EVS Broadcast Equipment S.A.

Good afternoon. Welcome to the presentation of EVS figures end of June '21.

This presentation contains forward-looking statements with respect to the business, financial condition and results of operation of EVS and each affiliate. These statements are based on the current expectation or belief of EVS management and are subject to a number of risks and uncertainties that could cause actual results or performance of the company to differ materially from those contemplated in such forward-looking statements.

This risks and uncertainty relate to changes in technology and market requirement; the company's concentration on one industry; decline in demand for the company's product and those of its affiliate; inability to timely develop and introduce new technologies, product and application; and loss of market share and pressure on pricing resulting from competition, which could cause the actual results or performance of the company to differ materially from those contemplated in such forward-looking statements.

EVS undertakes no obligation to publicly release any revisions today's forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. On the agenda, we have a business update, financial update, outlook, conclusion, question and answer.

So good morning, good afternoon, and good evening to all of you attending to this call. Happy to have you here with us.

So today, we are indeed giving more information or update on our H1 figures for this fiscal year. We like to say that we are preparing to deliver a strong result in 2021.

Indeed, we see that H1 is a quite strong H1. And all in all, we can see that we've seen the best H1 in the last 5 years for revenues as on profitability.

So you see indeed the numbers on the revenue side for H1 landing nicely compared to last year. Of course, we know that last year we were impacted by COVID, but nonetheless, the EUR 61.8 million revenue of H1 is the best we did in 5 years.

And the same thing applies for our EBIT. And we see that the result increases from EUR 3.3 million last year to EUR 15.4 million this year.

And again, this has been the best result in the last 5 years. So we're quite happy to see strong results.

Also on the order book, we see a very good evolution. Remember at the end of 2020, we had already a strong order book and a very nice increase in that order book.

And we see that order intake is still strong and that this is being reflected in our order book. So for end of H1 '21, we see a number of EUR 67.8 million, which is nearly 48% more than last year.

And then the result also has translated in a very good net cash position where we have been able to increase over a year that cash position of EUR 33.5 million to EUR 41.8 million.

So what are the big things to remember? Definitely, what we see is that we are going towards a new normal after this specific COVID situation.

We see a successful deployment in support of our dedicated solutions for the major summer events. I'm sure that many of you have been seeing a lot of them on television over the weeks and months, so we're quite happy with the realization of that.

It's been [ done ] with equipment on site, but also partially also with the technology that we have put into the ground.

We've seen a continuous and even accelerated growth in our Live Audience Business market, while the customers which were -- well, and those customers definitely continued their investments in their modernization projects. We've seen that on the other hand, our Live Service Providers, which were severely hit last year, that they are in catch-up modes or some [indiscernible] modes effectively contribute increased revenue generation in that LSP, Live Service Provider market pillar.

So that we will see in those [ environment ] those LSP customers, a lot of them have confirmed the commitment to further upgrade their infrastructure to our latest solutions. That is also helping to further increase our order book for us.

Then on the right-hand side, some other important topics that you could remember. And we had last year, our acquisition of Axon.

So those figures of Axon numbers as from May 1, 2020, and now fully into our fiscal year this year. We have launched also a new Media Infrastructure routing solution, of which we expect quite some interesting growth in the future.

We have launched our cloud-based XtraMotion, artificial intelligence-based solution, which is a very good service and will help our customers to create super slow motion replays from any type of camera. So that is really a very interesting capability that we have launched.

We launched our new website, highlighting the new solutions that we bring to the market. So we've been putting more focus on our new channel partner program.

So we hope indeed in the coming years to further increase our revenues that will be generated through our partner program.

By the end of this year or later this year, we will be starting to go back to trade shows. For instance, NAB in the U.S.

or IBC in the Netherlands. Those are shows which are now back on the agenda.

For more than a year, we've not been able to go to shows, of course, so that is slowly starting up again. And last but not least, we expect a bigger effort from colleagues to come back to the office, and that is planned here in Belgium and in most of our offices around the world as from September onwards.

So that's in short, the highlights for H1 2021. Ingrid?

Regarding the H1 financial highlight is the best result in terms of revenue and profits since the last 5 years. Indeed, end of June 21, we reached a revenue of EUR 61.8 million.

The 3 main reason as discussed with us are the accelerated growth in Live Audience Business and in Live Service Provider market pillar, the back order end of 2020 and the big event.

Profitability remained healthy, with a gross margin of 68.9%, a positive EBIT of EUR 15.4 million. The operating expenses are under control despite an increase of the team member cost due to the acquisition of Axon in May 2020, and we got a net profit of EUR 15.6 million.

Back to you.

Okay. Thank you, Ingrid.

So continuing on the successful summer events, so 2021 was definitely a special year. While normally, we do all those Big Events Rental business in the [indiscernible] you're seeing that this has been a delay to this year.

And effectively, the revenues that we were [ unable ] to generate last year has been generated in this year 2021.

So we have been quite happy with the results up to now. We have done most of the [ world's ] big events as we speak.

We have had a lot of teams, of course, working hard to deliver the different systems to those different customers. We, of course, have met various challenges.

Of course, due to COVID-19, with a limited number of staff on site, of course, so we are happy with the results that we've been able to [ address ].

