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 First Quarter 2026 Financial Results Presentation Conference Call. [Operator Instructions] At this time, I'd like to turn the conference over to Bernardo Mingrone of Nexi. Please go ahead, sir.

Good morning, everyone. Good morning, and welcome to our First Quarter 2026 Results Call. I am here today with Piergiorgio Pedron, our CFO; and Stefania Mantegazza, our Head of IR, as usual. Let me start on Slide #3 with the key highlights of the first quarter performance. We continue to deliver profitable growth. As you can see and we'll discuss later with Piergiorgio as well, our revenues grew about 1% in the quarter year-on-year. Our underlying growth continues to grow in the region of 5%, consistently with what we discussed a couple of months ago at the Capital Markets Day, in line with our historic performance in this respect. Things change in terms of mix and our well-diversified portfolio of geographies. Businesses help us achieve this resilient underlying growth. In this context, EBITDA also grew 2.6% in the quarter, and we continue to have margin expansion, which we'll see in a moment. In the first quarter of this year, we continue to work to shape Nexi to continue to grow profitably in the future. Our strategic initiatives, which we discussed back in March, continue to deliver and are on track, in particular, on ISVs and direct channels, we continue to grow, and we have strong commercial momentum in e-commerce and the front book in Germany and the DACH region, which, as you know, we consider to be a very important growth engine in our group. In the process, we continue to create value for all our stakeholders and shareholders. We are couple of weeks away from paying our second dividend, the EUR 0.30 per share dividend, an increase of 20% compared to last year when we paid EUR 0.25, total distribution of EUR 350 million. And in this context, we continue to deliver. We're now at 2.5x net financial debt to EBITDA, down from 2.6 at year-end. In the process, we have also started to reduce gross debt. We reimbursed about EUR 1 billion of maturities, including what we reimbursed in April with available cash balances, you can also speak of that later on. Before handing the floor over to Piergiorgio, who will give us more details with regards to the quarterly financial performance, I'm on Slide 4 now. I'd just like to take a few moments to recap and discuss a few points with regards to the fact that clearly, this is my first quarterly call as CEO of Nexi, a position I took over just over a month ago. And clearly, I'm not new to the company. I presented together with Paolo back in March, our Capital Markets Day, but I would like to reiterate some of the points we made during the course of the Capital Markets presentation, but also introduce, let's say, the way I view my role in the job and what I seek to achieve going forward. Some things don't change. I believe Nexi is a compelling equity story. I hope I have put cash where my mouth is, I bought stock over time. I invested in Nexi stock more than 100% of the bonuses, the cash bonuses I have received over the last 3 or 4 years. And I believe it's a very attractive financial investment. Based on our strong unique positioning, I tried to recap here some of the things we've said over time. I believe we combine in a unique fashion, European scale and have very strong local presence characteristics, I believe, are essential to be successful in Europe. I believe we are a critical European infrastructure. Actually, to put more appropriately, we are not the infrastructure. The infrastructure is composed by central banks, banks, market players like large customers, smaller customers, cardholders, other regulators schemes. We're at the heart of all of this. We are very central to a very complex ecosystem of payments in Europe, and it's hard, very hard to think of us as something which can be displaced from this position. We have a very diversified portfolio of products, diversified across geographies and customers, helping us deliver that resilient underlying performance, and we've spoken about the difference between underlying and reporting, and we'll come back to that. And we have very attractive exposure to some local MS segments, which will deliver top line growth sustainably in the future. From a financial perspective, we've also discussed this. I think we possess some -- most characteristics that you can find in many other payment companies. I think what makes us unique is the fact that you have them all under one roof at Nexi. We continue to deliver sustainable, profitable growth. We have a very predictable, resilient cash flow and cash generation. We have now, over the last couple of years, distributed a significant amount of capital close to EUR 1.5 billion, including the dividend, which will be paid on May 20th. And our credit profile has significantly improved over time. We're now investment grade and a repeat issuer in the investment-grade market. However, we need a clear road map, I think, to close this valuation gap. And I see a lot of, let's say, a big part of my role is aimed at closing this valuation gap between what I at least perceive and my colleagues perceive to be the intrinsic and true value of Nexi and what the market believes it to be. And I think I've highlighted here on the slide just 3 of the main areas where I believe we need to focus on in order to bridge this gap. We need to build a credible path towards our mid-single-digit revenue growth target, which we have highlighted in the Capital Markets Day. And this essentially, I think, this gap between reported and underlying, we tried to make the point, has to do with certain things which happened back in the day, and we are reabsorbing over last year, this year and next year, unfortunately. But we need to win your