Verisure plc ($VSURE)

Welcome to the Verisure Group First Quarter 2026 Results Presentation. Today, I am joined by CEO, Austin Lally; and CFO, Colin Smith. [Operator Instructions] Now I will hand the conference over to the speakers. Please go ahead.

Well, good morning, everyone, and welcome to our first quarter earnings call. First, just a reminder that you can find today's presentation, earnings release and interim report on our Investor Relations website, together with updated long-term trending schedules setting out our operating and financial performance. This morning, Austin will begin with opening remarks and first quarter performance highlights. I'll then walk through financial performance in more detail. So, with that, Austin, over to you.

Well, thanks, Colin. Good morning, everyone. Thank you for joining us on our first quarter 2026 results presentation. So overall, we are pleased with our start to the year. Our Q1 results demonstrate the strength of our business model. We delivered broad-based financial performance ahead of expectations. The results showcase our high-quality compounding portfolio growth, expanding margins, our second consecutive quarter of positive free cash flow and continued deleveraging, whilst making deliberate choices to protect the long-term value of our portfolio. Today, we reiterate our 2026 guidance, another year of quality growth, margin expansion and progressing cash generation. Colin and I very much look forward to your questions on the call this morning and to speaking to many of you in the coming weeks. Let's turn to Slide 2, where we present the key highlights from the quarter. We had a strong start to 2026 with financial performance ahead of expectations across the board and positive free cash flow was a real highlight. Starting with the financials. Annualized recurring revenue reached EUR 3.533 billion, growing 12.2% year-on-year at constant currency. This includes around 2 percentage points from the Mexico acquisition. This is fully in line with our 10% guidance for ARR in 2026 and for the medium-term. Adjusted EBIT was EUR 277 million, up 19.3% year-on-year, reflecting strong revenue growth, coupled with disciplined cost execution. And we delivered our second consecutive quarter of positive free cash flow at EUR 39 million. This further reinforces our confidence in being free cash flow positive for the full year 2026 and starting our journey of expected shareholder returns later this year. Beyond the financials, our customer portfolio is now around EUR 6.3 million. That's up 9.7% year-on-year, a compounding portfolio that makes us the largest monitored security company globally by portfolio size. Our rebranding program continues to progress well. In Portugal, the rebrand launched in late 2025 has been executed very well. And we already now have around 50% of digital traffic under the Verisure brand. Building on the experience from this Portugal lead market, we have now commenced the Verisure rebrand in Spain in April as planned. Spain is our largest market. So, this is the most important step in unifying the brand across our footprint. And I'll talk in more detail on the Spain rebrand later in the presentation. Our integration of ADT Mexico, our 18th market is progressing to plan. I was in Latin America last week to meet our teams from all 5 LatAm markets, including a detailed update with our Managing Director of Mexico and also our Integration Director. I was happy with the progress on the integration and the strong business plans ahead. The meetings reinforced my confidence in the Mexican opportunity. Q1 shows that our strategy is working, delivering long-term value creation through disciplined customer acquisition, predictable portfolio growth and moving into progressive shareholder returns. Let's turn to Slide 3. In Q1 2026, we delivered a strong set of results across the board. We now have the privilege of serving over 6.3 million families and small businesses across 18 countries. This is meaningful scale, but we see it very much as a way point rather than a destination, given the size of the addressable market opportunity across our footprint and therefore, the significant growth runway ahead of us in the medium and long-term. New installations increased 2.7% year-on-year in Q1, reaching 223,000. This was the second highest quarter of installations in our history. We were also happy with revenue. Q1 revenue increased 10.3% year-over-year to EUR 1.019 billion, and this was crossing EUR 1 billion for the first time. ARR reached EUR 3.533 billion, which was up 12.2% year-over-year at constant currency. The resilient recurring and compounding nature of our revenue remains one of the differentiated strengths of the Verisure model. And profitability scaled strongly in the quarter. Adjusted EBIT was EUR 277 million, representing 19.3% year-on-year growth. Q1 margins expanded to 27.2%, up over 200 basis points year-on-year. And this performance was achieved against an uncertain consumer backdrop towards the end of the quarter and underscores the range of levers we have to manage the business to good outcomes across varying economic backdrops. And we've demonstrated this resilience successfully a number of times before. Overall, Q1 reflected broad-based strength in volume, revenue and margin, a quarter of disciplined execution. And I want to take the opportunity to thank our teams across the company for their excellent work in delivering the start to 2026. Let's turn to Slide 4. Next, I want to step back and remind you of the scale of the business we have built and the position from which we are now operating. Verisure is now #1 in our industry globally. We protect approximately 6.3 million customers across 18 countries, and we have grown recurring revenues at a compound rate of around 14% per year over the last decade. As you see on the slide, we have overtaken the historical industry leader in the U.S.A., and we are now global #1, not only by portfolio size, but also by new installations. Now our growth profile is clear, reinforcing the quality growth playbook we've talked about so many times. But importantly, we see this as only a way point for us with much more growth to come in the medium and long-term. Verisure has always been a long-term growth story. I'm in my 12th year as CEO, and we know what this business is capable of. Turning to Slide 5. I wanted to touch on both the growth and the resilience of our portfolio in these more uncertain moments. Our customer portfolio continues to grow consistently, underpinned by disciplined customer intake and sustained low attrition. Last 12 months attrition was 7.4% with Q1 annualized attrition 7.5%, stable year-over-year despite an approximately 8 basis point mix impact from the Mexico acquisition, so a better year-on-year performance on an underlying basis with a reminder that Q1 is typically our seasonally highest quarter. We are well placed within our long-term attrition corridor, reflecting our focus on high-quality intake, stable portfolio and high levels of customer engagement. We were also pleased with how our 2026 price increase deployed in January has landed. Our attrition levels remain among the lowest across global consumer subscription businesses. Our approach starts with disciplined customer intake and rigorous quality standards at the point of sale. This is reinforced through operational excellence across installation, monitoring and service delivery as well as the increasing use of our AI-based customer management tools to identify signs of distraction and enable proactive retention actions. With that, I will now hand over to Colin to walk you through the financials in more detail.

