Good afternoon, everyone, and welcome to AUSTRIACARD HOLDINGS 9 months 2025 financial results conference call and live webcast. I'm joined today by Manolis Kontos, our Group CEO, and Markus Kirchmayr, Group CFO.

Before we start, I'd like to remind everyone attending today's event that during the course of the call, we may refer to forward-looking statements and certain non-IFRS financial measures. The relevant definitions, reconciliations, and disclaimers can be found in the results press release and the results presentation, which have been posted on our corporate website.

With that, I'll now hand over to Manolis Kontos, Group CEO, who will take you through the highlights of the Group's financial results. Manolis, the floor is yours.

Thank you, Dimitris, and welcome from my side, and thank you for having us, giving us the opportunity to share with you an update on the performance of the Group as we have published earlier today. We have put together a deck which will help us to guide us through the financial, and we are more than happy at the end of this presentation to answer any questions.

The aim of this meeting today is for you to have a better understanding of where do we stand up to now and what are the potential that we have in front of us. With that, I will go directly in the results highlights.

I want to say by I want to start by saying that we Q3 marked a return to the growth momentum of AUSTRIACARD. We have a very strong performance, as you can see in the financials, from our two main categories, Document Lifecycle and Digital Technologies, which have managed to alleviate revenue headwinds that we have faced from cyclical and macroeconomic factors which burdened the Payment Solutions segment in H1.

I would say on that, this is, I would say, behind us, and that shows also from the from the Q3 performance that we are returning back to the growth trajectory that we have recorded over the course of the past few years. Getting now in the details of the numbers, we see that as far as Q3 gross profit performance, it was one of the strongest performance we have shown.

Compared to the relevant quarter of 2024, we see also from an EBITDA point of view a 16% growth. This is all driven from the gross profit margin improvement.

As I said, the two categories, the Document Lifecycle Management and the Digital Technologies, are the one that are supporting this growth. If we just move also move from the P&L and look also at the balance sheet main financials, we will see that we had a very strong operating cash flow, getting at €23 million, growing 23% versus the same comparable period of 2024.

This is in the back of what we have said, working on improving our inventory management and cash collections, and also normalizing our working capital build-up. This is something that we have communicated from the beginning of the year that this is one of our priorities, and I'm happy to say that this is now being reflected in our results.

This shows also the free cash flow, where we reach €11.7 million versus €2.7 million, which was at the same period of of last year. The leverage of the Group is still at a very healthy level at 1.9, and the Group's debt is below 100 at 91 and even improves versus the year-end position that we had in 2024.

We believe that the strategy that we have set is paying off. We see that also the focus that we have in the digital digital identity and payment solutions and the digital transformation solution is the right one.

That's why you see that this is already being let's say recorded in the Q3 and will also help fuel the growth in the coming quarters and the coming years. If we now look at the main financials of the P&L, starting from the revenue line, the both Document Lifecycle Management and Digital Technologies recorded a 10% growth on a comparable basis versus the same 9 months of last year.

The challenges that we have faced, which is something we have communicated earlier in the year, has to do with the Turkish market, the normalization of the Turkish market payment cards, which already has impacted us €25 million. I would like to point out here that this also is behind us, we don't have anymore any impact, negative impact expected from the Turkish market.

Already in the in this quarter we show a good performance compared to the same quarter of last year. The second item, which we have again communicated, had to do with a large-scale launch of metal card promotion that one of the fintech clients that we have had done last year.

Obviously, when you have a launch of a of a large project, there is a big order that is placed, and then when you compare to the previous year, you cannot compare on a like-to-like basis on a launch order when you then have replenishment orders, which are much less in volume. If we take out this event of the Turkish market and the metal cards, the Group would have been showing a 3% growth even on the 9-month basis.

If we look at the EBITDA margin, we also see that the we reached 13.7% and the absolute number is €36.1 million. This is coming again from a very strong performance of Q3.

The Q3 performance on an EBITDA margin level was one of the highest EBITDA margins we have achieved around 17%, and this is in the back of having quite favorable revenue mix coming from services and solutions. That's why this has been our strategy, how we can increase the contribution of revenues coming from services and solution and keeping, of course, the product sales, which continue to be a big part of our business, but complementing it with service and solutions.

When we look at net profit, we move from a very low level of €2.5 million, which was the first half of the year, to €10 million already, and this is because of the fact that from from the EBITDA, let's from the EBITDA improvement, this is the reason that you see the improvement in the net profit, and also we have managed to have lower financial expenses, which helped let's say the EBITDA difference to be flowing mostly on the net profit level. Operating cash flow, as I said, on the working capital improvement and also a very disciplined focus in improving the inventory management and the cash collections.