hearts and your conviction with regards to our ability to compete successfully in the long term with new entrants, and that's what we discussed in terms of our ISV strategy, our direct sales force, which, as I said, is delivering the kind of results we're expecting. It will obviously take time to prove the point, but we're patient, continue investing in the space and continuing to deliver the results associated with it. We need to prove the resilience and the unique nature of our business and being able to work with sophisticated partners like banks, in particular in Italy, we need to strengthen our relationship with them. The vast majority of the gap between underlying and reported performance comes from what broke down at a certain point during the course of '23 and '24 but has since, I think, come a long way and landed. And indeed, we highlighted how over the last couple of years, we've had 100% success rate in terms of renewing our partnership with these all important partners in Italy. Another key concern that I pick up when speaking with you all in the market has been the fact that our structural efficiency, I think it is given to us -- credit is given to us for having been able to contain costs over time. But I think there might be some skepticism out there with regards to our ability to continue this going forward given the necessary investments to be able to bridge the gap I spoke of on revenues. And here, we need to convince you that our steadfast commitment to cost control and enhanced cost efficiency is something which is structural and will continue. We'll discuss costs, I think, later on. And one of the things -- one of the areas where I am particularly focused together with my colleagues from the Expo is to be as rigorous as we can be extremely focused on prioritizing our investments and making sure that we focus on those that create network effects and returns rather than have -- rather than casting the net too wide and be spreading ourselves too thin across products and geographies. Of course, I think the name of the game here will be in the short term, but even more so in the medium term about AI and how we structure ourselves to be able to adopt AI across geographies, across products and services. And this is an extremely fast-changing environment. And indeed, the information that we have today, the tools that we have today are even different to the ones that we were considering in the days leading up to the Capital Markets Day. And it is a very rapidly changing environment. And I believe together with my team, we need to think very hard as to how we want to structure ourselves to be able to embrace the benefits of AI. And indeed, I think we discussed this back in March. I believe Nexi is positioned in, let's say, in a favorable space with regards to AI as we benefit from an asymmetry in terms of the kind of disruption, which we can suffer from on the revenues front, given that most of our acquiring is in store and potentially this will have more time to adapt to AI than the e-commerce space, which will probably be most impacted by it in the short term. Whereas we can benefit in the short term and the medium term, much more on the cost front, just thinking of the kind of benefits you have in all the software space, which we are obviously a big consumer of. So AI is clearly critical to our success going forward and something I expect to be speaking with you over time a lot more. One of the other things, and I believe I have discussed this with my colleagues internally, we are now in a phase in our company's evolution where we can push back into the local regions. A lot of the things, which we are centralizing at the time of our Capital Markets Day back in 2022 in order to gain control of our pan-European platform, the biggest in Europe. Relatively complex, a phase which was necessary, and we have now, I think, completed and we can now, I think, improve our time to market and local agility by some organizational simplification, which will be implemented in the coming weeks and months. And finally, on disciplined capital allocation, it's not so much the fact that we're distributing capital. I think that's a fact, and you will be able to test it over time, the fact that we have the dividend policy, which we expect to stick to. So a dividend which will be paid every year and growing over time as we have discussed in the past. Again, here, I think we've had -- I picked up at least in those -- some conversations, some concerns with regards to leverage, it is coming down, but it's still substantial, but it will continue to come down given the cash generation going forward. I hope it gives you comfort that we are paying down our gross debt. As I said, EUR 1 billion now in March -- in March and April, apologies. We have about EUR 1.8 billion, EUR 1.9 billion of cash sitting on our balance sheet, and that will be used to -- or has already started to be used to pay down that EUR 1 billion of debt. We now have a EUR 350 million dividend. We are completing or have completed the purchase of a merchant book in Italy for north of EUR 100 million. Next year, we have EUR 0.5 billion convertible coming due in March. And I expect to reimburse and use that EUR 1.8 billion, EUR 1.9 billion of cash to meet all these short-term liabilities without having to access capital markets to do so, giving you proof, hopefully, that, again, cash is there to be used. It's put to its best use in the past. It was better to keep the cash on balance because we got a positive carry. That's no longer the case with rates having come down. So we're paying down gross debt, and this will continue going forward. Let me pause here because I have taken up already too much time. I'd like to hand the floor now to Piergiorgio, and then we'll come back and take Q&A at the end of the presentation. Piergiorgio?

