Esprinet (Milan:PRT) Q2 2026 Earnings Call

0:00 Good morning, this is the Chorus Call Conference Operator. Welcome and thank you for joining the ESPRINET First Half 2026 Results Conference Call. As a reminder, all participants are in listen-only mode and after the presentation there will be an opportunity to ask questions. At this time, I would like to turn the conference over to Miss Giulia Perfetti, IR Manager and Sustainability Manager. Please go ahead, madam.

0:29 Thank you, madam. Good morning, everyone, from me too. And thank you for joining us for the S.p.A. group H1 2026 results presentation. and Giulia Perfetti, Investor Relations and Sustainability Manager of Esprinet. And with me here is Giovanni Testa, CEO of the group, who today will comment on the results. Before we start, please note that this presentation contains a formal looking statement, so I would like to draw your attention to the regulation note on page two regarding information contained within this document. Today's call is being recorded and the podcast will be posted on the ESPRIT website in the investor section together with the presentation. I will now turn the call over to Giovanni to begin presenting and commenting with you on the H1 2026 results. Giovanni, over to you.

1:21 Thank you, Giulia. Welcome also from me. And I think that we can start with the H1 2026 results of the ESPRIT. The world picture of the first half of 26 confirmed our strategy. The solid results reinforced the momentum that we had from the start of the year. The second quarter, I've mentioned the strong performance of the first, and this allows us, and this is the first news that I would like to underline with you, with a solid outlook for the second half and let us to raise our 2026 guidance to adjust the bid of between 77 million euros and 82 million euros.

2:18 So the maximum of the previous guidance that we announced in May now is the minimum of the guidance, the minimum of the fork. Passing on the sales side, gross sales grew over 80% year-on-year, exceeding €2 billion in the half. Also in the second quarter, the Iberian Peninsula remained our engine. It is the market that is more growing in the region in which we are present. and once again delivering a double digit growth.

3:05 On the contrary in Italy the market is growing but low single digit and the trend of the market in the second quarter in Italy is more or less the same of the first quarter. So we are in a market that is starting to grow but not as we would like to see and what is not like we are seeing in the space. Demand is driven primarily by the infrastructure, artificial intelligence, memory and storage. and this is a trend that started in the last month or last year and is continuing also today.

4:01 We see a little shortage of components but we see also a very important increase of the unit average selling price overall speaking about smartphone, notebook, tablet and servers. The first three product categories are related to the S.p.A. space and several are related to the business that we manage under our brand Vivalli. In pieces, overall, what we have to underline is that the decline in unit shipment was more than offset by rising average price, but for sure we see a number of units sold that is less and is an important number, an important figure, with respect to what is the business of PC Notebook in this moment. Greentech has sustained the remarkable growth that we had in the first quarter and What is the main aspect for us is that our strategy to grow, to push a lot in these product categories, in renewable energy, is a win strategy in this moment.

5:36 Passing to profitability and about the financial structure, the bid adjust for the first six months of the year was at 31.9 million euro with an increase of 27% compared with the same period of 2025 and also the incidence of the sales rising to 1.53 from 1.30. This result is supported also by a gross profit margin of 5.79 and also from our capability to keep all the fixed and variable costs under control.

6:24 And this is another aspect that is important in our strategy because we are trying to grow in sales and in gross margin, gross profit, keeping under control the cost and reducing the impact of the overall fixed cost on the turnover. The cash conversion cycle is closed at 25 days, one day better than the first quarter and four days better than Q2 2025. The net financial position is negative of €325 million and is flat. if you see the compare period of June 2025 and is better or more or less 25, 30 million euro of March 2026. Rose stood at 6.3%.

7:30 At the end of the day, what we can see is that we are growing. We are growing in sales and we are growing overall in a bidda margin.

7:40 That for sure is the aspect most important.

