UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the Month of November 2024
Commission File Number: 001-40875
NUVEI CORPORATION
(Exact name of registrant as specified in its charter)
1100 René-Lévesque Boulevard West, Suite 900
Montreal, Quebec H3B 4N4
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☐ Form 40-F ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
EXHIBIT INDEX
| Exhibit No. | Exhibit Description | |||||||||||||||||||
| Nuvei Corporation Condensed Interim Consolidated Financial Statements for the Three Months and Nine Months Ended September 30, 2024 | ||||||||||||||||||||
| Nuvei Corporation Interim Management's Discussion and Analysis for the Three Months and Nine Months Ended September 30, 2024 | ||||||||||||||||||||
Certification of Chief Executive Officer and Chief Financial Officer required by National Instrument 52-109 - Certification of Disclosure in Issuers Annual and Interim Filings | ||||||||||||||||||||
Exhibits 99.1 and 99.2 of this Report on Form 6-K are incorporated by reference into the Registration Statement on Form S-8 of the Registrant, which was originally filed with the Securities and Exchange Commission on October 18, 2021 (File No. 333-260308), and the Registration Statement on Form S-8 of the Registrant, which was originally filed with the Securities and Exchange Commission on February 22, 2023 (File No. 333-269901) and the Registration Statement on Form S-8 of the Registrant, which was originally filed with the Securities and Exchange Commission on August 9, 2023 (File No. 333-273832)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Nuvei Corporation | ||||||||||||||||||||
| Date: November 12, 2024 | By: | /s/ Lindsay Matthews | ||||||||||||||||||
| Name | Lindsay Matthews | |||||||||||||||||||
| Title: | General Counsel | |||||||||||||||||||
EXHIBIT 99.1
Condensed Interim Consolidated Financial Statements
Nuvei Corporation
(Unaudited)
For the three and nine months ended September 30, 2024 and 2023
(in thousands of US dollars)
Table of Contents
| Pages | |||||
Condensed Interim Consolidated Financial Statements | |||||
Notes to Condensed Interim Consolidated Financial Statements | |||||
| 1 Reporting entity | |||||
| 2 Basis of preparation and consolidation | |||||
| 3 Material accounting policies and new accounting standards | |||||
| 4 Business combinations | |||||
| 5 Trade and other receivables | |||||
| 6 Trade and other payables | |||||
| 7 Loans and borrowings | |||||
| 8 Share capital | |||||
| 9 Revenue and expenses by nature | |||||
| 10 Net finance cost | |||||
| 11 Share-based payment arrangements | |||||
| 12 Income taxes | |||||
| 13 Net income (loss) per share | |||||
| 14 Determination of fair values | |||||
| 15 Related party transactions | |||||
| 16 Supplementary cash flow disclosure | |||||
| 17 Contingencies | |||||
| 18 Subsequent event | |||||
Nuvei Corporation
Consolidated Statements of Financial Position
(Unaudited)
(in thousands of US dollars)
Notes | September 30, 2024 | December 31, 2023 | |||||||||
| $ | $ | ||||||||||
Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | 138,027 | 170,435 | |||||||||
| Trade and other receivables | 5 | 134,397 | 105,755 | ||||||||
| Inventory | 3,194 | 3,156 | |||||||||
| Prepaid expenses | 20,999 | 16,250 | |||||||||
| Income taxes receivable | 994 | 4,714 | |||||||||
| Current portion of contract assets | 1,738 | 1,038 | |||||||||
| Other current assets | 692 | 7,582 | |||||||||
| Total current assets before segregated funds | 300,041 | 308,930 | |||||||||
| Segregated funds | 1,513,544 | 1,455,376 | |||||||||
| Total current assets | 1,813,585 | 1,764,306 | |||||||||
| Non-current assets | |||||||||||
| Property and equipment | 39,033 | 33,094 | |||||||||
| Intangible assets | 14 | 1,331,859 | 1,305,048 | ||||||||
| Goodwill | 1,989,858 | 1,987,737 | |||||||||
| Deferred tax assets | 5,125 | 4,336 | |||||||||
| Contract assets | 866 | 835 | |||||||||
| Processor and other deposits | 5,411 | 4,310 | |||||||||
| Other non-current assets | 36,820 | 35,601 | |||||||||
Total Assets | 5,222,557 | 5,135,267 | |||||||||
3
Nuvei Corporation
Consolidated Statements of Financial Position
(Unaudited)
(in thousands of US dollars)
Notes | September 30, 2024 | December 31, 2023 | |||||||||
| $ | $ | ||||||||||
Liabilities | |||||||||||
Current liabilities | |||||||||||
| Trade and other payables | 6 | 196,793 | 179,415 | ||||||||
| Income taxes payable | 20,684 | 25,563 | |||||||||
| Current portion of loans and borrowings | 7 | 6,833 | 12,470 | ||||||||
| Other current liabilities | 11,780 | 7,859 | |||||||||
| Total current liabilities before due to merchants | 236,090 | 225,307 | |||||||||
| Due to merchants | 1,513,544 | 1,455,376 | |||||||||
Total current liabilities | 1,749,634 | 1,680,683 | |||||||||
Non-current liabilities | |||||||||||
| Loans and borrowings | 7 | 1,241,175 | 1,248,074 | ||||||||
| Deferred tax liabilities | 126,581 | 151,921 | |||||||||
| Other non-current liabilities | 9,477 | 10,374 | |||||||||
Total Liabilities | 3,126,867 | 3,091,052 | |||||||||
Equity | |||||||||||
Equity attributable to shareholders | |||||||||||
| Share capital | 8 | 2,016,003 | 1,969,734 | ||||||||
| Contributed surplus | 362,249 | 324,941 | |||||||||
| Deficit | (255,226) | (224,902) | |||||||||
| Accumulated other comprehensive loss | (34,734) | (43,456) | |||||||||
| 2,088,292 | 2,026,317 | ||||||||||
Non-controlling interest | 7,398 | 17,898 | |||||||||
Total Equity | 2,095,690 | 2,044,215 | |||||||||
Total Liabilities and Equity | 5,222,557 | 5,135,267 | |||||||||
Contingencies | 17 | ||||||||||
| Subsequent event | 18 | ||||||||||
The accompanying notes are an integral part of these Condensed Interim Consolidated Financial Statements.
4
Nuvei Corporation
Consolidated Statements of Profit or Loss and Comprehensive Income or Loss
(Unaudited)
For the three and nine months ended September 30
| Three months ended September 30 | Nine months ended September 30 | ||||||||||||||||
| Notes | 2024 | 2023 | 2024 | 2023 | |||||||||||||
| $ | $ | $ | $ | ||||||||||||||
| Revenue | 9 | 357,618 | 304,852 | 1,038,205 | 868,376 | ||||||||||||
| Cost of revenue | 9 | 72,051 | 55,650 | 204,820 | 164,172 | ||||||||||||
| Gross profit | 285,567 | 249,202 | 833,385 | 704,204 | |||||||||||||
| Selling, general and administrative expenses | 9 | 239,108 | 217,282 | 697,701 | 633,655 | ||||||||||||
| Operating profit | 46,459 | 31,920 | 135,684 | 70,549 | |||||||||||||
| Finance income | 10 | (1,163) | (2,713) | (2,551) | (9,049) | ||||||||||||
| Finance cost | 10 | 29,045 | 30,053 | 88,648 | 77,839 | ||||||||||||
| Net finance cost | 27,882 | 27,340 | 86,097 | 68,790 | |||||||||||||
| Loss (gain) on foreign currency exchange | (6,572) | 13,033 | 10,933 | 520 | |||||||||||||
| Income (loss) before income tax | 25,149 | (8,453) | 38,654 | 1,239 | |||||||||||||
| Income tax expense | 12 | 7,914 | 9,667 | 20,878 | 16,031 | ||||||||||||
| Net income (loss) | 17,235 | (18,120) | 17,776 | (14,792) | |||||||||||||
| Other comprehensive income (loss), net of tax | |||||||||||||||||
| Items that may be reclassified subsequently to profit and loss: | |||||||||||||||||
| Foreign operations – foreign currency translation differences | 8,483 | 1,257 | 11,097 | (2,753) | |||||||||||||
| Change in fair value of financial instruments designated as cash flow hedges | (7,187) | (1,008) | (628) | (1,008) | |||||||||||||
| Reclassification of change in fair value of financial instruments designated as cash flow hedges to profit and loss | (742) | — | (1,747) | — | |||||||||||||
| Comprehensive income (loss) | 17,789 | (17,871) | 26,498 | (18,553) | |||||||||||||
| Net income (loss) attributable to: | |||||||||||||||||
| Common shareholders of the Company | 15,364 | (19,814) | 11,966 | (19,669) | |||||||||||||
| Non-controlling interest | 1,871 | 1,694 | 5,810 | 4,877 | |||||||||||||
| 17,235 | (18,120) | 17,776 | (14,792) | ||||||||||||||
| Comprehensive income (loss) attributable to: | |||||||||||||||||
| Common shareholders of the Company | 15,918 | (19,565) | 20,688 | (23,430) | |||||||||||||
| Non-controlling interest | 1,871 | 1,694 | 5,810 | 4,877 | |||||||||||||
| 17,789 | (17,871) | 26,498 | (18,553) | ||||||||||||||
| Net income (loss) per share | 13 | ||||||||||||||||
| Net income (loss) per share attributable to common shareholders of the Company | |||||||||||||||||
| Basic | 0.11 | (0.14) | 0.09 | (0.14) | |||||||||||||
| Diluted | 0.10 | (0.14) | 0.08 | (0.14) | |||||||||||||
The accompanying notes are an integral part of these Condensed Interim Consolidated Financial Statements.
5
Nuvei Corporation
Consolidated Statements of Cash Flows
(Unaudited)
For the nine months ended September 30
(in thousands of US dollars)
| 2024 | 2023 | ||||||||||
| Notes | $ | $ | |||||||||
| Cash flow from operating activities | |||||||||||
| Net income (loss) | 17,776 | (14,792) | |||||||||
| Adjustments for: | |||||||||||
| Depreciation of property and equipment | 9 | 13,244 | 10,739 | ||||||||
| Amortization of intangible assets | 9 | 100,696 | 89,386 | ||||||||
| Amortization of contract assets | 1,159 | 1,176 | |||||||||
| Share-based payments | 9 | 65,297 | 105,484 | ||||||||
| Net finance cost | 10 | 86,097 | 68,790 | ||||||||
| Loss on foreign currency exchange | 10,933 | 520 | |||||||||
| Income tax expense | 20,878 | 16,031 | |||||||||
| Gain on business combination | 4 | (4,013) | — | ||||||||
| Loss on disposal | 551 | — | |||||||||
| Changes in non-cash working capital items: | 16 | (31,509) | (3,473) | ||||||||
| Interest paid | (85,216) | (69,298) | |||||||||
| Interest received | 18,838 | 9,921 | |||||||||
| Income taxes paid - net of tax received | (43,463) | (32,208) | |||||||||
| 171,268 | 182,276 | ||||||||||
| Cash flow used in investing activities | |||||||||||
| Business acquisitions, net of cash acquired | 4 | (1,185) | (1,379,778) | ||||||||
| Acquisition of property and equipment | (12,020) | (7,879) | |||||||||
| Acquisition of intangible assets | (40,355) | (32,371) | |||||||||
| Acquisition of distributor commissions | 14 | (56,704) | (20,318) | ||||||||
| Disposal (acquisition) of other non-current assets | 468 | (31,223) | |||||||||
| Net decrease in processor deposits | 3,472 | — | |||||||||
| Net decrease in advances to third parties | — | 245 | |||||||||
| (106,324) | (1,471,324) | ||||||||||
| Cash flow from (used in) financing activities | |||||||||||
| Shares repurchased and cancelled | 8 | — | (56,042) | ||||||||
| Proceeds from exercise of stock options | 8 | 16,029 | 7,728 | ||||||||
| Repayment of loans and borrowings | 4, 7 | (49,154) | (112,840) | ||||||||
| Proceeds from loans and borrowings | 7 | — | 852,000 | ||||||||
| Financing fees related to loans and borrowings | 7 | (249) | (14,650) | ||||||||
| Payment of lease liabilities | 7 | (5,138) | (3,965) | ||||||||
| Dividends paid to shareholders | 8 | (42,275) | (13,907) | ||||||||
| Dividend paid by subsidiary to non-controlling interest | (16,310) | — | |||||||||
| (97,097) | 658,324 | ||||||||||
| Effect of movements in exchange rates on cash | (255) | 37 | |||||||||
| Net decrease in cash and cash equivalents | (32,408) | (630,687) | |||||||||
| Cash and cash equivalents – Beginning of period | 170,435 | 751,686 | |||||||||
| Cash and cash equivalents – End of period | 138,027 | 120,999 | |||||||||
The accompanying notes are an integral part of these Condensed Interim Consolidated Financial Statements.
6
Nuvei Corporation
Consolidated Statements of Changes in Equity
(Unaudited)
For the nine months ended September 30
(in thousands of US dollars)
| Attributable to shareholders of the Company | Non- Controlling interest | Total equity | ||||||||||||||||||||||||
| Share capital | Contributed surplus | Deficit | Accumulated Other comprehensive loss | |||||||||||||||||||||||
| Notes | Cumulative translation adjustments | Cash flow hedge reserve | ||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Balance as at January 1, 2023 | 1,972,592 | 202,435 | (166,877) | (39,419) | — | 10,759 | 1,979,490 | |||||||||||||||||||
| Contributions and distributions | ||||||||||||||||||||||||||
| Exercise of equity-settled share-based payments | 8, 11 | 21,902 | (14,174) | — | — | — | — | 7,728 | ||||||||||||||||||
| Equity-settled share-based payments | 4, 11 | — | 115,170 | — | — | — | — | 115,170 | ||||||||||||||||||
| Tax effect - equity-settled share-based payments | — | 943 | — | — | — | — | 943 | |||||||||||||||||||
| Effect of share repurchase liability | 8 | (33,378) | — | (22,093) | — | — | — | (55,471) | ||||||||||||||||||
| Dividends declared | 8 | (14,006) | (14,006) | |||||||||||||||||||||||
| Net loss and comprehensive loss | — | — | (19,669) | (2,753) | (1,008) | 4,877 | (18,553) | |||||||||||||||||||
| Balance as at September 30, 2023 | 1,961,116 | 304,374 | (222,645) | (42,172) | (1,008) | 15,636 | 2,015,301 | |||||||||||||||||||
| Balance as at January 1, 2024 | 1,969,734 | 324,941 | (224,902) | (36,354) | (7,102) | 17,898 | 2,044,215 | |||||||||||||||||||
| Contributions and distributions | ||||||||||||||||||||||||||
| Exercise of equity-settled share-based payments | 8, 11 | 46,269 | (30,240) | — | — | — | — | 16,029 | ||||||||||||||||||
| Equity-settled share-based payments | 11 | — | 65,297 | — | — | — | — | 65,297 | ||||||||||||||||||
| Tax effect - equity-settled share-based payments | — | 2,251 | — | — | — | — | 2,251 | |||||||||||||||||||
| Dividend paid by subsidiary to non-controlling interest | — | — | — | — | (16,310) | (16,310) | ||||||||||||||||||||
| Dividends declared | 8 | — | — | (42,290) | — | — | — | (42,290) | ||||||||||||||||||
| Net income and comprehensive income | — | — | 11,966 | 11,097 | (2,375) | 5,810 | 26,498 | |||||||||||||||||||
| Balance as at September 30, 2024 | 2,016,003 | 362,249 | (255,226) | (25,257) | (9,477) | 7,398 | 2,095,690 | |||||||||||||||||||
The accompanying notes are an integral part of these Condensed Interim Consolidated Financial Statements.
7
Nuvei Corporation
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2024 and 2023
(in thousands of US dollars, except for share and per share amounts)
1. Reporting entity
Nuvei Corporation (“Nuvei” or the “Company”) is a global payment technology provider to businesses across North America, Europe, Middle East and Africa, Latin America and Asia Pacific and is domiciled in Canada with its registered office located at 1100 René-Lévesque Blvd., 9th floor, Montreal, Quebec, Canada. Nuvei is the ultimate parent of the group and was incorporated on September 1, 2017 under the Canada Business Corporations Act (“CBCA”).
The Company's Subordinate Voting Shares are listed on the Toronto Stock Exchange ("TSX") and on the Nasdaq Global Select Market ("Nasdaq") both under the symbol "NVEI".
Proposed take private transaction
On April 1, 2024, the Company entered into a definitive arrangement agreement to be taken private by Advent International, alongside existing Canadian shareholders Philip Fayer, certain investment funds managed by Novacap Management Inc., and Caisse de dépôt et placement du Québec, in an all-cash transaction at $34.00 per Subordinate Voting Share and Multiple Voting Share ("Proposed transaction"). On June 20, 2024, final court approval was obtained following the shareholder approval obtained on June 18, 2024. The closing of this transaction remains subject to key regulatory approvals. A termination fee of $150,000 would be payable by Nuvei in certain circumstances. A reverse termination fee of $250,000 would be payable to Nuvei if the transaction is not completed in certain circumstances.
2. Basis of preparation and consolidation
These Condensed Interim Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) applicable to the preparation of interim financial statements, including International Accounting Standard (“IAS”) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”). Certain information and disclosures have been omitted or condensed. The accounting policies and methods of computation described in the audited annual consolidated financial statements for the year ended December 31, 2023 were applied consistently in the preparation of these condensed interim consolidated financial statements, with the exception of new accounting pronouncements effective January 1, 2024, described below. Accordingly, these Condensed Interim Consolidated Financial Statements should be read together with the Company’s audited annual consolidated financial statements for the year ended December 31, 2023.
The Condensed Interim Consolidated Financial Statements as at and for the three and nine months ended September 30, 2024 were authorized for issue by the Company’s Board of Directors on November 12, 2024.
Operating segment
The Company has one reportable segment for the provision of payment technology solutions to merchants and partners.
Seasonality of interim operations
The operations of the Company can be seasonal, and the results of operations for any interim period are not necessarily indicative of operations for the full year or any future period.
