Tinexta SpA
MIL:TNXT
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Earnings Call Analysis
Summary
Q1-2024
In the first quarter of 2024, Tinexta reported robust performance across its divisions. Digital Trust, the star performer, saw a revenue increase of 21%, with an EBITDA margin reaching a historical high of 31%. Cybersecurity grew its revenue by 15%, maintaining a 10% EBITDA margin despite some seasonality. Business Innovation had a modest 4% growth, with revenue dynamics expected to improve later in the year. The company completed the acquisition of ABF, impacting the net financial position, which stands at EUR 240 million. For 2024, Tinexta expects revenue growth between 21-23% and adjusted EBITDA growth between 28-32%.
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Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Tinexta Group Consolidated Results as of the 31st of March 2024 Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Joseph Mastragostino, Investor [ Relator ].
Yes. Good afternoon, good morning to the folks in the U.S. Thank you for joining Tinexta's 2024 First Quarter Results Presentation. Here with me today, Oddone Pozzi, Group Chief Financial Officer. As a reminder, all the relevant documentation for the first quarter 2024 results can be downloaded from our company's website in the Investor Relations section. For the purpose of this call, I will go over the first quarter 2024 highlights and updates. So Oddone instead, we'll go over the first quarter 2024 financial results as well as the business unit performance, providing us with a deep dive. The last part of the call will be dedicated to Q&A and a recording of this conference call will also be available on the company website, and it will be posted upon completion of this call. At this point, I will kick it off by turning to page 4 of the presentation. So, starting from page 4, you see we have provided you guys with the classic key data per quarter. We start with double-digit down growth from -- in terms of revenue, which reached almost a EUR 100 million, or EUR 98.4 million. EBITDA adjusted came in at EUR 15.4 million, growing around 3% versus the prior year. EBITDA on a reported basis was close to EUR 9 million and EBIT adjusted was around EUR 8.1 million. I think it's worthy of mention that net profit on an adjusted basis reached EUR 6 million, and even more interesting is also the free cash flow adjusted on a continuing operation base, which reached a very considerable EUR 27.2 million in the first quarter. Net financial position came in at EUR 240 million, and this is a fully function of the acquisition that you all know, which is related to ABF, which was closed in Jan of this year. At this point, I will be turning to page 5 of the presentation. Most of the numbers that you see here have obviously been commented. But I would actually start by talking about the first quarter from a qualitative perspective, right? The first quarter represents a gradual start of the year, and that was mainly driven by the well-known seasonality. We will need to stress the fact of the seasonality during this quarter and also in perspective in terms of what the year will be, and we have dedicated actually a slide on this, and we would like the market to be very accustomed to the seasonality of our quarters going forward. I think it's also important to highlight that the adjusted net profit on a continuing operation base is the real performer in terms of indicator when we look at the various numbers, obviously, we have to give out EBITDA reported, EBITDA adjusted. But on an adjusted basis, I think it's important to highlight how adjusted net profit is obviously a much better indicator. NFP/LTM is again a function of the most recent acquisition, were up at 2.32x, which is, again, a function of the recent acquisition. Going to the different divisions, Oddone will give you a deep dive. But let's start by saying that the top line in all 3 business lines grew, starting from Digital Trust, Digital Trust kicked off the year very strongly.It grew 21% and -- and even more important was EBITDA, which reached 36% with a very excellent EBITDA margin, which was around 31%. Again, another historical high for the division, so kudos to Digital Trust because they have started the year very well. Cybersecurity grew nice and healthy 15% in revenue. EBITDA had a plus 10% and the margin was around 10%. Even in Cybersecurity, we must highlight that there is some seasonality, and it is more pronounced in the latter part of the year. Business Innovation posted a single-digit growth, around 4% growth. And obviously, in revenue and EBITDA came a bit over EUR 1 million. We'll extensively discuss about the dynamics about business innovation. In terms of the most recent events, I'm on the bottom part of the slide 5, we reached 100% consideration of the 3 Cybersecurity companies, namely Yoroi, Swascan, Corvallis. As a reminder, there is no