I can get started here. My name is John Davis. I'm the Payments and Fintech Analyst here at Raymond James. We're excited to have Head of IR, Chris Mammone, with us this morning from Nuvei. So Chris, first off, thanks for joining us. Thanks for having me. Thanks, everybody, for being here. Appreciate it. Some pretty exciting news earlier this week, partnership with Microsoft. Maybe a little context on what exactly you're doing for Microsoft, how this partnership came about. Just any color would be helpful. Sure. Yeah, so we announced on Monday a new global partnership with Microsoft. It's a great marquee win for Nuvei. And we've been talking about, you know, for a while now, having a seat at the table with the largest, you know, organizations out there and being invited to RFPs, which, you know, frankly, probably three, four years ago, we wouldn't have been, you know, even asked to participate. So, this is a great proof point for that momentum playing out in a great new win. As far as, you know, what we're doing, it's a global partnership, and it's a great example of how we really enter the fray at new customers, enter the wallet share by, you know, targeting a specific use case, a strategic growth area for the organization. So in this case, with Microsoft, our global commerce channel will be offering a suite of payment solutions to them, within their Office and Xbox ecosystems. That's on the commerce side, and then on the B2B government and ISV side, we're partnering with Microsoft Dynamics as a new ERP partner, to grow that channel for us, globally, US and internationally. So, a lot of, a lot of great use cases off the bat and with plenty of room to, to grow from there, globally. So I'm really, really excited about it. Yeah, I think Phil mentioned on the, on the third quarter call, a robust demand environment, you know, several key wins, Caesars, Curve, just to name a couple. But, you know, obviously, Microsoft just further validates it, but what, what's really kinda getting you that seat at the table today that you weren't-- Like, what's driving- Mm ... the ability to bid on and win these that maybe is it capabilities you didn't have, you know, three, four years ago? Is it just recognition? Just curious, like, what's driven that kind of change from three, four years ago, clearly signing up a lot of new clients? Sure. I think we're on the map now, where we maybe weren't three or four years ago. There wasn't a lot of yeah recognition to the platform. But you know, we... Yeah, we've got the most robust pipeline, I think ever. you know, we spent more on you know on the brand and on our marketing over the past year, and that certainly has helped. But yeah, I mean, you've mentioned all those names. I think that you know across a lot of the end markets that we're targeting, you know, we're seeing larger you know larger enterprises you know recognize Nuvei, and again, invite us to participate in those RFPs, and now evidence of winning. So... No, that's great. And then, obviously, pretty uncertain macro environment that we're in. you've had a competitor call out weakness in Europe. Just curious, like, quarter to date, have you seen any meaningful changes in the macro backdrop, or just any commentary there? you know, nothing from our perspective. The last update we gave when we reported Q3 in early November is that, you know, spending trends and volume trends, at least as far as we see them, you know, are pretty consistent. There's no big delta there. So, you know, we feel, we feel really good about, you know, our positioning as far as the end markets that we pursue, many of which are, you know, less cyclical in nature, non-discretionary in nature. And we've only added, you know, more of those, you know, less, less cyclical end markets with, with the Paya acquisition and, you know, our, you know, entry into B2B, government, and ISV. So, you know, we feel, we feel like things have been, have been pretty stable. Okay. And there's just been a lot of chatter recently about the competitive environment, you know, with Adyen calling out pricing pressure, you know, Worldline having some issues in Europe. Just broadly, has the competitive environment changed? you know, maybe talk a little bit about where you play in the market versus maybe an Adyen, where you see them. Are you seeing the same type of pricing pressure? Any sort of change from, you know, let's say a year ago, two years ago? Sure. Look, I think the first thing is this has always been a hyper-competitive market. So you know, that's always been the experience. I think, you know, pricing is always a factor in business. In winning business, it's never the factor as far as we're concerned. I think what you've heard as far as you know, a lot of that chatter was primarily in the sort of U.S. acquiring, processing market for mega-sized enterprises. We don't typically compete for that business, and so you know, our focus is more on the kind of mid-market to sub-mega enterprise. you know, and then the follow-up might be, "Oh, well, then what about Microsoft?" That obviously is a mega enterprise. But again, we're not competing on price there. We're competing on capabilities, on our suite of services within our tech stack that we sell on a modular basis or sort of à la carte. So the difference between us and, say, an Adyen or a Stripe, who, you know, we do see a lot in the market, is with those platforms, if you sign on with them, you pay for the entire suite, the entire payment stack. With us, you get a single integration like you would with them, you get access to our entire payment stack, but you only consume what you actually need, sort of on a à la carte, modular basis. And that is a differentiator in how we go to market and is a factor in how we win new business. Okay, great. And, you know, having