Quadient (Euronext:QDT) Q2 2026 Earnings Call

0:00 Good evening, everyone. Welcome to Quadient's first half 2026 results presentation. I'm Laura Paxton, Quadient's Head of Investor Relations. Today's presentation will be hosted by Geoffrey Godet, our CEO, and Laurent Du Passage, our CFO. The agenda for today's call is on slide three. As usual, there will be an opportunity to ask questions at the end of the presentation. You can either submit your questions in writing through the web or ask questions live by dialing in to the conference call. Thank you very much. And with that, over to you, Geoffrey. Thank you, Laura. Good evening, everyone. Let me remind you to get started of the strategic direction that we set at the beginning of the financial year, since everything else follows on from it.

0:49 The pivot to digital is not new for Quadient, as you know. We've been preparing it for years. Demand for digital automated business and financial communication keeps building up. Artificial intelligence is accelerating it. The digitalization of financial workflows is also accelerating. And so are the invoicing mandates coming across Europe. And we set a clear objective. Digital becomes the largest and most profitable solution by 2030. So this is where the growth is. This is where our capital and our focus belongs. We reinforced the executive committee with four digital business leaders at the beginning of the year, and I personally took over direct leadership of the digital business.

1:37 Additionally, this year, on the 20th of July, we announced that we were conducting a strategic review of our locus business. This review, I'm happy to report that it is now complete. And I will take you through the outcome on the next slide. But first of all, Let's look at what the Locker team has built. Moving back to 2018, Lockers was small, we would say, around 2,000 Lockers and around 6 million in revenue. Then, quickly after that, as we set our strategy, we acquired Passer Pending, a US-based company, in 2019. And then from there, progressively, we expanded across the US, Canada, Japan, the UK, and France. We also made another acquisition called Passer Concierge, another U.S.-based company, to consolidate the U.S.

2:31 market in 2024. And in 2025, as a summary, the business delivered €114 million of revenue. Just as a quick reminder, this represented a 22.4% growth versus 2024 on a reported basis. and represented also 11% of Quadient revenue. The EBITDA margin was 5% last year, which was up 4.4 points after already passing the breakeven point in 2024. So, if I was to summarize in seven years, we multiplied 19 times the revenue and around 14 times the install base of location of lockers worldwide.

3:23 We could say that we have today a mature asset, profitable, and at scale, the number one position in the U.S. and in Japan, and a U.K. network that's scaled actually very fast in the last three years. We could say that this business has delivered on its promise. Just take the opportunity to thank, obviously, all our partners and our customers, and most importantly, the Quadrant Logo team that built up this business for us. And this is the context in which we ran the strategic review this summer. So now the time is right to consider what is next for Lockers. So let's look at the outcome, going to slide six. In conclusion, I think the review produced two major outcomes, and you can see them on the left. The first, following a competitive process, we have signed an agreement to sell our UK operation, our open network, to a company called IDS for 65 million euros.

4:27 The second outcome is that we also have launched the sale process for the rest of our local business. As a result, the local solution is now presented in accordance with the accounting rule called IFRS 5 in this presentation and in our first half financial statement. Consequently, 2025 figures have been restated on the same basis. Laurent will take you through all those changes and their impacts. So let's start with the sale of the UK open network to IDF, which as a reminder is the owner of Royal Mail, and also importantly is an affiliate of a company called Visa Equity Investment, which is a shareholder of Quaniance.

5:17 Let me come back to the price. The price is 65 million euros. I would like a few key points. The UK was the least mature of our 3K geographies with an expected 2026 revenue a little bit more than 10 million euros and it was doubling. We had a fast growth, doubling in size which is 25 as we were in the ramp-up period of getting more and more usage. And given this Early stage of development, because our longer investments are usually on a 10-year cycle, so it's the first three years, it was naturally the most capital consuming of our open network basis. Getting that rise on that stage, that maturity of the development, provided us with a very strong return.

6:09 The agreement came out of a competitive process that was run obviously with the advisors that we mentioned to you at the beginning of July. We had a chance to consider multiple offers that we have received and naturally after reviewing them, the board of Quadion concluded that this offer delivered the best value for the UK network and was in our corporate interest and its stakeholders, all our shareholders, and therefore approved the transaction unanimously yesterday. We expect this transaction, after the signing yesterday, to close before the end of 2026, hopefully even sooner. So, let's move to the next point that I want to talk to you about, about the consequence on leverage for Quadient. We expect the proceeds to take our leverage ratio target, which is screwed leasing, from 1.5 times, which was our previous guidance, to 1.2 times.

7:11 Let me be precise on this one. These improvements come from the UK transactions alone. It assumes nothing about the rest of the process and nothing about the capex, which is my next point. So if I step back a little bit on our capital expenditure at the coordinate level, and to be clear, we focus on the local business as a whole, even though the UK represented a large portion of the capex of the lockers, it more or less now will remove around 120 million euros of lockers capex over the next five years. 120 million euros that are no longer required and it's a capital that we can now redirect to new priorities and focus.

