NEXPF - Nexi S.p.A. (NEXPF) Q1 2023 Earnings Call Transcript
2023-05-14 11:18:09 ET
Nexi S.p.A. (NEXPF)
Q1 2023 Earnings Conference Call
May 11, 2023 02:00 AM ET
Company Participants
Paolo Bertoluzzo - Chief Executive Officer
Bernardo Mingrone - Chief Financial Officer
Conference Call Participants
Justin Forsythe - Credit Suisse
Hannes Leitner - Jefferies
James Goodman – Barclays
Sandeep Deshpande - JPMorgan
Sébastien Sztabowicz - Kepler Cheuvreux
Gianmarco Bonacina - Equita
Aditya Buddhavarapu - Bank of America
Alastair Nolan - Morgan Stanley
Mohammed Moawalla - Goldman Sachs
Simonetta Chiriotti - Mediobanca
Presentation
Operator
Good morning. This is the Chorus Call conference operator. Welcome and thank you for joining the Nexi First Quarter 2023 Financial Results Presentation Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. [Operator Instructions]
At this time, I would like to turn the conference over to Mr. Paolo Bertoluzzo CEO of Nexi. Please go ahead sir.
Paolo Bertoluzzo
Thank you. Good morning. Good morning to everyone and welcome to our results call for the first quarter of 2023. As usual I'm here with Bernardo Mingrone; and Stefania Mantegazza who's leading our Investor Relations team and we also have a few members of our teams connected to help us in case of need with your questions.
I will make a few introductory remarks and comments on volume dynamics that we have observed over the last four -- three, four months and then I will hand over to Bernardo who will cover our financial results and I will come back with Bernardo for your questions.
Let me jump straight to page three with our key messages as usual. First message across the quarter, across all geographies, we have seen double-digit volume growth. As we have anticipated, January has been particularly strong benefiting from an easier year-on-year comp because of last year January was still a COVID month, hopefully the last one.
We've seen positive volume growth across all categories with a particularly strong contribution from what we defined the high-impact consumption restaurants hotels, travel, entertainment, and the like. And also in April, which is instead a normal month with I would say more standard comparison versus last year, we continue to observe double-digit growth across all geographies. So, overall, quite strong double-digit volume growth.
Second key message. In the quarter, we have seen strong financial performance with solid margin expansion. Revenue grew 9% in the quarter with strong performance across all geographies. Bernardo will comment more on this.
We have seen double-digit revenue growth in Merchant Solutions with a particularly strong performance in Italy and DACH and Poland. Last, but not least, EBITDA growth has been at 13.6% versus the quarter -- the same quarter of last year with a margin expansion of almost two percentage points. So, strong financial performance across the quarter.
Third and last message, we continue to progress the execution of our strategy. We are well on track with the execution of our strategy announced back in September at our Capital Market Day. That strategy we want to reiterate is expected to generate about €2.8 billion of organic cash over the three years.
Over time we will be allocating most of this cash to leverage reduction still leaving a lot of room of maneuver to both return money to shareholders and do high-value accretive M&A as necessary.
We see stronger growth performance of all the recently acquired assets the digital merchant book in Italy, the book we bought in Greece, Croatia, and also Spain that we plan to close later in the year. And last but not least we are progressing well on our non-core asset disposal plans and we will tell you more over the next few months as we progress and we come to signing of these deals.
Overall, we -- for confirming our guidance for the full year with revenues expected to be at above 7%, EBITDA growth expected to be at above 10%, and excess cash generation at above €600 million.
Let me now move to page four and let me comment on the volumes that we've been observing over the last three, four months. Now, here the comparison is with the previous year and therefore with 2022, you see that across all geographies, we have been observing a total volume growth that is normally the blue line well into double-digit space with peaks in January.
Italy you see 18%, 13%, 13% was supported by the high impact consumption sector growing above 20% and with a contribution from the foreign cards growth and therefore, international travel remaining very strong at above 50% growth.
In the Nordics, as well we've been observing a stronger volume growth especially again in January and this growth is continuing also in April. Last, but not least, the DACH is also here very strong volume growth above 20% across the quarter.
I think here the relevant line is the dotted blue line 33%, 29%, and 21% is still continuing on a more normalized April at around 16%. So, across all geographies, we see the trends that we were expecting and we see these trends continually according to our expectations also now in April.
Let me now hand over to Bernardo to comment on the performance.
Bernardo Mingrone
Thanks, Paolo. Good morning. I'm on slide 6. So moving on to how Nexi performed from a financial standpoint in the context of the growing volumes that Paolo has just described. So top-line growth we've seen grew 11% if you look at it gross of scheme fees 9% on a net basis whereas EBITDA as we have seen grew almost 14% with a margin expansion of just shy of 200 basis points taking it to 45% at the end of the first quarter of this year.
