Earnings Call: Q1 2021

Apr 21, 2021

Thank you all for standing by, and welcome to today's Worldline Q1 Revenue Conference Call. Our presentation for today will be followed by a question and answer session. Please be advised the call is being recorded. And I would now like to hand the call over to your speaker, Chairman and CEO of the group, Mr. Gerald Pierre Grapinet. Many thanks, operator. Ladies and gentlemen, good morning. This is Jacques Grapinet speaking. Thank you for attending this wireline conference call today on our Q1 2021 revenue. And as usual, I'm going to share this presentation with our Deputy CCO, Marc Andre Deporte and with Eric Artaud, our Group CFO. As you can see, during the Q1, we faced, as anticipated in our central scenario, a 3rd wave of COVID, leading to new restrictions implemented in most of our key countries. Regardless, Wireline has shown a strong resilience with a limited 9% organic decline, which is notable compared to a very strong start of the year in 2020, with both wireline and Ingenico growing double digits. This resilience in Q1 2021 clearly reflects the increased share of our online activities and the acceleration of the cashless trends triggered by the pandemic. The evolution of payment transaction volumes is also showing an improvement at the very end of the first quarter, consistent with the expected strong growth acceleration during the Q2. This trend is currently supported by the ease of national restriction roadmaps and more than ever by the rollout of vaccination campaigns to reach the collective immunity in the course of the summer 2021 as per the official targets of European governments. Meanwhile, I'm pleased to report that the Ingenico integration is progressing at a rapid pace, allowing us to already secure a vast majority of the expected synergies in 2021, supporting our annual objective of circa 200 basis points profitability improvements. In parallel, we pursue the execution of our strategic road map with completion in 2021 of the strategic review of the payment terminal business as planned, while keeping as usual a maximum focus on new consolidation opportunity. Overall, I am very pleased to report that this Q1 is fully in line operationally and strategically with the expected trajectory presented in February 2021, and we confirm, of course, our full year guidance. I give the floor now to Marc Morrie to give you more color on the current AirSense business environment and how we see the coming quarters. Thank you, Gilles, and good morning to you all. There is clearly no precedent of such a crisis on our transaction based activity, and you can see on the chart the now 3 consecutive waves of various restrictions impacting massively merchants and consumers. Looking at it, starting from the left, you can observe that we enjoyed a very strong performance in January February last year, brutally interrupted by the 1st COVID wave in March 2020, triggered by strict lockdown rules in our core countries and impacting particularly our Q2. You can see as well end of Q2 and in Q3 the strong sensitivity of transaction volumes and their ability to recover quickly as soon as stores are even partially reopened and despite a certain number of restrictions remaining in place at that time. Since then, we have experienced 2 consecutive waves of government measures with the first one in Q4 2020, which included still a flexibility during the Christmas period that allowed us to deliver a decent Q4 despite the overall context. The second one beginning of 2021 and a re generalization of tighter restrictions in, of course, countries driving this quarter to be as expected between Q2 and Q4 2020. But more importantly, I would like to underline 2 points. First, we have been less impacted by the last two waves than by the first one, thanks to an increased online exposure, allowing us to capture growth opportunity and the acceleration from cash to card, driven by an improved usage of contactless payment. 2nd, the beginning of restrictions easing seen at the end of Q1 allowed us to be back to growth in the month of March. Maybe few data points to help you save the acceleration. In terms of number of transactions, we were up 12% in March with online up strong double digit and in stores up mid single digit. While in January February, we were down high single digit overall, but with in store transactions down double digit. My most important takeaway from this slide is a strong benefit in terms of resilience of the new group profile, Potin Velcro, with most significant online exposure, which is now 3 times bigger than the average reported for Worheim before the acquisition. Now let's have a look at Slide 6 on the current and expected health situation in Worheim core markets. In the first two columns, you can see the lockdown situation in our core European countries during the Q1. Most important part of the table is on the right hand side, showing the current and expected status of reopenings as of today based on plans implemented by European governments, except some markets such as France and Belgium, where stricter restrictions came into force in March, we have seen more relaxed measures across Europe as Austria and C3 settlements and at the very end of the quarter in Germany with end of lockdowns and at least partial reopening of non essential retail. This status is fully in line with our central scenario of progressive listing of restriction, on which I will comment later on in the presentation. This positive trend is strengthened by the acceleration of vaccination campaigns confirming our scenario of further progressive reopening as shown on Slide 7. So talking about vaccination campaigns. Here are the latest official data points in key European countries. As of today, circa 18% of the population in all key countries is already vaccinated. Based on the vaccination campaigns announced and observed, we see a strong acceleration that is planned to lead over the coming 4 months to reach 60% to 70% of the population vaccinated by summer 2021, reaching the early immunity. This vaccination ramp up will allow progressive acceleration in the course of Q2 and a more normalized environment