Secoo Holding Limited

Good afternoon, everyone. And thank you very much for joining us today for our quarterly earnings call. As usual, our CEO Max will share with you a detailed update on our strategy, as well as some trends on our business. And before that, Lorenzo, our CFO, will cover the key items of our financial results. But first, let me start with the usual snapshot of our first quarter numbers. We are kicking off the year with a 3% year-on-year top-line progression in line with the guidance we had given to the market. In what remains a complex market environment for memories, our P&L has shown strong resilience both at gross and EBITDA margin level. The quarter was also punctuated by good momentum for our hardware business, with our new modular vision product line receiving strong early interest, as well as for our CLIA division, which is seeing a high level of conversion to long-term recurring contracts, as illustrated by the Hitachi win and the 20% year-on-year revenue progression. All of this continues to support a positive outlook for the year and keeps unchanged our 2026 management objectives. Now let me hand over to Lorenzo to go through our full year results in more details.

Thank you, Clarence, and good afternoon to all. I want to start by pointing out that this first quarter was marked by further and significant increase of memory costs with an impact on the availability of those components. In that context, the group was able to react promptly, securing the critical materials and negotiating with the customer the measure to protect its profitability. Therefore, a 3% growth in net sales versus Q125 is for us an important result, given the two very different market contexts. Regards gross margin, we recorded in the quarter a level of 52%, one percentage less than Q1 25. We are really happy about this result, considering despite in the memory prices, we were properly able to manage from a purchasing point of view. In the quarter, we registered also a positive sales mix in profitability terms. Passing to EBTDA, we recorded a minus 1% of profitability, primarily explained by gross margin and by lower other revenues. These include mailing grants over R&D development, which will be partially recovered in the next quarters. Having a look to the sales breakdown by geography, I want to highlight the good performance of EMEA, Germany in particular, driven by the important growth quarter on quarter of customers like Shearer and System, Coesia Group Entity. By industry, I want to point out that the industrial vertical is growing pretty well, while venting decrease as expected due to the completed rollout of our edge payment model over the tobacco sector. Most important is the 20% growth quarter on quarter of CLIA recurring revenues achieved thanks to the progressive penetration of the platform among customers. Analyzing our Q126 eBTDA performance, we were able, still considering the cost I was mentioning before, to preserve a profitability close to Q125 level. We recorded a stable OPEX and similar operating leverage. The 1% EBITDA margin reduction follows mainly the impact of components cost increase over gross margin. I want to point out that from the second quarter, our price increase actions should start to take effect. Adjusted net financial position grows by about euro 7 million respect to year end due to inventory expansion. We reacted immediately to the memories cost spike through strategic purchasing of stocks at acceptable prices. Besides, we had to take in consideration the increase in procurement lead times and so enlarge our inventory level. Despite this growth in depth, our leverage position remain pretty solid. Thank you for your kind attention and I hand over to Max for the business update section. Thank you.

