Earnings call transcript: Veridian reports solid Q2 2025 growth, stock steady

Veridian (VRDG) reported its Q2 2025 earnings, showcasing a robust financial performance with an 8% year-on-year increase in total segment revenue to $575 million. According to InvestingPro data, the stock appears undervalued based on its Fair Value analysis, despite showing a strong year-to-date return of 14.7%. The company’s stock remained largely unchanged in after-hours trading, slipping slightly by 0.09% to $58.35. The company’s strategic focus on innovation and restructuring appears to be yielding results, although market conditions remain challenging.

Key Takeaways

• Veridian’s total segment revenue rose by 8% year-on-year to $575 million.
• Adjusted EBITDA increased by 25% year-on-year to $250 million.
• Stock price experienced a minor decline of 0.09% in after-hours trading.
• The company exited the seismic data acquisition services business, focusing on high-value segments.
• Oil market volatility continues to impact exploration and production plans.

Company Performance

Veridian has demonstrated strong financial growth in the first half of 2025, with total segment revenue reaching $575 million, marking an 8% increase from the previous year. The company’s adjusted EBITDA also saw a significant rise of 25% to $250 million, contributing to its impressive last twelve months EBITDA of $546.4 million. This performance is underpinned by the success of its Digital, Data, and Energy Transition (DBE) segment, which grew 9% to $400 million. Veridian’s strategic exit from the seismic data acquisition services business and focus on asset-light, high-value segments have been key to its improved financial metrics. InvestingPro analysis reveals the company maintains a healthy current ratio of 1.53, indicating strong liquidity to meet short-term obligations.

Financial Highlights

• Revenue: $575 million, up 8% year-on-year
• Adjusted EBITDA: $250 million, up 25% year-on-year
• DBE segment revenue: $400 million, up 9%
• Sensing and Monitoring segment revenue: $180 million, up 6%
• Net cash flow: $10 million in H1 2025
• Net debt: $997 million as of June 30, 2025

Outlook & Guidance

Veridian reaffirmed its net cash flow target of $100 million for 2025, reflecting confidence in its operational efficiency and cash generation capabilities. The company’s overall financial health score of 2.77 (rated as GOOD) by InvestingPro supports this outlook. The company expects stable market conditions for the remainder of the year, with potential improvements contingent on oil price stability in 2026. Additionally, Veridian anticipates transfer fees from deals with Chevron-Hess and Neo-Rexel, which could further bolster its financial position. For deeper insights into Veridian’s financial health and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Executive Commentary

CEO Sophie Zurchia highlighted Veridian’s strategic shift, stating, "We are now completely out of the seismic data acquisition services business." She emphasized the company’s focus on strengthening its core business, selectively developing new markets, and delivering operational excellence. Zurchia also noted, "We remain firmly on track on our revised leveraging journey," indicating a continued commitment to reducing debt and enhancing financial stability.

Risks and Challenges

• Volatile oil prices could impact exploration and production plans.
• The transition to asset-light segments may face operational hurdles.
• Global economic uncertainties could affect market demand.
• Potential competition in high-value segments may pressure margins.
• Maintaining technological differentiation requires ongoing investment.

Q&A

During the earnings call, analysts inquired about Veridian’s strategy for monetizing Pemex receivables and the market potential of its Accel technology. The company also addressed questions regarding its marine market outlook and plans for expanding computing power. These discussions provided insights into Veridian’s strategic priorities and operational focus moving forward.

Full transcript - Viridien SA (VIRI) Q2 2025:

Conference Operator: Good day and thank you for standing by. Welcome to the Veridian Q2 twenty twenty five Financial Results Webcast and Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to your first speaker today, Alexandre Leroy. Please go ahead.

Alexandre Leroy, Head of Investor Relations and Corporate Finance, Veridian: Good morning and good afternoon, everyone. Thank you for joining us today for

Jerome, Group CFO, Veridian: the Aurigion Q2 twenty twenty

Alexandre Leroy, Head of Investor Relations and Corporate Finance, Veridian: five results presentation. I’m Alexandre Roy, Head of Investor Relations and Corporate Finance. We are hosting today’s call from Paris, I’m pleased to be here with Sophie Zurchia, our Chair and CEO and Sharon Serb, our Group CFO, who will walk you through our Q2 twenty twenty five results. Before we begin, a few housekeeping items. This call is being recorded and accessible via both phones and online platforms.

An audio replay will be available shortly on our website, www.teragengroup.com. The presentation slides are also available from download from the website. Please note that today’s presentation includes forward looking statements. Actual results may differ materially from those expressed or implied today. Relevant risk factors are detailed in our 2024 Universal Registration Document, filled with the French Financial Market Authority, IMF.

As usual, we’ll conclude with a Q and A session. And finally, a quick reminder that we have written comments primarily on segment figures, which reflect our internal management reporting. These differ from IFRS numbers also published today due IFRS 15 impacts on our Earthdata business accounting. With that, I now hand over to management, starting with Sophie, who will take you through the key business highlights for the quarter.

Sophie Zurchia, Chair and CEO, Veridian: Thank you, Alexandre, and good morning, good afternoon, ladies and gentlemen. I’m on slide two. In Q2 twenty twenty five, despite the challenging environment with tariff uncertainty, geopolitical instability, oil price volatility and foreign exchange fluctuation, we delivered another solid quarter marked by sustained business momentum and consistent financial execution. Segment revenue reached $274,000,000 up 6% year on year, reflecting strong demand for our unique expertise and differentiated product offering. Segment adjusted EBITDA came in at $107,000,000 up 14% year on year, confirming our ability to translate top line growth into profitability, while continuing to execute on our SMO restructuring plan and fully benefiting from the positive impact of the end of EDA vessel agreement.

