Earnings call transcript: Edenred Q1 2025 reports steady growth

Edenred SA reported solid financial results for the first quarter of 2025, reflecting steady growth across various sectors. The company’s operating revenue reached €667 million, a 7.1% like-for-like increase, while total revenue was €724 million, marking a 5.7% reported growth. According to InvestingPro data, the company maintains a Fair financial health rating, with particularly strong scores in growth (3.29/5) and relative value (2.95/5). Despite a slight drop in stock price by 2.72% following the earnings announcement, Edenred remains optimistic about its future outlook, confirming its full-year guidance for 2025.

Key Takeaways

• Edenred’s Q1 2025 operating revenue increased by 7.1% like-for-like.
• The company confirmed its full-year guidance with expectations of at least 10% EBITDA growth.
• New partnerships were announced, including the Mexican central administration and Daimler truck charging network expansion.
• Despite macroeconomic challenges, Edenred aims to maintain its diversified business model.
• The stock experienced a 2.72% decline post-earnings announcement.

Company Performance

Edenred demonstrated resilience in Q1 2025, with significant growth in its "Beyond Food" and "Beyond Fuel" solutions, which grew by 16.9% and 15.1%, respectively. The company continues to expand its reach, serving 60 million users across 45 countries. InvestingPro analysis reveals the company is trading at an attractive P/E ratio relative to its near-term earnings growth potential, with additional insights available in the comprehensive Pro Research Report. However, the company faces macroeconomic challenges, particularly in Europe, where a soft market start and rising unemployment are anticipated.

Financial Highlights

• Operating Revenue: €667 million (+7.1% like-for-like)
• Total Revenue: €724 million (5.7% reported growth)
• Other Revenue: €57 million (+1.9% like-for-like growth)

Outlook & Guidance

Edenred confirmed its full-year 2025 guidance, targeting an EBITDA like-for-like growth of at least 10% and a cash conversion rate exceeding 70%. The company aims to leverage its recurring revenue model and unique platform capabilities to drive growth, while remaining prepared to adjust its cost structure in response to potential macroeconomic headwinds. InvestingPro data highlights the company’s strong dividend track record, having maintained payments for 15 consecutive years and raised dividends for the past 5 years, suggesting robust financial management.

Executive Commentary

CEO Bertrand Dulessy emphasized the company’s strategy to navigate a disrupted global environment. "We live in a very disrupted world. Every week, we all receive everywhere around the world some signals that can be positive and negative, but that creates, in fact, some instability," he stated. Dulessy also highlighted the importance of the "beyond strategy" for compensating market fluctuations and ensuring long-term growth.

Risks and Challenges

• Macroeconomic Pressures: Challenges in Europe, including a soft market start and rising unemployment, could impact Edenred’s growth.
• Regulatory Changes: Potential changes in French ticket restaurant regulations may affect the company’s operations.
• Inflationary Pressures: While limited impact from Argentinian hyperinflation was noted, inflation remains a concern globally.
• Fuel Price Sensitivity: Mobility revenue is sensitive to fluctuations in fuel prices, which could impact earnings.

Q&A

During the earnings call, analysts inquired about the potential impact of French ticket restaurant regulation changes and the sensitivity of mobility revenue to fuel prices. The refinancing of a €750 million bond at 3.25% was also discussed, highlighting Edenred’s proactive financial management strategies.

Full transcript - Edenred SA (EDEN) Q1 2025:

Bertrand Dulessy, Chairman and CEO, Edenhead: Good morning. I am Bertrand Dulessy, the chairman and CEO of Edenhead. I’m surrounded by our IR officer, Cedric Capper, but also Patrick Betaillard, our interim CFO till June the second of this year. Thank you for being with us today for me to share the Edenhead q ’1 ’20 ’20 ’5 revenue presentation. We’ll be together for the next sixty minutes.

I will start with the presentation. You should have the slides, and then I will be more than happy to answer any questions you may have. I propose that we move to slide two in the executive summary. What are the main messages of our q one publication? First of all, we deliver top line growth in line with our expectation despite a tougher macro environment, especially in Europe.

The operating revenue is up 7.1% like for like, driven by a good performance in Latin America and in mobility, but also by by our Beyond Food and Beyond Fuel digital services. The second message is, in fact, we continue to deploy our Beyond strategy, and it gives us an advantage based on this very unique platform serving millions of users, 60,000,000 of them around the world. The firm message, page three, Eden Red is able to confirm its target for full year 2025. What does it mean? An EBITDA growth like for like of at least 10% and a cash conversion, I e, EBITDA to free cash flow conversion rate superior to 70%.

We confirm our target, but we remain vigilant on any further macroeconomic deterioration. You know as much as I know that we are living in a very disrupted environment. These objectives are possible thanks to the dynamic we have on our top line, but also it’s gonna be led by operating performance optimization. What does it mean? Our fee for growth plan, which is focused on cost efficiency, but also our product improvement plan for two businesses that are performing below Edenor’s standard.

And finally, the rationalization of our portfolio. For example, we exceeded the b two c best activity. I propose that now we move to the highlights of the quarter. And so if we go now into more details, let’s move to page six. So you see that our operating revenue has been growing by 7.1% like for like, moving from 625,000,000 to €667,000,000.

It is the symbol of our continued success on the core, but also on the Beyond solutions, allowing us to drive further market penetration despite two headwinds. The first one, an economic slowdown in Europe, especially in France and in Germany. But I’ll also remember a very high basis of comparison in q one because in q one twenty twenty four versus q one twenty twenty three, we grew as much as 16.9% like for like. Then if we move to page seven and to look at the breakdown of the growth per business line, first of all, mobility representing 26% of our operating revenue in q one. Mobility has been growing at almost 12% like for like.

