Earnings call transcript: Fusion Group’s strong Q1 2025 performance

Fusion Group reported robust financial results for Q1 2025, with adjusted revenue reaching €233 million, marking a 31% increase year-over-year. The company achieved its best first quarter ever, driven by significant growth in its value-added services and a nearly doubled order entry. The stock price of Vusiongroup, trading at €233.30, rose by 1.08%, reflecting positive investor sentiment. The stock has demonstrated remarkable strength, posting a 52.6% return over the past year and trading near its 52-week high of €241.68.

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Key Takeaways

• Fusion Group’s Q1 2025 adjusted revenue increased by 31% year-over-year.
• Order entries nearly doubled, bolstering a 12-month order book of €1.9 billion.
• The company is expanding its presence in the US market with strategic manufacturing initiatives.

Company Performance

Fusion Group experienced a strong start to 2025, achieving its best first quarter to date. The company reported adjusted revenue of €233 million, a 31% increase from the previous year, highlighting its successful market strategies and product innovations. With a five-year revenue CAGR of 31% and an "GREAT" overall financial health score according to InvestingPro, the company shows strong fundamental momentum. The order entries for the quarter nearly doubled, amounting to $532 million, indicating robust demand and a solid pipeline.

Financial Highlights

• Adjusted revenue: €233 million (+31% YoY)
• Order entries: $532 million
• 12-month order book: €1.9 billion
• Value-added services revenue: €33 million (+71% YoY)
• Recurring VAS revenue: €17.2 million (+38% YoY)

Outlook & Guidance

Fusion Group has set ambitious targets for 2025, aiming for approximately 40% revenue growth and an adjusted revenue target of €1.4 billion. The company plans to generate €600 million in revenue during the first half of the year and €800 million in the second half. Value-added services revenue is expected to grow by 80%, with an improvement in the adjusted EBITDA margin by 100-200 basis points. According to InvestingPro Fair Value analysis, the stock currently appears undervalued, suggesting potential upside for investors. The platform’s advanced valuation models and peer comparison tools provide deeper insights into the company’s growth trajectory and market position.

Executive Commentary

Thierry Gadot, CEO of Fusion Group, emphasized the company’s strategic advantages, stating, "We are by far the safest choice because we have a very balanced geography diversification in the supply chain." He also acknowledged macroeconomic uncertainties, noting, "The current situation is creating uncertainty on macroeconomic growth or recession."

Risks and Challenges

• Tariff uncertainties could impact customer decision-making.
• Macroeconomic pressures may affect overall market growth.
• European market recovery is expected in the second half of 2025 but remains uncertain.
• Potential supply chain disruptions could affect production timelines.
• The competitive landscape in electronic shelf labels continues to evolve.

Q&A

During the earnings call, analysts inquired about the impact of tariffs, to which the company responded that tariff impacts are minimal due to pass-through clauses. Questions about the Walmart rollout were addressed, with no changes planned, and the potential for US manufacturing was discussed as part of the company’s flexible supply chain strategy.

Full transcript - Vusiongroup SA (VU) Q1 2025:

Olivier, Moderator/Presenter, Fusion Group: Good afternoon, everyone, and welcome to our First Quarter twenty twenty five Sales Presentation. With me today are Thierry Gadot, our Chairman and Chief Executive Officer as well as Thierry Lometre, our Deputy CEO, Finance and Corporate. Thierry Gadot will make some remarks on group’s business performance and financial performance in the first quarter as well as our full year outlook. After these remarks, we will be happy to take your questions. As a reminder, some of the information to be discussed on our call today is forward looking and subject to important risks and uncertainties that could cause actual results to differ materially.

For these, I refer you to the safe harbor statement included in our press release and on Slide three of this presentation. This evening’s release was issued a short while ago and is available in French and in English on Fusion Group’s website, fusion.com. The slides of this presentation can also be found on our website in the regulated information section. A replay and a transcript will also be available on our website after the call. And with that, it’s my pleasure to hand you over to Thierry Gadot for his opening remarks.

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Thank you, Olivier. Good afternoon, everyone. Thanks for joining our conference call. I’m very happy to present our sales figures for the first quarter. In a nutshell, Fusion Group achieved an excellent Q1, slightly ahead of our guidance with 31% growth in adjusted sales.

Order entries nearly doubled in the first quarter to $532,000,000 driven by the strong momentum in The United States. VAS sales reached $33,000,000 up 71% versus Q1 last year. And we reiterate our full year outlook of 40% adjusted sales growth and improved profitability. So let’s now go into a bit more detail. So the group’s IFRS revenue reached EUR215 million in the first quarter and EUR233 million on adjusted basis, and that is up 31% compared to the first quarter of twenty twenty four.

This is slightly above the guidance that we communicated during the presentation of the 2024 annual results, which was around 25%. And by the way, it’s also our best first quarter ever. In terms of geography, in this first quarter, growth was driven by Americas and Asia Pacific region. In this region, adjusted sales reached EUR143 million, up 100% compared to the first quarter of twenty twenty four. This performance was driven by the rapid expansion in The U.

