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Ladies and gentlemen, thank you for standing by, and welcome to the Worldline Third Quarter 2019 Revenue Conference Call. [Operator Instructions] I must advise you that this conference is being recorded today, Wednesday, the 23rd of October 2019.And now I would like to hand the conference over to your speaker today, the CEO, Gilles Grapinet. Please go ahead.
Thank you, operator. Ladies and gentlemen, good evening. This is Gilles Grapinet speaking. And many thanks for attending this Worldline conference call today on our third quarter 2019 revenue. As usual, I'm going to share this presentation with Marc-Henri Desportes, Deputy CEO; and Eric Heurtaux, our Group CFO. I will start by commenting the highlights of the quarter, then Eric will develop in detail the revenue performance for Q3. After Eric, Marc-Henri will take the floor to present the third quarter main commercial developments. And finally, I will come back to conclude before starting our Q&A session.Overall, the last 3 months were a very successful quarter for Worldline, both from an operational and from a strategic standpoint. First, from an operational standpoint. Indeed, our revenue, organic revenue growth reached a very solid plus 7.1% in Q3 2019. This is incidentally our best performance ever since we are listed, and this is fully in line with our anticipated growth profile and acceleration during this year. All our 3 business lines recorded a very good growth performance as you could see. And most notably, Merchant Services with a plus 8% organic growth this quarter.Operationally also, I can confirm the very strong momentum on SIX Payment Services integration, which is still running extremely well. Then for a more strategic standpoint, as you know, we have also closed swiftly and much faster than initially contemplated, the acquisition of the minority interest in equensWorldline, end of September at very favorable financing conditions, which allow us to confirm the double-digit accretion expected on our net income per share as soon as next year.All this allows us to confidently reaffirm all our objective for this year. I remind them, the group expects to achieve an organic growth of its revenue at constant scope and exchange rates of between 6% to 8%. In terms of profitability, the group targets an OMDA margin between 24.8% and 25.8%, and for cash generation, the group has the ambition to generate a free cash flow comprised between EUR 275 million and EUR 290 million, including the current synergy implementation costs.I will now leave the floor to Eric for more a detailed comments on these Q3 revenues.
Thank you, Gilles, and good evening to all of you. Before I start commenting on Q3 2019 revenue, just a word on the figures I used in my presentation. As you know, for the analysis of the group's performance, revenue for Q3 2019 is compared with Q3 2018 at constant currency exchange rates. You can see on the screen the main reconciliation items for Q3 2018, which in particular scope effects corresponding to the addition of SIX Payment Services revenue for the third quarter of 2018, and exchange rate effects corresponding mainly to the depreciation of the Argentinian peso, partly compensated by the appreciation of the Swiss franc. So on a comparison basis the revenue for Q3 2018 is at EUR 550.2 million.The table on this slide shows another view of the organic growth of the group and of each Global Business Line. During the third quarter of 2019, Worldline's revenue reached EUR 589.3 million, increasing organically by 7.1%. In acceleration, compared with the first 2 quarter of the year and perfectly in line with the 2019 objective. Growth has been well distributed between our 3 business lines, completely consistent with the growth profile we anticipate for each of these activities on the longest term, with Merchant Services driving the growth of company at 8%, Mobility & e-Transactional Services growing at 6.8%, more or less at the average of the group, and Financial Services at 6.1%.In terms of group profile, our revenues will reflect the new business mix of Worldline, firstly at the SPS acquisition, with Merchant Services being now the largest business line with 48% of total revenue, followed by Financial Services at 38% and Mobility & e-Transactional Services at 14%.Cash flow by business lines. Merchant Services revenue for Q3 2019 reached EUR 283.8 million improving by EUR 21 million or 8% compared to same period last year. Commercial Acquiring grew high single digit, first benefiting from the fast in-store transaction volume growth, triggered notably by the increased usage of payment cards for low value purchase and the rapid adoption of contactless payments.Second, the success of our commercial offers specialized by market verticals also supported this performance. I am also happy to report like in our previous quarter that our omnichannel and online payment acceptance grew double-digit, not only driven by additional volumes but also by new customers. Additional satisfaction this quarter, sales for Payment Terminals started to recover from H1 decrease, more than reaching stability in Q3. As expected, this is coming in particular from higher demand for a newly-launched product, mainly the new VALINA terminal, and from synergies with SIX Payment Services.Last, Merchant Digital Services, which is the smallest division of the business line decreased mainly due to less projects and volume in the third quarter.Turning now to Financial Services. Revenue reached EUR 225.6 million, improving organically by EUR 13 million or 6.1%. Very satisfactorily for us, all 4 divisions contributed to this growth. Account Payments grew double-digits, thanks to good SEPA and iDeal payments collection volumes, and thanks also to the continuous contract of Commerzbank. The Digital Banking division also contributed strongly to the performance of the Global Business Line, posting a double-digit growth. Growth in Issuing Processing was driven by increased cards and strong authentication transactions. Last year, Acquiring Processing resumed growth in the context of high comparison basis thanks to volumes and