Lectra SA (LSS) Earnings Call Transcript & Summary

Good morning to you all. Welcome. This meeting will be broadcast online, translated simultaneously into English, and we'll take questions from the room and those who have connected remotely. Welcome to those of you in attendance. We're going to cover a number of topics today. We're going to review evolution of our markets, cover the results of Q4 2025, an update on our balance sheet and free cash flow, tell you about Lectra today, things have changed in great detail. And when you follow us, sometimes we have a past look of Lectra our strategic road map for '26 through '28 and our financial objectives 2026, 2028. So 3 key highlights, macro geopolitical situation, extremely uncertain with news flow created a lot of damage worldwide because one thing that is said on Monday can be contradicted on Tuesday, prompting many reactions, a big wait-and-see attitude. People want to better understand what's happening, which has a negative impact. Secondly, when we look at our results, of course, we're not happy with the result. We'd, of course, prefer to have better results, but we are nevertheless proud. When we look at how Lectra has resisted in this environment, I'm sure you'll agree to say that these results demonstrate the very strong resilience of Lectra. We've also demonstrated our ability to continue to generate strong free cash flow, so we can view the future with confidence, more about that later, and it offers great potential for the future, whatever our plan. Our markets now. The first thing on the fashion market is a rebalancing in terms of subcontracting and production, a very sharp fall in China, an increase in a number of Asian countries, notably Vietnam, pretty much on a par of exports to the U.S. is China today. The big winner of this period and as we see a number of other countries, India, Bangladesh making inroads, a big shift of the market of clothing manufacturing in Asia with a rather strange situation because at the end of this period, only country whose tariffs haven't increased is China with all the discussions that were held. We've come back to the starting point pre-April 2, whereas tariffs have increased up to 30% all the countries up to a few days ago. India, very difficult situation, 60% tariffs brought down to 18% last year and Bangladesh, there's a portion of Bangladesh production to the U.S., which will be free of tariffs, and that was announced a few days ago. We're waiting for the details. We sent an easing in terms of bilateral talks between the U.S. and these countries, but the landscape is shifting. There will be winner and losers and this is shown clearly, we see the drop in China, no change in the tariffs. It's very surprising. When we look at automotive, I should have said, in fact, same situation in fashion. We see after a lot of turmoil, a lot of debate, we're at a level of production and sales on a par with last year, and it's also expected constant next year. So more fear than bad results. Tariffs, 15%. That's 5% higher than previously. [indiscernible] 0%, 5%, 15%, 25%. It's 0 in Mexico's production in our business exported to the U.S. The free trade agreement is being upheld. And the big change in automotive is the massive arrival of Chinese e-vehicles, a fierce price war in China. The Chinese government announced that it wanted to consolidate the market, 120 EV brands in China, government expects that in 3, 5 years' time, that should shrink to 20%. BYD, the #1, has cut its prices 30% to try and force all other car manufacturers to sell off or disappear. So all margins are being squeezed in China, at the same time, they want to export to the rest of Asia and Europe because their markets are now outside China. Moving to furniture. Here again, the market remained broadly stable. Great many question marks because tariffs into the U.S. were strengthened. Transportation cost for furniture is complicated. Generally, we manufacture close to where we sell. The situation is now stable in terms of normal tariffs. And the situation is furniture market that remains sluggish, challenging. People tend to change their furniture when they move. There are fewer house moves so less demand. But at the end of the day, we arrive normally at a demand equivalent in '25 and '24, expected equivalent in '26 in spite of the turmoil markets in terms of production and sales remain very stable. I'm going to hand over to Olivier du Chesnay for the financials.

