Edenred SE (EDEN) Earnings Call Transcript & Summary

Hello, and welcome for the Edenred Q1 2023 revenue conference call. Please note, this call is being recorded. [Operator Instructions] I will now hand you over to Julien Tanguy, CFO, to begin today's conference. Please go ahead.

Well, good morning. Welcome to the Edenred Q1 2022-'23 revenue presentation. I'm very happy to be with you this morning. As always, I will start with the executive summary on Page 2. We share a great set of figures. So leveraging its platform advantage and its leadership positions, Edenred confirms the strong 2022 momentum with an excellent start to the year. Total revenue amounted to EUR 557 million, up 26.8% as reported and plus 25.7% like-for-like. Operating revenue amounted to EUR 519 million, up 21.8% as reported and plus 20.4% like-for-like versus Q1 last year. The double-digit like-for-like growth is well balanced across all business lines and geographies. And other revenue nearly tripled to EUR 38 million, thanks to strong business momentum and increasing interest rates. On the ESG front, determined to increase its commitment on climate-related disclosures, Edenred has become an official TCFD supporter, TCFD meaning Task Force on Climate-related Financial Disclosures. Edenred is generating sustainable and profitable growth, thanks to the sound execution of Beyond22-25 and continuous tech and product innovation. Beyond plan means to scale the core thanks segmented go-to-market strategy to further penetrate its core markets and harness the potential of upselling in the context of increasing attractiveness of its solutions. Beyond also means to extend the scope beyond the core offer to unlock growth opportunities Beyond Food, Beyond Fuel and the Beyond Payment, thanks to new and innovative solutions, efficient cross-selling and targeted acquisitions. And Edenred increasingly invest in technology and product innovation to seize opportunities arising from new structural trends such as working world transformation and a new era of mobility. In this context, Edenred confirms Beyond22-25 targets for 2023, i.e., like-for-like annual EBITDA growth of minimum 12% and annual free cash flow versus EBITDA conversion rate of minimum 70%. We move to Q1 highlights on Page 4. Scaling its platform, Edenred records an excellent start to the year. And we move now to Page 5, where we see that Edenred posted strong growth across the board in Q1 2023. The total revenue grew by almost EUR 120 million, coming from EUR 439 million to EUR 557 million, so a reported growth of 26.8%. This growth is powered by strong commercial momentum on both core and Beyond solutions. And Edenred is benefiting from the platform advantage focusing attractive offers to its clients. On Page 6, we contemplate the Edenred's performance per business line. The operating revenue growth is well balanced across the 3 business lines. In Employee Benefits, operating revenue is up 23.7% year-on-year as reported. In Fleet & Mobility, operating revenue is up 16.1%. And in Complementary Solutions, operating revenue is up 25.4% as reported, too. In Q1 2023, Employee Benefits accounts for 61% of Edenred operating revenue, Fleet & Mobility represents 26%, and Complementary Solutions accounts for 13%. Strong double-digit growth across the business lines and across the geographies as we see it on Page 7. Europe operating revenue is up 20%. As reported, Latin America is up 21.9%. And Rest of the World is up 35.5%. In Q1, Europe represented 62% of Edenred operating revenue, and Latin America accounted for 29%, while Rest of the World is 9% of group operating revenue. I am now on Page 8. So on top of finance performance, Edenred is also paying a lot of attention to ESG since many years. As part of the ESG, climate is a key topic. In Q1 2023, Edenred became a TCFD supporter. It means that Edenred is formally expressing its support for the TCFD reporting framework and its recommended disclosure. Edenred is strengthening its information on climate-related financial risks and opportunities. And it is complementary with our commitment to achieve net zero carbon by 2050, as announced during our Capital Market Day. Becoming a TCFD supporter, Edenred has joined the 4,000 global companies and institutions already members of this product. After our first set of numbers, let's move to the successful deployment of our new plan Beyond22-25, moving to Page 10. Let's start with a synthetic view of our Beyond strategy showing how we are scaling the Edenred platform as shared during the CMD in October last year. This plan is made of 3 levels to take benefit from an increased total addressable market and to generate profitable and sustainable growth. The first level, scale the core. We grow further in underpenetrated core markets as we did over the last 7 years, onboarding more clients and maximizing our large customer base of almost 1 million corporates improving upsell, cross-sell, pricing and minimizing churn. The second level, extend beyond. We accelerate Beyond Food, Beyond Fuel and Beyond Payments, designing and distributing new services and using a comprehensive platform experience. Third level, expand beyond, where we expand in new business opportunities. Scale the core will represent 60% of Beyond plan growth. Extend beyond will account for 30%. And the remaining 10% will be generated by expand in new businesses. I'll focus to illustrate scale the core and extend beyond with some complete examples. On Page 11, let's zoom on the penetration of SME segments with our large round of products seizing the opportunity arising from new market paradigm. Quarter-after-quarter, we are improving our sales process efficiency, signing more and more SME thanks to the Edenred powerful sales and marketing machine. Due to higher cost of living, companies are more sensitive to employee benefits. The number of new contracts signed with SMEs grew by 30% last year. And face value on new business is 10% higher compared to our customer base average. This is an example explaining how we scale the core. On Page 11 (sic) [ Page 12 ], we find some illustration of the second level of our strategy, extend beyond. We come from employee benefits. And since this, we are moving to employee engagement. In terms of offer, what does it mean? We started with a benefit management platform managing many kinds of benefits, starting with food and extending to gift, mobility, well-being, health. Those benefits can be designed and operated by Edenred or by other companies. Then we enriched the platform with new features taking into account the needs of both clients and users such as employee savings, bringing discount to the employees of our clients, negotiating rebates with some merchants thanks to the volume we manage on our platform; employee engagements, providing rewards and recognizing performance and promoting life events; and social animation, driving corporate social agenda and monitoring engagement. Thanks to the Edenred platform, we are reinforcing Edenred value proposition for all stakeholders, corporate clients, users and merchants. On Page 13, we focus on our employee savings offer in 2 large countries, France and U.K. In the U.K., a new top UX interface including a mobile app has been launched in 2021. This app is accessible to 4 million users coming from 10,000 clients and connecting them to 275 brand partners. The app downloads almost doubled from Q1 2022 to Q1 2023. The number of orders have been multiplied by 3, and 50% of the orders are placed through the app, i.e., with a mobile phone. In France, Edenred is #1 on the work council market. We are managing an e-commerce website named MeyClub. 