Earnings Call: H1 2021

Sep 3, 2021

Good morning to everyone, and welcome to All Funds First Half Results Presentation. Thank you for joining us today in our very first webcast of financial results following our IPO. Before we begin, I would like you to remind you that our earnings press release, the results presentation and the supplemental Excel information can be found on the IR section of our website. This call is being broadcasted live, and a replay will be available on our website too. Joining me on today's presentation are Ronald Carath, our Chief Executive Officer and Amory Doge, our CFO. Juan and Amory will provide a company update and an overview of the first half twenty twenty one financial results. After our prepared remarks, we will open the call to questions. Will ask you to please stick to one question plus a follow-up. If you have any additional queries, you may go into the queue afterwards. With that, I will hand over to Juan. Thank you, Silvia. Thank you very much. Good morning to everyone. I'm really glad to be here with you today and be able to, with Amogi and the team, to walk you through our first half results, which I believe are pretty, pretty, pretty strong. Okay? So let's jump into first slide, the takeaways, twenty twenty one takeaways, please. Okay. So if during the IPO road, so, you know, we talked about, Old Fans, you know, as a growth company. No? I think that four months after, you know, this, our IPO, what you can see today and what you are going to be able to to to to see during, the whole presentation are even stronger, no, even stronger trends, results, and financial performance. When we talk about assets under our administration, you see that we had a growth of 16.4% with an 11.5% growth of organic flows, which means, existing clients and migrations, new clients, thanks to a strong commercial activity and and really strong, secular tailwinds. No? When we talk about revenues, very strong revenues, upside 40%, year on year, a, up to €247,000,000 of revenues first half of the year. And this brings us to, to also a fantastic and and and record adjusted EBITDA of €181,000,000, with a 73% margin. Second important note takeaway for me is that we keep on focused on our strategic pillars, the five strategic pillars that you can see on the right of the presentation. So subscription revenues, we'll keep on diversifying our revenue stream, what we call the fun house harmonization program. So keep on implementing the new open seat across all the different fan houses that work with us. All the new business strategies like blockchain, digital, sub advisory, The fourth pillar is, you know, our migration. So keep on focusing on bringing new clients and gaining markets across the world. And finally, the fifth pillar is working on on the BNP transformational transformational integration. You know, it's a critical critical project for the company. So the third main takeaways regarding the customer proposition. So we kept on investing in technology, innovation, people. And as you have as you as you will see later in the presentation, you know, we have launched a number of, new products, new service services and new strategic, partnerships, you that we we we have announced during h one. And finally, you know, the famous, flywheel effect, no? So more fan houses, more clients, helps, you know, old fans to to gain scale. And also h one has been a record, period, of, well, onboarding new fan houses, onboarding distributors, something very important, not just coming from a couple of countries, but coming from 22 different countries, and also a record number of migrations. In fact, in this first half of, of the year, we have migrated more assets, okay, than the three previous years altogether. No? Again, comparing first half, no, of the three previous years. No? So record also on migration. So These are the main takeaways of of today's presentation. So now I'm gonna move pretty quick. Okay? And I will try to cover all these slides. So please next slide. Well, I think I have already touched many of these numbers. No? So a scale, very important, €1,348,000,000 as of June. This is the 16.4, growth that I mentioned before. But let's let's translate, no, this growth, the 16.4, no, into billions. We're talking about 189, 1 8 9 billion euros of growth, which just to give you some color and to contextualize, no, if this is a lot or not, just bear in mind that it took all funds fifteen years, okay, from February when we created the company up to 2015 to reach the 200,000,000,000 mark. In one semester, we have gathered the same. €247,000,000 of revenues, which represents 40% year on year pro form a and 81% of growth 81% of growth, compared to, twenty twenty h one results. No? Net flows, I have already mentioned, 11.5, which represents €85,000,000,000. So this is excluding market appreciation. And regarding profitability, I already mentioned it, €181,000,000, which compared to H1 of last year represents a 99 percent growth. Okay? When we see this number pro form a, so including of the banca correspondent, the business coming from BNP Paribas, the figure, the growth is 46%. Seventy three % EBITDA margin will come from 70% more or less end of last year. So I think that all the metrics, the financial KPIs are really strong in a minute. And now he will will touch these KPIs and some others. No? So just let let me go very, very quick to to what makes Ofwans special. Next slide, please. Well, our unique four selling points scale, we are the largest b to b platform in the world. Global, we love to work in this combination of, being close to our clients, 15 offices across the world, but at the same time having, you know, the support of the global framework, the one stop solution, our integral solution unique in the market. And finally, this buy free model for distributors, which is still also unique in the market. No? This unique four selling points combined with our historical track record, more than twenty years serving our clients. Founder led business, I think, is important. The top management, I think, apart from my friend Amauri has been with has been with me working in working in this company, and and therefore, are responsible of of all these KPIs, all these metrics, all these numbers for the last almost twenty years. No? And and a proven global expansion through organic organic growth and more recently through through acquisitions. This is this is what this combination of these unique selling points plus this historical record makes all funds to be an special company without any doubt. Next, please. Very quick. Just two comments regarding our one stop shop integral solution. So