Thank you, Bernardo. And again, good morning, everyone, and thank you for joining us today. Before we turn to the results, I would like to take just a moment to briefly introduce myself as this is my first call with you as Nexi CFO. I'm really pleased to take on this role, and I'd like to thank the Board and Bernardo for their trust. I'm excited about this opportunity and very proud to be joining Nexi. Over the past few weeks, I've had the chance to get to know the company more closely and what has struck me most is the quality of the people, the strength of the platform and the strategic relevance of Nexi as an orchestrator and infrastructure provider within the complex and essential European payment ecosystem. This is a totally strong organization with a clear purpose and a very talented team. While I come from a completely different industry background, I believe this allows me -- this will allow me to bring fresh perspective. My focus will be on working closely with Bernardo and the leadership team to ensure cost discipline, strong execution and constructive challenge while supporting Nexi long-term value creation for all of our stakeholders. Turning now to Q1 results. I would frame the discussion around 3 key messages. First, growth remains solid, supported by healthy underlying trends, as we've just heard from Bernardo, despite temporary and known headwinds as we discussed during the very recent Capital Markets Day. Second, our diversification continues to provide resilience across both businesses and geographies. And third, we are executing with discipline on costs, supporting margin and excess cash generation. With that in mind, let me start with the performance of the group in the first quarter. Overall, we started the year with a resilient performance with solid underlying growth and sound profitability, despite the expected impact of external headwinds on net revenues related to the bank contract effects across both Merchant Solutions and Issuing Solutions. Starting with the top line, net revenue grew by 1% year-on-year to about EUR 821 million, broadly in line with our expectations and consistent with the back-end loaded growth profile we outlined on our recent CMD. It is important to highlight that the underlying growth was around 5%. Looking at the top line in more detail, all businesses contributed positively on an underlying basis with solid volume across both merchant and issuing activities, supported by continued structural tailwinds such as digitalization of payments and increasing card penetration across our markets. Turning to profitability. EBITDA reached approximately EUR 397 million, up 2.6% year-on-year, with an EBITDA margin at 48.3%, supported by disciplined cost execution and some favorable phasing in the quarter, which I will comment in a while. In general, Q1 confirms the resilience of our business model with diversification across both businesses and geographies playing a key role in supporting performance and enabling continued delivery of profitable growth. Let me now turn to Merchant Solutions, where most of the temporary headwinds are concentrated. In MS revenue were down 1.4% year-on-year, which is broadly consistent with our expectations entering the quarter. The decline is primarily driven, as we know, by bank-related effects in Italy, including loan outflows and contract renegotiation, which had a material impact on the year-on-year comparison and by timing of specific projects compared to last year. Let me remind you guys that about 25% of our MS revenues are not driven by volumes. H2 '26 will show a reduced impact of the bank contracts effect, which, combined with the additional traction we will get from our strategic commercial initiatives will lead to a growth acceleration in the second half of the year, as discussed during the CMD. However, when we look at the underlying performance, revenues grew by about 3% year-on-year, which is consistent with the underlying volume trends. On volumes, we saw continued growth in the number of managed transactions supported by processing activities, which benefited from the ramp-up of Bancomat processing hub consolidation in Italy. This is an important development to us as it further strengthened our positioning as an infrastructure provider with domestic -- within the domestic payment ecosystem. At the same time, towards the end of the quarter, we observed some softness in consumer spending, particularly in Germany and Nordics, which had a limited impact on volumes. From a commercial standpoint, we are seeing encouraging signals coming from all of our growth initiatives discussed during the CMD. ISVs, direct channels and e-commerce, in particular in Italy, are contributing positively with good commercial momentum in Germany and across geographies. Let me now move to Issuing Solutions. In Issuing, we delivered a strong performance with revenues increasing by almost 5% year-on-year despite the expected negative impact from bank-related effects. Important to notice, unlike Merchant Solutions, these bank-related effects are expected to increase in the second half of the year. And therefore, we expect the full year growth of this business to be closer to low-single-digit in line with what we outlined in the CMD. Looking at the underlying drivers, performance was primarily supported by strong volume growth with the value of managed transaction increasing by more than 7% year-on-year. Growth was driven by both international and domestic scheme, including the continued ramp-up of Bancomat hub in Italy. In addition, we benefited from the completion of new client onboarding in DACH, which contributed to the performance of the quarter. We also saw a positive impact from business initiatives, including international debit in Italy and the increasing penetration of value-added services across client portfolios. Finally, part of the performance in the quarter was supported by favorable phasing of certain projects initiatives. Let me remind you once again that almost 50% of the revenues of this business line are not volume-driven. Overall, Issuing continues to represent a structurally sound business supporting Nexi profitable growth. Moving now to DBS. DBS delivered solid and consistent performance with revenues up 2.8% year-on-year. Growth in this segment was supported by both volume dynamics and the contribution of new initiatives and projects. In particular, we continue to see good traction in core infrastructure services such as SEPA Clearing and Network services, which represent a key pillar for this business. We also made further progress on strategic initiatives, including new account-to-account solutions such as Zippay for Irish banks and verification of pay services launched last October and now impacting hundreds of banks across Europe. As a reminder, DBS is structurally even more exposed to project-based revenues compared to the other 2 business lines. And in Q1, we enjoyed some favorable phasing. Moving now to the next slide. Let me comment on performance across geographies, where our diversification continued to be a key strength, allowing us to offset the localized headwinds with growth in our regions. Starting with Italy, which is the region most impacted by bank contract FX, revenue were broadly stable. Headwinds, especially in Merchant Solutions, driven by these effects were partially offset by continued growth in Issuing Solutions and DBS. In the Nordics, revenues were slightly down year-on-year, mainly due to migration of a major Issuing client at the end of 2025, as we discussed a few times in the past, as well as somewhat softer macro conditions. Importantly, underlying trends remain positive, and we continue to see growth in value-added services and on e-commerce key propositions. DACH delivered strong year-on-year growth, particularly in Germany. This was driven by solid volume dynamics and the completion of the new client onboarding in Issuing Solutions, despite a macro environment that remains somewhat challenging in terms of consumer spending, especially in the hospitality sector. CSEE revenue grew at mid-single-digit pace, supported by volume growth and installed base expansion. Finally, let me turn to cost performance. On the cost side, we delivered a solid performance, reflecting our continued focus on efficiency and disciplined cost control going back to what Bernardo just said a few minutes ago. Total operating costs were flattish compared to last year with approximately EUR 425 million. This result was achieved despite ongoing inflationary pressure and continued investment in key strategic areas, in line with what we outlined during the CMD. Looking at the cost components, personnel costs increased by approximately 4% year-on-year, reflecting inflation, salary adjustment and the carryover of hiring initiatives starting in 2025 and continued into Q1, aimed at supporting our strategic priorities, as we know, ISVs and direct sales, to name a few. At the same time, operating cost decreased, largely driven by efficiencies, also enabled by the deployment of AI initiatives across the entire organization as well as favorable phasing in the quarter. It is important to highlight that part of the cost performance to this point in Q1 reflects the timing effects. And as such, we would expect cost to increase over the coming quarters, both for personnel and operating costs. At the same time, we continue to see structural improvement from our ongoing efficiency program, some of which, as I said, are enabled by AI initiatives, which support our ability to manage the cost base with discipline. Overall, this reinforces our commitment to balancing growth investment with rigorous cost control, supporting the delivery of our EBITDA and excess cash guidance over the year. Finally, we confirm our 2026 guidance with net revenues growth broadly in line with what we saw in 2025. EBITDA in absolute amount broadly stable and excess cash generation of EUR 750 million. With that, we can start the Q&A session.

