Tinexta S.p.A.

Good afternoon, this is the Chorus Call Conference operator. Welcome and thank you for joining the Tinexta Group Consolidated Results at 30th September 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 N0 on their telephone. At this time, I would like to turn the conference over to Mr. Joseph Mastracostino, Chief Investor Relations Officer. Please go ahead, sir.

Thank you, operator, and good afternoon to all of you that joined this call. This is Tenexa's 2025 Nine Months Results. Here with me today, Odone Pozzi Group, Chief Financial Officer. Good afternoon, everybody. Good afternoon. As a reminder, all the relevant documentation of the nine months 2025 results can be downloaded from our company website in the Investor Relations section. For the purpose of this call, I will go over key strategic items of the call, although we'll go over instead the nine months 2025 financial results, as well as the business unit's deep dive, providing us with all the insights. At the end of the call, we will have the dedicated area for Q&A. 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. So results on a nine-month basis ending September 30, 2025, reported revenue at $347 million, growing 14% versus prior year. Adjusted EBITDA came in at $63 million, growing 12% versus prior year. EBITDA on a reported basis was $55 million, growing 20% versus the prior year. And net profit on an adjusted basis was $15 million. Net financial position came in shy of 300 million euros versus the 322 registered on the fiscal year 24, while free cash flow on an adjusted basis was very strong, registering 56 million for the nine months or 47% versus prior year in terms of growth. Turning to page six, so nine months registered double-digit growth and a very strong cash flow generation. As we mentioned, EBITDA adjusted was 62.7 million, which was mainly driven by the strong growth in cybersecurity due to Tenexa Defense's contribution. Digital trust results, while positive, were still impacted by the delays in Asherz's performance. Business innovation figures still lagging due to the political unrest impacting subsidiaries in the French market, in particular ABF. We will give you a very detailed description of what is going on in ABF, and also we registered during the third quarter of – of business innovation, a strong contribution from industry 5.0. And even on this item, we will give you an in-depth description of what is going on in that particular side of the market. EBITDA on a reported basis, as I said, grew 20% versus prior year, and that growth was due to lower charges related to LTI incentive plans. EBITDA adjusted margin was 18%, mostly in line with prior year. and EBITDA reported margin was even better than last year, close to 16% versus the 15% of the prior year. EBIT on a reported basis instead was negative of $26 million due to some impairments of goodwill related to the acquisitions, and EBIT on an adjusted basis was positive $31 million. Net profit adjusted was already commented, while the net profit on a reported basis was negative $16.5 million. Net financial position was a little bit shy of $300 million. The decrease in the net financial debt in the first nine months reflects the solid cash flow generation, positive put adjustments, and a lower impact from acquisitions. Free cash flow, $56 million, very strong versus the prior year, mainly reflects lower capex and cash taxes during the period. Net financial position over LTM EBITDA adjusted came in at 2.55 times versus the 2.8 on a performance basis reported as of December the 31st of 24 or 2.9 times on a reported basis. In terms of BU, digital trust grew mid-single digit at 5%. EBITDA was a bit lower than 4% in terms of growth. The margin was still strong at 29% in terms of EBITDA. Cybersecurity grew 37% in terms of top line. while EBITDA was very strong, growing 71%, mostly and entirely driven by Tenexa Defense's contribution. Business innovation grew 9% in terms of top line, while decreased around 9% in terms of EBITDA. Maybe the most important part of this slide, aside from the numbers that have been commented, are the recent events and updates. In particular, let me draw your attention to a couple of items. Mostly, I would say in July, we had the purchase of 70% of LexTel AI on one side. And then maybe the most important item, obviously, is the announcement on August of the signing of a binding agreement for the purchase by private equity funds Nextalia, together with advance of a stake in Tinexa's ownership from Technoholding. The stake is around 38.74% of the company's share capital at a set price of €15 per share. Following the announcement of August, let us all recall that in September, we exercised a call option for the remaining 35% of our shares, which was paid for around 8 million British pounds or 9 million euros. In October, we received the approval of the EU Commission regarding the above transaction related to the sale of the next shares from Nextalian Advent in compliance with EU antitrust regulations. And just a couple of days ago in November, there was the conditional resignation of the majority of the next SPA's board of directors and subsequent calling of the shareholders meeting for December of 2025. Let me turn to page seven. Even though most of these numbers have been commented, maybe it's important to highlight here that net profit on an adjusted basis was around $15 million, and the free cash flow was very strong at $56 million, growing almost 40% versus the prior year. Let me wrap it there. I think O'Donnell will go over the financial results, turning to page 9.