Moving on to slide 7. We have Merchant Services top-line growth again double-digit. Paolo has already called out the strong performance we've had in Italy and the DACH and Polish regions. This 11.5% of course is 14% gross of scheme fees. And this was sustained -- this growth was sustained by strong volumes particularly in international schemes as we see in the charts on the page.
But it's important also to notice how it's not only the volumes growing that are fueling the growth in our top-line but also the expansion of our footprint in terms of growth in a number of customers both in the physical acquiring and the e-comm space across all geographies and segments. We have strong wins in SME and LAKA and we are further expanding our partnerships and our footprint in terms of our presence of acquiring through ISVs.
Moving on to Issuing Solutions, particularly, strong quarter here. You can see top-line growth of just north of 8%. Again I would call out the contribution to top-line growth of volumes in particular here we have let's say recovery in travel-related volumes both in terms of cards -- Italian cards in particular being used abroad, but also commercial cards.
We have to be -- to be fair we have a slight benefit in this first part of the year in terms of a better phasing with regards to contract renewal we had spoken of in the past. So that has helped us. But most importantly, I'd say the key driver to top-line growth being volumes and the overall advancement of our cross-selling and up-selling initiatives in particular in advanced digital issuing solutions.
Page 9 on DBS here. In DBS in the past this is only Italy -- or the I'd say the vast majority of this is Italy once we recast our numbers moving EID and available for sale. And this is a division which is most impacted in the past by domestic Italian banking M&A. So notwithstanding the fact that in the past we've lost clients you can see some growth on the top-line which is again benefiting from stronger volumes in the first half in particular on bank transfers and the EBA clearing framework we manage.
If we look at the revenue performance which as I said was strong in the first quarter in every business unit we operate. The same holds true on a geographical basis which you see on slide 10 with Italy and the DACH and Polish regions growing almost 10% top-line double-digit if you look at the gross of scheme fees in both Nordics and Southeastern Europe, which are growing above the minimum guidance for the year.
If we move on to costs on slide 11 you see the cost performance essentially should be thought of as being impacted by four key components. The first is the investment we've made in people during the course of 2022 and the start of this year. This is catching up in terms of the cost dynamics.
The second effect is clearly with the strong volume growth we've seen part of this speeds into our cost base notwithstanding the very strong operating leverage we benefit from. We then have some effects coming from inflation. And as we had discussed back in September when we looked at our projections for the three-year period we knew we'd be able to manage the progressive impact of inflation mitigating it and we are starting to see some of it filter through this year.
And then finally obviously we have the benefit of our synergies which are helping to offset these trends and effects on inflation. Finally, if we look at leverage on slide 12. we have some good news in the quarter. We've already spoken that we have an upgrade from rating agencies. We hope for more to come. I think the key point to remark always is that we have sufficient cash on our balance sheet to cover commitments up until the end of 2025, which stands us in good stead given market conditions.
Overall, the book is -- our debt stack is I think -- and again I apologize if I'm saying it about ourselves, but I believe it's well-balanced in terms of the maturities profile in terms of the mix of funding sources in terms of the mix of fixed versus floating rate. So we see a leverage profile which is substantially flat in the quarter having closed the M&A deal in Croatia. And I think we are -- we have we benefit from a very sound balance sheet.
So I'll hand over the floor back to Paolo for his concluding remarks.
Paolo Bertoluzzo
Thank you, Bernardo. Let me move now to page 14. As I've anticipated on the back of these results and what we see in the market we confirm our 2023 guidance that is I want to remind is fully in line with our longer-term medium-term Capital Market Day growth targets.
On net revenues we plan to deliver at least a 7% growth. On EBITDA, we plan to deliver at least a 10% growth. We plan to generate at least €600 million of excess cash at the organic level. On the back of this, we expect net leverage to come down to 2.9 times EBITDA organically, 2.6% including run rate synergies. If you include the announced deal in Spain with Banco Sabadell, you should top it up by 0.1 and therefore three times EBITDA and 2.7 times EBITDA including synergies and normalized EPS. We plan to grow at more than 10% year-over-year.
Let me now conclude reiterating the three key simple messages. Across the quarter, we've seen double-digit growth across all geographies and we see this double-digit growth continuing in April. Second point, strong financial performance 9% top line growth double-digit revenue growth in Merchant Solutions, particularly strong in Italy and DACH and Poland. EBITDA, at almost 14% growth with 183 basis points EBITDA margin expansion. And again, last but not least, progressing well in executing our strategy is expected to generate €2.8 billion of excess cash that we plan over time to allocate mostly to leverage deduction still leaving a lot of flexibility to also give that money to our shareholders and focus on highly value-accretive M&A.
Let me stop here and let's open to your questions.
