SeSa S.p.A. (SES) Earnings Call Transcript & Summary

Welcome, everybody, and thanks for joining our SeSa Virtual Investor Day. First of all, it's a great pleasure to be here in order to present you our group strategy, results and ambitions. Before starting, I give the floor to Chorus Call conference operator in order to give you some technical information to follow the presentation. Then we can start with the Investor Day. Thanks again, and enjoy the presentation.

Thank you. This is the Chorus Call conference operator. Welcome, and thank you for joining the 2024 SeSa Virtual Investor Day. [Operator Instructions] At this time, I would like to turn the conference over to Jacopo Laschetti, Investor Relations and Sustainability Manager. Please go ahead, sir.

Good afternoon, and thank you very much for joining 2024 Sesa Virtual Investor Day. We are looking forward to spending next 50 minutes with you and several members of SeSa Group leadership team. We have exciting sessions lined up in which we can go through group strategy, performance and ambitions. We are starting off with our CEO, Alessandro Fabbroni, who will take through our transformation program and our points of difference. Then we will head to Alessandro Di Stefano, our HR business partner, who will walk through our group human resources evolution and talent management. And to myself, IR and Sustainability Manager; and Elisa Gironi, Corporate Governance and M&A Director, with a focus on group's M&A and sustainability programs. Then we will be break into 3 specific sessions focused on AI. First, we will have Francesca Moriani, Software and System Integration Managing Director, who will walk through SSI sectors with results and evolution. We will showcase our business services sector with Leonardo Bassilichi, Business Services Managing Director; and then we will provide a deep dive on our value-added solution sector with Duccio Castellacci, VAS Managing Director. In the final part of the session today, you will hear from our Chief Financial Officer, Francesco Billi, with an update of our 2024 financial results, investments and cash flow. And we close with our group CEO, Alessandro Fabbroni for the final conclusions, focus on the guidance and industrial targets for the fiscal year 2025. Then there will be the opportunity of Q&A session with Alessandro Fabbroni, myself and our finance team. As usual, you will find the relevant material and documentation on the Investors section of our website. Thanks again. And now I give the floor to Alessandro that will start the SeSa Virtual Investor Day.

Good afternoon, everyone, and thanks for joining our presentation. Today, we are glad to share with the stakeholders our strategic achievements and role to group transformation. We turned out over last years to implement and consolidate our great leadership in the European digital industry by creating sustainable value in the long term. First of all, let me underline, we close once again the last fiscal year with a strong improvement in technological skills, about 5,700 people, up by 21% year-on-year and financial results both in terms of revenues with EUR 3.2 billion, up by 10.4% year-on-year and profitability with an EBITDA equal to EUR 240 million, up by 14.4% year-on-year by achieving a great 7.5% EBITDA margin compared to 7.2% on the previous year and 5.3% in the full year 2020. We extended our long-term track record, thanks to a great organic growth driven by successful market positioning on the cutting-edge technology from cloud to cyber security, digital platforms and data AI, with cloud and data AI that in growing way are pervasive in our offering and solutions. We continue to improve size of market share in all group sectors by achieving a growth rate, mainly organic, significantly higher than the Italian IT market with a 10.4% growth year-on-year compared to the 2.7% increase of Italian market in 2023 here. We would like to underline, in particular, the strong performance of our value-added solutions sector growing high single digit against reference market declining mid-single digit in 2023 and a great 35% growth of the business services sector that improved its development path as reference player in digitalization of Italian financial services industry. In the last 5 years period, we evolved our organization and improve our size by about 2x in terms of revenues and 3x in terms of people and operating profit, thanks to our business model, consisting of vertical specialized business units with core competencies on the emerging technologies by focusing on consulting, business integration, vertical applications and digital platform. The group's organization consists of 4 sectors grouped in different vertical business units. Software and System Integration, EUR 823 million revenues, up by 17% year-on-year, 3,850 people, and EBITDA equal to EUR 99 million, up by 17% year-on-year with an EBITDA margin at 12.1% stable year-on-year. Business Services Sector with EUR 114 million of revenues, up by 35% year-on-year, 720 people, and EBITDA equal to EUR 18 million, up by 65% year-on-year with an EBITDA margin at 16% compared to 13% on the previous year. Value-Added Solutions sector with EUR 2.4 billion revenues, up by 6.8% year-on-year, around 700 people, with EUR 116 million EBITDA, up by 6.6% year-on-year with an EBITDA margin at 4.9% stable year-on-year. Corporate Services Sector with annual revenues for around EUR 46 million with EUR 5.7 million EBITDA and 370 people, including customer experience business unit recently added to the corporate sector. In the last 4-year period, we accelerated our investments equal to around EUR 0.5 billion and growth with 2020-2024 CAGR equal to 16% in revenues, moving from EUR 1.8 billion in 2020 to EUR 3.2 billion in 2024 and equals to 26.2% in EBITDA, moving [indiscernible] up to EUR 240 in 2024 with a deep group transformation towards higher marginality and value-added business and group EBITDA margin improving from around 5% in full year 2020, up to 7.5% in full year 2024. These performances were driven, first of all, by our great path in technological skills development, with strong people attraction and integration and new 3,000 skilled human resources over the period of 2024 with growing focus on the emerging technologies. To announce our capability to support the digitalization of companies and organization, we reinforced a lot our market positioning, digital platform, vertical applications and digital skills in all group sectors with special focus on cloud security, data science and AI. We are entering in the age of AI as megatrend, reinventing business industries, the way we work and live, and we made advance investments in data/AI across all group sectors as crucial driver of transformation. During the presentation of today, we will have specific sessions to discuss our main pillars of group transformation from people to M&A and sustainability programs up to the business sector evolution with a specific focus on AI as a merging topic. Now we start with an overview of our talent management programs with Alessandro Di Stefano.

