Hello, and welcome to the Edenred Q3 Results 2024. Please note this conference is being recorded, and for the duration of the call, your lines will be on listen-only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your questions. 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 your host, Bertrand Dumazy, Chairman and CEO, and Julien Tanguy, CFO, to begin today's conference. Please go ahead, sir.
Ladies and gentlemen, good morning, and thank you for joining us on this Thursday morning for Edenred Q3 results. Around the table, I am with Julien, who is the CFO of the Edenred group, but I am also with Fabrizio, who is the Managing Director of Italy. I propose that we start with the executive summary, and in this executive summary, page 2, in fact, there are six points that I want to share with you. Point number one: in Q3 2024, Edenred, once again, was able to post a double digit top line growth. Why? Because we have a diversified growth model that proved efficient once again, despite the worsening of the macroeconomic context across Europe. The second point is, why are we able to post such obvious growth? There are mainly three reasons.
The first one is, yes, we continue to grow on under-penetrated market, our core business, because our offer is relevant, and we have a powerful go-to-market machine, in particular, within the SME segment. We grow because we are able to grow even faster on what we call beyond our core offer, i.e., additional services that allows Edenred to target wider, addressable, non-regulated market, and we are able to accelerate our cross-selling from one service to another. The third reason why we are able to post double-digit growth is we are using acquisitions, so external growth as an additional lever to consolidate our leading position by adding synergistic businesses to our portfolio. The fourth point is, yes, there is the economic performance, but what about the extra economic performance?
We are proud to share with you the fact that we get the approval of SBTi as to our Edenred carbon reduction target to achieve our net zero carbon ambition by 2050. So the fact that our targets have been approved by SBTi is a step forward. The fourth point is: What about the 2024 guidance? We are pleased to share with you that our guidance for 2024 is confirmed, and we are able to narrow the range. So the EBITDA guidance for 2024 stands now between EUR 1.245 billion and EUR 1.285 billion. As to the cash conversion, once again, we are able to confirm the guidance with a ratio of EBITDA to free cash flow conversion rate that will be above 70%.
The fifth point I want to share with you is an update on the situation we have in Italy, and what are the implications for the 2025 outlook. First of all, it's a very early stage, we are at the beginning of it. And, in fact, a preliminary amendment has been presented to a parliamentary commission yesterday, and this amendment is calling for the introduction of a 5% cap on merchant fees for meal vouchers in the private sector in Italy, as it is on the public sector since 2022. It's really the beginning of a long process, and we are ready to fight against it. I will go into more, much more detail as to the technicalities later on in this presentation, but there are three things that I want you to remember.
The first one is, this Italian situation has no impact on our 2024 guidance. Then, if, in fact, the case of a 5% cap on merchant fee is happening in Italy, and once again, I say if, and it's the beginning of the battle, we are confident to deliver a minimum 10% like-for-like EBITDA growth in 2025. And obviously, if the Italian risk does not materialize, Edenred is confident to deliver a minimum 12% like-for-like EBITDA growth in 2025, in line with our beyond strategy. The last point I want to share with you is we will be pleased, on December 3rd , to share with you, during what we call an investor update, the progress on our beyond plan, and how this plan has shaped the future of Edenred and reinforced our sustainable and profitable growth profile.
That were the six points that I wanted to share with you in the executive summary, and it's now time to listen to Julien, who will go with you through the highlights of the quarter, then, the explanation of the revenue of this quarter and what is the outlook for 2024. I will be back to give you a more detailed update on Italy and the implication on the 2025 outlook. Julien, we are all yours.
Thank you, Bertrand. Good morning, everyone ... So we move now to the Q3 2024 highlights, starting with the operating revenue performance of Edenred. So Edenred delivered double-digit growth in Q3 2024, despite worsening of the macroeconomic context in Europe. I'm on page 7. Q3 2024 operating revenue is growing 10.8% like-for-like, leading to a year-to-date performance of 13.8% like-for-like. Despite a macroeconomic worsening across Europe, mainly in France, Germany, and Eastern Europe, and a soft performance in complementary solutions, Edenred confirms its ability to generate sustainable growth, thanks to a good commercial momentum in Benefits and Engagement, as well as in Mobility. Edenred continuously penetrates the market with core solutions, delivering more than 10% growth in Q3 2024. And core solution includes a meal voucher and fuel card, mainly.
Furthermore, Edenred succeeds in Beyond Food and Beyond Fuel, delivering more than 15% growth in Q3 2024, thanks to a positive momentum for Reward Gateway in Benefits and Engagement, and thanks to maintenance and tolls in Mobility. I move to page 8, and of performance per business line. Edenred recorded double-digit growth in Benefits and Engagement and Mobility in Q3 2024, and first nine months of the year. Benefits and Engagement represents 55% of total group operating revenue. Benefits and Engagement grew by 11.7% like-for-like in Q3, while Mobility, that represents 24% of total group operating revenue, is up 13.2%. Growth of Complementary Solutions is below the two other business lines at 0.9%.
Complementary solution performance was penalized by the discontinuation of the CESU social services offer in France, the reduction of some public social programs in Central Europe, and by the slowdown in the Edenred Pay North America business. This is due to its strong exposure to the traditional media vertical, despite good sales performances in other sectors. I move now to page 9, with a geographical view of our performance. Its healthy growth comes from all geographies. In Europe, growth in Q3 stands at 6.7%, with a deceleration versus year-to-date growth at 9.5%. In Latin America, the business is growing at 17%, in line with the year-to-date performance, and the rest of the world grew at 16.3% in Q3.
After this introduction focused on performance, I propose to go deeper into what supports this double-digit sustainable growth, and to answer to a question: How do we generate growth quarter after quarter? Indeed, this double-digit growth is supported by new clients' acquisition, accelerated cross-selling, and higher users engagement. As you know, our Beyond strategic plan is built around three pillars: Scale the Core, Extend Beyond and Expand Beyond. Today, we will focus on the first two. Scale the Core is the first one, and I'm on page 11. We are scaling the Edenred platform by growing the core. I take two examples to illustrate that. The first one is the penetration of SME segments, and the second one, the engagement of users on our platform.
If we start with SME segments, Edenred activated more than 100,000 new SME contracts between January and September. I remind you that this segment is under-penetrated, and we invest in lead generation and continuous improvement of our conversion processes to onboard new clients on our platform. The second example we have chosen to illustrate how we scale the core is the level of user engagement. The number of monthly active users of Edenred application has increased by 60% year- on- year. Concretely, it means more and more users are coming to our applications to enjoy our services. Thanks, thanks to a strong focus on our core business, and thanks to a perpetual evolution of our products, we have been able to grow our core solution revenue by more than 10%. I move to page 12, and to the second level of our Beyond plan, extend beyond.
