Nuvei Corp

TSX:NVEI

Earnings Call Transcript 2021-Q4

[Operator]

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Nuvei Corporation's Fourth Quarter 2021 Earnings Call. As a reminder, this conference call is being recorded. I'll now turn the conference over to Anthony Gerstein, Vice President and Head of Investor Relations for Nuvei. Please go ahead, sir.

[Anthony Gerstein, executive]

Thank you, operator, and good morning, everyone, and thank you for joining us. With me today are Philip Fayer, Chair and CEO; and David Schwartz, CFO. As a reminder, this conference call is being recorded and webcast and is copyrighted property of Nuvei, 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-month period and full year ended December 31, 2021. The release as well as an accompanying presentation is 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 anticipated results, performance achievements and developments expressed or implied by such forward-looking statements.

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

Our discussion today will include non-IFRS measures, including adjusted EBITDA, adjusted net income, adjusted net income per share and free cash flow. Management believes non-IFRS results are useful in order to enhance our understanding of our ongoing performance, but they are not 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 is available in our earnings release and MD&A. We'll open up the call to your questions after our prepared remarks.

With that, I'll now turn the call over to Phil.

[Philip Fayer, executive]

Thanks, Anthony, and thank you, everyone, for joining us today. We had an excellent fourth quarter delivering results ahead of our outlook and capping off an exceptional year in which we advanced our strategic initiatives while achieving an unprecedented number of milestones along the way.

For the fourth quarter, total volume increased 127%, revenue increased 83% and adjusted EBITDA increased 78% year-over-year. For the full year 2021, total volume increased 121%, revenue increased 93% and adjusted EBITDA increased 95% year-over-year. On an organic revenue basis, which excludes revenue from acquisitions completed in the trailing 12-month period, increased 55% and 61% for the fourth quarter and full year, respectively.

Our net revenue retention rate was 146% for the 12 months ended December 31, 2021.

Our consistent revenue growth profile, combined with our exceptional free cash flow generation and strong balance sheet is class-leading in our opinion, when comparing Nuvei to many other fintech companies.

We have made tremendous progress transforming the company to a leading global payments platform. Most importantly, our TAM is large and growing, and we see so much opportunity ahead of us. To continue to accelerate our momentum, we've announced several promotions and leadership changes across our organization. First, we've appointed Yuval Ziv to President of Nuvei, a newly created global role. Yuval has been with the Nuvei group of companies for the past 15 years and his leadership and experience are invaluable; Nuvei's worldwide product, sales, marketing, client engagement and AI.

We've also promoted Praful Morar, who joined the company in 2014 as Chief Strategy Officer, to Nuvei's Global Expansion Officer. Praf has moved to Singapore and is responsible for driving Nuvei's international growth in target markets across Asia Pacific, the Middle East and North Africa. Third, we've appointed Netanel Kabala, a co-founder of Simplex, who joined through our acquisition of Simplex last September to Chief Data and Analytics Officer as we continue to grow our data-led services. I also want to welcome all 75 of our new teammates who joined us in the fourth quarter from around the world. We're excited to have you as part of the Nuvei family, which totaled 1,368 at December 31, 2021.

We remain steadfast in our mission to make the world a local marketplace by growing our modern, scalable, modular technology with our key growth pillars, namely expanding our geographic reach, growing with our existing customers, accelerate new client wins and, finally, exploring inorganic opportunities that drive further value to our customers.

As you know, our focused verticals each have inherent growth, longevity and a propensity to operate globally. Our technology and expanded geographic reach is helping win customers in all our core verticals, which include regulated online gaming, social gaming, online retail, digital goods and services, financial services, travel and now digital assets in cryptocurrencies. We're excited about the progress we're making across all verticals and in our earnings supplement and press release today. We are providing a onetime disclosure, which includes showing revenue contribution and growth by vertical for the full year 2021.

While we have historically discussed concentration by vertical in terms of gross profit dollars, which continues to be no more than approximately 21% for any given vertical, our additional disclosures provided today focus on revenue to remain consistent across all onetime disclosures. As you'll be able to see, Nuvei is experiencing momentum across all verticals, but we are especially pleased with the progress we're making in our focused global verticals.

At our core, we are a technology company. We're a payment innovator, driving real-world solutions that make a material difference to our customers' businesses. What's crucial to understand is that our modern, scalable, modular technology stack addresses the needs of our customers with an unprecedented number of solutions offered uniquely as modules, a la carte, that go far beyond acquiring.

Our technology stack has been purpose-built from the ground up by our nearly 500 software engineers and products experts supporting our exceptional growth. Having our own acquiring licenses in multiple jurisdictions, principal membership with the card schemes and our own processing platform allows us to dictate our own road map and is a primary reason we have been able to successfully accelerate our product innovations. In fact, we are one of the few truly global payment platforms to date. Available a la carte as modules, our platform offers our customers incredible flexibility as they look to simplify inefficient technologies, consolidate global vendors and streamline their back-office functions while achieving cost and operating synergies.

While we intend to unpack these modules and respective features in detail at our upcoming Capital Markets Day, I thought it important to highlight a few key modules. The journey begins with the flexibility of our API solutions, allowing our customers to connect to our platform for their global operations, supporting in-app, online and soon in-store customer engagements or, preferably, our customers can elect to use our low code cashier, simplifying global commerce and instantly offering our entire toolkit while de-scoping PCI burden.

Once integrated, our clients can use our solutions as is appropriate for their business model. And this could include our advanced authentication tools to comply with enhanced customer authentication mandates around the world, available as plug-ins, meaning that our authentication tools are available with -- in conjunction with any third-party acquirer.

