NEXI S.P.A.

Good morning. This is the Cards Conference co-operator. Welcome and thank you for joining the NEXI first quarter 2025 results presentation. 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 Paolo Bertoluzzo, CEO of Nexi. Please go ahead.

Thank you, and good morning. Good morning to everyone. Welcome to our call for the first quarter of 2025 results. As usual, I'm here with Bernardo Mingrone, our Deputy GM and CFO, Stefania Mantegazza, who leads our investor relations operations, and Stefania. a number of other colleagues in case we need their support to answer to your questions. Today, as usual, we start with an overview of the key messages. Then I will hand over to Bernardo that will cover the results for the course, but we'll also deep dive on the topic that we have chosen for today, which is actually our progress on debt and, more in general, capital structure management. And then we come back for conclusions, and most importantly, together with Bernardo, for answering to your questions. Now, let me start with the summary of the key messages of the day, page three of the document. First of all, point number one, continued delivery of profitable growth in the quarter. Revenue went up 3.7% in the quarter, with merchant solutions up 4.5% versus the first quarter of last year. And it is despite some effects from the leap year and the different Easter phasing that is a disadvantage in 2025 versus 2024 for the first quarter. In this quarter, we also did continue to show strong cost efficiency control. Cost did grow only 0.8% in the quarter thanks to continued cost control and operating leverage. As a result of revenue growth and strong cost control, EBITDA went up in the quarter by 7.1% with an EBITDA margin expansion of almost 150 basis points. Second key point, we continue to focus our attention, the vast majority, to be honest with you, of our attention into shaping next year for future profitable growth. Four points that we want to underline. First of all, we continue to make progress on integrating software payments into strategy execution in the quarter. By the way, we also signed a strategic partnership with Planet in the vertical of hospitality for the large merchant segment. We will start from there with Planet with focus on the Nordics, Thirst, Italy, and DACA to come. And we probably then extend the partnership into additional verticals where they are particularly strong, such as luxury and high-end retail. Second point, we confirm that we continue to see a strong traction from our direct complementary sales channels in Italy, where we are adding a strong firepower to our bank partnerships that are there, will continue to be there. And these additional channels are now representing about 30% of the total new sales in the quarter. Third point, on top of our very strong focus on SMEs that remain the core and remain the priority for us, we are increasing, especially in certain geographies where we are already market leader, our focus on the mid-corporate and national LACA segments. which is a segment that is particularly interesting for us on the one side because it's profitable, and on the other side because it's a segment where we gain a lot of traction with our positioning that is combining scale that allows us to have product strength, technology strength, and at the same time, local in-market presence and entrenchment, which is very, very important for these players that require a lot of local support across all possible fronts. Last but not least, as you've seen, we continue to have a strong performance on cost, but we're already working, as you can imagine, into the next round of efficiency measures, looking forward to 2026 and beyond. Third and last point, we are creating value for our shareholders. As we announced three months ago, we are returning in 2025 600 million to our shareholders, which is 20% more than last year. We will pay the 300 million euro of dividends, our first dividend on the 23rd of May, and on the same day we will also start our share buyback program of another 300 million euros. Second point, as you may have seen, we've been upgraded to investment grade by Standard & Poor's in March after the same upgrade from Fitch at the end of 2024. And last but not least, we have completed in March a 2.9 billion euro financing plan, and we've established more recently our EMTN program that will allow us to further optimize the financial structure, and Bernardo will deep dive in these topics Overall, based on what we have seen in the first quarter of the year, we confirm our guidance that we gave you three months ago. Now, let me hand over to Bernardo for results.

