Good day, and thank you for standing by. Welcome to VusionGroup H1 2025 Results. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to Olivier Gernandt, VusionGroup's Investor Relations Officer. Please go ahead, sir.

Thank you very much, operator. Ladies and gentlemen, good afternoon, and welcome to our 2025 first half results presentation. With me today are Thierry Gadou, our Chairman and Chief Executive Officer; as well as Thierry Lemaitre, our Deputy CEO, Corporate and Finance. Thierry Gadou will make some brief opening remarks on the group's business performance, which we already presented to you at the end of July. Thierry Lemaitre will then make some detailed comments on our first half financial performance, and Thierry Gadou will conclude with some remarks regarding our full year outlook, which we are upgrading today. After these remarks, we will be happy to take your questions. As a reminder, some of the information to be discussed on our call today is forward-looking, and subject to important risks and uncertainties that could cause actual results to differ materially. For these, I refer you to the safe harbor statement included in our press release and on Slide 3 of this presentation. This evening's release was issued a short while ago and is available in French and in English on VusionGroup's website, vusion.com. The slides of this presentation can also be found on our website in the regulated information section. A replay and a transcript will also be available on our website after the call. And with that, it's my pleasure to hand you over to Thierry Gadou for his opening remarks.

Thanks, Olivier. Good afternoon, everyone, and thanks for joining our conference call. I'm very pleased to present to you along with Thierry Lemaitre, the second part of our H1 results, which is dedicated to the financial performance. I will, therefore, hand over to Thierry Lemaitre very shortly after just a brief reminder of the main highlights. So VusionGroup achieved an excellent first semester ahead of our guidance with 51% growth in adjusted sales at EUR 649 million. Order entries were up 22% for the first half and the VAS revenues doubled year-on-year at EUR 91 million. Thanks to our strong business model and operating performance, our profitability continued to increase sharply with a 300 basis point increase in EBITDA margin versus H1 last year. And we delivered a sharp increase in operating free cash flow, even when neutralizing the prepayments on large contracts as well as a strong increase in our net cash position. We are confident also in our growth visibility for the rest of the year and have therefore raised our revenue and profitability targets for the full year. I will come back on this last point. But before I hand over to Thierry Lemaitre for the detailed comments on our financial performance.

