Earnings call transcript: Econocom Q2 2025 sees revenue growth and stock dip

Econocom Group SA reported a revenue increase of 6.6% in the first half of 2025, reaching €1,421 million. Despite this growth, the company’s stock saw a 2.78% decline following the earnings announcement, reflecting investor concerns over market conditions and a slight decline in its Product & Solutions division.

Key Takeaways

• Revenue grew by 6.6% in H1 2025, totaling €1,421 million.
• The Technology Management & Financing division surged by 18.4%.
• Stock price dropped by 2.78% post-earnings announcement.
• Econocom raised €225 million in new financing, surpassing its target.

Company Performance

Econocom demonstrated robust performance in the first half of 2025, with significant growth in the Technology Management & Financing division, which increased by 18.4%. The Services division also experienced growth of 3.6%, although the Product & Solutions division saw a minor decline of 2.4%. This mixed performance reflects the company’s strategic focus on expanding its technology management services and adjusting its product offerings.

Financial Highlights

• Revenue: €1,421 million, up 6.6% from the previous year.
• Operating margin: 41.4%.
• New financing: €225 million raised, exceeding the initial target of €100 million.

Market Reaction

Following the earnings release, Econocom’s stock fell by 2.78%, closing at €1.94. This decline may be attributed to investor concerns over the slight downturn in the Product & Solutions division and broader market challenges, despite the company’s overall positive revenue growth.

Outlook & Guidance

Econocom has set a growth guidance of 6.6% for the remainder of 2025, targeting organic growth of 70% and acquisitions contributing 30%. The company plans to focus on infrastructure and security market expansions and is exploring potential acquisitions, particularly in Italy. InvestingPro data shows analysts are maintaining a positive outlook, with revenue growth forecast at 5% for FY2025. The company’s solid financial health score of 3.01 out of 5 suggests strong fundamentals supporting its expansion plans.

Executive Commentary

CEO Angel Benghigi emphasized the company’s alignment efforts, stating, "We are aligning the activities and the countries. We are aligning the group." Founder Jean Louis Bouchard highlighted the transformative potential of AI, saying, "AI is like electricity. You have different engines and different data."

Risks and Challenges

• Market conditions: Reduced public spending and distribution market challenges.
• Product & Solutions division: Slight decline may indicate potential issues.
• Competitive landscape: Pressure from competitors like Accenture and Capgemini.
• Transition to OpEx solutions: Shift from CapEx may impact traditional revenue streams.

Q&A

During the earnings call, analysts inquired about the challenges faced by the Cynotrade subsidiary and the company’s AI integration strategy. Management addressed these concerns, detailing plans for subsidiary disposal and the strategic role of AI in future growth.

Full transcript - Econocom Group SA (ECONB) Q2 2025:

Moderator/Host, Econocom: Hello everybody. Can we start? Okay, good. Hello, everybody. Welcome today in Puteaux for the Analyst and Investor Meeting for the first half of twenty twenty five.

The speaker for today will be our Founder, Jean Louis Bouchard, Angeline Belguigi and myself. Around the agenda, which will be as usual some strategic update, the performance of our first semester, some outlooks and welcoming some Q and A from your side. I now leave the floor to Jean Louis Bouchard.

Angel Benghigi, CEO, Econocom: Yes, sir. Okay.

Jean Louis Bouchard, Founder, Econocom: Let me wake up. Somebody asked me when I was coming in if I was stressed. I’m not stressed, so everything’s Okay. I’ve been here a few times, so I’m kind of acquainted. Anyway, one year ago, just one year ago, on July 24, I made, I think, one of the most important decision in my professional life.

And probably the best one was to appoint Angel Benghigi, on the first row here, as CEO of Econocom Group. So let me say thank you, Angel, because everything that you’re going to see now is has a stamp of angel, like the room, the quality, the presentation, the atmosphere, the music, probably a bit Spanish, but very angel. And the question is, probably you can ask me, is why did it take me so long to make this decision? Because for some time now, a lot of people were advising me that I should try to get more help, not to be so selfish, to be more clever, to be so I did look around and try to pass the helm to somebody else, especially after the years from 2010 and 2020 when we had a tremendous growth in the group from EUR 700,000,000 to close to EUR 3,000,000,000. We had a fantastic team and a lot of people were tired because almost everywhere.

And then I was looking for somebody to take the helm. So I tried my son Robert, which is not here today because he’s very successful with his business. He’s been running now for more than fifteen years. He’s a very talented man, but also lucky because he’s building data centers and the market is quite good. So he’s doing a fantastic job.

So Robert was not experienced with Econicom, so it was not the proper time to pass the power to him. And at the same time, we had a financial crisis quite severe in 2018. So, you know, the stars were not aligned for him to success. So I had a decision to make. I had very good two people working with Econicom.

I had Angel, now he’s been nineteen years with Econicom. At that time, that is like six, seven years ago. He was twelve years with Econicom, very talented and doing a fantastic job at Econocom International out of France. And that at the same time, we had Laurent Rudi, who was doing a very good job in the service activity, where we bought our main competitor in service activity in France, which was Oziatis in 2013. And he had joined the Econcom service activity with Oziatis service activity and made the service provider that we are today and which is very respected and is very successful too.

So I made the decision to choose Laurent instead of Angel. I remember we had a lunch together, together. I look at Angel and say, Angel, I did not choose you, I choose Laurent. He looked at me and said, it’s not very motivating. Then I knew I did not write the good choice, but Okay, it was done.

So we tried with Laurent. And eventually Laurent decided that it was too much for him. So I went to Angel. We worked together a lot. And now he’s in charge.

And I really regret not to have made this choice many years ago. But, Okay, the choice is made. It’s a good choice. And he will tell you what he’s doing and he will present you his team and you can be very first of result, but also what he will tell you will show you how good the decision was. Okay.

