VusionGroup

Good day and thank you for standing by. Welcome to the Fusion Group Q3 2025 Sales Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1, 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1, 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Olivier Grenant, Investor Relations Director. Please go ahead.

Thank you very much. Good afternoon, ladies and gentlemen, and welcome to our third quarter 2025 sales presentation. With me today are Thierry Gadoux, our chairman and chief executive officer, as well as Thierry Lemaitre, our deputy CEO, corporate and finance. Thierry Gadoux will make some remarks on the group's operational highlights. Thierry Lemaitre will then discuss our group's financial performance, and Thierry Gadoux will conclude our presentation with some remarks on our full year outlook. After this presentation, we will be happy to take your questions. As a reminder, some of the information to be discussed on our call today is forward-looking and subject to important risks and uncertainties that could cause actual results to differ materially. For these, I refer you to the safe harbor statement included in our press release and on slide three of this presentation. This evening's release was issued a short while ago and is available in French and English on Vision Group's website, vision.com. The slides of this presentation can also be found on our website in the regulated information section. A replay and a transcript will be also available on our website after the call. And with that, it's my pleasure to hand you over to Thierry Gadoux for his opening remarks.

Thank you, Olivier. Good afternoon, everyone. Thanks for joining our conference call. Very pleased to present to you, along with Thierry Lemaître, our sales figures for the third quarter. So let's start with the main highlights. Vision Group achieved an excellent third quarter with 59% growth in adjusted sales year-on-year at €355 million. The nine-month adjusted sales are just above €1 billion, up 54%. The nine-month VAS sales reached €144 million, up 115% versus last year at the same period. And we had a continued good level of order entries, which are now just below 1.8 billion euro over 12 months, an increase of 26%. And the momentum is good. We just announced an important deal this morning. So if we look at the performance by region now, the strong growth outside Europe is particularly driven by the intensive rollout of H-sense in Walmart in the US, which is now reaching cruising speed. and fast speed. Over nine months, Europe is still showing a small decline, but the situation is stabilized in Q3, and the other entries are good, too. As I said, this morning we announced the full fleet rollout of one of the largest British retailers, Morrison's. It's about 500 supermarkets to be deployed as soon as next year. And as you know, after as that this is the second wind in the UK since the beginning of the month. We announced as the early October and it's the third win in the UK since the beginning of the year, which if we include the full rollout contract for Co-op. Which makes over over 3000 stores to roll out in the UK with new orders this year. So the momentum is quite good in Europe in general, both in new logos, and we have also a large part of our customer base who will begin to renew their infrastructure in the next year. So we see the momentum very good also in Europe. Regarding VaaS now, revenue more than doubled, particularly driven by vCloud and Fusion Cloud and Fusion OX. Our cloud ESL install base, by the way, has grown by over 200% in the last year, thanks to both new rollouts on cloud and also legacy customers migration to cloud. And we passed a very symbolic threshold in Q3 of 50% of more than 50% now of our total install base in the cloud now. And in Q3, there was also a significant increase in the vast pipeline, in particular with computer vision projects and data solutions, which are both being more and more seen as a must-have technology in the future. We are very well positioned there and very optimistic to have a big part in this future big wave. We're also excited about the impact of AI in retail. And you've seen a number of announcements in that area over the past few weeks. But on Monday, we made also an announcement, an important announcement about the opening of our EdgeSense connected store platform to AI applications and generative models. This is really important. I mean, today, AI lives essentially online in the cloud. Tomorrow, it will come to the physical world and in particular to the physical stores. As you know, EdgeSense, the infrastructure turns the store into a smart grid, into a digital twin. where every product, every associate shopper are located, connected, synchronized. So just as GPS enabled the smartphones to navigate and understand digital maps, Edge Sense provides a store context and data layer that generative AI models, autonomous agents, and soon AI wearables such as smart glasses will need to understand and interact intelligently in the physical store. So, AdChance AI now is making this data infrastructure available through APIs and developer partnerships. This is the core of the announcement of Monday. AdChance gives AI the self-learning real-world context it's been missing until now. It's, we believe, a major step toward bridging the digital and the physical dimensions of commerce and bringing AI to physical retail. Having said that, I hand over to Thierry for detailed comments on our figures, and I'll be back for our outlook.

