Quadient S.A. (QDT.PA) 2026-09-23 Earnings Call Transcript

Good evening, everyone. Welcome to Quadient's First Half 2026 Results Presentation. I'm Laura Paxton, Quadient's Head of Investor Relations. Today's presentation will be hosted by Geoffrey Godet, our CEO; and Laurent Du Passage, our CFO. The agenda for today's call is on Slide 3. [Operator Instructions] Thank you very much. And with that, over to you, Geoffrey.

Thank you, Laura. Good evening, everyone. Let me remind you, as we get started, of the strategic direction that we set at the beginning of the financial year since everything else follows on from it. The pivot to digital is not new for Quadient, as you know, we've been preparing it for years. Demand for digital automated business and financial communication keeps building up. Artificial intelligence is accelerating it. The digitization of financial workflows is also accelerating and so are the invoicing mandates coming across Europe. And we set a clear objective, digital becomes Quadient's largest and most profitable solution by 2030. So this is where the growth is. This is where our capital and our focus belong. We reinforced the Executive Committee with 4 digital business leaders at the beginning of the year, and I personally took over direct leadership of the digital business. Additionally, this year, on the 20th of July, we announced that we were conducting a strategic review of our Lockers business. This review, I'm happy to report that is now complete. And I will take you through the outcome on the next slide. But first of all, let's look at what the locker team has built. So moving back to 2018, lockers was small, we would say, around 2,000 lockers and around $6 million in revenue. Then quickly after that, as we set our strategy, we acquired Parcel Pending, a U.S.-based company in 2019. And then from there, progressively, we expanded across the U.S., Canada, Japan, the U.K., and France. We also made another acquisition called Package Concierge, another U.S.-based company to consolidate the U.S. market in 2024. And in 2025, as a summary, the business delivered EUR 114 million of revenue. So just as a quick reminder, this represented a 22.4% growth versus 2024 on a reported basis and represented also 11% of Quadient revenue. The EBITDA margin was 5% last year, which was up 4.4 points after already passing the breakeven point in 2024. So if I was to summarize in 7 years, we multiplied 19x the revenue and around 14x the installed base of location of lockers worldwide. We could say that we have today a mature asset, profitable and at scale with the #1 position in the U.S. and in Japan and a U.K. network that scaled actually very fast in the last 3 years. We could say that this business has delivered on its promise. So just take the opportunity to thank obviously all our partners and our customers and most importantly, the Quadient team that built up this business for us. And this is the context in which we ran the strategic review this summer. So now the time is right to consider what is next for lockers. So let's look at the outcome. Moving to Slide 6. In conclusion, I think the review produced 2 major outcomes, and you can see them on the left. The first, following a competitive process, we have signed an agreement to sell our U.K. operation, our open network to a company called IDS for EUR 65 million. The second outcome is that we also have launched a sale process for the rest of our Lockers business. As a result, the locker solution is now presented in accordance with the accounting rule called IFRS 5 in this presentation and in our first half financial statements. Consequently, 2025 figures have been restated on the same basis. Laurent will take you through all those changes and their impact. So let's start with the sale of the U.K. open network to IDS, which, as a reminder, is the owner of Royal Mail and also importantly, is an affiliate of a company called VESA Equity Investment, which is a shareholder of Quadient. So let me come back to the price. The price is EUR 65 million. I would highlight a few key points. The U.K. was the least mature of our 3 key geographies with an expected 2026 revenue at a little bit more than EUR 10 million, and it was doubling. We had a fast growth doubling in size versus '25 as we were in the ramp-up period of getting more and more usage. And given this early stage of development because our locker investments are usually on a 10-year cycle, the first 3 years, it was naturally the most capital consuming of our open network basis. Getting that price on that stage, on that maturity of the development provide us with a very strong return. The agreement, I want to stress this, came out of a competitive process that was run obviously with the advisers that we mentioned to you at the beginning of July. We had a chance to consider multiple offers that we have received. And naturally, after reviewing them, the Board of Quadient concluded that this offer delivered the best value for the U.K. network and was in our corporate interest and its stakeholders, all our shareholders and therefore, approved the transaction unanimously yesterday. We expect this transaction after the signing yesterday to close before the end of 2026, hopefully even sooner. So let's move to the next point that I want to talk to you about, about the consequence on leverage for Quadient. We expect the proceeds to take our leverage ratio target, which exclude leasing from 1.5x, which was our previous guidance, to 1.2x. Let me be precise on this one. These improvements come from the U.K. transaction alone. It assumes nothing about the rest of the process and nothing about the CapEx, which is my next point. So if I step back a little bit on our capital expenditure at the Quadient level and to be clear, we focus on the Lockers business as a whole, even though the U.K. represented a large portion of the CapEx of the lockers, it more or less now will remove around EUR 120 million of lockers CapEx over the next 5 years, EUR 120 million that are no longer required, and it's a capital that we can now redirect to new priorities and focus. My next point is that we expect, obviously, additional proceeds from the sale of the rest of the Lockers business, and this is in addition to the proceeds from the U.K. This includes, obviously, for the rest of the locker, our Japanese base and our North American operation to cover what we have. These are our largest and much more profitable lockers networks. They hold a leading position, the #1 position in their respective markets. We are currently engaging with potential buyers. And obviously, like we are doing right now in the U.K., we will update the market in due course as we make progress. Put all of this together, and we have what we could say now a strategic and financial flexibility that we simply did not have 6 months ago. So let me now hand it over to Laurent for the first half financials. Laurent?

