Worldline Sa Ord

Thank you, operator. Good morning, everybody. So my name is Wilfried Verstraete and I am the chairman of the board of directors of Worldline. As you will see later on in the presentation of the financial results, these results demonstrate our strong, resilient performance and also the strategic direction of the company. But before handing over the call to Grégory Lamberti, our group CFO, who will walk you through these results. I want to address last night's announcement of Pierre-Antoine Vacheron as our new Group CEO effective March 1st, 2025. Let me first express our sincere gratitude in the name of the Board to Marc-Henri Deporte, who has served as Chief Executive for an interim period. His significant contributions to the development of Worldline in his roles as deputy CEO and as interim CEO have been invaluable. The board appreciated his leadership in maintaining the company's momentum since October 2024. Marc-Henri will ensure a seamless transition to Pierre-Antoine reflecting his unwavering commitments to Worldline's continued success. So the board of directors has decided that the company requires a new external perspective and has selected Pierre-Antoine Vacheron after a rigorous international selection process led by myself and the nomination committee. Change in leadership is a crucial part of our strategic plan to drive the company forward. The board of directors yesterday has unanimously approved the recommendation from the nomination committee. P1 brings extensive experience within the BPCE group. having been head of payments in the digital and payments division since 2018. And from 2009 to 2017, he successfully led Ingenico's merchant and acquiring services activities. This is where he played a key role in expanding operations and fostering partnerships across diverse international markets. His ability to lead in a complex multicultural and international context is well proven. Pierre-Antoine Vacheron is a strategic executive with profound industry expertise. His deep understanding of global markets and proven ability to deliver results in challenging environments make him the ideal leader for Worldline. His passion for technology, commitment to positive transformation, assured leadership, and focus on performance and delivery are seen as invaluable assets. The board is confident that under his leadership, Worldline will strengthen its position as a frontrunner in payment technology and drive sustainable value creation. In the coming months, you will have the opportunity to get to know him much better, and I am convinced that you will appreciate his knowledge and expertise, and of course, the continuous improvement of our results. So now, I want to hand over the call to Gregory, who will walk you through our full year 2024 financial results and answer any questions you might have after his presentation. Thank you. Gregory.

Thank you, Wilfried. And good morning, ladies and gentlemen. Welcome to this four-year 2024 call. I'll start by going through the highlights of 24, detail the accounts, and then give you an outlook for 25. As we detailed during the Q3 presentation, our efforts have mainly been focused on three well-identified areas. Firstly, accelerating our investments on our core product offering and growth accelerators, for which the first signs of success are evident in our commercial dynamic. Secondly, maintaining a tight control of costs, including finalizing the delivery of Power24 in order to secure a rationalized cost base. And finally, executing on our portfolio pruning to drive a leaner and more focused organization. As a result of those actions that will continue in 25, we expect to see a progressive acceleration in growth starting in the second half of this year. This will be driven by our strengthened commercial dynamic, as evidenced by some important wins in recent months, the ramp up of our distribution and banking partnerships, as well as our core product offering. Let's now have a look at the main highlights for 2024. In a macroeconomic context that remained soft throughout the second half, we managed to deliver revenue of 4.6 billion euros, equating to organic growth of 0.5%, with H1 growth coming in at 2.1%, followed by a slight decline of 1% in H2. Full-year 24 adjusted EBITDA came in at 1.07 billion euros, impacted by the revenue slowdown we experienced in H2, but supported by the delivery of Power24. Looking at our H224 dynamic in greater detail, as you remember, our Q3 revenue growth was impacted by specific challenges in Australia and in some online verticals. As we had indicated during Q3 revenue call, management focus was placed firmly on resolving these issues as early as Q4, and this is what we did. Australia is now back to accretive growth thanks to pricing action and there's a new leadership. and the online verticals performed much better as we accelerated the onboarding of new customers while benefiting from the ramp up in volumes from already onboarded customers. While this drove a slightly better performance in Q4 relative to Q3, we obviously acknowledge that not everything is going perfectly yet. In this challenging environment, the teams nevertheless delivered well on free cash flow performance with free cash flow of 201 million euros in 2024, including 139 million non-recurring expense linked to Power24. This reflects a strong focus on controlling costs across the board, be they operating costs, capex, or integration costs. Looking at 2025, we expect a rather slow start