from, fund trading, custody and execution, we do data and analytics, digital solutions, investment solutions, all under, you know, the bundle of, our digital ecosystem, CallConnect. And more recently, last year, we launched our All Funds blockchain initiative. So we have a company called All Funds blockchain that is also bringing, you know, the new and disruptive technology to to the fund industry market. And next, I mentioned a minute ago next slide, please. I mentioned a minute ago Connect. What is Connect? It's a new digital way that we have to communicate, not to interact with our with our clients. You know? So we launched this new ecosystem, digital ecosystem in 02/2019. Previous to 02/2019, all our relationships were, well, through files, you know, where was not we were not a digital company since then. And since we have Connect, I think we have enhanced, you know, the relationship of all funds with both, no, distributors and fund houses in a much more efficient way. These are the famous five components of our connect, digital ecosystem, fund information, data analytics, all type of digital wealth solutions, the digital investment center, and finally, the digital, what we call, trading execution system. Next, as I said at the beginning, when we went and when we talked during the IPO, road, so we talked about growth. Olfas is a growth company. Well, four months later, what I can tell you is that the growth is even bigger than than during that roadshow. I see this secular market growth trends increasing. So the fan industry in Europe, no, first, first half of the year had record numbers. We see that this platform outsourcing, open architecture penetration is still there. And what we see, no, and you see is that everybody now talks about investments. It's not so much about savings, no, so cash accounts, bank deposits, but real investments. No? The second pillar of our building blocks of growth are the continued, no, share gain. So this is what I think we have been doing for the last twenty two years. No? The flywheel network effect, you know, keep on growing, keep on bringing clients, keep on onboarding fund houses, keep on making, you know, the cake, bigger and bigger. The strategic growth initiatives is also an important lever, no, of, of growth through connects, advisory, and blockchain. And finally, the strategic m and a, you know, which, what I can tell you without disclosing, of course, you know, any any deal is that we are working in the in the two m and a strategies that we have, not the platform m and a strategy. So seeing if there are opportunities around the world to incorporate b to b platforms to all funds, local champions. Okay? And the second strategy is what we call product M and A, which is all about, you know, bringing to all funds or enhancing all funds value proposition with bolt on acquisitions. No? If we move to the next slide, very quick commercial update. When we talk about regional updates, I think all the countries are performing strongly well. Think especially, you know, Spain and Italy booming. Also, The Nordics, a very powerful, you know, pipeline since, we bought NFM couple of years ago. So the model is working extraordinary well in The Nordics. I think that a, what doing a I also think a great job in The UK, number one, purely b two b platform with 75,000,000,000. And and Asia, no, in Asia, we got the approval from the board, three days ago. I think it's not in the presentation, but what is because it happened two days ago, the approval to open in Shanghai, which means that we will have three offices, okay, in Asia, our Singapore office, Hong Kong office and now our Shanghai office. So as you can imagine, our commitment in the region is huge. 47 new distributors, as as I mentioned before, in 22 different countries, which means that the business model works, but it it works all around the world. No? This is extraordinary important. Migrations, 34,000,000,000. As I mentioned before, record migrations, in the first half of the year. As I said before, you know, when you sum 2018, '20 '19 and 2020 migrations first half of the year, we don't even reach this €34,000,000,000 mark. When we see fund houses, also record number in fund houses on boarded, more than 100. So I believe that this year is also going to be a record number because remember that last year, I think we had around 185 new fund houses on boarded. And first half of the year, we are already 100. Connect, revenues plus 42 revenues, okay? And as you see there, 35% increase in year on year new contracts. So it's also performing pretty well. And we are really pretty, pretty happy with our subscription revenues, which as you know are pretty new. I mean, started to diversify this or to bring these new revenues to the platform in 2019. So just a couple of years ago when we launched Connect. And finally, this is one of the hottest questions during the IPO presentation, which was, okay, what about the BNP Paribas opportunity? We thought this famous client migration, I mean, and conversion, so converting those hundreds of distributors to our, global distribution agreements. Well, during the IPO, we did not have any number to give you. The good news is that now, we have some numbers, and I think they are pretty promising numbers. So as you can see here, we have converted 20 new clients for that accounts for €20,000,000,000 okay? And we are in advanced negotiations, as you see there, with another 15 clients that if we finalize, you know, these agreements in the coming weeks, months, you know, we will add to the €20,000,000,000 another €38,000,000,000 Next, well, I think I have covered next. Thank you. I think I have covered, you know, almost all these points. Powerful flywheel effect, fund houses, record number of fund houses, record number of distributors, exceptional growth in assets, the three levers of growth. Remember that what how we feed all funds, you know, when we talk about AUMs, assets, we always see it in three with three levers. You know? One is organic growth, so, you know, existing clients buying, so 51,000,000,000. Migrations, new clients that join the platform, 34,000,000,000. And market appreciation, 49,000,000,000. No? This accounts for €134,000,000,000 of growth. And that if you include on top of this the €55,000,000,000 that comes from from what we call BNP Paribas, other businesses, no, other other other flows, is what it take us to the 189,000,000,000 and the 16,400,000,000.0 growth. No? How's the BNP Paribas integration going? I think pretty good. We expect to to finalize, you know, all the AUM migration for Q1 of next year. We also expect, although it's very challenging, very