Barco NV (BAR) Earnings Call Transcript & Summary

[Audio Gap] [Operator Instructions] As a reminder, this conference call is being recorded. Madam, sir, please go ahead.

Good morning, ladies and gentlemen. I am Carl Vanden Bussche, Head of Investor Relations for Barco. Welcome to this conference call on the results of the third quarter 2020. Today with me in person but at safe social distance, our CEO, Mr.Jan De Witte; and our CFO, Mrs. Ann Desender. We all realize that the results of this year, including the third quarter results, do not pass unnoticed. And we understand that -- next to the short release note issued this morning, that some extra insights are helpful. Both Ann and Jan will therefore present and provide extra color on the latest results, on how the growth opportunities look like and how we navigate the current and next quarters to come. We will do so using the third quarter earnings presentation, which is available on our investor portal since early this morning. And following the presentation, we foresee also some time for Q&A. That's it for the introduction. Let's kick it off here. Jan, the floor is yours.

Thank you, Carl, for the introduction. And yes, I'll go straight into the executive summary and then results, and I'll then come back with some more color. Starting Page 4, a COVID-safe work environment in all of our Barco locations. We rode the ups and downs of our markets as we saw our customers and partners aim for recovery; in some markets and geographies, more successful than others at this point. And as we flag in the title of the document, COVID is still very much visible in the third quarter results, which turned out, at group level, in line with the second quarter but softer than we had aimed for. The third quarter also reflected a mix of clear but different levels of recovery. For Entertainment, the third quarter was flat compared to the second quarter, very much as we anticipated, given the impact COVID has on closings or partial openings of cinemas, events and other entertainment venues. In Enterprise, both Control Rooms as well as ClickShares started to show solid signs of recovery, fueled by upticks in economic activity that we saw in APAC, including China and several EMEA countries, places where also the back-to-office trending is translating in the pickup of the ClickShare business. Where the third quarter was softer than expected is Healthcare. Okay. Here, we saw our medtech customers in diagnostic imaging and interventional adjusted their call-off schedules by roughly 1 quarter as they saw their customers, the hospitals, push out installations in function of ongoing COVID-focused activity in the hospitals or in some cases, financial pressures. We're going to be talking more about the longer-term growth trajectory for Barco to date, but the short is that we see our long-term growth opportunity is unchanged though, in some cases, delayed; late, for sure, in events and cinema, where the current push-outs of content and the back and forth with cinema openings and reclosings is likely to see the renewal wave that had started end 2019 shift out to tempered recovery over the next year. For ClickShare, it's becoming clear now that people will be returning to offices and that the future will be about hybrid workplaces, which creates a market that plays into the ClickShare conference proposition, resulting in a target market that's likely to turn out larger than we assumed when we started this new development 3 years ago. In Healthcare, apart from the reset of the second half delivery timings that we experienced over the third quarter, we see the fundamentals of our Healthcare business intact. Like many businesses, we're navigating this crisis with both the short term as well as recovery for the long term in mind. We see top line pressures also continue in the fourth quarter, and we see a considerable decrease for the full year EBITDA. But in parallel, we are keeping up and protecting the investments in the strength of our portfolio and our commercial capability as part of our aim to come out of COVID stronger and earlier than competition while planning in a responsible cost base for 2021. So with that, I'm going to hand it to Ann to take us through a bit more of the numbers. I'll come back then with a number of deep dives in parts of the business.

