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Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the WIIT First Quarter 2023 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Alessandro x Cozzi, CEO of WIIT. Please go ahead.
Good afternoon, everybody, and thanks for joining in this conference. Board of Director, this morning approved the results of the First Quarter 2023. The overview was -- figures are very, very well. We are very happy.
Start with the highlights, you can follow the presentation -- with the presentation I sent you. You can follow the presentation. Highlights, strong growth in terms of sales, growth over 20% compared to last year. Thanks to organic growth, expansion of the existing customer acquisition of the new logo and a good contribution from the new 2 companies acquired last -- the first one last year and the second one, the first quarter of this year. EBITDA grows fast, EUR 12 million, plus 19% compared to last year, it was and EUR 10 million. EBIT margin was EUR 6.7 million, growth 17% compared with EUR 5.7 million of Q1 2022, and the margin of the revenue was 21%, increased a lot compared to last year. Adjusted net profit, EUR 3.9 million, 20% plus the Q1 2022. Adjusted net finance position, including the IFRS impact and with debt for 191. We are considering this debt, we have diluted share for approximately EUR 32 million. During the first quarter 2023, the energy cost was EUR 2.5 million compared with EUR 2 million, [ Italy ] and Germany where we have 65%. And this is the consequence of the increasing of the energy, but we have the cost of the new percent of the company acquired in the field. It jump to the first -- Page 2 of the presentation highlights, EBITDA margin increased a lot to 37.8%. As a result of strong synergy, we have been used to achieve in the first quarter and the starting of the billing of all the contracts signed in the last part of 2022. EBIT rose EUR 6.7 million compared with EUR 5.7 million. In the margin, 21%, reflect the investment we have last year in terms of [indiscernible] and the CapEx that we did after last half of the year to support the new onboarding clients. Net profit, EUR 24 million, relatively the same, particularly of the EBITDA compared to EUR 3.2 million Q1 2022. Net debt -- these figures is net -- we exclude the IFRS impact of the rent of the space and including the value of treasury share with the value of 31 March 2023. Net debt is EUR 146 million, compared with EUR 140 million end of last year. Consider that in this period, we have the acquisition of Global Access of EUR 6.2 million and the impact of IFRS of the percent of [indiscernible] for over EUR 2 million and buyback for over EUR 2 million.
Breakdown, you can jump to the Page 3, you can show the breakdown of revenue and EBITDA, Italy and Germany. For the first time, we have -- we are very happy to discuss that because this was our target in the last 2 years. Germany overtake Italy in terms of EBITDA and in terms of revenue. There in Germany is, at the moment, 54% of the total group revenue and EBITDA is EUR 6.1 million in Germany and EUR 5.9 million in [ Italy ]. Consider that our expectation in the next quarter and the next -- in the following quarter was in Italy, we will have the positive impact of the contract signed in the first quarter. In Italy, we had a very, very positive closing in terms of booking new customers. And all these contracts impacted our quarter in the last part of the fiscal year. In terms of EBITDA, Italy performed very well, 40.8% in the margin. That means the refocusing of the high value-added services and the achievement of cost synergy. You can see in this result because EBITDA margin in Italy jumped over 40%. And last year, the EBITDA margin in Italy was below 40%. Germany, EBITDA margin is 35%, very good, was strongly impacted from the cost energy. We have 2 points EBITDA decreased for the more cost of energy, but I want to remember that we have just signed an agreement with a local carrier in Germany and this is were that we have the possibility to come back to $0.11 per kilowatt from the first January '24 and with this assumption, we can increase our EBITDA margin in Germany with a reduction of the consumption -- because of the consumption of energy. Page 4. 80% of WIIT revenue at the moment is recurrent and 84% group level. That means in Germany at the moment, we have the highest level of recurring revenue. In Italy, we have a residual part of our revenue or recurrent, but we're working to move the residual part of nonrecurring revenue to be recurrent. One-off is 20% in WIIT and 60% group level. Consider that in this quarter, we have a positive impact of the onboarding of a new client that means we have a little more [indiscernible] than the usual plan. Revenue, Page #5 about revenues, 1.8 plus 20. Organic growth means in Italy, we grew 7.8%, but in the core revenue, cloud services will grow 9%. In Germany, organically, we grew 4%. In Germany, we have two different scenario. All the companies acquired growth double-digit already very close to that. But we have one single company, [indiscernible] Boreus is stable on -- because we are in the moment to improve the sales team and the momentary company don't have the capacity and the sales team inside. So we are improving that. And we -- our expectation is that this company start to grow over next year. The contribution of company acquired was EUR 1.9 million related to [indiscernible] goes very fast in the first quarter growth roughly 20% [indiscernible], very, very good results and EUR 1.8 million related to Global Access and EUR 1.8 million related to [indiscernible].
