Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Nuvei Corporation Third Quarter 2023 Earnings Call. As a reminder, this conference call is being recorded. I'll now turn the conference over to Chris Mammone, Head of Investor Relations. Please go ahead, Mr. Mammone. .

Thank you, operator, and thanks to everyone for joining us this morning. With us today are Philip Fayer, Chair and CEO; and David Schwartz, CFO. As a reminder, this conference call is being recorded and webcast and is copyrighted property of Nuvei. We broadcasted this information in whole or in part without written consent of Nuvei is prohibited.

Prior to this morning, we published this shareholder letter for the third quarter. We encourage everyone to read it if you haven't done so already. The shareholder letter contains commentary that otherwise would've been included during our prepared remarks to this conference call.

Shifting to this new format allows us to spend more time on today's call answering questions. We decided to make this change in part based on feedback from investors. We hope you find the shareholder letter informative, and of course, we welcome your feedback.

We would also encourage investors that the shareholder letter be read in conjunction with our press release, MD&A and consolidated financial statements, all of which are available in the Events and Financial Information section on our Investor Relations website, investors.nuvei.com.

During this call, we may make certain forward-looking statements within the meaning of the applicable securities laws.

Such forward-looking statements involve risks, uncertainties and other factors that may cause the actual results, performance or achievements of the business or developments in Nuvei's industry to differ materially from anticipated results, performance, achievements and developments expressed or implied by such forward-looking statements.

Information about these factors that could cause actual results to differ materially from anticipated results or performance can be found in Nuvei's filings with the Canadian securities regulatory authority and on the company's website.

Our discussions today will include non-IFRS measures, including but not limited to adjusted EBITDA, adjusted net income and adjusted net income per share.

Management believes non-IFRS results are useful in order to enhance our understanding of our ongoing performance, but they are not a supplement to and should not be considered in isolation from a substitute for IFRS financial matters. Reconciliation of these measures to IFRS measures is available in our earnings release and MD&A.

We will just have some brief prepared remarks here before opening up the call to your questions. In order to get to as many people in queue with Nuvei allotted Q&A time, we ask that you limit yourself to one question and one follow-up. And with that, I would like to now turn the call over to Phil..

Thank you, Chris, and thank you all for joining us this morning. As you have now seen, we have reported solid quarter results in line with our growth objectives. Highlights for the quarter include, strong growth across the board, with total volume increasing 72%, revenue increasing 55%, and adjusted EBITDA increasing 36%.

On a pro forma basis, third quarter revenue growth was 14%. This was 550 basis point greater than our growth rate in the second quarter. Pro forma per channel, revenue growth improved sequentially as well. Global Commerce increased 25%, accelerating by 890 basis points. We continue to believe this represents category leading growth.

Our B2B, Government and ISV channel increased 16%, which represented 360 basis points of growth acceleration, and SMB declined 3.8%, which was 170 basis point better sequentially. We are driving efficiencies throughout our business and expand our adjusted EBITDA margin sequentially by 40 basis points to 36.3%.

On capital allocation, we continue to delever re-paying $36 million of debt and reducing our leverage by 0.2x to 2.6x at September 30, 2023. Our Board has authorized and declared a cash dividend of $0.10 per share. It is worth noting that since 2022, we have returned $237 million to shareholders in form of share repurchases and dividends.

With these results, we are raising our full year financial outlook for 2023. This concludes my prepared remarks, and we are now ready to take your questions..

[Operator Instructions]. Our first question is from the line of Sanjay Sakhrani with KBW..

Pro forma growth across all the three channels accelerated.

Could you talk about what were the drivers of that acceleration?.

Good morning, Sanjay. Yes. Happy to. I think the first and foremost for us is the way we have been managing the business. So we have created [tiger] teams to look at how we engage with our current customers and how we execute on new customers.

We have been able to bridge the gap to help them go from signing to live faster, by embedding sales enablement and executive leadership into every single factor from client onboarding. And that has been seeing some great results. Early momentum now, across our core channel, which is our Global Commerce, our B2B government and SMB.

In our Global Commerce channel, we have been activating, the pipeline that we have been building. Obviously, we saw a very significant pipeline. And we have been monetizing across our regions of operation as well as naturally continuing on driving product innovation. In our B2B government and IT business, we've been applying our playbook.