Thank you, Thierry. Hi, everyone. Let me take you through the financials for the first half year. Let's start with revenues, which, as you know, increased by 51% in adjusted terms, driven by a strong traction in the U.S. showing 134% adjusted sales growth in H1. VAS revenues increased twice as fast as total revenues at EUR 91 million versus EUR 44 million in H1 2024. VAS revenues represent 14% of total revenues at the end of H1 this year versus 10% 1 year before, and this has, of course, a positive impact on profitability. Profitability, in fact, also increased, driven by the variable plus margin. The adjusted variable plus margin reached EUR 200 million in H1 this year, which is a 66% increase versus H1 last year. It is also almost 3 points more than the adjusted VCM rate last year. And this increase is mainly due to the positive mix effect which I mentioned before, between VAS and ESL for 2.5 points and also a continuous increase in the overall profitability of our solution for 0.7 points. The ForEx impact is limited at minus 0.3 points on the VCM rate, thanks to cash inflows and outflows in USD, almost balancing each other. On the adjusted EBITDA side, the trend is similar with 84% growth between H1 this year and H1 last year. The adjusted EBITDA margin grew 3 points and reached 16.7 points -- sorry, in H1 2025, driven by the variable gross margin improvement and the slight decrease of the OpEx ratio by 0.2 points. Below EBITDA, the financial result which is plus EUR 6.1 million in adjusted terms, thanks to the level of cash and the decrease of the interest rates, the financial income from cash investments exceeded the bank interest expenses and the group also incurred EUR 2.5 million exchange gains. This leads to a cash financial income amounting to EUR 6.3 million. As you know from the past semesters, the group is also booking IFRS restatements relating to the fair value of the warrants granted to Walmart and the IAS 21 impact regarding the unrealized ForEx impact on the intercompany balance between the U.S. and the parent company. They both impact the financial results and show a net noncash negative impact of EUR 20 million in the IFRS accounts. CapEx now, they reached EUR 98.5 million in H1, of which EUR 76 million were funded by customers. The CapEx funded by the group stands at EUR 22 million in H1 or 3.4% of adjusted sales. Let's now have a look at the impact on the cash flow. In H1, the group generated a significant EUR 120 million increase in its net cash position. The cash position exceeds the financial debt by EUR 513 million at the end of June, versus EUR 393 million at the end of December last year. This increase in the net cash position is mainly coming from the free cash flow, which reached EUR 192 million in H1 this year. We made the same exercise as the previous semesters and calculated what the free cash flow would have been without factoring in the downpayments and the manufacturing lines funded by the customers. And this shows a EUR 58 million restated free cash flow and a 53% adjusted EBITDA to free cash flow conversion. This calculation takes into consideration the operating working capital at the end of June, which is EUR 195 million or the equivalent of the last 21 days of the semester which is also 6% of the annual sales. The other items impacting the increase in the net cash position of the group are the cash impact of the financial income for EUR 6.3 million, the shares both in the BOE placement for EUR 16 million to investments that the group made in H1 from EUR 9 million; the dividends paid in H1 for EUR 9.6 million and some noncash expenses impacting the EBITDA and cash expenses relating to the performance share plans for a total of plus EUR 12 million. And the last item, the impact of the volatility of the euro-dollar exchange rate also significantly impacted the cash position in dollars for EUR 55 million. This is a negative impact and this is resulting from the conversion impact only because, of course, we will not convert these dollars in euros, but we will use them to pay future spend is in dollars. So there is no actual loss of value of the cash. If we now have a look at the trend and the coming trend because I understand the questions of some of you, we present on the following slide. The total free cash flow in H1 this year at EUR 192 million on H1 last year at EUR 203 million. Within the free cash flow, we highlight the operating free cash flow, defined as adjusted EBITDA minus CapEx funded by the group. We believe this is a good indicator of the cash flow of the group because it clearly shows the cash generated by the group before any timing impact of the working capital and the prefunded CapEx. It includes both the operating working capital, inventories, accounts receivables and account payables and the nonoperating working capital, which is mainly the down payments. It is also excluding the prepayment by customers of CapEx and the associated cash out related to this CapEx. This financial indicator increases significantly. It increased from EUR 31 million in 2023 to EUR 116 million in '24, and it increased by 147% in H1 from EUR 34 million to EUR 84 million. This financial indicator should keep on growing in H2, this year and beyond. What you can also see on the graph is that the impact of the down payments collected minus reversed and the customer funding CapEx, prepayment corrected minus the cash invested for CapEx is positive in H1 for EUR 108 million, but it is less than it was in H1 last year at EUR 169 million. This mainly comes from lower down payment collected in H1 this year, and this trend should continue as the group will consume down payments. So what is the medium-term trend? The group should keep on generating a positive operating free cash flow, consuming down payments, and the net cash position should remain positive. This positive net cash position is, of course, an asset to pursue the group's dividend policy and the funding of potential external growth projects. So as a summary, the first half year showed a very strong financial performance with significant revenue growth and profitability improvement and an increase in net cash position. I will now hand over to Thierry for the outlook.

Thank you, Thierry. And as I said earlier, as we speak, our visibility is quite high for the rest of the year. We increased our targets for the full year. Our new annual revenue target is now around EUR 1.5 billion on an adjusted basis compared to EUR 1.4 billion previously, which represents a 50% growth versus 40% previously. We also believe that we can exceed our initial target of 80% growth in VAS revenue for the whole year. We now also target an adjusted EBITDA margin increase by 200 to 300 basis points over the whole year compared to 100 to 200 basis points previously. This increase in profitability should be accompanied and Thierry has stressed this point just before by positive free cash flow generation for the full year. Finally and based on our strong backlog and pipeline, we're also confident on growth perspectives for next year. With this Thierry and I are happy to take questions.

[Operator Instructions] And your first question today comes from the line of Benjamin Thielmann from Berenberg.

This is Ben from Berenberg. Three, if I may. So first one is on the target for 2025. So in H1, you had an adjusted EBITDA margin of 16.7%. I know you're raising the guidance. I was wondering if you could give us a little bit of color where exactly is the operating leverage coming from in the second half of this year? Is it mostly the VAS outgrowing significantly the ESL revenues? Or is it coming from both segments? That's the first question.

Ben, yes, on this topic, I think that the trend that we saw in H1 will continue in H2. It's -- you're right, there is an overall positive impact coming from the VAS ESL mix, which is driving the variable plus margin up and also an overall improvement of the profitability of our offers driven by scale effect and cost optimization. So it's essentially driven by the variable plus margin and to a lower extent by the OpEx ratio.

You said you had a second question, Ben.

Yes. Second question would be the typical question you guys get. Maybe an update on the Walmart situation. Can you give us any update how many ESL or for how many stores did you deliver ESL so far? How is the rollout going? Any issues in terms of execution that popped up in recent weeks?

