Nuvei Corp

TSX:NVEI

Earnings Call Transcript 2021-Q1

[Operator]

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Nuvei Corporation's First Quarter 2021 Earnings Conference Call. [Operator Instructions] I'll now turn the conference over to Anthony Gerstein, Vice President and Head of Investor Relations for Nuvei. Please go ahead, Mr. Gerstein.

[Anthony Gerstein, VP & Head of Investor Relations]

Thank you, operator, and good morning, everyone, and thank you for joining us. With me today are Phil Fayer, Chair and CEO; and David Schwartz, Chief Financial Officer. As a reminder, this conference call is being recorded and webcast and is copyrighted property of Nuvei and rebroadcast of this information in whole or in part without written consent of Nuvei is prohibited. This morning, Nuvei issued a press release announcing financial results for the 3 months ended March 31, 2021. The release as well as an accompanying presentation are available in the Investor Relations section of the company's website, nuvei.com, under Events and Presentations. During this call, we may make certain forward-looking statements within the meaning of the applicable securities laws. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the business or developments in Nuvei's industry to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements. Information about the factors that could cause actual results to differ materially from anticipated results or performance can be found in Nuvei's filings with the Canadian Securities Regulatory Authority and on the company's website. Our discussion today will include non-IFRS measures, including adjusted EBITDA, adjusted net income and adjusted net income per share. Management believes non-IFRS results are useful in order to enhance an understanding of our ongoing performance, but they are a supplement to and should not be considered in isolation from or as a substitute for IFRS financial measures. Reconciliation of these measures to IFRS measures are available in our earnings release and MD&A. We'll open the call up to your questions after our prepared remarks. With that, I'd like to turn the call over to Phil.

[Philip Fayer, Chair of the Board & CEO]

Thanks, Anthony. And thank you, everyone, for joining our call today. We have a lot of exciting things to talk about this morning as it relates to our financial performance, operational highlights and recent acquisitions. With respect to our financial performance, we're extremely pleased with our results for the first quarter. We reported that total volume increased 132%, revenue increased 80% and adjusted EBITDA increased 97%. Based on the momentum we've seen through early May, the depth in our sales pipeline, the introduction of new product capabilities and innovation and the expansion into new geographies, we have good visibility through the balance of the year and are raising our financial outlook for 2021. This exponential growth we're experiencing is driven by a number of factors, including geographic expansion, product innovation, growing wallet share with our existing customers as well as new client wins, all of which is supported by the natural tailwinds of the industries we serve. Our focused verticals include online gaming, social games, online retail, global marketplaces, subscription and digital goods, financial services and travel. These verticals are complex with high barriers to entry and have 3 key criteria in common. They all have inherent growth, they have longevity and they have a propensity to operate globally. These verticals are experiencing strong tailwinds driven by 2 factors: first, the accelerating change in consumer purchasing behavior; and second, geographic expansion resulting from change in regulatory environment as well as our ability to offer our solutions in new markets. This last point is especially important as we are in the very early days of online gaming, not just in the United States, but also in LatAm, and we are just at the beginning to see the evolution of cryptocurrencies around the world. Further illustrating our momentum in these verticals is the growth in our e-commerce mix. E-commerce represented 87% of the total volume in the first quarter, up sequentially from 80% in the fourth quarter and 72% in last year's first quarter as more and more transactions are taking place online. Turning now to some of the operational highlights during the quarter. We continue to add new markets and product solutions, which contribute to our expanding wallet share and accelerating growth. During the quarter, we added a number of new alternate payment methods, increasing our portfolio to 470 from 455 at the end of 2020. We believe we have 1 of the industry's largest portfolio of alternative payment methods today, which are required table stakes when merchants want to connect with customers in geographies with low card utilization. In terms of expanding our acquiring coverage in the quarter, we launched local processing solutions in Argentina, Chile, Peru and Ecuador, while expanding our acquiring capabilities in Brazil, Colombia and Mexico. We now provide local acquiring in 44 markets, up from 35 at the end of 2020, which provides us with greater reach and more favorable economics. With respect to innovation, we recently added pay-in and pay-out support for nearly 40 of the world's leading cryptocurrencies, including Bitcoin Ethereum, Bitcoin Cash, Litecoin, Neo, and XRP, amongst many others. With this capability, our merchants can now accept cryptocurrencies as easily as any other form of our alternative payment methods at a time when both the number of cryptocurrency users continues to expand and mainstream adoption steadily increases. All of our solutions have the same goal in mind, helping our customers connect with theirs regardless of location, currency or the preferred payment method. We continue to see acceleration of new client wins coming through our direct sales channel. This has been a highly successful area of investment focus, which we plan on accelerating. We're expanding and investing more in marketing, corporate development and direct sales in our focused verticals and in the geographies we serve. Finally, I want to touch upon our recent strategic acquisitions announcements. In order to extend our leadership position in our verticals, we have announced that we're acquiring 2 amazing businesses, Mazooma and Simplex. Each is at a really important inflection point with very specific capabilities that fit our differentiated value proposition, strategic rationale, strengthening our competitive position and serving as a catalyst for future growth. The first Mazooma is a top account-to-account payment provider in the U.S. online gaming and sports betting market. The acquisition will bolster alternative payment portfolio with a leading ACH platform encompassing both pay and paired functionality developed for online gaming in the United States. Mazooma real-time account validation allows for single click experience and seamless checkout, effectively transforming the online betting experience and is more favorable and convenient to both customers and operators due to low credit card acceptance rates. Mazooma recently launched real-time withdrawals to the sports wagering iGaming industries for the first time through their real-time payment network from the clearing house. This offering enables players to receive immediate payouts into their bank accounts, safely and securely, 24/7, 365, a real win for both players and operators. In addition, Mazooma provides us with a vendor registration, compliance, and operational infrastructure to address merchant requirements in any regulated U.S. state. Our second most recent acquisition announcement was last week's agreement to acquire Simplex, a payment solution provider to the cryptocurrency industry. Simplex will expand Nuvei's capabilities to offer bespoke AML/KYC solutions, transaction guarantee solutions and value-added services to 190 liquidity providers and partners. This results in higher conversion rates when end users buy or sell digital assets like cryptocurrencies or NFTs. In addition, the acquisition will provide Nuvei with an EMI license and offer IBAN capabilities to end users and merchants, which opens up potential opportunities like banking as a service. Importantly, both of these acquired capabilities through Mazooma and Simplex are relevant to all of our focused verticals, and we believe another great opportunity for us to help our customers connect with theirs. We are really excited about these pending acquisitions, which will expand our capabilities, expand our reach and capture more of our customers' wallet share. Please note that neither acquisition is included in the financial outlook we are providing today. Before I turn over the call to Dave, I want to reiterate how incredibly pleased we are with our results, which are being driven by the execution of our strategy. We are excited about how we're positioned as a company for the opportunity ahead of us. And as always, we believe we are still very much on the ground floor. It is a team effort, and I want to recognize and thank all of my colleagues who contribute to our success each and every day, you guys are rock stars. With that, I'll now turn it over to Dave to discuss the financials and our updated outlook for 2021.

