Q4 2021 Nuvei Corp Earnings Call
Good morning, ladies and gentlemen, and thank you for standing by and welcome to news Corp's fourth quarter 2021 earnings call. As a reminder, this conference call is being recorded I would now turn the conference over to Anthony Gerstein, Vice President and head of Investor Relations for New Weil. Please go ahead.
Sir.
Thank you operator, and good morning, everyone and thank you for joining US with me today are Philip there chair and CEO and David Schwartz CFO .
As a reminder, this conference call is being recorded and webcast and is copyrighted property of New Bay and.
And rebroadcast of this information in whole or in part without written consent of <unk> is prohibited.
This morning, <unk> issued a press release announcing financial results.
For the three month period and full year ended December 31 2021.
The release as well as an accompanying presentation is available in the Investor Relations section of the company's web site <unk> dot com under events and presentations.
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 movies industry.
Differ materially from 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 anticipated results or performance can be found in <unk> filings with the Canadian Securities regulatory authority and on the company's website.
Our discussion today will include non I FRS measures, including adjusted EBITDA adjusted net income adjusted net income per share and free cash flow.
Management believes non I FRS 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 iff's financial measures.
Reconciliation of these measures to Iff's measures is available in our earnings release and MD&A.
We'll open up the call to your questions after our prepared remarks.
With that I'll now turn the call over to Phil.
Thanks, Anthony and thank you everyone for joining US today, we had an excellent fourth quarter delivering results ahead of our outlook and capping off an exceptional year in which we advanced our strategic initiatives, while achieving an unprecedented number of milestones along the way for the fourth quarter total volume increase of 127% revenue increased 83% and adjusted EBITDA increased seven.
The 8% year over year for the full year 2021, total volume increased 121% revenue increased 93% and adjusted EBITDA increased 95% year over year on an organic revenue basis, which excludes revenue from acquisitions completed in the trailing 12 month period increased 55% and 61%.
For the fourth quarter and full year, respectively.
Our net revenue retention rate was 146% for the 12 months ended December 31 2021.
Yeah.
Our consistent revenue growth profile combined with our exceptional free cash flow generation and strong balance sheet is class leading in our opinion when comparing debate and many other fintech companies. We've made tremendous progress transforming the company into a leading global payments platform. Most importantly, our tenant is large and growing and we saw so much opera.
Charity ahead of us to.
To continue to accelerate our momentum we've announced several promotions and leadership changes across our organization.
First was appointed to president of new way of newly created global role you've always dealing with the new Hay group of companies for the past 15 years, and his leadership and experience and valuable.
These worldwide product sales marketing client engagement and a like.
We've also promoted for full Mora, who joined the company in 2014 as Chief strategy Officer can use that as a global expansion officer practice.
<unk> has moved to Singapore, and he was responsible for driving new ways of international growth and target markets across Asia Pacific The Middle East and North Africa.
Third we've appointed an Italian cabela, a cofactor simplex, who joined through our acquisition simplex last September to Chief data and analytics officer as we continue to grow our data led services.
I also want to welcome all 75 of our new teammates who joined US in the fourth quarter from around the World. We're excited to have you as part of the Newberg family, which totaled $13 68 at December 31 2021.
We remain steadfast in our mission to make the world a local marketplace by growing our modern scalable modular technology with our key growth pillars, namely expanding our geographic reach growing with our existing customers accelerating new client wins, and finally exploring inorganic opportunities that drive further value.
For our customers.
As you know our focused verticals each have inherent growth longevity and a propensity to operate globally.
Our technology and expanded geographic reach is helping when customers in all our core verticals, which include regulator online gaming social gaming online retail digital goods and services financial services travel and now digital assets in crypto currencies.
We're excited about the progress, we're making across all verticals and in our earnings supplement and press release today, we are providing a onetime disclosure, which includes showing revenue contribution and growth by vertical for the full year of 2021.
While we have historically discussed concentration by vertical in terms of gross profit dollars, which continues to be no more than approximately 21% for any given vertical our additional disclosures provided today focus on revenue to remain consistent across all onetime disclosures.
As you'll be able to see new ways experiencing momentum across all verticals, but we are especially pleased with the progress we're making in our focused global verticals.
At our core we are a technology company, we are a payment innovator driving real world solutions that make a material difference to our customers' businesses.
It's crucial to understand is that our modern scalable modular technology stack addresses the needs of our customers with an unprecedented number of solutions offer uniquely as modules Ala Carte that go far beyond acquiring.
Our technology stack has been purpose built from the ground up by our nearly 500 software engineers and product experts supporting our exceptional growth.
Having our own acquiring licenses in multiple jurisdictions principal membership with the card schemes and our own processing platform allows us to dictate our own roadmap and is a primary reason we have been able to successfully accelerate our product innovations. In fact, we are one of the few truly global payment platforms.
Hey.
Available la Carte as modules our platform offers our customers incredible flexibility as they look to simplified efficient technologies.
Solid global vendors and streamline their back office functions, while achieving cost and operating synergies.
While we intend to unpack these modules and respective features in detail at our upcoming capital markets day I thought it important to highlight a few key modules.
The journey begins with the flexibility of our API solutions, allowing our customers to connect to our platform for their global operations supporting enact online and in store customer engagements or preferably our customers can elect to use our low code cashier simplifying global commerce.
And instantly offering our entire toolkit wildly scoping PCI burden.
Once integrated our clients can use our solutions as is appropriate for their business model and this could include our advance authentication tools to comply with enhanced customer authentication mandates around the world available as plug ins, meaning that our authentication tools are available with in conjunction with any third party acquirer.
Our global payment Gateway, which offers payment orchestration and connectivity to over 200 markets around the world.
