Good morning, this is the Chorus Call Conference Operator. Welcome and thank you for joining the Nexi first half 2025 financial results presentation. As a reminder, all participants are on listen only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing Star and zero on the telephone. At this time I would like to turn the conference over to Paolo Bertoluzzo, CEO of Nexi. Please go ahead, sir.
Thank you.
Good morning.
Good morning to everyone and welcome to our results call for the first half of 2025. As usual, I'm here with Bernardo Mingrone, our Deputy GM and CFO, Stefania Mantegazza, who leads our investor relations activities, and a number of colleagues that may provide help in case we want to deep dive on very specific topics. Today I will start by providing a short overview of the progress in the first half and the key messages associated to it. We'll then hand over to Bernardo for results and come back for conclusions and most importantly, together with Bernardo, to answer to your questions. Let me start on page three of the document with a summary of our key messages. First of all, we continue to deliver profitable growth and I would add strong cash generation.
The first half of the year revenues were up 3.4% with Merchant Solutions up close to 4%, but actually growth across all business units and growth across all regions as well. In the first half, EBITDA did grow at 5.2% with an 88 basis point EBITDA margin expansion thanks to a combination, obviously, of top line growth, continued operating leverage, and strong cost control, with OpEx growing in the first half below 2%. Last but not least and most importantly, I would say given the strong focus we have on it, in the first half of the year we'll be generating excess cash for more than EUR 400 million, EUR 407 million more specifically, which is well on track to deliver the committed more than EUR 800 million across the full year.
Second set of messages, we continue to shape Nexi for future profitable growth and reacceleration as we look into the coming years. First of all, we continue to progress on our strategy on integrated payments and software payment integration. As we discussed in the past, our strategy is fully focused on partnering with ISV with different partnering model. The first half of the year we did continue to progress in the development of this partnership. We have been adding another 30/40 partnerships across the region and we have a fairly good coverage of partners across different regions. In particular, I would focus on the Nordics where we have a very strong coverage. The Nordics are particularly relevant for this conversation because that's the region where we see integrated payments having higher relevance versus the rest of our geographies.
Second key message, we continue to have stronger performance in the Italian complementary channels for SMEs. As a reminder, SMEs is our highest priority in general. In the first half of the year, complementary channels were representing 26% of the new sales, up from 20% last year. The field sales channel, which is the most recent one, we've been developing, tripled the acquisition volumes in the first half in the period. Third key message, we continue to see strong progress on e-commerce with good customer base growth, about 5% customer growth across the various geographies. This is very important to us as e-commerce is one of the key pillars of our growth and future acceleration.
Last but not least, and this is something that is very important, especially given the dynamics that we've been observing over the last two or three years, we continue to strengthen the relationship with Italian banks that are incredibly important for the Italian region. Here we are mentioning two facts that are really important to give you a clear sense of resilience of our position in Italy. Over the last 12 months, we've been renewing 100% of the contracts that were potentially expiring. On top of it, we have already renewed the major contracts that could potentially expire in 2025. Let me mention one, we normally, as you know, don't call out specific customer names or contract relationships, but this one was also in a very specific press release. We've been renewing our relationship with Crédit Agricole in Italy.
Very successful relationship with Crédit Agricole in Italy for both merchant services and issuing solutions from now up until 2029. Third key message, we continue to create value for our shareholders. As a reminder, across 2024 and 2025, we're returning to our shareholders EUR 1.1 billion as a combination of dividends and buybacks. We're doing this while having become investment grade issuer at the same time. In particular, in 2025, we are returning EUR 600 million, up 20% versus the previous year. We have paid our very first dividend of EUR 300 million in May. Again, as a reminder, we're committed to increase this dividend over time. We have the share buyback program of a similar size that is ongoing as we speak. Last but not least, in the last quarter we have also issued our first issuance actually as an investment grade player. We have issued EUR 750 million of senior unsecured notes.
Six years with 150 basis point spread, which we believe is quite telling about the outlook of the business overall in this environment. We are confirming our guidance for the full year. Revenues growing low to mid single digit, EBITDA margin expanding at least 50 basis points, and last but not least, excess cash of at least EUR 800 million starting from the EUR 407 million that we have delivered in the first half of the year. Let me now hand over to Bernardo.
you, Paolo. Good morning everyone. Results for the quarter and first half show continued and steady progress towards delivering our full year guidance, as Paolo has just finished with his section.
If we look at slide 5, we.
