Good morning. Welcome to Quadient Capital Markets Day, Elevate to 2030. I would like to thank all of you being present in the room, as well as those of you listening from the webcast. A quick word on logistics. We have prepared quite a long presentation for you this morning. You have the, the agenda on the slide. We're going to cut it in two parts. We will have the introduction and the first three chapters before heading into a 10-minute coffee break. Then we will have the rest of the presentation, and we will have a Q&A session. So we'll keep the question for the end. We'll take questions from the room, as well as, question, written question from the web. Your speakers for today, most of you already know Geoffrey Godet, Quadient CEO, and Laurent du Passage, Quadient CFO.
But today, you'll have the pleasure to hear from Petra Wolf, our Chief Marketing Officer, from Brandon Batt, our Chief People and Transformation Officer, as well as from our three solution leaders. So Chris Hartigan for Digital, which is a new name for ICA, for Intelligent Communication Automation. From Alain Fairise, our Chief Solution Officer for Mail, and Benoît Berson for the Lockers. I hope you enjoy the presentation. Before I leave the floor to Geoffrey, I would like to introduce you to Quadient, Elevate to 2030. Thank you.
Today's business challenges demand more than just technical solutions. They require forward thinkers who understand the hurdles of modern business environments and prepare you to leap into the future with confidence and purpose. Leaders across industries face growing costs and challenges trying to run their business efficiently. They must meet customer demand and regulatory requirements, manage complex data sets, drive operational efficiencies, and improve cash flow, all while preparing for the future and new opportunities. One question remains: how do you not just adapt, but thrive? In a world driven by digital connections, over 350,000 businesses of all sizes around the globe rely on Quadient to design and deliver billions of effective and personalized customer interactions every day across digital and physical channels. We don't just automate processes, we elevate customer experiences, designed to seamlessly integrate with your existing systems and applications.
Our solutions create the most secure, reliable, sustainable, and advanced processes to support your growth ambitions and your success. Beyond technology, we enable a future where every connection is meaningful and every touch point exceptional. We are epic. Together, we invest in our people, in our technology, and in the future. Every business decision we make is guided by our commitment to service excellence and sustainable growth. We're building the world's most trusted connections between businesses, their data, and their customers. Quadient, because connections matter.
Thank you, Catherine, for the introduction. Good morning, everyone. Five years ago, after I joined Quadient, we embarked into a first strategic plan, aiming at profoundly changing our company and setting it onto a sustainable growth trajectory. With the full year 2023 results, we successfully closed the plan earlier this year, with the company now focused on leveraging its existing assets and growing a solid recurring business model. Today, I'm pleased to introduce you Quadient new strategic plan, Elevate to 2030. So you're gonna ask me, why 2030? Because we are confident to project ourself for a longer period of time than just two or three years. We have developed a recurring business model with yearly contract terms, and sometimes even longer than five-year terms at times with our customers.
We also have developed very sticky solutions with customers that we keep for even a longer period of time, so it was only natural to get to 2030. We choose to share our expectation for the next seven years with you today. Now, why Elevate? We believe the decision taken in the past few years have set Quadient on a long-term, sustainable, profitable, growing trajectory. Our goals are to accelerate the trend and to propel Quadient as the undisputed leader in intelligent automation. How do we plan to do this? First, we focus on our customers, providing them with a greater value proposition, and it's gonna be powered by our innovative tech platform, which we'll discover throughout the presentation today with our solution leaders. Second, we drive higher recurring revenue through more cross-sellings, higher customer penetration, and market share gains.
At Quadient, ESG is just not words for us. We've been an active player for many years in this field to drive change. We've been designing, for example, our application to meet very stringent environmental standards, and we obviously intend to continue to do so and to raise the bar in terms of sustainability in the coming years. Finally, all this translate into a stronger investment proposition, resulting in rising recurring revenue and also rising profitability, with an accelerating trend, thanks to the favorable business mix change in the coming years.... So if we step back a little bit from a macro perspective, we see four major trends that are essential drivers for our modern world, for all of us today. We believe that companies of all size face the critical needs to either embrace this change or risk disappearing.
Now, at Quadient, we see these market drivers as shaping the business world of tomorrow, and at the same time, these trends create exciting opportunities, right, for organization like Quadient that we could embrace, but also for all of our customers. We obviously intend to help them face those challenges. We believe at Quadient we're strategically positioned at the junction of these four major trends, and so naturally, consequently, our vision is to power the world's most trusted connections, and I insist, between businesses, their data, and their customers. So how are we gonna achieve this vision? Very simply, to support businesses in their digital transformation and their growth journey, unlocking both operational efficiency with reliable, secure, and sustainable automation process. This is the simple, yet powerful, mission statement of Quadient. How does Quadient is gonna turn words into action?
More than just words on a slide, Quadient has refined over the recent years the platform it offers to its customers, and it's now an intelligent automation platform, and it addresses the pain point naturally coming from those four market drivers. The Quadient platform provides multiple benefits to answer those customer needs. We'll get to that today in the presentation. But our platform main value proposition are the following today: Not only do we accelerate digital transformation for businesses of all size, but we do it through an AI-powered automation platform, allowing the processing of large and complex quantities of data. Third, we do that by respecting the rules, strict rules and regulation, and we wanna do that in a sustainable way.
The last point, the fourth one, finally, is that our intelligent automation platform not only provides a differentiated customer or digital customer experience, but will also operate, as you know, in the physical world. This means that we automate the exchange and delivery of both physical mail and goods through the parcels. By doing so, we wanna reduce the CO2 emissions significantly, naturally, and we provide extended benefit, consequently, for the environment. So with Quadient intelligent platform now, we have a unique launchpad to Elevate to 2030. In terms of execution, we're quite confident in our ability to execute successfully, as we have been doing so for more than 100 years, not everybody can say that, which I believe speaks volumes of the proven capacity of Quadient to adapt and be agile over time, which is super important nowadays. We talk about a technical platform.
We have obviously inherited in that platform all the benefit from this experience, and also, most importantly, today, we're leveraging AI in the development of this platform in all aspect of what we deliver and everything we do for the, for the platform. We'll give you quite a few example today on how AI is transforming our platform for the benefit of our customers. In term of proven scalability, our platforms are already is used by hundreds of thousands of customers daily, and I would say highly satisfied customers, and is already powering billions, and I insist, billions of daily trusted and secure, compliant business connections. Now, we would not be able to do so if we did not provide a high quality of service to those 350,000 customers in more than 70 countries.
Again, I think this speaks volumes about the proven capabilities, operationally, of Quadient, and also our capability to scale our operation further. We have, obviously, the right applications to propel our customers into what we call intelligent automation success, and obviously, we're committed to do that in a sustainable way. So to continue to elevate our ambition in terms of ESG, and as part of this presentation today, I'm quite excited to have the honor to announce to you that we have committed by achieving net zero by 2050, and we'll come back to this in this presentation today with Brandon. We have also some strong financial ambition for 2030 that I'm gonna share with you today, naturally. We aim to generate, and I'm gonna insist, EUR 1 billion of subscription revenue by 2030.
Let me repeat that, EUR 1 billion of subscription revenue revenue. This represent EUR 250 million of additional recurring revenue that will be created yearly by 2030, and it will naturally come from our digital and local platform, but also from a resilient contribution from our mail platform. Now, we talk about top line. We also intend to grow profitably, with the current EBIT expected to reach EUR 250 million, which is EUR 250 million, by 2030. And this is a, an additional EUR 100 million of additional profit created between 2024 and 2030. This improvement comes from both our revenue growth, naturally, a part of it, and also from the improvement in profitability from our digital platform and also from our local platform....
Now, these ambitions would not be meaningful if they do not come with a strong ESG commitment as well, notably in terms of CO2 emission reduction. So we are also committing to reduce our emissions for all three scopes, and I want to insist, including the Scope 3. So it's not just one and two, it's one, two, and three, and we want to reduce those emissions by 35% by 2030 if we compare ourselves to the 2018 baseline. So naturally, as a CEO, for me and for the team, these are exciting times for, for Quadient.
And as you have known me, for most of you, for the last five years, rather than hearing from me today, I wanted you to have the opportunity to hear directly from the teams, the amazing teams, that are part of Quadient today, and in particular, their leaders. They are the one that lead the team and execute this vision every day at Quadient. So let's hear from the team and how they plan to elevate Quadient to 2030. Thank you.
Thank you, Geoffrey. This was exciting, and our 2030 ambition is exciting. I'm happy to be with you today, and talk to you about how Quadient is creating value for our customers. I'm Petra Wolf. I'm the Chief Marketing Officer at Quadient, and during this section of the presentation, we're gonna answer the following questions: First, what are the benefits that Quadient is bringing to our customers? And second, which strategic pillars have we put in place to execute on our 2030 ambition? But before we do so, let's have a look at the following video.
Prior to installing the Quadient solution, our processes meant that every single parcel that was delivered to us had to be signed in manually by a member of staff, and then had to be manually processed when handing out to students.
Over the past few years, technology's really changed the scope of what's required.
If UBC didn't have automation like Beanworks, we would be spending 50% more of our time on manual processes.
It was quite error-prone, and it took quite a long time.
We are challenged to do more with less.
Quadient got in touch with us and introduced their parcel locker solution. We immediately saw this as a really innovative and exciting way to improve the student experience.
For me, Quadient is more than a tool. It's a whole community.
How easy it is for our customers to go onto a secure link. They feel secure in leaving their credit card or bank information, you know, just going in there, looking at their invoices, and making a payment online.
The documents that we produce are a lot more rich in terms of content.
We've been able to generate documents that are the size of 300 pages in length and be able to drop batch files and produce multiple documents at one time, and have a very large stream go through in a short amount of time.
The key reasons for selecting Quadient, I think, come down to performance, ease of rollout, integration with the different systems that we actually have, and the training that Quadient provides.
Overall, the new parcel locker solution has been a massive improvement to the service. We've had some really positive feedback from staff and students, and it's been a massive benefit to the university.
Well, CX is really what sets us apart from the competition, and Quadient plays a big role into that by providing us flexibility, scalability, and great performance in our service offer to our clients.
It has enabled us to remove legacy, redundant applications. All of our developers really appreciate the support that Quadient provides.
Exponential in terms of the productivity. It changed our business overnight.
... Our customers about the difference we make in their daily lives makes us happy and proud. But let's zoom out at the moment and look at the larger market trends. When we look at the business environment as a whole, there are four key trends, as Jeffrey alluded to. First, there is digitization, and we all know digital transformation has been around as a buzzword for a while. But at the same time, we know that only 35% of all businesses claim to have completed their digital transformation successfully. And this is why, according to IDC, this digital transformation market will continue to grow at a 16% annual growth rate for the next coming years. And then there's e-commerce, and more importantly for us as a company, the e-commerce logistics market.
It's another very important sizable market, and the logistics aspect alone has a value of over $323 billion. The same holds true for ESG, and ESG truly is undergoing a seismic shift in the attention it gets from CEOs and CFOs. According to a study that McKinsey has done, managing ESG effectively can help to reduce operating costs and impact operating profits by as much as 60% . Lastly, according to some latest research, the AI and the global intelligent automation market is expected to reach over $25 trillion by 2025, 2028, apologies. Now, in response to these key market drivers, Quadient positions its intelligent automation platform. In technology, an intelligent automation platform is defined as the software and technology which companies use to unify and streamline business operations and IT systems.
Such a platform is the backbone of a company for its operations and customer engagement, and that's exactly what the Quadient intelligent automation platform does. Our platform standardizes business processes, making workflows more efficient and transparent, so that companies can better manage internal functions and satisfy its customers. Through the use of our platform, companies can more efficiently service their customers, create intelligence to improve operations, and inform their business and product strategy. This improved intelligence can equip internal teams and departments, like the claims department, with the data, analytics, and insights to better engage customers and generate revenue. Now, let's look at our platform. Our platform is truly unique in three different ways. First, our platform offers both physical and digital solutions to different use cases.
This is important because speaking of this digital transformation journey, this combination allows customers to embark more gradually on a digital transformation path, right? They can benefit from digital solutions while with some foot still remaining in the physical world, and our hybrid mail solutions are a perfect example of this. Or take, for instance, our customer communication management software, which allows customer to issue documents via PDF, print, email, or SMS. Second, this winning combination of digital mail and lockers is a winning combination, particularly for such an exciting market as the e-commerce logistics space. And third, our platform has a great number of connectors and APIs to existing ecosystems. Based on a Forbes survey, which was done most recently, the average number of applications that a mid-market company has in-house are over 1,000. 1,000 applications, and only 30% of them are actually integrated.
We have heard this in our most recent customer research that we have done, and we've also heard it in the video. The ability of our platform to integrate with existing ERP systems, payment provider, postal service provider, and carriers, is a huge benefit which customers really appreciate about our platform. Now, let's look at the benefits that our automation platform brings to our customers. We heard very powerful statements from some of our customers at the beginning of this presentation. Well, first of all, we help companies to improve and accelerate cash flow. Bear in mind that our financial automation solutions allow businesses to process invoices 9 times faster, right? And with that, being paid earlier. Our platform allows companies to reduce delivery costs.
Our locker solutions helps companies to reduce the time for delivering a parcel by 78%, and of course, it reduces costs that companies need to put aside for maintaining a fully staffed mail room. And then, our automation platform eliminates end errors that come from the manual processing of data. With our automation software and for AP and AR, we reduce the effort for manual data entry by 83%. And then, most importantly, what our customers value most is just having a partner by their side who has the experience and is a, is reliable to handle the most sensitive data and goods. Bear in mind, what runs over our platform, be it data or be it goods, are really highly sensitive in pieces of information. It's financial information, invoices, health information, right?
It takes a partner like us, who is used to handle these pieces with utmost precision and care. Honestly, Quadient has a history of zero incidents, data breaches, data leakage, or parcel thefts. None of that has ever been out there, right? This is why customers appreciate a lot that we are just a reliable, safe bet to get the most sensitive jobs done. Then, we reduce carbon footprint. We heard how important it is, right? I just wanna remind you that our lockers team concluded a collaboration with UPS France last year, and exactly this collaboration allows UPS France to reduce the carbon emission per parcel delivered by 50%. Amazing benefits, which our customers love about what we do... Now, let's look at how this customer base is actually structured.
You will see that our customer base is a very healthy customer pyramid. We have around 3,000 customers sitting on the top end in the enterprise space, with more than 1,000 employees. Then we have this super healthy mid-market space, which accounts in total for 13% of our customers, with, like, 4% in the upper mid-market and 9% in the lower. And then we have, as it's representative of the market out there, 86% of our customers sitting in the SMB space with less than 100 employees. Now, let me remind you that for us, our SMB customers are all from very resilient industries, right? These are lawyers, accountants, financial service providers, right? Also noteworthy to call out, that we have this immense stronghold in regulated industries.
34% of our customers are from finance and insurance, healthcare, legal, and government institutions. And this is testimony to the trust that we have built, again, with industries that operate under highly regulated frameworks and environments. Now, this healthy customer base is proof point of a very sizable market share as well. For mail, we maintain a market share of around 35%, for our locker business, around 15%, and for our digital platform of around 3%. Now, let's look at the strategy that we have chosen to execute in our 2030 strategy. And our strategy really resides on two pillars: expansion and acquisition. Now, expansion has always been the core and at the heart of our strategy, right?
Let me just remind you that 65% of our digital customers from our top three markets are actually mail customers that have upsold to a digital solution. Right. Now, acquisition is still very important. It lays the foundation for our future success, right? We need to be there now, because as we have heard, there is so much growth and opportunity in this whole digitization market. Now, let's look at exactly how big this market opportunity is. There are significant market drivers that are behind this 7% market growth in the markets we are in. And important to note is, that these market drivers, according to the hype cycle of trends, are all in the early or late majority stage. And what does this tell us? This tells us that these trends are here to stay, right? They have gone beyond the early chasm of introduction.
We have heard about digital transformation, and noteworthy as well, that 35% of the spend on digital transformation will actually happen in the U.S. And the U.S. is one of our key markets that contributes over 50% to our total revenue, right? Second, there is e-commerce with a very solid growth rate, and also, as we've heard, the associated e-commerce logistics market. And then there are regulatory drivers, which will accelerate the need for digitization, like e-invoicing, right? And e-invoicing is a very good example, which generates needs for companies to connect their business, their data, and how to manage their customer relationships. In summary, across the 27 markets where Quadient is active, the total market value today amounts to EUR 9 billion, and this will grow to EUR 11 billion by 2027. What an exciting market to be in!
Now that we have seen the size of the opportunity, let's have a look at actually how we execute on our acquisition strategy. First of all, let me tell you and reassure you that we have a history of building a scalable, efficient acquisition engine. Over the past couple of years, Quadient has acquired over 30,000 new customers, right? Which is massive. And all of this is just at the beginning of this next huge digitization wave, right? Now, let's have a look at actually which levers we're leveraging to deliver on this acquisition opportunity. First of all, we are using what we call agile squads. And what this means, these are really super agile task forces that assess our market opportunity, the value, the competitive landscape, and our product market fit.
For lockers, for instance, if we come to the conclusion that we can't be number one or number two on the market, we won't enter that country, right? Second, we have an extensive networks of partners out there. Over 1,300 partners give us immense additional feet on the street, right? And then we've heard it before, in the introduction, we are using machine learning models and AI to inform our acquisition strategy. We're using machine learning to actually predict the propensity to buy, and with that, really focus where we invest in our acquisition. Another example is the use of AI, and we will hear more from Benoît in his presentation. We're using AI to really identify the perfect location for our locker, right?