We concluded the quarter with $30,000,000 in net cash flow, underscoring our enhanced ability to generate cash flow from operations, thanks to our differentiated technology and a significantly more flexible asset light business model. On the strategic front, we continue to build on the leadership of our three core businesses. In Geoscience, our differentiation continues to grow and our expertise is increasingly sought after across a broader range of geographies. Notably, secured more work from clients who maintain strong internal teams and technology development. It’s an important endorsement of our capabilities and a strong driver for future growth.

In Earthdata, we launched new Ocean Bottom Nodes projects, OBN projects, in our core bases, maintaining strict portfolio discipline, fully aligned with our cash focused, balanced risk return approach. And in sensing and monitoring, we achieved another innovation breakthrough, reinforcing our technology leadership in the LEN business with the launch of our new Axcel technology and the next generation, which is the next generation LEN nodal solution. We also continue to execute on our restructuring initiative, which is progressing according to plan and delivering the expected margin improvement. We are reaffirming our 2025 guidance with the $100,000,000 net cash flow target. Given our leading competitive positioning, strong backlog, active client discussions and continued operational discipline, we are confident in our trajectory and in our ability to deliver on our cash generation objectives.

Before diving into our Q2 twenty twenty five results, let me take a quick step back to remind you where we are today, as 2025 is our first year as a truly asset light company and is a key milestone for Veradia. So I’m now on slide three. Our strategy is defined around three pillars. The first pillar is about continuously strengthening our core business. We strongly believe that oil and gas will be required for many years into the future to support a rational energy transition.

And in most market scenarios, our clients will need to improve their portfolio performance and ensure their reserves replacement is increasing. So, we looked at our top 15 clients and their reserve life has been consistently dropping over the last ten years. Oil prices may continue to fluctuate in the short term, but all fundamentals still point towards a relatively solid longer term outlook for our coal markets. And we intend to keep excelling there. The second pillar is about selectively developing new markets.

The fact that oil and gas will remain critical for the long term doesn’t mean we shouldn’t prepare for a sustainable future and strengthen our transition. And we’re doing so with several initiatives that you’re already familiar with, leveraging our unique competitive strengths. Our exceptional technical teams with their deep mathematical, scientific, high performance computing and coding expertise, our rich earth data assets and our ability to maximize the value we extract from them, and our industry leading technologies in geoscience, imaging and sensing and monitoring. These give us the ability to deliver unprecedented subsurface images and break through products. The third pillar is about delivering operational excellence across everything we do.

We fully recognize the importance of cash generation. Deleveraging remains a top strategic priority. We are relentlessly focused on performance and discipline at every level of the company, from leveraging AI to ensuring the highest operational efficiency. Turning now on to slide four. For those of you who may be less familiar with Verigen and the seismic value chain, let me highlight an important point.

We are now completely out of the seismic data acquisition services business, having refocused on asset lighter, technically differentiated, high value added segments. Providing seismic acquisition services is about the management of assets and crews, the collection of subsurface data using source and receiver technology. Whether offshore or onshore, this means deploying our vessels or land crews with various tools to capture seismic signals. This is a high fixed cost asset intensive business, but the key challenge and value generated is mainly around reducing costs and maximizing asset utilization. We exited this commodity business, which is the data acquisition business, to focus on our three differentiated technologies.

With our sensing and monitoring systems and solutions, success depends on offering leading technology, industrial efficiency and operational reliability. Our sensing and monitoring business is recognized for the quality and the robustness of these equipment solutions, and we have made significant progress in lowering our fixed costs. Second, in multi client data licensing, which is our Earthdata business, success hinges on having the right data in the right place at the right time. This requires flexibility, being close to our clients, making smart basing selections, structuring deals intelligently, and providing excellence in the final product. These together are what ensures strong prefunding, lower risk, and higher commercial potential on each survey.

And thirdly, finally, in subsurface imaging driven by our Geoscience division or business line, it’s all about top tier expertise, advanced technology and algorithms, optimized computing power and delivering value to clients, which earns us recognition and repeat business. This strategic positioning allows us to focus on expertise driven, cash generating activities with higher competitive barriers and better margins. Let me take you to slide five to say a few words about what makes us the global leader in sensing and monitoring. The keywords are innovation, quality, optimization, and reliability, which together require technological leadership. In this business, we don’t just sell leading equipment and systems.

We deliver fully integrated solutions, combining products, the software that powers and optimizes their deployment and a full suite of support services. This together ensures operational excellence from crew efficiency to final data quality. To stay ahead, we be continuously improving our value proposition, as well as our industrial structure and processes to optimally deliver our products and services. We help our clients solve their challenges, address their pain points, and ultimately optimize the operational performance, while delivering the highest quality of data. This is how we differentiate ourselves and build lasting partnerships with our clients, a key driver of both our global leadership and the depth of our installed base.

Turning now to slide six for a quick focus on our approach to MultiClient survey. MultiClient is by nature the most cyclical and volatile part of our business, particularly when it comes to late sales. Now that we’ve exited the Seismic acquisition vessel business entirely, we have the flexibility to adopt a disciplined risk managed approach to multi client investment. We’ve chosen a balanced strategy that combines low risk, low investment re imaging of legacy data, leveraging our geoscience expertise, which adds significant value to existing data. So, this is the first pillar.

