Welcome to the Edenred half-year results 2026 conference call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, sell-side analysts are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to the speaker, Bertrand Dumazy, CEO. Please go ahead.
Ladies and gentlemen, good morning. Thank you for being with us today for the H1 2026 Edenred results. I'm pleased to be with Virginie, who is the CFO of Edenred, together, we will be explaining the H1 results for the next 75 minutes. What I propose is a presentation of about 35 minutes max, then the remaining 40 minutes plus to answer any question you may have. I propose that we move to slide three of the deck, in fact, I have six messages that I want to share with you today in this presentation. Message number one is 2026 is a reset year for Edenred due to the meal and food regulatory change in Italy and in Brazil. Nevertheless, we delivered a sustained commercial performance in Q2, leading to an 8% operating revenue intrinsic growth in H1 2026.
Furthermore, Edenred posts a resilient financial performance, demonstrating the strength of Edenred business model. My message number four is with better-than-expected results in H1 2026, Edenred is able to raise its guidance for the full year 2026. The previous guidance was an EBITDA like-for-like growth between minus 8% and minus 12% for the year 2026, we are now upgrading this guidance to - 7, - 10%, which is an equivalent in EBITDA of EUR 1.23 billion and EUR 1.27 billion. We confirm our free cash flow on EBITDA conversion rate of 35% for the full year 2026. If we are moving to the page five, my message number five is, in the first part of the year, Edenred continues to execute its Amplify strategic plan as evidenced by attract, i.e., the ability to grab more users, enrich the ability to generate more revenue per users.
Finally, we'll make a point on data and AI because Edenred is and will be the winner of the data and AI revolution. Finally, thanks to these results of H1 2026, thanks to all the investments that we are doing and the visibility we have, we are happy to confirm the sustainable and profitable growth trajectory for 2027 and 2028, which is an outlook of EBITDA like-for-like growth of between plus 8% and plus 12% in 2027 and 2028, a free cash flow on EBITDA conversion rate of at least 65%. Those are the six messages that now I will go into more details. If we move to page seven of the presentation, I would like to start with a showcase on the benefits of being able to deploy fast some earmarked funded solution.
As you know, there was a G7 in France, Edenred was the partner of the government on those events. Basically, what we did is we deployed 2,300 meal card for the G7. We have been able to do that in two months from the concept to the deployment, we have been able to put in place a qualified network of 500 merchants. What does it demonstrate? The ability of Edenred to develop fast some earmarked funds capabilities. The second thing that it demonstrates is it useful to operate in a closed-loop system with some filtering capabilities? The showcase of the G7 demonstrates once again the benefit of such solution.
First of all, 70% of the loaded funds have been spent in local restaurants, i.e., it demonstrates our ability to earmark the funds and to make sure that the funds are spent where they need to be spent. The second data that I found very interesting is the users, they are briefed, the money is for their lunch and dinner, but still 27% of the transactions, the users are trying to spend the money somewhere else. Thanks to our open closed-loop system and filtering system, we are able, in fact, to stop and to reject the transaction when the money is not used where it should be used. It is another demonstration of our high filtering capabilities and the ability to generate value for everybody, and especially for the merchants network.
Let's go now into our operating revenue growth and performance in H1 2026, I propose that we move to page nine. What do you see? Page nine is in fact, first of all, our operating revenue like-for-like growth. I would like that we spend a few seconds on what we call the intrinsic growth, i.e., the growth of Edenred, excluding the resetting in 2026 due to the meal and food regulation in Italy and Brazil, which I repeat, represent 20% of our revenue. What you see is in 2025, this intrinsic growth was 8.3%. What you see in H1 2026, this intrinsic growth is 8% with +8.2 in Q1 and 7.9% growth in Q2. What does it mean? It means that the underlying trends of Edenred are very vivid.
As you know, due to the meal and food regulation, the operating revenue like-for-like growth, which is not the intrinsic growth, in fact, has been growing at 1.5% in H1. The difference between 1.5% and 8% is due, first of all, to the Italian meal and food regulatory impact, which is in line with our expectations in H1 2026, we will have the last residual impact in July and August 2026, the last two months of, in fact, this regulation resetting impact. The second thing to explain the delta is the Brazilian meal and food regulatory impact, stronger in Q2 than in Q1 because we had three months impact in Q2 2026 versus one month in Q1 2026. I'm very pleased by the intrinsic growth of Edenred and very pleased by the fact that slowly but surely we follow up the change of regulation.
We move to page 10, you have the breakdown per business line and per geographical zone, or let's say geography. My first comment is the fact that the operating revenue is growing at 1.5% like for like. We go into detail and we go into the business line or the geographies that are not impacted by this resetting of regulation, you see double-digit growth. Mobility +11%, and in the rest of the world, +almost 11% as well. Strong, healthy, double-digit growth. In the business lines and the countries that are impacted by the one-off resetting, basically you see a growth of Benefits & Engagement, a negative growth of -2.2%, or the growth in Europe and Latin America impacted by Italy and Brazil, Europe +0.4%, and Latin America +0.8%.
This 1.5% operating revenue growth like for like in H1 2026 is sustained thanks to our large portfolio of solutions, the double-digit growth in Mobility, for example, a broad geographical mix, and also the good growth of our beyond activities that are growing faster than the core as expected in the Amplify plan. I propose that we move to page 11, i.e., the bridge between the total revenue growth and the EBITDA growth. Growing at 1.5% is leading to a negative growth of EBITDA at -4.6%, which is a decrease that is in fact lower than expected. The total EBITDA is made of our operating EBITDA and the other revenue. The other revenue, which is growing at +1.2%. Virginie later will explain, but a few elements.
Our BV is growing well, our float is growing well, and the interest rates are going down but going down less than expected. That's why we reached a better performance than expected in our other revenue in H1 2026. I propose now that we move to the business highlights of Edenred in H1, page 13. I'm sure you remember our Amplify strategic plan, which is based on a very simple equation, more users times more revenue per users. More users, let's start with, in fact, the driver number one, which is attract, i.e., attract more new users and more new clients within the Edenred family on market that are growing market and vastly under-penetrated market. What did we achieve in H1? First of all, we have a strong commercial traction in SME segment.
