Verimatrix S.A.

You know that the world is in a situation of instability, whether for wars, the war in Ukraine or the Middle East, or for the approach of the United States on the part of the customs, which has destabilized certain areas of the world. especially in Latin America, in which Verimatrix is the absolute leader. The countries of Latin America, with economic instability since January, they have to make big investments. And we, as Verimatrix, have concentrated to develop other areas in the world, especially in the Middle East and Africa, as you will see, on the figures that Jean-François will show you. We reacted with a very strong market weakness in the first quarter, with integrated solutions to take market shares. These are the clients that you see that we signed in the first half of the year, divided into anti-piracy products and cybersecurity products. And to finish on the second quarter, as a turnover. Compared to the first quarter of 2025, we have progressed by 30.5%. To tell you, Verimatrix has implemented a whole new strategy of commercial forces with our focus on new customers to take market share and we are accelerating our activity on the market to increase both the turnover and the profitability of the company. And by the way, I will show you on the first half of this year, which is slightly lower than the first half of 2024 in turnover, we have progressed the EBITDA, the profitability of the company, by 49%. There is an improvement on the first quarter of 30% and an improvement on EBITDA in the first quarter of 2025 and the first quarter of 2024 of 49%. The company will continue to focus either on profitability or on winning market shares. This is our promise to our shareholders and our focus on companies around the world. Jean-François, do you want to continue to share the figures with our shareholders and our partners?

