Good morning, and thank you for joining us today. It's my pleasure to welcome Oskar, our new CFO, who joined us earlier this year. Oskar will take you through our financial review in a minute, but just a few words from me first. Eurowag entered 2023 in a strong position and continues to grow in spite of the challenging macroeconomic environment in which we are operating. High inflation and interest rate has undoubtedly impacted the CRT industry across Europe, where we have seen notable slowdown in product manufacturing, freight demand, and therefore, few kilometers driven by our customers. Alongside this, anticipated challenges have arisen from a decision we took last year following the Russian invasion of Ukraine, to adapt our business operations to a level beyond restrictions the sanction imposed, which has impacted our fuel pricing in some, some of our markets.
With this backdrop, I'm proud of our teams who could deliver robust double-digit organic growth, which is in a reflection of our resilient business model. In the period, we successfully completed the acquisition of Inelo, which represents a major milestone for Eurowag, while rapid integration of WebEye is underway. These acquisitions contributed to our Adjusted EBITDA growth of 43%, and our net leverage, as expected, increased to 2.9 at the end of the period. Just as a reminder, Eurowag ambition is to build an integrated end-to-end digital platform that will address in-depth CRT industry challenges and pain points. In the first half, we have made significant progress on our strategic journey to deliver this, and I have highlighted some of the key deliverables on the slide. We signed our third OEM deal, I mean, truck manufacturers deal, further expanding our indirect partnerships.
This third partnership allows us to cover almost 45% of European truck manufacturers market. Integration plans for WebEye have progressed well, as the sales teams are already working under one management and enabling cross-sell opportunities in both product portfolios. We have made further improvements to our customer self-care portal. This takes us one step closer to offering our customers a seamless end-to-end digital user experience. We have doubled the number of mobile payments acceptance points, which now sits at 800 sites across Europe. At the beginning of the year, we were the first to receive EETS certification in the Czech Republic. We have also further expanded our EETS offering in Hungary, where we now offer post-pay toll service. We have continued to develop our financial platform capability as we are preparing the launch of our eWallet product next year.
Our large-scale ERP implementation is still on the track to launch at the start of the next year. This will bring further operational efficiencies across organization. I will go through our strategic update in more detail later, but I would like to hand over to Oskar, who will walk you through our financial performance for the first half of the year.
Thank you, Martin. Good morning. I'm delighted to be joining Martin and Carla this morning, presenting the interim results of Eurowag. It's been a great time for me to join this impressive business as we embark on a journey of delivering something quite unique in our industry. As Martin has already mentioned, we are pleased to share with you today a solid set of results in spite of the macroeconomic headwinds we're facing across Europe. Our net revenues increased by 36.9% to EUR 119.1 million in the first half, driven by organic growth of 14.4% and the recent acquisitions of WebEye and Inelo. With the contribution from our recent acquisitions, we saw mobility net revenues almost double to EUR 46.7 million, with strong underlying growth of almost 20%.
Mobility solutions now represent 39% of total revenue, and we expect this to grow to approximately 45% with the full annualization of Inelo. This is an important change to our revenue mix, especially as most of our mobility business is subscription-based, and as previously reported, it is our ambition to move the entire Eurowag business onto this model. Payment solutions grew 14.1% to EUR 72.4 million, with organic growth of 12.5%. This slowdown in revenue is driven by two factors. Firstly, the economic headwinds in Europe, which is impacting freight demand, and therefore, we can see our customers driving less kilometers.
The second factor, which Martin has already mentioned, has arisen following a decision we took last year, following the Russian invasion of Ukraine, to adapt our business operations to a level beyond the restrictions the sanctions imposed and withdrew all operations and fuel purchases with any exposure to Russia. This has impacted fuel pricing in some of our markets, and with this backdrop, we still managed to deliver double-digit growth, reflecting our resilient business model and our products are truly mission-critical to our customers. Adjusted EBITDA grew 43.5% to EUR 50.2 million, with margins of 42.2%. I'll talk more about EBITDA shortly. We spent EUR 11.7 million on our transformational CapEx program and EUR 12.9 million on ordinary CapEx. Our transformational CapEx program is on track to complete at the end of the year, in line with guidance.
