Atos Origin Sa

Good day and thank you for standing by. Welcome to the Atos Group first half 2025 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Philippe Salle, Chairman and CEO of Atos Group. Please go ahead.

Okay. Good morning, everybody. This is Philippe Salle. I'm in the room with Jacques François. start the presentation i will do the business highlights and the operating performance jacques francois will then talk about the financial results and the weekend we will wrap up with the outlook so if we start on the first topic first the h1 performance is in line we are very i would say pleased with the results that we have announced this morning We reiterate the guidance of 2025, the guidance that we have given on the CMD in May. Second, on the right, you have the genesis plan. So it's in force on the seven pillars. In fact, already three pillars have been completed. And we are, I would say, well engaged on the restructuring plan that we have, of course, launched in the beginning of this year. We estimate that we are, versus the restructuring, half of, I would say, of the journey. And we'll be probably at two thirds by the end of the year. Third point, we have signed with the French state yesterday night. During the night, in fact, the SPA for the French, the advanced computing. So remember that we had a press release on June the 2nd saying that we have been able, I would say, to renegotiate the deal because we have changed the perimeter. And then we confirm exactly what we have announced on the 2nd of June. We are entering now, I would say, in the phase of the carve out of the business and the closing will happen probably in Q2 26, between March and June, end of Q1 or in the course of Q2. And the last point that we strengthen the governance with board members, with a new board member, in fact, that joined the company in June. And we have done also the reverse split according, I would say, to the AGM of January where we announced, I would say, that we will launch this in the course of Q2, in fact, the 25th. Key figures, so revenues around 4 billion plus. The good news for me is that we are stabilizing, I would say, the revenues at roughly 2 billion per quarter. operating margin is 113 million which is roughly three percent of revenues 2.8 to be really precise and i would say it's a 15 organic growth versus last year which i think is quite a performance given of course the slide of the revenues order entry is 3.3 billion so it's improving we are restarting i would say to I would say Chase, of course, new deals, and it will continue, I would say, to increase in the course of the year. For information, last year, it was at 73%. So the free cash flow, we have said already, is around the minus 96 million. The net debt, 1.7 billion. And the liquidity, and we have advertised it, in fact, in the course of July at 1.8 billion. If we look at the book-to-bill ratio, as you can see, in fact, we have taken quite a hit in Q2 and Q3 last year. And of course, this translates, I would say, to loss of contracts in H2 last year. And of course, we have the effect in H1 this year. But as you can see, it's improving. And we are, I would say, quite confident that it will now increase in the coming quarters. We have put some... examples in fact in the below on the the major contracts or wins or renewals that we had in q2 now if we go to genesis this is the seven pillars i have shown in fact in may so the growth is done so we have i would say reorganized completely i would say the i would say the growth uh excuse me I would say the gross organization in the street has been selected. The bid excellence has been reviewed. The only thing, of course, that we have not touched is the HR is done. Country reviews, we have started, I would say, to launch this process. It's an acceleration in fact in H2 and I would say next year. We probably, I would say, exit probably 10 countries plus probably in the course of the second semester this year and we continue next year. Portfolio review is done also with the business sign offer, the contract review, so what we call the red and black contracts and the practice turnaround. Now the gross margin and of course the cost review, this is of course a journey that we have in the course of 25 and 26. So the billability rate in fact has increased, the pre-sales is completely done, the project margin announcement, it's the move to offshore is in course, it's a journey also, it will take some time. Delivery Excellence, that's the only topic that we haven't touched, but the CTO who is joining the company on September the 1st, we launched, of course, this project. Cost review, everything is under review. I would say we have done all, I would say we have identified, I would say, all the savings. And then the cash, DSO and DPO is in force. Of course, it's a journey also for the next probably two or three years. The DPO probably We will finish by 2025, 2026. And so for me, it's a two, three year project. Securitization, we will not do anything this year. CAPEX has been reviewed, and tax management with a new tax manager. In fact, there is a lot of things in course. Now, if I just zoom on some projects. So as I say, on growth, this pillar is down. So we have a new operating model. we have also reviewed i would say the backbone of our sales i don't know if you i have said that but we have what we call cep so client executive partners around 300 of them roughly one third will be a probably change in the course of h1 so some of them have been replaced already and probably in the course of h2 the idea for us is to have i would say the full team by the end of the year and we expect of course then to i would say to to see an increase, I would say, in the pipeline, of course, and in the deals in H2 and next year. Portfolio review, as I say, we have already exited one country, but it will accelerate for sure. And the low margin contracts, we are now back to only three contracts and probably two next year. And we are trying, I would say, probably to exit these two by 26 or 27. Of course, it will depend on the negotiations that we have with the customer. Delivery on the GNA, as I said, the billability rate now is at 79, so we are above 79%, so plus 3% versus the end of 2024. The offshoring rate, remember that we are targeting around 65%, so we have gained roughly one point. The cost base of the GNA has been reduced, I would say, by 10%. And as I said, overall, I would say the envelope of Genesys has been uh we are roughly at 50 percent of the envelope so of course some exits have been done at the end of each one this year it will accelerate in fact in h2 in some countries because we have negotiated i would say with the unions the exit and as i say we will be probably between 60 and 70 percent of the plan by the end of the year So if I look at the operating performance by segment now so just as a reminder, what was the revenues last year and this year, remember that we have a scope and which is well grid and foreign exchange, which is mainly in the US. US euro dollar, as you can see, we are roughly at a 2 billion around 2 