Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Nexi First Quarter 2020 Results Conference Call. As a reminder, all participants are in listen-only mode.
After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, please signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Paolo Bertoluzzo, CEO of Nexi. Please go ahead, sir.
Good afternoon or good morning if you are back in the U.S., and welcome to our first quarter results for 2020 . I'm here with Bernardo Mingrone, our CFO, and Stefania Mantegazza, in charge for investor relations as usual, and we have a few other colleagues on the call in case we need support for any more detailed questions. Today we will basically cover three topics.
I will start by giving you an update on the COVID-19 situation here in Italy, and most importantly, on what we see in terms of volume evolution with some sector by sector evidence as well. Then I will hand the floor to Bernardo, who will cover the results for the first quarter that we have somehow already anticipated a couple of weeks back.
And finally, come back with some closing remarks on how we see 2020 going forward, and then I will leave the floor for Q&A. Let me start with the executive summary to make sure that we can give you a comprehensive view of what is happening here. So let's start with COVID-19. You know, Italy is going through a pretty strict lockdown, one of the strictest in the Western countries, and it started earlier than other places.
The good news is that from May 4th, we entered in what is called phase II, with some reopening, and I will tell you more about that. Second, as a company, since day number one, our total focus and commitment has been in ensuring business continuity, efficiency, security, as always. At the same time, safeguarding the health and safety of our colleagues inside and outside the company. We did do whatever we could to also help the country through a range of initiatives to support consumers, merchants, institutions, more in general.
As you know, our business model is only partially affected by this current situation, at least in short term, because our revenues are more than 50% related to the installed base, and therefore, not directly impacted by the volume contraction in the short term. And our cost base is now variable, semi-variable for about 38%. When it comes to volumes, and you will see graphs later on, we had a good start of the year, in line with the closing of 2019, with volumes going higher than growth at about 4%-5%.
Then we saw a contraction throughout the month of March, which closed around -33%. The situation, the latter part of March and throughout April, it stabilized around -45%, bouncing up and down, depending on the week, because of the lockdown measures. I will comment more in detail on the trends on the different sectors and what we have seen in commerce, which has been resisting actually better with some, I believe, positive signals on certain merchant categories.
We will also comment what we've seen over the last seven days rolling for which we have detailed visibility. This is the week, the rolling week from the second to the eighth of May, where we saw some change in trajectory with some recovery starting, I would say, a little bit across the sector, but it's really very early days to draw any final conclusion here. On top of this, we've been, since the very beginning, observing customer behaviors and customer needs evolution, and we already reshaped our plans to take this into account in our growth initiatives. When it comes to results, the first quarter 2020 has been broadly in line with the first quarter of last year.
EBITDA has been actually a bit ahead of that, with a 3.9% growth, where revenues have been marginally down -0.5%. We did continue to implement our key initiatives across different areas of the business in Merchant Services and Solutions. As you can imagine, we've been accelerating as much as we could our commerce proposition for larger merchants, but also for SMEs, launching remote payment dedicated services for the smaller merchants and entry-level offers to support the new merchants that were entering into the digital payment space. On Cards and Digital Payments, we continue to push, in particular, on the most digital products, and we did also try to support our customers in educating them in using our products to buy online throughout the crisis.
Digital Banking Solutions, we will continue with our plans, and we also launched Nexi Open Ecosystem. This is our open banking ecosystem, and that includes partnerships with about 20 fintechs and technology companies, including Microsoft, Plug and Play, and others. Cost went down 4.8%, thanks, obviously, to the impact of the volume reduction, but also to the continued work we're doing on efficiency. We're closing the quarter with a strong cash position, with a leverage that is around 2.8 at the end of the quarter. We are also providing, and Bernardo will comment more about this, the pro forma financials for the Intesa Sanpaolo merchant acquiring business acquisition, including these component revenues, in the quarter will be up 1% and EBITDA up 6.3%.
Finally, while it is very difficult, I would say impossible, to have a realistic reliable projection for the revenues for the rest of the year, for that part, that is, driven by the volumes, that's 50%. We already started to implement a cash cost reduction program of about EUR 100 million plus, while remaining absolutely focused implementing our growth initiatives, our growth-oriented investments. As you know, we have suspended our guidance a couple of weeks back, and as I said, we'll implement these initiatives on cost and CapEx to minimize the impact upon EBITDA and cash flow for the year. Let me now move to page 5 and start a little bit of an overview of what we see on the COVID-19 crisis evolution.
Here, on this chart, we try to simplify as much as possible the evolution of the situation from the health of people point of view. Here, we are mapping with the gray line the active positive numbers per day in Italy since the beginning of the crisis. In the blue line, we're mapping the number of Italians that are in intensive care across Italy. Here, you see that both lines did accelerate throughout the first part of March, but then as the measures went into place at the beginning of March, and of the lockdown measures went in place at the beginning of March, and went into place progressively throughout the country, you see that the acceleration curve did start slowing down, and both curves reached the peak between the end of March and the second part of April.
Now, the active cases, the positive currently in the country are about 82,000. This is from yesterday, which is about 20% down from a peak that happened on the nineteenth of April of about 110,000. Most importantly, I personally believe this is the most relevant indicator because it talks about not only about the number of cases, but also about the intensity and how difficult these cases are. If you look at the blue line with the number of people that are in intensive care, this curve did peak at 4,000 at the beginning of April, and is now, since yesterday, below the 1,000 cases, with a reduction of 35%, showing that not only we have less new positive cases, more people are getting out and becoming negative to the virus, but also the new cases are of a different level of severity.
As far as the phase II is concerned, this phase II has started in Italy, Monday, last week, on the fourth of May. As you can see in the boxes on the right, it started with the reopening of manufacturing, industrial production, and business-to-business activities and food delivery also for restaurants and bars, where you can now also pick up your own food or drinks and eat them at home on the move. We also have the reopening of parks, and visiting relatives were allowed within your same region. In about a week, on the eighteenth, we should have the reopening of the other retail businesses. Just as a reminder, groceries and food stores, as well as pharmacies and other high emergency businesses were already open.
On the 18th of May, we will have the opening on the rest of the retail, including museums and exhibitions. Obviously, there will be a list of measures that you can imagine in place to make sure this is done with a strict control on the health and safety of the people visiting the stores, but also people working to the stores. On the first of June, the current plan is on the first of June also to reopen bars and restaurants and barbershops and beauty centers, that, as you can imagine, are the most difficult ones to be reopened. There is now discussion within the country and the government, with the regions, about the possibility to anticipate in certain cases, the reopening of some of these categories earlier in May.
Across this crisis, and also today, the government has taken action to try and soften the impact on the country, with a specific focus on enterprises, small enterprises in particular, I would say, that went under pressure because of the lockdown. But they also did put in place measures to support employment, support families, support the people that were the most exposed to the crisis. In mid-March, we had a decree that is called Cura Italia, it means Care Italy. Then there was a second one at the beginning of April called Liquidità, which means liquidity. The purpose was there to provide liquidity and funding to enterprises, in particular, small enterprises.
And the government is now discussing a newer decree that should come alive at some point over the next few days. It is called Rilancio, which basically means, obviously, relaunch. According to the declarations across these three decrees, the government is proposing over 75 billion EUR to support, as I said, families, employment, companies. And they're also trying to leverage, to apply leverage and in part of the money to allow the banking system to provide about 900 billion EUR of funding and liquidity to the economy. Everybody, as we speak, is very, very busy to make sure that these decisions going to place, and more importantly, they are effective and money arrives to citizens and to companies in our country.
Moving to page six, as you can imagine, since the very beginning of the crisis, we put in place a task force under my personal supervision and the rest of the executive committee. The task force has been working on a daily basis to make sure that we were combining business continuity, but also the safety of our colleagues, in cooperation with the key institutions in our country. As far as people's safety is concerned, we were able to basically put after a few days, 95% plus of our colleagues working from home, working from remote, including customer care.