For certain of our products, it was the first time that they were used in such a major environment, and we're thinking of, for instance, LSM-VIA. And there again, we are quite happy and proud of the results we've been able to achieve.

Also the feedback we got from users was very positive. So that shows that we've been able to successfully launch a new LSM remote.

Remember that we did launch it last year and that it was more than 20 years ago that we launched the first one. So this was a very important launch.

We also started first events with hybrid cloud-based workflows. So that was also an interesting and important evolution in our service offering.

And last but not the least in this case, we're quite happy with the feedback we got from our customers, which indeed congratulated us with the results and felt that we were at par to the expectations. So 2021, although an uneven year, it was -- I could see an Olympic result that we were able to achieve.

Going forward, Benoît, the floor is yours.

Thank you, Serge. So in fact, the success is -- we're not limited to the summer events.

And we also got some other kinds of contracts and [indiscernible] with different kinds of solutions along this H1. And typically, we have continued the deployment of the existing contracts that we earned on the previous years, and we also secured new multimillion modernization contracts based on the VIA platform and fully leveraging all the assets that we have in these solutions, especially the fact that it supports IP.

It's based on micro-services. It's [indiscernible] technology and now completely packaged under the flag of a new solution named MediaCeption.

And so typically, our LAB customers are adopting this solution and we get a significant traction for this kind of solution.

But our success are not limited to LAB. We also observed that the LSP, the Live Service Provider that were suffering a lot in 2020 due to the fact that they had a lot of OB vans on the parking lot due to the cancellation of the events.

Now catching up and they have been catching up to prepare the summer events because they were participating and supporting these major summer events.

But not something that we observed for just one shot of the summer events. We also secured some midterm upgrade plan so that these Live Service Providers will update their fleet of servers with the newest technologies that we will deliver them in the coming months and in coming years.

So that means that we will observe replacement and upgrade of the fleet of servers [indiscernible] set of Live Service Providers.

We also gained new customers because we now have a new solution targeted for entry-level live production and replay, that's LiveCeption Pure. I will detail that later.

And in fact, we perceive traction and successes for this as well, and that allows us to actually have contact with new kinds of customers, new segments of customers and to penetrate some market segments that we were not seeing before.

It is also to be noticed that we got significant success with Xeebra. Xeebra, our video-assisted referring system.

We got success in Australia, typically with a Gravity Media for Australian sports, and the system is there used as well for medical review and also in Eastern Europe, where we provide to a set of leagues, the Xeebra Essential in fact, and this Xeebra Essential implements all the protocols that have been defined by the FIFA so that now this [indiscernible] can also benefit of the VAR technology.

And finally, during H1, we also secured the fact that EVS technology would be used for the 2022 major events, in fact. And that's for us, of course, a very important milestone.

That means that EVS is still at the [indiscernible] technology and is gaining trust or, let's say, preserving the trust that we had in the past for the support of these major events. So that's about the success in terms of business during this semester.

But the achievement that we did during this semester is not just about business. It's also about the evolution of our company.

And so we must all realize here around this call that EVS is living an evolution journey. We go from a company in 2015, and we are heading to 2025 group, in fact.

We have been and we are still a product market leader, but we want to become a solution market leader. We were in a premium market exclusively, and of course, we want to preserve this premium market, but we will also want to go into different market tiers.

We were selling in CapEx only, and now we have opened the possibility for our customers to also buy with different business models, including recurring revenues, including OpEx. We were focused only on SDI replay-centric system with, let's say, SDI technology, and now we are broadening our solutions and not only our products, but our solutions to really have a broader mission with IP total cost of ownership optimized media solution.

And then we were focusing on EVS hardware and now, in fact, we are delivering more and more software, which is deployed on the COTS system, which is deployed on the cloud and of course, still on EVS hardware. We were present mostly for on-prem live production, and now we have solutions that allow our customers to really have live anywhere operation.

And last but not least, we were mainly in sports, and we are extending much beyond sports in news, entertainment and we are extending our reach in terms of markets, thanks to the new solution.

And so we have progressed on each of these steps because typically, we have integrated third party so that we can now present solutions and not only product. We have good traction with our LiveCeption Pure, our XT-GO for small OB vans, which enables us to meet new customers and address new market tiers.

We also strengthened our channel partner program, our new partner program, which allows us as well to reach different customers in different market tiers. We observe that we have longer SLA subscriptions, thanks to a change in the value proposition.

We also acquired last year Axon, which enables us to really broaden our offering much beyond replay with a full Media Infrastructure portfolio. We have pure software solutions that are now deployed in a [indiscernible] center and that are used by our customers with the success and we launched as well the XtraMotion for this AI-based replay, which is totally cloud-based.

So that means that we are more and more becoming software.

We have launched last year LSM-VIA, which has been used extensively during the major summer events, which is a major achievement for us. and which allows this remote operation.

And then within the projects of the broadcast center, we extend our scope and we go beyond sports, and we address the workflows in news or entertainment and the production typically of sometimes even of TV series. So these are, let's say, different kinds of evolutions and different directions of evolutions.

And in the next slides, we will see the progress that we did on some of these evolutions.

