Nuvei (US:NVEI)2022-03-08 12:04Executive Summary & Financial Highlights Q4 2021 Financial Highlights Nuvei reported strong top-line growth in Q4 2021, with an 83% increase in revenue to $211.9 million and a 127% rise in total volume to $31.5 billion, though net income decreased to $12.3 million primarily due to increased share-based payments Q4 2021 Key Financial Metrics | Metric | Q4 2021 | Q4 2020 | Change | | :--- | :--- | :--- | :--- | | Total Volume | $31.5B | $13.9B | +127% | | Revenue | $211.9M | $115.9M | +83% | | Organic Revenue Growth | 55% | N/A | N/A | | Net Income | $12.3M | $22.6M | -45% | | Adjusted EBITDA | $91.5M | $51.3M | +78% | | Adjusted Net Income | $70.6M | $46.5M | +52% | | Net Income per Diluted Share | $0.07 | $0.16 | -56% | | Adjusted Net Income per Diluted Share | $0.47 | $0.33 | +42% | - eCommerce transactions constituted 88% of the total volume processed during the fourth quarter6 - The decrease in net income was primarily driven by a $29.7 million increase in share-based payments to employees from acquisitions completed in the third quarter and other incentive grants6 Fiscal Year 2021 Financial Highlights For the full fiscal year 2021, Nuvei demonstrated exceptional performance with revenue growing 93% to $724.5 million and total volume increasing 121% to $95.6 billion, achieving a significant turnaround in profitability with a net income of $107.0 million Fiscal Year 2021 Key Financial Metrics | Metric | FY 2021 | FY 2020 | Change | | :--- | :--- | :--- | :--- | | Total Volume | $95.6B | $43.2B | +121% | | Revenue | $724.5M | $376.2M | +93% | | Organic Revenue Growth | 61% | N/A | N/A | | Net Income (Loss) | $107.0M | ($103.7M) | +$210.7M | | Adjusted EBITDA | $317.2M | $163.0M | +95% | | Adjusted Net Income | $248.6M | $89.0M | +179% | | Net Income (Loss) per Diluted Share | $0.71 | ($1.08) | +$1.79 | | Adjusted Net Income per Diluted Share | $1.69 | $0.85 | +99% | - eCommerce transactions represented 86% of the total volume for the full year6 - Cash flow from operating activities surged by 182% to $266.9 million from $94.8 million in 20207 Operational Highlights Nuvei significantly expanded its global capabilities and product offerings in Q4 2021, adding local acquiring in the UAE, securing licenses in Hong Kong and Singapore, and enhancing payment routing in Europe, while also growing support for cryptocurrencies and alternative payment methods - Expanded global footprint by adding local card acquiring in the UAE (now in 46 countries) and securing Visa licenses in Hong Kong and Singapore10 - Enhanced product capabilities, including smart payment routing in the UK and Europe, and expanded crypto on-ramp/off-ramp solutions to support 109 coins and 89 fiat currencies10 - Increased support for alternative payment methods (APMs), ending the year with 528 APMs available on the platform10 Financial Outlook and Growth Targets 2022 Financial Outlook Nuvei projects revenue for fiscal year 2022 to be between $940 million and $980 million, representing 30% to 35% year-over-year growth, reflecting accelerated investments in distribution, marketing, innovation, and technology Financial Outlook for 2022 | Metric | Three months ending March 31, 2022 | Year ending December 31, 2022 | | :--- | :--- | :--- | | Total Volume | $28B - $29B | $127B - $132B | | Revenue | $208M - $214M | $940M - $980M | | Adjusted EBITDA | $82M - $85M | $407M - $425M | - The financial outlook reflects the company's strategy to accelerate its investment in distribution, marketing, innovation, and technology9 Medium and Long-Term Growth Targets The company has set ambitious medium-term annual growth targets of over 30% for both Total Volume and Revenue, with a long-term goal of achieving an Adjusted EBITDA margin of 50%, which are strategic goals rather than formal projections Growth Targets | Metric | Target | Timeframe | | :--- | :--- | :--- | | Total Volume | 30%+ annual YoY growth | Medium term | | Revenue | 30%+ annual YoY growth | Medium term | | Adjusted EBITDA margin | 50% | Long term | - These targets are presented as goals the company seeks to achieve through strategic execution, not as formal financial forecasts1213 Corporate Actions Normal Course Issuer Bid (NCIB) Nuvei has authorized a Normal Course Issuer Bid (NCIB) to repurchase up to 6,617,416 of its subordinate voting shares, representing approximately 10% of the public float, from March 10, 2022, to March 9, 2023, based on the belief that its shares may be undervalued - The company has authorized the purchase of up to 6,617,416 subordinate voting shares, representing approximately 10% of the public float14 - The NCIB will be active for a twelve-month period from