Nexi SpA

MIL:NEXI

Earnings Call Transcript

[Operator]

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Nexi Third Quarter 2021 Financial Results Conference Call.

[Operator Instructions] At this time, I would like to turn the conference over to Mr. Paolo Bertoluzzo, CEO of Nexi.

Please go ahead, sir.

[Paolo Bertoluzzo, executive]

Good morning. Good morning to everybody on this call, and thank you for joining us in our third quarter results session.

As usual, I am here with Bernardo Mingrone, our CFO; and Stefania Mantegazza, who's leading investor relations, but we have also a few other colleagues connected and here with us in case it's needed.

As usual, I will start giving you a little bit of an update on where we see the volumes going and evolving on the back of the evolution of COVID. And I will also give you a short business update, with focus on merchant services. Then I will hand over to Bernardo, who will cover financial results. I will come back to give you a quick update on where we are in creating the European paytech leader and bringing the new group together. And obviously I will conclude commenting on guidance that, as you know, has been confirmed for the full year already. Before I go in, let me remind to everybody this is the first time for us in presenting the aggregated numbers of Nexi and Nets. Last time, you may remember, Bernardo gave you an overview of what pro forma the profile of the new group would have looked like to kind of introduce the topic. This time, we are reporting integrated Nexi+Nets. We will cover the performances by region, which will give you an indication of how things are going. We'll probably make a few more comments on the stand-alone performances, but as I said, we are reporting for the first time in an integrated way. And then at the end of the presentation, we'll have time as always for your questions.

Now let me start as usual with key messages at Page 3. The 3 messages basically are reinforcing the same 3 messages we had over the last couple of quarters. Number one, we observed continued volume recovery and acceleration across the various geographies. In Italy, we continued to see a strong volume performance with Italian cards growing anywhere between 20% to 25% versus 2019 that, again I remember to everybody, is always our benchmark here because it was recorded here. Next to Italy, we have seen also a good recovery in the Nordics that came back to positive over the last few weeks as a total with some strong performances across many sectors. The DACH region is still recovery is not back to the previous level at full but actually seeing a stronger basic consumption growth. And also, more recently, we've seen the discretionary sector coming back to positive here. The travel sector impacts that -- for our business there, still relevant in volumes, is the one that is still behind although recovering.

Third point, we see an acceleration stronger in SMEs than in LAKA. This has to do also with the different profiles of the different sectors in terms of mix of SMEs and LAKA, but we believe this is really positive for our positioning and for the outlook as well. And last but not least, we continue to see clear signals of acceleration of cash-to-digital payments transition across all sectors and visible in all geographies, also the ones that are already more penetrated. Message number one.

Message number two. Also in the third quarter, we've seen strong and growing financial performance. Revenues for the group were up 10.1% in the quarter, in acceleration versus the previous 2 quarters, for a total of 9.6% in the 9 months. We have seen in particular strong revenue growth performance in Merchant Services & Solutions with -- for both Nexi and Nets at very similar levels at plus 12.2% for the total in the third quarter, 10.6% year-to-date. And again here you see an acceleration. E-commerce revenues were particularly strong at plus 32% despite the fact that the travel-related sectors are still affected by COVID. EBITDA in the quarter was up 14.6%, up 12.3% from the beginning of the year with continued margin expansion that in the third quarter was at 53%, up 2 percentage points versus last year.

Third message, we continued to progress in the creation of the European paytech leader; SIA as reported, again stronger stand-alone performance. And we'll comment on a dedicated page. As you know, we have received the antitrust approval on October 14 on the combination of Nexi and SIA and the closing is now expected by year-end. In the meantime, we have closed the deal with Intesa on the UBI merchant book. Yesterday, we have also signed the deal with Alpha Bank to create a joint venture in merchant services still in Greece. Closing is expected at some point in the second half, probably the second quarter of -- sorry, in the second half, probably second quarter, of next year.

And last but not least, we made [ or we've done ] a small but actually strategic investment for our future in a company that's called orderbird. And it's the leading DACH merchant software solution for the hospitality sector present also in other geographies. It's a small investment. I'm talking of only about EUR 16 million. We have increased our ownership from 20%, we were already there, to 40% with a clear path to control. And we are very happy for this because it's the first real [ SML test for us ] in entering in a deeper way the software space, especially for SMEs, starting from Germany that is a very strategic market for us and expanding in other places as well.

On the back of all of this, we have confirmed our ambition for 2021 on a Nexi+Nets combined-level. Revenues, we expect them to grow at about 10% year-over-year. And EBITDA, we expect EBITDA to grow at 11% to 13% year-over-year.

Now before I go into volumes, let me jump to Page 5. As a quick reminder: This is the new profile of the group. We have a group that sees about 60% of the revenues in Merchant Services & Solutions with a strong exposure to e-commerce. 29% is what we call Cards & Digital Payments; and the remaining 10%, in what we call Digital Banking & Corporate Solutions. Second, the group is highly, highly exposed to markets with super strong and very, very long-term and secular growth opportunity in digital payments. 71% is -- of our revenues are in low-penetration markets such as Italy, such as Germany, such as the Central European ones and Southern European ones. Number three, 64% of our revenues are coming from volume, and the 36% from installed or installed like [ type of revenue ]. And last but not least, we have a very strong operating leverage.

Now let me jump into volumes, and we'll cover Italy first. And then I will also give you highlights on what we see happening in the other key geographies. Page #6 is the usual page. The dark blue line is the total here. We are focusing on merchant services, where we have more insights and therefore the dynamics are more interesting. The dark blue line is the total. The lighter blue line is actually on Italian cards. The gray one is on international cards and therefore visitors to Italy.

Here you see that, after the summer, we continued to basically grow revenues compared to 2019, anywhere in between 10% to 20%, sometimes also above 20%. And here there is a clear strong contribution from Italian cards that [ have been ] growing anywhere between 20% to 30% over the last few months. I will say particularly interesting is also the dynamic in the international visitors cards. Here you see that we had a very, very fast recovery in the summer, leading to August where we went back to the levels of pre COVID, mainly driven by European visitors, with Americans and Asians being still not present or present in a very limited way. Then we had a slowdown again but then have had strong recovery over the last few weeks. This dynamic is probably explained by the fact that the touristic side of international travel is recovering fast. People are really keen to travel as soon as they can do it. Well, actually the business traveler dynamic is still behind and therefore depending on the moment of the season, but probably we will continue to see these dynamics happening. Hopefully, the recovery of October is also due to the fact that we have -- we had less restrictions also for business travelers. So it's [ further ] combination of business travelers coming a bit back and actually holidays in some countries in Europe in the latter part of October as well.

Jumping to Page 7. We have the usual split by macro sectors. This is the total, so this is not separating Italian cards versus international cards. And therefore, the sectors are also affected by the dynamic that I was explaining before. Here we see very strong continued growth in the basic consumption sectors like groceries, utilities, medical and so on and so forth, growing anywhere around 30%, 34%, 37% in the last week. And we see the other 2 sectors now moving kind of similarly anywhere in between, I will say, 5% to 10% year-over-year with a super strong recovery, I would say, definitely faster than expected, in particular in the high-impact sectors and, I would say, in particular in restaurants and bars. So this is the dynamic we're observing in Italy. We'll come back in a moment to give you a bit more insight on specific subsectors because I think it's interesting.

On Page 8, we see instead the dynamics we observed -- the dynamics in the Nordics area and in the DACH region. If you just take the total before going into the subsectors space, we have observed a plus 12% growth in October across both -- across the Nets, if you like, geographies, 12% growth of our SME versus 2019. LAKA, instead we're still behind, but actually, if you strip out the effects of the high-impact consumption sectors, growing as well plus 8%. Last but not least, we also see a good recovery in issuing, now growing 5% in Nets geographies. And basically this is mainly relating to the Nordics. As we are talking about the Nordics [ at here ], you see in the top graph the dynamic. Nordics have been back to positive from September and actually growing further in October. As a total, they've been growing 7% versus 2019 in terms of volumes. Actually, in the last week, [ this level ] was actually double digit with 12%. Very strong and continued performance on the basic consumption sectors, above 30%, actually 45% in the last week; the discretionary consumption sector trending a bit slower but now close to 0; and a good recovery over the last few months also for the high-impact sectors, over the last month at minus 1%.

