Edenred SE (EDEN) Earnings Call Transcript

Hello, and welcome to the Edenred Half Year Results Conference Call. My name is Sharon, and I will be your coordinator for today's event. Please note, this call is being recorded. [Operator Instructions] I will now hand you over to your host, Mr. Bertrand Dumazy, CEO; and Mr. Julien Tanguy, CFO, to begin today's conference. Thank you.

Good morning, everybody. Bertrand Dumazy speaking. With Julien, we are happy to share with you the results of H1 2023 for Edenred. If we move to Page 2 of the presentation, is the executive summary. First of all, Edenred confirms the strong momentum of the last few semesters, because we grew our revenue in H1 2023 by 26% and 25.5% like-for-like. Our level of EBITDA is at EUR 483 million, which is a growth of 32.5% as reported and 35.2% like-for-like. We also improved our EBITDA margin moving up to 41.5%, which is 310 basis points up like-for-like versus the first semester of 2022. As you know, cash is king. So we are able to post a strong cash generation with double-digit like-for-like FFO growth. We also present a strong balance sheet, because S&P has upgraded Edenred from BBB+ to A- in April of 2023 with a confirmation of the A- after the acquisition of Reward Gateway. The second thing is, yes, in H1 2023, we made a 2 landmark acquisition to position Edenred as the most trusted Global Benefits, but also Engagement platform with the acquisition of GOintegro to address the Latin American Employee Engagement market, but also the acquisition of Reward Gateway, which is a leading and fast-growing Employee Engagement platform, that is a leader in U.K., in Australia and a challenger in the U.S., and we plan to expand in 6 other European countries in the coming years. So Edenred is building a leading comprehensive worldwide offer, combining Engagements & Benefits to meet the needs of a changing working world. The third element is, yes, we continue to expand our value proposition at each level of our 4-layer platform. And finally, thanks to this first semester, that demonstrates our ability to deliver our Beyond strategy. We will continue to generate sustainable and profitable growth. As you can see on the bottom of Slide 3, our estimate for the full year 2023 EBITDA is between EUR 1.20 billion and EUR 1.09 billion versus EUR 836 million in 2022. So if we move now to Page 5. Yes, the Q2 2023 is another buoyant quarter that leads to another record performance in H1 2023. So Page 6. As you can see, our total revenue has increased by 25.5% like-for-like in H1 2023 versus 2022. Our level of EBITDA has increased by 35.2% as compared to H1 2022 like-for-like. Strong cash flow generation plus 13% and net profit group share has increased by almost 19% in reported figures. If we move to Page 7, where you have the sequence in Q2 -- in Q1 of this year, we grew by 20.4% of our operating revenue like-for-like, in Q2 plus 19.6%, leading to a plus 20% like-for-like growth of operating revenue in H1 2023. So we have a very strong business momentum behind our attractive solutions. The growth of Edenred is, in fact, well balanced between every product line. So Page 8, you see that the Benefits & Engagement has grown by 22.8% operating revenue growth in H1. Mobility has grown by almost 15%, and Complementary Solution has grown by 18% in this first semester of the year. And if we move to the geographies on Page 9, you see that not only the growth is well balanced per product line, but also per geographies. So Europe has grown by more than 21% like-for-like, Latin America by almost 15% like-for-like, and rest of the world by almost 31% like-for-like. So if we move to Page 10, let's look at what it means in terms of generation of EBITDA. And you see that the EBITDA is up 35.2% like-for-like versus H1 2022, moving from EUR 365 million to EUR 483 million. The other remarkable thing is the improvement of our EBITDA margin that is up like-for-like 310 points, and it's driven by our operating leverage and the strong contribution from other revenue. At Edenred, we look at the financial performance, but also the extra financial performance. So on Page 11, you see that in fact all our efforts that we are doing in CO2 emission has been recognized, in fact, by Trucost. And we are now, in fact, rated A. And as to the Transparency of our communication, we have been ranked #6 among the most transparent companies within the SBF 120 Index. As you know, Page 12, we joined the CAC 40 Index on June of this year. And in fact, 1 week after having joined the CAC 40, we also joined the Euronext Tech Leaders, which is probably the recognition of our investment in the technology, but also of our economic performance. So Page 13. What do we do and what do we intend to do? We intend to continue scaling the Edenred platform to extend our value proposition. What does it mean? Page 14, you remember that the way we are organized is we are organized with a 4 layers platform. We have the infrastructure and the digital services, on which we are trying to have a global scale. And then we try to stay super local