Secoo Holding Limited

Thank you very much. So good afternoon to all of you, and thank you very much for joining us today for our full year result presentation and business update. As usual, we will start by giving you the key highlights of the past 12 months, and I will then hand over to our CFO, Lorenzo, for a deeper dive into our financials. In the second half of this presentation, our CEO Max will give you a full update on our business and the milestone we have achieved. This will include some flavor for our outlook in 2025, as well as insight on our product pipeline, strategy, and a financial guidance for the coming months. So if we start by looking at this picture of our quarterly top line, It is fair to say that we went through an unprecedented difficult year. This comes on the back of over a decade where we delivered a continuous double digit growth in revenues. And it means that for the first time, we ended up with sales down 13% at 183.5 million euros. This is obviously disappointing. But we want to look at the glass half full and focus your attention on three elements. First, the headwinds that we had to navigate were the same, if not worse, for every global player in our sector. This top line decrease is actually marginally better than most of our competitors, which ended up their fiscal year down between 15 and 20%. So this should be read as a demonstration that our positioning and business model is more resilient through the cycle and that the long term relationship we have built with our core customers is a significant asset in more difficult times. The second point we want to highlight is obviously our margin profile. This is a very important KPI for us and it has actually improved in what was a complex environment, staying consistently at or above our 50% target. This is a proof that focusing our offering on custom-made hardware solution and increasingly cross-selling it with our software suite allows us to set a best-in-class standard in terms of gross profit margin. Finally, we want to emphasize that both of these numbers came ahead of the guidance we had shared last summer. We view this as a significant milestone on the road to gradually re-engaging in a constructive dialogue with both our shareholders and the broader buy-side community. Looking at our numbers, there are four items to take away. I have already addressed the trajectory of our top line and how resilient it was versus the rest of the sector. But we wanted to highlight what's the contribution of our CLIA business. It is now consistently providing us with a visible and recurring stream of revenues driven by the increasingly adoption from both historical and new clients. Max will come back in the second half of the presentation, highlighting some of the new projects we have won, as well as our pipeline of solutions and services for the next 12 months. The second point I wanted to stress was the gross profitability. I have already addressed it, and I can therefore focus my comment on the bottom half of our P&L. The high operating leverage under which our company is structured means that the decrease in revenue was always going to be amplified at EBITDA level. That being said, we still managed to report an adjusted EBITDA of 28.2 million euro, a figure which came ahead of consensus expectations. You can also expect to see this operating leverage playing back in our favor as soon as this year, supported by the quick rebound in our business. Finally, and on a much more positive note, we focus our attention in 2024 on significantly improving our operations and networking capital. This had an immediate impact on our cash generation, and allowed us to keep a full control of our balance sheet, reducing our net financial position to 41.3 million euro, equivalent to a 1.5 net leverage. Before I leave the floor to our CFO, I wanted to reiterate my comment on the importance of putting these results in perspective with the rest of the sector. Impacted by a longer than anticipated destocking from OEMs and combined with an adverse macro environment, our top line suffered from subdued demand. But our business model enabled us to keep a best-in-class level of profitability, both at gross margin level as from an adjusted EBDA perspective. this is extremely important for us and will continue to be a key performance indicator under which we want to operate and we hope that this will gradually be appreciated again by the financial community i now hand over to our cfo lorenzo who will go through our financial results in more details

Thank you. Thank you, Clarence, and good afternoon to everybody. Let's go together to see 2024 financial highlights. For what regard net sales, I do not comment further. Clarence fully explained it really in details. Instead, I would like to spend and to focus my attention on gross margin. As you can see, for the first time, we talk here of adjusted gross margin. The reason is due to the fact that the year was impacted by an extraordinary breakdown of components relating to Biorespira. Biorespira was a ventilator, a pulmonary ventilator that was developed by us during the COVID period, and due to the fact that the rotation in the last 12-18 months reduced, we decided in the year to write this out. The amount that we impaired was 4.1 million. So for this reason, for the first time, you see here an adjustment to the gross margin. Excluding this item, the adjusted gross margin was at 23% in line with the 2023 This is a really good result if we consider all the dynamics of the year. In particular, the driver to get this gross margin was for sure