Then benefits and engagement representing 65% of our operating revenue. Benefits and engagement business line has been growing at 7.6%. If we move to page eight and we look at the breakdown of the growth of our operating revenue per geographies, you see that in Latin America, we are growing like for like at 16.3. Latin America representing 30% of our revenue operating revenue. Rest of the world is growing double digit as well, 16.7% like for like in this first quarter.

And as I previously said, we see a slowdown in Europe. Europe has been growing at five percent reported in q one and one point two percent like for like in q one. So if we go into more details as to, you know, the understanding of the growth, and we start page nine with the difference between meal and food and Beyond food. In meal and food, when you look at the business volume growth in q one twenty twenty five, like for like and excluding the consumption vouchers in Belgium, you know, it’s a program that was launched and stopped in fact in 2024. So if you look at the performance of the core of meal and food, we have been growing like for like in q one twenty twenty five by more than 8%.

What is interesting is to look at the acceleration of our Beyond Food, which will present more than 30% of, in fact, the operating revenue for this business line. You see a strong acceleration of the growth moving from 13.5% to 16.9% excluding the GISSolutions. So why? Because, as you know, we have a high basis of comparison. In fact, due to the program that were not as good as we expected in q four twenty twenty four.

If we continue the analysis for the mobility business line, page 10, you see that in terms of the core of the mobility, which is our fuel activities, you see a growth that is at 7.7% like for like versus 7.5% in 2024. And when we look at the Beyond Fuel, just like with the Beyond Food, you see an acceleration moving from 10.5% to 15.1%. It is the confirmation of the solidity of our Beyond strategy. We are serving 60,000,000 users around the world via 1,000,000 corporate clients with a very unique digital platform on which we can serve more and more our clients with additional services, accelerating the cross selling and the upselling, which is one of the advantage of the platform. Now if we move into the highlights of the quarter, per business line, what are the few things that I would like to share with you?

Page 12, if we start with the first business line, which is benefit and engagement, you know that one of the driver on the growth on top of the penetration and the upselling and the cross selling is, obviously, the face value. And in fact, I have some good news to share with you. In 2024, we had 10 countries that increased their maximum legal face value. And in fact, in the first quarter of twenty twenty five, we already have eight countries that have increased their maximum legal face value in 2025 for an average of 4.3%. What does it mean?

If you remember the principle based on our historical observation, it takes about two years to go after the 85% usage of the face value legal face value increase. So the 10 countries that have increased their maximum face value in full year 2024, it’s gonna contribute to the growth in 2025 as it contributed to the growth in 2024. But now that we are recharging with additional eight countries in 2025, it will contribute to the growth of 2025, but also to the growth of 2026. If we move now to the second business line, which is mobility, page 13, you we selected for you two examples to demonstrate the upselling capabilities of Head and Head, but also the cost selling capacity. As to the upselling capabilities, we took the example of the fact that we became the exclusive fuel provider for Mexican central administration.

What does it mean? It’s a fleet of 75,000 vehicles. We started a relationship five years ago. Slowly but surely, we increased our share of wallet, and we are very pleased to have 100% of the total needs of the good the central administration of Mexico for the first time in our history, so in 2025. It means 55,000,000 additional liters that are expected for 2025.

So it’s an example of our capabilities in terms of upselling. We can start slow. We can start low. But thanks to our digital platform, our innovation capabilities, and our sales and marketing efforts, surely slowly and surely, we are able to increase our share of wallet and so our upselling capabilities. Second example in mobility in Europe this time, in fact, it’s a worldwide partnership, but with a European partner, one of the leader of the truck business, which is Daimler.

We started a partnership many years ago. We started with providing a fuel cam to any owner of the Daimler truck and to have access to a fuel network of 68,000 fuel stations in 37 different countries. Then we were able to provide toll and maintenance, and we are very pleased to have signed a few weeks ago an extension of our partnership with the the the fact that we will provide for any user owner of a Daimler truck, a newly charging network, it means 300 truck compatible charging station in 28 countries. This is another example of our cross selling capacity, but also and also surfing on the electrification wave of the mobility that we are seeing everywhere in Europe, and it’s true for the light vehicles, but also for the easy vehicles like the Fox. If we move now to page 14 and for the third business line, the complementary solution, here, we selected an example of our product innovation based on the leverage of our specific purpose Mexico.

This state represents 5% of the Mexican population. It’s for almost 600,000 mothers that are cardholders of the Tarheita Rosa, and they will be able to benefit from health services and additional purchasing power through the usage of this Tarheita HOSA that is, in fact, issued and emulated by Edenhead. It will present €260 of annual subsidy per mother and, as I said, per year. So it’s a good example of the leverage of our innovation capabilities, specific purpose payment, and I took an example in Mexico, but you’ll remember that we are in 45 countries and specific purpose payment is a technology of some interest for public social programs. You want the founders of the program.

They want to know where and when the money is spent. So I propose now to move into more details as to the q one twenty twenty five revenue. So if we move to page 16, we post reported operating revenue of €660,000,000. It is a growth of 7.1%. Behind that, you have some scope effect and currency effect.