Yes, of course. Thank you, Amedeo. Now we're going to talk a little bit about the financial figures, we're going to start with the second quarter. So the second quarter, as Amedeo said, the point of satisfaction is that after a first quarter of 2025, quite disappointing, we had made a turnover of a little more than 11 million dollars, we had the satisfaction to straighten the bar a little bit by generating a turnover on the second quarter which is higher. We achieved a turnover on the second quarter of 15 million. Certainly, it is lower than the second quarter of last year, we are 10% below, but the trend is rather good compared to the beginning of the year. You remember, at the beginning of the year, we mentioned a certain number of attentions from our main customers. on the order, in particular, of perpetual licenses or important subscription orders. And of course, in the second quarter, even if we still have this attention and this decision-making delay of the customers, which tends to lengthen, we have achieved a certain number of successes, we have had a certain number of successes in the second quarter. You have seen the logos previously on the slide of the achievements of the first semester. But in the second quarter, we signed, for example, RTL in the sport environment, in subscription, which is rather very interesting. We renewed a three-year contract with Swisscom also, which finally translates the trust of this client towards the solutions of Verimatrix. And then on the side of the protection of applications, we signed two interesting banks, Banca Transilvania and HDI Bank to protect the applications. Thanks to these successes, what we can observe in the second quarter, if we go into more detail, is that we see that we have 8% growth on subscription revenues, with a turnover of 4.7%. We suffered a little in maintenance. You can see that we have a 6% drop in maintenance revenues. We know that the maintenance revenues are not necessarily where Verimatrix puts the emphasis, since the transformation of the group is carried out by subscriptions. But it is true that we had a few cancellations of orders in the second quarter, which weighed on performance. In total, we manage to slightly increase recurring income, which is rather good news for the Group. The main challenge is always the same, which is to limit the decrease in non-recurrent income. And in the second quarter, it is better than the first quarter, but we are still 21% down compared to the second quarter of 2024. Note that on the second quarter of 2025, customers like Hotwire finally renewed their license order with Verimatrix, which is very good news, it is an American customer. And then we finalized an agreement with a client, a telecom operator and media operator in Eastern Europe. Important revenue and, I would say, an important stake since we have been working with this client for several, several quarters. So, everything has not been realized. we still suffer in Latin America, but we see a recovery in the second quarter, which is rather encouraging. At the level of annual recurring revenues, ARRs, so the value of the contracts embarked, we see that we are in a very slight drop in total at the level of Verimatrix at the end of the second quarter. The good news is that it comes from maintenance. However, when we focus on subscriptions, which is our main source of investment today, we see that we managed, in the first part of the year, to generate a 10% growth, a growth of two figures, which is in line with our indications for the whole year. Once again, it's satisfying, but we still have great opportunities that we're working on, which should, we hope, materialize in the third and fourth quarter. So you have here the evolution of ARRs, it is an indicator that we share with you every quarter. So here we are only on subscriptions and you see that a little bit like last year, about the same period, we have a plateau effect on the second quarter. A plateau effect that comes from two elements, it is indeed the dynamics of Latin America did not take place in the second quarter, and we had a slightly lower control over our expectations. This is what explains the plateau effect that you see here in the ARR. I insist once again, there has been no loss of opportunity, but it is rather an important gap, or in any case a much longer delay for our customers to make investment decisions on their part. So we're going to move on to the first semester and we're obviously going to cover the results, but it's mostly EBITDA and the evaluation elements. So several important elements to note. We observe a stabilization of recurring income. So this is an element on which the group is working, since we have to be able to finalize all the important orders that are in the process of discussion on new subscriptions for the coming quarters. Unfortunately, this will not have an immediate effect in the recurring revenue, since they are subscription revenues, so we will recognize them at the pro-rata of the number of months remaining until the end of the year. On the other hand, you remember that we worked well on the cost structure of Verimatrix. Last year, we were able to improve EBITDA throughout the year. And you can see that over the first six months of the year, we were able to increase our EBITDA by 49% compared to the first half of the year. So we see that all this cost optimization work is starting to bear fruit. And once again, as Diame Deo said, this in the context of business figures going down over the first two quarters of 2025. So, we have a deterioration of working capital, mainly customer accounts. We always have a cyclical effect with Verimatrix. We had exactly the same phenomenon last year at the same time. We have payment delays that are relatively important with very targeted customers. mainly in Latin America. These payment delays are in the process of resolution, but this is what explains the consumption of cash that there was in the first semester. We also adjusted the value of Goodwill to the balance sheet, an important adjustment of 60 million, which ultimately follows the observation of the trajectory of the group's transformation. and then redefining medium-term objectives. So the transformation objectives are always the same, but the speed at which this transformation will take place has been reviewed, which required, according to the IFRS rules, an adjustment of the value of the trade fund to the balance sheet. So first quarter, after a catastrophic first quarter, thanks to the performance of the second quarter, we are still in a downturn, but only 14%. You can see that recurring revenues are slightly growing at 1%. You can also see that the dominant revenues are recurring revenues. So that's exactly the structure of the turnover that we want to have at Verimatrix. Unfortunately, we are penalized by the delay in orders on perpetual licenses, i.e. non-recurrent business figures, which, as you can see, drop by 33% over the first six months of the year. I talked a lot about geography, so to illustrate the idea, a few orders of magnitude. You have about the anti-piracy that represents 90% of the revenue. This is the activity that carries the bulk of the recurring revenues, but also a good part of the subscription revenues. On the other hand, ShredDefense represents only 10% of the turnover and it is 100% based on subscription revenues and maintenance revenues. In terms of distribution, the notable point is the Latin America area, what you have on your right. You see that Latin America represents 20% of the total turnover of the group. In the first part of the year, Latin America is down by 55%. So, with targeted countries, We are talking about Brazil, Colombia, Mexico and Argentina, all of these countries. In Brazil, there is a delay in the deployment of new infrastructure programs in paid television, which delayed the orders for perpetual license. We are waiting for the decision of the Brazilian government so that these programs are relaunched. Once these programs are relaunched, there will be a positive effect for Verimatrix quite quickly. Colombia is a somewhat particular context, we have a few things to discuss, there will be elections in Colombia, so we do not expect to have, I would say, answers at the Colombian level before the end of the elections concerning Mexico. This is also an interesting area for Verimatrix. We have very large historical clients with whom we are in discussion and we hope to be able to complete these discussions. Discussions that deal with both non-recurrent income and important subscription contracts. So that's the comment on the table. You can see that the United States is pretty stable. The good news is that the IMEA part is back to 14% growth. I mentioned the contract with Swisscom. I also mentioned the contract with this major operator in Eastern Europe. All this has contributed to re-dynamizing the region a little bit. Asia is down 20%. Once again, this is a lower turnover. It represents only 11% of the total turnover of the group. And in Asia, I remind you that last year we had an important agreement with the second largest operator in India. which is called Airtel. We will continue to have new business with Airtel, but I would say it will certainly be, it will certainly be realized by the end of the year or the beginning of next year. So let's move on to the results account. So here you have the result, the adjusted results account. So what are the main points of comment? a drop of 14% of the turnover and despite this you see that the margin in percentage is rather well protected, it is slightly lower compared to last year, we are at 66.6% against 69.7% in the first half of 2024. What you have behind this performance is a decrease in the return prices of Verimatrix, a decrease in the return prices that have been articulated mainly around the customer support organization, which has been optimized, and then also the optimization of consumption in the cloud, solutions that we host. So we manage to maintain or even improve the performance of our solutions in the cloud and at the same time reduce the cost of hosting. So we have a contribution of these new activities that improves each year. We see the results here. I mentioned the important work on optimizing operational expenses. You can see that we have lowered operational expenses over the period by 20.7%. And you can see that this concerns more or less all the lines. We have continued to work on research and development. and on the sales and marketing part, on which we did a certain amount of adjustment work and we continued to consolidate the different entities of the group. So thanks to that, we have an increase of 49% to 2.5 million. The adjusted operating income is still negative, there we have the weight of the amortizations related to the important investments that we made in R&D in the years 2020 and 2021, this weight of the amortization, which is a non-cash element, should drop in current in 2027 and allow Verimatrix to pass in positive operational results. Here are the financial costs that are essentially linked to the cost of the debt of Verimatrix for a result, a net stable adjustment compared to last year. We are in the adjusted result, so that's why you don't see the application of IFRS standards concerning the depreciation of the asset of the trade fund for 60 million, which was passed on June 30, which you see in the net non-adjusted result. So I told you about cash, we have a position of cash at $ 5 million at the end of June. We clearly have a degradation of the old balance sheet, which has made us consume a little more cash than expected, so despite the improvement of the EBITDA, the variation the need for a rolling stock has been unfavorable over the first period of the year, whereas usually it is rather favorable. Basically, over the entire year, we always have a drop in the need for a rolling stock, whereas cyclically, over the first part of the year, this need for a rolling stock increases. This is a subject to address, which will allow us to go back to a drop in working capital over the entire year and to find a treasury available much more favourably.

