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 Half-Yearly Financial Report at the 30th of June 2024. [Operator Instructions] At this time, I would like to turn the conference over to Josef Mastragostino, Investor Relator (sic) [ Relations ]. Please go ahead.

Good afternoon and good morning to the folks in the U.S. Thank you for joining Tinexta's first half results presentation. Here with me today, Oddone Pozzi, Group CFO.

Good afternoon, everybody.

As a reminder, all the relevant documentation of the first half 2024 results can be downloaded from our company website and in the Investor Relations section. For the purpose of this call, I [ won't go over ] the first half 2024 highlights and updates, although instead will go over the first half 2024 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. Given that you all have the available documentation, I will turn to Page 4 of the presentation to go over some key data of the first half 2024 results. Revenues came in at EUR 203 million, growing 11% versus prior year. EBITDA adjusted was EUR 34.4 million, with a decline of 9% versus the prior year. EBITDA on a reported basis was EUR 25.5 million and EBITDA adjusted was EUR 19.5 million. Net profit on an adjusted basis was close to EUR 12 million. Important to highlight is the free cash flow of continuing operation, which was pretty much EUR 26 million in terms of free cash flow. Net financial position is at EUR 276.9 million versus EUR 102 million of the fiscal year 2023. Let us turn to Page 5. On Page 5, we give you a bit of a summary of the first H highlights and updates. Therefore, we're updating the market following the first 6 months. Aside from some of the numbers that have already been mentioned, I would concentrate on EBITDA adjusted, which was again EUR 34.4 million. The decline of 9% was mainly impacted by ABF's contribution combined with CS's less favorable revenue mix and Business Innovation's known seasonality. We will discuss extensively on a business unit by business unit basis to try to understand what has affected the decline of the first H results. It is important to highlight that on the positive term, there was a partial offset of a very strong performance from Digital Trust, which I think did an excellent performance both in terms of revenue as well as EBITDA. EBITDA reported was EUR 25.5 million, with a significant decline versus the prior year, but that includes EUR 6.5 million of nonrecurring items. EBIT margin came in at EUR 17 million (sic) [ 17% ]. Adjusted net profit on a continuing operations base was around EUR 12 million. Let's highlight, I think, both the leverage ratio, which is to be defined as a peak for the year, which came in at 2.78x. But I think it's important to highlight how the free cash flow was pretty decent, coming in at EUR 26 million. But more significantly, I think, is the LTM base adjusted free cash flow, which was still more than EUR 50 million, more close to EUR 53.4 million. Top line still growing on all 3 divisions, notwithstanding what we just said. Again, very good performance on the Digital Trust base, which grew 18.4%. And still, again, witnessing operating leverage on an EBITDA base, which grew 21%. So I would say excellent maintenance of margin, if not an increase in margin, which reached 28.8% in terms of the first half results. Cybersecurity grew around 6.5% in revenue. EBITDA was 4%. We will discuss about the margin, but it was around 9%. Business Innovation obviously grew mid-single, so we're around 7%. It needs some explanation. We will give extensive explanation in terms of how the EBITDA progressed in the first half. In terms of recent events and updates, this is on a 1H basis. You all know that in January, we finalized a 74% purchase of ABF. In February, we launched a new strategic operational advisory business in the SMEs and reached in April 100% of Yoroi, Swascan, and Corvallis. As a reminder, the 100% ownership of Yoroi, Swascan, and Corvallis is already reflected in the net financial position. Just as a reminder, the Board of Directors also authorized the purchase and disposal of treasury shares. Turning to Page 6. I think this is more of a graphic representation of the results. Most of the numbers have already been highlighted. Let's concentrate mostly on 7. Slide 7 shows you, obviously, the cadence of the different quarters. We did not purposely remove this slide because we wanted to highlight to the market how important, again, for us is the second half of the year. Second half of the year, in the last 3, years shows 60%, 61%, and 63%. I'm talking about 2H generation of EBITDA. This year, this percentage is going to be even more important. As we know, the second half will be important both for the divisions in the case of Business Innovation, first and foremost, and then also in terms of Cyber. We highlighted the contribution or the missed contribution of ABF in that dotted line on the right because it shows you where the miss is. And obviously, the percentage of the second quarter in terms of the midpoint of the initial guidance that we provided in March. We'll have time to discuss about that. At this point, I will leave it to Oddone, which will pick it off from Page 9 with [indiscernible] (0:7:03) analysis of the P&L. Oddone?

