Good afternoon, everyone, and welcome to our first quarter 2025 sales presentation. With me today are Thierry Gadou, our Chairman and Chief Executive Officer, as well as Thierry Lemaître, our Deputy CEO, Finance and Corporate. Thierry Gadou will make some remarks on the group's business performance and financial performance in the first quarter, as well as our full-year outlook. After these remarks, we will be happy to take your questions.
As a reminder, some of the information to be discussed on our call today is forward-looking and subject to important risks and uncertainties that could cause actual results to differ materially. For these, I refer you to the safe harbor statement included in our press release and on slide three of this presentation. This evening's release was issued a short while ago and is available in French and in English on VusionGroup's website, vusion.com. The slides of this presentation can also be found on our website in the regulated information section. A replay and a transcript will also be available on our website after the call.
With that, it's my pleasure to hand you over to Thierry Gadou for his opening remarks.
Thank you, Olivier. Good afternoon, everyone. Thanks for joining our conference call, and very happy to present our sales figures for the first quarter. In a nutshell, VusionGroup achieved an excellent Q1, slightly ahead of our guidance with 31% growth in adjusted sales. Order entries nearly doubled in the first quarter to EUR 532 million, driven by the strong momentum in the United States. VAS sales reached EUR 33 million, up 71% versus Q1 last year. We reiterate our full-year outlook of 40% adjusted sales growth and improved profitability.
Let's now go into a bit more detail. The group's IFRS revenue reached EUR 215 million in the first quarter and EUR 233 million on adjusted basis, and that is up 31% compared to the first quarter of 2024. This is slightly above the guidance that we communicated during the presentation of the 2024 annual results, which was around 25%. By the way, it's also our best first quarter ever.
In terms of geography, in this first quarter, growth was driven by America's and Asia Pacific region. In this region, adjusted sales reached EUR 143 million, up 100% compared to the first quarter of 2024. This performance was driven by the rapid expansion in the U.S., our first market today, and particularly the deployment at Walmart U.S., which is continuing according to plan. The fluctuating tariff situation was, of course, discussed with our U.S. customers, and that led to unchanged rollout plans due to the strategic importance of digitizing stores in a context of increasing price volatility. Our forecasts for the year are kept unchanged, and confirmed.
In Europe, we achieved adjusted sales of EUR 90 million, and it's down - 15% compared to the first quarter of 2024. The business in Europe is, again, not yet benefiting in Q1 from the contract that we signed at the end of last year and more recently, due to normal manufacturing lead times. Deliveries will increase sequentially in Q2 and over the following quarters. We do confirm our target of resuming growth in Europe for the full year. The pipeline is strong. We see increasing focus from retailers on improving the efficiency of stores across Europe.
If we now look at order entries, Q1 was a very strong quarter, with new orders increasing by 94% year-on-year to EUR 532 million. Over the last 12 months, that represents EUR 1.9 billion. This record figure is in large part explained by the recent Walmart contract extension, and this number includes a part of the new EUR 1 billion order announced at the end of the year, and which will be booked in our orders over the next quarters of 2025. The group expects this good momentum in order entries to continue for the full year, also driven by signing of new contracts in both the United States and Europe.
Let's look at VAS now. Revenue from software services and non-ESL solutions reached EUR 33 million in the first three months of the year, up sharply by 71% compared to the first three months of 2024. Both recurring and non-recurring revenues grew strongly. Recurring revenues in particular reached EUR 17.2 million, up 38% year-on-year and represented about 52% of the total VAS revenues. Note that our cloud install base grew rapidly during the first quarter of the year to reach approximately now 26,000 stores and 188 million labels. The dynamic will accelerate in the coming quarters. As a reminder, the cloud install base was around 19,000 stores and 94 million labels a year ago at the end of March 2024.
Our outlook for 2025 is confirmed. I'd like to just comment a little bit the situation. On the one hand for sure, the fluctuating tariff environment may lead to slower investment decisions for some retailers, those who are still in pilots or just evaluating business case. Those who have not yet measured the benefits at scale, and those may wait until there is less uncertainty on tariffs and costs of the technology. On the other hand, though, retailers who have already decided and launched rollouts are clearly determined to move forward and are not changing plans despite the current tension in global trade. More than ever, this proves that in today's environment, our solutions are providing retailers with measurable benefit, efficiency, and resilience, enabling them to increase the return on capital employed of their most important asset, their stores. Our technology perfectly fits the present challenges of our customers.
