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Ladies and gentlemen, welcome to the Edenred Q3 2020 Revenue Conference Call. I now hand over to Bertrand Dumazy, Chairman and CEO; and Patrick Bataillard, CFO. Sirs, please go ahead.
Yes. Good morning, everybody. Thank you for joining us this morning to share the Edenred Q3 2020 revenue. Together and for -- sorry, and I will be with Patrick Bataillard, our CFO, and we will be together for the next 75 minutes. I propose that we go to Page 2 of the presentation, titled Executive Summary. The first thing I want to share with you is, yes, Edenred demonstrated a rebound in Q3 with a total revenue of EUR 357 million, up 0.5% like-for-like versus minus 15.5% in Q2. So Edenred is back to growth. The second thing is the growth means a global improvement in all business lines and in all geographies with a specific focus on Europe, where the operating revenue grew up 7.3% like-for-like versus minus 13.1% in Q2, and we also see a gradual recovery in Latin America. The third element is we demonstrated Edenred that for the first 9 months of 2020, we have been resilient with a total revenue of more than EUR 1 billion, down 3% like-for-like. The second thing I want to share with you is, as you already know, Edenred is a digital champion with some strong fundamentals and so we are well positioned to seize business growth opportunities from the new trends that are arising out of the crisis: trend number one, a more connected, contactless and digital world; second trend, a world where working is more and more in a remote mode; and third trend, working well, seeking for more responsible behavior. The third thing I want to share with you is about our guidance for the full year 2020 EBITDA. Our guidance is now between EUR 550 million and EUR 600 million. Why such a guidance? First of all, because our business excellence actions will continue to contribute to business growth in Q4. We are able to confirm our EUR 100 million of cost savings, cost avoidance plan. However, we see the rising of new partial lockdown in Europe that could slow the trend in Q4 despite the improved sales dynamic that we have been able to generate in Q3. I propose that we move to Page 4 to go into details. Page 4. So first of all, as I said, you see a strong resilience in 2020 for Edenred. The group operating revenue like-for-like change is at minus 2.8%. But more importantly, the rebound in Q3, plus 0.9% versus minus 15.4% in Q2. How do we explain that? First of all, a solid rebound in Europe with a good restart of our commercial activity and a catch-up effect in Employee Benefits. The second element of explanation is we have the contribution for -- from our COVID-19 specific-purpose programs. And finally, the situation is better than expected in Latin America, but contrasted. In Brazil, we are very resilient in Fleet & Mobility, and we see some gradual improvements, even if it's late in Employee Benefits. However, in Hispanic Latin America, we are still very much impacted by the economic and sanitary situation. The rebound that you see in Q3 is in all business lines, so Page 5. If you look at Employee Benefits, minus 1.4% in Q3 versus almost minus 21%. In Fleet & Mobility Solution, minus 1.5% versus minus 14.3% in Q2. And for Complementary Solution, plus 17.5% in Q3 versus plus 9.9% in Q2. This rebound on every product line, Page 6, is also true on every region. All regions rebounded in Q3 2020. As said before, in Europe, plus 7.3% versus minus 13% in Q2; in Latin America, minus 7.6% versus minus 20.4% in Q2; and for the Rest of the World, minus 4.1% versus almost minus 10% in Q2. So after the results, the second thing I want to see with you, Page 7, is the megatrends that we see arising from the COVID crisis and what do we do to make sure that we exploit those new trends. First of all, in a more connected, digital and contactless world, remember that Edenred is the digital leader. And by being the digital leader, we are able to continue to grow and grab market share. For example, in mobile payments, we have a rollout now in 22 countries with our solution, Edenred Pay, but also compatible with Samsung Pay, Apple Pay and Google Pay. If you think about our activity in Fleet & Mobility, we launched in Q3 this year the UTA SmartCockpit that is an innovative travel planning solution, individualizing fueling plans to reduce the costs easily. As a reminder, 86% of our Edenred business volume was digital in year-to-date 2020. And in fact, we grew very significantly, especially in Employee Benefits in Europe, where the penetration of our digital solution increased by 9 points versus Q3 2019. And remember that in Fleet & Mobility, all our solutions are fully digital. If we move now to Page 8, the second trend that we see accelerating with the COVID crisis is a more and more remote working world. And in a more remote working world, Edenred is developing innovative solution. First of all, if you think about our newer solutions, we are able to put in place flexible and efficient solutions at lunchtime. Ticket Restaurant, in fact, brings canteens up to 2.0. Ticket Restaurant is flexible, so you can eat whatever, whenever and wherever you want. So in store, takeaway or deliver to your door. As an example, we have now more than 1 million restaurants and food stores that are connected to our canteens 2.0, and we do that with 67 partners of meal delivery platforms. And those solutions of meal delivery platform connected to our network of restaurants and food stores around the world is especially convenient when you work from home or when on-site food services, unfortunately, are unavailable. A second example of our ability to develop solutions that are really well adapted to the more and more remote working world is digital solution to strengthen social bonds with employees. As you know, we invested a lot for ProwebCE in France. And then we deployed those solutions that we call