Amazing stuff going on there. Then, last but not least, it's the sheer size of our direct sales force. We have over 1,000 sellers, right? 1,000 sellers, which is so impressive, right? The combination of these key levers allows us, going forward, to acquire over 16,000 new customers and sites in the next coming years. Now, as important as our go-to-market is, of course, the strength and the quality of our platform. We are constantly featured by leading industry analysts as a leading vendor in the different spaces of the market we are in. This lends credibility to our solution and also helps us to basically share our brand recognition in the market. We are particularly proud of two awards which we received last year.
First, we received the Innovation Award from Postal Technology for the Drop Box innovation in our lockers division, which we are really proud of. And then EcoVadis, who is a vendor that basically compares over 130,000 companies in their sustainability ambitions, and they awarded us a platinum standard, which puts us at the top 1% of companies in terms of our sustainability ambitions and achievements. Then, we have all these amazing analyst brands out there who continuously endorse Quadient. We have IDC, who in the IDC MarketScape positions us in the leader section for our customer communication management software. We are currently in the review process to renew that assessment for 2024.
Aspire is an analyst group who is wholly dedicated to the customer communication management space, and over the past years, we have been constantly featured as the leader in that space, both for customer communication management, as our, as well as our customer experience management applications. Then Gartner. Gartner has only started very recently, actually three years ago, to cover the AR space, and they have identified us as the niche player. We are still featured as a smaller player there. Why? Because of the size of our revenue in AR. But with our ambition, we are confident that we can move up into the leader section of that grid as well in the next few years.
And then we have Gartner, who is a more specialist analyst firm, but over the past years, they have constantly rated us as leaders, both in communication management, customer experience management, and customer journey mapping. And then Forrester, they did their customer journey management wave in 2022, and they have zeroed in on our ability to combine customer communication management with, with real-time customer journey mapping, right? Which is truly exciting. And same as for IDC, we are currently in the review process to renew that assessment for 2024.
Just to give you a quote, what Quadient, what Forrester had to say about our solution was the following: "Quadient is a good fit for companies that want to visualize customer, business, and operational data in real time, in the context of the journey to optimize customer communications and customer experience across journeys." So very exciting recognition from all of these analyst firms. Now, let's move on from the acquisition pillar, and let's have a look at the expansion pillar. This is a foundational pillar for us in our strategic execution. It accounts for 70% of our 2030 ambition, right? So that's massive. This expansion pillar is really at the heart of our business strategy. Our strategy and the way how we report on the progress we're making is around recurring revenues, minimizing churn, and maximizing the lifetime value of our customers.
So how do we do this, right? Again, we have some powerful levers in place to execute on this. First, what we are doing, and marketing is spearheading this, we are pivoting our value proposition and our go-to-market to uplevel our, our value prop to higher up in the organization to talk about the impact and the changes we are making for the overall transformation of the business and the company, right? Then we for our customer engagement, engagement platforms, like for instance, the Quadient Hub, we have next best buy logic in place to really systematically drive upsell from the first to the second and third product. And then we really focus a lot on customer retention, right?
We do have teams in place that sort of take care of this relationship from the day they had the first conversation with a BDR rep to the expansion of their solution, right? And this pays off. The average contact duration for us is around seven years, right? It starts with one year, it goes up to 10 years. But we have very healthy long-term relationship with our customers. And then we do have customer success teams in place that work with customers to really allow them to maximize the features of our platform and drive usage and volume. All right. So let's then have a look and quantify the size of this expansion opportunity. What we've done is a very surgical examination of our mail customer base.
This mail customer base has the size of around 315,000 customers. What we have done, we have applied the detailed criteria for our digital products to that base, which meant we used demographic criteria, behavioral criteria, to see how much of this base overlaps with the ideal customer profile for our digital solutions, right? What we found was truly amazing, right? Because 150,000 of our customers in this mail base qualify as ideal customer profiles for our digital solutions. That's 50%, and this equates a theoretical addressable potential of around EUR 1 billion, right? Now, this is, for us, the huge potential that we wanna leverage over the upcoming years, and which ultimately also tells us that there is upside to the current plan.
Now, what I also wanna mention, right, that this expansion strategy is based on very solid KPIs. First of all, we have been doing this very successfully. Over $300 million over the past couple of years have been generated from cross-sell, from our mail base to digital and locker solutions. What we also see, whenever we do deals with our existing customers, that our productivity is 50% higher, so is our conversion rate. Our conversion rate is 21% higher when we do deals with customers versus net new acquisition. Right. And then to really hone in on this, like, big opportunity that we identified, we have created cross-functional leadership teams that really focus solely on making sure we unlock this opportunity. Now, important, when we talk about expansion and selling to our customers, is the question: How much do our customers love our products?
And they do. They love them a lot. And we are so proud that in our post-call satisfaction service, which we do, we are constantly scoring at 97% for both digital and mail, right? For our locker division, our service mobile application is rated 4.8 against a score of 5, right? And we have numerous very favorable endorsements on various user platforms, which is so important for the mid-market space, right? So this is very reassuring to see that. Now, behind both these pillars, acquisition and expansion, there is one powerful pillar which is underlying both of these efforts, and that's our sales force. I mentioned before that we have over 1,000 sellers, right? Which is just mind-blowing. And the way how we organize our sales force is based on customer tiers that correlate also with average deal sizes.
We do have a very classical key account structure for our top for our top enterprise segment with larger deal sizes. For our mid-market deals in the upper end, we have a combination of account managers and dealers. For the lower mid-market space, we are mainly operating with inside sales and dealers. Then for deals with lower than $5,000 of deal value, we are using already, but plan to expand further, our digital sales and self-service capabilities. So this is truly exciting and really sets up in the best possible way to execute on our strategy. Now, let me bring it all together, right, to summarize. What we have seen, there is a tremendous market opportunity out there. We have a very healthy customer base, and we have an award-winning platform.
Last but not least, we have this very powerful sales force, and these are the ingredients that make us confident that we will deliver on our 2030 strategy. Now, with that, I have the pleasure of passing the baton on to Chris Hartigan, Chief Solution Officer for Digital, and he will share with us how this strategy manifests for our digital solution.
Wonderful. Good morning, everybody.
... I'm Chris Hartigan. I am the Solution Officer for our digital business. Before today, our digital business was referred to as ICA, Intelligent Communication Automation, but we are elevating to 2030. As we elevate, we are renaming the business Digital, because it is our opportunity to really reinforce the role that our business plays in the overall strategy of Quadient. We bring pure digital capabilities, pure software capabilities, to organizations that are looking to automate and digitize those back-office processes that are critical for them to manage their communication and their financial automation processes. And doing this helps them lower cost, creates greater efficiency, brings regulatory compliance, and overall better customer experiences. It's my pleasure to be with you today to discuss this. Businesses are facing a lot of operational pain, really at every turn, especially as they look to compete in a heightened digital landscape.
Petra mentioned that the average business is using over 1,000 applications to run its business. Most of those, by the way, are software. A recent Deloitte report indicates that this problem, this technology sprawl, is only gonna get worse. The number could double, even triple, in the coming years. This highlights the enormous organizational, operational complexity that businesses need to manage. It brings with it decreased agility and higher costs as well. At the same time, companies are managing this sprawl, they have to operate in a world with ever-changing regulatory oversight. Staying compliant is not easy, especially in the areas of financial management and communication management.
We know that data security is a concern, is a risk, really, of any operational leader, and we've all seen the unfortunate headlines in recent years, where some of the world's most successful and well-regarded companies can feel this pain. Operationally, every business has to get control of payables. You have to make sure you're watching the money that's going out the door. Integrating the cycle of accounts payable activity with the issuance of invoices in your collections activity is critical to optimizing cash flows. After all of this, Petra identified as well, is that customer experience is the foundation of competitive advantage. We all know that. Managing all of these operational pain points while also trying to deliver great experiences is very, very difficult. For millions of businesses every day, big and small, they are feeling this pain. Addressing the pain is absolutely mandatory.
Those who can do it well, will have a sustainable advantage. Those that cannot do it well, could find themselves facing operational disaster. And that's where we come in. That's what we do. We help companies manage this pain so that they can run their businesses confidently and with control at all times. Specifically, we target those back offices, back-office processes that pertain to financial management and communication management. Processes such as document automation, customer communications, invoice to cash or accounts receivable automation, invoice to pay, accounts payable automation. Processes that are really at the heart of any back-office operations. Our digital applications are used to manage the customer communications that are used to service and support customers all along their journey, all along their life cycle, from the simplest bill or statement or correspondence, to the most complex policy or document.
Our applications are used by businesses every day to deliver invoices across paper and digital channels. Our applications are used every day to automate the collection and the cash application that has to happen after that invoice is sent. Our applications are used every day to manage the complex workflows of receiving invoices, matching them to orders, approving them, so that you can make sure your payment processes are optimized as well. We don't just do this as a series of applications. We do this across an integrated SaaS platform, which serves as the intelligent control panel, the hub for all of our customer interactions. Because of this, our customers can benefit from shared services such as authentication, access control, metering, messaging, licensing, dashboarding, analytics, API integration, and many, many more.
By centralizing these services, not only do we help our customers manage complexity, but selfishly, for us, it gives us the ability to build once and deploy everywhere, which improves and increases our time to market. In addition to advancing our own technology, we support an ecosystem of technology partners that we work with that allows us to extend our value proposition even further and become more relevant and credible to our customers. ERP integration is critical for us, because when we can integrate seamlessly to an ERP, customers can use their back-end ERP with our applications to bring the data that they need into the invoice for invoice presentment or invoice distribution. It also allows them to take the data from an invoice and reconcile it back into that ERP efficiently.
To date, we have built integrations with 130 different ERP vendors, and we expect that number to continue to grow as our market penetration grows. Our payment partners are critical to provide digital payment capabilities on both ends of the AP and AR cycle. In AR, our customers can embed the payment capabilities into the collection activity so that they can get paid faster once the invoice is distributed. In AP, our customers can themselves use the integrated payment capability to make sure that they can pay their suppliers on time after the invoice is received and approved. As our customer base has grown, and as the volume of invoice-related transactions has grown, so too has this payment revenue. This is an important opportunity for us when we think about expansion, which we'll talk about in just a minute.
With regards to communication management, we work with many partners who help us automate the building, the collection of data required in order to distribute documents and communications to their customers. Integrations with core systems, such as Duck Creek for insurance claims management or Huawei for telecom billing, allows our customers to integrate our platform together with other technologies as part of a larger technology stack. This brings more of a validity, credibility to our application as part of their technology ecosystem. And integrations for us with core print service providers allows us to bring to our customers a fully outsourced capability for document creation and distribution.
To date, we have over 1,000 partners that we work with across our business, and again, this is very critical for us to bring extended value to our customers, and we expect to see this number continue to grow as we evolve our business. So this is how we help customers attack those pain points. We help businesses tackle financial pain. We help them get paid faster, we help them better control their payables, and doing it together, we help them optimize their cash flows. We help businesses consolidate multiple systems together. We help them eliminate manual processes that are time-consuming and costly. We help them integrate several different communication types together for effective omni-channel engagement. We help business tackle regulatory and data security pain by solving for the requirements of some of the most, risk-averse and the most complex organizations in the world.
We've been doing that with a very, very long track record of success. These pain points are real. The pain points we talked about are real, and as I said, they're being felt by millions of businesses every single day, and the benefits that we bring are real as well. So let's look at a few examples. Petra mentioned the advancement in the growth of AI. For us, in the digital business, AI is nothing new. Almost a decade ago, we released some of the first AI technology sentiment analysis as part of our customer journey mapping application. So AI is already a central component of our digital automation platform. So we have two AI examples to share with you today to show how we are using this type of innovation to bring benefits to our customers. The first is in our accounts receivable automation area or invoice-to-cash area.
Inside of our application, we are using AI to read and categorize every single email that is received by the application. The typical AR team, accounts receivable team, at any one of our customers receives thousands, tens of thousands of emails a year. The email could be a question from a customer. It could be a request for another copy of the invoice or more information. It could be a dispute, or it could be information regarding a payment. Instead of reading these emails and figuring out what to do with them manually, our application is able to do this automatically. It's not just an RPA process, it is AI, and when the AI engine identifies something related to payments, it's able to distribute that and send that directly to remittance. Speeds up my cash flow.
Because it's AI, every time this process happens, the engine is getting smarter, so that it is getting better and more optimized every single time. Across the scale that we're talking about, this relates to thousands of hours saved by our customers each year, which allows our customers to reduce their cost and makes them more efficient overall. Example number two, this comes from our customer communications applications. Inside of our customer communication application, our customers are creating and sending and authoring interactive correspondence. This has to be compliant, so it has to stay within our application. Interactive correspondence is a one-to-one. We've received them all the time. It could be a follow-up from a customer service call. It could be a letter thanking you for your new credit card or something like that.
Not all of our customers are using this capability today. We're working on it... But those that are, are using it extensively. Across the platform, we're seeing 100 million interactive communications annually. Each of these communications takes time to author, takes time to approve, 'cause it has to be compliant, and it takes time to send. By incorporating generative AI capabilities into the application, we're able to reduce the time it takes to author one of these communications by 60%. 60%. This relates to millions of dollars of cost savings per customer. We have many more examples of where we're using innovation and AI inside of our application to bring benefit and value to our customers. This is an area of strength for us, we believe, and one that we will continue to invest in as we go forward.
We're able, we're able to deliver these benefits across a scale and a landscape that really few others can match. We work with some of the largest corporations in the world, like this massive North American bank, who was able to consolidate several different communication management solutions onto our platform and save $45 million a year. $45 million. I know what Laurent is thinking. He's thinking we didn't charge that customer enough for that solution. $45 million is a true customer benefit. We work with thousands of mid-market customers, like this manufacturing services provider, who is able to use our accounts receivable automation solution to eliminate all of the manual tasks regarding invoice, distribution, and collection activities, and therefore automate $3 billion of invoice volume with faster cash cycles and a smaller team.
With regards to managing invoicing, we are primed to address the needs of millions of businesses in our core markets with compliant e-invoicing capabilities. It's an important market driver for them and for us, and we're gonna discuss it in a little bit shortly. But before we do, we have another short video to highlight some of the additional benefits that our customers are realizing.
PrintMail, as a company, we're all about serving our customers. We primarily service banks, credit unions, and different financial institutions. We're getting into other industries like insurance, utilities, that have critical communications. Oftentimes, when people are thinking about a print company, they think just print, right? But over the past few years, technology's really changed the scope of what's required. The way that the consumer wants to receive their information through these different technology touchpoints, we have to support. Quadient Inspire is what we call a composition tool. So it takes data in its various forms, and it enables you to build a document from that data that's gonna be branded and in a presentation that's gonna make sense. A lot of the feature sets that are built into the application are drag and drop or are, you know, easily accessible through a menu.
There's not a ton that needs to be scripted for certain applications, so you're able to, you know, really streamline what you're trying to put on a document or how you're trying to design it. And that's all enabled through the different automation features. Before I got Quadient, I literally couldn't get work out the door. Our run rate for producing, what we call a job or a document, was maybe 20 a month. When we brought Quadient in, that number went from 20 documents a month to 200 documents a month. So exponential in terms of the productivity, it changed our business overnight.
“10x productivity improvement changed our business overnight.” They're not alone. We have many customers who say things like that to us. With our digital automation platform, we're addressing a EUR 6 billion market opportunity that is growing at 10% per annum. The market size is comprised of the specific areas around communication management, financial automation that we're addressing. It also takes into account the specific verticals and customer segments that we are targeting. The size and growth of this market is supported by several compelling trends. Petra highlighted many of those, most notably, the continued urgency around digital transformation. We've been hearing about digital transformation for years, but there is a continued urgency around digital transformation, which is supporting the overall growth of this market.
Add to that, the forceful market driver of compliance, of which e-invoicing is a big part, not the only part, but a big part, and you have a strong foundation for growth and expansion of our digital business in the years ahead. Now, a market this large and this dynamic is going to attract competition, and by all means, we have competition. But when we look at the competitive landscape, we see many different approaches being taken to address this market opportunity. Several competitors are taking what we would characterize as a niche approach by focusing on one specific application process or potentially one specific customer segment. For example, in the communication management space, there's competitors like Smart Communications, strong competitor, CCM or Communication Management focused and primarily focused just on the insurance vertical. Or Sidetrade in, AR automation.
Good competitor, just focused on AR automation, really focused at the high end. Or Tipalti in AP automation, really focused on the mid segment.... Other companies are competing in this market opportunity with multiple applications, but still might be focusing just on one specific segment or one specific geography. We all know Bill. Bill competes in AR and AP and payments, but is really focused on the small segment in North America. Quadient, by contrast, is one of the few competitors who's truly taking an end-to-end approach, a best of suite approach to this market opportunity, because we see value, and our customers have pain at that intersection. That intersection between managing the communication, which is most oftentimes financial in nature, and managing the invoice and the AP activity and the AR activity that are associated with that communication.
These are complementary spaces, and we are focusing on that intersection, and that's where we are differentiating. And of course, there are others who are also focusing on that intersection, but we are further unique in the fact that we are truly a global platform provider, covering and addressing multiple segments. We have presence in North America, presence in Europe, and selected international markets as well. And we are confident that this approach gives us the best opportunity to adapt our business over time as global market dynamics potentially may change, but also, very importantly, it gives us the ability to target and build synergy with our mail customers. And perhaps more than anything else, what differentiates us is that relationship that we have, that ability to drive opportunity with our mail, with our mail customers.