Our single global processing platform connected directly with the card schemes.
Our local acquiring now offered in 46 markets globally, we simplified onboarding and contracting.
Our open banking payments for faster cheaper and instance, Heath on Europe .
Extra payments in the U K and ACTH same D C H and are keeping in the U S.
Our more than 530 alternative payment methods, including cryptocurrency acceptance.
Our instant payouts solutions across multiple payment mediums.
Our risk as a service, enabling transaction, scoring mitigation and now full guarantee on both the ECH and card acquiring.
Our debit and very soon prepaid card issuing.
Our advanced currency management solutions to help localized product offerings, our rich data reporting to enhanced business intelligence.
Our extensive reconciliation tools to streamline back office functions across all regions.
Our on and off ramps solutions for crypto currencies, and if Ts and defy supporting over 109 different coins via 89 different Fiat currencies. In addition to a long list of value added capabilities that build deep moats with our customers.
And while the list is long I thought it worthwhile to highlight our native commerce platforms, which includes all key components that our customers require topic globally.
Each individual module has its own independent addressable market.
And that's why you can't simply compare requiring only Pearson hubei as our modules expand our Tam and differentiate new way from additional and legacy acquires and remember to enable all of this functionality customers would need multiple vendors per country, resulting in increased cost complexity inefficiencies, which would impact their flexibility and ultimately.
Hinder their growth opportunities.
Providing all these services is why we went for example, combining reschedule service acquiring and payouts simplifies the experience for both our customer and their customers as we manage the complete risk free process opinions, regardless opinion medium.
Reconciliation dry real time payouts to our customer's customer and net settle to a customer eliminating back office workload, allowing our customers to focus on what's important growing their business.
So what each module can be consumed individually combining them together creates an incredibly powerful offering to our customers.
Their customers a new way.
We believe our approach to offering solutions as individual modules provides greater flexibility and allows us to engage with customers based on their specific need at the time of on boarding.
And grow with them as their needs and requirements change, it's a foundation to our land and expand strategy and when drives our net revenue retention rate, which I'll highlight in a moment.
We've broken out processing revenue into acquiring and modular technology revenue to help you appreciate the breadth of our technology and the relevant contribution to our growth trajectory.
For the full year 2021, acquiring represented approximately 62% of total revenue an increase of 73% from the prior year, while modular technology revenue represented 38% of total revenue increasing 138% from the prior year nearly twice the rate of acquiring.
Because of our modular technology and its significance to our success you can see why comparing new way to other requires is simply not accurate in our view. Most importantly, we're not standing still as our pace of innovation is accelerating.
At the same time, our technology is scalable in 2021 our transaction count grew 77% from 2020.
Breaking it down one level deeper credit card transactions increased 51% debit card transactions increased 21% and alternative payment methods increased 286%.
Furthermore, we have ample capacity to continue processing significantly more going forward.
And because our technology is fully proprietary we customize our solutions to any customer vertical or geography. This flexibility is paramount as we continue scaling and growing our customer base around the world.
The takeaway here is that new base technology is really second to none in our opinion, unlike other global payments providers, including Igen and strike, we believe customers prefer our flexibility and our modular offering we are one of the few leading global payment solution providers with this depth of capabilities, which.
Driving our overall performance and showing up in our new customer wins.
Which I'll address momentarily.
I'll now walk you through our growth pillars in greater detail to help you appreciate our focus momentum and growth trajectory I would also describe how we've expanded our Tam and explain why we're so confident in our outlook for this year and beyond.
First let's talk about geographic expansion many of our customers may be expanding country to country growing not only in one market, but in many markets around the world.
As we enable more geographies it allows our customers to seamlessly and immediately access those markets. The other existing integration into new vein and this is where we absolutely shine, we normalized customer experiences from market to market. So they could focus on growing their business and coupled with our single integration.
As we enable more countries our clients can activate them without any technical integration whatsoever.
We offer connectivity and over 200 markets, making sure our platform can support our clients everywhere they want to be.
Additionally, we now offer local acquiring in 46 markets with simplified Onboarding contracting client services and standardized reporting.
As part of our geographic expansion strategy. We also continuously seek payment Situtions licenses card Association memberships and acquiring licenses in order to better support our customers. We have obtained our visa license in both Hong Kong and Singapore, We continue to focus both in Asia, and Latam to expand herself acquiring.
As this occurs it allows us to increase our capabilities to providing gateway our routing hold me to provide full stack and then offering this strategy in unison with our technology is another key pillar to driving our impressive and R. R.
Embedded in our geographic expansion is a change in regulatory framework around the world in certain key focus verticals. As you know we believe we are in the very early days of online gaming and sports betting not just in the United States, but also in Canada and hopefully soon in Brazil, we're executing well in these markets and our momentum in the U S has been accelerating.
In 2020 , one we launched our global payments business unit in North America, and significantly enhance our capabilities in a lot of time with the acquisition of payment test.
We have commercial teams across both regions and coupled with key product launches. We now support most of our modular offerings in both geographies dramatically expanding our Tam from 2020.
And naturally we are not stopping there our mission is to make the world a local marketplace and what we're focused on scaling and our current regions. We're also excited about meaningfully expanding our presence in key Asian markets for.
For perspective, looking at our revenue by region for the full year 2021 EMEA North America, Latam and APAC represented approximately 54%, 42%, 3% and 1% of their revenue respectively and from a growth perspective, EMEA North America, Latam and APAC all inquiry.
<unk> hundred and 23%, 64%, a 112% and 16% respectively.
Our second growth pillar is growing with our customers.
When you bring it altogether approximately 80% of our growth in 2020 , one king from capturing greater wallet share from our existing customers.
