WLN.PAWLN.PAPAR
Loading
Operator: Welcome to the Worldline Full Year 2025 Results Conference Call. Our speakers for today include Pierre-Antoine Vacheron, CEO; and Srikanth Seshadri, CFO. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Pierre-Antoine Vacheron. Please go ahead.
Pierre-Antoine Vacheron: Thank you. Thanks a lot, and good evening, everyone, and thank you for joining us for this call. I'm here with Srikanth Seshadri, our Group CFO, and I'm happy to share with you our results for the full year and especially, the dynamics of Q4 as well as our perspectives for 2026. We distributed a deck on top of the press release. And since we had a lot to share with you, but a limited amount of time, you will find a lot in appendix of the deck, and this is on purpose. So it's been just 1 year for me as the CEO of the company. When I joined Worldline, I came with a strong conviction that this company had the position and the assets to be the main European operator of critical infrastructure in Europe, and I must say that after 1 year, I'm even more convinced. Obviously, we met a lot of headwinds during this first year. But I'm proud to say that we are today where I wanted us to be, with a stabilized company, a significant progress in our business turnaround and a transformation in full motion. With the fifth disposal announced this morning with Worldline India, we enter 2026 operationally much stronger than a year ago and focused on our mission, payments and only payments and this in Europe. So as I said, it has been, for me, a year of stabilization and turnaround. Yes, I'm trying to follow where we are. Okay. So looking at the numbers. First, I'm happy to share and to state that we did what we said we would do. In terms of revenue, we closed the year at EUR 4.5 billion pre-IFRS 5, and we'll come back to that, which is minus 2.4% organically, in line with our low single-digit decline guidance and Q4 was at minus 1.5% organic. In terms of adjusted EBITDA, we closed at EUR 841 million, representing 18.7% margin on external revenue in the range, EUR 830 million -- EUR 855 million that we committed to. In terms of free cash flow, we closed the year at minus EUR 9 million, including minus EUR 49 million of free cash flow for the H2 at the top of the range that we gave a few months ago. But beyond financial delivery, on which Srikanth will give a lot of details, we have built foundations for '26 during this period. Our renewed executive team is in full motion, and I must say that I'm extremely proud of the team that has joined me. Our transaction platform delivered record volumes with our Axis acceptance solution serving more than 10 billion transactions last year; our online acceptance target solution, GoPay, delivering 3.4 billion transactions last year. The customer satisfaction held steady with an average NPS at 40 despite our challenging times and thanks to the dedication of the teams. In terms of commercial turnaround, the churn improved in all SMB geographies, and several regions, Nordics, Germany, Switzerland returned to growth, joining Eastern and Central Europe, Italy, and Greece. Enterprise is still declining but saw a strong momentum in the kiosk and self-service vertical, driven notably by the trends that we've seen on EV charging, and we are very satisfied of the specific position that we have on this vertical of self-service. Financial Services, we had one target that was to increase the pipeline and to regenerate the order intake, which we did. We have, at the end of this year, a pipeline that is double of the level it had at the end of H1. Finally, in terms of transformation, we laid the foundation for the new Worldline. We -- first, we reshaped the scope of the company. We have a much simpler scope. I will come back to that. We have a simplified operating model since a few months now, and we have fully operationalized and put in execution the overall plan. Before moving to this transformation, let me insist and highlight some key -- some two wins, which are quite illustrative of what we've been doing over the last months. The first one is Kempinski. So Kempinski, as you know, is a large hotel chain in the luxury segment, and we won back Kempinski from the competition, leveraging on our solution, integrated omnichannel, DCC, so dynamic currency conversion in-house; advanced reconciliation, which is so important in this vertical; and finally, multi-local support, which is also a differentiating element for this type of decentralized company. PSA is another example of the rebound of Worldline. So we renewed their long-term partnership with Worldline on behalf of the whole Austrian banks community. PSA committed to migrate to our target issuing platform on which already transact more than half of our volumes in issuing. They committed also to operate on our sovereign private cloud solution and to expand our services to additional features that we offered them, the strong customer authentication, the ACS, but also we hope that we will operate for the Austrian banks. As we said in the introduction, the pruning program that we decided when I joined is nearing its end. When I joined the company, we said, okay, let's select the assets that we want to keep as part of our strategy to where we can have a differentiating right to win. And this program is now close to completion. North America, Cetrel, Payment IQ are expected to close in Q1 2026. METS is on track for Q2 2026. We announced this morning the signing of our Merchant Services business in India, and we are actively working on the finalization of the discussions on the remaining assets, which are not part of our focus. All those transactions will help us to focus on what we want to achieve, the core European footprint. We will be less distracted by noncore or nonstrategic assets. We will get the net proceeds, which are expected between EUR 550 million and EUR 600 million. We dramatically simplified the group with a reduction of FTE of 30%, moving from 19,000 FTEs to 13,000. And obviously, with this new scope, more compact, more robust, we can build now our transformation and our European payment leadership. North Star, as I said, is fully operationalized. But more than that, we already delivered in 2025, some key results and some key outcomes for the coming years. As I remember -- as a reminder, we have 4 levers: simplify, converge, integrate, grow, that will generate altogether EUR 210 million of recurring EBITDA by 2030. In 2025, we closed and liquidated 7 legal entities. We delayered the organization, simplifying with the elimination of the merchant services layer. And finally, we deployed the