VusionGroup

Good afternoon and welcome to the Vision Group Q4 and full year 2023 self-call. After today's presentation, there will be an opportunity to ask questions. To ask a question during today's event, please click the send request button in the onstage window of your webcast. You will be placed in the queue to join the live presentation. Once we take your question, we will announce your name and unmute your line. Please note this event is being recorded. I would like now to turn the conference over to Thierry Gadot, Chairman and CEO, and Thierry Lemaitre, CFO. Gentlemen, please go ahead.

Thank you and good afternoon, good evening everyone. Thanks for joining our conference call following the disclosure earlier today of our full year 23 sales figures. So you can follow the slideshow if you're connected on the web conference. First of all, I'd like to remind start by reminding that in 24, a few weeks ago, a new company is born, and that is the Vuzion Group. And in many ways, this is the start of a new era. So why Vuzion Group? First, of course, to capture a new reality. Our group has changed a great deal in the recent years, expanding its range of solutions. It's a change with continuity because SCSC Magotag, as you can see on this slide, remains our ESL brand and the world leader in ESL. But we now have six families of solutions. We're now at the cutting edge in computer vision, in artificial intelligence, in big data, and in store retail media. And behind this range of solutions, there is the Fusion IoT Cloud Platform, hence the new name of the group. And the last comment about this word, Fusion, it's a combination of vision and fusion, because our vision of the future of retail is a fusion of physical and digital. So we concentrated the launch of this new identity at the world's biggest annual event in retail technology, NRF, in New York. And we had there, as you can see here, one of the largest and the most crowded stand on the whole event. Some of our U.S. investors were present, by the way. And we announced not only the new group identity, and this was in itself a sudden very positive important clarification of the consistency of our multi-product brand strategy towards commerce digitization. But we, of course, also introduced our major innovation, Edge Sense, as well as new AI applications together with Google, while strengthening at the same time our strategic partnership with Microsoft and many other innovations we introduced on the sixth family of products. But it was really beyond expectations start of the year. And now I'm coming back to our sales figures. So today's message is rather short and simple. Q4 was our best quarter ever. Same for H2. And overall year 23 was a great year. 30% growth, 800 million revenue. We reached both our annual objective but also our five-year plan objective. We posted nearly 1 billion euros in order entries and we are on track to cross the 1 billion revenue mark this year. So before we go any further, let's talk about an IFRS restatement on revenues on the new Walmart US rollout contract, which started, as you know, and was planned in Q4. From now on, we will publish two sets of figures. And to get into this detail, I will hand over to Thierry Lemaitre for a longer explanation.

Thank you, Thierry. Hi, everyone. So, yes, we decided starting Q4 2023 to disclose two sets of figures, the regular IFRS figures and the restated figures, aiming at presenting comparable figures between 2022 and 2023. 2023 Q4 figures are indeed notably impacted by two major IFRS restatements, reducing the revenue level versus the revenues actually invoiced to Walmart U.S. We have identified separately the impact of these two resetments, and we will keep reporting consistently on both full IFRS published revenues and also resetted revenues. Out of these two resetments, there is one resetment which you were already probably expecting because we discussed it in December 2023 on H1 2023 earnings. It is linked to the warrants that were granted to Walmart U.S. Although this warrant allocation will only generate a potential dilution for shareholders, IFRS 15 standard provides that the fair value of these warrants must be amortized against the revenues generated by this contract. So the €163 million fair value of the warrants started being amortized against the revenues in Q4 2023, and this €163 million amount is amortized in proportion to the revenues generated by the Walmart contract over the period. So first, you can expect a larger impact in 2024 because Walmart's revenues will be higher than in 2023. And second, this impact will flow directly to the bottom line of the P&L and will impact the VCM, the APDA, the operating income, and the net income. Of course, these warrants have no impact on the cash, And of course, they had and they will have no impact on the revenues actually invoiced to Walmart. That's for the first restatement. For the second restatement, it also refers to IFRS 15 standards in the Walmart contract. The Walmart contract, as you know, is a multi-year contract that should generate significant volumes of hardware. Based on the volumes that Walmart will commit to purchase, the group will, as usual, be able to scale down the cost. and we agreed with Walmart to apply discounted prices if and only when Walmart reaches certain volume thresholds. If such volumes are never reached, prices will remain stable. Nonetheless, IFRS 15 standard provides that we must book the revenues based on the volume weighted average prices over the expected lifetime of the contract. So we had to book a negative minus 1.7 million euro adjustment in deduction to the amounts actually invoiced to Walmart U.S. in Q4. This 1.7 million euro impact should grow in 24, and although we have to anticipate price decreases, we are not allowed to anticipate likely cost decreases. So this 1.7 million euro negative impact will also impact all the lines of the PLL down to the bottom line. So this is the reason why we thought it was necessary to provide such information to give a more precise and economic view of the revenues and very soon the profitability generated by the group's operations.