with our digital experiences and business applications that are local and gives us local relevance. The combination of the all 4 layers should lead us to accelerated time-to-market. So that's the idea. Now, let's see, in practice, what we are doing towards the vision. If you are moving to Page 15 and if we start with the first layer of the platform, the top of the platform, which is the digital experiences. In fact, we continue to invest and to innovate to improve the user experience. One example, mobile payment at scale. We are now in 46 -- in 26 countries developing 46 different mobile payment programs, and we are proud to offer the most versatile offer allowing mobile payment with the 3 wallet service provider that are Apple Pay, Google Pay and Samsung Pay. If you look at the number of transactions between the first semester of 2022 and 2023, we increased the number of transaction mobile by 50%. Then if we move to the second layer, which is the business applications. Do we demonstrate that we are able to provide more and more services to the users of our platforms? And I'll remind everybody that today, we have 60 million users around the world. Let me share with you a few examples. The first 1 is the Emirates. It's now by regulation, a requirement for the employees to have insurance in case of involuntary job loss. In Dubai, we are managing something like 1.4 million salary cards, and we were the first one to propose the access to this insurance via our platform via the mobile. And in 6 months, we have been able to enroll 270,000 beneficiaries for this unemployment insurance and it's a 76% cross-selling. So the idea is to propose more and more services to our 60 million users and leveraging the cost selling. The example of C3Pay in the Emirates is a good example of that. I can take an example, Page 17, in Fleet & Mobility. You know that we made the acquisition of EBV in 2019, and we are now the top 3 biggest tax refund service provider in Europe. And we propose digital solutions that are available 24/7 on self-service portal for the VAT refund in 31 different countries, and we are able to help for the partial excise duty refund in 7 countries. What does it mean? It means that, we made an acquisition. We refurbish our digital offer. And we improved, drive that security into quality of service. It leads to an NPS score of 58, but it also leads into a strong business momentum because we increased our operating revenue growth by 40% between the 2 semesters. It's another example of our ability to scale our platform to provide more and more digital business applications. If we move to Page 18 to the third layer of our platform, which is what we call the digital services. It means, the ability to be connected with the other digital platforms to be able to distribute inside the services of some other platforms on Edenred platform. And here, we give you 2 examples of things that we put on the market. First of all, in Mexico, we now partner with Medicato, which is telemedicine services. And in fact, we are connected to the digital platform of Medicato. So as a member and the user of the Edenred platform, you have access to the service of Medicato. We multiplied by 15, the number of users, in the first half of 2023 versus 2022. We do it in Mexico. You know that we are in 45 different countries. So scale is our DSM at Edenren. We just signed the same agreement with Stairwage in France, which is a digital service of salary payment on demand, and we just launched the service in May 2023. So what we are doing is to use the power of APIs to provide innovative and differentiating third-party solutions to HR managers, leveraging the go-to-market of the Edenred digital platform. So we are doing what we are seeing. But to be able to do that, we need to continue to invest in our technology and especially in the layer 4 of our infrastructure. So to give you a few elements in terms of API. API meaning application programming interface, i.e., the ability to call for a service. In fact, we continue to invest into our APIs. And to give you an order of magnitude, the number of API has increased by 30% in 1 semester. But to give you an order of magnitude, we have 3 billion API messages per month, which makes the Edenred one of the biggest user of API around the world. But to be able to do that, this 4-layer platform, and to be able to be connected, we need to be on the cloud. Today, 100% of our digital volume is in the Cloud, and we multiply by 5 our number of Cloud experts since 2019. Then to do what we are doing, we need to be Data & Artificial Intelligence at Scale. At Edenred, we have more than 200 data experts and we are bringing more than 50 data power solutions, but also internal use case live with the usage of Artificial Intelligence. So we try to augment our capabilities, thanks to the Data & Artificial Intelligence. And finally, part of what we are doing, not only, but part of what we are doing is a payment and the payment industry is a scale industry. So are we working towards payment at scale? Yes. And today, we are able to post something