Thanks, Austin. Let's turn to Slide 6 and note that I will always refer to growth rates in constant currency where applicable. Today, we're reporting a strong start to the year with good growth rates and a beat across the board on financial metrics. Annualized recurring revenue reached EUR 3.533 billion, growing 12.2% year-over-year. As a reminder, ARR growth benefits by around 2 percentage points from the ADT Mexico acquisition completed in Q4 last year. Mexico will continue to contribute to reported ARR growth rates until Q4 2026, at which point we will fully lap the acquisition. Total revenue in Q1 was EUR 1.019 billion, up 10.3% year-over-year. As Austin noted, this is the first quarter in the group's history in which our quarterly revenue crossed the EUR 1 billion mark. Adjusted EBITDA was EUR 472 million in the first quarter. This represents an EBITDA margin of 46.3%, an increase of 82 basis points year-over-year and a growth rate of 12.3%. Q1 adjusted EBIT was strong at EUR 277 million. This represented growth of 19.3% year-over-year with EBIT margin expanding 207 basis points to 27.2%. These results reflect strong portfolio growth, together with valuable ARPU increase and continued control of cost. Margin progression was broad-based across all 3 geographic regions. I'd also like to remind you of our rebrand program in Spain and Portugal, which has an estimated marketing investment of approximately EUR 25 million in 2026. The bulk of that investment begins in Q2 as we launch the Spain rebrand. These costs will be recorded in adjusted EBIT as per previous updates and are fully included within our full year adjusted EBIT margin guidance of above 26%. We remain very comfortable with that outlook. Turning to the situation in the Middle East. In terms of cost, we do not expect any material impact on the group. We carry around 6 months' inventory and expect limited impact on shipping and logistics costs. Our vehicle fleet will incur additional costs from a fuel expense perspective. However, I fully expect to be able to defray these additional costs with no adverse impact on guidance. In short, this quarter demonstrates that we have strong levers to manage the business. Profitable analytics-based pricing, quality customer intake and tight cost execution all came together well in Q1 against an uncertain customer backdrop towards the end of the quarter. Let's now turn to Slide 8. Our portfolio is highly stable, growing strongly and increasing in profitability. Breaking down the components, Q1 ARPU was EUR 48.30 per customer, up 2.2% year-over-year. This is a particularly important data point. As I mentioned, we deployed our annual price increase across the group in January, and it's landed well, in line or slightly ahead of our expectations. Our price increase process is optimized for long-term profitability and value creation. As noted previously, the company has no back book, front book dynamic. ARPU was also enhanced by upselling, which continues to be a meaningful lever to grow ARPU over time as we broaden our product and service portfolio. Recurring monthly costs were EUR 12.70 in Q1, up 0.6% year-over-year. This includes the temporary headwinds from the Mexico integration of approximately EUR 0.20 per customer, which we expect to reduce over time. Therefore, excluding Mexico, underlying RMC was around 1% lower year-over-year. As an example of continued progress on cost, in Q1, we delivered a 9% reduction in maintenance visits per customer, supported by our digital-first program, first-time resolution improvements and the increased use of computer vision AI on-device technology. These are tangible operational gains that flow directly to our cost base as well as improving customer experience. As a result, EBITDA per customer was EUR 35.50 in Q1, up 2.8% year-over-year, generating an EBITDA per customer margin of 73.7%, up 42 basis points year-over-year. Compounding ARPU growth, coupled with disciplined cost management differentiates Verisure and underpins our long-term margin growth trajectory. Turning next to customer acquisition on Slide 9. As Austin noted, Q1 new installations were 223,000, up 2.7% year-over-year. This is the second highest quarter of installations on record and only 1,000 or so behind our Q4 record. In the quarter, as ever, we were disciplined and focused on quality customer intake. We expanded further our sales channels through strategic alliances. In France, our partnership with BPCE has now scaled nationally, supporting further growth in our #2 market. In Spain, our partnership with Mass Orange launched in April and opens another sales channel in our largest market. Sales made through alliance partnerships increased year-over-year, and the development of this channel continues to offer both incremental growth and diversification opportunities across the group, all at an attractive CPA. Cost per acquisition in Q1 was EUR 1,574, up 6.7% year-over-year. The year-on-year increase was in line with our expectations and consistent with the trends reported in Q4. Previously