Finally, as expected, our net leverage increased to 2.9 x following the completion of Inelo in March. Our priority remains to bring this back in line with our medium guidance of 1.5-2.5 x. Moving to the next slide, as I already mentioned, EBITDA included our acquisition. It's increased by 43.5% to EUR 50.2 million.... taking out our acquisitions and looking at the underlying business, EBITDA grew 21.6% to EUR 42.6 million. However, as you can see from the chart, we reported other operating income of EUR 6 million, which is the realized FX gain as a result of our prudent risk management. Our objective is to reduce the currency exposure for purchases of fuel, employee expenses, and other operating expenses. Our intention is to manage the costs, not pursue financial gain.
If you remove this benefit, organic EBITDA grew 5% with margins of 37.2%. There were a few factors that impacted growth and our margins. The first being cost increases were ahead of revenue growth, and this is driven by our usual seasonality of net revenues being second half weighted. The second is our employee expenses and technology expenses grew organically 12% and 58% respectively. Half the employee expense increases was due to salary increases, which we communicated at the start of the year, and the remainder was in hiring the right people to support the business through the next phase of our transformation. Growth in technology expenses reflects the group's focus on technology transformation, cloud transition, and the implementation of our new ERP system.
Our overall EBITDA margin of 42.2% was negatively impacted by WebEye, where integration has just begun and costs are not proportional to our legacy Eurowag business, and positively impacted, as expected, by Inelo. Looking out to the full year, along with the net revenue weighting in the second half and cost actions we have already proactively taken through headcount reduction in anticipation of integrating WebEye and Inelo into our organization, we expect margin levels to be in line with FY 2022 at around 43%. We still expect our margin in the medium term to move to high 40s as operational leverage and acquisition synergies are realized. Now turning to our capital expenditure.
Capital expenditure in the first half of 2023 amounted to EUR 24.7 million, of which EUR 11.7 million was spent on our transformational CapEx program and EUR 5.6 million related to the capital investment in Inelo and WebEye. This drove the year-on-year increase. Martin will talk through where we invested our transformational CapEx shortly, but I wanted to reiterate that the transformational program remains on track to complete at the end of the year, on time and in budget. We will continue to invest in the business through ordinary CapEx. As you can see in the first half, with the inclusion of Inelo and WebEye, our ordinary CapEx ratio as a percentage of net revenues has increased from a high single digit historically to just above 10%.
Both WebEye and Inelo have historically invested a higher percent of net revenues, of which almost half is in onboard units or hardware. Therefore, our CapEx mix has changed, and as of the half year, just over 26% of ordinary CapEx has been spent on onboard units. Excluding this, ordinary CapEx as a percentage of net revenues would be 80%. With this in mind, we expect to keep our ordinary CapEx levels at around 10% of net revenues. Going forward, however, through a combination of full integration and the transition to a single technology platform, we expect to reduce duplications across IT, hardware, and technology processes over time. Moving on to the cash flow slide.
As the title suggests, this period has been a record investment year at Eurowag, mainly through organic, but inorganic too, and can be seen on the right-hand side of the slide in the green box. We completed the acquisition of Inelo in March, and as I've just mentioned, we continue to invest in the business through ordinary and transformational CapEx. The gray box shows the amount we funded through our new finance agreement we secured in September last year and cash we held at the time. On the left-hand side, we had around EUR 56.3 million of cash from operating activities before taking into account working capital, interest, and tax. I'll talk about working capital on the next slide, but I wanted to note that our interest costs have increased due to the high net debt levels and will be around EUR 17 million for the full year.
Our cash adjusting items are costs related to our M&A activities, our ERP implementation, and the integration of our businesses. Almost half of these costs relate to M&A and will fall away, and the other half are expected to continue until we are through the integration phase and the ERP implementation is complete. I'd like to address the working capital movement. As many of you know, due to the nature of our receivables and when we might contractually receive them, our working capital can swing in either direction on a daily basis. However, it's important to note that working capital is a result of our fuel purchases, tax refund, and toll businesses, and therefore you need to compare this as a percentage of gross revenue rather than net revenues, which is minimal.