the performance we achieved in the last quarter of 2024, in which we recorded a gross margin of 54.5. The driver of this really good gross margin in Q4 was for sure the sales mix in the edge computing business in which we had the really profitable customer that come out again. And moreover, we continue to get really good performance in the components buying and we are getting reduction in the cost of our components. uh passing to our performance at the adjusted ebtda level we closed 2024 with an adjusted gross margin of 15.4 percent uh really good results on our standpoint and this show on my point of view the resiliency of the company considering the difficult performance at the sales level we have been able to get this performance in terms of adjusted gross margin thanks to a really robust performance in Q4 in terms of adjusted dbtda actually with adjusted dbtda we reach in Q4 18 percentage uh this was driven by two things for sure the performance of gross margin level that as i told you i told to you before we uh we achieved more than 54 percentage and moreover a really good control over our opex consider that respect to coup free we say the 700k of transformation and manufacturing manufacturing cost in terms of outsourcing and direct label respect to Q3 and this trend we are also expecting to be continued in the next quarter passing to our performance in terms of adjusted net income we closed the year with a positive net income uh this is for sure for us a good result in a difficult year in terms of sales we have been able to be positive in them in terms of adjusting the income thank you to a really careful management of net financial expenses. Actually, as you can see, we were able to reduce by 3.2 million the net financial expenses in 2024, respect to 2023. And these, despite the fact that you know what happened during the year on the Euribor side that up to the summer reached level pretty, pretty high. Just a comment regarding adjusting the income that this year was adjusted for an extraordinary item that is a goodwill impairment regarding the cash generating unit uh that is the second mind usa the reason of this goodwill impairment is due to the fact that this cast generating unit stopped to exist because the software development team reached this goal in terms of developing all the Declia add-on that was integrated in the platform, the CGU will be integrated into another CGU, but according to IFRS 16, Goodwill cannot be transferred, and so we decided and we were obliged to the accounting principle to import this item. Let's go and let's spend a couple of words regarding our net sales breakdown by geography and by verticals. I would like to say that the decrease that we had in sales is equally spread out geographic area in verticals. Actually, the reduction in sales was driven by macroeconomic context, so the stocking and interest rate, and not related to our sector. There are some exceptions of verticals that performed a little well with respect to others, like, for example, vending on fitness, but these are related to the situation of specific customers. Passing to commenting a little bit in more details our performance in terms of adjusted eBTDA. In this bridge chart, we can see what are the key driver and reason that we pass from the 50.6 million to the 28.2 million. You can see here that the big portion is for sure explained by the reduction of sales and by obviously the impact of the negative operating leverage. However, I think that I really would like to stress out is the fact that during the year we were able to really control pretty well the OPEX and consider that in 2024 we had OPEX that was more or less equal to 2023, despite the fact that in the first half we were impacted by high transformation and manufacturing costs in terms of outsourcing and direct label due to an unfavorable mix in terms of product that was more complex to reproduce. However, we recover a lot on this factor in the second half of the years also thanks to the fact that we were able, that we was able both in Italy and also in Germany to increase our level of manufacturing efficiency and we expected to bring in the future also this performance in terms of productivity. Passing to comment the EBITDA adjustment and to see them with you. You can see that a big part, as usual, is explained by the stock option actuarial value for 5 million. Other than these, Almost 3 million is explained by the tax verification that we had in the first half of the year. 2.3 million is reassessment while 700k that is included in the other extraordinary OPEX is related to accrual that we did during the year. In addition of this, as explained already to you before, there is this breakdown of the components that we had in the inventory relating to the pulmonary ventilator. A comment regarding our performance on which we closed the year on the adjusted net financial position. uh we was able to reduce the net financial position by 11 million in just one year this is a really really good number for us it means that we was able to improve our net financial position by 20 percent in just one year so 11 million of cash generation a big part of this result was generated in the last quarter of the year thanks to a really good management of the trade working capital so we reduce trade receivable and we reduce in particular in particularly inventor inventory of just 3.3 million in the last quarter of the year, but of about 10 million all over the year. And last point that I would like to stress regarding the net financial position and related to this is our leverage ratio. We close the year to 1.5 net financial position on ebtda i think this is a really solid that good number in particular considering the fact that this year due to sales we reduce ebtda but despite this we keep the company with a really solid and good situation in term of leverage thank you very much for your attention and i pass the speech to max maury thank you