Then the second thing I wanted to tell you today is to come back to what is economic because every time we talk to the external world, everybody try to especially the bankers or the financial people they tried to compare us to competitors. So who can we compare to? It’s not so easy because I cannot tell you one company doing the same thing as Econocom. Our great competitors would be Accenture or Capgemini, but Capgemini and Accenture, they don’t do financing and they don’t provide equipment. So I would like I was asking we I was thinking what would I like best for the future when I hear or talk about Economy.

Would like to be like Accenture, which is when I see a CV and I see that somebody has a part of his time a few years within Accenture, it’s always a big plus. I would like in the future that any CV with I’ve been at Iconocum for two, three years or ten years or fifty years or one hundred and five years. That would be a very plus. Iconocum is a company like Cap or Accenture, smaller but the same quality. But we can provide equipment and we can finance it.

So it’s a huge difference. So don’t always try to exactly think the same. We are different and we want to stay different. So Andre, it’s for you to speak.

Angel Benghigi, CEO, Econocom: Thank you, Jean Louis. Thank you very much. Thank you everybody for being here. Thank you for the ones you came physically. Thank you for all the people that are looking at us through the video.

I will try to quickly tell you some highlights on this first part of the year. The main points in my opinion. First of all, we are keep on going with the path of the strategic plan we built in 2023. And I can tell you that we are progressing very well on that in the different streams. One of the main streams is the reinforcing of the sales force.

We are reorganizing the group. We are promoting the cross selling around the group. We are delivering new offerings. We are investing in new tools, in tech. So the first part, and this is the follow-up of the strategic plan, is led by business development of the group led by Israel Garcia, one of the members of the COMEX.

So we progressed a lot and we will tell some examples in the qualitative part of the strategic plan. Second, the total revenue growth of this H1 plus 6.6% seems to me to be very good. It’s very boosted by the growth of the TMF activity, the backbone of the group more than 18% with a very good evolution on the services side because it’s 3.6% in an environment that as you know is not good at all. And with just a slight decline in the distribution market. We are at minus 2.4%.

But globally, I can say that it’s knowing the environment, we are knowing in Europe, a very good organic growth. So we are happy with that. And on the inorganic growth and the M and A, that is an important aspect of our strategic plan. We finalized in H1, at the end of H1, four acquisitions in the other visual integration activity, one of the main pillars and one of the activities that we think that will be growing a lot in the next year is in Europe. So we will tell you more about that.

In terms of reorganization, you know that we have a plan that is Mission Impossible. And it can be funny, but it’s very difficult to do it. We have to increase 160 sales and agents in net in three years, 2024, 2025, 2026. We reached the objectives in 2024, plus 57 sales and agents. In terms of agents, you know the model of the agents is very important for the group.

As our founder, Jean Louis, started Econocom Group with the agent model that is very resilient because a good agent used to deliver much more than good sales. So we can say that since January 24, we onboarded 41 new agents that we are following the performance of all these new sales and agents. So 57, as I said, in 2024, the same objective for 2025, and I think that we are progressing very well and we will be reaching. And the objectives will be then to come to the end of twenty twenty six with more or less 600 sales and agents all over the group. So for the growth, also we are progressing and putting in place a cross selling model.

And for the cross selling model, we are doing a pilot in Spain, training all the sales and making that the sales work together from the different activities. And we had already good results on that because with these pilots we are demonstrating that on a client base that was choose for that, we already had good results. So this is something that we will be deploying in all of the group. On the acquisition side, you know that we just only bought one company since the starting of the strategic plan. It’s BBNET, a refurbishment company in Germany.

And as I said, some AV acquisitions in the group. Coming back to the organization, first of all, people. So we are reorganizing the teams and preparing the teams for developing the cross selling, developing the synergies, aligning a certain number of activities all over the group. So the alignment is a very important word for this transformation. As in Econocom, we always had an addition of different units working independently and delivering results.

If the results were good, very good. If the results were bad, well, you used to change the P and L manager and that’s all. But now we want to become bigger. We want to become bigger company and more efficient and more profitable. This is the plan.

And for that, we have to align a certain number of things. So these are the different streams of the strategic plan. Second, I can tell you that we put in place in H1 a profit sharing plan for about more than 20 managers in the group. And the profit sharing plan is based on the creation of value since the net result on 24 to the net result that we will have in 2027 and 2028. So the average of the net result 2027, ’28 compared to the net result of ’24, you will see that the net result that we have in H1 is not good.

It’s not good at all, the net result. But the commercial activity in H1 is very good. The difference is a one shot that we had to and Philippe will tell us about Sinatraide. But this is something that very in the legacy, you have good things and bad things. So this is a bad thing.

And we had some problems at the end of last year with this company, so we have to make provisions of that. We will sell the company and that’s all. But we are looking for the growth and for the profitability of the whole business for the future. So this profit sharing plan is based on the creation of value on the net result of the group for the next years. So our objective is to have a very nice net result in 2027 and 2028.

Back to life program is coming back to is not only coming back to office. It’s important coming back to office because after the COVID, everybody was teleworking and so on. And we are not so driving this as you have all to come back to the office every day, but you have to come back to the live the flesh, meeting the clients, meeting the partners, having dinners and breakfasts. And some P and L managers, good ones, they look for the activity of the sales, looking at the expenses. When you don’t have expenses, you don’t have meals and breakfast and so on, it’s a very bad sign.

If you have some expenses, it’s a very good sign because we have to meet the clients. And in the COVID period, I think that in many companies, the bad habit of many sales were to try to do business through the screen and this is not working. So the Back to Life program is a global program for all the group in order to try everybody to become alive, to see the clients, to come to events, to come to the office, to meet the partners and to meet the colleagues. And for developing the cross selling around the group, we developed a project that is a one portfolio. One portfolio is like we speak about all the offerings of the group on the different pillars that we built through the strategic plan, services around the workplace, around the infrastructure, networks and security, around the audiovisual integration and around the asset based finance for strategic assets.