Have the breakdown of revenues in the quarter and for the first half, as you see, for the first half we grow 3.4%. I'd say in the middle of our low to mid single digit top line growth range. In the quarter is a slight deceleration, 3%, but broadly speaking in line with pretty steady and in line with the first quarter of the year. EBITDA margin continues to grow, 34 basis points in the quarter. We are at 88 basis points in the year. Again, our guidance was to do more than 50 basis points for the full year. I'd say that we are on track for that as well, with EBITDA growing 3.7% in the quarter and that is just north of 5% for the first half. I'd say at a consolidated level for the group, a good second quarter in line with our expectations.
Moving on to Merchant Solutions, here we highlight as usual the strong contribution to our top line growth coming from international schemes, which also benefits to some extent from migration across the regions in which we operate, from national schemes where they're present to international schemes, as expected, and we have talked about this a number of times. Our underlying volumes and revenues are growing and accelerating more than to growing more than last year. However, we have the effect that we're working through this year of banks that we had lost a few years ago. In terms of distribution capacity, this weighs approximately 2 percentage points, I would say, in terms of the value of managed transactions.
Notwithstanding that, highlight the resilience and the strength of our business and its ability to grow in the quarter by 3.4% in Merchant Solutions and close to 4% if you look at it in the first half. We continue to accelerate our growth in SMEs, our core segment. DACH and Poland we call out as e-commerce's core engines of growth for our business, and we continue to grow our business thanks to upselling of value-added services and products to our customer base. We move on to Issuing Solutions. Some of similar themes that we highlighted for Merchant Solutions apply here as well. We have a continued growth of international scheme volumes outpacing those with national schemes as we move more and more towards those.
We have continued success in upselling our international debit product in Italy, which is a key driver for growth in that region, and upselling and cross-selling of value-added services across geographies. Again, growth in the second quarter I would say mimics that of the first quarter, broadly in line with the full first half number of 2.9%. Nothing really compared to other years, project work, these kind of things. Pretty steady phasing throughout the first half of the year, so nothing really to call out. Also, compared to last year, Digital Banking Solutions, I'd say 2.5% growth in the quarter is quite good given the main infrastructural nature of this business. Even though in those areas where we benefit from volume growth, we are taking advantage of it.
For instance, on instant payments and our partnership with EBA Clearing, we continue in this business unit as well to increase the value of our client base by cross selling and upselling value-added services. For instance, here we call out on the instant payments front how we have rolled out verification of pay and anti-fraud features on the instant payment product. If we look across geographies on slide 9, I would say, you know, pretty homogeneous set of numbers for first and second quarter across geographies. Italy growing 4%, which is supported again as we mentioned in both issuing and acquiring by international scheme volume growth. We have obviously in Italy most of that drag I was referring to in terms of customers, which we lost a few years ago and are now starting to move away from us.
Nordics, I'd say good revenue performance with 3% top line growth, which is supported in particular by e-commerce growth and the upselling of value-added products to services. In the DACH region, we have strong growth in revenues in Merchant Solutions. In Germany, we call that out at 8% top line. We have one issuing processing client which has been migrating away from us for the last three years or so, which is hitting the top line, which otherwise would be showing the strong growth we're experiencing in Germany. Merchant Solutions on the CSEE front, we will be lapping the kicking in of a discount which was embedded in a contract we acquired a number of years ago in Greece. Other than that, I would say there's solid performance, in particular in Poland, which is, together with Germany, one of the key engines of growth for the group.
We look at the costs and the cost evolution. Another, I'd say, good quarter cost control and commitment to contain growth in costs. 2.3%, 1.6% in the first half. If you look at the nature or if you split the costs by nature between HR costs and non-HR costs, we have the year-on-year comp effect, let's say on personnel costs last year, most of the people that left round about this time. We have a year-on-year comparison benefit in the first half in absolute terms. This will unwind in the second half and at the same time we have some front loading of project work in the non-HR cost which actually again will unwind in the second half. Broadly speaking, that's the key takeaway for me as we manage our cost base, as we do with our guidance on a full-year basis.
We're highly confident that with regards to our overall targets, these are highly achievable and we remain committed to second half cost growth, which is pretty much in line with what we saw in the first half. Strong reduction compared to last year on the CapEx front. We need to speak about seasonality. EUR 180 million is just around 10% of revenues in terms of CapEx intensity. We have a sharp reduction compared to the first half of last year. In the second half of last year we had approximately EUR 250 million, if I remember correctly, of CapEx. There is seasonality, as you would expect in the second half of the year. We expect to have something similar this year, although we remain committed to reducing our CapEx intensity and in absolute terms year-on-year, as we have discussed in the past. There is some phasing effect.
