Banqup Group SA (BANQ) Earnings Call Transcript & Summary

Thank you, David, for your introduction, and welcome. I'm very pleased to have you supporting us on all Investor Relations matters going forward. Thank you all for joining this webcast and this call where we will try to explain our evolution at Banqup Group. A lot has changed since our last webcast. You will already have noticed this through our recent press releases. And of course, it will become even more clear through the presentation we shared with you today. So a very logical question is, why have we changed the vision and approach? And what does this mean for Banqup and ultimately, for investors and shareholders. I do not want to spend too much time looking backwards or reflecting on what might have been done differently. With hindsight, it is always easy to identify things that could have been improved, but I believe that is neither constructive nor respectful to many colleagues who have worked hard to build Banqup over the past years. I would, therefore, first like to recognize and thank all of them for their commitment and contribution. What we are doing now is looking forward. Following a comprehensive 360-degree strategic analysis, the Board has concluded that we need to take the next step in the evolution of the group by organizing the business more clearly around its key business functions and importantly, by giving each business unit greater autonomy and accountability. This means creating a clear focus around product development, customer acquisition and customer support within each business unit. At the same time, we are adapting our governance model accordingly. Each business unit needs to have the appropriate level of operational autonomy, while an executive committee will provide the overall group perspective, ensure alignment across the businesses and drive decisions where they have an impact across the group. The reason for this approach is quite straightforward. We have learned that the business in which we operate, documents, payments, consult, including business to governments are fundamentally different in a number of important aspects. They require different technical expertise and know-how. They have different go-to-market models. They have different scaling potential, and they have different capital and financing requirements. This means for us that a one-size-fits-all management approach is no longer the most effective way to develop these businesses. Instead, we need to create the right conditions for each business to grow and perform according to its own characteristics. This evolution towards more autonomous business units has several important consequences. First, the product strategy needs to reflect the specific requirements and capabilities of each business. Second, the operational priorities and management focus can -- will be different for each business unit. Third, the go-to-market strategy needs to be tailored to be -- to the specific market dynamics and customer propositions of each business unit. And finally, we need to recognize that European markets are evolving at different speeds. Different countries are implementing different components of our product suite in different formats and at different points in time. As a result, we need to be much more agile in the way we steer and develop the business. This is why we are moving towards clearer business unit accountability, supported by agile steering structures that can respond to the specific evolution of each business and each market. Ultimately, this is about one thing, creating a simpler, more focused and more accountable organization that can execute faster and allocate its resources more effectively. And I believe this is an important step in positioning Banqup for sustainable growth and importantly, for creating value for our shareholders. Let me now say a few words about the extended executive team. One of the strengths of this team is the depth, the in-depth or the depth of experience it brings to the organization. The members of the team have long and proven track records in their respective areas of expertise, combined with in-depth knowledge of the market products for those leading our business activities and strong professional expertise for those responsible for key back-office functions. And just to avoid misunderstanding, when you look at the numbers next to each person on the slide, these numbers are not their ages, fortunately or perhaps unfortunately. Depending on how you look at it. They represent the number of years of professional experience they bring to Banqup. You will also notice that 3 of our 4 business units are represented within the central management team. However, I would not want to overlook our 4 business, our B2G business and e-invoicing activities in the Balkan, who are managing and developing their business locally. This business is organized through separate legal entities and operates across specific jurisdictions, which requires a somewhat different governance approach. Batias Bart and I are therefore closely following the evolution of this business and will remain directly involved in key strategic decisions and priorities going forward. Let me now briefly bring the key priorities and the short term of the newly installed executive team, the short-term goals of the new executive team. We have a clear focus, and we are translating that focus into action across 4 areas: market, company, liquidity and transformation. First, on the market side, France is our immediate strategic launch pad. We have built a strong position ahead of the upcoming e-invoicing mandate with around already 150,000 enterprises onboarded, ready for accepting e-invoices %from 8,000 potential e-invoice customers. Jan will tell you more about this. This gives us a strong basis to demonstrate that our new operating model works at scale before expanding further into other key European markets such as Germany. At the same time, we continue to benefit from the Belgium mandate, which is already supporting digital adoption. Second, we are simplifying the company itself. We are moving towards a much flatter organization with clear ownership and accountability. We are putting the customer much more explicitly at the center of everything we do, while at the same time, increasing product discipline and focusing on development efforts on the core banqup platform. Third, liquidity remains a key management priority. We continue to manage cash very tightly with continuous cash flow monitoring and strong focus on working capital and portfolio optimization. The divestments we have completed together with the continued support of our senior lenders have helped controlling our liquidity position and extend our runway. And finally, transformation. We are moving towards a more decentralized operating model with clearly defined business units and dedicated leadership. Each division will have a clear P&L responsibility and the ability to execute according its own market dynamics. This creates much greater accountability while allowing us to distinguish clearly between our core digital platform activities and our professional consulting services. So taken together, these 4 priorities are about one thing, creating a simpler, more focused, more disciplined organization that can execute faster and convert the significant market opportunity ahead of us into sustainable digital growth. Now I give the floor to Jan Druppel, who will explain more about business developments within our document business. Jan, the floor is yours.

