Earnings call transcript: Indra sees 88% profit surge in Q2 2025

Indra reported a significant increase in net profit for Q2 2025, with an 88% year-over-year rise to €215 million. Revenue grew by 6%, reaching €5.2 billion, driven by robust international sales and a strong order backlog. According to InvestingPro data, the company has maintained impressive revenue growth of 67.42% over the last twelve months, with a strong financial health score of 3.67 out of 5. Despite the positive financial performance, Indra’s stock price fell by 2.92% during the day, closing at €37.28. The market reaction may have been influenced by broader market conditions or investor expectations.

Key Takeaways

• Indra’s net profit increased by 88% to €215 million.
• Revenue growth of 6% was recorded, totaling €5.2 billion.
• The company’s stock price dropped by 2.92% on the earnings announcement.
• The order backlog saw a substantial 33% increase.
• Indra launched its IndraMind AI platform, targeting €1 billion in AI revenues by 2030.

Company Performance

Indra’s second-quarter performance showcased strong financial growth, largely attributed to its expanding international business, which now accounts for 49% of total sales. The company has made significant strides in the defense and cybersecurity sectors, enhancing its competitive position in these high-growth areas. The increase in order backlog by 33% signals robust demand for its products and services.

Financial Highlights

• Revenue: €5.2 billion, up 6% year-over-year.
• Net profit: €215 million, an 88% increase from the previous year.
• EBITDA margin improved to 10.8%.
• EBIT margin rose to 8.6%.
• Free cash flow amounted to €65 million.

Market Reaction

Despite the positive earnings report, Indra’s stock fell by 2.92%, closing at €37.28. This movement may reflect investor caution or broader market trends impacting the defense and technology sectors. InvestingPro analysis shows the stock has delivered an impressive 91.17% return year-to-date, with 2 analysts recently revising their earnings expectations upward. The stock trades near its 52-week high, suggesting strong momentum. Discover 10 more exclusive InvestingPro Tips and comprehensive valuation metrics with an InvestingPro subscription.

Outlook & Guidance

Indra has set ambitious targets for the remainder of 2025, aiming for sales to exceed €5.2 billion, with a projected EBIT of over €490 million, representing a 9.4% margin. The company is also focused on doubling its defense orders and achieving €300 million in revenue from its IndraMind platform by the end of the year. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading above its intrinsic value. Get access to the full Pro Research Report, available for 1,400+ top stocks, featuring detailed financial analysis and expert insights to make informed investment decisions.

Executive Commentary

CEO Jose Vicente emphasized the company’s commitment to growth and innovation, stating, "We want to be champions. We want to win the game." The Executive Chairman highlighted the strategic importance of Indra’s initiatives, saying, "We are building Europe’s digital shield."

Risks and Challenges

• Supply chain disruptions could impact production timelines and costs.
• Economic uncertainties in Europe may affect defense spending.
• Increased competition in the AI and cybersecurity markets.
• Potential geopolitical tensions influencing international sales.
• Execution risks associated with expanding production and hiring.

Q&A

During the earnings call, analysts inquired about potential acquisitions and the company’s strategy for optimizing its Minsight division. Indra’s management expressed confidence in securing defense program contracts and highlighted the positive outlook for the Eurofighter program.

Indra’s strategic focus on AI and cybersecurity, along with its robust financial performance, positions the company well for future growth, despite the immediate market reaction.

Full transcript - Indra A (IDR) Q2 2025:

Ezequiel Nieto, Director of Investor Relations, Indra: Good afternoon and welcome to the results presentation for the first half of twenty twenty five. I’m Ezequiel Nieto, Director of Investor Relations. First of all, let me refer you to the current slide, which shows the legal framework under which this presentation must be considered. Let me begin by introducing the speakers of this session: Achal Ecrivan, Executive Chairman of Indra Jose Vicente de los Mucio, Chief Executive Officer of Indra and Miguel Fortesa, Chief Financial Officer of Indra. Angel, you have the floor.

Thank you, Ezequiel. Good afternoon, everyone, and welcome to this results presentation for the first half of twenty twenty five, in which we will take stock of the first half of the year and share the group’s performance with you. These results reflect the sound direction and strength of our strategy, the resilience of our teams and interest ability to continue leading the defense and advanced technologies sectors which are strategic for both Spain and Europe. The defense sector is at a decisive moment with strong tailwinds from recent geopolitical and technological developments, which I would like to delve into. Firstly, Europe and Spain are significantly increasing defense spending.

As you know, we are witnessing historic events of great relevance that are directly reshaping and boosting defense investment both at the European and national levels. In this context and as a response to security needs, the European Commission announced the Rearm Europe Plan early this year. This plan aims to mobilize up to 800,000,000,000 in additional defense spending through 2029. In Spain, on the other hand, the government through the industrial and technological platform security and defense has increased spending by an additional €10,471,000,000 just in 2025 with significant focus on streamlining the capabilities and equipment of our armed forces. Secondly, Europe and Spain have also set a strategic goal to increase their autonomy in defense.

The European Commission and member states have not only expressed a firm commitment to developing Europe’s defense and security industrial base, but have also placed a special emphasis on ensuring strategic autonomy. And we would like to underscore these terms, strategic autonomy. Currently in Europe, nearly 70% of defense equipment spending goes to non European suppliers, highlighting the need to industrialize the sector and redirect the spending to European companies. And along these lines, the Spanish government has set the target for more than 80% of the industrial plans budget to be executed in our country. Thirdly, regarding technology, artificial intelligence and cybersecurity have become strategic segments in defense and security.

Specifically, the European Defense Fund allocated around EUR $350,000,000 in 2024 to advanced technology projects. Of this budget, over 50% has been invested in AI and cyber initiatives. This investment lays the groundwork for developing proprietary technology and ensuring our technological sovereignty. It is crucial to create European leaders to compete with new international players who have emerged with solutions for dual civil military use cases. In conclusion, we are living through a crucial moment to industrialize Spain and Europe with interacting as a driving force for the country’s industrial and technological ecosystem.

