Edenred SE (EDEN) Earnings Call Transcript & Summary

Ladies and gentlemen, good morning. Thank you for being with us today for the Edenred Investor Update. I'm pleased to be with Julien Tanguy, the CFO of the group; and Constance Le Bouar, who is the Head of Strategy, Marketing and Transformation. We are together for 120 minutes. The presentation will be around 80 minutes, and then we will spend 40 minutes answering any question you may have. Today, in fact, there are 6 things I want you to focus on. Thing number one is, yes, Edenred is well on track to deliver our Beyond strategic plan. So far, thanks to the outperforming -- or thanks to the outperformance of Edenred as a result, and that's the point number two, we start the year 2025 significantly stronger than expected. And let me give you some examples. Our addressable market is now 3x bigger. We have a larger customer base. We are almost fully digitalized, and we have a higher proportion of recurring revenue. And finally, thanks to a larger scale, we have a stronger operating leverage. The third point I want you to focus on is, yes, thanks to this, let's say, overperformance for the last few years leading to being stronger in 2025, we commit to a 10% like-for-like EBITDA growth in 2025. Even if we recognize that there are some new macroeconomic conditions in 2025, that will be less favorable than what we had for the last 4 years and even if there could be a potential fee cap in Italy. The point number 4 that I want us to focus on is based on this new environment that we are totally aware of, expect some management actions to improve our cost base in order to get some operating EBITDA margin expansion. The point number 5 is with this new context, Edenred adjust its capital policy. So we continue to be committed on a progressive dividend policy, but there are 2 things that are slightly amended. The first thing is for the coming years, we will focus on the integration of the recently acquired businesses. And in terms of M&A, our strategy will be refocused on opportunistic bolt-on targets. The second thing is the supplementary excess cash will be returned to shareholders through an up to EUR 600 million extension of the existing share buyback program over the next 3 years. And the point number 6 that we will discuss about is based on all those elements, yes, Edenred is on a path to EUR 5 billion of revenue -- total revenue by 2030. So now if we go into the details. You know Edenred, Edenred is a global digital B2B2C platform and reaching connections for good. We have our first business line, Benefits & Engagement. It's more than 100 programs across 30 countries. The business line #2 is Mobility with more than 90 programs across 35 countries. And the business line #3 is what we call the Complementary Solutions with more than 60 programs across 30 countries. And all those 3 business lines are enabled, thanks to a mutualized specific purpose payment factory. We are the only one in our industry to have our own purpose -- specific purpose payment factory, and we are the only one to be able to mutualize this asset across all our business lines. So yes, Edenred is overdelivering its beyond strategic plan. What does it mean? And how does it help us to commit for the years to come? You remember the plan. The plan is based on 2 very simple elements. What we want to achieve day after day is to increase our total addressable market, objective number one. Objective number two is to enrich our business model. And we will do that, and we are doing that via scaling the core, extend it beyond and expanding in new businesses. So that's the plan. What did we do for the last 3 years of the plan? In terms of total revenue, when you look at the sequence of figures, you see a like-for-like growth that has been 21%, 23%, and this year, based on the consensus 14%. What does it mean? It means that we multiply our total revenue in 3 years by 1.8x. What is true, in fact, in total revenue is also true in EBITDA. That's why at Edenred, we are very focused on sustainable and profitable growth. So if you look at the evolution of the EBITDA, first of all, the like-for-like growth for the last 3 years, plus 23%, plus 44% and, based on the consensus in 2024, around plus 16%, it means that, yes, we over delivered versus our midterm targets that were at a minimum of 12% per year. If you look at the EBITDA margin, you see that the EBITDA margin was 41% in 2021. And in 2024, once again, based on the consensus is going to be around 44%. That's why we are talking about sustainable and profitable growth. In a nutshell, what does it mean? We multiply by almost by 2 our generation of EBITDA in the last 3 years. Another way to look at it is to share with you what we call our growth equation, and we will go later into the details. But if you look at our growth equation for the last 3 years, we start with a total revenue CAGR published of about plus 20%. The 20%, in fact, if you get rid of the M&A effect and the FX impact, you land at a like-for-like growth of 19%. Another way to say it, the vast majority of the FX impact has been erased by the M&A that we did for the last 3 years, so from plus 20% to plus 19%. Then we looked at the exceptional events we had during the last 3 years. First exceptional event is what we call the Argentinian hyperinflation. Argentina is less than 1% of the total contribution to the revenue. But due to the hyperinflation, it had a positive impact in terms of growth of 2%. Then the second exceptional event we had for the last 3 years is the evolution of the interest rate. We have been in a period of high abnormal interest rates. And in fact, when you look at the impact, especially on our revenue and the other revenue, it has, in fact, created a positive impact of plus 3.5%. Another way to say it, if you take the evolution of our float with the same interest rate as the one at the end of 2021, the growth would have been 3.5% less. And then we looked at the face value increase as well that were pushed by, in fact, the inflation, but not only because Constance will explain to you that, yes, the envelopes have been increased. One of the driver was inflation, but we are still very far from the total usage of the envelope. But if we are very severe with the performance of Edenred, let's take 100% of the face value increase. And so if you get rid of all those abnormal elements that we had for the last 3 years, what do you see? You see, in fact, a normative growth CAGR for the last 3 years that is around 11%. It means that the core of the core of the growth engine of Edenred is growing at 11%. Why is it so? Because, in fact, Edenred solutions are covering essential needs especially, in fact, driven by secular trends. Talent war is here to stay for a long time. Having to work on the employee engagement that is too low and to increase the productivity is here to stay for a long time. The transition to the greener mobility is here for a long time, and the rise of digital payments, Edenred being the digital leader of its industry, is here to stay. That's why we are talking of secular trends, and those trends are fueling the core engine of growth of Edenred for the last 3 years. The core of the core has been growing at 11%. Another way to look at our performance for the last 3 years is to look at the generation of EBITDA. What did we -- what do we say? We say that if you look at the generation of EBITDA for the last 3 years, in fact, the total EBITDA cumulative that has been generated is EUR 3.2 billion. Out of the EUR 3.2 billion, you have EUR 1.9 billion, which is the level of EBITDA generated, in fact, in 2021 that you multiply by 3. And then you have the growth of EBITDA. Our beyond midterm target was minimum 12%, and we did 24%. 24% means that we overgenerated versus our target, EUR 650 million of additional EBITDA. And at the same time, we have been able to invest a lot in our assets because you know that when we invest, 60% of the investments are in OpEx. So basically, what we have been doing for the last 3 years is overgenerating EBITDA while, at the same time, investing a lot on our digital platform via the OpEx. And even having done that, we have been able to generate EUR 650 million cumulative of EBITDA on top of our commitment of a minimum of 12%. So what did we do with this cash? So I said that -- Page 12, I said that, in fact, we generated EUR 3.2 billion of EBITDA for the last 3 years. We have been able to convert that with an average free cash flow on EBITDA conversion rate of 78%. Taking into account the German change of regulation, in fact, Julien will explain that later on, but let's say, 78% of conversion rate, so it means that the cumulative free cash flow that has been generated for the last 3 years is EUR 2.5 billion. What did we do with cash? In fact, we did 2 things on top of transforming our platform, which was part of the EBITDA, the first thing we did is we invested in M&A, both strategic and bolt-on acquisitions. So for the last 3 years, we acquired for EUR 1.4 billion of M&A. Why did we do so? In fact, it's to increase our addressable market and to accelerate the share of Beyond in our total revenue. That's the first thing we did. The second thing we did is to increase the shareholder returns by paying dividends. So you know our progressive dividend policy. And by the way, the dividend progressive policy means that you had an increase of 10% year-on-year since 2021. And the second thing we did and we initiated in 2024 is an extra shareholder return. Thanks to the shareholder buyback, it was a program of EUR 300 million over 3 years launched in March 2024. As of November 29, 91% was achieved. And that's why we propose today an extension of this program to EUR 600 million for the next 3 years. So extra generation of EBITDA, part of it used to invest in M&A to increase our addressable markets and Beyond share, part of it returned to the shareholder via the progressive dividend policy and a share buyback program. And in fact, when you look at the performance of Edenred for the last 3 years, what was key and core to our strategy was to increase the proportion of Beyond. And you see that Beyond has moved from 32% to 37%, that's the first thing. And the second thing is the regulated core Meal & Food has decreased from 45% to 43%. And what is true for the group is also true, in fact, for the major contributors of the group. So if you look at Brazil, which represent 20% of our operating revenue, what you see in Brazil is Beyond is 28%, but what you also see is what is not regulated core Meal & Food represent 54%. If you look at Italy, you see that Beyond is 21%, and what is not regulated core Meal & Food is 32%. And in France, that represent 14% of our total operating revenue. You are super well balanced with 50% on regulated core Meal & Food and Beyond that is 42%. Knowing that the proportion of Beyond is growing. Why? Because the growth we have on those newly addressed market is higher than on the core Meal & Food. So based on all those elements, we can say that we start 2025 significantly stronger than we expected when we started the Beyond plan. Significantly stronger, what does it mean? First of all, yes, we are stronger because our addressable markets are much larger. Think about it. When we look at the Beyond solution addressable market, those markets are 3x bigger than our core solutions. And we are able to address those new markets, thanks to the innovation of Edenred, but also thanks to the acquisitions. So think about Greenpass, for Reward Gateway, GOintegro and Spirii and IP. If I segregate between what is Mobility and what is Benefits & Engagement, Spirii is the EV charging e-pay that, in fact, we closed very recently is the fact that now in Italy in Mobility, we move from the #6 position to the #2 position. Greenpass, also in Mobility, is the extension of our digital offer in Brazil for the toll payments, but think also about engagement with the acquisition of Reward Gateway in Europe and the U.S. and GOintegro in Latin America. So yes, we are stronger because we are able to address much larger markets than in the past. Yes, we are stronger because we have a larger customer base. If we look at the number between 2016 and 2024, the number of users using the Edenred digital solutions has moved from 43 million to 60 million, the number of clients from 750,000 clients to 1 million clients. Our network of merchants has increased from 1.4 million to 2 million, and the business volume has increased from EUR 20 billion to EUR 45 billion. On the right part of Slide 17, we made a quick comparison with the available number of one of the most well-known and successful platform around the world, which is Uber Eats. We have 60 million users. They have 90 million users. We have 2 million merchants. They have 1 million merchants. We have EUR 45 billion of volume. They have EUR 68 billion of volume. To give you an idea on the power of this larger customer base. Yes, we are stronger because we invested a lot to strengthen our digital platform. Invest a lot, what does it mean? The tech cash-out is EUR 1.4 billion cumulative for the last 4 years. And once again, 60% of it is in the OpEx. So it has impacted our EBITDA, and it did not prevent us from overgenerating some EBITDA for the last 3 years. So yes, this -- our digital platform is stronger because we invested a lot. Thanks to this platform, now, 93% of our revenue generated is generated by digital solutions. Thanks to this platform, we are able to drop, in fact, the unit cost per transaction. It's minus 22% decrease of cost per transaction between 2021 and 2024. Thanks to the platform, we are scalable and robust. So we are processing now more than EUR 100 billion of processed volume. And we invested also in compliance and security, compliance and security because when you manage flows of money, you have to look very carefully at fraud. To give you an idea, the fraud impact has been decreased by 80% between '23 and '24. Another example of how compliant and secure we are, 100% of our authorization platform are certified now based on international standards. And obviously, nothing is possible without having the right people working on the platform and improving daily the platform. We have now more than 500 product experts at Edenred and 250 data experts. So yes, we enter 2025 stronger, thanks to a strengthened digital platform. Then another thing to consider is our operating leverage. In fact, we have -- we are stronger because we have a stronger operating leverage, thanks to larger scale. If you look at the evolution of our operating EBITDA margin reported, you see that, yes, we invested a lot, but you start seeing, in fact, the operating leverage. And you see on published number, you see the improvement year after year, and you will continue to see it, and it's going to be explained by Julien. Here, it's published. If you look at it in like-for-like, in fact, the improvement is even better. Why? And it's the graph that you have on the right part of the side for 2 reasons. First of all, if you look at our total OpEx base, it's now EUR 1.6 billion. It means that it's a large base on which there are many things that can be done. If you decrease your level of cost by 1%, it means immediately EUR 16 million of EBITDA increase. So due to the scale we have now, the operating leverage is very powerful. The second thing is when you look at the split between fixed cost and variable cost, in fact, 60% of our cost are fixed cost. What does it mean? It means that the more we grow, the more we are able to dilute those fixed costs. So based on the trend that you see for the last few years and based on the fact that we are absolutely determined to accelerate the operating leverage, and based on the fact that we have a large base of OpEx and a proportion of 60% fixed cost, expect to see this operating EBITDA leverage being more powerful in the years to come, especially when you accept the idea that 2025, from a macroeconomic point of view, is going to be more difficult than the years before. And then, yes, we are stronger as well from an extra economic point of view. Why? Because the successes we had for the last 3 years allowed us to commit especially with, in fact, the SBTi target, our trajectory has been approved by SBTi in 2024, and we are really proud of that. That's why we have a clear road map of improvement on Scope 1 and 2, but also on Scope 3 by 2030 and by 2050. At Edenred, we will demonstrate that we are able to be economically super performant, but also on some dimensions that are key for the future of all of us, especially the greenhouse gas emission reduction. So to make a long story short, yes, Edenred begins 2025 better positioned for growth and significantly stronger than we could have envisioned at the start of the Beyond plan. Yes, we have increased total addressable market. Yes, we have an accelerated diversification. Yes, we have an enlarged customer base. Yes, we have a boosted digital platform. Yes, we strengthened our compliance and security. Yes, due to our scale and the 60% fixed cost, we have some operating leverage. And yes, we will do it also on extra economic commitments. And that's why I'm very pleased to tell you that, as we expressed during our last Capital Market Day, Edenred is on its way to at least EUR 5 billion of total revenue by 2030. So with this transformed platform, short term, we are able to reaffirm our double-digit EBITDA growth ambition in 2025. And so it's now time for Constance to explain to us and to go more into the details of the growth equation from the operating revenue point of view. Constance, why do you think that there is a lot of potential to grow?