Estimates, judgments and assumptions
The preparation of these Condensed Interim Consolidated Financial Statements in conformity with IFRS requires management to make estimates, judgments and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The significant estimates,
8
Nuvei Corporation
Notes to Condensed Interim Consolidated Financial Statements
September 30, 2024 and 2023
(in thousands of US dollars, except for share and per share amounts)
judgments and assumptions made by management are the same as those applied and described in the Company's audited annual consolidated financial statements for the year ended December 31, 2023.
3. Material accounting policies and new accounting standards
New accounting standards and interpretations adopted
The following amendments were adopted on January 1, 2024:
Amendments to liability classification
On October 31, 2022, the IASB issued new amendments to IAS 1 in addition to the previous amendment issued in 2020 that clarify requirements when classifying liabilities as non-current and extend the application period to January 1, 2024.
When an entity classifies a liability arising from a loan arrangement as non-current and that liability is subject to the covenants which an entity is required to comply with within twelve months of the reporting date, this amendment requires the entity to disclose information in the notes that enables users of financial statements to understand the risk that the liability could become repayable within twelve months of the reporting period, including:
(a) the carrying amount of the liability;
(b) information about the covenants;
(c) facts and circumstances, if any, that indicate the entity may have difficulty complying with the covenants. Such facts and circumstances could also include the fact that the entity would not have complied with the covenants based on its circumstances at the end of the reporting period.
The amendments described above had no impact on these Condensed Interim Consolidated Financial Statements.
New accounting standards and interpretations issued but not yet adopted
The IASB has issued new standards and amendments to existing standards which are applicable to the Company in future periods.
IFRS 18 Presentation and Disclosure in Financial Statements
On April 9, 2024 the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements to improve reporting of financial performance. IFRS 18 replaces IAS 1 Presentation of Financial Statements. It carries forward many requirements from IAS 1 unchanged. IFRS 18 applies for annual reporting periods beginning on or after January 1, 2027. Earlier application is permitted.
The new Accounting Standard introduces significant changes to the structure of a company's income statement and new principles for aggregation and disaggregation of information. The main impacts of the new Accounting Standard include:
•introducing a newly defined "operating profit" subtotal and a requirement for all income and expenses to be allocated between three distinct categories based on the company's main business activities: Operating, investing and financing;
•disclosure about management performance measures; and,
9
Nuvei Corporation
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2024 and 2023
(in thousands of US dollars, except for share and per share amounts)
•adding new principles for aggregation and disaggregation of information.
•requiring the cash flow statement to start with operating profit; and
•removal of the accounting policy choice for presentation of dividend and interest.
Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures
In May 2024, amendments to IFRS 9, “Financial Instruments” and IFRS 7, “Financial Instruments: Disclosures” were issued. The main impacts of the amendments include:
•clarification of the timing of recognition and derecognition for a financial asset or financial liability, including clarifying that a financial liability is derecognized on the settlement date. In addition to these clarifications, the amendments introduce an accounting policy choice to derecognize financial liabilities settled using an electronic payment system before the settlement date, if criteria are met;
•clarifications regarding the classification of financial assets, including those with features linked to environmental, social and corporate governance and contractual cash flows that are solely payments of principal and interest on the principal amount outstanding; and
•additional disclosures are required for financial instruments with contingent features and investments in equity instruments classified at fair value through other comprehensive income.
These amendments are effective for annual reporting periods beginning on or after January 1, 2026. Early adoption is permitted, with an option to early adopt only the amendments to the classification of financial assets.
The impact of adoption of these standards and amendments has not yet been determined.
4. Business combinations
Transactions for the nine months ended September 30, 2024
Till Payments Inc.
On January 5, 2024, the Company acquired 100% of the shares of Till Payments, an independent software vendor ("ISV") focused payment technology company headquartered in Sydney, Australia, for a total consideration of $36,905, comprised of $30,000 in cash and $6,905 of pre-existing loan with Till Payments being settled as part of the business combination. The Company determined that the transaction met the definition of a business combination. The fair value of net assets acquired was greater than the consideration transferred resulting in a gain on business combination of $4,013 which was recognized in other selling, general and administrative expenses (Note 9). Acquisition costs of $819 have been expensed during the nine months ended September 30, 2024. For the period from the acquisition date to September 30, 2024, Till Payments contributed revenue of $28,460 and net loss of $9,603. The net loss includes the amortization of identifiable intangible assets acquired.
10
Nuvei Corporation
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2024 and 2023
(in thousands of US dollars, except for share and per share amounts)
Purchase Price Allocation
The following table summarizes the preliminary amounts of assets acquired and liabilities assumed at the acquisition date for the acquisition:
| Till Payments $ | |||||
| Assets acquired | |||||
| Cash | 28,815 | ||||
| Trade and other receivables | 19,761 | ||||
| Prepaid expenses | 1,880 | ||||
| Property and equipment | 7,309 | ||||
| Processor deposits | 6,202 | ||||
| Deferred tax assets | 4,412 | ||||
| Other non-current assets | 459 | ||||
| Intangible assets | |||||
| Software | 1,393 | ||||
| Trademarks | 875 | ||||
| Technologies | 23,078 | ||||
| Partner and merchant relationships | 776 | ||||
| 94,960 | |||||
| Liabilities assumed | |||||
| Trade and other payables | (15,162) | ||||
| Other current liabilities | (150) | ||||
| Income taxes payable | (148) | ||||
| Loans and borrowings | (38,450) | ||||
| Other non-current liabilities | (132) | ||||
| 40,918 | |||||
| Total consideration | |||||
| Cash paid | 30,000 | ||||
| Loan settled as part of the business combination | 6,905 | ||||
| 36,905 | |||||
| Gain on business combination | 4,013 | ||||
In the nine months ended September 30, 2024, the Company repaid $33,267 of loans and borrowings assumed at the acquisition date.
11
Nuvei Corporation
Notes to Condensed Interim Consolidated Financial Statements
September 30, 2024 and 2023
(in thousands of US dollars, except for share and per share amounts)
Transactions for the nine months ended September 30, 2023
Paya Holdings Inc.
On February 22, 2023, the Company acquired 100% of the shares of Paya Holdings Inc. ("Paya"), a leading U.S. provider of integrated payment and frictionless commerce solutions, for a total consideration of $1,401,261, comprised of $1,391,435 in cash and $9,826 of the portion of replacement share-based awards that was considered part of the consideration transferred. The cash consideration included the settlement by the Company of seller-related payments of $51,876 paid by Paya immediately prior to closing and thereby increased the calculated purchase price.
Other
On March 1, 2023, the Company acquired certain assets of a service provider. The Company determined that the transaction met the definition of a business combination. The total cash consideration for this acquisition was $10,000.
12
Nuvei Corporation
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2024 and 2023
(in thousands of US dollars, except for share and per share amounts)
Purchase Price Allocation
The following table summarizes the final amounts of assets acquired and liabilities assumed at the acquisition date for acquisitions in the nine months ended September 30, 2023:
| Paya $ | Other $ | Total $ | |||||||||
| Assets acquired | |||||||||||
| Cash | 21,657 | — | 21,657 | ||||||||
| Segregated funds | 244,798 | — | 244,798 | ||||||||
| Trade and other receivables | 23,263 | — | 23,263 | ||||||||
| Inventory | 293 | — | 293 | ||||||||
| Prepaid expenses | 2,816 | — | 2,816 | ||||||||
| Property and equipment | 5,419 | 12 | 5,431 | ||||||||
| Processor deposits | 385 | — | 385 | ||||||||
| Intangible assets | |||||||||||
| Software | 3,131 | — | 3,131 | ||||||||
| Trademarks | 16,607 | — | 16,607 | ||||||||
| Technologies | 178,173 | 6,908 | 185,081 | ||||||||
| Partner and merchant relationships | 455,364 | — | 455,364 | ||||||||
Goodwill1 | 864,172 | 3,193 | 867,365 | ||||||||
| 1,816,078 | 10,113 | 1,826,191 | |||||||||
| Liabilities assumed | |||||||||||
| Trade and other payables | (30,037) | (113) | (30,150) | ||||||||
| Current portion of loans and borrowings | (1,142) | — | (1,142) | ||||||||
| Other current liabilities | (3,142) | — | (3,142) | ||||||||
| Due to merchants | (244,798) | — | (244,798) | ||||||||
| Income taxes payable | (1,696) | — | (1,696) | ||||||||
| Loans and borrowings | (2,492) | — | (2,492) | ||||||||
| Other non-current liabilities | (131,510) | — | (131,510) | ||||||||
| 1,401,261 | 10,000 | 1,411,261 | |||||||||
| Total consideration | |||||||||||
| Cash paid | 1,391,435 | 10,000 | 1,401,435 | ||||||||
| Share-based payments (note 16) | 9,826 | — | 9,826 | ||||||||
| 1,401,261 | 10,000 | 1,411,261 | |||||||||
1 Goodwill mainly consists of future growth, assembled workforce and expected synergies, which were not recorded separately since they did not meet the recognition criteria for identifiable intangible assets. Goodwill arising from the Paya acquisition is not deductible for income tax purposes.
13
Nuvei Corporation
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2024 and 2023
(in thousands of US dollars, except for share and per share amounts)
5. Trade and other receivables
| September 30, 2024 | December 31, 2023 | |||||||
$ | $ | |||||||
| Trade receivables | 108,401 | 74,409 | ||||||
| Due from processing banks | 12,766 | 21,403 | ||||||
| Other receivables | 13,230 | 9,943 | ||||||
| Total | 134,397 | 105,755 | ||||||
6. Trade and other payables
| September 30, 2024 | December 31, 2023 | |||||||
| $ | $ | |||||||
| Trade payables | 91,787 | 70,125 | ||||||
| Accrued bonuses and other compensation-related liabilities | 67,354 | 52,155 | ||||||
| Sales tax payable | 8,805 | 7,295 | ||||||
| Interest payable | 1,974 | 3,982 | ||||||
| Due to merchants not related to segregated funds | 15,914 | 29,105 | ||||||
| Other accrued liabilities | 10,959 | 16,753 | ||||||
| 196,793 | 179,415 | |||||||
14
Nuvei Corporation
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2024 and 2023
(in thousands of US dollars, except for share and per share amounts)
7. Loans and borrowings
The terms and conditions of the Company’s loans and borrowings are as follows:
| September 30, 2024 | December 31, 2023 | ||||||||||||||||
| Notes | Facility | Carrying amount | Facility | Carrying amount | |||||||||||||
| $ | $ | $ | $ | ||||||||||||||
| Amended and restated credit facilities | (a) | ||||||||||||||||
| Term loan | 1,258,626 | 1,234,733 | 1,275,000 | 1,248,270 | |||||||||||||
| Revolving credit facility | 800,000 | — | 800,000 | — | |||||||||||||
| Total | 1,234,733 | 1,248,270 | |||||||||||||||
| Lease liabilities | 13,275 | 12,274 | |||||||||||||||
| 1,248,008 | 1,260,544 | ||||||||||||||||
| Current portion of loans and borrowings | (6,833) | (12,470) | |||||||||||||||
| Loans and borrowings | 1,241,175 | 1,248,074 | |||||||||||||||
The facility amount represents the principal amount of each credit facility. The carrying amount of loans and borrowings is presented net of unamortized deferred financing fees. Financing fees relating to the issuance of loans and borrowings are amortized over the term of the debt using the effective interest rate method. The continued availability of the credit facilities is subject to the Company’s ability to maintain a total leverage ratio of less than or equal to 5.00 : 1.00 as at September 30, 2024 and prior to March 31, 2025 (5.00 : 1.00 as of December 31, 2023), and with the ratio decreasing by 0.25 year over year every March 31, until it reaches 4.00 : 1.00 for the period on or after March 31, 2028. The total leverage ratio considers the Company’s consolidated net debt, calculated as long-term debt less certain unrestricted cash, to consolidated adjusted EBITDA, calculated in accordance with the terms of the credit facility. The Company is in compliance with all applicable covenants as at September 30, 2024 and December 31, 2023.
a) Amended and restated credit facilities
i)Loans drawn in US dollars under the term loan facilities bear interest at the Term SOFR (in addition to a 0.10% credit spread adjustment) plus 3.00% per annum or the ABR1 rate plus 4.00% per annum. Loans drawn in US dollars under the revolving credit facility bear interest at the Term SOFR plus 2.50% per annum or the ABR1 rate plus 1.50% per annum until March 31, 2024. Thereafter, the revolving facility will bear interest at (a) the Term SOFR plus a margin ranging from 2.25% to 2.75% or (b) an alternate base rate plus a margin ranging from 1.25% to 1.75%, in each case, based on a total leverage ratio. As at September 30, 2024, interest rate on the outstanding Term loan facilities was 8.35% or 7.91% after giving effect to the interest rate swap (Note 14) (December 31, 2023 – 8.46% or 8.27% after giving effect to the interest rate swap).
ii)Loans drawn in Canadian dollars ("CAD") under the credit facilities bear interest at the Canadian prime rate plus 1.50% per annum or Term Canadian Overnight Repo Rate Average ("CORRA") rate plus 2.50% per annum. As at September 30, 2024 and December 31, 2023 there was no loan denominated in CAD.
iii)Loans drawn in Euros under the credit facilities bear interest at the EURO InterBank Offered Rate ("EURIBOR") rate plus 2.50% per annum. As at September 30, 2024 and December 31, 2023, there was no loan denominated in Euros.
15
Nuvei Corporation
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2024 and 2023
(in thousands of US dollars, except for share and per share amounts)
iv)Loans drawn in Sterling under the credit facilities bear interest at the Sterling OverNight Index Average ("SONIA") rate plus 2.50% per annum. As at September 30, 2024 and December 31, 2023, there was no loan denominated in Sterling.
1 The Alternate Base Rate is defined as a rate per annum equal to the higher of a) Federal funds effective rate + 0.50%; b) Adjusted Term SOFR for a one-month tenor plus 1%; c) Prime Rate; and d) 1.00%.
Daylight overdraft credit facility
On May 10, 2024, the Company entered into a daylight overdraft credit facility of $30,000 CAD (or US dollar equivalent) to assist with intraday merchant settlement requirements. This facility bears interest at Canadian prime rate plus 3.00% per annum on Canadian dollar overdrafts or US Base rate plus 3.00% per annum on US dollar overdrafts. As of September 30, 2024, the credit facility was undrawn.
Letter of credit
As at September 30, 2024, the Company had letters of credit issued totaling $58,355 (December 31, 2023 - $56,175). Letters of credit do not reduce the amount that can be drawn on the Company's revolving credit facility.
8. Share capital
The Company had the following share capital transactions:
2024
The Company issued 2,568,034 Subordinate Voting Shares for a cash consideration of $16,029 during the nine months ended September 30, 2024 following the exercise of stock options and the settlement of Restricted Share Units ("RSUs").
During the nine months ended September 30, 2024 the Board of Directors declared total cash dividends of $0.30 per subordinate voting share and multiple voting share.
On November 12, 2024, the Board of Directors approved and declared a regular cash dividend of $0.10 per subordinate voting share and multiple voting share payable on December 12, 2024 to shareholders of record on November 26, 2024. Should the Proposed transaction be completed before the record date, the dividend will not be paid. Accordingly, payment of the dividend will be made on December 12, 2024 if the Proposed transaction is not completed prior to the record date of November 26, 2024.
There were 76,064,619 Multiple Voting Shares and 65,931,755 Subordinate Voting Shares outstanding as at September 30, 2024.
2023
On March 20, 2023, the Board approved a normal-course issuer bid ("NCIB") to purchase for cancellation a maximum of 5,556,604 Subordinate Voting Shares, representing approximately 10% of the Company’s "public float" (as defined in the TSX Manual) of Subordinate Voting Shares as at March 8, 2023. The Company was authorized to make purchases under the NCIB during the period from March 22, 2023 to March 21, 2024 in accordance with the requirements of the TSX and the Nasdaq and applicable securities laws. During the nine months ended September 30, 2023, the Company repurchased and cancelled 1,350,000 Subordinate Voting Shares for a total consideration, including transaction costs, of $56,042.
16
Nuvei Corporation
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2024 and 2023
(in thousands of US dollars, except for share and per share amounts)
9. Revenue and expenses by nature
| Three months ended September 30 | Nine months ended September 30 | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||
| $ | $ | $ | $ | |||||||||||
| Revenues | ||||||||||||||
| Merchant transaction and processing services revenue | 347,224 | 302,616 | 1,012,461 | 862,064 | ||||||||||
| Other revenue | 3,722 | 2,236 | 9,459 | 6,312 | ||||||||||
| Interest revenue | 6,672 | — | 16,285 | — | ||||||||||
| 357,618 | 304,852 | 1,038,205 | 868,376 | |||||||||||
| Cost of revenue | ||||||||||||||
| Processing cost | 69,683 | 54,397 | 198,825 | 160,620 | ||||||||||
| Cost of goods sold | 2,368 | 1,253 | 5,995 | 3,552 | ||||||||||
| 72,051 | 55,650 | 204,820 | 164,172 | |||||||||||
| Selling, general and administrative expenses | ||||||||||||||
| Commissions | 76,696 | 59,721 | 213,909 | 158,288 | ||||||||||
| Employee compensation | 68,648 | 52,418 | 194,243 | 151,548 | ||||||||||
| Share-based payments | 14,898 | 34,042 | 65,297 | 105,484 | ||||||||||
| Depreciation and amortization | 39,105 | 36,544 | 113,940 | 100,125 | ||||||||||
| Professional fees | 12,998 | 8,760 | 37,770 | 48,752 | ||||||||||
| Transaction losses | 2,433 | 1,642 | 6,347 | 5,177 | ||||||||||
| Other | 24,330 | 24,155 | 66,195 | 64,281 | ||||||||||
| 239,108 | 217,282 | 697,701 | 633,655 | |||||||||||
17
Nuvei Corporation
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2024 and 2023
(in thousands of US dollars, except for share and per share amounts)
10. Net finance cost
| Three months ended September 30 | Nine months ended September 30 | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||
| $ | $ | $ | $ | |||||||||||
| Finance income | ||||||||||||||
| Interest income | (1,163) | (2,713) | (2,551) | (9,049) | ||||||||||
| Finance cost | ||||||||||||||
| Interest on loans and borrowings (excluding lease liabilities) | 28,237 | 29,201 | 86,241 | 75,559 | ||||||||||
| Change in fair value of share repurchase liability | — | — | — | 571 | ||||||||||
| Interest expense on lease liabilities | 149 | 171 | 492 | 520 | ||||||||||
| Other interest expense | 659 | 681 | 1,741 | 1,189 | ||||||||||
| Accelerated amortization of deferred financing fees | — | — | 174 | — | ||||||||||
| 29,045 | 30,053 | 88,648 | 77,839 | |||||||||||
| Net finance cost | 27,882 | 27,340 | 86,097 | 68,790 | ||||||||||
11. Share-based payment arrangements
The Omnibus Incentive Plan permits the Board of Directors to grant awards of options, RSUs, Performance Share Units ("PSUs") and Deferred Share Units (“DSUs”) to eligible participants.