And these are driven by changing consumer behavior.
Advancing regulatory frameworks are customers' own growth trajectory, our technology and our new geographies.
This is best reflected in our overall net revenue retention rate of 146% for the 12 months ended December 31 2021.
What's most interesting and compelling is that when you unpack. It further you'll see that our global E Commerce direct channel hadn't enter our of 179%, which is a true testament to the success of our investment in this channel.
Our global E Commerce direct channel is the largest in terms of revenue contribution and is growing the fastest by contrast, our north American small business portfolio and our E. Commerce reseller channels are slower growth and a smaller part of our revenue.
Naturally as our global E Commerce direct channel continues to expand.
So too will our growth.
With our new geographic capabilities in North America, and Latam, we feel there remains a significant opportunity to cross sell within our current customer base and we're starting to see this with some of our existing gaming customers, who are entering the U S and Canadian markets for example.
The next growth pillar is winning new customers as you may recall, we have frequently spoken about being under distributed and we've since been accelerating our investments in expanding our direct commercial teams globally. We've done this because of the complexity the breadth of our technology and the types of customers. We are targeting in addition to its global nature.
Or simply requires a direct sales force.
Our investments are yielding exceptional results with so much more to come our objective remains to be local to our customers around the world and remain focus on continually expanding our sales force in every region to make sure we have global coverage.
We manage our commercial teams by having regionally vertically focused sales teams are in country in time zone and in language supported by a team of local solutions 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 challenges we are solving for them and the sophistication and capabilities of our leading technology.
Looking back we started with the commercial team of about 10 salespeople and have now expanded to more than 100 at the end of 2021 with a target of multiplying again in the coming years, mostly as a result of our expanded Tam opportunities as I mentioned earlier.
In 2020, new in your customers generated $42 million in revenue. This cohort subsequently grew in 2021 to more than 190 million in 2021 new in your customers represent in excess of 71 million, which represents a 69% increase in new business.
2020.
You can appreciate that the 2021 core is expected to significantly grow in 2022.
And our momentum continues as we see exceptional depth in our pipeline. We are engaged with the who's who across all our key verticals and geographies, we're expecting a very strong performance in this area in 2022.
Alongside our investment in direct sales is our increased investment in marketing perspective were increasing our marketing spend in 2022 by up to approximately 20 million compared to 2021, we expect this investment to yield greater brand awareness with the objective of ensuring new way is associated with other global providers.
The increased marketing spend is fully considered in our adjusted EBITDA look for the year.
Remember our land and expand strategy is also relevant to new sales and allows us to engage with customers around the flexibility of our modular technology offerings, which means new they can build relationships with customers and grow with them accordingly.
Turning now to our last strategic growth pillar, which is M&A.
We don't do acquisitions simply to buy short term revenue growth rather our acquisition strategy follows three strict criteria as we look at adding new geographies.
Capabilities.
And or scale to support our long term growth.
We completed four acquisitions in 2021, Ace Commerce, Mazuma simplex and payment does and we are pleased with how all of these acquisitions are performing what's most exciting is that each one of these early stage businesses strengthens our technology and sales proposition.
Additional growth opportunities and capabilities to our platform for the long term.
For 2020 one we.
We reported revenues for these four acquisitions of approximately $73 million, representing approximately 10% of our revenue.
Going forward, our exceptionally strong balance sheet and low leverage provides optionality and flexibility as we continue exploring future opportunities.
With additional onetime disclosures today and the double click into our growth pillars, you should have a much better understanding as to why we are unique when compared to others. In this space and appreciate why we're so excited about our future.
We're also looking forward to sharing even more detail with you at our upcoming capital markets Day later this month.
This morning, we are announcing that the board has authorized a share repurchase program pursuant to which they can purchase an open periods in one or more transactions and at its discretion up to approximately $6 6 million subordinate voting shares over the 12 month period, which represents approximately 10 per se.
<unk> of the public float.
The NCI does not obligate new way to acquire a specific dollar amount or number of shares and may be extended modified or discontinued at any time.
Also this morning, we are introducing our financial outlook for the first quarter and full year 2022, which Dave will walk you through in greater detail.
We are also reiterating the medium and long term targets previously provided of total volume and revenue growth in excess of 30% annually in the medium term and adjusted EBITDA margins greater than 50% over the longer term.
Before turning it over to Dave I want to briefly touch on the tragic events in the Ukraine.
Our thoughts are with the innocent people of Ukraine as it relates to our business. We are of course complying with all global sanctions and confirm that our exposure there is negligible.
We've also announced that we will match any and all employee donations to any accredited charity supporting Ukraine up to a total of $500000. Furthermore, I've extended our global HR teams to help our employees across neighboring countries mature theirs and their family's safety.
Finally, I want to recognize all the fabulous and hard work of all of our employees, who contributed to new base success, each and every day.
Is invaluable and it's a privilege to have you all the shareholders to our global <unk> program, which we introduced companywide in November .
We also recently implemented a policy that each time, we beat our outlook our employees receive an additional two and a half days vacation.
You guys are Rockstars I'm grateful for your dedication and contribution to our mutual success.
In closing I'll reiterate how pleased I am with our results and the progress we're making across the entire company I Love, where we sit as a company today and I've never been more confident and optimistic about our future with that I'll turn it over to Dave to discuss our financials and our financial outlook for 2022.
Thanks, Bill and good morning, everyone. Let me start with what we believe to be the four key financial takeaways from our fourth quarter.
As a result of the power of our platform. We grew revenue year over year by 83% and on an organic basis. This translates to revenue growth of 55%.