Thank you, Geoffrey. Good evening. And before going into the numbers, a word on presentation. Just following the strategic review, as mentioned by Geoffrey, the lockers business is reported in accordance to IFRS 5 in our half year financial statements. And the European private lockers network, which we are retaining as they are largely managed through mail employees has been reclassified within the Mail segment. All 2025 comparatives shown today have been restated on the same basis, except if explicitly mentioned, so that the figures you see are fully comparable. This reclassification strongly benefits to our EBITDA and EBIT at group level as lockers are dilutive to the Quadient margin. It brings about 130 basis points on EBITDA and about 230 basis points on current EBIT margin. On the revenue side, as you can see on the slide, the translation post IFRS 5 is very straightforward. Digital scope remains unchanged and Mail is about [ EUR 3 billion ] of revenue for the private Lockers network being added into H1 2026. On that basis, Quadient delivered EUR 448 million of revenue in the first half of 2026, representing a 2% organic decline compared to the same period last year. Digital confirmed its growth momentum, up 6.7% organically at EUR 146 million, while Mail was down 5.7% at EUR 302 million. From a geographic perspective, again, North America, our largest region, was essentially flat at EUR 254 million. Main European countries were down by 4.4% at EUR 165 million, with, as usual, we'll see that further later, a stronger mail underlying decline in this geography. International is down by 4.9% at EUR 29 million, mostly driven by Mail. Turning now to profitability. While as just mentioned, total EBITDA margin is improved post IFRS 5 due to the dilutive EBITDA from lockers, EBITDA by -- at Digital and Mail level are impacted by some lockers stranded cost and [ dissynergies ] reallocated to both solutions and impacting EBITDA margin by about 0.6 points on top of which we have a small dilutive private network impact on the Mail side for 0.5 points. Group EBITDA margin stands at 21.5%. It's down 0.8 points compared to last year, mostly due to the erosion on Mail side and unfavorable mix effect. Digital margin was stable at 14.5% despite the implementation costs linked to the French invoicing go-live and of course, the ForEx. Current EBIT for the period came in at EUR 57 million, a 5.9% organic decline due to Mail. Let's now turn to the revenue bridge on Slide 9. Starting on the left with EUR 465 million restated revenue for last year H1. This bridge shows the continued rebalancing of our portfolio. Digital contributed EUR 9 million of additional revenue, partially offsetting the EUR 19 million of organic decline in Mail. The scope effect added EUR 2 million from the acquisitions of both Serensia in June last year and CDP Communication in December '25. On the right-hand side, currency had a EUR 10 million negative impact, and it's all coming from Q1, meaning on Q2, no currency impact on the bridge. All in reported revenue declined 3.7% and by 2% on an organic basis. Moving now to the current EBIT bridge on Slide 10. On the EUR 64 million restated current EBIT last year, digital EBITDA growth of EUR 3 million partly offset the EUR 6 million decline in Mail EBITDA, and you have an additional EUR 1 million of organic increase in depreciation and amortization, notably tied to digital R&D. Currency accounted for EUR 3 million of negative impact on the current EBIT, while the scope effect was relatively neutral at the EBITDA level. As a result, current EBIT for the first half stands at EUR 57 million, down 5.9% on an organic basis. Let's now move into the details of the performance by solution and starting with Digital. On Slide 12. So before reviewing specifically the half year, let me put our digital performance into a longer-term perspective and note that those figures are prior to the application of IFRS 5 due to the lockers that are due to the lockers business for the sake of the consistency of those figures across the long time period. On the bottom left chart, our annual recurring revenue has grown from EUR 109 million in 2019 to EUR 264 million at the end of July '26, a compound annual growth rate of about 15% per annum with a remarkably regular improvement over the period. The chart on the bottom right now shows the same story on quarterly revenue with subscription-related revenue growing at 16% compounded growth rate since 2020, a logical similar trend compared to the ARR and now represents 87% of the digital revenue at the end of H1 2026. And on the top left side, you can see the profitability of Digital with EBITDA rising from around EUR 20 million over a 12-month period at the of the chart and to more than EUR 50 million if you take both H2 last year and H1 this year in for the past 12 months. Over to you now, Geoffrey, on Slide 13.

