Good afternoon. This is the Chorus Call Conference Operator. Welcome, and thank you for joining the Tinexta Group Consolidated Results at September 30th, 2023 conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Josef Mastragostino, Chief Investor Relations Officer of Tinexta. Please go ahead, sir.
Good afternoon, and good morning to the folks in the U.S. Thank you for joining Tinexta's 2023 nine months results presentation. Here with me today, Oddone Pozzi, Group Chief Financial Officer. As a reminder, all the relevant documentation of the first nine months 2023 results can be downloaded from our company website in the Investor Relations section. For the purpose of this call, I will go over the first nine months 2023 highlights and updates. Oddone instead will go over the first nine months 2023 financial results, as well as business units performance, providing us with a deep dive. The last part of the call will be dedicated to Q&A. A recording of this conference call will also be available on our company website, and it will be posted upon completion of this call.
At this point, given that you all have the presentation, I will kick it off by turning to page four of the presentation. Here we have highlighted some of the key data. Revenues for the first nine months came in at EUR 269.5 million, +9% versus prior year. EBITDA adjusted came in close to EUR 57 million, growing 4% versus prior year. EBITDA on a reported basis came in at EUR 51 million or growing 5% versus prior year. Net profit at a reported basis was EUR 48.5 million. Net financial position was EUR 91.5 million versus EUR 77.6 million of the prior year. Turning to page five.
Aside from some of the numbers already commented, it is important to highlight that adjusted free cash flow of continuing operation rose by 11% versus prior year, hitting EUR 40 million, and even more significant is the adjusted free cash flow on an LTM base, which came in at over EUR 53 million, showing the group's continued ability to generate significant amount of cash. Net financial position grew versus fiscal year 2022 to EUR 91.5 million. Such increase, it's important to highlight, is attributable to the acquisition of a minority stake in Defence Tech Holding, as well as Ascertia, which took place in the months of April and July of 2023, respectively. This was partially offset by the proceeds of the sale of Re Valuta, just as a reminder, which was completed on March the seventh of 2023.
Net financial position over last 12 months, EBITDA adjusted, came in sub 1x or 0.94x . In the first nine months of the year, in a nutshell, Digital Trust continued very strongly with growing trends. Revenues grew 14.4%, with EBITDA growing nearly 15%. EBITDA margins set a historical high, almost close to 29%. Cybersecurity grew 15% in terms of revenue. Even, even more, I would say, outstanding was the performance of the EBITDA on an adjusted basis, which grew 67% versus the prior year. This is therefore an extremely great result. We have posted resilient growth for four consecutive quarters, with EBITDA margin reaching nearly 13%. Business innovation grew fairly in terms of revenue, with EBITDA reaching EUR 22 million and EBITDA margin close to 28%. Going to page six.
As most of the comments, the numbers have been commented, I would like to remind you that the comparative data for the first nine months of 2022 have been restated in relation to the completion in the fourth quarter of 2022 of the activities identified in terms of fair value for the assets and liabilities of CertEurope, consolidated November 1, 2021. Evalue, fully consolidated in January 1, 2022, Enhancers April 2022, set up in May of 2022, and Plannet nine and one, consolidated as of July 1, 2022. It is important to highlight that the results in the first nine months of 2023 include the contribution of Ascertia Limited and its subsidiaries.
We'll go into the detail, and Oddone will provide you all the backup of this, but it is important to highlight that the contribution is as of August 1, so it is basically August and September of the third quarter. Such contribution is shown as a change in scope, while as a result of the aforementioned mergers, the contribution of the 2023 results of the acquisitions finalized during 2022 is not functionally measurable and accountable as a change in scope. For any further details, always refer to the interim report. Turning to page seven, we think this is, again, another slide that we are proposing again in Q3. It is an important one because we would like to highlight the cadence and confirm that this is a back-ended EBITDA story, with the fourth quarter obviously having the greatest weight in terms of adjusted EBITDA.
Again, we have confirmed that the average weight per quarter is absolutely in line with the average of the prior two years. At this point, I will leave it to Oddone, for to provide us with a deep dive on the results. Oddone?
Thank you, Josef. Good afternoon, everybody. Good morning to people who's connected from the U.S. As anticipated by Josef, you know, results of year-to-date Q3 came, you know, aligned with our expectations first. Overall, we got two business unit, Digital Trust and Cybersecurity, that continue the excellent, has continued the excellent performance of first two quarters. This was also confirmed in Q3, showing, you know, the steady growth of digital trust and the significant rebound of Cybersecurity. As far as concerned, business innovation, we the situation is on track with, you know, our expectation, and we do expect a quite significant important Q4, as occurred during Q4 2022, and this is refers exactly to what, to the last slide that Josef presented to you.
