Tinexta (Milan:TNXT) Q1 2026 Earnings Call

0:00 Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Tinexta Group Consolidated Results as of the 03/31/2026 presentation. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions.

0:26 At this time, I would like to turn the conference over to Mr. Joseph Mastrogacino, Chief Investor Relations Officer. Please go ahead, sir. Thank you, operator. Good afternoon and good morning to the folks connecting from abroad. Thank you for joining Tinexta's first quarter twenty twenty six results presentation. Here with me today are Dona Palsy, Group Chief Financial Officer. Good afternoon and good morning. As a reminder, all the relevant documentation of the first quarter results can be downloaded from the company website in the Investor Relations section. For the purpose of this call, I will cover some key highlights and updates of the call. Oddone instead will go over the first quarter financial results as well as the business unit's performance providing us with a deep dive.

1:11 The last part of the call will be dedicated to Q and A. A recording of this conference call will also be available on the company website and it will be posted upon completion of this call. Without further ado, let me turn to Page five of the presentation, which is available on the website. Let's go directly to the KPIs. Revenues came in line with prior year at around 106,000,000 EBITDA adjusted was $15,000,000 declining 14% versus the prior year. EBITDA on a reported basis was $14,000,000 net profit adjusted was $1,000,000 for the quarter. Net financial position came in at $351,000,000 versus the $240,000,000 of the fiscal year 2025, while a very strong performance from free cash flow on an adjusted basis growing 12% to $35,000,000 for the quarter.

2:08 Let's turn to Page six. Again, let me just deep dive on the non commented numbers. So we said the net profit on an adjusted basis from continuing operations came in at around $1,000,000 while net profit on a reported basis was negative $5,000,000 The change in net financial position, which is important mainly reflects the estimated value of the exercise of the call option on Bregala Milestone stake, which is at around $137,000,000 The free cash flow on adjusted basis from continuing operation was $35,000,000 compared to $31,000,000 in the prior year, reflecting strong cash generation from net working capital and provisions.

2:56 NFP over last twelve months EBITDA adjusted was 3.49 times. In the medium part of the slide, we give you some key highlights of the single divisions and namely Digital Trust grew 0.4% versus the prior year in terms of top line, EBITDA grew 1.3% and the EBITDA margin was still very strong at around 29.4%. Cyber had a challenging quarter with revenues declining 16% versus the prior year and EBITDA plummeted 61% versus the prior year with margins at around 5.4% for the quarter. Business innovation grew on the top line 7.6%, while EBITDA declined a bit more than 40% with margins in the mid single digit range at around 6%.

3:50 On the bottom section of the slide, you can see some of the recent events and updates in particular, let us give the markets some updates. This is all public information available on the website. Between February 23 and March 20, the first window of acceptance period for the mandatory takeover on Tinexta shares promoted by private equity funds Advent and Xtalia was obviously carried out between March 30 and 04/07/2026. The reopening of the terms of EMTO on Tinexta shares was again promoted by the offer, even though the results were just shy of the 90% threshold, which were necessary to trigger the mandatory takeover and therefore delisting procedure.

4:39 In terms of the recent acquisitions, you can see in terms of purchases actually between April 8 and April 30, the offer, diligently with all the requirements from Borsitallana purchases various shares on the market in particular in accordance to MARA in order to reach the threshold of around 90% again, which will trigger the delisting process. You can find all the official documentation on the website. Turning to page seven, I think most of the comments on the numbers have been commented here. Maybe it's worth noticing again that the free cash flow is very strong at around 35%, but Odono will definitely give you more color on that. In fact, for that matter, I will leave the page floor to him.

5:35 Thank you, Joseph. Good afternoon again everybody. As anticipated here by Joseph, you have seen that the quarter was almost basically aligned with the prior year results, while the group suffered a little bit on the margin side. Entering to different business units at Page nine, you're seeing that Digital Trust went up both in revenues and EBITDA, while definitely was less expected to have revenue falling down in cybersecurity by 60%, driving obviously an impact on the profitability.

6:26 On business innovation, we had some good news in terms of revenue, especially on the completion of the 5.0 longer walk through three different years. And but on the other side, we suffered a bit we suffered in France on ADF. If we move to Page 10 to the P and L, you have seen that the revenue is basically flat and also that the personnel cost been kept at basically flat compared to previous year, in some way anticipated the situation.