Thank you, Laurent. I mentioned at the beginning of the call that our focus is on our digital solution. I think we could say that we have built a comprehensive and differentiated B2B platform centered around business and financial communication. We bring it all together in 1 connected experience, customer communication management, invoicing, account payable, accounts receivable, payment and cash visibility. Once the customer is on the platform, every module, every product offers opportunities for upsell, making our solutions stickier for the customer. Compliance, whether regulatory or financial is the entry point. It's not a destination. And every change in regulations offers new opportunities for us. The invoicing mandate in Europe is a case in point. This is a clear regulatory catalyst that offers significant growth opportunities for digital solutions. Take the example of France, it just went live with its invoicing mandate on September 1. Germany follows in 2027, the U.K. 2029 and the broader European framework in 2030. Everyone and each one of those deadline extends our addressable base market by market over several years. This is not a single event in 1 country. It's a sequence for which we have been preparing for and which we reinforce the synergies between our Mail and Digital activities. Our mail solution brings a large installed base of business customers who will have to digitalize their financial processes. What goes through a franking machine and for those installers are mainly invoices, which will have to find the delivery electronically in the future. We're, therefore, ideally positioned to support our mail customers into their digital transformation. Moving on to the next slide. Let me give you the facts on e-invoicing in France, where the go-live happened on September 1, so barely 3 weeks ago. Since that date, every business must be able to receive electronic invoices. Large and midsized companies must issue them. The issuance obligation extends to SME in September 27, which is a year from now. End of '28 will be the first full year of the widened scope. Now where do we stand? As of September 21, just a few days ago, more than 950,000 entities were registered with Serensia by Quadient. 950,000 were a little bit short of 1 million entities. That also includes entities registered with our partners. As a reminder, we go to market directly and through white label. For a business we acquired 15 months ago, this is a strong commercial success as we currently are one of the largest platform in terms of registered entities. Now there's 2 different categorization based on SIREN or on SIRET numbers of companies or entities. Slightly less than 50% of the companies and entities in France have registered with the new invoicing platform to date. For the one that have registered with the companies or entities, we can estimate that we currently have between 13% to 19% market share, a market share that is now much bigger than we have ever anticipated. Contracted annual invoices now stand around EUR 350 million, and this is to be compared to a total nationwide number of invoices that we estimate from the French government between EUR 2 billion to EUR 2.5 billion of B2B invoices exchanged annually. We have a commercial momentum that is very strong. The invoicing booking in France grew 11-fold year-on-year in the second quarter. Let me just repeat this. Invoicing booking in France grew 11-fold. This includes a multimillion-euro white-label agreement. Now let's go on actual volumes. I want to be measured. We processed in the last few weeks -- in the last 3 weeks, only 700,000 invoices. We expect the ramp-up to remain slow and probably slow until the end of the year as there are only a few platforms fully operational in France, limiting the digital exchange of invoices, right? Somebody registered with us, they'd like to send invoice to companies that is not yet registered, but the exchange cannot happen digitally still, right? So we need the entire market to be able to come together. So there will be an exponential acceleration progressively, but we're still in a slow ramp-up phase. Market is in just in its first few weeks. Many receiving platforms are still coming online. A lot of the different platforms that have obtained their registration are not live yet, and they will likely come in the next few months. Adoption will take time. So what matters at this stage is the following: We are certified, we are live, we're fully operational. And I would add that we are part of a limited number of fully functioning platforms. We are operating without any incidents, and we have secured an already significant numbers of customers, so the volume will continue to follow. On monetization, the model is a subscription structured by deal type plus the monetization of the usage of numbers of transactions of invoices. So if I focus on our direct go-to-market, where we sell directly to companies, we offer a subscription fee plus an invoice volume commitment. We now focus on our white label customers, we offer them a subscription covering a committed volume that will be guaranteed revenue for us. And in both cases, sorry, invoices above the commitments will be billed per invoice. Now invoicing is way more than just processing invoices. For us, it's a fantastic upsell opportunity within our digital platform. So let me explain to you why by turning to the next slide. The e-invoicing mandate brings customers to us in France, but also in other European countries as we build a proven track record of delivery and reliability. The opportunities around this initial invoicing service and what drives customers retention in the long term and what helps grow our relationship with them. On our digital platform, e-invoicing is embedded with account payable automation. So the customer gets approval and purchase order matching. He's got an ERP integrated workflows, he's got payment control and compliance with e-reporting. They move from being just compliant to actually improve how they work and the benefits are tangibles. Our published figure shows 5x average return on investment on those solutions. Invoice processing time cut by half, approvals 56% faster. From there, we connect account payable with accounts receivable, and that gives a real-time view for a CFO of both sides of the cash cycle. In June, if you remember, we launched our AI-powered cash dashboard, which report now better forecasting and better working capital decision for those modern CFOs. So each new module deepens the relationship and each one of them increase the value of the platform, which in turns for us into more upsell. Looking ahead and to give you a sense of the proportion for the opportunity for e-invoicing, we're expecting revenue from e-invoicing to increase at a very fast pace from now to 2030. In terms of upsell into the financial automation, we expect the invoicing and financial automation solution combined to represent close to half of our European digital revenue by 2030. Another key point that I'd like to stress with you is our solutions are recognized obviously, externally and such across our customer journey. So if I take a few examples, during the period, Quadient was named a leader by Quadrant Knowledge Solutions in the SPARK Matrix for account payable automation for the third year running. And the same SPARK Matrix for accounts receivable application and this one this time for the fifth time running, in both cases, specific recognition for AI-driven capabilities. Moving to the next slide. I do not want us to lose sight of customer communication management. It remains the foundation of our digital business. And this ties together the financial automation and invoicing to the rest of Quadient offering. Our performance remains very solid for our CCM business, especially in the U.S., where we have signed several large deals in H1. So let me give you a few examples. We had a long-standing U.S. financial services customer that signed a multiyear agreement to expand from a point solution to a full CCM platform. This is a multimillion dollar commitment. To give you another example, a major health care customer expanded volumes by 75% from 4 billion to 7 billion pages and they consolidated on to Quadient, displacing competing solution again. Now both of these are expansion within our existing enterprise or larger enterprise customer base, right? In both case, we're replacing somebody else. So we took -- it was a competitive win. So for me, that's still the clearest evidence that this platform delivers at enterprise scale. So why do customers choose us? I'll give you 5 main reasons: unified platform, flexible deployment, governance, compliance and enterprise at scale. Similarly, to the financial automation product, Quadient was also named a leader by the Quadrant Knowledge Solutions in the SPARK Matrix for Customer Communication Management for the sixth year in a row. So we sit at the top right of the leader band on both customer impact and technology excellence. With that said, Laurent will now take you through the digital numbers.

