Italian Summer Boosts Nexi

Nexi’s Q3 results showed a strong performance in Italy as tourists returned to the Mediterranean in droves although this travel-related boost was offset by weaker growth elsewhere in Europe. This financial update came hot on the heels of last month’s detailed strategy update. [See Ten Things We Learned from Nexi’s Capital Markets’ Day]

Even in September, Italian payment volume was running 50% ahead of 2019. This not only boosts turnover but also margins as merchants are often charged a premium for foreign card transactions.

Nexi payment volume, Italy vs 2019. Source: company report

Payment volumes continue to grow at double digits in all Nexi’s markets outside Italy although performance in the DACH region suffered from “discontinued clients due to optimised risk profile.” This is a polite way to say that some unwanted customers were fired. 

Across all European markets, Nexi reports SME merchants particularly buoyant. Volume was up 29% in the first nine months. Switzerland and Poland are reported notably strong. Total POS terminals were up by 200,000 in last twelve months with most of the extra estate deployed in Italy.

Large account volume was up 17% and management is particularly pleased with a landmark SoftPOS win at Danish Railways. Train guards can now sell tickets on their standard Android tablet instead of needing to carry a separate payment terminal. Paolo Bertoluzzo, CEO, also highlighted SoftPOS as a resilience tool: “We have been helping a Nordic customer that was under a cyber-attack that had nothing to do with us, but we have been able to bring them back into active sales mode, thanks to a superfast rollout in few hours of SoftPOS for their stores.” 

Nexi also claim SoftPOS is showing good commercial traction in Denmark, Greece and Hungary. 

eCommerce volume was up 16% including notable increases in account-to-account payments in Poland (where Nexi owns P24) and Finland. Bertoluzzo explained. “We are focusing more and more on the mid-market, which tends to be a very attractive local segment, faster-growing, where we have seen very nice wins also when competing with the specialized Neo PayTechs.”

Overall revenues were €853m in Q3, up 7.1% at what Nexi calls “constant scope.” This excludes the impact of acquisitions and FX.

Merchant solutions continue to outperform the other business units. Its revenue was up 9.6% at €483m. Issuing solutions recorded sales up 5.9% but digital banking turnover was flat. Management blamed banking consolidation in Italy.

Reflecting the good summer, Italy (Nexi’s largest market) outperformed, with sales revenue up 9.9% compared with considerably less impressive returns of 4.4% for SE Europe, 3.9% in DACH + Poland and 3.7% in Nordics.

Cost control was impressive, up just 1.9% with personnel costs flat asssisted by “our ability to extract further efficiencies and the synergies coming from the integrations,” according to CFO . Bernardon Mingrone. This sounds like code for significant job losses. Management also confirmed that integration synergies were track to deliver €105m this year. 

Nexi is benefiting from long term supply contracts which don’t adjust with inflation. This shifts the short term pain to vendors but cost pressures must ultimately flow through at some stage.  

The combination of 7% revenue growth and flat operating costs saw EBITDA up 12% to €463m. Margins grew 2ppt at constant scope to 54%.

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