Tinexta S.p.A.

Good afternoon, this is the Coruscall conference operator. Welcome and thank you for joining the T-NEXA group consolidated results at the 30th of June 2025 presentation. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Joseph Mastragostino, Chief Investor Relations Officer. Please go ahead, sir.

Good afternoon and good morning to those joining from abroad. Thank you for joining Conexus 2025 first half results presentation. Odone will be joining us in a few minutes, but in the meantime, I will kick it off. As a reminder, all the remaining, all the relevant documentation of the first half 2025 results can be downloaded from our company website in the investor relations section. For the purpose of this call, I will cover the key strategic items of the call, and then we will go over the first half 2025 results, and from the financial point of view, as well as the business units' performances, providing you with a deep dive. The last part of the call will be dedicated to Q&A, and as a reminder, a recording of this conference call will also be available on our company website, and it will be posted upon completion of this call. At this point, I will kick it off by turning to page five of the presentation, which you can find, as we said, on the Investor Relations section of the company website. Let's go over some key group financial data, in particular, as of the 30th of June 2025. Revenues were up 16% versus prior year, growing double digit versus the prior year. Interesting is also the growth in terms of EBITDA adjusted, which came in short of a millionth and 40 million. It came in at 39% to be exact, growing 13% versus the prior year. EBITDA on a reported basis was 33 million, growing 29% versus prior year following the considerable lower number of one-offs and non-recurring. The net profit on an adjusted basis came in at 8 million. The net financial position was strongly improving versus the fiscal year 2024 number coming in at over 300 million. I think it's worthy of mention that free cash flow on an adjusted basis was very strong, growing 86% versus the prior year and reaching almost $50 million in the first half of 2025. We will discuss more deeply on the components of free cash flow later in the financial section of the presentation. Turning to page six, we're highlighting the first stage results came in double digit in terms of growth with an expected acceleration in the second half. Let's deep dive directly on EBITDA, which, as we said, came in at 39 million, growing 13%, and that performance was mainly driven by the growth in cybersecurity with the integration of Tinexa Defense, which is performing very well. Asherty's contribution in the digital trust area is still light, expected to come in in the latter part of the year or more precisely at the end of the year. In terms of business innovation and ABF, the performance is still lagging given the persistent macroeconomic uncertainty. In terms of BI, in particular in Italy, we're still witnessing some general delays in subsidized finance in Italy, but we're due to recover in the second age, given the very strong pipeline. EBITDA on reported basis was $33 million, growing 29%, as we said, driven by lower one-offs and non-recurring. EBITDA adjusted margin was just shy under the prior year at 17%, and the EBITDA reported margin was higher at 14% versus at 12.6% of the prior year. EBIT on a reported basis was negative 19 million due to some impairment of goodwill related to acquisitions, which we will detail later. And they're also available on our financial statements report. adjusted was $18.3 million. Net profit adjusted was $8.4 million, while net profit on a reported basis was negative $7.5 million. Again, we will see what is moving going down the P&L when Ozone will go down on the financial statements section. Net financial position, again, $300 million. The decrease in the net financial debt in the first semester is attributable to the increase of the free cash flow and the positive adjustments from put adjustments that we re-recorded during the first half. Free cash flow adjusted was $48 million, and 1H cash generation was driven by favorable network and capital dynamics, decreasing capex as we had anticipated back in March, and lower cash taxes. Net financial position over LTM EBITDA adjusted was 2.6 times versus 2.79 on a pro forma basis on December 31st of 24. Brief highlights on the business unit. Digital Trust grew around 5% on the top line, flattish to partially positive, 1.5% growth in EBITDA. Margin is still attractive at 28%. Cybersecurity, very strong growth, 46% versus prior year on the revenue base, and EBITDA was over 130%. margins strong at 14% BI. sees a growth in terms of revenue, while we see a decline in terms of EBITDA, and we will discuss that later. In terms of recent events and updates, we highlight that there was a transfer of DefenseTech shareholders' equity into Tenexa Defense Holding by Star Life. This is basically just a corporate governance aspect that we can see. There was, very importantly, the exercise of the call option for the 25% stake in EBS, which was paid only one euro, and that followed the subsequent exit of founding managers. Also recently, and it was still recorded in the first half, the acquisition by Tinexta Infojet of the digital trust division Linkverse, which expands, therefore, the operations of digital trust in the private and public healthcare sector. Lastly, from a Tenexta Defense point of view, we recently launched a proprietary cipher, which was developed by Tenexta Defense, and it has the so-called dual-use functionalities working both for companies as well as institutions. Let me turn to page 7, where most of the comments have been highlighted. Maybe it's important to highlight the growth again of EBITDA, which is still being around double-digit levels. Page 8, I think it's important to remind the market that, and therefore stakeholders and shareholders in general, that the overall expected second age, given the performance of first age, is going to be very, very important. In terms of percentages, you're looking at another important year where the second age performance will be around or more than 70% in terms of weight, in terms of EBITDA. You can see that here, basically, in the first half, we grew versus the prior year, both in terms of EBITDA and also in terms of revenue. Let me stop there and turn it to Odone for page 10 on the results and the views, these guys.