Thank you, Geoffrey. The digital revenue reached EUR 146 million in the first half of '26. It's up 6.7% organically. And nonrecurring revenue increased further to EUR 264 million, representing an annualized organic growth of 12.9% compared to the end of January '26. This was driven by the momentum of bookings. It's up 20% in Q2 versus last year related to French invoicing and by a solid performance in North America in CCM. It includes around EUR 5 million of contractually committed components related to invoicing and also absorbs EUR 1 million of negative currency effect compared to January '26. Subscription-related revenue continued to show a sustained growth. Nonrecurring revenue improved markedly in Q2 compared to Q1, thanks to a more moderate decline in professional services revenue. On the right-hand side, EBITDA reached EUR 21 million, up 17% year-on-year on an organic basis with an EBITDA margin stable at 14.5%. It's a solid outcome given the increase in implementation costs tied to the French invoicing go-live, and we expect margin progression over the full year. On an organic basis, margin has increased by 130 basis points. Now moving to Mail on Slide 18. The structural trend in Mail is well understood, and it has not changed. But what I want to show you here is different. Mail is not simply a declining business that we manage for cash. It is an asset that is actively supporting the digital transition. In Europe, cross-sell of digital financial automation solutions to Mail customers grew 4-fold ahead of the French mandate. So the Mail base is doing exactly what we said we would do. It gives quite privileged access to business as they digitalize their financial processes. At the same time, we keep investing where customers ask us to. We launched the iX-9, a premier mailing system in France, which extends our leadership at the high end of the market. We secured a major U.S. public sector deployment for certified Mail. And our DS-67iQ for the is now rolling out globally. We also continue to create intelligent devices by adding complementary software to our mailing solution globally. To date, we have rolled out our intelligent solutions to almost 80,000 customers globally, reinforcing the value of our mailing hardware. We continue to add capabilities to this solution with Smart e-Certify, ability to print and manage all certified and tracked mail and digital steps coming in November this year in the U.S. The customer relationship remains strong. Satisfaction was above 96% globally and 98% in North America, our largest market. Quadient was also named a Leader in the IDC MarketScape for Worldwide Mailroom Solutions and Services in its 2026 Vendor Assessment. Let's now move to the number for Mail on Slide 19. Mail revenue stood at EUR 302 million in the first half. It's down 5.7% organically. The 2 factors explain this performance. First is a slower subscription related revenue, reflecting the gradual contraction of the installed base after the lower placement of recent periods; and second, software hardware volume in Europe, partly offset by the resilience in North America. Q2 was down 6.4%, a weaker sequential performance, which mainly reflects the expiry of -- at the end of Q1 of a service contract in the U.K. Excluding this specific impact, the underlying trend was stable over the 2 quarters. On the right-hand side, Mail EBITDA came in at EUR 75 million. It's down 6.6% year-on-year on an organic basis with an EBITDA margin of 24.9%, down only by 0.6 points despite the top line performance. This resilience reflects our continued cost discipline, U.S. tariff reimbursement as well as the commercial productivity gains achieved with digital in connection with the ramp-up ahead of the invoicing mandate in France. Moving now to Quadient financials. So first, let's review on Slide 21, the P&L. And as you can see in this slide, the 25 comparatives are shown both as published and restated for the application of the IFRS 5 to the Lockers business. Starting from current EBIT of EUR 57 million, optimization expenses and other operating income amounted to EUR 7 million, essentially to restructuring in Mail. This brings EBIT to EUR 50 million. Net financial expenses stand at EUR 23 million, slightly above last year. Income before tax is therefore EUR 27 million with an income tax charge of EUR 7 million. This charge benefits from the release of EUR 5 million tax provision. Net income from continuing operations comes out at EUR 21 million and net income from discontinued operation is negative EUR 11 million, and that reflects the measurement of the lockers asset at fair market value less cost to sell in Europe outside of the U.K. plus the loss of the business over H1. All in, net income for the period stands at EUR 10 million, of which EUR 10 million attributable to shareholders. Moving now to Slide 22 and the cash flow. We are up to a very strong free cash flow standing at EUR 34 million for the first half. It's a significant improvement compared to the negative EUR 4 million we had last year at the same date. Starting from EBITDA at EUR 96 million, other items represent a EUR 10 million outflow, bringing cash flow before net cost of debt and tax to EUR 86 million. The change in working capital required is a EUR 25 million outflow. It's a normalized level compared to H1 '25, reflecting our business model and building seasonality. Last year, if you remember, this working capital was particularly affected by the additional inventory we had built at the end of January '25 and that was paid over the first half of '25. The change in the receivable contributed