enterprise performance system that will help us in 2026, 2027 to automate our finance function. On the converge stream, and I will come back to that, we decommissioned 4 platforms, and we made significant progress in the migration of our Hugon legacy portfolio in SMB to GoPay, our target platforms and also to get the commitments of major enterprise customers, which were on the French platform SIPs on to GoPay, SNCF, the French SNCF being one of the examples. In integrates, we have now put in pilot our AML automation tool, which is so important to industrialize our KYC processes and the risk merchant operations. And we made significant progress in the ramp-up of our global competence center offshore in India, Romania and Poland. And more importantly, we started to generate the gains coming from adoption of Gen AI in our Indian developers community. As regards to the growth lever, we made significant progress in what we call value-based pricing with a positive input of EUR 15 million only in Q4 2025. We launched some very attractive products in terms of additional value for the company, merchant loan and We Rool. And finally, we made available in the recent weeks our agentic commerce capabilities that will help us to capture this emerging channel for the merchants. So as you can see, North Star is no longer a plan. It is clearly in execution mode. Now we are heading to the capital increase that we consider as a strategic accelerator. As you know, our EUR 500 million capital increase that will take place if the market conditions are met in the coming weeks will reinforce the balance sheet, which is important for our financial institution customers, but also the large enterprise. But more importantly, the fact that we will have 3 major financial institutions like BNPP, Credit Agricole, BPI France, as anchor shareholders serves our strategy of positioning Worldline as the main operator of major payment infrastructure in Europe. Having said that, I leave the floor to Srikanth, who will comment our 2025 results and 2026 outlook.
Srikanth Seshadri: Thank you, Pierre-Antoine. A warm welcome to you all. I'm pleased to tell you for 2025, we committed, we executed, we delivered as promised. We have fully met our 2025 guidance on a comparable basis. Revenue, we achieved a point landing at EUR 4.5 billion, representing a low single-digit organic decline of 2.4%. Adjusted EBITDA, we landed at EUR 841 million, placing us in the midrange of EUR 830 million to EUR 855 million guidance that we provided. Free cash flow, we landed at minus EUR 9 million, positioning us at the upper end of the guidance and above market consensus. While our reporting net income was impacted by significant noncash items on goodwill and other impairment, our operational performance was delivered. Moving on to the next slide. A technical point before we proceed. as Pierre-Antoine mentioned, we are in the year of perimeter change due to the pruning program. We are governed by IFRS 5, which is the International Financial Reporting Standard governing discontinued operation and assets held for sale. So it has 2 components. It has discontinued operations, which, in our case, is the mobility and e-transaction services as it's a separate division, a cash-generating unit. So we restate the P&L, the cash flow and the balance sheet. For the rest of the committed divestments signed or not, they are treated as assets held for sale. We carve out only the balance sheet for assets and liabilities in this case. So as you see, we had 2 sections back in the same slide, please, the previous one. So you see that we mentioned during the CMD that we had signed Mobility Transaction Services, the Worldline North America as well as Cetrel. Since the CMD, we have now divested Payment IQ and this morning, India. And as Pierre-Antoine said, we have a few more assets to be signed. And all of this is held as assets held for sale. So if you go to the next one, please. So you've got here the 2025 guidance, the first 2 slides that we have already discussed, and on the right-hand side, you see the published scope, which is IFRS 5 restated, which simply means for the P&L, it's without METS. So EUR 4.03 billion of sales revenues, EUR 737 million of adjusted EBITDA and free cash flow at minus EUR 26 million and the net debt at EUR 2.2 billion rather than the EUR 2.1 billion, showing that the cash in the divested entities are outside the perimeter of continuing operations. So if you go to the next slide, please. So here, we look at for the published scope, i.e., without MES, what Merchant Services and Financial Services. So for the full year, we see that Merchant Services declined 1.4% and Financial Services declined 7.7%. We said during the CMD that we've been impacted by an unfavorable mix effect on Merchant Services. And you see that in the table below on adjusted EBITDA, Merchant Services ending up with a margin of 19.3% and Financial Services, where we continue to have an overhang of client terminations from the past with a margin at 21.7%, down 5.5% year-on-year. If we move to the next slide, please. We see that the Q4 revenues year-on-year declined 2.2% vis-a-vis the full year basis at 2.7%, again, for the second quarter in a row after Q3, showing that our revenues are stabilizing year-on-year, and we continue that momentum into 2026. If we move to the next slide now, going into a bit of detail on income statement. At the bottom part, you see the normalized net income at EUR 175 million, which means normalized diluted EPS at EUR 0.063 per share. Going back to the top of the slide, we see that there is a EUR 100 million cost increase year-on-year. This has got 2 parts to it. The inflation at EUR 80 million year-on-year has been fully offset by our structural cost savings. The second aspect of the EUR 100 million is, again, broken into 2 parts, 50% due to higher scheme fees due to the cross-border nature of our airlines business and other businesses, and another EUR 50 million due to one-off transition costs. We've cleaned up the balance sheet, some product and compliance costs that we have incurred during '25, and we'll continue to invest costs on compliance in 2026. The second aspect below adjusted EBITDA, you see the impact of Power24. We have halved the level of integration and rationalization costs as compared to '24 to '25, and we'll continue to reduce that into 2026. The big one there is the goodwill impairment. You know that we impaired at H1 EUR 4.1 billion of goodwill. We've added another EUR 600 million of impairment due to the portfolio pruning and reassessment of the pruned scope. And in terms of the bottom part, you