If we move into the PNL, the PNL is showing a growth in the range of above 9% for the consolidated results of the group. In top five products and services, you know, all our business units are represented. It mean that, you know, revenue is well distributed between the companies and between the different business units. In terms of cost, we do see that service and other costs are growing less than the revenue, and this is bringing some contribution of profitability, while the personal costs are growing more than the rest.
This is something that we do see as a temporary situation, as the Q4 is gonna be the stronger quarter of the year, where, you know, the absorption of personal costs will be much higher than in the previous quarters. So we do expect at the end of the year, you know, an improving of profitability compared to the situation where we are. The EBITDA adjusted came in the growth of 4% compared to previous year. The LTI incentive, as well as the non-recurring costs, are aligned with the previous year. EBITDA is at 19%, compared to 19.8% of previous year, for the reason I mentioned about.
The level of depreciation and amortization that are linked to our investment policy in terms of CapEx is quite increasing. This is the results of the continuous investment from our business unit. Digital Trust, Cybersecurity, and Business Innovation are continuing to invest in new solution and products in order to keep a very updated and fresh our portfolio of product and services, and this is showing an increase compared to the previous year. If we move to financial charges and income, we do see here a quite significant improvement. So our capability to cover the financial debt keeping it well below the current cost of money allow us to invest the cash available at the higher interest rates than the cost of debt.
That is bringing up, as we can see, we recorded just in nine months EUR 5 million positive interest, while, you know, the negative interest grew compared to the previous year, and half of this was related to couple of write-offs in term of minority interest in some activities. Income taxes is aligned with our expectation, higher than the previous year, but here last year, we had a tax relief related to the affrancamento we performed last year, and that was already very clear, explained last year. Result of discontinued operation includes both in first nine months, 2022, as well as in first nine months, 2023.
The gain related to the sale of Innolva in 2022, with a net gain of EUR 41 million, and the gain of the sale of Re Valuta in 2023, with a gain of EUR 37 million after taxes. Capital investment of the group grew from the year end, mainly is driven by the acquisitions and the consolidation of Ascertia from August first, and this accounted for EUR 44 million, as well as the acquisition of a minority interest in Defence Tech, for which we acquired 20% of the stake for a value of EUR 25 million. For the rest, there are no other significant changes. CapEx came at EUR 50 million on a recurring basis with EUR 9 million of amortization.
Net financial position, as Joseph already mentioned, is up, but only driven by the acquisition we performed in the first nine months, and free cash flow kept very positive standard. And as we will see then, you know, with the significant growth compared to the previous year. Shareholder equity increased for several reasons that we can see here at page 10, including the completion of the second tranche of the capital increase performed by Bregal in InfoCert. If we move to page 11, I would say very interesting is the growth of the free cash flow from continuing operation.
The adjusted free cash flow, excluding the non-recurring components, it went up in the first nine months from EUR 36.2 million up to EUR 40.3 million. This means a quite strong capability to convert the EBITDA into cash despite the significant increase of EUR 4 million that we have in CapEx compared to previous year. Basically, we were able to cash and to improve the working capital of EUR 6 million compared to previous year, and this is for us the confirmation of the quality of the services we are rendering to our clients and our capability to cash it. I would say I will move to page 13.
As already explained this, you know, over the last 12 months, if we look at the movement of the net financial position, the free cash flow from continuing operation in the last 12 months is above EUR 43 million. Again, this is encouraging and confirmed capability of the group to generate cash from the operation. We were able to distribute dividends at EUR 33 million. Then the group went through several, you know, M&A operation, both as a sale as well as acquisition that you know has changed this situation.
We went through also capital increase with Bregal that, I have just mentioned, for EUR 30 million, as well as the capital increase of Intesa and Warrant, after the completion of the transfer of full value, from Innolva that was sold to Warrant. Let's move now more into business deep dive. At page 15, you have here, you know, in just one page, the situation of the group with, you know, what I mentioned before, the very positive performance of Digital Trust and Cybersecurity, while for business innovation, we do expect, according to what also happened last year, a much stronger Q4 than the first part of the year. I move now to page 16. Digital Trust, you know what?
As already commented during past conference call, or during meeting, we got all together, you know, it's now, I would say, it's 10 quarters that we are recording a steady growth in both revenue and even more the capability to grow faster in GAAP EBITDA. This means that, you know, the size of digital trust now is quite significant. The revenue went up EUR 37 million. It means 14.4% with strong capability, with a quite interesting percentage of recurring revenue, and the continued capability to acquire large clients is, you know, one of the major driver. On top of this, both InfoCert and Visura are able to improve faster the EBITDA than the revenue.
