Earnings call transcript: Quadient Q4 2024 sees steady revenue growth

Quadient SA (QDT) reported its financial performance for the fourth quarter of 2024, highlighting a modest increase in revenues and current EBIT growth. Full-year revenues reached €1,930 million, marking a 2.8% increase on a reported basis and a 0.4% organic growth. The company also noted a significant rise in subscription-related revenue, now accounting for 71% of total revenue. According to InvestingPro data, the company maintains healthy profitability with a 74.17% gross margin and trades at an attractive P/E ratio of 9.57x. Despite these positive developments, Quadient’s stock saw a slight decline of 0.99% following the earnings announcement, closing at €16.08, trading near its 52-week low.

Key Takeaways

• Quadient’s full-year 2024 revenues increased by 2.8% to €1,930 million.
• Subscription-related revenue now constitutes 71% of total revenue.
• Digital business experienced a robust 7.7% organic growth.
• Stock price fell by 0.99% post-earnings announcement.

Company Performance

Quadient’s performance in 2024 demonstrated steady growth, particularly in its digital and subscription businesses. The digital segment saw an impressive 7.7% organic growth, while the mail business faced a 2.5% organic decline. The lockers business contributed €94 million in revenue, growing by 4.3% year-over-year. These results underline the company’s strategic focus on digital transformation and subscription services, which continue to bolster its revenue streams.

Financial Highlights

• Revenue: €1,930 million, up 2.8% year-over-year.
• Current EBIT: €146 million, reflecting a 2.2% organic increase.
• Subscription-related revenue: 71% of total revenue.
• Digital business growth: 7.7% organic.

Outlook & Guidance

For deeper insights into Quadient’s financial health and future prospects, InvestingPro subscribers can access comprehensive analysis, including Fair Value estimates and detailed financial health scores. The platform’s exclusive Pro Research Report provides in-depth analysis of Quadient’s market position and growth potential.

Looking ahead, Quadient expects an acceleration in organic revenue and current EBIT growth in 2025. The company aims to achieve a 1.5% organic revenue CAGR and a 3% organic current EBIT CAGR from 2024 to 2026. Quadient also targets €1 billion in subscription-related revenue by 2030, with the lockers business aiming for a 10% EBITDA by 2026.

Executive Commentary

CEO Geoffrey Godet expressed confidence in Quadient’s trajectory, stating, "We successfully met all our financial targets for the year." He emphasized the steady growth in subscription-related revenue and maintained a cautiously optimistic outlook for 2025.

Risks and Challenges

• The mail business continues to decline, posing a challenge for future growth.
• Economic uncertainties and potential market saturation could impact revenue targets.
• Competitive pressures in the digital and parcel locker markets may affect Quadient’s market share.

Q&A

During the earnings call, analysts inquired about the profitability of the Package Concierge acquisition and the seasonality affecting Q1 performance. Quadient confirmed that Package Concierge was already profitable in 2024 and discussed plans for potential future acquisitions to bolster growth.

The overall sentiment following the earnings call remained cautiously optimistic, with Quadient’s strategic initiatives and focus on digital transformation positioning it well for the future.

Full transcript - Quadient SA (QDT) Q4 2025:

Anne Sophie Jugend, Head of Investor Relations, Quadient: Good evening, and welcome to Quadient’s full year twenty twenty four results presentation. I am Anne Sophie Jugend, Quadient’s new head of investor relations. Today’s presentation will be hosted by Joffre Gaudet, CEO and Laurent Du Passage, CFO. The agenda for today’s call is on slide three. As usual, there will be an opportunity to ask questions at the end of the presentation.

You can submit your questions in writing through the web or ask questions live by dialing into the conference call. Thank you very much. And with that, over to you, Geoffrey.

Geoffrey Godet, CEO, Quadient: Thank you, Anne Sophie, and welcome. Good evening, everyone. Let me start by highlighting our key achievement for 2024. So first and foremost, I wanted to share that we successfully met all our financial targets for the year. We delivered EUR 1,930,000,000.00 in revenues, up 2.8% on a reported basis, and up 0.4% on an organic basis.

Our current EBIT for the period was EUR 146,000,000. This represents an organic increase of 2.2%, mostly driven by significant improvement in the profitability of our digital and locker automation platforms. Beyond the financial performance, we have also successfully started to execute our strategic roadmap, as you know, elevate to 02/1930 that we have announced in June. Our digital business delivered robust growth in both subscription related revenue and profitability. We also continued to expand our subscription based revenue model, and we’ll get into more details today with you.

And we also launched the share our share buyback program, which demonstrate our confidence in our value creation potential. And finally, additionally, we successfully raised approximately €325,000,000 in new facilities to refinance our 2025 debt. Last but not least, we completed two acquisition this year, one in mail and one in lockers, both reinforcing our leadership and setting the stage for future revenue and EBIT growth. Turning to Slide six, the highlight of our full year results. As mentioned, we delivered strong double digit growth in subscription related revenue for both digital and lockers, reinforcing the rapid expansion of our subscription based model, which now represents 71% of Quadrant Total revenue.

With one third of our 90,000,000 subscription growth 2026 target already secured, we are now well on track to hit our 2026 objective. Moving to profitability, 2024 mark two major milestones. Digital EBITDA margin surged to 17.5%, up almost six points year over year, putting us firmly on the path to exceeding 20% by 2026. Locker’s reach EBITDA breakeven, meaning that all three solutions are now EBITDA positive. I think it’s a testament to the strength of our operational execution.

2024 delivered a successful start to our twenty twenty three-twenty twenty six financial roadmap. We’ll now move into the details of the performance by solution, and let’s go to Slide eight. And let me start by showing you the longer term track record of our digital business. On this slide, we have shown the evolutions of the key financial and operational metrics of our digital solution over the past five years combined. So starting with the revenue on the top left hand side of the slide.

The graph speaks for itself. It has been a constant and steady increase in revenue quarter after quarter, driven by the successful adoption of our digital automation platform by our customers in The U. S. And in New York mostly. Our subscription related revenue has increased by an impressive 19% CAGR on average per year over the period.