[David S. Schwartz, CFO & Corporate Secretary]

Thanks, and good morning, everyone. We are very pleased with our first quarter results. These results are a testament to our business model. We are at scale from a volume perspective. We are experiencing strong growth. Our business model has operating leverage and our vertical diversification and focus results in stability, resiliency and predictability of our results. For the first quarter, total volume increased 132% to $20.6 billion from $8.9 billion in the first quarter of 2020. E-commerce volume was approximately 87%, representing a sequential increase from 80% in the fourth quarter. Revenue in the quarter increased 80% to $149.9 million from $83.2 million in the first quarter of 2020. Gross margin in the first quarter was 80.7% compared to 81.8% in the first quarter of 2020. Adjusted EBITDA increased by 97% to $65.5 million in the first quarter from $33.3 million in the first quarter of last year. Adjusted EBITDA margin was 43.7% in the quarter compared to 40% in the prior period. Net finance costs decreased by $27.5 million in the first quarter compared to Q1 of 2020. This is mostly as a result of paying down long-term debt in September 2020 with the proceeds from the IPO. Net income for the quarter was $27.8 million or $0.19 per share compared to a net loss of $62.3 million or $0.74 per share in the first quarter of 2020. Adjusted net income was $51.2 million or $0.35 per diluted share compared to $9.8 million or $0.11 per diluted share in 2020. Operating cash flow in the quarter was $53.4 million, which represents a 17% sequential increase from the fourth quarter of 2020. Looking at our balance sheet. At March 31, 2021, our cash balance was $144.5 million, while loans and borrowings, including lease liabilities, was $212.6 million. Turning now to our financial outlook, in which I'll refer you to our forward-looking information disclosure. For the second quarter, we expect total volume of between $21 billion and $22 billion. Revenue of between $153 million and $159 million and adjusted EBITDA of between $66 million and $70 million. Based on our first quarter performance as well as the continued momentum in the business, we are increasing our full year 2021 outlook as follows: total volume of between $83 billion and $89 billion, revenue of between $610 million and $640 million and adjusted EBITDA of between $264 million and $277 million. I'll reiterate that our financial outlook for the year does not include any contribution from U.S. online gaming nor the pending acquisitions of either Mazooma or Simplex. We will now take your questions. Operator, please open the lines for Q&A.