We were in the country, one of the first ones to put also customer care colleagues and to enabling them to work effectively from home with all, you can imagine, the tools and security measures that are normal into this case. Today, on a daily basis, out of two thousand people population in the company, we're about 20, 30 people per day that have to come through some offices or sites, because there is no other alternative, but the number is really, really limited, and obviously, they do it with all the necessary protection measures. As far as business continuity is concerned, our services across all different areas did function regularly as well as usual, even better than usual in some cases, across the country.
We maintained our service levels, in some cases improved, and actually, it's interesting to see that customer NPS across various areas has been resisting well and in many cases, improving as well. So this is what we've done to keep the business up and running. It's most important to provide continuity of our services, given how essential they are for the functioning of the society and of the economy. Now, as we have started phase II, we will remain the current model of operation for some time, given the fact that the company is operating quite effectively from remote, and I believe this will also allow other companies that needs to have people going to work, and therefore using public transportation, so on, to do it more safely as we keep our people the current mode of operations for a bit more time.
Moving to page seven, once we put our business well in control from the business continuity point of view and our people safe, we did do whatever we could also to support the country around a list of customer and social initiatives, having in mind, in particular, the smaller merchants. Here on this page, you see some examples. I will not go through all of them, but obviously, we put a special effort in helping the businesses that were shut down physically, even the smaller ones, to operate from remote with products such as Nexi Pay by Link, that allows smaller merchants without a website to sell online, simply sending.
Sorry, to sell from remote, simply sending via WhatsApp, SMS, and email, a link to their customers that then could pay with their digital payments. Or, for example, we did push education campaigns to cardholders to help them to buy online, even if they were not, let's say, highly experienced in buying online. On the other side, as you can imagine, we work with institutions to help them to implement some of the measures that they decided. I think a nice example is what we've done through our open banking platform, enabling a real-time bank data check to help the government push subsidies through the bank, so Nexi together with the banks.
And last but not least, we also promoted a collection for a donation for the creation of a COVID-19 hospital here in Milan, with the support of employees, the customers, and management of the company. So this is about it in terms of it's like the more business continuity and other type of initiatives to support the country. Now, let's move closer to Nexi, and before I talk about the volume dynamics that we've seen over the last couple of months and we currently see, let me, before I do it, remind everybody what is the impact of what is happening out there on Nexi business and economic model. Here on the left, you see the breakdown of our revenues.
As a reminder, more than 50% of our revenues are driven by the install base, number of merchants, number of customers, number of POS, number of cards, number of ATMs, and while a bit less than 50% are driven by volumes. Here you see the breakdown across our three business lines, 36%- 59% and 91% are the percentages of variable revenues associated to volumes for the three different business areas. Now, when it comes to the impact we are seeing, obviously, on the install base revenues, we don't see and we don't expect any material impact in the short term. We are clearly monitoring very closely the evolution to confirm what we expect to be a limited impact in the medium long term, due to the natural slowdown of new customer acquisition and new installations and potential SME distress.
Clearly, it is also partially, you know, in the medium, long run, marginally, but, potentially affected also by the repricing of certain projects, for example, new product launches or similar type of, activities. When it comes to volume, driven revenues, obviously, we see a direct impact from volume contraction. On the right, you see instead, the breakdown of our, cost base. 62% of our costs are broadly, fixed, while 38% are somehow variable, semi-variable, and therefore driven either by the volume of transactions or the level of activities, such as, for example, customer care activities, installation activities, variable compensations, and so on. Out of these 38%, 20% is, in fact, fully variable because it has to do with, external processing.
Now, moving to page nine, what have we seen since the beginning of our crisis in terms of volumes? And here, the numbers that you see on this page, in the lines, they represent our acquiring volumes. We have taken the data that we see more dynamically, more precisely, that are the data for international schemes for a part of the business and full data, including international schemes for another part of the business. Here, basically, what you see is that we had a good start of the year, around 5, 6, 7% year-on-year growth, and that's the blue line that includes physical transactions, online transactions, also cash transaction from ATMs.
And then you see that, you know, January, February were progressing well, and then, when you see that the crisis start to hit, you see that progressively throughout March, you know, the year-on-year growth rate went down to around 45%-50% reduction, year over year. That did continue basically until last week. We have decided to highlight also the data from the last seven rolling days that are available to us, and you see them on the far right of this chart, with the blue line. These data refer to the seven days that go from the second to the eighth of May.
This week is a bit of a special week because we have two days, the weekend days, that are still in the previous lockdown measures, and the five days of the working days, that are instead into the what we call phase II mode already. Here, what we can observe is that it seems to be some recovery starting with last week rolling seeing a reduction of volumes on a year-on-year basis more around the 30% in the 30% space. I will give you more detail in a moment around the underlying dynamics by sector. As far as online is concerned, I always want to remind everybody that online, for us, represents about 7%-8% of our volumes here.
You see that online did resist well or better to the crisis situation. However, it's important to notice the fact that online is also affected a lot by travel and tourism. That is a category that is highly intense in terms of online purchasing, and therefore, it's important to look at these numbers by category, but the key message is, you know, volume is going down gradually in the first part of March, stabilizing around minus 50%, starting to see some possible recovery in the last few days as some re-opening is starting. Page 10 is a bit of a busy page, so sorry about that, but we are trying to provide you as much evidence as we have on what is happening here.
In this page, we try to go one level down in terms of categories, and as you can imagine here, below, under these numbers, we have views of details that we are trying to summarize for to make sure that it's understandable. On the left, you see the breakdown we're using in terms of categories. We basically look at the merchant categories, and here we're looking at acquiring volumes in basically three buckets. What we call the basic consumption, the light blue bucket, where we basically put groceries, medical, retail, utility services, things that were kind of open or anything that people need to continue throughout the crisis. That represents about 35% of our total sales. It's 37% for e-commerce only.
The second bucket is what we call non-essential and discretionary consumption, such as, for example, clothing, household products, and other more discretionary services. These represent about 34% of total sales and about 19% for e-commerce. The last one, obviously, is the category that we call the high impact consumption, where we're grouping everything that has to do with hotels, restaurants, travel, tourism, transportation, entertainment, cinemas, all of those. Clearly, this is the category that is the most impacted. As you see, this category accounts for 31% of our total sales, so it is the smallest. However, for the e-commerce channel, this is 44%, so it is the most important category.
On the right, we're giving you the year-on-year growth rate for each one of these blocks. For the month of January plus February, March, April, and the last week rolling, that I remind you, is from the 2nd to the 8th of May. A nd we are also trying to provide you the split between physical and e-commerce to give you as much insight as possible on this one. To be clear, we don't commit to report everything like this going forward, because we believe it will just be not helpful. But now it's very helpful for all of you to understand, and therefore we are providing this detail. You can see that on basic consumption, basically, we saw the continuation of the structural growth we've always seen. You see the numbers, 16%, 13%, 11%.
Last week it was still very positive. I don't believe there is anything particularly significant here because these were the shops that were open, and here you start to see that e-commerce was already growing nicely, 27% year-on-year. It actually did accelerate now across March and April, 30%, 40%. The second category, the generic discretionary consumption category, here you see that this category was also hit because A, the shops were closed, and B, e-commerce that is a smaller impact in this category, but however, e-commerce was not really functioning at its best, because you know very well that when demand on e-commerce did grow, immediately delivery chains, the delivery systems went under pressure, and therefore merchants could not guarantee the delivery, the timely delivery as normal.
That's the reason why you see that, now from the normal growth of the combination of all these elements, this category was also growing 6%, went down from minus 62, minus 77%, with e-commerce also suffering in the beginning, but then recovering very well as the delivery systems were improved, and the situation was improving more in general. Therefore, you see that in this category, while physical went down minus 65, minus 81%, actually, e-commerce did double speed from 25 down to negative 10-47%. As far as high impact consumption is concerned, here you see this is where the effect has been very visible and very strong.