hopefully in H2. As for the partial listing of restriction, this trend is fully in line and embedded into our central scenario. As I mentioned, all the recent announcements will confirm our central scenario assuming a gradual recovery along the year. As a reminder, our scenario is based on the following assumptions. For the first half twenty twenty one, we expect to be flat to slightly negative in terms of organic performance driven by several government domestic restrictions during Q1, including lockdowns of non essential merchants, curfews and border restrictions with Q1 performance as a crossroad between Q2 and Q4 2020, which is in line with our publication today. Partial relief of restrictions in the course of H1 2021, in particular in Q2, no significant intra European travels, no intercontinental travels and ramp up of vaccination campaign. More importantly, for the second half of the year twenty twenty one, we expect to reaccelerate towards the circa double digit organic growth based on the ease of domestic restriction with end of lockdown for non national promotions and of curfews and borders restrictions. Intra European travels fully allows an progressive return to normal level of travel flows intra European travel flows and no significant intercontinental travels yet. Once again, it's just a reminder of what we already shared with you of SunTrust scenario and so far confirmed by the 1st 4 months of 2021 and supporting the full year guidance that Gilles will remind you in the next slide. Many thanks, Marc Henry. Indeed, our resilient Q1 2021 in such a context and the ongoing recovery that we observed in transaction volumes at the end of March as per our plan allows us to fully confirm our 2021 guidance based on the scenario of the previous page, and I remember the guidance. At least a mid single digit revenue organic growth for the full year of 2021 and OMDA margin improvement by circa 200 basis points compared to 2020 pro form a margin of 23.9%, including Engencore on a full year basis and finally, an OMDA conversion rate into free cash flow of circa 50%. Now, Eric will take you through Q1 performance by activity before I come back for the conclusion. Thank you, Gil, and good morning to all of you. Let me start with an overview of our revenue performance in Q1 2021. During the Q1 of 2021, Royal Mail's revenue reached €1,080,000,000 with revenue impacted by CV restriction implemented in our key countries, as already mentioned by Mark Horrie. Consequently and as expected, organic revenue decline for the Q1 was minus 9%, rather resilient in such a context. But the most important point is the phasing of the quarter. First, I remind you that both Coreline and Ingenico experienced last year a very strong start of the month of January February 2020, up double digit and after the month of March impacted by the strict lockdown put in place, as all of you know. This high comparison basis coupled with the new restrictions in Q1 2021 has obviously impacted our activity. But the important message here is the inflection point we have seen in March. All our transaction based activities were back to positive organic growth in March. This acceleration fully confirms the expected trend we foresee for the entire year 2021 and highlight the strong rebound capacity of worldwide production activities when we have the relaxation of restrictions. Let me now put this number by business line. Starting with Merchant Services activities. Revenue reached €517,000,000 representing an organic decline by 8.7%. Most of the decrease was in commercial acquiring, while payment acceptance, both online and in store, as well as digital services, showed more resilience in the current COVID-nineteen context. Digging into more details of our activity. 1st, on the commercial acquiring side, we experienced a strong impact on the new COVID-nineteen measure in our key countries, mainly in the German and Swiss market, with a particular low high value transaction and DCC payments. Moving to the payment acceptance. Our activity was quite stable versus last year, despite the lower activity on the SMB acceptance. The main positive drivers were good dynamism on the large retailer transaction volumes, mainly in France and Germany, as well as our online activities continuing to grow double digit excluding travel, having in mind that travel activities were still strong in Q1 2020, creating a high comparison basis. Last, with digital services, we have seen a steady performance with a good trend in our key countries such as Belgium or Switzerland driven by large retailers, while SMBs remained under pressure during the Q1 due to CV implemented in Germany, Belgium and the Netherlands. Over the quarter, commercial activity remains strong. Notably, we have renewed in a competitive process an important contract with Totalo. The main pillar of this success are our ability to provide a competitive pricing for their acquiring transactions in Europe market such as Benelux, France and Germany, a solution offering end to end and globalized reporting and system connectivity and a specific customization to answer customer needs. The flexibility of our solution, combining reach, scale and customization is clearly a key differentiating factor in such merchant LSP. Now moving to Financial Services. Financial Services revenue reached €216,000,000 representing an organic decline by 2.4%. The activity showed an overall resilience with a progressive improvement throughout the quarter. Regarding issuing processing activities, we have experienced lower volumes related to COVID-nineteen on a high comparison basis. This effect has been partially compensated by the ramp up of new projects, notably Comdirect. Our acquiring processing activity has been impacted by meeting transaction due to the restriction in our key countries. It has been partially compensated by the start of the run phase in new contracts signed. This latest effect should continue to contribute in 2021. On the other hand, both digital banking and account payment have grown significantly in this quarter. On digital banking side, we have seen a strong growth of the activity across all geographies, driven by higher