The scope effects are due to the acquisition of Ipe, Spiri, PacBen, and Airbase Services representing an impact of plus 4%. But we have a currency impact mainly driven by the weakness of the Brazilian reals and the Mexican peso in Q1 twenty twenty five, representing minus 4.5%, leading to this reported growth of 6.7% of our operating revenue. If we move to page 17, what does this mean in Latin America? We are pleased to post double digit like for like growth in Latin America. Latin America representing 30% of our operating revenue.

It means a like for like growth of 16.3% in q one twenty in q one twenty twenty five versus 2024 as reported almost 8%. Then if we look for major geographies and if we start with Brazil, you see an acceleration of the growth in Brazil. We were at 10% in q four twenty twenty four, and we are moving at 16%. What is behind the 16%? Double digit growth in benefits and engagement and for the meal and food cost solutions, but also for the Beyond Food solutions.

In mobility, the very dynamic growth as well that has been augmented by the beyond fuel solutions, maintenance, toll, and freight payment that have been growing at double digit in q one twenty twenty five. Then if we look at Hispanic Latin America, we are able to post in q one double digit like for like for like growth in both benefits and engagement and mobility. And so it means a growth if we exclude, in fact, the Argentinian hyperinflation in 2024. It’s a growth of 14.8% in q one twenty twenty five. Then if we move to Europe, yes, in Europe, it’s a soft start to the year as expected and I shared with you during our 2025 2024 results.

First, general comment for the entire continent of Europe. We have a context of macroeconomic slowdown, but we also have something that is specific to Edenhead, which is a high basis of comparison. So then if we move into the geographical breakdown and if we start with France, the good news is in 2024, Eden Red in France has gained market share in meal voucher market. Having said that, we post a growth of plus 0.4%. There is, in fact, a drag of the gift activity as a consequence of the low performance of our gift campaign in q four twenty twenty four.

So as you know, the campaign is the last quarter of the year, but it has some economic implication in terms of reimbursement volume in the first quarter of the year after. So we have this drag, and we also have a slowdown of the activity in France leading to this 0.4%. Once again, the good news is market share gain. Then if we look at the rest of Europe we start with benefits and engagement, we are able to post a steady performance in Southern Europe, but we have a high basis of comparison in q one twenty twenty four. We discussed previously about the consumption voucher program in Belgium.

And in fact, because the program has been stopped in the q one twenty twenty four or five, we still have, you know, this this impact in terms of basis of comparison. As to the mobility in the rest of Europe, we have a positive commercial traction of Edenor UTA. It is partly offset by Edenor’s finance performance, which is in our portfolio of business where we need to accelerate our development. And I don’t have news that I can share with you this quarter, but hopefully, for the presentation of the results h one, we’ll be able to demonstrate the rebound in this in this activity. So that’s for the soft start to the year in Europe.

Now if we move to the other revenue, we can confirm another revenue flow at €210,000,000 for 2025. So the performance in q one twenty twenty five is at €57,000,000, which is a like for like growth of 1.9%, but we posted it is a decrease because in q one twenty twenty four, we posted €60,000,000. What are the drivers behind that? The positive one is our float increase, which is due to our busy business volume increase, but also an upward trend in Brazilian interest rates. On the on on the headwinds, we have a downward trend in the Eurozone interest rate, and we have some negative ForEx impact, which is which explains the difference between a like for like growth of 1.9 and a reported decrease of 5.2.

But thanks to this q one results and thanks to the wide management of the other revenue, we are able to confirm a floor at €210,000,000 for 2025. So it leads to the final equation of revenue, page 20. Total revenue of €724,000,000 in q one twenty twenty five, which is a like for like growth of 6.7%. Then we have some scope effect due to the acquisition of e tapes, period, back then, and air based services. But then a currency impact mainly led by the Brazilian reais and the Mexican pesos.

So a reported growth of 5.7%. So after this q one twenty twenty five revenue results, what does it mean for the rest of the year? So page twenty twenty two, despite a challenging macro environment and the impact of the fee cap in Italy, which will take effect from q three on one, we confirm our full year 2025 guidance, which is an EBITDA like for like growth of at least 10% and cash conversion of 70% and plus for the year 2025. I said in introduction, we live in a very disrupted environment. Every week, we all receive everywhere around the world some signals that can be positive and negative, but that creates, in fact, some instability.

And as you know, capitalism doesn’t like instability and the CEOs, they do not like that as well. So we need to remain vigilant on any further macroeconomic deterioration. This growth in 2025 will be delivered thanks to four factors on the top line. First of all, the business model that is strong and that relies on the recurrence of our revenues. We have a diversified business mix and multi local footprint, and we see that clearly in q one twenty twenty five.

Yes. It’s soft in Europe, but strong in the rest of the world. Yes. It’s softer on the meal and food, but stronger on mobility. Yes.

It can be slightly softer on the core, but we have the beyond products that are accelerating. And so that’s the first the first point. The acceleration of our Beyond strategy is one of the pillar of the growth for 2025. And finally, the relevance of our solution offering, thanks to our unique platform serving 40 60,000,000 users around the world, plus 10,000,000 users, in fact, in three years. We are able more and more to leverage these technological capabilities.

And to give you an example, when we talked about the Tarreta Rosa in Mexico, the low solution has been developed and deployed in less than three weeks. But so the year 2025 is a year of growth on the top line, but also a year of higher operating profitability. And this higher operating profitability will be supported by the focus on cost efficiency, the program that we call fit for growth, but also the implementation of our performance, product improvement plan, and a portfolio review. So 2025 for ahead and ahead is a year of growth of the top line, but also operating efficiency to meet our guidance of 10% growth EBITDA like for like. In page 23, you have an illustration of what it means.

