Quadient S.A. (QDT) Earnings Call Transcript

Good evening, everyone. Welcome to Quadient's first half 2026 results presentation. I'm Laura Paxton, Quadient's Head of Investor Relations. Today's presentation will be hosted by Geoffrey Godet, our CEO, and Laurent Dupassage, our CFO. The agenda for today's call is on slide 3. As usual, there will be an opportunity to ask questions at the end of the presentation. You can either submit your questions in writing through the web or ask questions live by dialing in to the conference call. Thank you very much. And with that, over to you, Geoffrey.

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

So, let me now hand it over to Laurent for the first half financials. Laurent. Thank you, Geoffrey. Good evening. And before going into the numbers, a word on presentation. Just following the strategic review, as mentioned by Geoffrey, the Lockers business is reported in accordance to IFRS 5 in our half year financial statement. And the European private locker network, which we are retaining as they are largely managed through mail employees, has been reclassified within the Mail segment. All 2025 comparatives shown today have been restated on the same basis, except if explicitly mentioned, so that the figures you see are fully comparable. This reclassification strongly benefits to our EBITDA and EBIT at group level, as Lockers are dilutive to the guidance margin. It brings about 130 basis points on EBITDA and about 230 basis points on current EBIT margin. On the revenue side, as you can see on the slide, the translation post-IFRS 5 is very straightforward. Digital scope remains unchanged. And Mail is about €3 million of revenue for the private local network being added into H1 2026. On that basis, Quadient delivered €448 million of revenue in the first half of 2026, representing a 2% organic decline compared to the same period last year. Digital confirmed its gross momentum at 6.7% organically at €146 million, while Mail was down 5.7% at €302 million. From a geographic perspective, again, North America, our largest region, was essentially flat at €254 million. Main European countries were down by 4.4%, at €165 million, with, as usual, we'll see that further later, a strategic increase of €1.5 billion. Stronger Mail underlying decline in this geography. International is down by 4.9% at €29 million, mostly driven by Mail. Turning now to profitability. While I just mentioned total EBITDA margin is improved post IFRS 5 due to the deleted EBITDA from Lockers, EBITDA by at Digital and Mail level are impacted by some low cost, front end cost, and dis-synergies reallocated to both solutions and impacting EBITDA margin by about 0.6 points, on top of which you have a small dilutive private network impact on the Mail side for 0.5 points. Group EBITDA margin stands at 21.5%. It's down 0.8 points compared to last year, mostly due to the erosion on the Mail side and unfavorable mix effect. The return margin was stable at 14.5% despite the implementation costs linked to the French invoicing GoLive and, of course, the Forex. Current EBIT for the period came in at €57 million, a 5.9% organic decline due to Mail. Let's now turn to the revenue bridge on slide 9. Starting on the left is €465 million restated revenue for last year H1. This bridge shows the continued rebalancing of our portfolio. It had contributed €9 million of additional revenue, partially offsetting the €19 million of organic decline in Mail. The scope effect added €2 million from the acquisitions of both Serendia in June last year and CDP Communications in December 2025. On the right hand side, currency had a €10 million negative impact. It's all coming from Q1, meaning on Q2, no currency impact on the bridge. All-in reported revenue decline at 3.7% and by 2% on an organic basis. Moving now to the current EBIT bridge on slide 10, from the €64 million we stated current EBIT last year, Digital EBITDA grows of €3 million, partly offset the €6 million decline in Mail EBITDA, and you have an additional €1 million of organic increase in depreciation and amortization, notably tied to Digital R&D. The currency accounted for €3 million of negative impact on the current EBIT, while the scope effect was relatively neutral at the EBITDA level. The result, current EBIT for the first half stands at €57 million, down 5.9% on an organic basis. Let's now move into the details of the performance-backed solution and starting with Digital. On slide 12, so before reviewing specifically the half year, let me put our Digital performance into a longer term perspective and note that these figures are prior to the application of IFRS 5 that are due to the discontinued business for the sake of the consistency of these figures across the long time period. On the bottom left chart, our annual recurring revenue has gone from €109 million in 2019 to €264 million at the end of July '26, a compound annual growth rate of about 15% per annum, with a remarkably regular improvement over the period. The chart on the bottom right now shows the same story on quarterly revenue, with subscription-related revenue growing at 16% from the compound annual growth rate since 2020. A logical similar trend compared to the ARR, and now represents 87% of Digital revenue at the end of H1 2026. And at the top left side, you can see the profitability trajectory with EBITDA rising from around €20 million over a 12-month period, at the mean of the chart, and to more than €50 million if you take both H2 last year and H1 this year, so the past 12 months.