I would say here, the operating leverage is basically helping this situation. We do see also, although we start from small numbers, our capability to export, on top of the business we do in the countries where we have already a local company there, we are ready to export to international clients our solution, and this part is growing, basically is growing 50%. Again, we are talking about small numbers, but this is a confirmation. Here, you know, for the year end, you know, we do expect continue to grow at this basically at this level, expecting to deliver results, you know, above what was, let's say, our original expectations.
In Cybersecurity, again, Q3 confirmed the positive indications of the first two quarters. Cybersecurity business now has taken, you know, a clear route of continuous improvement. Deep diving the figures, I would say, within these figures, we do basically see our traditional business, the traditional business quite flat, while all the growth is coming from pure Cybersecurity services. This has supported also Q3, and compared to previous year, we do see significant growth in term of revenue, well above the market, the market situation, and this is very positive. As well as we do see a significant improvement of the margin. The margin went up 400 basis points. This is quite an impressive results.
We can definitely say what we have anticipated during previous conference call, that basically, compared to our expectation, we are, let's say, 9 months - the original expectation of the investment, we are nine months later, but now we are deploying exactly as we expected this growth. Also, Q4 is we forecast a very positive Q4 in order to end up the results according to our expectations. Business innovation, I can understand that looking from outside is something that needs explanations on this. But you know, we know what we have done last year. Last year, Q4 was very strong.
The level of portfolio we have now is, is encouraging, and, and therefore, we do expect to recover, quite significant in term of profitability, during Q4. Obviously, in this area, part, we have, two trends that, you know, all trends was basically, already expected. You know, we, we were already planning a reduction of rates that is obviously occurring accordingly, to the budget law, but, you know, we are, reacting, with other, businesses. And, obviously, we, we were expecting a reduction in international, in, in, you know, temporary export management, solution, even though, starting from July, the level of incoming orders of this area is improving, so we do expect, a slight positive, Q4.
Very positive information is here that the investment we have done in digital innovation, the acquisition of Enhancers and Plannet, are perfectly aligned with our internal budgets, and so is perfectly aligned with the investment case we developed at the time of the acquisition. Obviously, the decrease of the profitability compared to the flat revenue we recorded is mainly driven by the increase of labor cost, but we do expect to significantly compensate this situation in Q4, where most of the revenue will come and the margin, the marginal profitability will be much higher in Q4.
So, now, I leave you now to Joseph for final consideration and guidance, but, you know, we have in place all the action to work through the result we expecting and the guidance we are sharing.
Okay, Oddone, thank you. So just to wrap it up, I'm on page 20. On page 20, I would like to reiterate what the board of directors has confirmed, which is also the guidance. The guidance in terms of 2023 versus 2022 on a reported basis sees revenue growing anywhere between 11%-15%, EBITDA adjusted growing in the range of 8%-12%, net financial position over adjusted EBITDA 0.7x-0.8x . I would like to reconcile this number for the market in order for everyone to be online. We had come out with a guidance in March of cash positive, obviously, not including the acquisitions that we have completed throughout the nine years.
There's another moving part, which you see here on the note, which is also the lower proceeds due to the postponement by management of the exercise of mature stock options. So these two items, which are obviously the ones that are moving, bring the NFP over adjusted EBITDA to 0.7x-0.8x , just to flatten any doubts and iron anything out in terms of that. Oddone, do you want to-
Maybe, on this point to make... You know, Josef was very clear here. I want to make, going back into numbers. We were planning cash positive. Here, we are planning 0.7x, 0.8x. If we estimate an EBITDA north, obviously, of some millions north of EUR 100 million means we are talking about EUR 70 million-EUR 75 million debt. EUR 44 million came from inaudible. EUR 25 million came from,
Defense.
From Defence Tech. We had the extra investment in the software of [clip] and, you know, the non-exercise of the stock option. So basically, this accounts for more than EUR 75 million. So this is how this is explained. Obviously, next year, we will have the full deployment of our that definitely will help in delivering the results.
So that, that wraps it up. I would open the Q&A for any questions that you might have. Operator?
This is the Coralville Conference Operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and One on their touchtone telephone. To remove yourself from the question queue, please press Star and Two. Please pick up the receiver when asking questions. Anyone who has a question may press Star and One. At this time, the first question is from Alexandra Arsova of Equita. Please go ahead.
Hi, good afternoon. Thank you for taking my questions. A couple of questions from my end. The first one, just a clarification on business innovation. So you mentioned that you expect a significant recovery in the fourth quarter. Just to get it clear, since we are already in the mid of the fourth quarter, you're actually already seeing this improvement, so we should expect a significant positive growth in the EBITDA in the fourth quarter for business innovation. So this is the first one. And the second one is just, an update on your partnership with, Defense Tech, and, if you see the probability of, exercising your call option to maybe be increasing, I mean, in the first half of next year. Thank you.