So first bucket of growth is the operating revenue growth. Thanks to the call, thanks to the Beyond, and thanks to the m and a integration, but also focused management actions for operational efficiency, fit for growth, product performance, and portfolio review. But we also know that we have some headwinds. In 2025, we will have a drop in other revenue, but we will flow expected at €210,000,000. And as you know, we have a fee cap in Italy, and the fee cap estimate is about €60,000,000.

The combination of both elements lead to an equation of 10% and more like for like growth for the operating revenue. Thank you for your attention. Page twenty twenty four is a gentle reminder as to our Capital Market Day that will happen in Paris on November. Thank you for your attention, and I am all yours to answer any question you may have. Thank you, mister Dumonti.

As a reminder, if you like to ask a question or make a contribution on today’s call, please press 1. We’ll start off with the line of mister Andre Julien from Deutsche Bank. Please go ahead. Good morning. Thank you for taking my question.

First one is about regulation. Could you give us some more color about what is happening in Italy and France? Second question, could you also update us on the reorganization of CSI in The United States? And at last, about reward gateway deployment, Could you also update us on how it goes and and what are the first takeaway you are having on on this part? Thank you.

Good morning, Andre. Thank you for your questions. So regulation regulation in France, the minister, Veronik Lou Regis, set an agenda, and she said phase one is what they call the consultation or consultation. So listening to all the stakeholders, the employer, the employees, the issuers, the merchants, and this consultation phase is supposed to be over by this month. Then if we understand the the minister, she said that there will be the synthesis and the platform of synthesis that is gonna be put on the table within, in fact, by the summer and then go to the parliament for a vote.

Our understanding based on the conversation we have in the different roundtables is the following one. Priority number one is do everything possible to make sure that there is more ticket restaurant in France because the penetration is only 28%. It’s low as compared to many other countries. So how do we make sure that this measure, which is a measure of equity or, let’s say, equality between the people who have access to accounting and the people who do not have access to accounting to make sure that more and more people who do not have access to accounting have access to ticket restaurant. So the priority for the government is based on our understanding is to help grow the business.

Then the second priority is to decrease the cost of operating for the merchants. What does it mean? It means digitalization. The French market is digital at only 80%. The cost of dealing with the paper with 14 different issuers, 14 and more, the cost is is not sustainable.

And so priority number one is the end of paper in France. And our understanding is it should happen in 2026. So 2025 could be the last year of paper in France. The second priority is the clarification of the usage. Can we use that in restaurants?

Yes. Can we use that in hypermarkets and supermarket? Yes. But under certain conditions and for certain product, So there’s still a need for clarification in terms of usage. Our understanding on the first point is that clarity on on on the the the the prices, highly depending on the model.

So closed loop, for example, for IBM had open loop from some other players to make sure that the tariffs are clear, especially in open loop because the interchange does not always appear in the clarification of the people that are using this kind of technology. So it’s our understanding of, let’s say, the main points of what will be the reform of the ticket restaurant in France. Your question was about Italy. In Italy, today, there is no change as the cap of 5%. So we are getting organized as to the rebalancing.

And what I can share with you is as of today, because that’s something we follow, obviously, in in a very disciplined manner. As of today, in terms of renegotiation, I e, rhythm of the renegotiation. And as to the rhythm of rebalancing, we are in the plan we define for the year 2025. Your second question was about reward the third was about reward gateway. How it goes?

It’s double digit growth. Good success, in fact, in The US, in The UK, in Australia, which is the historical basis of the business, good deployment in France, Belgium, and Romania. So for example, in Belgium, we transferred all the users of our platform of engagement that was much more limited than the one of reward gateway. Everything has been, in fact, moved to the reward gateway platform with a great success because we see the level of engagement, the level of usage, and the level of spending that has dramatically improved based on the quality of the digital service that we are proposing. As to the synergies, know that in 2024, we were in line with our plan.

And for the first quarter of twenty twenty five, we are also in line with the objectives we set. So as to reward gateway integration, synergy generation, migration, and conquest of new markets, so far, it is according to the plan that we set at the time of the acquisition. Then your second question as to CSI. CSI, double digit growth for many years, flat in 2024. So we decided to to change a certain number of things.

First of all, a renewed management team. Second thing, a new commercial ambition, sourcing reinvestment on the platform to adapt better to the evolution of the corporate payment in The US. We are in the middle of the work in a tough economic environment in The US because, as you know, due to the uncertainties that has been created at, let’s say, the the the commercial level and decisions that were made at the American government, it creates uncertainty, and it creates some negative impact on the level of activity. So to make a long story short, CSI, we are in the middle of the work. We are seeing some improvements and it’s encouraging, but there’s still some way to go.

Very clear. Thank you very much. You find that your question has been answered, please press 2 to remove yourself. We’ll take your next line from Ed Young from Morgan Stanley. Please go ahead.

Thank you. I’ve got two questions, if that’s okay. The the first is you’ve talked a little bit, Bertrand, about the macroeconomic situation. I think that’s obviously very understandable with everything that’s going on. And you’ve inserted, you know, a little bit of clarifying language on your guidance about remaining vigilant.

I wonder if you could tell us if you’re seeing any changes so far on the client side. And what is it you’re looking for order to gauge whether what, you know, what the impact might be on the business? And the second one is on is is related to this on the on the cost side. You talked about a cost suppression program, and you’ve spoken that there were some areas around around sales or other areas where you’re gonna you’re gonna protect the cost. In other words, you’re looking to suppress them.

