EVS Broadcast Equipment SA

Welcome to all of you here to review with us the results of our first half year of 2024. Together with me, we have Veerle De Wit, our CFO, and Benoit Quirynen, who is our SVP Strategy and Mergers and Acquisitions.

And we look forward to share today with you our results of those first 6 months. But before I start with the agenda, I'll leave the floor to Veerle to talk about the disclaimer.

Okay, thank you, Serge. So yes, this presentation contains besides actual actuals, also some forward-looking statements with respect to the business, to financial conditions, to results and operations of EDS and its affiliates.

Those statements are actually based on our current expectations and beliefs of the management and are subject to a number of risks. We will dive into those risks later on during the presentation, but we could have potential material changes should any of those risks actually occur, and they might impact forward-looking statements.

EVS undertakes no obligations to publicly release any provisions of those forward-looking statements to reflect if events or circumstances after the date hereof and to reflect the occurrence of unanticipated events.

Thank you, Veerle. So let's go to our agenda of the day.

We'll be talking of course on the business update. Topic 2 will be an update on the recent transactions that we have announced regarding MOG Technologies and TinkerList.

We have Benoit that will explain or give us an update on the market situation. Veerle will talk us through the financial updates and the outlook that we have in front of us.

And I will end with the conclusions before we give you the opportunity effectively to ask us questions and that we try to give you the right answers. So let's start with that business update and jumping to Slide Number 5.

So 4 topics I'd like to review with you. The first is the market and customers.

We definitely see a strong book and pipeline, so we are quite happy to see that our strategy, our play-forward strategy is delivering in the expected results. In H1 we saw especially EMEA and NALA regions and the LAB market pillar driving our revenue growth, so in line with our objectives and our strategy.

And the last but not least here on this first topic is we're quite happy with the successful delivery of those major summer big events that we had of the last weeks and months. So we are really quite proud of what we've been able to achieve with our customers around the world.

And I trust that many of you have seen some spectacular images over the last weeks and months on your television, on your iPad or any other type of device that you, you use to watch live content. On the technology side, we continue to further work also on AI capabilities.

Benoit will further during the presentation have one slide to focus on that, but we are quite happy and proud of what we're doing there with AI that EVS is introducing to further improve the live motion that we create. On the balanced computing part, so the combination between on-prem and cloud type of applications, we definitely see that our thought leadership is further increasing, that the customers appreciate what we do there.

Also, when it comes to security, to deployment in private cloud environments, for instance. So definitely we are making progress in that.

And last but not least, we feel that we are offering the right mix between hardware and software. We like to repeat ourselves here, that when we look to our engineering team, more than 80% of our engineers are working on software and about 20% on hardware.

So we really think we have the right mix in development, and that the solutions that we offer are really answering to our customer needs. When we look to corporate topics.

A few topics to discuss here. You have seen in early July that we have announced the strengthening of our commercial organization to capture the future growth.

Remember we have announced that we were creating a team to focus on large customers, strategic customers. So that is definitely an addition to our capability to further grow in the future.

We have a focus on North America, so we also further strengthened the team over there because we are absolutely convinced that our -- a big part of our future growth will come from North America. And last but not least, we recently announced those two transactions.

And we'll take a few minutes later on to further go into details in MOG Technologies and TinkerList. Last topic here is on the shareholder side.

We definitely are happy to say that we further increased our revenue and our EBIT guidance for the rest of the year, and Veerle will further talk about that later in this presentation. We are happy to see that we continuously further grow our EPS, our earnings per share.

And we also are announcing here that we are planning an investor day somewhere in the fourth quarter of this year to give a more in-depth overview to our shareholders or potential investors about what we're doing. Going to the next slide on financial highlights.

So in a strong order, €141 million which is plus 7% compared to last period last year. On revenue side, showing a number close to €100 million at the €91.1 million.

So a new high in the history of EVS, which is 12% more than last year. And when we exclude big event rental, we see an increase of 7%.

On the bottom line EBIT, we also see strong results with €23.8 million compared to €25 million last year. Veerle will further explain later how we come to that number.

But with a net profit, which is further improving to €21.8 million compared to €21.2 million last year. And with the number of team members further increasing to 642 at the end of July which is 35 more than at the end of July in 2023.

Going forward in the agenda and having a few words about the transactions that we have announced over the last weeks, in fact early August. We have announced that we are acquiring MOG Technologies in Portugal.

The company was created in 2002. At this stage about 47 team members with a revenue in '23 of slightly below €4 million.

They have acquired good experience in our industry. They have over 8,000 systems deployed worldwide with customers that we know well.

They have expertise in video and media technology with a leading role in MXF video file format. That expertise of course is crucial for us, because we believe that it is very well complementary to what we do.

They are focusing on software and cloud-based products, which are recording, transcoding, streaming and OTT with white label platform, they have optimized -- that they have optimized for digital media beyond pure broadcast. So we really are convinced that this is a very nice complementary activity and will help us to further strengthen our product offering towards existing and new customers.

When we look at the business model, it's a combination between on-prem CapEx and SaaS. So that's also for us a very interesting opportunity to further learn about the SaaS business model.

So again that's a very nice complimentary addition to our current situation. The transaction represents a full acquisition amount of below €5 million.

That includes also earn-out that might be earned over the next years. And we expect to have the closing happening somewhere in Q4 of this year.

This depends on some third party confirmations that we need to receive over the next weeks and next months. The strategic intent that we have with the acquisition of MOG is definitely further strengthening our MediaCeption and MediaHub solutions with new software solution components, especially for new software solution components that will help us further grow our digital and cloud components.

We use their technical expertise also to accelerate our enhancements that we'll be adding to VIA MAP. Remember, we've introduced the VIA MAP to the market last year and implementing that since this year.

And we also think that adding MOG to our capabilities will help us to further increase our channel partner approach. And last but not least, having an office now in Portugal [indiscernible] will also give us access to more Portuguese R&D talent.

We see quite some good universities working or delivering young engineers with quite some focus on technologies that are very useful for EVS in our industry. Going to the next topic is TinkerList.

And there we did not do an acquisition, but we are participating to capital increase in order to help them to further fuel their growth. TinkerList is a Belgium company based in Leuven, created by Erik Hauters in 2014, together with Vero Vanden Abeele.