challenging, to migrate all the IT system, not the flash system to host, to all funds, host infrastructure also for Q1 twenty twenty two, so six months. And as you can imagine, you know, we are going to do all our best to keep on converting, not converting clients, to our to our distribution agreements with fund houses throughout the whole 2022. This is a project that takes takes a lot of time as you can imagine because we have to visit client by client. No? Okay. So, next, please. I think I have already covered this. As as you can see, what, record, again, a, organic, flows in first half of the year. Here you can see what the company did, you know, in first half of twenty eighteen, '4 percent growth. H 01/2019, not even 1%. And last year, 3.7%. This year, 11.5%. So I think that the growth the unbelievable growth of of, first semester is there. And before we enter into the financial update by our CFO, just let me talk very, very quick about some initiatives now that we have launched because this is extraordinary important. I mean, we need to help our distributors. You know? We try to help our clients, you know, with bringing them, you know, new ideas. It's not just all about, you know, trying to to to solve the pain points, you know, that our clients have. It's also trying, you know, to to bring new solutions and to anticipate, okay, our clients' needs. So that's why, you know, we have closed this, I think, pretty extraordinary and unique agreement, with iCapital. So now our clients, I think, going we we will start in October. Our clients will be able to buy all type of private market products, so private equity funds, private debt, infrastructure, real estate through connect and through all funds. Okay? That's basically, you know, why why we have why we have closed this deal with with High Capital, again, trying to anticipate the need, you know, of of our clients. We recently, we also closed, you know, this strategic agreement with Interactive Brokers in The US. Why? Well, we have an interest, no, as as I special interest, no, as I mentioned during the IPO road. So in two countries in where, you know, we need to grow, The US and China. I think I have already mentioned our strategy in China, becoming local in China. And in The US, we are already local just for offshore business. No? But, again, I hope that you will see news, you know, in the coming in the coming months regarding our US business because we have a lot of focus on on this market. And finally, blockchain. Okay? So here you you can see two initiatives that we launched just in the first half of the year, the sandbox with the Spanish regulator and FAST, which is supplying our innovative technology, you to deliver efficiencies in investment fund transfers. And and what I really like also of of this FAST new product is that it's gonna be the first initiative, no, in which old funds blockchain is going to monetize, no, our technology. We will monetize our technology. No? So it's not just about all about, you know, new technology, disruptive technology, but it's also about making money, you know, with blockchain. And I think that with this, I'm gonna handle to to, Maury. Please, Maury, thank you very much. Thank you, Juan, and good morning, everyone. So we've seen, as Juan has said, a very strong set of results in the first six months. And in this section, I will run you through the key financial figures and explain the main underlying drivers of this solid performance. We will begin with a zoom on our AUA and we'll then move to our financials. But before doing that, let's go to Slide 16 and take a look at a couple of key metrics that you've already seen. So I'm not going to go through them again. I'm going try to move fast. But I think it's fair to say that the performance has been highlighted in AUA, of course, translating into revenues, profitability and, of course, cash flow, as we will see later. So moving to the next slide please. AUA is a key performance indicator of our business and the team is particularly proud of the amount and more importantly, high quality growth we have achieved this semester. Let me explain this in three points. First, we have grown by EUR189 billion of AUA or 16.4% since December 2020. This is against the actual AUA as of the end of last year and not the pro form a AUA, which included assets yet to be transferred. Second, growth is evenly split, as Juan said, across all of our three drivers: 4.4% came from flows from existing clients 3% from migrations and 4.3% from market performance. If we look at All Funds organic business, our net flows in H1 were €85,000,000,000 That represents an overall 18.1% growth and net flows growth of 11.5% over the €746,000,000,000 of AUA, again excluding the BNPP portfolio. And then last, in addition, the BNPP portfolio has also performed well this semester with €55,000,000,000 of flows. From this €55,000,000,000 40 2 billion were net transfers into All Funds Platform and €13,000,000,000 corresponded to an increase due to the flows and market performance. So turning now to the next slide, let's look at the group's continued diversification. As you can see here, our AUA continues to diversify in all verticals: client type, asset class and geography, allowing us to withstand market volatility more comfortably. Looking at client types, private banks, asset managers and banks represent around 20% of AUA each with the remaining being custodians, insurers and others. From an asset class perspective, our mix is still roughly one cell equity, one cell fixed income and one cell mix of MN multi asset and alternatives. We're also well geographically diversified, in particular across Europe, but the rest of the world has also slightly increased since the beginning of the year, as you can see on the right hand side. Following the acquisition of the activities of BNPP, France and Benelux now represent about 38% of the group AUA. Moving to Slide 19 and focusing on the top line. Our net revenues totaled €247,000,000 in H1, representing a year on year growth of 40% on a pro form a basis. Out of this, $238,000,000 were platform revenues and €9,000,000 subscription based revenues. Therefore, platform and subscription based revenues contributed 96 percent and 4 percent of total net revenues respectively. In H1, Platform revenues year on year growth was about 40% and this again was mainly driven by three factors. The first one is higher volumes of AUA. Second, positive dynamics from the Funhouse harmonization program, as mentioned by Juan, that was initiated in 2020. We're going to discuss revenue margin dynamics in more detail in the following slide. And then lastly, an