Last but not least, in the DACH region. And here the -- most of the volumes are actually associated to Germany. Here you see a continued strong performance of growth in the basic consumption sectors. You see actually discretionary services going back to a positive 8% last week, 2% in October versus 2019. Here the sector that is still behind is actually the one that is related to travel, yes. And here in Germany this is an important impact on the total mix; and this is one of the reasons why, the key reasons why actually Germany is still behind compared to 2019 volumes.

So this is the total picture. Page 9 digs a bit more into the specific sectors to reinforce the point that I think we've made over the last many calls, I will say, that we have been observing underneath these COVID-related dynamics a very strong acceleration of the transition from cash to digital payments not only in underpenetrated markets like Italy but also in more penetrated markets like the Nordics. And here you see on Page 9 a few examples here. We did pick from top to bottom the top 8 sectors per market. Some of them maybe are less relevant in size, but here you see actually also very relevant sectors. When we think of the restaurants and bars, in Italy it's 34% growth; or groceries, 25% growth, nicely growing all double digit next to some very special ones like doctors at 82%, for example. Nordics, similarly, groceries 23 -- 25% versus 2019. Again, for a market that we tend to believe that is already highly penetrated, it's a big positive in our opinion. And you see more specialized and smaller sectors such as, for example, cosmetic or hardware growing at 40%, 59% and so on.

And last but not least, also in the DACH region, groceries, 49%; also restaurants, despite some limitations being still in place, 13%; and many other sectors growing double digit, with actually department stores growing triple digit, but I would look at it that -- with a lot of sympathy that it's probably not the benchmark for the other sectors, that it's not for now.

So this is basically the picture in terms of volumes. Before I hand over to Bernardo to cover financial results, I'll go to [ a bit ] dive with you for a few minutes on the dynamics and the key initiatives that we are observing in particular in merchant services that, as you know, is more than half of our revenues and is always a clear focus not just for us but also for you and for investors more broadly. And here we try to give a little bit of a feeling of what we are doing in the different segments. And let me cover this by SMEs that represent almost 60% of our revenues in merchant services, e-com that represents about 25% and also LAKA that is a bit less than 10% of total revenues. If you're asking yourself why they don't sum up to 100%: The reason is that there is a 7% that has to do with acquiring ATMs, as we call it, cash; and this is not allocatable to any segment. For simplicity reasons, we have allocated POS terminals revenues to SMEs because most of it is really SMEs.

Now going one by one. In SMEs, we see a strong acceleration on our digital proposition in Germany, positive results in Germany on the back of the very positive results we have in the Nordics; as well as in Italy we are promoting more and more the mobile POS proposition for [ new-to-merchant ] subsector. At the same time, we are very successfully pushing on vertical propositions in the specific sectors. We have started in Italy with a dedicated go-to-market for [ very narrow ] verticals, for example, restaurants, cafes, hotels, retail and so on and so forth, where we package very often from the distribution go-to-market point of view but sometimes also pricing and product itself. And this is really hitting the ground well with customers. At the same time, we are increasing our focus on ISVs and in -- more in general the software space. And here basically there are 2 things we are doing. On one side, we're expanding our partnerships across all geographies, I would say, with ISVs. And I -- if you count them across the board -- we'll -- count them actually for this call. It's actually more than 500 partnerships in the ISV space. And they are a mix of partnerships with local leaders on merchants, CRM and ERP softwares, for example, TeamSystem in Italy, just to mention one; and many, many, many smaller, much smaller, vertical specialists that very often are local companies as well. And we normally partner. We do technical integration. With some of them, we do also go to market together. As anticipated, with orderbird, we are going one level deeper, as we'll integrate more on the proposition side as well. And we'll test it in one segment in one market, to expand it further as we go along.

In the SME segment, basically we are not seeing any major news in terms of competitive dynamics. We know, I mean we've discussed it in the past, that we have important competition in the "new to digital payments" segment, the smaller merchants that have started to use digital payments for the first time, in particular in Italy, in particular also in Germany from basically one player that is [indiscernible]. They're actually successful in the market in winning number of customers, but actually the value associated with these customers, given the size of them, is not -- very small. We have also increased in Italy our focus up in that segment and we're actually quite successful. We have doubled our acquisition volumes, but we're also focusing in winning back up these customers as they grow and when they need a proposition that is more structural and more complete. This is it in terms of SMEs. Volumes across our geographies were up about 14% in the quarter compared to the same quarter 2019.

E-commerce that represents about 25% of our revenues in merchant services is seeing a lot of dynamics; a lot of new players coming, some of them going as well, to be honest with you. And by the way, this is a sector where we have new segments and new propositions emerging as well. Let me maybe talk more about it in our Q&A sessions, but let me give you a flavor of what we are doing here. First of all, when it comes to the more PSP-like type of proposition for the acceptance propositions, we are launching Easy in Germany after a pretty good success in the Nordics. It's a collecting PSP proposition. In the same time, we are expanding our PSP proposition in terms of capability in Italy. It's called Xpay. And we are expanding this proposition also on the back of the experience and the capabilities that we have in Nets, for example, in one-click checkout and [ card pre onboarding ]. In the 9 months, our e-commerce activations in Italy have been up 70% compared to the same period 2 years ago, just to give you a flavor.

At the same time, we are seeing a lot of activity in the alternative payment method space. Here our angle is twofold. We know -- we own alternative payment methods, and at the same time, we partner with the payment methods to make them available through our gateways to our merchant customers. If you focus for a moment on account-to-account propositions: We actually have a very strong position, a successful position, both in Poland and in Finland. And they are growing very, very strongly. At the same time, we are onboarding more and more account-to-account solutions to our gateways, for example, BANCOMAT Pay in Italy. Similarly, in buy now, pay later, we have a very strong proposition called Ratepay in Germany. We own that proposition. That proposition is growing very, very strongly, but again this is a proposition that is made available not only through our gateway solutions in Germany but also to basically every other national and international PSP active in the country. At the same time, in the other geographies we are partnering more and more with third-party "buy now, pay later" providers because, at the end of the day, as a PSP, we must be able to offer all possible payment methods to our merchants' customers in order to allow them to basically maximize their conversion rates at checkout.

Last but not least, we continue to strike partnerships with e-commerce enabler platforms across all markets. We have about -- well, actually we have more than 10 partnerships across the group. Many of them are with players that are present in more than one market. Today, we cover about 66 -- 76% of the relevant market. Today, e-commerce enablers cover across our geographies about 10% of the volumes. They basically serve the tiniest or the micro merchants, the micro SMEs in e-commerce. We cover through technology, integration and in certain cases also go-to-market partnership 76% of that. Again, here volumes are growing 13% despite the travel-related sector still being -- suffering. The reason why the growth rate of revenues is actually well above 30% is because, when it comes to account-to-account and buy now, pay later solutions that we own, the growth rate is very, very strong. And it's contributing to the total growth.

Last but not least, the LAKA segment that represents about 9% of our total revenues in merchant services. Here we don't see any major news in terms of competition. Obviously we continue to see active, very active players like Adyen in very specific segments that are basically segments of the global brands, in particular, I would say, in luxury and in fashion. To be very clear: We continue to compete successfully and win in the sectors that instead are more local in nature such as, for example, food retail, household goods, mobility, insurance, public administration and so on and so forth. Basically we win and continue to win where the physical component of the omnichannel solutions is actually irrelevant for these companies, where they need -- there's complex needs in terms of terminals and terminals acquiring-acceptance integration, where the local integration with local payment methods is important, where the vertical sector integration is important, where customization is important. At the end of the day, that's the core of what we do, thanks to our local entrenchment.

And here we continue to serve successfully not only the local large merchants but also global brands that are present in markets with the characteristics I just described. So across our geographies, we cover and we serve merchants such as, for example, [ IKEA, Sky, Decathlon ] Vodafone, [ Zara ]. I mean names that are clearly international names but require very specific local support integration and delivery, yes.

Now before I move on, let me use one example of something that we have announced yesterday. It is actually today small, but I think it's also a good example of what we see as the core of the nature of the new Nexi Group. I think we've said in the past that -- and in many one-to-one conversations that, at the end of the day, our strategy is quite simple. We want to combine the scale that is necessary to drive hard innovation, digital innovation in particular. And we understand competence is important. Investments are important [ before we need scale ], so we want to remain competitive with the global players, specialized players when it comes to product proposition innovation, but at the same time we also want to be very, very locally entrenched, thanks to our people, thanks to the ecosystem integration that we have in the different geographies. And one simple example of these, on top of the many given to you over the last few minutes, is to do with the products we launched yesterday. It's called PagoinConto. It's translatable as pay by account. It is a very nice product because it is an accounts-to-account payment product that we are making available, to begin with, in e-commerce but will be available also on omnichannel solutions for LAKAs and SMEs as well.