Our global payment gateway, which offers payment orchestration and connectivity to over 200 markets around the world. Our single global processing platform connected directly with the card schemes. Our local acquiring, now offered in 46 markets globally. We simplified onboarding and contracting. Our open banking payments for faster SEPA and instant SEPA in Europe, faster payments in the U.K. and ACH, same-day ACH and RTP in the U.S.

Our more than 530 alternative payment methods, including cryptocurrency acceptance. Our instant payout solutions across multiple payment mediums. Our risk-as-a-service enabling transaction scoring, mitigation and now full guarantee from both ACH and card acquiring.

Our debit and very soon prepaid card issuing. Our advanced currency management solutions to help localize product offerings. Our rich data reporting to enhance business intelligence. Our extensive reconciliation tools to streamline back-office functions across all regions. Our on- and off-ramp solutions for cryptocurrencies, NFTs and DeFi supporting over 109 different coins via 89 different fiat currencies in addition to a long list of value-added capabilities that build deep moats with our customers.

And while the list is long, I thought it worthwhile to highlight our native commerce platforms, which includes all key components that our customers require to operate globally. Each individual module has its own independent addressable market. And that's why you can't simply compare acquiring-only peers to Nuvei as our modules expand our TAM and differentiate Nuvei from additional and legacy acquirers.

And remember, to enable all this functionality, customers would need multiple vendors per country, resulting in increased costs, complexity inefficiencies, which would impact their flexibility and ultimately hinder their growth opportunities. Providing all these services is why we win.

For example, combining risk-as-a-service, acquiring and payouts, simplifies experience for both our customer and their customers as we manage the complete risk-free process of pay-ins regardless of payment medium; reconciliation, drive real-time payouts to our customers' customer and net settle to our customer, eliminating back-office workload, allowing our customers to focus on what's important, growing their business. So while each module can be consumed individually, combining them together creates an incredibly powerful offering to our customers, their customers and Nuvei.

We believe our approach to offering solutions as individual modules provides greater flexibility and allows us to engage with customers based on their specific needs at the time of onboarding and grow with them as their needs and requirements change. It's a foundation to our land and expand strategy and what drives our net revenue retention rate, which I'll highlight in a moment.

We've broken out processing revenue into acquiring and modular technology revenue to help you appreciate the breadth of our technology and the relevant contribution to our growth trajectory. For the full year 2021, acquiring represented approximately 62% of total revenue, an increase of 73% from the prior year; while modular technology revenue represented 38% of total revenue, increasing 138% from the prior year, nearly twice the rate of acquiring. Because of our modular technology and its significance to our success, you can see why comparing Nuvei to other acquirers is simply not accurate in our view. Most importantly, we're not standing still as our pace of innovation is accelerating.

At the same time, our technology is scalable. In 2021, our transaction count grew 77% from 2020. Breaking it down one level deeper, credit card transactions increased 51%, debit card transactions increased 21% and alternative payment methods increased 286%. Furthermore, we have ample capacity to continue processing significantly more going forward. And because our technology is fully proprietary, we customize our solutions to any customer, vertical and geography. This flexibility is paramount as we continue scaling and growing our customer base around the world. The takeaway here is that Nuvei's technology is really second to none in our opinion. Unlike other global payment providers, including Adyen and Stripe, we believe customers prefer our flexibility in our modular offering. We are one of the few leading global payment solution providers with this depth of capabilities, which is driving our overall performance and showing up in our new customer wins, which I'll address momentarily.

I'll now walk you through our growth pillars in greater detail to help you appreciate our focus, momentum and growth trajectory. I'll also describe how we've expanded our TAM and explain why we are so confident in our outlook for this year and beyond.

First, let's talk about geographic expansion. Many of our customers may be expanding country to country, growing not only in one market but in many markets around the world. As we enable more geographies, it allows our customers to seamlessly and immediately access those markets via their existing integration into Nuvei.

And this is where we absolutely shine. We normalize customer experiences from market to market so they could focus on growing their business. And coupled with our single integration, as we enable more countries, our clients can activate them without any technical integration whatsoever.

Today, we offer connectivity in over 200 markets, making sure our platform can support our clients everywhere they want to be. Additionally, we now offer local acquiring in 46 markets with simplified onboarding, contracting, client services and standardized reporting.

As part of our geographic expansion strategy, we also continuously seek payment institution licenses, card association memberships and acquiring licenses in order to better support our customers. We have obtained our Visa license in both Hong Kong and Singapore. We continue to focus both in Asia and LATAM to expand our self acquiring. As this occurs, it allows us to increase our capabilities to providing gateway or routing-only, to provide full stack end-to-end offering. This strategy, in unison with our technology, is another key pillar to driving our impressive NRI. Embedded in our geographic expansion is the change in regulatory framework around the world in certain key focused verticals.

As you know, we believe we are in the very early days of online gaming and sports betting, not just in the United States but also in Canada and hopefully soon in Brazil. We are executing well in these markets, and our momentum in the U.S. has been accelerating. In 2021, we launched our global payment business unit in North America and significantly enhanced our capabilities in LATAM with the acquisition of Paymentez.

Today, we have commercial teams across both regions, and coupled with key product launches, we now support most of our modular offerings in both geographies, dramatically expanding our TAM from 2020. And naturally, we are not stopping there. Our mission is to make the world a local marketplace. And while we are focused on scaling in our current regions, we're also excited about meaningfully expanding our presence in the key Asian markets.

For perspective, looking at our revenue by region for the full year 2021, EMEA, North America, LATAM and APAC represented approximately 54%, 42%, 3% and 1% of revenue, respectively. And from a growth perspective, EMEA, North America, LATAM and APAC all increased 123%, 64%, 112% and 16%, respectively.

