Quadient S.A. (QDT) Earnings Call Transcript & Summary

Hello, and welcome to the Quadient Business Process Automation Education Session. My name is Jess, and I will be your coordinator for today's event. Please note that this conference is being recorded. [Operator Instructions] I will now hand you over to your host, Geoffrey Godet, CEO of Quadient, to begin today's call.

Thank you. Moving to Slide 1. So good evening and good afternoon to all of you. As you know, I am Geoffrey Godet, CEO of Quadient. So thank you very much for joining our second Education Session that is dedicated to Quadient's Business Process Automation activity. As you know, as part of our Back to Growth strategy, Quadient moved away from holding of independent businesses in order to become an integrated company with a simplified, focused and synergistic offering of Software and Smart Hardware solutions. In order for its shareholders, analysts and investors to further discover these solutions, we are hosting now a series of Education Sessions, each dedicated to one of Quadient's main solutions. So today, we will be talking about our Business Process Automation activity. I am joined on this call by Alyna Wnukowsky, Chief Solution Officer for BPA.

Hello. It's a pleasure to be with you.

[indiscernible] Alyna. So throughout this call, I will be referring to the presentation that will be -- that you -- can be downloaded from our website. Note that we will not provide with you any trading updates on the BPA activity or the company overall during this call. The purpose of the Education Session is to allow our audience to further discover each of our main 4 solutions and further expand on the publicly available information for the benefit of all. So please refer to the press release related to our first half 2020 results and third quarter 2020 [ sale ] to get the latest financial information about Quadient's performance. So moving to start, to Slide 3 and starting with the agenda. I will briefly introduce Quadient and more specifically, the Software ecosystem, end markets in which BPA, Business Process Automation, operates and where our offers are positioned. Alyna will then take a deep dive into our Business Process Automation solution in order to allow you to have a clear understanding of what we do for our customers. Lastly, I will come back for the conclusion. And after that, I will be happy to take your questions with Alyna and the rest of the team. Moving to Slide 5. I will imagine that most of you on today's call already know us, but I wanted to remind you of a few things about Quadient. Firstly, Quadient has an extensive base of 500,000 customers in the geographies we operate and built on a highly efficient go-to-market organization, powered again by a strong sales team and also an indirect sales network of more than 100 partners and dealers worldwide. Secondly, Quadient has a very strong R&D capability with a team now of more than 750 engineers, working on the development on new, innovative Smart Hardware product, but also Software modules and solutions, obviously for the benefit of our customers. And that is a significant source of synergies across our organization. Moving to Slide 6. As you can see, Quadient has a global footprint as we commercialize our solution in more than 90 countries. North America is obviously our first region, representing now more than 1/2 of 2019 revenues for our Major Operations segment, while main European countries contributed to over 40%. Slide 8. So before we jump into the details of our BPA activity, let's spend a few minutes reviewing Quadient Software solution. When we defined our Back to Growth strategy, the goal was to progressively reposition our portfolio by building a stable businesses with high-growth and leading-market position potential. So in addition to the Smart Hardware solution, it was obvious for Quadient that we needed to focus on helping our customers drive digital transformation. This is a natural shift from physical to multichannel communications. In today's world, communication between a company and their customers are no longer limited to physical paper, they must be digital and available across all devices and is a key enabler for the delivery of exceptional customer experience and, in particular, also digital experience. This is the reason why we have focused on innovating our award-winning customer communication management solution, or also known as CCM, if we use acronym, into the customer experience market and the strategy, for which we have outlined in detail during our last Education Session. So linked to the CCM market is output management. What is it? It is the ability to take content from any business application and automatically distribute it to the various channels, print, PDF, e-mail, et cetera. As we look at the content that gets distributed, a good portion is related to invoices or correspondence related to payments. This is why CXM; CCM; accounts receivable, AR; and account payables, AP are adjacent markets and considered as part of one landscape from our perspective. They are connected. The processes related to creating invoices, personalizing them and distributing them automatically and in an efficient manner drive the overall customer experience. You will note there are many players that sit in more than one market. These players have started in one of these categories and have, organically, and in some cases, inorganically, moved from one market to another. Some notable examples include, obviously, publicly traded companies like Bill.com, UnifiedPost or even Esker. So finally, our customers and industry analysts see this landscape as tightly integrated markets. The landscape as a whole is growing and represents significant opportunities for Quadient as a business. Moving to Slide 9. So here, we see how we have focused our Software solution to deliver on the digital transformation opportunity represented by these 4 markets. Our last Education Session reviewed Quadient's Inspire platform, and Alyna will present our solution for output management, account receivable and account payables. You can see the close adjacency of Quadient Inspire and Impress platforms and how they are further augmented with YayPay accounts receivable solution. And our Neotouch activity further, obviously, complements this portfolio with account payable solution. Just a couple of weeks ago, IDC, as you know, published a report covering CCM and how the market has evolved in the last few years. In particular, they highlight that the most