Vusion S.A. (VU) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Vusion H1 2026 Revenue Webcast and Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Olivier Gernandt, Investor Relations Officer. Please go ahead.

Thank you very much, Sharon. Good afternoon, ladies and gentlemen, and welcome to our first half 2026 sales presentation. With me today are Thierry Gadou, our Chairman and Chief Executive Officer; as well as Thierry Lemaitre, our Deputy CEO, Corporate and Finance. Thierry Gadou will make some comments on the group's business and financial highlights, including the recent acquisition of In-Store Media, which we announced earlier this week. Both Thierry will conclude our presentation with some remarks on our full year outlook. After these remarks, we will be happy to take your questions. As a reminder, some of the information to be discussed on our call today is forward-looking and subject to important risks and uncertainties that could cause actual results to differ materially. For these, I refer you to the safe harbor statement included in our press release and on Slide 3 of this presentation. This evening's release was issued a short while ago and is now available in French and English on Vusion Group's website, vusion.com. The slides of this presentation can also be found on our website in the Regulated Information section. A replay and a transcript will also be available on our website after the call. And with that, it's my pleasure to hand you over to Thierry Gadou for his opening remarks.

[Foreign Language], Olivier. Good morning, everyone. Thanks for joining our conference call. I'm pleased to present along with Thierry Lemaitre, our commercial performance for the first half of the year. So in summary, we delivered strong growth, 29% organic growth in H1, reaching EUR 839 million in adjusted revenue. Order intakes were strong at EUR 681 million, returning to growth in Q2. VAS revenues, which are revenues from software services and non-ESL solutions grew by 39% at EUR 125 million, with recurring VAS up 73% at EUR 61 million during H1. We reiterate our full year '26 guidance of continued growth, profitable growth. And we just, as you know, announced a strategic acquisition in Retail Media to broaden our connected store platform. So let's review the semesters key highlights now. So thanks to a very strong second quarter, actually our best historic quarter, the first half was in line with our guidance, delivering strong organic growth. Both main regions were growing in H1. So in the EMEA region, revenues amounted to EUR 209 million, up 6% compared with 225 million. Business activity remains solid, evenly distributed across regions, particularly France, DACH, U.K., Scandinavia, Spain and Turkey. And while strong order intake growth in the first half bodes well for the remainder of the year. The first half of the year was marked, as you know, by the signing of a strategic partnership with Carrefour Group, covering the deployment of EdgeSense, VusionCloud, Captana in hypermarkets and supermarkets in France and with a 3-year exclusivity in Europe. Other contracts were announced during the first half in the EMEA region, including JYSK, Decathlon and Gratis in Turkey. The commercial momentum is good and more wins are expected in the second half, both in the grocery sector and other verticals. The group expects revenue growth of 15% to 20% in the EMEA region for the full year. In the rest of the world, adjusted revenues reached EUR 630 million up 39% year-on-year. In the Americas, Vusion continues to demonstrate strong commercial momentum, driven in particular by the successful deployment of EdgeSense at Walmart in the U.S. As you know, completion of this phase of the partnership is expected by the end of the year. However, other projects involving new solutions, new geographies are underway and will continue driving the activity. In March, Walmart expanded its strategic partnership with Vusion to deploy the EdgeSense platform in Mexico, which is Walmart's first market outside the U.S. across Walmex, express stores and supercenters. This expansion reinforces the global strategic partnership between Walmart and Vusion, which expands now