Thales S.A. (HO) Earnings Call Transcript

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Thales First Half 2026 Results Conference Call. The presentation will be held by Patrice Caine, Thales Chairman and CEO; and Jeremie Papin, Thales CFO. It will be followed by a question-and-answer session. [Operator Instructions] I must advise you that this conference is being recoeded. I would now like to turn the conference over to Mr. Louis Igonet, VP, Head of Investor Relations. Please go ahead, sir.

Thank you. Good morning, everyone, and welcome to this presentation of Thales' H1 2026 results. I'm Louis Igonet, Head of IR for Thales. With me today in the room are Patrice Caine, Chairman and CEO; and Jeremie Papin, our CFO. As usual, this presentation is webcasted live on our website, thalesgroup.com, where the slides and press release are also available for download. A replay will be available soon after the end of the event. With that, I'd like to turn over the call to Patrice Caine.

Good morning, everyone, and welcome to Thales 2026 half year results conference call. So let me begin with a few highlights of our performance in the first half of the year. And I'm on Slide #2. So first, we delivered robust order intake, mainly driven by Defence & Space. Once again demonstrating the strength and the relevance of our products and solutions. Notable examples include major contracts to supply satellites to Luxembourg and Turkey for air surveillance systems to Qatar or radars to the UAE. Our sales growth was driven by the successful ramp-up of our defence activities, especially in [indiscernible] and [indiscernible], together with the rebound in cyber and the resilience of our aerospace business. From an operational perspective, our continued focus on efficiency and competitiveness resulted in a robust year-on-year improvement in profitability. The first half was also marked by outstanding free operating cash flow generation this performance was exceptional, notably reflecting the growth in order intake and our strong project execution. Now beyond these financial results, we also reached several important strategic milestones during the first half of the year. We launched new solutions to enhance counter-drone capabilities and smart ammunitions. We entered into promising partnerships with dustiness for instance, to support arm forces in counter U.S. and ground-based air defence through enhanced system integration and production ramp-up. We also entered with a partnership with Airbus Defence & Space, MBDA, [indiscernible], Safer Electronic Defence & Destinus to establish the BLM Exo consortium a multinational European industrial partnership to develop Europe's first sovereign Example interceptor program. or again with Renault to enhance our mass production. On top of that, we also enlarged our strategic partnership with Google to develop trusted cloud solutions now in Germany. And finally, in early June, we announced the planned acquisition of with the ambition of creating a world-class player in autonomous underwater warfare while further strengthening our capabilities in inertial navigation. So let us now take a closer look at the numbers, and I am on Slide #3. So as previously said, the commercial momentum in H1 2026 was particularly robust with order intake reaching EUR 12.5 billion, a 22% organic increase year-over-year. The book-to-bill ratio is maintained significantly the 1 reaching 1.14. Sales reached EUR 10.9 billion, growing by 7.8% organically in H1. And if we exclude the one-off impact linked to the constellation of 2 geostationary satellites, the underlying organic growth in H1 is close to 10% a at 9.6% precisely. Adjusted EBIT rose by close to 10% on a reported basis while EBIT margin improved to 12.5%. Then adjusted net income group share grew sharply by 13%, reaching EUR 990 million for the first half. Free operating cash flow generation was exceptionally strong in the first half, reaching EUR 1.8 billion, which is close to 3x the level reached in H1 2025. Of course, Jeremie will further elaborate on that evolution. Net debt now, while net debt stood at around EUR 500 million at the year to be compared to EUR 1.6 billion at 31st of December 2025. As you can see on the chart, over the last 12 months, Net debt has been reduced by around EUR 3 billion, which is a major achievement. So moving to the next slide. and leaving the floor to Jeremie.