Indeed, our new SME clients signed in H1 2026, both in B&E and Mobility, has been growing by more than 10%. How did we achieve that? Two main drivers. The first one is in the context of inflationary environment. We launched dedicated marketing campaigns to push the attractiveness of Edenred solutions on benefits. When there is inflation, you need purchasing power, and we have a flexible digital state-of-the-art solutions for you. In a context of rising fuel prices, you need to better control what's going on or to accelerate your EV revolution. At Edenred, we have some solutions for you, Mr. Client. The second thing we did is to leverage, in fact, the new capabilities generated by the LLMs and to help us generating more leads, thanks notably to the GEO. The revolution from SEO to GEO is on its way at Edenred.
In fact, when we look at this commercial traction, even in the countries that are under meal and food regulatory change, in fact, the underlying trends are growing fast. If we take a zoom on Italy and Brazil, in fact in Mobility, we are growing at more than double-digits in business volume in H1 2026. More interestingly, the business volume in B&E growth like for like in H1 is at 7%. A very robust and healthy commercial traction in H1 2026, which is in fact the contributor to the attract pillar, i.e. more users. If we are moving to the second pillar of the equation, which is more revenue per user. More revenue per user is driven by our innovation, i.e. the ability to propose more services totally integrated on our digital platform.
The example we took here is the acquisition of TMH, The Mobility House in Germany. What does it give to us? First of all, we increased by more than 15 our depot and home charging points in Germany and Austria, i.e. a stronger coverage of one of the leading country in the EV transition. The second thing this acquisition brings to our portfolio is new capabilities. First of all, thanks to the expertise of TMH, we are now able to propose turnkey solution, i.e. a B2B client who has a fleet of vehicle 100% fuel, wants to move part of the fleet into EV vehicles. What they need first of all is some engineering capabilities for the design, the installation of their infrastructure to recharge. We are now able to do that. In partnership, we do the engineering part.
TMH is reinforcing our maintenance capabilities of the charging point. Even more important, what TMH is bringing to the table is the energy management. What does it mean? I have 10 vehicles, 10 charging points. I need to recharge at the same point. Maybe the capacities from an electrical point of view are not enough, and you need to be able to balance, in fact, the charge from one point to another, which is a key element for the fleet manager. Thanks to ChargePilot, we are now able to do that. To make a long story short, with the acquisition of TMH in the EV revolution, we have now a very well-positioned end-to-end value proposition that has been reinforced at work, on depot, on road, and at home. A concrete example of the deployment of Amplify on Enrich, i.e. more value per user.
Now if we move to another element, which is data and AI, page 15. You have here a very concrete example of what Edenred is putting in place. First of all, we do everything to make sure that Edenred is and will be the AI winner. To be able to do that, we use AI for personal efficiency, but also to redesign our processes to be able to be stronger, faster, and at a lower cost. What does it mean? Let's take the lead to order process for the SME acquisition. Today, we looked very carefully at the lead to order process. It's about 60 tasks with limited automation. Can we do differently thanks to the AI? Absolutely. We redesigned the entire process with, in fact, let's say, two series of Agentic AI that are able to automatize a good part of the process.
The name of the game is very simple. We want to be faster, and we want to be more efficient. By redesigning the process, integrating Agentic AI, we are aiming at improving by 20 points our conversion rate and reduce the customer acquisition cost by 30%. Thank you for your attention. It's now time to go more into the details of our financial performance under the leadership of our CFO, Virginie.
Thank you, Bertrand, good morning, everyone. Let me take you through Edenred H1 2026 detailed financial performance. Our results came ahead of expectations, this demonstrates the strength of our business model, the benefits of our diversified portfolio, and our ability to keep delivering sustained growth despite a significant regulatory reset. If we look now to our total revenue. Total revenue for H1 amounted to EUR 1.5 billion, reflecting a +1.5% like-for-like growth. The foreign exchange impact on our H1 operating revenue was a positive +0.2%, combined with a non-material negative scope effect of -0.2%. All in all, this resulted in a nice published growth of +1.5% for the first half of 2026. Overall, it confirms that Edenred continues to deliver sustained growth even after absorbing meaningful regulatory impact in Italy and in Brazil. Moving to next slide.
The breadth of our portfolio remains a key strength. In the Mobility business line, accounting for 28% of Edenred business, operating revenue came to EUR 373 million in the first half of 2026, up 11.2% like-for-like versus the first half of 2025. This continued double-digit performance over the quarter confirms the relevance of Edenred's Mobility offering despite an uncertain environment. Growth was driven by strong commercial momentum, marginally helped by a limited fuel price tailwind in Q2 2026. In Latin America, we delivered a double-digit growth, notably thanks to the attractiveness of our beyond fuel solutions such as toll, maintenance, and freight payment, which grew double digits, underlining the breadth of our offer. In Europe, we recorded a double-digit growth in Germany and a high single-digit growth in Southern Europe.
Also worth mentioning the double-digit growth of our EV offers that will further reinforce with the acquisition of The Mobility House Solutions that Bertrand presented earlier. Overall, Mobility continues to demonstrate its resilience and capacity to capture structural growth drivers. In Benefits & Engagement now, accounting for 65% of Edenred's total operating revenue, we delivered EUR 887 million in first half of 2026, down 2.2% like-for-like versus H1 2025. Adjusted from the regulatory impact in Brazil and Italy, operating revenue grew 7.4% like-for-like. This mainly reflects the robust growth in Southern Europe, like Portugal or Greece, the continued momentum in France, and a good business volume growth in Brazil. In beyond fuel, we registered double-digit growth, notably in Italy with Edenred Shopping and Edenred Welfare, and in Germany with Edenred City.
In Payment Solutions & New Markets, 7% of Edenred total operating revenue, operating revenue came to EUR 100 million in the first half of 2026. At 3.6% like-for-like versus the first half of 2025. The business line delivered strong double-digit growth in our digital wallet offering in Taiwan, while Middle East conflict hampered growth in UAE in the second quarter. In addition, we saw some tail effects from the exit of BaaS B2C business. Moving now to geographical areas, you'll observe once again a balanced increasing growth between business geographies. In Europe, up 0.4% like-for-like, the performance benefited from a good momentum in Germany, both in Benefits & Engagement and Mobility, as well as a high single-digit growth in Southern Europe. Worth to mention, the success in beyond fuel offer, not only in EV, but also in VAT recovery, with an acceleration of Edenred Finance in Q2 versus Q1.
Adjusted from the impact of the regulatory change in Italy, operating revenue rose by 5.9% like-for-like. Latin America was up 0.8% like-for-like versus the same period in 2025. This was driven by the double-digit growth of Mobility, notably by the success of our beyond fuel offer, maintenance, toll, and freight payment. In Benefits & Engagement, the region posted a sustained growth supported by the solid sales dynamics in Brazil, which contributed to double-digit increased growth in the country. However, this good performance has been offset by a high comparison basis for a public social program in Chile and the impact of the implementation of the Brazilian decree late February and then mid-May in Brazil. Adjusted from the Brazilian regulatory impact, Latin America operating revenue grew 11.6% like-for-like. In the rest of the world, it was up 10.6% on a like-for-like basis.
The double-digit growth was supported by solid sales performance in Japan, Taiwan, and Turkey, offsetting Middle East lower contribution. Moving now to other revenue, which was up 1.2% like-for-like in H1 2026 versus H1 2025. This good performance reflects the higher average volume in float driven by Benefits & Engagement performance combined to a slower than expected interest rates decrease due to the challenging geopolitical context. This has been partly offset by the Brazilian regulatory change and the ongoing BaaS B2C exit. Taking into account H1 performance and sustained interest rate expectations for the second half of the year, we now expect full year 2026 other revenue to reach around EUR 210 million. Let's move to the rest of the P&L. Operating EBITDA was EUR 503 million, down -5.9% like-for-like, which resulted in an operating EBITDA margin of 37%.
EBITDA amounted to EUR 616 million, down 4.6% like-for-like, ahead of our expectation. The decline mainly reflects the impact of regulatory change in Italy and Brazil, combined with the deliberate acceleration of strategic investments in data and AI notably, such as the redesign of lead to order process in maintenance in Brazil, as described earlier by Bertrand. In addition, we are also investing in efficiency initiatives such as platform convergence or the standardization of support functions, because we mean profitable growth in 2027 and 2028. Moving down the P&L. Adjusted EPS stood at EUR 1.09, down 6.2% year-on-year, broadly in line with the reported EBITDA decline.
Higher level of depreciation consistent with the start of amortization of our new platforms recently implemented, such as Edenred+ in Europe or Ticket Car Plus in Mobility in Latam, was partly offset by a lower tax rate reflecting our sound geographic mix, the H1 2025 negative one-off, and the positive impact of our ongoing share buyback program. Overall, adjusted EPS sustained by ongoing share buyback program remains well controlled in the context of a regulatory reset and continued investment efforts. Turning to cash flow now on the next slide. Free cash flow was a negative EUR 164 million in H1, reflecting the usual seasonality pattern of our business in the first half, and notably the decrease in flow versus CRM.
The underlying cash generation remains solid, with free funds from operation at EUR 432 million, and CapEx well under control at 6.7% of total revenue, well within our 6%-8% range. In terms of working capital, negative impact of the regulatory change in Brazil was largely offset by higher flow to Italy coming from the increase in payment delay to merchants and the improved Mobility working capital. On that basis, we confirm our objective of at least 35% free cash flow to EBITDA conversion rate for full year 2026. In the next slide, you can see how we illustrate the continued deleveraging of the group. Net debt decreased by around EUR 0.6 billion year-on-year. This improvement was supported by strong cash generation while we continue to return capital to shareholders and pursue targeted acquisitions.
This continued deleveraging gives us significant flexibility to allocate capital dynamically between growth investments, selective M&A and shareholder returns. Our financial positions remain, though, robust. We end H1 with EUR 4.9 billion in cash and restricted funds on the balance sheet, a well-spread debt maturity profile, no financial covenants, and a new fully undrawn EUR 900 million revolving credit facility maturing in 2031. Our cost of debt was 3.4%, broadly stable versus year-end 2025, and S&P affirmed our A-minus rating with a stable outlook earlier in July. This confirms the strength of our balance sheet and the confidence of debt investors in Edenred's financial profile. On the next slide now, we wanted to make a status on the ongoing portfolio rationalization at Edenred. Indeed, part of our strategy is the continuous optimization of our portfolio.
Over the past 18 months, we've taken decisive actions to optimize our portfolio of activities. We focus the group on activities offering the best strategic fit, growth prospects, and profitability potential. This includes the ongoing withdrawal from past B2C operations, the disposal of Edenred Global Rewards encompassing our incentive business in Asia, as well as a nearly completed exit from our African food activity. These actions illustrate our disciplined approach to capital allocation and portfolio management. At the same time, enable us to redirect capital resources and management attention towards our core platforms and highest returns opportunities. With this, I thank you for your attention, and I now hand you back to Bertrand for the 2026 outlook.
Thank you very much, Virginie. I propose that we move to page 28 to conclude before answering any question you may have. Yes, Edenred is well positioned for sustainable and profitable growth from 2027 onward. First of all, in H1 2026, we sustained commercial traction irrespective of meal and food regulatory change. Secondly, yes, Edenred continues to execute its Amplify strategic plan to grow its number of users while generating more revenue per user. Further, in the meantime, we invest in data, in AI, and efficiency measures combined with further portfolio rationalization, as explained by Virginie, and all those things are set to enhance our operating performance. Therefore, following the 2026 meal and food regulatory reset, we are able to confirm the resume of sustainable and profitable growth from 2027 onwards.
At the same time, our continued deleveraging leaves room for dynamic capital allocation focused on growth investments, organic and M&A, and also shareholder return. Page 29. Yes, better than expected H1 results is leading us to a full year 2026 guidance that is upgraded, moving from -8%, -12% to -7%, -10%, which means in euro, EUR 1 billion 230 million and EUR 1 billion 270 million. We confirm as well our conversion rate of free cash flow on EBITDA at at least 35%. Finally, more importantly, beyond the 2026 rebasing year, Edenred will resume this sustainable and profitable growth trajectory from 2027 onward, which means an outlook of EBITDA like for like growth in 2027 of +8%, +12%. In 2028, +8%, +12% as well, and a free cash flow on EBITDA conversion rate that will be at least 65%.
Thank you for your attention. Virginie and myself are now all yours to answer any question you may have.
Ladies and gentlemen, for sell side analysts, if you wish to ask a question, please dial pound key five on your telephone keypad. Please limit yourself to two questions. The next question comes from Julien Richer from Kepler. Please go ahead.
Good morning. Two questions. for me, excluding regulation, the H1 operating revenue was up eight, broadly in line with last year. Could you please bridge this by component, what is coming from new users, face value, upsell, cross-selling, et cetera? when looking into H2, should we model a similar intrinsic growth rate than to H1, or is there any tailwinds or headwinds that could change that? Second question on Brazil, how are business volumes, client wins, merchant acceptance evolving post the second leg regulation that has been implemented mid-May? Thank you
Julien, thank you for your questions. first of all, the increasing growth in H1, in fact, when you look at the drivers of growth, they are in line with what we shared during the Capital Market Day, i.e. the driver number one is attract, i.e. more users, which represent, let's say, about 50% of the growth. Once again, we are on vastly under-penetrated market, and our SME acquisition and middle market acquisition machine is running full blast. as I said, 50% of that growth is coming from the acquisition. the second thing, which is more revenue per user, i.e. the attract part and the enrich part. In fact, it's the remaining 50%. enrich, activate, sorry, and enrich, which is, in fact, the cross-selling and the upselling, is going as planned, i.e.
It will present about 40% of the growth in H1, and it is driven by two things. The first one is the face value increase. And you remember we shared the fact that in many countries, you have a positive face value increase. So let's talk about Japan. We can talk about Romania. We can talk about Bulgaria. You remember about Italy. You remember about Belgium. So the face value increase is one of the contributor of this driver, which is enrich. And, in fact, the second contributor is our ability to propose additional services and to cross-sell them. And in fact, what is very interesting in the H1 performance is the cross-selling, and so the beyond is growing more than the core.
Once again, which is the proof that we're able to bundle more and more, which is the proof that all investments we are making in the convergence of our platform to be able to propose an integrated app for our users, is working well in terms of cross-selling, and so more value per users. So that's how the growth equation has played in 2026 H1, i.e. as planned versus what we shared with you in October 2025. Are we going to have a similar pattern in terms of drivers of growth in H2? Most probably. So it's going to be the same combination of more users, so attract 50% of the growth and enrich about 40%. The machine in terms of cross-selling and farming better will continue. Then you had a second question about Brazil, but, in fact, could you rephrase your question as to the Brazilian merchants update?
Yes. Just wondering, post the second leg regulation that happened mid-May, what do you see in terms of the competitive environment in the country, the merchant acceptance network evolving potentially, client wins, the penetration, et cetera? Have you seen any specific changes?
Yes. Okay. As you rightly said, there was a second part of the new regulation in Brazil that was about the opening of our arrangement to some acquirers. Let's say, the open loop. In fact, what we see is the following thing. We are compliant with the regulation, i.e., the technical documentation, commercial documentation, everything is ready. In fact, it takes more time than expected for some acquirers to get connected to our arrangement. In fact, it's what we shared before. When we see that happening in the banking industry, it took much more than a few months for let's say, potential players to get connected. Today, the implementation is according to our plan, i.e., it takes much more time than a presidential decree to make it happen. What does it mean from a competitive point of view?
As of today, we didn't see any major change in, let's say, the competitive environment and its dynamic.
Thank you very much.
The next question comes from Pravin Gondhale from Barclays. Please go ahead.
Hello, good morning. Thank you for taking my questions. Firstly, on the full year guidance, given the H1 top line EBITDA performance strength, the guidance upgrade appears a bit conservative, given the beat versus consensus. Could you please explain what is holding you back? Is it the regulatory evolution in Brazil, given we had less than two months of open loop, so we are a bit early there and you want to see how that evolves, or anything else? Related to that, has the Brazil regulatory impact so far, in line with your expectations, similar to what you suggested for Italy? Thank you.
Okay, thank you for your question. As to the first one, is it conservative? I will say two things. First of all, if you look at the bottom range in absolute value, the bottom range of the new guidance is the consensus. It's your consensus. I don't know if you are conservative or we are conservative, but the range we just gave in absolute numbers is the bottom is at your consensus. The second thing is, as you know, at Edenred, we love being in the first part of the range, let's say the upper range versus the bottom range. As you also know, we have six months to go. The second part of the year is also the year of, let's say, the part of the gifting campaign. We are well prepared, but it still needs to be done.
To make a long story short, we are pleased by the upgrading of the guidance, thanks to the good first semester, and we will do everything we can to be in the upper range of that guidance. Your second question was about the Brazilian impact. Was it in line with what we expected? More or less, yes. I have to say that things went better on the renegotiation part. As you know, when you have a new regulation, it's a new, in fact, balance to be found between what is paid by the merchants, but also what is paid by the clients. When you have less from the merchants, it means that the employers have to pay more. We started the vast majority of our renegotiation campaign in Q2, and I have to say that things went better than expected.
To make a long story short, the Brazilian negative impact, mainly thanks to the renegotiation, went better than expected, which is very good, in fact, for the years to come.
Thank you very much. This is really helpful.
Thank you.
The next question comes from Estelle Weingrod from JPM. Please go ahead.
Hi, good morning. I've got two questions as well. The first one on Brazil, it's a similar question than previously, but phrased a bit differently. The adverse impact seems to be more gradual than initially anticipated. As you just mentioned, it's taking more time. Some of us were worried that the better Q2 could have an impact just being pushed back into next year, which is not the case as you confirmed 2027 guidance. Again, did you just guide maybe a bit conservatively or have you just been nicely surprised about something like you just said, a renegotiation campaign? Another one on Benefits & Engagement. You mentioned a healthy momentum overall driven by Germany and Southern Europe, and France a little bit.
Can you just provide a bit more color on what you're seeing in France in terms of overall sentiment and what's happening among corporates and so on? Thank you.
Estelle, thank you for your question. Yes, as you said, it's the same question with different words. Let me try to answer with different words. The implementation of the regulation takes, let's say, longer than some people imagined in terms of open loop. At the same time, the renegotiation, which is in our hands, went better than expected. There is the combination of those two elements. What does it mean for the second part of the year? It means that we're able to upgrade our guidance. What does it mean for 2027 and 2028? Maybe, life is full of good surprises, especially with Edenred.
Maybe there will be, let's say, a higher impact in 2027, we have many other things to compensate for those impacts due to the resilience of our model, due to the fact that we are in many different geographies, due to the fact as well that even if the unit economics can produce less, but the unit in itself, what we call, in fact, the Business Volume, we still have a lot of traction behind that. To make a long story short, maybe it will be pushed further, we have many other things to compensate. That's why we are happy to confirm the +8, +12. As to the healthy momentum, what is the sentiment in France? In fact, the dynamic in France is the following one.
First of all, you see a rise of the unemployment, i.e., when we look at our portfolio, we serve slightly less people today than we were serving last year because the unemployment rate has increased in France. It's a negative trend. The good things that we are seeing in France is, first of all, as you remember, our activity as to the workers council is cyclical in the sense that when we have election coming, we see a rise. Basically, we started seeing the rise, we already know that 2027 is going to be a good year thanks to, let's say, the structure of our offer. As to the beyond, things are going well on workers council. The other thing as well, where we are very pleased is we redesign, in fact, our offer in CESU, and we have a super good traction.
It's the same product, but completely redesigned, completely integrated into our new platform, Edenred+. We see the cross-selling, in fact, skyrocketing. To make a long story short, the portfolio of the current clients are shrinking a little bit. The churn is well under control. The new sales is working well, and the beyond is tracking well because we have a large, in fact, portfolio of offers, and we are much more integrated today than we were, in fact, yesterday. You know that in France, it's the first country where we deploy our new platform, Edenred+. I'm also pleased to share with you that by June the 30th, all our clients are in the tube of the upgrade to Edenred+. They are not 100% now using Edenred+, but they are all in the upgrade and migration process.
Very soon we will get the benefits from a cost point of view, but also we will get the benefits from an upselling and cross-selling point of view.
Thank you very much. Super helpful.
The next question comes from Justin Forsythe from UBS. Please go ahead.
Good morning, Bertrand and Virginie. Thank you so much for the questions here. Two from my side. First one, I just wanted to, Virginie, re-walk through the EBITDA guidance range, if you don't mind. Understand that Bertrand's comments around wanting to end up at the higher, or the more conservative, and over time. If we could just walk through the components there, because you have an other income raise of, I think, EUR 15 million relative to the EUR 195 that you had guided to previously. Some of the changing around Brazil expectations, as well as fuel benefit. If we just go off the midpoint, I think that's about a EUR 20 million increase to the guide again at the midpoint.
Maybe you could just parse through whether there's any intrinsic strength flowing through there at the midpoint, or if it's all related to other income Brazil expectations and perhaps fuel. Maybe you could just briefly touch on the fuel impact as well. Bertrand, just wanted to comment on the commercial strength, specifically in Brazil on an intrinsic basis. May have missed it. I don't think you commented. You gave the BV growth on a like-for-like basis overall at 7% for one H. We've heard a lot from the newcomers in terms of their growth over the last year, whether it's iFood, as an example, doing a pretty sizable growth number in Brazil. To me, it seems like everybody appears to be growing in the market. Is that just a signal of the strength in the Brazil market?
If so, could you maybe elaborate on some of the dynamics there? Thank you.
Okay, Justin, thank you for your question. I start with the second one, Virginie will take the first two ones. Yes, there's a good dynamic in terms of business volume on the Brazilian market for many reasons. First of all, the Brazilian economy is growing. The second thing is you have inflation in the Brazilian economy, you have many workers who are not equipped yet with those programs. We value, in fact, the addressable market at 40 million employees, today you have only 20 million of them that are, in fact, equipped with a meal and food solution. In fact, it's a healthy market. It's still a non-penetrating market. There is growth, there is growth for many players. That's why we have a healthy BV growth in Brazil.
I'm not surprised that some of our competitors are leveraging that growth as well.
Thanks, Bertrand. Hi, Justin. Hi, everyone. In terms of EBITDA and how we see the rest of the year. Number one, we have delivered EUR 660 million and generally, our second part of the year is a bit heavier than the first part is. Remember that this year we will get six months of impact of Brazil in the second part of the year, while we only had half of that in the H1. That changes a little bit, the usual balance and the usual pattern that we can have within the two semesters. That's the first element to take into account. On the other side, what we have is, yes, as Bertrand mentioned earlier, probably a bit more progressive impact also in terms of open loop.
Yes, you have some open loop impact, which was, let's say, anticipated on our side to be more on the second part of the year, we still keep that element in terms of this computation. In addition to that, we have a strong traction that we anticipated in Mobility. We have seen that in H1. We still see that as a pattern in H2, that will definitely contribute. You can also have a bit of good of bad surprise on that side. Knowing that, we know that we can be positioned potentially in the higher pace of the range. When it goes to other revenues, it's a combination of, yes, the Brazilian impact. On that one, I would also remind everyone that the part which is coming from the Brazilian, we always guide in terms of absolute value.
This is what we see as of today based on the FX exchange rate that we have at the moment. Elections are also coming within the second part of the year. You could see, as we've seen on the last two years, quite a strong volatility in FX impact in Brazilian real. Let's say, if you go back to the last two years, you will get November and December that can be drastically down. That's also an element that I keep in mind viewing the brackets we put on the table. Finally, in terms of fuel price, the fuel price has been a little bit of a tailwind in Q2. That remains relatively limited.
Number one, we worked a lot to desensitize more or less the business from the fuel price over the year than in the good moments it plays a bit less than also as it does in the bad moments. That's what it means to us. Then obviously there is an incentive. Finally, we've seen when you look to rest of the world, you know that we grow nicely 10%, but we've been growing also quite a stronger pattern before. All our business are really going well. Middle East has been starting to suffer from the impact of the conflict in Q2. It's still growing, but in fact, it's not growing as fast and as strongly as it was before. Depending on what's going to happen in the second part of the year, that's also an element that we keep in mind.
Maybe, Virginie, on the fuel price, first of all, why are we less sensitive year after year to fuel price increase is first of all, the proportion of Beyond is growing, and none of our Beyond services is linked to fuel prices. You remember, Beyond represent more than 30% of the total revenue of the Mobility part. The second thing is you have the difference between the pump price and the brand, and it depends per country. For example, in France, what you saw at the pump, in fact, was much less an increase than the brand price because some measures were taken by the French government. It's true everywhere in Europe. To make a long story short, was it a positive driver in 2026 H1 net? The answer is yes.
If you exclude the net fuel price impact from the performance of Mobility, the Mobility is still growing at double digit.
Got it. No, that's really helpful, both. I think, Virginie, yeah, the point I was trying to get at is there upside if intrinsic growth is stronger in 2H if we're just mostly layering in some of the impacts? I think you covered it pretty well. Really appreciate that. Thank you so much.
Thank you, Justin.
Thanks, Justin.
The next question comes from Josh Levin from Autonomous Research. Please go ahead.
Hi, good morning. I have two questions. One, Bertrand, you said that following Open Loop in Brazil, renegotiations have been better than expected. Could you provide more detail there? What specific metrics have you been looking at that tell you that renegotiations are better than expected? The second question is on cash flow. Virginie, I know your predecessor, Julien, had talked about how in late 2023, Edenred locked up some of the European float in two, three, and four-year term deposits. Now we're in 2H 2026. Does that mean that some of these term deposits start to roll off? How might that affect cash flow? Thank you.
Josh, thank you for your question. Renegotiation better than expected. How do we measure that? In fact, we have the portfolio of our clients. We look at the level of take-up rate we have with those clients before the implementation of the new regulation. We set a plan, i.e., how many clients do we visit, and what is the objective we have to negotiate with them at new take-up rates due to the fact that we are going to get less from, in fact, the merchants. It's exactly the same process as what we did in Italy, and we call that the rebalancing. We set some objectives in terms of speed, in terms of volume, and in terms of take-up rate.
Basically, versus our objective, we did better than expected, i.e., the market, which is a growing market, is accepting better than expected the rebalancing between the merchants and the employers. At the same time, we are looking carefully at the churn rate to make sure that it's under control and when I look at all those indicators, I'm able to say that we did better than what we expected in our initial plan. Virginie, for the cash flow.
Yes. On the cash flow, Josh, in fact, these investments that we have in asset are still in fact in motion as we speak today, and they won't be expiring before the end of the next two to three years. It was a midterm deposit, and then that's a four to five years mid deposit. Since then, the rates, mid to long-term in EUR have been increasing. In fact, we do not expect really any difficult effect or anything like this when they expire.
Thank you.
Thank you, Josh.
The next question comes from Kate Xiao from BofA. Please go ahead.
Thank you very much for taking my questions. Good morning. My two questions are around the SME growth and efficiency that you've highlighted in the release. Thanks for sharing that color. Can you explain a little bit to us in which countries have you seen better traction in terms of SME penetration? What is the SME mix in your business today? Do you see better economics or margin profile in this business compared to your current portfolio? Secondly, obviously, you mentioned before that you have been approached by investment funds. I just wonder whether this SME growth and penetration is also a key focus area of your discussions with them. Thank you very much.
Thank you for your questions. I start with the second one. Have we been approached? The answer is yes, and for very good reasons. If you look at the cash flow of Edenred and the value of the equity, you take the cash flow, you multiply now by six, which is to have the value of the equity. It's very rare to have such a ratio. Obviously, many investors are interested in better understanding, in fact, the intrinsic growth of Edenred and the growth potential for the future. Did we have some conversation with many people who were interested? The answer is yes. Is it to a point where we entered into SME growth? The answer is no. We don't have, as of today, and as we said, when there was this rumor, we don't have any material proof of interest of investing into Edenred.
Having said that, is the SME and middle market growth a key driver for Edenred? Yes. It has been the case, in fact, for many years. Why? First of all, the level of penetration on the SME and middle market is, in fact, lower than on the large companies. For a long time, a solution like Ticket Restaurant for Benefits & Engagement was mainly dedicated to large accounts. Thanks to the digital revolution, it becomes more accessible for, in fact, the SMEs, and it becomes more economically performant or economically interesting for us to serve that market. It's a growing market, an under-penetrated market. That's why going after the middle market and SME is one of the major growth drivers for the attract pillar. Which country, which profitability?
We have been doing that for many years, and in fact, we have been growing at double-digit on SMEs and middle market for many years. We are trying to improve the model because it's a very exciting model from an economic point of view, if you master it well. For example, in H1, the growth was strong growth, double-digit growth in Italy, in Germany, in France, in Brazil, more or less everywhere around the world. And when we were not double-digit, generally speaking, it's because of us, i.e., we need to redesign a little bit our processes or change the leaders, because it's just like a factory with an input and an output. The potential is there, and when we are not growing double-digit, it's because we need to tune our processes and organization. That's for the countries.
For the business line, double-digit growth in SME acquisition is in Benefits & Engagement, but also in Mobility. That's the second thing. The third thing is the economics. If you maximize well the equation, the economics are very good. If you compare that to the large account, what are the pluses and minuses? The minus is the cost of acquisition is higher, because when you have one negotiation for a large account, you have one negotiation for less users. If you look at the cost of acquisition per user, the cost per acquisition is higher on the middle market and SME than the LNE. That's why we implement more and more the Agentic to decrease the cost of acquisition. The second, let's say, negative things on SMEs and middle market versus the LNE is the churn.
In fact, the economic attrition is higher on SMEs and middle market than LNE. The lifetime value of the user is lower in SMEs and middle market as compared to LNE. Having said that, you have very positive factors, which leads to a positive equation in terms of profitability. The first thing is the take-up rate is higher on SMEs, i.e., their negotiation power is smaller. The second thing is, if you want to convert an SME client, you have to do it with what we call a hot lead. Hot lead is you need to be able to conclude in 45 minutes.
If you do that well, especially when you are augmented via the AI as to your speech, being able to analyze the answers of the client and having your sales pitch that is super efficient, you close very quickly, and you close at a higher take-up rate on the SME side. To make a long story short, it's a science with an input, which is the lead and the cost of the lead. That's why we are moving from SCCO to a GEO. It's a process, it's a factory, i.e., the ability to convert the leads into a deal, and it has to be done on time and well coordinated with the lead coming in and the ability to conclude very fast. If you do that well, then the total economics of SME and middle market is even better than on the LNE.
That's what we are working on, we have been working on, the technological disruption is a source of being even more efficient in the future. Finally, when you have your clients, you need to do, in fact, the onboarding. With our integrated solution, the onboarding at Edenred is now super fast, super easy, and that's why Edenred+ help us. The client satisfaction. If you do properly the first phases of the onboarding process, you have less call. As you know, the best customer care is when your users and clients do not need to call you. That's an equation that is complex, but we love it, and we love it at scale, and we love it for every business line, whether it is B&E, Benefits & Engagement, or Mobility and whatever the countries.
It's where having a worldwide base, doing things at scale gives us a very interesting competitive advantage.
Thank you very much.
The next question comes from Hannes Leitner from Jefferies. Please go ahead.
Thanks, and thank you for the intensive presentation. The first question is, you talked about 7% BV like-for-like growth for Italy and Brazil combined. If you are now taking that, and then you mentioned also Brazil, so if you take that with Brazil growing around 10%-12%, the 7% would almost imply that Italy was only in low single digit. Maybe you can help us square that. I know you reduced your concept allocation or how much you want there. Maybe you can give there some dynamic around the B&E in Italy, the business. Maybe just in the beyond strategy, I was missing any comments around Reward Gateway. Maybe you can give us an update. You initially talked at the time of the acquisition around six markets you planned to enter.
I think you were only entering three so far, and it's a couple of years back, so maybe you can give us there an update how that asset performed. Maybe just one thing is around the OpEx. It seems like OpEx has been growing a little bit faster than expected. Maybe you can talk there where the moving parts were. Thank you so much.
Okay, Hannes, thank you for your questions. I will answer the last ones and leave Virginie for the first one. First of all, Reward Gateway, the engagement. Where do we stand? In fact, we are continuing the deployment in France, in Italy, and in fact, in Belgium. We are contemplating the second wave with countries like Spain and Romania. The deployment is on its way. As you know, Reward Gateway is part of what we call the Beyond and the Beyond Food. As I said before, the Beyond is growing faster than the core of our activity, which is the meal and food, representing 40% of our total revenue. It's part of this league. Having said that, due to the macroeconomic condition, the growth we have today in Reward Gateway is less, in fact, as compared to what we had last year.
It's still obvious growth, but less than last year. This activity is not 100% recession-proof. We are working hard on the deployment, and we are, in fact, very enthused and positive for the future of the engagement. Once again, the equation we try to solve with our clients that are HR people is how to better attract, how to better engage, and how to better retain. It's a question of benefits that can be implemented easily, in a flexible manner and totally digital and integrated, but it's also a question of engagement solutions. As to the OpEx, no, the OpEx grew as planned, and as we said, in fact, in the presentation of our 2025 results. You have to look at the OpEx the following way. First of all, you have the cost of sales.
The cost of sales are directly linked, in fact, to your business volume, i.e., the units. Maybe a unit in Italy is bringing less revenue today than before the regulation, but a unit is a unit. When you have a BV growing, for example, at 10%, your cost of sales are going to grow at 10%. The second aspect is part of the growth is also our ability to use more the indirect distribution channel. In the indirect distribution channel, in fact, you see the margin you need to give them into your cost of sales. As of today, the cost of sales are about 15% of our OpEx, and they are growing in line with the growth of the BV and the higher proportion of indirect sales. You have the payroll, which is more or less 50% of our OpEx.
This payroll is growing much less than the business volume. Why? Because, in fact, that's something we control very carefully, and we are very much on the efficiency of our people. You add the other costs that are 35%. Other costs are everything that we invest in data and AI, for example, in the platform conversions, plus all our tech spendings, plus the lead generation, let's say, the sales and marketing to fuel the growth. To make a long story short, the growth of our OpEx in H1 2026, which is about 6.6%, is in line with what we said, i.e., fuel the growth, prepare for the future by implementing our efficiency program, and accelerate on our convergence and accelerate on data and AI. You had a question on the 7% BV.
Yeah, 7% BV to be more or less being put in relation, if I understand well, with the metrics that we have been giving in operating revenue for Italy and Brazil.
No.
And maybe
No. You gave BV combined for Italy and Brazil, isn't it?
Yes.
In one of your slides.
Yes, I gave BV for Italy and Brazil, you compare that to the comment I made on the growth of operating revenue, I think, in Brazil and Italy later on.
Yes.
When I was giving the intrinsic growth, which was on operating revenue, because I was comparing operating revenue intrinsic growth and operating revenue like for like growth.
What I propose on this one, maybe, Hannes.
Sorry. You, on page 19, you talk about Benefits & Engagement for Latin America. Double-digit intrinsic growth, that's the revenue, notable driven by Business Volume growth in Brazil. We know the regulatory headwinds, that's why I'm asking. It feels like Brazil double-digit intrinsic growth notable with Business Volume in Brazil. It should be easily growing 10%, which is in line with your Q1 comment. I'm focusing on Italy because Italy feels to still be in a good unemployment market compared to France. You had some moving parts with concept rolling off the regulatory headwinds, you confirmed that you don't see competitive pressure there or changes in the market. Can you talk us through here, specifically Italy? Seems Brazil is less of a problem.
I understand that. I just wanted to start with Brazil because the double-digit refers to operating revenue growth, very strong business volume. I don't mean that exactly it is double-digit business volume growth in Brazil, just to make that clear. If we go back to what we have and what has been fueling the growth, both in Italy and Brazil, you have at the end of the year, quite a strong business volume that has been acquired just before year-end in Brazil, and maybe probably a bit less in Italy. In Italy, what has been fueling the growth, which really brings a strong business volume growth in H1 is also Edenred Shopping. That has been probably March, April, and May.
As we speak, all that is not something which has been fully redeemed, and you will get further operating revenue growth coming from the redemption when people will be using that. You have a timing difference a little bit in the growth of the business volume and what you get in terms of operating revenue growth that we see in that. There is less difference, I think, between Italy and Brazil than what you are assuming maybe by the unclear comments I've been making earlier, and I apologize for that.
Hannes, if you need more conversation, we will be pleased to answer you.
Thank you.
Thank you. Maybe one last question or two last questions.
The next question comes from Zach Al-Qaryooti from Morgan Stanley. Please go ahead.
Good morning, Bertrand. Good morning, Virginie. Two questions, please. Firstly, on the capital allocation, given the continued de-levering, how are you thinking about capital allocation over the next kind of 12 to 18 months about where you're going to prioritize between further buybacks, bolt-ons, more de-levering, and the investment in the Amplify plan? Secondly, just on payment solutions, obviously it was a little bit softer on the Middle East impact. Is there any opportunity to catch up any of that business over the remainder of the year? Separately, do you think there's any midterm opportunity there to kind of capitalize on the rebuild in that region? Thank you.
Yeah. Thank you, Zach, for your question. I start with the second one, payment solution. Yes, you are right. In payment solution, part of our activity is in the Middle East. In fact, we are based in Dubai, and unfortunately, with the never-ending war and rebounds of the war in the Middle East, when we look at the growth for Q1, it was a strong double-digit growth as it has been the case, in fact, for many years in Dubai because our solutions of salary payment plus value-added services. For example, we sell on top of the salary payment, some insurances, some phone units for the people to call back home, an entire portfolio of value-added services.
We have been growing at strong double-digit, which is in fact the proof well in advance that when you have a platform with a core product and the ability to bring everyday additional digital services, you have, in fact, a very positive effect on growth. Since the beginning of the war, we saw it in Q2 2026, unfortunately, you have less employed people in Dubai. Some people went back home, and you have, for the people who stayed, the beginning of, let's say, temporary unemployment. I used to work six days a week. I now work five days a week. In our system, the volume of salary, in fact, has decreased. What does it mean? It means that we are still growing in Dubai, but the growth was much lower in Q2 than in Q1.
The reconstruction of the country or the we are still very positive on the Middle East. As soon as, in fact, the war is over, we believe that we will go back to, let's say, normal, and normal is a strong double-digit growth in UAE. That's why you saw, in fact, the PS&NM growth in Q2, but was in fact lower than in Q1. We are positive on the underlying trends of that business. Your first question was capital allocation. Yes, we are generating a healthy level of cash. What do we intend to do with that? First of all, we are in business for sustainable and profitable growth. The allocation of this cash first is to fuel the growth, to prepare for the future. That's organic growth, but also growth by acquisition. As you see, we bought TMH a few weeks ago.
Any acquisition reasonable that will allow us to accelerate, in fact, the more revenue per user or to accelerate the answer to the needs of our clients. Capital allocation number one is, in fact, to develop the business because we have very good perspective organically and per acquisition. Obviously, return to shareholders. As you know, we have a progressive dividend policy. We're committed to continue on that. If there is some remaining Let's say cash flows, obviously, we could give back via share buyback. We are still in our program of share buyback that was in fact presented EUR 300 million by the end of 2027. As of today, we did EUR 200 million. There's still EUR 100 million to go before we take any decision on a new program.
Thank you.
Thank you, Zach.
The next question comes from André Juillard from Deutsche Bank. Please go ahead.
Good morning. Congratulations for this solid results and improving perspective. Two short ones from me. First one is about the calendarization of the second half of the year. Correct me if I'm wrong, Q2 should be, in a certain sense, relatively comparable. Sorry, Q3 should be relatively comparable to Q2. Should we reasonably expect an acceleration in Q4 considering that Italy should be behind us? A progressive acceleration beginning in 2027. Sorry. At last, coming back to the former question about capital allocation. Your leverage should be around one time at the end of this year, if I'm right. I perfectly understand your message about first focus on growth, then return to shareholders if there is a margin of maneuver.
Do you see any acceleration in the potential consolidation in Brazil due to the fact that some smaller players could be at pain because of the new regulation and especially the acceleration of the reimbursement delay? Thank you.
André, thank you for your two questions. First of all, in terms of capital allocation, and the leverage, yes, your computation is right. We think we're going to finish the year between one and 1.2. We'll see how it goes, and it's going to depend also on some potential small acquisitions we could make by the end of the year. Yes, it is in that range. As to targets, you saw what we did with TMH. You say, what about Brazil and consolidation? In fact, yes, we have some rumors on small players for whom it's more difficult. We were contacted by some investment banks as to strategic options that could be contemplated. I would say it's going to happen. There is nothing serious on the table today. That's my view on Benefits & Engagement in Brazil.
It is true that when the market conditions, not as to the business volume, but as to the operating revenue, are more difficult, especially for the ones who were living only on the float, they will have to reconsider their options. At that time, we'll see what we could do. As to the calendarization, Q3 and Q4, no, in fact, we have a slightly different view. In fact, in Q3, you have the full impact of Brazil, and you still have an impact, in fact, of Italy. If you think about the calendarization, Q3 is going to be probably, let's say, more difficult than H1 due to Italy and Brazil, two months of Italy and three months of Brazil. It's going to be, let's say, the worst quarter in terms of regulation resetting.
After that, in Q4, no more Italy, which is going to be helpful in Benefits & Engagement. We have a different view than your view on calendarization. Q3, that's going to be, let's say, from a regulatory point of view, the worst in 2026. Better in Q4 because only Brazil.
Sorry, if I may, André. You have three months in Q2, I agree. In Q3, we had last year this effect that preparing for the regulation to come, we had quite a number of clients putting a lot of orders. If you remember, Italy has been quite strong in Q3 last year. That regulatory effect will be, even if we have two months on the paper, we have this effect of the sort of abnormal volume of orders that came in last year in Q3.
André
Okay. No, sorry, I've not been clear. My question was Q3 still very difficult comparable to Q2, then re-acceleration in Q4. Okay.
Exactly.
Sorry. We got you online.
Okay. We misunderstood you. Sorry.
Maybe I was not clear. Beginning of 2027, maybe could you give us some more color?
Well, André, the color of 2027 is the color of the +8%, +12%. As to the calendarization of Q1, I don't know yet. We didn't start it yet. The budget process is going to be November.
We'll be patient.
André, we had the chance to have you as an analyst, at least for me, for the last 10 years. If I understand correctly, you're going to move to some other industrial sectors. From the bottom of my heart, I wanted to thank you for those 10 years, who have been 10 years of questions that made us think twice about our business. Thank you for all those moments together.
Thank you very much as well. They've been fantastic years and I wish you all the very best.
Thank you, André. Thank you all. Once again, yes, 2026 is a resetting year. Having said that, whatever the meal and food regulation reset, the underlying trends are good for Edenred, and we are able to limit the financial impact of this reset. When we look at what we have in our hands, especially our ability to deploy the Amplify plan, attract more users, enrich, activate more value per users, we are able, first of all, to upgrade our guidance for 2026, i.e. the bottom range is at the level of the consensus today. Then we will be, let's say, delighted to work hard to make sure that we are in the first part of the range versus the second one. It's, let's say, a good first start of the year for the 2027 and 2028 sustainable and profitable growth. Thank you for your attention.
Thank you for your questions, and I wish you a fantastic day. Bye-bye.