March 10, 2022, to March 9, 202314 - The rationale for the share repurchase is the belief that the market price may not reflect the underlying value of Nuvei's business17 Supplementary Financial Information (FY 2021 vs FY 2020) Revenue Breakdown This section provides a detailed breakdown of Nuvei's $724.5 million revenue for FY2021, showing significant growth across various channels, verticals, technology types, and geographies, with Global eCommerce direct, Digital Assets & Cryptocurrencies, and EMEA being standout performers By Channel The Global eCommerce direct channel was the primary growth driver, with revenue increasing 130% to $486.5 million, accounting for approximately 67% of total revenue in 2021 Revenue by Channel (in thousands USD) | Channel | 2021 | 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Global eCommerce direct | $486,511 | $211,667 | $274,844 | 130% | | Small and medium-sized businesses | $136,682 | $116,627 | $20,055 | 17% | | eCommerce reseller | $101,333 | $47,932 | $53,401 | 111% | | Total Revenue | $724,526 | $376,226 | $348,300 | 93% | By Vertical Revenue from Digital Assets & Cryptocurrencies experienced explosive growth of 1626%, while Regulated Online Gaming remained the largest vertical by revenue, growing 93% to $180.8 million, and Social Gaming also saw substantial growth of 504% Top 5 Revenue Verticals by 2021 Growth % (in thousands USD) | Vertical | 2021 | 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Associations & co-operatives | $23,293 | $1,000 | 2229% | | Digital assets and cryptocurrencies | $80,486 | $4,664 | 1626% | | Social gaming | $52,144 | $8,627 | 504% | | Energy & utilities | $2,792 | $1,240 | 125% | | Regulated online gaming | $180,843 | $93,502 | 93% | By Acquiring and Modular Technology Modular technology revenue grew faster at 138% compared to acquiring revenue at 73%, indicating strong adoption of the company's value-added platform services like gateway, global processing, and APMs Revenue by Technology Type (in thousands USD) | Type | 2021 | 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Acquiring | $451,413 | $261,376 | $190,037 | 73% | | Modular technology | $273,113 | $114,850 | $158,263 | 138% | | Total Revenue | $724,526 | $376,226 | $348,300 | 93% | By Geography Europe, Middle East and Africa (EMEA) is the largest and fastest-growing region, with revenue increasing 123% to $394.8 million, while North America also showed strong growth of 64%, and Latin America grew 112% Revenue by Geography (in thousands USD) | Geography | FY 2021 | FY 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Europe, Middle East and Africa | $394,758 | $176,771 | $217,987 | 123% | | North America | $301,257 | $183,803 | $117,454 | 64% | | Latin America | $22,841 | $10,771 | $12,070 | 112% | | Asia Pacific | $5,670 | $4,881 | $789 | 16% | | Total | $724,526 | $376,226 | $348,300 | 93% | Customer Cohort and Retention Analysis The analysis highlights Nuvei's ability to effectively grow revenue from existing customers and successfully onboard new ones, with the 2020 merchant cohort growing its revenue contribution by 364% in 2021 and the overall net revenue retention rate improving significantly to 146% Revenue by Annual Cohort Revenue from the 2020 merchant cohort grew by 364% in 2021, demonstrating strong 'land and expand' execution, while the pre-2019 cohort also grew by a healthy 38%, and the new 2021 cohort contributed $71.3 million in its first year Revenue by Cohort (in thousands USD) | Cohort Year | 2021 Revenue | 2020 Revenue | Change (%) | | :--- | :--- | :--- | :--- | | 2019 and before | $460,542 | $334,710 | 38% | | 2020 | $192,657 | $41,516 | 364% | | 2021 | $71,327 | N/A | N/A | Net Revenue Retention Rate The overall Net Revenue Retention Rate increased substantially to 146% in 2021 from 101% in 2020, with the rate for the Global eCommerce direct channel being even stronger, improving to 179% from 152% Net Revenue Retention Rate | Category | 2021 | 2020 | | :--- | :--- | :--- | | Net revenue retention rate - Global eCommerce direct | 179% | 152% | | Net revenue retention rate | 146% | 101% | Transaction Metrics Total transaction count grew 77% to 1.18 billion in 2021, propelled by a 285% surge in transactions from alternative payment methods (APMs), indicating a significant shift in payment preferences and Nuvei's successful capture of this trend Transaction Count by Tender Type While credit card transactions remain the largest by volume, the number of transactions using alternative payment methods grew 285% year-over-year, highlighting a key area of growth and diversification Transaction Count by Tender Type (in millions) | Tender Type | 2021 | 