10% growing in the to begin with, and then minus 68, minus 89, with both physical commerce and e-commerce suffering in a very similar way, because at the end of the day, here you're in a situation where people were not booking or paying hotels, airlines, restaurant, and alike. So in total, you see what the effect has been from an 11% growth year-on-year, now went down minus 35%, minus 48%, and you see the split between physical and e-commerce. But actually, when you look at e-commerce, you see that actually e-commerce has been accelerating a lot into the basic consumption, the general discretionary consumption categories, and then the total was then affected by the very negative impact on the travel and tourism areas.
One last focus on the last week rolling, but again, I remind you, from the second to the eighth of May, and I really believe these numbers have to be taken with a lot of caution because you know that in our industry, there are a lot of daily effects, technical effects that may change and reshape the dynamics in unexpected ways. But we felt it was, in any case, interesting to share them also because they go, all of them, in the same direction, and therefore, giving us, confidence it might be, a bit more robust. You see that overall, on the total, you had a little bit of recovery from a minus 40% to a minus 35%, with most of the recovery happening into the physical commerce, and you see that this recovery has happened quite similarly across all the different categories.
So you saw not only some acceleration in the basic consumption, but also some recovery happening in the generic discretionary consumption and in the high impact consumption as well. Still very negative impact, with a good 10-20 basis percentage points improvement across categories. Again, now, we are monitoring this on a daily basis. We hope this will be confirmed going forward, but I believe we should just take it as a data point without drawing too many conclusions on the topic.
Finally, before I leave the floor to Bernardo to cover results, and we can go back on Q&A on these topics. As you can imagine, since the very beginning, we've been observing customer behaviors and somehow analyzing the evolution of customer needs throughout the crisis. We are convinced that there are certain behaviors that we have been seeing over the last couple of months that will remain because they don't represent new behaviors.
They just represent an acceleration of structural underlying trends that were already very visible, but maybe they were moving a bit slower. And here, what you're seeing is therefore an acceleration. Based on this, we are already reshaping our product plans, accelerating or intensifying our efforts on certain activities here. I will not go through all the pages because you can read it yourself, but clearly, as you can imagine, what we are observing in terms of behaviors is that obviously, as far as the merchants are concerned, everybody is trying to go omni-channel, not just the large ones that were already going that direction. We saw a strong increase in volume in that space, but also the mid-size merchants. They now see omni-channel as the only way to run their business.
SMEs were particularly active, and that's where we're putting a lot of focus. Consumers did obviously intensify their activities online, but also they become more interested in understanding how they could run their digital payments from apps from online as well. Digital banking solution, a lot of interest in business to business payments, as checks, for example, were decreasing in importance. We could not use checks, or for example, banks and corporates were trying to digitize their services faster. Across the board, we also saw a growing and accelerated interest from the banks in digitizing their processes and the products as fast as they could with clearly an omni-channel focus.
On the bottom of the page, you see some of the initiatives that have been accelerating, and where we're intensifying investments from, for example, omni-channel proposition in addition to mid-large corporates, to, for example, striking partnerships with store platforms to help SMEs to go online very rapidly in a very simple and cost-efficient way with e-commerce in a box type of solutions, mobile POS acceleration, Pay by Link I named before, cards and digital payments, similar type of activities, and growing interest for everything that can support a more digital life.
I would say on digital banking solutions, a similar type of moves. Clearly, everything that you see in this page was already well in our plans. For us, it was just a matter of accelerating or decreasing certain activities, but we are convinced that overall, it's confirming, you know, the secular growth of our industry in our country in particular. I would stop here on this topic and happy to go to questions later on. Bernardo, I leave the floor to you now.
Thanks, Paolo. Good afternoon, everyone. We're on slide 13, where we start with revenues. I'll try and be quick in this section because this was largely summarized in our trading update back in April, in order to leave more time for Q&A, so starting with revenues, group revenues, as you see, we closed the quarter slightly down year on year, 0.5% down year on year. Our trading update had highlighted how we were expecting EUR 220 million of revenues. We closed the quarter EUR 225 million, slightly better than that.
With regards to EBITDA, even there, we had made reference to it in our trading statement, with EBITDA expected to be in excess of EUR 110 million for the quarter. We closed at EUR 115 million, so slightly better than that. This is a 4% growth year on year, which basically reflects a strong start to the year, January and February, with strong volumes and stock performance, both on the revenues and the cost side, and then March, which suffered increasingly throughout the month of the lockdown, which progressively spread from the north of Italy to the rest of the country, as Paolo has described in his section earlier on.
Overall, the margin still increased from 49% to 51%. The revenues lost with volumes are, I would say, higher margin revenues, so the impact was significant on the margin. It would have been higher than that. But as we expect things to improve, we should go back to the earlier kind of pace of improvement of the EBITDA margin. On slide 14, we start looking at the various divisions and our usual breakdown, starting from Merchant Services and Solutions. Just to remind us, Paolo highlighted earlier how roughly half of our revenues are volume driven, roughly half of them are install base driven. In Merchant Services and Solutions, this is roughly 40%, which is install base and 60% volume driven.
This has been such that in terms of the impact from the foreign volumes, was mitigated by the install base component, and revenues were down only 0.9% in the quarter of 905.1 million EUR. The performance in the quarter was again strong in the first two months of the year, weaker in March, sustained by international scheme growth. Domestic debit was weaker. We've seen, as Paolo commented on, stronger growth in e-commerce, which is less impacted by COVID-19, less impacted obviously than physical sales in those sectors which were not impacted by the lockdown.
So for instance, travel, or hoteling, et cetera, we've had very strong acceleration, as we have commented on earlier. We've focused our attention on, as we have in the past, on new partnerships that are aimed at accelerating e-commerce for SMEs. There are a few examples of these here, and on launching new products which enable merchants to tap the online market, such as Pay by Link, or indeed, for micro merchants, with the Nexi Welcome package, which we discussed a few moments ago. Cards and Digital Payments shows a similar picture to Merchant Services and Solutions. Here, the percentage of volume-driven revenues, we're on slide 15, is slightly higher than it is in Merchant Services.
We have volume-driven revenues of about 40% and 60% of them being install base driven by card management fees and the likes. Revenues were down 0.4%, so again, similar impact on the cards as we had in merchant services. Even here, we have volume growth, stronger international schemes than it is in domestic debit. We see the benefit here in terms of our cards being transacted on overall global e-commerce players, which we don't see in the acquiring side.
Think of an Amazon of this world, or a Netflix, and so on and so forth, that we still make money on those merchants through our card business, although we don't see the volumes on the acquiring side, and hence, the reduction in volumes here is slightly lower than we saw on merchant services. In general, our initiative in the mobile payment space with the app has, you know, performed well, notwithstanding the circumstances. And we launched a number of campaigns aimed at stimulating digital payments under COVID, which helped sustain the performance in the quarter.
Digital Banking Solutions, this is the division which is less impacted, I would say, by COVID, given that the revenues are predominantly install base driven, so ATM machines, digital corporate banking workstations and the like. Again, growth in the quarter year-on-year, close to 1% growth, slowed down by the impact COVID has had on most of our clients, our banking clients. Nonetheless, a quarter in which we have managed to register growth, and we have, more importantly, launched our Nexi Open platform, which Paolo described earlier. Moving on to costs, we made reference to the fact that approximately 20% of our cost base is directly linked to volume.
So in the first quarter, it's fair to say that you have seen through the March numbers or in the first quarter a reduction in costs, which was primarily driven by the lower volumes we experienced in March. I will talk about our cost containment initiatives later on, but we have the benefit of this in one out of the three months of the quarter. And this helped us reduce costs overall by 4.8%. There are some other automatic adjustments to our cost base, which come with lower volumes and lower revenues, such as variable compensation, but this is pretty much the extent of the cost cutting, which happened in the first quarter.