7:45 And we have maintained a solid financial structure. So all is the reason why we decided to increase the guidance both 27 to 82 million euros. If now we look, thanks Giulia, to the H1 and Q2 2016 evolution, the messages are more or less the same that we discussed and we shared in the first quarter. We have outperformed the market conditions and all the regions of Europe in which we are present.

8:32 Overall, in the peninsula Iberica, that is the country that is leading the way, Spain grew 18% in the second quarter and 21% in the half. The market grew less, as you can see in the picture, so we beat the market. Portugal is continuing increasing its market share and we are doing more than the market up to 62% in the quarter and 37.5% For Morocco, we didn't have data of the market, but what we can say is that it's still small in absolute terms on the total turnover, but an increase of 20% the sales here and here.

9:38 Italy rebounded in the second quarter with gross sales up to 8%. and in the H1, we are increasing exactly the same percentage of the market. The group grew 4% broadly in line with the market over the last. Pensing to the product categories, the double digit market growth in the quarter was driven by the performance of the infrastructure sales and also a strong performance of the personal system, what we see in the product category screens.

10:27 Solutions and services grew over 15% in the quarter and 13% in the half. and the screen of 4% and 9% respectively. Device that is a product category that last year was in crisis, in this year are growing of 8% in the second quarter and 4% in the half of 2026, ahead of a market that was down in both the period. We speak about the categories with the green tech that remain our fastest growing area with up to more or less 40% in the quarter and 40% in the half.

11:20 that confirm our strategy, that confirm our capacity to grow all the month of the year. It's not a spike in one moment and then result not in line in another month. And confirm also our strategic role on renewable energy and energy efficiency technologies. For sure, in the green tech, there is the port of the result of our last acquisition in October 2025. Passing to customer, IT reseller were the main engine of our customer cluster. and are growing 8% in the quarter and 13% in H1.

12:12 Retailers were down 9% in the quarter. Here we want to... We decided not to take some business that under the profitability and working capital point of view were not, in our vision, good to take. We wanted to create a value, not to destroy the value. And we are not following the turnover just to have a better figure in the top line if the result is not reflected in the bidder margin.

13:05 And so we decided not to take some business in the retailer and retailers space. Passing to the next one. Here we see the profit and loss of H1AQ2 by the three dimensions that represent our go-to-market, screen and devices for the S.p.A., solution and service for Vivale, and green tech for Zeratec. As you can see, all the figures are positive. Some comments that we have already done a few minutes ago. What I have the pleasure to underline is the performance of the services.

13:51 If you remember in Q1, we had services figures that decreased of more or less half a million euro for a spot deal that we had in the previous year, not in 2026. but you can see the performance of the services in Q2. So after the announcement of our new division in Novexia that we announced at the end of March 2026, we are very focused on services. We are pushing a lot and in Q2 we increased over 41% of the turnover and 56% in EBITDA margin.

14:39 It's clear that there are small numbers of turnover in our global turnover, but with the EBITDA margin of more than 50%, also a small increase of turnover represents a good impact in our total EBITDA margin. Another aspect that we are the pleasure to to underline, as we have told before, the green tech with an increase of 40% of the turnover and 57% of the bidder margin, with a bidder margin that grew of more than 20 basis points.

15:30 Other aspects that...

15:33 We want to underline is the increase of the turnover of the screens, which for sure there is the impact of the increase of the average selling price of a notebook and a smartphone, but also the good performance respect to the previous year of the devices. If you see the H1 result of the bidder margin, €3.1 million against €0.3 million with a delta of €2.8 million, more than 100% of the increase. Also in this particular case, as we have said, and the last investor call. We have changed the profile of our business. We have decided not to go on in some categories of each product and we are pushing a lot on the market in which we can see the margin higher than and in the past.