This really was one of the theses of why we acquired Pia. And you guys are starting to see the results naturally up sequentially, mid three hundreds of basis points. And we see there's a lot more drivers there when you unpack that, taking our B2B operators globally, cross-selling our value-added services beyond pure play acquiring.

And from a continued growth perspective, we find that there's opportunities around off-balance factor and AP in our B2B business in particular. We're seeing momentum in government as we move from a direct sales channel to an indirect by allowing our citizens portal to bolt on existing software platforms.

And then naturally on IT is relatively new channel for us, but we're seeing great momentum in being able to offer IT's omnichannel global commerce solutions for them to service their customers in all pockets of the world. In our SME channel, we're seeing progress as well as you guys can see some great recovery.

We're quite bullish about what this will do over the course of 2024 on one end product innovation, like we talk about from a backend perspective, from simplifying clearing and settlement, on the second side to be able to provide more tools to our resellers and ultimately on the third side is just driving some focus.

And when you bring it all together, we've seen 14% pro forma growth, quite confident in our two high growth channels and quite confident in terms of bridging the gap in the SME to bring us in line to our midterm growth targets, next year as we continue driving the building blocks. .

And if I think about the revenue growth into next quarter, this may be a question for David. When we think about the slight deceleration from the third quarter, how much of that is related to conservatism versus the client loss? I'm just trying to think about, the sequencing of the revenue growth and seasonality and such.

So maybe David, you can help us with that. .

Yeah, sure. Good morning. Good morning, Sanjay.

From, look, from a revenue perspective let me start off, thinking about just overall assumptions, I guess for the fourth quarter, you think about, from a volume perspective, look, we're seeing it's early in the month of November, but for the month of October and so far in the month of November, we're seeing, good progress in terms of the trends that we're seeing on a volume perspective.

Remember that Q4 on the volume side, there is a fair amount of seasonality. We've seen that in the past. So there is from a sequential perspective, we will see volume step up sequentially in the fourth quarter, but keep in mind that volume isn't necessarily the same, doesn't necessarily yield the same from a revenue perspective.

There is a lower yield in some of that volume. Keep in mind that we do a fair amount of government payments as it relates to kind of real estate taxes, donations also. So those are more large size transactions with fixed fees associated to them. So that results in a lower yield.

And you'll see that in the outlook that our outlook from a yield perspective comes down from the 63, this quarter, kind of to the mid-fifties next quarter. And then from an EBITDA perspective, the outlook is really around, that 36.5, 36.3, very similar to what we saw in Q3 so we feel good about that margin. We continue to focus on margin expansion.

We feel that we're at an inflection point from a platform perspective and that there's certainly, as we move forward, there's certainly opportunity to expand EBITDA margins and ultimately get to that long term target of 50 plus percent. So overall I think, I don't think there's anything different season seasonally that you'd see in the past into Q4.

But again, and Phil highlighted from a channel perspective, the channels are performing quite well each of the three channels, so continue to drive that, that growth that Phil just outlined. .

Okay, great.

Is there any way to quantify that, like, large client locked headwinds?.

So what I would say is that, most of the impact happened in Q3. It wasn't a full impact in Q3. Q4 will be a quarter with the full impact. But like we said, it was a Top 10 customer. We have talked about in the past, no customer represents more than 5% of total revenue. So that can kind of give you a sense of size.

But certainly, there is some impact into Q4, still with that customer, from a sequential perspective and year-over-year. .

Our next question is from the line of John Davis with Raymond James. .

Good morning, guys. Phil, I just wondered if you could touch on some macro and competitive landscape. Obviously, you had add-in in talk about competition, worldwide, macro fear. So just want to get your perspective on what you are seeing from a macro perspective, but also competitively..

Thank you, John. It has been quite the topic that you are in terms of world and audience. From our perspective, I think it is important to understand where we sit within the ecosystem. And on one end, we are not necessarily touching the mega merchants, we are really focused on a mid-market to enterprise.

I think that's the first pocket, meaning that we are targeting different merchants from an audience perspective. I think the second thing that is really important is that, we are the challenger, meaning the incumbents typically have these stresses from a margin compression, we are a challenger.