S, our first market today, and particularly the deployment at Walmart U. Which is continuing according to plan. The fluctuating tariff situation was, of course, discussed with our US customers, and that led to unchanged rollout plans due to the strategic importance of digitizing stores in a context of increasing price volatility. So our forecast for the year are kept unchanged and confirmed. In Europe, we achieved adjusted sales of EUR 90,000,000 and it’s down minus 15% compared to the first quarter of ’20 ’4 percent.

So the business in Europe is, again, not yet benefiting in Q1 from the contracts that we signed at the end of year and more recently due to normal manufacturing lead times. Deliveries will increase sequentially in Q2 and over the following quarters. So we do confirm our target of resuming growth in Europe for the full year. The pipeline is strong. We see increasing focus from retailers on improving the efficiency of stores across Europe.

If we now look at order entries, Q1 was a very strong quarter with new orders increasing by 94% year on year to EUR $532,000,000. And over the last twelve months, that represents EUR 1,900,000,000.0. This record figure is in large part explained by the recent Walmart contract extension, and this number includes a part of the new €1,000,000,000 order announced at the end of the year and which will be booked in our orders over the quarters of the next quarters of twenty twenty five. So the group expects this good momentum in order entries to continue for the full year, also driven by signing of new contracts in both The United States and Europe. Let’s look at VAS now.

Revenue from software services and non ESS solutions reached €33,000,000 in the first three months of the year, up sharply by 71% compared to the first three months of twenty twenty four. Both recurring and non recurring revenues grew strongly. Recurring revenues, in particular, reached €17,200,000 up 38% year on year and represented about 52% of the total VAS revenues. Note that our cloud installed base grew rapidly during the first quarter of the year to reach approximately now 26,000 stores and 188,000,000 labels. This dynamic of will accelerate in the coming quarters.

And as a reminder, the cloud installed base was around 38,000 stores and 94 in labels a year ago at the March ’24. Our outlook for 2025 is confirmed. And I’d like to just comment a little bit the situation. On the one hand, for sure, the fluctuating tariff environment may lead to slower investment decisions for some retailers, those who are still in pilots or just evaluating business case, those who have not yet measured the benefits at scale. And those may wait until there is less uncertainty on tariffs and costs of the technology.

On the other hand though, retailers who have already decided and launched rollouts are clearly determined to move forward and are not changing plans despite the current engine in global trade. More than ever, this proves that in today’s environment, our solutions are providing retailers with measurable benefit, efficiency and resilience, enabling them to increase the return on capital employed of their most important asset, their stores. Our technology perfectly fit to the present challenges of our customers. So with an order book at an all time high, with strong visibility and we reiterate our growth and profitability improvement objectives announced on February 26, which are a revenue growth rate of around 40%, an annual adjusted revenue target of EUR 1,400,000,000.0, split between around EUR 600,000,000 in the first half and EUR 800,000,000 in the second, an 80% growth in VAS revenue for the full year, an adjusted EBITDA margin improvement of 100 to 200 basis points in 2025 and a positive free cash flow generation. With this, I thank you for your attention and give you back the floor for questions.

Speaker 2: Thank you. A. We will take our first question. And your first question comes from the line of Bennett Thielman from Berenberg. Please go ahead.

Your line is open.

Bennett Thielman, Analyst, Berenberg: Yeah. Hey. Good evening, guys. Can you hear me?

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Yes. We can.

Speaker 4: Okay. Perfect. Hi, Thierry. Hi, Olivier. I have a couple of questions, if I may.

The first one would be on the Walmart rollout. Thierry, you already mentioned regarding the you have customers that are currently in pilots, but I was wondering how do your conversations with Walmart go. I remember when I met them in New York, they seem to be very bullish in rolling out the ESL and the VAS solutions. Has that changed in the last couple of months because of the tariffs? Any color, on the wall Walmart roll outs in particular?

Thank you.

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Yeah. So no. Not at all. No change. I think they are, as I said, I made a general statement on those, customers who have already, who had already decided and launched a rollout.

And, those are typically the customers who, you know, have already measured, you know you know, at scale the benefits of our technology. And and those are, the message is very clear. We’ve been discussing with all of them, including, the the the largest one you mentioned. There is no, you know, no change in rollout plans. So we are, as I said, continuing the rollout as planned with, you know, an acceleration throughout the year.

So no change. And, so that’s a very clear message.

Speaker 4: K. Thanks.

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Is why we are able to this is why we’re able to to be, you know, sort of confident in our on our guidance for the year because we we have a very strong backlog and, you know, and that’s and strong visibility, and there is no change on this this side. And I think it’s it’s very telling, to be frank. I mean, it’s very telling because it shows, you know, the the the the the very strong benefits if, you know, if there is no change in raw plans with the type of, you know, situation. I think it’s a stress test that is quite quite a confirmation of the the the very strong value of the technology we we we provide.

Speaker 4: Mhmm. Yeah. Makes sense. Thank you very much, Thierry. Maybe another question regarding tariffs.

