Viridien Société anonyme (VIRI) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Viridien Full Year 2025 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Alexandre Leroy. Please go ahead.

Thank you. Good morning, and good afternoon, everyone. Thank you for joining us today for Viridien's full year 2025 results presentation. I'm Alexandre Leroy, Head of Investor Relations and Corporate Finance. We are hosting today's call from Paris, and I'm pleased to be joined by Sophie Zurquiyah, our Chair and CEO; and Jerome Serve, our Group CFO, who will walk you through our performance. Before we begin, a few housekeeping items. This call is being recorded and is accessible via both phone and online platforms. An audio replay will be available shortly on our website, www.viridiengroup.com. The presentation slides are also available for download from the website. Please note that today's presentation includes forward-looking statements. Actual results may differ materially from those expressed or implied today. Relevant risk factors are detailed in our 2024 universal registration document filed with the French financial market authority, AMF. As usual, we'll conclude with a Q&A session. And finally, a quick reminder that Viridien comments primarily on segment figures, which reflect our internal management reporting did differ from IFRS numbers also published today due to IFRS 16 impact on our Earth Data business accounting. With that, I'll now hand over to management, starting with Sophie, who will take you through the key business highlights for the quarter. Sophie, the floor is yours.

Thank you very much, Alexandre. Good morning, and good afternoon, ladies and gentlemen. I'm now on Slide 2. 2025 has been a very strong year. I would even say it has been pivotal in advancing the asset-light technology differentiated strategy that we initiated in 2018 as we are no longer exposed to vessel capacity, either directly or indirectly. 2025 was also a key year in our financial transformation. We successfully refinanced our bonds, extending their maturity to 2030 and generated a significant amount of cash, which we fully allocated to deleveraging the company. And more concretely, we generated revenues of nearly $1.2 billion, up 4% year-on-year. Performance was very strong across our data, digital and energy transition businesses with overall top line growth of 8%. Geoscience once again delivered strong performance, leveraging our unique business model and clear competitive advantages in subsurface imaging. Earth Data also performed well, supported by sustained customer demand for our advanced data sets in mature and strategic frontier basins as well as by recent industry consolidation. Beyond revenue growth, profitability improved further with segment adjusted EBITDA exceeding $550 million. Net income increased by 40% year-on-year. We also delivered strong cash generation. Net cash flow reached $107 million, exceeding our full year 2025 guidance, driven by our first year of operations following the full implementation of our asset-light strategy, solid operating performance and disciplined cash management. All the net cash flow generated was allocated in deleveraging as per our commitment, combined with the refinancing completed last March, during which we reduced the principal amount of our bonds. This enabled us to lower gross debt by $230 million year-on-year at constant exchange rates. Moving on to quarterly performance by business line. I'm on Slide 4, starting with Geoscience. Full year 2025 was another solid year of revenue growth, combined with continued productivity gains. Geoscience external revenues increased by 10%, reaching nearly $450 million. Performance was once again driven by our 3 core basins of U.S. Gulf, Brazil and Norway, where we delivered a significant volume of OPN imaging projects for leading IOCs and NOCs. The Middle East also showed solid momentum, particularly in Abu Dhabi and Saudi Arabia. Productivity per employee continued to improve, up 13% to $387,000 per employee and this reflects our continuous improvement initiatives and our increasing use of computing and AI to produce high-quality data-driven outputs while continuing to enhance efficiency. Backlog at year-end 2025 stood at $256 million, down from last year, while still providing good visibility and confidence as we move into 2026. Moving on to Slide 5. You can see how our unique differentiated business model enabled us to reinforce our competitive edge and consolidate our global leadership in subsurface imaging. Subsurface imaging is the highest value-add activity across the entire seismic value chain. It is not a commodity service business. It requires elite talent, leading innovation and technological scale, 3 structural barriers to entry. We support these with excellence in our services. Our winning business model rests on 2 core pillars. First, people. We recruit and retain the very best experts worldwide and foster a culture of excellence. This is critical to addressing the most complex subsurface challenges that our clients bring to us. To give you an example, we enable clients to make exploration plans in areas that they historically would have discarded or deemed too risky, thus potentially improving their reserves. In 2025 alone, Geoscience received more than 8,000 postgraduate applications from leading universities and engineering schools worldwide. As every year, fewer than 1% were selected to join our team. This level of selectivity ensures that we work with the most talented, creative and technically advanced experts in our field. We also remain strong and -- we also maintained strong academic and scientific credibility. In 2025, 77 peer-reviewed technical papers were published by our team. And among them, we received the 2025 EAG Award for Best Paper in First Break, one of the industry-leading technical publications. The award-winning paper highlights how our high-frequency full-waveform imaging significantly enhances imaging and reservoir characterization in complex environments such as the Barents. The second pillar of our model is our deep expertise in algorithmics and high-performance computing. From the selection and optimization of the algorithm, software and hardware infrastructure to the execution across tens of thousands of processing units 24/7, subsurface imaging requires highly customized, exceptional and reliable computing capabilities. At year-end 