We have both personnel costs down 4% and the non-personnel costs down 5% and more cost cutting in the future in order to offset the negative effect of volumes on our revenues and preserve cash flow and profitability. One word on credit risk. Obviously, for acquirers, credit risk tends to be an area of concern for investors, for acquirers themselves, obviously. Given this, the nature of our business and our underwriting policies in terms of the risks we're willing to underwrite as acquirers, fortunately, our credit risk exposure to sectors such as travel, aviation and the likes is limited. Therefore, to date, we can say that we have this limited exposure, which isn't particularly concerning at this stage.
In the first quarter, I would say there was one non-COVID related event in January, which led to a default similarly to what we have in any given year. As I said, it wasn't COVID related, it was actually related to corporate card business. It was provisioned adequately in the quarter. But we don't expect this to be materially different in the future, particularly if the government initiatives, which Paolo was highlighting earlier, are as effective as we hope they are. Slide eighteen gives us an overview of our overall net debt. Clearly, it's more important to focus on where we will be in the future rather than where we are in March, given that March is...
...or sorry, March, in the quarter, the quarter is not a runway quarter, given that COVID only impacted us for one out of the three months in the quarter. However, we generated net cash of approximately EUR 60 million, and this helped reduce net financial debt to EUR 1.42 billion with an overall leverage level of 2.8 times. This is very far from the 5.75 times leverage, which is the only covenant we really worry about, which is that, which would give term loan lenders the option if they chose to recall their term loan, the EUR 1 billion term loan. And as I said, we don't expect to be anywhere close to that anytime soon.
We also, however, actually, we also issued the convertible bond back in April, during the public disclosure. This has allowed us to further strengthen our liquidity position, and positions us very well to complete the funding of the Intesa acquisition, in due course, given that we are fully covered for it, thanks to the bridge facility, which takes us to the end of next year. Slide 19, I think, gives you one of the most interesting pieces of news compared to the trading update we published in April, which is the pro forma number for Nexi if we had closed the Intesa acquisition on the first of January, for instance. This is the nature, the economic nature of the agreement with Intesa.
We take full economics of this book from the first of January, and we will pro forma our numbers once we close the transaction in the summer, starting from the first of January. So we have given you a preview of what the quarter would have been if closing had occurred, and you can see that revenues would have actually increased by 1% year on year, and EBITDA would have increased slightly more at 6.3% year on year, thanks to the fact that part of the volume effect on the merchant book would be compensated by the protection mechanism we negotiated with the seller, which allows us to offset part of this underperformance with their distribution fees. I mentioned the convertible bond, so I won't spend any more time on that, and I'll hand the floor back to Paolo to wrap up.
Thank you, Bernardo. Let me wrap up to give you, I mean, to share with you how we see 2020 going forward. I'm on page 20. As you can imagine, it is difficult to have a strong, reliable view on the rest of the year as far as the variable component of our revenues, that 50% is concerned. This will depend on the length of the crisis that maybe is now clearer, but it will also very much depend on the speed and the nature of the recovery in the rest of the year.
As you can imagine, we are considering multiple scenarios for our own internal planning purposes, but none of them is, as we speak, reliable enough to be used as a reference as a new reference. On the same time, despite the fact that revenue scenarios are not yet completely clear, we have decided to take immediate action on the cash cost base across all elements, across obviously the volume-based costs that are naturally affected by the evolution of volumes, but also now throughout the more discretionary spending categories, such as the other operating expenses, the capital expenditure and the rest of the transformation costs. Here you see some example, obviously, we are reducing hiring, consulting expenses, and travel.
So the top management team, myself and the top management team decide to waive voluntarily today our short-term variable pay for the 2020 on CapEx. We're postponing less strategic projects and replacing part of our IT strategy, postponing less strategic investment transformation costs. We are doing a few other things. So in general, an important intervention to minimize the impact on EBITDA and cash position for the year. But I want to be clear, we will continue to invest and spend our effort and the money necessary to push the key initiatives that are in our plans, not only for the year, but for the coming years, to drive future growth and continue to make our business more and more efficient.
Page 21 is just, if you wish, a summary. On the left you see our previous guidance. It is now suspended, and we confirm it is for the moment, suspended. Again, our quick considerations in line with what you just said, now, 2020 volume driven revenues will depend on the duration of the peak and the speed of recovery. We are implementing this EUR 100+ million cash cost plan to mitigate the impact on EBITDA and cash flow, while continuing to focus, invest on our key initiatives for growth and efficiency, and we are sitting on a strong cash position. I would stop here and we are ready, I believe, to take questions.
Excuse me, this is the call with 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 their touchtone 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 James Goodman with Barclays. Please go ahead, sir.
Good afternoon, Paolo, Bernardo. Thanks for taking my questions, and thanks for the additional color and detail around the volume trend. The first question I had was just digging into the EUR 100 million cost containment plan. You know, that's a significant number versus your OpEx base and your CapEx.
Can you sort of split it between the two, between the P&L and the cash flow? And just help us a little bit with how we should think about it versus, perhaps your OpEx budget, or is it a year-on-year number? You know, is it annualized? Does it contain already the variable cost reductions that you'll see, reasonably automatically within the business? So really just trying to get to what the commentary is that you're making around EBITDA.
I mean, does this guarantee positive EBITDA development year on year, for example? That would be helpful. And then the other question is a slightly broader one, just around the structural acceleration that you touched on from cash to card, and clearly, you know, many other vendors in the space have spoken to this.
Can you sort of quantify that in any further way as it relates to the Italian market, given the immaturity of the market, you know, are you seeing similar contactless strength to what we've read about? And do you think there's any impact on the government initiatives, given there seems now already to be a sort of rapid acceleration of this digitalization? Thanks.
Hi, James, and thank you for the question. Let me start from the second one, and then I will introduce the first one a little bit more to Bernardo. On your second question, to be clear, we. I think, everything that we are seeing, in terms of customer behaviors and underlying trends and so on and so forth, is suggesting the fact that, the secular trends, of growth for digital payment growth are just confirmed and, in some cases accelerated.
If you look at market research information that we have and we see on a daily basis, you have more and more people saying, but literally now, this has been growing throughout the crisis, that are more confident in using digital payments. Also for micro payments, they need less cash retrievals from ATMs. I mean, there are lots of elements that suggest that contactless mobile payments, we see nice trends in mobile payments, even if they're still small. So everything is suggesting that people are getting more and more used and they see digital payments as a more safe and secure way of paying. However, I think we have to be very, very clear here.
I think that, the numbers, I mean, the overall trends, and the shifts that you see, that you've seen over the last, couple of months, are so large that it is very, very difficult to distinguish, you know, the effect of these underlying trends versus, the sharp decrease of volumes. I think in the next, few weeks, will be particularly interesting, because, we will see by category how, the recovery may take shape. So, we are very comfortable with the idea that, these secular shift, would not only continue, but potentially accelerate. But to be honest with you, I think it's a bit too early to put numbers on top of it.
You also mentioned the government interventions. There is nothing new in the government interventions that are going into place because of COVID around these topics, but you remember well that at the end of last year, the government approved a list of very important measures to support digital payments for the benefits of the country. These measures, most of these measures are supposed to go into execution in July, and may provide further support to this secular growth. At the moment, I understand they're fine-tuning the operational procedures for this. I would not be surprised if some of the most complex ones for execution, for example, the lotteries, are reshaped or potentially postponed by a few months.
But the bulk of the important measures should go into place as expected. As far as the cash cost intervention are concerned, before leaving the floor to Bernardo, may I just highlight again the fact that, A, these include all possible cash categories, including, as we try to highlight on page 20, including also the variable volume-based cost, and that's the reason why it's very difficult for us to be precise with a number here, because it depends on the volume. And B, I think you used the word guarantee EBITDA or something like that.