8:05 My next point is that we expect, obviously, additional proceeds from the sale of the rest of the locker business. And this is in addition to the proceeds from the UK. This includes, obviously, for the rest of the locker, a Japanese base and a North American operation to cover what we have. These are our largest and much more profitable locker networks. They hold leading position, the number one position in their respective markets. We are currently engaging with potential buyers and obviously, like we're doing right now in the UK, we will update the market in due course as we make progress.

8:50 Put all of this together and we have what we could say now a strategic and financial flexibility that we simply did not have six months ago. Let me now hand it over to Laurent for the first half financials. Laurent. Thank you, Geoffrey. Good evening. And before going into the numbers, a word on presentation. Just following the strategic review, as mentioned by Geoffrey, the lockers business is reported in accordance to IFRS 5 in our half-year financial statement. And the European private locker network, which we are retaining, as they are largely managed through male employees, has been reclassified within the male segment. All 2025 comparatives shown today have been restated on the same basis, except if explicitly mentioned, so that the figures you see are fully comparable.

9:42 This reclassification strongly benefits to our EBITDA and EBIT at group level, as local are dilutive to the equivalence margin. It brings about 130 basis points on EBITDA and about 230 basis points on current EBIT margin. On the revenue side, as you can see on the slide, the translation post IFRS 5 is very straightforward. Digital scope remains unchanged, and MLC is about 3 million of revenue for the private local network being added into H1 2026. On that basis, Quadrion delivered 448 million euros of revenue in the first half of 2026, representing a 2% organic decline compared to the same period last year. Digital confirmed its gross momentum at 6.7% organically at 146 million euros, while male was down 5.7% at 302 million euros.

10:33 From a geographic perspective, again, North America, our largest region, was essentially flat at 254 million euros. Main European countries were down by 4.4% at 165 million euros, with, as usual, we'll see that further later, a stronger male underlying decline in this geography. International is down by 4.9% at 29 million, mostly driven by male. Turning now to profitability, while I just mentioned total EBDA margin is improved post-IFRS 5 due to the deleted EBDA from lockers, EBDA buy at digital and male level are impacted by some lockers' transit costs and disenergies. reallocated to both solutions and impacting ABDA margin by about 0.6 points, on top of which you have a small dilutive private network impact on the main side for 0.5 points.

11:31 Group ABDA's margin stands at 21.5%. It's done 0.8 points compared to last year, mostly due to the erosion on the main side and unfavorable mix effect. Digital margin was stable at 14.5% despite The implementation costs linked to the French Invoicing Go Live and of course the Forex. Current EBIT for the period came in at 57 million euros, a 5.9% organic decline due to May. Let's now turn to the revenue bridge on slide 9. Starting on the left is 465 million euros restated revenue for last year H1. This bridge shows the continued rebalancing of our portfolio. Digital contributed €9 million of additional revenue, partially offsetting the €19 million of organic decline in mail.

12:20 The scope effect added €2 million from the acquisitions of both Serendia in June last year and CDP Communication in December 2025. On the right-hand side, currency had a €10 million negative impact, and it's all coming from Q1, meaning on Q2, no currency impact on the bridge. All-in reported revenue decline at 3.7%, and by 2% on an organic basis. Moving now to the current EBIT bridge on slide 10. From the €64 million we stated current EBIT last year, digital EBITDA rose of €3 million, partly offset the €6 million decline in male EBITDA, and you have an additional €1 million of organic increase in depreciation and amortization, notably tied to digital R&D.

13:08 Currency accounted for 3 million euros of negative impact on the current EBIT while the scope effect was relatively neutral at the EBITDA level. As a result, current EBIT for the first half stands at 57 million euros, down 5.9% on an organic basis. Let's now move into the details of the performance-backed solution and starting with digital. On slide 12, So before reviewing specifically the half-year, let me put our digital performance into a longer-term perspective and note that these figures are prior to the application of S5 that are due to the local business for the sake of the consistency of these figures across the long time period.

13:53 On the bottom left chart, our annual recurring revenue has gone from €109 million in 2019 to €264 million at the end of July 26th. a compound annual growth rate of about 15% per annum with a remarkably regular improvement over the period. The chart on the bottom right now shows the same story on quarterly revenue with subscription-related revenue growing at 16% compound annual growth rate since 2020, a logical similar trend compared to the ARR, and now represents 87% of digital revenue at the end of H1 2026. And at the top left side, You can see the profitability for Victoria with EBDA rising from around 20 million over a 12-month period at the beginning of the chart, and more than 50 million if you take both H2 last year and H1 this year, so the past 12 months.

14:48 Over to you now, Geoffrey, on slide 13. Thank you, Laurent. I mentioned at the beginning of the call that our focus is on our digital solution. I think we could say that we have built a comprehensive and differentiated B2B platforms centered around business and financial communication. We bring it all together in one connected experience, customer communication management. Invoicing, account payable, accounts receivable, payment and cash visibility. Once a customer is on the platform, every module, every product offers opportunities for upsell, making our solutions secure for the customer. Compliance, And every change in the regulations offers new opportunities for us. The invoicing mandate in Europe is a case in point.