I will now move on to the balance sheet.

On the balance sheet, the important comment is the adjustment of the Goodwill, the value of the trade fund, to 55.2 million, so we have made an adjustment of 60 million. And then we reopened the discussions with Apera, given the weight of the financial interests. Then we also wanted to renegotiate the repayment conditions of the debt with Apera. And because of that, Apera's debt went up again in the short term, until we finished the discussions with with the APERA group, we should finalize the discussions by the end of September. This is something that we do regularly, that we have already done in previous years, and on which the discussions are rather well engaged. So, we will now look at the prospects for 2025. We revised a little bit our goals for the year to take into account two elements. The first is, you understood it, we have an extension of the decision time of our main customers on investments in perpetual license. What does that mean? That means that today we do not have a short-term visibility on the return of significant orders of perpetual license, even if we still have these same discussions going on, but we see that we have external elements, also of a general economic context, which encourage us to be careful about our commitments, given the evolution of, I would say, the turnover of Verimatrix. The second element of caution we have is that we have an ARR evolution that is a little below our objectives for the first part of the year. However, to achieve these objectives of growth of recurring business figures, in any case to secure them, it is important to have a good performance on the first part of the year, since this is where you will maximize the realization of these new subscriptions in the business figure. So, as I told you, we have great prospects for important subscription signatures, but it is clear that if these subscriptions come in at the end of the year, we will have a positive effect in the value of the annual recurring income, that is to say in the 12 months of projected turnover, but we will not have an immediate positive effect in the turnover of the exercise. So we are still on an ARR growth target of two figures. On the other hand, the effect in revenue growth is much more random. So that's why compared to a commitment to generate at least 10% of EBITDA on the turnover over the entire year, we revised this goal to move on to a commitment to generate at least 5% of profitability on EBITDA, on the turnover on the entire year. Again, the 10% are still achievable, but this is an objective on which we wanted to come back for this publication. That's it, I'm done with the presentation of the figures, so before moving on to the questions, I remind you that one of the important events to come is on October 22, 2025, after the end of the stock market. We will share with you the performance of the third quarter of Verimatrix. Thank you and then we will now move on to the list of questions.