I mean, over 2025, you’re ramping up capacity to manufacture the absinthe for particularly Walmart. I was wondering how does the current tariff environment affect your decision making where to ramp up basically that production capacity? Because if I look at your competitive landscape and I look at Hanshaw and I look at SoloM, everybody is very much focused in producing or working with EMS that are manufacturing in China, in Vietnam, in Mexico. And I was wondering, given that you work together, for example, with Chabelle, what is actually the real likelihood that you would decide to not ramp up the capacity with them in, let’s say, Mexico, or in Vietnam, but maybe in The United States? You probably have a little bit of higher wages, but you probably save a bit on the lead times.

And US, the global number one, is there a real likelihood that you would be the first one to actually manufacture ESL for The US market in The United States?

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: So it’s true that we have a very I mean, we consider to to be in an environment like like like we have today. We consider that we are by far the safest choice because we we have a very balanced now very balanced geography diversification in the supply chain and a very strong set of partners who are also a balanced geography, including as you pointed out The US as a as a very strong geography where they have many, many factories. So for us, this flexibility is a is a real strength, and we’re, you know, sort of we’re ramping up capacity. We have some flexibility to, you know, to to decide. With all the the partners, you know, both Foxconn, Jabir, you mentioned Jabir, but there is also Foxconn, both have, you know, capacity in Vietnam, in Mexico, in The US.

And so all the scenarios are on the table. And so far, we are not changing our plans because, as I said, the customers who are, you know, essentially in our backlog, and we have a very big backlog, have said, you know, no delays even if it’s so right now, we’re we’re flexible. We we probably would be the first one to to do what you mentioned. If we were to, we’re not announcing anything. We just have very strong flexibility, because we also you know, as you know, you know, we we own our equipment so we can move it easily and etcetera.

So there is plenty of factors that are, you know, sort of favorable for for our flexibility. And but the the the main message we receive from our customers right now is, you know, no delays. Continue, you know, keep up with the with the with the with the with the rollout plans. No delays for relocation. So we have flexibility because some of our, you know, sort of capacity is not yet is not yet decided the geography.

So we keep very, you know, very close to all the the stakeholders of this conversation, you know, including officials in The US and to see how it unfolds. But, you know, having said that, in any scenario, we see no change in the in the growth plan.

Speaker 4: Okay. Sounds good. And then maybe third question from my side. So order intake numbers, look actually pretty good. I think it’s the highest book to bill, you have at least since my model reaches back, so that’s that’s quite encouraging.

I know you don’t disclose numbers on a on a per customer level, but could you maybe guide us a little bit how much of the q one order intake was driven by Walmart?

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: As you said, I mean, you said the answer in your in the beginning of your We don’t disclose specific, but what we you know, what you know is that we just got a very, very big order at the end of the year, and we said we would you know, we were booking it in the in the in the firm in the firm orders as we, you know, receive, you know, sort of nominative, you know, sort of store orders. And so it would be spread over the the the the whole twenty five years, so year of ’25. So it gives an indication. But I I I think, again, it’s a it’s a, you know, it’s a big it’s a big part, of course. It’s a very big customer.

So big part, and we we we have a part of this 1,000,000,000 order in here. That’s what I can say because we don’t we don’t disclose customer specific data.

Speaker 4: Yep. Fair point. And then maybe final question, and then I go back into the queue, would be on IFRS 15. The adjustments you have, we currently have the situation that adjusted revenues is larger than reported revenues. And at the certain point in time, that should basically reverse.

Right? So if I assume that you’re capable of doing 100% of the Walmart US stores by the end of twenty twenty seven, let’s say, is it fair to say that those IFRS 15 adjustments were basically reversed somewhere in, like, late twenty twenty five, early ’20 ’20 ’6 so that we should expect that maybe by, q three or q four numbers that adjusted revenues will be lower than reported revenues?

Thierry Lometre, Deputy CEO, Finance and Corporate, Fusion Group: Hi, Ben. Sierra speaking. Just be careful because within the adjusted revenues, you’ve got two impacts. One’s stemming from the warrants, another one’s coming from the the the price the price decrease. That’s related to the price decrease.

We said it’s going to reverse in the course of h two this year. So, you’re right. In h two this year, you should see this amount reversing, but we don’t disclose the split between the two adjustments. But, yes, of course, the the the depart on the wallets will keep, having impact, until the end of twenty twenty thirtieth of twenty twenty ninth. Sorry.

And the impacts relating to the price decrease will reverse in the course of q of h two this year.

Speaker 4: Okay. Cool. That’s it from my

Bennett Thielman, Analyst, Berenberg: side for now. Thank you, guys. Going

Speaker 2: you. We will take our next question. Your next question comes from the line of Valentin Pourjian from Stifel. Please go ahead. Your line is open.

Valentin Pourjian, Analyst, Stifel: Good evening, everybody. Do you hear me well?

Olivier, Moderator/Presenter, Fusion Group: We do.

Valentin Pourjian, Analyst, Stifel: Perfect. So three kind of questions for me, please. First, could you please give us more granular view about the order intake momentum in Europe? Like, which countries are driving it? And also, what is your feeling about the momentum in The UK market?

Is it starting to take off from your point of view? And if so, what tangible evidence do you have to share to back this up?