RSUs, PSUs and DSUs are settled by the issuance of shares at the settlement date. DSUs vest immediately as they are granted for past services. The RSUs and PSUs vest over a period of up to three years. RSUs, PSUs and DSUs participants are eligible to receive RSUs, PSUs or DSUs dividend equivalents with the same vesting conditions under the Nuvei Omnibus Incentive Plan. Under the Paya equity plan, RSU holders are eligible to receive dividends in cash, payable upon settlement if all vesting conditions are met.
18
Nuvei Corporation
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2024 and 2023
(in thousands of US dollars, except for share and per share amounts)
Share-based payments continuity
The table below summarizes the changes in the outstanding RSUs, PSUs, DSUs, and stock options for the nine months ended September 30, 2024:
| Stock options | |||||||||||||||||
| Restricted share units | Performance share units | Deferred share units | Quantity | Weighted average exercise price | |||||||||||||
| $ | |||||||||||||||||
| Outstanding, beginning of period | 7,357,279 | 1,332,903 | 113,835 | 8,147,423 | 57.86 | ||||||||||||
| Forfeited | (259,634) | (8,671) | (14) | (70,007) | 39.91 | ||||||||||||
| Granted | 875,476 | 290,738 | 38,853 | 41,301 | 33.22 | ||||||||||||
| Dividend equivalents | 61,641 | 14,075 | 1,116 | — | — | ||||||||||||
| Exercised | (598,961) | — | (10,146) | (1,958,927) | 8.18 | ||||||||||||
| Outstanding, end of period | 7,435,801 | 1,629,045 | 143,644 | 6,159,790 | 73.70 | ||||||||||||
| Exercisable, end of period | 1,631,748 | 143,888 | 143,644 | 2,965,875 | 46.16 | ||||||||||||
Granted - weighted average grant date fair value 2024 | $32.19 | $32.22 | $31.92 | 4.40 | — | ||||||||||||
The PSUs, RSUs and DSUs grant date fair value was determined by using the quoted share price on the date of issuance. During the three months ended June 30, 2024, 290,738 PSUs awarded included performance conditions and the right to these units will vest upon meeting the related performance criteria. These units have a maximum payout of 200% and could result in an additional 290,738 shares being issued.
12. Income taxes
Domestic Pillar Two legislation has been enacted in Canada and Bulgaria, which are main jurisdictions where Pillar Two income tax exposures arise for the Company. Income tax expense for the three and nine months ended September 30, 2024 included $5 and $8 million, respectively, of current tax expense related to Pillar Two legislation. For more information on Pillar two legislation, refer to Note 17 of the audited annual consolidated financial statements for the year ended December 31, 2023.
19
Nuvei Corporation
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2024 and 2023
(in thousands of US dollars, except for share and per share amounts)
13. Net income (loss) per share
Diluted net income (loss) per share excludes all dilutive potential shares if their effect is anti-dilutive as well as all potential shares for which performance conditions have not yet been met as of the reporting date. For the three and nine months ended September 30, 2024 and 2023, anti-dilutive stock options, RSUs and PSUs were excluded from the calculation of diluted net income (loss) per share when their effect was anti-dilutive.
| Three months ended September 30 | Nine months ended September 30 | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||
| $ | $ | $ | $ | |||||||||||
| Net income (loss) attributable to common shareholders of the Company (basic and diluted) | 15,364 | (19,814) | 11,966 | (19,669) | ||||||||||
| Weighted average number of common shares outstanding – basic | 141,954,687 | 139,138,382 | 140,736,389 | 139,209,728 | ||||||||||
| Effect of dilutive securities | 6,496,277 | — | 6,732,553 | — | ||||||||||
| Weighted average number of common shares outstanding – diluted | 148,450,964 | 139,138,382 | 147,468,942 | 139,209,728 | ||||||||||
| Net income (loss) per share attributable to common shareholders of the Company: | ||||||||||||||
| Basic | 0.11 | (0.14) | 0.09 | (0.14) | ||||||||||
| Diluted | 0.10 | (0.14) | 0.08 | (0.14) | ||||||||||
14. Determination of fair values
Certain of the Company’s accounting policies and disclosures require the determination of fair value for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes using the following methods.
Financial assets and financial liabilities
In establishing fair value, the Company uses a fair value hierarchy based on levels as defined below:
•Level 1: defined as observable inputs such as quoted prices in active markets.
•Level 2: defined as inputs other than quoted prices in active markets that are either directly or indirectly observable.
•Level 3: defined as inputs that are based on little or no observable market data, therefore requiring entities to develop their own assumptions.
The Company has determined that, excluding the derivative financial instrument, the carrying amounts of its current financial assets and financial liabilities approximate their fair value given the short-term nature of these instruments.
The fair value of the variable interest rate non-current liabilities approximates the carrying amount as the liabilities bear interest at a rate that varies according to the market rate.
20
Nuvei Corporation
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2024 and 2023
(in thousands of US dollars, except for share and per share amounts)
As at September 30, 2024 and December 31, 2023, financial instruments measured at fair value in the Condensed Interim Consolidated Financial Statements of financial position were as follows:
| Fair value hierarchy | September 30, 2024 | December 31, 2023 | |||||||||
| $ | $ | ||||||||||
| Assets | |||||||||||
| Investments measured at fair value through profit or loss | Level 1 | 1,306 | 1,255 | ||||||||
| Derivative financial asset - Interest rate swap | Level 2 | 692 | 677 | ||||||||
| Investments measured at fair value through profit or loss | Level 3 | 2,245 | 2,444 | ||||||||
| Investments in equity instrument designated at fair value through other comprehensive income | Level 3 | 27,844 | 25,862 | ||||||||
| Liabilities | |||||||||||
| Derivative financial liability - Interest rate swap | Level 2 | 10,172 | 7,780 | ||||||||
| Contingent considerations | Level 3 | 3,099 | — | ||||||||
Interest rate swaps
In August 2024, the Company entered into an interest rate swap agreement maturing August 31, 2027 with a notional amount of $200,000 where the Company pays a fixed interest rate of 3.62% and receives Term SOFR in order to hedge a portion of its future variable interest payments.
In September 2023, the Company entered into an interest rate swap agreement maturing September 30, 2026 with a notional amount of $300,000 where the Company pays a fixed interest rate of 4.67% and receives Term SOFR in order to hedge a portion of its future variable interest payments.
The Company has elected to use hedge accounting for both interest rate swaps. These derivatives are carried at fair value and are presented in other current assets and liabilities and other non-current liabilities in the consolidated statements of financial position.
Fair value of the interest rate swaps is calculated as the present value of the estimated future cash flows. Estimated future cash flows are discounted using a yield curve which reflects the relevant benchmark interbank rate used by market participants for this purpose when pricing interest rate swaps.
Level 3 fair value measurement items
The following table presents the changes in level 3 items for the nine months ended September 30, 2024:
| Investments measured at fair value through profit or loss | Contingent considerations | Investments measured at fair value through other comprehensive income | |||||||||
| $ | $ | $ | |||||||||
| Balance as at December 31, 2023 | 2,444 | — | 25,862 | ||||||||
| Acquisition | — | 3,099 | 2,500 | ||||||||
| Disposal | (173) | — | — | ||||||||
| Effect of movements in exchange rates | (26) | — | (518) | ||||||||
| Balance as at September 30, 2024 | 2,245 | 3,099 | 27,844 | ||||||||
21
Nuvei Corporation
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2024 and 2023
(in thousands of US dollars, except for share and per share amounts)
Fair value remeasurement of level 3 instruments is recognized in selling, general and administrative expenses. Investments measured at fair value through profit and loss and through other comprehensive income are recognized on the statement of financial position in other non-current assets. Below are the assumptions and valuation methods used in the level 3 fair value measurements:
•During July 2024, the Company entered into a distributor commission buyout agreement for a total consideration of $1,335. In September 2024, the Company entered into a distributor commission buyout agreement with an independent sales organization. The agreement included an initial consideration of $75,000 CAD and a contingent consideration to be measured twelve months following the effective date. The fair value of the contingent consideration is determined using a formula specified in the purchase agreement. The main assumption is the forecast of financial performance. Additionally, the agreement includes an attrition guarantee. The Company recognized a total amount of $59,491 as distributor commission buyout, presented in intangible assets in the consolidated statement of financial position, which includes the initial consideration and variable consideration.
•On March 15, 2023, the Company acquired an equity interest in a private company for a total cash consideration of $25,000. The company designated this equity investment at fair value through other comprehensive income. The fair value is estimated using a market approach, which is the revenue multiple.
15. Related party transactions
Transactions with key management personnel
Key management personnel compensation comprises the following:
| Three months ended September 30 | Nine months ended September 30 | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||
| $ | $ | $ | $ | |||||||||||
| Salaries and short-term employee benefits | 2,307 | 1,874 | 6,302 | 6,524 | ||||||||||
| Share-based payments | 16,528 | 18,848 | 45,859 | 56,531 | ||||||||||
| 18,835 | 20,722 | 52,161 | 63,055 | |||||||||||
Other related party transactions
| Three months ended September 30 | Nine months ended September 30 | ||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||
| $ | $ | $ | $ | ||||||||||||||
| Expenses – Travel | (i) | 228 | 269 | 1,367 | 1,216 | ||||||||||||
(i)In the normal course of operations, the Company receives services from a company owned by a shareholder of the Company.
22
Nuvei Corporation
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2024 and 2023
(in thousands of US dollars, except for share and per share amounts)
16. Supplementary cash flow disclosure
| Nine months ended September 30 | ||||||||
| 2024 | 2023 | |||||||
| $ | $ | |||||||
| Changes in non-cash working capital items: | ||||||||
| Trade and other receivables | (25,849) | (17,133) | ||||||
| Inventory | (63) | 97 | ||||||
| Prepaid expenses | (2,995) | (2,299) | ||||||
| Contract assets | (1,911) | (911) | ||||||
| Trade and other payables | 1,086 | 15,326 | ||||||
| Other current and non-current liabilities | (1,777) | 1,447 | ||||||
| (31,509) | (3,473) | |||||||
17. Contingencies
From time to time, the Company is involved in various litigation matters arising in the ordinary course of its business. The Company is also exposed to possible uncertain tax positions in certain jurisdictions. Management does not expect that the resolution of those matters, either individually or in the aggregate, will have a material effect on the Company’s Condensed Interim Consolidated Financial Statements.
18. Subsequent event
On October 30, 2024, the Company entered into an overdraft credit facility of $50,000 to fund interchange fees which are billed and collected from merchants monthly. This new facility replaces a service fee arrangement previously in place. This new facility bears interest at Daily Simple SOFR rate plus 2.50% per annum.
23
EXHIBIT 99.2
Management’s Discussion & Analysis
Nuvei Corporation
For the three and nine months ended September 30, 2024 and 2023
(in thousands of US dollars)
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024 and 2023
As used in this management’s discussion and analysis of financial condition and results of operations (“MD&A”), unless the context indicates or requires otherwise, all references to the “Company”, “Nuvei”, “we”, “us” or “our” refer to Nuvei Corporation together with our subsidiaries, on a consolidated basis.
This MD&A dated November 12, 2024, should be read in conjunction with the Company’s unaudited condensed interim consolidated financial statements, along with the related notes thereto for the three and nine months ended September 30, 2024 and 2023 (the “Interim Financial Statements”), as well as with our consolidated financial statements along with the notes related thereto for the years ended December 31, 2023 and 2022. The financial information presented in this MD&A is derived from the Interim Financial Statements which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) applicable to the preparation of interim financial statements, including International Accounting Standard ("IAS") 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”). All amounts are in US dollars except where otherwise indicated. Additionally, tables included in this MD&A are presented in thousands of US dollars, unless otherwise indicated. This MD&A is presented as of the date of the Interim Financial Statements and is current to that date unless otherwise stated.
We have prepared this MD&A with reference to National Instrument 51-102 – Continuous Disclosure Obligations of the Canadian Securities Administrators. Under the U.S./Canada Multijurisdictional Disclosure System, we are permitted to prepare this MD&A in accordance with Canadian disclosure requirements, which requirements are different than those of the United States.
FORWARD-LOOKING INFORMATION
This MD&A contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking information”) within the meaning of applicable securities laws. Such forward-looking information may include, without limitation, information with respect to our objectives and the strategies to achieve these objectives, as well as information with respect to our beliefs, plans, expectations, anticipations, estimates and intentions. This forward-looking information is identified by the use of terms and phrases such as “may”, “would”, “should”, “could”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe”, or “continue”, the negative of these terms and similar terminology, including references to assumptions, although not all forward-looking information contains these terms and phrases. Particularly, information regarding our expectations of future results, performance, achievements, prospects or opportunities or the markets in which we operate, expectations regarding industry trends and the size and growth rates of addressable markets, our business plans and growth strategies, addressable market opportunity for our solutions, expectations regarding growth and cross-selling opportunities and intention to capture an increasing share of addressable markets, the costs and success of our sales and marketing efforts, intentions to expand existing relationships, further penetrate verticals, enter new geographical markets, expand into and further increase penetration of international markets, intentions to selectively pursue and successfully integrate acquisitions, and expected acquisition outcomes, cost savings, synergies and benefits, including with respect to the acquisition of Paya, future investments in our business and anticipated capital expenditures, our intention to continuously innovate, differentiate and enhance our platform and solutions, expected pace of ongoing legislation of regulated activities and industries, our competitive strengths and competitive position in our industry, and expectations regarding our revenue, revenue mix and the revenue generation potential of our solutions and expectations regarding our margins and future profitability, as well as statements regarding the proposed take private transaction with Advent International L.P. (“Advent”), alongside existing Canadian shareholders Philip Fayer, certain investment funds managed by Novacap Management Inc. and Caisse de dépôt et placement du Québec, including the proposed timing and various steps contemplated in respect of the transaction and statements regarding the plans, objectives, and intentions of Philip Fayer, certain investment funds managed by Novacap Management Inc., Caisse de dépôt et placement du Québec or Advent, are forward-looking information. Economic and geopolitical uncertainties, including regional conflicts and wars, including potential impacts of sanctions, may also heighten the impact of certain factors described herein.
In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances.
2
Forward-looking information is based on management's beliefs and assumptions and on information currently available to management, regarding, among other things, assumptions regarding foreign exchange rate, competition, political environment and economic performance of each region where the Company operates and general economic conditions and the competitive environment within our industry, including the following assumptions: (a) the Company will continue to effectively execute against its key strategic growth priorities, without any material adverse impact from macroeconomic or geopolitical headwinds on its or its customers' business, financial condition, financial performance, liquidity or any significant reduction in demand for its products and services, (b) the economic conditions in our core markets, geographies and verticals, including resulting consumer spending and employment, remaining at close to current levels, (c) assumptions as to foreign exchange rates and interest rates, including inflation, (d) the Company's continued ability to manage its growth effectively, (e) the Company's ability to continue to attract and retain key talent and personnel required to achieve its plans and strategies, including sales, marketing, support and product and technology operations, in each case both domestically and internationally, (f) the Company’s ability to successfully identify, complete, integrate and realize the expected benefits of past and recent acquisitions and manage the associated risks, as well as future acquisitions, (g) the absence of adverse changes in legislative or regulatory matters, (h) the Company’s continued ability to upskill and modify its compliance capabilities as regulations change or as the Company enters new markets or offers new products or services, (i) the Company’s continued ability to access liquidity and capital resources, including its ability to secure debt or equity financing on satisfactory terms, and (j) the absence of adverse changes in current tax laws. Unless otherwise indicated, forward-looking information does not give effect to the potential impact of any mergers, acquisitions, divestitures or business combinations that may be announced or closed after the date hereof. Although the forward-looking information contained herein is based upon what we believe are reasonable assumptions, investors are cautioned against placing undue reliance on this information since actual results may vary from the forward-looking information.