[Operator]

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

[Sanjay Harkishin Sakhrani, Managing Director]

Great results. Phil, you mentioned a number of reasons for your improved outlook. Maybe you guys could just drill down a little bit more and rank order, what's driving the positive sources of upside and maybe also include the impact of the acquisitions of Smart2Pay and Base?

[Philip Fayer, Chair of the Board & CEO]

Sure. I'll take the first part, and I'll turn it over to Dave for the acquisition of Smart2Pay and Base. I think you unpack it, the first thing is to understand the verticals that we operate. They have inherent growth, and they have a lot of tailwinds. And naturally, as being part of those verticals, we end up growing with our customers. The second part is our expanding geographies as we add more geographies, our ability to enable our customers in those geographies are naturally driving growth for us. Our continuous rolling out of new technology and new features and new enhancements. And I mentioned a few of them just a few minutes ago. And then naturally, the acceleration of new sales. And this has been an area of investment for us and something that we plan on accelerating and bringing forward 2022 investments into '21. But we are seeing significant momentum, both from discussion active conversations and merchants actually integrating and going live. In fact, when we look at Q1 this year versus last year, we're about 3x higher in our e-commerce implementation queue. So really, really exciting for what we're seeing. And naturally, it's driving the output that you guys have witnessed today for Q1.

[David S. Schwartz, CFO & Corporate Secretary]

Sanjay, it's David. On the -- from an acquisition perspective on the acquisitions, those are smaller acquisitions, of course, meaningful from a capability perspective. Think the way that you may want to think about it just on a pro forma basis, our volume grew year-over-year by 53% pro forma, including those acquisitions. And from a revenue perspective, the pro forma growth was about 44% year-over-year. So really strong growth, even considering the acquisitions.

[Sanjay Harkishin Sakhrani, Managing Director]

Got it. Great. And just 1 follow-up on Simplex. Obviously, a very interesting acquisition. It seems like you're getting a couple of capabilities. One is the crypto, the other is some of these issuing capabilities. Maybe you could just talk about sort of how you see building that out? And then the really strong growth rates, the 400% anticipated in 2021. How sustainable are those?

[David S. Schwartz, CFO & Corporate Secretary]

Yes. Great question. So if you think about Simplex, they're fully focused on the fiat side, right? They're not necessarily touching crypto. They focus on 3 key areas. The [ DFI ] enabling FTEs and enabling liquidity providers out there to connect with their customers using their advanced AI and fraud tools from a guarantee perspective. And really, that's how they've integrated to about 190 different customers. And they're providing a very single set solution stack, which we think, naturally, we can expand both from purely just fraud services to our full stock of payment capabilities. So there's quite a bit of opportunity from our capability back to Simplex. On the reverse side, Simplex has been innovative in providing IBAN services both to their liquidity providers as well as the customers, really driving down settlement time and opening up significant opportunities both from the customer perspective and the merchant's perspective, and we think that is a very compelling road map for our overall customers. And then actually, you touched upon it, issuing. They are a member of Visa and they have issuing capabilities. This is something that has been our innovation charter for a while, and we think it's very relevant to our overall businesses and the merchants that we're servicing today. So we think that, that is something that's very compelling. We haven't actually defined it just yet. But we know that there is a significant demand to enhance our payout business with issuer.

[Operator]

Our next question is from George Mihalos with Cowen & Company.

[Georgios Mihalos, MD & Senior Research Analyst]

Let me add my congrats as well on another great quarter. Wanted to follow-up a little bit on Sanjay's question. Just apologies in advance, but sort of a multipart question. But can you size for us the Mazooma and Simplex acquisitions realizing that that's not in the guide today? And then digging into them a little bit more, Mazooma here in the U.S., Phil, by how much does that sort of accelerate your push into U.S. gaming? I assume now you've acquired a number of iGaming customers through it. And then with Simplex or more broadly on crypto, the ability to transact with crypto for your merchants. I'm curious, where are you seeing demand from that? Is that broad based? Is it more geographic? Just any sort of sense you can give us around that?

[Philip Fayer, Chair of the Board & CEO]