authentication volumes related to the growth acceleration on online transaction and higher volumes of orders processed on Royal Mail eBocque platform. To end with our current payment activities, the performance has been solid, benefiting from the ongoing ramp up of the UniCredit contract combined with significant project activities. Regarding the commercial activity, one of the key contracts to mention is the one with Comdirect. Following many years of successful partnership, we have extended by 5 years the existing service agreement with Comdirect, a commercial bank brand. We will process the bank's new Visa debit card via our next gen API based issuing service. And on top, the bank has been seduced by our catalog of value added services, such as the possibility to offer instantaneously a virtual car to its customer. This quarter highlights once again the highly resilient profile of SS division, which could face 3 waves of COVID, never exceeding minus 5% organic evolution. Regarding TSL, revenue reached €266,000,000 representing an organic decline of 16.5% in a challenging environment adversely impacted by COVID-nineteen consequences as anticipated. In this context, we naturally stayed focused on the cost management, which combined with favorable geographical mix allowed to preserve margin profile. Let me now cover the performance per region. Regarding EMEA, Western Europe, particularly France, UK and DACH suffered from lockdowns implemented in the Q3 as expected. In Eastern Europe, we have been impacted mainly by several order delays that should come back in the coming quarters. LARS, Middle East and Africa suffered from high comparison basis, but the pipeline of projects remains strong, offering future growth opportunities. In APAC, the market offers an overall good traction with a strong momentum in Australia with our main customer, a resilient performance in Southeast Asia. The only market suffering is China, impacted by a lack of market dynamism and a high comparison basis related to APOS project delivered in Q1 2020. Latin America has shown a strong performance with a solid momentum of project execution with key customers in Brazil and market share gains in a new equipment phase in other countries such as Argentina, Chile and Peru. Last, in North America, despite the strong pipeline, the quarter was soft due to a high comparison basis, difficulties of our clients to deploy terminals in the 1st 2 months of the year. However, we expect a sequential increase of the activity for the coming quarter. During the Q1 of the year, Terminal Solution and Services continued to strengthen its payment platform as a service, PPaaS, with the onboarding of 16 transactional partners to co design and test the solution. These include leading acquirer, global PSPs, payment payers and fintechs. Clearly, it's a new step in the business model transformational journey of TSS to move toward a more recurring revenue based activity. Let me conclude this part with MTS. Revenue reached €82,000,000 representing a quality stability, thanks to a new project contribution in the quarter. By divisions, the main highlights were as follows. Starting with trust digitization, the activity has been impacted by the end of specific contracts, but we have been able to partially offset this effect by new projects and additional volumes coming from contracts, new and existing such as tax collection services in LatAm region. Indicating activities have been obviously impacted by the at the beginning of the quarter suffering from the exposure of transportation in our key countries, but the situation progressively recovered at the end of the quarter on the back of new project development in France and a better activity in the UK. Lastly, on the e consumer and mobility, we have experienced a steady performance with a strong momentum in contact solution with increased volume and a strong dynamic in e health activities in France regarding consumer cloud solution and new projects in connected living and mobility solutions. To end with MTS commercial activity over the quarter, we have signed a new contract with the contest region in France, we have been chosen to equip the region with a last e ticketing generation platform. This solution will enable the harmonization of mobile ticketing assets throughout the region and will facilitate intermodalities between the various regional transport networks. In the long term, this ticket model could be used to access other services provided by the region and its partner cities such as e administration or public services. Now let me hand over to Gilles to conclude. Many thanks, Eric. Before concluding this presentation, I would like to take advantage of this call to highlight the successful completion of our trust 2025 year CSR program, which has been recently reported within our universal registration document, which was filed last week. Since our IPO in 2014 and in parallel, as you know, to a very robust value creation for our shareholders, Wireline had indeed committed to an ambitious corporate social responsibility approach. The resulting 5 year action plan, Trust 2020, was launched in 2015 and fully embedded in the group's corporate strategy and after the materiality assessment we did at the time covered multiple dimensions like business, people, value chain analytics and the environment of course. Trust 2020 has proven to be a very powerful framework, mobilizing the whole organization around the 13 measured objectives to be achieved by 2020. As a result, we have delivered successfully on most of our ambitions and correspondingly, Wireline is now seen as a CSR leader in the field of payment and technology awarded by the leading non financial rating agencies such as GRI, CDP, EcoVadis, Vigeo, Odorjums amongst many others. Building on this strong momentum, strengthened in 2020 by the adoption of the company's sense of purpose by our shareholders, Wireline has been designing its new Trust 2025 program post the Angelico acquisition. It aims to open a new chapter for the company's CSR journey with the same level of ambition to secure further long term value creation for all stakeholders by driving new long term