Thanks, Paolo. Good morning. Starting on slide five, revenues, we brought the announcement forward in terms of the growth in revenues. That doesn't come as a surprise. 3.7% growth year-on-year, as Paolo reminded us. Last year was the leap year. Easter was at the end of March. This year it's in April, and that has affected these dynamics slightly, just like for most other payments companies. I think the strong point on this slide to highlight is the margin accretion, close to 150 basis points in the quarter. There are timing and phasing effects during the course of the year. We'll speak of them in a second as we go through. I would say strong performance in the quarter with regards to our leverage delivering payments. The margin accretion in the EBITDA growth, which you see, is just north of 7% at 386.9 million euros. Moving on to merchant solutions, we have, I'd say, continued growth in the segment, in the business unit, which continues to be supported by volume growth. This is the business unit which most benefits from volume. From volume growth, we call out on the slide the fact that this volume growth is generalized across the group, and especially in Italy, Germany, and Poland, notwithstanding the calendar effects that I spoke of earlier and notwithstanding the fact that we have initial impacts coming from the loss of the Italian banking client. We have also spoken of in the past slightly, I'd say, the volume growth in the first quarter re-accelerated during the course of April clearly because also of the calendar effects that I was mentioning earlier. We highlight and call out the fact that we continue to grow our customer base and the SME segment, the most important one for us. This is particularly true in Germany where we gain market share in Poland and also in e-commerce and we continue to get contributions, important contributions to our top line growth from the upselling of value-added services to our customer base. Moving on to issuing solutions, we continue to show growth on the top line in issuing, again, driven by international schemes. Clearly here the contribution of volume growth is slightly less on a percentage basis than for merchant solutions. We continue to derive most of our revenues from international schemes. Even here we have a bit of a calendar effect, as we mentioned, for merchant solutions. But I think it's important to continue to highlight the contribution to our top line growth of international debit in Italy, which is a very strong contributor to the top line in Italy and for the group. And even here, the upselling and cross-selling value-added services and the focus on advanced digital issuing solutions and the rollout across Europe. Digital banking solutions, the division which is most infrastructure-like in terms of its characteristics, grows in the quarter close to 1%. We have, from the volume-driven businesses within digital banking solutions, it's a good development from instant payments and its adoption across Europe with volumes growing very handsomely in that segment and other areas like the Italian public sector. The Bill Payments Campaign, which is contributing again to the top-line growth in the bank payments hub, payments as a service proposal, contributing to this. Moving on to the regional distribution of growth within the group, I'd say that most geographies contribute to the top-line growth. We have some specific impacts in certain geographies, the net of which obviously contributes to the top-line growth of 3.7%. In Italy, we had, as I was saying earlier, strong support from international scheme growth notwithstanding the leap year in this race to phasing. However, we also had some project phasing contributing to this, and as I was mentioning importantly, the initial contribution or negative impact of the exit of some clients, which at the end of last year started to pick up in terms of volumes in the first quarter of this year, and we will have for the remainder of the year. In the Nordics, the weaker macro, I'd say, is what I would call out in terms of the impact on the Nordics. And notwithstanding this, we have a top-line growth in the low single-digit range. I'd say Easter is probably less relevant here, but the leap year obviously contributes to this as well. DAC, we have, you know, continuous strong year-on-year growth in merchant solutions in Germany, which is very high single-digit in terms of growth. We highlight here 9% growth. And then we have an issuing client impacting our top line in Germany. Obviously, for Germany, it is more relevant than it is for the group. However, the exit of this client started a number of years ago is impacting the top line growth there. In CSCE, I'd say that the negative number, which might stand out, is more to do with phasings of last year's first quarter impacts, one-off impacts, which were positive last year, less positive. less relevant this year in Poland that swing the balance. In terms of just while we're on this page, just to clarify the fact that we have now, as we continue working on one next year, as Paolo was suggesting, one of the things we're doing is aligning our accounting and reporting systems, and we're now reporting Poland in CSC no longer together with Germany. The database will be aligned in the future, and this allows us to align the reporting with the way we manage the business within Nexi. Page 10 on cost performance. As you know, we have a natural aversion to cost growth, and we focus a lot on managing our cost base to deliver the most out of our operating efficiency. costs were growing less than 1%, notwithstanding the fact inflation is higher, notwithstanding the fact that volumes are driving about 20% of our cost base. The number of transactions growth is driving our cost base, 20% of our cost base. Notwithstanding this, we have managed to limit the cost growth to 0.8%, which is, I think, a very good result. It is fair to say that in the first quarter this year, we benefit from a year-on-year comp in HR costs. You know that last year, We had a large transformation initiative which led to about 1,000 people exiting the group. Most of this happened in the second half of last year, so the first quarter is the one where we have the biggest year-on-year effect, and you see that in the minus 5.4%. This will come down during the course of 2025. However, we manage our