At Edenred, extend beyond means Beyond Food, Beyond Fuel, and Beyond Payments. Having new features on our platforms allows us to foster cross-selling with our existing clients. Thanks to this large range of product, in 2025 and compared to 2023, we increased by 15% the percentage of clients using at least one extra solution. In Belgium, we are generating additional user-based revenue streams, thanks to the deployment of the Reward Gateway platform. In this country, we were using an old platform to serve our clients and users. The migration to the Reward Gateway employee savings module has multiplied by two the number of active buyers. Globally, our Beyond Food and Beyond Fuel solutions are delivering growth above 15% in Q3 2024, compared to Q3 2023.
After our Scale the Core and extend beyond pillars, let's have a look to the acquisitions we've done since the beginning of last year. I am on page 13. External growth is an additional lever to reinforce Edenred leadership and to enlarge total addressable market we are in. On this page, you will find the last five acquisitions done by the group to support the growth. Those acquisitions are covering a large number of countries. Reward Gateway and GOintego are two engagement platforms proposing solutions in Anglo-Saxon countries and Latin America. Spirii is a software as a service provider for EV charging with operations in Europe, and IP is an Italian company proposing energy card.
The annual total revenue brought by those acquisitions is around EUR 190 million, based on 2023 figures, and you can see that more than 85% of this yearly additional revenue is non-regulated, and more than 80% of this additional revenue is extending Edenred offer Beyond Food or Beyond Fuel. Those acquisitions are fully consistent with the group strategy and with our ambition to boost cross-sell and to diversify Beyond Food, and Beyond Food and Beyond Fuel. On top of that, it allows us to decrease our exposure to regulated products. On page 14, you can see how Edenred extends its offer beyond its core solution. As mentioned earlier, extending Edenred beyond offers leads to a decreasing rate of meal and food solutions in our operating revenue.
Between 2021 and 2024, for both BNE and Mobility, the proportion of beyond revenue is up, +8 points in Benefits and Engagement from 26% - 34% and +5 points in Mobility from 27% - 32%. The combination of these product mix in 2024 means meal voucher, meal and food operating revenue accounts for only 43% of group revenue. 57% of Edenred operating revenue is coming from our other products. So to summarize those highlights, I would say that thanks to the beyond strategy deployment, also supported by relevant acquisitions, we are succeeding in increasing the proportion of revenue coming from beyond products, decreasing the operating revenue generated by meal voucher. So I propose we move to Q3 2024 balance sheets and extrafinancial highlights. Starting with the balance sheets on page 16. So two topics on this page.
The first, the issuance of a new bond in July, and second, an update on our share buyback program launched in March this year. Regarding the bond issuance, on July 29th, Edenred issued successfully a EUR 500 million bond with eight-year maturity. This bond has been issued to repay the EUR 500 million convertible bond that matures in September 2024. The order book has been oversubscribed more than four times, and the success of this operation reflects the confidence of markets in Edenred's credit quality. Following this issuance, Edenred has no debt rollover, and the average debt maturity is now 3.9 years, up from 3.2 years previously.
Regarding the share buyback program, as of today, 75% of EUR 300 million share buyback program announced on March 2024 has been achieved, and we already canceled 5.6 million treasury shares purchased for a total consideration of EUR 224 million. They have been canceled on September 16th and October 21st, leading to a share capital decrease of 2.2%. I move now to page 17 and to extra financial performance. So as Bertrand explained, it's a great news we were expecting this year. SBTI approved Edenred's strong commitment to reduce its GHG emissions. From a 2019 base, Edenred committed to decrease greenhouse gas emissions by 55% per EUR 1 million value added for Scope 3 by 2030, and this reduction will reach 97% by 2050.
This is it for the highlights of the quarter. Let's look at revenue trajectory in more detail. I move to page 19, and with a view on our revenue for the quarter. Edenred posted a double-digit like-for-like growth in both operating revenue and other revenue. Operating revenue grew 10.8% like-for-like, while the other revenue grew 18% like-for-like. Total revenue growth stands at 11.5% in Q4 in Q3 2024 versus Q3 2023. I also want to mention the negative FX impact of 6.2% coming mainly from Brazilian real and Mexican peso. On page 20, you will find our strong nine-month performance.
Operating revenue is up 13.8% like-for-like, and other revenue is up 41.1%, leading to a total revenue growth of 16.9%. We go now to page 21, and I will comment on performance per geography in more detail, and we start with Europe, so in Q3 2024, growth in Europe is at 7.8%, 6.7%. Operating revenue stands at EUR 1.141 billion. Europe accounts for 60% of Edenred operating revenue, so this growth is impacted by slowdown in some countries such as France, Germany, and Central Europe, and it is partially offset by strong dynamics inside Southern Europe. In France, operating revenue is up 4.4% in Q3, and the first nine months' performance is 6.6%.
We recorded high single-digit growth in Benefits and Engagement, led by new sales despite the political uncertainty slowing down the prospects' decision process. I remind you that in France, President Macron decided to go for snap elections, and it took almost three months before the appointment of new prime minister. In Mobility, we noticed an increasing demand for energy cards, providing access to a unique network, and complementary solutions decline is mainly due to the end of CESU social services. In the rest of Europe, first nine months growth is 10.2% and 7.4% in Q4. We recorded a solid performance in Benefits and Engagement, supported by double-digit growth in Southern Europe, notably Italy, partially offset by a slowdown in Northern and Central Europe.
In Mobility, activity slowdown is mainly driven by Germany and Central Europe economic situations, and we have also been impacted by the negative impact of fuel price. Fuel price at pumps stands at a low level compared to Q3 2023, following the trend of oil on financial markets. After Europe, we move to Latin America, where we see strong momentum supported by Brazil and Mexico, and I'm on page 22. Operating revenue in Latin America stands at EUR 562 million for the first nine months of the year, and Latin America represents 30% of group operating revenue. Growth in Q3 is 16.7%, with double-digit growth in Brazil, and Brazil growth in Q3 is 11.5%, and it is at 9.7% for the nine first months of 2024.
Brazil is back to double-digit growth, thanks to strong performance for both BNE and Mobility. In Benefits and Engagement, double-digit performance is driven by a good business momentum and the growing contribution of the Itaú Unibanco partnership. After five years, this partnership is still very successful, allowing us to further penetrate the Brazilian market. In Mobility, all our products contribute to the double-digit growth. Energy card business is doing well, and our Beyond offer is growing nicely, supported by maintenance and toll services. Hispanic America operating revenue is up 28%. Growth in service and engagement is mainly supported by a good sales momentum in Mexico. Regarding Mobility, growth is driven by the success of Beyond with the accelerated growth in maintenance solutions. As explained a couple of minutes ago, Argentina contribution is lower due to softening inflation.