So along this solid product placement trend, the transition to SaaS has led also to an increase in the share of subscription related revenue from 59% in 2020 to now more than 80% this year 82% this year. Similarly, if we look at the bottom left, the ARR growth, which is more forward looking indicator as you know of future subscription revenue growth has now increased from EUR 109,000,000 at the beginning of the period to EUR $230,000,000 over the period, which represents in itself a CAGR of 16% over the period. On the bottom right side, now let’s go to the share of SaaS customers, which also has grown significantly and which reflects naturally the change to our SaaS digital automation platform. Now let’s move to the top right side. Let’s review the EBITDA evolution.

It shows a low point early twenty twenty two, which is the combination of the impact at the time from a change of business model that happened over time, and our investment in accounts receivable automation and account payable automation after, if you remember, the acquisition of Vipay and Beanworks respectively in 2020 and 2021. Most importantly, the regular and strong EBITDA margin over time is the reflection, I believe, of two three main things. The growth of the subscription and the usage naturally from our customers of the platform. They use the platform more and more every day. Steady and regular gains in productivity from the teams.

If we take a metric that is fairly relevant, we had a 60% increase in employee productivity since the first semester of twenty twenty one. If we measure if we take the full ARR and we divide that by the numbers of FTE, it’s AR by FTE ratio, which represent a 60 increase in productivity. And finally, the benefit of not only having our enterprise segment at scale, but also our fast and growing SMB segment is also now contributing to this improvement. Moving now to 2024 accomplishment and focusing on what happened last year for a digital automation platform. Quadient has been recognized for having the fastest growth among the major customer communication management vendors globally, capturing more than 30% of the market growth in size in 2023 according to the latest SEC report.

On a different topic, we are incredibly proud to continue delivering the fastest growth among all major vendors in the CCM market, and we believe this achievement speaks to the trust that our customers place in us. Additionally, and again this quarter, the last quarter, Q4, Quadrant has been recognized by multiple software industry analysts for its different modules of our platform. In the latest report, Quadrant is again on the top right hand corner, as we could see on each of those charts, among the leaders of the major players and whether this is for account payable automation segment, the account receivable automation segment, but also our customer communication segments. These awards are just examples amongst the many that we have recently received and over the years, highlighting the strong positioning of Quadrant as the best of suite in the SaaS industry today. So turning to Slide 10.

Our strategic approach from a go to market perspective is based on two pillars: acquisition of new customers on one hand and expansion within our base of existing customers. In terms of customer acquisition goals, digital continues to demonstrate a strong commercial momentum. Over 2,600 new customers were added in ’24 alone, since in particular to the robust cross selling with our male customer base and such, especially in North America this year. Digital also delivered a strong fourth quarter with several key deals secured in The U. S.

With one of the largest law firms as well some large HR technology companies. Additionally, a new partnership was established with Avalloc, a core banking software provider and a partner for us that delivers customer communication management capability to the financial service industry. For customer expansion, our upselling has been going fast, as I’ve shared with you over the years and contributing more and more to our whole booking with notably also our payment automation services that has been expanded at more than 20% in ’24 versus the previous year. To further expand with our existing digital customers, I want to remind everybody that innovation within the platform plays a key role. In the last twelve months, naturally, AI has been at the center of many visible innovation we have provided to our customers.

One example I want to share with you is now the high level automation provided to create templates and to write content. And this is a big deal because it saves so much hours to our customers. We also added key capabilities with the integration of Repay for direct suppliers invoice payments in The U. S. And Canada as we had signed the partnership a while ago.

And we also have made more progress with new electronic invoice formats such as the UBL, it’s a bit more technical, the CII of the Fatur X to align with the upcoming European invoicing regulation. With that, Laurent, over to you.

Laurent Du Passage, CFO, Quadient: Thank you, Geoffrey. Good afternoon and good morning, everyone. I’m Laurent de Passage, I’m Quiddon’s Chief Financial Officer. So digital represented million of software revenue for Quaidant this year. It’s an organic growth of 7.7% for the year, which has been accelerating over H2.

H1 was 5.9%, Q3 eight point seven %, Q4 ten point one %, also resulting from the convergence between recurring and non recurring revenue growth. Now, I’m continues to be very dynamic, thanks to cost and upsell. The annual recurring revenue has grown by 12.7% to reach million with a limited impact of currency on this figure. This high top line has allowed for a swift increase of EBITDA from million to million, as you can see on the right hand side. With more than 19% of EBITDA margin, just in H2, we delivered very close to 20% mark that we set for 2026.

This is thanks to the maturity of the platform. You typically get additional incremental revenue with gross margin at more than 85% and the limited additional OpEx required in absolute value. Moving now to Slide 12. Moving forward, our digital business still is positioned on a very well oriented market, expected to grow at 10% per annum over the period and will worth 9,000,000,000 by ’27. Quadrant is well positioned to capture this market growth opportunity in the future, notably thanks to a large and sticky customer base, its 16,000,000 new customer 16,000 sorry customer in digital today, metrics like churn below 5%, our net retention rate for the sustainability of our installed base.

And those are positively oriented. A highly recognized platform exposed internationally with 50% of the business in North America and 40% in Europe. And finally, a scalable and modular platform with strong bookings increasing by 34% just in Q4 and NAR growing by 12.7% in 2024 with strong direct and indirect go to market organization. Over to you, Nao Joffre, for our Mail business.

Geoffrey Godet, CEO, Quadient: Thank you, Laurent. I have already emphasized how innovation is at the core of Quadient. It is our innovation that delivers a strong return for our customers, but also for investors. And this is also relevant to our mail business, where we continue to evolve and meet the changing needs of businesses all over the world and for all size of customers. In December, we launched SimplyMail in Europe.

It’s a solution that is really tailored to the growing demand for mail automation among the small businesses. SimplyMail is a very intuitive SaaS platform, again, right, that enables businesses to send physical mails, registered letters, but also parcels with just a few clicks and such from their existing digital workspace. We believe that today it offers unmatched flexibility and efficiency without requiring any complex IT systems or additional support that small customers don’t have the time and the money to spend. So this is really an ideal scalable solution for small business looking to optimize their operation very simply. Another example, in addition, we also introduced our latest cutting edge solution, which we call the Max seven.

