Tinexta (Milan:TNXT) Q2 2026 Earnings Call

0:00 Good afternoon to all of you that joined Tinexta's first half financial results presentation. Here with me today, the group financial officer, Oddone Potsi. Good afternoon, everybody. As usual, I will go over some highlights and updates. Obdeno then will deep dive into 1H results as well as the business units dynamics and updates, and then we will be closing with some closing remarks. The last part of the call will be dedicated to Q and A. And as a reminder, all the recording and the necessary

0:33 documentation, as the press release as well as the presentations, are already available on the company website. So let's turn to Page five so we can go over some of the key group financial data. Revenues came in at $214,000,000 pretty much in line with previous year. EBITDA adjusted was 34,000,000 with a small decline of 3% versus the prior year. EBITDA on a reported basis was EUR 28,000,000. Net profit on an adjusted basis was EUR 2,000,000. And the net financial position was EUR $343,000,000 versus the EUR $240,000,000 of the fiscal year 2025. Very strong came in in terms of cash flow results, million, plus EUR39 million versus the prior year. And even an LTM number, which we'll discuss later, was very, very strong.

1:23 Let's please turn to Page six of the presentation so we can go over some of the key highlights. Revenues, as we said, are $14,000,000 pretty much flat versus the prior year, reflecting growth both in Digital Trust, which grew 3.8%, and Business Innovation business units, growing 2.9%, which were offset, unfortunately, by Tinexta Siber's performance, which declined by 17%. EBITDA adjusted was EUR 33,000,000, dragged down by a significant decrease both in the cybersecurity and business innovation business lines despite a double digit growth instead in the Digital Trust business unit. EBITDA on a reported basis was 28,000,000.

2:12 The margin was EUR 15,700,000. When we're looking at EBITDA adjusted margin, The reported margin was 13%. EBIT reported instead was negative $41,000,000 This was entirely related ABF, but Aldona will go over the impairments in detail. Net profit on an adjusted basis from continuing operation was $2,000,000 while on a reported basis, it was negative 43% EUR 43,000,000. Net debt, we discussed, and maybe it's worthwhile mentioning that the change in the net financial debt mainly reflects the estimated value of the exercise of the call option milestone, but this is a known fact.

3:01 Free cash flow from continuing operation, again, was $53,000,000 versus the $38,000,000 of prior year. And kudos to, I think, the entire finance department because $85,000,000 of free cash flow on an LTM basis was a great result, specifically in the last twelve months. That was reflecting favorable net working capital dynamics. Lastly, net financial position over LTM EBITDA adjusted was 3.36x. In the center part of the slide, you can see already the KPIs from a business unit perspective, very good top line, I would say, in terms of revenues for Digital Trust, even though it was shy of 4%. EBITDA was much stronger at 13% growth versus prior year. EBITDA margin was at another historical high, 30.2%.

3:56 Cybersecurity instead was deeply impacted, with revenues declining 17% and EBITDA declining 59%. The margin was really mid double, mid single digit at five Business unit Business Innovation grew 3%, while EBITDA declined 36% versus the prior year. The bottom part of this slide, instead, we are recapping some of the recent events. As you all have been aware, as of June 10, there was a launch of a voluntary tender offered by ZynqBitko. And by July 22, the final results of the VTO, again, voluntary tender offer, showed an overall 90.34% of the share capital of Tinexta.

4:48 Relatively to the last couple of days between July 24 and July 29, the offer continued to purchase Tinexta shares, reaching a total as of July 30 of 90.36%. I think the major takeaway here is that the consideration due to for the shares remaining will be determined by CONSOL. So you will obviously be informed

5:12 by all means. Turning to Page seven, I think most of these numbers have been commented and highlighted. So the revenues were flat. Revenue in EBITDA declined 3%. And at this point, I will leave it to Adone, turning to Page nine of the presentation. Okay. Thank you, Joseph. Good afternoon again to everybody. Here, we have the results of overall group and by business unit, as you have may have seen in the in the press release. You know, we are delivering now sharing the result of h one while the result of q two has been improving compared to to last year with, you know, basically same revenues, but increased about 9% over the EBITDA following, you know, an expected trend from our side.

6:09 You know, overall, still the revenue is, flat compared to previous, previous year. And also, you know, an LTM basis, we are basically flat, with the with the end, of the year. On the EBITDA, like I said, we recover a bit despite, you know, a a results of cybersecurity that unfortunately was definitely much lower than currently we expected, but already there's some action that we put in place in order to restore partially the situation by the end of the year. Digital trust went well in terms of revenues.

