Investors reacted positively Wednesday to Nuvei’s first public earnings report, which saw the Montreal-based payment-solutions company boost its quarterly revenues but widen its net losses, due primarily to the one-time cost of going public. The company made a blockbuster public debut in September, raising US$758 million in the most valuable tech IPO in Toronto Stock Exchange history. In the first hours of trading Wednesday morning, Nuvei’s stock rose by as much as 10 per cent , hovering at the $55 mark—an increase of approximately 60 per cent from its IPO price. 

The company reported US$93.6 million in revenue, a 32 per cent increase year over year, and a 13 per cent increase from the quarter prior. Those results were mostly in line with analysts’ expectations; a note last week from BMO Capital Markets analyst James Fotheringham  projected Nuvei would pull in US$97 million in net revenue for the quarter. 

On the earnings call, Nuvei’s CEO hinted at a new focus on catering to the U.S. gambling market, and at the possibility of more acquisitions. Here’s what else you need to know about the company’s first-ever public results:

Nuvei’s year-over-year losses increased: For the period ending September 30, the company reported a net loss of US$77.9 million, compared to US$65.7 million the same period last year. This was, however, a bit of an anomaly, and mainly attributed to a US$83.4-million one-time cost of issuing an IPO. On a conference call with analysts Wednesday morning, the company’s CFO David Schwartz noted that Nuvei’s selling, general and administrative expenses had declined on an annual basis, usually a measure of how prudent management is with cash burn. Adjusted EBITDA—net income before interest, taxes, depreciation and amortization—improved by 10 per cent on a quarterly basis, to approximately US$41 million. Nuvei ended the quarter with US$99.4 million in cash. 

Its revenue is being driven by an increase in both clients and transaction volume: The company’s revenue is essentially generated from fees for its gateway and payment-processing services. Nuvei also provides value-added services like analytics and market intelligence. Its 32 per cent year-over-year revenue increase largely came from the number of net new clients it obtained, and the volume of transactions that clients had using Nuvei software, Schwartz said. He also noted that the key to understanding Nuvei’s revenue figure is looking at the total volume of transactions using Nuvei software. “Fluctuations in total volume will affect our revenue,” he said. In the third quarter, the company saw its total volume increase by 29 per cent over the last quarter, which corresponded with a 13 per cent increase in revenue for the same period. 

It used the IPO money to pay off debt: The company disclosed during its earnings call that it used most of its IPO earnings to pay down huge term loans it had racked up in previous years, mainly due to the global expansion of its payment software. Nuvei has over 800 employees, and operates in more than 200 global markets, processing transactions in about 150 different currencies, according to its third-quarter earnings supplement. Nuvei ended the quarter with US$99.4 million owing on its available credit facilities, a sharp decrease from the US$717.8 million it had in debt as of Dec. 31, 2019. Schwartz also said that Nuvei increased one of its credit facilities from US$50 million to US$100 million, to provide the company with “flexibility and opportunity to continue acquisitions.” Earlier this month, Nuvei acquired payment-software company Smart2Pay for US$83 million in cash and 6.8 million in shares, an acquisition that gave the company access to more than 750 of Smart2Pay’s own customers. 

Nuvei is breaking into the American online gaming market: Last quarter, the company gained licensing rights to launch sports-betting software in Indiana and Colorado, its first foray into the American online gambling and betting market. It pits it against betting heavyweights like Atlanta-based First Data, another payment-solutions provider catering to the online sports-betting and e-gaming industry. Nuvei CEO Philip Fayer said the company intends a concerted focus on the sports-betting industry south of the border, calling it a “US$15- to US$20-billion opportunity.” Merchants in the space require more sophisticated integrations when launching in different markets, according to Fayer, which he said would give Nuvei a competitive advantage. “We spend an enormous amount of time integrating cashiers into all the vendors, for example…. We are still walking today, but as we see more progress, we are going to be running in that space,” he said.

Here’s what’s next: Nuvei’s executives provided analysts with a rough forecast of its fourth-quarter results, which would reflect a full three months of the company trading publicly. Fayer said that total volume in Q4 would be “in line” with what the company reported in the third, but its operating costs could increase as Nuvei looks to expand its direct sales force. Fayer said he did not expect the expansion of the sales team to affect margins, saying they would remain in the “low to mid 40 per cent range.” Acquisitions are still part of the company’s growth strategy. According to Fayer, the company is currently in conversation with multiple entities that have “compelling capability in the verticals we operate in,” that perhaps would not have considered Nuvei pre-IPO. In a note to clients, National Bank analyst Richard Tse wrote that based on his diligence, he expects to see “multiple transactions over the next 12 months.” Tse’s overall assessment of Nuvei’s results was positive—he called the company a “disruptive player with outsized growth relative to the sector,” and continued to place an “outperform” target on the company, at a target stock price of $70.