common use cases for CCM include customer correspondence for 39% of those communications, marketing materials for 37% of those communications and statements and invoices for 36%. This further highlights why CXM, CCM, AR and AP are part of the same landscape for us. Moving to Slide 10. This IDC report, which is available complimentary on our own website, highlights Quadient's performance and leadership position compared to other traditional CCM players in the market. The report includes both CCM players, such as OpenText as well as CXM, AR and AP players like Esker in its CCM market mapping, showing that the market delivered around 10% Software revenue CAGR in the past 2 years, and with Quadient capturing around 25% of the market growth during the same period, outpacing all of other players. This overperformance is a result of our -- obviously, continued effort of our team; I think their proven expertise; obviously, innovation is part of our strong commitment in terms of product; customer success because you have to onboard the customers in a well manner; and the application, obviously, of our disciplined go-to-market strategies, which obviously we will discuss in further detail in the coming few slides. Moving to Slide 11. Looking at the evolution of our CCM market share from 2017 now to 2019, you can see that Quadient outperformed, by far, every other player. Our efficient go-to-market strategy and developed synergies for our Software solutions enabled us to focus on delivering features and solutions that allow our customers to address a wide range of customer communication-related challenges. So based on the 2019 CCM software revenue, Quadient ranked #2 worldwide with a market share in excess of 13%, quickly catching up rapidly on OpenText and being about twice bigger than the #3 player. This represents a major achievement for Quadient and our teams. Moving to Slide 12. You may be asking why CXM is related to today's Education Session on Business Process Automation. It is critical to understand how BPA was created and where it started. Back in 2012, Quadient made the acquisition of GMC, a Swiss-based company generating roughly EUR 43 million of revenue at the time and mostly serving the print service providers, but with a great software that allowed them to optimize the management of print output. This was the defining entry point into the Software business for Quadient. Shortly after the acquisition, we realized the potential of this technology and that it could be expanded to other markets, and in particular, to large enterprise, and this is what we presented during our last CXM Education Session; and to SMBs, and that is what Alyna will present to you today. So we invested in both segments and adapted the technology and our respective go-to market. And from EUR 43 million in 2012, this allowed the company to reach EUR 203 million of revenue in 2019, of which EUR 140 million are for CXM and EUR 63 million are related for BPA, which is the purpose of our presentation today. On this base, we keep on refining our obviously know-how on products. And in 2020, we acquired and launched Quadient Impress and that Alyna -- that Alyna, sorry, will detail a little bit in a few minutes. Moving to Slide 13. When you look under the hood of Quadient Impress, what do you see? So we see the same core components and similar modules as Quadient Inspire. Both software applications have been created from the same roots, same platform and are designed to meet specific customer needs. Inspire is dedicated to the large enterprise, while Impress is dedicated to the small and midsized businesses. Quadient has one R&D team, reusing a proven architecture and technology stack from Quadient Inspire. It is what is allowing us to deliver an enterprise-grade software platform for our small and midsized customers with Quadient Impress. These customers automatically benefit from high availability, scalability, load balancing, multitenancy,and all the certifications related to quality control. We estimate roughly today that at least 60% of the code is shared between Inspire and Impress. And as we look at the synergies, we save the significant time to market, and we save several hundred years of [indiscernible]. Moving to Slide 14. So this strategy, obviously, has allowed Quadient to generate EUR 203 million of software revenue in 2019, growing roughly around 14.5%. As explained, our 2 software solutions address the same customer needs, each for a different type of customers, CXM for the mid- to large enterprise and BPA for the small to medium-size customers. And both solutions benefit from the reuse of the same IP and shared R&D. In addition, we obviously commercialized both solutions in conjunction with our smart hardware solution for print delivery to provide our customers with multichannel communication, both digital and physical, both of them. So finally, both solutions benefit from strong growth market drivers. As we all have experienced that it's more and more important for customers to digitalize their internal business processes and automate them and also to differentiate themselves against the competition by providing a much better end user digital experience. Moving to Slide 15. Very briefly, you can see here how we have focused our CXM and BPA activity by segmenting the respective go to market, while benefiting from common verticals and geographic synergies. So from a customer standpoint, CXM offering is targeting the mid- to large enterprise segment, while our BPA business is concentrated on the small to medium-sized market. And this allow Quadient to address different customer needs and thus, different decision-makers. With regards to our geographic footprint, we focus BPA operation on Quadient's major geography, meaning, in particular, North America and the main European countries, both with direct and indirect channels, while CXM has a more global footprint today with operation also into other European countries, Asia and Latin America. In terms of verticals, we focus on verticals that are close to our existing small and mid-sized customer base from other business lines. So for instance, government, business services, manufacturing property management, banks, insurance companies. And obviously, many of them being common to both BPA and CXM. So after that brief introduction, this concludes what I wanted to share with you about Quadient today and my overview of our software solution. I am now handing over to Alyna to present our Business Process Automation activity. Alyna?

