© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Thank you all for standing by, ladies and gentlemen. Welcome to today's Worldline Q3 2020 Revenue Conference Call. Our presentation for today will be followed by a question-and-answer session. [Operator Instructions] Please be advised that today's call is being recorded, and I would now like to hand the call over to your speaker, Chairman and CEO, Mr. Gilles Grapinet. Thank you.
Many thanks, operator. Ladies and gentlemen, good morning. This is Gilles Grapinet speaking. Thank you for attending the Worldline conference call today on our revenue of the third quarter of 2020. I'm going to share this presentation as usual with our Deputy CEO, Marc-Henri Desportes; and with Eric Heurtaux, the Group CFO. And I am particularly pleased to welcome on this exceptional day Michel-Alain Proch, CFO of Ingenico until yesterday and still today, by the way, and also a special adviser to myself that you know very well. I have 4 main elements to highlight today. First, we delivered a revenue for the third quarter well in line with all our expectations. Indeed, the revenue decline is limited to minus 2.7% and materializing the strong recovery compared to the previous quarter and the strong resilience of our business model. The significant improvement of the revenue evolution during Q3 reflects in particular the strong dynamic of domestic payments in all our key merchant acquiring countries, supported by a very significant accelerated penetration of cashless payments and a strong dynamic of e-commerce. Second, beyond the current business activity, of course, our main achievement over the last month was clearly to bring to a successful closing yesterday our strategic and friendly acquisition of Ingenico. I would like to warmly thank the teams of the 2 groups for their exemplary cooperation, which led to the results in line with our overall transaction time line. I am very pleased with the extremely high contribution rate to the tender offer of circa 89%, which demonstrates the massive support of Ingenico's shareholders to our project and the recognized industrial relevance of this combination. Thanks to the new governance, which is already fully in place, and after the detailed preparation work performed by the teams since the announcement of the transaction, I can tell you that we are, today, ready to operate as a single company and to immediately start to implement the integration and synergy programs, and Marc-Henri will provide you more details a bit later. As planned, we are also launching the strategic review of the payment terminals business unit, and I will come back on it in a few minutes. Third, you certainly saw Ingenico's very solid Q3 published this morning, which is good news for the forthcoming integration. In the current environment, I view these results are -- as perfectly in line with the full year trajectory they expected and thus their guidance. It adds even more comfort to our conviction of the power of the forthcoming combination of 2 resilient and well-managed businesses. Warm congratulation again to Nicolas Huss, Michel-Alain Proch and all their teams. Finally, taking into consideration the recent evolution of the health situation and the 2-month financial contribution to come from Ingenico, we confirm today all our objectives for the year. Eric will comment later the underlying assumptions of this combined guidance. As I said, closing the Ingenico acquisition timely has been a formidable achievement as its strategic, and industrial rationale is even more compelling in the post-COVID-19 context. You can see indeed on this slide the new ID card of Worldline. The group is now the undisputed European leader in payments and the world #4 in payment services with more than 20,000 employees in 50 countries. The new combined group offers best-in-class payment services to nearly 1 million merchants and 1,200 financial institutions with estimated pro forma revenues reaching circa EUR 5.3 billion in 2019, out of which EUR 2.5 billion in Merchant Services. And since the announcement, the transaction, I can tell you, has been particularly well received beyond the shareholders by the customers and key partners. You can see on the next chart our new business profile, including the creation of a dedicated global business line for Terminal Solutions & services based, of course, on Ingenico former B&A divisions, reinforced by our own payment terminal business. Of course, the main integration work is in Merchant Services, which, beyond its extended size, has been deeply reshaped to accelerate the synergies and organic growth potential, as Marc-Henri will detail later on. This division has been definitely shaped and staffed to be a very, very powerful organic growth engine for the future. I told you in my introduction that our new governance is already fully in place. Consequently, the Board of Directors is now composed of 18 directors; 3 directors appointed by SIX Group AG, the largest shareholders of the company; 1 director appointed by BPI; and 1 director representing the Deutscher Sparkassen. The composition of the Board of Directors is well balanced and fully complies with the French rules enacted by the AFEP-MEDEF Code. In particular, the Board is composed of 65% independent directors, while 41% of its members are female directors. Last comment, as you could see, the SIX Group has undertaken a new lockup confirmed until June 2021. You can see on the next slide all the members of the new Board of Directors exactly as it was voted during our last shareholder meeting. As you know, I took the chairmanship of the Board when Thierry Breton had to resign to fully dedicate himself to his new role as European Commissioner. It was agreed and planned to appoint Bernard Bourigeaud as Chairman of the Worldline Board of Directors. The Board -- having been informed by Bernard Bourigeaud that, for personal reasons, he would temporarily be unable to assume the duties of Chairman, the Board of Directors decided, in agreement with the Board of Directors of Ingenico, to defer such dissociation until the personal constraints of Bernard Bourigeaud are resolved. If these constraints are not resolved at the end of the first quarter of 2021 at the latest, the Board of Directors and, in particular, its Nomination Committee and Lead Director will work to assess the situation and will make all the necessary decisions in the best interest of the company in preparation for our 2021 shareholders' meeting. In this context, the Board of Directors of Worldline, in agreement with the Board of Directors of Ingenico and upon the proposal of the Nomination Committee and the Lead Director, has decided to maintain myself as Chairman and Chief Executive Officer in order to successfully lead the integration and address the strategic challenges of the new combined group in the current context. You can also see the chairman or chairwoman of each of the committees of the Board: Mr. Aldo Cardoso, Chairman of the Audit Committee; Mr. Lorenz von Habsburg Lothringen, Chairman of the Nomination Committee; Mrs. Danielle Lagarde, Chairwoman of the Social and Environmental Responsibility Committee; Mr. Luc Rémont, Chairman of the Remuneration Committee; and Mr. Daniel Schmucki, Chairman of the Strategy and Investment Committee. In addition, I would like to take this occasion to remind that George Pauget, a highly respected French executive, is our Lead Director. On the next slide, you can see the new group Executive Committee, which is designed to lead the company to its new page of strategic and operational development. Concretely, close to me and Marc-Henri Desportes, the former Excom of Worldline has been reshaped and extended to 6 new joiners from Ingenico: Matthieu Destot will lead the newly created business line, Terminal Solutions & Services; Nicklaus Santschi is CEO of Payone, our joint venture with Deutscher Sparkassen; Eglantine Delmas has been appointed to supervise Quality, Risks and Security of the group; Jacques Guerin will be in charge of the special initiatives throughout the group and, in particular, to coordinate the strategic review of Terminal Solutions & Services; Grégory Lambertie is our new Head of Strategy, Mergers & Acquisitions, Publics & Regulatory Affairs. And finally, Michel-Alain Proch will be my special adviser while accompanying Eric to integrate Ingenico's Finance function. I want to thank him in particular for his outstanding involvement during the whole acquisition process, alongside many of his fellow executives of Ingenico, who have been instrumental to bring this fantastic transaction to the finish line, particularly in the tougher COVID context. I am really very happy to welcome all of them. Finally, on my last slide of this section, I wanted to confirm that, as already communicated since the production announcement early February, the group is now launching the strategic review of its payment terminal business, now renamed as Terminal Solutions & Services, TSS. This business, which represents roughly 1/4 of the group, has significant synergies with Worldline terminal activities. It is a global leader with strong operational performances and in terms of cash generation, a very strong management team and a high degree of operational autonomy. The review will be undertaken to secure the long-term development perspective for the business in the best interest of its customers, employees and shareholders. Looking for the most appropriate shareholding structure, the strategic review will consider the future managerial and financial support needed to accelerate the engaged transformation of the business from an Hardware + Service business today to a cloud-based Software-as-a-Service business model in the future. It will, of course, take into account the important relations with Worldline's Merchant Services business, the benefit for all stakeholders and the best financial resource and time allocation for the rest of the Worldline strategic agenda, in particular regarding consolidation opportunities in the years to come. Led by a dedicated team, we target to have completed the review in 2021. I now lend the mic to Eric.