Thank you, Koen. So first of all, the scope of what we're doing in the Documents division. Today, what we're doing is, in a way, enabling automation of purchase to pay, order to cash and cross-border e-invoicing through an API-first platform. That's basically our core business in the Documents division. What we're trying to do is and what we are bringing to the table is turning key administrative friction into connected automated workflows. That's basically the core of our documents platform with a clear strategic focus. We want to position Banqup as a solution for upcoming mandatory European regulation on B2B e-invoicing and e-reporting mandates. And this includes tax validation. Today, what we're seeing is that everybody is talking about formats of electronic invoices and really, the question of tomorrow and the problem of tomorrow is going to be everything to do with DAP. So we are focusing today on multicultural country scalability and effortless integration with all the systems we can connect to, such as ERP, accounting networks, et cetera. Now giving you some insights into the key commercial milestones and strategic wins. First of all, of course, there's the French market. We had the launch of the mandate for electronic invoicing end of '25, beginning of '26. And now we are preparing for the French mandate, which will kick off in a couple of days. Today, we are at a situation where we onboarded 150,000 businesses through 4,700 accounting firms who are our natural partners on the eFacture platform and 100 -- a little over 100 technology partners. They are all ready to accept because this is step 1 in the French mandate. They're all ready to accept electronic invoices in September '26. Second important win, and it's really an important one is the tax automation partnerships and the tax validation partnerships. So in the past months, we signed 2 partnerships for rolling out the tax validation engine. And the tax validation engine has today capabilities in more than 40 countries. Important one, it includes France, and it also includes the DOM-TOM areas, French DOM-TOM areas who have slightly different tax regulation in place. The third important win is the partnership we have signed with Austrian Close. So basically, what we are going to do in Austria is give SMEs and corporate structures the possibility to send out electronic invoices to other countries. Why is it an important one? Well, as you all know, we are also preparing for the German mandate of electronic invoicing, which is quite a liberal mandate in a way because you are able to receive your electronic invoices via e-mail. There has not yet been a German platform that has been identified. And why is the Austrian Post partnership really important? Because it will give the SMEs and corporate structures the possibility to deliver their invoices to their German customers in the correct format that is expected by the German mandate. So we're talking about software and we're talking about [indiscernible], okay? So Austrian Post is for us an important partnership that has been signed during the first semester. Operational focus, I think we need to have a clear and very strict operational focus that is really driven by the regulatory tailwinds. So we know in Belgium, the mandate has kicked off. Today, more than 90% of all businesses in Belgium are using electronic invoicing in their B2B transactions. What will come next? Well, first of all, there is now a legislation in place for the Peppol access point who need an ISO certification. We have upcoming ADAS 2.0 regulation that is going to be implemented in Europe and something new called the Business Wallet. And this will have huge impact on the current more than 400 active vendors in the Belgium space, just in Belgium. So these are really the elements. ESAP certification for Peppol access points will be mandatory as from July 1, 2027, and Belgian government has released or is planning to have e-reporting implemented by January 1, 2028. Now legislation is still being -- is still following its process. Technical specs have not been released. But clearly, this is something that will impact the Belgian market in the years to come. France, so we said we have the mandate kicking off in a couple of days. So really, today, there's only about 8,000 companies in France, so the really big corporate structures that have the obligation to send out their electronic -- their invoices to their B2B customers in an electronic way. The big bang in a way, if you want, is going to come in September 27. where at that time, all businesses, so even the small ones will have to send out their B2B invoices in an electronic format. So it's going to be a year more or less that France is going to go through this process. We're also preparing for Spain. We have the VERI FACTU e-reporting obligation that is going to become effective in January '27. And then you will have the mandatory e-invoicing for all companies in October 27 described by [indiscernible]. So this is an upcoming regulation change in Spain. And then finally, Germany, also a very important market for our company. So Germany, today, you have the obligation in Germany to be able as a company to be able to receive your electronic invoices in a structured format in an electronic way, [indiscernible]. So this is ongoing. Again, it's a very liberal market. Communications has been done recently by the German government, where they are specific on one thing, and it's the e-reporting part. They have been -- they have clearly identified that they are going to use the data from the e-reporting in combination with AI to do everything they can to avoid and to detect fraud on invoicing levels, VAT fraud, et cetera. So these are really for the Documents division, the main drivers for the months to come. So Anouk, I'll let you take the floor for payments.

