two-thirds of the revenues. What we expect is the first quarter to be affected by where we exited 2021 and entered into 2022 by, so a situation in which there were lockdowns pretty much across Europe. And the situation will rapidly increase and recover. And we expect the second quarter to be better, significantly better than the first quarter in terms of growth. And that environment will continue throughout the year. And as Paolo said, at the end of the year, we reach a pretty much pre-COVID scenario in terms of foreign travel, both business and tourism. So I hope that answers the question in terms of phasing. We're actually, you know, when we walked into budget discussions back in October, we actually thought the first quarter would be the best if we looked at it against 2021 because 2021 was a very severe lockdown period for next at least in Italy, whereas now given where we ended up after Christmas in the beginning of January or through the first half of January, it's kind of taken part of that away from us. But as I said, it doesn't change our outlook for the rest of the year being extremely positive. In terms of investments, so the e-commerce investments are not a hand the floor over to Paolo with regards to what areas we're looking to invest. But in terms of financial impact, I mean, it's unlikely that these are going to generate huge impacts in the short term. Obviously, we're building new product services, accessing new markets, and this takes time. So we can definitely try and work on the phasing of investments. of the investment part, but in terms of the revenues going in, that's going to be a little slower than the spending part, which is why we have that margin erosion. Fortunately, we have the synergies to offset that, which is the balancing act we're trying to carry out.

Let me come back on where we are investing in terms of where we see the areas of opportunity and where we're spending the money as well. So let me try to simplify. Number one, most of the investments, most of the focus is going to be on the mid-markets, so the mid-sized merchants or if you like the upper part of SMEs where we see a lot of market potential from local merchants or regional merchants. So this is not intended to be in the very large global market. e-commerce merchants, but it's really to what is relevant in our geographies, in our footprint, and so on and so forth. So that's number one. Number two, in terms of focus, geographical focus, clearly, again, there are certain geographies where we see more potential than in others, but honestly, we'll be investing across all the geographies where we are present. I think at some point we will also consider the opportunity to launch greenfielding markets where we're not present at the moment. In Jersey, we're not present at the moment, but it is not in the plan for now, but definitely we'll consider it, I think, later in the year. Where do we spend the money in terms of what we pay for? Basically, there are two fronts here, and we'll be working on them at the same – we're already actually working on them at the same time. On the one side, go-to markets. I think that with the propositions that we have at the moment, we can do more, even more than what we're doing right now in terms of sales results. And this means actually more direct sales and, of course, sales people, more investments in digital channels that are more and more important for this type of segment. And last but not least, more and more partnerships with companies ISVs, but also with e-commerce platforms across the various geographies. The second area is obviously the product, the proposition here. We already started. It's a combination of enriching the proposition with additional functionalities, additional value-added services, more intelligence, artificial intelligence and machine learning on the back end. to improve the conversion rates for our merchants, but also investments dedicated to localize very, very effectively these propositions in the various markets, not only the ones where we're already very active, like Italy or the Nordics or Poland, but also the ones where we are... such as... Germany, Switzerland, and others.

Great.

Thank you very much.

The next question is from Aditya Budavarapu with Bank of America. Please go ahead.

Hi, Paolo Bonato. Thanks for taking my question. Just quickly, I think you spoke a lot about your success in some of these alternative payment methods like account-to-account, the NPLs. Can you maybe talk about the unit economics of those and how those are actually sort of in terms of the revenue model there? And then second one, as you look at the large account segment, so that you've been winning against some of the digital native and traditional competitors, can you maybe talk about in those pitches, how are you actually differentiating yourself and actually how are you able to win those contracts? And yeah, that's my side.