Thank you, Geoffrey. Good evening, and good afternoon, everyone. It's really a great pleasure for me to be here and to have the possibility to go into more depths of our Business Process Automation activity. And let's move to Slide 17. Let me start here with an overview. Business Process Automation generated revenue of EUR 63 million in 2019, which is an increase of 18.8% year-over-year. The growth was mainly driven by our SaaS business model that is also represented in the more than 80% recurring revenue that BPA presents today. We strongly focus, Geoffery has said, our activity in Europe and North America. And we have more than 5,000 customers. They are 70% shared with our installed base for our Mail-Related Solutions. Moving to Slide 18. Let me explain what we do for our customers. We are bringing Business Process Automation to SMBs with enterprise-grade quality based on the platform synergies that we have with our CXM business line, and based on the go-to-market synergies that we have with our MRS business line. We make sure that our customers can operate in a better way, because we allow humans to focus on high-value tasks, so to spend more time on what matters most for their business instead of administrating manual tasks. We do this by building and delivering solutions that eliminate and streamline manual tasks and therefore, give them time to concentrate on what is the core of their business, so make them more competitive and improve their customers' and employee satisfaction. Hereby, we focus on business communications and cash cycle management processes. And during the presentation, I will give more examples of how these are linked together. Moving to Slide 19. Let's now understand the challenges of our customers together. SMBs, and though they are lagging a bit behind large businesses, face the same challenges that are actually drivers for automation. Government regulations, such as the European digitalization agenda, requiring digital invoices -- by requiring digital invoices by many European government entities by the end of the year or the Loi de Finances in France that even digitalizes every invoice that the business sends to another business in 2023. Then there is increasing customer demand for digital formats. And there are increased competitive pressures that demand increased efficiency and lower costs that can be achieved through streamlined back office automation. Security concerns and compliance mandates are issued, e.g, for data privacy, such as GDPR in the EU or HIPAA in the U.S.. And here, professional digital processes help a lot. And there's another angle. They're changing employee demographics that force companies to find ways to eliminate repetitive manual tasks and provide more meaningful work. And now SMBs have the opportunity to have access to a wider offer of services via cloud-based SaaS solutions. But of course, this is also a challenge for them because they do not have an extensive IT department that helps them to take the right decision for their business. And finally, the changing world conditions in the COVID context puts an extra challenge on businesses everywhere, but specifically also on SMBs because business process are done now in a different way, remotely and often with less persons. So for a CEO of a small company or a CFO of a midsized company or a Director of Finance or Operations in the upper mid market, the simple need of sending a document, and often, it is an invoice, comes with many questions, such as: Was my document really delivered? And was it delivered in the valid format? And if it wasn't, how can I get it in this format? And ultimately always, will I ever get paid? So this gives you a context. And let's now move to Slide 20, where we see why there are so many questions: because those questions are often tied to business processes that are still manual. And these business processes, they often rely on business applications, such as, for example, Microsoft Office or ERPs. And this is specifically the case for business communications and cash cycle management where the processes are built on output of business applications, such as an invoice or a document with lab results or an appointment. And here, let's take a first example. The invitation for a general assembly for a property management company. There are several business applications that are well adapted to the property management company's need to be able to inform its customers about the state of the properties as well as scheduling the appointment. But these documents are coming from different data sources, and they are not optimized to be sent in the right format efficiently. In most cases, these documents need to be merged or at least grouped and sorted. And then they have to be printed before being stuffed into the right envelope. Let me give you a second example, where the document in question is an invoice. This invoice has now to be sent in a specific electronic format, so it needs to be converted. And then in the second process in regards to the invoices, our customers are asking themselves, how can they make sure that the invoice was well received and will get paid. And for that, they have collection processes where in the large majority of cases, they follow still manually whether they have received the payment, and then they call the customers where they have not received it yet. So moving to Slide 21. And with all these manual processes, this is where our BPA solutions can really tremendously improve our customers' lives. We automate processes in business communication and cash cycle management that are closely linked together as invoices or invoices-related documents are more than 50% of all documents that our customers actually send in their business communication. An automation example is the reformating, grouping, merging and compliance control of documents that can all be automated with Impress. Once set up, including the channel preference of our customers' customers, and like this, also the format of the communication that the customer wants to receive, the only thing that customers have to do is to validate that the communication should be delivered, and it's done. And they can concentrate on more valuable tasks. In the physical mail process, we see like this, a 90% reduction in labor associated to sending business communications. And for getting paid in the AR process, our YayPay solution already validates automatically all billing events without issue and points customers to cases where human interaction is needed. For example, in the collection processes, using machine learning and artificial intelligence, our solution predicts when customers are likely to pay and focuses collectors on those customers that are maybe at risk. This one action cuts manual labor by 70%. And an example for the AP process, the solution further drives efficiency by eliminating 80% of the labor associated to paying an invoice and decreases errors at the same time. We do this by automating the workflows associated to this accounting process and provide full visibility to help businesses make more informed decision. So overall, our customers simplify and optimize their processes and have more time for concentrating on the more difficult cases, where human interaction is really needed. And like this, they improve their relationships with their customers and with their employees. And most importantly, and this is a specific situation like the one we are all experiencing today, they have the possibility to work remotely with automated communication processes. And at the same time, they can enhance their business-critical KPIs around cash cycle management. Moving to Slide 22. To be able to deliver this value proposition to our customers, we are building great technology. For business communications, as we heard before, we are based on Inspire. And we are able here to offer a solution that is really adapting this best-in-class technology to the SMBs' needs. We've also acquired YayPay, which is a leading solution in the AR automation space, recognized for its great technology by IDC. And what makes us unique for the segment that we are competing in is that we are really concentrating on offering a very user-friendly UI that makes these complex processes simple and makes the usage of our solutions really simple. And here, we benefit from great product development teams that have a strong link to our markets and customers that we can make sure that we have the right features and that those are offered in a very simple way. And as said before, our solutions linked to business applications, and here, we have strong technology connectors that create a really seamless experience. In some countries, and for some applications, we also work with strong partners. We complement our offering with great technology from renowned partners, such as Esker or Kofax as well as DocuWare or DocuSign to be able to add best-in-class features where needed to our customers. Moving to Slide 23. Our business model is also adapted to the needs of our target markets. We allow SMBs to have access to this enterprise-grade technology with a business model that gives them access easily. The base is also the most current -- the base for our mostly recurring revenue model is a subscription for the platform and services that we offer. And this starts as low as some USD 10 per month, but can increase, of course, to much higher fees in AR and AP automation. And then our customers pay for what they use, and what they pay depends on the services that they use. So for example, they can print or they can pay for payment usage or for portal usage. And then also on the commitment that they are willing to make upfront. And finally, we can configure our solutions according to our customers' needs, and that can take between some hours or few weeks of paid services, depending on what is really the customer wishing for. Moving to Slide 24. With our offering, we focus on verticals that are close to our existing customer base from other business lines, which makes sense because here also, we have a lot of business communications and invoices. So those verticals are wholesale, manufacturing, government entities, property management, or business services, such as financial advisers or lawyers. With regards to our geographical footprint, we are present with both our direct and indirect sales and service teams in North America and Europe. And we concentrate on the SMB and mid-market segment, so companies with less than 500 employees in general and with less than USD 500 million in revenues. And our key decision-makers are either in different finance functions or operations or for the smaller part of the customer base, the CEO or the COO himself. We know from our customer base that many of these target companies are not yet equipped with software, and that can automate their processes. So they do a lot of it still manual. And this is where we see a huge potential because we see a total market of 1.5 million companies in our target geographies that give us a great potential to grow in a market that is growing from the EUR 3 billion that we have [indiscernible] today in double digits every year. And now let me show on Slide 25, a video demo with you that gives you also an overview of our solutions. [Presentation]