Thank you, Gilles, and good morning to all of you. As usual, let me start by presenting to you the Q3 2019 numbers I will use in my presentation. As you know, we measure our performance at constant scope and foreign exchange rates. The scope effect you can see on this slide corresponds to the acquisition of the online payment pure player in Eastern Europe, GoPay, which was closed during the quarter and which already contributes to the revenue and profitability performance of the group. Regarding exchange rates, the Swiss franc depreciation in Q3 2020 compared to Q3 2019 was offset by the depreciation of the Indian rupee versus the euro as well as, in a lesser extent, of Asian currencies. This brings constant scope and exchange rate revenue for Q3 2019 at EUR 589 million. Before going into further detail by global business line, just an overview of our revenue performance in Q3 2020. During the third quarter, Worldline's revenue reached EUR 572.7 million, with revenue trends strongly improving compared to the second quarter as social distancing, confinement and store lockdown measures were progressively eased from mid-May in our key markets, leading to a quick recovery. Consequently, and as expected, organic revenue decline for the third quarter was limited to 2.7%, representing a strong improvement over the 13% decline recorded in Q2. Let me now detail this number by business line. I'll start with the analysis of Merchant Services revenue during the past quarter. As you can see, Merchant Services revenue reached EUR 270.4 million and limited its organic decline to 4.7%, which represents a very significant recovery compared to the 21.5% organic decline recorded in Q2. Indeed, over the summer, transaction volumes continued to steadily recover, along with the reopening of the European economy. The number of commercial acquiring transactions in Continental Europe increased by 13% during the quarter, with a strong growth as early as July and notably much stronger e-commerce transactions. Nevertheless, as anticipated, cross-border credit card transactions and associated services were strongly impacted by travel restrictions and the absence of international events. As a consequence of this mixed trend, revenue decreased mid single digits organically in both commercial acquiring and payment acceptance. Regarding Merchant Digital Services, revenue decreased due to fewer volume on private label card program in the U.K. and, in particular, for cinemas and hospitality chains. Lastly, it is to be noted that our payment terminals division was quite resilient in Q3 as in Q2. Revenue was almost stable, thanks to good sales of newly launched products, such as VALINA and YUMI, in the context of stronger demand for unmanned retail and merchant digitization and even accelerating with the COVID-19. Moving now to Financial Services, which continued to show resilience and was nearly stable over the period with revenue reaching EUR 224.1 million, declining organically by 0.4% only. As in the first semester, performance of this division was contrasted. Notably, on the one hand, Account Payments remained quite unaffected by the COVID-19 situation as the division's revenue grew high single digits, supported by the increased volume and contract ramp-ups. Also, authentication volume related to e-commerce payment transaction strongly increased, as I just commented, for Merchant Services. Higher transaction volumes were also processed on our e-brokerage platform. As a consequence, a strong double-digit growth was recorded in digital services. Now on the other hand, revenue linked to card-based payment processing activities, while recovering from the Q2 lowest point, decreased by a mid-single digit, impacted by the mix as well as lower discretionary spending from banks in the current economic context. Let's finish with Mobility & e-Transactional Services, where revenue reached EUR 78.2 million, decreasing organically by 2%. As during Q2, performance of each of the 3 divisions remained contrasted. Revenue in e-Consumer & Mobility grew strongly at a double-digit percentage rate, thanks to existing and new contact contracts and to digital health solution. This strong performance was unfortunately offset by a revenue decline in e-Ticketing with payments severely impacted by the current health situation in the United Kingdom and in Latin America and by Trusted Digitization due to lower project activity as some contracts are reaching now the run phase. Turning now to a brief comment of the revenue evolution of the last 9 months, as you can see here on these graphs, the revenue curves of Worldline and each of our 3 business lines since the start of the year. As we already commented in previous quarters, thanks to its diversified business profile, Worldline's revenue was globally resilient in the extraordinary COVID-19 context. And you can see here the strong Q3 recovery from more than 13% organic decline in Q2 to minus 2.7% in Q3. Notably, as expected, Merchant Services was severely impacted from March to May by the general confinement and lockdowns in our key markets. But as you can see, as soon as the restrictions were lifted, the division showed a very sharp reactivity, in particular supported by much stronger domestic and online payment volumes. Financial Services revenue evolution at the 9 months was quite stable, declining by 0.6% only. Last, our Mobility & e-Transactional Services division had limited year-to-date decline to 2.5% despite the strong impact of the health situation on transportation and thanks to a very strong demand for highly secure Worldline contact customer interaction platform. Let me now give you some clarity on the status and time line of our current friendly offer on Ingenico. As you know, our initial offer in Ingenico, which was launched end of July, is now closed. The offer was very successful as we could get close to 89% of the shares and the totality of the convertible bond. The settlement-delivery of the shares happened yesterday and allowed the full consolidation in our book on November 1, 2020. Following this very large success, the offer has been reopened until November 4, 2020, with a settlement expected on November 17. Let me now finish my presentation with the guidance. Following the completion of the acquisition of Ingenico, we issued today a combined set of 2020 objectives, including 2-month contribution of Ingenico, fully consistent with previously communicated objectives. This combined set of objectives is based on the macroeconomic hypothesis outlined during Worldline's Q1 2020 revenue publication and, in particular, for the second semester. As a reminder, we are basing our guidance on a very gradual lift of government constraints in H2, which -- in particular, a general retail reopening and an increase of domestic payment flows following a progressive business recovery; very limited international travel, tourism and related businesses; last, postponement of all key conventions and events to 2021. For fourth quarter of 2020, in particular to take into consideration the recent evolution of the health situation, the group's objectives are based on stronger government targeted restriction but no full lockdown of nonessential retail until year-end in our key acquiring countries, Benelux, Germany, Switzerland, Austria and the Nordics, as well as the business performance of Ingenico consistent with its full year guidance. In spite of deteriorating Q4 assumption, I am pleased to confirm that the group expects a full year 2020 financial performance broadly in line with 2019, most probably in the lower end. With this, now I hand the mic to Marc-Henri Desportes.