For our part, we are proactively positioning ourselves to respond to this new context. We have launched three key divisions aimed at strengthening our offering in market segments where we expect a significant share of defense spending will be concentrated. However, our ambition goes beyond our own positioning. We aim to be a driving engine for the national industry. That is why we’re also accelerating our industrial plan with the goal of boosting our production capabilities and strengthening the defense industrial ecosystem in Spain.

Next, let me give you an overview of our ambition for each of these divisions. With Indra Land Vehicles, we are strengthening our position as a prime contractor by integrating all stages of the design, manufacturing and delivery of land vehicles. This will enable us to fully execute programs such as the VCR 8x8 and VAC, which are currently going through manufacturing processes and be a key player in new programs like the modernization of the Liopar tanks, the new main battle tank MGCS or the development of multi role vehicles. With the creation of intra weapons and ammunition, we aim to build a high-tech offering and become the national prime contractor for smart weapon systems. And this translates into three main business lines, developing guidance capabilities, unmanned systems such as loitering munitions, directed energy and laser effectors, accelerating our anti drone systems business and integrating self defense systems into platforms.

With the launch of Intramind, we are consolidating our capabilities in advanced technologies such as AI and cybersecurity. In cyber, we already hold a leadership position being a national and an international benchmark for critical solutions. Intramind in turn will allow us to leverage these capabilities and integrate them into new AI developments for both civilian and defense environments. Our goal is to create a benchmark AI platform capable of competing with major global players in both civilian and military use cases. As for our industrial plan, we are developing capabilities to increase production and ensure quick delivery to our clients.

We are strengthening our footprint across Spain by opening new production and engineering centers. As a result, we have an ambitious plan to hire over 3,000 technical professionals in the next two years. We will also generate indirect employment through our network of suppliers and partner companies. As I mentioned before, we aim not only to be a defense leader in Spain, but also to act as the driving force of the national defense industrial ecosystem. As evidence of this on June 12, we brought together in this very same venue more than 150 companies including SMEs, startups, research centers, universities and training centers from all over Spain.

And this meeting highlighted the importance of our collaborative model that enables us to respond swiftly and effectively to the industrial plans announced by Spain and Europe. We are fully aware that current challenges demand strong structural decisions and agile execution capabilities with this approach. And fully aligned with our strategic plan, we are moving decisively towards becoming a company capable of fully developing and executing complex defense and technology systems. This roadmap will allow us to seize the sector’s opportunities and accelerate the achievement of our goals for 02/1930. Now I will hand over to Jose Vicente, our CEO, to present the progress achieved in the first half of the year.

Thank you.

Jose Vicente de los Mucio, Chief Executive Officer, Indra: Thank you very much, Mr. Chair, and good afternoon to everyone, and welcome to the presentation of our results for the first half of twenty twenty five. We continue to make progress in the transformation of the Indra Group, achieving solid financial results and advancing in the implementation of our Leading the Future strategic plan. I would like to begin with the financial aspects and highlight that our performance in the first half of the year is fully aligned with our 2025 targets. Our order backlog and new orders grew at double digits compared to the first half of twenty twenty four.

Specifically, the backlog grew by 33% partly due to the consolidation of tests and new orders, which grew by 18%. Revenues have also increased by 6%, and the EBIT margin improved by 0.8 percentage points. Net profits reached 215,000,000, an 88% increase over the first half of twenty twenty four, partly driven by the consolidation of TESS. In addition, we recently, as you know, secured €385,000,000 in financing from the euro Investment Bank to boost research and development in new technologies. This is a significant milestone.

Indra is the first defense company in Spain to sign a financing agreement with this institution. This strong performance during the year will allow us to reaffirm our commitment to the 2025 guidance and the financial objectives of our 2026 strategic plan. Regarding business milestones, I would like to highlight the main progress in the implementation of our strategic plan, Leading the Future. As I announced in the first quarter, we launched Intramind. The chair has already given some insights into this, a new division through which we aim to capitalize our capabilities in advanced digital technologies and become a European benchmark in AI and cybersecurity.

Our goal in this division is to reach €1,000,000,000 in revenue by 2030. And to do so, we will invest more than €200,000,000. This step will further strengthen our technological leadership and also consolidate our commitment to developing advanced digital solutions. In line with this, as we explained at the annual shareholder meeting a few weeks ago, we’ve carried out a corporate reorganization to leverage Minsight’s digital capabilities across the Indra Group through the creation of a new cross cutting tech operations division, which is led by Sebastian Balmonde. Additionally, as part of our industrial plan, we are moving forward very firmly with the expansion of our industrial and engineering footprint and strengthening our supply chain integration.

This point is very important. Indra is a technology company, but it has been industrially weak. We develop prototypes. We want to develop that industrial capability, and we’re doing this. And you will see this in the coming months and years and see how those capabilities are being developed together with other industrial sectors that are very well known in this country.

And finally, I would like to highlight that we are comfortably exceed our ambition of doubling defense orders in 2025 with respect to the orders achieved in 2024. And when I say double, I say so with without referring to the pen. I think that one thing that we can say is that what we’ve advanced in terms of sales and defense, and we’re increasing our, let’s say, our order book in Spain and elsewhere. This will allow us to double that order intake. I would also now like to look in more detail at some of the main milestones for each of these strategic cross cutting lines of the plan.

In defense, we continue to work on developing our role as a national coordinator in the FCAS program. And it’s important to remember that Spain pays 23 percent of this project. Indra, the national coordinator, will continue to work on these milestones for which we’re responsible. And for this purpose, we’ve already presented 17 disruptive projects which are driven by leading companies, universities, and research centers in Spain. Europe needs to do take full advantage of this new generation, and Spain will be able to do this.

