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

Hello, and welcome to the Quadient Capital Markets Day and Full Year 2020 results. My name is Jess, and I'll be your coordinator for today's event. [Operator Instructions] I will now hand you over to your host, Rob Daleman, to begin today's call. Thank you.

Thank you, Jess. Good afternoon, and good morning to everyone joining us from around the world. Welcome to Quadient Capital Markets Day 2021. My name is Rob Daleman. I'm the Senior Vice President of Corporate Marketing for Quadient. And it's my pleasure to invite you and be your host to today's session. Before we begin, I'd like to give you a quick overview of the virtual platform you see before you. You have one area of the screen dedicated to the slides that will currently be presented as well as another area that features the current speaker. Note that you can maximize this area of the screen to make it easier to view the content. Also note the Q&A box where you may ask questions at any time. These questions will be addressed during designated Q&A time spots throughout the agenda. Should you accidentally close your browser or need to step away from the meeting, simply revisit the link to the event to return to the live portion of the broadcast. A link to today is available on the home page at invest.quadient.com. In addition, a replay of today's session will be available on our investor site shortly after the conclusion of this session, along with a downloadable version of the presentation materials. Today's agenda will begin with an update on our FY '20 results, which will be presented by our CFO, Laurent Du Passage; followed by CEO, Geoffrey Godet, who will present an update on our Back to Growth strategy. We will then hold a 20-minute Q&A session to address any questions on these 2 presentations. At that time, I'll offer an overview of market trends, as presented by our Chief Marketing Officer, Tamir Sigal, which will be followed by a presentation on each of our key solutions, led by our Chief Solution Officers. We will then provide an opportunity for 10 minutes of additional Q&A on the solutions content presented. And finally, we'll provide an overview of our go-forward 3-year plan and provide a summary and conclusion. At the end of the session, we will provide additional time to address any outstanding questions. In total, the running time for today's session is planned at approximately 3 hours and 45 minutes. Now please join me in welcoming our Chief Financial Officer, Laurent Du Passage, to begin today's session with an overview of Quadient's FY '20 financial results.

Thank you very much, Rob. Good afternoon, and good morning, everyone. My name is Laurent Du Passage. I am Quadient's Chief Financial Officer, and I have the pleasure to walk you through our full year 2020 figures. We'll start with a quick snapshot of the year. In fiscal year 2020, Quadient improved agility in the difficult 2020 context. Our total sales stands at slightly more than EUR 1 billion, which is down 7.3% organically. And if you look at major operations, it is slightly better at minus 5.9%. This limited decline year-on-year was achieved by 2 things. First, the robust performance of our recurring revenue. Second, the strong recovery in licenses and hardware sales throughout H2. In parallel, we have also performed active cost and cash management, making arbitrage between short-term savings, while protecting our key investments and employees to capture the rebound. It allowed us to reduce in 2020 our OpEx by EUR 46 million against 2019, excluding bad debt evolution. Overall, we've delivered EUR 152 million current EBIT or EUR 145 million excluding the earn-out reversal. We also delivered a strong EUR 167 million cash flow, which both aggregates it in the high range of the guidance we've been providing to you. If now I move to the next slide, we can see that from September onwards, we've given you a guidance, as you remember, one year ago, we were not able to give you a guidance for the year, and we started to gain more visibility in September 2020. And we've done subsequent upgrades as long as we are getting more and more traction across the H2. Now moving to the next slide. Very interestingly, you can look on the left-hand side to the quarterly year-on-year growth. As you can see, the quarterly and year-on-year growth is the green line and is showing a U shape that basically shows in Q1 and Q2, the strong impact of the decline related to COVID. On the right-hand side, you can see the difference between the light blue and the dark blue line, that is showing our recurring revenue and on our nonrecurring revenue as well. So what we can say is that by definition, the nonrecurring revenue has been more affected by the COVID crises, and that which we can see that even in Q2, we dropped to a level of minus 29% against last year when it goes to non-recurring revenue. At the same time, as you can see, on the recurring revenue portion, it has been very, very resilient, and we've seen still a drop in Q1 and Q2 because, as you know, some of our recurring revenue is our volume-based revenue such as supplies for fracking machine or usage fees for the other solutions that have been suffering from the slower business in Q1 and Q2. In summary, Quadient demonstrated its good resilience in H1, thanks to its highly recurring model and delivered a strong recovery in H2, thanks to the relevance of its solution. Now that we can -- now we can see for those who don't know that we operate 4 major solutions. Our software practice on right side with customer expense management and business process automation. And our smart hardware practice with Parcel Locker Solution and Mail-Related Solutions. All our solutions have been impacted by COVID this year, particularly in H1. But as you can see on the chart, we experienced a sharp rebound in the second half, except for the delayed recovery you can see in customer experience management, which was still impacted in our also due to a high comparison base. I now suggest we review each one of those and work through the key figures as well as the main takeaways of the year. First, customer experience management. On the right-hand side, you can see that in 2020, CXM accounts for EUR 126 million revenue, which is down 8.5% organically versus 2019. The year-on-year quarterly revenue evolution just below shows a decline from Q2, Q3 and Q4 versus 2019. This is largely COVID related, but again, also due to a high comparison basis. As you remember, 2019, second half of the year, particularly, was a very strong year for CXM, notably with large deals that we have booked in North America. When we look at CXM 2020 revenue breakdown, you can see that on one side, you have the license and professional services, which is basically the upper part of the pie that you see here, accounting for 26% and 21%, respectively, those were particularly impacted this year, indeed, although our win rates are maintained, particularly high, we've seen large enterprises delaying some investment decisions, which affected both license and the professional services revenue. From a phasing standpoint on this topic, we have a 6- to 9-months sales cycle in CXM, which explains why our was also hit, as it did suffer during Q1 and Q2 from the drop in pipeline generation, notably to the lockdown -- due to the lockdown situation in Europe and North America. On the other hand, we have a subscription-related revenue, which is more than half of CXM revenue, which grew high single digit, thanks to the growth in SaaS and an increase in maintenance revenue. So to conclude, even if declining versus last year, CXM was still able to secure 60, 6-0, new customers in 2020, of which large deals were closed in Q4, which is a very good sign. It did show growth in North America and it was able to increase its revenue in absolute value quarter-over-quarter. Now moving to next slide, with business process automation. And starting with the key figures. In 2020, the revenue totaled for EUR 69 million, achieving high single-digit growth at plus 9% versus 2019. As you can see on the quarterly year chart, the containment measure implemented in response to COVID impacted BPA revenue mostly during H1. Q3 was very strong. On top of the recovery, we benefited from some catch-up on some volume-based activities. And we finished the year with a good level of growth in Q4 at plus 12.8%. From a business model standpoint, the subscription-related revenue that includes SaaS, maintenance and volume-based revenue, accounts for the bulk of our revenues, 71% of BPA revenue in 2020. It grew by about 20% versus 2019, which resulted from the strong growth in SaaS placement and as well as the usage, notably in the favorable work-from-home context. Conversely, as we continue to transition to SaaS, we have licensees that have logically declined this year. Lastly, YayPay, that you remember was acquired end of July 2020, recorded a very promising first contribution with 100% growth in -- organic growth in H2 versus H2 last year. It also has shown early traction from cross-selling through our Mail-Related Solution channel. Moving now to the third major solution, Parcel Locker Solutions, the 2020 business performance was particularly remarkable. Revenues exceeded EUR 80 million, achieving about 36% organic growth versus a 2019 year that was already more than 30% above 2018. From a quarterly perspective, while the Parcel Locker business suffered from delayed implementation due to sanitary restrictions and a difficult property management environment, the business overall had an impressive finish at more than 85% growth in Q4. In 2020, more than half of Parcel Locker revenue is subscription-related revenue. This results from our business model, which combines rental, fully accounted in the recurring pay, and purchase. For the purchase business model, we have maintenance, consumption and usage revenues that are attached to the local household and creates the subsequent recurring revenue. Despite a slower rollout in Japan, which is a rental-based model or subscription-related revenue, grew about 25% this year. The other half is mostly related to hardware sales and our strong H2 performance was mainly driven by the rollout of 80% of the large contract with lots of retail chain in U.S. The dynamic we see in Parcel Locker is explained by the fact that volume in parcel continue to boom and have been booming particularly this year and that consumers, carriers and retailers are seeking for safe, available and convenient last mile or click-and-collect delivery solutions. Moving to the Mail-Related Solution. The revenue totaled EUR 641 million in 2020, that's what you can see on the right-hand side. It's down by 10% organically versus '19. As we shared with you earlier in the year, the negative impact from COVID was significant in H1. Since then, we experienced a recovery in H2, as you can see in the chart. To understand the performance of MRS across this year, again, you need to segment the revenue in 2 categories. The subscription-related revenue that accounts for 74% of MRS revenue in 2020, are mostly originated by our mixed rental and leading model. This have shown good resilience, except for consumption-related revenue, which stayed below '19 level, but it has improved throughout the year. On the other side, you have the hardware sales, meaning the new placement or the replacement of the hardware, which accounted for 26% of MRS revenue in 2020. They were significantly impacted in H1. As for new business and replacement, it requires someone physically at the office to install or receive the equipment. It has recovered strongly in H2, although high-end products are still somewhat lagging behind. The performance was contrasted across regions with a much slower decline in North America than in Europe. Now if you -- now we have seen all 4 solutions. If you add that up, it brings you to the figures from major operation that you see on the right-hand side, EUR 919 million revenue, down by only 5.9% and better than the total group sales at minus 7.3%. To be noticed, North America only decreased by 1.5% in 2020, and this is a remarkable achievement for the year. And even a low single-digit growth was recorded throughout the second half of the year in North America and is driven by each one of our 3 growth engines. Conversely, our main European operations posted a minus 12.5% organic sales decline. This decline is a result of more stringent lockdowns than in U.S. in H1 as well as a proportion of growth engine in the revenue mix. Their performance, however, improved during the second half of the year, especially in France, Benelux. Lastly, we experienced solid organic growth in revenue from the International segment, fueled by strong revenue growth from Parcel Locker Solutions in Japan. The remaining part of the group is additional operation, with EUR 110 million revenue in 2020, that decreased by 17.6% versus '19. This is mostly due to a continued sales decline from graphics business that was largely impacted by the COVID context. Sales of graphics are mostly driven by events that were almost inexistent, particularly in the first half of the year. And demonstration, physical interaction are key in the sales cycle of Graphics. On the other side of the coin, we've seen automated packaging system, showing good traction with 17 CVP units sold in 2020, up versus 2019. We continue to execute our strategy to grow, improve our exit with the completion of 2 divestments for ship at the end of February 2020 as well as the graphics activity in Australia and New Zealand in January 2021. As a recap, you can see in this table, the summary of what we've seen together. From a top line perspective, you can notice that the group's joined EBIT in 2020, that stands at EUR 152 million or EUR 145 million excluding the earn-out reversal, was fully generated by major operations, while additional operations were close to breakeven. I will now show you how this current operating EBIT of 2020 bridges with the one-off last year and the efforts we have put together to offset the top line decline. We have been engaged in managing our cost structure across 3 pillars that you see on the right-hand side. First, efficiency adjustments, including hiring freeze, partial unemployment and time reduction measures. Second, restructuring and resizing, particularly regarding our MRS business, that we adjust year after year to take into consideration the structural decline of the business. And finally, one-offs and reshaping that were required to quickly generate savings against the sudden COVID headwinds, including bonuses, marketing events, travel ban, et cetera. These cost optimization measures allowed us to generate EUR 46 million, which is what you see in the middle of the bridge of savings in OpEx in 2020. Last part was done, thanks to short-term adjustments, which allowed us to protect our sales growth potential and our R&D. And we were able in H2 to take advantage of the rebound and now be ready for 2021. At current operating income level, so the first-line of this line, we recorded a decline of about EUR 37 million versus last year, if we neutralize scope for expedite and earn-out reversal. This decline is mainly the result of the lower revenue and hence, the lower gross margin, that was half offset by OpEx savings. If you look just under this line, you have the M&A-related cost, we have been active in M&A, 2 divestments, 1 acquisition and another one post-closing. Hence the expenses are up against last year, you can see a drop in optimization expense and other operating income in 2020, the line just below because, as you can remember, last year goodwill was impaired for EUR 73 million in additional operation, which is included in the minus EUR 93 million figure from 2019. Hence, we benefit from this favorable comparison. Though it was partly offset by higher restructuring expenses and the impact of the divestment of our activities in Australia and New Zealand. We also benefited from a lower interest expense as a result of all the work we've been doing in refinancing operations, which occurred in '19 and '20. All in all, the net attributable income amounts to EUR 40 million in 2020, which is up from the EUR 14 million figure in 2019. Moving now from a cash flow standpoint. From a cash standpoint, the group's free cash flow generation, which is the cash flow after Capex, you can see not exactly at the bottom of the table but it's just before the acquisition net of divestment line. It was very strong, and it's the aggregate we used for our guidance. At EUR 167 million cash flow after Capex, that is to be compared to EUR 96 million in 2019. This reflected our good resilience of EBITDA with EBITDA margin close to 24%, which is only down by 80 basis points from 2019, thanks to active cost management and the business recovery we had in H2. Favorable working capital and this receivable change, particularly in H1, that reflected the lower level of activity year-on-year, particularly on the MRS portion. And last, the reduced interest and income tax paid, mainly due to the positive impact of '19/'20 refinancing operations as well as the lower cash tax paid this year. And last, the decrease in CapEx year-on-year that I will comment on the next slide. From a CapEx standpoint, we can see that the capital expenditure declined from '19 to '20 from EUR 109 million to EUR 90 million. This is showing a lower level of CapEx for rent. So this is the green part, which is detailed in the chart below, and it's notably due to the lower rollout of rented Parcel Locker in Japan. We maintain the development CapEx to secure the development in the new technology and the launch of new products. And last, we've seen a slight decrease in the maintenance Capex, which is related to some delay in our new projects. If now we move to the financial structure. Our strong cash flow generation has translated mechanically into a significant decrease of the net debt, that amounts including IFRS 16 to EUR 512 million as at 31st of Jan 2021, and is down by EUR 156 million year-on-year. Last year, end of year we were EUR 668 million. Accordingly, this resulted in an improved leverage ratio versus the end of '19 financial year, moving from 0.9x to 0.4x, excluding leasing. Here, you can see, and that's a comment I will make, you can see that our financial debt maturities. And just a quick comment. The ratio that I just mentioned of the 0.9 and the 0.4x are based on the net debt divided by EBITDA ratio, excluding leasing. It also excludes what you can see in the chart shaded in gray. It's shaded in gray because it's an equity instrument that is called ODIRNANE. It's worth EUR 265 million on our balance sheet and which is not included in our ratio that we just mentioned, okay? In 2020, we have continued to actually manage our debt, notably with the repayment for $115 million of USPP in September 2020. And despite these repayments, our liquidity position at the end of the fiscal year is still very strong with EUR 0.5 billion of cash, basically, which was fueled by the strong 2020 cash flow. And I remind you that we also have EUR 400 million of undrawn credit facilities. Post closing, in March 2021, we took the opportunity to repay EUR 163 million of our 2.5% bond, which is in the chart, the white chart, in 2021, 3 months earlier than its maturity, which will save us approximately EUR 1 million of interest this year. And it gives us with no further debt repayment for this year. The next milestone is in June 2022, as many of you know, we have the majority of our EUR 265 million of general instrument, which is today booked under equity as per IFRS and for which we are contemplating a reimbursement next year. This will be possible, thanks to our highly cash-generative business model that with a well-spread business portfolio and handle future cash flows that you can see in the chart in green at the bottom of this slide. Our corporate social responsibility program establishes the link between our company strategy and our main ESG, environmental, social and corporate governance, risk and responsibilities. Our CSR plan is composed of 5 pillars, announcing the most material issues for Quadient and its stakeholders. In 2020, we continue to focus on providing our talented employees with an inclusive, safe and flexible work environment. Second, we maintain high standards of ethical behavior and we instituted a new ethics alert process. Third, to complement our long history of responsible manufacturing, we have designed a low-carbon strategy to guide our efforts in the coming years. Fourth, continue improving our customer experience. And last, we implemented a new corporate CSR program and at increasing the positive impact our employees have in their local communities and on the environment. As you can see at the bottom of the slide, in 2020, several rating agencies have continued to recognize our achievements and progress, either maintaining or increasing our standing. Now I will hand back to Rob. Thank you very much.

Thank you, Laurent. It is now my pleasure to introduce our CEO, Geoffrey Godet, who will provide an update on our Back to Growth strategy.