increase in transaction revenues given higher volumes of transaction in this period. Looking at subscription based revenues, they also increased by 40% year on year following an improved penetration from fund houses and distributors. There is, as you well know, still a significant potential to expand the current penetration. Fun houses, for instance, which currently generate 62% of subscription revenues, has still only 24% of penetration rate versus 93 for distributors, and both have a strong potential for upselling. So let's now focus on the revenue margin evolution on Slide 20. Thank you. So Slide 20 is showing you the platform aggregated margin that is looking at the ratio between average annualized revenues and average AUA over the period. Platform margins stood at 3.8 basis points versus 3.3 in December of last year. The increase was mainly driven by a stronger contribution from All Funds portfolio excluding BNPP, which has a higher margin than BNPP operations. During H1, the contribution of All Funds standalone portfolio has been 64% versus 57% during 2020, as you can see in the peak bubble. The second and also very important driver for the positive margin evolution is the positive individual evolution of both portfolios, which is another highlight of the semester. The margin of old funds stand alone increased from 5.4 basis points to 5.5% due to several factors: high amount of new clients onboarded, usually at a lower margin, which is offset by higher transaction related revenues and our ongoing effort and successful implementation of contract harmonization. And then three, a slowing shift to clean asset classes. The BNP platform margin has also performed positively at 0.6 basis points versus 0.5 basis points in December 2020. The slightest increase is driven by a good progress on margin initiatives in the BNPP operations. Moving to next slide and to cost. We can see that total adjusted expenses increased by 24% year on year on a pro form a basis. This is mainly driven by an adjustment of perimeter as expenses are now reflecting BNPP support functions as well as the Paris office. In the period, we've also onboarded 43 new employees, a 5% increase in headcount, taking our total number of employees to nine zero eight. Staff cost also includes a higher bonus accrual in line with year to date performance and some one off items such as the end of the deferral of bonuses for some employees. Finally, with regard to BANDOL or BNP integration, this is ongoing and in line with our plan. The synergy plan should allow for further savings and headcount reductions going forward. Moving to the next slide. So EBITDA was EUR181 million in H1 versus EUR124 million for the same period last year, representing a 46% year on year growth. The EBITDA margin stood at 73% for the semester versus 70% last year. The positive jaws effect is a result of the strong AUA performance in H1, translating into higher level of revenues while costs increased at a lower rate despite the level of activity due to the scalability of our platform. Next slide is showing you the exceptional items, which stood at €77,000,000 for the period. In line with our guidance, IPO costs stood around €20,000,000 and €21,000,000 and TSAs from Credit Suisse and BNPP acquisitions stood at around €30,000,000 Other one offs include sign on bonuses paid by pre IPO shareholders to some employees, and these are noncash items. Most of the other one offs affecting adjusted net incomes are the PPA amortization charges of €69,000,000 which increased following the acquisition of the BNPP business. From a capital expenditure perspective, they stood at €10,400,000 in H1 versus 8,500,000.0 last year, out of which €10,000,000 were maintenance maintenance CapEx over net revenue ratio is about 4.1%, which is in line with the figure we had last year. And finally, we see on the next slide, thank you, that the free cash flow for the period was €114,000,000 from an adjusted EBITDA of €181,000,000 proving the strong cash conversion of the business on a normalized basis. So looking at now quickly moving into outlook and financial guidance in Slide 28. Thanks. We have included a reminder here on this slide of the midterm and near term financial guidance we had presented at the IPO. The performance we've seen in H1 gives us strong comfort to reaffirm this longer term guidance and we believe it is the best proxy to model the performance of our business in the long term. Special mention though to some parameters in which we've outperformed this longer term guidance in the first half of the year. So the first one is platform margin. As already discussed, the 3.8% platform margin is the result of the solid growth combined with a positive mix effect and the action undertaken on harmonization. For the rest of the year, we expect the overall Platform margin to stand between three point three and three point eight basis points, depending, of course, on the level and type of market activity in the second half. And then the second one that you can see on the table, which is a bit different from the guidance, is the effective tax rate, which sits on the top of the range of the guidance we provided. This is mainly the result again of the strong performance of H1 and country mix. It's worth noting that this effective tax rate excludes the optimization that we've carried out recently, which needs further evaluation, which we will share with you in due course, most probably when we present our full year numbers. But from a tax perspective, it's important to note that the effective tax rate going forward would probably sit at the lower end of medium term guidance with potentially some further upside to that. So thanks for your attention. And with that, let's now open for Q and A. Our first question today comes from Antonin of HSBC. Antonin, please go ahead. Your line is open. You very much and good morning. Antonin Baudry from HSBC. Two questions, if I may. The first one is on your geographical expansion. Could you give us more color about your expansion in Asia on the opportunity you have four months after your IPO. I saw it was a strong contributor in H1. So what should we expect in the future for Asia? My second question is about M and A strategy. Can you remind us the strategy of the company terms of M and A and if you have some acquisitions in the pipe currently? Thank you. Yes, absolutely. Well, thank you. Thanks. Thank you very much. Well, regarding Asia, there are two main countries in where no. I mean, locations. I mean, one is Singapore and Hong Kong. Hong Kong is is is China. Okay? In where open architecture the business model of is the traditional, open architecture