16:51 In the particular last summary, we see the good momentum of the EBIT adjusted and the EBIT adjusted. For turnover and for gross profit, we have already commented what happened. We see about the SG&A costs that are growing of 4% in H1 and 7% in Q2. The main reasons are all related to personal costs, because I remember you that the perimeter of the group was not present in Q1 and Q2, with VAMAT, for example. And there are also the two renewals of the Collective Vargas Agreement that there is, both in Italy and Spain, with a percentage that are important.

17:57 For the other costs, people under control are in line with our expectation and also with the 2025 result. And the percentage of the incidence of SGNA on the turnover, H126 decrease from H125 from 4.44% to 4.26%. About what we to underline in Q2 is that for the first time there is a difference between EBITDA and EBITDA adjusted but also at the level EBITDA adjusted because in Q2 entered the We have included some costs, some non-recurring costs that are related to the termination of the relationship with our former CEO, Sandro Cattani, and three managers of the group, one in Italy, one in Spain, and one in Portugal, that left the company during the Q2 2026. About the financial...

19:23 The impact as we have already seen in Q1 of the not favorable dynamic of the euro-dollar exchange. On the contrary, the other financial costs are in line with the last year, speaking about 6.2 million euro. in H1 2026 against six millionaires in H1 2025. At the end of the day, we know that net income increased over 40% in the half, and you see the decrease of the income in Q2, but it's all related to the not recovering cost

20:16 that I have explained a few minutes ago.

20:23 Thinking about the balance sheet summary, there are two aspects that are the main focus of the group since a lot of quarters. The first one that you can see in the right side of the slide is related to the operating networking capital. You can see that in the total operating network capital is in line with the result at the end of June, is in line with the result of 25, because we are speaking about 428 million euro against 417 million euro. You see an increase of the inventory.

21:13 and also have increased the rate of trade receivable that is connected to some deal that we have decided to do because connected to the continuing increase of the prices. We have decided to have the product already in our warehouse for the H2, for the back to school in August and also the campaign September to December that I remind you that are the four months in which we have to create the majority part of our EBITDA margin of the year. and so we have decided to prevent the increase of the of the products to have some products available with the better price of the maybe of the competition of our competitor for our customer we have decided to anticipate some deals speaking about the net financial debt that you can see in the left part of the side Even if we have done this deal and we have anticipated some purchasing deals with the vendors, then the financial debt is fully stable because we are talking about 325 millionaires of debt in 2026 against 328 millionaires in 2025. That is also connected.

22:53 to agree on more than 8% of the turnover. So in this moment, we are confident that also our hard work, to get back to the inventory management, is offering us a good result and a good demonstration that our strategy is in this moment a win strategy. Here we see the working capital matrix for the average of four quarters. The figure that we see in this slide are the same as the next one. Seeing the average of first quarter, we are passing from 29 of Q2, again, of Q2, 25 to 25. So we are increasing the result. We have a better result of four days, and of one day, respect the Q1 2026. If we see the In the next slide, if we see the ER quarter metric, also here we see four days of better result for the Q2, so June 25, June 26, and a decrease of three days, so more than one day of the average of the last quarter,

24:26 from Q1 26 to Q2 26. Rosse is stable, 6.3%, fully in line with the result, a little increase with respect to the result of Q1-26 and a little decrease of Q2-25 that was 6.6%. So, final remarks. The geopolitical scenario is changing every day, as you can read in the newspaper and the websites. Every day we have a news that could be a good news or a bad news. And the two, in the bracket, big wars, big crises, we're speaking about Iran and Ukraine, every day offer us a different scenario that can change the visibility over the next month. For sure, all these aspects are creating issues on supply chains, the cost pressure, the price pressure, the price increase of the product, the cost pressure overall related to transport and energy aspect.