Forward-looking information involves known and unknown risks and uncertainties, many of which are beyond our control, that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to, the risk factors described in greater detail under “Risk Factors” of the Company's annual information form ("AIF") and the “Risk Factors" section in this MD&A, such as: risks relating to our business, industry and overall economic uncertainty; the rapid developments and change in our industry; substantial competition both within our industry and from other payments providers; challenges implementing our growth strategy; challenges to expand our product portfolio and market reach; changes in foreign currency exchange rates, interest rates, consumer spending and other macroeconomic factors affecting our customers and our results of operations; challenges in expanding into new geographic regions internationally and continuing our growth within our markets; challenges in retaining existing customers, increasing sales to existing customers and attracting new customers; reliance on third-party partners to distribute some of our products and services; risks associated with future acquisitions, partnerships or joint-ventures; challenges related to economic and political conditions, business cycles and credit risks of our customers, such as wars like the Russia-Ukraine and Middle East conflicts and related economic sanctions; the occurrence of a natural disaster, a widespread health epidemic or pandemic or other similar events; history of net losses and additional significant investments in our business; our level of indebtedness; challenges to secure financing on favorable terms or at all; difficulty to maintain the same rate of revenue growth as our business matures and to evaluate our future prospects; inflation; challenges related to a significant number of our customers being small and medium businesses ("SMBs"); a certain degree of concentration in our customer base and customer sectors; compliance with the requirements of payment networks; reliance on, and compliance with, the requirements of acquiring banks and payment networks; challenges related to the reimbursement of chargebacks from our customers; financial liability related to the inability of our customers (merchants) to fulfill their requirements; our bank accounts being located in multiple territories and relying on banking partners to maintain those accounts; decline in the use of electronic payment methods; loss of key personnel or difficulties hiring qualified personnel; deterioration in relationships with our employees; impairment of a significant portion of intangible assets and goodwill; increasing fees from payment networks; misappropriation of end-user transaction funds by our employees; frauds by customers, their customers or others; coverage of our insurance policies; the degree of effectiveness of our risk management policies and procedures in mitigating our risk exposure; the integration of a variety of operating systems, software, hardware, web browsers and networks in our services; the costs and effects of pending and future litigation; various claims such as wrongful hiring of an employee from a competitor, wrongful use of confidential information of third parties by our employees, consultants or independent contractors or wrongful use of trade secrets by our employees of their former employers; deterioration in the quality of the products and services offered; managing our growth effectively;
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challenges from seasonal fluctuations on our operating results; changes in accounting standards; estimates and assumptions in the application of accounting policies; risks associated with less than full control rights of some of our subsidiaries and investments; challenges related to our holding company structure; impacts of climate change; development of AI and its integration in our operations, as well as risks relating to intellectual property and technology, risks related to data security incidents, including cyber-attacks, computer viruses, or otherwise which may result in a disruption of services or liability exposure; challenges regarding regulatory compliance in the jurisdictions in which we operate, due to complex, conflicting and evolving local laws and regulations and legal proceedings and risks relating to our Subordinate Voting Shares. These risks and uncertainties further include (but are not limited to) as concerns the proposed take private transaction with Advent, the failure of the parties to obtain the necessary regulatory approvals or to otherwise satisfy the conditions to the completion of the transaction, failure of the parties to obtain such approvals or satisfy such conditions in a timely manner, significant transaction costs or unknown liabilities, failure to realize the expected benefits of the transaction, and general economic conditions. Failure to obtain the necessary regulatory approvals, or the failure of the parties to otherwise satisfy the conditions to the completion of the transaction or to complete the transaction, may result in the transaction not being completed on the proposed terms, or at all. In addition, if the transaction is not completed, and the Company continues as a publicly-traded entity, there are risks that the announcement of the proposed transaction and the dedication of substantial resources of the Company to the completion of the transaction could have an impact on its business and strategic relationships (including with future and prospective employees, customers, suppliers and partners), operating results and activities in general, and could have a material adverse effect on its current and future operations, financial condition and prospects. Furthermore, in certain circumstances, the Company may be required to pay a termination fee pursuant to the terms of the arrangement agreement which could have a material adverse effect on its financial position and results of operations and its ability to fund growth prospects and current operations.
Our dividend policy is at the discretion of the Board. Any future determination to declare cash dividends on our securities will be made at the discretion of our Board, subject to applicable Canadian laws, and will depend on a number of factors, including our financial condition, results of operations, capital requirements, contractual restrictions (including covenants contained in our credit facilities), general business conditions and other factors that our Board may deem relevant. Further, our ability to pay dividends, as well as make share repurchases, will be subject to applicable laws and contractual restrictions contained in the instruments governing our indebtedness, including our credit facility. Any of the foregoing may have the result of restricting future dividends or share repurchases.
Consequently, all of the forward-looking information contained herein is qualified by the foregoing cautionary statements, and there can be no guarantee that the results or developments that we anticipate will be realized or, even if substantially realized, that they will have the expected consequences or effects on our business, financial condition or results of operation. Unless otherwise noted or the context otherwise indicates, the forward-looking information contained herein represents our expectations as of the date hereof or as of the date it is otherwise stated to be made, as applicable, and is subject to change after such date. However, we disclaim any intention or obligation or undertaking to update or amend such forward-looking information whether as a result of new information, future events or otherwise, except as may be required by applicable law.
Overview
We are a Canadian fintech company accelerating the business of our customers around the world. Our modular, flexible and scalable technology allows leading companies to accept next-gen payments, offer a multitude of payout options and benefit from card issuing, banking, and risk management services. We believe we are differentiated by our proprietary technology platform, which is purpose-built for high-growth eCommerce, integrated payments and business to business (“B2B”). Our platform enables customers to pay and/or accept payments worldwide regardless of their customers’ location, device or preferred payment method. Our solutions span the entire payments stack and include a fully integrated payments engine with global processing capabilities, a turnkey solution for frictionless payment experiences and a broad suite of data-driven business intelligence tools and risk management services. Connecting businesses to their customers in more than 200 markets worldwide, with local acquiring in 50 of those markets, 150 currencies and 720 alternative payment methods (“APMs”), we provide the technology and insights for customers and partners to succeed locally and globally with one integration – propelling them further, faster.
While global commerce continues to pivot digitally, eCommerce channels are converging and creating new and fast-growing opportunities for businesses of all sizes. Rapidly scaling across these commerce channels,
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however, can be complex and costly for businesses that rely on multiple providers in each local market. For example, customers may use disparate and varied systems for gateway services, payment processing, online fraud prevention, business intelligence and more, creating operational distractions and workflow challenges, which result in additional costs and financial inefficiencies. In parallel, consumers expect a consistent and frictionless transaction experience across all channels, whether from a mobile device or computer. As a result, we believe businesses increasingly seek payment providers such as Nuvei who have a unified approach and can offer end-to-end solutions to help them navigate this complex environment.
We distribute our products and technology through three channels: (i) Global Commerce, (ii) B2B, Government and Independent software vendors (“ISV”), and (iii) SMBs. Our approach to distribution is designed to enable us to efficiently market our payments and technology solutions at scale and is customized by both region and vertical to optimize sales. By relying on our local sales teams and partners who act as trusted technology providers to our customers, we believe we are able to serve more customers globally and grow with them as they grow their businesses and expand into new markets. We focus on the needs of our customers and how we can help them grow their sales, and in turn our volume, with them. Due to the scalable nature of our business model and the inherent operating leverage, increases in volume drive profitable revenue growth.
Our revenue is primarily based on sales volume generated from our customers’ daily sales and through various transaction and subscription-based fees for our modular technology. Examples of our modular technology include gateway, global processing, APMs, currency management, global payouts, risk management, card issuing, open banking, data reporting, reconciliation tools, in addition to a long list of other value-added capabilities. Our revenue is largely recurring due to the mission-critical nature of our product and service offerings and deep integration of our payments technology into our customers’ ERP systems. We believe the depth and breadth of our payment capabilities help our customers establish and expand their presence in emerging commerce channels across many markets. This enables us to develop long-standing relationships with our customers, which in turn drive strong retention and significant cross-selling opportunities.
Financial Highlights for the Three Months Ended September 30, 2024 Compared to 2023:
•Total volume(a) increased by 27% to $61.3 billion from $48.2 billion;
•Revenue increased by 17% to $357.6 million from $304.9 million
•Net income increased to $17.2 million from a net loss of $18.1 million;
•Adjusted EBITDA(b) decreased by 2% to $108.8 million from $110.7 million;
•Adjusted net income(b) decreased by 8% to $52.3 million from $56.8 million;
•Net income per diluted share increased to $0.10 from a net loss per diluted share of $0.14;
•Adjusted net income per diluted share(b) decreased by 13% to $0.34 from $0.39 ;
•Adjusted EBITDA less capital expenditures(b) decreased to $92.6 million from $97.5 million.
Financial Highlights for the Nine Months Ended September 30, 2024 Compared to 2023:
•Total volume(a) increased by 30% to $183.1 billion from $141.2 billion;
•Revenue increased 20% to $1,038.2 million from $868.4 million;
•Net income increased to $17.8 million from a net loss of $14.8 million;
•Adjusted EBITDA(b) increased by 7% to $340.4 million from $317.3 million;
•Adjusted net income(b) decreased by 1% to $177.4 million from $179.3 million;
•Net income per diluted share increased to $0.08 from a net loss per diluted share of $0.14;
•Adjusted net income per diluted share(b) decreased by 4% to $1.16 from $1.21;
•Adjusted EBITDA less capital expenditures(b)increased by 4% to $288.0 million from $277.0 million; and,
•Cash dividends declared were $42.3 million.
(a)Total volume does not represent revenue earned by the Company, but rather the total dollar value of transactions processed by merchants under contractual agreement with the Company. See "Non-IFRS and Other Financial Measures".
(b)Adjusted EBITDA, Adjusted net income, Adjusted net income per diluted share and Adjusted EBITDA less capital expenditures are non-IFRS financial measures and non-IFRS ratios. These measures are not recognized measures under IFRS and do not have standardized meanings prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. See “Non-IFRS and Other Financial Measures”.
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Proposed take private transaction
On April 1, 2024, the Company entered into a definitive arrangement agreement to be taken private by Advent, alongside existing Canadian shareholders Philip Fayer, certain investment funds managed by Novacap Management Inc., and Caisse de dépôt et placement du Québec, in an all-cash transaction which values the Company at an enterprise value of approximately $6.3 billion. Subject to certain conditions, Advent will acquire all the issued and outstanding Subordinate Voting Shares and any Multiple Voting Shares that are not Rollover Shares (as defined in the “Risk Factors” section of this MD&A), for a price of $34.00 per share, in cash (“Proposed transaction”). This price represents a premium of approximately 56% to the closing price of the Subordinate Voting Shares on the Nasdaq on March 15, 2024, the last trading day prior to media reports concerning a potential transaction involving the Company, and a premium of approximately 48% to the 90-day volume weighted average trading price1 per Subordinate Voting Share as of such date.
The Proposed transaction will be implemented by way of a statutory plan of arrangement under the Canada Business Corporations Act. The Proposed transaction was approved by shareholders at a special meeting held on June 18, 2024 and received court approval on June 20, 2024. The proposed transaction remains subject to customary closing conditions, including receipt of key regulatory approvals (a number of which were received and/or for which the waiting period has expired as of the date hereof, with a limited number of approvals remaining outstanding), is not subject to any financing condition and, assuming the timely receipt of all required key regulatory approvals, is expected to close in the fourth quarter of 2024.
The Arrangement Agreement (as defined in the “Risk Factors” section of this MD&A) provides for a non-solicitation covenant on the part of Nuvei. Nuvei may in the future be required to pay a termination fee of US$150 million in certain circumstances. A reverse termination fee of US$250 million would be payable to Nuvei if the transaction is not completed in certain circumstances.
Following completion of the transaction, it is expected that the Subordinate Voting Shares will be delisted from each of the Toronto Stock Exchange and the Nasdaq and that Nuvei will cease to be a reporting issuer in all applicable Canadian jurisdictions and will deregister the Subordinate Voting Shares with the U.S. Securities and Exchange Commission (the “SEC”). Please see “Risk Factors” below.]
Till Payments acquisition
On January 5, 2024, we acquired 100% of the shares of Till Payments, an ISV focused payment technology company headquartered in Sydney, Australia, for a total consideration of $36.9 million, comprised of $30.0 million in cash and $6.9 million of a loan receivable that was considered part of the consideration transferred.
Quarterly dividend
On November 12, 2024, the Board of Directors approved and declared a quarterly cash dividend of $0.10 per Subordinate Voting Share and Multiple Voting Share payable on December 12, 2024 to shareholders of record on November 26, 2024.
In accordance with the Plan of Arrangement, shareholders are entitled to dividends with a record date prior to the effective date of the Proposed transaction. Should the Proposed transaction be completed before the record date, the dividend will not be paid. Accordingly, payment of the dividend will be made on December 12, 2024 if the Proposed transaction is not completed prior to the record date of November 26, 2024.
1 Based on Canadian composite (TSX and all Canadian marketplaces) and U.S. composite (Nasdaq and all U.S. marketplaces).
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Non-IFRS and Other Financial Measures
Our Interim Financial Statements have been prepared in accordance with IFRS applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting, as issued by the IASB. The information presented in this MD&A includes non-IFRS financial measures, non-IFRS financial ratios and supplementary financial measures, namely Adjusted EBITDA, Adjusted net income, Adjusted net income per basic share, Adjusted net income per diluted share, Adjusted EBITDA less capital expenditures and Total volume. These measures are not recognized measures under IFRS and do not have standardized meanings prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing further understanding of our results of operations from our perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of the Company’s financial statements reported under IFRS. These measures are used to provide investors with additional insight of our operating performance and thus highlight trends in Nuvei’s business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use these non-IFRS and other financial measures in the evaluation of issuers. We also use these measures to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. We believe these measures are important additional measures of our performance, primarily because they and similar measures are used widely among others in the payment technology industry as a means of evaluating a company’s underlying operating performance.
Non-IFRS Financial Measures
Adjusted EBITDA: We use Adjusted EBITDA as a means to evaluate operating performance, by eliminating the impact of non-operational or non-cash items. Adjusted EBITDA is defined as net income (loss) before finance costs (recovery), finance income, depreciation and amortization, income tax expense, acquisition, integration and severance costs, share-based payments and related payroll taxes, loss (gain) on foreign currency exchange, and legal settlement and other.
Adjusted EBITDA less capital expenditures: We use Adjusted EBITDA less capital expenditures (which we define as acquisition of intangible assets and property and equipment) as a supplementary indicator of our operating performance.
Adjusted net income: We use Adjusted net income as an indicator of business performance and profitability with our current tax and capital structure. Adjusted net income is defined as net income (loss) before acquisition, integration and severance costs, share-based payments and related payroll taxes, loss (gain) on foreign currency exchange, amortization of acquisition-related intangible assets, and the related income tax expense or recovery for these items. Adjusted net income also excludes change in redemption value of liability-classified common and preferred shares, change in fair value of share repurchase liability and accelerated amortization of deferred financing fees and legal settlement and other.
Non-IFRS Financial Ratios
Adjusted net income per basic share and per diluted share: We use Adjusted net income per basic share and per diluted share as an indicator of performance and profitability of our business on a per share basis. Adjusted net income per basic share and per diluted share means Adjusted net income less net income attributable to non-controlling interest divided by the basic and diluted weighted average number of common shares outstanding for the period, respectively. The number of share-based awards used in the diluted weighted average number of common shares outstanding in the Adjusted net income per diluted share calculation is determined using the treasury stock method as permitted under IFRS.
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Supplementary Financial Measures
We monitor the following key performance indicators to help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. Our key performance indicators may be calculated in a manner that differs from similar key performance indicators used by other companies.
Total volume: We believe Total volume is an indicator of performance of our business. Total volume and similar measures are used widely among others in the payments industry as a means of evaluating a company’s performance. We define Total volume as the total dollar value of transactions processed in the period by customers under contractual agreement with us. Total volume does not represent revenue earned by us. Total volume includes acquiring volume, where we are in the flow of funds in the settlement transaction cycle, gateway/technology volume, where we provide our gateway/technology services but are not in the flow of funds in the settlement transaction cycle, as well as the total dollar value of transactions processed relating to APMs and payouts. Since our revenue is primarily sales volume and transaction-based, generated from merchants’ daily sales and through various fees for value-added services provided to our customers, fluctuations in Total volume will generally impact our revenue.
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Reconciliation of Adjusted EBITDA and Adjusted EBITDA Less Capital Expenditures to Net Income
The following table reconciles Adjusted EBITDA and Adjusted EBITDA less capital expenditures to net income (loss) for the periods indicated:
| Three months ended September 30 | Nine months ended September 30 | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||
| (In thousands of US dollars) | $ | $ | $ | $ | ||||||||||
| Net income (loss) | 17,235 | (18,120) | 17,776 | (14,792) | ||||||||||
| Finance cost | 29,045 | 30,053 | 88,648 | 77,839 | ||||||||||
| Finance income | (1,163) | (2,713) | (2,551) | (9,049) | ||||||||||
| Depreciation and amortization | 39,105 | 36,544 | 113,940 | 100,125 | ||||||||||
| Income tax expense | 7,914 | 9,667 | 20,878 | 16,031 | ||||||||||
Acquisition, integration and severance costs(a) | 7,675 | 5,120 | 24,295 | 37,000 | ||||||||||
Share-based payments and related payroll taxes(b) | 15,416 | 34,102 | 70,158 | 106,423 | ||||||||||
| Loss (gain) on foreign currency exchange | (6,572) | 13,033 | 10,933 | 520 | ||||||||||
Legal settlement and other(c) | 131 | 3,014 | (3,663) | 3,192 | ||||||||||
| Adjusted EBITDA | 108,786 | 110,700 | 340,414 | 317,289 | ||||||||||
| Acquisition of property and equipment, and intangible assets | (16,233) | (13,205) | (52,375) | (40,250) | ||||||||||
| Adjusted EBITDA less capital expenditures | 92,553 | 97,495 | 288,039 | 277,039 | ||||||||||
(a)These expenses relate to:
(i)professional, legal, consulting, accounting and other fees and expenses related to our acquisition and financing activities, including the expenses related to the Proposed transaction. For the three months and nine months ended September 30, 2024, these expenses were $2.4 million and $16.8 million ($3.4 million and $23.0 million for the three months and nine months ended September 30, 2023). These costs are presented in the professional fees line item of selling, general and administrative expenses.
(ii)acquisition-related compensation was $0.7 million and $2.4 million for the three months and nine months ended September 30, 2024 and $0.6 million and $3.5 million for the three months and nine months ended September 30, 2023. These costs are presented in the employee compensation line item of selling, general and administrative expenses.
(iii)change in deferred purchase consideration for previously acquired businesses. No amount was recognized for the three months and nine months ended September 30, 2024 and 2023. These amounts are presented in the contingent consideration adjustment line item of selling, general and administrative expenses.
(iv)severance and integration expenses, which were $4.6 million and $5.1 million for the three months and nine months ended September 30, 2024 ($1.1 million and $10.6 million for the three months and nine months ended September 30, 2023). These expenses are presented in selling, general and administrative expenses and cost of revenue.
(b)These expenses are recognized in connection with stock options and other awards issued under share-based plans as well as related payroll taxes that are directly attributable to share-based payments. For the three months and nine months ended September 30, 2024, the expenses consisted of non-cash share-based payments of $14.9 million and $65.3 million ($34.0 million and $105.5 million for the three months and nine months ended September 30, 2023), $0.5 million and $4.9 million for related payroll taxes ($0.1 million and $0.9 million for the three months and nine months ended September 30, 2023),
(c)This primarily represents legal settlements and associated legal costs, as well as non-cash gains, losses and provisions and certain other costs. These costs are presented in selling, general and administrative expenses. For the nine months ended September 30, 2024, the gain consisted mainly of a gain on business combination of $4.0 million.