Indra will form part of that plane, that new generation plane. And we’ve also been named one of the five main companies in the Marte Mars project, The project, which aims to develop a European main battle tank. In air traffic, we continue to strengthen our position in Europe and Latin America with contracts which were recently awarded. For example, via approach systems in the airports in Paris and Helsinki to implement air traffic management systems. And I would like to highlight the importance of Paris because until now, France was, due to the context, a country which wasn’t really open to Indra.

But thanks to Thales, we’re also going to have the opportunity to operate in France for approach systems for French or, more specifically, Paris airport systems. We will also expand our presence in The US with the opening of a new office and production plant in Kansas, fundamentally centered on mobility and air traffic, which is what we’re working on. In space, we are demonstrating our ability to handle end to end missions following the success of the first Starticle missions in which we’ve already launched two satellites, and we’ve successfully successfully tested their operations. On the other hand, we expect to complete the Hispasat and Hispasat transaction in the second half of this year. As a cross cutting element for defense, ATM, and space businesses, we are rolling out the new industrial plan with which we can significantly expand our production and engineering footprint, and at the same time, bolster our supply chain.

I’ll speak more about the progress of this industrial plan later because I think there’s been a lot of work in of our teams in the industrial plan using best practices in other areas of Spanish industry, which is important elements as we’ll see later. Regarding Minsate, we’re seeing strong growth in digital solutions, and I would like to highlight a shift in our operating model with the creation of a new cross cutting division with digital capabilities, tech operations. This company has enormous digital capability, and those digital capabilities are working exclusively for Minsight. And we believe that this has tremendous potential for the group’s other divisions because all sectors will have to digitize. And so far, we haven’t taken full advantage of that potential.

Moving on to our cross cutting strategic lines. We’re also working very actively to strengthen our presence in new domestic markets. To this end, we’ve reinforced our international model by creating an international director role to ensure coordination across regions. We’re also strengthening our presence in Europe with new hubs and offices in Germany, The United Kingdom, and Poland. For us, Europe is a priority.

Countries such as The UK, Poland, and Germany are ones in which Indra must have a stronger presence. Regarding portfolio rotation, we continue with our strategy of analyzing companies in the market that can provide us with the following, capabilities that we lack in order to enhance our product portfolio. That is where the stakes lie in Europe, and we need to have products which will allow us to compete in European markets, presence in strategic markets where we are currently not present or operating, acceleration of our company’s industrialization, and above all, and perhaps most importantly, we must provide added value to all our shareholders in the Indegroup. More than 20 European companies are under ongoing analysis to increase our added value. And in this study and under the supervision and based on the decisions adopted by the board of directors, we will take the best decisions for our company.

In this line, we have strengthened our position as a prime contractor for land vehicles by completing the acquisition of a majority stake in test defense. Moreover, we continue to strengthen our positioning in new technologies by closing our investment as the main shareholder in Spark, a cutting edge technology company that specializes in the production of gallium nitride chips. And finally, most importantly, talent. We continue to make significant efforts to attract and retain talent. I’ve come from a different world.

The talent in this company is a true benchmark in this country and in Europe. Indra possesses enormous talent. And for this reason, we are transforming Indra at the pace that you’ve seen. We’ve already hired around, more than 2,000 or we will plan to hire more than 2,000 new employees by the end of the year, and this confirms our commitment to 5,000 new hires by in the strategic plan. In conclusion, the progress achieved in this first half of the year demonstrates the strength and robustness of our strategy and reaffirms our goal of being Spain’s leading driving force in defense and technology.

Allow me now to move on to the group’s financial results. The 2025 has been a good start to the year for Indra, and it allows us to reaffirm our full commitment to all our financial targets for ’25. Our order backlog grew by 33%. It’s true that this includes the impact of the consolidation of TESS, But without that, it would also have been double digit growth. This provides us with greater stability and visibility for future revenue growth.

The second quarter was mainly driven by the defense and ATM businesses. Order intake grew by 18% with strong growth across all divisions, notably air traffic, defense, and mobility, which all showed double digit increases. And here on this point, I would just like to make a comment. When I joined the company, air traffic was integrated in another division. We’ve actually ensured that ATM actually has the value that it deserves with a growth and investment of more than 50%.

And EBIT has increased by more than 50%. This means that air traffic we have to remember we’re the world’s second company in this area, and we’re a benchmark company in air traffic. This means that when we refer to transformation, this is a clear example. Very often, we tend only to talk of defense, etcetera. But what about air traffic with growth of more than 50%?

We are present on all continents, and this is thanks to the work of the technology arm of all of the people that work in that division in Indra. Overall, revenues grew by 6% with all divisions in presenting increases except for mobility, which remained stable. And beyond revenue growth, we’ve also improved operational profitability. The EBITDA margin reached 10.8%, translating to absolute growth of 15%. The EBIT margin grew to 8.6%, representing absolute growth of 17%.

And before I came to the presentation this afternoon, I was looking at the Indra’s EBIT over the last two years, which has increased by 1.6 points. That’s more than 48%. So this means that on top of it, at a time of growth, the results are there for all to see. This transformation is a three sixty degree transformation. We’re working on an all means of standardization.

We’re working on talent on all of these different aspects. Indra has a tremendous opportunity, and we can see this every day thanks to the efforts of all our teams. As I said, that’s the way forward, but we have to continue. We have to continue working on our products, on production efficiency, and we must also continue working on the change in our business mix. Moving forward.

As you can see, this performance resulted in a net profit of €215,000,000. That’s 8088% up on the same period last year. As a result, as I explained earlier of operational improvements and the one off financial impact of the consolidation of TESS. Regarding cash flow, we generated €65,000,000 in the first half of the year, and this has remained virtually stable thanks to the investments made in anticipation of increased market demand. So at a time of growth, we continue to generate cash flow, and that is very important.