15:45 This is a clear regulatory catalyst that offers significant growth opportunities for digital solutions. Take the example of France. It just went live with its invoicing mandate on September the 1st. Germany follows. , the UK , and the broader European framework in 2030. Every one and each one of those deadlines extends our addressable base, market by market, over several years. This is not a single event in one country. It's a sequence for which we have been preparing for, in which we reinforce the synergies between our mail and digital activities. Our mail solution brings a large install base of business customers who will have to digitalize their financial processes.

16:36 What goes through a franking machine and folders and shutters are mainly invoices, which we'll have to find the delivery electronically in the future. We're therefore ideally positioned to support our mail customers and through their digital transformation. Moving on to the next slide, let me give you the facts on e-invoicing in France. where the go-live happened on September 1st, so barely three weeks ago. Since that day, every business must be able to receive electronic invoices. Large and mid-sized companies must issue them. The issuance obligation extends to SME in September 27, which is a year from now. End of 28 will be the first full year of the Winanscope.

17:25 Now, where do we stand? As of September 21st, just a few days ago, more than 950,000 entities were registered with Serendia by Quadians. 950,000, so we're a little bit short of a million entities. That also includes entities registered with our partners. As a reminder, we go to market directly and through white label. For business, we acquired 15 months ago. This is a strong commercial success. as we currently are one of the largest platforms in terms of registered entities. Now, there's two different categorizations. For example, SIREN or on SIRET, numbers of companies or entities.

18:10 Slightly less than 50% of the companies and entities in France have registered with an invoicing platform to date. For the ones that have registered with the companies or entities, We can estimate that we currently have between 13% to 19% market share. A market share that is now much bigger than we have ever anticipated. Contracted annual invoices now stand around 350 million. This is to be compared to a total nationwide number of invoices that we estimate from the French government between 2 to 2.5 billion of B2B invoices exchanged annually. We have a commercial momentum that is very strong.

18:57 Invoicing booking in France grew 11-fold year-on-year in the second quarter. Let me just repeat this. Invoicing booking in France grew 11-fold. This includes a multi-million-euro white-label agreement. Now, let's go on actual volumes. I want to be measured. We process in the last few weeks, in the last three weeks, only 700,000 invoices. We expect the ramp-up to remain slow and probably slow until the end of the year as there are only a few platforms fully operational in France limiting the digital exchange of invoices, right? Somebody registered with us that would like to send an invoice to a company that is not yet registered but the exchange cannot happen digitally still, right?

19:47 So we need the entire market to be able to come together. So there will be an exponential acceleration progressively, but we're still in a slow ramp-up phase. Market is in just its first few weeks. Many receiving platforms are still coming online. A lot of the different platforms that have obtained their registration are not live yet, and they will likely come in the next few months. Adoption will take time. So what matters at this stage is the following. We are certified, we are live, we are fully operational, and at I would add that we are part of a limited number of fully functioning platforms. We are operating without any incidents and we have secured and already significant numbers of customers so the volume will continue to follow.

20:34 On monetization, the model is a subscription structured by deal type plus the monetization of the usage numbers of transactions of invoices. So if I focus On our direct go-to market, where we sell directly to companies, we offer a subscription fee plus an invoice volume commitment. If I now focus on our white-labeled customers, we offer them a subscription covering a committed volume that will be guaranteed revenue for us. And in both cases, invoices above the commitment will be billed per invoice. Invoicing is way more than just processing invoices.

21:20 For us, it's a fantastic upsell opportunity within our digital platform. So let me explain to you why by turning to the next slide. The invoicing mandate brings customers to us in France, but also in other European countries as we build a proven track record of delivery and reliability. The opportunities around this initial e-invoicing service are what drives customers' retention in the long term and what helps grow our relationship with them. On our digital platform, e-invoicing is embedded with account-payable automation. The customer gets approval and purchase order matching. He's going to ERP-integrated workflows. He's got payment control and compliance with e-reporting.

22:11 They move from being just compliant to actually improve how they work. And the benefits are tangible. Our published figure shows five times average return on investment on those solutions. Invoice processing time cut by half. Approvals 56% faster. From there, we connect account payable with account receivable. And that gives a real-time view for a CFO of both sides of the cash cycle. In June, if you remember, we launched our AI-powered Cash Dashboard, which reports now better forecasting and better working capital decisions for those modern CFOs. So each new module deepens the relationship, and each one of them increases the value of the platform, which in turn for us, into more upsell.

23:02 Looking ahead, and to give you a sense of the proportion for the opportunity for me in voicing, We're expecting revenue from invoicing to increase at a very fast pace from now to 2030. In terms of upsell into the financial automation, we expect the invoicing and financial automation solution combined to represent close to half of our European digital revenue by 2030. Another key point that I'd like to stress with you is our solution is recognized, obviously, externally and such across our customer journey. So if I take a few examples during the period, Quadriant was named a leader by QKS Group in the SPARC matrix for account payable automation for the third year running. In the same SPARC matrix for account receivable application, and this time for the fifth time running, in both cases, specific recognition for AI-driven capabilities.