Hello, Donna here. Definitely, you know, you know, just to give you a little bit of more color on the question of business innovation, I think is already clear to everybody that Q4 is the driving quarter of the profitability of business innovation because it's you know, the Finanza Agevolata as a business itself, work in the way that our customers has to complete their investments and put them up and running before the year end, in order to have the opportunity to cash the grant when they are going to to file the tax declaration. So this is the natural way why these results are improving, are improving in Q4.
So, so this is a rush in Q4, where our clients are rushing to complete the investment, and we got the right to bill our services to them when their system, their investment are up and running. So it's a mutual benefit of ourselves and our clients to complete the activity by the end of the year, so they can cash their grant during the following year. So having, you know, trying to clarify why we are stretched over the year end, we have to consider that compared to previous year, you know, the reduction of rates is impacting part of the activity, and in some way, some clients reduce their you know willing to run this investment.
Now, approaching Q3, some of them came back to us, and they are reevaluating this opportunity, so we are in a rush, you know, to try to complete with them this investment. Indication from the revenue of months of October is positive compared to previous year. So, and honestly, you have to consider now that already Finanza Agevolata has a very high profitability, because we have to remember that then, when Warrant was basically only in Finanza Agevolata, the EBITDA was in the range of 50%. Now, we are considered basically that we are recording a lot of revenue, while the costs are, because we are basically cost of people, will be only one-fourth.
So the profitability of Q4 in terms of EBITDA of this business will be much higher. So we do expect to convert in EBITDA more than 60% of the revenue we generate. So we do expect a significant. You know, our board of directors today review all the information from the business management and therefore, you know, the board and all us, we are aligned to confirm the guide. As we move to Defence Tech, obviously, you know, after the approval of the balance sheet of 2023, our board of directors will convene in order to analyze and go and taking the decision of whether or not to exercise the call.
Obviously, we are working with the Defense Tech within the clear limitations we have, as we are talking about the two listed companies. But, you know, we can say that already some, let's say, commercial cooperation between the two companies is helping and is definitely some is a positive signaling indicator. We will work again, together within, you know, all the limitation in order to better understand each other and explore all the opportunity of synergy, but I would say it's not going to be a business of cost synergy, but will be an opportunity of developing cross-selling and developing, you know, and exchange capabilities from the technical standpoint.
So far, you know, I have to tell you that I do see positive indicator, and as of today, no one negative indicator. But again, at the end of the day, will be the board that will convene after the approval of the balance sheet to analyze the situation and taking a decision.
Okay, very clear. Thank you.
The next question is from Russell Pointon of Edison. Please go ahead.
Thank you. Good afternoon, Oddone. Good afternoon, Joseph. A couple of questions, if that's okay. First of all, I'm just trying to square a couple of the comments off. You're confirming overall guidance for the year, but, I mean, in your comments, you state that Digital Trust is, you know, expected to continue growing at above the original guidance. And does that mean that actually you're going to get to the overall group guidance by a different means? I guess what I'm trying to get to is business information going to be weaker than you originally anticipated at the start of the year?
My second question is, this is on the, on the Digital Trust, you know, it is performing, you know, 12, which is a couple of percentage points above your, you know, attempts that you spoke about at the start of the year. So could you just give some indication of what is driving that being so much better than you anticipated at the start of the year? And my third question is, there hasn't been much activity on the share buybacks in Q3. Just be interested in your thoughts on that, given where the share price is. And similarly on M&A, just be interested in your thoughts there. You know, the balance sheet's looking, is going to be in good position by the end of the year.
Is it, is it more cautious on your side with respect to the outlooks, valuations of the companies and sector, or is there resistance on the part of the companies you're looking at? Thanks very much.
Russell, good afternoon, Oddone here. If I have well understood your question, you know, Digital Trust is performing slightly above our expectation. Honestly, growing very close to 50% in terms of revenue is above our expectations. It's above our budget, and at this level, as anticipated, the profitability, the EBITDA adjusted is growing much faster. You are telling me why this? Definitely, I would say that our products continue to perform very well. Last year, we have to remember that inflation in the beginning of the year was quite a potential significant issue.
So we put in place in the early part of the year, the opportunity to improve pricing, especially on the OTS when possible, and we do that, and it's driving result, driving results. Inflation now is slightly lower our expectation, and we were able to manage it in the on the cost side, also negotiating very well with our supplier. And I would say, we were able to continue to develop a digital transformation management solution with some large customers. So the combination of slightly better performance on different items drove us to this. There is no any one-off positive thing. There is no any magic touch from the magic, is their hard work.
