Viridien S/Adr

Good day and thank you for standing by. Welcome to the Viridian Full Year 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1, 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1, 1 again. If you wish to ask a question via the webcast, please use the Q&A box available on the webcast link anytime during the conference. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Alexandra Leroy. Please go ahead.

Thank you. Good morning and good afternoon, everyone. Thank you for joining us today for Viridian's full year 2025 results presentation. I'm Alexandre Bollonroy of Investor Relations and Corporate Finance. We are hosting today's call from Paris, and I'm pleased to be joined by Sophie Soffiat, our chair and CEO, and Gérôme Serre, our group CFO, who will walk you through our performance. Before we begin, a few housekeeping items. This call is being recorded and is accessible via both phone and online platforms. An audio replay will be available shortly on our website, www.viridangroup.com. The presentation slides are also available for download from the website. Please note that today's presentation includes forward-looking statements. Actual results may differ materially from those expressed or implied today. Relevant risk factors are detailed in our 2024 Universal Registration Document. sealed with the French Financial Market Authority, AMS. As usual, we'll conclude with a Q&A session. And finally, a quick reminder that the periodian comments primarily on segment figures, which reflect our internal management reporting, did differ from IFRS numbers also produced today, due to IFRS 16 impacts on our Earth Data Business account. With that, I now hand over to management, Starting with Sophie, who will take you through the key business highlights for the quarter. Sophie, the floor is yours.