Today it's a company with about 24 colleagues with recurring revenue of slightly above €1 million and in growth mode. They mainly have European presence with a reference list that is quite impressive.

And we believe that we definitely will help them to further grow in Europe, but also in other regions of the world, and especially also North America. They have a deep understanding of media production workflows, which is also for us very useful as we want to further grow in that environment.

They have products aimed to ensure consistency between preparation and life production to leverage efficient and consistent, consistent media production automation workflows. And last but not least, their business model is fully SaaS-oriented so for us reasons enough indeed to help them provide additional means to support their growth plans.

The transaction is that where we take a minority stake. And the total investment is less than €3 million.

This includes both the capital increase and certain convertible loans that we're providing. And again financial means to fuel their growth.

The strategic intent is indeed supporting their growth through EVS' world presence. That is definitely something that we can do.

It's opening doors for TinkerList to go and present their solutions. And also embed TinkerList in our solutions as options inside the EVS flexible control room and MediaCeption solutions.

So we really see there the complementarity between our both product offerings. And we will provide TinkerList with full autonomy to apply SaaS-compliant go-to market strategy for media production.

So definitely they keep on working as an independent company. We have two seats on their board and we will give them some advice, but they continue working as an independent company.

When we go to our next slide, Slide 10 and we look at the corporate strategy that we've been implementing now since quite some years, where we go from products into solutions, into an ecosystem, we see the different dimensions. So what that means from CapEx only to more OpEx [indiscernible] to growing into broadcast centers to go from EVS hardware to more software and even more software as a service, where before we were mainly in sports moving into entertainment and news, and also adding digital.

And when we move to the next slide we see where indeed MOG and TinkerList, well, especially TinkerList in this case will be helping us to grow. So we really think that both companies, TinkerList and MOG will be helping us in those different dimensions.

So we are quite happy with those transactions and that shows indeed and that we are looking closely in further doing acquisitions and investments to grow our market presence, our product portfolio. And we intend to keep doing that in the next month and years, of course.

So all in all, quite happy with those transactions. Happy also that we were able to announce that while we were in Paris in the EVS House during those Olympics.

So that shows indeed to our customers so that we are actively working on further helping them in providing them with the right technologies and solutions for doing their live productions also in the future. That brings me to the next topic here in the presentation, which is a market update.

And then we go to a Slide Number 13, and I'll leave the floor to Benoit.

So good morning, good afternoon for -- to everyone. So indeed all these transactions, this just strengthen our position to achieve our BA goal, big and airy audacious goal, which is to become the #1e solution provider in the live video industry.

And in order to do that, we have the three solution that you probably start to know with LiveCeption, which is focused on replay and highlights to elevate the fan experience, with MediaCeption which is about asset management for production, for fast and easy content turnaround, and Media Infrastructure for routing and infrastructure solutions to control and process all media workflows. And in these 3 categories of solutions, we did progress.

And the 3 categories were used during the major summer events which strengthened our position in LiveCeption. The LiveCeption signature remains the reference in terms of workflows for premium productions.

And XtraMotion, the generative AI system is spreading for major leagues in U.S. And we will see in the next slide that we offer even more generative AI services on top of the XtraMotion.

In the MediaCeption category of solutions, then we in fact deliver now the VIA MAP solution that we announced at IBC last year. We started delivering it.

And in fact this VIA MAP is very important because it allows us to go from pure solution to an ecosystem. VIA MAP is making the link between MediaCeption and LiveCeption.

We continue to have a very good market traction in the LAB, Live Audience Business market pillar in terms of order. And globally, we have MediaCeption and MediaHub which has been used and extensively used for the major summer events and contributed to the success.

For the Media Infrastructure, we have the Strada evolutive routing which is in operation in more and more customer premises. We have success and high market traction for Neuron View, the multiviewer solution that we launched at NAB last year, which is strengthening the neuron ecosystem, meaning that when you buy a Neuron chassis, you have more and more applications that can be deployed on it.

Cerebrum management and control solution is also gaining market traction, and especially in U.S. We also get market traction from flexible control room solution, the solution that has been codeveloped with RTBF, and we see that the solution is considered as applicable to our customers.

We see a request on the market to have a similar kind of solution components. And on the MediaInfra, we have to notice here that the MediaInfra, meaning Cerebrum and Neuron have both been used during some major summer events.

Related to these big events and major summer event, so it was a real success for the event started in June and for the events that just finished a few days ago. And we have also received nice quotes from France television, quotes that are extracted and translated from a post in L'Echo, a Belgian newspaper on 9th of August.

And so the quotes from television engineer is at the Olympics EVS is everywhere but invisible. And another quote, which was from the production team, we work with EVS for more than 15 years, to our knowledge it's the only company able to deliver such services.

And of course, we will continue to support France TV and other, let's say, broadcaster or rights holders for the Paralympics as well in the future which is very important for our DNA to continue in this venture. So in terms of -- if we move to Slide 16, in terms of generative AI, so we started a few years ago to develop the XtraMotion.

We started actually something like 2017 and continue to deliver. We launched the service a few years ago for XtraMotion, and we see it applies more and more.

And this XtraMotion is a generative AI system which creates smoother slow motion. It allows to actually have a quality of image which is close to super slow motion cameras, but not using these expensive super slow motion cameras, but to use it from any broadcast camera.

And we now had more effects, again, based on generative AI, like cinematic effects to, let's say, avoid that our customers have to deploy very specific cameras with specific lenses. Now from any broadcast camera we can create the cinematic effect.

We also have some algorithms that are working to maximize image sharpness to really apply a deblurring effect. We also have some more algorithms to actually frame the image for social network.

So typically, the social network images on Instagram, TikTok and all these social media, they are more applied in 9 cross 16, meaning the vertical format. And then with our system, it allows to automatically track the action so that we can publish directly without human intervention from a TV signal to a social media live signal without human intervention.

So that also brings some value in terms of delay to live for all these systems and that prevents to have dedicated systems to publish on social network. And we are also working on an auto zoom facility which is from a 4K image enabling to really reframe the image to focus on the action.

And so again, without human intervention, the system based on generative AI can detect what is the most important part of the image. And we are preparing even more effects for the future.