Thank you, Eric, and good morning to you all. I will start by commenting the Q3 payment transaction volumes. As Eric has mentioned, acquiring volumes in our European markets grew strongly in Q3 at plus 13%, which is a massive improvement compared with the volume decline we recorded in Q2. What is interesting to note is that this increase comes mainly from local debit card transactions, which are up plus 16%. We see here the impact of the increase of the contactless payment limit and, in general, the adoption of contactless payments. As an illustration, more than 1 payment out of 3 is now made contactless in Belgium. What is also interesting to comment is the fast growth of our online transaction volumes at plus 48%, which is both the consequence of change in consumer habits and market share gains. In terms of merchant turnover, the situation is very much in line for debit cards as it grew plus 15%, while credit card volumes are still impacted by the low level of high-value travel and tourism-related transactions, thus staying 15% below last year. Speaking about Financial Services volumes. E/M volumes evolution are similar with what we reported in previous quarters, including, on the positive side, the good growth in account-to-account payments, which were not significantly impacted by the COVID situation, as well as topics related to e-commerce like ACH and stronger authentication transactions that keep experiencing a solid year-on-year volume growth. Coming to the Q3 wins. Let me share with you some highlights commencing with Merchant Services. For the apparel chain, C&A, what is interesting here is the extension of our current pan-European payment acquiring service to 4 new countries. Indeed, this [indiscernible] pretty well. Large retailers need a one-stop shop partner for their payments. And Worldline is, as you know, one of the very few provider able to deliver this service to a pan -- on a pan-European scale. We will also deploy the online acquiring payment for fast -- a global fast food chain, which reinforces our position in this market after the Subway reference contract we already announced in April. Regarding e-commerce, we continued our good momentum with the signing of a new partnership with iPayLinks, an online payment gateway to propose Visa and MasterCard acquiring services to iPayLink's existing and new merchants across Europe.Lastly, in payment terminals, beyond the new contracts signed, it is interesting to note that the VALINA unattended payment terminal is in the process of being deployed in the U.S.A. with several partners, among which is VenTek, as you can see on this slide. In Financial Services, one of our main contracts is with the Austrian banks. So PSA has been renewed for 5 years. And in MeTS, our secure customer engagement contact platform is gaining traction as we have just sold it to the French statistic administration, INSEE. Coming now to the Ingenico integration. Thanks to the detailed preintegration work that I presented to you in previous calls, we are today perfectly ready to deploy our new organization, which will be live by next Monday. As we presented it to you earlier, we have redesigned our Merchant Services organization, on which I will deep-dive in a minute, and we combined in a dedicated business line our payment terminals business with the one of Ingenico. In addition, we have already validated all managerial positions, and 2,200 managers are identified in their roles for the go-live next week. Thanks to the deployment of the best-fit-for-the-job principle, the new organization is well balanced with 47 of these positions held by former Ingenico managers. Lastly, our synergy plan has been structured and detailed further to deliver the EUR 250 million synergies over 4 years. The integration team is now ready to track and coordinate the plan as per integration practice, supported by managers in terms of the business. These managers are confident to achieve the target and are starting now to execute with immediate attention to low-hanging fruits such as the G&A synergies, de-duplication of programs and projects, real estate consolidation, procurement, et cetera, et cetera. I will now do a close-up on the new Merchant Services organization as this business line is at the core of our new group. This is the biggest business line and the most balanced in terms of contributions. This organization was designed to take full advantage of our new side in 2 principal ways: first, by being even more specialized by merchant segment while still having critical mass for each go-to-market, thus optimizing sales expertise and firepower for growth; secondly, by grouping platform by product domains to optimize scale and functional richness for both cost synergies and revenue growth, innovation and agility. I will come back on the next slide to the go-to-market organization and its 4 divisions. But regarding product and platform, we have 3 product divisions, as you can see on the left part of this chart: commercial acquiring, payment acceptance and digital services. They will gather all product owners and platform developers. And finally, to serve the full scope of merchant services, the back office, including customer services, platform operation, will be shared for scale effect and proper sharing of the most efficient practices. I believe this organization is optimal to deliver cost and revenue synergies. Let me now turn to focus on this new market organization, which has been designed to accelerate growth, thanks to the combination of -- a combination of our unique assets. So 4 go-to-market divisions. First, for small and medium business. The addition of Worldline's all-in-one, very comprehensive solution with Ingenico's successful go-to-market approach and efficient onboarding coming from Bambora will allow us to respond to the growing market demand for automated process and full omnichannel solution. Here, with more than 1 million merchants in 16 European countries, scale and reach are unique on the market. Fantastic asset. Second, for global sales and vertical, we will combine Ingenico's vertical expert sales in domain like big retail, petrol, hospitality, for example, in order to bring to the market the best European cross-border acquiring offer with the best payment acceptance offer. So it's an unmatched combination. Third, for the digital e-commerce division, you know that in Worldline, we have a strong solution combining acquiring and payment acceptance, while Ingenico excels in collecting and online acceptance. Together, we manage yearly 2.5 billion online transactions covering all key countries and, in particular, all of the BRICs. And this position us very well in the fast-growing market. Last, we will be very well placed to respond to the growing appetite from financial institutions. And so we organize it in a dedicated go-to-market for tailored partnerships through the addition of Worldline's leading payment capabilities and Ingenico's