If you guys look at Nuvei's history coming from a single vertical focus now to supporting multi verticals and multi end markets and multi jurisdictions, this allows us to naturally have a more dynamic opportunity, and we think that this is an up-sized opportunity for us as our product continues to evolve.

Both of what we are doing on the authorization side, we are doing a clearance settlement and what we are doing just in general from the geographies that we support. So we feel quite good from a macro perspective. We feel while some of the companies you mentioned are world-class companies, we feel like we now have a great team at the table.

And we have upside, naturally from our end, every incremental dollar that we process creates gross profit dollars. And because we are at scale today, those gross profit dollars fall the majority of them to EBITDA. So we really like what's out there today.

We think this macro in terms of merchants focusing internally as well as still managing the growth is an opportunity for us. In terms of pricing and take rate, we have not actually seen that, per say. What we are seeing is merchants moving faster and being more thoughtful in terms of how they monetize and connect with their customers.

And that's been voting well for us because we are not just a pure play acquirer. We provide our modules, as is required for our customers. And we are seeing them being really thoughtful in terms of what they need in the different markets. So in general, that is what we are seeing. We are seeing great momentum in our core channel in Global Commerce.

We are seeing some great movement in volume from a macro perspective. We are not seeing any significant deterioration from a consumer standpoint. And naturally, we are very different to our peers as we do have other end markets, and we have been very thoughtful in bringing our use cases into B2B, into government and into software as well.

So our makeup of our end customers is different. The size of our customers is different. And I think the last part is, we don't have a 100% wallet chair. In fact, some of these new end markets for us we are still very much the challenger with strong product offering, and that gives us upside..

And just as a quick follow-up, can you help us with the crypto contribution in 3Q or what's implied in the 4Q guide? That would be helpful. Thanks, guys..

I am happy to. We have seen sequential decline in the second quarter to the third quarter. So it is declined around a mid-single-digit from Q2 to Q3. And that's about the same. It was more mid to high single digit from a year-over-year perspective.

So again, it's no longer we've lacked it, we've lacked a larger part of it, but it is still a declining vertical for us. .

Our next question is from the line of Darrin Peller with Wolfe Research. .

It's obviously great to see the acceleration in the business and it's just -- it's interesting coming off. Last quarter was one where investors were concerned on the guide change, and it was a second guide change.

And so, I really just want to make sure we understand the visibility that you have when you, when you look forward, it was a nice acceleration. You beat numbers, obviously, you guided conservatively after last quarter.

And so, help us understand your philosophy in guiding now and making sure that the next quarter is properly set, and what you really have going into it in terms of macro assumptions also. .

Hey, good morning. I can start off. It's David. So with the last quarter we certainly had some call it, one-off events, that really resulted in the guide down. Those things have now we understand those, they're gone. We kind of learnt on the delays in implementation. We've learned a little bit there.

So in terms of the guide that we gave last quarter, you're seeing the result and we're basically happy with the results in line and slightly above. So we're happy with what we saw in Q3. We're also pleased with what we're seeing in Q4. Like I said earlier, our October and November trends are good.

Obviously, we have more visibility at the Q4 now than we did a few months ago. We want to take a position where we're trying to be very mindful of the macro at the same time. Like that's, there's certainly some challenges there.

We think that from a macro perspective we're pretty well insulated, but it's there's always some level of let's say items that we want to think about as it relates to macro.

So that's always top of mind, but we're trying to be mindful and be reasonable in terms of the guidance and the outlook that we're giving both for the quarter and for the medium term.

And as we exit the year, there's a couple of months left in the year we'll be working we've already started to work on next year, and looking forward to giving our 2024 outlook when we give our Q4 results in March.

But overall, we're taking -- we're trying to be mindful, reasonable in that how we give outlook, and make sure that we're achieving what we set out to achieve. And internally, the execution has been great. I mean, we're really happy with how the business is performing.

From a revenue growth perspective, the margins are great, the cash generation is great. We're being mindful around capital allocation. So internally things are really humming and we just got to make sure that we're, that the expectations we set externally are reasonable and that we achieve them. And that's kind of the approach we're taking. .

Phil, when we spent some time in meetings with you recently, it was pretty clear that some of the differentiation is resonating is really the vertical differentiation you guys have on the -- especially on the digital side, right? The e-com side, despite competitive questions that even came up earlier on this call.

