Tinexta S.p.A. (TNXT) Earnings Call Transcript & Summary

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Tinexta Group's Consolidated Results at the 30th of June 2023 Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Josef Mastragostino, Chief Investor Relations Officer. Please go ahead, sir.

Thank you, operator. Good afternoon and good morning to the folks in the U.S. Thank you for joining Tinexta's First Half 2023 Results Presentation. Here with me today are Oddone Pozzi, Group Chief Financial Officer.

Good afternoon, everybody.

As a reminder, all the relevant documentation of the first half 2023 results can be downloaded from our company website in the Investor Relations section. For the purpose of this call, I will go over the first half 2023 highlights and updates. Oddone instead will go over the first half 2023 financial results as well as the business unit's performance, providing us with a deep dive. The last part of the call will be dedicated to Q&A. A recording of this conference call will also be available on our company website, and it will be posted upon completion of this call. At this point, I will kick it off by turning to Page 4 of the presentation. As you have all received the information, revenues in the first half of 2023 came in at EUR 182.5 million, growing 9% versus prior year. EBITDA adjusted came in close to EUR 38 million, growing 2%. And more importantly, EBITDA on a reported basis grew 6%, reaching almost EUR 35 million. Net profit came at EUR 45.4 million, growing over 200% mostly on the proceeds of ReValuta as you all know, which we communicated to the market in the month of March of '23. Net financial position came in at EUR 52.6 million, improving around 32% versus prior year, the prior year figures here on the bottom right EUR 77.6 million in the fiscal year 2022. Turning to Page 5. Some of the numbers here have been commented. I will draw your attention mostly to adjusted free cash flow, which definitely will going to deep dive and provide us with more detail. But adjusted free cash flow of continuing operations came in at EUR 29.3 million, growing 27.4% versus prior year. On an LTM basis, adjusted free cash flow continuing operation was EUR 55.7 million, which was another historical high. In the first half of 2023, Digital Trust continued to register solid growth, posting a plus 12.4% growth in revenue. EBITDA on an adjusted basis was 15.5% in terms of growth. The EBITDA margin was superb, hitting 28.2%. Cybersecurity grew 15.8% in revenues, but obviously did much better in EBITDA. On an adjusted basis, we continue to register a strong rebound, growing more than 59% versus the prior year. EBITDA margin was 11.3%. And this innovation posted a 1% growth in revenue. And in terms of EBITDA, the EBITDA registered in the first half 2023 was EUR 16 million. EBITDA margin was 29%. We'll discuss about the, I would say, the evolution of EBITDA in just a second. In terms of the most recent events and updates, as you know, we finalized the acquisition of the 65% ownership of ASCERTIA LIMITED. So we have now welcomed ASCERTIA into the group. We also signed a 50-50 joint venture agreement with Digital Magics for investments innovative start-ups. And we also completed the acquisition of the 40% remaining stake of CertEurope, reaching now 100% ownership of the share capital. Turning to Page 6. As a reminder, we have commented most of these numbers. It must be said though that the comparative data of the first half of 2022 have been restated in relation to the completion in the fourth quarter of '22 of the identification of the fair values of the assets and liabilities of CertEurope, Evalue innovacion as well as Sferabit as of the consolidation of the 1st of May of '22. Now I would like to draw your attention maybe to one of the most important slides that we have on the deck, which is Slide 7. On Slide 7, we think this is an important slide and we would like to highlight the cadence and therefore, the back-ended weight of our EBITDA. As you can see, the relative weight of 2023 on a quarterly adjusted EBITDA basis is perfectly in line with that of the last 2 years, which clearly show how the first 2 quarters evolve versus the third and even more so the fourth quarter. The assumption relating to the average rate of 2023 considers the midpoint of the guidance on a 2023 EBITDA-adjusted basis. As you can see, the first quarter, it's weight was 14%, and the second quarter's weight, EBITDA was 22%, exactly in line with 2022 and 2021. Let me turn it now to Oddone, I don't know if you have any other comments on this slide Oddone.

