Pluxee N.V. (PLX) Earnings Call Transcript & Summary

Good morning, and thank you for standing by, and welcome to Pluxee Fiscal Results 2026 Presentation. [Operator Instructions] I advise you that this conference is being recorded. At this time, I would like to hand over the conference to Pauline Bireaud, Head of Investor Relations. Please go ahead, madam.

Good morning, everyone, and thank you for joining us today for Pluxee 2026 results. I'm Pauline, Head of Investor Relations at Pluxee, and I'm pleased to be here with you today to present our full year performance. Today, I'm joined by Aurelien, our CEO; and Stephane, our CFO. Before we begin, let me walk you through today's agenda, which you can see on the next slide. Aurelien will start with the highlights and key figures for fiscal 2026, followed by a review of our strategic initiative and key achievements of the year. Stephan will then take you through our financial results in more detail. Finally, Aurelien even will come back to present the priorities from fiscal 2027 onwards and conclude with our outlook before we open the floor to Q&A. And with that, I will now hand over to Aurelien.

Thank you, Pauline ma'am, and good morning, everyone. Let me start with our financial performance. In fiscal 2026, despite the challenging environment, we delivered ahead of all our financial objectives. Total revenues continued to increase slightly, while recurring EBITDA margin expanded organically by more than 100 basis points and recurring cash conversion reached 70% for the year. This demonstrates our ability to translate operational discipline into tangible results. Our strong commercial execution remains a key pillar of our performance. First, new client wins generated EUR 1.5 billion in annualized business volume ahead of our objective for the year. And second, net retention stood at 99.4%. It was supported by strong client royalties, sales value increases and growing cross-selling, almost offsetting lower end user volumes. All this allowed us to keep funding our development both organically and through additional bolt-on acquisitions, while substantially enhancing shareholder returns, notably through a 71% increase in the proposed dividend per share. Looking ahead, our ambition is clear, position the group for its next phase of profitable growth. To get there, we will focus on a set of strategic priorities to capture revenue momentum, drive further efficiency and scale AI across product tech and data. I will come back to each of them in more detail later. This translates into clear financial objectives, underpinned by sustained growth in employee benefits volume across our markets. First, fiscal 2027 will be a transition year, reflecting an extended rebate scenario triggered by the tax reform as we decided to equalize merchant terms across all our meal and food programs in Brazil. Against this backdrop, we are targeting to deliver at least EUR 440 million of recurring EBITDA and at least 50% recurring cash conversion. Beyond fiscal 2027, we expect to return to profitable growth over the medium term, sustained by steady recurring EBITDA margin expansion and recurring cash conversion back to normalized level. Let's first turn to our key financial figures for fiscal 2026, starting with total revenues, which amounted to EUR 1.3 billion, up 0.7% organically. This is slightly ahead of our objective of stable organic growth despite the regulatory and macroeconomic headwinds that we faced during the fiscal year. Turning to profitability. Recurring EBITDA reached EUR 488 million. The margin rose by plus 101 basis points organically to 37.5%, well ahead of our objective of slight organic margin expansion. Lastly, recurring free cash flow came in at EUR 341 million, representing a recurring cash conversion rate of 70%. This brings our 3-year average to 82%, again, above our objective of around 80%. This gives us the flexibility to keep investing in growth while rewarding our shareholders. And let's look at this on the next slide. Adjusted net profit per share reached EUR 223 million and adjusted basic EPS was up 4.4% year-on-year to EUR 1.58, reflecting both higher adjusted earnings and a portion of the accretive impact of our share buyback. Confident in the structural cash generation of our model, we have decided to significantly raise our payout ratio from 25% to 40%. This translates into a dividend of EUR 0.65 per share, up 71% year-on-year subject to shareholder approval. And this comes on top of the EUR 100 million share buyback program completed in May 2026. Stepping back, let me put this year's performance in the context of what we have delivered since the spin-off. Looking first at the top line, we delivered a 3-year organic CAGR of plus 11.2% in total revenues, driven notably by high single-digit growth in Employee Benefits business volumes. We combine this growth with a significant improvement in profitability. Recurring EBITDA grew at an organic CAGR of plus 17.9% over the period and the margin expanded by around 500 basis points to reach 37.5% in fiscal 2026, reflecting the benefits of scale and the efficiencies captured across the group. This stronger earnings profile translated into substantial cash conversion, with EUR 1.1 billion of recurring free cash flow generated over 