W.A.G payment solutions plc (9VU.F) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Eurowag Half Year Results Investor Presentation. [Operator Instructions] Before we begin, we would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to Carla Bloom, VP of Investor Relations and Communications. Carla, good morning.

Good morning, and welcome to all of those who have joined me this morning. And thank you for taking the time out to get to know a little bit more about your W.A.G. We obviously posted our results last week, and I thought today was a good opportunity not only for shareholders who know us, but actually for new shareholders. So welcome to those who are new to Eurowag. I've looked at the list of those who've joined us today, and there's a mixture of you say who -- some of you know us really well and some of you don't know us at all. So I have got a mixture of slides here today, one is more of an introductory for those who are new, give you sort of a basic level of who Eurowag is before I then move on to more of our strategic and financial update, which, as I said, we presented last week. And then I'll close off with Q&A towards the end. So before I start on Eurowag, what is really helpful for investors to really understand is actually the industry in which we operate. So for those who don't know the trucking industry across Europe, it's made up of 9 million vehicles. It makes up 5% of European GDP. And as you can see, it provides sort of -- over sort of 20 million jobs across Europe. And you can also see that actually road transportation is a very key pillar to the economy. Anything in your offices, anything in your homes needs something and needs a vehicle. Yes, there are trains in both, but actually the trucks are the pillar of the economy in Europe. On the right-hand side, as you can see, the 9 million vehicles, and they made up of a variety of different types of vehicles. So you've got sort of 10 to 15, so about 1.5 million sort of heavy vehicle trucks, and they do the international haulers. So a lot of these trucks you see in Europe across in Europe, these are the international haulers. And the majority of them are based in sort of Central Eastern Europe and actually Iberia, Portugal and Spain. You then have some more sort of kind of commercial vehicles, again, heavy, and they make up more of the domestic. So they sort of are traveling within sort of countries rather than doing the international. And as said, they need go back to the sort of medium-sized carriers. Just to give you a bit of sort of understanding of the challenges that this industry faces and again, laying a foundation for you to then really understand where Eurowag was sort of founded and why it's grown into the business that it is today. So looking at the trucking industry, CRT industry, and I talk mainly about the sort of the international haulers. So those that are crossing borders, having to go through tolls, having to get to their sort of cheapest fuel, where do they stop, where do they refuel, where do they sleep, et cetera, et cetera. So this industry is very much a nondigital industry. There are multiple, multiple systems that these haulers use that are from different service providers. So as you can see on the left-hand side, 13% of companies are using digital applications to help them with their operations. It's a very complicated sort of operation. So if you think about a truck starting its journey until the end of its journey, there are so many administrative tasks that they need to do. Where is the next load? When do they get there? How do they cross the borders, how do they use the tolls, what foreign exchange to use, what driver, where do they stop, all the regulatory sort of pieces that go with that. And so therefore, it's a very, very complicated business. Many of you might know or not know that when you see trucks on the European roads, we think that they come from these big operations, and they don't. So 90% of the 9 million trucks across Europe are made up of small, medium-sized businesses. So on average, these companies have up to 7 trucks per fleet. So as you can see, very small, very unsophisticated, trying to do their best in terms of trying to operate across Europe. Their financing is constrained. So if you think about these operations, a lot of their costs come upfront. So if you think about it, it's their fuel, their employee costs, their maintenance, all of those day-to-day operations are paid upfront and yet they're only invoiced and paid sort of 30 to 90 days later. So their working capital, their cash is very constrained. As you can see with the lack of digitization, let's say all of these systems that they have to use within their operations, some of it's manual, some of it's actually still whiteboards on their offices, to try and understand where their fleet is, margins are particularly low because of these inefficiencies with the lack of digitization. The other issue with this industry is because there hasn't been any sort of digital applications sort of applied across the haulier system or the ecosystem, should I say, 20% of the trucks in Europe on the road are empty. So whilst a truck might be going from -- example, from Bratislava to Barcelona, they might not be able to find their load going back, and therefore, that load is empty. And that has a fundamental impact on the environment so -- only environment. And as you can see there, a lot of the greenhouse gases in Europe are from these trucks crossing Europe. So where does Eurowag come into this? So Eurowag was founded 30 years ago by our CEO and Founder, Martin Vohánka. He actually lives near a local refinery. And so he started to transfer fuel to local farmers to truckers. And therefore, this sort of fast forward 20 years on. So in 2015, Eurowag was very much a fuel card company. It's a closed-loop card. So when a truck goes and fuels up, there is no cash that passes at that moment in time, but it's effectively a transaction that we will take from our card into our system. And we then would invoice the truck owner for that fuel. And we've obviously pre-agreed with that particular fuel station, a pre-agreed price for the fuel. So that was sort of 20 years of growing this business into very much a fuel card company. As you can see on