many thanks lorenzo for your presentation and i now i want to take some time to give you an update on our business On this slide, our intention was to share some visibility on the KPI we monitor when we track in the direction of our business. As you can see, there was a clear inflection in our order book at the end of the last year. On the left, you can see basically the trend of the order book, and on the right, the book-to-build ratio. As you can see, also the book-to-bill ratio confirmed that we are now from already a couple of months back over one. I can also say that the context of the discussion we are having with both new and historical clients has dramatically improved in the last few months. All of this reinforce our view that the past year was just an exceptional negative contest and the investment case behind our business remains intact. so in the next slide you can see more in details the driver behind the rebound of our grow and i want to put them into buckets first all the r d investments we have made over the past decade will now allow us to capture the demand for technology from our customer this is through both our hardware division and our software one both of which come together and offer a unique and well solution for OEM. In fact, I will shortly take you through the pipeline of new products we have in store for the next 12 months with a strong focus on the edge AI application. This will be very important for the evolution of our sector. I think this is true also for our software business and the CLIA is getting a lot of traction thanks to the request of more connectivity, more IOT, more capability to analyze data and we are receiving endorsement for a growing numbers of leading partners. All of this is backed by a market contest which is improving by the day. The normalization of some macro indicators should help unlock the next capex cycle from the industrial player. And we are seeing a growing adoption of IoT technology among OEM driven by the demand for HMI and the need of performing IoT platform to deploy AI at the edge. So in the next slide, we can see basically how we will go back to deliver double-digit growth in 2025, as we have done historically. This rebound will start as early as the first quarter of the year, for which I can already confirm we will reach over 47 million euros of revenue. I'm also expecting a positive trend during the year and for the quarter one to be the foundation for higher revenue in the incoming quarters. The guidance in terms of gross profit margin remain unchanged at above 50%. in line with the historical one. I really think that this year has started with a robust demand in any region, excluding for now the German part of the Dutch area, which we are expecting to see a recovery on it. in the second part of the year, but the rest of the world is really going in the right direction, getting better and better as we go. Let me now take you through a more operational update on our business, our news flow, product pipeline and strategy. I'm sure that you will have noticed the intense news flow surrounding our company in the past few months. From key technological partnership growing our ecosystem and expanding our client reach with like of NXP, Raspberry Pi and NIAX. Two significant new business wins such as one with Hitachi Energy or BTDA fueling our revenue for the years to come. On three of this recent announcement, I want to provide more details on the meaning they have for our CLIA business. In the agreement, for example, we signed with Hitachi Energy for their new family of smart box boxes. It will cover almost 200,000 pieces of hardware based on the latest generation of Qualcomm chip. but it also includes the development of a dedicated IoT platform based on CLIA. This contract, valid for 10 years, will generate around 1 million of recurring revenue on the software alone per year, and this is a significant validation of our technology from a global player such as Hitachi. In the similar way, the 11 years agreement that we signed with BTDA in Germany will lead the rollout of our CLIA platform on over 200,000 devices. It will generate, thanks to different CLIA vending and telemetry solutions, recovery revenue of circa 8 million per year. i think this one it's a very good achievement and the last one which is very promising look in the future is the payment system we did together with niax where we are including the niax solution into clia it will open for us a very big potential market, multiply these use cases in the vending industries. I think this one will strengthen our historical leadership in that segment and increase the portion of recovery revenue attached with each hardware device. So I was in Nuremberg attending the Embedded World, which is the most important trade show in our sector, and I want to provide you, which was basically the feedback that I received from the exhibition. I can tell you that basically this solution that we presented are getting a lot of traction we was able to present a lineup of over a dozen of new hardware products running on nxp intel qualcomm accelera and more and we were able also to show live demos running CLIA over 50 different kinds of verticals where CLIA was able to deploy in