Worldline Sa Ord

Good day and thank you for standing by. Welcome to the Worldline H1 2023 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 one and one on your telephone. You will then hear an automated message advising your hand is raised. And to withdraw your question, please press star one and one again. Please be advised today's conference is being recorded. Now I'd like to hand the conference over to your speaker today, Gilles Grappinet, CEO. Please go ahead.

Gilles Grappinet Many thanks. Ladies and gentlemen, good morning. This is Gilles Grappinet speaking. And thank you for attending today's Worldline conference call on our first 2023 results. I will start this presentation providing you with some key highlights of our first semester. Then Marc-Henri, our Deputy CEO, will make a deeper dive on merchant services dynamics And as we regularly do, we'll update you on some innovation topics today with a focus on artificial intelligence in Worldline. Hereafter, Gregory, our group CFO, will present you in detail our first half results before a wrap-up from myself for the conclusion before opening the Q&A session. Well, let me start by stating that I believe that Worldline did deliver a good first half 2023. completely in line with our full year guidance. Indeed, after our solid full year 22 and Q1 23, our second quarter is showing again a good organic growth with 9.4%, bringing the first half at 9.3%. This performance has been fueled again by our merchant services activities, up 13.1% in each one, of which plus 13.5% in Q2. It reflects the good commercial dynamic achieved during the semester in terms of acquiring volume development, merchant count growth, and several new large merchant wins. This overall growth could translate into 80 basis points improvement of our OMDA margin, while our OMDA conversion rate free cash flow reached a high level, close to 45%. Now, regarding the strategic initiatives of the group, during the first half, as you know, we've been very active with the entry into exclusive discussions mid-April with Credit Agricole to create together a new major player in merchant services in the French payment market. Since then, we have reached some first important milestones, in our roadmap to close. In parallel, we have completed the closing of Banco Dezio in Italy and are now in the integration and migration process that I will update. All this taken into consideration. We believe this H123 has been a positive semester for our group. It is paving the way to a successful execution of our full year 2023 guidelines and our mid-term trajectory that we, of course, will both confirm today. Regarding our key H1 figures now, revenues stood at 2.24 billion euros, representing an organic growth of plus 9.3%. Regarding profitability, our NDA stood at 519 million euros, representing a 23.1% of revenue of 80 basis points improvement. This margin improvement highlights our ability to deliver the expected 2023 synergies, to take advantage of our operating leverage, and to start to benefit from our repricing efforts and cost containment actions. All this allowed us to overcome the inflationary pressures waiting on our cost base and deliver an H1O MDA in line with the anticipated 2023 trajectory. Free cash flow was 232 million euros, representing a very good conversion ratio close to 45% of our MTA. Normalized net income group share reached 243 million euros, representing 10.8% of our revenues. Normalized diluted EPS reached 0.84 euro per share, up 10.5%. On the strategic initiative side, As said, we've been very busy and we believe very successful too. First and fully in line with our well-known strategic roadmap to expand our distribution network through bank partnerships, the announcement made in April of our entry into exclusive discussions with Credit Agricole is a very important achievement. Together, we target indeed to create a new major player in merchant services in the French payment market, which is the largest European acquiring market where, so far, Worldline was not operating as an acquirer, as you know. Doing so, we will also get access to the local domestic scheme, CarbonCare, one of the very few that was not in our portfolio of local European domestic schemes. It will be also, doing so, creating for Worldline a new and strong long-term organic growth engine that will actually be visible in our figures primarily from 2025 onwards. And as it has been structured as a contribution in kind for both parties, it is preserving our balance sheet for other potential M&A on which we work. Since the announcement, we have quite well executed the roadmap to closing and in hand with Credit Agricole and already reached timely important first milestone with the finalization of the social processes and the antitrust filing process which is now officially initiated. This allows me to confirm the target signing in the course of Q3 2023 and the closing in Q4 2023. Talking about strategic development, we have also completed earlier this semester, the closing of Banco Dezio and we have actually started our integration and migration process right away. The main important point here is that the merchant migration on our targeted platform of the Banco Dezio portfolio is executed very efficiently, and we target to finalize this process in the course of the current quarter as per plan. And this asset represents a very nice add-on to our existing Italian activities, leveraging the banking network of Dezio and its distribution. I will now give the floor to Marc-Henri to guide you through the commercial dynamics in our Merchant Services Division.

