Hello, and welcome to the Exclusive Networks first quarter 2024 conference call. Please note this call is being recorded, and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero, and you'll be connected to an operator. I will now hand you over to your host, Mr. Hacène Boumendjel, Head of Investor Relations, to begin today's conference. Thank you. Thank you. Good morning, everyone, and welcome to Exclusive Networks' first quarter 2024 earnings conference call, which is broadcasted live and will be available on demand on our website. The presentation slides and press release for this call are also available on our website in the investor relations section. First, I would like to draw your attention to the disclaimer on slide two of this deck regarding the information contained within this document, and in particular, the forward-looking statements. I invite all participants to read this. Today's call is scheduled to last about 60 minutes, and I'd like to introduce our key speakers this morning, Jesper Trolle, CEO of Exclusive Networks, and Nathalie Bühnemann, our CFO. The presentation will last about 30 minutes and will be followed by Q&A session. If we don't have the time to take everyone's question in this session, I am available and happy to take any of your questions following up the call. I will now pass it over to Jesper for a few opening remarks and his overview of Q1 2024. Jesper, the floor is yours. Thank you, Hacene, and good afternoon, everyone, and welcome to our Q1 trading update. I want to start today's call with a few quick words of context. First, I'm sure that you have seen that cybersecurity continues to make headlines, with several high-profile cyber attacks widely reported in the media these past months. In this environment, cybersecurity continues to remain at the top of the agendas for CEOs globally. In fact, recent CIO surveys shows that cybersecurity continues to remain among the top spending priorities for companies worldwide. This trend naturally continues to benefit the demand for cybersecurity solutions and in turn, our business. Secondly, you may recall that our full year results presentations, I announced that half one would see a continuation of the softer trends already observed in the second half of last year. I said that we expect growth to accelerate in the second half of this year, and I confirm that this is still our outlook today. Therefore, when presenting our Q1 numbers today, I would preface by saying that, one, Q1 is broadly in line with Q3 and Q4 2023, as expected. And two, Q1 also takes into account the high basis of comparison versus our high Q1 last year at plus 28%, due to the backlog release after the supply chain bottlenecks, as you recall, we have spoke about many times. Finally, I want to express my sincere gratitude to all of our teams across the globe for their hard work and their consistent execution of our strategy. These skilled people are what really make Exclusive Networks unique in the markets we serve. In Q1, we grew 7% at constant currency, a figure that we are proud of, and it is fully in line with the market growth. The current macro environment remains similar to previous quarters. We continue to see that it takes longer for deals to close, and that there is more financial scrutiny going into every project. However, on a positive note, in Q1, we have not seen any further deterioration of this demand environment. As you can see on this slide, our global serviceable addressable market continues to expand. It is now estimated at over $50 billion, more than double the size since our IPO. Therefore, our market share today of around 10% of this market still leaves significant runway for future growth as we continue to develop our global platform, our offerings, and our vendor portfolio. Furthermore, whether it be with our vendors or our customers, we continue to enjoy very strong relationships, as you can see from our retention rates, which continually are above 100%. This is an important metric for our operating model, as it's very efficient to upsell our existing vendors to our existing customers as a complement to the onboarding of new customers and new disruptive vendors. Lastly, I want to highlight that we have reached an important milestone this quarter, because for the first time ever, software have reached more than 50% of our gross sales mix, which I will comment on in a moment. But before we go into more details about Q1, I just want to say that so far, 2024 is progressing according to our expectations, with an acceleration expected in the second half, and therefore, we feel confident today in reconfirming our previously stated outlook for the full year. Moving on to the next slide, a couple of takeaways. First, we continue to see rapid growth in our cloud-based business. This once again confirms that our added value business model is truly relevant in software, cloud, and services. As you can see, our cloud-based business continues to represent an increasing share of our mix, up six points to reach over one-third of our business. Since cloud cuts across software and