discussed media cost inflation in both digital and TV, together with the continued rollout of the Portuguese rebrand. Encouragingly, CPA was lower than Q4 2025 on a sequential basis. As we've said consistently, CPA will naturally ebb and flow quarter-to-quarter, and I remain very comfortable at these levels of investment. Importantly, our acquisition multiple was broadly stable at around 3.7x in Q1, in line with recent periods and in line with our 10-year average. New customer cohorts continue to generate an internal rate of return of around 20% measured over a 15-year time frame. These are highly attractive value-creating returns. Turning next to cash flow on Slide 10. We generated EUR 39 million of positive free cash in Q1. This represents a EUR 95 million improvement year-over-year versus the equivalent EUR 56 million outflow in Q1 2025. This marks good progress as we move through our cash inflection point. Lower interest expenses, slightly lower working capital and a lower portfolio reinvestment rate, all manifested well in Q1, setting up the strong cash generation performance. Walking through the bridge on the slide. If we start on the left, Q1 adjusted EBIT, as noted, was EUR 277 million. We then add back customer acquisition EBITDA and D&A and remove EUR 122 million of CapEx investment and EUR 48 million of working capital outflow. This means our operating cash flow before customer acquisition was EUR 499 million in the quarter, up 17% year-over-year. In terms of customer acquisition, we invested EUR 184 million in attrition replacement and EUR 167 million growing our portfolio. Our portfolio reinvestment rate continues to reduce year after year, now at 57% as our increasing portfolio cash flows create more capacity to absorb customer acquisition investment. Adjusted operating cash flow reached EUR 148 million, growing 48% year-over-year. We benefited from lower financing costs, EUR 45 million less cash in Q1 year-over-year. This reduction came from a paydown of EUR 2.7 billion of debt at our IPO alongside the valuable refinancing work the team completed, reducing our weighted average cost of debt. I also wanted to note that in Q1, we received a EUR 16 million tax refund. This related to an overpayment of corporation tax in Sweden in 2025. All in, we generated EUR 39 million of free cash flow in Q1. This supported a reduction in net debt and a further reduction in our external factoring balance. Looking ahead, we remain confident in delivering free cash flow positive for the full year and reaffirm our expectation to pay our first interim dividend in the second half of 2026. Let's now turn to Slide 11. Our leverage continued to reduce. Last 12 months net leverage stepped down to 2.8x at the end of Q1, a 0.1 turn improvement with net debt now below EUR 5 billion. Our balance sheet has strengthened significantly, and we reaffirm our year-end 2026 leverage target of 2.5 to 2.75x. On the right of the page, you can see our weighted average cost of debt at Q1 was approximately 4.9%, around 100 basis points lower than 2024 levels. More recently, on the 24th of April, as some of you will have seen, we finalized a EUR 570 million Term Loan A upsize with several of our key banking partners. The proceeds were used to redeem our EUR 450 million 7.125% senior secured notes due February 2028 and partly redeem our EUR 1.175 billion, 5.25% senior unsecured notes due February 2029. That transaction was completed at a cost of debt well below 4% and helped deliver annualized savings of EUR 15 million to EUR 20 million. Pro forma for that transaction, our weighted average cost of debt is approximately 4.5%. We are ready to access capital markets to refinance the remaining EUR 1 billion of unsecured debt to further reduce our debt costs when conditions are attractive. Lastly for me, let's now turn to Slide 12 for a reminder of our 2026 outlook. Today, we are reconfirming our 2026 guidance. For full year 2026, we expect ARR growth around 10%, supported by portfolio growth and ARPU progression. We expect 2026 adjusted EBIT margin above 26%, which includes the step-up in rebrand investment from Q2 onwards. We expect to be free cash positive for the year as structural improvements in reinvestment rate, working capital and financing costs continue to flow through. And we expect to pay our first interim dividend in H2 this year at a payout ratio of 30% to 40% of H1 2026 adjusted net income. This will be a key milestone marking the beginning of a sustainable accelerating shareholder returns profile. We also reaffirm medium-term guidance. We remain confident in delivering around 10% annual ARR growth, revenue growth up to 100 basis points below ARR growth and progressive adjusted EBIT margin development to 30% over the long-term. The company continues to combine a highly predictable compounding revenue base with expanding profitability and increasing cash generation, and we are firmly focused on delivering long-term value for our shareholders. So, with that, thank you, and I'll now pass back to Austin.