Our second growth pillar is growing with our customers. And when you bring it all together, approximately 80% of our growth in 2021 came from capturing greater wallet share from our existing customers. And these are driven by a change in consumer behavior, advancing regulatory frameworks, our customers' own growth trajectory, our technology and our new geographies. This is best reflected in our overall net revenue retention rate of 146% for the 12 months ended December 31, 2021. What's most interesting and compelling is that when you unpack it further, you'll see that our global e-commerce direct channel had an NRR of 179%, which is a true testament to the success of our investment in this channel.

Our global e-commerce direct channel is the largest in terms of revenue contribution and is growing the fastest. By contrast, our North American small business portfolio and our e-commerce reseller channels are slower growth and a smaller part of our revenue. Naturally, as our global e-commerce direct channel continues to expand, so too will our growth.

With our new geographic capabilities in North America and LATAM, we feel there remains a significant opportunity to cross-sell within our current customer base, and we're starting to see this with some of our existing gaming customers who are entering the U.S. and Canadian markets, for example.

The next growth pillar is winning new customers. As you may recall, we have frequently spoken about being underdistributed, and we've since been accelerating our investments and expanding our direct commercial teams globally. We've done this because of complexity, the breadth of our technology and the types of customers we are targeting, in addition to its global nature, simply requires a direct sales force.

Our investments are yielding exceptional results with so much more to come. Our objective remains to be local to our customers around the world and remain focused on continually expanding our sales force in every region to make sure we have global coverage. We manage our commercial teams by having regionally, vertically focused sales teams that are in-country, in time zone and in-language, supported by a team of local solutions engineers, integration specialists and account managers.

This white glove service is crucial to building relationships with our customers given the complexity and importance of the challenges we are solving for them and the sophistication and capabilities of our leading technology. Looking back, we started with the commercial team of about 10 salespeople and have now expanded to more than 100 at the end of 2021 with a target of multiplying again in the coming years, mostly as a result of our expanded TAM opportunities, as I mentioned earlier.

In 2020, new in-year customers generated $42 million in revenue. This cohort subsequently grew 2021 to more than $190 million. In 2021, new in-year customers represented an excess of $71 million, which represents a 69% increase in new business compared to 2020.

You can appreciate that the 2021 cohort is expected to significantly grow in 2022. And our momentum continues as we see exceptional depth in our pipeline. We are engaged with the who's who across all our key verticals and geographies. We're expecting a very strong performance in this area in 2022.

Alongside our investment in direct sales is our increased investment in marketing. For perspective, we're increasing our marketing spend in 2022 by up to approximately $20 million compared to 2021. We expect this investment to yield greater brand awareness with the objective of ensuring Nuvei is associated with other global providers. The increased marketing spend is fully considered in our adjusted EBITDA outlook for the year. Remember, our land and expand strategy is also relevant to new sales and allows us to engage with customers around the flexibility of our modular technology offerings, which means Nuvei can build relationships with customers and grow with them accordingly.

Turning now to our last strategic growth pillar, which is M&A. We don't do acquisitions simply to buy short-term revenue growth. Rather, our acquisition strategy follows 3 strict criteria as we look at adding new geographies, new capabilities and/or scale to support our long-term growth.

We completed 4 acquisitions in 2021, Base Commerce, Mazooma, Simplex and Paymentez, and we are pleased with how all these acquisitions are performing. What's most exciting is that each one of these early-stage businesses strengthens our technology and sales proposition, bringing additional growth opportunities and capabilities to our platform for the long term.

For 2021, we reported revenues from these 4 acquisitions of approximately $73 million, representing approximately 10% of our revenue. Going forward, our exceptionally strong balance sheet and low leverage provides optionality and flexibility as we continue exploring future opportunities.

With additional onetime disclosures today and the double-click into our growth pillars, you should have a much better understanding as to why we are unique when compared to others in the space and appreciate why we're so excited about our future.

We're also looking forward to sharing even more detail with you at our upcoming Capital Markets Day later this month. This morning, we are announcing that the Board has authorized a share repurchase program, pursuant to which Nuvei can purchase in open periods in 1 or more transactions and at its discretion up to approximately 6.6 million subordinated voting shares over the 12-month period, which represents approximately 10% of the public float.

The NCIB does not obligate Nuvei to acquire specific dollar amount or number of shares and may be extended, modified or discontinued at any time. Also this morning, we're introducing our financial outlook for the first quarter and full year 2022, which Dave will walk you through in greater detail. We are also reiterating the medium- and long-term targets previously provided of total volume and revenue growth in excess of 30% annually in the medium term and adjusted EBITDA margins greater than 50% over the longer term.

Before turning it over to Dave, I want to briefly touch on the tragic events in Ukraine. Our thoughts are with the innocent people of Ukraine. As it relates to our business, we are, of course, complying with all global sanctions and confirm that our exposure there is negligible. We've also announced that we will match any and all employee donations to any accredited charity supporting Ukraine up to a total of $500,000. Furthermore, I've extended our global HR teams to help our employees across neighboring countries to ensure theirs and their families' safety.

Finally, I want to recognize all the fabulous and hard work of all of our employees who contribute to Nuvei's success each and every day. Your commitment is invaluable and it's a privilege to have you all the shareholders through our global LTIP program, which we introduced company-wide in November. We also recently implemented a policy that each time we beat our outlook, our employees receive an additional 2.5 days' vacation. You guys are rock stars, I'm grateful for your dedication and contribution to our mutual success.

In closing, I'll reiterate how pleased I am with our results and the progress we are making across the entire company. I love where we sit as a company today and have never been more confident and optimistic about our future. With that, I'm going to turn it over to Dave to discuss the financials and our financial outlook for 2022.