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Yes. So as I said, Europe is again, there is good signs in Europe since already a number of months, and we were already happy with the performance in in q four. We had, you know, sort of a growth in order entries overall last year. And and so there are several geographies which which are in, you know, sort of good. You you specifically, and you’re probably right to point out that The UK because it’s a it’s a country where there is a bit more I mean, it’s a bit more lagging behind Continental Europe in terms of adoption and penetration.

So it’s where we see a catch up sort of dynamic. And it’s true that those who have been, for instance, at recent RTS event, the retail trade show event could see very significant interest of all the retailers. I think those who follow a little bit the press know that we’ve been mentioned by a lot of journalists who’ve seen our pilots here and there. And and so we we’re expecting, you know, sort of things to unfold, you know, clearly this year, a number of, you know, sort of deals. So we’re we’re quite optimistic on The UK.

It’s the but there are other regions where the pipeline is big. I think the and so far, I mean, the tariff situation is not impacting the, let’s say, the decision time. So at least we won’t have that topic. So but DACH region also has also a good strong pipeline. Even in France, supposedly a mature market, we we see we had you know, we see growth opportunities.

So plenty of things going on. And, you know, when we will announce, we will, you know you know, we will announce. But, right now, we we we are, let’s say, positive about the the momentum. And

Valentin Pourjian, Analyst, Stifel: Okay. Understood. And maybe about value details, could you please give us more detailed explanations of the factors behind the strong growth in nonrecurring value details? I mean, is it coming from the expansion of VisionOX licenses or from computer vision camera that you can sell before, or from other services and hardware? Is it possible to have more details on it?

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Well, details, I don’t know. But, clearly, there is something that we’ve we’ve been talking about is the fact that, Hedgehence is a is a, you know, is a is a vast rich platform. This is why, you know, one of the things we’re doing nowadays is to tran trans transition, you know, as many pilots as we can from ESL pilots to, you know, to HSense pilots. So and and and as you know, FusionOX is, you know, is the is the is the operating system, so the software that that powers this this this solution and which is the the next generation operating system. So this is a big contributor to the increase of the so called nonrecurring, but it’s not one off because it’s, you know, it’s it’s gonna continue.

So but but, yes, the ramp up of FusionUX. Generally speaking, the whole growth in VAS is really driven by software, whether it is recurring or embedded one off licenses of software like FusionUX, it’s still essentially software that drives really the the growth of that. So it’s a very positive momentum and a momentum that’s going to to stay. We and it does include also a number of other things, by the way, but I just, you know, the the the the key driver in in in in q one is is is around this this type of soft of software. That’s why I mentioned also the, you know, the cloud the growth of the cloud of the cloud installed base.

Valentin Pourjian, Analyst, Stifel: Okay. Understood. And maybe last one about tariffs. So in term of profitability, tariffs are a factor of uncertainty and as they could affect the gross margin in the coming, I don’t know, quarters. You can manufacture in Mexico, Vietnam or in The USA, like you said, thanks to your EMS.

But could you tell us what maybe what proportion of your purchases correspond to components versus the proportion that corresponds to the payment of the assembly work, I would say? And maybe among components, what proportion of components you buy from Chinese company located in China if and which will not benefit from another source of supply from another country. I mean, what I mean is that even if you manufacture in The US, you will need to buy components from China. Right? So, it can still be cheaper to produce in Mexico than in The US given the the price of components and the the share of components within the total cost of of of your solutions?

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: So there is several aspects to your question. So maybe, Thierry, on the first aspect, which is the impact of gross margin. I understand it’s because of the reinvoicing of taxes that you’re talking about, the sort of mechanical impact on the gross margin. Is that what you are talking about? I understand.

I mean, the the first part of your question seem to be related to that, that if we, reinvoice because Yes. The the the increase in tariffs. So is it that mechanical impact?

Valentin Pourjian, Analyst, Stifel: It’s it’s, my question is basically the fact that you you you within the total cost of of of of your electronic shelf labels or digital shelf labels, there is some components, and there is assembly work.

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Okay. No, I understood. That was part of your second I understood the second part of the question, but I thought the first part was relating to something that is more the mechanical effect of reinvoicing a component, which is no margin, obviously, is tariffs. So reinvoicing tariffs to customers may be, you know, putting a little pressure, a small pressure on the total margin rate, which is true because you have a part of the so I I I just wanted to, Thierry, to comment on this if you have quick question.

Valentin Pourjian, Analyst, Stifel: But in

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: fact, your question is all about the component versus finished product. It’s okay. I I may have misunderstood. Tell me.

Thierry Lometre, Deputy CEO, Finance and Corporate, Fusion Group: Yes. But I think that maybe maybe, Vanessa, just just to answer your question because, first of all, you you know that the largest customer, which is currently subject to to tariffs, is Walmart in The US. And with Walmart, you get a pass through close. So currently, for the next coming months and, of course, for the full year 2025, tariffs should have no impact on our profitability. The only impact that could potentially raise from the the tariff is the fact that, yes, we’re going to recharge at zero margin the cost of the tariffs to the customers.

