NEXI 15 April 2020

NEXI

Company report Hold (unchanged)

15 April 2020 – 5:30 PM MARKET PRICE: EUR13.74 TARGET PRICE: EUR14.80 (from EUR15.20)

Financial Tech. - Payments Limited downside, but 100% exposure to Data Italy and to consumptions not in favour Shares Outstanding (m): 627.8 Market Cap. (EURm) : 8,626 While it is still unclear how COVID-19 will develop, we reassessed our view on NEXI based on two scenarios. Our base case assumes the Enterprise Value (EURm): 10,876 infection normalizing towards the end of 2Q20 and incorporates a Free Float (%): 46.6% "swoosh"-shape recovery thereafter. In this scenario, we are revising our EPS estimates by 12% for 2020-22. We are revising the TP less Av. Daily Trad. Vol. (000): 3,908 than the estimates cut (-3%, to EUR14.8 from EUR15.20) for two Mercury UK reasons: 1) we now incorporate a 30% chance of a merger with SIA; b) Main Shareholder: (50.2%) we are structurally increasing the penetration of digital payment in Italy. Reuters/Bloomberg: NEXI.MI NEXI IM In the worst-case scenario, we assumed that either COVID-19 will last longer or that it will resurge during the fall season (thus also troubling 52-Week Range (EUR) 7.8 16.9 financial markets for equities but also credit, ABS and the likes). In this Source: FactSet, UBI Banca estimates case, the EPS cut will be 20% and the fair value would be EUR13.7 (thus offering no downside vs. current prices, also because in this case, Performance the chances of a merger with SIA would increase to 50%). While we 1m 3m 12m acknowledge that the stock has limited downside, we confirm our Hold rating on this market darling because we don’t favour its 100% exposure Absolute 27.9% 10.2% n.a. to Italy and to consumptions. Rel. to FTSE IT 12.8% 29.7% n.a. > Our base case: a "swoosh"-shape bounce. In this case we are assuming that Source: FactSet the penetration of digital payment should reach almost 30% in 2020 and 32% in Graph area Absolute/Relative 12 M 2021, due to COVID-19 impact. Nexi will benefit from having a part of its revenues (that we estimate being 52% in 2019) fix (i.e. not linked to transaction volumes/value). We assume it to decline 2% YoY in 2020 (due to merchant closures) and then back to growth in 2021. For the remaining part of the revenues, equally split between hardly hit by COVID (entertainment/travel like), benefiting from COVID (pharmacies/IT/food delivery & online) and somewhat hit (i.e. discretionary consumptions), we modelled a -3.5% YoY in 2020 and then back to growth from 2021. As for costs, two/thirds of which are fixed, we incorporated some additional cost optimization efforts. We increased the refinancing cost of the ISP deal to 2.25% from previous 1.25% while leaving unchanged our capex estimates. > Our worst case: a prolonged recession. In this case the fix share of revenues would decline by 5% YoY in 2020 and then back to growth in 2021 (although at a Source: FactSet lower pace). Another lockdown would be needed in October (or, alternatively, Massimo Vecchio consumptions would recover at a lower speed) so, the transaction volume/value Senior Analyst part of Nexi revenues would decline by -8.5% YoY in 2020 and then back to [email protected] growth from 2021. Cost optimization will accelerate, and capex would be reduced. Tel. +39 02 62753016 > Enough liquidity to cover maturities up to 2024. Total liquidity amounts to Dario Fasani EUR721 million (of which EUR350 million of committed credit lines) with no major Analyst [email protected] maturity until 2024 (when EUR1.8 billion of term-loan and a bond would expire). Tel. +39 02 62753014 The ISP deal, which should have been financed through a bond issuance, is currently funded by a bridge facility that expires in 2021. Closing the deal is www.ubibanca. com/equity-research therefore not linked to short-term bond issuances but the refinancing of the bridge should take place sooner rather than later. Financials Ratios priced on 14 April 2020 2019A 2020E 2021E 2022E 2019A 2020E 2021E 2022E Revenues (EURm) 984 1068 1168 1258 P/E (x) 44.2 43.7 33.8 26.7 EBITDA (EURm) 503 603 701 795 P/CF (x) 35.1 33.1 25.7 23.0 EBITDA margin (%) 51.1% 56.5% 60.0% 63.2% P/BV (x) 4.5 5.7 4.9 4.1 EBIT (EURm) 382 453 526 615 Dividend Yield 0.0% 0.0% 0.4% 0.7% EPS (EUR) 0.22 0.31 0.41 0.52 EV/EBITDA (x) 14.8 18.0 15.1 12.8 CFPS (EUR) 0.27 0.41 0.53 0.60 Debt/Equity (x) 1.1 1.5 1.1 0.8 DPS (EUR) 0.0 0.0 0.1 0.1 Debt/EBITDA (x) 2.9 3.7 2.8 2.0

