Nuvei (US:NVEI)2024-08-06 21:04Revenue and Financial Performance - Nuvei's revenue is primarily generated from sales volume, with a significant portion being recurring due to the integration of its payment technology into customers' ERP systems[5] - Total volume increased by 22% to $61.7 billion for the three months ended June 30, 2024, compared to $50.6 billion in 2023[7] - Revenue increased by 13% to $345.5 million for the three months ended June 30, 2024, from $307.0 million in 2023[7] - Net income decreased by 54% to $5.3 million for the three months ended June 30, 2024, down from $11.6 million in 2023[7] - Adjusted EBITDA increased by 6% to $116.8 million for the three months ended June 30, 2024, compared to $110.3 million in 2023[7] - Revenue for the six months ended June 30, 2024, increased by $117.1 million or 21% to $680.6 million compared to $563.5 million in the same period of 2023[40] - Total volume rose to $121.8 billion from $93.0 billion for the six months ended June 30, 2023[40] - Adjusted net income increased by 2% to $125.1 million for the six months ended June 30, 2024, from $122.5 million in 2023[7] - Adjusted net income for Q2 2024 was $62,564,000, an increase of 7.5% from $58,093,000 in Q2 2023[16] Strategic Initiatives and Acquisitions - The company is actively pursuing strategic acquisitions to enhance its capabilities and market reach, including the acquisition of Paya[2] - The company acquired 100% of the shares of Till Payments for a total consideration of $36.9 million, consisting of $30.0 million in cash and $6.9 million of a loan receivable[9] - The acquisition of Paya has allowed the company to enter under-penetrated verticals such as B2B, healthcare, government, and non-profit, increasing its total addressable market[19] - Till Payments, acquired on January 5, 2024, contributed $17.7 million in revenue to the Company's consolidated revenue of $680.6 million, representing 3%[85] Market Presence and Growth Strategy - The company operates in over 200 markets globally, providing local acquiring in 50 markets, supporting 150 currencies and 716 alternative payment methods[5] - Nuvei aims to expand its market presence by enhancing customer relationships and driving cross-selling opportunities through its modular technology offerings[6] - The company plans to expand its presence in Asia Pacific, Middle East, Africa, and Latin America, focusing on local market needs and regulatory compliance[19] Financial Position and Liabilities - Total assets increased by $126.73 million to $5.26 billion as of June 30, 2024, reflecting growth from acquisitions[53] - Total liabilities increased by 3% to $3.17 billion, driven by higher segregated funds and obligations to merchants[53] - The company declared a dividend of $28.2 million, contributing to an increase in the deficit to $(256.48) million[53] - The revolving credit facility of $800 million remained undrawn as of June 30, 2024, providing additional liquidity[56] Operational Efficiency and Costs - Operating profit for the three months ended June 30, 2024, was $48.9 million, compared to $31.3 million in the same period of 2023, indicating improved operational efficiency[30] - Selling, general and administrative expenses increased by $6.7 million or 3% to $228.5 million, with commissions and employee compensation rising by 20% and 22%, respectively[36] - Cost of revenue rose by $14.1 million or 26% to $68.0 million, representing 19.7% of revenue, up from 17.6% in the prior year, primarily due to increased processing costs from Till Payments[34] Risks and Uncertainties - Economic and geopolitical uncertainties, such as regional conflicts, may impact the company's performance and strategic initiatives[3] - Foreign currency exchange rate fluctuations may negatively impact revenue, particularly for revenues denominated in currencies other than the US dollar[20] - The company has not seen any impact from the ongoing Middle East conflict on its operations and does not expect material adverse effects[20] Arrangement Agreement and Future Outlook - The company entered into a definitive arrangement agreement to be taken private by Advent, valuing the company at an enterprise value of approximately $6.3 billion[8] - The proposed transaction includes a cash price of $34.00 per share, representing a premium of approximately 56% to the closing price on March 15, 2024[8] - The Arrangement Agreement restricts the Company from taking specified actions without the Purchaser's consent until completion, potentially hindering capital raising and asset transactions[78] - The Company may incur a termination fee of $150 million if the Arrangement Agreement is terminated under certain circumstances, which could deter alternative transaction proposals[79] Internal Controls and Compliance - The Company's internal controls over financial reporting were assessed as effective as of June 30, 2024[83] - There were no changes to internal controls over financial reporting that materially affected their effectiveness during the three months ended June 30, 2024[84] - The company is required to disclose information regarding liabilities classified as non-current, including carrying amounts and covenant information, as per amendments to IAS 1 effective January 1, 2024[69]