to a positive EUR 29 million, reflecting the continued decline in our installed base. Interest and income tax paid amounted to EUR 31 million. It's well below last year to EUR 52 million, which included, as we mentioned last year, one-off impacts of the bond refinancing as well as the BEAT tax and Swiss exit tax payments. Cash flow from operations, therefore, reached EUR 59 million and after capital expenditure of EUR 25 million continues to reflect the low level of CapEx in Mail, free cash flow comes out at EUR 34 million. Cash flow from discontinued operation rep an outflow of EUR 12 million, higher than last year due to the EUR 5 million plus increase in CapEx in the U.K. Moving now to Slide 23 to give you some details on the CapEx. The capital expenditure presented here, including -- excluding IFRS 16, stands at EUR 25 million for the first half, down from EUR 28 million last year, mostly due to the lower placement in mail. This mainly reflects a reduction of mail CapEx in line with lower franking machine placements, while investment in digital is growing also due to acquisitions. As you can see in the published figure from 2025, lockers accounted for a very large share of total CapEx was about 30% (sic) [ 14% ] in H1 '25 against a revenue that represented at the time about 10% of the company. Moving now to Slide 24. focusing on the net debt and the leverage, the debt stands at EUR 683 million, that includes IFRS 16 at the end of July '26 is broadly stable compared to the end of January. And in reality, it hides a ForEx adverse to the debt at EUR 15 million between the 2 [ dates ]. It's offset by the cash generation during the period. At the end of H1 '26, it breaks down into EUR 435 million of net financial debt for leasing and EUR 216 million of non-leasing debt as well as the EUR 32 million of IFRS 16 debt. Our leverage ratio, excluding leasing, is stable at 1.6x EBITDA, even if when removing EBITDA from lockers and cash held by lockers entity, which is EUR 7 million, the leverage at group level stands at 3.1x, including leasing. Please note that the H1 ratios reflect the application of IFRS 5, while prior periods have not been restated on this graph. Those ratios continue to stand well below our covenant levels. And as mentioned by Geoffrey, the sale of U.K. open network is expected to bring the leverage ratio, excluding leasing, down to around 1.2x by the end of the financial year. Moving now to Slide 25 and our financial structure. Our liquidity position at the end of July was still strong at EUR 123 million in cash, EUR 300 million of undrawn credit facilities maturing in 2030 and a customer lending portfolio at EUR 522 million, contributing to future cash flow visibility with maturities well spread over the coming years. Subsequent to the period end, in August, we carried out 2 transactions, the issuance of EUR 100 million Schuldschein loan and a German private placement and the earlier repayment of EUR 65 million of our existing Schuldschein covering the tranches maturing both in November 26 and May 27. This confirms both our access to diversified sources of financing and our discipline in managing a balanced maturity profile. Let's now move to the conclusion on Page 26 and 27. We are confirming our guidance for the full year on a basis that now excludes lockers. You can see the translation on this slide. Our previous guidance for fiscal year '26 was organic revenue change of minus 2% to plus 2% EBITDA margin above 20% in digital, above 25% in Mail and above 10% in lockers and the leverage ratio, excluding leasing of 1.5x. Now take lockers out and that translates mechanically organic revenue change of minus 3% to plus 1%. EBITDA margin above 19% in digital and above 24% in Mail. These are the figures we confirm for the full year. And I stress this is a technical translation. It's not a change in our view of the business. The margin step down reflects the relocation of lockers costs and the synergies across digital and Mail. And for Mail, it also reflects the dilutive effect of the European private network, private lockers network we are keeping. On average, the same translation takes out our deleveraging targets from 1.5x to 1.6x because local EBITDA comes out. Then we apply the proceeds of the U.K. sale and that takes us to the 1.2x at the end of the financial year, comforted with the strong free cash flow generation at the end of H1. That the sale completes before year-end. And finally, moving to Slide 28. So the same logic applies to our 2030 ambitions. And here, I want to be explicit about what we are doing. 2030 revenue ambition, if you remember, by solution are unchanged. It's around EUR 550 million for digital and around EUR 500 million for Mail. On profitability, take out and the ambition we announced in March will mechanically come down as well, around 29% for digital instead of 30% and a range of 19% to 24% for Mail instead of 20% to 25%. We expect to absorb that impact in full. So we are maintaining around 30% for Digital and to 25% for Mail by 2030. On the restated scope that is an upgrade. It is our commitment to absorb around 1 point of margin over 5 years through the growth we are building in Digital, taking lockers out does not dilute the ambition we set and Digital is on track to become Quadient's largest and most profitable solution by 2030. A Digital business growing with strong regulatory and structural tailwinds behind it, a mail business that is resilient and that is actively feeding digital transition and with financial flexibility to act. Thank you. And with that, I think we are ready to take the questions.