[David Schwartz, executive]

Thanks, Phil, and good morning, everyone. Let me start with what we believe to be the 4 key financial takeaways from our fourth quarter. As a result of the power of our platform, we grew revenue year-over-year by 83%, and on an organic basis, this translates to revenue growth of 55%. Our scalable operating model drove adjusted EBITDA margin of 43% and generated free cash flow of $82 million. As you can see, we had another great quarter.

Now let me get into the details. In addition to the 4 key takeaways, the fourth quarter represented some new milestones for Nuvei. Notably, it's the first time that total volume exceeded $30 billion and revenue exceeded $200 million in a given quarter. More specifically, total volume increased 127% to $31.5 billion and was above the top of our outlook range of between $25.5 billion and $26.5 billion. The variance versus our outlook is in part due to certain recent large wins in the government and charitable services sector, which also tend to have higher volume in Q4.

For the quarter, revenue increased by 83% to $212 million compared to our previously provided outlook range of between $204 million and $210 million. Organic revenue, which excludes revenue attributable to acquired businesses for a period of 12 months following their acquisition and excluding revenue attributable to the divested businesses, was $179 million, representing 85% of our revenue and which grew by 55%. Previously, we presented different adjusted revenue non-IFRS measures. But as we continue to execute on our acquisition strategy and align with other companies in our industry, we believe organic revenue and organic revenue growth best portrays our organic growth and presents more useful information about comparable growth in the period.

Take rate in the fourth quarter was lower due to high ticket transactions such as property tax payments and chartable donations relating to the new client wins I just mentioned. In many cases, especially for property taxes, the fees charged are typically fixed transaction fees, therefore, these transactions have a lower yield. However, as we've stated in the past, our focus is on meeting the needs of our customers and driving incremental gross profit dollars through our land-and-expand approach.

Gross margin in the fourth quarter was 76.8% compared to 79.7% in the fourth quarter of 2020. The change in gross margin is primarily as a result of the inclusion of certain acquisitions which have a higher associated cost of revenue. In terms of gross profit for the quarter, we generated $163 million, which represents more than a $70 million increase as compared to the prior year period.

Selling, general and administrative expenses increased by $72 million as a result of both organic and inorganic growth. The largest contributor to the increase in SG&A was share-based payments, which increased by $30 million, primarily due to awards to employees who joined Nuvei as part of the acquisitions completed during the third quarter and other employee grants made in the third and fourth quarters, including the annual LTIP grant for our entire employee base, which occurred in the fourth quarter.

Employee compensation other than share-based payments increased by $21 million. This is as a result of the investments we're making in the business, including distribution and technology, as well as increased headcount of approximately 280 team members and our associated costs relating to the 4 acquisitions completed in the year. Commission expense increased by $10 million, primarily due to the acquisition of Base Commerce as well as the increase in commission-based volume and revenue from organic growth.

Adjusted EBITDA increased by 78% in the fourth quarter to $91.5 million as compared to the outlook range we previously provided of between $86 million and $90 million. Adjusted EBITDA margin was 43% in the quarter compared to 44% in the prior year period and towards the top end of the outlook range. Net finance cost was $4.5 million compared to just over $1 million in last year's fourth quarter. And that's mainly due to increased borrowing costs related to the acquisitions we made in 2021.

Income tax expense in the quarter was $7.5 million, which represented an effective tax rate of approximately 38%. The reason for the higher effective tax rate is primarily due to an increase in nondeductible share-based compensation expense. As the share-based expense is expected to continue, the effective tax rate will also continue at this level, everything else being equal.

Net income for the quarter was $12.3 million or $0.07 per diluted share compared to $22.6 million or $0.16 per share in the fourth quarter of 2020. As I mentioned earlier, this year's fourth quarter included a $30 million increase in share-based expense, which represented approximately $0.20 per diluted share. Adjusted net income was $70.6 million or $0.47 per diluted share compared to $46.5 million or $0.33 per diluted share in the fourth quarter of 2020.

I will now turn to our full year results. Total volume increased 121% to $95.6 billion from $43.2 billion in 2020, with e-commerce volume representing 86%. Revenue for the year increased 93% to $725 million and $376 million in 2020. Gross margin was 79.6% compared to 81.6% in 2020. Similar to the fourth quarter, the change is primarily as a result of the inclusion of certain acquisitions which have a higher associated cost of revenue. SG&A expenses increased by $196 million as a result of both organic and inorganic growth, of that, commission expense increased by $58 million, employee compensation other than share-based payments increased by $52 million and share-based payments increased by almost $43 million.

Adjusted EBITDA for the year increased 95% to $317 million, up from $163 million in the prior year. Adjusted EBITDA margin was 43.8%, which compares to 43.3% in 2020. Net income for the year was $107 million or $0.71 per diluted share compared to a net loss of $104 million or $1.08 per share in 2020. Adjusted net income was $249 million or $1.69 per diluted share compared to $89 million or $0.85 per diluted share in 2020.

Looking at our balance sheet and liquidity for the year. Our cash position and cash generation remained strong. Cash flow from operating activities for the full year was $267 million compared to $95 million for the comparable prior period. Free cash flow, which we define as adjusted EBITDA less capital expenditures, increased to $290 million for fiscal year 2021, representing free cash flow conversion of over 90%. As at December 31, 2021, we had cash of nearly $750 million, which includes the net proceeds of $411 million raised from our NASDAQ listing in the fourth quarter. In addition, we had term debt of $500 million, resulting in a net cash position of almost $250 million with access to an additional $385 million available under our revolving credit facility. In addition, our leverage remains low.

I will now discuss our financial outlook for the first quarter and full year 2022 and refer you to our forward-looking information disclosure in our press release and MD&A. For the first quarter, we expect total volume of between $28 billion and $29 billion, revenue of between $208 million and $214 million and adjusted EBITDA of between $82 million and $85 million. For the full year 2022, we expect total volume of between $127 billion and $132 billion, revenue of between $940 million and $980 million and adjusted EBITDA of between $407 million and $425 million.