Question-and-Answer Session
Operator
This is the chorus call conference operator. We will now begin the question-and-answer session. The first question is from Justin Forsythe from Credit Suisse. Please go ahead.
Justin Forsythe
Paolo, Bernardo, good to speak to you again. I have a couple for you. Just wanted to first ask around the reiteration of guidance. I understand it wasn't a super size it would be albeit a beat. Is that related to conservatism or perhaps a bit of weakness exiting the quarter? Just looking a little bit at back of envelope math, does appear perhaps a little bit of a slowdown on a worst 2019 basis and I guess on a year-over-year basis in Italy. So maybe you could talk a little bit about trends in your key market?
And then I wanted to flip a little bit to a more longer-term question regarding the Nets and SIA integrations. I think SIA was expected to be mostly finished at this point with a little bit of synergy flowing through in '23 with the majority of the go-forward being related to Nets and a significant amount of revenue synergy coming from the e-commerce and omnichannel platform and the next-gen SME proposition. Now, that you've had a year to evaluate Nets and the propositions they're bringing to the table what is the progress on your thinking there? And do you expect to have those solutions integrated? And what is the kind of product map going forward for integrating them? Thank you.
Paolo Bertoluzzo
Good morning, Justin, thank you for your questions. Listen, on guidance, we consider the first quarter bang on line with our expectations. I want to reiterate the fact that, we didn't say that our guidance was 7% and 10%, but it was at least 7% and 10%. And the first quarter was expected to be a stronger quarter than the rest of the year. We've been also very clear in anticipating this when we did communicate the guidance back in February. And we continue to have exactly that view of that expectation. So, we don't see at this stage any reason why we should revise this guidance if anything being four months into the quarter we have even stronger confidence in our guidance.
As far as the volume dynamics are concerned, they are broadly speaking in line with what we were expecting. And now, we are reporting them compared to 2021 because we believe this has become the real -- sorry 2022, because this is -- we are getting to a normal way of living and to a normal comparison as well. And I think this is really important and allows us to go back to also a normal way of looking at numbers.
However, we still among ourselves continue to look back to 2019. And if you look at the volumes on Italy, that you mentioned specifically compared to 2019. In the quarter, they were up about 40% compared to pre-COVID. And it's a solid 40% continuing also in April. So, we don't see any particular dynamic different from what we were expecting.
On the Nets SIA integration, let me reiterate what we've said in the past, because what you're mentioning around the focus on SIA and the focus on Nets was more around the organizational integration.
As you remember, we did integrate since the beginning of 2022 organizationally with SIA, especially in Italy and we had decided to postpone a fuller integration also with Nets later on. This has happened on the 1st of January this year. So now we are operating as one company fully integrated. That's also one of the reasons why it's becoming very difficult for us to talk about synergies, because they are fully embedded now into the way we run the business and into our guidance into our long-term guidance as well.
As far as how the plans on the Nets side on the previous -- on the former Nets side concerned, they are basically moving according to plan. We are -- for example, let me give you a couple of examples specifically on e-commerce as you are referring to that and that's clearly one of the areas where we were expecting to have a stronger contribution.
We have recently launched in Italy a [indiscernible] solution that allows to maximize, basically the probability of success of our transaction the conversion rate for a merchant and this has been very well received by the market and this is actually translated from the Nets experience in the Nordics that is now being rolled out also in Germany.
A second example. There is a mid-layer that we talked about at the Capital Market Day that we call Nexi Relay that is de facto mid-layer that allows us to decouple the underlying processing platforms and the customer-facing acceptance platform the gateways and that solution that was originally developed to serve the Nets state is now actually being extended to Italy as well. And over the next few months, we will roll out for example certain new payment acceptance method in Italy on the back of that platform. So it's progressing overall according to our plans.
Justin Forsythe
Got it. Thanks so much guys. And congrats on a good quarter. Cheers.
Paolo Bertoluzzo
Thank you.
Operator
The next question is from Hannes Leitner from Jefferies. Please go ahead.
Hannes Leitner
Yes. Thank you. I have also a couple of questions. The first one is if you look into your database and you calculate the basket the average basket of transactions. Actually you had a decline, which seems a little bit against the typical inflation trends we see. Maybe you can comment on that?
And then the second is could you comment on the Italian landscape. I think Banco BPM is looking to a similar increase the value of their payment assets and their fee income, I think similar to UniCredit. That's for now then maybe a follow-up.
Paolo Bertoluzzo
Listen on the impact on inflation on overall volumes and so on and so forth to be honest with you we gave up to try to have a precise assessment, because what we observed in our volume dynamics is a mix of very different things. Now you have the real economy real consumption dynamics. You have the inflation and most importantly you also have the cash to digital payments have continued their structural transition.
I think inflation is supporting now the top line here, but we also have to consider the fact that real consumption now over the last several months on the back of pressures on energy, pressure on mortgages, and pressure on many other things have been suffering quite a bit. I think overall the mix is evolving in line with what we were expecting.