Thank you, Patrice. Good morning to everyone, and thank you for joining our call. Turning to Page 4. Order intake was solid in the first half of 2026, standing at EUR 12.5 billion, a 22% organic growth. This achievement reflects a continued strong momentum across our businesses with particularly good bookings in space and in defence. Growth was widespread with all regions contributing. Europe and the Middle East, leading the growth in H1. . A benefit of our long-lasting presence in those regions, our engagement to remain close to our clients and to our them highly performing products and solutions in the current context. In the first half of 2026, 18 large orders with a unit value above EUR 100 million were booked, 7 in Q1, 11 in Q2. Of these 18 large orders, 13 were in defence, including a number of new contracts in air defence. We had mentioned the sum new generation in Q1 and Q2 has seen further orders in air surveillance and air traffic management. The momentum was also good in the naval domain. Furthermore, the group recorded 5 large orders in space, both in observation, exploration and in telecom, supported by sustained and robust institutional demand. Finally, our small orders dose below EUR 10 million. were up 5% organically, which is another indication of the ongoing healthy underlying momentum of the businesses and the high granularity of demand across all our portfolio. Overall, the solid order intake performance confirms the strength of our positioning on growing markets and the continued relevance of our offerings. Now let me move to sales on Page 5. In H1 2026, sales were up 7.8% organically to EUR 10.9 billion. If we exclude the impact of the cancellation of geostationary telco satellites in our space business, sales growth amounted to 9.6%, which reflects a solid underlying growth momentum. Each of our 3 segments contributed to growth in H1. In terms of geographies, sales growth remained well balanced between mature and emerging markets. Europe posted a solid 9.4% organic increase, while emerging markets grew by 14.6% and including a particularly strong performance in the Middle East, up 36.7%. You will note that in H1 2026, changes in scope had a very minor impact, and currency impact was negative at minus EUR 116 million, mainly linked to the evolution of the euro against the U.S. dollar in the first quarter. Turning to Slide 6 and having a look at the drivers of our group EBIT adjusted increased year-on-year. Adjusted EBIT for H1 2026 amounts to EUR 1.4 -- nearly EUR 1.4 billion, up 10% year-on-year and 11% organically. The strong increase in our gross margin was the main driver of our adjusted EBIT growth in semester. It is up EUR 219 million, and the main contributor to sales volume growth were defense and aerospace. Part of this increase in gross margin was reinvested to support our future growth. R&D was up 9% and reached 6.2% of sales and marketing and sales were up 4%. G&A expenses up only 3% are being constrained growing at less than half the pace of sales and reflecting our focus on cost discipline. Finally, restructuring costs stood at EUR 24 million in the first half, down by EUR 30 million compared to last year. This is mainly explained by the ongoing execution of our space adaptation plan over the first half of last year, which incurred some restructuring costs back then. This plan is now over and paying back. Moving on to the performance review by segment and starting with Aerospace on Page 7. Orders in this segment reached EUR 3.3 billion, up 24% organically reflecting solid momentum overall. In Avionics, order intake remained high, notably in the civil domain. Order intake in space showed strong demand from institutional customers. In total, 5 large contracts were booked in space in the first half of 2026, including just stationary telco satellites for Luxembourg and Qatar and orders for major programs and missions such as Copernicus and ExoMars, Sales amounted to EUR 2.8 billion in the first half, up 2.1% organically. This performance was primarily driven by Avionics where sales increased in the first half. Sales growth in Q2 was, however, a bit slower than Q1 as a result of the first impact from lower air traffic on aftermarket activities. In space, underlying growth was solid over the first half. However, Thales has been notified of the cancellation of 2 telco satellites based on our Space Inspire platform order back in 2022. This impacted sales by a negative EUR 153 million over the semester. Given the positive underlying momentum with our customers and the quality of the space Inspire platform, we are confident in our capacity to use what was achieved and delivered so far as part of this contract. If 1 excludes this one-off element, Aerospace sales were up a solid 8.8% in the first half of 2016, reflecting the continued underlying momentum in both Avionics and Space. Looking at adjusted EBIT, the segment delivered 130 basis points increase in margin to 10.4%. The strong progress was supported by an improvement in space profitability as it benefits from the successful implementation of the adaptation plan carried out since 2024. Meanwhile, avionics continued to deliver a high and solid contribution. Moving on to Defence on Slide 8. Order intake reached EUR 7.4 billion up 28% year-on-year, reflecting sustained and continued success for Thales products and solutions across many geographies, but notably in Europe and in the Middle East, where demand remains very strong. large contracts were booked in the first half compared to 6 in the first half of 25%. The strong performance was broad-based across the portfolio as the vast majority of our products and solutions are addressing critical needs of our clients. In particular, Air Defence Solutions saw strong client demand in the first half. It's also worth mentioning that 2 large orders in the first half were related to the development of the F5 standard of the Rafal, a key priority of the French military programming law. Defence sales amounted to EUR 6.3 billion, up 13% organically year-on-year. It reflects another quarter of double-digit growth in Q2 at 11.9% and supported by the ongoing production ramp-up in sensors and effectors and by solid contract execution across the defence business. Finally, adjusted EBIT increased by 22% organically in the first half, with an improvement in margin from 12.8% last year to 13.8%. The Overall, these results confirm a solid sustainable trajectory in the Defence. Cyber & Digital now on Slide 9. Sales in the Cyber & Digital segment reached EUR 1.8 billion, a 0.4% increase. In cyber, sales were up 1.6% organically year-on-year. growth resumed in Q2 with a 4.5% organic growth. This is a positive evolution and a good sign that the business trajectory is recovering. Digital sales -- digital identity sales were broadly flat year-on-year. After a good Q1, Q2 sales declined compared to last year when our secured connectivity solution has recorded some nonrecurring one-off orders. In Payment Services, Digital Banking Solutions saw continued strong growth. However, those were more than offset by lower volumes in payment costs. Moving to profitability with adjusted EBIT down year-on-year. This decline is driven by a decrease in digital identity. H125 had benefited from 2 one-offs we mentioned last year. an exceptional contribution from a JV, [indiscernible] and another one-off order in secured connectivity. In addition to that, margin was also impacted by some challenging situations in the markets. First, in payments and services, where pressure is building in both volume and prices, but also in identity and biometrics. This activity, which includes secure travel documents saw an impact in the first half from lower passenger traffic and accordingly, less issuance and renewals of documents. In Cyber, adjusted EBIT was up 5.5% organically with a resilient margin at 14% while we resume growth. Moving on the first half of 2026 adjusted P&L on Slide 10. The cost of financial debt and other financial results was down compared to last year. This improvement is driven mainly by lower net financial charges at minus EUR 33 million. reflecting lower average net debt over the period. Foreign exchange results were also favorable in the semester. The finance cost on pension and employee benefits were stable year-on-year. The effective tax rate in the first half was nearly similar to last year and stands at 25.8%. It includes, this year, again, a temporary additional corporate tax in France, which added an additional EUR 57 million to our tax charge in the semester. Excluding this impact, the effective tax rate is stable at 21%. As a reminder, the additional corporate tax is expected to stand at nearly EUR 100 million in 2026. Minorities year-on-year evolution reflects the further reduced net losses incurred in Thales Alenia Space and as the company's operating profit turned positive. Overall, adjusted net income group share stood at EUR 990 million, up 13% compared to last year. Turning to free cash flow on Slide 11. The free cash flow was somewhat exceptional in the first half of 2026 and stands at EUR 1.9 billion versus EUR 0.5 billion last year. As you can see, the main driver of this performance was a significant improvement in change in working capital driven by continued supportive momentum in order intake with a very strong semester that I detailed earlier, coupled with favorable phasing in customer payments. This reflects Thales long-standing ability to execute products well, which is obviously a key focus for the group. As you know, a target of adjusted net income to free operating cash flow conversion was upgraded early July, and we now aim at reaching 100% to 110% conversion ratio in 2026, which is obviously strongly supported by the H1 performance. Before handing over to Patrice for strategy and outlook, let's look at the net debt evolution over the past 6 months. Net debt amounted to EUR 519 million as of June 2026. This is down EUR 1.6 billion compared to a negative EUR 1.6 billion at the end of December 2025. This is nearly a EUR 3 billion reduction in net debt since June of 2025. The main driver of the decrease in net debt is, of course, the exceptional free cash flow generation we just reviewed. The group also paid $606 million in dividend in the first half and new leases amounted to EUR 178 million. Our financial position is very sound. We have ample means to finance our growth going forward, starting with the planned acquisition of XL that we announced a couple of weeks ago. Thank you for your attention. I now turn over the call to Patrice to review the group's strategic priorities and guidance.