gone through COVID and just kind of the volatile macro environment, you know, I think a couple of quarters ago, Phil reset the midterm algo to kind of 15%-20% growth. Maybe help us understand kind of the drivers and the building blocks and, like, kinda how you get to that kind of 15%-20%. Sure. Yeah, it's a great question. I think, maybe overall, what we've said in the past, kinda structurally is, our growth is driven by, you know, both wallet share expansion with existing customers and, new in-year business, winning new logos. And the rough breakdown there is, you know, roughly 80% of the growth comes from expanding wallet share with existing, the other 20% roughly comes from winning new logos in-year. And so that's the sort of structural setup. But then within that, a couple of quarters ago, we started talking about the three primary distribution channels of our business and talking about sort of how the weighted average growth rates of those channels factors into our overall growth expectation of 15%-20%. So taking those components, the largest and fastest-growing channel that we have is global commerce. That's the core Nuvei processing engine, initially was the SafeCharge business that we bought in 2019. That's global commerce, in Q3, it was 56% of total revenue, and it was growing 25%, year-over-year. Our expectation for global commerce is that it grows, you know, on a normalized basis within 20%-30%. So sort of, you know, think about that. The next channel, B2B government and ISV, this is primarily the old Paya business that we bought earlier this year. In Q3, it was 18% of our total revenue, and it was growing 16%, year-over-year. you know, we think of the normalized range for that business is sort of within 15%-20%. So, you know, we think we can accelerate from the 16%, you know, higher within that range and, you know, maybe even beyond that 20% clip for that channel. And then finally, SMB is our third channel. This is really the legacy Nuvei business, kind of founded 20 years ago. It's primarily a in-person, you know, merchant portfolio in the U.S. and Canada. It's mature, still, you know, contributes very positively from a cash flow perspective, good margin business for us. But it is also more prone to same-store sales trends. It's probably the business that's most prone to, you know, whatever prevailing factors are happening on the macro front. So, for example, last year, SMB was growing in the low to mid-single digits for us. This year, that's reversed, and it's actually been declining low to mid-single digits, so Q3 was down 3.8%. We are focused on having that business not be such a drag on the overall growth, and so doing what we can to make it more of a flattish experience. We have some initiatives in place there. But you know, so if you think about that business as you know, flattish to at most you know, down 5%, you know, on a normalized basis, the weighted average of those three components should get you comfortably within the 15%-20% overall construct for a 3- to 5-year outlook. Okay, great. So let's just, let's talk a little bit about the path back there. I think the 4Q guide implies exiting this year about 10% ex crypto. I know you lost a large customer that you called out a couple quarters ago, so that's part of it. But maybe just talk about, I think Phil said you would be exiting 2024 in that 15%-20% range, but maybe help us talk about how we get there and kind of any other factors other than that one large customer. Sure. So, yeah, maybe the way to answer this is to talk about, yeah, all the factors that are causing the Q4, you know, exit rate to be kind of below that range, which is incorporated in the outlook that we have already provided. So it's a few things. One, we did have the World Cup in Q4 of last year, which was, you know, unique timing for that event. It was a pretty significant event for us. So there's a tough compare when it comes to that. I just mentioned SMB, which last year was growing, you know, kind of mid-single digits in Q4, and now it's actually shrinking, you know, by low to mid-single digits, so that there's a tough comp there. We talked about the fact that, you know, that new business component of our growth, we had to recalibrate our expectations for the pace with which we were activating a lot of new business that we signed earlier this year. So basically, for example, for Q4, everything that we had had on the books to convert and start activating and generating revenue for, we pushed out that timing into 2024, and so that's having an impact on the expected growth. And then finally, you know, the off-road customer, there was a full quarter impact there, which is impacting the growth expectation for Q4. So all that combined is really what's kind of driving that delta. Okay, great. And maybe we talked a lot about the top-line outlook, but maybe shifting down to margins. you know, despite changing or and kind of recalibrating the top line, midterm algo still kinda stuck with the 50% plus margins. I think we're in the high 30s, right around 40%. Today, Paya was, you know, a lower margin business. So maybe just talk about, you know, how you kind of get there and maybe the pace at which we should expect just kind of normalized margin expansion. Sure. So just to level set for everybody, we have a few kinda longer-term targets out there. We have a medium-term revenue target, which I just walked through. That's a 3-5-year target, 15%-20% normalized top-line growth. The margin target is a 5-7-year target, so we do expect to get to a 50%+ Adjusted EBITDA margin over that 5-7-year timeframe. As you mentioned, today, we're at 36.3%. That was what we reported for Adjusted EBITDA for Q3, and that's I think that's an important baseline level and inflection point for the business because it absorbs a couple