No, everything is going fine. We are always a bit reluctant to talk about nominative questions about our customers. But the program, this one is a bit more -- obviously, a bit more famous. So it's going well. Our 4 lines, by the way, or a set of lines of production are now as I speak, fully operational. And so the program is at a significant pace. And so there are -- there is significantly more now than 1,000 stores installed, and it's going fast and it's going well. So yes, that's what I can say.

Okay. Perfect. And then maybe a third question, if I may, is a general update on orders coming from EMEA clients. I mean EMEA has a little bit been under pressure over the last 12 months. So any color from what regions in particular or probably when we could expect new orders? I remember in the latest earnings call, you said that you expect that, let's say, the downturn in EMEA is over, you expect orders to grow in H2 year-over-year. Is that still the case? And yes, in what regions? Is it fair to say that you announced Eroski in Spain that this is something where we could expect more adoption to increase? Is it going to be in your home market? Is it going to be the U.K.? Any color on EMEA would be very helpful.

Yes. So actually, there was already -- as I think we mentioned earlier in July, a growth in order entries in Europe. So the downturn, I think it's a little bit -- let's say, let's not forget there is comparison basis issues here because we've been growing extremely fast with very accelerated rollout previously, so it gives a comparison basis, which looks like a downturn. But I think the business in Europe is showing good momentum. There is an excellent pipeline where we've announced a number of deals including also in the U.K. As you remember, we are optimistic about new deals announcements in the near future. Our win rate is excellent. Of course, there are some macroeconomic headwinds in Europe, and everybody know that, that can slow a bit decisions, but we definitely aim at reversing the trend during the course of this semester. And yes, and I think the momentum comes, frankly, from many areas. There are, for instance, the Central Europe, Germany, U.K., but also the countries in which we have a very significant installed base are actually delivering growth because they have a lot of renewals of installed base to come. And since we have a lot of innovations over the past 5 years, it's a big -- it's a growth driver for us. So I would say, yes, the macroeconomic headwinds exist in Europe. It's slowing down investments in some cases, but there is a need for our solutions. And so the prospect is good for at least a part of our solutions, which really addresses the challenges, which is reducing cost and reducing OpEx for retailers, in particular.

And then maybe one last question. You mentioned that all the 4 EdgeSense manufacturing lines are now up and running. What would happen if you would sign another rollout in the U.S.? I mean I know Walmart is a different ballpark. But you could use those lines to also manufacture EdgeSense for a customer that is not Walmart? Or would you require a fifth line to achieve that? Because I would assume that all of the 4 lines you have now up and running, they're running at 100%, close to 100% utilization just for Walmart. So how would that work if another Tier 2 retailer in the U.S. would decide to install your ESL?

Yes, you're right, Ben. Actually, those 4 lines, we consider that they are fully dedicated to Walmart. Just keep in mind that we have also invested to a much lower extent, but we have also invested in our own line of product channel, which means that it gives us the flexibility to have a kind of a buffer period between the time when [ DMS ] will invest themselves because the model is still the same. We want to remain really CapEx light. So by definition, it's up to DMS to invest. If by chance we were to sign a contract with a limited visibility, we still can't produce EdgeSense on our own manufacturing lines.

[Operator Instructions] We will now go to our next question. And your next question today comes from the line of Flavien Baudemont from Bernstein.

In the presentation, you said that your BCN margin improved by 250 bps. Can you please elaborate on that? What mainly drove this improvement is due to the volume increase in volume by ESLs or mainly because of the surge in nonrecurring VAS revenues? Then my second question is what did motivate you to increase revenue guidance? Is it because you are going to sell more asset to your main customers? Or -- is it something else? Or is it because something else? And lastly, I heard in the news that you were considering a dual listing in the U.S. Can you tell me if it's true or not?

Flavien, thank you for your questions. I'll take the first and the last questions. And just on the first question regarding the VCM rate improvement, so we mentioned actually, it's a combination of 3 items, 2 being positive, the first one, which is the mix impact. So of course, since we have 14% of our revenues, which are VAS instead of 10% last year, and we've got a much better margin on VAS versus ESL. It's driving the VCM rates up, and this is explaining approximately 2.5 points increase in the VCM rate this time. We also have globally a better economic environment for ESL and VAS. It's approximately plus 0.7 points. And then it's got the ForEx impact, which has a limited but a negative one, minus 0.3 points. So all in all, that is explaining the change in the VCM rate between H1 last year and H1 this year. The last topic regarding the dual listing. I don't know where it comes from, but actually, I can confirm that we are not working out this scenario currently. So we don't intend to get a double -- double listing -- dual listing in the U.S. And can you just remind us the second question?

