Good afternoon. This is the Chorus Call Conference operator. Welcome, and thank you for joining the WIIT nine months 2023 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Alessandro Cozzi, CEO. Please go ahead.a Good afternoon, and thanks everybody for joining this conference call. The board of directors has approved the results for the first nine months, and you can follow the results with the presentation I sent last year. With me there are our CFO, Stefano Pasotto, and Head of Sales, Enrico Rampin. At the end of the presentation, we have a Q&A session; you can do some question. I start with the highlights of the presentation. Nine months results. The sales growth persistent with the 12.7%, but the good news is that EBITDA improve more proportional of the revenue and they growth 26.5%. The margin of the sales was 39.2%, and increased a lot compared of the last year. The result in terms of revenue, if you can show later in a specific slide, is a result of the small consolidation of the M&A, but the last part of the growth is thanks to the organic growth. Organic growth was very, very high, particularly in Italy, but to be honest, Germany, they recover a lot the figures during the summer seasons. Consolidated EBITDA was EUR 37.3 million, +26.5% compared with EUR 29.8 million last year. Producing a more proportional growth of the revenue, thanks to the consolidation focus on the cloud services, more high value services, and we are reducing all the revenue with low, low value. For example, hardware and software sales and consultancy, consultancy business. Cost synergy is achieved, consider that, we fully integrate all the Italian legal identity, and this results. This is a result of this success in terms of integration of all the Italian company. The margin revenue is 39.2%, compared with 35%. It's our goal, because our target was to achieve 40% in two years, and just in this current year, we are very close to our target. Consolidated EBITDA— EBIT to EUR 21 million, +36.8, compared with 15.4. Margin on revenue is 21.9. We improve over 2 points compared to last year. Depreciation, EUR 16 million, increased to EUR 0.5 million, and adjusted profit was EUR 11.6 million, +21. Impact a little bit for main interest because we have part of the debt is a variable interest rate. Fortunately, last part of the debt is now in our bond fixed rate, 2.37%. The net debt was gross was 199 million, compared to 180. This amount include the Global Access acquisition for EUR 6.7 million, CapEx for EUR 18.2 million. Very, very lower compared to last year. Payment of dividend, EUR 7.8 million, and the, the residual part earn-out of ERPTech acquisition, EUR 700,000, and strong treasury share buyback from 15.2 million, and sales of part of them for EUR 6.7 million. You can go to the short, jump to the page number five, the breakdown of revenue. German business now is just over 55% of group revenues, remain the main market for WIIT, and we want to continue our develop of this market, because it's what I just to say, the in the past is the main market in Europe for the cloud business, and is a growing market. Italy is 44%, but in term of profitability, you can see Italy remain higher than is, than Germany, is 19.6, because EBITDA margin Italy is 46%, compared roughly 34% in Germany. In Italy, we just are totally exposed in our high value business. EBITDA margin in the Q3 is over 50%. In Germany, we are more traditional at the moment, but we are improving a lot, the profitability in Germany. EBIT margin is similar, Italy and Germany. We achieved EUR 9.5 million in Italy and EUR 11.5 million in Germany. 22.4% in Italy and 21.8% in Germany, because in Germany we have less amortizing. This is important to the page number six, the breakdown revenue. Italy have EUR 35.6 million of annual recurring revenue, that means 83% of total revenue. Germany is higher, is EUR 48 million, and it's 92% of the revenue. If in these figures we exclude the consulting business of GECKO, because in Germany we have only one single company, that they do, are doing a business of a consulting business, 100% of the cloud business in Germany is recurrent. Italy, we do have 17% of one-time, because we have a last part of the revenue to claim about our sales hardware, and we have a big project for migration. Because the size of the deal in Italy is bigger than Italy, that means when we sign a new contract, we have more project management to migrate the new client in our data center. Revenue, page number seven. Okay. What I anticipate, at the beginning, last part of the growth is related to core revenues, organic growth. In Italy, we grow 10% organically, thanks to the very, very strong booking in terms of sales for the first six months. Germany recover a lot during the summer, and the revenue core growth 8%. In terms of sales, we are going to the end of this year with a record of the sales. Because we just closed the full year target by the end of August. At the moment, we want to increase it a bit, our forecast in terms of sales from the end of this year. Driven by Italy, because Italy overachieve the target, Germany is in line with the budget. The contribution of the acquisition is very, very low, is 5.3 million and 3 million of Global Access. Last part of the organic growth of the revenue is driven by organic growth. EBITDA, page number 8, growth