Speaker #1: This presentation. After the presentation, there will be an opportunity to ask questions. By pressing star 1 at any time. I advise you that this conference is being recorded.
Speaker #1: At this time, I would like to hand over the conference to Pauline Bireau. Head of Investor Relations. Please go ahead, madam.
Speaker #2: Good morning, everyone, and thank you for joining us today for Pluxee 2026 visits. I'm Pauline, head of Investor Relations at Pluxee, and I'm pleased to be here with you today to present our Q3 performance.
Speaker #2: So today CEO, and Stephane, our CFO. Before we begin, let me walk you through today's agenda, which you can see on the next slide.
Speaker #2: Aurelien, we'll start with the highlights and key figures for fiscal 2026, followed by a review of our strategic initiatives and key achievements of the year.
Speaker #2: Stephane will then take you through our financial results in more detail. Finally, Aurelien will come back to present our priorities, from fiscal 2027 onward, and conclude with our outlook before we open the floor to Q&A.
Speaker #2: And with that, I would now hand over to Aurelien.
Speaker #3: Thank you, Pauline. And good morning, everyone. Let me start with our financial performance. In fiscal 2026, despite the challenging environment, we delivered ahead of all our financial objectives.
Speaker #3: Total revenues continued to increase slightly, while recurring EBITDA margin expanded organically by more than 100 basis points, and recurring cash conversion reached 70% over the year.
Speaker #3: This demonstrates our ability to translate operational discipline into tangible results. Our strong commercial execution remained a key pillar of our performance. First, new client wins generated 1.5 billion EUR in annualized business volume, ahead of our objective for the year.
Speaker #3: And second, net retention stood at 99.4%. It was supported by strong client loyalty, face value inclusive, and growing cross-selling, almost offsetting lower end-user volumes.
Speaker #3: All this allowed us to keep funding our development, both organically and through additional bolt-on acquisitions. While substantially enhancing shareholder returns, notably through a 71% increase in the proposed dividend per share.
Speaker #3: Looking ahead, our ambition is clear: position the group for a next phase of profitable growth. To get there, we will focus on a set of strategic priorities to capture revenue momentum, drive further efficiency, and scale AI across products and data.
Speaker #3: I will come back to each of them in more detail later. This translates into clear financial objectives, underpinned by sustained growth in employee benefits volume across our market.
Speaker #3: First, fiscal 2027 will be a transition year, reflected in an extended rebate scenario triggered by the PACT reform, as we decided to equalize merchant terms across all our million-foot programs in Brazil.
Speaker #3: Against this backdrop, we are targeting to deliver at least 440 million EUR of recurring EBITDA and at least 50% recurring cash conversion. Beyond fiscal 2027, we expect to return to profitable growth over the medium term.
Speaker #3: Sustained by steady recurring EBITDA margin extension, and recurring cash conversion back to normalized levels. Let's first turn to our key financial figures for fiscal 2026.
Speaker #3: Starting with total revenues, which amounted to 1.3 billion EUR, up 0.7% organically. This is slightly ahead of our objective of stable organic growth, despite the regulatory and macroeconomic headwinds that we faced during the fiscal year.
Speaker #3: Turning to profitability, recurring EBITDA reached 488 million EUR, with margin rose by +101 basis points organically to 37.5%, well ahead of our objective of slight organic margin extension.
Speaker #3: Lastly, recurring ticket flow came in at 341 million EUR, representing a recurring cash conversion rate at 70%. This brings our 3-year average to 82%, again above our objective of around 80%.
Speaker #3: This gives us the flexibility to keep investing in growth while rewarding our shareholders, and let's look at this on the next slide. Adjusted net profit per share reached 223 million EUR, and adjusted basic EPS was up +4.4% year on year, to 1.58 EUR, reflecting both higher adjusted earnings and, above all, the equity impact of our share dividend.
Speaker #3: Confidence in the structural cash generation of our model: we have decided to significantly raise our payout ratio from 25 to 40%. This translates into a dividend of 0.65 EUR per share, up +71% year on year, subject to shareholder approval.
Speaker #3: At this time, on top of the 100 million EUR share buyback program completed in May 2026. Stepping back, let me put this year's performance in the context of what we have delivered since the spin-off.
Speaker #3: Looking first at the top line, we delivered a 3-year organic tagger of +11.2% in total revenues, driven notably by high single-digit growth in employee benefits business volumes.
Speaker #3: We combined this growth with a significant improvement in profitability, recurring EBITDA grew at an organic tagger of +17.9% over the period, and the margin extended by around 500 basis points to reach 37.5% in fiscal 2026, reflecting the benefits of care and the efficiency captured across the group.
Speaker #3: This stronger earning profile translated into substantial cash conversion, with 1.1 billion EUR of recurring free cash flow generated over 3 years, and an average recurring cash conversion rate of 82%.
Speaker #3: This enables us to maintain a strong net cash position, as reflected in standard and cost estimation of our investment-grade rating. Beyond the numbers, let me turn to the progress we've made on our strategic initiatives.
Speaker #3: In fiscal 2026, we continued to move forward on all fronts. Winning more clients, sharpening our value proposition, and intensifying our efficiency initiatives. To restart with new client development on slide 9, we delivered 1.5 billion EUR in annualized business volumes of new client acquisitions.
Speaker #3: Exceeding our objective of more than 1.3 billion EUR and demonstrating the strength of our commercial execution. This performance was broad-based, with all regions and client segments contributing growth.
Speaker #3: At same year, we made a key growth lever, accounting for more than 32% of new client development. This strengthened our conviction in the significant potential of this still underpenetrated segment.
Speaker #3: Portugal is a good example of how we are broadening our value proposition to win new clients. There, we have progressively evolved from a mid-count provider into a leading multi-benefit platform, with more than 18 benefits now available through our Kobe by Pluxee operator.
