Hello and welcome to the Edenred Q1 2024 Revenue Conference Call. My name is Saskia, and I will be your coordinator for today's event. Please note this call is being recorded, and for the duration your lines will be on listen only. However, you will have the opportunity to ask questions at the end. This can be done by pressing star one on your telephone keypad. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now hand you over to CFO Julien Tanguy to begin today's conference. Please go ahead.
Right, thank you, and good morning everyone. I'm pleased to welcome you to the Edenred Revenue Presentation for Q1 2024. Well, this presentation will be the opportunity for me to share our financial performance, the key highlights of the quarter with a specific focus on M&A and an update on Italy case. Like every year since COVID, Edenred records a strong performance in Q1. Before entering the executive summary, I want to make a specific comment regarding our set of figures for Q1. After the change of regulation in Brazil on client discounts, we have replaced, since January 1st, the discounts granted to customers with alternative services recognized as cost of sales in our operating expenses. As such, we adapted the accounting method of our revenue for benefits and engagement in this country.
Starting January 1st, the operating revenues are now an equivalent to gross income instead of net income previously. This change will allow us to save around BRL 17 million in sales tax named PIS/COFINS in Brazil, based on our 2024 estimates. If this new methodology has a positive impact on the group operating EBITDA, it will impact negatively the group operating EBITDA margin due to the increase of the numerator when computing the margin. We estimate the impact to approximately 50 basis points. You will find all 2023 adjusted numbers on page 35 in the appendices. All the Like-for-like and reported variation in the presentation are based on 2023 adjusted numbers, which are reflecting the pure economic performance of Edenred in Q1. So after this brief clarification, we move back to the executive summary.
As I said, we experienced continuous vigorous momentum leading to a buoyant start to the year. We recorded a Q1 2024 total revenue of EUR 685 million, up 21.4% as reported and up 20.5% like-for-like. Operating revenue is up 19% as reported and 17% like-for-like. Other revenue amounts to EUR 60 million, up from EUR 38 million in Q1 2023. Q1 2024 is the eighth quarter in a row with total revenue growth above 20% like-for-like for Edenred. Regarding the execution of our Beyond Plan, we are seeing growth opportunities both organically and via selective acquisitions. With the execution of Beyond, Edenred is scaling the core to continue to penetrate core markets and reinforce leading positions. Thanks to the acquisition of IP energy card business , we are becoming a leader in B2B mobility in Italy.
50,000 additional clients will join our platform, and we will build for them an access to our EV charging offer. Edenred is also extending Beyond to unlock growth opportunities Beyond Food and Beyond Fuel. Reward Gateway integration is progressing according to plan, and we start to roll out the engagement platform in three continental Europe countries: Belgium, France, and Italy. We are reinforcing multi-benefit Brazilian platform with the acquisition of RB, a leading player in the employee commuting market. This acquisition will improve our Ticket Transport offer and will generate synergies in our Brazilian operations. And finally, we are accelerating in e-mobility with the acquisition of Spirii, a European SaaS platform dedicated to EV charging, proposing end-to-end solutions for fleet managers. Regarding Italy, you know Edenred takes this case very seriously.
It has led to a strengthening of our internal control procedures, and I will come back to the concrete action plan in a couple of minutes. As announced in March, share buyback operation is about to be launched for a maximum amount of EUR 300 million over a three-year period. Thanks to the good start to the year, I confirm Beyond 2022-2025 targets for 2024, so a like-for-like annual EBITDA growth of minimum 12% and annual free cash flow EBITDA conversion rate of minimum 70%. As you can see, we have recorded a strong growth in Q1 2024. The trend we see should lead us to another record year for Edenred in 2024. On top of that, we are paving the way for future growth with targeted and relevant acquisitions. Let's go through the presentation, starting on page 4.
So as we said, Edenred records an excellent start to the year and pursues a strong momentum. And on Q1, some vision of our performance in numbers. So the operating revenues stand at EUR 625 million, up almost EUR 100 million versus Q1 last year, i.e., a growth of 17% like-for-like. This growth is a consequence of the continued strong sales momentum supported by powerful long-term drivers. Markets we are in are still underpenetrated, and we convert this growth opportunity to larger total addressable markets as we add new features to our platform. After the global performance, let's move to our performance per business line on page 6. Performance is strong for both benefits and engagement and mobility. Benefits and engagements grew at 17% like-for-like versus last year. Benefits and engagements account for 65% of Edenred's operating revenue in Q1.
Mobility operating revenue stands at EUR 150 million, up 23% versus last year, reflecting the dynamism of our sales. Regarding complementary solutions, the growth is lower. Complementary solutions is impacted by two different events in France. First, the end of Action Logement contract as all subsidies have been distributed since July last year. As we regularly review our portfolio activities, we have decided to stop CESU social program. Finally, Edenred Pay America is still impacted by traditional media volume decrease. I am now on page 7 to comment on our performance per geographies. Edenred's growth is well balanced between geographies. Europe operating revenue is up 13%. Latin America operating revenue is up 22% like-for-like, and the rest of the world operating revenue growth is 29% like-for-like. In Q1 2024, Europe accounts for 61% of Edenred's operating revenue, and Latin America represents 29%.
Thanks to well-balanced growth, the proportion of operating revenue from different geographies is quite stable. After a global overview of our performance, let's move to the rollout of the Beyond strategy. I am now on page 9. So Edenred continues to benefit from powerful long-term drivers. I remind you, two of them: working world transformations and a new area of mobility. Thanks to the acquisition of Reward Gateway engagement platform and thanks to a unique leadership positioning in benefits, Edenred is building a fully integrated benefits and engagement platform to take advantage of working world transformation. On mobility markets, fleet managers demand for greener and smarter mobility with a large base of clients. And after the acquisition of Spirii, Edenred will propose an end-to-end platform for seamless and efficient mobility management for any kind of vehicle: ICE, hybrid, or EV. I move to page 10.