Many thanks, Lorenzo, for this clear presentation, as always. Let me start with a bigger picture of what underpins our strategy. We are witnessing a fundamental shift in the way how the artificial intelligence is being rolled out for industrial application. The direction of travel is clear. from the cloud to the edge, as an increasing begin deployed directly where decision need to be made, on field device close to the action. This shift is begin driven by three core factor. One, faster real time decision making in mission critical environments. improved cost efficiencies at scale. Third, and greater resilience and data protection. As a result, we are seeing the emergence of a new class of AI-driven application and this is placed directly into our core capability. This is exactly where SECO is strategically positioned and this is where the interception between the Edge AI And all our end-to-end technology capability really play a crucial role for the customers. So let me now show you how we translate this positioning into concrete solution. So here in Seco, our approach is end-to-end, vertical integration. We addressed a broad set of applications where edge AI can create tangible value. This includes industrial automation through HMI, scalable embedded modules, and advanced robotics, including autonomous and humanoid systems. And this sector, I can tell you, is starting to give us very good results, especially considering the business in the 27, because we are getting traction with a couple of very good, very large robot makers. We are also active in the high-performance vision application, intelligent retail, and automatic vending, where edge analytics improve customers' experience and operational efficiencies. In addition, we support critical infrastructure such as smart energy grid, security system, and medical devices, all of which require reliable real-time data processing. And of course, we are more than ever a key partner in more specialized domain like defense, aerospace and drone. And here is where we are facing a very strong demand from the market. So having given this such of positioning, let me now to continue with some feedback that we are getting from the market by the launch of our modular vision. which is offering a very good beginning phase of market adoption. The core idea is simple but powerful. A standardized modular HMI platform that can be configured across different chipsets and applications needed. This approach brings multiple benefits. For SECO, it reduces R&D complexity and enables a more scalable business model. For customers, it shortens their time to market and simplifies the integration thanks to a ready-to-use, customizable solution. We are seeing this translating into a growth pipeline across many verticals like industrial automation, medical, smart building, energy and professional appliances. And we are expanding our go-to-market through distributor and strategic partnership with leading silicon vendors This all together are very good early signals and the sales data that we are receiving are very positive. I think that talking about the traction that we are seeing in the modular vision is almost the same also with CLIA and the customer engagement is really growing also in this specific business and we recently secured a multi-year multi-million agreement with a tier one global leader in electrification This is a strong validation of our end-to-end approach. Hitachi was looking for a secure and scalable way to digitalize distributed energy assets, including data collection, real-time processing, and device management across a global field. They also needed a unified platform capable of handling different kinds of hardware, both new and installed base. Our KIA platform was selected because it's a very complete product with strong differentiation factors. It enables secure data transfer, fleet management and engine solution for AI models and for immediate deploy of this model into the hardware. All of this with a very agnostic approach on the hardware side, meaning that our platform is capable to run Seiko as well as no Seiko hardware and therefore can be used successfully also for the retrofitting program that Hitachi have in place. I think that This is a very good example of how our technology stack can address complex, large-scale industrial needs. And this project moving to the deployment, they also start to impact our revenue mix, which brings to me the next point. So one of our strategic goal is to increase the recurring component of our revenue on the software side. As project progress from the deployment into, from development, sorry, into deployment, more devices get connected to clear platform and this drive a recurring revenue growth. In the first quarter of this year, the recurring revenue presented a 60% of the total mix and showed 20% year-on-year growth. This is an important trend and confirms that our platform-based model is gradually getting traction. Of course, you will see this growth path continue growing over the next for coming quarters because as much as our strategy of deployment go into revenue, as much as this progression will be even better. Let's now look at the order intake which provide a good visibility on the future performance. We are seeking to continue momentum in order intake. The pipeline is converting into confirmed orders at a healthy rate, contributing at a growing backlog and improved visibility. As you can see, we have a very good data point, like the 60% of the order intake year-on-year, counted from January to April. This is encouraging, particularly in a market environment that remains somewhat volatile. At the same time, our order book-to-bill performance remains consistent, which suggests a balanced flow between demand and delivery. Again, we view this cautious optimism as a positive trend but one that we want to continue to monitor because it's a tough year. Supply chain, macroeconomic tension, geopolitical tension. So a lot of things are happening as we speak and therefore we need to continue to monitor it very closely. But I can tell you that data are growing and moving definitely in a positive direction. So looking ahead at the second quarter of the 26, the environment remain, as I told you, complex. However, the year started with a solid piece supported by continued demand for our product and our solution. We expect the revenue to continue along this trajectory at the 15 million plus revenue. We think that this growth path will accelerate further significantly in the second half of the year. And this is based on an already taken orders and therefore we remain positive for the rest of the year. Overall, our priorities remain clear, executing on our pipeline, scaling our recovery revenue base, and maintaining discipline in a still uncertain environment, especially on the cost control. In the summary, we see encouraging signals across multiple dimensions, technology adoption, commercial traction, and order momentum. while remain focused on a consistent execution. I think that's all. I hope that this presentation has addressed all the key points and I want to thank you again for your attention. We can now open the lineup for questions. Thanks again.