Speaker #3: In May, we strengthened this further with a new distribution partnership with Sagteng, one of the largest independent insurance brokers in Portugal, with more than 200,000 clients.
Speaker #3: This partnership opens up access to its large corporate client base, and adds insurance and shipping plans to our available product range. And it is already paying off, last goods like Adecco, Arnav, PlasticJet, Plastinet, with more than 9,000 employees to be progressively onboarded.
Speaker #3: Winning new clients is one half of our commercial engine, the other half is retaining and developing our existing client base as illustrated on slide 10.
Speaker #3: In fiscal 2026, net retention stood at 99.4%, client loyalty standing high across our market, and we kept deepening this relationship growth. Third, further obtained value increases which added 1.1 billion EUR of business volume during the year.
Speaker #3: And over the past 3 years, the cumulative contribution reached 3.5 billion EUR, half a billion EUR above our objective, and this underscores our ability to advise our clients in preserving their employees' purchasing power in a context of persistent inflation.
Speaker #3: Second, cross-selling has gained traction, with a growing number of clients adopting our multi-benefit approach, broadening the range of employee needs that we addressed and deepening our share of wallets with each client.
Speaker #3: Together, loyalty pays value increases and cross-selling almost offset lower-end end user volumes, driven by a tougher economic macro-environment and a softer employment in some countries, especially in continental Europe.
Speaker #3: Our commercial performance is also built on an offering that we keep enriching for clients, consumers, and merchants as we will see in the next slide.
Speaker #3: In fiscal 2026, increasingly leveraging on data and AI, we continue to strengthen our value proposition for all our 3 main stakeholders. Supporting deeper engagement and creating new avenues for growth.
Speaker #3: For clients, we further enriched our range of solutions, our integrated multi-benefit solutions, and our available in 2020. Underpinning the cross-selling momentum as mentioned earlier.
Speaker #3: For consumers, we are building a unified, seamless digital experience that brings all their benefits together, making them easier to activate and use. And this is driving increasingly stronger engagement.
Speaker #3: In Spain, for example, employee opt-in reached more than 60% across migrated client portfolios. For merchants, we continued to expand the value generated through our ecosystem, business volumes, benefiting small and medium-sized merchants reached 7.8 billion EUR, a plus 46% compared to fiscal 2023.
Speaker #3: We are also expanding digital solutions to boost their visibility and also traffic to their stores, alongside a growing range of complementary services. Beyond this development, we also made progress on our four sustainability commitments which I will now cover in the next slide.
Speaker #3: First, responsible business conduct remains fundamental to how we operate with 99% of our employees having completed the required training. Second, on diversity, women now hold 45% of leadership positions, ahead of our 42% target.
Speaker #3: Lastly, alongside our SME merchant commitment that I have just mentioned, we are well on track on the environment. Our COP1 and 2 greenhouse gas emissions are now 62% below fiscal 2017 level.
Speaker #3: All this progress is reflected in our ESG ratings, such as CDP and EcoValley. To close this section, let's look at the drivers behind the group's strong margin expansion.
Speaker #3: As already mentioned, recurring EBITDA margin increased organically by +101 basis points in fiscal 2026. Around 3 quarters of this improvement came from the operating leverage, business volume growth, the scalability of our model, and synergies from acquisitions allowed it to grow with limited additional costs.
Speaker #3: And second, efficiency. By tightening cost discipline and accelerating optimization efforts, both in Brazil and increasingly across the globe, the group has begun adapting our cost base.
Speaker #3: And with that, I will hand over to Stephane who will go into this in more detail as he walks you through our financial for fiscal 2026.
Speaker #1: Thank you, Aurelien. And good morning, everyone. I will now take you through our fiscal 2026 financial results, starting with our business volume trajectory at key indicators of Pluxee's underlying commercial momentum on slide number 15.
Speaker #1: Total business volume issued, or BVI, reached 26 billion EUR in fiscal 2026, up +4.5% organically. This positive trend was driven by employee benefits, which accounted for 79% of total BVI and which grew by +7.7% on an organic basis to 20.6 billion EUR in fiscal 2026.
Speaker #1: Organic growth accelerated quarter after quarter, from 5.4% in Q1 to +11.2% in Q4, providing us with the healthy solid exit rate as we enter fiscal 2027.
Speaker #1: All three regions contributed positively with double-digit growth delivered both in Latin America and the rest of the world. Turning to other products and services, BVI declined organically by -6.1%, down to 5.4 billion EUR, reflecting the expected natural and scaled-down of phasing of certain public benefits programs in continental Europe with best effects turning favorable from H2.
Speaker #1: Overall, excluding non-recurring impacts, our steady BVI trajectory throughout the year confirmed the strength of our commercial momentum even in a challenging regulatory and macroeconomic context.
Speaker #1: Focusing a bit more on our main line of service, employee benefits, let's now look at how the growth in BVI was queued on page number 16.
Speaker #1: In fiscal 2026, employee benefits BVI growth was underpinned by, first, new client win, which demanded the primary growth driver contributing approximately 1.5 billion EUR of additional volumes on an organic basis.
Speaker #1: Second, net retention had an almost neutral impact over the year. Strong client loyalty and active portfolio management almost fully opted lower end user volumes in some markets going through a softer macroeconomic environment.
Speaker #1: Lastly, scope and foreign exchange impact provided an additional positive contribution of approximately 0.4 billion EUR, driven by a favorable currency impact from Brazil and Mexico and a lesser extent by the recent small Balkan acquisition.
Speaker #1: This business net volume trend from employee benefits, together with those from other products and services, translated into total revenues as shown on slide number 17.
Speaker #1: Total revenues reached 1 billion 302 million EUR in fiscal 2026, up +0.7% organically, and +1.2% reported, slightly ahead of our full year objective. This resilient performance was delivered despite the introduction of the 3.6% cap on merchant fees under the patch reform in Brazil from Q3.