see EUR 290 million, which has been impaired for our interest in Ingenico, where we had a remaining preferred shares interest, which has now been completely impaired due to the new business plan that we have received from them. If we now move to the free cash flow on the next slide, you see at the bottom, year-on-year, we have reduced our level of free cash flow by EUR 150 million. This is driven by the adjusted EBITDA reduction by EUR 230 million year-on-year. On the other hand, we have stabilized working capital. We have halved the level of inventory. You will see that in the next slide. We've been able to afford a higher level of interest cost within this perimeter and the level of Power24 cost cash out has, of course, reduced year-on-year and will continue. And next year will be the end of spend on Power24, and then we start with the North Star. If you were to move to the next slide on the net debt evolution, please. We see that the year-on-year evolution is EUR 200 million. One part is due to the acquisition of our Credent portfolio in Italy, where we have got new merchants for us to grow our business in Italy. And the second one is you see the impact of the discontinued business, where we have EUR 186 million of cash on the assets held for sale that is not anymore reflected as part of our continuing operations. So if we go to the next slide in terms of the balance sheet, again, when we look at 2024, this is not restated for IFRS. That's the old scope. And at December '25, this is restated with the assets held for sale. So you see the size of the goodwill has dramatically reduced from EUR 9 billion to EUR 3.8 billion, so a EUR 5.2 billion reduction. EUR 4.6 billion is what has been impaired and EUR 600 million additionally has been reclassified into the assets held for sale. We've talked already about the Ingenico preferred shares. The third one is the level of terminals inventory that you see we have halved from EUR 70 million to EUR 33 million. Cash and cash equivalent, we did say that we would be at EUR 1.1 billion by the end of the year, and we did. So we have EUR 900 million in continuing operations and another EUR 200 million-ish on the divested scope that we will see further when we discuss the liquidity slide. Moving on, to the planned capital increase heading to the capital increase of EUR 500 million, enhancing our strategic flexibility for the new Worldline -- we are on course. Very simply put, we are on track. We have the commitment for the first half, as we already mentioned during the Extraordinary General Meeting and during the Capital Markets Day. And since then, in January 8, we had an overwhelming support from our shareholders to pass the resolutions. And now after our publication of our annual results today, we head in March to execute the transaction. It's a dual construct. As you know, we have the reserve capital increase first, which we'll execute early March, and the rights issue is planned for mid-March, subject to market conditions. Moving on. On the cash pooling, that was another thing that we did address at Q3, specifically, there were some concerns on the level of cash overdraft that we had on the pooling of EUR 1.6 billion, we did tell you that we will look at some measures, including loans -- intercompany loans and deposits, we have executed that. So we've done EUR 1.1 billion of intercompany loans and deposits. So the size of this overdraft is now down from EUR 1.6 billion to EUR 500 million. So we have shown that this cash is physically repatriable from subsidiaries to parent. And now going into 2026, we will review hybrid cash pooling options. Continuing the notional cash pool, we did say that it's been in practice for the last 10 years without a glitch. It continues to be a smooth functioning notional cash pool that we have with the subsidiary of ING. Second one is the intra-group loans and deposits that we have reinstituted in 2025, and we'll continue to work on our dividend cash upstreaming in 2026, as well as potential physical sweeps wherever it makes sense. Now moving on to the last slide before we go into the outlook is look at our liquidity. That picture should be exactly the same in terms of what we presented on the liquidity. We said we landed EUR 1.1 billion of cash on hand. We did. There's a potential equity of EUR 500 million and the undrawn RCF at EUR 1.125 billion in order to face the upcoming maturities. Of course, we have retired the CP of 2025 now. And the next one to retire will be the convertible of EUR 414 million in 2026. Below on the M&A cash in and cash out, we have, as Pierre-Antoine mentioned in his speech, EUR 540 million to EUR 590 million for the 5 deals we have signed so far and additional cash to be received for future assets that we have earmarked for sale, but not yet signed. And then in terms of the cash out, we talked about specifically 2 puts that we mentioned during the CMD, one which is in terms of Greece and another one for Italy. We are in advanced negotiations with both our partners. They are both progressing well, and we'll be looking at extending these puts to give us even more leverage in terms of liquidity headroom. So the proceeds coming from those M&A divestments will be invested in the Worldline transformation, the balance sheet strengthening and deleveraging. If we now move on to the outlook, please. The next slide. So again, here, we mentioned the 2 scopes that we have already talked about. So during the CMD, we said we have signed those 3 deals, Met, North America, and Cetrel. We also gave you the orders of magnitude that they have an impact of EUR 500 million, adjusted EBITDA at EUR 110 million and free cash flow at EUR 55 million. So that hasn't changed. Now on the right-hand side, you see the additional divestments after the CMD. In terms of revenue, that means another EUR 400 million. Adjusted EBITDA at EUR 900 million and the free cash flow is neutral. So some are cash generating, some are a cash drain, and that's the right time for us to now exit some of those portfolios. So in the main, we talk about EUR 900 million of revenue, EUR 200 million of adjusted EBITDA and EUR 55 million of cash, which is what goes away from the perimeter that we had for 2025 before -- in 2025, essentially. So if you go to the next slide, please. So this slide shows on the right-hand side, what we guided at CMD. With the 3 divestments that we had on hand, we said that we'll be at the lowest -- low single digit, EUR 720 million of adjusted EBITDA, EUR 85 million of free cash and less than 2x of reported leverage. We indicated those will be at the lower end of what was then the 2025 