Thank you, Colin. Let's turn to the next slide. This brings together the 4 building blocks of what we call our growth algorithm, the engine that has consistently delivered around 10% ARR growth and that underpins our medium-term guidance. The first block is market penetration. As I mentioned before, our category penetration is only at around 4% TAM penetration across our footprint, with around 50% of growth coming from other Europe. The market opportunity ahead of us is significant. The second is our stable, high-quality portfolio. Our customers stay with us on average for around 15 years. Our attrition is 7.4%, which we believe is best-in-class, not only within our peer group, but across consumer subscription businesses more generally. The third element is ARPU growth, driven by pricing and upselling. We've delivered a 5-year ARPU CAGR around 2.5% without front book, back book dynamics, an important and differentiating feature of our model that protects long-term portfolio value. And we continue to see strong upselling momentum with propensity across the portfolio growing. Finally, the fourth is expansion. Mexico is our 18th market following the acquisition completed in Q4, giving us a leadership position with around 40% market share in a sizable and underpenetrated geography. On new segments, we continue to expand product categories, new product, services and use cases, all generated by our 1,800 in-house technologists. Together, this algorithm supports sustained revenue growth and underpins our confidence in our 2026 outlook and the guidance we've given for the midterm and the long-term. Now on the next slide, I want to spend a moment on a message that goes to the heart of how we run Verisure, how our model compounds long-term value through disciplined quality-led growth. You can see on the slide how our model self-reinforces. It begins with disciplined customer intake, quality at the point-of-sale flows through into a growing high-quality portfolio. That in turn drives strong portfolio economics, which generates the cash to reinvest in growth. And from 2026, we expect to begin the phase of returning capital to shareholders. It's a virtuous circle designed to maximize long-term value per customer. At the center of the model is what defines Verisure, quality growth, margin expansion and cash generation, translating ultimately into shareholder returns. And this is the philosophy that drives our decision-making. Our model has been proven over many years and through many cycles, delivering quarter after quarter. Across varied macroeconomic backdrops, we've consistently combined disciplined customer intake with industry-leading attrition, expanding portfolio economics and disciplined capital allocation. That's what enables us to compound long-term value with confidence. And it's why we remain firmly committed to our model, protecting and growing the value of the portfolio rather than chasing volume. And the Q1 numbers are a clear proof point that the strategy is working. The resilience and predictability of our business model gives us the strong conviction to deliver attractive compounding shareholder returns over the long-term. Turning to the next slide. Building on the successful launch of our rebrand in Portugal in late 2025, we've now launched the Verisure rebrand in Spain in the month of April. Spain is, of course, our largest market, and this represents our final step in unifying the Verisure brand across our footprint. We've launched in Spain under the tagline First to Protect, a powerful expression of our brand promise. First means that, first and foremost, our priority is intervention. Verification and intervention are the core of what we do. We're a high-touch human service company. And First also points to our global leadership. Under this banner, we are significantly increasing investment behind the Verisure brand in Spain with a highly visible presence across out-of-home, television, digital and our retail and fuel channels. We're targeting 98% reach with this campaign. And you can see from the images that it's hard to escape the Verisure brand in Spain right now. Reaction so far from our colleagues, existing customers, prospective customers and the public at large has been positive. So, we look forward to the opportunities that this investment in unification will bring us. The financials of the Spain rebrand are in line with the guidance that we set out last summer. Incremental marketing investment in Spain and Portugal in 2026 is estimated at EUR 25 million, which we included in our 2026 EBIT margin guidance of above 26%. As Colin mentioned, the associated step-up in investment for Spain will be taken in adjusted EBIT from Q2 onwards. In parallel, the Portuguese rebrand continues to progress at pace. Around 50% of our digital traffic in Portugal is now under the Verisure brand. And the strong learnings from the Portugal lead market are informing our execution in Spain, and we are well positioned to deliver this transition with both discipline and success. On the next slide, I want to highlight 2 recent examples of new products and services we've launched with AI at the core. As you know, innovation is a core part of our model. Our investment here sets us apart and enables us to continue to extend our category leadership position. Our vertically integrated platform supports us delivering proprietary differentiated products and services. Guardian is our outside the home personal protection service, which we launched in France in Q1. Guardian is mobile-based and connected to our 24/7 monitoring centers, providing security, assistance and monitoring and combining geolocation technology with real-time human support. It includes an SOS button directly connected to our monitoring centers as well as timer functionality that triggers alert if the user has not arrived safely at their destination when planned. As you would expect, it particularly resonates with families, and we plan to roll out Guardian more broadly across the group in 2026. Second, our Seniors protection proposition in Spain. This demonstrates our continued evolution from reactive assistance to proactive intelligence. We use personalized AI models to monitor behavioral changes in the home with over 100,000 individualized behavioral models running live every day. We use personalized AI models to monitor behavioral patterns in the home. The system is designed to detect potential emergencies early, providing peace of mind for families and meaningful support for an underserved and growing demographic. Both Guardian and Seniors Protection illustrate our broader innovation playbook, leveraging proprietary AI personalized at scale with human assistance when it matters most. They are also strong examples of how we are expanding the addressable market and creating new vectors for Verisure growth. With that, let me move to the key takeaways. First, we're pleased with the results in the first quarter, and we look ahead to the rest of the year with confidence. We continue to scale well and with quality. Since we last spoke, we've become global leaders by portfolio size, and we're only getting started. Our model has proven time and again to be defensive and highly resilient. We've delivered strong financial results through all forms of macroeconomic situations, executing with strength and momentum and delivering double-digit growth throughout. We're pleased to have delivered positive free cash flow in Q1. This sets us up well against our expectation to pay a first dividend later this year. Lastly, today, we reiterate our 2026 outlook, an outlook that aligns with the medium-term guidance we set out last summer. ARR growth of around 10%, adjusted EBIT margins above 26% and free cash flow positive for the full year. With that, I will now hand back to the operator, and Colin and I look forward to taking your questions.

