Nexi S.p.A. (NEXI) Earnings Call Transcript & Summary

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Nexi First Quarter 2020 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Paolo Bertoluzzo, CEO of Nexi. Please go ahead, sir.

Good afternoon or good morning, if you are back in the U.S., and welcome to our first quarter results for 2020. I'm here with Bernardo Mingrone, our CFO; and Stefania Mantegazza, in charge for Investor Relations as usual. And we have a few other colleagues on the call in case you need support for any more detailed questions. Today, we will basically cover 3 topics. I will start by giving you an update on the COVID-19 situation here in Italy and most importantly, what we see in terms of volume evolution with some sector-by-sector evidence as well. Then I will lend the floor to Bernardo who will cover the results for the first quarter that we have somehow anticipated a couple of weeks back. And finally, I'll come back with some closing remarks on how we see 2020 going forward, and then I will leave the floor for Q&A. Let me start with the executive summary to make sure that I can give you a comprehensive view of what is happening here. So let's start with COVID-19. Italy has gone through a pretty strict lockdown, one of the strictest in the western countries, and it started earlier in other places. The good news is that from May 4 we entered in what is called Phase 2 with some reopenings, and I will tell you more about that. Second, as a company, since day #1, our total focus and commitment has been in ensuring business continuity, efficiency, security as always, at the same time, safeguarding health and safety of our colleagues inside and outside the company. We need to do whatever we could to also help the country through a series of initiatives to support consumers, merchants, institutions more in general. As you know, our business model is only partially affected by this current situation, at least in short term, because our revenues are more than 50% related to the installed base and therefore, are not directly impacted by the volume contraction in the short term. And our cost base is somehow variable, semi-variable for about 38%. When it comes to volumes, and you'll see graphs later on, we had a good start of the year, in line with the closing of 2019 with volumes going higher in growth at about 5%. Then we saw a contraction throughout the month of March, which closed around minus 33%. And the situation, the latter part of March and throughout April, we stabilized at around minus 45%, bumping up and down depending on the week because of the lockdown measures. I will comment more in detail on the trends on the different sectors and what we have seen in commerce that has been resisting actually better with some, I believe, positive signals on certain merchant categories. We will also comment what we have seen over the last 7 days rolling for which we have detailed visibility. It is the week -- the rolling week from the 2nd to the 8th of May, where we saw some change in trajectory with some recovery starting, I would say, a little bit across the sector, but it's really early days to draw any final conclusion here. On top of this, we have been, since the very beginning, observing customer behaviors and customer needs evolution, and we already shaped our plans to take this into account in our growth initiatives. When it comes to results, the first quarter 2020 has been broadly in line with the first quarter of last year. EBITDA has been actually a bit ahead of that with 3.9% growth, where revenue has been marginally down minus 0.5%. We did continue to implement our key initiatives across different areas of the business in Merchant Services & Solutions. As you can imagine, we've been accelerating as much as we could our e-commerce proposition for larger merchants but also for SMEs, launching remote payment-dedicated services for the smaller merchants and entry-level offers to support the new merchants that were entering into the digital payment space. On Cards & Digital Payments, we continue to push, in particular, on the most digital product. And we will also try to support our customers, educating them in using our products to buy online throughout the crisis. Digital Banking Solutions, we did continue with our plans, and we also launched Nexi Open ecosystem, and it is our Open Banking ecosystem. That includes partnerships with about 20 fintechs and technology companies including Microsoft, Plug and Play and others. Costs went down 4.8%, thanks obviously to the impact of the volume reduction but also to the continued work we are doing on efficiency. The closing of the quarter with a strong cash position with a level that is around 2.8 at the end of the quarter. We are also providing, and Bernardo will comment more about this, the pro forma financials for the Intesa Sanpaolo merchant acquiring business acquisition. Including these, component revenues in the quarter would be up 1% and EBITDA up 6.3%. Finally, while it is very difficult, I would say, impossible to have a realistic, reliable projection for the revenues for the rest of the year. For that part, that is driven by the volumes. That's 50%. We already started to implement a cash cost reduction program of about EUR 100 million plus while remaining absolutely focused implementing our growth initiatives, our growth-oriented investments. As you know, we have suspended our guidance a couple of weeks back, and as I said, we'll implement these initiatives on cost and CapEx to minimize the impact on EBITDA and cash flow for the year. Let me now move to Page 5 and start a little bit of an overview of what we see on the COVID-19 crisis evolution. Here on this chart, we try to simplify as much as possible evolution of the situation from -- as of a people point of view. Here, we are mapping with the gray line the active positive numbers per day in Italy since the beginning of the crisis. In the blue line, we're mapping the number of Italians that are into intensive care across Italy here. You see that both lines did accelerate throughout the first part of March, but then, as the measures went into place the beginning of March and -- the lockdown measures went in place at the beginning of March and went into place progressively throughout the country, you see that the acceleration curve would start slowing down, and both curves reached the peak between the end of March and the second part of April. Now the active cases that are positive currently in the country are about 82,000, a decrease from yesterday, which is about 20% down from a peak that happened on the 19th of April of about 110,000. Most importantly, it was -- I believe it is the most relevant indicator because it talks about -- not only about the number of cases but also about the density and how difficult these cases are. If you look at the blue line with the number of people that are in intensive care, this curve is at its peak at 4,000 at the beginning of April and is now since yesterday below the 1,000 cases with a reduction of 75%, showing that not only we have less new positive cases. More people are getting out, becoming negative to the virus but also the new cases are of a different level of severity. As far as the Phase 2 is concerned, this Phase 2 has started in Italy Monday last week on the 4th of May. As you can see in the boxes on the right, it started with the reopening of manufacturing, industrial production and business-to-business activities and food delivery also for restaurants and bars, where you can only -- you can also pick up your own food or drinks and eat them at home or on the move. We also have some reopening of parks, and visitors were allowed within your same region. In about a week on the 18th, we should have the reopening of the other retail businesses. Just as a reminder, groceries and food stores as well as pharmacy is another high emergency businesses were already open. In -- on the 18th of May, we will have reopening on the rest of the retail, including museums and exhibitions. Obviously, there will be a list of measures that you can imagine in the space to make sure this is done -- we have strict control on the health and safety of the people visiting the stores but also people working through the stores. On the 1st of June, the current plan is on the 1st of June also to reopen bars and restaurants and barber shops and beauty centers and, as you can imagine, are the most difficult ones to be reopened. There is now discussion within the country and the government with the regions about the possibility to anticipate certain cases the reopening of some of these categories earlier in May. Across this crisis and also today, the government has taken action to try and soften the impact on the country. We have specific focus on enterprises, small enterprises, in particular I would say, that went under pressure because of the lockdown. But they also did put in place measures to support employment, support families, support the people that -- who are more exposed to the crisis. In mid-March, we had a decree that is called Cura Italia. This means Care Italy. Then was the second one at the beginning of April called Liquidità, which means liquidity. And the focus is also to provide liquidity and funding for enterprises, in particular, small enterprises. And the government is now discussing a newer decree that should be -- come -- that should come alive at some point over the next few days. It is called Rilancio, which basically means obviously relaunch. According to declarations across these 3 decrees, the government [ distribution of ] EUR 75 billion to support, as I said, families, employment, companies. And they're also trying to leverage -- to supply leverage and use a part of this money to allow the banking system to provide about EUR 900 billion of funding and liquidity to the economy. Everybody, as we speak, is very, very busy to make sure that these decisions go into play, but more importantly, they are effective and money arrives to citizens and to companies in our country. Moving to Page 6. As you can imagine, since the very beginning of the crisis, we put in place a task force under my personal supervision and the rest of the Executive Committee. Task force has been working on a daily basis to make sure that we were combining business continuity but also health and safety of our colleagues in cooperation with the key institutions in our country. As far as people safety is concerned, we were able to basically put after a few days a 95% plus of our colleagues working from home, working from remote, including customer care, who were in the country, [ one of the businesses ] to put also customer care colleagues aiming to -- enabling them to work effectively from home. You all can imagine the tools and security measures that are normal into this case. Today, on a daily basis, out of our 2,000 people population in the company, we have about 20, 30 people per day that have to come to some offices or sites because there is no other alternative, but the number is really, really little, and obviously, they do it with all necessary protection measures. As far as business continuity is concerned, the -- our services across all different areas that function regularly as well as usually even better than [ usual ], in some cases, across the country. We have maintained our service levels, in some cases, improved. And actually, it's interesting to see that customer NPS across various areas has been resisting well and in many cases, improving as well. So this is what we've done to keep the business up and running, most importantly to provide continuity of our services even essentially are for the functioning of the society and of the economy. Now as we have started Phase 2, we will remain the current model of operation for some time given the fact that the company is operating quite effectively from remote. And I believe this will also allow other companies that need to have people going to work and therefore, using public transportation soon to do it more safely as we keep our people -- the current mode of operations for a bit more time. Moving to Page 7. Once we put our business well in control from a business continuity point of view and our people safe, we did do whatever we could also to support the country around a list of customer and social initiatives. Having in mind, in particular, the smaller merchants here on this page, you see some examples. I will not go through all of them, but obviously, we will put a special effort in helping the businesses that were shut down physically, even the smaller ones, to operate from remote with products such as Nexi Pay By Link that allows smaller merchants without a website to sell online, simply sending -- sorry, to sell from remote, simply sending their WhatsApp, SMS and email link to their customers that then could pay through their digital payments; or for example, we did push education campaigns to card holders to help them to buy online even if they were not, let's say, highly experienced in buying online. On the other side, as you can imagine, we work with institutions to help them to implement some of the measures that they decided. I think as example is what we've done through our Open Banking platform enabling real-time banker data check to help the government push subsidies through the bank -- through Nexi together with the banks. And last but not least, we also promoted a collection, therefore, a donation for the creation of a COVID-19 hospital here in Milan to support our employees, the customers and management of the company. So this is about it in terms of -- it's like the more business continuity and other type of initiatives to support the country. Now let's move closer to Nexi, and before I talk about the volume dynamics that we've seen over the last couple of months and we currently see, let me, before I do it, remind everybody what is the impact of what is happening out there on Nexi business and economic model. Here on the left, you see the breakdown of our revenues. As a reminder, more than 50% of our revenues are driven by the installed base, number of merchants, number of customers, number of POS, number of cards, number of ATMs. And while a bit less than 50% are driven by volumes, here, you see the breakdown across our 3 business lines. 