[Operator Instructions] At the moment there are no questions from the conference call.

[indiscernible] Written questions. Thank you, everybody. So first question, what is the expected time line and valuation range for the remaining assets? U.S. and Japan businesses where Quadient holds leading market positions. Do you expect the transaction to be completed by the end of FY '26? Would you pursue a single buyer for the entire business or separate transactions by geography?

It's a good question. I think what is important is to do the process right and maximize the value for Quadient. So that's really, I think, our guiding principles. The U.S. market is a market we probably have close to 1/3 or 40%, 1/3 of the market share. We're definitely #1. It is an at-scale business. It's probably representing 85% or 90% of the rest of the revenue. So this is really the primary asset in terms of value creation. It is a profitable base. It is cash generative. So we have obviously a lot of things for us to look for. In combination to the strong position, we also have the Japanese base, where we have 7,000 lockers, roughly a little bit less than half the base in the U.S. It's a more mature base, strongly cash generative. We have probably 65%, 70% market share still left there. So I would call them definitely premium assets with respect when comparison to the lower maturity of the asset that we just sold in the U.K. We do have obviously global players that are operating throughout the U.S. and Japan in different areas that are interested by those assets because they obviously play into the locker themselves, use lockers, invest in lockers, potentially also use their own lockers. And we also have local or country-specific interested parties. So I would say it will take as long as it needs. The rest of the lockers is obviously a little bit more complex than the U.K. We have several entities across several countries spanning from France, U.K., U.S., Canada, Japan, et cetera, with a bigger scope of the business. And so aside that, we'll do what we think is the right thing to do. We have obviously communicated this announcement publicly. So it's also in our best interest to move diligently and as efficiently as we can on that. I'm not going to commit to any particular time line. We obviously just want to make sure we are doing the right thing, but we are definitely focused on it now that we have completed the U.K. sale.

Thank you, Geoffrey. What is the return on investment of the lockers business?

So on this question, I can take it. I'm not sure if the return on investment is you're looking to the divested part or the existing part, I think we've been quite clear when we are presenting the investment in lockers that we're expecting notably in Japan, we discussed for that, but in the U.K. that we were expecting an internal return rate that was significantly above our WACC, whatever the region of the world is. I think the divestment of the lockers in the U.K. is an example of divestments where we've been achieving those goals in terms of return. It's the same that we see today in the Japanese space when we look at the future cash flow. And as mentioned by Geoffrey, it's also the rest of the Lockers network and its quality that we expect to produce a strong payback, which I remind you is already significantly positive in terms of EBITDA on the regions that are Japan and North America.

Will the EUR 120 million of locker-related CapEx that is expected to be freed up over the next 5 years, be reallocated to accelerate investment in the digital business? And over what time frame does management expect to eliminate the EUR 2 million to EUR 3 million of stranded costs?

So a few points. I think I could talk a little bit about the strategic allocation of our capital and maybe you can specify the costs that are probably a little bit more complex than what was mentioned in the question. So from a capital allocation perspective, I think we've been in our last Capital Market Day, pretty specific on how we intended to allocate CapEx, deleverage of the company, debt reduction, shareholder return, notably dividend, also share buybacks. And obviously, where we think it was needed also to invest into the business and potentially at times also doing some smaller acquisitions like we've done with Package Concierge, and we've done more recently with Serensia. I think we've been also very clear as it relates to what is our focus and our strategy, right? And our decision to sell the Lockers business is only to be able to focus even more on our goal, which is to make digital the largest activity naturally of the group and see the momentum that we see we've been investing in Europe. Now as a reminder, to achieve our goal for 2030, this is an organic plan and does not require -- does not necessitate any inorganic investment or allocation of capital. So from that perspective, we just remain opportunistic, right? So now that I have shared that context, I think it's important that we complete the U.K. sale, we finished the divestment of the rest of the lockers. And once we have received those proceeds, it will be probably around after our full financial communication for the full year. So now that then there will be a good time to reset the expectation, I think, for the coming years. And as part of that, obviously, to be able to share with you what the Board of Quadient will have decided in terms of allocation of those resources and capital. But from a business priorities, I think we are pretty clear and pretty focused on what we need to do.

Thank you, Geoffrey. Could you remind us what the revenue and EBITDA from the U.K. open network was? And what multiples do the EUR 65 million represent against these?

So I think Geoffrey mentioned the revenue being expected more than EUR 10 million this year and EBITDA being expected breakeven this year.

Is it safe to assume that the U.S. and Japan will be sold to 2 different buyers?