Thank you very much, Alexandre. Good morning and good afternoon, ladies and gentlemen. I'm now on slide two. 2025 has been a very strong year. I would even say it has been pivotal in advancing the asset-light technology differentiated strategy that we initiated in 2018. as we are no longer exposed to vessel capacity, either directly or indirectly. 2025 was also a key year in our financial transformation. We successfully refinanced our bonds, extending their maturity to 2030, and generated a significant amount of cash, which we fully allocated to deleveraging the company. And more concretely, We generated revenues of nearly $1.2 billion, up 4% year-on-year. Performance was very strong across our data, digital, and energy transition businesses, with overall top-line growth of 8%. Geoscience once again delivered strong performance, leveraging our unique business model and clear competitive advantages in subsurface imaging. Earth data also performed well. supported by sustained customer demand for our advanced data sets in mature and strategic frontier basins, as well as by recent industry consolidation. Beyond revenue growth, profitability improved further, with segment-adjusted EBITDA exceeding $550 million. Net income increased by 40% year-on-year. We also delivered strong cash generation. Net cash flow reached $107 million. exceeding our full year 2025 guidance, driven by our first year of operations following the full implementation of our asset-light strategy, solid operating performance, and disciplined cash management. All the net cash flow generated was allocated in delivery. As per our commitment, combined with the refinancing completed last March, during which we reduced the principal amount of our bonds, This enabled us to lower growth debt by $230 million year-on-year at constant exchange rates. Moving on to quarterly performance by business line, I'm on slide four, starting with Geoscience. Four years 2025 was another solid year of revenue growth combined with continued productivity gains. Geoscience external revenues increased by 10%, reaching nearly $450 million. Performance was once again driven by three core basins of U.S. Gulf, Brazil, and Norway, where we delivered a significant volume of OBM imaging projects for leading IOCs and NOCs. The Middle East also showed solid momentum, particularly in Abu Dhabi and Saudi Arabia. Productivity per employee continued to improve, up 13% to 317%. $387,000 per employee, and this reflects our continuous improvement initiative and our increasing use of computing and AI to produce high-quality data-driven outputs while continuing to enhance efficiency. Backlog at year-end 2025 stood at $256 million, down from last year, while still providing good visibility and confidence as we move into 2026. Moving on to slide five, you can see how our unique differentiated business model enabled us to reinforce our competitive edge and consolidate our global leadership in subsurface imaging. Subsurface imaging is the highest value add activity across the entire seismic value chain. It is not a commodity service business. It requires elite talent, leading innovation and technology for scale, three structural barriers to entry. We support these with excellence in our services. A winning business model rests on two core pillars. First, people. We recruit and retain the very best experts worldwide and foster a culture of excellence. This is critical to addressing the most complex of the subsurface challenges that our clients bring to us. To give you an example, we enable clients to make exploration plans in areas that they historically would have discarded or deemed too risky, thus potentially improving their reserves. In 2025 alone, Geoscience received more than 8,000 postgraduate applications from leading universities and engineering schools worldwide. As every year, fewer than 1% were selected to join our team. This level of selectivity ensures that we work with the most talented, creative, and technically advanced experts in our field. We also maintain strong academic and scientific credibility. In 2025, 77 peer-reviewed technical papers were published by our team. And among them, we received the 2025 EAG Award for Best Paper in first break, one of the industry-leading technical publications. The award-winning paper highlights how our high-frequency four-way form imaging significantly enhances imaging and reservoir characterization in complex environments such as the band. The second pillar of our model is our deep expertise in algorithmics and high-performance computing. From the selection and optimization of the algorithm, software and hardware infrastructure, To the execution across tens of thousands of processing units 24 by 7, subsurface imaging requires highly customized, exceptional, and reliable computing capabilities. At year-end 2025, a proprietary infrastructure approached 700 petaflops of computing power. Excluding hyperscalers, which operate in a different category, This places us among the top five industrial players worldwide in terms of computing capacity. To give you a sense of scale, our computing power exceeds that of many national weather forecasting agencies or publicly funded nuclear research institutes. Cyclic data processing is one of the most demanding computing activities, with datasets reaching several hundreds of terabytes and growing further with the development of OBN technologies. And to continue addressing increasingly complex reservoir challenges, we invest continuously in our infrastructure. In that context, we have just approved the expansion of our U.S. HPC center with a phased investment plan over the next three years. This will ensure we remain at the forefront of the industry and continue to consolidate our leading global market. And finally, I would like to reiterate that high-end subsurface imaging provides value across the exploration, the development, and production value chain. In 2025, two-thirds of geoscience revenues were generated from development and production-related work. This makes the geoscience business structurally less sensitive to oil price volatility than more exploration-driven segments. And this performance is supported by a well-diversified client base, including national oil companies, majors, and independents worldwide. Now turning to slide six for the EarthData performance review. In four years 2025, EarthData delivered solid performance with revenues up 6% year-on-year. This growth was driven by two main factors. First, Sustained industry demand for high-quality data, both in mature basins and in high-potential frontier areas, where we are strategically positioned. And second, transfer fees generated by recent industry consolidation. Excluding transfer fees, which are a normal and recurring component of the multi-client business model, after-sales remain similar to the previous year. As of the end of December 2025, the net book value of our Earth data libraries to that $494 million. I'm now on slide seven to discuss our Earth data strategy and performance in more detail. While our primary focus remains on our core and most active offshore region, Norway, Brazil, and the U.S. Gulf, we continue to selectively assess attractive frontier opportunities. Now that we're no longer exposed to vessel ownership, which, when underutilized, can significantly weigh on cash flow and profitability and create incentives to produce suboptimal projects, we approach the multi-client business with a very disciplined portfolio framework. Our strategy combines highly profitable legacy data reprocessing projects, leveraging our unique subsurface imaging capabilities, with continued investment to strengthen our competitive positions in our three core offshore basins, Norway, the U.S. Gulf, and Brazil, while also making selective strategic moves into highly prospective frontier areas. In 2025, given the scale of the Laconia and Azera OBN projects, approximately 80% of our multi-client capex was allocated to reinforcing our library in our core basin. As a rule of thumb, in general, out of the roughly $200 million of multi-client capex we invest annually on average, reprocessing typically represents $30 to $40 million, or 15 to 20%. Emerging basins account for approximately 10 to 15%, meaning that around two-thirds of our yearly investments are normally directed towards a three-course basin. This disciplined allocation strategy once again delivered strong results in 2025 with cash EBITDA reaching $178 million and revenue to CapEx ratio of 2.4 times. Now moving on to slide eight, covering sensing and monitoring performance. For your 2025 sensing and monitoring, Revenues decreased slightly, posting negative 5% year-on-year, landing at $315 million. Some deliveries in our land business that were expected in Q4 were postponed to 2026. Overall, the picture for the year remains consistent with what we have previously indicated. The market dynamic in the marine segment was more subdued, but this was partly offset by the strength in our install base in the land segment. In land, our technologies continue to lead the market, both through our established product lines, such as the 528, WING, and through our new solutions like Accel. Now turning on to slide 9 for further insight into our sensing and monitoring strategy. CERCEL was founded in 1963 and is the incumbent leader in seismic equipment, software, and solutions design. The core recurring business of SMO is resilient through the cycle, supported by our streamlining efforts together with a large product portfolio. The largest install base worldwide and sustained R&D efforts that allow us to regularly launch new innovative products and solutions. Our services share of our core revenue represented around 15% and is growing, and our global market share is around 50%. The legacy activity represents 80% of total SMO revenue. To beyond this, reaching 20% of SMO revenue, we're actively pursuing a diversification strategy, leveraging our technological expertise across adjacent markets. Infrastructure monitoring includes surveillance, advisory services, and structural testing. This business has experienced good momentum for several years now, with revenues that grew by a further 20% in 2025. We are also expanding in defense markets, where demand for our specialized cables and subsea monitoring solutions are growing. Long-term framework agreements are currently under discussion with strategic partners. Another growth avenue comes from adapting our marine operational management platform, initially developed for seismic applications to new cases, use cases such as operational efficiency and safety enhancement for ports and offshore oil field infrastructure. In 2025, we also completed the restructuring plan launched two years ago at SMO. Our operations have been streamlined, allowing us to unlock additional value growing forward. And our efforts increased business resilience through the cycle by reducing SMO's cost base by $13 million, bringing EBIT and cash break even down to levels close to the lowest revenue environment experienced over the past decade, around $280 million, while also releasing $60 million of working capital. With that, I'll now hand over to Jérôme, who will talk you through, walk you through the financial performance review.

