Poste Italiane Spa

Good morning, everyone, and welcome to Poste Italiana's first quarter 2026 results conference call. In a few moments, the CEO, Matteo Versante, will take you through some opening remarks as well as a short update on the team offer. Then our 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 via phone or through our webcast platform. For any topics we won't be able to cover today, please do contact the Investor Relations team, who will be happy to follow up. With that, over to you, Matteo. Good morning, everyone. Our Q1 2026 results highlight a very strong start of the year and confirm the strength of our platform model. We delivered a record first quarter with revenues of $3.5 billion and a healthy portfolio. 8% year-on-year growth supported by all business units. On profitability, we achieved a record adjusted EBIT of 9.5 million, up 14% year-on-year, reflecting continued cost discipline in the current inflationary environment. Net profit reached 617, up 3% year-on-year. Commercial trends remained solid with 1.7 billion investment inflows coupled with strong momentum in postal savings and stable retail deposits. We continue to operate from a position of strength. The group balance sheet remained robust with our solvency ratio of 294% and a 341 million improvement in our net financial position generated in the quarter. which is 43 million more than in the first quarter of last year. Finally, digital payments once again grew above the market, underlying the strength of our platform and its ability to generate sustainable growth. On the back of this strong start of the year and a better-than-expected interest rate environment, we have raised our full year 26 adjusted EBIT guidance to 3.4 billion. We present our standalone 2026-2030 plan together with Q2 results on July 24th. Let me move for a second on team and give you an update on the tender offer. Over the past few months, we have further strengthened our conviction on the strategic rationale of the transaction and it's perfect fit with Poste Italiane platform business model. With our solid balance sheet and strong cash generation, we're uniquely positioned to support digital investment and accelerate strategic initiatives that will deliver growth. The merger of Poste Telco and team consumer businesses will create the number one mobile operator in Italy, kick-starting the next leg of domestic Telco consolidation. Importantly, financial and insurance services will remain the dominant profit contributor within the combined entity, representing around 82% of domestic EBIT and approximately 64% of the overall EBIT, including Brazil. The financial profile of the proposed transaction is extremely strong, with positive EPS impact from 2027 rising to double-digit accretion from 2028. Our guidance implied 26 DPS is confirmed and the dividend policy going forward will be accreting compared to the standalone scenario. Proforma leverage is expected at 1.4 times by the end of 2026 and steady decreasing going forward thanks to the strong cash flow generation of Poste Italiane and Team Brazil. The offer terms are compelling for team shareholders, implying a 17% true premium to the pre-announcement price and up to over 50% premium on unencumbered average prices, with 40% value sharing from expected synergies and an attractive stable dividend outlook. The combined entity will have performed a free flow of around 20 billion, enhancing stock liquidity with a highly diversified shareholder base. We are on track to close the deal by Q3 2026. Let's go back to post and group financials on slide five. We have posted for the fourth quarter For the fourth consecutive time, a record first quarter, with revenues at $3.5 billion. Top-line growth translates very effectively into profitability, as adjusted EBIT for the quarter reached $9.05, up 14% year-on-year. Net profit, excluding the team stake contribution, was $617, up 3%. On slide six, the healthy underlying revenue momentum across all our business segments continues into the new year. In mail parcel and distribution, revenue growth was driven by increasing parcel volumes. The anticipated decline in mail volume is effectively mitigated through ongoing repricing actions. In financial services, revenue increased by 11% year-on-year to 1.6 billion. supported by investment portfolio strength and a solid commercial performance. Insurance services deliver strong results across both life and protections. Revenue rose 6% in the quarter, reflecting stable CSM stock, coupled with higher release percentage. Post-pay services deliver solid growth across payment and energy, ahead of integration into the new financial hub. Telco customer base remains stable with the number of energy clients has now reached around 1.1 million clients. Let's go to slide seven and look at EBIT evolution by segment. Mail parcel and distribution reported an adjusted EBIT of 43 million for the quarter in line with our full year guidance. Financial services operating profitability is up 22% $318 million driven by overall strong revenue trend. Insurance services EBIT is up 4% supported by both life investment and protection. Finally, post-pay services double-digit EBIT growth to $153 million is driven by resilient top-line performance and effective cost management. Let's now look at some examples of how our platform business model is delivering tangible results. We operate a scalable, digitally-enabled infrastructure supported by in-house product abilities and a unique combination of physical and digital distribution. The platform allows us to add clients and revenues at near zero marginal cost while