Thank you, Bertrand. Without repeating obviously what you've shared before, if we look at our larger scale, our transformed digital platform and the boost of our Beyond solutions, combined with the attractivity of these solutions, boosted by secular trends that Bertrand shared on talent war and employee engagement, greener mobility, Edenred is confident in delivering strong operating revenue growth in 2025 and beyond. As a result of our strategy, our operating revenue model has been both enriched and diversified, enriched with higher recurring revenue as we extend to platform solutions. As an example, and I will take Reward Gateway, 70% of Reward Gateway operating revenue is currently coming from SaaS subscription fees. So as we extend to Engagement, we bring higher platform subscription fees, which are, by nature, recurring. It's true as well in Mobility as we extend to fleet management solutions such as GoHub in Brazil, which again increases the share of platform subscription fees. I've talked about the higher recurring revenue. I can add on that volume-based fees, which as we diversify and increase the number of solutions to cross-sell that are available on our platform, we obviously diversify our revenue model through increased solutions. Finally, on top and between the operating revenue and total revenue, and Julien will cover that in the finance section, obviously, contribution of float, which is generated from the business volume from Benefits prepaid solutions. Now from this enriched and diversified revenue model, 2 key drivers of growth. Number one, client acquisition. As we highlighted in Bertrand's introduction, we continue to operate in underpenetrated core markets. And as we've extended beyond, we operate in broader addressable markets, which provides a huge opportunity of growth potential and client acquisition, combined with a low cost of acquisition as we remain true to our business model of a B2B2C business model, meaning that when we acquire 1 middle market client, it provides us access to thousands of new users on our platform using our solutions. Over 2023, 2024, 65% of our operating revenue growth has come from client acquisition. On top of client acquisition, and it's our second driver of growth, portfolio expansion. Given that we benefit from a strong structurally low attrition in business volume below 5%, combined with a strong potential to further grow our revenue per customer through upsell, but also cross sell. And as we cross-sell our solution, this plays both on platform subscription fees as we provide access to more modules on our platform, but also as we add revenue from volume-based solutions with new solutions that are taken. If I come back to client acquisition, first, obviously, client acquisition of large accounts, and you have here a few of our 2024 flagship wins. But I would like to insist maybe on what is unique and a key differentiator for Edenred is our ability to partner with clients across multiple countries with 1 global account, 1 unified value proposition, but the ability to cover employees or vehicles across multiple countries. Small example with Goodyear with whom we've extended our partnership from 2 countries in Europe to now 8 countries in Europe with 1 unique contract and more than 60,000 employees leveraging our Benefit solutions. Acquisition of large accounts, but also SME clients in markets that continue -- in core markets that continue to be underpenetrated. If we look at our operating revenue, we currently still generate 80% of our operating revenue in countries where the SME market penetration is below 10%. Now how do we tackle this penetration? Most importantly is by mastering our return on investment through an efficient go-to-market. When we compare our marketing and sales acquisition cost to the life time value of the SME acquired, we have a return on investment of about 10x, which is more than double the average of the SaaS B2B sector. How do we manage that? By having 3 main channels of acquisition, web sales for really small micro enterprises with 20% of our SMEs that are not acquired through web sales, our own sales force and our own telesales 1,200 FTEs across the globe for which we monitor very strongly the conversion rate from the workable lead to the contract signed and activated, and then complementary sales channels, which I will cover in the next page. All of this -- our operating model allows us to be confident to deliver and having added to our platform this year more than 650,000 new SME users using our solutions. We extend our reach to complementary indirect sales channel, choosing selective and strong local distribution partners. This allows us to extend our reach both in the B2B distribution, but also B2C. B2B, we often -- we've discussed in the prior presentations our partnership with Itau in Brazil to acquire the -- more SMEs. But I will highlight here our partnership with Aon and Mercer in Spain, which allows us to target more middle market companies and acquire through these HR consulting companies additional clients. In 2024, it's 300 B2B clients that were signed, thanks to Aon and Mercer. Extended reach as well with partners to extend to B2C, while still mastering our cost of acquisition. In Latin America, we've partnered with a new bank, which is the largest fintech in Latin America, which now distributes our Edenred Mobility to offer to its B2C clients, providing us with a reach of more than 100 million clients. I've talked about client acquisition, as I mentioned, 65% of our 2024 operating revenue growth. Now portfolio expansion, which covers 35% of our net -- of our operating revenue growth in 2024. We measure the healthy -- the health of our portfolio through the net retention rate, which in Benefit & Engagement in 2024, this year, will be above 104%. What this next -- net retention rate measures for us is the growth of our installed base given low attrition. I mentioned it earlier, less than 5% attrition rate in business volume on our installed customer base, but also further potential to upsell and cross-sell through portfolio expansion. Now this net retention rate of 104% and this potential of portfolio expansion is actually a small portion of the full potential that we have on our installed base. If I take a few of the indicators from upsell and cross-sell, we still have further untapped potential to grow our existing base. As of 2024, 75 -- on our client base, we have 75% of maximum legal face value achieved on our clients. This means that we still have potential to go up to 100% of our maximum legal face value. Same on the cross-sell potential. On average, our clients hold 1.5 solutions from Edenred, knowing that when we look at all our key geographies, we have between 3 to 8 solutions per country, and this is extending as we further diversify Beyond. And if we move up to, let's say, 5 solutions per client on average, this means that we can almost triple the value of an existing portfolio if we penetrate the entire white space, which is why we further confirm our strategy to enrich our value proposition, not only with Edenred solutions, but also with third-party services to further push this cross-sell potential. And if I look at the white space, I didn't share it on the slide before, 2/3 of our white space potential is coming from further cross-sell. In Benefits & Engagement in France, we have our Edenred Benefits, Ticket Restaurant, Kadéos, CESU, Télétravail. We've added to our platform third-party benefits, Betterway in employee mobility, Ekie in legal care, Stairwage in salary advance. And since this year, we've launched Edenred Engagement with the rollout of Reward Gateway in France, which gives access to 4 additional modules of engagement for our clients in France from discount, rewards and recognition, well-being and social communication. This is also true in Mobility, if I highlight it with the truck mobility services in Germany, where, obviously, we provide our clients with Energy cards, Edenred VAT refund services, Edenred toll solutions, Telematics, but also now expanding to EV, electric vehicle business services, and also distributing third-party parking services with our partnership with TRAVIS. So if you have to summarize our growth potential, we've extended Beyond, we have larger scale, we have an enriched and diversified revenue model with growth potential coming 2/3 from further client acquisition, both large accounts and underpenetrated SME markets, and further portfolio expansion through upsell and cross-sell through our Beyond strategy. And this increased revenue growth provides us with operating leverage, which Julien will cover in the finance section. And now to Bertrand.