Thank you, Thierry. Hello, everyone. I will now go through the detail of the Q3 revenues and all the entries. Q3 revenues this year stood at 347.8 million euros in IFRS and 355.3 million euros in adjusted terms, which is a 59 percent increase versus just last year. You can see that the value of the adjustment in Tier 3 is now lower than in Tier 2 due to the adjustment on the selling price starting to reverse in Tier 3 this year, as we mentioned earlier. Over the first nine months, we are exceeding 1 billion euros total adjusted revenues, which is close to the full year adjusted revenues last year, an increase of plus 54%. Within the total revenues, are now accounting for 14.3% versus 10% over the first nine months last year. We see the main momentum at the end of H1 with a strong growth of 115% versus last year. Both the recurring and the non-recurring VAS revenues are showing strong growth of 37% and 238% respectively. All the entries are also solid. at almost 1.3 billion euros over the first nine months, showing an increase of 12% versus last year and 26% on a 12-month basis. And I will hand over to Thierry for the outlook.

Thank you, Thierry. So we're expecting a big quarter in Q4, our biggest quarter ever, revenue about around 500 million to reach our target of 1.5 billion euros. So we do reiterate the guidance that we raised one month ago. Fusion Group also expects to exceed its initial vast revenue growth target of 80% for the entire year. And overall, with an excellent order book and pipeline, the visibility for next year is excellent, and growth prospects are very good. So we will detail all this, I mean, our 2026 guidance in February when we report our full year 25 results. Thank you very much, and now we can take questions if there are.

Thank you.

Operator?

As a reminder, if you wish to ask a question, please press star 1, 1 on your telephone, and wait for your name to be announced. To withdraw your question, please press star 1, 1 again. We will take our first question. And the question comes from the line of Ben Thielman from Berenberg. Please go ahead. Your line is open.

Yeah. Hey, guys. Good evening. Can you hear me?

Yes, we can.

Okay, perfect. Hi, Olivier. Hi to the two TREs. A few questions from my side. First one would be on revenues. In EMEA, it seems like revenues in Q3 are up 3%. You guys have flagged it already in Q1 and the Q2 earnings call that you expect an H2 recovery. I was just wondering if you could guide us a little bit. How shall we split the 500 million in revenues? in Q4 between EMEA and Americas? Is it fair to say that the slide plus we have seen in Q3 is likely to be seen in Q4 as well for EMEA? That's the first one.

Yeah, well, I mean, we give guidance for quarters. We don't make precise guidance by regions. But I think... Overall, what I said is that in Europe, again, we've had a decline which is partly visual because of the comparable basis. I don't want to repeat myself, but there's been much, much higher growth than expected in the past years, so we have a comparable basis which is not really favorable. However, we're now back to this breakeven. Other entries growing, because I think we mentioned that for the third consecutive quarter we see growth in order entries in Europe. We announced several of these, including this morning, which are not in these numbers, by the way, because they would be in Q4. So all this shows a good momentum. So now, on a quarter-by-quarter basis, we don't give the guidance numbers, but we see very good momentum in Europe, need for our solutions, and so that's why we are positive. And we really are very confident in our average growth guidance that we had given a number of years ago, about 20% per annum. We're still on that trend, by the way, and we will continue. But it's just, yeah, there's been a little bit of decline, as you know, but we see that more behind us now.

Okay, perfect. And then maybe another question which was related to something that you announced already a couple of weeks ago is in terms of M&A. You guys took a minority stake in a German robotics company called Ubica. There was also a majority stake that you took in another data analytics company. And I was just wondering, maybe you could give us some color. What was the rationale behind it? As I understand it, it goes into the field of computer vision. And maybe what is the revenue contribution from that on your 2025 numbers?