36%, 59% and 91% are the percentages of variable revenues associated to volumes for the 3 different business areas. Now when it comes to the impact we are seeing, obviously, on the store base revenues, we don't see and we don't expect any material impact in the short term. We are clearly monitoring very closely the evolution to confirm what we expect to be a limited impact in medium, long-term due to the natural slowdown of new customer acquisition and new installations and potential SME distress. And clearly, it is also partially on the medium, long run marginally but potentially affected also by the rephasing of certain projects, for example, new product launches or similar type of activities. When it comes to volume-driven revenues, obviously, we see a direct impact from volume contraction. On the right, you see instead the breakdown of our cost base. 62% of our costs are broadly fixed, while 38% are semi-variables and therefore driven either by the volume of transactions or the level of activities such as, for example, customer care activity, installation activity, variable compensations and so on. And out of this 38%, 20% is a fact fully variable because it has to do with external processing. Now moving to Page 9. What have we seen since the beginning of our crisis in terms of volumes? And here, the numbers that you see on this page in the lines represent our acquiring volumes. We have taken the data that we see more dynamically and more precisely. These are the data for international schemes for a part of the business and full data, including automation schemes for another part of the business. Here, basically, what you see is that we had a good start of the year, around 5%, 6%, 7% year-on-year growth. And that's the blue line that includes physical transactions, online transactions, also cash transaction from ATMs; and you see that January, February, we're progressing well. And then when the crisis start to hit, you see that progressively throughout March. The year-on-year growth rate went down to around 45%, 50% reduction year-over-year. That did continue basically until last week. We have decided to highlight also the data from the last 7 rolling days that are available to us, and you see them on the far right of this chart with the blue line. And this data refer to the 7 days that go from the 2nd to the 8th of May. This week is a bit of a special week because you have 2 days, the weekend days that are still in the previous lockdown measures and the 5 days of the working days that are instead into the, what we call, Phase 2 mode already. And here, what we can observe is that it seems to be some recovery starting with last week rolling, seeing a reduction of volumes on a year-over-year basis, going more around 30% -- in the 30% space. And we'll give you more detail in a moment around the underlying dynamics by sector. As far I said as online is concerned, I always want to remind everybody that online for us represents about 7%, 8% of our volumes here. You see that online did resist well or better to the crisis situation. However, it's important to notice the fact that online is also affected a lot by travel and tourism, that is a category highly intense in terms of online purchasing, and therefore, it's important to look at these numbers by category. But the key message is volumes going down gradually in the first part of March, stabilizing around minus 50% and starting to see some possible recovery in the last few days as the summer reopening is starting. Page 10 is a bit of a busy page. So sorry about that, but we are trying to provide you as much evidence as we have. What is happening here? In this page, we try to go one level down in terms of categories. And as you can imagine here below -- under these numbers, we have billions of details that we are trying to summarize for to make sure that it's understandable. On the left, you see the breakdown of using [ merchant categories ]. We basically improved the merchant categories, and here, we're looking at acquiring volumes in basically 3 buckets: what we call basic consumption, the light blue bucket, where we basically put groceries, medical, retail, utility services and things that were kind of open organically that people need to continue throughout the crisis. That represents about 35% of our total sales. It's 37% for e-commerce only. The second bucket is what we call generic and discretionary consumption such as, for example, clothing, household products and other more discretionary services. This represents about 34% of total sales and about 19% for e-commerce. The last one of these categories that we call the high-impact consumption, where we're grouping everything that has to do with hotels, restaurants, travel, tourism, transportation, entertainment, cinemas, all of this. And clearly, this is a category that is most impacted. And as you see, this category accounts for 31% of our total sales, so it is the smallest. However, for the e-commerce channel, this is 44%, so it's the most important category. On the right, we're giving you the year-on-year growth rate for each one of these blocks. For the month of January plus February, March, April and the last week rolling that I remind you is from the 2nd to the 8th of May, and we are also trying to provide you the space between physical and e-commerce to give you as much insight as possible on this one. To be clear, we don't commit to report everything like this going forward because we believe it would just be not helpful. But now very helpful for all of you to understand and therefore, we are providing this detail. You can see that on basic consumption, basically, we saw continuation of the structural growth where we've seen these are the numbers, 15%, 13%, 11%. Last week, it was particularly positive. I don't believe there is anything in particular significant here because these were the shops that were open. And here, you start to see that e-commerce was already growing nicely, 27% year-on-year. This actually did accelerate throughout March and April, 30%, 40%. The second category, the generic discretionary consumption category, here, you see that this category was also hit because, a, the shops were closed; and b, e-commerce, that is a smaller impact in this category, but however, e-commerce was not really functioning at best because you know very well that when demand and e-commerce did grow immediately, delivery chains, delivery systems went under pressure and therefore, merchants did not guarantee the delivery -- the timely delivery as normal. And that's the reason why you see that now from the normal growth of -- is a combination of all these elements. This category was also growing 6%, went down from minus 62%, minus 77% with e-commerce also suffering in the beginning but then recovering very well as the delivery systems were improved and the situation was improving more in general and therefore, see that in this category, while physical went down minus 65, minus 81%, actually e-commerce did double speed from 25% down to 8%, then 47%. As far as high-impact consumption is concerned, here, you see this is where the effect has been very visible and very strong, 10% growing to begin with and then minus 68%, minus 89% with both physical commerce and e-commerce suffering in a very similar way because, at the end of the day, here, you're in a situation where people were not booking -- neither booking or paying hotels, airlines, restaurants and alike. So in total, you see what the effect has been from an 11% growth year-on-year, now went down minus 35%, minus 48%, and you see the split between physical and e-commerce. But actually, when you look at the e-commerce, you see that actually e-commerce has been accelerating a lot into the basic consumption, the general discretionary consumption categories, and then the total was then affected by the very negative impact on the cargo and tourism areas. One last focus on the last week rolling that, again, I remind you, is from the 2nd to the 8th of May. And I really believe these numbers have been taken with a lot of caution because you know that in our industry, there are a lot of daily effects and technical effects that may change and reshape the dynamics in unexpected ways. But we said it was, in any case, interesting to share them also because they go all of them in the same direction, therefore, they give us a comfort that this might be a bit more robust. You see that overall on the total, you had a little bit of recovery from a minus 48% to a minus 35% with most of the recovery happening into the physical commerce. And you see that this recovery has happened quite similarly across all the different categories. So you saw not only some acceleration in the basic consumption but also some recovery happening in the generic discretionary consumption and in the high-impact consumption as well. Still very [ negative ] impact with a good 10 to 20 basis -- percentage point improvement across categories. Again, we are monitoring this on a daily basis. We hope this will be confirmed going forward, but I believe we should just take it as a data point without drawing too many conclusions on that topic. Finally, before I leave the floor to Bernardo to cover results, and we can go back on Q&A on these topics, as you can imagine, since the very beginning, we've been observing customer behaviors and somehow analyzing the evolution of customer needs throughout the crisis. We are convinced that there are certain behaviors that we have been seeing over the last couple of months that we have renamed because they don't represent new behaviors. It just represents an acceleration of structural underlying trends that were already very visible but maybe were moving a bit slower. And here, what you see is, therefore, an acceleration. Based on this, we are already reshaping our product plans, accelerating or intensifying our effort on certain activities here. I'm not going through all the page because you can read it yourself, but clearly, as you can imagine, what we are observing in terms of behaviors is that obviously, as far as the merchants are concerned, that everybody is trying to go omnichannel and not just the large ones that were already going in that direction. We saw a strong increase in volume in that space, but also the midsized merchants, they now see omnichannel as the only way to run their business. SMEs were particularly reactive, and that's where we're putting a lot of focus. Consumers did obviously intensify their activities online, but also, they become more interested in understanding on how they could run the digital payments from apps and from online as well digital banking solution, a lot of interest on the business-to-business payments as checks, for example are decreasing in importance because we could not use checks or, for example, banks and corporates were trying to digitalize their services faster. Across the board, we also saw a growing and accelerated interest from the banks in digitizing their processes and their products as fast as they could with clearly an omni-channel focus. On the bottom of the page, you see some of the initiatives that have been accelerating and where we're interested buying investments from, for example, omni-channel proposition in extension to mid-large corporates; to, for example, attracting partnerships with store platforms to help SMEs to go online very rapidly in a very simple and cost-efficient way with "e-commerce in a box" type of solutions, mobile POS acceleration, Pay By Link, and then the fourth, cash and digital payments, similar type of activities and growing interest for everything that can support a more digital life. And I would say, digital banking solutions, a similar type of moves. Clearly, everything that you see in this page was already well in our plans. For us, it's just a matter of accelerating or increasing certain activities, but we are convinced that overall is confirming the secular growth of our industry in our country in particular. I would stop here on this topic and answer to questions later on. Bernardo, I leave the floor to you on results.