scope. Now if you look at now on the left-hand side, 2025, what we call as post-pruned scope. So we go to EUR 3.57 billion of sales, EUR 631 million of adjusted EBITDA, EUR 72 million of free cash and reported leverage at 2.5. And you'll recall that we said we would end up at 2.6 on a previous scope. So we are still consistent on leverage. And when you look at the 2026 fully pruned, it's exactly in line with what we said at the CMD, still with a low single-digit organic growth. We are at the 2025. In fact, we are even showing a range that's higher. Free cash flow between minus EUR 80 million and minus EUR 70 million, knowing that our H2 2025 had a cash out of EUR 49 million and the reported leverage targeted at less than 2. So this brings us now to the 2030. If we were to project it to the same scope to 2030, you see that during CMD, we said 4% CAGR between '27 to 2030, EUR 1 billion of adjusted EBITDA by 2030 with a EUR 300 million to EUR 350 million of cash conversion, which is 30% to 35% on adjusted EBITDA. Now the fully pruned, we are growing at 4% plus CAGR and then with a EUR 900 million plus in terms of adjusted EBITDA with the same free cash flow, so we increased the cash generation, cash conversion on a smaller scope, driving better operational cash conversion. So with that, I conclude my part of the presentation, hand you back to Pierre-Antoine for the next section and to conclude.
Pierre-Antoine Vacheron: Thank you, Srikanth, and thank you for bringing so much clarity in such a complex situation from an accounting standpoint. But I think it was necessary to go through that. So as you've seen, '25 has been a year of execution, discipline, and tangible proof point for our turnaround and transformation. And '26 will be a question of execution, discipline, and tangible proof point. Obviously, what is the most important for all of you is the progress that we are making in North Star. So as I said in introduction, we've gone through a very detailed and analytic process with the enlarged teams on the priority of the actions, the initiatives that they wanted to develop to execute and to deliver those 4 streams that we have identified at the CMD. It's been extremely rich, and we are now in the phase of giving the priority in 2026 for the actions that will generate short term, the highest ROI, enabling us to evolve significantly our cost structure in 2027. I just put here some highlights just to give you a sense of what we are looking after. So obviously, in simplify, there will be many initiatives, including the continuation of the reduction of legal entities. But what will matter the most for 2027 is what we will do in terms of functions, automations, and the tools that we are expanding to enable typically finance function automation, which is needed in the size of the perimeter. In terms of convergence, and I will give more detail, the 2 markers that we foresee for 2026 is the migration of the Italian acquiring portfolio to our target acquiring platform, which is well on track and that we plan to have finalized by the end of '26, beginning of 2027 and to sunset the Oregon legacy platform by having migrated all the portfolio of Hugon to our GoPay target platform. In terms of revenue management, in terms of growth, the priority is given on revenue management. And you've seen already what we delivered in Q4 2025. So it is all about making sure that we invoice what we are supposed to invoice. It's all about selling to the merchants additional services like DCC. And it is also a lot about product innovation, especially the deployment of our One Commerce integrated product geography by geography. Finally, in terms of integrate, it is a lot about digitization of our processes, starting with the merchant customer journey with the launch pad that we already presented at the CMD, and that will be deployed in the first geography at the beginning of the second half of this year. Maybe to put a focus on Converge because this is, as you remember, the lever on which we account for half of the savings coming from North Star. So as you can see, and you will find again what I described about the migration of portfolios from Hugon to GoPay, and the termination the sunset of Hugon but we will also have the migration of the SMB portfolio from the French e-com platform inherited from Worldline SIPs on to GoPay, and that will be also done at the end of 2026, and we will be progressing in the migration of the enterprise portfolio of SIPs on to GoPay that will be finalized hopefully at the end of 2027. In '25, we will also finalize the convergence of all the platforms that are supposed to migrate to Global Collect. So this is Woppa, our Argentinian platform. We still have one customer that will migrate in the coming weeks. So hopefully, at the end of Q1. We will also sunset and that's the third platform, S-Credit, which is a platform dedicated to hospitality that we have decided to decommission. Finally, on acquiring, we have this migration of the Italian portfolio. This is obviously one of the most accretive migration that we have enhanced because it is a significant portfolio, and it is internalization of flows from a third-party platform. So it's pure savings for the company without any restructuring to fund those savings. And in parallel to that, we have a massive project of migrating the legacy Swiss front office on which we have many merchants running. So the front office is the authorization part of the acquiring and that we are migrating on to the target acquiring front office that we call Worldline Pay front office, which is also used for the issuing business. So all this makes a program on Converge, which is well secured, which is well prioritized and that will deliver significant value as early as 2027, for the company. Beyond that, as we committed already, we are conscious that we need to provide visibility and transparency on the milestones that we will reach in 2026, so that you don't wait for the improvement of the financials to recommend the investment into online. So we will drive around 3 axis: one, which is operational performance. And so we will share information about the evolution of the SME portfolio churn and also the order entries on financial institutions and enterprise and global commerce, because this is where we know that we need to put the focus in order to deliver accelerated growth as of '27. The second axis will be around North Star. And obviously, we will give you updates on the decommissioning of the platforms in 2026 and the savings that it will generate. We will give you update on the migration of the various SME portfolio onto GoPay. And we