business model of all funds. So insurance companies, private banks, wanting to access plain vanilla, no open architecture. So, again, Hong Kong and and Singapore for us is, in some ways more of the same. No? It's, promoting our all our added value services and our and our billing, no, and execution platform to this type of of entities. In the case of, our, future near future, Shanghai, no, initiative, that is different. Okay? Because, as you know, Chinese institutions today are, they have a limited access not to, to offshore, not open architecture. So we will definitely focus on on strengthening, okay, our institutional relationships with with the Chinese, main Chinese financial institutions. We currently have 16 agreements with Chinese institutions. But for their offshore businesses or offshore units, understanding by offshore Hong Kong and and Singapore, so outside outside China. A, it is very important, you know, for for for the Chinese market, you know, to to, well, to to be local, to see the, the commitment, you know, for funds for that country. But what we are really gonna do, you know, in in Mainland China is to to focus on, on our, added value services. So basically, investment services and digital services. Okay? So again, they have limited access on the execution and dealing, in third party funds, offshore third party funds. However, we see a fantastic opportunity, to serve, no, these institutions with, with our connect, no, value proposition. So this is, regarding Asia. So, again, Singapore is core. We are there since, the last, I think since 02/2017, Hong Kong core, and now the new opportunities in Mainland China. And I think with this, we have we have covered, you the the Asian question. Of course, you know, we keep on trying to onboard, the top distributors in other countries, you like in the region, you like, Thailand and and the Indonesia, a or or The Philippines. No? But, again, our main, and and core, no, strategy is in in these three locations, no, that I I have mentioned before. And regarding m and a, I think I already mentioned it. No? There are, like we we see M and A as as two different types of of a strategy. One is to keep on increasing our scale. So identifying local champions in Europe, but it could also be in Asia, that could contribute with assets, with business, with clients and could help all funds to penetrate in a new market. Okay? And we are always going to be very active, no, with this strategy, you know, is what we did with, NFM, no, for instance, in The Nordics, no, or what we did with InvestLab, no, in Switzerland. So, yes, there are opportunities, and we are on top of these opportunities. And the other strategy is is completely different. It's it's what we call product m and a strategy, which is more about identifying mid size or in some cases not mid size, but even big, fintechs, companies, work tech companies that, could enhance, our connect value proposition. Okay? So as I mentioned during the road, so we have two strategies. One is to partner with these entities, through the Open Connect project, remember? So bringing third party vendors to connect, we don't we do not necessarily need to do everything, in house. Okay? And the other strategy is not just to partner, no, but to acquire, no, that, that company. And and, yes, we are currently analyzing around five deals on the bolt on acquisition and fintech space. You. Thank you. If I may, a quick follow-up on your platform margin. I see the guidance for H2, but should we assume that this guidance for H2 twenty twenty one can be a new guidance for 2022, '20 '20 '3 on the company year? Thank you. Yes. Hi, this is Amore again. So no, I mean the idea was to try to, again, to show you where we to put things in context of where we stood for the first semester of the year and to try to guide you a bit for the second half, right, and to make sure that people kept in mind the relationship between the margin and the mix, the growth of the activity and so on, right? So we feel that what I was trying to say, and hopefully it's clear, is that we're very happy with the results of H1. We've seen some very strong growth. All the three levers have grown exceptionally well and which led also to a margin that has been very strong, right? Hopefully, it's clear to explain how the 3.8% move compared to the 3.3% at the end of last year. We think that we're not coming back on what we were saying. And if you were there at the IPO, you remember probably that we were explaining that we felt that the margin would stabilize and potentially increase a little bit. That's what we've seen here. We think that this is still the case, but we're not going to be talking about this is not the moment and the place to start talking about near term and midterm guidance update. We'll do that at a later stage. For the moment, we are reconfirming our guidance on all the lines and on this one, providing a bit of more color of what will happen in the second half. Thank you very much. Very clear. Thank you. Thank you. Our next question comes from Andrew Coombs of Citi. Andrew, please go ahead. Your line is open. Yes. Good morning. I'll have a couple as well, please, if possible. Firstly, just a repeat, I guess, some extent, the previous question. When you look at the improvement in the platform revenue margin, as you said, you provided very specific guidance in the second half between three point three and three point eight basis points. But when you when you dig into the improvement from 3.3 to 3.8, you provided a list of reasons. You talked about the results of the harmonization program, the transaction revenues we can obviously calculate for ourselves. You've also talked about some of the BNP other portfolio platform margin improvements. I'd be intrigued if you could split out the 0.5 basis points improvement between some of those items that you flagged. Is there any way you can provide for the quantification of each of those drivers with one driver much bigger than the other? That would be very useful. And then the second question, just on Interactive Brokers in The U. S. And Canada. Could you just provide a bit of detail on how the economics are going to work for that? Thank you. You want to start with the margin, Yes. Let's start with the margin. So yes, so look, this is what you see on Slide 20 of our presentation. And we've tried and you've got the main blocks of which contributed to this evolution. It's very, very hard. And in fact, it's not possible, not that we don't want to share it, but to attribute some clear points between those various impacts because, of course, they accumulate, right? So for instance, migration