So with an order book at an all-time high, with strong visibility, and we reiterate our growth and profitability improvement objectives announced on February 26, which are a revenue growth rate of around 40%, an annual adjusted revenue target of EUR 1.4 billion, split between around EUR 600 million in the first half and EUR 800 million in the second, an 80% growth in VAS revenue for the full year, an adjusted EBITDA margin improvement of 100- 200 basis points in 2025, and a positive free cash flow generation.
With this, I thank you for your attention and give you back the floor for questions.
Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster.
We will take our first question, and your first question comes from the line of Ben Thielmann from Berenberg. Please go ahead. Your line is open.
Yeah. Good evening, guys. Can you hear me?
Yes, we can.
Okay, perfect. Hi, Thierry. Hi, Olivier. I have a couple of questions, if I may. The first one would be on the Walmart rollout. Thierry, you already mentioned regarding the U.S. customers that are currently in pilots, but I was wondering, how do your conversations with Walmart go? I remember when I met them in New York, they seemed to be very bullish in rolling out the ESL and the VAS solutions. Has that changed in the last couple of months because of the tariffs? Any color on the Walmart rollout in particular? Thank you.
Yeah. No, not at all. No change. As I said, I made a general statement on those customers who had already decided and launched a rollout. Those are typically the customers who have already measured at scale the benefits of our technology. The message is very clear. We've been discussing with all of them, including the largest one you mentioned. There is no change in rollout plans. We are, as I said, continuing the rollout as planned with an acceleration throughout the year. No change. That's a very clear message.
Can I-
This is why we're able to be confident on our guidance for the year because we have a very strong backlog and strong visibility. There is no change on this side. I think it's very telling, to be frank. It's very telling because it shows the very strong benefits. If there is no change in rollout plans with the type of situation, I think it's a stress test that is quite a confirmation of the very strong value of the technology we provide.
Yeah. Makes sense. Thank you very much, Thierry. Maybe another question regarding tariffs. Over 2025, you are ramping up capacity to manufacture the ESLs for particularly Walmart. I was wondering, how does the current tariff environment affect your decision-making where to ramp up basically that production capacity? Because if I look at your competitive landscape and I look at Hanshow and I look at SOLUM, everybody is very much focused in producing or working with EMS that are manufacturing in China, in Vietnam, in Mexico.
I was wondering, given that you work together, for example, with Jabil, what is actually the real likelihood that you would decide to not ramp up the capacity with them in, let's say, Mexico or in Vietnam, but maybe in the United States? You probably have a little bit of higher wages, but you probably save a bit on the lead times. As the global number one, is there a real likelihood that you would be the first one to actually manufacture ESL for the U.S. market in the United States?
It is true that we have a very, we consider to be in an environment like we have today, we consider that we are by far the safest choice because we have a very balanced geography diversification in the supply chain and a very strong set of partners who are also a balanced geography, including as you pointed out, the U.S. as a very strong geography where they have many, many factories. For us, this flexibility is a real strength and we are ramping up capacity. We have some flexibility to decide with all the partners, both Foxconn, Jabil, you mentioned Jabil, but there is also Foxconn. Both have capacity in Vietnam, in Mexico, in the U.S. All the scenarios are on the table.
So far we are not changing our plans because as I said, the customers who are essentially in our backlog, and we have a very big backlog, have said, "No delays," even if it is. Right now we are flexible. We probably would be the first one to do what you mentioned if we were to. We are not announcing anything. We just have very strong flexibility, because as you know we own our equipment so we can move it easily and et cetera. There is plenty of factors that are sort of favorable for our flexibility. But the main message we receive from our customers right now is no delays. Continue, keep up with the rollout plans. No delays for relocation.
We have flexibility because some of our capacity is not yet decided the geography. We keep very close to all the stakeholders of this conversation, including officials in the U.S. and to see how it unfolds. But having said that, in any scenario, we see no change in the growth plan.
Okay. Sounds good. Then maybe third question from my side. Order intake numbers look actually pretty good. I think it's the highest book to bill you have at least since my model reaches back, so that's quite encouraging. I know you don't disclose numbers on a per customer level, but could you maybe guide us a little bit how much of the Q1 order intake was driven by Walmart?
