Good morning. Thank you for standing by, and welcome to Pluxee First Half Fiscal 2025 Results Presentation. After the presentation, there will be an opportunity to ask questions by pressing star and one at any time. I advise you that this conference is being recorded today on Thursday, the 17th of April 2025. At this time, I would like to hand over the conference to Ms. Pauline Bireaud, Head of Investor Relations. Please go ahead, madam.
Good morning, everyone. Thank you for joining us today for Pluxee First Half Fiscal Year 2025 Results. My name is Pauline. I'm Head of Investor Relations, and we are very pleased to be here today with you for this presentation. We are joined with our CEO, Aurélien Sonet, and our CFO, Stéphane Lhopiteau. Here is our agenda for the call today. First, Aurélien will start with the highlights of the semester, and this will be followed by an in-depth analysis of the group key growth levers, which we felt was helpful at the midpoint of our three-year strategic plan. Stéphane will then walk you through our financial performance in detail before Aurélien comes back to discuss our outlook for the year. With that, I will hand over to Aurélien.
Thank you, Pauline. Good morning, everyone. I'm pleased to be with you today to share the achievements that Pluxee delivered in the first half fiscal 2025. Starting with our key highlights on the next slide. First, I'm pleased to share that the group is well on track with the deployment of its strategic growth plan, as shared at the time of the spinoff. We continue to successfully execute our roadmap and deliver on our key initiatives quarter after quarter, including M&A, where we are beginning to capture the benefits of our initial deals. The broad set of levers available across our markets allowed us to sustain profitable growth, illustrating the group's resilience in a volatile and uncertain environment. Second, I would like to highlight our strong commercial execution.
I'll come back later on the detailed KPIs, but let me emphasize that our teams on the ground have done a remarkable job both in retaining and signing new clients. This demonstrates the effectiveness of our commercial strategy and the relevance of our product offering, translating into market share gains in the countries where we operate. Turning to financial performance, we delivered another strong semester, starting with low double-digit total revenue organic growth. We also achieved remarkably strong recurring EBITDA margin expansion, while recurring free cash flow conversion remained above our average target. Based on the strong execution and performance achieved in the first semester, and while closely monitoring the macroeconomic environment, we upgraded our fiscal 2025 recurring EBITDA margin objectives while reconfirming our organic total revenue growth and recurring cash conversion fully objectives. I will come back on this later in the presentation.
Let's now focus on the key financials of the semester on slide six. Total revenue organic growth stood at +10.8% for the first half, in line with our low double-digit full-year objective. This performance comes on top of a high comparison base with +24% total revenue organic growth delivered in H1 2024. Recurring EBITDA margin reached 36.4% on an organic basis, expanding by +260 basis points at constant rate, so well above the +75 basis points objective set for the full year 2025. This translates into a 35.4% recurring EBITDA margin at current rates, representing an improvement of over +150 basis points. While float revenue growth continued to contribute positively, the expansion of the recurring operating EBITDA margin was a key driver of this improvement, partly supported by the fading impact of certain spinoff-related base effects.
Moving to recurring cash conversion rate, which stood at 76%, it remained again above our three-year average target, despite some base effects affecting the change in working capital that Stéphane will detail later. In short, we are delivering on all of our financial KPIs. This is particularly remarkable considering that our objectives were set in early 2024, at a time when we were certainly not anticipating the current macro and geopolitical environment and its impact on the corporate sector. Let's now turn to our commercial trajectory, which continued to show strong momentum in the first half. On the new client front, we signed an incremental EUR 800 million of annualized business volume over the semester, marking another period of strong performance, especially when compared to our EUR 1.3 billion annual target.
This highlights the relevance of our offering, the agility of our commercial teams, and the effectiveness of our go-to-market strategy deployed across each country. Moving on to net retention, which, as you remember, encompasses client loyalty, increase in average face value, portfolio growth, and cross-selling. I will go into more detail on these drivers in the next section, and I will just focus for now on the net retention rate, which reached 102% this semester. It excludes the one-off impact related to the Purchasing Power Program, which was launched in Belgium during the second half of the 2023 calendar for only a few months to sustain employees' purchasing power in the country. As part of our net retention, we delivered an additional circa EUR 600 million increase in face value during the semester, representing already more than 60% of our cumulative objective of EUR 3 billion for fiscal 2024 to 2026.
We are well on track to deliver on all our commercial objectives. I will now come back on our strong commitment to sustainability, illustrated by the multiple awards that the group has received over the semester. Starting with our environmental commitment, I'm pleased to share that after our first rating assessment, we received a B score from the Carbon Disclosure Project, materializing our efforts to reduce our environmental impact across all our operations. Continuing with our engagement towards sustainable business practices, we earned the highest sustainable IT rating in France, the Label Numérique Responsable, which highlights our focus on driving accessible, efficient, and secure IT and data management operations. Lastly, the group has been recognized with several awards across countries, underscoring our commitment to creating inclusive and engaging work environments. This includes the Great Place to Work labels in several countries such as Belgium, Romania, India, and Turkey.