things. It absorbs the lower margin Paya business that we bought earlier this year. That's fully baked into that 36.3% margin number. It also absorbs a lot of the volatility that we saw from the crypto end market, which was a higher margin end market for us, and was the reason why in the past we were one of the reasons why in the past we were already in the kind of low-to-mid 40s from an Adjusted EBITDA margin standpoint. you know, that's fully now been lapped and absorbed in the numbers, and so, you know, we don't have, we don't have those, we don't have those issues now. So that 36.3%, we think on a sequential basis, can kinda, you know, stair step march higher over time to get, you know, closer to that long-term range. you know, we'll get there, we think, you know, via quite a few buckets that we have, you know, at our disposal. One is just the fact that we're a scale platform, and largely, you know, all, all incremental revenue dollars fall to the Adjusted EBITDA, you know, line, so we have that going for us. We have the fact that there's $21 million of cost synergies related to the Paya acquisition that's mostly still on the come. We talked about realizing those synergies within 24 months post-close of the acquisition, and so most of that's gonna be in 2024 and beyond. Then, separate from that, we have another initiative underway. Both the CFO and COO are leading across the organization, where we've identified tens of millions of dollars of cost savings, kind of low-hanging fruit around the organization that we can drive further cost savings and efficiencies. So that's underway, and we feel like we have good line of sight there. And then further to that is incremental kind of projects that we have underway that could drive margin benefits, such as insourcing our back-end processing in North America. We see margin benefits there. We have some other initiatives underway to improve our authorization rates across the platform. We're seeing some good early results there that could have margin benefits. I think all that, taking all that into consideration, we feel good about, again, sequential margin improvement, you know, over time. Okay. Yeah, but Phil's also talked about really investing for growth and investing in the business. So, you know, appreciate that there's pockets of low-hanging fruit, kind of cost cuts, but where are the incremental dollars of organic investment in the business? Like, what are the key buckets there? Yeah. So I think, you know, it just additions to, like, our modular offering. So we announced card issuing, you know, recently, and we can get more into that, as a good modular extension of our offering. A lot of good use cases there. Unified Commerce, which is our omni-channel offering. you know, until now, we've only really participated in the online, the e-commerce processing for of our end customers in the global commerce channel. A lot of those customers have physical presences as well that we don't participate in today, and as we roll out this omni-channel Unified Commerce offering, we'll get to participate in that volume. So there's good incremental TAM there. So I would call those out, and I would say there's further extensions in the B2B offering that we now have. you know, we're primarily on the AR side of the house with B2B, so there could be use cases in AP as we move forward and other things like that. So those would be the... Yeah, those would be the major call-outs. Okay. And maybe we'll double-click on the, on the card-issuing business. I think you're in 30 markets globally. you know, how does that enhance the value prop? Yep. you know, what's kind of the impetus to kind of grow that business, and then why does it make sense to kind of push that offering? So to be clear, this is. It's a great modular extension that, you know, gives us, you know, the right to win further, you know, wallet share expansion opportunities within our existing customer base, primarily. And, you know, there are three kind of primary use cases that we have identified, that'll drive a lot of these opportunities. you know, one is a physical card that we can issue for. you know, a couple examples would be, like, an online retailer that wants to use it for a loyalty program for their end customers, or for a gig economy customer, like a ride-sharing customer that, you know, would use it to pay their drivers, would be another kind of real-world use case for that. Second is virtual cards. So issuing virtual cards to, for example, OTAs in the travel end market that we serve, to make payments to airlines or rental car companies on behalf of the consumers that are booking their trips through the OTA. That'd be an example. And then so a third primary use case would be as a wallet solution. An example there would be with an online gaming customer that would use that mechanism for their end customers to store their funds, to do the pay-ins, and to you know, fund gambling transactions. That way, it cuts down on the ability or on the need for those gaming customers to run to redo KYC on every transaction. So it saves them time and efficiencies. And so there's a few examples there. Okay, great. It's been, you know, eight or nine months since you closed Paya. you know, maybe just revisit the strategic rationale. I'd love to get an update, maybe where you are more positive or you think there's more opportunity maybe than the initial diligence suggested, and just an update on kind of how that's going. I know Phil called out on the second quarter call of the softness in that business in the quarter, but just curious where maybe you're more positive on the opportunity and just overall how that's gone so far. It's been a great fit. The people are amazing there. The integration's gone very well. We feel, I think, as bullish as ever about bringing these two businesses together. you know, I think the strategy of both bringing what Nuvei, our payment capabilities and our global technology and payment stack to the fore and helping existing Paya partners, especially on the ERP side, grow the offering outside the U.S. 