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

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Nexi First Quarter 2024 Presentation. [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 morning to everyone, and welcome to Nexi call for first quarter results 2024. As usual, I'm here with Bernardo Mingrone, Stefania Mantegazza, who leads our Investor Relations activities and a few colleagues from our team that may help us in case you have very specific questions. . As usual, I will start by summarizing the key messages. Then we'll deep dive in a topic that is very strategic for us, and we understand attracts a lot of interest from our investors, the topic of payments and software integration. we'll then hand over to Bernardo that will cover results in more detail, and I will come back for final comments. And obviously, then we will have time for your questions. Now let me start with the key messages of today on Page 3. The first message is that we continue to consistently deliver on growth and also on margin expansion at the same time. In the quarter, our revenues did grow about 6% with Merchant Solutions at 6.8% and with e-commerce actually growing double digit. This growth that is broadly in line with our own expectations has been supported by good volume dynamics in line with last quarter -- of last year, maybe slightly better. EBITDA growth has been at 8.6% in the quarter with a very strong EBITDA margin expansion of 112 basis points. Second key message, we continue to shape our company for future profitable growth. We are continuing to execute our growth strategy. Two specific topics we want to mention here. We're increasing day by day our focus on our payments and software integration strategy execution based on partnering with the best-in-class localization, we will have a deeper dive on the topic. And in parallel, we're obviously working on efficiency and profitability, accelerating the cost synergies and more broadly, our efficiency initiatives also on the back of the integration of the group, and this will have a more visible effects later in the year. Third, simple message. We continue to pursue a capital allocation to create value for our shareholders. We are starting actually today this morning, the share buyback program that we have announced in early March. It's a EUR 500 million share buyback program that will last for a maximum of 18 months. And as I said, is starting today. Second key message, our net leverage in the quarter has been down to 2.8x EBITDA from 3.0 at the end of last year. Again, we consider this clear evidence of our ability to strongly generate cash at the organic level and therefore, the leverage if we don't have better usage of capital. Obviously, the impact of the buyback will happen later in the year. But for this quarter, where there was no material M&A and no buyback effect, you see that the leverage went down 0.2x in 3 months. Last but not least, we confirm, as anticipated, that EUR 1.3 billion maturities -- debt maturities that expire in '24 and '25 will be fully paid down with existing cash. And actually, EUR 220 million of that has been already reimbursed during the month of April. Overall, in this context, we want to confirm our guidance. That is, I remember to everyone revenues growing mid-single digit; EBITDA growing mid to high single digit with an EBITDA expansion of at least 100 basis points; and excess cash generation of at least EUR 700 million. Now before handing over to Bernardo for results, you remember that in the past, we were covering volume details. This was a heritage of the COVID days as I've anticipated a couple of times that we will not do this going forward. Obviously, Bernardo will comment and we'll give you more color on volumes in the context of revenue growth. At the same time in the past, we were also providing an overview of our progress on the various fronts of Merchant Services. We continue to do this, and it is actually the same page, you will find it into our attached documentation at the end of the presentation. This time instead, we'd like to focus a bit more on a topic that is attracting a lot of attention is always central topic in the conversations we're having with our investors and with all of you more broadly that is payment software integration. And here, we want to provide you our point of view on the topic and most importantly, summarize our strategy. And therefore, let me jump on Page #4, starting with the way we look at this ecosystem. When you compare Europe versus the U.S., it's really important to observe the fact that the software and payment integration ecosystem in SMEs is much more fragmented and definitely a very, very local. There are SME software markets, specific characteristics and there are European structural characteristics. Starting with the SME software market characteristics that you find summarized on the left of this chart. First of all, this is a highly fragmented and extremely local market, the market of software providers for SMEs. There are hundreds of players in each market. And by the way, they are normally different by market. Normally, the top 5 to 10 cover less than 20% of market share, and therefore, there is a long, long tail. Second point, in general, these software providers are less developed in their propositions and they're actually much smaller than what you find in the U.S. In fact, 90% of their proposition of still relying on stand-alone or lightly integrated payments and moving into integrated payments is more by obsession for the moment. And last but not least, the fact that we have smaller SMEs plus specific market characteristics basically create a lower unit economics for integrated payment solutions versus the U.S. Normally, how much can be charged to an SME for an integrated software and payment solution is normally half or, in any case, much