Poste Italiane Spa

Good morning, everyone, and welcome to Poste Italiana's third quarter and nine-month 2025 results conference call. Shortly, our CEO, Matteo De Fante, will take you through some opening remarks, and then the CFO, Camillo Greco, will cover the financials. As usual, the presentation will be followed by a Q&A session where you can ask questions either by phone or through our webcast platform. And for any topics we won't be able to cover today, please do contact the investor relations team. We'll provide any clarifications you might require. With that, over to you, Mattel. Good morning and thank you for joining us today for our Q3 in nine months, 2025 results call. As we celebrate 10 years since going public, we're proud to report another record-breaking quarter. reflecting sustained growth as we approach the end of 2025. The positive momentum established in the first half of the year has continued in the third quarter. We remain focused on executing our strategic plan and we're fully on track to achieve our updated 2025 guidance. In the first nine months, we delivered record results across group revenues, adjusted EBIT and net income. Each business unit contributed to a robust 4% earnings increase in top line, reaching €9.6 billion in total revenues. Adjusted EBIT grew by 10% to just over €2.5 billion for the period, and net profit reached €1.8 billion, representing an impressive 11% compared to the previous year. Since the start of the year, we have seen solid net inflows in investment products, confirming strong commercial performance in insurance products and improved net inflows in postal savings. I'm pleased to report that the migration of our clients to the super app has been successfully completed. To date, the app is used by 50 million clients with 4.1 million daily active users in November 25. which is more than our previous apps combined and the highest level among Italian apps. Our balance sheet remains extremely solid, with our insurance solvency tool ratio at 312%, well above our stated ambition of 200%, providing us with significant financial flexibilities. On November 26th, we'll pay a record interim dividend of $0.40 per share, totaling $518 million, up a remarkable 21% from last year. I'm pleased to share that our initiative to unlock synergies with teams are currently underway. At the end of September, we launched Team Energia, powered by Host Italiane, in more than 70 team retail outlets. This marks a significant step in combining the strength of both organizations, expanding our retail customer reach through TEAM's network and post-Italiana trusted energy offering. In the coming months, we will continue the strengthening of the Servigi partnership and roll out additional joint initiatives to deliver synergies and value creation for all stakeholders. While our investment in TEAM remains strategic, We are also pleased to note that the value of our stake has nearly doubled, now at 1.1 billion euro. These results underscore the strength of our business model, flawless execution, and our ability to adapt and grow in a dynamic environment, all while maintaining street cost discipline. Let's move to group financial results on slide four. also delivered a very strong performance in the third quarter and first nine months of the year. These were the best for Q3 and nine-month results ever reported by the group in terms of revenues, EBIT, and net profit. Focusing on the nine months, revenues at €9.6 billion, up 4% in a year, adjusted EBIT at €2.5 billion, and net profit at €1.8 billion. up a remarkable 10% and 11% respectively. In the quarter, we achieved record group revenues at 3.2 billion, up 4% year-on-year. Adjusted EBIT reached €856 million and net profit is at €603 million, up 8% and 6% respectively. On slide five, the strong revenue momentum across all our business segments continues into the year. In mail parcel and distribution, revenue growth was driven by higher parcel volume and supported by increasing client diversification. The anticipated decline in mail volume is effectively mitigated through ongoing repricing actions. In financial services, revenue increased by 5% year-on-year to $4.2 billion, supported by NII and solid commercial performance. Insurance services deliver strong profitability in both life and protection segments. Revenues rose 10% in the nine months, reflecting stable CSM and higher release. Post-EPA services' unique and integrated ecosystem of everyday services deliver sustainable revenue and profitability growth. The telco customer base remains solid and stable, while the number of energy clients has grown to approximately 950,000, on track to reach the target of 1 million clients by year-end. Team Energia, powered by Poste Italiane, launched on September 29, will provide an additional boost to this business. Let's go to slide six and EBIT evolution by segment. Mail parcel and distribution reported an adjusted EBIT of 137 million for the nine months in line with our full year guidance. Financial services operating profitability is up a sound 23% in the