We continue to grow by investing, and our debt position is practically neutral. That’s a significant milestone, which puts us in a good position with a view to the future with a free hand to grow and to adapt to that inorganic growth. And now let’s look at the details of our sales results for the 2025 in which we achieved a local currency growth of 85% organic growth. And we can also see this positive trend, which was also reflected in the second quarter of the year with a growth in sales of 8%. As regards the distribution of our sales by geography, Spain continues to be our main market with growth of 7% compared with the same period in 2024.

International business, which already accounted for 49% of total sales, has reflected strong growth, particularly in Europe, up 10%. Now moving on to distribution of EBITDA by division, defense and ATM represent more than half of the company’s EBITDA contribution. And this reinforces the growing weight of this segment in our business structure, in line with the targets that were set out in our strategic plan. As regards the evolution of our workforce, it’s important to highlight that we’ve achieved 2% increase in our revenue per employee compared to the end of last year. This positions us reaching revenues per employee increasing over 4% by the end of twenty twenty five, which demonstrates or reveals a strong efficiency ratio.

We continue to attract the best talent in the market aligned with our strategic priority of becoming the or an employer of choice in Spain. This technology and defense sector in Spain is the sector which is generating most of added value and employment in the country, and we are an important contributor for those young people that would like to develop their professional careers in the fields of technology defense, in high added value sectors, and the Indra Group can offer them those jobs, which in other circumstances, they would find themselves in a position to have to look for opportunities in other countries. As a result, our workforce has grown by 6% compared to the first half of twenty twenty four, and we will continue to focus on attracting top human capital. Now we’ll continue with a breakdown of our business results for the first half of the year. As you can see, our defense business shows solid growth in order intake, which has increased by 53%, mainly driven by the Eurofighter project, the radar contracts in Germany and Oman, and also inorganic contribution from Deimos.

Given this trend, as I said before, we expect to exceed our target of doubling orders compared to 2024 by year end. Revenues have also grown by 16% in the first half of the year, thanks to the contributions from Eurofighter space and also the weapons and ammunition businesses. In addition to these double digit increases, the EBITDA margin stood at 19% and the EBIT margin at 17%. And this is very important. We talk a lot today about investment in defense.

But in the last two years, our sales have gone from 729,000,000 to more than $11,100,000,000.0. That’s an increase of more than 25%. And the in addition to this greater contribution, we’re also driving our mix, and the bit has increased by more than 73%, more than 1.4 points. So in addition to that mix, we can also highlight the improvement in operational efficiency that I’ve highlighted during my presentation. Another important point that I would like to highlight is the preparatory work that’s being undertaken by our teams and also their ambition to lead or participate in different PM programs defined by the Spanish Ministry of Defense.

And we will soon know the final scope of our involvement. And it it’s important to highlight that we are very ambitious. We want to be champions. We want to win the game here, and nobody’s going to take that ambition away from us. That’s the reason why we’ve begun to invest, to prepare capabilities so that when the game really starts, we will be in a position to play the game and to win it.

And that’s part of the transformation in Indra. And it’s important to mention that since the arrival of our new chair, we’re also stepping up that ambition. You know, I have industrial background, and I think that there are clear signs here of that clear synchrony. We’ve got no fear to further develop the Indra Group. Now moving on to the air traffic division, I would like to to highlight the importance of in order intake, grew by more than 38%.

Thanks to the new contracts in The UK and Spain, as well as expansion in Azerbaijan, Saudi Arabia, and Malaysia. Sales have increased by more than 25% driven by double digit growth in The Americas. Thanks to The United States and Canada, iTech, and also Europe vertical in in Belgium, Germany, and The UK. The EBITDA margin stood at 14.5% and the EBIT margin at 12%. Moving on to the results of the mobility division, order intake has increased very, very strongly by more than 40%, 41%, in fact, driven by urban transport management systems in Ireland and toll systems in Colombia.

And as you know, we’re also opting for important projects where we’re also attempting to really, play a strong game. Sales remain stable with increases in Europe and Spain, offset by declines in The Americas, Azerbaijan, The Middle East, and Asia. Margins have improved substantially, consolidating at a level of 6% for the EBITDA margin and 4% for the EBIT margin, thanks to significant improvements in project management and a stronger focus on profitability within the division. Today, we can say that mobility is no longer in the emergency ward. We have stronger ambitions, and we will soon announce what we aim to achieve in the future in mobility.

Let’s now move on to MINSIGHT. Well, Evolution has been stable. We’ve expanded our portfolio with growth in order intake and revenue growth of 11%, two point five percent and one point five percent, respectively. Similarly, profitability in Minsight has also improved with the EBITDA margin rising from 7.4 to 7.9% and the EBIT margin increasing from 5.3 to 5.7%. And I can announce that there is still room for improvement.

In the coming months and under the leadership of Luis Fernandez and Sebastian Barmondi, our main priority will focus on achieving greater operational efficiency, pursuing cross functional integration of our digital capabilities throughout the group so that we can get even closer to our customers. And I would now like to discuss in more detail some of our key business milestones, starting with corporate reorganization. To fully leverage our technological potential and respond swiftly to current market challenges, we must launch a new organizational model. And as you’ve seen in recent operations, this will focus on promoting internal talent. First, we have launched Indramind led by Ignacio Martinez as a new business unit.

And I will give you more details of this shortly. And the main goal, as mentioned by our chairman, is to consolidate the group’s leadership in AI, cybersecurity, and cyber defense with a dual civil military focus. Minsight maintains its role as a business unit providing technological services under the leadership of Luis Fernandez, focusing its efforts on prioritizing high impact digital solutions and improving operational efficiency. Our tech operations are established as a cross cutting division aimed at providing high value technological services across all Indra business areas. Led by Sebastian Bamondi, it will take on functions that were previously integrated solely within Minsight.