Thank you, Daniel. Good morning to you also. I'll begin by presenting the key highlights for 2025 and activity and then balance and free cash flow. On the right, you see that when we have the presentation of the amounts for 2024, we use the '24 exchange rate. And for the results of '24, we'll use the '25 rate. When we look at the comparison between the 2, we'll take into account each. The increase can be a variance, but we have to note that the dollar is down versus the euro. All the data on '24 are pro forma data. We added 23 days of launch metrics. So I'll begin by activity on recurring and then nonrecurring and then the P&L. First point is the information published since on the ARR, which is the basis of all our contracts in annual value for subscription. ARR is up 14% on the year 2025, constant exchange rate, 88.9 at the start of the year to 101 when we use the start of the year ForEx. We saw an increase in the final quarter when we look at the numbers when they were reported end of September. The run rate was close to 12%. We ended the year at 14%. So all our offers, be it the new acquisitions of launch metrics, [indiscernible] contributed to that increase, but we also have Valia or Cubic took part and have a growth rate higher than the 14%. When we report our numbers, ARR based on the balance sheet December 31, that's why the is at 97.2, not because we use the balance sheet rate, which is 117. If we stay on recurring revenues in the middle, you have total recurring revenues. Total recurring revenues 2025 accounts for 75% of revenue. This recurring revenue is up 2% and split into 2 parts. On the left, you have the recurring revenue, the recurring contracts. And on the right, you have the consumable and parts. Take the last bar on the left-hand chart. That's the total amount of activity of revenue of contracts, EUR 242.3 million. Within those recurring contracts, you have 5% growth, 5% growth already at the end of September. It was 5% in Q4. Within those recurring contracts, you have 3 types of revenues. The purple, the software SaaS subscriptions for EUR 89 million. That's revenue, which is the transcription of the ARR mentioned previously into revenue with an increase of 14%. Next, you have 2 types of maintenance contracts. Software maintenance contracts that represent EUR 51.1 million that are slightly down. That's pretty logical because now all our software offers, the new ones are SaaS and, then you have maintenance contracts on maintenance -- annual maintenance contract with [indiscernible] renewal. They're up 2% on normative growth is 5%, 6% on maintenance contract. There we have pressure on activity, but we're still up on those equipment maintenance contracts. On the right, you have the second part of recurring revenue, which is the activity of consumable parts. Consumable parts is more subject to our clients' activity, the number of hours that machines are running. We've not seen any positive inflection in Q4 on the activity of consumable parts. We remained at 4% full year. The activity represents 137.7% at 2025 exchange rates in '25. Moving now to nonrecurring. Nonrecurring, we start with the new system orders, the orders of software perpetual equipment and consultants. For 3 quarters, we were pretty much on the same level in value of order intake, about EUR 25 million in Q2, Q3 and Q4. When we compare it to Q4 '24, Q4 '24 was pre-announcement on tariffs. Q1 was also previous to the tariff. And we have a basis of comparison that's higher. 27% drop on the quarter in spite of stability of order intake quarter-on-quarter. Full year was 17% drop in orders. This decrease by geography varies from one quarter to the other. First thing to look at is top right, Asia Pacific. On Asia Pacific, that's where we have the highest decrease in Q4, primarily in China and automotive. So full year, we have a decrease of 26% in Asia Pacific. Asia Pacific, we had Q3 -- Q4 growth in '24, continued to grow into Q1 and it stopped after the tariff announcements. On the other regions, Europe is holding up better, minus 4% in Q1, minus 6% full year. More favorable basis in the U.S., flat in Q4, no rebound yet in America, but stable in Q4. On bottom right, you have the other countries of the world. That's Turkey, Egypt, Morocco. We have 2 different dynamics. Turkey sharply down and Morocco, Egypt are growing. You see that with these results in SPAC. SPAC last year accounted 43% of orders. This year only accounts for 38% of order intake. Still looking at new systems orders by sectoral markets, same items by sectoral market, what you see. The second graph is automotive is sharply down in Q4, minus 52% here again, essentially Asia, minus 30% on the first 12 months of the year. Fashion in the same trend between Q4 and the rest of the year. We lose 1/3 for furniture and other industries essentially that have a somewhat different CapEx cycle. Composite materials in '25, we have 13.8 of order intake. That's double what we had in furniture in '25. Activities, orders, you find these orders on the left on the -- of EUR 119 million, down 17% versus start of the year. And those 17% orders, you have natures that have different cycles. The top, the EUR 7.9 million are the orders, software perpetual licenses. The software perpetual license are decreasing by 1/3 every year. Why? Because we sell all our new software offers in SaaS mode. And then you have a low training and consulting. Over half training and consulting comes from projects that are triggered by SaaS subscription sales as it's following the dynamic of SaaS sales and part of the equipment sales, but equipment sales are down 19%. EUR 119 million of orders will generate over time, nonrecurring revenue, EUR 119 million of orders generated EUR 126.6 million of nonrecurring revenue. Since we have more revenue than orders, it means that we had to delve into the backlog at the start of the year. We end with a backlog that's lower, and we're decreasing nonrecurring revenue of 12%. If we summarize, across the P&L on recurring revenue, we're up 2%. Recurring revenue accounts for 75% of revenue. For nonrecurring revenues, minus 12%, the sum of those 2 numbers, minus 2% revenue, landing at EUR 506.7 million. Next, you have the gross margin. Gross margin in '24, 71.7%, 72.9% in '25. So we managed to up our gross margin. There's a positive mix effect with more recurring with a higher margin. There's also an unfavorable ForEx effect when the dollar slides, it squeezes the margin. So we have a dollar rate that's unfavorable in 2025. But line by line, we grew all our margins across the various product lines in spite of pressure on revenues, we're resisting in terms of gross margin generation. On the right, you have cost control. In the cost, we have fixed and variable costs, the sum of the 2 is slightly up by 2%. Let me remind you, 70% of cost are payroll costs. We increased salaries in '25 2.5% to 3%. We managed to offset part of that inflation through departures and cost savings. Moving down through the P&L. EBITDA goes from EUR 91.4 million last year to EUR 79.7 million this year with an EBITDA margin of 15.7%, income from EUR 48.8 million to EUR 38.2 million, net income at EUR 25.6 million. On net income, we have 2 items to note. Between operating income and net income, we had 2 one-offs. The first relating to New York. We depreciated the rent on future years because of the ideal and a positive tax rate, it's positive. We activated the deferred tax assets of LaunchMetrics, losing money before we acquired them. So we have DTAs that we were able to activate in 2025. If we summarize the P&L., I said starting from EBITDA that was reported in '24, a slight pro forma effect, pro forma 91.1% to 79.7%, 84.4%. We see the strength of the recurring model. The green bar of EUR 11.3 million is the EBITDA contribution of recurring revenue, recurring contract. Generally, the bar next door. Consumables and parts generates a profit here. It's down 4% consumables and parts. We don't have that upside this year. And the green portion offsets in part the decrease in nonrecurring revenues and the growth in fixed costs. When we go from EUR 91.4 million to EUR 79.7 million, that's about EUR 12 million in decrease, EUR 7 million decrease activity and EUR [ 6 ] million that's linked to unfavorable exchange rate. The dollar went to EUR 1.08 last year to EUR 1.13 on average this year. If I end on the P&L, I just mentioned the exchange rate in '26, '28. We're not making any assumptions on where the dollar is going to land. We just take the dollar at the 1st of January 2026. The dollar 1st January '26 is at EUR 1.17. The average for the year was EUR 1.30. When I take up the P&L of '25, convert it every quarter to EUR 1.17, reported revenue of EUR 506.7 becomes EUR 497 million and EBITDA goes from EUR 77 million to EUR 75.2 million. The EBITDA margin to 15.7% to 15.1%, [ 65.2 ] is the starting point for the '26-'28 road map at [ EUR 1.17 ] parity and below regarding equipment orders in '25, we had a higher basis effect in Q1 and Q2, that will be on nonrecurring revenue. Moving to the balance sheet and cash flow. Our balance sheet remains really strong. We've got limited debt, EUR 100 million at the time of the LaunchMetrics acquisition, and we're paying back about EUR 50 million plus interest every year. So the debt is going from EUR 102 million to EUR 86 million. Strong cash flow generation, EUR 57 million. This means our net financial debt is only EUR 21.3 million, and we have EUR 65 million in cash. After buying more minority interest for LaunchMetrics for EUR 20 million and also the remaining minority interest for Planco, the Turkish distributor, and also [indiscernible] activity, we also paid out EUR 50 million in dividends, and therefore, repaid part of our debt. If we look at one of the group's fundamentals, our free cash flow generation remains strong. This year, we generated EUR 57 million in free cash flow before nonrecurring items, EUR 72 million last year, that was a record. EUR 57 million with a declining income and difficult macroeconomic conditions, also generating a drop in working capital requirement, which stands at minus EUR 37.7 million this year, which is typical of our business model. It's also a record in terms of managing our working capital requirement in 2025. When it comes to our share price, we're still under pressure, have been under pressure since the beginning of the year. At the beginning of this week, the share price stood at EUR 23.1 with EBITDA multiples of EUR 1.7. From now, the share price remains stable. And now I'm going to hand over to Daniel to discuss Lectra.

First of all, in 2017, we announced a new strategy for Lectra. The goal was to turn Lectra into a major player for Industry 4.0. Back in the day, everybody wondered what that was all about. We have described this at great length. So I'm not going to belabor the point. Throughout our system, throughout our software packages and all our equipment, we have developed 4 major technologies to support this transition into Industry 4.0: artificial intelligence, big data, IoT in particular, and cloud technology. So we are very comfortable regarding all of those AI-driven technologies. And those technologies have supported the ways in which we have implemented this plan. We accelerated in October. As we saw in October, we fast tracked our efforts over the past 3 years, and these efforts will continue throughout 2026. This strategy is based on 5 different pillars. First of all, a premium offer, a premium positioning. We want to have the most premium position in the market every single time. And also, our strategy is designed for all 3 strategic matters: automotive, furniture and fashion, even though there are products that we develop so that they can be used in other industries as well. So these are our 3 primary market segments. Also, customer centricity. More and more customers are at the heart of what we do. And our ties with customers have grown closer in recent years, and this explains our results today. We have close ties to customers that are in dire straits. And this means we are a preferred partner when customers decide to make investments. So we'll see when the recovery takes place. But having such close ties to customers is a good idea. Also developing new 4.0 services. It's a mixture of artificial intelligence, expertise and data. In other words, we are able to monitor what customers are doing and then provide the analytics and the expertise that customers may be lacking, and this provides significant value added. And lastly, we have a very strong and committed sustainability policy. In the latest sustainability rankings by independent third parties, we are always in the top 5%. Now there are 2 aspects that are going to radically change our environment in the next 3 years. First of all, artificial intelligence. And there are ups and downs. There's positive and negative perception of AI. Maybe our vision of AI is much more pragmatic than that of others because we use it. And we know that it works for us in many regards, and there are things that don't work as well. So we are deploying AI internally for a number of functions. So artificial intelligence is pretty much everywhere in all of our products. Also, we're navigating in a world fraught with increasing uncertainty, therefore, we need a plan that can be adjusted on an ongoing basis. We need to work on the basis of scenarios as opposed to having a deterministic vision of the future. The future is not set in stone. You need to be really, really powerful in order to predict the future. So thinking on the basis of scenarios makes us really strong. There are 3 market segments that are in the midst of vast, fast-changing trends. Markets are shifting in Asia, in particular. A lot of companies, luxury companies, in particular, are shifting their positioning. And this trend is going to continue. In automotive, we're seeing the rise of Chinese-made electric vehicles, which are a major threat to the European industry, and particularly the U.S. industry in the future. Right now, the barriers to entry for Chinese vehicles onto the American market are still very high. It's not just about subsidies -- Chinese subsidies to the Chinese vehicle industry because it takes 3 months for the Chinese to design a new EV, but 3 years in Europe. So the barriers to entry in terms of R&D are pretty strong as well. Also furniture, everybody is expecting recovery in real estate and the recovery in furniture should follow the same trend. So that's a market that we are keeping a close eye on. Now let's drill down on Valia. Valia is our new software platform. We've been marketing that since the beginning of 2025. We already started using it in automotive and furniture, and now we launched it in fashion. It's a very sophisticated platform. We start with customer orders. And it takes us all the way to the cutting room production facilities and also execution of the various production orders. It took 10 years of R&D efforts to develop Valia, and we rolled it out gradually market segment by market segment. And now we have a full system. It's an open platform that it's compatible with any ERP, any CAD system, in any manufacturing system, any customer system. So it's compatible with Lectra and non-Lectra systems. So Valia is a demonstration of what we're doing for Industry 4.0. We address a lot of functions that are currently managed by independent software packages. And this means that in terms of the customers' value chain, they're having a hard time ensuring compatibility between those different systems. So we have an agentic AI approach. We have an expert model for each step of the process and the platform will behave as an expert for that decision-making process. So Valia is a true revolution. It is unmatched on the market. We believe in it 200%. Valia is how we spearhead our strategy on the manufacturing front. Now we have an extensive offering when it comes to the fashion industry based on 5 different pillars. First of all, design, creation. That's our core business. Our first products were CAD products and then manufacturing. We bring together Valia and equipment. And Max can talk to you about that successful combination. And then markets, which is mostly driven by launch metrics, [indiscernible] and rent reviews and also Kubix Link drives our collaboration business, but it does much more than just a product life cycle management system. So we've gained a lot of traction in recent years. And finally, we have a traceability platform with TextileGenesis. If we look at the shift, what is it that makes us strong today compared with the beginning of our strategy? We have operations in 100 countries or so. We have a strong customer base, which has been strengthened by the Gerber acquisition. We doubled our customer base with the Gerber acquisition. So the potential for selling our solutions to all those customers is significant. And we support our customers, and this drives customer success. We have 800 people dedicated to customer success, and we have state-of-the-art technology in every area. Our offer is unique. Very often, it is unmatched on the markets. And lastly, we have a very strong presence in terms of sustainability and compliance because we support our customers on their quest for sustainability, and this includes ethics, material savings and traceability. There are 2 main figures that reflect our policy. Since implementation of our strategy in 2017, our ARR has jumped to over -- to close to EUR 100 million. So these figures demonstrate the success of our strategy over the years. And also, we've positioned ourselves well to address the next 3 years. Now I'm going to hand over to Maximilien. He will tell you a little bit more about our strategic road map.