Thank you, Jan. Good morning, everyone. I want to give you and summarize on the structure and the strategy we will follow with the payment. We are now independent, and that means that we can -- we will be able to support Jan and all the country where Jan is developing the document part to add payment as a part of the business to make sure that SMEs are able to pay their invoices in euro and non-euro with our Visa partnership. And on the second part of the business, now that we are independent, we are leveraged the fact that we have a license. We are able to be an acquirer for bank contact Visa, Mastercard and want to approach new business like post business, e-com business and be able to support SME everywhere, every time and give them a clear view on the financial situation. We want to be a partner of SME but also the fact that our company decided in the past to have everything that we offer to our customer API based, we are able to find partners that needs also to have embedded payment solution for their customer. So we will have the dual strategy. My focus today is really to refocus back to the basic and sell what we have with a very clear approach on the market. And then on the other part in the payment business unit, we have trust and identity. Still not sure about the name, but I call it today like that. It's the business like Jan was telling, it's becoming very important on the EU regulation. And since I think it's 3 or 4 weeks, we have as far as the certificate for [indiscernible] that will give the possibility also to the colleagues of Documents to seal e-invoicing in the future. That in a nutshell, what we will do with the payment team, very focusing on growing on the market. Thank you, and I give the word back to David. [ id="-1" name="Operator" /> Thank you, Koen, for the insights into the business unit structure, and thank you, Anouk and Jan, for the introduction and operational overview of the Payments and Documents business unit. Koen, can you, as CFO, give us an overview of the financials?

Thank you, David, again. So now I will debrief as usually, I did in the past in my role as CFO of this group. Let me briefly walk over this -- over the key financials. I think the 9 times here on the screen, they are self-explanatory. I'm sure you overlook them even faster than I can comment them. Total revenue amounts to EUR 26.5 million for the first half, representing EUR 21.1 million that came from recurring digital revenue or digital services. The strongest growth was in subscription revenue, which increased by 42.3% year-on-year to EUR 10.4 million. This continued growth is also reflected in our recurring revenue base with ARR already reaching EUR 48.2 million at the end of June, representing a growth of 12.1% compared to June 2025. And this is mainly driven by the mandate in the Belgian market, and it's not yet considering the growth of our French opportunity, as Jan explained, which will be launched from September onwards. On profitability, our adjusted EBITDA amounted to a negative of EUR 6.1 million. We incurred EUR 1.4 million of nonrecurring costs during the first half related to the actions we are taking to reshape and simplify the organization and the management change. At the end of June, the net financial debt position stood at EUR 46.1 million, while we still have a CapEx level of EUR 8.1 million for the first half reflecting continued investment in our digital platform and the regulatory requirements that are installed by different governments. As previously announced, we expect a decreasing number of CapEx for the coming future as the e-invoice product reaches a mature position. CapEx and payments will still be maintained at current level. And finally, our total workforce stood at 632 FTEs at the end of June. So in summary, the key financials messages for H1 are strong subscription growth, continued growth in our recurring digital revenue base and continued focus on profitability, liquidity and disciplined investment. As already said, the nonrecurring costs amount to CHF 1.4 million related to divestments and transformation exercise. The OpEx exclusive these nonrecurring costs increased by 4.8%. I think I can go here. year-on-year, that's CHF 1.4 million, mainly driven by higher depreciations of own development costs due to the release of the BTX platform in Q4 2025. BTX platform is the banker platform we are using in the Belgian market and also for JeFacture.com in the French market. The cash spend increased with less than 2%, which is a positive evolution, but which needs to show further decrease in the second half of this year. In-depth cost management is installed and discussed during weekly ExCo meeting to ensure the further decrease. A clear internal ambition and target is defined for Q4 2026. In H1, the group employed an average of 527 indirect FTEs. So I just spoke about 632 FTEs in total. Nearly 90 persons are dealing with our direct operating activities, so are classified under the line gross margin or cost of service. 