And that brings us to the topic of growth, which Petra highlighted, is achieved and delivered through the complementary activities around acquisition and expansion. For us, customer acquisition relates to all of those activities that are required to get a customer onto our digital automation platform for the first time. This involves working with our direct sales teams, our partner channels, and of course, our mail cross-sell efforts as well. Because we address a large and growing market opportunity, and because we have diversity of go-to-market for new logo sales, customer acquisition represents approximately 60% of our total growth. Growth with customer expansion begins with our customer success organization, making sure that we are bringing value to our customers every single day. Expansion begins with renewal, managing churn, helping make sure the customers get to and through their renewal efforts.
But over time, as they become more and more successful, they are more inclined to grow with us as their business grows. So let's step into these in a little bit more detail. Our acquisition goal is to bring on board 3,000 new logos a year, and because of the strength and the adjacency of our cross-selling efforts, we expect half of those new logos to come from our mail customer base. Our cross-sell teams work closely together, and due to the integrated nature of the motion here, the cross-sell business is inherently more efficient, as Petra identified earlier. The other 50% of our new logo sales come from our direct sales teams, which includes a bit of telesales, which is comprised truly of specialists who need to compete against the best of niche players that we mentioned.
And it's also supported actively by our very strong marketing demand generation efforts. And of course, it's complemented by our partner channels. As I said, we have over 1,000 partners that we work with across our business. In some cases, those partners resell our applications directly. In other cases, those partners bundle our technology with theirs, and in yet other cases, our partners are a valuable source of referral and influence in the market. When we bring a customer onto the platform, they typically sign a multiyear subscription contract that commits their usage of the platform over a duration of time, but also based on their known requirements at the time of sale, typically measured by users and usage in some combination.
Once the customer is onboarded to the platform, we're focused on bringing them value and deriving success because, as I said, growth and expansion begins with renewals and managing churn, which our team is doing very, very well. If we can do that successfully, the customer will be motivated more and more to grow their usage of the platform and to grow across the platform as well. The usage of the platform can grow, the number of users can grow, or the number of applications can grow. This is expansion for us. Most of the expansion, when customers opt to use more of the platform, most of the expansion is committed in nature, just like the initial subscription contract is. Sometimes the expansion can be non-committed.
It can be transactional volume, and the payments activity that I mentioned earlier is one of those types of transaction volume that we encourage our customers to use across the platform. In addition to this, as I said, we are working with our customers to adopt more of the platform over time as more and more of their pains are identified and realized. So while they may start with AP, we can see expansion into hybrid mail, we could see expansion into AR and other solutions, other applications down the line. And admittedly, today, while the number of customers using multiple applications is small, we are confident that by 2030, half or 50% of our customers will be using two or more applications across the platform. So it's a huge opportunity for us.
This concept of cross-selling and expanding our customers inside the application and across applications is not new to us. It's already being proven. The example on the left here is similar to that of thousands of mail customers who have already been onboarded to our digital platform, using some of those digital on-ramps that Petra identified. The next example in the middle is an enterprise use case, one application, but because of the success of the initial usage in one country, has now expanded the usage to multiple geographies, a very large and important and growing customer with us. And the last example is where it all comes together. Nirvana. Customer starts as mail. They're onboarded to the digital platform through the first application, and based on the success of that, we're able to leverage that success into a second application.
We have many examples like this, and as we continue to drive our dual levers of acquisition and expansion, we can expect to see many, many more. So all of what I just described would create an enviable market opportunity for any company. But as I mentioned earlier, our market is facing the disruption of E-invoicing, which we believe and are confident, brings with it a very compelling transformation opportunity unto itself. First, let's align on a couple of definitions when we're talking about E-invoicing. There are several ways to invoice your customer, starting with very simple invoice delivery, sending an invoice through the mail or through email. Very simple, straightforward, yes, but it does not provide any control over what happens to that invoice once it's sent and once it's received.
So this is where we start to see the beginning of invoice presentment, which is sending that invoice or presenting the invoice through a controlled portal. This provides a much more secure interaction between the two parties. It brings governance and some level of control, and oftentimes comes with the ability to pay that invoice directly through the portal. So it's great, much more advanced, but it doesn't provide any visibility to the tax authorities who are party to this transaction because they need to calculate and collect tax, VAT. So this is where E-invoicing comes in. E-invoicing pertains to sending that invoice, not as a piece of paper or as an email, but as a structured data file. It's purely a machine-to-machine transaction using standard data formats. It's a digital process.
It's an entirely digital process, and all of the information transmitted between the two companies is secure and standard based on EDI, electronic data interchange. Again, a truly digital process, a machine-to-machine process. It secures the invoice data between the parties, and when the tax authorities can simultaneously have access to that invoice data, guess what? It allows for the better verification, calculation, and collection of tax. And because of this, many governments see e-invoicing as a key method of reducing and helping to prevent tax fraud or VAT fraud. In Italy, when it was introduced in 2014, subsequent to the introduction of e-invoicing in 2014, the government there was able to realize a reduction in the VAT gap of EUR 4 billion. The number in Brazil was significantly higher than that.
Like Italy, like Brazil, many countries around the world, the Nordics, Mexico, elsewhere through Latin America, many countries throughout the world have implemented e-invoicing mandates for this very purpose, and dozens of others are working on fashioning new mandates as well. And because of this, every company, not just the ones in those domiciles, but the ones that transact with those countries as well, every company needs to figure out and think about how to manage these financial processes as part of their daily activities. We know that Belgium, France, and Germany, core markets for us, will be implementing e-invoicing mandates in the coming three years, which will complement European-wide mandates, that in the digital age, VAT, will complement European-wide mandates that come into play in 2028. Together, we believe this represents a EUR 1.5 billion market opportunity. This is pain.
To address the pain, we are leveraging the innovation of our digital platform. We have strong invoice generation, distribution, ingestion capabilities that exist across our applications. We're going to be leveraging that for the benefit of our customers and for the benefit of ourselves. E-invoicing may be seen as a burden by some, but we see it as an opportunity. It's a compelling event, and we're prepared to use this compelling event to help our customers and help other organizations optimize their ability to automate and digitize beyond what the mandate requires. With authorization in France, with activity in Germany today, we're delivering e-invoicing services. And for us, this will be delivered as a central capability inside of our SaaS platform, our central control panel, our hub, so that it is accessible to all of our customers.
This approach will give us the opportunity to quickly support all of our customers, to quickly adapt e-invoicing services to new markets if we so choose, and also to bring new capabilities onto the hub that surround this entire life cycle and this workflow. Our platform already provides access to our AP and AR applications, which are value-added applications that complement e-invoicing. Our platform already has the integration to the ERP systems that I mentioned, and our platform already is built using AI and other innovative intelligence. So bringing e-invoicing together with these capabilities, we believe, can bring additional customer value. And so because of this, we envision a future where we can deliver more and more digitalization capabilities to our customers around and supporting this entire workflow. E-invoicing is a regulatory mandate. It is forcing digitalization upon millions of businesses, but digital invoicing really is just the beginning.
It's an opportunity for us to help our businesses accelerate their overall digital transformation by coupling it together with the other digital capabilities that we can bring. While, yes, it's a market disruption and potentially a point of pain, we are looking forward to using this as an opportunity to continue to deliver customer benefits. As you can see, our digital business here has a very exciting future. We are focused on a large and dynamic market opportunity. We have great applications that solve real customer pain. We are uniquely positioned through our integrated platform approach and through the activity on our dual growth levers of acquisition and expansion. We are facing a transformative market event that will give us the opportunity to showcase our competitive advantage and our technological success for years to come.
So for these reasons, we are confident in our ability to grow our digital revenue by twofold to EUR 500 million by 2030, with 90% subscription-related revenue, up from 80% where it is today. As our revenue grows, so too will our profitability as we continue to scale the investments that we've been making in product, in our platform, in our go-to-market, so that we can deliver an EBITDA margin by 2030 of approximately 30%. We have demonstrated in digital, we've demonstrated our ability to grow our revenue and our profitability simultaneously, and this will continue throughout the plan in accordance with our objective to incrementally advance towards our Rule of 40 software ambition. Thank you very much. I'd like now to hand over to my friend and colleague, Alain, to pick up the story from here.
Thank you, Chris. Thank you. Thanks, man. Hello, everyone. My name is Alain Fairise, and I'm going to take you through the physical communication side of the Quadient platform. We will start with taking a look at what the pain points are that we address with Quadient Mail, because Quadient Mail provides solutions to businesses for the management and optimization of printed communications. That's what we do. Mail is actually complicated. Our clients are facing several difficulties. From big to small mailers, the pain points may be very different, but we address them all. The more mail you produce, the more important it becomes to access the right postage pricing. Producing batches of envelopes can be very time-consuming, and it diverts your staff from doing other bigger, better things. Payment to many carriers requires validation points and audits.
How do you know that that carrier bill is correct? How do you know that you should pay it? When you produce mail, you want to make sure that each envelope contains the right document and that no document gets left behind. Sending parcels can be a very complex task as well, and more and more, we see postal operators handling envelopes like parcels, with value-added services around tracking, requiring a shipping label to be put on that envelope. Managing budgets, reconciling spend, producing internal reporting, that's also difficult. And then, for some industries, you have, on top of everything else, regulatory requirements, which can be a very real operational burden. Our mail automation platform takes care of all those pain points. If we go to the next page, we will see on this page that, our solution portfolio meets the needs of small and large mailers alike.
We play in all market segments, and that's a specificity of Quadient Mail. From managing, printing, and funding postage with our mailing machines to creating ready-to-mail envelopes with our line of folder inserters. These are our two major lines, franking and inserting. But then we also help with opening mail, printing addresses, weighing for pricing, managing, reporting, accounting, and we actually provide a full line of solutions which surround the processing of mail in a company. And of course, these applications come with associated services. We have an array of services that will meet the various demands of our clients with the appropriate level of processing power and the right capabilities. Our line is scalable. Our solutions are scalable.
Our range actually goes from a small tabletop mailing station that you can rent for something like EUR 30 a month, all the way to a full production mail capability with equipment that would probably fill all of this room... and require an investment of EUR 1 million and above. We go from very small to very large. And let me mention another very important point, we have a portfolio of IP, of patents, that protect very much our exclusivity on some of those segments. So the Quadient Mail platform is very strong. To enable these services, we have to integrate with many partners. You will recognize many of the names on that page.
We've built these integrations over many, many years of tough work, hard work, often going through very extensive processes of certification, approval, renewal of certifications, and these interactions, these connections, they are part of our competitive advantage in mail. We're actually a trusted partner to all these organizations. We produce compliant proof of payment and induction. And completely managing that on behalf of those large organizations is no small feat. We really are good at managing those connections. The picture on this page is actually representing years and years of development and partner management, and it's a key asset for Quadient Mail. And of course, we can use those connections for more than just mail. To help our friends from the locker division, for example, as lockers become more and more relevant for many of those carriers.
We've done that very successfully already in countries like Australia, Canada, and most recently, you saw the announcements regarding Royal Mail. So those connections that we've built, we leverage them for more than just mail. Now, looking at how we address those pain points. We have a depth of expertise in what we do. We've been at it for some time, and this expertise translates in many benefits for our clients, which really can be summarized in three main categories: cost savings and efficiency by optimizing with automation the mail management process, and providing access to the best possible carrier pricing for all your specific needs, number one. Number two, convenience, especially for our small mailer clients. Enjoy your own post office on your desk. No need to manage stamps, no need to go to the post office, and you will never overpay for postage anymore. And finally, compliance.
Very important for these industries that manage specific data on behalf of their customers, and that manage this data in their communications. These mailers need to ensure completeness and privacy of all mailings. They need to make sure that your social security number, your bank account, your medical test results, do not fall into the wrong hands, and they get audited. We help with those issues. So a very rich and important array of client benefits centered around the business need to communicate printed documents with an ecosystem of clients and partners. But let me give you three concrete examples of what we do. On this page, you will see on the left the story of one of our large U.S. clients in the insurance industry. We worked with this company, and we were able to reduce by 80% the labor costs, thanks to Quadient automation.
Big win for them. They reengineered with automation, the mail production process for their insurance claim, which was a specific line of business within the company, and previously required extensive manual checks and intervention. On the middle, you have another case. This one is a police authority in the U.K., a regional police authority, and they launched a big campaign to improve safety on the roads. Problem, it generated a lot of speeding tickets, a lot of speeding tickets, an increase of 40%. And those tickets, they get sent to you guys by mail. Therefore, they had the need to increase their mail processing capability by 40%, almost overnight. We came in, and we make it happen. We made it happen. Another example of what we do.
And finally, on the right, to go to the other extreme of the customer pyramid that Petra showed you, let's take a look at this local plumber in Connecticut. They're growing their business with the convenience of a small in-house mailing station from Quadient. They accelerate the distribution of their bills to customers, to consumers, so you're talking private individuals, mostly. And they also have implemented a very regular process of customer communications by mail. I happen to be one of their customers, and I can testify that, A, they collect very quickly, and B, they sent me every year by mail, a very nice magnet that I stick on my fridge, and I never call another plumber again. That's mail at work to grow your small business, a very real application for many of our customers.
So from large mailers to very small mailers, we deliver results, and it shows in our customer satisfaction scores, like you've seen with Petra before. But now let's hear from some of our real-life customers with this small video. If we can launch it?
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So a very real, life example of what we do with customers and that equipment that you saw briefly in the movie, it's a bestseller for us. That inserting station, we sold thousands of them around the world in very much applications like this one, for small companies who need something very easy to work with. Now, let's size this market where we operate, the market of mail. It's a large global market, both in volume and in value. And one driver of that market, one of the drivers of that market, but not the only one, is transactional mail and how it moves. Transactional mail, it's mail from businesses to their customers or to other businesses. That's where we focus, as opposed to marketing mail or general correspondence. With more than 68 billion pieces in 2023, it's a very large stream of communications.
There are a lot of envelopes being produced and moved around the world. But mail is a media in secular decline, we know that. With a historical decline rate of about 4.5%, a slow and predictable decline. We constantly monitor every other report that comes out from postal organizations, and we update our projections for the evolution of mail, and we estimate that the trend in the future will be closer to a -7% decline. That's what we based our business assumptions on for the 2030 plan that we're showing you today. This is based on the evolution we have seen in the most recent years, and it includes also the move to e-invoicing that you heard about from Chris and the impact that it will have in Europe. But mail volume, it's not the only thing that drives our business.
We have many other drivers for our revenue. For example, new technology features that we can introduce. For example, the resilience of mail as a communication tool. Even if you send less of it as a business, you still need to send some, you still need to have a solution for generating mail. It's part of your array of communication tools. Another thing that favorably impacts our revenue, we have multi-year contracts with most of our customers, so the decision times are spread over typically five years for the portfolio. It's not something that moves very quickly. All these elements, plus, of course, very high customer satisfaction, which is a tenet of Quadient. You've seen it before. That's very important for us. Customers are satisfied.
They enjoy working with mailing solutions from Quadient, and that's why we think the value of the market does not move at the same pace as mail volume does. The side of our business that's directly really related to mail volume, it's supplies. Supplies for ink, and it's only 10% of our revenue, roundabout. Other revenue streams of Quadient Mail, they're expected to be impacted favorably by all the other factors that I mentioned today: contract commitment terms, solution scope, expansion, or upgrade. Also, one other very important point that you need to keep in mind, mail is not moving at the same pace everywhere.
In North America, more specifically in the U.S., usage of mail remains very strong, and the USA is the largest equipment market in the world, with more than 50%, excuse me, of the value of the market in the U.S. for us. So being well-established there is very important for Quadient Mail, and we are very strong there, and we are a challenger there with room for growth. All in all, we estimate the global value of the mail market to be around EUR 2.4 billion, and we see that declining at a pace of 5% a year. Our business planning, the numbers that we're going to show you, it's based on those assumptions.... So on this EUR 2.4 billion euros market, who are the players? Well, we have three major players on the market.
Quadient is the number one in Europe and the number two i n the world. We offer a full range, and we're also the global leader in folding, inserting, with many other companies reselling our equipment. We compete with the global number one, an American company with a very high market share in their home country. We also compete with a smaller player, a German company, very focused on one particular segment of the market, and which is also reselling our folder inserters, by the way. With volume declining, opportunities for consolidation may exist. We have announced this year the acquisition of Frama, who used to be the fourth player on that page, and is now part of Quadient.
It's also important for me to mention that there are a number of adjacent markets where we sometimes overlap and sometimes get to play, and you see at the bottom of that page, a few names which give us also a bigger playground in some opportunities. So that's the competitive environment that we play with. Now, on that market, let's take a look at what the vision is for our Mail Solutions division. We have a very strong position in mail, very strong, and our action plan is twofold. It's based on two sets of strategic assumptions, which you can see on the left of the page here.
First of all, we believe that mail is not going to disappear overnight, and that we can produce very good results for many more years in that market, with market share gains and also with a very good return on investment. But at the same time, we're very aware that businesses are digitalizing. We are aware of those trends, and we are aware of the need to accompany our customers on that digital transformation journey. We believe we actually have permission from our customers to help them, and we believe that we have the right solution set for them as well, with our digital portfolio that Chris just mentioned before. We are trusted advisors to those customers. So the operational choices that we make, well, we go after both opportunities on the right of the page.