So the one portfolio that is an internal document allows all the sales managers and all the sales to know about the global offering of the group. And when they come to see a client, it’s much more, I would say, valuable for the sales to say, okay, I am just sales coming from leasing activity, but you know, we know how to do many things in our group. So maybe sales coming to leasing is not coming back to the office with a new contract on leasing, but maybe with a new contract of distribution of workplace. And we are training people in other countries in order to develop this idea and this knowledge for all the sales and the pre sales of the group. I was speaking about the very successful integration of BBNET.

BBNET is a very nice company and has a very good CEO. For telling you about BBNET, I think that the best is to look and hear at this video of Marco that will tell us exactly what is Bibinet.

Marco, CEO of BBNET, BBNET: Binet is a company in Germany, IT refurbishing company, and we specialize on notebooks, computers, monitors, and mobiles. We give them a second life through refurbishment and have a quality brand called TechXL. We sell our refurbished products to the reseller with two years of warranty and also the Microsoft authorized refurbisher. Econicom and BBNET is a perfect match because Econicom provides to its customers new high quality IT products. And after the lease term, we can buy it back and refurbish it and bring it into a second market.

Together with Econocom, we like to be the number one IT refurbisher across Europe. Not just in refurbishment, we also like to expand our services, especially in IT audit and also data ratio. Because refurbishment is not also a compromise, it’s a smart, efficient way to sell IT devices.

Angel Benghigi, CEO, Econocom: So many thanks to Marco and many thanks to Christoph Blazer, the country manager of Germany that is here with us today. And Marco is now part of the executive committee of Christophe in Germany and Poland. We already are growing a lot in Germany. And Bibinet is a very nice acquisition, a very good company, very Germanic, well organized, solid, very good. So we made also some other acquisitions in these months.

We worked on some audiovisual projects. And there are three acquisitions, majority stake holding acquisitions, so between 7080%. And we bought also the portfolio and the team of a company in UK. So I will start with Germany because I think that Germany, as we already said, is one of the main focus for the development in Europe of Econicom as it’s the largest economy and a very rich country. Well, I really think that it’s a rich country.

When I go there, I really see that it’s very powerful. And compared to Spain, it’s really much more when you have a €1,000,000 deal in Spain, you have a €4,000,000 deal in Germany, 2,000,000 deal in France and so we bought the majority stake in ICT. That is one of the leaders in the audiovisual in Germany. Audiovisual is a market that is very fragmented and with 40,000,000 sales and 160 people, so very good to have them on board. We are completing our operation in Spain on audiovisual.

We already have about EUR 40,000,000, 50,000,000 turnover in audiovisual in Spain. And we bought Avancia. That is EUR 8,000,000 sales with 50 people, but a very good company in terms of offering. And they are very specialized in museums, digital museums, and they do a lot of business also in some Latin America countries. We bought also in Ireland ISS, 30 people, 10,000,000.

So we are developing with that our business in Ireland. And as I said, the portfolio in U. K. This portfolio in U. K.

Is already integrated in our P and S activity in U. K. And we also have, and I remember, a very good operation in audiovisual in The Netherlands, a very good one also in Belgium, a very good one also in France, where we are winning very nice deals, and also in Spain. So with Spain, France, Belgium, Netherlands, Germany, UK, Ireland. We still need something in Italy, but we have a very good network in audiovisual.

And what we are going to do is to have a global governance of coordination between these companies in order to unify the branding and unify the offering and to be we are the leaders in audiovisual but to be seen as the main clients as clearly the main leader in audiovisual integration in Europe. And now I will ask my colleague Philippe to tell us about figures.

Moderator/Host, Econocom: Thank you, Jean. So let me share with you some figures in respect of the first semester of the 2025 exercise. So in terms of growth, we’ve been able to deliver a 6.6% growth for this semester with turnover ending up to €1,421,000,000 which is quite an achievement with operational leverage allowing us to have an operating margin at 41.4. This is quite an achievement which was the combination of all the effort mentioned by Angel in terms of organic growth, plus the benefit of the integration of BBnet for the first semester, which allow us to have 70 basis points of additional growth. In respect of the profit, what is worth to mention is that this increase in the profit, which increased faster than the path of the revenue, even 8.5% increase in the OM, was achieved despite an investment in the sales force as also mentioned by Anjan as well as tooling of the organization with renewed investment in the CapEx, in the tools, in the software, so on and so forth.

This growth was driven by our TMF activity, which demonstrated a very solid growth of 18.4%. It was to be mentioned that it is within this business unit that BBnet is included as BBnet is closing the circle of the life cycle of the IT units which are leased by TMF. In this business also, had a very strong operational leverage which allow us to have EUR25.3 million OM on the first semester. In the Product and Solutions division, we experimented quite a difficult market and it’s fair to say that I think we overperformed the market. We were better than our competitor.

Despite that, we had a slight decrease of 2.4% in our revenues due to this reduction due to the reduction of certain public spending, including notably in France, as well as some, let’s say, wait and see approach due to the renewed governance of The United States Of America, as well as certain level of pressure on the pricing due to the reduction of the market. Hence, our result decreased from 14.2% down to 5.8. So the number of our competitors in this first semester, which are only focused on distribution experiment negative profit during this first semester. So I think it’s important to see the resilience of our business model for Product and Solution as well as the portfolio effect which we benefited from in between our three activities. On the Service business, we experimented a steady growth of 3.6% in between last year and this first semester with the adequate level of margin, which is still one of the most profitable business units of the group with a margin ending up at 4.2%.