6:57 We have a growth of 4%, but in term of EBITDA, we are up of 13.4% as we were able to handle, you know, the cost that affected negatively the last year internal third party cost and cloud as we shared with the market here. You know, the company's back to the to delivering a higher than double digit result in first half. Cybersecurity is facing a tough h one. The revenue are continued to go down basically aligned to the performance of h one that retrieve the pressure on the market of system integration is heavily impacting the results of our division, but also in cybersecurity despite reasonable profitability in term of, EBITDA margin, still the revenue are weaker, than expected, I would say, mostly driven by internal effect. You know, our capability to drop cost, has been there because, you know, we we left 7,000,000 of revenue, but we dropped only, 2,500,000 of profitability.

8:22 We were able to cut quickly some cost, but not enough to restore the situation. Definitely, the the aggressive action we have taken over q two on cost will start to deliver back in Q3 and Q4, and we do expect to partially recover compared to in H2, even though also for H2, we are not planning recovery in term of revenue as the trend in this moment is what we have seen. For business innovation, I would say that if we are going to take out the impact of ABF, the results of business innovation are finally back to to to a positive, let's say, growth despite, you know, the number in this in looking at the numbers, you know, basically, we are all growing the revenue, but not in term of profitability of h one, but I will deep dive later on. In term of, p and l, as you you may see already commented in term of EBITDA, as you as you can see here, we were able to drop the cost of third party and services cost. As, like I mentioned, in term of of personnel cost, we are, slightly going up compared to previous year, but

9:54 with the trend that is basically declining driven by the action we have put in place. On nonrecurring cost, we are facing a couple of million dollar cost related to the public offer. The company has been involved in many, many legal matters as well as fairness opinion for the board, for the independent board member. And so this has been a burden of cost and activity for our for our group over the last six months with that is carrying some cost. We had also some cost of layoffs here as well as some cost from, you know, consultancy in order to speed up cost out program here on the business unit that are facing more, difficulties.

10:55 Depreciation, amortization includes 30,500,000 that then net of the fair tax liability went down to 31,000,000 related to ABF to ABF business. Basically, here, you know, the the trend in term of success rate is went down to the minimum level ever just to before, you know, the the the the France enter into a very different dynamics compared to the past where the rate of the filing was 71% in h one. The rate at the end was 24%.

11:44 So, definitely, you know, we are reacting in term of again, here in term of cost cutting and, you know, not replacement of resources, and probably we will accelerate further, but the situation as of today is this. Financial charges, overall, the the the cost of debt is is over just the we accounted the put and the call for the minority of the next generation app and the Infosec, but not yet. We had the cash out. So overall, the financial cost is the same, while, obviously, last year, we got benefit as financial income that came, from the cancellation of put on, Asherzia in ABF.

12:44 Overall, the result has been impacted, like I mentioned before, by the depreciation of the the the the depreciation from ABF. In, you know, nonrecurring results, the nonrecurring impact, you know, is quite detailed over here. I will say the the main point is related the main difference compared to the past is related to ABF, not, you know, I would say no major other impact that I have not yet commented, like the nonrecurring service cost that we had on the past. Net capital invested decreased compared to the end of the year. Obviously, here, we benefit as already Joseph shared with you. We had strong organic decrease in net working capital that helped us to deliver a very strong cash generation.

13:50 And despite, you know, of the overall results, so it means that we further improve our DSOs down the road. Obviously, we have amortization on top of the, let's say, depreciation of ABF. Net financial position went up as we accounted already in Q1 the potential debt for the payment of the call the exercise of the call over the minority of ABF. Still, the process is ongoing following the shareholder agreement that the contract with the minority.

14:35 We do expect the following quarters to be completely set up. No other major point on total shareholder equity. Obviously, here, we have two two impact, you know, deputy the main impact is related to the decrease by the estimated value of the acquisition of the shares of Bregal in Tinexta Infosert as well as the impact of the loss of the. If we go to on LTM basis, I would say I have nothing major to to share here, with you.

15:26 And while if we jump to page 14, yes, to page 14, like like, like I said before, we had a very strong another strong quarter in term of cash generation, strong improvement over the previous year that was less positive than the past driven by the Infoset that now is fully recovering. So we adapt to 52,000,000 in one h and LTM basis. We are up to 85,000,000. That is a very a very strong performance, in term of cash, chain hedge.