No, no. Definitely, what Josef said is very important. We feel comfortable with our guidance that basically was concerned. What's happened in the first half is aligned basically with our projections. And definitely, as we expect to grow specifically in the most important way in the cybersecurity is going to have most of the profitability by the end of the -- in the second part of the year, the same exactly what happened last year in business innovation. So definitely we are going to face a very important Q3 and Q4, but we feel comfortable with the achievement of the guidance. Okay. So after Josef's highlights, we go to Page 9. We have our income statement for the first half. The revenue went up like we said, close to 9%. We are very glad about the results of all the business units. Definitely, the growth of Digital Trust as well as cybersecurity were very strong. And overall, if you look at our top, let's say, 15 products, they increase the weight on the total revenue. This means that our strongest products are performing well. And honestly, when we have a strong product, we should be in a position to deliver the strong margins. Looking only at the first half is not like we said, very so relevant as we are looking for the full year. In terms of costs, we see that the cost of services basically remains the same in terms of as a percentage of revenue at 36%, while we have a slight increase in the cost of personnel and the incidents, but this -- we see this as a timing as we prepared our infrastructure to address the future revenue in the second part of the year. The part of our recurring costs are slowly -- slightly below the previous year as we incurred in lower M&A activity, but this is not a projection for the full year. In terms of depreciation, amortization, definitely, we have more amortization on intangible assets. We are investing quite significantly in terms of product development, in terms of system improvements and therefore, we are impairing a couple of million more in amortization. We have to consider almost 50% of this amortization are related to the PPA. It means that part of the good deal that we allocated after the acquisitions on specific assets. So this is something that is a noncash item, definitely, and this is going to reduce basically the level of risk for future impairments. We are very happy about the handling of the financial charges despite an increase of the interest rates, we are reducing our financial charges. This has been driven by 2 main items. The first item is the fact that we improved our net financial position compared to this year. But I would say even more important for us is the fact that we basically almost fully covered our exposure in terms of rates. And therefore, basically, as of now, we have a cost of debt in the range of slightly above 2%, while we are able to invest all the cash that we have available at 3% rate so it means that honestly, we are getting a benefit from this. So -- and we believe that by the end of the day, we could be in a position to almost bring this figure to 0. If we go down to the P&L, we have the income taxes that are higher in the previous year, but last year, we benefit from the [indiscernible] that we have done on one of our largest companies and the tax release that we reduced that help us to have a better tax impact. But as of today, we have no at all significant and permanent difference share on this. During the first half, we also reduced the profit from the sale of ReValuta. And so the net profit is up to EUR 45.4 million for the first half. In terms of balance sheet, the net investment capital dropped last year from Q2 to Q4. Now this year is going up again. But this is only driven by the new investment that we have done especially with the Defence Tech as mentioned here on Page 10 and extraordinary investment in the acquisition of Phygital software license. Very positive, and I will be dive later on is the working capital management that decrease from the beginning of the year of EUR 11 million that helped to deliver a very solid ordinary cash flow. Net financial position dropped by EUR 25 million. There are several matters that has driven to this, but the free cash flow has been very solid with a significant growth compared to previous year, then we have the capital increase of Bregal as well as the disposal of ReValuta. On the other side, we have the dividends that accounted for EUR 33 million dividend distributed acquisition for EUR 26 million, mainly driven by Defence Tech and this is what was has driven basically the net financial position basically went up because of the profit of the period and the Bregal patent. If we move to Page 11, as you can see, I already commented a bit on the financial position. I will focus now on the free cash flow. First of all, all the business units improved their free cash flow compared to previous year, and this is a very good index indicators for us. Second, we put an extremely strong focus on cash collection. This is over the last 12 months, the interest rates increase has driven how our clients to a little bit later in paying us. But we reacted very strong and we were able during the first half to significantly improve this. CapEx has been slightly above previous year as part of our continuing investment in order to improve our products for our customers as well as a solution for internal management. If I move Page to 12, basically is the same as we jump to Page 13 to show you the net financial position LTM Bridge. So basically, we adjust free cash flow from continued operations over the last 12 months has been close to EUR 56 million. So this is a very good indicator for us. It means we have a very solid cash flow generation that is supporting our results. The financial charges are definitely very thin line. We were able to distribute dividends quite significant dividends. Of course, the drop of our net financial position has been driven by the sale of Innolva and ReValuta, we continue to purchase treasury shares to serve the stock option program for the management. And I would say these are the most important items to which we have to add the Bregal second tranche of the share capital increase that was completed during Q1. Last year, in July, we had the completion of Intesa Sanpaolo share capital increase. So basically, on LTM basis, the ratio between net financial position EBITDA is just around 0.5x. So this is put in next in front of very strong capability to deliver activities in cash is very strong. Our net financial position is very low. And so our strategy to continue to invest and to continue to pursue M&A development is in a very, very solid LTM acquisitions. Now we try to divide that into the 3 business units. We have already commented the total group performance, and we have seen basically out of the 3 divisions, we have 2 of them that have performed really well. Digital Trust, if you go back over the last 3, 4 or 5 presentation is delivering a very steady and solid growth. With every quarter, the revenue growing more than 10%, and the EBITDA grow even more than the revenue. And cybersecurity, deliver also a very encouraging and stronger first half. And then we will dive to better analyze what the situation of the business. So let's go into Page 16 into Digital Trust details. Like I said, revenue went up 12.4%. InfoCert obviously, is driven this growth, growing more than 50%. But for example, also [indiscernible] has been able to deliver revenue growth in the range of 20%. So most of the -- with the entity of the -- this segment went up in a very strong and solid way. Same record also into the EBITDA with again the EBITDA margin going up now from 27.4% up to 28.2%, and this is very, very encouraging performance. Let's say that overall, if we look at InfoCert of the shares went up by, let's say, 14% and the EBITDA went up by 17%. So this means that our strategy is very solid. Our sales and our capability to deliver are organized by the customer. And I would say, even more, we have a very strong capability to convert EBITDA into cash. And in fact, this business area has also a negative working capital is that we are very fast in terms of collection. This first half has been, like I said, very solid, and we have a very a lot of confidence in delivering the second half results and the full year results. Cybersecurity. So after 6 months, now we are in a full position to confirm that what we said 1 year ago is definitely happen. Like we said last year, during Q1 and Q2 '22, we invested massively to hiring new people specifically focus on cybersecurity. And I remember most of you were getting a lot of questions of this and but we have clear our strategy and we implemented it. The management and service security will say both to an order the incorporation of these new people and these new activities. And we started to build up backlog for this. So starting from Q1 '23, and comparing Q2 '23, our revenues are going up at 16%. That is a performance well above the market of the cybersecurity as we are very confident. And we are pleased to say that all the 3 companies of the business unit has recorded a very strong EBITDA growth. All 3 of them were going up. And as a combined segment, we went up close to 60%. We know that we are talking still about small numbers. But as the small numbers were last year, but the numbers are becoming bigger and bigger and the EBITDA margin went up from 8% to 11% and the best is next to come in the second half of the year. The company has also -- the group has also signed an agreement with Google Cloud that it has also in a position to develop further opportunity to better. Second part of the year would be critical for us to the delivery of the sensor that was launched on the market that represents a part of our revenue and profitability of the second half. The portfolio is encouraging. We were growing among the different business unit of the cybersecurity, we are growing significantly in the segment of pure cybersecurity compared to other information technology activities. So this is the situation. Obviously, Q2 H2 will be the most important part of the year, but we enter into the second part of the year with a much better position compared to previous year with much higher backlog and already with customers that has a lot of confidence. If you look at the business innovation, we have slightly different situation. We know that warrant is the most important part of this business. And if you look at the revenue, the revenue are up 1%. First of all, the markets were warrant and other currencies are operating are very different from -- here we are talking about consulting business and we are not talking about pure tech and digital business. Although we are definitely investing and being more exposure also in consulting for digital innovation. So the revenue went up 1%. Like I said, compared to our expectation for the first part of the year, definitely, what we are slightly missing here is value that could have been that come from the potential register of players into this market that has been delayed in terms of low after year. Nevertheless, the company is performing well. The part of the digital business is going up from EUR 3 million to EUR 7 million revenue hiking us we are direct in terms of revenue on the business of subsidized finance, that is the business with the area profitability and therefore, the revenue mix as insurance quite significantly the margin of the first half. Also the contracts for internationalization services, as we expected already. We do expect in the second half of the year, the capability to recover the demand compared to the previous year and to help overall to deliver results within the guidance of that we shared with the markets at the beginning of the year, and we are going to -- constantly the Board of Directors, also confirmed by [indiscernible]. Now I completed my thought. I leave to Josef for closing remarks. And then obviously, we will be fully available in any question.