employee engagement platform in Italy, in Romania, in Belgium and in the U.K. Those platforms are flexible benefits, reward or savings that you can load on the platform. And as an example, in Italy, the 2020 yearly cap for welfare benefits has been multiplied by 2. So it's a trend, and it's a trend on which we are well positioned in many countries around the world. If we move to Page 9. And if we look at the third trend accelerating with the COVID crisis, we are living in a world that is seeking for more responsible behavior. And as you know, Edenred is an enabler or, I could say, an accelerator of responsible behavior. I'll take 2 examples. The first one is a Ticket EcoCheque in Belgium. In Q3, we posted a double-digit growth on this product, and this product is able to stimulate green consumption. Anytime you use EUR 1 via your Ticket EcoCheque, you are able to save one kilograms of CO2, which is good for the planet. The second example, in France, in March, we launched the Ticket Mobilité. It's a solution that already exists in the U.S., in U.K., in Belgium and in Finland, and one of the first decisions taken by the French government a few weeks ago was to increase the yearly cap from EUR 400 to EUR 500 per year and per employee. So once again, in a world seeking for more responsible behavior, Edenred is an accelerator of those responsible behaviors. Another way to say it, the more you are using Edenred products, and remember that we have 50 million users around the world, the more you contribute to a better world. If we move now to Page 10, the fourth trend that we see accelerating through the COVID crisis is the trend of looking for more digital payments. And by the way, Edenred is digitalizing B2B payments. So when you think about CSI, we are able to increase the attractiveness of digital B2B payment services. And basically, what we are seeing with CSI is the number of new contracts that we signed is in line with the pre-COVID expectations, both through direct and indirect sales channels. So we are also able to leverage the CSI platform to target new promising verticals, such as the utilities and construction. And by that, we are able to mitigate the volume decreases that we have in our existing portfolio. Remember that CSI is very much focused on media and hospitality and, obviously, those 2 sectors are badly hit by the crisis. But due to the fact that we are, in fact, enrolling new clients and developing new verticals as soon as the crisis is over, the volume will flow into our CSI channels. Finally, Page 11. You'll remember that we made the commitment to put or to fund our More than Ever relief plan. It's a commitment of up to EUR 15 million to mitigate the consequences of the COVID-19 epidemic on Edenred's ecosystem. We have 3 priorities: protect our employees, support the merchant and support the scientific research. In fact, we made a selection of 65 initiatives out of more than 100 proposals that were made by our local companies. And so we are proud to share with you some of the key examples of the things we did for our ecosystem. First of all, we finance better health insurance coverage and COVID-19 tests in some Latin American countries for our people. We have been also able to support essential needs for professional users such as sanitary facilities for European truckers or free online health consultation from Brazilian truckers. And finally, we developed many initiatives that seeks to protect our merchants' treasury and help to relaunch the restaurants business. So we waived some of our fees temporarily for fast reimbursement services. We launched an incentive campaign to tempt users back in restaurants. And a good illustration of that is the award we have received in Czech Republic. We have been recognized as the Czech Top 100 Hero of the fight against coronavirus. It's now time to go into more financial details. Thanks to Patrick. Patrick, the floor is yours.
Thank you, Bertrand. Good morning, everyone. Let's go through the detailed figures now, and let's start with Q3 and year-to-date 2020 total revenue on Page 13. So in a nutshell, the cumulative figures as of the end of September 2020 amounted to EUR 1,053,000,000 in terms of total revenue. This is a minus 10% in comparison to last year, of which the like-for-like decrease amounted to minus 3% and the rest is explained by the positive scope effects of plus 0.3%. And unfortunately, a large important negative currency impact of minus 7.4%, of which Q3 2020 is a very satisfactory quarter, amounted to EUR 357 million, i.e., a minus 9.3% in terms of reported change but plus 0.5% in terms of like-for-like change. So yes, we are back on track, and we surpassed here in Q3 a positive growth in terms of total revenue. Let's deep dive now into Q3 and year-to-date 2020 operating revenue on the next slide, Slide #14. So we are back to positive organic growth in the third quarter of the year, with a plus 0.9% organic growth for Q3. Once again, we face very important and negative impact of minus 9.7% during Q3. And when you look at the cumulative figures, the total impact in absolute figures regarding the currency, a negative impact amounting to EUR 92 million. And this mostly come from the Brazilian real exposure, but as well as for Mexican peso and other currencies such as U.S. dollars and Turkish lira, especially. But what is important there is, as you can see, posting a 0.9% positive growth during Q3 compared, of course, to the very negatively impacted by the crisis Q2 2020, where we posted minus 15.4%. So we have a strong rebound coming earlier than what we expected during H2. And this is especially explained by the exit of lockdown situation we have experienced in certain countries. Year-to-date figures for operating revenue amounted to EUR 1,021,000,000, so minus 9.7% on a reported basis and minus 2.8% for the like-for-like growth or decrease during the 9 first months of 2020. If we look now at the operating