First, our solutions. In fact, for our solutions, we have categorized in fact, 3 different categories of solutions.

The LiveCeption is focused on live production, on replays and highlight solution and the objective is to elevate the fan experience. The second category of solution is MediaCeption.

It's mainly to address the LAB market, but not exclusively the LAB market and product asset management solution for fast and easy content turnaround. It's about asset management to manage all the media and use it as fast as possible in live conditions so that the audience can be pleased with all the content we can enjoy.

And last solution is Media Infrastructure, which is about routing and infrastructure solutions to control and process all the media workflow.

And these 3 categories of solutions, we have designed this, of course, around EVS product, but also leveraging different partners. And typically, thanks to these partners, we can have faster integration because we have the workflows that have been integrated with hundreds of technology partners.

We have also better integrated products, EVS products with partners for higher efficiency of operation. And then we have also certified, and that's new for EVS.

We have certified some workflows within this solution to deliver a broader scope to our customers. So with these solutions, in fact, we transformed the company from a product vendor to a solution vendor.

And now I would like to transfer the control of the next slide to Serge, who will speak about two of these very innovative solutions within these categories.

Thank you, Benoît. So I will be talking about the MediaInfra Strada and our XtraMotion.

So MediaInfra Strada is a new solution that we bring to the market. It's based on our Media Infrastructure solutions and where we are combining different technologies together with switches that enables our customers effectively to easily implement video routing solutions, some with -- especially when they have to go from SDI to IP.

There is a big challenge for our customers to do that in a most efficient way.

And with this Media Infrastructure Strada solution, I'm sorry, we are indeed giving a very good answer to that. So we -- we're convinced that this is a solution that will help our customers to reduce their total cost of ownership and will help them indeed to do that migration from SDI to IP in the most efficient and with the least amount of resistance.

So -- and the good thing is that we already have won an important first deal in North America, a USD 1 million more deal. That shows effectively that this is answering an important need that customers have around the world.

Another important product launch that we did is XtraMotion. This is an EVS solution and that is built on cloud technology, and that helps our customers to generate super slow motion video and that's by using any type of camera.

Where before you have to use very expensive cameras, with this new technology, customers can create a very appealing effect by further reducing the speed of the images, and that is what we do with XtraMotion.

So this is really elevating the fan experience with this new technology. And we have seen some important customers like FOX Sports in the U.S.

as an early adopter of this new technology, so we are sure that those both technologies in the future will be used more and more and will help to support our growth in both revenue and profitability.

Next to that, on the next slide, a short word also on our new channel partner program that we have launched. While we had already some distributing or distributors around the world, we have created our program and made it more clear of what benefits our partners can expect but also what they need to do to keep their certifications or to receive their certifications.

So we are really putting more efforts in further expanding our revenue growth through those partners all around the world.

We're also promoting the idea of pure and essential solutions. So as Benoît pointed out before, we also were trying to go in other tiers and only the Tier 1 environment.

And we believe that those -- this effort on the channel partner program will help us do so. And we already saw the first successes with our LiveCeption solution in that essential environment that is generating quite some nice results.

So this is also an important element in our strategy that we are pushing up forward.

Then next, as I said before, we will be joining trade shows again as they are taking place, and we've seen so many of them being delayed or canceled. But the first one to come is NAB in the U.S.

later this year. We also expect to be at IBC later this year.

That will take place in December. But we've seen that all those shows, of course, has been heavily impacted by COVID, and they have [indiscernible] their format and their format is a little bit smaller than the previous years for sure.

And we'll see how that evolves in the future.

But the good thing of COVID is that we learned the new ways to promote our technologies. On the right-hand side of this slide, you can see a new studio that we did set up and the way we indeed can really make a great presentation, some very nice demos to our customers.

And so we've learned a lot. So while we don't have to ship equipment to our customers around the world to do demos, we can now do a remote demo.

So this is something we have learned and it's -- we are convinced that it is there to stay for the future.

Then next, back to the office after this COVID period. We hope actively to get more people in our offices around the world.

That is, of course, depending on vaccination levels but in the different countries that we are very active in, we see an increasing level of vaccination. And we also see that the measures by the government are being relaxed.

We see it not yet in the case in Asia, but in Europe and in North America, that's for sure the case, and that is also where we have most of our offices. So that definitely will help us to get colleagues back in offices, but we know that it will be in a hybrid way of working, being in the office and some working from home, and we've learned to do that in a very good way over the last year.

Now it's time to present the financial update with the H1 financial highlights. H1 revenue, geographical split, revenue destination split, consolidated income statement, team member and balance sheet.

As already mentioned before, we end of June '21 with a revenue of EUR 61.8 million, a gross margin of 68.9%, positive EBIT of EUR 15.4 million and a net profit of EUR 15.6 million.

When we compare the revenue of the first year, we deduced that it's the best H1 since the last 5 years. Thanks to the back orders at the end of 2020, the Big Events Rental and Axon revenues.

In conclusion, we increased the guidance by EUR 5 million and expect to land between EUR 115 million and EUR 125 million.

we have more Live Audience Business project spread on several years and more recurrent revenue. We observed also a significant increase of the long-term order book.