Right. So thank you Oddone. At this point, I'm going to turn to Page 20. Page 20 is exactly what you all are accustomed to. We would like to stress the fact that on a '23 base. The organic growth is intact, as we're saying, trying to target revenues in the numbers that you see here, Digital Trust plus 10% in revenue, organic cybersecurity in the 30-ish percent, mostly in the second age. As Oddone just said, and business innovation in terms of revenue is expected to grow 15%. The EBITDA trajectory is on the right side. That means that Digital Trust is expected to grow 11% versus the prior year, cybersecurity anywhere in the 40-ish percent growth and then 5% for business innovation. 2022 and 2025 CAGR are the same. Let me just comment briefly on Page 21, where we have confirmed the guidance. And let me walk you through it. Our revenues are expected again on a '23 versus prior year basis to grow 11% to 15% EBITDA adjusted is expected to be anywhere between 8% and 12%. And NFP or EBITDA adjusted is expected in the range of 0.2 and 0.3x. On this, we need to say that on a like-for-like basis, the guidance is confirmed as of December 31, 2022. And this follows the disbursements of the period for the acquisitions that obviously place and as well as the lower collection in the postponement by management of the exercise of matured stock options. That is an adjourned number. A lot of the analysts have already accounted for that somehow, some of them not, but this is absolutely in line with what has been communicated to the market.