So, I mean, can you just revisit, there are verticals like airlines and others that were pretty exciting that were coming in a much bigger way.

Can you just revisit what's actually sort of insulated versus the competitive dynamics in the digital side? And then on a quick follow up, just the improvements that you could make from here on SMB to get that flat to better. Thanks guys. .

Yes, thanks Darrin. Great question. I think the first thing to keep in mind is our customers are never new customers there, right? So we're always entering the wallet share with our customers because of the particular needs. So we are not servicing an Uber, for example, and they are just a start-up.

Customers are coming to us for a very particular need, and that is true across all the verticals as we continue amending and building innovation around helping our customers grow their business, do things better, execute on their own journeys.

We focus on verticals that have the propensity to operate in multi country, in multiple currencies and require multiple payment begins. That is where we focus, predominantly cross border or local to local depending on the business model that our customers execute on. And we think there is a lot of tailwinds across the board.

So obviously, starting from gaming, which is a no nonsense always on, no latency vertical that our customers are sometimes spending millions of dollars a day in marketing, and we deliver and we have taken that skill set into social gaming, into marketplaces, into travel, into retail, while building out our capabilities to improve authorization rates, lower the latency, provide greater conversions for them.

So what we are seeing today is, our focus on execution, nationally in retail, what we are doing around travel with specific, working with global airlines with respect to local acquiring and us to local domestic interchange around the world by utilizing our platform.

And then naturally looking at the overlap between us solutions that we require from a multi-vertical perspective, very much like B2B. We think about virtual card issuance that's relevant from both a loyalty perspective to a payout perspective, to accounts payable perspective.

So in general, from a road map perspective, we have made meaningful inroads into airlines. I mentioned last time that we are supporting four of the Top 20.

We think there is a lot more to do there, specifically of how other acquirers have treated airlines during the pandemic, we think that has left a bad taste, and they are seeking alternatives with greater technology. So we think we are well-positioned there.

Retail ultimately was a low-single-digit vertical for us, and we have been meaningfully accelerating our position with customers like Shein and Temu and [indiscernible] amongst many others, and naturally a very significant pipeline as we help our merchants go from market-to-market.

And the same is true with strengthening our position in the markets that when you have leadership position in like gaming. So we are very bullish of our end markets. We try being industry experts of where we operate in Global Commerce.

And I think we mentioned this in the shareholder letter, right? The days of companies just needing a vendor are long gone. They need partners. They need people that pull up a chair. There is always challenges and opportunities, and I think that's where my team shines to be able to be that partner for our mid-market enterprise customers.

So that is on the vertical side. On the SMB, you and I chatted about this when we were in Boston, we have seen some sequential improvements of SMB. We think there is more to come, naturally to achieve our mid-term targets SMB has to be between that 0% and minus 5%. So we feel very comfortable with what we set out from our mid-term growth targets.

That being said, we think there is opportunities to improve in SMB, and a lot of that is going to be driven by one applying the resources of our global capabilities. So today with our omni, we are able to expand our SMB footprint and expand the tools that our sales channels can consume.

I think the second is things that, we are seeing right now in Canada as we have implemented our back end. Darren, we are doing interchange prediction, meaning that, we see now interchange prices on a per transaction basis, which is what's required from our global customers.

But that allows us to have great pentacles for example, instant commission funding and instant payments for ISV and ISO partners and reseller partners. So there is a lot of pentacles of improvement from a product perspective, specifically when we look at this macro, where we are able to change the lives of both our resellers and then customers.

So there is more to come. We think there is opportunities to continue improving and all of that comes back to utilizing our product stack and our technology to drive feature functionality to execute on both our customers and our resellers in the case of our SMU channel's journeys. .

Our next question from the line of Dan Perlin with RBC Capital Markets..

Phil, I just wanted to ask you about the kind of a hundred million of annualized revenue you identified last quarter for the enterprise clients.

Obviously, we're not going to see a bunch of conversions over the holiday season, but I'm really more interested in the conversations that you've had with those clients and then kind of your level of conviction that that can still kind of close over the next 12 months.