Okay. Thank you, Josef. Good afternoon, again. Here, after the introduction of Josef, we go through the P&L of Q1 '24 that we compared both to '23 as well as on the same perimeter basis. As Josef said, Q1 showed a positive revenue growth over the previous year, but the revenue mix that happened then was slightly unfavorable. In Cybersecurity, within the Implementation Services, we deliver more products as a resale of products than services, and this unfavorable product mix has definitely impacted the results. The same, I would say, occurred within Business Innovation where the expected decline in the rates on subsidized finance, and this was definitely expected, has not properly replaced by the 5.0 sales motion we have, and this has impacted the margin. I would say these are the 2 main drivers, and I will deep dive later on that impacted the results. If we go through the P&L, we do see that we have a quite significant increase in terms of third-party costs where the percentage of revenue landed in the region of 40% on the same perimeter basis, and this is, I would say, mainly driven from the revenue mix and partially driven for a potential better management that we are planning to have in the second part of the year. As far as concern personnel costs, I would say, they are definitely -- although they grew on the same perimeter, came not as expected. They are under control with an incidence on the revenue that is almost the same over the period. Definitely, we are in front of a business where part of the revenue has been shifted to Q3 and Q4, and this is something that year over year is definitely emerging quite clearly. And so when we talk later on, we will see which action we are going to take on these subjects. EBITDA landed at EUR 25.5 million, and this has been impacted, as already highlighted during Q1 by the fees related to the ABF purchase as well as other costs in terms of a [ slight ] layoff of people that we have done in some specific areas. Depreciation, amortization, and provision, we have no significant difference from what we expected. I would say, it's continuing the level of investment from business units in order to support the continuing innovation of our portfolio of products and services, and I would say especially we will see then in terms of capital, especially Digital Trust is investing quite heavily in order to continue to maintain at the best of capabilities its portfolio of products. Financial charges, here we have a mix. Definitely we have some positive financial income coming from nonrecurring items as we had some decline in earnouts that occurred during Q1. And when we are talking about interest, obviously, the net financial position moved quite significantly compared to the yearend '23, but the level of interest is under control, so the increase is very light. Overall, we came to a net profit of continued operation that is positive, and we benefit here from a tax anticipation that we have done in order to get a better tax relief in the next years. Here we have Page 10. Definitely we have the adjustment from the reported income to the adjusted income statement results. As you can see, we have several impacts here, and I would say I will concentrate the focus on the 3 last numbers of the column 1H '24. So basically, we have a [ relief of ] earnouts for EUR 3.9 million. Then we had to rectify the amount we have in our books on defense tech driven by the lower market value of the company related obviously to some results. And then we have the tax effect -- the nonrecurring taxes that I already mentioned. If we go to the balance sheet, I would say, that the balance sheet is running as expected. We have no major variances compared to our expectation. Obviously, our net invested capital went up 26%, mainly driven by the acquisition we have done both in ABF and in Lenovys for a total amount of EUR 150 million. So basically, this is the driver. And I would say very important to mention is that our working capital management again helps us to generate a positive cash flow. This is a key indicator that we are monitoring. And so, when you look at the cash generation on short term, we know that the first half has been slightly impacted by the drop in the EBITDA, but the net working capital has been properly managed also during the first half. Net financial position, as I mentioned, is driven by the acquisition we have done over the period. In addition, we distributed almost EUR 30 million dividends over the period. Total shareholder equity obviously is declining due to the significant distribution of dividends during the month of June. Net financial position, we talked about it. And I would focus on free cash flow on continuing operations. Technically, we do see here a slight decline compared to previous year, but still as already Josef mentioned, we were able to deliver on an LTM basis a free cash flow well north of EUR 50 million. And so, we do have in this first half a slight decline, but it's mainly driven again by the delay of EBITDA booking. And like I said, we properly managed the working capital. I would say, in the first half, we accelerated our investment in the most profitable and stable business unit, that is Digital Trust, as we continue to invest in order to renew our services, our infrastructure, and the products that we are bringing to the market. I would skip the Page 13. Like I said, it's a graphic analysis of what we have already seen. I would say very important is to look at the net financial position LTM bridge. So the group has invested over the last year more than EUR 200 million. So the group basically at mid-'23 has squeezed the net financial position close to 0. So we had room for investment. And so, we completed the acquisition of Ascertia, ABF, and Lenovys over the period. And then, as you can see, we generated more than EUR 50 million as adjusted free cash flow from the operation. We were able to distribute dividends in the region of EUR 30 million. And then for the rest, we do not have major difference compared to the previous year. Now I think it's time to move to Page 16. And I would jump immediately to Page 17 in order to start to comment on operational performance of our business. Like I said, over the last 10-plus conference calls, we do have a further positive performance from Digital Trust. Both InfoCert and Visura, the 2 main legal entities in the group, have delivered a significant increase with an operational leverage -- a very interesting operating leverage. So on a same perimeter basis, you can see here that the growth in the revenue has been 9%. It's very aligned to the previous quarters, with the EBITDA going up in double digits. If we add Ascertia, basically the ratio has doubled, and the component of revenue coming from international is increasing. But I would say even more important is that the solution related to both LegalMail and LegalCert, as well as GoSign, has continued to grow significantly over the last half year. Here, the EBITDA increased close to 20%, with a very interesting ratio in terms of profitability. So I would say here, definitely, again, a brilliant quarter and a brilliant delivery. Cybersecurity. In Cybersecurity, we all know, and I think you all learned over the period that this basically is a segment of the IT business, and the IT business has a significant acceleration, driven by the spending on the budget by the customer in the second half of it. Definitely, we are not that happy about the absolute results of EBITDA in the first half, but again, we are talking about EUR 800,000 difference, or even less compared to previous years. So here, like I said before, the driver has been mainly the revenue mix, so we were in a position to deliver more products and services, services will come later on during the second half, and so these have been the main drivers. I would say here we have a few things also to improve, and already we put in place action to improve it, and what I would say, if we look ahead, looking at versus the second half, I would say, that we ended up the first half with a very promising backlog of orders. This is something for which we are very glad about that, and we do believe that we have all the opportunities and capabilities to deliver as it happened also in '23, a very strong second half. So here, again, we did not deliver exactly as we expected, but the gap is absolutely not relevant, and the second part of the year in terms of profitability is like 2.5x the first half, so this difference is something that is not a worrying us, also specifically because we have a very strong backlog as an opening balance of second half. Let's move now to Business Innovation. Here the situation has to be explained. First of all, I will [ speak ] for a second about ABF, and then I will start to talk about the traditional core business of the Business Innovation. Within our internal plans, we already knew that the lowering of the rates in the tariffs on Industry 4.0 was going to happen. We were fully aware of this, and we factored it in our first half projection and in our full year projection, so this has been known. Obviously, we put in our original budget quite interesting business from Industry 5.0, and this has taken or is taking more time in the approval process from the public bodies in order to be available. This is something that has impacted our first half, and this is definitely the main driver of the results if we take apart ABF. Obviously, this is putting us in an even more challenging situation. I think everybody here is going to remember the very strong second half we delivered last year, and here the mix is changing during Q1, so a lower contribution from subsidized finance, a higher contribution from new businesses that we developed definitely was able to keep a certain level of revenue, but this was impacting in terms of EBITDA. Again, here the last, I would say, June and also the information we have from July in terms of incoming orders are very promising, and so we are in a position where we will be not in a position to fully recover the gap of Q1, but we are in a position to perform the second half accordingly to the original plan and probably being slightly below the original budget, mainly driven by this. Obviously, the second part of the year is going to be very, very challenging, but people around the table, I think, everybody knows Tinexta, everybody knows what Warrant and Business Innovation were able to deliver in the last part of the year, both in '23 and even in '22, so we are reasonably confident at this point in time to project still results not far from the original plan we have here. If we talk about ABF, again, here obviously we are very disappointed. Sorry, I'll move to Page 20 now. Obviously, we are very disappointed of the results. This has to be very clear and cannot be different, so we had a delivery in the first half well below our expectations. We are working very closely with the management of the company and everybody is aware that the political environment in France during the first month of the year, I would say, during the full first half has been not the best condition where to work. So basically, there has been a government change in January, and we all know, and I would say that what happened in close to the end of February with the significant budget revision that was a public information around a possible cut of EUR 10 billion has definitely impacted in 2 ways: the first way it was a significant slow in terms of projects accepted; and on the other hand also on a much more selective way of accepting projects. So although the level of backlog was very positive, then the percentage of projects that were filed and then won was below the expectation driven mainly by the political situation around and the public bodies reacted at this cut in slowing down the acceptance and secondly to being much more selective. Obviously, again, it happened also in order to create unfortunately the perfect storm, the dissolution of the National Assembly at the end of June and the election was another. Having said that, obviously, this has heavily impacted the results. That is very clear. The results are, like I said, we are very disappointed about that, but we are putting a lot of effort in order to start an immediate and strong recovery in the second half. Definitely, this situation allowed us to swap out of the balance sheet, EUR 23 million of financial debt. As you know, with this information, we are not going to have earnouts and this is definitely reducing our capital investment. Second, this has been seen from the local management as a postponement in the range of 6, 9 months of the planned delivery, but we are working closely with the management in order to put pressure on this and also we slightly review also the value of the PUT at the end of the period because obviously this is something we saw. I think this is very important. So again, not happy at all about what's happened here. Monitoring closely and working hard on the subject. Obviously, we will keep you updated, and we do expect a reverse of performance in the second part. I will comment a bit also when Josef will go through the update of the guidance. I leave now to Josef for the closing remarks.