Thanks, Paolo. Good afternoon, everyone. We're on Slide 13, where we start with revenues. I will try and be quick in this section because this was largely summarized in our trading state -- trading update back in April in order to leave more time for Q&A. So starting with revenues, group revenues, as you see, we closed the quarter slightly down year-on-year, 0.5% down year-on-year. Our trading update had highlighted how we were expecting EUR 220 million of revenues. We closed the quarter EUR 225 million, slightly better than that. With regards to EBITDA, even there, we had made reference to it in our trading statement with EBITDA expected to be in excess of EUR 110 million for the quarter. We closed at EUR 115 million, so slightly better than that. This is a 4% growth year-on-year, which basically reflects a strong start to the year, January and February, with strong volumes and strong performance, both in revenues and the cost side. And then March, which suffered increasingly throughout the month of the lockdown, which progressively spread from the north of Italy to the rest of the country, as Paolo has described in his section earlier on. Overall, the margin still increased from 49% to 51%. The volume -- the revenues loss with volumes are, I would say, higher margin revenues, so the impact was significant, and the margin would have been higher than that. But as we expect things to improve, we should go back to the earlier kind of pace of improvement of EBITDA margin. On Slide 14, we start looking at the various divisions and our usual breakdown starting from Merchant Services & Solutions. Just to remind us, Paolo highlighted earlier how half of our revenue -- roughly half of our revenues are volume-driven. Roughly half of them are our installed base-driven. In Merchant Services & Solutions, this is roughly 40%, which is installed base and 60% volume-driven. This has been such that in terms of the impact from the foreign volumes, we -- was mitigated by the installed base component, and revenues were down only 0.9% in the quarter of EUR 105.1 million. The performance in the quarter was, again, strong in the first 2 months of the year, weaker in March, sustained by international scheme growth. Domestic debit was weaker. We've seen, as Paolo commented on, strong growth in e-commerce, which was less impacted by COVID-19 and less impacted obviously than physical sales, in those sectors, which were not impacted by the lockdown. So for instance, travel or hotel, et cetera, we've had very strong acceleration as we have commented on earlier. We've focused our attention on, as we have in the past, on new partnerships that are aimed at accelerating e-commerce for SMEs. There are a few examples of these here and are launching new products, which enable merchants to tap the online markets, such as Pay By Link or indeed for micro merchants with the next welcome package, which we discussed a few moments ago. Cards & Digital Payments shows a similar picture to Merchant Services & Solutions. Here, the percentage of volume-driven revenues were on Slide 15, is slightly higher than it is on -- in merchant services. We have volume-driven revenues of about 40% and 60% being installed base-driven by card management fees and the likes. Revenues were down 0.4% so again, similar impact on cards as we had in merchant services. Even here, we have volume growth, stronger international schemes than it is in domestic debit. We see the benefit here in terms of our cards being transacted on overall global e-commerce players, which we don't see on the acquiring side. Think of an Amazon of this world or a Netflix and so on and so forth, that we still make money on those merchants through our card business, although we don't see the volumes on the acquiring side, and hence, the reduction in volumes here is slightly lower than we saw on merchant services. In general, our initiative in the mobile payment space with YAP has performed well, notwithstanding the circumstances. And we launched a number of campaigns aimed at stimulating digital payments under COVID, which helped sustain the performance in the quarter. Digital Banking Solutions, this is the division, which is less impacted, I would say, by COVID given that the revenues are predominantly installed base-driven, so ATM machines, digital corporate banking workstations and the likes. Again, growth in the quarter year-on-year, close to 1% growth, slowed down by the impact COVID has had on most of our clients, our banking clients, nonetheless, a quarter in which we have managed to register growth. And we have, more importantly, launched our Nexi Open platform, which Paolo described earlier. Moving on to costs. We made reference to the fact that approximately 20% of our cost base is directly linked to volumes, so in the first quarter, it's fair to say that you have seen in the -- through the March numbers or in the first quarter, a reduction in costs, which was primarily driven by the lower volumes we experienced in March. We'll talk about our cost containment initiatives later on, but we have the benefit of this in 1 out of the 3 months of the quarter. And this helped us reduce costs overall by 4.8%. There are some other automatic adjustments to our cost base, which come with lower volumes and lower revenues such as variable compensation, but this is pretty much the extent of the cost cutting, which happened in the first quarter. We have both personnel costs down 4% and the non-personnel costs down 5% and more cost cutting in the future in order to offset the negative effect of volumes on our revenues and preserve cash flow and profitability. One word on credit risk. Obviously, for acquirers, credit risk is -- tends to be an area of concern for investors, for acquirers themselves obviously. Given the nature of our business and our underwriting policies in terms of the risks we're willing to underwrite as acquirers, fortunately, our credit risk exposure to these sectors, such as travel, aviation and the likes, is limited, and therefore, to date, we can say that we are -- we have this limited exposure, which isn't particularly concerning at this stage. In the first quarter, I would say there was one non-COVID-related event in January, which led to a default similar to what we have in any given year. As I said, it wasn't COVID related. It was actually related to corporate card business. It was provisioned adequately in the quarter, but we don't expect this to be materially different in the future, particularly if the government initiatives, which Paolo was highlighting earlier, are as effective as we hope they are. Slide 18 gives us an overview of our overall net debt. Clearly, it's more important to focus as to where we will be in the future rather than where we are in March given that March is -- or sorry, March, in the quarter, the quarter is not a run rate quarter given that COVID only impacted us for 1 out of the 3 months in the quarter. However, we generated net cash of approximately EUR 60 million, and this helped reduce net financial debt to EUR 1.42 billion with an overall leverage level of 2.8x. This is very far from the 5.75x leverage, which is the only covenant we really worry about, which is that -- which would give term loan lenders the option, if they chose to, to recall their term loan, the EUR 1 billion term loan. And as I said, we don't expect to be anywhere close to that and it's true. We also -- or ever actually. We also issued the convertible bond back in April [ unit -- back ] given the public disclosure. This has allowed us to further strengthen our liquidity position and positions us very well to complete the funding of the Intesa acquisition in due course given that we are fully covered for it thanks to the bridge facility, which takes us to the end of next year. Slide 19, I think, gives you the -- one of the most interesting pieces of news compared to the trading update we published in April, which is the pro forma number for Nexi if we had closed the Intesa acquisition on the first of January for instance. This is the nature -- the economic nature of the agreement with Intesa. We take full economics of this book from the first of January, and we will pro forma our numbers once we close the transaction in the summer starting from the first of January. So we have given you a preview of what the quarter would have been if closing had occurred. And you can see that revenues would have actually increased by 1% year-on-year, and EBITDA would have increased slightly more at 6.3% year-on-year, thanks to the fact that part of the volume effect on the merchant book would be compensated by the protection mechanism we negotiated with the seller, which allows us to offset part of this underperforming with their distribution fees. I mentioned the convertible bond, so I won't spend any more time on that, and I'll hand the floor back to Paolo to wrap up.