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Reconciliation of Adjusted Net Income and Adjusted Net Income per Basic Share and per Diluted Share to Net Income
The following table reconciles net income to Adjusted net income for the periods indicated:
| Three months ended September 30 | Nine months ended September 30 | |||||||||||||
| (In thousands of US dollars except for share and per share amounts) | 2024 | 2023 | 2024 | 2023 | ||||||||||
| $ | $ | $ | $ | |||||||||||
| Net income (loss) | 17,235 | (18,120) | 17,776 | (14,792) | ||||||||||
| Change in fair value of share repurchase liability | — | — | — | 571 | ||||||||||
| Accelerated amortization of deferred financing fees | — | — | 174 | — | ||||||||||
Amortization of acquisition-related intangible assets(a) | 27,338 | 27,356 | 80,821 | 74,896 | ||||||||||
Acquisition, integration and severance costs(b) | 7,675 | 5,120 | 24,295 | 37,000 | ||||||||||
Share-based payments and related payroll taxes(c) | 15,416 | 34,102 | 70,158 | 106,423 | ||||||||||
| Loss (gain) on foreign currency exchange | (6,572) | 13,033 | 10,933 | 520 | ||||||||||
Legal settlement and other(d) | 131 | 3,014 | (3,663) | 3,192 | ||||||||||
| Adjustments | 43,988 | 82,625 | 182,718 | 222,602 | ||||||||||
Income tax expense related to adjustments(e) | (8,912) | (7,744) | (23,120) | (28,503) | ||||||||||
| Adjusted net income | 52,311 | 56,761 | 177,374 | 179,307 | ||||||||||
| Net income attributable to non-controlling interest | 1,871 | 1,694 | 5,810 | 4,877 | ||||||||||
| Adjusted net income attributable to the common shareholders of the Company | 50,440 | 55,067 | 171,564 | 174,430 | ||||||||||
| Weighted average number of common shares outstanding | ||||||||||||||
| Basic | 141,954,687 | 139,138,382 | 140,736,389 | 139,209,728 | ||||||||||
| Diluted | 148,450,964 | 142,386,834 | 147,468,942 | 143,632,801 | ||||||||||
Adjusted net income per share attributable to common shareholders of the Company(f) | ||||||||||||||
| Basic | 0.36 | 0.40 | 1.22 | 1.25 | ||||||||||
| Diluted | 0.34 | 0.39 | 1.16 | 1.21 | ||||||||||
(a)This line item relates to amortization expense taken on intangible assets created from the purchase price adjustment process on acquired companies and businesses and resulting from a change in control of the Company.
(b)These expenses relate to:
(i)professional, legal, consulting, accounting and other fees and expenses related to our acquisition and financing activities, including the expenses related to the Proposed transaction. For the three months and nine months ended September 30, 2024, these expenses were $2.4 million and $16.8 million ($3.4 million and $23.0 million for the three months and nine months ended September 30, 2023). These costs are presented in the professional fees line item of selling, general and administrative expenses.
(ii)acquisition-related compensation was $0.7 million and $2.4 million for the three months and nine months ended September 30, 2024 and $0.6 million and $3.5 million for the three months and nine months ended September 30, 2023. These costs are presented in the employee compensation line item of selling, general and administrative expenses.
(iii)change in deferred purchase consideration for previously acquired businesses. No amount was recognized for the three months and nine months ended September 30, 2024 and 2023. These amounts are presented in the contingent consideration adjustment line item of selling, general and administrative expenses.
(iv)severance and integration expenses, which were $4.6 million and $5.1 million for the three months and nine months ended September 30, 2024 ($1.1 million and $10.6 million for the three months and nine months ended September 30, 2023). These expenses are presented in selling, general and administrative expenses and cost of revenue.
(c)These expenses are recognized in connection with stock options and other awards issued under share-based plans as well as related payroll taxes that are directly attributable to share-based payments. For the three months and nine months ended September 30, 2024, the expenses consisted of non-cash share-based payments of $14.9 million and $65.3 million ($34.0 million and $105.5 million for the three
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months and nine months ended September 30, 2023), $0.5 million and $4.9 million for related payroll taxes ($0.1 million and $0.9 million for the three months and nine months ended September 30, 2023).
(d)This primarily represents legal settlements and associated legal costs, as well as non-cash gains, losses and provisions and certain other costs. These costs are presented in selling, general and administrative expenses. For the nine months ended September 30, 2024, the gain consisted mainly of a gain on business combination of $4.0 million.
(e)This line item reflects income tax expense on taxable adjustments using the tax rate of the applicable jurisdiction.
(f)The number of share-based awards used in the diluted weighted average number of common shares outstanding in the Adjusted net income per diluted share calculation is determined using the treasury stock method as permitted under IFRS.
Summary of Factors Affecting Our Performance
We believe that the growth and future success of our business depends on many factors, including those described below. While each of these factors presents significant opportunities for our business, they also pose important challenges, some of which are discussed below as well as in the section entitled “Risks Relating to Our Business and Industry” of our AIF for the year ended December 31, 2023, and in our other filings with the Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission, all of which can be found on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov.
Growing with our Existing Customers. Our success is directly correlated with our customers’ success. We focus on the high-growth markets within omnichannel payments and intend to grow alongside our existing customers as they grow their businesses and expand into new markets, including online retail, online marketplaces, digital goods and services, regulated online gaming, social gaming, financial services, government, healthcare, non-profit and travel. Key characteristics of these verticals are inherent growth, longevity and propensity to operate globally.
In addition, our existing customers represent a significant opportunity for us to cross-sell and up-sell products and services with limited incremental sales and marketing expenses. As our customers increase their business volume, we can offer more solutions from our proprietary integrated modular platform. Our future revenue growth and the achievement and maintenance of profitability is dependent upon our ability to maintain existing customer relationships and to continue to expand our customers’ use of our comprehensive suite of solutions.
Acquiring New Customers. Our future revenue growth will also depend upon the effectiveness of our sales and marketing efforts. We have significant sales and marketing experience in capturing and serving SMBs and third-party partners in North America and large enterprises in Europe. We intend to leverage this experience and enable customer base expansion by targeting large enterprises in North America and elsewhere. Key to our success in achieving customer base expansion is continued investment in our direct sales team and further leveraging our broad and diversified network of partners.
Expanding in Regions Internationally. We plan to expand and deepen our footprint in geographies where we have an emerging presence today, such as Asia Pacific, Middle East and Africa and Latin America. Our expansion has also been driven by the needs of our customers. For each new country where we seek to expand, we focus on understanding the needs of the local market and invest to develop relationships, while gaining an appreciation for the appropriate local regulatory and compliance frameworks. We believe this will help our growth strategy in achieving global presence and connectivity across all targeted markets.
Investing in our Technology and Product Portfolio. We believe our technology-first culture enables us to enhance our offerings to remain at the forefront of payments innovation. Specifically, our proprietary integrated modular platform enables us to deliver comprehensive payments and technology solutions to power a convenient and secure transaction experience for our customers and their customers. Further investment in our platform is necessary to expand and keep our portfolio of services to our customers technologically current. Close collaboration with our customers through an ongoing communication feedback loop is also key, as it enables a better design and delivery of solutions that meet their specific and evolving needs.
Maintaining and Adding to our Acquiring Bank and Payment Network Relationships. We have built strong relationships with acquiring banks, APM providers and payment networks globally. The maintenance and/or expansion of these relationships and strong collaboration will be a key enabler in the pursuit of our growth strategies.
Adding new use cases and verticals to our technology. We are adding new use cases and verticals to our technology. For example, with the acquisition of Paya at the beginning of Fiscal 2023, we expanded our expertise to include under-penetrated verticals such as B2B, healthcare, government and non-profit. By adding these use cases to our existing offering, we are growing our total addressable market.
11
Adapting to Regulatory Changes. The nature of our product and services offerings necessitates that we adhere to strict regulatory regimes in the countries where we operate. Our operational teams are fully versed in the varying regulatory requirements applicable to our operations. As regulations change or as we enter new markets or launch new products and services with different regulatory requirements, we will continue to upskill and modify our compliance capabilities as appropriate, such as our customer underwriting, risk management, KYC and AML capabilities, in a manner to minimize disruption to our customers’ businesses.
Selectively Pursuing and Successfully Executing Acquisitions. We have in the past augmented, and intend in the future to continue to augment, our capabilities and organic growth with strategic acquisitions. Critical to our success is continuing to be highly disciplined in integrating acquisitions into our Company in a manner that allows us to fulfill the potential that these acquisitions bring.
Digital assets and cryptocurrencies. We generate a small portion of our revenue from customers operating in the digital assets and cryptocurrencies industry. Cryptocurrencies have historically and currently exhibit significant price volatility that have and could continue to adversely affect the operations of our customers in that industry, and, in turn, our results of operations and profitability. As a result, the Company is exposed to volatility in the cryptocurrency industry generally, including in sectors of the cryptocurrency industry that do not directly apply to the Company’s payment services business but that are integral to the cryptocurrency industry as a whole. Cryptocurrency market prices depend, directly or indirectly, on the prices set on exchanges and other trading venues, which are new and, in many cases, largely unregulated as compared to established, regulated exchanges for securities, derivatives and other currencies.
Foreign currency exchange rate fluctuations. Exchange rate fluctuations may negatively affect our results of operations. Our presentation currency is the US dollar. We derive the largest portions of our revenues and expenses in US dollars. Foreign currency exchange rate fluctuations have and may continue to negatively affect our revenue that is denominated in currency other than the US dollar. To the extent that we have significant revenues denominated in foreign currencies, any strengthening of the US dollar would reduce our revenue and any weakening of the US dollar would increase our revenue as measured in US dollars.
Middle East conflict. The current Middle East conflict may affect our business as we conduct some of our operations (which excludes production) and have employees, including some technology personnel, in the region. Since the beginning of the conflict on October 7, 2023, we have not seen any impact to our ongoing operations and we do not expect the situation to materially adversely affect our business. We will continue to monitor these developments while supporting the safety and well-being of our employees.
Key Components of Results of Operations
Revenue
Merchant Transaction and Processing Services. Revenues from our merchant transaction and processing services are derived primarily from eCommerce payment processing services, and stems from relationships with individual customers. Additionally, transaction and processing services revenues stem from contracts with financial service providers and other merchant acquirers. The contracts stipulate the types of services and set forth how fees will be incurred and calculated. Merchant transaction and processing services revenues are generated from processing electronic payment transactions for customers.
Our transaction and processing services revenue is primarily comprised of (a) fees calculated based on a percentage of the monetary value of transactions processed; (b) fees calculated based on the number of transactions processed; (c) service fees; or (d) some combination thereof that are associated with transaction and processing services.
We present revenue net of the interchange fees charged by the card issuing financial institutions and the fees charged by the payment networks when it is determined that we are acting as an agent and do not have the ability to direct the use of and obtain substantially all of the benefits of these services.
Other Revenue. We may sell hardware (“point-of-sale equipment”) as part of our contracts with customers. Hardware consists of terminals or gateway devices. We do not manufacture hardware. We purchase hardware from third party vendors and hold the hardware in inventory until purchased by a customer.
Interest revenue. We earn interest revenue on funds held on behalf of customers. While this is not revenue earned from contracts with customers, we present interest revenue on segregated funds in revenue since it is earned on customer funds that are held as part of our revenue generating activities.
12
For more information on our revenue recognition policies, refer to Note 3 of the annual consolidated financial statements for the year ended December 31, 2023.
Cost of Revenue
Processing Costs. Processing costs consist of fees paid to processing suppliers. When we are the primary obligor providing payment processing services, we record processing fees paid to processing suppliers as a cost of revenue. If we are not the primary obligor providing payment processing services, processing fees are netted from the revenue recorded for such transactions and we do not record separate processing fees as a cost of revenue. Processing costs also include losses resulting from our transaction guarantee solutions.
Costs of Goods Sold. Costs of goods sold consist primarily of costs associated with selling point-of-sale equipment, such as the cost of acquiring the equipment, including purchase price, expenses associated with a third-party fulfillment company, shipping, handling and inventory adjustments.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses primarily represent the amounts associated with commissions, employee compensation, share-based payments, and depreciation and amortization.
Commissions. Commissions are comprised of incentives paid to third party partners for referring customers.
Employee Compensation. Employee compensation consists of salaries, incentives and benefits (excluding share-based payments which are disclosed separately) earned by our employees. Employee compensation includes costs related to the various functions of the Company, including technology, sales and marketing, operations, as well as various business support functions.
Share-Based Payments. Share-based payments consist of our equity-settled share-based compensation earned by our employees, directors and consultants.
Depreciation. Depreciation consists of depreciation of property and equipment, primarily point-of-sale equipment, office and computer equipment, furniture and fixtures, leasehold improvements and right of use assets over buildings. We calculate depreciation using the straight-line method over the useful life of the relevant asset or over the remaining lease term, as applicable.
Amortization. Amortization consists primarily of amortization of intangible assets, which consist of internally generated and externally purchased software that is used in providing processing services to customers. It also includes trademarks, technologies, distributor commission buyouts and partner and merchant relationships that are acquired by the Company. Distributor commission buyouts represent amounts paid to independent sales organizations to buy out their rights to future residual commission payments. These intangible assets are amortized on a straight-line basis over the course of the relevant asset’s useful life.
Selling, general and administrative expenses also consist of professional fees, transaction losses, contingent consideration adjustments and other expenses.
Net Finance Costs
Net finance costs primarily represent amounts associated with:
Interest on Loans and Borrowings. Interest expense consists primarily of interest incurred on term loans outstanding.
Change in Fair Value of Share Repurchase Liability. When the Company enters into an automatic share purchase plan, it recognizes a share repurchase liability. The share repurchase liability is a financial liability accounted for at fair value through profit or loss, and as such, is remeasured at fair market value until it is settled or upon termination of the agreement, with fair value changes being recognized in finance costs.
Accelerated amortization of deferred financing fees. When the Company extinguishes or modifies a financial liability and the transaction is treated as a debt extinguishment, the Company recognizes unamortized deferred financing fees and other related gains or losses in finance costs.
13
Interest Income. Interest income consists of interest received on cash and cash equivalents belonging to the Company.
Loss (Gain) on Foreign Currency Exchange
Loss (gain) on foreign currency exchange results from monetary items that are held by the Company or its subsidiaries in a currency different than its functional currency. These items are translated into the functional currency using the exchange rates prevailing at the date of the transactions or when the items are re-measured at the end of the reporting period. The resulting gains and losses subsequently being recognized are recorded in loss (gain) on foreign currency exchange.
Income Tax Expense
Income tax expense comprises current and deferred taxes. Current and deferred taxes are recognized in profit or loss except to the extent that they relate to a business combination, or items recognized directly in equity or in other comprehensive income (loss).
14
Results of Operations
The following table outlines our consolidated profit or loss and comprehensive income or loss information for the three months and nine months ended September 30, 2024 and 2023:
| Three months ended September 30 | Nine months ended September 30 | |||||||||||||
| (In thousands of US dollars except for share and per share amounts) | 2024 | 2023 | 2024 | 2023 | ||||||||||
| $ | $ | $ | $ | |||||||||||
| Revenue | 357,618 | 304,852 | 1,038,205 | 868,376 | ||||||||||
| Cost of revenue | 72,051 | 55,650 | 204,820 | 164,172 | ||||||||||
| Gross profit | 285,567 | 249,202 | 833,385 | 704,204 | ||||||||||
| Selling, general and administrative expenses | 239,108 | 217,282 | 697,701 | 633,655 | ||||||||||
| Operating profit | 46,459 | 31,920 | 135,684 | 70,549 | ||||||||||
| Finance income | (1,163) | (2,713) | (2,551) | (9,049) | ||||||||||
| Finance cost | 29,045 | 30,053 | 88,648 | 77,839 | ||||||||||
| Net finance cost | 27,882 | 27,340 | 86,097 | 68,790 | ||||||||||
| Loss (gain) on foreign currency exchange | (6,572) | 13,033 | 10,933 | 520 | ||||||||||
| Income (loss) before income tax | 25,149 | (8,453) | 38,654 | 1,239 | ||||||||||
| Income tax expense | 7,914 | 9,667 | 20,878 | 16,031 | ||||||||||
| Net income (loss) | 17,235 | (18,120) | 17,776 | (14,792) | ||||||||||
| Other comprehensive income (loss), net of tax | ||||||||||||||
| Foreign operations – foreign currency translation differences | 8,483 | 1,257 | 11,097 | (2,753) | ||||||||||
| Change in fair value of financial instruments designated as cash flow hedges | (7,187) | (1,008) | (628) | (1,008) | ||||||||||
| Reclassification of change in fair value of financial instruments designated as cash flow hedges to profit and loss | (742) | — | (1,747) | — | ||||||||||
| Comprehensive income (loss) | 17,789 | (17,871) | 26,498 | (18,553) | ||||||||||
| Net income (loss) attributable to: | ||||||||||||||
| Common shareholders of the Company | 15,364 | (19,814) | 11,966 | (19,669) | ||||||||||
| Non-controlling interest | 1,871 | 1,694 | 5,810 | 4,877 | ||||||||||
| 17,235 | (18,120) | 17,776 | (14,792) | |||||||||||
| Comprehensive income (loss) attributable to: | ||||||||||||||
| Common shareholders of the Company | 15,918 | (19,565) | 20,688 | (23,430) | ||||||||||
| Non-controlling interest | 1,871 | 1,694 | 5,810 | 4,877 | ||||||||||
| 17,789 | (17,871) | 26,498 | (18,553) | |||||||||||
| Weighted average number of common shares outstanding | ||||||||||||||
| Basic | 141,954,687 | 139,138,382 | 140,736,389 | 139,209,728 | ||||||||||
| Diluted | 148,450,964 | 139,138,382 | 147,468,942 | 139,209,728 | ||||||||||
| Net income (loss) per share attributable to common shareholders of the Company | ||||||||||||||
| Basic | 0.11 | (0.14) | 0.09 | (0.14) | ||||||||||
| Diluted | 0.10 | (0.14) | 0.08 | (0.14) | ||||||||||
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Results of Operations for the Three Months Ended September 30, 2024 and 2023
Revenue
| Three months ended September 30 | Change | ||||||||||||||||
| (In thousands of US dollars, except for percentages) | 2024 | 2023 | |||||||||||||||
| $ | $ | $ | % | ||||||||||||||
| Revenue | 357,618 | 304,852 | 52,766 | 17 | |||||||||||||
For the three months ended September 30, 2024, revenue increased by $52.8 million or 17% as compared to the three months ended September 30, 2023. The increase in revenue mainly reflects organic revenue growth, mainly from the increase in revenue in our global commerce channel and in our B2B, Government and ISV channel as well as contribution from the Till Payments acquisition of $10.8 million and was partially offset by unfavorable changes in foreign currency exchange rates year-over-year.