All these awards reflect our determination to implement concrete initiatives that make Pluxee a sustainable player, actively engaged with all our stakeholders in every country where we operate. Following this high-level perspective on our first-half performance, we will now take a closer look at the structural levels activated by the group to support its growth trajectory. At Pluxee, our profitable growth ambition relies on a balanced and sustainable model, which has proven its resilience in the past. It is built on multiple levels, which I will outline in the following slides. As you remember, our top-line growth is fueled in two main ways. First, we rely on organic growth. Our strong value proposition to all stakeholders, and in particular to our clients and merchants, enables us to continue unlocking the full potential of the large, under-penetrated, and steadily expanding employee benefits and engagement market.
Second, we are committed to accelerating growth through M&A. Strategic acquisitions and partnerships are not only enhancing the group's momentum but also complementing organic growth by expanding our market reach and enhancing our product and tech capabilities. To generate growth, we can activate a number of key levers that drive first, business volume, which serves as a foundation for our revenue generation model, and second, our take-up rate. All this reinforces our balanced model, ensuring we remain well-positioned and agile in seizing opportunities in an ever-evolving market. Let's now dive deeper into our key growth levers in the next slide, starting with new client acquisitions. In H1 2025, we signed circa EUR 800 million of additional business volume through new client acquisitions. It puts us well on track to achieve our EUR 1.3 billion annual objective.
Second, the contribution from new client development is well distributed across regions, and this demonstrates the strength of our geographic footprint and the effectiveness of our global commercial strategy, which is adapted by our local teams to the unique dynamics of each market. Third, we are seeing a growing contribution from SME, representing now more than 30% of development business volume over the semester. Thanks to our tailored commercial strategy and simplified offering, we are well equipped to further unlock this significant market potential. Fourth, M&A is also a very compelling accelerator for new client acquisitions. The Santander exclusive partnership allows us to benefit from a much wider reach to offer our solutions to Brazilian companies, while the Cobee platform has been a game-changer in Spain.
This first pillar of growth is both robust and balanced, and we certainly feel encouraged by the sales pipeline ahead of us to continue building on this momentum. Let's now look at how we maximize the potential of our existing client portfolio. The KPI we are tracking here is the net retention rate, which allows us to measure the growth in business volume generated from existing clients. It is driven by several components. While not all of them are delivering at the same pace and can vary across countries, they collectively provide a solid foundation for growth. It is evidenced by our robust 102% net retention rate achieved in H1 fiscal year 2025 after adjusting for the one-off Purchasing Power Program in Belgium.
Let's take a closer look at each of the components of this net retention, starting with client loyalty, which has significantly improved as of end of H1 versus the previous years. This is a testament to the quality of our solutions, the value we bring to our clients, and the resilience of our business model. The second contributor is the further increase in average face value. It has consistently risen over the past years, with positive contribution from all regions. Remarkably, this growth has continued even as inflation has stabilized in several of our markets, reflecting the strength of our portfolio management led by our local sales teams. We still see significant growth potential ahead, as evidenced by our EUR 3 billion target for fiscal 2024 to 2026.
Last but not least, average face value serves as a highly effective natural hedge against inflation, which is important to keep in mind given the possible inflationary pressures expected in certain macro scenarios. Switching now to portfolio growth, which primarily refers to the number of employees benefiting from our services within our existing client base. Portfolio growth has been somewhat less significant during the first half, partly due to the uncertainty and cautious approach to hiring observed among corporates in certain countries. A notable example is Mexico, where uncertainty around U.S. tariffs has led some local businesses and international players to freeze hiring. The final contributor to net retention is cross-selling, which remains a significant driver of business volume growth, highlighting the effectiveness of our multi-benefit approach.
To convert our business volume growth into revenue growth, our key focus is on the take-up rate now that I'm going to discuss in more detail in the next slide. We remain constantly focused on delivering value to all our stakeholders. The KPI which reflects this constant focus is our take-up rate, meaning the ratio of operating revenue to business volume generated on our platform. It reached 4.8% for employee benefits in the first half of fiscal 2025, representing a 40 basis point increase from H1 fiscal 2023, which over the period was mainly driven by sustained client commission levels. This performance is underpinned by our ongoing effort to enhance our value proposition for our more than 500,000 client base and our more than 1.7 million merchant community.
I won't go into detail on all the initiatives that we launched in recent years, but I do want to highlight the importance of our multi-benefit approach. Whether it's meal, gift, mobility, or wellness, our suite of benefits is designed to support employees in every aspect of their daily lives. Aggressively rolled out across an increasing number of countries, multi-benefit allows us to support our clients with a comprehensive offering addressing the full spectrum of their employee needs. It is also a key driver of increased loyalty for our clients. On the other hand, we are constantly strengthening our value proposition for merchants by paying close attention to their daily experience and interactions with the group.
In that respect, we've been focused on rolling out best-in-class digital tools such as our merchant app, enhancing onboarding and support processes through solutions like our self-affiliation platform, and developing tailored value-added services to better meet their daily needs. Finally, let me conclude this section by exploring how M&A is helping us accelerate growth. Indeed, our final growth lever is M&A, which, as you know, plays a central role in our value creation model. Over the last months, we have started capturing the first benefits of the deals recently closed, demonstrating our ability to successfully execute value-accurate transactions. Let me highlight the type of opportunities that we've been targeting, focusing on three key strategic themes. First, gaining market share. Second, expanding our product portfolio. Third, enhancing our tech capabilities.
