Month. The third point, the last point is about the positive impact that we have introducing AI, both internally and externally into the market as well. Let's start from the first slide. In this slide, we can see our main market success for the first quarter, one project with new customer, two cross-selling and one upselling case. As a reminder, our strategy is to push cross selling and upselling activities between the companies while also focusing on acquiring new business, new customers.
Seeing the picture, the top left section highlights a new customer, Blu Dental Clinic, and healthcare company providing high quality dental care with a network of over 80 centers spanning in 11 regions in Italy. Here we provided an accounting financial information system with the ERP, our vertical solutions, and IDC services with a full outsourcing of the solutions. Moving on to cross-selling in the top right section, we have an excellent example with Seven to Seven.
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Evolution improves our value proposition for the market in two parallel direction. The first with specific solution and add-ons through our arIA suite designed to manage specific processes with AI embedded. The second is about our AI-powered portfolio. We are transforming our solutions in e-solutions, transforming the software solution from feature reach to intelligence reach. We are transforming the solution that have embedded the best practices into solutions that have embedded the intelligence of the vertical markets.
This transformation give us a very great opportunity because we have analyzed our portfolio, our customers, and we can say that only less than 5% of our customer are today using our AI solutions. This is an significant indicator of our potential growth. This is all from the summary of execution for the first quarter that was very well, as Emanuele Angelidis said before. Now I pass the floor to Andrea, who will present our financial data.
Okay. Good. Thank you very much. About the Q1 financial highlights. It was overall a very strong quarter in terms of growth and in terms of results. In particular, we have here the usual slides about the top line, and then we'll have the bottom line and a little bit of comment about liquidity and the net financial position. Let's start from the top line. The top line, in terms of revenues, grew by almost 16%, quarter one 202 5 to quarter one 2026. This growth, as usual, is made of two components, the first being the organic growth. The organic growth in terms of revenue was more than 7% in the period compared to last year.
In terms of additional components, we have et.ics and Technis Blu, the newly acquired companies, you know, that represent EUR 2 million of revenues in the period. In terms of market growth versus our growth, of course, the market is growing at around 4.7%, so around almost less than 5%, whereas our growth is certainly way more than the market, more than 50% of the market growth. This is in a quarter which is not traditionally the strongest quarter of the year. As you remember, last quarter was particularly good. In Q1, we also have the effect of having a Q4 that was particularly strong.
In terms of EBITDA, the EBITDA margin is increasing. If we look in terms of growth, the total EBITDA grew by almost 26%, 25.6% exactly. There are some one-off effects included in this. Some are negative, and some are positive. The negative ones are the M&A costs. The positive ones are one-off effects given by a different law passed in Italy that has consequences on IAS 19. Basically, this is about the employee benefits. And this had an effect of about EUR +100,000 . The total effect results in a, you know, growth of net growth, if you will, on an of a 22.6%, excluding this one-off effect.
The organic growth, same basis here, in terms of, you know, everything excluding et.ics and Technis Blu, this and including, of course, A&C Group, which was acquired at the beginning of last year. We have here, 19% of growth compared to last quarter. As you can notice, the EBITDA growth, in terms of organic growth, and organic EBITDA is way more, than, you know, more than double actually than the growth of revenue. That means that, of course, the margins are increasing. If we look at the margins, we have Q1 2025 with an 18.3% margin, Q1 2026 with an almost 20% margin. Even looking at the organic margin, is still around 20%, which means that we were able to integrate A&C.
If you remember, A&C had the lower margin when we brought them in at the beginning of last year. Now the effects of this lower margin are basically again brought up to our standards, so we are back again at the 20% level. This is always a good reading of our accounts. We always pay something in terms of EBITDA when we acquire companies, because the companies we acquire have, in general, a lower EBITDA margin level. We are able to fully integrate them pretty quickly and then to bring them up to our level. Going to the bottom line and in particular then the element on the left is, first of all, R&D. We have still investments of course in R&D, which are comparable to last period.