As you said, you said the answer in the beginning of your question. We don't disclose specific, but what you know is that we just got a very, very big order at the end of the year and we said we're booking it in the firm orders as we receive sort of nominative orders. And so it will be spread over the whole year of 2025. So it gives an indication. But I think again, it's a big part of course. It's a very big customer, so big part and we have part of this EUR 1 billion order in here. That's what I can say because we don't disclose customer specific data.
Mm-hmm. Yeah. Fair point. And then maybe final question and then I go back into the queue, would be on IFRS 15. The adjustments you have, we currently have the situation that adjusted revenues is larger than reported revenues and at a certain point in time that should basically reverse, right? So if I assume that you're capable of doing 100% of the Walmart U.S. stores by the end of 2027, let's say, is it fair to say that those IFRS 15 adjustments will basically reverse somewhere in late 2025, early 2026? So that we should expect that maybe by Q3 or Q4 numbers that adjusted revenues will be lower than reported revenues.
Hi Ben, Thierry speaking. Just be careful because within the adjusted revenues you've got three impacts, one stemming from the warrants, another one's coming from the price decrease. That's relating to the price decrease. We said it's going to reverse in the course of H2 this year. Yes, you're right. In H2 this year you should see this amount reversing but we don't disclose the split between the two adjustments. Yes, of course the depart and the warrants will keep having impact until the end of 2030, 2029, sorry. The impact relating to the price decrease will reverse in the course of H2 this year.
Mm-hmm. Okay. Okay. Cool. That's it from my side for now. Thank you.
Thanks Ben.
Going back to the queue.
Thank you. We will take our next question. Your next question comes from the line of Valentin-Paul Jahan from Stifel. Please go ahead. Your line is open.
Good evening everybody. Doing well?
We do.
Perfect. Three kind of questions from me please. First, could you please give us more granular view about the order intake momentum in Europe? Which countries are driving it, and also what is your feeling about the momentum in the U.K. market? Is it starting to take off from your point of view? If so, what tangible evidence do you have to share to back this up?
Yes. As I said, again, there is a good sign in Europe since already a number of months. We were already happy with the performance in Q4. We had a growth in order entries overall last year. There are several geographies which are sort of good. You specifically, and you are probably right to point out the U.K. because it is a country where there is a bit more lagging behind continental Europe in terms of adoption and penetration. So it is where we see a catch-up sort of dynamic. It is true that those who have been, for instance, at the recent RTS event, the Retail Trade Show event, could see the very significant interest of all the retailers.
I think those who follow a little bit the press know that we have been mentioned by a lot of journalists who have seen our pilots here and there. We are expecting sort of things to unfold clearly this year, a number of deals. So we are quite optimistic on the U.K. There are other regions where the pipeline is big. I think, so far, the tariff situation is not impacting, let us say, the decision time. So at least we will not have that topic. DACH region has also a good strong pipeline. Even in France supposedly Metro market, we see a growth opportunity. Plenty of things are going on and when we will announce we will announce. But right now we are, let us say, positive about the momentum .
Okay. Understood. Maybe about value added service s. Could you please give us more detailed explanations of the factors behind the strong growth in non-recurring value added services ? Is it coming from the expansion of VusionOX licenses or from computer vision camera that you can sell before or from value added services and hardware? Is it possible to have more detail on it?
Well, details, I do not know, but clearly there is something that we have been talking about is the fact that EdgeSense is a VAS, rich platform. This is why one of the things we are doing nowadays is to transition as many pilots as we can from ESL pilots to EdgeSense pilots. As you know, VusionOX is the operating system, so the software that powers this solution and which is the next generation operating system. This is a big contributor to the increase of the so-called non-recurring, but it is not one-off because it is going to continue. But yes, the ramp-up of VusionOX.
Generally speaking, the whole growth in VAS is really driven by software, whether it is recurring or embedded one-off licenses of software like VusionOX. It is still essentially software that drives really the growth of VAS. It is a very positive momentum and a momentum that is going to stay. It does include also a number of other things, by the way, but the key driver in Q1 is around this type of software. That is why I mentioned also the growth of the cloud install base.
Okay, understood. Maybe last one about tariff. In terms of profitability, tariff are a factor of uncertainty, as they could affect the gross margin in the coming, I do not know, quarters. You can manufacture in Mexico, Vietnam, or in the U.S.A., like you said, thanks to your EMS. Could you tell us maybe what proportion of your purchases correspond to components versus the proportion that corresponds to the payment of the assembly work, I would say? Maybe among components, what proportion of components you buy from Chinese company located in China, and which would not benefit from another source of supply from another country?