So urce: Company data, UBI Banca estimates Source: Company data, UBI Banca estimates

NEXI 15 April 2020

Key Financials (EURm) 2019A 2020E 2021E 2022E Revenues 984 1068 1168 1258 EBITDA 503 603 701 795 EBIT 382 453 526 615 NOPAT 312 363 425 497 Free Cash Flow 170 260 335 375 Net Capital Employed 2795 3772 3723 3691 Shareholders' Equity 1325 1522 1777 2101 Net Financial Position 1471 2250 1945 1590 Source: Company data, UBI Banca estimates

Key Profitability Drivers 2019A 2020E 2021E 2022E Net Debt/EBITDA (x) 2.9 3.7 2.8 2.0 Net Debt/Equity (x) 1.1 1.5 1.1 0.8 Interest Coverage (%) 3.1 8.1 10.1 12.1 Free Cash Flow Yield (%) 2.8% 3.0% 3.9% 4.3% ROE (%) 10.2% 13.0% 14.4% 15.4% ROI (%) 13.6% 12.0% 14.1% 16.7% ROCE (%) 9.1% 8.0% 9.5% 11.2% Source: Company data, UBI Banca estimates

Key Valuation Ratios 2019A* 2020E 2021E 2022E P/E (x) 44.2 43.7 33.8 26.7 P/BV (x) 4.5 5.7 4.9 4.1 P/CF (x) 35.1 33.1 25.7 23.0 Dividend Yield (%) 0.0% 0.0% 0.4% 0.7% EV/Sales (x) 7.6 10.2 9.1 8.1 EV/EBITDA (x) 14.8 18.0 15.1 12.8 EV/EBIT (x) 19.5 24.0 20.1 16.6 EV/CE (x) 2.7 2.9 2.8 2.8 Source: Company data, UBI Banca estimates * Based on 2019 average price

Key Value Drivers 2019A 2020E 2021E 2022E Payout 0% 0% 15% 20% NWC/Sales -5.2% -6.1% -6.8% -7.5% Capex/Sales 17.1% 13.8% 12.4% 10.3% Source: Company data, UBI Banca estimates

NEXI 15 April 2020

Recent developments

> Rumors of a merger with SIA intensify. An article appeared on 11 April on the Italian newspaper “Il Messaggero” (edited in Rome) stated that Nexi management officially proposed to SIA a merger and that CDP (SIA major shareholder with 83.1%) is actively exploring the option. According to the article, now that the proposal is official, documents can be exchanged, and the talks may become more real. SIA Chairman (Mr Sarmi) and Nexi CEO (Mr Bertoluzzo) are the two managers in charge of the negotiations. The article says that, while SIA had begun an IPO process, it has always been a dual track and, with current market conditions, the IPO seems less likely. CDP wishes to have the control of the combined entity as long-term industrial shareholder and ISP may also remain in the shareholders base. > S&P confirmed Nexi long term rating at BB-, revising down the outlook to stable (from positive). On 8 April, S&P issued a report saying that its decision was based on the impact that Covid-19 will have on Italian consumers which could weaken Nexi’s revenues and EBITDA in the short term. This, in turns, could weaken the Debt/EBITDA ratio closer to the high-end of the 4-5x range for the period 2019-2021. The rating however was confirmed because S&P expects Debt/EBITDA to remain within the afore-mentioned rating.