Sure. I hope I remember all your questions, George. So I'll start with the first 1 from Mazooma. We really like the folks in Mazooma. I think their account-to-account capabilities are unique, and it's a truly enhancing experience for people that want to pay via ACH and it's enhancing experience for the operators that typically had check guarantee and high cost of check guarantee. So we actually think Mazooma's plant powered capabilities for real-time account validation and then couple that with their innovation around real-time payments is highly complementary. So today, we're able to approach. I know the operators with credit, debit, our cashier, our authorization enhancement tools, a variety of ACH capabilities from standard ACH to guarantee to account-to-account. So we really cover ultimately what the operators need from a full capability stack, both pay in and pay out fully reconciled and single deposited. When you look at Mazooma, it accelerates our position because naturally, they're integrated to all key operators in the United States. And more importantly to that, I think that they're just at their initial inflection point. So combined with our distribution and our focus and expanding our product mix, we think we have a very, very strong value proposition to merchants operating in U.S. gaming. But it also takes a little bit further, right? When you think about social games or marketplaces or other. Today, with Mazooma and our overall capabilities, 1-click payment can go all the way from paying with their credit card down to paying with your bank account. And we found it was interesting is folks remember their bank account, user name and password much faster than credit cards so each and every opportunity that customers prefer to pay with is now supported. So we're really excited about enabling Mazooma within our own ecosystem. We're really excited about using Mazooma as a platform for expanding our reach from an acquiring standpoint and a value-added service standpoint. And we think the logic for us coupled with Base provides an exceptional value proposition to the operators in the U.S. I think your question around crypto is really interesting. And we talked about this last time, we find that the digital revolution has begun. We're firm believers of it. We really look closely at what sphere and where we wanted to participate. And we are remaining solely on the fiat side, but we want to help with the on-ramp and off ramp. And ultimately, when you think about where we want to sit, we want to, on 1 end help our customers be able to sell to their customers at any form of payment that the customer so chooses to pay with. And so it was a natural mix to add cryptocurrencies into our overall capabilities. So we enable the fiat collection, and we will use third-party partners to convert that into crypto. We remain solely on the fiat side to help with both pay ins, we need to be able to collect, to help with payouts, meaning be able to pay in real-time commissions anywhere around the world. And then actually, something that we're keenly exploring is how can we help from a settlement perspective. On the Simplex side, it gives us access to every major liquidity provider there. And that is -- when you look at our capabilities, bringing it back to Simplex, there's a significant amount of opportunity for us to capture continued growth within the sphere. Where it's happening around the world? We're seeing about 50% in some of the key countries like Europe and the United States, Simplex is not yet into the U.S. We do believe that the combination of Mazooma's capabilities into Simplex will also be very, very compelling. But when you end up looking at overall, naturally, Simplex operates around the world. And that capability that we offer to them is actually quite a nice fit from our overall breadth of geographies that we support to where they operate today. I think I got all of your questions, George, you tell me if I missed one?

[Georgios Mihalos, MD & Senior Research Analyst]

The only 1 is if you guys can size those 2 acquisitions, and then I'll hop out. I know I had 4 or 5 in there.

[Philip Fayer, Chair of the Board & CEO]

So Mazooma is early stage, non material, but lots of opportunity. Simplex, we did disclose the volume growth. Simplex did about $500 million last year in enablement. This year, they're tracking towards $2 billion. I think we're nibbling at that, Dave, if there's anything else that we disclose, I'll turn it over to Dave.

[David S. Schwartz, CFO & Corporate Secretary]

No, that's right. I think that's $2 billion of volume for '21 for Simplex.

[Operator]

Our next question is from Jason Kupferberger with Bank of America.

[Unknown Analyst]

This is Mike filling in for Jason. And echo those comments on a nice quarter there. So it looks like the implied EBITDA margins at the midpoint of your revised outlook for the year or about a full point lower than your prior outlook. Just wondering what dynamics are driving this?

[David S. Schwartz, CFO & Corporate Secretary]

Mike, it's David. So it's really about the growth that we've seen, the success we've seen and the investments we're making, and we're basically going to bring forward some of the investments that we planned for 2022, specifically as it relates to direct sales. We're going to bring those forward into the second half of '21. So it's really about -- because of the success, we're going to continue to reinvest. Nothing structural here that should cause any concern. It's really just we reinvest back into the business to drive growth and continue the success we're having from a market share perspective and an expansion perspective. Of course, technology, too, is part of that investment. But I'd say that's kind of the way to think about the margin differential from the previous outlook to the current outlook.

[Unknown Analyst]

Got it. That's very helpful. And just a quick follow-up for me. So again, going back to the take rate here. It looks like it's going to stabilize around these levels for the balance of the year after the initial step down from I presume the lower-yielding based commerce volumes coming on board. How should we think about the spreads from Mazooma and Simplex? I know they're going to be relatively small initially, but just wondering what those spreads look like relative to your existing take rate?

[David S. Schwartz, CFO & Corporate Secretary]

Yes. I wouldn't -- we think about take rate as an output, and we're really more focused on the inputs. Both Simplex and Mazooma bringing tremendous capabilities. Phil just outlined them. And they're really going to be additions to our capability stack. We're going to be able to kind of offer across our key verticals. So really, it's a capability play that we're bringing to the table, and we think they're going to drive incremental gross margin and gross profit dollars, which will over time, drive EBITDA margin as well.

[Operator]

Our next question is from Matt O'Neil with Goldman Sachs.