thank you good afternoon everybody as already introduced by joseph here at page 10 you see how the group was able to perform a double digit draw both in revenue and abtda basically almost aligned to our expectation. If we walk through for each division, and I will deep dive later on, we have digital trust that is growing 5.4% in terms of revenue and 1.5% in terms of EBITDA. Obviously, these figures have been impacted as already anticipated during Q1 by the fact that during 2024 deliver most of the sales of one-off product and license during Q1, while this year they have expecting to be delivered down the road during the year. If we are going to neutralize this effect, and I think this is very important, Basically, digital trust, especially InfoServe, are growing basically at the same pace that was projected at the beginning of the year. Cybersecurity overall is delivering very strong results. We have the revenue going up by 46 percent, mainly driven by the results of T-NEXT defense. You know, a former cybersecurity business delivered a flat revenue, but a significant increase in that grew in the range of 18%. The first half is very positive and basically it's happening everything we were waiting to happen during the plan presentation. Business innovation. The revenue is up both in absolute value as well as in organic way. In terms of profitability, we are a bit slightly below our plan, mainly driven by the fact that compared to our initial expectation, the level of revenue coming from ABF and from the Nexa Innovation Hub, from the finance and grants part, the revenue was there and also the profitability expected while we are a little bit late in digital innovation and and ESG, but again, for us, is a phasing subject. If we walk through page 11, you see here, we try to segregate the digital trust without Ascertia, so if we exclude what's happening in Ascertia, we are going up 2.6 million ABTDA, that is exactly in the range of 7-8%. we were expecting, we expect this couple of billion ABTDA to be delivered between end of Q3, Q4. Cybersecurity, as I mentioned, if we exclude obviously the next defense is improving mainly by the cost reduction as already anticipated during Q1. And if we walk through the business innovation, We have the marginality of financing grant basically aligned with previous year despite a higher level of revenue while we are suffering as a phasing in the first part of the year. 14 ESG activity, as well as digital innovation, but most of this delay is planned to be recovered in the second part of the year. And then we are adding up the results of Lenovo that last year was not consolidated in Q1, and obviously Tinexa Defense that has been consolidated starting from August 24th. Overall, the revenue is going up 13.3%, moving from 34.4% to 39%. If we go at the The P&L, you know, the business-related part of the P&L is, like I mentioned here, you see, you know, ABTDA going up at 39%, 16.6%. EBITDA margin. We have to remember that the most important part of the business is happening, especially in cybersecurity and business innovation, the second part of the year. Last year, we delivered a 17% EBITDA the business innovation is the main driver with a decline, a timing decline of four point percentage compared to previous year. No recurring costs are below previous year. This cost includes 5 million costs mainly related to internal reorganization where we are going to lower our recurring costs. We did some action in order to lower our people-related recurring costs and on an organic basis Basically, the number of FTEs is basically equal to the previous year, so we are planning to be in a more favorable position approaching the second half of the year. When we look at depreciation amortization provision, we have to keep in consideration that here we have a A change in application of an accounting principle is a change that we decided to apply also after having changed the auditors that we changed starting from this year. What's happened here? As you know, during the month of May, Tinexta and basically Tinexta Innovation Hub decided to exercise the call of underperformance related to the 25% of ADF. So we performed this step. So the founders are now out. And so we had basically a gain that passed through the P&L, a gain of €12 million that has been included as a profit in the financial rate. In the meantime, we adjusted for an amount of €16 million the goodwill that we had on ADF. So basically it's a balance sheet path where we have lower debt and lower goodwill. In the meantime, we had to reclassify compared to the Q1 reporting, but all figures here have been restated. So basically, the cancellation of the put of a share for 6 million euros, that that declined our debt has also been recorded now as a profit that still is accounting in financial charges. The remaining part of the Bright Town has been basically driven by the increase of weighted average cost of capital, we rectify our amount of good during September offer for 1.6 million euro. Overall, If we combine the profit that we get from the put cancellation as well as the adjustment of the goodwill, more or less we are in the range of 19 million euros. So on the net profit, it's not impacting so much, but you can imagine that it's quite reasonable if you decline that also the goodwill is going to lower. So this is the main driver of these figures that have been quite significantly different from the previous year. uh for the rest i think that obviously in this first uh uh in this first half we are counting uh two and a half million euro more in the net of financial interest driven by the fact that this with this year we have the full debt in the first half of the acquisition of avf and the acquisition of defense tech while last year We add in the books only the debt related to the acquisition where we have the income. In the second part, we have started to counting the interest for the acquisition of defense. If we move to page 13, we have basically the adjustments. on our P&L. We have a lower adjustment compared to previous year, and no recurring service costs are partially related this year to rebranding activities, while no recurring personal costs, like I mentioned before, are related to reorganization, optimization of the cost basis. I think I already talked about the changes that we have in non-recurring drying down as adjustment of non-controlling ether. But anyway, these are the most important part. We are booking into our TNL €12.6 million of amortization driven by the purchase price allocation, as well as the 12.4 of last year. The balance sheet, obviously, the balance sheet has been favorably impacted by a very strong first half cash generation. as we were expecting after a week 2024 driven by like we said very clearly, non-recurring, I would say, CAPEX that allow us to