Ladies and gentlemen, thank you for standing by, and welcome to the Atos Q3 2020 Revenue Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. I must advise you that this conference is being recorded today, Thursday, 22 of October, 2020 . Now I'd like to hand the conference over to your first speaker today, Elie Girard, CEO of Atos. Thank you. Please go ahead.
Hello, everyone, and thank you for being with us this morning for our conference call on the third quarter of 2020 . Of course, first of all, I hope you and your closest ones are doing well and keeping safe in those times. I will first go through the highlights and the key figures of Q3, then Uwe will develop the financial performance of the quarter. After my conclusion, we will open the floor to your questions. Eric Grall, our COO and head of manufacturing, and Adrian Gregory, our head of financial services and insurance, and head of Atos Syntel, are with us this morning to answer your questions. On my first slide, what are the main highlights of the quarter?
First and foremost, and our commercial activity in Q3 was very strong, and I should say, reached record high levels, both in terms of order entry and in terms of pipeline. But equally important to me is that the content of what we sell is progressively pivoting towards more digital, more cloud, more cybersecurity, and also now more decarbonization. As a first result, our top line started to recover in Q3 from the trough of Q2 and will continue in the next quarters. I am sure we'll come back to this later on. This commercial activity is obviously the first result of the Spring program implementation. As a reminder, in Q3, we launched the step two of the transformation, including vertical expertise, and we are now preparing for the last step, step three, early next year with the implementation of our practices.
Next highlight, in Q3, we intensified our actions on cost and cash, launched in H1, on track towards our objectives of operating margin and free cash flow for the year that we confirmed today. Uwe will give you more details on this in his presentation. While we are delivering our quarters, I also want to underline that the group pays a very high attention on pioneering, on more structural matters, reinforcing our strength on all dimensions, in corporate social responsibility, in our decarbonization business, decarbonization for our customers, and in key technology areas. Finally, I am glad to announce today three new important acquisitions fully in line with our M&A strategy that I had the opportunity to explain to you earlier this year. Eagle Creek in Salesforce in the U.S., Edifixio in Amazon Web Services, Azure, and Salesforce in France, and SEC Consult, a cybersecurity consulting player with positions worldwide.
As a reminder, we also closed four transactions announced in previous quarters, EcoAct, Paladion, Digital Security, and Alia Consulting. Let's move to the next slide, where you can see the main figures of Q3. Revenue at constant currency was down -2.5% at EUR 2.644 billion. An organic decrease contained at -3.5% after a second quarter at -4.8%, which, as announced earlier in the year, represented indeed the trough of the year's revenue profile. The very balanced group mix across industries, geographies, as well as businesses, has played once more an amortizing role. But more importantly, to prepare the future, the commercial activity was really strong, as bookings increased by 20% year-on-year at EUR 3.3 billion, representing a 124% book-to-bill.
This ratio was particularly high in financial services and insurance, and in healthcare and life sciences. Important to note as well, that the backlog reached a record level of EUR 23 billion, and above all, that the pipeline was up 25% year-on-year, in spite of strong signatures in Q3. All these commercial KPIs are therefore pointing into the right direction to generate the revenue growth to come and to give visibility in those uncertain times. On the next slide, let's focus on some examples of representative deals signed in Q3. Globally, we saw an acceleration in signatures in cloud migration, such as with Willis Towers Watson in financial services and insurance, which was actually a client of Syntel on a much smaller scope, and therefore a great example of revenue synergies between Atos and Syntel. Another one is PwC in Telecom, Media, and Technology.
This PwC contract also includes, on top of business-critical application migration to a secure hybrid cloud and digital workplace management, a Decarbonization Level Agreement, a DLA clause, committing to reducing the carbon footprint of PwC digital services. Still, in this vein, and I've said before, Atos is ideally positioned to capture the emerging demand coming from decarbonization needs. As another example, Atos will help Infineon to create a digital factory by providing a carbon-neutral facility with a suite of state-of-the-art solutions, including active LAN and Wi-Fi networking through advanced technology, compute and storage supported by a professional services package and maintenance support. As a last example, in public sector and defense, we signed a contract with Linköping University to build Sweden's fastest supercomputer for machine learning and artificial intelligence. Very interestingly, it will deliver 300 petaflops performance dedicated to AI.