I'd say that CapEx intensity will also come down as well as the absolute value of CapEx compared to 2024. Slide 12 about reduction of transformation integration costs. On the far left you see how we continue to reduce the integration transformation costs associated with two very large mergers we completed at the end of 2021 or during 2021. These come down to just under EUR 35 million. The overall absolute number is also coming down here. Clearly last year we had a large one-off coming from the downsizing plan, from the severance cost, this was EUR 165 million. Even if you normalize for that, we expect a full-year reduction in this line item, also helping to compound the EBITDA growth and generate incremental cash year-on-year, which we see on slide 13. On slide 13 we have the excess cash generation.
Our measure of free cash flow, essentially we have a target of at least EUR 800 million for the year. We are at EUR 40 7 million. There are seasonality effects here. However, I would expect we feel. Paolo and I feel very comfortable with regards to our target of exceeding EUR 800 million at this stage of the year and given where we are in the first half. Finally, before I hand the floor back to Paolo, we look at our indebtedness. I think it's important to say that we are 2.7x EBITDA having already returned EUR 1 billion. This is on the 30th of June. Today we're closer to EUR 1.1 billion to investors in the form of share buybacks and our first dividend as a listed company which was paid in May. Had we not done this, clearly our deleveraging profit would be much steeper. We'd be at 2.2x .
We're investment grade, absolutely committed to maintaining this rating, hopefully improving it. This helps us manage this debt stack very proactively. We issued a EUR 750 million note last May which was successfully priced as Paolo suggesting, you know, the very low end of the pricing range consistent with a higher rating than ours. We managed to contain our cost of debt to 2.4% which is clearly also something which helps us manage this cash flow generation.
That said, let me hand the.
Floor back to Paolo for his closing remarks.
Thank you, Bernardo. You've seen a fairly, I would say, straightforward set of results on the back of all of that. We are confirming our guidance for the year. We expect revenue to grow low to mid single digit for the full year. As a reminder, we would be including into this guidance two aspects, an underlying growth acceleration versus last year that was about 5%. However, not undermined by a combination of some Merchant Solutions effect in Italy on the back of banks M&A and other contract effects coming from two, three years ago, and at the same time instead smaller contract renegotiations or terminations across the other geographies. At the same time, we continue to expand margin by at least 50 basis points thanks to strong cost control, continuous strong cost control that Bernardo has just mentioned again.
Overall, for the year we expect to grow cash by at least EUR 800 million for the full year. Let me just recap the three very key messages. Continued delivery of profitable growth. Let me stress the excess cash generation continues acceleration. Second point, shaping Nexi for profitable growth and acceleration. Let me stress again the strengthening of the relationships with the Italian banks with a very successful season of renewals and extensions, including the key contracts that were potentially expiring into 2025. Last but not least, returning value back to shareholders with EUR 1.1 billion returned across 2025 and 2026. Let me pause there and open to your questions.
Excuse me, this is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Justin Forsythe from UBS Investment Bank. Please go ahead, sir.
Thank you very much and good morning. Paolo, Bernardo, thank you for having me. A few here if I may. First, a couple questions on Italy. If I look at retail sales, it looks like for the quarter it hit maybe about 1% year over year in Italy per our math, suggesting there's still a degree of cash-to-card conversion on that, and excluding M&A, it seems like maybe you were close to in line with industry growth, but maybe you could just parse through a few of those impacts and tie in the Italy growth and maybe size a bit the M&A impact, as we can see the overall transaction volume growing, I mean around flattish for the quarter. Secondarily, you mentioned a little bit about new sales channels in Italy.
How material is this, getting the direct go-to-market with SMEs, and maybe you could talk about the margin associated with those, meaning clearly you have an incremental cost associated with paying salespeople. Should we still expect this to be EBITDA margin neutral as it becomes more material? Lastly, I wanted to ask, there's been some news around the Dankort scheme, which operates in Denmark, and the share of transactions going down quite meaningfully, I think from 80% to 40%, was one article that I saw. Maybe just highlight a little bit around what drove that and maybe remind us how you monetize that scheme ownership and understand that functionality is supposed to be improving. Sounds like fees are increasing as well. Should we expect that to hit P&L directly in a positive fashion going forward? Thank you.
