NVEI BILL and the Payment Space

The digital payment / payment processing space seems pretty crowded and may be due for 
consolidation, but these companies keep coming up as I search for high-growth markets 
with a large and expanding TAM. 

While these are not all apples-to apples, I wanted to compare some simple metrics from a few others in the payment space:

       **Market cap   Revenue (Q3)       YoY     Gross Margin     P/S (I know)**
SQ       $100B          $3840          27%        24%            6x
GLBE     $9B            $59            77%        39%            38x
LSPD     $10B           $133           193%       50%            19x
BILL     $31B           $116           176%       **83%**            66x
NVEI     $17B           $184           95%        **80%**            24x
FOUR     $5B            $351           148%       23%            3x

Looking at this list, we see FOUR with more than three times the revenue of BILL and yet trading at 3x current sales versus BILL at 66x. 
Not to mention FOUR's market cap 1/6th that of BILL's. 
As an illustration to the power of the gross margins we typically look for in our companies, I wanted to flesh out the comparable-- 

FOUR's revenue of $351M @ 23% gross margin = $80.73M (351*0.23)
BILL's revenue of $116M @ 83% gross margin = $96.28M (116*0.83)

BILL is not only a more profitable company, essentially FOUR needs to make $4 for every $1 that BILL needs to make just to stay even.

Now obviously this is a very limited look at very basic metrics and isn't a fair representation of the companies listed-- I understand. 
But I do believe it is important to see this illustration to help understand the value hidden in the margin. 

Many, if not all of these companies have been making acquisitions early and often over the past 12-24 months, which isn't necessarily a bad thing, 
it just muddies the waters a little in regards to YoY and QoQ growth. One of the metrics I like to look at now is how the gross margin changes following acquisitions. 
BILL's recent quarter actually showed improved margins after its most recent acquisitions-- A very good sign I think.

NVEI made it on to my watchlist recently, then the CEO popped up on the Industry Focus podcast this
 morning, so I thought I'd extend it from my watch list to the scrutinizing eyes of the board. 
I found the podcast shed a little more color on the CEO and the culture of the company, 
which I found to be accreditive. 

You can check it out here: 


NVEI is a payment intelligence and technology company that provides a platform for customers and 
partners to accept and provide payment in over 500 payment options, including ~40 cryptocurrencies.
 They are a Canada-based company and completed their initial U.S. listing last month (Oct. 8).

If you calculate NVEI's revenue of $184M @ 80% gross margin = $147M

NVEI recently became a profitable company and has increased their cash position materially this year, as well as closed several acquisitions.
They have a growing global exposure, including LATAM, Europe / Africa / Middle East, North America, and APAC. 
NVEI also provides indirect exposure to the cryptocurrency market as they are able to accept and provide cryptocurrency payments to and from customers.
Essentially, if you decide you want your business to accept bitcoin, all you have to do is slap a "we accept bitcoin" sticker on your window--
NVEI's platform does the rest-- in fact this is a lot of what they do with any payment type they support-- 

NVEI's "Purpose" is to turn the whole world into a local market-- essentially providing the platform to make global payments anywhere in the world as easy
and seamless as paying for a roll of toilet paper at your local grocer. 

Okay, that's probably enough color commentary-- 
here are the highlights from their recent earnings, as well as a few more links and recent earnings. 

**Financial Highlights for the Three Months Ended September 30, 2021**

Total volume(1) increased 88% to $21.6 billion from $11.5 billion
eCommerce represented 83% of total volume
Revenue increased 96% to $183.9 million from $93.8 million
Net income increased by $105.9 million to $28.0 million from a net loss of $77.9 million
Adjusted EBITDA(2) increased 97% to $80.9 million from $41.0 million
Adjusted net income(2) was $62.3 million compared to $16.5 million
Net income per diluted share of $0.19 compared to a net loss of $0.88
Adjusted net income(2) per diluted share of $0.42 compared to $0.17
Cash balance of $288.7 million at September 30, 2021 compared to $180.7 million at December 31, 2020

**Financial Highlights for the Nine Months Ended September 30, 2021**

Total volume(1) increased 119% to $64.1 billion from $29.3 billion
eCommerce represented 85% of total volume
Revenue increased 97% to $512.7 million from $260.3 million
Net income increased by $221.0 million to $94.7 million compared to a net loss of $126.2 million
Adjusted EBITDA(2) increased 102% to $225.8 million from $111.7 million
Adjusted net income(2) was $178.0 million compared to $42.5 million
Net income per diluted share of $0.64 compared to a net loss per share of $1.49
Adjusted net income(2) per diluted share of $1.22 compared to $0.46
Cash flow from operating activities of $201.9 million increased from $49.0 million

Fiscal Quarter: Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 (E)
Revenue ($M):  	70.8	$78.30	$83.20	$83.30	$93.80	$115.90	$150.50	$178.20	$183.90	$207.00
QoQ:  		11%	6%	0%	13%	24%	30%	18%	3.20%	12.56%
YoY:  					32%	46%	80%	114%	96%	79%

Some of the risks as I see them are similar to others in the space, albeit NVEI has to prove more I believe-- 

A busy and competitive space-- NVEI has to prove their ability to land and expand with existing customers, as well as in its global footprint.

Acquisition synergies-- NVEI has to prove they can maintain and improve profitability after acquisitions-- growth must be organic and not through 
acquisitions only.

NVEI must be able to fund its expansion into new markets and maintain high gross margins-- scaling success.

NVEI must maintain accelerating volumes quarterly through accreditive acquisitions and product innovations. 

Some Links:
PowerPoint Presentation: [https://s26.q4cdn.com/502814386/files/doc_financials/2021/q3...](https://s26.q4cdn.com/502814386/files/doc_financials/2021/q3/Nuvei-Q3-Earnings-Supplement-11-8-2021.pdf)



I hope this is helpful to someone, and -- as always-- I'm confident I'm about to learn a whole lot from someone.  





Good post, and since there are so many different types of companies that do something involving or related to some kind of payments, I won’t pretend to understand where this company fits into the landscape, or what particular niche they might fill. I’ll focus only on the numbers. You gave some good info, but there were some things you didn’t address that will be important.

  1. What’s the organic growth rate? The YoY numbers look impressive, but I didn’t get any sense from your post on how much of that comes from acquisitions. This is imperative to know. If we zoom out, is this company a 30% grower or an 80% grower? I have no idea.

  2. Why was there barely any revenue growth sequentially from Q2 to Q3? Could be partially seasonality, but I bet it has more to do with acquisitions fueling growth in previous quarters.

  3. Total Volume has gone from 20.6b to 21.9b to 21.6b the last 3 quarters. They guide for 26.5b in what must be a seasonally high Q4, but do they say anything about the next year? Otherwise this doesn’t look like much growth.

In short, I would ignore the impressive YoY numbers, and dive in to find out what you believe about the bolded question above. I only spent a few minutes looking at the links you provided, but it doesn’t appear the company is making it easy to find that answer. Could be a flag.