On the next slide, let me now turn to the pipeline of commercial offers we are currently working on with our customers. What are the offerings which are interesting our customers the most often at the moment? Starting by manufacturing, we see, of course, a significant acceleration with COVID on digital workplace and cloud migrations, but also more and more on cybersecurity, SAP HANA operations, and more vertical needs aiming at fostering efficiency, automation, and process excellence. In financial services and insurance, digitization comes first with moving to a real digital business by investing in fintechs as a move from build to buy, by moving workloads and applications to the cloud, and by using automation and machine learning to optimize B2B transactions to drive personalization.
Financial institutions are also working hard on optimization programs, such as working from home with significant investments in the digital workplace, as well as data insight, including improving the quality of that data using AI. Finally, cybersecurity has been an accelerating trend in the financial sector to support workloads and applications being moved to the cloud. In public sector and defense, there is a continued strong momentum on high-performance computer deals, driven by the progress of the European Exascale program to come, but also by a growing concern in European and South Asian R&D and government organizations regarding their digital sovereignty in the big data area. There is as well a growing awareness in cybersecurity and in digital public safety as European countries build their digital defenses.
Finally, technology independence is now at stake for many governments, starting with Europe and the creation of Gaia-X, of which Atos was a founding member, to foster data portability across clouds. In Telecom, Media, and Technology, a strong demand comes from BSS, OSS, business and operations support systems for telcos, which need a deep transformation in preparation for 5G. On another note, we started to get tower company RFPs, where we're using our digital twin solution along with third-party solutions. We work as well on several deals with applications moving to the cloud, DevSecOps, data center consolidation, hybrid cloud, and finally, perimeter services for applications requesting SLAs. In Resources and Services, we see three rising trends. First, decentralization, which clearly comes together with renewable energy that is causing a distributed production network.
There is also, by the way, a significant acceleration of this trend in retail due to COVID impact and need to secure the value chain. We are here strongly positioned thanks to our edge computing offering. Second, decarbonization. This is a clear trend in industries like oil and gas, with clear strategy in renewables and circular economy. And of course, third, digitization. On this, I just would like to mention hyperautomation and multi-sided platforms, especially in transportation. Finally, in healthcare and life sciences, a strong trend relates to the acceleration of third-generation outsourcing and end-to-end infra and app deals in the provider space in the U.S. in response to the financial impact of the pandemic. Another trend is the acceleration of all kinds of remote care services, such as telehealth, remote monitoring, virtual clinical trials, and digital displays in pharmacies.
On the next slide, you see that once again, we have been very active on the CSR front over the quarter. In Q3, we have once more accelerated further the skilling of our staff, increasing by 74% year-on-year, the number of certifications obtained by our people globally, including in cyber, SAP, and cloud. We prioritize our internal people when filling positions as part of our retention HR policy. In Q3, we have also issued a new flexible working charter, which will materialize into a new balance between work from home and work from office in the new normal. In the environmental dimension, we introduced our internal carbon pricing mechanism, which will drive for all managers the right business decisions supporting our decarbonization strategy.
Finally, we are going to hold a general meeting next week with the vote by shareholders on Atos' ambition, strategy, and midterm targets, as presented at our Analyst Day in June this year. Obviously, as a result of all CSR actions and the ones from previous quarters and years, I would like to mention that Atos has been rewarded the platinum medal by EcoVadis for its outstanding performance, the best result ever, and that Atos also rated a top score, triple A, for the fourth consecutive year in MSCI ESG ranking as a leader in the software and services industry out of a 139 companies. We are also pioneering in decarbonization for our customers. On the next slide, indeed, you can see a few of our commercial successes in Q3 in that area.