NEXI 15 April 2020

Financial Projections

> Our assumptions on COVID-19 . Based on talks we had with pharmaceuticals, vaccines and diagnostics companies and with public health operators we believe that: a) A vaccine for the mass population would not be ready before fall 2021 but it should be ready for healthcare operators in fall 2020; b) Drug approvals at best should arrive by fall 2020; c) Serology testing is probably the faster and easier way to stabilize the economy by allowing immune people to avoid the lockdown; d) Very likely the virus would re-emerge in the fall so, social distancing is here to stay for a while. Based on this top-down assumption, we built two scenarios. In any case, we assume an increase in the penetration of digital payment in Italy because of the different behaviours induced by COVID- 19. We now expect penetration to grow by 260bps YoY in 2020 and 300bps in 2021 as opposed to the 160bps we had before (which reflected the historical growth rate). > A “swoosh” shape recovery: our base case scenario. In this case the lockdown in Italy should finish at the beginning of May with industrial production to begin some days before that. The rest of the world should follow with a couple of weeks of delay. While the virus could resurge by fall, following social distancing rules, thanks to vaccines/tests/drugs availability and to the measures put in place by governments and central banks, the economy should stabilize. Our estimates assume a -5.3% YoY for the Italian GDP in 2020 (based on UBI research department proprietary estimates) and are also based on the following assumptions: > Fixed revenues: almost half of Nexi revenues are fixed (52% our estimate for 2019), which means they are not transactions’ volume/value related. In our base case we assume this part of the business to go down by 2% in 2020 as a result of merchants closures. In 2021 the rate of growth should resume to 4.5-6.0% (as in our previous estimates); > Variable revenues: we grouped revenues in three macro categories: entertainment/travel like, pharmacies/IT/food delivery & online and lastly discretionary consumptions. We modelled 28% overall revenues decline in March & April and then a gradual recovery that ends with September through December growth of 5%. We than added the revenues coming from ISP; > Costs: we assume that 2/3 of Nexi’s costs are fixed. Some additional efforts in cost optimization could be done but most of the cost benefit should still come from variable costs (processing and the likes); > Debt, working capital and cash flow: we increased the cost of the ISP deal refinancing to 2.25% from previous 1.25%. We didn’t change anything else, including our capex estimates (both recurring and non); > The overall result is a 11.9% cut in 2020-22 EPS estimates that still sees 2020 revenues growing YoY (due to ISP, net of that and net of the increase in digital payment penetration, the decrease would be 3.5% YoY) and back to organic growth from 2021, as can be seen in the following table:

NEXI 15 April 2020

Figure 1 – Old vs. new estimates – base case scenario

2020E 2021E 2022E

(EURm) Old New % diff. Old New % diff. Old New % diff.

Sales 1,156 1,068 -7.6% 1,227 1,168 -4.8% 1,315 1,258 -4.3%

EBITDA 669 603 -9.9% 744 701 -5.8% 833 795 -4.5%

Operating Profit 519 453 -12.7% 569 526 -7.6% 653 615 -5.7%

Operating Profit % 44.9% 42.4% 46.4% 45.0% 49.7% 48.9%

Net result 316 264 -16.5% 353 315 -10.7% 411 377 -8.4%

Net Debt/(Cash) 2,197 2,250 2.4% 1,854 1,945 4.9% 1,470 1,590 8.1%

Source: UBI Banca estimates

> 2Q20 strongly hit, abnormally high 4Q20. While Nexi will consolidate the business to be acquired from ISP since 1 January 2020 this will happen “retroactively” (i.e. after the deal closing, expected in the summer). The quarterly estimates presented below include ISP as if consolidated 1 January 2020, to reconcile with the 1Q20 figures that Nexi will publish on 12 May deduct EUR24.2 million from the revenues (which therefore will be flat YoY) and EUR20.2 million from EBITDA (which therefore would grow 2.4% YoY):

Figure 2 – Quarterly estimates

(EURm, %) 1Q19 2Q19 3Q19 4Q19 1Q20E 2Q20E 3Q20E 4Q20E Merchant Services & Solutions 106.1 117.5 124.1 131.3 127.3 117.5 142.7 186.7

Cards & Digital Payments 93.0 94.8 98.2 101.4 96.7 75.8 99.2 108.3

Digital Banking Solutions 27.4 28.5 28.8 33.0 26.9 26.2 28.2 32.5

Net Revenues 226.5 240.8 251.1 265.7 250.9 219.6 270.1 327.5

YoY 5.2% 6.2% 5.5% 6.2% 10.8% (8.8%) 7.6% 23.3%

EBITDA 110.6 122.3 135.6 134.0 133.5 116.4 158.8 194.6

EBITDA margin 48.8% 50.8% 54.0% 50.4% 53.2% 53.0% 58.8% 59.4%

Source: Company data, UBI Banca estimates

> Enough liquidity to manage upcoming maturities. Total liquidity amounts to EUR721 million (EUR371 million of liquidity and EUR350 million of undrawn committed credit lines) with no major maturity until 2024 (when EUR1.8 billion of term-loan and a bond would expire). The ISP deal, that should have been financed through a bond issuance, is currently funded by a bridge facility that expires in 2021 (we presume of around EUR1 billion). The deal closing is therefore not linked to short-term bond issuances, but the refinancing of the bridge should take place sooner rather than later. > A “L” shape recovery: our worst-case scenario. In this case, vaccines/tests/drugs would arrive later so other lockdowns could be needed by fall. Consumer confidence will be hit and there is the risk that the virus will “infect” also the financial markets (equity, credit, currency, lending). Under this scenario also the other assumptions would be completely different: > Fixed revenues: under this scenario we assume this part of the business to go down by 5% in 2020 as a result of merchants closures. In 2021 the rate of growth should resume at around 5.0% (slower when compared to our previous estimates);