Obviously, you got a lot of great momentum in the business, so I suspect that that's not going to be an issue, but any color there would be helpful. .

I think the biggest thing that could leave you guys is just the overall momentum. So what we saw this year versus last year was client conversions were running behind last year, not because the pipeline was smaller, just ultimately from time from signing to closing.

So the biggest thing that we've done internally is created Tiger teams and we've changed the way we operate and I run the business to make sure that we have a really clear set of visibility in terms of the opportunities and how we can help as an organization to drive those conversions. And what's happened since doing that is quite interesting.

So we've gone from being down year over year to being 15% up year over year from a new business perspective. We look at our overall sales conversion. So we're starting to see really good progress on that. But ultimately, there's also this comment around macro and naturally end market.

So, we have signed and want some great large enterprise customers that are scheduled to go live in 2024, late 2024, which is very different from other customers. I think I have an issue in Brazil and I need to go live now. So it's a matter of us having learning experiences between the different verticals that we operate in.

Some of them are planned implementations and some of them have to go like yesterday. And these are things that as an organization we have improved dramatically and something that we're going to continue to focus on. In terms of overall timing, I think certain verticals are continuing on the regular pace that we've seen over the last three, four years.

New verticals are just longer and so it doesn't mean that we're going to see 100 million lap immediately next year plus net new.

I think just in general, Dan, the way it's view this is that everything has been pushed out and we're going to get back on cadence now that we've pushed it out and we'll start being on that regular cadence on a quarterly basis from a new business activation. .

Just one quick follow-up. It's a metric I just, I might have missed it in all the materials but it, I found it to be helpful over the past couple of quarters, which is really your organic global e-com constant currency X crypto growth. So by definition, I think last quarter it was 34%. I'm just wondering if you are providing that for this quarter. .

We haven't provided that metric for the quarter. I think, we try to simplify our disclosures and improve disclosure and such. You see kind of in the shareholder letter. I guess, some of the metrics to point out organic growth at 16%, organic growth at concurrency at 13%.

Keep in mind what we mentioned earlier that the revenue from digital assets did decrease sequentially both year over year and quarter over quarter by kind of mid-single-digit percentage in both cases. And then the other metric I'd point to is, the 14% pro forma growth rate. I think those are kind of the key metrics.

And then all the improvements that we have made and continue to make from a channel perspective that you have seen, that will drive us forward to our medium-term target of 15% to 20%. And that's something that, we will obviously give our 2024 in early next year.

But, thinking about exiting 2024 at that medium-term target of 15% to 20% is kind of the way to think about it..

Our next question is coming from the line of Jason Kupferberg with Bank of America..

This is Cassie on for Jason. I just wanted to ask if you are seeing any difference in trends by region most recently, particularly in EMEA, given everything going on in the Middle East there? Thank you..

Not specifically. We have been seeing consistent volume trends as We would expected between October and November. So we have not seen any different trends to highlight. We are seeing great momentum in North America.

If you look at the recent disclosures that we have made, so quick growth in North America, EMEA had 17% growth last quarter and then naturally good momentum that we are seeing in APAC. Certainly smaller, but great momentum and in LatAm as well..

Okay. Got it. And just wanted to ask, I mean, margins obviously came in nicely this quarter. Can you just talk about where the incremental growth margins will come from going forward? I know you guys have made some progress with the North American processing being in sourced.

Are you seeing more opportunities in headcount or tech efficiencies, et cetera? Thank you..

From a margin perspective, we are quite pleased with our both the gross margin and the adjusted EBITDA margins. Business that generates plus or minus 80% gross margin gives a lot of flexibility and especially when you think about the platform that it is built on.

And, yes, at the gross, look, the gross margin level, there will be puts and takes as it relates to just kind of what we launch from a new product perspective. The way to think about it, though is, every incremental gross profit dollar has a high propensity to fall down to the bottom-line and generate incremental EBITDA.

On the clearing and settlement, you are right. There has been very good progress in that regard. And we continue to make progress there. There will be more progress into 2024, rest of this year and into 2024, specifically in North America where we will in source.

And so that creates -- it certainly creates cost efficiencies and cost effectiveness, which I think was the core of your question. But the other thing that it drives is, it drives a greater connection to our customers because we can do certain things that we weren't able to do in the past because we were reliant on a third-party.