On this chart, you can see that despite the growth of our business, our net working capital remains flat to stable. Our trade receivables, you can see, have increased in the half, and this is due to seasonality with December, the comparative being our quietest month. You can see a similar trend in the first half last year. Our trade payables have decreased from the start of the year, and this has been driven by the fall in fuel prices. Other payables has increased in the half, mainly due to the deferred consideration from our Inelo acquisition. These factors have driven a slightly larger working capital swing in the first half.
When we announced our intention to acquire Inelo, we stated that we anticipated our net debt to Adjusted EBITDA ratio would increase by half a turn above our medium-term guidance range of 1.5-2.5 x. At the end of the period, our net debt to Adjusted EBITDA was 2.9 x. As I've already mentioned, with the transformational CapEx program coming to an end this year, combined with a very ambitious amortization program, which you can find in the appendix, together with an estimated improvement earnings and margins, we expect to bring leverage back in line with our medium-term guidance of 1.5-2.5 x. Moving on to my final slide.
With today's results, we have updated some of our medium-term guidance, which was given at the IPO in September 2021, when the business was very different from what it is today. In the near term, we anticipate net revenue percentage growth to be around mid-teens. However, we believe the value creation from our platform and full extraction of acquisition synergies over the medium term, net revenue will return to high teens growth. As I've already mentioned, full year Adjusted EBITDA margins are expected to be in line with FY 2022, at around 43%. Over the medium term, we still anticipate margins to trend to a high 40% as well as operational leverage and our acquisition synergies are realized.
We have updated our ordinary capital expenditure levels today following the acquisitions of Inelo and WebEye, which have historically spent higher CapEx, and we expect to keep our capital expenditure at around 10% of net revenues, with a focus to reduce duplications across IT, hardware, and technology processes over time. I'll now hand back to you, Martin.
Thank you, Oskar. Before I update you on our strategic progress, my intention is not to go into too much detail today, as we will have plenty to talk about at our Capital Markets Day in London on the eleventh of October. We will give you some further detail on the industry and markets we operate in, our equity story, as well as our vision for further developing our platform. If you have not signed up already, please get in touch with our Investor Relations team, who can provide you with more information for those who can make it in person. Or if you are not based in London, we can share a video link. The Exco team and I look forward to seeing as many of you there. Now, moving back to the slides. The priorities we set out at IPO have not changed.
However, the evolution of the business and change in the revenue mix has. As a result, you may remember, at the beginning of the year, we set out a new strategic framework to align with this. Our ambition has always been to drive change within our industry, and the only way to do this is through digitization and offering our customers a digital end-to-end solution for all their business needs. These strategic priorities continue to take us one step closer to delivering our industry-unique digital platform. Attract. We are focused on expanding our customer base and market share through our multi-channel sales approach, which maximizes the opportunities for us to drive growth. In our direct channel, we are focused on integrating our sales teams together with those of WebEye and Inelo to create an agile, multi-competency sales teams.
Indirect channels will allow us to be in every truck at sale. As I have already mentioned, we have signed three deals so far, with further opportunities to sign more. Our digital channel allow us to generate digital lease leads to reduce our acquisition costs. Engage. Here we are focused on digitizing our customers' user experience, which will support our sales efforts and improve the way we cross-sell and bundle our products. Customers will have single login, integrating all our brands and front ends into one platform. Monetize. This is all about continuing to grow our core services, and following our recent acquisition, we have further opportunities to cross-sell while unlocking revenue and cost synergies. Finally, retain. Here we are expanding our mission-critical products offering by adding products such as financing and eventually load matching on our platform. We also have access to real-time data from...
of our customers' trucks and operations, which will, over the time, attract new partners who can offer their service to our digital platform, allowing us to meet all truckers' needs. As I have mentioned at the beginning of this presentation, one of the areas of focus is integration of WebEye and Inelo. This is not something that happens overnight, and we are very much aware of the efforts and time it takes to integrate a business. Following these acquisitions, our organization has almost doubled in size, and this, of course, comes with unique opportunities as well as challenges. For both WebEye and Inelo, we have established integration of org teams and a clear roadmap to ensure a seamless transition. WebEye's core corporate functions has already been integrated across Eurowag.