Looking at the leverage, we see that I have a chart here that shows how this has been progressing over the course of the 9 months of of 2024 and the full year of 2024. We see that we our debt has been reduced from 104 at the same period of last year to €91 million, and the net debt to EBITDA ratio closed at 1.9.

On the working capital level, we see that we are at a similar level like last year. As we have mentioned, we expect this year is to be the last year that we've been we'll be talking about working capital, let's say, because we have managed to now rationalize our inventory intake, especially for the from the semiconductors, which is the main component of our inventory value, which is used in the in the payment and identity cards that we produce.

We have now we are in the pleasant position to say that this, let's say, contracts that we had in place, we have managed to get out of commitments that we have. That way, we are confident that as we enter in next year, the topic of the increased inventory levels will be behind us.

Also, on the free cash flow level, we see that we have reached €11.7 million, which is coming from the improved, practically, operating cash flow generation. Our CapEx level is within the target range that we have communicated on the low end of it also, between 4% and 5% of revenue.

This is what we had given. The absolute amount that we have is €11.4 million.

All this CapEx that we are doing is mainly, I would say, going forward in capabilities that we want to add, in development that we want to do, because as far as our main capacity concerning the production of the of the payment cards and identity cards, we are more than okay, we don't need to do any large-scale investments to be able to accommodate the demand that we have we are anticipating. Now we will go to look at the situation from a geographical point of view.

We will start with the biggest cluster, which is the Central Eastern Europe cluster. The reason that we have this decline of 14% is because of the fact that the Central Europe cluster is the one that has the largest manufacturing site of the Group, which is supplying most of the markets.

The fact that the Turkish market had seen that adjustment is impacting the intra-segment sales. If we take this is around €21 million.

This €21 million is recorded here in this in the Central Eastern Europe cluster and is also recorded in the Turkish and Middle East in-market sales cluster, which is the far right. This is the main reason that we have this decline versus last year.

In the middle part, which is Western Europe and US, there is a decline because of the metal cards related to this fintech launch that that we had in 2024. If we take out this impact, I would say that both, and you will see later on, the Western Europe and the Middle East and Africa clusters are showing a growth, and this is verifying our strategy why we are focusing on these two clusters, because these are the one that have potential for us to grow, because especially for the Middle East and Africa, we are under-indexed, under-represented, and it poses a lot of opportunities for us to grow our footprint and also provide our our services.

You will hear more and more us talking about this part of the world, and we will be investing in this part of the world in order to be able to get much more meaningful contribution from this cluster. As far as the Western Europe and US cluster, again, we have very good news from the US market.

US market is an entry that we have done in the recent years, this is the the year that we are able to see a double-digit growth and the US market starting to contribute nicely in the portfolio of this cluster, but also in the portfolio of the Group. Also this is the cluster that has all the fintech clients.

Most of the fintech clients are especially in the UK market, the ones that we are serving, where, as you might recall, we have quite a large market share in the fintech space. The fintech and based on the research also that we are tracking is expected to continue to grow double-digit.

The fact that we have a big market share in this segment is also going to be supporting the growth as we expect in this cluster. Central Eastern Europe on the other side, it might not be showing significant growth because of the fact that we are quite a strong we have quite a strong market share in this cluster in most of the markets that we operate.

On the other side is the cluster that we are developing and launching a lot of digital services and solutions. That's why you will see that although we have this decline in the top line, on the EBITDA level, it doesn't show to have such a big impact, and this is because of the fact that we have quite a good margin improvement from the contribution of of digital solutions and services there.

If we now look exactly to this point on the contribution of each of the three main categories that we report, the identity and payment continues to be the the biggest let's say solution cluster that we have at 51%, and then Document Lifecycle and Digital Technologies is now increasing. Digital Technologies are increasing, let's say, their contribution, they have reached 9%.

This is the one that has quite a strong potential to grow, and this is the one that we continue investing. You will see more and more the contribution of the digital solutions in the total mix of the Group.

As far as the geographical segments, Central Eastern Europe, as I mentioned, is the biggest cluster of the Group. It's 53%, but all of the clusters have shown a growth in the last, let's say, in the 9 months.