transformation actions as customer satisfaction and their long term commitment to source, firmware line, attractiveness and retention for our people and for talent, positive contribution to climate change with carbon neutrality objectives, sustainable practice with our suppliers and deeper engagement with local communities, in particular with payment services dedicated to charities. This new Trust 2025 CSR program will, of course, be presented to you more in detail in our projected Investor Day in H2 2021. Now let's conclude this presentation by restating our key priorities for 2021. First, from an organic standpoint and beyond reaching our guidance, we will focus on delivering the strongest possible acceleration of our growth rate as soon as of Q2 upon the progressive normalization of the health situation. And of course, as usual, we will focus on the quickest possible execution of our synergy road map already largely secured for the objective of the Ingenico synergy in 2021. 2nd, we will keep a very strong focus on executing our strategic initiatives within particular the completion as planned this year of the currently ongoing strategic review of the payment terminal activities, which is very well on track and the continuation of our scale and reach enhancements through further consolidation opportunities, notably given the favorable context created by numerous initiatives currently taken by European banks in terms of contemplated divestment of their payment activity. Thank you very much for your attention. And with Marc Henry and Eric, we now will be happy to take your questions. Thank you. We will now take our question. The first question is from the line of James Goodman from Barclays. Thanks very much for taking my questions. Just 2, please. First one, just on the guidance, mainly for the first half of the year. Just in terms of the reiteration there of flat to down slightly, given your comments around the March run rate, the sort of regions opening up, given the comp effect mathematically in Q2, I find it hard not to look for double digit growth in the Q2, so bringing you maybe into positive territory in the first half. Just wondered if you could address that really and anything I'm not thinking about there in terms of the Q2 likely performance. And then second question, just on terminals. There was a press article a couple of days ago again commenting on the process, valuation and various other things. Just wondered if you could add a bit of context to that. And maybe you could recap a little bit the latest thoughts around protecting, I guess, what will be a very important supplier relationship to Worldline in the event that you pursue that course of action? Thank you. Hi, gents. Many thanks for your questions. Maybe I will start on the first one. I will also comment a little bit on your question regarding TSS. Well, I see where you are going on the Q2. And indeed, you're right. Q1 is fully in line with the expected trajectory, in particular, as you noted, with the very solid recovery of the revenue and the transaction volumes at the end of the quarter. So all this is totally confirming our H1 view of circa flat performance with all division we expect to be in positive territory, including potentially even TSS. And it's true that then the final result may depend a little bit on the speed of some relaxation here and there. So it's hard for us to forecast. There could be a favorable scenario indeed that could bring us even better than what we see. For the time being, we still stay on the trend that has been described by Martin Maris sooner of what we said for the H1. But of course, some good news may happen during the course of Q2, let's see. Regarding TSS, as you know, we don't comment on rumors coming in such circumstances from all types of media. What I can say, nonetheless, is that definitely, we are progressing extremely well on the strategic review and we've been exploring all the potential options. And definitely what I cannot deny is that we came in particular amongst many other options to observe that probably TSS could be an attractive asset also for financial sponsor. And so as we are committed to explore the feasibility of all options, we cannot exclude that some types of renewals will pursue popping up. This is the only comment I could do. What we want to secure in any case is the best possible future for T8SES in the interest of all stakeholders who are aligned, the business, the employees, the customers and we will pursue exploring all the relevant options. What we are pleased with is to see the level of attention that the strategic review has updated around us. Now regarding the relationship, which has been a deep work done by the strategic review, indeed to project ourselves in a world where TSS would no longer be controlled by the company, which is important indeed. We have a clean base to start a new relationship with these major suppliers. Maybe, Marc Andre, you can talk about it. It is clearly in place today as an intra group relationship and a key element to secure for the future for both parties. Clearly, we rely on this hardware supply and the innovation, the quality of the work between the two teams to provide the best possible combination to our customers. And obviously, TSS as well needs with very, very important customers, rising huge volumes and leading on the market. And the work has been done to make sure that this is secured, this is stabilized, this can last and be a long term value building relationship of both parties. And it took quite some energy to make sure that documentation support that beyond the quality of the people relationship. And that is a strong basis of the strategic revenue, no doubt. And to be ready indeed to execute fast and also to give visibility and transparency to the potential long term investor that would take over the business if we go in that direction in the end. Many thanks. Our next question is from the line of Josh Levin from Autonomous Research. You may ask your question. Good morning. I have two questions. The first, you achieved 2 thirds of your 2021 Ingenico synergies target in the Q1. Does that mean you may beat the original synergy