The outlook, specifically the adjusted EBITDA, reflects our strategy to continue to invest in our business such as in distribution, marketing, innovation and technology. Historically, our marketing spend has been nominal. As Phil mentioned for 2022, in addition to the investments we are making in the marketing team, we've also planned to significantly increase our advertising spend, to increase brand awareness and drive growth. We're very pleased with our Q4 and full year 2021 results and are excited about 2022. We're now happy to answer your questions. Operator, please open the lines for Q&A.

[Operator]

[Operator Instructions] Our first question comes from the line of George Mihalos with Cowen and Company.

[Georgios Mihalos, analyst]

Congrats on the results, the outlook. And I'm not sure if there's anything left to complain about in the disclosure. I think you covered more than everything anyone could have imagined. I guess first question for me, guys, if we look at the guide for '22, a couple of macro things to sort of think about. I'm assuming FX is working against you now. I know you usually don't call that out. But I'm just curious, how much of a negative impact is embedded in the guide for the strengthening USD?

And then just a point of clarification, Phil. I understand you don't have direct exposure to some of these Ukraine and Russia and the like. But I'm just curious, could there be any sort of fall through for some of the partner platforms that you service? And any sort of slowdown there that might give you some pause?

[Philip Fayer, executive]

Thanks, George. I'll take your second question. I'll let -- go ahead, Dave.

[David Schwartz, executive]

George, I'll take the first one. I guess, Phil will take the second, as he was just saying. So from an FX perspective, as you probably know, the largest single currency we deal with is the U.S. dollar. The euro would probably be the second largest that we deal with. So -- and we're obviously operating in an environment that has some volatility, and so it's kind of difficult to forecast.

So for the most part, we've kept it relatively flat. And what I'd say is in recent history, the FX impact has been pretty minor on our results. So like I said, probably we're in U.S. dollars anyway. So that impact should be muted because of that. I'll let Phil answer the next question, the second part.

[Philip Fayer, executive]

Thanks, Dave. And George, for clarification, so we don't have any merchants that operate in Russia and Ukraine. Naturally, there are our customers' customers that were accepting transactions from Russia and Ukraine. We have implemented the sanctions as they were developing. And certainly, this week, Visa, Mastercard have ceased accepting transactions across the board. It was a very small and negligible amount of volume from our end. In terms of platforms, when we end up looking around it, and we included this impact ultimately in the outlook for 2022, we found that also to be fairly negligible.

[Georgios Mihalos, analyst]

Okay. That's helpful. And just a quick follow-up. Phil, if you look at the growth you've seen in the modular technology and the success you're having there, I'm just curious if you could talk a little bit about the pipeline of where a customer starts with you on the modular side and then you're able to sort of cross-sell the acquiring into them. What does that pipeline look like? And typically, if there is -- if you can say typically, how long does it take to sort of get that cross-sell into new customers?

[Philip Fayer, executive]

Yes. Thanks, George. Great question. I mean, we always start with the ethos that we want to help our customers connect with their customers. And whichever module is right for their business, it's a win for us. So for us, we have ultimate flexibility of how customers engage and utilize our platform. Sometimes, it's restricted on one particular item, but that item allows you to grow.

For example, in one of our large social gaming customers. They started with one single alternative payment method and now expanded to multiple. So the expansion is not just necessarily to -- moving from technology to acquiring. It's really what's right for their business and how do we incorporate the customers' needs from a geographic perspective and from an overall market perspective into our product road map. So our team is tasked naturally of building relationships, understanding where their needs are. We do a great job of staying close to the customer and embed them really within our road map. And that is what's driving the growth from the business because roughly 80% of our growth last year came from existing customers.

[Georgios Mihalos, analyst]

Congrats again.

[Philip Fayer, executive]

Thanks, George.

[Operator]

Our next question comes from the line of Will Nance with Goldman Sachs.

[William Nance, analyst]

Thank you for all the additional disclosures. Really great and a lot of work that went into those. Wanted to ask a question on some of the near-term puts and takes. I know -- and I guess we can see from the new disclosures that there is a decent exposure on the cryptocurrency side. Just wonder what you're seeing from an activity level perspective and whether that's kind of impacting any of the near-term numbers.

[Philip Fayer, executive]

Thanks, Ron. On the crypto side, we've taken that into consideration. So naturally, Simplex is directly tied because they do on and off-ramp. So they're directly tied to the price of crypto, so certainly we have taken that into consideration.

From an overall perspective, what we found in the crypto market is because they utilize multiple solution stacks across the board from us, we feel that this year will be a continuous trend of last year. As -- if you look at our portfolio, we have predominantly services now in Europe where we're looking at expanding that into North America and LatAm. So those will offset any of the headwinds that we would see in Europe.

[William Nance, analyst]

Got it. That's helpful. Appreciate it. And then just on the Simplex business, any color on just thought process or plans on rolling that out to other verticals outside of crypto and what the road map on the product looks like?

[Philip Fayer, executive]

Yes. We have a really exciting road map around Simplex, so it's not just rolling it out to other verticals. It's actually looking at infrastructure, custodial, looking at pivoting more -- with a greater focus on NFT platform. So there is an incredible amount of opportunity with Simplex within its own current vertical focus. But certainly, from a Nuvei standpoint, we are using that capability from a transaction guarantee perspective, and that is planned for this year.

[Operator]

Our next question comes from the line of Sanjay Sakhrani with KBW.

[Sanjay Sakhrani, analyst]

I appreciate all the disclosure as well. I've got a bunch of questions, but let me focus on one related to earnings and one on the disclosures and just maybe summarizing some of the ones that were asked before. Just in terms of the outlook for 2022, can you remind us, David, maybe how much of the acquisitions contribute to the growth rate?