But that is a very limited impact. So we don’t consider that it should have any impact on the profitability target that we have already guided the market with. So we confirm the the capacity to deliver the the profitability improvement that we are targeting for the full year even in the current context of the tariff. That’s the the the the situation so far. Of course, no one knows what the price is going to be in the next coming three, four months.

So currently, from what we know and from what we see in the situation, we confirm the capacity to deliver the expected improvement of the profitability.

Valentin Pourjian, Analyst, Stifel: Yes. But my question was more about beyond Walmart because then you Yes. In The US, you have

Thierry Lometre, Deputy CEO, Finance and Corporate, Fusion Group: Yes. But Well, Anton, you know, we we are on q one twenty twenty five revenue from French Toast. So, yes, we can try to give an estimate of what the profit will be in the context of tariffs that no one can already anticipate, but I’m afraid that it’s a little bit, fiction so far.

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Yeah. We we confirm, you know, for sure, we we confirm our, you know, our guidance for the year, which is, I remind, you know, relatively precise when I compare the guidance of other companies, frankly. So that’s confirmed. What you need to have in mind is that because we would be on equal, I would say, basis here, is that we need to stay very humble about what will be the outcome because you seem to have already a certainty about what’s going to happen with China. I’d be a little more careful, you know, because we’ve seen a number of things over the past six weeks, including this morning.

We don’t know where things are going to end up. So, you know, making plans on, you know, depending on the relative cost of components and the relative, the relative tariff on components versus finished goods, depending on whether you put your these cases of some manufacturing products where the suppliers and the assembly line is crossing the border of Canada Seven times, you know, before the finished goods. So you can’t make simulation on that. We what we what I think is really interesting about this the the stress test that we went through is that so many customers say, you know, don’t change anything. Why?

Because this world that we enter is a fundamental world of volatility. I I don’t want to disclose any of our customers’ data, but I can tell you the cost of volatility, managing volatility in the store, the manual cost of that is massive. So what is the only protection? You know, it is it is the the the digitization and and the automation. So at the end of the day, you need to make sort of choices not on like sort of super short term volatility of decisions around tariffs because that’s not an industrial policy.

We have gotten closer and closer to The US. We may operate in The US. That will not be for, you know, it will be for many reasons if we do. It will and it will be for reasons that will stay. So it it may happen.

We will do it, maybe. We will certainly get closer and closer to America for sure in many ways, but we’re taking decisions, you know, in a in a, you know, sort of reasonable way. Those things are not volatile. You know? Production is a is a is a big decision.

So the good news is right now, none of these things are gonna, you know, sort of impact the the the the the growth plan that we have for this year. And and so that that’s the good news, really. So we’re we’re staying flexible. We’re looking at things. But right now, nobody knows where the where the tariffs will land for for for any country, including China.

So

Valentin Pourjian, Analyst, Stifel: Okay, understood. Thank you for your answers.

Speaker 2: Thank you. We will take our next question. Your next question comes from the line of Adam Gildea from Bank of America. Please go ahead. Your line is open.

Adam Gildea, Analyst, Bank of America: Hi. Good evening, guys. Can you hear me okay?

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Yes. We can.

Adam Gildea, Analyst, Bank of America: Oh, perfect. Thank you so much for taking my question. I really appreciate it. This is also sort of on the timing. You mentioned that it it’s possible and it’s very flexible to move production around, whether it’s to The US or to another third country outside Vietnam or Mexico.

I was wondering if you can just elaborate a little bit on the timeline there because as I understand it, the new Walmart prefinance lines that are going live throughout this year are located in Vietnam and Mexico, and and, presumably, the process of getting those up and running is already ongoing now. So does that mean that that’s essentially committed for 2025 if, let’s say, tariffs were going to go into effect two to three months from now after the ninety day pause? And and how quickly could you react and move that to The US in terms of of keeping the 2026 and 2027 timelines together?

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Yeah. Sure. So you’re you’re absolutely right. So our the the flexibility, we’re still, you know, we’re still in in the process of setting up these lines, and some of them are you know, still have a bit of flexibility in terms of the final location given it’s the same EMS on both on both ends, right, Vietnam and Mexico. And if we were to to to to go to to The US, it would be the same EMS.

So that provides another element of flexibility. It’s true that if we were to decide, and we haven’t done that, to move as, you know, as soon as this year in in America, it would delay, you know, some of the ramp up of this capacity. And that’s why we even though it would be possible, there would be a delay, and that delay you remember I mentioned no delay was the answer of our customers. And so precisely those who are already expecting, you know, sort of rollouts to happen because of decision have been taken, they said no delays for the reasons I mentioned. So no delays means not relocating.

Right? Now it doesn’t mean that for ’26, we would take a different decision. But right now, we’re not planning to relocate. We already have a, you know, dual location. We have a bit of flexibility of load balancing between those locations, by the way, and still now.

But, you know, for for for ’25, the the the the the all the discussions have have taken place. Every scenario has been analyzed, shared with our customers, and the answer is no change in plans and we deliver. That’s what they expect us. And so we will deliver our growth.