'Cause Paya was only a domestic-focused U.S. business, yet they work with many global ERP partners, primarily Sage, Acumatica, and ECI were the big ones that they brought to the table that have global pools of customers that until Nuvei came into the fore, weren't able to access that offering outside the U.S. So we're already moving into Canada, we're moving into the U.K. and some other European markets. We've also had good success in adding new large ERP partnerships to the mix since closing Paya. We've added SAP and Infor, and I mentioned Microsoft Dynamics. So we've more than doubled the kind of ecosystem of opportunities around the world with that platform. And so it's all playing out very, very well. And so... And we but we still feel like we're, you know, we're just getting started, clearly, so. Yeah. Well, obviously, the growth in margins, you generate a fair amount of free cash flow. you know, understanding you're kind of de-levering post-Paya currently, but historically, been a relatively acquisitive company. Maybe talk a little bit about kind of leverage, comfort range, kind of where you want to be there, how you think about, like, higher rates and how that, you know, changes the return profile needed for or the hurdle for a potential acquisition and kind of, you know, also maybe touch on the, you know, the decision to implement a dividend a couple quarters back. Sure. So look, I think for starters, we're very proud of our financial profile and our strong cash flow generation. I think we saw a chart recently that, you know, there were of the 16 or 17 Canadian tech IPOs that happened, you know, 2020, since 2020, they're still public. We generate more free cash flow than the other 16 combined. So like, you know, we're, we're really, we're really, you know, highly cash generative, and we're, we're proud of it. We're also very good stewards of that capital, very disciplined in our approach, and so, you know, those are, you know, that's how we philosophically view it. In the near term, I think that, you know, the top priority for excess cash is to continue to pay down debt. you've seen us pay down about $90 million or so over the past six months. When we closed Paya in February of this year, we were just a shade under 3x, you know, from a combined leverage ratio. We have now reduced that to 2.6x as of September 30. And all else being equal, I think you'll see that continuing to come down by sort of 0.2 turns per quarter, and, you know, by this time next year, we should be around, you know, 2x, maybe slightly below. you know, we introduced a dividend, as you mentioned, and we would expect to continue paying that dividend as an efficient way to return excess cash to shareholders as well. Since we're still a young public company, since early 2022, we've returned over $250 million of excess cash to shareholders via buybacks and dividends. So, you know, we have a good track record there too, so that's what I'd say. Yeah. What, when you think about M&A, I guess, you know, first, have you started to see kind of the private market valuations start to rationalize a little bit? And then, as you guys think about your M&A strategy specifically, are there certain geos, capabilities, you know, that stand out as, you know, kind of top priorities? First, I think, look, we have a dedicated team that looks at M&A opportunities. They are very disciplined. I mean, just to give you a sense, before Paya, I think it had been 15 months or so since we had announced the previous acquisition, and we looked at a lot of potential opportunities over that 15 months and passed on all of them. So, it really has to, you know, strike the right balance for us and really, you know, fall into that sweet spot. For us, you know, we have a couple emerging geographies, LATAM and APAC, naming those small portions of our business today, growing nicely and, you know, if there's something out there that could really help us grow in those markets, for example, that would be, that'd be one call-out perhaps for... you know. But again, probably, you know, only looking at small tuck-in deals, you know, in the near term. Okay. And then, you know, as we think about, you mentioned you guys have bought back, some stock and dividend, but, you know, how do you weigh kind of liquidity? you know, was that maybe one of the driving decisions of why to decide to do a dividend? Just think about, how do you guys think about the kind of dividend buyback- Yeah ... dynamic, if you're, you know, assuming, you know, M&A is probably going to be the forefront, but as we think about dividend versus buyback, like, how do you guys think about that? Yeah, look, I think, again, we've done a lot of buybacks. Most of that $250 million plus that I mentioned came in the form of buybacks. And, you know, we sit here today and, you know, the valuation is still kind of where it is. I think today our multiples, you know, below a lot of the legacy processors. Dividends are viewed as really a good, efficient way to return excess cash to shareholders. We're seeing incremental interest from dividend growth investors. That was also one of the, you know, one of our thoughts is that, you know, introducing a dividend would open up Nuvei to a new pool of capital, perhaps, in the public markets. Based on my inbound requests and things like that, that is starting to play out. So, you know, we're happy about that. And so, you know, we'll see. We just started. We paid it for two quarters now, so, we're just starting on that journey. Yeah, this may be putting the cart before