can be done with different types of asset classes, flows as well. So it's very hard to say, okay, this is what's coming from asset class versus migration and so on because they will be cumulative to some extent. What I can say though is, again, as we've described, the biggest contributor here of the margin evolution, of course, is the reason that is the fact that the all funds organic, if you go back to Slide 20, which accounted for 57% as of end of last year and now 64%. And given that it's coming with a higher margin, of course, it's going to drive the overall platform margin, right? Don't forget that, and this is what I was trying also to make clear, the fee structure and the way the yield management of all funds is quite complex, right? So of course, it's not like we have one fee covering everything. This is more of a theoretical margin to help you see how the business is evolving and what are the main angles. But I would say that the main drivers, if you want to, is the one I've just mentioned, is the fact that transaction revenues or transaction related revenues stood quite high during the period and then the impact of harmonization. And the offset of this was additional migration, which came sometimes from countries where the average margin is a bit lower and then clean share classes evolution, which, as we said during the IPO, moves up and down, but it's kind of has kind of stabilized around the level that we have you know, we we were talking about already a couple of months ago. And probably, I'm only just to add the product mix. No? Yeah. It's very favorable product mix. Bear in mind, you know, how bullish is the market. Obviously, this means that, our clients have appetite for equity products. And equity products have higher management fees, are more expensive, and and therefore our our margin is higher. And very quick regarding Interactive Broker, I mean, is an agreement with with a fantastic, you know, distributor client in in The US. Always remember that we do not do any onshore, US business. This is all about offshore. Okay? And, well, our first goal in The US, now that we are local, is to keep I mean, is to become number one provider of offshore, funds to US, entities. And second, to explore how can we become, okay, a non shore provider, the same as with China, as I mentioned before. And is there a revenue sharing agreement between yourself and Interactive Brokers? Revenue sharing agreement is not. We have a we have a we have a revenue sharing agreement with iCapital, but with Interactive Brokers, we have a normal revenue agreement. Thank you very much. You're welcome. Thank you. Our next question comes from Greg Simpson of Exane BNP Paribas. Greg, please go ahead. Your line is open. Hi, good morning. Thank you for taking my questions. The first one is on the BNP business slide. Slide 11 shows a €20,000,000,000 converted and it seems like a €38,000,000,000 near term pipeline, so that's about 12% of the original book size. So is there any sense of how far this can go in terms of conversions given the work you've done since closing the deal? And then is the revenue margin you're capturing on these converted clients, is that comparable to the five basis points showed for funds organic? That's my first question. I'm gonna try to answer the first part because the the second part of your question, we we were not able to to to to hear you. Okay? We had some some problems. Don't know if Revenue margin from this business? Of this business? Yes. It's comparable with the one that Okay. So then it was me. It was not the No. It was hard. Okay. So the I will answer the first part, and I will let Amawi, you know, to cover cover the the second part. Well, I think we were if you remember, no, during during the the IPO, Rodson, all the meetings, we were extraordinary conservative, extraordinary cautious, no, with this client conversion. Why? Because as I said before, we have to go client by client, okay, knocking at the door and trying to convince that client to join our distribution agreements with the fund houses and then make that client that today is just trading and execution full service, no, OFA's client. So, unfortunately, and I said that four months ago, we are not able to to give you any guidance. What we will do, and and of course, you know, as you can imagine for us, it's it's it's very, very important. What I can guarantee you is that we have a specific team working on on this conversion program, this conversion project. And I'm really glad and happy with what we have achieved in the first couple of months, this 20,000,000,000. But I cannot, unfortunately, give you if you any guidance, if this is gonna move to to 50,000,000,000 or or to 100,000,000,000. We have converted 20, you know, and we have a very good pipeline, almost done, of another 40,000,000,000, but that's all I can say really at this point. Yeah. And and maybe to add on what Juan was saying, you know, this is a point that was mentioned a couple of times in IPO, but, now that we have a semester under our belt with numbers to show it, I think it's important to again emphasize the fact that all funds is not dependent on this from a migration perspective, right? I mean we've had a record semester in terms of migration. This without taking this into consideration, right? So in the business plan and the numbers we gave in the guidance and so on, this is what is going to be important is the level of overall migration of the group. And then in terms of margin, yes, there should be I mean there's no reason why they should not be in line. Again, with the caveat, of course, that the €3,800,000,000 is a blended margin. It includes many different things. But there's no reason why the €20,000,000,000 that we just mentioned should perform differently than the rest of the Thanks. And a follow-up would be on the private markets initiative, which sounds quite interesting in terms of being able to offer distributed access to private markets. But since it's in partnership with iCapital, is this more about enhancing the offering of all funds? Is there a specific revenue angle? I mean, for example, do distributors need the premium version of Connect to access it? Or is it in the in the in the the standard free version for distributors? Thank you. Yeah. Andy, apologies, but but the line was was cut off. Can you please repeat the last part? Yeah. I was hoping you can hear me. The private markets initiative with iCapital, what is the kind of revenue angle for all funds? I'm wondering, do you need the if you're a distributor, do you need the premium version of Connect to access it? Is it more less about revenues and then about