Improved settlement time as an example, report speed of reporting allows us to do things quicker and to implement things quicker for our customers. So there is a lot of, I would say intangible or non-quantifiable benefits more than just the cost savings that it drives from a in-sourcing perspective.

And then if you think about on the OpEx side, we have a great platform. We have the people. There is certainly always enhancements that we make. But we feel really good about where our OpEx is today? Where the margins are today? We think we can expand from here. The other area on SG&A we have pointed out in the past is on share-based compensation.

That continues to decrease as a percentage of revenue. And that is a large item. The other area I point out is is commissions. So if you think about our channel distribution, and you think about the global commerce channel in specific and that's being the highest growth channel, most of the commissions are driven by our B2B gov ISB channel.

And so as that -- as the Global Commerce Channel grows, again, commission as a total percentage of revenue also has some opportunities there. So there's -- and there is many, many specific cost initiatives that we have internally that both affects gross margin as well as OpEx.

And similarly, to how we're driving new implementations that Phil talked about earlier, we have a similar cadence with respect to costs. And we have a regular cadence internally with a tiger team as well, where we're driving through a lot of the initiatives that we identify.

And the fact is we keep identifying more as we kind of go down and hit the larger items and the lower hanging fruit. There's still more that we see. So we're driving margins as we go forward. .

Our next questions are from the line of Matt Coad with Autonomous Research. .

Wanted to double click on your commentary around the retail vertical earlier, I thought that was pretty interesting. Wanted to better understand the land and expand opportunity here. So you have some great clients and Shein and Temu.

How do you kind of expand that wallet share over time?.

Hey, Matt, to great question. What's interesting about Shein and Temu [indiscernible], and a lot of these merchants is that they are global brands and they too have their own journeys of expansion. So, for example, with some of them, we're looking at new countries, in particular regions, we're looking at new alternative payment methods.

We're always looking with them and piloting with them trends with respect to authorization rate improvement. So we are not a vendor to them. We are a partner, with one in particular is been a big driver to help us in terms of cascading and driving better authorization rates in the U.S. which is a very interesting project for us.

And then actually using them as key pillars since they are what some of the most recognizable names as you kind of enter with the market leaders and helping us gain credibility as we continue building out our retail capabilities around the world. Within that as well on retail, which is really important, is the omni application that we're building.

So we're launching that into three markets so that we can provide multi-channel journeys for our end customers. But we started at the top with retail, with some great brands that they themselves are growing. We're seeing opportunity within those to capture more wallet share and transparency.

We are still small on the wallet share, so there's a lot of opportunity we think to continue expanding our relevancy with these big brands, both from a country, from a capability, and then from a payment application in terms of what we provide to them. So retail is something that we are just entering.

We're lapping somewhat of our first and a half year and a half in retail. And we think we're starting to build some really strong momentum. .

Really helpful, Phil. And then just for my follow up here, the growth and the margin expansion that you guys talked to free cash flow improvement should follow.

So just curious, the incremental dollars of free cash flow that you'll get, how are you thinking about that from a capital management perspective?.

I think, your base case is that we're going to continue focusing on debt repayment and to deliver, we're quite excited. Just the performance of the business from when we acquired Paya sub 3x, just under 3x to today to 2.6x, that is kind of the cadence that we'd like to be at 2 or less.

We think, Matt, that's going to open up opportunities, the entire backdrop is changing. And from our perspective in terms of building blocks and opportunity around M&A, we think the second half of next year will yield some quite compelling opportunities, both domestically and globally, and we want to remain opportunistic.

So our base case will be continued to focus on debt repayment, lower our interest expense, and then have the ability and flexibility and optionality to execute on potential M&A. But naturally, we have so much optionality with our cash flow and our balance sheet, and we will execute on that, as is appropriate and remain opportunistic..

Next question comes from the line of Robert Napoli with William Blair. .

Hi. Thank you, and good morning. Good to see the solid quarter and guidance. A question on Paya, I guess, and integrated payments.

How is that acquisition performing versus your expectations and what are your thoughts around being able to leverage, the integrated payments strategy from Paya and from elsewhere within new base over the next few years?.