It’s a color digital envelope printer, and it’s very specifically designed for the high volume envelope printing, which enables a significant reduction in cost per print versus what is being offered on the market today. Turning now to Slide 14. So Quadrant Smelt business continues, and I want to stress that again, to outperform the market, right. It’s been several years we continue to perform the competition. This is the result of the effort in delivering exceptional customer satisfaction to our large customer base, as well as a contribution from the gain in market share that we have with new customers, for which we continue to deliver.

Customer expansion is the main driver today, naturally, considering the large size of our mail customer base of our revenue, and it’s backed by an exceptional 95.7% satisfaction rate. And naturally, a strong cross selling momentum, especially in The U. S, where we have record breaking placements of digital solutions that has been achieved in particular in the last quarter of twenty twenty four. In the same quarter, geographically, if we look at some differences, our commercial performance was strong in North America, where the ongoing U. S.

Manning System decertification for Southern Catagazer product provided a temporary boost in 2024, though we do expect this impact to conclude naturally probably in the first quarter of twenty twenty five. Looking ahead, Quadrant is actively working to upgrade Frama install base, right? Frama is the Swiss player or European player that we have acquired a year ago, and we expect to drive as well cross selling opportunities and positioning our digital solution for a broader adoption among pharma customers.

Laurent Du Passage, CFO, Quadient: Laurent? Thank you, Geoffrey. So revenue for mail came up at million. It’s a 2.5% organic decline, and it’s up 0.4% reported, thanks to a recent acquisition from our consolidated since first of Feb twenty twenty four. Mail business continues to outperform our main competitor despite Q3 and Q4 high comparison basis, leading to a decline of 4% for both Q3 and Q4.

Performance in full year and subscription related revenue continues to stand above the CAGR of the CMD over three years. Turning to the EBITDA margin for Mel, it stands at 27.4. It’s down 2.5 points compared to last year, where in H1 it was declining by three points. EBITDA stands at million for the year, and this business remains highly profitable and it’s above 25% threshold we have set to 26%. The EBITDA decline compared to last year is explained by higher hardware and revenue mix, the dilutive impact of Frama improving over H2 and finally, the short term cost of the desertification, which has been continued this year in The U.

S. Back to you now, Joffre, for Parcel Lockers.

Geoffrey Godet, CEO, Quadient: So turning to Slide 20 and our locker business. Just as a reminder, in December, we announced the acquisition of Paques Concierge with the aim of further reinforcing our leadership in The U. S. Multifamily local market, where we now believe we come in approximately 40% of the market share and naturally continue to be the leader of this market. This move, the strategic move, combined with our accelerated installation effort in The U.

S, right, has driven quite a global locker network to approximately 25,700 units at the end of twenty twenty four. This is a significant increase from the little bit more than 20,200 units exactly at the end of twenty twenty three. This naturally includes around 3,000 units that came from the Packages Concierge acquisition and reflects as well a strong acceleration in deployments, particularly in The UK, which was fueled by new strategic partnership securing Premium Locust location. So now turning to Slide 17. And our Package Concierge acquisition.

In December 24, we announced the acquisition of Package Concierge, and that company was specializing in innovative digital locker technology designed to tackle the growing challenge of package management across not just the residential, as I mentioned before, but also commercial retail and university campuses in The United States. With a team of roughly 40 employees, Package Concierge generates 50% of its revenue from subscription, offering a combined hardware and software platform with a strong foothold in The U. S, Northeast in particular. This acquisition represents a unique opportunity for us, right, for Quadion to solidify our position as the undisputed leader in The U. S.

Multifamily and local segment, securing approximately 40% of market share. The deal also brings optimal geographical complementary and is expected to generate synergies with Cogent’s existing software infrastructure, install base and operation. Ultimately, these moves accelerate Quadrance Locker’s revenue and profitability trajectory, advancing progress towards the company 02/1930 ambition of reaching more than 40,000 installed lockers. Moving to the next slide, on customer acquisition. The graph on the left highlight the strong acceleration and lockers installation across Europe open networks since January 23, so since last year.

With the installed base that has been growing by 145% year on year and such primarily in France, but most importantly in The UK. This growth is fueled by strategic partnership, as I mentioned earlier, with very premium location. And what I mean by that is location, including, for example, Morrison’s daily stores and Scottsdale. If we now move to the customer expansion, the graph on the right highlights the increase in volume in European open networks alone. That volume have surged fivefold.

Let me repeat, fivefold since the end of twenty twenty three, and that is the result of a strong pickup and drop off adoption within the local base. Momentum in North America remain also quite robust in Q4, particularly in the Multifamily and the University segments. Meanwhile, in Japan, macroeconomic condition have impacted somewhat the overall parcel volumes, but new initiatives that we have taken, such as a strategic partnership with ChapinPost, another key player locally, our aim to drive growth and boost adoption as well. With that, I will now hand it over to Laurent to walk you through the financial result of the Locker’s business in more details.

Laurent Du Passage, CFO, Quadient: Thank you, Geoffrey. Revenue for Parcel Locker stands at EUR 94,000,000 this year. It’s up by 4.3% over the year. When you remember, we were declining by 2.5% in H1, which means a strong recovery has happened towards H2 with a double digit over the period and just plus 8% in Q4. This affects the strong volume ramp up in The UK as well as the momentum in The U.

S. Notably on the usage. This translates to a 20% subscription rated revenue growth in Q4, as you can see in the graph. Total revenue figure for Q4 also included million of packet concierge consolidated into the total revenue figures. Hardware sales have been impacted by lower level of installation in U.

S. Than last year. However, H2 overall, hardware has been growing year over year. As mentioned earlier in ’twenty four, locals’ EBITDA has turned positive over the full year ’twenty four, an improvement between H1 and H2, as you can see on the right hand side, reaching 6.7% in H2, has been material. This is thanks to the recurring revenue improvement, including the increased usage.

Moving now to slide 20. I will now go through the key financial figures at group level. Slide 21, as mentioned by Geoffrey, the review stands at 1,930,000,000 and when it was $1,620,000,000 just a year ago. It’s about $30,000,000 more in absolute value and 2.8% growth reported. You can see the positive effect of scope, million, the bulk of it being explained by Framer and to a lower extent, Delight and Packet Concierge that is included for six weeks here.