What I would add, Josef, is that here, the cash flow from the operation is projected exactly as we expected. The difference is only in disbursement for the same stack and less cash in from the mature stock option. So what is important is that the operating cash flow is expected to be exactly as the original guidance.

Right. So and we'd like to stress that, obviously, and function of also the last 12 months free cash flow adjusted is exactly growing even more than what we did actually last year. So 30% of net profit in terms of dividend with an inflation assumption around 6%. I would stop here. I would like at this point for the operator to give us some on the Q&A and see if there's any questions, and I'll leave the floor to the next question.

[Operator Instructions] The first question comes from Isacco Brambilla of Mediobanca.

I think 3 questions from [indiscernible] as well as on the cybersecurity. You mentioned several new initiatives, including partnership with Google Cloud as well as on the advisory market and loan of defense loan. Could you just more color on potential impact of such initiatives, in particular, if you have any sort of backlog or contracted order for defense loan. Second question is on business innovation. Your guidance implies an important acceleration in the back of semesters is definitely reassuring to see of the division fully [indiscernible] nothing like performance for the second half looks [indiscernible] could you better explain the drivers to support such a short acceleration if you may, between [indiscernible] formats and other digital marketing activities. Last question is more on strategy, the generating revenues are healthy where you written the complete acquisition of ASCERTIA. What are the next priorities in terms of redeployment also and specifically on this fiscal year.

So I'll take the first, and then Oddone will go on the other 2. In terms of cybersecurity, I would like to start from a couple of facts, right? We already said this during the call last year, we invested heavily exactly a year ago on people, unit capital. As you know, that was clear. That was also a function of the performance of last year. These results and those investments are already showing their strength, 59% growth in terms of prior year EBITDA is definitely a good achievement. The growth, as we said, is growing steadily around all of the businesses. We would like to emphasize that. And that means both in the advisory part as well as digital transformation. You definitely asked about Google Cloud. The Google Cloud agreement is an important agreement because it is basically concentrating mostly on, first of all, partnership of, I would say, accountability, right? I mean, Google Cloud does not need any presentation. It has chosen Tinexta in order for that to execute the deployment of services, mostly around threat intelligence. We highlighted that in the press release, we're going to actually underline it here. So it's all about utilizing also the potential that Tinexta has, in particular, in the Threat Intelligence part. We -- remember, it is a partnership. The business development is underway, so we can't really discuss any further expectations for the year, but we can definitely say that we're in a much better position than not having the partnership per se. So this is a partnership, a strategy. It is a partnership, b, of having also the potential to sell our solutions in the Google Cloud marketplace, which is definitely an important element and gives you some value added on that. So on the partnership, we'll see how that evolves, give us the next couple of quarters to kind of give you a bit more of a qualitative/quantitative answer. In terms of DefensYo, the DefensYo is definitely, I would say, an important step in the development and deployment of the product. This is a proprietary product. It is called DefensYo because it is jointly developed with Yoroi. And the idea here is, first of all, let's talk about timing. We deployed it at the end of June. So we're talking about very brand-new product, still need to gather a bit more data. The feedback is definitely positive because what it does just to give you a bit more of a background, it allows small organizations, both public or private, to have medium-sized days to have a threat intelligence services. This is a plug-and-play service. In other words, entirely deployed remotely. So you don't physically need people to go into the store organization. Most of these organizations can also be small city hall. So we're talking about [indiscernible] here in Italy, which have, first of all, a budget constraint and have little to no protection from a cybersecurity standpoint. So with this type of product, which is a much more evolved sandbox, we would like to say that, we're able to get into those systems, check the system remotely and give them a first stop first shop approach in cybersecurity. So the unit price, we're not going to disclose, but it's obviously a very advantageous one which gives our commercial colleagues and therefore, the sales force the opportunity to pitch the services to these organizations and at the same point, try to get these contracts signed. We will see how the product evolves in the second part of the year. We'll keep people posted on that, but I think this is definitely very good news because of the development of the product, which I would like to underline is proprietary. Oddone for DI?