The Santander partnership has significantly boosted our distribution capabilities in Brazil, creating a win-win model that delivers value for both partners. There may also be opportunities down the road to expand our offering, and we will share more on that in due course. The acquisition of Cobee was driven by a combination of market share gains and product and tech enhancements. This powerful multi-benefit platform is completely transforming our growth profile in Spain, positioning us as the number one player in the market. Finally, the acquisition of Benefício Fácil in Brazil enables us to strengthen our multi-benefit approach in the country by bringing a key partner in employee mobility benefits into our ecosystem. This will drive additional revenue through cross-selling. Step by step, we are strengthening our track record in sourcing and acquiring strategic targets, while demonstrating our ability to successfully integrate them and generate growth synergies.
While market volatility tends to delay transactions, we remain encouraged by the pipeline ahead of us. I will now hand over to Stéphane to go through the detailed review of our financial performance.
Thank you, Aurélien. Good morning, everyone. It is a pleasure to be with you today to present our financial performance for the first half of our fiscal year 2025. Let's start this financial review with our total business volume issued on slide number 16. Total business volumes issued, also called BVI, reached EUR 13.1 billion in H1 2025, reflecting a +9.3% organic growth, including a +9.4% organic growth in Q2. Employee Benefits BVI, which represented 73% of total business volume issued, reached EUR 9.6 billion, showing a sustained organic growth of +8.4%.
The group faced a high base effect with H1 2024, partly due to a one-off employee benefit program in Belgium, the Purchasing Power Program launched at the end of calendar year 2023. Excluding this program, employee benefits BVI organic growth would have reached +10.1% in H1 2025, demonstrating solid dynamics, especially in Latin America and the rest of the world. Concerning other products and services, BVI were back to growth in H1 2025. This improved trajectory was partly due to a temporary phasing effect in a large public benefit contract, which fully offset the residual impact of the discontinuation of a contract in Chile until December 24. Keeping in mind Aurélien's presentation on our key growth levers, let's now look at how the growth in employee benefits BVI was fueled over the semester on page number 17.
As we just saw it on the previous slide, employee benefits BVI grew from EUR 9.2 billion to EUR 9.6 billion, an increase of approximately EUR 400 million, including the impact of the Purchasing Power Program recognized last year in cross-selling. Solid dynamics was driven by a combination of factors. First, contribution from net retention stood at EUR 200 million, fueled by a combined increase in client loyalty and face value across regions. It also included a constrained portfolio growth due to the impact of the macroeconomic environment in specific sectors and countries, as previously mentioned by Aurélien. Second, new client gains contributed up to EUR 800 million over the semester, illustrating the group's solid development trend, especially among SMEs.
Third, the BVI bridge disclosed on the page also included a positive scope effect of EUR 300 million resulting from the integration of the recently closed deals, of which the exclusive partnership with Santander in Brazil and Cobee in Spain. The impact of currencies evolution contributed negatively over the semester, most of it being related to Latin America. The sustainable growth experienced in BVI over the semester has been, of course, a key contributor to revenue growth for both operating and float revenue, as disclosed on slide number 18. Total revenues reached EUR 635 million in H1 2025, up plus 10.8% organically, on track with the low double-digit organic revenue growth objective for the full year. On a reported basis, total revenues were up plus 7.2% year-on-year, including a plus 2.8% scope effect, partly offsetting a minus 6.5% currency impact.
Operating revenue, which represented 87% of total revenues, reached EUR 552 million in H1 2025, up +10.1% organically, or +6.6% on a reported basis. This growth was primarily driven by the Employee Benefits line of service and by a progressive return to revenue growth for other products and services. Focusing on Q2 performance, operating revenue amounted to EUR 303 million, up +8.4% organically. The robust underlying business trends were partially compensated by a significant base effect in Q2 2024 due to non-recurring programs, notably in Belgium and Romania, along with the residual impact of the discontinuation of the public benefit contract in Chile. Flipping out the Belgium Purchasing Power Program and the discontinued Chilean contract, operating revenue growth would have reached +10% in Q2 2025.
Turning now to float revenue, it increased by +16.2% organically year-on-year, reaching EUR 83 million in H1 2025, including EUR 43 million in Q2 2025, up +11.9% organically. I will come back on float revenue growth drivers in more detail later in the presentation, but before doing so, let's focus on the solid organic growth in operating revenue over the semester that has been driven by your two lines of services as presented on page number 19. Employee Benefits operating revenue reached EUR 464 million in H1 2025, up +11.8% organically, or +7.7% on a reported basis, including a positive +3.2% scope effect, partly compensating a -7.4% currency effect. Employee Benefits represented approximately 84% of total operating revenue over the semester.
This strong performance was fueled by the increasing business volumes issued that we saw earlier in the presentation, particularly in Latin America and the rest of the world, as expected, along with a steady rise in the average take-up rate, up plus 13 basis points year-on-year, to 4.8% in H1 2025. This take-up rate improvement highlights the group's strong commercial focus and its continuously enhanced value proposition to both clients and merchants. Focusing now on Q2 2025, the Employee Benefits service line generated operating revenue of EUR 252 million, up + 9.3% organically, confirming the continued momentum despite a high comparison basis year-on-year, notably in Continental Europe. The other line of service, other products and services, generated EUR 88 million in operating revenue, up + 1.3% organically in H1 2025 and + 4.3% in Q2.