The goal of this new division is to scale the group’s digital capabilities and turn them or transform them into a competitive advantage across all verticals, thus contributing to the creation of new business. And finally, our international model will also be strengthened with the incorporation of Pedro Rodriguez Bego, the general manager of the division, whose role and responsibility will be to ensure global coordination of the entire international business and ensuring strategic consistency across all markets. These changes reinforce the group’s ambition to accelerate its leadership in key digital capabilities and strengthen its position both nationally and internationally.

Angel, Executive Chairman, Indra: In an uncertain and digitalized world, foresight and autonomy are not just advantages. They are the best strategy. Today, our security and sovereignty are at stake on two fronts, the physical and the digital. Those who master technology will multiply their capabilities and shape the future. To achieve this, Europe needs the very best.

And in Spain, we make the difference. Our talent is the key. And so IndraMind was born, Indra’s group intelligence platform. Technology backed by decades of expertise in the most demanding and strategic environments, designed to protect what truly matters. We are building Europe’s digital shield, a secure and sovereign technological foundation that will enhance the efficiency and security of our strategic infrastructures and services, support the operation of mission critical systems, and safeguard our society and its stability.

We are leading a purposeful digital revolution in service of society, in service of Spain, and in service of Europe. Because this is not just about innovation, it’s about building a future we can trust. Tech for the future.

Jose Vicente de los Mucio, Chief Executive Officer, Indra: The Indra Group is driving the development of this new artificial intelligent platform, Indramind. Our ambition is to provide advanced software solutions powered by AI, which will enhance sophisticated decision making and ensure the reliability of mission critical cooperations. Intramind is built on three fundamental pillars. Firstly, the creation of a propriety proprietary server in platform natively designed for artificial intelligence. Secondly, the development of use cases tailored to the needs of our clients, including both public institutions and private companies in Spain and Europe, some of which already exist within our product portfolio.

And thirdly, the strategic combination of our unique capabilities in data cyber cloud technology in order to create cutting edge solutions. Ultimately, with Intramind, we offer our clients an advanced technological platform aligned with the principles of strategic autonomy required in today’s global context. I would now like to detail Intramind’s value proposition. As you can see, our platform is designed through a customer centric approach capable of addressing both military and civilian use cases. Key military use cases include cyber defense, mission planning and scenario simulation, logistics and supply chain optimization for the armed forces.

And key civilian use cases include climate emergency management, such as in the case of the flash floods which occurred last November or wildfire response, response to critical incidents such as power outages and land and maritime border control. All of this is supported by a platform architecture that combines several key layers. An operational layer, integrating command and control, visualizations, and generation of RoMecca recommended actions. An artificial intelligence layer specialized in data processing, combining or merging information from structured sources, open sources, advanced sensors embedded in radars, drones, or satellites to incorporate real time satellite images in decision making processes. To develop and strengthen our platform, we’re leveraging the group’s existing advanced technology capabilities in artificial intelligence, cloud, data, cybersecurity, and cyber defense.

And please allow me just to provide you some more details focusing on a use case of IndraMind. IndraMind, for example, enables climate emergency management for events, as I mentioned earlier, such as wildfires or floods. In these contexts, response time is critical to minimize material and human losses. And to this end, it’s essential to ensure the coordination of all authorities and emergency units. In this regard, IndraMind is capable of performing real time AI analysis.

It uses high frequent frequency satellite imagery to detect and analyze emergencies very quickly. It triangulates weather information to predict the evolution of the fire or the flood. And this is something very logical. When we integrated Hispasat, Hispasat launched images to Earth every x minutes, and we have those images, and we can use those images. We’re working on end to end capabilities.

It also deploys autonomous drones with integrated AI to conduct detailed situational assessments. We’re working with these type of systems. Additionally, the IndraMine platform also coordinates the response to such incidents. As you can see, the coherence between all of these capabilities is more and more logical between all of our units and divisions in the group. For this reason, it’s important to establish a common data source to ensure that all authorities and emergency units are able to take informed decisions.

It recommends actions to the command and control team responsible for managing each emergency, and it also coordinates the response of all of our units in real time to mitigate potential damage and, let’s say, casualties. Everything we’ve just shared with you is not a vision for the future. It’s a tangible reality today. Today, IndraMind already has more than 2,500 people, professionals, working in the Indra Group involved in its developments and deployment, working actively with our main clients. We’ve already developed technologically in house, a huge number or more than 10 use cases that are ready to be implemented, and we have the support of key national and European clients such as the Ministry of Defense or NATO.

And all of this will consolidate IndraMind as a platform offering unique capabilities and strategic reach, able to address, adapt to, and provide services to large scale programs and needs both nationally and across Europe. Thanks to these capabilities, we aspire to achieving a very ambitious goal by the year 2030, namely to surpass €1,000,000,000 in revenues by the year 2013. In the short term, we are integrating our current digital capabilities to develop that platform in the short term and to implement the first use cases, starting fundamentally with the civil sector. As a result, Indramind will achieve revenues of more than €300,000,000 this year. For the coming years, we hope and expect to expand the use cases in the defense sector, leveraging our presence in major programs to upscale the program.

As a result, we aim to achieve a total of €700,000,000 in revenues by the year 2028. Once we’ve built a solid track record of impactful use cases, we aspire to becoming Europe’s benchmark, capturing a significant share of the market and surpassing €1,000,000,000 in revenues by 2030. I would now like to come to an end, but I don’t want to end this presentation without giving you some insights into something that I’m very familiar with, and that’s the progress of our industrial plan. Firstly, we will increase our production and engineering footprint by more than 100,000 square meters, incorporating new facilities in key regions such as Asturias and Cordova in Spain or Vigo with the technological center in line with industrial corridors defined in the industrial strategy of the Ministry of Defense. And we will be one of the companies driving developments of the depopulated regions of Spain.

