Quadient Sa

Good evening and welcome to Quadient Full Year 2024 results presentation. I am Anne-Sophie Jugean, Quadient's new Head of Investor Relations. Today's presentation will be hosted by Geoffrey Godet, CEO, and Laurent Dupassage, CFO. The agenda for today's call is on slide three. As usual, there will be an opportunity to ask questions at the end of the presentation. You can submit your questions in writing, through the web, or ask questions live by dialing into the conference call. Thank you very much, and with that, over to you, Geoffrey.

Thank you, Anne-Sophie, and welcome. Good evening, everyone. Let me start by highlighting our key achievement for 24. So first and foremost, I wanted to share that we successfully met all our financial targets for the year. We delivered €1.93 billion in revenues, up 2.8% on a reported basis, and up 0.4% on an organic basis. Our current EBIT for the period was €146 million. This represents an organic increase of 2.2%, mostly driven by significant improvement in the profitability of our digital and locker automation platforms. Beyond the financial performance, we have also successfully started to execute our strategic roadmap, as you know, Elevate to 2030 that we have announced in June last year. Our digital business delivered robust growth in both subscription-related revenue and profitability. We also continued to expand our subscription-based revenue model, and we'll get into more details today with you. And we also launched our share buyback program, which demonstrates our confidence in our value creation potential. And finally, additionally, we successfully raised approximately €325 million in new facilities to refinance our 2025 debt. Last but not least, we completed two acquisitions this year, one in mail and one in lockers, both reinforcing our leadership and setting the stage for future revenue and EBIT growth. Turning to slide 6, the highlight of our full year results. As mentioned, we delivered strong double-digit growth in subscription-related revenue for both digital and lockers, reinforcing the rapid expansion of our subscription-based model, which now represents 71% of Quadrant's total revenue. of our 90 million subscription growth 2026 target already secured. We're now well on track to hit our 2026 objective. Moving to profitability, 24 marked two major milestones. Digital EBITDA margin surged to 17.5%, up almost six points year over year, putting us firmly on the path to exceeding 20% by 2026. Lockers reach EBITDA breakeven, meaning that all three solutions are now EBITDA positive. I think it's a testament to the strengths of our operational execution. 2024 delivered a successful start to our 2023-2026 financial roadmap. We'll now move into the details of the performance by solution. And let's go to slide eight. And let me start. by showing you the longer-term track record of our digital business. On this slide, we have shown the evolutions of the key financial and operational metrics of our digital solution over the past five years combined. So starting with the revenue on the top left-hand side of the slide, the graph speaks for itself. It has been a constant and steady increase in revenue quarter after quarter driven by the successful adoption of our digital automation platform by our customers in the US and in Europe mostly. Our subscription-related revenue has increased by an impressive 19% CAGR on average per year over the period. So along this solid product placement trend, the transition to SaaS has led also to an increase in the share of subscription-related revenue from 59% in 2020 to now more than 80% this year, 82% this year. Similarly, if we look at the bottom left, the ARR growth, which is a more forward-looking indicator, as you know, of future subscription revenue growth, has now increased from 109 million euros at the beginning of the period to 230 million euros over the period, which represents in itself a CAGR of 16% over the period. On the bottom right side, now let's go to the share of SaaS customers, which also has grown significantly and which reflects naturally the change to our SaaS digital automation platform. Now let's move to the top right side. Let's review the EBITDA evolution. It shows a low point early 2022, which is the combination of the impact at the time from a change of business model that happened over time and our investment in account receivable automation and account payable automation after, if you remember, the acquisition of EAP and Beanworks, respectively, in 2020 and 2021. Most importantly, the regular and strong EBITDA margin over time is the reflection, I believe, of two, three main things. The growth of the subscription and the usage, naturally, from our customers of the platform. They use the platform more and more every day. steady and regular gains in productivity from the teams. If we take a metric that is fairly relevant, we had a 60% increase in employee productivity since the first semester of 2021. If we measure, if we take the full ARR and we divide that by the numbers of FTE, it's an ARR by FTE ratio, which represents a 60% increase in productivity. And finally, the benefit of not only having our enterprise segment at scale, but also our fast and growing SMB segment is also now contributing to this improvement. Moving now to 2024 accomplishment and focusing on what happened last year for a digital automation platform. Quadient has been recognized for having the fastest growth among the major customer communication management vendors globally, capturing more than 30% of the market growth in size in 2023, according to the latest IDC report. On a different topic, we are incredibly proud to continue delivering the fastest growth among all major vendors in the CCM market, and we believe this achievement speaks to the trust that our customers place in us. Additionally, and again this quarter, the last quarter, Q4, Quadrant has been recognized by multiple software industry analysts for its different modules of our platform. The latest report, Quadient is again on the top right-hand corner, as we can see on each of those charts, among the leaders of the major players, and whether this is for account payable automation segments, the account receivable automation segment, but also our customer communication segments. These awards are just examples amongst the many that we have recently received and over the years, highlighting the strong positioning of Quadient as the best of suite in the SaaS industry today. So turning to slide 10. Our strategic approach from a go-to-market perspective is based on two pillars. Acquisition of new customers on one hand, and expansion within our base of existing customers. In terms of customer acquisition goals, digital continues to demonstrate a strong commercial momentum. Over 2,600 new customers were added in 24 alone, since in particular to the robust cross-selling process. with our male customer base, and as such, especially in North America this year. Digital also delivered a strong fourth quarter with several key deals secured in the U.S. with one of the largest law firms, but as well, some large HR technology companies. Additionally, a new partnership was established with Avalok, a core banking software provider and a partner for us that delivers customer communication management capability to the financial service industry. For customer expansion, our upselling has been going fast, as I've shared with you over the years and contributing more and more to our overall booking, with notably also our payment automation services that has been expanded at more than 20% in 2024 versus the previous year. To further expand with our existing digital customers, I want to remind everybody that innovation within the platform plays a key role. In the last 12 months, naturally, AI has been at the center of many visible innovations we have provided to our customers. One example I want to share with you is now the high-level automation provided to create templates and to write content. And this is a big deal because it saves so much hours to our customers. We also added key capabilities with the integration of repay for direct suppliers' invoice payments in the US and Canada, as we had signed a partnership a while ago. And we also have made more progress with new electronic invoice formats, such as the UBL, it's a bit more technical, the CII, or the Facture X, to align with the upcoming European Invoicing Regulation. With that, Laurent, over to you.