So moving to Slide 26. I hope you have now a good overview on what we do. And I would like to take some more minutes to share with you where Quadient's Business Process Automation is unique. In a nutshell, because we can offer the right product easier to our target segments because we have synergies for both creating better products and for having an easier access to customers. And we have proven with our execution that we can deliver on this. So let's start with our access to segments that are on the verge of digitalizing. We are present today with 500,000 customers worldwide, most of them from Mailing-Related Solutions. And mailing is for many companies at the center for business communications with a lot of manual tasks linked to it, as described earlier. And therefore, here are cross-sell and upsell opportunities. Every machine in place today and sold in addition to our existing base is a potential to add Business Process Automation to automate even more of the business communication processes of our customers. We are the only one that offer to our customers the best of both worlds and accompany them on their way to digitalize in the speed that they actually are comfortable. And this is why 70% of our Business Process Automation customers are also Mail-Related Solution customers. And this is why we can increase our Impress installed base in double digits. We also have an important advantage in our sales channels. We can leverage our existing sales force that is mainly situated in our major geographies. This allows us a reduced cost of acquisition. We've trained our sales forces to be able to sell BPA, which led, for example, in France, to an increase of more than 20% in productivity. We also have dedicated sales teams for BPA that are benefiting from their colleague selling MRS and BPA as they get easier access to customers. We also see that there is an opportunity for us to accelerate our growth via partners. We have started investing into this opportunity with first success, for example, in France, where now 10% of our BPA revenues are generated by partners. And of course, also our products benefit from what was said before. We have great knowledge specifically about our mailing customers because our machines are already connected and help us to understand their processes better, such as peaks or formats or even types of documents. And by being locally connected, we also understand the local requirements that they are facing. And this knowledge helps us to create products that are really solving the pain points for them. With the right priority and really simplifies their processes by focusing on these features and the overall integration that is exactly appropriate for them. And all this based on a very, very powerful technology, on the one hand, the Inspire platform; and on the other hand, on the IDC-accredited YayPay platform. Here, as we said, we share R&D resources, methods and codes that allow us to, a, move faster; and b, move more efficiently; and lastly, create products that are adapted for SMBs but have the stability of enterprise technology. And this concludes the overview of Quadient Business Process Automation, and I'm now handing over to Geoffrey for the conclusion.