billion, I would say, per quarter stabilizing I would say the revenues and minus 17% versus last year for the first semester. in terms of, I would say, the revenue by regional business units. So as you can see, in blue, you have Atos, and in orange, you have Eviden. So Atos, in fact, the severe hits we had, in fact, was US and UK, where I would say the customer were more, let's say, frightened on the situation of Atos in the course of 23 and 24, and to lesser extent, in fact, in Europe, so for Benelux and Germany and France. As you can see on the right, the number one country right now, given the new exchange rate, is Germany, around 19% of the turnover, the revenues of the company for each one. Then you have the US, 17%, France and the UK, around 15%, also international market. Then Benelux and Nordics are evident around 10%. If I look at the operating margin, so we are quite a good news. So we are roughly flatish versus last year. But if you take into account, I would say the scope we were agreed and the exchange rate, we are in fact increase the operating margin by 15%. Now, if we go deeper, I would say by business union and SBU, in fact, the good news is that ATOS is around 6% already. For the first time, Germany is positive in H1, and of course, there will be much more to come with the restructuring plan that is in force, that will, in fact, start in H2 this year and will be completed, in fact, in H1 next year. USA and Canada, 10%, and that will come back. France is 2%, which is also still low, and there will be more to come also with restructuring. UK, 909, international market, 8%, and Benelux is 6%. What is very important is also to understand that we have a seasonality for the SBU of Eviden. So Eviden is negative in the first half and will be strongly positive in H2. So overall, I would say Eviden, of course, will be positive for the fiscal year of 25. Now, if I deep dive, let's say, geo by geo on the ATOS, remember that ATOS is service and Eviden is hardware and software. So Germany first, the biggest country, as you can see, minus 8% in terms of organic growth. We have been able, I would say, to resign a very big contract, in fact, with one of the OEM in the automotive sector, and with a positive margin because it was a contract that was losing money. As I said, the operating margin now is positive. Of course, it's quite, I would say, close to zero, but it will be strongly, in fact, impacted by the restructuring, positively, of course. uh for 26. so we are definitely seeing that in 26 we will have a very tough very steep in fact increase in profitability and we will be probably back at five percent plus in terms of margin then if i go to the next one the us and canada this is uh of course one of the region where we have been hit i would say severely in terms of contracts around down because of course as you can imagine in the anglo-saxon world let's say the uh the risk department probably a stronger than i would say the the case in continental europe or in other countries and probably i would say some of our customers were a little bit frightened we have been of course uh also hit by the competition we have let's say used the i would say the weakness of fatos last year to try to steal some business not the case of course in h2 this year but for sure it was an opportunity for the competition i would say to try to stack, we say, to arm us a little bit. We have been able, I would say, to, of course, shave costs very rapidly. So the margin is increasing. Of course, it's a decrease in terms of quantum because, as you can imagine, the decrease of turnover is too strong, I would say, to have a profitability that can stay, I would say, the level of last year. Now, next, France also hit roughly of minus 11%. And also, we had a very slow start of this year in the public sector that is very strong in France. Remember, it has hit, in fact, all of our competition. Remember, since in France there was no budget for some time, it was not possible for our public, I would say, customers to launch new projects, and that's why there is a delay. We definitely think that there will be much more opportunities, in fact, in H2. The good news is that we have been able to increase, I would say, the operating margin. It's still too low, for sure, at 2%. But it's much better than last year, given the fact that we have also lost some contracts. If I go now to UK, same thing. We have been able to stabilize, I would say, the operating margin in Euro. But in fact, in terms of percentage, as you can see, we increased it roughly by 3 points. Still decreased also, like in the US, for the same reason. And also remember that in the UK, that's where the BPO contracts are there. And we have, of course, closed some of them. There are only two remaining. And we want to close, of course, both of them in the course of 26, 27. I already said, in fact, that there is one that is going to be terminated, in fact, in the course of next year, normally 26 or 27. And the second one is a much longer contract. And we are in negotiations, I would say, to stop this contract. Now, last, international markets. Also quite, I would say, some decrease. Remember that in the international market, so you have Latin America, Africa, Eastern Europe, and Asia, and we have also MEV, the major event business unit, of course, with the Olympics, with a strong turnover that was the last year. So there is an impact. And we have also a strong impact, in fact, in Switzerland also, where some clients have decided, I would say, to stop some contracts. However, as you can see, we have been able to manage the margin at 46 million, roughly 8%. So we are quite, I would say, pleased with the genesis, I would say, actions that we have taken in this region. Last, Benelux and Nordics, also an impact. Less, probably, I would say, than the rest of the, let's say, the other regions, around minus 5%. uh same thing i would say with the public sector that was impacted also with the i would say the beginning of this of this year and the good news as you have seen is that we have done a lot of restructuring in this region mainly benedict in fact in belgium and around and we have also signed new contracts that are in force in fact in q2 so we are quite confident i would say for the rest of the year With this, I give the floor to Jacques-Francois to review. Sorry, I have Eviden, sorry. I went a little bit too fast. So Eviden, remember, this is the hardware and software. Again, this, as I think we said that, but I would say this year is a very particular year with the Jupiter project and the Exascale that we have sold to Germany. remember also that we are also in the process of selling another exact scale in fact for france next year but in fact with the i would say the pattern of the delivery most of the revenues and the margin will be in h2 between let's say september and december so as i say we had minus 33 million so roughly flatish versus last year but in fact the h2 will be of course very strong and the profitability will come back on a yearly basis for evidence. Jacques-Francois, it's yours.