2020 result. Thank you, Rob, for the introduction. I'm obviously very happy to be with you today. So let's get started. I will now spend a little time on the first phase of the execution of our Back to Growth strategy, which we launched in early 2019. Why and how we choose the strategy? And how we executed for the first 2 years? In just under 2 years of execution, our Back to Growth strategy and even still on the heels of a worldwide pandemia that is still impacting our world. The thorough focus and disciplined execution of the first phase of our Back to Growth strategic plan has laid a strong foundation, putting Quadient in a position to deliver sustainable value for its shareholders and all stakeholders over the next few years and beyond. The first phase of execution of our strategy was dedicated to the transformation of the company around 3 pillars. First, simplify and refocus our operation and solution portfolio to become a leader in each of the gross market that we serve. Second one, define a sustainable value-creation model for Quadient, based on value-added growth engine, recurring revenue and, in particular, subscription-related revenues and our major operation. And the third one, become one company to quickly scale our solution, all our solution, by leveraging shared expertise, infrastructure, commercial relationship and our global footprint as reflected by now EUR 100 million in synergies unlocked. Thanks to our dedicated employees, partners and loyal customers, I believe we have delivered on all these points. So before reviewing our progress and the results, let me share, especially for the ones that do not know us yet, how we develop our strategy called, at the time, Back to Growth. Our Back to Growth strategy is the result of the holistic and complete in-depth strategic review that we conducted in 2018 under the supervision of our Board of Directors. At the time, we took the time to assess the company's organization, different businesses and markets. And we did this thoroughly and with a very open mind set with no sacred accounts. We reviewed transparently in brining what we need to be changing, what could be leveraged, where are our strategic differentiators, what we were good at or not, and if we were the best one of our existing business. So while they were saying that require changes, I also found a company with so many talents and very strong assets to leverage such as, among others, an amazing and resilient mail equipment business with a second position worldwide, with strong cash flow generation, a very large customer base of hundreds of thousands of customers with further cross-selling potential, and fair interest in Parcel Locker, Japanese practice, and a very strong customer communication management software business with a second position worldwide as well and with a great software engineering practice. As part of this in depth review, which involved several months of internal and external analysis, we contemplated many strategic numbers, which were all very rigorously changed, emphasis. Our final plan was then selected, taking into account, obviously, its potential execution risk and on the ground of providing the highest value-creation prospects for our shareholders. The result of this work was the foundation of our Back to Growth strategy. Our strategy is simple and straightforward. We decided to focus on high-growth markets, centered around smart hardware and software solution to help our customers with their challenges today and the challenges to come. The first pillar of the strategy is our software pillar. We have a very rich customer base who rely on our solutions to manage and optimize physical communication. By talking to our customers, we took the time to do so, as you can imagine, we know they trust us and look for us to provide additional solution that can further enable a digital communication flow. It was obvious for Quadient to continue focusing on helping its customers to drive to digital transformation. This is a natural shift from physical to multichannel communication. In today's world, communication between the company and their customers are no longer limited to physical paper. They must be digital -- sorry, they will be digital and available across all devices. And is a key enabler for delivery of exceptional customer experiences and automating business processes. This is the reason why we have focused on leveraging further our award-winning customer communication management solution, also known as CCM, into the customer experience market. And how we develop solution to automate business processes, which is our BPA solution. The strategy for which we outlined in detail during our last education session. You will hear Chris Hartigan later today on how we help them overcome these challenges. Our second pillar is the Parcel Locker Solution. As the world shifts for mail to parcels and the necessity to connect hardware to cloud application, we developed solution to bring automation and convenience to the last-mile parcel delivery for all their stakeholders, from carriers, retailers, property managers, corporation as well as consumers in today's booming e-commerce market. So you will hear more about our Parcel Locker Solutions from Daniel Malouf on these solution, I guess, in a few minutes from now. Our third pillar of our strategy is our Mail-Related Solution. We decided to refocus on our traditional business because of its resilient and highly cash-generative model, and our goals are for the Mail-Related Solutions to gain market share, extend the value from this business and protect its high profitability. And last but not least, to leverage our sales organization to cross-sell our newest software and hardware solution into our customer base of more than 440,000 Mail-Related Solutions customers. You will hear from Alain Fairise on the solutions as well, I'm sure in the next few minutes. Another point is that we selected these 3 pillars, not only because they were great opportunities by themselves, but we also selected them because they were highly synergistic among each other. Our strategy is to foster these synergies across our solution and we decided to integrate the company to truly unlock those synergies. In summary, our Back to Growth strategy aims at repositioning Quadient's portfolio by building sustainable businesses with high-growth prospects and leading market potential that are synergistic with our structurally declining but highly profitable and cash-generative mail business. However, relevant and grounded our strategy was execution is what matters, execution and execution. How do we operate, our people, our values and how we work together, our KPIs, et cetera, this is what makes the difference and how strategy goes live. To lay the foundation of this transformation, we launched a number of strategic initiatives to properly change the way we work. We changed our organization to simplify its operation model, gain efficiency and unite inter-company under strong common culture. The executive team has been reviewed with new tenants hired to lead the transformation with notably international and software background. Leaner management layers were put in place with a strong regional focus. And also centers of excellence were established to streamline internal tools and process and better leverage of teams' expertise while continuing to be close to our customers. The adoption of a new unified and modern relative Quadient that we could leverage in the digital space and coming to all our solutions. We also put a bit of refocus and simplification of Neopost for more than 15 independent businesses to Quadient. We're focused on Parcel Locker, non-native solution and software solutions. As part of this first phase of transformation, we have also been reshaping our business portfolio with the objective of strengthening and scaling our major operation through a combination of organic initiatives, starting with a bolt-on acquisition and while implementing a grow and improve or exit plan for additional operations. Regarding M&A, our approach has been very selective and disciplined with 3 bolt-on acquisitions completed since the launch of our plan for total cash out of a little less than $200 million to date, including our first acquisition Parcel Pending in January 2019 to reinforce our market share in the U.S. Parcel Pending is the leading U.S. player in parcel world, and we have been scaling this business, successfully expanding into the U.S. retail market, and now exporting its franchises into residential corporate market in new geographies such as U.K. and France, as recently announced. The second acquisition -- second phase of acquisition are the 2 leading North American fintech software companies with YayPay July 2020 and Beanworks as recently as March 2021, to bring advanced SaaS accounts receivable and accounts payable automation capabilities to our software portfolio. In the meantime, Quadient has divested its data equity business, satellite software and human inference. We have significantly reduced our shipping software activities with the disposal of ProShip and the shutdown of Temando. And we have recently sold our graphic activities in Australia and New Zealand. The net cash spend in M&A over the period amounts to around EUR 105 million. Now speaking of M&A discipline within our current media operations scope, Quadient has shown a good track record of conducting successful M&A operation in the past and today, and especially in the field of customer communication management side. So let's share a couple of examples. GMC, which was acquired in 2012, an industry-recognized during the time in the field of customer communication management, from which we built our Inspire platform, our Quadient's award-winning customer experience management plan. We also acquired icon in 2016, which allowed us to reinforce our positioning in Germany, in particular in the insurance sector. Both of them achieved double-digit growth in year 3, both acquisition, of around 16% and 28%, respectively, above the WACC after our financial discipline guidance. Since the launch -- sorry, since the launch of the first phase of our Back to Growth strategy in 2019, we made a few targets, promising bolt-on acquisition to reinforce our smart hardware and smart software solutions portfolio, as I shared with you just earlier, Parcel Pending, according to '19, the market U.S. residential leader, which exceeded our growth ambition in 2020, as mentioned by Laurent earlier. YayPay was acquired in 2020, as I mentioned, a fintech specialized in account receivable automation solution recognized for the first time by IDC as a leader in accounts receivable automation as recently as in December 2012 -- 2020, barely less than 6 months after we acquired them, validating the quality of our choice and our assessment. So another key direction of the Back to Growth has been to favor across all institutions, a resilient value-creation model based on recurring revenue. In 2020, subscription-related revenue accounted for 69% of sales within Quadient's major operations. With increasing services attached to the cell or rental or hardware solution and a swift transition towards SaaS and cloud models for software solutions. A few more numbers to better understand the success of the first phase of our transformation. Revenue from our growth engine, which combines our Parcel Locker and software practice grew by 45% over the last 2 years and accounting for 27% of the total revenue in 2020, up from the 17% in 2018, reflecting today lower dependencies of Quadient compared to historical map solution business. And lastly, the revenue contribution from major operations remained broadly stable in absolute term between 2018 and 2020, demonstrating our ability to compensate the structurally declining recurring Mail-Related revenue by growing, on the other side, recurring revenue stream from our growth engines. So as you can see here on the slide, the first year of our Back to Growth strategy delivered strong results, with an organic sales growth at 1.6%, our best performance since 2013 and with Q4 2019 being our seventh straight quarter of positive organic growth in a row. The COVID-19 pandemia obviously impacted our 2020 top line performance. As Laurent just shared with you, Quadient has, however, demonstrated the strong resilience of its business model in the first part of 2020 and recorded a sharp rebound in the second part of the year, boding very well for our organic growth to resume in 2021. Now, if we look at the individual performance of our solution, our 3 growth engines delivered double-digit organic growth in 2019 versus 2018, and this is a great achievement. 36.8% for our Parcel Locker Solution, 18.8% organic growth for BPA solution and 12.6% organic growth for our CXM solution. Our Mail-Related Solution business also recorded its best organic performance in 2013, with only a 2.8% organic decline, outperforming the market. Of course, 2020 was an exceptional year due to the COVID-19 pandemia. But we were able to go through this crisis, thanks to the resilience of our recurring business model. Obviously, a very strong and passionate team of employees, our strong go-to-market capabilities and our commercial successes and as well our synergistic portfolio solution. When you look at the numbers for 2020, our Parcel Locker business grew about 36% organically despite a challenging 2019 comparable base, with sales already exceeding EUR 80 million driven by large contracts. BPA, our software, sales rose 9% organically to $69 million, returning to double-digit growth level in H2 after an H1 impacted by the lockdowns. And we strengthened our offering with the launch of Impress, our own cloud-based multichannel document automation platform, and the acquisition of YayPay. The CXM revenue declined 8.5% on an organic basis to EUR 126 million, reflecting the COVID impact on our pipeline of projects, but also our voluntary strategy to shift the business to a SaaS-based model as reflected by the high single-digit growth of subscription-related revenue, even in a COVID year. And lastly, our mail related business proved resilient during the year, down about 10% organically, but with a material recovery in H2 and particularly strong in the U.S. and still high, stable profitability. Our strategy to promote revenue across a large installed base of customers. For each of our solution has resulted in an increasing share of subscription-related revenue in our total revenue. And this is creating a resilient value creation business model for Quadient. For MRS, we have about 440,000 customers with a high share of subscription-related revenue at around 70% -- 74% of MRS sales in 2020 is coming from rentals and financing and supplies and services activities. For our Parcel Locker Solution, we have about 5,000 customers already, with a share of subscription-related revenue around 50% of our Parcel Locker sales in 2020, which is also the reflection of our different business model, purchase, rental and pay-per-use. In another software, we have more than 8,000 combined customers across CXM and BPA segments. BPA by itself has about 7,000 customers and benefit from a strong contribution of our subscription-related revenue, which is already reaching 71% of BPA sales in 2020. Due to its -- proven, sorry, SaaS and subscription model. CXM has about 2,000 customers, mainly large organization but also mid ones, and is still transitioning from a one-off license to a subscription model, as reflected by 53% share of subscription sales in 2020. So the successful transformation of Quadient as one integrated company has profoundly changed its organization. It's simplified its operating model. We gained efficiency and we united the entire company under a unified brand and a strong, common goal. This is what has allowed us to benefit from a strong ability sharing in a numbers of areas and in particular, within our operation, product development, go-to-market capabilities or supply chain and with, for instance, our MRS and Parcel Locker Solutions showing already the same warehouses, for example, in the U.S. Take another example regarding our proprietary assets, we have shared technology and IP. If we take the example of CXM Inspire and BPA Impress platform, customer relationship, very important, with significant strong cross-sell opportunities across our Mail-Related Solutions customer base and our unified Quadient brand and value proposition and lastly, management capabilities in the field of marketing, regulation and even M&A. We have also identified a number of areas where we see strong potential, sourcing, customer expense, tangible assets, tenant management, among others. So beyond those capability synergies, from the outside of the plan, fostering synergies has been an imperative objective to scale our growth engine. So let's start with our software business. During our education sessions in the last quarter, we already discussed that we have one common software practice on the one leader, to be neck with it, sharing best practices towards processes and expertise. And furthermore, the leading software platform from CXM Inspire platform and from BPA share the same code. In addition to the R&D synergies, it is important to highlight the synergies from our customers, which is the automatization of our strategy. Approximately 75% of BPA revenue and 10% of CXM revenue is generated by cross-selling with our Mail-Related Solution organization and customers. And this is done by sharing the same commercial teams across our software and mail organization. As we move to our Parcel Locker Solution, we benefit already from net worthy synergies with our NI business in hardware R&D and in supply chain. We also manage -- it's also managed by one leader, [indiscernible]. So let's take another example. Our analyst teams in North America successfully grew the Parcel Locker business in corporate and education market with over 200 universities as Parcel Locker Solution customers. Outside the U.S., we leverage the Mail-Related Solution team's relationship that they have with postal and carrier organization, and this is the reason why we've been able to secure JVs in partnership with Yamato, GeoPost from La Poste in France, which help accelerate the launch of our Parcel Locker Solution a few years ago. So thanks to our integration, we also centralized all core business function, support function, IT, human resources, legal, marketing, finance, transformation activities. So concretely, in terms of hard euro and dollars savings and synergies, Quadient has successfully unlocked around more than $70 million in revenue synergies in 2020. Thanks to our commercial cross-selling between the solution and mostly between our software and Mail-Related Solutions business so far. And with this new integrated organization in place, we've seen between EUR 25 million and EUR 35 million were saved in cost synergies, including centralized marketing and administrative function, back office efficiency, mutualize R&D as well as an integrated supply chain and the logistics between MRIS and PLS. This is already a great achievement for our strategy in such a short period and such despite 2020 being a challenging year across the board. So I would like now to spend time to present the second phase of execution of our strategy. After this -- these initial 2 years of execution, we also needed to take into account the impact of COVID on our future. So we did a holistic and in-depth review of our assumptions of our businesses. Tested our business plan, we revaluated our risk of execution moving forward. We estimated our future synergies and even considered automotive scenarios. We did so with the same open mindset with no sacrifice. Our reviews are always vested and changed by our Board of directors. And a result of these assessments to continue to maximize value creation over the long-term for stakeholders and shareholders, we have decided, as part of the Phase 2 of our Back to Growth plan, we are strategically focused on driving sustainable value. And we will do so in part, by accelerating the conversion of Quadient's software strategy with a newly created intelligent communication automation segment, combining our customer expense management and business process automation solution. And this is driven by the customer needs and market drivers that we see. We will continue to unlock more synergies between our solutions and operations, powered by a unified company. And defining forward-looking objectives to measure the impact of our corporate and social responsibilities activities led by being a signatory member now of the U.N. Global Compact. As a quick reminder, when the Back to Growth strategy was invented in 2019, even though we already had one strong software pillar, we intentionally kept our software solutions separated at CXM and BPA for a few reasons. Early on, we realized that customer communication and experience management, account payable and account receivable and electronic document delivery were converging into one market. However, we assessed that we were lacking the organic capability to build timely all of these solutions. And this is why we decided to achieve our account receivable and account payable roadmap with bolt-on acquisition. And until we brought them in, the internal convergence was still in its early days. The second factor was centered around cloud maturity within our own customer base. What makes Quadient really unique in the market is that we are listening very carefully to our customers. In 2018, a few large customers from CXM were ready to rely on cloud and SaaS as a platform for their critical customer communication needs. However, BPA customers, more smaller and midsized customers had a strong requirement to running the cloud already. And as such, we accelerated the launch of Impress, which we communicated in June 2020, to enable our midsized customers to leverage our cloud capabilities. This allowed us to better prepare ourself to support our large customer need for the club. To ensure a strong execution both organically and through acquisition, we intentionally put in place, focus and dedicated management for CXM and BPA to reach first the required maturity. And specifically for our fragmented and incomplete BPA solution at the time, while ensuring continued market share gain in our flagship CXM solution. So why now? And what are we announcing today? First, when our customers in the market look at how communication are created, how and when these communications should be delivered and how communication drive automated processes. They see this more and more as one integrated value chain. These are integrated components to better serve the customer and drive stronger efficiencies internally for business-critical application. Second, the team has done a tremendous job elevating the maturity of each solution, BPA and CXM, and especially on the software and the R&D side, which was detailed in our BPA application. Third, the recent announcement of YayPay and Beanworks acquisitions have been completed and have reinforced our [ dull ] and SaaS software offering. We're now -- we now need to integrate them to realize the synergies. By combining CXM and BPA together, they are a strong benefit to all stakeholders. Regarding our partners in each customer segment, we have a more holistic, integrated and simplified value proposition, centered around the automation of communication and business-critical application. This will help unlock more revenue synergies. Quadient will also continue to unlock further material cost synergies between CXM and BPA solutions on product management, marketing and go to market. Having one R&D team allows customers to benefit from stimulated innovations with additional features, leveraging cloud and artificial intelligence already in our solutions. We heard from clients the need to provide a solution, end-to-end digitized customer chain across the entire value chain of how a communication is designed, how it is personalized to each customer and how it is delivered across all channels. So let's take in invoice, for example, in invoice bill is a commercial document issued by a seller to a buyer, relating to the sell transaction and indicating product, quantities and the price the seller has provided to the buyer. Payment terms are usually stated on the invoice. The creation of this invoice is not so easy, especially if it is required to be delivered across many channels. So in addition to just grading and delivering the invoice, there are many processes linked to it, the central contract, the purchase order, the proposal that was sent to the customers and so many more customer communications and interaction that the company creates for managing additional correspondence, payment terms, collection of cash. Company needs this entire process to be super accurate, future proof, automated and intelligent to do this on top of it in a personalized and efficient manner. And this is just one example of how process and communication documents interact together. And in 2020, with the pandemia heading everyone overnight. There are many reputable third-party research firms that illustrate how companies have accelerated the digitization of the customer joining. This is you, for many reasons, people working from home, companies needing to provide better experience to their customers, stronger cash management and induction of communicating new digital ways. So as we look at the market and listen to our customers, it is important we cover the needs of the different segments. Yes, at a high level, the need is the same. Create, deliver and automate communication in an efficient and simple manner. However, we understand the needs of the top 10 global customer worldwide will be different than the midsized insurance company. Our specialized teams talk to our customers all the time, and we make sure we understand the business requirement and mapping the right solution. Our customer segments are split into 3 categories, making it very simple to understand. Starting at the bottom of the triangle, we have small clients who have a low volume of transaction and are requesting more convenience and fewer manual tasks. They typically have no dedicated IT organization. The next segment is our medium-sized customers with, obviously, more transactions and more requirements with still level IT resources for which a cloud solution brings many benefits. And the last segment is our large customers who have enormous volume, more compliant mandates and record to deliver highly personalized communication. Our sales organization is obviously organized by customer segments, and we focus them in priority on the mid and large customers. The validation from our customers is a strong indication. However, we also look at other companies who compete for our business. In this diagram, we look at the various solution providers -- I'm sorry, the various solution providers, and you can easily see, there are numbers of players who played more than one category, which is another indication that they are seeing the same requirement and market trend as Quadient. Quadient has been recognized for many years by industry alumnus, as you know, such as Gartner, IDC, Forrester, Aspire and others as a leader with a strong vision in the industry. We do not take our leadership position for granted, and we work every day to continue to innovate. And as we share our vision with customers and partners and analysts, I would like to share with you very recent feedback we received from a very respective analyst from IDC, [indiscernible] and she states, the combining CXM and BPA together into one business unit is a logical step for Quadient. This move will broaden their reach in the communication services and automation market, offering their expertise to organization, both large and small, with a strong coalition of communication management and its newly acquired SaaS cloud base accounts receivable and accountable automation capability. Quadient, according to her, is uniquely positioned to help its client with a transaction through a modern architecture with an eye towards customer experience exits. There was also another IDC report that came out in late 2020, who also pinpoint the use cases of how transitional customer communication includes communication related to statements and invoices. Now on the right-hand side of this slide, you will see a sampling of our partner ecosystem, who support our software portfolio by cross-selling several of our software solution always. So if we take the example of Capgemini, Capgemini already promotes both Inspire, our current CXM platform, and YayPay, our current accounts receivable platform, for which they have a relationship together. Sage is also, I think, working with both YayPay and Beanworks. And we also have another example with Canon, which is reselling both our customer experience management platform and our BPA platform and even, by the way, our Parcel Locker Solutions. Chris Hartigan will go into a little bit details and relate to the importance of our partner ecosystem in a few minutes with you. Our 2 software solutions addressed the same customer needs, each for a different type of customer, and both solutions benefit from the reviews of the same ID and shared R&D. As explained at the time of our last BPA education session, when we look under the hood of Quadient's Impress, you'll see the same core components and similar modules as Quadient Inspire. Both software application have indeed been created from the same roots and are designed to meet specific customers, Inspire for large enterprise and Impress for smaller or midsized customers. We estimate today that more than 60% of the source code is shared between Inspire and Impress together. Building on one R&D software will reduce the proven architecture and technology stack from Quadient's Inspire to deliver enterprise-grade software platform to small and midsized customers with Quadient Impress. These customers automatically benefit from high visibility, scalability, low balancing, more tenancy and all the certification related to quality control. And as we look at the synergies, we have saved a significant time to go-to-market and saved several hundred years of man development here. We have all this additional R&D synergies we plan to leverage between Beanworks and YayPay, and also between Inspire and Impress on one hand and YayPay, Beanworks on the other, all around cloud and artificial intelligence, UI and UX developments. Our global R&D software team includes core developers dedicated to Quadient solutions, Inspire, Impress, obviously, now YayPay and the recently acquired Beanworks account payable platform. We have also integrated some nonshared functions on R&D, for instance, around architecture, quality engineering as well. So starting in 2020 now and going forward, former CXM and BPA will become intelligent communication automation, also known as ICA. Chris Hartigan, our new ICA Chief Solution Officer, will go over in more details our solution is at the center of every customer communication and business process automation. Continuing to work as a unified company, we are confident we will bring existing and new synergies to the next level. With and increased software portfolio focused on better responding to our customer needs, for digital and automation, we will also -- that will allow us to scale our core selling synergies with our Mail-Related Solution and our hundreds of thousands of customers. The same cross-selling synergies can be further leveraged between our Parcel Locker Solution and our Mail-Related Solution sales organization in the coming years. And as we scale further our parcel solution -- Personal Locker Solution business, we are also able to extract more synergies from our supply chain and service organizations to deploy and support our lockers in so many countries. The integration of YayPay and Beanworks into our software solution, ICA, enables Quadient to also unlock further cost synergies for product management, marketing and go to market. It will bring technology and R&D synergies to the next level as well. And while we do all of this, we will also benefit for more efficient, centralized support motion. So for Phase 2 of our Back to Growth strategy, we also plan to continue driving sustainable value in areas of corporate social responsibility as well. For the first time, we have set forward-looking targets on several meaningful objectives to provide our stakeholders with the foresight on our anticipated CSR impact. As of March of this year, Quadient is now a signatory member of the U.N. Global Compact, which officially formalized publicly our commitment to sustainable development. Our objectives for 2023 specifically support 8 out of the 17 sustainable development goals from the United Nations. Amongst our objectives, we're committed to the implementation of multiple programs to foster inclusion and diversity in the workplace, including the launch of employee legislature networks and women's environment leadership program. We've also been focused on low-carbon approach, aligned with well below 2-degrees Celsius scenario, the remanufacturing of our hardware solutions and over 90% of industrial waste recycling, increasing our impact in our local communities and the environment. We have additional objectives that we will be introducing before 2023, notably related to our efforts to continuously reduce the impact of our solution on the environment and our approach on responsible procurement and also, very importantly, our financial fee programs. The -- thorough execution of the first phase of our Back to Growth strategic plan has laid strong foundation, putting Quadient in a position to deliver sustainable value for shareholders and all the stakeholders over the next few years and beyond. We truly transform our company. And we deeply changed our operating model, satisfied our organization, reshaped our portfolio, having completed acquisition in the business areas that we validated and targeted. In the meantime, we have also successfully developed our software and Parcel Locker activities, constrained the decline of our Mail-Related Solutions, increased the proportion of subscription-related revenue -- recurring revenue and unlocked significant synergies. As we're entering now the second phase of Back to Growth, we're confident in our capacity to leverage our leading market position to reap the benefit of further distribution of the economy and an increasingly high-volume of parcel deliveries, while maintaining our mail business highly cash generative. Our new profitable growth trajectory is primarily based on organic initiatives, and they will be ranging from investments and delivering high risk-adjusted returns, the development of our end-to-end SaaS cloud intelligent communication automation software portfolio. And also, the generation of further synergies and a strong focus on innovation. I will now pass it over to Laurent so that he can share how we plan to report and monitor the progress of our execution with you. Well, Laurent?