No, I mean, again, those are relatively small entities. And in one case, it's a minority company. It's a minority investment, so it's very insignificant in terms of the – but it's more to bring on board either some skills that we may lack in some very important geographies or a foot in some of the technology areas where we were absent. I'm thinking about the robotics. So those are things that are part of our, I would say, building our skills and building our portfolio of technologies, watching things. So it is something that is small in size. So we don't comment about that.

Yeah. OK. And then third question would be, you mentioned it, outlook and visibility for 2026 are excellent. I know you're going to guide on next year officially in February, but maybe you can help us a little bit. What does that refer to? Is it revenues and earnings momentum? Or is that also referring to your cash generation capabilities? Any color on that?

I think that there was a lot of color on the cash flows last time. It's not really the call to talk about financials and cash flows, but maybe Thierry, you can repeat what you said.

No, nothing that we want to elaborate on furthermore compared to what you said last time. You said that, of course, I don't want to give any color on potential guidance for 2026. That's not the right timing to do it. I just reiterate that we said that in terms of cash flows, next year there will be a reversal on the down payments, so that will certainly be a negative free cash flow at the company level, but that's it. So there is nothing new and nothing new compared to what we said in September a few weeks ago.

I think you said that our intrinsic operational cash flow is continuing to grow this year and next year, and that we will consume some of the down payments, but we will stay on the net cash positive in the medium term, which is already saying a lot. in terms of the positive cash flow generation of the company because it's the case. So I'm not sure it's the, you know, we'll talk about that when we present our H2 and full year results now, but we've talked a lot about this, I think, in September. And regarding the, you know, you said we should help you, I mean, I think we are helping a lot already because when you say that you are confident that you are going to have robust growth next year after posting 50% growth in a year, at the scale we have now, this is saying a lot already. So we would make more detailed statements on the way we see 26, but we're already saying that in spite of having very strong growth, Having raised our guidance in the middle of the year, we're still seeing robust growth for next year. I think it's already a lot. I won't be more precise than that, Ben. Sorry.

It is. No, it's totally perfect. I'm very happy with that. Okay, that's it from my side. Thank you, guys. I'm going back into the queue. Thank you.

Thank you. We will take our next question. Your next question comes from the line of Hugo Paternoster from Kepler Chevrolet. Please go ahead. Your line is open.

Yes. Good evening, Olivier and Thierry. Can you hear me well?

Yes, we can.

Great, I would like to come back first of all on the deal that you announced this morning with Morrison and maybe just wanted to focus not on the hardware but potentially on the initiative that you want to explore with Morrison. If you could shed some light or concrete example of what you are expecting to do with them, I believe it's mobility to AI and yes, what could you potentially tell us from this deal?

I think there is nothing, I mean, let's say, you know, we have a customer development approach with every one of our customers, which is to, you know, develop a roadmap with them about digitalization of a number of processes. And then the digitalization can enable new processes experiences in the store with the shoppers, new relationship, new ways of delivering loyalty. So we have, let's say, a pattern of developing our customers, but it always starts with the backbone of the digitization. It always starts with putting the infrastructure first, because then it becomes the backbone where we can enable a number of additional functions. So in that respect, Morrison is not really different. It is, we're putting first, and we need to roll it out, so in the next, you know, 12, 18 months, you know, first the infrastructure, the ESLs, the cloud also, because it's going to be all cloud-based, and then we will work on a number of features additionally. But you need to first do the things, you know, Now we have a portfolio of solutions for every one of our customers where we start. It's true also with the previous deal we announced at the beginning of the year, sorry, of the month in the UK. We have a number of solutions that after we install the first DSS, we add to the, but you need to do things in order because first you need the backbone infrastructure and then you can add additional services. Here we have the right infrastructure, it's all cloud, it's all new generation of solutions. So I'm sure we'll do a lot of things with Morrison's in the future.