Thank you, Daniel. Good morning, everyone. Pleasure to see you all again this morning. I look forward to introducing to you our strategic road map for 2026, 2028. Now for those of you attending remotely, you may not have noticed, but I have pinkeye like our dear president, but I'm not going to wear aviator shades, the contrary to you, Mr. [indiscernible]. Lectra has scaled up significantly over the past 3 years. Over the past 10 years, it's consolidated its business plan, its economic model. It has strengthened its new positioning, its new leadership. It's been enriching its offer significantly over the past 10 years. Lectra has supported key customers throughout their transformation process, and it's now seen as a responsible, sustainable player, which are huge fundamentals for the next 3 years. And our fundamentals, our financials are extremely strong. recurring revenue, in particular, 2025, EUR 380 million in recurring revenue. 2016, prior to the launch of the Lectra 4.0 strategy, our total revenue was EUR 260 million. Now EUR 380 million in recurring revenue versus EUR 260 million back then. So a major gain if we look at the next 3 years. So on the basis of all our strengths, we are confident in our ability to handle '26. But we will remain humble. We will continue to implement our strategy methodically, stringently. We will continue to rely on the fundamentals of Industry 4.0. As Daniel recalled, as early as 2017, we stated that cloud technology, Internet of Things, big data and AI would support that new industrial revolution, Industry 4.0. Now those technologies, well, we've been handling them well for decades. We've been using AI since the 1990s, not just for software, but for equipment as well since the year 2000. In terms of Internet of objects, IoT, we've been doing that since 2007. We've had smart equipment then. Remember, back in the day in 2007, the term IoT did not exist. So we know what it's like to toy with data. We know what it's like to use cloud technology. And we know the potential of those technologies. We have to fully materialize it because things shift all the time, but things are well under control. And those technologies have been factored into all our new offers. Industry 4.0 is more than just a vision. It is a reality that is fully coming into its own. So over the next 3 years, we're going to take things up a notch. We're going to go even further. We're going to maximize customer value as we maximize the contribution of all our solutions. We have a portfolio of solutions that are designed to support customers through their transition into Industry 4.0. So 4 different -- rather 3 different priorities. First of all, position Valia at the forefront of the manufacturing offer. Secondly, we want to scale up the Software-as-a-Service business. And third, we want to ratchet things up, and we want to boost operational excellence to accelerate growth. Over the next few minutes, I will review all 3 priorities. Let me start with priority #1. This revolution in production will be driven and scaled up by Valia. It's taken 10 years of R&D to develop Valia. It's more than just a slide or a theory or a concept, it is a reality. Over the past few months, we have raked in 70 customers who now use this revolutionary solution, and we launched it in a number of geographic areas, huge potential with Valia. The manufacturing offer as far as Lectra is concerned, combines equipment, software, Valia now spearheads that, and also related services as symbolized by maintenance contracts and CPs, consumables and pieces. And this is how we generate value for our customers by combining all those offers. So to sell Valia, we're going to rely on our installed base. On this slide, as you can see, on customer premises, we already have 9,000-plus Lectra-connected IoT equipment in operation. This equipment is natively connected to Valia. And we've been marketing them since 2007. It's a huge -- this means huge potential for upselling because if the equipment is connected with Valia already, we are providing much higher value for customers. And also, there's huge potential when it comes to replacing the older generation equipment, 5,000 such equipments. So older Lectra equipment that we sold at the end of the '90s in the beginning of the year 2000, which are not compatible with Industry 4.0 fundamentals, that are not IoT capable and that have to be replaced by the next generation of equipment that we are marketing. And so this means huge efficiency and productivity gains, unmatched material savings as well. And as we announced a couple of months ago, Valia is now compatible with any industrial equipment, whether Lectra equipment or third-party equipment. As you can well imagine, the value that we provide when Valia is combined with the latest Lectra equipment, that value is much bigger than if Valia is combined with older generation equipment or third-party equipment. And this means a virtuous cycle. We're using our installed equipment base to sell Valia, digitize production flows for our customers, to have a single flow that connects with all equipment and Valia can help us demonstrate the difference between the latest Lectra generations and other providers. So it's a virtuous cycle that will strengthen our economic model. So like I said, it's taking 10 years of R&D to develop Valia. And the predecessors include the digital cutting platform, quick flex offer. 700 customers already adopted those predecessors of Valia. Now it makes sense to naturally migrate towards Valia. But well before 2017, we had software solutions for production and preproduction purposes that customers were using. We have 5,000 customers who are using those software packages under contract. So they are active customers, and those solutions will be replaced by Valia. So there's huge potential, both in terms of equipment with Valia software and also related services such as maintenance contracts and CPs. Now getting back to maintenance contracts. We talked about that right here last October, Empower. Empower is the next generation of maintenance contracts. Those maintenance contracts are absolutely unique on the market. It's underrepresented globally. It's a contract that guarantees availability of Lectra equipment. In other words, our maintenance contracts meant an obligation to repair the equipment. Now we ensure results, and we do whatever it takes to make sure the outcomes are achieved. This is unique. And we capitalized on 15 years of IoT expertise. We're capitalizing on our model where we support our customers remotely. We're able to troubleshoot malfunctions remotely in 90% of cases. We -- out of 10 calls for help, we send out a technician only once. And our customers serve as our best ambassadors when it comes to our manufacturing offer for all 3 strategic sectors: automotive, apparel and furniture. This slide shows a number of verbatims from our customers. This is how they use our offers. Now the common denominator between all 4 verbatims is that our customers understand the value provided by our solutions: related services, equipment and software. The value this means to perform better, transform their services, gain -- generate competitiveness and productivity gains. MAS is a leading player, but we're also working with Tesca in automotive. They are a European leader when it comes to automotive. And also in the furniture segment, we have 2 examples here, including Gamma. So here's a video from HCOM, an American company, one of our customers, and it reflects exactly what we've been doing over the past 10 years, both in terms of transforming our model, unlocking synergies, thanks to the synergies, thanks to the acquisitions that we've made, including Gerber. So HCOM is a long-standing customer of Gerber. They used to use Gerber software and equipment. And 2 years ago, they knocked on our door and said, "I want to increase my capabilities. I want new equipment." and this is what we did for them. we explained to them the value of our manufacturing offer for furniture. It's call funiture on deman. It's a combination of Valia in furniture and Lectra and Gerber in equipment. let's see what value this means for the customer. [Presentation]