Thank you, Philippe. Good morning, everyone. Now that Philippe has gone through the drivers of the business operational performance, let me review the P&L items below the operating as well as the cash flow statements and the balance sheet. So let's start with the P&L. As Philippe indicated, Our operating margin amounted to €113 million in H1 2025. We incurred reorganization and rationalization charges for €379 million in total, of which €355 million reorganization costs as we have made significant progress in the execution of our restructuring program, and €24 million provision related to real estate leases. We did not impair any goodwill this semester, contrary to last year when we booked a €1.6 billion non-cash charge. Other items reached a negative €174 million. They include litigation provisions for €107 million and asset impairment for €35 million. The net cost of our debt reached €162 million, up from €73 million last year reflecting our new debt structure and including peak interest, non-cash interest, as well as the amortization of the 2024 fair value adjustment of the debt, according to IFRS 9. Other financial expenses were 40 million euros in the half due to debt lease and pensions. As a result, our net income group share amounted to minus 696 million euros. Okay, moving on to the cash flow statement. Free cash flow generation improved significantly year-on-year from minus €593 million to minus €96 million in H1 2025. We generated €309 million OMDA in the first six months and expensed €93 million in CAPEX and €122 million in LEASES. Our change in working capital requirements once we neutralized for the working capital action was positive of 167 million euro you might recall that these working capital actions i'm referring to are the cash that we received in advance from some customers at the end of 2024 and these customers were mainly from the public sector this positive 167 million comes mainly from the lower revenue and therefore lower associated trade receivables Due to timing effect, our cash restructuring expense was only, if I can say so, only 154 million euros. It is expected to accelerate in the second half of the year. Tax paid was 13 million euros, mainly due to one-off credits in the half and cash cost of debt 80 million euros. Other items amounted to 109 million euros. They included litigation settlements and onerous contracts cashed out. As a result, our free cash outflow was limited to 96 million euros. Turning now to the net debt bridge. At June 30th, 2025, net debt was 1 billion and 681 million euros compared to 1 billion and 238 million euros as of December 31st, 2024. Beyond free cash flow, it reflected the impact of the change in working capital actions for 176 million euros, negative Forex impact for 112 million euros and other elements such as peak. Another way to look at net debt is to start with cash and cash equivalent for 1.4 billion euros, which I deduct from the gross debt for a nominal value of 3.1 billion. And then we end up again with a net debt close to 1.7 billion. This is excluding the IFRS 9 fair value adjustment. As a result, leverage ratio increased to 4.0 times during the period. I remind you that our target is to reduce leverage below 1.5 times at the end of 2028. Before handing back over to Philippe for the outlook, I would like to clarify for you the impact of Forex during the semester. Whilst we have a degree of natural transactional hedging, we are exposed to currency translation. In the half, 17% of our revenues were USD denominated, hence the impact on reported aggregates. We also had a significant portion of our cash position in USD, which resulted in a negative impact on our net debt in euros. The euro to USD conversion rate evolution also affected our equity position, which led, when we added to our negative net results, to a negative equity position in consolidated of minus 90 million euros. at the end of June. You should be aware that currently we are under constraints which prevent from systematically hedging our transactional risk. However, with the ongoing normalization of our financial situation, we will increasingly be in a position to actively manage our currency exposure. Thank you all for your attention. I will now hand back to Philippe.