Thank you, Geoffrey. Good afternoon and good morning, everyone. I'm Laurent Dupassage, I'm Quentin's Chief Financial Officer. So digital represented €267 million of software revenue for Qyzen this year. It's an organic growth of 7.7% for the year, which has been accelerating over H2. H1 was 5.9%, Q3 8.7%, Q4 10.1%, also resulting from the convergence between recurring and non-recurring revenue growth. NORAM continues to be very dynamic thanks to cross-sell and up-sell. The annual recurring revenue has grown by 12.7% to reach €232 million, with a limited impact of currency on this figure. This high top line has allowed for a swift increase of EBITDA from €29 to €47 million, as you can see on the right hand side. With more than 19% of EBITDA margin, just in H2, we already delivered very close to 20% mark that we set for 2026. This is thanks to the maturity of the platform. You typically get additional incremental revenue with gross margin at more than 85% and the limited additional OPEX required in absolute value. Moving now to slide 12. Moving forward, our digital business still is positioned on a very well-oriented market, expected to grow at 10% per annum over the period and will worth 9 billion by 27. Quadrant is well positioned to capture this market growth opportunity in the future, notably thanks to a large and sticky customer base. It's 16,000 customers in digital today. Metrics like churn below 5% or net retention rate prove the sustainability of our installed base. And those are positively oriented. A highly recognized platform exposed internationally with 50% of the business in North America and 40% in Europe. And finally, a scalable and modular platform with strong bookings, increasing by 34% just in Q4, and an ARR growing by 12.7% in 24, with strong direct and indirect go-to-market organization. Over to you now, Geoffrey, for our main business.

Thank you, Laurent. I have already emphasized how innovation is at the core of Quadient. It is our innovation that delivers a strong return for our customers, but also for investors. And this is also relevant to our mail business, where we continue to evolve and meet the changing needs of businesses all over the world and for all sizes of customers. In December, we launched Simply Mail in Europe. It's a solution that is really tailored to the growing demand for mail automation among the small businesses. Simply Mail is a very intuitive SaaS platform, again, right, that enables businesses to send physical mails, registered letters, but also parcels with just a few clicks, and such from their existing digital workspace. We believe that today it offers unmatched flexibility and efficiency without requiring any complex IT systems or additional support that small customers don't have the time or the money to spend. So this is really an ideal scalable solution for small business looking to optimize their operation very simply. Another example, in addition, we also introduce our latest cutting edge solution, which we call the MAX7. It's a color digital envelope printer, and it's very specifically designed for the high volume envelope printing, which enables a significant reduction in cost per print versus what is being offered on the market today. Turning now to slide 14. So, Quadion's mail business continues, and I want to stress that again, to outperform the market, right? It's been several years, we continue to outperform the competition. This is the result of the effort in delivering exceptional customer satisfaction to our large customer base, as well as a contribution from the gain in market share that we have with new customers for which we continue to deliver. Customer expansion is the main driver today, naturally, considering the large size of our male customer base, of our revenue. And it's backed by an exceptional 95.7% satisfaction rate. And naturally, a strong cross-selling momentum, especially in the U.S., where we have record-breaking placements of digital solutions that has been achieved, in particular, in the last quarter of 2024. In the same quarter, geographically, if we look at some differences, our commercial performance was strong in North America, where the ongoing U.S. mailing system decertification for certain categories of product provided a temporary boost in 2024, though we do expect this impact to conclude naturally probably in the first quarter of 2025. Looking ahead, Quadriant is actively working to upgrade Frama install base. Frama is the Swiss player or European player that we have acquired a year ago. And we expect to drive as well, cross-selling opportunities and positioning our digital solution for a broader adoption among Frama customers. Laurent.

Thank you, Geoffrey. So revenue for mail came up at 732 million euros. It's a 2.5% organic decline and it's up 0.4% reported thanks to a recent acquisition from Frama, consolidated since 1st of February 2024. Mail business continues to outperform our main competitor, despite Q3 and Q4 high comparison basis, leading to a decline of 4% for both Q3 and Q4. Performance in full-year and subscription-related revenue continues to stand above the CAGR of the CMD over three years. Turning to the EBITDA margin for mail, it stands at 27.4%. It's down 2.5 points compared to last year, where in H1 it was declining by three points. EBITDA stands at 200 million euros for the year, and this business remains highly profitable. It's above 25% threshold we have set for 2026. The EBITDA decline compared to last year is explained by higher hardware and revenue mix, the dilutive impact of FRAMA, improving over H2, and finally the short-term cost of the decertification, which has been continued this year in the US. Back to you now, Geoffrey, for Parcel Lockers.