Then end of June, we have a total of the order book of EUR 67.8 million split it in short term by EUR 36.7 million and on the long term, EUR 31.1 million. It's an increase of 48% compared of last year.

As started in 2020, we continue to split the revenues per market pillar, meaning by customer type. Live Audience Business, LAB, include the broadcasters, stadium, media center and sports organization.

While the Live Service Provider, LSP, include rental and facilities companies, production companies, freelance operator.

As the previous year, we note that the Live Audience Business is the main driver of the revenue. Indeed, we have an accelerated growth in Live Audience Business market pillar thanks to attractive MediaCeption solution based on VIA platform.

On the Live Service Provider, we have some catch-up from customer to support summer events. Then we can see that at end of June '21, Live Audience Business represents 50% of the revenue while Live Service Provider represents 43% of the revenue, with the 7% on the Big Events Rental.

Globally, all regions are above the revenue of previous year. Indeed, we got large Live Audience Business contracts in NALA support the growth in the region.

On Live Service Provider, we have an effect of catch-up, which support the growth in EMEA. Finally, we have on the Big Event Rental revenue linked to major summer event has been recognized on June 30.

Let's move on the income -- to the income statement. As already mentioned, we have an increase on the revenue of 56% year-over-year.

We have a gross margin of 68.9% due to lower gross margin of MediaInfra ex Axon product and an increase of remuneration costs in operational costs. The OpEx increased by 15.4% year-over-year mainly explained by the increase of the remuneration cost due to the integration of Axon in May 2020.

We achieved with an EBIT of EUR 15.4 million, and the earnings per share is EUR 1.16. About the team members -- about the team member, we closed the book end of June with 542 people.

It's slightly increased in comparison with the period before the acquisition of MI.

Now let's talk about the strong balance sheet. Firstly, the lands and the buildings decreased EUR 1.2 million due to the depreciation of the contract lease with the IFRS 16 and the depreciation on buildings and equipment.

On the other long-term amounts receivable, we have an increase of EUR 1.2 million due to the noncurrent finance lease receivables. Deferred tax assets, we have netting between the deferred tax liability and assets for an amount of EUR 1.2 million.

And the deferred tax assets are mainly composed by the deferred tax on EVS Belgium due to the Innovation box and deduction for investors.

The inventory includes EUR 2.3 million from Media Infrastructure and also EUR 2.2 million of the supply for the Big Event Rental. Of course, the trade receivable increased by EUR 8.4 million following the strong results of H1.

Nevertheless, the DSO decreased by 3 days. We have a strong cash position increasing with EUR 4.3 million, mainly explained by the increase of the operating income.

And as you can see, we have cash available of EUR 56.9 million.

Regarding the liability, the reserve has been impacted, of course, the dividend payment, that increased with the results of the period. As mentioned before, the [indiscernible] deferred tax liability has been [ decreased ] with deferred tax assets.

The trade payable increased due to the high level of activities and the other amount payable increased with EUR 5.3 million, mainly explained by the increase contracts in progress for the big events, Olympic Games and EURO.

And finally, we will talk about the working capital, which increased to reach EUR 54.2 million. It's an increase of 15.3% versus the first quarter of '21 and an increase of 9.5% versus last year.

It's certainly due to the increase of the trade receivables, and of course, it's the impact of the increase on the sales volume. Thank you.

Thank you, Ingrid. So let me go forward here with the outlook and the guidance for 2021.

So indeed, considering that the conditions that we initially defined are being met. And when we also look at the results for H1, we're happy to say that we are further increasing our revenue guidance, some with EUR 5 million, so that brings it now for the fiscal year 2021 to something between EUR 115 million and EUR 125 million, where before it was indeed between EUR 110 million and EUR 120 million.

On the OpEx side, we expect that for the full year it will slightly increase compared to last year, of course due to the [ integration ] of Axon in mid-year 2020. But at the same time, we also try to keep our costs under control.

The gross margin percentage, there we expect it to be relatively impacted by some price increases that we see both from a raw material and on components. So that is the expectation for the gross margin.

And last but not least, we expect that we will be able to pay a dividend of EUR 1 for the fiscal year 2021. And that, of course, subject to market conditions, but with the current understanding and belief, chances are very high that we'll be able to bind -- sorry, to pay those dividends.

Going forward in the presentation, focus, key activities. So looking at focus and key activities, we definitely will further focus on delivering those large multi-years modernization projects that we have won with major broadcasters around the world.

So that's on top of our list, of course. We will continue helping our customers to evolve in this new environment where remote production is even more important than before.

And that, of course, to the COVID situation. We will continue to expand our solution offering, both organically and through acquisitions and strategic partnerships.

And of course, we will also prepare for the 2022 major events that will effectively take place next year.

So that brings me to the following conclusion. So we're quite happy with the result of this H1.

And we're happy to say indeed that it's the best H1 both on the revenue side and profitability side for the 5 last years. So of course, we were able to successfully deliver those major summer events.

We've seen the growth in that LAB market pillar, which is continuing and further accelerating, which is a very good -- and for the future of our company. And last but not least, we also see that our LSP customers are catching up, and we see midterm commitments that help us believe or make us cautiously optimistic about also their evolution in the future.