Now, I believe that, given that what is the outlook today in terms of scenario recovery, it's very difficult to guarantee EBITDA because at the end of the day, it's gonna be driven mainly by revenues. I think here, our intent is clearly to minimize as much as possible any impact that may come from these volumes. And therefore, the volume-driven cost, we just follow volume dynamics, but on everything else, we have to take action now. We are already taking action now because otherwise, later in, if you just look later in the year, these would have, we would have less flexibility. Bernardo?
I think Paolo said it all. I think this is not, our cost-cutting exercise is not targeted at a specific EBITDA number for 2020, because that's, you know, will depend on various factors largely outside our scope, but rather finding a balance between the most we can do in order to protect our cash flow and our profitability without compromising, you know, strategic or structural initiatives which are for the, you know, for the benefit of Nexi in the medium to long term, because we believe this to be a temporary crisis, the one related to COVID. So, you know, this EUR 100 million is to be referenced against an overall cash cost between operating expenses and CapEx of approximately EUR 650 million, which is what we would have had in 2020.
It's approximately 15% of that. You have, on the far left of this, cost containment plan, volume-based cost. I think Paolo mentioned earlier that we have approximately 20% of our costs, which are essentially external processing costs, approximately 90 million EUR, and those will follow a reduction based on the volume reduction, almost linearly. And the rest are everything we could freeze, and readjust to the new lower revenue scenario without compromising, as I said, the strategic nature of certain investments or operating expenses.
I don't think we want to give you the full split at this stage, but it's a healthy split, I'd say, between directly volume-driven cost cuts, which don't come automatically but require work and effort on our behalf to make sure we don't spend that money, and CapEx, which is project-driven in nature and is all the kind of CapEx, I would say, which is more tied to the slower level of activity of our clients, rather than our willingness to postpone strategic projects.
I think, James, you also asked about what is the baseline for comparison here. Clearly, it's more about our own plans. But if you go back to the previous guidance and you reverse engineer what was underlined there, you would assume that there is probably also very much of a year-on-year type of directional cut. Yeah.
Yeah, thanks for that context. That's helpful. Thanks.
The next question is from Massimo Vecchio with UBI Banca. Please go ahead, sir.
Good afternoon, everybody. Two questions, if I may. The first one is on, since the IPO, you were talking about developing internal processing capabilities. I was wondering if this is delayed because of the cost optimization efforts or if it remains a priority?
And second question is, you waived some fees to your merchants. I understand the obviously the commercial logic of it, but I was wondering if you have a number trying to quantify if this impact was meaningful in the quarter, in Q1, or it will be meaningful in Q2, or if we are just talking about zero, zero point something percentage?
Hi, Massimo, thank you for your questions. Starting from the second one, I think the track to the end, the support we're trying to give on merchants is more on things that otherwise they would have probably not used or not done. And therefore, now, hopefully, now, this will be very helpful for them, but the cost against our baseline or our current revenues is very, very low. Therefore, we're giving up value, yes, it's true, but it's more helping them in using services that probably they would have used them more in a few years, and we hope they will use more now because they need them more and carry out their business.
I think a good example is waiving the fees on pay-by-link, on a per transaction basis, while we still charge the volume-based fees. As far as the internal pricing is concerned, our plans are, we're just executing the plans that we've declared in the past, since IPO, as you correctly mentioned. Where are we here? Well, first of all, we already generalized a certain processing components that I think we are completing as we speak. We just completed, for example, what we call the terminal management, for example, for POS, which was an important cost, a valuable cost on our cost basis. So it's done, and we've done ATMs in the past.
We are now in the process of executing the complete renewal of our acquiring processing platform. It's progressing well, and we'll start implementation with the first merchants in a few weeks or months. But by the end of the year, we'll be well comfortable, of course, where we see it will be comfortably on top of a platform that is operating as we want, and we'll be able to start migrations in between the end of this year and next year. As far as the broader issuing space that is concerned, we've been running a standard that is now focused on a couple of different providers. We are considering, also in that case, the option to source completely with one of them that is providing a very advanced platform.
But it is a bit more-
It is not happening this year.
Okay. Okay, thank you very much.
The next question is from Sebastien Sztabowicz with Kepler Cheuvreux. Please go ahead, sir.
Yeah, hello, thanks for taking my question. On one on Intesa deal, are you still on track to close this deal by the summer, or it could be a little bit delayed because of the current COVID situation in Italy? And also, could you make an update on the potential revenue and EBITDA contribution from this acquisition, knowing that today we are seeing a bit of downturn in the market?
And the second one is on your take rates, which both continue to increase in MSS and CDP, again, in Q1. What was the reason behind this continued growth on the take rate in the first quarter, and what could we expect for the coming quarters? Thank you.
Hi, Sebastian, thank you for the question. I'm happy to answer both. So Intesa, the transaction is due to complete as soon as we have received regulatory approval, which is expected by the summer. So, it's likely to be at some point in July. I would say we wouldn't close the transaction on the thirty of June, just simply for a convenience perspective, not to have to prepare half-year accounts in a very short period of time. So it will likely close in July, subject, as I said, to the approval process, which so far envisages approvals from Bank of Italy, which has formally suspended the terms for providing these approvals, but has informally told us that they're working business as usual.
We don't expect any delays coming from COVID, and from DG Comp in Brussels, which you know, with whom we expect, if the timetable is met, as I said, approval within the originally envisaged timeframe, even they are working remotely. Obviously, everyone is dealing with COVID, but so far, as we can see, work is progressing, so there shouldn't be anything which would stop us from or which would delay the timetable. Recently, a new regulation has also been introduced, which requires a third approval layer, which is the Golden Power, which the Italian government has introduced as part of COVID-19 measures, which would therefore require us to obtain approval from the government, which I think is a formality, and should, again, not impact on the timetable I gave you.
Testament to this is the fact that we tapped the market with the convertible bond back in April in order to fund at least part of the acquisition, given that we think it will close within this timeframe. With regards to your question on volumes, on the revenues and EBITDA, I would refer you to slide 19, where we tried to give you a view as to how our business would have looked like if we had closed the transaction on the first of January. This is the substance of the agreement. When it closes, we will have economics from the first of January this year. You just need to look at the difference between slide 19 and the earlier slide on revenues to figure out the difference, which is the merchant book from Intesa.
In terms of the terms of the ability to withstand the volume pressure or the volume impact we have on revenues, Intesa's the acquisition from Intesa the merchant book allows us to benefit from the protection mechanism I mentioned earlier, i.e., a compensation of a target level of profitability for the year with distribution fees we would have otherwise paid to Intesa. So we are protected on the downside by this acquisition related clause. So this is with regards to the first question. The take rate is, again, the reason for the take rate increasing is related to the drop in volumes, and not all our revenues are impacted by volumes, as you know.
The take rate, the way we measure it, for the purposes of passing on the message of substantial stability or slight positive accretion in take rate, is a very coarse measure of our profitability because it divides 100% of our revenues by volumes, and not all the revenues are volume driven, and therefore, with the drop in volumes in March, you have a spike in take rate for the quarter. I wouldn't use that as indicative of the future take rate of the business, given that when volumes recover, the take rate will come down.
Yeah. So Stefan, sorry, Sebastian, just to be clear, if you just take the volume component of take rate, that growth this table is marginally increasing, but in a completely different way. So the effect that you see is purely technical.
Thanks, that is very clear.
The next question is from Stephane Houri with ODDO BHF. Please go ahead.
Yes, hello, good afternoon. I have two questions, if I may. So the first one was on your slide 10. Just to understand, when you look at the acquiring volume by category at the top left of the chart, and if I calculate that, the e-commerce share of all that, I arrive at 29% of the acquiring volume. So, is that correct, that e-commerce does represent about 30% of your volumes? Or am I reading something wrong there, and if you can explain?