On the other hand, you have an almost neutral currency effect, higher dollars versus euro in Q4, conferencing the Q3 that was adverse. Organic growth in the middle of the chart is showing 0.4%, thanks to an acceleration of both digital and lockers in H2, moving from 5.9% and minus 2.5% in H1 to around 10% each in H2, partly offset by decline in mail in H2. Moving now to slide 22, to review the same bridge, but with profitability. So the reported current EBIT stands at million. It’s almost flat compared to last year from a reported standpoint, but growing 2.2% organically, SCOOP effect being unfavorable due to FAMA and Delight.

Digital and lockers together are bringing more than million of EBITDA than last year, more than offsetting the million drop of EBITDA in Mail. Conversion from incremental top line in digital and lockers to EBITDA is huge, as you can tell. Not having digital, thanks to the strong margin of incremental revenue of and contained as well OpEx evolution between the two years. Moving now to slide 23. If you look at the current EBIT evolution over the years, you can see that as promised in 2021, we have proven our capability to our current EBIT while transforming the company at the same time.

Let’s now move to Slide 24. I will now move on to group financials. In Slide 25, the slide presents you with a summary of the full year result. You find the same information as listed before is the billion of revenue for the period and a 0.4% organic growth, broken down by solutions, as well as the details of the EBITDA by solution. The revenue speed is also detailed by region and continues to show North America is overperforming the rest of the regions due to main market being better oriented, but also growth engines representing a larger share of the total revenue.

International is impacted by twenty twenty three large deals, explaining most of the decline. Let’s turn now to the P and N on Slide 26. And net attributable income stands at million compared to million last year. And this is despite the significantly higher cost of debt due to the higher interest rates and higher optimization expense, notably due to the pharma integration, which is offset by the net income from discontinued operation, which is close to zero and which confirms the assessment we’ve made last year on the fair market value of our Italian subsidiary, HealthForce. Turning to the cash flow statement now on Slide 27.

Free cash flow generation is slightly higher than last year at million despite the higher interest and tax paid and an adverse effect of leasing portfolio as well as stronger CapEx than last year. This is thanks to good EBITDA level, lower variation of provision and significant improvement in working capital change this year, plus $9,000,000 Acquisitions net of divestments reflects Frama and Packet’s concierge acquisition in ’twenty four, where it was delayed back in ’twenty three. Moving now to Slide ’28. The level of CapEx is increasing in locals due to the important rollout in UK in ’twenty four, as detailed by Geoffrey. Mail CapEx is declining in absolute value as expected, however, still high due to the continued high placement of machines related to U.

S. Decertification again in ’twenty four. Digital CapEx is up by million compared to last year, which is mostly linked to the R and D and platform development. Let’s turn now to Slide ’29 and the debt situation. The net financial debt for the year stands at million compared to the million last year.

It’s mostly due to the balance between the free cash flow and acquisitions, dividend and share buyback, but also scope and 4x during the year. Despite those effects, you can see the leverage ratio is relatively stable, thanks to a robust EBITDA. Turning now to Slide 30 on our financial position. So we have successfully raised million of new facilities in ’twenty four, notably to ensure the reimbursement of the bond, in green in the chart and the Shushein in February 2025. At the February, the average debt maturity has increased from three to four years compared to January.

We have no major maturity until H2 twenty six and we still have million of Honduran facility that is maturing in ’twenty nine, as well as million of customer leasing portfolio. It’s up year over year since it’s the first time since many years. This concludes my review on the financial. Back to you, Geoffrey, for the conclusion.

Geoffrey Godet, CEO, Quadient: Thank you, Laurent. For the full year 2024, moving to Slide 32, Quadrant will propose a dividend of $0.7 per share, marking an 8% increase from 23% and reflecting a payout ratio of 31.136.1% of the net income, which I want to remind everybody, it’s well above the group minimum threshold of 20%. This I want also to point out, this represent the fourth consecutive year of dividend growth with a $0.05 year on year increase. Naturally, subject to the approval of the Annual General Meeting on 06/13/2025, the dividend will be paid in cash expected to be paid in cash on August six of twenty twenty five. Additionally, as we touched upon that earlier in the presentation, Quadion launched a 30,000,000 share buyback program in September of twenty twenty four with an estimated 10,000,000 worth of shares already repurchased, €10,000,000.

The program set to be executed over eighteen months, and the regular increase in dividend underscores our confidence and our capacity to deliver our Elevate to 02/1930 strategic plan. And it also reinforced our company our commitment as a company to our capital allocation policy, It supports our 2026 leverage ratio target as well, and naturally, will ensure that we enhance shareholder returns. Turning to Slide 33, which will wrap up our key achievement of the year. Our Elevate to 02/1930 plan is off, we could say, to a powerful start. We’ve got a strong momentum across the organization.

Before I wrap it up, I wanted just to focus with you on a few selected additional key milestones among the one that are presented in this slide. Quadient has been also delivering an unmatched customer centric platform, as we mentioned, combining complementary services through what we believe today is a cutting edge intelligent automation capability. But that’s on the feature and capability side. If we look at one thing that I think differentiators today on the market is obviously our large customer base and the business that we generate from that customer base. And we would not be able to do so if we didn’t have a customer satisfaction that was exceptionally high.

And this year, we reached 94%. We have a churn that is at an industry low level, and that reflects the strength and loyalty of our customer base, which is essential to ensure we could generate upsell and cross sell successes. As you know, we also go to market with a recurring business model, which allows us a higher predictability of our revenue over the long term. So our subscription related revenue has continued its steady growth, as Laurent mentioned to you. It has reached million in 2024.

This represent a million increase from a year over year, and that obviously is allowing us to progress towards our billion target of subscription related revenue that we’re going to achieve by 02/1930. I want also to spend a little bit time to turn to our ESG engagements that are fundamental. Our near term and net zero targets have now finally officially been approved by SBTI, so it’s a major step. And then, obviously, it’s the reinforcement of our dedication to all the climate actions that we’re taking. Our ESG leadership was also, I think, further validated on the market as we have obtained, and we’re obviously very proud and humbled by the platinum rating from AT Finance in 2024 scoring an impressive 82%, which was we still have, even with a high score, a lot of things that we can do to improve.