In this context, Edenred's ambition is to generate profitable and sustainable growth scaling the Edenred platform. You know our Beyond Plan is based on three pillars: scale the core, extend beyond, and expand beyond. Executing Beyond, we both enrich our business model and increase our total addressable markets. I will illustrate scale the core with two acquisitions made this year with the acquisition we made in Italy. I will take three other acquisitions Spirii announced in February this year and Reward Gateway done last year to explain how we accelerate Beyond Food and Beyond Fuel. Before touching those acquisitions, let's move to page 11 to come back to the large and underpenetrated market we are in and to see how we harness this vast potential for organic growth with one example. Edenred's offer covers three markets: benefits and engagements, mobility, and corporate payments.
As you can see, those three markets have things in common. They are large markets, and they are underpenetrated. For instance, the mobility market is a EUR 1,700 million market with a penetration of only 35%. Underpenetration means many companies are still not equipped and are opportunities for Edenred to grow. This is particularly true for SME, as the SME segment is three to five times less penetrated than global markets. In terms of organic growth potential, we can harness the face value usage increase of meal voucher in benefits and engagement business line. We are still expecting face value increase in 2024 in the context of purchasing power needs and challenges around employee engagement and retention. In France, in Poland, or in Finland, we still have growth opportunities as maximum face value usage is far from the average usage of 85%.
I propose we zoom now on mobility to share with another example of our scale the core pillar with the acquisition of IP. I move to page 12. So just to remind you, Edenred entered the mobility market in Italy in 2018, taking advantage of UTA acquisition. In 2024, the acquisition of IP allows Edenred to scale in the Italian B2B mobility market. IP is a best-in-class asset with a highly recognized brand present across all Italian regions and a strong footprint in the SME segment. And you know how this segment is key for Edenred. In numbers, IP is a EUR 30 million revenue company connecting 50,000 clients to 4,060 stations across Italy, representing 20% of the total number of stations. I am now on page 13. Becoming a leader in B2B mobility in Italy will open up new growth opportunities for Edenred.
We will leverage the great complementarity between both brands: IP's strongly established brand across all Italian regions with an SME-focused portfolio of clients and Edenred's UTA's pan-European premium offer for larger and international clients. On top of fuel card business, and thanks to the services available on our platform, we have cross-selling opportunities ahead. We will have the opportunity to cross-sell Edenred's value-added solutions such as electronic toll settlement or international refueling. We will leverage the acquisition of Spirii to provide end-to-end EV charging solutions to existing IP's customers. After IP, let's move to the next slide and to another acquisition on page 14. In Q1 2024, we also announced the acquisition of Spirii, a Denmark-based company managing a software as a service platform offering a broad range of EV charging solutions. Spirii has been founded in 2019, manages operations in 18 countries, and counts 100 employees.
The ambition for 2024 is to generate a revenue above EUR 25 million. You can see on this page some logos that trust Spirii for their EV fleet management. From a client perspective, what does Spirii's service look like? First, Spirii supports its clients when they need to install EV charging points on their parking lots thanks to best-in-class partners. Second, Spirii has built a charging point management system to manage infrastructure, including availability of the charge points, load management, reporting, and customer care. This software is appropriate technology. Finally, Spirii is in the pocket of the drivers thanks to a mobile app managing on-road services such as charge point availability, climate impact, or charge optimization. All those features will allow Edenred to propose an integrated fleet services platform as described on page 15.
I remind you, EV charging solutions need to cover three cases: recharge on-road, at work, and at home. Today, Edenred is offering recharge on-road to its clients thanks to a partnership with ChargePoint, with access to 570,000 charge points in 34 countries in Europe. With the acquisition of Spirii, Edenred will cover the three use cases of EV charging and will be able to propose integrated fleet services helping our clients to manage the transition from ICE to EV. This transition will take time as companies' fleets will not become 100% EV in two weeks. Turning to page 16, after mobility acquisition, we move to the benefits and engagement business line. As announced during our full year 2023 publication, we signed the acquisition of RB in Brazil. RB is one of the leaders in commuting markets in Brazil.
The employee transport market is very attractive as transport voucher is a mandatory benefit for employees with 130 million annual public transportation users. The acquisition of RB will drive growth and scale in Brazil with a reinforced multi-benefits platform and a leading position in the employee commuting market. As our benefits and engagement operations are big in Brazil, we will generate synergies. After the presentation of our most recent acquisitions, let's look at the rolling out of Reward Gateway offer in continental Europe on page 18. I remind you, we have three main integration goals for Reward Gateway. First, continue to grow in historic countries: UK, Australia, and the US. Second, deliver EUR 10 million synergies within 24 months after the date of acquisition. And third, rollout of Reward Gateway offer in continental Europe.
Regarding this third target, we are all set for the deployment of Reward Gateway in continental Europe. The sales team has been recruited, and a go-to-market strategy has been defined. We met tens of potential clients in France and Belgium, and we confirmed appreciation for engagement platforms by HR managers and employees. And as sales pitching started, we have positive feedback from the sales team. The rollout of Reward Gateway will start in Q2 2024 in Belgium, in France, and in Italy. After news about our recent acquisitions, I propose to share an update on the Italy investigation process. So I'm on page 20. So regarding the Italian case, where do we stand? So I start with a quick reminder of what happened.