Second, strategic core base in enrichment and expansion, where demand visibility is strong and where we can leverage our footprint. This is the second pillar. And the third one is a selective opportunistic exposure to high risk, potentially higher return frontier projects. Our key rule is simple. We are disciplined in selecting projects with strong economics, measured in prefunding and solid commercial potential.

Our seismic multi client strategy is not about volume, but focused on maximizing value creation and cash generation. Moving on to slide seven on seismic subsurface imaging. Geoscience is the global leader in seismic imaging because over the decades we have been relentlessly building with focus competitive advantages that truly matter in this market. First, our people. Our team is second to none with over 300 PhDs in mathematics, physics, engineering and geosciences recruited globally.

Out of 100 applicants, only 1% make it through our selection process. This talent base is the foundation of our success. Second, our technology. Though the industry calls them by the same brand name, like elastic for waveform inversion, we developed unique highly advanced proprietary algorithms that are suited to a large variety of subsurface challenges, now even further enhanced by AI driven models. Our subsurface imaging technologies are second to none, being consistently rated number one in the external Kimballite survey.

We also operate around 600 petaflops of computing power in highly optimized and specialized data centers, all fine tuned specifically for high throughput challenges like seismic imaging. Three, our corporate culture, which is deeply rooted in service quality and a commitment to problem solving, openness and excellence. This unique combination of talent, technology, and relentless drive for excellence is what makes Biogen the global reference in seismic imaging. Finally, moving to slide eight, let me recall the philosophy behind our selective diversification strategy. It applies three key principles when evaluating new opportunities.

One, they should preferably enable us to grow outside the oil and gas sector. Second, they should build credibly on our existing expertise, capabilities and technology with minimal dedicated costs or CapEx. And they must offer a stronger potential. We are determined to prepare our future in the smartest, most disciplined possible way. Now, I’d like to move on to slide 10 to cover the quarterly performance review, starting with Geoscience.

Q2 twenty twenty five was a solid quarter for Geoscience, with external segment revenue up 10% year on year to $115,000,000 This strong performance was primarily driven by work performed in Latin America and The Middle East. Over the past few years, Viragen has experienced a steady increase in global demand for its high quality, high technology subsurface imaging solutions. Advanced elastic for waveform imaging technology represents a significant leap forward in imaging quality, setting a new benchmark in the market. This strong demand has translated into healthy order intake, supporting a robust backlog that underpins our growth, margin expansion and cash generation for the remainder of the year. Moreover, our strategic focus on complex projects, a pivotal role in development and infrastructure led exploration, and our strong relationships with less oil price sensitive clients, such as key international oil companies and national oil companies provides a solid foundation of growth and resilience for our Geoscience business.

On slide 11, we highlight a compelling example of how we have expanded our service offering by leveraging the high fidelity subsurface images we produce. Traditionally, these tasks were handled by our clients using laborous and time consuming techniques. By turning to Virigen, they now benefit from our advanced AI suite and high performance computing capabilities enabling faster, more efficient and more effective results. In early twenty twenty three, Viridian completed the full processing of the largest ever OBN, Ocean Bottom Node Acquisition Programme in The UAE. Covering 26,000 square kilometres, the project deployed more than 2,000,000 sensors and generated around 700,000,000,000 seismic traces amounting to several dozens of petabytes of data.

This was a monumental technological challenge, successfully met thanks to our deep expertise and proprietary technology. Today, we are empowering our clients with extensive interpretation insights derived from the resulting seismic images using our advanced AI suite. The scale and complexity of this data demand exceptional computing capabilities, software, middleware, power and storage, all optimized for the immense data and high throughput HPC requirements, something only Virgin can deliver effectively. Off the shelf commercial platforms and cloud solutions simply cannot handle seismic images with the efficiency, precision, and scale that we provide. Ultimately, our seismic imaging expertise, powered by bespoke high performance computing, remains a key competitive advantage.

We continue to build on these strengths to further expand our market presence and deliver unmatched value to our clients. Now turning on to slide 12 for the Earthdata performance review. Q2 twenty twenty five revenue declined 8% year on year, following a strong Q1 twenty twenty five. Overall, as expected, multi client performance for H1 twenty twenty five is relatively flat with H1 twenty twenty four. In Q2, we started two surveys involving OBN acquisition, one in Norway and another in The US Gulf with good prefunding.

We remain confident in the outlook for our multi client business, supported by the strength of our modern, strategically focused data library and the relevance of our new projects, both in terms of industry alignment and commercial potential. As of the June 2025, our library’s net book value stood at $5.00 $8,000,000 primarily composed of recent technologically advanced data sets. These are concentrated in our core basins, the three most active offshore regions for our clients, offshore Norway, offshore Brazil and The US Gulf. I’m now on slide 13. Earlier, I mentioned our disciplined approach to multi plant project investment.

The Brazilian Equatorial margin is a prime example of our prudent and strategic entry into emerging basins. Located offshore in the North And Northeast Brazil, this region is highly prospective with the petroleum system analogous to the prolific Guyana Suriname Basin, one of the most active exploration hotspots in the recent years. Viridian is among the few players with existing data coverage in this area, and we currently hold the largest footprint. The region is drawing strong interest, particularly from Petrobras, which has designated it as a priority in its five year exploration plan. Recent Brazilian licensing rounds also confirm growing interest for both international and national oil companies.

In short, this is a commercially attractive basin. As it remains in the early stages of exploration, we are proactively securing partnerships to support our upcoming multi client projects. This collaborative approach allows us to share risk and optimize capital expenditure while positioning ourselves for long term success. Now, moving on to slide 14 covering sensing and monitoring performance. In Q2 twenty twenty five, SMO revenue grew by 14% year on year, reaching $93,000,000 This growth was primarily driven by strong land activity, supported by sustained commercial momentum.