faster than the revenue, EUR 37.3 million. EBITDA margin was 39.2%. Excellent from my point of view. The concentration of cloud services naturally give us the advantage in term of leverage the business, because the business is very, very leveraged. We can do a lot of... The scalable of the business is very, very high, and the cost increase less than the revenue. The EBITDA margin in the first nine months was 46% in Italy, compared with the 37%, and in Germany 33.9%, compared to 33.6%. But in the Q3, Italy is running 52% and Germany is running 34%. So we're increasing a lot the profitability in Q3, and we increase the average of the whole nine months. This profit could be sustainable. I think the last quarter, we can obtain similar results. EBIT increased a lot, from EUR 15 million to EUR 21 million, and EBIT margin, in terms of EBIT margin, we increased the profitability from 18% to 21.9%. Roughly 3%, because we are reducing the CapEx. We just anticipated that, because last year we had a lot of CapEx for expanding our capacity in terms of data center. We built the second one in Milan, and we built the first one, Tier IV, in Düsseldorf. We ended this investment. That means that we want to close the year with a full CapEx below EUR 20 million, and we will maintain this level of CapEx for the following years. Net profit increased 21, not with the same... Not so fast, because we have a little impacted about interest rate. Interest rate impacting us 2 points more because of the part of the debt that we pay, even wherever, whatever interest rate, at the moment, we are paying from 5%-6%. Net debt, adjusted, because in our definition of Net debt we included the value of the treasury share, is EUR 160 million. Consider that our target will be to close the end of 2023 with the debt close to 3x net debt EBITDA. And at this level, we can achieve this target. Consider the EBITDA target end of the year is 50, and the treasury share value at the 30 September was [lower than the] actual market price. Just with the actual market price, we are very close to achieve 3x net debt EBITDA. In this net debt, we include we have a lot of strong operating cash flow generation for EUR 35 million, CapEx EUR 18 million, acquisition of Global Access in January for EUR 7 million, the residual parts of the equity investment in ERP Tech for EUR 700,000, dividend payments EUR 7.8 milion, treasury share buyback EUR 15 million, and sale treasury share in July for EUR 6.3 million. What I just anticipate, last part of the debt, EUR 150 million, is fixed rate bond at 2.37%. Thanks for all, and we are ready for a Q&A session. This is the conference call operator, and we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Giorgio Tavolini with Intermonte. Please go ahead. Hi, good afternoon, and thanks for taking my questions. A couple if I may. The first one is on the sustainability of the current margin going forward. I mean, after these nine months results, the consensus expectation of EUR 133 million revenues and EUR 50 million EBITDA imply something like 33% profitability in Q4, after 39% in the nine months. So do you think an upward revision of the EBITDA could be possible to reflect increased profitability in Q4, perhaps thanks to the fact that you are seeing Italy overachieve the target, Germany is more or less in line? So should we expect some room to improve Italian profitability also in Q4 to, let's say, to lead at least EUR 52 million EBITDA in for the first half? For the full year, sorry. The second question is on the consensus expectation on 2024. Current consensus is projecting EUR 144 million sales and EUR 56 million EBITDA. This imply roughly 39% margin. That is very close to the nine months results level. So I was wondering if you see... If you are happy with these expectations? Thank you. Okay. Giorgio, to be honest, we are, at the moment, we have a very, very high visibility in terms of last quarter. But you have to consider Q3 is a little impacted for the seasonal topics about the vacation cost of employees. So we have a little more margin Q3, because we are less cost of people for July. August, typically in Italy, not in Germany, but in Italy is a vacation period. But with the currently pipeline, we I think we can achieve the figure, the EUR 15 million EBITDA, for the consensus. And naturally, at the moment, the visibility we have for 2024 is very, very high, close to EUR 56 million EBITDA. Depend a lot of the closing of, of the new pipeline, from the pipeline. The pipeline is good at the moment, currently. We have a very good pipeline, but at the moment we confirm the figures 2024. And in case of strong close from the pipeline perspective, in the next five months, we can increase a little bit our estimation, but dependent at the timing. Because for that we have a lot, always we have nine months deferred, the revenue from the booking. So these results is a consequence of a very, very good booking, Q1 and Q2. It depend a lot if you close it from, starting from the day to January, the contract, or something contract will be deferred the next year. Because if you, you close the contract in March, March next year, we have only one quarter next year in our current trading. So it depend a lot on the timing. In general, the division we have, the sales pipeline continue to stay high in Italy. In Germany is in line with our expectations. But the Q3 is particularly positive for a little seasonality for the vacation, and good sales in the first quarter. Last Q we have full visibility for the Q4. I think Q4, the Q4 is very, very similar to Q3, because we have just in running a lot of contract, and our expectation is to start to end some migration we have in the middle. So probably Q4 is very, very positive. For the full year, 2024, I think, we want to maintain the expectation, a bit of margin from 39%-40%. With Germany, next year could improve 2 points for the reduction of the cost energy. And in Italy, it can stay in the range from 46%-48%. 