With all these generative AI system, we allow our customers the live service providers to increase the quality of the production without necessarily using dedicated specific camera systems. That means that we allow them to provide better quality with same or lower costs.

And all these effects have been presented at NAB already. And going into the Slide 17, the feedback was really impressive.

Our customer, they understand and they follow the EVS strategy. We have a lot of visits on our booth.

We discuss with customers very concrete projects, large attendance of course from the North America and Latin America clients. And during our channel partner events, we receive each time more visitor, more interest for local channel partners.

And it has to be noticed as well that beyond the broadcast in U.S., we also get more visits and more traction for what we call Live Audience Business hours, meaning the nonbroadcast players like corporate, like house of worship, like governments that are really interested to better understand our system, the value that it brings because they are also engaged into optimizing the way that they are doing production. So in terms -- if we move on the next Slide 18, in terms of contracts.

So we had some public announcement of important contracts, which are confirming that EVS is definitely perceived by our customers as a trusted and innovating partner in the broadcast transformation journey. And here to illustrate this we have 2 live service provider, Alkas in Qatar and LMG in U.S., which are deploying new generation of solutions, one for LiveCeption and one for Media Infrastructure.

So I will now hand over to Veerle, who will explain the different risks that we face.

Yes. So as highlighted earlier on in the presentation, we do see some economical and geopolitical risks that we need to call out.

Two of them, we have been systematically calling out in the past quarters. The first one is obviously the macroeconomic situation where we continuously see inflation still being called out and, yes, potentially having an impact on interest rates, et cetera, but also on price increases in prices for components.

Obviously we continue to monitor that situation closely. And I think we have been doing that successfully over the past couple of quarters, but it is definitely a situation that requires continued attention.

A second risk that we systematically have been calling out is obviously the management of our inventory and electronic components. We have to ensure that we can have enough inventory and the right inventory to continuously deliver our products and solutions within reliable delivery terms even though that risk is mitigating right now.

So I think we have a better control and the market has been stabilizing over the past couple of months. Again, it is a risk that we continue to monitor and make sure that we're on top of it.

We call out two new risks. First of all, it is potential impact of upcoming elections in North America and the potential impact that the results of those elections may have on global geopolitical situation.

And obviously, there is one final risk that we highlight as well, which is very specific to the LSP market in the U.K. We have seen 2 LSP customers actually going bust in the past 2 months, and there is quite some tension in that LSP market specifically for the U.K.

And obviously we're following up on that situation closely and staying close to our customers in this case. If we go to our ESG roadmap and our sustainable value creation, it's no new news.

I think early in January, received the silver medal from Ecovadis ranking EVS in the top 15 percentile of companies proactively managing ESG. So we're very proud of that medal.

We are still reporting here the ESG risk rating also from Sustainalytics, which was rating us at a low risk last year at 13.5%, the lower the number, the better the assessment. So I think it demonstrates that we're on a good track.

We have some focus items for 2024. So we are redoing our carbon emission exercise.

So we have been working on the data quality as to make sure that carbon emission is as qualitative as possible, and we will definitely redo the exercise based on data of 2023 throughout the year in '24. We're obviously working on all the CSRD requirements, which will have to be reported on in 2025 based on numbers 2024.

And will, for sure, defining and implementing the action plans to reach our 2030 ambition. So that is definitely work in progress.

And I now hand over back to Serge to discuss some evolutions of the leadership team.

Thank you, Veerle. Thank you, Benoit.

So yes, let me take a few moments here to talk about the evolutions that we announced early July, evolution regarding our leadership team. So the objective is to further focus on commercial activities and extend our commercial activities.

So what you need to remember here is that Quentin Grutman, who was previously our Chief Customer Officer, has become a Chief Strategic Accounts Officer. We are creating a new team in that respect that Quentin is leading in order to focus on some large strategic accounts worldwide.

He will help the local sales team to further focus on those big customers and further make sure that we focus on large opportunities and of course also with those large opportunities. So that's really an important focus that we have is to further extend the commercial capabilities by focusing on those large strategic accounts.

So that's Quentin picking up that new role. While Nico who was previously our Chief Marketing Officer is now becoming our Chief Customer Officer and will make sure that he further scales the sales organization as a whole worldwide.

So definitely we're happy that they both take up those new roles and will help us drive our growth in the future. As Nicolas is taking the role of Chief Customer Officer, we also have Oscar Teran now taking up his previous role as responsible for Market and Solutions.

So in that team, one of the major responsibilities is product management. And I'm happy that we have now Oscar joining the leadership team to take up that role as our EVP Market and Solutions.

Oscar brings quite some experience in our industry. He has been now at EVS for 2 to 3 years.

And before that, he has been also the CTO of Eurovision. So quite an experienced person from a Spanish background, bringing in quite some experience in our broadcast industry to the table.

So we're quite happy in this evolution. We really believe that this is helping to further increase our commercial focus and helping us further to bring talent and experience around the table when you look at our EVS leadership team.

So quite happy with the progress, and I'm sure it will help us to further accelerate our growth into the future. Going further here in the presentation, Slide 30, talking about 2024.

We are celebrating, as you know, 30 years of EVS, and I'm quite happy with of course the results that we are delivering in this year that we are celebrating 30 years. Next slide shows you what you've been doing over the last weeks in Paris in the EVS House.

We rented a house in Paris to invite customers, to invite EVS operators, to invite the press, to invite team members, but also Board of Directors and shareholders. So this was a great opportunity to have quite some persons joining us for celebrating 30 years and also enjoying of course, some of those Olympic moments in Paris.

And last but not least, we took the opportunity to announce indeed our partnerships with MOG Technologies and with Tinkerlist. So we really are quite happy with all the positive vibes that we were able to experience during those Olympics in our EVS House in Paris.

We all believe this was definitely a big success. So this gives us quite some positive energy for the future.

Going forward here, financial updates, and that's one that Veerle will talk us through.

Yes. Thank you, Serge.

So first of all, Slide 25 is the first half '24 top line performance. We still continue to see a strong top line performance, underpinning actually our continuous growth path.

First of all, our order intake, our order intake ends at €87 million, which is an increase of 7.1%. It does include around €7.8 million of Big Event Rental.