cost phases one, and these phasing effects are all known and planned for when we give our guidance, so there's absolutely no surprises in this. Moving on to slide 11, before we go into deep dive on our capital structure, you can see leverage is now 2.5 times. This is coming down every quarter, as you see in the bar chart here. If you take a step further back, if we go back to 2021, we started this journey after the mergers of Nets and Sea at 3.6 times. If I go further back, when I joined the next year, we were 6.5 times leverage. All of this just to say that our business is one which, thanks to its growth and the EBITDA, thanks to the strong cash generation, is a business which can leverage pretty quickly and, more importantly, predictably, which is what we bank on in managing our cash allocation, our capital allocation strategy, which Paul reminded us of, includes a $300 million dividend, which will be paid later on in the month in a buyback program, which will start once the dividend has been paid. We also do this whilst at the same time reimbursing maturities as they come due. We've reimbursed three quarters of a billion euros last year. Another half a billion is in the process of being reimbursed. We have spread, and we'll look at this in a second, about three billion euros of maturities, which came due in 2016 after a large renegotiation of partner banks. And we're now ready to approach the market with senior unsecured bonds as an investment grade issuer, thanks to the establishment in the MTM program. Moving on to the final chapter before I hand the floor back to Paolo, we thought it would be helpful to just take a moment to review our capital structure now that we are investment-grade by at least two rating agencies, which makes our future issuance eligible for all kinds of indices and gives us access to a different pool of investors and markets for our debt. Slide 13 just summarizes what we said back at the beginning of March with our four-year results presentation. Our commitment is that of remaining investment-grade going forward, and we target the leverage of between two and three years. We're there at this point in 2025 in the quarter. Given the phasing of buybacks, et cetera, this will change in the course of the year. But that is our primary commitment we make. We are returning capital to shareholders. We spoke of that, and we will – and we will focus only on very selective and value-creative M&A acquisitions, as, frankly speaking, we've done so in the past. This is both on the buy side and on selling. We always review our portfolio to identify assets which are not core to us or have better owners than Nexi to dispose of them, and even, of course, we sold a small capital markets business. We also sold a 50% stake in business in the Nordics. Site 14 reminds us of the journey in terms of the leverage, which I was speaking of earlier, 3.6 times at the time of the mergers with Nets and SIA, 2.5 times now. This has actually been 2.3 times the leverage if we perform it for the share buyback, and we'd probably end the year, and this is not guidance, but we'd probably end the year below two times if we hadn't decided to allocate 600 million euros to buybacks and dividends. So What this slide is aimed at showing is just the point that I made of the fact that our business, given its characteristics, is one which the leverage is organically pretty quickly over time. Slide 15 summarizes our approach to debt management, which I believe to be sound, disciplined, and the key recent events. First and foremost, our journey towards investment grade. Started off from single B plus a number of years ago. We've had eight rating upgrades since January 2022. We're now investment grade by S&P and Fitch, and Moody's has upgraded us in terms of its outlook to positive, which is all good news for us. The debt repayment and refinancing, over time, we have discussed why we are carrying cash in our balance sheet, why we're managing the debt we were managing. The overall cost of debt has always been pretty low as a function of the time in which we We issued the bonds, the convertible bonds, got the bank loans, etc., and we are having a positive carry effect on our interest margin thanks to the fact that the cash balances were being deployed and invested at a higher rate. Nonetheless, last year we started to pay down this debt given where we were in our journey of transformation of Nexi, and we started to pay back some of the cash generated to our investors with the buyback which was completed in the second and third quarter last year. During the course of this year, as you know, we will continue to pay down the maturities, those in June, in addition to the three-quarters of a billion reimbursed last year. And during the course of the first quarter, we renegotiated 2.9 billion euros of financing for us. These were maturities, bank loans, which are insuring 26 and 27, as well as increasing the size of our RCF to 1 billion euros, which gives us increased flexibility to manage the remaining maturities in the shorter term. We've also filed registration and established a $4 billion EMTN program. This makes us basically ready to tap the investment-grade market with new issuances at some point in the future. Slide 16 is the final one on the debt structure. The first chart shows where we are. I believe a well-diversified and balanced debt profile, diversified in terms of the investors we can access to lend us money well-balanced in terms of the various mixes of debt that we have. And if you look at the pro forma schedule on the bottom of the page, well spread out in terms of maturities of the maturity profile, which has been increased to 3.3 years from 2.4 years, and a cost of debt that fortunately for us didn't spike during the period of rate hikes given the predominantly fixed nature of the debt and the maturity profile we had set up before the rate hike cycle, and now we're able to refinance at rates which bring this 2.35% down from where it was before, it was 2.7%. With no maturity walls ahead of us, and with our ability to further optimize the spread of these maturities over time as time goes by, thanks to the fact that we now have a truly MTN program which is extremely flexible and helpful in that sense. That said, let me hand the floor back to Paolo for his final remarks and guidance for 2025. Thanks.