I propose to spend a couple of minutes discussing hyperinflation in Argentina on page 23. So you know that Argentina is a country with hyperinflation. This hyperinflation has a slight impact on Edenred numbers. Argentina represents around 1% of Edenred operating revenue. Argentina contribution to Edenred full year 2024 operating revenue, like-for-like growth, is expected at around 1%. This contribution will, however, not be equally spread over 2024, and then operating revenue like-for-like growth for the first nine months includes 2.4% contribution from Argentina, and Argentina contribution to Edenred operating revenue growth like-for-like, will turn negative in Q4 2024. After the operating revenue comments, we move to other revenue on page 24. Q3 2024 is another quarter with solid other revenue generation.
In Q3, other revenue amounts to EUR 63 million, so we delivered a strong like-for-like growth of +18%, thanks to a healthy float increase in all geographies. However, level of other revenue is normalizing due to a lower interest rate in Brazil, Selic down by 200 basis points since Q3 last year, and in the Euro zone, where we lost 50 basis points since last year. For 2024, other revenue is expected between EUR 240 million and EUR 250 million, and the normalization of other revenue is done at an extremely high level, bringing high perspective in terms of flow for other revenue. As shared with you in July, our best estimate for other revenue in 2025 is a minimum of EUR 210 million.
I'm moving now to the next part of this Q3 earnings presentation, which discusses our guidance on page 26. So as Bertrand said, our targets are confirmed for both EBITDA and free cash flow conversion rate. Full year guidance is confirmed for EBITDA, with the low end being expected between EUR 1.245 billion and EUR 1.285 billion. The mid-range of the guidance means an EBITDA like-for-like growth of around 20%. Two factors are impacting the guidance and are offsetting one another. We have a slight increase in unexpected other revenue, which is fully offset by negative FX impact due to the strengthening of the euro against Brazilian reals and Mexican peso, notably. In terms of cash, cash conversion ratio, the guidance is confirmed, and our EBITDA to free cash flow conversion rate will be above 70%.
Thank you for your attention. Bertrand is going to share with you an update on Italy and on Edenred 2025 outlook.
Thank you, Julien. So I propose that we move to page 28. So where do we stand on this potential cap on merchant fees in Italy? First of all, what happened? In fact, an amended Italian competitiveness bill has been presented to a parliamentary commission yesterday, and the text has been published this morning, so it's the beginning of a long process. In this competitiveness bill, you have 400 different amendments and one amendment would call for the introduction of a 5% cap on merchant fees for the private sector, referring to the 5% cap already implemented on the public sector. This proposed preliminary amendment states that the objective is to rebalance the fees between the merchants and the employers. So what are the next steps? If voted, this amendment, this amended competitiveness bill would be voted in Q1 2025.
If voted, and I say if, because once again, we are at the beginning of the process, if voted and voted as such, because many works will be done also, in terms of what is in it. Due to our contractual agreement with the merchants, the amendment would not start being applicable before July 2025. So that's the preliminary situation we are in. What is our position? And in fact, it's a position that we share with, in fact, the association, Italian Association of Meal Voucher Issuers, because once again, it's very preliminary. It is not against Edenred, it is the expression of the willingness to rebalance the fees between the merchants on one side and the employers on the other side.
But we believe that a cap on commission on meal vouchers is legally not applicable, because it would run counter to the principle of freedom to set prices, which is a fundamental principle of European and Italian commercial law. And such a measure would restrict the ability of issuing companies to freely determine their prices, which is a key element of a healthy and competitive market economy. So based on this legal analysis that were run by Edenred, but also by themselves, with the best lawyers we can find in Italy, our action plan obviously will be to challenge this potential amendment in front of the Italian court, but also the Italian antitrust authority, but also the European Commission. So that is the plan, and obviously in parallel, we are not against a rebalancing of the fees.
So, the discussion will start to find a way that is agreeable for all the stakeholders of a system that is, once again, everybody in Italy is in favor of. I propose to move page 30 to give you, you know, more information as to the Italian market. First of all, when you look at Edenred Italy's breakdown of the operating revenue, what you see is the proportion of meal and food operating revenue as to the total operating revenue in Italy. This proportion is decreasing, moving from 85% - 68%. We have been growing fast on meal and food, but we have been growing even faster on what we call Beyond Food and Mobility.
As you can see, Beyond Food, so for example, welfare represents now 20% of our of our operating revenue, versus 7% a few years ago, and Mobility is 11% versus 3%. This rebalancing of our portfolio will continue and accelerate in the upcoming years. Why? First of all, because, in fact, the welfare solution will continue to develop fast. The second reason, as you know, we made the acquisition of Reward Gateway, and one of the country of deployment in wave one of the engagement solution is Italy. And finally, as you know, we made the acquisition of IP Energy Cards. We expect to close that in Q1 2025. And this acquisition help us move from the number six position of Mobility in Italy to the number two position.
And so we are now in, you know, the top two, and if we do it, it's to accelerate the growth, and so over-generate some growth, and so continue to contribute to the rebalancing of our portfolio. If we move now to page 31, what is the weight of Italian meal solution within the Edenred operating revenue? And what you see is this ratio is broadly stable between 12% and 13%, depending on the year. Another way to say it, Italy did well for the last three years, but almost as well as the entire Edenred group. Then, what would be the potential impact of a 5% cap on merchant fees? First thing to remember, there is no impact on the float.
The idea behind the pressure that is put on us is, in fact, to rebalance and to force the rebalancing between the merchants and the clients. Then, if it happens like that, based on the assumption that the application date will be as of July 2025, which is for us, our worst-case scenario, because based on the few information we have today, the idea is to give one year to help the issuers to rebalance. But based on the fact that we don't know and there are many if, we took the worst case in the assumption, knowing that the worst case assumption depends on whether the amendment is voted or not. And once again, you understand that from the legal point of view, we think it's not possible.
But there are also some other parameters, as I just said, the implementation timing, the rebalancing magnitude and timing, but also the technicalities of the fees, because when we say a cap on fee, what does it mean? Which fees? By when? There are still many things that can be discussed between now and the voting. So based on what we call the worst case scenario, one thing to remember, no impact on float, no impact on 2024. Worst case scenario, application, economic impact starting July 1st , 2025, for Edenred in Italy, it will mean for 2025, an impact of up to EUR 60 million of EBITDA. Meaning an annual impact of EUR 120 million, but as you know, it doesn't work like that.