So if we exclude Big Event Rental order intake, we currently see a decline of around 3.5%. It's not concerning from our point of view, given the fact that we see a very strong pipeline.

Our funnel is growing by 44% compared to last year, and this is definitely supporting growth of our order intake at a full year basis. So definitely, order intake, we believe we're on good track, and we believe we are on good track to reach our full-year objectives.

From a revenue point of view, Serge already mentioned performance of €98.1 million. It's a growth of 12.2%, again including already around €4.5 million of Big Event Rental.

So excluding the Big Event Rental, we still see our base business growing at 7.2%, which is for us a nice way to see and obviously also a reason for us to reconfirm and upgrade our guidance. In terms of order book, we're very happy to see as well that our order book is continuously growing.

It's growing with 6.6% and is a total of €141.7 million at the end of June. And the good thing is that we, at the same time, also see our long-term order book still growing.

So beyond 2024, the order book is now at €67.6 million already, I would say, growing actually with about €15 million compared to the beginning of 2024. Finally, the secured revenue in this top line performance is at €172.2 million at the end of June, and obviously [ sandwiched ] positively for the full year.

If we look at the revenue in a little bit more detail, you'll find on Slide 26 actually the spread by market pillar and by region. By market pillar, you will see that, obviously, the impact of the Big Event Rental is about 5% of our total revenue number in first half but you see the growing impact actually of our LAB market pillar as Benoit mentioned before.

And so this is part of our play-forward strategy. And we see that activity is increasing in the market.

Global and our geographical split, again the impact of Big Event Rental is at 5%, but we see a very strong growth both in EMEA and NALA and definitely those NALA being a very much a focus area for us. This is very nice to see.

We do see APAC actually declining a little bit in the overall total compared to last year. I think APAC had a very important first half revenue last year when it comes to one specific or 2 specific deals that we signed at that moment in time in Australia.

The good thing is that post Q1 we -- first half results, we signed a very important deal again in APAC, sending us again positively as well that we will also realize growth in that region as from Q3. If we look at the profitability, we see a very nice gross margin.

Gross margin is at 71.9%. It's actually 1.2 points better than last year.

Do mind that that number includes a reclassification, so a new way of taking into account internal assets. Internal assets previously were reported as a cost of BOM as they were considered in inventory.

As of 2024, they will be considered as fixed assets, which is a normal way of accounting for them, and it's actually impacting depreciation. So this change in accounting policy is actually increasing our gross profit margin, but it's also at the same time, transferring cost from our cost of BOM to our OpEx in the depreciation line.

So it's actually a shift in reporting. If we look at the restated numbers, so we restated first half '23, if we restate the first half '23, we realize a gross margin of 70.7%.

So that is a 1.2 point improvement. Prior to the restatement, the margin in first half '23 was 70.3%.

So it's about 0.5%, 0.6% change. Next to that accounting change and that reclassification of internal assets, we definitely see an improvement of our BOM cost, actually reflecting our increased components of software in every part of our solution.

We see every solution actually performing better, except for LiveCeption, which is staying stable in terms of above margin, but we definitely see all the other solutions progressing, which is a testimony to cost management and our price and sales price management. If we look at our OpEx, so our operating expenses that include other revenue expenses and ESOP, they are at €46.7 million, which is an increase of 28.7%.

It is an important increase, but it is an expected increase. First of all, it is driven by additional resources that we have been adding.

As you may remember, we started hiring again in second half of 2023, and we continued hiring in the first half 2024. As mentioned already by Serge, we strengthened some teams, primarily also in North America.

And we added around 32 FTE on average comparing first half '24 to first half '23. So that obviously has an impact.

We also have the impact of the depreciation of assets, intangible assets that we have created in the past. So this is around €1.1 million being added by default linked to the launch of VIA MAP.

And then we have some smaller additional expenses that are linked to the support of major big events over summer period and obviously ensure the success of those events. And obviously the change in accounting of internal assets is impacting this OpEx as well.

It's important to notice that OpEx is fully progressing in line with our expectations. So we don't see any deviating factors there.

Taking then a look at the first half EBIT margin. The margin definitely remained strong at 24.3%.

If we do compare it to last year, it is a decline. So we are now at €23.9 million.

We were at €25 million last year. So it's a 4.4% decline.

Yes, we do have still a strong revenue performance but it is coming with an increased cost base as a result of the hirings done and as a result as well as of the depreciation of internal assets or internal intangible assets developed in the past. Again, this EBIT is in line with our expectations, and it is still a very profitable performance.

If we look at the financial health then, and this is combining a view on earnings per share and the balance sheet. So earnings per share are growing.

They are growing as a consequence of, obviously, the strong revenue performance, the solid margin performance, gross margin performance and the balanced OpEx performance, but also positively influenced by strong financial results. So we have a €1.1 million positive financial result, which is a result of our hedging policies and of our cash management.

So we ensure that we have optimal interest on our cash, which are definitely delivering a good contribution to the earnings per share performance. So earnings per share of €1.54 per share, growing 1.3% compared to last year.

As mentioned, we have a very strong net cash position. So our net cash position is at €51.5 million, growing €15.6 million.

It is a combination of a very strong cash flow from operations in first half, obviously compensated by the final dividend being paid in May 2024 of €0.6 per share. And finally, trade receivables.

You see that our trade receivables, yes, they are increasing. We're at €74.1 million.

So compared to first half '23, it's actually an increase of €13.3 million. But you see that we have plotted the receivables against the sales numbers.

And you see that the receivables are actually fully in line with those sales numbers, which is important for us to note is that we continuously improve the constitution of our total receivables. End of 2023, we had quite some receivables that were overdue.

Actually, 38% of our receivables were overdue over 90 days. We're happy to share that this has reduced now to only 10%.

So it's a huge improvement working together with sales on our aged receivables. And we're actually also happy to see that 66% of our receivables at the end of June are not due yet.

So we do see that, that aging of our trading in the receivable account is definitely at a very, very healthy. A word on Slide 29 on intangible assets.

So in 2022, EVS launched 2 internal developments, 2 internal projects with expected returns in a couple of years later. The first one, you all know it is linked to VIA MAP.

VIA MAP, we actually completed the development phase in Q4 '23, where we had a viable product. And at which point in time we also started the depreciation in fourth quarter of '23.