Thank you, Bernardo. Let me wrap up to give you -- I mean to share with you how we see 2020 going forward. And on Page 20, as you can imagine, it's difficult to have a strong, reliable view on the rest of the year as far as the variable component of our revenues that 50% is concerned. This will depend on the length of the crisis that maybe is now clearer, but it will also very much depend on the speed and the nature of the recovery in the rest of the year. As you can imagine, we are considering multiple scenarios for our own internal timing purposes, but none of them is, as we speak, reliable enough to be used as a reference -- as a new reference. On the same time, despite the fact that revenue scenarios are not yet completely clear, we have decided to take immediate action on the cash cost base across all elements, across obviously the volume-based costs that are naturally affected by the evolution of volumes but also throughout the more discretionary spending categories such as the other operating expenses in capital expenditure and the rest of the transformation costs. Here, you see some example. Obviously, we are [ decreasing ] hiring, consulting expenses, internal and external travels of the top management. Myself and the top management team decided to waive voluntarily today our short-term variable pay for the 2020 on CapEx. We're postponing less strategic projects and rephasing part of our IT strategy, postponing less strategic investment transformation costs. We are doing a few other things. So in general, an important intervention on -- to minimize impact on EBITDA and cash flow generation for the year, but I want to be clear. We will continue to invest and spend our efforts and the money necessary to push the key initiatives that are in our plans not only for the year but for the coming years to drive future growth and continue to make our business more and more efficient. Page 21 is just, if you wish, a summary. On the left, you see our previous guidance is now suspended, and we confirm it is, at the moment, suspended. Again, our consideration's in line with what we just said. 2020 volume-driven revenues will depend on the duration of the peak and speed of recovery. We are implementing this EUR 100-plus million cash cost plan to mitigate the impact on EBITDA and cash flow while continuing to focus, invest on our key initiatives for growth and efficiency and we are sitting on a strong cash position. I would stop here, and we are ready, I believe, to take questions.

[Operator Instructions] The first question is from James Goodman with Barclays.

The first question I had was just digging into the EUR 100 million cost containment plan. That's a significant number versus your OpEx base and your CapEx. Can you sort of split it between the 2, between the P&L and the cash flow and just help us a little bit with how we should think about it versus perhaps your OpEx budget? Or is it a year-on-year number? Is it annualized? Does it contain already the variable cost reductions that you'll see reasonably automatically within the business. So really just trying to get to what the commentary is that you're making around EBITDA. I mean does this guarantee positive EBITDA development year-on-year for example? That would be helpful. And then the other question is a slightly broader one just around the structural acceleration that you touched on from cash to card, and clearly, many other vendors in the space have spoken to this. Can you sort of quantify that in any further way as it relates to the Italian market given the maturity of the market are using similar contactless strength to what we've read about? And do you think there's any impact on the government initiatives given there seems now already to be a sort of rapid acceleration of this digitalization?

James, thank you for the question. Let me start from the second one, and then I will introduce the first one. I'll leave the floor to Bernardo. On your second question, to be clear, I think everything that we are seeing in terms of customer behaviors and the underlying trends and so on and so forth is suggesting the fact that the secular trend of growth -- for digital payment growth I just confirmed and some cases, accelerated. If you look at market research information that we have and we see on a daily basis, you have more and more people saying, but literally, this has been growing throughout the crisis, that are more confident in using digital payments. Also for micro payments, they need less cash retrievals from ATMs. I mean there are lots of elements that suggest that -- contactless mobile payments, we see nice strength in mobile payments even if they are still small. So everything is suggesting that people are getting more and more used and they see digital payments as more safe and secure way of paying. However, I think we have to be very, very clear here. I think that the numbers -- I mean the overall trends and the shift that you see -- that you've seen over the last couple of months are so large that it is very, very difficult to distinguish the effect of this underlying trend versus the sharp decrease of volumes. I think the next few weeks will be particularly interesting because we will see by category how the recovery may take shape. So we are very comfortable with the idea that this secular shift will not only continue but potentially accelerate. But to be honest with you, I think it's a bit too early to put numbers on top of it. You also mentioned the government interventions. There is nothing new in the government interventions that are going into place because of COVID around these topics, but you remember well that, at the end of last year, the government approved a list of very important measures to support digital payments for the benefits of the country. These measures -- most of these measures are supposed to go into execution in July and may provide further support to this secular growth. At the moment, I understand they're fine tuning the operational procedures for this. I would not be surprised if some of the most complex ones for execution, for example, the lotteries are reshaped or potentially postponed by a few months, but the bulk of the important measurements would go into place as expected. As far as the cash cost interventions are concerned before leaving the floor to the Bernardo, right again, the fact that, a, this includes all possible cash categories, including as we did try to highlight on Page 20, including also the variable volume-based costs. And that's the reason why it's very difficult for us to be precise with that number here because it's [ independent ] of volume. And b, I think you used the word guarantee EBITDA or something like that. I believe that given what is the outlook today in terms of scenario and recovery, it's very difficult to guarantee EBITDA because, at the end of the day, it's going to be driven mainly by revenues. I think here, our intent is clearly to minimize any -- as much as possible -- minimize as much as possible any impact that may come from these volumes. And therefore, the volume-driven cost will just follow volume dynamics. But everything else, we have to take action, and we are already taking action now because otherwise, later -- if we just do it later in the year, this would have -- we would have less flexibility. Bernardo?