past record in setting up banking partnerships, the most prominent one being Payone. Leveraging over -- and we will leverage over 1,000 existing bank relationships with the group's combined units. So I'm very confident this new organization is the organization that will foster the relevance of our offers and our future growth in Merchant Services. Now looking forward, we as a management team believe that beyond the short-term COVID rate attention, our 2021 and medium-term perspective are more than strong in terms of growth and margin improvement due to a very positive combination of market-specific drivers and company-specific drivers. Starting with market drivers. We are observing a strong acceleration of cashless payment trends, a sustained change of consumer habits moving away from physical cash and a strong dynamic of e-commerce. This is clearly a long-lasting impact of COVID, while the temporary limitation of the economy due to government restrictions should fade away in 2021, allowing a progressive recovery of cross-border transactions. As soon as the economy reopened at the beginning of Q3, we saw debit transactions growing 20%, and credit transactions were only partially meeting travel and hospitality business. Now the new Worldline with Ingenico included will benefit from the repositioning of the Merchant Services portfolio toward more online, moving from over 20% of all transaction online for Worldline in 2020 to over 30% post-Ingenico merger. This will be further enhanced by the client wins from Wirecard with the full year impact materializing in 2021. On top of that will come the top line synergies fostered by the new Merchant Service organization I just presented, and we will benefit from stronger revenue contribution from the ramp-up of large processing contracts like Commerzbank or UniCredit. We will handle this situation with a very cautious management of the cost base. Having secured at the end of 2020 a very lean cost base, we will start 2021 with the full potential to maximize scale effects of new volumes. And to improve it further, we will have the deal cost synergies, strong contribution of the first year of synergies with Ingenico and circa EUR 66 million positive impact on OMDA and the third year of the SIX Payment Services synergies. All in all, we see a strong potential of growth in top line and margin. And on this good perspective, I'll now give the floor to Gilles to conclude on this slide and on the whole presentation.
Many thanks, Marc-Henri. I cannot agree more, as a matter of fact, that with so many assets, with such a transformative impact of the pandemic on the shift to cashless everywhere in the world, and, more importantly, with the Tier 1 Merchant Services team and organization that you just described, this company, our company, Worldline, is definitely geared to deliver a formidable organic growth as early as 2021 when hopefully the pandemic will start to fade away. This will -- by the way, the whole point of the transformative and strategic acquisition of Ingenico, and I can tell you that our entire team is enthusiastic to start today to unleash the power of this new group in the marketplace. Please let me conclude with my 5 main priorities for the group: first, to perfectly, as usual, manage the integration of Ingenico in order to deliver as fast as possible the planned synergies; second priority, to complete the strategic review of the payment terminal business in 2021; third, of course, to maintain our current strong focus on the consolidation opportunities, which are many, in our industry; fourth, to drive all the actions to anchor Worldline more and more as a premium global payment brand and fast-growing company everywhere; and finally, to leverage the new position of the group, its enhanced visibility and market impact to actively participate and influence in the right way into the industry-defining regulations and initiatives such as EPI, digital currency and many others to come. Thank you very much for your attention. But before taking with the team your question, let me, of course, share with you that today is special for one of our teammates in the staff, David Pierre-Kahn. David Pierre-Kahn has been our Head of Investor Relation for the last 6 years. He will be promoted to a new role in a few weeks in the group. But he had been having, and I want to say that in front of you all who are knowing and appreciating him very well, the perfectly remarkable track record as IR of Worldline since the IPO. And you gave him, by the way, many rewards and recognition as one of the best IR of this industry. So I want to express my warmest gratitude for his outstanding contribution to our story since we launched this small, vaguely known Worldline business in 2014 and where we had to educate so many investors about what was the payment industry in euros -- in Europe all about. And really, many, many thanks, David, and we wish you, of course, all the best for your new endeavors in our group. It was not easy to find someone to replace David, by the way. But by chance, we have found the second equivalent excellent investor relation of the payment industry with Laurent Marie, who was, until yesterday evening and even this morning, by the way, still investor relation -- Head of Investor Relation at Ingenico. And I am so pleased that Laurent has accepted the challenge to take this key role from David and to become the new Head of IR of Worldline after and during, of course, a small period where we will manage handover period with David. Many thanks, Laurent. We wish you the very best. We are so pleased to welcome you to the team. With that, guys, we are ready to take your questions.
Thank you, Gilles, for your comment.
Thank you.
And thank you for all of you on the call for having worked together the past year. This was really a great pleasure.
[Operator Instructions] The first question is from the line of James Goodman from Barclays.
Congratulations, David and Laurent. Very encouraging. I'll focus my questions just on the Q4 outlook, keep it simple. If I look at the lower end of the guidance, I see something like 1% to 2% growth in Q4. So really, the question is, can you give us some comfort around the achievability of that? Clearly, we saw the news around France yesterday. Maybe you can talk about the sort of resilience of financial processing there. And just in Germany and Switzerland, I know there's not full lockdown at the moment, but there's definitely some measures. So just some comfort around the inclusion of that. And then related to that, Michel-Alain, thanks for joining the call. I'm afraid I missed the earlier one. Could you just help us a little bit with the Ingenico Q4 outlook? I sense from the release it was really a case of stronger Q3 but perhaps a slightly more gradual Q4 recovery, understandably, but still the mid-case scenario. So is it really sort of mid- single-digit-type Q4 expectation for the decline in -- at Ingenico?