[Audio Gap] year-to-date comparison with the third quarter of last year, but then also comparable to the second quarter to see where we did see growth opportunities or recovery in different areas and pockets. First, on the left-hand side, so year-to-date sales are 25% below last year. Entertainment and Enterprise at about 1/3 below last year. Healthcare year-to-date flat after a softer third quarter, explained, as Jan indicated already, by third quarter push-outs, both in diagnostics and surgical. If we look to the right-hand side of the page and -- where we see the differences or the uptick versus the second quarter, you see we saw an increase in orders of 9% compared to the second quarter, in particular in Enterprise, both in EMEA and the Americas, where Entertainment had some increases in APAC and EMEA but they're still more on what we call prudent recovery, about 3%. Enterprise, both in [ MX ] and [ OX ] actually and in that sense, [ OX ] Control Rooms being quite resilient on the top line through this COVID crisis. Actually Healthcare, this is where -- also compared to our initial outlook at the beginning of the quarter, came out lower, with a quarter push-out. Taking you to Slide 7 then, the sales of the third quarter compared to the second quarter. The Americas is the main down actually, where we do see cinema and events, as expected, staying low, driven by what is happening in the cinemas and events, being no events actually. ClickShare investments, contrary to what we see in EMEA versus last quarter-over-quarter, all to do with the very low returns and some delayed returns back to the office. People, they do more stay at home for the moment. Healthcare is the main down in the Americas. In the third quarter there, we have the bigger customers who did push out, for mainly budget constraint reasons, their main orders and deliveries to the next quarter. And so that's both in diagnostic and in surgical. EMEA considerably did better in the third quarter compared to the second quarter. Entertainment business was up there, in particular in the Middle East cinemas there, and then the rebound of services as the cinemas did reopen again throughout EMEA. ClickShare, we saw some momentum, driven or fueled by the back-to-office activity, and Control Rooms have indicated quite resilient during this COVID time actually. Healthcare in EMEA, more in line with the second quarter. We do see there's some -- no further what we call crisis orders, which helped us really in the business on diagnostics in the first half, and that was one of the reasons of a very strong first half and second quarter. We do see some stronger surgical sales again versus second quarter. Asia Pacific, more in line compared to the second quarter. Entertainment in line. We do see some new orders and pickup again in cinema as well as in V&H. But overall, Asia Pacific was in line. We see some recovery into Enterprise. And there you see also the plus 28% compared to the second quarter. But then on the contrary, also there, Healthcare down in the third quarter compared to the second quarter. And also, it's the same explanation, really push-out, not lost business or lost market share as such. With that, I hand it back over to Jan, who will [Audio Gap]