And then, Phil, you sort of indicated you were applying some of the market pressures out there from a macro standpoint in crypto as well. Can you just maybe just go through sort of the macro assumption embedded in your guidance?

[David Schwartz, executive]

Thanks, Sanjay, it's David. So from an acquisition perspective, I guess what I'd point you to is you'll see in our financials -- and I'll give you a bit of history, and then I'll talk a bit about kind of the outlook, which is more of your question. But on a historical basis, the acquisitions represented about 10% of our revenue for the full year of '21 and about 13% for Q4.

So on a go-forward basis, for the most part, Mazooma and Paymentez are still kind of early stage in terms of the size of revenue they contribute, and you'll see that base is larger but a more steady kind of business.

Phil just alluded a bit on the Simplex side, that's -- and we would be talking about what was questioned before, that's where it's a little bit more, let's say, volatile and difficult to forecast as we look forward just because of the sector that Simplex primarily services today. So we've taken that into consideration in our outlook, but it's certainly part of the growth that we see coming forward.

[Sanjay Sakhrani, analyst]

Anything more, like on the macro? Like you guys are assuming crypto is going to be weak. Anything else from a macro perspective inside that? And the share buyback, like are you guys assuming you're going to use it?

[Philip Fayer, executive]

Lots of questions there, Sanjay, but let me come back to them.

[Sanjay Sakhrani, analyst]

Sorry. I told you I had a lot of them.

[Philip Fayer, executive]

Yes. So what we assumed is -- and Dave highlighted, we assumed a slower year for in 2022. Certainly, Simplex moves fast, right? As markets change, Simplex moves very quickly as well. On the crypto portfolio, for us, we've assumed a relatively flat crypto this year, predominantly as slowdowns are offset by more market expansions, which we're executing on now.

So we feel really good about where we sit. The other element to highlight is we're pivoting to -- and there's really good momentum around not just crypto, but enhancing our position in NFTs. And we have been announcing some of the early-stage wins that we've been onboarding, and we're actually really excited about what that's going to drive for us.

So from our perspective, we pulled the chair. We really like what we see in terms of consumption. It's not just acquiring keep in mind, right? It could be payouts. Mazooma is a really good product for any digital asset purchase, for bank-to-bank payments in North America, which we're rolling out now as well. So we feel really good about the solution stack and ultimately will now drive forward for us in 2022.

[Operator]

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

[Jason Kupferberg, analyst]

Maybe just to build on Sanjay's question. Can you just clarify how much of the 30% to 35% revenue growth in 2022 is organic? And then can you just talk about margin cadence for the year? I think the Q1 guide puts you right at around 40% at the midpoint, full year is 43%. So just talk about the drivers of the ramp. I don't know if it's just some of the expense timing and then maybe if you can quantify some of the year-over-year increase in the other spend categories. I know you gave the $20 million on the marketing side.

[Philip Fayer, executive]

Yes, Yes. The 30% to 35% is organic, if you take into consideration the slowdown of Simplex. So it is purely organic. On the margin cadence, ultimately, the largest increase in expenditure is marketing, it's front-loaded, as you guys can probably see in the first couple of quarters and we'll expand it from that. We have lots of interesting opportunities to build regeneration and build brand awareness. From our organization, our marketing spend was very light compared to our peers.

So we are enhancing that. And our objective is to make sure that as folks look at their global options from payment enablement, they don't just consider Adyen and Stripe, they also consider Nuvei. So it is a journey. It's starting now. It is probably a little bit late from our end, but we're really excited about from a positioning perspective to the capability that we've onboarded with talent and others helping us build out our marketing strategy for '22 and beyond.

[Jason Kupferberg, analyst]

Okay. That's helpful. And then I just wanted to ask a follow-up on yield. I know you called out some of the mix factors, the property taxes, the charity piece. I mean you came in, I think, around 67 bps in Q4. The guide for '22, I think, implies around mid-70s, call it, at the midpoint. So what would drive that expansion? I guess there must be some other mix factors or anything on pricing -- apples-to-apples pricing. Any part to your customer base worth calling out?

[Philip Fayer, executive]

No. I think ultimately, when you end up looking at the yield factor, tax, property tax and charitable giving are typically Q1 and Q4 events. So it is very seasonal. And they're large tickets and they carry a fixed transaction fee, so they will impact the take rate. And that is why we've always stayed away from take rate. We've always said we're at scale platform and every incremental gross profit dollar falls to the bottom line.

And most certainly, we wouldn't reject customers if opportunities presented themselves. So from our standpoint, actually as that volume shifts down because of the seasonality, our take rate will go back up. In terms of areas of opportunity for us, we think LatAm is a higher take rate market. We certainly are excited about our expansion in the U.S. We're excited about the momentum that we're seeing across the U.S. We feel very comfortable with the outlook on the take rate.

[Operator]

Thank you. Our next question comes from the line of Bob Napoli with William Blair.

[Robert Napoli, analyst]

Again, thank you for those disclosures, those are super, super helpful.

[Philip Fayer, executive]

A pleasure.

[Robert Napoli, analyst]

So just the -- what's -- I guess part is in the product pipeline. So what are the most important areas of technology development that you've had over the past 12 months organically and is in the pipeline or that you're focused on in '22 and '23?

[Philip Fayer, executive]

Sure. I'd urge you guys to go back and look at the press releases because they've been accelerating from our capabilities and what we've been rolling out. I would call out naturally our SEPA payments, faster SEPA, U.K. instant payments and our bank payments with Mazooma ACH with ACH Guarantee. But in combination of that, we've also dramatically expanded the APM reach that we have. So I'm very excited about what's happened there. I think the other element for us, payout in North America, and Bob, we're seeing some wonderful traction across the board there.