Thank you, Oddone. So to be very clear, we're on Page 22 of the presentation. We are giving an update on the financial targets. Let me explain all of it and, obviously, Oddone, please feel free to add anything that we're missing here. The guidance has been updated and excluding ABF, this is the most important thing I would say of this call, the performance, the underlying performance is showing continuing progress. So the underlying business trends are strong and sound. We want this to be crystal clear. We want this to be very achievable also in terms of the outlook for the second H. ABF contribution for fiscal year '24 has been moderately revised, and that was due to the political events that we just mentioned. Transition 5.0, as you all know, is a major factor for the contribution of BI, of Business Innovation. So the benefits are expected to come in the latter part of the year. We explicitly said that we are expecting contribution already in the second half of August, more likely beginning of September. So no earlier than the end of Q3 and Q4 we will see a strong acceleration. So again, for the last 4 or 5 years, Business Innovation is going to be extremely busy already end of Q3 and Q4. How does all this end up in terms of numbers? As you can see on this slide, we have parsed out ABF. So we are isolating the effects of ABF. Without ABF, revenues are expected for fiscal year '24 versus prior year to be growing anywhere between 11% and 15%. EBITDA adjusted, which I think is an extremely strong message, is expected to grow anywhere between 10% and 14%. When we add the new outlook of ABF that Oddone just pointed out, we are looking at, again, revenues for fiscal year '24 versus prior year growing 20% and EBITDA adjusted growing 22%. So we are still growing in excess of 20% in terms of EBITDA. In terms of the NFP/EBITDA adjusted, the overall target is within the obviously announced guidance at 1.9x. This does not include any additional M&A in terms of guidance. I wanted this to be very clear. I don't know, Oddone, if you wanted to add anything.