7:13 The revenue mix and especially also the 5.0 acceleration brought a higher utilization of third party services that moved up from 38% incidents to close to 40% incident that is driving basically the erosion of couple of points of the EBITDA. We have to consider as usual that the Q1 represent a portion well below one fourth of the total year EBITDA. We're talking basically below 15%. So this is something that can be managed through the year where the group has already put in place some actions in order to confirm and achieve the year end projections.

8:12 In term of depreciation, basically flat compared to previous year. Financial income and charges, the only difference is related to last year, we got a profit on the cancellation of the put on Acercia that drove to 7,000,000 profit that did not occur this year. For the rest, as anticipated by Joseph, the net profit was basically negative by $5,000,000 compared to $4,000,000 of the previous year.

8:58 Also this year, we had some nonrecurring especially costs. Definitely, this has been driven mostly by the all the activities we incurred both on some M and A activity, but also on all the listing activities that the company has carried out during the process. If we go to the balance sheet at Page 12, the net invested capital went down quite significantly, definitely as expected. We had an organic decrease in term of working capital of almost €30,000,000 The higher level of billing that occurs in Q4 has been cashed during the Q1 as usual.

9:58 And we were able as we will see during the presentation to deliver a very strong gain cash generation. So the invested capital went down, while the net financial position went up as the group decide to exercise the call on the 60% percentage of the stake in the infrastructure by the private equity Bregal. And this brought basically to book this debt like item basically the net financial position that is at $351,000,000 I would say that almost 50% of this debt is related to future put and cost to be executed is not all financial debt bearing interest and cost.

10:59 As a reverse of this, we have seen the shareholder equity going down to €200,000,000 I think we on the STM basis, obviously, the net investment capital went down to almost €200,000,000 Obviously, half of this has been driven by the impairment that has been implemented at Q4 and the shareholder equity is more as part of the previous mentioned put as well as obviously the loss of the previous.

11:52 On the if we move to Page 14, on the net on the basically the free cash flow from continuing operation, obviously, it has been extremely positive. Basically, the free cash flow from continuing operations went up from 31,000,000 to almost €35,000,000 in the first quarter, significant growth at double digit. And if we look at the on the LTM basis, basically, we are talking about more than €74,000,000 that is meaning that again is a confirmation of the stricter financial policy, financial discipline, I would say, that we are able to put in place, especially on net working capital, improving year on year the capability of collect our receivable and the revenue we produce and a very strict control in the CapEx to confirm the financial discipline that we have in place.

13:12 Also, if we again, if we move to Page 15, again, you have seen that we do not have a major issue around the Q1, excluding basically booking an estimate of potential cash out coming from the exercise of the put on the stake of Bregal as well as small addition to our portfolio of activity that we delivered during Q1. We acquired a couple of small company who complete our offer in basically in digital trust and business solution as well as we disposed a business in the Sixtaema business that is part of digital cashing in booking €1,600,000 cash.

14:17 On the LTM basis, we're seeing here the picture is more wide. I would say, we have an important part of cash generation of the last twelve months. And obviously, last year, we distributed dividends for almost EUR 17,000,000. And obviously, the net between acquisition and disposal has been €110,000,000 debt because late last year basically we deconsolidated put as a financial credit the the consolidation of defense net.

15:15 I think it's very important to go and to deep dive into the business unit. I would say if we deep dive in digital trust, we have to say that the division overall went well if we exclude the performance of ADF of Acercia. Acercia had not positive Q1, especially in terms of revenue and obviously also in term EBITDA. So basically, we had a quarter with no one time sale of licenses that are generally fueling the growth on top of a traditional EUR 1,000,000 recurring revenue that we have each month.

16:19 Apart of Achalzia, we may say that the online sales grew almost 20%. And this is very important and encouraging achievement we delivered as well as we were able to confirm the positive trend in other part of the business and still confirming the importance of the growth and the results of this area. CapEx has been aligned with in previous year confirming our capability to manage them. And again,

17:04 EBITDA the is growing just 1.3%. But if we exclude the Acercia, I would say the revenue and profitability would have been much more positive. On cybersecurity, I have to say this year is the level of drop of the revenue was definitely quite significant because we are talking about more than 15%. Security solution Services especially were down 2024%, especially in lower sales in Advisor as well as in Managed Security Services. So we were definitely in this area weak in term especially on sales. On Technology Solution, obviously, we are suffering about all the

18:07 portion of the business mostly related to project and system integration is suffering. This is a situation of this segment, especially we are suffering on activities in a primary client in the banking sector that is also putting under pressure our profitability. We will continue in this area to recover profitability through cost cutting, rebalancing of the cost with the revenue. At the same time, we are pumping up our portfolio and trying to accelerate the recovery of direct.