Therefore, we are pleased that other products and services revenues were back to growth over the semester, fueled by solid trends in both reward and recognition solution and public benefit programs, despite the remaining impact of the contract discontinuation in Chile. Please keep in mind that a portion of this contract has now been regained from March 25 onwards. While both service lines supported operating revenue growth this semester, the contribution by geography was more weighted toward Latin America and the rest of the world, as expected. Switching to slide number 20 to walk you through the regional trends in more detail. Continental Europe, top right, reached EUR 248 million in H1 2025, up +5% organically, or +6.7% reported as anticipated. It represented 45% of total group operating revenue over the semester.
The H1 2025 growth in the region was primarily driven by Southern Europe, particularly in Spain, where the group started benefiting from growth synergies following the Cobee acquisition, in addition to the strong performance of Pluxee Spain. On the other hand, the exceptionally strong performance delivered in Q2 2024 in the region, when operating revenue increased by +19.5% organically at that time, created a significant base effect. This was partly due to one-off programs, as already mentioned, in Belgium as well as in Romania. Latin America reached EUR 204 million in H1 2025, up +12.3% organically, or +2.5% on a reported basis, representing 27% of total operating revenue of the group. The robust organic performance delivered over the semester reflected strong dynamics in business volumes in the region. It ramped up sequentially over the semester as the impact of the discontinued public benefit contract in Chile faded away.
Despite a positive scope effect with the Santander deal, reported growth included a negative currency impact over the semester, mainly related to the group's operation in Brazil and to a lesser extent in Mexico. In the rest of the world, operating revenue amounted to EUR 99 million in H1 2025, up plus 18.5% organically, representing plus 15.7% on a reported basis, including a negative currency impact mostly related to the evolution of the Turkish lira. It is worth noting that the group continued to take advantage of the hyperinflationary environment in Turkey, driving further increases in face value across its client portfolio, while expanding also its presence in the meal benefit segments through new clients' acquisition. After operating revenue, we will now see how float revenue also contributed to growth over the semester on page number 21.
Float revenue rose to EUR 83 million in H1 2025, up +16.2% organically year-on-year, including EUR 43 million in Q2, up +11.9% organically. This sustained growth over the semester was driven by the float base expansion underpinned by a continuous increase in BVI, particularly in Latin America and the rest of the world. The group also benefited from rising interest rates in a few countries, such as Brazil and Turkey, while a downward trend was observed in Continental Europe, as expected. In order to mitigate interest rate fluctuations and protect float revenue in the concerned countries, the group continued to opt for longer maturity and fixed rates tailored to each country's financial market condition. Based on the current forward curves, we now anticipate float revenue to grow by mid to high single digit in fiscal 2025.
After business volumes and revenues, we will see now how revenue growth has fueled recurring EBITDA growth and the related margin improvement over the semester on slide number 22. We are very pleased with the group's recurring EBITDA increase over the first semester. It stood at EUR 225 million in H1 2025, increasing organically by +22.5% or +12.0% reported year-on-year. Recurring EBITDA margin stood at 36.4% on an organic basis, growing by +260 basis points organically and putting us on track to significantly exceed our recurring EBITDA margin objective for the full year in 2025. On a reported basis, this margin reached 35.4% in H1 2025, growing by +151 basis points versus H124.
All regions contributed to the strong margin expansion, which relied on ongoing operational improvement, combining further operating leverage and efficiency gains, as well as on the conclusion of some spin-off non-recurring effects that impacted recurring EBITDA margin in H1 2024. The margin also benefited in H1 2025 from the further float revenue positive contribution, notably in Latin America and the rest of the world. This strong growth in recurring EBITDA, along with additional normalization effects on the other lines of the P&L, contributed positively to the full income statement all the way down to net profit, as disclosed on page 23. Below EBITDA, recurring operating profit reached EUR 171 million, representing a plus 6.4% increase on a reported basis, after accounting for minus EUR 54 million in depreciation and amortization charges.
Those D&A charges rose by +34%, mainly as a result of the recently closed M&A transaction, notably the exclusive distribution agreement with Santander in Brazil. Other operating income and expenses, also called OI, amounted to -EUR 13 million in H1 2025, mainly reflecting some one-off residual charges related to the finalization of the IT carve-out for -EUR 9 million and some costs related to business combination for -EUR 2 million. This is a significant improvement versus the -EUR 41 million recognized in H1 2024, which reflected a portion of last year's spin-off and rebranding costs. All of this led to a +31.9% year-on-year surge in EBIT, reaching EUR 158 million in H1 2025. Financial income and expenses stood at -EUR 3 million compared to -EUR 10 million in H1 2024, reflecting a positive swing of +EUR 7 million, primarily due to the group's one-off refinancing cost last year.