impact in terms of net financial position because it is already included in the net financial position at the date of the acquisition. We also, during the quarter, launched a new strategic and operational advisory business for small, medium enterprises. We all did -- obviously are aware of the fact that we announced a very large acquisition and completed it in January. It is about 74% of ABF. And the Board of Directors today approved the start of the share buyback program, which we will execute according to market dynamics. Now going to page 6, I think page 6 represents more of a graphical representation of the numbers that we already highlighted. So mostly important is to turn to page 7. Now we -- I think that we should focus extensively on page 7 because it represents, first of all, history of the group from an EBITDA perspective, in particular, because that is what we will be concentrating on. But the most important thing here is the weight. The weight of second H in the last 3 years has considerably grown -- it was 60%. And I'm talking about EBITDA adjusted in the second H , that includes third quarter and fourth quarter of the year, was equal to 60% in the year fiscal year '21. It was 61% in the fiscal year '22. And even more important was last year in '23, where the overall weight of the second H, EBITDA was 63%. This year, as you can see, we started the year, as we announced in the most gradual way, the overall weight of the single quarters can be found on the bottom of each histogram. And you can see that the first quarter for this year represents around 12% of the data, considering the endpoint of the 2024 adjusted EBITDA guidance. So, as you can see, the overall relative weight of the second H will be even higher this year. So, we want the market to be acquainted with that. And that's also one of the big elements, I think, of our business model. Remember, Business Innovation has a relative weight, which is obviously very important and much more significant in the second quarter -- in the second H. So, as you can see, the cadence of the single quarters shows a very light first quarter, a bit more pronounced second quarter and then the base obviously, between Q3 and Q4, mostly being around fourth quarter. So, we want the market to be accustomed to it. We are preparing the market for it in order to have a much more, I would say, gradual outlook for the market. Let me stop there. Let me leave it to Oddone to do a much more deep dive on to the numbers. Oddone also will give you a nice outlook on the adjustments so that you have a very clear P&L and then we'll wrap it up through some Q&A. Oddone?
Thank you, Josef. Good afternoon, everybody. Thank you for joining us this conference call. I will start from page 9, where we have the income statement. Josef already explained how different business units, and then I will further deep dive. But you see the revenue is going up by almost 5%, mainly driven by all the business units. In terms of EBITDA adjusted, definitely, we overperformed the previous year with the different perimeter. And as you can see here, we have a mix that I'm going to explain that is the explanation for the drop of the EBITDA margin. Basically, as a revenue mix during Q1, we had more business --got more business from the business unit with a lower EBITDA margin and also in the Cybersecurity, we delivered a revenue mix with more weight from the products that are carrying definitely a lower margin. So overall, the EBITDA landed at 15.4% with 15.6% EBITDA. Definitely, as Josef clearly stated, we -- overall, we deliver the best ever EBITDA margin from Digital Trust, the EBITDA margin from Cybersecurity was definitely aligned to the previous year, again, driven by a worse revenue mix with more products.And if we look at business innovation, definitely there, we have a lack of profitability driven by the by 2 things. First of all, the first quarter of ABF is negative in terms of EBITDA, something that we already accepted very clearly. Revenue for the first quarter accounts for 5% of the total revenue. So, you have a lower absorption of fixed cost during Q1. Second, as revenue from [ warrant ], again, expected with lower weight from the subsidized finance has driven a lower EBITDA margin. We do see this as a temporary situation.Also, because the industry 5.0 that we expected to start in Q1 has been, I would say, approved but definitely delayed at the end of May. So, from that on, I think we could compensate the lower revenue that we are generating in a subsidized [ side ]. In terms of non-recurring costs, this has been quite heavy quarter. Obviously, we completed the deal of ABF, clearly the largest d level of Tinexta Group, this brought quite important cost of transaction. Basically, in our view, is an additional cost of the enterprise value but accounting-wise, we have to book there. In terms of depreciation, amortization, the incident is slightly above previous