Total volume increased to $61.3 billion for the three months ended September 30, 2024 from $48.2 billion in the three months ended September 30, 2023.
Cost of Revenue
(In thousands of US dollars, except for percentages) | Three months ended September 30 | Change | |||||||||||||||
| 2024 | 2023 | $ | % | ||||||||||||||
| Cost of revenue | $72,051 | $55,650 | 16,401 | 29 | |||||||||||||
| As a percentage of revenue | 20.1 | % | 18.3 | % | |||||||||||||
For the three months ended September 30, 2024, cost of revenue increased by $16.4 million or 29% compared to the three months ended September 30, 2023, mainly driven by higher processing costs stemming from higher volume on our guarantee solutions, the contribution from Till Payments in the 2024 period as well as organic revenue growth.
Cost of revenue as a percentage of revenue increased from 18.3% for the three months ended September 30, 2023 to 20.1% for the three months ended September 30, 2024 mainly due to higher processing costs resulting from an increase in volume on our guarantee solutions.
Selling, General and Administrative Expenses
| Three months ended September 30 | Change | ||||||||||||||||
| (In thousands of US dollars, except for percentages) | 2024 | 2023 | |||||||||||||||
| $ | $ | $ | % | ||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||
| Commissions | 76,696 | 59,721 | 16,975 | 28 | |||||||||||||
| Employee compensation | 68,648 | 52,418 | 16,230 | 31 | |||||||||||||
| Share-based payments | 14,898 | 34,042 | (19,144) | (56) | |||||||||||||
| Depreciation and amortization | 39,105 | 36,544 | 2,561 | 7 | |||||||||||||
| Professional fees | 12,998 | 8,760 | 4,238 | 48 | |||||||||||||
| Other | 26,763 | 25,797 | 966 | 4 | |||||||||||||
| 239,108 | 217,282 | 21,826 | 10 | ||||||||||||||
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For the three months ended September 30, 2024, selling, general and administrative expenses increased by $21.8 million or 10% as compared to the three months ended September 30, 2023 primarily due to the following:
Commissions. During the three months ended September 30, 2024, commission expense increased by $17.0 million or 28% as compared to the three months ended September 30, 2023. The increase was primarily driven by revenue growth over the same period, as well as contribution from Till Payments.
Employee Compensation. During the three months ended September 30, 2024, employee compensation increased by $16.2 million or 31% as compared to the three months ended September 30, 2023. The employee compensation includes costs related to the various functions of the Company, including technology, sales and marketing, human resources, and administration. The increase year-over-year was mainly due to higher headcount to support and accelerate growth, as well as contribution from Till Payments.
Share-based Payments. For the three months ended September 30, 2024, share-based payments decreased by $19.1 million or 56% as compared to the three months ended September 30, 2023 mainly due to adjustments relating to expected achievement of performance-based units' conditions. Share-based payments represented 4% of revenue for the three months ended September 30, 2024 compared to 11% of revenue for the three months ended September 30, 2023.
Depreciation and Amortization. Depreciation of property and equipment expenses and amortization of intangible assets for the three months ended September 30, 2024 increased by $2.6 million or 7% as compared to the three months ended September 30, 2023. The increase was mainly due to higher amortization of intangible assets acquired as part of the Till Payments acquisition and amortization of a distributor commission buyout completed in the three months ended September 30, 2024.
Professional Fees. For the three months ended September 30, 2024, professional fees increased by $4.2 million or 48% compared to the three months ended September 30, 2023. The increase mainly reflected higher costs in connection with the proposed take private transaction.
Other. For the three months ended September 30, 2024, other expenses increased by $1.0 million compared to the three months ended September 30, 2023. The increase was mainly due to higher transaction losses of $0.8 million in the current period resulting from higher volume.
Net Finance Cost
| Three months ended September 30 | Change | ||||||||||||||||
| (In thousands of US dollars, except for percentages) | 2024 | 2023 | |||||||||||||||
| $ | $ | $ | % | ||||||||||||||
| Finance income | |||||||||||||||||
| Interest income | (1,163) | (2,713) | 1,550 | (57) | |||||||||||||
| Finance cost | |||||||||||||||||
| Interest on loans and borrowings (excluding lease liabilities) | 28,237 | 29,201 | (964) | (3) | |||||||||||||
| Other | 808 | 852 | (44) | (5) | |||||||||||||
| Net finance cost | 27,882 | 27,340 | 542 | 2 | |||||||||||||
During the three months ended September 30, 2024, net finance cost increased by $0.5 million or 2% as compared to the three months ended September 30, 2023. The cost was primarily due to the following items:
Interest income. A decrease in finance income of $1.6 million during the three months ended September 30, 2024.
Interest on Loans and Borrowings. The decrease of $1.0 million was mainly due to lower loans and borrowings outstanding in the three months ended September 30, 2024 resulting from mandatory and voluntary debt repayments in 2023 and 2024 as well as the reduction in interest expense due to the effect of interest rate swaps.
17
Loss (Gain) on Foreign Currency Exchange
| Three months ended September 30 | Change | ||||||||||||||||
| (In thousands of US dollars, except for percentages) | 2024 | 2023 | |||||||||||||||
| $ | $ | $ | % | ||||||||||||||
| Loss (gain) on foreign currency exchange | (6,572) | 13,033 | (19,605) | n.m. | |||||||||||||
Gain on foreign currency exchange for the three months ended September 30, 2024 was $6.6 million compared to a loss of $13.0 million for the three months ended September 30, 2023. This was mainly due to currency fluctuations related to U.S. denominated debt and cash and cash equivalents held in our Canadian subsidiary.
Income Taxes
| Three months ended September 30 | Change | ||||||||||||||||
| (In thousands of US dollars, except for percentages) | 2024 | 2023 | $ | % | |||||||||||||
| Income tax expense | $7,914 | $9,667 | (1,753) | (18) | |||||||||||||
| Effective tax rate | 31.5 | % | (114.4) | % | |||||||||||||
Income tax expense for the three months ended September 30, 2024 was $7.9 million on net income before income tax of $25.1 million, representing an effective tax rate of 31.5% for the period. The effective income tax rate was different than the Canadian parent's statutory income tax rate of 26.5% mainly due to unfavorable impact from share-based payments, unrecognized tax benefits, acquisition costs and Pillar 2 income taxes accrual, which were partially offset by favorable impact of lower income tax rates in other jurisdictions.
Income tax expense for the three months ended September 30, 2023 was $9.7 million on income before income tax of $8.5 million, representing an effective tax rate of 114.4% for the period. The effective income tax rate was different than the Canadian parent's statutory income tax rate of 26.5% because it includes non-taxable foreign exchange losses and share-based payments of $34.0 million recognized in the three months ended September 30, 2023 that are non-deductible in most jurisdictions, as well as the impact of lower income tax rates in other jurisdictions.
Results of Operations for the Nine Months Ended September 30, 2024 and 2023
Revenue
| Nine months ended September 30 | Change | ||||||||||||||||
| (In thousands of US dollars, except for percentages) | 2024 | 2023 | |||||||||||||||
| $ | $ | $ | % | ||||||||||||||
| Revenue | 1,038,205 | 868,376 | 169,829 | 20 | |||||||||||||
For the nine months ended September 30, 2024, revenue increased by $169.8 million or 20% as compared to the nine months ended September 30, 2023. The increase in revenue mainly reflects organic revenue growth in our global commerce channel, the additional days of contribution from Paya of $44.8 million in the 2024 period and the contribution from Till Payments of $28.5 million.
Total volume increased to $183.1 billion from $141.2 billion for the nine months ended September 30, 2023.
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Cost of Revenue
(In thousands of US dollars, except for percentages) | Nine months ended September 30 | Change | |||||||||||||||
| 2024 | 2023 | $ | % | ||||||||||||||
| Cost of revenue | $204,820 | $164,172 | 40,648 | 25 | |||||||||||||
| As a percentage of revenue | 19.7 | % | 18.9 | % | |||||||||||||
For the nine months ended September 30, 2024, cost of revenue increased by $40.6 million or 25% as compared to the nine months ended September 30, 2023 mainly due to an increase of $38.2 million in processing costs. The increase in processing costs was mainly driven by organic growth in Total volume and, to a lesser extent, the additional contribution from Paya and Till Payments.
The cost of revenue as a percentage of revenue increased from 18.9% for the nine months ended September 30, 2023 to 19.7% for the nine months ended September 30, 2024 mainly due to the contribution from Paya and Till Payments, and higher processing costs related to increased volume in guarantee solutions.
Selling, General and Administrative Expenses
| Nine months ended September 30 | Change | ||||||||||||||||
| (In thousands of US dollars, except for percentages) | 2024 | 2023 | |||||||||||||||
| $ | $ | $ | % | ||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||
| Commissions | 213,909 | 158,288 | 55,621 | 35 | |||||||||||||
| Employee compensation | 194,243 | 151,548 | 42,695 | 28 | |||||||||||||
| Share-based payments | 65,297 | 105,484 | (40,187) | (38) | |||||||||||||
| Depreciation and amortization | 113,940 | 100,125 | 13,815 | 14 | |||||||||||||
| Professional fees | 37,770 | 48,752 | (10,982) | (23) | |||||||||||||
| Other | 72,542 | 69,458 | 3,084 | 4 | |||||||||||||
| 697,701 | 633,655 | 64,046 | 10 | ||||||||||||||
For the nine months ended September 30, 2024, selling, general and administrative expenses increased by $64.0 million or 10% as compared to the nine months ended September 30, 2023 primarily due to the following:
Commissions. During the nine months ended September 30, 2024, commission expense increased by $55.6 million or 35% as compared to the nine months ended September 30, 2023. The increase was primarily due to the additional contribution from Paya now reflected over the entire nine months of 2024 as well as organic growth and the contribution from Till Payments.
Employee Compensation. During the nine months ended September 30, 2024, employee compensation increased by $42.7 million or 28% as compared to the nine months ended September 30, 2023. Employee compensation includes costs related to the various functions of the Company, including technology, sales and marketing, human resources, and administration. The increase mainly reflects higher headcount mainly from organic growth, including growth in headcount in direct sales, account management, and sales enablement to drive future growth and execute on our strategy, as well as additional headcount resulting from the Paya and Till Payments acquisitions.
Share-based Payments. For the nine months ended September 30, 2024, share-based payments decreased by $40.2 million or 38% as compared to the nine months ended September 30, 2023 mainly due to adjustments relating to expected achievement of performance-based units' conditions. Share-based payments represented 6% of revenue for the nine months ended September 30, 2024 compared to 12% of revenue for the nine months ended September 30, 2023.
19
Depreciation and Amortization. Depreciation of property and equipment expenses and amortization of intangible assets for the nine months ended September 30, 2024 increased by $13.8 million or 14% as compared to the nine months ended September 30, 2023. The increase was primarily due to higher amortization of intangible assets acquired as part of the Paya and Till Payments acquisitions.
Professional Fees. For the nine months ended September 30, 2024, professional fees decreased by $11.0 million or 23% as compared to the nine months ended September 30, 2023. The decrease mainly reflected acquisition costs of $15.5 million for the Paya acquisition in the comparative period, partly offset by transaction costs related to the proposed take private transaction in 2024.
Other. For the nine months ended September 30, 2024, other expenses increased by $3.1 million compared to the nine months ended September 30, 2023. The increase was mostly due to the incremental contribution from the Paya and Till Payments acquisitions as well as higher technology expenses. The increase was partly offset by a gain on business combination of $4.0 million resulting from the Till Payments acquisition.
Net Finance Cost
| Nine months ended September 30 | Change | ||||||||||||||||
| (In thousands of US dollars, except for percentages) | 2024 | 2023 | |||||||||||||||
| $ | $ | $ | % | ||||||||||||||
| Finance income | |||||||||||||||||
| Interest income | (2,551) | (9,049) | 6,498 | (72) | |||||||||||||
| Finance cost | |||||||||||||||||
| Interest on loans and borrowings (excluding lease liabilities) | 86,241 | 75,559 | 10,682 | 14 | |||||||||||||
| Change in fair value of share repurchase liability | — | 571 | (571) | (100) | |||||||||||||
| Accelerated amortization of deferred financing fees | 174 | — | 174 | n.m. | |||||||||||||
| Other | 2,233 | 1,709 | 524 | 31 | |||||||||||||
| Net finance cost | 86,097 | 68,790 | 17,307 | 25 | |||||||||||||
During the nine months ended September 30, 2024, net finance cost increased by $17.3 million as compared to the nine months ended September 30, 2023. The increase was primarily due to the following items:
Interest income. The decrease in interest income of $6.5 million was mainly due to lower cash balances earning interest subsequent to the Paya acquisition in February 2023.
Interest on Loans and Borrowings. The increase of $10.7 million was mainly due to higher loans and borrowings balances and amortization of deferred financing fees in the nine months ended September 30, 2024 resulting from the incremental months of financing costs related to the Paya acquisition in the 2024 period.
Loss (Gain) on Foreign Currency Exchange
| Nine months ended September 30 | Change | ||||||||||||||||
| (In thousands of US dollars, except for percentages) | 2024 | 2023 | |||||||||||||||
| $ | $ | $ | % | ||||||||||||||
| Loss on foreign currency exchange | 10,933 | 520 | 10,413 | n.m. | |||||||||||||
Loss on foreign currency exchange for the nine months ended September 30, 2024 was $10.9 million compared to $0.5 million for the nine months ended September 30, 2023. This was mainly due to currency fluctuations related to U.S. denominated debt and cash and cash equivalents held in our Canadian subsidiary.
20
Income Taxes
| Nine months ended September 30 | Change | ||||||||||||||||
| (In thousands of US dollars, except for percentages) | 2024 | 2023 | |||||||||||||||
| $ | $ | $ | % | ||||||||||||||
| Income tax expense | 20,878 | 16,031 | 4,847 | 30 | |||||||||||||
| Effective tax rate | 54.0 | % | n.m. | ||||||||||||||
Income tax expense for the nine months ended September 30, 2024 was $20.9 million on income before income tax of $38.7 million. The effective income tax rate was higher than the Canadian parent's statutory income tax rate of 26.5% mainly due to the unfavorable impact from share-based payments, unrecognized tax benefits, acquisition costs and Pillar 2 income taxes accrual, which were partially offset by the favorable impact of lower income tax rates in other jurisdictions.
Income tax expense for the nine months ended September 30, 2023 was $16.0 million on income before income tax of $1.2 million. The effective income tax rate was higher than the Canadian parent's statutory income tax rate of 26.5% because it includes the unfavorable impact of share-based payments of $105.5 million recognized in the nine months ended September 30, 2023 that are non-deductible for income tax purposes in most jurisdictions and the impact of acquisition costs that are not deductible for income tax purposes, and was partially offset by the favorable impact of lower income tax rates in other jurisdictions.
21
Summary of Quarterly Results and Trend Analysis
| (In thousands of US dollars except for per share amounts) | Three months ended | |||||||||||||||||||||||||
| Sep. 30, | Jun. 30, | Mar. 31, | Dec. 31, | Sep. 30, | Jun. 30, | Mar. 31, | Dec. 31, | |||||||||||||||||||
| 2024 | 2024 | 2024 | 2023 | 2023 | 2023 | 2023 | 2022 | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Revenue | 357,618 | 345,478 | 335,109 | 321,517 | 304,852 | 307,026 | 256,498 | 220,339 | ||||||||||||||||||
| Cost of revenue | 72,051 | 68,039 | 64,730 | 58,734 | 55,650 | 53,926 | 54,596 | 50,166 | ||||||||||||||||||
| Gross profit | 285,567 | 277,439 | 270,379 | 262,783 | 249,202 | 253,100 | 201,902 | 170,173 | ||||||||||||||||||
| Selling, general and administrative expenses | 239,108 | 228,492 | 230,101 | 216,435 | 217,282 | 221,755 | 194,618 | 148,465 | ||||||||||||||||||
| Operating profit | 46,459 | 48,947 | 40,278 | 46,348 | 31,920 | 31,345 | 7,284 | 21,708 | ||||||||||||||||||
| Finance income | (1,163) | (676) | (712) | (234) | (2,713) | (961) | (5,375) | (7,267) | ||||||||||||||||||
| Finance cost | 29,045 | 29,625 | 29,978 | 43,495 | 30,053 | 29,318 | 18,468 | 9,214 | ||||||||||||||||||
| Net finance cost | 27,882 | 28,949 | 29,266 | 43,261 | 27,340 | 28,357 | 13,093 | 1,947 | ||||||||||||||||||
| Loss (gain) on foreign currency exchange | (6,572) | 8,555 | 8,950 | (10,621) | 13,033 | (11,115) | (1,398) | 4,663 | ||||||||||||||||||
| Income (loss) before income tax | 25,149 | 11,443 | 2,062 | 13,708 | (8,453) | 14,103 | (4,411) | 15,098 | ||||||||||||||||||
| Income tax expense (recovery) | 7,914 | 6,095 | 6,869 | (388) | 9,667 | 2,486 | 3,878 | 5,746 | ||||||||||||||||||
| Net income (loss) | 17,235 | 5,348 | (4,807) | 14,096 | (18,120) | 11,617 | (8,289) | 9,352 | ||||||||||||||||||
| Net income (loss) per share attributable to common shareholders of the Company | ||||||||||||||||||||||||||
| Basic | 0.11 | 0.02 | (0.05) | 0.08 | (0.14) | 0.07 | (0.07) | 0.06 | ||||||||||||||||||
| Diluted | 0.10 | 0.02 | (0.05) | 0.08 | (0.14) | 0.07 | (0.07) | 0.06 | ||||||||||||||||||
Adjusted EBITDA(a) | 108,786 | 116,760 | 114,868 | 120,052 | 110,700 | 110,307 | 96,282 | 85,685 | ||||||||||||||||||
Adjusted net income(a) | 52,311 | 62,564 | 62,499 | 68,629 | 56,761 | 58,093 | 64,453 | 68,036 | ||||||||||||||||||
Adjusted net income per share attributable to the common shareholders of the company(a) | ||||||||||||||||||||||||||
| Basic | 0.36 | 0.43 | 0.43 | 0.48 | 0.40 | 0.41 | 0.45 | 0.47 | ||||||||||||||||||
| Diluted | 0.34 | 0.41 | 0.41 | 0.47 | 0.39 | 0.39 | 0.44 | 0.47 | ||||||||||||||||||
(a)These amounts are non-IFRS measures. See “Non-IFRS and Other Financial Measures” section.