[Matthew Casey O'Neill, Research Analyst]

A bunch of my questions have been asked and answered about the 2 acquisitions. I guess, just to be clear, I think you guys just pretty much answered it, but both are essentially spread-based businesses, though. Is that correct? I guess maybe to clarify from like a revenue model standpoint, it's going to be a yield on a volume process basis over time?

[David S. Schwartz, CFO & Corporate Secretary]

Yes. They're both very similar to our core business. They fit very well from a payments perspective. So it's volume generated as well as the yield that we'll generate on those and of course, the gross margin dollars that we'll bring. So yes, it's very similar to the core business, Matt.

[Matthew Casey O'Neill, Research Analyst]

Got it. And maybe I could just do follow-up.

[Philip Fayer, Chair of the Board & CEO]

If I could add...

[Matthew Casey O'Neill, Research Analyst]

Oh sure.

[Philip Fayer, Chair of the Board & CEO]

Just to add on that. Remember, right, it's -- they're a single thread, right? So as Nuvei brings more capabilities, there's a significant opportunity to expand wallet share. And Mazooma today is just account to account, where we can expand that and Simplex is just fraud services where we can expand that as well. So it's not linear to what they have. It's going to be what we can bring as our own capabilities and vice versa.

[Matthew Casey O'Neill, Research Analyst]

Got it. That's helpful, Phil. And just from a follow-up perspective, you guys have shown really impressive and consistent improvement in the percentage of the volume since we started talking at the time of the IPO. So now that's sort of e-com generated up to 87%. So just curious, as we start to think about 2Q and comping some of the tougher or probably toughest COVID quarters for brick-and-mortar. Would you expect that to level off or even retreat a little bit as some of the legacy brick-and-mortar business sees year-on-year comp improvements?

[David S. Schwartz, CFO & Corporate Secretary]

I think because we're -- like you said, we're almost 90% or 87% e-commerce, I think the brick-and-mortar has a smaller and smaller impact, and that will continue to be the case as we roll forward and grow the e-commerce side of the business. I would say that looking at the outlook we gave and looking at the pro forma growth that we achieved in Q1 and even going back to Q4, it's been relatively consistent. In fact, it's accelerated in the current quarter from a pro forma perspective significantly. So I think that those pro forma growth rates are the ones you should think about on a kind of near-term basis, Matt.

[Operator]

Our question is from Craig Maurer with Autonomous Research.

[Craig Jared Maurer, Partner, Payments and Financial Technology]

I was hoping you could provide some color on the travel industry, what you're seeing there in terms of activity, and what you're building into your expectations for the remainder of the year in terms of the contribution of travel?

[Philip Fayer, Chair of the Board & CEO]

Yes. Great question. Craig, for us, travel is our smallest vertical. So from our perspective, we actually view travel as only upside. We did focus on a lot of indirect capabilities, and we announced a partnership with UATP, I'm not sure if you guys saw that, but that was a gateway and technology service partnership. We do believe that travel will continue upticking. Especially in the U.S., we've seen it pick back up. But from a Nuvei standpoint, it's still our smallest vertical. It's something that we think is an opportunity for future growth.

[Operator]

Our next question is from Timothy Chiodo with Crédit Suisse.

[Timothy Edward Chiodo, Director]

I wanted to dig into the growth algorithm over the, call it, medium-term once we get past this year. So clearly, it's part existing customer growth and part new merchants. Within the existing piece, there's a same-store sales component and then there's a wallet share component. I mean, right now, it seems like all of those components are doing quite well. When we think about your growth algorithm in the future, can you just talk about the contributions you might expect from some of those? What might be some of the bigger portions? How we should think about that same-store sales growth?

[Philip Fayer, Chair of the Board & CEO]

Yes, it's a great question. What's different about us, Tim, is the same source sales is not linear like you have it for U.S.-based acquirers. Because in our case, as we add new markets, it allows us now to grow with our customers in those markets. And so it's not a proportional area of saying this is a customer that's linear, I operate in the United States, and that's that. So from our standpoint, we look at same -- our current customers and then we look at net new customers, and then naturally, those net new customers become same customers and they grow as well. Our verticals have high propensity to operate globally. Well, one, we focus on it. Number 2 is many of them are digital and so their ability to expand into new markets is far accelerated. So within that, we're trying to manage naturally, providing innovation solutions to grow and help them as they go from country to country. And that is about half of our growth and naturally accelerating our new sales, which is a key area of focus and the key area of our investment thesis for the remaining of '21 and '22.

[Timothy Edward Chiodo, Director]

Very nice. And then a quick follow-up. The sales force last year, I believe you disclosed that the size of the team roughly doubled and the investment continues this year. Is it fair to think about the size of the team increasing meaningfully this year, but maybe not quite doubling again?