Okay, got it. And a question, a little bit of follow-up on this is, how do you think both ASDA and Morrison Rollout will influence the discussion that you may have with other retailers in the UK and potentially one of the tier one retailers like Tesco, Sainsbury's, maybe LD? Do you feel that there is an impact already in the discussion?

Yes, I think Morrison, Asda would not be happy to hear that they are not considered as Tier 1 by you, because they are clearly all in the Top 5 or Top 6, including co-op of the retail. So when you are talking about a market of the size of the United Kingdom, the Top 5 retailers are really big retailers, so they are all Tier 1s. But to answer your question, yes, I think the momentum in the UK is excellent. And the pressure is high also to bring automation and to bring intelligence to the store. And so I think there would be, you know, in the next 12 months there will be a lot more announcements.

Okay, okay, go ahead. Regarding the top tier, I will name the over top tier.

Okay, sorry.

And another question on the like, it's beyond the UK. Just wonder, apart from Walmart in North America, currently, what is the level of discussion that you may have with additional potential customer? And perhaps you could provide us some information on the pilot that you may have there.

Well, I mean, we have a big pipeline in America, in North America particularly, also a little bit in Latin America. So there are a number of things going on. We don't make comments on our pipeline. This is a bit too, you know, this is confidential matters, and we are not here speaking only to our investors, so I won't be... very talkative about any individual deals, but we have a big pipeline in America.

Okay, okay. I had to try. I can jump back into the queue. Thank you.

Thank you, Hugo. Thank you. We will take our next question. Your next question comes from the line of Flavian Baudemont from Bernstein. Please go ahead. Your line is open.

Hello, gentlemen. Good evening. My first question is a follow-up on Hugo's question. Last quarter, you mentioned that in terms of visibility in the U.S., you think that you can possibly sign a deal in H2 2026. Is it still the case?

Yes, I didn't remember I was that precise, but I mean, I would just follow up, follow on the previous answer I made, which was about also the U.S. We have a very significant pipeline in the U.S. It's always uncertain which quarter you may sign, but I'm sure that in the next 12 months, there'll be deals, you know, signed, yes. So... including H2-26, yes.

Okay, thanks. Then I have a second question on the other book. It's still down in Q3 by approximately 5%. Maybe can you add some color on that?

Well, yes. You know, the color is simple. I personally think for a third quarter, it's an excellent, really excellent quarter. um this number in in absolute terms it obviously is a little bit affected by a comparative basis because we you know we were getting big multi-year orders uh and you know in the in the previous period but it's a good absolute uh it's a it's it's a good absolute number and we're happy with the with the level of order entries uh so you know it's it's compatible with When I look at the level of order entries, the level of the pipeline and our plan 27, all this is completely consistent.

Okay, thanks. Ben, on the VAS, your recurring VAS revenue per cloud ESL is again down quarter to quarter. I'm mainly wondering, because I think that there is a volume effect with Walmart that impacted it. But what is the dynamic of your recurring sales excluding Walmart? What's basically the growth with this kind of client?

Yeah, I think, you know, the dynamic of the cloud connected and you need to be taking into account different things we have. Migrations, we did a lot of migrations, which is a very positive factor because we have this objective of being at some point very soon at 90% in the cloud. So pushing a lot of migrations, and we did huge migrations. And those things can happen. You need to look at the average level of labels really when you make those comparisons, because here you're talking about revenues during a three-month period compared to a number of... So if you look at this, you will not see that big trend. And I don't want to enter into too many comparisons between customers in terms of pricing or revenue, so I will leave it here. But the growth of 37%, is something that we feel very comfortable. I mentioned also that we are having an increase in the pipeline of a vast recurring project, particularly a strong increase in the pipeline of Captana computer vision projects, which I mentioned is a particular pattern of the Q3. So we're very confident about the fast growth which is quite consistent, which probably will be accelerating in our vast recurring revenue.