And the second question is really to understand if, when the situation will normalize, if we can say so, do you think that you ... The positive impact of consumer changing their habits will overcome the less positive impact of, I would say, maybe a deep economic crisis or less consumer spending, to say the least, for the second half? So if you can give us your opinion and give some clarity on that, would be very helpful.
Stefan, thank you for the questions. On your point on page 10, I think the numbers that you're looking for are on the bottom right of that page, which is the percentage of volumes that are e-commerce volumes, on the totals, and you see that those volumes were in a normal situation, January, February, about 7% of total volumes, and they did go up, on a relative basis, of course, to around 10%, as we speak, which shows you, you know, how, you know, more relevant e-commerce has become, for our customers and for ourselves.
Honestly, I think, I don't know how you would come to the 20% looking at on the left, but just to be clear, again, those percentages are the split of the 100% on total sales, physical and online, in the pie chart. And in the call-outs, you have that same breakdown if you take e-commerce only. Okay?
Okay.
So it's not the percentage of e-commerce on the specific thing. Okay?
Okay.
And therefore, you can see that the importance of e-commerce is at around, if you do the numbers precisely, used to be, because these are 2019 numbers, it's kind of 10% for high impact consumption and less for the others. As far as we'll see that in the future, as you know, as we may have some positive effects in terms of customer behaviors, but at the same time, also, as far as digital payments are concerned, but also, you know, some pressure from economic macroeconomic challenges, I think this is very, very difficult to say.
Also because, as we speak, it's a bit unclear, you know, how much payments are shifting as we speak, or did shift over the last couple of months from cash to digital. That's the key question. We're trying in every single possible way to second-guess that number, but as we speak, there is no evidence that is reliable, and that may will make sense to share with you. Again, all factoids and every customer feedback and observation, articles and so on and so forth, would suggest that it is happening, but nobody is able at this stage to quantify it.
As far as, if you like, the other component, the possible negative component, which is the impact of the economy on our broader business, you may remember that in the past, we've always said that our volume trends for digital payments and just for Nexi, for our sector in Italy, were a kind of more resilient to short-term GDP consumer consumption spending trends. And we still believe that is the case. Obviously, it very much depends on what is the underlying impact of the economy.
Because, if you're talking about one-two percentage points of a change of speed versus normal state, that's something that probably is absorbed within the overall trend, the secular trend of growth of digital payments, no? If it is much more than that, I think we would like to see. It also very much depends on the nature of the crisis and what are, if you like, the segments of the society that are the most affected, the ones that are protected. I think it also depends a lot on the effectiveness of the measures that the government is putting into place.
Because if you look at the quantity of them, they're fairly relevant, they're fairly massive, as much as is also happening in other countries around the world. I think the key question that will have to be answered going forward is the effectiveness on these topics. But honestly, I would love to give you more insight, but difficult to say more than this.
Okay, thank you very much.
The next question is from Charles Brennan with Credit Suisse. Please go ahead.
Great. I've got two questions, if I could. Firstly, just on the e-commerce side, do you think you've taken or lost market share in the overall e-commerce market through this COVID-19 period? It's obviously taking up more of your volume, but it is for with your competitors as well.
And then secondly, can we just think about the trends before COVID-19, and specifically, you're highlighting 5% volume growth. That's tracking below the high end of the 5%-7% revenue guidance that you're aiming for. Were you confident of closing that gap between 5% and 7% through increasing take rates? And is increasing take rates a sustainable driver of revenue growth, or is that a phenomena that would have been isolated to 2020? Thank you.
Thank you, Charles. So as far as the first one is concerned, to be honest with you, again, unfortunately, it's impossible to assess market shares in this current environment. I believe it's always important to underline the fact that even if today we're talking more about e-commerce because we're trying to second guess the behaviors of our customers and what will happen in the very long term and so on and so forth, still around now, it used to be 7%, and now in the peak of the crisis, around 8%-10%, and therefore, I think it's always important to mention that. I mean, we've been digging into the numbers as much as we could, both from the acquiring side and the issuing side.
Here, the market share don't change in two months. It's more a matter of the dynamics, the volume shifts, if you wish, and the different dynamics across the different segments, which are the merchants that grow faster into this space as far as the e-commerce side is concerned. Here, to be very clear, now, we have the market, as we said in the past, is basically composed by two macro segments. The one of the very global pure e-commerce players, the Amazons of this world, the Amazon.com, the Expedia, the Netflixes, the eBays. That is clearly not our market.
And then there's a second part of the market is a combination of the e-commerce, the multichannel component of physical, Italian, and international, merchants that too have that are large or semi or medium large, that have a physical presence in Italy, and the smaller Italian, merchants that are either pure e-commerce or growing multichannel as well. And we always separate these two markets because the first one, that's clearly the space for other players, it's not our target market, while the second is clearly our target market. We have invested a lot over the last few years in that space, having a good successes as well. And here, what we see is the following.
As far as the first part of the market is concerned, you clearly see the successes from the Amazons that are excelling better than the others, and the Netflixes of this world. However, in that segment, you have a very large number of players that are very heavy on international travel, tourism, and all of that, and therefore, that macro segment as a whole is not necessarily performing better than the local segment, where instead you have all the phenomena that we were describing of our own merchants going omni-channel, our own SMEs going omni-channel, and Italian-owned merchants, and that's the space where we are stronger, where we compete well, and therefore, I believe what will drive the market share dynamics is gonna be more the mix of segments rather than the market share per segment.
What we have been observing over the last two weeks, literally, for example, is a strong growth of the e-commerce component of larger merchants, for example, in retail, that are our customers. So I think too early to say, but what we see makes us feel at least at this stage comfortable for the dynamic... and if anything, we have now a stronger push from local merchants physical merchants of all sizes to go digital, and that's actually our space. Never forget, for example, that every single contract for physical commerce for Nexi is automatically already expanded enabled for e-commerce as well.
On your second question around volumes and revenues in January, February here, for us, there is, I would say, nothing new in the sense that if you look at the unitary prices in our industry and for Nexi as well, they are over time as volumes go up going marginally down, I would say slowly, but the direction is, I think, clear, and it's normal. We expected. It's planned. The reason why I said that with our revenues tend to perform better, or in any case, broadly in line with the volumes, despite this gradual decrease in the unitary prices, is because the type of strategy we have is a value centric strategy.
In terms of, we're trying to push more and more valuable products to our customers, and the way take rates are calculated, if you just take total revenue divided by total volumes, is very materially affected by that. I give you an example. If there is a merchant that is already working with us, driving a certain volume, that has a very traditional legacy terminal, and we upsell a smart terminal to that merchant, the value of that merchant goes up, our earnings go up, but the volume is more or less the same, and therefore, the take rate for that merchant goes up.
The merchant is happy, we are happy, everybody's happy, the bank is happy, but the take rates, technically calculated like that, is going up. Or for example, what we are doing in open banking or in corporate banking, you know, those services don't generate volumes in the traditional way, but they generate revenues. So again, I would say it's more a technical effect rather than a market dynamic.
Perfect. Thank you.
The next question is from Aditya Mettuku with Bank of America Merrill Lynch. Please go ahead.
Yeah, good afternoon, gentlemen. So, three questions. Firstly, I just wanted to delve a bit more into these OpEx savings. I'm struggling a bit back on how to incorporate these savings into my model. So if you could give us some sense of any additional context around how we should think about the CapEx. So if you know should we think the CapEx will be down year on year in 2020? And then again, when I look at the OpEx, you know, obviously, I understand you can't comment on the variable element, but maybe you know if you could give us some steer on the fixed cost element of your OpEx, where that was last year and where that could end up this year.
And then again, when we think about this EUR 100 million in savings, are they - how will we judge them versus the end of this year? Is it versus 2019? Any color you can give us to help us with our modeling would be super helpful. And secondly, I just had a question on SIA. There was some news flow in the middle of April around Nexi and SIA entering talks. Obviously, this has been around for some time now, but I just wondered if you could give us any additional color there. And finally, just one last question on the issuing side. You talked about some credit risk. I just wondered if you could give us some color on the exposure there. That'd be super helpful, t hank you.