For the new guidance.

I do, I wanted to understand why you increased your guidance what motivated to increase it?

Well, I think we were ahead of our guidance already in H1. But as we explained in July, we wanted to carefully analyze the various effects which are not all going in the same direction of the dollar going down, which has an effect on our revenues because of the revenues in dollars, but at the same time, there is tariff. And so we were ahead in H1. So mechanically, we could have concluded that already in July, but there were a number of other effects that were -- took time to evaluate. And so it is not something really new, but it's just a careful evaluation of where we are now. And so we see now we are confident. On the same H2 roughly as was kind of anticipated plus a little bit more and then the advance that we have in H1. So that's why we waited until today to make it, but nothing really.

And could it be linked to a contract announcement by the end of the year?

No, because usually, the contract announcement don't impact the short-term revenues. So it would be totally -- but we have other entries on a daily basis. We have news on the business on a daily basis. So I mean -- but it would not be that because anyway, it would not have an impact on '25. There was anything very significant amounts, so that would not impact.

[Operator Instructions] And your next question comes from the line of Gilles Crespel from Alizés.

I'll have only one actually. It's regarding the Walmart contract, not for spec -- I'm not looking for specific customer inflows. But I just wanted to confirm on the contract, that the midpoint of the contract. You remember that the way you accounted IFRS meant that the midpoint would be significant. And looking at the current ramp up of your deliveries, when would you expect this midpoint of the contract targeting, let's say, 4,600, I think, point of sales, and is it legitimate to expect it somewhere in Q1 or Q2 '26?

Gilles, I think that you are referring to the impact of the weighted average price in IFRS.

Exactly.

Okay. And we said that it should reverse in the course of H2 this year, and we confirm it is the case.

Okay. H2 '25?

Yes, correct.

We'll now take the next question. And your next question comes from the line of Laurent Gelebart from BNP Paribas.

Laurent speaking. Three questions on my side. So the first one on the guidance upgrade regarding the turnover. Is it due to faster rollout with your main clients? Or it is basically broad-based within all your key clients? That's the first one. The second one is, can you comment on your deal with NielsenIQ, your partnership, how is it going? And if you see better traction on Captana? And the third one relates to your VAS upgrade regarding the guidance. So is it a recurring VAS or nonrecurring VAS. And last point, you said that today you are comfortable regarding your level of growth for next year. Can you elaborate a bit on what makes you comfortable for next year, please?

Well, I'll start with the last question because I think the answer is very simple. We have a very large backlog and a large pipeline, weighted pipeline, which makes us very comfortable on the growth perspective for next year. So that's very simple. We have strong visibility, and we are confident enough to make that statement of solid growth for next year. Regarding NielsenIQ, we're really -- we just signed it very recently a few months ago. So we are now entering pilot phases in some countries, and finalize -- working on the joint offering, et cetera. So we are more in the early stages of this partnership because it's a partnership that relies -- that includes developing joint offers. So it takes it of time. But we are -- it's moving well, and we are entering into operational pilots now. And yes, Captana, I think I gave a bit of color also in July. Captana is now implemented in a number of retailers in many countries. We have momentum. We're improving the solution a lot. And we have -- we mentioned a few developments in some accounts like Carrefour, but there are others and in several countries. So Captana is a very promising solution. and the partnership with Nielsen will also contribute to the growth and the rollout of this computer vision in retail. And yes, and the statement on VAS growing beyond the initial target is because our model is roughly -- is to bring value-added services on all our customers. When you grow a little bit faster, you always have also an impact on the VAS generally. So there is a natural impact -- positive impact of having an upgraded revision on the total revenue, and it implies also that we are positive on the VAS impact.

And regarding the top line, is it due to a faster rollout at your main client or it's broad-based?

Yes. I mean, it's generally speaking, as I said, the -- it's all the clients, the ones who are really in the process of rollout tend to try to accelerate because they know the return is good. They have tested it. At scale, usually, they are in the process of rollout, so they can go maybe a bit faster. So it's that, but it's also some deals that we signed and some of them we announced, I said that we were optimistic in new deals also in the near future. So it's a combination of things where we now have sufficient visibility based also on the momentum, the reality of the momentum of H1. So I think we gave quite an aggressive, I mean, an ambitious target at the beginning of the year. We are revising it upwards. Now we are a few 8, 9 months into the year, so we have a bit more visibility. But it's a combination of factors, which are both on ESL and on VAS and so it's -- it's a bit of everything. There is not one element.