And profitability, as we mentioned quite a few times for this presentation, is on the rise, as you know, but our digital platform EBITDA margin, again, I want to remind you, hit a 17.5% for the full year 2024, which is already delivering the step up that we committed at the Capital Market Day. So this, generally speaking, reflects the confidence we have in building an intelligent automation platform capable of delivering one more than 1,000,000,000 in subscription related revenue and not just the top line, but naturally converting that revenue and profitability and being able to generate $250,000,000 EBIT by 02/1930. This confidence is also reflected in our outlook for 2025. So let’s move to the next slide. And to give a little bit more context, we obviously had a solid growth trend that was recorded in digital and lockers in ’24.

So the solution mix is at quadrant level, is naturally evolving favorably for us year after year. The two growth engines of the companies are getting weight within that mix, which is driving an increasing contribution to the overall performance year after year, both at the revenue level and the current EBIT level as those two also improve in profitability. On a different level, if we look at market trends, just remind everybody that AI and digitalization remain strong underlying drivers for our solutions and for customers buying our solutions, which is leading us naturally to be confident that positive business trends we’ve seen in 2024 in both digital and lockers will continue. And while we also observe some conflicting trends, we could say, in The U. S, as you all are aware and significant macro, I would call it, uncertainties in the last few months, We believe that our automation platforms, whether it’s mail automation delivery, parcel automation delivery, digital automation delivery, provide at their heart cost and time savings to our customers, making them very essential solution regardless of the economical environment.

And when I also consider the strong booking trends we had across all solution in Q4, we finished ’24 with a good momentum, okay? So when I take all that into account, this is why we remain cautiously optimistic regarding the outlook for the company for 2025 and expect an acceleration in both organic revenue growth and in current EBIT organic growth for 2025 compared to last year. If we look at it in a little bit more details from a quarterly perspective, the quarterly revenue growth is expected to improve progressively throughout the year with a lower or softer performance in Q1 and then moving up to Q2, Q3 and Q4. And naturally, consequently, we also confirm our three year guidance on the 2426 period of a minimum 1.5% organic revenue CAGR and a minimum 3% organic current EBIT CAGR for the period. So I wanted with Laurent and Sophie to thank you, and we’re now ready, the three of us, to take your questions.

And Sophie, you can lead us through the Q and A.

Anne Sophie Jugend, Head of Investor Relations, Quadient: Yes. Thank you, Geoffrey. And we will start the Q and A by answering the questions by phone.

Conference Operator: Thank you. Ladies and gentlemen, We currently have no question in the queue. So as a final reminder, The first question comes from the line of Maxence Durie calling from BNP Paribas. Please go ahead.

Maxence Durie, Analyst, BNP Paribas: Yes. Thank you. Good evening, everyone. A few financial questions for my part, mostly regarding this year. Could you give more detail on what you expect for Ferma profitability?

Is it safe to assume that, normal profitability will not be reached this year, but mostly more next year? And given the lever at Fremont, is it realistic to expect quite a stable EBITDA margin at mail this year? And another question is regarding CapEx. So it was a bit higher last year than anticipated offset, but from asset side. What do you what kind of amount of CapEx are we looking for this year?

Thank you.

Geoffrey Godet, CEO, Quadient: Laurent, I think you’re going to take those two questions.

Laurent Du Passage, CFO, Quadient: I think there are three. Just on the first one, you mentioned the profitability. Was it the Group one or which one?

Maxence Durie, Analyst, BNP Paribas: For Pharma and its impact on Mail. So we understand it was loss making in 2024.

Laurent Du Passage, CFO, Quadient: Yes. So as mentioned during the slide, Pharma is debited this year, has been improving between H1 and H2. We have about $4,000,000 of restructuring cost attached to that acquisition as well. But basically, in 2025, it will produce it will not be debited anymore to the profitability of mail. So we’ve not yet reached the run rate, but we are very well on track to be able to deliver ’25 at level of the rest of mail.

EBITDA, Nelly mentioned what was the perspective for next year. I would say tell you that we don’t guide every year by EBITDA for each solution. Otherwise, it would be a big amount of information. What I can tell you is the 25% that we mentioned at Capital Market Day at the end of twenty six is very much valid, and we will be above the 25 mark, knowing that we are 27.6% this year. And last question was around the CapEx, I think.

You mentioned that we’re expecting a bit less. As you mentioned as well, it’s offset by the sale of the asset. But the 108 is a bit more than what we had last year. That’s correct. It’s mostly local rollout in The UK.

I think it’s relatively expected. And the amount we mentioned over the three year average during the capital back ended, it was about $100,000,000 Again, it’s still valid.

Maxence Durie, Analyst, BNP Paribas: Thank you.

Conference Operator: As this was the first and last question coming from the telephone line, I’m going to hand the floor I’m going to hand it to the studio to take the question coming from the webcast. Please go ahead.

Anne Sophie Jugend, Head of Investor Relations, Quadient: Okay. So now we are going to answer the recent questions. Starting with digital, first question, is digital current EBIT positive?

Geoffrey Godet, CEO, Quadient: Laurent, do you want to answer the question?

Laurent Du Passage, CFO, Quadient: Current EBIT for digital is positive and you have the details in the appendix of the foundation. For H2E, just EUR 7,000,000, I think, on EBIT. That’s what I can see in the slide in the appendix that you can also see, like me, we had published as well during H1 the EBIT for that activity. And I think for the year, we are close to the million mark on the EBIT side. So, yes, positive.

Absolutely.

Anne Sophie Jugend, Head of Investor Relations, Quadient: Okay. And moving on to the next questions on digital. So what is the share of the IR and AP automation revenues within digital revenues?

Geoffrey Godet, CEO, Quadient: So we do not break down anymore the revenue breakdown by modules. For the main reason that when you sell a platform, obviously, the function and the capabilities on one module versus the other ones could be shared. If we take the example of the in invoicing services, the invoice could be received and treated as much on the account payable automation, which is the incoming invoice, as well as the outgoing invoice capability when we talk about accounts receivable. What we could say roughly is that we have 60%, maybe a little bit less, 55%, sixty % of revenue related to our enterprise segment, and that we have, obviously, the delta of 40%, forty five % into the mid segment. Generally speaking, but it’s true also for 2024, the mid segment is going, generally speaking, faster than the enterprise segment And it’s driven mostly by the account payable and account receivable and financial automation and invoicing growth that is also has been the strongest out of all the activities.