Morning Jack. Let me try to take the three of them on retail season in Italy. If you strip out the effect of the couple of, if you like, banks that we've lost two years back and are now migrating, actually the market, we are growing. We will be growing nicely on volumes and pretty much in line with the market. I think that the cash-to-card conversion in Italy remains fairly healthy. We see it even more when you look at e-commerce where the reality is that the vast majority of the custom remains with us, even if not the bank would like to migrate them and they remain with us for obvious reasons of stronger products, stronger support and all of that. I would say the net of these couple of banks affects the underlying volume trends, remain pretty robust.
Clearly they may be affected by macro, but the reality is that cash-to-card conversion is the main driver here and remains pretty strong. On SME direct sales and so on and so forth, again, as a reminder, we did start adding complementary channels to our bank channels. They remain the most strategic, the most relevant for us back four years ago, five years ago with a strong focus on digital channels and retail channels. More recently we have started to add obviously the ISV channel as well, so the software partners, although that remains very, very low as a relevance in Italy. Not just for us, for the entire market.
The real new news is when a year and a half ago, more or less, we did have a more direct sales on the ground as a combination of our own salespeople and sales agents, which is a normal practice in Italy to reach out to SMEs. This is the one that has been driving the acceleration of our performance. They normally target larger SMEs but also midsize SMEs. We normally go with our own people on the mid segment, on the larger and more valuable ones. We go with third party agents on the smaller ones. Here as far as the economics are, sorry, in overall what is nice is that this has been more than rebalancing the potential lack of distribution from the couple of banks that have been changing a couple of years ago.
In terms of margins, it's always a little bit difficult to say, but never forget that yes, true that we either have OpEx associated to our people or to pay a new channel. Never forget the fact that as the vast majority of these customers are coming from customers that we had with banks, we were not in any case fully retaining the full revenues, the full price as we had to leave to the banks a good share of that because it was more of a wallsy relationship with the banks. For the moment these are kind of a more neutral effect.
Last but not least, as Dankort is concerned, as you know, the local institutions were obliged to go on the topic of Dankort in opening Dankort to multi acquiring approach because that, to make it consistent with European regulation, there's been a very constructive and longer conversation across the ecosystem with merchants involved, banks involved, ourselves and other players involved. We believe that the outcome is ultimately a balanced outcome where on the one side there will be over time more acquirers into the market. Over time means that I think this is going to be applicable towards end of next year, I think, or two years from now, I think two years from now. There is a lot of time before it happens.
The reality is that we are also gaining much more flexibility and economic support on the running of the schemes, which is considered locally a pretty relevant national asset and a key asset from the merchants that support it heavily. I think that all in, this can be a positive evolution as far as the volume dynamics that you observe with national schemes, not just Dankort losing value to international schemes. I just remind the fact that a little bit across all geographies, including Denmark, despite the fact that we are owners of the scheme, the migration is normally net positive for us. In general we are obviously not working on this evolution in Denmark, but we see it as neutral to positive.
Great, thank you so much.
The next question is from Josh Levin, Autonomous Research. Please go ahead, sir.
Good morning. Two questions for me. One of your largest competitors has been in the news, not in a good.
Way, and is struggling to turn around the company.
Has that created any opportunities or might it create any opportunities for Nexi? Paolo, you had mentioned the acceleration in growth. You've mentioned that before.
Can you maybe give us a sense?
Of how much roughly we might be talking about and over what time frame? Thank you.
Good morning Josh, thank you for your questions. On the first one, in general, I try to capture all possible opportunities offered by the markets, including ones offered by competitors as well. In general, we see a good fashion in conversations with, let's say, counterparts that are longer term focused and really focused on resilience, stability, and again, longer term outlook of growth. These normally have to do with banking partners, ISV partners, I would say very large corporates, but also people and talent. This is clearly an area of focus for us. As far as when you talk about smaller SMEs or individual cash customers, really not focused on these types of things, they are very much distracted by their own business, as is normal.
Talking about acceleration here, I really want to be very, very clear and consistent with everything we've said in the past. As you can easily understand from our first half performance being materially ahead of our full year guidance, in the second half of the year we expect to see a softer top line growth. As a consequence, also EBITDA margin expansion. We're just confirming our guidance. This has to do with the fact that while we continue to see underlying growth and a little bit of acceleration as well in the second half of the year, we will see also a more material impact of these bank migrations that combine themselves, or if you like, contract renegotiations. It is absolutely in line with what we said in the past.
As we look forward, we have been starting our work on the budget for next year and also a refresh on our longer term plan. For now, what we see is a gradual acceleration into 2026 and, most importantly, the coming years. It is a combination of continued underlying growth acceleration driven by mostly, I would say, our growth engine and the resilience of our very large cash engines starting from Italy. At the same time, a softening of the impact of these bank contract renegotiations or, in a couple of cases, losses. That's the dynamic that we expect to see.