16:15 Page 15, you can see here how we we do, you know, that we have the test of covenant on the net financial position over the the EBITDA. As planned, we are below the 3.5 despite we are including both the debt for Intesa and for for acquisition of the minority stake in direct generation now from Intesa and the minority stake from Bregal. So it means that the very strong cash generation allowed us to keep a well balanced ratio and well controlled financial situation.

17:05 Like I said, we have more nonrecurring free cash flow components driven by the cost that I have already mentioned. And, obviously, the net financial item is a very small portion. I would say I I would jump to the business unit in order to give you more color along around our operations. You know, Infoset, you know, went up to 3.8% compared to previous year. I would say that all the different legal entities performed reasonably as we expected.

17:58 We had no major variances. Finally, also a that is not being mentioned up to now. It means that, went, finally well. We had a strong q two, and this is is an an encouraging situation. The positive development of this activity and combined with the tight cost management control allows to jump up already above 30% at H1, while generally we will achieve this percentage at the end of the year where we have a little bit more revenue there. So I think we are glad of the results and the potential of the company is there.

18:54 CapEx has been managed accordingly to previous year. And so we had as you can see here, we had the low we lowered production cost by 5%, G and A cost by 8%. So we had the combination of revenue growth as well as cost strong addressing strong actions on the cost side. Cybersecurity, unfortunately, is down quite significantly with the the system integration activities as that, you know, are from one side are, you know, bringing lower contribution from the other side, you know, the we have a range of fixed cost, I would say, immediately to the structure of the revenue, and this is heavily impacting, our result. Nevertheless, we are we were able to, basically, absorb, five out of the 7,000,000 of revenue declined, but still many action has already put in place that will deliver a best situation, best results over the second part of the year.

20:23 Although we are not expecting actually a a a recovery in term of revenue. If we go to to business innovation, like I said, we are overall glad of the results delivered because we unfortunately, we need to taking out ABF from this feature. And ABF, we know that we have a tough situation there mainly driven the from the market, although the company is trying to address this shortfall in term of revenue. For the rest of the business, we we are in a situation where financing grants, you know, overall are improving over the previous year. We are in the middle of the campaign for the I The the level of incoming orders is satisfactory.

21:28 You know, we are we have a challenge in front of us, but so we have a target, by the end of October to collect, orders, and we are on, as of now, perfectly on the trajectory, and this will help us to deliver a very strong q four because, you know, most of the revenue will be deliver delivered when the investment of our customer will be finalized and put on on put on working. And at that time, we will be able to deliver, you know, a very strong result. We do expect to fully achieve the results of the plan the initial plan of the business unit by by the end of the year, excluding, obviously, what is happening relating to ABF. But this is I think it's very important. It's a step there. Also, we are we are trying to to to implement a streamlining activities that we for which we will benefit in the second part of the year.

22:53 I leave now to Josef for the final comments. You've entered Yes. So closing remarks on Page 22. Following the first stage financial results, the Board of Directors updated the group targets. You can find them on this slide. Revenues are now expected to be anywhere between 0% to 2% growth versus the prior year versus the three to four percent growth that we had disclosed back in March in 2026. The EBITDA adjusted is now expected to grow between 24% versus the 67% that we had disclosed in March. And lastly, the net financial position over EBITDA adjusted or leverage ratio is expected to be anywhere between 3.3 to 3.4x versus the 3.1x and 3.3x we had discussed back in March.

23:51 Like I said, you know, in order to complete, so basically, we do expect a good year from digital trust and and business innovation, and this really key to us because, you know, they are the the most important contributor of the results, both in term of revenue and EBITDA. Unfortunately, the situation on the cybersecurity is affecting for the portion for which we are missing this result, but, you know, several election has been put in place and we deliver full capability later on in q four and next year. Net financial position EBITDA will be, you know, slightly above what what planned, but not for a a weakness in term of extraordinary cost that we incurred already driven by the public off, public tender and all the related activities.

24:59 We have strict management of the cash flow will be continuously in play. At this point, we are done with our prepared remarks. We can please ask the operator to open the Q and A. If there are any questions, please go ahead. Thank you to the speakers today. We now have an opportunity for questions. Thank you. Are currently no questions, so we will wait just a few moments to give everyone the opportunity to ask a question if they have any.

25:56 As there are no questions, I will now give the word back to the speakers for any final comments before bringing this presentation to a close. Thank you. Okay. Thank you very much for your attention. And if you have any questions, we're always available. Thank you again, everybody.