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.

Thank you to the management team. We now have an opportunity for questions. As a reminder, if you would like to ask a question, please use the raise hand function on your screen or for those dialing in, it's star nine on your keypad. Once your name is announced, please unmute your line and say your company name before asking your question. Thank you. The first question today comes from Arianna Terazzi. Please, Arianna, go ahead.

Yes, I hope you can hear me. Good afternoon all. You are sharing a solid indication on the commercial front and I also thank you for the detailed presentation on your product pipeline. I have three questions. First, if it is possible to have a breakdown of your commercial pipeline or backlog in terms of new and existing customers. Then I was wondering if in the market there was or there is any sign of orders that were placed in advance to try and avoid the application of tariffs, even indirectly, but also considering the strong demand you are seeing in the US. It is just to have a fair comparison base for future growth. And then lastly, I would ask you an update on your capex level for the next three years. Thank you.

Thank you to you, Arianna. So let's start in providing you answer. So about the level capex, we are going to stay on the similar level, I guess, for the next three years. It means that we will be in the range of 20, 22 million capex. That said, and returning back to your questions, I think in terms of orders, no impact so far from the potential, I would say, trade block or increasing cost due to this. what is happening on the global side. So our sector so far is not impacted. And so the request that is coming from the US is mainly driven by the full recovery out of the stocking situation of a couple of big customers that we historically have in the US on the medical side, so it's nothing related to what is happening about Trump and what he's making, which again has no impact so far in our business. Regarding the impact of new customers in our bounce back of the growth in 2025 is not too much in this related to the first quarter of the year. I would say it is below 5%. now but it will grow in the forthcoming quarter because we have four or five new customers that will start mass production between second quarter and the third quarter so therefore we will add some revenue stream driven by the new customers in the second part of the year because just because we are completing right now the developing and the test phase and we will enter into the mass production later this year.

Thank you Max. Thank you for this question. Our next question today comes from Marco Vitale. Please Marco go ahead.

Good afternoon. Hope you can hear me. Thank you for taking my question. Three one from my side. The first one is on the top line trend and the outlook. You're anticipating that you're guiding for revenues flat to positive in the first quarter. I was wondering, should we still expect double digit growth for this year and how we should think about the evolution of the growth pace over the next quarter? second second question is about the profitability uh we have noted that uh you are guiding for a gross profit margin level uh still above 50 percent uh this compared with uh around 53 percent recording for year 24. do you think that this current level is sustainable also going forward and if you see any room for further improvement considering the say favorable product mix at your site before last question about the free cash flow follow up if you see current uh say working capital on sales level as sustainable uh as we noted that you did a very good performance in the last quarter of the year should we assume this as a sustainable also going forward thank you

Thank you. So first of all, about the revenue side, as I already mentioned during the presentation, yes, you should expect to see a double digit year growth. We will be more specific during the course of the year, at a certain point in time, we will provide you a full year guidance. We do not have enough data points now to release it, but we will do it as soon as we will have a clear situation back. But the first quarter is very important to say after six quarters of a negative sign, we will have the first quarter providing us, let me say, a positive sign also. Quarter by quarter, but not only also year by year, comparing the same period. On the margin side, yes, I think we did a 54 gross profit margin quarter in the last quarter of the year. i would assume it will be a sustainable level also for the next future so we are expecting to have more or less the same kind of gross profit margin during the during the rest of the year at least for the first quarter for sure And about the level of the working capital, I think, as you said, we did a very good job in the last quarter of the year. But I want to outline the fact that at that level will be not sustainable, but something you know, slightly worse of that, yes. Meaning that we did in the last quarter a full optimization of the working capital also thanks to basically the factoring that we are not using it every quarter due to financial cost reasons. but a good portion of it was also achieved because the reduction of the inventories. This process will continue and will be also better during the course of 2025.

Thank you. Our next question now comes from Bharat Nagarjay. Please, Bharat, go ahead.

Thank you for taking my questions. With regards to Feb and March, are you continuing to see positive book to bill evolution? I note that your graph ends in Jan and similarly on the backlog trend as well. Has that improved further? That's my first question. I'll go one by one, please.