Okay. And maybe a last one regarding the tariff situation in the U.S. I think you were trying to make your product exempted from potential tariffs. So could you elaborate on this? It has been changing or not? I mean -- and if you have tariffs, I mean, have you changed your mind on how to handle them?

No. I think that currently, we still have an exemption due to the fact that the product coming from Mexico are complying with the USMCA law. So that's it, but there is not much more that you can do. So that's the situation so far.

Your next question comes from the line of Benjamin Thielmann from Berenberg.

It's me again. Just one quick question. On your nonrecurring and noncash items in the P&L, which was EUR 21 million in H1 this year, and last year it was a little bit more than EUR 9 million. And I was wondering, it's written in the press release that most of that was related to IFRS 2. I was wondering whether any burn-outs related to your acquisitions that went into them as well? Because if I remember correctly, in H1 '24 last year, there were some burn-outs related to the acquisition of memory included. And I was wondering if that was the case this time as well?

No, there is no such item this year. So it's entirely due to the way we need to account for the performance share plans under IFRS 2.

We will now go to the next question. And your next question comes from the line of Valentin-Paul Jahan from Stifel.

Do you hear me well?

Yes.

Yes.

Perfect. So I have 2 questions on my side, please. The first one on margins and the second one on capital allocation. So for the first one, just if you could please confirm that you spent around EUR 300 million in the 4 production lines currently dedicated to Walmart and which are amortized over 5 years, therefore, generating around 60 million depreciation that are not included in your VCM calculation right?

So we confirm that the total amount that is funded by Walmart is $320 million that it is not fully invested yet in H1, but it will probably be fully invested by the end of this year. And yes, it is amortized over 5 years. And of course, since it is amortization, by definition, it comes into the P&L on the depreciation and amortization expense line, so it's not included in the VCM.

Okay. Perfect. And about the capital allocation because you have a lot of cash currently and you will stay cash rich even if it could decrease a little bit due to the effect of unwinding effect of the working cap. But did you define an M&A budget? And how much is it if it is defined? And how fast you ideally would like to deploy it? And what will be the perfect target? I mean what kind of solutions or technologies are you looking at? And in which geographies you are targeted? Any granularity on the M&A policy would be helpful.

Yes. So I will answer on the first one, which is, I would say, the capital allocation policy, and I will leave Thierry elaborate on the kind of M&A or external growth project that you might consider. First of all, we said that our policy is to accelerate the growth when possible through external growth projects. We said that we always want to remain below 2x EBITDA. And so far, when you have a look at the project that we are considering, there is no project which is going to lead us to 2x EBITDA net debt. So we still have a very strong firepower to do some M&A deals that we do not consider to do in one time and that we need to not consider to do in 1 or 2 years. So we've got multiple projects, different sizes. And of course, some of them could be funded through that. But at the end of the day, it's really very unlikely that we reach 2x EBITDA in debt very soon.

Yes. And regarding the, let's say, the potential things we're looking at, I mean, we've always been looking at the possibility of accelerating the development or the deployment of our strategy, we saw that obviously is it 2 years ago, 3 years ago with Memory and Belive. We look at things that essentially grow, I would say, the VusionData. So we have -- you remember, we have 3 main divisions, Vusion IoT, VusionCloud and VusionData. So it's essentially around the VusionCloud and VusionData. So essentially the vast area, which we want to accelerate, and there are 3 areas

the analytics world, retail analytics, retail media, which is a big topic coming -- going forward and obviously, AI. So all this is the core of what we look at with always the same sort of focus. We are about modernizing the physical part of commerce or the physical stores. That's what we do. We transform them into data assets into digitized assets into very automated data-driven. So that's still the same focus. There's no diversification away from that. We really focus on that, but we build the portfolio that allows us to really maximize the impact for our customers and also simplifies the digitization by bringing different parts that are worth more than some of the -- each individual part as a system, as a platform. So that's what we do. And so as we said -- as I said, Thierry mentioned it, we have firepower. We are able to do things. It's in no rush to do things, but we look at carefully in terms of geography, I would say, there is a strong focus in the U.S., but also we're not neglecting Europe as the last 2 acquisitions 3 years ago were in Europe. So there is a focus in the U.S.

There are currently no further questions. I will now hand the call back to Thierry Gadou for closing remarks.

Thank you. And thanks to all for your participation. See you maybe this week for some of you at NRF Europe, which, for the first time, takes place in Paris. It's going to be a big event, and we are a big partner of that event. So it would be very visible if you join. And we'll meet again on October 22 for our Q3 sales figures. So have a good evening or afternoon. Thank you very much.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.