If we if we look at a quarter-by-quarter comparison, we will see that we have added value in all the in all the clusters, all the clusters in Q3 have shown a positive growth. H1 was the worst, let's say, performance that we have seen in this year, and going forward Q3 onwards, we will be seeing a positive growth in all clusters and across all solutions, which lead us exactly to this point.

On a 9-month level, we on the left side, you see 303 being the turnover that we recorded in last year 2024 in the same period. We are now at 262.

We are coming at 14% decline. I would like to remind that during the first half of the year, this percentage was closer to 17%, we are now correcting this gap, let's say, that we have, and we are working in the direction to reduce further this decline on a full-year basis.

This is in the back of initiatives starting from Central Europe on the Digital Technologies, where we already see an an 8% growth versus the 9 months of last year. This is coming also a strong contributor is the the project that we have secured in Greece, which has shown a performance of 60% versus the same period of last year.

In Western Europe and US, the the fact that we see good performance in the fintechs is recognized in the in the delivery also service. The the cards that we personalize, we also do the last mile of delivering these cards.

The fact that you see an increase here means that there is more volume of cards that are being personalized and distributed. The point on US that I made, we see 17% growth in the US market versus the same period of last year, which is a combination of business that has to do with the segment of metal cards and regular PVC cards.

The fact that we are now able to claim that in US, we also recently secured quite a significant contract which will start contributing from from next year, which has to do with enabling us to increase significantly the West Coast of US, because now we have one in the East Coast. With this contract that we have secured, we will be able to finance the investment in a second personalization bureau, because this will be an enabler for us to be qualified for even more customers to be served, because of the size of the of the US market.

In order to be able to meet the service levels that are expected, you need to be able to serve both the West and East Coast at a certain timeframe. By saying that, we expect that US will continue to be a good contributor in the growth in the coming year.

Last but not least, on the Middle East and African and Turkish market, we are now able to say that on the Document Lifecycle Management, we are able to get recurring revenues. This means that in the past, you might recall, we were mostly into election projects.

Now we have expanded our our portfolio and offering. We have made a very good let's say reference and reputation in the market.

Now we are one of the players that are in position to qualify for holistic security documents projects that have to do with both managing information and data in a secure environment, printing on security documents level like this examination papers, and dealing with of the of the results of these examination papers. We are focusing to doing more projects in this space, continuing having election projects that we serve.

Even now in the last quarter of this year, we will be having a part of an election project that has to do with one of the African markets. The Middle East and Africa region will be a combination of identity holistic solutions, this is what we will be focusing on, and security holistic security projects.

This is the the focus as far as that part of the world is concerned. The good sign is that on the Turkish market, which is the one that has impacted us the most during the course of this year, there is early signs of stabilization.

We are comparing quarter-on-quarter what is the volume of cards that we personalize and distribute, and we see an increase of 70% versus the same the the second quarter of 2025, which gives us confidence that the issue that we faced in the first half is behind us, since we are seeing that there is a volume uplift in the number of cards that are being let's say Which means that there's more customers that our clients are, let's say, onboarding and are issuing cards. The point I want to make also on the Turkish market is that although we had faced this situation that I mentioned in the first half and and we don't have to anymore come back to it, it is to do with the fact that we have lost no customer.

We continue being one of the biggest player in the in that market. We serve the majority of the major banks in Turkey, all we have faced in the first half was a normalization of the inventory levels on hand that the customers had.

With that being said, we move to the EBITDA performance on a Group level. The Group recorded €36.1 million as actual in the 9 months compared to 43.5.

As I said, we are narrowing the gap that we have in the first half in Q3, having a strong Q3. This is in the back of cost-saving initiatives that we have done and also managing our selling and administrative cost.

That's why you see a a reduction in CEE. The fact that we had this decline because of the inter-segment sales to Turkey, we have managed on a gross profit level to improve our gross profit level, and that way, we reduced the impact of the top line when it comes to the EBITDA line.

In Western Europe, it is purely because of this metal cards business that we had last year, because if you look at the rest of the business, as I said earlier, there is a growth and there would continue to be a growth in this part of of the world that we are serving. For MEA, it's purely because of the Turkish market.

If you exclude the Turkish market, in MEA, we have very strong pipeline of initiatives that we are implementing. We are starting to get traction on holistic citizen identity solutions, which is the strategy that we have communicated that we want to be focusing on.

Already we have a few projects that we are implementing and will be delivered by the end of this year, and there is a strong pipeline of initiatives that we are qualifying in order to be able to continue having a good progress on the on the citizen identity solutions in the Africa region. Going now on the on the solutions contribution, we see that it's crystal clear here that all the issue that we have faced in this year is coming from the two the metal cards from the Western Europe and the Turkish market.