This is actually integrating many capabilities that we have in Nexi not only in merchant services but also in the payment space, the European banking space to deliver a solution that we are making available to our PSP merchant customers and, I would believe, progressively also to other PSPs that want to operate in Italy. And this solution is basically leveraging open banking enablement that we provide, because we are the provider of the open banking system for Italy, our capability in this space; plus our local licenses; plus our local integration; plus our local capabilities on the e-commerce side. And basically a merchant can offer the opportunity to its own customers to pay by the bank account without [ registering ] on anything because, thanks to open banking, the customer will find a click button on the checkout page and will click on the button. Then the -- basically the page of the bank will open. The customer will identify himself with standard identification method of the bank. And the transaction will happen because it will be, pre, already filled on the different components of the transaction itself. And the reconciliation will happen automatically.

Again, it's a small thing, but I give -- I believe, gives you an idea what it means having global scale but also being locally entrenched and integrated. Clearly this is targeting not necessarily the small transaction but actually the large transaction because, being pay by account, you can pay for the moment up to EUR 15,000 per transaction and, going forward, even more.

Let me now hand over to Bernardo. Sorry if I took a bit more time here, but I really wanted to try and give you a flavor of what is happening in this space.

Bernardo?

[Bernardo Mingrone, executive]

Thanks, Paolo. So just we'll try and be quick here so we leave as much space as possible for Q&A.

Starting on Slide 12. We've seen how revenues have grown approximately 10% in the quarter and 10% for the 9 months. As Paolo said earlier, this is how what we discuss in terms of volumes and in terms of the business updates translates into the financials. I think it's important to underline how growth in revenues was very similar, both Nets and Nexi. I guess that's the message I would like to leave you with.

In terms of EBITDA, we can see there's been a 2 percentage point accretion year-on-year in the quarter. And the same applies if we look at the 9 months. Most of the this accretion actually comes from Nets. We have less of an accretion this year on Nexi, as we've discussed in the past, due to the fact that we're unwinding. Or let's say there is the -- coming out of last year, we have the effect of certain costs, the cost-cutting exercises we had last year, which impacts our growth in costs in Nexi this year as expected. So 2 percentage points accretion which is in line with our expectations.

On Slide #13, we see how the various geographies performed: Italy, a strong performance in the quarter with 12% growth, accelerating compared to -- 12%, sorry, versus 2019; accelerating, compared to the 8% we had, in the first 9 months. So again good signs of recovery from COVID. DACH and Poland had even stronger growth. We have an 18 -- close to 18% growth for the 9 months, 19% if you look at it in the quarter; actually Germany growing more than Poland, thanks to the strong exposure we have in Germany to e-commerce and BNPL, which Paolo also referred to earlier.

In the Nordics and South Eastern Europe, a slightly different dynamic. Again there is less exposure, I would say, to e-commerce, compensated in Germany and Poland for the slow recovery in terms of coming out of the lockdown in some of the former -- or the -- some of the geographies Nets is present in; plus, as we will see later, the effect in the Nordics of the -- as we had mentioned in the past, the fact that we have renegotiated the last major contract at Nets. And that has hit us in 2021.

Moving on to the various divisions. On Slide 14, we have Merchant Services & Solutions where we've had a very strong quarter with double-digit revenue growth across the group. And this is true, as I said, both at Nexi and at Nets level. Nets has proved to be extremely resilient in all its geographies. We can see that transactions have recovered very nicely throughout the group. [ And we can see ] we have 15% year-on-year growth for the 9 months. And this was only partially offset by slightly slower growth in some of the other geographies due to the different phasing of lockdown. I think it's important to underscore how e-commerce is continuing to grow nicely. We have 37 percentage growth in the third quarter this year, 32% if you look at the 9 months. And this is also sustained, as I said earlier, through a strong performance in Germany and Poland.

Just a word of explanation with regards to a trend which in the past has been different in terms of the growth in volumes of international schemes which is lower than the overall volume growth. This is due to a factor in Italy of domestic debit cards now being able to transact contactless transacting on the domestic scheme rather than international schemes. And this has caused this inversion of the trend.

On Slide 15, we can see the data for Cards & Digital Payments. Even in this division we have good revenue growth with good volume recovery. Here the volume recovery, as you can see, is what we're more used to, where the trend I highlighted earlier of the shift to domestic debit in Italy on contactless transactions is more than offset by the fact that we are moving some of our -- or we're progressively moving our domestic debit cards into international debit cards, which fuel the growth in international schemes, but overall we have strong growth in the quarter also in Cards & Digital Payments.

Slide 16. We can see how DBS or Digital Banking & Corporate Solutions as it's now called, performed in the 9 months. This, we have discussed this in the past, is a division in which project-related revenue which is recurring by nature even though it's not contractualized -- but every year, we have project work for our partner banks, mainly, in the various geographies -- has been, from a seasonality perspective, present in our P&L more in the first half of the year, hence the deceleration you can see from 11% to 5% -- so 11% for the first 9 months and 5% for the last quarter. Overall, I would say that performance has been in line with our overall expectations. Maybe in Italy we have had a bit of a slowdown, which will also impact us -- or has impacted us this year on Monte dei Paschi as they were discussing a potential transaction with UniCredit. That is no longer the case, so hopefully, we'll recover some of the lost revenues there in 2022.

Slide 17 shows us the cost dynamic. I think it's important to look at the commentary we put into the side of this slide where we try and give you a picture of what the cost dynamics really look like if we normalize for last year. I mentioned earlier that at Nexi we had -- or I reminded you that with Nexi we had a cost containment program, which was EUR 100 million of cash costs cut last year to protect our P&L and our cash flow. This unwinds this year; and hence we have a bounce back of accruals on variable compensation, a bounce back of travel expenses and the likes. If we normalize for those, I would say, 2 items in HR costs, for instance, the overall HR cost would actually be flat year-on-year. There is some slight, let's say, increase due to the annualization of people that were hired last year but overall basically flat HR costs if we normalize for a variable comp. With regards to other non-HR costs, these will be up 1.4% if we normalize for the growth in volume. So effectively, obviously, revenues are growing. We've seen double digit. Our cost base grows by 1.4%, so if we take out the growth in volume-driven processing costs, a testament to the fixed nature of most of our cost base.

With regard to, let's say, the net debt position of the group, we should look at it with SIA. Or at least I look at it with SIA included. We have received antitrust approval. And Paolo will speak to this in a second, but basically now we have deal certainty. If we look at the combined numbers both of net debt and EBITDA: [ So us ] adding onto our last 12 months EBITDA also SIA's EUR 327 million of EBITDA for the last 12 months and we include SIA's EUR 820 million of net debt, our overall ratio is 3.6x leverage, which is 3x if we include also run rate synergies which we announced as part of this transaction. And this, we expect to unwind pretty quickly and deleverage with the profile we highlighted at announcement.

Just a reminder, that 3/4 of our indebtedness is fixed rate, so moving into, let's say, a potentially higher rate environment, we think we feel pretty comfortable with regards to our capital structure.

So with that said, I will pass the floor back on to Paolo so he can take us through the M&A updates and closing remarks.

[Paolo Bertoluzzo, executive]

Thank you, Bernardo.

On Page 20, a quick update on SIA. SIA reported over the last few days their results for the quarter. Their revenues were up 9.3%, and EBITDA was up 12.9%, so very close to the rest of the group performance. Year-to-date results are even higher than these. I think, as we anticipated at the beginning of the conversation around SIA, first half of the year is a bit richer than the second half basically due to phasing and very specific events and nothing to do with underlying. As far as the closing agenda is concerned, as you know, the Italian antitrust has approved the deal on October 14. There were remedies specifically in the areas that are connected to national products, and this is something consistent with what our expectation was and, we believe, is -- are very much correct. In terms of remedies, there is only one of them that is structural, and this remedy has to do with what I would call the national clearing non-SEPA clearing. To be precise: The size of that business is about EUR 6 million of revenues full year; about [ 2 to 3 ] of EBITDA, more or less, with by the way, revenues declining because we are talking about products such as, for example, checks. We will be obviously implementing [ or work ] to implement these remedies as we speak. And we expect to close by the end of the year.