Good afternoon. I'm glad to be here. Human resources are the beating heart of SeSa Group, the pillar on which our success is built. They represent our most important stakeholder in terms of value creation and distribution. The skills and specialization of our people and the key to provide innovative technological and digital solution, supporting businesses and organization. Thanks to the internal hiring programs and our capability to integrate bolt-on M&As, we boosted the group's ability to attract people with new 3,000 human resources over the last 4-year period. As of the end of April '24, we achieved a total of 5,700 people, up to 21% year-on-year. Thanks to our intensive recruiting programs in the last 12 months, we onboarded over 1,000 people and integrate over 460 coworkers through bolt-on and M&A operation. Over 52% of the new hires are young talented people under 30 years old from top university and business schools, introduced in specific long-term career paths and training programs within the organization. On this point, we strongly believe that the key to our success lies in our ability to respond to market needs and changes with competence and professionalism. For this reason, we have further strengthened our investment in training with about 100,000 training hours delivered in the fiscal year. People under 30 years old represents the 24% of the coworker, with strong improvement compared to about 15% of 5 years ago. As evidence of the effectiveness and quality of the personnel management and retention processes implemented by the group, the churn rates for the fiscal year 2024 was about 7%, thanks to our group strategy, focus on long-term employment, over 98% of human resources are employed with permanent agreement, continuous investment in learning and professional development and a corporate culture oriented to the wellbeing of human resources. Since 15 years ago, in fact, we have been committed to identifying concrete initiatives aimed at promoting and increasing the well-being of our employees through a comprehensive restart plan aligned with our group purpose and core values. On this point, we closed the fiscal year with over 15,000 welfare facilities. Now I give the floor to Elisa and Jacopo for an overview of our group's M&A and sustainability programs.