[Audio Gap] lots of attention from our investors and stakeholders, also from us over the past couple of months and rightfully so given the importance they have for the P&L. You will see especially at the start of the third quarter, there were 2 [ broad ] questions that I kept getting over and over. The first one, is cinema going to survive? The short answer is yes. And the second question was, if everybody is going to work from home, then what is the use of ClickShare? The short answer here is that people will be back in office, and this hybrid work environment that's emerging is playing into the ClickShare proposition. But let me deep dive in both of these, starting with cinema on Page 9 and then later on 10. But if you turn to Page 9, on the cinema industry itself. Okay. And clearly, COVID is challenging the full ecosystem. As a result of the shock of cinema closures in the second quarter, we've seen a lot of movement. Okay. We've seen release dates for blockbusters shift out, with most of the blockbusters now moved out of 2020 into 2021 and then some others shifted to even later, putting more pressure on cinema reopenings. We've also seen experimentation and even more talk with regard to shortened theatrical release windows, box office split and premium video on demand. These were themes and trends that have been present in the ecosystem for many years, and COVID may accelerate and amplify some of these trends, though we do not see them fundamentally change the attractiveness for big movies and blockbusters to be going through a theatrical release first on a cinema big screen, generating lots of revenue and profit for the studios, but also creating the hype and advertising for the content to then see that content move to the next channels like DVD and streaming. We also have seen some and expect to see further refinancing, partial closings, divestitures and consolidation as large and small cinema groups feel that they lack box office revenues. Overall, the box office is expected to recover, though projections indicate it may take until 2022 to get there globally back to 2019 levels, but with a very strong slate of delayed blockbusters that are waiting to fill theaters in the coming year. Today though, we see very significant geographic differences in the trends in the recovery. If we start on the right-hand side of this page with cinema in China, which is about 22% of the box office at least in 2019. Here, it looks like the market has fully recovered at this point with a solid activity during the summer driven by strong local content slates and a number of strong Western movies and then a very strong September month and a Golden Week holiday, where box office exceeded 2019. Now cinema in the U.S. is pretty much the opposite, after late and partial reopening of theaters in the month of August, with important markets like California and New York states not opening yet. The blockbuster Tenet did not succeed the hoped-for big return of audiences into the U.S. cinemas despite the Tenet movie doing well in Asia in Europe. Now the result of that in the U.S. further worried the studios into pushing out blockbusters into 2021. We've seen a comparable false start in China, by the way, in the month of April, where China tried to open and close again after a couple of weeks, only to come back stronger 4 months after that false start. And then the rest of the world, that's about 50% of the global box office, I would say, is a mix. It's a mix between what we see in China, good momentum, and what we see in U.S., delayed momentum, balancing between local content and Hollywood content and then, of course, the country-specific rules that apply to cinema. So that's about the cinema industry in itself. But how does that translate to Barco business? How does that translate to projection technology? That's where we go to Page 10. In May last year, we shared our volume projections for the future years, driven by 2 factors, and we're retaking those charts on the left-hand side of this page. Two factors, the first one -- the first factor is the further expansion of screens in China and other emerging new markets. Here, we expect COVID to have a delaying effect, delaying the curve by 2 to 3 quarters. And for example, we see the projector business in China pick up again in the fourth quarter. And we've seen activity in the Middle East with regards to new installations. And then the second factor, a big factor, the replacement wave from lamp to laser projections in the Western and more mature markets. Here in our forward planning, we assume that the number of screens may reduce by 10% and worst case, up to 20% as we assume that some of the smaller theaters may not reopen at all after COVID and some larger groups may be forced to rationalize their network. Secondly, we also expect our customers to focus over the next few quarters on repairing their balance sheet as they see box office pick up again. With this, we expect the replacement wave that got interrupted in the first quarter of this year to stay at the low level for the next year and only pick up its momentum again and get back to volumes like the first quarter of this year or better by the end of 2021, beginning '22. So what it essentially means is that the curve that we drew at Capital Markets Day last year may shift out up to 2 years in time. Now these 2 factors would reduce the accessible markets, which, last year, we quantified at 80,000 to 100,000 projectors that needed to be renewed -- needed to be replaced over the next years until 2026. We see this reduced down to 65,000 to 80,000 projectors, though with Sony having exited the market, this is now a market opportunity that's to be divided between 3 instead of 4 contenders, with Barco being definitely the market share leader and being positioned to take more than our typical market share. Also, with cinemas increasing their focus on higher image quality and premium formats to compete with streaming to the home as well as requiring competitive total cost of ownership, which is increasingly becoming important for the cinemas, we feel Barco is very competitively positioned with our new Series 4 platform, the platform that we launched last year and where we are further extending the platform this year. So that's with regard to cinema, a couple of the big movements that we see and how we look at the future. Let's then go through the second one for the post-COVID world. Well, over the summer, it's become clear that little to no company is assuming that they're going to remain working 100% from home. The world of business will become a hybrid world, meaning that at any point in time, you will have as well people working in an office while some of their colleagues or partners may be working from home or another location. A recent Gartner study predicts that by next summer, the business world may be in an office/home split of 75%-25%, so 75% of people in offices, 25% working from home and rotating in some sorts. This also corresponds with results from other global services -- surveys, sorry, that we've seen, including one that we commissioned recently to understand the hybrid business world. What we also see is that when businesses start to return to office, like several countries did over the third quarter, they are now struggling to run effective meetings where part of their team is together in one or more meeting rooms while others of their team are dialing in over video conferencing, a true hybrid type of working. We also see corporates increasingly look at their office environments, define it more as meeting