I think -- on your second question, obviously, we cannot comment on Banco BMP and other banks statements. It's for them to comment. Overall, we see in Italy the dynamic that we see everywhere else, where banks continuously revisit their payments strategies and approaches now realizing the fact that this business is becoming more and more of a technology-centric business, and therefore, they really need to have a stronger focus and work with dedicated partners and this is not an Italian -- an Italy-only phenomenon. I think specialization in digital payments is becoming the rule of the game across, I would say not just Europe but across the world. So it's very consistent with what we see everywhere else.
Hannes Leitner
Okay. Thank you. And then just a short follow-up on Justin's comment and your answer on it in terms of it goes according to plan the integration of SIA and Nets. Maybe you can comment around that if there are more assets you have so far identified you might want to divest or spin out looking into this after you had now moving a couple of assets is available for sale?
Paolo Bertoluzzo
Hannes, I would reiterate what we said at the Capital Market Day. We had identified for sure, and therefore made explicit with the market our plans to sell the Nets DBS business the electronic identity business in the Nordics and the Buy Now Pay Later business that we have in Germany. But we also said that, especially in the third business unit, in the overall DBS business to be continuing to revisit the portfolio to make sure that all the different products and services and assets that we have there are really core to the strategy and we can continue to focus our investments also on them. So it's a continuous evaluation of options. And for now there is no new news on that front.
Hannes Leitner
Thank you.
Operator
The next question is from James Goodman from Barclays. Please go ahead.
James Goodman
Good morning. Thanks for taking my two questions. And the first one just on DACH, where we a very strong volume acceleration in the quarter, I think up into the mid or high 20s, depending how you look at that. But the revenue growth at 10% is quite similar to other regions. So the question is just why are we seeing a lower level of conversion of that very high volume into revenue in DACH, and then given the mid-term outlook for that region to reach mid-20s growth? When and why do you the acceleration in the revenue side on that?
The second question is just around press reports again last month that the Italian government is meeting with I think banks and payment firms retailers in order to discuss again potential additional taxes on transactions I think up to €30. Can you just talk a little bit about that regulatory backdrop and evolution in Italy and potentially, if you've run any stress tests or otherwise around any sort of impact of that sort of legislation. Thank you.
Paolo Bertoluzzo
Good morning, James, thank you for your questions. Let me take the second one and then I will hand over to Bernardo for the one on DACH and Poland. On the Italian government side, I think that the only relevant comment is that the conversations are continuing across the different stakeholders on the topic obviously, led by the government.
It's taking probably a little bit more time than what it was expected. But for what we see, we see pretty constructive approach from outside. For the outlook, we have at the moment we honestly, don't see any material impact on our growth and our financials. We should always remind the fact that since three, four years ago, ourselves, we started a specific promotion to support micro merchants on smaller merchants on smaller transaction. We're out in the market since three, four years was basically the option for merchants to basically the app for free transactions below the €10 and we use this to have the merchants on one side but also to stimulate usage on the other side. And all in, we do not expect any negative impact of the ongoing conversation.
On DACH, let me hand over to Bernardo. I think one element to notice is that probably DACH has been one of the regions where last year COVID impact was the strongest. And therefore, this year the rebound is also the most visible and the most positive on the link with revenues and over to Bernardo.
Bernardo Mingrone
Yes. No, I think the first point to note James, is that – is DACH and Poland, actually in Germany it was growing significantly more than Poland. So that's an average of the two. And then the other point to note is that the rebound in volumes is primarily coming from travel and this is probably larger merchants, lower average take rates. And finally obviously not all volumes translate into top line growth because we also have revenue being generated from the installed base so you can just say 20% volume growth 20% revenue growth. However, you strip out Poland, Germany is much more similar to that top line growth.
Paolo Bertoluzzo
Well, I think here just to help you, figure it out, actually German revenue growth in the quarter was above 20%.
James Goodman
That’s helpful. Thank you.
Paolo Bertoluzzo
Yes.
Operator
The next question is from Sandeep Deshpande from JPMorgan. Please go ahead.
Sandeep Deshpande
Yes, hi, thanks for letting me on. My question again, coming back to one of the earlier responses from Bernardo, you talked about travel being a constituent of your growth in Germany. Are you seeing this travel being a constituent of your growth in Italy and particularly, China travel has it returned. And in terms of – because you can see it with your card mix. That's my first question. And my second question is regarding the growth you're seeing. I mean of the acquisitions you've done I guess only the Greek acquisition may have a one-year period where you can see the growth. And can you comment on how you're seeing the organic growth within that business asset or in the acquired businesses? Thank you.