to the year, given the ongoing refocusing of the company and the continued impact of headwinds in the business, plus the delay of hardware deliveries and some market share loss in Northern Europe. So we're confident that we can return Worldline to a progressive growth reacceleration in the second half, driven by a number of leadership changes in MS, the end of the impact of merchant terminations, and major client re-insourcing in FS. plus the ramp up of newly signed clients. Let's now have a look in more detail at our initiatives and growth drivers in merchant services that will help us re-accelerate later on this year. We reorganized MS through Power24, increasing our customer centricity approach. Under the new leadership of Paul Marriott Clark, we have strong assets to leverage our scale, our European reach, and our wide product range. A number of signings should drive future growth, namely the ramp-up of our partnerships with Chichibi and Credem in Italy, which will add around 85,000 new merchants, the expansion of our market reach through ISVs, such as Tebesto and Wix, the latter being a new win signed in Q4 that will allow Wix users to access Worldline's local payments and banking solutions to better meet customer expectations. We also signed a partnership in Italy with RCH, the leading technology company for the management of electronic cash systems, to offer integrated payment solutions at the point of sale. Meanwhile, the joint venture with Credit Agricole is progressing well with an initial offering for SMBs that will be followed later in the year with products for the enterprise segment. Other key contributors to our growth acceleration include embedded payments with, for example, nearly 30,000 sellers onboarded onto the OPP platform, which helps us address ISVs and marketplaces across Europe, and the expansion of our tap-on mobile solution, where the monthly MSV is now at around 30 million euros and growing fast. Looking to our other divisions, our financial services will remain impacted by the one-off reinsourcing in the payment accounts segment in the first half, The momentum will improve thereafter and we're confident that we'll be back on growth in the second half of 2025. We continued our positive commercial dynamic in Q4 with further wins, notably an instant payment, which together with our strong position in issuing has led to around 200 million of new business signed in 2024, a 50% improvement versus the prior year. This clearly underpins our ambition to return to growth. Finally, in METS, after a positive 2024, showcasing our dedicated solution for e-health and contact solution, we expect further growth in 2025 and beyond, driven by product expansion and innovation. Moving on to free cash flow and cost control, this has been a key area of focus. Power24 has been successfully executed. enabling cash cost savings of $220 million with a full run rate towards the end of 2025. The savings are visible in a number of levels. In the P&L, we had benefits of $117 million on our cost base in 2024, and we expect a further $70 million in 2025. In our CAPEX, which we managed to reduce by 15% in 2024 in absolute terms with the stabilization expected in the medium term, that's another 50 million euros. And in our rationalization and integration costs, which decreased by more than 50 million euros in 2024. Integration costs should continue to come down in the coming years to eventually represent less than a percent of revenues. All these efforts paid off with free cash flow protected versus other elements of the guidance and will maintain this free cash flow focus going forward. This should enable us to improve operating leverage in the medium term as our revenue growth regains traction. Now regarding the outlook for 2025. In the current context, we expect a similar growth rate in 2025 versus 2024, with a progressive acceleration in H225 after an H1 performance slightly below Q4. In terms of unlevered free cash flow versus 24, we expect some growth before the cash cost of our net financial debt. Further details regarding the 2025 trajectory will be provided during the Q1 2025 publication on April the 23rd, 2025. In the meantime, the new CEO will be working on Worldline's next strategic plan to be presented in the autumn. Moving on now to the full year 2024 financial. Let's look at headline numbers. As mentioned earlier, we posted 4.6 billion in revenues representing 0.5% growth. And in NNR terms, this means a contraction by 1.3%. On profitability, adjusted EBITDA reached 1.07 billion in 2024, representing 23.1% of revenue. Based on NNR, our adjusted EBITDA margin stands at 28.7%. Free cash flow stands at 201 million euros, or a conversion rate of 19%, and normalized net income group share reached 434 million, representing 9.4% of revenue. while reported net income group share equates to a loss of 297 million, mainly due to the one-off provision related to Power24 and the impact from a revised fair value of the TSS preferred shares. Normalized diluted EPS stands at 1.53 euros a share. Moving on to the revenue performance by business line on the next slide, our fourth quarter came in at 1.2 billion euros at group level, i.e. contracting by 0.9% in organic terms and 4.3% on an NNR basis. This increase in NNR to NNR gap is mainly related to lower hardware sales, that I remind you are 100% NNR, thereby having a dilutive impact on NNR growth, and a higher proportion of higher fee international schemes. Looking at it by business lines, The main