This will allow us to meet the expected demand growth driven by the new defense spending targets. As a result, we plan to hire over 2,000 engineers and 1,000 new operators with technical and technological qualifications over the next two years. Secondly, I believe that we have made progress in looking at best practices implemented in other industries, integrating our supply chain by optimizing our relationship with suppliers. In 2024, we had a fragmented base of over 2,000 suppliers. This year, we’ve implemented a tiering model that allows us to focus management on approximately 700 suppliers today.

So what you know from or based on our knowledge in the automotive sector, we’ve implemented here. We’ve gone from having a destructurated structure in of more than 1,000 suppliers to having tier one seven hundred suppliers. And we can see that we’ve managed to concentrate more than 90% of procurement spending in this first half of the year with 550 suppliers. But I think that the work that’s been undertaken by the team from more than 2,000 for more than 2,000 producing this from more than 2,000 to 700 in this period actually is the basis of one of these best practices. And finally, we continued to advance and making progress in commonality.

More than 60% of component commonality in the new generation of ISR radars based on modular architectures, which will maximize common elements. We’re also reducing costs by implementing designs focused on production, famous designed cost, which will allow us to increase efficiency and guarantee quality and production processes. In short, we’re applying best in class industry practices to transform the company and become an industrial leader in defense. After our achievements in 2024, we reaffirm our ambition to meet the target set for 2025. In sales, we will exceed €5,200,000,000, representing growth of more than 7% over 2024.

In EBIT, our goal is to surpass €490,000,000, representing an EBIT margin of 9.4%. And finally, free cash flow of over €300,000,000 And now I would now like to hand the floor to Miguel Forteta, who will give you more details of the relevant financial information.

Ezequiel Nieto, Director of Investor Relations, Indra: Thank you very much, Jose Vicente. Good afternoon, everybody. Let’s continue with the key financials for the first half of twenty twenty five. Starting with free cash flow. We reached 65,000,000 this first half of the year, a figure slightly below, but still very similar to the same period last year.

As we disclosed in Q1, the year is evolving positively compared to the historical trend, especially considering the usual seasonality of this metric in the first nine months of each reporting period. Once again, we reiterate our target of generating more than 300,000,000 in free cash flow for fiscal year twenty twenty five. Regarding working capital, although days sales outstanding did not perform as positively as in the first half of twenty twenty four. This is mainly due to increased inventory in defense and ATM projects with longer life cycles. This puts us at plus six days compared to minus seven days at year end and plus three days in the previous half yearly period.

As shown on the slide, the consolidation effect of TES is neutral regarding days sales outstanding. Moving on to the positive evolution of net financial debt during the first half of twenty twenty five, we closed with a positive net position of EUR 4,000,000 compared to the EUR 86,000,000 cash position at 2024 year end. The main factors explaining this change are first, the contribution from operating cash flow of $219,000,000 and non recurring financial impacts due to group investments amounting to EUR 155,000,000. As a result, the net debt to EBITDA leverage ratio is neutral, standing at zero accounting for a decrease of two 10s compared to June 2024. In closing, regarding our debt structure, I would like to highlight that we have managed to reduce the cost of our gross debt to 3.3% from 4.2% at the end of twenty twenty four.

As a result, the average debt maturity stands at three point three years compared to 1.5 reported in the same quarter last year. We ended the quarter with a cash position of $658,000,000 compared to EUR $616,000,000 in December 2024. And this concludes our presentation. We now open the floor for questions and answers. First, we will hear the analysts who are present here in the room.

Congratulations for such good results and thank you for allowing me to address the floor. I have one question as to how you intend to double your order intake in the defense segment. Can you give us some highlights as to how much you expect might come from the investment in new budgets? And then I have another question as for test defense. I would like to know how many tanks have been delivered up until now and how many you estimate will be delivered going forward in 2025?

Thank you very much, Beatriz, for this question. As for our increased order intake, the closing of the period as we’re trying to explain during the presentation as Jose Vicente said, we do not have any of the PEM programs up until now. So the market is demanding products and services that we already have available. That’s why we have increased our portfolio. Up until now, there’s nothing concerning PEM having been contracted.

Therefore, we expect we will be able to get a percentage of the amount that has been announced by the government. But right now, we cannot quantify We believe that it’s going to be above two digits. We are sure we’re going to attain that. So up until now that’s all we can say.

We had to wait until October or November, but the outlook is very good, is very positive and we believe that we can get significant projects. As Jose Vicente said, we cannot say that we are the only company, but we certainly one of the few companies that are ready to step up. The companies are waiting to see what might happen or what they should expect from these SMPs. Now the company supports Jose Vicente’s decisions. I endorse his decisions.

So we are now trying to think and find the resources. We are now hiring more than 2,500 professionals in order to gather these tasks. And of course, we meet our obligations with them as soon as they get on board. We are perhaps the only company or almost the only company that is now ready to bear whatever workload might come up. So we are ready.

And as we said before, want to be a player in this Champions League. Now we want to win the game. As for Test and the 8x8 vehicle, as you know, 11 vehicles have already been delivered. They were made available. This is a wheeled vehicle and we have another 22 units that are ready to be tested and subsequently delivered to the Ministry of Defense.

We hope and we are certain that we will be ready to deliver between sixty and eighty or 70 units. This will somehow depend on what happens in the supply chain because there are certain disruptions and some shortage of supplies. But we believe that we will be delivering 60 units for sure by the end of this year. So Indra and all of its partners are doing their best within our reach in order to deliver on that goal and I’m sure that we will be successful in this delivery. Thank you.

You for the presentation. Carlos Revino from Santander. Have two questions. The first question concerning MINSIGHT. I would like to know whether the sale of payments is closed this morning we read that maybe Minsight will be selling other businesses.