23:59 Moving to the next slide, I do not want us to lose sight of customer communication management. It remains the foundation of our digital business. And this ties together the financial automation and invoicing to the rest of Quadint's offering. Our performance remains very solid for a CCM business, especially in the US where we have signed several large deals in H1. So let me give you a few examples. We had a long standing US financial services customer that signed a multi-year agreement to expand from a point solution to a full CCM platform. This is a multi-million dollar commitment. I'll give you another example. A major healthcare customer expanded volumes by 75% from 4 billion to 7 billion pages, and they consolidated onto Quadient, displacing competing solution again.

24:54 Now, both of these are expansion within our existing enterprise or larger enterprise customer base, right? In both case, were replacing somebody else. So we took, it was a competitive win. So for me, that's still the clearest evidence that this platform delivers at enterprise scale. So why do customers choose us? I'll give you five top main reasons. Unified platform, flexible deployment, governance, compliance, and enterprise at scale. Similarly, to the financial automation product, Goyer was also named a leader by the QKS group in the Spark Metrics for Customer Communication Management for the sixth year in a row. So we sit at the top right of the leader band on those customer impact and technology excellence.

25:44 With that said, Laurent will now take you through the digital numbers. Thank you, Geoffrey. The digital revenue reached 146 million euros in the first half of 26. It's up 6.7% organically. and other recurring revenue increased further to 264 million euros representing an analyzed organic growth of 12.9% compared to the end of January 26th. It was driven by the momentum of bookings. It's up 20% in Q2 versus last year related to French invoicing and by a solid performance in North America and CCM. It includes around 5 million euros of contractually committed components related to invoicing. It also absorbs 1 million euros of negative currency effect compared to January 26th.

26:29 Subscription-related revenue continued to show a sustained growth. Non-recurring revenue improved markedly in Q2 compared to Q1 thanks to a more moderate decline in professional services revenue. On the right-hand side, EBITDA reached €21 million, up 17% year-on-year on an organic basis, with an EBITDA margin stable at 14.5%. It's a solid outcome given the increase in implementation costs. tied to the French University in Go Live, and we expect margin progression over the full year. On an organic basis, margin has increased by 130 basis points. Now moving to mail on slide 18. The structural trend in mail is well understood and it has not changed, but what I want to show you here is different. Mail isn't simply a declining business that we manage for cash. It is an asset that is actively supporting the digital transition.

27:21 In Europe, a cross-set of digital financial automation solutions and many customers grew fourfold ahead of the French mandate. So the Mailbase is doing exactly what we said it would do. It gives foreign privileged access to business as they digitalize their financial processes. At the same time, we keep investing where customers ask us to. We launched the IX9, the premier mailing system in France, which extends our leadership at the high end of the market. We secured a major US public sector deployment for certified mail. And our DS67 IQ for the insider is now rolling out globally. We also continue to create intelligent devices by adding complementary software to our mailing solution globally. To date, we have rolled out our intelligent solutions to almost 80,000 customers globally, reinforcing the value of our mailing hardware.

28:10 We continue to add capabilities to this solution with smart e-certify, the ability to print and manage all certified and tracked mail, and digital stamps coming in November this year in the US. The customer relationship remained strong. Satisfaction was above 96% globally and 98% in North America, our largest market. Quotient was also named the leader in the IDC marketscape for worldwide mailroom solutions and services in its 2026 vendor assessment. Let's now move to the number for mail on slide 19. Mail revenues stood at €302 million in the first half, down 5.7% organically. The two factors explain this performance. First, it's a slower subscription-related revenue, reflecting the gradual contraction of the installed base after the lower placement of recent periods. And second, software hardware volume in Europe, partly upset by the resilience in North America.

29:07 Q2 was then 6.4%, a weaker sequential performance, which mainly reflects the expiry at the end of Q1 of a service contract in the UK. Excluding this specific impact, the underlying trend was stable over the two quarters. On the right-hand side, male EBDA came in at 75 million euros. It's down 6.6% year-on-year on an organic basis, with an EBDA margin of 24.9%, done only by 0.6 points, despite the top-line performance. This resilience reflects our continued cost discipline, U.S. tariff reimbursement, as well as the commercial productivity gains, achieved with digital in connection with the ramp-up ahead of the invoicing mandate in France. Moving now to Quadient Financials.

29:52 So first, let's review on slide 21 the P&L. And as you can see in this slide, the 25 comparatives are shown both as published and restated for the application of the FAS-5 to the local business. Starting from current EBIT of €57 million, optimization expenses and operating income amounted to €7 million, essentially restructuring in mail. This brings EBIT to €50 million. Net financial expenses stand at €23 million, slightly above last year. Income before tax is therefore €27 million, with an income tax charge of €7 million. This charge benefits from the release of €5 million tax provision. Net income From continuing operations, it comes out at €21 million.