enhancing the offering more broadly? Thank you. Well, as always, the main reason, you know, why why we always bring these, these new services or these new initiatives is in order to satisfy, you the need of our of our clients. That's the main driver. Okay? So, we realized that there was appetite, across many of our clients in many different countries for accessing in an efficient way, okay, to private market products, and and we were not there. We were not able to satisfy that need. So that's basically, you know, why we why we closed this strategic, no, agreement with Thy Capital. Of course, you know, we we will also monetize, this agreement, no, because this part of the business was not going through old funds. And therefore, we were not making any money, no, out of assets, volumes that were not trading through old funds. And now thanks to this initiative, we will monetize also this type of assets. Thank you. Our next question comes from Arnold Gibblatt of Exane BNP Paribas. Arnold, please go ahead. Your line is open. Yes. Good morning. Thank you. If I could start coming back to the 3.8 basis points margin. Clearly, there seems to be some transitionary elements contributing to the elements, I suppose, those are transaction costs. Should we regard a period of high inflow activity as bringing in exceptional level of transition costs transaction costs, sorry, and that pushing up the margin finally? And if flows were to normalize, that would bring the margin back down, that's probably why you're guiding to 3.3% to 3.8% rather than around 3.8 for H2. That would be my first question. And following up on the same topic actually, I was wondering if you could comment as well in terms of how the shift to non rebate models has impacted the fee margin this half, if at all? And how what the outlook is for continued shift to non rebate models amongst your clients? Yes. So Arnaud, I'm sorry, but I just missed one word. I think it was the important one, which is Transaction revenues, I think. Okay. So that was okay. Okay. So I think I've got everything now. So yes, definitely, the transaction revenue sat quite high during the semester. And this is because of FX. This is because, as you know, we have some of the LPA or the banca correspondente activity, which sits in the transaction revenues, and we've seen a lot of volume. Where I'm not quite sure, and please follow-up if I'm not spot on in the answer, is this is not because of the transition, right? This is, of course, due to the underlying activity, the mix and so on. And there's a bit of cyclicality on some of those metrics in transactions such as, for instance, FX. We know that FX is not FX is the money we make when we obviously trade in another currency and do the conversion for our client. And we've seen in the past that this tends to have some cyclicality elements in it. But apart from that, it's more activity based and which is hard to predict, right? So and that's why we see a bit of movement. And again, yes, the reason why we think that it makes sense to guide towards a margin for the second half, as we again, I would like to reiterate, as we said in the IPO, would be slightly above flat or above 3.3%. This has not changed, but we think that the current level is definitely has been impacted positively by the strong level of activity. And the second half may be a bit softer, right? So that's on the first part of the question. With regard to the second one, so the mix between clean share classes and rebate shares has moved a little bit. If I'm not mistaken, and Sida correct me, it was sitting at 18% at the end of the last year, and it's now at around 16%. Correct. And again, this is in line with what we had said during IPO. We reiterate the fact that we feel that the evolution which was driven from a regulatory angle is done. And then you'll see a bit of change or viability, again, depending on the product mix and what clients are looking for at a very specific moment. Yes. And from where the clients come, no? Yes. Sometimes we gather a client with a big book of direct distribution. You know, this is very good, good margin. And and and in that case, you know, our the percentage of our assets, you in in rivet surpluses might increase. So but the trend is clear. It's keep on reducing. That's very clear. Thank you. Thank you. Our next question comes from Philip Middleton of Bank of America. Philip, please go ahead. Your line is open. Yes, good morning and thanks for taking my question. I wondered, could you talk a little bit about the level of conversions you achieved in the first half? Your guidance at IP, I think, was for about GBP 100,000,000 over several years, so you seem to be running well ahead of that. Is this a sustainable level? Do you think this is something that will revert to the mean? And what lies behind that really strong number? If we are talking about client conversion and understanding we understand client conversion just for the book. No? The FBS book and the Banca Correspondente book now in in in Italy. No? And correct me if I'm wrong, Silvia, but I I don't think we gave any any specific guidance. No. We did not. Because I I think it's probably a mix between migration and conversion, which which is onboarding on new clients. Is that is that the question? Or There can be a confusion. Yeah. Yep. Well, there are two different things as you know. Migrations for us is our, plain vanilla, no, and our business as usual is what we do. So it's, it refers to new clients, new distributors, new banks onboarding the platform. And this is a €34,000,000,000, first half of the year number, which is, yes, is a record record figure, okay, in the history of the company. And different things, this client conversion, that is how we is the name, not that that that we have that we use, no, to explain the conversion to our distribution agreements, okay, that we have with the fund houses of all the FBS and all the BNB Paribas Banka correspondente, institutional clients, you know, again, to our, global distribution agreements with fan houses, which are the €20,000,000,000 of 20 clients. No? That is the figure that we have closed, as of '30, June 30. And the only guidance that we can give there is the one that we have already given, that we are close. We are negotiate we are I mean, in advanced negotiations to convert another 40,000,000,000 of 15, clients. Apart from that guidance, at this point, as I said in a as I answered, not to to a previous question, we are not, I mean, we prefer not to give any any any other number. No? Because, again, this is not really included in in our business plan. It's not really included in any guidance. It's and