Will this mean that you might be divesting or restructuring some businesses that do not add much value? Will this mean that you might divest in certain countries? The second question is concerned with inorganic growth possibilities. You are analyzing the possibility of cutting out more than 20 acquisitions. From a financial perspective, from an M and A perspective, would you maintain the guidance of not surpassing two times your net debt EBITDA ratio?

Do you think that you can resort to a share capital increase should the time come or might you buy more shares if you do not surpass that threshold?

Jose Vicente de los Mucio, Chief Executive Officer, Indra: Well, let’s start with Minsight. Well, I think that the Chairman has mentioned this many times and myself as well, Minsight’s not for sale because we believe that here there’s potential for growth and also potential to support the other divisions in the group. And there are certain technologies that we cannot lose because they’re necessary. Having said that, we mentioned that in Minsight, we’re going to move towards a greater added value. And evidently, with a new management team, we are also undertaking three sixty degree transformation.

In terms of payments, well, that does remain open. Why not? What about BPO? Could that be open? Well, why not?

Could there be a geography that is not strategic? Well, this forms part of an ongoing strategic analysis. But the reference is clear. It hasn’t changed. MidSight will be part of the Intra Group, and all the technologies will work for the rest.

From that point forward, clearly, optimization can be carried out in all areas of the business. But depending on the proposal that is presented and the opportunities, well, we will be open. And as regards inorganic growth, we mentioned this in the plan. We said €6,000,000,000 by the year 2026, 300,000,000 organic and the rest inorganic. The inorganic growth will probably be achieved by the end of the year, and I’m always pushing the financial divisions in order to instead of achieving 200, let’s get to 5.2.

But let’s continue to try to drive that. And in terms of inorganic growth, I mentioned this earlier. We have to be present in markets. We have to be capabilities. And what we want to do is to provide value to our shareholders, and on that basis, we’ll be open to any opportunities.

And the elephants in the room that everyone seems to see, Escribano. Well, Escribano is a company that, before the chairman arrived, was one that we were actually looking at before. And as CEO, the first thing that I did once we carried out a detailed analysis was to present this to the board of directors. The decision was taken unanimously, and we decided to set up a committee for this. We this is a company that’s listed on the IBEX twenty five, and we also adopted a unanimous decision in this regard on the board.

I’m not sure whether this type of operation will end up going one way or another. Like many other transactions, you know, we wanted to lower indebtedness by the year 2026 and to improve our EBITDA. But since this the the we’ve advanced the plan, we’re more or less six months further along in this plan. But as the chairman mentioned, when we present the 2025 results, we will invite you to a Capital Markets Day not to explain this, but also how we will achieve 10,000,000,000 in which businesses with what margins, what markets, with what products, because we’re already starting to work on this already. I said this earlier.

We have a company here with tremendous potential. The potential is truly impressive. If we didn’t have this impressive talent in the company, we couldn’t move forward with this pace of transformation in the intergroup. And we’re open to opportunities. We’re an industrial company, and we focus on managing the company and achieving greater value possible for our shareholders.

If an operation makes sense, that’s the way it is. And that is my responsibility as the CEO to present the best proposals to the board to benefit the company as much as possible.

Ezequiel Nieto, Director of Investor Relations, Indra: I have two questions. The first question, Juan Canobas from Alantra Equities. So question number one is concerned with land vehicles. You have reached an agreement with Reimetal and we have read that there might be a joint venture between Reynaldo and ReyMetal. So could you please give us more color on this matter and how things are evolving in this respect?

And the second question, you mentioned that before during your presentation Jose Vicente is concerned with free cash flow. Now you have 33% but then we’re moving to the industrial phase, this percentage might change. So if there is a partner to the consortium that might say that they claim 80%, how are you going to cope with that? Do you think that this project might be at stake? Thank you very much Juan for your question.

In fact, we have controlling interest in TES. This company serves a purpose. The purpose is clear. It was built for VCRA by eight and VAC. It might serve a different purpose in the future.

That’s a possibility because both programs guarantee a certain workload in terms of the unit numbers and also over time because we would need between eight to ten years to produce all these units. There would be three phases for each model of vehicles. So we will have to build 2,000 vehicles approximately in aggregate and that takes time. So this project might take between ten to twelve years. But we would like to cover other options with other partners.

Indra is a company that respects all of its partners. We have three partners, three reference partners in test, but there are other players and we have armed forces that seek products of different brands. Indra’s DNA is about building these synergies with other companies. Therefore, these technology players maybe do not want Lee, they want other players. So Indra is a company that thanks to the products that we produce and this is of course the core supporting our foundation.

We can never have an exclusivity agreement because we have a multi platform product. Therefore, understands that we have land vehicles, that we have tests. On the other hand, whatever might come in the future, we cannot rely on a single reference manufacturer.

Jose Vicente de los Mucio, Chief Executive Officer, Indra: As regards FCAS, I mentioned before that Europe needs this generation type of aircraft. There are three countries, Airbus and three companies. Indra is not a a or Airbus and France. And it took well, there’s there’s a company that’s been in France operating there for thirty six years. What I can tell you is that Spanish money has the same value as French money and German money.

And it’s clear we’re not going to make a unique aircraft. We’re not experts, but the systems for which Indra is responsible for, well, we can make those as well or better than us or or Airbus. And we’re going to ensure that our percentage is value is maintained. What about the decision in phase two? Well, that doesn’t depend exclusively on Indra.

As you know, there are three countries in which this is distributed. And depending on how this evolved, we’ll actually exactly see what work is assigned to us. But our work share and our money is as good as the money of France or Germany.

Ezequiel Nieto, Director of Investor Relations, Indra: If you could allow me, let me add. That this is something that we are not reflecting fully. Actually, are asking for 80% of one portion of the aircraft, not 80% of the entire program because Jose said, 33% of Spanish money is worth as much as 33% of French or German money. So there is this company, Dassault, that feels that is quite strong. So everything that is concerned with structure that is part of their core business.