the top piece of the slide is that Martin and the team 10 years ago started to really truly understand exactly what our customers needed. It wasn't just a fuel card, but it was about putting all of these different pieces of their operations into one place. So today, energy, toll, finance, regulatory applications, the shippers, the freight forwarders, everything is done in a separate system. So if you think about a dispatcher who's on 24/7, 7 days a week, trying to make sure that everything is working, their fleet is in the right place. They're paying for their fuel. They're not stopping. They can make it through the toll systems. There is a lot of systems and processes and suppliers that need to be connected to these small, medium-sized businesses. And as you can see on the bottom is effectively where Eurowag's customers sit. So we deal with the fleet owners, obviously, majority of the time, but it's actually the dispatches and the drivers who are doing the functionality of their business. And that's where Eurowag sort of started to think about, it's not just about the fuel, but it's all of these sort of operating systems that need to come together to truly drive their operational efficiencies, but equally to help with these empty loads to help these very small businesses with their operations. And so that's where sort of Eurowag 10 years ago started to buy these sort of digital applications that we would be able to, over time, integrate into one system and give the sort of the trucking industry a digital tool to make sure that they can help with their operations and to make it much more efficient. So if I revert back to IPO, which was 4 years ago, as you can see there, we only had sort of a select amount of products and services. They were not digitally sort of put together or they were sort of single products. As I said, energy was our majority of our revenue. So about 75% of our revenue back 4 years ago was made up of energy. So that was the fuel card business. We then started to acquire certain, let's say, digital applications. One was navigation. So there's only 5 navigation businesses left in the world. And we acquired Sygic, which is basically the heart of this application, which I will come to talk about in a bit. Tax is another one. So if you think about all of these international hauliers, you are buying fuel, food, all of their kind of expenses within the markets that they don't reside in, they can get that VAT back. And as I mentioned, 3% to 5% of margins is very low. So every single penny counts for these businesses. And so you're allowed one sort of VAT agent and Eurowag is one of those. Toll, again, I'll come back to in a minute. But toll, we've to -- about 5 or 6 years ago, we decided to invest in a system, which effectively allows truckers to have one onboard unit in their truck, and that allows them to move seamlessly through Europe. Where -- we have toll now available in sort of 24 markets. If you have ever seen a truck on the road, I would encourage you to look at their windscreen and you might see sort of 3 or 4 boxes. And this is for the sort of the toll sort of services that allows them to move freely across Europe. Since IPO, we started to invest in data-centric businesses. So as you can see there, we bought 2 very large businesses, one which was fleet management solutions. So that is for the dispatcher, where are your trucks? Are they going in the right direction, making sure that they're on time, making sure they're filling up at the right station. So we bought WebEye. And then more recently, we've acquired Inelo, which is, again, fleet management solutions, work time management. And we've now also got transport management systems, which is more about when you accept the load until the invoice, how does that all kind of process together. Move a bit forward. And over the last few years, we've actually been trying to, again, in-house, create a financing and e-wallet solution. So that's, for example, a kind of a revolute within the system. If you think about the trucking industry today, as I said, multiple suppliers, multiple systems, trying to understand your cash flow, all in separate systems. What we're trying to do here is bring everything together so they can see all of their transactions, all of their credits, all of their invoices in one place. And that's effectively what we've launched this year. So as you can see, our addressable market today is EUR 9 billion, but there is a significant amount to go in the foreseeable future once we've digitized all of these solutions into one place. So bring to life a little bit about what -- why sort of you may have heard about Eurowag Office. And I say this is this platform that we are trying to create to put all of these mission-critical services into one system. It's not just about bringing these products into one place. It's actually about bringing the -- some of these products might come together, we can try and pull them together and create digital solutions for our -- for the trucking owners using AI and various tools for their operations. So if you want to think about the Eurowag Office on the right-hand side, we've got 3 different users. You've got the driver, the owner and the dispatcher. We need to make sure that these tools service these different users in various fashions. And as you can see there, there's desktop, mobile and actually in the cockpit today. We're working with some of the manufacturers to ensure that some of our applications are in the infotainment. And as you say, on the left-hand side, you can see that we're bringing all of these mission-critical services all onto one platform. Before I move on to our financial results, as we mentioned last week, I thought we -- I was going to give you sort of a snapshot in time of where we are today. We have been investing heavily, and I'll come back to where we've been investing in. But effectively, where we are today with bringing all of these sort of products and solutions together is last year, we launched sort of the first phase of this platform, and that has your navigation, and it had a bit of a fleet management solution. We've been testing and trialing with our customers how to -- does the migration work for them. The tools that they use for their everyday needs to be