There are continuous efforts in the Service business to improve the margin, including notably enhanced operator thanks to AI, including a certain number of tooling to reduce the time of execution of the ticket as well as the pace of growth of the business in order to be able to answer for client need with new tools and a better experience. During this first semester, as certain number of you know, we raised a new shoeshine of €225,000,000 which was aiming to refinance the tranche of €60,000,000 of the shoeshine, which was issued in 2022. Initially, we target €100,000,000 We were fortunate enough to raise €225,000,000 thanks to the confidence demonstrated by the pool of investors we had within our 2022 Shoe Shine, as well as welcoming new investors around the table, which will support the execution of the strategic plan. Within the portfolio of Econicom, there have been a certain number of operations which are the legacy of acquisition. There is a very strong history of acquisition within Econocom, which was built both organically as well as inorganically.

And following the 2023 strategic plan, certain number of activity were marked as non core. The decision taken there was to focus energy, effort, management bandwidth, financial resources on certain number of business unit, which you know, TMF, P and S, services and the geography we mentioned. In this context, Sinotrade is a e procurement software company, which was acquired at the late twenty twenty years twenty ten years, think in 2019, which is one of the world leader in the e procurement business with the full comprehensive chain of procurement. The company operates worldwide, with presence in all the major European countries as well as The States, and had the benefit of 85 very experimented professionals. He is also part of the magical quadrant of the Gartner for his business of eProcurement.

As I mentioned early this year in February, the company experimented losses during the second half of twenty twenty four, which impacted negatively our result end of last year. During this first semester, we also had negative results, slightly lower but still, which are the consequences of strong managerial decision taken by the group with the reinforcement of the management team, with the reorganizations, with certain adjustments of the labor force, with investment in the IT infrastructure, with upgrade of the tooling, with new features including AI in the product which is now launched as five. In this context, we decided to write down the goodwill of Cynotrade by €10,000,000 to cope with the revised environment and ease the disposal of the company in the forthcoming quarters. In terms of simplified P and L, as you can see, the underlying operational performance of the group is very strong, much better than last year with net profit from continuing operation of 18.7% compared to 17.3%, while the net profit is negatively affected by Cynotrade both in terms of negative result as well as the €10,000,000 write off, while the 2024 result was positively impacted by the capital gain in conjunction of the disposal of Les Abeil for an amount of €8,000,000 In terms of net financial indebtedness, the debt as of June stands at $2.00 €8,000,000 which is totally under control compared to the figure of last year’s.

A few comments on this slide, which were to be mentioned. The first one is that in terms of operational cash flows, during July 24 and June 25, we had the benefit of a cash flow of €137,000,000 with a strong increase compared to the 125,000,000 which we experimented during the same period of the previous years. The non recurring items of minus 16,000,000 are the reflections of the strong reform and reorganization we are doing within the group during those two semester under the leadership of Angel. And at the very bottom, you can see that the losses of signatory rate, minus 15% including minus 12%, reflect the two semesters which were quite complicated for Sign Not Rate, on which we hope that the next semester will be close to profitability and in no case at the same level. In terms of structure of our net financial indebtedness, as of June, we benefit from a very strong liquidity of €360,000,000 We have a combination of short term and long term public instrument with commercial paper for €25,000,000 €368,000,000 of Schuhshein as a combination of the 2022 vintage and the newly raised 2025 Schuhshtein and other corporate financing, mainly term loan with banks for €175,000,000 This net financial indebtedness has to be seen in light of a factor and reverse factoring program, which is at European wide level for level of EUR210 million, which is more or less the same as last year same period.

Beside the financial figures, one thing which is very important is ESG, not only because we as a family company, family controlled company, are deeply involved in ESG as well as because this is now mandatory within the tender offer, we are responding with our clients and competitors. So now we have an increase of additional 2% on the EcoVetice rating. We are now within the top five. For our EcoFactory business unit, not only we are gold medal at group level, but we are there platinum, so EcoFactory is operation which are more or less the same as BBNET based in Montpellier, which is refurbishing mainly iPhone and mobile phone, is now platinum in the EcoVadis environment. Thanks to this and the BBNET acquisition, we increased our positive footprint with more than 600,000 units refurbished within the group, hence reducing our carbon footprint, also allowing us to have positive discussions with certain clients and customers so to exchange our economy of carbon footprint with them.

And we launched, in particular in France, a Messina des Competence in the service business, allowing people which are in between jobs to share their knowledge, their experience as professionals with young girls or people in need and improve the positive impact of our company within our community. Now I will leave the floor to Angel to give some outlook for 2025.

Angel Benghigi, CEO, Econocom: So first of all, the main takeaways. First of all, continuous transformation of the group following all the streams of the strategic plan we built. I have to say on that that in H1, we also take the opportunity of deep diving in our services activity with our advisers of Boston Consulting. But it was a very interesting exercise in order to be much more focused on the decisions to be taken for the next years. So to be short, we were looking at all the services on one side, all the services around the workplace.

And then the main conclusion was that the confirmation of the investments to be made in artificial intelligence tools in order to improve the efficiency of the activity for the next years. So Quentin Bouchard is in charge of the global tech of the group and is working very closely toward the services activities led by Philippe Bouillou. And on the other side, we were also seeing that we need some more acquisitions on the infrastructure networks and security activity. So we have a lot of business on the workplace services and not enough in integration of infrastructure on networks and security. So first, we will invest in tools and artificial intelligence in order to become more efficient and more profitable on the workplace services.

And second, we will be looking and we are already with a pipe of positions of infra networks and security. And the acceleration of growth, and this is something that will allow me to tell you that our guideline for the year that was to be better in growth than last year, meaning that last year, we had 3.6% growth. We can say that at least for 2025, we think that we will be at 6.6% growth, so the same level that the first half of the year. So this is our new guideline for 2025. Thank you very much.