So, I'm going to ask you a second.

So, I'm going to do it in chronological order. A first question concerning an increase Regarding an increase in capital, do you think an increase in capital is necessary to ensure the financing of commercial development? At this stage, not necessarily. Everything will depend on the speed at which the transformation of the group will take place. Once again, today we have sufficient cash and a cash that will improve over the coming months. If we have important investment needs, obviously capital increase is an option that is offered to us. So, second question, are you going to continue to try to repay the debt in advance? So, that's the subject of the discussions we're having right now. Well, it's obvious that it's not the Verimatrix's priority at this stage. The priority of Verimatrix at this stage is to re-dynamize subscriptions, to find a good business rhythm. on one of our main regions, which is Latin America, is to continue to work on our cost base to improve EBITDA and generate positive cash flows, since that is the goal displayed at the end. The repayment of the debt in advance is not in our priorities at this stage. So, will the sale of licenses to telecom operators completely disappear? No, the sale of telecom operators will not completely disappear. I told you earlier, I think we can go back a little bit to the example of Brazil, where there are still programs for the development of new infrastructure, of satellite broadcasting by broadcasting, which will generate additional licenses. So these programs, they are late, but they were decided by the state and the Brazilian government, so it will not disappear. You have to imagine that there are geographical areas where the number of broadcasting subscribers continues to increase. I told you about this major operator in the Eastern countries. with which we signed an agreement. There are other European clients that you have seen with which we signed agreements. These are revenues that are what we call non-recurrent revenues for Verimatrix. So no, it's not going to disappear. On the other hand, it's not a growth engine for Verimatrix in the long run.

Excuse me, but the question is, will there still be licenses for operators and subscribers? The answer is yes. No, because there will always be new licenses to be sold, whether for system changes, for old operator systems. But we have been pushing since 2021 many operators to make subscriptions rather than non-recurrent licenses. Licenses are going to continue. Today, there is a bit of economic instability for which large investments in Latin America under new systems are not there and we have put in such a complicated situation. This had already started in 2024. But the number of subscribers, as Jean-François said, on the broadcast part, which means not only IPTV but also satellite, will continue for at least fifteen years, twenty years. It is true that the greatest acceleration is on OTT, on streaming. such as Netflix and other operators that do streaming. But streaming also has a huge energy consumption. There are operators that are starting to slow down streaming a bit and come back to the broadcasting system, whether it's IPTV or satellite. But the end of digital content, of video, continues to increase. People want video. And the need to be paid for video is still there. Today, there are systems with advertising that are going to be paid with advertising, but other digital content, you have to make them pay. And on the part of payment, Verimatrix is a very important actor. The video licensing system on the IPTV and broadcasting part will continue for 15 years, I imagine. Excuse me, I don't know if I answered, but you see a lot of drop in perpetual licenses, but it's not the real drop. The real drop is lower because there was an increase in subscriptions with the operators. It is the sum of the two that makes the decrease in licenses. The difference of the two. Next question.

Yes, so next question. Are you satisfied with the new commercial partnerships?

Especially on the cyber side, We have been experimenting since 2021 with direct-to-indirect sales. You know that when you have direct-to-indirect sales with merchants, it costs to make sure that there are merchants who will visit the customer, do all the commercial action. So there is a whole layer of customers who are going to make recurring sales of 200, 300, 400,000 per year of cyber or also of pay TV, it's worth it to do live sales with our direct merchants who are employees with bonuses, but they are employees. The whole part of the large volumes, especially on the cybersecurity part, is easier and more strategic to sell with partners who have a bunch of offers on the cybersecurity part. who are going to sell their cyber products with ours. And this is an activity that we have started for 18 months. We can't say yet that we are satisfied, but if the question is whether it is the right direction, the answer is yes. It is necessary to make an important part of sales through partners, especially on the cyber part.