Speaker #1: As a result, Q4 total revenues to that 335 million EUR, down -4.9% organically, compared to -3.3% in Q3, reflecting a progressive implementation of the regulatory changes.
Speaker #1: Looking at the two components of total revenues, operating revenue reached 1 billion 136 million EUR, broadly stable at +0.1% organically, and +1% reported. This performance reflects growing macroeconomic and regulatory context across our markets, which I will detail in a moment.
Speaker #1: In Q4, operating revenue amounted to 293 million EUR, down -6.2% organically and -3.2% reported. Float revenue reached 166 million EUR, up +4.6% organically, and +2.1% reported, ahead of expectations.
Speaker #1: Growth was supported by business volume development and ultimately by a slightly increasing investment yield year on year. In Q4, float revenue reached 42 million EUR, up +5.1% organically, and +6.4% reported.
Speaker #1: Overall, total revenues resilience reflected the strength of our diversified business model and geographical footprint, as business volume growth and float revenue largely mitigated the regulatory pressure on pickup rates.
Speaker #1: Let's now look more closely at the underlying trends in operating revenue by line of service on page 18. As just mentioned, operating revenue reached 1 billion 136 million EUR in fiscal 2026, up +0.1% organically, reflecting contrasting trends across our two line of service.
Speaker #1: Employee benefits operating revenue reached 991 million EUR, up +1.7% organically, and +3% reported. In fiscal 2026, solid business volume growth across all regions compensated for the regulatory pressure on the pickup rate in Brazil.
Speaker #1: Reflecting this, the group's employee benefits pickup rate stood at 4.8%, down -30 basis points year on year. In Q4, employee benefits operating revenue declined by -8.3% organically to 252 million EUR, compared with -2.6% in Q3, slightly better than our expectations.
Speaker #1: Other products and services, generated 145 million EUR of operating revenue, down -9.1% organically and -10.6% reported. It reflects the softer momentum in public benefits programs in continental Europe, together with the ongoing business transformation in the UK and the US.
Speaker #1: As expected, this line of service returned to growth in Q4, up +8.5% organically to 41 million EUR, supported by an easier comparison basis year on year.
Speaker #1: Let's now move to the geographic mix and explore how such operating revenue evolved across regions on slide number 19. Indeed, operating revenue performance varied across regions reflecting a combination of strong commercial momentum and market-specific situations.
Speaker #1: First, continental Europe, which now represents 44% of group operating revenue, reached 495 million EUR, down -3.1% organically and -2% reported. Regions showed differentiated business momentum across countries, reflecting varying macroeconomic conditions and public sector standing trends.
Speaker #1: Excluding public benefits, the region was broadly stable at -0.3% organically over the year. Second, Latin America, which represents 39% of group operating revenue, reached 449 million EUR, up +1.1% organically and +4.6% reported, including a notably high comparison base in Q4 2025.
Speaker #1: This resilient performance was mainly led by better-than-expected H2 2026 dynamics in Brazil, due to strong commercial performance and progressive implementation of the patch report.
Speaker #1: Excluding this patch impact in Brazil, Latin America operating revenue will have grown by +8.2% organically over the year. Lastly, rest of the world, which represents 17% of group operating revenue, reached 192 million EUR, up +6.7% organically and +1.1% reported.
Speaker #1: This reflects strong commercial momentum in Turkey and Asia-Pacific, notably in India by the end of fiscal 2026. Excluding the UK and the US, where we are refocusing our business, operating revenue in rest of the world would have grown by +18.9% organically.
Speaker #1: After operating revenue, let's give a look at how float revenue contributed to growth on page number 20. Float revenue reached 166 million EUR in fiscal 2026, up +4.6% organically and +2.1% reported, including 42 million EUR in Q4, up +5.1% organically and +6.4% reported.
Speaker #1: This performance was driven by two factors: first, a positive volume effect thanks to continued business volume growth, notably in Latin America and the rest of the world; second, a slightly higher average investment yield on float of 6.2%, up +20 basis points year on year.
Speaker #1: This was supported by elevated interest rates in Brazil, and by the group's discipline and flexible investment strategy adapted to local market conditions. After business volumes and revenues, let's now see how recurring EBITDA was fueled working news through the related margin expansion on slide number 21.
Speaker #1: Once again, in fiscal 2026, profitability came in significantly above our initial objective. Recurring EBITDA reached 488 million EUR, up +3.8% organically, and +3.7% reported.
Speaker #1: Recurring EBITDA margins stood at 37.5%, up +101 basis points organically, and +91 basis points reported versus 36.6% in fiscal 2025. On top of the float revenue contribution, this margin expansion was mainly driven by a +75 basis point organic improvement in recurring operating EBITDA margins, up to 28.4% reported.
Speaker #1: This was supported by a combination of continued operating leverage from business volume growth and accelerated efficiency initiative and tighter cost discipline, both in Brazil and progressively across the group, in response to the evolving regulatory environment.
Speaker #1: This performance provides clear evidence of our ability to execute rapidly adapted operations and deliver meaningful cost efficiencies. Looking now at how this recurring EBITDA growth translated into the pool income statement, down to net profit, on page number 22.
Speaker #1: Let's start below the third line disclosing recurring EBITDA, where BNA depreciation on amortization amounted to 128 million EUR, up from 110 million EUR last year reflecting the impact of recent acquisitions and the commissioning of newly capitalized assets.
Speaker #1: As a consequence, recurring operating profit or recurring EBIT was stable at 360 million EUR, other operating income and expenses amounted to -65 million EUR versus -26 million EUR in fiscal 2025.
Speaker #1: This 40 million EUR increase in OIE costs is the result of additional contingency reserves for ongoing legal and tax proceedings, impairment charges, and restructuring costs.