So in May 2021, four lots out of 15 were won by Edenred Italy as part of Consip nine public tender for a business volume of circa EUR 600 million for 2-3 years. In September 2021, the tender was challenged by a competitor. The name of this competitor is Repas. Repas has 5% market share in Italy. And they challenged the tender before the administrative court. Despite favorable first-instance judgments, an appellate decision led to one lot being awarded back to Repas in February 2022. In February 2024, a criminal complaint has been filed by Repas based on Decree 231, resulting in the indictment of Edenred Italy. Edenred Italy is accused of not having provided all the information required in the tender.
The prosecutor demanded to put EUR 20 million in an escrow account representing Edenred's estimated revenue in relation with Consip nine and to cover the related risk. So what's next? The case will now be examined by the criminal courts. The total case timeframe could be around 4-5 years. I move to page 21 to share with you what was in place at group level before 2024. First, at worldwide level, a whistleblowing system was in place on many dimensions to other topics than corruption as from the beginning of 2022. The list of mandatory trainings on business ethics and compliance has been extended for all employees. New trainings are about antitrust and competition law, anti-money laundering, or cybersecurity. Moreover, dedicated mandatory trainings have been put in place for exposed employees such as public affairs people as from the end of 2021.
The Charter of Ethics has been revisited in 2021, reinforcing the standards of behavior and implementation of the acknowledgment process as part of the integration that allowed to reach 100% acknowledgment at the end of 2023. The risk and fraud committee has been implemented in all business units at least once a quarter under the leadership of the risk and compliance department. And locally, Edenred Italy obtained the ISO 37001 certification in June 2023. This certification is the highest level of anti-bribery certification. So I move to the next page to present what we put in place after February 2024. So at group level, we are setting up a new group tender procedure. A group-wide framework preparation is in progress with the assistance of a world-leading audit and consultancy firm. The deployment of this framework in all Edenred business units is scheduled for H2 2024.
The new procedure should be as follows. Each public and private contract is assessed using a risk matrix. Some of the risk assessment drivers are listed there: country, public or private nature, amount, nature of the product. Depending on the risk level, sign-off is required by the local compliance department and/or the local general manager and/or the head of the business line. The internal audit plan will be adjusted. Procedure implementation will be audited by group internal audit. After these updates on the Italy investigation process, let's go back to our financial performance and to this strong first quarter for 2024. Let's look to our total revenue on page 24. Edenred's total revenue stands at EUR 685 million in Q1, up 20.5% like for like and up 21.4% as reported. Scope impact is positive thanks to Reward Gateway acquisition mainly.
Currency impact is negative due to Argentina and Turkey. I remind you, the total revenue is the sum of operating revenue and other revenue. We move now to operating revenue on page 25. In Q1, the operating revenue is up 17% like for like and 19% as reported. Comments on variations in scope and currency are the same as those on total revenue. I'm now moving to page 26 to focus on Europe. Operating revenue grew double-digit in Europe in Q1 2024, +13%. In published figures, the growth is 18% as Reward Gateway figures are still not included in like for like performance because acquisition has been closed in May last year. In France, we recorded 8% growth thanks to continued strong momentum in Ticket Restaurant delivering double-digit growth fueled by new clients win.
We also benefit from the success of Beyond Food offers, notably an employee savings platform dedicated to works councils . We still have the negative impact of Action Logement contracts. As I said, we decided to stop the CESU social program. Regarding meal voucher regulation and to follow up after what we said in February, discussions with the French government are still in progress to prepare the new meal voucher framework. Those discussions are constructive and positive. The government is expected to speak in the coming days. We hope to have this new regulation voted before the end of the year. Among the points that are discussed and according to what came out in the newspapers, we find digitization, purchases in the supermarket, and donation to homeless. In the rest of Europe, benefits and engagement performance is strong thanks to both meal voucher and Beyond Food solutions.
Ticket Restaurant did well thanks to new client wins and growing contribution of maximum face value usage. Regarding Beyond Food, we benefited from continued success of our first, notably linked to quality of life. In mobility, vigorous growth in mobility solutions is supported by the increase of volumes and the growth of toll business in Germany. Toll business in Germany is boosted by the CO2 tariff increase. Now moving to page 27 and to Latin America. In Brazil, the like-for-like growth of operating revenue is 7.2%. So a performance much higher compared to Q4 2023. We got a strong momentum in benefits and engagement. The trend is in line with what we achieved in full year 2023 as we are delivering double-digit growth in Q1.
Regarding mobility, the growth is fueled by the traction of Beyond Fuel solutions but still impacted by lower fuel price at pump. In Brazil, fuel price at pump stands at a lower level compared to last year, even if oil price is higher on the financial market. In Brazil, Petrobras, the national oil company, is managing fuel price at pump. In Hispanic Latin America, the like-for-like growth stands at 66.1%. We recorded solid growth in benefits and engagement driven by robust commercial activity in Mexico. In mobility, Edenred's activity growth is driven by the good traction of our offer in Mexico. The performance is also impacted by hyperinflation in Argentina. After the operating revenue per geography, we move to other revenue on page 28. In Q1 2024, other revenue stands at EUR 60 million, up 71% versus Q1 last year.
This strong growth is supported by two major factors. First, the sustained business momentum impacting the float in all geographies, in particular in Brazil. Second, the positive interest rate impact explained by the positive effect of H1 interest rate increase in the eurozone of setting the decrease of interest rates in Latin America and the rest of Europe over the last quarter. When comparing the level of other revenue in Q1 2024 versus other revenue in Q4 2023, it went from EUR 62 million-EUR 60 million. Our forecast for 2024 other revenue is to generate double-digit growth like-for-like compared to 2023. To conclude this presentation, I propose we move to page 30. Edenred is on its way to capture sustainable and profitable growth in 2024 and beyond.