Scalable operating model drove adjusted EBITDA margin of 43% agenda.
Generated a free cash flow of $82 million.
As you can see we had another great quarter.
Now, let me get into the details.
In addition to the four key takeaways.
Fourth quarter represented some new milestones for another day.
Notably, it's the first time, a total volume exceeded $30 billion in revenue exceeded $200 million in a given quarter.
More specifically total volume increased 127% to $31 $5 billion and was above the top of our outlook range of between $25 five of $26 $5 billion.
The variance versus our outlook is in part due to certain recent large wins in the government and charitable services sector, which also tend to have higher volume in Q4.
For the quarter revenue increased by 83% to $212 million compared to our previously provided outlook range of between 204 and $210 million.
Organic revenue.
Which excludes revenue attributable to acquired businesses.
Period of 12 months following the acquisition.
Excluding revenue attributable to divested businesses.
It was $179 million, representing 85% of our revenue and which grew by 55%.
Previously.
We presented different adjusted revenue and non <unk> measures.
We continue to execute on our acquisition strategy and align with other companies in our industry, we believe organic revenue and organic revenue growth, thus portrays our organic growth.
And it's more useful information about comparable growth in the period.
Take rate in the fourth quarter was lower due to higher ticket transactions, such as property tax payments and charitable donations relating to the new client wins I just mentioned.
In many cases, especially for property taxes or fees charged are typically fixed transaction fees there.
Therefore, these transactions have a lower yield.
However, as we stated in the past our focus is on meeting the needs of our customers and driving incremental gross profit dollars through our land and expand approach.
Gross margin in the fourth quarter was 76, 8% compared to 79, 7% in the fourth quarter of 2020.
The change in gross margin is primarily as a result of the inclusion of certain acquisitions, which have a higher associated cost of revenue.
In terms of gross profit for the quarter, we generated $163 million, which represents more than a $70 million increase as compared to the prior year period.
Selling general and administrative expenses increased by $72 million.
A result of both organic and inorganic growth.
The largest contributor to the increase in SG&A was share based payments, which increased by $30 million, primarily due to awards to employees, who joined US as part of the acquisitions completed during the third quarter.
And other employee grants made in the third and fourth quarters, including the annual Elfa grants for our entire employee base, which occurred in the fourth quarter.
Employee compensation other than share based payments increased by $21 million.
This is as a result of the investments, we're making in the business, including distribution and technology.
As well as increased head count of approximately 280 team members and their associated costs relating to the four acquisitions completed in the year.
Commission expense increased by $10 million, primarily due to the acquisition of based commerce as well as the increase in commission based volume and revenue from organic growth.
Adjusted EBITDA increased by 78% in the fourth quarter to 91, and a half million dollars as compared to the outlook range. We previously provided of between 86 and $90 million.
Adjusted EBITDA margin was 43% in the quarter compared to 44% in the prior year period.
And towards the top end of the outlook range.
Net finance costs was $4 $5 million compared to just over $1 million in last year's fourth quarter, and that's mainly due to increased borrowing costs related to the acquisitions, we made in 2021.
Income tax expense in the quarter was $7 $5 million, which represented an effective tax rate of approximately 38%.
The reason for the higher effective tax rate is primarily due to an increase in non deductible share based compensation expense.
The share based expense is expected to continue the effective tax rate will also continue at this level everything else being equal.
Net income for the quarter was $12 $3 million or seven cents per diluted share compared to $22 $6 million or <unk> 16 per share in the fourth quarter of 2020.
As I mentioned earlier this year's fourth quarter included a $30 million increase in share based expense, which represented approximately 20 cents per diluted share.
Adjusted net income was $76 million or <unk> 47 per diluted share compared to 46, and a half million dollars or 33 cents per diluted share in the fourth quarter of 2020.
I will now turn to our full year results.
Total volume increased 121% to $95 $6 billion from $43 $2 billion in 2020.
With e-commerce volume representing 86%.
Revenue for the year increased 93% to $725 million.
$276 million in 2020.
Gross margin was 79, 6%.
Got to $81 six and 2020.
Similar to the fourth quarter.
The change is primarily as a result of the inclusion of certain acquisitions, which have a higher associated cost of revenue.
SG&A expenses increased by $196 million as a result of both organic and inorganic growth.
Of that commission expense increased by $58 million.
Employee compensation other than share based payments increased by $52 million.
And share based payments increased by almost $43 million.
Adjusted EBITDA for the year increased 95% to $317 million.
Up from 163 million.
In the prior year.
Adjusted EBITDA margin was 43, 8%, which compares to 43, 3% for 2020.
Net income for the year was $107 million or <unk> 71 per diluted share compared to a net loss of $104 million or $1 eight per share in 2020.
Adjusted net income was $249 million or $1 69 per diluted share compared to $89 million or <unk> 85 cents per diluted share in 2020.
Looking at our balance sheet and liquidity for the year, our cash position and cash generation remained strong.
Cash flow from operating activities for the full year was $267 million compared to $95 million for the comparable prior period.
Free cash flow, which we define as adjusted EBITDA less capital expenditures.
Increased to $290 million for fiscal year, 2021, representing a free cash flow conversion of over 90%.
As at December 31, 2021 we had cash of nearly $750 million, which includes the net proceeds of $411 million raised from our NASDAQ listing in the fourth quarter.
In addition, we have turned that a $500 million, resulting in a net cash position of almost $250 million with access to an additional $385 million available under our revolving credit facility.
In addition, our leverage remains low.
I will now discuss our financial outlook for the first quarter and full year 2022, and refer you to our forward looking information disclosure in our press release and MD&A.
For the first quarter, we expect total volume of between 28 and $29 billion <unk>.