project revenue.Our third division, Mobility & e-Transactional Services reached EUR 79.9 million in the quarter, improving organically by EUR 5.1 million or 6.8% compared to last year. E-Ticketing grew double-digits, notably with the development of Tap2Use contracts in Continental Europe and growth in Latin America. Trusted Digitization revenue grew double-digit as well, thanks to good volumes and project activity notably in Western Europe. E-Consumer & Mobility activities decreased organically, which in particular less project this quarter.Looking at the first 9 months of 2019. Worldline's revenue was EUR 1.741 billion, up 6.7% organically with each of the Global Business Lines significantly contributing to the growth performance.As you can see on the screen, with those [ initial 5, ] we find similar business drivers for the first 9 months of 2019, than the ones I just commented for Q3. With solid transaction volume growth over all platforms in our 3 business lines, a good level of project activity linked to new contracts. In particular, Merchant Services accelerated during the year from 5% in H1 to 8% in Q3. You can also see that Financial Services organic growth is above our midterm target of 5%, with 5.8% growth since the start of the year. Last, Mobility & e-Transactional Services with the year-to-date organic growth of 11.4% started the year extremely high and is after 9 months, well above our long-term guidance.To conclude my presentation, let me remind you that after the exercise of our call option in July, we have now closed on September 30, 2019 the acquisition of a 36.4% minority stake in equensWorldline, ahead of the timing initially contemplated, thanks to an efficient management of the closing process and trust established with regulators over time.The call exercise price was circa EUR 1.070 billion for the remaining stake, corresponding to an acquisition multiple significantly below Worldline's current trading multiple. The transaction has been supported by a newly issued BBB stable investment-grade rating received from Standard & Poor's. It has been financed in July with a 7-year EUR 600 million convertible bond with the following characteristics: 60% conversion premium, zero-coupon and a negative yield to maturity of circa minus 1%. Associated in September with a 5-year BBB rated EUR 500 million bond with a 0.25% coupon corresponding to a 0.35% yield. Thanks to a very attractive term of 2 bond issuances, the overall financing of the acquisition has a negative cost for Worldline and allowed to fully confirm the double-digit accretion expected on the earnings per share as soon as 2020.Thank you, and I now leave the floor to Marc-Henri for his comments on Q3 2019 operational and commercial highlights.
Thank you, Eric, and good evening to you all. I'm sure you have in mind that we are managing the day-to-day business while performing in parallel our biggest to date integration with SIX Payment Services. Today, we're not going to the detail of it, but I can tell you it continues spot-on, slightly ahead of the plan. This being said, an integration -- in an integration, internal growth are notoriously easier to control than customers, and this is why I'm particularly proud that we can report today excellent results on the customer front as a colorful integration, I mean in Merchant Services. The increase of 18% of order entry during this quarter on the numerous new client sign is the best proof of the relevance of our commercial strategy for global accounts around specialized offers by market verticals. We enjoy also a very high retention rate on our large customers and overall, the customer satisfaction measured by the Net Promoter Score is excellent.With this momentum, it is no surprise that our platform's recorded very strong volume growth, with plus 20% transaction acquired in-store. Obviously, supported by the boom of low value payments and contactless transaction, and also plus 37% transaction online.In Financial Processing, volumes were very high as well. With Issuing and Acquiring transaction growing more than 10%. There was also a strong increase in mobile payment platforms, with a doubling of e-Wallet payment transactions. Lastly, our payment security offers such as Trusted Authentication and ACS continue to grow strongly, with altogether a plus 25% driven by overall remote payments expansion and this despite the postponement of PSD2 online payments strong authentication enforcement to the end of the year 2020.Let me now comment some of the key deals and achievements during the first quarter, and I will start with Merchant Services. Continuing on the trend of large contract signed in H1, like with PayPal in Latin America, with double-digit performance of e-Commerce acceptance was fueled by the signature of numerous new customers in Europe this quarter. In addition, after the successful deployment of Worldline's unattended terminal VALINA earlier this year, new orders were received this quarter from operators of shared mobility solutions. Overall, the doubling of the number of units in operation, only 12 months at the start of commercial campaign confirms the quality of the VALINA value proposition.In terms of product innovation, I mentioned that Worldline successfully made its acquiring and e-commerce platform compliant for the new 3D-Secure 2.0 standard, with live transaction already performed for European retailers, allowing them to prepare their readiness well ahead of the regulatory deadline. WeChat Pay was launched in Switzerland during the third quarter and with the introduction of UnionPay and Alipay acceptance in duty Free stores at Budapest Airport, Worldline enhances its positioning in the European travel retail market by catering for the need of a growing number of Chinese travelers across Europe.Regarding Financial Services, commercial activity during the third quarter was marked by several contract renewals notably with -- in Germany with LBBW for SEPA payments until 2025. And with a large financial institution in Central Europe. In parallel, significant progress was made on large commercial engagements in Continental Europe during this quarter, reinforcing confidence