3 years and an average recurring cash conversion rate of 82%. This enables us to maintain a strong net cash position as reflected in Standard & Poor's affirmation of our investment-grade rating. Beyond the numbers, let me turn to the progress we've made on our strategic initiatives. In fiscal 2026, we continue to move forward on all fronts, winning more clients, sharpening our value proposition and intensifying on efficiency initiatives. So let's start with new client development on Slide 9. We delivered EUR 1.5 billion in annualized business volumes of new client acquisitions, exceeding our objective of more than EUR 1.3 billion and demonstrating the strength of our commercial execution. This performance was broad-based with all regions and client segments contributing to growth. SME remains a key growth lever, accounting for more than 32% of new client development. This strengthened our conviction in the significant potential of this still underpenetrated segment. Portugal is a good example of how we are broadening our value proposition to win new clients. There, we have progressively evolved from a [ meal card ] provider into a leading multi-benefit platform with more than 18 benefits now available through our Cobee by Pluxee offering. In May, we strengthened this further with a new distribution partnership with SABSEG, one of the largest independent insurance brokers in Portugal with more than 200,000 clients. This partnership opens up access to its large corporate client base and add insurance and savings banks to our available product range. And it is already paying off. Large groups like Adecco are now placing their trust in us with more than 9,000 employees to be progressively onboarded. Winning new clients of our commercial engine. The other half is retaining and developing our existing client base as illustrated on Slide 10. In fiscal 2026, net retention stood at 99.4%. Client loyalty stayed up high across our markets and deepening relationship through further value increases which added EUR 1.1 billion of business volume during the year. And over the past 3 years, the cumulative contribution reached EUR 3.5 billion, EUR 0.5 billion above our objective. And this underscores our ability to advise our clients in preserving the employees purchasing power in the context of persistent inflation. Second, cross-selling has gained traction with a growing number of clients adopting our multi-benefit approach, broadening the range of employee needs that we address and deepening our share of wallet with each client. Together, loyalty, face value increases and cross-selling almost offset lower end user volumes driven by a faster economic macro environment and a softer employment in some countries, especially in Continental Europe. Our commercial performance is also built on an offering that we keep enriching for clients, consumers and merchants as we will see in the next slide. In fiscal 2026, increasingly leveraging on data and AI, we continue to strengthen our value proposition for all our 3 main stakeholders, supporting deeper engagement and creating new avenues for growth. For clients, we further enriched our range of solutions. Our integrated multi-benefit solutions are now available in 20 countries, underpinning the cross-selling momentum as mentioned earlier. For consumers, we are building a unified seamless digital experience that brings all their benefits together, making them easier to activate and use. And this is driving increasingly stronger engagement. In Spain, for example, employee opt-in reached more than 60% across migrated client portfolio. For merchants, we continue to expand the value generated through our ecosystem. Business volumes benefiting small and medium-sized merchants reached EUR 7.8 billion, up plus 36% compared to fiscal 2022. We are also expanding digital solutions to boost their visibility and also traffic to their stores alongside a growing range of complementary services. Beyond these developments, we also made progress on our fourth sustainability commitments, which I will now cover in the next slide. First, responsible business conduct remains fundamental to how we operate with 99% of our employees having completed the required training. Second, on diversity, Women now hold 45% of leadership positions ahead of our 42% target. Lastly, alongside our SME merchant commitments that I have just mentioned, we are well on track on the environment. Our Scope 1 and 2 greenhouse gas emissions are now 62% below fiscal 2017 levels. All this progress is reflected in our ESG rating such as CDP and EcoVadis. To close this section, let's look at the drivers behind the group strong margin expansion. As already mentioned, recurring EBITDA margin increased organically by plus 101 basis points in fiscal 2026. Around 3/4 of this improvement came from operating leverage. Business volume growth, the scalability of our model and synergies from acquisitions allow us to grow with limited additional costs. And second, efficiency by tightening cost discipline and accelerating optimization efforts, both in Brazil and increasingly across the group as we begin adapting our cost base. And with that, I will hand over to Stephane, who will go into this in more detail as he walks you through our financials for fiscal 2026.