like EUR 100 billion of annual payment volume. And obviously, we want to do that in a super safe environment. So we are investing a lot in our cybersecurity capabilities. So yes, we are strengthening our tech infrastructure by accelerating our investment to continue to fuel the growth of Edenred. Why, Page 20, because our mission in life is to be the most trusted global Employee Benefits & Engagement platform. So not only we invest internally and develop our innovation capabilities internally, but we also proceed to some acquisition. As you know, Page 21, we are a benefits management platform with some employee savings, and we decided to accelerate in the adjacent market of the employee engagement. That's why we made the acquisition of Reward Gateway and in Latin America, the acquisition of GOintegro. And if you move to Page 22, what does it mean? The Reward Gateway is the leading SaaS employee engagement platform in 3 countries, leader in the U.K., leader in Australia, challenger in the U.S. And Reward Gateway is serving more than 8 million users around the world via 4,000 clients. And as you can see, iconic clients. So AXA, for example, Atos or some other ones. And we do the same in Latin America. We bought GOintegro. We invested and bought GOintegro. It's also a SaaS employee engagement platform. Its development business is in 7 Latin American countries. And this platform is serving 1.2 million users via 500 clients, some iconic ones such as General Electric, HP, PepsiCo or BAYER. So yes, we want to help companies to enhance their organizational culture and be an employer of choice. Another way to say it, when you are using the world-class solutions of Edenred in engagement as an employer, you improve your capabilities in terms of attractiveness, but also retention of your employees. And with the capacities of Edenred and with those acquisitions, our goal is to build a leading worldwide offer. And what does it mean? GOintegro is in 7 countries, Reward Gateway is in 3 countries. And our goal is to deploy the solution of Reward Gateway on Continental Europe and to start within 6 countries where Edenred operates today. To give you a little bit of flavor around what it means in terms of what is an Engagement platform. I propose that we move to Page 24. We gave you 2 examples. One for Reward Gateway, another 1 for GOintegro. Reward Gateway for a well-known service company in the U.K. that is called MEARS. And in fact, MEARS, they are a client of Reward Gateway. They employ 6,500 employees. The vast majority of those employees are what we call [ undesked ] worker. So they don't sit on the desk with a computer or something else or laptop. So -- but they need to be in touch with their company. So thanks to Reward Gateway and a mobile application. They have access, in fact, to the modules of Reward & Recognition, savings, wellbeing and communication. 83% of the 6,500 employees are now registered. And in fact, we are able to measure their engagement that in the front line has increased by 500%. We can go through the same case, use case for GOintegro in Latin America for McDonald's in Uruguay. The challenge is to connect 2,500 employees in 60 different restaurants. Once again, those people are what we call [ undesked ] worker and they need to have a contact with their company on their mobile. And it's exactly what is purpose of GOintegro. 76% of the employees are now registered. And out of the 76%, more than 90% are active users. So if we move now to Page 25. In the Reward Gateway project, where do we stand? As you know, we bought the company for EUR 1.3 billion. The transaction was closed on May 16. So it's done. The consolidation has started in the May financial statements of Edenred, and the refinancing was done only 1 month after the closing of the deal. Thanks to a bond for a total amount of EUR 1.2 billion, EUR 500 million with a 3.5-year maturity, EUR 700 million with a 8-year maturity with a coupon of 3.6%. And so the structuration of the -- is behind us. It's what we like at Edenred. When we move, we move fast and we can be focused on the development of the business. Thanks to the talent of the team of Reward Gateway. We are happy to announce that in H1 2023, Reward Gateway has posted a growth that is above 30% in both revenue and EBITDA. So we see the continuation of the strong momentum and track record of Reward Gateway. In terms of post-merger integration, where do we stand? The governance has been finalized. We have a fully dedicated integration management office team. And we are working on the Business and Support function of the workstreams. We are implementing the quick wins. We have some synergies that we prioritized around people and organization, product and brand and the international rollout is in progress. So at Edenred, we love to do things well, and we love to do things fast. We hate wasting time. So that's it for, let's say, the general introduction of the first semester. Now let's move to the most important part under the leadership of Julien. Julien, what is the H1 2023 detailed financial performance?