Edenred's value proposition is meeting the growing needs arising from a changing world and the advent of a new era of mobility. Thanks to its relevant offer, Edenred further penetrates its core under-penetrated market while reinforcing its leadership through bolt-on acquisition in mobility in Europe with IP and in benefits in Brazil with RB. Executing Beyond, Edenred is extending its portfolio of solutions and enlarging its total addressable market through targeted acquisitions in employee engagement, which is Reward Gateway, and in e-mobility with Spirii. Finally, Edenred is leveraging its unique digital platform to efficiently provide a higher number of clients: 1 million, 60 million users, and 2 million merchants with a broader range of solutions. Thanks to the good start to the year, Edenred's targets for 2024 are confirmed.
At least 12% EBITDA like-for-like growth for 2024 and the cash conversion rate from EBITDA to free cash flow equals or above to 70%. This is it for the presentation. I'm now happy to answer your questions.
Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question or make a contribution on today's call, please signal by pressing star one on your telephone keypad. To withdraw your question from the queue, please press star two. So again, that is star one for your questions today. Our first question will come from Julien Richer from Kepler. Please go ahead.
Yes. Good morning, everyone. I have three questions on my side. The first one on other revenue. When we look to the evolution Q1 2024 compared to Q4 2023 on the slide you mentioned, we can see that the change is more or less the same in terms of trend in Europe and in LATAM despite the fact that in LATAM, you are already suffering from lower interest rates. So can we assume that the growth in float in LATAM is compensating? And how do you see the mix between increasing float and decreasing interest rate going forward? Is it something that can compensate? Second point on the ramp-up of the SaaS platform and the acquisition of Reward Gateway, can you give us some example of the already positive impact on your growth coming from that implementation and how it can continue going forward? And the last thing on France.
When we look to the like-for-like growth in France, it is more or less in line with last quarter. Just want to make sure that it is below 10% just because of the Action Logement plus the CESU that is not there anymore and there is no change in the competitive landscape in the country. Thank you.
Well, thank you, Julien, for those three questions. So let's start with other revenue. So we have other revenue that are growing 70% compared to last year. Keep in mind that last year, the ECB increased interest rates in the eurozone by 100 basis points in Q1 and by another 100 basis points from March to July. So it means that we have this positive impact, for sure. But this positive impact will be there in Q1 and Q2. And then in Q4, we'll have a kind of normalization. And the growth will come from the growth of operating revenue will come from the growth of our business volume. Regarding Latin America, the float in Brazil has increased, yes, because of the new regulation. And this is something that is very positive. And it is good to underline that payment terms have been banned in Brazil.
It means that the free cash flow has increased. And yes, we have a higher level of float in Brazil. And it allows us to compensate the interest rate decrease. Now, same as in Europe, this new regulation has been put in place in Brazil starting in June last year. So you will still have a positive impact during the first half of the year. But this impact will be lower at the end of the year in H2. Now, as I said, when we look at the trajectory of other revenue for 2024, it will be double-digit growth like-for-like compared to 2023 as our business volume is increasing and we have more float to invest.
On top of that, maybe just to give you a view on our investment policy, you know that in Brazil, we have some swaps that are implemented to protect the level of interest rates we have in terms of investment. So we revisit our swaps every quarter with my team. And we see how we can manage knowing that our ambition is to fix interest rates at a higher level than what they are on the market today. So this is the first question you had. Regarding the second question and the SaaS platform and Reward Gateway, so as I said, we have three goals to achieve with Reward Gateway. So the first one is to generate synergies. And we are on track with our plan. Our ambition is to generate EUR 10 million synergy before May next year. And as I said, everything is on track.
Then we have the Reward Gateway performance on the three countries where they have operations today. So in the UK, in the US, and in Australia, Reward Gateway did very well in Q1 this year. So it's a growth above 20%. So we know that this is what they've been able to achieve over the last years. And we see that they are keeping on with this level of growth. And as I said, we are starting the deployment of this platform in continental Europe. Today, you don't have any impact of this deployment in our numbers because we are just starting. So we have some meetings with clients. We have some pilots that are in progress in Belgium.
But we are still not generating revenue, which is good news because we are able to generate more than 20% like for like growth in Q1 this year without the impact of Reward Gateway deployment in continental Europe. As I said, in this growth in like for like, you don't have the performance of Reward Gateway as the acquisition has been done in May. Till May 2024, Reward Gateway will be considered out of the like for like performance. Now, if we look at what it will be in the future, if we invest this year, hiring new people to sell the platform in Italy, in France, or in Belgium, it's because we believe that it will allow us to generate additional revenue in 2025 and beyond.
What we said when we did the acquisition is that we will be able to generate at least EUR 50 million additional revenue in continental Europe in 2027 thanks to the acquisition of Reward Gateway. Our ambition is to do more than that, obviously. Your last question was about France and the growth we have in France. So in like for like, our growth is close to 8%. Yes, we have the impact of the end of Action Logement contract and the fact that we decided to stop CESU social program. So the impact of those two products is around 2% growth. So if we include the revenue we were generating last year with those two products, the growth in France in Q1 is close to 10% like for like. Now, you have a gap between like for like and the published number in France.