That being said, whether it’s the enterprise segment, automate segment or the financial automation activities, they all grow faster than the market trend. We’ve seen the IDC report on the enterprise segment for particular customer communication. We usually in 2023 was three times, I think, the pace of growth of the market. And that’s applicable for the enterprise segment, which is for us between a high single digit to sometimes even above 10%. And the mid segment has generally over the years been more around 20% growth, moving from 15% to 25% depending on the region and the different areas.

And usually, the biggest impact to the growth has been on the financial automation that since the acquisition of Binworks and Yaepe, we’ve been moving from 60%, fifty % in the early days to a 30% growth in usually in that particular part of the segment.

Anne Sophie Jugend, Head of Investor Relations, Quadient: And last question on digital. Could you give us a few details on the software business since the beginning of the year and particularly in The U. S?

Geoffrey Godet, CEO, Quadient: So So it’s a little bit too early to give reviews first. For us, as I remind everybody, our Q1 start in February. So we do not have the revenue, obviously, of March yet completed nor April. And for us, the third month of every quarter is always an important month. What we could say, generally speaking, on the momentum on the activities and the booking is that we finished strongly at the beginning of the year, and we obviously started the year on the software side in The U.

S. The same way. We have not seen yet changes from that perspective.

Anne Sophie Jugend, Head of Investor Relations, Quadient: Thank you, Geoffrey. Moving on now to our Mail division. The Mail division underperformed in Q4. Can we expect the same sharp decline in 2025, especially in H1?

Geoffrey Godet, CEO, Quadient: I’ll take it, Jair.

Laurent Du Passage, CFO, Quadient: I can take it. I’m happy to take it. So again, I’ll put into context of the Capital Market Day. We mentioned at the time of Capital Market Day that the expected decline was around 3% CAGR over the three year period. We delivered minus 2.5% this year.

We know that the H2 was a higher comparison base. We had a large deal for, I think, about 6,000,000 in H2 twenty twenty three. That obviously is weighing on the decline. The perspective that we have for the two coming years again are that the minus 3% CAGR is still very much valid. And we know that we are still overperforming the market, and we are still confident that we can deliver that in the coming years.

And yes, I think it’s important to mention, I think we’ve mentioned it several times with Jofre. The 0% or close to 0% we had over the twenty one to twenty three period is not, I would say, the market trend and the minus 3% is already over performing the market and we are confident that we can continue to over perform the market.

Geoffrey Godet, CEO, Quadient: Can you give a little bit more color in addition to what Laurent shared with you from a quarterly perspective? This is not a business, just an introduction that we measure on a quarterly perspective, right? Because we have the certification activities, as you know, that has been happening in The U. S, for example, in the last year or a little bit more, but our contracts are over five years period of time. So sometimes the performance in one quarter, as Laurent mentioned, is related to a big deal that we had.

It could be related to like COVID was five years ago, so Q1 will be an echo of what happened in Q1 probably 2020. What we need to look at is always the business as a whole on a long term basis or a few years in a row and in particular in one year. So we do expect a year where we’ll have a softer Q1 and then moving up to Q2, Q3 and Q4 for the NERB business.

Anne Sophie Jugend, Head of Investor Relations, Quadient: Thank you, Lucret. And moving on to the second and last question on Mail. Is there a better seasonality in H2 to explain the better results of Mail in H2 this year?

Laurent Du Passage, CFO, Quadient: I mean, usually, we have strong hardware placement on the second part of the year that obviously absorbs more more fixed cost of the business and then obviously has a higher margin, both in percentage and absolute value in H2 than H1. It’s something that you can check and verify for, I think, about every year of the past exercises that we did. So it it must be as well true for the coming years. There is no reason why it would change.

Anne Sophie Jugend, Head of Investor Relations, Quadient: Thank you, Laurent. Moving on now to lockers. Is package concierge already profitable in 2024?

Laurent Du Passage, CFO, Quadient: Yes.

Geoffrey Godet, CEO, Quadient: I like this.

Anne Sophie Jugend, Head of Investor Relations, Quadient: Okay. So moving on to the next question. Okay. So I think it’s on mail, back on mail. Is there an important detrimental base effect at mail due to the end of the deregulation cycle in The US?

Geoffrey Godet, CEO, Quadient: So this was I mentioned that during the first some of the first slide, that this certification in The U. S. Should end and should be completed for us in the first quarter. There could always be extension from the regulator, but this is not something that we expect at this time. And with that activity, naturally, there was also a lot of other campaigns and activities that we’re planning.

So definitely, and we will move back to what we traditionally do in terms of customer acquisition, focusing on obviously taking customers out of the competition, which we do very well, and focusing on the renewal of existing days for 2025.

Anne Sophie Jugend, Head of Investor Relations, Quadient: Thank you, Jofe. Moving on now to questions on financials. Why the debt net the net debt, sorry, is increasing whereas the free cash flow after acquisition is positive?

Laurent Du Passage, CFO, Quadient: So if you look at the free cash flow of acquisition, it was, I think, million in the slide. But on top of that, below that free cash flow, you have obviously a dividend. We paid for million in August. We had a share buyback for close to million, I think million. Obviously, we’ll get all those details in the URD later in the month of April.

And after that, you have also some scope, 8,000,000 of debt that we repaid, I think, for Framat and as well as FX effect because you are basically closing USD ForEx that is a dollar that is quite strong on the thirty first of Jan twenty five compared to thirty first of Jan twenty four.

Anne Sophie Jugend, Head of Investor Relations, Quadient: Thank you, Laurent. Next question, do we have to expect every year EUR 15,000,000 of restructuring costs? Can you explain what is behind these restoring costs? Do you reduce your headcount in the mail business?

Laurent Du Passage, CFO, Quadient: So they are primarily linked to the mail business. But if I had to expand the 15,000,000 this year, there are three main elements. One is the about 4,000,000, and I mentioned that earlier during the presentation, the $4,000,000 of restructuring costs that we had for Pharma that were planned. It was part of the acquisition plan. You have still some restructuring of lease, of real estate lease.