Thank you very much, Geoffrey. So in the continuity of what Geoffrey just said, please let me illustrate what it means for our reporting. In this slide, you can see the way we have been reporting our 2020 fiscal year. From now on, basically, intelligent communication automation will replace CXM and BPA. In combining CXM and BPA together, we are also restating a small portion of software to MS for approximately EUR 12 million. Going forward, for each of the solutions, we will provide you with a new profitability KPI being the solution profit or the solution profit margin that will stand in the line below. The rest of our reporting remains unchanged. So what is the solution profit or the solution profit margin? It's basically the revenue minus cost of sales and minus all costs related to sales, marketing, support, implementation of the solution as well as R&D. The only costs that are not included in the solution profit or the solution profit margin are G&A expenses. And this is because support functions are mutualized across solutions, and mostly at regional level, it's HR, legal, finance, et cetera. And it reflects how, in fact, we changed our operating model. This metric, therefore, is the best possible measure of our profitability by solution, which enables us to monitor the real financial performance and the profitability as such by solution. So now if I take back my 2020 reporting. So we were already disclosing the revenues that you can see on the third line and on the columns separated by solution and geography for major operation and additional operation. You already knew the EBIT, split by operation, major versus additional. And finally now, the solution profit margin by solution as well as major operation as a total and additional operation level. What it means for 2020 is a 21% solution profit margin for ICA, 45% for MRS and 5.6% for PLS, which results at major operation level to 36.9% solution profit margin. And on the additional operations side, you have slightly dilutive 15.4% solution profit margin. The total group solution profit margin is, hence, reaching 34.6%. Thank you very much. I think I need to hand back to Daniel for the next -- and the market dynamics.

I think we're going to do a little Q&A.

Q&A first, sorry.

[Operator Instructions]

Thank you, Geoffrey. Thank you, Laurent. [Operator Instructions] I'm going to start with our first question from Patrick Jousseaume. Patrick asked, could you elaborate on professional services, CXM and BPA, which is new in the reporting, if I'm not incorrect. What is it exactly? And to what extent is this recurring or not? So we'll address that question, start with you, Laurent.

Yes. So you're completely right, Patrick. So we now are disclosing professional services. It's new as such. So before you had only recurring and nonrecurring revenue for both CXM and BPA. Now you get subscription-related revenue, professional services that were part of the recurring portion. And then you have the license portion that is still separated that you had it as a nonrecurring item. So professional services as such is repeatable and was qualified as a recurring up to now. And I know also some competitors disclose it as a recurring revenue. But we felt that as it was not related to subscription as such, and it was mostly time and material related to an implementation or customization service that followed either SaaS subscription or a first license implementation that it was maybe clear to separate them and be able to monitor them separately. I don't know, maybe, Geoffrey, you want to complement that?

No, it was very clear. Thank you, Laurent. Rob, do you have another question for us?

Another question from Patrick. What tax rate should we model going forward?

Want to take this one?

Yes, I will take [indiscernible]. So the tax rate, I believe we should -- you should use 22% to 25%. You have some variability depending on the mix of this geographical split where you do your profit basically across the group. But 22% to 25% is a fair narrow range of what we -- what you should use, I think, for the coming years.

Okay. Our next question is from Mourad Lahmidi. He asked, could you split out cash tax and cash interest for 2020, please?

Yes, for sure. So as you saw in the cash flow statement, the simplified cash flow statement we showed you, we moved on this line, that is a bundle of interest and tax cash aspect from EUR 85 million to EUR 37 million. Last year, on tax, we had EUR 45 million. And this year, we have EUR 10 million cashout. And last year, in interest, we had EUR 40 million. And this year, we have EUR 27 million.

Another question from Mourad. Could you please give us an apple-to-apple comparison of your 2023 leverage target in terms of end of 2020 leverage?

So what we mentioned at the end of 2020 is the 0.4x we saw is the ratio of net debt over EBITDA, excluding leasing at the end of the fiscal year 2020. Now, your point is very interesting because you're saying, in fact, you're anticipating a little bit the condition, but you're saying compared to your guidance in 2023 how this compares to basically my [ open for ]. So what you need to know is, first, you need to take into consideration that ODIRNANE from June 2022 onward, as we are contemplating the reimbursement, will be requalified as a debt. So either in the net debt calculation, basically, it will increase our net debt by this amount. So that's the first point you need to take into consideration. So we could do and what we will do for 2020 is you're asking apple to apple, we are assuming that this year we will treat the EUR 265 million of ODIRNANE as a debt, okay? And if you do that, you would move basically the 0.4x to 2.1 this year, okay? That being said, you need also in the perspective of the -- I'm anticipating a little bit in the perspective of the 2023 guidance. You need also to include the fact that we purchased in cash Beanworks, that we announced last week, for more than EUR 70 million that you need to factor in. And all that being made together, apple-to-apple with 2.1x of this year, plus this effect of Beanworks that we will have throughout 2021, we are looking for a leverage ratio, which is again the net debt divided by EBITDA excluding leasing, well below 1.75x. So from 2.1x 2020, we are aiming apple-to-apple at 1 point -- well below 1.75x, and you need to take into consideration because I'm trusting in your model, you will do year after year, you need to take into consideration the fact that we've purchased of more than EUR 70 million in cash Beanworks this year.

Great. There's a follow-up question from Mourad as well, which is, could you give us an idea of the deleveraging trajectory that corresponds to your 2023 leverage target?

Yes. So I think that's -- I think I addressed it, but basically, we are moving from 2.1 to well below 1.75.

Okay. Great. Now these 2 questions, very similar, so I'll group them together. First is from Marc Saint John Webb, who asked, could you please give us EBIT per division and trend for the 4 divisions? And another question from [indiscernible], who asked, can you give the details with EBIT by solution as only revenues, given it would help us to fall the progression of Back to Growth plan and he said [Foreign Language], which is very, very nice, thank you. So maybe if you could address those 2 questions.

So first, thank you, [ Franc ], for your support. Second, so that's what we want to address with the solution profit margin and the solution profit we've been disclosing and I trust it was slightly after maybe you asked the question because it's a return question. The idea being, we have, overall, at the group level, you need the top line, you need the EBIT between major and additional operations. And by solution, you want to have an indicator. And the way we have transformed Quadient and that we have, I would say, leveraged the DNA across the board for each given geography, makes it a very, I think, I would say meaningful to have a solution profit because the EBIT will, basically, you would have to cut into pieces G&A that are mutualized, which is always -- there are always many methods and I would say, no perfect method. So we are providing you with something that could -- you could work back the metrics, I think you -- the way you want. But basically, the solution profit is anything that today we can qualify as being direct cost related to the given solution, and that will give you and enable you and us to qualify the evolution of this profitability by solution moving forward. And I think the second part of the question -- so I think it's -- I addressed it.

Yes.

Our next question is from Jean-Francois Granjon, who asked, could you give us the level of debt and EBITDA without leasing?

2020.

In 2020, I guess, yes. So the net debt, excluding leasing, if I remind well, is -- so the net debt exceeding leasing is around EUR 70 million. Basically, that's including IFRS 16 now -- sorry, including IFRS 16, in 2020, the net debt amounts to EUR 70 million or EUR 71 million.

EUR 70 million.

EUR 70 million, thank you. And the EBITDA if I take my EBITDA excluding leasing, I'm at EUR 160 million -- a little bit more than EUR 160 million, which makes back your 0.4x, I think, ratio that we communicated.

Thank you, Laurent. Again, from Mourad, a quick question, which is how is the solution profit margin similar to gross margin?

I think it's quite different. Basically, Mourad, in the gross margin, you would assume what we usually call the cost of sales, which are basically all the cost triggered by a sale. In the solution profit, we add up everything that contributes to the value of your solution, including the R&D that will be not tied directly to the revenue, including the sales OpEx. So basically, every revenue-generating cost, plus the cost tied to the production of the solution, so R&D, service as well. So -- and as well as marketing, so includes product marketing, basically anything, but the G&A, I think, is the best definition I could give, anything but G&A.

Thank you. From [ Olivier Nobau ] we have a question. Hello, and thanks for the excellent presentation. Thanks, Olivier. Can you please share with the current profit -- share with the current profitability between CXM and BPA which are up to be merged into ICA?

So up to now, we have not given any insertion profit. So it's a new KPI that we disclosed. And today, we are, I would say, merging ICA because I believe that we -- as explained by Geoffrey just earlier is that we have been building our BPA suite based on the backbone of the CXM R&D. So today, it felt to us that trying to now cut in pieces an R&D that serves both solutions didn't make sense. So we have not computed, and we have not made the exercise because it's again trying to reallocate things that are not together, the management, the R&D, the product marketing as well, the part of the go-to-market. So basically, we have not done the calculation, and we believe it's not so relevant as they are basically based on the same infrastructure and part of the same cost.

Excellent. And a question from [ Hope Gretchens ]. What explains the high level of central costs, $200 million, approximately, how do you expect central cost to develop going forward?

I'll take this one, Rob. It's a good question, [ Hope ], thank you. So we have obviously -- as you know, we operate in 2 several continents and 27 countries. This is also why we've been also progressively trying to reshape and simplify the business model. And it's also the benefit of serving 500,000 customers. So you have a lot of different customers that our back office, our finance team has to be able to process with some complexity in our model. If you look at the EUR 200 million, I think that you're referring to in 2020 in this reporting, it gives you probably a little less than 20%, around 19% for those G&A. I think we have to appreciate that it's a level that is on the heel of a year in which we've been severely impacted. So it's definitely a level that is after the impact that we had from the COVID of reduced sales, as you know, from the top line. This is though a boosted percentage that has been improving from 2019. And also in terms of absolute number, we've been able to reduce the G&A this year in 2020, based on the measures that Laurent described as short-term measures on the G&A, but also some measures that we're going to be able to have the benefit moving forward, such as the reduction of, for example, the numbers of offices that we have closed during the year, a little bit more than 30 offices this year. And to your point, moving forward, and I think that is also the benefits of our project of simplifying the organization and focusing on major operation is to also get more efficiency on our central functions over time and progressively, hopefully, be able to reduce the percentage of G&A within the group, so that our central function could be more efficient and provide better support, probably with less effort than before. And progressively, as we improve the trajectory on the solution profitability, we have also an improvement coming from more efficient G&A, all in all, helping improving the overall group profitability trajectory that we are describing in this second phase of the plan.

Thanks, Geoffrey. Our next question is from [ Roland Keenan ] and who asked, your 2% growth target for 2021 seems not to be very ambitious. Having in mind that the 7% sales decrease in 2020 and the 7 quarters of growth before COVID, why is there not more growth possible in 2021?

Thank you, Rob, for the question. I'm sure Laurent and I will be happy to address that part of the questions. So we potentially keep them for the end of the presentation, we will get to the guidance specifically of 2021 and moving forward, but maybe just a quick answer. Even as we speak, there are countries that are considering sometimes some more stricter confinement, like in France, as we're both sitting. So we don't have yet the same level of visibility that we had in 2019 before the COVID impact. So I think definitely, and there is a measure for us to take into account that uncertainty. And we definitely see, I think, that 2% as probably, hopefully, something that we should be able to improve upon if the conditions improve in the coming months. So we've seen in February and March, a good trend as we were exiting the trend of Q4, continuous improvement across the business. We haven't seen yet the impact of the new confinement, so we remain hopeful that, hopefully, we can potentially do more. Thank you, Rob.

Our next question is from David Cerdan, who asks, are you impacted by the issues on electronic components?