And now we are very pleased to answer all the questions you may have. And I will ask Jean Louis, if you want to come to the scenario and the comnex for answering your questions. Questions, please. Any kind of question related to the business, of course. Yes, please.

First of all, about Cynetrade, I have to say, last year, we had two cyber attacks on this subsidiary. At the end of the year, this was something that was impacting negatively. So it was new elements that we had. So we decided to change the management. And then first, on Q1 this year, we realized that we had to make some exceptionals, restructuring of the company and investments in infrastructure just in order to be protected against other eventual attacks and to improve the platform of the group.

So these are the reasons why this is appearing now. It’s not something that is in our books since five years, and we just are raising it right now. It’s because we had new elements at the end of last year that we realized with an audit made by the new management that we needed to put some exceptionals for investing in reducing the structure and two, invest in our infrastructure. And for the second, we are working with Bering Capital. Maybe you can tell us something about that, Philippe, for the selling of the company because we really want to sell.

Moderator/Host, Econocom: Yes. So we are working since the second quarter of this year in their preparation for the disposal, in parallel the reorganization of the company, so it has to be made in sequence. So first, reorganizing the company and putting it in the right context and the right shapes. We retain the banks, which is bearing Point Capital, to advise us on the disposal. We performed certain number of preparatory works.

And our objective and intention is to conclude the disposal of this company during the second semester of this twenty five fiscal years.

Speaker 4: And what is the price?

Moderator/Host, Econocom: Due to the context of the forthcoming disposal of the company, we’ll not disclose the value of the company in our book.

Speaker 4: You don’t disclose the amount in your book?

Moderator/Host, Econocom: It is disclosed in our books.

Speaker 4: And it’s how much?

Moderator/Host, Econocom: It is in our books.

Speaker 4: But I am not in our books today.

Moderator/Host, Econocom: I will have it. It’s in a range of two to three times revenue.

Speaker 4: And the company is losing money in operational or it’s mainly exceptional on first half?

Moderator/Host, Econocom: So right now, the company is still losing money on operations. We are working hard to complete the reorganizations. And our expectation is to break profitability during the course of next years. We have reasonable hypothesis in terms of turnover development, including new clients, very prudent approach on one end, as well as more operational performance and leaner organizations, which is the main driver of coming back to profitability.

Speaker 4: And about distribution business?

Angel Benghigi, CEO, Econocom: Maybe Isael, you

Israel Garcia, Business Development Executive, Econocom: can answer your question. This is joint this situation is joint to the conversation we had last year same time more or less when we were discussing our situation of the market. The situation of the market in distribution was expected to be growing more. Windows 11 is still coming later. So that’s creating a really big component in front of our competitors we are having a strong fight for the pricing and that’s really one of the problems that we are having there.

So that’s quite similar. If you check exactly the same the situation with the competitors, you’re going find more or less the same. Nothing different. It’s expected for the second part of the year, a really good improvement on that.

Speaker 6: Morning. Frederic Anderson from ING. Could you provide us with bit more insight on the revenue evolution on TMS side, especially on geographical breakdown, including France?

Angel Benghigi, CEO, Econocom: Yes, of course. I can say that in France, we had a double digit growth, but not only in France. France is a telecom leasing in France is a leader in the market even if we think that we can do much more and we are reinforcing the teams and the management. But we had a double digit improvement, but we also are growing a lot in Italy. We also are growing a lot in Germany and we also are growing a lot in Spain.

These are, for the moment, the four main countries for the TMF activity. But as TMF is the backbone of the group, we have the activity in all the countries where we are. And even if these are the main ones, we are developing also the business and we are growing also the business in all the countries. Just one country that not developed the growth in this, but you always have an exception. So globally, the growth is a very good one.

I have to say that there is a good growth in IT leasing, refinanced without recourse with our partners and funders, and then we are also progressing on the strategic assets financing.

Speaker 7: Yes, have a question on the platform. Do you have a more precise timeline regarding the acquisition or development of the infrastructure division? And if so, in which country will it take place?

Angel Benghigi, CEO, Econocom: We have now infra network and security activities in France, in Spain, in Belgium. But we would like to have a good division in Italy also, but we would like to be reinforced, in fact, in other countries Because through the analysis that we made with Boston, we were seeing that this is a market that will have a big growth in the next years. Everybody is obsessed with data centers. Everybody is obsessed about data. And when we speak about artificial intelligence, we are speaking also about data servers and so on.

In the infrastructure world, we can see four pillars. We have the servers, we have the storage, we have networks and we have security. So we have just to align. We have to align exactly our offering, but we would like to have an aligned offering in all of our countries. We don’t need for that big acquisitions.

We need medium sized acquisitions with very good teams because it’s essential to have good engineers and very good sales and presales for developing this activity with a good profitability.

Speaker 7: So I continue with the question on the platform. How is AI integrated in your strategy? So I think question for Quentin.

Quentin Bouchard, Global Tech Lead, Econocom: Thank you, Anne. Good morning. So AI is topic that is across every topic that we’ve seen and it’s really a transformation and really a really interesting topic to work on. So this is the first thing. And what we see is that there are many big players especially in The States but also in Europe and Asia that are bringing big solutions, very powerful solutions, very interesting solutions for CRM, for ERP but also for DEX, which is Digital Experience Users for IT services.

There are really big innovations and possibilities, but they are very big because they need to invest billions of billions to have really good tools. And we have the big customer as well who wants to make the use of it. And what we see is that we can still do go between as we are in EPS or as we are in leasing, go between between those big actors and our big customers in order to make it for real and to get the value because most of the time we buy a nice software but we don’t get the value. And we’ve been testing a lot. Our approach is to be very iterative and test in prod, delivering prod as fast as possible to get the feedback because it’s innovation.