Well, thank you, Bertrand. Good morning, everyone. Yes, so we opened the Section 2 of this presentation to look at Edenred financial performance in details. So I propose you move to Page 27. So Edenred posted a remarkable growth in both reported and the like-for-like figures. Our operating revenue for H1 2023 stands at EUR 1.081 billion. It's a reported growth of 21.3% and like-for-like growth of 20%. So after the record Q1, Edenred delivered another strong quarter despite low level of fuel price. Focusing on Q2, the revenue reached EUR 562 million, i.e., a like-for-like growth of 19.6%. In reported figures, the growth is 20.9%, including negative impact from currency, minus 3.2%, and positive impact from scope, plus 4.5%, mainly supported by M&A and Reward Gateway acquisition. I move to Page 28 with some comments about our top line performance in Europe. So in Europe, Edenred recorded a strong double-digit growth of 21.2% like-for-like in H1. Operating revenue increase has been supported by another great performance in Q2 2023 with a growth standing at 21.9% in acceleration versus Q1. In France, Q2 growth is above 10%, allowing Edenred to post a solid first semester at plus 12%. And this growth is a consequence of sales dynamism on both SME and large accounts for Ticket Restaurant. On top of our capacity to grow with Ticket Restaurant, we benefit from the leadership position of Edenred Employee Savings Platform with ProwebCE. The success of those 2 products confirm our capacity to sign new clients with an attractive solution fitting with both client expectations and user on needs. Regarding the rest of Europe, operating revenue is up 26% in Q2 and 24.7% in H1. For Benefits & Engagement, growth drivers are quite similar to what they are in France. Ticket Restaurant growth is driven by a solid commercial momentum, and our sales teams are succeeding to push adoption of new legal face value by our clients, helping them to protect the purchasing power of their employees. Our Beyond Food Solutions are also performing well in countries where we operate the amount of our products. On top of Benefits & Engagement, we recorded an outstanding performance for our mobility business line. Thanks to good dynamics in Fuel solutions as well as sustained success of Beyond Fuel strategy. During the first part of this presentation, Bertrand came back on EBV and Tax refund offer that is doing well in H1. We move now to Page 29 and to Latin America. In Latin America, business traction is strong across the region with a like-for-like growth of 14.7% in H1. In Brazil, the growth in Q2 reached 5.9% in the first half of the year to an 8.1% growth. This growth is supported by robust performance in Benefits & Engagement business line, thanks to both Food and Beyond Food Solutions. Our performance in H1 is above the performance of full year 2022. We also registered a strong business momentum in our Mobility business line that has been more than offset by low fuel price at pump. I remind you, the barrel average price was around USD 150 in Q2 last year. The barrel was below USD 80 in Q2 2023. This level of fuel price has impacted our overall performance in Brazil in H1, as Brazil price pump is very sensitive to barrel price. In Hispanic Latin America, operating revenue is up 31.9% in Q2 and plus 30.1% in H1. This performance is driven by our 2 major business lines in the region, Benefits & Engagement and Mobility. In Mobility, the growth is mainly due to a good sales momentum on SME segment. And in Benefits & Engagement, Edenred is accelerating across the region. I shared with you a detailed analysis of our operating revenue performance for H1. We can move now to other revenue on Page 30. Other revenue more than doubled, moving up from EUR 31 million to EUR 82 million from H1 2022 to H1 2023. This strong increase is mainly driven by Europe and more specifically by eurozone, where interest rates increased significantly over the last 12 months and where our strong sales performance impacted positively the level of float. In Latin America, interest rates started to pick up earlier. The other revenue trend is still positive, but the growth is softer as Brazilian SELIC stabilized. SELIC rate is expected to decline in the coming months. On Page 31, we present our total revenue performance for Q2 and H1. As operating revenue, total revenue is surpassing EUR 1 billion mark. The performance of Q2 is in line with the performance of Q1, allowing us to post the first semester with a reported growth of 26.1% after total revenue reaching EUR 1.163 billion. This growth includes a negative currency effect of 2% and a positive impact of 2.7% from scope as we did Reward Gateway acquisition in May. I move now to Page 32 to comment the P&L starting with EBITDA. As we've just seen, the total revenues increasing by 26%, and the EBITDA is growing even faster at plus 32.5% in reported figures and plus 35.2% in like-for-like. Thanks to the strong operating revenue growth and other revenue performance, we have been investing in technology to fuel future growth. As explained by Bertrand, we are connecting our platform to partners in order to maximize our client portfolio monetization. As a result of combination of top line growth and operating expenses monitoring, the EBITDA margin is up 3.1% in like-for-like and up 2% in published numbers, reaching 41.5% at the end of the first semester. On Page 33, we present the net profit, group share of this first semester. The net profit group share stands at EUR 202 million, up 19% compared to last year. Major numbers to comment on this P&L are other income and expenses and the net financial expenses. Regarding other income and expenses, it moves from minus EUR 9 million to minus EUR 19 million. This variation is mainly due to Reward Gateway acquisition costs, that are one-off costs. Regarding net financial expense, it goes from minus EUR 70 million to minus EUR 58 million. This EUR 41 million variation includes the impact of interest rates, increase on net debt costs and CapEx investments and equity revaluations. This variation also includes the debt financing cost for Reward Gateway acquisition. This is it for the P&L. I move to Page 34 and to free cash flow statements. Free cash flow stands at EUR 11 million for H1 2023 to be compared to EUR 24 million for H1 2022. Keep in mind, our performance in 2022 has been positively impacted by one-off effect of EUR 170 million from changing regulation in Germany. Considering these impacts in 2022, our performance in H1 2023 is very good. In details. The FFO, so the funds from operation is benefiting from strong EBITDA growth, partially offset by net financial expertise and tax. I already commented the net financial expense numbers. Float stands at minus EUR 45 million to be compared to minus EUR 267 million last year, and this is a solid position. The performance in float is strong. Thanks to sales dynamism in H1. As you know, we did a great gift voucher campaign in Q4 '22, and we have been able to compensate the reimbursement of gift vouchers during the H1. On top of that, new regulation unpacked in Brazil, bringing no tenants down, has also impacted positively our level of float. When it comes to working capital, excluding float, it has been mainly impacted by the clients of PPS Direct, which is the activity we operate for digital banks in Europe. Restricted cash has also been impacted by PPS activity as this cash is regulated. And as already mentioned, we benefited from a one-off effect in 2022 for EUR 170 million. Last comment on free cash flow is about our CapEx level. We invested EUR 79 million in CapEx in H1. It represents 6.8% of our total revenue, and it is in line with the numbers we gave during our last CMD. We intend to invest between 7% and 8% of total revenue to develop Edenred platform. We move to Page 35, and we contemplate the bridge of our net debt from June 2022 to June 2023. So in June 2022, our net debt was EUR 1.056 billion, and our net debt is EUR 1.851 billion on June 2023. It means the net debt has increased by EUR 800 million, while we did acquisitions for EUR 1.4 billion. We returned to shareholders almost EUR 300 million and we generated EUR 868 million of free cash flow. Our capacity to generate a high level of free cash flow allows Edenred to keep a low level of net debt and to finance significant acquisitions. I go to Page 36. And after the acquisition of Reward Gateway, Edenred has a robust financial position. Edenred's new rating, i. e. A- has been confirmed by S&P after the acquisition of Reward Gateway. And regarding the financial results and as explained during the last Capital Markets Day, the increase of interest rates impact financial costs in terms of sensitivity, 100 basis points increase drives additional EUR 16 million in financial expenses. And I remind you, we financed Reward Gateway acquisition through a dual tranche bond successfully issued early in June. The cost of those 2 bonds is around EUR 45 million on a full year basis, and this is the impact before tax. This is it for the detailed figures. Bertrand will share with you now the 2023 outlook.

