Nuvei reports in U.S. dollars and in accordance with IFRS
MONTREAL, Nov. 11, 2020 — Nuvei Corporation (“Nuvei” or the “Company”) (TSX: NVEI and NVEI.U), the global payment technology partner of thriving brands, today reported financial results for its third quarter of 2020.
“I am incredibly proud of all that we accomplished in the third quarter, as we embarked on our journey as a publicly-traded company. We believe our performance, which included total volume* of $11.5 billion along with strong revenue growth, is a testament to the strength of our technology, business model and focus on high growth verticals,” said Philip Fayer, Nuvei’s chairman and CEO. “Furthermore, we made significant progress executing our growth strategy, broadening our capabilities and footprint, as well as winning many notable clients. We earned regulatory approval in the states of Indiana and Colorado for sports betting, and launched local acquiring in Hong Kong, Singapore, Russia, Brazil, and Columbia, meaningfully expanding our total addressable market. Lastly, we were thrilled last week to announce the closing of the Smart2Pay acquisition, which not only strengthens our global presence in high-growth markets including digital gaming, but allows us to offer a more complete, robust alternative payment solution. Looking ahead, we are well positioned to continue to scale the business and drive shareholder value.”
Financial Highlights for the Three Months Ended September 30, 2020
- Total volume was $11.5 billion, an increase of 62% as compared to $7.1 billion in the third quarter of 2019
- Revenue was $93.6 million, an increase of 32% as compared to $70.8 million in the third quarter of 2019
- Net loss in the quarter was $77.9 million, as compared to $65.7 million in the third quarter of 2019
- Net loss included $83.4 million in non-cash finance costs resulting from the Company’s initial public offering (“IPO”) and associated valuation
- Adjusted EBITDA** was $41.0 million, an increase of 59% as compared to $25.8 million in the third quarter of 2019
- Adjusted net income** was $16.5 million, as compared to $2.2 million in the third quarter of 2019
- Following Nuvei’s successful IPO in September, the Company used the net proceeds for the repayment of debt. The Company ended the quarter with $99.4 million in usage of its credit facilities (net of unamortized transaction costs), down from $717.8 million (net of unamortized transaction costs) as at December 31, 2019. In addition, unsecured convertible debentures and liability classified common and preferred shares were fully converted or repaid as a result of the IPO.
Recent Operational Highlights
- The Company made significant progress on its strategic plan to support the fast-growing U.S. sports betting industry launching its first pilot merchant, Carousel, in Colorado. In August, Nuvei was awarded a certificate of registration for sports wagering from the Indiana Gaming Commission, and in September, the Company received its sports betting vendor license from Colorado’s Division of Gaming. In addition, the Company is in the process of applying for approval in all other states that permit online sports betting and gaming.
- Nuvei has accelerated its new client wins by signing many notable merchants in the quarter including Kwiff, Maxbet, Superbet, Wargaming, Oanda, Pepperstone, and Rinascente, across the gaming, financial services, and marketplace verticals. This provides strong momentum into the fourth quarter and 2021.
- Nuvei continued to execute on its strategic plan by expanding its footprint geographically, launching local processing solutions in Hong Kong, Singapore, Russia, Brazil, and Colombia. These new markets enlarge the Company’s total addressable market, providing extended reach for existing merchants and enabling Nuvei to win new merchants in those countries.
- The Company expanded its support for cryptocurrency exchanges, onboarding two exchanges during the quarter.
- The Company continues to enhance its offering including foreign exchange services, PSD2 mandate support, early warning dispute management solutions and payout capabilities that includes the launch of Mastercard MoneySend.
Initial Public Offering
On September 22, 2020, Nuvei announced the successful closing of its IPO. The IPO, along with a concurrent private placement, raised $833 million in aggregate proceeds resulting in $758 million of proceeds to the Company.
