Earnings call transcript: Rai Way SpA Q2 2025 sees revenue growth, stock steady

Rai Way SpA reported a modest revenue increase of 2% to €140.3 million in the first half of 2025, alongside a 3% rise in adjusted EBITDA to €96.3 million. The company’s stock price remained relatively stable, with a slight increase of 0.17% following the earnings call, closing at €5.84. According to InvestingPro data, the stock trades with notably low volatility (Beta: 0.62) and currently sits near its 52-week high of €11.97, reflecting investor confidence in the company’s steady performance.

Key Takeaways

• Revenue increased by 2% to €140.3 million in H1 2025.
• Adjusted EBITDA rose by 3% to €96.3 million.
• Strategic expansion into CDN and IaaS services.
• Stock price showed a minor increase of 0.17%.
• Maintenance CapEx rose due to extraordinary activities.

Company Performance

Rai Way SpA demonstrated steady financial performance in the first half of 2025, with revenue and adjusted EBITDA both showing growth. The company is focusing on expanding its product offerings and services, particularly in the Content Delivery Network (CDN) and Infrastructure as a Service (IaaS) sectors. This strategic focus aligns with industry trends as the CDN market stabilizes post-pandemic.

Financial Highlights

• Revenue: €140.3 million, up 2% from the previous period.
• Adjusted EBITDA: €96.3 million, a 3% increase.
• Net result: €47.3 million.
• Free cash flow to equity: €63 million.
• Net debt: €178 million, approximately 1x last 12 months EBITDA.

Outlook & Guidance

The company has raised its adjusted EBITDA guidance for 2025, indicating confidence in continued growth. Despite increased maintenance CapEx, Rai Way plans to lower development CapEx compared to 2024. Investments in network expansion and data centers are ongoing, with potential mergers and acquisitions being considered for further consolidation.

Executive Commentary

Roberto Cecatto, CEO, noted, "The CDN market is now approaching a new normal, with a more balanced supply and demand." He also emphasized the company’s expansion into IaaS services. CFO Alberto Pellegrino highlighted, "Our free cash flow generation remains healthy and in line with the previous year."

Risks and Challenges

• Market stabilization in CDN could limit rapid growth opportunities.
• Increased maintenance CapEx may impact short-term profitability.
• M&A consolidation processes present integration and execution risks.
• Potential macroeconomic pressures could affect future performance.

Q&A

During the Q&A session, analysts focused on the company’s hyperscale data center project, with a concession expected to be signed by September. Questions also addressed the CDN and edge data center initiatives, which target €1 million in revenues, and the long-term expectation for maintenance CapEx to average 6.5% of core revenues.

Full transcript - Rai Way SpA (RWAY) Q2 2025:

Conference Operator, Chorus Call: Evening. This is the Chorus Call conference operator. Welcome and thank you for joining the Driveway First Half twenty twenty five Results Analyst Presentation. All participants are in listen only mode and after the presentation, there will be a Q and A session. At this time, I would like to turn the conference over to Mr.

Andrea Moretti, head of IR of Driveway. Please go ahead, sir.

Andrea Moretti, Head of Investor Relations, Driveway: Thank you, operator, and good afternoon. Welcome, everybody, to our to our half year financial results call. Today’s speakers will be, as usual, our CEO, Roberto Cecatto our CFO, Alberto Pellegrino and Giancarlo Benucci, our chief corporate development officer. Let’s start with mister Ceccato. Please go ahead, sir.

Thank you, Andrea. Good afternoon to all of you. Let me start with some positive news in terms of results that we are delivering. Revenues were up to 2%, accelerating from 1.7 performance in the first quarter, underpinned by both media distribution and digital infrastructure. Considering the CPI increase contribution equal to 1.2%.

The additional boost was provided by the coverage extension for Rye, rising power hosting volumes, in particular from radio broadcaster and initial contribution from diversification initiatives. Adjusted EBITDA hit €96,300,000, up by 3%, also helped by some noncore items that Sao Alberto will cover in a while. Scrapping them, adjusted EBITA underlying trend was in line with our expectation and full year guidance, providing for a constant growth in traditional business compensated by the setup operating expenses of diversification initiatives. Net profitability was in line with last year’s as were investments, but with a significant difference compared to the 2024. Out of €16,100,000 CapEx in the first six months of twenty twenty five.