guidance or did you expect it was going to be front loaded this year? And then on PAYONE, has there been a change to the degree which the Sparkasse are distributing your payment products and services versus concartis' payment products and services? Thank you. Hi, Josh. Good to hear you, pursue well. Lucky guys, you live in a country which is the head of Europe in terms of relaxation measures, as well as I know. I give the floor for your first question to Eric and then provide him a colleague and discuss a bit around philosophy. Hi, Josh. Yes, so you're right. We're very pleased with the progress so far of the synergy plan. We have, after 3 months, secured already twothree of the synergies. But for the year, it means that we still need a few additional actions to deliver the last third of the synergies expected for the year. And not the 2 thirds have already materialized in Q1. But we are really on a good track. That's what I can confirm to you at this point in time. That's why we thought interesting to share this data point with you all. You know us basically, we will not over commit. It's very early in the year, but it's promising. And we always apply the same approach. We try to deliver fast. That's our motto. That's our signature. And usually, when we deliver fast, ultimately, we get more synergies. So that's what we will be aiming for. This time again, that's a proven recipe, and we expect to apply it again. Yes. And I will continue on this work of delivering the synergy. And I can tell you, we see the teams extremely motivated to demonstrate that this fast spirit is everywhere in the company. There is a kind of internal competition to demonstrate that you are the fastest to the target. And we keep also the momentum of the company, the morale despite personal opinions of the people with this big, big energy and momentum around the scenario that's very supportive to building our future. Now coming to the relationship with Spark Hetton. Yes, indeed, it's excellent. And given their interest into PAYONE and their very strong support to the project, They have put more and more emphasis, in particular over the last years months, into making sure that all the individual branches, the network, the sub banks inside the selling banks group are equipped in terms of online tools, process, relationship, trainings to push the solutions of PAYONE. And it is an accelerator of our commercial performance. Obviously, right now, it is a bit hidden by the low level of transaction. In Germany, we are insisting about the lockdown situation, to state the obvious. And German is the big, big case of the Q1. We're having been under every extremely strict rules and lockdowns, I would say, beyond what was seen before 2020 during Q1, but ending at the very end of the quarter and the very last days, the last week of the quarter has shown that when things ease in Germany, it's a big game changer. So yes, the Sparkassen relationship is improving. It's developing fast and will support an acceleration of the sales and top line momentum. Thank you very much. Our next question is from the line of Hans Ulitier from UBS. You may ask your question. I got also a couple of questions. The first one is on terminals. Just in regards to puts your comment in context of concluding by year end, could you talk a little bit about the timing? If something gets announced, in what time frame could you be closing the business as you have already legally separated the businesses? And then just in terms of EBITDA, can you maybe scope what is in the current scope? And is there a certain range because you still have different scenarios running there? And would there be an internal re cost allocation if you completely divest the business? And then just a short follow-up afterwards. Hello, Annette. So good morning. So I will take the first one, Eric will take the second one on the relevant EBITDA scope. So regarding the strategic review timing, we are as you know, as you remember, we launched it as soon as the closing. We executed very seriously to make sure that we can actually come after the potential signing would be done to a relatively fast closing without too many things to be further worked around. For example, it's why it was so important to prepare properly the future relationship between Merchant Services in Roanlein and So this is off the table for business signing and closing. So with that in mind, our ideal scenario would be to start 2022 ideally in the new setup, whatever it could be. So it may look ambitious. We believe it could be feasible depending on the scenarios that would be retained by the Board in the end and in particular, of course, for scenarios that would imply a divestment of a controlling stake in the TSS business. It is still what we are after and the time line has been built with that overall objective in mind. Of course, then it may probably also depending on multiple factors, it may move a little bit by a few months, but we are in this mindset to try to make it in 2021 and to start 2022 on a new setup on both sides. Eric? On the scope and EBITDA, so the scope is the terminal activity for both Royal Enge and Ingenico. In terms of EBITDA, you should expect probably something between €300,000,000, €350,000,000 This, of course, will be finalized with any potential buyer if we decide to sell. There is always a bit of tuning in Black Mile, as you know, but that's probably the right order of magnitude. And to give you another data point, also rough order of magnitude, you should expect for this unit probably circa 25% of Whangdee Martin. Okay. Thank you. And then just a topic here, something a topic of theme is alternative payment methods. Maybe you can remind us what is the typically different, let's say, profitability rates between payment methods if you do Visa, Mastercard, Amex, PayPal or, for example, direct accounts to account payments or PSE2 related direct online banking payments, etcetera? Thank you. Yes. Johannes, this is probably one of the most difficult question of the industry right now. And clearly, there is no stable answer to it because it's in constant evolution. A payments mid pricing model is a choice made by