I talked already about some of them, so let me just point out a few more examples. We have delivered and continue to support Scottish Water in their decarbonization roadmap to provide energy efficiency and leakage reduction. Concretely, we provide 6%-8% energy efficiencies across their 1,700 pumping stations. For our client TransnetBW, we developed a data exchange and redispatch platform that brings 10,000 renewable energy sources into the grid control system of the German state of Baden-Württemberg. But there is much more to come, with already more than EUR 50 million of pipeline just for Q4. Our decarbonization assessment offering, opening doors to implementation contracts, is delivering well across our accounts, with 13 won and a further 43 in our pipe for Q4.
Our decarbonization level agreement, which is our contractual commitment to carbon reduction, has also been proving very popular and is developing very well in our pipe. Of course, the acquisition of EcoAct that we have just closed represents a significant boost in our ambition for our customers. We are also definitely pioneering on some key technology areas, which is on the next slide. There is one in particular that I want to highlight today, as a lot is happening as we speak in many countries, especially in Europe, and Atos is ideally positioned to lead the pack here. I am talking about high performance computing, HPC, and quantum computing. In HPC, Atos has become number one in Europe, but also in Brazil and India, for example. Mastering these technologies is essential in the battle around simulation, artificial intelligence, and virtual reality.
And then Atos is also leading in quantum, the next frontier of computing, for which we offer the most powerful simulators on the market, already adopted by nearly 30 of the most prestigious research laboratories in the world, including in the U.S., of course. We expect first quantum industry or in financial use cases and applications by the end of the year, and we will build a quantum accelerator by 2023. Stay tuned on those matters. Very large governmental plans are being prepared, in which Atos will be ideally positioned to lead the effort. I will not go deeper here, but the same goes with Gaia-X initiative to promote data portability across clouds in Europe, where Atos has been a founding member and is playing a leading role.
Now, on my last slide, I simply want to confirm today all the objectives disclosed as early as in April for the full year 2020, based on the same macroeconomic scenario of a progressive recovery over H2 2020 and over 2021. A revenue organic evolution between -2% and -4%, an operating margin rate between 9% and 9.5% of the revenue, a free cash flow between EUR 500 million and EUR 600 million. Thank you for your attention, and I now hand over to you, Uwe. Thank you.
Thank you, Elie, and good morning from my side as well. Let's start with the reconciliation between statutory figures and pro forma for Q3 revenue. Currency exchange rate effect came mostly from the depreciation of both the U.S. dollar and the Brazilian real. This leads to a Q3 revenue development of minus 2.5%, whereas Q3 2019 at constant exchange rates. Second element, our scope effects mainly related to the acquisition of Maven Wave and the disposal of some specific Unified Communications & Collaboration activities, resulting altogether in a revenue decline of - 3.5%, whereas Q3 2019 at constant scope and exchange rate. I continue with the revenue development by industry. Manufacturing reported a decrease of - 12.8% compared to Q3 2019 organically, which is an improvement of circa 2% whereas Q2 organic growth rate.
Manufacturing was still impacted by project reductions with aerospace and automotive clients. Financial Services and Insurance considerably improved in Q3 to - 2.6% organic decline, an improvement of more than 3%, whereas the Q2 organic growth rate. The industry generated a good performance in Southern and Central Europe, partly offsetting reductions in other geographies. Public Sector and Defense is the largest industry of the group, representing 23% of the overall revenue. It grew organically by 13% in Q3 compared to Q3 2019. This growth was driven by North America, thanks to the ramp-up of new projects, and in Europe, based on the activities with the European Union institutions and large big data projects in multiple countries. Telecom, Media, and Technology is decreasing by - 4.8% organically.
After a challenging second quarter, the industry showed first signs of improvement, while trends are still very contrasted between the different components. The High Tech Engineering and Media parts grew organically, thanks to increased cloud demand in North America and Northern Europe, and the partnership with Google Cloud, which led to multiple projects in several countries. This did not compensate the decline in the telco area. Revenue generated by Resources and Services in the third quarter 2020 is down by - 16.3%. The industry was mainly impacted by ramp down and delay of projects in the retail and transportation space across the geographies, and especially in North America. Healthcare and Life Sciences is growing by 2.2% organically, and recorded a solid performance for the second consecutive quarter in most geographies, especially in pharma. Let's move now to the performance by geography.