For example, they had slightly above CapEx than expected because they decided to improve the operation, that to be more and more focused on the core business, they are outsourcing all the infrastructure management. So we went into an agreement that was also public with with. And so this is undergoing, is going to be complete soon. This will allow even more and more focus on product solutions development and client service, while, you know, we are moving to third party the management of the very large and complex infrastructure. So I would say this growth, as you can see, is steady. This growth is happening quarter by quarter. We don't have the significant up and downs compared to the previous year.
It means that the company and the business unit I'm talking, you know, especially of InfoCert and Visura, are very solid, are very well managed. They have a strong management. They put in place operational targets of improvement, and they are able to deliver. So this was the first question. Josef, help me on the second one?
Yeah, buyback and M&A.
by whom?
Yeah. So in terms of, Russell, in terms of buyback, obviously we know where the share is. You know, there's not much more that we can comment on it, right? And when it comes down to making strategic decision, it is a decision of the board. We are evaluating all the options. I guess it's just more of a wait-and-see type of scenario here. In terms of the M&A, again, you know, I mean, we would love to give you so much more detail, but, you know, it takes the time that it takes, right? And, you know, when you start evaluating assets, we are constantly evaluating assets in all the different business units, and therefore, when the time is already, we can then obviously disclose more.
If I can just add, you know, although we just invested in the minority part of the Defence Tech, we have a call option for going to majority, and this is gonna be once, when it's completed, a major investment, because we are talking about under EUR 25 million. So for Cybersecurity, you know, the focus and the capital allocation as of now is this. For Digital Trust, we completed in July the acquisition of Ascertia, putting a foot into not only the U.K. market, but having, you know, a hub of development in Pakistan, as well as a presence in Middle East, Africa.
Very important is, as I already mentioned, that Ascertia has a solution for on-premises solution, and this, combined with the capabilities of InfoCert, has led to an important contract we are going to, we signed, but we cannot yet disclose, but an important contract we got internationally as a combination between capabilities of Ascertia with capabilities of InfoCert. We have done this, obviously, in Digital Trust, we are very open to analyze any opportunity that comes, but, you know, we are not in a hurry. We have set the inaudible, we could just acquire Ascertia.
We need to find the right deal to be done, and we are interested in deals that amounts for ex- for something that help us to bring really a significant improvement. Our eyes are very open, and we are looking at potential opportunity when something will come, obviously, will come to the market. Same thing is on business innovation. We are progressing with, you know, the acquisition where we are done, and we are looking very actively in the European markets. We are evaluating some opportunities, and, you know, we are confident that this opportunity could one of this opportunity could come to the end.
If you ask me when is M&A, but we are both working very actively. Financially wise, we are very, we are in a very healthy situation, and so we are looking around the market for interesting opportunities.
Yeah, maybe to complete that, remember, the two, the two business units, both BI and Digital Trust, if we look at a, a Pan-European market-
Yeah.
They are very diversified, right? I mean, the market is extremely fragmented, and therefore, any further consolidation is probably very welcomed. I'll leave it there because we can't really comment more.
Okay. Joseph, then just go back to that first question. My main question was, if you're confirming the guidance for the year, but Digital Trust is better, does that imply that business information is not going to do the revenue that you expect at the start of the year? 'Cause when I read the financial report, the Cybersecurity and Digital Trust, you do kind of refer—you do talk about the good growth rates and the growth rates for the next few years, but you don't do that in the section for business innovation.
... Russell, you know, you have seen that, digital trust is growing like we, like, like we said, slightly above our expectations. So when we talk about, a business unit that could do, let's put EUR 15 billion, slightly above, we are talking one, two, three million, I don't know. Obviously, this is what, you know, we are growing 15% in terms of the EBITDA, it would be not significantly different at the year-end. So, if we add the guidance, it would be one or two point less. We are talking in absolute value, one or two million, this is what is gonna happen.
In the same way, you know, it's not gonna change the picture of the business innovation if instead of a gain of EUR 50, it's gonna deliver EUR 48. What is gonna change? You know, I have to tell you that we are very glad that the improvement of the slightly below performance are in a very, very limited variance. But, you know, when we started the year, the situation was also from the macroeconomic standpoint less negative. Also, the GDP was expected to be slightly better.
So we are very, let's say, happy, that in a context like this, you know, we are still confirming to be within the range that we shared with the market at the beginning of the year. Obviously, as in any company, as in any business, you may have something that is performing slightly better, something that could perform slightly below our expectation, but there is no a major difference everywhere. And on top of this, you know, we share with the market a strong guidance in terms of increase of Cybersecurity, and after nine months, we are growing 66%. On small numbers, it's very clear, because the numbers are there. The small numbers, but still is on track with expectation.