52% is a little higher for the less cost of employees. Many thanks. The next question is from Domenico Ghilotti with Equita. Please go ahead. Good afternoon. A couple of questions. The first is related to the so-called non-recurring sales. So I see that they are going down. I presume that part of the Italian non-recurring structure you were mentioning the migration, so we should expect them to be something structural. So I wonder if you have already almost completed the process of cleaning up the low so low value-added phase, or if you see still a negative impact in Q4 and 2024? A second question is on the recent contract that you have announced. You issued a press release a few days ago. So if you can just elaborate and clarify on the contract, and that's it. In general, it sounds like you see a good pipeline, but I would like to have your comment on the current pipeline. Okay. I'll start to answer about the first question after I go to Enrico and team about the call about the pipeline. Well, we are cleaning the revenue. We have a residual EUR 2 million to clean, but we are very close to end this process in Italy. In Germany, we have, you see, consulting business is not really no recurrent or remain not recurrent, but in this consulting company, we have a part of the IT services. We want to carve out this part with WIIT again, and we want to clean this part of revenue. Additional EUR 4 million revenue we want to reduce in the next two years. But in Italy, we are very, very close to the end of the process to clean up the revenue, and it may naturally, the part of the transition, when we sign with a big client, we ask of the client, part of the cost for the transition. For example, PAM, we discussed the market, the migration PAM, our target is to migrate by the end of this year. PAM pay probably EUR 500,000 contribution to the process of migration. Okay. But in general, we had during the year a lot of new clients with mid-large deals, and all these clients do have a migration project. Being large project, migration is longer from one side, but means in a way one-off that we ask for the partial contribution for the activity that we are going to plan for the migration, that normally takes from three to five months. Coming to the second question, the last, the when we share the signing of a new deal, so this a very important and very large legal firm here in Italy. The project is quite large because it was already a client for a small part of services. This new project is, at the end of the day, the full migration to a full private cloud with the integrated cybersecurity services. So, the clients will belong completely to WIIT for the technology, for the services, for managing all the critical application. It will be, of course, fully based on the critical regions belonging to WIIT, and these services will be fully integrated with the cybersecurity. So it's an important step. We are quite proud of this journey, not only because it's a very important legal company in Italy, but also because this is a confirmation of our presence into the legal market in Italy, that remains an important step. It's a market where the privacy, the security, reliability is a mandatory part of their own business. In general— Yeah. Yeah, sorry. No, just a follow-up on this. So the selling point in this case to, to, for the upgrading services was, so the possibility to offer a fully secure and, and, and controlled environment. Yeah. So security. To consider that, this client was a client acquired with Etaeria, our company we acquired in 2020, indirect channel. We moved the client [crosstalk] from the indirect channel to the direct, because the client was bigger. And when the client started to talk with our direct sales, pre-sales understood that, "Okay, now I have a full portfolio services, and I want to enter in with this industry, with this full and increase the personal service." This client was a client in Etaeria. Etaeria was a company, now the name is with indirect channel, it provide service in indirect channel. Yeah. And if you remember, we disclosed during the summer that we expanded the footprint of our services with the private cloud, which included the critical cybersecurity. That means, premium zones, where the client belongs not only to data center, Tier IV, but fully integrated the managed services and integrated with the cybersecurity. This is one of the examples of the deal we are signing this month, where the clients more and more are looking for the reliability overall with the integration of the cybersecurity. This is something will arrive also into the market for the SaaS services. For example, this is also one of the part of the offering that we are, in our lab, we are