So that testimonial summarizes the full value we can bring when Valia teams up with Lectra or Gerber equipment. Second priority is to accelerate the growth of SaaS adoption in our model for recurring, profitable, sustainable growth. Our goal is clear, to accelerate the adoption of all SaaS solutions in our portfolio on our installed base, maximize the number of solutions used per customer. We're going to review our commercial go-to-market model, the way the sales, marketing, customer success teams work together to facilitate sales, upsell and cross-sell. We're going to work far more on data. We have huge amounts of data stemming from our solutions, loads of data that came from other solutions ERPs, EMS, we can create unique values by combining all these data and providing new services. In fashion, we have an extended fashion offering, create, manufacturing market, collaboration, traceability. It's unique. No other company has such an extended offering on the fashion market with such a footprint. Our job is to connect all the fashion players around the products, the same date, the brands, the subcontractors or suppliers. SaaS is a reality. It's no longer a theory. It's no longer a buzzword shown on slides. It's epitomized by the amount of ARR close on EUR 100 million of ARR December 31. The flagship solutions mentioned by Daniel have reached maturity. We're no longer of the proof-of-concept stage. We have a maturity across these solutions, TextileGenesis with one of the customers who felt about the value. TextileGenesis is a traceability solution for fashion products. We look at the top 200 fashion brands, 140 have now opted for traceability solution. The 60% -- 80% use TextileGenesis. We have a huge untapped potential. Dido for launch metrics, the flagship solutions of markets to support the go-to-market strategies of our customers, be it for Valia, also a customer testimonial here for furniture. Our Kubix Link collaborative fashion platform aggregates all product. It's far more than a PLM. As Daniel said, it's a solution that allows us to design, create, go to market our products. I'm going to show you the testimonial of [indiscernible], one of our customers. They have quite a few stores in France telling them what Kubix Link brings to the table. [Presentation]

So these testimonials not just PLM, KubixLink come from an acquisition in 2018. KubixLab, a small start-up back then that tried to disrupt the PLM market as it known a few years ago. Kubix Link was still a challenger today on the market. It's KubixLink that is setting the tempo and it's the bedrock of our development strategy in fashion around data and collaboration within the fashion ecosystem. And the Final priority is to reach a new level in terms of operational excellence. We have very strong base. Lectra is recognized as a solid player, rigorous in terms of operational excellence. We're going to go further, improve performance, efficiency and promote the take-up of all the SaaS solutions, several initiatives that we've launched. The first is to define common processes throughout the group, including all recent acquisitions on financial, commercial, marketing, customers some more processes. This is an effort that's already underway. We're going to reach new synergy levers that we couldn't have one single way of talking to the customer and is aligned as one with the customer, not appear as a company. Lectra launched metrics Genesis being common underlying. Second major initiative is focused on SaaS. We're going to redesign SaaS-related processes by drawing inspiration from best practices in the group, launch metrics born in SaaS, representing, as Olivier said, half of ARR of the group that grew through acquisition, reaching new levers of operational excellence. We're going to profit from that to apply new SaaS processes in the group. We can accompany and serve our customers today. It's not a problem with the EUR 100 million in ARR and the dozen coming. It's going to prepare us to absorb twice that amount in the coming years. And then simplify the offer portfolio by phasing out nonstrategic activities. That's about EUR 20 million in revenue. These were activities mainly related to old nonconnected equipment, not compatible with Industry 4.0, taking time and resources. So we focus resources on high added value. We initiated that in the previous road map, that nonstrategic activity was the order of EUR 25 billion. It's slowly declining, and we'll continue to do so. This improvement in operational efficient internally will allow us to grow our investments to go further, better serve our customers, be more relevant. We're going to continue to invest in R&D, the equivalent of 12% of our revenue every year in R&D and accelerate the integration of AI and big data in office to better know how our customers use our solutions and how to create new products. We'll also accelerate the renewal of generations of equipment. Following the acquisition of Gerber. We preserved Gerber Lectra equipment. We began to unify that portfolio. We'll continue to launch new equipment generations, which will replace Lectra and Gerber equipment far more efficient based on Industry 4.0, more profitable using the Lectra tech platform with better margin. We're going to invest heavily in our information system over the next 3 years. That will be around EUR 10 million per annum in CapEx for our new ERP to be rolled out and also change our CRM solutions linked to the CRM ecosystem, bring new solutions to our customers' success team. Final point, as Daniel said, is to put in place more AI capabilities to automate low value-added repetitive tasks, streamline processes and free up more time for high value-added missions pragmatically with obvious return on investment. We're not, as other company doing, just putting in place AI for the sake of saying we're doing that. We want those tools to serve our customers and our teams. So as you can see, this road map for the next 3 years aims at building a model for Lectra that will be better, more efficient of higher performance and more profitable over time. We have 2 very -- 3 very clear priorities. Our campus, if I were to summarize, the potential is there. The offers are there. We have everything it takes to succeed in this new chapter of our transformation, and I'll let Daniel conclude for the end of the presentation.

Thank you, Max. So one slide that replaces the guidance, which tells you very clearly how we view things. In fact, we have 2 parts in our activity, a part where we have very considerable visibility another part where we have no visibility whatsoever. What we've decided to do is to give identifiers on everything that's under our control. ARR for SaaS, we expect to have an ARR that will increase 15% per year over the next 3 years. As you see, we achieved 14% in 2025. So it's a realistic objective. The higher ARR gets, the more difficult it is, but we think that target is realistic given the solutions we have today. That will lead to an increase of contracts of recurring contracts of 5% to 8%, depending on the growth of ARR and on growth of maintenance contracts that we hope will return to normal speed in '25, 2% instead of 6% because of bankruptcies and cancellations because customers were short of cash. We don't expect that to last forever. So 5% and 8% yearly growth over time and continued cost optimization. We increased our cost by 2% on average in the past 2 years. But it hides the fact that we've considerably cut costs on our traditional equipment, equipment, maintenance optimize hugely and invested in SaaS, both for R&D services and commercially. We transformed our teams. We transformed our model with a total that has remained broadly constant and will remain constant, but with resources that are focused on issues for tomorrow. And we have teams that are geared up to support growth on SaaS and to continue to drive our activity on equipment and on equipment. The biggest engine for those savings and cost optimization. The most recent the stock of equipment, the few of the technicians we set out, we can process remotely. As Max said, 90% of problems that arrive at a cost, we send out a technician 1 in every 10 times. Previously, it was 50% of the time we had to take -- send a technician that is that our technicians are being sent out 5x fewer. So it's high cost optimization. We have integration of Lectra, but to pull costs we have teams that can address both ranges simultaneously. That has generated considerable equipment savings. Gerber synergies we presented in October in 2024. That was over EUR 36 million. The EUR 36 million of synergies were invested or spent on SaaS solutions for tomorrow. We've saved and spent more with a total that's well nice stable. It gives us considerable strength to address the future. We'll continue to extend cost optimization throughout that period. Lastly, when we look at what it leads to, we expect an increase of EBITDA margin of between 120 to 180 basis points, all other things being equal, if there's no rebound on the equipment and with exchange rates the same as those factored in at the start of the year. But mechanically, the growth of our recurring business and cost optimization will lead to an EBITDA margin increase of 120 to 180 basis points, not taking into account equipment rebound, which would be added upside on those numbers. We look at one of the major Lectra ratio, security ratios, all costs covered by the recurring contracts business and consumables, the margin generated by the activity. Today, we're at 96%. When we start the year, 90% of our costs are already covered by recurring business. Our ambition is to increase that security ratio by 2 to 3 points a year to exceed 100% so that 100% of costs are covered by recurring revenue. Those are the 2 targets, whatever the cycle and a possible rebound of equipment that will be added upside. Over and above that, we will continue a targeted acquisition policy. We have several companies we're interested in. The issue is valuation. These companies are valuated far too highly by their current shareholders either because they're private equity, and they compare that with the valuation of the last round 2 or 3 years ago, the principle, I invested EUR 100, I must sell at EUR 300. They say, we're prepared to be reasonable, let's say, EUR 200, but we say no, our valuation is EUR 60. We have some way to go. A number of companies we've met are interesting. We have a team that screens the start-ups or midsized companies that complete our offer, and they meet about 100 companies a year. And Max and I meet with some 15 that are interesting, but there's no match on the valuation, but there is a fit in terms of the interest and synergy with Lectra. And lastly, we'll continue our dividend payout, 50% of net income. In fact, 40% of net income restated because we have a portion that's linked to previous acquisition, but we refer to reflect it by saying 50% payout ratio. The objectives are summarized here. So part of our activity, 75% recurring where we have visibility today. These are numbers that we control well. We control the costs on this portion, 120 to 180 bps on EBITDA margin, we're very comfortable for the equipment. We don't know. Depending on the day, we wake up and say, tomorrow morning, it's going to bounce back. And then there's negative announcement, positive announcement. If you ask the question on Monday, I'd say we're far more optimistic; on Tuesday, I'll say we're more pessimistic. We don't have a crystal ball, but maybe there's something that plays in our favor. After a while, people get used to that, they're beginning to look at things pragmatically and say, what am I going to do now the situation is clear. It's something that over time is set to improve because now in every country, people have visibility, clarity on tariffs, customer relations, which will make them more comfortable because there'll be less uncertainty.