NEXI 15 April 2020

> Variable revenues: also under this scenario we modelled a 28% overall revenues decline in March & April but the recovery would be slower and in October another lockdown would be needed (September through November YoY decline of 13%). We than added the revenues coming from ISP (impacted themselves by the slowdown); > Costs: we assumed cost cutting to accelerate and no growth in employees average yearly compensation (actually a small decline in 2020); > Debt, working capital and cash flow: we increased the cost of the ISP deal refinancing to 2.50% and reduced capex a bit for 2020 and 2021 (both recurring and non); > The overall result is a 19.9% cut in 2020-22 EPS estimates that still sees 2020 revenues growing YoY (due to ISP, net of that and net of the increased penetration of digital payments, the decrease would be 8.5% YoY) and back to organic growth from 2021, as can be seen in the following table:

Figure 3 – Old vs. new estimates – worst case scenario

2020E 2021E 2022E

(EURm) Old New % diff. Old New % diff. Old New % diff. - Sales 1,156 1,014 12.3% 1,227 1,104 -10.0% 1,315 1,189 -9.6% - EBITDA 669 565 15.5% 744 659 -11.4% 833 753 -9.6% - - Operating Profit 519 415 20.0% 569 484 -14.9% 653 573 12.2%

Operating Profit % 44.9% 40.9% 46.4% 43.8% 49.7% 48.2% - - Net result 316 237 25.0% 353 286 -19.0% 411 347 15.7%

Net Debt/(Cash) 2,197 2,265 3.1% 1,854 1,975 6.5% 1,470 1,645 11.9%

Source: UBI Banca estimates

NEXI 15 April 2020

Valuation

> Reducing our target price to EUR14.8 (from EUR15.2). Quite a few changes in our valuation methodology: a) while we raised our free risk assumption to 3% (from 2.5%) we also raised the g on the DCF to 2.5% (from 2.0%) to take into account the improved profile of the digital payment industry after COVID-19; b) we incorporate a 30% chances of a merger with SIA, on the back of recent press articles and a worst scenario for an IPO; c) considering the superior growth profile of Nexi vs. its peers driven by the market in which it operates (Italy) we use, for the peers valuation, only the growth-adjusted multiples. Having said all that, and due to the cut in estimates, our target price is reduced by 3%. The standalone summary valuation can be seen in figure 4 while the target price calculation giving a 30% chance to a merger with SIA can be seen in figure 5.

Figure 4 – Valuation summary standalone

(EUR) New Old % difference

DCF 15.5 15.2 2.6%

Peers 13.2 15.3 -13.9%

Average 14.4 15.2 -5.7%

Share price 13.7

Upside 4.5%

Source: Company data, UBI Banca estimates

Figure 5 – Valuation summary including SIA

(EUR)

Nexi fair value - standalone 14.4

Nexi fair value - including SIA 15.7

Chances of deal happening 30.0%

Nexi fair value - weighted 14.8

Upside 7.4%

Source: Company data, UBI Banca estimates

> We confirm our Hold rating on this quality name, any weakness is to be seen as a good entry point. While we understand that payment stocks are extremely resilient in this new context and that Nexi has also a speculative appeal (both as a consolidator or as a target) we cannot avoid noting that it is exposed 100% to Italy, the country with the highest GDP decline expected for 2020. Furthermore, the company is exposed to the consumption part of the GDP and, in case a worst-case materializes, it could be severely hit. The stock has rebounded massively from lows (+76%) and while we tried to be as bullish as possible in our valuation exercise we don’t have enough upside to suggest being a buyer. > Our worst-case scenario. In our worst-case scenario, on top of a deeper cut in estimates, we assumed that consolidation would make even more sense (and that the IPO market will be even more complex). As such we assigned 50% chances of a merger with SIA to happen. We expect this merger to generate an upside to our standalone fair value ranging from EUR0.80 to EUR1.80 per share depending on the synergy’s assumptions (see our report published on 9 January 2020). All in all, under our worst-case scenario, Nexi fair value would

NEXI 15 April 2020

be EUR13.7, not far from where the stock travels now. > A look at historical multiples. At this point any peer group valuation is more complex as it is not clear at which stage the consensus adjustment process is. It is useful to look at current multiples (1 Year Forward EV/EBITDA) compared to where it was back in 2009. As can be seen in the next graph, the current level of 14x expressed by the payment sector is above the 2008 bottom (6.7x), the 2009 average (7.6x) and even above the exit speed from the 2009 crisis (9.3x). While arguably the sector is in much better shape now and as it is considered more valuable from investors, bottom multiples suggest that there could be further downside if our worst-case scenario materializes.