That's why you see this €53 million, it's all related to this. The other two, let's say, segments that we have, the Digital Technologies and the Document Lifecycle, are both showing an increase of 10% and 11%, respectively.

On a on a quarter-by-quarter level, it is worth now seeing exactly what I was saying in the beginning of our call, that if we compare the quarters of this year, we see that Q1 was at €82.6 million, Q2 is was €81.1 million, this was the lowest quarter of that we have seen, and Q3, we moved significantly at €99 million turnover, having a growth of 22% versus the previous quarter. That's why we are able to see on a month 9-month level a good improvement and closing, let's say, the the gap that we had shown in the first half of the year.

The same goes on the EBITDA level. We see that Q2 was the lowest quarter that we had in this year.

Q3 is coming back strongly at €17 million. It's worth mentioning here that Q4 of last year on EBITDA level was one of the lowest of 2024, which means that our expectation, and we're working in this direction, in order to be able to overcome the value that we had of last year in Q4, and already it's shown from Q3 of this year, and we are confident that Q4 of this year will be stronger than the Q4 that we had last year.

Net working capital, 77.7 is the 9-month position that we have. It's exactly the same position that we had in the 9 months of 2024.

As I said, this situation will be completely normalized as we enter in 2026. We are now still at this 22% percent of working capital on sales, but our projections and based on the orders we have in place for the replenishment of especially on the chips, on the semiconductors, we are confident that we will be able to to have a reduction of this percentage on sales as we enter in the next year.

Debt kept at a very healthy level. We see that the debt in '23 was 95, in '24 it was 95, and in the 9 months of '25, we are at 91.

Very good management of our of our balance sheet and our and our cash, which converts to a lower debt position, which also converts to lower financial costs that we have for the Group. I would like to reiterate here what are the key drivers for Q4 2025 and beyond.

Our focus in the in the in building and implementing our strategy is the right one. It is worth mentioning that besides the challenges that we have faced in 2025 in the first half of the year, we continued investing behind implementing our strategy, because we are a long-term player.

We're not a company that is looking on a on a quarter-to-quarter basis, but we look into investing behind solutions and people in order in R&D in order to be able to fuel the growth in the coming periods and the coming years. We are a long-term player, and as such, we continue implementing this strategy that we have, despite the headwinds that we faced.

This is paying off. That's why we have a solid backlog of customer onboardings both in US and and and the Western region in Q4, which will start showing results also as we enter in the first half of next year.

Our focus on building new technologies, like our GAb generative AI appliance with this partnership with a player like Dell, where Dell it's a very strong vote of confidence in our ability and our know-how for a partner like Dell to be comfortable to pre-install on Dell servers our generative AI software and be able to launch together such a solution shows that we really have something good here, and that's why partners like Dell are are willing to to work with us on having generative AI on a controlled environment. This is the other thing I want to point out.

We are not We are a We are an organization that is very strong in data management, and this is another example of how we are able to provide to our customers generative AI on a controlled environment and not in the open cloud. That way, they can have the confidence that their information is kept at the level, and that way, they can have the ability to get the benefits of generative AI without having to be having their data there in the open.

Our focus in holistic let's say identity solutions and Document Lifecycle combined with our enabling technologies is making us confident that we can continue on the growth trajectory that this Group has shown in the recent years. The progress that we have shown in Q3 reinforces exactly this confidence.

More importantly, all the investments that we are doing in the course of '25, we didn't stop the investments. As I said, we continue doing the investments in people and and R&D.

If you look at the financials, you will see that the R&D line is the line that has shown a growth even in the 9 months of this year, despite the challenges that we faced, because we strongly believe that you the organization have to continue investing in order to be able to have a long-term journey and progress, as we have shown over the course of the 130 years that this organization has been around. All this noise, I'm sorry to say, that we have heard during the course of this year, and all this communication that has been out there about what is going on with AUSTRIACARD, what I want to say on this is that we have to be assessed on a more broader range and not on a short-term view.

This is why we keep iterating this, that this is not a company that is being assessed on a quarter-by-quarter basis. This is a company that has to be assessed over time.

This is what I have from my side, and as I said in the beginning, happy to answer any questions or provide any clarifications that you would like.

thank you for taking my questions. I got two questions from my side.

The first question is regarding guidance. The Investor Day, the 6% to 7% CAGR was communicated based on the full-year revenue, full year '24, which were available at that time, which gets you to roughly €470 million to €480 million of revenues by 2027.