migrated very seamlessly. And if you think about the fleet management solutions, there's multiple across different markets that look very different. We today have 7 fleet management solutions through the various acquisitions, and therefore, bringing them together is quite a complicated process. So last year, when we launched it, it was about kind of testing and trialing sort of the fleet management solutions and how we bring that into the platform. This year, our priority has been energy and toll, and you'll see from our results why it is a priority. But effectively, it's again, bringing those -- sort of a phased approach is you have to bring the products into the platform and then we slowly need to migrate those customers onto the platform, and then we can start to digitally onboard new customers. Where we sit today is, as I said, we've acquired multiple businesses over the last few years. Our sales teams go together, and they sell the individual products. But again, every -- all the user interfaces are still separated, and this is how we're now bringing it all together. So there's only one user experience for our customers. The other piece, I'd say, this year is about the e-wallet. I mentioned that shortly is that, again, bringing everything into one all the transactions. Today, if you're an energy and toll customer, we invoice you twice a month, and that's the only part of the process that you will see is through an invoice. This allows them real-time visibility of their transactions. And because they have a credit effectively with Eurowag, they can also manage their cash a lot better because they can see their credit history, they can see where they are in terms of their cash, and that will enable them to help with their management of their operations. Digital onboarding is a new one for us. And for those again who don't know us, we've got 600 sort of sales and marketing teams across Europe in 19 countries. The industry is very much door-to-door sort of marketing and sales still. So we have people on the ground going to meet customers and selling these products, as I said, on an individual basis today. This will dramatically change the industry because there will be digital onboarding. So today, you might go meet a customer, you manually input it into the system. And again, 2 weeks later, sort of 3 weeks later, you might get your physical card, or your service might be initiated. With digital onboarding, it happens within sort of 2 to 3 days. They're able to use their sort of their credit and their services. So again, just thinking to not just the efficiencies of our customers, but actually Eurowag as a business. And as I said, we are starting to look at our other products and how we slowly migrate those onto the platform. I'll move on to our financial results. But again, for those who are new to Eurowag, I wanted to just quickly brief you and -- sort of brief you on how we look at not just our revenues, but our KPIs, what are the key KPIs within our business. So as I mentioned to you, we've got a lot of different types of products and with those different types of products come different types of revenue. So on the left-hand side, we've grouped our energy and toll payments, which are very much transactional into what we call payment solutions. And on the right side, we call them mobility solutions. So those are very much your data-centric services that are subscription-based, so monthly recurring revenue. Over time, we're sort of talking about subscription revenues because those are sticky, but actually, energy and toll are equally as sticky as the sort of the mobility solutions. But as you can see, we've come a long way, as I mentioned to you, energy made up sort of 75% of our revenues just sort of 3, 4 years ago. We're now at 60% and 40% of those are our mobility solutions. In terms of KPIs, again, it's quite key in terms of the way we look at our business and the decisions we make within our business. As you can see, the sort of the 2 core KPIs that we do look as a business is number of active trucks. And when we say active trucks, a truck or an owner or a dispatcher has to use our services within a month, and that's what we call active. And we talk about number of active or sort of products per active truck. So how many products of ours are using our services. As you can see today, we've still got quite a way to go. We have a North Star of 1 million trucks. And today, we've got just over 300,000 trucks using actively one or more of our products. And as you can see on the right is that 2.8 products are being used from our customers on average. And we've got more than 8-plus products that we can sell to our customers. And again, our ambition is obviously using more than 6 products over time. When we've done some cohorts in terms of customers taking 1, 2, 3 or 4 products of ours, we know that after we've sort of cross-sold them another product, but they've got 2 products, the churn halves. If you offer them a third product, the churn halves. And we know after sort of 3 products that actually we've got the customers for life. And that's effectively the model that we're using in terms of the forward-looking piece. And particularly when you've acquired the customers through the digital application, where we will have a lot more of their data in one place, that will certainly be encouraging for customers to take more than one product of ours. When we also look at the sort of the customer acquisition costs, those will come down over time. As I just mentioned to you, this is sort of the industry is very much a manual and door-to-door process. With this digital platform, we can now start to acquire and cross-sell our products to customers. So we would hope that the acquisition costs will come down over time. And ARPU, as you know, and a good example is the telecom industry has also moved to this sort of multiple product bundling. And we know that ARPU, the average revenue per truck will go up every product that you add into their portfolio, the average revenue per truck will go up. So as you can see, we've got a long way to go, but it's a very exciting journey that we've been on. So if I now move to our results for last week, as I said, taking these key KPIs as our focus going forward. As I mentioned, we've