Revenue of between 208 $214 million and adjusted EBITDA of between 82 and $85 million.
For the full year 2022 we expect total volume of between 127 and $132 billion.
Revenue of between 940, and $980 million and adjusted EBITDA of between 407 and $425 million.
The outlook specifically the adjusted EBITDA reflects our strategy to continue to invest in our business such as in distribution marketing innovation and technology.
<unk>, our marketing spend has been nominal.
As Phil mentioned for 2022. In addition to the investments we are making and the marketing team. We've also planned to significantly increase our advertising spend to increase brand awareness and drive growth.
Pleased with our Q4 and full year of 2021 of the results and are excited about 2022.
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, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before.
Pressing the star keys.
The interest of time, we ask that you each keep to one question and one follow up thank you.
Our first question comes from the line of George Melas with Cowen and company. Please proceed with your question.
Hey, guys. Good morning, Congrats on the results the outlook and I'm I'm not sure. There's anything left to complain about the disclosures I think you covered more than everything anyone could have imagined.
I guess first question for me guys. If we look at the guide for 'twenty two.
A couple of macro things to sort of think about I'm, assuming FX is working against you know I know you usually don't call that out but I'm just curious how much of a negative impact as it is embedded in the guide for the the strengthening USD and then just a point of clarification, Phil I understand don't have <unk>.
The exposure to some of these.
Ukraine and in Russia, and the like but I'm I'm I'm, just curious could there be any sort of fall through for some of the partner platforms that you are that you're servicing any sort about a slowdown there that they might give you some pause. Thank you.
Thanks, George I'll take the second question I'll, let Oh go ahead.
Yeah, Hey, George Oh, I'll take the first one I guess, Phil I'll take the second half he was just saying.
So from an FX perspective, as you as you probably know the largest single currency we deal with is the U S dollar.
The euro would probably be the second largest that we deal with so.
And you know, we're obviously operating environment that has some volatility and so it's kind of difficult to forecast. So for the most part we've kept it relatively flat and what I'd say is you know in recent history. The FX impact has been pretty pretty minor on our on our results. So like I said probably were in U S dollars anyway, so that impact should be muted because of that.
I'll answer the next question second part.
Thanks, Dave and George for a clarification. So we don't have any merchants and operate.
In Russia, and Ukraine naturally there are customers customers that we're accepting transaction from Russia, and Ukraine, we have implemented the sanctions as they were developing and certainly this week visa Mastercard it she's accepting transactions across the board. It was a very very small and negligible amount of volume from our end in terms of plant.
Forums, when we end up looking around it and we included this impact ultimately in the outlook for 2022, we found that also to be fairly negligible.
Okay. That's that's helpful and just a quick follow up.
If you look at the growth you've seen in in the modular technology and the success you're having there.
I'm just curious if you could talk a little bit about the pipeline of where a customer starts with you on the modular side and then you're able to sort of cross sell.
The acquiring into them, what what does that pipeline look like and typically if there is if you can say typically how long does it take to sort of get that cross sell into a into new customers. Thanks guys.
Yeah. Thanks, George Great question, I mean, you know, we always start with the ethos of we want to help our customers connect with their customers in whichever module is right for their business you know, it's a win for us so for US we have ultimate flexibility of how how customers engage and utilize our platform. Sometimes it's restricted on one particular item, but that item allows you to grow for example in one of our large.
<unk> and social gaming customers. They started with one single alternative payment method that now expanded to multiple so the expansion is not just necessarily to moving from technology to acquiring its really whats right for their business and how do we incorporate the customers' needs from a geographic perspective.
And from an overall market perspective into our product roadmap. So our team is tasked naturally a building relationships.
Understanding where their needs are we do a great job of staying close to the customer and embed them really within our roadmap and that is what's driving the growth from the business because roughly 80% of our growth last year came from existing customers.
Thank you and congrats again.
Thanks George.
Thank you. Our next question comes from line of will Nance with Goldman Sachs. Please proceed with your question.
Hey, guys. Good morning, and thank you for all the additional disclosures are all really great and there are a lot of work that went into those.
Wanted to ask a question on some of the near term puts and takes I know.
You can see from the new disclosures that there there is a decent exposure on the cryptocurrency side, just wonder what you're saying from an activity level perspective, and whether that's kind of impacting any of the near term numbers.
Thanks will.
On the crypto side, we've taken that into consideration. So naturally simplex is directly tied because they do on and off ramps. So they're directly tied to the price of crypto. So certainly we have taken that into consideration from a from an overall perspective, what we found in the crypto market.
Is.
Is because of utilizing multiple solution stacks across the board from US we feel that.
This year will be a continuous trend of last year.
You look at our portfolio, we have predominantly services now in Europe , we're looking at expanding that into North America and Latam. So those will offset any of the headwinds that we would see in Europe .
Got it that's helpful. Appreciate it and then just on the simplex business any color on just the thought process or plans on rolling that out to other verticals outside of crypto and or what the roadmap on the product looks like.
Yeah, we have really exciting roadmap around simplex. So it's not just rolling it out to other verticals is actually looking at infrastructure custodial looking at pivoting more with a greater focus on S. T platform. So there is an incredible amount of opportunity we sent blake's within its own current protocols.
Brokers, but certainly from a new base standpoint, we are using that capability from a transaction guaranteed perspective and that is planned for this year.
I appreciate you taking my questions nice job today.
Thanks, Paul.
Thank you. Our next question comes from the line of Sanjay Sock, Ronnie with K B W. Please proceed with your question.
Thanks, Good morning, and I appreciate all the disclosure as well I've got a bunch of questions, but let me focus on one related to earnings and one on the disclosures.