Thank you, Jacques-Francois. So on the outlook, as I say, first we confirm, of course, the 25 Guidance that we have given in May. So the 8.5 billion revenues. Remember, this is, of course, on the FX at the end of 24. So the FX could have an impact around 100 million. The operating margin at 4%. And I think we can touch the 4% this year. And the cash will be at a maximum, let's say, 350 million. We'll try to do more, of course. So it's possible that we have some good news. uh for 2026 i just want to reiterate what we have said in may there is nothing new we should rebound in terms of top line positive organic growth and we should be also cash positive in terms of free cash of course before debt repayment and any mna that we will probably restart in h2 next year and then for 2028 i would say we continue to estimate that we will have a top-line growth around the 5% to 7%. It will be less, of course, next year because we are recovering, and I definitely think it will accelerate, in fact, in 2027 and 2028. We are still looking at a 10% operating margin and, of course, leveraging, I would say, the balance sheet, starting, in fact, in 2026 next year and, of course, continuing in 2027 and 2028 with, I would say, a net debt to Rondal below 1.5 times. With this, we can turn to the Q&A session and we are ready to take any questions.

Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. We will now take the first question from the line of Frederick Boulan from Bank of America. Please go ahead.

Hi. Good morning. Thanks for taking the question, Fred, at Bank of America. Firstly, a question on the top line, if you can discuss any thoughts around the trajectory for the rest of the year. Was Q2 as you expected? Any specific assumptions for the rest of the year in terms of demand and sales cycle? Any impacts on the seasonality in Q3, Q4? I think we had the Olympics last year in Q3. So firstly, on revenue. Second question on the free cash flow. So in your liquidity update, you had, I think, 373 million negative cash flow in H1 if we include working cap actions and FX versus the kind of 96 adjusted number this morning. If you can discuss for the rest of the year beyond the 350 million kind of adjusted number, any other impact around working cap and FX, we should expect, assuming the FX stays where it is.

and then lastly on the cost and maybe within that a follow-up on the cost-cutting plan uh you're saying um you know two-thirds will be done by the end of the year so what does it mean in terms of restructuring cash out for for your second house thank you very much uh okay so uh on the top line i would say we are first uh the q2 was on expectations and there was no surprise for us as i say we are stabilizing inside the turnover and all the revenues around the two billion In Q4, in Q3, we estimate that we will again be around this 2 billion, a little bit less, but I would say continuing, and then it will start to increase in Q4. So I would say it's a stabilization for the first three quarters, and I would say an increase, in fact, in Q4. So we continue, I would say, to see, I would say, a stable basis, which I think is very important. In fact, we didn't lose that many contracts in H2, probably only one. That's a big size. And it's normal, of course, that we cannot renew, I would say, 100% of the contract. But I would say more than 90% of the contracts have been renewed. So I think it's quite a good news. I have told already, because I have decided, I would say, to meet with the top 100 clients. I have met probably 40 of them. And definitely, I think that the trust has come back. Some of them are reopening, of course, the tender, because for some of our customers, it was blocked. And I think it's good news because we're going to have, I would say, more tenders to ensure, in fact, the pipe is increasing for H2. For the cash flow, probably I will give the floor to Jacques-François.

Yes, hello Fred. So yes, a couple of elements to answer your question. First of all, it's the bridge between the 373 and the minus 96. I think it's clear for you and for everybody that on one hand, the working capital normalization for the cash in advance, which we received at the end of the year. So because we received at the end of December 319, and at the end of June, much less than that, so there is an impact, which if you want to look at the underlying performance, working capital, et cetera, we need to neutralize. So that's an impact of 176 to neutralize. And the second element, indeed, is BFX. So second part is looking forward for the rest of the year, So A, on ethics, I cannot comment because by definition, it's a bit difficult to predict. The only thing I can say on ethics is that we constantly look at ways to mitigate our risk and to repatriate cash through dividend distribution, through capital reduction, or whatever. And already in H2, we have taken some steps, let's say, to significantly reduce our exposure on the debt side, on the cash and debt side. Regarding working capital, my expectation is that at the end of the year, we should be in the same ballpark in terms of cash in advance compared to last year, which will make a more natural normalization, if that's clear for you.

And Fred, just for information, we don't do working capital actions. I just want to make sure that... We receive advance payment in clients, but we don't ask for them, and we don't give rebates. It's very important, and that's a big change for the company. And on the DPO, on the suppliers, we don't stop paying suppliers. So it has been paid accordingly, I would say, to the contractors. In fact, if you look at the balance sheet that you have in the press release, you can see also that on the supplier side, for the liability, in fact, it has decreased. The amount has decreased, which is in line, of course, with the decrease of the turnover.