Income tax expense was minus EUR 48 million, with the effective tax rate progressively normalizing at 31% from 38% in H1 2024 because of last year's spin-off costs. Overall, in the end, net profit reached EUR 106 million, up plus 55.5% year-on-year, fueled by a significant increase in total revenues, a continued expansion of the recurring EBITDA margin, and a gradual normalization of other operating financial and tax expenses. Excluding OIE, adjusted net profit group share amounted to EUR 107 million, growing up plus 10.5% reported, while Adjusted EPS group share stood at EUR 0.73, up plus 11.4%. After the income statement, let's now take a look at how operational and financial performance also translated into strong cash flow generation over the semester on slide number 24.
Recurring free cash flows stood at EUR 171 million in H1 2025 versus EUR 228 million reported in H1 2024, corresponding to a comparable EUR 180 million when stripping out the positive last-year impact from the regulatory change in Brazil. The strong recurring free cash flow generation was driven over the semester by a significant increase in recurring EBITDA and by a positive contribution from the change in working capital, while consistently executing the group's investment strategy. Indeed, capital expenditures amounted to EUR 43 million in H1 2025, representing 6.7% of total revenues, temporarily lower due to the finalization of the IT carve-out during the semester. Additionally, operational investments have been progressively shifting towards a more opaque categorization, particularly in areas such as cloud migration, IT service management, and process automation. Change in working capital stood at EUR 38 million in H1 2025 compared to EUR 218 million in H1 2024.
This change reflects some one-off effects, including a positive plus EUR 48 million impact from the regulatory change in Brazil of H1 2024 and some working cap swings in H1 2025 versus H1 2024 due to large benefit programs in Belgium and Romania for a total of EUR 70 million. As a result, recurring cash conversion rate came in at 76% in H1 2025, remaining again above our average objective for fiscal 2024 to 2026. This strong free cash flow generation sustained the group's net financial position, offsetting the impact of acquisition, disposal, and dividend payment, as illustrated on page number 25. Net financial cash position as of end of February 2025 stood at EUR 1,045 million compared to EUR 1,054 million as of end of August 2024, remaining overall stable.
This mainly reflected the positive inflow from the strong recurring free cash flow of EUR 171 million, along with a positive currency impact due to the appreciation of the Brazilian real and the Mexican peso in between the last August and February closing dates. This positive inflow nearly fully offset both the cash-out paid and short-term debt recorded for the Cobee acquisition and the distribution of dividends to the group shareholders and non-controlling interest. Pluxee's strong financial cash position and cash generation is also reflected in the BB B+ rating with a stable outlook confirmed by S&P in the course of the semester. Before handing over back to Aurélien, I will conclude this presentation of our financial performance in H1 2025 with a focus on our capital structure and financial profile on slide number 26.
The group's net cash position of EUR 1,045 million as of end of H1 2025 was made of minus EUR 1.3 billion of gross debt, plus EUR 1.5 billion of cash and cash equivalent, and EUR 828 million of current financial assets. It excluded EUR 975 million of restricted cash, stable year-on-year. As of end of H1 2025, gross debt mainly consisted of long-term bonds. The group's liquidity is further strengthened by an undrawn revolving credit facility of EUR 650 million and by a EUR 400 million unused commercial paper program recently announced in March 2025. On the assets side, cash allocation between cash and cash equivalents and current financial assets reflects the group's flexible investment strategy tailored to each country's financial market conditions. This efficient cash management and liquidity strategies are designed to support the group's operation and long-term growth, reflecting our commitment to maintaining financial stability and diversifying funding sources.
I will now hand it back to Aurélien to conclude the presentation with our outlook.
Thank you, Stéphane. Let me wrap up this presentation with our outlook. In the current uncertain environment, we continue to benefit from the resilience of our model, namely in a nutshell, the nature of our solutions, helping our clients meet the essential daily needs of their employees in both large and small companies, and our balanced growth engine supported by multiple levers across a diversified geographic footprint. It includes a natural hedge against inflation thanks to face value in a macro and trade context where inflation could reemerge. In today's context, I would also stress that the group has no direct exposure to the contemplated tariff changes because we do not export or import any goods, and we rely on local in-country businesses.
As a result, and on the back of a strong first half of the year, and while closely monitoring the current environment, we are upgrading our fiscal 2025 recurring EBITDA margin objective, and we remain committed to deliver on all our other full-year objectives, which implies first, low double-digit total revenue organic growth, and it will be predominantly supported by operating revenue growth, while float revenue should land in the mid to high single-digit organic growth based on the H1 performance and the latest forward curve, triggered, as discussed, plus 150 basis points recurring EBITDA margin expansion at constant rates compared to plus 75 basis points initially, and this is backed by the strong margin expansion in the first half. Third, above 75% recurring cash conversion on average over fiscal 2024 to 2026. In addition, we keep our fiscal 2026 financial objectives unchanged.
All these objectives take into account the growth synergies expected from the deployment of our partnership with Santander and the integration of Cobee. To conclude, I would say that from the spin-off, we have envisioned Pluxee as an independent company that would be stronger, more agile, and better positioned to generate creative value for all its stakeholders. That vision is now translating into tangible results quarter after quarter, and we remain fully committed to continue this trajectory even in a challenging environment. We are now pleased with Stéphane to answer your questions.
Thank you. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions.