Over to you now, Geoffrey, on slide 13.

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

With that said, Laurent will now take you through the Digital numbers.

Thank you, Geoffrey. The Digital revenue reached €146 million first half of '26. It's up 6.7% organically. And our recurring revenue increased further to €264 million, representing an annualized organic growth of 12.9% compared to the end of January '26. It was driven by the momentum of bookings. It's up 20% in Q2 versus last year, related to French invoicing, and by a solid performance in North America and CCM. It includes around €5 million of contractually committed components related to invoicing. It also absorbs €1 million of negative currency effect compared to January '26. Subscription-related revenue continued to show a sustained growth. Non-recurring revenue improved markedly in Q2 compared to Q1, thanks to a more moderate decline in professional services revenue. On the right-hand side, EBITDA reached €21 million, up 17% year-on-year on an organic basis, with an EBITDA margin stable at 14.5%. It is a solid outcome given the increase in implementation costs tied to the French invoice in Go Live and we expect margin progression over the full year. On an organic basis, margin has increased by 130 basis points. Now moving to Mail on slide 18. The structural trend in Mail is well understood and it has not changed. But what I want to show you here is different. Mail isn't simply a declining business that we manage for cash. It is an asset that is actively supporting the Digital transition. In Europe, a cross-sell of Digital financial automation solutions to Mail customers grew 4-fold ahead of the French mandate. So the Mail base is doing exactly what we said it would do. It gives full and privileged access to business as they digitalize their financial processes. At the same time, we keep investing where customers ask us to. We launched the IX9, the premier mailing system in France, which extends our leadership at the high end of the market. We secured the major U.S. public sector, deployment for certified NEO. And our DS67 IQ for the Insata is now rolling out globally. We also continue to create intelligent devices by adding complementary software to our Mailing solution globally. To date, we have rolled out our intelligent solutions to almost 80,000 customers globally, reinforcing the value of our Mailing hardware. We continue to add capabilities to the solution with Smart e-Certify, the ability to print and manage all certified and tracked mail, and digital stamps coming in November this year in the U.S. The customer relationship remains strong. Satisfaction was above 96% globally and 98% in North America, our largest market. Quadient was also named the leader in the IDC MarketScape for Worldwide Mailroom Solutions and Services in its 2026 Vendor Assessment. Let's now move to the number for Mail on slide 19. Mail revenues stood at €302 million in the first half, is down 5.7% organically. Two factors explain this performance. First, it's a slower subscription annual recurring revenue, reflecting the gradual contraction of the installed base after the lower placement of recent periods. And second, software hardware volume in Europe, partly offset by the resilience in North America. Q2 was down 6.4%, a weaker sequential performance, which mainly reflects the expiry at the end of Q1 of a service contract in the U.K. Including this specific impact, the underlying trend was stable over the 2 quarters. On the right hand side, the EBITDA came in at €75 million, it's down 6.6% year on year on an organic basis, with an EBITDA margin of 24.9%, down only by 0.6 points despite the top line performance. This resilience reflects our continued cost discipline, U.S. tariff reimbursement, as well as the commercial productivity gains with Digital in connection with the ramp-up ahead of the invoicing mandate in France. Moving now to Quadient Financials. So first, let's review on slide 21 the P&L. And as you can see in this slide, the '25 comparatives are shown both as published and restated for the application of the IFRS 5 to the Lockers business. Starting from current EBIT of €57 million, optimization expenses and operating income amounted to €7 million, essentially restructuring in Mail. This brings EBIT to €50 million. Net financial expenses stand at €23 million, slightly above last year. Income before tax is therefore €27 million with an income tax charge of €7 million. This charge benefits from the release of €5 million tax provision. Net income from continuing operations comes out at €21 million. And net income from discontinued operations is negative €11 million. And this reflects the measurement of the Lockers asset at fair market value, less cost to sell in Europe, outside of the U.K., plus the loss of the business over H1. All in net income for the payers is €10 million, of which €10 million are attributable to shareholders. Moving now to slide 22 and the cash flow. We are up to a very strong free cash flow, standing at €34 million for the first half. It's significant improvement compared to the negative €4 million we had last year at the same date. Starting from an EBITDA of €96 million, other items represent a €10 million outflow, bringing cash flow before net cost of debt and tax to €86 million. A change in working capital required is a €25 million outflow. It's a normalized level compared to H1 '25, reflecting our business model and billing simplicity. Last year, if you remember, this working capital was particularly affected by the additional inventory you had built at the end of January '25, and it was paid