So, turning to slide 20 and our locker business. Just as a reminder, in December, we announced the acquisition of Paquet Concierge with the aim of further reinforcing our leadership in the U.S. multifamily local market, where we now believe we command approximately 40% of the market share and naturally continue to be the leader of this market. This move, the strategic move, combined with our accelerated installation effort in the U.S. has driven quite a global locker network to approximately now 25,700 units at the end of 2024. This is a significant increase from a little bit more than 20,000, 20,200 units exactly, at the end of 2023. This naturally includes around 3,000 units that came from the package concierge acquisition and reflects as well a strong acceleration in deployments, particularly in the UK, which was fueled by new strategic partnership securing premium blockers location. So now turning to slide 17. And our package concierge acquisition. In December 24, we announced The acquisition of Package Concierge and that company was specializing in innovative digital locker technology designed to tackle the growing challenge of package management across not just the residential, as I mentioned before, but also commercial, retail, and university campuses in the United States. With a team of roughly 40 employees, Package Concierge generates 50% of its revenue from subscription, offering a combined hardware and software platform with a strong footfall in the U.S., northeast in particular. This acquisition presents a unique opportunity for us, for Quadient, to solidify our position as the undisputed leader in the U.S. multifamily locker segment, securing approximately 40% of market share. The deal also brings optimal geographical complementary and is expected to generate synergies with Quadient's existing software infrastructure, install base, and operations. Ultimately, these moves accelerate Quadient's lockers' revenue and profitability trajectory, advancing progress towards the company's 2030 ambition of reaching more than 40,000 installed lockers. Moving to the next slide on customer acquisition, the graph on the left highlights the strong acceleration in lockers installations across Europe's open networks since January 2023, so since last year. with the in-store base that has been growing by 145% year-on-year and such, primarily in France, but most importantly in the UK. This growth is fueled by strategic partnership, as I mentioned earlier, with very premium location, and what I mean by that is location including, for example, Morrison's Daily Stores and Scotts Rail. If we now move to the customer expansion, The graph on the right highlights the increase in volume in European open networks alone. That volume has surged five-fold. Let me repeat, five-fold since the end of 2023. And that is the result of a strong pickup and drop-off adoption within the local base. Momentum in North America remains also quite robust in Q4, particularly in the multifamily and the university segments. Meanwhile, in Japan, macroeconomic conditions have impacted somewhat the overall parcel volumes, but new initiatives that we have taken, such as a strategic partnership with Japan Post, another key player locally, are aimed to drive growth and boost adoption as well. With that, I will now hand it over to Laurent to walk you through the financial results of the lockers' business in Mauditers.