Very helpful, thank you.
The next question is from Grégoire Hermann of Barclays Bank PLC. Please go ahead.
Good morning everyone. A few questions for me please. The first one, given that we are now more than halfway into 2025, can you comment on 2026 and based on the contracts that you have renewed and what you still have in the pipeline, how confident are you that we are going to see the growth acceleration that consensus expects? Maybe just trying to understand the phasing for the rest of the year. I think you guided initially as a relatively strong Q1 and then Q2 to Q4 being slightly lower than Q1, especially due to this Italy M&A impact that you called out. I think you already mentioned some M&A impact in Italy in Q4 last year. Why shouldn't we expect sort of a pickup in Q4 as this effect should be partly over?
Last question, on your growth and especially in Italy, can you please impact what's the growth attributable to integrated software payments offering versus point of sales terminal, please. Thank you.
Good morning, Grégoire. 2026, we'll talk about it obviously in March when we talk about guidance for the new year. We see potential for re-acceleration. I think as we've commented in the past and we confirm it again, the work is ongoing. We just started not giving to the rest of the team on the targets for next year. The dynamic that we expect to see is the one that I just mentioned in my previous answer, which is on the one side not further acceleration of our ultimate growth engines and namely, I would say, the DACH region, Germany in particular, and e-commerce. At the same time, a continued resilient performance of Italy and in parallel a softening of the impact of these bank contracts that were lost or renegotiated with discounts over the last, I would say, ultimately 2023 and 2024. That's the dynamic that we see.
At the moment, that's what we expect in the second half of 2025. I don't remember exactly what was the effect of last quarter last year, last quarter, but I think it was pretty small. The fact that instead that will be impacted in the second half is actually the peaking, I would say, of the effects of basically the known banks losses, I would say, in Italy and the kicking in of some of the discounts that we had to give in the renegotiation on IS contracts from the past. It's more of a phasing effect of the different dynamics rather than anything else. At the moment, we don't see any new news from where we were when we provided the guidance for the year back in March. Last question was, and if I understand it properly, Grégoire, on the impact of the ISV channel in Italy.
To be honest with you, as we've said many, many times, ISVs are very marginal in Italy at the moment in terms of dynamics here. Nevertheless, we've been rushing to cover as many as possible and we have a nice set of pretty strong and strategic partnership and here we are preparing for the future more than really in terms of proposition integration, in terms of support, in terms of business model definition. While at the moment there is still limited commercial activity because there is still limited demand from the market. At the same time, we work a lot with all possible type of partners that are more, if you like, distributors rather than real software providers that are integrating software and payments. We have another number of examples of local situations being very nice and quite effective, but I can't really define them as true ISVs.
Again, we really focus on these also in Italy because over time this becomes more relevant and we want to be fully ready for it.
Thanks very much.
The next question is from Sébastien Sztabowicz of Kepler Cheuvreux. Please go ahead, sir.
Hello everyone, and thanks for taking my question. Could you please provide some color on volume trends since the start of the quarter? Have you seen a specific change in market dynamics over the past few weeks given the uncertain macro conditions? Your European peers, Worldline, was blaming some tougher market conditions in June. Just curious about the dynamic since the start of the quarter. The second one, you have renewed a lot of contracts recently. I just wanted to know, do you have any big contract renewal that is coming for 2026? Just to understand a little bit the downside risk for 2026. Thank you.
Good morning, Sébastien. Listen, on volume trends, nothing remarkable to be mentioned at this stage. July is just finishing and we still need to fully understand the numbers. Never forget that for our region, for our geographical footprint, August is the real month that basically shapes somehow because that's really the holiday month. We continue to see pretty resilient, strong trends on typical, if you like, grocery channels and in general non-discretionary. I think on discretionary spending it really depends a little bit on the various geographies, maybe a bit softer than non-discretionary spending. However, never forget that the trends are affected by a number of things: weekends, the weather. For now we feel comfortable with the guidance we have given and there is nothing really major to be pointed out in terms of dynamics.
Again, never forget that you will continue to see for Nexi at least some volume slowdown in Italy that is driven by the bank. The bank contracts have been discussed a few times already in this call that were known and budgeted and embedded already into the guidance. As far as big contracts into next year, we do not have major ones. This does not mean that we don't decide together with customers to anticipate certain renewals simply to make sure that we extend in advance the future contracts for as well. It really depends. For now we don't see anything major. Never forget that when you have hundreds of bank relationships, some of them are more material, some of them are less material and therefore you renegotiate that basically every day. At the moment we don't see in the coming months and quarters anything major coming.