No. It's not safe to assume that. We have a business that has a common platform, a shared R&D. It's 1 platform. It's the same platform that is being used by the U.S. consumers, the multifamily, the residents in the U.S., the one that is being used in Japan or Canada or the rest of the world, by the way, into the U.K., which is a good opportunity for me just to specify. We sold the U.K. based, but we did not sell the IP of Quadient, right? So the platform is the ownership of the platform and the technology and the R&D, whether it's hardware or software is retained by Quadient. So this is really what we're selling is the distribution and of the locker base in the U.K. and we retain that IP and that IP is necessary to sustain both the U.S. and Japanese base notably. So there's, I think, a legitimate case for a buyer that would be interested by the entirety. That being said, we obviously -- this is the purpose of the process. We'll remain open to see if there are various interest as part of the business. And if it makes sense and it creates more value, then it's something we could also consider.

And how does Quadient intend to use the disposal proceeds, debt reduction, enhanced share buyback program, a special dividend or reinvestment in the digital business?

So I think it's a similar question from the one we have before. I think I could just use the difference on the short-term basis. we do expect to receive the cash of the EUR 65 million of the U.K. divestment before the end of the year. Laurent explained to you that based on that, we will be able to deleverage the company much further than what we had anticipated in our guidance. So from the 1.5x to the 1.2x at minimum, obviously, but that's a short-term deleverage. And I think it will be great at the full year result to be able to come back to you and set a new expectation as we move forward in line with our business strategies, which is obviously to focus on our digital business and shareholder return.

And could you give us an overview of the criteria on which the transaction was done?

Yes. On that front, I think we have a very open process, and we have received obviously multiple bids because also the quality of the assets, and we reviewed it independently and I would say, on different aspects. Obviously, price is 1 of them, speed of execution, also the quality of the partnership because I remind you that we didn't sell the IP here. It's just the distribution. So what does it mean for the coming quarters, for the coming months in terms of software, for example, in terms of support, services, et cetera. So all those elements. And obviously, the IDS software has been the best offer we received.

And could you give us some more color on the involvement of VESA in the lockers, mail and digital business?

None whatsoever. And we're very grateful to have them as our first shareholder, but they are not at the board, and they have no Board representation. Therefore, they're not part of the deliberation, evaluation, reviews of the different stage of the offers we have received for the U.K. neither as part of the decision and the making of the decision about which offer to select and which deal to make. And after that, I will not speak on behalf of any of our shareholders about anything else that they may think or have expressed unless they have expressed it publicly.

And what are your expectations regarding the cash proceeds from lockers divestitures? Leverage is already under control and 2030 goals are organic.

So that's a good comment and statement. It's logical. And I think with Laurent, we've been very clear and being supported by the Board that for us, this year was the year where we needed to get shareholder return and being focused on the return to our shareholders. We have made during the last few years, significant investment to transform the company. And we felt that it was time also to be able to provide return to our shareholders. Now there could be different ways, right, the share price, the dividend, the share buybacks. And it's true that unless there was something significant that would come, we can achieve our 2030 ambition without that. So a big part of the analysis between what is expected as a fair deleverage, the interest rates are also increasing or they haven't been as low as they used to be, and we need to also anticipate how the market condition could evolve. So there's always a case with a little bit more deleverage. And after that, we have many other options, I think, to create that shareholder return. Dividend is part of our policy. We've been increasing it steadily year-on-year. Now if we have exceptional proceeds, I think that will also be something we could review. And obviously, there's also a legitimate evaluation of the opportunity of doing a share buyback, especially when we have a share price that is low. And that's part of what the Board is reviewing on a regular basis and have made decisions on a regular basis to augment or initiate a different program in the past. And I think it's in that light that I am sure we will review those expectations and set a new course probably at the beginning of next year.

Thank you. So IDS Holdco is owned by EP Group, [ Mr. Kretínský ], who is also more than 26% shareholder of Quadient through VESA. How was the conflict of interest managed in the transaction? Were there any competing third-party offers for the U.K. open network? And did the Board obtain an independent fairness opinion confirming the EUR 65 million valuation?

So this was a very competitive process. We had received several multiple offers at various stage, nonbinding and obviously, preliminary LOIs at various level of indication of interest before we could select the right body for us. We had independent advisers with Societe Generale and also our legal advisers, [ Darin ] has supported us in the process to make sure we could have a good and fair valuation of the different terms and conditions that was presented to us. But I think on just the merit of the competitive offer, I think for the Board, which is an independent Board and [ Mr. Kretínský ] or his entities to not participate at the Board of Quadient, right? So the Board has been able to review those without any interference from anybody else. And I think we made the decision that was in the best interest of Quadient based on a very competitive process.

Thank you. There is a provision for the European parcel network on which country? What would be the remaining equity for the European parcel network? Is there a specific explanation versus other areas where parcels are strong? And is the European parcel network to be sold in the medium term?

So I'll take that one, Geoffrey. The rest of Europe in terms of balance sheet, in terms of size is relatively small. So basically, the level of equity is limited outside of the private network that is now part of the Mail division. So there is not much left, I'd say, in the book value of Europe. Obviously, the biggest part is obviously Japan, to a certain extent, North America and also all what we call the IP that stands in France and that is part of basically the scope to be sold.

Thanks, Laurent. Are your expectations to sell at a premium versus the U.K. price, the U.S. and the Japan lockers business?