We do still have continuous development in this area, but they are run in a business that's usual mode and are actually reported into OpEx. We did the official market launch in July of 2024, and we will have the first customers operationally ready over summer in 2024.

So we're now delivering our first operational and customer projects. What is important to say as well is that we do see a significant pipeline on VIA MAP, a good market traction, and that we have some key strategic wins identified to go and position VIA MAP in the market.

The second project that we launched in 2022 is still in development with an expected launch date in 2026. It's really a minor project contributing for €0.1 million in first half in terms of intangible assets.

But we did launch in first half a new project that is linked to the evolution of technology foundations, balancing hardware with software capability. We foresee an overall spend there of €5.9 million over 3 years.

And the launch date of this project is targeted to be in 2027. We have spent around €0.4 million of CapEx in first half on this project.

And we will continue investment there in the next couple of months. If we then move to the outlook on Slide 31.

You will see that based on the secured revenue end of June at €172.2 million and also based on a solid pipeline and obviously also taking into account the acquisition of MOG Technology, we have decided to upgrade our revenue guidance. Our full year revenue guidance is now upgrading from an initial range of €180 million to €195 million to now a new range, €190 million to €200 million.

So from a spread of €15 million, we go to a spread of €10 million. The long-term order book, as mentioned already, is growing, which is also setting us positively for the basis that we're building for 2025.

And obviously, a lot of the orders that we will sign in second half 2024 will contribute also to the order book in 2025. As a consequence of the upgrade in the revenue guidance and the strong profit performance in the first half, we also upgraded our EBIT guidance.

We now call an EBIT guidance from €40 million to €46 million compared to an initial guidance of €30 million to €45 million. So the spread is also narrowing marginally to €6 million spread versus €7 million previously.

And this concludes the financial update.

Thank you, Veerle. So that brings us to the conclusions of our presentation here today.

So going to the 6 key learnings that we see at this stage on Slide 33. Key learnings are the following.

So we see that the industry is keeping on with consolidating. And you see that we play an active role in that.

And so we're quite happy with the progress we're doing on that front, and we'll continue to do so, definitely. It's part of our strategy.

We see that the big tech providers are still in the place, of course, and we don't expect them to go away. We expect them to further invest and also help us to grow our own business by the investments that they do.

We see that Media Infrastructure or infrastructure in general is definitely a cornerstone of big changes, which are happening as we speak. So that is also helping us further grow our company over the next years.

We see that business models are shifting. They shift slowly from CapEx to OpEx.

But definitely we are following that trend and giving our customers the opportunities to choose more and more between one or the other. Next topic is about cloud.

Definitely, cloud, we see it as just an enabler as another one. So definitely we keep on further developing our technology to make sure that they are compatible with cloud deployments, be it private or public cloud deployments, but it's definitely part of the whole picture.

And last but not least, we see our market shares in the different markets that we serve, continuously increasing. So we're quite happy to see that progress.

Definitely our play-forward strategy is paying off. It helps us to grow and to take market share from some of our colleagues in the market.

When we look at the focus topics for the next months on Slide 34, and the key activities for the second half of the year and the following, we continue delivering on the large multiyear modernization project that we have won over the last months and the last years. We have a continued focus on North America and Latin America and new LAB customers and channel partners.

That's absolutely a part of our strategy and focus for those next month. We are leveraging our new solutions to continue the increase of order book, and you've seen Veerle talking about our pipeline increasing very nicely.

So we really trust that we'll be able to transform part of that pipe into additional order book. We'll be working on the closing and integration of MOG Technologies over the next weeks and months.

We'll continue to expand our EVS solutions offering organically or through acquisitions and strategic partnerships. And last but not least, we will further focus on cost control based on the growth system as we absolutely want to make sure that we are able for the future to further fuel our growth.

So that brings me to my last slide with conclusions, Slide #35. Our objective is definitely to reach sustainable and profitable growth for 2024.

We see that our play-forward strategy is generating the expected sustainable and profitable growth ambitions. With the 2 M&A transactions announced on August 2, we will be able to further support our future growth ambitions.

We are planning limited further investments in our cost structure, and we'll focus for the rest of '24 also on cost control. You've heard Veerle talking about the revenue guidance increase, that is indeed now somewhere between €190 million and €200 million.

And also on our EBITDA guidance, we have increased that to reach a target somewhere between €40 million and €46 million. And the targeted dividend in line with our policy will be €1.1 for this year 2024.

So overall, we're quite happy with the progress that we are making. We see quite some positive indicators that our strategy is really delivering on the expected results.

And we think that indeed '24 will be a new high in the history of our company. So we look forward indeed to deliver on those guidances, and we look forward to further turn that pipeline into order intake over the next weeks and months.

So that concludes here this session of the presentation, and we'll be happy to take some questions at this stage.

I've got the first question on the pipeline. I'm trying to make sense of this 44% growth.

Could you comment it and help us understand its meaning. Also what I'm thinking about is maybe quantify it or compare it to sales to give us an order of magnitude and explain maybe the sort of probability you've demonstrated in the past of achieving the pipeline and how fast you can transform the pipeline into orders.

Second question on the gross margin. So what level of gross margin should we expect basically in H2?

I think based on your guidance, which there is a good chance we'll have higher sales in H2, more big events. So should we expect the gross margin to be up?

And is this why you dropped, it seems to me you topped your comment, your previous guidance that the gross margin could be slightly down this year. Last question for now on the OpEx.

Again, when I look at the guidance, I have the impression you intrinsically assume around €100 million of OpEx this year, which would imply, let's say, more than 20% growth in OpEx in H2. While if I remember correctly last year in H2 you had quite a few exceptional expenses.

You started to depreciate VIA MAP, you fronted some investments. So how much of this OpEx growth in H2, let's say, is prudent, so it's related to big events.

And then related to that, going forward, can you explain your growth system? So basically, how should we think about OpEx growth going forward?

Thank you, David, for those questions. I'll take the first question and then let Veerle also comment on the second and third question.

So the first question is about the pipeline growth. So definitely we are focusing on measuring our pipeline in more detail compared to before.

And with the introduction of, for instance, also VIA MAP, we see quite some opportunities arising and customers knocking on other to replace aging systems that they have with some of our colleagues in the market. So definitely, the VIA MAP introduction is creating some healthy growth in our pipeline.