lower than what you would find in the U.S., which makes these markets much more difficult for large players to be entered and most importantly, much more difficult to be developed cross-border in Europe. At the same time, on the right, you can see a number of specific characteristics that are actually structural for Europe. First of all, we have very country-specific tax rules and fiscal infrastructure to be integrated. Second, when you look at it from the vertical standpoint, you find even more differences in terms of local regulations. Let me give you a simple example of the way you need to present allergies, food allergies in our restaurant menu in Germany is completely different from the way you have to present them in Italy or in Switzerland, therefore, creating further complexity on top of the more regular ones. And last but not least, when you look at the local regulations for a highly integrated business model that tend to be more difficult than what you have in other places. And therefore, this makes models -- highly integrated like the PayFac model more difficult and expensive to be deployed. And these are the software market characteristics. On top of this, we should always remember that also the payment market is highly fragmented itself, not with more than 150 local payment methods and more than 10 national debit schemes to be managed if you really want to be successful in the mass market of SMEs in the specific country. Therefore, the software SME market has been more fragmented and complex than the payments one. Now for all these reasons, what we are seeing and what we are expecting as a consequence as well, but it's already happening is that, in Europe, this market will develop at a lower speed and with different dynamics and very local dynamics, I would add versus what we have seen in the U.S. Now our strategy in this context to make integrated payments an opportunity for us is based on 2 very simple pillars. The first one is that we want to be the partner of choice for local ISVs. We are the partner of choice already, in most cases, for local ISVs. We provide the Nexi payment solutions to the localize ISVs relevant in the key verticals and then integrate bundle them with their software solutions. These integrated bundles are normally distributed by their own channels we offer a number of flexible business models to these partners of all sizes and maturity, and this is very important given the fragmentation of the market and the very different nature of the players that we find in the different markets. Among these business models, we also have what we call a smart PayFac model for larger and more sophisticated ISVs, again, is more an exception rather than a rule. But it's a model that allows on the one side a simpler life, more efficient life in terms of complexity management to the ISV and on the other side, the more customer and experience control for Nexi. In this context, we have developed and already launched a digital integration platform that is enabling an integrated CRM across Nexi, the software partner and the merchant to allow, for example, for frictionless onboarding and therefore, merchant and partner fidelization. Last but not least, we're also launching a partner program to help these ISVs to be effective when they sell integrated solutions to the market, again, the vast, vast majority of them that don't have experience in payments, and it's in our best interest to help them to be effective in that space on the back of our solutions. And this is the first pillar. The second pillar goes in parallel to this, we very selectively bundle a very small number of best-in-class software solutions from our preferred local partners with our Nexi payment solutions, and we distribute them through our channels, not all of them, not all channels are good for selling integrated solutions but over time, this will expand more and more. We are obviously starting with basic core solutions that work across most of the simple application, starting with retail. And over time, we'll expand into a few selected key verticals. When we are able to upsell to a merchant, the bundle, normally, we see an increase in terms of value of the merchant to us in terms of net revenues of about 50% to 100% depending on the specific situation. So these are the 2 strategic pillars that we are executing. In parallel to that, on top of that, we are also leveraging Orderbird for learning and development. This is a very specific investment we have done a couple of years ago. Orderbird. Let me remind everybody is a leading SME hospitality point-of-sale software provider in Germany that is fully owned by Nexi. We have developed with them an integrated payment software proposition that is distributed by Orderbird channels, but now also by Nexi channels. They are fully integrated on the digital platform and was mentioning before. And obviously, we leverage Orderbird also to develop this platform and in general, the capabilities that we have in payment software integration further and further. And obviously, even if it's not necessarily a plan today, we remain with the option to expanding now Orderbird into further verticals in Germany or into new markets or both. On Page 6, you'll find a few examples of things that are live today. Here, I just want to mention the fact that on Pillar 1, being the partner of ISVs, we already have more than 500 partnerships over 8 markets. Here, the focus is coverage of the market with all the relevant applications and all the relevant solutions being available in the market. While on the second pillar, the rule of the game is more focused in selection. Here, you see 3 examples of what we are doing in Denmark where we have selected 3 solutions from 3 key partners and we bundle them and distribute them together with our own services. Let me now hand over to Bernardo for results.