Thank you, Sophie. Good morning and good afternoon, everyone. Let's move to slide 11, covering total segment revenue. In 2025, we generated $1.17 billion in segment revenue, up 4% year-on-year. This performance was driven by data, digital, and energy transition, also called EDE segment, which includes our geoscience and earth data businesses. EDE revenues reached $850 million, up 8% versus 2025. Geoscience grew much faster than the market, posting a plus 10% year-on-year, while Earth data was up 6% despite lower capex and pre-funding contributions. In sensing and monitoring, revenue totaled 315 million, down 5% year-on-year. The launch segment performed well, although some QCAP deliveries were postponed to 2026. At the same time, new businesses' revenues within SMO continued to grow, supported in particular by strong momentum in infrastructure monitoring, plus 20% year-on-year. Turning to slide 12, covering profitability. Total segment adjusted EBITDA reached 551 million in 2025, up 21% year-on-year, leading to a margin of 47%. Once again, its performance was driven by DDE, which delivered 549 million of the PDA, up 20% versus 2024. The margin reached nearly 65%, representing a 640 basis point improvement year-on-year. This mainly comes from three factors. First, higher revenue levels in both geoscience and on data, which benefit from strong margin conversion. Secondly, we delivered continued productivity gains in geoscience, with an increasing shift from people-time to computing time, which carries a lower cost base. And third, the absence of vessel penalties following the final settlement with Shearwater, completed in January 2025. Sensing and monitoring generated 32 million of EVDS, slightly down versus 24. It mainly reflects the somewhat lower level of activity, as well as a strongly adverse currency effect driven by the US dollar depreciation, while SMO cost base is predominantly in Europe. This negative effect impacts being approximately 7 million Iranian. Cost reduction measures implemented over the past 24 months to lower SMO break-even points help limit this impact on profitability. In 2025, we benefited from a cost base roughly 20 million lower than at the end of 2023. Starting this year, we expect to capture the full annualized savings, which will amount to around 30 million. This positions SMO well for improved profitability as the activity recovers. Finally, corporate costs decreased significantly from 38 million in 2024 to 29 million in 2025, reflecting continued cost discipline across the group.

Moving to slide 13, covering the IFRS figures.

The IFRS 15 adjustment was significantly negative this year, totaling minus 94 million at both revenue and NDA level for the year 2025. The comparison base is particularly adverse, as 2024 benefited from a positive contribution of 95 million. As you know, this adjustment relates to our ongoing Earth data survey, currently mainly in the U.S. Gulf and Norway, which are expected to be completed this year. Despite this significant negative adjustment, ISRS net income increased by 40% year-on-year to $71 million, highlighting the company's improved momentum not only cash-wise, but also down to the bottom line. Looking at the other P&L lines, the net cost of financial debt increased, mainly due to lower interest income as we reduced excess cash balances. Note that the overall gross cost of debt remained broadly stable, as while the bond refinancing resulted in slightly higher interest rates, this was offset by a lower principal amount. Other financial losses primarily reflect the non-capitalized portion of the bond refinancing cost, as well as some negative foreign exchange effects.

The absence, sorry.