Thank you, Geoffrey. Revenue for Parcell Locker stands at 94 million euros this year. It's up by 4.3% over the year. When you remember, we were declining by 2.5% in H1, which means a strong recovery has happened throughout H2, with a double digit over the period, and just plus 8% in Q4. This reflects the strong volume ramp-up in the UK, as well as the momentum in the US, notably on the usage. This translates to 20% subscription-related revenue growth in Q4, as you can see in the graph. Total revenue figure for Q4 also includes the 2 million euros of package concierge consolidated into the total revenue figures. Hardware sales have been impacted by lower level of installation in the US than last year. However, H2 overall, hardware has been growing year over year. As mentioned earlier in 24, Locker's EBITDA has turned positive over the full year 24 and improvement between H1 and H2, as you can see on the right-hand side, reaching 6.7% in H2, has been material. This is thanks to the recurring revenue improvement, including the increased usage. Moving now to slide 20, I will now go through the key financial figures at group level. Slide 21, as mentioned by Geoffrey, the revenue stands at €1.93 billion, and when it was €1.62 billion just a year ago. It's about €30 million more in absolute value and 2.8% growth reported. You can see the positive effect of Scope, €24 million, the bulk of it being explained by Frama, and to a lower extent, Delight and Packets Concierge, that is included for six weeks here. On the other hand, you have an almost neutral currency effect, higher dollar versus euro in Q4, compensating the Q3 that was adverse. Organic growth in the middle of the chart is showing 0.4% thanks to an acceleration of both digital and lockers in H2, moving from 5.9 and minus 2.5 in H1 to around 10% each in H2, partly offset by decline in male in H2. Moving now to slide 22 to review the same bridge but with profitability. The reported current EBIT stands at 146 million euros. It's almost flat compared to last year from a reported standpoint, but growing 2.2% organically. Scope effect being unfavorable due to pharma and delight. Digital and lockers together are bringing more than 26 million euros of EBITDA than last year, more than offsetting the 18 million euro drop of EBITDA in May. Conversion from incremental top line in digital and lockers to EBITDA is huge, as you can tell, notably in digital, thanks to the strong margin of incremental revenue and contain as well OPEX evolution between the two years. Moving now to slide 23. If you look at the current EBIT evolution over the years, you can see that as promised in 2021, we have proven our capability to grow our current EBIT while transforming the company at the same time. Let's now move to slide 24. I will now move on to the group financials. In slide 25, the slide presents you with a summary of the full year result. You find the same information as existed before. It's the €1.093 billion of revenue for the period and the 0.4% organic growth broken down by solutions, as well as the details of the EBITDA by solution. The revenue split is also detailed by region and continues to show North America is overperforming the rest of the regions, due to male market being better oriented, but also gross engines representing a larger share of the total revenue. International is impacted by 2023 large deals, explaining most of the decline. Let's turn now to the P&L on slide 26. And net attributable income stands at 66 million euros compared to 69 million euros last year. And this is despite the significantly higher cost of debt due to the higher interest rates and higher optimization expense, notably due to the FRAMA integration, which is offset by the net income from this continued operation, which is close to zero, and which confirms the assessment we've made last year on the fair market value of our Italian subsidiary, Health for Sale. Turning to the cash flow statement now on slide 27, free cash flow generation is slightly higher than last year at 66 million euros, despite the higher interest and tax paid, and an adverse effect of leasing portfolio, as well as stronger capex than last year. This is thanks to a good EBITDA level, lower variation of provision, and significant improvement in working capital change this year, plus 9 million. Acquisition's net of divestment reflects Frama and Packet's concierge acquisition in 2024, while it was Delight back in 2023. Moving now to slide 28, the level of CapEx is increasing in lockers due to the important rollout in the UK in 2024, as detailed by Geoffrey. Male CAPEX is declining in absolute value, as expected, however, still high due to the continued high placement of machines related to U.S. decertification again in 2024. Digital CAPEX is up by €2 million compared to last year, which is mostly linked to DR&D and platform development. Let's turn now to slide 29 and the debt situation. The net financial debt for the year stands at €741 million compared to the €709 million. Last year, it's mostly due to the balance between the free cash flow and acquisitions, dividend and share buyback, but also scope and forex during the year. Despite this effect, you can see the leverage ratio is relatively stable, thanks to a robust EBITDA. Turning now to slide 30 on our financial position. So we have successfully raised €325 million of new facilities in 2024. notably to ensure the reimbursement of the bond in green in the chart and the shoeshine in February 2025. At the end of February, the average debt maturity has increased from three to four years compared to end of January. We have no major maturity until H226 and we still have €300 million of undrawn credit facility that is maturing in 29, as well as €623 million of customer leasing portfolio. It's up year over year since the first time since many years. This concludes my review on the financial. Back to you, Geoffrey, for the conclusion.

Thank you, Laurent. For the full year 2024, moving to slide 32, Qualient will propose a dividend of 70 cents per share, marking an 8% increase from 23 and reflecting a payout ratio of 36.1% of the net income which I want to remind everybody, it's well above the group minimum threshold of 20%. This, I want also to point out, this represents the fourth consecutive year of dividend growth with a 5 cents year-on-year increase. Naturally, subject to the approval of the annual general meeting on June 13th of 2025, the dividend will be paid in cash, expected to be paid in cash on August 6th of 2025. Additionally, as we touched upon that earlier in the presentation, Quadion launched a 30 million share buyback program in September of 24 with an estimated 10 million worth of shares already repurchased. 10 million euros. The program is set to be executed over 18 months and the regular increase in dividends underscores our confidence and our capacity to deliver our Elevate to 2030 strategic plan. And it also reinforced our commitment as a company to our capital allocation policy. It supports our 2026 leverage ratio target as well, and naturally will ensure that we enhance shoulder returns. Turning to slide 33, which will wrap up our key achievement of the year, our Elevate 2030 plan is off, we could say, to a powerful start. We've got a strong momentum across the organization. Before I wrap it up, I wanted just to focus with you on a few selected additional key milestones among the ones that are presented in this slide. Quadient has been also delivering an unmatched customer-centric platform, as we mentioned, combining complementary services through what we believe today is a cutting-edge intelligent automation capability. But that's on the feature and capability side. If we look at one thing that I think differentiates us today on the market, it's obviously our large customer base. and the business that we generate from that customer base. And we would not be able to do so if we didn't have a customer satisfaction that was exceptionally high, and this year we reached 94%. We have a churn that is at an industry-low level, and that reflects the strength and loyalty of our customer base, which is essential to ensure we can generate upsell and cross-sell successes. As you know, we also go to market with a recurring business model, which allows us a higher predictability of our revenue over the long term. So our subscription-related revenue has continued its steady growth, as Laurent mentioned to you. It has reached €777 million in 2024. This represents a €30 million increase from year over year. and that obviously is allowing us to progress towards our one billion target of subscription-related revenue that we're going to achieve by 2030. I want also to spend a bit of time to turn to our ESG engagements that are fundamental. Our near-term and net-zero targets have now finally officially been approved by SBTI, so it's a major step, and obviously it's the reinforcement of our dedication to all the climate actions that we're taking. Our ESG leadership was also, I think, further validated on the market, as we have obtained, and we're obviously very proud and humbled, by the Platinum rating from AT Finance in 2024, scoring an impressive 82%, which shows we still have, even with a high score, a lot of things that we can do to improve. And profitability, as we mentioned quite a few times through this presentation, is on the rise, as you know, but our digital platform EBITDA margin, again, I want to remind you, hit 17.5% for the full year 24, which is already delivering the step up that we committed at the Capital Market Day. So this, generally speaking, reflects the confidence we have in building an intelligent automation platform capable of delivering more than 1 billion in subscription-related revenue, and not just the top line, but naturally converting that revenue in profitability and being able to generate 250 million EBIT by 2030. This confidence is also reflected in our outlook for 2025. So let's move to the next slide to give you a little bit more context. We obviously had, you know, a solid growth trend that was recorded in digital and lockers in 24. So the solution mix is, at the quality level, is naturally evolving favorably for us year after year. The two growth engines of the companies are getting weight within that mix, which is driving an increasing contribution to the overall performance year after year, both at the revenue level and the current EBIT level as those two are also improving profitability. On a different level, if we look at market trends, just remind everybody that AI and digitalization remain strong underlying drivers for our solutions and for customers buying our solutions, which is leading us naturally to be confident that positive business trends we've seen in 24 in both digital and lockers will continue. And while we also observe some conflicting trends, we could say, in the US, as you all are aware, and significant macro, I would call it, uncertainties in the last few months. We believe that our automation platforms, whether it's mail automation delivery, parcel automation delivery, digital automation delivery, provide at their heart cost and time savings to our customers, making them very essential solution, regardless of the economical environment. And when I also consider the strong booking trends we had across all solutions in Q4, we finished 24 with a good momentum. So when I take all that into account, this is why we remain cautiously optimistic regarding the outlook for the company for 25. And I expect an acceleration in both organic revenue growth and in current EBIT organic growth for 2025 compared to last year. If we look at it in a little bit more details from a quarterly perspective, the quarterly revenue growth is expected to improve progressively throughout the year with a lower or softer performance in Q1 and then moving up to Q2, Q3 and Q4. And naturally, and consequently, we'll also confirm our three-year guidance on the 2024-2026 period of a minimum 1.5% organic revenue CAGR and a minimum 3% organic current EBIT CAGR for the period. So I wanted, with Laurent and Sophie, to thank you. And we're now ready, the three of us, to take your questions. And Sophie, if you can lead us through the Q&A.