25:57 You see perfectly the increase of the cost of the oil. So it's an issue that can have some aspect related to the control of the fixed cost and the variable one of the company. There are also some issues about the project timelines because some companies, we are speaking about private companies, are looking for starting new projects. and they want to see which will be the future. And we still have, as in the Q1, some problems related to the public tender, we're talking about concept tender and so on, because even if the vendors are trying to enlarge and the time in which they can grant the price to Consip there is still an issue because in the past we were in a market in which the prices decreased and the The visibility for the tender with the public administration was three years

27:31 for the price. Now it's not possible to have the same situation. The ICT distribution market is growing. It's growing with different percentages, country by country, but all in all is growing. And the dream was driven mainly by, as we have already said, the demand for infrastructure, artificial intelligence, software cloud, cybersecurity, and for sure for the PC segment that, as we have already said, see lower units volume offset by the average price that is increasing more.

28:23 So we can confirm at the moment that our strong performance of H1 is a demonstration that we think is a good strategy that we started some years ago with the three divisions, S.p.A., Vivar and Zegatec, with the decision to enter in a renewable energy, with the decision to have a push More than in the past on services and data center solution is in this moment because we can comment the results since today. But also in our forecast and the reason why we increased our guidance, We are positive and we think that we can have a long-term growth also in the next quarters because our market and our strategy as well will permit us to grow.

29:34 So if the guidance, we decided to create the guidance, and the new one is a bit adjusted between €77 to €82 million. And we will work as in the past to arrive in the high part of the fork as we have done last year. I think that I have finished from my side and Giulia or the team for the Q&A session. Thank you, this is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone.

30:24 To remove yourself from the question queue, please press star and two. First question is from Pietro Nargi, Intermonte.

30:35 Hello, good morning. Thanks for taking my questions. Two questions on my side. The first one is on the device segment. As you already said before, there was an improvement in both revenue and profitability. I was wondering if this trend could be, let's say, sustainable also in the second part of the year. The second question is on the V-Valley. We have seen, again, a solid growth on this segment.

31:21 If you could provide us more color on your, let's say, expectation for the mid-term. So if, let's say, the high single digit target year on year, it's a sustainable trajectory for the next few years. Thank you.

31:46 The results of Q1 will be possible to reach also in H1, will be possible to reach also in H2, and also in the next year. The result is related, as I have mentioned before, to a decision not to manage anymore some of that categories that enter in devices, and also there is an aspect that I'm happy to comment with you that today our own brands performed better than in the past and all brands in our division of the turnover entered in the vice segment. So the answer is yes, we see more or less the same trend also for H2 and we are forecasting also for the next year. About Vivaldi, Vivaldi is one of the pillars that is present in our strategy.

32:53 Also in the Vivaldi space there are a lot of product categories that all together created the result of Vivaldi. Some product categories are growing a lot and also in the future are, from our point of view, the trendsetter of the market. We are speaking about overall software and cloud that are mixed, because there is no difference between boxed and cloud in this moment, so on-premise or cloud. And overall cybersecurity. There is also an apport of artificial intelligence agents that is starting It's not showing 100% in the results of each one, but it's starting.

33:45 And we have signed some contracts with vendors of agents. As I told you in... in a lot of interviews in the last month about artificial intelligence and about the agent. We are developing some agents internally. and also we are signing some contracts with the vendors to distribute agents that are done by other companies. What is the common point for the two strategies is that we are testing the agents internally before to put in the market.

34:43 to offer to our customers because we wanted to be sure that they are working well because artificial intelligence is a space in which a lot of people are speaking and I'm not sure that all are knowing perfectly what they are saying. We can say in this way because I wanted to be polite. And so we wanted to test to be sure to offer to our customer agents that are working in a right way. Speaking again about Vivaldi, there is also another aspect that are important for us, is the market that is related to servers.

35:34 also connected to the artificial intelligence the needs and the performance of the servers necessary to manage the AI artificial intelligence are growing a lot so we have to offer to the market servers with the capability, with the power but higher in a very important percentage or increase of the power of the service. So there is a market in which we will see in the future some needs of change of the infrastructure that are present now in the data center and so it's another opportunity for us.

36:31 I hope to have well answered you. If you need some other comments, please tell me.