Moving to slide 14, and how this translates into the net cash flow. In 2025, we generated 107 million of net cash flow. From an operating perspective, this is closer to 136 million, as the reported figure includes the early repayment for 29 million of the asset-backed activity put in place in 2022, to finance our UK HPC data center. At inception, this facility was included in the net cash flow, so it's consistent from an accounting standpoint that the repayment is treated the same way, although this blurs a bit the picture. In any case, whether you take 107 or 136 million, it is well above our 2025 guidance of 100 million. Looking at the bridge versus 2024, when we generated 56 million, the main positive driver of this performance were significantly stronger EBITDA contribution, up 134 million year-on-year, lower capex mainly in our data, contributing an additional 69 million of cash. These three positives were partly offset by two factors, 110 million negative variation of the change in working capital, primarily related to lower payables on ongoing Earth data projects, as well as the still ongoing PEMEX receivables. Note that our PEMEX exposure was reduced to below 50 million at year-end 2025. The other line at 41 million, negative 41 million, reflects mainly the net of the three items, first the absence of the one-off 38 million cash inflow recorded in 2024 from the settlement of a long-standing litigation in India, Secondly, the savings in 2025 from the end of our vessel commitments with Shearwater.

And thirdly, the repayment of the asset-backed facility mentioned earlier. Finally, a few words on debt, turning to slide 15.

For the past two years, we have been actively managing our balance sheet to reduce financing costs and strengthen the group overall risk profile. In 2025, at constant effects versus year 2024, we reduced gross debt by 230 million, bringing it down to close to 850 million. Over the year, we took three key actions. First, we refinanced our bond in March, extending maturity to 2030, and using part of our available cash to refinance a lower principal amount. Second, we began repaying the bond in line with our commitments. using the cash generating during the year. We did fully exercise the 10% annual optional retention clause embedded in our bond documentation at 1.03. And thus, we've risen a total of 97 million of USD equivalent trip depots through two transactions in mid-October and mid-December. Finally, we repaired the asset-back facility mentioned earlier at URAN. This action will reduce further interest expenses and free up additional cash to continue our deliberating. One of the clearest indicators of this progress is certainly our net leverage ratio. It has declined from 2.5 times at year-end 2023 to 1.6 times today, and we definitely intend to improve it further. With that, I will hand back to Sophie for the occupancy.

Thank you, Jerome, and I'm now on slide 17. In conclusion, 2025 was a strong year for Veridian, marked by significant operational, technological, and financial progress. We're now fully asset-light, focused on differentiated technology offerings, and have complete flexibility to decide our multi-client investments based on their pure merits. We exceeded our net cash flow generation guidance for 2025. Now for 2026, we're again targeting the generation of $100 million of net cash flow. This includes the financing of phase one of the expansion of our US HPC data center, as well as normalization of working cap, including PEMEX. Please note that cash generation seasonality is expected to be similar to that of 2025. This $100 million target assumes a business environment that is overall broadly comparable to 2025. As you know, and as many of our OFS peers have already indicated, energy price volatility may lead in the short term to some industry caution, with software activity expected in the first half of 2026 and recovery anticipated in the second half for an overall steady performance of the four years. Looking out over the medium and long-term, the structural fundamentals of our market are supportive. Accelerating fill depletion and increasing reserve replacement pressures are driving operators to focus more intensively on long-term resource security. And this combined with the asset-lightened model focused on high-end, technologically differentiated solutions and our disciplined multi-client strategy underpins a continued robust outlook for Verizon. Thank you very much, and I'll now open the floor to questions.

Thank you. As a reminder, to ask a question, you will need to press star 1, 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1, 1 again. If you wish to ask a question via the webcast, please type it into the box and click submit. Please stand by while we compile the Q&A roster. Once again, if you wish to ask your question, please press star 1, 1 on your telephone.

We will take our first question.

And the question comes from Gillum Delaby from Bernstein. Please go ahead. Your line is open.

Yes, good afternoon, Sophie and Jerome. Quick question regarding, maybe I missed it, but have you communicated any CAPEX figures for 2026? What could be your multi-client CAPEX and what could be the CAPEX associated with your infrastructure development in North America?

I will take this one. So you know that in 2025, so last year, we spent about $265 million for the library. In 2024, on the back of this Laconia project in the Gulf of America, it was $250 million. I would say both numbers more or less represent the range of what we intend to spend in a given year. So, take a number in the middle, and I guess that's more or less the normalized capex we envisage to spend in our library. Regarding the infrastructure, so the expansion of our data center in the U.S., the current estimate is around 30 to 35 million. How much are we? 30 to 35 million in 26. Okay. Regarding the, just one last comment on the library capex, what matters to us now, you know that, Guillaume, is really not the overall amount of what we spend, but the quality of the project. as we judge on two metrics, the pre-funding, which will require a high pre-funding, as well as a high, what we call cash-on-cash, so for $1 invested, we usually require $1.8 of sales generated over the life of the service. So we really focus on what we call the cash-to-BDM metrics that we started to introduce last year.