Subsequent Event
On November 2, 2020, the Company announced the completion of its previously disclosed acquisition of Smart2Pay Global Services B.V. (“Smart2Pay”), demonstrating the Company’s commitment to growth through strategic acquisitions. The total consideration was settled with $82.9 million in cash, and the balance with 6,711,923 shares issued by the Company. The Smart2Pay acquisition strengthens Nuvei’s presence in the high-growth digital gaming space and further expands the Company’s geographic footprint in additional regions including Russia, Brazil, as well as adding UnionPay processing. Furthermore, the transaction creates one of the largest and most complete alternative payment method (“APM”) solution providers in the world, with 450 APMs supporting global commerce, all through a single integration.
Outlook
Total volume in the fourth quarter of 2020 to date continues to be strong with year-over-year growth in line with the third quarter of 2020. The following should also be considered for the fourth quarter of 2020:
- The results of Smart2Pay will be included in the Company’s results as of the date of closing, November 2, 2020.
- The fourth quarter of 2020 will represent the Company’s first full quarter as a public company. As a result, incremental costs pertaining to being a public company will be incurred in the quarter.
- The Company continues to invest in its direct sales force.
*Total volume does not represent revenue earned by the Company, but rather the total dollar value of transactions processed by merchants under contractual agreement with the Company. Total volume is explained in further detail in the Company’s MD&A.
**Adjusted EBITDA and Adjusted net income are non-IFRS measures. Reconciliations of these non-IFRS measures to the most directly comparable IFRS financial measures are included in the tables at the end of this press release. An explanation of these measures and how they are calculated are also included under the heading “Non-IFRS Financial Measures”.
Conference Call
Nuvei will host a conference call to discuss third quarter 2020 financial results today at 8:30 am ET. Hosting the call will be Philip Fayer, Chairman and CEO, and David Schwartz, CFO.
The conference call will be webcast live from the Company’s investor relations website at https://investors.nuvei.com/ under the “Events & Presentations” section. The conference call can also be accessed live over the phone by dialing 877-425-9470 (US/Canada Toll-Free), or 201-389-0878 (International). A replay will be available approximately two hours after the call, and can be accessed by dialing 844-512-2921 (US/Canada Toll-Free), or 412-317-6671 (International); the conference ID is 13711347. The replay will be available until Wednesday, November 25, 2020. An archive of the webcast will be available at the same location on the website shortly after the call has concluded.
The complete financial results are available at Sedar (www.sedar.com), as well as at Nuvei’s investor relations website.
About Nuvei
We are Nuvei, the payment technology partner of thriving brands. We provide the intelligence and technology businesses need to succeed locally and globally, through one integration – propelling them further, faster. Uniting payment technology and consulting, we help businesses remove payment barriers, optimize operating costs and increase acceptance rates. Our proprietary platform offers direct connections to all major payment card schemes worldwide, supports 450 local and alternative payment methods and nearly 150 currencies. Our purpose is to make our world a local marketplace. For more information, visit www.nuvei.com.
Forward-Looking Information
This press release contains “forward-looking information” within the meaning of applicable securities laws, including statements with regard to our objectives and the strategies to achieve these objectives. Forward-looking information involves known and unknown risks and uncertainties, many of which are beyond the Company’s control, that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to those described under “Risk Factors” in Nuvei’s supplemented prep prospectus dated September 16, 2020. Forward-looking information is based on management’s beliefs and assumptions and on information currently available to management. Although the forward-looking information contained in this press release is based upon what management believes are reasonable assumptions, you are cautioned against placing undue reliance on this information since actual results may vary from the forward-looking information. Unless otherwise noted or the context otherwise indicates, the forward-looking information contained in this press release is provided as of the date of this press release, and the Company does not undertake to update or amend such forward-looking information whether as a result of new information, future events or otherwise, except as may be required by applicable law.
Non-IFRS Financial Measures
The information presented within this news release includes the non-IFRS financial measures, “Adjusted EBITDA” and “Adjusted Net Income”. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. These non-IFRS measures are used to provide investors with a supplemental measure of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Our management also uses non-IFRS measures to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. We believe Adjusted EBITDA and Adjusted Net Income are important supplemental measures of Nuvei’s performance, primarily because these and similar measures are used widely among others in the payments industry as a means of evaluating a company’s underlying operating performance.