They are increasing, but out of 3.5% last year, out of revenues and 3.8% this year. This represents around 24% increase compared to last year. Here we have of course investments in our core business, which is the ERP, CRM, retail software solutions, and also the investments on the artificial intelligence side, which of course is both internal and regarding products. As a reminder, this is not the entire R&D, which is actually the D part, the development part that we do, because most of our development is actually paid for by customers. It's actually on the revenue side and not on the R&D side.
On the net income, so on the right, you have a growth of 22%. This growth is calculated with a rectified value for Q1 2025. Q1 2025 was affected by D&A from the PPA, so from IFRS 3, which were provisional in nature, and then we rectified them in H1. Just for sake of purposes, sorry, of comparison purposes, we actually increase in the comparison the net income from last year to better compare it with the net income of this year. On an adjusted level, there's additional adjustments in terms of M&A D&A and one-off effects of around EUR 400,000.
In general, the result is a net income which is on an adjusted basis, 9.4% of revenue. As you can see, is basically saying that we are able to go down to net income from the top line through the EBITDA on a pretty consistent level. Now, the liquidity side is still very strong. As Emanuele was saying, we have the Sorry, slide is not changing. No. We still have quite a bit of the liquidity, you know, compared to end of last year. This is because, of course, we have EUR 5.5 million of cash from operations. These are cash flows. This is the cash conversion from the EBITDA, which is above 100% in this level, at this level.
We have all the payouts for the investment activities. Of course, in terms of payouts, we have the M&A payments for et.ics and Technis Blu, and this is limited because it's just the first tranche of those payments. On top of it, there are all the payments of previous acquisitions, including A&C Group, and that portion is of course way more significant. This explains the vast majority of the EUR 6 million from investment activities. The additional is the R&D and CapEx. CapEx are very limited. It's pretty much everything on the development side. There's also the positive component of the liquidity acquired through the acquisitions. On the financing side, it's limited compared to the rest.
We have here a small effect from loans and IFRS 16 leasings, and most of the effect here is the negative component of the buybacks, is negative in terms of cash flow. Of course, it's a program that was announced to the market some time ago. Just for to remind you, this program has been renewed after the assembly, general assembly. Now it's again in effect. The total here is going from EUR 48.5 million at the end of last year, going to EUR 47.3 million. It's moving by not a lot. It's basically EUR 1.2 million less, which means that we basically finance almost the whole M&A activity through cash flows, internal cash flows.
Next slide is our reconciliation in terms of net financial positions and in terms of the net financial position and liquidity. In particular, on the left-hand side, you have the net financial position at the beginning of the period, so end of 2025, and at the end of the period, so Q1 2026. Here we have a around EUR 3 million difference in terms of net financial positions. It's expected that our net financial position is actually getting lower because of the M&A activities. As you can see, cash flow from operations is the positive component, and on the negative components, there is the development that we already talked about, the IFRS 16 side, which is moving the net financial position in terms of debt components. The most of it is the M&A side anyway.
That explained the EUR 3 million difference. On the right-hand side, we have the reconciliation between the net financial position and the liquidity, both of them at the end of the period, so for Q1 2026. In this case, most of the explanation is, as usual, in the earn-out component here. The earn-out which represent EUR 23.4 million of debt, is, as you remember, the full actualized value of all future payments relating to acquisitions. This includes all the various tranches, and the final call and put options and earn-outs for the various acquisitions, and this is based on the business plan negotiated with the companies.
It's of course a pretty conservative view of what our debt situation is, and this is of course related to mostly long-term components, which means that they will come in two, three, or even four years' time. The rest of it is basically IFRS 16 with smaller components for you know, for bank loans, which is very limited. We basically are not leveraged with banks and other components, adding up and explaining the difference between the EUR 14.3 million net financial position and the EUR 47.3 million of liquidity at the end of the period.
Okay. Thank you. Thank you, Andrea.
Next slide.
On our side, obviously Q1 was very good from many points of view. Obviously in terms of growth, we had a very nice growth, and most importantly even a better valuation looking at the EBITDA. We also generated significant cash from our operations, and alongside with that, the M&A progressed pretty well. A&C, we can definitely say is fully integrated, and as you can see, even as a result of the EBITDA level, we can say that it started benefiting from the cross-selling opportunities. We have also the new acquired et.ics And Technis Blu that are in the process of being fully integrated and start benefiting from those synergies as well. All in all, I would say a strong Q1.