Yes, I think it's improving as we go. And at least we are maintaining the same kind of level, you know, here. We have not collected actually the full data. This is the reason why we show to you only the data that we had at the time basically to double check them three times, as you can imagine. But In general, yes, the trend is confirmed. Just to let you know that in the last 10 days, we got a significant amount of orders intake and the order intake now seems to be extremely high and very robust. I hope it can continue.

Okay, very good to hear. Thank you. My second question is around the edge product mix that you mentioned that led to higher gross margins, especially in Q4 last year. Could you give us some color on what those products are exactly?

I think when we sell a system instead of a board, we are making a better gross profit margin. Since we are moving progressively, it's a step-by-step process. But it is progressing as we go from the border to the system. And also the incidence of the software in general is growing, the recovery revenue portion of it. at least, I think the combination of the two factors, the fact that we are selling more HMI and the fact that we are proportionally selling more recurring revenue software is providing us a better gross profit margin. As I already said, it will continue. to drive us a superior gross profit margin also for the first quarter of 2025 and beyond.

Sure, thank you. I just have two more questions very quickly. The first of them would be, could you elaborate on the exposure to the defense sector? I do note that it's like 1%, I think, of your revenue currently. What kind of projects are you working on in defense and maybe also in industrial sectors? And how do you expect to take advantage of the German fiscal stimulus? And maybe I can finish off with the other one as well so that you can answer in one go. Could you remind us on how clear is differentiated business model? What is the differentiation versus peers that is allowing you to win with clients such as Hitachi, Energy, et cetera, as well? Thanks.

right so on the defense sector uh beside the fact that the contribution nowadays is is low we have a very good exposure to players like leonardo for example in italy or players in the us like Lockheed, Boeing, L3, Raytheon, this kind of players. The sector is super hot now and there are a lot of new projects that are starting right now and we will see a big contribution will come from this kind of industries uh you should know that the industry life cycle is quite quite slow and and very long therefore we will see results starting from the 26 27 but it will be solid and like a rock for the next 10 years so we will have a big impact from the defense market but not this year because we are getting the project right now and meaning that we will deploy it into revenue later in 26 27 but it will have a duration of a decade in terms of business about clear which is make really the difference uh will uh with for a customer is basically Two factors. One, CLIA is natively installed on all Seco hardware and can run basically all the kind of third-party hardware. on the agreement that we did with mxp clia is fully integrated also with the real-time software which is zephyr platform which is another big ecosystem of software that can run on mpu means basically we can cover from the cpu to the to the microprocessor, providing a very, very large, covering a very large scale of different kind of hardware. And this is the first point. The second point is the platform is super flexible. And the reason why Hitachi selected this because it's super flexible, meaning that a customer can really customize it. Tyler making all the pieces of the platform to perfectly cover their needs. and is designed to run AI at the edge. It means that it will be connected with our app store. We'll integrate the Studio AI that I just presented to you that will allow customers to basically make a simulation of a model before a deployment. or giving you as as a user the possibility to create containers and to run application into different kind of containers containers different kind of application for example you can have a containers running all your cybersecurity application and another containers running all the payment or monetization application that you are using to make money on your device. And all these such of application, you can really secure them into a single container, providing you a very robust and secure infrastructure to run and build your strategy in terms of recurring revenue and value-added services. All in all, what we can offer in terms of hardware and software contribution, considering also that we already have done and trained successfully over 140 AI models that are running perfectly into CLIA and we will present them on as soon as we will publish our Seco application hub and basically we have a unique end-to-end solution that to run AI on the edge and what will happen I'm pretty much sure about it progressively it will be in any any device so each device will run sooner or later if you look from now in the next five years ai on this device because ai it's a new user experience infrastructure is a new way to monetize your data is a unique way to build a new monetization strategy so it's providing you really money and really extra value on your strategy for each company and it will happen as we go and as and as it will happen we'll unlock our strategy providing us better margin better cash flow and better revenue uh grow trajectory thank you for the detailed answer max thanks thank you to you

Thank you for these questions. Our next question now comes from Pietro Nargi. Please, Pietro, go ahead.

