Q3 2021 Nuvei Corp Earnings Call
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Ladies and gentlemen, thank you for your patience, we will begin in a few minutes again. Thank you for your patience will begin in a few minutes. Thank you.
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Greetings and welcome to the New very Corporation third quarter 2021 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded.
Now I'll turn the conference over to your host Anthony Gerstein, Vice President of Investor.
Investor Relations you may begin.
Thank you operator, and good morning, everyone and thank you for joining US with me today are Phil Bayer Chair and CEO and David Schwartz CFO.
As a reminder, this conference call is being recorded and webcast and is copyrighted property of <unk> and rebroadcast of this information in whole or in part without written consent.
It's prohibited.
This morning, they issued a press release announcing financial results for the three month period ended September 32021.
The release as well as an accompanying presentation are available in the Investor Relations section of the Companys Web site <unk> dot com under events and presentation.
During this call we may make certain forward looking statements within the meaning of the applicable securities laws.
Such forward looking statements involve known and unknown risks uncertainties and other factors that may cause the actual results performance or achievements of the business or developments in rebates industry could differ materially from the anticipated results performance achievements and developments expressed or implied by such forward looking statements.
Information about these factors that could cause actual results to differ materially from the anticipated results or performance can be found in <unk> filings with the Canadian securities regulatory authorities and on the company's website.
Our discussion today will include non <unk> measures, including adjusted EBITDA adjusted net income and adjusted net income per share.
Management believes non <unk> results are useful in order to enhance our understanding of our ongoing performance.
But they are not supplement to and should not be considered in isolation from or as a substitute for <unk> financial measures.
Reconciliation of these measures to <unk> measures are available in our earnings release and in MD&A.
On the call up to your questions after our prepared remarks.
With that I'd like to now turn the call over to Phil.
Yeah.
Thanks, Anthony and thank you everyone for joining our call today.
To celebrate our first year as a publicly traded company and excited to now be dual listed company also trading I mean, NASDAQ following our highly successful U S. IPO in early October.
Turning now to the quarter, we have a lot of really exciting things to share with you. This morning, but before we begin I want to extend a warm welcome to our newest colleagues, including those from simplex and payment test who joined US in September following the closing of those acquisitions. The newest members of our executive leadership team <unk>, our new Chief Mark.
Getting officer, and Nicky Zheng Yan, who was appointed to the newly created position of Chief people Officer.
And the 116, new team members, who joined the company from all over the world in the third quarter. We're excited to have you all as part of the new lifestyle.
We had another exceptional quarter and I'm Super pleased with our results our progress and how the business is tracking our unrelenting focus and passion for helping our customers connect with their customers is key to our success, while the investments we're making today in technology.
Innovation distribution and talent are driving performance and laying the foundation for sustainable long term growth.
For the quarter total volume increased 88% revenue increased 96% and adjusted EBITDA increased 97%.
Growth was broad based with North America volume increase of 118% EMEA volume, increasing 62% in APAC, and Latam volume, increasing 93, and 140% respectively.
This is a testament to how were executing on our strategic initiatives importantly, so early days and we see a lot of white space in each of our verticals and our current geographies as well as significant opportunity in our underpenetrated geographies in Latam APAC Africa, and the Middle East.
Our comprehensive technology platform offers the most complete set of capabilities to help our customers connect with their customers from paying supporting 204 markets local acquiring 45 markets.
500, plus alternative payment methods 40, crypto currencies and growing to our payout offering seamless disbursements to card issuing to risk as a service to our extensive value added solutions driving better operational oversight to enhance client authentication.
And to a better authorization rates all available to our customers in a single integration.
As you know our bespoke solutions go far beyond acquiring allowing our customers to collapsing efficient technology stacks, all the while driving state of the art engagements with their customers online in app or via mobile.
We believe new way is one of the few leading payment technology solution providers with this depth of capabilities, which is the underlying driver to our performance.
We remain focused on executing our strategic growth pillars, including growing with our customers expanding our geographies driving technological innovation and pursuing strategic M&A.
Growing with our customers is the primary contributor to our growth story as our customers grow their needs grow and their solution requirements change they may be expanding from country to country growing not only in one market, but many markets around the world. They may need additional functionality for pay and they may need payout functionality they may need more alternatives.
The methods or they may need to simplify their technology stack.
Whichever is the need our customers end up requiring additional capabilities are consuming more of our flexible offering and that's what's really powerful it's what drives our strong net dollar retention rate.