Paolo Bertoluzzo
Good morning, Sandeep, let me try to address both of them. Then if Bernardo you want to add something more on the specific M&A, performance, please do it. On travel, I mean you see it clearly in our volume page that now the high consumption is clearly not sustaining a very high level of growth. And you see clearly that when it comes to the contribution of international travelers you have the example of Italy this is particularly stronger and continue to be particularly strong.
And we expect this to continue throughout the year as international travel fully recovers plus honestly at least my point of view is that in the new economic environment post-COVID, I think whatever has to do with social activities and services, we see a very positive dynamic potentially rebalancing a lighter spending on a more discretionary spending type of goods.
Specifically when it comes to China or Russia and the impact of all these elements, I think we said in the past that both China and Russia were very small part of our total volumes, low single digit of the international travel component. And, therefore, now that at least the Chinese volumes are recovering, it's true that they are recovering. They are already -- they are -- sorry I'm just looking at the numbers here. The China volumes are still below -- materially below the pre-COVID, but actually growing almost two times what they were last year. But again the impact on the total numbers remains pretty low.
On your second question…
Bernardo Mingrone
Yeah. No, if we look at it I think Paolo called it out at the beginning, I think we're very -- we're extremely happy with the performance of the assets that we acquired and closed during the year. But -- then I spent a word on some of that as well. But if you look at the performance of Croatia, which we signed in the first half of last year only closed at the end of February because of the say the lengthy process due to Croatia entering the euro area and the approval process took a little longer, but we were accruing cash on -- as part of the agreement we basically took the benefit of the performance from signing until today.
In Croatia, the book there is growing 30% I think in the first quarter year-on-year. If we look at Alpha Bank, Alpha Bank is also growing like 15% or so. I mean, we won't be giving the details every quarter. But given that we've disclosed and I got the question I thought it would be helpful to highlight how -- and by the way BPER, which is an entity as well is performing much better than any other merchant book say we acquired. Why? Because in the first quarter we normally go and work on those customers that are loss-making, we price them and get a benefit early on in the process.
And if we look into Spain as well I think Sabadell made comments to that effect. Of course, we don't get the benefit of that. We haven't closed the transaction but that book is also performing better than our average. So the four acquisitions I've just mentioned on average are all performing better than the average of the portfolio, which is clearly good news.
Sandeep Deshpande
Thank you.
Paolo Bertoluzzo
You're welcome.
Operator
The next question is from Sébastien Sztabowicz from Kepler Cheuvreux. Please go ahead.
Sébastien Sztabowicz
Hello, everyone. Thank you for taking my question. You mentioned healthy price dynamic in issuing contract renewal in Q1. You explained a little bit the reason behind that. And also attached to that in the Nordics where are you standing in your contract negotiation and specifically the price adjustments that are materializing there?
And the second question is on the business trends for the second quarter. We are only one month into the second quarter, but what kind of net revenue growth do we expect for Q2? Do we expect growth more or less in line with the middle of our guidance above, or below depending on the ups and downs? Thank you.
Paolo Bertoluzzo
Good morning, Sébastien. Let me try to take the two questions. I think in general we see -- I mean we tried to point it out this positive and healthier dynamic of price renegotiation in the issuance space because that's actually what we see. I think this is driven by a combination of elements.
On the one side I think that the flow of those contracts that were very old and that were maybe highly priced on the back of the acquisition debt repricing has already happened and now we are actually moving into a more normal market dynamic. Add on top of it, the fact that more and more when we renegotiate contracts we were able to add more products and services, more value-add and more components of the value chain.
And last but not least, obviously, inflation is making everybody more price aware. And clearly we can also justify a certain type of dynamic. By the way in most of the new contracts we're also including inflation-linked annual repricing, which we believe given the fact that the future is a little bit unclear now what the normal -- the new normal level of inflation will be -- we believe is super important and super strategic.
As far as the Q2 business trends are concerned, allow us not to give a quarterly guidance, sorry, if I put it that way. But it's also very, very difficult because you're starting to discuss a few million euros shifting from one quarter to the other both in terms of revenues and cost. Again let me just reiterate the fact that we continue to see all elements to confirm with confidence our full year guidance. Obviously, the first quarter is stronger than the rest of the year because of the easier comparison with last year. But let me stay on this statement without getting into the specific quarter dynamics more than that.
Sébastien Sztabowicz
Okay. And just to the Nordics, most of the contracts have been renegotiated and repriced and there is no more lingering impact moving to Q2, is it a fair assumption?
Paolo Bertoluzzo
No. I think we are mentioning in the comments, in the page the fact that, we still have some impact from one legacy …
Sébastien Sztabowicz
Okay.
Paolo Bertoluzzo
…contract and that impact was expected to be more material this year, but maybe instead postponed to next year. But again, in the big scheme of things given the size of the group and given the size of what we are talking about these type of things the overall performance of the business are actually pretty much diluted and therefore much less impacting.
