Sopra Steria Group Un/Adr

Good morning, ladies and gentlemen, and welcome to this quarter one 2026 revenue announcement for the first part of the conference. Participants will be able to listen only during the Q&A session. Participants can ask a question by dialing hash five on your telephone keypad. I'll now hand the floor to Rajesh Krishnamurthy, CEO. Over to you. Good morning, ladies and gentlemen. Welcome to this conference call to comment Soprasteria's revenue in Q1, 2026. I'm here with Etienne Designeaux, Group CFO, with whom I will lead this session. I'll start with a few general comments on the quarterly performance. Next, I'll go over the figures for our four reporting units. Finally, we'll finish with a Q&A session. Revenue in Q1 2026 stood at 1,463,200, growth 3.4% when compared with Q1 last year. At constant exchange and scope, growth in revenue was 3.2%. As previously announced, The revenue in Q1 2026 includes the first significant impact of the conclusion, which has been planned for several years and announced in 2023, of the SST program with the spider banks. The negative impact, which is not recurring, of the conclusion of this program was 1.2 points over the quarter. Thus, excluding the impact of the SST program, Underlying organic growth for Q1 was 4.4%. Q1 2026, this confirms the rebound in business activity which we observed as of Q4 2025. Business momentum improved across most of our geographies. All the group's reporting units, France, the UK, Europe excluding SFT and Solutions, saw growth in the first quarter. Even if the basis for comparison was favourable, Q1 2024 saw a contraction of 4.9%, but we've seen an acceleration in the aeronautics sector, which showed growth of 15% over 12 months, and in defence, security and space, which posted growth of 7% over 12 months. The consulting business confirmed its rebound with organic growth of 5%. Business in Q1 2026 highlights that there is significant demand from our customers to implement transformation through technology. We've seen growing interest in terms of matters linked to AI, cybersecurity, and digital dependency. These are many topics where Soprasteria is well positioned. Now I'd like to suggest that we move on to the detailed analysis of the performance by reporting unit. Let's start with France. In France, revenue stood at 650.1 million euros. Organic growth in revenue experienced a clear acceleration, so plus 7.2% over 12 months, compared with the fourth quarter of 2025, which stood at 1.6%. With the exception of energy and telcos, which were still contracting, all the reporting units' verticals demonstrated positive growth. The most buoyant verticals were transport, aeronautics, public sector, with growth rates above 10%. Defence, security, space and financial services also experienced sustained growth between 5% and 10%. Now for the UK. In the UK, revenue stood at €220 million. Organic growth was 4.2%. The basis for comparison was particularly favourable because in Q1 2025, there was a contraction of 10.1%. This being said, the NHS FBS platform business was solid. So with the next-gen business process services services, especially for recruitment, private sector and then financial services. For Europe, excluding SST, the division returned to growth in this quarter after having experienced an average quarterly contraction of around 2.6% in 2025. Organic growth was thus 1.6%. Italy, Switzerland, Scandinavia and Spain demonstrated dynamic growth Germany, Belgium, and the Netherlands posted a moderate contraction, but a lot less pronounced than in the fourth quarter of 2025. We're expecting ongoing improvement and a return to growth in these three countries over the coming quarters. SFC posted revenue of 31.9 million euros, compared with 47.7 in Q1 2025, so this is aligned with expectations. In total, including SFT, Europe generated revenue of €507.8 million, or an organic contraction of 1.6%. Now for solutions. Solutions generated revenue of €85.3 million, organic growth of 0.9%. The business focusing on human resources, which represents two-thirds of the unit, activity was stable, whereas the property management business was very buoyant. To conclude, Q1 2026 confirms the return to growth in our business that started in the fourth quarter of 2025. Our customers are still investing in a technology-driven transformation, and they're displaying a growing interest in matters linked to AI, cybersecurity, and digital dependencies. We've got a significant exposition to strategic sectors like aeronautics, defense, space, public sector, and financial services, which represents 70% of revenue. And this is where there's significant investment momentum. We're drawing on an entrepreneurial model, which makes us agile, and where most of our work is carried out under a fixed price or an outcome-based agreement, so 60% of revenue at the end of 2025. And this enables us to ensure that we share the value created by our solutions with our customers. The environment is quite uncertain, even more so since the end of February, but our profile gives us a high level of resistance with an exclusively European presence, lack of exposure to sectors like industry or goods exporting companies, with the exception of aeronautics, strong foothold in public and parapublic sectors, and a commercial strategy focused on close customer relationships and our top 100 customers. So based on this, we're confirming our goals for 2026 in terms of organic growth in revenue, operating margin, and cash generation. while recalling that quarterly seasonal impacts will be as pronounced as in 2025. I'd now like to suggest that we open the Q&A session. If you'd like to ask a question, please dial hash 5 on your telephone keypad. Please limit yourself to two or three questions max. The next question is from Nicola David at Oddo. Your line is open. Over to you. Good morning, Rajesh. Good morning, Etienne. Good start to the year. I've got two questions which are linked. The first is, last February, you were expecting Q1 to be aligned with the annual guidance. But finally, here your Q1 is above your guidance. Where were the positive surprises? when compared with the initial expectations. And then in February, you were expecting excluding SFT. Obviously, that's going to increase over the next quarters. This implies an increase in growth, excluding SFT over the coming quarters at growth level. So are you confirming that we can see an acceleration in growth, excluding SFT at group level over the next quarters? Thank you, Nicola. So we don't give quarterly guidance. We gave an indication at the start of last year. That was an exception. With starting the year aligned with our forecast, you've obviously understood the annual guidance. In some geographies, Germany, Netherlands, Belgium, we're expecting an acceleration in growth rate. compared with what we've seen at the start of the year, so an improvement on last year as well. So the business is volume related than France, UK. We're not necessarily expecting acceleration here, but we've got a favorable basis for comparison in the first quarter, but that will be less so in the coming quarters. And then with SFT, obviously you've got in mind, We've got the deflation impact, which is going to slow down. Obviously, Rajesh gave you the revenue, a few 10 million euros in the first quarter. Obviously, that's going to be eliminated. It'll be roughly 5 million by quarter. And then, obviously, Rajesh has also reminded us that the environment is highly volatile. So today, we're focused on our annual guidance target of growth between 1% and 2%, excluding SFC 3% to 4%. Thank you. So just to understand, when you say Q1 is aligned with the guidance, this Q1 at 3%, does this contain any positive surprises? So we're not expecting to have to review our yearly guidance. Okay, thank you.

The next question comes from Michael Breist from UBS. Please go ahead.

Good morning. Two from me. Can you confirm the 2020-8 outlook is also intact and unchanged today? And then I noticed in terms of headcount, there was 800 people added in the international delivery centres. Can you talk about the strategy around offshoring? And I think previously you said you wanted to get to about 20% by 2028 from those markets. Is that still the case? Thank you.