every payment based on their willingness to go fast on the market, fast or slow, much, much more than the technical way it is operated. It's not because an account to account payment is settled by a central ACH infrastructure that it doesn't need to be known by a consumer, accepted by a merchant integrated in the current consistent reporting. And so we have situation typically, I can think about the Chinese payment means where we make more money than on the traditional card schemes. So you have a huge diversity of situations. Overall, what remains a driver of the growth and the relevance of our positioning is to serve the merchants in handling this diversity. What the merchant aids is losing the sale. Merchants are there to sell. They want to serve each and every customer whatever its preference in terms of payment means. And they want to know how much they sold. They want to know their treasury level, and they want ideally to get their treasury as soon as possible into their account. And that is the job of a merchant service provider to provide a consistent solutions to all business, accept all kind of payment methods, be efficient, provide the right reporting, make sure the cash flows quickly and then the exceptions, incident is the most professional way. And as we, I think, shared with you already a few times, we believe that diversity in this moment and likely to continue or even to develop in the coming months years is a strong driver of our growth and of the relevance of our positioning on the market. The next one is from the line of Mohamed Mohalla from Goldman Sachs. Great. Thank you very much. Hi, Gill, Henry and Eric. I had two questions. One, you sort of sounded more optimistic in terms of your sort of exit rates around March. Could you give us a sense of how April has been trending in terms of sort of the pace of the acceleration? And I'm cognizant that the comparisons now really start to ease up that drive your kind of view around a kind of flattish H1. And then as we think about the back half of the year, you've clearly excluded travel and tourism. But is there any other factors that potentially could paint to a more optimistic scenario around the growth recovery that we're missing, particularly in terms of revenue synergies the Ingenico side? And then secondly, any update on M and A? I know you've talked about terminals a lot, but if you sort of come up with a announcement around terminals, Could you update us on the discussions you're having? I know there was something on the wires earlier this morning that you're increasingly still being approached by banks as an industrial vendor. So that would be helpful in terms of how quickly you can transition on the next M and A moves. Thank you. Sure, Marc Henri, maybe on the first one. On the momentum, what we saw beginning of April was very much a continuation at the level at the end of March. So remaining strong compared to the previous period. Not yet an acceleration further, remaining strong like at the end of March because there was no new listing of restriction happening. But what we see is extremely reactive to any listing of restriction. And this gives us a good visibility for the period to come, as we say, at this very solid and decent level. And we are hopeful that with what we shared with you as the vaccination campaign progress and progress. All these very, very tight situation of the core European countries is getting to be behind us. Maybe to your question of what are the upsides that could come as a positive. There is one we did not mention is the accumulated 100 of 1,000,000,000 of saving in Continental Europe. And the particularity of its Continental Europe is maybe very restrictive measures when it comes to freedom to operate, but also very protective measures when it comes to business and people to secure that the revenues are not impacted. So of course, a lot of public debt has been generated, but somehow the private savings have been preserved. So people have accumulated a huge amount of unspent money. Consumers may decide to mobilize this money at a much faster pace. And that is the external factor on the context data on which we miss a bit of knowledge because this was not so strong and so much accumulated in Q3 last year, and this may come as an accelerator this time. So that's the outside part, of course, and there is inside all the energy that we have accumulated internally in terms of capacity to cross sell and deliver the revenue synergies with Ingenico with a better product mix, a better combination of teams and that will be potentially an accelerator as well. And regarding M and A, what is striking these days over the last recent months is that more and more banks, including leading domestic players in their home markets, are accelerating somehow the strategic review that they do on their payment activities, and it covers 2 dimensions. The first one is on the merchant services business, where clearly there are more and more opportunities recently of potential sale or partnership or Geely's along the merchant acquiring related activities of banks who are recognizing that they lack scale, sometimes technologies, sometimes just the focus on this business given the fact that it is more and more populated by large pure players in Europe and that partnership makes absolute sense in the nature of the ANZ Worldline joint venture that we announced at the end of 2020. We believe this is a winning formula. Not always a GV by the way, but always at least a commercial alliance and a distribution agreement. And this is really one of the trend we see in more and more countries. The second one is related to relatively transformative thinking around the processing factories of payments. Some banks are really questioning the contribution to their cost income ratios of the way they operate their payment. It is more cost driven than about accelerating growth for merchant distribution, but it connects probably to the overall environment in which large universal banks are operating these days and which is clearly driving the strategic agenda of some of these to really reconsider their level of insourcing versus outsourcing. And so it can