gentlemen is your phone on mute sorry but we are having the mic that goes on mute let me try so the account accountant by now pay later listen at the end of the day the way it works is that you are at the same time the PSP acquirer somehow and the payment rail and this makes the economic of this when you own it pretty attractive, so these are good margin businesses to begin with because at the end of the day, you don't have another third party that you need to pay money to because you distribute your scheme and you don't have someone else to be paid for. This is particularly true, I would say, for account-to-account. Then the level of take rates that you have depends on the market because clearly it has to remain competitive with card schemes and alternative propositions in the market. But normally it has pretty attractive economics when you own it. Buy now, pay later is a similar structure but for the cost of risk. as you can imagine and therefore here is structurally a less profitable business compared to account to account or PSP. Here depends how good you are or bad you are in managing risk or if you like managing the balancing of risk and letting the customer transact on that specific transaction. Normally, in buy now, pay later, the player, and it's also our case, charges a nice merchant fee that, depending on the player in the market, can be above 3%, 4%, and that has to cover the risk. In our case, as you understood, thanks to the ability of the team, thanks to the investment we have done, in technology, in managing properly all the possible information that is available in the market, plus the one that is built through history by our systems, we are able to make the business profitable. But as you know, not all buy now, pay later players are profitable. And this is the space where when you own account to account, you own buy now, pay later players. I think it's important to remember that even when as a PSP, as an aggregator, a collecting PSP, you distribute account-to-account propositions of third parties that also can be a profitable business. That's actually what we are seeing in some of our geographies as well. The second question was around how do we differentiate with competitors. Again, I guess you're referring more on what is happening in the omnichannel space and e-commerce space. Again, here the simple theme for us is offering the best combination of on the one side products On the one side, the product capabilities that have to be as good as or better than the ones of the newcomers in the market for that specific segment, but at the same time, having everything that is needed for to help the merchant locally from integration of local schemes to integration with the locally relevant ERP systems to customer support to the integration with the physical channels and so on and so forth. If I look at, just to be very, very practical, the three cases I was mentioning before the three cases I was mentioning before where we won with the new challenger players in Italy. One is because we already had a very strong relationship on car present business and we had the availability of a very specific plug-in in the ERP systems that was necessary. The second case was Again, it had to do with the ability to integrate with the reporting systems of the merchant and post sales guarantees and the systems that we could provide. The third example, again, a strong relationship across other businesses as well and bundle solution for the different components. These are characteristics that obviously are relevant not for all merchants, and I think we were talking about luxury before. For those brands, probably global integration is more important, but actually the vast majority of our business is with customers that require local ability to integrate, customize, and support.

Great. Thank you. Thank you for that. Can I just have one follow-up on rate pay? I think you said that it's growing about 60%, 70%. In the past, I think you said that's about tens of millions of revenue. Could you maybe just give an update on the size of that segment, that business?

It's somewhere around 100 million euros.

Okay, great. On an annual basis, right? Yeah. Yeah. Okay, thank you.

The next question is from Antonin with HSBC. Please go ahead.

Hi, good morning, Paolo and Bernardo. Most of my questions have been answered, but two quick follow-up questions. I know that you will organize a capital market day later in the year dedicated to mid-term guidance, but can we say that the 7% to 9% revenue growth guidance for 2022 is a good proxy for your top-line growth during the next three to four years? Or do you think that these guidance for this year are still impacted by Omicron, the renegotiation of contract, and we could see the mid-term guidance to be stronger than that? This is my first question. My second question is about consolidation of the European payment market. Is it possible to update us on this? Do you target particular countries? Where do you see the opportunities? And when do you expect to close and consolidate the acquisition in Greece? Thank you.

Hi, good to find you again.

So, listen, on your first question, I think you said it all, actually, with the rationale that you applied to our 2022 guidance. As you've understood, our 2022 guidance is partially affected by this COVID variant at the beginning of the year, but also, to be honest with you, supported by the fact that last year was not a normal year either. So I think that net-net, when you look at merchant services, things more or less balance on each other, while in the other two divisions, there are in-year effects that are either one-off or unwindings or in any case will fade away. So I think there is room to believe that the mid-long term will guidance could be stronger also on the back of the extra investments that we discussed before to accelerate growth in certain potential areas. But again, let's have that conversation because I cannot confirm it now and I don't want to confirm it now because otherwise if we were at very high confidence we would be giving it today. But I think the rationale that you have in mind I think is the correct one. As far as consolidation, again, I think we are super busy at the moment in consolidating the three businesses that we are putting together and creating value out of it for our customers and our shareholders. We will continue to consider opportunities to begin with in the geographies where we are present if and only if they are available with the right evaluations and with the right conditions. We will try to stay focused on these geographies and consider only by exception outside of it. And again, the focus will continue to be pretty much on merchant services, and I would say with a particular focus on SMEs and e-commerce. But on your broader question around consolidation, I think we continue to talk about consolidation in our industry. In Europe, I think for the next five to 10 years, to be honest with you, because there are still so many things happening, so many assets how they are available, so many dynamics that these will continue for a long time. And by the way, I think we continue to offer good opportunities.