Thank you, Bob. Great question. We are super pleased with Paya. For one, wonderful people. We share the same values and culture. We hit the ground running. You can see ultimately, Paya is our B2B government and most of our integrated payments business. And we are accelerating the growth of the business.

We are creating more dependency on new base technology stack, and we are executing ultimately not just the expectations, but I think we have exceeded reductions with respect to where we are at right now. We firmly believe this channel can and will be a 15% to 20% grower.

We are naturally now above that, from a pro forma basis, and there is a lot more to come, with each providing very unique pentacles for continued growth. And B2B, we are going to be baiting factoring off balance sheet naturally with a partner.

We are going to be driving applicability around our card issuing for virtual card issuing, and then expanding into the AP side as well. So there is a lot of pentacles, and then naturally kind of our bread and butter on the B2B side with respect to Paya is bringing and internationalizing these relationships.

We have kicked out of that now with Canada, and going to be taking these partnerships around the world. So we are very pleased with Paya. The performance of the business has been strong.

We have been executing thoughtfully on the cost side, and we are actually very pleased, both from our technology, from a gap that we are able to plug from what Paya had. And more importantly, from the relevance from our own use cases to Paya end customers. In terms of integrated payments, you will see us spend a lot of time there, Bob.

We wanted to naturally focus on kick starting our government in B2B business, which is what we have done being really thoughtful in terms of mine and management time. And now returning our focus around integrated payments. It is the slower growth out of our B2B government and ISB channel. But we think there is a lot of pent-up opportunity.

Where we are focused on right now naturally is plugging in our omni into that offering into the three markets that we are servicing that, and then driving our ISV capabilities to the use cases that we have in the markets that we support.

We believe integrated payments will be that last piece of the puzzle to accelerate this channel to the high-end of what our internal targets are around, the integrated payments vertical for us..

And then just maybe, I am sure if it is a fair question, but what's that changed since last quarter? I mean, as far as visibility, I mean not certainly the tone in the quarter, what is it that it seems to have led to more stability, clarity, and overall, in your business?.

I wouldn't say, and that's a good question. I think it's a fair question. I wouldn't say, it's toner or visibility. I think the biggest thing in payments is that it's never built just quarter to quarter. We report quarter to quarter, but customers live and they have their own journeys that we're trying to manage our way to.

We were quite bullish last quarter as well. It's just a matter of client activations and timeframe around activations, and then naturally what ends up happening around the end markets that we're operating in.

So I think we're really bullish, right? If we look at our own metrics, be it per channel, organic growth the health of our financial profile, the fact how quickly we're delivering our ability to continue executing and the fact that we have low CapEx and a very, very high cash flow profile allowing us to be thoughtful in terms of where we're investing and more importantly that the investments that we have already made have hit an inflection point.

We like where we are and we think our core global commerce channel has so much opportunity ahead. That one is a bit chunkier in terms of when it comes in and out. We think we've now had some great stability and momentum in B2B and we're executing on the SMB side.

So I wouldn't call it a visibility question or a tone, it's just a matter of great businesses are not built overnight and they're not necessarily measured quarterly. We understand your job is measured quarterly, and we totally get shareholder sentiment with respect to the quarterly side.

But we really do love what we have going on, and we think this is a platform from a profitability perspective to be at a multiple of where we are now. So we still think we're on the ground floor above. .

Our next question is coming from the line of Todd Coupland with CIBC. .

Phil, I wanted to have you comment on how much you think is in your control as you think about ‘24, and getting back to your midterm guidance of 15% from 13% or 14%.

And talk about what's in your control and what needs to happen and what might be a factor out of your control?.

I mean, I think the biggest thing that I would leave here is that we have the building blocks, the people, the technology and the world class sales organization to execute. And that's exactly what we're focused on.

And you could see that as we look at the sequential improvement in Q3, do we really do love the conversations that we're having with customers? We have some pretty meaningful conversations in flight. Actually, those take time and it's a matter of understanding that, taking the time, right? Those are the things that we're working hard on.

And for that we have changed the way I operate the business in terms of being really, really focused, pulling up a chair and making sure that my entire ELT is extremely focused on the five pillars, which are our current customers on new customers, product innovation cost efficiencies, and our people. And those are the things that are in our control.