Adam Gildea, Analyst, Bank of America: Okay. That’s that’s very clear.

Valentin Pourjian, Analyst, Stifel: Thank you.

Speaker 2: Thank you. We will take our next question. Your next question comes from the line of Flavian Bourdemont from Bernstein. Please go ahead. Your line is open.

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Hello. Can you hear me? We can. Yes.

Bennett Thielman, Analyst, Berenberg: Okay. Thank you. Hello to all of us. I’d like to have a

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: bit more color on one of your comments. You said that there is a wait and see attitude for your clients that are currently in pilot phase. Do their decision are motivated by weaker pure return on investment projection or more on higher uncertainty on future retail prices? And if I had to say my question differently, does this wait and see attitude from retailer will disappear once The US tariff will be settled? And if not, what is the main concern currently from US retailers?

No. I think, yes, I mean, you did understand me correctly in a sense that the the the the situation in tariff is, you know, is is is creating uncertainty on a lot of, let’s say, on the cost of technology, on the future cost of technology. And so when you are at early stage in pilots or even before, you know, sort of evaluating business case and you have to put in your model cost and everything, and all of a sudden, don’t know if it’s, you know, you know, this level of 40% plus, etcetera. All these are, you know, indicating to, you know, creating an uncertainty on the models and we expect and we may be wrong, but, you know, we expect on these type of customers that they will probably there may be a slowdown in the the speed of decisions. Also, there is another factor.

The current flu you know, the current situation is not only, you know, creating an uncertainty on cost, but it’s also creating an uncertainty on recession, you know, on inflation. And those are very significant concerns for retailers in general. So, again, this is, you know, pushing for that. So that that’s why I said it’s it’s a contrasted situation because on the one hand, we had this incredible good news that those who were already, you know, sort of planned rollouts wanna absolutely it’s, you know, either, you know, stay on plan or even go faster. And that’s where but there is on the other hand this situation which is creating uncertainty on the, I would say, the macroeconomic growth or recession and also on the cost of technology that is imported.

And so those uncertainties will logically defer some decisions. Now, we’re on the right side of the market because we happen to have, as I mentioned, lot of our, you know, sort of revenue plan is, you know, is in backlog or in in in customers that have already, you know, sort of made decisions. And so that’s why we’re able to, you know, to to to to have our guidance, you know, confirmed, having said that. But it’s true. There is a there is a this reality, this contrasted reality.

Let’s say the good news is we’re on the right side of the of the market right now.

Valentin Pourjian, Analyst, Stifel: Okay, great. Thank you.

Speaker 2: Thank you. We will take our next question. Your next question comes from the line of Laurent Galbard from BNP Paribas. Please go ahead. Your line is open.

Bennett Thielman, Analyst, Berenberg: Yes. Good evening, gentlemen. Laurence speaking from BNP. So a couple of questions on my side. The first one regards your your exposure to The US market.

Can you share with us what is the first question? Are you shifted from tariffs with all your US clients or only Walmart? And if not Walmart, I mean, if other are not shifted from tariffs, what is the size of the backlog you have still to deliver at, let’s say, past prices? That’s the first question. So second one relates to Walmart and Captana.

Could you share with us where do you stand in terms of the pilot regarding this technology and if you expect them at some point to sign a contract with you. And the first the third one is really related to VAS services. So recurring VAS are up 38% in first quarter. Do you expect the level of growth for recurring VATs to accelerate throughout the year?

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: So yes, so regarding I don’t know if Thierry wants to, but the first question was about the tariff. I think the situation is relatively the same in a lot of our customers that I described. In fact, we described the situation of the customers who had already decided rollouts and as roughly the same regardless of the impact, which is not fully known at the moment. But they’re asking us essentially to continue as planned even though they might incur some pass through of those. And and in most cases, we have the same the the same provisions.

So there are, I would say, no no no difference here. And and and so, yeah, we we’ve we’ve seen, you know, most of each situation, and that’s why we, you know, we’re I wouldn’t make a a different statement here for a given customer. It’s mostly the difference is really the customers who had already decided or already launched their their rollout, and they are not changing plans. You know, it’s also true from for a retailer we had mentioned in December, like the fresh market, etcetera. So regarding Captana, I mean, the the the computer vision projects, we we have several computer vision projects, which are, you know, sort of, which are developing on plans.

They they will they are they are in pilot mode. So it’s too early to to say if we’re going to sign a contract, but we you know, they are very, very important project. They are very sort of they are developing well, and so, we’ll certainly, you know, talk about it when when we can. But right now, they’re just, they are developing well.

Laurent Galbard, Analyst, BNP Paribas: And then

Thierry Lometre, Deputy CEO, Finance and Corporate, Fusion Group: recurring Just regarding the last point regarding the and the recurring VAS. Yes. We said that we wanted to to grow the VAS approximately, 80% in 2025 versus, 2024. And given 31% increase in Q1, yes, you’re right, that should probably accelerate over the course of the year 2025.

Bennett Thielman, Analyst, Berenberg: Okay. Thank you.

Speaker 2: Thank you. We will take our next question. Your next question comes from the line of Giles Crespo from Allais. Please go ahead. Your line is open.