EBITDA adjusted, I just anticipate that increase, thanks to the cost synergy and the focusing on the high-value services. In these figures, as a result, the achieved restructuring [indiscernible] because when most of the company, EBITDA margin was close to 0. In the first quarter, EBITDA is just 30% of EBITDA margin. It's very, very fast recovered. It's not total recovered, but is 70% of the target. That means in Italy, 40% included this [indiscernible] organization, our point of view is a very, very good result.
We go to EBIT. EBIT increased to EUR 6.7 million. This is are exactly in line with our budget and this reflects the high CapEx we had last year. And we confirm that for this year, we -- our expectation in terms of CapEx, we come back to EUR 22 million to EUR 24 million. And we generate cash this is because EBITDA increased a lot and the CapEx decreased compared with last year. Net profit, plus 20%, EUR 3.9 million. Net EBITDA adjusted EUR 146 million. We paid EUR 6.4 million plus IFRS impact for the acquisition of Global Access. We have strong operating cash flow, EUR 33 million. Rest of the share buyback 2 million. The diluted share value is EUR 32.8 million. It's not included with the accounting. The release of the investment activity for EUR 8.7 million for new CapEx and also for the new data center [indiscernible]. IFRS impact increased from EUR 10 million to EUR 12.8 million for the consolidation of Global Access. I remember that all the debt of the group is very, very safe and secure because it's all about -- related about the bond issued in 2021 when the company pay a -- fixed rate for 2.37% Okay. I think it is all -- we can start the Q&A session.
[Operator Instructions] The first question is from Giorgio Tavolini with Intermonte.
I was wondering if you can elaborate more on the energy headwinds. You mentioned the 2 percentage points in Germany -- on the German margin, in this quarter, and you said also the benefits from 2024 from the agreement with the local utilities. How should we look at the next quarters, Q2, Q4 headwinds? Do you expect a similar 2 percentage point impact. And the second one is on the onboarding of new clients. You mentioned there was a contribution this quarter, one-off contribution. I was wondering how much it contributed to the revenues and the third question is on CapEx. You also said that you expect to come back to 22 million to 24 million CapEx decreasing from last year. If I remember correctly, in the last quarter, you mentioned EUR 4 million CapEx shift from 2022 to 2024, so leading to EUR 25 million CapEx for this year. So should we expect a lower CapEx this year? Or we have to seek at the '25?
Okay. About the first question, the cost energy, that is the misleading formation. 2% is the impact -- negative impact for the full EBITDA German level. So if the cost of energy come back to historical value, the EBITDA margin in Germany jump to 37%, okay? The impact is roughly EUR 1.5 million yearly value more cost of energy. This EUR 1.5 million we expect to have next year because we just signed with a carrier -- electrical carrier in [indiscernible], the new price of $0.11 of kilowatt. This means with the sale revenue, the cost reduction is roughly 2% of the total revenue, not the quarter, it's the full year.
But sorry, Alessandro. It's 2%, let's say, EUR 17 million revenues in [indiscernible] so roughly EUR 3 million, 3.5 million is correct? The impact on...
No, no. The revenue in Germany is 17% in the quarter, the review in Germany. 2% is 400,000 quarterly. EUR 1.2 million is yearly value. It's 2% of the revenue. The more cost we at the moment are paying, Germany. That means EBITDA is lower of 2%. Okay.
And regarding the onboarding?
On onboarding, if you consider the organic growth of 8% in Italy, in this quarter, I think 5% or 6% is the new client, okay? And because at the moment, the mix is little changed. We have more revenue from year ago and lower revenue from upselling. The [indiscernible] of the first quarter is lower than the fourth quarter. We don't have impacted the first quarter with -- for [indiscernible], increased their current value and 60% of these more recurring revenue is coming from new logo. If the client order the last quarter, you see that we have -- always we start to build the customer when the migration is [indiscernible].
You are including the healthcare clients and the other one in the retail. [indiscernible] retail client that you acquired very recently?
Yes, yes. Exactly. We care be honest starting the second quarter. There is the client signed last quarter of 2022 and very small part of the clients signed in the first quarter because the onboarding period is 6 months, okay? Probably we have very, very no material impact in the first quarter or [indiscernible] and for retail, we disclosed the market. In the second quarter -- in the first quarter, we have a full impact of these new clients. The last part of the increase is the contract signed in last year, last quarter, onboarding during the first quarter. We have always 6 months delay from the sign of the contract to start to charge the service and capital because the migration period is usually 4 or 6 months. The last question about the CapEx are concerned, I confirm that means our expectations is EUR 25 million included EUR 4 million coming from the credit residual. Consider that -- we have 2 million more CapEx related to IFRS 16 of Global. That probably is from 25 to 26 because of the acquisition of Global Access means add additional IFRS CapEx for EUR 2 million, EUR 2.5 million.