30:38 And net income from discontinued operations is €11 million, and this reflects the measurement of the local asset at fair market value, less cost to sell, in Europe, outside of the UK, plus the loss of the business over H1. All in, net income for the payers stands at €10 million, of which €10 million are attributable to shareholders. Moving now to slide 22, and the cash flow. We are up to a very strong pre-cash flow, standing at 34 million euros for the first half. It's a significant improvement compared to the negative 4 million we had last year at the same date. Starting from ABD at 96 million euros, other items represent a 10 million euro outflow, bringing cash flow before net cost of debt and tax to 86 million euros. A change in working capital required is a 25 million outflow.

31:26 It's a normalized level compared to H125, reflecting our business model and bidding simplicity. Last year, if you remember, this working capital was particularly affected by the additional inventory you had built at the end of January 25 and that was paid over the first half of 25. The change in these receivables contributed to a positive 29 million euros, reflecting the continued decline in our install base. Interest and income tax paid amounted to 31 million euros, which was well below last year, to 52 million euros, which included, as we mentioned last year, one-off impact of the bond refinancing as well as the bid tax and the 360 tax payments. Cash flow from operations therefore reaches 59 million euros and after a capital expenditure of 25 continues to reflect the low level of CapEx in mail, free cash flow comes out at 34 million euros.

32:16 Cash flow from discontinued operations represents an output of 12 million euros. It's higher than last year due to the 5 million plus increase in CapEx in the UK. Moving now to slide 23 to give you some details on the CAPEX. The CAPEX expenditure presented here including excluding IFR 16, standard €25 million for the first half, down from €28 million last year, mostly due to the lower placement in mail. This mainly reflects a reduction of mail CAPEX in line with the lower fronting machine placements, while investment in digital is growing also due to acquisitions. As you can see in the published figure from 2025, locals accounted for a very large share of total capex, with about 30% in H1-25, against a revenue that represented at the time about 10% of the company. Moving now to slide 24, focusing on the net debt and the leverage, the debt standard 683 million euros, that includes data 16, at the end of July 26, is broadly stable compared to the end of January, and in reality it hides a forex that is adverse, to the debt at 15 million euros between the two dates.

33:27 It's offset by the cash generation during the period. At the end of H126, it breaks down into 435 million euros of net financial debt for leasing and 216 million euros of non-leasing debt, as well as the 32 million euros of IFR16 debt. All leverage ratio, excluding leasing, is stable at 1.6 times. Please note that the H1 ratios reflect the application of IS-5, while prior periods have not been restated on this graph. Those ratios continue to stand well below our covenant levels, and as mentioned by Geoffrey, the set-up UK Open Network is expected to bring the leverage ratio extremely leading down to around 1.2 times by the end of the financial year.

34:22 Moving now to slide 25 and our financial structure. Our liquidity position at the end of July was still strong, 123 million euros in cash, 200 million euros of unloaned credit facilities maturing in 2030 and a customer lending portfolio at 522 million contributing to future cash flow visibility with maturities well spread over the coming years. Subsequent to the period end, in August we carried out two transactions, the issuance of a 100 million euro Shulshine loan and a German private placement and the earlier repayment of 65 million euros of our existing Shulshine covering the trenches maturing both in November 26 and May 27. This confirms both our access to diversified sources of financing and our discipline in managing a balanced maturity profile.

35:14 Let's now move to conclusion on page 26 and 27. We are confirming our guidance for the full year on a basis that now excludes lockers. You can see the translation on this slide. Our previous guidance for fiscal year 26 was organic revenue change of minus 2% to plus 2%. EBDA margin above 20% in digital, above 25% in mail, and above 10% in local. And the leverage ratio, exceeding of 1.5 times. Now we take local out, and that translates mechanically, organic revenue change of minus 3% to plus 1%. EBDA margin above 19% in digital and above 24% in mail. These are the figures we confirmed for the full year. And we stress that this is a technical translation. It's not a change in our view of the business.

35:59 The margin is stepped down We affect the relocation of lockers for net cost and the synergies across digital and mail. And for mail, it also affects the dilutive effect of the European private network, private locker network we are keeping. On average, the same transition takes out our deleveraging targets from 1.5 times to 1.6 times because local IBDA comes out. Then we apply the procedure of the UKSL and that takes us to the 1.2 times at the end of the financial year, comforted with a strong free cash flow generation at the level of S1. It assumes the sale completes before year end. And finally, moving to slide 28. So the same logic applies to our 2030 ambitions. And here I want to be explicit about what we are doing.

36:46 2030 revenue ambition, if you remember, by solution are unchanged. It's around 550 million euros for digital and around 500 million euros for mail. On profitability, the clock goes out and the ambition we announced in March would mechanically come down as well, around 29% for digital instead of 30%, and a range of 19% to 24% for mail instead of 20% to 25%. We expect to absorb that impact in full, so we are maintaining around 30% for digital and 20% to 25% for mail by 2030. Underestated scope, that is in a grade. It is our commitment to absorb around one point of margin over five years through the growth we are building in digital. Taking locals out does not dilute the ambition we set, and digital is on track to become Quasar's largest and most profitable solution by 2030.