Very good question, David. As the world is actually progressively exiting the year that we went through with COVID, sourcing, traveling, being able to order electronics is obviously putting stress on the worldwide supply chain. So this is something that we're -- as a hardware manufacturer, obviously, on top of and managing with lead time quite ahead of the moment. We need to produce and manufacture own product on some of the electronic components, some of the lead time that we are usually having and ordering them is up to a year. So we have time to be able to anticipate, but this is definitely something that is to be of notice. We've seen already some costs on travel. Shipping is obviously a little bit more expensive. So that's an ongoing optimization of our supply chain and sourcing that basically is capable sourcing things both in Asia and bring them to North America as well as Europe. So, so far, it's okay, but it's definitely something we'll have to continue to monitor in the coming months, hopefully, after the world is getting back to a normal level activity, things will probably receive.

And our last question for this portion of the session comes from [ Olivia Amba ], who asked, how much acquisition cost incurred in 2020 were dedicated at Beanworks? How much M&A cost should be added in 2021 on top of the EUR 70 million price acquisition?

So I'll let Laurent give you more some of the breakdown information. But generally speaking, in our M&A of -- in the acquisition cost, you have the amortization, yearly amortization. So this is the structural part that Laurent will refer to. And then you have more of the one-off costs associated to M&A. This is obviously, as you've seen in our press release, this is not something that we plan to incur for the upcoming years. Our plan is an organic plan. We may remain opportunistic on M&A, but there is no particular amount that we should take into account from an acquisition cost for those one-off costs. But Laurent, you want to maybe and so more on the amortization side of the loss.

Yes. Up to now, The -- Geoffrey is completely right, first. But just to give some color around what he said, we have induced M&A-related expenses that amounts to EUR 20 million this year, a chunk of that, which is PPA depreciation, which is basically the amortization of some of the assets we purchase and the value we give to them, could be IP, it could be a customer base, et cetera. So Geoffrey is mentioning that in the future, and the guidance that we'll give you afterwards are mostly related to an organic plan. So as such, in fact, we are moving forward to decline at some point this PPA amount. The more we amortize what we have been acquiring in the past. Just for the sake of the clarity on 2020 figures. We have EUR 7 million roughly of PPA for this year. So from the EUR 7 million, you can, I would say, trend on progressively in your model, if it's the question, I guess it is the question towards maybe something from EUR 3 million to EUR 5 million at the end of the plan. That's, I think, a fair assumption.

And we have also the divestment-related costs.

Yes. So Beanworks more specifically. So basically, so out of the EUR 13 million, small portion -- relatively small portion. And as you know, the M&A activity this year was quite intense. We divested 2 company, acquired 1 and did an acquisition post-closing. Beanworks is relatively minimum. Top in mind, I have between EUR 500,000 and EUR 700,000 of fees on Beanworks.

Excellent. Thank you for that. So at this point, we're pretty much caught up on questions. We do have a couple that we set aside for either after the solutions presentation or after guidance and looking at the 3-year plan. So we'll lead those in those sections, and we will address those questions. Please continue to ask them as we go throughout the presentation, and we'll be sure to answer those as we progress. We'll now move on to the presentation on current market trends. Please welcome our Chief Marketing Officer, Tamir Sigal.

Good morning or good afternoon everyone. I'm Tamir Sigal, Chief Marketing Officer of Quadient. It is my pleasure to provide you with a more detailed view of the trends we see in our core markets. As we move to the first slide, when we create the back-to-growth strategy, we spent a tremendous amount of time looking at our core and adjacent markets, understanding the underlying drivers, the past and current and future trends, how these trends impact our customers and partners. And finally, what do these trends mean to our solutions and to our overall strategy? Quadient has a strong global team with specialized in diverse skills to monitor external sources, analyze many different data points and access to a wealth of trusted resources. A core principle of our back-to-growth strategy in 2019 was to focus is on 3 major topics. The first one, the impact of e-commerce and parcel volumes. Second one is the acceleration of digital agendas within all companies. And last but not least, keeping a close eye on the mail volume. In 2019, over 100 billion parcels were delivered globally. And it shouldn't be a surprise to anyone on today's call that parcel volumes are growing fast as a consequence of customer reliance on e-commerce, driven primarily by the COVID-19 pandemic. Looking forward, e-commerce is predicted to further grow by 10% on average per year over 2019 to 2024 in our 4 main countries. U.S., U.K., France and Japan. Digitalization, which continues to be a long-term business trend has been accelerated by new work-from-home habits, enables business continuity especially for our small and medium-sized customer segments. Furthermore, new regulation mandates in some countries are further driving this trend. Last but not least, all companies today do not simply compete on product and price. We're pushing the digital agenda to deliver great experience to customers, partners and vendors. And while the mail market continues to decline, there has been an estimate of 185 billion pieces of mail sent every year in our major operations. Quadient still has only 20% market share in the mail market. With significant room to gain more market share. Let's move to the next slide. Let's now look at the underlying drivers for Parcel Locker Solutions, which is split into 3 main categories. The left chart demonstrates that even pre-COVID-19 context, e-commerce sales are poised to increase by 26%. That's just from 2019 to 2020. In the middle of the chart, the volume of parcels increases at a similar rate, creating tremendous and different challenges for consumers in all e-commerce stakeholders, including side effects on our environment. Last but not least, when you look at our major countries, all 4 postal authorities show a huge spike in parcel volumes. This volume increase triggers the need for proven solutions to better manage last-mile deliveries. When you go to the next slide, let's push the fast-forward button for a minute. All indications and sources show e-commerce will continue to grow exponentially. According to third-party data, the combined e-commerce market in our main countries is expected to amount to USD 1.5 trillion by 2024. A staggering growth of 66% over 2019. And it's our belief that this growth will continuously drive the demand for Parcel Lockers across these countries in the years to come. Our market insights and competitive estimates indicate that there are roughly 2.4 million boxes installed across our 4 key countries in 2019. Comparing this network density to the most advanced countries in Europe and globally, we believe this number to potentially grow from 3x to up to 10x by 2025. And that gives you a perspective of how massive the opportunity in front of us is for our Parcel Locker Solutions. When we move to the next slide, we continue to scrutinize the development of mail volumes across our main markets. While physical communications continue to decline, it's still very important channel and not going away completely anytime in the immediate future. As we separate the marketing mail from the transactional mail, it's very clear that transactional mail is much more resilient, especially during a pandemic. And this makes complete sense as people still need to receive statements, bills, correspondence, health records, investment portfolio update, insurance documentation, medicine, legal documentation from the government and the list continues. It's worth noting that our MRS customers rely on Quadient's smart hardware solutions for processing transactional mail. This resilient segment of the mail volume is our most relevant underlying driver. It will come to no surprise that mail volume experience one of its deepest year-over-year decline in 2020. Yet looking forward, our market intelligence backed by publicly shared insights from some major postal organization suggest that mail volume will evolve broadly in line with its historical trend. That means that pace of decline that is manageable by -- for our customers and by our teams. As we move to the next slide, in addition to the increase in e-commerce and parcel volumes, the acceleration of digitalization also should not be a surprise. Our mobile devices are usually the last thing we see before we go to bed and the first thing we see when we wake up. As individuals, we rely on our mobile devices and tablets for more than just e-mail and social media. We use our devices as our wallets, as a vehicle for driving our banking investment and for doing our job and work from anywhere outside the office. In light of COVID, companies had to adapt to a new way working, enabling their employees to work from anywhere. A few fascinating dynamics related to working from home, include 55% of companies surveyed in the U.S., expect a portion of their employees will work remotely at least 1 day a week post-COVID. That's up 30% pre-COVID level. And in France, 60% of companies surveyed expect that more than 25% employees will work remotely at least 1 day a week after COVID. And IDC published a great report in September of 2020 and how small, medium-sized organizations are investing in new technologies that help employees work remotely to ensure resilience, high levels of customer support and enable business continuity. As we witnessed in the last few years, the drive of digitalization agenda is being pushed by regulators across the world, in particular, with Germany recently in 2020, France in 2023. And in the U.S., the subject continues to be the top of the mind. Our local teams are keeping a close eye on these regulations and working with customers on key digitalization projects. Last but not least, in our annual survey to our large software customer base, over 50% indicated they intend to increase their usage of Quadient Inspire to drive more customer communications for the sole purpose of delivering great customer experience. As we move to the next slide, to summarize, the intelligent communication automation market is driven by a number of trends, including the prevalence of remote working for all companies, regardless of the size and regardless of the location. Driving a better and personalized experience for customers, for suppliers, for vendors and for employees, the evaluation and replacement of legacy systems using future-proof technologies that support all communication types, all channels, all formats and making sure that the future proofing of demanding business requirements. The acceptance of using SaaS-based technologies for digital communications with stronger cash management capabilities, especially in times of economic uncertainty, like the ones we're still living in today. When we look at the combined software solution, Quadient is active in a EUR 6-plus billion market with sub markets growing double digits, as you can see on the slide. We are really excited about the future of our software business. As a summary, we chose these 3 markets for their current and future potential. We have confidence these markets will continue to drive the demand for our innovative solutions. This concludes my overview of the market dynamics. Thank you very much for your time.

Thank you, Tamir. Now we have an overview of the market forces and trends that are impacting Quadient and our customers. We will provide more detail in each of our solutions, and we begin with an overview of our new combined software solution, Intelligent Communication Automation. Please welcome our Chief Solution Officer for Intelligent Communication Automation, Chris Hartigan, who will present from Boston, Massachusetts.

Wonderful. Thank you, Rob. Good afternoon, and good morning, everyone. I am Chris Hartigan, the Chief Solution Officer for Quadient's Intelligent Communication Automation business, and I'm thrilled to be with you here today. Quadient Intelligent Communication Automation generated EUR 183 million of revenue in 2020, of which approximately 60% was subscription-related recurring revenue, which grew double digits over 2019. Our software solutions are used to power over 1 billion customer-facing communications and interactions every single day and are, therefore, absolutely critical to the operations of our over 8,300 customers around the world. 55% of our customers are on SaaS contracts, a figure which will continue to grow as we expand our SaaS footprint and accelerate our SaaS offerings in the market. We work with customers across multiple segments. From large enterprises to mid-market and small businesses as well. And we operate with a global footprint with approximately 85% of our revenue coming from North America and Europe combined. We owe a great deal of our attraction to our synergies with MRS, where we share approximately 35% of our customers as of the end of 2020. And we contribute to the group's profitability and achieved a 21% solution profit margin in 2020, providing more background of ICA to you. [Presentation]