O'Donnell? Okay. Thank you, Joseph. As anticipated by Joseph, you may see here the quick overview of the group results. Like we said, overall, and then we will deep dive in details, overall revenue went up 13% compared to previous year, and ABTDA adjusted went up 12%. If we go in details into the business unit. We have here digital taxes continue to grow 5% in revenue and almost 4% in ABTDA. Cybersecurity overall has been growing significantly by the contribution of Tinexta Defense, formerly Defense Tech. And overall, the contribution of the business unit went up close to revenue 100 million euro with 37% increase, while the EBITDA is almost double than the previous year, moving from 8.5 to 14.5. In the business innovation, we have revenue going up. But ABTDA is going down. We may say that this is a temporary situation driven by the mix of revenue and from the expectation of Q4. If we go in analyzing in detail the results Basically, the digital trust, we may see here very clearly that digital trust overall, if we exclude Asherzia, that is not performing accordingly to its station this year, all the rest of the business, the vast majority of the business, is growing basically at 10% ABTDA and this is definitely very, very positive. In cybersecurity, T-NEXT Cyber is almost flat. Unfortunately, the expectation we had at the beginning of the year has been late by the end of Q3 with the flat results both in revenue and BTDA, while T-NEXT Defense, if we compare here only the two months before, the company was able, in just two months, to improve the EBITDA almost 1 million. In business innovation, and we will dive later on also in the future, the EBITDA is down by 2.1 million in basically in the next innovation hub in Warrant. We have an higher impact of labor costs while we are expecting significant growth revenue in the last part of the year. ABF is performing less than the previous year in terms of ETA, while in Texas, Lenovo is slightly improving in comparison with the last two months of the previous year. Kinecta is reducing It's cost by alfa, middle euro. And the component of the non-comparable business, I mean the change of perimeter of both Lenovo and Tinexa defense is significantly improving. And this is driving to the growth of almost 12%. If we go to the P&L, I will basically We talk about the revenue growth and where the revenue is coming. I would say that overall the profitability is aligned with the previous year. We are talking about an EBITDA adjustment almost around 18%. In terms of depreciation, amortization, and provision, Obviously, here we went through some impairments from one side and from another side, and we may see this in the financial cost and expenses part, some profit. So we had some profit there. that already occurred during the first six months. We released basically some debt related to put of ADF and Asherzia, and this brought to a profit in the range of 19 million, while we went through impairment of 25 million in ADF and Asherzia. The remaining part is related to Central Europe and also Ascensia. Financial charges net of all not ordinary items are going up from 6.5 million to 9.3 million. This is mainly related to the higher average exposure that we had as last year we completed the deal of Tinexa Defense Tech in July 2024. The results is what already Joseph mentioned. On a non-recurring basis, on the recurring basis, sorry, on adjusted basis, we see here basically the EBITDA going up 12% and the EBIT is going down by 3%. If we move to the balance sheet, the company has continued in a very positive way It's the leverage from one side and the proper invested capital management. So, basically, the invested capital drop by almost 60 million, obviously, including the goodwill impairment by 20 million, but for the rest, obviously, it's a better management working capital compared to the position at the beginning of the year, as well as... the amortization of a fixed asset has been lower than the capex and during 2025 are significantly declining compared to previous year. Net financial position at the end went down exactly as expected. Here I would highlight and I will explain in more detail that adjusted free cash flow of the continued operation peaked 56 million euro cash generation. I would say this is obviously one of the peaks, historical peaks of the company, perfectly aligned with the company expectation at the beginning of the year. If we go to the net financial position and more details of the cash flow, as you can see here, on a LTM basis, we are almost close to 60 million on a like-for-like basis. So it means very, very positive results and obviously, This is as part of the strict financial management where we basically work on capex management, on working capital management despite the growth of the revenue. If you compare with previous year of 40 million, still the working capital has been affected by only 4 million, and we do expect even better results in Q4. So the free cash flow compared to previous year is going up of 46% as a result of a solid management. The net financial position breach from the beginning of the year, you know, as you may see here, Financial charges are in the range of 9 million. The company has distributed dividends by 19 million euro. The net between acquisition and put is basically close to zero, and we have no other main items. We are at the end of Q3 with the net financial position below €300 million, with the net financial position EBITDA that is dropping from 2.8 to 2.55, and is even expected more to drop during Q4. And if we move to the FDN, you know, overall... The picture is almost the same with a few different details, but overall the trend is what already I like. Let's go now to deep dive into the business unit. Like I mentioned before, the revenue of digital trust is going up by – five percent like I said the business is going well and you see most of the the product lines are going going up and we are really glad to the level of grow of the part of online channel and that is going up after the renewal of the, say, the selling website that occurred at the beginning of the year. After nine months, we are up 13% compared to previous year, and the Q3 only is going up 50%. It means that obviously the market in the B2C segment is very positive looking at InfoCert product and solution for us is a key indicator and also the investment that we put last year in the CAPEX relating to this project are giving a very interesting payback. We are legal set revenues are going down 3% but this is is still basically affected by the delay in sales of Ascherzia proprietary TKI product license in Middle East. In Middle East, this probably definitely will be lower than compared to what is expected. So overall, if overall looking at these figures are lower than uh what presented in the past but again this is a temporary situation because we expect a strong recovery uh during q4 at the end of the day the core and solid the business is very solid it's growing and the only delay is related to uh fashion at the security business so Two different situations. If we move to Tinexta Defense, I would say this is a very, very positive result. I may say that Tinexta Defense picked revenue at 31.1 million. on 38% on a pro forma basis. Two-thirds of the business are related to the fast market and one-third to the cyber market. So I would say the very solid plan that was The base of our investment one year ago has been fully confirmed. The company is performing well. The level of the growth, the revenue is what we do expect. The EBITDA is growing more than 20%, perfecting accordingly to the to our expectation. The decline in ADTDA margin is something that was fully factored already in our guidance. If we move to the next cyber revenues, I would say that the company, at the end of the day, delivered results fully aligned with the previous year. Obviously, this is not what we expected at the beginning of the year, but still in a market that has been severely under pressure because of the, in general, of the competition and on the pricing pressure. And, you know, the market overall, we know that The IT market overall is growing by 4%. We are playing part of our revenue are coming from a segment of the business that is not growing so much while it's growing the component of the cybersecurity. Obviously, we are late here in some activity like advisory activities where we are working We have a decrease of more than 20 percent, and this is not exactly what we would expect. For the remaining part of our technology solution, we are growing mainly, the growth was mainly attributable to competitive products . Overall, I would say the segment, our segment picked 14.5 million euro. That is significantly higher compared to previous year. Also, the revenue in nine months is very close to 100 million euro. In business innovation, I think we are basically, we have we have a situation where we were able to grow in some part of the market. The Italian financing market was up 4.1%, driven by the segment of industry 4.0, industry 5.0, and patent boxes. And we have also a growth in digital market business by 22%. Obviously, the digital marketing revenues are delivering a lower percentage compared to finance and grant, and this is driving basically the lower margin compared to previous years. A very different situation is related to ADF. I think here, I think it's important to share with all of you, which is the state of the art situation. We know that the French political environment has been dramatically changed, unfortunately, since we invested. The company last year struggled because of the change in the market where, you know, but the company has been able last year as well as this year to continue to improve its capability to get order from the client. Unfortunately, the filing of dossier into the company, The relevant commissions has been continued very well, but unfortunately, the success rate of this filing has dropped from 70% of 23 to close to 40% in 24 and 33% in 25. the change of the market has been dramatic. France, that was basically the key part of the business of the company that accounted for more than 60% of the revenue in 2023. Last year accounted for like 20% and this year will account for even less. So this is basically a situation that has been is obviously very tough in in this moment the company is reacting continue to produce a very good level of backlog the company is cutting the cost and i would say the company is trying to uh to evolve the go-to market with the new proposition with a new methodology that allow to still deliver in profitability, although the market is under pressure by the political situation. So, this is something that, you know, obviously was absolutely not expected even in the size of what happens. What happened, sorry.