also echo sometimes some M and A dimension or feed a potential longer term pipeline of large processing opportunities in the coming years. Not everything should be short term to be clear, but clearly we are entertaining sometime very interesting discussion with banks that are clearly opening up a brand new array of thinking on their strategic options to rethink the way they should distribute payment and consequently also partner in producing the right level on cost on their payment means and payment products and payment solutions. So it is really I think something that we will need to further observe in the coming months. But I must say that the last months have been pretty interesting from that standpoint. I think also preparing very well a new wave of consolidation of payment volume in Europe, whether through M and A or through large outsourcing in the same nature of the one we discussed around commerce and unit credit over the recent years. Okay. And I just had one for Eric. On the synergies, can I just reconfirm that there was not a pull forward, but rather you're realizing the synergies quicker and there could be the numbers of $66,000,000 could still be a relatively conservative estimate for the year? That would be my assumption and my hope, that around this objective that we are all pushing the team that are already quite motivated, as Marc Maric said. Indeed, now we try to secure the 66, but that's really well on track. And then potentially doing a bit more or doing a bit faster even some of the synergies that could have been done in 2022, so that it can bring positive impact earlier. Great. Thank you, gentlemen. Thank you. The next question is from the line of Stefan Howari from ODDO. Yes. Hello. Good morning, everyone. I have two questions. The first one is a little bit long term or not so much in a way because if you try to imagine the group when you will have solved the TSS issue or if we can call it like that. What kind of what is the profile do you see for the group in terms of growth and EBITDA margin, let's say, starting in 2022 because 2021 is obviously not a normal year. So that's the first question. And the second question is, if you could give some details about your online business today, how it is growing, if your traditional customer has changed a little bit the way they think about it and if they want to accelerate? And yes, that's basically my question. Thank you. Hi, Stefan. Nice try, Stefan, but rendezvous in our future or the previous question in our future Capital Market Day, if you don't mind to talk about the medium term perspective of the group with or without TSS on board. It will, of course, depend on the outcome of the strategic review. But indeed, it should be an interesting moment for you all. And really, as you know, for us, TSS is not an issue, as you call it. TSS is a great asset, having great teams, super transformation ahead and we just want to make sure what is the best home for driving this business to its next journey of world leadership in the future secured, interactive, cloud based payment devices of tomorrow. This said regarding e comm and online, indeed, we see interesting evolution, particularly post the Ingenico acquisition and maybe Martin Ric can give you some more colors here. Yes. Maybe just to insist that as a starting point, ecom is indeed going strongly since the end of Q1. In particular, as we don't have travel anymore in the comparison basis towards last year. And Ingenico, in particular, was strong in the travel sector. And that's weighted a bit on the performance of its business during the year 2020. This is behind us, and this is just now a full upside when travel is coming back. And as you see in our central scenario, very progressively in Europe and Intercontinental will need to wait for the following years. What I can say on in store and online and its acceleration further is the quality and the scope of the offering that now from Banyan, Worland and Ingenico is much bigger and we can offer that to both portfolio in cross selling logic. But more importantly, I think we see what we see accelerating very fast is the fact that there is no in store or merchant that do not think about having an online solution. And for the bigger ones, a fully integrated in store and online solution that allows to have a very consistent experience, a real omnichannel experience when you can start online, finish in store, move from a remote to in store experience with a mix of click and collect or some in store combination. The need for a seamless world in which this dimension in so and online are not anymore separated but tightly related is the new trend in the industry. And that's very good for us who have such an in store position and online capability because we are perfectly positioned to capture this evolution of the market, which is largely was existing before COVID, but the COVID has accelerated it because now merchants see a situation when you have ups and downs and you may I mean, people tend to foresee the future like with events like looks like today that may reoccur and they want to keep fully flexible and have the ability to serve their customer in whatever way. So this need of combining online with in store, which is the new not the new normal, the new must have for everyone, is a very interesting accelerator of the momentum, and we are putting a lot of emphasis and energy on this dimension in MS right now. Okay. Okay. Sorry, yes. The world issue was not appropriate, of course. I've got a short follow-up on online. When you say integrated offer, does it mean that you think about integrating services like buy now, pay later or things like that? Or you just continue to outsource these kind of services? Today, there are a lot of partners that are very dynamic in this market. So our first move is clearly to offer the big names to the merchants. Buy now Pay Later is primarily a branded concept targeting consumers. And we think it's important. We are not a B2C company and that we offer this kind of solution to and we allow the merchants to accept this kind of solution and to serve their consumers. And then, of course, all options are quite open. It's quite