Thank you, Jeremie. So moving now to Slide 14, which is a kind of a recap. So Thales is well positioned on markets, offering strong growth and long-term visibility, supported by a comprehensive product portfolio and a broad customer base. So we continue to see attractive growth opportunities across our 3 core businesses: defence, aerospace and Cyber & Digital. So we start with defence. In defence, demand for our products continue to grow, driven by the current geopolitical environment all around the world. And the breadth of our products, spanning across air defence, maritime warfare effectors, electronic offers, among others, together with the diversity of our customer base provides a strong foundation for sustainable long-term growth. Our strong commercial momentum and our continued ramp-up of our industrial capabilities, we continue to support our fast pace of organic sales growth. Looking ahead, as already said, the planned acquisition of XL will further strengthen our strategic position in the autonomous underwater systems domain and inertial navigation. Now moving to aerospace in a nutshell, well, Avionic. In Avionics, the underlying market fundamentals are solid, of course, supported by structural long-term growth in passenger demand for air travel. And this is the case regardless of temporary uncertainties related to the current situation in the Middle East. In space, activity continues to benefit from Europe's growing focus on space sovereignty, supported by an unprecedented level of public funding typically the last ministerial conference, 2025, 2028, has secured EUR 22.1 billion for European space plans increasing the European space agency budget up to 30%. And looking further ahead, the next EU multi-annual financial framework is expected to allocate around EUR 70 billion to space, almost double the amount under the previous one. And this favorable space environment is also very promising for the romo project as well as for future growth opportunities. And finally, Cyber & Digital. While in Cyber & Digital demand continues to grow as well with AI typically acting as a key market accelerator. We expect AI to strengthen our position by accelerating the digital and transformation of our customers. And therefore, growing the need for cybersecurity as cyber attacks continue to grow in both scale and sophistication, leveraging AI. These trends are driving demand for Detection & Response services, application security and data protection to mention a few. To address these evolving needs, we will continue to expand our portfolio with new solutions, including, for instance, our next-generation HSM, hardware security modules, namely LUNA 8, a new data security poster management solution or another example with our forthcoming AI Security Fabric solution expected in 2027 next year. So moving to the last slide, Slide 15. Well, the performance in the first half confirms the trajectory of durable and profitable growth on which Thales is established, and we are entering the second half of 2026 with confidence. The robust momentum and strong visibility enjoyed by the group in particular, within defence activities has led us to upgrade 2 of our 2026 guidance items a couple of weeks ago, which are, number one, the expected book-to-bill ratio for 2026, now expected above 1.1. And number two, the conversion rate of our adjusted net income into operating free cash flow for the year, now expected between 100% and 110%. Therefore, we are confirming our objective to deliver between 6% and 7% of organic growth for sales in 2026 corresponding to sales of EUR 23.3 million to EUR 23.6 billion. It means that nonrecurring items have no effect on our sales guidance, given the underlying improvement in growth trends, notably in defence. We are also confirming our expected of a solid increase in adjusted EBIT margin, which is expected between 12.6% and 12.8% for 2026. And this driven mainly by progression in the Aerospace and Defence segments. So that concludes our presentation with Jeremie. And now we are happy to take all your questions.