Sorry, Jacques-François, just to clarify on your commentary, so you're saying the 319 million advance payments, that's going to be zero at the end of the year?

No, not necessarily. Unfortunately, I would love, because I would say I don't want this, but we cannot stop some public, I would say, customers to pay in advance, and we will probably have, again, payments in advance by the end of the year, but of course we will advertise them because we want to be very, I would say, transparent.

Yes, and my comment was more that Without doing anything, I expect that we will be in the same ballpark, even if we are not organizing, provoking, desiring to have that. By the nature of the business and our exposure to the public sector in particular and some habits which have been there for many, many years, we have plenty of customers who are used to that. So in terms of their way to manage their budget and you know how it goes when it's decided by whatever, their parliaments or things like that.

they have a vested interest in paying us before the end of the year so in my assumption i would not be surprised if at the end of the year we are around the 300 million mark for the cash in advance and on your question on restructuring frederick so of course genesis is accelerating so we have more cash out i would say but it will be spread between h2 this year and probably h126 i definitely think that Most of the restructuring will be done by the summer of 26. So Genesis, I would say restructuring will be almost complete. There will be still some countries continuing because it takes more time in H2 26 and H1 27. But probably I would say the ballpark will be between H2 this year and H1 next year.

If I can add on this point as well, you have seen or you're currently looking at The cash out in H1 related to restructuring exit of people amounted to 149, whereas the P&L charge amounted to 355. So there is a lot which has been signed and agreed. Just the implementation will come in the next month, as Philippe was just explaining. Perfect.

Thank you, Philippe.

Thank you, Jean-Claude.

Thank you. We will now take the next question from the line of Nicolas David from OdoBHS. Please go ahead.

Yes, good morning. Thank you for taking my question. First, I would like to come back on the commercial activity and revenue trends. Do you expect a significant improvement of your book to build in H2? And if yes, do you think that you can get really closer to 100% quite soon. And looking at the trajectory for Q4 and for next year, could you please clarify the fact that in Q4, you expect a stabilization year on year, still like discussing the CMD, or it's more a quarter on quarter stabilization, Q4 versus Q3. And for next year, given that you're probably ending the year with a book-to-bill which will be way lower than 100%, what gives you so much confidence that you can have an organic growth? And if you were to decline again next year in organic terms, what kind of decline could you absorb without needing more restructuring to get to your ambition of margin improvement? Thank you very much.

so i would say the pattern of revenues for this year as i say we expect q3 to be around 2 billion to be in minus and last year i think we were 2.3 billion so it's minus 15 minus 16 so we are still i would say in the same pattern in terms of organic decrease and then it will change in q4 because we will be probably at zero plus The book-to-bill will increase, yes, we will be above 80%. Are we going to be close to 100%? The goal is to be roughly at 100% in Q4, but I would say on the year-to-date, probably a little bit below. So we will close, I would say, between 90% and 100% at the end of this year. Remember that the book-to-bill also is not, I would say, a precise measure of the organic growth of next year because it depends if it is, I would say, long-term contracts or short-term contracts. And that's why I think we need to, it is not an easy reading, I would say, from the book to read, unfortunately, to derive, I would say, the organic growth for next year. And I will come back to you because I think we'll give probably better measures in the course of next year so that you have a better reading, I would say, to translate the book to be in terms of revenues. It's not an easy reading, in fact. So I would say we have, the pipeline, in fact, is increasing, which I think is very good news. So definitely, we think that we're going to strike new deals in the course of H2 that will, of course, give revenues for next year. Now, I don't expect any decrease in top line next year. But as you say, if it happens, I don't think it's a big deal for us because the restructuring that we have is quite heavy, in fact. So the operating margin will strongly increase, in fact, in the course of 26, whatever is the top line. If we have more top line, of course, it will accelerate even more. And if we don't have, I would say, we will still have, I would say, a very sharp increase in terms of profitability. The question, of course, then it's a question for me, but I would say I will not take this decision because I'm quite confident on the top line for next year. But if it happens that it is weaker than expected, I think we can, of course, continue probably to shake some costs. So there is no problem for us. So remember that the way we are Chekvin Cost is four different buckets. The first one is the billability rate. So we have 79 now. We will be probably at 80 plus in Q3. And we will continue, I would say, to touch the 85%, which is the target. We estimate that we can touch this target by end of 26. 85 is the right level, whatever is the revenue. Unfortunately, this does not change anything. The second one, of course, is the gna the sdna so this one of course we have we will reduce heavily and we can we have some measures we can continue we are doing a lot of things in fact in it in real estate in a different measures for example we have reduced the number of cars etc in different countries if we need i would fail to accelerate or let's say do more i think it's still possible for us there is no problem for that uh the the the third one is the move to offshore and i definitely think that we have also we have gained one point we can and remember one point is roughly 0.4 percent of margin uh if i see i would say that we are let's say weakening the top line next year we can accelerate the move to offshore and probably have two or three points so we i would say protect the margin for sure but the margin in fact of four percent this year will be much higher next year whatever is the top line uh And then, of course, we have what we call the non-personal costs, where we touch in the G&A. So in G&A, in fact, it's, of course, the personal costs and non-personal costs, where there are a lot of initiatives. And, in fact, I will accelerate the NPC by September. There are a lot of things that we're going to start reviewing, in fact, after the summer.