Thank you, Alyna. So if we move to Slide 28, to give you a quick summary. Quadient BPA solutions are based, obviously, on great technology, the Inspire leading software and YayPay AR automation platform. I think we have a proven double-digit growth track record in the past few years, and we are in a market that is expected to continue growing in the double digits going forward. We have a unique market positioning, thanks to our synergies, mainly based on our existing customer base and as well as our stronger local connection, combined with a global approach. So thanks to the connection we have received through our existing customer base and thanks to our overall company offer, I think we're the ones that can offer those small-sized businesses a transformation that goes from paper to digital that is not disruptive, but give the customers the best of both worlds. We sell in proven channels with a global go-to-market strategy. And we offer, therefore, with a SaaS business model for those small and midsized businesses, access to an enterprise-grade technology. So the same way, on my side, I think it concludes our BPA Education Session. And obviously, with Alyna and the team, we're going to be happy to take your questions. Obviously, questions, do not hesitate to post them online in the webcast. So I believe we have our first question coming.

So there is a first question on the webcast from [indiscernible] Quadient entered into a JV with Esker in 2015 called Neotouch, where Esker is providing the technology and Quadient, the distribution capabilities. How much revenues did Neotouch generate in 2019?

So this is a good question. Thank you, [indiscernible]. We did enter into a JV with Esker, and we continue to operate that JV today. Just as a matter of context for everybody, the partnership with Esker has allowed us to leverage, obviously, through the JV with Esker access to some of their platform and technology, which we have promoted, obviously, to our customers in some countries, mostly in France. Overall, the Neotouch platform is we probably -- because we don't share it, obviously, by product, but it's probably less than 1/3 of the BPA revenue, definitely doesn't exceed it. And it's mainly generated in France and knowing that out of that 1/3 of revenue, probably less, some of it is related to the subscription, and some of it is related to volume-based activity.