Adjusted EBITDA is defined as net income (loss) before finance costs, finance income, depreciation and amortization, income taxes expense/recovery, acquisition, integration and severance costs, share-based payments, net gain/loss on foreign currency exchange, and other.
Adjusted net income is defined as net income (loss) before acquisition, integration and severance costs, share-based payments, net gain/loss on foreign currency exchange, amortization of certain intangible assets, and the related income tax expense or recovery for these items. Adjusted net income also excludes change in redemption value of liability-classified common and preferred shares and accelerated amortization of deferred transaction costs.
Contact:
Investor Relations
NuveiIR@icrinc.com
Public Relations
Nuvei-PR@icrinc.com
| Interim consolidated statements of profit or loss and comprehensive loss | | |
| (In thousands of U.S. dollars except for per share amounts) | Three months ended September 30 | | Nine months ended September 30 | |
| 2020 | | 2019 | | 2020 | | 2019 | |
| $ | | $ | | $ | | $ | |
| | | | | | | | |
| Revenue | 93,599 | | 70,752 | | 259,165 | | 166,489 | |
| Cost of revenue | 17,007 | | 12,173 | | 45,736 | | 27,683 | |
| Gross profit | 76,592 | | 58,579 | | 213,429 | | 138,806 | |
| | | | | | | | |
| Selling, general and administrative | 61,398 | | 62,689 | | 168,499 | | 138,405 | |
| Operating profit (loss) | 15,194 | | (4,110) | | 44,930 | | 401 | |
| | | | | | | | |
| Finance income | (1,375) | | (1,532) | | (4,170) | | (4,058) | |
| Finance costs | 90,933 | | 62,069 | | 171,368 | | 71,386 | |
| Net finance costs | 89,558 | | 60,537 | | 167,198 | | 67,328 | |
| Loss before income tax | (74,364) | | (64,647) | | (122,268) | | (66,927) | |
| Income tax expense (recovery) | 3,505 | | 1,049 | | 3,979 | | (539) | |
| Net loss | (77,869) | | (65,696) | | (126,247) | | (66,388) | |
| | | | | | | | |
| Other comprehensive income (loss) | | | | | | | | |
| Foreign operations – foreign currency translation differences | (8,849) | | 1,836 | | 14,461 | | 843 | |
| Total comprehensive loss | (86,718) | | (63,860) | | (111,786) | | (65,545) | |
| | | | | | | | |
| | | | | | | | |
| Net income (loss) attributable to: | (78,579) | | (66,054) | | (127,956) | | (66,915) | |
| Shareholders of the Company | 710 | | 358 | | 1,709 | | 527 | |
| Non-controlling interest | (77,869) | | (65,696) | | (126,247) | | (66,388) | |
| | | | | | | | |
| Comprehensive imcome (loss) attributable to | | | | | | | | |
| Shareholders of the Company | (87,428) | | (64,218) | | (113,495) | | (66,072) | |
| Non-controlling interest | 710 | | 358 | | 1,709 | | 527 | |
| (86,718) | | (63,860) | | (111,786) | | (65,545) | |
| | | | | | | | |
| Net loss per share attributable to common shareholders of the company | | | | | | | | |
| Basic and diluted | (0.88) | | (1.10) | | (1.49) | | (1.11) | |
| | | | | | | | |
| No of shares weighted average | 89,217,178 | | 60,072,213 | | 86,153,927 | | 60,072,213 | |
| | | | | | | | |
| Consolidated statements of financial position | | | | | |
| (in thousands of U.S. dollars) | | | | | | |
| | | September 30, | | | December 31, | | |
| 2020 | | 2019 | | |
| $ | | $ | | |
| | | | | | |
| Assets | | | | | | |
| | | | | | |
| Current assets | | | | | | |
| Cash | | | 99,426 | | | 60,072 | | |
| Trade and other receivables | | | 31,880 | | | 34,069 | | |
| Inventory | | | 540 | | | 709 | | |
| Prepaid expenses | | | 1,648 | | | 964 | | |
| Current portion of advances to third parties | | | 7,914 | | | 8,901 | | |
| Current portion of contract assets | | | 1,755 | | | 1,720 | | |
| | | | | | |