We still have 2 or 3 authorizations missing, but they tend to be either a bit more technical; or in many case, due at the end of the process, such as for example, Italian stock exchange regulator for the approval of the prospectus. And everything else is in-line in terms of preparing for the execution of the closing [ within ] this time frame.

On Page 21, you have a bit broader update on what is happening on the various fronts. You may remember we did tell in the past we're structuring our transformation plan and the different work streams and so on and so forth. A quick update: On the technology side, basically we already have one new group technology plan. And we already started to execute around some areas, for example, CapEx savings and deduplication; pulling together group digital delivery under one hub; optimizing infrastructure; ready to execute processing platform consolidation, yes, as soon as we close SIA; and many other areas of initiatives. As far as insourcing and operational excellence is concerned, we have already started to optimize turnover management in the HR side. And we are ready to execute the full integration of Nexi and SIA in Italy, while there are many other operational excellence initiatives already ongoing.

As far as procurement is concerned, we've started working on this a few months back, and we have a very detailed plan defined. And we've already closed -- or close to close already 12 strategic renegotiations. And as far as revenue synergies are concerned, we touched on a few of them before, but the teams are already working together, starting from the lower-hanging fruits. And even on the SIA side, we did use a clean team approach to prepare a very detailed commercial plan; and to be able to go out, as soon as we close, in upselling, selling more products and services to our customers in Italy, to begin with.

All in, we expect to have synergies for about EUR 100 million of cash for next year. An important part of this is CapEx. As you can imagine, it's one of the areas where it's easier to optimize and faster to optimize, but we're progressing on all initiatives here. I'm talking about EUR 100 million of cash synergies in the year, and therefore, obviously the exit rate will be much higher than that.

So let me now move to Page 23. I think, in short, we are basically simply confirming the guidance that we gave you last time when we talked for the first time about the new, aggregated group. This is valid obviously for Nexi and Nets. And I just remembered that we did upgrade our guidance at quarter 1 results, when we were talking about Nexi wholly. And we are now confirming all of this: 10%, about 10% revenue growth in the year; about 11% to 13% EBITDA growth, with margin expansion, both versus '21, 2020 and even more 2019, it was a more normal year, about 3 percentage points versus 2019; broadly stable CapEx intensity ratio, with anticipation of the M&A synergies; and last but not least, as Bernardo showed you, continued cash flow generation and progressing deleveraging over the long run, starting from a new level that is exactly in line with what the plan was with what we did announce when we'd signed the deals with SIA and Nets.

So on Page 24. I will not go through all of it again, key messages for today: continued recovery and acceleration of volumes across all geographies, with clear signals of acceleration of cash to digital payments across again all geographies; very strong financial performance with double-digit revenue growth in the quarter and further margin expansion as well and a particularly stronger performance in Merchant Services & Solutions; and last but not least, progressing according to our plan and marching ahead in putting the new group together as a combination of Nexi, Nets and SIA. And last but not least, as I just said, [ reconfirmed ] the ambition for the full year.

I'll stop there and open up for your questions.

[Operator]

[Operator Instructions] The first question is from Sébastien Sztabowicz with Kepler Cheuvreux.

[Sébastien Sztabowicz, analyst]

So I know it is a bit too early to provide any precise indication for 2022, but I'm just wondering if you could help us to a little bit understand the dynamics behind your sales and your margins moving into 2022. We are seeing DACH or Nordics gradually recovering. Is it reasonable to assume a kind of acceleration of the trend moving into next year? And the second question will be more on the competitive landscape, to understand a little bit what is happening in your main market, Italy. We discussed a couple of time competitive landscape, but on your new markets like Nordics or DACH, who do you see usually in those markets? And do you see any fast-growing acquirers in those markets moving from online to in stores and trying to compete on the SMBs? Or it is not already the case.

[Paolo Bertoluzzo, executive]

Sébastien, thank you for the questions. So listen. 2022, we'll talk about guidance for 2022 in February. That's when I will try to give you our view for the year. I think, when we did announce the deals, we said that our ambition was to obviously increase the speed of growth of the company on a larger and more resilient perimeter. Our previous, pre-COVID, if you wish, guidance was 5% to 7% of revenues and, if I remember, 13% to 16% of EBITDA. Our plan is to do, obviously, better than that on the back of the new context and the new group profile. Then every single region has its own dynamics. Clearly we see it as we are preparing the budget, as you can imagine. We're actually having, in terms of volumes, good expectations from the Nordics, but then there are many other specific dynamics that have to do with specific contracts, specific areas of investment and so on and so forth, so I would really prefer to wait and give you more detailed commentary when we come to February and within a broader picture. But I believe that what we are observing as we speak and the data [ that I already show you ] in terms of specific individual sectors are confirming that we see growth potential in the Nordics as well, on top of obviously Italy or Germany and obviously places like Poland or Central and Eastern Europe.

Listen. When it comes then to the dynamics in the other markets, I think that in other markets we are seeing a little bit the dynamics that I mentioned before. I mean in the SME space you see these [ new entrants ], but to be honest with you [indiscernible] we don't see, for the moment, in our geographies other players becoming more visible or more aggressive. [ So this is a ] competition that we know and is very much focused on new-to-cards segments. In the e-commerce space, you tend to see a little bit the same players around. I mean the Stripes and the PayPals. [ And there are like ], I will say, no major new dynamic there. Clearly [ Stripe ] are making more inroads in the smaller merchants on the back of the strong partnership that they have in Shopify in the markets where Shopify is strong, but we've said before we're also strengthening our position through partnerships with the other content management systems and e-commerce enablers. And when it comes to LAKA, I would say a bit more of the same of what I said before and also Adyen being more present and in general international acquirers being present but nothing really major. As in -- as you know, buy now, pay later is becoming a bigger phenomenon; and we're actually benefiting from that ourselves with Ratepay. Klarna is becoming more active in the Nordics and, I will say, in Germany as well. It's particularly successful in Sweden, where honestly we're not very exposed, as we've discussed in the past. When it comes to due to online players moving more in store, in particular SMEs, to be honest with you, for the moment, we don't see a lot of movement. You don't have yet any particularly successful case of other PSPs or account-to-account providers or "buy now, pay later" providers in SME space, which is -- actually, as you've seen, is [ the far ] majority of our revenues in merchant services. It remains a very, very specific space. It is very local, is very -- still very much connected with banks, requires a lot of specific attention. And the more we segment, the more we realize that because [ we're even more local somehow ]. So I will say nothing really new from that angle.

[Operator]

The next question is from James Goodman with Barclays.

[James Goodman, analyst]

Just looking into the fourth quarter, firstly. I mean you've reiterated clearly the guidance for the year, 10% growth. I mean previously you specified an H2 growth to get there. I think it was 11% to 13%. And obviously we can sort of do the calculation around Q4, but I guess my question is, is it fair to expect an acceleration perhaps across all your geographies into Q4? I mean we've got a weaker comparative base, I think, in the Italian business; and clearly the progressive reopening across the Nordics but particularly DACH, I mean, given the travel exposure that you have there. That's the first question. And then maybe to sort of follow up on the EBITDA for the quarter and for the outlook, can you make a comment just on -- I mean we can see the revenue, I suppose, more or less for Nexi and Nets for the quarter, but can you just make a comment on the EBITDA performance between Nexi and Nets for the quarter? And as we look out to the full year there, I mean, you're sort of in the middle of your 11% to 13% range at the moment, but depending on what you say about revenues for Q4, is there any reason to expect EBITDA not to sort of grow similar to revenues in the fourth quarter?

[Paolo Bertoluzzo, executive]

James, this is Paolo. Bernardo, do you want to take...

[Bernardo Mingrone, executive]

Yes, sure. So the question on the fourth quarter is -- and [ I'd say ] it's the difference between our guidance and where we are in the third quarter. So as you said, the math is pretty easy, but what we can say is that we expect the fourth quarter revenue growth to accelerate compared to the third quarter. And this is primarily driven by merchant services performance, which we expect to be strong in the fourth quarter and stronger, if you want, than the third quarter. Overall for the year, though, I would take what Paolo said with regards to overall guidance, which is to grow revenues double digit. The second question you asked was on -- well, was it on EBITDA growth for Nexi and Nets? Is that right?