[Operator Instructions] The first question is from Gregoire Hermann from Barclays.

Maybe the first one would be on EBITDA. So you are keeping your guidance changed despite growing EBITDA in Q1 already. Can you be a bit more precise on your phasing of the cost plan for the rest of the year? And do you see upside basically to your EBITDA? Or should we expect some more pressure in -- for the rest of the year? And then maybe more on the Merchant Services performance. Can you clarify a bit the moving parts, please? Because it seems like the performance in Q1 has been a bit tougher than expected. Is this only due to bank M&A? Or if I look at underlying growth, it seems like it's decelerating a bit. And despite that, you maintain your guide for reacceleration. Can you tell us when you expect an inflection point and also how this is going to face for the rest of the year, please?

Thanks for the question. This is Piergiorgio speaking. So in terms of EBITDA, as I said, we confirm our EBITDA in absolute terms similar to what we saw in 2025. That's the guidance, which means since we also confirm the growth of the top line, if you do some kind of a reverse engineering, you would see that our expectation is that the cost base is going to grow here to go by approximately, again, ballpark number, 5% to 6%, right? So yes, the short answer is we do expect the cost base to increase in the year to go compared to what we had in Q1. And this is mainly driven by 2 factors. We will keep on investing in all those initiatives, which we defined as strategic during the Capital Market Day. And then we also had some positive phasing in Q1 that we're not expecting to see in the rest of the year. Nevertheless, our commitment, as I said, to a very disciplined cost control and cost management. And when I say our, it's not just Bernardo, myself, it's the entire leadership team is there to deliver what we are committed to. In terms of MS phasing, I believe what we said also during the Capital Market Day is that we expect an acceleration in the second part of the year, in H2, basically for 2 reasons. One, because we will see the initiatives that we're working on, IVS (sic) [ ISV ] , direct sales channel, e-com, all the growth engine we have discussed about during the Capital Market Day, gaining momentum in the second part of the year. And then also if you look at what we call market risk, you would see that in the second part of 2025, the impact of market risk on DMS was higher than what we expect in the second part of 2026, which is going to add to our growth year-over-year. Lastly, I believe your question was about the underlying growth. I believe what we see there, if you break down the growth and the sales of MS among the volume-driven components and the non-volume-driven components, you will see that 25-ish percent or so of the growth of revenues of MS are non-volume driven. Whereas last year, if you go back and look at Q1 '25, you will see that we had a bigger impact of non-volume-driven components in the MS sales. So year-on-year, just because of phasing of projects, we have a negative impact that if you do the math and the reverse engineer on the numbers, you will see is around EUR 10 million, EUR 11 million, give or net ballpark, which is working against us. We have a phasing -- we have a mix effect there because a part of the volume growth has been driven, and we are very proud of it by the Bancomat hub in Italy, which speaks about the fact that we are really at the center, let me say, of the payment infrastructure, as Bernardo was saying at the beginning of the call. And then we saw, especially at the end of the quarter, as I believe we discussed during my written remarks that we saw some headwinds on consumer spending, and that is especially true for hospitality sectors in Germany and in our Nordics geography and especially in Denmark. So all of these combined give us confidence that in the following few quarters and especially so in H2, MS will see an acceleration in its growth.

The next question is from Hannes Leitner from Jefferies.

Congrats to both for your new roles within Nexi. Maybe we can just drill down on the underlying metrics. When you say on group level, it was 5% underlying. But then when we look on Merchant Services and we calculate those numbers, it equates to EUR 20 million Merchant Service headwinds, while on group, it's EUR 40 million. So maybe we can just like get that on. And then also, what would have the Nordics grown on underlying metrics if you look for the Nordea -- expected Nordea ramp down? So that would be the first question. And the second question is maybe just one more -- a little bit more high level. Your European peer seems to have fixed the capital structure for the moment. Do you see -- what do you see in terms of pricing in the market on the SMB side? Has it been becoming more aggressive? There's also a handful of challengers, which seem to be very active in Italy, but also in Germany and in other markets. So maybe you can talk to us a little bit about regional differences, competitive pressure because you have talked quite a lot about ISV channel and then the banking channel, which is probably a little bit more protective even those contracts have longer maturity rates.

Thanks, Hannes. Let me try and answer these questions and then Piergiorgio can obviously chip in. By the way, thanks for your opening remarks. In terms of the underlying profitability, I think your math is more or less right in terms of the, I think the exact numbers on MS is below 20%, but close to 20%. And as a group, it's actually closer to it's actually 30% rather than 40%, but this is so on and so forth. It doesn't change the point that you're making. And clearly, the biggest contributor to the gap between underlying and reported does come from MS, and it does come from Italy. It does come from banks that we lost, and we know the name of the banks we've discussed them in the past. And as Piergiorgio was saying, we expect that to revert in the second half on MS. But as we discussed back in March, we then have the second leg of this migration of this customer, which used to be a customer both in Issuing and acquiring. So we will digest and we will have lapped in the second half of this year, the exit of the Merchant Solutions, and that's when we expect the Issuing to start to kick in, which will feed into next year. The rest of the market risk comes from come from -- the customers loss comes from Issuing as we discussed. The biggest contributor to this, I believe, is that Nordic customer, which we've also discussed. And if you normalize the Nordics for, which in our [Technical Difficulty] negative in terms of top line growth, on issuing, we would be slightly positive. It's low single-digit as you would expect, given the nature of that business. There's also another factor which we should bear in mind, and we mentioned it, I think, back at the Capital Markets Day with regards to the growth of buy rates on e-commerce and some of the physical channel as well. We are normalizing year-on-year for that. We discussed that in the Capital Markets Day. But last year in the final quarter, I think there was a couple -- there was a bit of that in the fourth quarter, which basically hits us in the first quarter this year, but not in the first quarter of last year for migration issues from -- not material overall, but that -- if you normalize for these 2 things, the Nordics would actually be slightly positive, both in terms of growth, both on the Merchant Solutions and on Issuing. So I'm actually quite happy with that, notwithstanding all the phenomenon we've discussed in the past of competition, which moves to your third question. I didn't quite get the reference to our competitors. But in general, I understand it was about price competition coming from new entrants and general competition. And as you correctly pointed out, we have a quite a diverse set of distribution channels in Italy, Greece, Croatia, we distribute primarily through banks, even though there's obviously a convergence of software and payments, which speaks to the entry of ISVs and so on and so forth and the need to address the market also through direct sales channels in the Nordics and Germany, Poland, et cetera, we go direct to merchants. Nonetheless, we suffer from competition in all these channels. And I would say, as you correctly pointed out, we're lucky enough to have, let's say, a strong distribution partner in banks in Italy, Croatia and Greece, which help preserve margins. They have a strong cloud on their merchants, notwithstanding concern that as payments become more technological, ISVs will take away market share from the banks, and we are accompanying the banks in being able to distribute the product -- the more technological product, thanks to our work on integration with their distribution channel and with ISVs. And we've also developed our own distribution channel, either direct or in partnership with ISVs, all of which is trying to accompany this migration, which is happening towards a more direct distribution channel, which has, as you correctly pointed out, overall a net lower take rate than the back book. But this has been the case for the last 10 years, or at least since I've been in Nexi, and we expect this trend to continue. I don't see any big discontinuity. There's no -- I mean some of the competitors you often mention and talk about and ask about are not competing on price in terms of dumping. They are just formidable competitors in terms of their product, their onboarding, et cetera. And we just need to improve and bring our game to their level where it isn't. At times, it's better to compete with them. And all of this is reflected both in our actual numbers and the forecast we've given. So I wouldn't say there's anything different in this quarter compared to 2 months ago at the Capital Markets Day compared to November when we had the third quarter call and so on and so forth.