Thank you, Constance. So we all understand what it means our growth equation on operating revenue. So as you said, client acquisition on one side, because we are vastly underpenetrated market for 65% of our growth and portfolio expansion, thanks to the NR at 104% and more to come, but also the upselling and the cross-selling. That's, at least for me, absolutely clear. So now maybe a quick focus on regulation on Meal & Food benefits. What does it mean? First of all, if you look at the breakdown of the operating revenue of Edenred, you see that the core Meal & Food regulated activity represent now 43% of our total revenue. And what you know also is this proportion is decreasing year after year, thanks to the acceleration of the growth, especially on Beyond. What does it mean to be regulated? Why are we regulated on the core Meal & Food? We are regulated for a good reason, but it's super good, in fact, for the development of the business is there are some tax exemptions. And tax exemptions exist for both employers and employees. And it is programs that are funded by employer and employee, and the proportion between the employer and employee depends on the program and depends on the country because those structural drivers, tax exemptions and financing by the employers that are very positive for the development of the program, because there is tax exemption, there is regulation. But the regulation is not here to bother us. The regulation is the consequence of the fact that there are very positive drivers in our industry. Part of them are based on tax exemption. So when you look at what it means for all our stakeholders, in fact, the Meal & Food benefits are highly praised, and they are highly praised for good reasons. First of all, if we look at the employees, and we give you some examples, country per country, but those programs are cherished by employees. If you think about Romania, it means a yearly additional targeted purchasing power for employees of EUR 1,500. It means a lot for the employees. If we look at Italy, 70% of the workers consider meal benefit plans as an indispensable benefit. So those programs are cherished by employees because it means additional purchasing power. But those programs are also cherished because they are very advantageous for the corporate clients. An example in Mexico, 75% of employers consider meal benefits implementation increases employees' motivation. In Belgium, 66% of the employers today would support the maximum face value increase and will use it. So not only it is cherished by employees, but also it's very advantageous for corporate clients. But it is essential for partner merchants. Here is an example in France. The total business volume of Meal & Food benefits in France is between EUR 8 billion and EUR 9 billion. The last study that was made by C-Ways demonstrate that, in fact, the EUR 9 billion represent for the partner merchants, EUR 14 billion of annual income that are generated for them. Why? Because you have the business volume and then you have a top-up, and the top-up is about 50%. I received EUR 10. I'm going to spend EUR 15. Because the EUR 10 are magic money. It's money that you didn't finance totally or not at all because it could have been paid 100% by your employer. So there is a top-up. So the partner merchant are really aware that it is essential for them. And finally, the question is for the public authorities. Because you have some tax exemption, they are leaving some tax money on the table. And why do they do that? Because net -- in fact, they are making some money. Surveys have been done again and again and again in France. If you look at the difference between what the French state makes out of the program and how much it cost in terms of tax exemption, it's a net plus of almost EUR 900 million. Why? Because VAT is paid on that. But also why? Because jobs, direct jobs are supported by meal benefits in restaurant. And the estimate, in fact, in France is about 75,000 employee jobs that are created, thanks to the program. So yes, Meal & Food benefits are highly praised by all the stakeholders, whether they are the employees, but also the employers, the partner merchants and the public authorities. And in fact, if you look at the evolution of our market and the evolution of the regulation, there are more tailwinds than headwinds in regulation supporting, in fact, the market expansion. First of all, on the left part of this slide, if you look at the evolution of the market size in 10 years, in fact, the market size has been multiplied by 2. Knowing that if we take the country one by one, there are still a lot of underpenetration. That means that we believe that this trend of a growing food and benefits business volume market, we believe deeply into it. And then on the right part of the slide, you have some illustration of the regulatory changes. And in fact, you have some headwinds and you have some tailwinds, but the sum of the tailwinds is much higher than the sum of the headwinds. If we look at the tailwinds first, think about it. For the last 3 years, we had face value increase in 13 countries, and there is more to come. We had an acceleration of the digitalization. So there was some regulatory push for 100% meal voucher digitalization in Belgium and Bulgaria. And it will come in France, one of our main market. It will come one day or another. And if you think about the digitalization push in Italy, the way it has been done is there is paper voucher, there is digital voucher. And in fact, the face value for the employer and the employee is twice higher in digital vouchers than in paper voucher. It has been and it will be a trend for the growth in those countries. But yes, it's also true that when you are in a regulatory environment, sometimes, you have news that are less favorable. And it's our job to manage it and to develop some business models to overcome the difficulties. I'll give you an example. In Turkey, yes, we have the competition of cash allowances versus ticket restaurant. And you know what? We develop strategies, business model that allows us to grow at strong double digit in Turkey. When you think about the potential implementation of a 5% merchant fee cap in Italy in the private sector, yes, we can play with a rebalancing. So there are many ways, in fact, to take the regulation. But what I want to share with you, we are absolutely convinced that it's cherished by all the stakeholders. Because it is cherished by all the stakeholders and it is pushed by the public authority, we will continue to see a growing market in the coming years, as remember that it has been multiplied by 2 for the last 10 years. And yes, in regulation, you have some good news and some bad news. It's our job to exploit all the good news and to overcome the bad news. But the sum of the good news on a long trend is much higher than the sum of the bad news. Now Julien, this growth equation, what does it mean in your P&L, in your balance sheet and in your cash flow?