Thank you, Geoffrey. And we will start the Q&A by answering the questions by phone.

Thank you, ladies and gentlemen. If you would like to ask a question or contribute on today's call, please press star 1 on your telephone keypad. And to redraw your question, please press star 2 Ensure your line remains unmuted locally. You will be advised when to ask your question. Please press star one now to ask questions. We currently have no question in the queue, so as a final reminder, please press star one now if you want to ask a question from the telephone line. The first question comes from the line of Maxence Dury calling from BNP Paribas. Please go ahead.

Yeah, thank you. Good evening, everyone. A few financial questions for my part, mostly regarding this year. Could you give more detail on what you expect for FOMA profitability? Is it safe to assume that normative profitability will not be reached this year, but mostly more next year? And given the lever at FOMA, is it realistic to expect quite a stable EBITDA margin at mail this year? and another question is regarding capex so it was a bit higher last year than anticipated offset but from asset side what do you what kind of amount of capex are we looking for at this year thank you

Laurent, I think you're going to take those two questions.

I think there are three. Just on the first one, you mentioned the profitability. Was it the group one or which one?

For Fama, it's impact on mail. So we understand it was last making in 2024. Yes.

So, as mentioned during the slide, Frama is dilutive this year. It's been improving between H1 and H2. We have about 4 million of restructuring costs attached to that acquisition as well. But basically, in 2025, it will not be dilutive anymore to the profitability of mail. So, we've not yet reached the run rate, but we are very well on track to be able to deliver 25 at the level of the rest of mail. EBDA and mail, you mentioned what's the perspective for next year. I would tell you that we don't guide every year by EBDA for each solution. Otherwise, it would be a big amount of information. What I can tell you is the 25% that we mentioned at Capital Market Day at the end of 26 is very much valid. And we will be above that 25% mark knowing that we are at 27.6 this year. And the last question was around the capex, I think. You mentioned that you were expecting a bit less. As you mentioned as well, it's offset by the sale of the asset. But the 108 is a bit more than what we had last year. That's correct. It's mostly local, all out in the UK. I think it's relatively expected. And the amount we mentioned over the three-year average during the capital market, it was about 100 million. Again, it is still valid.

Thank you. As this was the first and last question coming from the telephone line, I'm going to hand the floor, I'm going to hand it to the studio to take the question coming from the webcast. Please go ahead.

Okay, so now we are going to answer the written questions, starting with digital. First question, is digital current a bit positive?

Laurent, do you want to answer the first question?

The current EBIT for digital is positive, and you have the details in the appendix of the presentation. For H2, it's just €7 million, I think, on EBIT. That's what I can see in the slide in the appendix that you can also see like me. We had published as well during H1 the EBIT for that activity, and I think for the year we are close to the €10 million mark on the EBIT side. So, yes, positive, absolutely.

Okay, and moving on to the next questions on digital. So what is the share of the IR and AP automation revenues within digital revenues?