Good afternoon. Bolt-on M&As and external alliance have been one relevant driver for our long-term group and contributed by around 30% to our historical track record, accelerating the group growth in skills and competencies. We selected the target companies in the group's strategic areas as security, cloud, data/AI, digital platforms, that represent the main digital trends of innovation technology. Since 2015, we closed around 75 M&As in all group sectors with additional 2,800 people and EUR 660 million revenues at acquisition time, becoming as of today about EUR 1 billion. In the fiscal year 2023, we closed 6 M&As with EUR 80 million revenues and an accretive EBITDA margin of 90%, with new 390 people, while in the fiscal year 2024, we closed 13 M&As that generated around EUR 111 million revenues with 17% EBITDA margin, with 465 skilled human resources. Our typical deal structure is oriented to the long-term commitment of skills and keep people of the target companies with 5x EBITDA entry value and the progressive integration within the group strategic business units up to the final merger. We started the fiscal year 2025 with the 2 new M&As, of which one in the financial services industry, ATS that is one of the leading Italian company in digital platforms for capital markets with embedded AI technology to serve financial markets and traders to define customized strategies to support investment achievements and executions. We will continue to attract on industrial basis small mid-companies with skilled human resources under a sustainable 5x EBITDA multiple evaluation and with progressive integration in the group and specific focus on the 2 most dynamic group sectors as software and system integration and business services. Now I give the floor to Jacopo to provide an updated overview of our group sustainability programs.

Good afternoon again, and thank you, Elisa. In recent years, we have progressively improved our ESG performance, consolidating our strong commitment to value generation in a responsible way. In line with our group purpose to create long-term sustainable value for our stakeholders, promoting the digital innovation of companies and organizations and the well-being of people. Our ESG policies are aligned with international best practice with a strong focus on governance, environmental respect, human resources and welfare management and economic development. In fiscal year 2024, we reported a strong improvement of our environment performance. First of all, we reduced emissions per capita down 12% year-on-year from 1.22 CO2 tons in fiscal year 2023 to 1.07 CO2 tons in fiscal year 2024. We also increased the share of green electricity purchase from third parties, about 95%, including self-produced green energy. And finally, we decreased the waste per capita down 21% year-on-year from 0.03 tons in fiscal year 2023 to 0.02 tons in fiscal year 2024. In terms of sustainability governance, we extended our main group certifications as social international standard, gender quality certification, environmental certification and United Nations Global Compact membership, confirming at the same time all of our ESG ratings as Ecovadis: Gold medal; MSCI: BBB; and the Carbon Disclosure Project with a B score. Finally, we will continue to work intensively to develop our ESG programs by focusing on energy and natural resources efficiency and energy production for renewable resources to further improve our scores of main sustainability ratings. Thanks for the attention. Now I give the floor to Francesca Moriani to introduce software and system integration business evolution with our focus on data/AI.

Good afternoon, everyone. I'm pleased to be here to present our business model and last strategic achievements in software and system integration, which I've been leading since 2014. Over the past 5 years, we have accelerated our growth and indicating our position as a leading system integrator and software solution provider for European enterprises. We assume that the new role of business consultancy and integration, developing new strategic business units in vertical applications and increasing our focus on cutting-edge technology, including cloud, cyber security, digital platform, data science and AI. We organized the software and system integration operations in vertical business units with the core competencies in digital services and business applications including cloud technology services, cyber security, European vertical solutions, enterprise platform, digital experience, digital workspace and data science and AI. We have reinforced our strong market position, serving European enterprises with a customer set of around 10,000 enterprises and mid corporates, of which over 2,000 are abroad. Our international presence is growing across Europe, in particular in Western Central Europe, in Spain, France, Germany, Austria and Switzerland. We have established a leading position in the cyber security consulting field for the enterprise segment with a specialized team of approximately 300 professionals, Yarix Digital Security across Italy, Spain and Germany with a significant focus on the manufacturing industry. We integrated our offering with Hybrid Cloud, SaaS, PaaS and IaaS and multi-cloud services, integrating public cloud and data center services for infrastructure modernization of our customers. As a result of this strategy, we achieved a record CAGR from 2020 to 2024 in both revenue up 20%, from EUR 396 million in 2020 to EUR 823 million in 2024, and in EBITDA, up by 27.3%, moving from EUR 37.8 million in 2020 to EUR 99.4 million in 2024, with an EBITDA margin moving from around 9.5% in 2020 to 12% in 2024. During the same period, our human resources reached a total of 3,850 people. In the fiscal year 2025, we expect to extend this double-digit growth path driven by an outstanding growth in strategic business units and emerging technologies as data and AI, cloud and cyber security. Our growth trajectory was significantly initiated by the strategic leveraging of mergers and acquisition, with approximately 50 acquisitions executed over the past 5 years. These acquisitions have contributed approximately 50% to our expansion in emerging technologies and to most innovative areas of our business, namely data and AI. We have recently increased our investment in data and AI, which is a crucial driver of transformation. In 2020, we established the dedicated business unit for this purpose, following the acquisition of Analytics Network and the integration of Mediamente Consulting and Visualitics. We anticipate that this investment will generate revenues of EUR 25 million, EUR 30 million in fiscal year 2025, representing a 30% increase year-over-year. Additionally, we have a team of over 150 professionals, 50% of whom are below 30 years old. Data and AI is the core competencies of our vertical business units with approximately EUR 100 million in revenue in fiscal year 2024, and 400 employees with expertise data and AI technology. Our strategic focus is on predictive discriminative AI, generative AI and conventional AI. Among the development project on data and AI, we recently announced the Egyda, an AI platform for cyber security operations. Egyda analyzes user behavior and data to improve precision and response speed to hacker attacks. This improves the quality of work life of our ethical hackers and efficiency of our security operation center operations. This represents a great example of how much data and AI technology will contribute to the upgrade of our business to support the digital transformation of our customers. Now I invite Leonardo Bassilichi to provide an overview of the evolution of the business services sector.