Our experience shows that as we add and deliver more solutions to our customers and enables us to create relationships and grow with them and that's what our business is all about helping our customers connect with their with the foundation of our land and expand strategy.
A perfect example of this is our recent work with long standing customer in pain and their bet MGM partnership in which new Weil assisted them with their opinion and payer functionality in North America.
We see many such opportunities like this.
So the time of our IPO last year, we talked about having an under distributed business model, which has been an area of investment focus with accelerated investments originally scheduled for 2022 into 2021, expanding our commercial teams globally.
Today, our commercial team has more than doubled from the first half of last year and we're extremely pleased with the talent. We brought on board. The team is making real contribution and there was a lot of momentum, which is both very exciting and as important inflection point.
We manage our commercial teams by having regionally vertically focused salespeople that are in country in time zone and in language supported by a team of local solution engineers integration specialist and account managers.
This white glove service is crucial to building relationships with our customers given the complexity and importance of the problems, we're solving for them and the sophistication and capabilities are industry, leading technology, which is unmatched in our opinion.
The conversations with customers. We're having today are so powerful because we're not just talking about simply helping them was acquired we're talking about helping them with our vast solution set that is purpose built specifically for their verticals and geographies.
In our opinion.
One of the few industry participants capable of this.
Alongside our investment in direct sales is our increased investment in marketing account management and corporate development.
Our brand awareness is translating to increasing and more frequent engagement with large growing enterprise customers, we wouldn't have spoken too within the past.
Our pipeline has never been deeper and the teams engaging with really the who's who in the verticals in which we operate and we're starting to see the results with our recently announced wins.
We have a lot of momentum that's building and it's very exciting to see what's happening across all our geographies and further strengthened my time with the additional payment tests.
Really proud of what the team is doing our success is built on our reputation our delivery and our.
Focus we expect more good things to come.
Turning now to technology innovation. This year's third quarter was without exception the most significant quarter for solution deployment offering meaningful opportunities, including Tam expansion growing discussions with customers and servicing new geographies.
Let me highlight five key innovations for this quarter.
First we launched card issuing in Europe, a brand new line of business that further expands our product offering and solution capabilities to our customers in the region.
<unk> is an exciting incremental market opportunity for future growth.
Second we launched visa direct and Mastercard send payouts in North America, further expanding and enhancing our suite of real time payment options fully reconciled and that sell to the customer.
Our paid offerings integrate into the flow of funds, meaning we offer net settlement to the customer after reconciling the funds collected paying the disbursement and subsequently net circling the customer this is critically important and simplifying customer operations when considering the multiple types of patients.
Flexi associated driving instant or near instant payouts, so our customers create stronger relationships with their customers.
Today, we offer one of the industry's most robust suite of digital offerings in both North America and Europe.
Okay.
Third we've added more than 50, new alternative payment methods since the beginning of the year, increasing our portfolio of alternative methods to more than 500 at the end of the third quarter of 2021.
Allowing our customers to operate more countries, except more forms of regionally familiar and preferred digital payment methods in order to drive higher conversion rates.
Fourth.
Our platform is fully live supporting U S online gaming an incredible team effort.
We offer the most comprehensive payment acceptance.
Payouts alternate payment methods and integration for U S online gaming and sports betting operators. Many of you heard me talk about crawl walk run with definitely walking now it's still early innings, but we recently announced some exciting ways, including bet MGM.
<unk> Sports illustrated sports book Carousel group amongst several others.
Finally, we made the investments to continue scaling our technology to offer no latency minimal downtime and first of all capacity to support our customers' future growth.
In the third quarter, we achieved record transactions per second of 325 compared to our previous record of 222.
Turning now to M&A, we completed three acquisitions in the third quarter, including the tumor simplex and payment types, while not currently material to our results. Each of these early stage companies has significant capabilities and momentum, adding exciting breadth of products and expanding both region and market opportunities for new Guy.
As a brief reminder.
Zuma enhances and expands in todays portfolio of North American payment options with instant bank to bank payment for paints and payouts and real time payments for accelerated withdraws, allowing our customers.
To provide their customers with instant and immediate payouts into their bank accounts 2700 36 five.
As you may seen exceptional momentum with monthly volume growth for September up 25% over August combined with new bank, but assume as an integral part of our north American payment offering and we're excited to see momentum there continue.
Simplex expense base capabilities to offer bespoke fraud prevention and risk management tools backed by proven artificial intelligence technology, resulting in higher conversion rates and better liquidity simplifying instantly it purchases for crypto currencies, and Ftes and decentralized finance providers.