It's very difficult to know at this stage. We obviously have, I think, a very competitive price for the U.K. I think we need to go through the process and look at what the market will tell us on the rest of our Lockers business, which, again, I think have significant difference both in terms of maturity, scale and leadership position in those respective markets versus the U.K. And we look forward to it.

And how much profit is expected on the EUR 60 million (sic) [ EUR 65 million ] divestment of U.K. house?

It's a EUR 65 million divestment. I would say we really don't go to the details by country, what's the equity of each locker. So I suggest we end -- we wait for the closing, and we see eventually at the end of the year, what is the net impact from the specific IFRS 59 and how much upside has been against the equity value.

I think it's just principally with the equity, we have a bit of tax naturally.

Absolutely. But there is nothing special. Absolutely. And the bulk of it will be the net between whatever the purchase price is minus the tax and minus the equity, which is mostly the tangible assets that are the lockers, the 3,000 lockers.

And how will customer data and accounts be migrated and managed as part of the divestment...

The customer data is obviously of the platform itself, it's how we operate the network. So I think we need to differentiate the data, the operational data, the customer data to run the business versus the back offices, the CRM, ERP and the financial system that needed. We have established a TSA agreement with the buyer to be able to support them in that transition and making sure that we focus on the customer satisfaction at every moment during that transition and making sure there's been no disruption and allowing them sufficient time to be able to migrate the back office system more generally speaking. And as part of the process, too, as Laurent mentioned, the software is owned by Quadient locker. -- and we will now become a software vendor for this buyer, and we will be like we do for many other carriers. And we will obviously maintain and support and upgrade the system. So there will be no disruption on the data and no need for migration on the short term. The new buyer obviously will set its new course, a new strategy, and we'll be happy to support them in case they elect at some point to change and migrate to another system if they elect to.

Okay. Is it your ambition to sell the rest of the lockers business at a price more than 20,000 per locker? -- that price would be consistent with premium versus U.K. deal.

So I'll take that one, Geoffrey. It's a bit of a simplest view to price, I think, to value a business just based on number of lockers. It's depending on much more what's the usage of this locker in which market are we in? Do we have the ownership of this locker on our balance sheet. So again, if you remember, Japan and U.K. are mostly open network and sitting on the balance sheet of Quadient, while North America is mostly sold lockers. So I don't think we can take this shortcut of 20,000 per locker. It's going to depend again how much is the usage, what is the maturity of this base as well? What's the remaining value of these assets? What's the future growth, obviously, what's the expected margin? And here, we mentioned that we sold U.K., but it's the distribution part. We also have all the IP in the royalties that has been captured in France. And this also brings an additional layer of margin that needs to be also assessed in the future cash flow.

Thanks, Laurent. You mentioned enterprise value of EUR 65 million for the open network disposal in the U.K. And what was the equity value?

So I think we mentioned that already, 3,000 locker, but the bulk basically of the net book value is the tangible assets, which is -- and we know there is a range between 10,000 to 20,000 depending on the size of the locker basically.

Thank you, Laurent. Could you just remind us what is the cost of locker?

Just what I mentioned. So it's okay.

And perhaps moving on to Mail. How much was the tariff refund in H1?

So we got about EUR 3 million back on the tariff refund. So we got a little bit more, in fact, but part of it was tied to lockers. So it's been reclassified as well. It's about EUR...

And is there a share buyback program ongoing at the moment?

So we're not currently buying back shares, but we -- obviously, it's part of the consideration of capital allocation in the future whenever we sell, obviously, and we get the cash first and sell the rest of the locker as well.

Beyond the acquisition of the U.K. lockers business, do you have any visibility on [ VESA ] or EP Group's intentions regarding its shareholding in Quadient? Is a shareholder agreement or standstill arrangement being considered?

So obviously, we're not going to speak on behalf of our shareholder. We can refer to their last declaration when I think they passed the threshold of 26% of ownership and the intent that they had. And I think they've been pretty clear that they were putting the strategy and that they had no intent to ask for a board position. And therefore, there is no basis to have a sense or any other type of agreement that will be a shareholder agreement at this stage.

Thanks, Geoffrey. And when selling the U.K. fleet of lockers, do you -- have you kept some intellectual property on the technology with future royalties received?

Absolutely. As I was mentioning, you need to be distinguishing the distribution part, which is the distributing legal entity within Locker U.K. in this particular case, that is buying both lockers from our supply chain that owns the IP, both of the hardware and the software and pays royalties based on the usage and based on the access to the software for each locker. So the IP has not been sold, and that's why I was mentioning that the overall project of the buyer was also included in the evaluation and notably the ability to continue supplying IP.

The EUR 65 million purchase price do not include the services to maintain the technology that we will obviously commercialize on arm's length basis with anybody that use our technology, including the new buyer until they elect to do otherwise.

So I think that's all the questions. So we can conclude the call. Thank you, everyone, for attending and for asking all your questions. So our next call will be on the 1st of December for our third quarter sales release. In the meantime, we look forward to seeing you, some of you in the coming days during our road show. Thank you very much, and have a wonderful evening.

Thank you, Laura . Thank you, everybody. Thank you, Laurent.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.