Good afternoon. It's a great pleasure to share with you our business model and the strategic achievement in the business services. We have started SeSa Group, a new sector in 2020 by leveraging on my experience on financial services industry with Bassilichi, my previous family company. Thanks to the contribution of several bolt-on acquisition that we closed on 2021 to 2024, we have built up one of the reference players in consulting and business applications. With a growing market share and a unique business model that has been since the beginning, focused on cloud digital platform and vertical application, we modernized ERP processes of our customer with a tailor-made approach. In just 4 years of operation, we have developed an organization consisting of 4 business units: digital platforms; security; vertical application for banking and financial service players from treasury and the rebates to wealth management; and digital services, master servicing for securitization and credit management. Our sector started in 2020 with an active business model focused on data/AI, cloud and digital platform in order to upgrade and modernize ERP and the process of financial service industry. The data/AI technology is embedded in Base Digitale Group solution with about EUR 50 million revenues and 300 skilled people in fiscal year 2024. AI for financial services is functional to operational upgrades and the reengineering of financial intermediaries, enabling them to enhance their competitiveness through the application of artificial intelligence. Among the main AI applications to financial services, we underline business development, data management analysis, efficiencies and cost reduction, improvement of customer experience. Base Digitale Group has developed advanced technologies, platforms, providing value-added functionalities with a new solution for the financial market. Thanks to the last acquisition of ATS Advanced Technology Solutions, we have improved our portfolio with capital market platforms, integrate artificial intelligence solutions. This platform serve markets and players defining customizing strategies based on statistical algorithms in order to support investment decision and execution. This offer a good view of how a data/AI technology may contribute to upgrade our business as well as to support the digital transformation of our customers. Thank you very much for attending our presentation. I'll give you the floor to Duccio Castellacci to provide an overview about the value-added solution evolution and focus on data/AI.