Yes. We were talking about the DI. Definitely, like I said before, Q1 has been for the reason I explained below the previous year. We are confident in how our view and the detailed management analysis that has been before and they are telling us that in the second part of the year, we should recover. And we will recover this and we do expect by the end of the year to land in line with the previous year or slightly above. Overall, the guidance is confirmed. Honestly, if you look at results first part probably we will be in a position as of today to deliver slightly above in Digital Trust and potentially above previous year, but slightly below our initial expectation in the DI. Having said that, we are not worried about the performance of the second half. Josef started in showing you a chart where organically, our last quarter is very strong, is typical of the cycle of the business innovation. We have to remember that most of the revenues of low run are coming from when the investments of our clients has been completed and put up and running. And our clients definitely the aim to complete their investment that they put them up and running before year-end in order to benefit in the tax declaration of the sale that is going to occur in April, May to apply for this potential tax release and benefits. So this is the reason why the revenue is concentrating over there. It's going to be a tough second half, but we have to say that a tough second half, we already experienced last year and will deliver as expected. To confirm that we started the business if our strong revenue of Q4 has been collected in the first half '22 means that strong revenue has been collected in the following quarters. So we are not worried about this. Obviously, we are very concentrated and because we have a few more room for changes, but we know what to do and the management is fully focused on that. The last point in terms of M&A, we completed the acquisition of the first part of Defence deal during this year. And as you know, we have a call for the majority or the majority of Defence Tech next year. We are working with them, and we are focused working with them in order to define a combined plan that is going to support the exercise of the call. So far, we are very happy and we are working very closely. As far as concerned, ASCERTIA acquisition, we completed the acquisition the first 65%. We are glad about the start of the business between the signing and the closing and so now we are working at the integration of ourselves into the group. The performance are aligned with the expectation from the acquisition. Obviously, Tinexta, also, if you look at the net financial position, is closely looking at potential deals in Italy, but also outside Italy. Priority for this year are continue to be Digital Trust and business innovation like we said in the past, we do believe that potential opportunity in France for business innovation would be very important as well as we are looking at potential opportunity around Europe for Digital Trust. For [indiscernible] , we will focus only on relevant targets, target in a very solid position with a significant expectation of growth.

The next question is from Carlo Maritano of Intermonte.

I just have a couple of questions. The first one is on ASCERTIA that you mentioned before. I was wondering if you could provide us some -- we have updated the end of March 2022. So at least how much this company will last year. And the second question is related to the cash flow all of the quarter. I've seen that you are not putting the contribution from option. I was wondering if you could provide some follow-on use [indiscernible] in fact we might give [indiscernible].

Carlo, can you repeat the second? Was it on cash flow?

The second one on cash flow is related to the adjustment of adoption that contributed positively to the quarter. I was wondering what is the reason which are the core and a subsidiary involved in new adjustments.