over the first half of. The change in these receivables contributed to a positive €29 million, reflecting the continued decline in our stock base. Interest and income tax paid amounted to €31 million, it's well below last year, to €52 million, which included, as we mentioned last year, one-off impacts of the bond refinancing as well as the BIT tax and the 360 tax payments. Cash flow from operations therefore, which is €59 million and after capital expenditure of €25 million, which is to reflect the low level of CapEx in Mail, Free Cash Flow comes out at €34 million. Cash flow from discontinued operation was an amount of €12 million. It's higher than last year due to the €5 million plus increase in CapEx in the U.K. Moving now to slide 23 to give you some details on the CapEx. CapEx expenditure presented here including excluding IFRS 16, stood at €25 million for the first half, down from €28 million last year, mostly due to the lower placement in Mail. This mainly reflects a reduction of Mail CapEx in line with lower fronting machine placements, while investment in Digital is growing also due to acquisitions. As you can see in the published figure from 2025, Lockers took for a very large share of Total CapEx was about 30% in H1 '25 against a revenue that represented at the time about 10% of the company. Coming now to slide 24, focusing on the net debt and the leverage, the debt stood at €683 million, that includes the EBITDA 16 at the end of July '26, is broadly stable compared to the end of January. And in reality, it hides a Forex that is adverse to the EBITDA to the debt at €15 million between the two dates, it's offset by the cash generation during the period. At the end of H1 '26, it breaks down into €435 million of net financial debt for leasing and €216 million of non-leasing debt, as well as the €32 million of IFRS 16 debt. Our average I show, excluding leasing, is stable at 1.6 times EBITDA, even if when removing EBITDA from Lockers and cash held by Lockers entity, which is €7 million, the leverage at group level stands at 3.1 times, including easing. Please note that the H1 ratios reflect the application of IFRS 5, while prior periods have not been restated on this graph. Those ratios continue to stand well below our covenant levels, and as mentioned by Geoffrey, the set of U.K. Open Network is expected to bring the leverage ratio extremely down to around 1.2 times by the end of the financial year. Moving now to slide 25, our financial structure. Our liquidity position at the end of July was strong at €123 million in cash, €200 million of unloaned credit facilities, maturing in 2030, and a customer lending portfolio at €522 million, contributing to future cash flow visibility, with maturities well spread over the coming years. During the period ending in August, we carried out two transactions, the issuance of a €100 million Schuldschein loan and a German private placement and the earlier payment of €65 million for existing Schuldschein, covering the tranches maturing both in November '26 and May '27. This confirms both our access to diversified sources of financing and our discipline in managing a balanced maturity profile. Let's now move to conclusion on page 26 and 27. We are confirming our guidance for the full year on the basis that now excludes Lockers. You can see the translation on this slide. Our previous guidance for fiscal year '26 was organic revenue change of minus 2% to plus 2%. EBITDA margin above 20% in Digital, above 25% in Mail, and above 10% in Lockers. And the leverage ratio extremely low of 1.5 times. Now take Lockers out, and that translates mechanically organic revenue change of minus 3% to plus 1%, EBITDA margin above 19% in Digital and above 24% in Mail. These are the figures we confirmed for the full year. And we stress this is a technical translation, it's not a change in our view of the business. The margin is stepped down. The relocation of local costs and synergies across Digital Mail. And for Mail, it does reflect the utility effect of the European private network. Private local network we are keeping. On average, the same translation takes out our deleveraging targets from 1.5 times to 1.6 times because Lockers EBITDA comes out. Then we apply the procedure of the U.K. sale, and that takes us to the 1.2 times at the end of the financial year comforted with the strong free cash flow generation at the end of H1, that assumes the sale completes before year end. And finally, moving to slide 28. So, the same logic applies to our 2030 ambitions, and here I want to be explicit about what we are doing. 2030 revenue ambition, if you remember, by solution are unchanged, it's around €550 million for Digital and around €500 million for Mail. On profitability, take Lockers out and the emission, we announced in March we'd mechanically come down as well, around 29% for Digital instead of 30%, and a range of 19% to 24% for Mail instead of 20% to 25%. We expect to absorb an impact in full, so we are maintaining around 30% for Digital and 20% to 25% for Mail by 2030. Under the restated scope, that is in aggregate. It is our commitment to absorb around 1 point of margin over 5 years through the growth we are building in Digital. Taking Lockers out does not dilute the ambition we set, and Digital is on track to become Quadient's largest and most profitable solution by 2030. A Digital business growing with strong regulatory and structural tailwinds behind it. A Mail business that is resilient and that is actively feeding the Digital transition. And with financial flexibility to act. Thank you. And with that, I think we are ready to take the questions.