Good afternoon, everybody. I'm glad to share with you our business model and strategic achievements in the value-added solutions sector that I led from 2014 after joining Computer Gross since I was 19 years old. We have developed a unique business model focused on consulting, marketing and training services to enable and orchestrate emerging technologies across ICT ecosystem, with a great capability to overperform the market trends and gain market share as we did in Italy over last years by achieving a great leadership in IT advanced solutions. We have a unique portfolio of advanced solution in Italy, with the most relevant worldwide vendors partnership in the field of cloud and data center security, data analytics and AI. We evolved the new role of value-added solutions, aggregator and ecosystem orchestrator in the cutting-edge technology, with an organization consisting of specialized business unit with 750 people and more than 160 vendors, with the top 5 representing less than 30% of the total revenues. With 48% market share in advanced solutions in Italy, we work with a customer set of about 25,000 business partners. Most of them, system integrators, managers and the cloud service providers. Since our beginning in 1994, we developed a long-term agreement with the major vendor, among them, IBM, with no relevant termination in our history, thanks to our great capability to educate, enable, support and integrate the offering in the market. In the last months, we have been working a lot to extend our offering of cloud and data AI solution with special focus on human resources, skills and business relationship with major vendor in order to lead the megatrend of AI as a crucial driver of digital transformation and future growth. In the last years, we accelerate our advanced solution offering that represents a share of 75% of total revenues in fiscal year 2024, and that grew by 11% year-on-year. In the fiscal year 2025, we expect to extend the growth path driven by an outstanding growth about 35% in strategic business units and emerging technologies as data/AI, cloud and security. In particular, we boosted our investment, data/AI, with the opportunity to create an industry-leading AI solution offering for the business partners and to enable and lead the growing of AI demand that will characterize the industry in the coming years. We develop industry-specific capabilities to help customer adoption of revolutionary AI solution in partnership with the major IT vendors that continue to unlock business and the industry value with new generation AI solution. In particular, we developed with IBM the first European competence center for IBM watsonx, to accelerate AI opportunity for partners, including additional services and enablement and trading. As leading Italian partner of Microsoft, we moved, focused on AI, Copilot Microsoft Solution to support partners' AI business transformation and to enable companies and organization to make data-driven decisions. We accelerate the offering of technologies enabling AI adoption, thanks to our partnership with the main ICT vendors. I hope I gave you a clear picture of our operation. Thank you for attending our presentation.

Good afternoon, and thank you all for joining our investor meeting. In financial year '24, we report once again a strong improvement in revenues, reaching EUR 3.2 billion, up to 10.4% compared to financial year '23. Our operating profit grew by 14.4% year-on-year, with an EBITDA margin at 7.5% compared to 7.2% of the previous year, and adjusted EBIT at 6.0% versus 5.8% year-on-year. Group EAT was negatively affected by the growth in interest rate. Around EUR 20 million increase in net financial charges was due for about EUR 15 million to the higher interest rates on Group's account receivable management and floating rate debt. And for the receivable, EUR 5 million to the increase in turnover and figurative IFRS financial charges. I remind you that Group uses non-recourse factoring programs to manage net working capital in an ordinary and recurrent way and to keep absolutely low the risk on its account receivables portfolio. Thanks to the strong cash flow generation, our net financial position as of April 30, 2024 was active. That means net liquidity for EUR 211.0 million compared to EUR 239.5 million of the previous year. Net of investment in corporate acquisitions and technology infrastructure for EUR 142 million. And dividend distribution and buyback over the last 12 months of about EUR 25 million. We proposed to next shareholder meeting a dividend distribution for EUR 1.0 per share in line with financial year '23 in order to continue our industrial bolt-on M&A path and to seize market opportunities. In terms of segment financial performances, group revenue achieved EUR 3.2 billion, up by 10.4% year-on-year, with positive contribution from all our business sectors, each gaining market share from competitors. Value-added solutions sector revenues increased by 3.8%, driven by data/AI, cloud, security and data center solution revenues. EBITDA was EUR 116.3 million, up by 6.6% year-on-year, with an EBITDA margin of 4.9%, in line with financial year '23. Software and system integration sector revenue up by 17.1%, thanks to the development of the main operating business units, including data/AI, cyber security, cloud, vertical applications. EBITDA was equal to EUR 99.4 million, up by 17.1% year-on-year with a 12.1% EBITDA margin stable year-on-year. Business services reported an outstanding 35.2% growth year-on-year driven by the development of applications and digital platforms for insurance companies and financial service operators. EBITDA in further acceleration was EUR 18.1 million, up by 65.1% year-on-year with an EBITDA margin of 15.9% compared to 13.0% in financial year '23. This year, too, the process of improving cash flow generation and net working capital management continues. Thanks to a strong improvement in Q4, net working capital revenues ratio remained negative at 0.4% in Q4 compared to 0.6% in the same quarter of financial year '23. By year-end, net working capital stood at EUR 20.8 million, recovering most of the increase seen in Q3. The net financial position benefited from the positive trend in Q4 net working capital. At year-end, net financial position totaled a net liquidity balance of EUR 211.0 million compared to EUR 239.5 million of financial year '23, reducing the different year-on-year which was wider in Q2 and Q3. The Group's financial strength and its ability to sustain investments from growth are confirmed by several key factors. A total investment of EUR 400 million over the last 3 years, continuous path of improvement in net working capital management, strong cash flow generation and sustainable dividend and buyback program. Net financial position path calculated net of IFRS debt of EUR 208.3 million, relating mainly to deferred payments of corporate acquisitions, and that for option to purchase equity investment is mainly driven by significant improvement in Q4 operating cash flow, totaling EUR 242 million at year-end, up by 41% compared to financial year '23. Investment in M&A and CapEx of around EUR 142 million, same amount in financial year '23, totaling EUR 400 million over the last 3 years. We continue in this year to deliver our typical M&A strategy based on industrial investment and bolt-on operation in strategic areas such as cyber security, cloud, data/AI, digital platforms. The strategy led the group to gain market share against competitors in all group sectors and continue in the EBITDA margin improvement path from 4.6% in financial year '19, targeting about 8% in financial year '25. Now I give the floor again to Alessandro for the final conclusion.