I think Paolo said it all. I think this is not -- our cost-cutting exercise is not targeted at a specific EBITDA number for 2020 because that will depend on different factors largely outside our scope, but rather finding a balance between the most we can do in order to protect our cash flow and our profitability without compromising strategic or structural initiatives, which are for the benefit of Nexi in the medium to long term because we believe this to be a temporary crisis, the one related to COVID. So we did -- this EUR 100 million is to be referenced against an overall cash cost between operating expenses and CapEx of approximately EUR 650 million, which is what we would have in 2020. So it's approximately 15% of that. You have on the far left of this cost containment and volume-based costs, I think Paolo mentioned earlier that we have approximately 20% of our costs, which are essentially external processing costs, approximately EUR 90 million. And those will follow a reduction based on the volume reduction almost linearly. And the rest are everything we freeze, and we adjust to the new lower revenue scenario without compromising, as I said, the strategic nature of certain investments or operating expenses. I don't think we want to give you the full split at this stage. But it's a healthy split, I'd say, between directly volume-driven costs -- cuts, which don't come automatically but require work and effort on our behalf to make sure we don't spend that money; and CapEx, which is project-driven in nature and is all the kind of CapEx, I'd say, which is more tied to the slower level of activity of our clients rather than our willingness to postpone strategic projects.

I think, James, you also asked about what is the baseline for comparison here. Clearly, it's more about our own plans. But if you go back to the previous guidance and you backward engineer what was underlying there, you would assume that it's probably also very much of a year-on-year type of directional cut.

The next question is from Massimo Vecchio with UBI Banca.

Two questions, if I may. The first one is on -- I mean, since the IPO, you were talking about developing internal processing capabilities. I was wondering if this -- that is delayed because of the cost optimization efforts or if it remains a priority. And the second question is you waived some fees to your customers, to your merchants. I understand that the -- obviously, the commercial logic of it. But I was wondering if you have a number, trying to quantify if this impact was full in the quarter in Q1 or it will be meaningful in Q2 or if we are just talking about 0-point something percentage.

Massimo, thank you for your questions. Starting from the second one, I think the correct answer is we're trying to give our merchants more things that otherwise they would have probably not used or not done. And therefore, hopefully, this will be very helpful for them. But the cost against our baseline or our core revenues is very, very low. Therefore, we're giving up value. Yes, it's true, but it's more helping them in using services that probably they would have used more in a few years and we hope they will use more now because they need them more in carrying out their business. I think a good example is waving the fees on Pay By Link on a per transaction basis, why we still charge the volume-based fees. As far as internal pricing is concerned, our plans -- we're just executing the plans that we have declared in the past since IPO, as you correctly mentioned. Where are we here -- well, first of all, we've already internalized certain processing components I think we are completing as we speak. We just completed, for example, what we call the terminal management, for example, for POS, which was an important cost -- variable cost on our cost base. So it's done. We've done ATMs in the past. We are now in the process of executing the complete renewal of our acquiring processing platform. It's progressing well, and we will start presentation with the first merchants in a few weeks or months. But by the end of the year, we will be well comfortable where we will see -- we'll be comfortably on top of a platform that is operating as we want. And we'll be able to start migrations in between the end of this year and next year. As far as the broader issuing space instead is concerned, we'll be running a tender that is now focused on a couple of different providers. And we are considering, also in that case, the option to in-source completely with one of them that is providing a very advanced platform. But it is not happening this year.

The next question is from Sébastien Sztabowicz with Kepler Cheuvreux.

One on the Intesa deal. Are you still on track to close this deal by the summer? Or it could be a little bit delayed because of the current COVID situation in Italy? And also, could you make an update on the potential revenue and EBITDA contribution from this acquisition knowing that, today, we are seeing a bit of downturn in the market? And the second one is on your take rates, which both continue to increase in MSS and [ CBT ] again in Q1. What was the reason behind this continued growth from the take rate in the first quarter? And what could we expect for the coming quarters?

Sébastien, thank you for the question. Bernardo, you want to answer that?

So Intesa, the transaction is due to complete as soon as we receive regulatory approval, which is expected by the summer. So it's likely to be at some point in July. I would say we wouldn't close the transaction on the 30th of June just simply from a convenience perspective. We have to prepare half year accounts in a very short period of time. So we'll likely close in July, subject, as I said, to the approval process, which so far envisages approvals from Bank of Italy, which has formally suspended the terms for providing these approvals but has informally told us that they're working business as usual. We don't expect any delays coming from COVID and from DG COMP in Brussels, which -- with whom we expect, if the time table is met, as I said, approval within the originally envisaged time frame. Even they are working remotely. Obviously, everyone is dealing with COVID. But so far, as we can see, work is progressing. So there shouldn't be anything which should stop us from -- which would delay the timetable. Recently, a new regulation has also been introduced, which requires a third approval layer, which is the Golden Power, which the Italian government has introduced as part of COVID measures, which would therefore require us to obtain approval from the government, which I think is a formality and just should again not impact on the timetable I gave you. A testament to this is the fact that we tapped the market with the convertible bond back in April in order to fund at least part of the acquisition given that we think it will close within this time frame. With regards to your question on volumes, on the revenues and EBITDA, I would refer you to Slide 19, where we tried to give you a view as to how our business would have been -- would have looked like if we had closed the transaction on the 1st of January. This is the substance of the agreement. When it closes, we will have economics from the 1st of January this year. And you just need to look at the difference between Slide 19 and the earlier slide on revenues to figure out the difference, which is the merchant book of Intesa. In terms of the ability to withstand the volume pressure or the volume impact we have on revenues, Intesa's -- the acquisition from Intesa of the merchant book allows us to benefit from the protection mechanism I mentioned earlier, i.e., a compensation of the target level of profitability for the year with distribution fees we would have otherwise paid to Intesa. So we are protected on the downside by this acquisition-related close. So this is with regards to the first question. The take rate is -- again, the reason for the take rate increasing is related to the drop in volumes. And not all our revenues are impacted by volumes, as you know. The take rate, the way we measure it for the purposes of passing on the message of substantial stability or slight positive accretion in take rate is a very coarse measure of our profitability because it divides 100% of our revenues by volumes and not all the revenues are volume-driven. And therefore, with the drop in volumes in March, you have a spike in the take rate for the quarter. I wouldn't use that as indicative of the future take rate of the business given that when volumes recover, the take rate will come down.

Yes. So Stephane, just to -- sorry, Sébastien, just to be clear, if you just take the volume component of take rate that's broadly stable, it's marginally increasing but in a completely different way. So the effect that you see is purely technical.

The next question is from Stephane Houri with ODDO BHF.