Thanks. And I have a last one regarding your slide growth in Europe. Is it coming from new logo or mainly from existing customers? And is it mainly due to a growth in ES sales revenues or in vast revenues?

Well, it's really, really coming from both ESS and VAS, definitely, first. Second, it's coming from also, I mean, we announced a number of new logos, and it's not yet coming from these new logos because the recently announced ones are going to be more feeding growth in 26. But, you know, again, when we talk about our existing customers, it's always important to remind we have a very, very large base of customers, particularly in Europe, and a huge install base. But even in that base of customers, we have only partial penetration of our customers. So we continue to grow the coverage, the penetration, the coverage of our customer base, and that is always driving growth. And also we expand categories. So a big part of our growth is within our customer base. And then we add new logos regularly. And we regularly announce new ones. So a big part of our growth is also coming from customers. And I mentioned also that the number of customers who have rolled out in 2017, 18, 19, are going to be also upgrading, refreshing, or renewing the tech in their stores. So this is also a growth driver for the next years. So it's a perpetual sort of business. And so we have a lot of growth in the customer base. And so if I look at 27, 28, it would not be very surprising 70% of our revenue then is actually coming from customers we already have today.

That's clear. Thank you, Charlie.

Thank you. Once again, if you wish to ask a question, please press star 1, 1 on your telephone. We will take our next question, and the next question comes from the line of Lorien Sivignol from OdderBHF. Please go ahead. Your line is open.

Hi, good evening, gentlemen. Two follow-up questions from my side on UK. First, on the Morrison contract, do you expect this to be completed by the end of 26? And second one, finally, would you say UK could quickly become your second largest country by revenue going forward and maybe from 26? I mean, adding Morrison to Asda and to Co-op, numbers are getting quite significant.

Thank you. So yes, it could be. I'm not making a promise here, but let's say the intention is to go relatively fast in the rollout. So yes, it could be done by the end of 26. Maybe it could roll over a little bit in 27. It's a possibility. Obviously, if you look at GDP and retail intensity of the market, UK is a big market and certainly one of the top three markets in Europe. So it should really catch up. I've been waiting for this moment. It should really catch up in the top three markets of Europe. Whether it's going to be the second one, I don't know, because there is a big... you know, competition between our markets. Germany is also a very important market. But, you know, it's going to be one of the top three, definitely. And we are very excited about this market.

Thank you. And just on the Morrison contract, does it make sense to think that this will be completed by the end of next year or maybe a little bit too short?

Yeah, I thought I answered that question. I said, yes, it's not a promise, but it's very likely we can complete the rollout by the end of next year. Absolutely.

Okay. Thank you very much, Thierry. Thank you.

Thank you. We will take our next question. And the next question comes from Flavien Bourdemont from Bernstein. Please go ahead. Your line is open.

Yes, sorry. I forgot one question on the ASDA deal. Does the deal include any VAS sales?

Yes, of course. Well, first, it's, again, a full cloud service. deal, plus a number of new services, which are additional services and solutions which are not in the press release, but which are being already tested in many stores and very likely to be rolled out. So there will be more announcements about ASDA as we go. But yes, the scope is quite significant in terms of solutions.

Okay, thanks.

Thank you. There seems to be no further questions. I would like to hand back for closing remarks.

Thank you very much, everyone. It was a pleasure to spend these minutes with you today, and we will be back now in quite a while, Olivier. 26th of February. 26th of February. which is maybe late for the revenue, but early for the financial results and for the first time it will be together. Well, the first time, yes, it will be the first time we do this. So we inaugurate a new timing. So it will be the 26th of February. And in the meantime, I wish you a great evening. Bye-bye. Bye-bye.

This concludes today's conference call. Thank you for participating. You may now disconnect.