Quadient SA

PAR:QDT

Earnings Call Transcript 2020-Q3

[Operator]

Hello, and welcome to the Quadient Q3 2019 Sales Presentation Conference Call. My name is Lydia, and I will be your coordinator for today's event. Please note this conference is being recorded. [Operator Instructions]I will now hand you over to your host, Geoffrey Godet, CEO of Quadient, to begin today's conference. Thank you.

[Geoffrey Godet, CEO & Director]

Thank you. Good afternoon, everybody. Welcome to our third quarter sales conference call. I will be here today with you presenting with Gaële Le Men, Investor Relationship; Jean-François Labadie, CFO; and myself, Geoffrey Godet, CEO of Quadient.So let's get to it. Quadient's consolidated -- so let's move, sorry, to Slide 3. Quadient's consolidated sales total EUR 278 million for this third quarter, which is up 5.2% on a reported basis. This represent 2% of organic growth at group level excluding currency and scope FX.If we break down this performance by operation, our major operation grew by 0.4% organic growth. Thanks in particular to the strong performance of our North American region, which grew at 4.6% in the first -- in the third quarter, with a good performance in each of our 4 major solution.Our second operation, Additional Operation, had a strong growth at 9.7% in this third quarter. This represent a year-to-date organic sales growth performance at 2.2%. This represent our sixth consecutive quarter of organic growth. I will obviously share with Jean-François some more detail toward this presentation on everything we have achieved since the beginning of the year, since the announcement of our new strategy, and going quickly on some update on our new organization that we had established since the beginning of the year, the work we have done operationally, the investment that we've been making on our go-to-market, on our R&D, on our operation and major solution, and obviously, all the focus that we had as well on reshaping our portfolio of businesses, in particular, giving you some updates on our recent acquisition since the beginning of the year and the performance of Parcel Pending, which now stands at a top line growth above 30%. And obviously, the phase shutdown that is halfway completed of Temando in our Additional Operations.Consequently, so that's sixth quarter in a row of organic growth. We are now updating -- upgrading our top line guidance to above 1% of organic growth for the rest of the year, considering the fact that we've got to maintain the other indication, but we will go through this in details with Jean-François.Moving now to Slide 4. A quick summary on our current strategy that we have announced at the beginning of the year. We are focusing -- refocusing our business on 4 major solutions across 2 main geographies, North America and a few key European countries. The core of our strategy is to focus on the acceleration of our organic growth, thanks in part to some operational investments in our go-to-market and R&D as well as our CapEx, and augmenting this organic growth, thanks to an M&A plan to accelerate, overall, the growth of our company in the coming years.In addition, we are also reshaping the portfolio of our solution and focusing on our other solution and other operation called Additional Operations. We are trying to grow, improve or exit those other solutions.Moving to Slide 5. To give you now a little bit more color on our execution on Back to Growth -- on our Back to Growth strategy since the beginning of the year. Everything we've done since the beginning of the year has been focused on executing the strategy we shared with you. We have put in place a new worldwide organization by moving from a decentralized company, holding of independent company on one hand, to a unified and integrated company. This is now in place, and obviously, we have also a new management team that has been put in place since the beginning of the year that has been executing of deploying the strategy in this new organization.Naturally and consequently, it was time to have a brand that could represent all of our customers and all of our employees. Hence, why we made the announcement at the end of September that we should resume to rebrand the company, and as a quick reminder, this was not just a branding or logo exercise, it's been a holistic work to make sure we work on our vision, mission statements, values and we look at what is the best way the value proposition for each of our solution and the synergies that existed across the organization.As part of that holistic work, obviously, our corporate and social responsibility have been at the cornerstone of this strategy. So therefore, achieving the gold certification of our commitment to sustainable development by the rating agencies, EcoVadis, is a very encouraging step in the recognition of our progress. And obviously, the execution of our ambition in this domain.In addition, as you know and as we shared, we have continued since the beginning of the year, but then also in the third quarter, to further do investment in our go-to-market, investing in our sales and marketing organization for each of the major -- 4 major solutions that we have decided to refocus the company on. And also penetrating or developing new verticals and some other of those solutions, and we will go over some of the details as we go over each of the major solution and where we stand and the progress that we have made for each.We have also started to work since the beginning of the year on some of our R&D platform and being able to enhance and accelerate the development and the go-to-market of certain features. We've made some good progress as well. And obviously, we have also focused on developing the synergies that were available to us before, but we've been in a better in a [ linked ] sense since the implementation of our new organization.In addition, we have spent, obviously, a good amount of time since the beginning of the year to focus on another priority, which is Additional Operations. As you know, our priority for Additional Operations have been to grow, improve or exit the different solutions and businesses that is comprised in this activity, which is part of the reshaping of the portfolio more globally of Quadient. We obviously made the first acquisition, and I will take a little bit more time to go in details with you on the progress we've made on the integration of this acquisition, which is critical for us, but obviously, the 2 divestments that we made in Additional Operations at the beginning of the year for Satori and Human Inference, which were -- both businesses representing our work in the Data Quality environment, which we have decided to exit. And since the announcement at the end of September, the phased shutdown of Temando and making a mini phased shutdown because we wanted to do a proper shutdown of those operations, making sure that we were abiding by all the commitments that we have with our customers and employees, and this shutdown has made good progress, obviously, since the announcements.Moving