The pipeline in such environments or for such a type of projects can take quite some time before it transforms into orders because those are typically large projects, multiyear projects that take 1 to 2 years before they land into an order. So but it's a mix of different products.

We have different lead times, I would say. But the biggest growth definitely comes from MediaCeption and with bigger lead times before we transform that from a pipeline in order.

I hear you ask the question, what's our capability to turn order to turn the pipeline into orders. That is throughout the year we've seen that was more than 50%.

Definitely we think a nice number. I don't think that 50% is lost to competition, for instance, but that sometimes also means that some projects are just canceled, but -- and are not done for one or another reason.

But we are quiet optimistic to see that pipeline growing. And that's for sure an important indicator that we'll be able to further increase our order intake over the next weeks, months and years.

And I'll leave Veerle answering the other question about gross margin and about OpEx.

Yes. In terms of gross margin, definitely we do see that it might be a little bit lower in the second half, possibly due to the mix that we see in the second half as well, but it will largely stay in line.

We're currently targeting for like a 70% margin at a full-year basis, so definitely more or less staying in line. From an OpEx point of view, I think we will see the OpEx growth decelerate in second half.

So we will not see growth numbers like we did in first half basically because we started hiring already in the second half of 2023. And also because we started already the depreciation, like you mentioned, David, in fourth quarter of 2023.

So okay, we will add 1 quarter in terms of depreciation, but we see -- we'll see a deceleration. We estimate that on a full-year basis the OpEx will grow like 15% to 16%.

So it depends if you look when you reference a €100 million number, it depends if you look at OpEx or discretionary as well. So OpEx number will rather be at the €91 million level mark.

15%, 16%, that is growth that is in H2? Or was it the full year?

No, full year, full year.

Full year, full year, full year. Okay.

And on the growth system that Serge mentioned, so to focus on the cost control in the coming years. Can you come back on, let's say, elaborate on how we should be thinking about OpEx growth in the coming years?

And what is this growth system?

Yes, I’m not sure what you refer to with growth system in OpEx. But I think that 2025 will be a year where we stabilize again.

So if you remember, we had also a year of stabilization in 2023. It will be the same for 2025.

So again, we need to consolidate all the hirings that we’ve done. We also believe that we will have stabilized a couple of regions and are up to the right staffing level with the hiring that we did over the past couple of quarters.

So we believe that 2025 will rather be a period where we stabilize OpEx again.

So, yes, to follow up just on David's question. So on the new outlook that was provided and considering the answer that you just provided, so you have quite good visibility on the cost structure, on the turnover.

So I was just wondering if the year progresses without any additional volatility, do you expect to be on the upper end or the bottom end of the outlook that you provided? Second question would be on the growth on LAB in the U.S.A.

Benoit already mentioned some drivers there. But I would just -- if you could just pinpoint the main drivers and how do you plan to strengthen the team there?

And then the third question would be on if you could provide some additional clarity on the turmoil and the LSP market because it wasn't completely clear what is happening there. Does that have anything to do with the replacement cycle?

Just trying to get a bit of a better explanation whether this is related to replacement cycle or whether this is something structural? And then the last question is just to better understand what type of elements were included in inventory are now classified as other tangible assets?

Okay. Thank you, Alexander, for those questions.

So let me take the first question. The new outlook, will it be on the upper or the lower guidance.

So I guess that we all hope that it will be on the higher one now. So that's the hope of everybody.

And if you look to the past and how we have announced guidance, the history shows that we're always on the upper one, but on the upper end. But that's definitely not a guarantee that this will happen again.

But I can only refer to that and that we all hope it will be on the higher side. But the reason why we give a guidance is -- and 2 numbers is that, okay, we know it will be somewhere in between but not exactly rare of course.

Then talking about the turnover in the LSP market in the U.K. What we see is there were some smaller players that can't compete with bigger LSPs in the market and are indeed forced to stop activities.

That is what we've seen over the last months in the U.K. We've seen some big customers also investing in their own capacity, which means that there was less need for the services of LSPs in the U.K.

in that respect. But we've seen indeed some customers, broadcasters investing more in their own capacity.

So that is a regional effect that is playing. Does that have anything to do with the replacement cycle?

My first answer would be, we don't see it like that. That is not what we -- we don't see the link there between the replacement cycle on those people going [indiscernible].

And then the third question, I need to refer to Veerle.

On the intangible asset.

Yes, for the intangible assets. Thank you.

Yes, so it's primarily employee team member costs. So I think that's your question was the composition.

So it's primarily team number of costs put on to the balance sheet.

And then there was a fourth question about NALA growth of the LAB, so Live Audience Business. So we see a growth of Live Audience Business.

As I did mention, we go in LAB others, meaning that other type of organization and broadcasters start to be interested by our solution, especially since we now offer Media Infrastructure Solution, which is applicable for a much broader kind of customers. And we see market traction, especially through channel partners.

We strengthened our team with our new SVP operations that you have seen published on our blog. And we are also strengthening our team in terms of channel partner management there so that we can provide the right support for the channel partners to grow in this area.

My first question is on the sales guidance, and I'm going to try to challenge you. If sales in the second half of the year would be similar to the first half of the year, then you would meet your sales guidance range.

However, in the second half of the year, the event rentals will do about €10 million versus €4.5 million in the first half. Then APAC will benefit from a very large project, and we saw last year how much that can benefit sales.

So that's probably going to be higher than the first half as well. Then VIA MAP will be contributing to sales for the first time in the second half of the year.

That will also be helpful. Then historically, Americas was roughly similar in H1 and H2.

So that's not going to push it down. And then EMEA historically was a bit higher in the second half than in the first half of the year.

So if I add up all these ingredients, then your outlook for the second half looks a bit conservative. So my question is, what is uncertain to you that your current sales guidance is what it is instead of being more optimistic.

Thank you, Michael. Well, I think you've seen us over the years being conservative and prudent in our guidance.

And I think that we don't change our way of working here. So well, is it prudent?

Well, we think it's realistic. Might it be more?

We hope so. But the future will tell effectively if that is the case.

Don't forget also, and I think Veerle pointed out that we still have delivery terms, which are typically of 20 weeks. And so most of the orders that will come in, in H2 will be for delivery in 2025.