Well, thank you, Bertrand. Hi, everyone. So as Bertrand already explained, we are on track to deliver superior performance in 2025, knowing that we will be navigating in the different environment, meaning that the macro factors we'll have in 2025 are less favorable to Edenred compared to what we had over the last 3 years. So during this section, we will go through the P&L, the balance sheet and the free cash flow. And we will -- I would do my best to explain to you how they reflect our business, and we're going to start with the P&L. So I start with the slide we already shared with you during our Q3 revenue presentation, and it explains how we are comfortable to deliver 10% like-for-like EBITDA growth in 2025, including the potential implementation of a fee cap in Italy. And what we're going to do during the next slide is to double click on the 3 building blocks you see on this slide, so operating revenue growth, other revenue and operating leverage and efficiency. But before moving to those 3 blocks, a quicker come back on Argentina hyperinflation. As Bertrand explained, it had an impact on our performance over the last quarters. But if we put aside this hyperinflation in Argentina, we've been able to deliver double-digit operating growth since Q1 '23. The point you need to note is the fact that in Q4 this year and due to the Argentinian peso devaluation in Q4 2023, the impact of hyperinflation will turn negative in Q4, and it should be around minus 3%. So after this smaller comment on Argentina, let's come back to the revenue equation that Constance shared with you a couple of minutes ago. So we have an enriched, diversified and increasingly recurring revenue model. What we mean by recurring is the fact that this revenue model is predictable. It means we know where we go for the next quarter. The revenue generation equation is quite similar between Benefits & Engagement and Mobility. The difference we have is the float and the fact that we have other revenue in Benefits & Engagement because we are in a prepaid model. So as Constance explained to you, we have an increased share of platform-based revenue. Why? We did some strategic acquisitions over the last 2 years, Reward Gateway in Benefits & Engagement and Spirii in Mobility. And the 2 businesses of those companies are increasing the part of revenue that is coming from client setup fees and platform subscription fees. Setup, why? Because when you deploy this kind of platform to a client, you need to prepare the setup. So you charge setup fees to your clients, you can personalize the platform, and you also have many things to implement. You do that right after you sign a contract. And then once the platform has been deployed, you have subscription fees, and you charge per employee per month fees to Reward Gateway client, but we do the same at ProwebCE as well in France. And then you have a program management fees. Especially in Mobility, you can charge fee per vehicle per card, you charge for the toll box or for the freight. So those revenue, the platform subscription fees are recurring revenues, and you see that we expect them to grow strongly in the coming years. On top of those new models, we have our volume-based revenue, and you see another equation. So the revenue we get from that is a business volume times take-up rate. So business volume, Bertrand explained that it comes from face value that we have on our product. But on Mobility side, it also comes from Energy cards. And you see that the volume is growing. And we apply take-up rate to this business volume. And you see that this take-up is based on value proposition that we give to our clients and merchants. For clients, we allow them to have attractive HR policy when it comes to Benefits & Engagement. In Mobility, we are here to help them to optimize the total cost of ownership of their fleet. So the take-up rate for the clients is supported by, obviously, their satisfaction. You know that it is also supported by the client mix. As you know that SME are paying higher fees compared to large clients. So the more SME we have in our portfolio, the higher the take-up rate will be on client side. And then we do a cross-selling, and we can propose additional and complementary services. On merchant side, we have another value proposition. We are generating traffic. Bertrand explained to you that in France, we are generating EUR 14 billion of traffic to the merchants, and our take-up rates for merchant is supported by the traffic we generate, but also by what we call the merchant mix. And you know that we have some partners such as Uber Eats or Deliveroo, for instance, and we are able to charge fees for the volume we bring to them. And as we do for the clients, we also have more services for the merchants. So this is it for the operating revenue. And as I explained before, we also have other revenue that comes with the Benefits & Engagement business model as it is a prepaid business model. On the left part of this slide, you see how other revenue have increased from 2021 to 2024. We were at EUR 44 million in 2021. In 2024, we'll be between EUR 240 million and EUR 250 million of other revenue. And you see that the proportion of other revenue in our total revenue started at 2.7% and will be around 8.5% this year and then will stabilize between 7% and 8% of our total revenue in 2025. Why will they stabilize at 7% to 8%? Because we have a kind of normalization in their trajectory. The other revenue is the result of an equation, float times interest rates. As our business volume is going to grow, and I will come back to that on the next slide, the retention time is stabilizing, the float will increase. And then we know that interest rates started to go down in 2024 and will go down again in 2025. When you took all those parts of the equation, you have the other revenue. So regarding the float, as we said, we are growing our issue volume. And you see on the left graph on this page that the issue volume grew from EUR 18 million -- EUR 18 billion in 2021 to EUR 24 billion in 2023. Then we are 93% digital, so the retention time is stabilizing. When we had paper, the retention time was a little bit longer. Now that we are fully digital, we are at around 7.5 weeks of retention time. And thanks to this issue volume growth and this stabilizing retention time, we have a float increase in value that you can see in our balance sheet. Regarding the interest rates, I think it's very important to look at what we expect in terms of rate evolution. Before moving to interest rates, one comment on our float. So we have more than EUR 4 billion float that is mainly generated in Europe. You see 70% of the float is in Europe, 20% is in Latin America, 10% in the rest of the world. We have a very strict investment policy. We don't transfer money between currencies, and we optimize the maturity of our investments because we can invest in a longer maturity when we have restricted cash. So depending on our expectations or forecast in terms of interest rates for the next quarters, we can decide to invest in a longer or shorter maturity. When you look at our expectation or, let's say, the consensus that we have regarding deposit rates of Central Bank, we see that the rates will go down. And based on these assumptions, we believe our other revenue should not go below EUR 210 million in 2025. And today, it's a floor that we should have for the coming years. So that's it for the top line. Now we move to the cost. Bertrand told you that our cost base is EUR 1.6 billion, and operating leverage is part of our business model. So we have 60% fixed cost, meaning that we have opportunity when we grow the business to keep those costs at the same level as they are. So it's pure operating leverage. But on top of that, we know that as a management team, we can decide to put in place actions to improve our cost base. And when I say we improve our cost base, we improve both variable cost and fixed cost. So when we look at variable cost, we have the platform scale effect, but then we have to -- we can renegotiate some global contracts. We can optimize the go-to-market we have. And when it comes to fixed costs, we have the continuous portfolio rationalization, and we can also mutualize some functions. For instance, we have shared service centers in Latin America today. We don't have a shared service center in Europe, and we are working on that. And on top of that, we will use data and AI to drive efficiency of our programs. And to give you numbers because I think it means a lot when you look at what is written on the right side of this slide. If we imagine that our operating revenue will grow at 9% and that our operating expenses growth will be 7%, it means that the operating EBITDA growth will be 12%. It means that we say that if we manage properly our top line and we are efficient in the management of our operating expenses, you have a big operating leverage in operating EBITDA growth. And if you do the same computation with 10% growth for operating revenue and 8% growth for operating expense, you see that the operating EBITDA growth is 13%. So I think those numbers are meaningful when we want to explain to you what operating leverage means. Then we go deeper into the P&L. So we started with the EBITDA, and now we go to the EBIT generation. So we've been investing, as Bertrand said, in OpEx and CapEx over the last few years to make our platform stronger and to add new features to it. When you look at the level of D&A as compared to total revenue, the amount of D&A, the percentage of D&A in total revenue is quite stable. We were at 5.8% in 2021. We are at 5.4% in 2024. And thanks to that, we've been able to improve the adjusted EBIT margin. And when you look at the numbers in absolute value, we have multiplied the adjusted EBIT by 1.9%. It's exactly the same number as we had in EBITDA. Then below the EBIT, we have other items. And as I said, other revenue will be negatively impacted by interest rate decrease, which is not the case of net financial expenses because they are working the opposite. So when you look at that, thanks to interest rate decrease, net financial expenses will be positively impacted. Then you see that we expect an effective tax rate that should be stable in 2025 compared to 2024. And minority interest, they follow the trajectory of Edenred. So we will grow at 10%. Most likely, minority interest will grow the same way. Last comment on the P&L. So the adjusted EBIT -- EPS growth that we expect, you see that we've been able to grow the adjusted EPS from 2021 to 2023, and the drivers of 2025 adjusted EPS growth are the EBIT increase -- the adjusted EBIT increase. Then you see that we have the below EBIT items optimization. And then we have the potential share buyback that has been explained to you by Bertrand. So that's it for the P&L. Now we move to the balance sheet of Edenred. Our business model is generating structurally negative working capital. Now we need to go business line to business line to understand how it works and how we are generating this negative working capital. So in Benefits & Engagement, we have 2 kind of products. Some are cash nonregulated, some are cash regulated. When you have products that are cash regulated, then the cash is restricted cash, meaning it is segregated for those products. When you have cash nonregulated solutions, it means that it is cash and cash equivalent, and this cash sits on the bank account of Edenred. Both of them are generating float, meaning we get other revenue from those 2 kind of cash. And you see that the contribution to negative working capital of Benefits & Engagement is very high, and the trend is positive as we are growing the business volume. In Mobility, all our solutions are generating cash and cash equivalents, and it's pure working capital. It's not float. Why? Because we manage our Mobility business with DPO, so the delay we have to pay our suppliers that are longer than the DSO the time we take to collect the money from our clients. And you see the contribution to negative working capital is positive less than Benefits & Engagement. And the trend is positive as well as we expect our business to grow in the coming years. And in Corporate Payments, we have services proposed to banking clients, so digital bank. And when we have these kind of services, it is restricted cash, and it has an impact on the working capital. So that's it for -- that's the business model of our 3 business lines when it comes to cash generation. Then when we look at our balance sheet, so how should we read it? First thing, as I said, we have the float. What is float? The float is what we call funds to be redeemed. So the money we will have to reimburse to the merchants minus the trade receivable of our clients, and it's very important to consider both parts because we will get the money from our client to reimburse the merchants. So when you look at the numbers at the end of 2023, the level of float was EUR 4.2 billion. The second thing you need to consider in this balance sheet is the counterpart of the funds to be redeemed of the float, and the counterpart is cash and restricted cash. You have the 2 lines at the bottom left of our assets. You see that restricted cash, as I already mentioned, is segregated cash, and cash and cash equivalents are owned by Edenred. As I said, this is -- this money is in the bank account of Edenred. And this is the reason why when we do the computation of our net debt, we take into account this cash and the gross debt. So at the end of last year, it was EUR 4.5 billion. And taking into account those 2 amounts, the net debt of Edenred at the end of 2023 is EUR 1.1 billion. And this net debt is, let's say, validated by S&P. You know that S&P is our rating agency. We were rated BBB+ 18 months ago. We moved up to A- in April last year, and this rating has been confirmed twice, once after the acquisition of Reward Gateway in June 2023 and this year in April 2024. So at the end of last year, the leverage ratio of Edenred was 1, as we did EUR 1.1 billion of EBITDA. Last comment on our, let's say, financial statement, the cash flow. And this is something that is very important because we have the business that is generating strong cash flow. How do we do that? We do that, thanks to 2 legs, let's say. The first one is funds from operation. And the second one is the negative working capital I already commented. So first, what is funds from operations? Funds from operation is the sum of the EBITDA, so that I already shared with you. And then we have to pay net financial expense, and we have to pay income tax. And we pay income tax that are based on the income tax that has been calculated 1 year before. So in 2023, you pay income tax based on your performance of 2022. So funds from operation in 2023 was around -- was EUR 730 million. And you see that it is the first free cash flow contributor. And then we have the negative working capital. So the EUR 365 million in 2023 are coming from what I shared with you a couple of minutes ago and the fact that we are growing the business volume, and we have this retention time. It means that in our balance sheet, we have this increase in negative working capital. Last thing that we take into consideration when we compute the free cash flow is what we call recurring CapEx, so the investments we do. You know that our level of recurring CapEx is below 8% of our total revenue. Last year, it was EUR 190 million. So if you consider the funds from operation, the negative working capital that we've been generating in 2023 and the CapEx, you see our free cash flow last year was EUR 905 million. One comment on 2022. We did EUR 711 million free cash flow because we excluded from this number the positive impact we got from the end of regulation of one of our products in Germany. And it is the way you should look at it when we mentioned that we generated around EUR 2.5 billion of free cash flow between 2022 and 2024. So please consider the EUR 711 million when you do the computation. That's it for the finance section. So Bertrand, please, for the conclusion.