[Operator Instructions] So we have a question from Nicolas Tabor. What is the average revenue size of the BPA clients? What is the average contract revenue per client per annum? You seem to to expect to continue growing double digit. Can we still expect 20% per annum over the coming years?

Okay. Thank you, Nicolas, for the question. So I will take probably the first part of the question and let Alyna answer the first part on the type of revenue that we get per customer, knowing that we don't give specific information on that, but we can -- I'm sure, Alyna can give you some ideas on the price range that we could get from customers, depending obviously on the set of customers. So on the annual growth rate, we are obviously not here to provide particular guidance for next year or even this year. What we could say is that, obviously, on BPA, we have enjoyed until last year, a pretty strong double-digit growth, around 20% overall. We've seen in 2020 that even though our go-to market was impacted during the confinement, in particular in H1, from the April period up to September, that quickly, as we get back to business and we've seen more connections with our customers, we could also enjoy it in Q3, the same 20% performance. That being said, it's really driven by the market. And I think this is why as we look at the future, we've got a big synergy with our own existing base, which is part of the growth. And then after that, there is, obviously, the market drivers themselves and the acceleration that we could see a lot into the digitization of small midsized companies. And as we plan to provide, obviously, an update on our views, obviously, on the market trends and all that, probably by the end of March and as well update the investors with the Capital Market Day update, probably we'll be able to give a better view on how we see those market trends impacting, obviously, our businesses moving forward on that topic. Alyna, do you want to give a sense on the questions, the first part of the question on the type of pricing we get from customers?

Yes, with pleasure. So yes, the pricing is consisting on the one hand of the subscriptions that we get from our customers that get access to our products and services. So those can go as low as -- yes, around $990 per month, and they can also go up to more than $15,000 per month, depending on what kind of platform access you get and then, of course, also there is a big part that is also coming from usage, that is also part of the pricing. And that is depending on, a, what service could you use? And also then on what commitments on volumes you would make from the beginning? And then, yes, also part of the pricing is, of course, how much personally configured you want to have your solution. And this is then also defined by the time and material that we will get in professional services. So yes, there is a wide range, as you could see from the subscription models, and this is how we can best adapt to our customer needs.

We will have a question from Jean-Francois Granjon. What do you project in terms of size of sales, market share and trend of the growth? And what about margin?

Thank you, Jean-François. It's a good question. So again, we did not give a specific target in terms of sales, neither in terms of market share. What we did say, though, is that we were looking at our growth engines and wanting to scale them as quickly as we could, during the period, obviously, of our midterm guidance over 4 years. And when we talk about scale, we said we wanted to try to get then at $100 million. Obviously, there was like a mark on that, it could be a little less, a little bit more, but that's what we saw because from there, you can get, obviously, the benefit of scales on R&D, on other investments. So that's one aspect on that. The second one, obviously, is we were looking at market and size of $1 billion or more, obviously, that could grow over the years, and for which we said we would like to be #1, #2, #3, #4, kind of a leading position. So that also inferred deductively the size of the business that we could be looking at. Now we had added obviously YayPay, since then, on the account receivable side. We just did the acquisition, so we're going to have to take the time to look at it, nurture it and integrate it. And being able to take into account, obviously, how much contribution we could expect out of YayPay also moving forward [indiscernible]. In terms of margin, [indiscernible], generally, to get to the last part of your question. Today, BPA is a practice -- is an area where we're investing money because, as you know, in our traditional business for Mail-Related Solutions, for CXM, we enjoy both high-margin business. Close -- actually, the proximity of both being close to each other, and they are more mature and scaled business. CXM being already more than EUR 100 million in size, as of 2019. And we're making investments today to scale both BPA segment and also the Parcel Locker. So this is where we look, obviously, when we are having those business to be profitable business as well in the future. And obviously, the sooner we scale them, the more -- the sooner they will become profitable as well. Thank you, Jean-Francois.

Thank you, Geoffrey. We have another question from [indiscernible]. How high is the R&D cost in BPA? At what revenue level the activity reach breakeven?