[Operator Instructions] First question comes from the line of Chloe Lemarie from Jefferies.

I'll have a first one on the momentum in defence because we've seen, obviously, growth that stands rather ahead of your high single-digit growth target. So could you maybe talk about the unlock there? What's happened for you to be able to sustain such level of production and delivery? And whether this could remain sustainable for the division in the future? And my second question was on Iris Square. I was wondering how the discussions were ongoing around that project, given there's been some concern that Germany is investing in its own sovereign at constellation. So any color on how any progress on the Iris Square project would be much appreciated.

Thank you, Chloe. We'll share the answer with Jeremie. I can start with growth and Iris Square, you would complement, Jeremie, if you wish. So yes, indeed, the first semester has allowed us to post quite a robust growth percentage. Obviously, it's the consequence or the outcome of the investment we have made in the previous years in terms in order to ramp up the production. So we've made a lot of investments in our industrial capacities in our engineering and also capabilities that led us to this type of course, now too soon to change the perspective for the full year. We see this business that by heart is not linear, but though it's very encouraging as well at the same time. Iris Square things are progressing, I would say, as expected. So this is for me, quite positive. We are waiting, I would say, being under contracts or following contracts say soon. I say soon because there is I would say, always some discussions to be, I would say, closed, but I see that coming now soon. And what is also encouraging is the official willingness to see Iris Square and the German Constellation being interoperable. So this is also a positive sign from our German colleagues or from Germany to position the constellation they need for their own needs, being complementary and not in competition with Iris Square. So for me, the late the last or later, sorry, Franco, German Minister Council that was held last week was also very reassuring on this point.