Would you be inclined to take more aggressive cost action to protect achieving your target if macro did get worse? Thank you. Ed, thank you for your two questions. First of all, as to the macroeconomic environment, uncertainty, in fact, increases the decision making process. So we see it everywhere in Europe as to the middle market and the SMEs.

We see the fact that it takes longer time today to close and to sign a contract with the middle market and the SMEs. And and myself, I took some time to listen to some of the prospects, And, basically, I will summarize it very simply. I want the Internet solution. Send me the contract. I’m okay on everything, but I will sign as soon as I know that, in fact, what’s going on on the international international scene and what’s gonna be the impact for me.

So we are in a phase where it takes longer to sign on the new business. Then the second thing that I see, and we don’t see it yet in the numbers, but be prepared for that. Unemployment will go up because that’s another thing we look at very closely. We look at our portfolio, and we look at how many orders are done from one month to another client per client. And when the order in number of users is going down, the question we ask ourselves, does it mean that part of it went to the competition, or does it mean that, in fact, the employer have less employees?

The good news is we are gaining market share everywhere around the world. So it’s not as if the business was going to somebody else. But the bad news is for many clients, especially on the temp business, especially on what we call the ESN, I e, consulting services, especially technological consulting, we see both employers that, in fact, have fired some people. So I can tell you for sure that you will see the unemployment going up in Europe because I see today in my portfolio. The good news is we are able to compensate that.

Thanks to, in fact, good activities on new clients, so more penetration. But also on our churn, we are very stable. So it’s not as if we were losing to the competition some, you know, some some clients. But, yes, the macroeconomic environment has, in fact, an impact on the unemployment and so the total number of users in the historical portfolio. The last element is the number of the of kilometers that is driven by the fleet under our management.

If you have a lower growth, obviously, the vehicles are driven less on a daily basis. The good news is we are able to accelerate on the beyond in in mobility as I demonstrated earlier. That’s why we are very vigilant on the macroeconomic environment because for us, the tariffs, no impact because we are multi local. We don’t import. We don’t export anything.

So we are immune directly from the tariffs. Indirectly, a lower GDP growth is no good for the kilometer driven and the unemployment. Having said that, our job is to compensate via the beyond strategy and more penetration. That’s for, you know, what we are looking at. Then as you rightly said, it’s a balance between the top line growth, but also our operational efficiency.

So what what have we been doing? In fact, we have a program, Fit for Growth, with a certain number of streams on which we want to be more efficient. First of all, at Edenhead, we were focused on growth, growth, growth. I remember that we multiplied by two our operating EBITDA in three years. And when you do that, certainly, you lose a little bit of efficiency.

So for example, we will implement shared business services in finance, in HR, in legal as well, which is a source of of, let’s say, efficiency. The second thing is we have been increasing a lot our investment in technology, and I shared that with you. You repair your roof when it’s sunny. So when we had all this growth, it’s the right moment to accelerate for the convergence of our platform and the the the development of our digital platform. Now we enter a phase where we’ll continue to invest.

So the tech investment will grow in 2025, but will not grow at 15 or 20% as we did during the last three years. And it’s the right timing because we need to have a return on investment on everything we invested for the for the last few years. One thing we don’t do is decreasing our investments in client facing and revenue generating activities. We need to continue to invest a lot on these activities to fuel the growth. So I take an example, middle market or SMEs, clearly says you need lead generation.

And so the thing you don’t want to, you know, to limit the increase of our investment is less lead. We are on under penetrated market. There are still a lot to go after. And so to be able to do it, marketing investment, for example, in lead generation is key. And after that, you need to have the workforce to transform the lead generation into sales and good contract with the highest face value possible.

And so we are very, very disciplined in where we want efficiency. So the back offices, where we want to invest in the technology, but at a pace that reflects all the investments we did before. And then the things where we continue to invest full blast sales and marketing, I e, client facing and revenue generating activities. Thank you. Can can I just perhaps follow-up on the on the on the cost side?

You you’ve you’ve explained very in a very detailed way the mentality towards it, but what I was wondering about is is is is there would you be willing to do more than you were planning if the top line was worse because of macro? You would be saying you protect revenue lead generation. You you told the efficiencies to some of those projects like HR and central services, you know, are gonna take longer than a few months to do. They can be multi year projects. So is there an incentive there, or do we just sort of think about this as the cost side you’re already planning efficiencies in the shape you think is correct, and therefore, the top line is a bit lower than that one just have to be reflected in the numbers.

How how do we think about that? Yes. So as as of today, the equation is balanced, I e, what we have in our efficiency program. And once again, the the operating expenses of Edinburgh will grow in 2025. But as of q one twenty twenty five, we are in our line to be able to deliver the 10% EBITDA like for like growth.

Then, as I said, we live in a very destructive world. The thing I will not do is compromise the future of hidden head. So what does it mean? It means that if the macroeconomic environment becomes so ugly and if the impact on our business line is more important than we expect, then we will get back to you because one thing that we’ll not do for Edenhead is to compromise the future growth of Edenhead. So we will do what is needed from an efficiency point of view, but in fact, we don’t do it for 2025.

We are doing it for the next three to five years. Shared business services is not for one year. And by the way, in fact, year one, shared business services cost you more than than it brings. We do it for the future of Edenhren. Continuing to invest in our tech, but let’s say, at a pace that is more reasonable versus the growth of the top line.

It’s just hygiene. We need to adapt, and we did a lot of investment in the past. So, no, there will be no compromise as to the the potential future growth of Edelman. So so far so good. We are in our line, and we’ll see how it goes.