If the worst case scenario happens, EUR 60 million in 2025, and an additional EUR 60 million in 2026. If I move now to page 32, whatever the outcome of this battle, and we are ready to fight it, and so despite this risk, the meal voucher market in Italy remains attractive for Edenred. First of all, it's a vastly under-penetrated market, especially for the SMEs. The SME Italian market is twice bigger as the size of the French market, and is twice less penetrated. The second thing is, the market is digital, not totally, so there are still some digital initiation work to be done, and as you know, Edenred is the leader of the digital benefits around the world. Another element is the face value is very low, and the face value did not change since early 2020.
I don't make any promise, but we know by experience that a level like that doesn't stay forever, because EUR 8 per day for those who know Italy, it's not enough to have access to a proper meal. Finally, whether the cap on fees is applied or not, the take-up rate will stay attractive for the group. A question you could have is, how come the take-up rate in Italy is higher than the average of what we have in Europe, and will stay slightly higher? Because, simply, in Italy, the way the market has been structured a long time ago, it's based on highly selective merchants network. To give a point of reference, the network in Italy is twice more selective than in France.
So the more you bring volume, the more it is visible for the happy few who are part of the network, and the higher they pay. Therefore, the take-up rate for the merchants is higher than the average of Europe. But on the other hand, the level of customer discount for large corporates is also higher than the average in Europe. That's why there are those tough conversation on how to rebalance between the clients on one side, and the merchants on the other side. I propose that we move now to page 33, to look at, in fact, our Edenred EBITDA growth outlook for 2025. Why are we confident to say that we are able to generate 12% like-for-like growth if the risk in Italy does not materialize?
But more importantly, if the risk materializes, why do we feel confident that we would be able to generate 10% minimum like-for-like growth in 2025? If I start on the left of the chart, what you see is our leading EBITDA in absolute value, between EUR 1.245 billion and EUR 1.285 billion. And then we have two major growth engines. The first one, that we call operating revenue growth, that is based on the growth of our core. Even bigger growth on the Beyond program, as explained by Julien, you see that we are growing double digits on core and bigger double digit on Beyond. And we also have the M&A integration of the recent acquisition. That's the biggest growth engine we have. The second growth engine we have is what I call the operating leverage and efficiency.
What does it mean? Operating leverage, it's simply because we are a platform, and on the platform you have what we call the scale effect. The more you bring volume, the more you are able to dilute your fixed cost. And you see good growth of Edenred in the past years, but good growth that we see in the coming years, so we will benefit from the scale effect. Moreover, the convergence of the platforms. We invested a lot in the last three years in our digital platform. We are making the migration to this single world-class platform, full cloud, full API, and the more we converge, the better we are in terms of cost. But it takes time, because as long as you did not migrate the last client of the old platform, you are in double run.
So we will see in the years to come, the double run cost going down. And finally, we still have a little bit of paper here and there, so for example, in France, at some point of time, paper in France is gonna be forbidden, which is good for us, because we are double running a digital platform and some paper costs that are not at scale anymore, so the cost, in fact, hurt us. So it's what I call the operating leverage. And then we have the efficiencies. The efficiency, what does it mean? When you move from a regime that, where you have growth at 20% more, the management focus is very much on growth, and we cannot do everything.
When you move to a regime that, where the growth is 12% like-for-like, then the management focus can be even stronger on what I call efficiencies. For example, people productivity gains, inclusion or, let's say, implementation of data and AI to help everybody to be more efficient. But also, to look at our portfolio of products. Once again, we have 250 different programs in 45 countries. Some of them do not produce what they should produce, so it's our duty now to look at our portfolio, make a review, and decide if we want to continue or not. So efficiency means under a regime of double-digit growth, but that is not 20%, it's in fact a call for the management and for myself to better master our cost base and our investments.
So that's what we have in terms of two major engine growth. And then, as you know, we will have, in 2025, another revenue decline. As explained by Julien, we will be between EUR 240 million and EUR 250 million in 2025. We know that we have a minimum floor of EUR 210 million next year, so it's gonna be a negative growth engine. And so if I make the computation of everything, the, all those elements will lead to a minimum 12% like-for-like growth in 2025. And then we have this potential fee cap in Italy. We shared with you the worst case scenario. If we take the worst case scenario, starting in July 2025, we move to 10% like-for-like growth minimum for 2025. So that's how we make the breakdown of our economic equation for 2025.
Then you could ask: What does it mean for 2026? And in fact, I have good news for you for 2026. First of all, the operating revenue growth will be there in 2026. Second thing, the operating leverage and efficiency will be there in 2026. As you know, those kind of battles are long-term battles with effects that you are able to generate for a certain number of years. The good news is the other revenue decline will not be there in 2026. We said we move from EUR 240 million, EUR 250 million to minimum EUR 210 million, and then we have this floor before we are able to increase the EUR 210 million due to the float increase, thanks to fortunately stabilized interest rates.
And so this negative organic growth will probably not be there in 2026, but the potential fee cap in Italy, worst case scenario, EUR 60 million in 2025, an additional EUR 60 million, so it's neutral in terms of, let's say, impact, if I compare 2025 to 2026. That's why when we look at our economic growth equation, we feel confident as to the 10% if the potential fee cap in Italy happens, and, 12% if it does not happen for 2025. So to make a long story short, page 34, I'm sure you got it. 12% without this risk, 10% EBITDA like-for-like, if the risk in Italy materializes.
To conclude, we will be happy to share with you during the investor update that is coming, in fact, on December 3rd at 10:00 A.M. and for two hours, we will be happy to share with you how the Beyond Plan has shaped the future of Edenred and reinforced its sustainable and profitable growth profile. Because the suspense is killing you, there are four things that we will be happy to share with you. First of all, the strongly recurring revenue and resilience of our platform model, with a diversified portfolio of solution and a well-balanced geographical exposure. Our Beyond strategy, that is unlocking new growth opportunity, and that allows us to enlarge our total addressable and non-regulated Beyond Food and Beyond Fuel markets.
But also, where do we stand in terms of the integration of recent acquisition, that present additional growth levers, especially in non-regulated market? And finally, how does it work with the operating leverage? Thank you for your attention, and Julien, Fabrizio, the Managing Director of Italy, and myself, we are all yours to answer any question you may have.
Thank you. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, please press star two. We will take our first questions from Ed Young, from Morgan Stanley. Your line is open, please go ahead.
Good morning. Two questions, please. First of all, you mentioned rebalancing of upstream, downstream, back at Q2. You obviously alluded to Italy on the slide. I just want-
Ed, Ed, we lost you.
Apologies on that. Ed has been disconnected. We will take our next questions from Justin Forsythe-
Okay.
Sorry, from Pravin Gondhale from Barclays, your line is open. Please go ahead.