Thanks, Paolo. Good morning. As Paolo has already mentioned, we had a reasonably good start to the year with revenues growing 6%. And EBITDA is growing just south of 9%, and this allows us to increase our EBITDA margin by just north of 100 basis points. Within the overall group revenue growth, we can see that Merchant Solutions contributed 6.8% in terms of its top line growth, and this was and continues to be sustained by international scheme volumes, which you can see grew 8.3% in the quarter. This international scheme volume growth, if you strip out the cash component was -- cash component being the cash withdrawals was actually growing healthfully in the double-digit area in DACH and Italy being in a very high single-digit area. Throughout Europe, we see continued growth in the crucially and ever-important SME segment. And more importantly, we point out how with e-commerce we're growing revenues in e-commerce year-on-year, driven by both the volume growth in the market, but also customer acquisition, customer base growth. We actually believe that we are growing substantially more than the market in e-commerce. If we move on to Issuing Solutions, I'm on Slide 10. We have a very strong quarter given also our expectations and guidance for the year with the growth, which is 5.2%, again, driven by top line growth driven by international scheme volumes. Here, we continue to call out crucially important for us, acceleration of international debit in Italy, we were well above the 6 million card mark in Italy, beginning of this year. So continued strong growth there, and we continue to focus and succeed in upselling and cross-selling our value-added services to our customer base across Europe. I think it's fair and important to call out what we did last year, if you remember, in the second quarter, if I remember correctly, last year, we called out how there's a one-off contribution coming from banking M&A, which flattered our performance somewhat in the second quarter last year, and this will obviously have an impact to our full year performance this year. This is obviously all expected, and it's just a comp issue year-on-year comp issue. So that 5% is a strong start to the year, but you should bear in mind that the comp for 2023 gets worse as we move forward in 2024. We move on to DBS. DBS had, I would say, a very strong start to the year with this growth of 4.3% coming from volumes in the EBA Clearing space. So a number of bank transfers increasing double digit in the year, but also project work coming in probably from a phasing perspective a little earlier than expected, but very good performance from DBS as well in the first quarter. If we look at the split geographically, you can see Italy and the growth in the top line Italy, as I mentioned earlier, supported by volumes in international schemes. If you look at the Nordics, the truth is you should probably look at that top line growth in the low single-digit area being split into one on acquiring where growth is more like mid-single digit and an issuing where we have the runoff of some legacy contracts, not really in issuing, but more in the account-to-account space or in the DBS space are also tied to past M&A with Mastercard and the current sale of Nordic DBS business. DACH & Poland, I would say, very strong performance in Poland and Germany, we spoke of the volumes in Germany in the Merchant Solutions part. And with regards to Southeastern Europe, I would only call out that Greece is performing well. But in general, I would say that Southeastern Europe is performing in line with expectations. Moving on to costs on Slide 13. We have growth in the quarter, which is very similar to the full year growth in costs of last year. We've already spoken about the effect of inflation, wage drift and impact upward pressure on wages coming from renegotiations of collective agreements in Italy and outside of Italy. I would say that and we mentioned that last year when we had a big one-off from Italy in the fourth quarter. But starting from the 1st of January this year, we are also taking a hit in Italy on the renegotiation of the contract, which, on a year-on-year perspective, actually, increases cost growth -- wages cost substantially at 6.2% would be half of what it is if we hadn't had that the early renegotiation hit us in the first quarter. On operating costs, I would highlight how I think we have our performance flattered a little in the quarter. So contrary to wages, on non-HR cost, we have a bit of a benefit coming from phasing of projects. And I just remind you that clearly our guidance for the year, whether it'd be revenues, EBITDA, cash, et cetera, is for the year, not for the quarter, but I'd say a good start to the year there as well. Slide 14 Paolo mentioned how the strong cash generation in the quarter has supported us to reduce leverage to 2.8x. Clearly, the first quarter is one which benefits from the seasonality of tax payments, no M&A being completed in the quarter and so on and so forth and that has led us to reduce leverage to just below around 2.8x. Just following quarter end, we paid down our nationals. This is as expected. We have highlighted how we had earmarked EUR 1.3 billion of available cash to pay down debt in '24 and '25. We started doing so. In April, we will continue for the rest of this year and next year as expected. And I will also highlight how rating agencies, and this is true after the call for the first quarter results have actually been supported with regards to the leverage profile and our cash generation ability. So from a net financial debt and net leverage position, I'd say a good quarter as well. Finally, before handing the floor back to Paolo, he mentioned we kicked off our share buyback program this morning, EUR 500 million in total. The 18-month time horizon is a maximum period, clearly, the speed and pace of delivery of this buyback program will depend on market conditions, share price and so on and so forth. But it's important to note that it started -- or will start actually in about half an hour when the markets open. I hand the floor back to Paolo.