got now over 300,000 trucks connected to one or more of our services. That's up 5% on the year. Net Promoter Score is important to us. So are we engaging with our customers? Are our customers happy with our customer service? That's improved over the last year to 43 points. Industry average, if we take an amalgamation of different industries because Eurowag unfortunately doesn't sit within just one industry, it's around sort of -- sorry, 39% points. So we're just above average in terms of the industry. Monetize, as I mentioned to you, is very important to us. So how are we cross-selling our products. And as you can see, we've actually made good progress there. It might look small, however, if you think about it, every time we add a new truck to the portfolio, they might start with one product. And over time, we can then cross-sell. So that will be a number that we will keep focused on. And as I say, if that gets diluted from more trucks being added, we will obviously make sure that the cohort is being communicated properly. But we're doing a good job in terms of the cross-selling of our products to our current customers. Retain, as I mentioned to you, our revenue model, subscriptions is sort of the recurring. That was up in the year and now contributes to sort of 24% of our total revenues. As I said, we will be looking at this metric, as I say, for us, it's about the recurring or reoccurring revenue, so the stickiness of our revenues. And we do feel that the majority of our revenue is sticky. As I said, that's why we talk about sort of active customers. Those that are actually giving us generating revenue on a monthly basis. And the final piece is about optimization of our internal processes. We've acquired 14 businesses over the last 7 years. And as you can imagine, every company comes with different customer services, different accounting platforms, HR systems, finance systems, and we're now trying to make sure that we can put all of this into one Eurowag operating model. So we've made good progress there. We hired a COO last year, who's been sort of making sure that we can start to streamline some of these processes. And again, for us, as a company, it's, a, we can scale once we are fully sort of aligned on our operating model. But equally, there is a lot of cost synergies that we can go for still in terms of some of these acquisitions that we've acquired. From a financial highlights' perspective, net revenue has grown 15%, again, strong net revenue growth. Cash EBITDA, we look at cash EBITDA. And again, I'll come on to why cash EBITDA, not just EBITDA, but that's again grown very nicely at 14%. Eurowag has always been a sort of a cash -- a strong cash generator. We -- I guess, we've not been able to see it fully because of the acquisitions that we've made more recently as well as investing back into the business and the platform. And again, I'll come on to that shortly. But again, we've been able to deliver really quickly to 2x net debt to EBITDA. And finally, we paid a 3p special dividend. I will talk about our capital allocation later on in the presentation. But obviously, that has been received well from our shareholders. And then finally, we've obviously reiterated our full year guidance, and I'll come on to that shortly. Quickly taking you on a bit of a journey in terms of our sort of financial performance since IPO. Eurowag has always grown at double digits. Even before the IPO, as I say, as Martin has grown his business, not just in fuel cards, but also the other services, it's always grown very nicely. 24% CAGR also includes our acquisitions. But as you can see there, as I've already mentioned, our acquisitions are very much data-centric, and therefore, mobility has grown as an absolute amount as well as sort of the contribution to total revenue. If I take the M&A out and sort of look at underlying growth, we've continued to grow double-digit growth since the IPO too. This year, so half last year and this year is a clean number, I would say, compared to the previous years. We've had no lapping of M&A. So the underlying, as you can see there, is growing at 15% year-on-year. And as I said, mobility, 40% now and 60% with payments. Cash EBITDA, as I said, is an important metric for us. It's a metric that's actually been just put into our new LTIP plan that was agreed at the AGM last week. That's very much about looking at the cash of our business and making sure that we are being efficient in our operations. And as you can see there, again, from a CAGR perspective, 29% over the last 4 years, year-on-year at 14%. If I just break down our revenue in terms of where the growth is coming from in the first half, as you can see there, very strong growth from energy and toll. Toll is a key growth driver for us going forward. EETs, which is the European Electronic Toll Service provider, we have now got 13 markets where we are the collector of toll on behalf of the authorities. And that is growing. So I say toll, a lot of investment has gone into the system and the onboard unit, which is the onboard unit that's on your truck. And so strong growth, we exited last year also at 50% growth in 2024. In terms of our mobility sort of solutions, say still strong growth. If you strip out the noncore CRT revenue. So with some of our acquisitions we bought, they are smaller fleet within that. Sygic and fleet management solutions will be sort of people carriers, light vehicles. Eurowag is very much focused on the CRT industry. So those are the heavy vehicles, international. And therefore, over time, those revenues will decline. If we strip these out, actually, our mobility solutions grew almost 8%. Looking at cash EBITDA, for those again who are trying to understand sort of the P&L, we look at net revenue. So whilst you might see our gross revenue reported, we look at net revenue. Our net revenue, as I suggested, sort of grew 15%. And then you take our costs off, which usually include credit losses, employee expenses and then technology and other OpEx, that gets you to our EBITDA number. Historically, that's been the focus of the business. But as I said, with all this investment in the business and actually, as a company that's been now listed for 4 years, the share-based payments are also growing. So what we've done in