I have 2 questions, if I may. So the first one was on your Slide 10. Just to understand when you look at the acquiring volume by category at the top left of the chart, and if I calculate that the e-commerce share of all that arrives at 29% of the acquiring volume. So is that correct, that e-commerce does represent about 30% of your volumes? Or am I reading something wrong there? And if you can explain. And the second question is really to understand if when the situation will normalize, if we can say so, do you think that you -- the positive impact of consumer changing their habits will overcome the less positive impact of, I would say, maybe a deep economic crisis or less consumer spending to say the least for the second half. So if you can give us your opinion and give some clarity on that, it would be very helpful.

Stephane, thank you for the questions. On your point on Page 10, I think the numbers that you're looking for are on the bottom right of that page, which is the percentage of volumes that are e-commerce volumes on the total. And you see that those volumes were in a normal situation, January, February, about 7% of total volumes. And they did go up on a relative basis, of course, to around 10% as we speak, which shows you how more relevant e-commerce has become for our customers and for ourselves. Honestly, I think -- I don't know how you were coming to the 20% looking on the left. But just to be clear again, those percentages are the split of the 100% on total sales, physical and online in the pie chart. And in the call-out, you have that same breakdown if you take e-commerce only, okay? So it's not the percentage of e-commerce on the specific thing, okay? And therefore, you can see that the importance of e-commerce is around -- if you do the numbers precisely, it used to be because these are 2019 numbers. This is kind of 10% for impact consumption and less for the others. As far as what should happen in the future, as we may have some positive effects in terms of customer behaviors, but at the same time, also as far as digital payments are concerned, but also some pressure from economic -- macroeconomic challenges. I think this is very, very difficult to say also because, as we speak, it's a bit unclear how much payments are shifting, as we speak, or did shift over the last couple of months from cash to digital. That's the key question. We're trying in every single possible way to second-guess that number. But as we speak, there is no evidence that is reliable and that would make sense to share with you. Again, all factoids and every customer feedback and observation, articles and so on and so forth would suggest that it is happening, but nobody is able at this stage to quantify it. As far, if you like, the other component, the possible negative component, which is the impact of the economy on our broader business, you may remember that in the past, we've always said that our trends -- our volume trends for digital payments and just for Nexi, for our sector in Italy, we're kind of more resilient to -- resilient to short-term GDP consumer consumption spending trend. And we still believe that in this case, obviously, it very much depends on what is the underlying impact of the economy because if you're talking about 1, 2 percentage points of change of speed versus normal state, that's something that probably is absorbed within the overall trend -- secular trend of growth of digital payments. If it is much more than that, I think we will have to see. The -- it also very much depends on the nature of the crisis and what, if you like, the segments of the society are the most affected, the ones that are protected. I think it will also depends a lot on the effectiveness of the measures that the government is putting into place because if you look at the quantity of them, they are fairly relevant, fairly massive as much as that is also happening in other countries around the world. I think the key question that will have to be answered going forward is the effectiveness on these topics. But honestly, I would love to give you more insight, but difficult to say more than this.

The next question is from Charles Brennan with Crédit Suisse.

I've got 2 questions, if I could. Firstly, just on the e-commerce side, do you think you've taken or lost market share in the overall e-commerce market through this COVID period? It's obviously taking up more of your volume, but it is with your competitors as well. And then secondly, can we just think about the trends before COVID? And specifically, you're highlighting 5% volume growth. That's tracking below the high end of the 5% to 7% revenue guidance that you're aiming for. Were you confident of closing that gap between 5% and 7% through increasing take rates? And is increasing take rate a sustainable driver of revenue growth? Or is that a phenomenon that would have been isolated to 2020?

Thank you, Charles. So as far as the first one is concerned, be honest with you, again, unfortunately, it's impossible to assess market shares in this current environment. I believe it's always important to underline the fact that even if today, we're talking more about e-commerce because we're trying to second-guess the behaviors of our customers and what we laid out in the very long term and so on and so forth, still around -- it used to be 7%. And now in the peak of the credit, it's around 8% to 9%, 10%. And therefore, I think it's also important to mention that. What -- I mean we have been digging to the numbers as much as we could, both on the acquiring side and the issuing side. Here, the market share is unchanged in 2 months. It's more a matter of the dynamics, the volume shift, if you wish, and the different dynamics across the different segments, which are the merchants that grow faster into this space as far as e-commerce is concerned. And here, to be very clear, we have -- the market, as we said in the past, is basically composed by 2 macro segments. One of the very global pure e-commerce players, the Amazons of this world, the Casino.com, the Expedia, the Netflixes, but it's clearly not our market. And then there's the second part in the market which is a combination of the e-commerce, the multichannel component of physical Italian and international merchants that do have -- that are larger or medium large that have a physical presence in Italy and the smaller Italian merchants that are either pure e-commerce or going multichannel as well. And we always separate this 2 markets because the first one, that's clearly the space for other players. It's not our target market, while the second is clearly our target market. And we have invested a lot over the last few years in that space, having good successes as well. And here, what we see is the following. As far as the first part of the market is concerned, you clearly see the successes from the Amazons that are existing better than the others and the Netflixes of this world. However, in that segment, you have a very large number of layers that are very heavy on international travel, tourism and all of that. And therefore, that macro segment as a whole is not necessarily performing better than the local segment, where instead, you have all the phenomenon that we were describing of our own merchants going omnichannel, our own SMEs going omnichannel and Italian merchant. And that's the space where we are stronger, where we compete well. And therefore, I believe what will drive the market share down is going to be more the mix of segments rather than the market share per segment. What we have been observing over the last few weeks, literally, for example, is a strong growth of the e-commerce component of larger merchants, for example, in retail, that are our customers. So I think too early to say, but what we see makes us feel, at least at this stage, comfortable for the dynamic. And if anything, you have now a stronger push from the local merchants, physical merchants of all sizes to go digital. And that's actually our space. Don't forget, for example, that every single contract of physical commerce for Nexi is automatically already expanded, enabled for e-commerce as well. On your second question around volumes and revenues in January, February here, for us, that is, I would say, nothing new in the sense that if you look at the unitary prices in our industry and for Nexi as well, they are, over time, as volumes go up, going marginally down. I would say slowly but the direction is, I think, clear. It's normal. It's expected. It's planned. The reason why I said our revenues tend to perform better or in any case, broadly in line with the volumes despite this decrease -- a gradual decrease in unitary prices is because the type of strategy we have is a value-centric strategy in terms we are trying to push more and more valuable products to our customers. And the way take rates are calculated, if you just take total revenue, divide it by total volumes, it's very materially affected by that. If I give you an example, if there is a merchant that is already working with us, driving a certain volume that has a very traditional legacy terminal, and we upsell a smart terminal to that merchant, a smart POS, the value of that merchant goes up. Our revenues go up, but the volume is more or less the same. And therefore, the take rate for that merchant goes up. If the merchant is happy, we are happy exactly. Everybody is happy. The bank is happy. But the take rates technically calculated like that is going up. Or for example, what we are doing in Open Banking or in Corporate Banking, those services don't generate volumes in the traditional way, but they generate revenues. So again, I would say it's more of a technical effect rather than a market dynamic.

The next question is from Adithya Metuku with Bank of America Merrill Lynch.

So 3 questions. Firstly, I just wanted to delve a bit more into these OpEx savings. I'm struggling a bit on how to incorporate the savings into my model. So if you could give us some sense of any additional context around how we should think about the CapEx. So if -- should we think that CapEx will be down year-on-year in 2020? And then, again, when I look at the OpEx, obviously, I understand you can't comment on the variable element. But maybe if you could give us some steer on the fixed cost element of your OpEx, where that was last year and where that could end up this year. And then, again, when you think about this EUR 100 million in savings, are they -- how will we adjust them towards the end of this year? Is it versus 2019? Any color you can give us to help us with our modeling would be super helpful. And secondly, I just had a question on SIA. There was some news flow in the middle of April around Nexi and SIA entering talks. Obviously, this has been around for some time now, but I just wondered if you could give us any additional color there. And finally, just one last question on the issuing side. You talked about some credit risk. I just wondered if you could give us some color on the exposure there. That would be super helpful.