services, you see a relative decline of hardware in our mix. This relative decline of hardware is partly due to the comparison versus last year, when much of the hardware growth was driven by the backlog release I already mentioned. To sum up, in Q1, we once again see the stickiness of our model and our value proposition in each of our swim lanes, whether be it in software, hardware, cloud, or services. Now let's look at our performance relative to market trends in key cybersecurity sub-segments. After a few years of significant spend on firewalls, which is the largest category within network security, we see a return to more normalized levels. Consequently, as per my earlier comments, hardware decreased as a percentage in our overall sales mix as we continue to focus our efforts on software and cloud-driven segments. We continue to have very strong momentum within endpoint security as companies are still bringing legacy systems up to date. Our performance in this segment is well above the market, driven by our strong partnerships with leading vendors such as SentinelOne, and more recently, with the addition of CrowdStrike, who we have onboarded within Ignition Technologies during Q1. Lastly, let's not forget that email still remains the number one attack vector for any organization. In this segment, we work with market leaders and disruptors such as Proofpoint and Abnormal. We are also proud of our newer partnership with Mimecast, which we rolled out across the U.K., as well as several countries in Asia. So as you can see, we continue to enjoy strong growth in this segment, and we are already getting tangible benefits from our partnership with Mimecast, which was only signed a year ago. Lastly, I want to give a few words on our successful M&A strategy. As you would have seen, we recently acquired NEXTGEN, a leading hypergrowth channel services company, headquartered in Australia with nearly 200 employees and about EUR 160 million in gross sales in the year ending June 30th, 2023. NEXTGEN is expected to generate steady double-digit growth in 2024 and beyond. This transaction was financed entirely in cash, and we have acquired 100% of the equity of NEXTGEN, which will be integrated as a wholly-owned subsidiary of Exclusive Networks. We are retaining the NEXTGEN leadership team to ensure continuity and a smooth integration process. We will be consolidating the financial results of NEXTGEN from the second quarter of 2024, and we anticipate that this deal will generate commercial and financial synergies starting in the second half of 2024. As we mentioned before, APAC is a very important market for us, and this strategic acquisition brings our combined gross sales for FY 2023 to EUR 615 million, making us one of the largest players in Australia and New Zealand. NEXTGEN is bringing us significant scale and reach in APAC, which in turn is enabling us to attract more vendors, more partners, and through them, more end customers in this important geography. NEXTGEN was created in 2011 and has since become a cybersecurity powerhouse. They are completely aligned with our vision and have recently started to expand across Asia, which brings us a fantastic growth opportunity. Furthermore, NEXTGEN has built a successful services business focused on market creation to spur customer demand. This comes as a perfect complement to our own services business, which has historically been focused on post-sales implementation, training, and support. For example, NEXTGEN owns a digital marketing agency, Elastic Digital, which brings us strong demand generation and digital marketing services capabilities. In addition, their oSpace platform provides lead generation and AI-based analytics. We are looking forward to start deploying these new service offerings on the Exclusive Networks global platform. NEXTGEN also possesses leading cloud assessment and management capabilities, thanks to their own developed IP. NEXTGEN is working with leading hyperscalers such as AWS and Oracle, and offers cloud migration consultancy services through its Optima company. We will be able to cross-sell our complementary offerings to our combined ecosystem, thanks to NEXTGEN's additional service offerings. With this wider approach, spanning from pre-sales to transactions through to post-sales, we can better serve our vendors and customers and thereby increase our market shares. To conclude, our strategic acquisition of NEXTGEN will create a lot of value. One, by enabling our larger footprint to grow faster in APAC. Two, by expanding important relationships like CrowdStrike, Netskope, and Okta. And three, finally, by adding new important vendor relationships such as AWS, Oracle Cloud, and IBM to our business. On a more personal note, I've known John Walters for the last decade and have always admired the business that he has built. During the last couple of years, him and I have discussed the opportunity to join forces, and I'm therefore very excited to welcome him and his team to the Exclusive Networks family. This acquisition will create significant opportunities for our company, and we look