Thank you, Julien. I propose that we move to Page 38. So what do we see as an outlook for the second semester of 2023 and beyond. In fact, what we will do is, first of all, to benefit from the strong business momentum that we have. I remind that we are on vastly under penetrating market, especially on SMEs, and the Edenred Solutions are very attractive and even more in the current environment of purchasing power needed to attract and retain the employees, but also the need to control your costs. And that is feasible with, for example, Mobility Solutions. The second thing is, yes, Edenred will continue to enrich its Beyond offer. We are integrating and deploying our newly acquired employee engagement platform, and we will accelerate the distribution of additional third-party services. Having a digital platform connected 60 million users to 2 million merchants is a very nice lever when you want to distribute additional third-party services. And yes, we will continue to invest in our technology to further improve the user experience and to leverage our state-of-the-art tech infrastructure, whether in cloud, API data, but also compliance and security. So what does it mean for the entire year 2023? Our full year 2023 EBITDA estimate stands between EUR 1.02 billion and EUR 1.09 billion versus EUR 836 million in 2022 and above the consensus. Thank you for your attention throughout presentation of Julien and myself. And now both of us are here to answer any question you may have.

[Operator Instructions] We'll now take our first question from Simon LeChipre from Stifel.

Yes. Three on my side, please. First of all, could you please quantify the fuel price impact in Q2? Secondly, on revenue growth, how should we view the rest of the year? Do you think the Q2 like-for-like growth could be sustained into the second half? And lastly, could you give us your view on where the financial expenses should land for the year? I guess, it should more than double compared to H1.