The majority was represented by maintenance activities. Indeed, as anticipated during the last call, This year, we are undergoing some extraordinary maintenance activities. And just to give you an example, in the Apulia region, we are investing 2,700,000.0, of which 1.5 already spent on a crucial 70 years old submission site in order to decommission two of the submission towers while building a brand new 20 sorry, 120 meters high tower. One of the tallest and more modern railway has ever engineered. That will rationalize and renew one of our major infrastructural assets while enabling synergies and efficiencies and guaranteeing the continuity of the TV and radio content transmission in full security with higher quality standards.

On top of that, the maintenance component of our CapEx also reflects the savings skewered in the first half of certain investment on the IP network. As for development component, the lower first half level reflects, First of all, the completion of the first phase of the rollout of the certification initiatives. And second, the current focus on marketing of the existing assets. And third, the design of new assets, in particularly the new edge data center in Barrie, as well as also incorporated in the guidance. The slight shift to 2026 of certain activities related to value initiatives, mainly in the traditional business.

And let me say that this must be misunderstood. Our view of the markets we are investing in remains confirmed as does the company commit. Optimates and commitments are clearly reflected in our operational progress. In fact, in the last two, three years, the CDN market has experienced a very rapid evolution, also driven by consumption dynamics during the COVID period. In fact, after a phase of tremendous volume growth followed by a period of traffic stabilization, but very high competition, the market is now approaching a new normal, let me say, with a more balanced supply and demand and a more rational and stable provision in both volumes and price.

On the one hand, this evolution has led to the acceleration of certain dynamics and that we initially expected to be more gradual. But on the other hand, it has created a context in which with decreasing competition, the performance and the quality of our solution can truly be a differentiating factor. To summarize, a more gradual growth curve, but with the same lending point in the long run and greater customer interest. Not surprisingly, from a commercial standpoint, we are reaching the players that we aim to reach. After a long trial period, which is normal for a newcomer, But let me say long trial, not so much longer because at the end, it’s really few months that we have the the infrastructure already on on running.

Our network architecture currently distributed across multiple distributed injection point and interconnected via a proprietary high performance network. And the quality of our application partners have led to sign framework agreements with at least three of the main operators offering live streaming in Italy with further negotiation underway. By allowing us to became one of the two, three CDNs used by each of these clients, these framework agreements will bring thin traffic, thus revenues, our network from now on. On the edge data center side, we maintain the view of a growing regional mix of megawatt. Today, underserved or currently served from the Milan region due to the lack of high quality alternatives.

Considering sites, location, and features, our commercial sweet spot is represented by mid sized enterprise and digital players, which is exactly where we are focusing our efforts. In the region where we already operate, apart from Milan, The South, Venice, Oliguria, Tuscanisia, Monter, and latter on parts of Southern Italy, Research estimate over 30 megawatt of additional demand in the coming years from this report. And we have to compare with one two megawatt that we currently have available are in the pipeline with relatively limited competition. While receiving positive client feedback on proximity, quality, interconnection, and national footprint, We keep working on few key points, particularly in terms of client targeting, which must be consistent with the typical commercial footprint of an infrastructure company and on the effectiveness on the go to market. Apart from passions, as many enterprise IT project, we see that have a long decision and implementation time, sometimes up to twelve, eighteen months.

Around half of the medium enterprise and data center requirements originate from private cloud application. Application that, luckily, are largely channeled through system integrators and which we have chosen as our partners. However, system integrator integrate solution provided by private cloud operators who are the ones who ultimately decide where to place the servers. Therefore, this is the experience that we’re seeing in these past months of the approaching the market. So therefore, to avoid being this is debt mediated and better intercept this underlying demand.