terms of our cash EBITDA is you take your EBITDA, you add your capitalized R&D. Again, we are investing in the business, and I'll come shortly on to where we've been investing our money. And then you add back the noncash-based payments, which do impact EBITDA, but we take that out of the noncash impact, and therefore, you get to a cash EBITDA number. And as I said, that's a key metric for our management team going forward. So as you can see, 14% up. We had a one-off settlement last year, which was EUR 2.2 million, extracting this therefore on a like-for-like basis, actually cash EBITDA was up 20% year-on-year. Before I go into the CapEx, again, what we spent this half year and last year, we often get asked, we've got quite a high capital investment program and have done so for some time. As I've alluded to, we've done a lot of acquisitions. There is a lot of work that needs to be done within the product portfolio. So it's not just about maintaining the product, but actually it's about advancing, developing it, making sure we remain competitive within the various industries. So if I look at this slide, we actually showed it at the Capital Markets Day 2 years ago. This is effectively our tech stack. This is what we've been building over the last few years. On the front end, you can see we've got the digital front end. That's about the application. That's about customers coming to us through a digital form. As I mentioned, it's been very sort of manual and let's say, multiple user experiences. We've now created one user experience where customers can come in through one platform. And as I already mentioned, you've got multiple users who are using it, which is the owner, the dispatcher and the driver, so making sure that they have accessibility to this application. Services, let's say, the integrated business services, those are all of the products that we have today. As I said, it's about not just migrating them to the platform, but making sure that actually we can start to create more tools with these products. So how do we bring some of these together so that, again, the operations for our customers are seamless from end-to-end rather than sort of having to jump from system to system. Tech and the data platform have been key. Technology platform is all about our sort of financial systems, the HR systems, and our customers as they're using their real-time transactions. We've been investing in an SAP project for the last 3, 4 years. We've got another year to go. This is about putting all of these financial systems together from all of these different acquisitions. And again, it's about making sure that it's modern. And then when we can scale, it's an easier platform to scale from. And finally, the data is super important for us in terms of this digital platform. It's about bringing all of our different customers' data, which again sits on different systems today through the different acquisitions. It's about bringing it all together so that the customer can see their data in one place. They don't have to look at multiple systems to find the information they're looking for. And I think once we brought all of this together, we're starting to look at AI tools that we can help our customers with their operations. You won't get this from any other service provider in the industry. This is quite a unique platform that we're trying to build together. Yes, you might have the separate individual service providers providing fleet management solutions, work time management, fuel cards, but they're all different customers -- different suppliers, different systems. So this is really, really key that we get this right in terms of integrating our platform into one place. I haven't really mentioned the hardware and infrastructure. And again, with some of our solutions like fleet management solutions and our toll, you need a box within the truck, and that's what we call our hardware. And this is key about now bringing all of our hardware together from, again, all acquired businesses, all procuring differently. It's all about bringing that together and procuring together and making one simple box for our customers. So jumping back into the last half of the year, as you can see there, we have grown our capitalized R&D. So we talk about capitalized R&D as our tech and data and platform and products. And that capitalized R&D has grown sort of 5%. We gave guidance that we want to make sure that we are controlling our CapEx. And therefore, at the beginning of the year, we communicated we need -- we will cap the capitalized R&D at EUR 50 million per year. As you can see, we are nowhere near there in the half year. And so we do anticipate a little bit higher CapEx in the second half. But again, we won't be using that sort of full EUR 50 million in this financial year. As I already mentioned, our onboard units is key to grow our growth -- our sort of our growth drivers, which is toll is a fleet management solutions. That has increased slightly. But as you say, if you looked at our 50% growth in our toll, that's partly because of these onboard units and putting them into our customers' hands so that we can grow our own revenue. So slightly up on our onboard units. And our infrastructure is at EUR 1.4 million for the half. That includes some of our truck parks. So we do have a few truck parks across Europe that we put our own fuel into and say that's kind of what we call infrastructure. Going back to cash. Net leverage is an important metric for us. We know speaking to U.K. institutional shareholders that leverage, especially over the last few years with interest rates being high, is not liked so much by U.K. shareholders. But again, Eurowag has been a very highly cash-generative business. It has gone to M&A, and it has gone back into the business. But here, you can see we've got leverage down to 2x. It was 3x only 18 months ago. So again, we are -- whilst we are investing, we are being able to pay that down pretty quickly. The only other sort of number on this slide that I'd like to kind of highlight is our working capital. So again, for those that don't understand Eurowag, our working capital is based on the payables and receivables of our operations. The gross revenue is about EUR 4 billion in the year, and that is majority of our