In the interest of time, we ask that you please limit yourself to two questions per caller. The first question is from Ed Young, Morgan Stanley. Please go ahead.
Good morning. First of all, I wanted to ask about the macroeconomic situation. You've said you remain vigilant. Obviously, you've upgraded your guidance in the face of it, which is perhaps a sign of confidence. Your main peer said they are already seeing signs of job cuts within the portfolio as they see it. Is that a comment and a trend that you recognize? What are you looking for in the business as signs of a macroeconomic business within your portfolio? Second of all, could you elaborate a bit more on where the margin gains have come from versus your initial expectations, i.e., the drivers behind the guidance upgrade?
Within that, perhaps, if you could specify what effects impact you're expecting from a margin perspective on top of the organic recurring EBITDA margin expansion that you're guiding to. Thank you.
Maybe Stéphane, you want to start with the second question from Ed regarding the effects impact? On the ingredient of the margin improvement.
Okay. The 260 basis point improvement in terms of recurring EBITDA margin, organic recurring EBITDA margin in the first half came out of three main impacts, three main favorable impacts. The first one, I don't know if you remember it, but last year in H1 2024, we had to support some kind of extra cost related to the spin-off process. At the time where we were still part of Sodexo, we were facing the ramp-up of our standalone cost.
Plus, as still a member of the Sodexo group, we had to support the Sodexo management fees. This was a kind of overcost that we had in the last year, and we did not have in this year. We had a push from the float revenue, and this is a push that was not expected as strong as this when we initially guided for the year. What happened in terms of float revenue is that we have been able to benefit from a higher increase in interest rates in Latin America and the rest of the world versus the initial consensus, the initial expectation. In Europe, we also benefited from lower or later decreases in interest rates versus the initial expectation.
I don't know if you remember, but a few months ago, we were all waiting, expecting some cuts from the ECB, and these cuts came, but they came later. This was both a push, part of the 260 basis point improvement, but also a difference between our initial guidance because we didn't have this in mind. The biggest part of this 260 basis point improvement is the efficiency gain that we have been able all together, and all the Pluxee teams have been fully focused on delivering scale effect, operational efficiency. Yes, we did slightly better compared to what we had initially in mind. This is very good news. We are on track to improve our profitability. Okay. Sorry, the last part of your question was regarding effects. The effects effect was a little bit higher in this first half.
We do not guide on effects effect because nobody knows, but it was a little bit higher compared to what we had in mind based on the Bloomberg consensus, the forward curves at the beginning of the semester. This is fully related to what happened in Brazil, even though we saw at the very end of the semester an improvement in the Brazilian real. With what is happening today, it is really difficult to have a clear view on what is going to happen in the next semester. This is another reason why we only guide on organic numbers at constant rates because nobody knows. It is true that if the Brazilian real was to remain in the second half of the year as it is today, we might face some quite higher currency transition unfavorable effect.
We do not know, and we will see what is going to happen based on the macroeconomic environment in the next months.
Talking about the macroeconomic environment and the impact on our portfolio, it is fair to say that we have observed over the semester some adverse impacts, notably due to this uncertainty, but just in a few countries or in a few sectors. This has affected the employment, indeed. It could be hiring freeze or a job cut. We touched this point when we discussed about the portfolio growth performance.
It is also worth noting that regardless of the current environment, some countries, and even in Europe, have continued to deliver strong and sustained growth, particularly in the south of Europe, such as Spain, where we have started to benefit from not only the growth synergies from the Cobee acquisition, but also benefiting from a strong performance of Pluxee Spain as well. If we step back and we look at the overall, let's say, uncertain environment, why are we confident? Because as we said, not only do we benefit from a diversified footprint, both geographically, we are in 28 countries, but also given the nature of our business with more than 500,000 clients, public, private, small, mid, large companies or organizations. Also, as we explained during the presentation, our business model is, by essence, resilient with multiple growth drivers.
We described them during the presentation. We keep on, by the way, working on new sources of revenue, trying to take advantage of the data and the artificial intelligence. Of course, we said it as well. We benefit from a natural edge against inflations through the increase of face value, but also the currency risk, I mean, through the float revenue. Last, and definitely not the least, our solutions are an essential engagement and motivation tools for our organization, for our clients. It is even truer during this period of time because we are helping them to address the daily needs of their employees. This is why we are confident as of today.
Thank you very much.
Thank you.
The next question is from Pravin Gondale, Barclays. Please go ahead. Hi. Good morning. Thanks for taking my questions.
Firstly, on the new business development, can you please share how that 800 million new business development splits between Q1 and Q2, and what was the volume contribution from the Santander deal in Q2 within that? Secondly, on the float revenue, can you share some color on current average maturities of your float investments and how that has developed over the last 24 months, and if there is any further headroom for extension of those maturities? Thank you.
Thank you, Pravin. Regarding the new bids, we saw some trends between Q1 and Q2. I shared this during the Q1 announcement. We see a very strong pipeline, and we keep on enriching this development pipeline so the trends remain positive. I have heard from a country to another, what we see is that the pace of the decision-making process from our clients can take more time.
This is what we currently see. Regarding the float revenue, Stéphane, maybe you want to answer?