Quarterly Trend Analysis
The quarterly increase in revenue and cost of revenue in the last eight quarters was primarily due to Total volume organic growth, as well as contribution from the acquisition of Paya in the first quarter of 2023 and from the acquisition of Till Payments in the first quarter of 2024.
The quarterly increase in selling, general and administrative expenses in the last eight quarters was primarily due to organic growth and contribution from the acquisition of Paya in the first quarter of 2023 and, to a lesser extent, from the acquisition of Till Payments in the first quarter of 2024.
Net income for the three months ended March 31, 2023 was impacted by Paya-related acquisition costs of $15.5 million as well as costs related to ongoing acquisition integration activities. Net income for the three months ended June 30, 2023, September 30, 2023 and December 31, 2023 reflects higher finance cost and loss (gain) on foreign currency exchange. Finance cost for the three months ended December 31, 2023 increased sequentially, mainly reflecting the accelerated amortization of deferred financing fees of $15.1 million. Net income for the three months ended March 31, 2024 includes a $4.0 million gain on business acquisition which partly offset a loss on foreign currency exchange. Net income for the three months ended June 30, 2024 and September 30, 2024 were respectively impacted by a loss and a gain on foreign currency exchange.
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Financial Position Data
| (In thousands of US dollars, except for percentages) | September 30, 2024 | December 31, 2023 | Change | ||||||||||||||
| $ | $ | $ | % | ||||||||||||||
| Trade and other receivables | 134,397 | 105,755 | 28,642 | 27 | |||||||||||||
| Intangible assets | 1,331,859 | 1,305,048 | 26,811 | 2 | |||||||||||||
| Goodwill | 1,989,858 | 1,987,737 | 2,121 | — | |||||||||||||
| Total Assets | 5,222,557 | 5,135,267 | 87,290 | 2 | |||||||||||||
| Trade and other payables | 196,793 | 179,415 | 17,378 | 10 | |||||||||||||
| Loans and borrowings | 1,241,175 | 1,248,074 | (6,899) | (1) | |||||||||||||
| Total Liabilities | 3,126,867 | 3,091,052 | 35,815 | 1 | |||||||||||||
| Deficit | (255,226) | (224,902) | (30,324) | 13 | |||||||||||||
Trade and other receivables and payables. The increase mainly reflects the contribution from the Till Payments acquisition.
Total liabilities and Total assets. The increase in total liabilities and total assets was mainly due to the Till acquisition.
Deficit. The increase in deficit for the nine months ended September 30, 2024 of $30.3 million is primarily the result of dividends declared totaling $42.3 million, partly offset by the net income attributable to shareholders of $12.0 million.
Liquidity and Capital Resources
Overview
Our financial condition and liquidity are and will continue to be influenced by a variety of factors, including:
•Our ability to generate cash flows from our operations;
•The level of our outstanding indebtedness and the interest we are obligated to pay on this indebtedness; and
•Our capital expenditure requirements.
The general objectives of our capital management strategy are to ensure sufficient liquidity to pursue our organic growth strategy and undertake selective acquisitions, while maintaining a strong credit profile and a capital structure that maintains total leverage ratio within the limits set in the credit facilities.
Our primary source of liquidity is cash from operations, debt and equity financing. Our principal liquidity needs include investment in product and technology, operations, selling, general and administrative expenses and debt service, as well as our selective acquisitions.
Our capital is composed of net debt and shareholders’ equity. Net debt consists of debt less cash and cash equivalents. Our use of capital is for working capital requirements and capital expenditures, and to finance business acquisitions. We fund those requirements with our internally generated cash flows and funds drawn from our long-term credit facilities or via equity financings.
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The primary measure we use to monitor our financial leverage is our total leverage ratio, defined as the ratio of consolidated net debt outstanding, calculated as long-term debt less unrestricted cash, to consolidated adjusted EBITDA, calculated in accordance with the terms of the credit agreement. Under our amended and restated credit facility, we must maintain a total leverage ratio of less than or equal to 5.00 : 1.00 as at September 30, 2024 and prior to March 31, 2025 (5.00 : 1.00 as at December 31, 2023), with the ratio decreasing thereafter every March 31, until it reaches 4.00 : 1.00 for the period on and after March 31, 2028.
As at September 30, 2024, the Company was in compliance with all applicable covenants.
We believe that the Company's available cash and cash equivalents, cash flows generated from operations, loans and borrowings will be sufficient to meet our projected operating and capital expenditure requirements for at least the next 12 months.
Credit Facilities
Our current Amended and Restated credit facility is comprised of $1,259 million of term loans. Outstanding principal of the term loans is payable quarterly at an annual rate of 1.00% and the remaining balance will be payable at maturity on December 19, 2030. The Company also has a revolving credit facility of $800 million which was undrawn as of September 30, 2024. The maturity of the revolving credit facility is December 19, 2028.
The term loan bears interest, at our option, at either (a) Term SOFR (in addition to a 0.10% credit spread adjustment) plus a margin of 3.00% or (b) an alternate base rate plus a margin of 4.00%. The borrowings under the revolving credit facility bear interest, at our option, at either (a) Term SOFR plus a margin ranging from 2.25% to 2.75% or (b) an alternate base rate plus a margin ranging from 1.25% to 1.75%, in each case, based on a total leverage ratio.
On May 10, 2024, the Company entered into a daylight overdraft credit facility of $30,000 Canadian dollars (or US dollar equivalent) to assist with intraday merchant settlement requirements. This facility bears interest at CA prime rate plus 3.00% per annum on Canadian dollar overdrafts or US Base rate plus 3.00% per annum on US dollar overdrafts. As of June 30, 2024, the credit facility was undrawn.
As at September 30, 2024, we had letters of credit issued totaling $58.4 million ($56.2 million as at December 31, 2023). Letters of credit do not reduce the amount that can be drawn on our revolving credit facility.
For more information on the Company's loans and borrowings, refer to Note 7 in our annual consolidated financial statements for the year ended December 31, 2023 and Note 7 of our condensed interim financial statements for the three and nine months ended September 30, 2024.
Cash Flows
| Nine months ended September 30 | Change | ||||||||||||||||
(In thousands of US dollars, except for percentages) | 2024 | 2023 | |||||||||||||||
| $ | $ | $ | % | ||||||||||||||
| Cash flow from (used in): | |||||||||||||||||
| Operating Activities | 171,268 | 182,276 | (11,008) | (6) | |||||||||||||
| Investing Activities | (106,324) | (1,471,324) | 1,365,000 | (93) | |||||||||||||
| Financing Activities | (97,097) | 658,324 | (755,421) | n.m. | |||||||||||||
| Effect of movements in exchange rates on cash | (255) | 37 | (292) | n.m. | |||||||||||||
| Net decrease in cash and cash equivalents | (32,408) | (630,687) | 598,279 | (95) | |||||||||||||
| Cash and cash equivalents – Beginning of period | 170,435 | 751,686 | (581,251) | (77) | |||||||||||||
| Cash and cash equivalents – End of period | 138,027 | 120,999 | 17,028 | 14 | |||||||||||||
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Cash flows from operating activities
For the nine months ended September 30, 2024, $171.3 million of cash was generated from operating activities compared to $182.3 million for the nine months ended September 30, 2023. The decrease was mainly driven by higher non-cash working capital items in the first quarter of 2024 related to the timing of payment processing cutoff dates.
Cash flows used in investing activities
For the nine months ended September 30, 2024, $106.3 million of cash was used in investing activities. This resulted primarily from the acquisition of $56.7 million of distributor commissions and $40.4 million of intangible assets. For the nine months ended September 30, 2023, $1,471.3 million of cash was used in investing activities. This resulted primarily from the cash consideration, net of cash acquired, for the Paya acquisition of $1,379.8 million.
Cash flows from (used in) financing activities
For the nine months ended September 30, 2024, $97.1 million of cash was used in financing activities, mainly reflecting the repayment of the credit facility assumed upon the acquisition of Till Payments as well as $42.3 million of dividends paid to shareholders. For the nine months ended September 30, 2023, $658.3 million of cash was generated from financing activities mainly reflecting borrowings and repayments under the reducing revolving credit facility, and was partially offset by $56.0 million used to repurchase and cancel approximately 1.4 million Subordinate Voting Shares under the Normal Course Issuer Bid.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures, or capital resources. We may, from time to time, be contingently liable with respect to litigation and claims that arise in the normal course of operations.
Related Party Transactions and Executive Compensation
We have no related party transactions other than those presented in Note 15 in the Interim Financial Statements.
Financial Instruments and Other Instruments
In the ordinary course of our business activities, we are exposed to various market risks that are beyond our control, including fluctuations in foreign exchange rates and interest rates, and that may have an adverse effect on the value of Nuvei's financial assets and liabilities, future cash flows and profit. Our policy with respect to these market risks is to assess the potential of experiencing losses and the consolidated impact thereof, and to mitigate these market risks as is deemed appropriate. A more detailed description of these risks and how the Company manages them, is provided in the section entitled “Financial Instruments and Other Instruments” of the Company's 2023 Annual MD&A. The Company’s exposure to and management of these risks have not changed materially since December 31, 2023, other than as noted within this MD&A. Please refer to the “Risks Relating to Our Business and Industry” section of the AIF for the year ended December 31, 2023 for additional information about the material risks we face in our business.
Credit and Concentration Risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Credit risk arises principally from the Company’s cash, segregated funds, trade and other receivables, other current assets and processor and other deposits. The carrying amounts of these financial assets represent the maximum credit exposure.
Cash, Segregated Funds and Processor Deposits
The credit risk related to financial institutions that hold cash and cash equivalents, segregated funds and processor deposits is managed as we seek to maintain funds with a diversified group of highly-rated financial institutions.
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Trade and Other Receivables
We provide credit to our customers in the normal course of business. We evaluate the creditworthiness of the corresponding counterparties at least at the end of each reporting period and on a specific circumstance basis. Our extension of credit to customers involves considerable judgment and is based on an evaluation of each customer’s financial condition and credit history. We have established various internal controls designed to mitigate credit risk, including credit limits and payment terms that are reviewed and approved by the Company. Any impaired trade receivables are mostly due from customers that are experiencing financial difficulties.
Foreign Currency Risk
We are exposed to the financial risk related to the fluctuation of foreign exchange rates and the degrees of volatility of those rates. Foreign currency risk is limited to the portion of our business transactions denominated in currencies other than the U.S. dollar. Fluctuations related to foreign exchange rates could cause unforeseen fluctuations in our operating results.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market rates. We do not account for any fixed interest-rate financial assets or financial liabilities at fair value through profit and loss.
All loans and borrowings bear interest at floating rates, and the Company is therefore exposed to the cash flow risk resulting from interest rate fluctuations. This risk is partially offset by the Company's cash balance and segregated funds which also bears interest at floating rates. We also entered into interest rate swap agreements to hedge a portion of the Company's future floating rate interest payments. For more information on the Company's interest rate swap, refer to Note 21 in our annual consolidated financial statements for the year ended December 31, 2023 and Note 14 of our Interim Financial Statements .
Critical Accounting Policies and Estimates
The preparation of the Interim Financial Statements in conformity with IFRS requires us to make estimates, judgments and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates, judgments and assumptions are reviewed on an ongoing basis and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to accounting estimates are recognized prospectively.
Critical judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the Interim Financial Statements include the following:
Revenue Recognition. The identification of revenue-generating contracts with customers, the identification of performance obligations, the determination of the transaction price and allocations between identified performance obligations, the use of appropriate revenue recognition methods for each performance obligation and the measure of progress for performance obligations satisfied over time are the main aspects of the revenue recognition process, all of which require the exercise of judgment and use of assumptions. In addition, we have applied judgment in assessing the principal versus agent considerations for our transaction and processing services.
Fair Value of Share-based Payment Transactions. We recognized compensation expense as a result of equity-settled share-based payment transactions which are valued by reference to the fair value of the related instruments. Fair value of options granted that did not contain a market performance condition was estimated using the Black-Scholes option pricing model. The risk-free interest rate is based on the yield of a zero coupon U.S. government security with a maturity equal to the expected life of the option from the date of the grant. The assumption of expected volatility is based on the average historical volatility of comparable companies for the period immediately preceding the option grant. We use an expected dividend yield in the option-pricing model.
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When granting share-based payment compensation with performance conditions, we assess whether those performance conditions are market or non-market conditions. Market conditions are taken into account in the fair value estimate on the grant date, using a Monte Carlo simulation and this fair value is not revised subsequently. For non-market conditions, we estimate the expected outcome of the performance targets and revise those estimates and related expense until the final outcome is known.
When issuing share-based payments in exchange for services rendered by an external party, the Company estimates the fair value of the instruments granted by reference to the fair value of services rendered by the external party, if the services can be measured reliably, instead of the fair value of the equity instrument granted.
Provisions for Losses on Merchant Accounts. Disputes between a cardholder and a merchant arise periodically, primarily as a result of customer dissatisfaction with merchandise quality or merchant services. Such disputes may not be resolved in the merchant’s favor. In these cases, the transaction amount is refunded to the customer by the card issuing financial institution, but the financial institution is refunded by us. We then charge back to the merchant the amount refunded to the financial institution. As such, we are exposed to credit risk in relation to the merchant since we assume the repayment to the merchant’s customer for the full amount of the transaction even if the merchant has insufficient funds to reimburse us. A provision for losses on merchant accounts is maintained to absorb unrecoverable chargebacks for merchant transactions that have been previously processed and on which revenues have been recorded. The provision for losses on merchant accounts specifically comprises identifiable provisions for merchant transactions for which losses can be estimated. We evaluate the risk for such transactions and estimate the loss for disputed transactions based primarily on historical experience and other relevant factors. We analyze the adequacy of the provision for losses on merchant accounts in each reporting period.
Determining the Fair Value of Identifiable Intangible Assets Following a Business Combination. We use valuation techniques to determine the fair value of identifiable intangible assets acquired in a business combination, which are generally based on a discounted cash flow model. We develop assumptions related to revenue and EBITDA margin forecasts, partner and merchant attrition rates, royalty rates and discount rates. These valuations are linked closely to the assumptions made by management regarding the future performance of the related assets and the discount rate applied as it would be assumed by a market participant.
Recoverable Amount of Goodwill. Our impairment test for goodwill is based on the fair value less costs to sell method, estimated using an income approach and uses valuation models such as the discount cash flows model. The key assumptions for the fair value less costs to sell method include estimated revenue, EBITDA margin forecasts in determining future forecasted cash flows, as well as discount rates applied to forecasted cash flows. These estimates, including the methodology used, can have a material impact on the respective values and ultimately the amount of any goodwill impairment.
Recoverable Amount of Tax Balances for Recognition of Tax Assets. Deferred income tax assets reflect our estimate of operations of future fiscal years, timing of reversal of temporary differences and tax rates on the date of reversals, which may change depending on governments’ fiscal policies. We must also assess whether it is more likely than not that deferred income tax assets will be realized and determine whether a valuation allowance is required on all or a portion of deferred income tax assets.
New Accounting Standards and Interpretations Adopted
The following amendments were adopted on January 1, 2024:
Amendments to liability classification
On October 31, 2022, the IASB issued new amendments to IAS 1 in addition to the previous amendment issued in 2020 that clarify requirements when classifying liabilities as non-current and extend the application period to January 1, 2024.
When an entity classifies a liability arising from a loan arrangement as non-current and that liability is subject to the covenants which an entity is required to comply with within twelve months of the reporting date, this amendment requires the entity to disclose information in the notes that enables users of financial statements to understand the risk that the liability could become repayable within twelve months of the reporting period, including:
(a) the carrying amount of the liability;
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(b) information about the covenants;
(c) facts and circumstances, if any, that indicate the entity may have difficulty complying with the covenants. Such facts and circumstances could also include the fact that the entity would not have complied with the covenants based on its circumstances at the end of the reporting period.
The amendments described above had no impact on the Interim Financial Statements.
New Accounting Standards and Interpretations Issued But Not Yet Adopted
The IASB has issued new standards and amendments to existing standards which are applicable to the Company in future periods.
On April 9, 2024 the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements to improve reporting of financial performance. IFRS 18 replaces IAS 1 Presentation of Financial Statements. It carries forward many requirements from IAS 1 unchanged. IFRS 18 applies for annual reporting periods beginning on or after January 1, 2027. Earlier application is permitted.
The new Accounting Standard introduces significant changes to the structure of a company's income statement and new principles for aggregation and disaggregation of information. The main impacts of the new Accounting Standard include:
•introducing a newly defined "operating profit" subtotal and a requirement for all income and expenses to be allocated between three distinct categories based on the company's main business activities: Operating, investing and financing;
•disclosure about management performance measures;
•adding new principles for aggregation and disaggregation of information;
•requiring the cash flow statement to start with operating profit and;
•removal of the accounting policy choice for presentation of dividend and interest.