We are expanding our offer to include the IAS services, basically, virtual machine for storage and computing. Let me say, still infrastructure based, with more value added features features. This solution became even more competitive. First, because when they get by a distributed interconnected network like ours. And second, when powered by smart cost effective software such as that of Cabbit, an Italian cloud storage startup that will support our service under strategic business alliance.

Going forward, we will therefore focus on expanding the service range, growing partnership including the private cloud players, using our direct presence in a more targeted and active way. Considering on the other side, the hyperscale project, the positive outcome of the so called conference release, The last step is the signing of the concession the concession with the municipality municipality. So that there is a final authorization, the agreement with the municipality. We have already finalized the the job document. Therefore, barring any unforeseen delays, we expect to sign the agreement within the next few weeks.

Let me say, taking into consideration the upcoming summer breaks, let’s say, by September, more or less. Finally, putting up in the composition to move forward with the final design and procurement activities. But going now back to the numbers, I would also like to underline the financial performance resulting in the generation of more or less 63,000,000 in the semester, and let me say, in line with the last year. The combined effect of free cash flow generation, investment activities, as well as the payout of dividends, drove our net debt at the June to around 178,000,000, which is lesser than our time, our last twelve months EBITDA. Looking ahead to the remainder of the year, we are pleased to rise our adjusted EBITDA guidance for the full year.

Together with the minor refraining of some investment that I mentioned in there. But I will elaborate more on that at the end of this call. To conclude, I would also like to share a brief update on the analysis currently underway regarding the potential consolidation with eight hours. To date, we have mainly worked on industrial aspects, and the activities are now progressing also on other relevant elements that you could easily imagine. Now it’s time to dive in our 2025 financial results, which will be discussed by our CFO.

Please, Roberto, now the floor is yours. Thank you, Roberto. Good afternoon to everyone. So I would skip to slide six to to to focus on core revenues, where you may see that we have an increase of 2% reaching €140,300,000 in the first six months of the year with both business lines on a positive trend. Media distribution increased by 10.8% more than CPI whose contribution was more or less 1.2%.

And the increase the organic increase is due to the coverage extension of the Ride app network that gave us a positive impact in the first semester, and that is included in the line new services to Ride that increased up to 20%. Then we have also the first positive contribution from the commercialization of our CDN services. Regarding the the digital infrastructure segment, revenues amounted €16,400,000 with a grew with a growth of 3.6%, mainly thanks to the tower hosting business. And in particular, we have seen a very interesting volumes from increasing volumes from radio broadcaster, growing 50% up to 50% as well as, also in this case, the first positive contribution from the commercialization of our edge data center. Moving to OpEx, next page, page seven, we see an increase of 3.7%, landing at €14,900,000 in the first six months.

Breaking down the OpEx, personnel costs were up 10%, which drops to approximately 6% when excluding the capitalization that are lower compared to the previous year. The residual increase is due to the plan the plan growth of our workforce in line with the assumption of our industrial plan. And also and also in the average increasing the average cost of their FTE due to the impact of the renewal of the collective level agreement and to other items. Other operating costs were down by 3.3%, positively affected by non core benefits. Excluding these items, the underlying basis grew by approximately €2,000,000, driven by diversification initiative, which contributed approximately €1,200,000.

Higher energy tariffs are being more or less €700,000. So we have a broadly stable stable level of our underlying cost basis in the traditional business. All these, we now we may move to the following slide. Slide eight, we see the adjusted EBITDA that reached €96,300,000 with a 68.6 margin, impacted also by proceeds from asset sales that we have included in the line other revenues and income. Slightly below, we highlight that nonrecurring costs mainly related to m and a as well as the DNA, which confirm the growing trend as the result of our development CapEx and financial charge that are improving vis a vis the the last year figures due to lower interest rates.

Net result amounted to €47,300,000 in the first six months of the year. Moving to to slide nine. Let’s have a look to our net debt. As usual, including the €40,000,000 of IFRS leasing, net debt closed at €178,000,000, close to one time the adjusted EBITDA generated in the last twelve months. Compared to the end of 02/2024, the net debt increased by approximately €50,000,000, including, of course, the impact of the payment of our dividend, €89,000,000.