I mean, what I mean is that even if you manufacture in the U.S., you will need to buy components from China, right? It can still be cheaper to produce in Mexico than in the U.S., given the price of components and the share of components within the total cost of your solutions.
There are several aspects to your question. Maybe, Thierry, on the first aspect, which is the impact of gross margin. I understand it is because of the reinvoicing of taxes that you are talking about the sort of mechanical impact on the gross margin. Is that what you are talking about? I understand. The first part of your question seemed to be related to that if we reinvoice because-
Yes.
the increase in tariffs. Is it that mechanical impact?
My question is basically the fact that within the total cost of your electronic shelf labels or digital shelf labels, there is some components and there is-
Yes. Okay.
assembly work.
Okay. I understood the second part of the question, but I thought the first part was relating to something that is more the mechanical effect of reinvoicing a component, which is no margin, obviously it is tariff, so reinvoicing tariff to customers. Maybe, putting a little pressure, a small pressure on the total margin rate, which is true because you have a part of the. I just wanted Thierry to comment on this if it is-
Yes.
your question. But in fact, your question is all about the component versus finished product. It is okay. I may have misunderstood. Tell me.
Yes.
I think that maybe, Valentin, just to answer your question, because first of all, you know that the largest customer, which is currently is subject to tariff is Walmart in the U.S. And with Walmart, you have got a pass-through clause. So currently, for the next coming months, and of course, for the full year 2025, tariffs should have no impact on our profitability. The only impact that could potentially raise from the tariff is the fact that, yes, we are going to recharge at zero margin, the cost of the tariff to the customers. But that is a very limited impact.
We do not consider that it should have any impact on the profitability target that we have already guided the markets with. We confirm the capacity to deliver the profitability improvements that we are targeting for the full year, even in the current context of the tariff. That is the situation so far. Of course, no one knows what the tariff is going to be in the next coming three, four months. Currently, from what we know and from what we see of the situation, we confirm the capacity to deliver the expected improvement of the profitability.
Yes. My question was more about, beyond Walmart.
Yeah.
Because in the U.S. you have-
Yes. Valentin, you know we are on Q1 2025 revenue confirmed stores. Yes, we can try to give an estimate of what the profit will be in the context of tariffs that no one can already anticipate. I am afraid that it is a little bit fiction so far.
Yeah. For sure, we confirm our guidance for the year, which is, I remind, relatively precise when I compare the guidance of other companies, frankly. That is confirmed. What you need to have in mind is that because we would be on equal, I would say, basis here, is that we need to stay very humble about what will be the outcome, because you seem to have already a certainty about what's going to happen with China. I'd be a little more careful. Because we've seen a number of things over the past six weeks, including this morning. We don't know where things are going to end up.
Making plans on depending on the relative cost of components and the relative tariff on components versus finished goods, depending on whether you put your you know these cases of some manufacturing products where the suppliers and the assembly line is crossing the border of Canada seven times before the finished goods. You can't make simulations on that. What I think is really interesting about the stress test that we went through is that so many customers say, "Don't change anything." Why? Because this world that we enter is a fundamental world of volatility. I don't want to disclose any of our customers' data, but I can tell you the cost of volatility, managing volatility in the store, the manual cost of that is massive. What is the only protection? It is the digitization and the automation.
At the end of the day, you need to make sort of choices not on sort of super short-term volatility of decisions around tariff, because that's not an industrial policy. We have gotten closer and closer to the U.S. We may operate in the U.S. It will be for many reasons if we do. And it will be for reasons that will stay. So it may happen. We will do it, maybe. We will certainly get closer and closer to America, for sure, in many ways. But we're taking decisions in a reasonable way. Those things are not volatile. Production is a big decision.
The good news is right now, none of these things are going to impact the growth plan that we have for this year. And so that's the good news, really. We're staying flexible. We're looking at things, but right now, nobody knows where the tariffs will land for any country, including China.
Okay, understood. Thank you for your answers.
Thank you. We will take our next question. Your next question comes from the line of Adam Gildea from Bank of America. Please go ahead, your line is open.
Hi. Good evening, guys. Can you hear me okay?
Yes, we can.