on several geographies, solutions and innovation projects. In addition, the group has significant pipeline of commercial opportunities with major U.S. retailers and anticipate strong adoption momentum in the U.S. over the coming years. Order entries in the second quarter of '26 increased by 7% compared with Q2 '25 and plus 16% compared to the Q1 of this year. Global order entries reached EUR 681 million in H1. They are down 22%, but in line with the group expectation, the expected decrease being primarily due to an unfavorable comparison base following the significant orders placed by Walmart in '25. With a strong commercial pipeline, we're expecting a positive momentum in H2 and a growth of order intake for the full year of '26. Coming to VAS activity. Software, services and non-ESL solutions revenues reached EUR 125 million in the first semester, representing a strong growth of 39%. Recurring VAS revenue reached EUR 61 million, up sharply 73%, sorry, compared to the first semester of '25, particularly driven by strong momentum in VusionCloud. A word about VusionCloud. The installed base grew strongly in the first semester reaching over 500 million connected ESL. So that's a very important milestone, reaching 0.5 billion connected device managed in the cloud. The strong momentum is expected to continue throughout '26. For reference, as of the end of June '25 a year ago, the cloud installed base stood at 220 million connected ESLs. So it's growing very fast. And on an annualized basis, recurring VAS revenue reached EUR 133 million in Q2, up 83% year-on-year. Another example of VAS momentum was a sharp increase in Captana orders intake, reaching several tens of millions of euros for the first time in H1, and finally, we announced recently, actually just a few days ago, having signed an acquisition which will accelerate one of the main pillars of our VAS strategy and our connected store vision, which is Retail Media. We have, as you know, a strong conviction that the next big digital media will be physical stores. And that's a fantastic opportunity for retailers and brands. and we know our technology can contribute to enable and accelerate this opportunity for our customers. We have been developing over the past years, our Engage and Vusion ad solution set and developing partnerships in that field, which will continue. The agreement signed with In-Store Media is a major new milestone in our strategy, which positions us as a major player in many countries. Just a quick word about In-Store Media. They are headquartered in Barcelona in Spain. They are well-established in-store retail media company, which brings, one, deep expertise in designing in-store retail media networks; two, proven execution over many years; three, long-standing relationships with 90 retail banners and more than 1,600 brands as well as strong international track record in 9 countries across EMEA, Americas and APAC. In 2025, the company generated revenue of approximately EUR 120 million with a robust profitability. Together, Vusion and In-Store Media aim to build a new platform for digital in-store retail media, connecting retailers, brands, shoppers, through personalized, measurable and real-time in-store activation. The proposed transaction has been approved by both Board of Directors. Completion remains subject to customary regulatory approvals and other customary closing conditions and the transaction is expected to be financed with debt and closed towards the end of this year. Now if we come to our 2026 guidance, we confirm it. So a growth in profitability target was announced during the publication of our annual results on February -- in February '26, and we confirm an annual adjusted revenue growth expected between 15% and 20% at constant exchange rates and tariffs. I will pause here, just to let Thierry Lemaitre comment a paragraph that we have added on the tariff and ForEx, following a number of questions during the quarter. So we wanted to be a bit specific on this. And you've seen already, as Thierry will explain that there is a difference already in H1 between our numbers at constant or growth at constant foreign exchange and tariffs. So Thierry, maybe you want to...