Thank you, Aurelien, and good morning, everyone. I will now take you through our fiscal 2026 financial results, starting with our business volume trajectory, a key indicator of Pluxee's underlying commercial momentum on Slide #15. Total business volume issued or BVI reached EUR 26 billion in fiscal '26, up plus 4.5% organically. This positive trend was driven by Employee benefits, which accounted for 79% of total BVI and which grew by plus 7.7% on an organic basis to EUR 20.6 billion in fiscal '26. Organic growth accelerated quarter 11.2% in Q4, providing us with a healthy exit rate as we enter fiscal '27. All 3 regions contributed positively with double-digit growth delivered both in Latin America and rest of the world. Turning to other products and services BVI declined organically by minus 6.1%, down to EUR 5.4 billion, reflecting the expected natural and scale down or phasing of certain public benefit programs in Continental Europe with base effects turning favorable from H2. Overall, excluding nonrecurring impact our steady BVI trajectory throughout the year confirms the strength of our commercial momentum even in a challenging regulatory and macroeconomic context. Focusing a bit more on our main line of service, Employee Benefits. Let's now look at how the growth in BVI was skewed on Page #16. In fiscal '26, Employee Benefit BVI growth was underpinned by, first, new client wins, which remain the primary growth driver, contributing approximately EUR 1.5 billion of additional volumes on an organic basis. Second, net retention had an almost neutral impact over the year. Strong client loyalty and active portfolio management almost fully offset lower end-user volumes in some markets going through a softer macroeconomic environment. Lastly, scope and foreign exchange impact provided an additional positive contribution of approximately EUR 0.4 billion driven by a favorable currency impact from Brazil and Mexico and to a lesser extent by the recent small bolt-on acquisition. This business volume strength from Employee benefits together with those from other products and services translated into total revenues as shown on Slide 17. Total revenues reached EUR 1,302,000,000 in fiscal '26, plus 0.7% organically and plus 1.2% reported slightly ahead of our full year objective. This resilient performance was delivered despite the introduction of the 3.6% cap on merchant fees under the tax reform in Brazil around Q3. As a result, Q4 total revenues stood at EUR 335 million, down minus 4.9% organically compared to minus 3.3% in Q3, reflecting the progressive implementation of the regulatory changes. Looking at two components of total revenues, operating revenue reached EUR 1, 136 million, broadly stable at plus 0.1% organically and plus 1% reported. The performance reflects growing macroeconomic and regulatory context across our markets, which I will detail in a moment. In Q4 revenue amounted to EUR 293 million minus 6.2% organic and minus 3.2% reported. Gross revenue reached EUR 166 million, plus 4.6% organically and plus 2.1% reported, ahead of expectations. Growth was supported by business volume development and ultimately by a slightly increasing investment yield year-on-year. In Q4, gross revenue reached EUR 42 million, up plus 5.1% organically and plus 6.4% reported. Overall, total revenue's resilience reflect a strength of our diversified business model and geographical footprint as business volume growth and gross revenue largely mitigated the regulatory pressure on take-up rate. Let's now look more closely at the underlying trends in operating revenue by line of service on Page 18. As mentioned, operating revenue reached EUR 1, 136 million in fiscal '26, up plus 0.1% organically, reflecting contrasting trends across our 2 lines of service. Employee Benefits operating revenue reached EUR 991 million, up plus 1.7% organically and plus 3% reported. In fiscal '26, solid business volume growth across all regions compensated for the regulatory pressure on the take-up rate in Brazil. Reflecting this, the group's employee benefits take-up rate stood at 4.8%, down minus 30 basis points year-on-year. In Q4, employee benefits operating revenue declined by minus 8.3% organically to EUR 252 million compared with minus 2.6% in Q3, slightly better than our expectation. Other products and services generated EUR 145 million of operating revenue, down minus 9.1% organically and minus 10.6% reported. It reflects the softer momentum in public benefit programs in Continental Europe together with the ongoing business transformation in the U.K. and the U.S. As expected, this line of service returned to growth in Q4, up plus 8.5% organic to EUR 41 million, supported by an easier comparison basis year-on-year. Let's now move to the geographic mix and explore such operating revenue evolved across regions on Slide #19. Indeed, operating revenue performance varied across regions, reflecting a combination of strong commercial momentum and market-specific situations. First, Continental Europe, which now represents 44% of group operating revenue reached EUR 495 million, down minus 3.1% organically and minus 2% reported. The region showed differentiated business momentum across countries, reflecting varying macroeconomic conditions and public sector spending trends. Excluding public benefits, the region was broadly stable at minus 0.3% organically over the year. Second, Latin America, which represents 39% of group operating revenue reached EUR 449 million, up plus 1.1% organically and plus 4.6% reported, including a notably high comparison rate in Q4 '25. This resilient performance was mainly led by better-than-expected H2 '26 dynamics in Brazil due to strong commercial performance and progressive implementation of the tax reform. Excluding this PAT impact in Brazil, Latin America operating revenue would have grown by plus 8.2% organically over the year. Lastly, Rest of the World, which represents 17% of group operating