revenue breakdown per business line on Page 15. Of course, Employee Benefits remains the most important business line for Edenred with 60% of the overall operating revenue, i.e., EUR 619 million, representing a like-for-like decrease of minus 6.3% for the 9 first months of 2020 and a reported decrease of minus 12%. Fleet & Mobility Solution is at 26% of the overall operating revenue, i.e., a minus 1.4% in terms of like-for-like decrease in comparison to last year. So we are seeing there a strong rebound. And the reported figure is minus 12% in comparison to last year's. And this difference between the like-for-like decrease and the reported figure is explained by the fact that we are very -- we are really deeply impacted by the currency impact, explained by the fact that we have quite a strong exposure to the Latin American economies. Then the Complementary Solution represented in the first 9 months of 2020 14%. This is a mix of different solutions, including Corporate Payment services that Bertrand mentioned before, but as well as Incentive & Rewards that did pretty well and Public Social Programs that -- where we had the big successes, especially with the specific program we've put in place in order to help the economy recovering during the crisis. So overall, the pricing revenue like-for-like change of plus 13% during the 9 first months of 2020 and plus 7% of reported growth. If we look now at the operating revenue breakdown per region on Page 16. What is important there, in my view, is that Europe confirmed to be the most important area in which we operate, with the total operating revenue representing 62% of the overall operating revenue of our group for the 9 first months of 2020. This is a 0% like-for-like growth but a 0.8% reported growth for 2020. Latin America stands at 29% with a minus 7.9% like-for-like decrease and a minus 27% reported decrease during the time. And then Rest of the World is now 9%, of which plus 0.9% in terms of like-for-like growth for 2020. Let's now focus on Europe. We saw in Europe the continuation of a strong rebound, particularly in France. Overall, Europe represented EUR 635 million for the 9 first months of 2020. And when you look at the difference between France and the rest of Europe, here, you can see a strong rebound in France, especially. We came from a minus 31% in Q2 2020 in terms of like-for-like decrease to a positive growth of plus 9.5% in Q3 2020. As you know, France was one of the hardest hit countries by stay-at-home and short-time working measures in Q2. But we have a really strong catch-up effect since June with a rebound of sales activity. And on top of that, we are pretty helped by the fact that the daily spending cap has been revised for the Ticket Restaurant. This cap came from EUR 19 to EUR 38 in restaurant, and this positively impacted the merchant revenue, even if a large amount of funds remain unspent at the end of Q3, meaning that we are still pushing in front of us some operating revenue in France. The rest of Europe did pretty well as well. We came from minus 5.9% in Q2 to plus 6.4% organic in Q3, with a strong performance in Employee Benefits, thanks to an improved sales dynamic and a progressive easing of lockdowns in many countries. In Fleet & Mobility as well, we had a continued volume recovery in Q3. And it's important to mention that we've experienced this rebound in both heavy fleet and light fleet in fact. Maybe you remember that heavy fleet was probably less impacted during Q2, but the rebound was posted in both heavy fleet and light fleet. Then if we look at what we did in Latin America on Page 18. The health crisis is still severe in Latin America with uncertainties surrounding economic recovery. Overall, Latin America represented EUR 298 million for the 9 first months of 2020. And here, again, we have a strong difference between Brazil and the rest of Hispanic Latin America. In Brazil, Q2 was much better than the Q2 -- sorry, Q3 was much better than Q2. We came from minus 22% in term of organic increase to minus 4% in Q3 2020. So we had a gradual recovery in the second half of Q3, especially with the easing of lockdown rules in this country. We had during the period as well a solid performance of the Fleet & Mobility Solution and especially explained by the fact that we continue to develop the maintenance offering. Employee Benefits was impacted by a closed restaurant, especially in the first half of Q3, but we had a really strong and fast adoption of meal delivery platform, app-to-app payment solutions with more than 1 million transaction in Q3, for instance. In Hispanic Latin America, Q3 was pretty comparable to Q2 with minus 15% like-for-like decrease to be compared to minus 16% in Q2. We still have lockdowns in place during Q3, impacting the business locally, of course. And Mexico, especially, is really impacted by the epidemic, the rise of unemployment and the negative retail fuel price effect in Fleet & Mobility Solutions. Last comment about other revenue, what we call previously financial revenue, up on Page 19. The lower interest rates worldwide and the strong negative currency effect in Latin America explain the fact that we came from EUR 40 million last year for the 9 first months of 2019 to EUR 32 million in 2020. We are suffering from the lower interest rate worldwide, especially in non-Eurozone and non-European countries in Brazil and Mexico, especially. And we have a strong negative currency effect in Latin America. And despite the fact that we still have a growing float, so importantly, interestingly enough, when you look at the like-for-like change in Latin America, for instance, we posted a minus 2.5% in terms of like-for-like change, which is not that bad. But unfortunately, the total reported change, including the currency impact, this represented a minus 20.7% for the 9 first months of 2020. Thank you very much. I'd now let the floor to Bertrand to tell us about the next future.