Many thanks to Leonardo, Duccio, Elisa and Francesca and [indiscernible] contribution. In 2020-2024, we boosted investment equal to around EUR 0.5 billion, and grew 2020-2024 CAGR with revenues up by 16% and in EBITDA equal to 26.2%, with human resources improving at 22.3%, achieving our main industrial KPIs in terms of customer set, revenues, human resources and market share, consolidating our competitive advantages and market position as reference system integrator for the business segment. Corporate and enterprises demand of digitalization is confirmed solid with steady investment in digital transformation, and the Italian IT market now is expected to grow by around 5% in 2024. Considering our successful business model and strategic achievements, today, we also confirm the positive outlook for the new fiscal year as of April 30, 2025, with a guidance of revenues in the range of EUR 3.35 billion to EUR 3.50 billion, up between 5% and 10% year-on-year. A target of EBITDA in the range of EUR 252 million to EUR 270 million, up between 5% and 12.5% year-on-year. A target of EAT adjusted in the range of EUR 110 million to EUR 115 million, up between 2.5% and 7.5% year-on-year, with expected net financial position that means a net liquidity in the range of EUR 215 million to EUR 250 million, net of about EUR 100 million of annual investment. We will also continue to develop our people and competencies with a target of around 6,300 people, up about 10% at year-end. We plan a positive contribution from all group sectors. We are low single-digit growth in value-added solutions sector and the double-digit growth both in software and system integration with about 10% low year-on-year and business services with an outstanding 40% growth year-on-year with a growth over 40% in the strategic areas of development as data/AI, cloud, cyber security and digital platforms. We expect also to achieve our annual growth target mainly in the second half of the fiscal year, driven by the acceleration of our core market with a low single-digit growth in the first half and a double-digit growth in the second half. We would like to close our presentation, underlining again the great job we did by evolving our organization towards higher marginality and value-added business, with a business model mainly based on emerging technology, consulting business application and a group EBITDA margin moving from 4.8% in the full year 2019 up to 7.5% in the full year 2024. In this scenario, we also continue to invest in data/AI across our group sectors as crucial driver of transformation, with 700 skilled people at about 5% of group revenues in full year 2024, driven by the data/AI solution expected to grow by over 30% year-on-year in the new fiscal year. As we did in the past, we will move forward by investing the long-term development of digital skills, human resources and business application to reinforce our role of reference player in the digital industry by generating sustainable value for all stakeholders. Thank you. Now we open the Q&A session. We will stay available, as usual, to answer your question with Jacopo, Elisa and our SeSa financial team.

This is the Chorus Call conference operator. We will now begin the question-and-answer session. [Operator Instructions] The first question is from Andrea Randone of Intermonte.