and collaboration spaces rather than individual cubicle spaces. I mean this could further lead to larger accessible markets for ClickShare, both ClickShare Presentation as well as ClickShare Conference. The feedback we're starting to get from our channels is that ClickShare Conference is the right product at the right time as it offers wireless, flexible, agnostic, low-investment and easy-to-install solution that enables corporates to run better hybrid meetings. So in that sense, COVID has accelerated the market for which we created ClickShare Conference. And we started to see this in the numbers. With the return-to-office dynamic over the past 5 months, we've also seen the ClickShare volumes pick up again. And that's what I show on the right-hand side. The 2 charts is showing -- or are showing the sellout from our distributors to their end users. We show you the line for 2019 and then the line in progress for 2020. We've broken it out in 2, the world excluding U.S. and U.S., as we see different dynamics in those 2 parts of the world. In our markets outside U.S., we've seen the volume pick up to 80% of last year by September after it dropped to 15% during the full lockdown in April and then month by month improving towards that 80% at this point in time. In the U.S. market, we are at this point at 50% versus 2019. There also, we fell to 15% in April and month by month came back, but came back in a delayed fashion as we see the back-to-office movement in the U.S. lack the momentum of the movements that we see in Europe. In both cases, U.S. and Europe, ClickShare Conference represents about 20% of the total volume, starting, by definition, from 0 at the start of the year, as we are now 6 months into the introduction of the product. We expect this momentum of sellout to further pick up across the globe as back-to-office momentum picks up. We're currently focused on stepping up market awareness for ClickShare Conference. Okay. We had the challenge of launching this product at the right time, but in terms of marketing, we are further stepping up the noise and the messaging to create stronger awareness for ClickShare at the time where all of our customers are extremely busy with a lot of factors in their business. At the same time, we're further extending the partnerships with videoconferencing peripheral vendors as a way to bundling ClickShare Conference with their sounds and video proposition. So I hope that these 3 pages provided you with a bit more helicopter perspective on 2 of our important segments and what our focus of the past months has been to secure our pivot on strategic drivers in the market. [Audio Gap] executing on our broader strategic initiatives and new opportunities for Barco. We continue to focus on bringing out new innovations and solutions, either as planned or in some cases, accelerating new propositions that play to the remote and hybrid nature of work in a post-COVID world, like remote connectivity on Control Rooms or remote collaboration tools in Healthcare. We also continued strengthening our footprint. We sustained our focus on China, a market that we see recovering faster than most other markets, and we continued broadening partnerships around ClickShare. We also continued making concerted efforts to strengthen our relationship with key partners and customers while we all navigate COVID and try to define together with them how the post-COVID world may turn out. And of course, we stayed on track with our sustainability initiatives, an integral part of our business strategy. I would say in all cases, we're convinced we will come out of COVID in a stronger competitive position than we went in as a result of our agility and our ability to sustain the investments. While over the past months, we've been more than busy managing the challenges COVID has thrown at us and our markets, we've also remained focused on looking ahead and preparing for 2021. Okay. And I'm now on Page 15. [Audio Gap] balance between hosting a COVID-proof work environment while keeping up productivity in a hybrid workplace of our own. In parallel, a lot of focus has gone into adjusting cost levels to top line impacts while, at the same time, redeploying resources to key opportunity, to key strategic areas. Overall, we are bringing cost levels for 2021 below 2019 levels to ensure that we can restore profitability levels as we see top line recover in 2021. And we continue working further down the inventory and DSO levels that we saw spike in the second quarter. On Page 16 then, we provide you an update of the [Audio Gap] helicopter view over the full portfolio. For cinema, I think, I talked extensively about the replacement market and where we expect delays. Well, for the new builds in cinema and services, we see this pick up further over the next quarters. For venues and hospitality, we expect events to remain slow over the next few quarters, probably until after next summer while we see fixed installs and simulation steadily continue to recover, as we saw over the third quarter. For Enterprise corporates, that's ClickShare, we see the trend further steadily pick up, as you saw in the graph, as we also expect to see the back-to-office movement further pick up in the U.S. and continue strengthen in Europe and Asia. Control Rooms within Enterprise has shown to be resilient over the third quarter, and we expect this to remain that way over the fourth quarter and beyond. Healthcare, we saw the impact of push-outs over the third quarter. Here, we expect the fourth quarter to further improve over the third quarter and get Healthcare back on track. Now while we share this directional insight, we also realize we don't control a number of things, given the world still contains significant uncertainties. The chance is that, tomorrow, one of these assumptions is already outdated, either to the positive or the negative or I would say, bigger than the chances of a stable fourth quarter. In this context, while we've seen good pockets of pickup over the third quarter, we also see the risk of the second COVID wave or continued wave and associated lockdown measures that different governments may be taking. These are risks that hang over our momentum, I think hang over the broader economic momentum in EMEA, but also may further drag the pickup in the Americas. [Audio Gap] Page 17. So clearly, 2020 is going to be a sobering year, an off year when it comes to the P&L, the financials. We see, over the next months, still pressures on our top line and with the risk of a potential second wave impacting our markets. This, together with unfavorable mix for the year and the fact that we are protecting key investments in commercial and innovation strength, is expected to translate in a considerable decrease in full year EBITDA margin. Now besides managing the short-term challenges and opportunities, we are also fully engaged to build the strength of Barco for the medium and long term, during this period where several of our markets are going through the motions. This is done with the ambition to come out of this COVID chapter stronger, with markets intact and our ability to compete strengthening and this by protecting our strategic investments but while, at the same time, managing our OpEx responsibly. We're managing the business with a clear aim to put the company back on its path of reaching its stated long-term financial goals while strengthening our competitive position and come out stronger out of COVID. So with that, we're at the end of our PowerPoints and prepared remarks. I'm going to hand it back to Carl to open the Q&A.

