Digital Payments Momentum Will Drive Broader Transformation Across Europe

Key Takeaways

• Digital payments adoption, e-commerce growth, and strategic bank partnerships are strengthening Nexi's core revenue, customer base, and long-term market position.
  
• Synergy-driven margin improvements, reduced integration costs, and innovative digital service offerings are driving higher profitability and new growth opportunities.
  
• Loss of key contracts, regional concentration, price pressures, and integration risks threaten margin resilience, constrain growth, and expose Nexi to increased competition and revenue volatility.

Catalysts

Provides electronic money and payment services to banks, small and medium-sized enterprises, large international corporations, institutions, and public administrations in Italy, Nordics and Baltics, Germany, Austria, Switzerland, Poland, Southeast Europe, and internationally.

• Accelerating migration from cash to digital payments continues to fuel Nexi's core transaction volumes, especially in Italy and Central Europe, supporting robust long-term revenue growth and offsetting short-term headwinds from bank contract renegotiations.
  
• E-commerce and mobile commerce penetration remains a key growth engine for Nexi, with customer base expansion of 5% across geographies and successful cross-selling of value-added digital services, driving higher take rates and supporting net margin expansion.
  
• Ongoing integration of recent mergers and realization of associated cost synergies-including the reduction of transformation and integration expenses-are expanding EBITDA margins and generating stronger free cash flow, positioning Nexi for enhanced future earnings.
  
• Investments in partnerships with ISVs (integrated software vendors), innovation in digital payment solutions, and support for emerging payment methods (such as instant payments and open banking alternatives) are creating new monetization opportunities, broadening the addressable market and supporting long-term revenue and earnings growth.
  
• Renewed and extended multi-year contracts with major banking partners, particularly in Italy, add resilience and visibility to Nexi's revenue streams, reducing downside risk and enabling continued investment in growth initiatives and shareholder returns.

Nexi Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Nexi's revenue will decrease by 13.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from 4.8% today to 20.1% in 3 years time.
• Analysts expect earnings to reach €813.9 million (and earnings per share of €0.66) by about September 2028, up from €304.8 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting €962 million in earnings, and the most bearish expecting €529.2 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 13.6x on those 2028 earnings, down from 20.5x today. This future PE is greater than the current PE for the IT Diversified Financial industry at 11.0x.
• Analysts expect the number of shares outstanding to decline by 2.86% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 13.75%, as per the Simply Wall St company report.

Nexi Future Earnings Per Share Growth

Risks

• Recent loss of key bank distribution contracts in Italy and associated migration of transaction volumes away from Nexi present a structural challenge, potentially leading to ongoing revenue headwinds and increasing volatility, particularly as these impacts are expected to persist and possibly accelerate in the coming quarters.
  
• Contract renewals with bank partners often require price concessions or discounts, and although volume growth can offset initial revenue loss, the cumulative effect of repeated renegotiations or lost contracts could compress net margins and constrain long-term earnings growth.
  
• While the company points to robust relationships with Italian banks, there is ongoing geographic concentration risk in Southern Europe; sustained macroeconomic volatility, economic stagnation, or intensified regional competition could weaken revenue resilience and growth prospects over time.
  
• Despite the company's strategy of cross-selling value-added services and innovation, the slow development and market adoption of integrated software payment (ISV) channels in key markets like Italy may undermine differentiation efforts, leaving Nexi more exposed to margin compression from both regulatory change (fee caps) and competitive threats (global tech entrants, local disruptors).
  
• Heavy reliance on M&A-driven growth and integration synergies presents operational and execution risk; persistent integration costs, delayed synergy realization, and ongoing leverage from recent acquisitions could limit Nexi's capacity for organic investment and innovation, thereby restricting improvements in net earnings and shareholder value creation in the longer term.

Valuation

• The analysts have a consensus price target of €6.9 for Nexi based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €8.75, and the most bearish reporting a price target of just €4.5.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €4.1 billion, earnings will come to €813.9 million, and it would be trading on a PE ratio of 13.6x, assuming you use a discount rate of 13.7%.
• Given the current share price of €5.24, the analyst price target of €6.9 is 24.1% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.