Notably, we delivered significant volumes of our wing nodal systems in South America and five zero eight cable systems in the MENA region. Among our SMO new businesses, infrastructure monitoring recorded double digit growth, while our Marlin Offshore Logistics Solution achieved encouraging early commercial traction, including a contract signed with ONGC as announced earlier in the quarter. We remain confident in the outlook for SMO, underpinned by our large installed base and the globally recognized quality and reliability of our products and solutions. And finally, our restructuring plan is progressing well with implementation completed in France during Q2. The positive impact of these efforts is already reflected in SMO’s financial performance.

And finally, on slide 15, I’d like to highlight a major milestone achieved by our team. At the EAG conference in June, which is an important industry conference, we officially launched Accel, the world’s first drop only landmode. This breakthrough innovation is the result of years of close collaboration with clients, extensive field experience and focused R and D. Accel is purpose built to enhance operational performance in desert environments and high productivity surveys, enabling clients to reduce operating costs up to 30%. Its drop only deployment method is the fastest ever introduced, significantly improving the efficiency of seismic campaigns, which are amongst the most logistically and resource intensive operations in the industry.

We are already seeing a strong client interest in this two step change in onshore acquisition, which is setting a new benchmark for the sector and reinforcing Virgin’s leadership in seismic technology innovation. With this, I hand over to Jerome, who will take you through the financial performance review.

Jerome, Group CFO, Veridian: Thank you, Sophie. Good morning and good afternoon, everyone. I’m now on slide 17. As Sofia has already provided a detailed overview of the activity this quarter, I won’t go into too much detail here. Overall, in H1 twenty twenty five, we generated total segment revenue of $575,000,000 up 8% year on year.

In Digital, Data and Energy Transition, our DBE segments, which include Geoscience and our Data businesses, segment revenue reached about $400,000,000 up 9% compared to H1 twenty twenty four. Meanwhile, Sensing and Monitoring delivered $180,000,000 of revenues over the H1 period, representing a 6% increase year on year. Turning to Slide 18, a few words on profitability. Group segment adjusted EBITDA reached $250,000,000 in H1 twenty twenty five, up 25% year on year or £50,000,000 more than H1 twenty twenty four. This solid performance was mostly driven by our DD segment, where margin exceeded 60%, up 500 basis points.

DD delivered $40,000,000 of incremental EBITDA, thanks to a higher Geoscience activity with strong margin conversion. And secondly, reduced penalties in EDA down to sorry, 12,000,000 from £25,000,000 last year, following the end of our vessel contractual agreement in January. Regarding our Sensing and Monitoring division, they contributed to the remaining £10,000,000 EBITDA increase. Margin approached 15%, up five points versus last year. And at EBIT level, we are not far from reaching 10%.

This reflects both higher revenue and the positive impact of the transformation plan launched eighteen months ago, which generated about $8,000,000 in extra EBITDA in H1 twenty twenty five. Finally, corporate costs slightly decreased, showing continuous cost discipline across all the group. Moving to slide 19. Here we do report the IFRS figures for the period. As you can see, the IFRS 16 adjustment is significant this year, minus CHF 83,000,000 on revenues and EBITDA in H1 twenty twenty five, plus CHF 34,000,000 in H1 twenty twenty four.

This adjustment mainly relates in H1 twenty twenty five to our ongoing survey in The U. S. Gulf and Norway. As a reminder, IFRS 15 requires data revenues to be recognized only upon delivery of processed data, deferring prefunding revenue and margin of ongoing surveys. This is different from our segment reporting where we continue using the percentage of completion methodology, which better reflects our business activity and cash generation of the division.

Also worth noting on this slide, the cost of debt remains pretty stable post refinancing in March. Despite higher coupons due to the increased risk free rate, this was partly offset by lower spreads, thanks to our improved credit rating and a reduced bond nominal consistent with the deleverage path we started two years ago. In other financial income, the minus CHF 34,000,000 mainly reflects to the non core premium from the March 25 refinancing, along with unfavorable ForEx impact. Moving on to slide 20 and how all this translates into cash flow. As you can see, we generated £10,000,000 of cumulative net cash flow in H1 twenty twenty five, including £30,000,000 in Q2 alone.

Just as a reminder, as defined in our annual report, net cash flow includes financial charges that exclude one off costs related to the March 25 refinancing operation. Now if we look at the bridge between H1 twenty twenty four, where we generated net cash of £24,000,000 and H1 twenty twenty five at £10,000,000 there are two key elements that more than offset the £55,000,000 gain in EBITDA. The first one, H1 twenty twenty four benefited from one off of £38,000,000 cash inflow coming from the settlement of ten year old litigation with OEC, the Indian National Royal Company. While this was partly offset by the fixed part of our vessel commitment in Q1 last year, it still leaves a net gap of £30,000,000,000 when comparing those periods. The second effect was a significant negative change in working capital in H1 twenty twenty five, mainly due to the overdue receivables from PEMEX, the Mexican national oil company, totaling around £50,000,000 at the June.

Note that we are actively pursuing options to monetize part of this exposure. And as a base case, we expect to recover at least half by the year. A quick word on our debt, which is on slide 21. As you know, we successfully refinanced our bond at the March ’25, with good timing concerning the volatility that followed. We issued two senior secured notes, one in USD and one in Euro, replacing the existing one.