7 million of users are eligible to access to MeyClub, where 2,000 e-merchants are connected. In Q1 2023, we signed a new partnership with Carrefour Voyages, the travel agency of Carrefour. The old catalog of Carrefour Voyages, more than 50,000 offers is on MeyClub platform. Our users can spend their benefits directly on the Edenred platform. And they can also access through physical travel agencies of Carrefour. The network of Carrefour Voyages is made up of more than 100 shops in France where Edenred users can meet 600 travel experts. It is an example of bundling employee savings and benefits. After employee savings products, let's pick another example of features available on the Edenred platform on Page 14. On top of employee savings, Edenred also provides reward and recognition and social animation in some geographies. I turn the page, and I'm on Page 15. To extend the reach of the Edenred platform, we are proud to announce the acquisition of GOintegro, strengthening Edenred's leading position in employee benefits in Latin America. GOintegro is a Software-as-a-Service employee engagement platform provider operating in 7 Latin American countries. It's a unique multi-module platform offering savings and discounts, reward and recognition programs, well-being content or pulse surveys. GOintegro is helping companies enhance their organizational culture and be an employer of choice. GOintegro has more than 500 clients and 1.2 million users. It's another step in the deployment of the Beyond strategy, demonstrating Edenred is the everyday platform for people at work. We said a lot about Beyond Food with those examples in the U.K., in France and in Latin America. Let's take a couple of minutes to focus on Beyond Fuel, another way to look at the extend beyond strategy. I am on Page 16. We already shared with you UTA One offer addressing the toll market in Europe, allowing our clients to go from Poland to Portugal using a single box and receiving a single invoice at the end of the month. This toll service offer is improving with a new generation box. The name of this new offer is UTA One next. This new product is bringing to our clients increased transparency for fleet managers through real-time monitoring, simpler and faster management via dedicated app and the integration of UTA telematics service, providing complete overview of fleet at all time. This new box already covers 15 European countries. After the highlights of the quarter, we move to a more detailed performance presentation, and I am on Page 18. You see the operating revenue bridge on like-for-like to published numbers. As already mentioned, Edenred operating revenue is up 20.4% in like-for-like. Including slight positive currency effect and slight scope effect, the published performance is plus 21.8%. Our operating revenue in Q1 2023 stands at EUR 519 million. On Page 19, I will comment on the performance of geographies, starting with Europe. Operating revenue growth in Europe is above 20%. The growth of our revenue in France is up 13.5%. This solid double-digit revenue increase reflects the continued strong momentum of Ticket Restaurant affecting new clients, notably on the SME segment. And the performance also comes from the success of Beyond Food offers, notably of ProwebCE and MeyClub, the Edenred employee savings platform. In the rest of Europe, our 2 main business lines are performing well. Edenred recorded a strong performance in Employee Benefits driven by solid growth on Ticket Restaurant offer, thanks to sustained commercial dynamism and progressive contribution of maximum face value usage. And in Fleet & Mobility, Edenred delivered strong performance, notably thanks to the success of Beyond Fuel offers. After Europe, I propose a focus on Latin America on Page 20. In Latin America, Edenred operating revenue is up 16% in like-for-like with a plus 11% in Brazil and plus 28% in Latin America -- Hispanic Latin America. In Brazil, operating revenue rose by 11% driven by a solid performance across both business lines, Edenred solutions benefit of solid commercial momentum in Employee Benefits Solutions, continued ramp-up of Itaù partnership, contributing to further penetration of the SME segment. And Edenred also delivered sustained growth in Fleet & Mobility Solutions supported by the continued success of maintenance and toll solutions and despite the lower pump prices than in Q1 2022. In Hispanic Latin America, Edenred experienced marked acceleration of growth in Fleet & Mobility Solutions thanks to successful rollout of maintenance offer in Mexico and Argentina and solid growth in Employee Benefit Solutions. After operating revenue, we moved to other revenue on Page 21. Edenred other revenue stands at EUR 38 million to be compared to EUR 13 million in Q1 2022. Other revenue almost tripled thanks to sustained business momentum positively impacting the float and more specifically due to a strong performance of end-of-year discount compare -- improving the level of float in Q1 2023. And Edenred also benefits from the full effect of 2022 interest rates increase in eurozone over the last few months and in Latin America and Rest of Europe over the last quarters. On Page 22, you can see the total revenue performance, summing operating revenue and other revenue. So the total revenue is up 26.8% in reported figures, standing at EUR 557 million. And that's it. So to conclude this presentation, let's move to Page 24 to talk about 2023 outlook. So Edenred is ideally positioned to capture growth opportunities. First, Edenred leverages its unique digital platform to deliver profitable and sustainable growth. Second, in a context strengthening the attractiveness of its solutions, Edenred further penetrates its core markets. Third, extending its portfolio of solutions, Edenred takes advantage of new growth opportunities. And fourth, further deploying Beyond22-25 strategy, Edenred will maintain in 2023 a sustained pace of growth in all regions and business lines. So Edenred confirms Beyond22-25 targets for 2023: 12% minimum EBITDA like-for-like growth; 70% minimum EBITDA to free cash flow conversion rate. The presentation is over. Thank you for your attention. I'm now available to answer to your questions.