the horse, but if we think about, you know, some companies in the space have a dividend just because it opens up a new pool of investors. Others, you know, have a certain, like, payout ratio, so they anticipate to grow that dividend. Like, how does the board or Phil think about, you know, whether you expect to kind of grow that dividend over time, or it's just, you know, something that you want to have because it opens you up to a new class of investors? Yeah, those are obviously, you know, board decisions, as you mentioned. So, you know, can't add much. But yeah, I think there's certainly a realization that once you implement a dividend, it'd be certainly tough to pull it back and in a perfect world, once you implement a dividend, then, you know, you would look to, you know, hopefully grow it over time. But yeah, we haven't made those types of announcements yet. Okay. And then I just wanted to talk a little bit about the SMB business in the U.S., 'cause if you think about the other two segments that you broke down for us a bit ago, very healthy growth, you know, largely e-commerce, card not present. you know, does it make sense? I know the cash flow from the domestic business or the U.S. SMB business is very healthy, good margin, but obviously a pretty big drag on growth. Has there been thoughts to potentially divesting that business, or is there a way to potentially re-accelerate that business? Like, you know, is this something you're investing heavily in, or is it just like, "Hey, the margins of cash flow are good, but we're gonna invest in our higher growth businesses?" Just curious how that dynamic is playing out. Mm-hmm. Look, it's a fully integrated business into the overall platform, and this is really the roots of Nuvei. It's the business that Phil founded about 20 years ago. And so, you know, fully integrated, it does generate, you know, positive economics for the rest of the business. We... you know, we're not gonna stand idly by and allow it just to, you know, melt away, I would say. So again, nor are we gonna invest aggressively into it. So sort of striking the right balance there. And for us, that is looking at things like, you know, could we have, you know, could there be pricing levers there? you know, we haven't really experimented with that much in the past. But, you know, we may have, we may have opportunities there going forward. There are other company-wide initiatives that are underway that will benefit that business. So I talked about the move to insource back-end processing in North America. That portfolio is a North American portfolio that is currently on our, our legacy processor. So that'll, that'll move in-house, and that'll have margin benefits for that, for that business. I talked earlier about Unified Commerce. you know, if you think about that and kind of reverse engineer, yeah, primarily, we're, we're rolling that out for our e-commerce merchants that have physical presences and, and participating in that incremental volume. But on the SMB side, there are businesses within that portfolio that either have or want to have online presences, and we can participate in that volume. Things like that, we're pretty confident we can, again, get it back to more, more of a flattish experience, you know, for the overall, overall mix. Okay. I know we talked on the pricing competitive landscape earlier. you mentioned that you guys win on capabilities, not price. you know, there are obviously, you know, David Schwartz question about take rate or yield, and you guys are looking at incremental dollars growth. Right. But just generally, on an apples-to-apples basis, I think David has said, and Phil, that pricing has been remarkably stable, kind of on a mix-adjusted basis. But if, if we were to think about, are there opportunities potentially to take price where you have a leading capability, you know, how do you guys think about that? I mean, I don't think Phil's talked in the past about that opportunity to potentially take price in some areas. I'm just curious if, you know, that's something that gets talked about internally, you know, or is that, you know, just you kinda feel like you're pricing for value? you know, you've seen a lot of other acquirers in the space raise price recently, and to drive growth, and Phil's been adamant that that's not been a growth driver. We're just curious, is there an opportunity to maybe take some price? No, I think it's, I think it's consistent with, with that, with that positioning that you kinda laid out. I think, look, we, just to maybe lay out why, why we win, you know, I, I talked about that modular approach to selling, and that, that really is, something that is differentiated, and, our customers, I know, appreciate that, the ability to just to consume whatever aspect of our platform they want and then kinda, kinda grow from there. We get a lot of high marks for, our responsiveness, the kinda human element that we put to- that we add to our, our customers. Even our mid-market and sub-large enterprise customers always have somebody to get on the phone if they have an issue to troubleshoot, and that's something that comes back as a differentiating factor with our platform that our customers appreciate. you know, we have an industry-leading portfolio of APMs, 669, I think was the latest update of APMs around the world. We'd hold that up against anybody as far as, you know, having very local market local solutions for, you know, for global businesses to, you know, target, you know, individual growth markets. And, you know, based on third-party studies and results, our technology stack always shows up in, you know, the top quadrants of these independent studies. Those would be some of the factors why we win. Okay, great. So I think we're gonna wrap it there. Great. Thanks, guys. Thanks, JD.