real-time algorithms to show how powerful could be the AGI running into the device thanks to CLIA. I think it was really good the exhibition we did and basically the fact that we showed to all the market how powerful was our one Turkey solution that we completed together with our hardware, our platform, the algorithms, all in all together. In fact, I can confirm that the feedback I have received from all the industrial leaders which I met was really good and was that our value proposition is exactly what differentiates Seco from the rest of the competition. So now we can go over a few slides where you can see some of this new product we presented from the Snapdragon X, which is the new generation of CPU made by Qualcomm. And we are one of the few developers around the world that are really working on this technology. The Accelera, where we are exclusive for the European side, as well as Raspberry Pi, where we are expecting to further strengthen the partnership in the forthcoming month. So basically, going back to all the products that we presented in the show, I think overall we are talking over 15 new hardware families which are planning to be released in the next 18 months. These are the results of years of R&D and of an intense collaboration with all our technology partners. our revenue for the future followed by our client need for more computing power to run inference at the edge i think this is very important also the update that we are providing you about clia the first point is of course regarding the cleai studio which is a unprecedented functionality under which people can run and deploy inference directly inside the platform, controlling the results of how the LLMs are used and which kind of solution I can design to really run the AI on a device. And this is a very important functionality that we will add during the second half of the year. Also, another important innovation that we will present in the second part of this year will be the Seco application app. This is fully dedicated to AI. It's an app store, basically. And the goal here will be to build our positioning as a provider of software and value-added services. and it will become a key reference point for developers in our space. The key differentiation factor between our app and the one that you may already see The traditional one that many silicon vendors have made is that Seco will bring together a global ecosystem focused around CLIA and our edge AI strategy. It will offer both SECO and partner-developed AI algorithms available for purchase. It will basically work as a pay-per-use business model, as well as we will have a dedicated section of open-source models which will be relevant to our industries i'm really excited about this innovation and this evolution of our software strategies which i can confirm that together with all our partners we are really capable to publish a lot of AI algorithms on the second application hub, creating a super strong ecosystem that will allow us to run and improve our business model. Finally, I think it's important to mention the modular vision, which is a product that fully integrated our hardware capability with our HMI capability. uh providing to the market a new uh generation of hmi where the hardware is already included and it will be the perfect evaluation kit also to run ai thanks to clia directly on the screen and in this screen will be the monitor for many industrial machines and applications and the customers can really use it to control all the data that the device is generating and to apply AI algorithms on it. The launch of this product will be ready soon. We are expecting to enter into mass production already by the third quarter of 2025. So I think in the conclusion, our strategy, which is based on the Edge system, the IoT suite, and all the functionality and the value added services that we are adding into the platform, like, for example, the cybersecurity one, thanks to Exane, and the payment telemetry system, with NIACS are really bringing SECO into a different year. Yes, the 2024 was a difficult year, but all the signs are now pointing to a V shape recovery. And I believe that we have an optimal product line and technology to fully benefit from this rebound. i think we had a decade of success evolving our strategy from a pure hardware company to an as an hardware and software company and this evolution will continue as we go to create really a leader in the market and this is validated by a number of strategic partners endorsing our technology a joint force with the seco to benefit from the iot implementation trend and the age of ai development and this is important and i think we are really a market leader in integrated edge system means electronic together with the HMI, as we saw with the modular vision. And I really think it will provide a lot of value add for our customers together with our ecosystem, CLIA, and together with all the value added service that we are including into the platform to really unlock the potential from a customer perspective to grow and to start new business model. This strategy will lead to gain more market share and grow the stream of recovery revenue opportunity for SECO in the forthcoming years. I think that this business model is really strong, is the key of our technology and is continuing to be consolidated by the relationship that we are building with our customers and is fuelling by the design with a new client that we are signing I think this is almost all from our side so far, so we can really start with the Q&A section, but thank you very much for your attention.