So let’s be quick and get the feedback and then adapt and see what is working for us, for our customers and for the specific sector we’re working, which is IT services and develop special agent for develop, integrate, use special agent dedicated to our sector. So this is the way we approach. And with Philippe Guillaume and with all the people in the services but also in EPS and CMF, we did deploy in prod, get the feedback. And we also do it internally. We developed we integrated a chatbot as everyone did and we deployed it very quickly internally and have it tested by the internal users to get some feedback and I proposed to our chairman to test it quite quickly and he said what is it, it’s a shit, it doesn’t work.

I don’t have any questions. And so we knew a little bit. So we went back and we worked during three months or four months to bring back with more added value to say for example now you can create a ticket automatically to the service desk, you can talk with it because you couldn’t talk with it. Also the data is really important because we put at the beginning to go really fast some knowledge base within the system and now we have much more concrete and complete knowledge base. So with this, now we say and also we review the look and feel, we have something a bit better and it’s bringing a bit of value.

So this is really the iterative approach that we have on this topic.

Jean Louis Bouchard, Founder, Econocom: No, no, let me help Martin, just a minute. If you want to understand AI, let’s compare it to electricity. Two hundred years ago, electricity did exist, but nobody was using it. It was you had in electricity, you have a lot of different engines, very small, very big, all sizes of engine. And you have a lot of different type of electricity, which is alternative electricity, high voltage, low voltage, continued, discontinued, whatever.

I. It’s the same. You have the engine is a software and the fluid itself is a data. So when you talk about AI, you have different engines and different data. So when you talk when typically when you have you go try to use AI, look at where do your data come from.

So typically, I used to to use Google like 20 times a day. Now I use probably Google six, seven times a day and chat or whatever, touch GPT typically about 15 times a day. But every time, where is the data coming from? Is it on the web? Is it internally?

Is it on our data? Is it on somebody else’s data? So you have to match it because everybody say AI, AI, AI, AI, but you have thousands of different engines and a lot of different data. So you have huge data. For example, the big platform like X have huge data.

In Econocom, we have our internal data, we have our customers’ data. So where do you use your engine and where does the power come from? And this takes time to build engines and to build data. But it’s happening, but it’s happening fast.

Israel Garcia, Business Development Executive, Econocom: Maybe at one point regarding this matter. We were reviewing right now the internal part of AI, okay? But it’s also joined to our future, what is our portfolio. And in our portfolio, we are also developing a lot the AI solutions for our customers. And just to explain you, yesterday I was in a management meeting with one of the companies of the group.

And what we could see is the big increase in the backlog, huge increase in the backlog, of course, in percentage because as you can imagine, the things are starting slowly, but a big increase in Brexit in AI. So the future is there. And also joining to the first question of how are we going to improve that part of the margin, do we have a plan for that? Because just to see that there is a problem with the margin in P and S is something that is seen in the graph, nothing special. But yes, do you have a plan in order to develop it?

And that’s the one is we are moving our portfolio. We are moving trying to find which are the solutions that are giving more added value to our customers. Based on that, that’s how we expect a good profitability based on the improvement in our new solutions we have. That’s just to join that.

Speaker 7: Perhaps for you, Israel, also, a question on the AV acquisition. So can you elaborate on the acquisition price of the four tactical acquisitions, both from absolute perspective and EVEBIT multiple, please?

Israel Garcia, Business Development Executive, Econocom: Well, that’s a very good question. It’s a nice secret just how we’re buying companies in which multiplayer. So that’s something that is in the market and I’m sure that depends on. But I think that when you are trying to and I can give you my personal experience because I was a company working in AI, and the Conoco in the year 2018 decided to buy my company. So so I can tell you that for me, there is one thing very, very important is is Conoco giving a project to these companies?

Do we have a project for them? More than discussing a multiple of the EBITDA is which is the business plan we can develop together in order to find a correct future? And that’s the way we are working with them. We are not only working if multiply by two, by 10, over 20. The idea is how we are going to evolve during the next year your business together with us, which is the growth.

And to give you an idea on what happened, for example, in my experience, when Econocombored my company, my company was around €10,000,000 more or less, so not but a very good profitability. We were a very nice profitability. After four years, the company was double the size and double the profitability. So that’s for me how we have to answer to the market. It’s not a question and that’s a question I discuss a lot with all the private investors on which is the multiplayer and so on.

But we have to define for when you have a real investor in front of us, the important thing is not only how we multiply, David. It’s do we have a project together for the future? And that’s the answer for that question.

Speaker 7: I have a lot of questions on the platform, so I continue, but feel free to ask in the room. What is the guidance on debt? And there is another question on the 2025 guidance. How sensitive is it to macroeconomic headwinds or changes, especially in public sector spending.

Moderator/Host, Econocom: So on the net financial indebtedness, in February last in February, mentioned that the guidance for indebtedness was to remain within the one times EBITDA published net debt range. So right now, we are confirming this guidance. We are working hard to have the financial discipline of cash conversion, increasing our cash flow and optimizing the investment. In respect of the headwind, we think that the bulk of the negative headwind in terms of public spending is almost behind us. We have suffered that in France, notably.

And we are expecting that the second semester will allow us to rebound, including in certain geography like France and others, so to be in a position to recoup growth and momentum in terms of operational leverage, thanks to the effort which has been performed during the first semester.

Speaker 7: Thank you. A question for Angel. What is your view after one year of your leadership? And what are the key milestones achieved?

Angel Benghigi, CEO, Econocom: I think that the most important is that we are aligning the activities and the countries. We are aligning the group. And we are starting having a quite good organic growth. You remember that in the strategic plan, we said organic growth will be 70% and acquisitions 30%. You see that in terms of acquisitions, we are behind what we said in our strategic plan because in terms of acquisitions, you never know when you will have the good opportunities.