Now the 3 of us are on hand, should you have any questions. Now for those of you attending remotely, feel free to ask questions. We have our Investor Relations team who will relay the questions to us. Feel free to ask questions in English or French. They will be translated into French for us, and the answers will be translated into English for your benefit.

When it comes to synergies with Gerber, a lot has been done already. The design machine market is quite sluggish at the moment. But do you have a unified platform?

Well, based on our estimates, the synergies come to over EUR 40 million a year. And the main source of synergies is the fact that there's cross-selling potential. We can also sell SaaS software packages to Gerber customers. And also, we've streamlined equipment, and we're selling more and more Lectra branded equipment. Our U.S. customers of Gerber, they see -- they can see the difference of they're switching to Lectra equipment for which the profit margin is much higher. And also, there are synergies when it comes to costs, we've been able to optimize all of these services teams. So over EUR 40 million synergies in 2025. So -- and we've used that money to invest into SaaS. And this is why we are well positioned when it comes to SaaS. So we are replacing 2 ranges of products by just one. Of course, it will take time, migrating the installed base in terms of sales support and that's important. And the second aspect, when it comes to the future, we only have a single R&D plan. So whenever we develop a product, it covers both installed bases, whereas in the few years that followed the Gerber acquisition, it took a lot of work, ensuring interoperability between the 2 ranges of products. Now whenever we design a new product, we develop it just once, and it applies to both installed bases. So this means untapped potential in terms of synergies.

I have a question regarding EBITDA. When you said that you intend to increased the ratio from 120 to 180 countries. That means you're planning to increase EBITDA from 17% to 20% in 2028.

At the moment, we stand at 15.1% looking at the ForEx on December 31. So yes, this does mean over 20% in 2028.

[indiscernible] I have 3 questions. First of all, Valia, the adoption or conversion rate, what do you anticipate by 2028? And also in your guidance, do you also consider penetration of the installed non-Lectra equipment base? Second question, when it comes to, Valia, but also the other SaaS offers, do you intend to revisit the sales organization? Have you taken initiatives already to that effect? Yes or no? And third question, regarding launch metrics. This is probably your software package that has the most exposure to generative AI. So what are your solutions?

Let me take the first question regarding Valia. As we said before, we have about 70 customers that currently use Valia for production purposes. And Valia is their only process workflow when it comes to Lectra equipment, whether Lectra or Gerber or any other third-party equipment. So there are no limits when it comes to our ability to ensure operability with non-Lectra equipment. So if we look at the number of products that have been processed by Valia, the more equipment we connect, the higher the subscription rate and the more value we create for the entire customer production process. So as I tried to explain before, there's a lot of potential when it comes to helping our customers migrate towards Valia. We had fewer than 10 such Valia customers. We announced a disruptive revolutionary solution at a time when a lot of customers had already finalize their budgets and see the pace of growth in just a few months. We have customers that are already using Valia's predecessors, and we need to support them as they migrate towards Valia and also our installed base needs support migrating to Valia. Now from a sales point of view, from the point of view of go-to-market, I'm talking about sales, marketing and customer success teams, they need to work together because they are increasingly specialized solution by solution. In other words, each customer has a contact person. But then we have presales and customer success teams that specialize offer by offer, product by product because it's more relevant to work this way. We're able to better showcase the value we provide and so we can better support our customers and their users when it comes to the new solutions that they embrace. So that's a shift. It's a group-wide shift, and this affects legacy Lectra equipment, but everything we're doing with Gerber, [indiscernible] and launch metrics. So we present a united front when dealing with customers. And who are our discussion partners, the C-suite level individuals, COOs, CEOs such as the [ EdCom ] CEO. So we need to speak the same language with our customers. And it doesn't matter who the person is, what they specialize in, what their job is. So we initiated that transformation last year, and we will fast track it even more in the coming years. And could you please remind me what your third question was? Launch metrics, yes. Now ARR grew by 9% over the first 9 months of the year, rather over 12 months. And that remained unchanged, 9% growth in ARR over 12 months. And the total increase in ARR is 12%. So we're seeing a 9% growth rate. And this means that the other solutions are performing even better. Do the math. So there's huge potential for adopting these new solutions. And Generative AI is not a technology that scares us because we've already integrated it into Lauchmetrics and other offers. It's great for generating graphs and images and visuals and -- but it needs to be based on data that should be understandable for this type of AI. And that's what Lauchmetrics does. It analyzes everything that's happening in terms of social media, all of the paper, all of the press clippings so as to be able to provide insights to customers so that they can better manage marketing investments [indiscernible] shows the value provided by Lauchmetrics to those brands. Just because some brands aren't doing too well, it doesn't mean they stop investing. On the contrary, it's the right time for them to transform themselves and the solutions we provide in our portfolio are the drivers behind that transformation.

I have 3 questions. First of all, a follow-up question to the previous one. You talked about your road map. Have you tried quantifying over the next 3 years, the proposed penetration rate of Valia for your installed base, we're talking 9,000 or so machines? Also the growth in profit margin. Is it mostly driven by your SaaS offers? Or is there continuous efforts in terms of reducing costs and labor costs and also M&A? On the M&A front, anything you're targeting over the next few years? Is it mostly SaaS in the short term? Or are you going to target technology building blocks rather? And also, you talked about market cap being too high. Could you give us KPIs? What's the threshold beyond which an acquisition is too expensive for you to agree to make it?