a new market. So we are not I'm not saying that we more B2B solution could not be envisaged, but the first move and the first priority is to ensure that big brand names are available to all our merchants. The next question is from the line of Alexander Fowler from Exane. We've got three questions. The first one is more of a housekeeping one. Wondering if you could give us a sense of the FX impact we should expect for the rest of the year. It's getting harder to model out FX now that you've got terminal. So that would be helpful. And then my questions, one would be on the order book and pipeline in Financial Services. I know, Gilles, you commented on potential large deals just now in outsourcing. Sometimes this takes a little while. So wondering perhaps smaller, medium sized deals that we might expect in the coming months and quarters. And my second question is a bit longer term. Curious to hear how you're thinking of a potential digital euro. Would you view this as a way to perhaps displace cash a little faster and therefore upside to word line? Or quite the opposite, some risk of putting pressure on take rate across all e payment methods? And that's it. Thank you very much. Okay. Eric speaking, I will take the first question, which is definitely not a new one. You know that FX is quite hard to predict. What I would say is that we are particularly sensitive to the evolution of euro to dollar. That's probably the primary KPI you should consider if you want to model based on your anticipation of this evolution. Also, sensitive to the evolution of Latin American currencies, which may evolve very fast. There is a very big high penetration in Argentina. Riaz in Brazil is also quite volatile. So I would say that's probably in this region that you should look for the various impact. And last, I would say the Swiss francs, which is also significant for us. With this, you have a good idea of the currencies that are impacting us. The first two must be for TSL, which is the division which is the most impacted. The last one, the Chevron being more connected with merchant services. In terms of absolute value, I will not bet because that's definitely not something I usually do. We give objectives and guidance excluding the FX rate because it's not something under our control. Just to give you a number in Q1, it has been €31,000,000 the FX impact, which impacted negatively the reported number from last year through the appreciation of euro, 2 thirds of it being in a bit more region than 2 thirds being in PSS division. Thank you, Eric. Regarding the pipeline in FS, just to what we can say is that end of March, the pipeline of commercial opportunities is at a very good level in FX. And the quality of the pipeline at this point in time, the one on which we actually work daily with the hope to close in the coming quarters, is made also very good many middle size opportunities. Larger deals, we have learned that from the past, are taking a long time to close always. But what is really interesting these days is to see that banks are really looking at this issue from a strategic and sometimes even from a top management standpoint with external advisory firms helping them to drive entirely new business cases. So this is more for me a medium term relay of strong growth for FS when such strategic decision could be proven right in certain European banks and then moved to the tender phase of the bilateral discussion with the most obvious supplier that, for example, WarBank can be. So this is what is really great is to make sure that and what we will monitor in 2020 is the speed at which the strategic review of the make or buy dilemma is taking place in some of the large European banks. And of course, we hope to keep you updated of our latest assessment of the market opportunities at the time of our financial communication with our Capital Market Day later in H2. And coming to Digital Euro to make it short because it is still a project, I think the most obvious use case would be to accelerate the cash displacement of particular categories of population of certain use cases. So today, the 2 hottest things that are looked after are the unbanked or the people that have difficult access to traditional banking networks. So like minor, migrants, the poorest part of our population, which are heavy cash users, but they need nonetheless now to be able to spend digitally. So they don't have a bank account nor a credit card, but they need nonetheless to buy things online to order streaming services or whatever to buy their tickets online. So digital euro could be a way to actually solve the cash issue on this front. And the second one is the moment in our lives where we have no connectivity and when we are traveling underground and there is a limited connectivity or in white spots in Europe, where basically you could be deprived of your ability to pay because of the lack of connectivity. And then a digital euro that would be a type of prepaid wallet with a certain amount of money encapsulated and then you reconnect when you get back online with your bank account to do the resynchronization could be also a valid use case. So this is the current state of thinking. Let's see where it goes. There may be other use cases, but we don't see that at all as a stress rather than an opportunity to accelerate the long tail of cash once we will get well above 50% of cashless penetration in most of the countries. There will be still a long tail of cash usage to this place and Digital Europe could play a part here. Understood. Thank you very much. So I think it is now the end of this hour. Guys, many thanks for your attendance this morning. It is still a bizarre moment in time, but we saw now we will see very, very clearly some solid light at the end of this tunnel and for our line. A strong return to growth as soon as of Q2. I can't wait to be with you at the end of the month of July to see the world starting to be normal again in most of our countries and big volumes flowing on our platform. In between, stay safe, get back signed and see you soon. Thank you. That concludes our conference for today. You may all disconnect. Thank you all for participating.