[Operator Instructions] The next question comes from Annelies Vermeulen from Morgan Stanley.

Two questions, please. So, in your opening remarks, you mentioned an uncertain customer backdrop towards the end of the quarter. So, regarding macro and particularly performance through Q1, did you see any discernible impact on the business in the latter half of March or into April in terms of attrition and so on? Or do you think it's potentially too early to see any impact to consumer behavior from the situation in the Middle East? And then secondly, clearly, a very good Q1 in terms of adjusted EBIT margin, but you've left your full year guidance unchanged. I appreciate you've got your rebranding costs sustained kicking in from Q2. So, could you remind us of the expected shape of year-on-year margin development as we move through the remaining 3 quarters of 2026 to get to your current full year guidance?

Well, thank you very much, Annelies. Let me take the first question on the macro. I mean I think certainly, consumer confidence, if you went through the quarter, was clearly more uncertain towards the end of the beginning. We're all following the global economic events. But actually, if you look at the shape of our delivery through the quarter, like month-on-month, what you don't see is material change in behavior that affected us. There's still plenty of demand out there and the portfolio rock solid. Actually, really pleased Q1, as you know, I mean, we ended up with a portfolio of 9.7%, nearly 10% higher than the year before. This has always been about the portfolio growth, remember, right? Because the heart of the model, it's the 90% of the revenue that's recurring coming from the portfolio. I was also very happy with stable attrition given the price increase that we put through against that backdrop. Now I think the important message, if you then think about the rest of the year, based on what I've seen in the first 4 months and based on the solidity of the portfolio, we're very confident to confirm the 2026 outlook, right? I'd also comment, again, obviously, we don't guide on short-term installation numbers. We guide on ARR, we guide on EBIT, right? And I think what we know, if you look at the midterm and long-term, we've been through this before, right, through various macroeconomic backdrops in the past, we've been able to get through that with double-digit growth, right, because of the resilience of the model. So, I mean net-net, reaffirming guidance for the year and confident. And I'll pass to Colin to talk about the margin.

Sure. Thanks, Annelies, for the question. I mean I think, look, on the EBIT margin, I think Q1 really does set out a clear example of how our model works effectively and at scale. Key driver of the accelerated EBIT growth was portfolio scale and profitability. We saw customer growth at 9.7%, boosted by Mexico. And we also saw our EBITDA per customer up over EUR 1 per customer year-over-year. And growth in both volume and rate is very powerful, and it really is at the heart of our margin growth model. That increased portfolio profitability and cash give us the capacity to invest more in customer acquisition in the first quarter. Now, if I take the second part of your question and talk a little bit about EBIT margin guidance and evolution. I think looking forward, we're not yet ready to increase our guidance on EBIT margin from the above 26%. You mentioned the Spain rebrand. But just to remind everyone, we expect to invest around EUR 25 million in the Spain rebrand from Q2 through to Q4. And I'm not going to give guidance on EBIT margin development quarter-by-quarter going forward, but I do expect in the second quarter those EBIT margins will come down a little purely because we really start and step into that investment. I think one other point that I would like to make as well, and it's stepping back a bit and thinking about things more broadly. It is worth remembering that we are in a period of heightened investment from both a profitability and a cash flow perspective. We've got 2 large programs in flight. 2G, 3G regrades are at peak investment level and the Spain rebrand will be significant in '26 and '27. But these, of course, will flip to become tailwinds to growth once we come through those investments over the next couple of years. So, it's just worth bearing in mind that those 2 things are temporary and transitionary. I hope that gives you what you need and thanks.

The next question comes from Suhasini Varanasi from Goldman Sachs.

A couple for me as well, please. When we think about the growth in new installs, it was a bit slower versus the pace that you had in the second half last year. Agreed that the ARR growth is still very, very strong at double digits. But can you help us understand how you're thinking about the moving parts to ARR growth for the rest of the year and whether you expect the growth in new installs to pick up over the next few quarters? Second one is on the outlook, please. I mean there's a small change in the wording compared to the full year results. Now it's 10% ARR growth without excluding Mexico. Just wanted to get a sense on what's changed? And are you a little more optimistic about the underlying growth trends?

Well, will I start with the second question and just take that one and then Austin perhaps on installs. I mean I think the answer to the question on outlook is no, there's been no change. We are guiding to ARR growth of around 10% for the year. The point that we're making here is that, as I said earlier on in my comments, we do expect to lap the Mexico acquisition by the time we get into Q4. So, we are running at around 12.2% in Q1, and that benefits from approximately 2 percentage points from Mexico. So, we're just basically indicating the fact that we will lap that by the fourth quarter, and we are targeting around 10% at that point in time. So, no change to what we previously guided.