Okay. So we, on page 22, we, Adonis gave us an overview of the ABF situation. I think it's very clear that KPIs, macroeconomic environments, different governments that have succeeded, others that most of them have failed, have brought into a very depressed overall macro environment in France, definitely. our performance. For that matter, starting to page 23, let me walk you through the updated guidance, which was, at this point, a requirement. In fact, with this persistent uncertainty, this led the group, in particular to the Board of Directors, to reexamine the 2025 Outlook, confirming, on one side, the overall expected consolidated revenue growth between 11 and 13 percent, with a slight offset in the organic guidance going from 7% to 9% to 6% to 8%. So the prior organic guidance was 7.9% and is now expected to be 6% to 8%. So again, a slight offset. In terms of EBITDA adjusted, parsing out ABF, Growth is expected to grow between 12% and 14%, which is in line with the expectation and showcasing also very strong underlying business growth, again, aside from ABF. If instead we were to include ABF, the EBITDA adjusted is expected to grow in the range of 8% to 10%. or 3% to 5% on an organic basis. And this is necessary also to kind of give you an outlook of where the epidae is growing. On the side, you can see what were the expected growth when we gave the guidance back on March the 6th, 2025, respectively 15%, 17% growth and 10% to 12% growth in terms of organic. In this scenario, the leverage ratio for the end of the year is expected to land at around 2.4 times, so slightly above the forecast range that we gave in July, but absolutely in line with what we said at the beginning of the year. So this is, I think, a very important highlight. Now, carrying forward, we must say that on November the 7th, which is just a couple of days ago, A directorial degree was published by the Italian Ministry of Enterprises and made in Italy, the so-called , which drastically changed the scenario for the tax credit plans, Industry 4.0 and 5.0, by cutting the ladders, therefore the Industry 5.0, available funds from 6.3 billion to 2.5 billion in a retroactive way. This resulted in, as I said, a retroactive exhaustion of the plan's funds, also considering that the amounts reserved on November the 5th were reported $2.52 billion already. This led to a sharp increase in applications related to 3.4.0, implying as well that the imminent exhaustion of that related fund as well. According to the latest official updates and statements, the ministry's intention is to refinance the plan with new funds based on the number of reservations currently rolling in the platform. The potential effects of these new developments on the group's results are currently being evaluated, also considering potential mitigation measures which could reduce the impact and may lead to further revisions of the outlook for the year. but I think it is mandatory and necessary for all and everybody to know. Aldona, please.