revenue reached EUR 182 million, up plus 6.7% organically and plus 1.1% reported. This reflects strong commercial momentum in Turkey and Asia Pacific, notably in India by the end of fiscal '26. Excluding the U.K. and U.S. where we are refocusing our business operating revenue in the rest of the world would have grown by plus 18.9% organically. After operating revenue, let's give a look at how float revenue growth on Page 20. Float revenue reached EUR 166 million in fiscal '26, plus 4.6% organically and plus 2.1% reported, including EUR 42 million in Q4, up plus 5.1% organically and plus 6.4% reported. This performance was driven by 2 factors: first, a positive volume effect, thanks to continued business volume growth, notably in Latin America and rest of the world. Second, a slightly higher operating investment yield and growth of 6.2%, up plus 20 basis points year-on-year. This was supported by elevated interest rates in Brazil and by the group's disciplined and flexible investment strategy adapted to local market conditions. After business volumes and revenues, let's now see how recurring EBITDA was fueled walking you through the related margin expansion on Slide #21. Once again, in fiscal '26, profitability came in significantly above our initial objective. Recurring EBITDA reached EUR 488 million, up plus 3.8% organically and plus 3.7% reported. Recuring EBITDA margin stood at 37.5% up, plus 101 basis points organically and plus 91 basis points reported versus 36.6% in fiscal '25. On top of the gross margin competition, this margin expansion was mainly driven by the plus 75 basis point organic improvement in recurring operating EBITDA margin plus 28.4% reported. This was supported by continued operating leverage on business volume growth and accelerated efficiency initiative and tighter cost discipline growth in Brazil and progressively across the group in response to the evolving regulatory environment. This performance provides clear evidence of our ability to execute, rapidly adapt our operation and deliver meaningful cost efficiencies. Looking now at how this recurring EBITDA growth translated into the two income statement down to net profit on Page 22. Let's start below the third line disclosing recurring EBITDA where D&A, depreciation and amortization, amounted to EUR 128 million, up from EUR 110 million last year, reflecting the impact of recent acquisition and the commissioning of newly capitalized assets. As a consequence, recurring operating profit or recurring EBIT was stable at EUR 360 million. Other operating income and expenses amounted to minus EUR 65 million versus minus EUR 26 million in fiscal '25. This EUR 40 million increase in OIE cost is the result of additional contingency reserves for our ongoing legal and tax proceedings, impairment charges, and restructuring costs. Consequently, operating profit of EBIT reached EUR 295 million. Financial income and expenses improved to minus EUR 6 million or minus EUR 17 million in fiscal '25, reflecting an increase in non-float related interest income, driven by higher invested cash balances and by sustained interest rates in Brazil and Europe. Income tax expense amounted to EUR 98 million, with an effective tax rate of 33.8% versus 31.4% in fiscal '25. This increase in the ETR was fully due to the non-deductible other operating expenses. As a result, net profit group share reached EUR 170 million, entirely explained by the specific one-offs in other operating expenses recorded below recurring EBITDA. Adjusted net profit group share, which excludes this item, amounted to EUR 223 million and adjusted basic EPS reached EUR 1.58 from EUR 1.52 in fiscal '25, benefiting from a portion of the accretive effect of the share buyback program and subsequent share cancellation. After the income statement, let's review how our operational and financial performance translated into cash generation on slide 23. Recurring free cash flow reached EUR 341 million in fiscal '26, compared to EUR 417 million in fiscal '25, which at the time benefited from favorable working capital variances, notably related to public benefits business volumes. More detail, in fiscal '26, recurring free cash flow was driven by, first, our recurring EBITDA growth and margin expansion. Second, a disciplined investment policy with capital expenditures reaching EUR 99 million, stable year-on-year, and representing 7.6% of total revenues. Third, a positive contribution on change in working capital of plus EUR 72 million, demonstrating disciplined management despite the headwinds on reimbursement terms in Brazil and softer business volume trends in continental Europe, especially related to public benefit programs. As a result, recurring cash conversion reached 70% in fiscal '26, reflecting the high quality of our recurring earnings and bringing the three-year average to 82% above our objective of around 80%. This strong cash generation enabled us to return more value to shareholders in fiscal '26, while still strengthening our sound balance sheet as shown on page 24. The group's net financial cash position stood at EUR 1,241,000,000 as of the end of fiscal '26, up plus EUR 178 million compared to the end of fiscal '25. Our strong recurring free cash flow of EUR 341 million more than covered the cash out, especially the ones related to the fiscal '25 dividends for EUR 76 million, including minority interest, and the EUR 100 million share buyback program completed in May '26. We also benefited from a favorable net currency translation effect of plus EUR 30 million as of fiscal '26, related mainly to the appreciation of the Brazilian real and Mexican peso. This solid financial position, combined with our strong cash generations, gives us full flexibility to keep on investing in our business while continuing to deliver value to our shareholders. With this in mind, I will now hand back to Aurelien, who will take you through our priorities and outlook for fiscal '27.

