By Shares of Nuvei opened significantly lower on Wednesday morning following the company’s announcement that it has slashed its revenue targets for the year. The Canadian fintech company cited the termination of a relationship with a major customer and a slower-than-expected pace of attracting new business as the primary reasons for the downward revision.
As of 9:55 a.m. ET, Nuvei shares were down by a staggering 35% at 26.60 Canadian dollars ($19.82).
Revised Revenue and Earnings Expectations
Nuvei now expects its annual revenue, at constant currency, to fall within the range of $1.16 billion to $1.18 billion. This marks a significant adjustment from its previous estimate of $1.23 billion to $1.27 billion.
The company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) are also anticipated to be lower at $417 million to $432 million, compared to the earlier projection of $456 million to $477 million.
Factors Impacting Performance
Nuvei attributes the reduction in revenue forecasts to longer-than-anticipated lag times in acquiring new business, as well as its decision to terminate its relationship with an undisclosed major customer.
Looking ahead, the company remains optimistic about securing approximately $100 million in annualized revenue from various stages of development over the next four quarters.
Q2 Performance and Profit Decline
In the second quarter, Nuvei reported a 45% increase in revenue, amounting to $307 million. This figure surpassed analyst expectations of $305.9 million, according to FactSet.
However, profits were negatively impacted by high debt costs. Net income declined from $35.1 million to $11.6 million, translating to a decrease of 7 cents per share from 23 cents per share. The decline in profit was primarily due to increased finance costs associated with amounts drawn under Nuvei’s new revolving loan, which amounted to approximately 20 cents per share.
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