I go for the second question. In order to as well understood what you say. You are talking about the impact on cash flow, destock option. Okay. To get into the presentation. If we move to Page 12 on Page 13 on the LTM basis of first half. First half EUR 5 million or EUR 6 million, yes. This is basically, what has changed here are 2 things. The deduction of the final exercise of the deduction for CertEurope has been lower than what has been projected at the end of the year. So basically, we may share part of this after having the review the performance, and therefore, we got, let's say, like a discount. Second, we applied a new weighted average cost of capital that reduced a little bit also the put option. So this is what basically happened a small amount that help us to reduce the net financial position. So this is basically what happened. I don't know if I make this clear to you. For ASCERTIA let's say, as of now, we are not releasing specific figures. We are going to consolidate the company since July 12. And with the -- when we are going to report ASCERTIA in September results, together with the other -- the 9 months results, we will provide more insight and more details on this.

Maybe just to give a bit of a smaller answer on this, Carlo, just to try to guide you a bit more on the press release, we definitely had given some pro forma figures, right? So and we saw that the growth was double digits, and we can definitely confirm the base. That's the trend, right? So we're not seeing any potential downside on this, but the double trend is...

From the information we have, we are very glad of what's happening, but I honestly, I don't want to comment on results that will be not consolidated in our books. Carlo, I will be more delighted to share with you, and with all you guys all the cases, but since we are going to consolidate the company.

[Operator Instructions] The next question comes from Russell Pointon of Edison.

I've got a couple of questions, please. First one, in the Digital Trust, there was a nice pickup in growth from Q1 to Q2 and in the presentation you referred to the incremental revenues coming through from the partnership with CRIF. So could you just give a bit of background on that and perhaps scale it? My second question is on business innovation. We fully understand the seasonality of the business. But could you give some idea of sort of there are lots of positives and negatives within there. So could you give some indication of how big are the positives and how negative are negatives? And in terms of that progression to meeting the full year guidance. Are there any businesses where you have more limited visibility? I would imagine advertising, for example, has very limited visibility. And obviously, some businesses, probably a bit more cyclical that is.

I'll start with the first question about Digital Trust. The impact of decreased business is very, very limited. We were talking less than EUR 0.5 million, but very high marginality, and this is going around our expectation. You know that we are consolidating this since basically here in 1 quarter, 1.5 quarter. So this is not a big deal. What is very important is the capability of the Digital Trust business to be very steady and addressing a very steady growth and having an operating leverage that is coming quarter after quarter more important. So we were able to lease up the profitability from, let's say, 27% to 28%, and this is definitely very, very important. So on this area, that we feel very, very strong and very happy how we are entering this performance. If we are talking -- if we move to the second question on the business innovation and the seasonality, I hope to -- and maybe I ask it of Josef, have to explain why the business is delivering in the second half where the investment has been completed and putting up and running. When the investment are up and running, then they can get the release when they are reporting the tax declaration for the year. So there is a rush of either reply to try to complete this by the end of the year. It's not the cash relief from the tax authority will come 16, 18 months later. So this is the primary driver of this. If we look at the report and the results by business unit. Like I said, in the business innovation business, we had a slight delay, the parcel was expected. With that said, subsidized finance, basically because we have a couple of million, it's not EUR 2.5 million less in terms of revenue that is being driving a very high loss of marginalities here. Then we have the warrant was able to develop other business lines I mentioned that, for example, for the digital innovation, we went up from EUR 2 million to EUR 7 million, but the profitability we have on the other business lines, that is still very strong, above 25% is not profitability of the [ Financial market ] is in the range of 50%. So this is the revenue mix as we wrote in the presentation is the main driver. So then we have the capability to develop other businesses at our support to our clients in energy is improving quite significantly as well as in the education business as well as in European funding. Some of them are going up, some of them are down. But this is part of the business because every year, the budget law is addressing the different distribution of funds. And so if you have several business lines, we are able to compensate and get some opportunities. We are focused on improving business and you have the risk not to balance exactly the revenue. Like we said with Isacco and Carlo the second half is going to be very busy, but yet on this last year. So the management is focused. They are running to achieve this, the portfolio that is supporting us, and this is what we do expect. Like I said last year, we should definitely our business is not a consumer business. It is a client-driven business. So if you have one big bill in one quarter instead of the following quarter, this can change the future of the quarter. The important that we are having across the full year all the businesses that we put in our guidance in our business. So we knew since the early beginning that our second half also in our internal budget, our second half was expecting a stronger growth compared to the first half.

So just going back on to things like the advertising. That's it. I would imagine visibility on that is relatively limited. Is that so to say?