As as you know, the world became very unpredictable. Having said that, we have a very resilient model as well. Okay. Thanks for the detail. Thank you.

We’ll take our next question from Justin Forsyth from UBS. Please go ahead.

Cedric Capper, IR Officer, Edenhead: Thank you very much. I have a couple questions from my end here as well. Wanted to hit a little bit on the growth algorithm. So I think if I heard you correctly, Bertrand, the back of envelope math suggests that those three impacts you talked about in Europe, maybe excluding that, would have been closer to the 4Q exit rate. So just wanted to think about the phasing for European revenue growth throughout the year.

Some of that stuff, I think, is not recurring the negative impact. So how should we think about puts and takes there? I guess the other implication on the back of that is, and I think you were alluding to this as well, is that a more negative, incrementally negative macro situation, I e, lower employment as an example would perhaps be an incremental negative. So maybe you could just rehighlight those two points. Separately, I wanted to hone in a little bit on Brazil and had a question specific to tag them.

Just wanted to clarify how you were recording that within your numbers, if that was hitting scope at any point in time because I believe that joint venture has gone live. And I guess more holistically, is that helping to fuel some of the acceleration in beyond fuel growth in the business? Thank you very much.

Bertrand Dulessy, Chairman and CEO, Edenhead: Justin, thank you for your questions. So first of all, the link between fuel and beyond fuel. Yes. There is a link because, in fact, you need a portfolio of users of the cost solutions to be able to propose additional services. And at the same time, when you come with an offer with the cost plus the Beyond, in fact, intenders, you increase your your chances of winning because many clients love the potentiality of having more than a fuel card or an energy card.

So, obviously, there is a link between the one and the other. Having said that, the level of penetration of Beyond, let’s say, the level of the level of cost selling on below on Beyond is not yet where we would like it to be. So to make a long story short, you need the core business to sell the Beyond, but having the Beyond when you sell the core business increases your chances to win. That’s the first element. And the second element, as I said, the level of cost saving reveals still a lot of potential.

And I’m sure you’ll remember that for the the what we shared with you in Feb twenty twenty five, we said that the average number of additional solutions that is sold is about 1.4, and we have some countries where we are at four or five. So that’s something we are working on. Then you had a question as to tag them. So we in fact, we made the merger between our cargo slash freight activities that we expect them in December 2024. And so, in fact, it’s it’s part of it’s part of the scope effect that you see, and it’s where I try to to to show you have between the like for like and the the published.

You have a scope effect, and the scope, obviously, is not in the like for like. And so for the year one, the merge between Pac Van and our cargo activities is not in the like for like, but it is in the published. Then you had a question as to the growth algorithm and the soft start in Europe. As I said, Europe, you have one element that is due to it and hide, which is a high basis of comparison. If I remember correctly, we were close to 14% growth in Europe in the q one twenty twenty four.

So that’s the basis of comparison. And then we had in the basis of comparison, as I said, the consumption voucher in Belgium that is gone. So and we have a drag as to the gifting activities where our campaign was was not as good as expected in q four twenty twenty four. And then as we said, we have, for now, a below standard department, Eden Ride Finance, previously known as EBG, where, in fact, we had a super good ride for many years, and the year 2024 was not as good as expected. And it’s a good kick in our butt, so we are working hard on it.

And as I said, the rebound is is very close. So we are very pleased by the performance improvement plan that has been put in place. So both elements are very specific to Edinburgh and contributed to the soft start of Eden Red in q one twenty twenty five. So that’s that’s one thing. Then soft start in Europe, as I said, the numbers of kilometers driven in Europe is at a low level.

But for mobility, we are able to compensate thanks to a very good dynamism in terms of product innovation and sales on the beyond. So in the tool, in the maintenance, in the telematics, we are progressing well in Europe. And the the the second thing is, as I said, in food and meal in Europe, we see saw it mainly in France and Germany, but it’s not super brilliant in the rest of Europe as well. We see some portfolios where, in fact, if you used to order 100, you’re gonna order 99 the next month. Why?

Because you let go one person. That’s why I said to you, you will see the employment rate rising in Europe for sure in h two because most people are not yet registered, but they will appear in the stats in in the second part of the year. By the way, I’m sure you saw the stats of the French government who said that the unemployment rate will move from 7.5 to up to up to eight, in fact, in the second part of the year. So that’s something we need to we need to take into account. But once again, we are here to to compensate and grow.

So more penetration, I e, very good new sales activities as low as possible churn and acceleration on additional services with the cross selling and the upselling.

Cedric Capper, IR Officer, Edenhead: Got it. Thank you for the detailed response. Just a quick clarification on that, Frank’s point. I think that was really good color. I guess on the on the benefit side of things, you walked through some of the impact there.

So EBV gifting in Belgium. Just just confirming, I think all of those have the potential, well, at least, you know, gifting is like a four q and one q phenomenon. Belgium, I think, was also specific to a couple of certain quarters. And then you noted the potential offset to EBV as you’ve invested in in, I think, potential large contract that comes through. So it’s possible that that effectively could be resetting almost at the four q exit rate in in February if all

Bertrand Dulessy, Chairman and CEO, Edenhead: of that goes as planned. Yes. In fact, Justin, you are right. Gifting, we should not see the impact in q two of this year. It’s behind us.

In Belgium, in fact, it should be over, in fact, in q two as well. And as to Edenide Finance previously known as EBV, in fact, the underperformance started, in fact, in q four. So the rebound, we should see it, in fact, commercially, I guess, in h two twenty twenty five. But in the numbers, the basis of comparison will not be there anymore in q four twenty twenty five.