Okay. Simon, thank you for your questions. So if -- maybe Julien, you can take the first one, the quantification of the fuel price for the Q2 and the first semester.

Yes. So regarding the fuel price impact, as I said, last year, in Q2, the barrel was at very high price, USD 115 per barrel. So we knew that the comparison basis for Q2 this year will be high. So it is the case. So if we look at the impact of the fuel price on the total revenue, on the operating revenue of Edenred, it's around 2% negative impact in Q2. So minus 2%. So it means that the growth we've been able to deliver at 19.6%. If we consider the fuel price impact, it means by yourself, we've been able to generate more than 21% growth. If we look at the impact on the Fleet & Mobility business, it's around 6% -- [ 66%. ] So we should have been able to deliver 6% additional growth compared to what we published today.

So our revenue has grown by 26% in H1 with fuel price impact on Q2 that were huge. So then your question is the second half, can we continue to generate revenue like that, revenue growth like that? First of all, when you look at the growth of Edenred, the growth is well balanced. On every product line and in every geographies, we are generating strong double-digit growth. The second thing is, there are some structural trends behind that, that are very positive and that will continue. First of all, inflation is everywhere, and the companies have more and more difficulties to make the link between salary increase and inflation. So they need to give back purchasing power, but it's very different from one country to another, from one category of employees to another, from one economic cycle to another. And we are coming with a portfolio of 250 different solutions, totally digital, easy to put in place, easy to modulate. And so we will continue to benefit from that. The second thing is every employer needs to be attractive and needs to develop some retention strategy. The job market is very tight everywhere around the world. We don't see the unemployment rate increasing. And so -- and we see on many categories of labor a lot of tension. You have between 50 million and 100 million jobs in the digital economy that are not filled. So we are all fighting for the same good resources. And to do that and to win that competition, we need to be more attractive and we need to be high -- better in terms of retention. And Edenred can help on that. Then because there is inflation, every company is trying to be very careful on the cost. And transportation costs, mobility costs are significant for many companies. So when you have the service of Edenred, basically you are able to better control what's going on. And you leave less money on the table. When you are using Edenred VAT services, you are sure that you're going to get your VAT on both. It's a luxury when times are good. It's not a luxury anymore when economic conditions are tougher. When you maintain thousands of vehicles using the maintenance services of Edenred is helping you, first of all to be compliant, but also is helping you to be efficient in your compliances. So those structural trends will continue. Another one, which is remote working. We all know that when you are a remote worker, you are looking for more versatile solutions. And we see it in the engagement platform that we deploy for many people who are undesked. And in fact, when you are a remote worker, to a certain extent, you are invested as well. So our solutions makes more and more sense. I could go on like that. Digitalization of the economy, it's increasing every year, and our solutions are totally digital. So to make a long story short, the fact that we are the worldwide leader. The fact that we are the ones who is investing the most, the fact that we have a good track record and the fact that we have both mega trends are very positive for the growth of Edenred. Then if we focus on H2, the business momentum is going to continue. However, you have to take into account a few things. First of all, the impact of the fuel price, as explained by Julien, it was mainly in Q2. And here, it's going to be in Q4 and Q3 of the second part of the year. So we know that it's going to have an impact on our growth in Fleet & Mobility, so our growth totally. And the second thing is the basis of comparison. Q4 was a superb year for us, for programs that are not repeatable in the sense that every year you play and you start from scratch. We are very confident in the capabilities of our salespeople. We are very confident in the attractiveness of our solutions, but you never know. So to make a long story short, structurally, do we see the same trend of growth for the second part of the year and beyond 2023? The answer is yes. Is it going to be 25%? Too early to say. Taking into consideration, the fuel price impact on 2 quarters, in fact, in H2 and taking into account the basis of comparison of Q4 that is super high. But you know us, we love those kind of challenges. Your third question was financial expenses.

Yes. So Simon, on the financial expenses, you really need to break down this line to take into account a few things. The first one is, as you know, and we explained during the last CMD, we have the bond, we issued before 2023 with fixed interest rates that have been swapped. It means that when interest rates are picking up, it has an impact on our financial expenses. This is the first thing you need to consider. Second thing is the financing of Reward Gateway acquisition. So we issued 2 bonds. And before that, we had a bridge to finance the acquisition. It means that you have financial costs regarding this acquisition that are booked in our P&L at the end of June, but it's only for 1.5 months duration. It means that it will have a bigger impact in H2. And the third thing you need to consider is that in financial expenses, you have more than the cost of our debt. You also have the cash that is invested, I would say, our corporate cash that is invested in our parent subsidiary. So it has a positive impact on this line. And the last topic, you need to consider is the fact that as we explained already last year, we are a limited partner of Partech. It means that the valuation of the portfolio of the asset we have is moving from 1 semester to another. But all in all, yes, financial expenses will increase in H2, mainly impacted by interest rate increase and the Reward Gateway financing costs.