The next question is from Sebastien Sztabowicz from Kepler Cheuvreux.

I've got one on the Q2 trends or the volume trends since the start of the quarter because in Q1, you had this positive phasing effect. Could you quantify a little bit the impact on your revenue and notably on the Issuing side that was apparently a bit strong? And then you are talking about some softening consumer spending in Germany and Nordics. Could you elaborate a little bit on the trend entering Q2? And the second question is on MS. When I'm looking at the take rate evolution in Q1, the take rate is declining year-on-year quite substantially. I was wondering what was the reason behind that? It is linked to your decline of big projects in Q1? Or can you elaborate a little bit on the take rate in MS.

Thanks, Sebastian. I think if I look at the April numbers, I mean, I'm comfortable in saying that there's no big difference in what we're seeing in April compared to what we saw in the first quarter and very hard to glean anything into any one monthly performance for the rest of the year. I think it's hard to really say that I don't know, the war in Iran or what's going on in the Ukraine and the Middle East has had any meaningful impact on us. For sure, the overall environment, the overall macro environment is not -- we're not in a booming environment. And we've spoken about this in the past about how it is hitting previously more so the Nordics than anywhere else and previously more so Finland than anywhere else or Sweden. Now it's really more in Germany, the issue, which is what I think Piergiorgio was referring to when we spoke of earlier with downward revisions in terms of consumer spend, in terms of real GDP growth and nominal. So I think April, first quarter and beginning of second quarter, no big changes, I would say. Hard to say, if you look forward and you asked me about the summer and how is -- what's going on in the Far East or in the Persian Gulf, et cetera, how will that impact travel given what we read in the press on jet fuel and that kind of stuff. The truth is I have no idea. I don't think anyone on this call can really make a certain call as to how that's going to impact us. What I would go back to is that we have a pretty diversified and well-hedged kind of business, both in terms of geographies, in terms of products, in terms of volume and installment or subscription-like revenues, which help us mitigate spikes and troughs in this sense. Going on to the take rate, you're right, we have dropped like I think it was 1 basis point or so from 23.5% to 22.5% or something along those lines, which is honestly just given the very approximate measure of the profitability, which is calculated this way, i.e., total revenues divided by total volumes where there's a lot of volume-related revenues and revenues. It's very hard to make any precise judgment. This is not the function of a kind of wild swing of mix from a higher profitability product region, channel to a lower one. It's the compounding of a number of effects. For sure, I think Piergiorgio mentioned the impact in terms of volumes that we're seeing more domestic scheme volumes in Italy. These are lower profitability. So that does speak in that respect to a kind of mix effect. But there's also seasonality. I mean we have -- when you actually implement value-added services, repricing tends to be maybe not in the first part of the year, maybe in the summer and later on, and this would affect it. So just like we don't give guidance on a quarterly basis, but look at and manage our P&L, at least on a yearly basis, if not multiyear basis, given the nature of our business, I caution you also not to read too much into a quarterly swing. So there's nothing specific you should worry about it. We point to a broad stability of the take rate, which is our medium-term target.

And on the phasing effect in the Issuing, was it very big in Q1? Just to understand the dynamic entering Q2 for Issuing?

Yes. As we said, we had -- I think you shouldn't worry about project work and stuff like that, which -- project work, for instance, we had Popolare di Sondrio was bought by BPER, right? They need to migrate on what was it, I think, the 13th, 14th of April, they migrated all their book from Sandrio to BPER, and we earn money by helping them and do so. This will be booked in the second quarter. Last year, in the first quarter, we would have had other project work maybe related to some other customers. So there will be a bit of that. But I think the most important thing that you should think of in Issuing is what we discussed earlier about the big banks that we -- the big bank, single, that we lost that will start migrating its card portfolio has started, but it will pick up in the coming months from us to our competitors. That is the real impact in the second quarter and second half of the year on issuing.

The next question is from Justin Forsythe of UBS.