Thank you. On the closing of the Greek acquisitions?

Sorry, I didn't get it. Well, we expect it to be around at the end of the first half of the year.

Okay. Thank you very much, Paulo. Thank you.

The next question is from Alexandre Faure with BMP Paribas Exxon. Please go ahead.

Hi, good afternoon. Thanks for squeezing me in. Just wanted to touch on this slide 11, I think you showed, and your exposure to SMBs, and I think in the previous answer, Paolo, you elaborated on the ISV channel. So a few things here. I was wondering if you could share with us perhaps how these SMB revenues breakdown by channel, ISVs, direct, bank led distribution, any color here would be helpful. And then if you could come back for a minute on the revenue model and incentives you have with those ISV partners. Is it a revenue share? Is it a referral fee? Are you happy with the way it's going or do you think you need to establish deeper relationships with ISV where they might become payment facilitators? Is it something they're keen to do or you're not seeing that market trend in Europe at the moment? Thank you very much.

Hi Alexander and thank you for the questions. Listen, we don't provide a breakdown of SMEs by channel also because unfortunately the definitions are very different by market and very blurred as well. But let me again try to give you a little bit of a flavor of that. If you look at Italy, the The vast, vast, vast majority of the fresh revenues that are coming in are with the banks, with the banking channel. And the banking channel includes in our mind both the licensing model but also the referral model. So we bought the books. Still, the bank is super active in partnership with us. on the sales activity. So while we are strengthening our ability to sell also on digital retail and through partnerships with software vendors and so on and so forth, the vast majority of the business is still with the banks and we are simply preparing for our future and also covering segments of merchants that are starting to shop in different ways or do require more technology support When it comes to the other markets, I would say that the banking channel, and I'm talking about here the next geographies. Sorry, I would assume that Greeks will become the same after we launch with Alphabank, a super strong partnership. We love that partnership, and we will develop it, hopefully successful as the ones that we have developed in Italy, and you just heard about the Ornata partnership. from Bernardo on the Intesa book. Now, for the other geographies, actually, the vast majority of it is not dependent on the banks. It's either direct sales, in particular for the mid-market, or software, sometimes also terminal vendors we partner with. I think then you have a lot of tele-selling and and cross-selling from customer care and more and more the digital channel is also starting to contribute. By the way, this is one of the key priorities for the group. When it comes to the revenue model, to be honest with you, you have a little bit of everything. It really depends on which case you're talking about. In the vast, vast, vast, vast majority of the cases, we give them either a recurring, give them basically a margin, a recurring fee that is clearly already embedded into our own numbers and projections. Sometimes a one-off acquisition contribution And for now, the model, sorry, remind me the name of the model. The wholesale model is something that we're not engaging at the moment. And by the way, to be honest with you, the more we spend time with software vendors and the more we talk to them, we explain to them the complexity of our business, the more we succeed to keep them on the current models.

I see. I see. Thank you. But at the moment, just to make sure I got that right, you're not seeing appetite from these ISVs to launch ISV pay powered by Nexi, nothing like that?

we try to stay away from that as much as we can. But let's be clear. I don't believe the name is what counts. You were talking about the payment facilitator model. That's what I was referring to. I call it wholesale, which is at the end of the day what it is. So regardless, the way they call it, it's a model that at least for now we try to avoid. We consider it by exception.

Okay. Okay, got it. Thank you very much, Paul.

The next question is from Paul Kratz with Jefferies. Please go ahead.