year. Here, the continuous level of investment to improve our products and solutions is there. And -- but we do see this honestly, as we expected. Net financial charges improved compared to previous year. Part of this is driven by a favorable adjustment of an amount of [indiscernible] for EUR 1.1 million. For the rest, we have not yet been impacted from the new financing that will start from early May. Definitely, our level of indebtedness was very low at that time with a very low interest rates, thanks to the IRS that we put on that. And in the meantime, we were able to monetize the cash available with some time deposits. Let's move now to page 10, in terms of net capital invested. So, if we see our balance sheet, basically, we have a net capital invested of not far from EUR 700 million, 1/3 is financed by the net financial position and 2/3 are total shareholder equity. The increase of net invested capital is totally, I would say, driven by the acquisition of ABF that I may recall is about EUR 155 million. And on top of that, we have to consider that the next [indiscernible] will include also the net working capital already that is positive by almost EUR 20 million. So, the net financial position ended at EUR 240 million, as we clearly expected. And I have to underline that the free cash flow as Josef stated, especially the adjusted free cash flow was very positive with a strong growth compared to the previous... Shareholder liquidity is EUR 451 million and obviously includes the results of the period as well as the 2 adjustments that we have in our share [indiscernible]. If we move to page 11, I will keep your attention to the adjusted free cash flow, the continuing operation. We delivered a very strong growth in terms of 20%. So it means that, obviously, what we voiced and how our revenue of Q4 has been [ cash ], partially obviously, during Q1, improving the performance compared to the [indiscernible]. And this is a very important indicator to us. If we look at the last 12 months -- no, the Q1 bridge, sorry, again, as I mentioned, is here with a strong adjusted free cash flow and the significant investment in ABF. If we look at the last 12 months, first of all, I think we need to highlight that the adjusted free cash flow is EUR 61 million. This is a very solid strong figure that supports our capability of converting our EBITDA into cash. So, this is a very important [indiscernible]. So, we were -- on top of this, net financial charges over the last year was basically close to nil. And again, the results of the very disciplined approach to the net working capital, dividends accounted for EUR [ 250 ] million, including also [indiscernible]. Obviously, the largest change is within the acquisitions. So basically, we have almost EUR 250 million. So, all the debt is driven by this. And with the acquisition of ABF for EUR 155 million, the acquisition of the 20% of the minority of [indiscernible] at EUR 25 million. And [indiscernible] including, obviously, both ABF and asset, including the put and call that we have there. We don't have other major changes over the last 2 years. And you can see here also the profit of EUR 3.4 million related to the OCI date [indiscernible]. So, let's move to a deep dive to the business unit. As I mentioned here, very, very quickly, we have seen Digital Trust, let's say, overperforming, Cybersecurity, considering that the Q1 is the weakest quarter of the year, we still deliver what we were expecting, and we have business innovation driven by the key factors that I already mentioned, but I will be [indiscernible]. So, let's move to Digital Trust. And I will say now probably we are talking about the last 10 quarters; the performance of Digital Trust has been extremely positive. We have seen over the last 10 quarters, the revenue going up in the range of 8% to 10% with the EBITDA cost any better in 3, 4 percentage points more and also in this quarter on, I would say, on a like-for-like basis, was up almost by 12% on a cash basis.If we had the performance of Ascertia, that is obviously in Q1, speaking the results, the performance being 21% with 36% growth. I will say that all the different components of the business went very well. Also, the activity in France were positive, also the activity we have in the [indiscernible] growth in the range of 10% in the revenue, 15% on EBITDA. I would say everything is moving accordingly to what expected, continue to deliver results with a very nice operating leverage and all the product lines moving very strong accordingly to our plans. We have no significant comment here. Not reiterating the capability to deliver strong results, we continue to invest significantly to support future products, future development and support customers' solution, but this is not impacting our capability to a strong cash conversion driven by the fact that the working capital [indiscernible] is negative. So Q1 continued very strong, aligned with the