If we grow like this, the growth will be, we will be between 35% and 40% at the year-end. That I would say is gonna be a huge number. So, some adjustment may come, some, you know, orders can come by year-end, some revenue could come later or before, it's not changing the picture. Finastra, after nine months, is continue to convert and to generate significant cash. Our major pillars are there. We are experiencing a delay in the business innovation, but again, the quarter that is making the difference is Q4.
Q4 is there, as I answered to your colleagues a few minutes ago, you know, we are encouraging information, but again, I will tell you, if Finastra will deliver EUR 1 million more or EUR 1 million less or EBITDA, honestly, is not making a major difference. What is making difference is our capability to continuously deleveraging, continuously to improve to increase double-digit in the two markets that are growing double-digit, and we are performing much better, both in Digital Trust and in Cybersecurity, compared to the market. We continue to deleverage, we continue to invest, we continue to deliver aligned with our expectations.
You know, just to wrap it up, as a reminder, all this growth is purely organic. We always-
Yes.
Just remind the market that this stuff is all purely organic. Thank you. Any further questions?
No, thank you. Thank you for being so concise. Thank you.
No, no, no, no, it's a pleasure, Russell.
The next question is from Isacco Brambilla of Mediobanca. Please go ahead.
Hi, good afternoon, everybody. Just a couple of quick questions from my side. First one is on Digital Trust. With first half results, you provided also a bit more of a granularity in terms of growth pace for off-the-shelf and DPM. Wondering if you can give us the same data on a nine-month basis, since it looks like business accelerated in the third quarter. Second question is on M&A. You already elaborated a lot, Oddone, on this. Just a follow-up. We saw some deals being completed recently in the Digital Trust space, apparently also regions which were of interest for you.
Is there a cap on your side in terms of multiple you are willing to pay, and so you are getting out of the transactions because of valuation for the time being?
Ciao, you know, talking about Digital Trust, like I said, OTS is performing very well, but, you know, also DTM, we were able to collect quite significant contracts also in this area. So I would say that we are not honestly in a pure consumer market, so we do see, we look at our business at least on an annual basis. So if in one quarter, we may have a slightly better in the OTS, but then if a large contract comes in the following quarter, it rebalances.
Both parties are growing very well, and in DTM, we have to remind that each contract we get, you know, some one-off opportunity in DTM in terms of revenue, but it starts a recurring revenue there. So, again, we have to look at the whole picture. In any case, both areas are growing very well, and as I mentioned before, is increasing also, let's say, the DTM at international level. So we are selling, starting from small number, also solutions and products on a DTM part to some clients around Europe. And this is also a very, very interesting indicator, because I tell you, to going to sell a DTM solutions moving from Italy is gonna be quite different.
Obviously, we are talking about the countries where we do not have a company there, but it is very positive. The last question was?
M- M&A.
On the M&A, yes, again, we are interested in looking at targets where we can really grow in that country, the opportunity to develop our solutions. You know, because if not, it's like acquiring just an asset in the digital trust. So our strategy is in each country to acquire what we have, and this allow us to be immediately up and running, to have the right authorization and certification. But then, the asset has to be the right platform to allow us to develop our solutions. So I think that with these explanations, you may understand why sometimes some assets that could be our interest has not been...
On the other hand, on the multiples, you know, the world around us has changed, and therefore, if sometimes multiples above what we- you know, more than multiples, I'm looking at the DCF. If the DCF is not allowing us to run an investment, we don't do it. In our DCF, we put also synergies, opportunity of selling our solution, and so on. So this is something that should help to provide you the picture of some of our decisions.
Thanks, Aldo, very clear. One quick follow-up on the first question. So, over the past days, the announcement of the agreement for InfoCert with Stellantis for GoSign, could you just remind us if Stellantis is now a brand-new client for Tinexta, or if it was already in your customer base?
Exactly. As a reminder, you know, InfoCert is a leader in all the major verticals, right? We're talking about the banking, we're talking about the telcos, utilities, and above all, the automotive, you know? So we already have, you know, extensive, I would say, connections with, Stellantis, the group, and other major brands. But I think that the key takeaway from the contract that you heard, which includes over 10,000, you know, dealers around Europe, is that our technology is extremely, at reach, right? And therefore, on one side, you have the flexibility of the solutions, on the other side, you have the trust, right?
We are the largest certification authority in Europe, and a big group that selects this type of company, like InfoCert, means that they really want, you know, the highest standards when it comes down to security and trust. So based on that, I mean, you know, this is another confirmation, obviously, that InfoCert is being chosen constantly from major groups, medium groups, or small groups, because of the exceptional offer that we have.
