NEXI S.P.A.

Good morning, this is the Coruscall Conference Operator. Welcome and thank you for joining the NEXE First Quarter 2023 Financial Results Presentation 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. Good morning. Good morning to everyone, and welcome to our results call for the first quarter of 2023. As usual, Amir with Bernardo Mingrone and Stefania Mantegazza is leading our investor relations team, and we also have a few members of our teams connected to help in case of need with your questions. I will make a few introductory remarks and comment on volume dynamics that we have observed over the last three or four months. And then I will hand over to Bernardo who will cover our financial results, and I will come back with Bernardo for your questions. Let me jump straight to page three with our key messages as usual. First message, across the quarter, across all geographies, we have seen a double-digit volume growth. As we have anticipated, January has been particularly strong, benefiting from an easier year-on-year comp because last year, January, was still a COVID month, hopefully the last one. We've seen positive volume growth across all categories with a particularly strong contribution from what we define the high-impact consumption, restaurants, hotels, travels, entertainment and the like. And also in April, which is instead a normal month with, I would say, more standard comparison versus last year, we continue to observe double-digit growth across all geographies. So overall, quite strong double-digit volume growth. Second key message, in the quarter, we've seen strong financial performance with solid margin expansion. Revenue grew 9% in the quarter, with strong performance across all geographies. Bernardo will comment more on this. We have seen a double-digit revenue growth in merchant solutions, with a particularly strong performance in Italy and DAC and Poland. Last but not least, EBITDA growth has been at 13.6% versus the same quarter of last year. with a margin expansion of almost two percentage points. So strong financial performance across the quarter. Third and last message, we continue to progress the execution of our strategy. We are well on track with the execution of our strategy announced back in September at our Capital Market Day. That strategy, we want to reiterate, is expected to generate about 2.8 billion euros of organic cash over the three years. Over time, we will be allocating most of this cash to leverage reduction, still leaving a lot of room of maneuver to both return money to shareholders and do high value creative M&A as necessary. We see stronger growth performance of all the recently acquired assets, the different merchant book in Italy, the book we bought in Greece, Croatia, and also Spain that we plan to close later in the year. And last but not least, we are progressing well on our non-core assets disposal plans, and we will tell you more over the next few months as we progress and we come to signing of these deals. Overall, we are therefore confirming our guidance for the full year with revenues expected to be at above 7%, EBITDA growth expected to be at above 10% and excess cash generation at above 600 million euros. Let me now move to page four and let me comment on the volumes that we have been observing over the last three or four months. Now here the comparison is with the previous year and therefore with 2022. You see that across all geographies we have been observing a total volume growth that is normally the blue line well into double digit space with peaks in January. Italy, you see 18, 13, 13, was supported by the high-impact consumption sector growing above 20%, and with a contribution from the foreign cards growth, and therefore international travel remaining very strong at above 50% growth. In the Nordics as well, we've been observing a strong volume growth, especially again in January, and this growth is continuing also in April. Last but not least, DAC is also here, very strong volume growth, about 20% across the quarter. I think here the relevant line is the dotted blue line, 33, 29, 21, still continuing on a more normalized April at around 16%. So across our geographies, we see the trends that we were expecting, and we see these trends continually according to our expectations also now in April. Let me now hand over to Bernardo to comment on the financial performance. Thanks, Paolo. Good morning.

I'm on slide six. So moving on to how NAXI performed from a financial standpoint in the context of the growing volumes that Paolo has just described. So top-line growth we've seen grew 11%, if you look at it, Growth of scheme fees, 9% on a net basis, whereas EBITDA, as we have seen, grew almost 14% with a margin expansion of just shy of 200 basis points, taking it to 45% at the end of the first quarter of this year. Moving on to slide seven, we have merchant services. Top line growth, again, double digit. Fala's already called out the strong performance we've had in Italy and the dark and Polish regions. This 11.5% of course is 14% gross of scheme fees, and this growth was sustained by strong volumes, particularly in international schemes, as we see in the charts on the page. But it's important also to notice how it's not only the volumes growing that are fueling the growth in our top line, but also the expansion of our footprint in terms of growth in number of customers, both in the physical acquiring and the e-comm space. Across all geographies and segments, we have strong winds in SME and LACA, and we are further expanding our partnerships and our footprint in terms of our presence of acquiring through ISPs. Moving on to issuing solutions, particularly strong quarter here, you can see top-line growth of just north of 8%. Again, I would call out the contribution to top-line growth of volumes. In particular, here we have, I'd say, recovery and travel related volumes both in terms of cards Italian cards in particular being used abroad but also commercial cards we have to be to be fair we have a slight benefit in in this first part of the year in terms of a better phasing with regards to contract renewal we'd spoken of in the past so that has helped us but most importantly I would say the key driver to top-line growth being volumes of and the overall advancement of our cross-selling and up-selling initiatives, in particular in advanced digital issuing solutions. Page 9 on DBS, here in DBS in the past, this is only Italy, or Italy, I'd say the vast majority of this is Italy, once we recast our numbers moving EID in available for sale. And this is the division which was most impacted in the past by domestic Italian banking M&A. So notwithstanding the fact that in the past we've lost clients, you can see some growth on the top line, which is, again, benefiting from stronger volumes in the first half, in particular on bank transfers and the EBA clearing framework we manage. If we look at the revenue performance, which, as I said, was strong in the first quarter in every business unit we operate, The same holds true on a geographical basis, which you see on slide 10, with basically in the DACA and Polish regions growing almost 10% top line, double-digit if you look at gross of scheme fees in both Nordics and Southeast Europe, which are growing above the minimum guidance for the year. If we move on to costs on slide 11, you see the cost performance essentially should be thought of as being impacted by four key components. The first is the investment we've made in people during the course of 2022 and the start of this year. This is catching up in terms of the cost dynamics. The second effect is clearly with the strong volume growth we've seen. Part of this feeds into our cost base, notwithstanding the very strong operating leverage we benefit from. We then have some effects coming from inflation. And as we had discussed back in September when we looked at our projections for the three-year period, we knew we'd be able to manage the progressive impact of inflation, mitigating it, and we are starting to see some of it filter through this year. And then finally, obviously, we have the benefit of our synergies, which are helping to offset these trends and effects on inflation. Finally, if we look at leverage on slide 12, We have some good news in the quarter. We've already spoken of it. We have an upgrade from rating agencies. We hope for more to come. I think the key point to remark always is that we have sufficient cash on our balance sheet to cover commitments up until the end of 2025, which stands us in good stead given market conditions. Overall, the book is – our debt stack is, I think, and again – I apologize if I'm saying it about ourselves, but I believe it's well-balanced in terms of the maturities profile, in terms of the mix of funding sources, in terms of the mix of fixed versus floating rate. So we see a leverage profile which is substantially flat in the quarter, having closed the M&A deal in Croatia. And I think we benefit from a very sound balance sheet. So, I'll hand over the floor back to Paolo for his concluding remarks.