So we do not break down anymore the revenue breakdown by modules for the main reason that when you sell a platform, obviously the function and the capabilities on one module versus the other ones could be shared. If we take the example of the e-invoicing services, the invoice could be received and treated as much on the account payable automation, which is the incoming invoice. as well as the outgoing invoice capability when we talk about account receivable. What we could say roughly is that we have 60%, maybe a little bit less, 55-60% of our revenue related to our enterprise segment, and that we have, obviously, the delta, 40-45%, into the mid-segment. Generally speaking, but it's true also for 2024, The mid-segment is going, generally speaking, faster than the enterprise segment and is driven mostly by the account payable and account receivable and financial automation and invoicing growth that is also has been the strongest out of all the activities. That being said, whether it's the enterprise segment, or the mid-segment, or the financial automation activities, they all grow faster than the market trend. We've seen the IDC report on the enterprise segment for particular customer communication. Usually in 23, it was three times, I think, the pace of growth of the market. And that's applicable for the enterprise segment, which is for us between a high single digit to sometimes even above 10%. And the mid-segment has generally over the years been more around 20% growth or moving from 15% to 25% depending on the region and the different areas. And usually the biggest impact to the growth has been on the financial automation that since the acquisition of Beanworks and YP, we've been moving from 60%, 50% in the early days to a 30% growth usually in that particular part of the segment.

And last question on digital. Could you give us a few details on the software business since the beginning of the year, and particularly in the US?

So it's a little bit too early to give reviews. First, for us, as I remind everybody, our Q1 starts in February. So we do not have the revenue, obviously, of March yet completed, nor April. And for us, the third month of every quarter is always an important month. What we could say, generally speaking, on the momentum, on the activities and the booking, is that we finished strongly at the beginning of the year. And we obviously started the year on the software side in the U.S. the same way. We have not seen yet changes from that perspective.

Thank you, Geoffrey. Moving on now to our male division. The male division underperformed in Q4. Can we expect the same sharp decline in 2025, especially in H1?

I take it. Do you? I can take it. I'm happy to take it. So, again, I'll put into context of the capital market day. We mentioned at the time of capital market day that the expected decline was around 3% Kega over the three-year period. We delivered minus 2.5% this year. We know that the H2 was with a higher comparison base. We had a large deal for, I think, about 6 million in H2 investment. 2023, that obviously is weighing on the decline. The perspective that we have for the two coming years, again, are that the minus 3% CAGR is still very much valid. And we know that we are still overperforming the market. And we are still confident that we can deliver that in the coming years. And yes, I think it's important to mention, I think we mentioned it several times with Geoffrey, the 0% or close to 0% we had over the 21 to 23 period is not, I would say, the market trend and the minus 3% is already overperforming the market and we are confident that we can continue to overperform the market.

I can give a little bit more color in addition to what Laurent shared with you from a quarterly perspective. This is not a business, just an introduction that we measure on a quarterly perspective, right? Because we have decertification activities, as you know, that has been happening in the U.S., for example, in the last year or a little bit more. But our contracts are over a five-year period of time. So sometimes the performance in one quarter, as Laurent mentioned, is related to a big deal that we had. It could be related to like COVID was five years ago. So Q1 will be an echo of what happened in Q1 probably 2020. What we need to look at is always the business as a whole on a long-term basis or a few years in a row and in particular in one year. So we do expect a year where we'll have a softer Q1 and then moving up to Q2, Q3 and Q4 for the male business.

And moving on to the second and last question on mail. Is there a better seasonality in H2 to explain the better results of mail in H2 this year?

I mean, usually we have a strong hardware placement on the second part of the year that obviously absorbs more fixed cost of the business and then obviously has a higher margin, both in percentage and absolute value in H2 than H1. It's something that you can... check and verify for i think about every year of the past of the past exercises that we did so we must be as well true for the coming years and there is no reason why it would change thank you lauren moving on now to lockers is package concierge already profitable in 2024 yes

I like this.

Okay, so moving on to the next question. Okay, so I think it's on mail, back on mail. Is there an important detrimental base effect at mail due to the end of the deregulation cycle in the U.S.? ?

So I mentioned that during some of the first slides, the decertification in the U.S. should end and should be completed for us in the first quarter. There could always be extension from the regulator, but this is not something that we expect at this time. And with that activity, naturally, there was also a lot of other campaigns and activities that we were planning on. So definitely, and we will move back to what we traditionally do in terms of customer acquisition, focusing on obviously taking customers out of the competition, which we do very well, and focusing on the renewal of existing days for 2025.

Thank you, Geoffrey. Moving on now to questions on financials. Why the net debt is increasing, whereas the free cash flow after acquisition is positive?

So if you look at the free cash flow after acquisition, it was, I think, 28 million euros in the slide. But on top of that, below that free cash flow, you have obviously a dividend. We paid for 22 million in August. We had a share buyback for close to 15 million, I think 14 million. Obviously, we'll get all those details in the URD later in the month of April. And after that, you have also some scope, 8 million of debt that we repaid, I think, for Frama. And as well as forex effect, because you have basically a closing USD dollar, USD forex. That is a dollar that is quite strong on the 31st of Jan 25 compared to 31st of Jan 24.

Thank you, Laurent. Next question. Do we have to expect every year 15 million euros of restructuring costs? Can you explain what is behind these restructuring costs? Do you reduce your headcount in the mail business?