Thank you, Stephane. Before turning to our strategic priorities, let's take a step back and look at the structural trends shaping our market. Valued at more than EUR 1,000 billion, with a penetration rate below 20%, the employee benefits and engagement market is vast and still largely untapped. It is also evolving quickly, with several mega trends reshaping the world of work and continuing to fuel structural market growth. First, demographic shifts are creating talent shortages, pushing employers to find new ways to attract and retain their people. While AI is gradually transforming the way people work. Second, persistent inflation and interest rate fluctuations reinforce the need to support purchasing power. In addition, climate change raises sustainability expectations both for employers and employees. Talent retention, purchasing power, well-being at work, and sustainability. These are precisely the needs that our solutions address, making them even more relevant for employees across sectors and job categories. At the same time, our competitive and regulatory environment has evolved, requiring us to keep innovating and to adapt quickly, as we are doing in Brazil. This is exactly what our strategic priorities are designed for. Building on the market fundamentals that I have just outlined, we have entered fiscal 2027 with a clear objective, positioning Pluxee for the next phase of profitable growth. In a nutshell, we are stepping up our ambition on 3 fronts. First, capturing growth momentum. We focus our commercial engine where the potential is greatest. Our most attractive offerings and high-potential markets such as India, key European countries, but also Brazil, where the structural volume growth remains significant beyond the rebasing. At the same time, we are doubling down on SMEs by scaling our targeted model across countries and on merchants by making our value proposition even sharper, notably on complementary services. Second, driving further efficiency. In a volatile environment, discipline matters more than ever. We are stepping up our cost optimization efforts, already well underway, with a goal to progressively build a leaner, more agile cost structure fit for our next phase of growth. And third, fostering our product tech and data ecosystem. We are progressively scaling automation and agentic AI, strengthening cyber resilience, and delivering more personalized AI-powered solutions, enabling faster innovation and go-to market. Finally, we will keep seizing target opportunities through both M&A and strategic partnerships wherever they can strengthen our capital. Taken together, these priorities reinforce one another and will make the group more competitive, more agile, and better equipped to seize the opportunities ahead. Let me now turn to how our capital allocation framework is supporting this priority. Our capital allocation framework has always balanced organic investment, M&A, and shareholder returns with a constant focus on value creation and financial discipline. This approach will continue with a few adjustments, starting with, first, organic investment. We now expect annual CapEx to land between 8% and 9% of total revenues to be focused on technology innovation, data, AI, and cybersecurity. As our model evolves, we are also gradually shifting part of these spendings towards cloud and SaaS-based solutions. Second, external growth. As mentioned, we will keep complementing organic investment with targeted acquisitions and partnerships. Each of them will continue to be assessed against strict criteria: strategic fit, value creation, and integration. Third, shareholder returns. As mentioned before, confident in the group's cash generation, we have structurally raised our dividend payout to 40%. Together, these 3 pillars continue to give us the flexibility to invest where we see the strongest returns and seize external opportunities selectively while distributing a greater share of the value we create to our shareholders. Let me now conclude this presentation with our financial sole objectives. From fiscal 2027, we will continue to build on our sustained employee benefit business volumes momentum and on the progressive rollout of our strategic priorities. That said, fiscal year 2027 will remain a transition year, reflecting an extended rebase scenario triggered by the PAT reform in Brazil following the equalization of merchant terms across all our meal and food programs. In this context, we are targeting to deliver at least EUR 440 million of recurring EBITDA at constant foreign currency and scope and at least 50% recurring cash conversion in fiscal 2027. This coming year will be clearly shaped by the significant impact from the Brazil reset in the first semester. While we continue to expect an inflection point from H2, as we will see the initial benefit of the rollout of our strategic priorities flowing through. Beyond fiscal 2027, with the Brazil rebasing behind us and our strategic priorities delivering their full effect, we plan to return to profitable growth over the medium term, supported by steady recurring EBITDA margin organic expansion, and a return to normalized recurring cash conversion. Let me now conclude the presentation before we open the floor to questions. Fiscal 2026 was another year of strong execution in a challenging environment. Beyond fiscal 2027 transition, we are confident in our return to profitable revenue growth, given the structural fundamentals of our market, the growing appeal of our solutions, and the disciplined execution of our strategic priorities. Before we take your question, I would like to sincerely thank our teams around the world. Their loyalty to Pluxee, their commitment to our clients, and their ability to adapt quickly made a real difference and contribute to the confidence that we have in the future. Thank you for your attention. And now Stephane and I are ready to take your questions.