The sales teams are working as one agile team and are focused on cross-selling products, training, and lead generation, campaigns, maximizing cross-sell opportunities. While Inelo's acquisition is more recent, their management team is already reporting into Eurowag. Their sales teams have seen good early momentum on cross-sell initiatives, and we are working on integration of their sales into agile teams by January 2024. Further levers for cross-sell are expected following the introduction of new platform during FY 2024. Now, turning to our capital investment program. Oskar has already updated you on our CapEx guidance, and I would like to talk about where we have been investing within the business. On the left-hand side, you can see through both organic and inorganic investment, we have created a truly unique platform with a large suite of products and services.
Our transformation program has been focused on building out each layer of the platform. As I already have mentioned, in our digital sales channels, we have invested in our customer self-care portal that will enable our customers to have a seamless digital end-to-end user experience. We are expanding our products and services capabilities, with our focus recently on scaling our EETS offering across Europe. With Germany set to double their toll income and further markets moving towards EETS, we have significant opportunity to capitalize on this growth... and the other area of focus has been on enhancing our financial capabilities, which will further help our customers' business financial needs. We are building our data and tech platform, which will allow us to better utilize the data gathered from our customers.
The second phase of our ERP project is on track to launch in the first quarter of 2024, and it will focus on improving capabilities in our general ledger and group reporting processes. Building on previous slide, I wanted to highlight the unique set of data Eurowag now captures. The data we collect covers every single touch point of our customer's journey, from real-time visibility of the fleets to the post-journey administrative task, including information relating to our customers' customers. All of this data will not only enable us to improve our products and services, including insights, improving sales performance, but will address the clear inefficiencies in the CRT industry. We are building an industry-first data platform, which will not only transform our business, but our customers, too. Which leads me nicely to, slide 20.
By creating our end-to-end digital platform, we are improving process that is unnecessarily complicated. Drivers should be able to wake up and start a journey without having to worry where their next load will come from, where or when they will stop along the way to fuel or rest. Our aim is to make the end-to-end journey as easy and painless as possible. The products we offer today help our customers. Our payment solutions simplify the payments process, allow cost savings, and improve working capital. Our mobility solutions improve efficiency in a back office, as well as on the road. As these comes together in a single platform, we will be able to add further value.
Through our recent investment in JITpay, we are now able to help our customers improve their cash flow, as they don't have to wait up to 90 days to get paid. Through our loads capability and data-centric platform, we will help the industry to tackle real issue of empty loads, empty journeys, bringing, bridging the gap between carriers and suppliers. Lastly, let's not forget that 9% of EU carbon emissions are generated by CRT sector, and Eurowag is well placed to help to reduce through improving truck utilization and enabling transition to low carbon energies. So to sum up, we had a resilient first half of the year, achieving robust double-digit organic growth. Looking at our priorities for the rest of the year, there are still a lot of to be done, and we have to manage it against a difficult macro backdrop.
However, we have been through these cycles before and have good track record of consistent growth through them. We are continuing to build our digital platform and integrating acquired businesses. We will finalize our transformation CapEx program, as mentioned by Oskar, by the end of the year, and we are focused on deleveraging. With further growth opportunities through cross-sell and geographic expansion, and the value we are unlocking for the customers through our digital platform, we are confident that we can continue delivering sustainable growth for all stakeholders. And with that, I will open the Q&A session. Thank you.
The first question we have comes from Gautam Pillai from Peel Hunt. Please go ahead.
Great. Thanks for taking my questions. Good morning, Martin and Oskar. So my first question is on the revenue growth trajectory. You have delivered close to 20% revenue growth in 2021 and 2022, and are now guiding to mid-teens growth. Despite the macro situation, and your guide down, the rate of growth is clearly well above the market growth. Can you comment on the drivers behind this implied market share gain? That's my first question. My second question is on the mobility solution segment, where you delivered 20% growth, organic growth in the first half. Can you walk us through the drivers of this? Is it driven by cross-selling into your existing payment solution customers, or is there new customer acquisition in there as well?
Also, should we expect this dynamic to continue, i.e., mobility solutions outgrowing payment solutions? Does that mean the predictability of revenues or the percentage of recurring revenues in the mix should go up? Thank you.
Thank you. Thank you, Gautam, for your questions, and great to have you on the call. I'm not sure whether I really captured the first question, but I will try to answer, and please, please correct me in case that I would need to add further, further details. You are absolutely right that this is the business with as we always said, midterm aspiration to grow high teens. So as we were presenting so far, low twenties and high teens, and going forward, we are guiding that in midterm we'll be growing high teens. So this hasn't changed. However, as we discussed at length, there is a market backdrop, which simply means that European economy is producing less physical goods.