| Total current assets before segregated funds | | | 143,163 | | | 106,435 | | |
| Segregated funds | | | 301,352 | | | 200,612 | | |
| | | | | | |
| Total current assets | | | 444,515 | | | 307,047 | | |
| | | | | | |
| Non-current assets | | | | | | |
| Advances to third parties | | | 41,442 | | | 42,584 | | |
| Property and equipment | | | 15,228 | | | 15,272 | | |
| Intangible assets | | | 362,234 | | | 408,380 | | |
| Goodwill | | | 760,833 | | | 768,497 | | |
| Contract assets | | | 1,291 | | | 1,426 | | |
| Processor deposits | | | 13,292 | | | 12,478 | | |
| Other non-current assets | | | 1,851 | | | 3,088 | | |
| | | | | | |
| Total Assets | | | 1,640,686 | | | 1,558,772 | | |
| | | | | | |
| Liabilities | | | | | | |
| | | | | | |
| Current liabilities | | | | | | |
| Trade and other payables | | | 57,477 | | | 51,258 | | |
| Income taxes payable | | | 153 | | | 2,866 | | |
| Current portion of loans and borrowings | | | 2,319 | | | 2,874 | | |
| Other current liabilities | | | 4,196 | | | 9,875 | | |
| Liability-classified common shares | | | – | | | 58,262 | | |
| Liability-classified preferred shares | | | – | | | 39,967 | | |
| | | | | | |
| Total current liabilities before due to merchants | | | 64,145 | | | 165,102 | | |
| Due to merchants | | | 301,352 | | | 200,612 | | |
| | | | | | |
| Total current liabilities | | | 365,497 | | | 365,714 | | |
| | | | | | |
| Non-current liabilities | | | | | | |
| Loans and borrowings | | | 106,037 | | | 722,166 | | |
| Deferred tax liabilities | | | 7,572 | | | 12,976 | | |
| Other non-current liabilities | | | 2,263 | | | 4,875 | | |
| Unsecured convertible debentures due to shareholders | | | – | | | 109,022 | | |
| | | | | | |
| Total Liabilities | | | 481,369 | | | 1,214,753 | | |
| | | | | | |
| Contingencies | | | | | | |
| Subsequent event | | | | | | |
| Equity | | | | | | |
| | | | | | |
| Equity attributable to shareholders | | | | | | |
| Share capital | | | 1,371,043 | | | 450,523 | | |
| Contributed surplus | | | 8,767 | | | 1,603 | | |
| Deficit | | | (232,768) | | | (104,812) | | |
| Accumulated other comprehensive income (loss) | | | 4,076) | | | (10,385) | | |
| | | | | | |
| | | 1,151,118 | | | 336,929 | | |
| Non-controlling interest | | | 8,199 | | | 7,090 | | |
| | | | | | |
| Total Equity | | | 1,159,317 | | | 344,019 | | |
| | | | | | |
| Total Liabilities and Equity | | | 1,640,686 | | | 1,558,772 | | |
| | | | | | |
| Interim consolidated statements of cash flows | | | |
| (in thousands of U.S. dollars) | | | |
| For the nine months ended September 30 | | | 2020 | | 2019 | |
| $ | | $ | |
| | | | |
| Cash flows from operating activities | | | | |
| Net loss for the period | | | (126,247) | | (66,388) | |
| Adjustments for: | | | | |
| Depreciation of property and equipment | | | 4,142 | | 2,115 | |
| Amortization of intangible assets | | | 47,121 | | 31,969 | |
| Amortization of contract assets | | | 1,697 | | 1,809 | |
| Share-based payments | | | 7,207 | | 767 | |
| Net finance costs | | | 167,198 | | 67,328 | |
| Impairment on disposal of a subsidiary | | | 338 | | – | |
| Income tax expense (recovery) | | | 3,979 | | (539) | |
| | | | |
| Changes in non-cash working capital items | | | 637 | | 11,568 | |
| | | | |
| Interest paid | | | (42,293) | | (21,089) | |
| Net realized loss on foreign currency exchange | | | (5,937) | | – | |
| Income taxes paid | | | (10,579) | | (2,083) | |
| | | | |
| | | 47,263 | | 25,457 | |
| | | | |
| | | | |
| Cash flows from (used in) investing activities | | | | |
| Business acquisitions, net of cash acquired | | | – | | (780,196) | |
| Decrease (increase) in other non-current assets | | | (1,080) | | 2,585 | |