[Operator Instructions] And our first question today comes from Simon LeChipre of Stifel.

Yes. Three questions on my side. First of all, in Brazil, how much of a drag was the oil price in Brazil in the first quarter? Secondly, on the outlook, can you give us a bit of color on what do you expect for the coming quarters? You mentioned a sustained pace of growth. And what does that mean as, obviously, comps will get tougher from Q2 onwards? And lastly, I mean I know it's a revenue call, but I would be keen to get your thoughts on margins and, notably, your expectation for the first half. Consensus expect H1 margins excluding other revenue to be flat or slightly down year-on-year. Is it a fair assumption for the first half?

Well, thank you for the 3 questions. So let's start with Brazil, so a few words about Brazil. So you know Brazil represents 20% of Edenred operating revenue. In this country, we have 2 business lines that are quite comparable. It means that it's 50% of our operating revenue that is coming from Employee Benefits and 50% that is coming from Fleet & Mobility. We did 17% growth last year compared to 2021. And during the first quarter, we did plus 11% in Brazil. And yes, you're right, Brazil is one of the country where the sensitivity of our revenue to fuel price is really higher. When we look at the performance we delivered in Q1 this year, in Employee Benefits, we did better than what we did in 2022. So the growth of Q1 2022 is above the growth that we've been able to deliver in last year. And in Fleet & Mobility, if we exclude the fuel price, it is the same, i.e., the level of growth in Q1 is above the growth of last year. So yes, we have an impact coming from fuel price, then we are able to manage and we've been able to grow during this first quarter even with the negative impact of fuel price in revenue. So this is for the first question. The second question regarding the coming quarters and the pace of growth. So first, we did very well in Q1. It is the same trend as what we had in Q4 last year. Why are we able to grow is because we have a solid sales momentum, we see that our solutions are very attractive to our clients due to the economic context. In Employee Benefits, we help clients to protect the purchasing power of their employees in a context where cost of fuel is increasing. And in Fleet & Mobility, we are here to help our clients to better control their cost and to be more efficient. So all this context allow us to have a very good drive in terms of sales performance. Now when we look at the next quarters, we need to take a few things in consideration. First thing is Q2 -- last year in Q2, the fuel price was very high. So we know that the comparison basis for Fleet & Mobility will be tougher in Q2, so this has to be included in our forecast. And second thing is we did a very, very good end-of-year gift card campaign in Q4 last year. So we know that the comparison basis is quite higher. However, as I said, solid momentum in terms of sales. We are pushing also for a face value increase. And as I explained, we confirm the fact that we will be above the mid-term targets we gave in October, so above 12%. And depending on what we've been able to achieve in Q1, we are confident in our capacity to beat this 12% minimum. Your third question is about margin and especially the margin at the end of the first half of the year. So definitely, we will be able to grow our EBITDA margin at the end of the first semester of 2023 compared to the first semester of last year. So we explained last year that we want to invest to prepare and to fuel the growth of the coming years. This is what we've done in 2022. And this is what we'll do also in 2023. But I confirm that our level of EBITDA margin will increase in 2023 compared to 2022. And all those things are under control and well monitored, obviously. And we -- as we scale our business, we are able to increase the EBITDA margin this year.