Hi. Hi, Julien. Thanks for taking my questions. So yeah, previously at H1 results, you did flag the risk to upstream, downstream fees. And then you did mention about Italy. But can you please give us a clear sense around how much of group EBITDA is represented by Italy? And secondly, until very recently, there was a thought that government would rather prefer the issuers and the merchants to work out the merchant commission rates in the country. What do you think has changed the government's stance to regulate the fees? A nd then finally, as stated in the presentation, the aim of the amendment is to rebalance the fees between the employers and the merchants, but is the proposed amendment very similar to the caps on the merchant on the employee's discounts, similar to what we have in the Consip contracts?
Okay. So Pravin, thank you for your questions. And I will start by answering, and then we will listen to Fabrizio. As I said, first of all, it's very preliminary, so it's the beginning of the conversation with a little bit of pressure that has been put by, you know, the Italian government, but to remember that it's the beginning of the journey. The second thing is the government stated many times that they want more Ticket Restaurants in Italy, and everybody likes the system. The third thing, as I said, it's a rebalancing. They want to force the rebalancing because the retailers want to pay less, and so there is a lot of, you know, public affairs behind that.
So that's the situation we are in, and we are ready to fight from a legal point of view, but we're also ready to negotiate, you know, this rebalancing in a situation where that was very unique. Like, Italy is the only country that we have so radical in the balance between the clients on the one side and the merchants on the other side. It's the unique country where you have such, you know, such a difference. Why? It's due to history.
Historically, when the system was put in place, employers said, "I don't want to continue, so I will push the volume of my employees to go to certain merchants, and I select a very, let's say, narrow network." So it means that me, as an employer, because I bring a lot of volume with a lot of certainty, I don't want to pay a lot. You have to give me, you know, a very good price, even some discounts, and the retailers has to pay for the volume and the certainty of the volume that we bring. It's coming from that history, and maybe it's the right time to rebalance that.
But what we would like is to have time to sit down and find a way, even if the government, what we understand, because once again, it's really the beginning, even if the government is saying, "We give you one year to rebalance." Okay? So just to make myself very clear. So then, did I answer your question?
Yes, yes, yes, please. But can you give us-
Okay.
A sense on what percentage of how much is Italy, as a percentage of group EBITDA? Any colors on that would be helpful.
The percentage of group EBITDA, do you mean that if we look at the risk in 2025, we said the worst-case scenario is EUR 65 million, sorry, EUR 60 million? We don't know yet what is EBITDA in 2025, but, you know where is the mid-range guidance for 2024. So to make-
Sorry, uh-
L ong story short, it's less than 5%.
Yeah, sorry, well, I wanted to check how much is Italy business as a percentage of group's EBITDA?
You know, yeah, so maybe a comment on that. So we gave a few numbers on the presentation. So you see that in voucher in Italy is around 13% of group total revenue, operating revenue. So if you do the computation, you will reach to something like for meal voucher in Italy, more than EUR 300 million in terms of operating revenue. A little bit more than EUR 300 million . And then when we look at the total of Italy, as meal voucher will represent after the acquisition of IP, 60% of operating revenue in Italy. The total operating revenue generated by Edenred in Italy for meal voucher, welfare, and Mobility, is above EUR 400 million .
Next year it will be more than EUR 400 million, knowing that the total group revenue this year will be close to EUR 3 billion. Let's say EUR 2.8 billion-EUR 2.9 billion. To make a long story short, it's about 13%.
I n Italy, and in Italy is about 13%. Then as to the EBITDA margin of meal voucher in Italy, as compared to the entire group, the EBITDA margin is higher, so the percentage of Italy's EBITDA meal voucher is higher than 13%, slightly higher.
Okay, understood. Thank you very much.
Thank you, Pravin.
Thank you. We will take our next question from Justin Forsythe from UBS. Your line is open, please go ahead.
Hey, Bertrand, Julien. Thank you very much for the time, appreciate it. So a couple from me, if you don't mind. First one, just wanted to think through a little bit the revenue progression. I think it was a little bit light compared to where the Street was expecting. Maybe we could just talk a little bit about the expected 4Q exit rate there. I know you don't guide to revenues, but it does, to a degree, imply, unless the Street numbers were a bit offsides, that, you know, your expectations came down a little bit on the revenue side as well. So how does that flow through to 4Q expectations?
You know, given you reiterated the midpoint of the EBITDA guidance, does that then mean that you're expecting greater EBITDA margin expansion in 2H than you'd expected initially? And on top of that, are we still expecting operating EBITDA margin to expand in 2024? I believe that was the prior guidance. The next one I wanted to understand also is if you could just walk through the kind of build up to Mobility growth in 3Q, and how we got there, particularly if we're talking about... I don't think you gave the 3Q inflation benefit, but what are we looking at on a like-for-like, and what drove that down sequentially from 2Q, the component parts from 2Q to 3Q? Thank you very much.
Julien, to answer questions of, Justin.
Yeah. So, Justin, regarding Q4, as you said, we confirm the EBITDA guidance, so it means that we are expecting growth in Q4. Maybe the two things you need to keep in mind for Q4 and what will impact, you know, the landing at the end of the year. The first one is, you know, Q4 is a very important quarter for Edenred as we need to manage what we call the peak season. So you know that before Christmas, we have big gift campaign to manage, and we are only, you know, the of October 24th, so we don't have visibility yet to see what will be our performance in terms of gift campaign.
So depending on the gift campaign, the growth will be higher. Let's say the landing of our EBITDA will be slightly different. The second topic we need to look at, but we don't manage it, is the impact of currencies. As I said, you know, the mid-range of the guidance we gave is 20% like-for-like EBITDA growth. We could have an FX impact, positive or negative, we don't know yet, coming from Brazilian real and Mexican peso. So depending on that, you know, the level of EBITDA in euros could be slightly different compared to what we said this morning.
So these are the two things we will have to manage in terms of, for the landing in Q4. Now, if we come back, you know, to our, let's say, core business and, the business that is running quarter after quarter, the business we have in, in, in Benefits and Engagement or in Mobility, will still grow in Q4. And as I said, you know, the, the difference of growth will come from, from additional, product like, like, gifts. Like, and this is the case, you know, every year. Now, regarding the EBITDA margin, yes, we said that the operating EBITDA margin, will, expand this year. This is what we've done, you know, at the end of June, and this is what we see for the end of the year.
Keep in mind that, you know, we made some changes in terms of a computation of our revenue in Brazil, because we don't have, you know, discount anymore, but we have cost of sales that replace the discounts we had before. And you know that this change in our accounting methodology has an impact on the EBITDA margin, on the operating EBITDA margin of 50 basis points. So even if we have this impact, what we see is that we will be able to improve the operating EBITDA margin in 2024. And I think it's the demonstration that we are able, you know, to manage operating margin and to be able to scale the platform.