36:36 Yes, thank you. Very helpful. Bye. Next question is from Matthias Palladino, TP Cup.

36:47 Yes. Can you hear me?

36:50 Yes.

36:51 Okay, thank you. I have a question, maybe more related to one on the working capital. So the cash conversion cycle improved to 25 days, but we remained above your 21 day, if I remember well, ambition. And while factoring and securitization programs increased to 402 million euros. And what concrete progress can be made on working capital in H2? Should investors expect that higher EBITDA guidance to translate into stronger cash generation this year? And maybe the second question is on Vivaldi on the margin. So if we compare it to the last year, we were at 4.75 and now we are 4.35. And so what drove this small, let's say, dilution? and should we view it as a temporary mix effect or as maybe the appropriate margin level for the current growth environment?

37:52 Thank you very much for the answer and the presentation.

37:56 Okay, let me start from the second one about the EBITDA margin of Vivaldi. In the reality, the gross margin, the gross profit of his company, his division, is growing. The reason why we see a decrease of the bidder margin is related to the fact that we are inserting in our structure, in our organization, some profiles that in the past we didn't have and other profiles that in our vision can support and support a lot in the future, next future. And so this is why we are speaking about personal cost that make the bid emerging with a little decrease. But we are quite confident that there is a good opportunity to improve in the future.

39:07 Another part of the bidder margin rules by the personal cost is related to the new sales structure of Innovexia. As we mentioned, the big difference in the managing of services The group, with respect to what we have done in the past, is that we are trying to sell services and solutions related to the services, not only with the general sales structure of each company, but we have created a specific sales division this group that help our customer to go together to then the user to explain the services and the solution and we're speaking about overall cyber security and artificial intelligence solution and so obviously these This group have a cost that in this moment have an incidence more than the growing that we are seeing in the turnover services.

40:34 But as we saw in the figures before of Q2, already there is a good result of 40% of the increase of the turnover in Q2. It's not only related to the new sales group, but it's also related to the news group. Speaking about the working capital, for sure we see a little slice improvement of the working capital. There is a seasonality that Vizia has changed in respect to the previous years, and the needs of vendors and customers, as I commented before, created a new need to anticipate some purchasing deals.

41:43 and so, this is why we are not, we have produced a better result of some days as you told us. We are not so far, but we have not already reached our target that is, as your writer mentioned, 21 days that in our calculation will permit us to be cash neutral. The main focus to arrive to that target will be to reduce another time the level of stock. We are confident to do that in Q4, overall in Q4. Also in Q3, you will see some some opportunities for us, we can define the bracket anyway, but overall in Q4.

42:43 That is the moment in which there is the big worries about the possible shortage of smartphone and PC notebook. There was also an aspect of a securitization and factoring We are trying not to do a lot more synchronization, but to sell more voices to factoring, because we are also trying to have the double advantages, not only on the FH position, but also because we are always in not recurring programs.

43:36 So we are matching also the aspect of the credit insurance aspect because it's true that in this moment there are some possible issues about credit with very small specific clusters. I don't want to mention now, but there are one two clusters very small as number of customers but very important in some specific market and speaking about smartphone one that are some some issues probably you have already read something in the newspaper and website very clear thank you very much Next question is from Gabriele Berti, Intesa S.p.

44:36 Good morning, everyone. First of all, congrats for the result and thanks for the presentation. First one is on Spain, which is still very strong. How sustainable do you see this growth pace and can you provide some color on how much of the performance was linked to public incentives in comparison to the underlying private sector demand? Then you mentioned memory shortages and higher component prices as relevant market factors. Could these dynamics become a potential headwind for demand or working capital management in the coming co-quarters, although they are currently supporting current selling prices?

45:27 And very lastly, if you can provide an update on the execution of the Novexia project.