Speaker #1: Consequently, operating profit or EBIT reached 295 million EUR, financial income and expenses improved to -6 million EUR from -17 million EUR in fiscal 2025, reflecting an increase in non-float-related interest income driven by higher invested cash balances and by sustained interest rates in Brazil and Turkey.
Speaker #1: In contrast, expense amounted to 98 million EUR, with an effective tax rate of 33.8% versus 31.4% in fiscal 2025. This increase in the ETR was fully due to the non-deductible other operating expenses.
Speaker #1: As a result, net profit group share reached 170 million EUR, entirely explained by the specific one-ups in other operating expenses recorded below recurring EBITDA.
Speaker #1: Adjusted net profit group share which excludes these items amounted to 223 million EUR, and adjusted basic EPS reached 1.58 EUR from 1.62 EUR in fiscal 2025, benefiting from absorption of the affected effects of the share buyback program and subsequent share concessions.
Speaker #1: After the income statement, let's review how our operational and financial performance translated into cash generation on slide number 23. Recurring free cash flow reached 341 million EUR in fiscal 2026, compared to 417 million EUR in fiscal 2025, which at the time benefited from favorable working capital variances notably related to public benefits business volumes.
Speaker #1: More details in fiscal 2026: recurring free cash flow was driven by, first, our recurring EBITDA growth and margin expansion; second, a disciplined investment policy with capital expenditures reaching 99 million EUR, stable year on year; and representing 7.6% of total revenues.
Speaker #1: Third, a positive contribution from changing working capital of the 72 million EUR, demonstrating disciplined management despite the headwinds on reimbursement terms in Brazil and softer business volume range in continental Europe, especially related to public benefits programs.
Speaker #1: As a result, recurring cash conversion reached 70% in fiscal 2026, reflecting the high quality of our recurring earnings and bringing the three-year average to 82% above our objective of around 80%.
Speaker #1: This strong cash generation enabled us to return more value to shareholders in fiscal 2026 while still strengthening our sound balance sheet as shown on page 24.
Speaker #1: The group's net financial cash position stood at 1 billion 341 million EUR as of the end of fiscal 2026, up +178 million EUR compared to the end of fiscal 2025.
Speaker #1: Our strong recurring free cash flow of 341 million EUR more than covered the cash-out, especially the one related to the fiscal 2025 dividends for 76 million EUR, including minority interest, and the 100 million EUR share buyback program completed in May 2026.
Speaker #1: We also benefited from a favorable net currency translation effect of +30 million EUR over fiscal 2026, related mainly to the appreciation of the Brazilian real and Mexican presence.
Speaker #1: This solid financial position, combined with our strong cash generations, gives us full flexibility to keep on investing in our business while continuing to deliver value to our shareholders.
Speaker #1: And with this in mind, I would now hand back to Aurelien who will take you through our priorities and outlook for fiscal 2027.
Speaker #2: Thank you, Stéphane. Before turning to our strategic priorities, let's take a step back and look at the structural trends shaping our market. Valued at more than 1,000 billion EUR, with a penetration rate below 20%, the employee benefits and engagement market is vast and still largely untapped.
Speaker #2: It is also evolving quickly, with several mega-trends reshaping the world of work and continuing to fuel structural market growth. First, demographic shifts are creating talent shortages, pushing employers to find new ways to attract and retain their people.
Speaker #2: While AI is gradually transforming the way people work, second, persistent inflation and interest rate fluctuations reinforce the need to support purchasing power. In addition, climate change, rising sustainability expectations, both for employers and employees, talent retention, purchasing power, well-being at work, and sustainability—these are precisely the needs that are solutions addressing.
Speaker #2: Making them either more relevant for employees across sectors and job categories. At the same time, our competitive and regulatory environment has evolved, requiring us to keep innovating and to adapt quickly, as we are doing in Brazil.
Speaker #2: And this is exactly what our strategic priorities are designed for: building on the market fundamentals that I have just outlined, we have entered fiscal 2027 with a clear objective: positioning Pluxee for the next phase of profitable growth.
Speaker #2: In a nutshell, we are stepping up our ambition on three prompts: first, capturing gross momentum; we focus our commercial engine where the potential is greatest; our most attractive offerings and high-potential markets, such as India, key European countries, but also Brazil, where the structural volume growth remains significant beyond the rebasing; at the same time, we are doubling down on SMEs by scaling our targeted model across countries, and on merchants by making our value proposition even sharper—notably on complementary services.
Speaker #2: Second, driving further efficiency: in a volatile environment, discipline matters more than ever. We are stepping up our cost optimization efforts, already well underway, with a goal to progressively build a leaner, more agile cost structure fit for our next phase of growth.
Speaker #2: And third, fostering our product tech and data ecosystem: we are progressively scaling automation and agentic AI, strengthening cyber resilience, and delivering more personalized, AI-powered solutions enabling faster innovation and go-to-market.
Speaker #2: Finally, we'll keep steering target opportunities to both M&A and strategic partnerships, wherever second strengthen our trajectory. Taken together, these priorities reinforce one another and will make the group more competitive more agile and better equipped to seize the opportunities ahead.
Speaker #2: Let me now turn to how our capital allocation framework is supporting these priorities. Our capital allocation framework has always balanced organic investment, M&A, and shareholder returns with a constant focus on value creation and financial discipline.
Speaker #2: This approach will continue with a few adjustments, starting with first organic investment. We now expect annual capex to land between 8 and 9% of total revenues, to be focused on technology innovation data AI and cybersecurity.
Speaker #2: As our model evolves, we are also gradually shifting part of this spending toward cloud and SaaS-based solutions. Second, external growth: as mentioned, we will keep complementing organic investment with targeted acquisitions and partnerships.