Next up, we have Julien Richer from Kepler.

So 3 questions from me. The first one, in terms of operating EBITDA margin, it has been down 50 basis points in H1. It was down last year also due to investment. What trend do you expect for the back end of this year and beyond? The second question in terms of competition in France. So you posted a strong 10% like-for-like growth in terms of operating revenue in H1, but Q2 was weaker and/or softer, let's say, than Q1. Is it due to tougher operating environment or just a question of quarter? And the last one in terms of other revenue. Any guidance for this year? Do we have to multiply H1 performance by 2 for this year and to be at around EUR 160 million?

Okay. So operating EBITDA margin, first of all, in H1, our operating EBITDA margin like-for-like has improved. So it's the Scale effect. After that, you have some mixed geographical effects. So that's why in published, you see a small decline of the operating EBITDA margin. What do we expect? We expect full year to have an operating EBITDA margin in published and in like-for-like to be at least at the level of last year, at least. And in EBITDA, we expect the EBITDA margin to improve significantly. And I remind that in H1 2023, the EBITDA margin has improved by more than 300 basis points. So -- and let me remind the way we operate the company. To fuel the growth, we need to invest, and we need to invest in technology. Our investment in technology is between 60% and 70% in OpEx and between 30% and 40% in CapEx. And in CapEx, as explained by Julien, this semester, we are at about 7%. And we said, our CapEx investment is going to be between 6% and 8%. We are at 7% in H1. So we sustained a high pace of investment in CapEx, so also in OpEx because we are a tech company and a good chunk of our investments are OpEx. So we pay super talented engineers to develop our digital solutions and to go after new markets. So the way we pilot is we are a platform. A platform needs to have Scale effect. Scale effect means improvement of the EBITDA margin. And you saw an improvement of the EBITDA margin like-for-like and published by more than 300 basis points. As to the operating EBITDA, we try to find the right level depending on the amount of investments we want to do to fuel the growth of Edenred. But by the end of the year, you will see an operating EBITDA margin at least at the same level as the one we had last year. Your second question is the competition in France. You cannot judge the situation in France in 1 quarter. It's double-digit growth. So for example, why is it slightly below? It's because we had a huge gift season in Q4 2022 with our leading product that is called Kadéos, the leading gift digital solution in France. So it has been a very good season in Q4 2022. So it means that you have a lot of reimbursement volume in Q1. So it creates the plus contribution to the plus 12%. And then we go back to a more regular, let's say, growth rate in Q2. So it has nothing to do with the competition in France. The market, I remind that the market is vastly underpenetrated. There's room for many players, and we have been growing at double digit for a long time in France. And our market share is increasing year after year. Finally, on the other revenue, can we multiply Q1 -- H1 by 2 to full year? Should you help us on that?

Yes. So maybe a few comments on that. First, when we look at the performance we did in H1, it's true, it's a very strong performance. But keep in mind that interest rates started to increase last year in Q2. It means that we have a very favorable comparison basis in H1, which will not be the case in H2. And it will not be the case in Europe, because interest rates, as I said, already picked up quite significantly in Q2, Q3 and Q4 last year. And second thing is about what is happening in Latin America. So in Brazil, the SELIC is at 13.75 today. And we expect the SELIC to go down starting in August. And what we expect is a first decrease of 25 basis points in August for the SELIC. So we will do another good semester in terms of other revenue in H2. But we have a comparison basis that is higher, and we know that interest rates will go down in Brazil.

Next up, we have Andre Juillard from Deutsche Bank.

Congratulations for the strong results. Just a question about external growth. So you acquired 2 companies in H1, one pretty big. What is the plan? Could you remind us the guidance you gave at the Investor Day in terms of external growth, the perspective midterm and the way you plan to do that? I mean by that, can we expect an acceleration on that side regarding your free cash flow generation, which is really strong? It allows you to accelerate. Or will you continue to do step by step?