522 are dealing with our indirect staff, which is mainly -- which is for a big portion, R&D staff and general and administrative staff and sales and marketing. Within CapEx, we maintain a document focus on Belgium and French markets, requirements for accountants and the user experience for our accountants. Within payments, we did quite a lot of investment in the trust component, as Anouk already explained, for which we are certified since June 2026 as the first one in Europe. Looking at cash flow positions, equity and net financial debt, which is also an important or important graphs we are following closely. Our operating cash flow amounts to minus EUR 6.4 million, compensated by working capital elements of EUR 0.4 million positive. Some small amount in income tax due and one-off nonrecurring restructuring costs of EUR 1.4 million. So the operating cash flow, minus EUR 6.4 million. Cash flow from investments is a positive of EUR 3.3 million. It reflects the divestment we have done and realized in March 2026 regarding the Baltic business. It reflects also the cash in from an escrow account that was linked to the transaction with 21 grams we have realized also in '25 and an escrow account needed to be released. So those 2 components were supportive for EUR 11.4 million in our cash flows. And we spent, as said already, EUR 1.8 million in our current CapEx level, mainly the intangible asset. And finally, cash flow from financing activities is minus EUR 0.7 million related to repayment of loans and leasings for EUR 10.8 million, but also we collected, on the other hand, EUR 10.7 million, mainly shareholders' loans for EUR 8 million and funding from BNP Bank of EUR 2 million. And we paid, of course, our net interest or our interest to our funding partners. So the available cash position end of Q2 is EUR 5 million compared to EUR 8.6 million end of December '25. Equity position is evolving accounting -- considering the loss of the period, including the continued and discontinued business. And then the net financial debt position is presented at the level of EUR 46.1 million, which is mainly coming from the senior facility from Francisco Partner for an amount of EUR 32.7 million, different bank borrowings of EUR 3.8 million and the newly shareholder loan of EUR 8 million, inclusive accrued interest, EUR 8.3 million. [ id="-1" name="Operator" /> Thank you, Koen for the financial overview. Koen as a CEO, can you look ahead and tell us what we need to remember of this presentation?

It's always good in such a presentation to focus on, yes, the takeaways, what should you take away from this presentation. And looking forward, Today, we can say that management believes, based on the impact of the transformation we are working on, on the one hand, the French market expectations as a second component that we can still maintain our guidance as announced at start of the year. So I think this is a message of confidence we are sharing with the market. And then my 3 takeaways, I think, very important to -- yes, to keep them in mind is Banqup is evolving. And the first one for me is we are just in front of launching the French market. Jan clearly explained this. We were dealing with that French market now for many years and announced it for many years, but it's now tomorrow. So this is a very important moment and the company and the teams are really focused, and I have to thank them for their focus and commitment and dedication. But we are, as a management team, together with the staff, we are focused on launching the French market. That's a very important element. Second point I would like to stress is you have understood, we are working on an operational transformation of this company. We are clearly setting up the different business units with autonomy, autonomy in its functions, and I mean functions such as sales, customer support, product development. And of course, the business units should also operate autonomous in its financial working. And the third point, and this is clear, the company yes, worked on it since many -- since a long time, but we have to -- we should be disciplined and even more disciplined in our financial management, in our cost structure, cost efficiency and in our capital management. And that is where the Executive Committee is committed to, to work on it and to realize evolution -- positive evolution by year-end. So thank you for listening, and I give the floor back to David, who will coordinate now the Q&A. And yes.[ id="-1" name="Operator" /> Thank you, Koen. Let's see which questions we have. We have a couple of questions. First question, can you deep dive in the French market and indicate what this would mean for Benqup Group?

I think Jan, you can clarify that.