2025, our proprietary infrastructure approached 700 petaflops of computing power. Excluding hyperscalers, which operate in a different category, this places us among the top 5 industrial players worldwide in terms of computing capacity. To give you a sense of scale, our computing power exceeds that of many national weather forecasting agencies or publicly funded nuclear research institute. Seismic data processing is one of the most demanding computing activities with data sets reaching several hundreds of terabytes and growing further with the development of OBN technology. And to continue addressing increasingly complex reservoir challenges, we invest continuously in our infrastructure. In that context, we have just approved the expansion of our U.S. HPC center with a phased investment plan over the next 3 years. This will ensure we remain at the forefront of the industry and continue to consolidate our leading global market position. And finally, I would like to reiterate that high-end subsurface imaging provides value across the exploration, the development and production value chain. In 2025, 2/3 of Geoscience revenues were generated from development and production-related work. This makes the Geoscience business structurally less sensitive to oil price volatility than more exploration-driven segments. And this performance is supported by a well-diversified client base, including national oil companies, majors and independents worldwide. Now turning to Slide 6 for the Earth Data performance review. In full year 2025, Earth Data delivered solid performance with revenues up 6% year-on-year. This growth was driven by 2 main factors: first, sustained industry demand for high-quality data, both in mature basins and in high potential frontier areas where we are strategically positioned. And second, transfer fees generated by recent industry consolidation. Excluding transfer fees, which are normal and recurring component of the multiclient business model, aftersales remained similar to the previous year. As of the end of December 2025, the net book value of our Earth Data library stood at $494 million. I'm now on Slide 7 to discuss our Earth Data strategy and performance in more detail. While our primary focus remains on our core and most active offshore region, Norway, Brazil and the U.S. Gulf, we continue to selectively assess attractive frontier opportunities. Not that we're no longer exposed to vessel ownership, which when underutilized, can significantly weigh on cash flow and profitability and create incentives to pursue suboptimal projects, we approach the multiclient business with a very disciplined portfolio framework. Our strategy combines highly profitable legacy data reprocessing projects, leveraging our unique subsurface imaging capabilities with continued investment to strengthen our competitive positions in our 3 core offshore basins, Norway, the U.S. Gulf and Brazil, while also making selective strategic moves into highly prospective frontier areas. In 2025, given the scale of the Laconia and Utsira OBN projects, approximately 80% of our multiclient CapEx was allocated to reinforcing our library in our core basins. As a rule of thumb, in general, out of the roughly $200 million of multiclient CapEx we invest annually on average, reprocessing typically represents $30 million to $40 million or 15% to 20%. Emerging basins account for approximately 10% to 15%, meaning that around 2/3 of our yearly investments are normally directed towards our 3 core basins. This disciplined allocation strategy once again delivered strong results in 2025 with cash EBITDA reaching $178 million and a revenue to CapEx ratio of 2.4x. Now moving on to Slide 8, covering Sensing and Monitoring performance. Full year 2025 Sensing and Monitoring revenues decreased slightly, posting 5%, negative 5% year-on-year, landing at $315 million. Some deliveries in our land business that were expected in Q4 were postponed to 2026. Overall, the picture for the year remains consistent with what we have previously indicated. The market dynamic in the Marine segment was more subdued, but this was partly offset by the strength in our installed base in the land segment. In land, our technologies continue to lead the market, both through our established product lines such as the [ 528 ], WiNG and through our new solutions like Accel. Now turning on to Slide 9 for further insight into our Sensing and Monitoring strategy. Sercel was founded in 1963 and is the incumbent leader in seismic equipment, software and solutions design. The core recurring business of SMO is resilient through the cycle, supported by our streamlining efforts together with a large product portfolio, the largest installed base worldwide and sustained R&D efforts that allow us to regularly launch new innovative products and solutions. Our services share of our core revenue represented around 15% and is growing and our global market share is around 50%. The legacy activity represents 80% of total SMO revenue. So beyond this, reaching 20% of SMO revenue, we're actively pursuing a diversification strategy, leveraging our technological expertise across adjacent markets. Infrastructure monitoring includes surveillance, advisory services and structural testing. This business has experienced good momentum for several years now with revenues that grew by a further 20% in 2025. We are also expanding in defense markets, where demand for our specialized cables and subsea monitoring solutions are growing. Long-term framework agreements are currently under discussion with strategic partners. Another growth avenue comes from adapting our marine operational management platform initially developed for seismic applications to new cases, use cases such as operational efficiency and safety enhancement for ports and offshore oilfield infrastructure. In 2025, we also completed the restructuring plan launched 2 years ago at SMO. Our operations have been streamlined, allowing us to unlock additional value going forward. And our efforts increased business resilience through the cycle by reducing SMO's cost base by $30 million, bringing EBIT and cash breakeven down to levels close to the lowest revenue environment experienced over the past decade, around $280 million, while also releasing $60 million of working capital. With that, I'll now hand over to Jerome, who will talk you through -- walk you through the financial performance review.