I will hand your questions to Eric and maybe Michel-Alain.
Yes. So as we said in our presentation, we strongly believe that we will achieve our guidance in the case of a not-full-lockdown and the closure of nonessential retail. Under these assumptions, the business can continue to operate. And the last 2 months of the year are quite strong due to the Christmas period but also for online in particular due to volumes on Black Friday and few relocations. So I think we have -- indeed we'll end up, especially again if the restriction do not come to a maximum in the last 2 months in our key geographies to deliver the guidance, as I said, now most likely in the lower end. On Financial Services, you have seen it's pretty stable, nothing really to expect as a surprise there. And you have perceived as well that we are already very much impacted on MeTS on the major second and impacting transportation in Argentina and U.K. So we do not expect SIX to get work there either. That's the reason why we, at this stage, are really confident.
Michel-Alain, do you want to add a word on James' question?
Yes. Sure, Gilles. So as we said on the call earlier on this morning, as maybe you guys remember, we had several scenarios for the full year, one of which was the most optimistic, which was to be negative mid-single; one in the middle which was a mid to high single; and one which was really more pessimistic, which was a high single. We are clearly in the central scenario, what we call central scenario or scenario 2, which is mid to high single for the full year. After 9 months of operation, we are at minus 8.12. So it gives you an idea of the Q4.
Many thanks, Michel-Alain.
The next question, it's from the line of Paul Kratz from Jefferies.
Just a couple of questions from me. I mean in terms of the Wirecard wins that you've had, I mean, could you maybe quantify what the impact is into 2021? I think the other you mentioned, you -- the other item that you also mentioned as well is that there's going to be clearly some retention of the cost reduction that you've had this year. I mean can you also give us an idea of how much of that is going to be retained into next year and how meaningful that is, I guess, for margin progression? And then finally, I think in the combined business, you also made a mention around the financial institutions' vertical or go-to-market. Does that free up maybe more management capacity to go and do joint ventures with banks and, on the same token, maybe also do outright acquisitions of bank books as well?
Yes. Many, thanks, Paul. I will take the third one maybe, and maybe Marc-Henri would confirm. Definitely, that is exactly the point. The point is to actually more or less double our capacity to manage this type of partnerships and commercial acquiring alliances with banks, which are somehow in between M&A sometimes and real business partnerships. So it is basically having doubled the capacity of the group to drive that, of course, in close relationship between this vertical financial institution business unit within MS and also the M&A team of Worldline, the point being also to really industrialize our approach to commercial acquiring alliances for us to get more replicability and really have a much more proactive approach. If you remember what I said at the last H1 publication, I mentioned that we definitely wanted to expand our capacity to strike deals in Europe and beyond. And this is particularly the case for bank alliances in merchant acquiring, which is definitely a global playground. The division has been definitely geared to now bring the power of Worldline and the brand of Worldline in different territories because there are also many opportunities beyond Europe in merchant acquiring alliances. So the first question, maybe Marc-Henri, the Wirecard win.
Maybe on Wirecard, I will not on this call quantify from a financial point of view. But bear in mind it is significant. It is a lot of customers on both sides, by the way, on Worldline and Ingenico. The teams on both sides have been very reactive and fast in offering solutions to Wirecard distressed customer. Of course, we did not onboard any request given our risk policies. But I can mention a few blue-chip customers like DSV won by Payone. We won Australian Railways. We won some countries from O2. So you see prominent names. And of course, most of the benefit will be next year. And the vast -- very vast majority of the business wins were for online transactions. And I think that's also a good element because we are talking about fast-growing business beyond the volume you onboard. It is then growing in the following years. Coming to your point about cost and continuity of actions. Very clearly, just to clarify, it's something we said already, the synergies that we announced are calculated on top of the stand-alone plan. Clearly, the Fit for Growth of Ingenico is intended to continue. And the COVID plans are, by nature, a bit more temporary to adapt to a specific top line situation. There is probably what we see on OCEANE and what we saw already talking with Ingenico and understand that there is a lot of basic contingent hygiene that can be sustained over time. And the rest, which is more temporary, we will clearly adapt it depending on the top line evolution. So if top line remains low, we can maintain these actions. If the top line resumes anyways, so we will have the margin improvement for the benefit of the revenue.
And scale effect.
And scale effect.
Our next question, it's from the line of Josh Levin.
Just for the sake of clarity, can you give us a bit more detail on how -- what your guidance assumes for lockdowns compares to what has actually been announced in France and Germany this week?And then the second question is, maybe you could comment a bit on your appetite for future M&A over the next few months. And on a related note, there have been media reports that one of the large U.S. payment companies is looking at MeTS. So do you think it's likely we're going to see more U.S. payment companies looking at European assets going forward?
So I will take the first one, Josh. So in term of assumptions that we put behind our guidance, this is very clear. Again, we expect most of the non-international retail to remain open in our key geographies. Well, our key geographies are Benelux, Germany, Switzerland, Austria mostly for commercial acquiring. As you recall, France is not one of those. So that's the reason why the major tenants in France will probably have a rather limited impact on our Q4 performance. In Germany, as you have noticed, the stores are expected to remain open even though restaurants and bars are supposed to be closed. So there might be a minor impact in relation to those 2 closure, but most of our business will remain in this important facemask period. I think all in all, what we believe is that governments are currently obsessed by finding the right balance between necessary measures on the health front and keeping the economy alive, maintaining business in particular in preparation of the Christmas festive season. And that's the reason why, again, under this assumption, we are a strong believer on the perspective for Q4.