As Bertrand explained, we are in a scale business, so the more volume we put on the platform, the more revenue we are able to generate. And because, you know, the cost of the platform are fixed cost, it means that we can get this operating leverage.
Got it. And regarding, sorry if I missed it, just the phasing and Mobility, and what drove the bridge to Q3, and inflation-hyperinflation benefit?
Yes. So, as I said, you know, you have hyperinflation in Argentina. Argentina is a country where we have mainly Mobility operations, so it means that most of the impact of hyperinflation impacts, you know, our Mobility business line. So I don't have a, you know, I did not do the math, but I give you some numbers, so maybe you can look at that. What is very important for me, it's not Q3, as we've been able to grow in Q3, then the main question is Q4, and as I explained, the impact of hyperinflation in our growth, this, let's say first nine months of the year, is around 2%.
We know that at the end of the year, the impact will be 1%, if I take the full year performance. It means that in Q4, we'll have negative impact coming from hyperinflation at operating revenue group level, and it will be also an impact, you know, in Mobility business line for sure.
To make a long story short, hyperinflation is 1% impact on our like-for-like growth, okay? But it has been higher beginning of the year, and it decreases quarter after quarter to be negative in Q4. The bridge between Q2 and Q3 in Mobility in Latin America is mainly due to this effect of hyperinflation.
Yeah, okay , got it. And then just to be very clear on the deceleration in Mobility from 2Q to 3Q , was there anything specific worth calling out that maybe wasn't flagged in the release, that you could be more explicit on? And how to think about that kind of business line going forward? That would be super helpful. Thank you.
What we said is that when you look at Mobility, we did very well in Brazil. Double-digit growth with, you know, a strong performance coming from Beyond Fuel solutions, maintenance and toll. And then when we said that we have a kind of deceleration in Germany and Central Europe, it comes also from Mobility. You know that German economy slowed down, and we see the impact, and we also have the impact of fuel price. And when you look at the level of fuel price today, it's the lower price since at least 2022. We need to manage. It has an impact on our revenue.
What we see is that we are able to find new clients, so we are able to, you know, to generate growth, but we are impacted by that. This is why you see a kind of slowdown. Now, depending on the worsening of the economic context, we'll see what it means, but we've been able to grow in Europe even in, with this context, and this is what I can tell you today.
Got it. Thank you so much, both. Really appreciate it.
Thank you. We will take our next questions from Ed Young from Morgan Stanley. Your line is open, please go ahead.
Good morning again. Please don't cut me off. I promise the questions are fair. So, the first question is, can you talk about when you first became aware of this amendment, and if there are any similar amendments that you're aware of being introduced in your other countries? And then second of all, you talked broadly about rebalancing the fees, but to be clear, you've also talked about EUR 60 million and the EUR 120 million being your kind of worst case assumption. So just for clarity, are you assuming any mitigation in terms of a rebalancing or an increase, essentially, or a lower rebates on the client side within your calculations? Thanks.
Okay, Ed, we are lucky to have Fabrizio, who is the Managing Director of Italy, and who is on the forefront. So, Fabrizio.
Thank you, Bertrand. Good morning, everybody. First of all, I confirm what Bertrand said before, the amendment has been just presented to the Competition Bill. It is the start of a battle. We have many months in front of us, and many reasons why we believe this is not the scenario should move forward. To go back directly to your question, we have been informally informed yesterday about the amendment. The amendment has been made official this morning, so technically speaking, 8:40 A.M., so right the call was just started.
If we are a bit back, in July, there was an article in the press in Italy, when there was the first time a large retailers association asking for a cap on fees to mitigate the cost, the level of commissions, and to rebalance, I want to stress this point, to rebalance between the commission they pay as merchants, and the discounts companies are receiving from us. If I go to the second question, the EUR 60 million fees for 2025, the EUR 120 million is the full year effect.
First of all, it is important to evidence that, in the amendment, it is stated the intention of the legislator is to give, the market 12 months post-approval of the Competition Bill. So it means that based on our history, because Competition Bill is a yearly bill, so every year there is a Competition Bill, normally is approved, in Q1. In Q1, it started the 12 months. In this period, in the amendment, is written that, the new contract with merchant will start at 5%, and the renewal of contract with merchant will move to 5%, but for the full market, the 5% will arrive after one year, 12 months. This is as it is stated to date. Again, it's voted, it's voted these ways, not change, etc.
This means that our best estimation for next year is to have an impact starting from half of the year with EUR 60 million, and this is EUR 120 million. The EUR 120 million is including the mitigation effect. This is what we tend to consider the worst scenario. It is a scenario, as I said, built very rapidly in emergency mode. There are mitigation sections that we are thinking to put in place, but you need to give us a bit of time to understand a bit better. But again, the main mitigation that we have in place is, of course, the rebalance of the level of discount versus customers, taking into consideration the new level of commission with merchants.
So if I rephrase what you said, Fabrizio, first of all, midyear is the worst case scenario, because today's information we have that is very fresh is it should be one year, but you know-
Correct.
Things could happen. So midyear is really the worst case scenario, and the mitigation plan we have is level one in emergency. So if it happens, we have some other ideas for level two. That's why we say the total risk is between EUR 0 and EUR 120 million on an annual basis, and it's gonna depend on many factors. But at least you have the worst case scenario, and you know that if it happens, we are able to commit today for 10% EBITDA growth, like-for-like, in 2025, and we gave you, you know, some indication as to 2026.
Okay, thank you.
Thank you. We will take our next question from Julien Richer from Kepler. Your line is open. Please go ahead.
Good morning, everyone. I have two questions on France this time, but on regulation and the like. So if we look to France, the regulation, can you please make a few comments on the end of meal voucher utilization at supermarket that is currently discussed? What do you think might happen, and what might be the potential impact on your activity, and more generally, on discussions on the full digitization situation of the market and the other previously discussed measures, is there anything new on that side, on the French market? And second question on the competitive environment in France, has anything changed?
The 4%+ growth in Q3, I catch the CESU impact and the like, but it's a slowdown since the beginning of the year, and some of your competitors are talking about Swile being more aggressive on price, and maybe it is something that is tightening the competitive environment in the country. So I appreciate the comments on that side, too. Thank you.
Okay. So Julien, in fact, our head of France met the new minister in charge of that yesterday. And basically, what she shared yesterday was, in emergency, they will take the decision to allow the usage of Ticket Restaurant for food in supermarket for an additional year. So the current system we are in will be, in fact, agreed for the next year, because they had a deadline before the end of the year to renew or not. So they decided for the status quo. What is the impact on us? No impact, because it's the situation we have been in for the last two years, and so no economic impact. Then, your second question is, as to, you know, the law.