Just a clarification on this point, you were talking about the EBITDA margin excluding other revenue or total EBITDA margin?

So when we are talking of EBITDA margin, it includes the other revenue. Otherwise, we are talking of operational EBITDA margin. So regarding operational EBITDA margin, as I said, it is clearly monitored at our level. And last year, we decided to invest. And especially at the end of the year, we invest more to support the growth and to improve our tech capacities. So for instance, we invested in data, in data management and to see how we can take value from all the data we get from our clients. We will keep on investing this year, but everything, as I said, is extremely well monitored, and we are dealing with that to prepare the growth of the future quarters.

And our next question now comes from Paul Sullivan of Barclays.

Just a few more from me. Just on Brazil, is there any update on the regulatory changes or the implementation of regulatory changes that we should be aware about? Could you just give us your best sort of guidance for other income for Q2 and going into the second half of the year? And then also, I mean, presumably, given the revenue -- continued revenue outperformance, the cash flow, it should be looking good again this year. Noting your sort of deleveraged position, any further appetite for M&A and the geographic priorities for M&A as we go through into the second half and how we should think about those versus your thoughts on cash returns?

Thank you, Paul, for your questions. So we'll start with Brazil and the regulation in Brazil. So you know that we are talking of regulation in Brazil since November 2021 and all those changes. So maybe a quick look back to the main events that happened last year. So first thing regarding that, that is the meal program in Brazil, so a few things have changed for PAT last year. And in our view, PAT has never been so strong in Brazil. Why? Because in August 2022, PAT has been embedded in a law. And previously, it was embedded in a decree. So today, it is stronger. And in this low, we know that payment terms and discounts have been banned. So this is the first thing that is obviously positive. Second thing is that this is good news for us because it confirms the PAT as a key socioeconomic program in Brazil. So this is what has been done in the law in August 2022. Then 3 topics have also been discussed and included in the law. Those 3 topics are interoperability, portability and open loop. Regarding interoperability and portability, when we published the full year results in February, we explained that a committee was about to be created to manage the implementation of interoperability and portability. This committee has been concerned since we discussed that. And today, there is no framework designed to explain and to put in place those 2 features. So it's unclear what is going to happen in the coming months knowing that those features should have been implemented in May 2023. We don't know exactly who is in charge in Brazil. We don't know if it is the Finance Ministry or the Labor Ministry. So for us, if those features are implemented, it means that a framework would have been designed, and it is not the case today. So for us, it's highly unlikely that those 2 features will be implemented in the coming weeks or months. Regarding open loop and qualified open loop, well, this thing is -- should be put in place in the coming months. This is something we know very well. We know in many countries, we are managing a qualified open loop and closed loop altogether. This is what we are doing in France. This is what we are doing in Belgium. So we will implement this new feature depending on the tech implementation and the availability of all those technical capabilities in Brazil especially regarding the acquiring market. So this is for Brazil regulation update. Now if we move to your second question regarding the other income, you've seen that during the first quarter, we've been able to triple the level of other revenue compared to last year in Q1. Two things explain this performance. The first one is the fact that we did a very, very good end of the year discount season last year. It means that we've been able to collect a lot of cash, and all this cash has not been spent by our users before the end of last year, so we have a high level of float in Q1. And the second thing is the level of interest rates that have still increased over the last months. So our view for the next quarter is as follows. First, the level of float should go down as our users will spend all the money that has been accumulated during the Christmas campaign last year. And then in H2, we expect a decrease in interest rates in Brazil. Today, the Selic is at around 14%. And when we look at what the economic plan for the end of the year, the Selic should go down knowing that inflation in Brazil is around 6%. And it will have an impact on other income. So yes, the level of interest rates will stay at this level in Europe, but they will go down in Brazil. And on top of that, we have a very high level of growth in Q1, so the level of other income should change a little bit. Third question about cash flow generation and capital allocation. So at the end of last year, our firepower is above EUR 2 billion, knowing that -- you know that we calculate this firepower taking into account our S&P rating, which is BBB+. And you know that we take this into account to calculate those EUR 2 billion. And our strategy in terms of M&A is still the same, knowing we are here to consolidate some markets. It is the case, for instance, in Fleet & Mobility. We know that in Europe, we could have some opportunities to consolidate the market. And then we are also here to add features to the Edenred platform. And you know it is exactly our strategy beyond. And if you look at what we've been able to do over the last 12 months, it's exactly what we've implemented with M&A. We did 3 acquisitions. We just announced the acquisition of GOintegro. GOintegro is the implementation of the Beyond Food strategy, i.e., we come to the platform with new features, and we are talking of employee engagement platform and employee savings. In October last year, we did the acquisition of IPS. So IPS is an invoice automation company. We took those features, and we bring them to our Corporate Payment solution in the U.S. So it is Beyond Payment strategy. And then 1 year ago, we did the acquisition of Greenpass. So it is a Beyond Fuel strategy. Greenpass is a toll operator in Brazil, and we did the acquisition of Greenpass to add our own toll service to the platform. So this is how we look at the M&A strategy. And we still have a pipe, and we are working on it. And our ambition is to make acquisitions to grow the company in the coming years and to be able to come to our clients with the right offer.