Oh, perfect. Thank you so much for taking my question. I really appreciate it. This is also on the timing. You mentioned that it's possible, and it's very flexible to move production around, whether it's to the U.S. or to another third country outside Vietnam or Mexico. I was wondering if you can just elaborate a little bit on the timeline there, because as I understand it, the new Walmart pre-finance lines that are going live throughout this year are located in Vietnam and Mexico. Presumably, the process of getting those up and running is already ongoing now. Does that mean that that's essentially committed for 2025, if, let's say, tariffs were going to go into effect two to three months from now, after the 90-day pause? How quickly could you react and move that to the U.S. In terms of keeping the 2026 and 2027 timelines together?
Yeah, sure. You're absolutely right. the flexibility, we're still in the process of setting up these lines. Some of them still have a bit of flexibility in terms of the final location, given it's the same EMS on both ends, Vietnam and Mexico. If we were to go to the U.S., it would be the same EMS. That provides another element of flexibility. It's true that if we were to decide, and we haven't done that, to move as soon as this year in America, it would delay some of the ramp-up of this capacity. That's why even though it would be possible, there would be a delay. That delay, you remember I mentioned no delay was the answer of our customers. Precisely those who are already expecting sort of rollouts to happen because those decisions have been taken. They said no delays for the reasons I mentioned.
No delays means not relocating. Now, it doesn't mean that for 2026 we would take a different decision, but right now we're not planning to relocate. We already have a dual location. We have a bit of flexibility of load balancing between those locations, by the way, and still now. But for 2025, all the discussions have taken place. Every scenario has been analyzed, shared with our customers, and the answer is no change in plans, and we deliver. That's what they expect us, and so we will deliver our growth.
Okay. That's very clear. Thank you.
Thank you. We will take our next question. Your next question comes from the line of Flavien Baudemont from Bernstein. Please go ahead, your line is open.
Hello, can you hear me?
We can. Yes.
Okay. Thank you. Hello to all of us. I'd like to have a bit more color on one of your comments. You said that there is a wait-and-see attitude for your clients that are currently in pilot phase. Their decision are motivated by weaker pure return investment projection or more on higher uncertainty on future resale prices. If I had to say my question differently, does this wait-and-see attitude from retailer will disappear once the U.S. tariff will be settled? If not, what is the main concern currently from these retailers?
No, I think, yes. You did understand me correctly in the sense that the fluctuation in tariff is creating uncertainty on a lot of, let's say, on the cost of technology, on the future cost of technology. When you are at early stage in pilots or even before, sort of evaluating business case, and you have to put in your model cost and everything, and all of a sudden, you don't know if it's this level or 40% plus, etc. All these are indicating creating an uncertainty on the models. We expect, and we may be wrong, but we expect on these type of customers that there may be a slowdown in the speed of decisions.
Also, there is another factor. The current situation is not only creating an uncertainty on cost, but it's also creating an uncertainty on recession, on inflation. Those are very significant concerns for retailers in general. Again, this is pushing for that. That's why I said it's a contrasted situation because on the one hand, we had this incredible good news that those who are already sort of planned rollouts want to absolutely either stay on plan or even go faster. There is, on the other hand, this situation, which is creating uncertainty on the, I would say, the macroeconomic growth or recession, and also on the cost of technology that is imported. Those uncertainties will logically defer some decisions.
Now, we're on the right side of the market because we happen to have, as I mentioned, a lot of our revenue plan is in backlog or in customers that have already sort of made decisions. That's why we're able to have our guidance confirmed, having said that. It's true, there is this contrasted reality. I'd say the good news is we're on the right side of the market right now.
Okay, great. Thank you.
Thank you. We will take our next question. Your next question comes from the line of Laurent Gélébart from BNP Paribas. Please go ahead. Your line is open.
Yes. Good evening, gentlemen. Laurent speaking from BNP. A couple of questions on my side. The first one regards your exposure to the U.S. market. First question. Are you shielded from tariffs with all your U.S. clients or only Walmart? If not Walmart, if others are not shielded from tariffs, what is the size of the backlog you have yet to deliver at, let's say, past prices? That's the first question. Second one relates to Walmart and Captana. Could you share with us where do you stand in terms of the pilot regarding this technology and if you expect them at some point to sign a contract with you? The third one really relate to VAS services. Recurring VAS are up 38% in first quarter. Do you expect the level of growth for recurring VAS to accelerate throughout the year?