will give you updates because it is easy on the entities that we will have closed in 2026 as part of our simplification program. Finally, we will give insights on our innovation capacity, as it is so important for the investors, but also for our clients, for employees to show that we are investing and that we are able to innovate even during transformation time. A lot is at stake in 2026. Some are not here on this slide, typically the deployment of -- we in Belgium, Luxembourg, and France. But we have the rollout of Launchpad that I already mentioned, to digitize the journey of the small merchants. As you've seen, we are quite advanced in Agentic commerce, and we expect to be able to give you -- to provide you information on the pilots that we will start with some brands to position ourselves as the frontrunners in Agentic payments in Agentic commerce in Europe, which is a bit specific as compared to the U.S. Finally, we will share insight on the deployment of Gen AI and the acceleration of GenAI at Worldline. We have a lot in the making, a lot in deployment. We are accelerating now. You may have seen that we hired a Head of Data and GenAI, who is starting the 1st of March, and who will help us to scale all the initiatives that we are taking. And so we will give you insights on what we've been doing on Gen AI when we present the H1 results at the end of July. So to come to the conclusion of this And the should consider Worldline as a stabilized company repositioned as the key European operator of payment critical infrastructure. You should consider Worldline as in track on its commercial turnaround and its transformation journey. And you should consider Worldline as a company with a robust balance sheet, reinforced by the capital increase that will reduce the leverage of the company. Thanks a lot for this -- for having listened to this long presentation and happy to take your questions now.
Operator: [Operator Instructions] We will take our first question -- your first question comes from the line of Justin Forsythe from UBS.
Justin Forsythe: I wanted to ask a little bit about the revenue progression, and there's a couple of points there. There was an acceleration for sure, but I think a little light of expectations. You noted that there was still churn causing the Benelux book to be below positive or negative growth alongside those some positives with the Nordics, Germany, and Switzerland returning to growth. And if I then take that point, like, okay, let's unpack the puts and takes between maybe what didn't go as planned that puts you to the bottom end of the range for 4Q. And then separately, it looks like NNR growth of 3.6% accelerated slightly, but still a delta there. And maybe just a little bit of context around the NNR side as well on top of that. Maybe you could talk a little bit about the businesses which were pruned as well. So the business you sold today in India, maybe you could just give us a little bit on the growth profile there. So we're, on average, these businesses growing faster than the rest of Worldline at the time that they were sold. And specifically on India, just curious why you didn't -- it seems like you're maintaining an ongoing presence there. Was there a reason why you didn't want to just -- you quite strongly reiterated your presence in India. Was there any reason why you didn't just pull out of that business entirely to focus on your core region within Europe?
Pierre-Antoine Vacheron: So a lot of questions. I will try to memorize them. So on your first question, we are exactly where we wanted to be, especially on the SMB front. And what's striking in the last quarter is that -- and it's also the case in the beginning of this year, is that month after month, we improved the churn in all the geographies. So it is true, as you said, that Benelux is still lagging behind. We've been -- we are in a bit specific ecosystem in Belgium with this local payment scheme, local protocol. And we've been a bit late as compared to the other geographies because we have to integrate this very specific setup in the various integrators and distributors. So I'm quite positive that things will also turn around in the Benelux in the coming months, but it takes more time than the other geographies. On your second question, which is the NNR versus the external revenue. So as you certainly remember, most of the gap between external revenue and NNR is coming from the scheme. So here, the discrepancy that we see is linked to the various dynamics between our segments. Obviously, when we are more growing in cross-border e-commerce like travel, airlines, when we are more growing in geographies where international schemes are stronger, then we have more scheme fees that we are struggling from time to time to replicate, I mean, to transfer to the merchants. And that does explain why you never have a good, I would say, synchronization between external revenue and NNR. I think what matters for us is step-by-step with the automation of our finance tool to be able to communicate also our trajectory in NNR as the industry does it. Today, we are able to give you what it is at the end of the period, but not to give you the outlook. On the third question, which is about India. So you're right, we have 2 presence in India. We have this merchant business, and we have our GCCs, which are the offshore to make it simple, development teams that we use for Western Europe. The Indian business, the Indian market has changed quite a lot over the last months. More regulation, especially on some verticals on which we were exposed, especially around digital goods and gambling and also shift from card to local wallets. And as a consequence, the growth profile of our Indian business has massively deteriorated over the last months. It was so specific with so little synergy with Europe, that we decided that it was better to exit. So this is what we did. And obviously, we keep our presence in terms of offshoring capability in India, because this is feeding our competitiveness in Europe. I hope I answered all your questions.
Justin Forsythe: Yes, yes. No, that's great. I'm thinking because there was another event, it might be a little bit light on questions. So I'll just ask a clarifier on the first one, which is just of those components within Merchant Services, maybe you could just comment on what helps deliver the low single-digit expectation for 2025 -- sorry, 2026. So is it Benelux returning to growth as part of that? Is it enterprise returning to growth as part of that? Maybe you could just walk through the components of merchant services growth that deliver us to the guidance.