19:04 Business innovation, I would say business innovation, the situation to some extent would be also

19:15 analyzed as the digital trust. So basically here, suffered quite significantly because we delivered €2,000,000 less EBITDA in RDF than previous year, and this has been the major impact that we have. The situation in the market of subsidized financing in France is really tough and difficult. Basically, the level of the success rate went down quite significantly, basically has been half than previous year. And this is not related to our capability to provide service to corporates. Definitely, the level of project upset by the relevant public bodies has been severally reduced.

20:24 And this is driving obviously from one side some issues in getting orders from the clients because in front of a potential lower probability of getting the project accepted by the relevant public bodies, sometimes difficult to get orders. On the other side, we may say that the level of positive responses for the relevant bodies are dropped. If you take out ADF and this situation, you have to say that at the end, we got a positive finally, a positive impact. So basically, has been missed in Q4 last year on 5.0 has been recovered in Q1. In Q1, we booked

21:28 better results compared to previous year. So basically, the company was finally able to get the revenue or all the activity performed on the 5.0. We are now waiting starting from Q2, an acceleration on the new measure that we have that is the Iperamortamento for which sales have already started. And we do expect that some major clarification that should occur over the next weeks will put our sales force in the position to collect all the orders that are expected by from this new measure. So overall, this is the situation. The revenues went up 7%.

22:22 There's been some pressure on the mix of the revenue we delivered also because the 5.0 has been requested to deliver in a very small amount

22:33 of time and this required additional effort from external resources being able to perform all the activities until the expiring of the measure. So basically, this is the situation. Then I leave to Joseph that will complete talking about the guidance. Yes. As you know, although the Board of Directors convened today and they obviously confirmed that as you have read on the official documents, press releases and presentation, the guidance which includes revenues growing 3% to four percent versus the prior year in terms of top line, EBITDA adjusted growing 6% to 7% versus the prior year and a leverage ratio to end around that is NFP over adjusted EBITDA to end around 3.1 to 3.3 times.

23:28 Obviously, there are key initiatives being already put in place in terms of implementation of action plans aimed at containing operating costs as although not extensively underlying. At this point, I would open the call for questions. I think Okay, sir. Sorry, your last word just cut out just to let you know. But we have the first question from Alexandra Arsova of Equit. Hi. Good afternoon. Thank you for taking my questions and for your presentation. A couple of questions from my side. The first one is just a follow-up on what we've what said at the very beginning on the delay of the postponing of the reverse merger since you're aiming to reach the 90% squeeze out threshold, which is the new threshold according to the updated TOOF regulation.

24:21 But since this new regulation came into effect after the end of the original tender offer period, so I was wondering if you have received a sort of formal confirmation by CONSOB that you can apply this new rule also retroactively to this, let's say, to this deal, to this tender offer. And the second one is on the call you recorded for Infochert. So for the 16% stake, if I read it correctly, you booked €137,000,000 for the 16%. So I was wondering if you can share with us what is the implied valuation in terms of multiples in this $137,000,000 Thank you.

25:14 Hi, Sandra. I'll take the first one and Aldone will take the second one. So in terms of the information that you're asking, first of all, obviously it's the offeror who is acting in terms of the mandatory takeover. We know about the new TUF, but that I think will be approved in June or something like that. In terms of the information that you see on the public press release, what has been mentioned is basically that the reverse merger has already been put in place or at least the initial works have been put in place. And that accordingly, we basically the offer has almost reached the 90% threshold.

26:00 I think that pretty much is the information that you guys need. In terms of retroactively, I cannot confirm if that is the case. We know that TOOFA was obviously amended and will make the processes easier. But let's keep it factual. Let's keep and stick to what is on the press release. So I will just say that we confirm what the press release is actually saying and that we also confirm all the already in public information in terms of the purchases made by the offer to reach the 90% threshold. Just give us a second for the second question. Okay.

26:51 Yes, going to the second question. So basically, we applied our view on the calculation of the value of the acquisition of the 16%. So basically this has been internally calculated based on the information and on how our view, how this is going to be calculated. So the process is currently ongoing as a normal M and A deal.

27:36 And we are dialoguing with the counterpart and the process is following. There is no definitely it's a complete calculation of the based on the agreement between the two parties. Okay. Thank you very much. Once again to ask a question please press star and one on your telephone. Gentlemen, at this time there are no questions registered.

28:30 All right. Thank you very much operator. And thank you. Thank you. Bye. Bye.