So on R&D, we don't share today some of the breakdown by R&D in terms of the solutions. Because we have, obviously, 2 things. One is we have a core central R&D team, both for hardware and software, for which the goal is obviously to share, mutualize, a lot of those R&D infrastructure. I could go into many examples, obviously, most of the team are usually located in the same office. But when you have, in particular, in the software side, for BPA and across CXM, the cloud infrastructures, the process, the quality, the tool, the engineering, a lot of the core components. And if we take one of the examples that we went through in the presentation, the compensation engine is obviously one that took us several years of development of very large size teams to be able to develop on Inspire, and for which we get the benefit for the cloud platform for Impress on the BPA at a fraction to some extent of the cost, if you look at the marginal additional R&D cost, to be able to develop one product. And once we make also R&D on an effort to launch Impress, which is a fully cloud platform and all the cloudification effort that we've done in this platform, we'll benefit also the other CXM segment, but also more generally, across the board, across the full solution as we have, things that are related in terms of domain. When we look at parcel, we look at mail, we look at documents. This is the core domain expertise of the -- for solutions. So there's obviously some allocation that we do in each of those business. Naturally, the Software business, including BPA, are a little bit more R&D consuming than the hardware, Smart Hardware business that we have. And it's probably -- and it varies from one year to another, but it's a single-digit percentage in terms of the total revenue today. So that was for the first part of the question. On the revenue breakeven, it's the same thing. When we look at our platform for BPA, like we do for the other businesses, we basically have an installed base, right? We're looking at platform with recurring SaaS revenue once you have the cost of that platform, and you have one user, one customer, you have the same infrastructure costs to pay for. So obviously, the more customers we have, the more the run rate of the installed base, become obviously breakeven and profitable. But today, this is not where the investment is on BPA. We have a pretty large, decent sized already platform, in particular, in some of the countries. So some countries we're launching it. In other countries like France and the U.S., we have a decent size, numbers of customers are leveraging those products. The investment -- the ballpark of the investment on BPA today is on the go-to-market because this is really where we take the time to increase the numbers of salespeople that are trained and then can sell and cross-sell the applications, so we could add more, obviously, customers in a rapid session. Thank you, [indiscernible].

Thank you, Geoffrey. We have one additional question from [indiscernible]. What is -- what year did OMS-500 come to market? Was this developed pre and/or post the acquisition of GMC? How much was the revenue in 2019?

A very good question. So I wasn't there, so I will try to make sure I have a good summary of those past years' events. I believe the acquisition of GMC was in 2012, and I wouldn't want to be mistaken, but I think the launch of OMS was probably in 2014 or '15, around that period of time, so a few years after the acquisition, so definitely developed post acquisition. And there was the purpose. The team, when they acquired GMC, looked obviously at that platform, and this is what I have introduced at the beginning is one thing about the GMC application was to develop it from the print service providers, to try to go to the large enterprise, and that has started slowly and has only magnified and amplified over the years on the -- what is now the CXM segment. And then the company also looked at this technology and trying to see from the get-go to adapt it to the small and midsized customers and started to have the OMS version not knowing that OMS that came in many version, OMS-100, or OMS-200 OMS-500, OMS Cloud over the years, segmenting the product to various size of customers and with various levels of integration with the Smart Hardware on the mailing and for the equipment side. And sometimes, there's a stand-alone application as well, not necessarily related to the machine, particularly for OMS-500. And Impress is naturally the next evolution, next step of the evolution of OMS, now being a full cloud version with a full business model, licensing being only for the on-premise side, and we have now a subscription basis for the entire Impress platform. And I don't have -- we don't give, again, the same breakdown in terms of Neotouch, OMS, all the different products that we have within BPA.

Thank you, Geoffrey.

But the -- just to give -- as I shared a little bit, 1/3 of -- no, less than 1/3 of the Neotouch, the vast majority of the rest, probably greater, the mass majority of it is related to obviously to OMS.

Thank you. We have no more question on the webcast.

So if we have no more questions, thank you, Caroline. We will now end this call. But before that, let me just tell you that we plan to host our next education session, and this one will be dedicated to Quadient's Parcel Locker solutions. And we hope to try to do that by the end of January next year or in Q1 and obviously, all the details of the event will be communicated later on. So thank you for taking the time, and have a wonderful evening. Thank you very much.

Thank you for joining today's call. You may now disconnect your lines.