forward to working with the NEXTGEN team to deliver increased value and innovation to our combined ecosystem. With that, I now thank you, and I will hand it over to Nathalie for a deeper dive into our Q1 numbers. Nathalie? Thank you, Jesper. Good evening, everyone, and thank you all for joining us today for our Q1 2024 update. I'm happy to report that Q1 continued our trend of EUR 1 billion+ gross sales in a quarter on the back of a record performance in Q1 last year. Let's look first at the drivers of this growth during the period on slide 11. On the left hand of the slide, you can see that we have experienced an outstanding performance over three years at +36% from Q1, 2022 to Q1, 2024. A large part of this growth is attributed to an exceptional contribution from Q1, 2023, notably with the impact of the supply chain. As a reminder, a large portion of the Q1 2023 growth in sales, close to 10%, were related to non-recurring drivers, such as the impact of our backlog Q4 2022, and the catch-up pricing effect. In this context of high basis of comparison, we still managed to post 7% growth like for like, and 6% reported at EUR 1,255 million. To get a better feeling of our business activity level in Q1 2024, I would like to develop more the growth headwinds and tailwinds. Growth was strongly driven by volumes for 9% in Q1 2024, close to double-digit growth, demonstrating the healthy activity levels and our strong positioning. However, 9% growth in volumes has been partially offset by some pricing headwinds, leading to 7% growth at constant rate. Coming now to the standard drivers of our growth on the right side of the slide. So most of our growth, close to 4%, came from existing vendors in the geographies where we operate. On that 6% is attributed to vendor expansion, either from new geographies or new vendor relationships, and the remaining 1% is thanks to the contribution of recent acquisition in Ingecom and Consigas. Moving now on to our regional performance on slide 12. To begin with, EMEA continues to be the driving force of the group. The region posted gross sales growth of 9% reported, or 10% at constant currency. We experienced healthy demand, reflecting the strong positioning of the group in this region. Looking at the performance over the last three years, the region grew an impressive 38% from Q1 2022 to Q1 2024. Moving now to Americas. Gross sales posted a stable growth at 1% reported or 2% constant rate, after an outstanding 50% reported growth in Q1 2023, and showing 51% growth since Q1 2022. Softer growth is mainly driven by high basis of comparison from Q1 last year. Finally, the APAC region continued its stabilization, with sequential improvement on the back of a high basis of comparison, resulting in gross sales being down 9% reported and 8% at constant currency in Q1 2024. As a reminder, Q2 2023 was presented at the lowest point in the business activity. After Q2 2023, the business has been stabilized and slowly recovering, all following quarters being above Q2 2023 in absolute value. Q1 2024 shows again stabilization and progressive recovery. The increasing booking trend in this region heralds for future development in billings. Additionally, as mentioned earlier by Jesper, we believe that NEXTGEN Group is a strategic acquisition, which will consolidate our position in the region by driving more business and expanding our service offering. For a reminder, NEXTGEN will be consolidated starting Q2 2024. Moving now on the breakdown of our revenue per geography and deal size on slide 13. In terms of our geographic split, EMEA grew by two points, driven by the lower growth of our North American region. This continues to stress the importance of our strong foothold in the most mature market. In terms of deal size, the share of deals above EUR 1 million was up by four points, from 13% to 17%. We experienced fewer large deals above EUR 10 million, but much more deals between EUR 1 million and EUR 5 million. An increase in deals above EUR 1 million shows our capability to be a major and global actor on this market. Deals in between EUR 100,000 and EUR 500,000 remained stable at 33% in our gross sales mix, while small deals in between EUR 5,000 and EUR 1 million grew by 1%, proving our good presence on the SMB market. With that, I want to thank you all for your time today, and I will now pass it over to Jesper for his final remarks. Thank you, Nathalie. So let me, wrap up before we take, your questions. So it's true that the market has not rebounded yet completely, as I, as I mentioned in my opening remarks. However, we all expect that this is going to take place in the second half globally. As you recall from what I said at the full year results in February, we have always known that Q1 would be somewhat in line with Q3 and Q4 of last year. Nevertheless, we are also fully confident, and so that's why we are confirming that we are on track to meet our full year guidance from 2024. And lastly, we are very excited about the future, particularly with the recent addition of NEXTGEN's capabilities, their IP, and their fantastic teams. This