Thank you. This is the conference operator. We will now begin the question and answer session. [Operator Instructions] Anyone with a question may press star and 1 at this time. Once again, if you wish to ask a question, please press star and 1 on your telephone. At the moment, there are no questions from the conference call. Thank you everybody.

The first question, what is the expected timeline and valuation range for the remaining assets? The U.S. and Japan businesses where Quadient holding leading market positions. Do you expect the transaction to be completed by the end of FY '26? Would you pursue a single buyer for the entire business or separate transactions by a geography?

It's a good question. I think what is important is to do the process right and maximize the value for Quadient. So that's really our, I think, our guiding principles. The U.S. market, we probably have almost a third or 40% of the market share, definitely number 1. It is an at scale business. Representing 85% or 90% of the rest of the revenue. This is really the primary asset in terms of value creation. It is a profitable base, it is cash generative. So, we have obviously a lot of things for us to look for. In combination to the strong position, we also have the Japanese base where we have 7,000 lockers, roughly a little bit less than half the base in the U.S. It's a more mature base, strongly cash generative. We have probably 60%, 65%, 70% market share left there. So I would call them definitely premium assets with respect when comparison to the lower maturity of the asset we just sold in the U.K. We do have obviously global players that are operating throughout the U.S. and Japan in different areas that are interested by those assets because they obviously play into the locker themselves, use lockers, invest in lockers, potentially also use their own lockers. And we also have a local or country specific interested parties. So I would say it will take as long as it needs. The rest of the Lockers will be a bit more complex than the U.K. We have several entities across several countries, spanning from France, the U.S., Canada, Japan, et cetera, with a bigger scope of the business. And so aside that, we'll do what we think is the right thing to do. We have obviously communicated this announcement publicly, so it's also in our best interest to move diligently and as efficiently as we can on that. We're not going to commit to any particular timeline. We obviously just want to make sure we are doing the right thing, but we're definitely focused on it now that we have completed the U.K. sale.

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

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

Thank you. Will the €120 million of locker-related CapEx, which is expected to be freed up over the next 5 years, be reallocated to accelerate investment in the Digital business? And over what timeframe does management expect to eliminate the €2 million to €3 million of stranded costs?

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

Thank you, Geoffrey. Could you remind us what the revenue and EBITDA from the U.K. Open Network was and what multiples the €65 million represent against these?

So I think Geoffrey mentioned the revenue being expected more than €10 million this year and EBITDA being expected to break even this year.

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

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

Thank you. And how does Quadient intend to use the disposal proceeds? Debt reduction, enhanced share buyback program, special dividends or reinvestment in the Digital business?

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

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

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

And could you give us some more color on the involvement of VESA in the Lockers, Mail and Digital business?

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

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

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