Okay. So M&A over cash returns, that's brilliant. And yes, thank you very much. That's brilliant. And well done on the quarter. Excellent results.

Thank you, Paul.

And now we're moving on to our next question, which comes from Julien Richer of Kepler.

Two questions from me, please. And the first one, on the inflation contribution to growth, do you have any idea of if most of it has been passed through now or if it remains? And what kind of growth could remain for the coming 9 to 12 months? And the second point, on competition in France, you posted a slight acceleration in like-for-like operating growth in Q1 in France. Is it due only to the inflation being passed through or is it also due to the competition situation with maybe Swile and Bimpli integration being positive for you guys further penetrating the SME market in the country?

Okay. So regarding inflation contribution, you know that inflation has not the same impact on our business lines. If you look at inflation for Fleet & Mobility, last year, we had a positive impact coming from the fuel price. You know that it's around 2% of growth that came from a fuel price impact in 2022. This year, it will be the opposite, i.e., we know that the fuel price should be lower compared to where it was 1 year ago, especially during H1, so inflation in Fleet & Mobility will be a headwind this year compared to what it has been last year. So this is the first thing. Then regarding employee benefits. You know that our products help employers to protect the purchasing power of their employees, not only in food, but also in mobility, in lifting. And the face value -- and the maximum face value of those products has been increased last year in many countries. Around 45% of our operating revenue has been impacted by face value increase in the country where we have operations. So you also know that once we have a new maximum face value that has been decided by our government, it takes time to go and visit all our clients to push the face value increase usage. We need to visit large accounts, we need to visit a middle-sized clients also to explain that they can use this new face value, and we know that the average usage of face value around the world is 85%, around 85%. And we know that we will need 2 years to go after those 85% of the new maximum face value. So today, yes, we have an impact coming from face value increase, but it will be the same in the coming quarters because we really need to go after our clients. And when we don't visit our clients, we use digital touch points to push face value increase to our clients, especially for the SME segment. So this is the impact of inflation on operating revenue. I don't come back to it, but obviously, inflation has also an impact on other revenue as interest rate increase is a consequence of inflation. Your second question is about the competition in France. First, you are totally right. We have an acceleration of growth in France as we've been able to grow by 13.5% in Q1. What we see is that the attractiveness of our solution is very high today on the market. And we know that as many other markets where we are the penetration rate is still low in France, and with the sales mission, we have been able to implement, we can find new clients, and we can grow in a country like France. And definitely, the performance we have is due to our capacity to go deeper in each segment and to find new clients, especially in the SME market. I don't think we have an impact coming from the merger of BP and Swile and all those things. The market is clearly underpenetrated, we are [ on sales mission ]. We have the right products. You know that the wallet we have in France allows company to give up to EUR 6,000 of purchasing power per year to each employee, and it helps a lot in the context we know, and we have a good [indiscernible] with our solutions. We have the right go-to-market. So it is what explained the great performance we did in France in Q1.

And now we're moving on to our next question, which comes from Justin Forsythe of Credit Suisse.

Julien. Just a couple for me, if you don't mind. I wanted to hit on the SME opportunity and apologies, my line dropped for a second, if you've already spoken about this, I don't think you have which is, I mean can you help us think a little bit around the sizing. I know you, in the past, gave a EUR 200 million number for meal and food TAM at your Capital Markets Day. Just want to understand if you can parse that between enterprises and SMEs, given I imagine enterprise spend quite a bit more than SMEs. And also kind of what percentage penetration of that opportunity do you expect over time perhaps within your 3-year time frame? I know you expect to win quite a few contracts compared to what you were doing before. And obviously, you've seen nice progress in that. The next question is around tolling solutions. So I think you talked a little bit in the slide deck around UTA within Europe. Perhaps you can talk a little bit about the moats around the tolling business. I imagine there's quite a few different tolling operators. I think you said there's 15 in the European region. I guess, maybe you could talk a little bit around the moats there, and I think that's mostly a fleet-related tolling solution. Would there ever be a propensity to move into, say, rental car agencies or a consumer-oriented model to utilize these quality integrations you have across several different countries in Europe? And maybe if you could just remind us the size of tolling within the Fleet & Mobility segment.