Next question about the automotive and medical sectors. Are they too complex or too competitive for Verimatrix? It's true that we talked to you about the automotive and medical sectors. It is true that what we observe today, especially in the cybersecurity part, is rather, and you see it in the new clients that we share with you, it is rather banking institutions. So it is true that today we have more discussions and more success with partners, with banking actors than with car and medical actors. Beyond that, as I have already explained, looking for new clients in the banking sector is energy consumers. This is also why we have associated ourselves with a certain number of partners. These are very long discussion processes, these are sales decisions which are very, very long because there is a whole phase of testing through which it is necessary to pass when a bank decides to make an offer to equip itself with a cybersecurity solution. So, for the moment, we have success at the bank level and part of the success of banks comes from partners, so in that sense, it's positive. I believe that we are concentrating our efforts and opportunities on this sector. The automotive and medical sectors, we do not have enough customer references today. So I think we are rather giving priority to the sector of financial services for cybersecurity. Can we hope for an action benefit at the beginning of 2026? The answer, well, listen, you're going to have to wait a little bit when we give the perspectives for 2026. But I remind you that the priority for Verimatrix is to continue to make EBITDA progress, to generate and stabilize the consumption of cash. The benefit by action will continue to be penalized, among other things, by the weight of the amortizations that we still have in the count of results of Verimatrix. A question about the second semester. Can we hope for a much better second semester than the first due to the report of orders? So when we look at the opportunities that are in front of us, when we look at the number of discussions that we have in progress with customers, it is possible. On the other hand, as we told you, the visibility that we have and the external impacts that may be on the investment decisions of our customers encourage us to be more cautious. So we are not committed today to a much better second semester than the first. I don't know, Amedeo, if you want to add something.

No, that's not what you have to answer.

So, a question about the accounting standard that is established in the result account displaying a net result of 3.3 million. So, this is an adjusted net result.

If you want, I will be the only one to update. We are today focused on our core business market, data protection activity and cash generation. That is to say that our commitment is from 2026 to generate cash. We are not going to make you forecasts today on 2026-2027, but we will améliorer beaucoup la profitabilité de l'entreprise. Ça c'est ma promesse personnelle, un commitment.

Une question sur les normes comptables établies, qui établit le compte de résultats on the result account showing a net result of 3.3 million in the S1 2025. Well, listen, this is what we call the adjusted result at Verimatrix. So, in fact, what is the adjusted result? The adjusted result, it returns all the elements, in quotation marks, exceptional that we have on the period. I will give an example. For example, if we have restructuring costs, these are exceptional elements that are withdrawn, except for adjusted elements. These are elements that are obviously reviewed by our account commissioners. This is a result that is supposed to be reflected the real contribution of the operations, except for exceptional elements. That's why you don't have the impact of the adjustment of the Goodwill on this adjusted result.

A question about the main shareholder.

Can the main shareholder encourage you to merge with a company in his portfolio in order to accelerate debt relief?

That's a possibility, because it's on the stock market side. If there are shareholders or investors who want to bring us closer, I don't know, it's a particular moment in our industry that making mergers and consolidating markets makes sense. And the reference shareholder, in his portfolio to several companies that are in our field. That's a possibility, but it's not a project we're still working on today, but these are possibilities, like possibilities for us. Maybe someone talked about capital increase. If there is a company to buy from in our field to do consolidation, that can accelerate profitability, solidity and put the group in a much more solid position on the market, that's a possibility. And it's also an interest for the market, for the industry.

Very good.