to sign these new contracts in the coming months. Also in the context of the implementation of PSD2, Worldline Digital Banking platform enabled our clients to successfully reach a September 14, 2019 deadline for access to account compliance. Furthermore, several differentiating services have been launched, including the browser-based version of Worldline Trusted Authentication. This service is targeting, for example, very promising market segment of B2B payment, typically all small businesses performing payments on their office computer.In Mobility & e-Transactional Services. Regarding e-Ticketing, Île-de-France Mobilités has launch its Worldline assistance -- with Worldline assistance, a ticketless smartphone solution for the Navigo transportation pass. In addition, the contract with Thalys International for onboard ticketing devices has been extended. We have also signed several new contracts in Latin America to digitize and validate medical prescriptions for the health insurance payment organizations. Lastly, Worldline has extended its contract with a French telecommunication operator for the provision of Worldline Contact, Worldline's secured omnichannel customer engagement solution.To conclude my business update pack, I'm glad to share with you the success of our second international Hackathon, or Worldline e-Payment Challenge, as we call it. That event, for which more than 100 companies applied, confirmed once again Worldline's strong and growing ties with European start-up and fintech ecosystem. 25 fintech candidates were selected for the final phase of the competition by the Worldline experts and our customers partners, while they we took the challenge to co-invent solution on 15 payment and business opportunities proposed by 11 of Worldline most prominent global clients. All these innovative solutions as to -- had to combine the fintech expertise and Worldline's portfolio of innovative assets, accessible through open APIs. And they will decide assets that are engaged, online payment gateway, Commercial Acquiring, Worldline Instant payment platform, Open Banking platforms, we can see really the core of our activities. So 14 fintechs were finally distinguished in various verticals for their winning solutions and the international jury selected 2 ultimate Grand Prix winners: One Visage for its biometric or digital identity solution; and CloudAsset, notably for its digital gateway solution to propose a seamless customer onboarding journey. Also during the event, Worldline announced the launch of its e-Payment booster program, which allows all start-ups and fintechs to very easily incorporate the Worldline API in their product road map and to plug into Worldline's payment platform and to benefit from our Pan-European reach. As a welcome pack in open innovation ecosystem, they benefit from 6 months free transactions. As a conclusion, we believe we are building a new win-win momentum with the fintechs, their energy being supported by our platforms, which in turns generate additional electronic transaction for us in the medium and in the long term.And this is more fuel for our growth. Thank you for your attention, and I hand it over now to Gilles for the conclusion.
Thank you very much, Marc-Henri. And it is indeed now time to conclude this presentation, before taking your questions, guys. As you could see previously with Eric's and Marc-Henri's presentations, this Q3 2019 was definitively very, very solid indeed. Our progressive and regular growth acceleration, which is materializing again this quarter, is definitively revealing the transformational impact of all the actions we have developed over the past years, and in particular, the more and more visible benefits coming now into the top line from the very successful integration of SIX Payment Services' teams, portfolio and customers.The fast and efficient financing and closing of the acquisition of the minority interest in equensWorldline was also a key element of this quarter. It has allowed us to fully complete the 2016 major Equens acquisition as soon as we could, at very favorable conditions. So beyond this Q3, I think today's call is a great opportunity for me to share with you the incredible past 9 months for Worldline since the start of this year, and to highlight the very deep transformation of the company's strategic positioning in the European payment landscape.First, I would like to emphasize that we have built an even stronger organization and even better line management teams now reinforced, and we see the benefit every day by key former executives of SIX Payment Services at key position in our divisions, in particular, in Merchant Services.Second, we received a clear and constantly growing market recognition from industry analysts, payment partners, fintech, as Marc-Henri illustrated, and customers alike, of our much improved leadership, pan-European reach and the relevance of our services and solution portfolio actually fueling extremely well our medium-term growth perspectives.Third, we could indeed, during the last months, very efficiently manage the transformation of our shareholding structure, becoming, through the Atos distribution, an independent player, with a largely renewed shareholder base and increased liquidity.Fourth, we have also reinforced our financial flexibility by obtaining our official investment grade BBB, with stable outlook rating from Standard & Poor's, and we could access very successfully the bond market for the first time since we IPO-ed.And last, owning 100% of equensWorldline at this particular moment of the European payment consolidation momentum give us renewed levers and more freedom for potential new discussion, particularly with banking communities.Thanks to all of this, Worldline is today more solid, more flexible and more maneuverable than ever to play in the coming months, a decisive role in the pursuit of the consolidation of the European payment space, and to continue to deliver its vision of building the leading innovative and highly growing company, delivering best-in-class payment services.Thank you very much for your attention, and I am now ready with the team to take your questions.