Thank you, Bernardo. Let me conclude, first of all, by confirming again our guidance for the full year. We expect to have net revenues growing at around mid-single digits, EBITDA growing mid-to-high single digit with EBITDA margin expansion of at least 100 basis points. We expect to generate excess cash -- organic excess cash of more than EUR 700 million, and we expect leverage to be down at below 2.9x EBITDA, including the announced M&A and the share buyback effect. Otherwise, this will be down to 2.6x on an organic basis. And let me conclude just covering again the key messages today. First of all, we have continued consistent delivery of growth and margin expansion, Bernardo just went through it. Second, that we continue to shape next year for future profitable growth both in terms of executing our strategies on the growth opportunities, but also at the same time, continue to drive efficiency in the business. And last but not least, we'll continue to pursue a capital allocation that we believe is the best to create value for our shareholders. And as you see today, at the same time, we reduce -- continue to reduce our leverage, but also we start giving back value to shareholders through the share buyback that is starting today. Let me stop there, and let me open to your questions.

This is the Chorus Call conference operator. [Operator Instructions] The first question is from Justin Forsythe with UBS.

A couple here from me. So first, I wanted to hit a little bit on the ISV strategy, which was a nice set of slides and section there. I really appreciated that. The point you make around the speed of adoption relating to fragmentation really resonated. I imagine you have a few scenarios mapped out in what instance drives your upside case for adoption. Maybe you could highlight a little bit where you could see where you think you might be able to see accelerated adoption of software-led across Europe? And also on top of that, it's clear from your slide deck and logically that you're best suited to serve local software platforms. Does that make the proliferation of more global ISVs a potential risk? And I was wondering if you could talk a little bit about the phasing in Merchant Services throughout the year. Clearly, there was some strength in Italy. However, I think there is also some impacts relating to competitors and other merchant portfolio purchases and dynamics relating to direct sales force distribution. Maybe you could walk through that as well.

