NEXI S.P.A.

Good morning. This is the Coral School Conference Operator. Welcome and thank you for joining the NEXI 9 Months 2023 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.

Good morning to everyone and welcome to our call for results for the first nine months of 2023. As usual, I'm here with Bernardo Mingrune, our CFO and Deputy GM. with Stefania Mantegazza, who leads our investor relations activities and team, and a few other members of our team in case we need their help to answer to your questions. As usually for our quarterly results, I will be covering the key messages, the volume dynamics that we are observing, the key updates on merchant services. I will hand over then to Bernardo, who will cover results for the nine months and for the quarter. and then we'll come back for my closing remarks and most importantly for your questions. Let me start at page three of the presentation that as usual summarizes the key messages. Message number one, throughout the quarter we've seen a continued volume growth across all our geographies. In general, we've seen a mid to high single digit growth across all of them. I think the group-wide average in the quarter has been around 7-8%, despite a tough comparison against August last year that was very, very strong, especially in the Mediterranean countries, Italy and Greece in particular. We have seen growth also across all consumption categories and segments, with in particular SMEs growing volumes double digit in the first nine months of the year. Last but not least, we continue to see a solid growth in September and October across all geographies. Second message, in the nine months, our results have been in line with our plan with a very strong continued margin expansion. Revenues did grow 7% in the nine months, with the third quarter performance affected by the comparisons with last year, a summer that was very strong. Merchant solutions revenues did grow in the nine months at 8.2%, with e-commerce growing double-digit. And here we underline the performance of Germany. There's been an area of attention over the last few weeks for the markets in Germany. In the first nine months of the year, we've been growing significantly. at 12.6%, with very healthy growth at 8% also in Q3. Last but not least, EBITDA has grown so far in the year at about 10%, 10.2% to be precise, with a margin expansion so far of 149 basis points, actually growing in the third quarter to 156, and we expect this performance to be confirmed across the year. Last but not least, we continue to progress in executing our strategy announced at the Capital Market Day. The various fronts are progressing well. As we've integrated the company more deeply at the beginning of this year, we've started to identify further efficiencies and synergies that will become visible in the next few months and in the coming years more broadly. Second key point, we have rebranded Germany and more broadly DAC to NEXE. This is a very important step for us because we normally rebrand an asset where we feel very, very comfortable with the status and most importantly with the outlook and the possibility to accelerate further in the region. Third, we have sold our, or actually we signed the sale of our Nordic EID business to for up to 127 million euros to Ion Group. The Ion Group is a French company leading global identity and secure digital services provider. This, as you remember, is an asset that we have declared is a very nice asset, in fact, but that we declared as a non-strategic and therefore asset for sale at the Capital Market Day last year. In attachment to this presentation, you will find a page that describes a better the terms of the deal and the perimeter of the business as well. Last but not least, we continue to reduce our net debt leverage in line with our plans and just as a confirmation, we have already, we will be covering, we'll pay down our 2024 and 2025 maturities that account for about 1.3 billion euros with the cash that we have already available that is close to 2 billion euros. Overall, we confirm the guidance for the full year that, as a reminder, is about 7% revenue growth, EBITDA of 10% or above that, and the excess cash of at least 600 million euros. Let me now move to volumes. Here, as usual, you see a very rich page from us on volume dynamics. I think into next year we'll probably simplify it and move it back because it was something that we do to allow you to understand the dynamics throughout the COVID period that hopefully is by now well behind our shoulders. I think there are three themes across the various markets. First of all, Italy and Nordics growing mid-high single digit, despite the fact that, as you can see very clearly, We had a lighter August in Italy on the back of a very strong August last year. And actually, we have the DAC region that is actually growing a double digit, more in the double digit space, driven, I would say, by a particularly strong performance in SME in Germany. Second key message, as you can observe, there is a solid continued performance in the basic segment that includes groceries, supermarkets, utilities, all those type of things that even throughout macroeconomic week period continue to basically perform well. You can also see that we have a lighter trend in discretionary consumption and a little bit across all markets slowing down throughout basically the summer. Third key message, in October we see these trends continuing in a pretty solid way and you see the numbers here on the page. Let me now move to the usual update on the key new news in the merchant services business that accounts for wealth for more than 50% of our business. In SME, with these three volumes growing about 11% in the first part of the year so far, a few things that we would like to underline. We continue to see a growth in our terminal base, that is a good proxy or customer base, as well. Over the last 12 months, this base did grow about 100,000 units. terminals. Second point I would like to underline again has to do with the rebranding of Germany and DAC into NEXE. In this occasion, we launched a very advanced digital proposition for SMEs with a very strong focus on SMEs that includes, obviously, a smart terminal, a very simple, no-fail pricing structure for our merchant customers, and a fully digital customer experience and onboarding experience so we can onboard customers in in less than basically two days and 48 hours. Third message that I'd like to underline, Orderboard, that as you may remember, is a German software company that is specialized in point-of-sale software, mainly for restaurants and hospitality. It's continuing to grow at around 20%, and we have started to cross-sell deeper across Nexi and Ardabird in our SME base from basically after summer. The fourth message I'd like to underline as far as SMEs are concerned is that we continue to expand our partnerships with ISVs and platforms. In the last quarter, we have signed about 40 new partnerships across the various geographies. Overall, Our partner base is by now above 1,100 partners. Moving to e-commerce. In e-commerce, we saw a continued nice growth, about 8%. It is probably better than what market is showing in Europe. This growth has been supported by a customer base growth of about 8%. mainly driven by continued expansion in Italy and in the Nordics. We continue to have a heavy focus on mid-market clients across geographies with a very strong focus on retail. Third thing that I would like to underline, as you remember, we have signed a strategic partnership with CompuTop, that is the the German leader on online acceptance solutions. Also in this case, similarly to what we are doing in SME with Orderbird, we are accelerating the revenue synergies, basically cross-selling and up-selling into the respective customer bases starting from Germany, and we are preparing to leverage computer technology across the group in line with our initial strategy. Last but not least, also in e-commerce, we have signed a number of partnerships. Let me underline three premium partnerships that we have signed at the group level with three very key leaders in the platform space, being Shopware, Magento, and PrestaShop. Last but not least, also in LACA, we see a healthy continued volume growth with a healthy pipeline of commercial new wins in key sectors and geographies, covering from retail to grocery to smart mobility and EV charging. And here, again, we are pleased to see that we are working on more and more advanced solutions. For example, in Italy, we have launched recently with one of the leading very large supermarket chains, a fully digital automated platform cashless supermarket experience and we will roll it out across the group in Italy. Let me now hand over to Bernardo for financial results.