Okay.

Thank you.

Thank you. We will take our next question, and the question comes from the line of Jean-Luc Romain from CIC. Please go ahead. Your line is open.

Good evening. I have two very different questions. One relates to what you were just mentioning, Sophie, the pressure on reserves of majors. Should we assume that companies like BP and Shell going as low as seven years reserve life is a conscious choice for them compared to Total or Exxon or do they really have to increase their investment to renew their reserve or do they feel they have a sufficient non-proofed resource base to make sure and increase their reserve life. That's the first question. The second question is, I think there was a merger between LLOG and Arbor recently. Does that translate into transfer fees, transfer of rights, or transfer fees, or revenues to transfer the licensees? And the question was, out of the 50 million due to Pemex, how much is overdue and how much is the normal payment?

Okay. Bonsoir. Thank you for those questions, Jean-Luc. I'll take the first two and I'll leave the third one to Jérôme. I think the pressure on reserves is there, and as you pointed out, seven years of reserves is is becoming on the low side. And why is it that we are where we are? I think it's been a lack of activity and exploration over the last decade. So our clients, in general, they've been working through portfolio of opportunities that were acquired in the busy years, call it 12, 13, 14, and that has carried them through now, but Clearly, they're faced with having to replenish their portfolio of opportunities with better quality of opportunities, with lower breakeven oil price, perhaps different jurisdictions. So we're heading into a time when those companies that are low on the reserves perspective will be having to invest more. in exploration position, and that is seen through the amount of acreage. So, for example, in January, it was 43,000 square kilometer of acreage that was taken by companies in the oil and gas industry. The second question is a good one. We always watch as well the M&A and consultation in our industry, so this one refers in the Gulf of America with Harbor acquiring a company called Adlog, and Adlog is one of our clients, and there will be transfer fees associated with that, but they're going to manage your expectation. They're not going to go on the high side. They're going to be moderate, and I would call them just as part of the normal expected transfer fee that we would see from one year to the another. So yes, they're very moderate. The third question on Pemex, I will leave to Jérôme.

Yes, bonjour Jean-Luc. The full 50 is overdue. So we still have good confidence that we will collect this money this year. It was part of the guidance. Well, also we expect to restart working with PEMEX and therefore create some receivables. Overall, it's not the full 50 that we are putting in the guidance, but that's where we are with PEMEX.

Okay. Part of the 50 is in the guidance. Correct. Okay. Thank you.

Thank you. We will take our next question. Your next question comes from the line of Baptiste in the back from other BHS. Please go ahead. Your line is open.

Yes. Hi. Good afternoon, everybody. Just one question on my side. Listening to conference call of IOCs for 2025, exploration is not anymore a swear word or something which is not quite common to speak about. Do you see them coming back actively? And in today's environment, who are the most active? let's say, active people in terms of negotiation for new businesses? Is it NOCs or IOCs at this stage? Thank you.

Okay. Yeah, thank you. Thank you for that question, and good evening, Baptiste. I absolutely agree with you. Exploration is now something, a word that we can pronounce, and if you look at all the quarterly announcements of IOCs and you know, publicly traded companies, that world is coming to the forefront and they talk about exploration. Actually, many, many more start to talk even about seismic and how the kinds of progress that we're doing in imaging is helping them de-risk their activities and actually shorten the cycle time between exploring and producing, which is an important activity for them. So who are those clients that are the most active? Definitely the IOCs have picked back up. Those are the first ones that shut down activity during the COVID. They're big time going back at exploration activity, particularly the North American ones. The ones that are still a little cautious are those independents that are maybe more cash constrained, that have high debt level. So we see a bit less, although they're interested in it, but a bit less active. And national oil companies, quite active. In South America, the case of Petrobras is quite public. They're actively looking for new. They have to make big finds if they want to be able to sustain the ambition for production. But the case of actually Pemex is another one that needs to really ramp up production. The Middle East. is quite active. We see activity from national oil companies in Asia as well. Pretty much, I would say, if I was going to summarize, IOCs and NRCs independents are a little bit more on the front, just because of their financial situation.

Okay, thank you. Sure.