37:33 A digital business growing with strong regulatory and structural tailwinds behind it. A made business that is resilient and that is actively feeding the digital tradition and with financial flexibility to act. Thank you. And with that, I think we are ready to take the questions. 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 telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone with a question may press star and one at this time.

38:26 Once again, if you wish to ask a question, please press star and one on your telephone. At the moment, there are no questions from the conference call. Thank you everybody. So first question, what is the expected timeline and valuation range for the remaining assets? The US and Japan businesses where Quadient holds leading market positions. Do you expect the transaction to be completed by the end of FY26?

39:14 Would you pursue a single buyer for the entire business or separate transactions by a job too? It's a good question. I think what is important is to do the process right and maximize the value for gradient. So that's really, I think, our guiding principles. The U.S. market is a market we probably have close to a third or 40% of the market share. We're definitely number one. It is an ad-scale business. probably representing 85% or 90% of the rest of the revenue. So this is really the primary asset in terms of value creation. It is a profitable base.

40:01 It is cash iterative. So we have obviously a lot of things for us to look for. In combination to this strong position, we also have the Japanese base where we have 7,000 brokers, roughly a little bit less than half based in the US. It's a more mature base, strongly cash generative. We have probably 60, 65%, 70% market share left there. So I would call them definitely premium assets with respect when comparison to the lower maturity of the asset that we just sold in the UK. We do have obviously global players that are operating throughout the U.S. and Japan in different areas that are interested by those assets because they obviously play into the locker themselves, use lockers, invest in lockers, potentially also use their own lockers.

41:01 And we also have local or country-specific interested parties. So I would say it will take as long as it needs. The rest of the locus will be a bit more complex than the UK. We have several entities across several countries, spanning from France, the US, Canada, Japan, etc., with a bigger scope of the business. and so aside that we'll do what we think is the right thing to do, we have obviously communicated this announcement publicly, so it's also in our best interest to move diligently and as efficiently as we can on that. We're not going to commit to any particular timeline. We obviously just want to make sure we are doing the right thing, but we're definitely focused on it now that we have completed the UKTEC.

41:52 Thank you, Geoffrey. What is the return on investment of the lockers business? So on this question, I can take it. I'm not sure if the return on investment is you're looking to the divested part or the existing part. I think we've been quite clear when we are presenting the investment in lockers that we're expecting and notably in Japan, we discussed for that, but notably in the UK, that we were expecting an internal return rate that was significantly above a WAC, whatever the region of the world is. I think the divestment of the locals in the UK is an example of divestment where we've been achieving these goals in terms of return.

42:39 It's the same that we see today in the Japanese base, when we look at the future cash flow. And as mentioned by Geoffrey, it's also the rest of the local network and its quality that we expect to produce a strong payback, which I remind you is already significantly positive in terms of VDA on the regions that are Japan and North America. Thank you. Will the 120 million euros of locker-related capex, which is expected to be freed up over the next five years, be reallocated to accelerate investment in the digital business? And over what time frame does management expect to eliminate the 2 to 3 million of stranded costs?

43:30 So a few parts here, if we talk a little bit about this. was mentioned in the question. So from a capital allocation perspective, I think we've been in our last capital market day pretty specific on how we intended to allocate CapEx, the leverage of the company, the production, share the return to note that the dividend, also share buybacks, and obviously what we think was needed also to invest into the business. and potentially at times also doing some smaller acquisitions that we've done with Passez-Petierge and we've done more recently with Célandia.

44:21 I think we've been also very clear as it relates to what is our focus and our strategy and our decision to sell the local businesses only to be able to focus even more on our goal, which is to make digital the largest activity naturally of the group and see the momentum that we see with investing in New York. Now, as a reminder, to achieve our goal for 2030, this is an organic plan and does not require, does not necessitate any inorganic investment or allocation of capital. So from that perspective, we just remain opportunistic, right? So now that I have shared that context, I think it's important that we complete the UKSL, we finish the investment of the rest of the lockers, and once we have received those proceeds, it will be time probably around the year after our financial communication for the full year.

45:25 So now that then there will be a good time to reset the expectation, I think, for the coming years. And as part of that, obviously, to be able to share with you what the board of co-agents will have decided in terms of allocation of those resources and capital. But from a business perspective, I think we are pretty clear and pretty focused on what we need to do. Thank you, Geoffrey. Could you remind us what the revenue in EBITDA from the UK Open Network was and what multiples do the 65 million represent against these? I think Geoffrey mentioned the revenue being expected more than 10 million euros this year and EBITDA being expected break-even this year.

46:12 Thank you. Is it safe to assume that the US and Japan will be sold to two different buyers? No, it's not safe to assume that. We have a business that has a common platform, a shared R&D. It's one platform. It's the same platform that is being used by the U.S. consumers, the multi-family residents in the U.S., the one that is being used in Japan or Canada or the rest of the world, by the way, even in the U.K. which is a good opportunity for me just to specify, we sold the UK base, but we did not sell the IP of Quadients, right? So the platform is, the ownership of the platform and the technology and the R&D, whether it's hardware or software, is retained by Quadients.