Thanks Paolo. So as long as you walked us through volume growth and the growth of our business in the third quarter and nine months of the year, we can now see how that translates into financial performance. So starting on slide seven, As usual, we summarized the group level performance with top line growing 7% in the nine months. That's 5% in the third quarter. As we had discussed at the start of the year and during the course of the year, we expected this slowdown in the third quarter due to the difficult comp we had with the summer of 2022. This has nonetheless not stopped us from increasing our EBITDA margin. 156 basis points in the quarter, around about 150 in the first nine months, and EBITDA growing by 10% for the first nine months, 8% in the quarter. Similar story for merchant solutions, where we continue to see sustained growth in the value of transactions across the group. I would call out performance in Germany in merchant services with 7.6% growth in the third quarter and 12.6% growth in the first nine months, But as we've seen, volumes continue to grow handsomely in both SME and e-commerce with double-digit year-on-year revenue growth. Moving on to issuing solutions, we have a similar story with 7% or close to 7% growth for the first nine months. We continue to grow our business across Europe. We highlight the partnership in Norway on Bank Accept and the continued focus on upselling and cross-selling our value-added services and value propositions across Europe and pursue our advanced digital issuing solutions as per our strategy. DBS had 3.3% growth in the quarter. It is actually growing year on year, notwithstanding the fact, and we discussed this a number of times in the past, that we suffered in this business unit from Italian banking M&A, which basically led us to lose some customers in the past. Notwithstanding this, we managed to grow the business thanks to strong volume growth, particularly in the account-to-account segment. EVA clearing volumes on instant payments were particularly strong, but in general, the business unit performed handsomely in the quarter. Moving on to the regions or the geographical split of our revenues. We can see how countries with Mediterranean focus, so Italy, South Eastern Europe are the ones that suffered most because of the summer or the year-on-year comparison I was referring to earlier. On that component, just remember that Germany within that group is growing 7.6% in merchant services, whereas in the Nordics I would call out how merchant services are growing 7%. With regards to costs, on slide 12 that is, you can see how our efforts to extract efficiencies benefit from the synergies of the past M&A allows us to reduce the impact, which is nonetheless there, of inflation. This you can see on operating costs. On personnel costs, we've discussed how we've been investing heavily in people in high growth areas, and obviously inflation leads some wage drift there as well. Nonetheless, for the first nine months, we're at 3.8% in terms of year-on-year cost growth, and in the quarter, it was 1.3%. Obviously, the third quarter and fourth quarter are seasonal. We have a benefit of holidays in the third quarter. In the fourth quarter, we will see where we end the year, as usual. It's a bit of a particular month in terms of invoicing from suppliers, accruals, etc. However, we stand by our guidance for the year in terms of EBITDA growth and therefore cost containment. With regards to indebtedness, on slide 13, we can see that we continue the deleveraging trend which we had observed in the previous two quarters. We're now at 3.1 times leverage, 2.8 if include run rate synergies. We were upgraded through BA1 from Moody's in August. This is the sixth rating upgrade since January last year, which is obviously something we are very proud of and reflects the strength of our financial profile. As Paul has mentioned, we will be refinancing with existing cash. The maturity is coming during 2024 and 2025. That's approximately €1.25 billion, so we won't be in need of tapping capital markets for these. The debt stack, I think, is well managed, obviously unbiased, but our cost of debt is 2.8%. This is less than the yield on our cash on balance sheet. The average maturity is 3.3 years. Three quarters of our debt is fixed and only a quarter of it is variable. So strong cash generation in the quarter, which stands us in very good stead to meet our targets for the year. That said, I'd hand the floor back to Paolo for his final remarks and guidance.