Basically, what the minister said yesterday, she wants to be in a situation where she will present the law in Q1 2025, and one of the main driver is one of the main, let's say, point of the law was to kill the paper in France, and to make of 2025 the last vintage, if I may say so, of paper. So we'll see how it goes. But to make a long story short, a consensus has been built, in fact, right before the dissolution of the National Assembly. You have a new minister, a liberal one.
She needs, you know, a little bit of time to, you know, to make her priorities, but she understands that priority number one is to kill the paper, which is gonna be a very good news from a cost point of view, and probably, but, you know, you never know in France those time, but probably it should happen in Q1 2025. Then, your second question was as to the competition. No, we don't see any. We don't see any significant change on the competitive front in France. What we see is, since the dissolution of the National Assembly, in fact, the process of decision in time has increased a lot.
So when you talk to the large account, but also the middle market, and probably more critical with the SME, it takes much more time to convert the lead into a contract, because there's a level of uncertainty that hurts the entire economic stakeholders in France. So when you look at the slowdown in France, part of it is due to a change in our portfolio, and remember I said that we started a portfolio review of our activities, and for then ahead, when we don't see a growth potential double digit or not enough profitability, we are ready to stop, which is what we did for CESU. So it has a price to pay. It has an impact on the revenue growth, but it's good for the EBITDA, and it's good also for the managerial focus.
So, to make a long story short, no significant competitive change in France, but a situation of economic uncertainty increasing the decision process of our clients.
Very clear. Thank you.
Thank you. We will take our next questions from Hannes Leitner from Jefferies. Your line is open. Please go ahead.
Yes, good morning. Thanks for letting me on. I got also a couple of questions. Maybe you could. I mean, I know it's early days to look at 2025, but given Q3 like-for-like growth on total revenues was 12%, maybe you can build us a little bit the moving parts for next year's at least 12% growth if we exclude Italy or the Italian commission regulation. If you just assume that this won't happen, maybe you can talk about the building blocks here and per segment. Then maybe just drilling down on Mobility, you called out less kilometers driven, the macroeconomy, and fuel prices coming down. Can you talk there, maybe, if you are doing any fuel price hedging, and where that hedge is currently sitting.
And then the last thing is around the Brazilian regulation commentary by the new central head of the Central Bank. Maybe you can give there your views on how far is the harmonization of the meal voucher and the technical integration. Thank you.
Okay, thank you for your question. Let me answer to you on the question two and three, and Julien probably will relay what I explained on page 33 as to 2025. So first of all, do we hedge the fuel price? No. We don't have any hedging instruments on the fuel price. What we do, however, is we work our economic equation, and once again, in terms of pricing, there are many ways to price. You can price as a take-up rate on the volume, you can have some access fee to the service, you can have some SaaS fees for, you know, the platform, you can have some billing as to the number of liters, you can have billing as to the number of times you refuel your tank.
And so depending on the countries, depending on the competitive environment, we use different pricing formula to maintain our leadership, but also our profitability. But as to the fuel price evolution, we don't have any financial hedging instruments. Third question about Brazil. In fact, things are moving for now in the right direction. I remember everybody that a law was written a few years ago, a law that was forbidding the discount, which is a very good thing, and which is also a way, in fact, to rebalance the commission between, in fact, the clients and the retailers.
In the law, it is stated now that this business is prepaid, and it cannot be otherwise, because it's a social program, and as an employer, you need to put the money before the money is given to the employees to avoid any problems such as bankruptcy, for example, where the money is gone, and the money has been spent by your employee, your employees. So those things are very good things for the program, and that's one of the reasons you see, you know, the growth we're having in Brazil. Then there are some ongoing discussion, as usual, in Brazil. And in fact, a decree came a few weeks ago to restate more firmly the ban on discount, because there is a lot of marketing creativity in Brazil.
So even if the law was clear, now, thanks to the decree, the law is even clearer as to, you know, the fact that discounts are banned at the exception of a few things concerning, you know, health. But it's much more restrictive after the decree than before the decree. So it's where we stand in Brazil. We know that we have a labor minister that is very keen to promote the PAT. The PAT is key for millions of workers, in fact, in Brazil. And once again, it's regular conversation with the regulator to make sure that the system with so many stakeholders, to make sure that the system is a well-balanced system. So it's where we are in Brazil.
As you said, it's too early to talk about 2025, but I shared with you some elements of our economic growth equation. Maybe Julien, you can say it with your words?
Yes. So what we said, and as Bertrand explained, it's on page 33. We give you a view on the bridge to a move from 2024 to at least a 10% EBITDA like-for-like growth in 2025. And we re-explained that the first level for growth is our capacity to grow our operating revenue. As we said during the presentation, we've been able to grow our core solutions revenue by 10% this year and our Beyond Food solution has grown by 15% this year. Our ambition is to keep on growing with those products.
And on top of that, we have the M&A integration, meaning that with the acquisitions we did in 2023 and in 2024, we have new features on the platform, and we want to propose those new features to our existing clients, increasing cross-selling and deploying those solution in countries where they are not available or where they were not available till now. So this is the first level of growth. The second one is around, you know, operating leverage and efficiency. And indeed, it's our capacity, you know, to grow our EBITDA margin, managing efficiency. So focus on cost and see how we can improve, you know, our processes and how the company is organized.
And also, you know, to see how we can review the portfolio we are managing. We do that year after year, but this is something we're gonna pay attention to. So this is it for efficiency. And regarding, you know, the operating leverage, as we are still growing, as the volume of activity is growing on the platform, it means that we are able to manage more with the platforms we have. And it will contribute, you know, to the improvement of the operating EBITDA margin of the company. And then the last topic that we will have to manage is the other revenue. We expect, you know, 4-5 decisions from the ECB to decrease interest rates next year.
What we see when we look at the consensus is that interest rates will stabilize between 2.25% and 2.50% till 2026. This is what we have in our plan. When we look at that, as I said, you know, we should have a floor for the other revenue at EUR 210 million in 2025, knowing that those EUR 210 million takes into considerations the level of interest rates and the fact that because our activity is growing, the level of growth we have to invest is higher compared to where it was in 2024. If we take all those things, and without the potential fee cap in Italy, we say we are comfortable with an EBITDA like-for-like growth of at least 12%.
And now, if we take into consideration the impact of the potential fee cap in Italy, we will be at least at 10% EBITDA like-for-like growth.
Thank you. We will take our next question from Estelle Weingrod, from JP Morgan. Your line is open, please go ahead.
Hi, good morning. Just two questions from me. Sorry to ask this one again on meal vouchers in Italy, you mentioned 13% of group total operating revenue. I understand margins are higher there, but is that a good assumption to say that perhaps Italy meal vouchers account for close to 20% of operating EBITDA? That's my first question. And the second one, on the worst case scenario of EUR 60 million impact next year, what does this scenario imply in terms of operating EBITDA margin year-on-year, please? Thank you.