Yes, sure. Thank you, Thierry. I think it is important to remind that our full year sales guidance is at constant exchange rates and tariff conditions. This is important because there is high volatility on the euro-dollar exchange rate. And you know that tariffs have been impacted by several decisions in the United States. Notably, a few months ago, the decision from the Supreme Court to invalidate the tariffs that had previously been imposed on certain products imported into the United States. At the beginning of the second half of the year, the group started receiving refunds of tariffs. And over the full year, the total amount of refunds could reach approximately $80 million. As previously indicated, the group passed through a significant portion of these tariffs to customers in 2025 and early 2026, where contractual arrangements allowed it. In such cases, the refund of the tariffs by the U.S. administration and the subsequent return to the group customers will be accounted for as credit notes, both in cost of goods sold and in revenues. These 2 items will then be reduced retrospectively in the 2026 financial statements with no impact on gross margin, no impact on EBITDA, no impact on cash position. The group's 2026 guidance was established at constant exchange rate and tariffs compared with 2025 and the book confirms its guidance. However, it should be noted that reported IFRS and adjusted revenue growth are likely to come in below the 15% to 20% range reflecting the revenue credit notes to be recognized in respect of tariffs that we are primarily charged to customers in 2025.

Thank you, Thierry. I think that was an important aspect. and the situation on tariffs keeps moving permanently because even in the few last days, there was a change again in tariffs in Vietnam. So it's a very moving target. But anyway, that's why it's important to say that our guidance has been neutralized in terms of the exchange rate and tariffs. Back to the guidance. So top line growth guidance confirmed, as we just said, VAS guidance is expected. So as revenue is expected to increase by around 40%, driven by strong momentum in both recurring and nonrecurring VAS. And we've just talked about a number of the drivers. And the group also targets improved profitability with adjusted EBITDA margin expected to increase by more than 100 basis points during the year. The improvement in profitability will be accompanied by positive operating free cash flow generation compared to '25, while maintaining a strong balance sheet with a positive net cash position excluding the impact of acquisition in this instance, the impact of the In-Store Media acquisition. The currently anticipated by the way, timing for the completion of the In-Store Media, as I said, acquisition is expected to have only a limited -- a very limited impact on the group's revenue because it's going to happen towards the end of the year. So that's it for today. And if there are questions, we'll be happy to take them.

[Operator Instructions] And our first question today comes from the line of Aurelien Sivignon from ODDO BHF.

First on order entries, if I understood correctly, you now expect full year '26 order intake to be higher than that we apply H2 order growth of at least 20% year-on-year, above EUR 1 billion on H2 stand-alone so which is quite an acceleration versus H1. So is it the right way to think about it? And if so, could you give some color on the underlying pipeline conversion, I mean, should we think about this acceleration to be driven mainly by a few large contract by a broader base increase in customer wins? And then second question was about the acquisition, so In-Store Media, can you elaborate on the strategic rationale behind the acquisition? And if possible, if you could provide some color on the profitability profile and the valuation which you tip paid for it.

Yes. To start with your multiple questions. Yes, you read correctly what we said regarding order entries. So we have a pipeline that has a certain timing, and it's true that we expect H2 to be and we expected already in the beginning of the year, H2 to be stronger than H1. The reason is there are multiple deals in the pipeline in projects, which are coming to a conclusion in the cycle during H2 and particularly Q4, but during H2. And so that's driving it. So there are both large pieces here. There are also multiple expansions of existing customers and small and large sort of deals -- so it's a mix of them. It's both in Europe, where a number of Tier 1s are in this final stage. So there are significant players and also in the U.S. So I mean, it's a strong growth that we anticipate in H2 and overall growth, I would say, for the full year. So that's the right interpretation. Regarding In-Store Media, the strategic rationale, I described it a little bit in my comments. We've always thought that digitization is going to transform the physical stores into an omnichannel asset, a very efficient asset, an omnichannel asset, a data asset and a media asset. We've always said that. Why is it? Simply because there is enormous traffic in stores. And so retailers have been looking for ways to value to monetize, to realize the value of this traffic, so many people are watching products in stores. And you know very well that it's happening the same way online and online, the fact that there is traffic online is, of course, generating a huge industry in terms of media. But it's not happening in store because in store, everything is physical. And so it's much more difficult to leverage the traffic. So digitization is an opportunity to make the store interactive, to make the store media at the shelf to make -- and to create new sources of revenue. It's an opportunity I said for retailers, obviously, because it's going to be a new source of revenue. It's an opportunity for brands because in the store, the impact the attribution, the measurability, the conversion is way higher than online. And so there is a big opportunity. Today, the rationale is very simple. We digitize stores, and we create personalized and localized interactions with shoppers. But that business, we were doing -- so we've been developing a whole solution set, the Engage, if you look at our website, we've -- developing digital touch points. We've been selling them to a number of players. We've been developing software solutions, EMS, et cetera. But and developing partnership like Médiaperformances, for instance, to learn and develop some clients. We've been really discovering understanding very deeply that business over the past few years. And we realized we wanted to be really fully in that space. And with In-Store Media, we are now. And so we'll talk a little bit more about the details of the financials later because we'll talk about that at closing. Right now, we're -- as I said, there are still a number of filings, antitrust findings in the number of countries, et cetera. So the closing will be towards the end of the year and a number of additional information will be given then but the rationale is very strong. It's a very strong milestone. It's a company we've known for some time. It was not a partner, but we've known them because they are very well known in that space. And we -- together, we are assembling the 2 expertise and aspects of the business we want to build. And it's a great news from -- for our retailers and a lot of them have been calling us and saying, well, that was really -- that's an interesting thing to do.

Just on EBITDA...

Thierry, you want to talk about the...

Profitability -- so we don't disclose the profitability of the company. We just said that it is -- it has a strong profitability. So we are really very happy with that. Even a bit more to say that it will not be dilutive for the group. And regarding the price, we will be happy to share with you the final details of the acquisition price at the closing of the transactions. So far, what we can tell you is that the price paid is a fair one, in line with comparable valuation multiples in the ad tech companies for companies showing such a significant revenue growth rate.