[Philip Fayer, Chair of the Board & CEO]

It will. The plan is to increase it meaningfully. We're bringing our 2022 plan into the second half of '21. So our objective is to continue expanding both in the verticals, but more importantly, in the geography. So as we expand more geographies, we're certainly coupling that with marketing local language support, local solutions, engineers and local sales folks to continue executing on enabling Nuvei in those markets.

[Operator]

Our next question is from Ashwin Shirvaikar with Citi.

[Ashwin Vassant Shirvaikar, MD & Lead Analyst]

Good quarter. I want to go back to sort of the e-commerce discussion because, obviously, and we've talked about this before, not all e-commerce is equal. So I was hoping perhaps you guys could provide some structure or help around what part of your e-commerce revenues are, let's say, more economically sensitive and can benefit from a rebound versus secular. Does that makes sense?

[Philip Fayer, Chair of the Board & CEO]

Yes, it does. I think the highlight here is that when you think about our gross profit, we're well diversified. So approximately, no vertical is more than 20% of our gross profit. Many of these verticals are seeing tailwinds because of the environment, and we talked about that. I think verticals that have been more status quo are B2B enabled verticals. But from our standpoint, when you look at e commerce, certainly, you have the extremely high-growth verticals. You have verticals that were underpenetrated today that we're making investments and certainly driving to a lot of growth opportunities for us. And then you have the more small business traditional. But Nuvei focused on typically large and enterprise merchants today from our global e-commerce capabilities. And many of the net new wins are clearly in high-growth verticals. I would say the ones that have experienced more, I would say, smaller levels of growth would be the B2B vertical for us.

[Ashwin Vassant Shirvaikar, MD & Lead Analyst]

Got it. And the follow-up question on M&A is what sort of leverage are you comfortable with your -- between Mazooma and Simplex going to spend, believe 300 -- a little bit north of $300 million. And so where does that take you in terms of leverage? What are you comfortable with? And what does your current M&A pipeline still look like?

[Philip Fayer, Chair of the Board & CEO]

Sure. Great question. We said many times before that leverage will never exceed 3x for us. And even with these 2 acquisitions, we'll be well below that. And from our current pipeline, we're having very interesting discussions as we always do. As you guys can see from what we are actually executing on, there needs to be the 3 spheres that we look for, expanding our geographies, expanding our capabilities, which clearly Simplex and Mazooma do or expanding our scale in certain areas, and that's what we're looking out for. I mean today, we're very satisfied with what we completed. I think we have our hands full for the next few quarters. But in general, we are confident in our ability to self source. We are confident in our ability to have a very good strategy around M&A and then actually to execute on it.

[Operator]

Our next question is from John Davis with Raymond James.

[John Kimbrough Davis, Research Analyst]

It's pretty obviously, you guys are taking significant market share. So Phil, maybe you could just comment on the 1 or 2 things that you think are driving those market share gains? And then are there any specific region or regions that are driving outside growth if you think about the global aspect of the business?

[Philip Fayer, Chair of the Board & CEO]

Yes, great question, John. I think because of our approach of coming with tech and innovation, we're continuously every 2 weeks on our proprietary platform, driving more solution stack and making our life easier for our customers to connect with theirs. I think that's the first part. I think the second ultimately is our ability to connect with more customers. So our entire distribution account management team really has resulted from significant investment and expansion. So from solutions engineers to appropriately integrating merchants to helping them, I mean, close to their operation has been very beneficial for us. And then when you're talking about where those investments have started, at the -- around second quarter of last year, we started significantly focusing on investments into Europe. We're now making those investments into North America, where we still feel underpenetrated and thereafter, we'll follow through with LatAm and APAC.

[John Kimbrough Davis, Research Analyst]

Okay. Great. And then, Dave, quick clarification. Organic growth of 44% in the quarter. Was that FX-adjusted or not? And then I think the guide implies somewhere in the high 30s for the full year. Any reason why growth would decelerate? Is it just tough comps, some conservatism, anything to call out there that would be helpful?

[David S. Schwartz, CFO & Corporate Secretary]

Yes. It's not currency adjusted. But from a currency perspective, there isn't a material impact. So it's pretty, pretty similar. Nothing -- in terms of outlook and growth for the rest of the year, nothing structurally. For sure, we'd like to be somewhat conservative, but nothing structurally has changed. I think the pro forma numbers I mentioned are good kind of data points to think about for the rest of the year.

[Operator]

Our next question is from Bob Napoli with William Blair.

[Robert Paul Napoli, Partner and Co]

Congratulations as well. Very impressive performance. The -- so I think, Phil, you said that your implementations for e-commerce were up 3x year-over-year and as you exited the quarter. Was trying to get a little color on which -- where you're seeing overweighted acceleration in that? And I know some of the less penetrated areas that you had highlighted, U.S. gaming, social gaming, and marketplaces were 3 areas of potential high growth. So maybe a little color on where you're seeing that 3x increase?