Figure 6 – Peer group historical EV/EBITDA 1 year forward

0 Jul-18 Jul-11 Jan-15 Jan-08 Jun-14 Oct-16 Oct-09 Apr-20 Apr-13 Feb-19 Sep-19 Feb-12 Sep-12 Dec-17 Dec-10 Aug-15 Aug-08 Nov-13 Mar-16 Mar-09 May-17 May-10

Global Payments Worldline Fidelity Fiserv

Source: FactSet

Figure 7 – Peer group – Multiples (priced on 14 April 2020)

Company name TIER Price Currency Mkt Cap EV/EBITDA EV/EBIT P/E FCF Yield

(bn) 2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E

Global Payments Inc. I 133.4 USD 40.0 16.6 x 13.8 x 11.1 x 17.8 x 14.8 x 12.1 x 22.5 18.1 14.8 3.6% 4.5% 6.3%

Worldline SA I 61.4 USD 11.2 19.0 x 16.0 x 14.1 x 26.8 x 22.4 x 19.4 x 34.7 28.8 26.2 3.0% 4.0% 5.2%

Fidelity National Inf. I 112.9 USD 69.6 16.3 x 13.9 x 11.7 x 19.4 x 16.4 x 13.1 x 21.2 17.7 15.1 4.7% 6.0% 7.5%

Fiserv Inc. I 88.3 EUR 59.7 14.6 x 12.8 x 11.0 x 27.1 x 21.6 x 15.9 x 20.6 17.2 14.8 5.5% 6.2% 6.8%

Average 16.6 x 14.1 x 12.0 x 22.8 x 18.8 x 15.1 x 24.7 x 20.5 x 17.7 x 4.2% 5.2% 6.5%

Nexi 13.74 EUR 8.6 18.0 x 15.1 x 12.8 x 24.0 x 20.1 x 16.6 x 43.7 x 33.8 x 26.7 x 3.0% 3.9% 4.3%

Premium/(Disc.) to peers 6.8% 7.3% -42.0% 5.4% 7.0% 9.9% 76.6% 65.0% 50.5% 39.7% 33.2% 48.6%

Source: FactSet, UBI Banca estimates

NEXI 15 April 2020

ESG Picture

Corporate Governance Does the company have a combined Chair/CEO? No 23.1% (3 out of Percentage of independent directors 13) Does the company have loyalty shares? No Does major shareholders (if any) have a “shareholders pact” in place? Yes Has the company adopted a “poison pill” or “change of control” clauses? No Potential dilution from stock options outstanding + not yet granted? Yes CEO remuneration detail (fixed salary) EUR1.2 million Chairman remuneration detail (fixed salary) EUR0.5 million Is the share price included in the MBO criteria? Yes Percentage of treasury shares 0%

Climate related risk Has the company defined GHG-emissions targets? No How does the company assess climate-related risk? Sustainability Report

Social Responsibilities Does the company publish a separated Sustainability report? Yes Does the company have a Chief SRI/CSR officer (or a committee)? Yes Does the Chief SRI/CSR officer votes in any of the company’s committee? Yes Is the Investor Relation officer a different person from CFO (or other officers)? Yes Is the ESG strategy integrated in the Business Plan (or in the group strategy)? No Does the company have an ethical code? Yes 30.8% (4 out of Percentage of female directors 13) How is the cybersecurity issue managed? Compliance with GDPR regulation and internal system for information security management

NEXI 15 April 2020

Income Statement (EURm, %) 2019A 2020E 2021E 2022E Net Revenues 984 1068 1168 1258 EBITDA 503 603 701 795 EBITDA margin 51.1% 56.5% 60.0% 63.2% EBIT 382 453 526 615 EBIT margin 38.8% 42.4% 45.0% 48.9% Net financial income/expense (160) (75) (69) (66) Associates & Others (81) (80) (70) (60) Profit before taxes 140 299 387 490 Taxes (4) (100) (130) (164) Minorities & discontinuing operations -0.9 -1.3 -1.7 -2.2 Net Income 135 197 255 323 Source: Company data, UBI Banca estimates

Balance Sheet (EURm) 2019A 2020E 2021E 2022E Net working capital 51 65 80 95 Net Fixed assets 195 195 195 195 M/L term funds 823 824 824 824 Capital Employed 2795 3772 3723 3691 Shareholders’ equity 1325 1522 1777 2101 Minorities 0 0 0 1 Shareholders’ funds 1325 1522 1777 2102 Net Financial Debt /(cash) 1471 2250 1945 1590 Source: Company data, UBI Banca estimates

Cash Flow Statement (EURm) 2019A 2020E 2021E 2022E NFP Beginning of Period 2418 1471 2250 1945 EBITDA 503 603 701 795 Interest expenses (116) (75) (69) (66) Cash taxes (38) (101) (131) (166) Change in Working Capital (11) (20) (20) (20) Other 0 0 0 1 Operating Cash Flow 338 407 480 544 Net Capex (168) (147) (145) (130) Other Investments 0 0 0 1 Free Cash Flow 170 260 335 415 Dividends Paid 0 0 0 -38 Other & Chg in Consolid. Area 0 0 0 1 Chg in Net Worth & Capital Incr. 829 (1000) 0 0 Change in NFP 999 (740) 335 378 NFP End of Period 1471 2250 1945 1590 Source: Company data, UBI Banca estimates