highlights for Q4 are MS up 1.2%. In a soft context, activity in the quarter was held back by the termination of merchant contracts and delays in the delivery of next-gen hardware products. Specific issues encountered in Q3 in Asia-Pac and in online were resolved as planned, driving a sequential Q4 growth versus Q3 that stood at 0.2%. For the four-year, Organic growth in MS came in at 1.9%, with good momentum in our core geographies, such as Central Europe, and strong activity driven by market share gains in Italy being partly offset by the headwinds I just mentioned. FS is down 8.9% in Q4, largely affected by the re-insourcing process of a significant client which had already impacted Q3. Lastly, METS grew 1.6%, driven by new business development in France. On a four-year basis, on the next slide, organic growth is at 0.5, and as you can clearly see on the chart, growth in MS slowed in H2 versus H1 due to the specific issues faced in H2. Financial services in H2 was also significantly impacted by the re-insourcing process we mentioned, while METS managed to deliver a slight acceleration in growth. Looking at margin evolution by GBL, MS adjusted EBITDA amounted to 815 million euros at 24% of revenues. FS adjusted EBITDA reached 242 million euros, representing 27.1% of revenue. MTS adjusted EBITDA stood at 68 million, representing 19.4% of revenue. Finally, corporate costs amounted to 54 million euros in 24, representing 1.2% of group revenues. In terms of business dynamics on margin, as illustrated on the next slide, one-off items and specific issues impacted the group's profitability in the second half. I divisioned Kiki figures as follows. For MS, margin impacted in H2 by softer revenue performance and one-off merchant termination process as well as the unfavorable country mix linked to the outperformance of Southern European markets relative to Central Europe. In FS, after good performance based on strict cost control in H1, EBDA was affected by the full effect of the contract re-insourcing in H2, which was not fully offset by cost-based mitigation actions launched in the second half. For METS, EBDA performance It reflects a good improvement in the first half before accelerating in the second half, driven by good productivity improvement and product rollouts. Finally, corporate costs decreased by 6 million euros over the year, including a 4 million reduction in the second half. Now, on the operational item of the P&L, the largest impact on EBITDA is the 203 million euros power 24 cost mainly related to a non-cast vision linked to people restructuring costs on integration and rationalization they're down by circa 60 million euros a report to the bda therefore reached 750 million euros net finance cost reached 406 million euros negative impacted by a 349 million fair value change to the TSS preferred shares. Income tax expense was at 11 million euros, the annual effective tax rate being at 22.4%. As a result, net income group share stands at minus 297 million euros, and normalized net income group share at 434. Looking at the cash flow statement on the next slide, We generated 201 million of free cash flow, or 19% of adjusted debit DA. The main elements are change in working cap outflow of 72 million euros. Tax paid increased compared to 2023, mainly due to catch-up payments. Our capex was lower in euro terms, as mentioned earlier. And mirroring the P&L trend and excluding Power24, Our integration costs were down by circa 50 million euros. Overall, free cash flow before Power24 stood at 340 million euros, close to 32% cash conversion. And finally, regarding Power24 execution costs, we've spent 139 million euros. After deduction of Power24 cash costs, our reported free cash flow came in at 201 million. Next, on the net debt, at the end of 2024, our net debt stands at 2 billion euros under a new definition, including IFRS 16 leases, or 1.9 times adjusted EBITDA. On the debt and liquidity management front, structural actions were implemented through the year. We signed a 1.125 billion revolving credit facility, maturing in 29, It replaces and upsizes the former 450 and 600 million lines, which were maturing next December. We issued a new 500 million bond under our existing EMTN program, maturing in November 29, and paying 525% per annum on the outstanding amount. These bonds are rated BBB-, in line with the most recent corporate rating of the company. And finally, we repurchased and then canceled outstanding bonds due July 25 for a total of 250 million, bringing the total reimbursed debt for the year close to a billion euros. Worldline will continue to actively manage its debt maturity profile while maintaining a high level of financial liquidity. So to wrap this up, I'd like you to remember three things about this presentation. 2025 should be a year of two halves, with progressive re-acceleration along H2, driven by an easier comp and new leadership in MS, new customer ramp-up, and product deliveries. Secondly, we'll remain focused on cost actions and free cash regeneration. Finally, as you saw in last night's press release, and we'll, for his remarks, welcome Pierre-Antoine Vacheron as our new CEO next week, and look forward to a fresh perspective for the group. Thank you very much for your attention, and I'm now ready to take your questions.

Thank you. To ask a question, please 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. We will now take the first question. from the line of George Levin from Autonomous Research. Please go ahead.