strategic acquisition will set us up for a strong performance in APAC, while also giving us the opportunity to scale their IP and market creation capabilities across the rest of our business. Thank you for the attention today, and we'll now open up to take your questions. Ladies and gentlemen, as a reminder, if you would like to ask a question or make a contribution on today's call, please press star one now on your phone keypad, and to withdraw your question, please press star two. Also, please ensure your line remains unmuted locally. You will be advised when to ask your questions. ... The first question comes from the line of Balajee Tirupati, calling from Citi. Please go ahead. Hi, good evening. Thank you for taking my questions, two from my side, if I may. Firstly, just clarification on the unchanged guidance for this year. Is the guidance including the acquisition of NEXTGEN? Given the size of acquisition, it will be contributing 2 percentage point—more than 2 percentage point to your gross profit growth for the year. So clarification there, and then I have a follow-up. There is only one question. I thought you said two questions, so- I was saying, I said that I'll... Okay. So I'll ask my second question. Okay. But I can answer your first question. Okay. So the outlook does not take into account the NEXTGEN. For the moment, we have just closed the deal. It's very recent, so we'll make an update at a point of time, but it's a very recent acquisition. Understood. And the second question was on the change in revenue mix, but increasing share of software and decline in hardware revenue share. How should we think about implication for margin profile of the business? Would it be fair to think that hardware or firewall sales had a bit higher, higher than the group average margin? Just, before Jesper can add some comments, from a pure financial communication, you know that we do not disclose margin by category of products. So we have not disclosed margin on hardware nor on software. So it's difficult to comment. Understood. Thank you. The next question comes from the line of Joe George, calling from JP Morgan. Please go ahead. Yes. Hi, guys, and thanks for taking my question. Just one from my side, please. Jesper, you mentioned that the market has not rebounded yet, and you're expecting this to take place in H2. Could you just point us to, you know, what data gives you the confidence that a rebound is coming in H2? And is this rebound expected to be broad-based across the business or skewed to any certain areas within? Thanks. Yeah. Thanks, Joe. Appreciate the question. So, you know, when I track sort of the underlying dynamics of our business, the pipeline we are having, the view from the field, it makes me, it gives me a certain level of confidence also when we look at new bookings. Secondly, I would say obviously the bar through the remainder of the year is very different from what we had in Q1, as you would recall, when you look at our quarterly performances last year. I believe we're gonna see, and Nathalie sort of alluded to that in her commentary, that in APAC, you know, we are seeing signs of stabilization. Obviously, the addition of NEXTGEN and their team and business will create a much more compelling business that will have a positive effect. And then in the U.S., I would say we've launched some new vendors last year that we are in the process of sort of onboarding and ramping. And while it takes a little bit longer than maybe what we had anticipated, this ultimately leads to a much more diversified business and a much stronger business going forward. Understood. Thank you. The next question is from Balajee Tirupati, as well again, calling from Citi. Please go ahead. Hi, and thanks again, for letting me ask my third question. In terms of trends at vendors, are you seeing any impact of consolidation by end customers, or also the strides of platformization by your vendors? How is that impacting your business? Yeah, it's a good, it's a good question. So I... we, we tend to get this question quite, quite a few times during these calls. So, you know, I would say our, we have a, we have sort of a twofold strategy, right? On one hand, we are working with probably the main platform consolidators. If you think companies like a Palo Alto Networks, Fortinet, CrowdStrike, SentinelOne, that are having a broader, broader solution offering, and they are certainly driving, their abilities for consolidation wherever they can. We see this in the types of conversations there are with, with end customers and partners around selling more of that same portfolio into, into more of that, that customer. But the other part of our strategy is also working with best-of-breed vendors in each of the distinct areas of cybersecurity. And, you know, whether that's, whether it's an Okta, maybe a Netskope or, or, or a Proofpoint, as I called out before, you know, these are companies that are very strong in their specific field and, what I would call based on best of breed. And so our strategy is sort of dual prong. We have both the platform consolidators that