Before leaving the floor to the Q&A, I just want to remind everybody that next Monday, on 18th of May , we are going to have an investor day here in Milan at 11:00 A.M. Italian time. Obviously, the event will be possible to be followed also online. This is about our investor day, where we are going to present the 2026, 2028 business plan. What we have in mind in terms of strategy, obviously in terms of numbers as well, and within that presentation we will give also the guidelines for 2026, which is something that we haven't done so far, but now we are obviously ready to do that. That's all from our side, I would leave you to go ahead with the Q&A.
Thank you. We will now begin the question and answer session. To enter the queue for questions, please click on the Q&A icon on the left side of your screen. When announced, please click continue on the pop-up window. If you are connected in audio only, please press star and one on your telephone. The first question is from Tommaso Nieddu of Kepler Cheuvreux. Please go ahead. Mr. Nieddu, your line is open. Please click continue.
Hi. Hi. Can you hear me?
Yes.
Thank you. Thank you a lot for taking my questions. I have just a couple. I guess also we will have more information indeed in your investor day on Monday and thank you for that. The first question is on your outlook growth despite an international macro environment which is very high uncertain. My question there it would be if we can have a bit more color on or your thoughts on the fact that if you are seeing any delays, for example, in customer decisions making, particularly among Italian SMEs or is demand still resilient? The second question is how much of Q1 organic growth came from new customers versus upsell and cross-sell?
The second question is about A&C. You talked about A&C that is fully integrated and already realizing substantial revenue synergies. My question would be if you can quantify the kind of revenue synergies that you are seeing or that you are expecting, any way, any more color on these synergies would be highly appreciated. Thank you.
Okay. I can start giving a little bit of qualitative feedback because as you correctly pointed out, then, next Monday we're gonna give more details about the numbers. From the qualitative point of view, and please, Matteo, Andrea, if you wanna jump in, go ahead. We don't see any specific slowdown despite the international situation, as you said. As you have seen, our growth has been pretty strong, both organic and overall. From this point of view, at the moment we are not experiencing customers delaying projects. About the second question, related to A&C, I would say the importance of the synergy is not only related to the revenue side, but I would say most importantly to the EBITDA side.
The big change is that we are absolutely absorbing the lower EBITDA margin that A&C had when we bought it, as a result of the fact that we are in a position to, you know, have higher prices applied to their customers, new customers, given that they are part of the group, plus obviously new contracts as well. It's a mix of growth and value as well. There was another question I think.
Customers versus up and cross-selling.
new customers versus yeah, if we don't have this kind of split, we'll dig into that and give more color eventually next week. Andrea, do you wanna add?
Maybe a little bit of color on again, on the SMEs and customer decisions. There are some effects in the market, but mostly we can diversify them away, and we are not affected. Just to give you an example of an effect in ICT markets, it is evident that we are not affected by hardware. Hardware is getting a little bit of a hit because of the prices going up on various for various reasons. We are barely affected by this, and anyway that's as you can see from the growth and from the margin growth, doesn't really matter. Even if the customers are not, you know, shifting towards hardware, it's actually better for us.
This is even a better, you know, a bigger push to go towards the cloud and go towards effectively not having any hardware and buying virtual services and virtual machines. In the end, they buy them from us because we give them the full solution. Of course, we don't have data centers, so we are not affected by these problems. We buy, you know, virtual services and virtual machines from existing data centers with long-term contracts. Again, our, you know, barely affected by this. In general, again, Q4 was a very strong quarter, so we were also looking at Q1 to see if there was any leakage or any problem with that. It doesn't seem like it was a complete shift.
You know, it was mostly just a lot of decisions done at the end of a very volatile year last year. Again, now they are starting with Q1, which is not traditionally our strongest quarters, as we said already, but with no indication effectively of a market slowdown, even in the, on the SMEs part. As a matter of fact, a lot of companies are looking at the market and actually looking in investing, because now it's a moment, right?