Justin, Thank you for your comment on ISV. And I think in order to cover your question, you could spend a few hours, I think, given our relevant and articulated topic is. First of all, I think what I've been describing is something that we observed across the board in Europe and across basically most verticals at the same time. Then said that, clearly, you have dynamics that are slightly different country by country and vertical by vertical. In general, you see the most digitalized countries and here I'm referring to the Nordics and moving a bit faster in this space than the less digitalized ones. And therefore, for example, Nordics are a bit ahead of Italy as it is normal for this type of dynamics. And you also see this sector by sector. For example, hospitality, and for example, restaurants are a bit ahead in this dynamic compared to, for example, to groceries, okay, where clearly the need for more sophisticated software is less relevant to manage the business. So this is what I would say at this stage. In terms of the relevance of the more local players versus the more global players, to be honest with you, this is really one of the points that we're trying to make with the context page. As I said, it's pretty difficult for software players to roll out across different countries and for the reasons that I've mentioned. And therefore, we see at least for some time, being the local players more active than the more global players trying to come over in the countries where we are, we don't see, for example, any relevant activity from the U.S. players that you may have in mind. And the ones that are present, for example, we have light speed in Switzerland are actually coming on the back of a very old acquisitions. They are not recent greenfield developments. I guess the point we're trying to make here is that for a large player that is very successful and growing nicely in the U.S. very efficiently with one solution that fits all to come to every single country in Europe and to a specific development of a much smaller opportunity, it's much more smaller SMEs and in a much more complex environment is not the same thing. And therefore, we see at least for some time, this local dynamic being the one that remains more relevant. As far as the Merchant Services development is concerned throughout the year, Bernardo will take it.

So I think there's 2 parts to Justin's question, Paolo. I think the first one on volume in general, across Europe, we have projected no real changes in pace during the course of the year coming from the market. Now I think and we've seen a slowdown coming from macro. We've spoken to that in the past, and I think nothing has changed there. What we've had, and I think that's what you're referring to, Justin, was, in the past, some M&A activity, which has seen us lose some clients to some of our competitors in Italy. And that obviously has happened. And over time, we will see the impact on that on our volumes. However, it's important to note in footnote in the appendix, we are building our alternative distribution channel, which is basically a nonbank distribution channel in Italy, in particular, a market where we've lost 2 competitors, some -- through some M&A, some of the merchant books. And in the future, this will help us to win back at least some of those clients, so things will improve.

The next question is from James Goodman, Barclays.

First one just on the growth of issuing through the rest of the year. You've been quite clear about the project related comp effect. You were speaking about that last year, but you're saying that's going to impact the business more from Q2. Just wondered how significant a slowdown should we anticipate here? And will that continue through the year? I think Q4 is the toughest comp. Is that right? Will that be the trough in the issuing side of the business? . And then just coming back a little bit on the merchant side. Just the fact that revenue was growing ahead of volume in the quarter. Is that pricing mainly? Or is it this dynamic where you mentioned that the international schemes excluding cash withdrawals are growing faster? And should we continue to expect basically the Merchant Services revenue to be growing ahead of the volume that you do report for the division through the rest of the year?

James, thank you for your questions. Listen,, I think we can only confirm what we anticipated. I think in the conversation we had when we did present the guidance. Again, a very strong quarter at the beginning of the year. And then throughout the rest of the year, you will see a lighter growth. I think, overall, we expect -- and this is basically driven by the effects from last year, strong project activities that we don't expect to see repeated this year with the same size. Overall, we expect for the full year growth in the space of low single digits. This is exactly confirming what we said in the past. As far as the Merchant Services dynamic volumes and revenues is concerned, I think that there is a part of what you are saying, but I think more broadly, the reason why revenues are well supported on top of what is the support that we received from volumes is driven by a number of factors. First of all, we continue to expand our customer base, which is important because there are revenues that are associated with the customer, not with the volume. And second, as much as possible, we try to up-sell/cross-sell more valuable propositions. I think in the Merchant Services pages, you find an attachment. For example, we are mentioning the fact that we are more and more upselling value-added services on top of our own products and services. And a good example is the good traction that we are seeing with merchant financing through a partner, but with merchant financing as we upsell it to our customer base. And clearly, this is contributing to customer value and therefore, to unitary revenues. And last but not least, clearly, the contribution from e-commerce that is growing faster than point-of-sale volumes is clearly -- revenue is clearly contributing because normally, again, the unit economics of e-commerce are normally a bit better than the unitary economics of traditional point-of-sale services. So that's a combination of elements there.