We want to win in mail and to go digital at the same time, balancing the switch over time between the two priorities. We don't want to move away from mail too quickly, because there is still very much good opportunity to do good business in that market, but we also want to be ready for the digital future. Two priorities. How do we do that? Well, to win in mail, we invest in innovation to expand share of wallet with our customer base and to expand market share in the geographies that we select to play in. To go digital beyond mail in order to secure the customer relationship, that's really what we're after, for a future in a more digital world with the full force of the Quadient digital portfolio. Our goal is, in fact, to, to do three things, to future-proof our three major assets.
Our go-to-market organization, they need to learn and sell both mail and digital. Our customer base, we want to turn our clients into clients for digital as well. And the third big asset is our product line, which we'll make open to digital applications more and more through the user interface of a mail client. Go-to-market... I'm testing you now. Go-to-market, customer base, and then product line. All three, that's what we want to future-proof. So we talked about innovation. Let's go to innovation now. What does it mean for mail innovation? Well, first of all, it's essential in our pursuit of market leadership.
Our flagship line, the iX, which you see at the top left of the page, has been adopted so far by 34% of our customer base, and we have room for more growth as we continue to deploy that new line globally in all the markets where we play. We maintain actually, a very strong cadence of new product introductions with very targeted investment in what will yield the best return for us. So we don't spray, we very carefully select where we invest. In particular, we extend the line of our hardware platform with facelifts. They provide the novelty effect that we need to renew a contract with a customer. It's something new, but they do not burden our development resources. In fact, they enable us to reuse components, and in the process, we support our ESG focus by recycling those components.
You will hear more about that later today. We also invest in a suite of, software applications, complementing our core hardware to create intelligent solutions with added customer value. For example, we don't just manage envelopes anymore, we also manage parcels. In that segment, parcel shipping, creating shipping labels, we grew by 14% last year. Our placements of our top-of-the-line mail center software application, and each placement comes with associated hardware to create an intelligent solution. We innovate in, the way we deliver service as well. You heard that service is very important for us. Customer satisfaction is extremely high. Well, we deploy, for example, two-way visual communication tools with our major customers, so that the moment you have a problem with your equipment, and our customers value uptime very much, you don't have to wait for someone to show up on site.
You connect, and you're immediately connected to a specialist who will fix the problem with you over that two-way communication tool that we've installed. Innovation in service is enabling us to deliver the high satisfaction and maintain, at the same time, the extremely good service profitability margins that we have. But innovation is also a must to keep up with changing mandates from our partners. You have on the page here at the bottom, an example of a new stamp design that was introduced by the United States Postal Service. It's a design that is more data-intensive, requires different data elements to be captured, and which offers new levels of traceability and also integrity. Well, this creates the need to upgrade all of the equipment in North America within a given time frame, a big market driver for us, with increased security all along.
More and more, and back to our mission of, future-proofing our solution line, we will also include within the user interface of mail products, access to the connectors of Quadient Digital through our mail user interface. We do that for our SimplyMail platform, which is a new platform that we're launching for our low-volume customers, and which includes access to the Send It For Me application of Quadient Digital. And of course, AI has arrived in Mail as well. We use AI in an upcoming product release to manage the automatic importing of your address book. Doesn't matter if your address book is in different formats, we use AI to translate it into the format that will work. You don't need to correct your data anymore, we do it for you, leveraging access to a learning base of a long, long list of addresses that we have.
Overall, I think we have a very good practice of innovating where it makes a difference. We're very, very, cautious about where we put our dollars, and we make it happen. Now, if we move to the next vision, we mentioned the fact that, we're an install-based business at Quadient, and to manage your install base, you balance between acquisitions and expansion. We do the same at Quadient Mail. For us, the mix is more towards leveraging the base that we have, because we have a large customer base of about 350,000 customers now. So 80% is expansion, 20% is acquisition for us. Let's take a look at acquisitions first. Every year, we sign onto the Quadient platform 10,000 new logos on average. And what's really important to know is that the mail market is not stagnant.
A very large percentage of those new logos, they're not just new to Quadient, they're new to mail altogether. They're new to mail automation altogether. They used to stick stamps before. They're looking for a solution. So that's a new influx of businesses that join the mailing community every year. And to go after those acquisitions, we have different go-to-market approaches. We leverage digital sales or telesales for the lower-value opportunities, where speed of reaction and price competitiveness are very key. For mid and high segments, the acquisition is d one through our field sales professionals or through our partners, and we have a very strong network of partners. We deploy a solution-selling approach through those field sales professionals, and that's what makes it very, very real for us when it comes time to win an account from competition.
We don't sell a like-for-like, we sell a complete analysis of your communication flow, and we make recommendations that bring us the deal at the end of the day. Going back to those resellers of Quadient Mail, we have a very large network in the industry, the largest in the industry, and very often, those relationships have been built over a long period of time. They're very trusted, trust-based relationship. I believe that that network of partners is one of the key assets of Quadient Mail as well, and one that makes a difference when you compare us to competition. Another competitive advantage. Of course, in support of our acquisition programs, we've developed a very efficient lead generation, demand generation engine. We leverage all the lead sources, and we optimize the cost per lead based on years of experience.
Of course, innovation is also used in that approach towards winning new customers. To differentiate ourselves, we are often leveraging the digital transformation story to win competitive accounts, and that's how we gain market share. We have also financing solutions, so the minute you've decided to go with Quadient, financing will never be an issue. We have Quadient Leasing, we have Quadient Subscription Rentals. We will always find a way of financing your acquisition with us. So in a nutshell, acquisitions, remember, 10,000 new logos a year joining Quadient Mail. Now let's talk about expansion. In line with our strategy, we focus a lot on expansion. We focus a lot on growing revenue from our installed base of clients. Managing the base is a key skill set for us.
We've developed that skill set over years of experience of driving key performance indicators and employing a very strict sales discipline. We use Salesforce. Our performance has been very strong in that area, and it's made possible by the very, very good service quality that we deliver. To grow revenue, you need a satisfied customer, and we have many of those. On top of it, most of our contracts are five-year, five years long, and that gives us the time that we need to penetrate all those accounts for cross-selling and for upselling, five years. In fact, in our sales approach, we practice something that we call business impact selling. We focus on delivering positive outcomes for our clients. We don't sell hardware or software, we sell solutions. That's how we approach the cross-selling approach.
Often this means that we have to analyze the usage data coming up from those customers of ours to make sure that we tailor the solution the best possible way for them. Our ultimate goal is to extend the contractual relationship for another five years or more. In our business model, we also leverage many, many after-sales revenue streams. I'm giving you a few examples on this page in the little box, bottom right. Let's start with the financing of postage. We process and finance very large amounts of postage money for our customers and for our postal partners. All flows are encrypted for fraud prevention and for secure payments. You could say that we were a fintech before the word existed, and we're very unique 'cause we are a very profitable fintech, and that's. There are not many of those.
These streams generate recurring usage and financing fees over time. But our solutions, they don't just manage money, they print money. A stamp is money, and to print, you need ink. So supplies for printing is another very important revenue stream for us, and one that we've been able to protect over the years with the success of our subscription program called Auto-Ink, where we send you your new inker before you need to replace your inker. And you see that the uptake from customers is very, very significant. Another very important stream for us is service revenue, the servicing of our equipment. We have an excellent service coverage with 90% adoption rate of our service agreements. That tells you how much customers value the service that we provide.
That's all related to what I would say, the upselling from mail to mail, but there's another side to the story, cross-selling of the other Quadient solutions. That's a key opportunity for Quadient Mail. Our sales force is trained to represent all solution lines, and we are meeting more and more success every year. Why is that important for us? Because being able to talk about digital or parcels or lockers, that's what keeps us relevant. It strengthens our client relation by helping them navigate digital transformation or the influx of packages that they suffer from. And ultimately, it future-proofs our portfolio of contracts by not relying on mail only anymore. And it's not either/or. When you look at the actual data, you see that 63% of the orders that we take for digital products include a mail component as well.
So the word is really digital transformation journey. Very few customers go from one to the other overnight. It's always a transition, and during that transition, Quadient can win by providing both the physical and the digital tools. The synergy is also very strong with lockers, particularly in some verticals where we've been very present for the mail side. For example, universities. If you visited ever a U.S. university, you may remember those walls of mailboxes that exist everywhere, where students go to pick up their mail. Those walls, they're being replaced with walls of lockers, because what students pick up today, it's not mail anymore, it's not paper anymore, it's packages. And we're in there to make that transition happen with our locker systems. Overall, our expertise in digital and in parcels is what protects our customers' investment for the future.
95% of our customers respond, "Yes," when we ask them if Quadient is a trusted advisor. 95%, that's unique. It's an extremely strong relationship that we have with our customer base. But let's take a further look here. On this page, I have three case studies to show you the power of the full Quadient offer. On the left, we're gonna give you an example of a customer who went for mail and lockers together. In the center, we're gonna see a customer who moves from mail to more mail. And on the right, you have a customer who moves from mail to mail and digital. Let's start with the one on the left. This is a large university in Texas, in the U.S. They have 50,000, 50,000 students on a campus that's gigantic.
They were a customer of Quadient Mail for one of their smaller satellite offices, but they knew Quadient. So when the time came to address the huge problem of dealing with gazillions of packages that students order online, they called us. And we were able to introduce a line of lockers and to design a solution with them that we implemented over several weeks in nine different sites on the campus. And today, the benefits are incredible, both for the student community and for the staff. Very good example of how mail and parcel and lockers work together. In the center of the page, you have another example. This time, it's a print service provider. So they print, they insert, and they mail communications on behalf of customers like utilities or, healthcare companies, all sorts of customers.
Their problem is, we need to deal with shorter jobs, shorter print runs, because customers do smaller, more targeted campaigns. To change from one campaign to the next, it's a big hassle. Their equipment was not done for that, was not made for that. They had these huge machines that needed three hours to be changed between jobs.... We came in, and we updated completely their equipment with a line of automatic settings solutions, and now changing jobs is a matter of minutes for them. We increased their bandwidth tremendously. They were able to take more business in, and we increased their profit tremendously. And oh, by the way, we also increased our revenue with them. We doubled it. Nothing to be ashamed of here. And then finally, on the right, I have an example of mail plus digital. So this bicycle company, not bicycle, motorcycle company. Oops!
Sorry for ll the bikers in the room. Didn't mean to offend here. Well, we worked with them to review what exactly they were sending in those envelopes. We opened the envelope, and we found out that one of the documents was a specific document that's necessary for their dealers to be able to bill, to invoice. And we designed a new process where we mix physical and digital to make sure that that particular document still gets sent with the other documents by mail, but is also emailed, sent digitally, very much faster than before. That improved their revenue cycle tremendously, and at the same time, we were also able to automate processes for control that were before very manpower-intensive. So we are quite popular in the motorcycle industry as well.
All of that shows you the power of carrying the full Quadient offer when we talk to our customers and clients. At the end of the day, if we look now at the numbers, these are the three numbers that we're putting on the table for 2030. You will see that we are planning to remain extremely resilient in terms of revenue, with EUR 600 million of revenue in 2030, with a very high share of recurring in our revenue. That's been a trademark of ours for a long time. We plan to continue, and we will remain a very profitable business as well. We have a track record of success in delivering our numbers. We completely plan to continue on that track record of success. Thank you very much. And, I think now we have a break, so you can breathe again.
Thank you. Other presenters. Chris, no? Let's give them a round of applause, please.
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... With the growth of e-commerce, parcel deliveries and returns create massive challenges for the different stakeholders of the last and first mile. Challenges for all business intervening along the logistic flow, carriers, property management companies, retailers, but challenges as well for all of us, you, me, as e-shoppers. What are the pain points we are dealing with? Carriers first. Let's cover carrier. Their biggest change is to handle the cost of delivery and return on the first and last mile. A missed delivery means effect on carrier margin and significant impact on their operational costs. It means as well, a need of additional manpower in the context of workforce shortages, or work time limitation in some countries like Japan. It means as well, a customer dissatisfaction, and finally, as a side effect, a growing CO₂ emission, particularly in city centers.
As far as the property management are concerned, companies who usually manage large properties with hundreds of households, they are overwhelmed with the burden of parcel flows to manage every day in the lobby. As far as we are concerned, consumers, it is the obligation to get there, to receive a parcel, and the complexity related to returns and growing parcel theft issue. Parcel lockers are solving all these pain points for businesses and end users. Our solution can solve these pain points for two major use cases. The first one is open network. What do we mean by open network?
Open network is an infrastructure of lockers, put in place on each territory for carriers and recipients, and particularly in urban areas with lots of traffic, such as train stations, such as supermarkets, such as gas stations, and the goal is to facilitate the exchange of parcels. We call this infrastructure open, because it is open to any partner willing to provide either parcel flows, such as carriers and retailers, or other services and items. We'll see that later on in the presentation. The second use case is related to multifamily residences, universities, particularly in the U.S.A., and retailers. Let's talk about the solution itself. This solution delivers an automated parcel experience through a combination of smart hardware, intuitive mobile interface, and cloud platform.
What makes Quadient Solution unique is our cloud-based network management platform, which is the core of our system, the fruit of 10 years of experience, which is quite unique on the market, of experience and expertise with carriers, with retailers, with property management company. This platform is instrumental in the tracking of all the parcels and the management of each locker. This platform is linked as well to smart hardware solutions, including a comprehensive range of secured indoor and outdoor, self-powered or not, modular and scalable lockers. This enables to fit a parcel locker in virtually any location and handle any volume.
Last year, we introduced the Drop Box, a module which is, which is a return and C2C, customer to customer, both for the carriers, who can collect all returns in bulk, and for the consumers, through its integrated printer, enabling the local printing of a label to send a parcel. This solution was regarded as the last-mile innovative solution of the year 2023, and we are very proud of that, because it demonstrates our innovation capabilities. The third component of this platform is the user interface and mobile app, which offers a unique parcel experience that is fast, secured, and intuitive. It serves both customers and delivery agents for any type of flows. With our network management platform, we are integrated with 100% of our customers, dealing with millions of parcels per year across thousands of locations. We have a rich integration portfolio.
This is really an asset for Quadient. It's a differentiator as well. This is the fruit of years of experience. This integration, which is built, is something that, that cannot be improvised by a newcomer on the market. We benefit from there from the leverage, the lever, from Quadient-wide know-how and relationships built initially, thanks to the mail team. Regarding carriers and major retailers, as you can see here, since we have a real agnostic positioning, we interface with the largest worldwide players. You see the names, they are exchanging with them data needed to manage deliveries and returns through modern APIs and webhooks. These connections are built for years, but we also integrate with other technological providers. For properties, it allows us to update automatically names of residents with the key property management software of the market. We can also port our solution in any hardware platform.
As an example, we recently integrated our solution with Japan Railways e-Smart Locker network in Japan, which means that today we can deliver parcels through this extension, created initially by Japan Railways. IT integration enables broader integration into the last and first mile logistic chain. Our solutions provide a large palette of benefits for all parties involved. The first one is cost benefits. I'm sure you have all experienced a misdelivery at home. This represent a failure for the carrier and the retailer, and a substantial cost for both of them. A recent study of the Capgemini Research Institute says that this cost is, roughly speaking, 40% of the total supply chain flow here. So adding a new step, which is a second delivery, is, of course, very impactful in terms of cost.
Instead of this failure, we orchestrate the delivery of a parcel in bulk by the delivery agent and the pickup at the right time for the customer. Second benefit, that's convenience of the solution, particularly for the consumer and property management for returns and beyond parcel usage. Our solution enables, for the end user, 24/7 access to the parcel to pick it up, but brings also easiness to the tedious return process on reverse logistics. The parcel locker can also serve as a hub of exchange and deliveries for items beyond traditional parcels, with keys, for example. You might have seen recently that we have made a, a deal in the U.K., an agreement with KeyNest for the exchange of keys between a landlord and a tenant. The solution also bring lots of benefits, benefits to residences.
First, they fix the concern of property managers regarding out-of-control parcel management in, and chaos in entry halls. Second, the risk of theft, as most of residences in the U.S.A competing, are competing one another regarding the amenities, lockers are seen as the second most important amenity in a building after the need for secure parking. Third, compliance with impacts on CO₂ reductions. Instead of multiple home deliveries, we enable the delivery in bulk, in a single location, resulting in lower carrier CO₂ footprint, as mentioned by Petra earlier. This resonates totally with that smart city expectations. If I had to summarize, thanks to our solution, we enhance the last and first mile into a frictionless and green experience for the well-being of the community. Quadient is the pain reliever of the last and first mile. Let me give you a few examples of various partners we help.
First, a large carrier, such as Yamato, has reduced by 6 million second home deliveries, its number of second home deliveries. Can you imagine what it represent in terms of workforce, in terms of additional cost, rents, in terms of customer satisfaction improvement, in terms as well, of CO₂ emission reduction? If I would ask of Ferguson, which is one of our customer in the U.S.A, a diverse distributor, thanks to our solution, they have created a unique delivery experience, particularly to contractors. These companies were having works in many homes in the country every day. We are able, thanks to our solution, to deliver up to 30% of what has been ordered outside office hours. This create a lot of efficiencies for the contractors, and that's a true game changer for them.
In the multifamily space, our solutions, sorry, enabled to restore control and peace of mind regarding the parcel flow, even at very large properties, such as Brickell on the River. We are talking for the concierge about managing more than 200 parcels a day here. Parcel burden? Solved. One of the big point we address is the complexity of returns. We have innovated, as I said earlier, and come up with automation of return Drop Box, and we have received for that, the Parcel and Postal Technology Award for the year 2023. Let's see a movie to further explain what it is about.