Hello, everyone. Thanks for taking my questions. I have three questions. The first one is on the order backlog. You have shown the evolution of both order backlog and book-to-bill ratio. My question is, what is the duration of the backlog, or say it in a different way, how many months or quarters should we expect to see in order to translate such figures into revenues? The second question is on the adjusted net debt. You experienced a sound improvement in Q4. Albert, the beat is almost due to the write-down of components for BIO Respira. And on this item, I was wondering if there is also a component due to higher recourse to factoring, since you had a significant reduction in trade receivables. The last question is on your outlook for Q125. you expect revenue at the floor of the guidance to remain almost flattish year on year. This would imply, at least based on the current market consensus, a strong acceleration of revenue in over the remaining nine months. If you can add some comments about this and what is the level of visibility you have on full year 2025. Thank you. Thank you.

Let's start from your first question. As I already explained it many times, but I will repeat it once again. I think due to the time of the components, the lead time, basically it was decreasing by a lot nowadays in the range of 10-11 weeks. Therefore, also the order backlog is covering a very limited period of time, I would say around 3-4 months. Apart from it, we have a lot of forecasts, rolling forecasts covering at least other additional six months. So we have definitely a good visibility about 2025. And as you can see from maybe we can show the slide where there is the evolution by quarter of the growth, we had basically a decrease into the result we did basically from above 50 million basically back to 47 and afterwards back down to 44. now if you should imagine the 25 you will see uh basically a quarter a first quarter above of 47 and it could be maybe 48 or above 47 let's see uh as we did with the guidance at the end of the year, we always intended to beat it. Anyways, you will see the forthcoming quarters back to 50 or above 50, where we was basically in the normal trend during the 22 and 23. So that's how you should see the evolution of the business. And again, as soon as we will have a full visibility on the year, we will also provide you a full guidance in terms of revenue as well as gross profit margin. Can you help me on the question about the net financial position? First of all, you did a bit of confusion in my point of view because the write-off we did on the inventories is not related in any case with the evolution of our net financial position. This is, as you can imagine, a simple write-off we did on our inventories level. no impact at all on our net financial position so the net final financial position improvements was driven basically by two factors one was the decrease of the the basically the level of the inventories on sales. And the second one was because we optimized the payment. We had, for example, in some region, an overdue payment, which was pretty much high during the course of the 23 and 24. And we finally was able, a strong action to substantially reduce it, and it will be basically fully sustainable also in the future. Another portion of it was due to, as I said, factoring that every year, anyway, we are doing more or less at the same level, for each year. So that was the contribution that you can see in the 15 million that we generated as per cash generation. Of course, we had also a very good conversion of the ABTDA. As Lorenzo mentioned, the ABTDA came in the region of 18% of the revenue. and we converted it into cash by at least 50% of it.

Okay, thank you.

Thank you to you.

Thank you for this question. Our next question of the day comes from his question is in the chat. So I will read it out. Philippa says, good morning. Could you give me more color on the trend in Germany? I wanted to understand if the sequential improvement that you anticipated in the 2nd, part of the year could have more speed in the short term. Also, given the increase, the confidence in Germany.

Yes, the trend in Germany now is pretty much negative. As I said, we are still facing a weakness into the demand. And let me make a comment on it. If we will see a rebound, in the economic situation in Germany. Of course, we will maybe recalculate in a positive way also our expectation for the year because we are strongly impacted from the Dutch region. It is counting around 30% of our total revenue, just to give you more or less the sense. And in our projection, we are not calculating any kind of positive news that can arrive maybe by the end of the war in Ukraine or a positive evolution of the political situation in Germany, as well as the financial stimulus. Because so far, we didn't have evidence. And when I mean evidence, I mean the days about how the world works. And therefore, we cannot in any way calculate eventually which could be the impact. Of course, if the situation in Germany will become positive, SECO will fly as a consequence. Basically, we are a European company with an earth split by Italy and Germany. So that's basically SECO. Easy to say. Thank you for your question.

Thank you. Currently, we do not have any questions queued, so we'll wait just a few moments to give everyone the opportunity to ask a question. As there are no further questions, I will now give the word back to the speakers for any final comments before bringing this presentation to a close. Thank you.

So with this, I want to thank you very much for your attention and your trust. And I think we will have the chance to meet most of you during the roadshow that we are starting from the next week around Europe. See you soon. Bye bye.