Thank you, Sophie. Good morning, and good afternoon, everyone. Let's move to Slide 11, covering total segment revenue. In 2025, we generated $1.17 billion in segment revenue, up 4% year-on-year. This performance was driven by data, digital and energy transition, also called DDE segment, which includes our Geoscience and Earth Data businesses. DDE revenues reached $850 million, up 8% versus 2024. Geoscience grew much faster than the market, posting a plus 10% year-on-year, while Earth Data was up 6% despite lower CapEx and prefunding contribution. In Sensing and Monitoring, revenue totaled $315 million, down 5% year-on-year. The Land segment performed well, although some [ QCA ] deliveries were postponed to 2026. At the same time, new business case revenues within SMO continued to grow, supported in particular by strong momentum in infrastructure monitoring, plus 20% year-on-year. Turning to Slide 12, covering profitability. Total segment adjusted EBITDA reached $551 million in 2025, up 21% year-on-year, leading to a margin of 47%. Once again, this performance was driven by DDE, which delivered $549 million of EBITDA, up 20% versus 2024. The margin reached nearly 65%, representing a 640 basis point improvement year-on-year. This mainly comes from 3 factors: first, higher revenue levels in both Geoscience and Earth Data, which benefit from strong margin conversion; secondly, we delivered continued productivity gains in Geoscience with an increasing shift from people time to computing time, which carries a lower cost base; and third, the absence of vessel penalties following the final settlement with Shearwater completed in January 2025. Sensing and Monitoring generated $32 million of EBITDA, slightly down versus '24. This mainly reflects the somewhat lower level of activity as well as a strongly adverse currency effect driven by the U.S. dollar depreciation, while SMO cost base is predominantly in Europe, this negative FX impact being approximately $7 million year-on-year. Cost reduction measures implemented over the past 24 months to lower SMO breakeven point help limit this impact on profitability. In 2025, we benefited from a cost base roughly $20 million lower than at the end of '23. Starting this year, we expect to capture the full annualized savings, which will amount to around $30 million. This positions SMO well for improved profitability as the activity recovers. Finally, corporate costs decreased significantly from $38 million in 2024 to $29 million in '25, reflecting continued cost discipline across the group. Moving to Slide 13, covering the IFRS figures. The IFRS 15 adjustment was significantly negative this year, totaling minus $94 million at both revenue and EBITDA level for the year 2025. The comparison base is particularly adverse as 2024 benefited from a positive contribution of $95 million. As you know, this adjustment relates to our ongoing earth data survey, currently mainly in the U.S. Gulf and Norway, which are expected to be completed this year. Despite the significant negative adjustments, IFRS net income increased by 40% year-on-year to $71 million, highlighting the company improvement on not only cash-wise, but also down to the bottom line. Looking at the other P&L line, the net cost of financial debt increased mainly due to lower interest income as we reduced excess cash balances. Note that the overall gross cost of debt remained broadly stable as while the bond refinancing resulted in slightly higher interest rates, this was offset by a lower principal amount. Other financial losses primarily reflect the noncapitalized portion of the bond refinancing costs as well as some negative foreign exchange effects. The absence -- sorry, moving to Slide 14 and how this translates into the net cash flows. In 2025, we generated $107 million of net cash flow. From an operating perspective, this is closer to $136 million as the reported figure includes the early repayment for $29 million of the asset-backed facility put in place in 2022 to finance our U.K. HPC data center. At inception, this facility was included in the net cash flow. So it's consistent from an accounting standpoint that the repayment is treated the same way, although this blurs a bit the picture. In any case, whether you take $107 million or $136 million, it is well above our 2025 guidance of $100 million. Looking at the bridge versus 2024 when we generated $56 million, the main positive driver of this performance were a significantly stronger EBITDA contribution, up $134 million year-on-year, lower CapEx mainly in Earth Data, contributing an additional $69 million of cash. These 3 positives were partly offset by 2 factors: $110 million negative variation of the change in working capital, primarily related to lower payables on ongoing Earth Data projects as well as the still ongoing PEMEX receivable. Note that our PEMEX exposure was reduced to below $50 million at year-end 2025. The other line at $41 million, negative $41 million reflects mainly the net of the 3 items. First, the absence of the one-off $38 million cash inflow recorded in '24 from the settlement of a long-standing litigation in India. Secondly, the savings in '25 from the end of our vessel commitments with Shearwater. And thirdly, the repayment of the asset-backed facility mentioned earlier. Finally, a few words on debt. Turning to Slide 15. For the past 2 years, we have been actively managing our balance sheet to reduce refinancing costs and strengthen the group overall risk profile. In 2025, at constant FX versus year-end '24, we reduced gross debt by $230 million, bringing it down to close to $850 million. Over the year, we took 3 key actions. First, we refinanced our bonds in March, extending maturity to 2030 and using part of our available cash to refinance a lower principal amount. Second, we began repaying the bonds in line with our commitments using the cash generating during the year. We did fully exercise the 10% annual optional redemption clause embedded in our bond documentation at 103. And thus, we redeemed a total of USD 97 million of USD equivalent principal through 2 transactions in mid-October and mid-December. Finally, we repaid the asset-backed facility mentioned earlier at year-end. This action will reduce further interest expenses and free up additional cash to continue our deleveraging profit. One of the clearest indicator of this progress is certainly our net leverage ratio. It has declined from 2.1x at year-end 2023 to 1.6x today and we definitely intend to improve it further. With that, I will hand back to Sophie for the outlook.