Hi, everyone. Thank you for squeezing me in. I don't want to keep you for too long. I think maybe the first question to start with is, you know, you upped your stake in Orderbird in Germany, and clearly you're investing a lot more in that market. So it'd be great to kind of get an understanding of how something like Orderbird fits into, you know, this ecosystem of value-add services for smaller merchants. The second question I had is, you know, the CDP business of Nets has actually done really well over the last couple of months. It'd be great to kind of get an idea of, you know, what is the ramp that we should expect from wins like Degusa and how that pipeline kind of looks for you over the next couple of months. And I think the final question that I had, and this is more focused on OpEx, is it would be great if you could just kind of update us on how the insourcing projects are going, both on the side of NEXE, and I guess as well NETS at the level of Concardis, and how we should think of the benefit of those migrations into kind of 2022, and whether you're actually reinvesting that operating leverage, or we should start to see some of that be true. Thanks, guys.

Hi, Paul. So, order, but I guess it's the broader software space, what you have in mind. Listen, we like the case of order, because for us, it's going to be a very interesting testing ground for us. And I think this connects nicely to the previous conversation we were having on software partnerships with Alexandra a moment ago. Dean... We are very happy to be owners or partial owners of this asset in Germany because it will give us a real chance to understand the effectiveness of the cross selling, gap selling and all of that. Clearly, this does not mean that we will go around to try and buy software assets around. the plan to be very very clear the current plan is actually to partner as much as we can in the various geographies for what is relevant in those geographies I give you another example in Italy today we are setting up partnerships that already started or that are going to start with with the basically the key players active in the SME space when it comes to to the ERP systems and CRM systems of the shops. And we're actually partnering with many places, but in particular with these three that do represent, I think, 60-70% of the total market, just to give you an idea. And definitely we're not planning to buy them, but we are developing very nice partnerships with them. So I believe it's going to be a mix of different situations. This order per case is for us a very, very interesting one but in any case we are developing more and more partnerships with software players especially in the sectors where this will become relevant because I think it's also very important to underline that the relevance of the potential conversion of software and payment is very very different depending on which sector you're talking about, which size of merchant you're talking about and so on and so forth. On the case of digital payments, I let Bernardo talk.

Thanks for the question. I think we're very happy with the development of NETS, of their unique platform in general, the way CDP is developing, you know, obviously structurally. Nordics are a market which is much more penetrated than Italy and as such is characterized by a lower growth rate, underlying growth rate, but made... single-digit level is where we're at. We're very pleased to have secured almost all contracts now in terms of the renegotiations which NETS was carrying over from the IPO days. So it's a business now that is looking to move outside of the traditional countries. Nordics, as you were mentioning, the GUSA was a big win this year. I think we have others in the pipeline, and indeed discussions have been ongoing. I think very constructive and fruitful. So with EPI, where we would hope that our NET's capabilities would be highly valued in terms of that initiative. So indeed a business which is structurally different to acquiring, but nonetheless performing pretty well, not only in the core Nordic markets. With regards to the insourcing, well, I think you referred to it correctly. We had huge insourcing projects at NEXEY, which was historically outsourced to Worldline and to SIA. Now that we are merged with SIA, obviously that aspect of things is more or less taken care of. We need to rationalize the platforms, but doing it from a position of greater certainty and strength in terms of ability to execute. With Worldline, this is an ongoing discussion. I think we've already significantly reduced our reliance on Worldline. We've now completed our core acquiring platform. That progress is picking up pace. And whereas NETS, I think itself, as we mentioned in the results, Coventry is undergoing its own transformation. One aspect of this, as you were suggesting, is insourcing from the German outsourcer provider of processing onto our open platform in Germany that is progressing well. Now, all of these benefits from insourcing and synergies from rationalizing our platforms is what feeds that 320 million euro number. of which 100 million are going to be hitting us in 2022. And we'd love for that to be quicker, but unfortunately, I mean, they're pretty sizable, insourcing activities, complicated, and they take time, and really we're running as fast as we can. We hope to over-deliver, but right now this is what we are committing to.

Okay, and just maybe a small follow-up on the CDP business. I mean, when you kind of think, you know, historically of this business maybe being more around mid-single-digit growth, With the success that you've seen with, you know, again, Tagusa and maybe the pipeline, do you have, you know, do you think there's actually scope that you could maybe break out of that mid-single-digit range, you know, over the next few years?