We see a strong order book that is -- this one is continuously increasing. So that's a positive [indiscernible] for the future.

We see definitely that our PLAYForward strategy that we deployed or developed at the end of 2019 is starting to pay off, and we expect to further deliver upon that in the next months and years. The gross margin percentage is expected to be negatively impacted by the prices of raw material and of components that is increasing.

We also expect that potentially will be impacted by availability of certain components. You've read that also in other industries that the shortage of chips is an issue, so we are very cautious about that, of course.

We believe that our OpEx over the year will slightly increase compared to the prior year, and of course, due to the acquisition of Axon. But we believe that our remuneration cost might slightly increase as we will be hiring a little bit more people in the next months.

We talked about our guidance that has been increased for -- and getting us in a range of EUR 115 million to EUR 125 million. We talked about the dividend that we expect to be EUR 1 for this fiscal year 2021, of course subject to further market conditions.

We feel all in all that we are all ready and in the starting blocks for addressing this new normal, this new post-COVID normal situation that we are getting in.

So thank you for attending this call and for your attention. We'll be happy to take some questions at the Q&A.

Matthias Maenhaut, Kepler Cheuvreux. Congrats with the results.

Maybe 2 to start with. You rightly said so, our visibility has improved.

PLAYForward has been successfully integrated, with EVS evolving.

So in that sense, looking a bit forward, what can we logically anticipate from EVS in terms of financial framework? And so maybe in terms of organic sales growth rate, excluding big events and the gross margin evolution and the OpEx growth?

Or is that still difficult to call out? And why would that be so?

That's my first question.

And then the second question is rather on the M&A front. I think you were having the ambition to do an acquisition a year, of course, staying very disciplined.

If you now look at your present pipeline, do you think it's still a possibility for 2021? Or should we see rather to the statement of the dividend that is probably not going to be the case?

That would be my question.

Matthias, thank you for those questions. So let me try to answer your questions.

So first question about the ambitions for the future and what do we expect of the growth. Remember that our ambition is effectively to generate growth over the years to come.

We see ourselves as a value company. So we have an ambition to grow in a controlled way.

So expect that to be in the low percentage mode. That is the least that we would like to achieve.

So -- and that is especially for the revenue, and we hope that it will have a positive effect, of course, on the bottom line on our profitability. So that's our ambition that we have.

On the M&A side, it's clear that we took, with Axon, a very interesting case on [indiscernible]. We believe that the [indiscernible] center our PLAYForward strategy, and we are indeed finalizing the integration of the company.

For the future, definitely, our ambition stays at 1 to 2 players or companies per year. Will that happen this year?

Well, that could be. That all depends on the opportunities that we have and as I said before, you have to be 2 to tango.

So it's not always only us who decide upon that. It's also the other party.

So the ambition is there. Will there be another one this year?

That is difficult to say. Might be, might not be.

That's -- the future will tell.

Then your question about dividends, here you say is the dividend showing or indicating and we don't want to make some acquisitions? The answer is no.

And we think that as a company creating value for our shareholders, it does not exclude the other one. We have sufficient capability to pay dividend and to also go for acquisitions.

So there is definitely no -- nothing to -- there is no reason to think that if we are paying a dividend that we would not do an acquisition. So let me be very clear on that.

I hope this answers your question.

All right. Very clear.

Maybe if I may have one more. On the outlook, there's the rising prices of products you call out.

Could you just maybe elaborate a little bit on how long that you see this being an impact? Do you already have a view on normalization?

And why not passing this through to customers? Is there a competitive reason to not pass through the prices?

Or are there any other reasons?

Well, the visibility stays very unclear. So we all hope it comes back to normal, but we don't expect that at this point in time it will be back to normal.

We still see prices increases and delivery times increasing. So that is what we see at this moment in time.

So it's still, I would say, going into the negative direction -- in the wrong direction. And then on our prices, effectively in certain of our products, so we are reflecting certain of those price increases.

So we are gently getting this into our products. And definitely, we are very cautious for those price increases.

We have high margins. So we are not that -- well, the impact is limited, but we are trying indeed to increase certain prices.

Yes. So first question, maybe on the -- so on the XT-VIA momentum.

Could you tell us today what is the percentage of your installed base that has already moved to XT-VIA versus your total installed base?

And then the second question on the order intake momentum so that we've seen in H1. What do you expect in H2?

Should we expect a slowdown? When I look at the sales guidance for this year, so EUR 115 million to EUR 125 million, it certainly seems to me like that mechanically we should expect quite a slowdown in the order intake in H2, and I would like to understand why.

And then the third question, if I may. It's on the tax rate.

So we had -- you paid, let's say, fortunately very little tax in H1. And I would like to understand what we should model, basically what we should expect for the 2021 full year and then also going forward 2022.

Okay. Thank you, David.

Let me pass on the work here to Ingrid to first answer the tax question.

Yes. Regarding the tax of this year, at H1, we have an impact of recovery of previous year, a huge impact and has each year, of course, we have the incentive -- the impact of the incentives due to the deduction for investments and the Innovation box.

It means for this year, I can say that normally, we should reach at end of the year a tax of around 6%. And I repeat again due to the fact that we recover the money of the previous year.