If we compare to the current run rate, which is around €360 million, this estimate for full year 2025, it implies something closer to a 15% CAGR for 2026 and 2027. Could you please confirm if this interpretation is correct and whether these targets should still be viewed on the base or adapted for the new reality?

Thank you for your question. Very valid question to raise.

Yes, we have given a three-year CAGR, as you said, 6% to 7%. The fact is that during the course of 2025, we faced the two challenges that I have mentioned.

This reduces the base on which if we apply this percentage, you're right, we have to increase the guidance. I would say that at this stage, we are not finalized yet with our calculation for our revised mid-term plan, which will include '26 onwards.

I would say that we are working in this direction, but I cannot confirm at this stage that it will be exactly in line. I can tell you that we will be working in the direction of a strong growth being a double-digit.

This is something that we have to provide as guidance once we have finalized our exercise internally. The guidance on a trajectory is the same, but I will be able to confirm on the level of double-digit after the completion of our workings.

The second question is regarding the East Africa examinations project. Since exams are not like elections, which only happen occasionally, should we think of it as a one-off item, or there is a potential for multi-year monetization, given the recurring nature that the national exams have?

Sorry, I thought you said about the exams or the elections. Can you please repeat?

My question was regarding exams. Should we think of them as an one-off, or something recurring giving their nature?

Yes, the exams are recurring, because they are happening every year. Elections are the one that have this period that are periodic, and that's why you see us focusing We started being present and visible in that part of the world starting from election projects, so that way, we can start building references and and being visible on our capabilities.

Now we have moved in the direction of pursuing more recurring revenue projects like the exams that happen every every year, and we're also looking to expand further our portfolio beyond just the elections and exams to look at other type of security documents that combine technology with security, which are more on a recurring revenue basis.

Thank you.

Thank you.

Many thanks for the presentation. Two questions from my end as well.

Regarding Q4, should we expect a similar EBITDA margin expansion as in Q3? Also, could you clarify the impact on Digital Technologies revenues from the phase-out of the RRF in 2026?

Thank you.

On the first part that has to do with the EBITDA margin, I would say that the EBITDA margin of Q3 was quite high because of the mix of the sales that we had in Q3. We don't expect a similar level, but we expect that our EBITDA margin will be improving on a full-year level and in line with what we had given as directions.

This is as far as EBITDA margin is concerned. As far as the digital RRF, it's in full implementation.

That's why you see that there is an increase in its contribution in Q3 and will continue also in Q4. There will be for sure a rollover of implementing this in 2026.

This applies not for us, but for all the commerce that are in this space. There will be projects that will have to be completed in the course of 2026, from the secure contracts that we have, there will be revenue and profit coming also in 2026.

Noted. Thank you.

Hi. Good afternoon, and thank you for the presentation, the opportunity to ask questions.

I would just ask about how you see your chances of repeating this pretty strong Q3 performance also in the Q4 '25. Maybe the second question would be then, can we expect to see margins that you generate in specific solution areas anytime soon?

Because from the point of tracking your shift towards margin-accretive solutions, I think this would be really, really helpful. Thank you.

On the first question that has to do with Q4 performance, as I mentioned earlier in the presentation, the Q4 of 2024 was one of the lowest that we showed in 2024. We are working in the direction of let's say improving Q4 2025 compared to 2024.

This is exactly the plan that we have in place, so that it will be improved, let's say, versus the same period of last year. As far as the margin coming from the solutions, we are still in the process of optimizing our reporting and in order to be able to provide additional information.

What I can tell you as a direction, because I understand you need some direction, is that you can always plan that the digital service and technologies are the ones that are higher on average versus the Group average EBITDA margin. If the Group's average EBITDA margin is in the range of let's say 14%, 13%, 14%, you can assume that the digital services and solutions are in the higher teens percentage in order for you to be able to do your modeling.

All right. Thank you very much, gentlemen.

That's really helpful.

Thank you, everybody, for participating in this call. We would like to share again with you that we are very confident that our strategy that we have put in place and we are implementing that is focusing on more holistic services and solutions is the right one.

Already, we are seeing, as we saw also in this quarter, but also in the quarters to come, that this will continue contributing in the growth of the Group. Having said that, I would like to wish to all of you a very good evening, and we are happy to answer any questions or any follow-up information that you need.

You can always refer to us in order to be able to continue providing meaningful information to all the market. Thanks again, and I would like to wish you a pleasant afternoon.