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Credit | 832.6 | 552.5 | 51% | | Alternative payment methods | 305.2 | 79.2 | 285% | | Debit | 42.4 | 34.9 | 21% | | Total transaction count | 1,180.2 | 666.6 | 77% | Consolidated Financial Statements Statements of Profit or Loss For fiscal year 2021, Nuvei reported revenue of $724.5 million, a 93% increase from 2020, with gross profit growing to $576.8 million, and the company achieving a net income of $107.0 million, a significant turnaround from a net loss of $103.7 million in the prior year Consolidated Statement of Profit or Loss (in thousands USD) | Line Item | FY 2021 | FY 2020 | | :--- | :--- | :--- | | Revenue | $724,526 | $376,226 | | Gross profit | $576,771 | $306,971 | | Operating profit | $145,468 | $71,999 | | Net income (loss) | $107,045 | ($103,670) | | Net income (loss) per diluted share | $0.71 | ($1.08) | Statements of Financial Position (Balance Sheet) As of December 31, 2021, Nuvei's financial position strengthened significantly, with total assets increasing to $3.46 billion from $2.25 billion in 2020, driven by growth in goodwill, intangible assets, and a more than fourfold increase in cash to $748.6 million, resulting in total equity growing to $2.02 billion Key Balance Sheet Items (in thousands USD) | Line Item | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Cash | $748,576 | $180,722 | | Total Current Assets | $1,526,632 | $677,775 | | Total Assets | $3,455,470 | $2,247,769 | | Total Liabilities | $1,433,630 | $789,880 | | Total Equity | $2,021,840 | $1,457,889 | Statements of Cash Flow Cash flow from operating activities increased by 182% to $266.9 million in fiscal year 2021, while the company used $395.1 million in investing activities, primarily for business acquisitions, and generated $706.1 million from financing activities, mainly through share issuance, resulting in a net increase in cash of $567.9 million for the year Consolidated Statement of Cash Flow (in thousands USD) | Line Item | FY 2021 | FY 2020 | | :--- | :--- | :--- | | Cash flow from operating activities | $266,857 | $94,752 | | Cash flow used in investing activities | ($395,108) | ($58,617) | | Cash flow from financing activities | $706,075 | $82,702 | | Net increase in cash | $567,854 | $120,650 | Reconciliation of Non-IFRS Measures Reconciliation of Adjusted EBITDA and Free Cash Flow Adjusted EBITDA for fiscal year 2021 was $317.2 million, up 95% from $163.0 million in 2020, and free cash flow doubled to $290.1 million from $145.1 million, with key adjustments from net income including depreciation & amortization ($90.8M), share-based payments ($54.9M), and acquisition-related costs ($25.8M) Reconciliation to Adjusted EBITDA and Free Cash Flow (in thousands USD) | Line Item | FY 2021 | FY 2020 | | :--- | :--- | :--- | | Net income (loss) | $107,045 | ($103,670) | | (+) Depreciation and amortization | $90,828 | $69,673 | | (+) Share-based payments | $54,919 | $10,407 | | (+) Acquisition, integration and severance costs | $25,831 | $9,970 | | (+) Other adjustments | $40,611 | $176,602 | | Adjusted EBITDA | $317,234 | $162,982 | | (-) Acquisition of property/intangible assets | ($27,169) | ($17,843) | | Free cash flow | $290,065 | $145,139 | Reconciliation of Adjusted Net Income Adjusted net income for fiscal year 2021 increased 179% to $248.6 million, resulting in an adjusted diluted EPS of $1.69, up from $0.85 in 2020, with major adjustments to net income including adding back amortization of acquisition-related intangible assets ($79.0M) and share-based payments ($54.9M) Reconciliation to Adjusted Net Income (in thousands USD) | Line Item | FY 2021 | FY 2020 | | :--- | :--- | :--- | | Net income (loss) | $107,045 | ($103,670) | | (+) Amortization of acquisition-related intangible assets | $78,979 | $59,219 | | (+) Share-based payments | $54,919 | $10,407 | | (+) Other adjustments | $26,506 | $130,750 | | (-) Income tax expense related to adjustments | ($17,867) | ($7,720) | | Adjusted net income | $248,582 | $88,986 | | Adjusted net income per diluted share | $1.69 | $0.85 | Reconciliation of Organic Revenue Organic revenue for fiscal year 2021 was $600.9 million, representing 61% year-over-year growth, derived by subtracting $123.7 million in revenue from businesses acquired in the last 12 months from the total reported revenue of $724.5 million Reconciliation to Organic Revenue (in thousands USD) | Line Item | FY 2021 | FY 2020 | | :--- | :--- | :--- | | Revenue | $724,526 | $376,226 | | (-) Adjustments for acquired or divested businesses | ($123,659) | ($2,524) | | Organic revenue | $600,867 | $373,702 | | Revenue growth | 93% | N/A | | Organic revenue growth | 61% | N/A |