No, the advertising is not an important part of our business. Digital product is -- Cybersecurity is 0. Warrant Hub is 0. The only part is the digital marketing for Queryo. There, we are facing some issues compared to our projection. Still, the results are growing compared to previous year in terms of revenue and in terms of profitability, we are almost there. But Again, we are talking about like less than 1% of our revenue advertise.

Yes. Sorry for the use of the word advertising. I'm on the digital margin.

So no, no, no. But Queryo is providing performance-driven capabilities to our clients. So since last year, we ended for them, the acquisition of advertising or to deliver the performance. But for us, it's basically a pass-through.

The next question is from Aleksandra Arsova of Equita.

So 3 questions on my end. Because one is more technical just to get better, the net financial position, sorry, net debt on EBITDA targets for 2023 does not include the disbursement for ASCERTIA, correct or not? The second one is again on business innovation. I recently read on the newspaper that the portfolio was in Italy is, let's say, pushing the government to stope their fanatic procedures for possible finance, the transition industry at 4.0 and all the finance projects, so meaning that first company patents must be approved the investment and then be entitled to get the grant by the government or the EU. So do you think that this happens if approved can, let's say, hold or hurt in a way that the business innovation revenue generation. And the very last one, maybe if you can give us some more color on the joint venture, the partnership with Digital you mentioned at the very beginning. So what kind of partnership you expect to have and what kind of investments and the amount you expect to invest in these activities.

Oddone here, yes, you are right, like we put in the press release, if not, it's going to be completed, everything that's already was booked in first half has been projected to the end of the year. ASCERTIA came after and therefore, is not part of this projection. But we have not either in the projection of revenue and EBITDA. So this is the first answer. What settled instead of setup, we already had the debt for [indiscernible] . What is changed is going to change it just a swap between less cash and less debt for it, but the net financial position is not changing. So I share result in revenue, EBITDA and investments.

So for the second one, could you repeat. Were you referring to the [indiscernible] ? Can you just explain it a bit better? What were you asking about fleet.

From my understanding, the quarter 4 just quarterly is asking the Italian government to change the rules the transition for [indiscernible] ones are awarded to companies. So now physically the company can invest in a project and then doing all the application gets the amount of the credit incentives, but they can do start the work whenever they want at the end. Now from my understanding, the quarter of auditors is asking the government in order to allow the companies to get this plan, first step to transfer permission, let's say, for an approval the project with the investment is, let's say, can be supported by this plant in order to start otherwise, if you start the investment and then as for the brand, for the incentive, you cannot get it if you are not approved.

Let me stop you there. Let us do a bit more work given that we want to do a follow-up and then if there's any news, we'll let you know. The answer is we'll chat with the business here and to see if there is anything to really mention. Of what we know, I mean, for the time being, everything is it is, I mean, we don't see any major disruption, but we'll see, and I'll get back to you on that. The third question was on Digital Magics. I mean here, you probably know Digital Magics is a listed density. The strategy is very simple in the sense that Digital Magics does this -- this is their typical job, which is investing into start-ups or even grown ups doesn't really need to be a startup. We are basically putting together the strategy of us being a company that looks into digitalization. So the angle here is that of identifying either start-ups or grown-ups that have that digital transformation angle Digital Trust angle and see if that can be of interest also with Digital Magics. This means that on our side, we will invest up to EUR 5 million. We said that already and announced that on the press release. It is for us an opportunity. It is the Digital Magics an opportunity. The workflow will be that of Digital Magics actually giving us a potential funnel of businesses that can be, at this point, evaluated jointly. That means both from our side and digital Magic side. And we will then have an investment committee that will look at the business plan to see how they are keen with the business of Tinexta, particularly on the digital on the digital angle and then we'll decide if to invest or not. This is part of a strategy that next put together of open innovation, which is basically given that we are a reference company specifically in Italy and also at the European level in the digital transformation side, it is good that we can invest in potential ideas that can become grown up, so even larger companies that could eventually become larger and larger. Are there and questions, operator?

At this time, there are no questions registered, sir.

I would like to thank you all for connecting to Tinexta's first half. Stay tuned for our next quarter results which would be obviously in the month of November, and we would like to wish you all a happy summer.

Yes. Absolutely. Thank you again, everybody, for attending today, and happy summer.

Bye.

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