[Operator Instructions] And the first question comes from the line of Mohammed Moawalla from Goldman Sachs.
Gilles, I was wondering if you could first comment on the sort of acceleration in Merchant Services. Clearly, you're starting to sort of reap the benefits of SIX now. As we look into the rest of the year, I think in Q4, Merchant Services also has relatively easy comps. I'm just curious as to the sort of current growth rate sustainability or is there scope for even sort of acceleration from those levels?And then secondly, just again, maybe your kind of latest thoughts on the kind of consolidation in Europe. I mean, we saw obviously, MasterCard acquired corporate services from Nets, and so there is still ongoing activity yet, sort of from Worldline other than the Equens' minority buy-out. We obviously haven't seen much evidence in terms of sort of new activity. So any sort of updates from your sense on the consolidation opportunities would be great.
Many thanks for these 2 questions. Maybe I will let Eric, handling the first one regarding the growth profile for this year, but definitely as the type of in trajectory comment, I would like to say that you definitely pinpointed indeed, and picked in my comment the very strong satisfaction we have with Marc-Henri and all our team in Merchant Services to see the incredible strength of the integration of SIX Payment Services, particularly in our go-to-market. And in the market, welcome of this very powerful combination. So we think that we are really building something special here for the medium term. And regarding the short-term, I give the floor to Eric.
Yes. Sure. So hello Mo, I think indeed, we are delivering on the trends we were shooting for, and we are probably in a position to accelerate and to deliver in H2, which is above H1, as expected. It also reversed the [ redeals ] for MS in particular, the good performance of the integration. On MS, we have now a better offer, better geographies, a stronger go-to-market with the verticalization of our sales organization, and also now the true Pan-European footprint. So all these, puts us in a very good position to indeed accelerate and deliver long-term perspective for this business division, which is to be in the high single-digit growth rate. So all in all, good semester -- good quarter, but definitely a trend that is here to stay.
Regarding your second comment, you are perfectly right. I mean, this, the last transaction between Nets and MasterCard is really showing that there is definitely a lot of activity still ongoing. A few comments here without being of course, as you can guess, too specific. Clearly, as I maybe mentioned already with some of you, I believe we are at the turning point of the European consolidation journey. I tend to believe that somehow the SIX Payment Services transaction, the Concardis transaction last year and the BS Payone combination in Germany with Ingenico, was to a certain extent the last key transaction of what I call wave 1, i.e., really a stream of transaction that has been primarily allowing to create the first real consolidators in the European payment space by extracting bank-owned assets primarily. Of course, there were some private transaction in parallel, but I would say the bulk of this wave 1 of consolidation was definitely companies like Worldline entertaining a strategic discussion with banks or banking communities. And this has been more or less the history of the last 4 years. We are now clearly into what we call wave 2, and wave 2 we believe will be made of 2 parallel streams. The pursuit of discussion with banks and banking communities, i.e., pursuing to do more of the same, and convincing large banks or banking communities to join our story and particularly in the case of Worldline, a very strong demand of our medium-term strategy, as you know. But I believe that the clock is also accelerating in Europe and we saw in the U.S. recently with the perspective of first maybe combination between the first consolidators that have emerged after wave 1. And this is why I believe you can have most probably a serious reason to believe that 2020 can be extremely busy also in Europe from a European consolidation standpoint, given the obvious momentum that is and has been created after the wave 1 has been completed and immediately that we have actually engaged on what could be, I think, in a couple of years call wave two. Clearly, the timing is accelerating in the European payment space for the consolidation and more than average is really key, as I was mentioning that we were able to be fully in a position to maneuver with the maximum freedom, and for the importance of the very fast and efficient buyback of the minority in equensWorldline. The very positive impact for us of the deconsolidation from Atos and fundamentally to have also very, very quickly executed on the integration of SIX Payment Services and to be here, as Marc-Henri was mentioning, already close to business as usual I would say, purely in execution mode. So all these parameters were key for us. We knew it would come, the key is now there. So I expect the news flow to be quite dense in the coming quarters.
And the next question comes from the line of Sandeep Deshpande from JPMorgan.
I have 2 quick questions, if I may. Firstly, on PSD2 and the strong application that needs to be implemented. Can you give as any indication of how you are seeing that? Because if there was a September deadline, what's happened to that September deadline and whether you are gaining customers because of your technology in PSD2, given that many banks, from what we hear, are not ready with the technology.And then secondly, with regard to the SIX integration. Can you talk about how this, I mean, we and this -- we have seen over the last many years your synergies associated with Equens but with the front end acquiring platform, how these synergies will be achieved? And I mean, clearly, you're saying that you have the -- all these synergies are on track, but maybe we could have some color on how these are going to be achieved?