Thank you, Jerome, and I'm now on Slide 17. In conclusion, 2025 was a strong year for Viridien, marked by significant operational, technological and financial progress. We're now fully asset-light, focused on differentiated technology offerings and have complete flexibility to decide our multiclient investments based on their pure merits. We exceeded our net cash flow generation guidance for 2025. Now for 2026, we're again targeting the generation of $100 million of net cash flow. This includes the financing of Phase 1 of the expansion of our U.S. HPC data center as well as normalization of working cap, including PEMEX. Please note that cash generation seasonality is expected to be similar to that of 2025. This $100 million target assumes a business environment that is overall broadly comparable to 2025. As you know, and as many of our OFS peers have already indicated, energy price volatility may lead in the short term to some industry caution with softer activity expected in the first half of 2026 and a recovery anticipated in the second half for an overall steady performance of the full year. Looking out over the medium and long term, the structural fundamentals of our market are supportive. Accelerating field depletion and increasing reserve replacement pressures are driving operators to focus more intensively on long-term resource security. And this combined with our asset-light model focused on high-end technologically differentiated solutions and our disciplined multiclient strategy underpins a continued robust outlook for Viridien. Thank you very much, and I'll now open the floor to questions.

[Operator Instructions] We will take our first question, and the question comes from Guillaume Delaby from Bernstein.

A quick question regarding -- maybe I missed it, but have you communicated any CapEx figures for 2026? What could be your multiclient CapEx? And what could be the CapEx associated with your infrastructure development in North America?

I will take this one. So you know that in 2025, so last year, we spent about $265 million for the library. In 2024, sorry, on the back of this Laconia project in the Gulf of America, it was $250 million. I mean, I would say both numbers more or less represent the range of what we intend to spend in a given year. So take a number in the middle and I guess that's more or less a normalized CapEx we envisage to spend in our library. Regarding the infrastructure, so the expansion of our data center in the U.S., the current estimate is around $30 million, $35 million.