With cash generation, therefore, remaining healthy and in line with the previous year. Free cash flow to equity stands at €63,000,000 in the first six months. So as the outlook, let me turn the floor back to our CEO, please, Roberto. Thanks, Roberto. In term of expectation for the full year, considering the trend and the results recorded in the first semester, we are now in a position to raise our profitability guidance for 2025 mainly to reflect more favorable electricity tariffs and higher non core benefits compared to the initial expectation.

Non core benefits that, by the way, really never come for free, but are actively targeted by the management to maintain the usual levels of growth despite the temporary impact of development initiatives. Excluding the non core impacts and other factors, none not under company control, the underlying trends are overall confirmed with the progressive growth of traditional business driven, for example, by contractual indexation, dubbed coverage extension, rising power hosting volumes with radio broadcast and so on, partially offset by the already anticipated absorption from the start up phase of the certification initiatives. As per the CapEx, we confirm the higher level of maintenance investment following some extraordinary activities such as the one that I mentioned before. While we now foresee a lower level of development CapEx compared to last year when we spent around €40,000,000 mainly investing in diversification projects. No doubt.

We will keep on working on our main projects such as the Braggio network expansion, the additional edge data center in the South Of Italy, and the other internal projects. Therefore, as commented in my initial remarks, this update follow just a slight shift to 2026 of certain activities related to the various initiatives, mainly in the traditional business, in particular, the radio and solar projects related. So that’s all on our side. We can now open the line for the q and a session. Thank you.

Conference Operator, Chorus Call: Thank you. This is the Chorus Call conference operator. We will now begin the question and answer session. To enter the queue for questions, please click on the q and a icon on the left side of your screen. When announced, please click continue on the pop up window.

If you are connected in the audio only, please press star and one on your telephone. The first question is from Fabio Panem, Mediobanca. Please go ahead.

Andrea Moretti, Head of Investor Relations, Driveway: Yes.

Roberto Cecatto, CEO, Driveway: Hi. Thank you for taking my two questions. The first one is on on the potential sector consolidation. I was wondering if you can share with us some more details eventually on what are the activities run so far and the expected timeline for this process. And the second question is on hyperscale data center following the green light and and so we had this expected signing of the concession, or what are

Andrea Moretti, Head of Investor Relations, Driveway: the next steps on this project?

Roberto Cecatto, CEO, Driveway: Thank you very much.

Andrea Moretti, Head of Investor Relations, Driveway: Concerning the the consolidation, the the external operation, but I consider that we are under a mountain of NDA and limits. So you could consider that I could give you some some information, but not so much. Let me say that there is a larger effort by all the parties involved, especially away. We have worked a lot on the industrial evaluation, especially on synergies. Of course, now we are progressing on on the other aspect because the synergies are one of the items, of course, of this kind of analysis and review.

And the work is going on for sure. Considering timeline, let me say that the timeline, I could also say only say that process also, as I mentioned in the past call, is quite complex. And so we have to spend a lot of effort to overcome this complexity, let me say. But the outstanding the timeline, we cannot give particular information up to now. And also because there was a reference given by the shareholders that is public.

Okay. So Fabio, on the hyperscale data centers, these steps that you record are are correct. We expect to sign the concession with the municipality in the in the coming weeks, I would say. The draft concession has already been agreed. So there are now some formal steps.

And after that, and in particular, after having reached full visibility on on timing, we will start on one side all the pre marketing activities also because any sort of a a pre agreement will be or or some sort of soft agreement will be more than what come also in terms of of the risking. And then we will start also the final design and and procurement activity. So now the focus is to finally close this, I would say, never ending authorization process. Thank you. Fabio, let me add also that we spend a lot of effort also thanks to our, let me say, institutional brand to speed up a process that is really was really a a nightmare.

And the fact that we really, we are arriving at the final step really the final step, I think that give us a very good opportunity compared to any kind of other subject that that would like to approach this kind of adventure in the region of the center of Italy. Thank you.

Conference Operator, Chorus Call: The next question is from Giorgio Sabolini in Termonta. Please go ahead.