last 10 quarters [indiscernible] very costly. Let's move to Cybersecurity. Also, we are -- again, although Q1 is not the most important quarter -- we continue strong in terms of growth in the range of 16% with the EBITDA going up 11%. Obviously, we are not having worst margins. If we look at business by business, obviously, during Q1, we delivered a mix between services and products that is more weighted on the products than on the services. And this is the reason why the EBITDA margin is dropping from 10.2% to 9.7%. This is not absolutely a trend, is an occasional situation, and we do expect the EBITDA margin move accordingly to our expectation and delivering an improvement compared to results as '23 as a percentage of revenue. We continue to develop our business in the pure Cybersecurity solutions with positive indicators from the customers. And obviously, also in the digital transformation side of business, we are continuing very strong and positive. Our pipeline is increasing compared to previous year, and we do expect also in this segment, a better delivery than usual. So overall, I would say, positive results and a good pipeline in order to address Q2. Let's move on Business Innovation. Obviously from the external standpoint, it's quite tricky to understand the figures. I try to be very clear, at least as clear as possible here. First of all, I think it's worth it to recall to everybody that last year, we delivered in Q1 EUR 5 million EBITDA and then we ended up the year with EUR 51 million. So Q1 is not at all the main part of the business. And so, this is to be -- everybody must to be very aware of this. Second, as the revenue mix, we do expect -- at the start of the year, the Q1 has been weaker, has definitely subsidized finance has lower rates that was clearly expected. And potentially, we could have expected a better start of the new industry 5.0. This is going to be delayed by 2, 3 months from our initial expectation, but we are very confident it's here. It's just a matter of to implement the new [indiscernible]. For the rest, I think that, as I explained before, the ABF's result is negative in the first quarter. But again, the seasonality of ABF is basically a mirror of the seasonality of [indiscernible] -- so therefore, obviously, we will expect a very strong Q4 and Q3 as Josef has anticipated during his part of the presentation. So obviously, not the best start, but no other indicators that this is a threat to the delivery of full year results. I think this is all -- I would say, very positive in the cash flow of this part of business during Q1. We believe that we are collecting properly the last part of 2023. Now I will revert back to Josef, and then we will be ready for the Q&A. Thank you, everybody.
So, following the deep dive that Oddone obviously gave us, which I think is always a high value added, we confirm our guidance in terms of 2024 versus prior year. Revenues, as a reminder, are expected to come anywhere between 21% and 23%, of which 7% organic. More interesting is EBITDA adjusted, which is expected to come in a range of 28% or 32% growth versus prior year, of which 10 organic and then, obviously, the leverage ratio, net financial position over EBITDA adjusted is expected between 1.7x and 1.9x.
This -- just to be very clear, does not include [indiscernible] for which we announced the closing at the end of last month as well as no effect from the potential goal we have in that [indiscernible].
Just to make it very clear. So it is with all the announced acquisitions that we did already. At this point, I will leave it to the operator to open the Q&A for us, please.
Thank you, sir. Excuse me, this is the Chorus Call conference operator. We will now begin the question-answer session. [Operator Instructions]. The first question comes from Isacco Brambilla of Mediobanca.
Three questions on my side, one rich business unit, starting from Digital Trust, more specifically Ascertia doing some rough calculation on the perimeter effect on the EBITDA and revenues looks like Ascertia's been a great contributor to EBITDA of Digital Trust. Could you just confirm the company was assertive to the EBITDA margin? Because I was thinking about the dilution in the first month of consolidation. Also, if you can share any target for a certain in terms of revenues and EBITDA for the full year. Second question on Business Innovation considering all the elements you mentioned then the fact that first quarter is very light seasonally speaking. Is it reasonable to expect the division to fill the gap at current perimeter in terms of revenues and EBITDA by the end of the year? Last question is on Cybersecurity. You mentioned in the press release orders at EUR 29 million as of the end of the first quarter. How should we read this data, which is the time horizon to attach to the others are all of these to be delivered by the end of this year or some of them are of a multi-annual extension.