Thank you, Julien, for this explanation as to the P&L, the balance sheet and the cash flow. So to conclude, the first thing I want to share with you is we are committed to adjust our capital allocation policy to deliver stronger shareholder returns. So yes, we are taking into account the situation we are in. There's still a lot of growth to go after. So yes, we will continue to fund organic growth initiative through investments in core capabilities. From an M&A point of view, it's -- we amend our capital allocation policy. We will refocus our M&A strategy on opportunistic bolt-on targets. And at the same time, we will continue post-merger integration and deployment of recent acquisition. Of course, our attractive progressive dividend policy will not change. It means a dividend growth in absolute terms every year. The second thing we amend, we will boost the shareholder returns through share buyback with the extension of existing share buyback program up to EUR 600 million over the next 3 years. That's the second, let's say, amended part of our capital allocation policy. Finally, we maintain our solid balance sheet corresponding to a strong investment-grade rating, as it has been explained by Julien. So now to conclude. There are a few things that I would like you to remember before answering your question. Thing number one is, yes, Edenred is a leading global digital B2B2C platform, and the platform has increased significantly in the last few years. We are now serving 60 million users, 2 million merchants and 1 million corporate clients. It means that we have a larger base on which we can work. Second thing, yes, Edenred is well on track to deliver our Beyond strategic plan. And yes, we outperformed midterm financial and extra financial targets. Based on that, yes, we are able to confirm for 2024 our EBITDA guidance between EUR 1.245 billion and EUR 1.285 billion. And yes, we are able to confirm our free cash flow conversion rate, EBITDA to free cash flow at more than 70%. Thanks to everything we did for the last years, we start the year 2025 -- or we will start the year 2025 significantly stronger. Having said that, we are a very pragmatic management team, and we know that we never swim twice in the same river. So yes, we will swim in a different environment in 2025. From a macroeconomic point of view, it's going to be tougher. And also we will have the potential impact of the implementation of a fee cap in Italy. But having said that, we are committed to growth, and we see the potential of growth of Edenred. So we will do what needs to be done, and we are pleased to commit again to a minimum 10% like-for-like EBITDA growth in 2025. But we also know that we have some opportunities in terms of revenue growth for 2025 and further. As rightly explained by Constance, we have a huge reservoir of growth in terms of client acquisition, but also in terms of portfolio expansion. And remember what has been said by Constance when you look at our revenue. The revenue is more and more rich, more and more diversified and more and more recurring. That's why we are a strong believer in the growth potential of Edenred on the operating revenue level. But so based on this new context of growth on one side, but macroeconomic environment that is going to be tougher, yes, we adjust our capital allocation policy to deliver stronger shareholder returns. And yes, we are on a path to EUR 5 billion total revenue by 2030. And yes, count on us to work our operating leverage, thanks to a large base, but also thanks to the repartition between fixed cost and variable cost, it's our job to create some margin expansion, and we are on it. Thank you for your attention. Constance, Julien and myself are now all yours to answer any question you may have.

[Operator Instructions] We will now take our first question from Ed Young of Morgan Stanley.

My first question is on the cost base. Could you lay out the areas you're potentially targeting? Again, you touched on it a little bit, but you've also spoken in the past about some nonnegotiable areas of investment, technology, technology security. I think marketing and sales and those that drive the top line have also been there. So can you help us understand your process of realizing that strong operating leverage without affecting the top line? And how does that approach change with the extra cost savings implied in the guidance you've given in the case of the Italian commission cap? And then my second question was on the buyback. You obviously increased the amount today. What were the -- what was the rationale of the constraints for choosing the number you did? Clearly, it's a strong balance sheet. As you've talked to why didn't you or couldn't you go higher, is it the constraint to the investment-grade rates and other reasons? Some sort of thought process around that would be useful to understand.

Okay. So Ed, thank you for your 2 questions. First of all, as to the cost base, in fact, there are things that we will continue to invest, and it's exactly what you said. First of all, cybersecurity is a top priority, okay? So we will continue to develop our expertise and to invest whatever is needed to make sure that we are totally secure. The second thing is, as explained, we still have a lot of growth to go after in operating revenue. What does it mean? To be able to do that, we need to pay for some lead generation. We need to pay for salespeople. We need to pay for web sales. And we will continue to invest because, in fact, when we look at the core of the core, we know that we are able to grow double digit on those markets. But there are things we didn't do for the last few years. Because when you grow at 20%, 25%, all your energy is focused on, let's go after the growth. And so now that we are facing a new environment, it's the right time to go after efficiencies. So first of all, there are some natural things that are going to happen. When you invest on the platform, you need, in fact, to move your client base from the old platform to the new platform. And while you are doing that, you are double running and the double run as a cost. Thanks to all the investments we made, we know that for the next years, we will cut one by one the double or the triple run we have. I give you an example in France. We are deploying the new platform. So it's not everybody yet on the new platform. You have the old platform, and you have the paper. We know that the paper is going to disappear hopefully in 2026. So we cut one subscale operation. And then moving all our clients to the new platform, we will kill the double run. So it's going to happen on every product line everywhere around the world. So we know that we're going to benefit from that in the coming years. But also there are things that we need to do, and it's time to do it. So I'll give you an example, and Julien talked about it, shared business services. Shared business services for companies like us, it's done everywhere. But we didn't do it. We did it only in Latin America. So now we entered a program of implementation of the shared business services and with the associated efficiencies that we will go after. So to make a long story short, in the plan we put in place in the last few months and, in fact, we started the journey and thinking about it during the summer, the summer is always a good time because you have vacation. So while you swim, you have some sunspots, you can think about efficiencies. So we started our journey during the summer, and we looked at all the drivers we have. So the natural drivers coming from our investments, but also the things we didn't do, and it's time for us to do it. And then, obviously, there are a few efficiencies that we can go after. When you think about our back office. We made a lot of migration on the same system, but sometimes, we didn't do it completely. So we are going to be more radical on that. So it means that in terms of back office tech as well, we will accelerate our rationalization. So to make a long story short, there are a few things that you cannot touch at Edenred. The first one is obviously cybersecurity, scalability of our platform. The second thing is what we call revenue facing. So anything you can -- you need to do in terms of field sales, web sales, telesales, lead generation. But even in lead generation, we are working on it because it's a huge investment for us to fuel the growth. And with the evolution of the artificial intelligence, with the evolution of the marketing technique, there are many things that we will do tomorrow that we don't do today that will create some efficiencies. On top of that, our back offices will be modernized, thanks to shared business services. And finally, we are organized per business line. And so sometimes, we created some, let's say, level of consolidation that are a little bit artificial like in any organization. So another thing that we are doing today is we look at the span and the layers, and we know that we can go after some efficiency on that. I could talk about it for a long time because efficiency is now part of the game. And it's very exciting because it's a new era also for Edenred, growth and efficiency. The second question was the share buyback. Do you want to answer that question, Julien? Or do you want me to do it? I'll let you start.