Okay. Justin, thank you very much for your questions, very precise questions. So if we come back to the first one regarding SME and the way we see penetration and how is the behavior of a small company compared to enterprises in terms of face value and the money that is given to the employees with our solutions. First, the penetration in SME is still very low. We took a few examples during the Capital Markets Day, but in France, for instance, the penetration rate for SME is below 10%. So to give you an idea, there is something like 1 million SME in France, and only 10% of them are using Ticket Restaurant. So it's a very, very low penetrated market. Then regarding the money that is given by a large company compared to what is given by SME, it can be amazing. But I can tell you that the money that is given by SME is at least as high as what enterprise are giving to their employees. I think that when you see what we are going to achieve in terms of new sales, and we explained that during the presentation of this morning, when we discuss with the new clients, we see that due to the cost of living, and by [ all months ], our clients are happy to give more money to their employees. And you see that when we sign a new client, we are 10% above the face value that is driven by, I would say, our portfolio of existing clients. So for me, there is no big gap between enterprise and SME when it comes to the face value that is given to their employees. And regarding the penetration, as I said, it's still very low in SME in many markets. Large accounts -- for large accounts, the penetration rate is higher, but we all know that, and we know that we still have a lot of things to do on the SME segment. Then regarding UTA and more specifically, the tolling business, so we have many products in Europe for the Fleet & Mobility business. We have, obviously, the fuel card. We signed partnership for EV charging last year with ChargePoint. We proposed to our clients VAT refund services, and it is, I would say, the same pain points as toll in Europe. When I say that we go through, we signed a partnership with toll operator in 15 countries. You know that in Europe, in each country, you have a toll operator. And if you want to use -- if you want to cross Europe, from Poland to Portugal. If you don't have the box of UTA, you will have to have something like 15 boxes on your windshield to go through the toll booth. So what we are doing for our clients is that we propose this service. And as I said, you have a single box to go for many countries. And on top of that, you receive only 1 invoice at the end of the month. Obviously, it's a product that is dedicated to what we call CRT, so commercial road transportation. And it is for companies that are going through many countries. So we're doing cross-border transportation. Then we also have some clients, obviously, in countries where we come with an offer that is used only for 1 country. We are in a B2B business. So our clients are the clients we have for fuel card and for other services, we don't go after B2C clients in Europe with this kind of offer. We stay focused on B2B.

All right. Just a couple of follow-ups on that, Julien, if I might. I guess what I meant on the tolling solution as well would just be rental car agencies in theory, which would be B2B. However, instead of the end user being a fleet management company or a truck operator, it would be more of a vacation-oriented type of traveler. And I guess, on the initial SME question, in terms of -- I totally appreciate that the face values are probably similar. I guess one of the things I was trying to get at was there's way more employees. I guess you could do some sort of average number of individuals per employer calculation to get at what you think the split of the EUR 200 million is between each, but maybe just, I do imagine the EUR 200 million is skewed towards enterprise for food and meal.

Well, Justin, I'm not sure I get what you mean by EUR 200 million. And you mentioned that we said a few things during the SME (sic) [ Capital Markets Day ] about that, but I don't get it indeed.

Sorry, maybe it was -- yes, it was EUR 200 million was the TAM that you gave us, right?

Yes. It's a total addressable market.

Yes, exactly.

Well, I need to check that, and maybe we could discuss this later, but I'll come back to what you said on toll. And you take the example of a car rental company, but I don't see how we can address this market with our solution today, knowing that when you rent a car, you don't have this kind of solution in the car by definition. And I'm not sure that a car rental company will be able to recharge their clients with what they have to pay. And I work for this industry many years ago, but I don't see how we could manage that. However, what we say is interesting because we explained during the Capital Market Day that we are working on B2B2C segments in Brazil. We did the acquisition of Greenpass. And one of the clients of Greenpass is a digital bank, and we are working with them because this digital bank allows its clients to use a tag from Greenpass. And indeed, obviously, we are not a B2C company, so we are not selling our tag directly to the end user, but we are giving our tag to end users through a digital bank. So this is an example of what we intend to do, and this is part of the Expand Beyond strategy at even further level of the Beyond plan. And so this is a way to go after clients through a digital bank. So it's quite similar to what you are saying about car rental companies.

[Operator Instructions] And we're moving on now to Geoffrey d'Halluin of Bank of America..

Geoff d'Halluin from Bank of America. So two quick questions for me, please. The first one is on the oil price sensitivity. So I guess you mentioned probably it was a year or 2 years ago kind of sensitivity, which was about EUR 7 million on group's total revenue for a 10% change in oil prices. Just wanted to clarify if it was still a kind of good numbers to have in mind in terms of sensitivity? And secondly, in terms of other revenues, so you mentioned you had the benefit from the fund accumulated from the Q4 [indiscernible] business in Q4 into your Q1 numbers? So if we look at the other revenue in Europe, it was EUR 22 million in Q1, could you share with us how much of that is driven by the gift vouchers tailwind, which is probably not going to be replicated in the next coming quarters, please?