So they are primarily linked to the mail business. But if I had to explain the 15 million this year, those are three main elements. One is about 4 million, and I mentioned that earlier during the presentation, the 4 million of restructuring costs that we had for Frama and that were planned. It was part of the acquisition plan. You have still some restructuring of lease, of real estate lease. We did reduce significantly our footprint, in terms of lease and we did further reduce it in 2024 so that's typically like Frama is not likely to happen again and the last portion again is mostly tied to the yearly, I would say, effort that we make on reducing, notably the mail team, to adapt this business that progressively is declining. And this year, as I mentioned earlier, mail has declined by 2.5%. And so the team also has reduced and part of this cost has come to restructuring.

Thank you, Laurent. Another question on our 2025 guidance. Why Q1 growth should be the lower point of the growth in 2025?

Sorry? Why is the Q1 expected to be a lower growth versus the rest of the year?

Geoffrey, you want to?

Sure. I think it's a little bit related to what we explained. So there's an effect on the male side because of the end of the decertification. And I believe also the echo of the lower activities in Q1 2020. So five years later, because at that time we placed less equipment. So we have less opportunities for renewal. And mechanically as a result, because those placement of hardware in 2020 picked up throughout the year in Q2 and Q3 and Q4, the same opportunities for us will echo five years later and be increasing in their size and giving obviously opportunities for sales guys to engage in the renewal and extension of the contracts. naturally so it's a it's a very mechanical view that being said we usually uh have a lower growth rate anyway by quarters q1 is always our smallest quarter across solutions um with q2 and more importantly q4 being the highest but as our revenue subscription and recurring revenue becomes bigger and bigger we could see that those difference actually by quarters starting to be lower and lower. And Q2 and Q3 will become closer and closer. Q4 still being the exception where we naturally, because of the renewal timing of most of our customer contracts that are signed annually, Q4 remains and will continue to remain usually the largest quarter for us. And then, sorry, a little more detail on seasonality. YQ4 is also a bigger quarter than Q1, and YQ1 is also the lowest one. On the locker side, we also have a seasonal effect on the usage, where in the last quarter of the year, usually because of the high seasons of the e-commerce activities related to the holidays. We have more usage on the platform, and we've seen that year after year, with a lower Q1 just on the usage side, has a much lesser impact in terms of materiality for the size of the group, but we always have a little bit lower growth as a result. And we have similar seasonality on the platform, on the software side as well, where the usage on the platform is differentiated by quarter. So that, generally speaking, explains why we, when we look cumulatively across the three solutions, why we have a Q1 that is expected to lower and build up from there, and Q3 and Q4 naturally.

So thank you, Geoffrey. And going back to lockers, how has evolved the revenues at your Japanese JV?

So we don't disclose, typically, the details of revenue by legal entity. Otherwise, it would be a long information to give. So we don't share the JV, typically, revenue evolution one year to another, except if it would have been significant to explain the total, which is that time.

Well, we could say that we have had new activities with obviously outside of just Yamato, a long-standing relationship and we continue to have them as a customer, as part of the JV, not just as a partner. But beyond the contribution from Yamato, we have opened new flows, new activities with new carriers, in particular, as I mentioned, Japan Post. But we also see a higher contribution from the C2C activities in this market.

Okay, so now moving back to the conference call, because I believe that we have a new question on the phone.

That's correct. We have another question coming from Jean-François Grandjean calling from OdoBHF. Please go ahead.

Yes, thank you. Good evening, everybody. Just one quick question regarding the local business. We see an acceleration of the business currently. Do you expect a continuing growth for this business in 2025-2026? And regarding the margin, do you confirm a minimum breakeven point for the EBITDA in 2025? And can we consider a positive EBIT level in 2026? Thank you.

So I can take the top and you take the bottom? Thank you. Good evening, Jean-Francois. Thank you for the question. So, yes, we believe and we expect that the return to growth that we have experienced in H2, 24, should continue and that the growth is expected to continue in 25 and beyond. Why? Because obviously we made and we shared with you a lot of different decisions and investments and evolution as well of the business model in the last two years to get the business locker to a steady growth and a steady recurring revenue growth where we've seen the share of the recurring revenue to increase in the total. And obviously with that, we also have more predictability. So we have this effect that naturally leads us to know that we expect higher recurring revenue in 2025. We have also renegotiated the contract in Japan, even though we don't disclose specifically the numbers. But we also had a negative effect that had continued as a result of that renegotiation of the contract up to H1-24. And we were sharing that we did not expect that moving forward. And the contribution on the top end was positive in H2 as well in that region. And most importantly, which is because it's the largest region out of the three, we also had some and we made some change to our businesses in the lockers in the U.S., that has impacted the level of booking and installation up to the first semester. We also had a first Q1, unfortunately, that was also a little bit impacted by the university segment that was disrupted by some of the political unrest and activities that you know over there. All those effects are either no longer the case or finished, and this is why we were expecting to be able to enjoy those benefits in Q3 and Q4. This is why you've seen that double-digit growth in H2. Compounded now with now the contribution, even though in terms of revenue volume, it's smaller, but its impact is bigger because of the combined effect of the increase in numbers of lockers that I mentioned on the slide in the UK. So we have more lockers on the ground and every day the entire network is also more used. So we are expecting in 2025 a repeat of what we're seeing in H2, which is more lockers to be installed, more being used. So we'll also expect a higher contribution to the growth coming from the European operation. So all those things combined and all things equal, we do expect the locker now to come back to a regular growth, both on subscription and the placement of hardware.