Sébastien Sztabowicz
Thanks a lot, Paolo.
Paolo Bertoluzzo
Thank you.
Operator
The next question is from Gianmarco Bonacina from Equita. Please go ahead.
Gianmarco Bonacina
Yeah. Good morning. A couple of questions for me, one is on the OpEx growth. So clearly you reported stronger revenues but also probably a little bit higher OpEx. So this 5.5% is the level we should expect for the year, because if I use your 7% revenue and 10% EBITDA, I get more of a 4% OpEx, so I know there is a variable component. But just if you can give some more color in terms of what we should expect for the OpEx. And also on the staff cost maybe -- I see you mentioned hiring for growth harder, so just a little bit more color there.
The second one is on the cash flow bridge. We saw the net debt increase by a little bit more than €100 million. If I recall well, you had to pay for in the case of Croatia €180 million which leaves you -- your underlying cash generation about €60 million.
Maybe here you can give more color on this cash flow, excluding the M&A how it has performed and also if you had to pay for the deferred taxes or not already in the Q1 so just to understand the underlying cash flow generation. Thank you.
Paolo Bertoluzzo
Good morning, Gianmarco. Let me hand over to Bernardo for your questions.
Bernardo Mingrone
Yeah. So starting from the last one, no, we haven't paid for that yet. So that €100 million hasn't come out yet. Going back to your bridge and I'm answering in reverse order. Going back to the cash flow bridge, I think not wanting to go into every nitty-gritty detail we report cash flow on a half yearly basis and there's a good reason for that.
But in the quarter, you should just broadly speaking think of that €150 million of -- which is a 1/4 of the €600 million of the cash we expect to generate in the year adjusted for seasonality so just shy of that.
And then, you can start working your adjustments on the cash out for the period on Intesa the Croatian book, for Intesa which as you're saying is €180 million. But I also mentioned earlier, we are accruing cash on that from signing so we get some cash from that as well.
And that translates into the cash flow that you've seen. But you'll see the full details of this in July or 1st of August when we report first half results. But in general I'd say, it's all pretty normal. There's, no exceptional items et cetera.
Just think of cash generation in the quarter as being seasonally adjusted what it should be for the €600 million target we've given ourselves, at least €600 million in the year. Again, I don't want to dodge the question, but we provide guidance on a yearly basis. And we've provided you guidance with at least 7% top line growth at least 10% EBITDA growth.
And we've given you a target in terms of -- or we've said -- commented in terms of margin accretion going into a detailed guidance of how costs are going to evolve in terms of FTEs or HR costs non-HR costs, is I think a level too much. I mean, we manage the business in order to deliver those targets we've given you and we are confident we will achieve them. I think that should be the answer to this question.
Gianmarco Bonacina
Okay. Thank you. Maybe just a follow-up, in terms of your staff costs, just if you want to mention the areas of growth in which you are investing. Thank you.
Paolo Bertoluzzo
Gianmarco, the areas of investment are the ones that we mentioned last year. You may remember that, overtime we did postpone some of the investments from last year to this year. And finally, they are coming in between the end of last year and the beginning of this year and mainly -- we are mainly investing into the merchant services space, especially in the areas of e-commerce and DACH and now that are expected to be very strong sources of growth for the near future.
Again, there are also other areas, but if I need to mention a couple of them they are the ones. On your previous question on cost dynamic, a little bit like, top line you should consider. The first quarter to be the highest quarter in terms of cost growth and then, will come down to levels that are more in line with the full year estimate that you were talking about.
Gianmarco Bonacina
Thank you.
Operator
The next question is from Aditya Buddhavarapu from Bank of America. Please go ahead.
Aditya Buddhavarapu
Hi, Paolo, Bernardo. Thanks for taking my question. Just a couple from me. You had mentioned that, you've seen some progress on the disposal of the non-core assets. Could you just maybe talk about the conversations there? I mean, how are those progressing? How should we think about when we should maybe hear a bit more on those? And then also on the comments you made on the Italian -- some of the Italian banks and in general banks are looking at their payments portfolios. I think you saw obviously one of your competitors recently going for a slightly different deal as a JV rather than purchasing the merchant book outright. Are those sort of deals something which would be interesting to you as well, or do you still look at assets where you can buy this out completely? Yeah, maybe -- those are the questions.
Paolo Bertoluzzo
Good morning, Aditya. Thank you for your questions. Let me start from the second and hand over to Bernardo on the first. I think in general, it's very good to see that there are multiple avenues for banks to revisit their strategies. And ultimately, as far as there is the opportunity to create more value together, I think all of them are to be considered. I think what we've seen recently is just another version with very specific characteristics also in terms of size of the opportunity, and type of dynamic there.