In North America, the organic decline in Q3 was -7.2%, at constant currency, -2.8%, due to the ramp down and delay of retail and transportation projects, and to a lesser degree, in manufacturing and financial services. At the same time, North America reported strong growth in cloud projects. Northern Europe grew compared to last year, thanks to a strong performance in Telecom, Media, and Technology, and Public Sector and Defense. Central Europe reported a decline mainly in Manufacturing, which could not be compensated by the strong performance in other industries. In Southern Europe, the good performance in Healthcare and Life Sciences and Financial Services and insurance could not fully offset the decline in other industries. Growing Markets were stable at 0.2% organic growth. On the next slide, I'd like to talk about the performance by division.
Infrastructure and Data Management recorded in Q3 an organic decline of -2.9% in comparison to Q3 2019, after -4.4% in Q2. At constant currency, Q3 was at -1.6%. The improvement is due to the ramp up of new cloud and digital workflows, workplace projects across the geographies. Business and Platform Solutions declined by -8.9% organically, whereas in Q3 2019 after -10.6% in Q2. The business is still impacted by COVID, as several discretionary application projects were either postponed or reduced across most of the geographies and industries. Big Data and Cybersecurity continue to perform on a consistently high growth, both in Big Data projects and Cybersecurity services.
On the next slide, I'd like to cover the evolution of the company profile in terms of the share of cloud, digital security, and decarbonization revenue. As the strong commercial activity in order entry and pipeline contain an increasing share in those segments, the revenue profile of the group is also shifting significantly. As explained during our analyst day in June, we target midterm 65% of revenue being in cloud, digital security, and decarbonization. In Q3, the group made already good progress and reached 45% of revenue, coming from 40% in 2019, with contributions from all segments. Another important information is the status of our M&A activities. As mentioned by Elie, we announced today, subject to the customary approvals and consultations, the acquisitions of three additional businesses in the field of digital, cloud, and security.
SEC Consult, a worldwide player in security consulting based in Central Europe and Asia, with almost 200 employees. Edifixio, a leading player in Salesforce and cloud consulting and integration based in France, with circa 367 consultants. And Eagle Creek, a digital technology and management consulting company specialized in Salesforce integration, operating in the U.S. and Canada with almost 250 employees. The closing of this transaction is expected to take place before the end of the year and mark a further step to implement our midterm strategy. Three separate press releases were issued this morning. Including the six companies already closed this year, we are adding so far a total of nine acquisitions in 2020 to our portfolio, representing an annual revenue of circa EUR 300 million with 2,400 additional experts.
Moving now to a quick update on the Syntel integration. The Syntel synergy pipeline is very active, with 46 projects won in Q3 above EUR 1 million, and an unweighted pipeline of EUR 1.4 billion. In Q3, we signed several deals, the largest ones being first, as mentioned before, the five-year contract with annual revenues of circa EUR 100 million per year with Willis Towers Watson for managing the digital transformation. Second, another multi-year large contract with a major hospital trust to deploy the Atos Digital Workplace, transform applications to the cloud, and deliver cybersecurity services. This is a new customer for us. All the examples at the bottom of the slide demonstrate that the combined offerings are finding very good response by customers in their core business around cloud, digitization, IoT, and automation.
Cost synergies are continuing to materialize in both G&A and direct costs through a tight management of projects transferred from Atos to Atos Syntel. Let's move to the next slide, which gives the status on the cost and cash actions. The cost containment program that we have initiated in Q2 is on track. The number of sub goals have decreased by 13% since the beginning of the second semester. Internal staff costs were down -6% year on year. Travel costs were 75% down, as well as marketing expenses were down due to events moving to virtual. Rental costs started to decrease, with much more to come, as we are reducing our overall real estate footprint in conjunction with maintaining a higher share of remote work compared to pre-crisis time.