Let's start good afternoon, Isacco. Okay. Thank you for your question. Yes, you are right, Ascertia accounted for in the first quarter for around EUR 6 million revenue and EUR 2.5 million EBITDA. Obviously, driven to the seasonality, I think this is attractive definitely in Q1. But on a yearly basis, this percentage of profitability will be deleted because we have historically a concentration in Q1 of our profitability. So, this is the first point. On the filling the gap is our goal, definitely. As of today, we do not have information for which will be not in the position to achieve the EBITDA. Obviously, in next quarter, orders will be very important, but we have seen also that last year, we entered Q3 with not extra portfolio on this, but then we were able in any case to deliver the results. As I mentioned before, the industry 5.0 is a key element, no doubt that this we are suffering a little bit of delay in this -- in issuing rules and putting this opportunity on the market, I think that by June, we will be in a position to sell a solution and the opportunity to our cost.We are already working from -- with our customers trying to explain to them exactly outwards and potentially how they could benefit in order to stimulate the obviously, they are interested. There is the interest on the market, but everybody was waiting for the final definition of the final rules of how this will be applicable. So, the level of investment is a little bit from our customers. We don't know as everything will be clear. But we are already ready to work with the client, and we already are working with them in order to identify can be as easy opportunity there. So, we do expect it. So far, the component of the Digital Trust, let's talk about the acquisition of an [indiscernible] plan that started the Q1 very well with more than double-digit growth with a proper profitability. So, this is another part of the business that started well. So obviously, challenging year as usual, but we have opportunity there to fill the gap and to achieve what respected. Sorry, the question on Cyber. In terms of backlog, definitely, we have to deliver more than EUR 100 million revenue in this area, as you know. So, backlog, I would say, is mostly related to the current year. Again, here, we do not see major risk, the reason why when we confirm the... the guidance. That activity is again, we developed our set challenging plan with growth and important growth on Cybersecurity. We are in the process of completing the merger between the 4. We -- last week, we launched the new organization and the new business model that will be -- that is in place now. And we do expect a better capability to address -- to manage internally and to address customers.
The next question from Alexandra Acova Equita.
A couple of my hand. The first one is on Digital Trust. So, we saw again a very solid growth profile in this quarter, plus 8% in revenue organically. I just wanted to understand how much of this 8% is volume and how much is price effect? And then a little bit of trading update on how it's performing the Digital Trust division in the first part of the second quarter? Then second one on Business Innovation, just a follow-up on what you were explaining before, that you were mentioning that you expect to see already some effects of the industry, 5.0 in June. So should we expect a sequentially better second quarter in growth rate terms vis-a-vis the first quarter, which has a double-digit decline -- I'm sorry, the last one. So, you already mentioned that your figures do not include the guidance does not include Lenodes and Defense Tech. So do you have any maybe timing of when you will start maybe consolidate Lenodes and maybe an update on Defense Tech?
Yes. Now here, so Digital Trust, no, it's not driven by volume and pricing is we are continuing absolutely as expected. We continue -- you have to consider that one part of the business is okay. And here, prices and volume as is an important matter. But on the other side, we have DGM where you are a complete solution that is different customers by cut. Any case, there is no a key element that is driving the growth. The growth is driven by the capability of on process and other composite group to stay in the market to selling the market in a profitable way and being able to manage fixed cost delivering an average. So here, you may see it since many quarters, there is no specific debt. Definitely, during early '23, we did some activity on pricing because our inflation was there. And so, we adopted the pricing in order to compensate the impact on salary and third-party services of the cost, and this perfectly was applied. So, you have seen from '22 to '23, no change in the market and Q4 even improved. So, this is the picture. Q2 started well as ended up Q1. So -- and table to predict now, we will be 9 or Page 5 of 8% growth. But still, we will have a growth of fast 10% and EBITDA growing more, obviously, digital normal way. Then if we cut the bigger project with a low margin, probably in the quarter, we may have slightly different, but this is a very stable elegant. On Business Innovation, what was mentioned, then we may start from June to sell industry 5.0. So, the revenue will come, we come down the road over the next month. So, I think this is basically the situation. Again, yes, several lines of business. We explained how they are moving. And this is the situation. Definitely, the industry piece will be a key driver of the final year results. [indiscernible] will be reported at during Q2. And we are discussing then you could see that by a man to the one, but it's not changing the future in these few months. In the first deck, I would say, the board will analyze in the next weeks, the dossier results 2023 of the executive lane ends in 1 month. We are doing the relevant pro-analysis of that when complete them, the dossier will be brought to the Board for this future.
The next question is from Chandra Sriraman of Stifel.
Just a couple from my side. So, I noticed the big step-up in terms of the inorganic contribution in Q1, and this is also -- goes hand-in-hand with this big jump in international growth. So, can you just talk a bit about this? What drove this acceleration? And my second question, I'm just trying to understand the impact of the P&R. You mentioned that it's not in the guidance, but you're highlighting that it was one of the reasons the delay was one of the reasons for the weakness. So, can you quite a different also quantify how big this could be the B&R impact for this year?