How much, sorry?

$30 million to $35 million in '26. Regarding the -- just one last comment on the library CapEx. What matters to us, you know that, Guillaume, is really -- it's not the overall amount that we spend, but the quality of the project that we judge on 2 metrics, the prefunding, which require high prefunding as well as a high -- what we call cash on cash. So for $1 invested, we usually require $1.8 of sales generated over the life of the survey. So we really focus on the -- what we call the cash EBITDA metric that we started to introduce last year.

We will take our next question and the question comes from the line of Jean-Luc Romain from CIC.

I have 2 very different questions. One relates to what you were just mentioning, Sophie, the pressure on reserves of majors. Should we assume that companies like BP and Shell going as low as 7 years reserve life is a conscious choice for them compared to Total or Exxon? Or do they really have to increase their investment to renew their reserve? Or do we feel we have a sufficient [indiscernible] resource base to mature and increase their reserve life? That's the first question. The second question is I think there was a merger between LLOG and Harbour recently. Does that translate into transfer of rights or transfer fees or revenues to transfer the licenses? And the last question was out of the $50 million due to PEMEX, how much is overdue and how much is kind of normal [indiscernible]?

Okay. [Foreign Language] Thank you for those questions, Jean-Luc. I'll take the first 2, and I'll leave the third one to Jerome. I think the pressure on reserves is there. And as you pointed out, 7 years of reserves is becoming on the low side. And why is it that we are where we are? I think it's been a lack of activity in exploration over the last decade. So our clients, in general, they've been working through portfolio of opportunities that were acquired in the busy years, call it, '12, '13, '14, and that has carried them through now. But clearly, they're faced with having to replenish their portfolio of opportunity with better, call it, quality of opportunities with lower breakeven oil price, perhaps different jurisdictions. So we're heading into a time when those companies that are low on the reserve perspective will be having to invest more in exploration position. And that is seen through the amount of acreage. So for example, in January, it was 43,000 square kilometers of acreage that was taken by companies in the oil and gas industry. The second question is a good one. We always watch as well the M&A and the consolidation in our industry. So this one refers in the Gulf of America with Harbour acquiring a company called LLOG and LLOG is one of our clients and there will be transfer fees associated with that, but there -- I want to manage your expectation, they're not going to go on the high side. They're going to be moderate and I would call them just as part of the normal expected transfer fee that would see -- that we would see from one year to the another. So yes, but very moderate. The third question on PEMEX, I will leave to Jerome.

Yes. [Foreign Language] The full $50 million or close to $50 million is overdue. So we still have good confidence that we will collect this money this year. By the way, it's part of the guidance, where also we expect to restart working with PEMEX and therefore, create some receivables. So overall, it's not the full $50 million that we are putting in the guidance. But that's where we are with PEMEX.

Okay. Part of the $50 million guidance then?

Correct.

Your next question comes from the line of Baptiste Lebacq from ODDO BHF.

Just one question on my side. Listening to conference call of IOCs for 2025, exploration is not anymore a swear word or something which is not quite common to speak about. Do you see them coming back actively? And in today's environment, what are the most, let's say, active people in terms of negotiation for new businesses? Is it NOCs or IOCs at this stage?

Okay. Yes. Thank you for that question. It's -- I absolutely agree with you. Exploration is now something -- a word that we can pronounce. And if you look at all the quarterly announcement of IOCs and publicly traded companies, that world is coming to the forefront and they talk about exploration. Actually, many, many more start to talk even about seismic and how the kind of progress that we're doing in imaging is helping them derisk their activities and actually shorten the cycle time between exploring and producing, which is an important activity for them. So who are those clients that are the most active? Definitely, the IOCs have picked back up. Those are the first ones that shut down activity during the COVID. So they are the big times going back at exploration activity, particularly the North American ones. The ones that are a little -- still a little cautious are those independents that are maybe more cash constrained, that have high debt level. So we see a bit less, although they're interested in it, but a bit less active. And national oil companies is quite active in South America, the case of Petrobras quite public that they're actively looking for new -- they have to make big fines if they want to be able to sustain their ambition for production. But the case of actually PEMEX is another one that needs to really ramp up production. The Middle East is quite active. We see activity from national oil companies in Asia as well. So pretty much, I would say, if I was going to summarize IOCs and NOCs, independents a little bit more on the fence just because of their financial situation.