And by the way, I would like to add that, of course, if we firmly believe that we can deliver this guidance, it's because also even if there were these type of measures, first, France is, of course, as you know, not a big merchant acquiring market for us. I mean it is very minor, very, very minor. And the point being that we believe also that in 6 months' time, beyond what Eric just said, many merchants have actually started to adapt themselves, even if they have not the right in certain circumstances to welcome customers, let's say, for a few weeks. Some -- and many of them have also adopted new ways of taking remote orders to still deliver. These are like with click-and-collect solutions or do a remote delivery at home or in the offices. So I believe that we should not exactly look at any lockdowns the same way we would have done when everyone was taken by surprise in Europe 6 months ago. And definitely, as you remember, we have also ourselves launched, and we reported doing so, of course, proactive commercial campaigns to equip merchants with our online remote ordering and click-and-collect solution or Pay by Link through SMS type of solution. So, I mean, we need to live with this thing around. And it's why also we believe merchants will find ways to adapt and defend their turnover as much as they can even if, like in France, there would be some extreme measures, which is not for what we see at this point in time a generic trend everywhere in Europe due to the need to find the right balance between maintaining the economy and, of course, taking good care of the population. By the way, to your second question, of course M&A is still quite important for us. And I must say that on top of everything, we still have, with Marc-Henri and Eric and now the colleagues [indiscernible] coming from Ingenico, still actually quite an active agenda of M&A reviews and also following here and there specific processes, the point being that I don't want to speculate on the intent of our U.S. colleagues in the industry. If you remember the most recent trends over the last few years, it was more some U.S. companies divesting European assets. First Data in particular was clearly withdrawing from many countries. We bought some assets from them. SIA did also some acquisitions from First Data. And as far as I know, this is not yet a general trend of seeing the large U.S. global firms having put Europe as their top priority list. Now they are also having specific agenda in the U.S. market for some of these or in other part of the world. So it's why I don't want to speculate. It may also happen that of course, Europe being such an attractive market in term of medium- to long-term organic growth perspective linked to the fact that we still have more than 65% of cash-based transaction at point of sale, it may happen that it is an attractive continent for one of these. This would be fairly normal the same way that Worldline start to look beyond Europe, and we want to grab opportunities ourselves in other geographies. This is just the normal evolution. It tells only one thing: consolidation momentum is absolutely at its peak. And there will be more and more opportunities, more and more pressure on the remaining banks that are processing payment by themselves or trying to still play a role in merchant acquiring, that if you look at the landscape in the coming 2, 3 years, the size difference, the scale difference, the reach, the technology difference between us, the pure players, whether we are European or U.S., and the remaining local banks will be so big that we will enter in what I anticipate being the end of the consolidation momentum, and every bank will have to step out before the end of the decade of this business. If not, I believe that at that point in time, they will probably not -- face other issues, their loss of competitiveness, their loss of customers, their loss of market share. And this is exactly what is happening. So for me, anything that is feeding the consolidation momentum is overall positive for our strategy.
Our next question, it's from the line of Hannes Leitner from UBS.
Yes. I got also a couple of questions. The first one is on the strategic review of the terminal business. Maybe you can talk a little bit about the potential scenarios and what could mean for earlier closing or a later one in 2021. And then also in regards to -- if you -- what keeps you away from potentially doing a forward sale agreement with a potential buyer. Then the second question is around M&A opportunity in the quarter or at Q3 results of a couple of Swedish banks. They announced also strategic agreements. And maybe you'll put this in context of your latest experience of the antitrust and EU commentary. And the third one is just on -- in terms of potential deterioration underlying business in Q3. Are you willing then to protect EBITDA on Ingenico side and on Worldline side to, for example, have there some protection then?
Thanks for being with us this morning and for your question. I will take the first one, and I will let Eric probably handle the other one. Regarding the strategic review, I mean, we are totally consistent with what we said since February 3. This is a strategic review that is starting with no taboo or preconceived ideas. The first phase will be really to assess the plus and minuses of every option. And options are many. Of course, they range theoretically from keeping the business because we feel there are more value to be extracted from it than by just changing the shareholding structure, down to, of course, selling it to interested parties that could add value both to the business, to ourself as customers. And of course, that would also help the company to take more benefit from focusing and deploying its equity and balance sheet as a potential consolidation opportunity. And in between, you can guess that all the options will be on the table. This can be a sale to a given named third party, it can be a strategic or a financial sponsor, it can be also a potential spin-off of a majority or minority stake at the beginning. We don't want to exclude anything, but we will do it fast and clear, taking into consideration how to maximize the value for the business but also how -- what it means, any option, for the rest of the strategic agenda of Worldline. And to your point, if the Board comes to the decision that in the end, it should be directionally a deconsolidation initiative, whatever the form it could take during 2021, of course I cannot exclude that a potential third party interested, and there are actually many that have expressed their interest for being involved in such strategic review at this point in time, could come to us and make a proactive proposal. That is sometimes happening in these type of processes, particularly for such a quality asset that is having such phenomenal characteristics, which are extremely scarce, by the way. So I don't exclude anything. We are ready for everything. It's also why we have set up a dedicated team for that. And of course, the Board has fully endorsed yesterday the formal initiation of this very important strategic review that I will drive myself personally, as you can guess.
On your second question, so we are not commenting individual in any opportunity. But maybe just to reassure you, in the Nordics and Sweden in particular, which is the geography you were mentioning, our analysis is so that we still have room to grow without reaching the antitrust limit. So of course, as you know, we are looking at every opportunity, and we'll be looking at the one you mentioned as we are looking at others, for sure. Your last question was related to EBITDA protection. This is really our DNA, to adjust our cost base. We have proved being able to do so in H1. You also remember that when we communicated in H1, we said that some of the impact of the actions conducted in H1 will be even stronger in H2. So this is still what you can expect on the Worldline side. On Ingenico's side, I think the team has demonstrated a strong capability to also adjust the cost base to the adverse effect on the top line. We are fully confident it will continue the same until year-end so that we are able to cope with any situation on the top line while protecting the profitability. Doing so, by the way, is not only a good way to end up the year and to deliver the results for 2020, but, as Marc-Henri said, this is also critical for us to start very lean into 2021, which is, as you understood from his presentation, a year where we expect even more profitability and growth.
The next question, it's from Emmanuel Matot from ODDO.
Emmanuel speaking from ODDO. Several questions from me, please. First, do you observe increasing risk of bankruptcy of your merchant customers, which could justify an increase in provision on prepaid transactions? In the past, you have always been reassuring on this topic in view of very cautious risk policies. Second, in Financial Services, are you confident that the main contracts with former Equens shareholders will be renewed next year with nice conditions for Worldline? And in Merchant Services, is it possible to know the level of sales which are directly correlated to transaction volumes and to have an idea of the size of the business dedicated to nonessential retail?