toll and fuel transactions. So that is the invoice that we get sent to the customers and is what they effectively pay. Our working capital on a EUR 4 billion over the year can swing in any direction on either day. The -- when we offer our customers a 30-day terms, we might be paying our fuel suppliers on a 35- or 40-day terms. So as you can see, that working capital could swing on any given point in time. This is just a snapshot of our working capital. So as of the 30th of June, and we do it as of the 31st of December. In our appendix slides and our presentation on the website, you will see that we give an average over the year because these can be very tricky. We've done a lot of initiatives internally in terms of supplier and contracts with our customers to make sure that these sort of movements are aligning over time. But as I say, we're proud to see that our working capital on this given snapshot is neutral. And I say that does definitely help towards our cash flow. This is again for those that don't know Eurowag well, but again, in terms of our capital allocation. So how does the Board and management look at our capital allocation. Our priority, as always, is the organic growth. So that's investing back into the business. As I've already sort of shown you, where our investment has gone is definitely into technology, this platform, and we need to start, as I say, in terms of our processes, this has helped us to continue to grow double-digit growth on an underlying basis. It's improving margins, cash margins, and it's about the generation of cash. Deleveraging, as we mentioned, is important. So we're glad to see it down at 2x. For the full year, we will remain at 2x because we've just paid the dividend in the second half of the year. M&A has obviously historically been important to us. It's about accumulating all of these different data-centric platforms. Once the platform is fully integrated and we've got everything in one place, we do think there will be some opportunities for smaller bolt-ons. So for example, if we buy a fleet management solution with 10,000 trucks that are connected to its solution, we can easily buy that, plug that into our system and then cross-sell. So we do see going forward that if we do see some opportunities with some either similar products or they enhance the product, we will be able to integrate that into the platform. And finally, if we've got some cash left over, we will return that to shareholders. And I say we showed that as a special dividend this year that we returned to say, in the second half of this year. And as I say, once we have -- the Board will continue to look at this and see if we can have a sustainable dividend that might be something that they might consider in the future. For our financial guidance, as I say, we've kind of reiterated it. So we do think that this year, we can maintain our double-digit top line growth. Margins, the EBITDA margins will remain in line with last year. With the new LTIP that was agreed by shareholders last week, there is a noncash EBITDA impact in the second half. So that will move it to 40% margins for the year. CapEx, as I mentioned, we remain the cap at EUR 50 million. Adjusted cash EBITDA at the beginning of the year, we gave a guidance range that we thought we would come between EUR 90 million and EUR 100 million. We're already into September. And so we've kind of -- we've moved that goalpost slightly to the middle of the range of EUR 90 million to EUR 100 million. And finally, as I said to you, the net leverage, we will remain around 2x. Our guidance is between 1.5x and 2.5x. And so as you can see, we're well within that range now. And finally, with the long-term incentive plan that we agreed last week by shareholders, the key metric there is cash, so cash EBITDA. So we have given a new guidance, medium-term guidance, where we see cash EBITDA on a CAGR of low teens. So just to summarize, a really strong half first year, continuing our kind of momentum, I would say, from 2024, top line double-digit and cash EBITDA growth. Energy solution is now within the platform as well as e-wallet and our focus now for the second half is on toll. I haven't touched on the indirect channel, and that is through some of our OEMs or some of our track manufacturers. Now that we have a digital platform, we can start to sell through digital means, and that partly through some of our dealerships across Europe. So we started to trial process in Spain and Italy through one of our manufacturers. Once we've got this fully tested, we can then start to roll out that further out across Europe. I said, net leverage now well within sort of the middle of the range. Looking forward to our second half, again, our platform is priority. I said toll is a priority, and we also now need to start to migrate our customers so we can then start to cross-sell some of those customers on the platform and equally start to introduce new customers through the platform. We do think that by the early next year, we will have 30% of our customers using the platform, and we aim for end of 2026 to have 80% of customers using our platform. As I said to you, the sort of the digital onboarding, we continue to develop that and roll that across Europe. And then the final piece, as I said to you, is key for Eurowag is the standardization and optimization of our processes across the group. Still quite a way to go in terms of integrating some of our acquisitions. So again, that's going to be key to driving our long-term growth. I will pause there, and I will now open up to Q&A.

Perfect. Carla, if I may just jump back in there. Thank you very much indeed for your presentation this morning. [Operator Instructions] I just like to remind you that a recording of this presentation along with a copy of the slides and the published Q&A can all be accessed via your investor dashboard. Carla, as you can see there, we have received a number of questions throughout your presentation this morning and thank you to all of those on the call for taking the time to submit their questions. But Carla, at this point, if I may just hand over to you just to read out those questions and give your responses where it's appropriate to do so. And if I pick up from you at the end, that would be great. Thank you.