But the critical components that Indra provides, well here we need to split this up into three equal shares. It’s as if there are three friends going to dinner at the same time. Well, they will share or split up the bill. This would happen with FCAS as well. Thank you.

Thank you. Carlos from Caixa, BPI. I have two questions. You spoke about a positive contribution of Eurofighter in the first half. What about the outlook for the second half going forward?

And what about the new order placed from Turkey might be outside of the scope of the backlog, the one that you said that could double over the period? And the second question is the following. You have spoken about IndraMind development. What’s the role that it has in the organizational structure of Indra? Would this be like a cost center for technological development to provide technology to the rest of the divisions, whether we talk about Ispasat satellites or cybersecurity to main site?

Or would this be a revenue generating unit with its own contracts, with its own public cybersecurity contracts or any other contracts? Well, as far as Eurofighter is concerned, we are in line with the target set for this year with revenue between two fifteen million and $220,000,000 foreseen for 2025. Therefore, above the amount reported last year amounting to EUR 200,000,000. We were able to post EUR 312,000,000 more than last year.

Jose Vicente de los Mucio, Chief Executive Officer, Indra: And this regards IndraMind. Well, we had a meeting yesterday with Ignacio, the representative of IndraMind, Luis from Insight, and Sebastian from technology. We’ve got till the end of the year to make a decision. What’s important, the rules of governance here? Because currently, well, the vendors are in men’s sight, and they’re in contact with the client.

So IndraMind incorporates cybersecurity defense, which also have a product and a service that they have to sell, but at the same time, they’ve also got to develop that platform. And that platform must also be supported by technologies and AI. But before we start asking whether this is a division or a p and l, we have to define the rules of governance. And we’re going to also determine exactly how each service is going to be paid for, and we’ll do so over the coming months. And by the end of the year, depending on business and how business goes, we will decide what the best way to report back on this is.

But I always like to start with the the groundwork here and to explain how we’re going to work and who’s responsible for everything. I’m convinced that Minsight is a differential element in our product portfolio, which will be developed by Instro over the coming years. And this is why the foundations have to be very, very firm and and consolidated. And that’s the reason why I would always like to start with the rules of governance.

Ezequiel Nieto, Director of Investor Relations, Indra: David Lopez from JB Capital. I would like to ask about air traffic. There was a strong growth reported over the quarter. Is this due to one off or a recurring contract? What’s your outlook in this respect?

And what about margins? Because margins were very positive. Do you think that this can be sustained over time? I’m talking about LV time margin.

Jose Vicente de los Mucio, Chief Executive Officer, Indra: Well, humbly speaking, Indra’s got the most advanced ATM technology. We’re in Canada, and also we’re working with iTech. So actually getting into the airports in Paris, well, we have an advanced digital solution. There are other things that I can’t reveal, but these are things that will actually really determine the way in which the we will transform in this respect. And at present, Indra is the most advanced company in this respect.

And we’re driving and striving to achieve global leadership. I can’t give anything away yet, but we’re working with the ATM team to achieve that. But to achieve that, there’s a clear differential element. We need to have the right product. And in air traffic, we are a benchmark in this respect.

And this is the reason why we are actually being awarded so many projects because we really set ourselves apart in terms of products with respect to our competitors. So

Ezequiel Nieto, Director of Investor Relations, Indra: we now open the floor for questions from those who are connected remotely. I don’t know whether we have much time left. Maybe we can allow one or two questions. Thank you. Our first question comes from the line of Dizika Agrawal.

Dizika Agrawal, Analyst: Thanks for taking my questions. The first one is basically on MedSafe. MedSafe for the first half grew like low single digit. And I think the indication is more this division to grow closer to mid single digit for the year. So what are the dynamics that are in place, which gives confidence around the dynamics in this particular segment?

And the second one is mostly following up on the question on Air Traffic Management. I think the margins were from what we understand EBIT margins were a bit lower in the second quarter despite like strong revenue. What are the puts and takes that we should be mindful of regarding that?

Jose Vicente de los Mucio, Chief Executive Officer, Indra: Yes, I would like to refer to Minsight. I think we mentioned this already. And it’s 1.2% in sales, and we hope to maintain that level. It’s more about technological or digital solutions which offer greater added value. That’s what we’re working on.

And also, let’s say, the cross cutting nature of technologies through the rest of the group. When I look at defense sectors, and I saw this in FinDEF, which is a Minsight competitor, and they’re working on the digitalization of defense, and Minsight has not done very much in this respect. Well, I don’t like seeing those type of things. This is the reason why I believe there’s strong potential. If we can work on that value added digital offer and we can work on the potential support of digital services to the other divisions, I think that we’re confident that we will achieve that growth by the end of the year.

So I think that those two levers are fundamental. And as regards air traffic and margins, well, this depends very much on the deliveries. We’ve, you know, won the contracts in Colombia and also we have done well in Germany. But rather than in the case of air traffic, we shouldn’t focus much on so much on the quarter but on the year because the mix of deliveries and milestones can vary. What’s important here is to look back in time.

And as I said before, in air traffic, if I compare the situation when I joined the company, air traffic revenues were EUR $321,000,000. By the end of the first quarter, it was 519,000,000. That’s an increase of 62, and it’s thanks to its good product range. And the EBIT’s increased from 37 to 65%. That’s a 74% increase, which is almost one percentage point.

For me, as I said before, our teams work based on three sixty degree analysis, how we can improve capabilities, our products, and how we can standardize processes. For example, in the case of deliveries, we’ve established a S and OP process, which comes from the automotive sector where all of the different departments, quality and engineering, would work every single month through different meetings, determining the frequency of sales, the frequency of sales, and the frequency of our designs. And what this means is that we’re able to increase our reliability and our sales processes and also development.

Ezequiel Nieto, Director of Investor Relations, Indra: There are no further questions and comments. Therefore, we close this presentation of results and the Q and A session. Thank you very much for

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