The next question is from Domenico Ghilotti with Equita.
My first question is a follow-up on the energy cost because you partly passed the energy cost in Germany to clients. So I wonder if when you have a decline in cost, you will have the same pass-through to clients. So partly this will be -- this saving will be partly offset by this pass-through.
Second question on the organic performance. So looking at organic growth in Germany 4%, you were mentioning Boreus flattish. Looking at Italy and the pipeline and the announcement. Should I expect, let's say, the mix in organic growth in 2023 being more skewed towards Italy so if you can provide any color on what you should we expect? And what is the pipeline because there is a lot of focus also on potential deceleration in the cloud services in Europe. So if you can comment on the German market, if you see any kind of lower demand. Third is on the -- I saw that in the press release that there is a potential put option in which the seller can decide to get WIIT shares or cash, if I'm correct. So just to -- could you clarify if there is the possibility that you are paying, so the EUR 10 million in cash instead of giving shares?
Sorry, the last question, we don't understood clearly. If we can the...
The EUR 10 million because I saw in the press release, if I'm not wrong, that there is a potential, as a put option in which instead of giving shares for the acquisition of Lansol, if I'm not wrong, you could pay in cash? I'm just checking if you...
Nonrelated to the Boreus. I started to answer the last question [indiscernible]. About the acquisition of Boreus, we had inside escrow account then the overall share to guarantee the results of the -- the result was totally achieved. And now we had to pay this amount. Currently, market price, the seller decided to save cash and come back the share to the WIIT. So we increased -- as we share EUR 10 million and will pay cash in the last part of the transaction.
Okay. So in the second quarter, you will have a EUR 10 million additional debt.
Yes, that's correct. We take the share. And about the -- energy spending is correct, probably something client could ask us to reduce the price in future. But consider that we don't pass-through all the cost of the customer. The pass-through was roughly EUR 1.2 million is divided to many, many, many customers, more customers. To be honest, I don't see the risk at the moment, still the client to us to reduce the price because we are very, very competitive in this business. And there is inflection and we are probably something clients can ask for these topics, but I don't consider at the moment the risk. Consider that only -- we increase the cost, EUR 4 million last year on the cost of energy and the pass-through was EUR 1.3 million, 30%.
But also considering that we had -- that we confirmed that the price before the world. So probably the real market price of gas will be not as lower as we will have. So we will have the benefit, but the price market into the market will be higher there's not really the visibility of the client of this reduction probably...
But in general, it's 30%. So if you have EUR 1.2 million of less cost, the total risk is 30,000 -- it's not material. In terms of organic growth, our expectation is to grow strongly in Italy, more WIIT the Germany. But the reason is, in Italy, the offering is more mature. The brand intensity, the brand awareness in Italy is strongly than in Germany at the moment. Because generally we are at the early stage. Now we are starting to push our high-valued services, but we need 2 years to perform the WIIT in Germany in the same company where in Italy.
The good news is in Germany, we have a very, very good result whenever -- we don't have at the moment a high-value offering. We are more traditional in Germany. But the market is very, very huge. And the general, the cost of employees is competitive because energy is lower than Italy. For this reason, we achieved 35% of EBITDA without sell high-valued services.
We can improve if belonging more on the maturity of the sales organization. Of course, Italy is overall is performing very good. Also, the booking of the first quarter is in line with the expectation of -- and the pipeline -- of course, the booking of Italy was much higher -- quite higher compared to the German one, but it's more on the maturity of the sales organization that we have in Germany because some part of the companies we acquired Boreus is one, we're not used to have sales. So we changed that this year. The overall organization. We are waiting for the onboarding of the new head of the north of Germany that is happening in 1 month. So they are growing. There's no -- for my visibility at the last month, all the 4 weeks in Germany, there's not really slowdown of the economy. There's no slowdown of the economy. So there's not a real expectation in terms of reduction of the demand coming from the client is more on our side. The good news is that Lansol and global did have -- were used to have an internal organization. This is a booking for the first -- the last quarter of last year and also for the first of this one are good. So these are performing -- there is more -- a lot to do on the overall improvement of the maturity of the sales organization of overall, Germany. That's really is good.
In Germany, what we see about the market is a very, very grow market. We see the [indiscernible] results in terms of [indiscernible] grow 18%. The margin due to grow double digits. At the moment, we are working to create this new sales organization. I think we can start to obtain some results by the end of this year, next year. We are working for next year results in Germany. We don't want to stop the traditional organic growth in Germany. Because the Germany continue to grow 8% in the normal traditional services, we want to add on the top our service.
Mr. Cozzi, there are no more questions registered at this time.
Okay. Thanks all for joining this conference. And we'll see for the next results presentation, would be the second -- most of all the first half, in the case of extraordinary use or naturally yearly.
Okay. Thanks. Bye-bye.