Release Date: February 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Nexi SpA (NEXXY, Financial) reported a 5.1% revenue growth for 2024, with Merchant Solutions growing by 6.3%.
- EBITDA increased by 7.1%, with a 101 basis points expansion in EBITDA margin, attributed to strong cost control.
- Excess cash generation grew by 19% to EUR 717 million, demonstrating strong cash flow management.
- The company plans to return EUR 600 million to shareholders in 2025, a 20% increase from the previous year, through dividends and share buybacks.
- Nexi SpA (NEXXY) was upgraded to investment grade by Fitch Ratings, reflecting improved financial stability.
Negative Points
- The company faces challenges from extraordinary events such as Italian bank M&A, which are expected to impact 2025 revenue growth.
- There is a concentration of extraordinary effects in 2025, making it a unique year with potential revenue growth constraints.
- The Nordics region experienced slower growth due to a weaker macroeconomic environment and phasing effects on partner commissions.
- The company is dealing with the impact of bank contract renegotiations and migrations, which could affect future revenue streams.
- Despite growth in some areas, there is pressure to maintain market share in regions where Nexi SpA (NEXXY) is a market leader, such as Italy and the Nordics.
Q & A Highlights
Q: Can you provide more details on Merchant Financing and its impact on the P&L? Also, is the rollout in Italy and Switzerland included in your assumptions for 2025?
A: Merchant Financing is a significant focus for us, but it does not impact our balance sheet as we do not take on credit risk. We distribute third-party merchant financing, which enhances customer value and loyalty. The rollout in Italy and Switzerland is planned for 2025, and while it's not yet included in our assumptions, it represents potential upside.
Q: Your guidance suggests a EUR 100 million increase in EBITDA. Does this imply limited leverage in other cash lines?
A: While EBITDA growth is a factor, we also expect reductions in nonrecurring items and CapEx, along with tax and interest savings, to contribute to our cash generation target of over EUR 800 million for 2025.
Q: How do you respond to concerns that low to mid-single-digit revenue growth suggests market share loss?
A: We see underlying growth and expect reacceleration due to the shift from cash to digital payments in Europe. While we defend market share in regions where we are leaders, we are gaining share in markets like Germany and Sweden.
Q: Can you comment on the potential impact of bank M&A and contract renegotiations on 2026?
A: We expect some effects from ongoing bank M&A in 2026, but they should be lower than in 2025. The impact will vary by segment, with merchant services affected this year and potential effects on issuing next year.
Q: What are your plans for capital management and M&A in the future?
A: We maintain a disciplined approach to M&A, focusing on small, accretive opportunities. Our capital allocation strategy aims to return most excess cash to shareholders while maintaining investment-grade status and reducing leverage.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