The USD note is now GBP450 million versus GBP500 million previously, and the Euro note is GBP475 million versus GBP585 million previously, reducing the total nominal value as mentioned earlier. Maturity was extended till October 2030, I. E. About five point five years from now. The refinancing was well received with 3x of our subscription and strong demand from broad based international investors.

As of 06/30/2025, our net debt stood at £997,000,000 carrying about £80,000,000 of negative ForEx impact versus December 24. We also maintained strong liquidity with 162,000,000 in cash in hand, as well as £100,000,000 of undrawn RCFs at the end of the semester and the 25 ancillary facility, which is half drawn. That, I will hand it back over to Sophie.

Sophie Zurchia, Chair and CEO, Veridian: Thank you, Jerome. I am now on slide 23 to share some perspective. The oil price environment has been volatile in recent months, but the commodity remains above $60 a barrel, which we consider a general equilibrium point for the industry. And in this context, oil and gas companies have largely maintained exploration and production and development plans, especially in our core segments, offshore markets and business with major industry players. Assuming no major disruption to the current environment, we approach H2 twenty twenty five with confidence, given our active client discussions and continued operational discipline.

And we’re supported in particular by a solid backlog in Geoscience, upcoming licensing rounds that should sustain our multi client activity and continued broad based demand in sensing and monitoring, especially for land solutions. We reaffirm our target of generating around $100,000,000 in net cash flow for the full year of 2025. And to conclude, slide 24 recaps the key elements of the Virgin investment case. Virgin continues to perform reliably, supported by the strength of our team, our technology leadership, our asset light approach and focus on operational efficiency. These competitive advantages support our ability to grow profitably and generate consistent cash flow from operations.

We remain firmly on track on our revised leveraging journey, while responsibly preparing for the future to enter the group’s long term sustainability. Thank you all for attending the Q2 twenty twenty five call and for your attention today. We’ll now open the floor for questions. And the operator, start the questions over the phone.

Conference Operator: Thank you. And your first question today comes from the line of Guillaume Delaby from Bernstein. Please go ahead.

Guillaume Delaby, Analyst, Bernstein: Yes. Good afternoon, Sophie and Jerome. Three questions for Jerome regarding the cash flow statement. So first, on Slide 20, can you remind us why the cost of debt in Q2 twenty twenty five is only negative €1,000,000 So this is my first question. On slide 20, cost of debt for.

Jerome, Group CFO, Veridian: Oh, yeah. Sorry. Yes. Because as part of the refinancing, we we paid our interest in in Q1. And so Okay.

That’s basically the.

Conference Operator: Okay.

Guillaume Delaby, Analyst, Bernstein: Second question, the increase in debt comes from, I would say, mainly from the negative foreign exchange impact on your bond. I think this is correct.

Jerome, Group CFO, Veridian: Correct. Yes. At the net debt level, is about million euros of ForEx impact between December 24 and June. December 24, euros 104 on the euro to dollar exchange rate, June ’17. That’s a massive depreciation of the dollar.

Guillaume Delaby, Analyst, Bernstein: Okay. Third point. So in your €100,000,000 free cash flow guidance, you expect to cash back half of Pemex receivable. So I think Pemex is currently being refinanced through a €12,000,000,000 program. Qualitatively So or quantitatively speaking, do you feel today slightly more confident in your €100,000,000 free cash flow guidance?

Or and I will turn over.

Jerome, Group CFO, Veridian: I mean, reaffirm our cash flow targets. So yes, we are confident in reaching this €100,000,000 As we said, we are proactively pursuing different options for the collection of this Pemex to value. The first one being chasing Pemex itself. And and the other alternative is for reverse factoring and factoring scheme that we are discussing actively with us.

Alexandre Leroy, Head of Investor Relations and Corporate Finance, Veridian: Very clear. Thank

Sophie Zurchia, Chair and CEO, Veridian: you, Guillaume.

Conference Operator: Thank you. Your next question comes from the line of Jean Luc Romain from CIC Market Solutions. Please go ahead.

Jean Luc Romain, Analyst, CIC Market Solutions: Thank you. I have two questions on SMO. First, on the potential of Accel. Do you see this as a new 04/2008 or 04/28 acquisition system in terms of potential revenue? Second, on the margin revenue, it’s striking that over the last few years, marine revenue has never quite recovered.

Do you see any inflection point or do you see the marine market definitely, I wouldn’t say lost, but distant.

Sophie Zurchia, Chair and CEO, Veridian: Okay. Thank you, Jean Luc, and good evening. So two questions on ACCEL potential. I think it has a huge potential. There is the it will certainly with time start replacing the revenue from the cable system.

But right now, we have a large installed base, mostly on the cable system, and we do continue to sell those to complement and replace some of the existing installed base. Now, for the future, the market is moving towards node systems because they’re more flexible and probably cheaper to operate. And we believe we have a very strong value proposition with the system. And what I can tell you is that the system will preserve our margins, right? So we worked it out that on the cost side that we can deliver the same amount of more margins that we’ve been delivering with the cable systems.

So it does have very strong potential because that installed base, which is the case of Marin by the way, and eventually clients will be switching. So those who aren’t switching are buying replacement parts, but eventually there will be a gradual shift. So I do expect a ramp up with this Axcel system. On the marine side, what drove the revenue the last few years was the equipment with acquisition company equipping themselves with OBN, cushion bottom node shallow in shallow water, very, very much driven by the large campaign to Middle East. And in a way, we have saturated the market with those shallow water OBN.

I think the acquisition company have what they need for their projected activity in the next few years or so. So the next opportunity to ramp up with OBM will be with Deporter OBM, which is eventually going to be becoming more active because the basin, the deepwater vessels in the world offshore are very much deepwater. And the acquisition company will be needing eventually more people to OBM to respond to the needs. And there are Chinese companies, acquisition companies that want to enter that market. That’s another additional opportunity to sell people to OBM.