addressing structural everyday needs such as digital payments, secure digital identities, energy and everyday services. You can see here a few examples highlighting the strength of the platform. We have become in fact Italy's largest payment ecosystem, reaching 1.6 billion revenues in 2025 from 0.4 billion in 2017, with transaction values growing at a 16% CAGR from 2018 to 2025, increasing our market share. Energy is another clear example of how we leverage the platform. Built on an in-house cloud-native backbone, we're scaling the customer base at near zero acquisition cost, reaching one million clients in three years since launch and becoming an increasingly meaningful contributor to group EBIT. Finally, digital identities address a systemic national need. It has rapidly scaled to around 30 million users with monetization now accelerating as adoption deepens and upselling opportunities materialize. This is the foundation on which we continue to build the new Poste Italiane as the leading integrated platform company in Italy. I would like now to move to a more detailed update on the team offer. The slide illustrates why Post Italiana and TEAM represent the perfect strategic fit enabling future growth. Post Italiana already operates a larger platform in Italy, combining financial and insurance services, logistics and distribution, energy, and digital identities, supported by an unmatched physical and digital network. TEAM adds connectivity and tech infrastructure leadership, completing the platform with an iconic cap market brand, a large retail telco client base, sovereign digital capabilities, enterprise commercial excellence, and a market-leading mobile operator in Brazil. The industrial logic is very strong. Together, we serve the largest Italian client base. leveraging a unique distribution footprint made of post offices, digital channels, third-party networks, and team outlets, underpinned by critical physical and digital infrastructure, supporting the country's digitalization, connectivity, and data plans. From an earning standpoint, the combined entity remains firmly anchored to post-Italian core strength with financial and insurance services accounting for around 82% of domestic EBIT and continue to present the bulk of the group cash generation. At the same time, connectivity and digital services to public administration and enterprises represent a powerful growth opportunity. And let me spend now a moment on our super app and why integrating the team consumer offer is so powerful. With 17 million users and over 4 million daily active users, we already operate an unmatched national scale platform. The super app is designed around everyday services, from payment and banking to connectivity, energy, driving higher frequency and greater stickiness than traditional e-commerce models. Today, close to 80% of our app users own more than one product, double the percentage of non-app users. Integrating team premium offering and broad customer base into the super app accelerates engagement, unlock cross-selling, and strengthens the flywheel effect. Important, this is built on critical infrastructure, not loosely assembled partnership. The results is a unique trusted marketplace for daily essential services and long-term needs, enhanced by AI-driven orchestration and personalization across key life events, supporting sustainable growth and multiple monetization levers over time. To summarize, it is much easier to sell one more product to an existing client than winning a new client, and this is thanks to our digital plus physical seamless assistance to our clients. Let me now hand over to Camillo for the financial aspects of the proposed transaction, as well as a detailed overview of our Q1 26 financial results. Over to you, Camillo. Thank you. Thank you, Matteo. Let's briefly focus on the shareholder value creation, which is a key pillar of the transaction. Our ongoing analysis confirms the initial assessment of circa 700 million synergies, with 400 million coming from cost efficiencies and a further 200 million EBIT from incremental revenues. From an earnings perspective, the transaction is EPS-accreted from 2027 with double-digit accretion in 2028, implying compelling pro forma 2028 TE multiple of eight to nine times. On dividends, we reconfirmed the 2026 guidance-implied DPS with dividends paid also to the new shares issued as a result of the team offer with an accretive dividend policy going forward. Leverage remains low at around 1.4 times the WBDA after lease by around 2026 and declining thereafter with current credit ratings as of today confirmed by all three rating agencies. Let's move to a more detailed overview of expected synergies. On the revenue side, with TIM, we will add a premium connectivity offer to our platform and unlock powerful cross and upselling opportunities through Italy's large distribution network and our 4.2 million super app daily active users. We will also accelerate growth across enterprise and public administrations as we expand the tech services offer of cloud, cybersecurity, IoT, and agentic AI, as well as integrated one-stop shop for financial, insurance, cloud-sovereign solutions, and other services. Overall, we confirm more than $200 million of EBIT from incremental revenues. On the cost side, the in-depth analysis confirms around $500 million efficiencies. The merger of Poste Telco and Team Consumer enables OPEX and workforce rationalization. The deal will generate efficiencies from digital and technology integration, optimization of the distribution networks and real estate footprint, as well as economies of scale on advertising and