Maybe if I may, Chloe add a point on defence. I think what we can say is that, clearly, the outlook for us this year has moved to a high single-digit growth in revenue to a low double-digit growth potential. So clearly, that -- some of that momentum is clearly going to continue. And the other point is we are also obviously aiming at and supporting the business further by reinvesting some of the into the R&D. So clearly, the focus on strengthening and keeping the momentum is there.

Can I have a follow-up on this. When you say you're investing into R&D, it obviously doesn't show in the margin that was a really strong performance. Are you capitalizing that?

No, no, no capitalization at all. But as you will see, the R&D is up faster than revenue, as we had indicated, and it's at 6.2% of revenue now for the group.

The next question comes from the line of Ross Law from Morgan Stanley.

So the first one, just on space. I wonder if you can give a little more detail on the growth in margin achieved in the first half. And what is driving that? Is it just volumes? Is it the result of the sort of transformation in that business or maybe even price? And then a follow-up to Chloe's question on the Defence margin which was very strong 13.8%. How sustainable is that as you progress through the remainder of the year?

So on space, I would say the outlook -- first of all, in the first half, the business obviously -- the revenue is somewhat impacted by the cancellation in those satellites that I mentioned, which reduced the revenue by EUR 150 million. The underlying growth is, however, solid, and we were making good progress on the program completion. We are also benefiting from the payback from some of the cost adjustment plans that we had kicked off and we're in full implementation through last year. On the outlook for the remainder of the year, I would say, on space, we should see a low single-digit growth and taking into account the cancellations. And yes, that's the current outlook. On defence, the defence margin, there is nothing that is specific in H1. We think we can support a margin that will be above 13.5%. So I would say while the growth is significant, we are seeing operational leverage and a constant good execution on our programs, which allows the margin to hold up.

If I could maybe just quickly follow-up on the margin a bit more specifically in space in both the first half and your expectations for the full year, please?

In the first half, what I mentioned in space is that we had turned positive, and we expect to see that in the full year.

The next questions come from Alessandro Pozzi from Mediobanca.

The first one is on order intake, specifically in defence. I think the order intake was supported by good performance of funds. I guess this is coming from the but also Middle East was up 200%, I believe. Can you give us a sense of whether you think this is a one-off in H1 because of the situation? Or whether do you think this is something sustainable that could support order intake as we go into the second half and in the coming years? . The second one is on free cash flow. You maintain the guidance that you have given just recently that the performance was really strong. And if you look at the second half implies small positive free cash flow, which is at odds with the historical performance. So just wondering whether it's just being conservative or there is just an acceleration of the free cash flow in -- of the payments in H1 versus H2.

I can -- hello, Alessandro, thank you for your questions. I can start on the first one and hand over then to Jeremie for the free cash flow. Indeed, in the appendix, you see all the organic, I would say, change H1, 2025 versus H1 26 in terms of order intake. It's positive and strongly positive almost everywhere, in fact. Then you know very well this business, as I said, it's not linear across the year. So it's always difficult to say that for the full year, it will be time to the first semester. What we see for real, what we see for real is that demand now comes from everywhere. In the past, I used to say that we had, I would say, 2 engine of growth, Middle East, Asia, Southeast Asia for the thins, why now a certain line of growth, which is Europe and not only France, but Europe as a whole, has been added to the 2 previous ones. And when you see a look at the percentage of growth of order intake for Europe, it's also very impressive, plus 46% organic growth at 2025 versus 2026. So let me just give a more qualitative than answer because, again, this is something which is not an equation. But clearly, we do expect for the full year a strong and very robust order intake momentum for defence as a whole. Leveraging all these needs coming from Europe, Middle East, needless to say that EURs are important in this region, of course, considering the war in -- or with Iran and still strong momentum in Asia and Southeast Asia. Free cash flow, Jeremie.

Yes, the free cash flow, as you pointed out, I think what we want to signal is obviously the fact that you cannot simply multiply H1 by 2 for the full year outlook. I want to point to the fact that our CapEx guidance for the full year is still roughly EUR 850 million. So obviously, the CapEx in H2 will be higher than the CapEx in H1 that there were some, I would say, cutoff payments between H1 and H2 in terms of cash received down payments that one needs to take into account. Overall, I think what is important is the fact that we are very confident about the overall cash generation of the business. We are normalizing working capital and as some of our, I would say, production in sensors and effectors growth. So there are a number of factors. But overall, obviously, the message on free cash flow is confident.