Very important to understand that looking at the business of InfoCert, you know, one contract is not making the difference next quarter or next two quarters, because you may have a one-off, or maybe one year we got with Stellantis, the year before we got with a public body, with the major Italian groups and so on. But what is gonna be important? This is the reason why we have a steady growth, well above double digit, is that, if things will move properly, you know, this will be further recurring revenue, and so this will help us to continue to keep a steady growth.
So, this business is not the one-off, but is the base, the installed base we have that is generating revenue quarter after quarter, providing us the opportunity to invest more in improving our solution and to allow us to create more and more a gap between our solution and the solution of our competitors.
Thank you, Giacomo.
The next question is from Chandra Sriraman of Stifel. Please go ahead, sir.
Yeah. Hi, can you hear me?
Yep. Yep.
Perfect. So thanks for taking my question. Just a couple from my side. Firstly, you've had the Cybersecurity business for a while now, it's doing quite well. Can you talk about the cross-selling that you have managed to achieve here in this business? Are you seeing some significant improvement in cross-selling across digital trust and Cybersecurity? That's number one. And number two is in terms of digital trust, are you seeing? You mentioned that not a single contract has made a difference. Are you seeing some systemic change in terms of your ability to gain market share in this business of late in the last few quarters? Anything to highlight there would be super helpful.
And lastly, in terms of just a follow-up on the digital side of things, the business is now becoming a meaningful contributor. It's now 66% of your EBITDA for the first nine months. How large can this get? How do you see this business in the medium term? Thanks.
Sorry. The line was not very clear, so try to summarize with Joseph.
Yeah. So the first question, Chandra, was about Cybersecurity cross-selling between Digital Trust and Cyber, right? The second was about-
Yes.
If you can give us some color on Digital Trust market share gains. I think that was pretty much the questions, right? Am I missing anything, Chandra?
Yeah, there's a last one, which is, in your medium term, in your medium term plans, how, how large do you... Can you hear me? Hello?
Yeah. In the medium term, where can digital trust go, right? That was the question, right?
Yes, exactly. Yeah. Yeah.
Yes. Here, you know, as we announced it last year, no, early this year, I do not remember exactly. You know, basically, InfoCert and Yoroi went through a joint development of a product. Means that in Italy we have the electronic certified email, and this kind of email became not only certified in term of trust, but became also cybersecure. So it means basically that we are a provider that is able not only to certify the sender and the receivers in both ways, but also to certify that the attached document, documentation has moved, have moved from one side to the other in a total cybersecure way.
This is what we brought to the market as unique proposition, and, yesterday we have our sales convention, and this was shared that definitely, the results of this cooperation and cross-selling went, very well. Obviously, now, every time one of our companies is delivering projects between to our customer, if we are talking about Cybersecurity solution, the solutions from Cybersecurity are the solution that Digital Trust is bringing to the customer. On top of this, I have to tell you that within the growth of the Cybersecurity is happening exactly what we were expecting when we acquire Corvallis, Yoroi and Swascan.
You know, Yoroi and Swascan are players very well recognized for vertical capabilities on Cybersecurity, while Corvallis has a strong long-term relationship in providing IT services to large corporate clients, like Banca Intesa, like UniCredit, like Unipol, and whatever. Now, we are seeing the more and more contracts within this large customer on Cybersecurity, and this is exactly what we do expect. This is the reason why we were able to grow within Cybersecurity in a significant way.
All right, so I'll take the other two questions, Chandra. So, you know, market share, I understand your concern about the market share, right? But the best way we've always represented that is also been reported in our prior Capital Markets Day.
Not talking about this year, I'm talking about the prior year. What we do is, and the best way, you know, to analyze it is on a revenue base, right? So, I still remember that slide where we were showing both at an Italian level as well as at a European level, where we were, and obviously we ranked number one in terms of digital trust. And when we, when we analyze those revenues, we're taking in consideration the digital transformation market, right? So in other words, I agree with you. We are now reaching a sizable amount of revenue. If I look at the nine months now, digital trust is now north of EUR 130 million, so you can see where we plan to land this year, right?
I think the most important takeaway here is the fact that we, and we mentioned this, you know, prior, you know, during the call, that it's been consistent, you know, 10, 15 quarters of growth. I mean, we've had the opportunity of growing mid-teens. And, and, you know, to kind of answer your third question, which was, yeah, you know, where do you plan to see it, where you see this business? You know, we definitely see this business growing on an organic base. That means without any acquisitions in the mid-teens, right? That was the number that we gave out, during the capital markets day in March, and, you know, there's no reason why this, this division shouldn't be growing in that direction.