Very clear. Thank you.

And just so in terms of book to build, it's fair to say so that In your H1 book to bill, the average length of contract is probably lower, shorter than what the company was used to book before you were there, when the H1 book to bill was more than 100% historically.

I'm not sure of this, unfortunately. So we can come back to you on this comment, but no, I don't think so. I'm not sure it's shorter. In fact, after that, you know, and that's why we need to segment the book to deal. And that's why, in fact, we need to put more, I would say, I don't know if it's clarity or whatever, but I would say more, let's say, transparency. It's not a transparency, but remember that in the book to deal, so in the contract that we sign, there are for me two kinds of contracts, what we call managed services. Usually it's contracts on three to five years. And then I would say the rest, which is roughly the digital, the smart platforms, ANI, cyber, usually data contracts of less than one year or one year plus. It depends. Sometimes in cyber, we have three or four years contract, but I would say we will segment probably the portfolio between, let's say, long-term contracts above one year and, let's say, shorter contracts below one year. I don't have, I would say, these numbers, unfortunately, and that's what I said. We will come back, I would say, to the market probably in the course of 26 to have a better understanding of the the portfolio but after that the dynamics of course is quite different between the two segments and in fact it's not because you have a book to build of 100 percent that you're going to grow unfortunately so that's why i think we will give probably i would say more comments on this one but i don't think that it has a short term i don't think so i think the contracts that we have resigned most of them are between three and five years so i don't think so yeah i was thinking maybe shorter in terms of um ramp up phase of ramping up faster and getting into production faster than or maybe it's possible I don't know this because I was not there so that's a good comment okay we can come back to you on this question okay perfect thank you very much thank you thank you we will now take the next question

From the line of Martin Porta from Amber Capital, please go ahead.

Hey, good morning. Thank you for taking my question today. I only have one, and it's for you, Philippe. Could you please share with us how much did you invest in the stock, and were there any special funding related to these acquisitions? Thank you.

Thank you. I think it's a question I had also on the CMD, but I'm fine tourists, because there were a lot of lies on this, unfortunately. So I have invested already 9 million. I will invest more in the coming weeks, you will see. And of course, it's on my own funding. Nobody has helped me in any sense. I have never covered also the investment that they have done in Atos. Thank you for the questions. But I think it gives clarity, because I have seen some comments that have been helped. is not really the case. Nobody asked me to fund, I would say, to invest in ATOS. Thank you.

Thanks. Thank you. We will now take the next question from the line of Laurent Doré from Cap Le Chèvre. Please go ahead.

Yes, thank you. Good morning, gentlemen. I have three questions, in fact. First one is to check on... the second half of the year, if you still have some important contract to renew, or if you think most of the losses are behind you. My second one is on the fourth quarter. You were talking about returning flat to a bit of growth. I think you have a one-off contract, probably in advanced computing, which will help in the fourth quarter. So I was really interested in the underlying growth excluding potential one-off in business. And finally, last one is on cash. The restructuring cash outflow, if we could have some color for second half of 25 and maybe 26, what to expect? Just on cash, not the P&L. Thank you.

Okay, so I see for the first question, in terms of renewals, we have several big contracts. uh in fact i was in the us for more than one week and we had already i would say the for the two big contracts that we're going to renew we have i would say a normal agreement that it will be the case so i don't expect in fact to lose any contracts in the coming semester uh for q4 you are completely right there is a big uplift i would say with evident and this hpc contract of jupiter remember last year i think we had 2.3 billion in terms of revenues i think into four little bit less So there is an impact, which means, yes, probably without this, we will be probably at, I would say, still a slight decrease. But as I said, the underlying is roughly at 2 billion. And that's what I'm looking for. I would say without, of course, I would say the increase we're going to have in Q4. 2 billion per quarter, to be exactly precise. And then for the cash-out flow, I give the floor to Jacques-Francois. Remember that we have said that in the CMD, we will spend roughly 700 million. We think we're going to spend probably less than that. And then I give the pattern in H2 and 26 for Jacques-Francois. Yes, Laurent.