Okay. Thank you, Patrick. So I propose that we move to Page 21. So if we look now at the full year 2020 outlook, 3 things I'd like to share with you. First of all, the business excellence actions that we put in place will continue to contribute to growth in Q4. In Employee Benefits, the continued business digitalization in Europe will contribute to the improved performance in Q4, and we also have year-to-date delayed user spending that will continue to have a positive impact on our merchants revenue in Q4. As to the Fleet & Mobility, we will see a gradual recovery in Europe and Latin America. However, we have to take into account a high comparison basis with Q4 2019 and also a negative fuel price impact, especially in Latin America. Finally, on Complementary Solutions, Corporate Payment solutions will still be impacted in some specific verticals in North America, such as the media and hospitality. And we don't know yet if we will have the restart of some COVID-19 specific-purpose programs. However, well, so that's the first thing, business excellence actions that will continue to contribute to growth. The second thing is, unfortunately, we see the rise of uncertainties related to impacts of new partial lockdown in Europe. But we are able to confirm our EUR 100 million of cost savings, cost avoidance because our plan is well on track. And we will see especially the impact on H2, because H2 is going to be the semester where we're going to benefit fully from the actions we took starting in March 2020. So the combination of those elements allows us to come to the following full year 2020 EBITDA estimate that is now between EUR 550 million and EUR 600 million versus what we previously announced for the results of H1 with a bracket that was larger between EUR 540 million and EUR 610 million. If we move to Page 22, yes, profit is sanity, but cash is king. So what is our cash flow outlook for 2020? Well, we will benefit from a gradual business recovery. We will benefit from the fact that our CapEx in H2 2020 will be lower than in H2 2019. We will benefit from the fact that we will have in H2 2020 limited M&A transactions, and we will be slightly impacted by further negative FX impact on the float and a float retention time that will gradually return to normal after a longer retention period in H1 due to lockdowns. The combination of all those elements, the EBITDA outlook and those elements as to the cash flow curve, leads us to confirm what we said in H -- at the publication of H1 2020 results. Our net debt should be below 2.8x the EBITDA in 2020. Page 20 -- 23, and as a conclusion. First of all, we are back to growth, back to growth in Q3. And you remember, what we shared with you is it will happen somewhere in H2, and we have been able to do it as early as in Q3. The second thing to remember is Edenred is a very resilient company. So when we look at what it means, the COVID-19 crisis around the world, we demonstrated a high level of resilience year-to-date and especially after a very tough Q2. The third thing is, yes, we see some tailwinds that are very favorable to the business of Edenred. Edenred can benefit a lot from a more digitalized and contactless world. Edenred can benefit a lot from a more and more remote working environment. Edenred can benefit a lot from the search for more responsible behavior in the working world. And finally, the world is looking for more and more digitalized B2B payments, and it's what we provide in the U.S. The other thing to take into account is, yes, Edenred has strong business and financial fundamentals. We have a strong growth profile, a robust financial position. We are in 46 countries. Our markets are still vastly underpenetrated market. We are a tech leader that is able to propose to the world specific-purpose payment solutions. We are covering essential needs via 250 different programs in 4 universes: the eat, the move, the care and the pay. And we think that we have an agile organization with local corporate entrepreneurs that are operating on the ground and that are supported by e-Quarter scaling champions and technology experts. So the combination of our resilience, of our ability to rebound quickly in Q3, our ability to serve on accelerating waves that are favorable to our business model leads us to the results we got in Q3, and we will continue to generate. Thank you for your attention. Patrick and myself are now all yours to answer your questions for the next 30 minutes.
[Operator Instructions] First question from Simon LeChipre from MainFirst.
Yes. Firstly, would you have any details to share on the evolution of the performance during the quarter? And particularly, if you could share the exit rate for September? Secondly, looking to Europe, you've benefited in Q3 from the catch-up of shares not used during Q2. And even if you would continue to benefit from this in Q4, I guess, the catch-up impact will not be as strong. So do you think the performance achieved in Q3 can be sustained in Q4, especially with new restrictions? And lastly, looking to Brazil, I would be interested to have your view, I would say, over the next 12 to 24 months. So beyond just the pandemic effect, what's your view on the economic environment and the impact for your business? Do you see a risk, you get back to sort of very tough situation, let's say, similar to 2017?
Okay. Simon, many, many questions. Let's take them one by one, and let's share with Patrick. I will start with Brazil. So first of all, as you see, Brazil demonstrated that it was more resilient than expected through the crisis. So in Q3 and like-for-like, minus 4.4% and year-to-date at minus 6.9%. So we see a certain form of resilience in Brazil, especially with our Fleet & Mobility Solution, because in Fleet & Mobility, it's a combination of more penetration of the market. And to a certain extent, when you propose a solution that makes sense from an economic point of view, it makes even more sense when you are through a crisis. So for Fleet & Mobility, it's a question, first of all, of penetration, and it's a question of innovation as well. And you know that our strategy of beyond fuel is especially buoyant in Latin America and in Brazil with new product lines such as maintenance or total payment or telematics that are booming, in fact, in Brazil. So for the next 12 to 24 months, I still see a high pace of growth for Fleet & Mobility in Brazil. Then as to the Employee Benefits, the situation we are in today is very similar to the situation that was my welcome gift when I joined Edenred exactly 5 years ago. What does it mean? It means that you have a huge devaluation of the reals. That's the first thing. The second thing is you have a strong GDP contraction. And the third thing is you have -- it's a Darwinian experience for many, many businesses in Brazil, so those businesses are going back to you and they renegotiate the terms of their contract, especially in terms of commission. Our ambition on that is we do everything we can to make sure that we don't lose any clients. Why? Because what we learned after the '15, '16 and mid-'17 crisis in Brazil is as soon as the times are better, it's also an economy that is rebounding very vividly, and it happens also on the commission. So the situation for Employee Benefits is -- sounds like what we did do in '15, '16. So to make a long story short, I'm very positive on Brazil in terms of Fleet & Mobility. And I am in, let's say, in a resilient resistant position on Employee Benefits. Let's make sure that the level of satisfaction of our clients is high and we adjust our pricing structure as needed. But we bear in mind that as soon as times are better, we will rework our commission to compensate from the efforts we did during that period. Then you had a question about the sustainability of the growth in Q4 and the catch-up. The catch-up effect, yes, we saw it, and we saw it in France. And as explained by Patrick, in fact, France was really badly hit, in fact, in Q2. And so the rebound is even higher in Q3. Part of the rebound is due to the catch-up effect. But the truth is when we look at all the business volume that has not been transferred into renewables volume, we still have a majority -- the majority that has not been spent via the merchants. So the catch-up effect we had in Q3, we still have a lot of potential in Q4. And what is true in France is even more true at the worldwide level. Another way to say it, it is in France where the catch-up effect in Q3 was the highest, even if it was not the major [ factor ] in France. So for the rest of the world, the catch-up effect to come is even stronger. Having said that, we don't know if it's going to happen in Q4. That's why we are cautious. We are cautious because we have some curfews that are happening right now in Europe, curfew that could move to lockdown. And we know that the lockdown in terms of moving from business revenue to reimbursement volume is our enemy. But the good news is the money is in our portfolio. So it means that it's going to be spent at one point of time. So to make a long story short, rebound effect due partly to the catch-up effect on the business volume to reimbursement volume. The effect stronger in France than in the rest of the world, but the biggest chunk of this money still needed to be spent, and it's true in France, but even more true in the rest of the world. Then the first question is as to some details for the September month. Maybe I can start and Patrick, if you want to add something. We went back to growth in Q3. In fact, we went back to growth early in Q3, and it has been true and also in September.