Yes. So as you know, we launched our first share buyback program in March this year, and this was something new for us. The only share buyback we are doing before is just for the long-term incentive plan of the employees. And what we said is that we're going to do EUR 300 million, and we decided to do that for the next 3 years. Why EUR 300 million at that time? Because when you look at the money we return to our shareholders through dividends, it was 1 year of dividend. And we were considering that it was the right amount of money for our first share buyback program. Now today, as Bertrand shared with you during the presentation, we did 91% of this program as of today, meaning that we did almost EUR 300 million during 2024. And when we look at the share price today, we still consider that we can go with a share buyback program. And we decided to extend the program from EUR 300 million to EUR 600 million to keep on buying shares at a level that we consider being not the right level when we look at the performance of the company and the size of the company today. So the amount that we decided to consider is -- it's the same philosophy as the one we had in March this year. And as Bertrand said, when you look at the capital allocation, we have decided we are keeping our progressive dividend policy. So we will keep on increasing the dividend we pay year after year. And we keep the opportunity to do small M&A when it comes to consolidate some portfolio in some geographies. So taking into consideration all those things, we believe that this EUR 600 million share buyback program is the right size as of today.

To make a long story short, Julien, it's a balanced exercise between the dividend progressive policy, the ability to do bolt-on M&As and to boost the shareholder returns. And it's a Board decision, and it's a balanced one.

And we'll now move on to our next question from Justin Forsythe of UBS.

So a couple of questions from me, if I don't mind. First one on the Italy EBITDA impact, maybe we just hit that in a little bit more detail, to be clear. So we have the EUR 60 million impact for a partial last year, and I think that was EUR 120 million impact for a full year. That's well higher than the 2-point downgrade to EBITDA growth. So I understand you gave at a higher level the puts and takes to get you down to the 10%. But maybe you could just kind of quantify the portion of the offset coming from rebalancing merchant and issuer fees and the portion coming from targeted cost actions to get to that 10% EBITDA growth. And also on that, I think the cap was mentioned to be now implemented later than the initial June 30 date, I think, that you had mentioned. So is that capturing the shift in the proposed change in implementation, the more recent update we had from the government there? And kind of a higher-level strategic question on Fleet actually. It looks like Visa is in the process of rolling out a new fleet card standard called of Fleet 2.0. I was just wondering if you could walk through whether you believe that's a tailwind or a headwind or neutral to your business over the medium term.

Justin, I'm not totally clear on the strategic question. Are you talking -- you are talking of which solution?

Yes. Sorry, the fuel card, just the new Visa fuel card standard, Fleet 2.0.

Yes. Okay. So let's start with the strategy. Yes, it is an opportunity. And by the way, we develop a platform that we will deploy in one country. Don't ask me which one, I'm sure you don't want to destroy value for Edenred, but we develop a platform we were able to integrate, in fact, the new capabilities of the Visa 2.0 on the platform. So do we see that as an opportunity? Absolutely. And to be even more, let's say, general, our job because, in fact, one of the technology that enables, in fact, the development of our business is to integrate payment technologies. We are not a payment technology as such. We are an issuer and an acquirer, and we develop programs. And to accelerate the deployment of the program, we need to make a frictionless and seamless experience for the user. So when you take an Uber cab, you don't know that you pay. But in fact, you paid because it's totally frictionless and seamless. Same thing with the Edenred solutions. And to be able to do that, we need to integrate on our specific purpose payment platform different conduits. So we are very, let's say, expert on the evolution of the payment technologies. So here, you are talking about Visa 2.0, but we could talk also about instant payment and the ability to integrate instant payment on our platform. That's why we have a unified specific purpose factory, and that's why this factory is under the leadership of Damien Périllat, who used to be the head of Google -- sorry, of PayPal in Europe because payment technologies and integration into our business has the best way -- is the best way to deliver a unique customer experience that is frictionless and seamless. So that's for Visa 2.0. Then as to the EBITDA or, let's say, the impact of Italy on EBITDA, remember, we said minimum 12% without Italy, and we are saying minimum 10% with a potential impact of EUR 60 million. It's minimum, so it doesn't mean that it's going to be 10% or 12%. So you have a delta between the two. So your computation saying, "Oh, there is 2 points and the 2 points is not the EUR 60 million," it doesn't work when we say it's a minimum. That's the first thing. The second thing is we will do what we have to do, i.e., if the assumption of the EUR 60 million is the one for 2025, we are ready from an operating revenue growth point of view, but also from a management of our cost base, we are ready to deliver the minimum 10% like-for-like EBITDA growth. Then Justin, you had a third question, which was the second in your rank, Julien. So no, it was only 2 questions. Okay.

Yes, yes. I was just -- sorry, it was just a follow-up on that first point, which was, yes, I think there was an update. I think the cap is meant to be implemented now in September. I think that maybe was a little bit later than the initial time line that you had contemplated in your updated guidance here. So I was just wondering if that was being accounted for in that EUR 60 million impact, which you reiterated here.

Justin, our business is slightly more complex than that because it's a 2-sided business, so you have the issue volume and you have the reimbursement volume. So basically, if it's in August or in September, that's one element of the equation. But the other element of the equation is the reimbursement volume because, here, we are talking of the merchant fees. So the question is the -- when the volume you issue is going to be reimbursed. So you cannot do it like that saying, "Oh, maybe it's slightly longer." So no, it depends also on when the volume that is issued is going to be reimbursed because the cap is on the reimbursement part. To make a long story short, yes, the implementation is slightly later than what we expected. We said, in fact, July or, let's say, H2 2025. So today, it seems that is going to be the 1st of September. But there's still a long way to go because it still needs to be voted. It still needs to be voted at the Senate. So we'll see how it goes, and we are working hard on this. But based on the information we have today, Justin, 1st of September, maybe slightly later than we initially expected. But then you have another variable of adjustment, which is by when the volume is going to be reimbursed. To make a long story short, we are still in a ballpark of EUR 60 million with the information we have today.

[Operator Instructions] We will now move on to our next question from Sabrina Blanc of Bernstein.

Yes. Two questions from my part. The first one is regarding the French evolution of the regulation and with the mess that we have since yesterday night, how do you see things evolving regarding the implementation of the new framework in France? And the second question is regarding the evolution of regulation in Italy. When we -- you are thinking about EUR 60 million potential impact in '25 and EUR 100 million in '26, does that take into account the gradual implementation? I mean that as far as I understand, the new regulation will be for only new contracts and for the renewal. And to finish on the Italy part, do you see potential M&A opportunities in Italy, bolt-on M&A in Italy due to the implementation of this?

Okay. So thank you for your question. As to the French evolution, what do we know? What we know is there was a new Minister appointed a few months ago in charge of many things and, among the many things, the reform in France. The contact the industry had with this person, we have a very positive contact because she received, in fact, the reform coming from our predecessor, and she committed to implement the reform in Q1 2025. So we see that the reform is moving from one hand to another hand or from one new Minister to another Minister. And the dialogue we have with the Minister, the industry is very positive dialogue on the reform that is based on, first of all, end of paper, which is very good for everybody and especially for the merchants because the cost of handling 15 different issuers and tickets versus the cost of digital is -- in terms of administrative cost is much lower. The second thing is the average rate of the industry on digital versus paper is lower. So to answer their needs of efficiency for the merchant and of digitalization is very good. But it's also very good for us. Edenred, the leader of the digital everywhere around the world. The second part of the reform was to forbid the large company to ask issuers like us for discount, which is a very good thing as well for the entire industry. So what we see is the reform was prepared right before the dissolution. It was supposed to be presented to the Parliament and voted. Unfortunately, the dissolution arrived. The new Minister take the reform and said, "I will do it by Q1 2025." Since yesterday night, we have some uncertainty. So we'll see how it goes. But we will do the work with all the players to explain once again 2 things to remember. First of all, it's the preferred social benefit of the French. And everybody around the table, they want to have more Ticket Restaurant, the first thing to remember. The second thing to remember, if there is no reform, we prefer a reform, but if there's no reform, we will continue to grow and to grow massively in France because there's still a lot to do, first of all, on the expansion of the revenue per user, but also in terms of penetration. Even if the French market is more penetrated in SMEs than the Italian market, the penetration is still very low. So that's why -- that's -- that was the first question. The second question was -- I take the second, you take the M&A opportunity.

Yes, yes.

So the second question was the gradual implementation. No, the way it works is every new -- the way we understand, and once again, it's not done yet. It's in the process. But what we understand in Italy, starting September 1, every new contract will be capped at 5% for the merchant, but also the old ones, i.e., everybody will be treated the same. So there is no -- in that sense, as to the merchants, there is no gradual implementation. It's going to be 5% for everybody, all contract, new contract starting September 1. And -- sorry, and it's part of our estimate of the EUR 60 million. So, Julien?