are playing that card, and then we have the best of breed that obviously plays, more on the depth of their technological offering for a specific, either use case or attack vector within a customer's cybersecurity infrastructure. ... Understood. Thank you. Thank you. The next question comes from the line of Derric Marcon, calling from Societe Generale. Please go ahead. Yes, good evening, everyone. I've got four questions, if I may. The first one is on price effect. So you mentioned -2. Can we have the split between currency impact and increase of price list of the software vendor you work with? My second question is down on the lending, on the net margin. If I look to the mix of this size into one, was it in line with your expectation? And the fact that you have so much big deals, does it put under pressure your net margin target for the year? Mm-hmm. My third question is on network security. It's probably for Jesper. You said, Jesper, that the network security market today is going in line with what we saw in the past. But don't you expect a rebound of customer demand later in the year, given the fact that we saw maybe two investments on that, on that part of the market, in the last 12 months to eight months? Or let's say that's what the big vendor you work with are saying. And the last question is on the mix, business mix of NEXTGEN. Can you help us to understand what's the proportion of pre-sales, post-sales activity they have, or, let's say, difference between professional services activity and software reselling business? Thank you very much, and sorry for the numerous questions, as usual. Thank you, Derric. Appreciate all the questions to keep the call going. So I- So, uh- Nathalie can take the first two- Yeah, so- And I'll take the three and four. For the price effect, Derric, it's 1.7% for the negative price effect, which come from 9%-7% constant rate, and you have 1% effect on the fluctuation of the currencies to go to six. Okay? But you don't break out the -1.7%? The one that 1. 7% is price effect, and then you have 1% more for the fluctuation of the exchange rate, because you have 7% You have exchange rate. ... constant rate and 6% reported. Okay, okay. Okay? Yeah, the calculation. Yeah. Then the question on the margin, as you know, it's not a margin release, huh? So we'll not disclose anything on the margin, but, what I said on the size of the deals, and I'm sure you heard that, is that we don't have large deals as we had before, above EUR 10 million, which are the ones where you have very low margin. And we have much more deals between EUR 1 million-EUR 5 million, which are large deals, but, smaller deals than the bigger one. So it can give you... You can interpret it as whatever you want, but, it should help you. Understood. And then, on the question on network security, so you're right, David. I mean, aligned with, you know, let's say the two key network security vendors we have in this space, Palo Alto Networks and Fortinet. Aligned with them, we obviously also expect a level of rebound in the second half, which is also built into sort of our outlook. I didn't mention it on Joe's question, but that's right. And in terms of the business mix of NEXTGEN, so you know, cyber is about two-thirds of their business. They also have a little bit of business in sort of what you call the digital enterprise. So some of the work they do with Oracle and IBM there. But majority of their business is cybersecurity, with very strong relationships with Check Point, Netskope and Okta, and also several of others of our vendors. In terms of their services, I mean, I can't break out today what is the size of it, but as I kind of laid out in the prepared remarks, their services focus have very much been on the front part of the business, so what we classify as sort of the pre-sales part, where they build very strong capabilities around digital marketing, demand generation, lead generation based on sort of own developed AI solutions. And these are chargeable services that they are charging for to the ecosystem. And obviously, you know, we look forward to be able to take that and deploy it on our platform. Then we have a much larger post-sale services business, and these capabilities, whether it's training, whether it's implementation and support, we look forward to be able to, to take this to their ecosystem. So that's part of the reason why we feel this, this transaction is so compelling for, for our company and, and ultimately also for our shareholders. Very clear. Can I add just a follow-up on the pricing for Nathalie? Always. Does it include the -1.7? Does it include the, the change in mix, or it's that constant mix of products? I- I'm just surprised by the- No, no, no, but it's not a constant mix of... So we cannot do that kind of analysis. It's the global impact. Oh, okay. Okay. The next question comes from the line of David Vignon, calling from Stifel. Please go ahead. Hi, thank you for taking my questions. I have two. The first one is a follow-up on pricing effect that you mentioned. Was it felt across the board, i.e., in all regions and all