Worldline Sa Ord

Good morning and thank you for standing by. Welcome to the Worldline First Half 2025 Results Conference Call. Please be advised that this conference is being recorded. I would now like to hand the conference over to our speaker today, Pierre-Antoine Vacheron, Worldline Group CEO. Please go ahead.

Thank you. Thanks a lot. And good morning to all of you for this H1 call. I'm here with Gregory Lamberti, our Group CFO, for his presentation. Last call with us, probably the opportunity to thank Gregory for his dedication to the company in its various shapes over the last 10 years. Gregory has been head of strategy, then CFO during all the journey at Engineering Code and OneLine. And I want to thank him for all his dedication until the very last moment. and I think we can be very proud to have had Gregory with us during those times. So let me move now, and before we enter into our presentation for H1, I would like to start with four key messages. First, as you have seen in our press releases, Q2 has been very active on many fronts, with a real sense of urgency so that we can turn around the company as soon as possible. Just to mention, entry into exclusive negotiation on METS, entering positive results on the audit of our merchant portfolio, the refinancing of the company, the assessment of our assets as part of our work on our strategy going forward, the reshuffling of the operating model in merchant services, And finally, the extensive renewal of our management team. Second comment, second message, we have strong assets and strength, and I can confirm that, but as H1 results show, we are facing several challenges that have to be overcome to restore the potential of this company in terms of growth and cash flow generation. Third, I still have uncertainty for the rest of the year, but I need to provide you with some visibility, with the guidance, and I have to be cautious where I stand. Last, my objective is to have robust groundwork when we turn the Capital Market Day on November 6th in Paris. I'm confident we are making good progress, and I have a strong and re-energized executive team joining on the same mandate in the coming weeks. Moving on now to H1 financials. Let's look at the headline numbers reflecting the challenges identified and highlighted last April during our Q1 revenue publication. In the first half, we posted 2.2 billion euro in revenue. representing organic decline of 3.4% compared with the prior year, a trend consistent in Q2 and in Q1. In net-net revenue terms, our revenue declined by 7.3%, impacted by the mix of products. On profitability, adjusted EBITDA reached €401 million in H1, representing 18.2% in revenue. And based on net net revenue, our adjusted EBDA margin stands at 22.9%. The free cash flow stands at plus 40 million of euros, or a conversion rate at circa 10%, which is not a good trend, still impacted by Power24. Finally, normalized net income group share reaches 121 million of euros, with a reported net income group share that equals to a loss of minus 4.2 billion of euro, impacted by a 4.1 billion of euro non-cash goodwill impairment, reflecting the evolution of the payment environment in Europe and also the consequences of the current performance and challenges of our merchant services business. I would like to precise that following this impairment, the warline equity remains solid at 4.9 billion of Euro. As I said, we've been very active during this first half, more particularly in Q2, with clear objectives. Restore trust and set the basis of our transformation. First, our immediate priority has been to address and fix the initial challenges presented last April. It has been a strong managerial focus and started to see the first tangible benefits. On the product side, we have made clear improvements. Regarding hardware, you will remember that we had significant issues across the board. Situation has been fixed in most of the geographies, with still few terminals missing in Belgium, and performance issues remaining in some markets on the enterprise segments. But this is much better. The first e-com offering for coal, the Crédit Agricole, is live and has been rolled out in the Crédit Agricole branches and soon within LCL. This is based on our refactored e-com solution, which got, by the way, commitment from large merchants to migrate out of the CIFS platform to this refactored solution. We launched Wiro payment method this summer in Germany. with a planned rollout in Belgium in October and in France in early 26. This will take some time, but based on the successes of Bizum and Twint in Spain and Switzerland, I'm quite optimistic that this will generate significant revenue going forward. Finally, on the acquiring front, we have started to deploy our UK offering to be able to operate there post-Brexit, and we have achieved end-to-end testing on carte bancaire in last June. On SMB, we have started to stabilize our churn rate, especially in Switzerland, Sweden, and Germany, but with better performance on small merchants than on mid-size, which leads to still lower volumes. Our merchant services operating model has been redesigned to drive more delivery and fast decision. The management team of Paul is being renewed with add-ons on Terminal Center of Excellence and on Regional Commerce beginning of September. Last, all action plans are operationalized to deliver the 50 million cash cut savings plans that were announced in April with a clear objective to over-deliver it. To prepare the future, we have cleared the table on several topics, enabling us to move forward from a healthy base. On the portfolio planning strategy, a very significant milestone has been reached on METS towards a disposal of the