So that definitely is also an important element to take into consideration.

Okay. So basically, the usual timing, do you deliver something in December or January that can make a difference?

But perhaps the EMEA base in the first half was quite strong at €49 million. Is there something like a large project in there that may not happen in the second half, which distorts my view on EMEA?

Well, history is never a guarantee for the same things to happen in the future. So our revenues are based on projects that happened, that might be delayed.

There is a strong pipeline, as you've heard. So we are quite confident in achieving nice figures for H2, but we remain cautious in calling numbers.

Okay. Perfect.

That's clear. And then my second question is on VIA MAP that is commercially launched.

First customers will see their installation. Is this product sold as a license or as a software-as-a-service model?

Or can the customers choose between the 2?

Well, today, that's mainly sold in a traditional way, being in the CapEx solution. So we sell the solution upfront and the customer base for that.

And linked to that, there is a service level agreement. So there is recurring revenue coming out of the sale.

So it's a combination of CapEx with recurring revenues coming from the service level agreement that is being provided together with the solution.

Okay. And based on your first customer wins, is that something that we will notice in the second half sales figure?

Can it be tangible enough to already add a few million? Or should we think as a much slower start that will grow over time?

That will definitely be translated in several millions in our revenue numbers for H2.

Okay. And in which regions do you see the most traction?

Is that Americas or EMEA?

We see in both EMEA and North America, and we even see that in Asia Pacific, specifically in a country like Australia.

Okay. That's encouraging.

And suppose that the license is 100. Suppose I buy the products, I pay you 100.

How many years do I have to pay a service fee and what would the service fee be on an annual basis? Is that 5 or 10 relative to the 100?

How is that structured?

Yes, that will be more between 10% to 15%, depending on the level of quality that the customer is asking for or even slightly above 15%. And that will last as long as he is taking -- using the system because, remember, those are systems that are being used at the heart of their operations that they are using to create their content.

And so working without the service level agreement with such system seems very strange. So that will last for probably 7 to 8 years and typically the lifetime of such systems or even longer.

The contract may vary. That might be a yearly renewal, that might be a 3-year or 5-year contract depending on the customer, but we give them the options initially to choose which duration he wants.

And there are of course incentives for taking longer durations as from the start.

Okay. So you sell it for 100 and you generate another 100 over the lifetime, depending on whether the customer renews or not an actual [indiscernible].

So that's quite interesting.

Yes. We expect, if I may answer that, we expect that we'll be selling additional -- not only that initial deployment, but it will be expanded with additional capacity or new features or capability throughout the lifetime that might generate additional revenue as well.

Yes. Just like those camera features that you add all kinds of new software apps for slow motion and sharpness that can also -- that also works with VIA MAP, extra features.

The ecosystem of which we are referring to.

Good. And then my final question on gross margin.

Fairly you mentioned the gross margin will be slightly lower in the second half of the year. Is that slightly lower versus the first half or versus last year?

No. So that's versus first half, yes.

And I think, Michael, to add on VIA MAP. So I think, yes, definitely, we see a pipeline.

And definitely, those projects might contribute to our order intake in second half. But do mind that the deployment cycles of those projects are a little bit longer, so potentially it does not contribute to our revenue base in 2024.

Okay. Well, being -- well, somewhat not being a software specialist, I imagine if a customer wants installation, well, it's a software product.

So that's easily done, quickly done. But then there's probably sort of a learning curve or a training mode, which delays your sales recognition.

Is that the case then?

In effect, these kind of projects, it's not just installing the software, it's also making sure that the software is integrated with the third parties in an environment. So it's bringing a solution for the customer, which can lead to a deployment time, which can lead, let's say, between 6 months and 18 months, depending on the complexity of the project, depending on the situation to the customer.

Yes, that's indeed -- I always expect that it's much more difficult than just plugging in the USB key and then uploading the software, but that's quite long, 6 to 8 months.

But Michael, if I make a comparison with ERP software. That's also only software, but takes quite some time to have the whole organization adapting their work process to that new environment.

I will limit myself to two questions. First is on MOG Technologies.

You highlighted they have 8,000 systems employed worldwide. Can you give us a potential if you put the [ PS ] quality standpoint, what could be the potential for that?

And what kind -- what's the competition for them? Second question is on the price increase you did in February of this year, how is that received?

And are you planning new price increases? Or do you only do it once a year?

Or is there another one expected in September?

Thank you, Sips. I'll ask Benoit to answer on MOG Technologies, and Veerle will talk about the price increase.

So indeed MOG Technologies, they deploy a lot of system in their history since 2002 for the last 20 years. In fact, and some of the systems have been deployed for, let's say, Tier 1 broadcasters and typically for Tier 2 workflows applications.

And in fact, we want to use some of the products of MOG into our solutions. We also want to apply different forms of synergies and certainly, as mentioned, leverage the talent there.

So all of this will be disclosed along the way when we do the integration on how exactly we want to, let's say, leverage all these talent, the technology and the products that we acquire.

Yes. Thank you, Benoit.

And in terms of price increases, so, yes, we did a partial price increase in February this year, so it was a selected amount of products and solutions that were increased. We did the analysis again, and we decided not to increase prices in September.

So there will not be a second price increase this year. Obviously, we also always try to limit it to one increase per year as to not have too many changes.

So I think the design we did earlier this year was the right one. And, yes, how is it being taken up by the market.

We don’t see decreases in our discount that we have to provide, our discount policy. So we don’t have to provide higher discounts to go and win deals.

So we do believe that it is still a balanced view.

You described that you have several strategic must-win opportunities in H2. And I think you're making quite clear that it's about VIA MAP prospect.

I think you explained that basically these are more going to end up in your order intake than into sales. But can you come back on the potential opportunity?

I understand that it's all multiyear kind of large ESP-like, let's say, sales, could you a bit quantify how much it could be basically? That's my first question.

And then secondly to come back on the LSP market and the sales being down 8% and putting aside U.K., which seems to be quite specific. Do you think that this is just phasing or let's say tough comps?

Or is it -- could it be macro related, so clients getting investment CapEx? Is it just actually related to big events that some production of further move to big events and so you couldn't sell to LSP.