In our current portfolio we have both straight merchant book acquisitions and joint ventures. And to be honest with you from, what we see so far what really matters is the quality of the collaboration with the bank and the real focus that you are able to generate together. So I think ultimately the different models can work. And we are keen to be open to what ultimately banks see as their strategies. Obviously, then whatever valuation whatever upfront payments we have to do remains consistent with that.
And therefore, we remain fully, fully value-driven and rational in looking at these different type of deals. But I think in general, it's good to see that for example a market like the French one is opening even, if with very different type of setup because this is going to be offering more opportunities also to us. And it's good to see that banks continuously revisit their strategy, because I think in general this will be good for the market overall.
Bernardo Mingrone
On the M&A disposal process, I think as -- I think the two processes so one for EID and Ratepay are traveling on different kind of pay -- at a different pace. EID is a pretty competitive process in place, which is progressing well and faster than Ratepay. And this is not surprising given the overall environment on the funding side and on the credit side. And therefore, you should expect EID to be completed sooner than Ratepay. I think, that's what I want to say about that.
Aditya Buddhavarapu
Great. Thank you. If I could just ask one follow-up on the M&A point would there be any sort of market share considerations in maybe Italy which might prevent you from doing something with a couple of those banking players in the future? And then just also -- just Bernardo, I think you also obviously talked about in terms of the excess cash you look at deleveraging shareholder return and M&A. I mean, any progress on when we might hear a bit more -- anything on when we might hear a bit more on some of the other use of cash let's say return to shareholders I mean or again the deleveraging? Any point on when you decide to look at some of the other avenues as well in more detail?
Paolo Bertoluzzo
On your first point, I think that the comment that I can make is that every case is different and the market is evolving in a direction that is more and more of a European market as we see very clearly from the different type of competitors that are appearing in different markets and ourselves expanding in other markets as well. On your cash allocation question, maybe Bernardo do you want to comment more?
Bernardo Mingrone
I think Adi, we should pick this up when we talk in the first half results from the beginning of August about capital allocation once we have the discussion on CapEx cash flow et cetera, and maybe who knows on some of the disposals as well in terms of how we plan to allocate this cash. I think, the important thing and I'm never tired of reminding us of this is that, if we believe our guidance and obviously clearly we believe our own guidance we expect to generate €2.8 billion of cash between now and the end of 2025.
We are sitting on north of €1.6 billion of cash as we speak. The sum of all of the cash both existing and to be generated is much more than enough to cover liabilities in the coming future, buy back stock if we choose to do so do any of the M&A that you might have read of in the press. So, our focus is obviously to generate this cash. And once we've generated it then it's a high-class problem how we actually deploy it.
Aditya Buddhavarapu
Understood. Thank you very much.
Operator
The next question is from Alastair Nolan from Morgan Stanley. Please go ahead.
Alastair Nolan
Great. Thank you. Good morning. I think quite a few of mine have been answered already, but maybe just a question on the expected pace of growth for the rest of the year. You've obviously had an easier comp in the first quarter. I think it's gotten a little bit tougher as we progress through the year and then there's the potential for kind of a tougher macro impact as well. Is the expectation broadly still to deliver that greater than 7% revenue growth in every quarter, or is there any kind of comments you could make there?
Paolo Bertoluzzo
Good morning, Alastair. Well, let me just reiterate what I've said before. The current view is that we'll be able to deliver at least the 7% that we have talked about. So it's very difficult for now to say if we're going to be much higher than 7% or a bit lower than 7% on every single quarter, because volume dynamics are not necessarily very constant and also other revenue components are not always predictable in terms of phasing across the year. But again, I want to confirm at least the 7% revenue growth is what we are confirming today.
Alastair Nolan
Great. Thank you. Appreciate it.
Operator
The next question is from Mohammed Moawalla from Goldman Sachs. Please go ahead.
Mohammed Moawalla
Yes. Thank you. Good morning, Paolo, Bernardo. I had two. What's -- Paolo and Bernardo, what do you see as the kind of primary risk around kind of achieving kind of this year's guidance or if we think of maybe the kind of the variables around kind of potentially exceeding? I know it's a pretty -- above 7% is kind of not very precise, but how should we think of the different kind of factors around sort of exceeding or significantly exceeding versus potentially disappointing? And is -- the 7% kind of sounds like a floor, so just curious to get kind of your perspective on that.
And then secondly on M&A, and I may missed your answer earlier. If you were to look at the kind of deals that are kind of available in the market, is sort of larger bank deals now kind of off the table? Is it largely a kind of JV approach or -- and most of the deals are kind of midsized? And would you also sort of look at perhaps more technology software kind of platform-type deals to kind of complement your M&A strategy going forward? Thank you.