Andrea Moretti, Head of Investor Relations, Driveway: Good evening. Thanks for taking my three questions, please. The first one is on is a follow-up on the M and A timeline. We appreciate that you can provide specific information at this stage on the timeline. But should we expect a very definite event, let me say, irrevocably revocable go no go decision by the by when you will make it these decisions?

And the second question is on EBITDA guidance. I was wondering you said that clearly that the non core benefits do not come up for free, but I was a little bit surprised to see the one and a half million non core benefits supporting the adjusted EBITDA performance. So I was wondering if can clarify if the the the upgrade will, of course, benefit or will be driven by the one and a half million on core benefit to book in h one. Or if the performance is pretty underlying, so freaking out to this 1 and a half million. And the third question is on the CDN and the edge data center revenue breakdown for this year.

You guided the during the first quarter call for around 1,000,000 revenues. Don’t know if it’s fair to assume an impact split between the two initiatives while looking forward to your business plan target of 10,000,000 revenues by 02/1927. I was wondering if you can, let’s say, give some indication on the mix that will be, let’s say, 70% as a data center, 7,000,000 or less. Thank you. So let’s start on the EBITDA guidance.

The 1,500,000.0 you mentioned was already embedded in our guidance. We we have seen in the first half some other some additional impact mainly impacting on other OpEx as commented previously. So these are this is the one off that we are referring to. As concerned, the the CDN and that data center guidance, yes, we mentioned in our in our last call the figures that you just remind in your question, giving some more details on these. Yes.

We may assume more or less half and half, probably. I expect a little bit more from from the CDN rather than on the edge of the present. Concerning the the first question, as I mentioned, I cannot answer completely. You could understand. But in my opinion, there is no deadline, let me say.

It’s a process that it is flowing and the work is progressing, but this is what we could confirm. Okay. Thank you.

Conference Operator, Chorus Call: The next question is from Andrea Dejita in Tilosanbalo. Please go ahead.

Alberto Pellegrino, CFO, Driveway: Yes. Hello to everybody. Very simple question on your level of investment. So it is volatility on maintenance CapEx and development CapEx. So just to understand, in the second part of the year, whether we will have maintenance CapEx more in the region of single digit or low digit or double digit in the euro, and the same for maintenance CapEx.

So we have a, like, a very, very different difference and very different level for FY ’24, and we’d like to understand that the absolute likely number for FY ’25 is is possible.

Andrea Moretti, Head of Investor Relations, Driveway: K. So as concern, our maintenance CapEx impacted this semester, we had high figures compared also to the past, but it is nothing impacting the overall figures that we expect to have at the end of the year. Simply, we have some activities that we we finalized in advance, keeping in mind that our overall guidance for present year is an increasing trend, but this trend will be exactly consistent with the trend of our of our business plan that, as you remember, has an increase in the the the media of our industrial plan to go back at the end of the plan at the 6.5%. So all in all, for sure, the first half figures confirm the fact that we will go above the previous year figures, but this is something that should be should be consistent with the trend of our industrial plan that includes some nonrecurring activities. And overall guidance, you should assume 6.5% of our revenues, of our core revenues on the long term.

Alberto Pellegrino, CFO, Driveway: Sorry to interrupt. But this 6.5% is the mid term average?

Andrea Moretti, Head of Investor Relations, Driveway: 6.5% is the longer term value. We should consider on top of this in 2025 and 02/1926, an additional, more or less, $1,520,000,000 euro of additional extraordinary and and no recurring CapEx that we will have to put in place as this as presented in our in our industrial plan. Andrea, just to be very clear on one point, mentioned long term target, the 6.5%. I mean, it’s not a long term target in the sense that it’s something that we need to reach through efficiencies or other. It’s it’s the usual average level of maintenance CapEx that we have in our business, around 666.5%.

The only difference in this plan is that this year and next year, we are booking some extraordinary activity. But the usual, let me say, run rate, recurring level was even will be around 6%.