So if you could elaborate a bit on the sales growth or decline rather in H1.

Okay. Thank you, David, for those additional questions.

VIA MAP definitely is generating interest. And we also see the signs of the opportunities increasing and the size of orders also increasing.

So it starts to be common to see projects worth several millions. It can be €3 million up to €7 million, €8 million.

So more and more, we see such opportunities arise. And that's also why we see that pipeline is increasing like it does as we announced.

So the size of the deal is increasing. The time to close deal is also not getting shorter by that, but definitely the size of the deal is increasing and the number of opportunities of such size is increasing.

So just that answers your first question. Then on the LSP market, the situation that we see in the U.K.

is very specific to the U.K. and the competition level that the recent U.K.

Let's not also forget that interest rates are still high. And for some players that puts additional pressure on their business model.

But in other regions of the world, for instance, North America, we see a healthier LSP market. Europe is tougher for LSPs, no doubt about that.

The contracts that they get are typically for several months, one in U.S., LSPs typically sign contracts for several years. So there are different market dynamics for LSPs in Europe compared to in the U.S.

The big events that are being planned in the next years will play a role, but that's mainly in North America. So we expect to see some growth there to happen over the next months and years, due to the big events of that are being planned in North America over the next years.

But it's definitely for LSPs in regional situation that really might differ from country to country.

If we can distinguish, let's say, between new customers or increase in installed base and then replacement of existing server, you see a change? Do you see -- yes, or would you describe the LFP market?

What could we expect basically in H2 or in the coming, let's say, 2, 3 years? Rather stable, rather down?

No, we expect that to be – to stay stable. That’s how we see the LSP market, yes.

That’s our expectation.

My first one is regarding the MOG Technology. If you could provide any details on the EBIT margin profile, please.

Thank you for that question. Veerle or Benoit, we know MOG is mainly software, but do we know -- can we share here with those numbers?

The EBIT, I didn't get the --

No, no composition of the revenue was requested, if it's mostly hardware or software, so.

It's mostly software.

Yes, exactly.

In fact it's mostly software. And they resell third-party hardware for most of their revenues.

Yes. And they do have some project-based revenues as well as they participate in a couple of EU funding projects.

So yes, it's primarily software, a little bit project-based and then a small portion that is hardware-based, yes.

So if I understand correctly, the profile of margin could be higher than your margin currently? Serge Van Herck EVS Broadcast Equipment SA – MD, CEO & Director Yes.

Benoit?

Perhaps, in fact, but not that sure that it scales the same way as it did today.

Yes, today, at least from an EBIT point of view, and obviously we're starting the integration right now. And so from a margin level, we yet have to identify how everything consolidates into our numbers.

But from an EBIT point of view, it is today a company that given its scale is not yet EBIT positive. So definitely, at first instance, there will be no contribution to the EBIT level.

But obviously, this is the synergy plan and the goal of the business plan and the combined business plan to absolutely make sure that we drive scale and we can make sure that we contribute to the bottom line as well.

Okay. Perfect.

Then I have a question on the order intake trend that you foresee in H2, especially based on the comments that you made on the potential pipeline that you have currently, which seems quite strong. Should we assume that you would be able to grow again in terms of order intake in H2 compared to H2 last year, excluding -- if we exclude Big Event Rental?

Okay. Thank you for that question.

Well, it's our intention. We have an intention to deliver sustainable and profitable growth throughout the years.

So in order to be able to achieve that, it means a need that our order intake needs to go the same way. So we're also continuously increasing year-after-year.

So it's definitely our intention. Will it happen, materialize?

Again, the possibility is there, but we cannot guarantee at this moment that it will be like that.

Okay. I see.

Very clear. And then on the Big Event Rental, you mentioned that you expected that this part of the business will continue to grow in '25, especially in the U.S.

Is it the case also for all the division? Or is it only the case for the U.S.

that you foresee a growth that we'll pursue in the coming year?

Yes. The Big Event Rental, remember, is typically every 2 years during the even years.

So when you see those big sport events that like the World Cup, like the Olympic Games, like the Euro Cup. So don't expect in '25 big event rental numbers or maybe only a very limited one.

So we'll be back in '26 with important -- or more important big event rental numbers. What is important to note is that our scope keeps increasing in those environments.

Also now we have the Media Infrastructure Solutions that we acquired in 2020 and now fully used and all those big events that we are supporting. So that shows that our customers were taking benefit of our extended product portfolio and that by doing so our scope and the revenues are typically further increasing.

Okay, I see. And then given this comment on the Big Event Rental for next year, do you expect to be able to compensate this revenue loss in '25 with other revenues, given your [indiscernible] and the order intake trends recently?

Yes. Well, we are not giving yet guidance on revenues for next year.

We've seen in '23 that we've been able to do that, exactly what you say, compensate for not having Big Event Rental in '23. So we more than compensated and we did a quite big growth in '23.

You have to wait some more time before we announce our guidance for '25. But I can only refer to the fact that our ambition is to grow and to achieve by 2030 the #1 status in our industry.

And we know that for achieving that, we'll have to grow both organically and by doing some further acquisitions.

Sorry, and to give an accurate response on the gross margin of MOG. In fact it's slightly above our gross margin today.

Yes. Thank you, Benoit.

Okay. Okay.

And then my last question is regarding the FTE headcounts for H2. Do you expect a further increase in FTE compared to end of H1?

Or should we expect a stabilization in terms of headcount?

We'll be close to stabilization for sure.

Yes. Obviously, with the knowledge that the people from MOG will be added in fourth quarter 2024.

So reported numbers will definitely grow.

Okay. Thank you.

Well, thank you to all of you for attending here today to our H1 update. And as you can see and hear, we are quite optimistic about the future.

There are some risks, of course, but we are definitely on our way to deliver a new high when it comes to revenues with a strong profitability as well. So we are quite happy to see that our strategy is delivering the expected results.

And again, we’re quite also proud of what we are achieving with customers around the world, especially when we talk about those big events which were again a big success. So thank you for attending.

Looking forward to give you further update after Q3, of course. And in the meantime, we will try to make sure that we transform as much pipeline into order intake, of course, to show very nice results later this year.

So thank you for attending and looking forward to meet soon or add some more questions if you might have in the next days and weeks.