Quadient Sa Unsp/Adr

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.