Cedric Capper, IR Officer, Edenhead: Got it. That that’s very clear. Thank you so much. Appreciate it.

Bertrand Dulessy, Chairman and CEO, Edenhead: Due to limited time, please kindly limit your questions to two maximum to allow us to take as many questions as we could. We’ll take our next question from the line of Prabhid Gondale from Barclays. Please go ahead. Hi. Good morning.

Thanks for taking my questions. Firstly, on on France, you previously mentioned that during your discussion, the discussion is around clarity on prices depending on the model, I. E. Close look versus open look. Are we are we talking about a regulation on dual pricing model for those different models here?

Can you please clarify that? And then secondly, the face value divisions, various countries which which are face value increases in q one. What proportion of revenue is that represent for Eden’s employment rates? Thank you. Yeah.

Okay. Pravin, thank you for your question. So, no, there is no regulation between a closed loop and an open loop or different pricing. The only thing I was saying is, in fact, you can use many different pieces of technology to serve the clients. And and based on the pieces of technologies, the and it’s very technical.

The way it is build up to the client can be via different ways. So sometimes, part of the fees, it’s not the case of Edenhead, but it’s the case of certain newcomers. Some of the fees are paid via the acquisition cost that is paid by the merchant to the acquiring bank. To make a long story short, if you go on the Eden website, as a merchant, you have a public tariff and that’s super clear because you will not pay more than what it is said on our public tariff. For certain newcomers that are using different pieces of technology, sometimes, they forget to mention additional fees that will be paid indirectly by the merchants to their acquiring banks.

Okay? And so what the minister wants is a clarity on prices, I e, what is the total cost of the service that is provided by the issuer. So there is no regulation on that. There is no willingness to regulate that. There is only the willingness to be transparent on how much it cost.

Then your second question was as to as to the the the number of countries since or let’s say, in q one twenty twenty five that have proposed, in fact, a phase value increase. The eight countries represent, let’s say, about 20% of our group operating revenue. Oh, thank you. That’s that’s really helpful, Julian. And then wishing you all the best for your future and the management.

Thank you. Thank you, Paslena. We take all the encouragement in a destructive world. We’ll now take our next question from Sivu Nasali from Bank of America. Please go ahead.

Yes. Thanks for taking my question on behalf of Sivona Salli. Both of my two questions are on the contribution of hyperinflation to the organic growth. First, in Argentina, any indication specifically about the contribution to mobility growth? And then any indication about the contribution to Turkish implementation?

Thank you. Okay. So as to Argentinian hyperinflation, you have a slide on page 30 in the appendix. As a reminder, we expect, in fact, the impact of hyperinflation in in Argentina to be at about 0.5% for the entire year. So it’s much less than the last year.

And if there is no devaluation of the Argentinian peso, we should avoid, you know, the effect that we saw in q four twenty twenty four. So to make a long story short, Argentina is still in hyperinflation, but the impact in fact on our total level of growth is now or should be super limited in 2025. As to Turkey, I don’t have the answer to your to your question, so so I propose that you contact Cedric. Okay. Thank you.

And any indication specifically on mobility for Argentina? For Argentina, mobility q one twenty twenty five. So, Cedric, I need your help on this one. Yeah. So you know that mobility is 25% of our banking revenue, and as I explained, it’s mostly mobility.

So which means that if you look at the impact of ad group level, it’s 4.4%. You you need to multiply by about four. So we try to, let’s say, 1.5% contribution to mobility growth. Okay. Thanks so much.

If you feel that your question has been answered, please press 2. Maybe maybe we’re take one last question unless two questions. Okay? Alright. So we’ll start with the line of Josh Levin from Autonomous Research.

Please go ahead.

Cedric Capper, IR Officer, Edenhead: Good morning. Two questions. First, just a follow-up on the Argentina hyperinflation. So in the last few days, Argentina signed a deal with the IMF that will allow the currency to devalue somewhat. So should we still think that that 50 basis points per quarter is still valid, or should we might be thinking it might be a bit different given that the the currency could actually devalue fairly soon?

And the second, you talked about in mobility, lower kilometers low kilometers being driven. What about lower oil prices and petrol prices? What have you seen there, and what might you see there?

Bertrand Dulessy, Chairman and CEO, Edenhead: And over what time frame might that impact mobility? Thank you. Okay. So I propose to answer question two, and then Cedric will help me on on on question one. So to make a long story short, mobility is 30% of our total revenue.

In mobility, 70% is the core, 30% is the beyond. The beyond doesn’t have any link with, you know, the price of the oil. So then if you take the 70% of the 30, then we have different pricing formula depending on the countries. So sometimes it’s, you know, it’s a mix of fixed fee and variable fees. And as to the variable fees, it can be on a percentage on the fuel price, but it also can be the number of times you fill in

Patrick Betaillard, Interim CFO, Edenhead: the

Bertrand Dulessy, Chairman and CEO, Edenhead: tanks. So that’s one one part of the equation. The second part of the equation is the link between the brand and the and the price at pump, and it depends per country. So for example, in Mexico, the pump price is somehow regulated. For example, for certain types of of fuel, the government set a price for the next six months.

So what does it mean in Mexico? Whatever the level of the Brent price, the Brent price has been set by the government. Then in Brazil, it’s it’s a price that is at pump, but it’s also, let’s say, more or less, administrated by the government via Petrobras. And Petrobras suffered a lot in the last few years because the oil price was low versus the Brent. So we’ll see how it goes in Brazil, but we don’t expect for today to see the pump price going down because Petrobras needs to, let’s say, redo its margins when the when the the WTI or the Brent was was high.