Thank you, Jan. Thank you, Ann. The operator will explain to you how that works. [Operator Instructions] So over to the operator.

[Operator Instructions] We have our first question from Mr. Guy Sips from KBC Securities.

Two questions. First is related to the order intake which is down over 40%. Can you give us a little bit of an overview over the 3 different divisions how this order book or order intake looks like? And is that suggesting that -- based on this number, that fourth quarter would be even worse than the third quarter or can that improve? And then also related to that, but second question is more on the Healthcare division. What does make you feel that there is only a pushback by 1 quarter and that is not a delay of these investments by 2, 3 or more quarters?

Okay. Thank you, Guy. So perhaps, first, on -- a bit of extra color on the order intake. So as indicated by Ann, we see good increase on quarter-over-quarter, which is a bit the benchmarking that we use in the third quarter compared to the second quarter, so mainly in Enterprise and then in Enterprise -- in 2 subsegments, both in Control Rooms as well as in ClickShare; also for the region EMEA and America. Next to that, also Entertainment showed recovery in order intake, and that's more focused to APAC and the EMEA region. Again, in the 2 subsegments, so both V&H as well as cinemas. Hope that provides the extra color. Jan, some feedback on Healthcare.

So in terms of Healthcare, what happened in the third quarter is well over a dozen OEMs, the typical big medtech players in diagnostic imaging and interventional adjusting their delivery schedules on outstanding orders, giving us the opportunity to sit with all to understand what their planning is. That gives us the confidence that it's essentially 1 quarter push-out. Okay. Why push out -- or why are they pushing out? They are reacting to the business of the hospitals over the summer, where many hospitals are still very much busy with COVID. So that pushed out implementation of their big installations. If you look at the order book, if you look at the discussions we have going, we feel in fourth quarter we'll see a pickup again and continuing next year on the same trajectory as we were.

Thank you, Jan.

Next question is from Mr. Matthias Maenhaut from Kepler Cheuvreux.

Yes. Two questions from my end. Maybe the first is on the guidance and then more specifically, the cost guidance for 2021. There, you say that you are now aiming for a decrease in operational costs. Can you give us a little bit more feeling on what kind of decrease you are budgeting? What are going to be the sources? And also in terms of government measures, what do you assume? And maybe then also, on the long-term targets, I guess those are presently under review. And then second question is actually on the order book and the receivables and maybe also the cash position. In terms of Entertainment, what is the exposure in the order book? And in the receivables, how is the aging doing? And how is the cash position evolving? And I guess, yes, M&A for now is probably a little bit on hold, and the focus is more internally.

Okay. Thank you, Matthias. Two questions, but let me break it down perhaps into 4. So first on guidance, in terms of cost control on 2021, Ann, can you shed some light?