Congrats to you, Bernardo, as well as you, Piergiorgio, for the new roles. A few questions, if I might. So Piergiorgio, I just want to come back to this underlying growth and make sure we -- understand the moving components correctly. So if I understand it, you're talking a little bit about the project-related benefits that were in the prior year base in Merchant Solutions. Was that a EUR 10 million or EUR 11 million impact on that aspect of the business specifically? And if you normalize for that, you would have been closer to the underlying growth. I understand you flagged a smidge of weakness coming out of March, which wouldn't have really moved the needle as you said, the relative moving pieces to get you from underlying 4Q through to 1Q and also the fact that the underlying transaction volumes in MS remained quite steady. And then I guess, Bernardo, you mentioned a little bit around the take rate of domestic schemes relative to international schemes. Maybe that played a role as well. And then I just wanted to hone in a little bit on the macro. Totally appreciate all the comments that you've just made around not really seeing anything. I guess it feels like a lot of investors are fearful of luxury-related spend levels and inbound tourism, so second derivative type of spend off of travel. I would have thought that, that was something that maybe would be impacted. It sounds like you're not seeing that at all or very minimally, say, in Italy, but maybe you could put a finer point on that. And just one point on the positive offsets, maybe you could give us some detail on -- or remind us on the percentage of your mix exposed to fuel, meaning processing payments for gas stations like Eni and others in the portfolio. And then just one final one. I wanted to understand a little bit more around the Bancomat hub. In Italy, I mean, you mentioned it a few different times. Does this have to do with the modernization efforts at Bancomat? Are you seeing that across all of your business lines? Like maybe you could quantify a little bit the benefit you expect to see from that going forward?

Sorry, Justin, we're just diving up your many questions. Thanks for your opening remarks as well. Let me just quickly talk about take rate, macro effect on tourism, luxury spend, that kind of stuff in the Bancomat hub. The Bancomat Hub and the take rate comment I was making earlier is actually are tied to one another. We do a number of things for Bancomat. For Bancomat, we are basically the sole provider of IT. So Bancomat, there is a scheme, and we do the processing of that scheme on issuing and acquiring 100% of it. And this has been consolidated onto our hub over time, when Bancomat went through its own transformation and it had -- used to have 3 processors and now there's only one, and we are that one. So we are bringing on board volumes that previously were processed by other processors. And this feeds into the take rate discussion I was mentioning earlier. So we have greater volumes because we're now processing more volumes on a largely kind of fixed kind of revenue base with Bancomat. It's actually not that fixed because it's growing, but you understand what I mean, the take rate on that processing volume is much, much lower pure processing. But the volume uplift is pretty big, and that dilutes, let's say, the take rate in this quarter. So with regards to Bancomat, yes, it is what you're sugging,i.e., the upgrade in technology. Bancomat now offers a number of features it didn't used to offer and it has ambitions to do more. And just like we do this kind of work for Bancomat in Italy, we are obviously present in more than one European jurisdiction. We do the same kind of work for our customers, whether they be schemes or customers in other countries as well. So helping them upgrade their technology to new requirements. On the macro effect, I mean, you're right. I mean, and I mentioned it, I hope I was transparent and honest about it. We don't have a clear answer to your question, how it is? What's going on in the Middle East going to impact us in terms of tourism over the course of the summer? I haven't any evidence that there's been huge levels of cancellations or anything in that respect in terms of some of the countries which is most impacted by tourism for us. So our home market here in Italy and in Greece. Anecdotally, we're trying to book a Board meeting in Rome and we can't find a free hotel to do it. Now I don't know whether it's from the U.S. or European tourists, but that doesn't seem to have fed through yet, but we will need to see. In terms of the kind of pure Middle East volumes in -- that impact us, we're talking a small fraction of a percentage point in terms of volumes, right? The overall kind of extra EU kind of volumes are less than 10% in total. So obviously, it will be meaningful if they were to be 0 as they did during COVID, but I don't expect that to happen even though the jury is still out. On the luxury front, please bear in mind that, that is kind of especially if you're thinking of some of the more global luxury brands, et cetera, that is where we compete less well, if you want. And so where we would lose out less because some of our competitors, one in particular, is not a monopolist, but has a big share of that market. It's not where we compete the most. So overall, I'm pretty -- I mean, I'm not overly worried about it yet, but this is based on the current set of information. We'll see going forward if things change. On Eni, you asked about the gas distribution. So I can say that the Italian company, the largest Italian company in the space accounts for about, I'd say, EUR 10 million or so of annual revenues, and it's very diversified across the board. Obviously, it's driven primarily by refueling of the station, but it's not just the commission we earn on the fuel. It's also all kinds of things we charge them for, including running their loyalty scheme or the e-commerce gateway they have and so on and so forth. So not 100% of that revenue is generated from them. But what you actually end up seeing even though people might travel less, they spend more for the fuel they're paying. And therefore, ultimately, in terms of value of transaction, we'll probably see less liters of fuel being sold, but the value of the transactions probably will remain similar to what it has been in the past. So I don't expect that to impact us materially. Let me hand the floor over to Piergiorgio to answer your question on underlying versus reported.

Yes. Thank you, Bernardo. I believe if you go back and look at what we reported in Q1 '25, I believe we have a very nice slide in our deck where we say how much of the revenue is volume driven and how much is non-volume driven. You would see that in Q1 '25, 27%, 28% off the top of my head of MS revenues were non-volume driven, whereas what we are seeing in Q1 '26 is 25-ish percent again off the top of my head. So if you do the math on MS revenues, you would see that the difference between the 2 quarters is around-ish, I don't know, EUR 10 million, I think, last time I did the calculation, which is the phasing effect I was discussing about. So once you strip it out and you try to understand and to compare the value of managed transaction vis-a-vis how our performance is going on the part of the MS revenue, which is volume driven, you're almost there. And what you see as a difference basically is due once again to national scheme growth, which Bernardo just commented, right? I believe we also made a few comments on how we get remunerated from those transactions. And that is explaining, I would say, a big chunk of that variance.

Got it. That's incredibly helpful. Just one quick clarifier on the project-related stuff. I thought that was mostly on the Issuing side. So maybe you could just provide an example of the type of project work that you do on the Merchant side.