On the next slide, we see Quadient's Intelligent Communication Automation customers depend on our business-critical software solutions to manage and automate those communication activities that lie at the heart of their business operations. Customer communications are the foundation of customer engagement. And our customers need to manage the creation, digitalization and delivery of communications at scale, including contracts, policies, statements, notifications and, of course, invoices. Some of these documents and communications are simple, while others can be very complex in structure and format, but all companies, regardless of size or industry, need to make sure that these communications, critical business interactions are compliant and secure and are also consistent across channels based on the customers' delivery preference. Our customers also need to make sure that these communications and business interactions are highly personalized and are enhanced with the right data and the right content so they deliver the right experience to the right customer in the right way. Oftentimes, the business communication is just the beginning of a more complex business process, which our customers also need digitalized and automated. This is the case, especially when the document being managed is an invoice, which for many of our customers makes up the majority of their business communications. In these cases, our customers need solutions that automate invoice presentment and all the collection activity that follows, so they can better secure payment inflows. And when that communication flow is reversed and our customers need to manage payable activity, they also need automation solutions so that they are fully in control of payment outflows as well. And as these various communication and process flows grow more complex, our customers need to map all of these interactions together into holistic customer journeys, so they're able to provide the best possible experience and level of engagement to all of their internal and external constituents. Automating critical customer communications and business processes saves time and money. In doing it with an intelligent set of integrated technologies, helps drive better customer experience, and better overall constituent engagement. These are the benefits customers realize with our ICA platform. Next slide. Our ICA solutions allows companies to digitally transform their communication and business process flows. And as a result, we complement closely the MRS solutions that many Quadient customers use to manage physical communication flows, do this across segments, just like the MRS solutions do. By being able to map both ICA solutions and MRS solutions by segment, we can, of course, unlock synergies across our go-to-market efforts, but more importantly, we can bring enormous benefits to our customers no matter their size or their related communication or invoice volumes. At the core of our ICA platform are our Customer Communication Management or CCM solutions, comprised of Quadient Inspire and Impress. Quadient Inspire is recognized as best-in-class for companies with very large communication volumes where scale and compliance are critical requirements. And Quadient Impress, which shares 60% of the code with Inspire is specifically designed for the needs of companies that have lower volume and complexity of requirements. Our depth and expertise in the CCM space provides us with the ability to effectively map leading digital communication capabilities to all of our MRS customers regardless of their size and regardless of their volume of communications. Of course, our ICA platform also includes AP automation, now centered on the Beanworks solution and AR automation centered on YayPay, we believe that the most attractive market opportunities for these solutions is the mid-market segment are not necessarily as large as those of big companies or the volume levels do suggest real benefits to automation. The market fundamentals in this segment are very strong, and the majority of these companies have not yet equipped themselves with either type of automation solution. And our CXM offerings, which include our customer journey mapping solutions and other digital capabilities to support 2-way and intelligent communication flows to enhance customer experience, are used by companies across the various segments as well. For our ICA solutions, we find that customers look for digitalization options when the size of their communication volumes or invoice volumes, reaches a level that is large enough to justify the investment in automation capabilities. And by the design of our solutions, we have the ability to scale up and scale down with customers as their business needs change and their communication and invoice volumes change as well. Next slide, please. In Intelligent Communication Automation, we have an expansive sales force of direct sellers, but our go-to-market is enhanced further with the large ecosystem of partners that we benefit from working with around the world. We have well over 100 go-to-market partners who are leaders in helping companies navigate technological change and who have built expertise around our ICA solutions, [indiscernible] consultancies and system integrators as well as regionally focused firms who perhaps specialize on just a specific area of digital transformation. Many of these go-to-market partners work with us on one of our solutions, but several of them partner with us across more than one solution area. Capgemini, for instance, as Geoffrey mentions, has a go-to-market focus, both for Quadient Inspire for communication management and on YayPay or AR automation. In addition to go-to-market partners, we are closely aligned as well with a number of reseller and distributor partners who embed our solutions into their go-to-market efforts and have developed excellent position, sell and support ICA solutions to their customers. We have some resell partners that are large global organizations that embed our solution into their go-to-market across many geographies, such as Canon, Ricoh or Xerox, and we have scores of others who cover the mid-market and small business segments and to extend our solutions to their local customers. And just like with go-to-market partners, some of these resell partners also work with us across our different solutions. Ricoh, for instance, is a partner for both Impress and Inspire as Geoffrey mentioned, and Sage is an active partner of ours, both with our Beanworks AP solution and YayPay AR. And a growing area of focus for us is our work with technology partners, who we align with on embedded technology integration so that our customers realize the benefit of an extended value proposition. These partnerships cover integrations with 4 business applications such as Duck Creek or Salesforce as well as specific technological needs that bring further power and extension to our solutions, such as DocuSign for e-signature, or Kitewheel for journey orchestration. Next slide, please. Our ICA software solutions are trusted every day by more than 8,300 customers. Not just across different segments and different geographies, but across many different verticals as well. Because of its enterprise-grade features and best-in-class performance capabilities, our Inspire communication management solution is the market leader at the high end of many regulated industries. In these verticals, such as financial services, health care, utilities, we have a lengthy customer roster that includes many of the world's premier brands. These customers trust us every single day to manage their most sensitive and most important customer communications in support of billions of customer interactions across their business. Our Impress solution is trusted by small and mid-market customers that have important communication automation and distribution needs for where simplicity at scale is a critical factor. This includes many of the same regulated industries but also cuts across other industries such as property management, government and services sectors. And due to our overlap in market focus and go-to-market synergies, our Beanworks AP solution and YayPay AR automation solution are also well represented in these same verticals. But do as well provide extension into additional adjacencies, such as high-tech and manufacturing, which are often characterized by large invoice volumes. Clearly, the need for communication management and business process auto manage -- automation solutions is not bound by any restrictive vertical use cases. And the strength of our ICA platform and the appeal of our solutions is exemplified by the expanse of our customer roster across these verticals. This further provides us with great support for our overall growth ambitions as we will compete for business and extend our solutions across a very large and compelling market opportunity. Next slide, please. Our ICA business is a global business with customers, partners and operations across all of the key regions that Quadient operates in today. Today, 50% of our revenue is driven from the main European countries, but our revenue in North America is growing meaningfully due to the dynamics of the communication management and business automation market in that region and also due to the recent addition of YayPay. And of course, Beanworks, which historically have been primarily focused on North America. In addition to this, some of our ICA solutions have enjoyed strong adoption in key international markets, such as Asia Pacific and Latin America. Given the rapid rise of digitalization in these markets in the early buying cycle for many companies, we expect this trend to continue for years. But as I mentioned, we are truly a global business. And we have proven customer adoption of all our ICA solutions across North America and European countries and adoption of selected solutions in further international markets. As a result, we are confident we have the foundation in place for successful expansion of all of our solutions across all our key regions going forward. Our next slide, please. Like many other software companies, we have been adapting our business model to place greater emphasis on recurring revenue, notably in the form of SaaS revenue and other forms of subscription-related revenue. Due primarily to customer preference, we still do offer some of our communication management solutions via upfront [indiscernible] but this has been transforming over the past several years. And going forward, we expect a larger mix of customers to be engaging with us through SaaS and subscription contracts. These types of recurring revenue contracts are understood and appreciated in the market both from customers and partners alike. Whether it's a subscription license, a SaaS license, a consumption or usage-based license, recurring revenue contracts allow us to better position the cost of the solution in line with the ongoing operating budgets of our customers, which provides our customers with easier onboarding and better run-time control of their overall operational spend. All of these license types are part of our definition of subscription-related revenue. As Laurent mentioned, with the addition also of maintenance revenue, which is highly predictable recurring revenue that flows in subsequent periods from the sale of an upfront software license. As evidence of our success in evolving our business with a greater emphasis on recurring revenue, we witnessed a strong increase in subscription-related revenue in 2020, achieving EUR 107 million, up 13% to EUR 95 million in 2019. This speaks especially to the market acceptance of these types of license models as well as to the timeliness of our push to prioritize these types of licenses over upfront software sales as we move forward. On the next slide, we can see that intelligent communication automation benefits greatly from and contributes greatly to, we actively leverage the installed base of over 400,000 MRS customers. And today, over 35% of our revenue and over 60% of our customers are aligned with our MRS solutions as well. Having the ability to align our solutions with the larger Quadient customer base is a significant competitive advantage of ours. And of course, will continue to be a core synergy for us. Further, we also leverage greatly sales and marketing infrastructure that covers our MRS customer base in key markets, and we equip those teams with the right marketing messages and the right sales skills to help them promote ICA solutions to their customers. The combined focus also expands our local and corporate marketing efforts, where we enjoy shared leverage effects. Of course, this provides enormous cost synergies to us and significant time to market benefits for ICA. And because of our portfolio approach to communication management and business automation solutions, we're able to share our customer service, customer support capabilities as well across the entire ICA platform. And as noted previously, we have deep R&D and product synergies throughout ICA, where we leverage common software practices, code bases, tools, frameworks as well as shared centers of excellence for functions such as documentation, quality insurance, cloud infrastructure, cloud operations and many other areas as well. All of this helps us to move faster with better best practices at greater scale and with lower overall cost than we could if we had to organize each of these efforts independently. Next slide, please. Since we announced our back-to-growth strategy in early 2019, we have been focused on building out our portfolio of software solutions and transitioning our platform to cloud and SaaS-based models, also while enhancing our go-to-market efforts in order to expand our market presence. Early on in 2019, we broadened our market focus for Inspire to target utility, telecom and government clients, and we have made several key hires and formed several new partnerships in these areas. In 2019, we also enhanced our Inspire solution with new cloud capabilities to help our customers continue their transition to cloud deployment models. In 2020, we built new market efforts around strategic partnerships, such as Kitewheel for journey orchestration and Duck Creek for insurance claims communication support. Both companies being well recognized as SaaS leaders in their space. In 2020, we also announced major advancements to our ICA platform with the acquisition of YayPay, of course, in June, and the launch of our cloud-based Impress solutions shortly thereafter. Both of these events allowed us to accelerate go-to-market efforts as we use them to correspondingly build out distribution capabilities across our sales teams and across our key regions in order to grow customer adoption of these important solutions. And 2021, we're obviously continuing our transition to cloud and subscription-related capabilities with our recent acquisition of Beanworks for AP automation, which will as well, drive even further go-to-market efforts in the future. Next slide, please. In 2020, our ICA revenue saw an organic decline of 3.5%, driven primarily from 2 factors. First, sales of large one-off software licenses and professional services engagements tied to our Inspire solution were delayed due to the COVID pandemic as large organizations were not able to execute cross-functional IT projects with the same level of agility as they were used to. Remember, when a customer adopts an enterprise software solution like Inspire, there is a great deal of project coordination required across multiple different groups to execute all of the integration and implementation work required. And as a result, there was a slight slowdown in 2020, partly resulting from many of these large Inspire projects being temporarily healthy. The second reason for the organic decline is due to our transition to a recurring revenue model, which we described earlier. As noted previously, our subscription-related revenue in 2020 increased 13% to EUR 107 million, driven from our prioritization of recurring license months, including subscription, SaaS and volume licenses as opposed to upfront software license sales. As has been exhibited by many other software companies, who have similarly transformed from one-off license models to recurring license models, such a transition results in a recalibration of revenue as the mix of revenue improves with each new SaaS and subscription license that is sold in lieu of an upfront software license sale. As a result, despite the organic revenue decline, in 2020, our mix of revenue was enhanced during the year, and we made great strides in improving the underlying growth fundamentals of our business as a result. As noted, and as a result of our 13% increase in subscription-related revenue, this subscription revenue now makes up 59% of our total revenue, up from 50% in 2019. Next slide, please. As we execute our transition to a true recurring revenue business, those areas that will help us drive further expansion and sustainable growth in the years ahead. Our ICA solution profit margin of 21% in 2020 has benefited from the fact that nearly 60% of our revenue is recurring in nature and provides a high degree of leverage that we can use to efficiently operate our business. As described previously, we will be continuing to transform more of our customers to recurring license models as opposed to upfront software license sales. And this will, of course, have an impact on margins as we implement this change. While this transition is happening, we will be making investments in R&D and go-to-market, so that we can enhance our platform to address even more customer requirements and so we can extend our reach into as many customer verticals and segments as possible. The markets that we compete in with our ICA solutions are fast-growing and dynamic. We are highly motivated to capture as much market share as possible. From a product standpoint, this means making sure our solutions remain extremely competitive, and from a go-to-market standpoint, this means making sure we are leveraging and empowering multiple different channels across all the regions we compete in. We are very confident that our transition with true recurring revenue business and our investments in these areas will derive an ICA business profile that will benefit over time from more attractive customer acquisition and retention attributes, which will, of course, lead to greater stability, predictability, and higher levels of solution and profitability. Next slide, please. We utilize a very data-driven approach to understanding and managing our ICA business with the 3 KPIs that we elevate of all others and use as accomplishments to measure how well we are executing our strategy are these 3. First is the percentage of customers that are on SaaS or subscription contract. Increasing the share of customers from these types of contracts will deliver more stability and sustained growth of our revenues over time, which is why this is important to us. The second KPI that we focus on is, of course, ARR or annual recurring revenue. ARR is the measure of committed annual recurring revenue that we have in the business and is a forward-looking indicator that helps estimate future recurring revenue growth. ARR also takes into account new bookings as well as renewals of existing recurring revenue customers. As ARR increases, it provides guidance as to what recurring revenue growth in future periods were like. And the last KPI that we focus on is the percentage of subscription-related revenue we have in our business, which is correlated to the first 2. As we increase the percentage of customers for SaaS and subscription contracts and as we grow ARR, we can better predict and manage the percentage of recurring revenue that we report in our business. The historical evolution of each of these KPIs for ICA has been favorable, with 9 points of increase in the percentage of SaaS and subscription customers with double-digit growth of ARR and with 9 points of increase in the share of subscription-related revenue over total revenue, all as measured in 2019 and 2020. Recurring revenue ultimately is what will drive our overall growth, and it is also the foundation for our profitability as it allows us to financial and operating leverage required to scale and optimize our cost structure over time. That is why these 3 KPIs are [indiscernible]. Next slide. As Geoffrey mentioned earlier, our ICA software business is poised to benefit from rapid convergence that is happening across previously separated communication management and process automation landscape. The lines are blurring between managing the creation and delivery of critical communications and automating the complex business process workflows that those communications were often linked. In each of the various segments where our ICA solution excel, there is a strong and capable competitor. While most of these competitors focus on just one portion of this monument market. Other competitors are also taking advantage of the comparator to this happening by looking across segments to expand their offerings and support our customer needs. Companies like OpenText and Adobe, for instance, traditional competitors in the communication management market also have strong capabilities in the broader omni-channel communication space. And are pushing aggressively on customer experience management with orchestration and analytics. In companies like Esker in France and UnifiedPost from Belgium, both until we have document outlook and delivery capabilities, which they marry together with a similar focus on AP and AR automation. And then, of course, there are many companies such as Bill.com that bring together both AP automation and AR automation capabilities together for a more complete process automation value proposition. Ultimately, however, it is the customer who decides. The customer decides how and when these things really converge. But our customers are asking for communication management and process automation solutions together. And we are clearly seeing a strong and compelling shift in the market that we believe will enhance our competitive position as our platform continues to strengthen and expand in all of these areas. By having a strong solution in market that is well adopted across all of these individual segments, we feel we are better positioned than anyone else to benefit from the convergence that is happening in the market. Next slide, please. Our strength in Intelligent Communication Automation comes not just from our integrated portfolio but also from the fact that the individual solutions within the platform are well recognized in their own right as leaders in the markets that they focus on. IDC, is in fact, has recently ranked both of our communication management capabilities represented by Inspire and Impress. And our AR automation capabilities represented by YayPay as clear leaders in their respective markets. In both of these rankings, our solutions are recognized for their overall breadth and capabilities as well as innovative SaaS delivery models, implementation of artificial intelligence, proven market penetration and customer adoption. It is notable that Quadient is the only provider to be ranked by IDC in both the communication management landscape and the AR automation market, much less recognized as a leader in both. And also to our point in the previous slide, the IDC market case where customer communication management here is further evidence of market convergence as the IDC landscape includes other many competitors that previously would have been identified as direct CXM competitors as well as several organizations that previously would have been identified as to our BPA competitor. Of course, we expect to continue to see more analysts cover [indiscernible] as move forward. And of course, not to be left out, Beanworks as well has received several positive accolades from market analysts and based on our own extensive market research, we know that Beanworks is a clear leader in the larger market with AP automation tools. Next slide, please. Our ICA business is a strong global software business. It has an established leadership position in the market and communication management and business automation. ICA will report meaningful revenue growth by expanding the capabilities of our solutions in order to address more customer requirements as well as by expanding our footprint across our key geographies. So that we can capture as much of the market growth as possible in the years to come. Our revenue growth will also be boosted by evolving our customer base and revenue mix to more of a recurring revenue model. We will also manage it from the upsell and cross-sell with various solutions within ICA, in line with the market's conversion. As we grow our revenue, we will strengthen our profitability as our subscription and SaaS models with scale with every new customer in our investments in R&D and go-to-market will be leveraged across a larger and more expansive customer. We are confident that our ICA solution is just at the beginning of being able to show strong growth and sustained contribution for many years ago. Next slide. In 2020 and as a result of the many factors presented over the course of our 3-year plan, we expect compounded annual growth in subscription-related revenue of between 20% and 25% and a solution profit margin exceeding 30%, most driven in part from the compelling and dynamic market opportunity that we are well positioned in as well as from the prudent management of our business as we execute our strategy in the coming years. And on the last slide, we'd like to summarize. ICA brings together the very best elements of CXM and BPA to allow us to take advantage of the market convergence that has happened, a highly synergistic and customer-oriented approach. ICA is the digital future for many of Quadient's historic digital mail customers, which is clearly a unique differentiator in the market and will support our sustained scaling growth for years to come. ICA delivers many benefits to the group, and we also benefit greatly moving part of the group, as evidenced by our high percentage of revenue and customer aligned with the MRS business. I see it's transitioning more and more on [indiscernible] business by emphasizing SaaS and subscription contracts where our customers and as a result, our annual subscription-related revenue growth is expected to be 20% to 25% over the course of the plan. Business is highly distinctive in the market by [indiscernible] meeting solutions across the CXM, CCM, AR, AP value chain, which especially brings compelling investment suite of capability to mid-market system, where we expect to see the strongest quarter of growth. Together with the dynamic market conditions that exist, the solution capabilities that we bring and the synergies that we can leverage within Quadient, we are very confident that ICA to be a premier software competitor in the global market for many years to come. Thank you.

Thank you, Chris. We'll now move to Milford, Connecticut, where our Chief Solutions Officer for Mail-related solutions, Alain Fairise will offer an update on that product line as well. Please welcome, Alain.

Good morning or good afternoon, everyone. My name is Alain Fairise. I am the Chief Solutions Officer for Mail-related solutions. Today, I will give you an overview of the MRS, which is a foundational business of Quadient and represented last year close to 70% of our revenue in major operations. You will see that MRS is a strong asset for Quadient despite the slow decline in mail volume and remains a business with high profitability levels and strong fundamentals where several market opportunities exist, which give us visibility over several years of sustainable performance. If we start now with a few highlights. Going left to right, we can start with the revenue reported in 2020, which came in at EUR 653 million for our major operations. That revenue is achieved with a large number of business clients across the world, businesses of all sizes, more than 400,000 of them. We are the second largest player in our market, with a global presence in each major country. 75% of our revenue is recurring and mostly tied to long-term agreements with our clients. We have built over the years a large portfolio of intellectual property patents, numbering more than 550 to date. Our contribution remains very good with 45% of solution profit last year, even in a year impacted by COVID. MRS is a global business. Like all the Quadient businesses with a large weight of North America, which is the largest MRS market in the world, plus a strong presence in Europe and about 10% of our revenue achieved in other smaller geographies. We employ over 2,800 highly engaged associates around the world, many with a long tenure and unique expertise in this business. We are a key solution line for Quadient, and have demonstrated leadership in this business since the very early days of postage metering technology. To help you better visualize what the value is that we bring to our customers, I would now like to invite you to watch a short video. [Presentation]