We are confident when it comes to our growth -- our projected growth between 2026 and 2028. Maybe this doesn't answer your question, but we are convinced of the value Valia provides. And over 2026, 2028, it's hard to quantify. The scenarios are based on the pace of buy-in by our customers. If we get back to what we said in October regarding fashion, we had 17 customers and a few more in furniture and automotive. So we almost doubled the number of customers in Q4. This time, Q4 is very encouraging because the pace of buy-in is much faster than expected, but things are still difficult because we're looking at every information system. A lot of factors involved. So it's hard for us to estimate the pace of adoption. So if we compare Valia with its predecessors, the growth in ARR in 2025 was 31%, which is pretty palatable already. I mean the figures aren't huge, but 31% is nothing to sneeze at. So are we able to quantify? We'd rather not say at this point because the range of assumptions is extremely broad. Things can go really well. They're going well now. We've gained traction on the market already, but we can't possibly know what the future holds. When it comes to your question on EBITDA, yes, clearly, one factor is our SaaS business, the fact that we're developing because for most of the solutions, we've achieved critical [indiscernible]. And that's when we generate an extra EUR 100 in revenue, we have between EUR 60 and EUR 80 that go into EBITDA. So critical size, critical mass is an important factor. In other words, mature companies such as Launchmetrics have developed their EBITDA much more as opposed to a growing software companies such as TextileGenesis. So the growth EBITDA mix is improving. So when you add up EBITDA and increase in ARR, this exceeds 40%, at least for mature lines, TextileGenesis, [indiscernible] and Launchmetrics in 2028. That's our compass. When it comes to costs, and this is in line with recent years, there's a source of savings, the synergies between Lectra and Gerber and those synergies will continue to materialize. I'm talking about maintenance, of course, but also equipment. And also, we will optimize costs across the board. This is something that we're keeping a close eye on. So more and more synergies will emerge as we design products that apply to both Gerber and Lectra equipment. We also have specialized teams vertical by vertical, solution by solution. And more and more, we lie at the heart of our customer strategies. And so our customers, they want to meet with our top regional heads. Max, Javier, myself, they only want to talk to the top people. So we organize meetings, and this is how we get the ball rolling. And very often, in our meetings, we meet with several members of the Executive Board, and we have strategic discussions. That wasn't the case several years ago, not necessarily. And this encourages us to continue as [indiscernible] in our customer strategies. Now when it comes to SaaS, usually, the ROI for customers is 24 hours. It is 24 hours for the customer to generate ROI. And just 24 hours, they generate more money than the cost they paid. And that means a lot. When it comes to Launchmetrics, we use it to optimize marketing budgets which is the lead expense item for all luxury and fashion brands. And now we're able to quantify ROI by using Launchmetrics. The marketing budget is much big used in the past. People try to optimize what they were doing. Now they get to optimize their costs. And this means they need less money to -- for the same scope of activities. They're able to better optimize their marketing budgets. And this is how they improve their operational ratios. In 2025, we had the lowest churn rate for Launchmetrics than its entire history. And this shows how much value we generate for customers. Now I'll let Max answer regarding acquisitions.

We will pursue the same strategy as since 2017, we target mostly start-up companies in the [indiscernible] universe with key Industry 4.0 technologies, IoT, big data, AI, et cetera. So we're looking for start-up companies that can support, supplement and enrich our product portfolio. In fashion, we have a pretty extensive offer, design, manufacturing, marketing, traceability, et cetera. So what we want to supplement is coverage of our customers' process -- manufacturing processes. Now 2 years ago, we could have said that the market cap was in line with the market. So 10, maybe 15x ARR. Today, multiples range between 4x and 6x. It depends on how healthy the company is. It's not me saying that is the market. And obviously, we don't want to pay too much for companies simply because they've added AI to their pitch because there's a difference between dreams and reality. So we are extremely cautious. We tread carefully. We really want to create value for our customers and also for our teams because we're bringing specific expertise and also we want to generate value for our shareholders. And we're not going to make an acquisition if we don't take all 3 boxes. If we look at our track record, first of all, the Gerber acquisition went off without a hitch. The figures show that. Customers as well, we lost pretty much a 0 customer. And we've held on to all the teams we wanted. The only people who left the group were hired by the private equity group to ensure the turnaround. So we consolidated our teams. We shored up our customer base, and we generated a lot of synergies. And if we look at our 2 key acquisitions over the past 3 years, TextileGenesis and Launchmetrics. TextileGenesis improved penetration when it comes to traceability and sustainability, which are highly sensitive aspects, 80% market share for the top brands. If we look at the entire traceability market, over 60%. And the rest of the competition, they have to share what's left. So we've gained a leadership position that's very strong over the past 3 years. And also the pricing system depends on the volumes that transit through the platform. And this will naturally increase over the next 3 years simply based on existing customers without even factoring in new customers. At the moment, there are 4 billion products. So by product, I mean a particular piece of apparel for a given colorway for a given size. So 4 billion products transited through the platform and 23,000 companies are logged into the platform, and we charge textile manufacturers and brands. So on both sides of the -- on the other side of the spectrum. And in the middle, access is free because we wanted to create a community. Eventually, we will build. But at the moment, we have 23,000 companies that use TextileGenesis as a platform every day. And some of our customers go through our platform for 100% of their offers. So we know what that brings. When we bought TextileGenesis, a lot of people -- I remember we paid EUR 30 million for this company, whose ARR was only EUR 1 million and a lot of people had questions about that. But we -- that was a sound move. We've proved Launchmetrics, EBITDA was negative, negative double-digit EBITDA. And now it's plus 20%, up from minus 20%. See, we've really focused on profitability and growth remains significant. So our target was 10%. We generated 9% growth considering the circumstances is pretty good in terms of ARR. So we're able to -- we've been able to combine that growth with an improvement in profitability. When it comes to our latest acquisitions, we have proven our ability to make acquisitions that generate value for Lectra. Now we bought a small company in the past, Kubix Lab, a team of 4 people, 0 revenue when we bought them, and now it's a linchpin of our offer. And at the time, we paid EUR 8 million for it. So compared with today's ARR, yes, we're talking 0.0-something percent of the ARR. So we tread very carefully. In this type of situation, I understand that some of you may be scared and -- but we'll never prioritize our egos or let our dreams get away from us. Launchmetrics, we talked for 2 years. We did our due diligence. It was our top target out of 200 companies that we screened, and we continued discussions until we felt ready we felt confident that the agreement would be favorable to us.