<unk> simplex as their risk as a service and intend on offering our expanded solutions to all our existing customers.
Similarly, we are introducing all new ways product solutions and capabilities to simplex customers.
And payment cash further increases our total addressable market by significantly expanding strengthening our presence in Latin America, hence our regional processing capabilities enables us to support additional local payment methods and ensures we are well positioned to service new and existing global customers in this fast growing region for online commerce.
What's important to recognize about our M&A strategy is our focus on strengthening and broadening our product suite by adding a unique and valuable capabilities to our already extensive solution offerings for our customers that are relevant to their industries.
Also looking for regional market expansion opportunities further extending our leadership position.
Let me highlight that we have an exceptionally strong balance sheet, allowing for flexibility as we explore future opportunities.
With respect to global concerns over supply chain constraints, we haven't seen nor do we expect to have any impact on our business our customers and verticals are predominantly digital and as such are insulated from the recent supply chain constraints for a physical good customers, we see wallet share expansion offsetting any potential slowdown.
Given the solid results and the momentum we are seeing quarter to date, the depth of our sales pipeline acceleration of investments in distribution.
Introduction of new product capabilities and expansion to new geographies, we are raising our financial outlook for 2021.
Also reiterating our medium and long term targets previously provided.
Before I turn the call over to Dave I'll repeat how incredibly pleased we are with our results driven by the execution of our strategy, we're extremely well positioned as a company for the opportunity had we believe it's early days and we're still very much on the ground floor.
As always I want to recognize and thank all my colleagues, who contribute to our success each and every day.
I also want to wish you and your families. The very best as we approach the upcoming holiday season.
With that I'll now turn it over to Dave to discuss the financials and our updated financial outlook for 2021.
Thanks, Bill and good morning, everyone.
Pleased to report another strong quarter, our performance continues to be driven by our team's focus on executing on our strategy.
For the third quarter total volume increased by 88% over the same period of last year to $21 6 billion.
We are very pleased with the growth across all four regions.
North America and EMEA.
<unk>, which represents 95% of our volume, we experienced strong growth of 118% and 62% respectively.
Both of these regions also represent meaningful growth opportunities for us within their market size and Tam expansion in our verticals.
In the emerging markets of Latin America, and Asia Pacific volume grew 93% and 140% respectively.
However, these regions represent significant opportunity for us on a combined basis as they account for only $1 billion of total volume for the quarter, which is less than 5% of our total volume.
With the addition of payment as we now have a meaningful beachhead within Latin America, which we expect to further fuel our growth in the region.
The strong total volume performance in the quarter resulted in revenue growth of 96% to $184 million.
As we have noted previously total volume and revenue may grow at different rates, depending on the relative mixes within each.
We are focused on solving the needs of our customers. Ultimately this drives additional volume on our platform, resulting in incremental gross profit dollars.
Due to the scalability and leverage in our operating model. This provides for the potential for increased profitability.
Gross margin in the third quarter.
With 79, 2% compared to 81, 9% in the third quarter of 2020.
The change in gross margin as a result of the inclusion of certain acquisitions, which have a higher associated cost of revenue.
The increase in selling general and administrative expenses.
So as a result of both inorganic and organic growth.
Continue to invest in the business, including in distribution and technology.
We believe these investments will continue to drive our growth.
Adjusted EBITDA increased by 97% in the third quarter to.
The $89 million.
Adjusted EBITDA margin was 44% in the quarter compared to 43, 7% in the prior year period.
Net finance costs decreased by $95 million, primarily as a result, the $83 million and noncash finance costs in Q3 of 2020, resulting from the IPO in September of last year as well as the reduction in debt since that time.
Net income for the quarter was $28 million or <unk> 19 per diluted share compared to a net loss of $78 million or <unk> 88 per share in the third quarter of 2020.
Adjusted net income was $62 million or <unk> 42 per diluted share compared to $16 $5 million or <unk> 17 per diluted share in 2020.
Our cash position and cash generation remained strong.
Operating cash flow for the nine month period was $202 million compared to $49 million for the comparable prior period.
As at September 32021.
Cash of $289 million.
All amounts outstanding under our credit facilities was $512 million.
Our balance sheet remains solid and does not reflect the impact from our U S. IPO on October six which resulted in net proceeds to the company of $411 million.
Furthermore.
Our $385 million revolving credit facility remains undrawn.
Regarding us with flexibility as it relates to our M&A strategy.
I will now discuss our financial outlook for the fourth quarter and full year 2021.
Refer you to our forward looking information disclosure in our Q3 earnings press release and our MD&A.