We did reduce significantly our footprint in terms of lease, and we did further reduce it in 2024. So that’s typically like pharma is not likely to happen again. And the last portion, again, is mostly tied to the yearly, I would say, effort that we make on reducing, notably, the mail team to adapt this business that progressively is declining. And this year, as I mentioned earlier, mail has declined by 2.5%. And so the team also has reduced and part of this cost has come to restructuring.

Anne Sophie Jugend, Head of Investor Relations, Quadient: Thank you, Laurent. And now a question on our 2025 guidance. Why Q1 growth should be the lower points of the growth in 2025?

Geoffrey Godet, CEO, Quadient: Sorry. Why is the Q1 expected to be a lower growth versus the rest of the year?

Laurent Du Passage, CFO, Quadient: Jofra, you want to Sure.

Geoffrey Godet, CEO, Quadient: I think it’s a little bit related to what we explained. So there’s an effect on the mail side because of the end of the decertification. And I believe also the echo of the lower activities in Q1 twenty twenty, so five years or later, because at that time, we placed less equipment, so we have less opportunities for renewal. And mechanically, as a result, because those placement of hardware in 2020 picked up throughout the year in Q2 and Q4, the same opportunities for us will equal five years or later and be increasing in their size and giving obviously opportunities for sales guys to engage in the renewal and extension of the contracts naturally. So it’s a very mechanical view.

That being said, we usually have a lower growth rate anyway by quarter. Q1 is always our smallest quarter across solutions, with Q2 and more importantly, Q4 being the highest. But as our revenue subscription and recurring revenue becomes bigger and bigger, we could see that those difference actually by quarter starting to be lower and lower. And Q2 and Q3 will become closer and closer. Q4 is still being the exception where we naturally, because of the renewal timing of most of our customer contract that are signed annually, Q4 remain and will continue to remain usually the largest quarter for us.

Anne Sophie Jugend, Head of Investor Relations, Quadient: Thank you.

Geoffrey Godet, CEO, Quadient: And then sorry, because a little more detail on seasonality, why Q4 is also a bigger quarter than Q1 and why Q1 is also the lowest one. On the local side, we also have a seasonal effect on the usage, where in the last quarter of the year, usually because of the high seasons of the e commerce activities related to the holidays, we have more usage on the platform. And as we’ve seen that year after year with a lower Q1, just on the usage side, has a much lesser impact in terms of maturity for the size of the Google. We always have little bit lower growth as a result. And we have similar seasonality on the platform on the software side as well, where the usage on the platform is differentiated by quarter.

So that, generally speaking, explain why we as a when we look cumulatively across the three solutions, while we have a Q1 that is expected to lower and build it up from there in Q3, Q3 and Q4 naturally.

Anne Sophie Jugend, Head of Investor Relations, Quadient: So thank you, Geoffrey. And going back to Locals, who has evolved the revenues at your Japanese JV?

Laurent Du Passage, CFO, Quadient: So we don’t disclose typically the details of revenue by legal entity. Otherwise, we have no information to give. So we don’t share the JV typically revenue evolution one year to another, except if it would have been significant to expand the total, which is that time.

Geoffrey Godet, CEO, Quadient: What we could say is that we have that new activities, which obviously outside of just Yamato, a long standing relationship, and we continue to have them as a customer as part of the JV, not just as a partner. But beyond the contribution from Yamato, we have opened new flows, new activities with new carriers, in particular, as I mentioned, Japan Post, but we will also see a higher contribution from the C2C activities in this market.

Anne Sophie Jugend, Head of Investor Relations, Quadient: Okay. So now moving back to the conference call because I believe that we have a new question on the phone.

Conference Operator: That’s correct. We have another question coming from Jean Francois Grangent calling from ODDO BHF. Please go ahead.

Jean Francois Grangent, Analyst, ODDO BHF: Yes, thank you. Good evening, everybody. Just one quick question regarding the locals business. We see an acceleration of the business currently. Do you expect a continuing growth for this business in ’25, ’20 ’20 ’6?

And regarding the margin, do you confirm at minimum breakeven points for the EBITDA in 2025? And can we considering a positive EBIT level in 2026? Thank you.

Geoffrey Godet, CEO, Quadient: So I can take the top, if you take the bottom,

Laurent Du Passage, CFO, Quadient: we’ll do that.

Geoffrey Godet, CEO, Quadient: Thank you. Good evening, Jean Francois. Thank you for the question. So yes, we believe and we expect that the return to growth that we have experienced in H2, twenty twenty four should continue and that the growth is expected to continue in 2025 and beyond. Why?

Because obviously, we made and we shared with you a lot of different decisions and investments and evolution as well as the business model in the last two years to get the business longer to a steady growth and a steady recurring revenue growth, where we’ve seen the share of the recurring revenue to increase in the total. And obviously, with that, we also have more predictability. So we have this effect that naturally leads us to know that we expect higher recurring revenue in ’twenty five. We have also renegotiated the contract in Japan, even though we don’t disclose specifically the numbers, but we also had a negative effect that had continued as a result of that renegotiation of the contract up to H1 twenty four, and we were sharing that we did not expect that moving forward. And the contribution on the top end was positive in H2 as well in that region.

And most importantly, which is because it’s the largest region out of the three, we also had some and we made some change to our businesses in the lockers in The U. S. That has impacted the level of booking and installation up to the first semester. We also had a first Q1, unfortunately, that was also a little bit impacted by the university segment that was disrupted by some of the political unrest and activities that you know over there. All those effects are either no longer the case or finished, and this is why we were expecting to be able to enjoy those benefits in Q3 and Q4.

This way, you’ve seen that double digit growth in H2. Compounded now with now the contribution, even though in term of revenue volume, it’s smaller, but its impact is bigger because of the combined effect of the increase in numbers of lockers that I mentioned on the slide in The UK. So we have more lockers on the ground, and every day, the entire network is also more used. So we are expecting in 2025, a repeat of what we’re seeing in H2, which is more lockers to be installed, more being used. So we’ll also expect a higher contribution to the growth of coming from the European operations.

So all those things combined and all things equal, we do expect the local now to come back to a regular growth, both on subscription and the placement of hardware.