| Proceeds from the sale of a subsidiary, net of cash | | | 19,045 | | – | |
| Sale of equity investments | | | – | | 21,800 | |
| Net decrease (increase) in advances to third parties | | | 2,129 | | (13,564) | |
| Acquisition of property and equipment | | | (1,701) | | (1,349) | |
| Acquisition of intangible assets | | | (10,570) | | (4,663) | |
| | | | |
| | | 7,823 | | (775,387) | |
| | | | |
| Cash flows (used in) from financing activities | | | | |
| Transaction costs related to loans and borrowings | | | (293) | | (27,491) | |
| Redemption of preferred shares | | | – | | (2,299) | |
| Issuance of preferred shares | | | – | | 81,240 | |
| Issuance of convertible debentures due to shareholders | | | – | | 199,000 | |
| Repayment of convertible debentures due to shareholders | | | (93,384) | | – | |
| Issuance of Class B common shares | | | 150 | | – | |
| Issuance of Subordinate Voting Shares, net of issuance fees | | | 719,886 | | – | |
| Proceeds from loans and borrowings | | | – | | 629,509 | |
| Repayment of loans and borrowings | | | (642,786 | | (60,507) | |
| Payment of lease liabilities | | | (691) | | (701) | |
| | | | |
| | | (17,118) | | 818,751 | |
| | | | |
| Effect of movements in exchange rates on cash | | | 1,386 | | 40 | |
| | | | |
| Net increase in cash | | | 39,354 | | 68,861 | |
| | | | |
| Cash – Beginning of period | | | 60,072 | | 6,070 | |
| | | | |
| Cash – End of period | | | 99,426 | | 74,931 | |
| | | | |
| Reconciliation from IFRS to Non-IFRS Results | | Three months ended September 30 | | Nine months ended September 30 |
| (In thousands of U.S. dollars) | | 2020 | | 2019 | | 2020 | | 2019 |
| | $ | | $ | | $ | | $ |
| Net loss | | (77,869) | | (65,696) | | (126,247) | | (66,388) |
| Finance costs | | 90,933 | | 62,069 | | 171,368 | | 71,386 |
| Finance income | | (1,375) | | (1,532) | | (4,170) | | (4,058) |
| Depreciation and amortization | | 16,931 | | 15,357 | | 51,263 | | 34,084 |
| Income tax expense (recovery) | | 3,505 | | 1,049 | | 3,979 | | (539) |
| Acquisition, integration and severance costs (a) | | 2,418 | | 13,898 | | 5,297 | | 17,129 |
| Share-based payments (b) | | 6,472 | | 425 | | 7,207 | | 767 |
| Net loss on foreign currency exchange (c) | | 778 | | 125 | | 3,118 | | 2,602 |
| Other(d) | | (802) | | 72 | | (146) | | 275 |
| Adjusted EBITDA(e) | | 40,991 | | 25,767 | | 111,669 | | 55,258 |
| Advance from third party – merchant residual received | | 3,848 | | 3,085 | | 9,515 | | 7,368 |
| | | | | | |
| (a) These expenses relate to (i) professional, legal, consulting, accounting and other fees and expenses related to our acquisitions and financing activities completed during the period and our initial public offering, (ii) acquisition-related compensation and deferred purchase consideration for previously acquired businesses, and (iii) integration expenses and severances paid. |
| (b) These expenses represent non-cash expenses recognized in connection with stock options and other awards issued under share-based plans. |
| (c) This includes gains or losses on foreign currency exchange included in selling, general and administration. | | | |
| (d) This line item primarily represents legal settlements and associated legal costs reached outside of the normal course of business as well as non-cash gains, losses and provisions and certain other costs. |
| (e) Adjusted EBITDA is a non-IFRS measure that the Company uses to assess its operating performance and cash flows. | |
| | | | | | |
| Reconciliation from IFRS to Non-IFRS Results | | Three months ended September 30 | | Nine months ended September 30 |
| (In thousands of U.S. dollars) | | 2020 | | 2019 | | 2020 | | 2019 |