And the next question comes from the line of [indiscernible] from Berenberg.

Three questions, if I may. Some investors have been asking me about 2 things recently. So first, could you please quantify the amount of free cash flow that has been generated by the group since the beginning of the Walmart rollout in the U.S.? Second, could you please confirm that you have no intention of paying the rest of the Walmart [ turnarounds ] in cash. And the third one, coming back on the other entries, given the current phase of order intake and what you expect in the H2, how confident are you in reaching the 2027 targets?

Just on the free cash flow, I think that if you just refer to publicly available information, I mean, universal registration document for the year '22, '23, '24, '25. At the end of 2022, the net debt was minus EUR 40.5 million A.t the end of 2025, it was a net cash of EUR 439 million. If you restate the EUR 439 million for the EUR 400 million reversal of Walmart down payment, you end up with a net cash position of EUR 39 million. So between the minus [ EUR 42 million ] plus EUR 39 million you already have million net cash generation, but within this amount, we did some M&A for EUR 105 million. We did some share buyback for EUR 40 million. We collected EUR 73 million from the warrants of Walmart, and we paid EUR 15 million of dividends. So the cash generated over this period, once you strip out this M&A, the share buyback the warrants by Walmart and the dividend is EUR 167 million. So between the end of 2022 and the end of 2025, we generated EUR 167 million, and on top of that, of course, we are going to still generate cash in 2026 on the Walmart contacts and all the other contracts. So yes, we generated a very significant amount of cash over 3 years. Second topic, which is about the warrants. Of course, we have no intention to buy back the shares on the market to deliver them to Walmart when there's a site they want that would make absolutely no sense. What we are targeting is to be able to deliver existing treasury shares to Walmart instead of generated dilution. So the treasury shares that we are referring to are those that we acquired through current and past share buybacks. We do not intend to buy back further shares in the market to deliver them to Walmart at a high price that would make no sense. So the purpose is to have the flexibility to use part of the treasury shares to give them to Walmart, and the last part is on the other entries...

Can you -- sorry, could you just repeat your question because...

I said given the current pace because I think we have like EUR 681 million in H2. And what you expect having its point and what you expect how confident are you in reaching the 2027 target of EUR 2.2 billion.

Okay. Well, I think when we look at the momentum of the business today, you can ask literally every retailer or look at their earnings call at the moment, you will see the digitization becoming more and more at the top of the agenda, digitization of stores, I mean. And it's more and more at the core of their omnichannel strategy, which means they intend more and more to win on e-commerce, leveraging their stores and the digitization of their stores. So there is a positive momentum, which is simply the demand, the increasing demand because it's really a moment for the type of things we do. We have a pipeline, as I already mentioned, with strong momentum, not only in H2 but also in H1 '27. And so we consider this ambition that we set ourselves 3.5 years ago in -- at the end of '22 when we announced the Vusion '27 plan. This ambition, we consider it absolutely achievable, and we're still committed to achieving this ambition. We will make -- yes, and just as a complementary, we will obviously make an update on our near- and long-term targets during our Capital Market Day, which is, as you may know, at least it's written in the press release today on November 18. And obviously, it will be the occasion to talk about the near term, which '27 will be at that moment and the longer-term ambition again. So we'll talk about it more. But right now, it's our ambition.

The next question comes from the line of Hugo Paternoster from Kepler Cheuvreux.

I will have a few questions. And the first one is a follow-up on Aurelien's question. And you mentioned during this call, have a nice pipeline in the U.S. to be materialized in the coming years. So the first question is should we expect something significant in the U.S. at short term? Or will it be mainly a call for 2027? It was the follow-up. Another question I have is regarding the recurring VAS momentum, which has been pretty nice in Q2. If you could give us a little bit of color on what has driven this improvement in growth for the recurring VAS? And another question, which is on the EMEA sales. We are still waiting or at least I'm still waiting the takeoff there? And the last quarter, you were flagged that you should expect an acceleration. It seems it's not still there. what do you expect there for the H2 in terms of EMEA, what's currently in the pipe, if you could give us more color on that, that would be helpful.