On the merchant side, it's primarily with lack of customers, and it can be many things within that space, not volume-driven to allow them to accept new schemes. I don't know, to their gateway on the e-commerce front, might be with a bank in terms of some development for the banks. I mean it's smaller. It's not like -- the bigger projects, as you were -- as we were mentioning, are related to -- tend to be related to bank M&A on the issuing front, indeed. And that's somewhere in the region of between EUR 5 million and EUR 10 million, whereas on the Merchant Solutions, it's much smaller and it's much more polarized.

The next question is from Pavan Daswani of Citi.

I've got a couple. Firstly, on the guidance assumptions, you flagged seeing some weaker consumer pockets, but kept the guidance unchanged. Could you talk about the macro assumptions that are baked into your full year guidance? And also just remind us of your revenue exposure to travel. Sorry if I missed that number. And then secondly, Germany continues to grow well despite the softer consumer trends that you touched on. Can you talk a bit about what's driving that and the sustainability of that growth looking forward?

Thanks, Pavan. I mean the guidance is unchanged. And as I said, we're just in the first quarter of the year. And just to be clear, the guidance is unchanged, but Piergiorgio, myself, the rest of the team, we're all working to do better than your expectations and our expectations and hopefully, we'll succeed. And I would say the first quarter of the year started off well, in particular, on costs. So hopefully, we will overdeliver. The underlying assumptions on this are, I would say, the ones I think we discussed them briefly at our Capital Markets Day, but we believe to be conservative. However, to be fair, if you look at the macro forecast today, by international agencies, they're slightly worse than they were only a couple of months ago for the year and looking forward. In particular, I think the biggest swing I noticed was in Germany, as we have pointed out. And indeed, when you go to Germany, you do read about layoffs and bankruptcies and the likes. So I would say the environment is slightly worse than what we were baking into our guidance. But it doesn't lead me to say that it's so material that I would like to change it. So I would stick to that. And then again, let's see what happens in the Gulf because every day that passes, you get a new piece of news. As things stand, I go back to what I was discussing when Justin asked the question. With regards to Germany, we -- I think just simply put, the way I think of it and the way we always think about it here is when you are in a market like Italy or Denmark where you're the incumbent player in order just to maintain that market share you have -- you need to win 50% plus or whatever your market share is of new RFPs, new contracts, and it's incredibly hard to increase your market share. And indeed, we are suffering some erosion of it coming from new competitions. And we have the exact opposite situation in countries like Germany, where we start from a 10% market share. If I win 11% of RFPs out there, I'm already increasing my market share. It's a lot easier. And this is off the back of a lot of work we put into having the right products, the right leadership. Thomas was on Board -- has been on Board now for a year, and he's doing a great job in terms of driving the sales effort in Germany. And to be fair, that 12% growth you've seen in the quarter is not 100% MS. A lot of it or part of it at least comes from ramping up an issuing customer we won back in the day in Germany is now coming into full swing. So there's some benefit there. However, we are growing more than the market, which means we are winning market share, thanks to our sales effort across the channels. In particular, I think the ISV channel and partner channel in Germany is actually growing very substantially off a very small base, but very substantially. But our direct sales force is doing well, and our products are such that we can win in the market. In Germany, by the way, we also have a pretty full kind of spectrum of offering. We also own a company called Orderbird, which is a native ISV in the restaurant space. We bought last year Computop, which is the largest gateway. All of these things contribute to success in Germany. Let me hand the floor over to Piergiorgio with regards to travel.

Yes. Thank you, Bernardo, and thanks for the question. So you have different exposures across different geographies, obviously. But if you want to take a ballpark number, I would say 10%, 15% of our MS revenues are exposed to travel. Very difficult to say how much of that is domestic in a sense, travelers, how much is international. So it's very difficult if you're trying to correlate that to what is going to happen if -- because of what we are seeing in the Persian Gulf, we will see some headwind in terms of vacations and people moving around. But long story short, ballpark number, 10-ish percent of our MS revenues are linked to travels and transportations.

I think it's fair, Piergiorgio, to say, just to go back to this question, that 10% to 15% includes also taxis, mobility, all kinds of things, right? So it's not just the flight from Dubai to Rome, which everyone is worried about.

The next question is from Alexandre Faure, BNP Paribas.

I've got a couple of questions, please. Firstly, on the change in net debt in Q1, which I know is not a great proxy to excess cash generation. I think you had an earn-out payment in the quarter relating to the Alpha acquisition. Could you just remind us of how much that was? And second question is going back to the latter part of your introductory remarks, Bernardo, when you talked about capital allocation, and you mentioned the EUR 1.9 billion of gross cash at the end of Q1 and paying down the upcoming maturities in April, paying the dividends and the 2027 maturities as well. I mean, if I do a very rough back of the envelope calculation, it feels like you'll end 2027 with, say, EUR 1 billion to EUR 1.1 billion in gross cash. Is it how you think about the minimum operating cash that Nexi needs or you could take that further down?