Adithya, I would like to hand the floor to Bernardo for OpEx and the credit, and I will came back on SIA.

So OpEx, I think Paolo mentioned it earlier, and I'll give you also another data point. What Paolo said was OpEx this year was -- expected for COVID was expected to be roughly flat, slightly down year-on-year. So last year, we closed the year around EUR 470 million, if I remember correctly. And this would have been more or less the level we would have expected this year, notwithstanding the increased volumes. CapEx also would have been slightly down year-on-year, approximately around between $160 million, EUR 170 million this year, and will be -- both will be down because of COVID and the cost containment initiatives we are speaking of, including the variable component. Now as you say, for me to comment on the variable component would imply making some kind of statements or prediction with regards to how volumes will evolve for the rest of the year. So I think what you should do in terms of modeling is basically what we do using the data we've given you. I said we have approximately EUR 90 million to EUR 100 million, to use round numbers, of fully variable costs, which fall in line with the fall in volume. So in March, we had processing costs, which were down 35%, pretty much in line with the fall you had in volumes. So depending on what your view is with regards to the recovery curve, which we were showing you in one of the slides in the document, you will have cost savings or lower variable costs driven by the fall in the processing cost, which follows the recovery of the volumes. With regards to CapEx and other discretionary cost cuts, we have been giving you the breakdown in order to retain flexibility on both of these in order to do a bit more or a bit less than what we need based on how we recover. But as I said, you have approximately EUR 100 million of cost cutting, which is a reduction year-on-year, if you want, simply because last year, we had the similar starting cost base or cost base as we would have expected to have this year. And it's something we feel that we can commit to without giving you the full split between CapEx and OpEx for the reasons I mentioned earlier. Depending on how quickly we recover, we may not need to cut as much CapEx because the fall in revenues won't be as high on the fixed cost basis. But EUR 100 million is what we can commit to in terms of overall cash cost cutting. Okay. And I think what you need to do is just work out your scenario where volumes are going to be. You will then have the split of directly variable costs. And then the rest will be a mixture of OpEx and CapEx. And as I said, CapEx will come down, and the rest will be OpEx. With regards to inside credit risk, last year, we had below -- less than EUR 10 million split between the issuing side and the acquiring side. The acquiring side, if I remember correctly, was EUR 6 million to EUR 7 million. In the quarter, we have a number, which is -- last year, it was EUR 5.3 million, sorry, on acquiring and $0.9 million on issuing. In this first quarter, if you strip out the single name, which cost us a couple -- just north of EUR 2 million, the rest was, on a year-on-year basis, slightly down, the cost of the acquiring risk. And as I said, depends on the depth of the recession and how this impacts SMEs and so on and so forth. The impact might be much higher than last year. But when I mean much higher, I don't mean tens of millions of euros. It might be twice what it was last year. But that is the extent of what we expect from credit risk. Hoping that, obviously, recession is as shallow and the recovery is as quick as possible, and the government-led initiatives are as effective as possible. And this is simply because we don't have a TUI kind of exposure, a Thomas Cook kind of exposure. We don't have merchants where we have EUR 200 million or EUR 300 million exposures. We have obvious exposure to travel, for instance, ferry operators or a car rental businesses, et cetera. But the level of risk associated with these kind of businesses is single-digit million euros or low double-digit million euros. And these kind of businesses will benefit from the state support measures, which we highlighted earlier.

Thank you, Bernardo. As far as SIA is concerned, as you correctly said, in the past, we confirmed that there were -- I think it was December, January, we confirmed that there were conversations happening. And that is still the case where there are no new relevant news. There is nothing agreed nor decided nor signed at this stage.

The next question is from Alexandre Faure with Exane BNP Paribas.

I just have a small clarification going back to this Slide #10 that you showed. And looking at the basic consumption line, I was a bit surprised that physical is not stronger in March and April because I would have imagined a lot of cash volumes to move to card. So I can see that part of it is moving to e-comm. But I am a bit surprised that electronic payment in physical is not stronger. So I was just wondering if you got other data points you could share to illustrate maybe what you're seeing in terms of cash to card in Italy.

Thank you, Alexandre. Again, unfortunately, we don't have more details, or if you like, text-based insights that we can share on this one. I think here, to be careful in not overshooting in terms of interpretation of these numbers, when we give more details, we always take the risk of creating more questions than the answers that we are able to give you. If you just take that category, it includes very different components because your comment may be right for groceries, for example. But when it comes to utilities or services like insurance bank services that are included in this category, they follow different dynamics. I think what you can observe here is that, which I think is the most relevant number, you have e-commerce that is growing throughout the period as merchants were getting better equipped and better prepared for serving their customers online. If -- instead, you can see in the analysis that at least in Italy, if you wanted to go shopping physically, you have to go through quite long queues and waiting times outside the stores before you were getting in because of all the measures that were correctly, I think, imposed. By the way, if you strip out and don't have here in front -- but if you strip out, if you just pick into that category, the grocery now that you were referring to, you may see a fairly different dynamics. And you see -- I can't find it. Yes, it's actually -- it's actually growing faster. If we take the grocery line, I'm looking at -- I'm just giving you this data point because you referred to it and also because at the end of the day, the grocery line is the most important subcategory among all the others. That category, if I understand well from the table in front of me, during the COVID crisis, has been growing basically twice these numbers, around 20%. So this confirms your insight. But to be honest with you, again, it's very difficult to then say that there has been a material shift, a massive shift to digital payments. I would love to say that. Hopefully, I hope that's what we will see. But I don't really want to misguide you on this one because it's important.

The next question is from Gianmarco Bonacina with Equita.

A question about the installed base. I understand that it's very difficult to give a forecast for the revenues, in particular on the volume. But on the installed base, is it possible maybe to have a little bit more visibility? In particular, I think on the car business, maybe there, we could have probably a growth, while in the terminal business, I'm not sure because clearly, maybe there could be the impact of higher bankruptcies from SMEs. I don't know maybe if you can elaborate on the evolution of the installed base, if it's possible to assume that this business would have maybe a very small growth in 2020. And the second question on the Intesa acquiring business. By subtracting the pro forma data with the actual data, I've seen that, for revenue, there was a double-digit growth. So is it correct, this is not the underlying performance of the Intesa business but it is more of the mechanism, which you mentioned before? So basically, you will have at the end of the year, your, I don't know, EUR 95 million of EBITDA regardless of the performance of the Intesa business?

Bernardo, do you want to...

