Comp S.A. (INLIF.AT) Earnings Call Transcript & Summary

Hello, everyone, and a warm welcome to the European IT Services Summit. It is a pleasure to have you all here today. And this session is dedicated to the Comp SA, and I'm delighted to welcome the CEO, Robert Tomaszewski; as well as CFO, Andrzej Wawer, who will share insights with us. With this, I hand over to you, Robert. The stage is yours.

Thank you. At Comp, we are one of the leading IT companies in Poland, specializing in IT security and retail RegTech solutions. Since 2022, we are executing our strategy Next Generation. It was aiming at increasing margins and cash flow. Cash is a king for us. And the successful implementation of the strategy ensured stable and more recurring revenues, increased margins and organizational efficiency and fast allowed us to pay a lot of debt and to transfer a lot of cash to the shareholders. And both tendencies are still going on. We have established a leading position in our areas of expertise, IT security, especially special security and also retail RegTech solutions which combines hardware and software expertise. And this is a foundation of our new products and upselling in our new strategy, Security First. We achieved all goals of our strategy, full utilization of a cybersecurity trend, which includes achieving leading position in special securities, effective development and sale of new value-added services in SaaS. Our SaaS is safe. We have small tokens at the physical presence in shops nationwide. We radically reduced the importance of fiscal equipment sales in favor of services and software, including Software-as-a-Service with, as mentioned, small tokens and large number of customers. We successfully merged with one of the companies inside our capital group, and therefore, we optimized the cash. Our profitability as a result of that is growing very significantly. On the EBITDA level, PLN 10 million to PLN 15 million just in 4 years, it was actually the target of the Next Generation strategy fully executed. As mentioned, we decreased the debt significantly to the level that we consider no longer strategically important. We think it's proper to have the debt because of the cost of own capital. And we also transferred a lot of cash to the shareholders. And we did it simultaneously, which means that we generated so much cash that we are able not only to reduce the debt transferred to the shareholders, but also to ensure the positions in our specialties for the future. Our EBITDA grew from PLN 74 million to PLN 135 million, which is planned for 2025. It's still not revealed the annual report will be in 2 months. And the strategy -- the plan of the strategy is to increase it further to PLN 150 million EBITDA in this year and up to PLN 180 million EBITDA in 2028. We significantly outperformed our Polish tiers in both transfer to the shareholders and EBITDA growth dynamics, as you can see on this slide. Security First. This is a name of our strategy. It's actually also something that tells about our attitude to business. So we simply stick to the areas that we know. We are predictable, therefore, and fully responsible for our actions in the area of IT security and retail RegTech. Therefore, the customers have a 100% support. Our partners, we are predictable partner for them and for the shareholders as we exactly did what we promised 3 years ago, 3.5 years ago when we first published our strategy. As a result, the price of our shares increased fivefold. We have 2 segments: IT security, secure IT and retail RegTech. The first, the IT security or secure IT comprises of the following areas. First of all, advanced cyber defense. Our largest customers are military sector and administration, critical digital infrastructure, they're same also trusted IT. We prefer IT on-premises solutions, so really significantly more secure than the cloud solutions. Of course, we are able to deliver what the customer needs. I'm talking what is our specialty. GovTech and Electronic Monitor, we're one of the leading in the world companies providing the technology for electronic jails. Integrated secure devices, which means we are able to produce our own encryption devices and security operations center, it's quite popular right now to introduce the monitoring of the IT systems within the companies. This is the example of our product in this specialty. It's a brand-new encryption device that is being used for the military and administration purposes in Poland. This is our own product. The second area of our expertise is retail RegTech, Software-as-a-Service services and software. We have a lot of customers, small tickets, physical presence. So we think we are able to maintain it for many, many years to come. SmartPOS, we integrate fiscalization together with added services and the private cloud. Secure Internet of Things, this is the way it's organized in Poland, where all the physical devices transfer the data to the Ministry of Finance, big data. We -- our partners is AC Nielsen, which is one of the largest companies in the world, collecting and analyzing the data, embedded payments, all POS are a very good platform for payments and green compliance, so the deposit return scheme that is being introduced in Poland. And this is exactly the good example of what we do. 3 months ago, we have no customer right now because of the deadline of the deposit return scheme in Poland, we have gained already 10,000 stores, and this number is growing everywhere. Of course, it will be also in Software-as-a-Service model and with physical presence, it's brick-and-mortar shops in Poland. Our strategy, security first, envisaged comes strengthening its position as the leading provider of digital securities for defense and administration sectors in Poland. These are our first and foremost, as a customers. We also doubled the EBITDA from Software-as-a-Service solutions that I mentioned previously in the retail segment. Threefold increase in revenues from implementation and integration of cybersecurity services, including security operations centers. This is another regulation that is coming, the NIS2 Directive from EU that has been introduced in Poland quite recently and doubling export revenues, especially export from electronic surveillance solutions. Outside of Poland, we are in Czech Republic, we are in Armenia, and we have a pilot in Mexico. Our goal is to build a strong recognizable market position on the European scale in the field of next-generation security technologies. We do not like innovations at all costs. We like innovations when it's proven and secure for our customer. And this is how we track Security First is also our attitude in this field. We leverage our position as the leader in these areas that we operate in and we'll expand our own solutions, as shown on this slide. By responding quickly and to trends in operating many niches from the position of leadership, we'll ensure high profitability, so the 15% EBITDA is not our long-term goal anymore and sustainable growth in value for our shareholders. So we have developed and proven the effectiveness on the method based on leveraging our position in niche markets, especially in the form of agile diversification, which means we do not enter the areas if we are not sure that the money is there and the customer would like to spend them. So we prepare, we build the position. We know what are key success factors for that. And we do not invest until we are sure it really develops. It's not only blah, blah, blah, but it really means that the budget is behind the interest of the customers. Our specializations actually respond to fundamental changes in the world as the growing digitalization of the society means that the cybersecurity is a key competence. And also the fact that there are so many regulations means that there are technologies that help you respond to that trend. So we think we'll join the ranks of the companies that have been growing steadily for decades. It's not just the 4 years, building our positions on solid values and predictable growth, predictable, as mentioned, all in every year, we have achieved our strategic goals. So therefore, we consider ourselves as a true value, the company that guarantees unique security for our solutions. It offers -- our company offers for customers. We are -- we adapted to the times in which we operate. So the actually the times of large uncertainty and turbulence. So it means that we do not invest in just one area. We have some 12 or 13 areas of our expertise. And as mentioned, we're entering them when we feel that the customers are ready to spend money, not just express interest. And we provide our shareholders with scalability, stability and cash flow, thanks to the agile diversification. What does it mean entire diversification because diversification can be rigid. So you are doing simply 2 different things. This is what mentioned. We constantly check the market, what are the key success factors, but we do not invest a lot of cash until we know the budget is confirmed by the customer. And the speed of action is critical. So if we have the confirmation that the money is there, we are ready to jump in. Thank you. That's all we have in the presentation. We are all yours for questions.