to slide -- Page 6. I wanted to take a little time to give you an update on the progress we have made on the integration of Parcel Pending. As you know, we have said that we would augment or we would accelerate our organic growth thanks to acquisition. We made an important acquisition at the beginning of the year with Parcel Pending. And Parcel Pending has, obviously, had already some significant contribution to our organic top line since the beginning of the year. And such, quarter-after-quarter, we have seen, for Parcel Pending, obviously, now an acceleration of the top line growth because we now stand at above 30% for Parcel Pending growth at the end of those 9 months. Parcel Pending integration is progressing well. We are very excited to work with this amazing team that has built a very fast-growing business. And since the acquisition, we've been validating all the different assumptions that we had about this business, about its potential, about the market trends. And one of the key things that we've been able to confirm, the good market dynamic in the residential markets that we had then defined as a priority in the U.S. -- in the North American market, but in particular, in the U.S. And we've seen that the ballpark, if not excluding here the growth that we have with Parcel Pending this year has been on this market, and we have confirmed the dynamic. We have the right team, the right product, the right operation to be able to sustain that accelerated growth.In addition to confirming, obviously, the core market penetration that we've seen in the residential market, as it is in nascent market of the Parcel Locker Solutions, and we see that in different countries in the world as well, there are other verticals that could be interesting and could also be seeing some growth in the coming years. So we've been taking the opportunity since the acquisition to work, obviously, together with the Parcel Pending team to study other verticals such as the rentals in which we have started to do with PLC that we have shared with you, I think, at the end of our first semester, looking at the carrier segment market, but also further looking into the corporate markets in which we have already started to gain some interesting position, for example, in the segment of universities in the U.S. And we'll be looking also of how to [ reuse ] the technology and the platform and the product launch of Parcel Pending into potentially other region in the world and continuing to look at our gross spend in the next -- for the duration of our Back to Growth strategy over 4 years.In addition, we've been also looking at operational synergies, which were part of the synergies identified following the acquisition, and we've been executing on them and studying on them since the beginning. We have, obviously, 2 different platforms with Parcel Pending, the one that Parcel Pending is presenting to us, a software solution for the residential market, and we have the one that we inherited from Quadient. So we're obviously looking at the combination of both and we have the same thing on the hardware side of the product line. We have now 2 product brands that we're combining together. And that makes us stronger in that market.So all those actions have taken place already. We've made some very good progress. It's obviously important to us because it's our first acquisition for the duration of our Back to Growth strategy and plan, and things have been progressing according to what we anticipated so far. So we're obviously happy of the result, but happy also to share with you how disciplined we've been in integrating progressively in the right way, this company. And I think that the acceleration of the topline we've seen is the demonstration that this company is providing the expected results, which is obviously very important for us in term of return.So if we talk obviously about return, it's also a good opportunity as a reminder, to share with you a little bit our M&A ambitions. We have set for ourselves an M&A envelop of EUR 100 million on average per year to contribute to the acceleration of our transformation, okay? And this is an amount that is net of divestments. So we might be spending as much as EUR 400 million net of those divestments by 2022. But we have no obligation to do so, okay? If we don't spend this amount, we will return to our shareholders the cash that is left at the end of the plan, and that is [ to say ] at the end of 2022.So in the meantime, let me stress that we have set ourselves some very strict criteria for M&A. That's the one we had shared with you. And by strict criteria, I mean that we aim for reaching, within 2 years for each acquisition, a [ work share ] higher than our work.Now the type of acquisition that we are considering are bolt-on acquisition, and bolt-on acquisition for each of our 4 major solution that we have defined as part of our refocus and our strategy. And that is in order to complement our existing major operation, which is mainly North America and a few key European countries. So it's both a focus for bolt-on in terms of the type of solution we are focusing on and in the type of region that we're focusing on as well. So we're very deliberate and very specific to execute according to those criteria.To date, we have concluded one deal, which I just mentioned before, which is Parcel Pending. And as I mention this again, we're very pleased with the performance and the prospect at what Parcel Pending has brought to us so far.So only one deal concluded this year, but this doesn't mean that we have not been active on the M&A front since the beginning of the year, obviously. Among -- we haven't -- sorry, we haven't completed any other deal for the time being. It is because we have a very, obviously, controlled screening process in place and we have a dedicated team to screen those potential targets in the market. So among the potential targets that we have been looking at, some were lacking potential synergies, some were not feeling well with the current organization or with the culture of our team. And as I mentioned that to you, I think the success of those acquisition is really important [indiscernible] integration. So as you look, it's not just the profile of the company, it's how successful to be to integrate them, and their culture is one element. And some were not meeting, obviously, our financial criterial. And to be frank, some others went to higher bidders, and we didn't want to overpay for them.And finally, some on our pipeline, obviously, are long shots, and still, obviously, still in our current pipeline, okay? So we've been fairly active since the beginning of the year, looking at potential targets. But what is important is that we want to find the right fit, at the right price, with the right prospect for us. And otherwise, then we don't go for it. So as we have some questions about M&A policy this year, I just wanted to make sure I provide a quick update to those questions along the way. Moving to Slide 7, and I am now going to hand it over to Jean-François.