Okay. Sandeep, I would take your questions. So starting with PSD2. So indeed over the last months, we've gained quite a lot of customers, and to examine their readiness on this. It's a bit complex. And that's regulation. Regulators love details. So what has been really enforced mid-September is the strong authentication for access to accounts and the third-party initiated Instant Payments, for example. So this has been enforced. What has been postponed is everything regarding, to make it simple, online card payments. So that majority of the e-commerce for which the plan was to bring them to strong customer authentication with some exemptions, but massively on this new way of authenticating. And here the regulator, seeing that the readiness was far from being there, has made the decision to postpone the enforcement to end of next year. But that being said, he has delegated to the national authority a very strong monitoring of the path to compliance and to force players to show that they are progressing into the right direction throughout the period. So that's why we see that this will bring additional transaction progressively in 2020 throughout the year with an acceleration. From that point of view, we have equipped a lot of players with our solutions that some are already live, over -- are in test, in pilot phase, and so the bulk of the volume will be fully enforcement of the law towards the year 2020. So yes, it is -- it allowed us to get some business. There are still some latecomers that are reviewing their options and we could gain, but more important for us, we have the highest volumes now, which is the online e-commerce. There will be a ramp-up towards the year 2020, and so that's a positive for us. And that's still in front of us as the enforcement has not -- has been postponed, as I say.To the SIX integration. I think it's a topic in which you have a lot of streams of synergies. It's not because it's a front end. It's acquiring that it's only a front-end topic. Indeed, you have a platform synergy from the front onboarding of merchants, managing of value-added services, corresponding acquiring platforms, front and back, can be merged, and we already merged the project roadmap with significant synergy as of this year. And so this is for the platform. But you also have all the merchant support with a customer call center in which it's about massification and know-how in terms of lean, in terms of robotization that we also expanding. It can be optimizing the way IT is performed. You know we are coming from a very optimized IT background, and so we know what how to optimize the IT landscape. Then you have all the traditional SG&A optimization, management teams, support functions, real estate, purchasing. Or via foreign purchasing is huge, for each time we acquire a company, we optimize that. I mean, it's a long list, but I can tell you the full cost base of SIX Payment Services is subject to optimization. It is a cost base for which we have corresponding activity inside Worldline, and we apply best fit for the job to people, to platforms, to process, to solution on each and every line. And we are, as I said, very much on track. The synergies are excellent. We are driving it slightly ahead of plan and they say that managing all these cost optimization, it's hard work, but it's very well-known. What's always a bit uncertain is to make sure that we are not losing any customers, that we are even gaining momentum and has a very good number, who we're sharing with you, I think are providing a lot of comfort that we are doing it the right way.
And our next question comes from the line of Josh Masser from Morgan Stanley.
Two please. The first one is just turning back to Merchant Services. I know you said terminals has recovered, but I was just wondering what the growth rate was if you exclude the terminal? I think the exit rate was 9% from Q2. And then within Merchant Services. Again, who are you seeing in tenders, I guess particularly on the omnichannel side, which you said is growing well, so that'll be the first one. And then the second one is just coming back again to PSD2. I recognize, clearly there's been a delay for the SCA migration period. I think NCAs are making sure the issuers have made some progress by the end-of-the-year. So generally, how would you see issuer bank readiness for SCA? And then just generally on PSD2, you've called out good growth in account payments. So do you see that PSD2 could enable direct account payments to take off across Europe and potentially disrupt the card networks?
Eric, you will take the first one. Marc-Henri, the second one, I believe.
So on the question of performance of Merchant Services without the terminal, I think it would have been indeed in line with the trend of the previous quarter. The terminals are still weighted a bit on the growth of MS, but not so much this quarter versus what it used to be on the previous ones. So I think now the situation is hopefully normalizing and getting to stability.
So maybe to come back on the PSD2 readiness. The PSD2 readiness is a very complex topic because the chain -- everybody in the chain is involved. The issuer need to adapt their systems and they're the one enforcing the strong authentication, but PSP online gateways need to be able to handle the new customer journey, and they acquire themselves, they need also to manage the additional data and to adapt to the exemption mechanism. So all, and of course, not mentioning the schemes that are on the center, again that needs to adapt as well. So all the values, elements of the chains need to adapt. So what is directly under our control in-house is -- is the Gateway and the acquiring side. So here we've done our job. The readiness of the rest of the market is a bit heterogeneous. On the issuing side, it's also, I must say to our knowledge, a mixed picture. There is still a lot of work to do in some of, of which in some case we are helping the banks and we are involved. And their plans -- from the plans, there are no -- I know it's always converging to the beginning of 2020, first quarter of 2020 for readiness of issuers that still have a catch up to perform. So that I would say the visibility I have, but of course, it's not complete. It's on some part of the market. On the fact that it can enable further acceleration of direct payment method as an alternative to cards. Of course, it can. It's part of the ambition and technically, now things are possible. This being said, changing customer habits, getting them to use a different way of paying online, getting them to trust this different way of paying online and sign it, as a natural new habit, is not something that can happen like that in 1 go. It means that big merchants or big brands or big payment brands start to switch volumes or a newcomer really makes a new payment methods very well-known to the market and widely accepted. And this will ramp-up progressively, in our view. We see how much people will want to push into this direction. We see initiative. We see retail as well. We are supporting some retailers already to propose this payment method online to their customer. So yes, this will change the mix of payment methods, but I think it will be a progressive switch in -- not 2020, massive disruptions as for my opinion. I think -- I'm not very sure about your exact second question. You mentioned something about online positioning, but maybe can you rephrase it?