nine months to 790 million euros driven by NRI and overall stronger revenue trends. In the nine months insurance services adjusted, EBIT is up 9% to $1.2 billion, supported by both life investment and protection. Finally, post-pay services EBIT growth of 9% to $416 million is driven by resilient top-line performance, significantly outperforming the market. Seven, let's take a closer look at what we're building through our strategic partnership with PIMS. Several work streams are underway to maximize synergies between the two groups. We have signed a contract that will allow the migration of post-immobilized NVNO operations to the T-Mobile infrastructure starting in Q1 2026. On the commercial front, we have reached the first significant milestones with the launch of Team Energia powered by Poste Italiane, now available through more than 70, 50 team retail offices with very encouraging results. Looking ahead, we are actively working on additional cross-selling opportunities on both retail and SMEs customers, including in the areas of insurance and payments. At the same time, we're exploring cost efficiency initiatives through joint procurement. We will communicate these developments to the market in a phased manner as relevant agreements are finalized. Post Italiana is taking a decisive step forward in digital innovation through a new joint venture with Team Enterprise dedicated to cloud-related IT services. This partnership will drive Italy's cloud transformation, harnessing the potential of generative AI and open source technologies. Our mission is to accelerate the nation's digital evolution, empowering public administration and private enterprises with secure and advanced solutions. The joint venture will deliver services across both leading public cloud platforms and several national infrastructures. With that, let's look at the detail of the financials. ...3.8 billion in the nine months, up 3.2% respectively. Main revenues, $480 million in Q3 and at $1.5 billion year-to-date, are in line with our fiscal year 2025 guidance presented in February. Passer revenues were up 10% to $420 million in Q3 and up 8% to $1.2 billion in the nine months, supported by all customer segments, which continue to improve our revenue diversification. Distribution revenues from other business units are up 3% in the nine months, reflecting positive commercial trends. Adjusted EBIT at $137 million year-to-date is in line with the guidance provided for the full year. Let's look at volume and tariff on slide 10. Parcel volumes are up a solid 14% in Q3 and 12% in the nine months to 245 million items. In Q3, we also increased the portion of items delivered via the parcel network to 45%, up five points versus last year, leading to a positive contribution to the overall profitability. Looking at pricing, the average tariff was impacted by higher volumes with lower pricing and unit costs as we continued to have high volumes in second-hand items and boxless returns. On mail, the volume trend is in line with expectations, showing a slower volume decline in Q3 compared to the first half of the year. The bulk of the volume decline remains concentrated on lower value items, such as direct marketing and unregistered mail. We continue to compensate the anticipated volume decline with ongoing repricing actions across both regulated and market products. Moving to financial services on slide 11. Gross revenue for Q3 landed at $1.6 billion and just shy of $5 billion for the nine months, up 3% and 6% respectively. Net interest income came at $669 million in Q3, up 3%. and at 2 billion year-to-date, up 6%, benefiting from higher average deposits and lower cost of funding. Postal savings distribution fees amounted to 443 million in Q3, up 3%, and 1.3 billion, up 5% year-to-date, supported by improved gross inflows driven by commercial initiatives as well as longer maturity of products sold. Consumer loans distribution fees reached $63 million in the quarter and $2 or $3 million in the nine months, both up 15%, driven by higher margins confirming the strength of our multi-partnership model. Asset management fees came in at $47 million in Q3 and $136 million in the first nine months, impacted by a different product mix with lower upfront fees, while AUM continued to grow thanks to positive net flows. Finally, adjusted EBIT came in at $262.3 million, up 16%, and $790 million in nine months, up 23%, compared to 2024, on the back of strong revenue performance. Moving to slide 12, TFA has continued to grow, reaching $6.1 billion, up $10 billion from the start of the year. Let's look at each component. We reported strong 2.3 billion net inflows in investment products, confirming the positive momentum in life insurance, where net inflows total 1.2 billion. Postal savings net outflows improved in Q3, supported by strong performance at 100-year anniversary postal bond. Deposits were up, benefiting from stable retail balances at 58 billion and higher, though more volatile balances from PA clients. Moving to slide 12. Moving to slide 13, insurance services revenues