Maybe, okay, thank you, Joseph. I think a little bit of more color to help you audience to better understand. Obviously, very clear as already stated, we wanted to show you guidance keeping apart ADF that is impacted by the a situation that is really unique. Still, there is a level of ambition in this guidance, but I would say that we do expect a growth of more than 10% compared to Q4 last year in digital trust, and honestly, we have almost in our background a very big deal here for which we do expect to deliver it by the end of the year. So this is a reinforcement of our vision of the part of the year. Defense tech is expected to grow in the Q4 exactly at the same pace of the first three quarter on a pro forma basis. So basically more than 20% in term of ABTDA and this is obviously very, very reasonable. Where do we have a little bit of more challenges? Obviously, last year, cybersecurity delivered a 5 million euro ADTDA in Q4. We do expect it to be above 6. But also, as you have seen, we had some sales of products in the first part of the year higher than previous year, and we do expect the same trend to occur in the last quarter. As far as concern business innovation, if you exclude ADF, honestly, here, we do expect to grow in the range in terms of TDA of 10%. Obviously, we have already all the orders in our hand to deliver the result, but what has been issued, like Joseph mentioned, on November 7th, is jeopardizing a bit the framework. We are working and accelerating our activity with our clients. We will be ready to file whatever 4.0 or 5.0 opportunity. There has been a lot of media disclaimer on this subject even today in many, many websites and newspapers. So it's a relevant matter. You may understand here when they decide to cut as of today, but still we may think that something could happen in the following days. You can imagine that there are some entrepreneurs and companies that have already invested millions of euros, thousands of euros hundreds of thousands of euros for the TMI companies, basically referring to a law that was expecting to be up to 6 billion to be distributed and then suddenly here. So we want to share this information that can impact the results of business innovation. Today we have no an exact figure to share and communicate, but it is. If we exclude this, obviously, this was, since we told, since the beginning of the year, a key point of our growth in the last part of the year, and at the end of the day, we are expecting to grow year-end around 5% in MTDA compared to previous year in business innovation. This is not a a very challenging feature driven by the capability of delivering the 5.0. Unfortunately, this news has been happened, and we are dealing with it, and we keep informed. And last comment. So if we exclude the ABF, honestly, the company is delivering basically a line, the term ABTA, with the expectation to the IVF and I will reinforce the focus on the solidity of the company capability to deliver the company because despite all the The leverage is expected to drop to 2.4. Today, we are already at 2.5. So this is exactly aligned with the guidance of the beginning of the year. So it's confirming the solidity and capability to generate cash from the group.