At the same time, the cost of purchased components for our big data activities increased in line with the growth in that segment. All in all, we confirm the 9% to 9.5% bracket for full year operating margin. On the cash side, we are on track to catch up from the first semester, and we confirm the free cash flow guidance of EUR 500 million-EUR 600 million for the full year. If we look into the status of the key indicators, since the beginning of the second semester, invoicing level is above last year. Second, the large big data project completion are lined up for a cash flow inflow in Q4. Third, the overdues at the end of September were -15% below last year.
Fourth, the payment to suppliers, which peaked in the first semester, was already partly recovered in Q3. Let me close my presentation with a view of the headcount development. The total headcount was 105,000 at the end of September 2020, down by -3.4%, excluding scope effects, compared to 108,000 employees at the end of December 2019. Of that, -1.8% were achieved in Q3, compared to end of June 2020. This considers necessary measures coming from the COVID-19 effect, as well as materializing the impact of automation. Attrition was 9% at group level, at the same level as in Q2 this year, and significantly down compared to 15.8% in Q3 last year. In offshore countries, attrition in Q3 this year was 11.2%.
Now back to you, Elie, for the conclusion.
Thank you, Uwe, and indeed, before moving to your questions, I just want to summarize here our main priorities for Q4 this year. First, we are working on industrializing the conversion of our large pipeline into order entries. Second, we will complete our strong cost saving plan over Q4, and of course, our cash actions are on track across the teams to reach the full year target. Third, it is a top priority to make successful, already this year, the rollout of Spring, in order to get definitively the relevant end-to-end business model, matching customers' increasing critical needs in their digital demand. In Q4, we will concentrate on the preparation of step three, which will be the final step in January. Finally, on M&A, we will pursue our strategy in Q4, which I believe has been delivering very well in the first nine months of the year already.
Same focus on cybersecurity and bolt-on acquisitions to reinforce our portfolio of offerings in specific industries and digital capabilities. All in all, we are on track to reach all our objectives this year, and we are obviously preparing for the return to growth next year, which is clearly an important step towards our midterm targets. Thank you very much again for your attention, and let's now move to your questions.
Thank you. Ladies and gentlemen, we'll now begin the question and answer. If you wish to ask a question, please press star one on your telephone keypad. Your first question comes on the line is Sven Merkt from Barclays. Please ask your question.
Good morning. Thank you for taking my question. Book-to-bill was very strong again. Could you provide us a bit more insight what drove this? How much are new contracts versus renewals? It looks like it's more the former, but any comment would be really helpful. And then could you also provide us some more color on what you see from the divisional perspective in Q4? Where do you expect the largest improvements versus Q3? Thank you.
On the first question, there is nothing special in this book-to-bill order entry for Q3 between renewals and the new contracts. Knowing that, again, the number that we showed with Uwe are excluding Syntel, okay? Excluding the renewals of Syntel of EUR 3 billion over five years, which, by the way, itself includes some new scope, but that's another story. Excluding Syntel, the 124% book-to-bill is perfectly normal in terms of split between renewals and new contracts. For Q4, look, I don't think we're going to be more precise.
We expect actually a progressive improvement across the board, and I would say in all dimensions and in all divisions, because that was your question. But I don't think it would be appropriate to go into those details for the next quarter by divisions.
Okay, that's fair enough. Maybe one follow-up question on the EUR 400 million cost-saving program. How should we think about those cost savings into next year? Clearly, some costs might come back, but on the other hand, some of the costs will only annualize next year. So maybe could you comment on the net impact of that for next year?
Yeah. Uwe?
Yeah. Thanks for the question. So of the overall EUR 400 million cost program, there's indeed pieces which are more structural and pieces which are more one-time. I expect circa 30% of the overall cost measures also to, you know, be with us on the long run, meaning more structural, 30% of the overall.
Okay, thank you.
Next question comes on the line of Michael Briest from UBS. Please ask your question.