[James Goodman, analyst]

Yes, just in the quarter, EBITDA between the 2 businesses and, yes, the sort of the relationship, [ I guess ], in the fourth quarter between revenue and EBITDA.

[Bernardo Mingrone, executive]

Yes. So in the third quarter, the EBITDA, as we said when we discussed the margin accretion, came primarily from the growth at Nets, right, where we had a significant step up from second quarter to third quarter, 19% growth in EBITDA. I think that's what we would like to stick to for now when we comment the fourth quarter EBITDA performance. Having said that, we've confirmed guidance where we have a guidance for EBITDA growth as well.

[Operator]

The next question is from Stephane Houri with ODDO.

[Stephane Houri, analyst]

Yes. First of all, I'd like to ask an update maybe on the SIA process, if you have any view on when you will start to consolidate SIA into the group.

And the second question is also regarding Italy, where you said that there was a 20% to 25% growth. Did you see this trend continuing into 2020 and if you expect kind of help plan from the Italian government to push further this penetration?

[Paolo Bertoluzzo, executive]

Stephane, thank you for the question. Let me take the second one, and then I will ask Bernardo to cover the first one and give you more details to what I've already done. Listen, I think we are very happy what we're seeing anything in terms of growth of volumes in particular on Italian cards. We expect this actually to continue into next year even if the comparison will become more and more difficult.

The reality is that today, you still have a little bit of limitations here and there. But honestly, even we project the fourth quarter this year, we expect to continue to see a bit of further acceleration. But we remain quite optimistic on the outlook. Take into consideration the fact that even if most of the -- all the peers are still -- are now open, you still have some kind of complexities for some of these activities.

Client initiatives. I think as we commented in the past, we believe every government will continue to polish the terms because of the many, many positive contribution that it gives to society, the economy, taxation, transparency and so on and so forth. In -- this government has decided not to basically stop the cash back that was the most visible initiative and because basically was not convinced on some of the mechanics. And it's obviously fine, as we said in the past, our plans, our expectations are not driven by that.

We always said that cash flow was a very good -- a nice initiative but now are basically changing the shape of our profile. The good thing is that this government has actually decided and implemented two more newer initiatives that are more on the merchant side. And therefore, they're incentivizing the merchants to basically upgrade their shop equipment in the terminals, basically. And at the same time, basically for one year, they're also supporting the new-to-card merchants in terms of giving them the possibility that, from the taxes, the commissions that the pay. So changing direction on cash back, but actually a confirmed belief of the importance of supporting digital payments through I would say the merchants, and we're happily cooperating with as much as we can with the government institutions by probably in implementing all of this and continuously provide further ideas and opportunities. Bernardo, do you want to cover the SIA front?

[Bernardo Mingrone, executive]

Sorry. On SIA, in terms of the process, there's a bullet point on Slide 20, where are we? We're expecting BaFin approval anytime soon. It's a pretty, I would say, administrative process here. There's actually a type in the presentation. Danish investment authorities have approved the transaction. And then we will need to have the prospectus with the pro forma numbers approved by time stock exchange regulators similarly to what we did with Nets, and that should happen again somewhere in mid-December. So we now have I'd say deal certainty given that antitrust approval, which was the one where most of the work needed to be done, has been obtained, and we're looking to close at midnight of the 31st of December.

That means going back to your question, we will be consolidating from the 1st of January next year. So we'll have a full year of consolidated numbers for SIA. And we will obviously, as part of this, provide you with comparison numbers for 2021, which includes SIA and Nets as if we had bought it from the 1st of January of this year. So you will have a same perimeter, and the same will go with the database that Stefania puts on the website.

And this, by the way, is also true for the UBI book acquisition, which closed on the 26th of October but has retroactive effects from the 1st of January. And the same will happen when we close the Alpha Bank deal, which will be at some point in the second quarter next year. So we will always strive to make sure you have a meaningful like-for-like comparison in the same perimeter. But the closing of SIA is midnight this year. So from 1st of January next year, you have the consolidated numbers in the actual accounts.

[Stephane Houri, analyst]

Okay. I have a quick follow-up on Germany. Did you see any weakness in Q3 to what you were expecting? And are you concerned about the rise in number of COVID case that could probably or potentially have some impact on your fourth quarter?

[Paolo Bertoluzzo, executive]

Well, I think in Germany, we see super strong, as you understood, e-commerce, in particular, I'd say, and that area as well. In terms of COVID, yes, I mean, you're right on the fact that, in the third quarter, there were still attrition in Germany more than in the other geographies. There is an index that is actually called the [indiscernible] index that is quite telling from this point of view in Germany. It was across Europe. At the country, we still see the restrictions. And I was there 2 weeks ago, and you could really feel it. I was there with Bernardo, you could really feel it from the smaller things in hotels to the more visible ones.

And this is actually, as we said before, affecting in particular I would say the LAKA sector, larger merchants where we have, as I said, still an important exposure to the travel industry. And I would say there are 2 angles that are particularly relevant that are kind of intersecting between international travelers coming in and business travel more broadly. And as you can imagine, while in places like Italy, you have a huge amount of inbound from tourists. So international travel ban tourism in the summer, don't have that many people going to Germany to enjoy the summer, it's actually the other way around. So the traffic there is much more business related and this is still suffering. But again, I said that we've seen a good recovery also there.

Listen, what is happening these days is difficult to comment, honestly. I think that I don't need to understand exactly what will happen in terms of measures. I was reading before coming the new news before coming into this call about cases growing again, but at the same time, the measure that we're thinking about implementing were not really comparable to real lockdowns and stuff like that. I think we're talking about asking the green pass to enter in certain places like restaurants, clubs, and stuff like that, which is something that in Italy is already happening. So let's see, I think it's really too early to say. I think the good news is that we are more or less the percentage of people with vaccine are now high. And therefore, the case is increasing, the impact on the health of the people is more limited and, therefore, hopefully, the need for restrictions.

[Operator]

The next question is from Hannes Leitner with UBS.

[Hannes Leitner, analyst]

A couple of questions also from my side. Maybe on the partnership strategy with ISP. Maybe you can talk a little bit about the economics there. And then also, is there a geographic kind of statistics around what is currently served by those partners, especially then maybe also breaking down between in-store and online?

And then maybe you can give some more color on e-commerce growth for the group. You have stated here e-commerce revenue growth, but it would be helpful to understand also the transaction volume growth. And then just in general, did you see throughout the quarter as it developed some shift between in-store and e-commerce. That's it.

[Paolo Bertoluzzo, executive]

Hannes, thank you for your questions. So let me start from the first one in here, and maybe we can follow up more precisely. I think in general, as I said that these partnerships, I mean, that are happening, I would say, in every single geography. And probably, they're actually a bit more new to Italy even if we are very active are happening with 2 type of players. The ones that are -- and this depends on the geography, and let me give you -- in this case it's probably a more closer one. If you take -- you have 2 type of players. You have the ones that are coming from the ERP systems, CRM systems, and they are keen to integrate payments, and they're actually across merchants from all possible industries, and sometimes their products are more specialized for certain industries. And we are partnering -- we've been partnering with some partnerships with the 2 super key ones.

At the same time, you have a bit more development with the ones that we'd call vertical ones. I don't know, I give an example, pharmaco that is serving pharmacies, just to mention one of them. But we're really talking about -- I mean, in Italy, talking about statistics, we have 48 of these partnerships today; Denmark, more than 100; Sweden, more than 100; Norway, almost 100; Finland, more than 100; Germany, more than 100; and France and so forth. So there are many, many of those.

And the economics vary a lot depending on what is the relationship. Some things these partnerships are more technical integration. So there is not a very specific economic punch in some of the cases, like the one I was mentioning before. Instead, you have a go-to-market initiatives you invest together, you go to market together, and you share the benefit together. So very, very different situation, but also evolving in an important way.

As far as maybe on e-commerce volume and revenue growth, you can comment, Bernardo. On the shift, this is a bit of more a qualitative question, but it's a very important question to us. To be honest with you, over the last, I would say, few quarters, we have not seen any further acceleration of e-commerce in terms of people moving furthermore or even more from physical to e-commerce.