Yes. It was just, who are you seeing in tenders and RFPs, particularly on the omnichannel payment side?
I don't know if it's very relevant to name the least of my -- of the competitors, but I think, I guess, you know the usual names. What I can maybe say is that it becomes more and more difficult. I see less and less of the local guys. The one was a specific position in 1 country as a big retailer, whereas for a multi-country and more and more in the omnichannel mix of in-store and online. And here, the list is quite short.
Just to add a final comment, to help you guide assessing the PSD2 opportunity. I mean at high-level, there are 3 layers into that. The first one, I would say, is just the compliance part of it and as Marc-Henri was saying, 2020 will still be, we believe, the year where there will be projects and activities throughout many banks to be compliant. Not only the one that they have done nothing but the one or so that have deployed something that is not working and they have already market survey that are showing that some of the first implementation by some other companies are within the bank themselves, well not actually really operational. Then there will be the volume growth. As Marc-Henri was saying, this will come progressively and for some of our customers, it has actually started, and we have already significant volume growth is was reported by Eric in his comments. And it will go on and go on, with strong customer authentication, adoption and implementation. And then you have the transformational, let's say the strategic impact on the way we transact and the way we pay and the merchant strategy and the bank strategy, which is a longer-term story that will need first, that everyone is compliant and then that it will be widely deployed and we start to see big volume. So these are the 3 layers of the story of PSD2, and we are still actually just at the start of the compliance phase to be recompleted and the start of seeing significant volume coming that is actually happening in some countries, but not everywhere. So strategic impact, I think, we can ready, probably from 2021 onward, but certainly not in the next 2 years.
And our next question comes from the line of Emmanuel Matot from ODDO.
Three questions from me, please. First, it is early to talk about 2020, but do you see anything that can prevent you from further increasing your top line growth? What will help you to move to a next step of growth next year, notably in Merchant Services? Second, last July, you mentioned that one of the processing contracts you have with a customer of equensWorldline has been extended for a period of 3 years. Do you expect your other key customers of equensWorldline to do the same, not waiting for the contract end period of 2021? And my third question, where are you in your discussions to sign a new large outsourcing contracts with banks? Are they still going in a positive direction?
Excuse me, Emmanuel. Can you just rephrase the third one, please? Okay, thank you. I was just confirming. Thanks, Emmanuel. So maybe regarding 2020. I can take the first one. Probably Marc-Henri can give you where we stand today, which is just business as usual. Of course, for us regarding the control and commercial discussions. And of course, we can also probably voice together regarding outsourcing for banks that you can probably follow up on this one or so, Marc-Henri. Well, 2020 it is, as you can guess, really we are not in a position at the end of Q3, which is not our usual rendezvous to talk about the formal guidance for 2020. But you know our 3-year plan. Our 3-year plan is the plan that is based on a progressive acceleration. We guide for 7% to 8% CAGR. And so clearly, it is what we have in mind looking forward. As a matter of fact, as of today, the company as you understand is really gaining many benefits from the deep in-depth work that we've been performing over the last years, reaping the benefit of the Equens acquisition, many other acquisitions, some smaller one as you know, and of course, the start of the benefit coming from SPS. So clearly, we anticipate that we are better positioned in many geographies, with fast market growth for our Merchant Services business, and we don't see any reason for that to slow down in 2020. We start with really, a real good benefit of our new sales approaches, our new go-to-market in term of vertical focus, and also a very good management of large accounts. We have structurally a progressive acceleration, a progressive increase of the share of online within our Merchant Services business. It's now growing bigger than the rest. So it is like a snowball that is helping the company to pursue, going faster in MS. And there are some further synergies in the top line to come of course from the progressive deployment of the SPS synergy plan, wholesale, up-sell, et cetera. Normally, we should have also some easier comp next year with the terminal, but as you know, we have a serious drag in H1 this year. And overall, we still have a very solid commercial pipeline. As you know, for FS and for MTS, so. I mean, really the vectors are pointing in the good direction. We have not fully completed our budget exercise as usual, so we will have with you guys a very clear rendezvous in Feb as usual with the full year, but so far, we'd say so good. Marc-Henri, you take the...