And it's maybe summarizing some of the ones that were asked before just in terms of the outlook for 2022 can you remind us David maybe how much of the acquisitions contribute to the growth rate and then Phil you sort of indicated you were applying some of the market pressures.
Out there from a macro standpoint in crypto as well can you just maybe just go through sort of the macro assumption embedded in your guidance. Thanks.
Hey, Sanjay if David.
So from an acquisition perspective, I guess, what I'd point, you to as Youll see in our financials.
I'll give you a bit of history, and then I'll talk a bit about kind of the outlook, which is part of your question, but on a historical basis. The acquisitions represented about 10% of our revenue for the full year of 'twenty, one and about 13% for Q4.
So on a go forward basis, you know for the most part resuming payments is are still kind of early stage in terms of the size of revenue they contribute and you'll see that base is larger but you know a more steady kind of business.
Phil just alluded a bit on the simplex sorry, that's the lowest.
Last question before that's where you know, it's a little bit more let's say.
Volatile and difficult to forecast as we look forward just because of the the sector that simplex are primarily services today. So we've taken <unk> taken that into consideration in our in our in our outlook.
But it's.
Certainly part of the part of the growth that we see coming forward.
Anything more like on the macro like you guys are assuming cryptos is going to be weak anything else from a macro perspective inside that.
And the share buyback like are you guys, assuming youre going to use it.
Lots of questions there Sanjay, but let me ask when he comes back.
I told you out a lot of them [laughter], yeah. So what we what we assumed is and Dave highlighted we assumed a slower year for simplex in 2022 certainly.
It certainly seemed like some moves fast right as markets change simplex moves very quickly as well.
On the crypto portfolio for us.
Assume they're relatively flat a crypto this year predominantly as.
Slowdowns are offset by more market expansion, which we're executing on now so we feel really good about where we sit.
[noise] element to highlight as we're pivoting to and there's really good momentum around not just crude, though but and enhancing our position.
In Ftes and we have been announcing some of the early stage wins that we've been onboarding and we're actually really excited about what that's going to drive for it. So you know from our perspective, we pulled the chair we really like what we see in terms of consumption. It's not just acquire and keep in mind right. It could be payouts mazuma is a really good product for <unk>.
The digital asset purchase for a bank to bank payments in North America, which we're rolling out now as well. So we feel really good about the solution stack and ultimately drive forward for us in 2022.
Okay, great I'll leave it to them to the rest task others. Thanks.
Thanks Sanjay.
Thank you. Our next question comes from the line of Jason Kupferberg with Bank of America. Please proceed with your question.
Hey, Thanks, guys, maybe just to build on Sanjay as question can you just clarify how much of the 30% to 35% revenue growth in 2022 is organic and then can you just talk about margin cadence for the year I think the Q1 guide puts you right at around 40% at the midpoint full year is 43, so just talk about the drivers of the rash.
I don't know if it's just some of the expense timing and then maybe if you can quantify some of the year over year increase in the other spend categories. I know you gave the $20 million on the marketing side. Thank you.
Yeah, Yeah, the the 30% to 35% is organic if you kind of if you've taken into consideration the slowdown of simplex. So is purely organic.
On the margin cadence ultimately the largest increase expenditure is marketing it's front loaded as you guys could probably see in the first couple of quarters and it will expand from that we have lots of interesting opportunities there'll be generation to build brand awareness.
From from our organization, our marketing spend was.
Very light compared to our peers. So we are we are enhancing that and our objective is to make sure that as folks look at their global options from payment enablement. They don't just consider auditing and strive to also consider new bank. So it is a journey. It's starting now it is probably a little bit late from our end, but we're really excited about from a positioning perspective to the capability that we've on boarded with talent.
And and and others, helping us build out our marketing strategy for 'twenty two and beyond.
Okay. That's helpful. And then I just wanted to ask a follow up on on yield I know you called out some of the mix factors to the property taxes. The charity piece I mean, you came in I think around 67 bps in Q4. The guide for 'twenty, two I think implies around mid <unk> call. It at the mid point. So you know what what would draw.
Five that expansion I guess, there must be some other mix factors or anything on pricing apples to apples pricing in any parts of your customer base worth calling out.
No I think ultimately when you end up looking at the yield factor tax property tax and charitable giving are typically Q1 and Q4 event. So it is very seasonal and they're large tickets and they carry a fixed fixed transaction fees. So they'll impact the take rate and that is why we've always stayed away from take rate. We've always said we're at scale platform any every incremental.
Gross profit dollar falls to the bottom line and most certainly we wouldnt reject customers if opportunities presented themselves. So from our standpoint, essentially as that volume shifts down because of the seasonality our take rate will go back up.
In terms of areas of opportunity for US we think a lot of time has a higher take rate market.
We certainly are excited about our expansion in the U S. We're excited about the momentum that we're seeing across the U S and felt very comfortable with.
I'm gonna take rate.
Alright, great and thanks for those new disclosures I appreciate it.
Thanks, Jason.
Thank you. Our next question comes from the line of Bob Napoli with William Blair. Please proceed with your question.
Thank you good morning, David and fill in.
Again, thank you for those disclosures are Super Super helpful.
So pleasure.
The.
What I get is in the product pipeline. So what are the most important areas of.
Technology development that you've had over the past 12 months organically and is in the pipeline or that you're focused on in 'twenty, two and 'twenty three.
Okay.
Sure.
I'd urge you guys to go back and look at the press releases, because they've been accelerating from our capabilities and what we've been rolling out I I would call out naturally our sherpa payments fastest cheap U K instant payments and <unk>.