So I think we'll be very prudent, very cautious today. We have situations. I think the valuations will align at some point. We have the 2 factors, private equity saying, I want to multiply my initial investment, but life is no longer like that. And then we have founders pitch, I've got AI in there. So it's more -- in terms of AI, we know it better than they do. So we can separate the speech from the reality and very often the words exceed the reality. Yes. I just got a question too clearly on this [ Kubix ] upstream will feed into Valia downstream for product. Launchmetrics, how is it going to fit into the grail would be to integrate everything, right? That's what we're working on with the customer. To give you an example, when our customers design collection, they no longer start with design. They start by analyzing the market to who they're going to sell at what price. What's the breadth, the depth of their. We're no longer the day where fashion is driven by style. Fashion is now driven by the go-to-market, and that's where we have our offer with net Launchmetrics that comes into play this ability to understand what the trends are, how brand can position itself, set itself apart from the competition, what price through what channel we'll sell it. That's how we set up these collection plants, how we produce the garments in the right quantity. I see with Kubix and Valia, but how is it going to happen? How is it going to be sold, invoiced? We have solutions by circle, [indiscernible]. They each have the critical persona, the model. The business model is very often business-driven product process, quantity, the peers were monitoring. And at the end of the day, all the value linked to the product transits via Kubix Link, be it in the market, creation, manufacture or traceability. We have customers who've already integrated Kubix Link and Launchmetrics. As I said last time, customers have included the samples of Launchmetrics, the analysis by Launchmetrics on the trends, product categories, various level breadth and depth of collections and Kubix mix, that's active and available. We're going to go further. How to combine everyone? Today, they use one solution, one platform. We want them to work around the same data with the same language, and that's possible with Kubix Link. It's a collaborative platform. We rates all the product data where they come from Lectra or non-Lectra solutions. Take another example, as Daniel said, we have over 20,000 23 actors in the fashion supply chain. In textile genesis, they declare who they are, their audit certificate, their production capacity. We retrieve that automatically in Kubix Link. We don't need to ask our customers to enter that data. We link it to the manufacturing production [indiscernible], company was involved at such time for such product. For tomorrow's product, it's additional insight to know what player could be the best place to produce the product that will be in your wardrobe in a few months. So that integration is largely already present. In the next 3 years, we plan to step up that integration. It will create value. And as Max said, we have a pricing scheme that's based on usage, the value added that we produce the outcome and not the number of users. Most of our solutions, number of users is unlimited because we realize that the more we have people who use our solutions, there's more the flow that transits and the more money we get, we're paid in proportion to the flows. Next question. Yes, we've got a number of questions that have already been answered. I see one on ARR growth. Do you think it might be even higher in 2026? 15%. We said our ambition is to achieve 15% average growth per year over the next 3 years. Of course, the higher the nominal base is higher, the higher that percentage will be there. We strong believers in that. We've launched solutions, Valia, TextileGenesis, which will nurture this potential growth of ARR. As Daniel said in his conclusion that 15% number may seem ambitious, but it's realistic. And we can think that there are pretty mature solutions where we control growth at Launchmetrics, we are at 9%. If it's not so good, it will be 8%. If it goes well, it will be 12% or even 14%, but we're not going to exceed those types of numbers given maturity on Valia, it's very open. We don't know if the growth will be 10%, 20%, 50% per year? We'll see that gradually. The 15% seems to us to be realistic. Our goal is to be at 15% or north of 15% as a target for the next 3 years. There's a question on Launchmetrics and this 9% performance. How do you explain it? It's viewed as an adverse performance. And what are the prospects in terms of top line growth and EBITDA growth. The target was 10%; with today's troubled times, 9%. I don't think it's subpar performance. I think it's good performance. Launchmetrics, EBITDA is above budget. If I remain on a rule north of 40 some of EBITDA plus ARR is above what we set by way of a target for 2025. We upped EBITDA more than expected with ARR growth. It's 1 percentage point below because we better optimize costs and pulled all the items. When we look at the large luxury companies, we're talking about an ARR in hundreds of thousands of euros. And for the mega players, it's between EUR 1 million and EUR 5 million per annum, and there hasn't been any churn on those solutions. So there's very great confidence of the luxury market. And the most challenging market is at the beginning. There were other targets such as the fashion press that's faring less well and where we have no development today. But when we look at customers who initially are Lectra in fashion and luxury, the growth rate is higher for all those reasons, we're very confident. What's more we believe that it's not an adverse performance. It's performance that's quite honorable compared to the situation. Just to return on the orders front, which is your daily concern. One day, you're optimistic, the next less so. When I look at Q4 there's a degree of stability in the U.S. Europe is flat and Asia is down. So in the year, there was a real reversal in the 3 areas. How do you view all that? The lead indicators and the fact that adoption in the U.S., it's perhaps stronger. And you mentioned that in China, it was difficult with automotive and reduced number of manufacturers. What can we have by way of onboarded information on the latest trends? What can we project your reasoning in scenarios just to assist us? Well, firstly, when we look at the Americas, we tend to think the United States, our #1 center for us is Mexico. Even our U.S. customers manufacture essentially in Mexico. So the revenues in Mexico. Very often, the Trump administration talks about manufacturing in the U.S., U.S. brands. There's big confusions. Most U.S. brands manufacture in Mexico, perhaps more Europeans in the U.S., but we confuse the fact that the brand is American. Our #1 manufacturing center is Mexico. The greatest problem was all the [indiscernible]. Is the NAFTA deal going to continue or not? Today, it's in place. There's a June 30 review clause that's what worries people. If it's adopted in the agreement maintained, we should return to normal. The potential is there and things will grow. That's for automotive. Fashion in the U.S., there's practically 2% of fashion items sold in the U.S. made in the U.S., practically 0, but Mexico or Central America, there'll be manufacturers who are in the same situation as automotive with favorable tariffs. So in the U.S. and in the Americas, there are 2 positives, stability in tariffs and an exemption for many products in Mexico and a ramp-up of other markets in the figures of Olivier, aeronautics, military, security, a whole slew of things that are promising business is highly developed in the U.S. So today, we have reasons to be more optimistic on the rebound in the U.S. that isn't at all driven by the situation we had in '25. In Europe, well, the fears were unfounded, a fashion company. I'll cover the 2 main markets, fashion, European fashion exports 20%, 30% to the U.S. Tariffs are up 5%. That's 1.5% of growth margin. You have to divide by 2 because it's on the transfer price and not the sale price to the end user, real impact less than 1%. So unfounded fears. We're back to normal in Europe on fashion. So it's really the mindset and confidence in the future that's at play because the situation is rather good today. In automotive, it's more strained. European manufacturers are under pressure. The Chinese are arriving. For Lectra, if we have a Chinese customer with a plant in Europe, it's not very different from the European customer with a plant in China, European markets. It's not European brands. It's those who manufacture in Europe. Trends are stable as we've seen, there are those who need to change, change strategy and produce differently as they continued now with product development cycles of 3 years and manufacturing systems that date back 20 years, we have Chinese brands that are at the cutting edge. What can create positive effect is the new effect. New Chinese industries will have to gear up and equip. Our competitors don't have presence in Europe. So we're favorite in the Chinese ecosystem in Europe. And then our historic clients in automotive in Europe need to change. So in Europe and Americas, we could see a return to normal rapidly, barring any upheaval. In Asia, it's more challenging. The country that's benefited the most of late is China. We were at the same tariff rate on the eve of the Trump announcement, and we need obviously to read the rooms of the messages, not the impression that we have at face value for the press releases, there are companies that are being favored. April 2 announcement, the Indians felt they were in favor, limited tariffs and then 50% penalty slapped on them for buying Russian oil. And now officially, they're no longer buying Russian oil. But I have my doubts. I was in India a fortnight ago, even the officials weren't aware of that, but they're going to stop buying Russian oil. And so tariffs have gone from 60% down to 18%, 18%. They're the most favored nation in Asia. So that's creating a lot of turmoil. When I take Indian clients, they've gone, okay, now our hour has arrived in April, are we going to be able to pay the wages next month? So we can think that, that situation will stabilize. And one of the advantages for us when we look at the glass half full or empty is that we're far stronger in countries that are favored by the new tariff deals in terms of market share and strong in India, Sri Lanka, Bangladesh and stronger than China in Vietnam. So all that will play in our favor because the shift in the market, if it plays out, that's where the most advanced [indiscernible] about MAS, MAS has 23 plants and over 100 Lectra equipment. So European players with Lectra cultures when he has 4. The mammoth players that have 100, 150 piece of equipment amongst the only ones who didn't stop investing during the period. We look at these companies present everywhere. Well, they do natural hedging because they produce in many countries. It takes them time to shift. They've better distributed or shifted production for the U.S., for Europe and Asia. So optimize the tariffs. So they'll emerge winners. There'll be market consolidation, very strong in Asia for fashion. So there are a number of things that are positive that lead us to hope for this rebound that will occur in places, Europe, United States and certain Asian countries where we're far stronger. So if I look at things going forward, I'm optimistic. If I look in terms of timing and maybe a comment additionally, 100 announcements made by Trump, 0 were implemented as announced. To know what's happening, you have to go on the custom side, read the implementation orders, and they're very different. Sometimes they bear no relationship whatsoever to the press releases and announcements. So all that is under control. We've understood the impact before the others. Everyone were taking the statements at face value. China is the only country in the world that hasn't seen its tariff increase. It doesn't sound natural. The advantage factually is that the countries favored by the new situations are countries where we have far higher market shares and a far stronger presence in the customer. So it makes me optimistic. Obviously, we refuse to make forecast. We just had 2 pieces of good news on India Bangladesh, far from negligible important countries that's going to relaunch investments. We can have further news tomorrow.

Aleksander Peterc, Bernstein. Just a couple of questions. One just a detail. When I look at your Valia offer, you say that it's kind of agnostic equipment. What's the percentage of non-Lectra that you're connected? Is it marginal? It's important priority? And second about your guidance when you say that we keep what we can model ARR there. We're seeing very good growth, okay. But on the nonrecurring side, when you say that the scenario today have no visibility, so it's flat. Is the situation where it can decline further or we reach the bottom, we don't know how long it's going to last?

First one for Max.

We announced that compatibility only a few weeks ago. End of October, we just announced it. We came out from that announcement in China. So we're really at the beginning of that shift amongst the 70, about 10 customers with non-Lectra equipment connected. It's a small percentage. If we look at the potential, you'll see that we have 9,000 Lectra equipments, natively IoT and 5,000 non-IoT compatible and the others, there's thousands, dozens of thousands after that for us. It's going to be a quest to not only connect those pieces of equipment, explain to our customers how by replacing those equipment with new Lectra generation, they'll be more efficient and reduce their cost. That's the past for us.