If I may jump in, Sébastien, I think you mentioned in your remarks, and I was just thinking back to Josh's question about, you know, the Worldline situation or our unnamed competitor. I think it was has it helped us or not? I think we, you know, one of our key partners in Italy, French bank, announced, you know, recently that we had renewed and extended our partnership with them here. You know, maybe we were helped by the situation, but probably it's got to do with our, the value of our relationship with them, the longstanding, the quality of the relationship there. In general, I mean, I think that would be the, you know, the one that we discussed in the past as one of the renewals that we were interested in and that's happened.
Okay, thank you.
The next question is from Mohammed Moawalla from Goldman Sachs Group Inc. Please go ahead.
Great, thank you.
Good morning, Paolo. Good morning, Bernardo. Two from me.
Firstly, just on that last point you talked about Crédit Agricole, when you look at some of your competitors like Worldline, as you look outside of your key home markets, and I'm talking now specifically about France, maybe Benelux, what are the opportunities you see across both the merchant portfolio and the issuing side to potentially take on more volume and more contracts over the medium term? Secondly, just as we think of the issuing business of cards and digital payments, I know you've got some headwinds right now, but over the medium term, is this a GDP business net of price concessions or do you believe you can outperform that? If that is the case, what would be needed to grow above GDP there? Thank you.
Good morning Mo, listen, on your first point, honestly we stick to our strategy and our focus a little bit also independently from the shorter term dynamics that competitors may have and hopefully they will also recover from specifically. Therefore, we stay focused on our geography and we stay focused on our priorities within those geographies. From this point of view, Benelux and France have never been priorities for us given the portfolio we currently have with a number of chances to enter Benelux. We never decided to capture them for a number of reasons. Similarly, France is a market where it is not obvious to know how to have value creating interest. Never forget that if you're talking about merchant services, it is very difficult to roll out greenfield in a very profitable way at scale.
I think given our scale and the many very important priorities for growth that we have, we really try to stay focused there. At the moment we are not putting a new or specific focus in those two geographies. Obviously, if relevant highly value creating opportunities will come, we will consider them but will not change our strategy because of the current situation with competition on the issuing business. We have a bit more of a more optimistic view than just GDP and obviously it depends on phasing, depends on a number of things, but we see this business, as you correctly mentioned, on the one side being affected by contract renegotiations and all of that. At the same time, we see it also as a resilient business because banks tend to be quite loyal here.
Migrations are not an obvious thing in this space and actually we see positive volume growth affecting also this space and most importantly we see the opportunity in the coming years to export more and more detail in the model that is the licensing model as we call it, where it's the next product being more distributed by banks rather than Nexi being a technology provider to banks only and that's a much richer product with a lot of higher upside. Therefore, we see these more as a GDP plus type of business, not as I think with the same potential of merchant services for a number of reasons, but not necessarily a low single digit only business.
Again, sorry, as a reminder, you also have some effects from one specific bank lost back two years ago that will touch us over the next couple of years but that again underlying net of this very specific effect. We see this as a GDP plus business.
That's great, thank you.
The next question is from Alexandre Faure from BNP Paribas Exane. Please go ahead.
Good morning, thanks for letting me on. A couple of questions. One maybe more for Bernardo, just going through the free cash flow bridge. I think, Bernardo, you called out CapEx raising as we think of the second half. In H1, working cap outflows were a bit on the high side, others item as well, so just wondering how we should think of those in H2. Also, severances were probably quite a bit lower than what we expected. Is it the sort of run rate we should expect for the second half and for 2026? My other question is something you mentioned in the press release around the Klarna partnership having good traction in the Nordics and Germany. Was hoping you could elaborate on this a little bit. Is it mostly volume led? Is it unique economics that could be a bit richer in the revenue partnership?
Any color you could shed would be super helpful. Thank you.
Alex.
On cash flow, as we saw even last year, there is some seasonality effect in cash flow coming from, firstly, clearly EBITDA, which is expected to, the second half of the year tends to be heavier than the first half. We have how taxes play out on this, how interest payments play out on this, and lastly the phasing of CapEx and non-recurring items. All of these together, I think if you look at the first half, the CapEx number, as I mentioned, is going to be heavier in the second half. Not all P&L CapEx is cash flow, right? If you get an invoice, you book it in December, but maybe the cash goes out last year, and hence the impact of CapEx might be counterbalanced by net working capital. Believe me, we do our best to make sure that it's managed as effectively and efficiently as possible.