Yes. The only thing I could add is that we did not see any difference in terms of exit rate in September compared to what we experienced previously during the quarter. So it does not lead us to anticipate a huge additional rebound in Q4, in fact.
Next question from Sabrina Blanc from Societe General.
I have 3 questions, if I may. The first one is regarding the Lat Am. You have spoke about Brazil. But can you come back also on the situation concerning the Hispanic -- the rest of the Hispanic Lat Am? What are you feeling for the coming months? The second question is regarding the -- what you have mentioned in terms of COVID specific-purpose programs. Do you have -- as I understood, you have further demand. But what is your view? Is there something which -- firstly, can we have an idea of the size and the impact in Q3? And secondly, what is your view in terms of resilience? And to finish about the -- what you said about homeworking. You said that you had some interest from some customers who would like to switch from a canteen to meal voucher, but can you provide more granularity or some example? And can you -- do you have any idea of the upside behind that?
Okay. Thank you, Sabrina, for your questions. Let's start with the first one as to Lat Am. Patrick?
Yes. This is not the simplest question to answer, of course, because as was mentioned during the presentation, the problem in Lat Am is really that we have a lack of visibility about the lockdowns. In many countries, people are still in a consignment mode currently. And it's really difficult to anticipate whether they will exit short-term or not, in fact. Having said that, as you know, Sabrina, the most important asset we have in Lat Am is Mexico, where we are facing a very specific situation linked to the fact that we had a good equilibrium between Employee Benefits that is not as resilient as it should be in a normal situation. And then we have a strong footprint in terms of Fleet & Mobility, where we are facing an impact coming from the fuel -- the pump fuel price decrease. Maybe you remember that we have made the choice to invest to be pretty much exposed to the fuel price for this Fleet & Mobility business. And of course, the negative trend has a negative overall impact so far. And most probably, it will be the case, in fact, for the next coming months, in fact. So very difficult to predict in Latin America. In Hispanic Latin America, as in many Lat Am countries, we are ready for the rebound. We are really optimistic about the fact that once the economy is doing better, probably the rebound will be pretty strong, in fact, but difficult to predict what will be the scenario for the next coming months.
Okay. So then, Sabrina, your second question as to the COVID-19 specific-purpose program. The first thing I'd like to say is, yes, we did really well, in fact, in Q2 and Q3, and the good news is we demonstrated to the private and public authorities that Edenred was the undisputable leader of specific-purpose program. We have been able to design and implement very quickly programs everywhere around the world. So in France, for example, we took care of poor students and in the U.K., we took care of peoples to have access to lunches every day for 1.4 million of them. We launched, for example, emergency holiday voucher in Greece or some specific-purpose program in Italy. So in every country around the world, we have been able to design, deploy and manage very quickly and very efficiently many programs, which is good, in fact, for the future, because we know that there is a growing trend for this kind of program. Having said that, some of them are temporary. So for example, what we did in the U.K. for Department for Education. The program is over. Why? Because the schools are now reopened in the U.K., and the access to canteen is now available. Having said that, you see that you have the beginning of the curfew and lockdown in some parts of the U.K. So maybe this program will start again. We don't know it. But if it happens, we are ready. And due to the good management of those programs in the past, most probably, we're going to grab the lion's share if it happens again. So what does it mean for Q4? It means that the third line of product, Complementary Solutions, that grew in Q3 by 17.5%, part of the growth is coming from these specific COVID-19 programs. And if the situation stays as is, the growth is going to be less in Q4 than what we had in Q3, because some of the programs stopped. However, it's too early to say because, unfortunately, you have more and more lockdowns and curfews that are happening. Then your third question was for remote working and homeworking and what does it mean versus the canteen now. In fact, the remote working and the homeworking is a good friend of Edenred services. Why? Because once again, if you are in remote working, thanks to our solution and digital solution, you can order at any time for any kind of food anywhere you are. And so it's much more convenient than the traditional physical canteen. The penetration of the physical canteen is very different from one country to another. But if we take one of the first market, which is the French market today, when you look at the new solutions that are provided to the workers, 25% is via canteen in France. And solution like Ticket Restaurant, so the entire market of Ticket Restaurant is another 25%. What we believe is the proportion will shift from physical canteen to a solution like Ticket Restaurant due to the remote working because the physical canteen is a fixed cost business. And if you are not able as an employer to predict the flow of clients you have every day, it becomes a negative margin business for the canteen managers. And as an employer, you have to pay for the difference. So taking into account that when you interview people who have a Ticket Restaurant versus going to the canteen, and so the fact that you have 3x more highly satisfied people with Ticket Restaurant than with a canteen solution, taking into account that you have 3x more people that are not satisfied with the canteen versus the Ticket Restaurant, and taking into account the fact that a Ticket Restaurant solution is less costly for an employer than a physical canteen. If on top of that, you add an element which is more and more remote working, so by definition, you cannot go to the canteen, we really think that it's going to be a significant shift in all the countries where you have a physical canteen and Edenred being the digital leader, Edenred being the most connected platform with food delivery companies and Edenred being the more, let's say, having the more digitally connected network of restaurants with now more than 1 million restaurants where you have access, thanks to our solution, in association with our more than 60 food delivery platforms. If you mix everything that I said, you see that the remote working is one of the best friends of Edenred for the future.