Laurent Du Passage, CFO, Quadient: I will take the two next question on EBITDA and EBIT, if I hear well, Jean Francois. EBITDA positive for 2025, I would say that we were positive already in 2024. The top line will be favorable. We know that we have this perspective of 2026 to be at 10% in EBITDA for the local business. So very naturally, I would tell you that between 2024 that is positive and 2026 that should be at this 10% mark.

We should be not in the middle, but at least positive and on the path to the 10%. Then you have another question, which is absolutely legitimate, which is the one on the EBIT on which we don’t guide, on which we did not guide during the Capital Market Day and for the reason that obviously this is a level of EBIT. And one big component, as you know, between the EBITDA and EBIT is the amortization of those tangible assets, notably the lockers that we are rolling out. Highly depends basically of how young is the rollout of the lockers because when you rollout the lockers, it starts the volume starts to get up, but the amortization is flat, I would say, across the lifetime of the locker. So in case we roll out many lockers just before the 2026 mark, the EBIT will change vastly because you’re not getting the revenue as a mature looker would have.

Hence, we don’t guide on the specific EBIT metric, but over the long run, there is no reason why the EBIT does not follow the EBITDA trend.

Geoffrey Godet, CEO, Quadient: And today, we don’t have any particular plan for any acceleration in ’26 at this stage. Correct.

Laurent Du Passage, CFO, Quadient: Correct.

Geoffrey Godet, CEO, Quadient: Of installations of locals.

Anne Sophie Jugend, Head of Investor Relations, Quadient: Okay. So moving back to the written questions. Now we have questions on acquisitions. So are you still looking for strategic acquisitions? If so, in which segment?

Mail, digital, locals?

Geoffrey Godet, CEO, Quadient: That’s a good question. And I will just take you back to what we have shared during our strategic plan, right, for the 11/2030. Our policy today is not to look at strategic acquisition, but look more at bolt on acquisition. When we say bolt on in terms of the size and the opportunity it could represent, all our plans that we have shared with you for 2013 did not include and excluded any benefit from any acquisitions. So we do not need to do acquisition to achieve our goals.

That being said, considering the leadership that we have on our market, naturally, we remain opportunistic to be able to look at different opportunities when they arise, and that applies to the mail business. We did Trauma a year ago because we felt that there was an opportunity for us to be able to have a strong return on this particular investment, and it was highly contributive to the mail business itself after first year of integration. We’ll and we felt also that it was helping us to be able to provide bigger opportunity for our digital transformation in terms of cross sell into those mailing customer base. So we acquired, I think, roughly 30,000 customers. We looked at the same opportunity the same opportunistic way

Laurent Du Passage, CFO, Quadient: when we

Geoffrey Godet, CEO, Quadient: had the opportunity to look at the acquisition of Packet Concierge in The U. S. This is allowing us to gain, obviously, faster scale. It’s obviously, already a large installed base. We add three more thousand lockers and with strong complementary value and skills and knowledge from a great team that we have acquired on the Northeast where we’re really not really penetrated.

So we felt it was naturally also a logical move to consolidate these activities. And we have done the same thing on our digital activities. I can remind you of some of the acquisition from Daylight. I believe it was the latest one, which was obviously a great e forms capability that we have bought into the platform, particular in The U. S.

So we remain obviously opportunistic to continue to benefit from those opportunities if they arise. But again, we do not count on them to achieve our strategy goals.

Anne Sophie Jugend, Head of Investor Relations, Quadient: Thank you, Geoffrey. Going back to Lucas, what is your interpretation when you see Montreal Relay planning to open 3,000 locals in France? Are you disappointed that they didn’t give you their flows through your locals?

Geoffrey Godet, CEO, Quadient: It’s a very good question. I’m glad I have the opportunity to be able to provide our perspective on that. I will not obviously comment on Mondiale’s business per se, but I see, Mondiale, which is owned by Inpost, in terms of the type of players they represent as a carrier that is just trying to smartly automate their own flows. And they provide and to do so, they obviously leverage Parcel Locker more strongly and more actively than other carriers. And in particular, in the case of their subsidiary in France of Mondiale, we are obviously quite happy and see this as a very positive sign that they are deciding to close down their, their environment, and replace them with automated location with parcel lockers.

Why? Because it speaks to the value proposition that we have advocated now in the last five years that we believe that the parcel locker is the true and ultimate way to provide the best solution for all stakeholders, the consumers, but also the retail and the shops, because it’s the best opportunity to actually bring back people into shops once they’ve made a purchase depending on the location, obviously, of that parcel locker. And it also provide benefit of scales and automation and cost savings to the carriers. The only thing that we will see differentiators is that we are not a carrier. We provide a technological platform to all stakeholders, the retailers, the e commerce players, the C2C, and to all carriers because we believe that it doesn’t make sense for a locker to not be fully utilized.

And usually, what we see is those private networks, whether they could be the one from Amazon or the one from in post, at times could not be fully utilized. And therefore, we feel that once you put a dollar in CapEx and investments, you have a better chance to get a higher utilization when it’s agnostic and shared by everybody. So coming back to a short version of that long answer, we see that as an opportunity because the French market had such a strong network of Pluto that was already in infrastructure to some extent, previously developed that was not automated versus the locker. So it feels that it moves from such a player can only increase the adoptions of Parcel Lockers in the French market, for which we would be happy to be able to benefit from.

Anne Sophie Jugend, Head of Investor Relations, Quadient: Thank you, Lefre. We have, again, a question on Locker. So how many Locker do you have in The U. S. Before the latest acquisition?

Geoffrey Godet, CEO, Quadient: So Laurent may be able to help me. The package concierge acquisition only added 3,000 lockers. So we’re at more than fifteen thousand

Laurent Du Passage, CFO, Quadient: seven zero nine between fourteen and fifteen. So Okay. So we were

Geoffrey Godet, CEO, Quadient: around 12,024 and we added 3,000 from the acquisition.

Anne Sophie Jugend, Head of Investor Relations, Quadient: Thank you, Geoffrey. And we have no further questions at this time, so we can close the call. So thank you very much for attending this presentation and for your questions. Our next call will be on the June 3 for our Q1 twenty twenty five sales release. In the meantime, we look forward to meeting some of you in the coming days during our shows.

Thank you, and have a good evening.

Laurent Du Passage, CFO, Quadient: Thank you. Thank you.

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