[Operator Instructions] The first question comes from Zachariah Al-Qaryooti with Morgan Stanley.

Two questions from me, please. Firstly, just on the guidance for next year, can you help us bridge the organic EBITDA guidance relative to the 2026 level? So particularly separating the incremental impact from the Brazil regulation, from underlying growth, cost savings that you mentioned, and any other factors that you'd call out. And within that organic decline, how should we think about top-line performance versus the EBITDA margin? And then second question, just again on Brazil. You refer to this extended rebase scenario. What specifically has changed relative to your previous assumptions? How confident are you that that headwind should dissipate by kind of the second half or late 2027? Is there a risk that we'll still be talking about this headwind at the back end of next year?

Stephane, do you want to answer the first question and I'll take the second?

Yes. Regarding your question on how we bridge the guidance of the at least EUR 44 million EBITDA versus what we delivered in 2026 with EUR 488 million, which is a EUR 48 million downside. The biggest impact or the big thing is this rebase and this extended rebase scenario that we currently have in Brazil. During my comment on the organic growth by region for fiscal year '26, I explained what had been the impact in 2026 for these changes happening in Brazil. When you look at it, if you do the math, you will notice that for H2, because for us, the impact started to materialize at the beginning of March, which is the beginning of our second semester, and the overall impact was EUR 30 million. Overall, we have a pricing effect of EUR 30 million hitting us in H2 of fiscal year '26. With the current extended scenario we now have in mind for what is going to happen in fiscal year '26, the impact is going to accelerate in fiscal year '27, and overall it's going to be approximately double the impact that we had in H2 of fiscal year '26. So instead of EUR 30 million over 6 months, which is basically EUR 5 million per month, it's going to ramp up to EUR 11 million or even EUR 12 million at the end of fiscal year '27, per month. This is going to be the impact of the repricing effect. If you have in mind at the end of the reform, an impact close to EUR 12 million per month overall. This is 12 multiplied by 12 months or something close to EUR 140 million, but we already had in fiscal year '26 an impact of EUR 30 million. Meaning that the difference between fiscal year '27 and fiscal year 2026 is going to be 140 less 30 million already recorded in '26, which is approximately EUR 110 million. So meaning that the pricing effect of the reform under our current extended scenario in Brazil is hitting the EBITDA for EUR 110 million. So meaning that this is going to be partly offset by, as you raised it during your question, the business volume growth that we will still have in Brazil because this country is remaining a priority country for us with significant organic growth in terms of business volume. There will be the growth in other countries all around the world. We have all our efficiency measures as they were introduced by Aurelien, that are going to help us to compensate. So overall, this a little bit lower than EUR 50 million hit on the EBITDA comes from a pricing effect of EUR 110 million from Brazil, which is partly offset by the growth, which is still going to be delivered by the group, plus efficiency measures.

To complete, because your answer was covering almost both, as you took with Zach, but maybe to complete regarding the impact of this, the extension. We made the decision a couple of weeks ago. This is already implemented. The impact, it is a full year impact, the extension of our commercial term to our merchants, I mean, for both the PAT program and the food allowance program.

The next question comes from Hannes Leitner with Jefferies.