Your next question comes from the line of Mick Pickup from Barclays.

A couple of questions, if I may. The first one, apologies if I say something that's a bit stupid. But can you just talk about the role of AI in your business? Because obviously, if we look at the wider market, we've seen many industries hit over the last couple of weeks as they suddenly get disintermediated by AI. And I keep getting the question, won't the oil companies just run their old data through their AI and don't need new data and don't need better images because their AI is going to do it all themselves in their supercomputers? And what you say today, you're saying AI means more computer time from your people and better margins and better numbers for your Geoscience business. So can you just square that one up? And then secondly, Beyond the Core, it doesn't seem to be there anymore. What are we doing in that?

All right. Okay. Thank you. Excellent question. The role of AI, there's a lot of hype around AI. The -- if I can square it up, where we're going to be using AI, for sure, we're going to be using for our functions. So that maybe is not very glamorous, but we're going to do like everyone and we're on our way to optimizing our support functions and leveraging that. But what you're talking about is the -- our core and imaging activity. And that one, we are embracing AI and we do believe AI will be more and more embedded into our physics-based workflows. And I insist on physics, what we're doing, we're using physics approach to model the behavior of the earth and therefore, getting those high-quality and high-fidelity images on that basis. So AI gets embedded into the workflow for some of the activity like, for example, you're trying to remove noise from the signal, AI is really good at that. You're trying to do quality control of the data, AI is really good at that. But AI will not replace physics-based workflow. It will help enhance it. So we are embracing AI. It will complement what we do, help us be even more efficient, provide better results. Where you're hearing our clients saying they want to leverage AI is what you do after you've done the image. You need that best image to be able to generate insights from that image and to do E&P, exploration and production work. So you're really identifying those exploration targets, you're designing the wells that you're drilling. So all these activities because they don't have a physics model are really well suited for AI. And other things the clients will be able to do is -- and we can do that as well on our data library, is identifying and start correlating different basins, different reservoirs and trying to get more and more insights from the data. But you've heard the sentence, garbage in, garbage out. In order to get those strong insights from the data, you need good data input. And of course, you need that best image to be able to get those insights. So we're quite confident that we are actually, if anything, in a very, very strong position to provide inputs to AI, if that makes sense. The second one on Beyond the Core, we are following our clients. So we've always said all along that our core business is oil and gas. It represents 90% of our revenue and we're committed to continuing to advancing technology and being the best at what we do in our core businesses in the oil and gas. We think it's important to continue developing new businesses for the long term. And we've selected those businesses to leverage our core capabilities. And so we're continuing on that, but we've decided that we were going to deemphasize the sort of the speed and the communication around those new businesses just because we're sort of following the path of our clients and the path of the general industry. Are we continuing? We're absolutely continuing because we're not -- it's not costing us money. We're doing this organically and it's more of a longer-term proposition.

In terms of number, if you're interested, we generated close to $110 million of revenues attached to our Beyond the Core initiatives, mainly driven by, as I think we said it during the presentation, infrastructure monitoring, which is within our SMO division as well a good momentum on the HPC and digital, which is part of Geoscience and especially with our oil and gas clients.

Your next question comes from the line of Kevin Roger from Kepler Cheuvreux.

I have 2, if I may. The first one is on Geoscience. Just to understand a bit the expectation for '26 because you always commented, Sophie, that the backlog doesn't mean a lot for the short-term earnings dynamic. But just to get a bit of sense on what you do expect for '26 on Geoscience based on the backlog that you have right now? And also trying to understand this increase in the petaflop capacity, you are now close to 700. So what does it mean exactly in terms of revenue potential for Geoscience, this increase in the petaflop? And the second one, so you recently said in an interview that Viridien needs to decide if Sercel is core or not for the group. So I was wondering if there is any development on that side, please.

Okay. Thank you. On the Geoscience, it's not -- as you pointed out and I said over the years that the backlog is not an impact translation. It's not a direct indicator of the health of the business. However, just let me remind you the number that we have at the end of 2025. It is a very good number and makes us quite confident that we can achieve a similar performance as in 2025. So call it sort of equal similar to 2025. Now the link with petaflop isn't as obvious because what's been happening over the last 10 years is we've been transferring people activity into computing. So that allows us to do more with less people. So in a way, that has driven more than efficiency revenue per head ratio higher. So we have less heads over the years because we're increasing the petaflops. And with those petaflop, we can increase the differentiation and therefore, have a better sort of pricing potential in what we do. So it's not necessarily purely are we going to do more, but we're going to do better. We have -- we're more resilient, we're more differentiated and we don't need as many people.