The same goes with non-recurring items, specifically with severance. You're right. We guided to more or less half of the cash cost of severance last year and the other half being spread over 2025, 2026. This isn't an exact science, but that would mean that we would have more than the annualization of the EUR 7.5 million we had in the first half, in the second half. We confirmed, broadly speaking, this phasing, but can I say it's going to be exactly a quarter of the total that we booked in the P&L last year on a cash basis expense in the second half or in the full year 2025? It might be a few million better or worse, but broadly speaking, that's right.
Ultimately, what I want to just underline is that being at where we are, EUR 407 million this time of year, considering all these phasing effects and the levers we have to pull in the second half in terms of working capital, in terms of how we manage CapEx, how we manage non-recurring items, how we manage all the P&L including interest expense, is a position where we feel very comfortable in terms of managing the full delivery of the at least EUR 800 million cash flow for the year.
As far as Klarna is concerned, in general we have signed a broader approach partnership agreement with them, which basically entails geographical expansion. Also, beyond the Nordics, it is a group-wide deal. The rollout of new functionalities and capabilities from Klarna and also new economics that in the context of all of these are somehow more favorable than the previous ones. For Nexi, we're pretty happy. As we mentioned several times in the past, we see buy now, pay later as a product that we don't own, it is not our business. We are very keen to distribute and offer to our merchants because it is a valuable product for them, and we're very happy to partner with Klarna in this space.
Today we will be calling out the Nordics in particular because buy now, pay later is particularly developed in those geographies, and we have a strong position as customer base in those geographies. Over time, this will become more relevant also as well.
Got it, thank you.
The next question is from Nooshin Nejati of Deutsche Bank. Please go ahead.
Hi, good morning. Thanks for taking my question. Maybe one for Bernardo. You mentioned approximately 2 percentage point pressure on the value of managed transactions for the loss of bank contracts. I was wondering what you expect for the next quarters here and if you can quantify this in terms of net revenue. Thank you.
I can tell you I'm not going to comment on the impact on net revenues. We don't want to give this kind of information in terms of profitability, individual clients, et cetera. I mean more or less 2% in the quarter.
I would say this, you know.
Is probably going to accelerate a bit. Obviously, we'll do our best to make sure it's as mitigated as possible.
I mean the flip side of this.
It will have, you know, if we mitigate it so there's a slower, let's say, outflow of these clients, it's better for us from a cash perspective. From a perspective. It makes these kind of calls, you know, we kind of repeated over and over. I would expect that 2% to be broadly the same, maybe accelerating in the coming quarters.
What measures do you take to mitigate?
We do our best to try and retain clients, win them back. I mean, Paolo, if you want to comment, we had the call on, we had the question on.
Good morning Nooshin. The dynamic here, you have two dynamics. You have certain, this is typical of our industry. It's not just Nexi. There are situations where you are just a technical provider, therefore at some point you have to migrate. This is the case, for example, for some issuing contracts, while in Merchant Solutions, in this specific case, the customers have also a relationship with Nexi. The product is technically a Nexi product as well. Therefore, we fight on the market, also thanks to our new sales channels, to retain as many customers as possible. That's the reason why the bank tries to migrate the customers back to them. It's a competitive dynamic that is happening, and therefore it is not a one-off migration happening on a certain day of every customer. It is something that is happening on a day-by-day basis.
Therefore, as Bernardo was suggesting, the final impact will depend on how this dynamic unfolds over the next several months, actually, because this is not just at the end of this year.
Thank you.
The next question is from Aditya Buddhavarapu from Bank of America. Please go ahead.
Hey, good morning Paolo, Bernardo, thanks for taking my question, sir. A couple for me. Firstly, just on the OpEx growth for H2, Bernardo, maybe could you just comment on any of the moving parts there. Of course, last year you had the benefit of the personnel cost, but if you have any color on H2 this year. A second question. You became an acquirer for the Wero Wallet earlier this year and I think the plan was to roll that out in Germany from the middle of the year. If you could give any update on how that rollout is going, that.
Would be quite useful.
The final one, merchant services again, you saw a small improvement in the take rate in Q2. Any comment there on?
Maybe.
Just take.
The first and the last one maybe and the last one first. I think when we're trying to measure the hundredth of a basis point improvement in take rate, I think it's false precision. Aditya. I like to say that there is strategy behind it, et cetera, but the truth is it has take rate as we measured is too coarse a measure to be that accurate. I think in general we try and make the point that we through value-added services and products we upsell and cross-sell to our customer base. We try to offset margin pressure coming from competition, renegotiation of clients, etc. Historically we've been, I would say, successful in doing so, in defending the take rate, maybe slightly increasing it, but it's impossible to comment on a quarterly basis this level of detail.