Yes, Pravin. On your question about the maturity of our cash investments, your question was about the current situation and how it has changed over the last 24 months. The current situation, overall, the remaining maturity of our cash investment is close to six months. Twenty-four months ago, it was close to three months. I am talking about the residual maturity. In terms of maturity at the time when we invest, it used to be, 24 months ago, close to six months, and now it is close to 10 months. We have extended overall the maturity of our investment in the last 24 months quite significantly, but monitoring it very tightly on a country-by-country basis.
Because as we explained it in the presentation, we really need to tailor our investment to each financial market situation in every country. If you think about what happened in Brazil, the strong rise in the salary rate in the last months was not expected a few months ago. We absolutely need to remanage our lives. On a country-by-country basis, we are balancing the maturity of our investment. In Continental Europe, we have significantly increased these maturities in the last months. We did it a lot in fiscal year 2024. In other countries, we always have to be careful. This is really a very specific monitoring on a country-by-country basis.
Thank you very much. That's really helpful.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Justin Forsythe, UBS.
Please go ahead. Awesome. Thank you so much for having me here. A couple of questions on my end. Question number one, maybe you could just parse through your percentage mix of revenues or business volume in the employee benefit side between government contracts and private contracts, and whether you think either of those might be more resilient in a potential recessionary environment. Perhaps government jobs in Brazil or Europe are a little bit safer in this scenario, but maybe you could just walk us through that. Secondarily, I caught actually in the footnotes the float guidance that you refreshed. Because I recall, I think historically, you had talked about for this year a slight increase maybe on a year-over-year basis. Just directionally, it seems like maybe that's, call it, EUR 9-11 million, EUR 12 million of incremental float revenue.
Now, if I put that against the guidance increase you had on EBITDA margin, it seems like it is basically the entirety of the upgrade is tied to float in EBITDA margin. I just wanted to confirm that. Are you also guiding to operating EBITDA margin expansion upgrade as well? Thank you.
Okay. I am just going to take the second question on the float revenue and then the related impact on guidance. You will take the other one. Justin, regarding float revenue, we started the year by guiding on slight increase. Now we are upgrading. This is not really a target, but this is some color that we share as part of our global objective, which is our guidance. We only guide on total revenue growth, but we share some colors.
The slight increase at the beginning of the year is now turning to a mid to high single-digit increase on float. If you do the math with the 16.2% that we delivered in H1, this means that overall in H2, this is going to be 0% growth so that you can make the average mid to high single-digit for the full year. We do not expect any push from the float in H2. In H2, it is going to be the opposite. The float revenue are not going to grow. This means that the proportion of float revenue within total revenue is going to be reduced. This means that although we had some push from the float in H1 to support the improvement in the margin, and I am moving slowly to the second part of your question regarding the margin guidance.
In H1, we had a push from the float revenue. In H2, we're going to face a drag from the float revenue in terms of margin improvement because the portion of float within total revenue is going to be lower. If you look at the improvement in terms of efficiency, you could also give a look at the operating margin, this recurring operating EBITDA margin, and compare to the 260 basis points that we have in the recurring EBITDA margin, the operating one showed in H1 a 235 basis point improvement.
We are truly delivering, leaving aside, and you're leading with the question we had from Ed on this, leaving aside the push from the float, which was only 25 basis points in H1. When you make the difference between the 260 basis point improvement for the full recurring EBITDA margin and the 235 basis point improvement for the operating EBITDA margin, we had only a small push from the float, meaning that most of our improvement in the EBITDA margin came from operational items, operational improvement in H1, and it's going to be the same in H2. In H2, the improvement of the margin is going to be lower because we won't have the push from the float.
It's going to be a drag from the float, and we won't have this one-off effect that I recalled when answering to Ed, which is this one-off cost that we had the year before. I don't know if this is clear enough. This is answering your question, but in the end, most of the improvement in recurring EBITDA margin come from operational efficiencies, even though there was a small push from float in H1. In H2, it's going to be a drag. We'll have to upgrade by strong operational efficiency.
Regarding your first question, Justin, the difference of the take-up rate between the public and private, actually, there is not really a difference of take-up rate. The difference in the take-up rate could be more between the very small clients and large organizations.
Regarding the behavior of our portfolio in an environment that would be, I mean, a recessionary environment, it's going to be really a sector-by-sector, country-by-country typology of activity by activity. It's not possible for me to answer this question precisely. To give you or to remind you, and we shared this during the capital market day, for a country like Brazil, 20% at least of our business volume comes from public sector. Again, if you look back at this slide of the deck, I mean, we shared with you how much diversified our current portfolio is. We took Brazil as a good illustration of what we are having across geographies.
Got it. No, that's really helpful. I guess you hit the point there, that last point, which was 20% mix in Brazil on government contracts.
That makes sense. I mean, the overexposure to, or I guess, growth being overexposed to small businesses, do you view that as a risk? Maybe there is a little bit more risk around small businesses that are having their supply chains impacted, less ability to pass through pricing, etc., or not really contemplating that in the go-forward?
Look, what I can tell you, Justin, is that for the moment, we do not see any specific trend that would allow me to confirm what you are saying.
Okay. Great. Thank you very much. Appreciate it.