As to the M&A, good question indeed. Today, we don't see opportunities coming from this new reform, but it's something that is quite new. So we'll see if it happens. Knowing that we announced this morning in Italy the closing of the IP deal. So we announced that we were close to this acquisition in February this year. And IP is one of the largest players in Mobility in Italy. They propose Energy cards. And with this acquisition, we will be the #2 on the mobility market in Italy. Knowing that it's a very promising market, we entered the market 2018, and we are growing a lot on this market. So we are very positive with this acquisition. And for us, we will have on top of our fuel card deployments, our ambition is to accompany our clients in the transition to EV. And you know we have Spirii on one hand and this new acquisition on the other hand. And our ambition is to help our clients to manage both combustion engine fleet and EV fleet. And we are very happy to close this deal, and we did it yesterday.

We will now move on to our next question from Andre Juillard of Deutsche Bank.

A few questions from me, if I may. First one about the legal actions you have at the moment in France and Italy, do you have any visibility on what is going on? Second one about the leverage you could target. You have a relatively low leverage at the moment, the financial leverage. You have an A- rating with S&P, and you were saying you are very happy with it. But could you give us some more color about the CapEx level you're planning for the future and the perimeter of the group you can consider? Do you consider that at the moment, there could have some potential disposal in your existing portfolio? And in terms of development, what is the plan at the moment, except that saying that you are more focused on bolt-on acquisitions in terms of leverage? Or could you give us some more color in terms of CapEx charge as well?

Thank you, Andre. I will start with legal and then Julien as to the CapEx and the leverage.

Yes.

Okay. So legal action in Italy, nothing new. As we explained since the beginning, it's a process that will take a certain number of years. So there is nothing new as compared to the last time we took. Let me repeat it again. When I listened to Fabrizio who is in charge of Italy and Fabrizio was not in charge at the time it happens, Fabrizio is absolutely convinced that we will win this case. And once again, if you look at the impact on our business, on Consip 9, we continue to deal with it. And the next Consip, we continue to deal with it as well. They could have the opportunities to stop the relationship with us if they considered that we did something wrong. And they wrote to us saying, "We continue to use you as our supplier and issuer of Ticket Restaurant." So it's going to take time. It's complex. There will be some ups and downs, but we are absolutely convinced that things were done properly.

So regarding the leverage, so as I mentioned during the presentation, at the end of last year, our leverage was 1, EUR 1.1 billion net debt and we did EUR 1.1 billion of EBITDA. And as you mentioned, we are rated A- by S&P knowing that our ambition is to stay a strong investment grade. So we are A- and were BBB+, and this was something that was okay for us. Now when we look at the perimeter of the group, over the last 2 years, we did some acquisitions, 2 of them being strategic ones. Reward Gateway and Spirii are 2 game changers for us, meaning that, thanks to those acquisitions, we have the right features on the platform. And we have all the things to grow, to increase the cross-sell when we are talking of Benefits & Engagement and to come to our clients with everything they need to move from the old mobility to the greener mobility. So when we see that and when we look at the capital allocation, we want to put in place. And when we think about the integration of the acquisitions we did, because we are talking of those 2 strategic acquisitions, but on top of that, we also did the acquisition of IP as I said in Italy. We did the acquisition of RB in Brazil. RB is the leader of the transportation voucher in Brazil. And we also have to manage the integration of our freight business, which is Repom with PagBem, which is another player on the market, and we will be #1 of the freight market in Brazil. When we look at the things we have in our plate and the things we need to manage, we consider that we have many things to do. So as we said during the presentation, we will look at additional acquisition of portfolio like we used to do. We did that over the last 5 to 10 years. When we find opportunities to consolidate the market and to get synergies from those acquisitions, we will do it because it has a huge impact on our operating leverage. When you have new contracts, you move them to our platform, you switch off the old platform, the company you bought, it has a huge impact on our profitability. And then when we think about the leverage we'll have at the end of the year, we did acquisitions this year, as I said, we're going to generate free cash flow, at least 70% of conversion from EBITDA in 2024 to our free cash flow. So our leverage will be slightly above what it was 1 year ago, knowing that we did the share buy back. And I think we are okay with that, and we'll see how it goes with the integration of all the acquisitions we did over the last 18 months.

And other follow-up in the existing portfolio. Any cleaning to consider or you're happy with the actual [indiscernible]?

Andre, indeed, we do cleaning every year. We are reviewing our assets. We look at our operations country per country. And when we see that a solution is not promising in terms of growth or if we think that we cannot penetrate the market, we did that in France, we decided to stop CESU Social, which is a product with low growth opportunity. We divested Cleanway, which was another benefit we had in France last year. And so we are doing that every day, and we consider we have no sacred cow, knowing that when we look at, let's say, the growth we can expect from an asset, we look at it without an EBS, and we are able to take the decision when we believe that growth is not there for some of our assets.

If I can rebound on that, Julien. I'm sure you remember the process we have every year, every year, in July and September. For every activity in every country, we have a complete portfolio review. And we ask this very simple question to our leaders. You are in charge of Edenred in the U.K. What do you want Edenred to be 3 years from now? And how are you going to support the operating growth based on acquisition, but also expansion of the revenue for your clients? And we do that program per program. And as Julien rightly said, we don't have any sacred cow. We are able to look at the growth opportunities on each submarket and some product. And if we say, "Okay, it's not strategic. We don't see enough growth. We are subscale. Or the kind of profitability we can have on that does not make any sense," our job is to focus, focus, focus. When you are an underpenetrated market and where you are growing, what can kill you is not being focused enough. So because we want to be focused, because there's a lot to go after, there is no sacred cow. So you took 2 examples in France, it's not easy, but we have to do it, and we do it every year, and we will continue to do it. The portfolio rationalization is, in fact, hygiene and discipline that will continue year after year. It's like I said to my kids, "You have to brush your teeth twice a day at least, and once a week, you have to cut your nails, clip your nails." It's just part of the game, and there is no discussion about it.

Very clear. Maybe just one thing about the legal action in France. Do you have any news flow? Or are you seeing any pressure there?

No, there is no news flow. In fact, our file is between Cour d'appel and Cour de cassation, so the second instance and the third one. I think if I understand well what Philippe shared with us, in Q1 2025, we should have an answer from the last level, which is called Cour de cassation in France. So more to come, but in 2025. Andre, you disappeared. Next question? I hope you are okay, Andre.

And we will now move on to our next question from Julien Richer of Kepler.

Two quick questions for me, please. You talked about Mobility and Benefits & Engagement, but you did not give additional details on view on your strategy for Corporate Payment, especially following the acquisition of CSI a few years ago? Where it is today? And what is the strategy and your view in terms of the contribution to growth of this division? And the second one, maybe a quick update on the gift voucher season now we are in December, if you have a better view on this season.

Julien, thank you for your question. So first of all, we have to make choices in terms of presentation. We said 2 hours, you have many questions. So we focused on 90% of the business, even if I'm sure you saw that on the first slide where we explained who we are per business line, you also saw that our specific purpose payment factory is a key element. And you also saw the third stack, which is what we call complementary solutions. But so next time, we'll focus more on that. Having said that, what is our strategy on that and especially on CSI? In a nutshell, payment solutions are an enabler of what we are doing. So we are not only a payment company. We integrate payment technologies on our platform to make sure that we deliver a seamless and frictionless experience for the users of our program because there is a moment of payment. And this moment of payment needs to be the coolest one on earth because it's an element that makes the difference versus the competition. So payment is a variety of technologies per country, per continent that we want to master. And we want to master it for the user experience, but also from a cost point of view because when you do, for example, a mobile payment, you have -- if you work with Apple or Google, you have to pay for the tokenization. So are we externalizing that? Are we doing it ourselves? When you are in 3 corner versus 4 corner, in 3 corner, you have some pluses, but you also have the cost. In 4 corner, you are using people like MasterCard or Visa. And so you have more variability, but then you need to pay. And then in terms of agility, it's not exactly the same thing. To make a long story short, the world of the payment is very diverse, very unique per country with different technologies that are evolving a lot. And we want to be the best in understanding those technologies, integrating them, leveraging them, but also make some structural choices to make sure that when we use an external partner, we have some leverage to pay the right price. So payment is absolutely key. Then CSI is part of that in the sense that having CSI in the U.S. is an open window for us to a market that is very innovative from a technological point of view, especially the B2B Corporate Payment. So that's the strategic angle we used to make the acquisition of CSI. As to the performance of CSI, we had very good growth up to 2024. 2024 is not a good year for CSI. So as usual, at Edenred, we don't wait. We try to understand what goes wrong, and we change. For example, there is a new leader at CSI. There is a new CFO. They are reporting to Damian, who arrived, as I said, from Paypal Europe. And we are reinitiating or, let's say, we are investing management time to think about the market to think about our positioning because when we look at the market, we know that there is double-digit growth. And so if we don't do double-digit growth, it's our responsibility to change what needs to be changed. So to make a long story, Julien, payment is up -- is key for Edenred. We are not only a payment company. We are using payment technologies to enable the best customer experience. But also by rightly leveraging that, we can negotiate with some external partner. So that's how we see payment, first thing. The second thing, as to CSI, as explained a few months ago, we are not happy with the performance of CSI in 2024 after many years of double-digit growth. So we change what needs to be changed, and we start with the top management team.

And regarding gift?

Regarding gift.

So regarding gift...

It's too early to say, no?