invest in some project evolution as well as they help us in the reconfiguration, I would say, of all our data center and the cloud approach and whatever. So now we are running, basically, more recurring capex, and this has had a positive impact on the cash generation. So the net invested capital dropped almost 50 million euros from the end of the year. Very strong has been the net working capital, organic net working capital decrease, as well as, you know, the decrease in fixed assets, despite the increase of $8 billion driven by the acquisition of Linkless by Kinect Infos. Next financial position, like I said, was... It has been lowered by more than 20 million on top of the Fricas Law, the very strong Fricas Law generation. We had the distribution of dividends. We had the acquisition of 8 million of liquid, but on the contrary, we had the opportunity to improve the financial position also by the elimination of the put adjustments between Asherzia and ADA. If we move to page 15, like I mentioned before, you can see here on the right part of the page a very positive improvement of the test generation. And if we look even at the LTM, on LTM basis, I think we delivered the best results. LTM ever cash flow generation, where we peaked 64 million euro, that if you consider that this has been also combined with the week 24 is absolutely a very positive result. I would like to underline also that DefenseTech, T-NEXT Defense, now renamed T-NEXT Defense, has delivered a very strong Q1 cash generation. And, you know, this is something we were looking very carefully, and this is a strong support to our decision of investing here. in defense tech and we were able to free this capability of cash generation. I would say that page 16 And 17, I would say, have been already mostly already commented, commenting the results. Here, you know, at page 17, you see over the last year, You know, the group invested more than 70 million euros in acquisition. We are talking about DefenseTech and Lidvers, basically, in the last 12 months, while we had a put adjustment of around 40 million euros. Now, you know, despite this acquisition, we have a net financial position that is Now at 2.6 times the GABTDA, and still we are entering in the part of the year where we are going to deliver most of the GABTDA. I move now to page 19, talking about digital trust. Like I said before, the core part of the business is progressing well. And we have some good news. Legal invoice up 12%. And I would say following also part of the investment we made last year, you know, the online sales are growing rapidly. On a 10% base, that is definitely a very strong result that is supporting, you know, the marginality, but as well as the cash collection. Trusted onboard platform grew 8%. due to the recurring revenues subscription of a new renewal from loyal loyal clients so again on dgm still a very positive result legal said the revenues are down seven percent but like i said that they are driven by the delay in sales over shared pki products in the Middle East, North Africa, for which we do expect to materialize during the second. The growth that, you know, is 1.5% could appear disappointing, but again, if you take apart this timing issue related to Asherzia, and we have seen from the product rate of growth, we are on track. Cybersecurity. As already shared during the plan presentation, we very well knew that most of the recovery of profitability would have been driven by a cost control. Definitely, you know, level of growth of the market on the The two arenas where we are playing are not so exciting, but in the part of traditional cybersecurity, but we were able to still improve our profitability for 4.1 to 4.8 million euros. Defense Tech is delivering exactly aligned with what we were expecting. You know, we anticipated also during the investor presentation in March Our projections were supported by a very strong backlog, and this is going to happen during Q1. It's happening also during Q2. The EBITDA margin is lowering, as we knew well in advance, still at the moment of the acquisition, due to a different trend. mix between basically we are operating even more and more as a main contractor and sometimes we have to resell hardware or other components that are delivering lower margins in percentage, but in absolute value we are growing exactly as expected. So the level of backlog is very strong. We are reinforcing our our capability to deliver the projects in this . If we talk about business innovation, I already anticipated that, you know, in this area, We were expecting actually during Q1 a little bit more revenue coming from ABF project to be delayed from the end of 24 to early 25. These occurred, but not at the level we were expecting. In ABF, in the French market, you know, now is unfortunately, and this is One of the reasons why we basically updated our goodwill value is that the market in this area has dropped. The success rate of the filing went down from 65% three years before the acquisition, and then when they the france went into a political struggling you know this kind of success rate has dropped to in the range of 42 43 percent so we are approaching after having uh laying off The funders, we are approaching the market. When the market was growing 70%, was having a success rate of 70%, you know, volumes were the drivers. Now we are approaching the market in a more selective way, trying to improve the success rate through a more selective selection process. of project to be driven. If we move to the Italian market, what we are observing here definitely is always the second part of the year will be the key part of our profitability. We are observing here that compared to initial projection, The level of revenue, we are observing a switch between 4.0 to 5.0 solutions, so the customers are switching there. So we have already on hand basically the backlog that we need to deliver the results. Now it's, you know, a run. that we are performing together with our clients to complete the project, to complete the investment, and to deliver what's needed by the end of the year. So before leaving to Joseph for the guidance, you know, like I said, I do not, we do not see major issues in delivering digital trust results. We have the open points on when Asherzia is going to deliver. In cybersecurity, overall, it's almost, you know, we do believe that the forecast is, you know, continuing from the first half. It's going to be very solid. On the business innovation, you know, we already factorized into our guidance, you know, The better result of our ADF, even though not aligned with our initial projection, but overall we have seen that if we are able to deliver the orders we have on hand for 5.0, we should be almost in the range of our projection. So I will leave now to Joseph for the closing remarks.