Remember that also part of those petaflop, Kevin, are used for -- to improve the algorithm. So for what we call R&D activities, we usually consider that about 20%, 25% of the capacity is there for these new features, which does not translate right away into positioning us as a clear leader in terms of the image we deliver for the future.

I wanted to add as well an additional comment on the nature of the backlog. The size of the project is actually getting bigger because of these OBN projects, which do -- are much more intensive in terms of work. And therefore, as a result of that, the backlog, the order intake becomes more bulky. So what I could say is that we are in discussion right now as we speak, for really, really large projects. And that's why we're quite confident that we could deliver a similar year to 2025.

And when you compare as a backlog of '24, I mean, there is indeed a significant decrease. But clearly, we are not worried. I mean, 3 key explanation on our side is we -- at the end of December '24, we did record long-term revenues through what we call dedicated processing centers with some of the NOCs, which is recorded in one shot, but the revenues are spread over 3 to 5 years. And there are like 2 other factors. I mean, you know that we had strong activity with PEMEX and the other dues that dented our performance during the course of '25, which we have stopped today working with PEMEX. So no further backlog on that front, but we are hopeful we will work again very soon when the payments are made on the remaining values. And the third one, the Chevron and Hess merger had an impact on the activity. We were a very good -- I mean, Hess was a good client of ours and Chevron has put on hold and Hess obviously has put on hold everything while the merger was between signing and closing. But now we are seeing a strong activity with Chevron, which should translate in a strong backlog or backlog building up hopefully before the end of Q1.

So -- and then your second question, Kevin, on Sensing and Monitoring. We -- as you know, we engaged into the restructuring. We're quite happy of where we are and how we improve the performance. And I just want to say that there isn't a process underway at this stage. So no news.

Your next question comes from the line of John Olaisen from ABG Sundal Collier.

I just wonder a little bit when you say that you expect a softer activity in the first half of '26, is that for all 3 segments? And also, when you say softer, is that relative to the first half of '25?

When I say softer, I say -- Geoscience, like we presented over the years, doesn't have much volatility because it is well covered with backlog. So we'll see a slightly softer, let's call it, for Geoscience. EDA is always the one that has more volatility, is the one where when clients are wait-and-see mode, they can decide to delay some of their spend. We're still a little -- 1 month away till the end of the quarter, so it's difficult to know where we're going to land, but that would be where I expect to see some softness. And also, this is combined with the fact that we're not spending much CapEx in Q1 on EDA because it just happened that way. We have lots of projects in the pipeline. So we're quite confident we'll be spending some CapEx and we'll have good prefunding in 2026. However, in Q1, there isn't an ongoing survey and therefore, there won't be prefunding associated with that. And on Sensing and Monitoring, it isn't linear. So we know right now that there isn't -- we have some orders in the pipe. But again, it will be -- that year for them will be pretty backloaded.

Okay. And then my second question, do you have any tangible signs that makes you see -- to expect recovery in the second half?

What are the signs? It's a good question and I expected it. It's the conversation. When you talk to clients, they're pretty much saying they're maintaining, they're upping, they're increasing the offshore spend in exploration, development in Geoscience. So they're quite confident about that they're going to have the money and they have the money to be spending. And again, there are different categories of clients. Majority of them are talking about stability. So it is obviously -- whatever they're not spending in Q1 will be spent later in the year. We're seeing it as well through the activity in acreage and then taking positions and we feel confident that eventually they're going to have to work through that.

Your next question comes from the line of Brage Reier Groven from Clarksons Securities.

One question from my end. I have a Brazil-specific question regarding multiclient service. So you have the megabar extension with TGS. TGS also has the PAMA Phase 2, Pelotas Norte, while Shearwater also has Pelotas survey going on, et cetera. So there seems to be significant multiclient coverage building up in the region among different players. So specifically what will be kind of the differentiator here? And what will Viridien's strategy be to gain market share and attain this market share in this key region?