Thank you. We will take our next question. Your next question comes from the line of Mick Pickup from Barkers.

Please go ahead. Your line is open. Good evening, everyone. A couple of questions, if I may. The first one, apologies if I say something that's a bit stupid. Can you just talk about the role of AI in your business? Because obviously, if you look at the wider market, we've seen many industries hit over the last couple of weeks as they suddenly get disintermediated by AI. And I keep getting the question, won't the oil companies just run their old data through their AI and don't need new data and don't need better images because their AI is going to do it all themselves in their supercomputers? I know what you're saying today. You're saying AI means more computer time from your people and better margins and better numbers for your geoscience business. So can you just square that one up? And then secondly, beyond the core, it doesn't seem to be there anymore. What are we doing in that?

All right. Okay. Thank you. Good evening, Nick. Excellent question. The role of AI, there's a lot of hype around AI. If I can square it up, where are we going to be using AI? For sure, we're going to be using it for our functions, so that maybe is not very glamorous, but we're going to do like everyone, and we're on our way to optimizing our support functions and leveraging that. But what you're talking about is our core and imaging activity. And that one, we are embracing AI, and we do believe AI will be more and more embedded into our physics-based workflows. And I insist on physics. What we're doing, we're using physics approach to model the behavior of the Earth, and therefore getting those high-quality and high-fidelity images on that basis. So AI gets embedded into the workflow for some of the activity, like, for example, you're trying to remove noise from the signal. AI is really good at that. You're trying to do quality control of the data. AI is really good at that. But AI will not replace physics-based workflow. It will help enhance it. So we are embracing AI. It will complement what we do, help us be even more efficient, provide better results. Where you're hearing a client saying they want to leverage AI is what you do after you've done the image. You need that best image to be able to generate insights from that image and to do EMP exploration and production work. So you're really identifying those exploration targets. You're designing the wells that you're drilling. So all these activities, because they don't have a civic model, are really well suited for AI. And other things the clients will be able to do is, and we can do that as well on our data library, is identifying and start correlating different basins, different reservoirs, and trying to get more and more insights from the data. But you've heard the sentence, garbage in, garbage out. In order to get those strong insights from the data, you need good data input. And, of course, you need that best image to be able to get those insights. So we're quite confident that we're actually, if anything, in a very, very strong position to provide inputs to AI, if that makes sense. The second one on beyond the core, we are following our clients. We've always said all along that our core business is oil and gas. It represents 90% of our revenue, and we're committed to continuing to advancing technology and being the best at what we do in our core businesses in the Olimpics. We think it's important to continue developing new businesses for the long term, and we've selected those businesses to leverage our core capabilities. And so we're continuing on that, but we've decided that we were going to de-emphasize the sort of the speech and the communication around those new businesses, just because we're sort of following the path of our clients and the path of the general industry. Are we continuing? We're absolutely continuing because we're not, it's not costing us money. We're doing this organically and it's a more of a longer term proposition.

In terms of number, if you're interested, we generated close to 110 million of revenues at that show beyond the core initiatives, mainly driven by, as I think we said during the presentation, infrastructure monitoring, which is within our SMO division, as well as a good momentum on the HPC and digital platforms. which is part of geoscience and especially with our .

Thank you. Cheers.

Thank you. Your next question comes from the line of Kevin Roger from Kepler Chevrolet. Please go ahead. Your line is open.

Kevin Chevrolet.

Kevin Roger from Kepler Chevro, your line is open.

Yeah, sorry, I was on mute. Sorry for that. Good evening. Thanks for taking the time. I have two, if I may. The first one is on geoscience. Just to understand a bit the expectation for 26, because you always commented, Sophie, that the backlog doesn't mean a lot for the short-term earnings dynamic, but just to get a bit of sense on what you do expect for 26 on geoscience based on the backlog that you have right now and also trying to understand, you know, this increase in the petaflop capacity. You are now close to 700. So what does it mean exactly in terms of revenue potential for geoscience, this increase in the petaflop? And the second one, so you recently said in an interview that you Viridian needs to decide if Cercelli is core or not for the group, so I was wondering if there is any development on that side, please.