Yes, absolutely. So our -- I mentioned that we have this objectives to be growing in terms of order entries for the full year. And I think I did answer Aurelien's question and confirm that it meant that we -- this pipeline is going to convert at least this is really what we are planning in H2, and that will be a substantial growth. And I also added, I think that in H2 -- in H1 '27, it will continue. So what matters really for '27 is H1 because given the cycle of conversion. Now that pipeline, which is very significant, is roughly split very relatively balanced between Europe and Americas. So it means that in both regions, we have significant targets in the site, okay? So yes, there will be significant deals in both areas, which -- so I'll come back to EMEA because that was your complementary question. But yes, in the U.S., there is at least half, if not more, of our pipeline right now. Yes. So clearly, recurring VAS driver is -- well, you see -- I mentioned one of the main driver is Vusion Cloud. And in Vusion Cloud, you have a number of SaaS products, but basically, they all come under the umbrella of the product umbrella of Vusion Cloud. And the driver is simple. It is the main driver of that, and you can see the underlying driver because it is simply the incredible growth of our connected -- the number of our connected devices, our devices that are managed in the cloud. If you look at the ambition we set ourselves again 3.5 years ago, we really deliver on this ambition. We are not only acquiring all our new customers on the cloud, but also migrating a lot of the legacy customers, the existing customer base who were initially on-premise in the cloud. And that translates into a growth where you see that there has been more than 2 times today, I think past 500 million or 520 million devices in the cloud versus last year at the end of June in '25. So it's a tremendous growth, and that is the biggest leverage. Now I mentioned a few other levers in other parts. But if you're looking at the recurring as, this is the main driver. And finally, your question so we're back on top line topics in EMEA. I understand your point. I would say, I share it because the reality is we have significant growth in other entries in Europe. And it's -- the momentum is really good. We just had a few delays in the ramp-up of projects that are signed but which in terms of implementation, supply chains, there have been a bit of delays. And the second thing is there are a number of projects which were converted from Vusion [ tax ], so classical, I would say, ESL to EdgeSense -- and that, of course, delays a little bit the projects because they start on the new technology, they're changing infrastructure from HF to Bluetooth. So -- but a lot of people are attracted now to EdgeSense, and they say, well, should I start now the rollout as it was planned? Or should I go on this technology that seems to deliver great results that seem to have convinced Carrefour, which is very, very experienced user of [ EdgeSense ] because I think they have been the first -- the pioneers in Europe. So it's -- those conversions make it. However, looking ahead in H2, we see that acceleration of -- and that momentum coming. So this is why we mentioned our target is still 20% growth in EMEA this year. We said the range is maybe 15% to 20%, but our target is still 20%. And it's no change. The momentum is good. People need to digitize their stores, and they increasingly realize it.

Okay. And perhaps a last one on the tariffs. Would you have already in mind what could be the impact on your top line of the tariff? I mean, the refund that you have to give to your clients?

Yes. That's what we previously mentioned. We received approximately we -- we expect to receive approximately $80 million on the full year be refunded to the customers. So that would come in deduction of the revenues.

Your next question comes from the line of Laurent Gelebart from BNP Pariba.

Just one question regarding In-Store Media. Could you share with us or give us a more granularity on the revenue split of In-Store Media, when I mentioned revenue granularity is, for instance, top 10 clients [ is 10% of [indiscernible] or ] stuff like that to see how the turnover is being split between the customer base?

Yes. So I would give you just at least not the numbers, but at least the key -- I think the -- what matters in terms of the color -- it's a quite balanced portfolio. The -- as we said, they have several tens of customers who are very often long-lasting customers repeat multiyear contracts. And there is a momentum in gaining new customers every year. And the customer base is very balanced. So there are multiple large customers, no customer is very strong. Like there is no customer representing 30% of the revenue. It's not like that. It's very balanced, very -- first, geography wise, because they have 9 countries and they are a very good position in each of the countries and it's a balanced portfolio. I say that, I think it's a very, very good question because we looked at other opportunities where precisely the portfolio was a bit too focused on 2, 3 clients. And so that was -- we considered it as a risk. So it's a balanced geographically. Balanced also in terms of top customers. And we'll -- again, we'll give more granularity as we close the transaction.