That's probably, if I can help address James' question because I think, James, the question was revenues are growing 6.8%. Volumes, I think the ones you were looking at were 5, but the truth is you should look more to the international [indiscernible] the point is what we -- that's where we derive most of our revenues from. So we should benchmark it against that. And then everything else that Paolo said holds true.

Next question is from Josh Levin, Autonomous Research.

Just going back to software and payments. I think you said so far, you're not seeing too much competition from U.S. players in this space. But how would you say Nexi's offering stacks up against Stripe or even Adyen in this area? What does Nexi bring to the table that they don't? And then the second question, if BBVA and Sabadell merge, what does this mean for Nexi?

Josh. Well, first of all, again, the strategy that we have in the space is very consistent with what we are doing more broadly in payments. And as you may remember from our Capital Markets Day and as we have reiterated several times, we are great believers of the fact that scale is very important to be able to offer very competitive products and services and also having leverage and efficiency and profitability. But at the same time, being extremely local is also very, very important. And as you can imagine in a world that is a highly fragmented that is super fragmented and super local. Our local presence, our ability to serve very closely these smaller ISVs, our ability to provide older local and relevant payment methods is something that is highly, highly appreciated. And it is also something that is very, very difficult for the more global players that are much more distant and by the way, much more standardized with their solutions is highly appreciated by our partners. I also mentioned, for example, the flexibility of our business model that is really suited to the specific situation of the specific market. So that's really not the differentiation angle that is very consistent with the broader differentiation of Nexi. Coming back on the situation in Spain, obviously, we're all observing the evolution there. We have developed a very strong and constructive relationship with Sabadell since the very, very beginning. Based on the work we have done together, we are even more convinced about not the potential of this partnership but more broadly of the Spanish market. As we speak, we can only monitor the evolution of the situation in close contact with Sabadell. And obviously, the situation is changing, I would say, by the hour. At this stage, in any case, there is no closing date being set because we have been waiting for the last authorization from Bank of Spain that is at this stage still pending. Said that, I said all of that, as you would expect and it is actually market practice and for us, is very much standard for all our deals from the very first ones we've done in Italy in the contracts that we have signed, there are a number of standard provisions that we always have that regulate the situation in case of a change of control in the best interest of all shareholders. So bottom line, we are monitoring the situation. But overall, we are very relaxed about it.

Next question is from Sandeep Deshpande with JPMorgan.

You have -- there are some businesses that you have disposed in the past couple of years. Are there any other businesses here that could be potentially disposed that could potentially help the growth rate of the business? We've seen, for instance, that you've seen very strong growth in Italy. You've seen growth in Germany, but Nordic seems to go up and down. Clearly, it's not a business you want to dispose, but are there any other smaller businesses there that could still go out to improve the overall growth rate? And I have a quick follow-up.

Sandeep. Well, it's -- I reiterate what we said in the past and what we said, I think, Capital Markets Day back at the end of 2022. Yes, as we look at our business portfolio in the area of the third business unit, digital banking solutions, there are certain businesses that are less core than others and that at some point, we may dispose the right conditions and to the right buyer as you can imagine as an example of that, we have signed a few months back a deal with a French company to buy our electronic ID business in the Nordics, and that deal is expected to close later in the year. But again, there is work ongoing on a number of opportunities, and we'll keep you updated on that. From the geographical standpoint, although I think that our view is more articulated in the sense that when you look at our portfolio of geographies, we really have a nice combination of what we call more the cash engines and the growth engines. And this is really important, I think, for any business to have this type of portfolio and we are quite happy with ours. And therefore, you see a larger -- you see markets where we have a large position and we have leaders and this includes obviously Italy, but it includes also the Nordics where maybe in the case of the Nordics growth rate that you can expect a bit lower, but actually the cash generation is pretty good, and it's helping us to fuel growth on the cash -- on the growth-generating engines, such as, for example, e-commerce across the board, such as, for example, the DACH region in Germany, more in particular and the other opportunities that we have around. So it's more a portfolio that is relevant for us from the geographical standpoint rather than the single stand-alone geography.