So there is therefore less kilometers driven, and that's what you've seen reflected in the divergence of the growth of mobility solutions and payment solutions. Payment solutions are direct reflection of number of kilometers driven, because we speak here about transactions of energy, energy transaction, and toll transactions. So when you are looking on the health of the business, I would be really looking on mobility revenues, because this is the indicator which is insulated from kilometers driven, because this is largely subscription revenues, and therefore it's connected with acquisition of new trucks, as well as cross-selling activities.
So, to your second point, definitely, we see already the results of being able to cross-sell the products which we have, which we acquired in Inelo and in WebEye to Eurowag portfolio. But as well, we continue successfully in acquisition of new customers.
Thank you, Martin. Can I just follow up on the question? I understand the macro headwinds. My question was more, even despite that, your rate of growth, which you have delivered and which you are guiding to, implies that you are having market share gains, you're winning market share from competitors. What is helping you do that? Is it the comprehensive product portfolio which is helping you do that? Or is there any other dynamic we should be looking out for?
Definitely, there is no change of the dynamic. But you are right that over the time, as we are adding more products, we are becoming more and more relevant. As you know, we were heavily investing in our platform, which is bringing all these things into one platform, and we'll be launching it next year. So we expect further acceleration and further appreciation of the market, of the breadth of our offering. Because what will be changing next year, that we will not be selling only more products next to each other, but all those will be integrated in one platform, as I was introducing earlier, through one sales organization, one brand, one user experience, one pricing, et cetera.
To sum up, the drivers so far, why we are gaining market share is breadth of our offering, better products, which provide simply better user experience or more features than the competitors. And we do expect, with the launch of the platform, therefore, we guide the market to return back to high teens. We do expect that relevance and attractivity of our offerings will only grow, and therefore we will accelerate the market share gains in mid-term.
Thank you. Can I squeeze in one question on the cost side as well? Oscar, you mentioned that proactive cost actions were taken in the first half. Can you please check if these cost measures have been in line with your integration plan for WebEye and Inelo, or have you taken some measures over and above the M&A integration plan? Thank you.
Hi, Gautam. No, this is in line with our original plan of integrating. We knew we had to address the cost base, and as we've just acquired Inelo in March, we're at the beginning of that phase, but we've also had WebEye for almost a year. So we've understood the cost base there, and now we're moving ahead. The number, the actions we've taken is reduction in headcount, reduction in some operating costs, and that's what's given us the confidence, 'cause these actions have already been... have taken place. Gives us the confidence to guide towards the 43% for the full year. This is the EBITDA margin. Sorry, I should have mentioned.
Great. Thank you so much, and see you at the capital markets in October.
Thank you. Looking forward.
Thank you.
Thank you. The next question we have comes from Hannes Leitner from Jefferies. Please go ahead.
Yes. Good morning. Thanks for letting me on. I got also two questions. I think one was partially a little bit answered, but maybe when you talk about this one data platform and that you're building out those capabilities, that seems fairly unique in the market. Can you talk about that, revenue opportunity you're expecting from that? And what is then probably, what does it do to the net retention rate? And then the second question is, looking into the competitive dynamics, given we have the tougher macro backdrop, is there also somewhere where you see increased intensity, further pushing down pricing? And then, on the similar line, can you talk about your geographic expansion, like, effort, like for example, Germany? Thank you.
Thank you. Thank you, Hannes. Three questions. So I will answer, I will now address the first one, when it comes to net revenue opportunities. We'll be talking a lot about impact of the platform on our Capital Markets Day. So what you may expect, that we'll be talking and comparing the old world, when we were selling multiple products, but in a silo, and the new world. And what we do expect, what will be the effect on our customers, what will be effect on our economics. We will be talking about KPIs, how we look in this new world on our business, and which will be, I believe, very instrumental and very much appreciated by outside world. So there will be, we will be discussing at length.