Giles Crespo, Analyst, Allais: Good evening, Thierry and Thierry. Thierry, you hear me?

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Yes, we can.

Giles Crespo, Analyst, Allais: Great. Thank you very much for all your comments and congratulations for the results. Few questions by allow, if you allow me. One is there has been great development in The U. S.

Backed on Walmart developments. It’s a little more muted or little less recovery on the European side. Could you give us a little color on this? That would be my first question. And how you expect the following quarters to evolve?

The second question is, there had been some strong recruitments in 2024. Could you give us an idea where we stand in at the end of the first quarter twenty five? Has these well, where does the headcount stand or how has your recruitment program being continuing or more stabilizing? And then technical question is, I have in mind that the whole of Walmart rollout would be something like 4,600 stores. Could you give us or remind us the date for completion of the rollout, as it was signed per the last contract?

Thank you very much.

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: And, yeah, the first question was about the European recovery. Yeah. So I’m I I hope I’m not, you know, sort of paraphrasing something I already already said. Let me say it differently. The the the European situation is is good.

It’s still a modest quarter in q one after a good quarter in q four. The thing is, you know, we have usually six, nine months, you know, sort of manufacturing lead time. So when the all the the the the the q four other entries in Europe are going to be, you know, visible, you know, throughout the the towards the end of of q two and in in h two. So we we again, that’s the thing. And we have also other entries in in Q1 that also would impact more more H2.

So that’s why we’re absolutely, know, confirming one of the things we mentioned about our guidance in our guidance was to that Europe in the full year would be coming back to growth. It would be more visible in H2. However, sequentially growth is gonna quarter, you know, quarter after quarter is gonna be growing. So increased deliveries will increase, you know, sequentially in q two and then in q three and then q four. So that’s the dynamic we see.

We’ll still be the the the plan of deliveries would be is lower in h in h one than in h two. And so in total, we’ll be, you know, resuming growth in h two and for the full year. So that’s what I can say. And I gave a a bit of color on some, you know, regions in Europe, which are which have a good momentum and where we we expect new new wins, you know, in the coming quarters to to continue to fuel growth, only in ’25, but also in ’26. So that’s for that’s for Europe.

Regarding h no. I think HR was the third one. The second one was the second one.

Giles Crespo, Analyst, Allais: Was HR.

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Yeah. Yeah. HR. Yeah. Well, you know, we we we we have passed, I think, not not long ago, our thousands employee.

So we are we I think we finished the year at something like 960 or something like that.

Thierry Lometre, Deputy CEO, Finance and Corporate, Fusion Group: And we are to hire

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: yes. Nine sixty. Yeah.

Thierry Lometre, Deputy CEO, Finance and Corporate, Fusion Group: Nine sixty. Nine five zero. Yeah.

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Nine five zero. Nine 50. Yeah. And so in the meantime, we’ve passed our our thousand, and we we we should be, you know, recruiting, like, like last year, you know, another 200 this year. And so it’s two to three hundred.

So it’s, it’s moving well, and, it’s particularly growing the team in the in The US. And finally

Laurent Galbard, Analyst, BNP Paribas: Walmart timing and completion of Walmart.

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Oh, yeah. This is something we we we didn’t I mean, precisely disclosed. We we we did say, I think when we signed the framework contract, which was in ’23, that it would be around five to seven years. So, you know, that’s that’s still the the the case. We we’re we’re still, you know, sort of on the on the planning phase of all the years.

Right now, obviously, the the plan for ’25 is is completed, but plan for ’26 and ’27, you know, are still so right now, it’s we should be we should be done, I would say, roughly, we should be done in ’27. Right?

Giles Crespo, Analyst, Allais: Thank you very much.

Speaker 2: Thank you. We will take our next question. Your next question comes from the line of Orelin Sovinon from ODDO BHF. Please go ahead. Your line is open.

Giles Crespo, Analyst, Allais: Yes. Good evening, gentlemen. Two questions on my side. Firstly, I just wanted to touch on the impact of a weaker U. S.

Dollar. I was wondering if that could change how you see VCM evolving for the rest of the year. And perhaps with higher taxation risks in The U. S, do you see this as a tailwind for further adoption of VAS with the retailers you are currently running out in The U. S?

Thank you.

Thierry Lometre, Deputy CEO, Finance and Corporate, Fusion Group: Maybe just on the first point, Oren. So yes, you’re right. It can have a limited impact actually because the impact is more on the revenues. So since euro is getting value or dollar is losing value against euro, It’s true that the revenues in dollars are a bit less significant. Nonetheless, we are still very comfortable with the EUR 600,000,000 revenue guidance for H1 and the 40% revenue growth for the full year.

And on the profitability, yes, you can have a limited impact. We said that we had quite a natural hedge between the revenues and also the cost in dollars. So we consider the impact to be quite limited in the gross margin. So the two impacts and the second question?

Laurent Galbard, Analyst, BNP Paribas: That’s a recession impact on impact on US retailers.