And normally, next year, we should have a tax rate between of 12% and 15%. Is it clear, David, for you?

Yes. Yes.

So this year, 6%, if I understood correctly, and then the next year 12% and 15%.

Yes. Yes.

Okay, David. So let me also try to answer your other questions.

So on the XT-VIA momentum and then on our installed base. So you know indeed that we don't advertise our numbers in detail, but I can give you an indication.

Definitely on the installed base, we are far below the health of our installed base and that has been [indiscernible] to [ exit ]. So that still gives us quite some possibility in the future to upgrade that installed base.

We are far from close to the end of that upgrade cycle of our installed base. And we still see customers even with XT2 or XT3 equipment operating at this moment in time.

So it's also showing how reliable and good targets in certain environments. But as a conclusion on that installed base, we feel that we still have quite some potential to upgrade to XT-VIA.

And then in talking about order intake, do we expect slowdown? No, we don't expect a slowdown, but let's not forget that there was a difference between order intake and revenue recognition.

So it's not because we have order intake that it automatically translates into revenue in the same year. So that is playing a role, of course.

And we are cautious, of course, also with what we said before with those component shortages that might have an impact on.

So in that respect, we feel quite confident with the EUR 115 million to EUR 125 million revenue. And still seeing the order intake not slowing down, but looking at similar levels as we've seen with H1.

So all in all, we are cautiously optimistic. So we definitely hope that we will be able to achieve good results and be on the high side of that revenue guidance.

Okay. So it's basically a question of being able to get the component and ship the contract, but no slowdown in order intake.

That's the right understanding.

Well, that is what we see at this moment in time. Of course, things can rapidly change for COVID reasons or maybe others.

So we are always cautious in this. But all in all, we are -- we don't -- if it continues like now and when we see the order intake that we've done at the end, the order book that we have at the end of H1, we have no reasons to believe at this moment in time that it would be severely affected -- negatively affected in the weeks and months.

Could you just say it again, Serge? I was just -- I couldn't hear what you said.

Just the last sentence, please.

Okay. Well, as I said, we have no reasons to think that our -- the pace of our order intake would heavily negatively impacted in the next weeks and months.

Okay. Very clear.

And maybe just a very quick follow-up on the OpEx guidance. So there is OpEx guidance for a slight increase.

Could you just define what is a slight increase? And then maybe if we could get a sense of how this OpEx guidance, we should interpret this guidance in light of basically -- this OpEx guidance in light of your sales guidance range.

So meaning that if you get, let's say, for instance, at the very high end of your sales guidance, should we then logically expect the OpEx to more than slightly increase given that you would have to pay commission, you would have to pay, I don't know, bonuses and so on.

Yes. Well, there are different reasons for an OpEx increase.

So of course, the acquisition of Axon, it's an obvious one as we acquired them on May 1 of last year. So there will be a full year in our figures this year.

We expect the remuneration costs to increase as we expect to hire some more colleagues to fulfill all the projects that we have won. So there will be an effect of adding colleagues to our -- the whole team.

As you rightly point out, there will be an impact also on bonuses, thanks to the good results. So that will also play an effect in that OpEx.

And then -- but that's on the gross margin. And the increased price of certain raw material, some components will have a negative impact on the gross margin.

But for the OpEx impact, we saw it's mainly remuneration-related, bonus-related and Axon-related.

I have 2 results. First is, yes, again, on the -- on David's question on the prudent -- in our view, prudent outlook although it's higher, of course.

But you stated that you do not expect a slowdown in order intake, but there is difference between orders and booked revenues. Is there also any correlation between the fact that some of the fairs are later in the year?

Normally, they are in -- in Amsterdam for instance, they are in September, so revenues there are still booked this year. Is there any impact coming from that?

And second is you indicated from -- EVS from 2015 to 2025, you're evolving from a product market leader to a solution market leader with -- yes, from CapEx-only to selling OpEx and CapEx. In 2025, what would be your ideal split in OpEx and CapEx products?

Okay, Guy, thank you for your question. Maybe I'll pass on the word to Benoît to answer that question about the impact of fairs.

Yes. So in fact, it is true that the rhythm of the business has changed completely.

In fact, there's a change for the events, it's the change for actually also the marketing of companies. And you're right that we will meet our customers to face the third [indiscernible] previous years.

So that means as well that some of the decisions could be delayed based on the appearance of these fairs. That's speculative at this stage.

We don't know exactly how this will happen.

We don't even know if some of these fairs will still happen because in some countries, it's very challenging to fly, to just travel depends on regions of the world. So that means that, yes, we plan to participate to this fair where we can, where it's relevant and when we have the opportunity to do it with an impact, in fact.

So -- and yes, this creates a certain level of uncertainties in terms of the impact of these fairs on our orders.

I think we can add to that, that the reputation that we have in the market, the brand reputation helps us to do business without fairs at this moment in time. So customers rely on EVS for the quality of the solution and service we provide.

So all in all, we don't see too much negative impact of not having those fairs at this moment in time. We see that in the figures of.

So we know the future phase will be different from what we've known before, and we'll definitely act accordingly, okay?