Yes. As we see a gradual recovery of our top line in 2021 but some more [ weighted ], call it, in the second half -- semester than in the first semester, we want to be -- start the year with a cautious reset on our indirect spend. But today -- and starting in the second and the third quarters, we are gradually moving from temporary measures to cost reset while still having temporary measures. If we talk of resets, that's primarily in the areas where we see that top line is not expected to recover back to 2019 levels already in next year. So that's in particular in cinema and in events. And then the other cost resets are a little bit across the board actually. Across the board meaning on all functions and meaning on -- in the different regions. We do -- and that's across the group actually, all protecting commercial, all protecting also investments to our road map in the sense that for whatever opportunity we see on recovery when our markets are back, that we can grasp it. And then when we come out of this period, that we come out on this stronger than our competition. So that's a, call it, delicate balance which we are trying to play and continuously monitoring actually on the costs.

Thank you, Ann. On the longer-term targets -- or the mid- to long-term targets, Jan, do you want to perhaps...

Yes. So what we keep in front of us is our -- also at Capital Markets Day, our target that we set. We see ourselves as a mid-plus single-digit growth company in the long-term or steady mid-plus single-digit growth with EBITDA margin between 14% and 17% by 2022. The way we plan for 2021 is to really get back on that track, that track towards mid-plus single-digit growth here, but equally important, setting the mix and the OpEx in a path back to that 14% to 17% EBITDA margin. So in that sense, 2021 is really going to be the getting back on the track as we see top line come back. Okay. Like Ann said, second half of that is going to be different than the first half in terms of steadily going back to seeing the growth in the profitability.

Good. Thank you, Jan. Ann, perhaps a couple of words on the cash and the receivables, working capital in general.

We are making progress on building down the big working capital and inventories in particular, which we had at midyear, and steadily working on this over the second half of the year. If we look to our DSO levels and in particular, the risk on our AR, which we saw in particular also in cinema, there, we -- the payment plans which we made to help out our customers at the start of the COVID, this cash is coming in as planned in the payment schedules actually. And in that sense, no, in particular, increased risk there or risks are being mitigated. So in that sense, I would say our cash moving back and working capital in particular into the right direction.

And then the last question of the 2, on order book. So we shed some light on order book evolution. So order book is 5% to 6% down compared to June of this year. And that is actually the spread over the different divisions. So there is not 1 particular spike or down in one of the 3 divisions. And as we said before, order book -- we look into the order book in a cautious way. Frame agreements are not part of order book. It's only when the orders are called off and due to ship or deploy in the near future that we take them into account in the order book.

Maybe to add to that, Carl. Any extra orders which we have in enterprise in the third quarter, yes, we've also pushed out of the door and sold, and that's why you have a quicker book and turn actually also reflected in the order book. There has been no cancellations in that sense of contracts or bigger contracts, but in detail, it's a lot of going after any opportunity and order book answer in this time.

Next question is from Mr. Marc Hesselink from ING Service.

Yes. First question is on -- can you talk about the level of comfort on your visibility, given that at the half year update, you were cautiously optimistic over the recovery plan for the good turnout over the second half of the year. Clearly, now it's a bit weaker to a certain extent, no surprise, given what we see in your end markets. But I had a feeling that you were a bit more positive earlier. So what really changed? And how good is your feasibility on those changes going forward? Yes. Maybe first question first.

Yes. Okay. Thank you, Marc. You get time in the room for a second question. So Jan, what changed compared to...