45:35 Okay, the first question is about the, for example, for Spain digital, the digital kit, and so the funds for the PNR programs in Italy, Spain, and Portugal. There are, also here, there are two different speeds in the countries. In Italy, the impact of the funds is not so important from our point of view, in our vision, because a lot of funds are already not yet spent and not yet used because sometimes our customers, our end users are not knowing perfectly how can do that and so there is Probably some also problem of communication.

46:36 When we've spoken with our customer, we have the feeling that not all is clear, not all the opportunities that this aspect can offer to the market are catching 100%. On the contrary, in Spain, I have to say that in Spain all the funds were used and were well used for the end user to start new projects. in some different markets and we see that in the new energy and also in the projects that are connected to the data center.

47:29 As I told you before, related overall to the change of the servers in order to manage better the agents were well used and We think that can support the business till the next two, three quarters as well. And then we will see what will be the decision of the governments and of Europe for sure. The second one was... The shortage of the memories and the impact on the prices. In this case, we have two divided impact in two main groups. The first one is we are sure because we are seeing also the projection of and so on, that the unit price of a notebook and smartphone will increase, I think, till September, the end of Q3 of 2026.

48:46 Sorry, 2037. Because also the possibility to create new factories for chips need more than one year. And in China, and not only in China, in Far East, started to build the new factories. A lot of vendors do that, did that. But there is... Thank you very much. In the future, there is also here the need to divide public and private market and user market. Private and public market, so we are speaking about public administration, central, local, there is no difference, the private companies will continue to buy because they need to have a notebook that can perform with a new

50:16 tool with also the chapter CBT, explode, tropical and so on because if you want to have a good performance you need to have a notebook to perform it. that can perform with the microprocessor RAM and so on better than what they have in this moment in the companies. I want to remind you and we have to remember well that the last big change of the devices was during and after COVID. Then there was another wave related to the change of Windows 11, but it was lower than expected what happened with the COVID change.

51:08 And now, for our point of view, we are already in the third wave. And speaking about for the companies. Speaking about for the users, We really, the vendor with whom we are speaking about this aspect, are really not all aligned on what can happen in the next month. We see a demand, a consumer demand, a demand of the user, we are speaking about the retailers and the retailers market, a stable or in this moment is decreasing a little and this is also reflected to the units sold in the H1 that were less than H1 2025.

52:08 To forecast now what will happen in the next three, four months, because we are speaking about Black Friday and Christmas campaign, it's quite difficult to forecast. The average of the vendors are saying that the units sold will be less, but less in an important percentage, with respect to the increase of the price. So the turnover and the bidder margin related to that part will increase.

53:01 and the last one was about Innovexia. We launched Innovexia in March 26. It is a division that is fully working since some weeks because we have created the structure, we have done all the We have hired all the people that we needed in the sales department that I mentioned before and so we have seen for Q2 that the result was 40% of increase of the turnover but overall we have as we can define our activity. We are in this moment in a phase in which we are explaining what Indovexia can do for our customers and for the end users and what the services and solutions that we have sold, we can sell Sometimes in exclusivity, for example, we have signed a contract in exclusivity on June 22-23, I don't remember. There's a date with data for a cybersecurity and artificial intelligence solution that is called Axia.

54:31 that we are offering, we are starting to offer overall in public administration, local and central, with good results. So we are in a phase in which we are explaining and we are quite confident that in the Q3 and Q4, and that's for sure in 2027, we will take the results from the market of what we are doing now. We are happy because the result is good so we can not be different that we are happy for the turnover for the bid margin result. But we think there is a big space in which we can grow in the next quarters.

55:24 Thank you very much. As a reminder, if you wish to register for a question, please press star and one on your telephone. Once again, if you wish to ask a question, please press star and one on your telephone. Ladies and gentlemen, there are no more questions registered at this time.

55:58 Okay, thank you. So we can end our today's conference call. Thank you for participating and of course we remain at your disposal. Thanks again and see you next time.

56:12 Thank you to you and we'll see you next time in November for the Q3 result. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.