And then your question, Guy, on that evolution to a recurring revenue, so the OpEx and the CapEx question, we did not put any figures on that at this moment in time. We know that this is a trend that we want to help realize, but it's very unclear in our industry if customers are really willing to go that way.

And we see certain customers in the broadcast industry, which are resisting heavily against this OpEx-ization of the costs.

So there, we are -- we will be following our customers. So we will not, at this moment in time trying to force them into a one or other situation.

So therefore, we did not put any specific ambitions on what revenue, what will be the percentage of recurring revenue or CapEx at that point in time.

And we [ do ] the plan to do price sacrifice to move our customers from CapEx to OpEx as we have seen on the market before.

I hope that answers your questions, Guy.

Okay. The last remark was reassuring.

This is Michael from Degroof Petercam. I have a follow-up question on the question raised by Guy on the OpEx model.

what would generally be a lease period for your equipment? I suppose that I would want to lease it instead of buying it.

That is a good question. Thank you for the question, Michael.

Lease periods -- and then moving to -- Ingrid, [indiscernible] help. So we don't push a lease model and that's a very...

It's common to have a lease period around [ 6 ] years, but what we can observe that depending of the last deal we sell that the period could become more earlier -- longer. But generally, we talk about a period of 3 years.

Is a very rare occasion. And this is in a very rare occasion that we do this, and this is on the request of customers.

When we talk about OpEx, we talk not about years. It's for a permanent basis.

And once we go into an OpEx, if we think of XtraMotion, for instance, that is a model where the customer is paying as he is consuming the service. So that will continue to go on as long as he consumes a service, he will pay year after year.

So that's definitely not a leasing formula. That's an OpEx formula where he pays for the consumption of the service.

Yes. Subscription.

We have different kinds of models, but one of these models is also a subscription base. So our customers subscribe to a service or to a software for a certain duration and the [indiscernible] subscription.

Okay. That's clear.

Well, you also mentioned that there is quite some opposition here and there against the OpEx model. Generally speaking, I think investors love companies having an OpEx model as a service.

So it's rightfully that you're looking for it. But interestingly, though, is mechanically supposed that customers would adopt it strongly, then there would be a short time frame in which your sales would be under pressure because the initial OpEx per annum is much lower than a CapEx solution.

Yes. We fully understand those mechanics.

We also know that we could do that. We have the financial strength to do that.

But at this moment in time, definitely, it's not our strategy to push hard and to transform to that format. And we understand that the financial market loves that model, but we have also to make sure that our customers are willing to order.

So we understand where your question is coming from. And this is indeed financial markets very, very interesting, but we are in between both there, customers who doesn't -- who don't want it and the financial market who would like to see it.

Indeed. Good.

And I have a second question. During the introduction, you mentioned that traditionally, the company was focusing on the high end of the market.

And you want to broaden the scope, acquisitions like Axon, but more on the menu partnerships, organic development of new solutions.

Could you give us a rough flavor of that high end of the market? What kind of size is that?

And what would be the future scope or the size of the market that you would be targeting?

Yes. That's also a good question.

Tier 1, the high end of the market, and I see that Benoît wants to say a few words about that, but I can start. So don't forget, we are in our Tier 1 environment when we talk about OB vans, and we are still a very strong market position in that.

There is no doubt about that. But there's also quality 1 market in the Live Audience Business, the broadcast centers.

We still think that there we have a very limited market share that will be probably around 10%, something like that. So we have quite some growth even in Tier 1 LAB environment to grow some of our MediaCeption sales in the future.

So we see growth potential over there.

In the other tiers, so the lower tiers, there we expect to be able to take some growth through channels. Difficult to say how big that market is at this stage, but we expect that to grow that market, for that market is indeed growing.

The demand in news, for instance, where you have a lot of live production, and it's not reducing on the top tier with all the news is that has to be produced for different formats for different viewers. It is there to stay, and we believe will further increase.

So the trend is positive in that environment and investments are taking place. We see more and more broadcasters that try to better differentiate themselves from the big players who offer a lot of series.

They're trying to differentiate themselves by having local content on news. So they are further investing in that environment.

So we believe that in that environment, both in the Tier 1, as in the lower tiers, so there are opportunities to get in them in the next years.

Globally, the [indiscernible] only increasing. And so -- and not necessarily the Tier 1 level of production, but in the lower tiers of production.

And so by going into these lower tiers, we will improve our global market share in the content production. And that's our objective.

And can you penetrate those lower segments with your existing products? Or do we have to make them simpler, less sophisticated and thus cheaper?

For some of these products, we are doing it with less features. And typically, when you compare, and I will not speak about content production, but I could as well compare an XT-GO with an XT-VIA in content production.

Then in fact, an XT-GO has less features globally than an XT-VIA, and typically an XT-VIA, you can associate up to 29 servers together to make a large setup and then serve the Super Bowl. With an XT-GO, you can only associate 2 servers together.

But it's 2 servers -- it's perfect for a small production of a baseball match or a volleyball match, a small regional event.

So that means that it's limiting the offering another new propositions, sometimes some other new features to address and to ease effectively the operation in these lower tiers because the conditions to produce are also different. And typically, it's the same in the VAR environment where we created this Xeebra Essential, fulfilled the requirement of the FIFA.