... Package can be completed in a few simple steps. First, the selection is made to drop off a package. The return code, received previously in email, is scanned at the locker. The user selects the package size, and the label is printed. The label is placed on the package, and the user then scans the label. At this point, the door opens, and the package may be dropped into the locker. There is no access to other packages in the box. The box holds approximately 12-15 parcels in various sizes, maximizing capacity in a small footprint. If the drop box should already be full, the return can still be completed using a regular locker. Drop Box simplifies returns for customers. The built-in printer provides added convenience.
The automated process provides assurance the return is underway, and furthermore, this could be an outdoor locker, providing convenient drop-offs day or night. Drop Box can help you build a return center of excellence. Use Drop Box to streamline store operations and increase customer satisfaction. Learn more about Drop Box. Visit parcelpending.com.
Isn't it a super solution? Unique on the market. We have a strong market outlook for the years to come. Please note that the figures we are showing you here are figures restricted to the geographies and verticals that we are operating these days. Parcel flow will continue to grow for three main reasons in the years to come. The first one is e-commerce deliveries, of course. Forrester and Research and Markets are planning a strong increase for the years to come, around 9% per annum as an average. This is a strong push. But this is also driven, or it will be driven as well by other additional flows coming primarily from two other sources. First one is returns. Every time today, a parcel is sent, one time over five, it is subject to a return.
So this is an additional flow which is added to the delivery itself. Second key flow, circular economy, which is growing in a lot of countries, particularly in Europe. Here, more and more direct exchanges between citizen fosters the need for end users to send goods for one another, and our specific Drop Box, as mentioned earlier, is really one of the solution. It's a significant part today, I said, in Europe, but as well in Japan, of the flows we are managing with our network of machine, of solutions. But there is a third reason. The third reason, which is related to the carriers themselves. They are today transforming a lot of home deliveries into out-of-home deliveries. This is key for them in terms of operational costs, and this is a strong pusher for us for the future in terms of, of growth to come.
Based on these, as well as stated plans of the main locker players we know in the world, we estimate that the market related to parcel lockers themselves will grow by around 10% for the years to come. The parcel locker market is made up of various types of player profiles. To make it simple, we have two. We have the network operators, which is the upper side of this slide, and we have the suppliers of lockers. As far as network operators are concerned, you have two kinds of them as well. You have the ones operating a closed network, a network for their flows only, and you have another one to which we belong, in which we believe, which is the shared open network.
Shared open networks means putting in place, again, as I said earlier, an infrastructure of lockers open to both carriers and retailers, but also to service, as I said earlier, with the example of KeyNest. To address, we have as well, players, sorry, to finish, that are addressing other verticals, such as universities, such as residential residencies, and that's particularly in the U.S.A, that we see this, this kind of market, as I said earlier. We have a positioning in which, we, we believe, which is to be really an agnostic player of open network. This is a differentiation we have on the market, and it's exactly where we think we can be really different from others.
Our reliability, legacy, security level enable us to differentiate strongly, to differentiate us strongly and against smaller players, but our belonging as well to the Quadient Group, enables us to compete with the largest players, such as Amazon and such as InPost. Supplier of lockers is the last category. They are here to equip mostly the closed networks, and we see that we don't belong to that, to that, category. So in the conclusion, again, thanks to the richness of our solution and our belonging to the Quadient Group, we have a unique positioning, definitely agnostic and global. We operate in many countries in the world, addressing different market verticals. How do we want to, to deploy the, positioning we have in order to grow? In fact, emphasizing on two pillars. The first one is acquisition.
Acquisition of new locations, we'll cover that in a minute, either on multifamily and residential, multifamily, residential, and universities, or on shared open network.... Second topic, we want to continuously improve the profitability of install base we have already created, particularly in U.S. and Japan, where we have thousands of machines installed. So in terms of balance, expansion will account for 60% of our growth and acquisition 40%. 60%, again, because we have this major install base in Japan and the U.S. Let's start, if you don't mind, with acquisition. Our ambition here is to install 3,000 units per year. How do we want to proceed? Let's start with multifamily and higher ed.
We in multifamily and higher ed, in the U.S.A, you have 170,000 residents today that are eligible to purchase such a solution. And you have certainly around 3,000 universities in the same countries who are eligible, which are eligible for such a solution as well. This represent big market. Why that? Because the penetration rate today is barely 20% on both sides. So we have here a business development for many years. That's the first vertical. Now, if we move to the shared open network, the sites are really the topic to address. The sites are critical for all players, and they must be selected on a win-win-win principle. What do I mean by that? They must be accessible to carriers and match with their delivery routes, first win, and so win for carriers.
They must be easy to access for end users and at walking distance from home, at the supermarket, for instance, or where the people are catching the train. Second win for consumers this time. And finally, they must be as well in such areas that they are going to generate some traffic for the hosts that are going to host again the lockers. That's the case of retailers. So to be successful in the recruitment process, we articulate our differences as well. Through our open network positioning, generating traffic, we have agreements today with major carriers worldwide, Yamato in Japan, Royal Mail recently in the U.K., and this is a certainty for the host to make sure that you will get some traffic coming from such flows, first thing. But we have as well a differentiation on use cases.
Box is the perfect reflection of that, with the capability, unique capability today, that we have to manage both returns and C2C flows. Finally, to make this a success, we leverage ecosystem, both direct, indirect, which are supported by an efficient demand generation engine. This is particularly the case for activities on multifamily. I mentioned earlier today, the importance of a country where we can operate, and then the country selection for building open networks. Here are some of the two main factors that we are considering, reviewing the countries where we want to intervene and to create a project. The first one is related, of course, to the how wide is the retailer, the e-retail business, the e-commerce countries, the e-commerce business.
The second thing that gives us a very good indication as well, that's the number of lockers already installed by 10,000 inhabitants. This give us a very good sign of what is the potential for us to install or not, a shared open network. Why that? Because we have a reference. First reference is China, 5.5 lockers per 10,000 inhabitants. Second one is Europe, Scandinavia, particularly, and even Nordics, with something with 9.1. So for us, knowing the starting point of other countries that you can see on this, on this slide here, that's a very strong, start point for us to see if it makes sense or not to go further in the installation of a new project. We consider as well as a second key topic, in addition to these KPIs here, what is the carrier market share available?
Some carriers are already involved in the creation of their own private network, closed network, as we saw earlier, and we want to see, of course, what could be the nature of the commitment of the, of the carriers that could work with us. So this is the second key topic for us to look at, the market share available in terms of flows coming from carriers ready to commit with us in the creation of such an infrastructure. The third one, which is very specificity of Quadient, is the fact that we have already, in the countries where we are working these days in terms of shared open network, we have already some strong international deals with retailers to install machines.
And it's important for us to know if these deals that we already have can be extended to the countries we could contemplate, because this is a good basis for us to have a strong installation of a network and a proper footprint as well, because machines are already there. And finally, as well, because it is one of the strength as well of Neopost, we look at of Quadient, sorry, we look at the footprint. We look at our installation of an entity, because we have a team here that can enable us to, of course, to enhance the creation of this network.. It has been the case in the U.K. and in France, of course, with the mail teams already ready, already there to help us installing the machines. So these are really the criteria we are looking at contemplating the installation of a network in a new country. As part of our plans today, after Japan, as you can see, that has been our first installation of shared open network. We are currently developing, deploying in U.K. and France for the reason I just mentioned, a shared open network. Our second, the main axis after acquisition, is to grow install base profitability. For this, we focus on two main store base, which are Japan and U.S., as I said earlier. We ambition to grow the parcel volume by 15% per year.
The Japanese base is an open network which belongs to us. In the U.S., the base is made up of thousands of different properties who have mostly purchased their device. So we adapt to the base business model particularities, but the overall approach remains the same. The first one is that we are gathering data, data of usage of each machine, and we have dedicated teams scrutinizing the usage and the profitability of each machine. Corrective action plan are implemented to stimulate usage and are constantly followed and led. Second topic, as important as the first one, we measure customer satisfaction. Today, as an illustration, we lead a quarterly customer survey with hundreds of thousands of customers, particularly in Japan, to measure their satisfaction about the use of the shared, of the shared open network of each machine.
And this is very instrumental for us to continue to adapt and even improve the services we are given to the end users. So this is to be generalized to the whole install base that we have in all countries. As far as multifamily and higher ed universities in the US are concerned, we monitor the amount of recurring revenue in our new placements, adding, for instance, additional maintenance contracts or later on in the life cycle, upselling our customers with more capacity. This is what we call a virtuous loop. Cross-selling on other solution is also an obvious way to improve our profitability. This is particularly the case for university in the U.S., as mentioned by Anna earlier today. For open networks, the choice of the location is key. We have enriched the selection approach with artificial intelligence.
Let me show you how. The introduction of artificial intelligence as part of a systematic approach has reinforced the efficiency of execution and increased the chances to get the most profitable locations. Artificial intelligence allows us to do what we could not do before, of course. We have built a predictive model, particularly based on the Japanese experience, of the first five-six years of Japanese experience, to allow us to gather automatically all key information, either from usage, surveys, and other infographics from these countries, and we put together all that, roughly 150 data characteristics, that we have for a site to select the best sites for the future out of roughly 1 million potential candidates. We accelerate install base profitability with artificial intelligence.
To summarize our approach here, we operate in selected countries, as I told you earlier, that meet the criteria of major business potential. We are definitely open and do believe this is the right approach to be open to major carriers, to major retailers, all of them. We believe innovation plays a significant role in boosting usage, Drop Box. And lastly, density is key. Density brings proximity, proximity brings convenience, and convenience drives usage. The importance of density is what we have learned from our Japanese experience. Let's have a look at how we have built up this network of 7,000 units in this country. In fact, the first phase, it was made up of three phases.
The first phase, that you can see on the right, lasted around three years and was a phase of fast base route, around 1,300 units as an average per year with one carrier. Then came a second phase of three-four years, between 2020 and 2023, where the priority was the densification of open network. Why that? Because densification means more usage. Of course, end users, we are very happy to find an open, a locker close to home or close to where we go very often during the day. And second thing, doing that, we have attracted much more carriers. It was the case of Japan Post; it was the case of Sagawa. And then comes the time of what we call maturity.
Maturity means, in fact, adjusting constantly the profitability of the machines, the location of the machines, to make them, again, more useful to the consumers and, of course, more profitable for all of us. This is the phase where we are today. How do we translate that in terms of financials? The first phase is, without any surprise, a CapEx time. We are putting in place a lot of machines, so CapEx, as we are bearing the investment. In the meantime, you can see in parallel the revenue growing with initially one carrier and then later on, more carriers. Second phase here is related to the cumulative cash balance. After six-seven years of such a project, we start to see a positive cumulative cash balance. Then third phase, in which we are today, measurement of internal return rate.
We are aiming, and we are very confident about the 15% internal return rate for such a project. This is the model we have put in place in Japan, unique model existing today on the market in terms of shared open network, and we want to replicate this model in the U.K., what we will see in a minute here. You have on the highest part of this slide here, what I just explained to you about Japan, and where we want the way we want to get benefits from this Japanese experience with the U.K. network. We have started to implement almost one year ago, more than one year ago. We are, of course, in the U.K. without any surprise in the first phase, with aiming at 1,000 units in store.
As our goal here is not 7,000, that used to be for Japan, but today, 5,000, so the ramp-up is in progress. We are absolutely matching to that goal as far as 2024 is concerned. Then we'll have, for sure, the 500 phase in the second part, a kind of reduction, aiming at density, so very focused installation. And then later on, refinance, I would say, with around 100 units per year later on, when we have achieved this density, we are aiming at in four major regions of the country. So today, in the U.K., we are operating with various carriers already, which is an acceleration versus Japan. We started with DPD, but in 2024, we saw an acceleration of the addition of carriers to our existing network.
More recently, you have been certainly aware of the fact that Royal Mail, the major carrier of this country, has opted for Quadient shared open network in order to use it. This is exactly what we want to show here, this case study about Japan, its success in terms of financial, and the way that we want to replicate it in other countries, such as the U.K., where we have started a similar experience almost 18 months ago. Taking all that into account, what are our ambitions for 2030? We want to double our install base, which is above 20,000 at beginning of this year, to achieve a bit more than 40,000 in 2030. All that being supported, as I tried to explain, by two major facts: multifamily and Higher Ed continuous growth in the U.S.A.
Second thing, re-implementing in full density the two shared open networks we have started in France and in the U.K. That's the first thing. We want to achieve EUR 200 million in 2030. Our start point is around 90, as you all know, so we want more than double it. We're counting a lot on our business model, which is made up of recurring and subscription model revenue. And lastly, our EBITDA margin that should be very close to break even at the end of that year will achieve a 20% EBITDA margin in 2030. And we are very confident about this because we have demonstrated in Japan that we can do that due to the deployment of a model that we master very well.
So this is the ambition that the whole local community has as far as Quadient is concerned. We have really great assets. First, it's our unique positioning, as I tried to explain. The second one is the fact that we have a real opportunity in this market with a double-digit figures, I mentioned earlier. And we have a very innovative approach in terms of value proposition on one side, with a shared open network, as well in terms of solution, innovative, constantly supported by new creation, as it used to be the case in 2023 with Drop Box. I pass now to Mr. Brandon Batt, my dear colleague.
Hello, hello. Good morning to everyone here and on the webcast. My name is Brandon Batt, Chief People and Transformation Officer. It's my pleasure to be with you today to discuss two topics. First is Quadient's unique organizational capabilities, which enable and power the plan that you've heard from our three solution officers and Petra earlier today. Second is to take a step back and look at how Quadient thinks about sustainability and how our ESG vision will be embarking us on a journey to net zero emissions by 2050. Quadient's greatest asset lies in its people, an inclusive, international community of over 4,500 talented professionals. At Quadient, we like to say that we are epic.
We have a community where people can grow their careers, create extraordinary connections with one another, feel empowered to do their best at work, and have fun along the way. Always doing what's right, it's our people's passion and inspiration that drives our customers' success. So let's discuss a few ways now how Quadient's organization helps drive value for our internal and external stakeholders. You heard today from our solution officers around our commitment to innovation. Quadient's commitment to innovation is central, both to our strategy, but it's also ingrained in our culture. Investing more than EUR 55 million per year in R&D across our business, we have an amazing community of over 550 developers and engineers.
Operating with scale on both hardware and software across multiple sites, Quadient's pursuit of innovation and intellectual property is an asset that serves to protect our future growth. Always future-focused, our customers have benefited from our digital business and our mail business, and now our parcel locker businesses, investment in AI, almost for nearly a decade now, and will continue to do so, as highlighted by our Solution Officers earlier today. This investment not only pushes us to the forefront of technology, but also brings enormous benefit to our customers as well, as they save enormous amounts of time and money as they automate their processes. A key component of our strategy is leveraging our global capabilities to grow our synergistic portfolio of solutions effectively and efficiently. From R&D, let's now move to our integrated supply chain for a moment.
Over the years, Quadient has intentionally designed the manufacturing of its mail and locker hardware to be both sourced internally and externally with different parties. This diversity in our portfolio allows us more variability and flexibility in our cost structure, and allows us to adapt to changing market conditions and opportunities more quickly. Spanning across Asia, Europe, and the U.S., as you see on the map, this global capability keeps our mail and locker business close to our customers. Our supply chain is comprised of two production and distribution centers in Europe. First, being in Le Lude, France, which is in charge of the production of the mailing equipment for lockers and lockers for Europe. Second, Loughton, in the U.K., in charge of production and distribution of our high-end mailing equipment worldwide.
Third, as you see into the U.S., we have a distribution center in Byhalia, Mississippi. This site's in charge of the customization and distribution of mail and lockers for both the U.S. and Canada. And last, we have a production and distribution center in Japan to address local market needs for our locker business. As Alain mentioned earlier, Quadient has also implemented a reverse supply chain model that consists of taking back products from the field at the end of their contract for a process we call remanufacturing, to give them another life. There, our distribution centers regroup the equipment back from local markets before sending them back for production in Asia and Europe. So let's zoom there for a moment. Quadient has been, and continues to be, a committed player in the circular economy for almost 20 years now.
Our organization's ability to grow sustainably is a key global capability. Starting in 2006, we implemented Eco Design principles into our mailing equipment business, aimed at improving efficiency and effectiveness, reducing the presence of hazardous materials, and increasing the lifetime, modularity, and recyclability of our mailing equipment. This relentless innovation around our products and Eco Design of our products in the past years has led us to a fairly sophisticated remanufacturing program, which reduces in impact on the environment, but is also great for our customers as well. So now at maturity, Quadient takes back free of charge equipment at the end of a lease term. It assesses whether that product is fit for remanufacturing or deemed as waste, which is then sent to a local recycling partner.
At the collection stage, depending on the type of equipment and ensuring good functionality, our logistics hubs then diagnose the equipment for being reused, checking whether it's to inspect the equipment, to clean the equipment. Worn parts are then replaced with new ones. All hardware and software that needs to be upgraded is done so at that time, and the product is then placed back on the market as with a warranty as of a new product. Once reassembled, this process is championed by our colleagues in Le Lude, Loughton, and Byhalia, as I mentioned earlier. Eco Design makes business sense, but is part of how Quadient has been operating for quite some time now. So what are the benefits for Quadient in this process? 50% reduction of our carbon footprint compared to new products.