No, for the equensWorldline shareholders, of course, we are according to this bank's agenda, entertaining discussions, looking to see if we, in some cases we can anticipate these renewals. This is indeed happening. And what we do as well, and that can be an excellent leverage for us is that these banks, they are facing the same challenges as others in terms of new features, new regulation, new issues to cover, and so we are pushing new products and new adaptation to them, and leveraging on this to tell them, you can potentially optimize and make it in 1 go. This, combined with the fact that any way we are very strong and very protective to others attached to this contract when we come at the time of renewal, is a very good incentive to push them into the other discussions. So that is something that indeed we are entertaining and that will materialize over time. So it's not certainly not a point of concern at this stage. When it comes for the outsourcing momentum in banks. It's not reduced, that's for sure. We still see a lot of opportunities, our pipes is really loaded with it. So and in particular, in some very big opportunities, we are making strong products in Q3, and that's going to be now the final period that's coming in front of us. Of course, with big magnitude you have the timing is subject to a lot of administrative constraint. So it's a bit difficult to forecast in detail. But for sure, it will have an impact on our 2020 numbers. That's clearly the way we see it at this stage.
And the next question comes from the line of James Goodman from Barclays.
Firstly, very encouraging development obviously in the Merchant Services side, but I was a little surprised by the performance in MeTS, actually. I mean, sequentially that was down I think about EUR 8 million. So I'm just wondering did something come out of the blue there, on the e-Consumer & Mobility side, and we're looking at a bounce back in Q4 because you got quite a tough comp there, I think. And as just a brief follow-up to that, I mean, I would presume that's margin accretive, given the way the mix is developing in top line for the full year.And then the second question is just more of an aside, really. I know because you call out DCC in the press release, not something I think I've heard you speaking about before. So was just curious how big that is for you and whether that's something that you provide yourself or whether you're working with partners there to facilitate that?
Yes. Thank you, James. I will take your first question, and then try to call out the next ones as well. So on MeTS, I think we have a mix announced beginning of the year in H1 now, and now it is normalizing a bit, but very much in line with our expectation. We said for this division the target to be in the average of a group so they're exactly where they are. There is as usual, a little bit more volatility in this division due to more project activity. It was the summer period in Q3, so maybe not the best one to be high on project, but all in all, we are still very confident in the medium-term perspective of this division.
On Dynamic Currency Conversion. As you may guess, SIX Payment Services, being born in Switzerland, that's, I would say is the perfect country for this because you have a lot of tourists that for sure are coming with different currency, own currency in Switzerland and with high activity in luxury goods. And this, combined with the fact that since SIX developed a lot in hospitality, in airports and these kind of things, they add a very strong know-how in Dynamic Currency Conversion solutions. And it is fully in-house. And we had a solution in 1, but that was also leveraging with partners. So the opportunity there is that we are going to migrate on the in-house solution to keep the full margin, as a full benefit of it and that's part of our synergy plan, no doubt. And clearly, their know-how and the quality of their solution is clearly supportive to the top line and allow us to be more efficient in pushing more heavily on these specific value added services, which is probably today is the most dynamic of the acquiring market in general and, in particular, for us.
And the next question comes from the line of Hannes Leitner from UBS.
I got also a couple of questions. The first one is on the continuous acceleration of growth. I know we have addressed it a couple of times tonight, but maybe you can help us, how much of that is driven by deal wins, and how much is it really by the ramp-up of existing platforms and the transaction volumes on top of it? Then the second question is around the equensWorldline, as 100% shareholder now of that subsidiary, have you identified any additional synergies which should help into next year's margin progression? And the last one is maybe just a data point on your current transaction volumes in the Merchant Services business. How much is offline and how much is web-based?
I will let maybe Eric give you a few colors around your first question, but fundamentally, as I said that the Merchant Services acceleration is driven really fundamentally by [ BAS ]as we see it. There are very solid volume growth on most of the geographies, particularly driven by the acceleration of the transformation also pushed by local regulators, by the payments team, particularly contactless payment. So it drives significant volume growth with existing customers. But we have enjoyed that since the start of the year, numerous new wins in the Merchant Services business. These are of course smaller contracts than In the Financial Processing side, but one of the real satisfaction and it was also a scene through which Marc-Henri was alluding to, when he was saying we are very happy that on the commercial front, this combination is working extremely well. It is on the satisfaction of existing customers but it is also on the signature of many new ones. Not always sufficiently big that we publish a PR each time, but ultimately by adding up, making a sizable addition to the existing business is when we started the year, and very promising for the medium-term. Eric?
Yes. More definitely, we have signed some large deal comparatively to the size of the MeTS. Some of it have been communicated. We are also glad not to have lost any customer. We've renewed all of them during the period, which is what we shoot for. So indeed, the prospects are good for this division. The volumes are excellent. Indeed, as you mentioned it, on top of the regular ramp-up of volumes, we are currently well-supported by the increase of low value payment boosted by contactless in our geographies. And last, I would say and that's an important component as well on the project activity with some of our customer are also supporting the growth. So we are well-positioned to continue to enjoy the current performance of MS.