testing with the full integrated, the cloud native platform for the new investment for software companies, for example. So it is one of the first examples. We have several other clients that we are signing with a similar deal, and my feeling is more and more during the coming quarters, the clients would appreciate this kind of offering. You are commenting in general on the pipeline? Yeah. Pipeline has been very good over the years. So the pipeline stayed high along the year, despite the fact that we signed a lot of contracts. So I'm checking on a monthly basis if the new contract we are signing, so the booking is rising very fast, and this is a good point. But on the other side, we are recovering the pipeline with new pipeline, with the new opportunities are coming. So I'm quite positive, first on, of course, the achievement of the target this year that we already achieved as a target. But I'm quite positive also on the pipeline for the next year. So we see an increasing demand for services for the private cloud with integrated cybersecurity. So this is important because, yes, we know that the sales cycle is very long, but of course, the starting point is having opportunities to discuss with the clients, so this is important. This is also a signal that the clients, despite the fact that in some cases they maybe are taking... They consider carefully the project on migration on the digital because the potential effect on the market on the market slowdown. But this kind of project that brings bring them into a consolidation of the infrastructure or keeping more security, more reliability, something that no one wants to wants to delay. And this is, I think, also discussing with C-levels of the client to say, "Okay, despite what's happening into the market, we need to consolidate," and from one side, having some synergies and potentially some good effect on the balance sheet, because the cloud is increasing the reliability, but in several cases is reducing the cost of the company. And this is an effect that I see in the Italian market, but also in the German one. Germany is different because we started only one year ago with the consolidation effect. So, I'm looking into the pipelines of my colleagues, and I've seen that they are increasing the pipeline, so I'm quite positive at the moment for the new year. Thank you. The next question is a follow-up from Giorgio Tavolini from Intermonte. Please go ahead. Sorry, again, just a follow-up on the EBIT margin. Since you said that in Germany you have less amortizing, so the EBIT margin is pretty similar between Italy and Germany. I was wondering why, since in Germany you have a higher number of data centers. And then if I move from adjusted margin to reported margin, I should expect even a much higher amortization due to the higher PPA allocated to Germany, because you made more acquisition in Germany than in Italy. So I was wondering, at least for the adjusted EBIT margin, why you have this very similar profitability, and why Germany has less amortizing... amortization? Thank you. Starting from answer of the PPA, it's not correct, because the PPA stay only in the consolidated balance, correct, Stefano? Yes. So it's not German PPA, but it's only in the consolidated balance sheet. Okay. The reason why we have less amortizing is in the data center we have in Italy is high-end data center, Tier IV. We have two data center in Italy, Tier IV. The cost of data center in Italy, we spend more than the other data centers. And the other question, the other point is, in Germany we have six data center, but the large part of this data center are just amortizing because it is the consequence of the mandate. Every single company acquired had minimum two data center, but the investment was eight years ago, 10 years ago. We have only in Düsseldorf built new data center the last two years, and we invest a lot in Düsseldorf. But the other part, we don't invest because it's part of our strategy to consolidate all the old data center in our new facility in Düsseldorf. The reason is, okay, if you consider CapEx, we have EUR 7 million CapEx Germany, EUR 8 million, and EUR 12 million in Italy. Because in Italy, the organic growth was higher, that means more CapEx. The double CapEx is a consequence of the organic growth. In Italy, we are we growth faster than Germany, and we have more CapEx. In this business, if you don't growth, you don't do CapEx. We have only maintenance CapEx. In Italy, the organic growth is very strong, and we need to invest more. The other reason is data center age is old for 10 data center in Germany, and we renew only our campus in Düsseldorf. We don't want to invest in Munich, in Frankfurt. We want to switch off data center in the next two years to consolidate in our new facilities, and we cut investments and OpEx. Very interesting. Thank you, Alessandro. As a reminder, if you wish to ask a question, please press star and one on your telephone. The next question is from Michele Baldelli with BNP Paribas. Please go ahead. Hello, good afternoon to everybody. I have three questions. The first one relates to the target on the net financial position 2023. Where should we think about close to the current level? Do you de- leverage a little bit in Q4, if you can provide some color? The second question relates to the revenues of 2023 as well. I saw the pro