So we’re targeting that market with the marine and as always, we think there will be some and there is already and we sell some streamers as a replacement. It’s not a high volume because as you know, the number of vessels we’ve been down, but we do sell some streamer replacement as well. But the big numbers and changes you’ve seen over the last few years have been driven by that OBN program.

Jean Luc Romain, Analyst, CIC Market Solutions: Thank you.

Sophie Zurchia, Chair and CEO, Veridian: You’re welcome.

Conference Operator: Thank you. Your next question comes from the line of John Olaisen from ABG Sundal Collier. Please go ahead.

John Olaisen, Analyst, ABG Sundal Collier: Yes, good evening and thanks for taking my question. Maybe this my first question goes to Sophie. Some other oil service companies like SLB, Halliburton and Baker Hughes have expressed weakness in the outlook for the second half, in particular for short cycle markets, which arguably your industry is. But your outlook comments seem to be more optimistic than some of your peers have expressed. Is that correctly interpreted?

Sophie Zurchia, Chair and CEO, Veridian: Hi. Good evening, John. To a certain extent, it is because if you start digging into where the softness was, a lot of it was North America, a lot of it was Mexico and Saudi Arabia, and those are markets where we don’t see similar softness. We’re not as exposed as they are to those markets. So in general, we are in markets offshore, deepwater, where our clients, which you’re talking here, national oil companies that have a long term view or large IOCs, are definitely taking a longer term perspective to exploration and development.

So in general, we see more stability. Arguably, you look at the history of E and P CapEx, our sub sector, our sector has been the one most affected by previous cuts. What we’re seeing right now is the cuts are going more into other bits of the value chain and the drilling certainly U. S. Land, the drilling, and driven by some of the clients, some of the annual season, particularly in Mexico and South Korea.

John Olaisen, Analyst, ABG Sundal Collier: So how do you see the general market then for the second half? Is it flattish or is it even improving? What’s your general view?

Sophie Zurchia, Chair and CEO, Veridian: I think I would call it flattish, and that’s my comment is saying that as clients are starting to arbitrate. So first of all, we’re 2025. Most clients have been asking whether they’re going to do with their E and P CapEx this year. They’re pretty much the answer has been, are we keeping course? Some of them are saying we’re growing, we’re shooting to the low end brackets that they have given.

But generally, they are staying the course. So we’re seeing that stability in 2025 with here and there some delayed decisions. But there are the positive side and we have some lease runs and there are some external factors that are sustaining our activity. Now, going into 2026 could be a bit of a different story. It depends on the outlook of oil price for next year.

As you’ve seen, the Q2 results from our clients have been softer because the oil price for Q2 was lower. And it really depends on what assumptions they’re going to be making for 2026. If the oil price is 60, I expect a bit of softness. If it remains 65, 70, right now it’s 72. It should be really a continuation and even go up in a scenario where the oil price is staying at above 17.

It depends. They’re working through it and their budgets are starting now. So we’ll have a better view in Q3, Q4.

John Olaisen, Analyst, ABG Sundal Collier: But if I look at the mix in the Q2 numbers, multi client or earth data sales were down year on year while the imaging business is very strong. Is that something you continue to expect to continue to see in the second half?

Sophie Zurchia, Chair and CEO, Veridian: So John, you know this industry quite well. We cannot read into a quarter. It is a very there’s a lot of cutoff effects. First of all, would advocate you to look at the multi client over H1. And if you look at H1, actually our active cells, which is sort of the nice indicator, is actually up year on year.

So it is, it might be down. There’s been a very strong Q1. A bit of phasing here, so I wouldn’t read too much Q2 to project into the second half, given especially there are some important news rounds that should help drive our business. I did not mention that maybe in addition to that, there’s a couple of transfer fees that should be helpful too.

John Olaisen, Analyst, ABG Sundal Collier: And the transfer fee, I guess, the biggest potential is from Chevron’s acquisition of Hess. Is it possible to give some indication of what timing of the transfer fees and kind of, like, the size of it, potentially how big could it potentially be for you?

Sophie Zurchia, Chair and CEO, Veridian: I would say the timing would definitely be this year. Actually, I’d like it to be earlier in Q3 should be because they closed the deal and they want to be able to move on. We don’t disclose the size and there’s a second deal that that is happening right now, which is Neo Rexall in the North Sea. Between those two, we do expect a sort of an average level of.

John Olaisen, Analyst, ABG Sundal Collier: Oh, say it again, please.

Sophie Zurchia, Chair and CEO, Veridian: It’s neo Rexel. If you remember, Rexel is

John Olaisen, Analyst, ABG Sundal Collier: gonna be

Sophie Zurchia, Chair and CEO, Veridian: Yeah. UK assets into neo. Yeah.

John Olaisen, Analyst, ABG Sundal Collier: And you did you say something about this potential size of the transfer? No.

Sophie Zurchia, Chair and CEO, Veridian: Is happening as we speak to this. The size of the magnitude of the transfer is being evaluated and there are discussions with clients. It depends really on how much they decide to take on in terms of data, how much overlap there might be between the two companies. There’s a lot of factors coming into it. We haven’t amended the number.

John Olaisen, Analyst, ABG Sundal Collier: Yep. All right. And then my final question is back to the question about the net cash flow. Of course, you reported net interest bearing debt increased by $76,000,000 in the first half, which is roughly the same as the currency impact of $80,000,000 And I guess, on top of this, you had the as Jerome you commented on, you had the costs related to the refinancing. Is it possible to say how much those costs were?