Pierre-Antoine Vacheron: Yes, yes. Sorry. So I did put focus on SMB, which is 50% of our total revenue, as you know, because it's -- because Belgium is massively a question of SMB. But you're right. On enterprise, so which is regional commerce. So here, we will be a bit impacted by churn of merchants that have decided in '24 and still in '25, when the company was in trouble to move to some other providers, okay? That's one important. And also when we migrate enterprise merchants to our new e-commerce solution, some are choosing to migrate to GoPay, which has been the case of SNCF, but also [ Bentley and Mercedes-Benz ], but some decide to migrate to some other providers. And so we did factorize some churn linked to this migration and by the way -- by the way, at the same time on SMB and on enterprise. Regarding Global Commerce. So here, we are in a different situation. There has been also some churn in the recent years. We've been also more selective in what we want to do, especially in the travel and airline segment, where we have derisked the portfolio. And we clearly need to reboost our sales in the digital goods where we have been a bit lagging behind in terms of sales performance. So that's -- those are the components that explain this low single-digit growth that we forecast for 2026.
Operator: Your next question comes from the line of Hannes Leitner from Jefferies.
Hannes Leitner: I got also a couple of questions. Maybe just like -- it seems like a small range, but when I'm looking at your Q4 still being down 2% on an organic basis, maybe you can talk a little bit about the low end of the guidance range and then the high end. And then maybe just squaring that how you see OpEx evolving. It looks like you look for low single-digit OpEx growth and low single-digit top line growth, so more or less in line with that. But then you talked about headcount reduction and divestments. The second question is just like the base of your guidance. You gave very welcome a pro forma including the pre-CMD announced and then the post-CMD announced divestments. Should we take those? Because clearly, some of them they still contribute for 2026 -- should we take the pro forma, excluding any of the currently announced targets as the base for the guidance? Or is it the mix because of the closing depending on the closing?
Pierre-Antoine Vacheron: I think Srikanth will take the 2 questions.
Srikanth Seshadri: Yes. Thank you. I'll start with the second one then. We debated that point a lot, obviously, because of some of the closings happening during the year. We felt that providing the clarity to all of you as to what will be the future perimeter in no unclear terms was very -- and then during the year, Hannes, we will, of course, provide what is the incremental contribution coming from the two, which are not yet -- which have been signed recently and not yet closed. Then for the other assets, which still need to be signed, we'll be providing a clear distinguished perimeter. But of course, that's going to be accretive to what baseline we are providing today for sure. Then most of those will be closed by H1. So it's going to be accretive to the basis we are providing today. But you can see that it's EUR 900 million of sales, EUR 200 million of adjusted EBITDA and EUR 55 million of cash. And if it's end of a quarter, you can probably linearize them to have a view as to what will be the potential upside to those numbers.
Pierre-Antoine Vacheron: If I may, it's EUR 400 million of revenue because the EUR 500 million of METS is already out.
Srikanth Seshadri: Correct. That's right. So excluding METS, we are talking about EUR 400 million.
Pierre-Antoine Vacheron: Okay. On the guidance, revenue and cost?
Srikanth Seshadri: So on the OpEx, as we said, we actually said two things during the CMD and it still stays. We said we'll have an adverse business mix in terms of revenues and margins. And secondly, we also said we're going to invest in remediation measures in 2026. So while you saw that there were some one-off costs in 2025, as I was alluding to the EUR 50 million, we will end up spending something like EUR 30 million, EUR 40 million on remediation costs in 2026, to address the backlog of ongoing due diligence. And the rest will still have an adverse mix effect in '26. At least for the airlines business, as we mentioned, the FX overhang will continue as well. So we don't expect the OpEx to be too different from what we had in 2025. Hence, both the single -- low single-digit revenue increase as well as a similar level of adjusted EBITDA.
Pierre-Antoine Vacheron: Maybe on your first question, which is the Q4. If you go to the Slide 33, you will see that in terms of transactions, in terms of merchant volumes in euro, we grew in Q4 by 3% okay? And you even have some insight on the beginning of this year. So it's more on the hardware side of things that we did less in Q4 than Q4 of the previous year. So that's the explanation of the gap probably between last year and this year.
Hannes Leitner: Just a small comment on this. I mean, MSV, you rebased basically for the Giro card acquiring volumes. Is that right? So that would be one element to see that.
Pierre-Antoine Vacheron: You mean, is the Giro card changing? -- because I think it's a pro forma. So I think the whole year is including the Giro.
Operator: We will take our next question. The question comes from Frederic Boulan from Bank of America.
Frederic Boulan: Two questions, please, and maybe a follow-up. So firstly, if I can come back on your '26 EBITDA guidance. So if I'm not mistaken, on Slide 25, we've got some flat to EUR 20 million EBITDA growth on a kind of fully rebased pro forma perimeter. If we look at '25, we saw about 5 percentage points margin compression and the kind of mix was a factor. If you can come back a little bit on the assumptions you've taken here, the impact of that adverse mix, maybe from a country perspective on the business, the kind of different dynamics between assets that are growing faster with lower margins, et cetera. So yes, so we look good to understand why we're going to see a much more stable performance from a margin standpoint this year. Second, on the comment you made around customer churn on the back of prior contract termination you had in '24, '25 that are yet to materialize and some churn driven by platform migration. Can you explain a little bit how things going right now in terms of discussion with customers? I mean you mentioned good NPS, et cetera. I mean, how do you measure the kind of commercial traction you're having right now versus competition? Is it stabilized or you still have some of those tough discussion and losses? And interesting to hear a bit more about that kind of churn driven by platform migration. I mean, is it significant? Is it more detail? So it would be good to have more detail on that.