Our core business is focused on 2 use cases. The first is the pricing, printing and payment of postage to enable mail distribution with our postage metering technologies. The second one is the creation of ready-to-mail communications addressed by a folding and inserting solution line. Around these 2 essential capabilities, we also offer a wide range of additional mail-related solutions. Most of our customers start the day using our technology in the morning when mail gets delivered using tracking and opening solutions. Then as the day unfolds, we will help design and create documents for efficient distribution, including scanning optical marks on invoices to determine what inserts need to get in the same envelope, or what invoices need to be mailed together. We also manage address printing and increasingly, the production of shipping labels as posts around the world vie for a bigger share of the growing shipping market. And add to document mail, the tracking and service levels previously available on parcels only. That wide array of solutions caters to the needs of a large range of clients. For small businesses, we help make mail more accessible, providing convenience and savings through accurate postage management. In many countries, the postal operator will also offer a price incentive to make the users recognizing the improved operating margin versus the production and distribution of physical stamps. At the other end of the spectrum, we enjoy highly engaged relationships with high-volume mailers, large mail rooms and service providers where mail is mission-critical and requires optimal service levels and sophisticated productivity solutions. In a nutshell, we make mail easy, efficient and compliant for our clients, large or small. Our presence across most segments of the Mail Solutions market represents the first strategic decision made by Quadient to differentiate us from competitors. The solutions that we offer keep evolving with technology, of course, increasingly leveraging Internet and cloud capabilities. The smart devices that we sell today are connected to remote management platforms for funding for rate updates, automatic inquiry ordering, management dashboards or statistics. We provide our mailing clients access to cloud-based shipping applications and document preparation tools. Connections also facilitate remote diagnosis and service in case of a problem. Our technology assets have evolved more and more towards a combination of hardware and software as IoT and cloud technologies greatly broaden the range of features that our smart devices can offer. Our design is based on reusable platforms across the entire mail-related solutions line. On the left side of the page, you will find pictures representing some of our product lines. Our main ones with pricing ranging from an entry-level of EUR 20 a month for a manual feed postage meter that would sit on the corner of an office desk and going all the way to the EUR 0.5 million investment for a high-speed folder insert that will fill an entire room. I would also like to highlight the fact that we enjoy technology leadership on the folding/inserting market and the #1 position in that market worldwide. Our commitment to technological excellence is a second strategic decision that drives our MRS strategy. Our business model now is focused on creating long-term relationships, which produce sustained cash flows over several years. We focus our sales approach on rental or leasing packages, which, in both cases, involve a multiyear commitment from our customers. The rental offers are sometimes dictated by local regulations, which forbid the sale of the money printing devices that postage meters are in order to ensure appropriate registration and tracking procedures with printed money. After the initial order is received, we continue to recognize various revenue streams during the term of the agreement. Service income, proprietary supply sales, rate software updates and postage financing revenue. We manage billions of postage dollars through our meters and help many customers with the financing of their postage. The combination of all these streams makes our revenue more predictable. The focus we have on creating sustainable recurring revenue has allowed Quadient to build a very sound business over the years. I also want to mention that we provide a very high level of service excellence. Satisfaction levels upwards of 95% are consistently reported by our customers, supporting a very high retention rate. And also noteworthy is the fact that we have no dependency on major customers as our revenue mostly comes from a large number of individual transactions with known maturity dates and scheduled renewals. All in all, the resilience of our MRS business is a very great asset for Quadient. Let's now review our market position. MRS is a large global market estimated at EUR 2.9 billion worldwide with 4 well-established factors. The underlying mail volume decline creates an interesting dynamic with smaller players finding it hard to continue manufacturing their own lines with reduced rents. Quadient is able to leverage this situation through agreements to provide white label products to those players. And today, 2 of them source products from us. We believe this trend will continue. The 2 major players on the other side, Quadient and Pitney Bowes are both investing in the growth engines, leveraging the cash that they generate from MRS. Barriers to entry, like the necessary certification by local postal operators and the heavy regulatory obligations, make it unlikely that new entrants will come in. From a geography standpoint, it's important to remember that 60% of the world market is in North America, where mail usage is particularly resilient in business communications. We have a unique advantage, strategic advantage in terms of geographic presence. We can benefit from the consolidation in Europe under our brand or not, and we are the only competitor with enough critical mass in North America to gain market share there. Our MRS market position is another strong asset for Quadient to build arm. Now you have heard today about mail volume across the world and the secular decline that it is experiencing, it's important to understand that the Quadient MRS business does not move at the same pace. First, mail decline is quite different by geography. And as individuals, our perception of mail may vary greatly depending on where we live. In countries where the government mandates the move to digital communications, like Denmark, it will decline faster than in markets where there is no such mandate like the U.S. And it so happens that the U.S. is the largest market in the world for mail. So as a player in the MRS market, it's important to be strong in the right geographies. Second, our business model serves as a natural shock absorber against short-term movements. As most customers make a renewal decision only at the end of their multiyear agreements. If you take a 5-year leasing term average, that means only 20% of the clients will be in play with the decision to be made every year. Plus, when there is decline in usage, we have offers that enable the customer to rightsize their equipment as mail usually remains a necessary media for companies even at a lower volume level. Third, product innovation and adjacencies like the growing shipping needs, make it possible to offer an attractive upgrade path to our clients, irrespective of mail volume. The value we bring is enhanced by new functionalities like management of shipping labels, progress in connectivity, user ergonomics. And you saw earlier that Quadient is committed to targeted investment in innovation to keep that value ad coming. Finally, we have opportunity to gain market share in the most resilient markets of the world starting with North America. Our operations there are at scale. We have a track record of performance, and we have critical mass. We have room to grow our footprint further from the 20% share of the U.S. space that we command today. The same goes for another market where mail is more resilient and Quadient is also a sizable challenger, Germany. We are leveraging the 4 elements I have described on this page in our strategic plan for MRS. The last point that I would like to highlight in this review of the MRS assets is the benefits that we derive from being part of the Quadient story. We are able to leverage the full array of Quadient solutions in many different ways. We can expand the customer relationship created through MRS products to include other solutions from the ICA software suite, in particular, and to generate cross-selling opportunities. Today, 60% of the customers using our ICA communication software are also using our MRS solution. The strength of the MRS sales channels can also be shared with the other solutions. We sell professionals carrying both product lines, enabling us to share distribution costs and increase productivity. The same applies to our marketing support. Overall, 35% of our ICA revenue originated from the MRS sales organization in 2019, 35% of our intelligent communication automation revenue. On the field service and customer support side, costs are shared between MRS and Parcel Lockers around the world. And in R&D and supply chain, we leverage shared talent and expertise in the common sourcing and delivery organization. The synergies between all the lines help MRS make the relationship with the client deeper and more relevant as conversations can expand beyond just Mail Solutions. The benefit is material on the top line and on the bottom line, both for MRS and for the other solution line. Over the last couple of years, we have continued to implement our strategy despite COVID. We were able to introduce in North America our new generation of Mail and Parcel Management Solutions, the iX/SMART LINE. The success of our virtual launch in the COVID year is a testament to the quality of our product design and the efficiency of our marketing and sales channels. We have shipped to date to more than 15,000 units. Progress was also made in critical areas of our strategic plan, in particular, with the expansion of our white label reseller agreements in Europe. On the after sales side, we activated new self-serve options for our customers who demand choice in the digital age, that investment was made. We have made great progress in the reconfiguration of our sales channels to increase the weight of inside sales for the more transactional side of the business in order to free up our field sales professionals for high-value ad solution selling, in particular, to support the cross-selling of our suite of ICA digital communications and AR Automation Solutions, Impress and YayPay. Now in terms of revenue evolution, in 2020, we suffered from the COVID crisis, of course, as you can see on the graph. But we were able to limit the revenue impact despite lockdowns that affected usage of our solutions around the world and despite the slowdown of the business cycles. The proof that the strength of our business model is very much real. We took at the same time, a very strong action to preserve our contribution in this unique year, delivering a very strong 45% profit margin level. Let's take a closer look at how we achieved that performance. In fact, the discipline, the fiscal discipline that we were able to exert in 2020, is a continuation of years of focus and efforts to constantly adapt our cost structure as the business of MRS rolls. We took extraordinary measures, short-term measures for expense control last year, reducing cash outlay and spend wherever possible, but without damaging our business engine. We also continued to reduce our fixed cost for the future by moving to an optimized distribution center in North America in Mississippi and by outsourcing more of our R&D efforts to offshore partners. We also implemented new, more efficient ways of designing our products, and we announced the divestment of our direct operations in Australia, in line with our geographic focused strategy. In addition, MRS benefited last year from expanded sharing with the other solution lines of some of our assets, namely sales, service, supply chain and R&D. The result was a very strong profit contribution in 2020. Now how do we manage our business in MRS? Well, we track 3 important KPIs to monitor the evolution of our execution plan. First, we measure how much of our customer base we have converted to our new technology and how much of grade potential we still have. As we roll out our new lines around the world, we have room to grow here, as you can see. Second, the resilience index is a measure of the difference between our supplies revenue evolution, and our total revenue evolution. It confirms that mail volume is not our only driver. And as you can see, during COVID, the gap has been quite significant. Usage slowed down during the lockdowns, but revenue did not slow down as much. We expect the spread will continue to -- will naturally reduce as COVID fades going forward and usage comes back. We'll see about that in 2021. Finally, we measure how our recurring revenue moves as a percentage of total revenue. We continue our focus on building a resilient business in line with the Quadient strategy. So when you look at the global picture for MRS, we have 2 priorities to drive the business in 2021. We will drive revenue in several ways. We will continue to roll out our new SMART device line with 4 new geographies introducing the iX this year, pushing for market share and upgrade revenue. Our focus will remain on the 2 main geographies, European Tier 1 markets and North America. The recent divestment of our Australian direct operations is in line with that strategy. MRS is also committed to growing cross-selling of the other Quadient Solutions, leveraging and sharing both customer base and sales channels. On the other side of the coin, our cost optimization program will continue. We will continue to adapt our sales channels to better fit the market opportunity available to us both in the transactional and in the professional segments. On the supply chain side, we are leveraging responsible manufacturing to reduce our environmental footprint and to generate savings. Thanks to our platform design philosophy, we are able to reuse many components for remanufacturing. We're also adapting our manufacturing facilities, applying the successful mix of outsource and insource that we've used for mailing to our folder inserter lines going forward. Our R&D organization, on the other side will benefit from streamlining of development centers in the document systems area. So a lot of projects, both on the revenue and on the cost control side. When we look at the past trends and also take into account the current impact of COVID and the digitalization trends, we feel confident that we can continue to take market share and outpace the competition. We feel that for the next 3 years, we can do better than a 5% decline, and in particular, in 2021. We are planning to put in place several cost-improvement initiatives in the coming years, as we highlighted in this presentation, in order to protect the MRS profitability. So in terms of numbers, our ambition translates for the coming years into a revenue trend CAGR of less than 5% decline and the profitability maintained at 43% to 45%. Now wrapping up. In summary, we have covered today an overview of the MRS assets that support our business plan. We've seen that we are a global business with a large offering, servicing small businesses and large volume mails alike. We are investing in the renewal of our line, leveraging innovation and our strong technology expertise. Our business model is exceptionally resilient and not prone to short-term swings. We are uniquely positioned on a geography standpoint as a challenger in the largest market in the world with the means to grow share in North America, and we are well positioned to benefit from industry consolidation in Europe. Our track record is one of performance, as highlighted by our 2019 results and our resilience during COVID, and we benefit from the Quadient Solutions story and the portfolio of solutions that Quadient offers to expand and secure the MRS business relationships over time. All of which is to our ambition for the business, which is to contain the long-term trend of slow decline and to maintain a very high contribution and cash generation level. We have every confidence that we will deliver on those goals. I thank you for your attention, and I wish you a great Investor Day with Quadient. Thank you very much.

Thank you, Alain. Finally, we go to our Chief Solutions Officer for Parcel Locker Solutions, Daniel Malouf, for an update on Quadient PLS. Please welcome, Daniel.

Good morning, and good afternoon, everyone. It is my pleasure to provide you additional insights into Quadient Parcel Locker Solutions strategy and activities. I would like to start with an overview of our Parcel Locker business. Parcel Locker Solutions generated revenue of EUR 83 million in 2020, a very strong organic growth of 36% year-over-year. 2020 growth was driven by the expansion of our network in the U.S. and Japan as well as by increased subscription-related revenue coming from our existing installed base. By the end of 2020, subscription-related revenue represented over 50% of total PLS revenue. PLS generated a solution profit margin of 5.6% in 2020, which is the result of a highly profitable installed base, in part offset by the investment to continue accelerating the growth of our installed base. The retention rate among our installed base is very high with a churn rate that remains below 0.2%, which is to us, a great indicator of the quality of our offer and the high level of services, our expert teams bring to our customers. In terms of number of lockers, Quadient is the second largest global player behind Amazon. With 13,000 lockers installed at the end of 2020. Lastly, we have experienced very significant growth in both parcel volumes and usage rate of our lockers, which validates the added value of our innovative and patented solution to our customers and to consumers. Parcel volumes are booming driven by a strong e-commerce growth and all indications show this trend will continue to accelerate for the years to come. Let's review the challenges that are generated by the strong decrease of parcel volume. Consumers are obliged to adapt their schedules to delivery times or have to go through long queues at collection points. Moreover, due to the COVID-19 context, human interaction and package hand-over continues to be a health concern. Carriers and retailers are seeing that last-mile costs increase dramatically as more parcels require more stops and generate more missed deliveries. Labor constraints are also strongly emphasized. Property and collection point staff are overloaded with incoming packages and the risk of loss on test is increasing significantly. And finally, the increase of packages creates a side effect on the environment, since 25% of CO2 emission and 20% of traffic in urban areas come from delivery vans. This situation is not sustainable. Short- and medium-term solutions are now essential for all e-commerce stakeholders. Actually, traditional hand delivery and return brings a lot of pain points to both carriers and consumers. Parcel Lockers are the only automated and proven last-mile delivery solution to answer these challenges. Parcel Lockers brings consolidations of deliveries, safety, speed and convenience. Consumers can choose to pick up and return their parcels whenever they want, wherever they want, at home, at the office and out-of-home and in totally secure way. So let me now introduce you to Quadient Parcel Locker Solutions and share with you why we are unique on the market and why our customers rely on our solutions. Let's share first a quick video. [Presentation]

I hope you have now a good overview of what we do and the added value we deliver to all stakeholders. Our primary focus is to offer to consumers an outstanding delivery and return experience. And to bring to retailers, carriers and property staff, the most efficient and convenient solution for their last-mile parcel operations. Our solutions address at home, at the office and out-of-home deliveries. Quadient's PLS mission statement is to grow and monetize the large dense and open locker network with a carrier-agnostic approach. We target cities in countries where e-commerce is strong. Our ambition is to be at less than 5 minutes' walk from every consumer by installing Quadient's Lockers in every building, office, store and collection points. Thus, we will maximize convenience and boost usage, which will drive profitability. We aim to automate both home and out-of-home last-mile parcel deliveries, returns and consumer shipments, targeting the 4 verticals that handle most of the parcels, carriers, retail, property managers and corporate offices. Last but not least, our Parcel Lockers contribute to the reduction in CO2 emission by consolidating parcel flows and reduced advanced traffic in European areas. This is made possible, thanks to our proven solutions and our comprehensive range. Quadient Parcel Locker Solutions breaks boundaries to create an integrated experience using a combination of smart hardware, intuitive mobile interface and cloud platform. Let's start with the smart hardware, which is the most visible and tangible part. We provide a comprehensive range with indoor and outdoor, standard and light lockers enabling customers to fit a Parcel Locker in virtually any location and handle any volume. The design, which is mastered by Quadient has been optimized for total cost of ownership. It is modular and scalable. It is totally configurable to adapt to customer requirements and evolves while volume grows. The safety of goods and people are totally guaranteed and the contactless delivery option is available. The user interface and mobile app offer a unique parcel experience that is fast, secured and intuitive. It serves both consumers and delivery agents for delivery and return parcel flows. We are glad to report that our app is rated 4.9 on app store, which shows that it is highly appreciated. Now let's highlight what makes our solution unique. Our cloud-based network management platform, which is the core of our system. This platform is instrumental in the tracking of all the parcels and the management of the network. With this, we can monitor the state of each locker and analyze key indicator of the installed base to make data-driven decisions. With our network management platform, we are integrated with 100% of our customers, dealing with millions of parcels per year across thousands of locations. This is the core where security, robustness and scalability are a must. Thousands of diverse businesses already rely on our vertical-agnostic, location-agnostic and open-parcel locker network solution. Thanks to our unique combination of great user experience, reach a scalable software and a comprehensive locker range, we meet the parcel management needs of carriers, retailers, property managers and corporate offices. By addressing these verticals, we provide Parcel Locker automation for both home and out-of-home parcel deliveries, and we relieve the last-mile parcel management pain points of e-commerce stakeholders. This value proposition to our customers goes with a strong added value to the consumers and the positive impact on the environment, which is a real lost given the strong sensitivity in cities on these topics. In order to enable the expansion of a large locker network, we offer 2 flexible business models to accommodate our customers' requirements. Both models generate already profitable subscription-related revenue. For the purchase model on the left-hand side of the slide, subscription revenue attached to the one-off sales represent 40% of total revenue over a 5- year period. These subscription fees encompass software subscription, support and maintenance. This significant percentage of subscription-related revenue is achieved, thanks to the high retention rate of our installed base with a churn rate below 0.2%. We already see that our customers tend to extend the use of our solution beyond the 5-year period. And as time passes, the long-term value of our solution increases with higher percentage of subscription-related revenue going further than the 40% rate. For the rental model, on the right-hand side of the slide, 100% of the revenue is recurring as it is spread over the rental contract with a commitment period from 3 to 7 years, depending on the contract signed. In addition, we continuously monetize our existing installed base by adding volume-based revenue streams, such as resident fees or per parcel fees. Let's focus on the rental model. In the case of an open network, Quadient manages its model securing a minimum return by renting a portion of the lockers with first orders. Then we drive additional revenues and profitability by onboarding other customers once rolled out. PLS in Japan is a perfect example of this model. Our first customer and main partner, Yamato, had made a 7-year commitment on a portion of each machine securing a minimum payback to Quadient within a decent time frame. On the basis of this commitment and the secured minimum payback, Quadient and Yamato have been able to roll out the locker network very quickly. As soon as the locker network became large and dense enough, Quadient was able to add new customers and new services. I am referring here to other carriers like Sagawa or Japan Post or the development of a C2C service. This is how we have been able to improve the internal rate of return. Indeed, as you can see on the chart, with additional secured volumes since rollout, Japan Parcel lockers currently sits at 11% internal return rate with 76% of boxes subscribed, and could reach up to 20% internal return rate with 85% to 90% of boxes subscribed. Calculation is based on the 7-year lifetime. If lifetime exceeds those 7 years, internal return rate will mechanically increase. As mentioned previously, our goal is to launch and expand our open locker network in countries where e-commerce is strong. We decided to focus on 4 countries out of the top 10 largest e-commerce market. The U.S., Japan and France, where we are in a leading position and the U.K. that we have just launched. We selected top largest e-commerce countries where we are able to leverage Quadient's existing strong operational and commercial capabilities. The United States is the second largest e-commerce market in the world. There, we are marketed doing residential segment, thanks to the Parcel Pending acquisition. And we also have a growing presence in retail sector, thanks to the last contract as well as in the indication segment where we have more than 50% market share with universities. Japan is the fourth largest e-commerce market and we have a strong market leadership, thanks to our joint venture with locker top carrier, Yamato. You will see the scale of our locker presence in a few slides. We also are the leading carrier-agnostic player in France, which is the 7th largest market. And lastly, thanks to our market recognition and scale as well as our existing operations, we are also developing in the U.K. the third largest e-commerce market globally. Our countries of focus are the largest e-commerce markets as of today, and they still have a lot of headroom to grow. Since our launch for the carrier and retail markets in France in 2014, we have focused on growth in our selected geographies and verticals. We have been leveraging Quadient's commercial relationship and operational capabilities with its MRS business. As an example, we leverage our existing relationship with La Poste to establish our first joint venture with Geopost. We have executed our plan and built a sustainable model step-by-step over time, and we have accelerated the execution of our strategy since the beginning of 2019 following the acquisition of Parcel Pending. A few major events have structured Quadient PLS story and demonstrated our model is repeatable. The first years allowed us, in France, to understand the challenges of carriers and retailers in the last mile and to develop solution in adequacy with the needs of these 2 verticals. We launched a joint venture with Yamato in 2015 in Japan, leveraging our experience with Geopost in France. This joint venture has been the foundation to our Japanese success, which was expanding now to working with Sagawa, DHL, Japan Post and many retailers and convenience stores on the unique scale project. In the U.S., the launch of the education segment in 2017 and the acquisition of Parcel Pending in 2019 have made us a leading player in this market. We are now expanding to the retail sector with a major contract signed with Lowe's in 2020, leveraging the experience we have gained over the last few years in the retail vertical. Our entry in the U.K. residential segment, leveraging Parcel Pending experience in the U.S. has been successful, and we are now scaling PLS presence in this market. Thanks to its position and its repeatable model, Quadient PLS has achieved a leadership position. Our future growth will be repeating on the same success factors that have brought us where we are today with further potential to save on our 4 verticals across our targeted geographies. Quadient PLS high-growth trajectory continued in 2020 with a 36% organic revenue growth and over 50% of subscription-related revenue, as you can see on the chart. This very significant growth was driven by a strong dynamic in all our targeted geographies. In the U.S., we are scaling on property managers since the acquisition of Parcel Pending with market share gain over Luxer One and Package Concierge. We have also launched the retail vertical with the successful rollout of the Lowe's project, which includes more than 1,300 units installed at the end of the year, generating a very significant revenue in the fourth quarter 2020. In Japan, we are continuously rolling out our large dense and open network strategy. We have successfully implemented this strategy in Tokyo with a fast ramp-up and with circa 3,600 lockers in October 2020. Thanks to the density that we have reached, we have been able to onboard new carriers, including Sagawa, DHL and Japan Post into our open network strategy, and we have been able to add new services, such as C2C. C2C now represents half of the volume. This further proves that with density comes convenience and proximity for consumers, driving benefits for all stakeholders. And in our 4 main geographies, we have further expanded our addressable market, thanks to the launch of our new Parcel Locker Lite to complete our comprehensive range. Our growth is based on the profitable and sustainable model. While our focus is to grow our PLS solution and gain market share, our priority is to grow a highly profitable recurring model. The profitability of our installed base per country increases with the growing number of locker install. Once each country has reached a scale network, then the profitability increases even more rapidly. For example, our installed bases in the U.S. or Japan are already at scale and are already highly profitable in a range of 25% to 30% solution profit margin. We are expecting the profitability of these installed bases to continue to increase in the coming years, thanks to a few additional levers. First, as far as the rental model is concerned, we have set up a conservative depreciation policy, 5 to 7 years depending on contract length. This is lower than locker life cycle, which is above 10 years. This means that once customers extend their rental contract, it is driving our profitability higher as long as we don't have to replace the locker. Second, the usage rate of locker boxes should continue to improve and with it further monetization of the base. Third, we also focused on upselling our customers through additional boxes and new services over time, which, in turn, further improves profitability. Last, our base in France and the U.K. are not yet at scale. In 2020, we have delivered a 5.6% solution profit, which is the combination path. On the one hand, the 25% to 30% profit margin from the installed base. On the other hand, the level of investments made to develop our market share and to enhance our solutions and complete our offering. We have enjoyed an ongoing improvement of the PLS solution profit margin for the last 3 years, and we expect it to continue to improve. We have set up many business indicators to help monitor our progress. In particular, I wanted to share with you 3 of these indicators that we constantly track to drive and monitor our growth trajectory and our profitability. First indicator is the size of the installed base with the number of focus installed, which allow us to monitor customer acquisition and churn. It shows the speed of expansion of the installed base, and it is the criteria we have chosen to estimate our market share. The second indicator is the usage rate, which shows the increase in usage for our customers and the level of consumer adoption. It drives the profitability for all stakeholders and for us in particular. We consider that the optimum in terms of usage rate is around 75%, so we have set up a series of programs to help increase this usage over time. The third indicator is the growth of subscription-related revenue, which is an indicator of the robustness of the revenue. Coupled with the duration of the contracts and the very low churn rate, this also gives us a very good visibility on the revenue base that is secured for the years to come. The subscription-related revenue growth is key for our model given the high profitability of the installed base. We remain confident that our unique positioning in the Parcel Locker market set up for success in capturing the Parcel Locker market future growth. Our geographic footprint, our value proposition and capability to address at home, at the office and out-of-home deliveries separate us apart. Our installed base is among the largest in the world. In particular, when we compare ourselves to other carrier-agnostic players, our global installed base is between 2x to 4x bigger that puts us in a unique position to act as the key partner for all the different e-commerce stakeholders who want to leverage our locker deployment capabilities and network. We are the only locker player able to address the needs of carriers, retailers, residential property managers, corporate offices and education alike. Thanks to our expert teams as well as our proven and repeatable model, we have the ambition to be a leader in each country we address. Quadient model is based on 3 differentiating pillars, our integrated and comprehensive solution, our unique positioning and scale and our unified service capability. Integrated and comprehensive solution. We provide software capabilities and the comprehensive range that meets e-commerce stakeholders' needs. Our proven integration capabilities and scalability allow us to onboard thousands of customers and deal with millions of parcels and transactions. Unique positioning and scale. We are in the leading position in the U.S., Japan and France, with a promising launch in the U.K. We have built strategic partnerships and have proven vertical expertise that will enable us to scale. Our carrier-agnostic positioning and our adaptive business models will allow us to quickly deploy a large dense and open network that can serve all e-commerce stakeholders in each targeted country. Unified service capability. We have proven capabilities to operate and monitor a locker network. In each targeted country, we leverage Quadient's operational capability and are able to scale network and services. PLS business differentiation is strengthened by synergies within Quadient. We are able to leverage Quadient's relationships with postal and carrier organizations. This synergy has been foundational for PLS business. Moreover, we are at the beginning of benefit from the synergies of large existing MRS customer base in corporate, education and property management. At Quadient, the supply chain organization and capabilities are fully shared between MRS and PLS. This generates economies of scale, while we can deliver best-in-class quality and service to our customers from sourcing in Asia to deliver in the U.S. and Europe. R&D capabilities are shared between PLS and all other Quadient solutions, which enable us to leverage existing competency and standardize processes, tools and infrastructure. Most PLS R&D resources came from MRS R&D teams, which allowed us to benefit from their mail and parcel expertise required in the postal domain. Last but not least, Quadient is leveraging its service, support, call center, field technician and operational capabilities to support the installed base and accelerate PLS scale development. As a result of its differentiation and its ability to leverage Quadient's commercial and operational capabilities, Quadient PLS' ambition is to become a leader in parcel lockers in a selection of the top 10 e-commerce geographies. Our strategic focus is to gain market share in our existing verticals and scale additional verticals in each category we address, thanks to our repeatable model. We also aim to expand into new countries among the top 10 largest e-commerce markets. Our goal is to scale fast, since the installed base profitability will continue to increase through scaling and monetization due to our strategy to create a large and dense network. This organic growth will be fueled by the related sales and marketing investment to expand our locker network, while R&D investment will be maintained to remain competitive and stay on the cutting edge of innovation. We are targeting ambitious top line and bottom line growth for PLS. In the coming 3 years, it is difficult to predict with accuracy to mix between subscription and purchase model, but we aim to almost double the size of Quadient PLS locker network across our core countries. We believe we will achieve this target by combining our standard and like lockers across our regions. As we continue to increase the size of the installed base in countries where we operate our lockers, we are planning to reach a 35% to 40% profit margin of the installed base on a full year basis by the end of the 3 year. So let's finish now with the key takeaways on Parcel Locker Solutions. Quadient is best positioned on the fast-growing market with strong underlying drivers. Quadient focuses on the key e-commerce countries, aspiring to build a large and dense local network in each one, targeting more than 25,000 lockers by the end of the 3-year plan. We are the unique Parcel Locker Solution provider, addressing the needs from all verticals, carriers, retail, property managers, corporate and education with a repeatable and scalable model. Quadient promotes environmental-friendly solutions by consolidating parcel flows, reducing traffic congestion in urban areas and cutting down on CO2 emissions. We are among the leaders in our targeted countries, #1 in Japan carrier, #1 in U.S. residential and #1 in France retail. Quadient builds a sustainable subscription-related revenue model with high profitability, and we have a secured 50% subscription-related revenue with low churn and multiyear contracts. And finally, it's important to highlight that we have extensive commercial and cost synergies with the rest of the Quadient organization. This concludes my overview of Quadient Parcel Locker Solutions activity. Thank you.