A question that comes back to the contracts that had to be signed at the end of 2024 and in the first quarter of 2025, have they been signed entirely? The answer is no. The answer is no. If we are talking about lengthening the decision time for customers, it means that we have contracts that were already in discussion in the second part of 2024, which are still in progress. in the course of discussions. Some have been signed, we mentioned them in the second quarter, but there are still some left. Again, the good news is that we are still in discussion, so the opportunity is there. Now the investment decision, we hope it will be made quite quickly now. A question about the depreciation of Goodwill. Does it concern the US Verimatrix company? In fact, the depreciation of Goodwill is done on the entire Verimatrix group and on the speed and growth of its profitability. So that's what was based on, I would say, the adjustment of goodwill. You remember that in relation to our prospects a few years ago, in terms of growth of turnover, we revised these prospects to the lowest to take into account the dynamics observed on our main markets. But that's what drives, define a little bit the adjustment of the goodwill of VRI Matrix. So, can you give us some information about the termination of a contract with a historic banking client? So, it is indeed a historic banking client of Verimatrix, which has not renewed its contract for the second quarter of 2025. It is a historic client that was there before the rapprochement between Verimatrix and Insight Secure. So it was a client who used a fairly old code protection solution at the level of cybersecurity and who no longer uses this solution and who unfortunately cancelled this contract.

Another question. Another question.

A question about research, development and sales and marketing. Given the drop in sales and marketing costs, are you planning to continue operational efforts in the second semester? So, as you know, we adapt regularly, we regularly optimize the cost structure and the organization of Verimatrix. On the R&D part, most of the development, I remind you, was done when we launched the new offers in the form of subscriptions, and this launch was at the beginning of 2022, so most of these investments continued a little in 2022. Today, we are in the process of stabilizing solutions, so the expenses necessary to the R&D to continue the transformation of Verimatrix are less important than they were a few years ago. Moreover, we had mentioned with you the opening of R&D and support centers in Mexico and Hungary, so we also continued to develop these centers. over the last few years, and this is what you see here as a result in terms of spending evolution. And then we talked about synergy earlier. We still have elements and pockets of synergy that we have to put in place, given the size of VV Matrix and given its geographical footprint, since we are still a company very, very international for our size. So we have optimization tracks that we will continue to pursue.

The question of marketing and sales, we have not reduced the commercial force, we have reduced the marketing costs a bit, the participation in the salons, which were much too expensive. We still participate in the salons. with suites next to the salons and appointments with the customers in continuo, but we no longer do the very expensive salons that we did before. We have reduced the value on the expenses that we think are a little useless. Clients don't want to see a lot of stands in the salons that are very pretty, but they prefer to talk in concrete. business and we make face-to-face appointments with all the clients who are going to come to Amsterdam, to NAB, to Las Vegas, which are the big salons of our anti-piracy.

Another question, have we increased the number of partners In fact, in the second quarter, yes, we signed new partnerships in the second quarter. We had signed a lot of partnerships at the end of 2024 and in the first quarter of 2025. We signed a little less, but we continue to increase the number of partners with which we are in full collaboration. There was a question about sales, but Amedeo, you just answered it, about the decrease in sales and marketing expenses. Another question. Can we consider a rapprochement with an actor in the cybersecurity sector?

Today, we are not doing research, we are open to the discourse of market consolidations. And remember that we have 90% of our turnover on anti-piracy and 10% in cyber. And getting close to someone, a giant of cyber, because cyber is very large and we are in a specific niche. Getting closer to a partner in cyber today doesn't make much sense, but someone who is from another type of profession, cyber video, yes, it makes more sense. In the course of cyber, no, because we are not yet of a considerable size to make fusions in cyber.

A question about the possibility of buying shares on the market given the position of the leader. The answer is yes, we have the possibility of buying shares on the market on very particular periods, that is to say, once we have published Verimatrix results. And in the case of leaders, to be very specific, when there is a purchase of, there is a purchase of a title, or at least a movement of a title for purchase or sale, the latter is declared on the market, which was the case last year with Amedeo D'Angelo.

Yes, I bought shares. Since 2019, I've been buying shares from the company.

Very good.

Well, listen, I think I have no more questions at this stage. So thank you again for your participation and for your questions. And then we'll give you an appointment on October 22, after the closing of the march, to share with you the results of the third quarter.

Thank you Jean-François, thank you everyone. It's always a pleasure to talk to you. We'll meet again in October. Goodbye.