Hi, Aditya. I would like to hand the floor to Bernardo for OpEx and the credit, and then we come back on SIA.
Hi. So OpEx, I think Paolo mentioned it earlier, and I give you also another data point. What Paolo said was OpEx this year was expected... Before COVID was expected to be roughly flat, slightly down year on year. So last year, we closed the year around EUR 470 million, if I remember correctly, and this would have been, more or less the level you would have expected this year, notwithstanding the increased volumes. CapEx also would have been slightly down year on year, approximately between EUR 160 million and EUR 170 million this year, and will be, both will be down because of COVID and the cost containment initiatives we are speaking of, including the variable component.
Now, as you say, you know, for me to comment on the variable component would imply making some kind of statement or prediction with regards to how volumes will evolve for the rest of the year. So I think what you should do in terms of modeling is basically what we do using the data we've given you. As I said, we have approximately 90% to 100%, to use round numbers, of fully variable costs, which you know fall in line with the fall in volume. So, in March, we had processing costs, which were down 35%, pretty much in line with the fall you had in volume.
So depending on what your view is with regards to the recovery curve, which, you know, we were showing you in one of the slides in the document, you will have cost savings or lower variable costs driven by the fall in the processing costs, which follows the recovery of the volumes. With regards to CapEx and other discretionary cost cuts, we haven't given you the breakdown in order to retain flexibility on both of these in order to, you know, do a bit more or a bit less than what we need based on how we recover.
But as I said, you have approximately EUR 100 million of cost cutting, which is a reduction year on year, if you want, simply because last year we had the similar starting cost base or cost base as we would have expected to have this year. And it's something we feel that we can commit to without giving you the full split between CapEx and OpEx, for the reasons I mentioned earlier. Depending on how quickly we recover, we may not need to cut as much CapEx because the fall in revenues won't be as high or on the fixed cost basis. But EUR 100 million is what we can commit to in terms of overall cash cost cutting. Okay?
And I think what you need to do is just work and virtually work out your scenario where volumes are gonna be. You will then have the split of directly variable costs, and then the rest will be a mixture of OpEx and CapEx. And as I said, CapEx will come down, and the rest will be OpEx. With regards to instead credit risk, last year we had less than EUR 10 million split between the issuing side and acquiring side. The acquiring side, if I remember correctly, was EUR 6 million or EUR 7 million. In the quarter, we have a number, you know, which is last year was EUR 5.3 million, sorry, on acquiring and 0.9 million on issuing.
In this first quarter, if you strip out the single name, which cost us a couple, just north of EUR 2 million, the rest was on a year-on-year basis, slightly down the cost of the acquiring risk. And as I said, depends on the depth of the recession and how this impacts SMEs and so on and so forth. You know, the impact, you know, might be, you know, much higher than last year. But when I mean much higher, I don't mean tens of millions of EUR. It might be twice what it was last year. But that is the extent of what we expect from credit risk.
Hoping that obviously, recession is as shallow, as recovery is as quick as possible, and the government-led initiatives are as effective as possible. And this is simply because we don't have a TUI kind of exposure, a Thomas Cook kind of exposure. We don't have merchants where we have 200 or 300 million EUR exposures. We have obvious exposure to travel, for instance, ferry operators or car rental businesses, et cetera. But the level of risk associated with these kind of businesses is single-digit million EUR or low double-digit million EUR. And these kind of businesses will benefit from the state support measures, which we highlighted earlier.
Thank you, Bernardo. As far as he is concerned, as you correctly said, in the past, we confirmed that there were, I think it was December, January. We confirmed that there were conversations happening, and that is still the case, but there are no new relevant news. There is nothing agreed, nor decided, nor signed at this stage.
Very clear. Thanks so much.
The next question is from Alexander Thor with Exane BNP Paribas ahead.
Hi, good afternoon. Thanks for letting me on. Just have a small clarification going back to this slide number ten that you show, and looking at the basic consumption line. I was a bit surprised that physical is not stronger in March and April, because I would have imagined a lot of cash volumes to move to card. So I can see that part of it is moving to e-com. But I'm a bit surprised that electronic payment in physical is not stronger. So I was just wondering if you've got other data points you could share to illustrate maybe what you are, what you're seeing in terms of of cash to card in in Italy. Thank you.
Thank you, Alexander. Again, unfortunately, we don't have more details or, if you like, fact-based insights that we can share on this one. I think here, let's be careful in not overshooting in terms of interpretation of these numbers. When we give more details, we always take the risk of creating more questions than the answers that we're able to give you. If you just take that category, it includes very different components because your comment may be right for groceries, for example, but when it comes to utilities or services like insurance, bank services that are included in this category, they follow different dynamics.
I think what you can observe here is that, which I think is the most relevant number, you have e-commerce that is growing throughout that period, you know, as merchants were getting better equipped and better prepared for serving their their customers online. If instead you get physical, never forget that, at least in Italy, if you wanted to go shopping physically, you had to go through quite long queues and waiting times outside the stores before you were getting in because of all the measures that were correctly, I think, imposed.
By the way, if you strip out, I don't have here in front, but if you strip out, if you just dive into that category, the grocery, no, that you are referring to, you may see fairly different dynamics. Let me see if I can find it. Yeah, it's actually growing faster. If we take the grocery line... I'm looking at, I'm just giving you this data point because you referred to it, and also because at the end of the day, the grocery line is the most important subcategory among all the others.
That category, if I understand well from the table that is in front of me, during the COVID crisis, has been growing basically twice these numbers, around 20%. So this confirms your insight, but to be honest with you, again, very difficult to then say that there's been a material shift, a massive shift to digital payment. I would love to say that, hopefully, I hope that's what we will see, but I don't really don't want to misguide you on this one, because it's important.
Thank you. Thanks, thanks for the incremental color here. Thank you.
The next question is from Gianmarco Bonacina with Equita. Please go ahead, sir.
Yes, good afternoon. A question about the install base. I understand that it's very difficult to give a forecast for the revenues, in particular on the volume, but on the install base, is it possible maybe to have little bit more visibility? In particular, I think on the card business, maybe there we could have probably a growth, while on the terminal business, I'm not sure because clearly, maybe there could be the impact of higher bankruptcies from SMEs. I don't know, maybe if you can elaborate on the evolution of the install base, if it's possible to assume that this business would have maybe a very small growth in 2020 .
And the second question on the Intesa acquiring business, by subtracting the pro forma data with the actual data, I've seen that for revenue there was a double-digit growth. So is it correct that this is not the underlying performance of the Intesa business, but is more of the mechanism which you mentioned before? So basically, you will have, at the end of the year, your I don't know, 95 million of EBITDA, regardless of the performance of the Intesa business. Thank you.
Bernardo, do you want to add?
So you're absolutely right, install base will continue to grow, including for cards. It has required an effort to make sure that new cards which get shipped are now shipped at home rather than in the bank branches, which are closing. Clearly, COVID-19 has an impact on this growth rate, so it will be somehow negatively impacted, but they should still grow. The same goes for Merchant Services and Solutions, where, you know, the fact that we are able to roll out upgrades in terms of our digital services, et cetera, helps the growth of the install base.
And, you know, obviously, even here we have an impact from COVID, given that the more shops are shut and the fewer new installations we have, but also the fewer deinstallations we have. So overall, we expect an install base, you know, to grow, and I think you mentioned it at some point, you know, obviously, the level, the depth of the recession and the impact this has on our customer base may impact this install base later on during the year and going forward as a function of the bankruptcies that we will have.