I think, Paul, if I may just complement what Penelope said, I think it's, I mean, you see it once, you start seeing many new wins of large customers. That's one, but also, and this is the priority for us as I mentioned before, the key theme for us going forward is also to try and make sure that we increase the value we provide to the customer base of banks outside of Italy. As you may remember, the vast majority of the relationships that we have both in NET and SIA outside of Italy are processing-like type of relationships. And we believe there is a great amount of value of increasing, sorry, there is an amount of work to be done to increase the value of these relationships, either selling more components of processing-like, servicing-like type of relationships. I was mentioning before the work that is already starting to do successfully around car management systems and account management systems. or also selling more valuable business models like the one that we have in Italy that is the licensing business model and I was mentioning as an example the fact that there are very many conversations outside of Italy on banks to add them in running their customer value management activities. This is a very high value, maybe not too large, but definitely a high value proposition. So on the one side, trying to develop a larger customer base beyond Italy and the Nordics, but at the same time, creating more value on the current base. If we're able to do that, you can be more optimistic, even more optimistic on the growth profile.

That's very clear. Thank you.

The next question is from Gianmarco Bonaccina with Equita. Please go ahead.

Yes, good afternoon. Just a follow-up on the theme of the reinvestment of the synergies. You talked before about e-com. Can you talk about Germany? You are making here investments in pricing or also go-to-market marketing, if you can clarify this. And more broadly, in the midterm, you mentioned next year you are going probably to reinvest still some of these synergies. But in the midterm, how shall we think about the payback scenario? of this reinvestment. So in 2023-24, you expect to have in the P&L the full amount of synergies or still a part of that will be reinvested? Thank you.

So let me try to take the first one and I'll leave it to Bernardo for the second. I think we partially covered it before, but I'll try to give you a bit more call if we can. On Germany, at the end of the day, Germany, the focus is going to be very much in line with what I've been commenting around e-commerce. First of all, an important part of e-commerce investments are going to be dedicated to Germany, so a combination of go-to-market and proposition. But again, the investment in Germany will go beyond e-commerce. We'll definitely be in the SME space. I would say, across the board. And again, here is going to be a combination of a combination of proposition and go-to-market. Here, in terms of proposition, we already have a proposition that is progressing very well that is the comprehensive digital proposition all-in-one smart pay that's already progressing very well. And therefore, we believe that adding more firepower to it a bit with direct sales, but most importantly, through partnerships and digital challenges and so forth can really make a big difference. Last but not least, on larger merchants, we will also be investing but in a very selective way in specific verticals where we believe we can be really competitive. Honestly, investing on price is not per se the strategy. We don't believe this is at the moment, at least not in these markets. a price-driven space. And I think this is good news. I think that reaching out to merchants in the right way with the right propositions is with the right support in terms of service and capabilities is the best way to go forward. So that, you know, that we consider ourselves more of a challenger in Germany. So we're not worried at all about price dynamics in that market. But honestly, we don't believe is the right way to win a market share. On your second point, again, we are trying to avoid to give, at this stage, mid-long-term guidance, but as I commented before, the way you should think about it is that this year, next year, will be going to be years of investment in the sense that this year, these extra investments do have a negative contribution because the impact on revenues is is very, very limited while actually ramping up the investments and the resources quite rapidly. I think next year you should look at it as more or less a year where you start to be more or less in balance. And then from year three or four, we should definitely generate an acceleration of not only revenues, but also EBITDA, while synergies will kick in stronger. And therefore, there will be no further need to reinvest them in this specific case. So that's the way we see it. And clearly these investments are supposed to deliver for us growth on top of what our earlier plan were. Then I think if going forward we see further opportunities elsewhere, then we'll have another conversation. But that's the way we see it at the moment.

Thank you. There are no more questions registered at this time.

Thank you. So let me just thank you all of you for being with us today. Again, simple messages. We see a good recovery and actually think very positive about the outlook for the new year as the situation normalizes. Stronger delivery for this year and outlook for next year and more broadly good progress in aggregating the company and transforming the company on the back of the completion of the combination with SIA as well. Let us stop here. I hope you will enjoy the rest of the day. Hopefully, with COVID fading away, we will also be able to meet in person. And therefore, we look forward to either seeing you in video or ideally in person very, very soon. Thank you very much. Bye-bye.