If anything, you had that, in some sectors, directional -- at the opposite direction. And therefore, people have been keen to go out and shop again in the physical world. I guess, obviously, because our stores are open again. But more in general, people being keen to go out and socialize and buying it in real places.

I think that -- I mean, the trend to more e-commerce remains there, but it's interesting because some of the acceleration that we've seen when COVID started in this period of COVID now is going down a bit in certain cases. It's working a little bit. But again, in general, the trend will continue. Bernardo, do you want to comment on...

[Bernardo Mingrone, executive]

E-commerce.

[Paolo Bertoluzzo, executive]

Yes.

[Bernardo Mingrone, executive]

Yes, sure. I mean we saw that revenues grow -- in the third quarter, grew 36%, 37%, if I remember correctly from the slide you have in the document. Volume growth was actually approximately 13% you see on Slide 10 of the document. Within this, clearly, SME are growing. LAKA suffers from the fact that LAKA has an e-commerce component, including travel high impact, which has caused it actually to shrink in the quarter. So if you look at LAKA without the high impact, it's actually growing 9%. Overall, e-commerce volumes as I said are growing 13%, and it's a mix of both.

[Hannes Leitner, analyst]

Okay. So it's about EUR 25 billion e-commerce revenue volumes in Q3?

[Bernardo Mingrone, executive]

Approximately EUR 23 billion.

[Hannes Leitner, analyst]

For the group?

[Bernardo Mingrone, executive]

Yes, for the group.

[Operator]

The next question is from Sandeep Deshpande with JPMorgan.

[Sandeep Deshpande, analyst]

I didn't hear all the questions. So please excuse me if some of this was asked before. In your Nordics or in your overall business, you're saying that the LAKA accounts are lagging behind the recovery compared to the SME accounts. We have seen quite a different effective players like Adyen. Maybe you can explain why Nexi is different in this regard as such really.

And then secondly, is there an explanation why you think that the DACH regions are lagging so much behind in terms of the account -- the recovery in terms of the volumes and thus, the revenues as such.

[Paolo Bertoluzzo, executive]

Hi, Sandeep, and thank you for the questions. Listen, on LAKA, the dynamics that we're observing is very much driven by the industry mix, and it's very, very clear. I mean, if you make it from the high-impact sectors like airlines that use the typical example of trading agencies and so on and so forth, the overall volumes are growing 9% compared to pre-COVID levels, actually, even more so in places like Italy. And therefore, you have growth coming back despite the fact that there is still some -- there are a few restrictions around.

I think that the different dynamics that you observe with Adyen is probably driven by 2 elements. Number one is that they are less exposed to travel sectors, I think, more broadly. And number two, you should also consider the fact that they're actually entering new markets and expanding further being the -- if you are pointing precisely on the relative dynamics with a player like them, I go back to what I said before. Clearly, adding the first example here that we have immense respect to be very, very clear. We continue then to see them successful when they play on a global merchant with global CRM systems integrated with a lot of alignment more limited in store, and we continue to be successful also against them, though instead, you have the more local regional merchants, more locally integrated that require local assistance, that require more specialized solutions, the more customized solutions and so on and so forth.

When it comes to DACH is 2 -- has 2 elements that explain the dynamic there. And I think it's very visible when you go at Page 8 of the presentation where you have the volumes for DACH by macro sector. And as you can see there, on the one side, there is a mix effect, and the mix effect has to do with the fact that the Nets, not Germany, but Nets was more exposed and still more exposed in terms of mix of sectors to the high-impact sectors in terms of volumes to travel and airlines in particular. This exposure has been diminished over time but still is a relatively high exposure. And therefore, there's a mix effect in Germany.

When you look at the other sectors instead, you see a very strong performance in the business consumption growing anywhere around 30%, 30% plus versus 2019 and also the more discretionary products and services sectors coming back to growth. And at Page 9 on the right, you see some very visible examples of sectors growing double digit in that space as well. So I would say it's more driven by the exposure to travel in the mix.

[Bernardo Mingrone, executive]

I'd say also part of the Italian SMEs were underpenetrated. I think there's a structural underpenetration there, which is now -- we're now closing the gap.

[Paolo Bertoluzzo, executive]

Yes.

[Operator]

The next question is from Mohammed Moawalla with Goldman Sachs.

[Mohammed Moawalla, analyst]

I had a couple as well. So firstly, just coming back to sort of the progression in the back end of the year, given the easy comparisons, and I think you've kind of grown broadly broad-based across both core Nexi and core Nets. Is the kind of essentially your guidance being perhaps a bit more prudent or conservative? And if so, what is your kind of thinking behind that prudence?

And then secondly, a question around, again, on to the competition. And here, I just want to nuance it a bit more in that there's clearly an appetite for larger merchants to take kind of more traditional omnichannel, but we also see the likes of sort of Adyen moving in with the kind of platform approach to address the longer tail of the mid-market.

Now what's your sort of strategy to sort of compete against that? And if I kind of nuance that further, the Nordics is a fairly well-penetrated market. And we have a number of kind of digital-first players there. So what's your sort of strategy to perhaps defend your position or even kind of grow your business there?

And then the last one for Bernardo. When we look at the kind of EBITDA performance, this was quite strong. In terms of sort of this synergy realization of Nets, it seemed like there was sort of mid-teens type cost savings. Could you give us a bit more color around where those savings came from? And as we go forward, what's kind of the path and what are the kind of levers in terms of the synergies that you expect to extract to sort of hit the milestones for the Nets kind of payout to be achieved.

[Paolo Bertoluzzo, executive]

Mohammed, thank you for these questions. I will cover the second, and then I will hand over to Bernardo. He will [indiscernible] question. Let me try this here. First of all, LAKA, as you understood, for the group is about 5%, a bit less than 10% of total revenues, is about 9 on total merchant services, about half or 60%. So we'll talk about more or less a percent of total to begin with.

Nevertheless, we believe it's actually an opportunity for the new Nexi, in particular. And to be clear, the competition from players like Adyen is there. As I said before, they are very good. They're more focused on certain markets than others. And I'm sure they will try to move a bit more in the market on smaller players.

At the same time, I think the good news is that, in those markets -- in the markets where we're present, we are better international -- and we're actually investing to build stronger in the camp of omnichannel products and services, omnichannel integration, analytics capabilities, and that would continue. So you will see a nice competitive dynamic where we probably try to do it. And we will defend our turfs on the back of being local but also scaled up, and therefore, being able to invest in new products and services.

At the end of the day, if you wish, each 1 of the 2 of us is strong and weak at the same time based on our strategies in a sense that the key strength of players like Adyen is the one platform that have seen many positives but also a lot of limitations when you have to start playing with the smaller players, more complex players, more integrated players and merchants. And in that, that don't have integrated CRMs that are less sophisticated, that require a lot of the local care and so on and so forth.

Our position is the other way around. It's true. We are more complex in terms of technology setup and plus and so on and so forth. At the end of the day, makes us quite effective in serving the local needs, being closer to the customers, being able to integrate effectively with their needs. And for example, segmenting by industry more effectively for what is relevant locally.

So I think we continue to see this dynamic in each 1 of the 2 of us will do its best. I think the good news is that, in any case, it's a market that is growing. So I'm sure that will be space for players like us, and customers will choose depending on what is the prevailing need that they have. Bernardo, just deferred.

[Bernardo Mingrone, executive]

Yes. So it's -- I think we're going back to also -- I think James asked a similar question earlier on. So I can only go back to what we said earlier. We expect the fourth quarter to be better than the third quarter in terms of top-line growth, and that I think with regards to the degree of prudence in this, we won't comment on that. Our guidance is our guidance. We're committed to deliver. Hopefully, we'll do better, but that's what I'm prepared to say on that front.

With regard to Nets, as I mentioned earlier, the EBITDA growth in the third quarter for Nets was 19%, 18.8%, if I remember correctly, 19% compared to 2020. I expect that to improve in the fourth quarter of this year. I think that's also implicit in what we had said some time ago, how we were aiming to hit an EBITDA for Nets, which lies within the earn-out range for Nets was agreed with the sellers back at the end of last year.

So this growth in EBITDA, which is obviously fueled by top-line growth, is also aided by the realization of synergies within Nets. And I think that was your question, though, because synergies coming from the Nets integration. Well, those this year are I would say, in total, approximately EUR 10 million, mostly CapEx. A small portion of that would be in our fourth quarter numbers.