Now it's a moment of putting in maybe smaller projects, but substantially, you know, timed and not waiting for these type of projects to the end of the year. As a matter of fact, we commented on the four names, and some of them are new customers, some of them are upselling and cross-selling opportunities. Some way we exactly hear. These are just samples. You know, some of these contracts are pretty substantial.
For example, the cross-selling, the one on the bottom left side is with the one of the biggest Italian law firms. It is an international law firm actually. The contract was pretty significant, almost EUR 1 million contract. Again, this was done with A&C. It was really a result of the synergy and being part of the group. As you know, in the group, we already have know-how and expertise in the law firm side. That was very, very beneficial.
Okay. Thank you. Thank you a lot.
You're welcome.
As a reminder, if you wish to ask a question, please click on the Q&A icon on the left side of your screen, or press star and one on your telephone. The next question is from Gabriele Berti of Intesa Sanpaolo. Please go ahead.
Hi. Good afternoon, everybody, and thanks for the presentation. A few question on AI. First one, on internal processes. The presentation refers to a gradual shift from manual to assistant and eventually agentic activities across areas such as gap analysis, business blueprinting, et cetera. What is the expected timeline for this transition? Which activities are already in the assisted phase today? What could this imply in terms of cost savings and efficiency gain? Maybe the next few question will come later.
Okay. Obviously in all of these processes depicted in this chart, we are already in at least in the second phase, if not in the final phase, depending on the type of process. The benefits are pretty consistent and considerable as well because the benefits are both in terms of timing and also quality of the output. There's a range of benefits, which is pretty ample depending on the specific process. In some cases, for example, the first one, the gap analysis, the time benefit is pretty big, more than 50%, I would say, in some cases.
In the project development, which is part the coding activity is slightly lower, even if obviously we are building our agentic database that is very, very supportive in providing a better quality of software solutions and also providing the same solution in a much shorter time. Obviously, what's really important here is not only on the technical side, but also all the other departments impacted by this because pretty much all of our employees use AI tool in different ways and at different levels. You have to think about the fact that everybody in each department is using it. We're talking about finance department, the sales, obviously technology, HR. That's a, that's a mindset from us, from our point of view.
We started investing in AI several years ago when back in 2021 we acquired Humatics, which was our company focused on AI solutions. Since then, we started obviously developing this mindset internally, in addition to obviously a product portfolio, all AI-based, which goes in parallel with the fact that our portfolio is also benefiting from AI features. As you can see here, our payoff is that we move from features-rich software solutions to intelligent-rich software solutions. Each area has different benefits. It's quite difficult in the short term to quantify this, I would say in the medium term, we'll be in a position to really see what the efficiency level is gonna be.
As you would expect, part of this efficiency level should be transferred to the market, and some of this efficiency level should be retained within the company. What we can clearly state is that we are very well positioned here. We have a very, you know, high level of focus and attention all over the company, and we have also an internal project which is pushing very hard to make sure that the level of understanding and usage of AI tools and AI capabilities and opportunities is maximized.
Okay. Thank you. I will also going to ask you something regarding the AI offering. First of all, arIA, could you remind me if it is currently sold mainly as an add-on module to existing customer or also as a standalone solution to attract new customers? Then, you mentioned the Mosaic project among the main R&D activities. Could you please remind me the project's objectives, current stage of development and the commercial application?
Yes. arIA are standalone solutions that obviously are integrated in our product portfolio, but they can be sold standalone. There was an example, I think, in the chart that before this one, where we sold basically after before this. Where we sold basically the solution as a standalone solutions to this customer, who was already one of our customers. That's an example of cross-selling where the AI solution is sold on a standalone basis. In this case, it was to optimize the warehouse sales process. The second question was about Mosaic. Basically these are standalone solutions for many markets, lawyers, manufacturing companies, retail companies, and so on. The Mosaic is the one I was referring earlier. That's the name of the internal AI project.
Okay
which is, the one that is making sure that we maximize the level of usage of AI tools and capabilities within our organization, not only in the technical department, but across the board, including then finance, HR, sales, and all the staff.
Okay. Clear. Thank you very much. See you on Monday.
You're welcome.