On top of that, obviously, you can add all the M&A you want, granted that the M&A is obviously of our interest, right? Because we want the M&A to be accretive, not just from a financial standpoint, which is a given for us, right? Cash flow is our fixation, but also from a, you know, strategy, service, and product standpoint, right? So, you know, just to give you a quick answer, you know, the overall organic growth is something that, you know, is absolutely to our reach when it comes down. And when I'm saying organic growth, I'm talking about mid-teens in terms of the EBITDA, and that's where, you know, we projected the growth. Again, you know, we'll see where the year ends up, but I think that's the best type of answer that we can provide right now.
Great. Thank you.
The next question-
You're welcome.
Excuse me. The next question is a follow-up from Alexandra Arsova of Equita. Please go ahead.
Hi. Sorry, just a very quick follow-up. Two questions. From the visibility we have today, I know it's a little bit early, but, how you see 2024, also considering the indications you gave, during your business plan at the beginning of this year, so you are still confident in what you said some months ago? And the second one, so previously you mentioned that if you, of course, exercise the call on the FinTech, you will cash out an additional EUR 125 million. So doing the maths, you will be close to 2x net debt to EBITDA after the deal, if the deal is completed, of course.
You will prefer to maybe wait and deleverage a little bit before doing additional M&A, or do you believe that this is not a threshold, that is 2x net debt to EBITDA, and so which is your target leverage? Thank you.
Yeah, Alexandra, so here, talking about the leverage, you know, historically, our group always thought that a 2.5x EBITDA could have been the right, the maximum level to put the leverage. So obviously, if we are going to run the FinTech, will be. And the additional cash out is gonna be not EUR 125, but early estimate is talking about EUR 100. But any case, so still, we are within our parameters, because on top of this year forecast, you have to include the shares, and then you have to include the FinTech.
Having said that, this is, I do, in terms of your correct question on potential limitation on M&A, I would say no, because I think that obviously we will evaluate if the 2x- you know could be you know evaluated, if we could go slightly above. Any case, we have to remember that already one and a half years ago, there was a resolution from the shareholder meeting for which you know the board of director is empowered to call for a potential share capital increase up to EUR 100 million. So this is in the power of the board.
So I have to tell you that if a major opportunity will come, you know, the Board of Directors will look carefully at all the options that we could put on the table. So I think that, you know, we and I strongly believe that we can have a full support from the bank to go also above, but then the board will decide what to do. So here we are, and I do not see the board having the view to limit our M&A policy.
As a reminder, we went over this during the capital markets day. The way we carry out M&A, some of the major requirements, you know, according to Tinexta, are the fact that these, these assets need to generate cash. So, as a prerequisite, this means that when we buy, we may reach a momentary peak in terms of leverage ratio-
Yeah.
- which would then fall down in the following year or year and a half or so. Okay? Thank you very much. The, on the second question, Sandra, on, 2024, we will reconvene, and, once we have, you know, a better picture of the end of '2023 and the assumptions for '2024, we will make it clear to the market.
Yeah, yeah. Also, you know, the perimeter has changed because of the inaudible, so we will do as usual.
Okay, thank you.
Thank you very much.
Thank you, Alexandra.
The next question is from Andrea Bonfá of Banca Akros. Please go ahead.
Hello, good afternoon to everybody. Ciao, Danilo. Ciao, Josef. Very quickly,
Ciao.
Most of my answer, most of my questions have already been answered, so, I got once again I would like to have a clarification-
I hope so, I hope so. I'm joking. Please, please go ahead.
No, again, on the higher net debt for the year and, you left us with the 0.2-0.3 at the end of the semester. There is definitely acquisition of Defence Tech, which is adding EUR 25 million, but there is another shortfall of EUR 25 million, which I don't get, because the treasury share were already included in the previous guidance. So, is there any item particularly worth mentioning or what is the delta?
Yes, probably you were not connected at that time. You know, it's, we have, we said to the market, cash positive. Let's, let's assume it was EUR 5 million, EUR 10 million, whatever. Now, if we are going to be in the range of 0.7-0.8, we are talking about roughly EUR 75 million to make it round numbers. Now, 44 is. Let's say 45, plus 25 is defense tech, and so we, we lend to 70. Then we have EUR 10 million investment in brief software, and then we have less cash in of about EUR 50 million from not exercising the stock options from the management.
Okay. Thank you very much indeed.
You're welcome.
Mr. Mastragostino, there are no more questions registered at this time.
Yeah. Thank you very much. We appreciate your time, and we'll reconnect for the fiscal year 2023, which will be announced next year.
Thank you, everybody, for your, for this call and your attention and the questions. We are obviously, we are available-
Anytime.
Anytime.
Bye.
Bye. Have a nice weekend.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.