Now the ratio is currently very low, but will increase quickly. The great thing for customers is they only have a single workflow of data and equipment. At the moment, they're specializing their workflows based on the type of equipment. This is why I mean it's a true revolution. You need to change your process and your mindset. So we are confident and our customers are very excited. And we know we will phase it in, but there's huge potential. Now based on the initial implementations of Valia, initial figures show even though we can't really mainstream, the materials gains has increased by 50% as opposed to cutters that are not Valia equipped. And this means customers recoup their subscription costs very quickly. So -- and the time it takes to develop the product is divided by 5. You can make a decision only one week ahead of time instead of 5 weeks ahead of time. And you can fulfill orders very quickly. And the true value generated by Valia is about everything else. Customers realize they're going to make money off Valia, but the real benefits materialize later. In terms of equipment, this is not a scenario, let's be specific. We have a calculation. We have an assumption if the number of equipment and systems is the same as before. If we bear in mind inflation, this is what we end up with. And we let customers decide what they want to do because we don't have a crystal ball. We can't possibly make forecasts. We'll see what happens. Can things be worse? Of course, in absolute terms, say there's a war that breaks out. You don't know what's going to happen when Trump threatened to invade Greenland and called Europeans enemies of the U.S., and we thought we were long-standing France. Yes, things can get difficult. There's a war in the Middle East. Yes, there can be an impact. If the -- if the war between Ukraine and Russia comes to an end, this could actually be good for us. We don't know what the future holds. We are all hands on deck. And we're seeing minus 19% for equipment in 2025. It's not good, but at least it's not minus 50%. Remember, overnight from -- when we went from March to April, we lost 70% of our equipment orders. And now it's only minus 20%. So barring a major development, it's not going to be worse, but things could actually be much better, but it takes a while before customers assimilate the news and change their budgets. So I'm very optimistic when it comes to the next 3 years. If good news materialize in April, but it takes until September before customers assimilate the news. We may have to wait an extra year. So we're not sure about the phasing. We firmly believe there's going to be a recovery. We just don't know when and how big that recovery is going to be. And we refuse to make forecast because [indiscernible]. Any questions? Any other questions? If you have to leave, we totally understand. I have a question regarding the dollar. What happens if the dollar continues to go down lower than 1.17. Well, we hedge 100% of our balance sheet, but not future flows every time we give information based on dollar parity because there can be a potential impact on the conversion of dollar-denominated figures into euros. So if we look at the management report for every EUR 0.05 in terms of the dollar going up or down, the impact on revenues is EUR 1 million and the impact on EBITDA is EUR 4 million. So when there are wide dollar fluctuations, there can be a huge impact when it comes to the competitive landscape, a number of competition of dollar-denominated business, and we need to look at the sale price. But otherwise, no major changes when it comes to our policies. And this brings me to the next and final question. The competitive landscape. How is the competition positioning themselves relative to you, relative to your performance? Maybe we should start with equipment because usually when we get that kind of question, it's usually about equipment first. We have small customers across the world, but they're very small. Our main competitors come from China. In China, there's one big player called [indiscernible]. They're held by a company called [indiscernible]. They're a listed company. And [indiscernible] made that acquisition, [indiscernible], which was #3 back in the day, the #3 provider of cutting equipment. That was a German company. So [indiscernible] is a very strong company. They're an industry player. They're fully capable of improving their unit costs spectacularly. And now they're #1 when it comes to sewing machines. And in China, they're very strong because they use their network of sewing machine distributors. So they sell quality products, but they provide 0 services. And also, they're not good with software. That's their weak point. So what really matters when it comes to equipment nowadays is the onboard software. Now when it comes to China, we have between 30 and 40 smaller competitors. Max, and I attended the Shanghai Trade Show on March 6. I've been going there for years. And 2 years ago, there were 40 competitors represented there. This year, 40 as well, but 20 of them are new. Because there were 20 new ones because they came in and replaced 20 companies that went belly up. So if you take the average value of EUR 60,000, multiply that by 50, we're talking EUR 3 million at 30% margin, there's EUR 1 million in margin. If they sell EUR 100 million, that's EUR 2 million in margin. With this, they pay production, R&D services sales teams. There's no way they can survive very long. So the downside is that these competitors are driving prices down because customers are thinking maybe it's better to pay for just 1/3. It will get the job done. We'll see what happens in a few years. But in a few years, because there's 0 maintenance on the machine, productivity goes down because -- the equipment looks great on day one for the demo, but performance deteriorates very much over the years. And as a result, all those smaller players are unlikely to survive. Maybe 2 or 3 of them will have longer lifespans, but I'm telling you, a lot of them are going to go belly up because market conditions are tougher and tougher. So in 2 years' time, chances are over 50% of them will have disappeared. So the competition in China is exacerbated because those companies are so desperate. They're willing to give the product for free for a whole year because they made the products, and they can't seem to be able to sell them. And the prices are so low, they make no sense, and that's how they hope to survive. And there's no way they will survive. I gave you the figures. I can't see why any company can survive. I mean, it takes us EUR 12 million to develop a new cutting machine. And in total, they spend EUR 300,000 a year, no way. There's such a strong disconnect. There's no way they can make it. Now maybe a lot of customers will decide, okay, well, that kind of equipment is good enough, it will get the job done. Well, at this rate, just use manual pair of scissors, it will get the job done, too. Now customers have seen the difference in terms of profitability and productivity. And they see the difference between Lectra cutting machines and the competitors' products. I mean, look at the textile savings. You use much less material. It's day and night in terms of productivity gains. And that is why [indiscernible] like I said, they are our top competitors in China. And of course, somebody had to take second place. But as far as the others are concerned, we don't see them as any kind of threat because they basically self-distruct. It's a price war, and they're fighting over the same customers. On the software side, just to wrap up, now create, and that's our core business. It's been our core business since 1983, 1984 pretty much. We've been #1 when it comes to computer-aided design, and we're very strong in the European market, thanks to the Lectra software. Gerber was #1 in the U.S. So we are very strong in the U.S. as well. And so our market share is difficult to estimate, but probably above 65% in Europe and in the U.S. Why? We don't look at our global market share. We only look at customers. When it comes to premium brands and luxury brands, we're closer to 80%, 90% market share. But if you look at the entire market, we still have a very strong position as opposed to Asia, where our position is weak because customers bought locally produced software, which was much cheaper. So much for design, for creation. Like I said, in Asia, we're not the preferred player because the economy there is different. But in the U.S. and in Europe, we are very strong. When it comes to automotive production, global market share, over 2/3 when it comes to textile coating machines and about 50% for leather, over 2/3 for airbags, our market share is very significant. And in [indiscernible] competition, they're sharing the rest of the pie amongst themselves. Things can always shift, but I think we are very comfortable. If we look at markets, there is no equivalent to Launchmetrics. We are very strongly positioned. And we've talked about TextileGenesis. We have vast market share when it comes to traceability. Our competitors are start-up companies to receive funding from private equity, and this scares a lot of major luxury players because they don't know how sustainable this is. So we are the preferred player. And Kubix Link, just to wrap up, we've seen the impact of the latest publications by [indiscernible]. As you know, I'm not a fan of their financial disclosures. I said that many times. I mean, always having to read the footnotes. But if you look at what they said about the product, it doesn't work at all. It will work initially because it changed the management structure, great. But I don't know where that is. The thing is customers made their decisions on December 31, not a year later. So if you look at their disclosures, at least in Europe, we secured 60% of contracts. It was 1 in 10 against [indiscernible]. We would win in 10% of the time 5 years ago, now 60% of the time. Now Prada, Burberry, they use the biggest PLM systems in existence, particularly in the luxury segment, and we have customers that are extremely satisfied with our products. So we're starting to grow in the U.S. We're very well established in Europe. But we're starting in the U.S., and we have 0 presence in Asia. But in the meantime, we only have one major customer, and that customer is losing steam for various reasons. Their technology has aged and their sales methods can work short term, but cannot establish a strong long-standing relationship with customers. So we feel really good about the competition. Our #1 problem is the macroeconomic environment. It's not the competition. Needless to say that macroeconomic environment, particularly when it comes to equipment sold in Asia, Asian customers prefer cheaper solutions because if you're running out of cash, is it better to have a cutting system or no cutting system? This means that we may lose contracts to smaller, low-cost competitors, but not because of the technology. Our technology is much better. Okay. This brings the Q&A session to an end. If you would like to talk some more, come and see us directly. Thank you so much for attending today's session, whether you're here in person or logged in online. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]