Thank you, Daniel, and thank all of you for your inbound questions. At this time, we're going to hold on the questions and address them at the end of the session when we'll host an extended Q&A. [Operator Instructions] Our next session will cover Quadient's 3-year plan, followed by a conclusion. I welcome back our CFO, Laurent du Passage; and our Chief Executive Officer, Geoffrey Godet.

Thank you, Rob. So our approach in terms of capital allocation is to maximize the long-term value for our shareholders by delivering sustainable returns. This implies that we are continuously reassessing our options, evaluating a project that is well invested, and our cash well allocated. And we are doing so with an open mind. For instance, we'd like to always ensure that we are the best owner of our businesses, meaning that we ask ourselves if we can create more value over time in owning them and operating them, then by divesting them. And when it comes to undertake a full strategic review, we'd like to consider as many suitable alternatives as possible. And this was the case with the Phase 1 of our back-to-growth strategy when we announced it, early 2019. It was the outcome of a holistic strategic review conducted in the second part of 2018. After 2 years of strong execution and due to the impact of COVID, we decided to perform another in-depth strategic review. In doing so, we considered potential divestments and our portfolio rationalization. The Phase 2 of back to growth will be -- which we presented today is the result of a thorough analysis. I remind you that our invested capital is bid between, on one hand, major operations where we have scalable growth engines and mail-related solutions across which we unlock significant synergies. And on the other hand, we have additional operations, which we manage separately to either grow, improve or exit these businesses. The way we allocate surplus cash is also the result of a thorough analysis of opportunities based on risk-adjusted returns between organic investments, M&A, and potential share buybacks. In line with this discipline, please let me introduce our financial trajectory to 2023 and our capital allocation policy priorities. Our new profitable growth trajectory is based on organic developments. And here, again, what is different from Phase 1 back to growth is that, in Phase 2, our base assumptions is that we will not rely on further acquisition. This is why both our top line and our profitability guidance are defined by organic growth indicators. We are providing you with both 2021 and 2022, 2023 period perspectives. From a top line standpoint, first, we expect to deliver at group level for 2021 a minimum 2% organic growth. Current context requires us to be prudent, but we are confident that this 2% organic growth is a minimum we can achieve this year, notably the trend we see in February and March continues. For '21 to '23 period, we expect a minimum 3% organic CAGR, compound annual growth rate. And from a current EBIT standpoint, we expect to deliver at group level for 2021 an EBIT organic growth between 4% and 6%. And for the period, we expect a minimum mid single-digit organic CAGR. Now if we move to capital allocation. From a capital allocation standpoint over '21, 23, here are our priorities. First, CapEx. We will focus on investing into organic growth opportunities if they offer attractive risk-adjusted returns, which means EUR 70 million to EUR 80 million per year of R&D and maintenance, which includes IFRS 16 CapEx over the period. And CapEx per rent for EUR 40 million plus per year over the period, particularly to support the parcel locker installed base growth. Second, deleverage, to ensure a healthy balance sheet adapted to the company evolving profile and taking into account ODIRNANE repayment in June 2022. As you remember, ODIRNANE is currently classified as an equity instrument in our balance sheet. We are committed to bringing our leverage, excluding leasing strictly below 1.75x in 2023. This will be post repayment of ODIRNANE. And as a comparison basis, if we had included the ODIRNANE in debt at the end of the fiscal year 2020, our theoretical leverage, excluding leasing, and including ODIRNANE, which have stood at 2.1x. This is an estimate at the end of 2020, so please bear in mind that this is obviously before taking into account the EUR 70 million that we just spend early 2021 in acquiring Beanworks. Third, portfolio management. We will continuously assess if we should divest or spin-off assets, no sacred cows and redeploy this capital, but not more, unless excess cash is available in more attractive areas, including potential opportunistic bolt-on acquisition. That should cover cost of capital by year 3 postclosing. And four, our shareholder return policy. We keep our dividend policy unchanged. We will maintain a minimum 20% dividend payout of net attributable income with a EUR 0.50 floor dividend per share. We will consider also yearly excess cash available for share buyback subject to value creation criteria. Quick focus on dividend. You may remember that last year, taking the COVID situation into account at the time of the first lockdown, the Board has decided to maintain a dividend but adjust the EUR 0.50 dividend down to EUR 0.35. This year, even if we are all still impacted by COVID pandemic, considering our fiscal year 2020 performance and future outlook, the Board of Directors has decided to resume our usual dividend policy and will recommend to the general assembly a dividend of EUR 0.50 per share. Before I hand back the microphone to Geoffrey, let me recap the ambition by solution of the plan. ICA, over 20%, 25% subscription-related revenue CAGR over the period. And circa 30% solution profit margin on a forward basis by end of the plan. MRS, better than minus 5% organic decline, which is a [ floor ] over the 3-year plan, while we will maintain a high solution profit margin of 42% (sic) [ 43% ] to 45%. Parcel Locker, more than 25,000 lockers at the end of the plan, and 30% to 40% of profit -- of solution profit margin on the installed base on a forward basis by end of the plan. The combination of these trajectories should allow us to reach a well balanced, growing and profitable profile, delivering sustainable value to our customers and shareholders. Of course, the execution of this plan will need to rely on an excellent operational discipline, which will be monitored closely, notably thanks to the 3 KPIs by solution presented earlier. Now please let me hand back the microphone to Geoffrey for an overall wrap up.

Thank you, Laurent. So before we go to the Q&A section to briefly conclude this Capital Market Day. I would like to summarize a few key takeaways for you. First, I hope -- we hope you enjoyed this opportunity of making a deep dive into our key solutions. It's a chance to better understand how we intend to leverage our strong positions to benefit from the latest trends of acceleration of digitization, on the one hand, and from the ever-growing issues surrounding the higher numbers of parcel deliveries that Daniel explained to us today. And of course, our ability to manage the impact of declining mail volume in a confident way. When we embarked on our back-to-growth journey 2 years ago, our first ambition was to transform Quadient. I truly believe that we have come a long way in deeply and profoundly changing our operating model, simplify our organization and make it more efficient. And this new approach is what is allowing us to be able to look at the second phase of our plan with confidence and to be able to rely on a trajectory that doesn't depend on M&A, like the first portion of our plan. So all the guidance we have presented that Laurent have shared with you are on an organic basis. Our growth engines, which accounts for 20% of our total revenue at the end of 2020, meaning that we're in a better position to grow moving forward for the second phase of the plan. Cross-selling and mutualized costs generated close to EUR 100 million in synergies last year, meaning that we are also in a better position to not only grow for the next few years, but grow profitably. And last but not least, we completed the key targeted acquisition that we aim for. And yet, thanks to the good divestment, we only spent a net amount of around EUR 105 million in M&A. This means we'll have more cash to allocate in the coming years to keep investing organically in our future growth, to optimize our balance sheet through an appropriate deleveraging, that Laurent presented, and to take into account the ODIRNANE repayment in 2022, to maintain the same dividend policy. And finally, not least, to choose to use our excess cash every year, either in additional investment in bolt-on acquisition opportunistically and/or in share buybacks, depending what we see on the opportunities every year. So we are entering the second phase of our plan with a clear goal of maximizing long-term returns to our shareholders and drive sustainable value. Our new midterm financial guidance is, first and foremost, organic, as we're now in a stronger position to leverage our key assets. And as we are introducing new KPIs, notably the solution profitability, but all the other ones that were shared with you today, we will have the possibility to better monitor our performance quarter-after-quarter, semester-after-semester. So we're looking forward to sharing our future success with you. I thank you on behalf of the team for having -- taking the time with us today, and we're now ready to take your question. Rob, if you want to coordinate those questions for us.

Yes, absolutely. Thank you, Geoffrey. Well, we'll start with a couple of questions. One from [ Julian Chatzka ] who asks, could you detail what is the business model of Parcel Locker Solutions? Rental revenue versus used revenue or sale of equipment, do you intend to develop the scope of activity of Parcel Lockers such as in post? I know we've covered a little bit...

Described by Daniel's presentation pretty well. And I think the question came just before. And as Daniel mentioned, we don't intend to be a carrier so some of those activities, I think, are being provided by -- in post are not in our scope. We remain to focus on developing a repeatable and scalable Parcel Lockers business as a provider.

Excellent. From [ Paul Poulin ] we have, what is the potential of the Parcel Pending business? What is about the concurrence -- or what is the competitive advantage of Quadient on this market segment?

Daniel, do you want to take the question to summarize it because you have just a lot of those points as well?

Yes, of course. So as said during the presentation, Parcel Pending experienced a strong double-digit growth this year, despite the profit crisis where we had some delays on the residential inflations. But what we can say is that we are in a leading position in residential vertical, and we gained market share against Luxer One and Package Concierge. We are also in a leading position in education segment with a market share that is above 50% in Higher Ed. And what the great achievement of this year is that we could leverage Quadient's experience and solution in retail and win our first significant customer in the retail vertical with Lowe’s. And now what we are going to do from now on is obviously to leverage this strong reference to develop this retail vertical. So coming back to the differentiation, what we can say from Parcel Pending first that we have a great team there. They are very focused on consumer experience. This is the first and main strength of the company. We have expertise in the 3 verticals that we are addressing, and that's absolutely great compared to most of our competitors. And our solution and our integration capabilities are a strong differentiation against the competitors, and these are absolutely key assets for our customers and on these markets. So that's what I can say about Parcel Pending.

Thanks, Daniel. There's a question that you've almost -- you've almost preempted here, but is there a risk of sales drop or sharp slowdown in 2021 due to the high base of comparison with the Lowe's contract? Which part of the contract was executed at the end of 2020?

So again, as mentioned during my presentation, we had a successful rollout of the Lowe's project. And actually, we shipped close to 80% of the total volume by the end of our fiscal year. And the remaining quantities will be shipped in Q1 2021. Well, obviously, it has generated a high hardware sale revenue in -- at the end of 2020, but at the same time, the growth in NorAm was driven by our subscription-related revenue. With a very strong growth and high double-digit growth in 2020, and we plan to have another double-digit growth of our subscription-related revenue in 2021 in NorAm.

Complement to add on that -- Rob, just to add on that to Patrick Jousseaume, not just the subscription revenue, the growth of Parcel Lockers will be double-digit this year -- I mean in 2021. Definitely at a lower level, probably considering the comparison basis, as Daniel mentioned.

Excellent. Thank you. For PLS, this is from [ Olivier Neuville ]. For PLS, do the installation fees invoiced to customers cover the on-site installation costs? Or put differently, is the on-site installation -- prior installation phase profitable or unprofitable?

Yes. Good question. So we are invoicing to the customers, the installation cost as well as the shipment costs. So this is part of our ASP.

Another PLS-oriented question, do you want to grow organically? Or if there's a chance, would you consider buying a smaller competitor? What are the current M&A multiple sales and/or EBITDA you would have to pay? This is from [ Roland Keenan ].

So I'll take this one. Just -- I don't know, Laurent, did you wanted to add something on the personnel? On the M&A, as we just presented, we don't have any current intent in the plan to achieve our guidelines to take into account M&A. That being said, we obviously will remain opportunistic on that. On the Parcel Locker, as a reminder, we did our first acquisition. So we did already allocate capital to this business with Parcel pending acquisition. And we took the last 2 years, the time to develop a comprehensive range. So we are very well equipped to address the market needs, as Daniel mentioned, across the 4 segments, there could always be opportunities to consolidate the market in the coming years. So we remain open to that, but I think we're pretty well equipped organically to further develop and grow this business.