But what I can signal already now, that we do expect, that the integration will at first deliver the value for the customer. Because we were trying to educate the market, that there are, for decades, unsolved pain points of the industry, like lack of digitization, low utilization of trucks, difficulties to access financing, and reporting obligations, which are ever-growing. So the platform primarily delivers the value for the customer. It delivers the value, it unlocks the value. And we do expect that we'll be sharing the value with the customer. So, we believe that our cross-sell pace, cross-sell rate will increase, substantially. As well, we do expect, and that's the experience which we made already, that every next product which we are selling to the customer brings churn half.
So integration indeed enhance customers to take more products, and we will be designing as well our pricing strategies around that. So the churn will go down, therefore, lifetime value of the customers. And we also do hope in the mid and long term that our average revenue per truck, as a consequence, will be increasing, you know? So this is general principles which we are expecting from after the launch of the platform to be gradually harvested. When it comes to competition and pricing pressures, not really in this sense.
What we've seen throughout the previous cycles, that there are factors which would suggest that there is a price pressure, and margin pressure on, let's say, energy pricing, et cetera. However, there are so many other factors. For instance, whether the price of energies are increasing or decreasing, it influences, again, different dynamics in the competitive landscape. As well, in difficult times, trucking companies are having more complicated access to financing, and therefore, they are more sticking to companies which are providing deferred payments, and this is one of the missions of Eurowag. So it's a mixture of the factors which, as you...
If, when you will check, our performance back in 2008, 2009, as well as in COVID, we were delivering very stable performance, despite the cycles. So, to answer your question, no, we do not see something extraordinary in those times. And, the last question was-
Geographic expansion.
Yeah, geographically. Pardon, I have geo, and I, I. No, do you, Germany. You remember very well that we were talking about Germany already two years, and we really launched Germany in full scale in last year. We opened the office in Köln. This team is the right size, and we do continue in gaining market share in Germany. This is really big country, important transport market, due to overall size of the German economy. So we are now focusing on Germany. When it comes to our geographies, definitely, in the medium term, we do expect to penetrate country by country.
But nowadays, when it comes to new territories, we are fully focused on Germany.
Thank you.
Thank you.
Thank you.
Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star and then one now. The next question we have comes from Alastair Nolan from Morgan Stanley. Please go ahead.
Great, thank you. I think a couple of mine have been answered, but maybe, maybe just to go back on the, on the macro and some of the headwinds you called out there. Just wanted to better understand kind of the timing of that, 'cause I guess if we look back, a lot of those kind of big events, I guess, probably were more 2022 weighted. Can you just talk to what exactly has happened, and why those headwinds have kind of gotten worse in the last six months, as an example, just to kind of better understand that? And then secondly, just a clarification question, the 43% margin that you are guiding to for this year, is that inclusive of the EUR 6 million FX gain or, excluding that? Thank you.
Yes. So thank you, thank you, Alastair. I will answer the first question, and for the second, I will ask, Oskar. You are right that we already seen headwinds already during 2022, but what we simply observed and what you see, projected in our numbers, that these difficulties has worsened, during, during this year. So that's, that's the effect, which, we are now presenting in our numbers. And Oskar, over to you for that.
Yes. I mean, we still see the interest rates and inflation are at still extremely high levels in the territories that we operate. So, that's having a direct impact on some of our customers. Onto the 43% margin question, the FX gain is actually booked in the first half, so it is included in the full year number of delivering a 43% margin overall.
Great. Thank you both. Appreciate it.
Thank you. Ladies and gentlemen, just a reminder, participants can submit questions in written format via the webcast page by clicking the Ask a Question button. Just a final reminder for those on the conference, if you would like to ask a question, please press star and then one now. We'll pause a moment to see if we have any further questions on the conference line. There are no further questions on the conference line. I will now hand over to Carla Bloom, who will address the written questions submitted via the webcast page. Over to you, ma'am.
Thank you. There are no written questions on the website. Obviously, if you've got any more questions, please don't hesitate to contact me on our investors web page on our website. With that, I'll hand back to Martin.
Very good. Thank you, thank you to all for participating, for joining us this morning and for, for following us on our journey. I'm very confident that, despite the headwinds and the market backdrop, which we are seeing, we are absolutely on the right path to make the CRT industry cleaner, fairer and more efficient. And finally, I look forward to seeing as many of you in October in our Capital Markets Day in London. Thank you very much.