And our bank payments with Mazuma, each with AC its guarantee but in combination of that we've also dramatically expanded the APM reached that we have so I'm very excited about what's happening there.
I think the other elements for us payouts in North America, and Bob We're seeing some wonderful traction across the board. There. We have now launched in Canada as well. So we're normalizing our capabilities around the world and certainly going forward for US a couple of them that it's not limited, but ultimately we like to ramp our card issuing business we are high.
We focus on our global platform capability to expand our marketplace reach.
And a third lever for US is at the end of this year or stay in source all processing around the world, but specifically in North America, which we saw in stores. So those would be some of the big rocks, but our capital markets day, we're going to unpack some of our focus is and the rationale behind them. So stay tuned for a few weeks.
Thank you and then a follow up I guess on the.
The bank the bank or account to account payments opportunities that you see there.
Investments Youre, making.
And account to account or in the open banking if you would.
Yeah, we're seeing wonderful momentum so wonder wonder wonderful momentum not just in Europe , but also in North America. So we actually think when you end up coming back to a payment page be it from card or bank to bank payments with recognition of your bank with a one click checkout is incredibly powerful and required it.
It is a.
A value added solution for certain verticals as well, where they have a higher propensity decline rate or where credit card transactions are considered quasi cash for example, like in crypto digital asset.
And for US the embedded solution is gaining momentum so very very excited about what we're seeing in North America as well as in Europe as bank the bank payments and open banking are becoming some of the norm with the expectation of capturing between five and 10% of the wallet share. What's fascinating is that we haven't seen the impact on card volume, but we suspect that no other alt.
Turner forms of payments are being replaced by bank to bank payment. So it is a must have a wallet share perspective.
And we think making it easy from an acceptance from our merchants for them to be fully neutral meaning to accept the credit card a debit card any form of alternative payment or open banking and payment for them is reconciled and settled in the same manner is critical so we're at the early innings of it but our momentum that we're seeing around the world is very exciting.
Great. Thank you I appreciate it.
Thanks, Bob.
Thank you. Our next question comes from the line of Timothy Chiodo with Credit Suisse. Please proceed with your question.
Great. Thanks, Good morning, and thanks for taking the question Global E. Com direct clearly that is the largest and fastest growing portion of the business really impressive growth. There wanted to talk about the direct sales force growth I know you disclosed total employee growth. So the head count growth year over year, which was very strong is it safe to say that the sales force growth was faster than that and in the <unk>.
You've talked about how you sort of benchmark your sales head count versus peers, where did you say you are relative to peers. At this point or are you kind of getting closer or is there still a lot of hiring yet.
I'll start with last part we still we still think there's a lot of hiring ahead. So we if you remember Tim since IPO, we always talked about being under distributed.
I want to congratulate UV and multi and the overall team of how we've built out our reach across Europe .
Last six months, we brought in our full team in North America, and all of our key verticals and now with.
The with Qantas held through payments as we're building out our team at Latam. So we want to always be close to our customers in verticals and regions and in time zones. Today, we have roughly 100 folks on the on the direct sales organization part of the business. We think it can continue growing by a multiple when you end up looking at.
Latam in particular, obviously, what we're doing in APAC is early property moving out to Singapore to help accelerate with licenses.
And local capabilities across the region is going to be net new for US and then we'll pivot to Mena in Africa. So a lot left to do and ultimately that's why we always say we are on the ground floor, but the effectiveness of the direct sales force because of the complexity of our technology has just been really the driver for a momentum right. So we're scaling our technology, we're able to show our wares to more merchants.
In our verticals of operation and that is driving a significant amount of our growth and we think we're right at the early innings of that as well.
Excellent. Thank you so much for that Phil.
Thanks, Dan.
Yes.
Thank you. Our next question comes from the line of Paul Chambers with RBC capital markets. Please proceed with your question.
Thanks, so much and good morning.
You you commented on crypto just the trends you're seeing there more recently generally speaking can you speak to the linearity of growth across all your verticals that you've seen through Q4, and even Q1 to date.
I don't have it by by quarter, but ultimately I, what I would urge you guys to look at the top line because it's already the disclosure that we have in the supplement.
We think all of our verticals and Theres some seasonality that you end up coming back to them, but all of them are seeing momentum and ultimately if you want to run down like a performance in social gains or if you look at the <unk>.
Performance in regulated gaming performance in financial services all of them are seeing really really strong momentum in all of them had been seeing momentum within our new net wins as well. So if you want to talk about crypto.
We are now engaged with many of the top 10 exchanges. We're now engaged with many of the top line if T platforms. Our solutions that goes from transaction guaranteeing email cable I see two open banking too.
Real time payments and payouts to acquiring and all forms of alternative payment methods, which we think actually if you look at open banking and and the alternate payment methods is probably more conducive for the industry because they don't have the higher credit card fees. So overall I wouldn't I wouldn't pinpoint one particular month, but we're really excited with the momentum that we've seen.
In terms of overall, what we saw in January was certainly an impact in Canada for a moment crown and that was taken into consideration in fact that was available in December as well. Unfortunately in some parts of February was a good recovery.
And so far for March we like what we see so very good momentum in the first quarter.
And related to that like in terms of the.
Bigger picture in terms of customer demand.
For digital or e-commerce versus card present, when you look at your sales pipeline.
Coming out of Covid are you seeing continued demand across.
Or are the digital channel, but then also building for card present mean, how do you sort of and you sort of gauge the momentum in both of those categories.
Yeah, I mean, we're very happy with the performance of our card present business, but there is not necessarily a huge overlap as we as we start rolling out or Ami solution, especially in North America, where that some of the integration will be available across all channels there'll be a convergence between the sales efforts for retail and online, but our digital verticals are predominantly digital.