Speaker #2: Each of them will continue to be assessed against strict criteria, strategically value creation and integration. Third, shareholder returns: as mentioned before, confidence in the group's cash yield generation we have structurally raised our dividend payout to 40%.
Speaker #2: Together, these three pillars continue to give us the flexibility to invest where we see the strongest returns, and seize external opportunities selectively. While distributing a greater share of the value we create to our shareholders.
Speaker #2: Let me now conclude this presentation with our financial objectives. From fiscal 2027, we will continue to build on our sustained employee benefits business volumes momentum, and on the progressive rollout of our strategic priorities.
Speaker #2: That said, fiscal year 2027 will remain a transition year, reflecting an extended rebase scenario triggered by the past reform in Brazil, following the equalization of merchant terms across all our Milan pool programs.
Speaker #2: In this context, we are targeting to deliver at least 440 million euros of recurring EBITDA at constant front currency and scope, and at least 50% recurring cash investment in fiscal 2027.
Speaker #2: This coming year will be clearly shaped by the significant impact from the Brazil reset in the first semester. While we continue to expect any inflection point from H2, as we will seize the initial benefits of the rollout of our strategic priorities flowing through.
Speaker #2: Beyond fiscal 2027, with the Brazil rebasing behind us and our strategic priorities delivering their full effect, we plan to return to profitable growth over the medium term, supported by steady recurring EBITDA margin organic expansion, and a return to normalized recurring cash consumption.
Speaker #2: Let me now conclude the presentation before we open the floor to questions. Fiscal 2026 was another year of strong execution in a challenging environment.
Speaker #2: Beyond fiscal 2027 transition, we are confident in our return to profitable revenue growth, given the structural fundamentals of our market, the growing appeal of our solutions, and the discipline execution of our strategic priorities.
Speaker #2: Before we take your question, I would like to sincerely thank our teams around the world. Their loyalty to Pluxee, their commitment to our clients, and their ability to adapt quickly made a real difference, and contribute to the confidence that we have in the future.
Speaker #2: Thank you for your attention, and now Stephane and I are ready to take your questions.
Speaker #1: This is the conference operator, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch tone telephone.
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Speaker #1: The first question comes from Zach Al-Qaryooti, with Morgan Stanley. Please go ahead.
Speaker #3: Good morning. Two questions from me, please. So firstly, just on the guidance for next year, can you help us bridge the organic EBITDA guidance relative to the 2026 levels, so particularly separating the incremental impact from the Brazil regulation from underlying growth, cost savings that you mentioned, and any other factors that you'd call out?
Speaker #3: And within that organic decline, how should we think about top-line performance versus the EBITDA margin? And then second question, just again on Brazil, so you refer to this extended rebase scenario.
Speaker #3: What specifically has changed relative to your previous assumptions and how confident are you that that headwind should dissipate by kind of the second half or late 2027?
Speaker #3: Is there a risk that we'll still be talking about this headwind, that the back end of next year? Thank you.
Speaker #2: Thank you, Zach. Stephane, do you want to answer the first question, and then?
Speaker #3: Yeah. Good morning, Zach. So regarding your question on how we bridge the guidance of the at-least 44 million euro EBITDA versus what we delivered in 2026 with 488 million euro, which is a 48 million euro downside.
Speaker #3: So the biggest impact, we had a big thing, is this rebase, and this extended rebase scenario that we currently have in Brazil. During my comment on the organic growth by region for fiscal year 2026, I explained what had been the impact in 2026 for these changes happening in Brazil.
Speaker #3: And when you look at it, if you do the math, you will notice that for H2, because for us, the impact started to materialize at the beginning of March, which is the beginning of our second semester, and the overall impact was 30 million euro.
Speaker #3: So overall, we have a pricing effect of 30 million euros hitting us in H2 of fiscal year 2026. With the current extended scenario, we now have in mind, for what is going to happen in fiscal year 2026, the impact is going to accelerate in fiscal year 2027, and overall, it's going to be approximately double the impact that we had in H2, of fiscal year 2026.
Speaker #3: So instead of 30 million over six months, which is basically 5 million euro per month, it's going to ramp up to 11 million euro or even 12 million euro at the end of fiscal year 2027.
Speaker #3: Per month. And so this is going to be the impact of the repricing effect. If you have in mind, at the end of the reform, an impact close to 12 million euro per month overall, this is 12 multiplied by 12 months, something close to 140 million euro, but we already had in fiscal year 2026 an impact of 30 million euro.
Speaker #3: So meaning that the difference between fiscal year 2027 and fiscal year 2026 is going to be 140 less 30 million already recorded in 2026, which is approximately 110 million euro.
Speaker #3: So meaning that the pricing effect of the reform under our current extended scenario in Brazil is hitting the EBITDA for 110 million euro. So meaning that this is going to be partly offset by, as you raised it during your question, the business volume growth that we will still have in Brazil, because this country is remaining a priority country for us with significant organic growth in terms of business volume.
Speaker #3: Then that will be the growth in other countries all around the world, and we have all our efficiency measures as they were introduced by Aurelien, that are going to help us to compensate.
Speaker #3: So overall, this 50, a little bit lower than 50 million euro hint on the EBITDA comes from a pricing effect of 110 million euro on Brazil, which is partly offset by the growth, which is still going to be delivered by the growth, plus efficiency measures.
Speaker #2: And to conclude, because your answer was covering almost both the two questions of Zach, but maybe to complete regarding the impact of this extension, so we already made the decision a couple of weeks ago, this is already implemented, so the impact, it's a full-year impact the extension of our commercial terms.
Speaker #2: So our merchants have been for both the PACT program and the food allowance program. Thank you, Zach.
Speaker #1: The next question comes from Hannes Leitner, with Jefferies. Please go ahead.
Speaker #4: Thanks. Maybe just like to double-click on Brazil, I have in front of me your November 2025 guidance cut, which had, from originally a high single-digit to stable total revenue growth, that was at the time around 80 million.