In May 2024, amendments to IFRS 9, “Financial Instruments” and IFRS 7, “Financial Instruments: Disclosures” were issued. The main impacts of the amendments include:
•clarification the timing of recognition and derecognition for a financial asset or financial liability, including clarifying that a financial liability is derecognized on the settlement date. In addition to these clarifications, the amendments introduce an accounting policy choice to derecognize financial liabilities settled using an electronic payment system before the settlement date, if criteria are met;
•clarifications regarding the classification of financial assets, including those with features linked to environmental, social and corporate governance and contractual cash flows that are solely payments of principal and interest on the principal amount outstanding; and
•additional disclosures are required for financial instruments with contingent features and investments in equity instruments classified at fair value through other comprehensive income.
These amendments are effective for annual reporting periods beginning on or after January 1, 2026. Early adoption is permitted, with an option to early adopt only the amendments to the classification of financial assets.
The impact of adoption of these standards and amendments has not yet been determined.
Outstanding Share Data
As of November 8, 2024, our authorized share capital consists of (i) an unlimited number of Subordinate Voting Shares, of which 66,056,014 were issued and outstanding, (ii) an unlimited number of Multiple Voting Shares, of which 76,064,619 were issued and outstanding, and (iii) an unlimited number of Preferred Shares, issuable in series, none of which were outstanding. The Subordinate Voting Shares are “restricted securities” within the meaning of such term under applicable securities laws in Canada.
As of November 8, 2024, there were 617,780 stock options outstanding under the Company’s legacy stock option plan dated September 21, 2017, 5,292,983 stock options outstanding under the Company’s Omnibus Plan and 141,597 stock options outstanding under the Company's Paya Equity Plan.
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As of November 8, 2024, there were 143,644 Deferred Share Units, 7,118,114 Restricted Share Units and 1,629,045 Performance Share Units ("PSUs") outstanding under the Company’s Omnibus Plan, as well as 288,351 Restricted Share Units outstanding under the Company's Paya Equity Plan.
Risk Factors
In addition to all other information set out in this MD&A, our Interim Financial Statements, and our audited annual consolidated financial statements and notes for the years ended December 31, 2023 and 2022, the specific risk factors that could materially adversely affect us and/or our business, financial condition and results of operations are disclosed under "Risk Factors" in our AIF dated March 5, 2024, except for the risks identified below in respect of the proposed take private transaction. Other risks and uncertainties that we do not presently consider to be material, or of which we are not presently aware, may also become important factors that affect our future business, financial condition and results of operations. The occurrence of any of these risks could materially and adversely affect our business, prospects, financial condition, results of operations or cash flow.
In addition to the specific risk factors disclosed under “Risk Factors” in our AIF dated March 5, 2024, the following risk factors could materially affect our business, financial condition and results of operations in the context of a statutory plan of arrangement (the “Arrangement”) involving the Company and Neon Maple Purchaser Inc. (the “Purchaser”), a newly-formed entity controlled by Advent, pursuant to the provisions of the Canada Business Corporations Act, dated April 1, 2024, as it may be amended, modified or supplemented from time to time in accordance with its terms (the “Arrangement Agreement”).
Risks related to Nuvei
If the Arrangement is not completed, Nuvei will continue to face the risks that it currently faces with respect to its affairs, business and operations and future prospects. Such risk factors are set forth and described in Nuvei’s AIF and the Management’s Discussion and Analysis of Financial Condition and Results of Operations for the years ended December 31, 2023 and 2022, which have been filed on SEDAR+ at www.sedarplus.ca and/or on EDGAR under Nuvei’s profile at www.sec.gov.
Risks related to the Arrangement
Conditions Precedent and Required Approvals
The completion of the Arrangement is subject to a number of conditions precedent, some of which are outside the control of the Company and the Purchaser, including receipt of key regulatory approvals and other customary closing conditions. Moreover, a substantial delay in obtaining satisfactory approvals and/or the imposition of unfavourable terms or conditions in the approvals to be obtained could have an adverse effect on the business, financial condition or results of operations of the Company or could result in the termination of the Arrangement Agreement.
The Arrangement Agreement also contains a number of additional conditions for the benefit of the Purchaser including compliance, in all material respects, with covenants by the Company, the truth and correctness, subject in most cases to certain qualifications, of the representations and warranties made by the Company in the Arrangement Agreement as at the date of the Arrangement Agreement and as at closing, and no material adverse effect having occurred between the date of the Arrangement Agreement and closing of the Arrangement. There can be no certainty, nor can the Company or the Purchaser provide any assurance, that these conditions will be satisfied or waived or, if satisfied or waived, when they will be satisfied or waived.
If the Arrangement is not completed for any reason, there are risks that the announcement of the Arrangement and the dedication of substantial resources of the Company to the completion thereof could have a negative impact on the Company’s current business relationships, including with future and prospective employees, customers, suppliers and partners, and could have a material adverse effect on the current and future operations, financial condition and prospects of the Company. In addition, failure to complete the Arrangement for any reason could have a material negative impact on the trading price of the Subordinate Voting Shares. If the Arrangement is not completed and the Board decides to seek an alternative transaction, there can be no assurance that the Rollover Shareholders would be willing to accept or support an alternative transaction, or that it will be able to find a party willing to pay an equivalent or more attractive price than the Consideration to be paid pursuant to the Arrangement.
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Certain costs related to the Arrangement, such as legal, accounting and certain financial advisor fees, must be paid by the Company even if the Arrangement is not completed.
In addition, since the completion of the Arrangement is subject to uncertainty, officers and employees of the Company may experience uncertainty about their future roles with the Company. This may adversely affect the Company’s ability to attract or to retain key management and personnel in the period until the Arrangement is completed or terminated.
Termination in Certain Circumstances and Termination Fee
Each of the Company and the Purchaser has the right, in certain circumstances, to terminate the Arrangement Agreement. Accordingly, there can be no certainty, nor can the Company provide any assurance, that the Arrangement Agreement will not be terminated by either of the Company or the Purchaser prior to the completion of the Arrangement. Nuvei’s business, financial condition or results of operations could also be subject to various material adverse consequences, including that the Company would remain liable for significant costs relating to the Arrangement including, among others, legal, financial advisory, accounting and printing expenses.
Under the Arrangement Agreement, the Company is required to pay a termination fee of US$150 million in certain circumstances.
The Conditions set forth in the Financing Commitments may not be Satisfied or Events may Occur Preventing the Financing from Being Consummated
Although the Arrangement Agreement does not contain a financing condition, there is a risk that the conditions set forth in the Debt Commitment Letter and the Equity Commitment Letter may not be satisfied or that other events may arise which could prevent the Purchaser from consummating the Financing. If the Purchaser is unable to consummate the Debt Financing and/or the Equity Financing, the Company expects that the Purchaser will be unable to fund the Consideration required to complete the Arrangement. In the event the Arrangement cannot be completed due to the failure of the Purchaser to fund the Consideration, provided that all other conditions to closing of the Arrangement in favour of the Purchaser are and continue to be satisfied or waived and that the Company is otherwise prepared to close the Arrangement, the Company may terminate the Arrangement Agreement, and the Purchaser will be obligated to pay a reverse termination fee of US$250 million and shareholders of the Company will not receive the Consideration.
Occurrence of a Material Adverse Effect
The completion of the Arrangement is subject to the condition that, among other things, on or after April 1, 2024 (the date on which the Arrangement Agreement was entered into), there shall not have occurred a material adverse effect in respect of the Company. Although a material adverse effect excludes certain events, including events in some cases that are beyond the control of the Purchaser, there can be no assurance that a material adverse effect will not occur prior to the closing of the Arrangement. If such a material adverse effect occurs and the Purchaser does not waive same, the Arrangement would not proceed.
Uncertainty Surrounding the Arrangement
As the Arrangement is dependent upon satisfaction of a number of conditions precedent, its completion is uncertain. In response to this uncertainty, the Company’s customers may delay or defer decisions concerning the Company. Any delay or deferral of those decisions by customers could adversely affect the business and operations of the Company, regardless of whether the Arrangement is ultimately completed. Similarly, uncertainty may adversely affect the Company’s ability to attract or retain key personnel. In the event the Arrangement Agreement is terminated, the Company’s relationships with future, prospective and current customers, suppliers, employees, partners and other stakeholders may be adversely affected. Changes in such relationships could adversely affect the business, financial condition, or results of and operations of the Company.
The Significant Resources Dedicated in Connection with the Arrangement, Restrictions from Taking Specified Actions while the Arrangement is Pending and Negative Impact of a Failure to Complete the Arrangement on the Company’s Business
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The Arrangement Agreement restricts the Company from taking certain specified actions without the consent of the Purchaser until the Arrangement is completed or the Arrangement Agreement is terminated. These restrictions may prevent the Company from pursuing certain opportunities that may arise prior to the completion of the Arrangement or preclude actions that would otherwise be advisable if the Company were to remain a publicly-traded issuer. Among other restrictions, the Arrangement Agreement restricts the ability of the Company to raise capital, acquire or sell, directly or indirectly, assets, properties, securities, interests or businesses, or make any capital expenditures or commitments, in each case, subject to the thresholds, limitations and other terms and conditions contained in the Arrangement Agreement.
In addition, the Company is subject to non-solicitation provisions under the Arrangement Agreement. If the Arrangement is not completed for any reason, the announcement of the Arrangement, the dedication of the Company’s resources to the completion thereof and the restrictions that were imposed on the Company under the Arrangement Agreement may have an adverse effect on the current or future operations, financial condition and prospects of the Company.
The Possibility for the Company, the Purchaser or the Rollover Shareholders to Become the Target of Securities Class Actions, Oppression Claims and Derivative Lawsuits Which Could Result in Costs and May Delay or Prevent the Consummation of the Arrangement
Securities class actions and oppression and derivative lawsuits may be brought against companies that have entered into an agreement to acquire a public company or to be acquired. Shareholders and third parties may also attempt to bring claims against the Company, the Purchaser or the Rollover Shareholders seeking to restrain the Arrangement or seeking monetary compensation or other remedies. Even when the lawsuits are without merit, defending against these claims can result in costs and divert management time and resources. Additionally, if an injunction prohibiting consummation of the Arrangement is obtained by a third party, such injunction may delay or prevent the Arrangement from being completed.
The Volatility of the Relative Trading Price of Shares prior to Closing
Market assessments of the benefits of the Arrangement and the likelihood that the Arrangement will be consummated may impact the volatility of the market price of the Subordinate Voting Shares prior to the consummation of the Arrangement.
Rights of Former Minority Shareholders after the Arrangement
Following the completion of the Arrangement, the former shareholders of the Company (other than the Rollover Shareholders) will cease to hold such shareholders’ Subordinate Voting Shares and will no longer have an interest in the Company, its assets, revenues or profits. In the event that the value of the Company’s assets or business, prior, at or after closing of the Arrangement, exceeds the implied value of the Company under the Arrangement, the former shareholders (other than the Rollover Shareholders) will not be entitled to additional consideration for their Subordinate Voting Shares.
The Diversion of the Attention of the Company’s Management
The pendency of the Arrangement could cause the attention of management to be diverted from the day-to-day operations of the Company and customers, suppliers or partners may seek to modify or limit their business relationships with the Company. These disruptions could be exacerbated by any delay in the completion of the Arrangement and could have an adverse effect on the business, operating results or prospects of the Company.
The Possibility that the Termination Fee provided under the Arrangement Agreement If the Arrangement Agreement is Terminated in Certain Circumstances May Discourage Other Parties from Proposing an Alternative Transaction
Under the Arrangement Agreement, the Company may in the future be required to pay a termination fee of $150 million in the event the Arrangement Agreement is terminated in certain circumstances. This termination fee, although considered reasonable by the Board, may discourage other parties from proposing an alternative transaction, even if those parties would otherwise be willing to offer greater value than that offered under the Arrangement.
For purposes of this section, the following terms have the following meanings:
“Consideration” means the consideration to be received by the shareholders of the Company (other than the Rollover Shareholders) pursuant to the Arrangement, consisting of $34.00 in cash per share, without interest.
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“Debt Commitment Letter” means the debt commitment letter delivered to the Company by the Purchaser concurrently with the execution of the Arrangement Agreement.
“Debt Financing” means the Debt Commitment Letter pursuant to which a syndicate of lenders have committed to provide to the Purchaser, subject to the terms and conditions therein, senior secured syndicated credit facilities in an initial aggregate principal amount of $3,150 million.
“Equity Commitment Letter” means the equity commitment letter delivered by the Purchaser concurrently with the execution and delivery of the Arrangement Agreement.
“Equity Financing” means the Equity Commitment Letter pursuant to which funds affiliated to and managed by Advent have committed, subject to the terms and conditions therein, to make available up to $1,775 million to the Purchaser through a direct or indirect equity investment in the Purchaser at the closing of the Arrangement or the purpose of financing the transactions contemplated by the Arrangement Agreement.
“Financing” means, collectively, the Debt Financing and the Equity Financing.
“Financing Commitments” means, collectively, the Debt Commitment Letter and the Equity Commitment Letter.
“Rollover Agreement” means each of the agreements entered into prior to closing of the Arrangement among, inter alia, the Purchaser and the Rollover Shareholders, for the transfer of Rollover Shares to the Purchaser in connection with the Arrangement.
“Rollover Shareholders” means the shareholders of the Company having entered into the Rollover Agreements with the Purchaser.
“Rollover Shares” means the Multiple Voting Shares and Subordinate Voting Shares held by a Rollover Shareholder that are the subject of a Rollover Agreement and that are to be exchanged for the consideration set out therein pursuant to a Rollover Agreement as of the closing of the Arrangement.
Controls and Procedures
Disclosure Controls and Procedures
The Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining disclosure controls and procedures (as defined by the Securities and Exchange Commission (the “Commission”) in Rule 13a-15(e) under the Exchange Act) for the Company to ensure that material information relating to the Company, including its consolidated subsidiaries, that is required to be made known to the Chief Executive Officer and Chief Financial Officer by others within the Company and disclosed by the Company in reports filed or submitted by it under securities legislation (including the Exchange Act) is (i) recorded, processed, summarized and reported within the time periods specified in securities legislation (including the Commission’s rules and forms); and (ii) accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. The Chief Executive Officer and the Chief Financial Officer, along with management, have evaluated and concluded that the Company’s disclosure controls and procedures were effective as at September 30, 2024.
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Internal Controls over Financial Reporting
Management of the Company, under the supervision of the Chief Executive Officer and the Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the IASB. Management, including the Chief Executive Officer and Chief Financial Officer, have assessed the effectiveness of the Company’s internal control over financial reporting in accordance with Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management, including the Chief Executive Officer and Chief Financial Officer, have concluded that the Company’s internal control over financial reporting was effective as at September 30, 2024.
Change in Internal Controls over Financial Reporting
There were no changes to our internal controls over financial reporting during the three months ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.
Limitations of Controls and Procedures
The scope of design of internal controls over financial reporting and disclosure controls and procedures excluded the controls, policies, and procedures of Till Payments which was acquired on January 5, 2024. The contribution of Till Payments to our consolidated statements of profit or loss and comprehensive income or loss for the nine months ended September 30, 2024 included revenue of $28.5 million to our consolidated revenue of $1,038.2 million, representing 3%. Additionally, as at September 30, 2024, Till Payment's total assets and total liabilities, excluding deferred tax assets, goodwill, trademarks, technologies, partner and merchant relationships, represented respectively 2% and 2% of the consolidated group. The amounts recognized for the assets acquired and liabilities assumed as at the date of this acquisition are described in Note 4 of the Interim Financial Statements.
Additional Information
Additional information relating to the Company, including the Interim Financial Statements, the audited annual consolidated financial statements for the years ended December 31, 2023 and 2022, and the AIF is available on SEDAR+ at www.sedarplus.com and on EDGAR at www.sec.gov.
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EXHIBIT 99.3
FORM 52-109F2 CERTIFICATION OF INTERIM FILINGS FULL CERTIFICATE
I, Philip Fayer, Chair of the Board of Directors and Chief Executive Officer of Nuvei Corporation, certify the following:
1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Nuvei Corporation (the “issuer”) for the interim period ended September 30, 2024.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in Regulation 52-109 respecting Certification of disclosure in Issuers’ Annual and Interim Filings (c. V-1.1, r. 27), for the issuer.
5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings
(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (COSO 2013 Framework) published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
5.2 ICFR – material weakness relating to design: N/A
5.3 Limitation on scope of design: The issuer has disclosed in its interim MD&A:
(a) the fact that the issuer’s certifying officer(s) and I have limited the scope of our design of DC&P and ICFR to exclude controls, policies and procedures of
(i) N/A;
(ii) N/A;
(iii) businesses that the issuer acquired not more than 365 days before the last day of the period covered by the interim filings; and
(b) summary financial information about the businesses that the issuer acquired that has been consolidated in the issuer’s financial statements.
6. Reporting changes in ICFR:
The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on July 1, 2024, and ended on September 30, 2024 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
Date: November 12, 2024
____(s) Philip Fayer________________________________
Philip Fayer
Chair of the Board of Directors and Chief Executive Officer
FORM 52-109F2 CERTIFICATION OF INTERIM FILINGS FULL CERTIFICATE
I, David Schwartz, Chief Financial Officer of Nuvei Corporation, certify the following:
1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Nuvei Corporation (the “issuer”) for the interim period ended September 30, 2024.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in Regulation 52-109 respecting Certification of disclosure in Issuers’ Annual and Interim Filings (c. V-1.1, r. 27), for the issuer.
5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings
(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (COSO 2013 Framework) published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
5.2 ICFR – material weakness relating to design: N/A
5.3 Limitation on scope of design: The issuer has disclosed in its interim MD&A:
(a) the fact that the issuer’s certifying officer(s) and I have limited the scope of our design of DC&P and ICFR to exclude controls, policies and procedures of
(i) N/A;
(ii) N/A;
(iii) businesses that the issuer acquired not more than 365 days before the last day of the period covered by the interim filings; and
(b) summary financial information about the businesses that the issuer acquired that has been consolidated in the issuer’s financial statements.
6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on July 1, 2024 and ended on September 30, 2024 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
Date: November 12, 2024
________(s) David Schwartz____________________
David Schwartz
Chief Financial Officer