NEXI 15 April 2020

Financial Ratios (%) 2019A 2020E 2021E 2022E ROE 10.2% 13.0% 14.4% 15.4% ROI 13.6% 12.0% 14.1% 16.7% Net Fin. Debt/Equity (x) 1.1 1.5 1.1 0.8 Net Fin. Debt/EBITDA (x) 2.9 3.7 2.8 2.0 Interest Coverage 3.1 8.1 10.1 12.1 NWC/Sales -5.2% -6.1% -6.8% -7.5% Capex/Sales 17.1% 13.8% 12.4% 10.3% Pay Out Ratio 0% 0% 15% 20% Source: Company data, UBI Banca estimates

Per Share Data (EUR) 2019A 2020E 2021E 2022E EPS 0.22 0.31 0.41 0.52 DPS 0.0 0.0 0.1 0.1 Op. CFPS 0.52 0.69 0.85 1.03 Free CFPS 0.27 0.41 0.53 0.60 BVPS 2.11 2.42 2.83 3.35 Source: Company data, UBI Banca estimates

Stock Market Ratios (x) 2019A 2020E 2021E 2022E P/E 44.2 43.7 33.8 26.7 P/OpCFPS 18.4 19.8 16.1 13.4 P/BV 4.5 5.7 4.9 4.1 Dividend Yield (%) 0.0% 0.0% 0.4% 0.7% Free Cash Flow Yield (%) 2.8% 3.0% 3.9% 4.3% EV (EURm) 7,441 10,876 10,571 10,216 EV/Sales 7.6 10.2 9.1 8.1 EV/EBITDA 14.8 18.0 15.1 12.8 EV/EBIT 19.5 24.0 20.1 16.6 EV/Capital Employed 2.7 2.9 2.8 2.8 Source: Company data, UBI Banca estimates

Growth Rates (%) 2019A 2020E 2021E 2022E Growth Net Sales 5.8% 8.5% 9.3% 7.7% Growth EBITDA 18.5% 20.0% 16.2% 13.5% Growth EBIT 9.3% 18.8% 16.0% 17.0% Growth Net Profit 579.1% 46.1% 29.3% 26.6% Source: Company data, UBI Banca estimates

NEXI 15 April 2020

Disclaimer

Analyst Declaration This research report (the “ Report ”) has been prepared by Massimo Vecchio and Dario Fasani (the “ Analysts”) on behalf of UBI Banca S.p.A. (“ UBI Banca ”) in the context of the ancillary service provided by UBI Banca named “Investment research and financial analysis or other forms of recommendation relating to transactions in financial instruments” under Paragraph 5), Section B, Annex I of the Directive 2014/65/EU (“MiFID II”). UBI Banca is an Italian bank under art. 4 (1)(27) of MiFID II and it is supervised by the European Central Bank and duly authorised to provide investment services pursuant to Article 1, Paragraph 5, letter a), b), c), c-bis), e) and f) of the Legislative Decree 24 February 1998, n° 58 under the supervision of the Italian Authority for the financial markets (Consob). UBI Banca has its head office at Piazza Vittorio Veneto 8, 24122 Bergamo. The Analyst who prepared the Report, and whose name and role appear on the front page, certifies that: a. The views expressed on the company, mentioned herein (the “ Company ”) accurately reflect his personal views, but does not represent the views or opinions of UBI Banca, its management or any other company which is part of or affiliated with UBI Banca group (the “ UBI Banca Group ”). It may be possible that some UBI Banca Group officers may disagree with the views expressed in this Report; b. He has not received, and will not receive any direct or indirect compensation in exchange for any views expressed in this Report; c. The Analyst does not own any securities and/or any other financial instruments issued by the Company or any financial instrument which the price depends on, or is linked to any securities and/or any financial instruments issued by the Company. d. Neither the Analyst nor any member of the Analyst’s household serves as an officer, director or advisory board member of the Company. e. The remuneration of the Analyst is not directly tied to transactions for services for investment firms or other types of transactions it or any legal person, part of the same group performs, or to trading fees it or any legal person that is part of the same group receives. f. The Analyst named in this document is a member of AIAF – Associazione Italiana per l’Analisi Finanziaria. General disclosure This Report is for information purposes only. This Report (i) is not, nor may it be construed, to constitute, an offer for sale or subscription or of a solicitation of any offer to buy or subscribe for any securities issued or to be issued by the Company; (ii) should not be regarded as a substitute for the exercise of the recipient’s own judgement; and (iii) should not be considered as an investment advice and is therefore not falling within the scope of the requirements governing the provision of investment advisory services within the meaning of the Directive no. 2014/65/EU. In addition, the information included in this Report may not be suitable for all recipients. Therefore the recipient should conduct their own investigations and analysis of the Company and securities referred to in this document, and make their own investment decisions without undue reliance on its contents. Neither UBI Banca, nor any other company belonging to the UBI Banca Group, nor any of its directors, managers, officers or employees, accepts any direct or indirect liability whatsoever (in negligence or otherwise), and accordingly no direct or indirect liability whatsoever shall be assumed by, or shall be placed on, UBI Banca, or any other company belonging to the UBI Banca Group, or any of its directors, managers, officers or employees, for any loss, damage, cost, expense, lower earnings howsoever arising from