The next question is from Pavan Daswani, at Citigroup. Please go ahead.
Thanks for taking my questions. I have got a couple as well. Maybe firstly, coming back to your comments on the macro, you talked about seeing some kind of pockets of hiring freeze in the job cuts. What about new wins?
Are you seeing any impact to sales cycles or RFPs? Secondly, on take-up rates, can you help us understand what drove the increases so far this year? Also, what does your guidance for 2025 and 2026 assume about take-up rates versus BVI as key drivers?
Thank you, Pavan. I will take the first question, and Stéphane will answer the second. Regarding what we see on the market at the moment, we continue to see RFP from large organizations. We continue to see small companies willing to enroll into our program as well. I mentioned it. The size of our pipeline is significant. It has never been as big as it is today. Again, it's fair to say that the pace for our clients or prospects to make a decision is longer than what it was one year back.
There is a bit of a lag effect. On the opposite side, I mean, it has also a very positive impact on the retention, the level of retention of our clients' portfolio as well. It is a combined dynamic. Again, we have not seen so far a massive change in the behavior of our clients.
Regarding the take-up rates, to part in your question, what we have delivered so far and what might happen going forward. In terms of delivery, and Aurélien explained it in the presentation, I think it makes more sense looking at the evolution of the take-up rate over the long term. The 40 basis point improvement that Aurélien recalled is most of it, not to say all of it, was related to some improvement in the client commission in the last year.
This is really something that we've been able to deliver. We had some push as well on this, thanks to the change in regulation in some countries like Brazil, where negative client commission were forbidden by law. Overall, when we compare, because I do not want to avoid your question specifically on the first half of this year, this is the same trend, and there are also some mixed effects. When you compare just one half year to the other half year, there are some mixed effects which also help to increase this take-up rate.
Because what we said at the end of fiscal year 2024 and what we are still saying today is that, of course, we have a target to go on improving all the value we deliver to clients and merchants, but not to support higher take-up rate, but to fully substantiate this take-up rate. Our strategy is not to increase the take-up rate going forward, but, of course, to maintain it as it is, and we consider it as a fair take-up rate so far. Going forward, we will go on increasing the value we deliver to clients and merchants in order to justify this fair take-up rate.
Thank you.
Once again, if you wish to ask a question, please press star and one on your telephone. The next question is from Hannes Leitner, Jefferies. Please go ahead.
Yes. Thanks for letting me on.
Yeah, I got also two questions. When we drill down a little bit into the Italian commission cap and the conversation you have with companies, we know you are not so exposed to the meal voucher directly, but more employee benefits. Now, given the common knowledge is that actually the rebates get reduced to corporates, how do you see your negotiation around employee benefits outside the meal voucher? Is there any cuts expected or any tough conversation? That's the first question. The second one is on Turkey. You called out the initiative around hyperinflation and face value increase. Maybe you can just stop there, double-click on it, and give us a little bit more information. Thank you.
Thank you. Thank you, Hannes. Regarding the situation in Italy, you said it.
I mean, we are right in the middle of the client renegotiation campaign, and the team is pretty confident regarding the outcome. Have we seen, have we observed any impact on the other employee benefits? The answer is no so far. I mean, we did not see any correlation between this renegotiation campaign and how much they could grant in terms of additional employee benefits.
Regarding your question on the connection between this hyperinflation and face value in Turkey, this is making me think that maybe there was some confusion in the way I introduced the matter during the presentation. In Turkey, basically, let's forget hyperinflation, which is more an accounting matter. There is strong inflation. There is right now very strong inflation in the country, as we all know.
Of course, this strong inflation environment is for us to push for all ourselves who can go to the client and propose some additional increases in face value. What we are saying is that our business is resilient to inflation situations because in such situations, we are able to place with our clients some additional face value increases. In terms of hyperinflation recording or accounting in our books, I think it's important to remember that the organic growth that we calculate is without the application of the hyperinflationary indexes that we have in the country. We calculate the organic growth without taking into account this potential push from hyperinflation. For our numbers at current rates, of course, we have to record it because this is the accounting standard. Sorry about that, because maybe there was some confusion.
We should not have spoken about an inflationary environment, but a high inflation environment, hyperinflation being just, again, an accounting standard matter.
Understood that. When you have those face value conversations, is this now a particular driver and impacting the overall growth? Because on one side, you have the currency effect, which you adjust away, but then you still have the face value increase. Can you maybe express that as a?
Absolutely. It is part of the organic growth. There are no automatic increases in face value due to inflation. This is up to our salespeople to go to the client and translate this inflation environment into face value increases. Yes, this is part of our organic growth.
Thank you, Hannes. Thank you, everyone, for your questions. Thank you for your attention and interest in Pluxee.
If I had to wrap up what we discussed, my three takeaways would be that, first, we continue to deliver strong performance in H1, both on top line and margin extension. Second, we are reconfirming all our objectives and upgrading our EBITDA margin target for fiscal 2025. Lastly, we have again demonstrated through our business and financial performance the strength and the resilience of our business model, making us confident in our ability to continue to create value over the long term. Looking forward to continuing our discussion in the coming weeks. We, Stéphane and Pauline, wish you a very good day. Thank you very much.
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