forma revenues was EUR 129 million for 2022. Can we assume a similar level for 2023, around EUR 130 million, or do you have another number in mind? And lastly, a bit of color on the electricity costs, how they are going down in the last quarter? If you can provide some color around it. Thank you. Okay, about the first question, our target will be to close, to close very close to 3x. In terms of net debt, EBITDA 2023, naturally depend of the value of the treasury share, 'cause, if the market price, going with the share price, our net debt go down. If the, the market, remain stable, at the moment we are little, little more, but it's 3.1x. We are very close, of our target. Okay. About revenue, I think we can, depend on actually of the, of the Q4, but the visibility we have at the moment, we stay in the range from EUR 130 miilion-EUR 133 million, uh, uh, turnover revenue. In line with the consensus. The consensus is EUR 133 million. I think we stay in this range from EUR 130 million-EUR 133 million, at the moment, the current trading. About the cost energy, I have a beautiful slide here. Our like- for- like, energy cost, nine months, we have EUR 5.5 million in 2022, and in 2023, we have EUR 4.9 million. So we have roughly EUR 700,000 less, because what I anticipate in Germany. In Italy, we was roughly EUR 900,000 for the first nine months, and this, the current year, we spend EUR 700,000. Totally, we reduce EUR 900,000, the cost of energy, EUR 190,000 in Italy, and EUR 700,000 in Germany, like- for- like. Naturally, if you increase Global, increase Global, one second, okay, we spend EUR 300,000 less, including the more cost of the Global. Because we have, just to give you a good contribution in Germany, the government give us a contribution to reduce from EUR 700,000, to reduction the cost energy. But we have the same positive effect next year, because we just have defined with the local carrier, the new energy price, and I think we have the same energy cost next year. If I may, just to follow up, and to be sure about it, because from the H1 results, and I'm looking to the, another, let's say the half year statement, you had EUR 4.3 million electricity cost in H1 2023, and EUR 4.1 million in H1 2022, which is anyway deteriorated by EUR 200,000. While you said that, you have gained in the nine months, almost EUR 900,000. So basically, in Q3 there is an improvement of EUR 1.2 million. Is it correct? I don't know, because I don't have at the moment the cost of the first half in June. I need to calculate. I have here only the 13 September results in terms of cost. Do you have the first half? Yes. Okay. Exclude Global. We exclude Global. Okay, first half, we have a reduction for EUR 571,000 in Germany and EUR 66,000 in Italy. Total saving, EUR 500,000. First half. Thank you. Thank you very much. Like-for-like, I exclude, naturally, the cost energy of Global, because last year was not consolidated. Sure, you're right. Yeah. Okay. Thank you. The next question is a follow-up from Domenico Ghilotti with Equita. Please go ahead. Two quick questions. First, is related to labor cost, because I see a small increase as a quarter-on-quarter, but you are saying, okay, that usually Q3 should be lighter. So I wonder if what is the trend on a per capita spending in labor, if you see some kind of acceleration, or what are you seeing for the full year basis? And the second, on the consultancy business, that I understand is not so strategic for you. What kind of profitability should I assume? So today is dilutive on the margin side. Should I assume a low double digit, mid-teens to low- teens profitability? Okay, one second. I do my one call about the total labor cost, but, first of all, the saving, what I anticipate, in the call for the Q3 is roughly EUR 200,000 less cost for the location Italy. Okay? About the labor cost, totally we have, One second. EUR 20 million? EUR 25 million adjusted, and EUR 26 million, EUR 25 million adjusted because - Adjusted. EUR 25 million compared with EUR 21 million last year. But last year was not like for like, because was not LANSOL and Global inside our consolidation, and not full ERPTech. Because ERPTech we acquired, we considered from 1st April. Second quarter of- Second quarter, and then LANSOL, only one quarter, and this year we consolidate full these three, like, entity. It's no material inflation, because consider that, we increase, roughly, 3% of the salary to compensate the inflation. But we increase more the annual rate of the contract, because with the clauses we have inside the contract, we can protect inflation, the value of the contract. So we compensate all the more cost labor with our clause inside our contract with the client. About the consultant business, is correct what you said, in the region about the EBITDA margin, but not of EBIT margins. Now I'll show you the result of GECKO. GECKO EBITDA is 25%, but the GECKO EBIT is 21.6. So because of the business dilutes a little bit, the EBITDA, sure, not the EBIT. It's not strategic, but remain a good business profit in Germany, and we want to understand the future. But in general, it's running well. Okay. Thank you. Mr. Cozzi, gentlemen, there are no more questions registered at this time. Okay. Thanks a lot, everybody for joining, and have a good day, everybody, and see you soon for the next call. Thanks. Bye-bye.