The FIFA created the VAR light protocol. And in fact, which is a lighter protocol than the VAR that we know in Belgium, Spain, France, U.K.

and so on. And then we created this special version of Xeebra to address this other protocols.

So it's not that the product is necessarily less powerful with the Xeebra Essential, it's just dedicated to another audience with some other properties that is it particularly fitting well in this marketplace. So it's not necessary less feature.

It's another set of feature bringing the right value position for this other segments facing different reality.

Okay. That's quite helpful.

Then I have a couple of very small financial questions. At the full year results, it was mentioned that the backlog for the sports event this year was EUR 13 million.

That was EUR 4.5 million in the first half, so that leaves EUR 8.5 million moving for the second half. Is that correct?

Yes. Yes, it's correct.

Good. Then next year, we also have 2 sports events, but then it's the other way around.

Olympics in the first half, World Cup in the second half. Does it mean that the sales split of this year will be exactly the opposite next year?

The split of the events, in fact, on the next year are not necessarily the same.

We will get less -- a little bit less revenue on the Big Events Rental next year compared with this year, of course. And normally, it should be recognize on the revenue during the first semester.

Okay. I guess, Winter Olympics are maybe small in the summer.

But anyway, we've got an idea now. And then the final question.

It's actually also a question on that gross margin. You flagged that it will be slightly -- it will be a bit lower in the second half because of input prices compared to the first half.

Well, obviously, because you flag it, it means it's not going to be 10 basis points lower or 20 basis points. It's 1% lower.

Is that a good indication? Or should I think very differently?

It will definitely not be 10%. We are thinking in percentage points.

That might be the impact. Yes.

Percentage points. So okay, that already gives me a clear indication.

And as you raise prices, which are gradually implemented, then that negative pressure should fade, say, early next year or something.

Well, we don't think that will fade away. We think it's also a product mix that is evolving.

We have Media Infrastructure, which, in general, has some lower margins than our legacy EVS products. We also see that by going more into solutions selling, we integrate third-party solutions, so that is also having a negative impact on our gross margin percentage.

But the objective, of course, is to make sure that the overall gross margin and the bottom line is increasing, but the gross margin percentage, that might, over the years, erode.

Yes. My first question is, who do you see as your most important competitors?

And do you see any new entrants to your market? And then maybe more generally, if you can give a comment on the current competitive environment.

Thank you for the question. So competition, who are our main competitors.

So when we think of people like Sony, like Grass Valley and Evertz, those are typically the companies that we think are our biggest competitors that we encounter in the industry. I would say those are the usual suspects.

And on the new entrants side, under, of course, on a regular basis, new entrants with new solutions in the broadcast industry. We follow them.

We don't feel threatened at this moment in them, but definitely, we follow up with them. And potentially, we see in certain of those players, new entrants also position opportunities.

So we're definitely have a good track of those new players. But we don't feel at this stage that there is 1 new entrant that will be a major threat on the short term.

That's definitely not the case.

And then a second question. So in the first half, you managed to get almost a 25% EBIT margin.

Is this sustainable? And where do you want to go from here on a middle, long term?

Do you have some target range in mind for the next, let's say, 3 to 5 years?

Well, our ambition is to grow the number, not in percentage, but in absolute number. So it might be the case that our percentage will decrease, but what we want to achieve at the end is that the absolute number of further increases.

So that is what we focus the most on to increase the absolute number. We hope that a relative number will also see at the level of this, but as I said, as we go more into solutions and include third-party solutions that the gross margin percentage might decrease and also that the EBIT percentage might decrease, but we still hope that it helps us to increase the absolute number.

Okay. And then my final question to come back on the CapEx/OpEx.

Could you share with us which percentage of sales at the moment is now coming purely from hardware? And which percentage actually already comes from a software or solution?

For the -- yes, at this moment in time, we don't share that level of detail. So it's still low.

So that recurring revenue number is still a low number, but we don't give detailed reporting on that at this point in time.

And on top of that, between hardware and software, even when we sell a solution based on EVS hardware, it's still sometimes software that we sell on top. So that means it's not because it's EVS hardware that we can consider that it's a full hardware sale.

Sometimes there are some -- even some [indiscernible] models are sold on top of EVS hardware. So that's not something that you can correlate.

Okay. So if no further questions, so we can conclude the call here today.

So thank you for participating. You've seen that we're quite happy with the results.

We expect effectively that we're preparing for a strong year in 2021. And of course, you see that in our increased revenue guidance.

So after a difficult year 2020 due to COVID, we are happy to see this recovery and that we are preparing for a strong 2021. So we hope indeed that we will be able to deliver upon the promises or the expectations for 2021 that we are indeed cautiously optimistic for 2021.

And we hope indeed that this is the first year of a turnaround for the company where we are starting to generating growth again because that's the objective that we have. It's to create long-term growth for our company, for our shareholders, for our employees who have done a fantastic job during this first half year.

So we are indeed quite happy with the results, and we look forward to indeed to continue delivering those results that you and the market is expecting us to deliver. So thank you for attending and look forward to meet you somewhere live in the next weeks or months or in the next call.

Thank you for your presence and attendance. Any questions?

Thank you.

Thank you.