Pierre-Antoine Vacheron: Sure. So in terms of -- so in fact, we are consistent, first point that we are absolutely consistent with what we said at the CMD, okay? So all what we see today is consistent, sometimes a bit better, but it's overall consistent with what we said. And if you recall the CMD, what we said that in '26, we would foresee still some pressure on the contribution margin. And then the rest of the plan, we are a bit conservative since we consider stabilization of the contribution margin, which is the highest level of the margin during the rest of the plan on the back of the evolution of the mix and the pricing initiative. So we are -- so why is that? So the first reason, obviously, is that the dip that we've been experiencing in financial services, termination of contracts impacting us in '25 and still '26, if you remember correctly, and lack of new orders, obviously, is there and that has a negative impact. on the margins because the contract that we have lost were very highly margin because they were quite old contracts. And when we start to refill the backlog of financial institutions, then it's mostly setup and the setups are a bit lower margin than the run. So what we anticipate for Financial Services is that the restoration of margins will take some time, and we were more speaking about '27, '28 than '26. On the merchant side of things, what we said is that -- so we were a bit cautious on enterprise and global commerce. So most of the swing will come from SMB. And on SMB, you're right, it a bit depends on the geographies. So in the restart, I would say, of SMB, we started with Sweden, which is a market which is significantly exposed to ISVs. So the margins are lower. and especially lower than the markets where we have very strong position like Switzerland, Belgium, Germany. So that's one point. And so -- in the countries where we've been attacked and then when we are now growing again like Switzerland, obviously, there is some pressure on the margins that does explain this evolution. So the good news because there are good news here is that we have very good results of our growth initiative in terms of evolving the pricing and the products that we sell. You know that we are investing also a lot on value-added services. So DCC is one of them. Merchant cash advance is another one. Merchant cash advance is now deployed in 6 geographies. So obviously, there is a ramp-up to make sure that we take the good risk, which are not on our balance sheet, but on the balance sheet of our partners that we have the proper digital experience. But step by step, those initiatives will help to preserve, if not increase, the margins that we are making on SMB. On the question on commercial traction and churn. So again, it depends a bit on the segments. If I think about Enterprise and Financial Services, we have clearly an improved commercial traction as compared to the situation we were in the first half of this year, first, because on the Merchant Services side, we have now the terminals, which are available with a good performance. So -- I mean, we are not winning every time, obviously, there is a very fierce competition, but we managed to turn around now the situation on FS and on MS Enterprise. Finally, regarding the churn of your question. So where the churn is the most -- I mean, is the most, I would say, predictable or the most significant. It's not on the acquiring, the convergence on acquiring because we are not really touching the merchants. We are more bringing additional functionalities to the merchants. And we migrate the portfolio when we have all the features which are requested. So it's more on the acceptance and more on the acceptance on e-commerce because, obviously, acceptance e-commerce is an area where the merchants are well integrated into their software systems. And so it's easy for them to benchmark what they can have. And so this is where we are the most exposed, especially on SMB to churn, okay? So we did factorize that, obviously, in the 2026 figures.
Frederic Boulan: Okay. If I can ask two quick follow-ups. Firstly, on the guidance, your CMD guidance pro forma was slightly lower adjusted EBITDA in '26 versus '25. Now it's for kind of flat to up. Is it because you are disposing of weaker businesses or there is an improvement underlying? And then second question or second follow-up, when you look at the leverage, your target of less than 2x for the end of this year. Beyond the free cash flow, the cap increase, the disposal and the puts you mentioned, any other item that we should bear in mind in terms of bridge to '26 debt?
Srikanth Seshadri: Well, I'll take the second one. I think you hit all the points that impact the leverage, no. So I think that's it. So we are consistent again with the less than 2 when we simulate the M&A cash proceeds, the level of EBITDA, the puts and so on. I mean, so that's really where it is. And the first question was?
Pierre-Antoine Vacheron: Just on -- the EBITDA as compared to the initial guidance.
Srikanth Seshadri: Yes. So we did say during the CMD that for '26, we'll be at the lower end. If you recall, we did say at that time because we had the EUR 830 million to and on the CMD scope was EUR 720 million to EUR 745 million. And we said we would be at the lower end of the 2025, and therefore, that's why the EUR 720 million because we had the unfavorable business mix as well as the investment in the remediation and the North Star transformation program does not bring results until 2027. So those were the 3 key drivers, and we are still in the same area. Then in terms of the upside of adjusted EBITDA between EUR 630 million to EUR 650 million. So that's a range. We did not have that range during CMD. We just said lower end. We feel that we've got some pockets to improve on our execution. So that's why we've given that range. But we are still consistent with the lower end of 2025 as our bottom end.
Operator: We will take our next question. And the question comes from Emmanuel Matot from ODDO BHF.
Emmanuel Matot: Three questions for me, please. First, can we expect revenue to stabilize in the first quarter or we have to remain patient? Second, why have you decided to do further impairments on goodwill in H2 in Merchant Services? And third, why is your 2030 guidance unchanged for free cash flows at EUR 300 million, EUR 350 million despite changes in scope that result in lower EBITDA?
