Nuvei Corporation
Pivoting back in the right direction
Our view: Following a challenging 2Q23, NVEI appears to have course corrected, with pro forma y/y seq. improvement across its portfolio (+550bps vs. PF2Q23) and most notably in global commerce (+890bps) and B2B, Government, and ISV (+360bps). In addition, guidance was increased with mid-term forecasts also reiterated, which we believe suggests management is gaining confidence in its visibility (all else equal relative to the macro backdrop).
Key points:
3Q23 results. NVEI reported $305M/$111M in revenue/adj. EBITDA compared to RBCe of $307M/$106M and the Street at $303M/$107M on total volume of $48.2B, +72% y/y, vs. RBCe of $48.6B, the Street at $48.5B and 68% y/y growth last quarter. Organic revenue growth at constant currency increased 13% to $223.3M. Revenue in North America grew +100% y/y in the quarter to $166.5M, vs. +108% last quarter; EMEA increased 17% y/y $123M vs. (1%) last quarter; LATAM increased +81% y/ y to $13.8M, vs. +77% last quarter; and APAC increased 67% y/y to $1.6M vs. 67% last quarter.
FY23 guidance increased; 4Q23 revenue and adj. EBITDA in line with expectations. FY23 guidance calls for volume of $198B–$200B, revenue of $1.175B–$1.195B and adj. EBITDA of $427M–$435M, compared to prior guidance of $193B–$197B, $1.17B–$1.195B and $417M–$432M, respectively. Management attributed the increase to the momentum in the business, including the acceleration seen this quarter. 4Q23 guidance is for revenue of $307M–$327M and adj. EBITDA of $111M–$119M, compared to prior RBCe of $314M/$111M and the Street at $315M/$111M, on volume of $57B–$59B, versus prior RBCe of $53.6B and the Street at $53.7B.
Adjusting estimates, maintaining price target and Outperform rating.
Incorporating results and updated guidance, we are adjusting our FY23/ FY24 revenue/adj. EBITDA/adj. EPS estimates to $1.2B/$432M/$1.69 and $1.4B/$495M/$2.02 from $1.2B/$423M/$1.72 and $1.3B/$487M/$1.95, respectively. Given the modest adjustments to our out-year estimates, we are leaving our price target unchanged at $29, or 11x our revised FY24E adj. EBITDA, which is a discount to its historical ranges, and in line with slower growth peers, which we believe is appropriate, as management rebuilds investor confidence