So you're absolutely right, installed base will continue to grow. And clearly for cards, it has required an effort to make sure that new cards which get shipped are now shipped at home rather than in the bank branches, which are closing. And clearly, COVID has an impact on this growth rate. So it will be somehow negatively impacted, but they should still grow. The same goes for Merchant Services & Solutions where the fact that we are able to roll out upgrades in terms of our digital services, et cetera, helps the growth of the installed base. And obviously, even here, we have an impact from COVID given that the more shops are shut and the fewer new installations that we have but also the fewer business installations we have. So overall, we expect the installed base to grow. And I think you mentioned that at some point, obviously, the level of the depth of the recession and the impact this has on our customer base may impact this installed base [ at least ] during the year and going forward as a function of the bankruptcies that we will have. But if you look at what is left, everything else, it's expected, as you're saying, to grow. And I think net-net, this should overall grow. Just think of the overall numbers we gave you in Merchant Services & Solutions. The installed base is approximately 40% of overall revenues. That's approximately EUR 200 million. So if you had, I don't know, 5% bankruptcy rate, that will be EUR 10 million of loss revenues on an annual basis. If they happen in the second half of the year, it's $5 million. So that will be more than offset by the inherent growth in the installed base, which is continuing. I hope I wasn't too quick, but I'm happy to take this off-line if you want. The second part of your question was with regards to Intesa. The growth year-on-year is actually not really deriving from the protection mechanism. It's rather deriving from Intesa's actions on this book during the course of 2019 in order to sell it. So effectively, they managed to implement certain commercial initiatives, end up making the book richer for the sale. It has nothing to do with the protection mechanism. The protection mechanism impacts revenues this year and will allow us to protect that EUR 95 million EBITDA number that we announced in December.

The next question is from Antonin Baudry with HSBC.

I have one remaining, if I may. Just to ask for more color about the tourism business in Italy. This is a big part of the economy, especially in Q3. What is the last information you have about the tourist peak season in Italy? And what could be the impact on your volumes, if -- what is your viewpoint about tourism in terms of volume and your activity?

Antonin, thank you for the question. There is still -- there has been no new news on how the season -- the summer season will work in our country. I think the Prime Minister declared in an interview yesterday that he was committed -- the government was committed to allow reopening -- I would say, let me say, a full reopening under strict rules, which I think is an interesting concept. But I think it's unfortunately unavoidable. And therefore, they're really working in defining the specific rules on how it should work in hotel, but most importantly, on beaches, mountains, trekking trails and so on and so forth. At the end of the day, it will be more of a national season. So clearly, there is the expectation to have less foreigners coming in. We don't even know if they will be allowed in from this point of view. And at the same time, less Italian tourist going outbound. And therefore, I think it will be a different season from this angle. I don't know what the net effect will be. But clearly, it will be a more Italian-centric, country-centric season. It is far too early to say anything about what we expect to see in that space. Clearly, it's one of the most affected sectors, but it's also the one that probably at this stage is attracting the most effort -- the highest efforts from the government in terms of support. I'll give you an example. In the relaunch decree that they are discussing, as we speak, and should be announced in the coming days, they are considering not only a list of measures to support hotels, travel operations, restaurants and so on and so forth but also to incentivize tourism by giving, for example, dedicated bonuses and coupons to Italian citizens spending their holidays in Italy this summer. Very difficult to predict anything beyond that. Just for you -- for your own information, when we ran our simulations of the different scenarios, we do it by, let me say, industry somehow. And clearly, we are particularly careful in avoiding to assume an over-optimistic second half of the year for tourism. I think in the end, it will be the most affected area of our economy. Sorry, unfortunately, I will not be able to say more than this, but it is about it.

The next question is from Gautam Pillai with Goldman Sachs.

Two quick questions, if I may. Firstly, on inorganic opportunities. And you already stated that Intesa is on course for completion. Apart from this, do you see scope for further consolidation in the Italian market in the near term? And have these conversations changed in any way in the current environment? And secondly, a quick follow-up on the cost containment plans. Just to clarify, you're not structurally lowering the cost base, rather this is a temporary adjustment by [ stopping ] hiring, et cetera, as an OpEx level you're doing in 2020. And also at a CapEx level, does it affect the transformational CapEx investments, which you had originally planned for the year?

So let me try to take them. And then, Bernardo, please jump in if you want to. To begin with Italian consolidation, we believe that there are opportunities out there. As we said in the past, when we think about our M&A options, at least as far as Italy is concerned, we remain interested in consolidation opportunities, in potentially buying more merchant books, and the Intesa deal goes exactly in this direction, and potentially adding smaller assets as far as products and technology are concerned. So yes, we may see further consolidation opportunities. But again, we normally talk about this type of things when they become available, and there is nothing that is active or decided. But we remain positive about it. And I think we mentioned a few minutes ago the conversations with SIA that would go in that direction. On cost containment, to be honest with you, we have not done yet that exercise. But as -- together with Bernardo, we go through the list of things and so on and so forth. It's very obvious that there are things that we are learning these days that will stay with us in the future. And I told you before that since the very beginning, we put together a task force to observe customer behaviors. And we plan our commercial and product innovation road maps on the back of it for the coming years, not just for the coming months. We are doing the same as far as operations are concerned. And there are things that are very obvious that will help our cost base going forward. I think the easiest example, the most obvious one, is the use of remote working. I think our company's hours went from 0 point something percent of remote working to 95% overnight, and we are learning very positive things. I don't believe we will stay at 95%, but I don't believe we'll go back to 0 point something percent either. I think that there are other areas, for example, of process digitalization, where we were already investing, that we're already into progress, and we were forced somehow to accelerate and fast track given this situation. And they will stay with us for sure, and we'll try to intensify them and so on and so forth. So while the number we're giving you is clearly, clearly, clearly, to be super clear for 2020 because we are giving gaps, certain things that we would have liked to be doing. And by the way, in some cases, we're giving up also because it's more difficult to execute them effectively. But we are working on the learnings, and I'm sure that we will have some benefits going forward as well. On the CapEx question, I think we can just go back to what Bernardo said. The CapEx level is here, will be -- was already planned to be lower than last year. It was a part of our technology strategy. We've been very explicit. Clearly, given the fact that a relevant part of the EUR 100 million plan has to do with CapEx, this means that CapEx will go down year-on-year in absolute terms. What will happen in terms of percentage of revenues will depend on the revenues as well, clearly. But given what we are seeing, probably, we will be below our plans as on a percentage basis as well. But honestly, this will have to be seen going forward.

The next question is from Simonetta Chiriotti with Mediobanca.

I have a question on revenues in the first quarter, but I think it's something that could be important also going forward in the coming quarters. If the trend in revenues and volume-related revenues was similar to that in transacted -- in the value of managed transactions or if there was some kind of mix effect that helps to support the overall revenues.

Yes. I mean the mix effect is one which is obvious in the volume front where we had less -- a lower decline in international scheme volumes and higher domestic debit, and most of our revenues are tied to international scheme volumes. So that is definitely a factor in helping our revenues. But if you look at the overall take rate, I would obviously go back to the comments we made earlier, which is the take rate is to grow. So too coarse as a measure of profitability to make anything out of it in a quarter in which we dropped very significantly in terms of volumes. And they only impact just under 50% of our overall revenue. So in terms of mix, the only comment I would make is the one with regards to domestic debit versus international activities.

Mr. Bertoluzzo, gentlemen, there are no more questions registered at this time.

So thank you. Thank you, everybody, for attending this call. I feel a bit sorry for not being able to give you forward-looking insights on what will happen with the evolution of the situation here and the reshaping of customer behavior underneath. I believe it's unfortunately unavoidable. I want to be clear we remain very positive about the future of our business and about the future of our company. We just want to avoid, in any possible way, to misguide you or to give you our optimistic comments on things that we perceive and that will need to be well understood in detail and with hard data and fact. Clearly, our key focus at this stage is to make the most out of a year that is going to be a difficult year. That's fairly obvious. But for our financials, it is important for our society, for the society, the cities in the world, but in its own little space, also our company, but we try to make the most of these in terms of accelerating the key initiatives that I'm sure we'll anticipate this evolution that is kind of visible. So thank you again for attending. Even if we are not traveling the world in physical road shows, we are, as always, available for clarification, comments and one-to-one meetings. I think -- I understand from Stefania we will also be participating in a few conferences -- digital conferences in the coming months. So hopefully, we will see and talk to you, many of you very soon. Have a good afternoon. Thank you.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.