Jerome, Group CFO, Veridian: For the for the refinancing?

John Olaisen, Analyst, ABG Sundal Collier: Yeah.

Jerome, Group CFO, Veridian: Yes. We had about 20,000,000 of non core cost for calling the bond earlier than their maturity. And on top, we had another 20,000,000, slightly above 20,000,000 for advisory, including including the banks, which which help between the the two months.

John Olaisen, Analyst, ABG Sundal Collier: Alright. So all in all, about 40?

Sophie Zurchia, Chair and CEO, Veridian: Yep.

John Olaisen, Analyst, ABG Sundal Collier: So so so according to your your definition in this first half, you generated a net cash flow of about $40,000,000 Is that a correct interpretation? And the second half should be about 60,000,000 to get to the 100,000,000 for the year. Is that the correct interpretation?

Jerome, Group CFO, Veridian: So the net cash flow, by definition, excludes the cost of the refinancing. So the €10,000,000 excludes those costs. So to get to the €100,000,000 target, we need to generate €90,000,000 in H2. How do we go from 10,000,000 in H1 90% in H2? As Sophie just explained to you, we expect a stable environment that supports the activity level.

That being said, the cash will benefit from four elements between H1 and H2. First, let’s say, the traditional seasonality that we have between the two semester. Just to give you an example, we pay our bonus in Q1. It’s a significant number. We’re talking €20,000,000 plus that we pay to our employees in Q1.

The second effect is the the penalty that that was in January, which was the end of the contract for $12,000,000 And in H2, we will we’ll have we’ll have zero. As I mentioned, we H one was was impacted by the working capital build up to the of Pemex. And and we said we we we are confident to to partial reduction of this working capital and a partial monetization of this overview. And the final element is CapEx for our library, which we anticipate to be slightly lower than h one. So all those four elements give us confidence that we can generate much more sizable net cash flow in h H2 rather than H1.

John Olaisen, Analyst, ABG Sundal Collier: Yeah. So just so I got it right. You expect about $90,000,000 in the net cash flow in the second half. So that should mean that net interest bearing debt should be about $900,000,000 at the year end 2025? Correct.

Are there any other costs? No, that’s correct.

Jerome, Group CFO, Veridian: At constant FX, yes?

John Olaisen, Analyst, ABG Sundal Collier: Yes. So it should be about CHF 900,000,000.

Jerome, Group CFO, Veridian: You have the accrued interest, I think, on top. But I mean, it’s yes.

John Olaisen, Analyst, ABG Sundal Collier: Do have on top? I’m sorry.

Jerome, Group CFO, Veridian: The accrued interest at the December, because we pay our debt as per the bond documentation in March and October.

John Olaisen, Analyst, ABG Sundal Collier: All right. And will that don’t see how that’s a negative impact. Yeah. More

Jerome, Group CFO, Veridian: or less half of your of your interest cost for twenty twenty twenty five.

John Olaisen, Analyst, ABG Sundal Collier: Okay. Yeah. Yeah. Yeah. Okay.

Thanks a lot for taking my questions. A great rest of the summer. Thank you.

Sophie Zurchia, Chair and CEO, Veridian: Thank you. Bye.

Conference Operator: Thank you. Your next question comes from the line of Kevin Roger from Kepler Cheuvreux. Please go ahead.

Kevin Roger, Analyst, Kepler Cheuvreux: Yes. Hi, good evening. Thanks for taking the question. I would have two, please. The first one is maybe on your strategy regarding CapEx on new MultiClient survey and nodes.

Referring to the fact, for example, that during their conference call and earnings presentation, one of your peer and partner, TGS, mentioned that their partner was participating with less CapEx to the new survey. And from what I understand, Laconia in the Gulf Of Mexico is probably one of the key example where it seems that your participation to the project is now close to 30%. So I was wondering in terms of strategic investment and the take that you’re going to take in new MultiClient survey, how should we think about your positioning inside the industry with those, in a way, example that we had from TGS a few weeks ago? And the second one is on Geoscience that continued to be one of the very strong performance unit for you. You still continue to increase the number of petaflop.

You are now close to 600. So it has been a massive increase over the past year. At the end, can you again give us a bit of color on how much beta flop you need for external revenue, but also for internal research and development, etcetera? And where you want to go for the beta flop capacity at the group level at Viridian, please?

Sophie Zurchia, Chair and CEO, Veridian: Thank you and good evening, Kevin. So first, your question on the multi client CapEx. As I was explaining, we have a portfolio approach, right? We have three buckets. The repro is one where we look at data where we can add value.

We look at core bases and how do we extend our footprint. And we look at strategically positioning and potentially frontier basis in the future like we did in Europe, for example, where I was giving the example of Northeast Brazil. Now the other dimension to that is the partnership. More and more, and I did comment on that in the past, we’re looking for partnerships because it helps manage the risk of the portfolio. And so we do this opportunistically.

And in that case, there was an opportunity to do and willingness to do that. We need to do two or three to be able to do that and where each of the parties sees the benefit for doing it. So I’d say you will continue to see us managing our portfolio, investing in the different types of investments. Some are more risky, some are less risky, and continuing to look for partnership on an opportunistic basis to manage the portfolio risk. There is not one strategy.

It’s a bit of a case by case basis and on our appreciation of the opportunity project and the appetite for other partners to join forces. The second one of geoscience, there’s not an exact science to it. When I joined the company twelve years ago, we had 30 petaflops, and I thought 30 was an extremely high number. And now we’re 600. And so the petaflops follows the need for more computing as we advance technology.