NEXI 15 April 2020

any use of this Report or its contents or otherwise arising in connection with this Report. The information provided and the opinions expressed in this Report are based upon information and data provided to the public by the Company or news otherwise public, and refers to the date of publication of the Report. The sources (press publications, financial statements, current and periodic releases, as well as meetings and telephone conversations with the Company’s representatives) are believed to be reliable and in good faith, but no representation or warranty, express or implied, is made by UBI Banca as to their accuracy, completeness or correctness. Past performance is not a guarantee of future results. Any opinions, forecasts or estimates contained herein constitute a judgement as of the date of this Report, and there can be no assurance that the future results of the Company and/or any future events involving directly or indirectly the Company will be consistent with any such opinions, forecasts or estimates. Any information herein is subject to change, update or amendment without notice by UBI Banca subsequent to the date of this Report, with no undertaking by UBI Banca to notify the recipient of this Report of such change, update or amendment. Organizational and administrative arrangements to prevent conflicts of interests UBI Banca maintains procedures and organizational mechanism (physical and non-physical barriers designed to restrict the flow of information between the unit which performs investment research activity, and other units of UBI Banca) to prevent and professionally manage conflicts of interest in relation to investment research in accordance with art. 23 of Directive 2014/65/EU and under art. 34 (3) and art. 37 of the Regulation 2017/565/EU. UBI Banca is organized in such a way as to minimize conflicts of interest and has within the meaning of art. 20 (1) of the Regulation (EU) No 596/2014/EU and has adequate control procedures in place to counter infringements of the obligations laid down in Article 20 (1) of the Regulation (EU) No 596/2014. More specifically, UBI Banca has established, implements and maintains an effective conflicts of interests policy aimed at preventing and managing the potential conflicts of interest that could occur during the performance of the investment research services. Insofar as the above mentioned organizational and administrative arrangements established by UBI Banca to prevent or manage potential conflicts of interests are not sufficient to ensure, with reasonable confidence, that risks of damage to the interests of the client will be prevented, UBI Banca engages to provide a clear disclosure of the specific conflicts of interests arising from the performance of investment research services, including a description of the sources of those conflicts and the steps undertaken to mitigate them, taking into account the nature of the client to whom the disclosure is being made. For further information please see UBI Banca’s website (www.ubibanca.com/equity- research - “Informativa sintetica sull’attività di ricerca”) and (www.ubibanca.com/Mifid - “Policy sintetica conflitti di interessi” ). More details about the conflicts of interests policy will be provided by UBI Banca upon request. Disclosure of interests and conflicts of interests pursuant to Delegated Regulation 2016/958/EU In relation to the Company the following interest/conflict of interest have been found: > UBI Banca, in the last 12 months, has acted as lead manager, co-lead manager, bookrunner or in similar roles in the context of a public offering of financial instruments of Nexi > UBI Banca may have long or short positions not exceeding the threshold of 0,5 % of the total issued share capital of the issuer > UBI Banca has delivered corporate finance services to Nexi S.p.A. in the last 12 months On the basis of the checks carried out no other interest/conflict of interest arose.