procurement costs. Additionally, the relaunch of our insourcing program will provide further structural cost benefits. Post-investment grade rating will allow for an optimization of the combined entity's funding costs. We expect one-off integration costs of around $700 million pre-tax, mainly over 2026-2027. Moving to slide 14. This page illustrates how we see the true premium offered to team shareholders and why we believe our value proposition is compelling. Considering both the cash component of the deal as well as the expected value of team shareholders' share of the combined entity, including synergies, the true premium embedded in our offer is 17%, calculated on a pre-deal spot basis. The embedded premium rises up to 50% if calculated on an unencumbered average price, as team shares have risen by around 110% since our first investment in February 2025. Importantly, our offer to team minority shareholders embeds a 40% sharing of the value of the synergies in line with the market standard 50-50 split when considering post-Italiani already owns 20% of team shares capital. Overall, this is a transaction structure to deliver an attractive premium, transparent value sharing, and long-term upside to all shareholders. Let's move to slide 15 for an update on the transaction timelines. We announced the deal on March 22nd, followed by the filing of the exchange and cash offer documentation and regulatory submissions on April 10th, both completed as planned. On June 18th, we will hold an EGM for the capital increase proposal. On July 24th, we will present post-Italian standalone 2026-2030 plan alongside with Q2 and H1 2026 results, providing full transparency and enabling a more informed assessment of the value of the equity component of the consideration. By the end of July, we expect Bank of Italy and Consul approvals along the offer period to start, with closing targeted for the end of Q3 2026. Overall, execution is progressing smoothly and in line with our stated timeline. Let's now move to our Q1 financial results from page number 17. In May, parcel and distribution revenues totaled just over $1 billion, up 6% year-on-year. May revenues of $5.5 million are down by 3%, in line with the trend that we anticipated for full year 2026. Pulsar revenues accelerated a remarkable 15% to $4, $5, $3 million, driven by market share gains across a diversified customer base and cost of logistics development. On the logistics front, we announced a JV with Benetton Logistics, leveraging our logistics and e-commerce leadership to create a scalable platform capable of attracting new customers and supporting profitable growth for the group. Distribution revenues from other business units are up 7% in the quarter, driven by strong commercial momentum and active portfolio management concentration in Q126. Adjusted EBITDA 43 million in Q126 is one in line with the full year guidance. Let's look at volumes and tariffs on slide number 18. Parcel volumes were up 15%, supported by continuing market share gains across customer segments. 43% of items are now delivered via the postal network, up 3 percentage points versus last year. Looking at parcel pricing, the average tariff remains broadly stable as volume growth is spread across customer segments and growth in lower-priced items comes with a lower unit cost to deliver. Moving to mail, the volume trend is in line with expectations down 8%, whilst the higher mail average tariff reflects ongoing repricing actions across both regulated and market products. Moving to financial services with gross revenues for the quarter at 1.8 billion, up 8%. Net interest income came at 658 million Q126, reflecting lower rates on variable portfolio versus Q125, while marginally ahead of 2026 guidance, as a result of an improved interest rate environment towards the end of the quarter. We expect this We expect this will provide more meaningful support to NII in the coming quarters. The $166 million active portfolio management revenues realized in the quarter represent most of the capital gains expected for the year. Postal saving distribution fees are stable at $440 million and supported by improving net inflows. Consumer loans fees reach $66 million. Asset management revenues are up 27% to $55 million in Q1. benefiting from higher assets under management. Finally, adjusted EBIT came in at 318 million, up 22% reflecting the positive revenue trend. Moving to slide 20, TFA has reached 606 billion, up 5.3 billion in the three months from the end of 2025. Looking briefly at each component, we reported strong 1.7 billion net inflows in investment products, confirming the positive trend in life insurance, with significant contribution from multi-class products as well as in asset management. Deposits were up, benefiting from higher balancing from PA clients and resilient deposits, retail deposits at 59 billion, confirming the stickiness and loyalty of our customer base. Improved postal savings net outflows were driven by higher flows in postal bonds. Moving to slide 21. Insurance service revenues amounted to $469 million in Q126, up 6% year-on-year. We continue to have positive net flows in Q126 with a significant contribution from multi-class products. Our improving lapse rate down to 7% is driven by normalizing market environment and lower client portfolio rebalancing activity. In Q126, at around 35% of our lapses have been reinvested into new life products. Life investment and pension revenues are up 6% to $4 to $3 million in Q1, driven by a growing CSM and higher release. Protection revenues are up 9% in the quarter, supported by higher growth return premium, up 6% to $3.92 million in Q1, and the market leading combined ratio. Adjusted EBITDA of $392 million is up 4% compared to Q125, supported by both life investment and protection. Net profit of $265 million reflects the lower free capital yield due to the additional remittance to the parent company and the temporarily higher ERAP tax rate. On slide 22, we show the CSM evolution in the quarter. Normalized CSM growth is positive at 2.9% annualized, with a strong increase in new business value and expected return more than compensated in the quarter release. Group CSM at the end of the quarter is at $13.8 billion, providing strong visibility on the division's sustainable profitability going forward. Importantly, both the CSM and the equity of our insurance business have grown in the quarter. Post Evita's Group Solvency Ratio was 294 at the end of March 2026, well above the managerial ambition of around 200% through the cycle. This ratio already embeds the accrual of the 100% net profit remittance to the parent company. The ratio remains solid, with the movement mainly driven by negative impact from economic variances due to high risk-free rates and spreads, while the impact external capital generation of the business fully covers the foreseeable dividend impact. Moving to post-pay services slide number 24, where solid revenue and EBIT progression continues ahead of integration into the financial hub. Revenues rose by 7% year-on-year to 4 to 5 million in Q1 as our unique everyday ecosystem continues to drive top line and profitability growth. Strong payment revenues at 297 million are up 5% in the quarter, supported by higher transaction value, up 10% year-on-year, and growth in total number of ecosystem transactions up 14%. Their core revenues are stable in Q1 at 82 million, thanks to solid client acquisition dynamics. The migration to the team network infrastructure has been completed in April. Energy revenues reach 46 million in the quarter, Driven by the expansion of the customer base, now 1.1 million clients. Top-line performance and effective cost management drove a strong 15% adjusted EBIT growth to 1.53 million in Q1. Let me now give you a brief overview of PostItaliana's telco business. Launched as an MVNO in 2012, the Telco business is now the fifth player in Italy with a total of 4 million customers with a 6% market share in mobile. Our Telco client base is extremely loyal with a 6% to 7% churn rate, well below market levels. 2025 revenues were 3 to 8 million, while in Q1 26 they reached 82 million. Profitability is meaningful and improving, contribution to Group C but implying a 25% margin. The business operates with a very lean structure, leveraging our nationwide physical distribution, network, and digital channels, including the super app. Against this backdrop, the envisaged possible combination of post-telco business with team consumer creates the number one mobile operator in Italy and effectively kick-starts the next leg of domestic telco consolidation. Since the end of 2025, the average headcount has fallen to just over 119,000. Importantly, the value added per FTE continues to improve by 7% and €93,000 per FTE. HR costs per FTE are up 2% to €48,800 per FTE as a result of higher variable compensation and labor agreement salary increase. Moving to slide 27, HR costs increased marginally by 1% to over $1.4 billion, mainly driven by $23 million of additional costs from higher variable compensation and labor agreement salary increase. In this quarter, ordinary HR costs on revenues are down to 39%. Non-HR costs increased by $116 million year-on-year, Fixed costs were up due to the concentration of marketing and advertising costs in the quarter. Variable costs are up 66 million reflecting business growth dynamics. DNA are up by 18 million in line with the increasing investment driving our continued transformation. In general, our focus on cost and capital discipline across all divisions remains at the shop and protecting the bottom line, profitability is a priority. Thank you for your time. Let me hand over to Matteo Ferrera-Papa. Thank you, Camillo. To conclude, Poste Italiana is delivering record results with healthy growth, rising profitability, and a very solid balance sheet, validating the strength of our platform business model. Looking ahead, in light of our strong Q1 results and an improved interest rate environment, we have raised our adjusted EBIT guidance to 3.4 billion for the year. Against this backdrop, we are even more convinced that the team transaction is the natural step in our platform evolution. Team adds connectivity and technological leadership, completes our offering with an iconic premium brand, and enables us to fully unlock the value of our physical digital ecosystem. The deal is financially disciplined. EPS and DPS are creative, also thanks to material expected synergies and is fully consistent with our capital and dividend framework. Execution is on track and the closing is expected by Q3 26. We're entering a new chapter of our journey, shaped by the progress we achieve and driven by a clear long-term ambition. On July 24, we will be unveiling our strategic 2026-2030 standalone plan alongside our Q2 26 results. I look forward to seeing you there or even before in our roadshow. Thank you, and over to Giuseppe, please. Thank you, Matteo. We are now ready to start the Q&A session. As a reminder, to ask a question, please press star 1 and to remove yourself from the question queue, please press star 2. Please try to limit yourself to two questions. The first question we have today is from Antonio Reale, Bank of America. Please go ahead, Antonio.