That's very good. I think on the building blocks of ARR, I mean, obviously, installation growth is one part of it. But fundamentally, 90% of the revenues are obviously coming from the portfolio itself. I think we've got a very good tailwind from the well-taken price increase, right, that we had in Q1. I mean the ARPU up, I think, 2.2% already with no measurable impact on attrition. Attrition is also obviously a key part of the solidity of the portfolio. I think if consumer confidence like outside is a little bit lower for now given the external situation, the fact that the attrition is so solid is one of the more pleasing KPIs actually in the book. The other, again, thing I'd remind you about is that -- when it comes to new installations, we don't chase volume. Certainly not, for example, if we think the consumers are more cautious because we want to absolutely make sure that the quality that comes in is of the same high quality that the portfolio itself demonstrates. So, you could say, for example, when you look at Q1 that we were really disciplined right on the quality of the intake and also looking at the acquisition like investment, and we will continue to do so. It's why we actually don't guide on quarterly install numbers, right, because we don't want to create a situation where we're chasing volume, right? What we want to do is just deliver very high-quality earnings, right? And that starts obviously with the recurring nature of the revenues.

The next question comes from Erik Lindholm-Rojestal from SEB.

So I just wanted to touch base on the free cash flow improvement here, improved clearly in Q1. And I guess the timing of paid taxes helps to a certain extent. But if we think about the remainder of the year here, should we expect paid taxes to swing back in Q2? And what do you think is a reasonable number for free cash flow for the full year? Then a second question, I mean, you mentioned several opportunities to use AI to take out costs and improve operations in the report. But what do you think are sort of the most meaningful opportunities for the near- to mid-term in terms of leveraging AI to improve the business?

Thanks, Erik. Well, listen, let me pick up one and then Austin will take the second. So, look, yes, absolutely. Look, positive cash flow, EUR 39 million in the first quarter was a real highlight. It's a very, very solid start to the year, and it further reinforces our move through our cash inflection point that we've talked about often over the past number of months. I want just to kind of add a little bit of context on the cash number and what sits underneath it. I mean, firstly, we made a working capital investment of EUR 48 million in the first quarter, and that was primarily driven by inventory build, which is kind of typical and customary for us to do at this point in the year. So, EUR 48 million investment in working capital should be borne in mind. We also paid out a proportionately higher than average amount of interest in the Q1. So, we paid interest charges of around EUR 90 million, and that's around 30% to 33% of our annual total. So that was a burden on cash, and we also invested in a good level of CapEx. Now you're right, we saw a onetime benefit in the Q1, which was a EUR 16 million tax refund in Sweden, as noted earlier in the presentation. And that is something that relates to corporation tax overpaid in 2025, and that is a one-off and EUR 16 million, as I talked earlier on. So broadly speaking, as I look at the numbers, I'm happy that it was a very good quality free cash delivery in the quarter. And I think it sets us up really well for the year ahead and the expected dividend in H2. Now if I just kind of like to add another point while we're on cash, I just want to underscore the fact that I'm really pleased more broadly with how the balance sheet is transitioning. Leverage is down again, as you saw, to 2.8x. We confirmed the range target of 2.5 to 2.75 at year-end. And I would just like to say, I'm not -- I don't intend to give guidance on quarterly cash flow, but cash flow will be a little bit lumpy quarter-on-quarter. It's not going to be linear through the year. But again, just to reiterate that we're fully on track to meet our full year guidance as regards the dividend. And of course, there's clear scope for additional returns ahead of the ordinary dividend once we set a leverage around 2.5x. And as we come through those large programs that I talked about earlier on. So, I hope that gives you what you need, and I hope it was clear. And Austin, why don't I hand to you on AI.

Yes. Thank you very much for the question. I think we're excited about the AI opportunities for Verisure. I mean we actually think we're very well placed to be an AI winner. And I mean, you've asked for some sense of the biggest opportunities. I mean let's start from what the platform is. We've got -- sorry, 90 million installed devices in customer homes. We're basically capturing real-time data 24/7 from those families and businesses. And I think if you want to be an AI winner, the AI strategy starts with data strategy, right? You're as good basically as the training data that you can put in to algorithms. And we've got AI models in place now that are being trained on this data as well as broader real-world behavioral data as well as the incident data. We're then deploying those models across this large installed base. So that really helps us do the core job of verification and intervention, which is what customers pay us for like much better. I mean that job around verification and intervention is basically the combination of technology and the high-touch human service that we provide. What we've done since the start of the year is we've also stepped up significantly the focus on the governance. We've built our own company-wide AI ops platform that we can leverage for all the use cases. We've also stepped up leadership in governance with the creation of a central group AI office to coordinate and accelerate the deployment of the AI use cases. So, I think there's more coming like from this. If I take some of the more interesting use cases I'll get to very excited at speech analytics. We're talking to hundreds of thousands of customers like every month. I think this quarter, I think we screened 400,000 customer conversations. We're screening them for insight, for sentiment. We're also automating manual tasks like call summaries. We're auditing the quality of calls. We think this is going to improve the customer experience by eliminating recurring problems. We'll be able to identify upselling opportunities, but will also play into operational efficiencies, right, because we'll understand how we can make those calls more efficient, more effective. If you take something like battery consumption, which is actually a significant cost, right? We're actually increasing the modeling through AI of devices so that we're not replacing batteries too soon. but also allowing us to group battery shipments, also helping us reduce field service visits in that area. If you go to AI agents, there's obviously a lot of discussion about Agentic AI. We're already piloting AI agents for internal use cases as well as for customer-facing ones. We had an interesting proof of concept in Germany, where we actually offered customers the option to be helped with AI and have a shorter waiting time. And we already had about 25% of customers accepting this option. And in some of these cases, there was no human intervention needed, right? We basically had 100% saving on the average handling time, but we also had happier customers. And we've got lots of other examples. We've got our seniors program, which I mentioned earlier. Now moving to proactive intelligence. I mentioned that in my earlier remarks. We've got our Guard Vision camera deployment moving to a really strong promise on outdoor monitoring. Well, actually, that was probably one of the more tricky use cases. I mean, outside the house in an external environment, distinguishing, for example, between human and nonhuman triggers, difficult to do without AI, right? And we know that outdoor monitoring actually it's a use case where there's a lot of appeal to customers even among existing customers. So, lots to go after from a customer experience perspective, from doing the core job better and from an operational efficiency perspective. So that's why we keep going back to that -- we're excited about AI and the benefits we're going to get from it.