This gap is due to the fact that last year, we decided to sell an activity we had. The name of this activity was Clean Way. It was a benefit for employees. It was a benefit allowing employees to clean their uniforms when they have one. We believe that this market will not grow. We sold the company in August last year. If we exclude all those elements, I confirm that the growth in France has been 10% in Q1. We did very well with Ticket Restaurant performance as we've been able to grow above 10%. We also did very well with the ProwebCE platform, so the platform we have for works councils. In terms of competition, we still have the same number of competition on the French market. As I said, I checked yesterday. We have today 13 competitors in France.
We see that even with this large number of competitors, we've been able to grow. If we look at the performance we've been able to achieve in France over the last two years, we've been able to grow double-digit even with the competitors we have on the market. We are on the market. We have the relevant offer for our clients. We have our B2B capability. We are a sales machine. What we say is that we are growing our market share on the French market. As I said, one of the positive impacts of the new regulation is the fact that 100% of the market should be digitized before 2026. As digital leader, it's a great opportunity for us to enlarge our market share and to migrate clients from paper to digital even if they are not working with us today.
Very clear. Thank you. Thank you very much.
Thank you. Our next question comes from Praveen Gondhale of Barclays. Please go ahead.
Hi. Thanks for taking my question. Just wanted to understand quickly on a couple of things changing in Brazil where customer rebates are being replaced with alternative services. What are exactly those alternative services are? And then when you realize, recognize any revenues against those, how those are exactly replacing the rebates that you provided to corporate clients previously? And secondly, on the margin expectations into 2025, I know it's a little bit early there, but you still have second wave of Reward Gateway rollout planned in the next 12-18 months. How should we think about the margin curve going into 2025 from here? Thank you very much.
Okay. Thank you for your questions. First, regarding Brazil and what happened in terms of new regulation, I remind you that today, rebates are banned in Brazil for a mini voucher. This new regulation has been put in place in May last year. It came at the same time as what happened for payment terms. Due to this new regulation, we decided and we had to adjust the way we book our revenue. It's a new market practice. What we do is exactly what I explained during my introduction. We have now the equivalent of gross income in our revenue. It comes instead of net income. The fact that we provide alternative services to our clients allows us to book the cost of these alternative services in our cost of sales.
So it has an impact, as I said, on the margin. As you know, if the EBITDA is at the same level, the margin is a little bit lower. But the very positive fact is that we have a positive impact in terms of tax. And we would generate BRL 17 million EBITDA. And it means more or less EUR 3 million, which is not a small amount. And as we used to say with Bertrand, each time we can get EBITDA to invest in the company is an opportunity we need to save. So this is exactly what we've done. So it has no impact on the performance we've been able to deliver. And what you see in the figures of this quarter is pure Edenred performance. Then coming to your second question on 2025. Well, we are a little bit far from 2025. We have this mid-term guidance.
Our ambition is really to keep on growing the company. We plan to grow this year at least at 12% the EBITDA. The ambition is to do the same in 2025. 2025 will be the last year of our Beyond Plan. Then if I look at the trends we see today, as we said, in terms of working world transformations, in terms of need for new mobility, we believe that we have all the cards in hand to deliver this growth. When I look to macroeconomic indicators, I'm quite positive because when you look at the major geography we have business in, you see that in terms of GDP growth in 2025, what is expected for Europe is 1.7% compared to 0.9% in 2024. So rather good news for us. In Brazil, GDP growth is expected at 2% next year compared to 1.7% this year.
So it's another good point to see that GDP growth would be higher next year compared to what it is in 2024. When I look to unemployment rate in those geographies, it's also good news because in Europe, unemployment rate is expected at 6.5% next year compared to 6.7% in 2024. It will be quite stable in Brazil. So unemployment that could be headwind if it is going up is not expected to go this way. So with those, let's say, macroeconomic indicators, we see that we will have opportunity to grow knowing that, as we used to say, on top of that, we are on under-penetrated markets. So our ambition is really to push and to increase the penetration of the markets we are in.
Thank you very much. That's really helpful.
Thank you. Up next, we have Justin Forsythe from UBS. Please go ahead.
Thank you very much. Good morning, Julien. Just wanted to ask a couple here from me. So first, wanted to understand a little bit more around take rates in Italy. There's been a lot of conversation, obviously, around Italy and the regulation side of things. But just wanted to understand what the differential is between private and public take rates. It seems like there's quite a large dichotomy there. And what drives that differential? Is there something related to taxation that enables a higher take rate? Maybe you could parse through that a little bit. Further, if you could highlight as well, you made some comments around France and newspaper articles and impending commentary from the government. Is there any expectations in there for them to update their understanding of merchant caps for meal vouchers and comment on their thoughts around the movement of the market? Thank you.
Hi, Justin. Thank you for your questions. I start with Italy and the question you asked about take-up rate and difference you can have between public and private sector. So take-up rate is something we do not provide by geography. You have the total take-up rate at group level. You got it for 2024 with our full-year publication. But you know that we don't give information per country on this topic. These contracts are private. So these are the contracts we have with our clients. And each of them have specific terms. When it comes to a public tender in Italy, sometimes you can have some conditions that are different from what we have with our other product as we have a dedicated product for some public tenders in Italy. So it's true that the level of merchant fee can be different from one product to another.
But it is like that in any country. What you need to understand because we already explained that in Italy, the take-up rate can be a little bit higher compared to what it is in other countries. You need to understand that the network we have in Italy is a much more selective network compared to what it is in other countries. Having a much more selective network, what does it mean? It means that the volume we send to merchants is much more concentrated as the number of merchants that take benefit of the volume we bring to the market is limited. So last thing I can comment is that the level of take-up rate we have in Italy and the level of commissions we have in Italy is totally in line with the local market standards. So this is not something specific to Edenred.