Perfect. Thank you so much for your presentation, Robert and Andrzej. We'll now move on to the Q&A session. [Operator Instructions] We will keep an eye on both channels. Let's see if we have any questions. Not yet in the chat, and there are no risen hands yet. And with this said, we have received one question in the chat box, which is, is it possible that transferring shareholders arise even larger than anticipated in the strategies?

Well, it was the case in every year. So it means that we exceeded the level of transfer of shareholders in every year of our next-generation strategy since 2022. So it's likely it will continue. We do it in the form of buybacks, share buybacks. So we do not pay dividends. We constantly buy shares and cancel them. So the number of shares is smaller and smaller. And of course, all the ratios per share are more and more attractive.

Thank you so much. And thank you so much for the question. We have another question, which is, do you plan any acquisitions?

In our strategy, Security First, we do not plan any large acquisitions because the pace in which we develop right now on the EBITDA level is double digit. So we don't need to have the acquisitions to grow significantly. However, if the opportunity will arise and it will smell that will increase the value, certainly, we'll take it into account. But up till now, we do not plan it -- the large ones, I mean, in our strategy, small ones, insignificant are possible in every time.

Perfect thank you so much for the question as well. For now, I cannot see any risen hands or questions in our chat box. So as no further questions have come in, we now come to an end of today's roundtable of the Comp SA. Should any further questions arise, please feel free to contact Comp SA and IR. Thank you dearly to Robert and Andrzej and to you all for attending this call. And now I hand over to you, Robert, for some final remarks.

Thank you very much. So as mentioned, we increased the value of our shares 5x during the last 4 years. We think we are well positioned to continue the trend, and we are a predictable partner and we achieved our goals so far. So probably we are good bet on in uncertain times and turbulent times. We are ready to operate in the uncertain environment so far. So thank you very much. Thank you.