The next question comes from Guilherme Sampaio from CaixaBank.

Two, if I may. The first one, again, if possible, on new installations. So, I appreciate the regional color you provided about U.K. and Italy being relatively strong. In Q4, you've mentioned that Spain or France were strong, but now they are no longer mentioned. I just wanted to understand is there some change in market dynamics there? And connected to that, how are you seeing the decline in new installations in Spain that your main competitor in the country has recorded this quarter, has seen the dynamics there. And the second question is regarding the high and the low end of your 2.5x to 2.75x net debt to-EBITDA target for this year. There's a significant leeway that you have here in terms of free cash flow. What could drive us to the high end and to the low end according to your expectations?

I actually don't read anything into mentioning the U.K. and Italy, for example. We did just put a little bit of color into the report because the results were particularly good, right? And really pleased with the resilience of the company's performance in general across the board. We did also note in the report that the growth in LatAm was a bit lower. Again, we did that in the spirit of transparency because the macro situation there is obviously a bit more difficult. But we're more than compensating that by growth in the rest of the footprint.

Guilherme, if I can just quickly pick up your point on exit leverage guidance for the year. I mean I think we gave 2.5x to 2.75x at the beginning of the year, and we're standing by that alongside the rest of our guidance. I mean I do expect that we will narrow that range in the coming months as we get a bit further through 2026. But for now, that's kind of where we are.

The next question comes from Jane Sparrow from JPMorgan.

Two questions, please. Firstly, just on the alliance partnerships where you referenced good growth. I just wanted to check on the long-term customer behavior of customers signed via those partnerships. Are there any differences in attrition rates for those customers or indeed any of your other metrics that we should consider if they're a growing part of the pie? And then secondly, just on CPA, you've lapped the big step-up in marketing and media costs from last year and CPA obviously pretty flat 1Q versus 4Q. As you look ahead for the rest of the year, is that year-on-year growth in marketing and media component now back at more inflation type levels or still running ahead of inflation and needing to be offset by savings elsewhere? Just a bit more color on the CPA, please.

Jane, it's Colin. Why don't I pick up the CPA question first and then Austin can add a bit more color on alliances. I mean, look, you're absolutely right. And we were pleased with CPA in Q1 at 6.7% growth. That was broadly in line at a growth rate to the levels that we talked about in Q4. The drivers for that are consistent, right? So, we are -- we've seen a like-for-like increase in media costs around 10%. We don't expect to lap that until the second quarter. The Portugal rebrand continues. And we had upfront revenues strong at EUR 420, but around EUR 30 lower on a year-over-year basis. So, it's the same combination as we saw in the Q4. I mean I would again just remind everyone on the call that we do focus on the acquisition multiple, not just CPA. The acquisition multiple takes account of both the CPA invested in acquiring a new customer and also the improving customer profitability that we get back in the turn, which is also increasing, and that's been broad and stable. So, as I look forward, I think there's a couple of things happening on CPA. We've talked about the Spain rebrand. That really starts to land in the second quarter. So, I would expect that to bring upward pressure on CPA on a like-for-like basis. But you're right in that we're lapping the step-up in the media costs that we saw start in Q2 of 2025. So, on a like-for-like basis, I wouldn't give quarterly CPA guidance, but we are broadly happy with where the consensus is. And I would -- I'd expect CPA to grow a kind of similar level in Q2 as what we've seen in Q1.

Thank you, Colin. On alliances, Jane, thanks for bringing this one up actually because it's an important topic for us. We're really happy with the economics of the alliance partnerships that we have. Typically, they have an attrition profile, for example, that's either buying in line with the company or even better, right? And the reason is that they're often being prequalified by the alliance partner. They're often part of a bundle, for example, with a mortgage or an insurance policy, which actually contributes to the stickiness right, of the customer. And if you look at the other parts of the economics, we're basically bringing in them on effectively very pricing because what we don't want to have is a dilutive channel coming in. And it often comes in actually with lower CPA, right, as a channel, right? Because effectively some of the work to bring the customer in is following on the alliance partner rather than necessarily coming from very media investment.