So this is my comment regarding the take-up rate in Italy. Then coming to France and, as you mentioned, the newspaper articles that came out, let's say, over the last few days, there is mainly three topics that are covered by those articles, as I said during the presentation. So the first one is about digitization. The second one is about donation to homeless. And the third one I forgot I missed it. And then the product you can buy when you go to supermarkets. Regarding merchant fee cap, we have no information saying that this will be put in place. This is not part of the conversation we have with the government today and with the administration. So today, we don't see merchant fee cap in France to be put in place with the new framework.
Thank you. Up next now, we're moving to a question from Johanna Jourdain from ODDO BHF. Please go ahead.
Yes. Good morning. Three questions on my side, please. First, could you provide us any update on the potential class action that could be launched by restaurants in France? My second question is regarding the buyback. So the launch, I understand, will be very soon. Could you please give us maybe more information on the timing? Is it a question of days or weeks? And last question, on your M&A pipeline, could you maybe revert on your firepower evolution and also on the appetite that you have at this stage considering the current valuation of the potential targets? Thank you.
Okay. So first question, regarding potential class action, nothing new since the last publication. We do not change our view on that. It can have class action. But when we look at the antitrust fine we had last year, it has nothing to do with the level of commissions. So the link between the decision that has been taken by the ADLC in France and the fact that some merchants want us to pay because commissions were too high from 2022- 2016 is something we don't see. So we have good arguments to face this class action if it happens. But today, we don't see the link that could be done between what has been decided by the ADLC and the potential class action that could be launched by some merchants.
As I said, when we look at the way we have discussions in France today with the government but not only with the government, I think that if you read the newspaper, you see that Olivia Grégoire, who is in charge of Ticket Restaurant in French government, she said that she wants all the stakeholders of meal vouchers to work together to make this framework a better framework for French people. The idea of Olivia Grégoire is to make of meal vouchers a benefit that will be there for a long period of time and for a larger number of French citizens. It is key. She explained that, for her, it's very important to have around the table the employers, the employees, the issuers, and the merchants and to work together to increase the penetration of meal vouchers in France.
And maybe a last comment on that because the CNTR, which is kind of the organization who is in charge of meal vouchers in France, did a survey a few weeks ago. 83% of French people see meal vouchers as something very positive. It means that 83% of French people want to have meal vouchers. I remind you that the penetration of the meal vouchers in France today is only 25%. It's a very popular benefit. As I said, the French government wants to increase the number of people who have access to our iconic products. We are very happy with that. We'll see how the discussions will go. We are positive on that. Regarding buyback, it's a question of days. We just need to sign the mandate to put in place the buyback.
It will be done in the coming days. Then regarding M&A and firepower, so in terms of firepower, you've seen that our leverage at the end of 2023 is one. As our net debt is EUR 1.1 billion and our EBITDA is EUR 1.1 billion, we did two acquisitions this year. And we're going to generate another, let's say, EUR 1 billion of free cash flow, let's say, more than last year, so more than EUR 900 million of free cash flow. So it means that we still have EUR 2 billion of firepower. And it's a kind of minimum because EUR 2 billion of firepower means we are still A- with the S&P rating. So we have still a lot of firepower.
Then in terms of acquisitions we could do, I think that what we've been able to achieve over the last year is quite important because with Reward Gateway, we moved from a benefit platform to a benefit and engagement platform. So we add to our platform features that are very important and that allow us to have a larger addressable market. So it means that we're going to grow with our benefit product. And on top of that, we'll have the opportunity to grow with engagement features. And second big acquisitions we did, big in terms of strategic perspective, is the acquisition of Spirii. And with Spirii, we'll be able to come with an end-to-end solution for EV charging. And I think it is something that is key. We have a lot of clients using our energy card today.
We will be able to deploy those EV charging features for those clients. For me, those two acquisitions are key because they allow us to enlarge the market we are in and also to come to our clients with new features. You've seen also that on top of that, we've done acquisition to consolidate the market. When we have opportunity to consolidate, we do the consolidation. This is exactly what we've done in Italy with IP. This is exactly what we are doing with RB in Brazil. I think this could be the kind of acquisition we could do in the coming quarters. These are acquisitions that allow us to scale the platform and to add volume on our existing platform. To summarize, we still have big firepower to make acquisitions.
We see that we still have potential to add volume on the platform to scale the platform we have, whether in benefits and engagement or in mobility or in beyond payment.
Thank you. Now from Morgan Stanley, we have Ed Young with our next question. Please go ahead.
Thank you. I have two, please. The first is on Brazil rebates. Thank you for the detail on the adjustments. My question on this was perhaps a broader one. So the government has banned rebates. And your response and perhaps the wider industry response from competitors is to then offer alternative services which net off the same amount. I just want to ask really, do you think from a business practice perspective, that's a sustainable response from the industry? Or do you think this might encourage the regulator or the government to have another look at this and say that, technically, this is a response that is possible, but it's not really what was intended by the change? And then the second question is on U.S. Pay or CSI. Could you let us know within that complementary solution, business, is U.S. Pay revenue declining?
Is it just in lower growth? Perhaps you could help us by giving a mix between media, which you say is being challenged given the wider advertising environment, and other verticals you operate in like hospitality and utilities, etc. Thank you.
Okay. So I start with the second question regarding Edenred Payments North America, which was previously named CSI. So now what I said is that we are still growing. But we have two things that are, let's say, doing a kind of compensation. So we are growing. We are growing at a lower pace compared to what we did last year. We see two trends indeed. You know that media vertical is very important for us. And we see that the volume that is going through traditional media in the U.S. is going down. So we have a decline in terms of volume in this vertical. But the good news is that we have strong new sales. So we are able to more than offset the impact of the media vertical decline. But the growth is a little bit slower compared to what it was last year.