For the fourth quarter, we expect total volume of between 25, five and $26 5 billion.
Revenue of between 204 and $210 million in it.
Adjusted EBITDA of between 86 and $90 million.
And based on our performance for the three and nine month periods ended September 32021 as.
As well as continued momentum in the business.
Raising our full year outlook and now expect.
Total volume of between 90 and $91 billion.
Revenue of between 717 $723 million.
And adjusted EBITDA of between 312 $316 million.
The updated financial outlook for both the fourth quarter and full year include the recent acquisitions of Mazuma simplex and payment types from their respective acquisition dates.
As Phil mentioned earlier.
While not currently material to our results.
Each of these early stage companies as a core solution set and expands regional and market opportunities for us.
The outlook specifically the adjusted EBITDA.
It reflects our strategy to accelerate our investments in distribution marketing innovation technology as well as the infrastructure, resulting from the acquisition of Missoula.
We are also reiterating the medium and long term growth targets, we disclosed last quarter of total volume and revenue growth in excess of 30% annually in the medium term.
And adjusted EBITDA margin greater than 50% over the longer term.
We're very excited about the remainder of this year and what lies ahead for <unk>.
We're now happy to answer your questions.
Operator, please open the lines for Q&A.
Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
Confirmation tone will indicate your line is in the question queue you.
You May press Star two if you would like to remove your question from the queue.
So participants using speaker equipment, it may be necessary to pick up your handset before Christmas turkeys.
Please while we poll for questions.
And our first question comes from the line of George <unk>.
With Cowen.
Please proceed with your question.
Hello, George are you there on the line.
Your line is live with you there.
Sure if you're on mute.
Okay and for George is not on the line.
Please go ahead with the next question.
Our next question comes from the line of Sanjay.
Zach Ronnie K B W.
Please proceed with your question.
Thanks, Good morning, and congratulations on the listing I guess my first question is the organic growth. Obviously, you guys have been doing quite well there.
Tracking well above the 30% target long term targets.
Can you just talk about.
The M&A strategy sort of feeding into the organic growth, if any and I understand the newer deals are going to help.
And then how.
Well youre set up in the future to sort of out do those those expectations as we've seen prior thanks.
Yes. Good morning, guys. Thank you so for on a pro forma basis, we saw a 54% growth in the quarter when you unpack or M&A strategy, we've been very clear to always look at how do we enhance our capabilities how do we grow our geographic presence and how do we add scale into the markets that we're subscale and we have executed on that when you look at the acquisition.
<unk> that we closed this quarter Mazuma, which we've talked about in the previous quarter.
The bank to bank payment opportunity that we expand from our acceptance capability to our customers. We think is critical in terms of wallet share opportunity in terms of flexibility as well as offering to our customers. While its early stage, we believe mazuma.
Play an important part to our U S growth story at the same is true for simplex. When you look at simplex has risk as a service and expand our solution stack and our capabilities to our customers, which today they may be using a risk of 5% or Florida or other where we can provide greater capabilities to them through the single integration and then turning over to paint.
<unk> has a wonderful team in Latam, where we felt subscale great leadership that we've added.
And really focused on building out our merchant of record opportunities and expanding throughout the region. So all of them today are early stage, but we believe.
For the upcoming years, they give us a wonderful platform for continued organic growth.
Got it.
And then when we think about any potential M&A going forward can you give us a sense of sort of what the flavor is for some of the high priorities that youre looking to add to your Arsenal in terms of products and then David just one quick clarification question on the revenue guidance range at that midpoint it seems like none.
The deals that you guys closed is very incremental materially incremental is that fair. So should we should think about that organic revenue guidance range is organic.
Sure.
Yes, I'll take the first one Dave on M&A side important for you guys. I appreciate we're not solving growth issues with our M&A strategy, we're really looking at capabilities to help our customers connect better with their customers and that is driving us.
We look at regions today, very pleased with what we're doing in Europe, Americas and Latam. We believe we're subscale in APAC. So certainly has some not some geographic opportunities for us there, but in reality with our strong balance sheet and the profile of our business, we have tremendous optionality and we want to remain entrepreneurial and we wanted to do.
We follow our customers into the regions that are important to them, but we will continue focusing on really enhancing that wallet share expansion opportunity that will drive our M&A strategy if needed any federal.
Hey, Sanjay on your second question.
I think that's right I mean, the way to think about it I'm still talking about these are really early stage acquisitions. So from a contribution perspective, they are still in the early stages.