Speaker #4: Or 90 million. So now you reported Brazil with just 30 million. Maybe you can kind of bridge what you just have said in terms of phasing of that repricing with customers and general dynamic also of what your expectations are given the president is returning.
Speaker #4: Or is confirmed in his seat. And then the second question, maybe just like thinking about the macro comment you gave, could you maybe focus there more on where do you see that is that a general employment unemployment rise and where in which region, or is this rather more competitive dynamic?
Speaker #4: Thank you.
Speaker #3: Thank you, Stephane. Do you want to start? So regarding the difference between the way we guided beginning of our fiscal year 2026 and what we end up with in terms of impact from the Brazilian reform, beginning of our fiscal year and equal even, which you remember just a few days after our release of fiscal year 2025 result, that we had this reform announced in Brazil in mid-November, and at the time, and because the reform is the reform that is applicable on the PACT program, we had delivered some guidance regarding a worst-case scenario of hitting only the PACT program.
Speaker #3: And then it happened that the rollout of this reform, its implementation came as we said at the time with, of course, some challenges for the industry, to adapt, to align, and the ramp-up has been, it did, but as we also had shared it, the ramp-up has been slower compared to what was initially targeted, but fully theoretically.
Speaker #3: And then we now have this new scenario, further to the discussion that we're engaged, further to the way that all the players on the market decided to adapt, that the reform is going to be extended to all programs.
Speaker #3: But in fiscal year 2026, what happened overall, answer in a few words your question, the ramp-up of the reform has been slower compared to the initial timeline.
Speaker #3: And again, we had draw your attention to the fact that there was an initial timeline and for us, our ability, the ability for all the players to adapt was very challenging.
Speaker #2: Maybe to complement and to give a broader view on what happened in Brazil over the past months now, first, I think it's worth mentioning that we delivered a very strong performance in business volume.
Speaker #2: We are talking about a double-digit growth, in terms of BDD, and this is a combination of the strengths of our commercial engine, the successful success of our multi-benefit strategy as well, with the acquisition we made with beneficial faculties integration of our new employee mobility benefits, and also the good contribution of the partnership with Santander.
Speaker #2: So we are still delivering a very strong performance in BB Gold. Even stronger what we initially expected. Back in November 2025, now, if I continue just going into more paper, detail, but again, I think it's important, from an operating standpoint, of course, the solution is now live, as we shared with you back to not lack, and it's very well received by the market.
Speaker #2: We are also currently working with acquirers to accelerate the deployment of our open arrangement team, and in the meantime, we keep, as mentioned by Stephane, we keep on exchanging with the government to get clarification and to see how we can improve the system with, again, the shared goal to accelerate the benefit curriculum and the adoption by more companies of the system.
Speaker #2: Could be the PACT or could be the food allowance. But in the meantime, we are also still running our legal actions to seek for clarification.
Speaker #2: So and indeed, more recently, we met a decision to neutralize our commercial terms, and now linking it with your comment on the reduction of labor, I think it this reduction brings even more clarity in bring further clarity at least for the coming I mean, coming in months or even the coming year, and that's why we embedded this scenario in our fiscal 2027 ABDA guidance.
Speaker #2: And regarding your second question, no, sorry, sorry, there was another question from Hannes. Regarding the macroeconomic context, and even and indeed the fact that we mentioned that it remains uncertain, it's fair to say, and when we look at before the continental Europe continue to be shocked and that reflected the combination of macroeconomic factors, but also from, as mentioned by Stephane, specific portfolio dynamics and public benefits causing effect, but from a macro standpoint, we continue to see a proper environment in several markets.
Speaker #2: With clients remaining present from hiring, and in some cases, on the employee benefits budget increases. So we are still suffering on Q4 from a reduction of the end-user portfolio, this has weighed on our business volume growth, in New York, but having said this, on Q4, we start seeing an acceleration of our BV growth in Europe, both to high single digits.
Speaker #2: So we that's why we say it's uncertain. We had some good signs on our way, and on the other hand, I mean, we remain cultured, because it's fair to say that the overall geopolitical and macroeconomic environment remains complex.
Speaker #1: The next question comes from Estelle Wingroad with JP Morgan. Please go ahead.
Speaker #4: Hi, good morning. Thanks for taking my questions. On Brazil again, I mean, how are operations evolving there since May specifically with the open loop arrangements?
Speaker #4: Could you just explain to us the new dynamic with the bank acquirers now, participating to the ecosystem in terms of perhaps having an increased competitiveness?
Speaker #4: I mean, just to see what may have changed lately. And a second one, you typically provide an element of revenue guidance, which is not the case this year.
Speaker #4: How should we think about it? Should operating revenue move in line with EBITDA, or are we looking at a margin rebasing? Thank you.
Speaker #2: And do you want to answer the second question, and I will answer regarding Brazil?
Speaker #4: Okay. So regarding the absence of guidance on the top line, as we said it, the action taken and already intense insisted on this, fiscal year 2027 for us is going to be a transition year.
Speaker #4: And we really want the teams to focus on preserving the mass of EBITDA, whatever happened to the top line. We currently have a scenario in Brazil and this is really an important for all the team to focus on protecting this mass of EBITDA.
Speaker #4: In terms of meaning of EBITDA margin, so first of all, no, I should say that. Indeed, and I think it's quite clear that we're going to degrow in fiscal year 2027.
Speaker #4: 2027 is going to come with a degrowth. The top line will be lower compared to another good surprise which new things happening in Brazil, but otherwise, because of this very significant impact, as I disclosed it, a bit more than 100 million euro pricing effect, we will degrow.
Speaker #4: In terms of EBITDA margin, I think you should keep in mind that as I explained it, breaking down this impact of Brazil by months, so it in H1 is going to be much stronger compared to H2.