Thank you. Another question from Olivier, would you try to sell or promote your ICA software solutions in the other minor geographies? Or would you stick to the main geographies?

Good question from Olivier. So the plan of back to growth since the beginning and moving forward, is a refocus on our 3 now main solution, but it was also refocus geographically. And that's the case for all our solutions, the 3 solutions. We pick and choose our battles so that we have basically the most chance of success and scale efficiently and profitably. Sometimes if you dilute yourself by going after too many small countries at the same time, you may not get the full return on your investment. So this is why the focus in the next 3 years for the 3 solutions, not just ICA, will be to focus on the scope of countries included in major operation.

Another question from Olivier. What are your expectations regarding the split between cloud and perpetual license models for new customers of CXM?

So it's a good question. This is a shift, as Chris explained earlier, that we're looking at for all ICA customers, whether they are small, mid or larger enterprise. The pace at which the market is taking cloud and subscription-based solution is obviously evolving differently based on region, and based on the type of customers. So in our plan, there is obviously room to account for different transition rate, if you want to go from an on-premise model to a subscription model, likely to be accelerated, as we can see already in NorAm versus Southern European countries, like if we take Germany, they will probably be a little bit slower in this adoption. And across the next 3 years, we expect probably the small and mid-sized customers to finish their transition, whereas on the larger organization, it will probably take the first 2 years, potentially 3 years of the plan to complete this transition. So it will be a progressive transition from cloud -- from on-premise to cloud.

Thank you. A question specifically focused on MRS. This is from Patrick Jousseaume. For the fourth quarter 20 MRS showed a negative 70% or versus 0% for Pitney Bowes' Send Tech division. How do we explain this -- or how do you explain this?

So there is a few points on that, because I think we had the same discussion in Q4 2019. So there is an element of a comparison basis. And Alain will correct me, I think Pitney Bowes' Send Tech division was probably minus 11% or so in Q4 2019, which makes it obviously a very easy comparison basis for them in Q4 2020. The second thing is that between PB and Quadient, just to remind that we don't have the same fiscal year. We start our year February 1 to January 31 and therefore, we have not been impacted the same way with respect to a COVID year, which benefited, I think, as well Pitney Bowes on that comparison. And after that, I think there is probably specifically 2 other elements to take into account. We don't have the same geographical mix. I believe probably for Pitney Bowes, NorAm, which is the primary region, represent 85% or so of their business, whereas for us in NorAm is probably 50%. And why is it important in the evolution of the business is as we have shared regularly, NorAm Mail segment is obviously much more resilient than the one we see in Europe. So we see a decline rate usually a little bit stronger in the European countries than we see in NorAm. And we have seen that also in 2020, as Alain and Laurent described for us. And therefore, we have a mix -- geographical mix that is a little bit more unfavorable for us this year. And then after that, I believe PB probably benefited from a one-off larger government contract that is probably not repeatable moving forward.

Thank you. A question from Olivier. What is the current retention rate of the MRS subscription? Do you still manage to gain new competitors from -- new customers from competitors?

Alain, do you want to take the question?

Sure. So our cancellation rates in MRS are in the single digits, and they've remained very stable during COVID, which is great for us, of course. We also are very much helped by the success of our cross-selling efforts, which helped us extend the customer relationship with the MRS customers by offering, when it's applicable, a smooth transition into digital communications. So that will be for the retention rate question. On the customer acquisition question, we absolutely continue to acquire new customers. We paused a little bit during COVID at the height of the lockdowns. So we are back at it full force in 2021, and gaining market share is definitely one of our major drivers.

Thank you, Alain. So this question is around our packaging solutions from Olivier as well. Do you still aim to exit your packaging solution, which is currently included in the additional/non-major operations? Is there really no synergies with the current MRS segment?

Thank you. Well, it's a good question from Olivier. So we did do a divestment as part of the reshaping of our portfolio, especially related to companies that were in the scope of additional operation, like I reminded you at the beginning. That being said, the strategy of additional operation is not just divestment, but it's to grow and improve the businesses that we have into this division. The CVP is a great product that automated packing solution. We're very happy to have been able to grow it this year in the COVID year. As Laurent mentioned, we did, I think 17 machines this year versus 16 last year and some of a higher-end capability. But fundamentally, the businesses that we have put into additional operation, part of the reason for some of them, was because they were not necessarily bad business, they were good business, but not synergistic with the rest of our domain solution. And that's what I explained in the beginning is that we -- within major operation, we kept the solution that were synergistic among themselves and with our core business on mail related solutions. And we don't have much exposure to the warehouses, which is really where the play is for the CVP because it's really the optimization of the warehouses and the automation that they need within the warehouses, and we don't have other solutions within the group synergistic with that approach.

Thank you. Another question from Patrick Jousseaume, is reducing the percentage of MRS in total sales to less than 50%, initially a goal for 2022, still a target? And if yes, when?

Good question, Patrick, as well. The goal was not to necessarily reduce MRS to less than 50%, but to grow the new businesses, the new growth engines, above 50%. And we still have the same ambition, but obviously, that ambition as it relates to the share of what MRS represent in the total of the company is a function most of the rate of decline of MRS and the performance of the growth engines. Definitely, this year in 2020, the COVID has impacted the difference in the performance of both. But as we move forward, I think we feel fairly confident on the level of decline that we can anticipate for the mail business. And this is why, for the first time, with Alain, we have been able to share a floor on the decline, and we obviously think we can do better than that in the next few years. So the stronger or the more resilient our mail business is, the better. But probably -- now to respond to your question, we're probably going to get closer to that 50% ratio by the end of the plan or after the plan, depending on the performance, obviously, on the growth engines, combined with the performance of MRS.

Our next question, 2 people asked a very similar question. So David Cerdan asked the question, can you give us the transformation rate into FCF for ICA, MRS and PLS or FCF per solution line? We got a similar question from Arthur Bernasconi who asked, Could it be possible to have an idea of FCF for each division?

So on the free cash flow, it's a good question. And we had a question on the profitability by solution before, so we fully understand where you're coming from. Today, we're looking at the profitability by solution, which as Laurent explained, does not include the G&A. So providing a free cash flow by solution, we would need to address the G&A point. So this way would be more like the profitability solution, the contribution of the solution without the depreciation coming from, in particular, the investments in R&D or CapEx that we're making. This is not an indicator that we're currently providing. We provide -- and you'll be able to see the free cash flow, obviously, at the group level and over the next 3 years.

Thanks, Geoffrey. Marc Saint John Webb asked, thanks for publishing the solutions profit margin by division. Now that you've done it, could you please explain the low level for Parcel Lockers? And also give targets for this margin per division in the medium and long term?

So I believe, Marc, that we have addressed for it, because I think some of the question coming are before the Parcel Locker Solutions. So just as a reminder, as Daniel mentioned, yes, we have around 6% solution profitability for Parcel Locker in 2020, but this is already a mix during the year between the profitability that we get from the installed base existing, which is fairly high because it's around 25%, 30% already versus the investment we're making in the same year to acquire, obviously, more market share in the different countries that we're launching our solution, for example, U.K., France or where we're also gaining market share like in the U.S. or Japan. And that will continue, obviously, to evolve year-on-year. What we have guided or what we have shared as an ambition for the Parcel Locker is that we feel that even the profitability on the installed base will continue to increase over the plan because as the benefit of this model is that as we scale it and the more lockers we have in the base, the more profitable the existing base will become. And obviously, we will also be able to monitor the investment we're making in acquiring more market share or continue to grow the business and also being able to monitor the level of investment, knowing that those level investment may become smaller and smaller as we continue to grow the installed base over the coming 3 years with the view to be able to more or less double the installed base, a little less, from 13,000 lockers at the end of last year to 25,000.

Thank you. So this is from -- just lost that question -- apologies. Here we go. From David Cerdan, have you made any material changes within your top management along with the second phase of your plan?

Good question. No, because the organization fundamentally has been established at the beginning of 2019. This is where we did adapt the leadership team globally. Obviously, as we evolve, we make some further change. I think the change related mostly to this new phase of the plan and this change that we have announced is related to ICA with Chris managing now both the former CXM initiative, the new ICA solution; and Alyna, which has been leading the BPA solution will continue to work with Chris and leading some of the effort with integrating have Beanworks and YayPay, obviously, under the leadership of Chris.

Thanks, Geoffrey. From Jean-Francois Granjon, what will be the trend of improvement for profitability for ICA and PLS? The timing of the ramp-up. I think this is -- which stage to reach 35% to 40% versus 5.6%, for example, in '21, '22 or '23? And the second part of the question, to reach 2,500 -- 25,000 PL, do you expect M&A or not?

Do you mind to take the first question?

Okay. I'll take the first one. So on ICA and Parcel Locker Solutions, so IC -- ICA first, we are coming from 23%, as far as I can remember, and we are -- have directionally the 30% solution profit margin on a fiscal year basis by the end of this 3-year plan. This is likely to be, considering that we are changing more and more business model from SaaS from -- sorry, on previous licenses to SaaS will be affected probably the first and the second year to basically catch up with the guidance we are providing here. That is what we're providing here. On Parcel Locker Solutions, the ramp-up is very steady compared to the current situation.

And the second part, no, we don't need M&A to be able to reach the scale of 25,000 lockers. And it's a good opportunity also to remind that we don't need M&A to reach any of the target that we have shared with you for the second phase of the plan to get to 2023. This is really, I think, that inflection point where we needed to equip ourselves at the beginning of the transformation in terms of capabilities, whether they were on the product side or the R&D. We completed that phase now even on the software side with the acquisition of Beanworks and YayPay, which means that we feel equipped for our 3 solutions to be able, in a sustainable way, to grow organically without the benefit of M&A. And that was what I shared with you in 2019, even though at the time we still needed the M&A, but we said that our goal ultimately was to be able to grow the company at some point sustainably organically, and this is what we're presenting now. And this plan is without M&A, we're going to be able to grow the top line, but also grow the profitability of the company in the next few years without M&A as well on the profitability side.

Okay. Next question is from Olivier. How much shareholder return do you plan for the next year? And which part could be allocated to buyback over dividend?

Do you want me to take that?

Sure.

So again, on the dividend side, we've provided the policy basically on the dividend of 20% of the net attributable income to be certainly down with the floor at EUR 0.50. Again, any surplus of cash that basically is inherited from our capital allocation policy will be considered to be eventually showing at share buyback program. That's basically our philosophy moving forward on that topic.

Thank you. Our next question is from [ Stanislav Perrot ], says, what is the point of maintaining even the symbolic dividend when our company has now adopted a growth profile? It would be better to invest this money in investments that will be our future growth drivers. It would also be a good signal for shareholders with a short-term vision who are ready to sell business units without business logic? Thanks in advance for your answer.

Thank you, Stanislav, for the question. So it's important because we, obviously -- and with the Board, take a lot of time to consider our allocation priorities. And the benefit of -- as I mentioned at the beginning, and that was part of the review, the holistic reviews with in 2018, but we did, again, especially to take into account the impact of what the pandemia had in the assumptions of our business plan on our business, but also look at whether or not we're the best owner of each of our business. And I think this is something you need to be able to do frequently and always be open to look at are we operating in each of the business that we have in the best way? Is there's somebody else that could basically operate those businesses better than us? And that's based on that also, that you could get the rationale of the synergies that you can extract yourself because if we're the best owner and we bring something that others don't bring, we can expect those synergies and as part of the rationale. After that, that's organically once you've made your plan and you've made your assumptions, then you could look obviously at the return that you get from a cash perspective and what you need to sustain your plan. And that's the proposal that we have been able to work on is that we believe today, with the current course of the growth that we're planning and the increase of profitability, we are allocating the amount of investment that we need to each of the businesses that are sufficient to be able to address those business plan in a satisfactory way. And therefore, it leaves the room for further return to our shareholders in the form of the dividend policy that we have set. And everything that Laurent just actually mentioned, everything that will be in excess within the constraint that we have set, that will also be able to be returned to shareholders in the form of share buyback opportunistically. And if there's other opportunities, we will also remain opportunistic on other additional organic plan beyond our plan or potentially M&A, as we mentioned at the beginning. But I think we have shared some of those clear assumptions today.

Yes. And a very similar question coming in from [ Roland Keenan ] as well. So I'll just maybe flip to that one in case there's any additional insight to give there. But the question indirect is, you promised to pay to the shareholders excess cash that is not invested in M&A. That would be roughly EUR 200 million. I recognize to bring down debt, but instead of share buyback, I would appreciate higher dividends. What are your thoughts -- your strategic thinking about the future of the CVP business. So, I guess, a 2-part question. For the first part, though, any additional insight, we covered a bit of it there?

On the -- do you want to -- I think on the -- just one comment on the arbitrage between dividend and share buyback. It's not exactly the same, I would say, mean or mechanism. At some point in the share buyback decision, there was one element that also you need to consider is basically the price at which your stock is being changed. And this is the main driver that will basically make us arbitrage between dividend, share buyback or other potential spending of the excess of cash.

And when we talk about shareholder return, there could also be a special dividend that could happen also on top if the opportunity is there. What was the second part of the question, Rob?

What are your strategic thinkings about the future of CVP business?

One of our additional operation scope, our goals for each of those business, which include the CVP, obviously, is to grow, improve or exit them. As long as we are able to improve them or ow them, which is the case of the CVP in 2020 we're obviously very happy. But all the scope of the additional business follows the same logic for us.

Thank you. So also from Roland, what would be the best guess for optimization expenses in 2021 in the next few years?

Yes. Shall I take this one?

Please.

So if you look back to what we mentioned last year, you had about EUR 10 million of the fee I presented that was a combination of depreciation of goodwill. The minus EUR 93 million I presented back in the P&L, EUR 10 million of that last year, so in fiscal year 2019 was optimization of expenses. This year, as I mentioned as a commentary, this has slightly grew because basically, we had to transform additional people this year, as we had -- we are suffering basically from the COVID impact. So from EUR 10 million, we moved to EUR 16 million. Keep in mind that we are a business in transformation. And is, as I mentioned, we'll need to resize along the way as the business basically has structural declines. So I guess, a good assumption would be somewhere between EUR 10 million and EUR 13 million moving forward per year.

So yes. Okay. Thank you. From Mourad, could you give us an idea of the embarked EBIT contribution of acquisitions, for example, YayPay and Beanworks?

Okay. So these were, as you know, were small companies, they were not profitable. So they will be dilutive at the beginning in terms of EBIT contribution, in particular, in 2021. And we will be able, as we integrate them, to obviously benefit from the synergies and the cross-sell and the acceleration that we believe we can bring to those 2 business platforms that we could leverage our great MRS sales channels the same way we have done so far, but accelerated now with the platform of Beanworks and YayPay.

Excellent. Thank you. This question came up before we concluded, so we may have covered it, but, what is your leverage target for 2023, including leasing, and that's from Patrick Jousseaume.

Very good point, Patrick. So including leasing, so again, excluding we mentioned significantly under 1.75x. That was the target for 2023. It is the target for 2023. If I include the leasing, it will bring me below 2.6x. So again, 2.6x would be the maximum leverage ratio, including leasing and including IFRS 16 by the end of the 2023.

Thank you. From Nicolas Tabor, could you please detail on what segments and end markets you could be making further M&A over the coming years?

Thank you, Nicolas, for this question. It's a good question. So if I was to summarize the opportunity. Again, it's a little bit different to look hypothetically of what acquisitions could bring in the next 3 years to achieve our targets, to achieve the growth in the Parcel Locker base, to achieve the growth in the subscription model and our ICA solution and to achieve the resilience of our Mail-Related Solutions business, we do not count and need any M&A. After that, we'll need to remain open and opportunistic there could be opportunities in the segments in the market we're putting into. So obviously, as we have market leadership position, there could always be opportunities of consolidation that exist across our solutions or -- and more interestingly, probably also to add capabilities that we may not be able to have to complement our platform or our offering. Today, knowing what we have been able to achieve, for example, on the Parcel Locker business, we have a range that we feel is fairly unique already today between the Parcel Locker Lite and the standard lockers, and already 4 segments that we're covering. So there's not a strong opportunity there in the coming years, so potentially the consolidation later. On the ICA side, we obviously have just finished the completion in terms of capabilities. There could always be consolidation opportunities in coming years. And on the MRS side, we're obviously one of the key players, and -- as I mentioned, in 2019. We'll always also remain opportunistic to look at potential consolidation if that was relevant, and if it was to make sense in a particular geographies that we operate into.

All right. We have one last question to get to. And this is from Roland, just to comment on optimization costs. As you book restructuring costs every year, you should include this cost in current EBIT and not as one-offs?

Please, Laurent.

So the policy is that any non-replaced people, cost -- related costs of restructuring will be classified in this line. The first, as mentioned, it is mostly related to the fact that we are transforming. Again, these people are not replaced. So they are really one-offs. Of course, the transformation is spread across a couple of years. It doesn't -- we will not restructure tomorrow the full amount of MRS. But at some point, it's something that doesn't come back. So as such, is basically the turn, the switching model and the switching business that Quadient is doing over the longer term. And I think for the sake of clarity is very separate in the P&L we provide you so I think you are able to assess it the way you need.

Excellent. Well, we're done with our questions. I want to thank all of our presenters today. I want to thank all of you for joining us on the line and for staying with us through the entire event. Very much appreciate all of your time. Geoffrey, any final words?

Thank you all for taking the time to be with us today. Obviously, we're looking forward to engage with you and getting your feedback and getting also one-on-one discussion. I want to thank the team all of you for sharing our plans and our visions and how we intend to get there. And we look forward to sharing the progress on how we execute on this plan every quarter and every semester moving forward. Thank you, everybody. Thank you.

Thank you.