And finally, my question is on e-commerce. I mean you seem to have highlighted e-commerce as a growth engine in this current quarter. What has changed there? Because when you look at the growth last year, it was single digit, now it seems to be going back into double digits. Has something changed? Is it regional? Is it across the board? Maybe any color on that would be helpful.

Yes, we have highlighted many, many times, e-commerce as one of the most relevant growth opportunities for our company. In fact, actually, growth has been double digit, not just in this quarter but for some time, I think the full year last year was also double digit. And here, we are increasing our focus more and more over time. We're increasing our commercial efforts more over time. We also have strong propositions in place that we are rolling out across the different markets, and you see the effect of it, which, again, are targeted not at a very large global merchant that is not in our space, but again, are really targeted to the mid-market, to the local semis or the local smaller corporates. And that market is a market that is growing very nicely and requires a lot of local support and local integration, which is very consistent with our strategy.

The next question is from Sébastien Sztabowicz, Kepler Cheuvreux.

Could you please provide some comments on the volume trends since the beginning of the quarter? Have you seen any change in the dynamic in consumer spending over the past few weeks, few months? And the second one is linked to the partnership with UniCredit. Have you made any progress there? And can you make an update on the situation with UniCredit?

Let me take the second one and then hand over to Bernardo to cover the dynamics consistently with what we said before. Listen, on UniCredit, I reiterate what we said in the past that we have a long-term partnership with UniCredit. As we always said, that goes up to 2036. As also announced by UniCredit themselves in their market communication on a few days ago. UniCredit has a lot of focus on payments, and they want to develop their strategy there and accelerate further. And we are very happy to be their partner. I think they also related Nexi together with Mastercard, their key partners there. And as we discussed in the past, we have, over time, conversations on how we can support more and more and better and better this strategy. On volumes, Bernardo?

Yes, Sébastien, I think we mentioned it during the course of the call, I'd say that the first quarter this year shows no real signs, if anything, a slight improvement on quarterly performance in the last quarter's performance last year. So there's no real change in terms of the expectations on macro. They have pretty much realized in terms of the slowdown year-on-year and the first quarter started pretty much in line with the fourth quarter of last year.

And just on UniCredit. Do you have an opportunity to partner on the merchant acquiring side? You have been a historical partner on issuing. But is there anything that you can do on acquiring?

Well, listen, I think these are choices that are in the ends of the banks. I think it really depends on the strategy that every single bank wants to follow impairment. So this is more of a question for them, not for us. Clearly 1 day -- as with any other bank, if when they have an interest in that direction, we definitely would have a conversation. But it is a question for them and more than for us.

The next question is from Hannes Leitner, Jefferies.

I got also a couple of questions. And I want to go back to the ISV business. Maybe you can talk a little bit about where Nexi services should end? Is it just acquiring? Or is it also the card acceptance? And what is the associated take rate you expect compared to the Merchant Services take rate you are having at the moment? And then the second question is around Italy. You talked at Capital Markets Day to build up your own sales force, maybe you can give there an update? And then maybe also on the expected growth for the region, thinking also about the backdrop of macro moving parts, what you are seeing there?

On ISV, again, as we have a number of business models, it really depends on the business model what we provide. Obviously, we provide acquiring. And I would say that in most of the cases, in one way or another, we also provided the acceptance solution. But on top of it, we also provide, in many, many cases, the digital assets and what makes the customer experience of the merchant. Again, given the specific situations that you have in Europe with the characteristics that I've highlighted in many, many, many cases, these are more pure distribution deals rather than highly integrated or complex business models these, and therefore, we are recapturing the benefit of having an additional distribution channel. And again here, the economics can vary a lot depending on the partner, the model and what we do for them. But normally, they are consistent with what I said. We look at this as a distribution channel that is normally paid for acquisition and normally retains a part of the fees that we have from merchants. But clearly, is very limited to no fixed cost for us. So it's also a pretty efficient additional distribution channel. As far as...