Thank you. Good afternoon. It's Antonio from Bank of America. I've got a couple of questions and one clarification, if I may. The first one is you've upgraded your EBIT guidance for the year up to 3.4 billion. And I understand you'll be presenting your standalone plan targets in Q2. But if you could give us a bit more color around sort of the moving parts driving this and where you think you see better commercial momentum within the group, that would be my first question. My second one is a follow-up, a clarification, I think, on your dividend remarks. I think if I remember back in February, you got it for a net profit of 2.3 billion with a payout that was at least 70%. which in your existing share count, it implies something like 1.3 euros dividend per share or so, which will still be up year on year. And I think this is broadly in line with consensus expectations. Now, I also think you've said that you expect this number to be growing consistently with the accretion that would derive from the deal. I just want to make sure I've understood this right. You're sticking to a growing DPS ratio. even after accounting for the new share count, which you need to issue to fund the Telecom Italia acquisition. Did I understand that right? And if you could elaborate, I think it's an important point. The last question is really on your synergies on the Telecom Italia deal. You've talked about 700 million pre-tax, of which 500 million cost synergies from year two and 200 million in higher revenues from year three, if I look at your slide 13 correctly. You've given us good details on this slide. Maybe you can sort of work us through and tell us where you would see any relevant upside that is not included in these numbers. Thank you.

Thank you, Antonio. I'll take the first question and then hand it over to the CFO. I think we have... a strong momentum in our core business, the financial business. We have posted the first quarter with strong retail investment flows and I think this is there to stay for this year and obviously it will be a target for the plan. I would say that the over the plan up to 2030 the also energy business will also finally give a very meaningful contribution to the EBIT base of poste and then I think the other very important direction we're taking is with the consolidation of our payment business into Banco Posta and the ambition to present to the market a unified financial services segment including insurance. We have started more than a year ago a journey giving on the three segments a unified leadership that will break some of the normal internal segment and will allow us to present a real client center offering for financial services. And finally, before I hand over to Camillo, we will keep the evolution of our logistic presence. We reach almost 50% of our parcels delivered by lettermen, the 28th plan was targeting two-thirds so you know i'm curious to see where you know we will be able to commit for 2030 but that's another you know a big transformation step allowing our lettermen that day by day has less mail to deliver to be busier and busier with Parcel and you know this quarter 15% growth on Parcel give us a lot of confidence that we are in the right direction. We're gaining market share in B2C for the first couple of years so we started gaining market share in B2B and finally, you know, we've never seen it in poste, we start to see a meaningful growth on outbound products since we did our strategic agreement with DHL, we, you know, since two years we have a product, we have put together commercial focus on this. and finally we start to see numbers coming through. Please, Camillo, on dividend. Yes, so I'll start with 2026 and then I'll comment on the second part. With regards to 2026, yes, we had given guidance of 2.3 billion for 2026. And we also said at the time that the expected dividend was going to be within the range of 125 to 1.3. I think that the guidance that we gave, the increased guidance we gave at operating profit level gives us space to be very confident to be at least at the end of that range. With regards to the second question, which is dividend policy going forward if the transaction goes ahead, the CEO did guide towards single-digit accretion for EPS and double-digit accretion EPS for 2027 and 2028, respectively, and we expect the dividend to follow that same direction. And then there is... The third question on synergies. Yes, and now we talk about synergies. So with respect to synergies, the number that we gave on the 22nd of March was 700 million euro. That was the result of some outside-in work that we did within POST with a very small group of individuals involved. I think that since then we have done a massive amount of work internally with different stakeholders with different workstreams involving both the revenue side and the cost side involving every corporate function of the group. And at this point, we can say that we feel very comfortable of our ability to deliver that level of synergies. Obviously, there is a marginally different mix compared to what we expected initially, but the total is confirmed at least as a base.