Thank you, Philippe. Laurent, same answer from my side, elaborating a bit more. So overall project is a 700 million cash-out impact. This year in the CMD, we guided saying that this would be between 300 and 400. We want to do that as fast as possible because obviously that generates big savings and that helps us drive the margin up. So we are still in the ballpark of trying to do 400. Maybe we'll be a bit shy of that. But that's a daily effort from all the teams in all the regions. And so far, we can see a very, very good progress. So same expectation, no changes versus the CMD.

You can put, you can assume 400 for this year. And number three, 200 next year. In fact, we said the 700 was 400, 200, 100. 25, 26, 27. We estimate that we will probably finish Genesys by the end of 26, so it's possible that in 27 there will be no verification.

Yeah, thank you. Maybe just an add-on. If you, I think you were planning to swap many meetings with your main client, Siemens. If you could give us a little bit more granularity on how the relationship is reshaping with them. Thank you.

So I was in Munich. So yes, I meet Siemens, I would say frequently. The relationship is very good. We had a very good meeting last time. There is no risk, I would say, that there is a run down in the contract. and then there are i would say they are reopening also the tender for us it's part of the clients also that was blocking i would say some contracts for us because they wanted to have a clear view i would say on the financial trajectory that's why i spend a lot of time with clients not just to reassure them that i would say at all is safe and back we have a lot of cash we're not going to burn this cash in the future we'll be back as a positive territory in terms of cash flow next year And with Immense, it's typically, I would say, one of the clients that is reopening. So we have a lot of opportunities now coming in H2. And I'm very confident, in fact, for 26 and I would say and beyond.

Great. Thank you.

Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. We will now take the next question. from the line of Tarek Marcon from Bernstein. Please go ahead.

Good morning, guys. Four questions on my side. The first one is on the order intake. You used to publish, at least last quarter, you did the next 12 months booking. Do you have the figure for Q2, so you find 1.6 billion contracts? What part of that will come through in the next 12 months? The second question is on the renewed contract in the automotive sector you mentioned during the call. Can you help us to understand the economics behind this contract compared to what it was before? What has changed in terms of revenue and profit generation? My third question is on the other items, so still a bit more of 100 million euros in H1. What do you expect from the P&L? I mean, What do you expect for H2 and going forward? And for the other financial expenses booked in the P&L in H1, what is cash and what is non-cash, please? Thank you.

Okay, Derek. So for the big contract we signed with German OEM, In fact, when I entered the company, there was a lot of contracts with negative margin. This is one of them. It's a mainframe contract, in fact. It's quite a sizable contract. It's around 50 million plus a year. The margin was probably around minus 10, I think. And now we are probably around 10%. It's still low for me, but I would say at least it's not bleeding anymore. And unfortunately, as you can imagine, I would say what is happening right now, the tariffs in the US, the German OEMs, of course, are not in an easy situation. Although I definitely think that the discussion I have with most of them, in fact, they are protecting, of course, their expenses in the digital world. for the first question.

It's a very interesting explanation here. In terms of revenue size, is it the same compared to before? And how did you achieve to go from minus 10 to plus 10?

It's a good question. No, but in fact, what I have done is that for all the negative contracts, I met the client saying that we cannot continue like this. And I think that for some of them, I would say, They know that probably we were not at the right pricing. And they know also that if we go, I would say, if they go to the competition, they will increase the price. So I think it was, I would say, the responsibility was probably, I would say, more on the Atos side probably than on the client side. The client is always happy, I would say, if we give a crazy price. And of course, we deliver the service because in terms of delivery, I think we are above the competition in most of the cases. So for this, I would say for all these customers, in fact, we have been telling them that we cannot continue on the same pattern. And I think that for some of them, they realize, for some of them, they are not happy. But I would say at least they understand. So yes, there is an increase of the top line because there is an increase of the margin. So in fact, there is more revenues, in fact, in the contract. And of course, it will yield to a positive margin. It's still not yet, I would say, the margin I want. because the minimum we set, the benchmark, even I would say to the team, for the growth team is to be at 25 plus. But at least we are not bleeding any hope. In fact, in terms of what we call, let's say, loss-making contracts, there are only two BPO contracts now in the UK. In fact, still, I would say, bleeding. And that's why I say, you know, we put a lot of energy first to reduce, I would say, the loss. and of course to stop the contract. We will have probably news during H2, so there are a lot of negotiations right now. On your first question, I think we don't have the answer, unfortunately, so we'll come back to you for your pipeline. And then for the questions on the two others, I give the floor to Jacques François.