Yes. Thank you, Josef. We want to try to make everybody very clear. So let's look at Tinexta for a while as the ongoing business, traditional business we have before ABF. Still, we are talking about -- so, we are confirming the implicit range we have excluding ABF. So it means in the range of 10%, 14% growth of EBITDA. Obviously, driven by the performance of the first half of Business Innovation would be more close to the lowest part of the fourth, but I think it's not changing the picture. So the message we want to share with you all, that the core traditional business of Tinexta has not changed. And it's very solid and is growing double digits. This, I think, is very important. We had a slightly weaker-than-expected first half, but again, you all know how business is moving quarter after quarter, and Josef and myself shared many times with you all, [ and so here is ]. So this is important. About ABF, obviously, we reduced our guidance. Obviously, everybody's alerted on this. We are focusing, following on a daily basis what's happened, the management of Warrant, and even the corporate people involved in that. The management strongly believes that this is what they committed to our Board to deliver by the end of the year and is reflecting in the total guidance we are giving. I would say even more important, despite of this disappointing first half results of ABF, if you look at the leverage of the group, it's still there. It's exactly, again, within the [ fourth ] we gave at the beginning of the year. So this has to be taken significantly in consideration because this is -- so, basically, the message that Josef, myself, and the managers is transferring is that EBITDA grow of the core recurring business is there, exactly aligned with the guidance, and the leverage is still there again. Then, we have an issue of ABF mainly driven by political environment, and so we are putting under pressure the management in order to deliver what they committed to the Board of Directors.