50%-75% of the components are often reused in the equipment before being placed as new products. The process also extends the lifetime of our equipment from five to 15 years, and within that, because we have such a detailed process, we have the continuous improvement of our manufacturing and remanufacturing over time. Our global capabilities not only power Quadient's products, they also ensure our support to our global customer base as well. As you heard from Alain earlier today, we take great pride in terms of the feedback loop and continuously improving our business for both mail, lockers, and digital. Each year, Quadient receives nearly 3 million inbound requests. 65% of those, handled at the top of the pyramid here, are handled via digital self-service.
That's done through not only the great people we have at Quadient, but also our relentless pursuit of innovation. Last year, we handled over 300,000 inbound calls through robotic process automation, and that investment in technology will only continue to allow us to grow this capability each year. As our customers' hardware and software needs grow in complexity, so does our ability to support them. Wherever they may be, we always, whether it's virtual, as Alain was talking about in terms of the interface, or if they need to be seen on-site, Quadient has skilled service technicians that are able to come on-site to support them in their needs. So that's it for global capabilities.
I'm going to switch now to our ESG plan, and it's my privilege to now speak with you about how Quadient thinks about ESG and how we, how we have embedded ESG into almost all aspects of 2030 Elevate plan. Quadient's been committed to sustainability for more than 15 years now, community being one of our four values since we started our transformation back in 2019. I'm very proud of what Quadient has accomplished in the last several years, and it's, it's only a testament to our, the success of our team that we've now been recognized year after year by the world's leading ESG organizations for our performance in the market, positioning ourselves against our peers. Looking forward, we plan to only accelerate and amplify this impact.
Designing the 2023-2030 plan was spearheaded through comprehensive stakeholder consultation in a process called a double materiality analysis. The plan you are about to hear not only incorporates this analysis, but it also incorporates the achievements and the learnings from the past plan at Quadient. Together with this feedback, we ensure that they also are in compliance with local regulations and leading market trends. Taking that, we then sat hand in hand with our business leaders to embed ESG into their business plans so that Quadient continues to grow sustainably over the period. Our 2030 vision is focused on three pillars: our customers, our people and communities, and the environment. First pillar, our customers.
We want to remain their partner of choice in their digital transformation, and together with continuing to provide them a great customer experience through secure, reliable, and sustainable solutions, our customers, at the same time, will be reducing their carbon footprint every time they process a transaction on our platform. The second pillar is dedicated to our people and communities. By 2030, our ambition is to be recognized as one of the world's top leading employers by choice, both by our employees and by external analysts. Achieving this vision means that Quadient will continue to have a strong corporate culture and providing a positive work impact, environment, providing trust, driving engagement, and giving a sense of belonging. The third pillar is on the environment. We recommit to our 2030 greenhouse gas trajectory, positioning the company to achieve net zero emissions no later than 2050.
This means the company will have notably achieved its transition to low carbon and renewable energy, will have embedded Eco Design deeply into all of our solutions, and perhaps most importantly, we engage with businesses committed to reducing their impact on the environment as well. Overall, Quadient continues as a signatory to the UN Global Compact, and we recommit that our plan supports eight of the 17 sustainable development goals, which you can see listed below the three pillars here. Let's move to midterm ambitions. First, for the customer pillar, our goal over the period will be focusing on maintaining that high degree of customer satisfaction, as said by each of our three solution officers, achieving at least 95% overall, as we have done for the past several years.
Every year, we're going to continue sampling our customer base, ensuring that we use their feedback to continuing, improving the products, solutions, and services that we provide to them. Our teams work daily to maintain this level of satisfaction for the past few years, and we will continue to do so. Our second goal is to continue with the eco-design approach of our locker eco-design into our locker and mailing solutions. Thus, we aim to perform lifecycle assessments during the design and development phases of production of at least 80% of our portfolio by 2026. These lifecycle assessments will be made to enable us to drive the same and better customer satisfaction while lowering environmental impact.
Our third goal focuses on the security of our solutions, where we're gonna extend our ISO 27001 certification from our digital to our locker business. Every day, Quadient manages millions of data points entrusted to us by our customers, and we take that incredibly seriously. At Quadient, we've already implemented privacy and security by design policies, as well as high digital security standards, which allow our business to operate today, and we're excited about extending this level of certification program into our locker business as well. The last goal we'll talk about today involves the third parties involved in our value chain of our solutions. I'm talking, for instance, about cloud-based services, hosting providers, print service providers, email sending solutions, and all the way down to those providing parts and components into our products.
Beyond the strong due diligence we already conduct today, and also into ensuring the continuity of our partners' services to us and our business, we want now for our strategic partners to now commit with us to reducing their carbon footprint and helping us to reduce our footprint along the way as well. Therefore, we have set the goal that by 2026, 30% of our strategic business partners will have agreed to reduce their carbon footprint, and 85% of our partners will have endorsed our code of conduct, even in being evaluated for their commitment to ESG. Regarding people and communities, our plan for 2024 to 2026 continues upon the previous plan and expands our commitment on all fronts. I want to focus on two elements here, diversity and inclusion.
First, to say, I believe diversity is one of the greatest assets driving the success of Quadient today. We define diversity at Quadient across many dimensions and broadly, including not only gender, but age, race, country of origin, experience, and many others. While our plan here focuses on gender, we continue to progress and celebrate all forms of diversity within Quadient, and together with the strong support of our CEO, the executive committee and I want to further improve our profile every year. On gender diversity, I have two aims. First, nurturing the career growth and representation of women in all levels of our organization. And second, continue to increase diversity across relevant metrics by at least 1% per year. Like many technology companies, Quadient, at the end of 2023, had the female population within Quadient represented approximately 35% of our total population.
So naturally, our first goal is to represent- to increase the representation of women in management to at least the same level. With a trend already of 1% per year, it's a significant achievement. That being said, if we can go faster, we will. Regarding inclusion, at Quadient, we strive for collective success. When employees join Quadient today, they join a community that cares about them, surrounded by talents as talented as they are. Our teams perform as they do because of the inclusive environment that allows us, that gives them the feeling to succeed. Already with a very high score of 72, we aim to continue increasing this and with a focus on inclusion, achieving 75 out of 100 by the end of 2026. Last, regarding environment.
Our plan over the period is to continue minimizing our impact on the planet and working with suppliers that intend to do the same. Today, let me first highlight Jefferies' announcement of our commitment to net zero by 2050. This ambition is not just a target for the market, it's part of our business trajectory and follows science-based targets. Applying well-known methodology, Quadient's commitment has now been accepted by SBTi, and we are excited to now take part in the Race to Zero, backed by the United Nations. We'll focus today's presentation on Scope 1, 2, and 3 emissions. Thinking about our path to 2026, we must first remember the last few years. The beginning of the last plan, we set our, our targets on Scope 1 and 2 emissions to reduce GHG emissions by 50%.
For Scope 3, our goal is to achieve a 30% reduction in absolute value by 2030. Both of which were against a 2018 baseline. Midterm, Quadient, I'm pleased to say, and as you likely saw in our registration document, already we achieved a 55% reduction in Scope 1 and 2 by the end of 2023, against the 2018 baseline. Fueled in part by our initiatives internally to streamline and refresh our office footprint for our employees. Therefore, for 2026, we've therefore increased our ambition again, now setting a 64% reduction target on Scope 1 and 2 against our 2018 baseline. And for Scope 3, we recommit to our 2030 target, originally set for a 30% reduction in absolute value against our 2018 baseline.
To summarize, the Elevate strategy will translate into happy customers, a more secure and sustainable solutions, a growing engagement with our high-performing, inclusive, and diverse workforce, and a continued reduction of Quadient's footprint on the planet. And with that, I wanted to say thank you for your support of Quadient and the important work we're trying to do here, and I'll now pass it to my dear colleague, Laurent du Passage, to translate everything you heard today into our financial plan. Laurent.
Thank you very much, Brandon. Good morning, everyone. I'm very happy to see you all this morning. And I have the pleasure to walk you through our last section today, Elevate in numbers, to give you the financial picture and perspectives, and the capital allocation needed to execute the plan that was shared earlier today by my dear colleagues. First and foremost, I think important to say, and Brandon has mentioned it, my other colleagues have mentioned it, we are very much exposed to North America, 57%, out of which the bulk is U.S. today. Many European countries is 33% of the 2023 revenue. And just to be noted, and we know what is the context in France and the tensions we have today, regarding the future elections coming in.
Our dependency to France is about 15% today, and the bulk of it is recurring contract. So we don't see much exposure to what is going on, and I don't think there is any concern to have regarding Quadient at this stage. We are 4,700 employees, Brandon mentioned it, and our size. I remind you as well, that we are eligible for PEA- PME investment criteria, which is relatively important in France. Moving now to the next slide. If you remember, since COVID, we've shown year after year growth. Since COVID, it's very different to what we had before. For those who does remember, I think in 2015, we were declining at 1.8%. In 2016, we were declining at 2.1%.
In 2017, we were declining at 2.2%. And this has particularly moved afterwards. Moving forward, and as you can see, since COVID, we see a catch up, obviously, of the hardware, post-COVID, the 4.3% you see on the left-hand side. But an overall growth of Quadient revenue, driven by subscription-rated revenue, 3.1% and 3.4% in 2022 and 2023. Which means big difference between yesterday and today at Quadient is the level of predictability we have since... to our growth engine and the subscription-rated revenue that we've been creating. And on the right-hand side, you see that since 2020, we've been adding EUR 90 million of annual recurring revenue, and we have EUR 740 million of subscription-rated revenue in 2023.
This has been possible thanks to a recipe we know quite well, being attracting first new customer to extend the customer base, and then expanding, upselling on that base, while at the same time, managing a churn as low as possible. You heard, obviously, Alain, still showing that even within mail, that is the most mature for our three markets, we are able to to grab 10,000 new logos per annum, of which some have never been using franking machine. If you start with digital, and we always have the question of how much of your subscription-related revenue also is committed? If you just look at digital, since we changed our business model, the vast majority of the revenue is driven by subscription-related revenue....
Within that subscription-related revenue, you have 85% of that, that is a committed contract from one-three years, and only 15% that is usage, including payments, number of outputs, mostly that is 15%. For mail, regardless of placing the equipment by leasing or renting it, we create a recurring cash flow packaging both hardware, service, and usage. Usage being limited as well to supplies and only accounting for 15% of the subscription-related revenue. On lockers now, hardware is either sold or rented, paid on usage. Even when sold, it still generates associated support and maintenance revenue. Within subscription-related revenue, volume and usage now represent 45% due to the change in Yamato contract mid-2023. Overall, our subscription-related revenue is 70% of Quadient sales. Out of the, out of the 70%, you have 80% that are fixed.
The positive development of growth engine and the strong stickiness and resilience of mail have allowed to deliver 3%, more than 3% current EBIT before acquisition-related expenses growth since 2020. As you know, up to now, we've guided on current EBIT before acquisition-related expenses, those being comprised mostly of PPA amortization and M&A fees, which have reduced in the past years. For the sake of clarity, we will now only guide on the current EBIT that you see on the right-hand side. This has grown in the past at a higher pace towards the pace of the left-hand side, notably due to the fact that in 2020, we had a large amount of M&A-related expenses. We obviously today are confirming the 2024 guidance will hence now be organic growth in revenue and in current EBIT.
By consistency, we'll also be moving the metric by solution in current EBIT, including these acquisition-related expenses, digital carrying the bulk of the PPA amortization today, because it's where we did the acquisition in the past. We will add as well in the reporting, EBITDA and an indication on future EBITDA by solution, is that being a replacement, but really an addition, allowing also for comparison with peers that are extensively publishing on these metrics, as well as being closer to the cash metrics pre-CapEx. Starting with digital now, we have successfully completed our transition to SaaS, with percentage of SaaS customers moving from 65% to 82%. That's what you see on the right-hand side. Our annual recurring revenue has been developing at a pace of close to 20% per annum since 2020.
We are now above EUR 200 million of ARR, of which only a small portion, again, is depending on volume. About EUR 90 million of additional yearly subscription-related revenue has been created since 2020 in digital. EBITDA and EBIT margin have seen a low point in 2022 due to the business model change that we know and the go-to-market investment, and since then, it has proven a five-point increase in 2023. EBITDA now standing close to 12%, thanks to a strong scalability point now achieved. Moving forward now, what it means. Thanks to our mature platform and proven go-to-market, as explained by Chris, and the very positively oriented underlying drivers, we expect revenue growth to stand at 10% CAGR to 2026, with subscription-related revenue still growing faster than total revenue.
This revenue growth is accelerating compared to what we had in the past three years, 7%, that you see on the graph, due to our business model being over and also the maturity of our go-to-market. This will lead us to about EUR 500 million of revenue in digital in 2030. Regarding EBITDA, positive trajectory since 2022 will continue. It will develop nicely to 20% by 2026. It's more than nine points of increase, and it's gonna be reach 30% by 2030, as mentioned by Chris. A quick note, amortization, in fact, is expected to trend down, notably as part of the scalability that we see is coming from the R&D side, but also, obviously, the PPA amortization is going to drive down on this organic view. Moving to mail now.
Clearly, our mail performance, as you know, the past years has been absolutely amazing. Since COVID, we even showed a 0.6% growth CAGR over the period. It's turning in a declining market, as we saw with Alain. It was helped, obviously, by the catch-up post-COVID. It was helped also with some price effect on 2022 and 2023. And this comes thanks to a pursued level of investment reflected in the amount of upgrade that we see on the top left of the install base. Alain mentioned the iX Series that now is 32%, basically, of our install base has been upgrading to that iX. And in parallel, thanks to that, the top line that has been resilient, our margin has as well been resilient, thanks to the share of remanufactured product.
We've seen it extensively with Brandon as well, that enables to do substantial savings. And despite the unfavorable mix effect from the low-end franking machine in France and the U.S. that are extremely profitable. Moving forward, what we're saying on this main market, and we know the market is declining, volume is expected at -7%, market is expected at -5%, and we are saying we will be at -3% revenue CAGR, so better than the market in the coming three years. In 2030, the revenue of Mail should still be around EUR 600 million. We just. Oh, sorry, we are one slide ahead. I'm piloting, it should be okay. Just a second. We're coming back to the ambition of Mail.
So you can see top line on the left. We're still going to be EUR 600 million of revenue in 2030, and the margin by 2026 will still be between 20%-25%, if I remember well. Both 25%, sorry, and 25% by 2030. Important to know on that Mail business, EBITDA has been declining historically more than EBIT, thanks to the progressive full amortization of existing printing machines that we have on the market in France and in the U.S. And now, finally, Lockers. Lockers installed base have increased by 55% compared to 2020. We have today more than 20,000 lockers installed. We are one of the few global leaders in this market.
Even if the revenue has been relatively flat since 2020, it was, in fact, hiding a strong growth in 2020 compared to 2019, and a progressive conversion towards open network rather than retail. And this has allows obviously, for a strong increase of the subscription-related revenue that you see on the bottom left. We did add EUR 9 million of yearly subscription-related revenue in this business between 2020 and 2023. From a margin perspective, despite the adverse transportation costs that we had in 2021 and 2022, a strong recovery was made in 2023. Although it has been done with a top line that has been flat between 2022 and 2023. It's close to 8 point of EBITDA improvement in 2023, and it's bringing us to -3% and setting the scene for being positive in 2024, as mentioned by Benoît.
This also has been obviously fueled by a favorable installed base, EBIT evolution, from 11.3% in 2021 to 13.6% in 2023. Now that, as presented by Benoît, large opportunities like, the U.K. Open Network are on track and scaling up, notably thanks to the Royal Mail contract that we signed earlier this year, and that Japan, France, North America will continue to generate growth because the underlying driver is the e-commerce and very well-oriented on this market. We expect Lockers, to be, above 10% CAGR in the coming 2023 to 2026 period, and the revenue should be more than double the one it is today by 2030. So we are talking about more than EUR 200 million of revenue by 2030.
Such increase in volume will largely enable an improvement of EBITDA, positive from 2024 already, but reaching more than 10% in 2026, and will be around 20% in 2030, which is very close to the Mail business by then. Capital allocation now will enable that profitable growth path. It's about EUR 300 million of CapEx that we expect over the period, 2024 to 2026, will be split between Lockers deployment, Mail CapEx, obviously, and R&D. We will remain opportunistic on M&A. We will continue to focus and manage an efficient balance sheet with a leverage ratio, excluding leasing below 1.5x by 2026. And finally, we will maintain in the same period, a minimum 20% payout ratio for the shareholders and consider share buyback.
Focusing on CapEx, in the past three years, we invested on average EUR 93 million per annum, and we will now invest about EUR 100 million, so about 7% more per annum over 2024-2026 period. The split evolving slightly and reflecting the maturity of the different businesses. Mail will be trending down, Lockers will be slightly trending up, and we'll have, on the digital side, something relatively equivalent to what we had to maintain the attractiveness of our platform, described by Chris. As Chris, Alain, and Benoît described, we have a strong in-house capability to support our plan organically, and hence, we'll have only an opportunistic approach regarding M&A. We'll also have a flexible approach on the Quadient portfolio, as we had in the past years, focusing on leader position and value creation.
Quick comment on net debt, but clearly it has been reducing in the past three years, despite the acquisition of Beanworks in 2021. And combined with a resilient EBITDA, it has translated on the right-hand side into a leverage, moving from 3.2x to 2.9 x at group level, and 2.1 x to 1.65x , excluding leasing. Our intent is to continue to manage an efficient balance sheet with a 2026 target of leverage ratio, as mentioned, excluding leasing, that will be at a maximum of 1.5x . One specificity of our business, and sorry for the busy CFO slide, is that, we finance our mailing hardware for our customer through our leasing.