amounted to $446 million in Q3, up a strong 12% year-on-year, and $1.4 billion in the nine months, up 10%, supported by both life and protection. In Q3, we continue to report positive life net flows, driven by strong GWP, up 7% year-on-year, with an increased share of multi-class products, now with over 70% of life investment and pension GWP. Our advisory offering, built in the context of the new commercial service model, is leading to proactive rebalancing of our clients' portfolios, resulting in a lapse rate of 8.3% in the quarter, more than 50% of which have been reinvested into new, live investment and pension products. Life investors and pension revenues are up 11% to $393 million in Q3 and up 10% to $1.2 billion year-to-date on the back of stable CSM stock and higher CSM release. Protection revenues are up a solid 11% in the nine months. to $147 million, supported by higher gross return premium and up 14% in the quarter. Combined ratio stood at 83%, while we confirmed our fiscal year 24 guidance of about 85%. Adjusted EBITDA, $1.2 billion in nine months, up 9% compared to 2024 and up 11% in Q3, reflecting top-line trends. Our stock of CSM is stable at 13.7 billion, driven by strong new business and positive financial variances. This provides us with strong visibility on the future profitability of the business. Normalized CSM growth stood at 3.5% on an annualized basis, up from 2% in 2024, with strong increase in new business value and expected return more than compensating the release. Let's look at the solvency ratio evolution on slide 15. Post Evita Group Solvency II was 312 at the end of September and well above the managerial ambition of circa 200% of the cycle. This ratio already includes the impact of foreseeable dividend based on 100% net profit remittance. The marginal reduction in the ratio was mainly related to economic variances such as higher risk-free rates. Our Solvency II ratio currently stands between 305 and 320 percent. Moving to PostePay service on slide 16. The PostePay ecosystem continues to represent a sustainable engine of growth, innovation, and customer engagement for the group. Revenues rose to 409 million in Q3 and 1.2 billion in the nine months, up 3 and 5 percent respectively. Payments are up 1% to 298 million in Q3 and are up 2% to 878 million in the first nine months, supported by transaction value growth of 10% in the quarter and 9% year-to-date, offsetting shortfall due to EU law change. We are significantly outperforming the market and growing our market share in a competitive environment. Net of instant payment shortfall, payment revenue growth is at around 5% in both the quarter and the nine months. Telco revenues are stable in the quarter and are up 1% in nine months to $247 million, supported by our resilient client base and the fiber offer. Finally, energy net revenues total $86 million in nine months, reflecting an increased customer base that now stands at around 950,000 clients and comfortably heading towards our 1 million client base target by the end of the year. Adjusted EBIT grew a robust 6% to $140 million in Q3 and 9% to $416 million in nine months, underpinned by solid top-line performance and in line with guidance. Since the start of the year, our average workforce has remained just under 120,000, consistent with the level of full year 2024, with hirings broadly offsetting excess of circa 6,000 FTEs. Our workforce productivity improved year on year as the growth in value added per FTE exceeded the increase in HR costs per FTEs. Moving to group HR costs on slide 18. At the end of September, ordinary HR costs increased by 2% to just under 4.2 billion due to higher FTEs. The new salary increase affects September 1st as part of the latest collective agreement and variable compensation. In the nine months, ordinary HR costs and revenues are down to 39% with improving operating leverage. Moving to slide 19, non-HR costs increased by $168 million year-on-year, mainly driven by $1.2 million additional variable COGS reflecting higher business volumes. Fixed COGS are basically flat, while DNA are up by $54 million in line with increasing investments driving our transformation. In general, our focus on cost and capex discipline across all divisions remains a little sharp, and protecting the bottom line profitability, as well as cash flow, remains our top priority. Thank you for your time. Let me hand over to Matteo for a wrap-up. Thank you, Camillo. Following five straight quarters of record performance, we have once again achieved outstanding results. with nine months revenues of €9.6 billion, up 4% year-on-year, and adjusted EBIT rising 10% to €2.5 billion. On the strength of these results, we can confirm that we are absolutely confident of hitting our €3.2 billion adjusted EBIT and €2.2 billion net profit for 2025 guidance. We continue to build on solid momentum with a clear commitment to creating long-term value for our stakeholders. Our focus remains on driving revenues growth and diversification, further improving our cost and capital efficiency, and maximizing