Thanks. Good morning. Elie, I know you don't wanna give a lot of detail, but just looking at the guidance for the year, it seems perfectly achievable. But how, what are you sort of factoring in for the current state of lockdowns? And if they get worse, could that put pressure on you, and I mean, you come in more likely at the low end of the range. And then I noticed that the Resources business actually deteriorated quite a lot in Q3 over Q2's growth rate. Maybe some color around that, and how you expect the recovery to play through? And then, finally, attrition for you, it's come down. I think many in the industry are reporting quite significant declines in attrition rates. What are you sort of comfortable with?
I think, you know, there's a natural rate which is actually quite healthy to have. Are we below that rate now, or, are you still sort of happy at 9% or so? Thanks.
Hi, Michael, thanks for your questions. I will take the first one and the last one, and Uwe will answer on resourcing services. On your first question, on the, you know, macroeconomic scenario or more sanitary or lockdown scenario, we have embedded in this scenario, or this scenario can afford some significant restrictions. I think we would get out of this scenario should we have, you know, other across-the-board complete lockdowns.
But apart from an extreme scenario like this, you know, our guidance is fully valid in a range of scenarios around the current situation, meaning including some restrictions should they increase across our countries in reasonable terms over the next two, three months. On the last question on attrition, I would say the current level of attrition is probably a little low. And we would expect it to re-increase progressively. I think we were fine with the level of attrition we used to have before the crisis. I would expect it to get back to this normal in the course of next year.
I would say probably maybe by the end of H1, most probably, but, going back to that level pre-COVID is fine with us and compatible with, you know, the turnaround of our business. You take, Uwe, please, the second question.
Yeah. Morning, Michael. On the Resource and Services side, so there are two reasons. One is the transportation side, second on the retail. I expect this industry to come back very strongly, actually, in the beginning of next year. The decline in Q3 specifically is more due to larger rollout projects we had last year, where with the, you know, slowdown of retail activities in this year, this came to a reduction. But we expect that to ramp up as we see already, you know, malls and retail activities to ramp up in the fourth quarter.
Okay, thanks very much.
Thanks, Michael.
Your next question comes on the line of Toby Ogg from Bank of America. Please ask your question.
Yeah. Hi, good morning. Thank you for the question. So two from me. So firstly, just on the infrastructure and data management side of the business, you know, Q2 obviously saw a significant slowdown, but actually, Q3 saw a bit of a better recovery than I probably would have expected. Perhaps you could just comment on the differences in performance within that business, between the infrastructure part and the non-infrastructure part. And then just secondly, coming back on the order entry, you know, perhaps you could just talk a little bit about the relationship between the bookings and the revenues. You know, is that relationship in lengthening or shortening? You know, when can we expect this sort of growth to start flowing through into the revenues? Thank you.
Uwe, would you like to take the first question? Maybe Eric will complement. I will take the second. Thanks, Toby. Please.
I think in essence, Toby, in infrastructure data management, you know, the classical data center infrastructure business in the meantime is very, very small. It's below 10% of the company, right? Of the company's revenue numbers. And where we see the positive activity are both in cloud and in digital workplace solutions, which actually order also in the order entry have a higher share than before in our overall activity.
Eric, you want to comment shortly?
Yeah, quickly to complement what Uwe said. We also see, very similar to the B&PS activity, a rebound, progressive rebound step by step, Q3 versus Q2, because of utilization starting to come back also in the account. Remember that our IDM business is a combination of run rates and projects, which we call utilization, starting to rebound a bit in Q3 versus Q2, which we expecting, a bit like B&PS, and we expect the same trend to continue in the coming quarters.
Thanks, Eric. On your second question, Toby, so I guess that was about the conversion and the lag between the order entry booking and the booking of revenue, materialization of the revenue. So there is nothing materially changed here in the you know usual cycle. And that supports our scenario for the coming quarters of a progressive recovery. So you know a better number in Q4 with an overall year around the middle of our range -2% to -4%. And the continuing improvement into 2021. Definitely a positive organic growth in Q2 next year. This is our scenario and obviously growth in 2021 on a full-year basis.
These commercial activity and the numbers that we showed, both order entry and the pipeline, are fully supporting this scenario.