Yes, so to wrap it up on page 23, let's quickly go over the financial guidance. Given all of the above, we confirm guidance in terms of revenue growing 11% to 13% versus prior year, of which 7% to 9% organic. EBITDA is confirmed as well, growing 15% to 17% versus the prior year, of which 10% to 12% organic, while we actually register an improvement of the leverage ratio which now is a leverage ratio meant as NFP over adjusted, which is now foreseen at 2.1 times to 2.3 times versus the 2.2, 2.4 times communicated back in March. I think the levers behind that have been extensively discussed during this call and obviously refer to the exercise of the call option at a very attractive rate in terms of APF. I will stop there, ask the operator to open to Q&A, and we are available for any doubts and any further developments.

Thank you. This is the Coruscant Conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Russell Poynton with Edison Group. Please go ahead.

Good morning. Good afternoon, Adone and Joseph. Just a couple of questions, if I may. First of all, in terms of Assertio, you've said there has been this deferred revenue effect. I'm just wondering if you could just give some background to why that revenue has been deferred. I appreciate it's It does move around a bit, but is there something from a customer perspective, et cetera? And then, so it is a question on the overall guidance. If I'm reading it correctly, you sound a bit less, it sounds that the guidance is going to be delivered in a slightly different way than you probably anticipated at the start of the year with business innovation being a bit behind and digital trust and cyber doing pretty well. Is that right? Yes. Thanks.

So, Russell, let's wrap up. On Ascensia, it's basically deferred revenue. Yes, this is a calendar aspect in the sense that they were supposed to close during their fiscal year closing, which corresponded to March 31st, which they did not. And therefore, we are expecting a full recovery by the end of the year. Again, these are just contracts that were supposed to come in. They did not, and they're expected to come in in the latter part of the year. In terms of, so we said this in Q1, and we're confirming it again now. In terms of the guidance, you know, what we're saying is that overall on an American base, you know, the ranges are fully in effect. So we have confirmed both revenues and EBITDA, and then the leverage ratio instead is just a function of the put call option adjustments, favorable adjustments that we registered. Notwithstanding the fact that BI is a bit behind in the first stage, we have a very strong pipeline. It's all about the delivery in the latter part of the year, the latter being mostly the end of Q3 and Q4. Let's be very, very clear on that. And again, more than 70% this year of group EBITDA will be generated in 2H. Full stop.

Okay. Thanks, Jackson.

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Given that there are no more questions, thank you very much for your attention, and we'll keep you self-posted on any further news. Bye. Bye. Thank you.