And we're going to be continuously focusing on those, and they give us visibility, great building blocks that we have today. And our focus is on delivering so that we exit Q4 in the range of our midterm growth targets and Q4 2024. .

And as a follow-up, how should we think about with -- I guess, combined with pia the seasonality in 2024? I know you're not given specific guidance, but what will be the rhythm of the business, sort of Q1 to Q4 and any qualitative discussion there would be helpful. Thanks a lot..

It has been very interesting when you think about seasonality in our business, Todd, because over the last three years, historically from New Lake's sorting Paya, there is been noise. In '21, you had COVID. In '22 comparison, we had World Cup, which is a significant event both in Q3 and Q4 when you compare Nuvei, in '23 to '22.

And then next year, we are going to have more of a normal year. So from a Nuvei perspective, it is actually going to be a normal year. And then you have kind of the dribs-and-drabs of each of the verticals that we can getting momentum into. So, in Q1 we have, a football season. In Q2, you have to build up for the summer season.

In Q3 you have travel, and then Q4, you have the holiday specials. And we are trying to build our end market exposure to have naturally some focus each of them. And that's kind of what Nuvei is in building out. We like where we sit.

But from a normal year perspective, from a Nuvei, you typically have Q1, a ramp into Q2, slight flattish down into Q3 and then step up into Q4. Paya is probably a slightly different. We have seen in Paya, if you look at historically, Paya had a softer Q1 and an acceleration Q2 and then flattish Q3, Q4.

What's changed for us around Paya is just the momentum of new business and the pipeline that we have. I mentioned it last quarter that, we had a 27% increase in stick count and B2B. That will be opportunity that we will see processing next year.

So we actually think our emerging channel, which is our government, B2B, and ISV will see some step-ups predominantly driven by new business..

Thank you. The next question is from the line of Joseph Vafi with Canaccord Genuity..

Good morning. This is Palazani on for Joseph. Thanks for taking our questions. First off, on the emerging business, last quarter, you added two new ERP platforms in for an SAP.

Can you maybe, give us an update on the progress there, and any update on a Microsoft Dynamics?.

Great, great questions. Yes. We have activated in four. That is already in process and part of our onboarding. The team is doing a great job at at not just -- if you think about the steps is, first, you are integrating partner with ERP and then you drive through our network. We have seen great progress around that.

SAP is still early, and Microsoft are expecting this quarter or early next quarter to activate. The great thing here guys, is, we now have access to about 3 million end merchants in all parts of the world, and that's what we are executing on. So each ERP, typically runs through its journey from an integration to activation.

But what we found aside from the ERPs is that a lot there is some overlap between the VARs underneath that we may or may not already have relationships with.

So it is an interesting environment that we want to make sure that our use cases and our technology is applicable and accessible for every one of the VARs that end up touching those 3 million merchants since that's what we are focused on..

Great. Thanks, Phil. And it would be good to get an update on the gaming business in the U.S. Thanks..

I would say, on the gaming business, we are continuously moving forward with new states. I think just last week we had Maine. We are progressing in terms of each of the states that come up. We have done a great job in Ontario. We are waiting to see what happens around Alberta in North America as well.

But there is nothing to flag from the gaming business. Obviously, we welcome Caesars. We helped to bring one of our European customers [indiscernible] into North America and we are continuously head down focused on helping our current operators in market go from state-to-state.

Our foreign operators enter the market and our current operators in the U.S. exiting the market in terms of global. I think the most interesting that I leave is gaming has become a global vertical. And it's not just what's happening within the four quarters of the United States. It's what's happening in every single market.

Lots of tailwind and interest in South America, actually still continued momentum in North America, and we still see continued momentum in Europe. So a significant TAM with still, even though we have a great position in gaming, but a lot of opportunity for us to continue expanding and growing. .

At this time, we've reached the end of our allotted time for questions and answers. I'll turn the floor back to Chris Mammone for closing remarks..

Thank you, Rob. Thank you again to everyone for joining us today. Please reach out to the IR team with your follow up questions. We'll be on the road in the next few weeks. We're planning to attend investor conferences hosted by RBC, Wells Fargo and UBS among others. So we hope to see many of you during those appearances. Bye for now. .

This concludes today's conference. Let me disconnect your lines at this time. Thank you for your participation..