The 54% organic growth that Phil mentioned I think is a good data point I.
I think I'd also point you to meet.
Medium term growth targets of 30%. That's also a good data point, so I think that that brings in the acquisitions really for the most part provide capabilities that will.
Would be very interesting in the near term.
And as we kind of integrate those businesses into ours and then they also open up other markets. So from a Tam perspective, it really helps as well from a geographic perspective.
Great. Thank you.
Thank you.
And our next question comes from the line of George and me how those with Cowen. Please proceed with your question.
Hey, good morning, guys I apologize I got I got disconnected a lot of a lot of good stuff here.
You went over.
First question.
So when you when you look overall some of your peers have talked about.
Slowing some of attributed uncertainty to the supply chain, which sounds like it's not a real big issue for you can you just talk a little bit about your confidence what what sort of reinforces this view that you're going to be able to outperform relative to.
Keith just some of your peers that are seeing diseases, and maybe somewhat related to that you've been very successful incorporating more and more atms different payment methods and the like as we hear about.
Potentially additional.
No payment methods coming to market I guess account to account does not necessarily mean, certainly not in Europe, but as you have other peers or competitors looking to rollout in payment systems.
Does that give you any pause because that would have any impact to your.
Business or is it just as simple as again, just enabling another another payment tender.
Yes.
Good morning, George Great questions I think from a growth perspective, you have to really unpack our solution stack and what gives us confidence really are the tools that we built and the pace of innovation that we're driving through and how we are assisting our customers and that allows us when we look at pipeline. We look at conversion as we look at market expansion from our current customers and how we're bringing them from country to country.
That drives quite a bit of confidence in our execution and hence the results we're seeing today and in the updated outlook for Q4. So we're really comfortable with where we are we think the additions that we've made in the business be at risk as a service strengthening Latam.
Expanding our merchant of record product capability in Latam, which will be really important to simplify our customers from entering the market.
And then certainly mazuma for direct banking fully integrated and within the cycle of card payments debit card payments direct bank to bank guaranteed or not or ACTH fully reconciled managing payouts and driving those capabilities is what sets us apart and I can't comment on our peers, but I believe our focus on verticals, meaning that we're creating bespoke technology.
<unk> for our customers.
What really sets us apart as well right, we're not selling and helping merchants sell tea cups, and helping online gaming.
We're really focused on our seven verticals and we are leaders within those verticals and we think that is the right strategy. When it comes back the payment methods. It's a very interesting question because payment methods are naturally changing our ethos is to help our customers connect with their customers and so we will always have every relevant payment message for the country that has a medium that is familiar so that the <unk>.
<unk> when he wants to purchase from one of our customers choose what he knows he recognizes the streamline that purchase and so when you look at it cheap out, which we just announced our real time payments that we just announced in Europe as part of our Q4 launches, we're always going to be making sure that everything that is relevant any form of connected with that.
Our customers customers will be provided within that single integration, but more important to that is that we unified the experience and that's very critical guide when you think about all the complexities they pay differently. They reconcile differently they pay different currencies from our merchants operating standpoint, we streamline that so it does if accepting any form of payment really credit Debbie.
<unk> alternative payment method really the entire experience for them from the back office is fully reconciled and we think that is the most important part to making sure that they focus on what's important for them is their business.
Okay. That's great color really appreciate that obviously, we're getting questions around that and then David very quickly I know you guys. Obviously don't manage due to our revenue yield and the like but that was higher than what we were what we had modeled in the quarter. Just curious what drove that is it the.
The inclusion of <unk>.
Simplex and it looks like simplex contributed a little over 3 million $3 5 million or so.
In the quarter say over over a month is that a good number to kind of extrapolate four.
For a full quarter kind of getting you almost a 10 or $11 million a quarter.
Hey, George I think that on the simplex question on the last question I think that's a fair representation.
Of kind of where the business is that but obviously brings a lot of capabilities and opportunity for growth in the future.
In terms of yield and take rate like we've said in the past.
It's not it's not a focus of ours I think really what it comes down to.
Is execution on our strategy I'd say, that's really kind of what I, what I would point to but it's good news is <unk> seen theres going to be fluctuations some quarters. It may be up some quarters. It may be down from a take rate perspective, it's really about the mix of volume and offering to the extent that we add Phil talked about earlier in the prepared remarks, you talked about.
This is a very significant quarter in terms of innovation and deployment from a technology perspective, so as we can continue to innovate and expand our solution set.
And that potentially drives.