So we are still growing. We are still profitable for sure. Then we need to manage the fact that one of our key verticals is suffering today on the U.S. market. Then regarding your question on Brazil and the evolution of the market, so it's not easy to substitute to the regulator. And I will not do that. I think that the Brazilian market is a very dynamic market. We see that you have more and more benefits that are coming on the market. And I think that this is very key because when you look at the trends we see, is that because you need to fight to attract and to retain people, you need to propose more benefits to your users. So what we do today indeed is that we give, let's say, we bundle our solutions.
And we give to the users access to two benefits instead of one. And because the benefit we give access to has a cost to produce, it's not considered as a rebate anymore. But it's really what we call a cost of sales. So what could be the view of the regulator on that, I cannot tell you.
Okay. Perhaps a follow-up on that, Arnaud. Do you think this is completely common practice across the whole industry? Or do you think some competitors haven't made the same changes?
Yes. It is a common practice from the industry.
Okay. Thank you.
Thank you.
Thank you. We're moving on to a question from Estelle Weingrod from JP Morgan. Please go ahead.
Hi. Good morning, Julien. Thanks for taking my questions. I mean, the first one is on complementary solutions. Just to understand a bit better the underlying momentum adjusted for Action Logement and CESU Social Services again. And second question is on CSI. You did talk about the media vertical growing less, a bit more difficult there. What's the plan to fix that problem? I mean, we've been talking about that media vertical for a while. So just want to understand better how you're going to move forward with CSI. And the last question, I mean, starting the year with close to 17% like-for-like given consensus expectations, I think closer to 13.5%, I think that your guidance could come across as slightly conservative. So would you agree with that? And I guess we should expect an update at the H1 results, right?
So thank you, Estelle, for your three questions. Starting with the complementary solutions, so yes, you have the impact of Action Logement and CESU social program in France. It has a quite significant impact on the growth of complementary solutions. The impact is between 3%-4%. So it's something that is to take into consideration for this business line. So this is it for complementary solutions. But as I said, we look at our product portfolio. When we see that growth opportunity is not as high as we expect, we decide to stop some products or to move and to invest into more promising solutions and markets. Yeah, last comment on that, you still have one quarter with the impact of Action Logement program in Q2. Then it will not impact anymore complementary solutions performance. Regarding CSI, yes.
So we see that we are suffering with media verticals. So what is the plan? The plan is not new. And it's something we are working on since many quarters and many months. The idea is to add new verticals to CSI such as, for instance, property management. So we've launched that months ago. The fact is that when you launch a new solution with CSI, you need a few months to be able to connect with the new clients and the new merchant ecosystem. So we are on it. And we have a new sales guy working with us at CSI. So this is what we are working on. And as I already mentioned, CSI is still growing. And CSI is a profitable business. So we are looking at that. And we see how we can get back to the level of growth we had a few months ago.
First question about the good performance we did in Q1 and the impact it could have on our target for this year. So it's quite early to say because we are only at the beginning of April. But yes, we did very well in Q1. And you know that we use to give more color on our EBITDA when we publish the half-year results. So it will be the same this year. And when we come to you in July, we come with an EBITDA range. So this is what we will do. But you understand through the presentation and through the tone of the presentation that we are positive when it comes to 2024 and our ambition to do more than 12% EBITDA growth thanks to the good start to the year we had. And well, this is all I can tell you today.
One more time, we did only one quarter. Still have three quarters to go. But we enter in 2024 with a very good level of growth. And our ambition is to keep on pushing till the end of the year as we used to do at Edenred.
Okay. Thanks a lot.
Thank you. And now we're moving on to André Juillard from Deutsche Bank. Please go ahead.
Good morning, Julien. Congratulations for this very strong Q1. Three questions, if I may. First one, sorry to come back on that. But could you give us slightly more color about Italy and where you are in the process? What are the risks? And do you have any risk on the existing business you're doing with the Italian government and so on? Second question is about capital allocation. So you're still doing some M&A. You announced a share buyback, which should be able to start rapidly. But don't you think that with the actual level of the share price being more aggressive in terms of share buyback would make sense in terms of value creation for shareholders? Second question. And third question about seasonality. Could you give us some more color about the way you expect things to happen this year considering that traditionally, Q4 is very big.
The base effect will be growing tougher and tougher year after year. Q1 has been very strong this year. Could you give us some slightly more color about Q2 and Q3? Thank you very much.
Well, thank you, André. And thank you for your congratulations. So regarding Italy, where do we stand in terms of process? Indeed, things have not changed since the last publication we had in terms of a pure process. So we'll see when the next stage will come, probably in the coming months. Regarding the risk we have, as we already shared, so the prosecutor did a computation. And he decided to save EUR 20 million. Why EUR 20 million? Because he considered that it is the money we made thanks to Consip nine. We consider that this is not the earnings of Edenred. It's the revenue we got from Consip nine. So for us, it is the maximum risk that we have.
We could add to that the fact that we could be fined with a fine of, let's say, EUR 1 million - EUR 2 million according to what our lawyers are saying today. So in terms of financial risk, let's say it will be less than EUR 20 million. Then in terms of business today, we don't have any impact on our business in Italy. When I say we don't have any impact is that we still have contracts with Consip, for instance. And the number of merchants we are working with is the same as the one we had in January this year. There is absolutely no impact on our business. And I can tell you that for sure, with Bertrand, we pay a lot of attention to what happened in Italy. And we are following that.