[Philip Fayer, Chair of the Board & CEO]

Sure, Bob. I'm happy to. It's interesting for our business is we're very targeted, right? Because the verticals that we solicit are from our direct sales force. So we are able to curate the merchants that fit our solution stack and merchants that fit the vertical capabilities into the markets that we operate in. And so we're seeing the wins really across the board. And when you end up talking about regions, certainly, Europe has been a big area of growth for us. America is -- and Canada are picking up right now. LatAm is an area of large focus for us. And APAC is an area that we hopefully will have some more announcements as the year progresses. So from a vertical perspective, really across the board, Bob, I think we're seeing wins in our gaming business in Europe, in North America, we have a very interesting pipeline. When you look at social games, we did announce war gaming in APAC. So we are seeing some very nice traction in social games. And certainly, marketplace is something that is an area for us to continue developing throughout the year.

[Robert Paul Napoli, Partner and Co]

Then a follow-up on Latin America. I mean, you've highlighted that several times and you announced -- I mean, opening Argentina, Chile, Peru, Ecuador, I mean that market is relatively more difficult to compete in closed market. I think it's opening up to outside payments companies. But how are you able to open -- when we say open 4 countries, maybe a little color on that and your thoughts longer-term on your LatAm focus?

[Philip Fayer, Chair of the Board & CEO]

Yes, great question. So when you look at how we're coming to market, right you have taking your customers in, you have taking customers out and then you have local acquiring in customers in market that you mentioned, Bob. Does that make sense?

[Robert Paul Napoli, Partner and Co]

Yes.

[Philip Fayer, Chair of the Board & CEO]

In our case, we're helping our merchants enter those markets. And so we're taking our existing customers and helping them activate and launch in those markets. So we have now providing -- we are now providing full local acquiring capabilities coupled with our APMs, which are table stake. There's quite a bit of requirements for merchants, and this is something that really depends on their business model. So you have merchant record models and you have local acquiring. And as you know, local acquiring requires local establishments for merchants to operate in, but we have flexibility in terms of the model that makes the best sense for them as they start expanding across LatAm.

[Operator]

[Operator Instructions] Our next question is from Paul Treiber with RBC Capital Markets.

[Paul Michael Treiber, Director of Canadian Technology & Analyst]

Congrats on the quarter as well. Just looking at the percentage of e-commerce numbers that you provided for Q1 and Q4, just doing the math, [indiscernible] math, it looks like e-commerce revenues were up 40% sequentially, whereas the non e-commerce is maybe down in the mid-teens or so. Just in terms of e-commerce, can you rank among the key drivers of growth? Which ones were most impactful to driving that sequential growth that you're seeing? And then in regards to card present, is there anything in terms of seasonality or is it just market-related in terms of the drop in the non e-commerce business?

[Philip Fayer, Chair of the Board & CEO]

Sure. Dave, do you want to take this one?

[David S. Schwartz, CFO & Corporate Secretary]

Sure. So yes, from a seasonality perspective, I mean, I don't think there's anything that's not a very seasonal business. So I wouldn't say there's anything specific on the seasonality side of things. And sorry, your other question, Paul, the first part of the question?

[Paul Michael Treiber, Director of Canadian Technology & Analyst]

Just in terms of ranking the drivers of sequential growth in the e-commerce business?

[David S. Schwartz, CFO & Corporate Secretary]

Yes. I mean, we saw it across the board. There wasn't any specific vertical per se that stood out amongst the others. There really was -- across our 7 verticals that we focused on to the most part, it was growth in all areas. And it's really -- it's as a result of everything we've been doing from existing merchants as it relates to wallet share expansion with them and entering new markets. And then for sure, the direct investment, which is driving growth from new merchants as well. So it's -- I wouldn't say there's anything specific to point to. It's really across the board and just a continuation of kind of the execution of the strategy that we've put in place.

[Paul Michael Treiber, Director of Canadian Technology & Analyst]

And then just wondering, if you can delve deeper into the strategy for gaining wallet share with your customers, typically, is there a path that customers take in terms of the first product that they adopt and then typically, how quickly after that do they adopt subsequent products? And do you see -- how sort of penetrated is that customer base in terms of adopting your full stack of solutions?

[Philip Fayer, Chair of the Board & CEO]

It really depends on how the customer integrates with us. So about 50% or 60% all use our cashier and cashier are highly customized, deeply embedded payment pages into the merchant checkout work stream. That allows us to roll out features effectively instantly. If they're using the API or our SDKs, then they need to elect the features that they want and they need to develop on them. So it's truly a dependency of how the merchants integrate it. And then depending on that integration, how quickly we can roll out new features to them is based on their needs.