Take rate on on either new volume or existing volume. So it really depends on where it all comes from at the end of the day, what we've said and it's true we're really out there to solve the needs of the merchant and because.
Our platform is of a certain scale.
Has that operating leverage.
It drives growth gross profit dollars and those gross profit dollars have you know.
Can can drive EBITDA dollars as well.
That being said, we continue to invest in our business.
Whether it's marketing and technology and direct sales those are some of the key focuses right now so.
Hopefully that gives you a bit of color and answers your question George.
That's great nice job guys. Thanks.
Thanks George.
And our next question comes from the line of Bob Napoli with William Blair. Please proceed with your question.
Good morning.
David.
Congratulations on strong results and on the U S listing.
Yes.
Brian.
It seems like you're.
Gathering speed.
Although the walk to the running U S sports betting I'd love, a little more color, even a lot of wins, there and what you think that opportunity.
Momentum you have going into 'twenty, two and 'twenty three and how important that is contributing we can contribute to long term right.
Yes, Thanks Paul.
We've always taken a cautious approach on U S gaming I want to first congratulate our team for what was achieved this past quarter, just a monumental delivery of product to enable gaming.
And that has allowed us to engage really with the who's who across the board from current customers that are looking to expand from clients.
That are operating that are looking at their entire payment payment ecosystem and more importantly in terms of the flexibility of our product offering and the fully integrated experience on multiple forms of pay and reconciled and payouts I believe we have a very very strong offering for U S gaming and Thats why were walking today, we've had some significant successes.
This quarter Q4 that we're seeing some very interesting momentum in but from our perspective U S gaming will remain.
Not quite material in 2022, we think we'll see an inflection point in 2023, but most importantly, though we are alive, we are executing and we are engaged today.
With the who's who in U S gaming, so really pleased with where we sit right now.
Thank you I appreciate that just on.
Monthly it seems like a number of the payment number of payment companies had slowdown in September and then it.
Seem to Reaccelerate in October have you seen.
Similar trends.
And.
How was how did October look versus September and then just my last question on card issuing it's not it's a new product line.
Was it was pretty interesting.
The thoughts around the opportunities in card issuing.
Yeah from a volume standpoint, it was the opposite for US we saw a softer July with an uptick in August and September and certainly continued momentum into <unk>.
Into October as well as month to date in November.
From a volume perspective, what's really exciting to see what's happening across our portfolio.
In the quarter there were two integrations on each side that slipped into Q4, which actions activated so we're very comfortable with what we see on the volume and the momentum for card issuing theres a lot of platforms for us around card issuing so it's still early innings, we have less than 100000 cards issued.
So we're starting that process today, it's predominantly Europe, but obviously, we have a roadmap.
To bring that into all of our markets and most importantly, it allows us to offer merchants flexibility with respect to expanding our payout business, simplifying and reducing cost for the paint and creating relationships with these customers across key verticals. So we're actually really excited about what card issuing does from a product offering perspective.
And the uniqueness that we think will create and then if you take it one level higher all.
All your opinion or your risk management all your.
Transaction authentication enhance authorizations.
As well as all your payouts and card issuing we become a really sticky vendor to our customers in a critical vendor that allows us to help them focus on what's important to them growing their business. So we think card issuing as an important aspect. It's obviously very early for us, but we will start gaining momentum.
Predominantly it will be probably more meaningful in 'twenty, three but we'll start seeing some momentum in 'twenty two.
Thank you appreciate it bill.
Thanks, Bob.
And our next question comes from the line of Jason Kupferberg with Bank of America. Please proceed with your question.
Thanks, guys. Good morning, I, just wanted to start by asking about the push into Latin America and how much of that is focused on building our cross border business in that region versus any kind of domestic acquiring and on the cross border side do you see the opportunity more to bring that your existing merchants into the region or to actually win new.
Global merchant to perhaps or using a different provider currently for their Latam payments.
Hey, Jason Great question.
For us we.
When you look at Latam and it's the same for every geography. The first element that drives US is how do we help our customers enter or operate within that market. So first naturally is taking our customers that are born elsewhere entering.
As we look at payment does now we also have feet on the ground, which allows us to engage with clients that are in market and Latam. Obviously every every country has different alternate payment method requirements.
Different issues around how merchants accept and how they transfer funds from country to country. So it'll be in market and then lastly, it's going to be Latam out helping some of these amazing companies that we service now be it <unk> or cabbie and others within the region as they seek to expand outside of Latam.
The biggest element for us in Latam is the merchant of record product.
That some of our peers do very well, we think that is going to be critical in terms of simplifying the complexity of operating in Latam.