I will take the two next questions on EBITDA and EBIT if I hear well Jean-François. EBITDA positive for 2025, I would say that we were positive already in 2024, the top line will be favorable. We know that we have this perspective of 2026 to be at 10% in EBITDA for the local business. Very naturally, I would tell you that between 24% that is positive and 26% that should be at this 10% mark, we should be not in the middle, but at least positive and on the path to the 10%. Then you have another question, which is absolutely legitimate, which is the one on the EBIT. on which we don't guide, on which we did not guide during the capital market day, and for the reason that, obviously, this level of EBIT, and one big component, as you know, between the EBITDA and the EBIT, is the amortization of those tangible assets, notably the lockers that we are rolling out. Highly depends, basically, of how young is the rollout of the locker, because when you roll out a locker, it starts... The volume starts to get up, but the amortization is flat, I would say, across the lifetime of the locker. So in case we roll out many lockers just before the 2026 mark, the EBIT will change drastically because you're not getting the revenue as a mature locker would have. Hence, we don't guide on the specific EBIT metric. But over the long run, there is no reason why the EBIT does not follow the EBITDA trend.

And today we don't have any particular plan for any acceleration in 26 at this stage. Correct. Of installations of lockers.

Okay. So moving back to the written questions, now we have questions on acquisitions. So are you still looking for strategic acquisitions? If so, in which segments? Mail, digital, lockers?

That's a good question. And I will just take you back to what we have shared during our strategic plan, right, for the 11-2030. Our policy today is not to look at strategic acquisition, but look more at Bolton acquisition. When we say Bolton in terms of the size and the opinions it could represent, all our plans that we have shared with you for 2030 did not include and excluded any benefit from any acquisitions. So we do not need to do acquisition to achieve our goals. That being said, considering the leadership that we have on our market, naturally we remain opportunistic to be able to look at different opportunities when they arise. And that applies to the mail business. We did Frama a year ago because we felt that there was an opportunity for us to be able to have a strong return on this particular investment. And it was highly contributive to our mail business itself. after first year of integration. And we felt also that it was helping us to be able to provide a bigger opportunity for our digital transformation in terms of cross-sell into those mailing customer base. So we acquired, I think, roughly 30,000 customers. We looked at the same opportunity way when we had the opportunity to look at the acquisition of Packets Concierge in the US. This is allowing us to gain, obviously, a faster scale It's, you know, obviously we have already a large install base. We add three more thousand lockers and with strong complementary value and skills and knowledge from a great team that we have acquired on the Northeast where we were really not really penetrated. So we felt it was naturally also a logical move to consolidate these activities. And we have done the same thing on our digital activities. I can remind you of some of the acquisitions from Daylight. I believe it was the latest one, which was obviously a great e-forms capability that we have brought into the platform, particularly in the U.S. So we remain obviously opportunistic to continue to benefit from those opportunities if they arise. But again, we do not count on them to achieve our strategic goals.

Thank you, Geoffrey. Going back to lockers, what is your interpretation when you see Mondial Relay planning to open 3,000 lockers in France? Are you disappointed that they didn't give you their flows through your lockers?

It's a very good question. I'm glad I have the opportunity to be able to provide our perspective on that. I will not obviously comment on Mondial Relais' business per se, but I see Mondial Relais, which is owned by InPost, in terms of the type of players they represent, as a carrier that is just trying to smartly automate their own flows. And to do so, they obviously leverage Parcel Locker more strongly and more actively than other carriers. And in particular, in the case of their subsidiary in France of Mondial Relais, we are obviously quite happy and see this as a very positive sign that they are deciding to close down their Point Relais, their PUDO environment, and replace them with automated location with parcel lockers. Why? Because it speaks to the value proposition that we have advocated now in the last five years, that we believe that the parcel locker is the true and ultimate way to provide the best solution for all stakeholders, the consumers, but also the retail and the shops, because it's the best opportunity to actually bring back people into shops once they've made a purchase, depending on the location, obviously, of that parcel locker. And it also provides the benefit of scales and automation and cost savings to the carriers. only thing that will differentiate us is that we are not a carrier we provide a technological platform to all stakeholders the retailers the e-commerce players the c2c and to all carriers because we believe that it doesn't make sense for locker to not be fully utilized and usually what we see is those private networks whether they could be the one from Amazon or the one from InPost, at times could not be fully utilized. And therefore, we feel that once you put a dollar in CapEx and investments, you have a better chance to get a higher utilization when it's agnostic and shared by everybody. So coming back to a short version of that long answer, we see that as an opportunity because the French market had such a strong network of PUDO that was already in infrastructure to some extent previously developed that was not automated versus the locker. So it feels that a move from such a player can only increase the adoptions of parcel lockers in the French market for which we would be happy to be able to benefit from.

Thank you, Geoffrey. We have again a question on lockers. So how many lockers do you have in the US before the latest acquisition?

So Laurent may be able to help me. The package concierge acquisition only added 3,000 lockers. So we're actually thinking of more than 15,700. I have in mind between 14 and 15. Okay, so we were at around 12,000 in 24 and we added 3,000 from the acquisition.

Thank you, Geoffrey. And we have no further questions at this time, so we can close the call. So thank you very much for attending this presentation and for your questions. Our next call will be on the 3rd of June for our Q1 2025 sales release. In the meantime, we look forward to meeting some of you in the coming days during our shows. Thank you and have a good evening.

Thank you. Thank you.