Okay. Thank you. Good evening, Kevin. On the geoscience, it's not, as you pointed out, and I said over the years, that the backlog is not an impact translation. It's not a direct indicator of the health of the business. However, just let me remind you the number that we have at the end of 2025. It's a very good number and makes us quite confident that we can achieve a similar performance as in 2025. So call it sort of equal, similar to 2025. Now, the link with Petaflop isn't as obvious because what's been happening over the last 10 years is we've been transferring people's activities into computing. So that allows us to do more with less people. So in a way that has driven more than efficiency revenue per head ratio higher. So we have less heads over the years because we're increasing the petaflops and with those petaflops we can increase the differentiation and therefore have a better sort of pricing potential in what we do. It's not necessarily Clearly, are we going to do more, but we're going to do better, we're more resilient, we're more differentiated, and we don't need as many people.

Remember that also part of the petaflop, Kevin, or use to improve the algorithm, so for what we call R&D activities, we usually consider that about 20%, 25% of the capacity is there for these new features. which does not translate right away into .

I wanted to add this additional comment on the nature of the background. The size of the project is actually getting bigger because of this OBN project, which are much more intensive in terms of work. And therefore, as a result of that, the backlog, the order intake becomes more bulky. So what I can say is that we are in discussion right now, as we speak, for really, really large projects. And that's why we're quite confident that we can deliver a similar year to 2025.

And when you compare it as a backlog of 2024, I mean, indeed... a significant decrease, but clearly we're not worried. I mean, three key explanations on our side is we, at the end of December 24, we did record long-term revenues to some of the NOCs, which is recorded in one shot, but the revenues are spread over three to five years. And there are like two other factors. I mean, you know that we had a strong activity with Pemex and the overview that dented our performance during the course of 25, which we have stopped today working with Pemex, so no further backlog on the front. But we are hopeful we will... We will work again very soon when the payments are made on the remaining values. And the third one, the Chevron and Est merger had an impact on the activity. Est was a good client of ours, and Chevron has put on hold, and Est has put on hold everything while the merger was between signing and closing. But now we are seeing a strong activity with Chevron, which is in a strong backlog, or a backlog building up before the adoption.

And then your second question, Kevin, on sensing and monitoring. As you know, we engaged into the restructuring. We're quite happy with where we are and how we improved the performance. And I just want to to say that there isn't a process underway at this stage.

So no news. Okay. Okay. Thanks a lot. Have a nice evening. Thank you. Thank you.

You too. Thank you. Your next question comes from the line of John Olson from ABG Sindor Collier. Please go ahead. Your line is open.

Yeah, good evening, ladies and gentlemen. Thanks for taking my question. I just wonder a little bit, when you say that you expect a softer activity in the first half of 26, is that for all three segments? And also when you say softer, is that relative to the first half of 25? Thanks.

So, John, good evening. When I say softer, I say geoscience, like we presented over the years, doesn't have much volatility because it is well covered with backlog. So we'll see a slightly softer, let's call it, for geoscience. EDA is always the one that has more volatility, is the one where when clients are in wait-and-see mode, they can decide to delay some of their spend. We're still a little one month away until the end of the quarter, so it's difficult to know where we're going to land, but that would be where I expect to see some softness. And also, this is combined with the fact that we're not spending much capex in Q1 on EDA because it just happened that way. We have lots of projects in the pipeline, so we're quite confident we'll be spending some capex and we'll have good pre-funding in 2026. However, in Q1, there isn't an ongoing survey, and therefore, there won't be pre-funding associated with that. And on sensing and monitoring, it's... It isn't linear, so we know right now that there isn't. We have some orders in the pipe, but again, that year for them will be pretty back-loaded.

Okay, and then my second question. Do you have any tangible signs that makes you expect recovery in the second half?

What are the signs? It's a good question, and I expected it. It's the conversation. When you talk to clients, they're pretty much saying they're maintaining, they're upping, they're increasing the offshore spend in exploration, development, in geoscience. So they're quite confident about that they're going to have the money and they have the money to be spending. And, again, there are different categories of clients. The majority of them are talking about activity. So it is obvious that whatever they're not spending in T1 will be spent later in the year. We're seeing it as well through the activity in acreage and then taking positions, and we feel confident that eventually they're going to have to work through that.

Okay. Thanks a lot for taking my questions, and have a good evening. Thank you.

Sure. Good evening.

Bye. Thank you. We will take our next question. Your next question comes from the line of Brage Rea-Groven from Clarkson Securities. Please go ahead. Your line is open.

Hi, and good evening. One question from my end. I have a Brazil specific question regarding multi-client service. So you have the megabar extension with the TGS. TGS also has the partner phase two, Pelotas Norte, while Sharewater also has the Pelotas survey going on, et cetera. So there seems to be significant multi-client coverage building up in the region among different players. So specifically, what will be kind of the differentiator here? and what will Berlin's strategy be to gain market share and obtain this market share in this key region?