We have now launched payout in Canada as well. So we're normalizing our capabilities around the world. And certainly, going forward, for us -- and it's not limited, but ultimately, we like to ramp our card issuing business. We are highly focused on our global platform capability to expand our marketplace reach. And a third lever for us is at the end of this year is to insource all processing around the world but specifically in North America, which we saw outsourced. So those would be some of the big rocks. But at Capital Markets Day, we're going to unpack some of our focuses and the rationale behind them. So stay tuned for a few weeks.

[Robert Napoli, analyst]

And then a follow-up, I guess, on the bank to bank or account-to-account payments. Opportunities that you see there, investments you're making in account to account or in the open banking, if you would?

[Philip Fayer, executive]

Yes, we're seeing wonderful momentum. So wonderful momentum not just in Europe but also in North America. So we actually think when you end up coming back to a payment page, be it from card or bank-to-bank payments with recognition of your bank with a one quick checkout, it is incredibly powerful and required. It is a value-add solution for certain verticals as well where they have a higher propensity decline rate or where credit card transactions are considered quasi-cash, for example, like in crypto or digital asset. And for us, the embedded solution is gaining momentum.

So very, very excited about what we're seeing in North America as well as in Europe as bank-to-bank payments and open banking are becoming somewhat of the norm with the expectation of capturing between 5% and 10% of the wallet share. What's fascinating is that we haven't seen the impact on card volume, but we suspect that other alternate forms of payments are being replaced by bank to bank payment.

So it is a must-have from a wallet share perspective. And we think making it easy from an acceptance of our merchants for them to be fully neutral, meaning they accept the credit card or debit card, any form of alternative payment or open banking payment, for them it's reconciled and it's settled in the same manner is critical. So we're at the early innings of it, but our momentum that we're seeing around the world is very exciting.

[Operator]

Our next question comes from the line of Timothy Chiodo with Crédit Suisse.

[Timothy Chiodo, analyst]

Global e-comm direct, clearly that is the largest and the fastest-growing portion of the business, really impressive growth there. Wanted to talk about the direct sales force growth. I know you disclosed total employee growth, so the headcount growth year-over-year, which was very strong. Is it safe to say that the sales force growth was faster than that? And in the past, you've talked about how you sort of benchmark your sales headcount versus peers. Where would you say you are relative to peers at this point? Are you kind of getting closer? Or is there still a lot of hiring ahead?

[Philip Fayer, executive]

I'll start with the last part. We still think there's a lot of hiring ahead. So we -- if you remember, Tim, since IPO, we always talked about being under-distributed. I want to congratulate [ Yuval and Monty ] and the overall team of how we've built out our reach across Europe. In the last 6 months, we brought in our full team in North America in all our key verticals. And now with the -- with [ Juan's ] help through payments or building out our team in LatAm.

So we want to always be close to our customers in verticals, in regions and in time zones. Today, we have roughly 100 folks on the direct sales part of the business. We think it can continue growing by a multiple, when you end up looking at LatAm, in particular. Obviously, what we're doing in APAC is early [ Praful ], moving out to Singapore to help accelerate with licenses and local capabilities across the region, is going to be net new for us, and then we'll pivot to [ MENA ] and Africa.

So a lot left to do. And ultimately, that's why we always say we're on the ground floor. But the effectiveness of the direct sales force, because of the complexity of our technology, has just been really the driver for our momentum, right? So we're scaling our technology. We're able to show our wares to more merchants in our verticals of operation. And that is driving a significant amount of our growth. And we think we're right at the early innings of that as well.

[Operator]

Our next question comes from the line of Paul Treiber with RBC Capital Markets.

[Paul Treiber, analyst]

You commented on crypto, just the trends that you've seen there more recently. Generally speaking, can you speak to the linearity of growth across all your verticals that you've seen through Q4 and even Q1 to date?

[Philip Fayer, executive]

I don't have it by quarter. But ultimately, what I would urge you guys is to look at the top line because there's -- sorry, the disclosure that we have in the supplement. We think all of our verticals, and there's certain seasonality that you end up coming back to them, but all of them are seeing momentum. And ultimately, if you want to run down like our performance in social games or if you look at the performance in regulated gaming, our performance in financial services, all of them are seeing really, really strong momentum and all of them have been seeing momentum within our new net wins as well.

So if you want to talk about crypto, we are now engaged with many of the top 10 exchanges, we're now engaged with many of the top NFT platforms, our solution stack goes from transaction guarantee, AML, KYC to open banking to real-time payments and payouts to acquiring and all forms of alternative payment methods, which we think -- actually if you look at open banking and the alternative payment method, is probably more conducive for the industry because they don't have the higher credit card fees.

So overall, I wouldn't pinpoint one particular month, but we're really excited with the momentum that we've seen. In terms of overall, what we saw in January, there was certainly an impact in Canada from Omicron, and that was taken into consideration. In fact, that was available in December as well, unfortunately, in some parts. February was a good recovery. And so far for March, we like what we see. So very good momentum in the first quarter.

[Paul Treiber, analyst]

And related to that, like in terms of the bigger picture in terms of customer demand for digital or e-commerce versus card present, when you look at your sales pipeline coming out of COVID, are you seeing continued demand across the digital channel? But then also building for card present? I mean, how do you sort of how do you sort of gauge the momentum in both those categories?

[Philip Fayer, executive]

Yes. I mean, we're very happy with the performance of our card present business, but there is not necessarily a huge overlap. As we start rolling out our omni solution, especially in North America, where Mazooma integration will be available across all channels, there will be a convergence between the sales efforts for retail and online. But our digital verticals are predominantly digital, so if that makes sense, Paul, right?