It's too early to say. We are in the 3rd of December. I don't have all the reports of November. So it's quite early to give you a trend. Maybe just one comment because last year, we did very well. Last year, we had two, let's say, exceptional products. The first one was in Belgium, the purchasing power, let's say, program, and it was a program that was in place only in 2023. And the other things was the welfare product in Italy where welfare, the amount with a tax break has been increased from EUR 258 to EUR 1,000 in September last year. So we had to kind of peak during the last quarter. And this year, the EUR 1,000 have been voted starting the 1st of Jan. So we already have some volumes that are coming from this product since, let's say, Q2 this year. So we'll see how it goes. Too early to say. And for sure, you will have more color on that at the end of the year.

But we know that we have a huge basis of comparison.

Yes, yes, yes. We have a huge basis of comparison.

Okay. So next question.

We will now take our next question from Pravin Gondhale of Barclays.

Firstly, on the normative 11% organic growth that you explained on your -- in the presentation, can you talk about how do you expect that to evolve in coming years given that your take rate being one of the components of that growth is likely to grow slower versus history? And then French regulations, are going [indiscernible] flat in your Q3 update. How do you think the shape of the normative growth will look like in the medium term? And then secondly, on the adjusted capital allocation policy, we suggest that there won't be any big ticket item M&A any time soon. How do you think that will impact your strategy to diversify away from the regulated revenue exposure?

Okay. Pravin, let me answer to the first question. The second question, we'll ask you to ask it again because, really, the communication is not good. But so for the first question as to the normative growth, if I understand correctly, you say, how do you see that evolving, once again, we looked at the last 3 years. We got rid of the M&A, got rid of the hyperinflation in Argentina. We got rid of, in fact, let's say, the total impact of inflation on face value and on interest rates. And we see that the core of the core is 11%. So how do we see that evolving? First of all, face value increase, there is more to come because in many countries, for example, the face value did not increase yet. You saw some face value increase only in 13 countries. So you will see more face value increase. The second thing is you have the legal envelope and then you have the usage. On average, the usage is at 75%. So even if there is no face value increase, we still have 25% to go. And when you think about it, are we going to have some inflation? The answer is yes. The inflation is decreasing, but it will be more inflation than before the COVID crisis. When you think about the geopolitical world, the idea to put some tariffs, there will be higher tariffs with the election of Trump and the conflict between the U.S. and China. And so tariffs, what does it mean? It means inflation. So without the tariff, there will be more inflation than before the COVID. But even with the election of Donald Trump and the rise of, let's say, the fight on the worldwide trade, I think it's going to create even additional inflation. And in parallel, when you look at how, let's say, the value is shared, we have to recognize for millions, millions of employees around the world, the share of the value creation is not that huge. So those people are fighting for their purchasing power, and we are here to help. So to make a long story short, when I look at, let's say, the normative growth on Benefits & Engagement, we know that we will have more face value increase. We know that there's a lot to go after. We also -- with the 75% in terms of then our base what we explained, thanks to Constance, we are a super large platform, 60 million users and, in fact, 1 million corporate clients. So if you look at the potential of upselling, if you look at the potential of cross-selling on top of the NRR, i.e., our ability, thanks to a low level of attrition, to increase the value by 4% every year, we know that those trends will be, in fact, tailwinds. But we will also have some headwinds. The GDP growth, everybody bets on slightly higher in 2025 than 2024. Who knows? We know that we are well diversified geographically. So we know that Latin America will do better than Europe. We also know that the Southern of Europe will do better than France and Germany who are in a political turmoil. So that's the good news about Edenred, different business lines, different programs, essential needs that are served by us, a lot to do on in terms of acquisition, a lot to do on a large base of customers. So how do I see that evolving? We are fighting every day to go after this double-digit operating growth to compensate for macroeconomic factors that will be less favorable in 2025. That's for sure. That's why we don't have the luxury not to be even more efficient on our cost base. Pravin, you had a second question. Just could you help us in a few words?

Yes, sure. So the adjusted capital allocation policy, we suggest that there wouldn't be any big ticket M&A anytime soon. How do you think that will affect the pace of group strategy to diversify away from regulated revenue exposure or reduce the regulated revenue exposure in longer term?

Okay. I start. First of all, regulation is good, regulation is good. There is regulation because there is tax exemption. And because there is tax exemption, everybody wants our product. And by the way, if you look at the conversation we have in France or in Italy, the conversation are never, "We want less." The conversation are, "We want more. And in the more, we want to have a better balance between the merchants and the employer." So it's not we don't want Ticket Restaurant. We want more. And everybody wants more because thanks to the orchestration and the tax exemption, everybody wins, okay? So the price to pay for that is regulation, but regulation is good in itself because it allows tax exemption. And regulation is good because it creates complexity in the management of the funds. That is a huge advantage for the larger player of the industry. So yes, we want more growth. So to have more growth, we go beyond, and we love it. And yes, it diversify the profile risk of Edenred. But please bear in mind that regulation is good for the Meal & Food in terms of barriers to entry and tax exemption, okay? So then how are we going to grow outside that? First of all, on Beyond, we're going to accelerate. And one of the things you have to take into account is the acquisition of Reward Gateway. Reward Gateway is to be able to do Benefits & Engagement. Then everything that we are doing in Energy, so we started with fuel. Now we have Energy, then we have telematics, then we have maintenance, then we have toll payments, then we accelerate on EV charging all the Beyond based on us, but also on this acquisition we are making is accelerating the development of Edenred outside the core Meal & Food that we like very much. So then when you think about the acquisition, is it going to have an impact on our ability to grow Beyond? We said that we're going to focus on -- more focused on bolt-on acquisitions, and bolt-on acquisition can be in Beyond. So the only thing we want to say is do not expect Edenred to do a large acquisition in the coming years, large acquisition that is adjacent to the businesses we have today. And when I say large, taking a huge level of debt or taking some equity. It will not happen in the coming years. We are focused, focused, focused on the strategy we shared with you. Thank you, Pravin. Last question from Hannes.

We will now take our last question from Hannes Leitner of Jefferies.

And I have also 2 questions. The first one is on the guidance for 2025, you gave quite good details, but maybe you can just summarize the expected ballpark of growth you expect by segment. And then in terms of the cost control, is there any headcount reduction associated? You talked a little bit about the shared services. And then the second question is in regards to Italy. Italy seems now quite imminent with basically the votes being in the Senate. Have you started to see some adjustments with existing merchant contracts, which are basically expiring since October? Or have you already seen any counter measurement being taken care of, for example, extending the payouts or other payment terms, which you have more influence of post that CapEx introduction?

Okay. Thank you, Hannes, for your question. So first of all, the guidance 2025 is a guidance on EBITDA, like we did in the past, plus 10% EBITDA like-for-like. What does it mean per product line? It's not the right moment to talk about it. But you see our portfolio, we are growing on the Mobility. We are growing on the Benefits & Engagement. As to the complementary solutions, this year was not a good year, especially due to the basis of comparison versus last year, which was the end of program that were coming from the COVID. But we are working on new, let's say, public -- what we call public social programs. So it will come back, and we discussed about CSI. So I don't expect a profile in 2025 that is very different from what you see in 2024 in terms of growth at the exception of complementary solutions where I would like to see more growth in 2025. So that's for your first question. The second question is headcount reduction. I think there is a misunderstanding here. What we are saying is our level of OpEx is going to continue to increase, but it's going to increase less than what we did in the past. And that was the demonstration of Julien. If you -- if your top line, and it's an illustration, it's not a commitment, if the top line operating revenue is growing at 9% and if your cost base is growing at 7%, then your EBITDA is growing at 12%.

Operating EBITDA.

Sorry, operating EBITDA. So to make a long story short, our OpEx base will continue to grow, but it will not grow everywhere. When we create a business shared center, we will have to adjust, rightsize, and we call that fit for growth. But to make a long story short, it's another trajectory of our cost base, but the cost base will continue to grow. Another element you need to take into account. We have a turnover depending on the functions, depending on the country. We have a turnover that is between 10% and, let's say, 15%. So it means that with the natural turnover, with the growth, those programs can be done in the right way, in an efficient way, but without headcount reduction. Then your third question was about Italy. Do we see some change? The answer is no because, first of all, it's not voted yet. Even if, unfortunately, it's well engaged, which is level 1, I remind everybody that we have another thing that we are working on is we consider that it's illegal to cap a fee on B2B transaction. And by the way, some journalists in Corriere della Sera wrote that a few days ago as well. So we see the -- what's going to happen on this front. But on the first front, it's not voted yet, and nothing has changed. Why? Because if we understand what's going to be voted is you -- it's the new contract or the old one starting September 1 and not before. So it means that everybody is waiting for September 1 because before that, there's nothing you can do. Thank you, Hannes. Okay. So the time is up. Once again, I thank you for the 2 hours you spent with us to discuss about what we achieved in the first years of the Beyond plan, why we think that we enter 2025 stronger, but also the recognition of things have changed, and you never swim twice in the same river. So let's go after the operating revenue growth, let's go after the efficiency of our cost base, let's go for higher shareholder returns, thanks to an amended capital allocation policy. We wish you a very good day, and talk to you soon. Bye-bye.