Yes. So I'll be glad to summarize it. If you go back to June, July, we had 2 types of uncertainty. One, real market uncertainty when our cinema is going to reopen again. How are they going to react? What's going to happen to the movies? I think you remember the discussions at that time. The second at that point was also our people don't come back to offices, which -- with 2 big question marks on what our market is going to do. And then the second is at that point, what is COVID going to do? What our government -- if I compare to today, then that first type of uncertainty is pretty much gone at this point, right? And cinema, it's not good news, but it's clear now, right, that cinemas are probably only going to start to really take momentum somewhere end of first quarter next year. China will be doing well. So that's pretty clear there. The same with the question on, are people going to come back to offices? Yes. That's also clear. What is not clear yet is second wave of COVID, if and how that's going to come and how are governments going to react, okay? Up until a couple of days ago, I would not have guessed that Ireland would go back in pretty much a full lockdown. I'm happy that France last week didn't go in economic lockdown. But we keep moving from week-to-week where any big decisions could have significant impact on some of our markets. And that drives the bulk of the uncertainty that we see.

Yes. Thank you, Jan. Marc, you had a second question.

Yes. Maybe then just first as a follow-up on that answer. Because you actually point now to the fourth quarter of, again, a gradual improvement versus first and third quarter. But given what you just mentioned, that uncertainty also with new lockdowns and everything, how can you be so comfortable on that end?

Yes. I'm not sure...

I think we should clarify a bit on what we said on the first quarter, Jan.

Yes. Yes, but let me try to rephrase it then. The third quarter, we've definitely seen in several of our markets momentum pick up again. And if there would be no second waves in the world, then we would assume that, that momentum would further strengthen in places like EMEA and, for sure, in Asia. And that Americas may start to also pick up and, let's say, stop lagging rest of the world. If you count in for a potential second wave and the impact, that could change in a matter of 2 weeks. That momentum could still, I mean, stop improving. It's not going to go backwards, but it could stop the improvements that we've seen week-by-week, month-by-month over the third quarter okay? And that's, again, the big uncertainty we have in extrapolating the movements that we've seen in the third quarter to, is it going to further pick up in the fourth quarter? Is it going to remain at the same level in the fourth quarter?

Okay. Great. And then my second question is -- yes, second question is on the cash. A little bit of a follow-up on Matthias' question. So if the cash is indeed coming in, in the second half of the year, you will still have a very large cash balance. Given all that's there, what are you thinking of what to do with that cash? Do you need it given that there's so much uncertainty? Do you need it to be on the balance sheet? Or does it get -- provide opportunity to do something else? And particularly also maybe address if that could include buying your own stock, given where it is today?

Jan, a question for you.

Yes. So I would say we remain cautious, like we've always been, with our cash. So we're not in a rush, definitely not in a tough time with this, to get rid of our cash. But at the same time, we are not holding back exploring strategic opportunities in the market today. And that goes back to the earlier M&A question of Matthias. Yes, strategic-type M&A, which, again, we take our time to evaluate. We do see several of our competitors are getting in trouble. We are looking at opportunities, although in many cases, it seems better for us to organically compete for their markets rather than inorganically. So that maybe also answers the question on potential buyback. I think that was part of your question. Yes, it's something that with our Board, we look at what is, let's say, short to medium term, the best way to deal with our cash.

Next question is from Kris Kippers from Degroof Petercam.

Just 2 small questions remaining. Firstly, during the H1 call, you had some high hopes on the education part for your presentations. It's something which is gaining traction. We have not received any update on that. Then second question would be, if you look at ClickShare talking to corporates on the sales side, what is the main pushback or the reason why clients or SMEs are not yet ordering massively? Is it because of the uncertainty? Or do they invest in print tools in the short term? Or what do you see on that side?

Okay. On education, Jan, the reconnect.

Yes. So the virtual classroom, we see very good commercial dynamics and good deals landing. Not sure what we have communicated. I know that in several of the beautiful names were not allowed to widely communicate from a -- let's say, getting confirmation from the market and the [indiscernible] that for higher education and corporate learning, this is why product we feel good. It is a SaaS proposition, okay? So in the next year, despite the good wins that we see, yes, it's not going to add up to big finances, okay? Here, we are really building a franchise for the long term. On ClickShare...