And with regards to Nexis, Paolo's already said we're targeting EUR 100 million of cash synergies from the 3 entities. Approximately, let's say 60% of that will be P&L synergies, and the rest will be CapEx synergies.

[Operator]

The next question is from Alberto Villa with Intermonte SIM.

[Alberto Villa, analyst]

I have just one question is on the buy now, pay later business. Can you give us some color on the revenues you're generating in this unit, the growth you're expecting? And if you have any thoughts on the strategy on this segment going forward, if you want to expand it or to exit, or what's your thoughts on the opportunity there?

[Paolo Bertoluzzo, executive]

Alberto, so our strategy in the space is, at the end of the day, twofold. Now we are happy to have this asset that is called Ratepay, just to be strictly this is operating at the moment in Germany and Germany only with potential to expand as well at some point. And it is by now [indiscernible] parity is focused on the merchant side. So they don't have a consumer-facing strategy like [indiscernible] They really partner with the merchants. They normally white label and, therefore, really the best possible partner for merchants. That's where they are successful. The business is growing very rapidly depending on the quarter. It's anywhere in between 50% and 100%. So I think last quarter was about 70%, 75%. And it's become a sizable business. We don't provide the details of this, but it's getting bigger and bigger. So we're talking about tens and tens and tens of million euros per quarter now.

The -- so this is one side of the strategy. At the same time, we also recognize the fact that, if you want to -- if you have as your core e-commerce strategy, the one of providing a great acceptance to merchants. Now you have to be able to provide the relevance -- the locally relevant buy now, pay later methods, together with other alternative payment methods. And therefore, in our geographies, we're also offering more and more the possibility to use other buy now, pay later methods that we partner with. And I believe this will continue to be the way forward.

Now clearly, the other way around works as well, and therefore, a company like Ratepay -- because it's technically a company, is also partnering with other PSPs. So in Germany, they are used by the Adyens, the Ratepays, the [ SD-WANs, ] and the Computops and [indiscernible] so at the moment, we have these 2 parallel strategies. It is very, very, very clear that, going forward, we'll continue to plan with more and more of them. And we are at the owners of this fast-growing and sizable buy now, pay later asset. Bernardo, I guess...

[Bernardo Mingrone, executive]

No, you said it 75% growth.

[Paolo Bertoluzzo, executive]

Yes.

[Operator]

The next question is from Paul Kratz with Jefferies.

[Paul Kratz, analyst]

Just 3 questions from my end. I think, firstly, when I look at your next figures on the presentation, that excludes volumes from Dankort. So it would be helpful if you could maybe give us some color over how kind of the volumes looked including these figures and if they differ materially, I guess, from what you presented.

The other thing that I'd also be interested in hearing as well is on the Girocard side, it appreciates the minority of your volumes in Germany, but how have the volumes on the Girocard side trended where historically, I think you guys have been actually a share gainer in that market, admittedly off of a relatively low base.

And then I guess the final question is a little bit bigger picture. But when we start thinking about capital allocation, the combined entity, I mean, you guys will be able to delever the business relatively rapidly at the current pace. I mean, is there any kind of updated thoughts you have around potential M&A, whether that switches maybe more towards e-com? Maybe looking at assets, for example, like a Computop in Germany to maybe strengthen your presence in e-com.

[Paolo Bertoluzzo, executive]

Paul, a good mix of detailed questions and super strategic ones as well. That was great. Listen, on the first 2, I think we'll come back to you with a bit more detail if it's important to you. I think in general, and on the second one, on Girocard, we are clearly challengers in that space. And therefore, we want to grow in the state. Don't forget that Concardis is coming from a position where they were mainly acquirers for international schemes. A little bit like what CartaSi was in Italy back 5 years ago, 6 years ago. And from there, they moved over the last year or 2 into offering the full package. So the terminal and basically acquiring across all schemes, including Girocard. So I don't have in terms of the numbers, but clearly, that's a space for development. On Dankort, I think we'll come back to you because we don't have a precise answer.

But broadly instead of capital allocation coming to the very strategic question, listen, our focus today is really, really, really on kind of getting the 3 companies together, delivering the synergies and, most importantly, building a stronger and stronger and stronger company for our customers, our people and our shareholders. Along the way, as we always said, we'll continue to consider opportunities, but it's our duty somehow, but we really, really focus on the ones that makes absolute sense for us. I think what we've done with UBI or Alpha Bank is very clear. We'll be looking at other stuff what we didn't do for very good reasons, but it was our duty to look at it. And I think we'll continue to do so going forward. As you can imagine, we cannot talk about specific cases.

Taking into account the fact that, as we deleverage and we divest with the potential divestment assets that are not core and so on and so forth. I will also consider putting more investments -- more organic investments now because there's always this feeling that M&A is easier than massive organic investments, actually, now given where we are as a company given how much we are keen to invest in geographies such as Germany or in spaces such as e-commerce. That is also another important area of investment. So I believe you will see our portfolio of those, but really, our focus today is to deliver in what we have already committed to you.

Bernardo is trying to give you a straight answer on what...

[Bernardo Mingrone, executive]

It's very best if we come back to you on...

[Paolo Bertoluzzo, executive]

Okay. Let us come back to you before we give an answer that is not reliable.

[Paul Kratz, analyst]

That's really good. Just maybe one quick follow-up is on the divestment of noncore assets, I mean, how should we start thinking of that? Is that part of a regular portfolio review that you would do on an annual basis? Or are we just talking more about concessions that would come as a result of antitrust?

[Paolo Bertoluzzo, executive]

No, no, no, I want to be very clear. Actually, thank you for giving the opportunity to clarify this. On the antitrust thing we have to do because it's a request by the antitrust. But again, it's about the business that needs EUR 6 million of revenues probably 2 or 3 of EBITDA declining revenues because it's a legacy business checks and the likes.

So that there's nothing to do with the divestment strategy, although given now how much that is worth that we are doing our remote work, but we're talking about a very, very small thing. I said, what is very much right is the first of what -- of the 2 things you said. That is an ongoing [indiscernible] strategic review of our portfolio of assets to make sure that we put our resources and focus and energy on what is strategic for our future.

And instead, we let the other assets to be owned by better owners than us as for [ Wona. ] They are strategic. Never forget as a benchmark that before doing -- even before the company was listed, actually, we need to do 5 or 6 M&A deal where we bought stuff. We did do 12 where we sold stuff. So we like to clean as much as possible a portfolio and focus, and we'll continue to do it.

And some of the businesses love them -- would love to continue to have them, but actually it doesn't make sense for them and for us. So I think it's very rational. I think we always need to be very rigorous. We're very -- continue to be very, very [indiscernible] look at what -- for example, also Nets when they sold the corporate services and instant clean services to Mastercard, by the way, it's a very interesting and attractive valuation. I will continue to do so. I think it's good discipline. We try to give you an update on this deal in February together with the outlook for the new year.

[Operator]

The next question is from Alexandre Faure with Exane BNP Paribas.

[Alexandre Faure, analyst]

I had a couple of questions. One is going back on your sort of own alternative payment methods with the counter accounting Poland or rate fares in Germany. I was wondering if you could go back on the economics of this payment method and whether they're accretive to your take rate, for instance. And as a side question to that, I was wondering if you view them as differentiating factors to win wallet share with a given account. Have you found yourself in a position where you went to a merchant to sell only Ratepay, and you ended up selling a much wider range of services, so might be my first 2-part question.

Second question is on Italy this time. I think we -- you mentioned in the past, I guess quite a bit of appetite to digital payments in Italy, at least on the consumer side. I was wondering if you had your own initiative to perhaps lower [ activating ] costs for merchant and the company, this transition to digital new pricing plans, low-cost terminals, any specific initiatives you're pushing as we go into 2022.

[Paolo Bertoluzzo, executive]

Hi, Alexandre, so I understand APMs, both economics and strategy and Italy, if we're doing anything to lower cost transformations. Well, listen, let me start from the second one around Italy. I think the good news for merchants actually is that prices are structurally going down in our sector. It's absolutely normal because, when volumes go up, unitary prices go down. It's almost a law of economic unless you have monopolies or duopolies, which is not the case in our industry, which is very competitive.