At this point, we can open Q&A. Please, operator.

[Operator Instructions] The first question is from Sriraman Chandra with Stifel.

Can you hear me?

We can, Chandra. We can. Go ahead.

All right. So, yes, a couple of questions from my side. The first thing in terms of the guidance, have you derisked the second half enough? Because when I look at your Cybersecurity side of things, at least when looking at the guidance for the year initially, it was in the mid-teens, and now you started off the first half quite weak. So I'm just wondering, do you have enough bandwidth to deliver a similar guidance, assuming that the guidance downgrade is only on the ABF side of things? That was my first question. And related one is, do you envisage any impact in the second half from the issues that CrowdStrike has faced in the recent weeks? That was my first question. And in terms of ABF, a 6- to 9-month delay is a significant delay, and given the uncertainties, maybe it's a bit too early, but I just wanted to get some early thoughts in terms of how you think this might affect your medium-term guidance that you're looking at.

Yes. Okay. I'll take the questions there. Like I said, on Cybersecurity, we have been late to start compared to previous year. That's a fact. The revenue was going up, so this is positive. The margin is going down, but it's mainly one thing, is the revenue mix we deliver. And sometimes it's very difficult to balance everything within a short time period. But the issue we face, the first half is the smallest part of the year, so if you have more products, you have been negatively impacted. We do expect in the second half not to be impacted again by this revenue mix because of the portfolio, because of the traditional flow of the business. So overall, again, we are not changing our view on the year. Definitely, it's a bit more challenging, but actions are already in place, and like I said, I think that the level of order portfolio and the backlog we have definitely helps us in looking in a solid way to the [ forecast ]. If we talk to ABF, the answer is, if I look at '24 and '25, for sure, there is a delay. This is also what the management of ABF reported to us. So, for midterm, you talk about '24 and '25, for sure. I would say that we have to look at it. We are monitoring very carefully. For sure, it's going to be impacted much more heavily in '24, and this is already incorporated in our guidance, although still a challenge is there for the management, but this is what they committed to our Board today. And for '25, I think it will be something like in the middle, before the original projections and ours. In terms of return of capital invested, but definitely we [ swap off ] from the debt of EUR 22 million, so less results, less debt. So overall, we do believe that -- and in the figures, the leverage we do expect is still slightly below 2x.

Chandra, I think you had also asked about CrowdStrike issues. We're not experiencing anything like that as we speak right now.

The next question is from Isacco Brambilla with Mediobanca.

A couple of questions from my side. The first one is on Ascertia. Looking at your details on perimeter effect, looks like the asset is already basically the same profitability of the rest of Digital Trust business units. So if you can comment a bit on integration of this asset, which looks like it's going quite well. Second question is on taxes. Oddone, if you can elaborate a bit more on what helped you in the first half and maybe help us for modeling purposes to better understand what we should expect for the full year in terms of tax rate.