So if that makes sense Paul right.
These are digital digital first and global operations.
You end up looking at the performance of their growth in different geographies their requirements to solidify assumptions back we're right at the beginning of it and our demand is very high so really like what we see in fact I mentioned in my prepared remarks, our pipeline has never been deeper and the engagements that we're seeing on the digital side are by far.
A multiple of where they were in the previous year. So we're starting off the year very strong.
Okay. Thank you I'll pass the line.
Thank you. Our next question comes from the line of John Davis with Raymond James. Please proceed with your question.
Yeah.
Hey, guys. This is Matt on for J D. Thanks for taking my question and thank you for all the disclosure.
Wanted to ask about <unk> for a moment 2020, it was definitely impacted by Covid and 2021 was likely a little bit higher than the normal.
So just what are you expecting for NR in 2022 and is there any reason to year on year growth from the previous year cohorts can't be the same in 2022 I think it was about 360% in 2021.
Yes.
We're not giving an outlook on the IRR, but we did want to kind of show for everyone is where the business was growing certainly when you end up looking for a total organization, 146% this year.
But when you add up zooming into E Commerce, which is really the point that our E. Commerce business had an interim almost 180 per cent and that enter our when you end up looking at e-commerce as we expand our geographies into.
What we are doing right now in North America.
And our objectives across Asia, we actually think we could continue maintaining that in our global ecommerce business from a small business perspective.
Probably more market driven certainly an impact.
In 2020 negatively and then 2021 from a COVID-19 recovery perspective, So I would I would look at those two that way, but from a global E com direct.
There is not just geography and actually to add to it. There's also capabilities. So as we launch more solutions.
As we monetize more of our technology stack certainly that helps growing the acquiring and other value added services that we do with the merchants. So we feel very good with what we're doing in the digital side certainly there could be an impact on the small business side post COVID-19 , but we're pretty bullish on what we see in the small business for 2022.
Ana It's David I would just add something to that as well.
I recall in our when we did our U S. I P O.
<unk> was 127% for the first six months of the year and so you can see it and accelerating we look at the full year to 146%. So there's been an acceleration even within 2021 and think about the first six months of <unk>.
2020 that basically a period, obviously was the most COVID-19 impacted so still an acceleration in the latter half of 2021 .
Okay. Thank you and then just as a follow up social gaming was very very impressive can you just talk about growth drivers there and maybe it's like a geographic mix larger enterprise customers.
And just how much if any part of that growth do you think it was pandemic or lockdown related.
I think social gaming has.
Hasnt necessarily benefited as much in our portfolio from from a lockdown perspective, because the markets that we're operating in have remained relatively open.
From a technology perspective, it's really across the board, it's more of a focus and something that we actually appreciate we're investing the same dollars in all our core verticals around the world and we're all we think that there is many opportunities across all key verticals, not just gaming and others that we've talked about today.
We're seeing momentum across all key verticals, certainly social gaming has been a pretty exciting road for last year with lots of momentum, but at the same is true digital goods.
And online retailers as well for us So we're happy with the investments that we're making they will all come in at different times right. So certain wins will come at different times. For example, the Hot group has been something that we're really pleased with the win large U K retail online retailer that has gone live now on the retail side. These things take conversations of.
Sometimes three months of the timelines years, so same investments across the board St horsepower, they were providing across the board. Some will come earlier someone come later, but these are the investments that we're making on core verticals.
Okay, great. Thanks again.
Thank you.
Thank you. Our next question comes from line of Andrew Baum with F. N B C. Nikko Securities. Please proceed with your question.
Hey, guys congratulations on a pretty solid set of results here and thanks for all the disclosure.
Wanted to touch upon the regulated online gaming piece, obviously, you're continuing to announce a bunch of new licenses and new partnerships. In this area. So could you help us kind of get a sense of how much of the performance in 'twenty 'twenty. One was from a U S efforts and now when you do kind of secure.
These new licenses is it as simple as kind of flipping the switch to translate to revenue or is there no more integration timeline that that needs to play out.
Yes.
Yeah. So.
Gaming revenue in United States was negligible in 2021, where we're starting to see momentum in Q4 are pretty excited about what that's going to shape up for this year, but again it will always be small we've always said it was more of a 2023 opportunity.
As licenses are pay to play that you have to have the infrastructure and licenses to be able to operate in those particular markets and thereafter, each each state that emerging goes live has an on boarding process that we need to follow so not not just because your license you can flick. The switch it's a new implementation on a per state basis.
Got it and then I wanted to touch upon the new phase approach around ecommerce, putting commerce platform specifically the Wix partnership. This is a really nice headline to you know a big tech.
Tech partner could you help us kind of.
Understand you know how this all came together and the differentiation that you have you have that that helped you win that business.
Yeah, I mean, I highlighted a lot of our modules right. So it can help you appreciate our differentiation. We're adamant that there is no e-commerce platform like nobody in the market today.
And our flexibility in what we offered two platforms. We think is unparalleled actually its a new endeavor I'm Super proud of the team for Onboarding wakes, we think theres a lot more to do with our capabilities in development with Wix, but which is one of many that we're engaged with the cros are.
Digital digital service vertical so very very excited about wix is our first win.
Why are we wanted I think there was a region that we have specific requirements that we were able to adhere to.
Very thankful for weeks for that partnership and we certainly think we can grow that around the world.
Great and congratulations again.
Thank you.
Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to management for any final comments.
Yes. Thank you everybody for joining today really appreciate everyones feedback over the past few months.
That drove us to the one time disclosure that you guys see now so we really are thankful for our partnership thanks, everyone for dialing in and looking forward to seeing everyone version.
Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.