Okay, Andre. So thank you for your question. What is the plan? The plan is what we said at the Capital Market Day in October 2022. So we said that by 2030, we want to meet the EUR 5 billion mark of revenue. And the way we look at that, we say we are EUR 2 billion. So we're going to add EUR 2 billion additional revenue coming from organic growth, which we love because organic growth is the only way to make sure that you are fit and competitive. But we also recognize that being a platform -- being a platform, we can accelerate and leverage even better the strength of the platform. Because we serve 60 million users. So to continue to be the most innovative, to continue to have 1 step ahead of the competition, we will also accelerate via acquisitions that bring services, reinforcing our mission, which is to be the everyday platform for people at work. So we said out of the EUR 5 billion, probably EUR 1 billion additional revenue will come from acquisition. Based on that, we also said that Beyond is our plan. So we want to go Beyond Food, Beyond Fuel. And so we gave proportion of where we want to be versus our current portfolio. And the acquisition of Reward Gateway and GOintegro is exactly what we announced at the Capital Market Day. And so we are moving into the integration. We are moving into the generation of growth and deployment on Continental Europe of those acquisitions. Then your question is do we expect -- can we expect some acceleration? What you can expect is, yes, you are right. Our cash flow generation is very good. And to give you an order of magnitude, the acquisition of Reward Gateway was EUR 1.3 billion. You look at our generation of cash flow. Probably by the end of the year, our leverage is going to be around 1. And if we don't do any acquisition by the end of 2024, it's going to be very close to 0. So do we have some dry powder? The answer is yes. But it's not because we have dry powder that we will not continue to be very, very disciplined in terms of strategic rationale, i.e. were yet to fuel the growth of Edenred via our Beyond strategy. So you can expect us to continue to be very disciplined on the strategic rationale of our acquisition. You can expect us to continue to be super disciplined on the financial metrics. So what is the multiple? What is the payback? What is the IRR? That things that we are following very closely. What you can expect from Edenred as well is to be super strong in terms of PMI. We start on time, we finish on time. We do what we say, we say what we do, and we do it in a very collaborative way. So with that spirit, yes, we will do some bolt-on acquisitions in Engagement & Benefits to extend our Beyond Food strategy. Yes, in Fleet & Mobility, we will continue to do some built-up acquisition in greener B2B mobility. And yes, in corporate payments, we will build up acquisition to further expand in new verticals or extend along accounts payable automation value chain. So to make a long story short, Andre, what we have been doing quite successfully, we will continue to do it in the coming years.

And just as a follow-up, the first feedback on Reward Gateway. Is it a good surprise, in line or right above expectations?

With Reward Gateway, it was love at first sight, but we didn't succeed 2.5 years ago, and now we are together. So in fact, we are, I would say, between good surprise and according to the plan. Why? Because we did some extensive due diligence and due diligence that started, in fact, almost 2.5 years ago. So we had time to get to know each other, and we had time to understand that we want to love each other. So on that, we are according to the plan. What is good is, first of all, the business is doing super well in H1 2023. So it's good when you start a relationship that you are up to the plan that you sold to your new family with growth that is both 30% in revenue and EBITDA. So that's very good. But it was the plan, but it's always better than it is done. The second thing is I just came back for many rounds of visiting our operating companies around the world to discuss what we call the 3-year plan, i.e., what do we want to be 3 years from now. So I had the chance to discuss very extensively with some of our teams, and I can tell you that the level of excitement as to the sales and marketing team to deploy on Continental Europe, the magnificent offer of Reward Gateway is super high. So I would say performance well done and according to the plan, spirit, i.e., the ability to work together from a central point of view, above expectations. And in terms of excitement from Edenred people to adopt the Reward Gateway solutions and to push them on our different distribution channel, super high.

Next, we have Harry Martin from Bernstein.

First question I have is on the Fleet & Mobility business in Europe. I mean, it's clear to see you're continually adding to the size of the merchant network here in terms of fuel stations, et cetera. But Bertrand, if you can give a bit of an update in terms of where we are on the journey to a complete European network and whether that is going to be a priority area for future M&A spend? And then a couple of questions on France. The first 1 is just on the regulation today are temporarily allowing vouchers to be used to purchase grocery as well as food. So I wondered if you had any quantifiable benefit in terms of higher usage there? And if that's something that in the long term, our regulators might be more willing to do if the pilot is successful. And then finally, just an update on the French Antitrust appeal, which I believe was during the first half of this year. Do you still expect to book that receivable at some point this year?