and we are extraordinary conservative and and and cautious, you know, with this figure. We prefer to be cautious with this figure. Yes. Thank you. Mean, that that was helpful. It was it was it was really the $34,000,000,000 I was I asking about. You highlighted how strong and extraordinary this was. Is this and, really, I was trying to ask, is this some a level you think is sustainable, or do you think there are one off factors in the half that made that particularly high? Okay. Superb. A, well, as I mentioned before, we did in six months, what we did in three years. No? First half of eighteen, nineteen, and twenty. So it's exceptional. No? Absolutely. No? However, the company is much powerful than in 2018 and 2019. The fact of being bigger, the fact of being a listed company, the fact of having new offices around the world, the fact of having new products, the fact of having connect, makes the flywheel effect. No? And this is scale. No? Business of the bigger we are, the more chances, no, probability we have to gather new clients. Well, makes at least me to be pretty optimistic with, with the migrations figures, in the future. Okay? But, but it's a record figure. You cannot keep on beating records every semester. No? I guess so. Okay. Thank you. That's helpful. Thank you. And our final question today comes from Angeliki Barakti from Autonomous Research. Angeliki, please go ahead. Your line is open. Good morning. Thanks for taking my questions. Just follow-up on the migrations that we were just discussing. You had released a number of 26,000,000,000 in the first quarter at the time of the IPO. And based on the 34 for the first half, and I hope those two numbers are comparable, the q two level of migrations has slowed quite a bit. I I think, as you mentioned, there is an exceptional element to the sort of first quarter migration flow. So I just wanted to ask you, do you have a sense of how the migrations are going to evolve in Q3 and Q4 in the second half of this year? Also based on the current pipeline, is the around 8,000,000,000 to 10,000,000,000 number that you seem to have printed in the second quarter a better sort of run rate for us to expect? And just a clarification, are the €20,000,000,000 BNP conversions included in the 85,000,000,000 net flows for the first half? Thank you. Okay. So the the the answer to the first to the second question, which is easier, is no. Okay? They are not included. And and again, regarding the €34,000,000,000 of of migrations, yes, of course, you know, at this point, we have a a clear pipeline, no, for a second half of the year, no, for migrations. What I'm not so sure is whether I No. No. No. Juan, if you don't mind. Just to be clear. So so I mean, what you're saying is factually correct. Yes, the when you're looking at Q1 versus Q2, Q1 was stronger. But you should not read again, migrations, they come in different shape and forms, right? It's not like we're signing whatever, 24 or 34 migration deals of €1,000,000,000 each, right? So of course, depending on the client that we migrate, you will see some viability, right? It's not these are not standardized contracts. It depends on the activity of the client. So I mean I think it would be a mistake to look at the trend on a quarterly basis. This is way too short. I think you need to look at it a bit with more time, and then it makes sense. Juan was comparing H1 of this year to last year to what we've done in six months compared to the last three years. I think this is probably easier to look at it this way. With regards to forward looking, again, as I've said when we were talking about the guidance, we are reaffirming our the near term and midterm guidance we gave at the IPO. We've started very strongly, and so which provide us with a lot of comfort to be able to reaffirm that guidance. But we're not going talk more today about, you know, guidance or give you any any additional updates. Sorry. Albert, bear in mind bear in mind For a business like all funds, which is similar in some ways to an asset management, you in in the sense that starting assets are really important. So, it is very important, you know, for the numbers of of of all funds, not for the p and l, a very strong h one. Yeah. Because, again, remember, it's all about assets, you know, times basis points. So it's very, very important to to start, first quarters. Let's say first quarter, not the year with very, very high and powerful, you know, assets that helps throughout, to navigate, not through throughout the whole the whole year. Thank you. Could I just add one more question since I am the last one on the line? The initiative, the partnership that you have announced with iCapital and also Interactive Brokers, is it fair to assume that sort of any incremental revenue that comes from those is already included in your midterm sort of revenue growth guidance, or is that something on top that you didn't envisage at the time of the IPO? I well, I think these are agreements that came, you know, for instance, the iCapital, no, we closed it q two. So it was not really a topic, no, that we included in the discussions of, during the IPO, Rodso. Yeah. Yeah. You know, this is again, and and this is this is definitely fueling the continued growth of the company and so on, right? It's a way to expand our offering, to reach out to new clients, to offer new ways of training to our existing clients and so on. We're going to we talked about what we're doing on the Connect side. So this is shooting the the, you know, the growth and and the potential of the company. Yeah. Now, you know, if Specific agreement? Correct. No. Because it was not closed in those days. Correct. But but, you know, again, if, you know, if you're trying to model, you know, we we we're not giving numbers. We don't expect this in the very short term to have a strong contribution to the P and L. Right? I mean, again, this is going to it's part of all the efforts we're making, but you should not assume that this is going to drastically change the revenues number for 2021. And again, of course, in due course, and that's probably going to be early next year, we will, of course, go back to you guys with a revised guidance, include all of what we've done and see what's the impact. Well, thank you very much. Unfortunately, we do not have more time. I know there are plenty of questions that have been unanswered, but we will take them from the investor relations team. So bear with us in that sense. It has been a pleasure to host you in our very first set of financial results presentation. We wish you well, and see you next quarter for the trading update. Bye bye. Thank you very much.