Yes, hello, Dirk. So let me take your questions on the detailed line items, one after the other. So starting with the other financial expenses line in the P&L, so these are non-cash items. This is mainly debt lease related and pension related, so non-cash. Secondly, on the net cost of financial debt, if you look at the P&L, this is exactly as per expectations. These lines don't change. We have the financial restructuring. We have the debt. This is locked. This is documented. So the 160, this is 50% non-cash, 50% cash. So 80 million cash and 82 non-cash due to the payment in kind and full premium for the bonds and the bank loads. And thirdly, the other items. I understand your question about how does it look like for H2 and beyond. It's a bit difficult to project. What I can tell you is that we are, how can I say, prudent, cautious. And what I know is that we have taken, we have booked everything which we assessed was deemed to be booked. And it's a big amount. So if you want to be guided, I would rather say to not expect similar amounts in the future. Does that answer your question or anything still unclear?

No, perfect. Thank you. You're welcome.

Thank you. We will now take the next question. From the line of Benoit de Broussia from Kevin Finance, please go ahead.

Hi, I have two questions, if I may. The first one is, do you expect any cash outflows related to litigation or cash outflows related to loss-making contracts that you are willing to exit going forward. This is the first question. And the second question is still about the book-to-bill. I guess, I mean, we still see figures much below 100%. So we're not sure about the growth trajectory for next year, because it seems like with such levels, it's going to be difficult. I mean, you'll have top-line pressure. So what kind of confidence do you have to find new deals and get to build above 100% as soon as FY26? Can you give us more color of the pipeline here?

and the timing of uh potential signings there thank you so as i say for the the growth uh the pipeline is increasing i think it's about 12 billion now and we have more and more tenders coming as i say i would say we a lot of clients have reopened the fact that we can tender it was not the case i would say for several clients last year They were waiting. They didn't stop the contract, but in fact, they didn't increase the share for us. So they were just waiting to see how Atos is maneuvering in the course of 25. And that's why it's very important that the teams, even myself, meet, I would say, the top clients to reinsure them and say that we are back on track. And we have, I would say, the financial stability, of course, to So that's why I would say the pipeline is increasing. And it's always like I would say it's normal. We are restarting, let's say, the growth engine. It takes some time. We are on plan. So there is nothing new for me. And you will see that I would say the pipeline will continue to accelerate in the coming quarter. So I'm quite confident, in fact, that out of this pipeline, of course, we're going to strike more deals in the quarters. So there will be some growth next year. That's the goal for us. uh i'm quite confident i would say that we will strike some deals in h2 that of course will be enforced for 26 and then probably we can give more colors i would say probably in the next quarter or at the full year results you will see that probably i would say by the end of the year I don't know if you have another question. It was on cash out regarding litigations. So litigations, I would say there are not that many cash out in terms of litigations in H2. I don't think so. We continue, I would say, to have the normal case. So I would say it's mainly lawyers' fees, but it's not a big amount. As I said, the two contracts that are bleeding, of course, we continue, I would say, to have a cash out. So there is one contract that will be probably around minus 10 million, I would say, loss per year. that we will stop bleeding in the course of next year, and we will probably try to stop this contract. The other one is bleeding a little bit more, minus 40 to 50 million, so I'm going to say 20 to 30 million. I think we will continue to be in that range, 20 to 30 in H2. And we have a lot of actions, in fact, to reduce, I would say, this in the course of next year if we cannot stop the contract. So next year, I think it will be... One contract will be flattish, the other probably around minus 10, minus 20. So the sum of the two will be much less than this year. Very clear. Thank you.

Thank you. There are no further questions at this time. I would now like to turn the conference back to Philippe Salle for closing remarks.

Yes, thank you. So thank you, everybody, for your time this morning. First, as you can see, we are very confident. It's a turnaround of a company. It takes some time. Of course, but I would say Genesis is right, I would say, on target. Accelerating, it will be probably a shorter journey than anticipated. As I said, it was a three-year plan. It will probably be a two-year plan. I'm still aiming, I would say, to strike or to finish, I would say, Genesis by H226. Most of the cash out will be, in fact, in the course of this year and next year. uh and now there is a big focus on the company for sure on growth and technology also it's very important that we spend also that we show to i would say showcase to the clients and in fact what is the difference between atos and the competition so i'm very confident very happy i would say on the h1 results the resilience of the team is very strong the staff turnover in fact has decreased which i think it's a very good sign and we are now i would say looking forward to a bright for sure for uh for the company And with this, thank you for your time. I wish you a very nice summer, and I will probably talk to you or see you, most of you, in the coming months. Thank you, and have a good day. Bye-bye.

This concludes today's conference call. Thank you for participating. You may now disconnect.