All right. I'll take those, Chandra. So, a couple of things. Let's start with the first part, right? You were asking about the step-up in inorganic versus the Q1 and therefore the international. As you all might recall, during the Capital Markets Day, we heavily stressed the fact that international revenues are growing, right? The company has now reached a considerable size and therefore, the revenues from an overall group perspective are expected to grow up to 25%, 26% by the end of the plan, which is 2026, right? So obviously, this is a function of what is all of our foreign subsidiaries and also the acquired companies. So, we are growing, specifically if I look at, for example, Digital Trust, Digital Trust has done a considerable jump in terms of foreign revenues, reaching a very considerable percentage point. Q1, obviously, it does not represent 1/4 of the entire year. But I think at least for digital trusted represents a good proxy of where we are going in a directional phase. So, stay tuned to see what the overall percentage will be on a yearly basis, but we have not given a specific foreign revenue percentage guidance for the year. We know that by the end of 2026, we should reach at least 25%, 26% of overall group revenue coming from abroad. The second question, I wanted to be very clear. We mentioned P&R from a BI perspective. Let me walk you through it until you get a better understanding. It has nothing to do from the potential impact that the plan could have had when we started discussing about the P&R what we are referring in BI is transition 5.0. Let me walk you through with greater detail. All of BI's business in the past 3 years when we referred to subsidized finance, is referred to the so-called Industry 4.0 or digitalization. So that means that you get to make it simple, tax breaks, subsidized finance, if you being an entrepreneur or up line for any sort of tax breaks in that realm or in that category of investments. Now as you all know, and this is the reason why you've seen a contraction in margins in the BI, the 4.0 margins and deductible rates have been lower year-over-year, and that's why we actually saw a reduction of margins in BI in the first quarter of this year. What will come later this year and what Oddone was referring to is the rephasing of that part of the plan refer of the P&R referring to the transition 5.0. Remember, transition 5.0 dealt with everything that's relating to investments, referring to environment, improvement of energy and so and so. So, what we are witnessing from a BI standpoint is basically a second H increased weight in terms of margins coming from that type of investment. So, the entrepreneurial right now is coming out of 2023 that has been obviously a very busy quarter, specifically in the fourth quarter for BI. The first quarter is usually very light -- and now, obviously, all the efforts are being concentrated on both the 4.0 that is residual and 5.0, which will kick in no later than the second part of the year, so after June. So, it is -- obviously, the first 2 quarters will follow the same type of logic and then the Q3 and Q4 will follow a more, I would say, 5.0 type of logic when it comes to BI. I hope this is clear because we need to make it very clear to the market.
Perfect. Maybe a quick follow-up. Can you give us a sense of the seasonality of ABF in Q2 and Q3?
Yes. Still, we are not expecting the not significant change. It's a trend that is what we have learned from the due diligence is a trend where Q2 should be better than Q1 and Q3 even better. Definitely, Q4 is the key element. You have to consider how these businesses are working here, basically, we are talking about investment from our customers that are subsidized. And so basically, a customer is a budget for doing investment. So, the budget of the climate is over the year, if you look at it with subsidy by finance, they are running to complete put up an investment just before the year. So, in the next tax filing, they can deduct the amount earned from this investment. From subsidized finance related to ABF, basically there, you have 5 to a public body. And when you get to the positive answers, then you have still timing for getting the cash from that. So here, again, also here the most important part of the year is expected to be late Q3 and Q4.
The next question is from Carlo Maritano of Intermonte.
I just have a quick question. You mentioned during the presentation that [indiscernible] is performing well. So, I was wondering if you could provide us some more color on this company and how is processing progressing after the change in if you're seeing an improvement in the trajectory compared to the past? Yes, Q1 of setoff was positive, both in terms of revenue EBITDA growing in the range of 10%. So, this is absolutely positive. Definity is not the most important quarter. But still, it's important to start very well compared to previous year. Second, we improved our capability to put in the market offers on the new the Infosys solution. So, as you may recall, we appointed late last year a new CEO after the exit of the minority shareholders. And then we have just on board a new sales direct. So, we -- the company is very well organized, is already putting in the market in processes, we do expect the growth of the revenue coming to be pushed by the same new infrastructure. In any case, this is the challenge we have when we go abroad, and I think we are working in the right direction.