The good news is that the combination of volume growth and unitary prices going down is positive. And on top of it, you also have embedded services. So prices tend to go down as has always happened. The -- if you like, the one thing that we're doing more proactively, and this is driven by competitive dynamics, is also to design propositions for the merchants that are newer to these products and services, not a typical new-to-card segment. We're offering a nice entry level, almost try and buy type situation that we believe is important.

Although it is not necessarily on the rates because a customer that is new to card doesn't know how much they will use. So for them, the barrier to entry is more the terminal. And that's where we have launched as well the mobile post terminal that doesn't have a fixed rate per month, but it's basically a small one-off depending on the campaign and so on and so forth is normally below EUR 50, EUR 49. But again, with a higher merchant fee, and then we upgrade the merchant to a proposition that was treated for higher volumes.

When it comes instead on the APM methods and so on and so forth, let me try to give you view the overview, then Bernardo can again comment a bit better. First of all, economics. Clearly, the economics are very different. If you're talking about APMs that you own or APMs that you distribute and you partner with, we should distinguish in between account-to-account and by an operator for the ones that you own. By an operator has an amazing growth, profitability-wise is actually lower because obviously it comes with a certain cost of risk. It is very much under control, but it's actually material. And by the way, in a specific case rate base also investing in growth as well as every other player in the industry. I'm sure you've seen the numbers from some of these players, and they're quite explicit about it, actually Ratepay's profitable. This is good news, but we'll keep on investing in growth.

Account-to-account is normally more profitable. There is a cost to develop the ecosystem because it's a 2-sided business model. You have to sell it to the consumer and sell it to the merchant. Once the system does normally it comes with nice, variable margins. Instead, when you distribute, you can't really have any type of deal, to be honest with you. The more you are the one facing the customer and distributing to the customer, the better the economics are. If it is just a technical integration, then your economics are much lighter.

But actually, for some of them, the economics are quite comparable with the ones that we have on cards, to be clear. And I cannot give you a specific example because -- I could, but I cannot in terms of disclosure, but I have in mind at least a couple of examples where the economics are exactly one in Italy and one in other place where economics are basically the same that we have on card.

[ Brother ] strategy, I mean, I think -- I'm not sure I understand exactly your question because the communication was not very clean. But if your question is, how do you guys balance on the strategy when I have a strong APM? Do I give it to everybody to expand it, or do I monetize it by differentiating myself as on the acceptance side. I think that's a very, very, very relevant strategic question that does not have one answer that is always the same by product and by market because it really depends on the specific market dynamics.

But again, if I use the example, I said before, on buy now, pay later, it's quite clear. Ratepay is a buy now, pay later acceptance method on basically every merchant, e-commerce merchant -- sorry, e-commerce acquired e-commerce PSP in Germany. Why? Because we have a lower market share. And therefore, if you were leaving it only to us, it would be too much of a restriction for the full potential of the product. Maybe in another market with a different starting competitive position and market share as we go in a different direction.

[Bernardo Mingrone, executive]

Term on the margin, yes. So I think we need to distinguish as Paolo did between accounts account and BNPL. Starting with BNPL, we should really think of it as a different product, a different business. So the margin accretion or the take rate accretion, it really depends where you put the P&L because -- there is a cost of risk element there that you have in BNPL but not in account to account. So take rates would be higher. But then if you go to the very bottom line right now, obviously, as you've seen in some of the other larger listed also players in the BNPL space, you have the cost of risk element that you need to take into account.

Whereas account to account, I think in terms of top line, you should think of it as being priced in the various geographies and which is present more similar to domestic rails but depending on how lean or efficient they are with the margin being similar to what a card acquirer could be in that same market. So in terms of the margins, it shouldn't be dilutive.

[Operator]

The next question is from Simonetta Chiriotti with Mediobanca.

[Simonetta Chiriotti, analyst]

Just a quick question on synergies. During the presentation of the first half results, you mentioned the possibility of increasing synergies by 10% in the long term. Is it something that you are still considering possible?

[Paolo Bertoluzzo, executive]

This is a short answer, yes. Yes, absolutely. I mean, we -- as we're defining in better and better plans, that's the reason why last time we gave you these highlights that, this time, we are giving you our outlook for next year. We'll continue to do it. We'll continue to update the more we have visibility. To be honest with you, it also goes in paces in the sense that we had -- obviously, when we did close to this, we had our own view that was outside-in on the opportunities.

Then as we're closing the deals, we do a first round of inside-out review of the opportunities in the long term, and then we go into the more year-by-year detail plans. And so this is a little bit what is happening. We'll continue to keep you updated, but the short answer is yes.

[Operator]

The next question is from Antonin Baudry with HSBC.

[Antonin Baudry, analyst]

Thank you for taking my questions. Two, if I may. I would want to have your view on the current macroeconomic environment and especially inflation. We see inflation coming in the U.S. and certainly in Europe soon. So how do you see inflation impacting your revenue growth. I mean, your revenue is partly related to value of transaction. At the same time, inflation could decrease the number of transactions. So how could -- how do you see inflation on your revenue growth?

My second question is about M&A. I understand that your focus will be to integrate the 2 acquisitions we give, but how do you consider evolutions of your model to address adjacent segments like business-to-business payment, for example?

[Paolo Bertoluzzo, executive]

Antonin, let me take the second one on M&A, and then I'll pass over to Bernardo because I'm a poor engineer, and he's an economist, so he can probably give you much more insight for what we're looking at. The -- on M&A, I think here, we'll have to remain focused, not only on what we do but also what we consider because also screening opportunities or engaging in processes is by itself an organizational cost, and we are trying to stay as much focused as we can.

I reiterate probably what I said in the past, the 2 key areas of focus for us where we engage remain -- our priorities remain at the end of the day, merchant -- I mean, first of all, it's mainly Merchant Services.

Now, first one being merchant books, especially in the markets where we are already and on relationships that we already have because, for us, it's important to follow our bank's other strategies and partner with them. And this is what we've done, for example, on UBI, on Alpha Bank as well and so on. And secondary is more broadly e-commerce both in terms of geographies and also capabilities.

And if you wish as an expansion to this, you could also consider this world of software that can be effectively integrated with payments. And this small example of [indiscernible] is a nice one. That does not mean that we go after many of those necessarily. We will face it very, very carefully, and we really want to understand it before. We did also because you're in a position here in market, the partnerships are also very good. And therefore, we want to learn more about the business. But clearly, e-commerce and omnichannel and merchant books are for us this years. Bernardo?

[Bernardo Mingrone, executive]

On inflation as well, thanks, Paolo, from the economist. But I'll give you my 10 cents worth. I don't believe Europe will definitely lag the U.S. and probably not have such a steep increase in inflation even though it's lingering. Our view -- or my view is that our business is actually geared to benefit from inflation. As you were saying, 2/3 of our revenues are volume-driven, and most of that comes from the value of the transaction.

Conversely, our cost base is predominantly fixed. And obviously, there may be some wage price inflation. Europe tends to be stickier or more resilient than the U.S. on that front. But that should give us some protection. But more importantly, we pay our processing costs on a per-transaction basis. So we'd have a nice spread between revenues growing because of volume growth thanks to inflation and, as you were suggesting, lower transaction numbers with lower processing costs.

In addition, on the capital structure front, I mentioned it earlier, I think 2 -- 3/4 of our capital base is -- or our fixed income capital base is effectively fixed rate. So any inflationary pressure should deflate the value of this debt so beneficial to us. And in the very short term, I think it's EUR 1.5 billion of our liabilities are indexed to your LIBOR, but your LIBOR is floored at 0, and therefore, we have some absorption capacity in that built into our debt structure. So overall, net-net, my take is that we're net beneficiaries of any inflationary pressures.

[Operator]

[Operator Instructions] Mr. Bertoluzzo, there are no more questions registered at this time. Do you perhaps have any closing comments?

[Paolo Bertoluzzo, executive]

Well, thank you. I think that's a simple comment. Thank you for being with us. Thank you for many important questions. I look across numbers, outlook and strategy, and well, I think it's important to have always that at the core as well.

Again, simple messages for us are continuing the volume recovery across all geographies. I think this is really important strategically, not just financially for us, a good, strong financial performance across-the-board revenues and margin as well. And last but not least, we continue to progress in the group coming together to have a stronger company for the future across the board.

So thank you very much, and looking forward to see many of you over the next few days and week. And hopefully, in person, and it's great to see that some of the meetings are starting to be in person again. Thank you very much. Enjoy the rest of the day.

[Operator]

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.