Well, thank you, Geoffrey. So first question regarding oil price sensitivity. Well, as I said, 11% of the operating revenue of Edenred is sensitive to fuel price. We worked a lot over the last years to decrease the sensitivity of our revenue to fuel price. And we did that changing the pricing methodology we use in all our operational companies. Why? Because we are not able to master fuel price. And we want to limit the sensitivity of our revenue to fuel price changes. Then we have the Beyond Fuel strategy and with the Beyond Fuel strategy, we come with new services to our clients. And obviously, the services we propose are not sensitive to fuel price at all as they are totally different services. So taking that into account, I think the sensitivity we a gave few years ago have changed. And as I said, today, only 11% of our revenue is sensitive on fuel price. What I can tell you on top of that is that the fuel price that is important for us is fuel price at pump. It's not fuel price on the financial market. And depending on the country, the fuel price at pumps is more or less correlated to the fuel price on the financial market. So for instance, in Brazil, we know that fuel price at pumps is following the fuel price on the financial market, which is not the case in Mexico, for instance. And we gave some information about that during the Capital Market Day we did in October. And you can see depending on the region, the percentage of our revenue that is sensitive to fuel price. So for instance, in Europe, in 2022, 25% of our revenue is proportional to fuel price, while in Brazil, it's 51%. So to give you an idea of the sensitivity of our revenue depending on the geography. Then your second question about other revenue. I don't communicate on the breakdown of floats per solution per country. Keep in mind that 85% of our float is in Europe. And when I say Europe, it's Eurozone and non-Eurozone countries. 15% of our float is in Latin America. As I said, yes, we have a positive impact coming from the gift campaign we did in Q4. So this level of float coming from this campaign will go down in the coming months. But I would not give you the breakdown of float per solution per country.

And now our next question comes from Harry Martin of Bernstein.

The first question I have is for a bit more detail on the fleet and mobility performance. You talked about very strong commercial momentum and vigorous growth. So I wondered if we go -- a little bit more detail about exactly which markets you're seeing are strengthening. And also, if you have any update on the launch of the U.S. Fleet & Mobility business targeting the SMEs that you were very excited about at the Capital Markets Day, that would be useful. And then secondly, just to go a bit deeper on that M&A firepower, Adding to that EUR 2 billion, I think if you take the midpoint of the guidance range, that's probably another EUR 500 million this year after dividends. Do you have any trigger points internally for when the balance sheet becomes too inefficient? And if opportunities on the M&A side don't come up? Or are you confident that there's enough bolt-on opportunities and potentially bigger deals out there that you would want to hold on to that cash?

Okay. Thank you, Harry. So regarding Fleet & Mobility, so two questions. Indeed, one about strong commercial momentum and another one about the U.S. and the product we launched last year. So regarding the commercial momentum, we see high level of demand from our clients for our offers. And it's too -- not only for fuel card because obviously, as I said, in a context where fuel price is still high, you need to control your cost and you need to be more efficient. So we have a clear traction on this product. both in Latin America and in Europe. And on top of that, we have a Beyond Fuel strategy, the new services that have been launched over the last years that are performing extremely well. And it is the case, for instance, of maintenance in Brazil. We launched a solution that is very innovative to manage [ so ] fleet maintenance of our clients. We built a network of repair shops in all the country in Brazil. We take in charge the maintenance of the car, i.e., we manage the relation with the repair shop. We do the negotiation of the pricing for our clients. We have technical people that are able to negotiate with the repair shop. So we bring a lot of value to our clients and the consequences that we've been able to grow a lot with this new service. And because we are successful in Brazil and because we have an international platform to deploy, we decided to go to Argentina and Mexico with this product, and we see that we will have the same success as in Brazil. So this is an example of new services that are fueling the growth on top of, I would say, our core product. So this is an example, but our ambition is really to add many services to the platform, and I could take another example in Europe, for instance, with what we are doing in terms of tax refund services. It's a true pain point for our clients and with the solutions that are proposed by UTA. We are here to solve the pain point and to help our clients to collect the VAT in many European administrations. So this is for the commercial momentum in Fleet & Mobility. Then regarding the U.S., so we launched an offer. It was in summer last year. So we are targeting the SME market. We don't want to compete with the big players such as FLEETCOR or WEX. The penetration rate is, in large accounts in the U.S. is very high, probably above 80%. So our ambition is really to focus on the SME market. So we signed a partnership with Visa, and we launched our product. We named it Essentials in the U.S. So it's a fully digital and mobile offer. So totally a digital customer journey. You can manage the transaction that are allowed with the card, and it's a realtime flexible control, and I think we give a great solution. So we are at the very beginning of the journey. We have a monthly meeting with the teams in the U.S. to see the traction on the market. So obviously, today, it's still very small compared to the business we are managing around the world. And we know that we will need few months and quarters to understand the market and to be able to find our clients and to see how we can speed up the growth in the U.S. Then your second last question about M&A. So yes, you said we have EUR 2 billion for firepower at the end of 2022, and this firepower should increase during this year. So I confirm that year after year, our firepower will increase. We are generating a high level of free cash flow. And even if we pay 100% of our dividend by cash, yes, the firepower will increase at least by EUR 500 million a year. So as I said, we still have the ambition to grow through acquisitions. We are working on that. So we announced regularly some acquisitions that are quite small, but we look at many things on the market, and as I said, we are looking at companies bringing new features to our platform, like we did with GOintegro. GOintegro is a very good example, of what we can add to the Edenred platform. So GOintegro is a company with operations in Latin America, in 7 countries. So we will be able to add those features to offered in those countries. And due to the number of clients we have, we will be able to cross-sell so to generate growth on top of the portfolio of clients of GOintegro. Then in terms of balance sheet, what will we do if we don't make acquisition, I think that we will reopen the question next year. But today, clearly, as we already said during the Capital Markets Day, our ambition is to go for acquisitions.