My first question is on the guidance. You are suggesting earning growth in the range of 2.5% to 7.5%, that is lower then the guidance you are indicating for EBITDA. And my question about this element is a clarification on financial charges. You are [ projecting ] in this guidance because, I expect [ DNA ] will grow similarly. In fact, you are indicating EBITDA to grow similarly. And so I think financial charges, that will remain quite high. And again, this is becoming a quite important point. So if you can help us in understanding the main components of this item, it will be very helpful. I don't know if you prefer one question or?

Yes. Yes. I prefer to reply immediately. It's true that we downgrade our expectation in terms of earnings after tax, it is adjusted in the range between 2.5% to 7.5%. That is due to a higher level of interest rates that we experienced in the last 3 months. So that guidance should be considered a fairly conservative guidance because how we experienced in recent days positive evolution of the interest rates market. So we may expect a performance higher than our guidance in the case of stabilization and improving of the market of interest rates. I believe it will be really crucial to consider, in particular, the second half of our fiscal year because in the first quarter, for example, our comparison is a comparison quarter-on-quarter in the quarter with higher interest rates. So the interest rates in the quarter 1 of the new fiscal year more or less were higher than the first quarter of the previous fiscal year. So the expectation that we have is to be in the right condition to recover and to overperform in the second half. So we prefer to stay conservative. We don't plan any depreciation. We don't plan any amortization, extraordinary item between the EBITDA and the net profit. Consider that we continue to work with good cash flow generation. We continue to plan around EUR 100 million of investment. And so that is also a positive baseline, not only for the full year 2025 but particularly for the full year 2026, that should be in our vision, in our view, a very positive financial year considering our evolution of our direct performance, in particular, in the area of emerging technologies.

About the clarification of the main components, I think we can have a better understanding maybe with the annual report. In any case, we already discussed this point. About the green digital, just the second question, then I leave the ground to my colleagues. The green digital is still 10% in this year, so just ended. And you are indicating from 2% to 5%, the growth for the VAD segment in 2025. I kindly ask you if you can comment what are the assumptions for green digital business in your guidance?

First of all, we performed really well in the fourth quarter because we improved our revenues in terms of old sector by over 10% despite a decrease -- strong decrease again in the digital gains. So that means that in the full year, we reported EUR 230 million revenues compared to EUR 360 million in that business unit. Now we plan to stabilize the revenues and to recover, in particular, in the second half of the year. That is an industry impacted by a strong decrease of prices by around 40%. And we plan that we will be able to stabilize and to recover, growing faster in particular in the second half of the year.

The next question is from Federico Belluati of Kepler.

Okay. Perfect. Yes. My question is regarding the performance by segment, especially looking at the fourth quarter software system integration has shown somehow a slowdown in its growth. So maybe you can give us more color about that and why it should grow more in next -- this year?

So yes, we grew by around mid-single digit in the quarter in the software system integration. We plan a 10% growth now in the full year 2025, with a stable trend quarter-by-quarter. It is true that we face a slowdown in comparison with a great path to growth that we experienced since in Q3. Considering that the market has changed. So the market is a market with the growth rate that is low single digit. We are, in any case, gaining market share also in the software system integration, and we are growing double digit in the Q1, and we are confident to that we are working, take this faster in the [ full year ].

Okay. The other question was already answered, so it's okay from my side.

The next question is from Aleksandra Arsova of Equita.

Maybe a couple of follow-ups. Some of them, you already explained. The first one, just if you can specify what amount of M&A is included in the guidance?

Sorry, Aleksandra. There's some noise in the line.

Sorry. So what amount of M&A is included in the guidance, in the fiscal year '25 guidance?

Okay. I understood, I understood the point. No, because we included just the M&A already closed as of today. So that means the 13 M&As, we already closed in the full year 2024. The 2 M&As, we already closed in the full year 2025. So that means that additional M&As may improve our performance, considering in any case that we will start the consolidation of the new companies from the date of acquisition because we, as usual, we down work with performance years in case of acquisition.

And also the net financial position guidance is without including the EUR 100 million CapEx and M&A or it's already including?