46:58 So this is really, what we're selling is the distribution entity of the local base in the UK, and we retain that IP, and that IP is necessary to sustain both the US and Japanese base, notably. There is, I think, a legitimate case for a buyer that would be interested by the entirety. That being said, we obviously, this is the purpose of the process, will remain open to see if there are various interests as part of the business. And if it makes sense and it creates more value, then it's something we could also consider. Thank you. And how does Quotient intend to use the disposal proceeds? debt reduction, enhanced share buyback program, special dividend or reinvestment in the digital business.

47:43 So I think it's a similar question from the one we have before. I think I could just use the difference on the short-term basis. We do expect to receive the cash of the €65 million of the UK divestment before the end of the year. Laurent explained to you that based on that, we will be able to deliver your company much further than what we anticipated and our guidance, so from the 1.5 to the 1.2 at minimum, obviously. But that's a short-term data bridge, and I think it will be great that the full year result will be able to come back to you and set a new expectation as we move forward in line with our business strategies, which is obviously to focus on our digital business and share the return.

48:30 And could you give us an overview of the criteria on which the transaction was done? Yeah, on that front, I think we have a very open process and we have received obviously multiple bids because also the quality of the assets. And we reviewed it independently and on different aspects. Obviously, price is one of them, speed of execution, also the quality of the partnership because I remind you that we didn't sell the IP here, just the distribution. So what does it mean for the coming quarters, for the coming months in terms of software, for example, in terms of support, services, et cetera.

49:16 So all those elements and obviously the IDA software has been the best offer we received. And could you give us some more color on the involvement of VESA in the lockers, mail and digital business? None whatsoever. The VEDA, and we're very grateful to have them as our first shareholder, but they are not at the board, so they have no board representation. Therefore, they're not part of the deliberation, evaluation, reviews of the different stages of the offers we have received for the UK. Then, neither as part of the decision and the making of the decision about which offer to select and which deal to make. and after that I will not speak on behalf of any of our shareholders about anything else that they may think or have expressed and that they have expressed it publicly.

50:15 And what are your expectations regarding the cash proceeds from Locker's divestitures? Leverage is already under control and 2030 goals are organic. So that's a good comment and statement, it's logical. and I think with Laurent we've been very clear and being supported by the board that you know for us this year was the board the year where we needed to get shareholder return and being focused on the return to our shareholders we have made during the last few years significant investment to transform the company and we felt that it was time also to be able to provide a return to our shareholders now there could be different ways right the share price the dividend the share buybacks and it's true that unless there was something significant without that. So a big part of the analysis between what is expected as a fair debt average, even though the interest rates are also increasing or they haven't been as low as they used to be, and we need to also anticipate how the market condition could evolve. So there's always a case for a little bit more debt average. And after that, we have many other options, I think, to create the shareholder return. Dividend is part of our policy. We've been increasing it steadily year on year. Now, we have a sectional procedure.

51:35 I think that will also be something we could review. And obviously, there's also a legitimate evaluation of the opportunity of doing a share buyback, especially when we have a share price that is low. And that's part of what the board is reviewing on a regular basis and have made decisions on a regular basis to augment or initiate a different program in the past. And I think it's in that light that I am sure we will review those expectations and set a new course for the beginning of next year. Thank you. So IDS Holdco is owned by an EP group, Mr. Krasinski, who is also more than 26% shareholder of Quadient through Visa. How was the conflict of interest managed in the transaction?

52:25 Were there any competing third-party offers for the UK open network? and did the board obtain an independent fairness opinion confirming the 65 million valuation? So, this was a very competitive process. We had received several, multiple offers at various stages, non-binding and obviously, you know, preliminary LOIs, various levels of indication of interest before we could select the right body for us. We had independent advisors with Societe Generale and also our legal advisors, Darwa and Vinnie, that supported us in the process to make sure we could have a good and fair evaluation of the different terms and conditions that were presented to us. But I think on just the merit of the competitive offer, I think, for the board, which is an independent board, Mr.

53:26 Kaczynski or his colleagues, and Steve do not participate at the board of Quadians, right? So it's really the board has been able to review those without any interference from anybody else. And I think we made the decision that was in the best interest of Quadians based on a very competitive process. Thank you. There is a provision for the European parcel network on which country? What would be the remaining equity for the European parcel network? Is there specific explanation versus other areas where parcels are strong? And is the European parcel network to be sold in the medium term?

54:14 So I'll take that one, Geoffrey. In the rest of Europe, in terms of balance sheet, in terms of size, it's relatively small. So basically, The level of equity is limited outside of the private network that is now part of the male division. So there is not much left, I'd say, in the group value of Europe. Obviously, the biggest part is obviously Japan, to a certain extent, North America, and also all what we call the IP that stands in France. And it is part of basically the scope to be sold. Thanks Laurent. Are your expectations to sell at a premium versus the UK price, the US and the Japan local business?