Ascertia started well the year. Ascertia is a business where sometimes we have peaks of business when we deliver our solutions. And let's say that as of the end of first half, the performance of Ascertia financially-wise is perfectly on track. I would say even more important, and we do expect by the end of the year, the companies delivering what expected, what was incorporated in our forecast. Now, I think here we are working together with Ascertia management in a very close and productive manner. I think we are working together in order to having a significant exchange of competencies and capabilities, and we are working on several matters. First one, you all know that they have a quite strong team in terms of solution development in Pakistan, and we are planning to have a [ central expertise ] and to reduce partially third-party at local level and to concentrate over there where we have strong skills, lower costs, and in order to internalize these competencies. Second, also in terms of sales approach, now the InfoCert together with Ascertia, we are in a position to offer to clients and customers solutions that can basically fit every need of the customer. Whether we are talking about on-cloud solution or on-premises solution, this is a unique capability that InfoCert has in the Digital Trust environment. So very happy about that. We have several areas of cooperation, and the trend of financial performance is aligned. So fine for this. About taxes, okay, very clear here. Here we have tried to say in Italian to make it very clear. So we take the opportunity of [ francamento ]. So basically, we had a cashout of EUR 4 million, and we have a tax benefit in the P&L. So the net was basically EUR 3.5 million benefit that we recorded during Q1. If you look at our tax rate, I would say that this is not significant to look at Q1 where we have such level of basically profit before taxes close to 0. You have to consider that there are few amounts of money that are not deductible. All costs we incurred for acquisition that are not, so they are going to increase the taxable income of EUR 4 million. So this is bringing EUR 1 million IRES on our P&L, and then we have IRAP that accounted for another EUR 1 million. Having said that, we do not expect a major impact on the tax rate. So overall, by the end of the year, the tax rate is going to be what we forecasted. And obviously, we have to add the benefit that we got from this [ francamento ]. But nothing special is going to happen there.

Can you hear us? Hello?

Mr. Brambilla, your question has been answered?

Yes.

Okay. The next question is from Andrea Bonfa with Banca Akros.

But my question has already been answered.

Thank you, Andrea.

We knew that. The tough one.

We move to the next question from Aleksandra Arsova with Equita.

Three on my side. The first one, again on ABF, if I may. One of the reasons you explained to us when you acquired the company early this year was the fact that you were trying to diversify the business outside of Italy and France was a country with a lot more stability in terms of government incentives for SMEs and generally a more stable country. Now the situation is likely changing and in Italy we are still having these ongoing issues on delays in [ Transition 5.0 ]. So the end question is, are these issues changing your approach to Business Innovation division to future M&A pipeline and overall strategy on this division? This is the first question. The second one is, again, on Business Innovations on the Italian part. You mentioned that you are ready with your clients, SME clients, on Transition 5.0 and 4.0 to be ready to work with them and to invoice all the activities once the regulation is set up and enforceable. So can you maybe give us a little bit more color on what is the actual backlog or [ soft ] backlog you can invoice within the end of the year once the regulation is set up? And the last one is maybe a technical one just to be very crystal clear on the guidance. During the previous guidance you usually provided the total, let's say, growth for the company and organic growth. So now you provide an indication ex ABF. So just to understand if the old organic guidance is, as far as I understand, confirmed and maybe just in the lower end, but still confirmed.

I keep the first question on ABF as well as the second on Warrant, and then I leave to Josef the third one. So on ABF, well, I think over the last decades the risk premium in France was lower than in Italy. So I would say this is normal. I remember several investors asking Tinexta to go abroad in order to lower the risk and to have more balanced areas where to operate. Having said that, it happens. This is clear. Having said that, we have a steeper climb, but like I said, nothing disruptive. Like I said, the leverage of the group is still there. The management of ABF committed to the Board of Tinexta to have a prompt, let's say, recovery and having, therefore, a delay of 6, 9 months. So this is not changing at all our long-term strategy. Obviously, it's something definitely unpredictable, and this is the case. Facts are there. We are reacting. But again, in this moment, we had recurring business that is solid, growing, delivering cash. So no issues. A lighter first half, fine. And then we have the second half that Tinexta always delivers what we commit. Then, if we move to ABF, we talk about opportunity of synergy. For example, an opportunity to address the subsidized finance segment of the market that is not covered by ABF is still an opportunity. Obviously, we have to face an unexpected market conditions, and we do face this situation. We react, but again, we lower our debt. We lower EBITDA as expected, but at the end, the leverage is there. The group is still solid. The core part of the group is growing, like Josef said, more than double. About Warrant, I think your view is correct. So we are working hard with our customers. Customers are very interested in 5.0. Rates are very interesting for customers and for us too. We do expect that -- we are working with them, we are getting orders, and we do expect to evolve. Obviously, the level of risk of this second part of the year of Warrant is higher than we planned at the beginning of the year. So we review slightly below our targets. But still, we are floating within the [ fork ].