Today, at least at the end of the last fiscal year, it represents close to EUR 600 billion, that you see on the right-hand side, of leasing receivables to be paid by our customers in the coming six years. That's the speed that you will have in the appendix. So in other words, if tomorrow, it's a very unlikely case, but if we stop this business, we would still able to collect that amount of money from the customers with a very low amount of default rate, 1.3% for the full portfolio. And we know that this amount is carrying a relatively comfortable interest rate at the same times. Hence, what does it mean?
It means that from one year to another, depending on the amount of hardware we finance compared to the average we had financed in the past five to six years, portfolio declines, like in 2020 and 2021, when we finance less hardware, it was the case for COVID, and it generates an inflow of cash under our change in these receivable lines that you can see in our free cash flow statement. This was EUR 62 million in 2020. It was EUR 39 million in 2021. And if you see in 2022 and 2023, the green box is lower because we almost, with our good performance in mail, we almost finance as much hardware as what we did in the past five to six years.
Which means that in the future, the placement of finance hardware, if it was to decline again, it will generate additional cash flow mechanically. Shareholder policy is maintained and is aligned with the next phase of Quadient's development, with a 20% minimum payout ratio that should be favored by progressive profitability improvement that we foresee, and we discussed about that. Excess cash return will be considered as well in the form of share buyback. As a summary, it's almost the last time. As a summary, total revenue growth is expected over 1.5% CAGR before 2026, this time with no COVID catch-up. And if you compare to the 2.5% we did before, I remind you that the last two years were 1.4% and 1.9%.
So today, we are confident, and we know that we have all the assets and the recurring contracts in place to deliver that ambition. With that, we'll be more than EUR 1.3 billion of revenue by 2030, and with more than EUR 1 billion of subscription-related revenue, as mentioned by Geoffrey at the beginning of the presentation. The makeup of Quadient is what will be very different because the makeup of the revenue by 2026 and 20, 2030 , sorry, 2030 , will be significantly different, with a higher share, again, of that subscription part. That's a given. But of course, within the subscription part, you have an extremely high expansion of the growth engines, notably digital and lockers, that are more compensating than the decline of mail to 2030.
About EUR 90 million, again, of additional subscription-related revenue will be added between now and 2026, and more than EUR 250 million by 2030. This will lead us to that EUR 1 billion mark. It's about 4%-5% CAGR of subscription-related revenue to 2030. So it's a big still going to fuel most of our growth. Current EBIT, on the right-hand side, will benefit from improvement in those growth engines and the scalability of the platform that comes from the R&D and the go-to-market mostly, but also the install base and the lockers. And this profitability will grow twice faster than the top line by 2026, which means above 3% per annum. And by 2030, we expect our current EBIT to reach EUR 250 million.
And now, as the last slide and as a summary, if you had to remember one thing from this morning, I believe it is Quadient will lead in mail, win in digital, and win in lockers. This will be possible only thanks to the customer-centric platform that we've built, our recurring business model that we know and that we've been capitalizing on in the past years, and of course, our sustainable approach that Brandon has described in the ESG section. This results in a strong investment proposition. Now it's time for the question. We are happy to take the question. Just before that, there will be a little bit of movements. We'll put some chairs on the stage so that we can hear your question and answer to this question, so you have some times to think about them. Thank you.
... So, yeah, I have two different questions. The first one is on slide 91. Look at the digital bucket, especially the subscription part.
Mm-hmm.
How much of that is on a fee per user basis?
On the digital business model? So, can you hear me? Yes, you can hear me. Sorry, I will-
We hear the question.
I will repeat the question of Murad. So, Murad, your question is: within the digital business, in the subscription related revenue, how much of that is committed?
No, on a per user basis.
On a per user-
So, do you charge clients on a per user basis, i.e., the more user, the more, the higher the invoice, or is it completely different?
I will try to detail that, and please don't hesitate to speak up as well. With the subscription related revenue, you have two portions. One is what I described as being committed, 85% of that. Within this 85%, the pricing obviously depends on several parameters, and one of the parameters would be the number of end user. Another parameter could be also the size of the company and the amount of transaction that they will do, without still being a usage part. Okay? The 15% that we describe as being usage is really when you price within of the number of output.
So if I take an example, a couple of years ago, when you had mobile phones subscription, you would price for four hours, five hours, six hours, seven hours of voice. That's a committed part, but obviously it increase depending on the number of hours or depending on users, for example, in our case. And then you can be on extra of that or do specific calls that will be charged at a higher fees, and that's the usage part.
Okay, thanks. And the other question that I had, if you take a step back and look at the group, let's say, 10 years ago, you guys were 6,000 people, a little bit more than that. Today, 4,700, making EUR 100 million less, so good job on productivity boost. When you think about the future, where should you land in terms of staff? And what was the main driver for the staff reduction? Was it basically the decline in the mail business, or did you do other stuff? I know that you sold some businesses-
Exactly.
- but there was staff reduction anyway, underlying. So I'm just wondering the mechanics here, and where, where should you land, let's say, in 2026, 2030?
So it's a good question, Murad. Definitely, part of the answer, especially if you come back several years ago, like 10 years ago. I think the divestment was a big difference because we divested businesses that were much less profitable, so more intensive also in terms of people. So I think as an operation, we became more efficient. Two, there's a level of synergies that did not exist 10 years ago, that exist today. So if you think about the synergies, a lot of them are people driven. You're gonna have synergies on the sales side, as one example. When we sell, when we have a sales guy that sells the mailing equipment, if we say 100 basis, he used to sell 400, right, booking, for example.
Now, when we sell lockers and or digital solution on top of it, it's not that he sells 100 and he does 80 on the mail and 20 on software, for example. We've increased the productivity, right? So now he sells 420, 20, 140. Maybe he sells a little bit less of the mailing, so he may be at 95 or at 90 on the mailing side, but the delta came from the additional solution. Because of that, with the same amount of people, we produce more revenue, right? This is what I think Petra and Alain has explained. The cross-sell is basically 50% more productive. That's also part of the plan moving forward, is we still have quite some reserve of additional productivity, because not yet 100% of the 1,000 sellers that we have cross-sell all the solutions.
So as we increase the penetration of the cross-selling, it comes with additional synergies, and therefore, reduce our need to hire additional people, right? So it's really about the efficiency. Another thing that did not happen, that was not there 10 years ago, which is a little bit more obvious, but is the integration of the back office, right? Finance people, HR, legal, so all the supporting function, instead of having one team. So if you take the example of France, one team by businesses, and we had 15 businesses at the time. Now we have, a single team instead of 15 different teams, supporting the same scope of businesses. And you've seen that, for example, in the reduction on the percentage of G&A out of the total revenue of the group. And that's also something that we intend to see, continue to improving.
We gain half a point to a point on a yearly basis. You have the same synergies on the operational side. What Benoît has expressed, which is, I think, fundamental, is we usually try to launch our parcel locker solution in the same countries where we have mailing operation. Take the example of the United States. Today, I have a single service team being able to do the installation and support of 50 states in the U.S. for the mailing activities, and it's the same technician that goes and do the installation and the support of the parcel lockers, right? So we definitely have efficiencies built in that have started to provide some result, but we have a lot more potential in the coming years.
If we look, specifically just at what happened, I think, for Chris, in the last 12 months, we increased the subscription revenue to more than 10% on the software side. And we have the same staff than a year ago on the full digital activity, right? So we definitely are starting to get the full benefit of being an integrated platform. So if now, trying to respond to your question, we likely gonna continue to have a little bit more people with the growth, but much less need, proportionally, to the growth. And this is why, consequently, we feel very comfortable to increase the EBIT and the profitability of the company. And just on average, we're hiring, in term of replacement, people that leave and goes are roughly-
About 600.
600, 500 people there every year. Depending on the retirement strategy, you know, some people leaving for retirement, do we replace them in the same countries or not? Where we've seen the growth in staff has been the U.S. in the first portion. I think where we see now for the coming years, probably the increase, is likely to be in Europe, as we're starting to get the benefit in Europe, which we didn't yet fully activate, so France, U.K., and Germany in particular.
Thank you.
David.
Yeah, good morning. David Cerdan from Kepler Cheuvreux. I have a few questions. First is on PLS, parcel locker. I would like just to share with you my personal experience as a consumer. When you order on the internet, online, I've never had the opportunity to get my parcel into a parcel locker. So can you explain why we don't have this? It should not be maybe an option, but maybe mandatory in order to save money, et cetera. So can you explain us why is it so much difficult to get access to this option? And secondly, in terms of cost for the carrier, can you give us some numbers? Is it significantly less expensive, et cetera? And I have a second question regarding the mail business.
David, maybe let's address the lockers-
One by one.
Then we move to the mail.
So as far as the way to find lockers or not, it depends. It's really something which is, we know it changed a bit since the COVID was really rising up, the parcel locker use. And that's a work which in progress in the multi-channel approach of retailers and carriers. So more and more, we see now growing the number of parcel lockers on the field. We see really this being included in the carriers and/or retailers. We see the list of parcel lockers, but it's true that it is a new movement. It's definitely quite new, and it is occurring. And I saw personally—I see personally some evolution in the website.
I'm just mentioning about retailers, about more and more seeing the parcel lockers. But it's true, it's a change of a bit in terms of multi-channel distribution.
I think if I complement what, Benoît is mentioning, in France, if you remember, don't remember by heart, what you've seen on the, on the chart, but the penetration of lockers in France is one of the lowest one, actually, of the, big e-commerce countries. I think it was 1.7-
It's 1.5-
1.5.
If I'm correct, in terms of the-
For 10,000. And if you compare that to the 10 ratio that you have in Poland, or if you look at the more than the-
Nordics.
In the Nordics as well, or in China, where China is basically a penetrated country. There's 300,000 installations already installed in China. That gives you a sense why in France you haven't seen that yet. I think the French market has one specificity compared to other countries. It had developed a network of PUDO, right? If you know the Point Relais, for example, which is obviously not automated. There are 30,000 of them in France, which has created, I think, an alternative solution before, I think, the advent that is now coming in the lockers in France.
Probably, the last year has been the year where there's been the most installation in France, so we feel that the French market is also about to pick up, the same way we've seen the acceleration in the U.K.. The second question was on...?
On the cost of the locker versus PUDOs.
So this is, of course, a question which is rather more for carriers, I would say, for them to really give you the information. What I can say is that in terms of value proposition for us, what I know is that we are bringing to the carrier some locations, locations which are very often in our value proposition premium sites, a recent example being Auchan.
... And the one of the specificity, of course, of a locker, as opposed maybe to some other touchpoint or pickup point, is the fact that it will be for years. I mean, we all know that for carriers, they have constantly a sales effort to constantly replace one shop that is no longer, I would say, distributor for them of parcels, to replace them. So I cannot answer because that's part of a booking, but I'm sure that the value proposition we are adding to the carriers is making sense. Because, again, we give them or we bring them some locations of very high value, first thing, and stable, stable cost-stable locations, which is very important for them as well.
David, you wanted some question on that mail?
Maybe it's possible to continue just on this point. Do you have in mind the proportion of parcels delivered by carriers into the parcel locker versus at home or some other ones? And how do you see the trend to be when you have some discussion with carriers?
Yeah, of course. So I'm not the accurate figures to answer you in terms of proportion, because it highly depends, again, from the strategy of delivery of each of the carriers. I'm sorry not to be accurate, but it's a reality. Each carrier has its own strategy in terms of delivery. But for sure, for the reason I just indicated before, which is stability, which is premium sites. The fact, as I said during my presentation, that it is a way for the carriers to avoid a second delivery, that it is the way for them to make deliveries in the bulk. So for financial reason, operational reasons, I'm doubting that it would not be a nice evolution in terms of growth of a...
I would say, the share between home, other out-of-home than parcel and parcel. And I think that parcel will be definitely beneficial to this evolution for the reason I just indicated fully clearly.
I think you had a question, maybe, David, on the mail side?
Just to follow up on parcel. Sorry about that. You show on slide 75 a payback period of six years, six-seven years. I guess it's based on your Japanese experience, right? Are there any reason for this payback period to be different in another country, i.e., the U.K. or any other?
Yes. You want to take it,
I'll take this one. Yes, well, obviously, clearly, part of it is based on the Japanese model, but also on the projected U.K. model. So basically, it's a nice, I would say, average between what we intend to do in the U.K. and what we already have done in Japan. That gives us the impression that it's gonna be relatively similar with the phase one, phase two, phase three, as described by Benoît. The only difference, I would say, is probably that in Japan, when we started, Yamato was the unique customer in the phase one. They were renting, kept paying a fixed amount for 2/3, a bit more than two-thirds of the locker, 70% of the locker.
And that obviously de-risk significantly the beginning of the cash inflow, okay? In the U.K., the approach has been at the beginning a bit different. Now, we have Royal Mail that basically takes the same role, more or less the same role, because they also have a commitment to the within our lockers. But we started with Royal Mail, and the trade-off in the U.K. is a little bit more variable and a bit less fixed than we had in Japan, but that's also an upside. In other words, when you have it fully fixed and when the risk is taken by the carrier, the price negotiate will probably be lower than if you were to price per parcel.
The bet we are doing in the U.K. is to shift a little bit more towards usage, that would potentially give us an upside. And then there is a last dimension that is obviously very important, is the lifetime of the locker. We know that, initially we are betting on seven years. We know that, the one we have in Japan, for part of them already have eight, and probably 10 would be, easily achievable. If it goes further, it would also significantly change, not the payback period, but the total return of the overall investment.
Just, I'm thinking about the first question on the out-of-home. It depends country to country, right? So, that's why it's difficult to give you an exact number, because the labor cost in Japan is very different in France or the U.K. or the U.S. What we know is that for the locker to obviously convince the carriers, the automation coming from both the automation from delivering at home or out of home and the automation of the return of the flows is significant. So if you think about a carrier that have to come back to a place just to deliver something, if at the same time they could pick up 10 boxes, it's 10 less travel that they need to do to pick up the return. So the – let's say, significant saving.
The second one is, if you compare to the PUDO, or the Point Relais in France, obviously, the locker is today much cheaper than a PUDO, manually being managed. So the PUDO fees, for example, in France, or the Point Relais, is around EUR 0.70 or, something like that, maybe-
A bit less.
A bit less. So the economics of the parcel locker is obviously much less than that, right? And the last thing is as a percentage of the flows, today, the parcel lockers captures a small amount of those flows, right? So less than double digit, less than 10%, I think. So for us, regardless of the increase coming from the e-commerce or not, right, we're not so much worried about whether the flows are gonna increase. What we see is a shift from parcel not being delivered in lockers, moving to lockers. So that's the first shift we benefit from. Returns that was not managed through the lockers that are also coming into the lockers. And the last shift that is important is from the countries that don't have an out-of-home strategy, where it's at home delivery that is pretty big.
The out of home is much cheaper than the at home, right? Because out of home, you can concentrate in one location, multiple deliveries. So the advent of increasing the out of home will shift some of the at home deliveries to the out of home, and the lockers will also benefit from that. So there's a multidimensional acceleration with the use of the lockers once the network is dense.
Yeah, we can move to your question.
Yeah, Max Zoey for Zompa. Thank you for the presentation and all the insights. My first question is regarding capital allocation. The 2026 leverage ratio, considering what you ended last year, can be seen as a bit modest, but I guess you plan to allocate money to either M&A or share buybacks. Could you tell us a bit more about, yeah, how much capital do you think you will be able to deploy in either M&A or share buybacks in the next few years?
I'm gonna answer it on the M&A side. Just to summarize, what I think, our three solution leaders have explained. As a result of the investment we have made in the last three years, today, we have the solution that we need to operate organically for the next few years or the next seven years. We believe we have a very competitive solution, right? And we have sized the level of R&D for the next three years to be autonomous and to remain a leader in our respective field. So we do not need to do acquisition to achieve the plan that we want to achieve. So we'll just remain opportunistic in terms of acquisition. We've done some smaller acquisition, like Daylight, on the general side, nine months ago almost, and more recently, for Alain Frama.
But this is not a focus for us. This is why we did not allocate particular amount of capital for M&A, right? That's purely opportunistic today. I'll let Laurent answer on the rest of the capital allocation and share buyback.
No, and, it's too loud? Too close? Sorry, Charlie, it's good? Okay. Yes, no, you saw in the last plan, we had mentioned below EUR 175. We ended a bit below that mark, EUR 165. I think this 1.5 mark is absolutely the maximum we'll hit. Do we have a way to do better? Absolutely. Absolutely. Do we have some room for additional CapEx that would be necessary for opportunities, eventually on the locker side, or some opportunistic M&A, we mentioned it, but also, potentially as well, share buyback, depending on, you know, what is the level of the share price? Would it make sense or not, with the cash available to perform such a share buyback?
That's those three components that basically are factored, if you want, in the gap that you see between the past leverage evolution, because I think that's what you are looking to, and the future that we foresee in the coming three years.
Thank you. And, second question is regarding lockers. If I understood correctly, up to 2030, your main focus will be on your four main countries. So first question, is that correct? And also, after that, do you think it will still be time to open new countries, or it will be too late because competitors will already have taken the market, and you will more focus on return on investment on those four main countries? Thank you.