Speaker #4: So overall, and including as well the momentum that Aurelien introduced on continental Europe, so we're going to have quite a big hit on the EBITDA margin in H1.
Speaker #4: While we expect to even improve a little bit the EBITDA margin in H2 compared to what it has been in this fiscal year, 2026.
Speaker #4: So fiscal year for fiscal year 2027, the EBITDA margin in H1 will be lower compared to the EBITDA margin of H1 2026, but slightly better in H2 compared to what it was in H2 of 2026.
Speaker #4: And this is going to be the result of all these efficiency measures that we are implementing. And that we started to implement as well in fiscal year 2026, so we did not go into some details on how we have been able to deliver this strong EBITDA margin in fiscal year 2026, if there are some questions I would be happy to go through the details, but this is just to tell you that this is not something that we are starting right now.
Speaker #4: We're going to accelerate but we have already and as we said it during the presentation, we have already cumulated some significant experience in the way to system, some EBITDA margin expansion even in challenging environment.
Speaker #2: Thank you, Stephane. And so regarding the situation in Brazil and the discussion with acquirers, so first of all, I mean, when you open your when you deploy your open arrangement scheme, you need to issue a list of technical specifications which are the prerequisites, I mean, for acquirers to connect to your system.
Speaker #2: So this was done back to as per our obligation. And since then, so we've been working and so dispensing, negotiating with the different acquirers locally.
Speaker #2: You can have small one, you can have the large one, you have also the digital native one. And so with each and every acquirer, we are running those discussions that we speak.
Speaker #2: And the phasing of somehow the connection of those acquirers to our open arrangement scheme has been modeled in our production. So it's on the progress, I would say.
Speaker #2: It will take a bit of time, but the team is really on it. Really on it. Thank you, Estelle.
Speaker #1: The next question comes from Justin Forsythe with UBS. Please go ahead.
Speaker #4: Hey, good morning, Aurelien and Stephane. Thank you for the questions. First, I just maybe you can just help us out a little bit with the or Hugh Bridge on getting to the ex-Brazil impact organic growth.
Speaker #4: You gave the 30 million euros in terms of the full half. I'm not sure we have the precise phasing there, but it just implies to me quite a big step down in the ex-Brazil organic growth sequentially from maybe something closer to high single digit to something closer to low single digit.
Speaker #4: So I just wonder if you could help us understand that math or if maybe there's something incorrect that we're putting through the numbers that would be super helpful.
Speaker #4: And then just further again, if we think about the broader dichotomy between business volume and then the ex-Brazil growth, in 4Q, is there something going on kind of excluding Brazil relating to the pricing as well, where you're seeing a little bit of take rate compression?
Speaker #4: Either an employee benefits or the broader business? Thanks.
Speaker #2: Okay, you want to start, Stephane, with the.
Speaker #4: Sure.
Speaker #2: And then take the next.
Speaker #4: Good morning, Justin. I think it's mindful keeping in mind that Brazil for us is really a strategic country and therefore looking at the growth of the group excluding Brazil would not make sense for us.
Speaker #4: It's really we really rely on this diversified portfolio large geographical footprint which provides the group with some resilience. But what maybe I can share with you in order to help you so I have maybe an even more detailed view on how fiscal year 2027 is going to be delivered.
Speaker #4: So I said that overall the full year is going to be growth. And you refer to the exit rate of fiscal year 2026 in Q4 of 2026, the growth in the quarter because of what is happening in Brazil was minus 4.9%.
Speaker #4: I said it during the presentation. So overall, let's say minus 5%. The growth in H1 overall at group level only all included with the impact I shared regarding Brazil is going to be even higher than this.
Speaker #4: And then in H2, we will trend overall with the growth coming from all other countries. And despite the hit in H2, because there will be a remaining hit on Brazil in H2 in terms of organic growth, even though the comparison basis with H2 of 2026 will be a little bit lower because we had the early effect of the Brazilian reform in H2 of 2026.
Speaker #4: But overall, so we will trend to something that is going to be negative we will heading to something that is going to be stable in the second half of the year.
Speaker #4: Despite the impact of Brazil. So this is just to tell you that without the degrowth in Brazil, because in Brazil it's going to be a significant degrowth all along the year, the rest of the group is growing.
Speaker #4: The rest of the group is growing and we will be too early to guide precisely on where we will land for H2, but H2 will be maybe still a bit negative or close to stable compensating the rest of the group will compensate everything that will still be happening in Brazil that will degrowth.
Speaker #4: The number from Brazil are simple. If you look at our books, in fiscal year 2026, because we have a disclosure in not number five where you will see that the revenue from Brazil is in fiscal year 2026 404 million euros.
Speaker #4: The 110 million euro impact that I shared, which is meaning that the top line in Brazil is going to be reduced by 25% overall.
Speaker #4: Fiscal year 2027, which is what is going to happen, based on the current scenario we have. But then there will be of course all the rest of the group that will keep on growing and with an inflection as Aurelien said, in H2, where the growth will be higher compared to H1.
Speaker #4: So H1 will come overall with a degrowth, which will be higher than the exit rate of Q4 2026. But then in H2, significant inflection.
Speaker #2: And to connect with your second question, Justin, the Q4 we shared with you that we indeed we delivered a much stronger growth in BDI for employee benefits.
Speaker #2: We expect this positive growth trajectory to sustain on in fiscal year 2027. And related to your question about a potential movement on the take up rate, excluding Brazil, now we haven't seen any deterioration of our take up rate.
Speaker #2: So and as we said, we keep on working both on the client and merchant side. On the merchant side, by developing our complementary services to be able to generate additional revenue from merchant.
Speaker #2: And on the client side, I mean, still targeting SMEs is definitely helping us to increase our commitment, our revenue from this side.