Regarding the, I would say operational benefits that we can extract from 100% ownership. Maybe Marc-Henri, you can...
Yes. On equensWorldline, so we are clearly not at the moment of giving 2020 numbers, but for sure this 100% ownership makes us, we are working even more fluid, and allows to think about some structural optimization potentially, so that's something we are clearly contemplating. So it will be easier and it will be more fluid, and maybe what I could add is anyway, having the full ownership of it may reopen the question to form JVs, if they are interested partners, and that's also another dimension of having this full ownership, of this processing factory now. Coming to your point of mix of offline and online transactions. Honestly, we did not really relook as the detailed KPI, but bear in mind we still have a vast majority of offline transactions. So for in-store, I would say physical transaction and in order of magnitude of circa 20% of the mix in online, it is probably still a relevant order of magnitude when you get the profile. So that's something that indeed is evolving with the faster growth of the online world, and that we think something that clearly we intend to continue improving.
Just a quick follow-up, I think next week or on the end of this month, the lockup period of Atos and SIX is expiring. Have you any comments from them and commit long-term commitments in Worldline?
No. As a matter of fact, that you've rightly mentioned that the end of the lockup is just a public fact. So it is, of course, something I believe the market has clearly in mind that we took. My only comment here is that whatever happens, there is a clear trajectory of Worldline to become progressively a more independent player, and this is fundamentally extremely supportive for our M&A ambition. So whatever may happen in the coming quarters or years fundamentally, I believe, it will only reinforce the independence of Worldline and its ability to strike very large and transformative M&A transactions. So we look very confidently to the future to be very frank with you in whatever scenarios we may face.
And the next question comes from the line of Antonin Baudry from HSBC.
So just a quick follow-up on revenue growth. You already addressed this question in 2019. I just wanted to know if you were comfortable with the midpoint of the guidance, 6% to 8%, because it seems that to reach this midpoint it necessitates something like a pickup of the top line growth in Q4.My second question is about the online exposure of the group. Is it possible to remind be the exposure of the groups on online, on which strategy do you have to accelerate this exposure? Is M&A, could be a way to accelerate this exposure. I mean to buy some smaller perimeter, but to grab a probably more dynamic top line growth at a higher price?
Thanks for the question. I mean, you know us. I mean, we are not giving quite early guidance of course, but what we are building is a company that is set and geared to regularly accelerate its growth profile. So what you see on this quarter, which I think has been highlighted by some of you and I am grateful for that, is only with the stabilization of the payment terminal. The real reported figures for MS that is really reflecting what we have been experiencing since the start of the year, as a matter of fact. And so, I believe, Worldline is really every quarter, becoming a better company and recognized as said by the customers, and enjoying fundamentally also the very solid structural momentum of the European payment industry, endowed with more transaction, mostly from cash to cashless, more online and fundamentally merchants investing to reinvent at least the large brands, better customer journeys and the international brand, looking for grouping under one roof, they are acquiring relationships. So all that is playing. So definitely we look forward at the end of the year. As you know, Q4 is always a very special quarter in this business, we have the Black Friday, you have the Christmas period. So of course, each year we've been beating records so far. So it is always -- I'm not to believe that we're going to, not beat again a record in terms of number of electronic transaction everywhere. But it is clearly what we are striving for, to really be as much as we can, to really be at the high end of our expectations still too soon to say for this Q4 because it is such a big quarter in the payment business. But we are confident. We are confident. What you have seen quarter-after-quarter is a regular and steady acceleration. I mean, you had a second question maybe, which was?
On online exposure of the group, on the way you could accelerate this exposure through M&A dedicated to [indiscernible]
Yes, yes for sure, Antonin. This is clearly as we did with Digital River, as we were very happy when we did the due diligence on SIX to find with Saferpay that we today, very, very nice add-on, particularly for the mass market, and offering the mass market a very efficient online payment solution, performing extremely well. We will pursue developing the group in online, including through M&A. And there are opportunities. And not always crazily expensive, just because there are situations sometimes that you can leverage and you can propose also a very smart transaction structure. So it is still part of the 2 duties of the group. We want to be, as I was saying, a high-growth company in the medium and long-term, and it will go certainly the reinforcements of our online presence, for sure.Thank you, guys. It is now 1 hour that we are with you. We are very grateful that you were with us for this important Q3. As you understand, it is somehow a quarter that is coming after 9 months of an extraordinary corporate life for Worldline, and particularly I don't forget that in Q2 we've been managing a very significant distribution and corresponding potential flowback that we could manage extremely well. We have engaged with many new shareholders across the world very successfully, receiving today and of course over the last months, very strong support for our ambition and our vision. I am also very grateful that you guys, you helped us to communicate these ambitions, this vision and their understanding of our very great industry. Thank you for that. Looking forward to be with you soon and in the longer term. Good evening.
That does conclude our conference for today. Thank you for participating. You may all disconnect. Thank you.