Next question from Geoffrey d'Halluin from Bank from America.
2 questions from my side, please. The first one is regarding the competitive landscape. I just would like to know if you have seen any change in terms of competitive landscape behavior since the beginning of the COVID-19 crisis. Secondly, do you have any first outcome regarding the gift voucher negotiations towards the end of the year? Or it's too early to say what should be the campaign for the next Christmas season?
Okay. Geoffrey, thank you for your questions. So let's start with the competitive landscape. We see some change in terms of our food provider, because due to the fact that we cannot have access to the physical canteen, you have the rise of new food providers on site. And so what does it mean for us? To go after those new providers and to make sure that as a client, if you order, you are able to pay with the Edenred Ticket Restaurant digital solutions. So for the last few months, it has been very active in terms of listing all the newcomers in terms of food solutions and making sure that they become part of our network of merchants. The second thing as well is you know that some restaurants didn't want to be part of the Edenred network because they didn't value our traffic generation. And in fact, what has happened for the last few months, we saw a rise of the number of restaurants who want to be part of the Edenred network. So to give you an example, in France, we used to have something like 70,000 restaurants that are part of our network. Here, I mean, only restaurants and not food stores. And in fact, we saw an increase of 10,000 restaurants for the last few months who asked to be part of the network. So from a competitive landscape point of view, when I look at the adjacency, we have more and more restaurants and more and more new forms of, let's say, food providers that want to be part of our network and have access to our volume. And remember, when you look at the growth of Edenred for the last few years, our business volume has constantly rose. So we made the demonstration that we are a traffic generator, and we are able to increase the traffic generation towards the restaurant owners. As to people who provide solutions like Ticket Restaurant around the world in 2020, we didn't see any newcomer. But the thing we saw is the traditional players such as Sodexo and Up struggled a little bit more than Edenred in this fast-moving environment and in this very digital environment. So what we see, to say it in other words, in an accelerated digitalization, the digital leader of the market tend to benefit more than the competitors who maybe invested less in digitalization in the past. Then your second question was how do we see the campaign of gift vouchers in Q4. Geoffrey, it's a very good question, because you know that Q4 is a peak of our season. It's too early to say, but what we saw for the first few weeks because basically, for us, the campaign starts in, let's say, in this -- after the second week of October. So for us, it's very early. But we see 2 trends. The first one, which is a positive one. Our clients are saying, I'm not sure I will be able to increase wages. And I didn't increase wages, so because when the COVID crisis came, it was in the season of wage increases. So I didn't increase wages in 2020. And I'm not sure I will be able to do it in 2021. And taking into account that my employees work really hard because we are facing turbulent times, I want to reward my heroes. And the only way I can do it is via some gift card. So we see a positive trend under, I would say, the title of -- I want to reward my heroes. And I want to do that selectively and with the right fiscal incentive versus salary increases on which you cannot go back and which is less, let's say, fiscal efficient. So this trend seems to be a positive trend. So that's one thing. On the other hand, we used to have sales incentive campaign. And as you know, the sales for every company has not been a success in 2020. So probably, we will get less activity from sales incentive campaigns. So too early to say. 2 trends that are, let's say, in contradiction. The first one is reward your heroes, very positive; the second one, where we don't know yet, which is the sales incentive campaign. So too early to say what's going to be the combination of both. But as for now, we started on a good trend.
Rajesh Kumar of HSBC, next question.
You briefly touched on the shift from cafeteria to vouchers as a trend that is emerging. Can you give us some color on what other changes you have seen in your markets structurally or early evidence of that in a world shaped by the pandemic?
Okay. When you mean cafeteria, you mean the canteen?
Canteen, yes, exactly.
Yes. Okay. So what you are looking for is more, let's say, colors around that and more examples?