Great. Thank you. And thanks to all those that have submitted some questions. So Michael has asked me the churn rate within the core SME fleet and how does this compare against the large enterprise clients. So I would say the large enterprise clients have their own sort of systems and processes. And so therefore, where we focus, and as I mentioned at the very beginning, 90% of the industry is actually small SMEs rather than these larger sort of enterprise businesses. And so these small SMEs don't have digital solutions. As I say, they've got multiple systems that they'll have to kind of flick between, hence, why we're trying to create this one digital sort of platform for them. If you talk about the churn rate, I would have to take each individual product individually. And what we look at is actually when we look at our fuel card, that is the most highly churned product saying that most truck drivers have 2 or 3 cards. One is their main card that they will use. The second might be -- there might be a cheaper rate for them on the road on any given day, which they might use. And then the final one is kind of if they're looking for more credit or they've used their first 2 and they need some more, that's kind of the third. So I would say, whilst we have churn, and that's why we give active trucks. So that is trucks using our card on a monthly basis. If they don't use our card on a given month, that is taken out of our numbers. However, they still have our card and can use it again. So actually, we've been quite -- we are being very transparent. So if you take fuel card, for example, that could be a 20% churn. However, as I've suggested, we've done a lot of cohorts within our own operations in terms of adding new services to our customers. So if you think about a fuel card customer, if we then add toll, the churn rate comes down to 10%. If we then add on fleet management solutions, that comes down to 5%. So we are very proactive at once we sold them one product, we then cross-sell. So that gives you a bit of sort of a flavor. In terms of the mobility, it's less churn because I say it's more of a monthly subscription. So once they're locked in, it's usually sort of 2 to 3 years depending on the product. So again, the churn rate is lower there. But as I say, for us, our focus now is definitely once they've got one product, it's about the cross-sell and being able to manage that churn better. I'll move on to the next one. So Paul, it says with SME being highly fragmented across Europe, what is your most effective route to market digital sales partnership or M&A? So that's a great question, Paul. I would say, if I go back a few years ago and actually the industry today, as I already mentioned on the presentation, it's very much about door-to-door salespeople. And so we've got 600 marketing and sales across our kind of 19 offices who are there going to our customers. So at this moment in time, it's very much direct sales. We did start to, a few years ago, look at our sort of digital sales, and that has improved dramatically. So again, how many of our kind of customers coming in are from direct -- from digital means. So that is growing. But as I said, once we've got a platform that we can launch, that will be a lot easier. In terms of the indirect is what we call indirect, we have now partnered with 3 truck manufacturers to put our navigation within their infotainment. So every new truck coming off the factory floor will have our navigation within that. So we are starting to build a partnership with some of our OEMs, as we call them, truck manufacturers. We also work with them in terms of selling our fuel card. So at any given time, when an owner comes and buys a truck, we will then ask to sell a fuel card at the same time. And this is what I was alluding to in the sort of the indirect digital platform that we've now created, which we're now trialing in Spain and Italy through some dealerships. So our OEMs don't necessarily have their own dealerships. There's kind of independent dealerships across Europe. So we're now trialing our digital onboarding. So when an owner comes and buys a truck, they'll also have a salesperson at the same time selling Eurowag products. We're still in early stages, but we do see that as quite a key driver for us in terms of the revenue and growth in revenue through these sort of indirect channels. M&A, as I mentioned, I guess, in the last slide, I think once we have a fully digital platform, this will be a lot easier in terms of acquiring new customers. So today, when we think about the direct sales, it's about EUR 500 to acquire one customer. When we look at the digital means, that comes down significantly because you're probably only just doing the sort of sales commission. And then when you look at M&A, we will need to understand how those customers versus kind of just organic, which is a lot slower. So when we look at our 1 million as our kind of North Star trucks connected to our platform, there is obviously some M&A in that to accelerate the trucks onto the platform. But I say, key once they're in that platform and we can get them in quite quickly, it's about cross selling the further products to them. I'll move on to Martin. What leverage range do you aim to maintain and what would prompt moving below or above it? So as I mentioned, we've got a range which we have 1.5x to 2.5x. We were at 3x when we acquired our Inelo business, which I know a lot of people were nervous at. But as I said, we've been able to deliver pretty quickly back to sort of the 2x. We will continue, as I say, we don't -- whilst M&A is key to us, I think the cash generation today can fund our investment into the business. And as I say, over time, that will come -- say we've got 2x now that will come down further next year, but there will be some small bolt-ons, but we aim to maintain that sort of 1.5x to 2.5x net debt to adjusted EBITDA. Edwin, thank you for your question. So in terms of subscription revenue, it went up as a percent of net revenue, but your mobility solutions were growing slower than payments in H1. How do you reconcile that? So Edwin, I think if you look at the absolute subscription revenues, they grew. So that 1% is the absolute amount of our subscription revenues. To your point, you are right. So I think at the full year -- as a contribution to the full -- to total revenue, I think it was at about 26%. So the percentage contribution has come down, but we still look at it on an absolute basis. So the absolute net revenue or contribution from subscription revenues went up. If you look at my chart, when I did the revenue chart, if you go back there, you'll see that the absolute year-on-year has grown. Yuri, why did Eurowag stop publishing trading updates? We used to -- for those that don't know, we used to do Q1s and Q3s. It's not a legal requirement as a listed company anymore on the London Stock Exchange. Whilst we are not reporting Q1s and Q3, it was only revenue. And I think a lot of the times, people were trying to understand then sort of low down on the P&L or certain KPIs. We are