Pierre-Antoine Vacheron: So maybe I can take the third one because it's easier. No, I think we -- I mean, the more we get mature on our trajectory, the more we see potential to improve EBITDA to cash conversion. I think that's the most important point. And we consider that the assets that we are disposing are were, in fact, cash dilutive in their trajectory as compared to the trajectory of the core European business. That's the first question. On the impairment, I can answer, but I will let Srikanth answer. On the first question, you are a bit -- but I recognize you. I think we -- what we do see as outlook is that we should be stabilized in H1, globally speaking, and we'll see what Q1 gives. So on the additional impairments, Srikanth?
Srikanth Seshadri: Yes, Emmanuel. So on the impairment, we had to go through -- I mean, again, to be extremely clear, when we did the H1 impairment of the EUR 4 billion and then we did the CMD presentation and the new business plan, there was no need to do any impairment, okay? Then when we talked about the revised scope, the way we did that was, again, coming back to the point that Pierre was saying, when we look at the prune scope and its growth prospects vis-a-vis the sale value we were getting, we had impairment on the prune scope. So this is -- when we say MS, this is not on the continuing business. It was really on the future outlook and the current sales value about this. It was not growing as fast this prune scope. So we had to impair this part alone. So all of the impairment that you see for H2 is everything related to the pruning scope and not to the underlying business. I don't know if that answered your question Emmanuel.
Operator: Unfortunately, it looks like Emmanuel has disconnected from the call.
Srikanth Seshadri: Okay. I guess his question was answered then.
Operator: We will proceed with the next -- your next question comes from the line of Craig McDowell from JPMorgan.
Craig Mcdowell: The first one is for -- I'm just wondering if you could give us a bit of a sense of the bridge from EBITDA to free cash flow. It certainly seems a bit better than consensus expecting and maybe better than the CMD suggested. So the cash bridge would be helpful. Then just a follow-up on pricing. Just wonder you could talk about your ability to reprice for those higher international scheme fees that you talked about. Is that being reflected in new contracts that you're signing? And then thirdly, if you could give any update on sort of the regulatory investigations in Belgium and Sweden, that would be helpful.
Pierre-Antoine Vacheron: Do you want me to take the cash cost and you take the other two? So Craig, on the cash cost, if you recall, we did say that more or less -- the cash cost was built into 5 blocks. That's what we said during the CMD. CapEx, we had the rationalization and integration costs. We did talk about taxes, interest and the leases. I would say most of them are unchanged. So we do have higher interest cost in '23 compared to '25. We -- especially with some of the bond refinancing we did in the summer of '25. Then we have indeed -- we did say during the CMD, we have a higher level of tax cost. We now expect this to be flatter. And then in terms of CapEx as well, we are -- we expect to remain flat on the postponed scope. Then the rationalization and integration costs, which is where we said that we'll move from a kind of EUR 240 million of spend in 2025 to a spend between EUR 170 million to EUR 180 million in 2026. And that's where, I would say, the reduction in the cash cost comes from with the offset in interest costs. So those are the 2 key factors that are at play, and we expect that to continue on through '26. And then '27, we expect the rationalization integration cost to go down even further. So on your question regarding revenue management or repricing. So basically, you have 3 types of actions to make it super simple. We -- you realize -- or we realized that considering where we are standing in terms of process and tools, we were not always invoicing all what we were supposed to invoice, okay? So it was just a correction of the way we do invoice that had to be implemented. This one is easy, if I may say so. The second topic, obviously, is to push as much as we can the scheme fees to the merchants. And the more we are able to invoice on what we call interchange plus, the better it is because then we are not exposed ourselves to the evolution of the scheme fees. So this is something that we do depending on the platforms. And clearly, we are pushing our systems to be able to do that on all our platforms. The third topic is to sell additional products to the merchants and to increase the ARPU. On the last question, which is regulatory investigation. So -- as you know, we've been doing all the audits to be sure about where we were standing in terms of portfolio, in terms of quality of the portfolio. We disclosed that in October. This is something which is behind us. There has been some -- obviously, some audits from the regulators in the various geographies. We don't have all the conclusions. Obviously, there are things to improve, especially what we call ongoing due diligence remediation that were not industrialized at Worldline, and that's one of the key topics on which we are working. And among the expenses that we have in 2026, there is a significant part, which is linked to the consumption of the backlog of ongoing due diligence. So this is where we stand. We have a very strong engagement with all the regulators in all our geographies, and we manage all of that as professionally as we can.
Operator: This concludes today's question-and-answer session. I'll now hand the call back for closing remarks.
Pierre-Antoine Vacheron: Thanks a lot, and thanks all for, I mean, staying so late on this call. So as you see, we've made significant progress over the last quarter. We are fully stabilized. We are fully repositioned as a key payment infrastructure pay. We are absolutely on track and we are where we want to be in terms of commercial turnaround. So there is still to do. That's a good news. But in terms of commercial turnaround, we are making the progress that we want to make, and that's the case also for transformation. And obviously, the capital increase that is ahead of us is an important milestone to be fully focused on the business drive and the achievement of the North Star objective. Thanks again and looking forward to have a new catch-up in the coming quarter. Have a good day. Thank you, everyone. and good night. Thank you.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.