So I'm not sure I followed 100% of your math, but let me try and answer what I think is what you're trying to get to. I mean, let's start with the detailed questions. So you asked about the earn-out, and we have paid, I think in total this year, it's between EUR 20 million and EUR 30 million tied to the acquisition of the Alpha Bank book back in 2021 or '22, if I remember correctly. And that was obviously -- part of it was paid -- most of it was paid, I would say, in the first quarter. And there's another payment, I think, in the second half, a smaller amount payable in the second half. But in total between EUR 20 million and EUR 30 million. Stefania can get back to you with a precise number. But in general, you should look at the dynamics of our net debt or cash generation as follows. Clearly, first point, the gross debt includes also non-cash, let's say, debt, non-financial debt, so IFRS 16 and the likes, which increased in the first quarter, which you should scoop out if you're trying to figure out how much cash we generated in the quarter. We paid down part of that EUR 957 million, EUR 967 million was paid actually in March. It was a loan from, if I remember correctly, CDP, yes. So part of that fed into it. So there's a few moving parts that you should consider within the quarter. But the way I look at our cash balance, and I made a point in my opening remarks, think of that EUR 1.9 billion that we have on balance sheet now, that is going to serve more than 2 billion of payables, which come due between now and next year, this time next year. So EUR 1.5 billion of gross indebtedness to be paid down, the dividend this year, the M&A, the earn-outs and so on and so forth. And we can do that without having to tap capital markets. And I hope that gives you kind of comfort that the cash, which is there is 100% available, none of it is trapped, et cetera. Then we have to deal with the mechanics of how we actually get that cash to pay the debt or pay the earn-out, et cetera. And the easiest way is to wait for dividends to be paid up by the subsidiaries to Nexi as a parent company. Nexi is a parent company, only needs cash to pay salaries for the few people that are employed by Nexi and pay the coupons on the dividend. So Nexi is a parent company only needs a few hundred million euros of cash on its balance sheet and then every operating company needs some cash to manage salaries and so on and so forth. In my estimate, we don't have -- a precise figure is less than EUR 0.5 billion at any given time. Why do we run more cash? Timing. When is the right time to tap capital markets to issue a bond? Do I bridge that with some bank loan between now and when the market opens, and it's just pure treasury management. So I hope that answers your question.

The next question is from Aditya Buddhavarapu from Bank of America.

Three from my side. So firstly, could you just talk about the trend you're seeing in Central and Eastern Europe. So you mentioned there's some unfavorable volume mix and pricing impact in Poland, if you could just expand on that. Second, you talked about expanding the direct sales force, ISV in other markets. Could you just maybe talk about how that's progressing year-to-date and maybe the phasing of that during the year as you think about the cost line? And then finally, as you think about the portfolio overall, Bernardo, across all 3 segments, is there anything which maybe you still think of non-core? I mean, parts of DBS maybe, but any other parts of maybe MS or Issuing as well, which you think could be less strategic going forward?

[indiscernible] , let me answer the portfolio rationalization and direct sales force, and then I'll hand the floor on the details of what went on in Poland in terms of mix, et cetera, to Piergiorgio. So on the portfolio rationalization, so we came to the conclusion at the end of last year that we weren't going to sell DBS. And indeed, going forward, I think also given the evolution we see in the payment space, it might have actually been a blessing in disguise given the centrality of the discussion on payment sovereignt in Europe and the space we want to really claim in terms of our role as an orchestrator, as a key element of the European payments ecosystem and the role that DBS can play in that in the digital euro, in account-to-account payments and all the like. So I think actually, DBS from being an asset which had attracted attention because of its merits is now an asset that we have and that we intend to grow and invest into its full potential. And there is also, I would say, reasons why we didn't sell it related to the role Nexi plays within the overall European ecosystem that kind of prevent us from selling that kind of asset. So within DBS, we've always said there are some smaller pieces which are less core, less strategic for us, and we might sell. But none of them are so large that you should worry about it as being impactful in terms of our strategy going forward and our results. It's really about just housekeeping for us and simplifying our business. On the direct sales force, we are approximately 500 strong, if I remember correctly, as a group. About 300 of them are in Italy, the rest are in Germany and the Nordics, et cetera. We are planning to more or less double that sales force over the course of our plan period. And we are progressing in that direction. I think I wouldn't call it a linear progression. It's more upfronted. But I think that's one of those areas where in trying to manage our P&L during the course of any given year to meet or beat our objectives, it's one of those areas where I would be more inclined to kind of ring-fence them and continue steaming ahead because I believe that's where a lot of value lies. Let me hand the floor over to Piergiorgio on CSEE dynamics.

I believe the question was specific on Poland, if I got right. So in Poland, as I believe we have said in the past, we serve the largest e-com marketplace there and also one of the leading platform overall in Central Europe. We are the gateway services for that customer of ours. So what we are seeing is that in terms of volumes that customer is now starting from 2025 actually because I believe this has been discussed in the past as well, open up its offering using different gateways. So we see a volume reduction there. But in terms of impact on revenue, it is very minimal because the margins we were making there were pretty low compared to other business we do with different customers. And on top of that, overall in Poland, so this is not specifically to us, what we see is more customers using local account-to-account schemes. So it's a mix, which everybody in Poland is kind of going through. And since you have this kind of shift of some volumes to this A2A scheme, account-to-account scheme, that's going to have an impact -- a slight impact on revenues as well. But overall, Poland remains a very strong market for us, and it keeps growing very nicely and according to our expectations.

Next question is from Antonio Gianfrancesco from Intermonte.

Several of my questions have already been addressed. So just one from my side. It is on capital allocation because you confirm the guidance, but do not explicitly mention the 5% plus year-on-year dividend growth indication provided at CMD. So it would be helpful to clarify whether that dividend growth framework is also for next year.

Thanks, Antonio. Easy one, yes. And let me just take your question and turn it -- I think one of the things we said at the Capital Markets Day was that this was a kind of floor that we intend to stick to. So growing dividend by at least 5% every year. But remember that in our projections, we only accounted for, if you multiply it out, a portion of the excess cash we expect to generate. And we said the remaining excess cash that we expect to generate, so that which isn't distributed as part of the 5% growing dividend over time, we would consider on a year-by-year basis in terms of what to do with it. Pay down debt, maybe there's some super accretive M&A, which today doesn't exist, but might appear, maybe we reconsider buybacks or maybe we distribute a special dividend. So that is the kind of floor, which we are committed to -- the Board is committed to. I think it's entirely consistent with the discussions we have with all constituencies, including debt holders and rating agencies, but we hope to do better. Okay. Thank you very much, everyone, for your time today, and I look forward to meeting with Piergiorgio and Stefania, many of you over the coming days and weeks. Thank you very much.