Some tax considerations the repatriation considerations and we think it is going to be an important push for us to continue developing in the region.
Okay. Thanks for that and then just wanted to ask a follow up on the payment volume in the quarter I think it came in kind of near the lower end of the guidance range was just curious I'm curious if there were any callouts. There I think you had mentioned in answering a previous question some slippage in ACTH activations.
A integrations there into Q4, so I don't know if that was a factor or anything from a vertical perspective.
Yes that actually is the exact factor there is some expected integrations, which slipped from August to October one so they have since gone live.
The rationale for slightly lower volume, but overall, we're really pleased with Q3.
Okay, just a timing issue then okay terrific. Thanks, guys.
Thanks, Jason.
And our next question comes from the line of Joseph <unk> with Canaccord. Please proceed with your question.
Hey, guys. Good morning, Nice results just wanted to drill down just a little bit more on simplex and.
Risk as a service.
Relative to exactly what simplex is bringing versus what you had before and then house simplex perhaps helps.
On the gaming side versus.
Some of the other vertical markets and then just one quick follow up.
Good morning, Joe, Yes, happy too.
If you look back in simplex to date they bridge the Fiat World to the digital asset World.
So their risk as a service guarantee effectively underwrites.
The customer purchased guarantees to funds. So there could be instant delivery of any digital asset which is really important.
Think about the frictions between Scott and risking in digital isn't real time, which could be at all with broad and a fantastic job really.
Second to none from a profile perspective, a conversion perspective and from a ease of use perspective. So it really excited on what had they've been predominantly focused digital asset for our perspective. This risk is probably the best we see and we are delivering it out is because the service. So we can offer to our customers across every <unk>.
Nicole.
Score transactions and the ability for us to assume risk on those transactions should that be the desire is going to be across the board just for cros.
Across the organization.
Value added solution that our customers choose us.
Thanks.
Okay, that's great and then just on the organic growth.
Can you just update us on what Youre still just really impressive.
Where.
Maybe a little bit of a breakdown there between just kind of core payment volume growth with existing customers versus.
Add ons of new functionality into the base versus kind of brand new logos. Thanks a lot.
Yeah.
We will do lock Jones case, right. So for US we would love to keep at it.
Simple.
We see momentum across the board essentially becomes our performance is driven by our customers.
A significant portion of growth comes from expanding relationships with our customers and expanding.
Geography or capabilities, we are truly focused on connecting customer their product road maps that we can adhere to.
What they need and how to help them.
So that is part of the fabric of the organization from a new logo perspective, we've been making meaningful investments and highlighted that during my prepared remarks, but the pipeline. The most active discussions that we've had across the board and really the who.
Recall that we operate in.
And both of them are in tremendous momentum highlights new logos signed in a year.
Motive.
Our history is that when you sign a customer it typically takes several months for them activate could go live. So you really see the benefit of this year, you're guarded in year benefits next year.
Look at what we sign.
And depth of the conversations you're having today really excited about continued profile organic growth.
Great. Thanks, a lot Phil.
Thanks, Dan.
Yeah.
And our next question comes from the line of Paul Treiber with RBC capital markets. Please proceed with your question.
Alright, thanks, very much and good morning.
Speak about the philosophy around press releases and customer wins. It seems like the company has been more active in press release and customer wins is the philosophy does that change or are you seeing a higher frequency of customer wins at the moment.
Great question, Paul actually a little bit of both.
<unk> always been heads down on executing I think marketing and positioning has been an area that the company lacked.
Welcome to Chief Marketing Officer, and we are making investments across the board in marketing and so youll see the pace.
A refresh of our brand the pace of marketing, making sure that we are top of mind and strengthening our brand awareness for our salespeople is it continued expanding the geographies that we operate in so a little bit of both certainly in an area that we we are going to be making additional investments.
Q4 and in 2022.
That's helpful to know.
Just in regards to the sales force expansion and your and your sales pipeline can you speak to the trend that you've seen in win rates, particularly as the Salesforce has ramped up become more familiar with your target customers in your value proposition.
Yes, Great question I think it's more important to take it one step further from win rates is that you engage with customers and some conversation could last years, Paul and some conversations can last weeks really just depends on where they are and so the way we end up looking at it is obviously what is closing in a particular quarter and what are the needs in discussions for particular customers.
So we focus on large established customers, meaning that we are often replacing.
Or.