They -- these are digital, digital-first and global operations. When you end up looking at the performance of them, their growth in different geographies, their requirements to solidify a solution stack, we're right at the beginning of it. And our demand is very high.

So really like what we see. In fact, I mentioned it in my prepared remarks, our pipeline has never been deeper and the engagements that we're seeing on the digital side are by far a multiple of where they were in the previous year. So we're starting off the year very strong.

[Operator]

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

[Unknown Analyst]

This is Matt on for J.D. Just wanted to ask about NRR for a moment. 2020 was definitely impacted by COVID and 2021 was likely a little bit higher in both than normal. So just what are you expecting for NRR in 2022? Is there any reason year-over-year growth from the previous year cohorts can't be the same in 2022? I think it was about 360% in 2021.

[Philip Fayer, executive]

Yes, we're not giving an outlook on the NRR. What we did want to kind of show for everyone is where the business was growing. Certainly, when you end up looking for a total organization, 146% this year in NRR. But when you add Mazooma in to e-commerce, which is really the point, that our e-commerce business had an NRR of almost 180%. And that NRR, when you end up looking at e-commerce, as we expand our geographies into LATAM, what we are doing right now in North America and our objectives across Asia, we actually think we can continue maintaining that in our global e-commerce business.

From a small business perspective, probably more market-driven, certainly an impact both in 2020 negatively and then 2021 from a COVID recovery perspective. So I would look at those 2 that way. But from a global e-com direct, there is not just geography actually to add to it. There's also capabilities.

So as we launch more solutions, as we monetize more of our technology stack, certainly that helps growing the acquiring and other value-added services that we do with the merchant. So we feel very good with what we're doing on the digital side. Certainly, there could be an impact on the small business side post-COVID, but we're pretty bullish on what we see in the small business for 2022.

[David Schwartz, executive]

Matt, it's David. I would just add something to that as well. You may recall in our -- when we did our U.S. IPO, NRR was 127% for the first 6 months of the year. And so you can see it accelerated if you look at the full year to 146%. So there's been an acceleration even within 2021. And think about the first 6 months of 2020, that base year period obviously was the most COVID-impacted. So still an acceleration in the latter half of 2021.

[Unknown Analyst]

Okay. And then just as a follow-up. Social gaming was very, very impressive. Can you just talk about growth drivers there? Maybe it's like geographic mix, larger enterprise customers? And just how much at any part of that growth do you think was pandemic or lockdown-related?

[Philip Fayer, executive]

I think social gaming hasn't necessarily benefited as much in our portfolio from a lockdown perspective because the markets that we're operating in have remained relatively open. From a technology perspective, it's really across the board. It's more of a focus. It's something that you guys appreciate, we're investing the same dollars in all our core verticals around the world. And we're all -- we think that there's many opportunities across all key verticals, not just gaming and others that we've talked about today. We're seeing momentum across all key verticals.

Certainly, social gaming has been a pretty exciting growth for last year with lots of momentum. But the same is true in digital goods and online retail as well for us. So we're happy with the investments that we're making. They'll all come in at different times, right? So certain wins will come at different times.

For example, The Hut Group has been something that we're really pleased with the win, a large U.K. retail -- online retailer that is going live now on the retail side. These things take conversations of sometimes 3 months, but sometimes years. So same investments across the board, same horsepower that we're providing across the board. Some will come earlier, some will come later. But these are on the investments that we're making in all core verticals.

[Operator]

Our next question comes from the line of Andrew Bauch with SMBC Nikko Securities.

[Andrew Bauch, analyst]

Congratulations on a pretty solid set of results here, and thanks for all the disclosure. Just wanted to touch upon the regulated online gaming piece. Obviously, you continue to announce a bunch of new licenses and new partnerships in this area.

So could you help us kind of get a sense of how much of the performance in 2021 was from your U.S. efforts? And when you do kind of secure these new licenses, is it as simple as kind of flipping a switch to translate to revenue? Or is there some more integration time line that needs to play out?

[Philip Fayer, executive]

Yes. So gaming revenue in the United States was negligible in 2021. We're starting to see momentum in Q4, pretty excited about what that's going to shape up for this year. But again, it will always be small. We've always said it was more of a 2023 opportunity. As licenses are pay to play, meaning that you have to have the infrastructure and licenses to be able to operate in those particular markets. And thereafter, each state that a version goes live has an onboarding process that we need to follow. So not just because you're licensed, you can flick the switch. It's a new implementation on a per-state basis.

[Andrew Bauch, analyst]

Got it. And then I wanted to touch upon the -- Nuvei's approach around e-commerce platform, specifically the Wix partnership. This is a really nice headline to a big tech partner. Can you help us kind of understand how this all came together and the differentiation that you have that helped you win that business?

[Philip Fayer, executive]

Yes. I mean, I highlighted a lot of our modules, right? So I can help you appreciate our differentiation. We're adamant that there is no e-commerce platform like Nuvei in the market today. And our flexibility in what we offer to platforms, we think, is unparalleled.

Naturally, it's a new endeavor. I'm super proud of the team for onboarding Wix. We think there's a lot more to do with our capabilities in development with Wix. But Wix is one of many that were engaged with across our digital service verticals.

So very, very excited about Wix. It's our first win. Why we won it? I think there was a region that we had specific requirements that we're able to adhere to. Very thankful for Wix for that partnership, and we certainly think we can grow that around the world.

[Operator]

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to management for any final comments.

[Philip Fayer, executive]

Yes. Thank you, everybody, for joining today. Really appreciate everyone's feedback over the past few months. That drove us to the onetime disclosure that you guys see now, so we really are thankful for our partnership. Thanks, everyone, for dialing in and looking forward to seeing everyone very soon.

[Operator]

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.