Okay. I just wonder if you expect any large down payments again in the second half?

I won't comment on that. But again, we had some favorability in the first half.

The next question is coming from the line of Christophe Menard from Deutsche Bank.

I had two. The first one is, on the space margin by 2028, are we still on the same trajectory given the strong performance in H1? And should you -- I mean could we consider levels above 7% by 2028. And the second question is on the digital identity recovery. Should we expect some recovery in H2? And is the margin target of 13% for Cyber & Digital still the message that you have? Or could it be lower given the H1 performance?

So maybe starting with the target on digital, it for the full year I think you should look at it as, yes, we are aiming at trying to be stable ex one-offs I would say, in the one-timers in 2026. So that would be around 13%, as you mentioned. We do reckon it is voluntaristic target. But clearly, we do not want to trade growth for margin. So we are confident that we -- we're not confident, but we are aiming for this rebound in the second half compared to the first half. And then on your first question...

I can take it if you wish. Yes, on space -- Christophe, Bonjour, we've said previously, and I'm sure you remember that, that what we foresee or what we are aiming at is a kind of a linear progression towards 7-ish percent by 2027. So we didn't extend to 2028. And your question was on 2028. So one, it's a bit too soon to say. Let's first reach this level of operational profit by 2027, let's say around 7%, and this is clearly in our hands or at reach, of course. But there is no reason why we should not continue to improve beyond 2027, of course. So without sharing figures on 2028. Yes, we work to continue to improve beyond 2027.

The next question comes from the line of Sam Burgess from Goldman Sachs.

Just first question on space. Can you hear me?

Yes. Yes, we can. We do hear you.

Perfect. I think there's a bit of a lag. In space, what demand trends are you seeing across commercial, institutional and defence markets? And on the commercial side, are you seeing more interest on low earth orbit applications versus geostationary? And then just a second question, if I can, on digital. How much of the margin decline that you saw reflected those nonrecurring benefits in H1 '25 versus some of the market pressures you mentioned in payment services and identity and biometrics. .

I can take the first one, Jeremie. We'll give you the second one. So good morning Sam, and thanks for your 2 questions. Well, on space, and that's what I've tried to recap during the presentation. First and foremost, yes, we do see a very strong momentum on the institutional segment, which is the vast majority of our business. In fact, that space, I remember a few years ago, it was around 2/3. It should be still the same, a bit more, probably now of our business of Arena's business is made with, let's say, governmental agencies, European Space Agency and so on and so forth. And I've shared those 2 figures during the presentation, which we say are 2 good illustrations of this momentum. Number one, the latest ministerial conference that defined every year the 3-year budget and the 1 which was held a while ago, and that covers 2025-2028, decided to globally speaking, invest EUR 22 billion representing 30%, I would say, increase versus the previous missile conference. But that's the second illustration, which is even more promising is the budget, the space budget that is under discussion at EU level. And clearly, the figures that are under discussion, so it's not yet decided, of course, we should be a bit, I would say, cautious but the figures which are under discussion are extremely, extremely important. Around EUR 70 billion to cover this multiyear period of budget for EU devoted to space. So in social market, for me, it's kind of a no-brainer, a very strong momentum. Number two, defence. Defense is something which I would say doesn't happen every year. I mean this is something that it's a more, I would say, scattered market. but still very active. And in particular, linked to the political situation. So the momentum of defence space for defence is really the same as we see in defence in general. And typically, the satellite that we have been, I would say, awarded by Qatar just recently is a military satellite. And it shows how important having in this case, it's a meter Satcom satellite. It's important for those countries. The last segment that you have obviously mentioned is the commercial one. This one has been clearly, I would say, impacted by the arriving of StarLink and the likes will go. So for the geostationary satellite telecommunication geostatic satellite, this market is what it is now. So clearly, it's a few satellites per year. now, which has emerged is, as you said, LEO constellation. And we have discussed -- or we've had a question about Iris Square typically high risk Square, which is, by the way, semi-commercial, semi-institutional, to be honest, but is a huge opportunity for us, which clearly, if it's materialize, and I'm optimistic on this point, will represent a very significant chunk of business for TAS for the years ahead of us. So globally speaking, the tone about space, is clearly much more positive than 2 or 3 years ago, you remember where the site was a bit different. Turning to digital.