[Operator]

Our next question is from Richard Tse with National Bank Financial.

[Richard Tse, MD & Technology Analyst]

With respect to the acquisitions, I was wondering if you maybe comment on the level of competition for those transactions? Is it sort of you're kind of on your own or you've got a number of other bidders here working against you on those deals?

[Philip Fayer, Chair of the Board & CEO]

Yes. Great question, Richard. As you know, M&A is very active these days. So we take pride on self sourcing. We have elected not to necessarily participate in every process that comes out, but really look at the areas and the capabilities that help change the verticals that we operate in and naturally help us helping our customers connect with their customers. So they're all proprietary, both Mazooma and Simplex were proprietary deals, and they were self sourced by capability. And yes, they're always very active, and they're always very competitive even self source. But it allows us to manage the narrative and work at our own pace.

[Richard Tse, MD & Technology Analyst]

Okay. And with respect to Simplex, it's kind of really interesting in terms of an opportunity. Given your Base is probably some of the more progressive companies out there, what proportion would you say are seriously considering accepting crypto's payments?

[Philip Fayer, Chair of the Board & CEO]

Yes. It's a great question. The reality is we have to support every form of payment because that is what we provide to our customers. So you have to unpack it a little bit, single integration, really a world of opportunities from local acquiring to connectivity to alternative payment methods to crypto, all neatly reconciled, deposited, both on the way in and the way out, right? Really, that is -- and then we certainly provide all our value-added services from fraud management, authorization approvals and cascading. But we have to come to the table with solution stack, and we're always focused on making sure that we're as innovative as possible because missing 1 sale for us is unacceptable. And certainly, we want customers to convert as many opportunities as they have and to be able to enable that in the medium that their customers choose to pay in. Crypto is interesting because still 60%, 65% is speculative. But over time, as folks look to use these currencies and maybe not, 1 or the other, but maybe even some stable coins, we want to enable it on a seamless basis. It is a discussion point and it is something that our merchants are considering. Not all of them are there, but when they choose to do so, for them, it's really just another form of alternative payment method, and there's no change to their entire operational back office reconciliation management on the day-to-day.

[Operator]

Our final question is from Paul Steep with Scotiabank.

[Paul Steep, Analyst]

So could you just speak a little bit to maybe what's going on with the cadence in U.S. online gaming. If you've seen in terms of customers' decision cycles as well as sort of how you're viewing the evolution of the strategy.

[Philip Fayer, Chair of the Board & CEO]

Yes. Great question, Paul. We've always been at the crawl, walk, run aspect, and we've been very consistent on that. I think coupled with Mazooma today from a technical and product offering, we're extremely competitive, coupled with Mazooma today. Certainly, we have relationships with just about every 1 of the major operators. From a Nuvei standpoint, ultimately, we were there to integrate with every provider, so our technology does exactly what we do everywhere around the world. Collapse inefficient vendors and have them have 1 integration to really any acquirer, any alternative payment method, any [ debit ] processor, PayPal or other as they so choose to. With that, we have seeked and secured licensing of every major state and continuously follow through that as a registered gaming provider, and they have different terms of it per stay. And then naturally providing from credit to debit, the acquisition of Base allowed us to provide basic ACH and introduction of check guarantee and now with Mazooma account-to-account. So we really feel the journey has been initially crawling. Today, I would say we're walking, combined with Mazooma I think we have a very compelling product mix. And more importantly to that is with Mazooma, we're also integrated to all the gaming platforms. So not just the customers but also the gaming platforms, which we think helps accelerate our ability to execute on our U.S. gaming strategy.

[Paul Steep, Analyst]

Great. One quick clarification. Just in terms of your increased investment in sales and distribution, can you just talk to us a little bit about timing-wise as to when you think that extra distribution would be in place? Are you calling it actually 6 months fully forward? Or should we think that okay, you're aiming to have everybody ramped and online for the end of Q3?

[Philip Fayer, Chair of the Board & CEO]

Great question. We -- it's very much an art to expand the distribution channel, so onboarding, training, the buddy system, giving them the tools, surrounding them with solutions engineers. So it's not just if you want to frame it as hunters and farmers but it's all the back office capabilities that come along with that. From our standpoint, we're bringing it forward. So we're bringing it forward of investments that we're planning for in 2022 to start those today. It's not a day one, right? I mean, typically, this is an initiative that takes time to hire, to recruit, to train. We do it on a class base and time base. So from us, we're bringing it forward, you wouldn't have that sale -- that entire sales force ready within a few months, but you're bringing it forward 6 months. Does that make sense?

[Paul Steep, Analyst]

Absolutely.

[Operator]

Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation. Have a great day.