Speaker #4: The last question comes from Pravin Gondale with Barclays. Please go ahead.
Speaker #5: Hello, good morning. Thanks for taking my questions. Firstly, on the efficiency measures in Brazil and elsewhere, can you split the 75 basis points uplift in FY26 margin between these two buckets of efficiencies and operating leverage?
Speaker #5: And how much further benefit from efficiencies we should be expecting for FY27? And then secondly, on grant, can you talk about the business in the country, what sort of impact you have seen so far from the project?
Speaker #5: Both for food as well as non-food business. And then finally, I would appreciate a comment on the draft law on Bill of Justice form in the front.
Speaker #2: Okay. Good morning, Pravin. Stefan, do you want to start with the first question and I will answer the question regarding it?
Speaker #4: Good morning, Pravin. So regarding these efficiencies that we've been able to deliver in fiscal year 2026 and then how this will fit the momentum for fiscal year 2027, so first of all, I know if you look at the phase of our income statement, you will notice that our operating expense expenses are stable year on year.
Speaker #4: Fiscal year 2026 compared to fiscal year 2025, so this is a second page of the press release. Top of this page, you have these operating expenses moving from 816 million euro in 2025 to 840.
Speaker #4: So it's even a small saving of 2 million euro. However, you know very well that the management for all companies of expenses comes every year with the need to absorb inflation overall.
Speaker #4: In the Pluxee group, when you look at our geographical footprints, inflation is for us is quite high because we operate in some countries like Brazil or Turkey or India or inflation is higher compared to more normalized level in western countries.
Speaker #4: And overall for us, we average weighted inflation is close to 4.5 to 5%. So if you apply this 5% to the cost basis of 800, now it comes with an impact of 40 million euro year on year of inflation.
Speaker #4: Then you should also take into account that we have delivered in fiscal year 2026 more volumes and I'm talking about business volume. So we have processed more volume than the year before.
Speaker #4: With an increase of 4.5%. Of course, a significant portion of our cost base is fixed with no impact from the volume, but there are some processing costs.
Speaker #4: And so therefore, the momentum of the inflation and business volume increase comes with a bit of approximately 15 million euro. And we have been able to compensate this fixed.
Speaker #4: So this is the order of magnitude of the outcome of the discipline and efficiency measure that we roll out. So we are accelerating. We are also building a plan.
Speaker #4: We might come to you later in the year with more details on how this plan is organized in order to accelerate. But basically what we plan to do in fiscal year 2027 is the same.
Speaker #4: Even though it's going to be a second layer so we plan to keep overall our cost basis unchanged, maybe a little bit improved. We have some repositioning action being rolled out in the UK and the US.
Speaker #4: And so this will come with some cost reduction. So we are likely to have our operating expenses to tend to an overall amount of 800.
Speaker #4: And I just taking one caveat on this because I'm talking about current euros and of course this might be impacted by some foreign exchange impacts.
Speaker #4: But basically at constant, the mass of our operating expenses should be a little bit lower. So meaning that we are really compensating inflation and the volume effect from higher business volumes.
Speaker #4: So with strong efficiencies that are being delivered year on year, and the low hanging fruit have been raised in the previous year and in this year and of course it's going to become more and more challenging.
Speaker #4: Hence the need to have a clear and detailed plan in order to sustain these efficiencies going forward.
Speaker #2: And regarding your two questions on France so first of all, it's fair to say that you already I mean, before or prior to the protest that we've been taking in France, already a situation the macroeconomic context was affecting decision making across parts of the market and particularly FMEs.
Speaker #2: So we were operating in a relatively but I would qualify as a subdued macroeconomic environment. And the protest will not help because it has deteriorated the confidence of companies and investors.
Speaker #2: But in the meantime, all the discussions and the reflections around the purchasing power is unlikely the relevance of our value proposition because we with Pluxee's offering but companies can defend, can protect and even try to increase the purchasing power of their employees while they can still optimize this cost.
Speaker #2: So we will that the period of renegotiation of salary will start soon. And our teams are very much active to make sure that the Pluxee new term is definitely part of the negotiation.
Speaker #2: Now talking about the draft law in France, as you can imagine, we welcome the current momentum behind the reform that we see because there have been under discussion for more than two years.
Speaker #2: So things are now getting clearer. The law draft will be discussed now at the Senate beginning of November. So the first round of the first step were completed in October.
Speaker #2: The 12th of October at the low chamber level where the this draft law was passed. And once we see what is embedded just to come back on it.
Speaker #2: So the GR of the paper starting from January 1st, 2028, some precision regarding the usage of the meal card. With the permanent inclusion of all food products as eligible item but also some clarification on where and when the meal allowance can be used.
Speaker #2: The prohibition of client discount was confirmed. And there is a specific amendment related to the possible or the right that is given to the government after seeking for the anti-touch authorities' opinion.
Speaker #2: To decide on a cap of merchant fee but which is not which we see more as a safeguard to prevent any business behavior from the industry.
Speaker #2: So this is what the text at the moment contains. And this is what is going to be discussed again in a couple of days.
Speaker #2: At Senate level. So hopefully by end of December 2026, we'll have full clarity on the new legal. Somewhere for the meal voucher in France.
Speaker #1: Thank you, Pravin.
Speaker #3: Mr. Sonet, there are no more questions registered at this time. Back to you for any closing remarks you may have.
Speaker #1: Everyone for your questions as we close today's call. Let me reiterate that our fiscal 2026 demonstrated our ability to quickly adapt to a challenging environment.
Speaker #1: While further strengthening our conditions with a highly cash generative model sustained underlying business trajectory and our strategic priorities already underway. Pluxee is well equipped to navigate fiscal 2027 and to position the group for its next phase of profitable growth.
Speaker #1: So we look forward to updating you on our progress throughout the year and by then I wish you with Stepan we wish you both very good day.