Okay. Thank you. Operator, if there's any questions, we remind everybody that we accept questions from financial analysts. So please, if there's any questions, operator, please let us know.

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 N1 at this time. First question is from Russell Poynton, Edison Group.

Good afternoon, Adone and Joseph. Thanks for the update. First of all, just in terms of the new guidance, can I just check that digital trust isn't worse than you thought at the start of the year? Because I think you said in your comments that you're expecting 10% growth in Q4, based on my numbers, and I hope I haven't gone wrong, but that looks as though that means you've come up just short of the 8% you guided at the start of the year.

Yes, you know, we're... We give a range during, so we give a range at the beginning of the year of where digital trad could have landed. So, obviously, the Q4 will be a very strong Q4 also with the help of one big deal that we are going to deliver. Obviously, the delay in Asherzia is reality, is going to happen. So, if we look at the range of digital trust, we will be in the lower part of the range of revenue ABTDA, but it's only driven by these assets.

Okay, thanks. And the second question, in business innovation, the last point on the slide is contraction in the margin due to an increase in labor costs, but you're expecting that to increase Is that all going to happen in Q4, do you think? Is that where the backlog comes in?

Yes, correct. Basically, we have the revenue of industry 5.0 was expected to grow significantly. As usual, in the last part of the year, we have a lower absorption, let's say, a higher impact of labor costs in the first three quarters than this impact is going to lower in the last part of the year. And so I have to tell you that also the number of people now are flat compared to previous year. So it means that while in the first three quarters we always had more people in 25 compared to the relevant period in 24, I think this last quarter of 25 will benefit from this. Taking apart the potential effect of the news of November 7, we were forecasting an important recovery that, at the end, was planning to deliver an increase of profitability, excluding IVF, compared to previous year of business innovation.

That's great. Thanks for answering the question.

Mr. Mastragostino, there are no more questions registered at this time.

Thank you very much for connecting and have a good evening.