activity. I will come back shortly on that specific point. But have in mind that other initiatives are getting mature with a strong momentum. We also have actively worked on our financing strategy and the coming debt refinancing are completely secured. We have made, based on our strategic work, a deep work on balance sheet to clean up the basis after several years of market consolidation. Last, we have launched two external audit on our merchant portfolio with already interim reassuring results. I will focus on this topic regarding the HBR portfolio. As you remember, on July 7, we mentioned an audit to be commissioned to Accuracy on the remaining high brand risk portfolio to confirm its cleanup and its alignment with our compliance and risk framework with a preliminary outcome today. I am very happy to say and to share that based on the preliminary findings of Accuracy, which will continue their audit over the coming weeks, there is no need for material off-boarding of merchants that has been identified so far in a regulated entity and the group has confidence that it is not to be expected. This confidence is reinforced by the fact that with very seldom exceptions that have promptly been addressed when appropriate, the cases referenced in the recent press campaigns were not or no more in the books of the group. As shared in June 25th press release, the group has extended its review of the technical orchestration layer portfolio activity to assess and take actions on merchants potentially lacking proper gambling licenses in the countries they operate, but we do not anticipate significant impact in 2025. In parallel to this, One Line is undertaking a comprehensive assessment of its compliance and risk framework and its implementation, a task assigned to Oliver Wyman. As said, the main conclusions will be communicated alongside the Group Earnings Report on October 21. By the end of October, any potential remaining weakness and improvement areas will be identified, and in such cases, necessary action plans will be executed to ensure optimal operational integrity. The Worldline top management and board of directors are fully committed to strict compliance with regulation and risk prevention standards. So regarding METS, as we announced yesterday night, a major milestone has been reached in our simplification journey with the entry into exclusive negotiations with Magellan partners regarding the divestment of METS activities and some financial services related activities after a competitive process. This transaction when concerned, will be fully part of our transformation roadmap and will enable us to refocus on payments as already announced through exiting from adjacencies with different type of business model, simplify group operations with a leaner organization, optimize the allocation of our resources with more focus on payments in terms of investments, while alleviating management bandwidth to be concentrating on the core. Finally, this will enhance our strategic flexibility with the reinforcement of wireline liquidity through the cash-in from the disposal. As announced yesterday, the divested activities generated revenue around €450 million, employing some 3,800 people. The discussions are based on an enterprise value of up to 410 million of Euro, including 10 million Euro turnout based on the 2025 operating performance of the perimeter. This valuation represents an approximately 11 times pro forma standalone adjusted operating income for 2024, which is the relevant aggregate to look at in terms of valuation multiple. We expect to close this operation during the first half of 2026. I want to mention here that this is also a very good opportunity for METS and their teams with a more strategic focus on their organizational structure, dedicated innovation resources, and development in new market and skills with a very strong and qualitative partner, Magellan partner, which is who is quite renowned in digital transformation in France and in Europe. We will obviously keep informed the market in due time regarding the next steps of the process. In parallel of my business key findings, I decided to extensively renew our leadership team to drive the transformation of the company ahead. After disposal of METS, the ExCo will be made of eight members only, out of which six will have been appointed in the last nine months. After the arrival of Paul McClark to drive MS Business last November, and more recently Candice Dion to improve our technology stack, I have the pleasure today to announce three newcomers who will be with us in the coming weeks. Trikant Sechradi will be the new Group CFO. With an audit background, he comes from a tough industrial environment, which was Alstom, and he will be key to run the ongoing finance transformation initiated by Gregory and the automation of our finance processes. He will bring as well a deep expertise in treasury and financing strategy. Annika Grant is Australian. She will be the new Group People Officer. and she will drive the people equation to manage our people costs while retaining and attracting talents, key pillars in the creation of the new world line with a very advanced digital DNA coming from Uber in the last years. Madalena Cascai will be the new head of financial services. She will regenerate and reposition this activity leveraging on her very strong expertise and reputation in the payment sector. Madalena did an extraordinary work to transform the CIPS Portuguese operator over the last years and to expand it internationally. Now I think we will have, from now, the right leadership team to drive successfully worldwide transformation.

Let's now go through our performance and key business highlights for Q2.