Worldline Sa Ord

Good evening, and thank you for standing by. Welcome to the Worldline Q3 2025 Revenue Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Pierre-Antoine Vacheron, Worldline Group CEO. Please go ahead.

Thank you. Thank you, operator, and thanks a lot. to all of you for joining our Q3 revenue call. Before we begin the presentation, let me welcome Srikant Sethshadi, who joined as our new CFO last month and who is here with me today. Some of you may have spoken to Srikant already and you'll have the opportunity to meet him, obviously, at our Capital Market Day on the 6th of November. I must say I'm super happy to have Shrikant on board with me. He comes with extensive experience at Alstom, and I can tell you that he already has a big impact on the organization. So maybe to start with the key highlights, I will not comment on the whole slide, but what you can see on this slide is that Q3 has again been super active as this management is acting with a true sense of urgency to put the company back on track. Our Q3 revenue performance is in line with expectations, with the good news of stabilization of revenue at merchant services versus last year's Q3, and the slowdown of the decline on financial services. that Srikanth will comment more, combined with the underlying trends that we see, allow us to confirm the guidance of July in a narrow brand between €830 million and €855 million of adjusted EBITDA and a free cash flow including the increase of financial costs that would be between minus 30 and 0 plus, depending on the ABDA. This performance of Q3 is linked to the positive impact of the measures that we have taken since April. As you remember, one of our key challenges was the unavailability of next-gen Android-based terminals. This topic is almost behind us. which enable the management, together with the improvement of customer satisfaction, to stabilize the churn in several geographies. Same with the ramp-up of our soft posts, which proves to be super competitive in the various segments and verticals where we deploy it. It's not big volumes, but it shows that our line is well-positioned in emerging customer journeys. The successful launch of Wiro with the first pilot in Germany, the fast ramp-up of GoPay e-commerce offering in the credit agriculture branches, the commitment of several enterprise merchants to migrate to GoPay are other testimonies of a world line in motion. And I could give other examples of this, notably in financial services, with the successful deployment of cards from our next generation issuing platform within the portfolio of a large Dutch bank. During Q3, we finalized the review of our merchant portfolio and the assessment of our risk framework. What is super important for you to get is that we confirmed today, based on the results on the analysis done by Accuracy, that the group merchants acquiring and collecting portfolios is generally mature and that no material off-boarding is expected beyond the merchants that were already off-bordered since 2023. We are also continuing the review of the technical orchestration layer that could lead to some decommissioning of some merchants, but the impact in 2025 will be marginal. On their side, Oliver Wyman concluded on the assessment of our compliance and risk framework. Their evaluation confirms that Worldline has made significant progress in enhancing its risk and compliance framework in the recent years. The AML framework and governance, according to them, are well-defined according to benchmarks, but we need to improve the harmonization of their implementations across entities which we knew. This is what we are committed to do through industrialization and automation across our global competence centers. As you know, our transformation roadmap includes the divestment of assets which we consider as non-core. To today, we announce our entry into exclusive negotiations regarding the contemplated, sorry, divestment of Worldline North American activities for an enterprise value of 17 million, 70 million of Euro. Worldline North America provides online and in-person payment services to SMBs across Canada and the United States in the range of specialized verticals, and this perimeter represents a turnover of 60 million of Euro in 2024, and $8 million of adjusted EBITDA. This contemplated transaction is a significant milestone after METS. In our journey to simplify the scope of this company, it is expected to close in the first quarter of 2026, subject to usual customary approvals. Regarding METS that we announced last July, the process is progressing as expected. The signing of the Share Purchase Agreement is expected in the coming weeks, while the closing of the transactions should happen in H1 2026. Ahead of this and in anticipation of the disposal of METS, we have decided to move to the next phase of simplification and streamlining of the organization. As you know, we renewed the leadership team in the last month to have greater diversity and increase the range of competencies. In the past few months, we have welcomed Candice Dion to head our technology operations. Srikant has joined as new group CFO. Annika Grant as group head of HR, and Madalena Cascais as new head of financial services. To make it simple, as Merchant Services will represent something like 80% of the revenue of the company, we are going to drive our Merchant Services business directly at the EXCO level, tailoring the organization. I will take myself direct ownership of the go-to markets while Candice will take ownership of the operations. This new setup will help maximize synergies between SS and MS and have a direct grip on the transformation journey ahead that I'm looking forward to share with you at the CMD on November the 6th. I would like now to hand over to Trikant who will enter in detail in the performance of the Q3 in our various business lines.