Coming next to another payment provider and so it always depends on what the need is and what country. They are going into and what they're looking for from a solution standpoint. So it's not just a win or loss, it's a discussion and that probability of close changes depending on the roadmap of where that customer for example, I'm entering United States in October Oh, no it's going to be.
Next November that is not a loss thats just a dependent on when that customer goes live. So that's the first element. The second element is we actually build it by revenue metrics per body.
And it takes it takes between six to nine months from Onboarding to start seeing positive momentum in each individual.
Folks that we have around the world. We are at that point right now so it's exciting to see.
The expansion of the pipeline the conversation that we're having and really the productivity of the workforce and I think that's what excites us quite a bit of what we're seeing.
In all the geographies that we are operating to the conversations and productivity.
The presentation that we're doing so like where we see we're kind of in that first year inflection point and I highlighted in the prepared remarks, it's an important inflection point because really of the time that the sales force has been active and the opportunity there starting to present themselves.
Okay. Thanks for taking my questions.
Thanks, Paul.
Okay.
Our next question comes from the line of Paul steep with Scott <unk> capital. Please proceed.
<unk>.
Great.
Just a quick clarification on some of the investment commentary and what's baked into Q4, David maybe you could talk a little bit about how much. This is you're accelerating the plan or pulling forward investments. We can make next year based on what you've already seen with customer wins and then I've got one very quick follow up.
Hey, Paul Good morning.
Look consistent with what we've said in the past, we're seeing really strong momentum.
Execution on our plan.
So what we decided last quarter was to pull forward some of the investments that we have planned for 2022.
With respect to direct sales and other areas marketing is a new addition in terms of the investments that we're planning to start implementing more so.
And in the fourth quarter of this year.
It's really no no significant change I'd say other than that.
A bit more focus on marketing as we have our chief marketing officer joined we're really excited to have him on board.
That's that would be the only I guess incremental.
Consistent with.
What we said in the past as well for them and you know how that translates to an EBITDA margin. We're still in this quarter. We were at 44%. That's the right range and that's kind of where we're providing outlook for Q4, so very consistent overall with the past, but we will continue to take the incremental dollars, we're seeing from a topline perspective and reinvest it back into the business.
To capitalize on the success that we're seeing.
And then not to.
To pull its too far forward, but we're going to lap some exceptionally strong organic growth that you printed in Q4, one and two of this year I think Phil's comments gave us a good sense for the mix and some of the what Youre assuming no to the supply chain is there anything we should think about just in terms of ramp up of <unk>.
These new customers or sort of variability that we want to do.
Be aware of as we lap some of those comps thanks guys.
I don't think Theres anything specific Paul.
0.2.
There is certainly a ramp up time for customers, but that's normal that hasn't it hasn't changed or you argued in any way.
In fact, we're getting better at it if anything and then the other part as well on the direct sales team. So just mentioned on the previous questions around the six to nine month ramp up to get direct sales going.
But yes, we.
We're very excited with the momentum we're seeing.
We're very excited about the white space that we have in front of us.
The increase in Tammy think about payments has in Latin America, and what that does there.
Those small today, we see a lot of opportunity and then some of the capabilities provided to us through the other acquisitions simplex Mizuna. There is there is a nice opportunity ahead of us both from a capability perspective, but as well from a geographic perspective.
Okay. Thank you.
Our next question comes from the line of <unk> with.
Credit Suisse. Please proceed with your question.
Great. Thank you. Thanks for taking the question I wanted to spend a little bit of time.
Related to slide nine in the slide deck, which is.
Released a month or so back with some great new logos I don't believe you had previously disclosed before that and I'm sure investors are taking note of many of those brands on there, but it kind of brings up another question I think we've covered a lot of the modeling stuff on the call. Maybe you could just talk a little bit about just sort of reeducating in terms of the.
The share with some of these customers and bringing it to life. These types of customers. These big brand names that we know are they often working with numerous local and regional merchant acquirers, maybe a few of your more global competitors as well and when Youre winning these logos is the RFP process opened.
Up for maybe a certain region or a certain product.
Just to bring it to life in terms of how you win these logos and then related to that I know, it's really hard to get to but on an aggregate basis could you just directionally talk about how penetrated you might be within this space.
Good questions I think I think Tim it's very much all of the above it really just depends I think when you look at it from a foundation perspective.
These customers are typically operating regionally they outgrow the regional provider and then they look at how can how can a company like a new vein, helping globally and I think thats the entrance of where we come in.
We compete mostly with the regionals that cannot service their customers.
It's differentiating from our integrations versus some of our global peers is that we're able to dismantle the payment flow and drive of the spoke integration.