So there’s a bit of a it goes hand in hand with advancing technology, providing value to the client because that’s the bit you need to be checking, making sure you can charge for it and then you can deliver value to the client. And so we gradually increase it hand in hand and if we test the market and see that the technology advances, value to the clients and the clients are willing to buy that approach, we’ll continue implementing that out of the box. Keep in mind that our computing is highly optimized. So perhaps to do what we do, if you took someone that didn’t optimize their computing power, maybe they’d need two, three or four or five times more than computing power. So it’s a big number.

The number in absolute terms doesn’t mean completely everything, all of it, because it is again, highly specialised and highly optimised to what we do. So where is it going? I suspect as technologies continue to advance, as we’re being more and more precise in what we can deliver using more advanced algorithms, more advanced definition, and precision, all equal across the thousand petaflops in the next few years is my guess. And we do have a multi year plan that eventually takes us there. I can’t

Conference Operator: tell you

Sophie Zurchia, Chair and CEO, Veridian: today when because there’s a cost associated to it and we need to make sure as we do that, that we can deliver the value and charge for it in the market.

Kevin Roger, Analyst, Kepler Cheuvreux: Okay. Thanks for all those color.

Sophie Zurchia, Chair and CEO, Veridian: Sure. Thank you.

Conference Operator: Thank you. Your next question comes from the line of Baptiste Lebak from ODDO BATS. Please go ahead.

Baptiste Lebak, Analyst, ODDO BATS: Yes. Good evening, everybody. Just two very quick questions, I guess, from my side. The first one is a technical one regarding Axel and your, let’s say, industrial footprint. Do you need to increase your, let’s say, capacity?

In other words, do you need to put some additional CapEx if there is a strong acceleration of demands? And still on the technical side, is it a solution with no cables between the different node? And second question, Sophie, you mentioned, let’s say, the resilience of national oil companies. Could you give us a split offshore, let’s say, I don’t know, sales in DDA, for example, between NOC, IOCs and independent? Thank you.

Sophie Zurchia, Chair and CEO, Veridian: Okay. So thank you, and good evening, Baptiste. So in Excel what makes it different is it’s a node and a node meaning it’s independent, it’s by itself. And what that allows to do, first of all, it’s super small and you could put it in a backpack and you can drop it. And that makes a huge difference from the past.

Nodes in the past had to be planted in the ground and that increased the operation. It was more heavier operations. This one is smaller, can be put in a backpack, a person can be walking and just dropping the note. So that’s what makes it different. As I was saying, the market is generally shifting from cable systems when the sensors were connected between each other through cables to just independent nodes that are sitting on the floor.

So that’s the technical side of AXA and that there’s a really impressive value proposition and the clients are reacting very well to that. The NOCs, they’ve always been in our mix and sometimes they go up and they go down. But in general, I would say they represent somewhere, if I look at VDE, somewhere around 20% to 30% of our revenue. And it could vary. We don’t sell to E and P companies, sell to acquisition companies.

But I say in SMO, our exposure to NOC is even higher because eventually we’re selling to acquisition companies that are very much operated in countries that are NOC driven like The Middle East, Sudan, India, South America. But in the GDE side, it’s much more balanced between the different client profiles. Call it a third, to make it simple, probably There’s IACs, a third or 20% to 30% in large independents and then national companies. And we work with everyone.

Jerome, Group CFO, Veridian: I think that is your other question on the manufacturing footprint and the impact of XL. There is no impact. It’s way we manufacture this this product, like like any other product for is a mix of insourcing I mean, insourcing. In house. House manufacturing and and outsourcing to suppliers.

In house is usually the electronics, and and we have we have the the capacity to to to do another product like like.

Baptiste Lebak, Analyst, ODDO BATS: Thank you very much.

Sophie Zurchia, Chair and CEO, Veridian: Thank you.

Conference Operator: Thank you. We will now go to your next question, which is a follow-up question from the line of Jean Luc Romain from CIC Market Solutions. Please go ahead.

Jean Luc Romain, Analyst, CIC Market Solutions: Yes. Thank you. Just to follow-up on after the the in The United States passes the law as the administration calls it, do you see a renewed or you estimate there could be renewed interest in carbon capture and in for carbon capture project as the credits have been extended or something?

Sophie Zurchia, Chair and CEO, Veridian: Yes, Jean Luc, I’ll take that one. Actually, if anything right now, we’re seeing a slowdown in CCUS space. A lot of those projects were driven by the traditional oil and gas clients, and they just are arbitrating more towards oil and gas. If you remember throughout the downturn and the energy transition or the COVID era where energy transition became more important, they cut more their E and P CapEx and created money, carved out money for the low carbon and other initiatives. And right now what we’re seeing is a little bit the opposite where oil and gas is being preserved more than the carbon sequestration project.

So if anything, we’re seeing in general a slowdown in that space, things being delayed.

Jean Luc Romain, Analyst, CIC Market Solutions: Thank you.

Guillaume Delaby, Analyst, Bernstein: Sure.

Conference Operator: Thank you. There are currently no further phone questions. I will hand the call back to Sophie.

Sophie Zurchia, Chair and CEO, Veridian: Thank you very much. I appreciate you taking the time in the really, really busy time of the year and for the good questions and wish everyone a good summer break, and we’ll see you in September.

Jerome, Group CFO, Veridian: Thank you, everybody. Have a good night.

Conference Operator: Bye. Thank you. This concludes today’s conference call. Thanks for participating. You may now disconnect.

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