And other trends like app-to-app payment or types of products you can develop in the world going forward. What are the opportunities for innovation?
Well, the -- so first of all, I explained earlier to -- by answering to the question of Sabrina. There's 2 structural change that is, I guess, a worldwide change: more remote working, so less ability to go to the canteen; and a canteen business model that is more and more challenged for the canteen managers but also for the employers who have to compensate. So it's a radical structural change. And so it's good for the canteen 2.0, which is a virtual canteen. You go and eat whenever you want, whatever you want, wherever you want. So that's the structural trend. Then I can give you a few examples. So first of all, you have companies that are 100% with canteen, and we decided to close some sites in urban areas because they moved to full remote working organization. So they don't use the canteen anymore, and they moved to something like Ticket Restaurant. You have the second case where you have a mix of -- on the same site of canteen on one side and Ticket Restaurant of the other side. And we see many clients calling us and say, "Help us to get rid of the canteen because we cannot sustain both systems," because it's a complexity from an administrative point of view. And from an economic point of view, it doesn't make any sense anymore. Then we have people who were not equipped with anything. So we didn't have any canteen and any Ticket Restaurant solution, and they decided to give back to their employees because in a remote working environment, you know that the loyalty of your employees is going down dramatically. And so if you want to keep your best people, you need to put in place some programs where you are able to give back. So we see that more and more. And we are developing specific economic model for each of the use cases I just shared with you. Then in terms of innovation, obviously, if you are universal canteen, you need to be sure that, first of all, it's a seamless experience. So the payment method is really well integrated into the different platforms and the platforms of your partners. That's why I said part of our job is to make sure that we contractualize more and more new providers of solutions. So for example, in France, you have people who are using part of the square meters that were used by the canteen before to put some fridges in which they deliver the food you ordered, but you need to be able to pay whether online or whether on site to have access to the fridge for the food you didn't order. But there is surplus of food and you want to have access to it, so we need to make sure that our system are able to do that. So we are in a mood of making sure that we are able to interact and integrate seamlessly with all the new forms of benefits. But it's not only food. As I said, if you want to increase the loyalty of your remote workers, you need to develop fringe benefits, for example, flexible fringe benefits. So to give you an idea, in Italy, they decided to allow more money for fringe benefit and to double, in fact, the amount in 2020. And we saw a surge of our business into that. For example, in September, on welfare, we did plus 30% or I'll give you another example. The U.S. market, it's a market on which we never had the chance to develop our food delivery solutions, and we have been able in Q2 to win our first clients, specified to give specific-purpose money to be spent by the employees only for meal and food. So to make a long story short, the remote working has a structural impact on the food business for the working world. The direction is clearly towards more loyalty and more universalities and a technological platform like us is a very good answer to those new needs. And those needs are evolving constantly and so that's why we continue to invest a lot in technology to make sure that we can answer quickly. Remember that we spend between EUR 250 million and EUR 300 million cash every year to sustain our technology and develop new innovative solutions.
Understood. Very comprehensive answer. Just on -- if we look at the future and assume that more of the vouchers are digital, what do you think is the likely impact on float and unused vouchers? And is that a risk you consider?
Well, what we have explained during the last Investor Day we've done last year, for instance, is that most probably, the average, what we call the duration -- the float duration, i.e., the time during which we keep the money in our balance sheet. So what we explained is that for the employee benefit, we should come from around 8 weeks now to 7 weeks. So the most part of the change is behind us now. And one way or another, it will reduce the duration of [ disconnect ] we keep in the balance sheet at the time during which we keep increasing the volumes. So overall, the float in absolute terms in my view should not decrease. In fact, the duration should decrease, but the volumes keeps increasing. And overall, the absolute terms should be higher. Having said that, what we experienced now during this COVID crisis is a very unexpected situation, during which the duration time is much longer than under a normal situation, because it is obviously much more complicated for many users to go to a restaurant and spend this wallet impact. So currently, the duration rate is much -- duration time, sorry, is much higher than what we knew in a normal base. And that explained the fact that, as you may remember, at the end of H1, we posted a positive free cash flow, which is -- which was not the situation during a normal year. During the normal year, we are earning some cash in H1. That was not the case this year. And what we will experience at the end of this year is most probably a float that may -- or sorry, a free cash flow that will be positive, partly explained by the fact that we keep this money for a longer period of time in our balance sheet.
Next question from Paul Sullivan from Barclays.
Just 3 from me. Firstly, EUR 100 million of savings, do you think that's still sensible now you're back to growth? And given all the structural growth opportunities, do you think you could actually be investing more? Or would it be prudent to be investing more at this time rather than cutting? Secondly, when it comes to your guidance or your outlook statement for the fourth quarter, when you talk about Q4 uncertainty, are you seeing revenues sort of reverse today? Or is it a case of sort of a case of conservatism? And it doesn't seem to be affecting your EBITDA. So to be clear, are you sort of -- are you calling Q4 down? And then finally, just one on Italy. Could you maybe talk about growth in momentum in Italy, its size relative to France? And also I remember at the first half results, there was some uncertainty around the difference between in-work and in-workplace benefits. Has that been sorted out?