Thank you, Gilles, and good morning to you all. I'm very pleased to take the floor and to get you through this part of today's presentation, zooming on our merchant acquiring business market performance in the first half. I will commit three types of business information and KPIs as we now regularly do. Regarding the merchant services mass market segment, I will share with you the evolution of our net number of small merchants over the period. Then I will share with you the main wins and upsells of Q2 on the large merchants and the new partnership sign, allowing us to further accelerate our monetization strategy. And I will conclude by sharing some updates on Warland acquiring MSV growth. To end this part of my presentation, I will update you on the innovation strategy of Warland with a focus, this time, on artificial intelligence, as it has been a topic of interest for many of you in our latest interaction. Now, deep diving on merchant services dynamics with merchant KPIs. In H1 2023, we have onboarded circa 40,000 new merchants, pushing our merchant base at the end of June 2023 at more than 39 million merchants. It represents a very satisfactory growth of world and acquiring merchant base. This is 2022. It is fully in line with our midterm objectives. It's a great achievement since the acquisition of Ingenico and fully illustrates what we have built through our strategic approach based on distribution partnership with banks and direct sales channel. It is also noticeable that we have delivered these good numbers despite some repricing actions in the current inflationary context. Since 2021, we have grown our merchant base by circa 120,000 merchants on a net monthly average growth of 7,000 merchants in both in-store and online. Commenting now on some big names. Let us start with the development of existing customers. In the online space with Blizzard Entertainment and Valve on the gaming industry, we have strongly expanded the scope of services offering them access to new geographies using specific domestic corridors such as LATAM or Turkey. In the in-store, with Arias, one of the world's leading providers for travel, food, and retail services, we have extended our geographical scope. Still on the in-store, in the in-store domain, with SNCB, the National Railway Company of Belgium, we have expanded our global one-stop-shop payment solution, coupling acceptance and acquiring, offering a seamless interface for all channels, such as web or online, while covering all payment means from domestic schemes to alternative payment methods. Last, with a large airline in the top 10 worldwide, we have extended our product offering with an Apple-based solution increasing our share of wallet. Now coming to new wins on full-service and omni-channel solution on the electronic vehicle charging space, electric vehicle charging space, all right. We made the difference again for Evoniti, a Belgian manufacturer of fast chargers for electric vehicles. This is one of many examples in this successful vertical. Regarding camping vision, especially in the campsite bookings, where an ability to manage complexity on a full service offering has been key. And in the online space, a full service offering including multi-countries and multi-currencies coupled with value-added services allowed us to gain Amazing Talker, a one-to-one learning native teacher's platform. Regarding the partnerships, our scale reached a single entry point of circa 15% of the European retail, giving us a key advantage and strong attractivity in the payment ecosystem. This position allowed us to pursue the momentum in numerous partnership signings during the second quarter with fintechs and digital native players. On this slide, you can see VTEX, with whom we made available a plug-in payment solution embedded into the enterprise digital commerce platform and enhancing authorization and conversion rates. And with Travel Plan Booker, an all-in-one planning and booking platform, we have integrated our full cross-border acquiring and payment services, improving efficiency and performance. Last, as announced by Apple in May and July, we have been selected among Overs players as a partner in Australia and in the UK to introduce tap-to-pay solution on iPhone. Overall, a very successful quarter with a sustained commercial momentum. Now, let's look at another building blocks of our revenue growth, the MSV. During the first half, it was up circa 10% in H1 2023 to reach a level of 220 billion euros. After a Q1 still supported by some favorable comparison effect, we enter in Q2 on a more normalized dynamic, i.e. with no more post-COVID effects, translating into a mid-to-high single-digit growth as expected. Then, we continue to see this dynamic at the beginning of Q3 2023 with a steady trend in MSV expansion in line with the Q2 developments, fueled by both in-store and online volumes. Now, regarding innovation, as I said, I will share with you a focus on artificial intelligence in online. Coming to this topic of AI, as a tech company, We did not discover it with the new attention for generative AI, and we are already an intense user of the previous generation of tools. But we fully recognize generative AI comes with new promises that we are exploring without delay to get the maximum benefit of its potential. So let me first start with what we already have in terms of standard AI in our live offerings and services to improve merchant performance and internal efficiency. Globally, artificial intelligence is embedded in our fraud detection offering, in our customer retention tools, in our anomaly detection and monitoring services. Then we offer to our most demanding customer a dynamic routing of transactions based on AI, able to predict where transactions are more likely to be accepted and thus increasing their authorization rates. We leverage our data set from multiple merchants to derive insights internally to determine patterns across different merchant verticals, currency, cardholder, origin, as an example. We use this combined data set to optimize pricing strategy and assess the probability of success for upselling or cross-selling campaigns based on the past behavior changes of our customers. Part of our payment performance optimization strategy uses those combined data sets to best determine the likely behavior of schemes and help our customers present payments with a greater likelihood of approval. Combining customer data sets is also obviously instrumental in our ability to combat fraud and money laundering and provide our customers with better products to address those. Okay, now regarding the new generative AI opportunities, we secured very early a widespread but controlled access to the latest tools, the first of which naturally charged GPT-4. We launched in parallel dedicated task force and encouraged experimentation to access the potential impact and benefits of generative AI. We already have several live proof of concepts to determine potential use cases that we could develop at scale. Main topics of investigations today are the merchant onboarding to assess potential faster onboarding through assisted KYC procedure, evolutive dashboard for the merchant, enriching our value proposition for topics such as dispute management handling, efficiency improvement on the coding side, supporting our teams to go faster with go-to-market. For a faster go-to-market, we've already 100 of internal users in this domain, software coders. and increase user experience on the customer service front with upgraded self-service tools. As these are still proof of concepts, we have no doubt that we will be able to boost our productivity and quality of service leveraging this technology, and we do believe that our tech DNA will be key to be a front-runner in this domain. I will now give the floor to Gregory to present you our financial performance.