Thank you, Pierre-Antoine, and good evening, everyone. I'm very happy to join you for my first results call at World Life. I'm aware of the challenges we are facing, and I've been working with the refresh management team across the organization, and we're all quite motivated, highly motivated, I would say, to deliver the Teleron plan to restore growth and cash generation potential. Now, looking at Q3 2025, Worldline delivered external revenue of €1.15 billion in line with expectation, representing an organic decline of 0.8%, with merchant services decreasing 0.1% or down 3.5% on a net-net revenue basis. The lag in NNR versus published revenue was mainly due to merchant and product demand. Financial services was down 4.5% with a decline versus H1 moderating after the end of client and sourcing in account payment division. And finally, MET revenue was up 0.6%. Turning on the next page to the detailed segment analysis. In merchant services, we delivered Q3 revenue of 862 million euro, broadly flat year on year in organic terms, but underlying was slightly higher year-on-year when excluding the hardware-based effect, looking at the trends by go-to-market. In large enterprise, the segment was impacted by lower performance on terminals, as Pierre-Antoine was alluding to earlier, as well as lower volumes in the retail vertical. On the positive front, our acquiring business has stabilized with good performance in Italy and in the Nordics. Our travel and hospitality franchise continued its momentum thanks to new client wins and growth of a business with existing clients. As illustrated by the logos on the side, our offering for airlines continue to expand. We notably signed a partnership with Yipei in China, where Yipei will be integrated into our dedicated travel hub platform and our acquiring capabilities. We also signed a couple of new customers in the hotel space and expanded our offering with Arabian Oud in retail and the Avis Budget Group. Then in the small and medium-sized business, while our performance was affected by the lack of availability of next-gen terminals in certain markets, this issue has been materially fixed, and our solutions are being rolled out. The stabilization of our churn has thus been confirmed during the summer. Our growth dynamic in Central Europe remains robust and broad-based across all verticals. Last in our joint ventures, we continue to see solid market share gains in Italy, thanks to progressive migration of Credem and CCB merchants. On the other hand, Germany performance was more difficult in acceptance and in terminals. Although situation has improved in SMB main channels, i.e. direct and savings bank, the partner channel is still suffering. Now looking at the FSQ3 revenue developments. Card-based payments processing revenue was broadly stable. We benefited from new contracts as well as upselling and volume increases on existing customers. These positive developments were partly offset by the descoping of certain activities of acquiring in Benelux and in Italy. Digital banking revenue was impacted mainly by lower SMS activity in France and to a lesser extent ideal volumes in Netherlands. Finally, account payment activities were held back mainly by a decline in transformation projects. Account payment was the main reason behind the drop of the segment's revenue decline, as the other two segments were broadly stable to slightly negative. In terms of commercial dynamic in Q3, Worldline won a contract with Guarantee Bank to plug in merchants for e-commerce acquiring services, as well as contracts with large banks in Italy and Netherlands for verification of pay, Vero Processing, and client migration to the target issuing platform. On mobility and e-transaction services, segment delivered positive organic growth in Q3. Transport and mobility sub-segment benefited from higher volumes in the UK rail sector and from higher activity in mobility projects and ticketing systems in France. In omnichannel interactions, we saw good growth in LCL in France, but faced a high comparison in license deals from the prior year. Finally, we had lower revenue and trusted services as a result of certain contracts coming to an end and lower volumes for our connected vehicle solution in France. In Q3, Worldline was selected by the French services and payment agency for the management, coordination and functional design of agricultural aid solutions in France. The business unit also renewed its contract with the rail delivery group in the UK for several years. Worldline will modernize and transform its service offering by migrating the solutions to a Google cloud-based service and replacing the existing ticketing software. Finally, on the guidance, based on the performance of the first nine months, we narrowed the 2025 guidance, which is still within the range of the guidance we provided on July 2025, a low single-digit organic decline in sales, an adjusted EBITDA of 830 to 855 million euros, and a free cash flow of minus 30 to zero plus. Before handing over to Pierre-Antoine to conclude the presentation, I would like to mention that we have a slide in the appendix related to the notional cash pool mechanism that would clarify several inbound questions from the financial community on liquidity management. I have looked at this setup, which has been in place at Worldline for over 10 years, where the subsidiary cash pooled into BMG, which is a subsidiary of ING, and used for offset at the parent to pay down debt. My conclusion is that it has been functioning smoothly and efficiently, and I'm willing to take more questions during the Q&A. We look forward to providing you more details on our transformation plan and the free cash flow outlook at the Capital Markets Day on the 6th of November. Thank you, and now I hand you back to Pierre-Antoine.