Alberto Pellegrino, CFO, Driveway: And just to understand whether the extraordinary portion was, let’s say, concentrated in q two or if

Andrea Moretti, Head of Investor Relations, Driveway: we will have a a

Alberto Pellegrino, CFO, Driveway: q three or q four?

Andrea Moretti, Head of Investor Relations, Driveway: No. We we had an impact in the first in the first half, but it’s quite limited. We should expect some other CapEx, extraordinary CapEx in in the second half. But this is something that should impact mainly 2026 figures.

Alberto Pellegrino, CFO, Driveway: And the same for the development capital. I understand this is this has to do with the delays and performance for hyperscale. But just just to understand the the the likely ballpark figure for h two this year?

Andrea Moretti, Head of Investor Relations, Driveway: Actually, the delay in the development CapEx level in 2025 as we commented on the guidance is related not to the hyperscale initiative, but to some other development initiatives in relation to the photovoltaic project, in relation to the edge data center, in relation to some activities with some key customer on the tower rental. So the the IP scale is something that was included in our industrial plan starting from 02/1926. Just to send you work on this, considering the timeline we just commented, we believe that the the amount of topics that we included in our business plan in for the construction of the hyperscale of the first part, of course, of the hyperscale amounting approximately $7,677,000,000 euro. And that’s at the time we plan to finalize in 2026 and 02/1927. Because of this timeline, we expect to have the majority of this CapEx in 02/1927.

We could have some delay but limited in 02/1928. But I’d say the majority should impact 2027 figures. To give you an example related to this shift of the hyperscale, I consider that we already have the order ready to dismantling two antennas that are antenna towers that are in the in the site of the hyperscale future hyperscale data center, some building that we are ready to activate as we finalize as told in the next weeks, maybe before September, more or less, to start the real operations at the scale. Of course, we have all the the activity ready to start, but we need, of course, the permission to go on.

Alberto Pellegrino, CFO, Driveway: Right. So just to to to be to understand, had the 40,000,000 development CapEx last year. We had a few million in h one. We going to have $10.20, or 30,000,000 by year end? I suppose you have a number in in mind that you can share with us.

Andrea Moretti, Head of Investor Relations, Driveway: Sure. No. No. We expect that the the the reduction is not it’d be not significant. We’re not talking about 10 or €20,000,000.

Our development CapEx are still expected to be I I say we could have we could have a decrease vis a vis 2020 for figures of 20%, 25% just to give you an idea of the magnitude.

Alberto Pellegrino, CFO, Driveway: Thank you very much. You’re welcome.

Conference Operator, Chorus Call: The next question is from Milos Silvesa, Equita. Please go ahead.

Roberto Cecatto, CEO, Driveway: Good afternoon, everybody. Two questions from my side. The first one concern, a follow-up on Azure Data Center and the CDN as well. So if you can operate on the target for the full year, if you are still assuming €1,000,000 of revenues. And the second one on hyperscaler, the target set by the plan is to have it nonoperational by 2027.

And then so if you can elaborate on that timing and if you think that is still achievable. Thank you.

Andrea Moretti, Head of Investor Relations, Driveway: On the on the data center, actually, we talk on the overall diversity initiative that we include in the overall diversity diversification project are we would expect to reach at least €1,000,000 as commented also in to give an answer to a previous question. So it’s an overall guidance on both CDN and edge data center. On the hyperscale revenue timing, actually, in our industrial plan, we really had a very, very limited impact in 02/1927. So even if, as I mentioned before, we could have a slight delay starting the activity in 02/1928. To be clear, there is no significant impact on our on our industrial plan.

Roberto Cecatto, CEO, Driveway: Thank you.

Andrea Moretti, Head of Investor Relations, Driveway: You’re welcome.

Conference Operator, Chorus Call: As a reminder, if you wish to register for a question, please click on the q and a icon on the left side of your screen or star and one on your telephone. Gentlemen, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

Roberto Cecatto, CEO, Driveway: That’s fine. Thank you. Thank you, operator. Thank you all. We just wish you a happy summer holiday.

Goodbye.

Conference Operator, Chorus Call: Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your devices.

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