For any further questions, please click on the Q&A icon on the left side of your screen or press star and one on your telephone. The next question is from Charles Patterson, Bank Capital LLC.
Hey, guys. Can you hear me?
Now, yes.
Hey, thanks for doing the call, and congrats on what look like pretty good figures. Couple of questions. I have sort of two on the cash flow statement, which I appreciate you guys including on the presentation. One is I'm trying to reconcile this figure that you have for M&A, the EUR 5.8 million in cash outflow. Can you remind me where I can see that on the actual cash flow statement? I'm struggling to figure out where that is flowing on the cash flow statement on page 22.
Okay, sure. As you know, the, you know, the IFRS standard puts this type of movement on the liquidity acquire and transfer from changes in the consolidation area. In terms of cash flow, most of it is actually underneath. Let me see. It's too small to show, but it's underneath.
Oh, I see.
the financial activities.
This 4.9%.
Yeah.
Okay.
Yeah. Most of it is there. Unfortunately, there's also movements in terms of debt, which is on the financial side because that's basically debt up and down. It's not directly, you know, readable in one line in the cash flow statements.
Right. Okay, got it. One more while we're on the cash flow statement.
Yep.
The taxes, it looks like you have, I see taxes paid of zero.
Yeah.
Is that correct?
Yeah, yeah. Taxes in Italy in Q1 are estimated.
The tax payments are actually in Q2, Q3, and Q4. In Q1, there's no tax payment, incredibly enough, but no. Don't worry, we're gonna pay them very soon.
Am I reading correctly that you have a tax liability this year, but last year it looks like maybe you had a tax benefit? Just trying to make sense year over year of what the cash tax is.
No. Well, the.
What your tax outflow last year?
the tax level-
Again, in Q1 it's estimated, so of course it's not the precise number. It's not, it's not as precise as end of the year when you have the full calculation or even H1. If you look at the cash flow statement, actually the taxes that are added up to, you know, on top of the net income, that's, you know, the component, right? That's estimated effectively.
Okay. I guess what I'm trying to make.
The taxes paid are.
Yeah.
They-
Trying to make sense of this big difference between last year and this year and the change in tax assets and liabilities.
Yeah, that depends also on DTA and DTLs, so on deferred tax assets and deferred tax liabilities. It mostly moves with deferred tax assets and with deferred tax liabilities, and that is heavily affected by the IFRS 3 and acquisitions. Of course, these are not easily comparable because in Q1 we had A&C Group last year, and this year we have nothing comparable to that. Of course, if you look at the PPA and the IFRS 3, all the components of the, you know, the first adoption, or the IFRS, in the case of A&C Group are hitting in Q1 in 2025, and we don't have that in 2026.
Okay. Would it, I guess if I'm thinking about this, your operating cash flow adjusted for those figures or excluding those figures, it implies that operating cash flow didn't grow very much year-over-year. Is that correct?
Yes, it is correct in the sense that it's growing with the business effectively.
Mm-hmm. Okay. Is the idea that these will sort of Don't pay too much attention to quarter figures, but maybe over the year they'll sort of even out. Is that the way to think about those?
It usually does that, yes.
Okay. Okay
Our usual perception, and again, Q1 is a bit of a weird one because there are tons of effects, like the invoicing, depending on how much you invoice at the beginning of the year. That changes the receivables quite a bit. The acquisitions were quite different, again, that changes things quite a bit. It usually levels out during the year.
Got it. Okay, maybe just last question.
Yeah
Update on acquisition pipeline and how potential deals are looking for the rest of the year.
Yeah. Obviously, the pipeline is pretty solid, I would say. We're working on several opportunities. As you know, we want to finalize the right deals. We are not in a rush. We're very much focused on obviously getting the best companies that best fit with our strategy and project development. As you know, the Italian market is providing a lot of opportunities. We're talking about thousands of IT companies, there's millions more IT companies. It's very fragmented, there's no problem of opportunities there.
Great. Thanks, guys. Appreciate it.
Thank you.
For any further questions, please click on the Q&A icon or press star and one. Gentlemen, there are no more questions registered at this time.
Thank you very much, and, see you next Monday then. Bye-bye.
Bye-bye.
Bye-bye.
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