Okay. Estelle, thanks for your question, but you know that we don't share, you know, this information as to, you know, the EBITDA, and you have all the information, and I'm sure Cédric will be happy to guide you. But to make a long story short, meal and food solution in Italy, it's 13% of the total operating revenue. And the margins we have in Italy on those programs are higher than the average of the group due to what we explained before, the specificity of the Italian market.
And once again, we don't play games here, but you have to understand as well that we are in the middle of negotiations as well, and so there are elements that we are not able to, not comfortable to share if we want to maximize our chances to have, you know, the right outcome in countries like Italy. The second thing is, with, you know, a cap on fees, what I can share with you, and once again, the worst case scenario, the EBITDA margin on food and meal solution in Italy will in fact grow to the average level of what we have, in fact, in the rest of the program everywhere around the world.
So another way to say it, the worst case scenario is a normalization of the situation of Italy versus the rest of the world, knowing that then the potential, so it's a rebasing, and the potential of growth is still intact. Once again, it's a large market, it's an under-penetrating market, especially on the SME. It's a market where the face value is low. And it's a market on which, on the other, what we call the Beyond Food, many things are happening. We could have good news, for example, as to the fringe benefits. Today, we talk about risk, tomorrow, we could talk about nice opportunities, for example, on the fringe benefit envelope that is given to the Italian employees, and it's a market on which we are number one.
So to make the long story short, we are agile, we adapt, and we are ready to fight when some of our programs are attacked.
Okay. Very clear. Thank you.
Thank you. We will take our next questions from André Juillard from Deutsche Bank. Your line is open, please go ahead.
Good morning. Two questions, if I may. First one, in Italy, if the amendment is adopted and capped the commission rate for merchants, don't you think that it could affect your top line growth and the penetration of the market, considering that you will try to balance the commission to employers with higher fees? So, couldn't that negatively impact your growth in Italy? Second question, about the general environment. We were not expecting this kind of regulation coming from Italy, even if we all knew that the commission, the reimbursement commission was higher than everywhere.
But considering that all states are looking for more regulation and more tax, don't you think that there are some risk in some other countries in terms of regulation, do you have any visibility at this stage? Thank you.
André, thank you for your question. I propose that Fabrizio answers the first one, and I will answer the second one.
Okay, thanks again for the question. No, we don't believe that it will impact our growth and our penetration for the reason that this is a generic law that is applied to all the competitors. As Bertrand said before, we are market leader in Italy. Our penetration is, as an overall representation, low in the SME market, where in any case, the value of having a meal voucher totally detached, also with a cap on fees is remaining super interesting for all the companies. As we said, penetration is still low, is a super good deal for small and medium companies to decide to invest some money in meal vouchers, and in any employee benefit solutions we have in Italy, so this is not the only one.
Growth is not impacted, and penetration is not.
As to your second question, André. First of all, I say it again, nothing is done. It's really the beginning of a process, and it's a tactic as well, of, you know, some politicians in Italy, to force, you know, the conversation. But as usual, there is a little bit of fight and they start, they start hard on it, I saying, "Okay, we put the baby in labor, and we'll see how it goes." Now start the real work. The real work is to sit down and to explain. As I said, from a legal point of view, we have many arguments. And then, this rebalancing is a question of finding also the right pace, and there are many, many things to be discussed.
So once again, it's the beginning. We share it with you guys because it could have an impact that is significant. The good news, as I said, is even if it happens in the worst case scenario, we commit to 10% EBITDA growth, like-for-like, in 2025. But we are ready to fight, and fight on no amendment, or try to define the technicalities that will lower the bill, but make everybody happy. Because we have a second objective, is to make sure that if there is a compromise, the compromise is the right compromise for the future growth of this market, where there are still many things to be done on meal, but also on engagement, on fringe benefit, as I shared with you before. The second thing is, is there a risk somewhere else?
Our view on that is the situation in Italy is a very unique situation. We don't have any other country where you have this kind of imbalance between, in fact, the merchants and the employers. So it's very, very unique. If you make a comparison, in France, our average take-up rate is less than four, and here in Italy, we are talking about five. You know, just to make some small points of comparison. What I want to say is, let's keep the Italian situation where it has to be, i.e., a very unique situation that will normalize one way or another, and we are ready to come with creative solutions or, let's say, legal fights to mitigate the risk.
Maybe one additional question about Italy. Do you have an idea of the market share split between you, international competitors and local players?
Yes, in fact, so for, Fabrizio?
International players are representing around 70%-75% of the market. Of course, there is no official data available, but there are more third parties, that's not our calculation, who are producing this data.
But do I perceive in your question a willingness of the Italian authorities to punish... foreign countries? Is that the sense of your question?
But that was not the sense of my question.
Yes.
My question was-
It could be-
To try to understand the weight of the local players rather than yours.
So, right. So the weight is about 30%, but if this idea arises, no, we don't think so. It's, there is nothing in terms of punishment, or anti-French, or whatever. It's just the willingness to rebalance from... So, Fabrizio?
Just to remind everybody, in this market, let me say, the most important player is the Italian most important player, a company called Pellegrini Group. Pellegrini is historic and very famous entrepreneur in Italy, very well-reputed, big business in canteen services, in the meal voucher industry, etc. They are exactly in the same situation which we are. So the 5% cap is impacting everybody from the big to the small, from the external to internal.
Would impact.
Would impact.
No, the sense of my question was really to understand, yeah, because the local players are exactly in the same situation than yours, and they are probably more at risk, considering their lower size and higher activity.
That's totally true, and this is also my answer to the point of growth and penetration before. So, I mean, even if 5% cap is already applied on public tenders, in which it is public, so it is every time official, who is winning, who is losing, and we are very strong, and all the big companies are very strong in signing the tenders. So it is creating economies of scale, which is getting more and more important in this business.
Okay.
Let's see what is happening, it's still quite the beginning.
Thank you. It appears that's all the time we have for questions. I will now hand back to your host for any additional or closing remarks. Please go ahead, sir.
Okay. First of all, thank you for being with us today. As we said, a few things to remember. First of all, yes, the macroeconomic conditions are deteriorating, but due to the solidity, the resilience, and, let's say the diversity of the business model of Edenred, we are able to confirm the guidance in EBITDA, but also in terms of free cash flow conversion. Second thing is, thanks to our model and our different engines of growth, we commit to a minimum 10% growth like-for-like EBITDA in 2025, if we have a materialization of the Italian case, and without that, we go back to the 12% minimum like-for-like. Thank you, and I wish you a very good day.
Thank you for joining today's call. You may now disconnect.