Maybe Marc-Henri, you take the first question on bankruptcy, please.
Now indeed, on merchant risk, we have not observed a significant level of bankruptcy so far. And we took advantage of the long time since the beginning of the crisis to reinforce even our risk policies and to limit our exposure and progressively to bring it down. So in fact, we are in a much better position now than when we started. And already, when we started, we had the benefit of what I call, I would say, cautious risk policies. So overall, our situation from that point of view is very solid. Okay. This being said, we have -- the government measures so far have been strong in all our countries, and we have not observed a wave of bankruptcies. But again, even if situation could deteriorate, we have meanwhile improved and limited the exposure to all service not rendered. So from that point of view, typically, airlines tickets booked with some anticipation -- there were tickets booked in anticipation in March. Since then, the level of booking has remained extremely low. No new bookings were accumulated. They're at a very low level. So the exposure, in fact, has gone down. In terms of renewal of the Equens -- former Equens shareholder contracts, I think from the point of view, we are on a good trend. Some of them were already renewed over there in discussions. We have a very correct visibility on the extension of these activities. So all in all, I would say the situation from that point of view give us the visibility to be able to handle this as we did. And there, with renewal in the past, no, it's not the first time we buy a business with a coordinated set of renewal. It was the case in Belgium, it was the case in Germany, where we also bought some share in joint venture in the past. So it has been -- and there's quite a history, and that's what we intend to do again, having already scored some of them.
And yes, if I may say so, one should not expect all the contracts to be renewed at the same time because some have been done already, some have been extended for a few years to give more time to readjust to the needs of the customer. So it's not at all a one-size-fits-all. It's not because you all started at the same time, that you will all renew them at the same time. But that's the good news. And the renewal will come at different points in time, and some of them already are even behind us.
Okay. The last question on the percentage of sales, I think we don't have the granularity on...
We don't monitor it as such, so we'll not be in a position to give you this granular view. I think the past history has given some visibility. I mean you saw what was the impact on our Q2 results. You saw what is the situation in Q3. You can see that when the activity fully opened, it goes very fast. And what I mentioned is that what still did come back only partially, I think we moved from nearly 0 to somewhere between 30% or 40% of usual volumes in sector like travel and hospitality in Q3, and that was clearly an important missing part of our usual revenue profile. And this -- we know it will come at some point in time when we will be already out of this COVID crisis, and that would be very mechanical. But for the moment, it remains [indiscernible].
Our next question is from the line of Alexandre Faure from BNP Paribas.
I've got perhaps 3 questions. Firstly is on synergies left with SIX Payment Services. I think, Gilles, you mentioned in April that perhaps you were looking at accelerating the delivery of synergies with SPS in order to weather the COVID hit. Is it something Worldline managed to achieve? And how much fuel in the tank is left as we go into 2021 relating to SPS synergies? Second question is on the Slide 24 there, where you detail the different segments in Merchant Services. Have you decided already on who would be heading those segments? And could you share that with us? Any key Ingenico staff in there? And finally, just in terms of future communication, I think there's probably a lot to elaborate about with the addition of Ingenico. So should we expect an Investor Day at some point next year in Q2 perhaps? So does it sound like a reasonable time frame? And that's all for me.
Okay. Eric, you take the first one; Marc-Alain, the second one; and I will close on your third question.
So indeed, we can proudly confirm that we have delivered and we will be delivering the synergy expected for the second year of the SPS integration. At the time, we said we would secure 50% of the overall amount, EUR 110 million, as a reminder, and we have indeed accelerated a bit. So that's very reassuring to see that through the mobilization of the team during this difficult period, keeping the focus allowed us to materialize even more than the 50%. So what is ahead of us, as a matter of fact, is probably, again, as we may towards the end of the plan, even deliver a bit more, probably a small -- [ 60 ]% percent of the total. So quite a high number that will be added, of course, to the synergies for the Ingenico transaction, combined, merged and delivered in parallel.
Marc-Henri, you take the second one.
Yes. Going to the go-to-market, I think you're right. Ingenico in retail, a very strong growth profile with a lot of talent and expertise, and we decided to leverage them. So clearly, 3 out of the 4 will be led by former Ingenico managers. Typically, small and medium business will be led by Daniel Nordholm, who's already managing this activity inside Ingenico, and he's a former Bambora lead. Global sales vertical will be led by Guillaume Pascal, who's today leading enterprise in Ingenico. And you see he was able to deliver a positive performance in Q3, yes? So a very strong professional, very experienced professionally in payment sector. Digital commerce will be led by Damien Perillat, currently in charge of Global Online in Ingenico with a very strong career in digital commerce, including companies such as PayPal. Damien is clearly a digital native and obsessed by this activity and very focused on growth. So we are very, very glad to have him in terms of this vertical. And finally, financial institution will be led by Raphael du Vignau, who was the CFO of Merchant Services. He's a former banker. He's very used to all kind of structures and relationships in the banking sector. He's coming from Worldline, and he will be leading this team, leveraging his over 1,000 banking relationship with us throughout the group. So very creative. And each vertical is indeed, again, a combination of former Worldline and Ingenico managers, and we took clearly the best and most dynamic of them to lead us through the growth momentum we intend to deliver.