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Well, I mean, again, this is, Aurelien, this is something I touched on just before the fact that the current situation is not only a tariff situation, it’s also a macroeconomic, you know, uncertainty about the the evolution of the of consumption and and purchasing power and and and and and and GDP growth. So in in theory, as I said, it might delay decisions of investment, not specifically affecting one or the other components of our business, but maybe delaying some other entries. Again, we are you know, we’re we’re this doesn’t call into question our guidance because, you know, it’s it’s on the other hand, a number of other things are absolutely confirmed, and they are you know? And so I I I don’t think it’s it’s something that, you know, would would would would have that would affect the the the the course of business in ’25. So we’ve taken it into account.

Giles Crespo, Analyst, Allais: Good. And my question was more, let’s say, about if, let’s say, with a higher risk, it could be a tailwind for further adoption of VAS with the retailers you are currently rolling out in The US?

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: A tailwind for the retailers who are so you mean Yeah. For Capsana,

Thierry Lometre, Deputy CEO, Finance and Corporate, Fusion Group: for instance.

Giles Crespo, Analyst, Allais: Yeah. Absolutely.

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: You mean recession would would be a tailwind for yeah. I think, you know well, I mean, I hadn’t thought of that. You’re right. It could be. But, no.

I I think we have, you know, already, you know, sort of included a a very positive momentum on VAS. As I said, we we expect to, you know, we expect to grow very rapidly VAS and already in the in q one, it’s it’s happening. But it should, as we said before, it should it should accelerate. So already, we are anticipating a a strong demand on on on VAS and a strong acceleration. So no doubt this is happening.

Now even more, you know, I I wouldn’t, you know, go as far as that in a pure, you know, sort of improvisation, but so I I I we we we try to stick on our you know, to our to our to our to the course of our business and to our plan right now. Okay. I appreciate the cut off. Thank you.

Speaker 2: Thank you. We will take our next question. Your next question comes from the line of Hubert Masset from Masset and C. Please go ahead. Your line is open.

Laurent Galbard, Analyst, BNP Paribas: Good evening, Jay. Just one clarification with HSense. Do you have still pilot running in Europe with the with HSense or not yet?

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: No. No. We have.

Laurent Galbard, Analyst, BNP Paribas: You have. Okay. And so what and what’s your, let’s say, normal scenario to to convert those pilots in orders? Is that, you know, end of twenty six or or sooner than that without, you know, making any forecast, of course?

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Yes. I mean, we we are we are hoping to to to convert pilots to to to roll out in as I mean, maybe towards the end of the year or current of next year. So yeah. And, I mean, it’s it’s there is we don’t see a big difference between between Europe. It it came later, so we started projects later, but it should it should happen.

We will already have, you know, sort of pilots which are in in in the phase of expansion to to to many stores. So, yeah, there should be decisions, towards the end of the year and and and and during next year for sure. We have Okay.

Laurent Galbard, Analyst, BNP Paribas: And and, technically, do you have the, you know, the extra capacity to fulfill these orders given the fact you will be at nearly full blast for for Walmart as a period of of completion of their own of their order?

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Yeah. We have, we have dedicated capacities to to, to other customers. Yes. We have a we have we have dedicated capacity.

Laurent Galbard, Analyst, BNP Paribas: Okay. That’s all for me. Thank you.

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Thank you.

Speaker 2: Thank you.

Olivier, Moderator/Presenter, Fusion Group: One last question.

Speaker 2: Thank you. We will take our next question. And the question comes from the line of Valentin Paul Jayhan from Stifel. Please go ahead. Your line is open.

Valentin Pourjian, Analyst, Stifel: Thank you. It’s me again, sorry. Just a last one. I have a feeling that Trump tariffs between Mexico and Canada and The US apply to non USMCA compliant product as well as automotive and steel, but there there are it seems that there are lots of product categories that are so USMCA compliant. And among these product categories, there is one category which could eventually be used to cover ESL type products in my view.

Do you think you could make your product USMCA compliant just to avoid finally, just to avoid tax tariffs? Is this something your legal teams are working on? What is your opinion on this subject?

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Yeah. So it’s something we were we are definitely working on. At the moment, for sure, there is a a list, which is called an HTS list, harmonized tariff schedule. So h HCS codes are covered by a number of HCS codes are covered by the exemption, and our products are not important under those codes. So that’s the current situation.

Now we are working, you know, on I mean, the the those lists and those codes are are not stabilized. So, you know, any we we need to to and they are still moving. And, you know, we we we, of course, are doing everything we can to, you know, to to to justify a number of exemptions, but we’re working on it. So it’s it’s something right now, it is not, right, exempted.

Valentin Pourjian, Analyst, Stifel: Okay. Okay. Perfect. Thank you.

Speaker 2: Thank you. This concludes today’s question and answer session. I’ll now hand back for closing remarks.

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Yes. So thank you for your attention and all your great questions. We wish you a very good evening, and, we will, meet you I think next now is at our yes.

Olivier, Moderator/Presenter, Fusion Group: July.

Thierry Gadot, Chairman and Chief Executive Officer, Fusion Group: Well, July and, of course, for for our shareholders at the AGM on June 17. So there’s gonna be thank you very much. Bye bye.

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