verticals, or only specific ones? And the second question is about the cloud services provided by NEXTGEN. Just want to hear more details about that and your strategy around the rollout of those services. Is this something that you expect to roll out in other regions and potentially with other hyperscalers as well? And could you comment on the net margins that you can expect with those cloud services? Thank you. So thank you for your question. Just the first, the first one, we, we do not disclose, the margin per vertical or per region or whatever, so I, I cannot comment on that. I'm really sorry, but we do not disclose this information. Yeah. I mean, we give you at the half and full year, we give you the, the sales and the EBIT, but, but the margin is, is something we keep, we keep at a global level. On, on, on the NEXTGEN services, so, you know, a lot of it was laid out in, in the press release and also in the prepared remarks. These are absolutely services that we expect to be able to, to roll out, over time on our, on our platform. You know, some of the things that they are doing, depending on which type of services, it, it really comes down to lead gen, digital marketing, and cloud services. And, and we are working on all three streams to, to take these, services and deploy them onto, onto the platform. Some of these are easier to scale, others require a little bit of investment, but we feel confident that we can make this work. In terms of the margin profile of their services, this is not something we break out at this point in time, at least. The next question, another question coming from Joe George from JP Morgan. Please go ahead. Yes. Hi, guys, and thanks. Sorry, I just had one more question. Could you please give us a feel for the trends you're seeing currently in the firewall market? Just given the very high comps a lot of vendors saw through the sort of 2021 to 2023 period, is it, is it fair maybe to assume that we might now have a longer digestion period, and therefore it may, it might take growth slightly longer to accelerate versus prior cycles? And then secondly, could you just give us any color on what firewall equipment you're seeing being deployed into new generation GenAI data centers or any retrofitted data centers, please? Yeah, I think, you know, I think I gave the answers to that question to when Derric was from SG. I know it's not called SG anymore, but was raising that question. So, there is certainly a piece of comps here. This is what we have said in our prepared remarks, right? We. There was a lot of firewalls that were built out, the hardware components in Q1 of 2023, which were basically orders that actually were booked in some cases, a lot earlier than that. And so we do expect the comps to start to get easier from here. And then similar to as laid out by in our case, Fortinet and Palo, we do expect to see a rebound in the future quarters. In terms of where spending goes in, there are some big data center projects, but there is also still a lot of upgrades happening for customers that needs more throughput and therefore need faster performance in their firewalls as well. So it's kind of. It's not one use case or one vertical. We see it sort of across the board. Great. Thank you. Thank you. As a final reminder, if you would like to ask a question, please press star one now. We have another question coming from Derric Marcon from Bernstein. Please go ahead. Sorry, guys, to come back. Just one follow-up for you, just, when you look to the conversion of your pipe into revenue, does it make a difference to when you got a hardware deal or contract versus software deal, i.e., do you think with more software in your business mix, the visibility is increasing or it does not change at all the story here? No, it is increasing a little bit because the time from book to bill is shorter with software than it is for sort of multi-projects that has a hardware component in it. You know, sometimes depending on the product and the customer, we might have that closer to the market where it is needed, but sometimes we'll need to do back to back, and then, of course, supply chain plays in. So I actually believe that as we move gradually to more software, we will get an even better visibility of our business going forward as the book to bill time is shortened. Very clear. Thank you. Thank you. There are no further questions, so I will hand you back to your host to conclude today's conference. Thank you. Yeah. So thank you. Thank you for all the questions. This was a rather short earnings call, so appreciate the-- appreciate all the questions and interest in our business. I'll just wrap up where I started to say, first of all, thank you to all of our people across the world. I mean, they truly are what's the secret sauce in our business, and they've done a tremendous work to get us where we are here. Secondly, as we said, we feel confident for the year. We are reiterating our full year guidance, and we believe that we will see a further acceleration off to one of this year. So thank you again, and wishing everyone a good evening.