Regarding, I don't know if Thierry you want to. The first question was about the tariff. I think the situation is relatively the same in a lot of our customers that I described. In fact, we described the situation of the customers who had already decided rollouts and as roughly the same, regardless of the impact, which is not fully known at the moment. They're asking us essentially to continue as planned, even though they might incur some pass-through of those. In most cases, we have the same provisions. There are, I would say, no difference here.
Yeah, we've seen most of each situation, and that's why I wouldn't make a different statement here for a given customer. Mostly the difference is really the customers who had already decided or already launched their rollouts, and they're not changing plans. It's also true for a retailer we had mentioned in December, like The Fresh Market, et cetera.
Regarding Captana, the computer vision projects, we have several computer vision projects which are developing on plans. They are still in pilot mode, so it's too early to say if we are going to sign a contract, but they are very important project. They are developing well, and so we'll certainly talk about it when we can. Right now, they are developing well.
And then recurring.
And the re-
The recurring VAS. Yes, we said that we wanted to grow the VAS approximately 80% in 2025 versus 2024. Given 31% increase in Q1, yes, you're right, that should probably accelerate over the course of the year 2025.
Okay. Thank you.
Thank you. We will take our next question. Your next question comes from the line of Gilles Crespel from Alizés. Please go ahead. Your line is open.
Good evening, Thierry and Thierry. Can you hear me?
Yes, we can.
Great. Thank you very much for all your comments, and congratulations for the results. Few questions if you allow me. One is, there has been great development in the U.S. based on Walmart developments. It's a little more muted or a little less recovery on the European side. Could you give us a little color on this? That would be my first question, and how you expect the following quarters to evolve. The second question is, there had been some strong recruitments in 2024. Could you give us an idea where we stand at the end of the first quarter 2025? Where does the headcount stand, or how has your recruitment program been continuing or more stabilizing?
A technical question is, I have in mind that the whole of Walmart rollout would be something like 4,600 stores. Could you give us or remind us the day for completion of the rollout, as it was signed per the last contract? Thank you very much.
The first question was about the European recovery. I hope I'm not paraphrasing something I already said. Let me say it differently. The European situation is good. It's still a modest quarter in Q1 after a good quarter in Q4. The thing is we have usually six, nine months manufacturing lead time. When all the Q4 order entries in Europe are going to be visible towards the end of Q2 and in H2. Again, that's the thing. We have also order entries in Q1 that also will impact more H2. That's why we're absolutely confirming one of the things we mentioned about in our guidance was that Europe in the full year would be coming back to growth. It will be more visible in H2.
However, sequentially, quarter- after- quarter is going to be growing. Increased deliveries will increase sequentially in Q2 and then in Q3 and then in Q4. That's the dynamic we see. The plan of deliveries is lower in H1 than in H2, and so in total will be resuming growth in H2 and for the full year. That's what I can say. I gave a bit of color on some regions in Europe, which have a good momentum and where we expect new wins in the coming quarters to continue to fuel growth, not only in 2025 but also in 2026. That's for Europe. Regarding H. No, I think HR was the third one. The second one was what?
Second one was HR.
Yeah. HR, yeah. Well, we have passed, I think not long ago, our thousandth employee. I think we finished the year at something like 960 or something like that.
950.
Yes, 960? Yeah.
950. 9-5-0.
950, yeah. In the meantime, we've passed our thousand. We should be recruiting, like last year, another 200 this year. It's two to three hundred. It's moving well, and it's particularly growing the team in the U.S. Finally-
Walmart timing and completion.
Oh, yeah. This is something we didn't precisely disclose. We did say, I think, when we signed the framework contract, which was in 2023, that it would be around five to seven years. That's still the case. We're still on the planning phase of all the years. Right now, obviously, the plan for 2025 is completed, but plan for 2026 and 2027 are still. Right now, we should be done, I would say, roughly, we should be done in 2027, right?
Thank you very much.
Thank you. We will take our next question. Your next question comes from the line of Aurélien Sivignon from ODDO BHF. Please go ahead. Your line is open.
Yes. Good evening, gentlemen. Two question on my side. Firstly, I just wanted to touch on the impact of a weaker US dollar. I was wondering if that could change how you see VCM evolving for the rest of the year. Perhaps with higher taxation risk in the U.S., do you see this as a tailwind for further adoption of VAS with the retailers who are currently rolling out in the U.S.? Thank you.