And by the way, this -- it gives me the opportunity to slide progressively to your first question. Adding to the comments of Marc-Henri, which I think has been very well illustrated by the name he has been sharing with you, that you know us now for the last 6 years, and if you look at the way we've been also integrating SIX Payment Services of Equens, I mean, Worldline is not the type of arrogant company that is claiming to do everything at the very best, and because we are the acquirer of a company, we just cancel and replace everyone by Worldline guys. Actually, the best-fit-for-the-job principle is something that is fundamentally in our DNA. I consider we're like a sponge. It is not about being bigger than me. And I know that in the payments industry, we've been ourselves super vocal about just the scale effect and the size of the platform and so on. But since the start, our vision is through acquisition to become better, not only bigger but genuinely better in the business with better products, better people, better go-to-market, a better brand. It's why when I said the fourth priority is really to drive all the actions to bring Worldline in the premium brand league which would be recognized as such, because we have the best people, we have leading-edge solutions, we have more and more a mass reach. This is really the project. It's why I'm so pleased that we have, once again, demonstrated that we could to the best-fit-for-the-job at 47% -- of the 2,000-or-so reviewed managerial candidates, actually 47% of them are coming from Ingenico. This is who we are. And I think as long as we will be driving this company, it will stay as such. Each acquisition is an opportunity to be better and to accelerate the organic growth potential of the company, to really transform the company not only in term of scale and, of course, on cash but also in term of top line momentum. And for that, we already started to think on it with Laurent actually. Indeed, you're right, Alexandre, to reveal the full potential of this fantastic, new company coming from the merger of these 2 leading groups, we will need to have a Capital Market Day. We still meant to -- we still need to make up our mind on the right timing, but indeed sooner will certainly be better. And I want to propose to the Board to have such a communication with you guys and all the investors interested as soon as it would be feasible. Ideally, I would like to position it at the moment in time where you could be welcome in person because I think there would be so many things that we could showcase beyond, of course, explaining what this new company is all about, also showing demos, products, live customer testimonies...
And I think...
And of course, the entire managerial team, which is all today actually spread all over the world. This is really something we would like to assess. But if it will not be possible in person, we will set the timing anyway. So please stay tuned. Some announcement will come soon.
Next question, it's from the line of Adithya Metuku from Bank of America.
So I just had one question left just to help us understand how the terminals business may be perceived by a potential buyer. I just wondered if you could give us an idea of when you transition the business to a terminal-as-a-service model, what would be the key attributes of this business that will change. And what will it mean for CapEx as that business transitions to this model? The reason I ask is historically, it looks like CapEx in this business has been very low. Would it imply that CapEx has to go up to make it a TaaS model? And how would a potential buyer perceive that? Any color around that would be helpful.
Many thanks for your questions. As a matter of fact, we are a bit ahead of schedule to talk about potential buyers' perception of the business. There is still a bit of education to be certainly done because not only the business in itself is having so strong qualities as it is today with its current evolution to reinforce the services part on top of the traditional sales of hardware, which is already happening as we speak, but then there will be indeed the pursuit of the technology and business model transformation. That is, of course, a super attractive story because you know that it is a trend that is already live in the industry. Now already, other companies have initiated this transformation, including actual go-to-market. So it is, of course, one of the most compelling aspect of the interest of potential buyers. It is not only buying the business as it is if it happens and if it is the decision of our Board to actually divest a controlling stake. It is undertaking a transformation that can make the business much more resilient, having even more operational leverage than do the shift to Software-as-a-Service and a clear competitive advantage because it is not given to any small player to actually get there. So with that in mind, maybe Michel-Alain, I know that you've been talking...
Well, sure, I am, I've been very close to this business indeed, Gilles. Maybe to give you, I mean, the global picture and complement what you just said. Basically, TSS is an operation that went through a profound transformation, a transformation in 3 waves, one which is behind us, one that we are delivering right now and one which is in front of us. The one which is behind us, you know it. For those of you who are following Ingenico, it is the transformation, optimization and optimization of the model of B&A, now TSS, that's done fully. The second chapter is the deployment of Android, which is an absolute chapter in order to go to Software-as-a-Service. Last year, we sold 2 strong, large contracts in Asia and in Brazil. And now in Q3, we reported one contract in the U.S. So -- and in H1 '21 -- 2020, we reported one contract in Europe. So you see this is fully going there. And then finally, on the last chapter, which is the one you are mentioning, the Software-as-a-Service that Gilles was commenting, we are fully on the trajectory, we are building the platform. We are already selling terminal-as-a-service, which is the first step to sell it as a Software-as-a-Service. So it's maybe too early to give the capital intensity. I don't think that's the point yet. But clearly, the important message here, we are fully in line to make it a reality.
Many thanks, Michel-Alain. Super clear, as usual. .
The next one is from Tammy Qiu from Berenberg.
I just have a quick one. So regarding your online business, which has been growing tremendously, how should I be thinking about the baseline of your online business growth now? Is it 20% e-commerce growth? Or should I be thinking about something lower because, I guess, a lot of your portfolio are actually coming from omnichannel business that you are doing?
Who wants to take it? Eric maybe probably?
No. No.
I'm not sure we got the very end of your question. Can you repeat the end of the question?
Yes. So I guess should I be thinking about the base growth of your online exposure at lower than 20% level? Because I guess you do get a lot of omnichannel business, which is contributing to online segment of your business.
I don't think the omnichannel contribution will be slowing us down because it's a strong momentum. And the online growth, we ambition to continue beyond even COVID. I definitely am targeting indeed above 20% in terms of ambitional growth. That's an ambition. Of course, that is momentum based on the combination of the 2 group. We have experienced volumes even higher during this period and much higher, so we feel very comfortable to go there. So we don't see omnichannel as anything that would...
Slow down.
Slow down. It'd further contribute to the volumes.
And by the way, this is an area where we may expect even cross-fertilization between the 2 groups. So it may be boosted, this omnichannel, by the integration of Ingenico as well. So definitely not a drag.
And again, you should really compare our KPIs with the one of those key player with EUR 2.5 billion online transaction, this momentum, this exposure to the digital native, this size of platform. It's very rare. Very, very rare.
Indeed, Marc-Henri, this is the transformative impact of this combination, which we need definitely Laurent and the team here to be in a position to further review. I mean we have been experiencing it over the last 7 months with our Ingenico colleagues, and it's why -- I mean I can tell you the trust in the company for what we've been building is phenomenal. And really, couldn't wait more to start living as one and unleashing this power in the marketplace. So more to come. It's early days, but we are in the Q1. We are in the right spots of what is the digital transformation of the world and further acceleration of digital payment. That is maybe one of the very few positives of the COVID and that it has accelerated massively cash displacement everywhere. And this will stay. COVID will go, but this will stay. And Worldline is much stronger and better than ever to capture that for the medium and long term. Guys, many thanks for being with us today. Sorry it has been a bit long, but we thought it was deserving this quality of dialogue. Look forward our next interaction in the coming road shows, and take care.
Goodbye.
Bye.
Thank you. That concludes our call for today. You may all disconnect. Thank you all for participating.