Do you have another question, -- it's not... I think there's another last question, operator?
The next question is from Russell Pointon of Edison.
Good afternoon, Oddone and Josef. Three questions from me, if that's okay. The first one, on Business Innovation, can I just be clear? So, I understand that 5.0 has been delayed coming into at the end of the year. And when you set your guidance at the start of the year, we knew that the deductibility rates were lower than what you'd anticipated. So, was it just a reflection, therefore, that in the first quarter that actually the underlying volume growth decline was probably worse than anticipated because of those lower rates? Or is it just a delay of 5.0%, which has affected Q1? My second question on Cybersecurity. In one of the documents, you quote market growth rates for 2024 is 26% or 6%. When I look back at the Capital Markets Day presentation from the start of the year, I think when you combine the 2 numbers quoted for Digital, Cybersecurity, you were looking for, I think it was about 5% compound growth, 23% to 25%. So, could you just talk about why it's slightly higher? Is it a different base? Or is this an acceleration in market growth rates versus what you had anticipated at the start of the year? And my final question, just a small detail. Ascertia's revenue of -- it was EUR 5.6 million revenue in Q1. That's more than way more than double of what you reported in Q4, which was the first full quarter, I think, of its results. You did mention earlier, there is some seasonality here, but I just wanted to get some feel for if that Q1 representative of the normal seasonality? Or has it just done a lot better than your Ansin the first quarter?
Okay. So, Russell, let me walk you through a couple of things. Let's explain again, I, so we get -- there's a couple of moving parts to explain the quarter, right? And they are the following. First item. We talked about physician 4.0 and as you correctly mentioned, the deductible rates are lower on a year-over-year basis. First point, then we have an overall and [indiscernible] very clear under an overall different mix from the other revenue streams. So, we're talking about what we've been investing in the last 2 years to diversify the top line. We're talking about energy transition. We're talking about training. We're talking about green, we're talking about ESG, okay? So that has an overall lower volume because -- and this is the fact that we want to stress or we touch upon it, let me stress it again. When an entrepreneurial falls into the new year, they have an overall budget that they need to deal with, right? So, what happens then? What they do is they allocate their priorities. Their priorities will play out throughout the year. So, if you like to say overall seasonality of [ BI ] on a like-for-like basis, it's always back ended. It's usually Q3 and the P3, we've mentioned this for the last 3 years in a row. And this year, it will be even more pronounced because we also have another business that came on board, which is ABF, which was very clear will follow the same type of logic. Another moving part is transition 5.0. So, the plan, the P&R states that 5.0 was supposed to come in, and it is -- has come in, but it will show its effect only in the latter part of the year. And what those -- what will those effects be? They will be the investment. Again, we go back to the budget of the entrepreneur that will have to play out what their priorities are and checks that the overall investment will have to fall under the umbrella of energy transition, improving in terms of energy consumption and all that, and they always have to deal with their personal budgets, okay? Now will it be obviously to the advantage of the interest in new invest, obviously, because they will get back the money that they will invest. Remember, we also were very clear on the overall deductible rate. The deductible rate of 5.0 can reach up to 40%. So, in this type of situation, we expect the second half to be definitely an area where EBITDA generation will be significant. Full stop. Now you talked about CS growth rates. I think it's customary for -- specifically on the overall interim report that we gave out a bit of color on what the market situation is. We have a guidance out there; we stick to our guidance. The market is probably higher or lower. It doesn't really matter what we really want to be is grow with the numbers that we gave out to the market, and we have confirmed that guidance. Lastly, we're asking about the shift Yes, a shift to have its seasonality. Q1, yes, it's a very strong quarter. without any doubt. And in fact, if you look at Q1 versus the prior quarter yet in the prior year, you see that Q1 is the best quarter, right? So, what we expect is the overall delivery to happen as we are seeing.
It is important to keep in mind. So, they delivered very well accordingly to our expectation. And so, we are happy because this is what we were expecting, and we will continue like this. We are working to improve the pipeline to achieve new customers. But very important for the pure financial standpoint, they delivered a very, very strong Q1 that is what was in our calendar is plan...
At this time, there are no more questions registered.
Thank you very much for attending the call, and I will talk to you soon for Q2 results.
Thank you. Thanks, everybody.