To wrap up on the last question, Aleksandra, on the guidance, I think we reiterate the message. Parsing out ABF, the business is solid. The sound growth is there. We have highlighted the interval in which we expect EBITDA to grow, and that is 10% to 14%. We think that this is very positive news because this means that aside from acquisitions that can be isolated in time, and it can be isolated in the geographical area, which it is, the overall underlying business is actually doing very well. So that should answer your question. So the 10% to 14% we're probably going to be in that range, maybe as you correctly mentioned in the bottom part of that interval. But overall, 10% to 14% without ABF and 22% with ABF we still believe are very round and strong numbers for the market.

[Operator Instructions] The next question is from Gabriele Berti with Intesa Sanpaolo.

Just a quick clarification from me. Oddone, you said that you expect EUR 23 million benefit on net financial position due to savings on ABF earnout. Is this correct or did I misunderstand? And if it is correct, is this impact already included in the net debt on EBITDA guidance you have given for 2024 or you will have this benefit on '25?

No, no. That's totally correct. I'll try to explain myself slightly better. So driven by results expected, the earnouts flew away. And so, we already reflected in the actual results and therefore that they will be not any more there compared to Q1, for example. And second, obviously, we review the cost of the PUT because of the delay of the plan implementation. So the total is amounted around EUR 22.5 million. But you can find also, I think, in our [indiscernible]. But in any case, that's it.

The next question is from Russell Pointon with Edison.

A couple of questions. Just on the [ 5-point information ], just for not knowing this. Can you actually do the work on behalf of your customers ahead of plan actually to claim for the deductions or is it a matter of [indiscernible] you can make the claims as and when they're allowed. So there's no [Technical Difficulty] in the timing of what you can do for them. And second, just following up on Ascertia, [Technical Difficulty] a little bit because in Q2 it looks as though it was about 6% and it was [Technical Difficulty] much contribution. So can you just qualify what happened in...?

Russell, we got your first question. We didn't get your second one because you're badly breaking off. What's the question on Ascertia that we did, what did you say?

So I saw that you said that the first half was good for Ascertia. [Technical Difficulty] in performance between Q1 and Q2 because it's slowed a little bit. Profitability was...

I got it. Let me try to take a stab at these questions, okay. So let's start with 5.0, right? Transition 5.0 is something that we -- it is the cause of the lower margins on BI. And we said this in the first quarter, and this is again the case in Q2, the explanation is very simple. We bear the cost, but we don't have the equivalent overall revenue of this. Now I understand your question, and the question is, can you start doing the work before? The question is we are mapping the overall market very closely. We go to our clients, we speak to them, we try to identify beforehand any probability that there is in terms of understanding what their needs are, but obviously we need to have certainty in order for us to actually start and take over and carry out the work. So, the answer to your question is, we already are proactively reaching out, but give us the time for these decrees, because they are [Foreign Language] that need to be actually approved, and therefore the process starts. One thing I want to really say to the market is, and we've seen that in 4.0, once Transition 5.0 starts, there's no stopping it, right? So this is a very good part. We've seen that in 4.0. It's been going on for 3 years. We said that the 4.0 was going to come to a big diminishing returns, because you're looking at deductible rates that go down versus what they are at the beginning, but now we are in 5.0 where deductible rates can be as high as 45%. So, this is very good news. It's just a matter of timing, that's pretty much it. Now, in terms of Ascertia, these businesses obviously can be lumpy. They are lumpy by nature, right? So Q1 did very well, Q2 is doing pretty well [indiscernible] for the first quarter, but we don't see any issue whatsoever in terms of obtaining what we expect in terms of year-end results. I think this is very good also because, remember, we consolidated Ascertia only as of last year, and also we are now seeing the pure effect of Ascertia. Remember, Ascertia has, from a strategic standpoint, it is very complementary because it's a complement to the offering of InfoCert, and we're actually able to participate in certain tenders, as you might recall, which we couldn't have with InfoCert on a standalone base. Operator, do we have any other questions?

No, there are no more questions registered at this time.

All right. Thank you very much. I'm available to all the analysts and investors that would like any additional information, so you can easily reach out to me, and we thank you very much, and stay tuned. Have a good evening. Bye-bye.

Good afternoon, everybody. Thank you. Bye-bye.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones. Thank you.