Yes. On ClickShare, I can kick it off. So compared to the second quarter, we see good pickup in EMEA and APAC local incidents. Those are the markets that are also more into recovery than the Americas markets. And so also further on the way in terms of back to office. So we expect really to see a close correlation between back-to-office dynamics and sales inflection. Also, perhaps good to highlight a bit on the 2 horses we have now in the race on ClickShare. So we have the conventional ClickShare Solution, ClickShare Present and the new ClickShare Conference. The new ClickShare Conference is good for about 22% of sales on ClickShare. So for a new product, that's a good pickup according to us, and we expect to see that further rising in the breakdown. In terms of pickup SMEs and large corporations, we have it a bit across the board. We see some nice reference customers coming in on ClickShare, ClickShare Conference as well and across regions. Jan, anything you'd like to add?

Maybe just on ClickShare, the dynamics. What we've seen with customers over the summer is that all companies have, in a matter of no time, thought and equipped their employees to participate in video conferencing over their laptops. Then over the summer, as companies pull people back to offices in a 50-50 set, you get now the situation where you have 5 people in the meeting room, each with their laptop, participating in a video conferencing with all the complexity and technical issues that this brings. That's the point where the need for ClickShare Conference comes up. Our challenge at this point is to make sure that there's awareness for this solution. And so we're really focusing on all sorts of marketing, thought leadership both, to educate the end market, but also to help our channel to step up the awareness for ClickShare Conference. And so that's, at this point, our main lever to further accelerate the ClickShare Conference pickup.

Yes. Thank you, Jan.

Next question is from Mr. Sébastien Lemonnier from INOCAP Gestion.

Yes. Just 2 questions. The first one, as you state, in fact, ClickShare need the people to get back to work. So assuming that July and August are more or less summer holidays, can you explain a bit the ramp-up of acceleration of ClickShare by September? Because then, everybody can make his own hypothesis about Q4. So I would just be interesting about the ramp-up of the growth, especially for September and the last 2 weeks of September. That's the first one. And the second one in relation to acquisition and/or share buyback. So I understand that it's part of consideration, but given the stock price and given your balance sheet, and given your Capital Market Day guidance, which probably still stay intact, we could assume maybe you have to take a decision anytime soon. So can you give a bit more color? I'm not asking if you're going to do a share buyback, but more when you expect a decision to be taken?

Okay. Thank you, Sébastien. I'm going to kick it off on your first question. So as you may have witnessed in the graphs that Jan showed during the presentation, it's a bit fair to see that the summer months were somewhat weaker. So not really showing, let's say, the momentum. And then September really started to kind of narrow the gap with last year. And so if you look through global numbers and whether that's including the U.S. or not, does not make a big difference. But so September is close to 8% of ClickShare sales compared to last year. So that feels indeed as narrowing the gap. But it will be seen how we continue on that track in the fourth quarter. Back to share, again that this is led by countries which are more in recovery stage and further in terms of back to office. So in EMEA, Germany and Nordics are definitely leading. In APAC, we see good momentum as well. And so yes, that's a bit -- we will not break it down week-by-week. But so September was essentially a good month.

And assuming no disruption, how long it should take on the hypothesis of Europe? How long it should take for U.S. that is the opening step-by-step to move from the 50% to the 80% level that was [indiscernible] in September in APAC and EMEA. Is it like -- could it be like 1 month if there is no bad news in relation to the second wave, that everybody get back to work? Or is a bit too optimistic?

What -- if I go back to Europe and what I said in July, I think in this call, where I said we've seen ClickShare drop to 10%, 50% of last year and then every month, stepping up 10%. And that pretty much has gone over -- gone further over the third quarter, also including the typical summer seasonality in Europe. In U.S., it has also kind of steadily stepped up from 15% to that 50%, so slower. But we also see in the U.S. market, only about a month ago, you've seen the first corporates that started to pull their people back or incentivize their people back. It's definitely still a slower momentum. We do expect that there's going to be one point where it -- let's say, it would be more politically correct to get back to offices or more proof points that give companies and people the confidence and so it may accelerate. When that is exactly, I think the elections always play a role in economic Americas. So we're watching what's happening over the next 2 months.

So in concluding, Sébastien, I think we can say we're climbing back, and we see good indications on the outcomes of September. But we're cautious in -- yes, let say, formulating...