the potential of people, technology, and data. We continue to maintain a robust balance sheet with low leverage and a solvency-to-ratio of 3.312%, well above our managerial targets. This strong financial position provides us with ample flexibility and underpins our confidence in a competitive dividend policy. As a result, we're distributing an interim dividend of $0.40 per share up 21% year-on-year, totaling nearly $520 million to be paid to shareholders on November 26th. I'm pleased with the progress of our collaboration with TEAM, which will generate meaningful synergies for both groups. The first of several projects, TEAM Energia Powered by Poste Italiane, was launched in September. It's now available through more than 750 TEAM outlets. This partnership will deliver significant value for all stakeholders in the future. Once again, these excellent results are a testament to the dedication and professionalism of our people, whose daily commitment remains at the heart of our success. With that, thank you for listening, and Giuseppe, over to you for the Q&A. Thank you, Matteo. And let's start with the Q&A session. To ask a question, please press star 1. And to remove yourself from the question queue, please press star 2. And please try to limit yourself to two questions. The first question is from Tommaso Niedo at Kepler. Please go ahead, Tommaso.

Hello and thank you a lot for taking my questions. The first one is on the super app. So the migration of the super app has now been completed with 15 million users and over 4 million daily active users, which is kind of impressive. So could you elaborate on the next phase of that in terms of cross-selling across all your main verticals, I don't know, like payments, insurance, energy, and any more color would be highly appreciated. Then on the speed, you currently manage almost 30 million digital identities and it's still growing. So if you can give us any update on a potential introduction of a fee-based model. similar to other providers. So basically, if you could update us on your latest thinking around speed monetization. And just a third one, very, very quick on insurance. If you can give us more color on the negative operating variances that impacted the CSM evolution this quarter. So was it mainly different lapses assumptions? Thank you a lot.

Thank you, Tomas. I will take the first two and leave Camillo for the third one. Yes, we're very proud that moving clients and users from one app that you close into a new app is a risky exercise because there is an attrition rate percentage of clients that you know don't get used to the new app so you know doing this migration process in a smart and organized way is crucial in terms of not losing business and 4.1 million daily active users, which is almost the double of the second Italian player on our data, is a level of daily active users that we never reached in the past, not even adding the daily active user or the single app we had in the past. So that's good. In terms of the revenue and the business impact of the new app, we have basically an increase of the... diversification and cross-selling that is coming with the use of the app and that cross-selling is increasing in a very meaningful way our revenue and margin figures so we don't disclose you know our cross-selling indices, but I can tell you that, you know, a one additional product, so moving by one, our cross-selling index creates a multiple of revenues additional to the firm. So this is really the way forward. I'm very happy with that. Second question on speed, yes. Since several months, several key identity providers under speed have started asking a limited amount of money to users on an annual basis, something in the range of 6 to 7 euro per year per user. And that's something that we are observing in the market and will make our consideration before we announce the plan in 2026. Over here. But we're a strong believer of speed. We believe that speed not only is serving over 1 billion cases of utilization per year in public administration service providers, so that has become the standard standard. and very effective standard with very good use cases for public service provider. But as you know, there is also the use of speed by private service provider that is increasing is also creating meaningful and increasing revenues to post. But we believe that there is a huge potential in the system to double up from public to private service providers. With respect to the last question on operating variances, the amount was driven by three different factors. The first was the higher degree of lapses, where, however, I want to remind the audience that half of that amount is of self-help as we moved customers to more services. So the market-oriented products are in multi-class. So there is half of the collapse rate that is associated to data around 4.3. The second point that impacted operating variances is an update of the mortality tables. And the third point was a time value of money related to the upfront payment for the insurance provider of stamp duty tax.