Maybe just like to double click on Brazil. I have in front of me your November '25 guidance cut, which had from originally high single digit to stable total revenue growth. That was at the time around EUR 80 million or EUR 90 million. Now you reported Brazil with just EUR 30 million. Maybe you can kind of bridge what you just have said in terms of phasing of that repricing with customers and general dynamic. Also, what your expectations are given the President is returning, or is confirmed in his seat. And then the second question, maybe just thinking about the macro comment you gave, could you maybe focus there more, where do you see that? Is that a general employment, unemployment rise and where, in which region, or is this rather more competitive dynamic?

Stephane, do you want to start?

So regarding the difference between the way we guided beginning of our fiscal year '26 and what we end up with in term of impact from the Brazilian reform. Beginning of our fiscal year, and it was even, if you remember, just a few days after our release of fiscal year '25 result that we had this reform announced in Brazil in mid-November. And at the time, and because the reform is a reform that is applicable on the PAT program, we had delivered some guidance regarding a worst-case scenario of hitting only the PAT program. Then it happened that the rollout of this reform, its implementation, came, as we said at the time, with, of course, some challenges for the industry to adapt, to align. And the ramp-up has been indeed, but as we also had shared it, the ramp-up has been slower compared to what was initially targeted, but fully theoretically. And then, we now have this new scenario further to the discussion that we're engaged, further to the way that all the players on the market decided to adapt, that the reform is going to be extended to all programs. But in FY 2026, what happened overall to answer in a few words your question, the ramp-up of the reform has been slower compared to the initial timeline. And again, we draw your attention to the fact that there was an initial timeline, and for us, our ability, the ability for all the players to adapt was very challenging.

Maybe to complement and to give a broader view on what happened in Brazil over the past 12 months now. I think it's worth mentioning that we delivered a very strong performance in business volume. And we are talking about a double-digit growth in terms of the business. This is a combination of the strength of our commercial engine, the success of our multi-benefit strategy as well with the acquisition we made with Benefício Fácil, the integration of our new employee mobility benefits, and also the good contribution of the partnership with Santander. So we are still delivering a very strong performance in BVI growth, even stronger with what we initially expected back in November 2025. Now if I continue just going into more paper detail, but again, I think it's important from an operating standpoint, our [ Pluxee solution ] is now live as we shared with you back to [indiscernible], and it's very well received by the market. We are also currently working with acquirers to accelerate the deployment of our open arrangement scheme. And in the meantime, we keep, as mentioned by Stephane, we keep on exchanging with government to get clarification and to see how we can improve the system with, again, the shared goal to accelerate the benefit program and the adoption by more companies of the system. It could be the PAT or it could be the food allowance. In the meantime, we are also still running our legal actions to seek for clarification. So and indeed, more recently, we made a decision to equalize our commercial terms. Now linking it with your comment on the re-election of Lula, I think this re-election brings even more clarity, or it brings further clarity, at least for the coming months or even the coming years. That's why we embedded this scenario in our fiscal '27 EBITDA guidance. And regarding your second question. No, sorry. There was another question from Hannes regarding the macroeconomic context, and indeed, the fact that we mentioned that it remains uncertain. It's fair to say that when we look at Q4, the continental Europe continued to be tough, and that reflected the combination of macroeconomic factors, but also as mentioned by Stephane, our specific portfolio dynamics and public benefits fading effect. But from a macro standpoint, we continue to see a corporate environment in several markets with clients remaining prudent on hiring, and in some cases, on the employee benefits budget increases. So we are still suffering on Q4 from a reduction of the end user portfolio. This has weighed on our business volume growth in Europe. Having said this, on Q4, we start seeing an acceleration of our BVI growth in Europe, close to high single digits. So that's why we say it's uncertain. We have some good signs on the way, and on the other side, we remain cautious because it's fair to say that the overall geopolitical and macroeconomic environment remains complex.

The next question comes from Estelle Weingrod with JPMorgan.

On Brazil again, how are operations evolving there since May, specifically with the open arrangement schemes? Could you just explain to us the new dynamic with the bank acquirers now participating to the ecosystem in terms of perhaps, I don't know, increased competitiveness? Just to see what may have changed lately. And a second one, you typically provide an element of revenue guidance, which is not the case this year. How should we think about it? Should the operating revenue move in line with EBITDA, or are we looking at a margin rebasing?

Stephane, do you want to answer the second question, and I will answer regarding Brazil.