Yes, Patrick and myself, we do well. Patrick? So your first question is about the EUR 100 million cost avoidance. Yes, it's still sensible. And I go back to what I shared with you guys a few months ago, the crisis is an opportunity you don't want to miss. So what does it mean? It means that we are working hard to adjust our cost structure versus the trajectory we set for 2020. In fact, our trajectory was double-digit growth. It's not going to be the case for 2020, unfortunately. So we need to adjust. And we are very strong on that because by adjusting, you discover areas where you can optimize and rightsize, but you also discover areas where, in fact, you didn't invest enough. So it's -- by putting some constraints, it's a good way to make some progress. There is another saying that I like very much, the constraint creates the talent. So yes, the EUR 100 million cost avoidance plan is still sensible. Having said that, what we always said, we said that we believe in the growth potential of Edenred, and that's why we need to continue to invest. So this plan is mostly cost avoidance. And as to our CapEx, we made a very sensible work of prioritizing the elements on which we don't make any compromise, i.e., we continue to increase our level of investments. So digitalization is one of them. Compliance is another one of them. Securities, digital security, is another one. But for example, we were in the middle of deployment of our new HRIS system with Workday, and we decided to take a few months more to deploy the system and to make some savings on that in 2020. So that's the kind of cost avoidance we decided to make, to make sure that we invest rightly and for the right purpose. Your second question was about our Q4 and our guidance in terms of EBITDA. The situation is slightly tricky. Business excellence is going to continue in Q4. The positive dynamics from the commercial activity point of view will continue in Q4 as well. So we are positive on that. The only thing that we don't control once again is the level of the curfew and lockdown. And unfortunately, things have changed very quickly for the last few days. What we believe is there will be more curfews in Europe, and the curfews are less impacting our activity than the lockdown. So we are less nervous than we were at the end of Q1 as to the impact on our activities. And it's because we are less nervous on those uncertainties that we are able to reduce the size of our EBITDA guidance by moving to EUR 550 million to EUR 600 million. So without the rise of these uncertainties as to the curfews and a few lockdowns, we could be more positive than what we are today. But you know us, we faced these questions before. But having said that, we have now more visibility on our EBITDA generation. That's why we have been able to reduce the guidance in terms of a -- reduce the size of the bracket, of course. Then you had a question about Italy. Yes, we have a very strong momentum in Italy. Why do we have a strong momentum? It's because we are in a situation where we are a leader of the market, where we are very innovative, especially on what we call the welfare solutions. And so -- and the leader in a time where the digitalization has accelerated a lot in Italy. So we over benefited from the digitalization in Italy as the digital market leader. We are really in a situation where the winner almost takes it all, and we have a rise of solutions such as Easy Welfare. As I said, in September, for example, plus [ 30% ]. So the combination of our innovation plus accelerated pace of digitalization leads to a very positive growth momentum in Italy.
And just to follow up on that. I mean, is Italy now comparable to France in size?
Sorry, we didn't hear you well.
Is Italy comparable to France in size?
In fact, the difference between France and Italy has narrowed for the last 3 years. You'll remember that France grew between 8% and 10% every year, but Italy grew even faster. So the size of the 2 countries is more or less comparable now.
Okay. Great. And then just finally, on that question mark around in-workplace and in-work benefits, which I think was specific to Italy, has that been sorted out?
In fact, it's -- as explained during the results, the publication of the H1 results, it's a negotiation that is done in Italy branch per branch. And what we see is a very positive trend, i.e., the vast majority of the branches consider that, yes, when you are a remote worker, you continue to have your benefits, okay? And there is one or 2 branches on which we are still waiting. But having said that, yes, we are confident that it's going to be cleared at some point of time. And by the way, even with the slight uncertainties, we are growing highly in Italy.
Great. And just finally, to be clear, you're not calling Q4 down at this stage?
I'm not calling to?
Q4. Q4 like-for-like revenues down at this stage. You're not saying they will be negative?
No. No. We are not saying that for now.
Next question from Johanna Jourdain from ODDO BHF.
Johanna, just for everybody, we are running late. So it's going to be the last question. I hope we don't create too much frustration. Johanna, we are all yours.
And I will be quick. Just one question from my side. So do you have a first view on what could be your dividend policy for 2020? So should we assume the medium-term guidance of at least EUR 0.01 per year to be applied this year? Or should we expect more upside as 2019 dividend was reduced due to the pandemic?
Quick questions, long answer. Thank you, Johanna. As to the dividend policy, it's too early to say, but we would like to go back as soon as possible to what we said, i.e., a progressive dividend policy. So it's too early to say, but it's our objective to go back to a progressive dividend policy as fast as possible. As to the medium-term guidance, it's too early to say as well. We are still in the middle of the wave 2 of the COVID. Yes, we are resilient, and we demonstrated it. Yes, we are able to rebound quickly as soon as the situation improve. So it's -- and yes, there are some very favorable tailwinds for Edenred. So the combination of that leads us to think that, yes, as soon as the crisis is somehow over, there will be growth for Edenred. As to the medium-term guidance, you have to give us a little bit more time to better understand the wave 2 and when this nightmare is over to communicate on that. Thank you. So thank you for all your questions. Thank you for your interest in Edenred. Bear with us. There's still a lot of innovation and a lot of growth to come with this fantastic company that is Edenred. Have a great day.
Thank you. Bye-bye.
Thank you, ladies and gentlemen. This concludes today's conference call. Thank you all for your participation. You may now disconnect your lines.