Paolo Bertoluzzo
Good morning, Mohammed. Listen on what can enable us to over-deliver materially, not the 7% or not get to that. Ultimately, it is macroeconomic evolution, driving volumes. And I think in this new world after COVID, it is particularly difficult to be predicted, because the mix of segments and the dynamics of the individual segments have changed quite a bit. I was commenting before that what we observed across, I would say, all geographies is that for example, people are actually spending in that mix more in everything that has to do with the social life from restaurants to bars to travel hotels, entertainment and so on and so forth, and probably less in certain categories that are more discretionary goods, hard-goods type of things, for example, household appliances or even clothing. And that's the reason why it's not -- if anything a bit more difficult than in the past to project volume. But the simple answer to your question is volume driven by macro. That's the reason why we have to remain quite flexible and open.
On your M&A question, I think as many banks are revisiting their strategies so on and so forth, I would say very different type of deals may pop up over the next few years. If we look at what are the conversations that we are having at this stage and then, when we can realize at some point over the next 12 months, they tend to be medium to small size, that's what I would say, at least in terms of capital commitment from our side.
And yes, we are also considering potential tech additions to our portfolio but we're really talking about smaller type of things with a pretty marginal impact, because our portfolio is already fairly complete and strong and therefore, we don't see the need of huge investments to add more to the portfolio as well. So, what you may see over time is a mix of technology capabilities lesser geographies but again, with a pretty limited capital commitments.
Bernardo Mingrone
I mean just look at the track record of the recent acquisitions, they will be in between €150 million and €300 million, if you exclude obviously the mergers of Nets and Sia, which were shared deals.
Paolo Bertoluzzo
Yes.
Mohammed Moawalla
Great. Thank you.
Paolo Bertoluzzo
Thank you.
Operator
The next question is from Simonetta Chiriotti from Mediobanca. Please go ahead.
Simonetta Chiriotti
Hey, good morning, all. One, a couple of questions from my side. We have seen in the quarter strong volume growth. My question is on the installed base component of the revenues, if you could give us a bit more color on this, both in Merchant Services and in issuing solutions?
And the second question on competition, just a general comment on how competition is evolving in the different markets. Looking at Italy, we have seen a bit more of activity from a relatively new player like Fondo Strategico Italiano. Just a comment from you on this if you may. Thank you.
Paolo Bertoluzzo
Good morning, Simonetta, thank you for your question. Let me just start with the second one, and then I will hand over to Bernardo to comment more on the strong growth dynamics. I think we continue to see an evolution of the dynamic that we have described at the Capital Market Day, and I would say across all markets. We're basically facing two type of extremes of competition then there are many other in the middle.
On the one side, we see the players that are operating more internationally, the some apps [ph], the Adyens, this type of people that are pretty focused on certain segments and come in with one strength and one weakness. The strength is the fact that they have good targeted propositions. The weakness is that they are much less local than we are. And therefore, our clear approach is to have a strong proposition but also being much into the market and enabling what is necessary to be successful for our merchants in the market.
And on the other extreme, you tend to have more local competitors that instead try to be local but normally they are subscale to have a strong technology, strong capabilities and strong proposition. And this is what we see, I would say across the board. And the latter tend to be a bit more aggressive on pricing because they need to be more aggressive on pricing to the group.
We see this dynamic evolving. And that is why the core of our strategy as we said at the Capital Market Day is to represent across our geographies the combination of the scale and the strength that the scale gives you in terms of product technology capabilities but at the same time also be very local with our presence in the local markets with our partnerships in the local markets with our capabilities in the local markets. And we see these honestly playing quite well in responding to both type of competitions. On the installed base Bernardo?
Bernardo Mingrone
Yes. No the installed base growth as you know because of the growth of the installed base itself, so we've highlighted how we added 170,000 terminals in the quarter on a year-on-year basis. The installed base grows not only because of that but because of the up-selling and cross-selling on that installed base. So if you look at the numbers, we have double-digit growth of 11.5% of Merchant Services and that is the product of volumes growing.
And you see on the charts on the page around about 15% in international schemes and just over 11% in total. And that accounts for about 70% of our total volumes. The rest of the growth – so if you multiply out 70% times that growth, you get part of the growth coming from, the top line coming from the volumes; and the rest is coming from the installed base. So you should think of in general our installed base growing mid-single digit and the volumes growing close to where the volumes are growing – the volume-related revenue is growing close to where the volumes are growing at.
Simonetta Chiriotti
Thank you.
Operator
[Operator Instructions] Mr. Bertoluzzo, there are no more questions registered at this time.
Paolo Bertoluzzo
Thank you. Thank you all for attending this call and thank you for your questions as well. As always, we'll continue the conversation with many of you in the coming days and weeks. And we'll come back with our results for the first half on the 1st of August. Thank you very much and have a good day. Bye-bye.
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Nexi S.p.A. (NEXPF) Q1 2023 Earnings Call Transcript