But, you know, if you look at what is left, everything else, it's expected, as you're saying, to grow, and I think net-net, it should overall grow. Just, think of the overall numbers we gave you in Merchant Services and Solutions. The Install base is approximately 40% of overall revenues. That's approximately EUR 200 million. So if you, you know, if you had a, I don't know, 5% bankruptcy rate, that would be EUR 10 million of lost revenues on an annual basis. If they happen in the second half of the year, it's EUR 5 million, so that will be more than offset by the inherent growth in the Install base, which is continuing. I hope I wasn't too quick, but I'm happy to take this offline if you want.
The second part of your question was with regards to Intesa. The growth year on year is actually not really deriving from the protection mechanism. It's rather deriving from Intesa's actions on this book during the course of 2019 in order to sell it. So, effectively, they managed to implement certain commercial initiatives aimed at making the book richer for the sale. It has nothing to do with the protection mechanism. The protection mechanism impacts revenues this year and will allow us to protect that EUR 95 million EBITDA number that we announced in December.
Thank you.
The next question is from Antonin Baudry with HSBC. Please go ahead.
Yes, good morning, everyone. Thank you to take my question. I have one remaining, if I may. Just to have more color about the tourism business in Italy, this is a big part of the economy, especially in Q3. What is the last information you have about the tourism season in Italy, and what could be the impact on your volumes, if, if... What is your dependence about tourism in terms of volume on your activity? Thank you.
Hi, Antonin, thank you for the question. There are still no new news on how the summer season will work in our country. I think the Prime Minister declared in an interview yesterday that the government was committed to allow a reopening, I would say, let me say a full reopening under strict rules, which is an interesting concept, but I think it's unfortunately unavoidable. And therefore, they're really working in defining, you know, the specific rules on how it should work in hotels, but most importantly on beaches, mountains, trekking trails, and so on and so forth. At the end of the day, it will be more of a national season.
So clearly, there is the expectation to have less foreigners coming in. We don't even know if they will be allowed in from this point of view, and at the same time, less Italian tourists going outbound. And therefore, I think, it will be a different season from this angle. I don't know what the net effect will be, but clearly it will be a more Italian-centric, country-centric season. It is far too early to say anything about what we expect to see in that space. Clearly, it's one of the most affected sectors, but it's also the one that probably at this stage is attracting the most efforts, the highest efforts from the government in terms of support.
I give you an example, in the relaunch decree that they're discussing as we speak, and should be announced in the coming days, they are considering not only a list of measures to support hotels, travel operations, restaurants, and so on and so forth, but also to incentivize tourism by giving, for example, a dedicated bonuses and coupons to Italian citizens spending their holidays in Italy this summer. Very difficult to predict anything beyond that. Just for you, for your own information, when we ran our simulations of the different scenarios, we do it by, let me say, industry somehow.
Clearly, you know, we are particularly careful in avoiding to assume an overoptimistic second half of the affected tourism. I think in the end, it will be the most affected area of our economy. Sorry, unfortunately, I'll not be able to say more than this, but this is about it.
The next question is from Gautam Pillai with Goldman Sachs. Please go ahead.
Great. Thanks for squeezing me in. Two quick questions, if I may. Firstly, on inorganic opportunities, and you already stated that Intesa is on course for completion. Apart from this, do you see scope for further consolidation in the Italian market in the near term? And have these conversations changed in any way, in the current environment?
A nd secondly, a quick follow-up on the cost containment plan. Just to clarify, you're not structurally lowering the cost base, rather this is a temporary adjustment by slowing hiring, et cetera, at an OpEx level you're doing in 2020. And also, at a CapEx level, does it affect the transformational CapEx investments, which you had originally planned, for the year? Thank you.
So, let me try to take them, and then, Bernardo, please jump in if you want to enrich. To begin with, Italian consolidation, we believe that there are opportunities out there. As we said in the past, when we think about our M&A options, at least as far as Italy is concerned, we remain interested in consolidation opportunities, in potentially buying more merchant books, and the Intesa deal goes exactly in this direction, and potentially adding smaller assets as far as products and technology are concerned.
Yes, we may see further consolidation opportunities, but again, we normally talk about these type of things when they become, when there is something that is active or decided, but we remain positive about it. I think we mentioned a few minutes ago the conversations with SIA that will go in that direction. On cost containment, to be honest with you, we're not done yet with that exercise, but as we, together with Bernardo, go through the list of things and so on and so forth, it's very obvious that there are things that we are learning these days that will stay with us in the future.
I told you before that since the very beginning, we put together a task force to observe customer behaviors and replan our commercial and product innovation roadmaps on the back of it for the coming years, not just for the coming months. We are doing the same as far as operations are concerned, and there are things that are very obvious that will help our cost base going forward. I think the easiest example, most obvious one, is the use of remote working. I think a company such as ours went from zero point something percent of remote working to 95% overnight, and we are learning very positive things. I don't believe that we will stay at 95%, but I don't believe we'll go back to zero point something percent either.
I think that there are other areas, for example, of the process digitalization, where we were already investing, that were already into progress, and we were forced somehow to accelerate and fast-track, given this situation, and they will stay with us for sure, and we try to intensify them, and so on and so forth. So while the number we're giving you is clearly, clearly, clearly, and to be super clear, for 2020 , because we are giving up certain things that we would like to be doing. And by the way, in some cases, we're giving up also because it's more difficult to execute them effectively. No, but we are working on the learnings, and I'm sure that we will have some benefits going forward as well.
On the CapEx question, I think we can just go back to what Bernardo said, that the CapEx level this year will be, was already planned to be lower than last year. It was a part of our technology strategy, we've been very explicit. Clearly, given the fact that a relevant part of the one hundred million plan has to do with CapEx, this means that CapEx will go down year on year in absolute terms. What will happen in terms of percentage of revenues will depend on the revenues as well, clearly, but probably we will be below our plans as on a percentage basis as well, but honestly, this will have to be seen going forward.
Okay, thank you.
The next question is from Simonetta Chiriotti with Mediobanca. Please go ahead, ma'am.
Yes, good afternoon, everybody. I have a question on revenues in the first quarter, but I think it's something that could be important also going forward in the coming quarters. If the trend in revenues and in volume-related revenues was similar to that in transacted value of managed transactions. Or if there was some kind of mix effect that helped to support the overall revenues?
Yeah, I mean, the mix effect is one which is obvious in the volume trend, where we had a lower decline in international scheme volumes and higher in domestic debit, and most of our revenues are tied to international scheme volumes. So that is definitely a factor in helping our revenues. But if you look at the overall take rate, I would obviously go back to the comment we made earlier, which is that the take rate is too gross or too coarse as a measure of profitability to make anything out of it in a quarter in which we dropped very significantly in terms of volumes, and they only impact you know just under 50% of our overall revenue. So in terms of mix, the only comment I would make is the one with regards to domestic debit fees versus international fees.
Thank you.
Mr. Bertoluzzo, gentlemen, there are no more questions registered at this time.
So thank you. Thank you, everybody, for attending this call. I feel a bit sorry for not being able to give you forward-looking insights on what will happen with the evolution of the situation here and the reshaping of customer behaviors underneath. I believe, it's unfortunately unavoidable.
I want to be clear, we remain very positive about the future of our business, about the future of our company. We just want to avoid, in any possible way, to misguide you or to give you over-optimistic comments on things that we perceive and that we need to be well understood in detail and with hard data and facts. Clearly, our key focus at this stage is to make the most out of a year that is gonna be a difficult year.
That's fairly obvious, but for our financials, it's important for our society, for this society and the citizens of the world, but in its own little space, also our company, but we try to make the most of these years in terms of accelerating the key initiatives that I'm sure will anticipate this evolution that is kind of visible, so thank you again for attending. Even if we are not traveling the world in physical roadshows, we are, as always, available for clarification, comments, and one-to-one meetings. I think Stefania will also be participating to a few conferences, digital conferences, in the coming months. So hopefully we will see you and talk to you, many of you, very soon. Have a good afternoon. Thank you.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.