So we made some acquisitions in refurbishment and audiovisual because we think that is, like Israel was saying, very synergetic. And then the investment will have a very good return. For bigger acquisitions, it depends. So we work on some big deals. We are working now in a big deal in Italy.

Maybe it can come, maybe not. But we will not be doing things that are not very synergetic and with the prices that can be reasonable because we don’t have a lot of that and we don’t have to be pushed by even the strategic plan that we made. So maybe some other big ones will come or not and when, we’ll see. But for me, the main is to transform the group and the organic growth. And for the organic growth, the reinforcement of the sales that is evolving very well and this is what will give us a return in the next years.

More questions please? Yes? It depends a lot about the owners of the companies that are for sale. Private equity are squeezed because they bought companies some years ago when the interest rates were at 0% and the multiples were very high. Now they want to sell, but they don’t want to write off losses.

So in this case, it’s difficult. So the prices now are different. When we look for companies to acquire now that are not the shareholders are not private equity owners, think that multiples of EBIT or EBITDA are going down related to what it was four years ago, three years ago. And that it will remain much more on the main, the same level because interest rates are in Europe at 2% and seems to remain stable. So we look for companies that are in multiples that are realistic for the present situation and not business between private equity owners.

Private equity, sometimes they bought and sell between them in order to move the money, but it’s not our case. It depends on the activity. But in security, the multiple can be higher than in distribution, for example. It depends on the level of the services and the value added of the companies. But we are not looking for very big companies.

We are looking for companies with a high quality of integration. And security is a very interesting question because security is more and more important for the infrastructure integration deals, for the audiovisual deals, for example, in video conferencing, security is key. So this is something that will be very useful for different offerings that we have. So we will need to be reinforcing that in all the countries.

Speaker 7: So do you have an explanation for the sharp slowdown in the growth of your services division in Q2?

Angel Benghigi, CEO, Econocom: I will ask Philippe Bouillou to answer because he is the President of the Services and the Distribution in France, and I am sure that he has the answer of that.

Philippe Bouillou, President of Services and Distribution, Econocom: Thank you very much for the question.

Speaker 7: You’re welcome.

Philippe Bouillou, President of Services and Distribution, Econocom: On the Q2, there are two explanations, think. One is the month of May in France is a little bit a day off habits of in France. And so we have this impact of the month of May and the day off of May. But also, there is a contextual aspect, in fact, in it because services is business also. And we lose some business, and we are winning some business.

And sometimes the beginning period and the ending period are not the same. And so there is some part of the year where we have business ending and other business starting and they all not join on the same date. And so that’s the explanation for Q2.

Speaker 7: Thank you.

Philippe Bouillou, President of Services and Distribution, Econocom: And thank you for the question.

Speaker 7: Another question on P and S activity. What are the main levers to restore growth and margin in this segment?

Israel Garcia, Business Development Executive, Econocom: Okay. I think I’ve been already explaining a bit So about this if you’re a P and S company and you’re thinking about only being a pure bus mover, your future is very bad, okay? So the company since two years ago, we started developing new solutions and trying to merge and change from P and S to workplace and infrastructure. So more services around these boats is going to give you more margin. That’s the main solution we’re going to be and we’re working on that.

Speaker 7: Thank you. I’ll try to find other question.

Israel Garcia, Business Development Executive, Econocom: While you find it, if you want, I can tell you that also based no, while you find it maybe to give you more time just to help you a bit. There is also again sorry for talking lot about the one portfolio, but again it’s part of our core in order to develop and see exactly which business are going well, which are the kind of solutions that are going well and giving good margin or not, okay? So one of the things we are seeing is that if you have a very good sales network with the capability to give more added value to our customers, the margin is immediately growing, okay? So that’s something that we saw. Angel explained before the pilot we are making in Spain with around some customers, some salespeople moving in around €30,000,000 It’s not a big, but it’s just a pilot.

And this change we are making there gave us an increase of more than 23% not only in revenue, but even higher in the part of the margin. And why? Because the main thing is that we are training especially to our salespeople where is really the added value we can give to our customers, so our customers are going to be really more happy on our solutions. What is needed? Of course, some of the solutions maybe are not in the country, but we are using the capabilities we have in other countries in order to give the support.

And joining that effort is the way to find a better margin for the future. As you can imagine, now we have to go into the second step and scale the project. And that’s the process that we are going to start working since the beginning of the next year. So that gives you more ideas on how we are developing on the solutions. But again, the situation of the P and S market, it is what it is.

So the market is this way. So if you check the situation of more or less all the companies that are working in this, It’s not even I can tell you and I’m not happy with it, but I can tell you that we have been in a positive situation because we are in a positive margin. But the solution in other companies is even worse. But I’m sure that with these kind of changes, things are going better. And even the market is going to improve for sure in the second part of the year.

Do you have time, Anne? It’s okay now?

Speaker 7: Yes, yes. That’s okay. Thank you. Another question on P and S activity. What is the impact of the tariff on this business and the impact for Econocoma?

Israel Garcia, Business Development Executive, Econocom: Okay. That’s a good question, the tariff. To talk about the tariff, you have to check exactly what’s happening today at eleven just to know what it is the situation. But anyway, the tariff what is giving is a bit of an uncertainty to the situation of the business. So as you can imagine, all the big companies they don’t know exactly what they’re going to find the following day.

So it would give us it’s a really situation in the market. And the market is also frightened. Everything is frightened. So that’s giving a real increase in prices. And that’s something that is happening, okay?