Maybe just on the first point, Aurélien. Yes, you're right. It kind of has a limited impact actually, because the impact's more on the revenues. Since euro is gaining value or dollar is losing value against euro. It's true that the revenues in dollars are a bit less significant. Nonetheless, we are still very comfortable with the EUR 600 million revenue guidance for H1 and the 40% revenue growth for the full year. On the profitability, yes, it can have a limited impact. We said that we had quite a natural hedge between the revenues and also the cost in dollars. We consider the impact to be quite limited on the gross margin.
And so-
The second question.
Potential recession impact on U.S. retailers.
Well, again, this is something I touched on just before. The fact that the current situation is not only a tariff situation, it's also a macroeconomic uncertainty about the evolution of consumption and purchasing power and GDP growth. In theory, as I said, it might delay decisions of investment. Not specifically affecting one or the other components of our business, but maybe delaying some other entries. Again, this doesn't call into question our guidance because, on the other hand, a number of other things are absolutely confirmed. I don't think it's something that would affect the course of business in 2025. We've taken it into account.
Got it. The question was more, let's say, about if with a higher taxation risk, it could be a tailwind for further adoption of VAS with the retailers you are currently rolling out in the U.S.
A tailwind for the retailers who are you mean a positive factor?
Yeah, I mean for Captana, for instance. Yeah, absolutely.
You mean recession would be a tailwind for Yeah, I hadn't thought of that. You're right. It could be. No, I think we have already included a very positive momentum on VAS. As I said, we expect to grow very rapidly VAS and already in Q1 it's happening. But as we said before, it should accelerate. Already we are anticipating a strong demand on VAS and a strong acceleration. No doubt this is happening. Now, even more, I wouldn't go as far as that in a pure improvisation. We try to stick to the course of our business and to our plan right now.
Okay. I appreciate the color. Thank you.
Thank you. We will take our next question. Your next question comes from the line of Hubert Mathet from Mathet & Cie. Please go ahead. Your line is open.
Good evening, Thierry. Just one clarification with ESLs. Do you still pilot running in Europe with ESLs or not yet?
No, no, we have.
You have, okay. What's your, let's say, normal scenario to convert those pilots in orders? Is that end of 2026 or sooner than that? Without making any forecasts, of course.
Yes. We are hoping to convert pilots to roll-outs maybe towards the end of the year or-
Okay.
beginning of next year. Yeah, we don't see a big difference between Europe. It came later, so we started projects later, but it should happen. We will already have sort of pilots which are in the phase of expansion to many stores. Yeah, there should be decisions towards the end of the year and during next year for sure. We have-
Okay.
several.
Technically, do you have the extra capacity to fulfill these orders given the fact you will be at nearly full blast for Walmart at the period of completion of their order?
Yeah, we have dedicated capacity to other customers, yes.
Okay.
We have dedicated capacity.
Okay. That's all from me. Thank you.
Thank you.
Thank you.
One last question.
Thank you. We will take our next question, and the question comes from the line of Valentin-Paul Jahan from Stifel. Please go ahead. Your line is open.
Thank you. It's me again, sorry. Just a last one. I have a feeling that Trump tariff between Mexico and Canada and the U.S. apply to non-USMCA compliant products. As well as automotive and steel. It seems that there are lots of product categories that are USMCA compliant. Among these product categories, there is one category which could eventually be used to cover ESL-type products, in my view. Do you think you could make your products USMCA compliant just to avoid tariffs? Is it something your legal teams are working on? What is your opinion on this subject?
Yeah. It's something we are definitely working on. At the moment, for sure, there is a list, which is called an HTS list, Harmonized Tariff Schedule. A number of HTS codes are covered by the exemption, and our products are not imported under those codes. That's the current situation. Those lists and those codes are not stabilized. They are still moving and we, of course, are doing everything we can to justify a number of exemptions. We're working on it. Right now it is not exempted.
Okay. Perfect. Thank you.
Thank you.
Okay.
This concludes today's question and answer session. I'll now hand back for closing remarks.
Yes. Thank you for your attention and all your great questions. We wish you a very good evening, and we will meet you, I think next now is at-
End of July.
Yes. Well, end of July, and of course, for our shareholders, at the AGM on June 17th. Thank you very much.