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Frequency of updates UBI Banca aims to provide continuous coverage of the companies in conjunction with the timing of periodical accounting reports and any exceptional event that occurs affecting the issuer’s sphere of operations and in any case at least twice per year. The companies for which UBI Banca acts as Sponsor or Specialist are covered in compliance with regulations of the market authorities. For further information please refer to www.ubibanca.com/equity-research Valuation methodology UBI Banca’s analysts value the Company subject to their recommendations using several methods among which the most prevalent are: the Discounted Cash Flow method (DCF), the Economic Value Added method (EVA), the Multiple comparison method, the SOP method and the NAV method. The analysts use the above valuation methods alternatively and/or jointly at their discretion. The assigned target price may differ from their fair value, as it also takes into account overall market/sector conditions, corporate/market events, and corporate specifics (i.e. holding discounts) reasonably considered to be possible drivers of the company’s share price performance. These factors may also be assessed using the methodologies indicated above. For further information please refer to www.ubibanca.com/equity-research . Rating system UBI Banca’s analysts use an “absolute” rating system, not related to market performance. The explanation of the rating system is listed below: Buy: if the target price is 15% higher than the market price, over the next 12 months. Hold: if the target price is 15% below or 15% above the market price, over the next 12 months. Sell: if the target price is 15% lower than the market price, over the next 12 months. No Rating: the investment rating and target price have been suspended as there is not sufficient fundamental basis for determining an investment rating or target. The previous investment rating and target price, if any, are no longer in effect. Alternatively, No Rating is assigned in certain circumstances when UBI Banca is acting in any advisory capacity in a strategic transaction involving the Company. Target price: the market price that the analyst believes that the share may reach within a one-year time horizon. Market price: closing price on the day before the issue date of the report, appearing on the first page. Distribution Italy: This document is intended for distribution in electronic form to “Professional Clients” and “Qualified Counterparties” as defined by Legislative Decree 24 February 1998, n. 58 and by Consob Regulation n. 20307 dated 15 February 2018, as further amended and supplemented. Spain: This document is intended for distribution in electronic form to “Professional Clients” and “Eligible Counterparties” as defined by Royal Legislative Decree 4/2015, of 23 October, approving the revised text of the Securities Market Act, as further amended and supplemented. IN THE UNITED KINGDOM, THIS DOCUMENT IS BEING DISTRIBUTED ONLY TO, AND IS DIRECTED ONLY AT PERSONS WHO (A) ARE (I) PERSONS FALLING WITHIN ARTICLE 19 OR ARTICLE 49 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (AND ONLY WHERE THE CONDITIONS CONTAINED IN THOSE

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ARTICLES HAVE BEEN, OR WILL AT THE RELEVANT TIME BE, SATISFIED) OR (II) ANY OTHER PERSONS TO WHOM IT MAY BE LAWFULLY COMMUNICATED; AND (B) ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE PROSPECTUS DIRECTIVE (DIRECTIVE 2003/71/EC), (ALL SUCH PERSONS BEING REFERRED TO AS " RELEVANT PERSONS "). THIS DOCUMENT MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. IN FRANCE, THIS DOCUMENT IS BEING DISTRIBUTED ONLY TO, AND IS DIRECTED ONLY AT PERSONS WHO ARE CONSIDERED AS PROFESSIONAL CLIENTS WITHIN THE MEANING OF ARTICLES L. 533-16 AND D. 533-11 ET SEQ. OF THE FRENCH CODE MONETAIRE ET FINANCIER (THE FRENCH FINANCIAL CODE ) OR AS ELIGIBLE COUNTERPARTIES, AS DEFINED IN ARTICLES L. 533-20 AND D. 533-13 ET SEQ. OF THE FRENCH FINANCIAL CODE.

IN IRELAND, THIS DOCUMENT IS BEING DISTRIBUTED ONLY TO, AND IS DIRECTED ONLY AT, PERSONS WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE PROSPECTUS DIRECTIVE (DIRECTIVE 2003/71/EC, AS AMENDED FROM TIME TO TIME, INCLUDING BY DIRECTIVE 2010/73/EC) (" QUALIFIED PERSONS "). THIS DOCUMENT MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT QUALIFIED PERSONS. Copyright This Report is being supplied solely for the recipient’s information and may not be reproduced, redistributed or passed on, directly or indirectly to any other person or published, in whole or in part, for any purpose without prior written consent of UBI Banca. The copyright and intellectual property rights on the data are owned by UBI Banca Group, unless otherwise indicated. The data, information, opinions and valuations contained in this Report may not be subject to further distribution or reproduction, in any form or via any means, even in part, unless expressly consented by UBI Banca.

By accepting this Report the recipient agrees to be bound by all of the forgoing provisions. Distribution of ratings Equity rating dispersion in the past 12 months Buy Hold Sell No Rating 81.3% 12.5% 3.1% 3.1%

Proportion on issuers to which UBI Banca has supplied investment banking services relating to the last 12 months Buy Hold Sell No Rating 75.0% 37.5% 100% -

For further information regarding yearly and quarterly rating statistics and descriptions, please refer to www.ubibanca.com/equity-research .

Historical ratings and target prices

Date Rating Target Price (EUR) Market Price (EUR)

23 May 2019 BUY 10.20 8.80 29 July 2019 BUY 11.70 9.80 8 November 2019 BUY 11.70 9.45 19 December 2019 BUY 13.70 10.94 9 January 2020 BUY 13.70 12.19 12 February 2020 HOLD 15.20 14.06