So for that, that’s the situation for me. The good question is which is the solution we have for that. And at Econocom, we are seeing and you could see today a very good growth on the TMF business and that’s part of it also. Because the situation is that we are seeing that the P and S business is moving a lot into more OpEx solution, not CapEx solutions. So really, we are joining forces between the team of P and S and the team of TMF.

And the solutions we are giving to the market is every day reducing that increase in prices because we are moving into OpEx. As the situation of the interest rates is going down, that gives you more comfort to our customers. But anyway, tariff is something I think we’re going to be leaving during the next year, two years, something changes. The market should be flexible. I think that’s another important thing that we have in Econocom is that we are flexible.

We are very good reading the market, situation of the market and just moving the company very quickly depending on the situation of the market. We are also a European company, so quite in our internal market, it’s not really having big issues. But of course, when you’re talking about the world of the PC, the increase on prices every day, the change not possible many times to change these prices into the contracts because you have a global contract. Those kind of things, of course, are impacting in the margin and then as a result of the company.

Speaker 7: Thank you. There is a question on the governance transformation. Has it impacted operational efficiency and decision making? I think this is mainly for you. So I can repeat it.

How has the governance transformation impacted operational efficiency and decision making?

Jean Louis Bouchard, Founder, Econocom: I think I take a lot of more time off. Play my golf is increasing. I mean he doesn’t agree with it. We are playing golf next week together, so I can tell you more about it. Well, there is a tremendous job being done.

And we are seeing the first result, but it’s a big transformation. You see, team is new. One year ago, Philippe was somewhere else. So that’s a big change. We had a very good team in finance, but they were tired, so we changed it.

Israel is traveling all over the world, but very much involved everywhere, including The UK. Including? And having a lot of fun in The UK, which is very promising. And Angel is busy. Okay, great.

Angele is busy. But okay, I’m very optimistic. With Economy, everybody is happy except journalists because if you’re a shareholder, I’ve been a shareholder for many years, I’m very happy with it, okay? The banks there are many bankers in this group. They are very happy because they don’t lose money, make money.

But every time the journalists, they come up and they are disappointed. But the economic people are happy and we’re having fun. So it’s okay.

Speaker 7: Thank you. I have no other question on the platform.

Jean Louis Bouchard, Founder, Econocom: We have a good very curious, but we’re happy with your questions.

Speaker 4: You are happy as a shareholder?

Jean Louis Bouchard, Founder, Econocom: If you keep your shares, yes, yes. I’ve been a shareholder for thirty years. I’m very happy with them. And they could give dividends. When I started, I used to have 37% of the company.

Now I control like 60%. So and I don’t have that. Our strategy is actually yes. We still keep on buying shares. Yes.

Excuse me?

Speaker 4: How much it was on the first half?

Jean Louis Bouchard, Founder, Econocom: The number of shares in the first half varies very little because probably 3,000,000 or 4,000,000 shares.

Speaker 4: I’ve seen EUR 15,000,000, is that right?

Jean Louis Bouchard, Founder, Econocom: EUR 15,000,000, yes. Number of shares is about EUR 5,000,000, so it’s about EUR 10,000,000. But we stopped buying one month ago when we knew about what we are obliged to do and to respect. But now we’ll start buying some shares again.

Speaker 4: And you buy shares also as a shareholder or you stay at the same level?

Jean Louis Bouchard, Founder, Econocom: I stay at the same level, but the company buys and then destroys shares, so it’s the same.

Speaker 4: And you spoke in the past to have an adjustment with some investors. Any news on this point?

Jean Louis Bouchard, Founder, Econocom: Yes. We’ve been we had offers on it, but at this time we don’t need it. In fifty two years, we had only one year where we lost money. That was in nineteen I ninety know, I know.

Israel Garcia, Business Development Executive, Econocom: That’s a

Speaker 4: question

Angel Benghigi, CEO, Econocom: of I don’t

Jean Louis Bouchard, Founder, Econocom: like to lose money. But at that time, what happened is we were mainly IBM secondhand and leasing operators in IBM. And we had started distribution, which was new with the PC. And also, we had a very good service company doing maintenance. And when the IBM crashed its price, the IBM pricing at that time, IBM was 80% of the market.

Today, it’s not IBM anymore. But the price went when all the equipment only central units, thanks for us, but not the tapes and disk drive and so on. They kept their price and also the printers. But the main central units, they dropped from EUR 100 to 10. So from one day on, the price of the equipment that used to be EUR 100, while the maintenance was EUR 10, then the rental price was at the price of the maintenance.

So we had inventory and we had leasing. And at the end of the leasing contracts, the price were nil. So our revenue went down from USD 1,000,000,000 in one year to USD 300,000,000. So that was kind of tough. And it’s still in my head.

So that’s why when you think it can come, you understand why it’s so diversified. We have normally three type of business now, the fourth one was AudioVideo. But every time you see one is going better, the other one is going up and down and up and down, but we keep it diversified. Then also we have the pace of growing. Well, the pace is like Europe.

You can compare economic to Europe, but there’s one main difference. Why is it European? Because our customers are being European, and they want us to be European. So the demand is for us to be at least in Western Europe, but more than Western Europe. And every country is doing up, down, well, better, long, but it changes.

But more or less, now Italy is doing very well. In Europe, you know that Greek Greece has recovered a lot. So it’s kind of we are following the European pace. The big difference is that we don’t have a real leader in Europe, where in econicom, you have a real leader and it’s me. So that’s a big difference.

And we know where we want to go. But I think the day we find a very good European leader to manage Europe, I think we all Europeans will have fun and we’ll be proud of it. But maybe Melanie or maybe I don’t know. Macro, I’m not sure, okay. But this is something else.

There’s no more questions. So maybe in the room, somebody else want to speak. Everybody is already thirsty and hungry. No? You’re sure?

Last time? Thank you very much. Bye bye.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.