| | $ | | $ | | $ | | $ |
| Net loss | | (77,869) | | (65,696) | | (126,247) | | (66,388) |
| Change in redemption value of liability-classified common and preferred shares (a) | | 58,952 | | 35,720 | | 76,438 | | 38,128 |
| Accelerated amortization of deferred transaction costs / loss on debt modification(b) | | 24,491 | | 4,830 | | 24,491 | | 4,830 |
| Amortization of certain intangible assets (c) | | 14,161 | | 12,485 | | 43,211 | | 28,234 |
| Acquisition, integration and severance costs (d) | | 2,418 | | 13,898 | | 5,297 | | 17,129 |
| Share-based payments (e) | | 6,472 | | 425 | | 7,207 | | 767 |
| Net loss (gain) on foreign currency exchange (f) | | (9,544) | | 2,021 | | 17,889 | | (955) |
| Other (g) | | (802) | | 72 | | (146) | | 275 |
| Adjustments | | 96,148 | | 69,451 | | 174,387 | | 88,408 |
| Income tax expense related to adjustments | | (1,824) | | (1,563) | | (5,646) | | (5,038) |
| Adjusted net income (h) | | 16,455 | | 2,192 | | 42,494 | | 16,982 |
| | | | | | |
| Adjusted net income per share attributable to common shareholders of the company (i) | | | | | | |
| Basic | | 0.18 | | 0.03 | | 0.47 | | 0.27 |
| Diluted | | 0.17 | | 0.03 | | 0.46 | | 0.26 |
| | | | | | |
| | | | | | |
| (a) This line item represents change in redemption value related to shares classified as liabilities prior to the IPO. As part of the IPO, the shares were converted into equity as Subordinate Voting Shares. For the liability-classified common shares, the expense represents the fair value adjustment for the corresponding period, with the three months ended September 30, 2020 amount representing the IPO value of $26 per Subordinate Voting Shares. These expenses are included in finance costs.(b) With the repayment of long-term debt from the IPO proceeds, the associated deferred transaction costs were recognized in finance costs for the three months ended September 30, 2020 on an accelerated pro-rata basis. Additionally, in 2019 a loss on debt modification was recognized because of the incremental debt taken to fund the SafeCharge acquisition.(c) This line item relates to amortization expense taken on intangible assets created from the purchase price adjustment process on acquired companies and businesses and from the acquisition of all of the outstanding shares of the predecessor by Nuvei in September 2017 (as further described in the 2019 notes to the audited consolidated financial statements).(d) These expenses relate to (i) professional, legal, consulting, accounting and other fees and expenses related to our acquisitions and financing activities completed during the period and our initial public offering, (ii) acquisition-related compensation and deferred purchase consideration for previously acquired businesses, and (iii) integration expenses and severances paid.(e) These expenses represent non-cash expenses recognized in connection with stock options and other awards issued under share-based plans.(f) This includes gains or losses on foreign currency exchange included in finance costs and selling, general and administration.(g) This line item primarily represents legal settlements and associated legal costs reached outside of the normal course of business as well as non-cash gains, losses and provisions and certain other costs.(h) Adjusted net income (loss) is a non-IFRS measure that the Company uses to further assess its operating performance.(i) Diluted Adjusted net income per share is calculated using stock options outstanding at the end of each period on a fully diluted basis if they were in-the-money at that time. Potentially dilutive instruments converted or reimbursed as part of the IPO have been excluded. |