Thank you. Okay. Yeah, thank you. Thank you for your comments. It's actually a bit, I agree with you, a notice with the quota margin in Brazil, which is an area of focus for exploration, is a busy area, and it is attracting more interest across players. It is busy, but it is enormous. And it has enormous potential. So we, what sort of differentiates it is your ability to anticipate, have the permit in the right places, and to be able to deliver the survey. What we know are big differentiation in multi-client as well is the imaging, because we're able to provide an image that's sort of ready for exploration is the best image, and that is something that our clients have been appreciating. Because otherwise, if they don't have the best image, they might have to reprocess and waste time to do that. So I would answer to that is we're quite confident with our permits that are in the pipeline and our ability to deliver more surveys, and there's a lot of space in that area.

I like it. Perfect. Thank you.

Thank you. Thank you. Once again, if you wish to ask a question, please press star 1 1 on your telephone.

There seems to be no further questions from the phone line.

Please proceed with the webcast questions.

Yes, please go ahead. So we have a couple of questions online from Steve, starting with, thank you, Steve, for your question. Steve asked, given the current euro-dollar rate around 1.15, what would be the break-even rate point for SMO?

I take this one. So for the year 2025, we said that SMO was negatively impacted by a lower USD your exchange rate impact was about 7 to 8 million. Now, if you, and basically, if you put yourself at 118, we said that the break-even point at the time of the, when we launched the transformation, obviously we were at a much lower FX. So I would say that 118, it would be slightly above 300 million. Thank you, Jerome.

The second question, Steve, I think has been answered on the geoscience year-on-year change. You understood the three factors precisely underlined by Jerome. Thomas, a question regarding our U.S. HVC infrastructure plan. Thomas is asking if we need specific state-of-the-art chips, typically from NVIDIA, how easily we can procure them. Is there some kind of waiting list for this, or if our HPC centers are structured in another way and chips are not so much of a concern?

Yes, that's a really good question. I'll take that one. Good evening. We have an ongoing, this is a an expertise that we've developed over the year. And so we buy chips on an ongoing basis. It's not like we have a monolithic data center that we make a big investment. We need a ton of chips in one go, and then we do nothing for several years. Our model is every year we purchase chips and upgrade. So our data center is an ever-evolving HPC center. And in that respect, we've already placed our orders for 2026, and we're quite confident that we'll be served. Another point I want to make, we're not interested in the latest and greatest. We always use probably a couple of generations behind, and we tailor them to our physics-based algorithms, and that's what we need. So perhaps a bit less of a competition in that space. And you might have seen we just did a press release with NVIDIA, and NVIDIA really does care about how we use their chips. And we have a long-standing relationship with them and with others.

Thank you, Sophie.

And the last question, Christine, from Benoit. You know, you're asking basically about the 2025-2026 Gag and Z-Cash flow breach. The Pemex topic has been answered. I have the floor to Jérôme for the main elements.

Yes, I mean, so basically we have some positives versus this year. We have the node, which for no shear water penalty in 2026 is about 10 million. We have the full effect of the SMO transformation plan. That's another 10 million that we will gain. Lower interest expenses, knowing that we have reimbursed some debt in 2025. Let's call it another 10. And as we mentioned, we were planning on a working capital release. You've seen that in 2025, we did burn 60 billion of working capital. on the back of TEMEX and feeding some payables with our data. As I said, for TEMEX, we are counting on collecting the overviews, but we are also counting on the restarting work with TEMEX, and therefore having some new receivables with them at the end of the year. That's on the positive side. On the negative side, we have not hidden that in 2025, we benefited from strong transfer fees, Chevron and S, Restore and Neo. We don't communicate on the amount, but it was a significant amount that we don't expect that magnitude to replicate in 2026. And we will have the capex we need to invest on the expansion of our HPC. So all in all, with those positive and negative, we are comfortable to re-guide again this year 100 million of net cash flow. Hopefully the bridge is detailed enough for you to be comfortable with this guidance.

Thank you. No more questions on my side.

Any more questions on the phone line, operators?

There are no further questions from the phone lines.

Well, thank you very much. It's been lots of questions and a heavy session. Thank you very much. And I look forward to interacting with you in the coming days and weeks as we go into your space. in the next week. Thank you very much. Have a good evening.

Thank you everybody.

Good evening.

This concludes today's conference call. Thank you for participating. You may now disconnect.