So we are following not only the case, but we are following, of course, all the plan I shared with you that are implemented in the group. But for us today, there is no impact on our business in Italy. Then what will happen in the coming months, we'll see. But as of today, no impact. Second question regarding capital allocation. So yes, we still have firepower to do M&A. And we announced the share buyback program. We said that we could buy up to EUR 300 million during the next three years. So why EUR 300 million? It's because when we look at the capital allocation, EUR 300 million is the amount of dividend we will pay on average from 2024- 2026. So it's an additional year of dividend that could go back to shareholders.
And this is the way we did the computation of the EUR 300 million. So then regarding the level of share price, we'll see if we need to adjust in the coming months. But as of today, we have this EUR 300 million share buyback plan to launch. And your first question about seasonality, yes, usually, Q4 at Edenred is bigger than other quarters. And it is bigger because we have these peak seasons, so the Christmas season. And we have products to help companies to give benefits to their employees for Christmas. So every year, it is the same story. We start with a higher base of comparison. And the ambition is to grow on this base. What we've seen over the last years is that we've been able to grow even if the comparison basis is higher in Q4.
So the name of the game for this year is to be able to replicate this performance knowing that for those products, every year, we start with the client portfolio we know. We try to find new clients to increase the penetration of our product. This is what we used to do year after year.
Okay. Thank you very much. Just a follow-up maybe on the capital allocation. So I understand the logic of the EUR 300 million. But when we look at the share price performance year to date, you've been losing close to 15% of your market cap. So one more time, if we consider the attractive level of valuation of your stock today, would you consider in a certain way that being more aggressive would be an opportunity of value creation short term?
Yes. The ambition we have with Edenred is to grow the company. We have a track record of growth. We did very well over the last few years. We are here to be sure that we will be able to grow in 2025, in 2026. To fuel this growth, we also need to invest and to seize the opportunities that we can see on the market. We want to be the one who consolidate the markets we are in. We really believe that M&A has to be part of our strategy. Then regarding the share price and the fact that we lost, as you said, up to 15%, we'll see if we need to adjust. The share buyback we announced was the first share buyback program at Edenred. I think that today, it is a good first step.
As I said, if we need to reconsider that, we'll do it. As of today, I believe we are at the right level in terms of share buyback intensity.
Okay. Thank you very much.
Thank you. Our next question comes from Mourad Lamidi of BNP Paribas Exane. Please go ahead.
Yes. Good morning, Julien. So two for me, please. First one, on legal face value increases that you mentioned at the beginning of the presentation. Could you give us the countries that decided to increase legal face value since the start of the year and maybe also the magnitude of these increases? And the second point is, again, on Italy. I know you don't give growth per country. But can you give us a sense of the growth in Italy for Edenred over the last couple of quarters? Is it in line with group or maybe above or below? Thank you.
Okay. Thank you, Mourad. So regarding legal face value, yes, we had a new face value increase. So first, we had this face value increase in France. In France, face value is indexed to inflation. So we had something like, let's say, 5% face value increase. And just to give you an idea of face value increase in France, two years ago, the maximum face value of Ticket Restaurants was around EUR 11. Today, the maximum face value is above EUR 14. So you see that. And it is what we explained during the presentation. We have great opportunities to push face value usage in France. Another example of country where face value increased is Romania. We had another face value increase in January this year. The new face value in Romania is 40 RON.
Just saying to give you an idea, in January 2021, the face value in Romania was 20 RON. Today, it is 40 RON. So it has been multiplied by two. So these are two examples. So it means that we still have, let's say, growth opportunity thanks to face value increase. Then regarding the growth in Italy, so you know that we don't give those figures. We don't give the detail of the performance country per country. So I will not give you the performance of growth of Italy. And that's it.
Okay. Thanks. But maybe can you give us a sense of the trends? I mean, is it maybe above what you had at group level, or?
Well, it is in line with what we have in terms of it is in line with the performance we have at group level.
Okay. Thank you.
Thank you. And our last question today comes from Simon LeChipre from Stifel. Please go ahead.
Yes. Good morning. Just one follow-up on the Outlook. I mean, anything in your view that suggests you cannot sustain the same pace of growth that you did in Q1 over the coming quarters? I mean, especially Q1 was, I mean, still suffering from a slight negative price impact. And also, you had one negative working day. So could this Q1 for our growth be the trend for the coming quarters?
Well, Simon, good morning. Well, thank you for your question. Yes, we had a negative impact on fuel price in Q1, even if it was a small impact. I think we could still have this impact for the next quarters. We'll see. It's not. Fuel price is not easy to predict. Then in terms of growth, we are positive. Will we be able to sustain the level of growth we had in Q1? We'll see. We are still at the beginning of the year. But as I said, we have many, many tailwinds with us. Even if inflation is lower, you know that purchasing power is still at the heart of the key topics that have to be managed in companies. And regarding fuel and the business we have in Beyond Fuel solution, we have very positive trends too.
I think that the digitization of all the flows and the fact that we come with so many services, with toll services, with maintenance, allow us to keep on growing for the next quarter. So far, so good. We'll see for the full year. You'll have more color in July.
Great. Thank you.
Thank you. With that, I'd like to hand the call back over to you, Julien, for any additional or closing remarks.
Yes. So thank you very much for attending this call. I think maybe one thing you need to keep in mind. So as I said, it is the eighth consecutive quarter with a like-for-like growth above 20%. And I think the message I want to pass to you is the fact that the momentum we have is still strong. So we did very well in Q1. And we'll see for the full year. And we will talk to you in July with the half-year publication. So thank you very much for attending this meeting. Bye-bye.
Thank you for joining today's call, ladies and gentlemen. You may now disconnect.