The next question comes from Adrian Elmlund from Nordea.

Only one question for me, please. Could the rebranding in Spain here create any sort of disruptions in Q2? Just when looking at Portugal, it appears to have been going smoothly. But did you see any sort of impacts on installation volumes or any other metric really in Portugal that we perhaps could assume to be similar for Spain?

Well, I think the one that's interesting actually is a little bit off the press. We're already 50%, right, of the total traffic in Portugal is actually coming in on the Verisure brand, right? That's actually quicker as a buildup than we have expected. We're actually already at more than 60% brand awareness for Verisure, right, in the country. So very happy with that. Now Spain only launched 2 weeks ago, building on the Portugal playbook. And we're already at 30% of leads originated on Verisure 2 weeks after launch. So, if anything, it looks potentially like Spain might go quicker. Now we're not building that in the guidance, somehow early days, a swallow doesn't make a summer, right? We just need to let it bed down, but we're very encouraged by how it started.

Right. And you do not see any impact on the installation volumes as you did this in Portugal?

I think the point about this is that because we're investing more and we're creating new, we're obviously triggering growth, right? And I always viewed this not as playing defense, right? I view this as being an investment in the long-term health of the business, right? And that $25 million, for example, that Colin referenced in 2026, it sort of ends up on the expense line, but I don't view it as an expense. I mean I actually view it as building brand equity and building brand consideration and preference for the long-term, and I think we're going to get a great ROI on it.

The next question comes from David Brockton from Deutsche Bank.

Two from me, please. Firstly, if you strip out Mexico, you held recurring monthly costs very low in the quarter. You touched on some inflationary pressures, vehicle costs, et cetera. But is it reasonable to expect that to remain broadly flat across the rest of the year? Or are there any signs of any other inflationary pressures building? And then the second one, just in relation to the Origin AI minority stake sale. I know you signed a 5-year commercial agreement there. Can you just help me understand how critical that tech is to the business and the offer? And did you consider acquiring it yourself?

I mean David, why don't I go first on RMC. I mean, as you see, I mean, we were pretty happy with the cost performance in the first quarter, down 1% if we exclude Mexico. We've talked about Mexico being slightly higher on RMC, and we're working, as you would expect, to kind of quickly bring that in line. We're going to introduce Verisure best practice. And we're also -- we've got some transition services agreements unwinding post the acquisition. So, we expect that to come back in line. On RMC more broadly, I mean, I think I would take you back to our long-term track record. And if you look at RMC over the past 10 or 15 years, we faced down inflation over that period, and we've reduced it by around 1% per annum on average. That's before, of course, any opportunity, any step change opportunity that we get from all the various AI techniques and technologies that we're introducing that help both the cost base and the customer experience. So, I think we're quite confident on RMC looking forward. We see a continuation of that evolution and that trend line that we've delivered over the last 10 or 15 years. And as you note, the specific on your question around impacts from the Middle East, I don't see any situation where increased costs directly from that conflict are going to take us off track as I talked about earlier on.

Let me talk about Origin Wireless. We actually do believe that Wi-Fi vision, Wi-Fi sensing will be one of the important future technologies. In fact, it's already a current technology for us. I mean not the only one, not unique, but certainly important to have the armory. And we identified this already like more than 5 years ago, right? I mean we've been users of the technology for 5 years, and we were our minority investors in 2023. You could see we were one of the first companies to see the potential and to move in. Now we were actually -- we were happy that ADT came into the mix here because what in essence, it does is it puts more scale right, behind the Wi-Fi sensing sort of development and deployment. We don't play in the U.S. market. We don't have a plan to do that. We're the leader in Europe and Latin America and globally. And effectively, this partnership between ADT Origin AI and Verisure, it gives ADT access to Wi-Fi sensing technology, which we've contributed quite a bit to the development of the use cases, but it actually expands our existing rights and it gives us exclusivity within professionally monitored security across our footprint. So, we've kind of retained like the strong access that we really wanted. And we think financially, that made more sense than us taking over global ownership of a technology that we would only deploy in a, let's call it, a more limited part of the world. Now -- it's also, I guess, make another commercial point here, which is that the financial commitment and so on is fixed at pre-agreed pricing, including for future renewals. So, there's no margin pressure from the arrangement over time for us.

Thank you for your questions. I will now hand over to CEO, Austin Lally, for closing remarks.

Well, thank you all for joining us today. Thanks for the questions. Thanks for the continued interest and support. And as I mentioned at the outset, we look forward to sharing these results today, and we hope we've addressed the questions that you had in the Q1. Also, our confidence in delivering on our full 2026 guidance. We remain the clear category leader. We're #1 in 14 of our 18 markets. We still operate in highly underpenetrated categories. So, we've got a long growth runway ahead. We offer a unique differentiated customer proposition, combining best-in-class technology and services with human intervention when it matters most. We've got a highly predictable compounding revenue base, expanding profitability. We've got a disciplined balance sheet. We've got increasing cash generation, and we're confident in our trajectory. We're also confident in our ability to deliver long-term value across varying economic cycles. So, thank you for joining us today, and we look forward to continuing the conversation with you in the coming weeks.