55:07 It's very difficult to know at this stage. We obviously have, I think, a very competitive price for the UK. I think we need to go through the process and look at what the market will tell us on the rest of our local business, which again, I think we have a significant difference in terms of maturity, scale and leadership position in those respective markets versus the UK. And we look forward to it. And how much profit is expected on the €60 million divestment of UK households? It's a €65 million divestment.

55:52 I'd say you don't go to the details of by country, what's the equity of each if local. So I suggest we end, we wait for the closing and we see eventually at the end of the year what is the net impact on the specific FIS pipeline and how much upside there's been against the equity value. I think it's just principally the We have a bit of tax, naturally, that you pay. Absolutely. But there is a... There's nothing special. Absolutely. And the bulk of it will be the net between whatever the purchase price is minus the tax and minus the equity, which is mostly the tangible assets that are the lockers, the 3,000 lockers. And how will customer data and accounts be migrated and managed as part of the data assessment?

56:46 To be... Customer data is obviously of the platform itself. It's how we operate a network. So I think we need to differentiate the data, the operational data, the customer data to run the business versus the back office, the CRM, the ERP, the financial system that is needed. We have established a TSA agreement. and making sure that we focused on the customer satisfaction at every moment during that transition and making sure there would be no disruption and allowing them sufficient time to be able to migrate to the back-office system, more generally speaking.

57:32 And as part of the process too, as Laurent mentioned, the software is owned by Quadient Locker and we will now become a software vendor for this buyer. and we will be, like we do for many other carriers and entities, and we will obviously maintain and support and upgrade the system so there will be no disruption on the data and no need for migration on the short term. The new buyer obviously will set this new course, a new strategy, and we'll be happy to support them in case they elect at some point to change and migrate to another system if they elect to. Thanks, Jacques. Is it your ambition to sell the rest of the lockers business at a price at more than 20,000 per locker?

58:21 That price would be consistent with premium versus UK deal. So I'll take that one, Geoffrey. It's a bit of a simplest view to price, I think, to value a business just based on number of lockers. It's depending on much more what's the usage of this locker, in which market are we in. Do we have the ownership of this locker? Is it on our balance sheet? So again, if you remember, Japan and UK are mostly open network and sitting on the relative quadrants, while North America is mostly sold lokers. So I don't think we can take this shortcut of 20,000 euro per loker. It's going to depend again how much is the usage, what is the maturity of this base as well, what's the remaining value of these assets, what's the future growth, obviously, what's the expected Martin and here we mentioned that we sold UK but it's just distribution part also have all the IP in the royalties that have been captured in France and this also brings an additional layer of margin that needs to be also assessed in the future cash flow.

59:28 Thanks Laurent. You mentioned enterprise value of 65 million for the open network disposals in the UK and what was the equity value? So I think we mentioned that already, 3,000 lockers, that's the bulk, basically, of the net book value is the tangible assets, which is 3,000 lockers. And we know there is a range between 10K to 20K, depending on the size of the locker, basically. Thank you, Laurent. Could you just remind us, what is the cost of one locker? That's just what I mentioned, so... It's okay. And perhaps moving on to mail.

1:00:16 Yeah. How much was the tariff refund in each one? So we got about 3 million back on the tariff refund. So we got a little bit more. In fact, part of it was tied to lockers. So it's been classified as well. It's about 3 million euros. Thank you. And is there a share buyback program on So we're not currently buying back shares, but obviously it's part of the consideration of capital allocation in the future. Whenever we sell, we get the cash first and sell the rest of the lockout as well. Thank you.

1:01:04 Beyond the acquisition of the UK lockout business, do you have any visibility on the basis of for EP Group's intentions regarding its shareholding inquiry. Is a shareholder agreement or standstill arrangement being considered? Obviously, we're not going to speak on behalf of our shareholder. We can refer to their last declaration when I think they passed the threshold of 25% of ownership and the intent that they had. I think they've been pretty clear that they were supporting the strategy and that they had no intent to ask for a border position and therefore, There is no basis to have a sensitive or any other type of agreement. There will be a shoulder agreement at this stage. Thanks, Geoffrey. And when selling the UK fleet of lockers, have you kept some intellectual property on the technology with future royalties?

1:01:59 Absolutely. As I was mentioning, you should be distinguishing the distribution parts. The IP has not been solved. and that's why I was mentioning that the overall project of the buyer was also included in the evaluation and the ability to continue supplying IP. The 65 million purchase price do not include the services to maintain the technology that we've all obviously commercialized on arm's length basis with anybody that uses our technology including the new buyer. until they elect to do otherwise.

1:03:00 Okay, thank you both. So I think that's all the questions so we can conclude the call. Thank you everyone for attending and for asking all your questions. So our next call will be on the 1st of December for our third quarter sales release. In the meantime, we look forward to seeing you Thank you very much and have a wonderful evening. Thank you, Laura. Thank you, everybody. Thank you, Laura. Thank you. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.