I think the good news is that it's stable or slightly improving most of the time. On personnel costs, again we have, we had about 1,000 people gross of new hires, et cetera, leave during the course of 2024. Mostly I'd say the weighted average is most of this happening around about this time of last year and hence the year-on-year comp effect that I was speaking of in the first half which reverses in the second half where we have returned to normal kind of impacts coming from wage drift, new hires, et cetera, on the personnel costs which are, you know, budgeted for, expected and embedded in our expectation that overall for the year we have that reduction I spoke of from compared to that just under 3% growth last year expected to be materially lower this year.
The inversion in the second half of the trend we've seen in personnel costs is offset by an inversion in the trend that we've seen in the non-HR cost and I would say there's, you know, there's a bunch of things that we're doing. There's no individual one item that causes this. As mentioning, there's some timing effects. We had some more intense project work in the first half. This corresponds project work tends to be a bit more revenues, a bit more costs and a bit of less of that in the second half. That impacts on HR costs. For instance, I know we're closing the second largest data center in the second half of this year. One in Italy here. Last year we closed the biggest one, this is the second biggest one and this will help us in the second half of this year.
All of this, you know, we embed into our guidance, you know, at the beginning of the year, and we guide to a yearly performance on revenues and margins, and therefore on costs and EBITDA. As I said, we are highly confident with regards to the full year performance and the second half being in line with the first. Paolo, and we are on Wero.
Good morning. On Wero again. As we discussed in the past, we are happy to support any alternative payment method that becomes relevant for our markets and, most importantly, for our customers, for the merchants. Wero is a special one because we are also one of the founding shareholders of Wero together with a number of European banks. As we speak, we are working to enable Wero in the one geography that is relevant to us for now, which is Germany. So far, the geographies that are affected by this are more Benelux and France, and now Germany is coming on top of them. For now, the proposition has been more on a person-to-person, person-to-professional, basically an app-to-app type of thing. It will land instead on merchants more towards the end of the year on e-commerce, and that's where our focus is.
We are working to enable e-commerce acceptance for Wero on larger merchants, the ones that are at this stage more interested in this, and then we see how it evolves. As we go forward, we'll support the majority of these alternative payment methods as they become important. Actually, we believe that over time they will become important.
I understood, thank you.
The next question is from Gabriele Venturi of Banca Akros Please go ahead.
Good morning. Thanks for taking my question.
I have two questions. First one, if you think that the.
Current Worldline situation could imply a.
Market share gain for you and the.
Second one, if you can give us.
Some color on renewal of partnership if current renewals are done at conditions that are better or worse than in the past.
Thank you.
Morning Gabriele, listen, I think on our French competitive situation, we've been already commenting. I think first of all, to be honest with you, maybe some, but we really hope and trust that they will recover very fast from a few topics that are affecting them because I think it's good for the industry and ultimately also for us. That said, we already commented. We see more interest in Nexi, let me put it that way, from, if you like, the counterparts that are more long-term oriented and where ultimately the resilience, the long-term credibility, and future growth is relevant. Therefore, we have interesting conversations with large customers, banks, partners, and also in some cases people as well. As far as the renewals are concerned, when you do these renewals, it's quite normal that you provide an incentive that, never forget, is on top of growing volumes.
Okay, so when you get to the moment of the renewal, you may have a shorter-term hit, but then as volume continues to grow, it is well recovered. In general, we're pretty happy with the long list of renewals that we've been able to successfully complete over the last 24 months and, as I mentioned before, also cover the major ones that could have been expiring this year.
Thank you.
Mr. Vetoruto, there are no more questions registered at this time.
Thank you. Thank you very much. Thank you for attending our call. My last, if you like, proper comment. I understand that you have a lot of curiosity and interest in understanding the short-term dynamics of volumes of the quarters this summer and so on and so forth. We are obviously very focused on that ourselves, so we fully understand it. At the same time, I really want to make sure that the main focus remains in the fact that we are confirming the guidance for this year and navigating through this year, and most importantly, building the basis for the extension and acceleration into the coming years. As also in 2025, we will deliver a stronger cash generation and higher cash generation versus what we've done last year. Materially higher versus what we've done last year. Let us stop here.
Thank you very much for your attendance and enjoy the summer break. Thank you. Bye bye.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephone.