Good morning to you all. Welcome. This meeting will be broadcast online, translated simultaneously into English, and we'll take questions from the room and those of you connected remotely. Welcome to those of you in attendance. We're going to cover a number of topics today. We're going to review evolution of our markets, cover the results of Q4 2025, an update on our balance sheet and free cash flow, tell you about Lectra today. Things have changed a great deal, and when you follow us, sometimes we have a past look of Lectra. Our strategic roadmap for 2026 through 2028, and our financial objectives, 2026, 2028. So three key highlights.
A macro geopolitical situation, extremely uncertain, with news flow created a lot of damage worldwide because one thing that is said on Monday can be contradicted on Tuesday, prompting many reactions, a big wait and see attitude. People want to better understand what's happening, which has a negative impact. Secondly, when we look at our results, of course, we're not happy with the result. We'd, of course, preferred to have better results, but we are nevertheless proud when we look at how Lectra has resisted in this environment. I'm sure you'll agree to say that these results demonstrate the very strong resilience of Lectra. We've also demonstrated our ability to continue to generate strong free cash flow, so we can view the future with confidence. More about that later, and it holds great potential for the future, whatever our plan. Our markets now.
The first thing on the fashion market is a rebalancing in terms of subcontracting and production. A very sharp fall in China, an increase in the number of Asian countries, notably Vietnam. Pretty much on a par of exports to the U.S. as China today. The big winner of this period, and as we see a number of other countries, India, Bangladesh, making inroads, a big shift of the market of clothing manufacturing in Asia, with a rather strange situation because at the end of this period, only country whose tariffs haven't increased is China. With all the discussions that were held, we've come back to the starting point pre-April 2nd, whereas tariffs have increased up to 30%, northern countries up until a few days ago. India, very difficult situation.
60% tariffs brought down to 18 last year, and Bangladesh, there's a portion of Bangladesh production to the U.S., which will be free of tariffs, and that was announced a few days ago. We're waiting for the details. We sense an easing in terms of bilateral talks between the U.S. and these countries, but the landscape is shifting. There'll be winners and losers, and this is shown clearly. We see the drop in China, no change in the tariffs. It's very surprising. When we look at automotive, I should have said, in fact, same situation in fashion. We see after a lot of turmoil, a lot of debate, we're at a level of production and sales on a par with last year, and it's also expected constant next year. So, more fear than bad results.
Tariff is 15%, that's 5% higher than previously. Mexico 0, 5%, 15%, 25%, it's 0% in Mexico's production in our business exported to the U.S. The free trade agreement is being upheld, and the big change in automotive is the massive arrival of Chinese electric vehicles, a fierce price war in China. The Chinese government announced that it wanted to consolidate the market. 120 EV brands in China. Government expects that in 3-5 years' time, that should shrink to 20%. BYD, the number one, has cut its prices 30% to try and force all other car manufacturers to sell off or disappear. So all margins are being squeezed in China. At the same time, they want to export to the rest of Asia and Europe because their markets are now outside China.
Moving to furniture, here again, the market remained broadly stable. Great many question marks because tariffs into the U.S. were strengthened. Transportation costs for furniture is complicated. Generally, we manufacture close to where we sell. The situation is now stable in terms of normal tariffs, and the situation is furniture market that remains sluggish, challenging. People tend to change their furniture when they move. There are fewer house moves, so less demand, but at the end of the day, we arrive normally at a demand equivalent in 2025 and 2024, expected equivalent in 2026, in spite of the turmoil, markets in terms of production and sales remain very stable. I'm going to hand over to Olivier du Chesnay for the financials. Thank you, Daniel. Good morning to you all.
So I'll begin by presenting the key highlights for 2025, and activity, and then balance and free cash flow. On the right, you see that when we'll have the presentation of the amounts for 2024, we use the 2024 exchange rate, and for the results of 2024, we'll use the 2025 rate. When we look at the comparison between the two, we'll take into account the increase can be a variance, but we have to note that the dollar is down versus the euro. All the data on 2024 are pro forma rate data. We added 23 days of Launchmetrics. So I'll begin by activity on recurring and then non-recurring, and then the P&L. First point is the information published since study on the ARR, which is at the basis of all our contracts in annual value for subscription.
ARR is up 14% for the year 2025, constant exchange rate, 88.9 at the start of the year to 101 when we use the start of the year Forex. We saw an increase in the final quarter when we look at the numbers that when they were reported end of September, the run rate was close to 12%. We end the year at 14%. So all our offers, be it the new acquisitions of Retviews, Launchmetrics, TextileGenesis, contributed to that increase, but we also have Valia or Kubix that take a part and have a growth rate higher than the 14%.
When we report our numbers, ARR, based on the balance sheet, December 31st, that's why the report is at EUR 97.2, not because we use the balance sheet rate, which is at 1.17. If we stay on recurring revenues, in the middle, you have total recurring revenues. Total recurring revenues, 2025, accounts for 75% of revenue. This recurring revenue is up 2% and split into two parts. On the left, you have the recurring revenue, the recurring contracts, and on the right, you have the consumable and parts. Take the last bar on the left-hand chart. That's the total amount of activity of revenue of contracts, EUR 242.3 million. Within those recurring contracts, you have 5% growth. 5% growth already at the end of September. It was 5% in Q4.
Within those recurring contracts, you have three types of revenues. The purple bar, the software SaaS subscriptions for EUR 89 million. That's revenue, which is the transcription of the ARR mentioned previously into revenue with an increase of 14%. Next, you have two types of maintenance contract. Software maintenance contracts that represent EUR 51.1 million that are slightly down. That's pretty logical 'cause now all our software offers the new ones, SaaS, and then you have maintenance contracts on maintenance, annual maintenance contract with tacit renewal. They're up 2% on normative growth, is 5, 6% on maintenance contract. There, we have pressure on activity, but we're still up on those equipment maintenance contracts. On the right, you have the second part of recurring revenue, which is the activity of consumable parts.
Consumable parts is more subject to our clients' activity, the number of hours that machines are running. We've not seen any positive inflection in Q4 on the activity of consumable parts. We remained at 4% full year. The activity represents EUR 137.7 million at 2025 exchange rates in FY 25. Moving now to non-recurring. Non-recurring, we start with the new system orders, the orders of software, perpetual equipment, and consultants. For three quarters, we're pretty much on the same level in value of order intake, about EUR 25 million in Q2, Q3, and Q4. When we compare it to Q4 2024, Q4 2024 was pre-announcement on tariffs. Q1 was also previous to the tariff, and we have a basis of comparison that's higher. 27% drop on the quarter in spite of stability of order intake quarter-on-quarter.
Full year was 17% drop in orders. This decrease by geography varies from one quarter to the other. First thing to look at is top right, Asia Pacific. On Asia Pacific, that's where we have the highest decrease in Q4, primarily in China on automotive. So full year, we have a decrease of 26% in Asia Pacific. Asia Pacific, we had Q3, Q4 growth in 2024, continued to grow into Q1, and it stopped after the tariff announcements. On the other regions, Europe is holding up better, -4% in Q1, -6% full year. More favorable basis in the U.S., flat in Q4. No rebound yet in America, but stable in Q4. And bottom right, you have the other countries of the world. That's Turkey, Egypt, Morocco.
We have two different dynamics: Turkey sharply down, and Morocco, Egypt that are growing. You see that with these results in ASPAC. ASPAC last year accounted 43% of orders. This year, only accounts for 38% of order intake. Still looking at new systems of orders by sectoral markets, same items by sectoral market. What you see, the second graph is automotive, is sharply down in Q4, -52%. Here again, essentially Asia, -30% on the first 12 months of the year. Fashion in the same trend between Q4 and the rest of the year. We lose a third for furniture and other industries, essentially that have a somewhat different CapEx cycle. Composite materials in 2025, we have fourteen--13.8 of order intake. That's double what we had in furniture in 2025.
Activities, orders, you find these orders on the left, on the, over EUR 119 million, down 17% versus start of the year. In those 17%, orders, you have natures that have different cycles. The top, the EUR 7.9 million are the orders, software perpetual licenses. The software perpetual license are decreasing by one-third every year. Why? Because we sell all our new software offers in SaaS mode, and then you have below training and consulting. Over half training and consulting comes from projects that are triggered by SaaS subscription sales. It's following the dynamic of SaaS sales and part of the equipment sales, but equipment sales are down 19%. EUR 119 million of orders will generate over time, non-recurring revenue. 119 of orders generated EUR 126.6 million of non-recurring revenue.
Since we have more revenue than orders, it means that we had to delve into the backlog at the start of the year. We end with a backlog that's lower and with decreasing non-recurring revenue of 12%. If we summarize across the P&L on recurring revenue, we're up 2%. Recurring revenue accounts for 75% of revenue. For non-recurring revenues, minus 12%. The sum of those two numbers, -2% revenue, landing at EUR 506.7 million. Next, you have the gross margin. Gross margin in 2024, 71.7%, 72.9% in 2025. So we managed to up our gross margin. There's a positive mix effect. There's more recurring that, with a higher margin. There's also an unfavorable Forex effect.
When the dollar slides, it squeezes the margin, so we have a dollar rate that's unfavorable in 2025. But line by line, we grew all our margins across the various product lines. In spite of pressure on revenues, we're resisting in terms of gross margin generation. On the right, you have cost control. In the costs, we have fixed and variable costs. The sum of the two is slightly up by 2%. Let me remind you, 70% of costs are payroll costs. We increased salaries in 2025 of 2.5%-3%. We managed to offset part of that inflation through departures and cost savings. Moving down through the P&L, EBITDA goes from EUR 91.4 million last year to EUR 79.7 million this year, with an EBITDA margin of 15.7%.
income from operations 48.8 to 38.2. Net income at EUR 25.6 million. On net income, we have two items to note. Between operating income and net income, we had two one-offs, the first relating to New York. We depreciated the rent on future years because of the idea in a positive tax rate. It's positive. We activated the deferred tax assets of Launchmetrics, losing money before we acquired them. So we have DTAs that we were able to activate in 2025. If we summarize the P&L now, I said, starting from EBITDA, that was reported in 2024, slight pro forma effect, pro forma, 91.4, 91.1 to 79.7, 84.4. We see the strength of the recurring model, the green bar of 11.3%-. . .
is the EBITDA contribution of recurring revenue, recurring contract, generally the bar next door. Consumables and parts generates a profit here. It's down 4%, consumables and parts. We don't have that upside this year, and the green portion offsets in part the decrease in non-recurring revenues and the growth in fixed costs. When we go from 91.4 to 79.7, that's about EUR 12 million in decrease, EUR 7 million decrease activity, and EUR 36 million that's linked to unfavorable exchange rate. The dollar went to 1.08 last year, to 1.13 on average. This year, if I end on the P&L, I've just mentioned the exchange rate in 2026, 2028. We're not making any assumptions on where the dollar is gonna land. We just take the dollar the first of January 2026. The dollar, first January 2026, is at 1.17.
The average for the year was 1.13. When I take up the P&L of 2025, convert it every quarter to 1.17, reported revenue of EUR 506.7 becomes EUR 497.3, and EBITDA goes from EUR 77 to EUR 75 to the EBITDA margin to 15.7% to 15.1%. 65.2 is the starting point for the 2026, 2028 roadmap at a 1.17 parity and below. Regarding equipment orders in 2025, we had a higher basis effect in Q1 and Q2, notably on non-recurring revenue. Moving to the balance sheet and cash flow. Toujours.
Our balance sheet remains really strong. We've got limited debt, EUR 100 million at the time of the Launchmetrics acquisition, and we're paying back about EUR 15 million plus interest every year. So the debt is going from 102 million to 86 million. Strong cash flow generation, EUR 57 million. This means our net financial debt is only 21.3 million, and we have EUR 65 million in cash. After buying more and minority interest for Launchmetrics for EUR 20 million, and also the remaining minority interest for Glengo, the Turkish distributor, and also Neteven another activity. We also paid out EUR 50 million in dividends and therefore repaid part of our debt. If we look at one of the group's fundamentals, our free cash flow generation remains strong.
This year, we generated EUR 57 million in free cash flow before non-recurring items. Seventy-two million euros last year, that was a record. EUR 57 million with a declining income and difficult macroeconomic conditions, also generating a drop in working capital requirement, which stands at -EUR 37.7 million this year, which is typical of our business model. It's also a record in terms of managing our working capital requirement in 2025. When it comes to our share price, we're still under pressure, have been under pressure since the beginning of the year. At the beginning of this week, the share price stood at EUR 23.1, with EBITDA multiples of 1.7x. For now, the share price remains stable. And now I'm going to hand over to Daniel to discuss Lectra.
First of all, in 2017, we announced a new strategy for Lectra, and the goal was to turn Lectra into a major player for Industry 4.0. Back in the day, everybody wondered what that was all about. We have described this at great length, so I'm not, I'm not going to belabor the point. Throughout our systems, throughout our software packages and all our equipment, we have developed four major technologies to support this transition into Industry 4.0. Artificial intelligence, big data, IoT in particular, and cloud technology. So we are very comfortable regarding all of those AI-driven technologies, and those technologies have supported the ways in which we have implemented this plan. We accelerated in October. As we saw in October, we fast-tracked our efforts over the past three years, and these efforts will continue throughout 2026.
This strategy is based on five different pillars. First of all, a premium offer, a premium positioning. We want to have the most premium position in the market every single time. And also, our strategy is designed for all three strategic markets: automotive, furniture, and fashion, even though they're all products that we develop so that they can be used in other industries as well. So these are our three primary market segments. Also, customer centricity. More and more customers are at the heart of what we do, and our ties with customers have grown closer in recent years, and this explains our results today. We have close ties to customers that are in dire straits, and this means we are a preferred partner when customers decide to make investments. So we'll see when the recovery takes place, but having such close ties to customers is a good idea.
Also, developing new 4.0 services. It's a mixture of artificial intelligence, expertise, and data. In other words, we are able to monitor what customers are doing and then provide the analytics and the expertise that customers may be lacking, and this provides significant value added.... Lastly, we have a very strong and committed sustainability policy. In the latest sustainability rankings by independent third parties, we are always in the top 5%. Now, there are two aspects that are going to radically change our environment in the next few years. First of all, artificial intelligence, and there are ups and downs. There's positive and negative perception of AI. Maybe our vision of AI is much more pragmatic than that of others because we use it, and we know that it works for us in many regards, and there are things that don't work as well.
So we are deploying AI internally for a number of functions. So artificial intelligence is pretty much everywhere, in all of our products. Also, we're navigating in a world fraught with increasing uncertainty. Therefore, we need a plan that can be adjusted on an ongoing basis. We need to work on the basis of scenarios as opposed to having a deterministic vision of the future. The future is not set in stone. You need to be really, really powerful in order to predict the future. So thinking on the basis of scenarios makes us really strong. There are three market segments that are in the midst of vast, fast-changing trends. Markets are shifting. In Asia, in particular, a lot of companies, luxury companies in particular, are shifting their positioning, and this trend is going to continue.
In automotive, we're seeing the rise of Chinese-made electric vehicles, which are a major threat to the European industry, and particularly the U.S. industry in future. Right now, the barriers to entry for Chinese vehicles onto the American market are still very high. It's not just about subsidies, Chinese subsidies to the Chinese vehicle industry, because it takes three months for the Chinese to design a new EV, but three years in Europe. So the barriers to entry in terms of R&D are pretty strong as well. Also, furniture. Everybody's expecting recovery in real estate, and the recovery in furniture should follow the same trend, and so that's a market that we are keeping a close eye on. Now, let's drill down on Valia. Valia is our new software platform.
We've been marketing that since the beginning of 2025. We already started using it in automotive and furniture, and now we launched it in fashion. It's a very sophisticated platform. We start with customer orders, and it takes us all the way to the cutting room, production facilities, and also execution of the various production orders. It took 10 years of R&D efforts to develop Valia, and we rolled it out gradually, market segment by market segment, and now we have a full system. It's an open platform that it's compatible with any ERP, any CAD system, any manufacturing system, any customer system. So it's compatible with Lectra and non-Lectra systems. So Valia is a demonstration of what we're doing for Industry 4.0.
We address a lot of functions that are currently managed by independent software packages, and this means that in terms of the customer's value chain, they're having a hard time ensuring compatibility between those different systems. So we have an agentic AI approach. We have an expert model for each step of the process, and the platform will behave as an expert for that decision-making process. So Valia is a true revolution. It is unmatched on the market. We believe in it 200%. Valia is how we spearhead our strategy on the manufacturing front. Now, we have an extensive offering when it comes to the fashion industry, based on five different pillars. First of all, design, creation. That's our core business. Our first products were CAD products, and then manufacturing. We bring together Valia and equipment, and Max can talk to you about that successful combination.
Then markets, which is mostly driven by Launchmetrics, Neteven, and Retviews, and also Kubix Link drives our collaboration business, but it does much more than just a product lifecycle management system. So we've gained a lot of traction in recent years. And finally, we have a traceability platform with TextileGenesis. If we look at the shift, what is it that makes us strong today compared with the beginning of our strategy? We have operations in 100 countries or so. We have a strong customer base, which has been strengthened by the Gerber acquisition. We doubled our customer base with the Gerber acquisition, so the potential for selling our solutions to all those customers is significant. And we support our customers, and this drives customer success.
We have 800 people dedicated to customer success, and we have a state-of-the-art technology in every area. Our offer is unique. Very often, it is unmatched on the markets... And lastly, we have a very strong presence in terms of sustainability and compliance, because we support our customers on their quest for sustainability, and this includes ethics, material savings, and traceability. There are two main figures that reflect our policy. Since implementation of our strategy in 2017, our ARR has jumped to close to EUR 100 million. So these figures demonstrate the success of our strategy over the years, and also we've positioned ourselves well to address the next three years. Now I'm gonna hand over to Maximilien. He will tell you a little bit more about our strategic roadmap. Thank you, Daniel.
Good morning, everyone. Pleasure to see you all again this morning. I look forward to introducing to you our strategic roadmap for 2026, 2028. Now for those of you, for those of you attending remotely, you may not have noticed, but I have pink eye like our dear president, but I'm not gonna wear aviator shades, contrary to Mr. Macron. Lectra has scaled up significantly over the past few years. Over the past 10 years, it's consolidated its business plan, its economic model. It has strengthened its new positioning, its new leadership. It's been enriching its offers significantly over the past 10 years. Lectra has supported key customers throughout their transformation process, and it's now seen as a responsible, sustainable player, which are huge fundamentals for the next 3 years. Our fundamentals or financials are extremely strong.
Recurring revenue, in particular, 2025, EUR 380 million in recurring revenue. 2016, prior to the launch of the Lectra 4.0 strategy, our total revenue was EUR 260 million. Now, EUR 380 million in recurring revenue versus EUR 260 million back then. So a major gain if we look at the next three years. So on the basis of all our strengths, we are confident in our ability to handle 2026, but we will remain humble. We will continue to implement our strategy methodically, stringently. We will continue to rely on the fundamentals of Industry 4.0. As Danielle recalled, as released 2017, we stated that cloud technology, Internet of Things, big data, and AI would support that new industrial revolution, Industry 4.0. Now, those technologies, well, we've been handling them well for decades.
We've been using AI since the 1990s, not just for software, but for equipment as well, since the year 2000. In terms of Internet of Things, IoT, we've been doing that since 2007. We've had smart equipment then. Remember, back in the day in 2007, the term IoT did not exist, so we know what it's like to toy with data. We know what it's like to use cloud technology, and we know the potential of those technologies. We have to fully materialize it because things shift all the time, but things are well under control, and those technologies have been factored into all our new offers. Industry 4.0 is more than just a vision; it is a reality that is fully coming into its own. So over the next three years, we're going to take things up a notch.
We're gonna go even further. We're gonna maximize customer value as we maximize the contribution of all our solutions. We have a portfolio of solutions that are designed to support customers through their transition into Industry 4.0. Rather, three different priorities. First of all, position Valia at the forefront of the manufacturing offer. Secondly, we want to scale up the software-as-a-service business. And third, we want to ratchet things up, and we want to boost operational excellence through accelerated growth. Over the next few minutes, I will review all three priorities. Let me start with priority number one. This revolution in production will be driven and scaled up by Valia. It's taken 10 years of R&D to develop Valia. It's more than just a slide or a theory or a concept. It is a reality.
Over the past few months, we have raked in 70 customers who now use this revolutionary solution, and we launched it in a number of geographic areas. Huge potential with Valia. The manufacturing offer, as far as Lectra is concerned, combines equipment, software, Valia now spearheads that, and also related services, as symbolized by maintenance contracts and Cs and Ps, consumables and pieces. And this is how we generate value for our customers, by combining all those offers. So to sell Valia, we're going to rely on our installed base. On this slide, as you can see, on customer premises, we already have 9,000+ Lectra connected IoT equipment in operation. This equipment is natively connected to Valia, and we've been marketing them since 2007.
This means huge potential for upselling because if the equipment is connected with Valia, already we are providing much higher value for customers and also there's huge potential when it comes to replacing the older generation equipment, 5,000 such equipments. So older Lectra equipment that we sold at the end of the 1990s and the beginning of the year 2000, which are not compatible with Industry 4.0 fundamentals, that are not IoT capable, and that have to be replaced by the next generation of equipment that we're marketing. And so this means huge efficiency and productivity gains, unmatched material savings as well. And as we announced a couple of months ago, Valia is now compatible with any industrial equipment, whether Lectra equipment or third-party equipment.
As you can well imagine, the value that we provide when Valia is combined with the latest Lectra equipment, that value is much bigger than if Valia is combined with older generation equipment or third-party equipment. And this means a virtuous cycle. We're using our installed equipment base to sell Valia, digitize production flows for our customers, to have a single flow that connects with all equipments, and Valia can help us demonstrate the difference between the latest Lectra generations and other providers. So it's a virtuous cycle that will strengthen our economic model. So like I said, it's taken 10 years of R&D to develop Valia, and the predecessors include the digital cutting platform, Quick, Flex offers. 700 customers already adopted those predecessors of Valia. Now, it makes sense to naturally migrate towards Valia.
Well before 2017, we had software solutions for production and pre-production purposes that our customers were using. We have 5,000 customers who are using those software packages under contract, so they are active customers, and those solutions will be replaced by Valia. So there's huge potential, both in terms of equipment with Valia software and also related services such as maintenance contracts and Cs and Ps. Now, getting back to maintenance contracts, we talked about that right here last October. Empower. Empower is the next generation of maintenance contracts. Those maintenance contracts are absolutely unique on the market. It's underrepresented globally. It's a contract that guarantees availability of Lectra equipment. In other words, our maintenance contracts meant an obligation to repair the equipment. Now, we ensure results, and we do whatever it takes to make sure the outcomes are achieved.
This is unique, and we capitalized on 15 years of IoT expertise. We're capitalizing on our model, where we support our customers remotely. We're able to troubleshoot malfunctions remotely. In 90% of cases, we out of 10 calls for help, we send out a technician only once. Our customers serve as our best ambassadors when it comes to our manufacturing offer for all three strategic sectors: automotive, apparel, and furniture. This slide shows a number of verbatims from our customers. This is how they use our offers. Now, the common denominator between all four verbatims is that our customers understand the value provided by our solutions, related services, equipment, and software. The value this means to perform better, transform their services, generate competitiveness and productivity gains. MAS is a leading player, but we're also working with Tesca in automotive.
They are a European leader when it comes to automotive and also in the furniture segment. We have two examples here, including Gamma. So here's a video from Edgecombebe, an American company, one of our customers, and it reflects exactly what we've been doing over the past 10 years, both in terms of transforming our model, unlocking synergies, thanks to the synergies, thanks to the acquisitions that we've made, including Gerber. So Edgecombebe is a long-standing customer of Gerber. They used to use Gerber software and equipment, and 2 years ago, they knocked on our door and said, "I want to increase my capabilities. I want new equipment." And this is what we did for them. We explained to them the value of our manufacturing offer for furniture. It's called Furniture on Demand. It's a combination of Valia in furniture and Lectra and Gerber equipment.
Let's see what value this means for the customer.
We work with the major hotel chains. We are primarily a guest room manufacturer. We do large quantity sleeper sofas, chairs, basically anything you sit on in the guest room. When I came back from college and started in the family business, my dad decided to purchase AccuMark, marker-making software, and it really transformed our cutting process. One of the main things we needed was redundancy. We were growing, and we needed an additional cutter, and I was thinking that we probably just needed another Paragon cutter. The automation of the Furniture On Demand was very attractive to me because you really think about what that product needs in the beginning, get it set up one time, and then you can just receive orders on it and let the system do the work.
Interface on the Paragon is really easy to handle. We can do very much machine.
That single ply match cutter, high-speed match cutter, really did help us take some of the work off of that Paragon and allow the Paragon to do what it does best. Seeing how fast it worked, how easy it was to work, the lack of requirement for paper and plastic overlay, it really helps make it a quick and efficient machine.
So that testimonial summarizes the full value we can bring when Valia teams up with Lectra or Gerber equipment. Second priority is to accelerate the growth of SaaS adoption in our model for recurring, profitable, sustainable growth. Our goal is clear: to accelerate the adoption of all SaaS solutions in our portfolio on our install base, maximize the number of solutions used per customer. We're going to review our commercial go-to-market model, the way the sales, marketing, customer success teams work together to facilitate sales, upsell and cross-sell. We're going to work far more on data. We have huge amounts of data stemming from our solutions, loads of data that come from other solutions, ERPs, EMS. We can create unique values by combining all these data and providing new services. In fashion, we have an extended fashion offering, create, manufacturing, market, collaboration, traceability. It's unique.
No other company has such an extended offering on the fashion market with such a footprint. Our job is to connect all the fashion players around the products, the same date, the brands, the subcontractors or suppliers. SaaS is a reality. It's no longer a theory, it's no longer a buzzword shown on slides. It's epitomized by the amount of ARR, close on EUR 100 million of ARR, December thirty-first. The flagship solutions mentioned by Daniel have reached maturity. We're no longer of the proof of concept stage. We have a maturity across these solutions. TextileGenesis with one of the customers who tells about the value. TextileGenesis is a traceability solution for fashion products. We look at the top 200 fashion brands. 140 have not opted for traceability solution. The 60% , 80% use TextileGenesis.
We have a huge untapped potential. Ditto for Launchmetrics, the flagship solutions of markets to support the go-to-market strategies of our customers, be it for Valia. Also, a customer testimonial here for furniture. Our Kubix Link collaborative fashion platform aggregates all product. It's far more than a PLM, as Daniel said, it's a solution that allows us to design, create, go to market our products. I'm going to show you the testimonial of, Boggi, one of our customers, they have quite a few stores in France, telling them what Kubix Link brings to the table.
Boggi Milano, distanza internazionale, distanza nazionale, distanza Italia, Francia, Germania, Gran Bretagna, Stati Uniti. Il brand punta molto sull'innovazione, tecnologia, sostenibilità e ricerca dell'alta qualità. I piani di sviluppo aziendali, uniti al contesto internazionale molto sfidante, ci hanno convinto ad investire in tecnologia al fine di efficientare e, soprattutto, monitorare costantemente tutti i processi della supply chain. [Foreign language]
Boggi Milano, international distance, national distance, distance within Italy, France, Germany, Great Britain, United States. The brand focuses strongly on innovation, technology, sustainability, and the pursuit of high quality. The company’s development plans, combined with a highly challenging international context, have convinced us to invest in technology in order to improve efficiency and, above all, to constantly monitor all supply chain processes.
La collaborazione tra Boggi Milano e Lectra inizia partendo dal nostro obiettivo, l'obiettivo di portare il prodotto Boggi Milano a un livello superiore. Abbiamo scelto Kubix Link perché è il prodotto PLM più flessibile, facilmente integrabile e user-friendly che vi sia oggi sul mercato. Ha la possibilità di gestire il ciclo di vita del prodotto, dal mood board virtuale all'industrializzazione dello stesso, e definire gli step produttivi all'interno di un workflow unico, continuativo ed omogeneo. L'impatto che ha avuto Kubix Link sull'azienda è stato un impatto nettamente positivo. Il progetto, fortemente voluto dalla proprietà, ha visto terreno fertile all'interno di Boggi Milano. [Foreign language]
The collaboration between Boggi Milano and Lectra began with our main objective: to bring the Boggi Milano product to a higher level. We chose Kubix Link because it is the most flexible, easily integrable, and user-friendly PLM product currently available on the market. It enables management of the entire product lifecycle, from the virtual mood board to industrialization, and allows the definition of production steps within a single, continuous, and consistent workflow. The impact that Kubix Link has had on the company has been clearly positive. The project, strongly supported by the ownership, found very fertile ground within Boggi Milano.
Se dovessimo definire, prendere di esempio qualche risultato che abbiamo ottenuto con Kubix Link, potremmo parlare di numeri veramente importanti: 3 piani di collezione gestiti, la possibilità di gestire anche informazioni presso le nostre filiali in giro per il mondo, 2,500 SKU, pari a 1,200 prodotti finiti gestiti, 1,500 materie prime ad oggi in utilizzo e tanti altri valori che potremmo ora citare come esempio veramente virtuoso di quello che è stato un progetto di grande successo. [Foreign language]
So these testimonials clear, not just PLM. Kubix Link come from an acquisition in 2018. Kubix Lab, a small startup back then that tried to disrupt the PLM market as it known a few years ago. Kubix Link was still a challenger today on the market. It's Kubix Link that is setting the tempo, and it's the bedrock of our development strategy and fashion around the data and collaboration within the fashion ecosystem. And the final priority is to reach a new level in terms of operational excellence. We have very strong base. Lectra is recognized as a solid player, rigorous in terms of operational excellence. We're going to go further, improve performance, efficiency, and promote the take-up of all these SaaS solutions. Several initiatives that we've launched. The first is to define common processes throughout the group, including all recent acquisitions on financial, commercial, marketing, customer support processes.
This is an effort that's already underway. We're gonna reach new synergy levers that we couldn't have. One single way of talking to the customer in this line, aligned as one with the customer, not appear as a company. Lectra, Launchmetrics, Gerber, Genesis, being common underlined. Second major initiative is focused on SaaS. We're going to redesign SaaS-related processes by drawing inspiration from best practices in the group. Launchmetrics, born in SaaS, representing, as Olivier said, half of ARR, the group that grew through acquisition, reaching new levers of operational excellence. We're going to profit from that to apply new SaaS processes in the group. We can accompany and serve our customers today. It's not a problem with EUR 100 million in ARR and the 12 coming on. It's gonna prepare us to absorb twice that amount in the coming years.
Then simplify the offer portfolio by phasing out non-strategic activities. That's about EUR 20 million in revenue. These were activities mainly related to old, non-connected equipment, not compatible with Industry 4.0, taking time and resources, so we focus resources on high added value. We initiated that in the previous roadmap. That non-strategic activity was the order of EUR 25 million. It's slowly declining and will continue to do so. This improvement in operational efficiency internally will allow us to grow our investments to go further, better serve our customers, be more relevant. We're gonna continue to invest in R&D, the equivalent of 12% of our revenue every year in R&D, and accelerate the integration of AI and Big Data in our offers. Why? To better know how our customers use our solutions and how to create new products. We'll also accelerate the renewal of generations of equipment.
Following the acquisition of Gerber, we preserved Gerber Lectra equipment. We began to unify that portfolio. We'll continue to launch new equipment generations, which will replace Lectra and Gerber equipment, far more efficient, based on Industry 4.0, more profitable, using the Lectra tech platform with better margin. We're gonna invest heavily in our information system over the next three years. That will be around EUR 10 million per annum in CapEx for our new ERP to be rolled out and also change our CRM solutions linked to the CRM ecosystem, bring new solutions to our customer success team. Final point, as Daniel said, is to put in place more AI capabilities to automate low value added, repetitive tasks, streamline processes, and free up more time for high value added missions pragmatically with obvious return on investment.
We're not, as other companies doing, just putting in place AI for the sake of saying we're doing that. We want those tools to serve our customers and our teams. So as you can see, this roadmap for the next three years aims at building a model for Lectra that will be better, more efficient, of higher performance, and more profitable over time. We have three very clear priorities. Our compass, if I were to summarize it, the potential is there, the offers are there. We have everything it takes to succeed in this new chapter of our transformation, and I'll let Daniel conclude for the end of the presentation.
Thank you, Max. So one slide that replaces the guidance, which tells you very clearly how we view things.
In fact, we have two parts in our activity, a part where we have very considerable visibility, another part where we have no visibility whatsoever. What we've decided to do is to give identifiers on everything that's under our control. ARR for SaaS, we expect to have an ARR that will increase 15% per year over the next three years. As you see, we achieved 14% in 2025, so it's a realistic objective. The higher ARR gets, the more difficult it is, but we think that target's realistic, given the solutions we have today.
That will lead to an increase of contracts, of recurring contracts, of 5%-8%, depending on the growth of ARR, and on growth of maintenance contracts that we hope will return to normal speed in 2025, 2% instead of 6%, because of bankruptcies and cancellations, because customers were short of cash. We don't expect that to last forever, so 5% and 8% yearly growth over time and continued cost optimization. We increased our cost by 2% on average the past 2 years. But it hides the fact that we've considerably cut costs on our traditional equipment, maintenance, optimized hugely and invested in SaaS, both for R&D services and commercially.
We transformed our teams, we transformed our model with a total that has remained broadly constant and will remain constant, but with resources that are focused on issues for tomorrow. We have teams that are geared up to support growth on SaaS and to continue to drive our activity on equipment and on equipment. The biggest engine for those savings and cost optimization, the most recent, the stock of equipment, the fewer the technicians we set out, we can process remotely. As Max said, 90% of problems that arrive at a cost, we send out a technician one in every ten times. Previously, it was 50% of the time we had to send a technician. That is, that our technicians are being sent out, 5 times fewer, so it's high cost optimization.
We have integration of Lectra, Gerber to pool costs. We have teams that can address both ranges simultaneously. That has generated considerable equipment savings. Gerber synergies we presented in October in 2024, that was over EUR 36 million. Those thirty-six million of synergies were invested or spent on SaaS solutions for tomorrow. We've saved and spent more with a total that's, well, now stable. It gives us considerable strength to address the future. We'll continue to extend cost optimization throughout that period. Lastly, when we look at what it leads to, we expect an increase of EBITDA margin of between 120-180 basis points, all other things being equal, if there's no rebound on the equipment and with exchange rates the same as those factored in at the start of the year.
But mechanically, the growth of our recurring business and cost optimization will lead to an EBITDA margin increase of 120-180 basis points, not taking into account equipment rebound, which would be added real upside on those numbers. We look at one of the major Lectra ratios, security ratios, all costs covered by the recurring contract business and consumables. The margin generated by the activity. Today, we're at 96%. When we start the year, 90% of our costs are already covered by recurring business. Our ambition is to increase that security ratio by 2-3 points a year to exceed 100%, and so that 100% of costs are covered by recurring revenue. Those are the two targets, whatever the cycle and a possible rebound of equipment that will be added upside.
Over and above that, we will continue a targeted acquisition policy into. We have several companies we're interested in. The issue is valuation. These companies are valuated far too highly by their current shareholders, either because they're private equity, and they compare that with the valuation of the last round, two or three years ago, the principle, "I invested EUR 100, I must sell at EUR 300." They say, "We're prepared to be reasonable, let's say EUR 200," but we see- we say, "No, our valuation is 60. We have some way to go." A number of companies we've met are interesting.
We have a team that screens the startups or mid-sized companies that complete our offer, and they meet about 100 companies a year, and Max and I meet with some 15 that are interesting, but there's no match on the valuation. But there is a fit in terms of the interest and synergy with Lectra. And lastly, we'll continue our dividend payout, 50% of net income. In fact, 40% of net income restated because we have a portion that's linked to a previous acquisition, but we referred to reflect it by saying 50% payout ratio.
The o bjectives are summarized here. So part of our activity, 75% recurring, where we have visibility today. These are numbers that we control well. We control the costs and on this portion, 120-180 basis points on EBITDA margin, we're very comfortable. For the equipment, we don't know. Depending on the day, we wake up and say, "Tomorrow morning, it's gonna bounce back." And then there's negative announcement, positive announcement. If you ask the question on Monday, I'll say we're far more optimistic. On Tuesday, I'll say we're more pessimistic. We don't have a crystal ball, but maybe there's something that plays in our favor. After a while, people get used to that. They're beginning to look at things pragmatically and say: What am I gonna do now? The situation is clearer.
It's something that over time is set to improve, because now in every country, people have visibility, clarity on tariffs, customer relations, which will make them more comfortable because there'll be less uncertainty.
Now, the three of us are on hand should you have any questions. Now, for those of you attending remotely, feel free to ask questions. We have our investor relations team who will relay the questions, to us. Feel free to ask questions in English or French. They will be translated into French for us, and the answers will be translated into English for your benefit.
When it comes to synergies with Gerber, a lot has been done already. The design machine market is quite sluggish at the moment, but you have a unified platform?
Well, based on our estimates, the synergies come to over EUR 40 million a year, and the main source of synergies is the fact that there's cross-selling potential. We can also sell SaaS software packages to Gerber customers, and also we've streamlined equipment, and we're selling more and more Lectra-branded equipment.
US customers of Gerber, they can see the difference, so they're switching to Lectra equipment, for which the profit margin is much higher. And also, there are synergies when it comes to cost. We've been able to optimize all of these services teams. So over EUR 40 million synergies in 2025. And we've used that money to invest into SaaS, and this is why we are well-positioned when it comes to SaaS. So we are replacing two ranges of products by just one. Of course, it'll take time, migrating the installed base in terms of sales support, and that's important. And the second aspect, when it comes to the future, we only have a single R&D plan. So whenever we develop a product, it covers both installed bases.
Whereas in the few years that followed, the Gerber acquisition, it took a lot of work ensuring interoperability between the two ranges of products. Now, whenever we design a new product, we develop it just once, and it applies to both, to both installed bases. So this means untapped potential in terms of synergies.
I have a question regarding EBITDA. When you said that you intend to increase the ratio from 120 to 180 countries, that means you're planning to increase EBITDA from 17%-20% in 2028?
At the moment, we stand at 15.1%, looking at the Forex on December 31st. So yes, this does mean, over 20% in 2028.
Hello. Oddo BHF. I have three questions. First of all, Valia. [Foriegn Language] The adoption or conversion rate, what do you anticipate by 2028? And also, in your guidance, do you also consider penetration of the installed non-Lectra equipment base? Second question: When it comes to Valia, but also the other SaaS offers, do you intend to revisit the sales organization? Have you taken initiatives already to that effect, yes or no? And third question, regarding Launchmetrics, this is probably your software package that has the most exposure to generative AI. So what are your solutions?
Let me take the first question regarding Valia. As we said before, we have about 70 customers that currently use Valia for production purposes. Valia is their only process workflow when it comes to Lectra equipment, whether Lectra or Gerber or any other third-party equipment. There are no limits when it comes to our ability to ensure operability with non-Lectra equipment. If we look at the number of products that have been processed by Valia, the more equipment we connect, the higher the subscription rate and the more value we create for the entire customer production process. As I tried to explain before. There's a lot of potential when it comes to helping our customers migrate towards Valia. We had fewer than 10 such Valia customers.
We announced a disruptive, revolutionary solution, at a time when a lot of customers had already finalized their budgets. And see the pace of growth in just a few months, we have customers that are already using Valia's predecessors, and we need to support them as they migrate towards Valia, and also our installed base needs support migrating to Valia. Now, from a sales point of view, from the point of view of go-to-market, I'm talking about sales, marketing, and customer success teams, they need to work together because they are increasingly specialized, solution by solution. In other words, each customer has a contact person, but then we have pre-sales, and we have customer success teams that specialize offer by offer, product by product, because it's more relevant to work this way.
We're able to better showcase the value we provide, and also we can better support our customers and their users when it comes to the new solutions that they embrace. So that's a shift. It's a group-wide shift, and this affects legacy Lectra equipment, but everything we're doing with Gerber, TextileGenesis, and Launchmetrics. So we present a united front when dealing with customers. And who are our discussion partners? The C-suite level individuals, COOs, CEOs, such as the Edgecombebe CEO. So we need to speak the same language with our customers, and it doesn't matter who the person is, what they specialize in, what their job is. So we initiated that transformation last year, and we will fast-track it even more in the coming years. And could you please remind me what your third question was? Ah, Launchmetrics. Yes.
Now, ARR grew by 9% over the first 9 months of the year, or rather over 12 months, and that remained unchanged. A 9% growth in ARR over 12 months, and the total increase in ARR is, is 12%. So we're seeing a 9% growth rate, and this means that the other solutions are performing even better. Do the math. So there's huge potential for adopting these new solutions. And generative AI is not a technology that scares us because we've already integrated it into Launchmetrics and other offers. It's great for generating graphs and images and visuals and. But it needs to be based on data that, that should be understandable for this type of AI, and that's what Launchmetrics does.
It analyzes everything that's happening in terms of social media, all of the paper, all of the press clippings, and so as to be able to provide insights to customers so that they can better manage their marketing investments more relevantly. So 9% growth in ARR shows the value provided by Launchmetrics to those brands. Just because some brands aren't doing too well doesn't mean they stop investing. On the contrary, it's the right time for them to transform themselves, and the solutions we provide in our portfolio are the drivers behind that transformation.
Thank you. Good morning, everyone. Thank you for this presentation. I have three questions. First of all, a follow-up question to the previous one. You talked about your road map. Have you tried quantifying over the next three years the proposed penetration rate of Valia for your installed base?
We're talking 9,000 or so machines. Also, the growth in profit margin, is it mostly driven by your SaaS offers, or is there continuous efforts in terms of reducing costs and labor costs and also M&A? On the M&A front, anything you're targeting over the next few years? Is it mostly SaaS in the short term, or are you going to target technology building blocks rather? And also, you talked about market cap being too high. Could you give us KPIs?
What's the threshold beyond which an acquisition is too expensive for you to agree to make it? We are confident when it comes to our growth, our projected growth between 2026 and 2028. Maybe this doesn't answer your question, but we are firmly convinced of the value Valia provides. And over 2026, 2028, well, it's hard to quantify.
The scenarios are based on the pace of buy-in by our customers. If we get back to what we said in October regarding fashion, we had 17 customers and a few more in furniture and automotive, so we almost doubled the number of customers in Q4. This time, Q4 is very encouraging because the pace of buy-in is much faster than expected, but things are still difficult because we're looking at every information system. A lot of factors are involved, so it's hard for us to estimate the pace of adoption. So if we compare Valia with its predecessors, the growth in ARR in 2025 was 31%, which is pretty palatable already. I mean, the figures aren't huge, but 31% is nothing to sneeze at. So are we able to quantify? We, we'd rather not say at this point, because
The range of assumptions is extremely broad. Things can go really well. They're going well now. We've gained traction on the market already, but we can't, we can't possibly know what the future holds. When it comes to your question on EBITDA, yeah, clearly, one factor is, our SaaS business, the fact that we're developing, because for most of the solutions, we've achieved critical mass. And that's when we generate an extra EUR 100 in revenue, we have between EUR 60 and EUR 80 that go into EBITDA. So critical size, critical mass is an important factor. In other words, mature companies such as Launchmetrics, have developed their EBITDA much more as opposed to a growing, software company such as TextileGenesis. So the growth EBITDA mix is improving.
So when you add up EBITDA and increase in ARR, this exceeds 40%, at least for mature lines, TextileGenesis, Kubix Link, and Launchmetrics in 2028. That's our compass. When it comes to costs, and this is in line with recent years, there's a source of savings to synergies between Lectra and Gerber, and those synergies will continue to materialize. I'm talking about maintenance, of course, but also equipment. And also we will optimize costs across the board. This is something that we're keeping a close eye on. So more and more synergies will emerge as we design products that apply to both Gerber and Lectra equipment. We also have specialized teams, vertical by vertical, solution by solution, and more and more, we lie at the heart of our customer strategies and, and so our customers, they wanna meet with our top regional heads, Max, Javier, myself.
They only want to talk to the top people, so we organize meetings, and this is how we get the ball rolling. And very often, in our meetings, we meet with several members of the executive board, and we have strategic discussions. That wasn't the case several years ago, not necessarily, and this encourages us to continue as linchpins in our customer strategies. Now, when it comes to SaaS, usually the ROI for customers is 24 hours. It takes 24 hours for the customer to generate ROI. In just 24 hours, they generate more money than the cost they paid. And that means a lot. When it comes to Launchmetrics, we use it to optimize marketing budgets, which is the lead expense item for all luxury and fashion brands. And now we're able to quantify ROI by using Launchmetrics.
The marketing budget is much better used. In the past, people tried to optimize what they were doing. Now they get to optimize their costs, and this means they need less money to... for the same scope of activities. They're able to better optimize their marketing budgets, and this is how they improve their operational ratios. In 2025, we had the lowest churn rate for Launchmetrics than its entire history, and this shows how much value we generate for customers. Now, I'll let Max answer regarding acquisitions.
We will pursue the same strategy as since 2017. We target mostly startup companies in the SaaS universe with key Industry 4.0 technologies, IoT, big data, AI, et cetera. So we're looking for startup companies that can support, supplement, enrich our product portfolio. In fashion, we have a pretty extensive offer, design, manufacturing, marketing, traceability, et cetera.
So what we want to supplement is coverage of our customers' process, manufacturing processes. Now, two years ago, we could have said that the market cap was in line with the market, so 10, maybe 15 times ARR. Today, multiples range between 4x and 6x. It depends on how healthy the company is. It's not me saying that, it's the market. And obviously, we don't want to pay too much for a company simply because they've added AI to their pitch, because there's a difference between dreams and reality. So we're extremely cautious. We tread carefully. We really want to create value for our customers, for our customers and also for our teams, because we're bringing specific expertise, and also we want to generate value for our shareholders, and we're not going to make an acquisition if we don't tick all three boxes.
If we look at our track record, first of all, the Gerber acquisition went off without a hitch. The figures show that. The customers as well. We lost pretty much a zero customer, and we've held on to all the teams we wanted. The only people who left the group were hired by the private equity group to ensure the turnaround. So we consolidated our teams, we shored up our customer base, and we generated a lot of synergies. And if we look at our two key acquisitions over the past few years, TextileGenesis and Launchmetrics. TextileGenesis improved penetration when it comes to traceability and sustainability, which are highly sensitive aspects. 80% market share for the top brands. If you look at the entire traceability market, over 60%, and the rest of the competition, they have to share what's left.
So we've gained a leadership position that's very strong over the past few years, and also the pricing system depends on the volumes that transit through the platform. And, and this will naturally increase over the next 3 years simply based on existing customers, without even factoring in new customers. At the moment, there are 4 billion products. So by product, I mean a particular piece of apparel in a—for a given colorway, for a given size. So 4 billion products transited through the platform, and 23,000 companies are logged into the platform. And we charge textile manufacturers and brands, so on both sides of the—on either side of the spectrum, and in the middle, access is free because we wanted to create a community.
Eventually, we will bill, but at the moment, we have 23,000 companies that use TextileGenesis as a platform every day, and some of our customers go through our platform for 100% of their offers. So we know what that brings. When we bought TextileGenesis, a lot of people... I remember we paid EUR 30 million for this company, whose ARR was only EUR 1 million, and a lot of people had questions about that, but we've that was a sound move. We've proved it. Launchmetrics' EBITDA was negative double-digit EBITDA, and now it's +20%, up from -20%. See? We've really focused on profitability, and growth remains significant. So our target was 10%.
We've generated 9% growth, considering the circumstances, is pretty good in terms of ARR, so we've been able to combine that growth with an improvement in profitability. When it comes to our latest acquisitions, we have proven our ability to make acquisitions that generate value for Lectra. Now, we bought a small company in the past, Kubix Lab, a team of four people, zero revenue when we bought them, and now it's a linchpin of our offer. And at the time, we paid EUR 8 million for it. So compared with today's ARR, yeah, we're talking 0.something% of the ARR, so we tread very carefully. In this type of situation, I understand that some of you may be scared, and. But we'll never prioritize our egos or let our dreams get away from us.
Launchmetrics, we talked for two years. We did our due diligence. It was our top target out of 200 companies that we screened, and we continued discussions until we felt ready. We felt confident that the agreement would be favorable to us.
So I think we'll be very prudent, very cautious. Today, we have situations... I think the valuations will align at some point. We have the two factors, private equity saying, "I want to multiply my initial investment," but life's no longer like that. And then we have founders pitch, "I've got AI in there," so it's more expen- In terms of AI, we know it better than they do, so we can separate the speech from the reality, and very often, the words exceed the reality.
Yes. Hi. Just got a question to clearly on, on this Kubix upstream will feed into Valia downstream for produ- Launchmetrics, how is it gonna fit into t he grail would be to integrate everything, right?
That's what we're working on with the customers.
Give you an example, when our customers design collection, they no longer start with design. They start by analyzing the market to who they're gonna sell, at what price, what's the breadth, the depth of their re- We're no longer in the day where fashion is driven by style. Fashion is now driven by the go-to-market, and that's where we have our offer with Neteven, Launchmetrics, that comes into play, this ability to understand what the trends are, how the brand can position itself, set itself apart from the competition, what price, through what channel we'll sell it. That's how we set up these collection plans, how we produce the garments in the right quantity.
I see with Kubix and Valia, but how, how is it gonna happen? How is it gonna be sold, invoiced?
We have solutions, as you buy, Circle by, Bubble. They each have their critical persona, their model. The business model is very often business-driven, product process, quantity, the peers we're monitoring, and at the end of the day, all the value linked to the product transits via Kubix Link, be it in the market, creation, manufacture, or traceability. We have customers who've already integrated Kubix Link and Launchmetrics. As I said last time, customers have included the samples of Launchmetrics, the analysis by Launchmetrics on the trends, product categories, various level, breadths, and depths of collections in Kubix Link that's active and available. We're gonna go further, how to combine everyone. Today, they use one solution, one platform. We want them to work around the same data with the same language, and that's possible with Kubix Link. It's a collaborative platform.
It orchestrates all the product data, whether they come from Lectra or non-Lectra solutions. Take another example, as Daniel said, we have over 20,023 actors in the fashion supply chain. In TextileGenesis, they declare who they are, their audit certificate, their production capacity. We retrieve that automatically in Kubix Link. We don't need to ask our customers to enter that data. We link it to the manufacturing production or say, company was involved at such time for such product. For tomorrow's product, it's additional insight to know what player could be the best place to produce the product that will be in your wardrobe in a few months. So that integration is largely already present. In the next three years, we plan to step up that integration.
It'll create value, and as Max said, we have a pricing scheme that's based on usage, the value added that we produce, the outcome, and not the number of users. Most of our solutions, number of users is unlimited because we realize that the more we have people who use our solutions, there's more, there's flow that transits, and the more money we get, we're paid in proportion to the flows.
Next question. Yes, we've got a number of questions that have already been answered. I see one on ARR growth. Do you think it might be even higher in 2026?
15%. We said our ambition is to achieve 15% average growth per year over the next three years. Of course, the higher the nominal base is higher, the higher that percentage will be, there. We strong believers in that.
We've launched solutions, Valia, TextileGenesis, which will nurture this potential growth of ARR. As Daniel said in his conclusion.
That 15% number may seem ambitious, but it's realistic, and we can think that there are pretty mature solutions where we control growth. At Launchmetrics, we are at 9. If it's not so good, it'll be 8. If it goes well, it'll be 12 or even 14, but we're not gonna exceed those types of numbers. Given maturity on Valia, it's very open. We don't know if the growth will be 10, 20, 15% per year. We'll see that gradually. The 15 seems to us to be realistic. Our goal is to be at 15 or north of 15. It's a target for the next three years.
There's a question on Launchmetrics and this 9% performance. How do you explain it?
It's viewed as, an adverse performance, and what are the prospects in terms of top-line growth and EBITDA growth? For the target was 10, with today's troubled times, 9, I don't think it's subpar performance. I think it's good performance. Launchmetrics, EBITDA is above budget. If I remain on a roll, north of 40, sum of EBITDA plus ARR is above what we set by way of a target for 2025. We upped EBITDA more than expected with AR growth. It's 1 percentage point below because we better optimized costs and, pulled all the items. When we look at the large luxury companies, we're talking about an ARR in hundreds of thousands EUR, and for the mega players, it's between EUR 1 million and EUR 5 million per annum, and there hasn't been any churn on those solutions.
So there's very great confidence of the luxury market, and the most challenging market is at the beginning, there were other targets, such as the fashion press, that's faring less well and where we have no development today. But when we look at customers who initially are Lectra in fashion and luxury, the growth rate is higher. For all those reasons, we're very confident. What's more, we believe that it's not an adverse performance, it's a performance that's quite honorable compared to the situation.
Sorry, sorry. Just to return on the orders front, which is your daily concern. One day, you're optimistic, the next, less so. When I look at Q4, there's a degree of stability in the U.S., Europe is flat and Asia is down. So in the year, there was a real reversal in the three areas. How do you view all that? The lead indicators and the fact that adoption in the U.S., it's perhaps stronger, and you mentioned that in China it was difficult with automotive and reduced number of manufacturers. What can we have by way of onboarded information on the latest trends? What can we project your reasoning and scenarios, just to assist us?
Well, firstly, when we look at the Americas, we tend to think the United States. Our number one center for us is Mexico. Even our U.S. customers manufacture essentially in Mexico, so the revenue is in Mexico. Very often, the Trump administration talks about manufacturing in the U.S., U.S. brands has big confusions. Most U.S. brands manufacture in Mexico, perhaps more Europeans in the U.S., but we confuse the fact that the brand is American. Our number one manufacturing center is Mexico. The greatest problem was all the to-ing, fro-ing. Is the NAFTA deal gonna continue or not? Today, it's in place. There's a June thirtieth review clause. That's what worries people. If it's adopted and the agreement maintained, we should return to normal. The potential is there, and things will grow. That's for automotive. Fashion in the U.S., there's practically none.
2% of fashion items sold in the US, made in the US, practically zero, but Mexico or Central America, there'll be manufacturers who are in the same situation as automotive with favorable tariffs. So in the US and in the Americas, there are two positives: stability in tariffs and an exemption for many products in Mexico and a ramp-up of other markets. So in the figures of Olivier, aeronautics, military, security, a whole slew of things that are promising business is highly developed in the US. So today, we have reasons to be more optimistic on the rebound in the US that isn't at all driven by the situation we had in 2025. In Europe, while the fears were unfounded, a fashion company. I'll cover the two main markets, fashion, European fashion. Exports, 20%-30% to the US. Tariffs are up 5%.
That's 1.5% of gross margin. You have to divide by two 'cause it's on the transfer price and not the sale price to the end user. Real impact, less than 1%. So unfounded fears, we're back to normal in Europe on fashion, so it's really the mindset and confidence in the future that's at play 'cause the situation's rather good today. In automotive, it's more strained. European manufacturers are under pressure. The Chinese are arriving. For Lectra, if we have a Chinese customer with a plant, Europe is not very different from a European customer with a plant in China. European markets, it's not European brands, it's those who manufacture in Europe. Trends are stable.
As we've seen, there are those who need to change tack, change strategy, and produce differently as they've continued now with product development cycles of three years and manufacturing systems that date back 20 years. We have Chinese brands that are at the cutting edge. What can create positive effect is the new effect. New Chinese industries will have to gear up and equip. Our competitors don't have presence in Europe, so we're favorite in the Chinese ecosystem in Europe, and then our historic clients in automotive in Europe need to change. So in Europe and Americas, we could see a return to normal rapidly, barring any upheaval. In Asia, it's more challenging. The country that's benefited the most of late is China.
We were at the same tariff rate on the eve of the Trump announcement, and we need obviously to read the runes of the messages, not the impression that we have at face value for the press releases. There are companies that are being favored. The April second announcement, the Indians felt they were in favor, limited tariffs, and then 50% penalty slapped on them for buying Russian oil, and now officially, they're no longer buying Russian oil. But I have my doubts. I was in India a fortnight ago. Even the officials weren't aware of that, but they're gonna stop buying Russian oil, and so tariffs have gone from 60 down to 18%. 18%, they're the most favored nation in Asia. So that's creating a lot of turmoil. When I take Indian clients, they've gone, "Okay, now, our hour has arrived in April.
Are we gonna be able to pay the wages next month?" So we can think that that situation will stabilize, and that one of the advantages for us when we look at the glass half full or empty, is that we're far stronger in countries that are favored by the new tariff deals in terms of market share and strong in India, Sri Lanka, Bangladesh, and stronger than China and Vietnam. So all that will play in our favor because the shift in the market, if it bears out, that's where the most advanced markets. About MAS. MAS has 23 plants and over 100 Lectra equipment. So European players with Lectra cutters, winning has four. These mammoth players that have 100, 150 pieces of equipment amongst the only ones who didn't stop investing during the period.
We look at these companies present everywhere. They do natural hedging because they produce in many countries. It takes them time to shift. They've better distributed or shifted production for the U.S., for Europe and Asia, so optimize the tariff. So there'll emerge winners. There'll be market consolidation, very strong in Asia for fashion. So there are a number of things that are positive that lead us to hope for this rebound that will occur in places Europe, United States, and certain Asia countries where we're far stronger. So if I'd look at things going forward, I'm optimistic. If I look in terms of timing and, and maybe a comment, additionally, 100 announcements made by Trump, 0 were implemented as announced. To know what's happening, you have to go on the customs site, read, the implementation orders, and they're very different.
Sometimes they bear no relationship whatsoever to the press releases and announcements. So all that is under control. We've understood the impact before the others. Everyone were taking the statements at face value. China is the only country in the world that hasn't seen its tariffs increase. It doesn't sound natural. The advantage, factually, is that the countries favored by the new situations are countries where we have far higher market shares and a far stronger presence in the custom. So it makes me optimistic. Obviously, we refuse to make forecasts. We just had two pieces of good news on India, Bangladesh, far from negligible, important countries. That's gonna relaunch investments. We can have further news tomorrow.
Alexander Peterc. [Foriegn language]
Alexander Peterc, just a couple of questions. One, just a detail. When I look at your value offer, you say that it's a kind of agnostic equip. What's the percentage of non-electric that you're connected? Is it marginal? It's important priority. And second, about your guidance, when you say that we keep what we can model, ARR, there we're seeing very good growth, okay, but on the non-recurring side, when you say that the scenario today, I have no visibility, so it's flat, is the situation where it can decline further, or we reach the bottom, we don't know how long it's going to last? First one for Max.
We announced that compatibility only a few weeks ago, end of October, we just announced it. We came out from that announcement in China, so we're really at the beginning of that shift.
Amongst the 70, about 10 customers with non-Lectra equipment connected, it's a small percentage. If we look at the potential, you'll see that we have 9,000 Lectra equipments, natively IoT, and 4,500 non-IoT compatible. And the others, the other thousands, dozens of thousands are up to that for us. It's going to be a quest to not only connect those pieces of equipment, explain to our customers how by replacing those equipment with new Lectra generation, they'll be more efficient and reduce their cost. That's the past growth.
No, the ratio is currently very low, but will increase quickly. The great thing for our customers is they only have a single workflow of data and equipment. At the moment, they're specializing their workflows based on the type of equipment. This is why, I mean, it's a true revolution. You need to change your process and your mindset, so we are confident and our customers are very excited. And we know we will phase it in, but there's huge entire potential.
Now, based on the initial implementations of Valia, initial figures show, even though we can't really mainstream, the materials gains is increased by 50%, as opposed to cutters that are not Valia equipped. And this means, customers recoup their subscription cost very quickly. So a nd the time it takes to develop the product is divided by 5.
You can make a decision only one week ahead of time instead of five weeks ahead of time, and you can fulfill orders very quickly. And the true value generated by Valia is about everything else. Customers realize they're gonna make money off Valia, but the real benefits materialize later. In terms of equipment, this is not a scenario. Let's be specific. We have a calculation. We have an assumption. If the number of equipment and systems is the same as before, if we bear in mind inflation, this is what we end up with, and we let customers decide what they wanna do because we don't have a crystal ball. We can't possibly make forecasts. We'll see what happens. Can things be worse?
Of course, in absolute terms, say there's a war that breaks out, you don't know what's going to happen. When Trump threatened to invade Greenland and called Europeans enemies of the U.S., and we thought we were longstanding friends. Yeah, things can get difficult if there's a war in the Middle East. Yes, there can be an impact. If the, and if, if, the war between Ukraine and Russia comes to an end, this could actually be good for us. We don't know what the future holds. We are all hands on deck, and we're seeing minus 19% for equipment in 2025. It's not good, but at least it's not minus 50%. Remember, overnight, from when we went from March to April, we lost 70% of our equipment orders, and now it's only minus 20%.
So barring a major development, it's not gonna be worse, but things could actually be much better, but it takes a while before customers assimilate the news and change their budgets. So I'm very optimistic when it comes to the next three years. If good news materialize in April, but it takes until September before customers assimilate the news, we may have to wait an extra year. So we're not sure about the phasing. We firmly believe there's going to be a recovery. We just don't know when and how big that recovery is gonna be, and we refuse to make forecasts because once bitten, twice shy. Any questions? Any other questions? If you have to leave, we totally understand. I have a question regarding dollar.
What happens if the dollar continues to go down lower than 1.17?
Well, we, we hedge 100% of our balance sheet, but not future flows. Every time we give information based on dollar parity because it's... There can be potential impact on the conversion of dollar-denominated figures into euros. So if we look at a management report, for every $0.05 in terms of the dollar going up or down, the impact on revenue is EUR 1 million, and the impact on EBITDA is EUR 4 million. So when there are wide dollar fluctuations, there can be a huge impact when it comes to the competitive landscape and number of competition of dollar-denominated business, and we need to look at the sale price. But otherwise, no major changes when it comes to our policies.
And this brings me to the next and final question: the competitive landscape. How is the competition positioning themselves relative to you, relative to your performance? Maybe we should start with equipment, 'cause usually when we get that kind of question, it's usually about equipment first. We have small customers across the world, but they're very small. Our main competitors come from China. In China, there's one big player called Bullmer. They're held by a company called Jack. They're a listed company, and Jack made that acquisition in Bullmer, which was number 3 back in the day, the number 3 provider of cutting equipment. It was a German company. So Jack is a very strong company. They're an industry player.
They're fully capable of improving their unit costs spectacularly, and now they're number one when it comes to sewing machines, and in China, they're very strong because they use their network of sewing machine distributors. So they sell quality products, but they provide zero services, and also they're not good with software. That's their weak point. So what really matters when it comes to equipment nowadays is the onboard software. Now, when it comes to China, we have between 30 and 40 smaller competitors max, and I attended the Shanghai Trade Show on March sixth. I've been going there for years, and two years ago, there were 40 competitors represented there. This year, 40 as well, but 20 of them are new. Because there were 20 new ones, because they came in and replaced 20 companies that went belly up.
So if you take the average value of EUR 60,000, multiply that by 50, we're talking EUR 3 million. At 30% margin, less than EUR 1 million in margin. If they sell 100, that's EUR 2 million in margin. With this, they pay production or R&D services sales teams. There's no way they can survive very long. So the downside is that these competitors are driving prices down because customers are thinking, "Maybe it's better to pay for just 1/3. It'll get the job done. We'll see what happens in a few years." But in a few years, because there's zero maintenance on the machine, productivity goes down because the equipment looks great on day one for the demo, but performance iterates very much over the years, and, as a result, all those smaller players are unlikely to survive.
Maybe 2 or 3 of them will have longer lifespans, but I'm telling you, a lot of them are going to go belly up because market conditions are tougher and tougher. So in 2 years' time, chances are over 50% of them will have disappeared. So the competition in China is exacerbated because those companies are so desperate, they're willing to give the product for free for a whole year because they made the products, and they can't seem to be able to sell them, and the prices are so low, they make no sense, and that's how they hope to survive, and there's no way they will survive. I gave you the figures. I can't see why any company can survive.
I mean, it takes us EUR 12 million to develop a new cutting machine, and in total, they spend EUR 300,000 a year? No way. There's just such a strong disconnect. There's no way they can make it. Now, maybe a lot of customers will decide, "Okay, well, that kind of equipment is good enough. It'll get the job done." Well, at this rate, just use a manual pair of scissors, it'll get the job done, too. Now, customers have seen the difference in terms of profitability and productivity, and they see the difference between Lectra cutting machines and the current competitors' products. I mean, look at the textile savings. You use much less material.
It's day and night in terms of productivity gains, and that is why Jack, like I said, they are our top competitors in China, and of course, somebody had to take second place. But as far as the others are concerned, we don't see them as any kind of threat because they basically self-destruct. It's a price war, and they're fighting over the same customers. On the software side, just to wrap up, now, CAD, and that's our core business. It's been our core business since 1983, 1984 pretty much. We've been number one when it comes to computer-aided design, and we're very strong in the European market, thanks to the Lectra software. Gerber was number one in the US, so we are very strong in the US as well.
Our market share is difficult to estimate, but probably above 65% in Europe and in the US. Why? We don't look at our global market share. We only look at customers. When it comes to premium brands and luxury brands, we're closer to 80% and 90% market share. But if you look at the entire market, we still have a very strong position, as opposed to Asia, where our position is weak because customers bought local, locally produced software, which was much cheaper. So much for design, for creation. Like I said, in Asia, we're not the preferred player because the economy there is different, but in the US and in Europe, we are very strong. When it comes to automotive production, global market share, over two-thirds when it comes to textile cutting machines and about 50% for leather.
Over two-thirds for airbags. Our market share is very significant, and the rest of the competition, they're sharing the rest of the pie among themselves. Things can always shift, but I think we are very comfortable. If we look at markets, there's no equivalent to Launchmetrics. We are very strongly positioned, and we've talked about TextileGenesis. We have vast market share when it comes to traceability. Our competitors are startup companies. They receive funding from private equity, and this scares a lot of major luxury players because they don't know how sustainable this is. So we are the preferred player. And Kubix Link, just to wrap up, we've seen the impact of the latest publications by Dassault Systèmes. As you know, I'm not a fan of their financial disclosures. I said that many times.
I mean, always having to read the footnotes, but if you look at what they said about the product, it doesn't work at all. It'll work initially because you change the management structure, great, but I don't know why that is. The thing is, customers made their decisions on December thirty-first, not a year later. So if you look at their disclosures, at least in Europe, we secured 60% of contracts. It was one in ten against Centric. We would win in ten percent of the time five years ago, now 60% of the time. Now, Prada, Burberry, they use the biggest PLM systems in existence, particularly in the luxury segment, and we have customers that are extremely satisfied with our products. So we're starting to grow in the U.S.
We're very well established in Europe, but we're starting in the US, and we have zero presence in Asia. But in the meantime, we only have one major customer, and that customer is losing steam for various reasons. Their technology has aged, and their sales methods can work short term but cannot establish a strong, long-standing relationship with customers. So we feel really good about the competition. Our number one problem is the macroeconomic environment. It's not the competition. Needless to say, that macroeconomic environment, particularly when it comes to equipment sold in Asia, Asian customers prefer cheaper solutions because if you're running out of cash, is it better to have a cutting system or no cutting system? This means that we may lose contracts to smaller, low-cost competitors, but not because of the technology. Our technology is much better.
Okay, this brings the Q&A session to an end. If you would like to talk some more, come and see us directly. Thank you so much for attending today's session, whether you're here in person or logged in online. Thank you.