Brilliant. Thank you.
Next question from the line of Laurent Daure from Kepler. Please ask your question.
Yes, thank you. Good morning. A couple of questions for me as well. The first one is on your M&A, the nine acquisitions. Globally, could you give us a sense of the growth profile, margin profile, average price for the EUR 300 million that you have acquired? My second question is on a regional basis, and most of the regions are showing some improvement except for North America. So when do you expect this region to be back to, maybe not to growth, but to show some improvement? And my final question is on the cash collection by the end of the year. I understand all the positive metrics that you're showing here for Q3, but what is your feeling regarding the cash collection with large clients?
Do you have any signs that some of the big clients could be tempted to postpone their payment from December to January, or nothing to worry at this stage? Thank you.
Hi, Laurent. So I will answer the first question. We will take the number two and number three. On the M&A, what I can tell you is that, on average, the acquisitions we're making, these built on the strategy, are clearly double-digit growth, very clearly double-digit growth. The margin, I would say, is standard. Okay? It's in line with the group's margin. And the price paid is, on average, clearly below two times the revenue. Okay? So Uwe, please, two other questions.
Morning, Laurent. Yeah, on the, on your second question around North America. So indeed, where you saw at, at constant currency, of course, the -2.6%, of course, showing the inclusion of our acquisition strategy. But to your question around the organic growth, we expect, North America to go back, to, you know, a decline in the decline at Q1 and Q2. So starting with 2021 , to improve significantly, on the rate, and then also get very early to growth in organic growth. To your last question around, postponement of customers, so far we see no pattern in that.
Actually, our overdues, as I said, are even, you know, better than last year, and I expect that also to be continued. No signs of those kind of questions.
Okay, great. Very clear. Thank you so much.
Thank you, Laurent.
Next question come on the line of Neil Steer from Redburn. Please ask your question.
Hi, thanks. Most of mine have been asked, but just a couple of quick ones. Could you give the size of the incremental revenue you get from the Willis deal?
Uwe, please.
So, the incremental revenue is once it is ramped up in the next few months, it's about EUR 70 million-EUR 80 million a year more than what we had before. So it's roughly times five the, you know, multiplying the number of what Syntel had before with that customer.
Okay. Thank you. And, can I confirm, when we look at the growth market revenues, is roughly a half of that, or slightly in excess of half of that, Brazil? Or how significant is Brazil within the growth market revenue, line that you have?
No, Brazil is not at all half of our Growing Markets. It's a minimal part of the Growing Markets region. Okay? But I think we will not give the, you know, the fuller breakdown. Thank you, Neil. Next question, please.
Once again, for any questions, please press star one on your telephone keypad. Next one comes on the line of Gianmarco Conti. Please ask your question.
Hi there. Yeah, thanks for taking my question. So just a quick one, as most of mine have been also answered. In terms of your M&A strategy, do you foresee continuing this, the same kind of bolt-on for cyber, digital, and cloud coming in the next quarters? Or have you, you know, kind of, subsided your appetite for M&A so far?
Hi. So, on M&A, it's quite clear. I think, we've got this what we call self-finance acquisition strategy, which corresponds over the next year, as announced in June, as part of our strategic plan. We use the free cash flow of the year, after, of course, a dividend payment, to make self-finance acquisitions in cybersecurity acquisitions, and bolt-on acquisitions in industry or vertical expertise, and some more transversal cloud digital expertise. Okay? This is what we are showing, I think, quarter after quarter, and today again. Then there is another branch of the M&A strategy, which would be, should there be an opportunity, you have noticed that our balance sheet is quite solid.
We have virtually no debt at the moment since we sold our Worldline shares. You know, we are open for any transformative deal, but we would use our balance sheet only in this type of situation.
Right. Thank you. That's all.
Thank you.
Once again, for any questions, please press star one on your telephone.
All right. So thank you very much for your attendance and your questions. Have a great day, and talk to you very soon. Thank you. Bye-bye, all.
That concludes our call for today. Thank you for participating, you may all disconnect.