And then you have Europe. And in fact, in Europe, you have a link between the brand price and the brand price, but it’s in Europe where we are, in fact, the least dependent because it’s where we have the formula that depend the less or the least on on the bank price. So to make a long story short, is the Brent or WTI price going down a good news for them? Right? The answer is no.

Have we been working on that for the last five years to limit our dependency on that? The answer is yes. By developing pricing formulas that are not dependent, but also by developing the beyond fuel strategy. For example, at the group level, let me I think the level of of dependency to the the brand price, I e, the link is about 6.5%. So at the group level, we have almost 94% of our revenue that is, let’s say, ring fenced versus the evolution of the brand price.

So to conclude, with a brand at 64 today, based on the things in our equation that I shared with you, it’s 64 is not a good use, but that’s something we can manage easily easily at Edenhed. Maybe to complete, and then we’ll take the first one.

Cedric Capper, IR Officer, Edenhead: Yeah. Argentina. Yes. First of all, you know, on the

Bertrand Dulessy, Chairman and CEO, Edenhead: 6.5% of sensitivity to to fuel price at book level, it used to be 8.8% last year and and more than ten percent two years ago. So as that prompted, yes, we have decreased our exposure to fuel price. And then on Argentina, so, like, the question is whether this this change of situation on the on the on the ARS or the Argentinian peso will drive to a higher inflation in in Argentina. So it’s a bit too early to say, but but then an increasing peso means that we will have a higher scope higher ethics impact. But if we look at how we see both over the last two days, yes, it increased, but it has not been, let’s say, massive.

And and remember that Argentina is less than 2% of our operating revenue and EBIT.

Cedric Capper, IR Officer, Edenhead: Thank you. Okay.

Bertrand Dulessy, Chairman and CEO, Edenhead: And we’ll come to our last question today from Hans Lechner from Jefferies. Please go ahead.

Patrick Betaillard, Interim CFO, Edenhead: Meta? Yeah. You can hear me? I keep it brief. You mentioned, you know, the Q4 results that you went down some of the BASF business in The UK.

Maybe you can talk a little bit about the expected outflow on the float and how that has progressed already. And then maybe you can comment on the refinancing of your bond. How come that you had to refinance a higher amount? And for what corporate purposes do you intend to use that? And just then some bookkeeping, maybe you can give us a rough size of the gift solutions and the Edenworth finance given both had been called out as recent headwinds.

Thank you.

Bertrand Dulessy, Chairman and CEO, Edenhead: Okay. So, hence, thank you for your brief questions. First of all, as to the refinancing, as we present every semester, you see that we have to refinance between 507 hundred and €50,000,000 every year. So there is no debt rule at Edinburgh. You will see that it’s regular rhythm every year of between 507 hundred and 50.

So so the refinancing is things that we will do every year. So we will refinance €750,000,000, and I can announce you that in 2020 next year, there will be also another refinancing like every year. The good news is the bond has been oversubscribed more than four times, and so we have been able to reduce the, you know, the the the price. And if I remember correctly, the price is at 3.25, which is, in fact, a price that is the right price for a minus company like us. And I’m sure you remember that in the a minus category, we are the smallest company.

I it’s very rare that a company of our size has a signature of a minus. And why do we refinance? Because in fact, it was the end of the bond that was issued five or seven years ago. So expect some refinancing every year on the regular rhythm to finance the activity of Edenhed. Then as to the best b two c, maybe, Cedric, you want to take this one?

I’m not sure I get your question, but I think you mentioned about outflow. So there, I think it’s important to mention that there is no free cash flow impact coming from the addition of the business on the bad b two c because there is a there is two impacts in our cash flow statement. One is on the working capital excluding fraud, and the other impact is on the restricted cash as the cash we hold in this business is is in the rest of the cash in our balance sheet. So the fact that we, you know, progressively exit this this business has no impact on our future.

Patrick Betaillard, Interim CFO, Edenhead: And the last bit, just on the gift solutions and the even worth finance.

Bertrand Dulessy, Chairman and CEO, Edenhead: So can can you remind us your question?

Patrick Betaillard, Interim CFO, Edenhead: The the question the last question is just, like, some you know, you mentioned Gift Solutions as being a tough comparatives. Maybe you can can just, like, quantify how much this solution is within E and E or within the whole operating business. And then even with finance, you mentioned also is one of the headwinds. Maybe just like the annualized number of those two that would be interesting. You called out that even with finance has been a growth driver and now basically has lost the customer.

So maybe just to quantify it.

Cedric Capper, IR Officer, Edenhead: Well, they’re they’re under gift solution. You know, one way to look

Bertrand Dulessy, Chairman and CEO, Edenhead: at it, but it’s it’s to give an idea, we don’t provide the exact details, is to look at the operating revenue we generate on the q four in in a given year and and compare it with the the few quarters before. So it’s it’s an approximate, and it’s nothing that you would the amount, but it is at least an idea.

Patrick Betaillard, Interim CFO, Edenhead: Thank you.

Bertrand Dulessy, Chairman and CEO, Edenhead: Okay. Thank you. It’s sixty five minutes that we are together. So thanks a lot for being with us as to the q one twenty twenty five revenue of Ed and Ed growing at 7%. Let’s go for the year 2025.

Thank you. Bye bye. And this concludes today’s conference. You may now disconnect.

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