Nexi: Returning International Travel More Than Offsets Inflationary Cost Pressures

Narrow-moat Nexi NEXI reported a decent third quarter. The payment services provider showed a good 7.1% revenue growth to EUR 858.9 million paired with a good cost control, which increased 1.9% despite the inflationary environment. The resulting EUR 463.1 million in EBITDA beat consensus expectations of EUR 453 million. Guidance for the full year was unchanged, and we maintain our EUR 15.80 per share fair value estimate.

Nexi’s largest segment by revenue, merchant solutions, continues to be the core driver of growth for the group. In the third quarter, revenue came in at EUR 482.7 million or 9.6% higher compared with a year ago. Foreign card transactions have held up well through the summer in Italy, contributing positively. As a reminder, Nexi earns wider margins on foreign cards and therefore benefits from higher travel activity to Italy.

Volume growth has started to slow. Through the third quarter, transaction volume growth has declined to 11.3% versus 20.1% in the first half. October figures appear even softer. In October, Nexi saw 8% volume growth in Italy, 11% in the Nordics, and 2% in the DACH region. Taken together, this constitutes a tougher start to the last quarter of this year, suggesting about 8% volume growth.

Issuing solutions saw revenue increase 5.9% to EUR 264.2 million in the quarter, which was decent and slightly ahead of the year-to-date performance (up 5.2%). Transaction volume growth naturally also slowed similarly to merchant services, but continued good growth in the card stock drives the decent performance in the segment.