Okay. Yes. Thank you for your comments. It's actually -- I agree with you. Northeast, it's equatorial margin in Brazil, which is an area of focus for Petrobras for exploration, is a busy area and it is attracting more interest across players. It is busy, but it is enormous and it has enormous potential. So we -- what's sort of differentiated is your ability to anticipate to have the permit in the right places and to be able to deliver the survey. What we know a big differentiation in multiclient as well is the imaging because we're able to provide an image that's sort of ready for exploration, is the best image and that is something that our clients have been appreciating. Because otherwise, if they don't have the best image, they might have to reprocess and waste some time to do that. So I would answer to that is we're quite confident with our permits that are in the pipeline and our ability to deliver more surveys and there's a lot of space in that area.

[Operator Instructions] There seems to be no further questions from the phone line. If we wish to proceed with the webcast questions.

Yes, please go ahead.

So we have a couple of questions online from [ Steve ], starting with -- thank you, Steve, for your question. Steve asked, given the current euro-dollar rate around $1.18, what would be the breakeven point for SMO?

I take this one. So for the -- for the year 2025, we said that SMO was negatively impacted by a lower USD-euro exchange rate. Impact was about $7 million to $8 million. Now if you -- and basically, if you put yourself at $1.18, we said that the breakeven point at the time of the -- when we launched the transformation, obviously, we were at a much lower FX. So I would say that $1.18, it will be slightly above $300 million, the breakeven point.

Thank you, Jerome. The second question, Steve, I think, has been answered on the Geoscience year-on-year change. You understood the 3 factors precisely underlined by Jerome. [ Thomas ], a question regarding our U.S. HPC infrastructure plan. Thomas is asking if we need specific state-of-the-art chips typically from NVIDIA, how easily we can procure them? Is there is some kind of waiting list for this or if our HPC centers are structured in the way and chips are not so much of a concern?

Yes, that's a really good question. I'll take that one. We have an ongoing -- this is an expertise that we've developed over the year. And so we buy chips on an ongoing basis, not like we have a monolithic data center that we make a big investment, we need a ton of chips in one go and then we do nothing for several years. Our model is every year, we purchase chips and upgrade. So our data center is an ever-evolving HPC center. And in that respect, we've already placed our orders for 2026 and we're quite confident that we'll get our -- we'll be served. Another point I want to make, we're not interested in the latest and greatest. We always use probably a couple of generations behind and that we tailor them to our physics-based algorithms and that's what we need. So perhaps a bit of a less of a competition in that space. So -- and then you might have seen we just did a press release with NVIDIA. NVIDIA really does care about how we use their chips. And we have a long-standing relationship with them and with others.

Thank you, Sophie. And then the last question, Christian [ from ] Benoit. So Benoit, you're asking basically about the 2025 to 2026 net cash flow bridge. The PEMEX topic has been answered. I leave the floor to Jerome for the main elements mainly.

Yes. I mean, so basically, we have some positive versus this year, the one that I guess which are no Shearwater penalty in '26, it's about $10 million. We have the full year effect of the SMO transformation plan. It's another $10 million that we will gain. Lower interest expenses, knowing that we have reimbursed some debt in '25, let's call it another $10 million. And as we mentioned, we are planning on working capital release. You've seen that in '25, we did burn about $60 million of working capital on the back of PEMEX and phasing of some payables with our data. As I said, for PEMEX, we are counting on collecting the overdues, but we're also counting on restarting work with PEMEX and therefore, having some new receivables with them towards the end of the year. That's on the positive side. On the negative side, we have not even that in '25, we benefited from strong transfer fees, Chevron and Hess, Repsol and Neo. We don't communicate on the amount, but it was a significant amount that we don't expect to that magnitude to replicate in '26. And we will have the CapEx we need to invest on the expansion of our HPC. So all in all, with those positive and negative, we are comfortable to reguide again this year $100 million of net cash flow. Hopefully, the bridge is detailed enough for you to be comfortable with this guidance.

Thank you. No more question on my side. Any more question on the phone line, operator?

There are no further questions from the phone lines.

Well, thank you very much. It's been lots of questions and a heavy session. Thank you very much, and I look forward to interacting with many of you in the coming days and weeks as we go into new phase in the next week. So thank you very much. Have a good evening.

Thank you, everybody. Good evening.

This concludes today's conference call. Thank you for participating. You may now disconnect.