Indeed, the plan that we have presented this morning, as I said, is focused on the four countries that in which we are operating these days. And what we do as well, of course, as I said this morning, is the fact that we are analyzing country by country, based on this KPI, the framework related to e-commerce growth itself, to the coverage of the territory in terms of number of lockers per inhabitants. So we are reviewing, I would say, each major country one by one, and we don't prevent ourselves to take an opportunity. But at least today, what you have in the plan is based on the countries where we're operating.
Again, we are analyzing, scrutinizing constantly, any other market, with the criteria I listed this morning.
Jean-Fran ç ois.
Thank you. Jean-François from Oddo BHF. So for PLS, for the development, you mentioned other countries. Is Germany could be interesting for you? When we are, we see the slide show, this is one important market. So is it possible to invest in other European countries? And also for the PLS, you expect 40,000 lockers in the medium term, so to double the current level. Do you see some risk to have some more expensive to develop the business, and the risk to delay the growth expected for the margin, and the strong growth expected for the margin? Is it the case previously? And even if you want to develop other countries, the risk is to see a delay for the rest of the margin.
Bernard, do you want to take the first part? I'll take the second one.
Okay. So definitely. So the first part is related to other countries and to Germany.
Germany.
Germany. So, Germany is definitely, as you maybe saw this morning in one of the slides covering the major e-commerce countries, is definitely one of the countries that are, I would say, could match with the criteria that we have listed, definitely. So it's one of the countries that is currently scrutinized and that we are looking at very carefully.
So today, in the plan, the 40,000, so the extra 20,000, it's a small increase of pace versus what we have done.
... for example, the last two years, we've been around more 2,000, a little bit more. To achieve the 40,000 is 3,000, right? Knowing the phase that we're in now, particularly in the U.K., but also France, knowing that the first phase is almost behind us, we should be able to be in that phase of acceleration. This is where we feel we've got the contract, and we've got the team in place to be able to ramp up to those level. In terms of margin, this is why it's important for us today, for all of us, is we have entered a phase where the profitability is gonna increase twice as fast as the top line.
So we are gonna be obviously very careful to ensure that in terms of allocation of resources, and if we were to launch a new country, which naturally you've seen the J curve in Japan, but it could happen, obviously, in the U.K. or any other country we launch, we'd wanna make sure that we would only consider such a new venture, right? But not to the detriment of the profitable trajectory of the group, right? So that's something that we obviously have to weigh. Obviously, on that, there's always downsides and upside.
For us, I think the downside that could happen if there is any risk to our pace would be that if we decide to slow down for whatever reason, which we can, because the acceleration of the installation of the lockers is upon us, so we could potentially wanna slow down the phase in U.K. and France. That could happen for this reason, and if so, it could potentially delay the acceleration of the profitability in those countries. On the other hand, we also have the opportunity to accelerate, which is a little bit the case right now in the U.K., because everything has been set right. We've got the integration done with the carriers.
The team really benefiting from the AI tool that Benoît mentioned is also an acceleration of the choosing of the location, for example, in the U.K. market. So that works the other way. It could require a little bit more CapEx up front, but then we would get the benefit on the profitability sooner as well. So that's something I think where we feel confident today, is that we control our destiny, and we can pilot basically the improvement of profitability. That's the case for the parcel locker, but we expect the same thing on the digital side, and you've already seen, I think, for now, almost 18 months, the steady improvement in profitability on digital activity as well.
Regarding the CapEx, could we have the allocation between maintenance, development, R&D, et cetera?
Always more.
Always more. No, I think, you have the data for the past, Jean-François, because we publish it since the segment reporting change, for the full year 2022, since, our URD published in April 2023. We, we would still have on a, on, on digital, the R&D carrying the bulk of the digital CapEx. That being said, it's gonna be at a higher growth rate, at a lower growth rate than the top line. So that's where you get some scalability, and that's where the amortization as well, in percentage of revenue, will reduce in the future. When it comes to mail, bulk of, the CapEx's, tangible asset is the franking machine. This usually goes down, except when, my friend Alain does a decertification, which is the case last year and this year.
You remember, I think that last year, and I have my piece of paper to please Alain, last year that we had a CapEx for mail of EUR 26 million, where it was EUR 21 million one year before. That's relatively exceptional. We are more usually in this EUR 20 million and going down as the install base is going down, even if the revenue is relatively stable, the install base of the franking machine, notably, that are rented for 15 years, is declining. That's what I was mentioning. And you would expect that the level of CapEx we do also on the R&D side for mail is slightly down, but still one key reason why we've been successful compared to the market is the fact that we did not stop investing in those product.
And last but not least, on the locker side, yes, this has increased. So you had a high point in 2019, then a relatively low level of equipment CapEx in 2021, 2022. Now again, a high point in 2023 at EUR 18 million, driven by both U.K. and France, which are the main open networks that basically keep us busy. We expect that this trend is easier, at least at the same level or eventually a bit growing, and that's a big difference that you see. Total, EUR 93 million per annum in the past, EUR 200 million. Yes, favorability towards equipment CapEx on parcel locker side and a little bit more of R&D on the locker side in absolute value, and relatively stable in digital and trending slightly down around me.
I think that's the main takeaway. You can take the past figures, and with those trends, I think you're very close.
One thing I think that could potentially change on the amortization of the lockers, because as we're on the lockers today, for very good reason, historically, we have decided to amortize our lockers over seven years, right? Because when you start, you know, seven years before, you don't know what is the length of time of those assets. It's considered today fairly conservative, for a few reasons. When we look at our competition, if we take InPost or others, they do amortize it over 10 years today, right? What we've seen today is that we have installed lockers for more than seven years in Japan, in the U.S. as well. I remember my last visit, I was visiting the first lockers that were installed in the U.S.
I think it was in 2016 or 2017. The shape of the lockers, or the state of it, was as new, right? It's in a multifamily residence. It was indoors, but it hasn't changed. So it also speaks of the quality of the asset. So one thing that may change in the future, as we pass the years, we do have two benefits. One, as the base gets over the seven years, there's no more amortization, so the profitability, mechanically, on the base that is amortized, will increase...
Then for the new lockers that we will consider to install, as we gain confidence that the 10-year or a longer period might be more relevant, we may decide also to amortize those assets over a longer period of time than just the seven years, which are to benefit from a profitability standpoint on the near term.
Thank you. The last question concerns the trend for the profitability. You seem a little bit cautious for the short term, but until 2026, with at minimum 1.5% growth for the top line, and at minimum 3%. We see an acceleration of the profit growth and profitability after 2026. So can you explain why we see an so huge acceleration after 2026 and a more limited growth for the short term?
So, Jean-François, when we say 1.5% above, it's above 1.5%, and technically, there is no limit. And it's the same for EBIT. When we say above 3%, it means it's gonna be strictly above 3% over the coming three years. And if you look at the trend, and it looks like being an acceleration on the graph, but the percentage, in fact, growth is very, it's quite similar, in fact, it's an effect of the size of the starting point, that, materially, if you apply the same percentage growth over a long period of time, it shows a curve and not a straight line. And that's most of the explanation, to be honest, of that acceleration.
But where you're right, Jean-François, is that this assumes that we are capable to maintain a percentage growth rate year after year. And we know, and I'm turning to Chris, that it's harder to do 10% CAGR when you do EUR 250 million of revenue than when you do 10. So that's the commitment we take.
Is there any other question in the room? So if not, we have a question from the web. I think it's a question for either Geoffrey or Laurent. You have started to disclose EBIT by product segment over the past years, and it is our understanding that you have also further progressed the legal separation of the three business units. Can you please provide an update on where separation work stands, and also explain the rationale for completing the separation?
I will take this one.
Of course.
It's a technical question. First, because as you know, and I mentioned that just before, we did change our segment reporting. We were organized primarily by region, and we've moved to give more granularity, more specificity by solution. And you can see that the three leaders here are the solution leaders since the full year of 2022. And with that change in segment reporting, as a listed company, we had a number of obligations regarding the details we provide in terms of P&L financial statements, but also balance sheet. That requires us first to be able to communicate on an EBIT and an EBITDA now, progressively being able to split CapEx, but also balance sheet items, current, notably, current assets.
That requires that more and more we are able to split by legal entities, and different balance sheet. That's what we are ongoing. But last but not least, I think it's also important that we give Alain, Chris, and Benoît the appropriate tool and systems to be able to manage, optimize their different businesses. And obviously, managing the parcel volumes in Japan and U.K. requires slightly different systems, and lower number of invoices than the main business, where you would have hundreds of thousands, close to 500 million of invoices per annum, probably, that are being sent to customer. And on Chris' side, being able to manage payments, and integration of third party and, notably the partners that resell our solutions. So yes, we've been progressively going that path.
Yes, because it brings visibility, consistency to the market, but it's also internally to be able to execute the best way in our solutions.
I can't wait to see the free cash flow by solution, Laurent.
One thing at a time.
We have a question on the Frama acquisition. How is the integration going, and what was the rationale for buying it?
Can you hear me?
Yes.
Yeah, yeah.
Yep. Okay. So first part of the question, the acquisition is going very well. We're on track with the integration plan. All the benefits that we were expecting to realize are being realized. There's no particular roadblock at this point. So from a planning and execution standpoint, nothing to say that's bad at this point. Why did we do it? Because it's an opportunity for us to really realize economies of scale by adding more base to the infrastructure that we have already. And it's also an opportunity for us to upgrade those customers down the road with the full array of our solutions. And maybe third, but not last, the price was good.
Thank you. We have a question for Chris on digital. Why do you think the platform approach is a stronger value proposition than a specialized or niche approach for AP and AR?
That's a good question
Okay, good. Thank you. Thank you for the question. Simply because it gives us the opportunity to address customer pain points as quickly and as efficiently as possible.
... and because our customers ultimately are asking for help managing the pain at that convergence point, that convergence point between when they're managing the communication, creating, sending, distributing the invoice, and all the payments and the receivable activities around that invoice. We're not alone, I would say, in the concept of a platform per se. If you look at some of our competitors who also do APAR, they talk about platform as well in some places. I think what differentiates us more than anything is how we're delivering and developing the platform. By thinking about the platform as offering those shared services that are valuable to a customer, if they're just using AP, or if they're just using AR, or if they're using both. We don't need to build certain capabilities multiple times in different technology stacks. We can do it once.
That reduces that complexity that we talked about early on, so the customers can maintain fewer and fewer applications, and it also, very importantly, gives us, gives us synergies. We don't need to build things multiple times. We can build them once, we can reuse them everywhere, we can deploy them faster, and create faster time to value for our customers. So, yeah, we're excited about it. We think it's a differentiated approach in how we're doing it, not necessarily in what we're doing, but in how we're doing it. And frankly, even though the number is small today, we've seen the benefits. The customers are adopting multiple applications on the platform and using them together in a very, very different way. So the proof points are starting to build.
We have another question on lockers, very popular. Benoît, how do you differentiate from InPost?
InPost, in the slide that I presented this morning about the various categories of players we have on the parcel locker market, InPost was in a category called closed networks. Otherwise speaking, they are a carrier, as we see them at least. They are a carrier investing in a network of lockers to make sure that it will be part of a strategy to go to the end user customer. And that's at least based on what we see today, a closed network for their own flows. The positioning of Quadient is quite different.
It's to be an agnostic open network operator, otherwise speaking, to put in place an infrastructure which is offered to carriers in order for them, of course, to make deliveries and able to take the returns. But not only, we offer in our lockers the capability for retailers who could host our machine, the capability to make some click and collect flows in our machines. In addition to that, we are as well offering the capability to service company to join the usage of the not... the users of this network. I mentioned this morning an example in the U.K., which is KeyNest, which is a real service offered to consumers, a landlord and a tenant, for them to exchange a key.
So we have an approach which is, again, agnostic, which is, multi-carrier definitely, and multi-services. We want our lockers to become ultimately a hub of service. Of course, mostly with carriers, but not only.
Thank you, Benoît. We have a question for Petra. How do you make sure that the cross-sell is not done at the expense of mail? And how do you keep the mail salesperson motivated to sell both products?
Well, that's an interesting question because it is not either/or, very interestingly, right? What we have seen when our salespeople that, predominantly they were to go with a mail solution to their customers, by positioning Quadient as a more strategic partner, they get from the mail room to the boardroom, right? They have C-level entry points, and they have significantly deeper strategic conversations. And at the end of the day, in most of these cases, they walk out with a larger deal size that mostly includes both software and hardware. This is what we alluded before. Our customers, they don't switch like binary from, like, digitization to where they are today, right? It's a gradual transition, and in most cases, we actually sell both very successfully.
Thank you, Petra. We have one last question, and I think this is one for, for Geoffrey. How does upsell work on the platform?
So it's a, it's a good question, and I think it relates a little bit to the question that Chris had earlier. Petra just answered how we do cross-sell from a mail platform to a digital platform. So we're happy to get a new customer on board of our platform on, on the digital side. And when they come, they could come from different module, right? The first purchase they make, one module, could be a hybrid mail module. It could be a account payable module that Chris was answering before. It could be a account receivable module, it could be a e-invoicing solution, it could be a payment solution, it could be naturally a customer communication management solution.
So they come, at one point, on the platform, and this is where we make the difference with the platform and the upsell strategy, and it works in both ways. It works at the acquisition stage that Chris was mentioning, is when a CFO calls us for an accounts payable solution, and we say, "You know what? Have you also thought about your invoicing need and accounts receivable?" We sell them, actually, instead of one module, we sell them two modules at once. So that's a way to differentiate from all the niche players that don't have that additional module. Then, once they are a customer, whatever they use, we've got a customer success agent that looks at the usage of the platform. Based on the usage of the platform, we could see that they are using the platform in that particular context.
They have that pain point, that workflow. We see the increase of numbers of invoice, we see the delays in payment or DSO. That gives us the opportunity, either in the platform through the app itself, to push recommendation, or through a sales agent, a customer success agent, to actually call the customer with the use of the data and say, "Mr. Customer, we see you have that problem. You know, we could help you," and we could propose to them to actually use other part of the platform. But the great benefit of the upsell is they already bought the platform, they already have a contract with us. We don't need to, to go through a new RFP or purchasing cycle. We just need them to use more of the platform, and for them, obviously, to agree with that on the financial terms.
That's how we make the pitch on the upsell. The upsell strategy is obviously much differentiated. Like for the cross-sell, it costs less to upsell a customer than to acquire a new customer, and from one module to two modules to three modules. So obviously, part of the growth, and also coming back to the profitability on the digital side, is that more of the growth is gonna be coming in the next three to seven years from the upsell and the expansion on digital side, versus the acquisition. Up to now, the growth that we have achieved, up to EUR 250 million, most of it was acquisition of new customers. We're gonna continue the same engine, but we're gonna add a second engine, which is what the Chris described.
We're gonna add the expansion of more module being sold to existing customers. Yeah.
Uh-
Yes?
Okay, one last one, David.
You have the microphone, maybe, or we can.
Give me and I can, read. And we'll have to conclude after that.
I will be, rapid. It's a question for Mail. So in your plan, you target a 3% decline per year, and to reach a 25% EBITDA margin. So what happen if you do zero instead of - 3%? And what about if it's not - 3%, but - 5% for your margins? And how do you reconcile this?
When you say what happens, what do you mean?
Imagine your revenues are flat.
Okay.
Okay, so you should be more ambitious, maybe, for the margin. And if there is a worst case,
Uh-
The business is down every year 5%.
Okay, so-
Is it possible for you to resist to that?
So yeah, if the revenues are flat, we'll be very happy. That's really what will happen. That's something we're gonna strive towards, of course, as we have in the past. But based on what we know of the market, the evolution of mail, and where we see it going, we're comfortable with 3% at this time.
But that,
And-
Yeah.
Just a quick comment to David. Obviously, it's gonna be better if we are flat. If you look at the past, since 2020, we've been flat, we lost 2 points of EBITDA. So now we're saying at -3%, we lose 3-5. So that gives you a little bit of a hint. And you could ask, but yes, but why... If you are flat, why you lose in the EBITDA? Part of the answer is what I mentioned on the installed base of franking machines, notably in France and in the U.S., where you get fully amortized franking machines. That benefits the EBIT, but not necessarily to the EBITDA at the same level, okay?
So, the mix is a little bit favorable to folder inserters, notably, and higher-end customer that are a little bit less profitable. You have a mix within this recurring that is detrimental to the rental franking machine that goes with some service as well. There's very high margin. So you have a. Even if you are flat in top line, you would be not, you will not necessarily be flat in EBITDA. Probably the good answer is to look at the past two points when we are flat.
Then to conclude, because I'll try to wrap up for Catherine at the same time.
Right.
If we were to go to 5%, which was the case before, we're at the best position possible to limit the impact that it has on the margin. Why? Because if we have less volume to push on the market, I mean, our salespeople will sell less hardware, but they will be reused to sell more of the other product, and we have the capacity to fine-tune the relationship. So it may still erode the margin on the mailing side, but at group level, we'll be able to reuse, reuse that resources and still have the benefit of a higher contribution from the other solutions.
Yeah.
Same thing on the OpEx on the technical side.
So-
We have a pretty good track record of estimating where the market is going, number one. Number two, should the shift happen faster, the other line will benefit. So Quadient is kind of-
Naturally hedged.
Exactly.
We have to conclude. Thank you very much for attending. Thank you to all the Quadient team for the huge work that was put into today's event. For those of you in the room, there's a lunch being served outside. Thank you very much.
Thank you very much.