trying to see whether we can publish some information on a quarterly basis, but it won't be our revenues anymore. We don't feel that it was kind of helpful in terms of the other metrics. But as I said, we will sort of make sure that we can continue to give some information on the platform, be it some of the KPIs. So that will hopefully, over time, come back in terms of quarterly. But right now, half 1, half 2 kind of is key to us for publication. And I'll move to the final question from Michael. Carla, can you please talk about the progress of the Eurowag office and onboarding of products such as well as feedback from users, positives or negatives. Yes. Michael, again, good question. I didn't cover that so much on the presentation. I was obviously trying to make use of our time. Where we are right now, as I said, is the platform is very much up and running. We have some fleet management solutions using it. We wanted to do fleet management first because that was the key user journey that was most important for our customers. So when we try and migrate a dashboard that might look different from the one that we might have in the platform, these dispatches are using it all the time. And therefore, these slight tweaks, be it a color or a font size or when we have our applications or banking applications change and we don't know what to do, it could be quite frustrating, but these are very important to their day-to-day operations. And so what we've done is we created the platform. We migrated a few customers untested and trialed and went back to them to understand what they like, didn't like, why they didn't like it. And then once we felt that we had it in a good sort of shape, we then started to migrate a few more of our sort of fleet management customers. What we have done for them, though, is we put a little icon on the dashboard that will take them back to their original view. That just gives them the sort of the knowing that they can go back. We would again monitor that and understand why they went back. And again, slowly, but surely, we've monitored that most people now go straight to our dashboard and don't necessarily go back. So that's something we're working on. As I said, energy is now in the office and being used from, again, a cohort of our customers. Again, we don't -- we need to make sure that our growth and our results today are very much a reflection of our historical business, not necessarily the business that we're getting through the platform. And so it's making sure that we can continue to grow our current base whilst we migrate these customers slowly. So energy is now within the platform. Navigation is within the platform. Half 2 is about toll. And as you can see, growing at 50%. We really need to make sure that we maintain that momentum whilst sort of taking customers onto the platform. One thing to note about these products is the SMS solution is probably the hardest because I say you've got a user journey that you are aware of. All of the other services like toll, energy, work time management, sort of the back-office VAT is not necessarily such a difficult user journey to migrate into the platform and for customers to keep using. So again, that's what we've been doing. And very much -- there is no one else -- and I need to reiterate, there is no one else who's creating such a platform for this industry. So there is no need to rush. As I said, we need to make sure that we're maintaining our growth in the business as well as then slowly migrating customers onto the platform. So you need to think about the full integration. We also need to make sure that we migrate customers at the right time. So for example, if we've only got energy and toll, we can only migrate customers who have those 2 products into the platform. So if they've got fleet management solution as well, we need to make sure once the fleet management solution is within the platform, we then migrate the customer onto that. It's about making sure, obviously, all their data is also in one place. So a bit of a complex journey, but I'd say we're quite well kind of within our journey of putting this into one platform. But I would say even when we've migrated the fleet management solutions, we've not had that much churn. It's about making sure, as I say, the customers are understanding the new user experience. And over time, we will be giving them new tools to use, which they would never used before. So this is very much an education for them. But I want to reiterate, these are mission-critical solutions for them, and they do need to use them on a daily basis. And so therefore, if we are offering them something that's better than what they have just with one simple solution for, I don't know, the telematics or for their work time management, we do feel that this will be something quite new to the industry and something that will be -- will change the industry quite significantly. So say we are on track. We -- obviously, there will always be on that road map that we've created where we might have some delays, or we might move around which products we prioritize. But as I say, we're doing this very -- we're taking our time. We're making sure that we're not actually losing the revenue growth and all the customers as we migrate onto the platform. I don't see any more questions. But obviously, I'm very happy to take any other questions after this call. But I hope I have answered everyone's questions appropriately.

Absolutely, Carla, if I may just jump back in there. Thank you very much indeed for being so generous of your time then addressing all of those questions that came in for investors this morning. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended. But Carla, perhaps before really now just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that would be great.

Sure. So thank you for all of those again who have joined me today. I'd say Eurowag is on a quite an interesting journey. I think there are not many other companies with such interesting journeys. I think we've got a long way to go in terms of what we were able to achieve. But as you can see, very strong results that we can continue to maintain. I didn't mention, obviously, the macro environment that we're sitting in, very little GDP growth. The industry is growing sort of flat to slightly up, and yet we are able to deliver double-digit growth. We've got a diversification of revenues. We're creating something that's quite unique to the industry. We will get there in time. But I say we don't see anyone else doing what we are doing. So we are confident that this is something that, again, customers will want. And as I say, we're on our journey, and we see that there's quite a lot more to do and which makes us very excited. So again, thank you for joining me today. As I said, any further questions, please feel free to reach out to us.

Perfect, Carla. That's great. Thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure it will be greatly valued by the company. On behalf of the management team of Eurowag, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.