And our last question for today comes from Paul Charpentier of Bryan Garnier & Co.

Congrats on the very strong results this morning. I wondered if you could give us a bit more detail and maybe some more updates on how you're progressing with the increase in face value of Ticket Restaurant on the client side. I know it takes usually 2 years between the legal measures taken by a country and the adoption by your clients. So I wondered if you could tell us how [indiscernible] you are with the progression? And maybe second question related to the first one. I remember you mentioned that 45% of the geographies addressed by Edenred. So revision in the maximum face value of the Ticket Restaurant, so did the, was there a progression in that figure?

Okay. So regarding the second part of your question and the 45% of the operating revenue, we have made some decisions have been taken by government regarding the face value level. Yes, this is what we explained and where we stand today, knowing that inflation is still there, and we know that in some countries where we already had some face value increase last year, we could have other fair value increase this year. And I think that what happened last year in France is a good example. When I said that the face value moved from EUR 11 to EUR 13, it has been done in 3 times. Third decision, the 1st of Jan last year, because Ticket Restaurant was indexed to inflation. So first increase of 2.6%. Then because of the inflation level in France, the government has decided to increase the face value of Ticket Restaurant by 4% in October. So the 1st of October, it has been another increase 4%. And then the third increase of the year that has been available in Jan 2023, it's more than 10%. So at the end of the year, it's a plus 17% of maximum face value. But you know that -- you see that it has been done, I would say, quarter after quarter. So this is something we could have in the coming months in some countries where we already had face value increase last year. Then how does it worked -- the sale speech to encourage clients to increase the face value? Well, indeed, it depends on the size of the clients. And because we know our clients very well, we have a dedicated sales team and I would say, sales know-how to push face value increase. So for instance, when you are managing large accounts, you prepare the negotiation of a salary increase with your clients and with the HR director. And we know that when you are an employee, it's always good to receive both salary increase and benefit increase. And so it's good for the employees, and it's also good for the employer. And because you have a tax break on Ticket Restaurants. It is less costly to with both salary increase and benefit increase rather than just a salary increase with the same percentage. Then when we manage SME, it's quite different. And what we are doing is that we are using data. What do we do with data, data and the fact that we have many clients and many users allow us to know what is the average face value given by all the companies in a city, and the second thing we get is the average [indiscernible], the average price of a lunch in a city. So taking all those things and managing properly our data, we can show -- we can demonstrate to our clients about the level of their fair value is low compared to their peers. So when we say their peers, it's all the companies that are, for instance, in the same city. So to propose a new face value to SME, we use Internet. Every month or every 3 months, you need to visit our website to place an order for your employees. And when you visit the website, we are able to push a pop-up and we propose a new face value, and we push data that we collected to explain to our clients that it should increase the face value of these employees. So this is how it works. And then you know today how our websites are connected to our CRM. And when we see that someone hesitated to push the face value on the website, we can call him back and have a discussion with him to close the deal with the new face value. And as we already said during the presentation, on top of that, each time we have a new client in front of us, we are pushing for highest face value, and you see that we are able to sell face value to new clients that are above the average face value of our -- for clients. We have a face value that is 10%, above the face value of the portfolio of our clients.

Thank you. And there are no further questions, I'd like to hand the call back over to Julien Tanguy for any additional or closing remarks.

Well, so thank you very much for attending this meeting this morning. As we already explained, we did a very good start to the year in Q1. And well, we will be happy to talk to you again in July with Bertrand to present the half result of 2023. So have a great day, and thank you again for being with us this morning. Buh-bye.

Thank you. That concludes today's call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.