[Jean-François Labadie]

Thank you, Geoffrey. So to continue to elaborate on the capital allocation discipline, as you know, to further support our Back to Growth plan, we are planning to allocate EUR 100 million per year on average to CapEx. At this stage, several comments need to be made.First, EUR 100 million of CapEx per year is consistent with the last 2 years. As you can see, 2017, we're allocating EUR 99 million of CapEx; 2018, EUR 93 million of total CapEx. And as you can see as well, we are in line with our strategic plan at the end of H1, with the level of CapEx amounting to EUR 49 million.Second comment, we need to provide you with more detail on the CapEx material for you to understand the specificity due to our rented equipment business that fuels our future recurring [ audit ].In this chart, you will see an average of 50% of our total CapEx for the year that we allocated to rental equipment. Clearly it provides us strong visibility on future cash flows, and in addition, over the last 3 years, within the rented equipment CapEx, we managed to shift between an increased CapEx allocated to our Parcel Locker Solution to deploy our network in Japan and a decrease at the same time of the CapEx allocated to Mail Related Solution linked to the decline of these activity.Still on the CapEx material, we are increasing the LNG CapEx related to the development of our new solutions, which represents 32% of our total CapEx in H1 2019, and we are optimizing the portion of our maintenance CapEx representing 80% of the total CapEx in H1 2019. We will continue to carefully manage the breakdown of our EUR 100 million of CapEx per year, with a high priority given to rental equipment and LNG development.Let's move now to Page 8. Our Q3 organic change in sales as were for sales for quarter 3, we posted sales of EUR 278 million, up 5.2% compared to Q3 of 2018. We had a small positive scope effect of 0.7% coming from the acquisition of Parcel Pending in the U.S. in the Parcel Locker Solution in the residential market and the divestment of both Satori and Human Inference from our former debt equity activity. The current impact is strongly positive at 2.5% representing this quarter EUR 6 million increase in our top line. But if we move to the organic growth, the organic growth of the quarter stood at plus 2%, representing an increase in revenue of EUR 5 million. It is our sixth consecutive quarter of organic growth.In major operations, organic growth stood at 0.4%, an increase in revenue of EUR 1 million. Customer Experience Management grew by 1.1%. Our Business Automation Solution grew by 14.4%, Mail Related Solutions experienced good revenues with a limited decline at minus 2.4% and our Parcel Locker Solutions grew by 36.2%. Altogether, Business Process Automation, Customer Experience Management and Parcel Locker Solutions grew by EUR 5 million, offsetting the minus 4% -- minus EUR 4 million, excuse me, decline of Mail Related Solutions.Moving to Additional Operations. We posted an organic growth at plus 9.7% or plus EUR 4 million, driven by good performance in Customer Experience Management, Parcel Locker in Japan, and a good quarter for automated packing systems. At this stage, I would let Geoffrey sharing with you more color on our major operations.

[Geoffrey Godet, CEO & Director]

Thank you, Jean-François. So let's be moving to Page 9, and let's talk in more detail about Customer Experience Management. If we look at it, Q3, we stood at 1.1% organic growth, and if we look at it geographically, we underperformed in 2 regions, mostly Germany, Italy and Switzerland in one hand, and as well U.K. and the Ireland region. And that underperformance did offset the good performance that we had in North America and in France Benelux in the third quarter. So we've been able to keep adding new customers as we do on a regular basis in the last few years. And since the beginning of the year quarter-after-quarter, we have a very stable existing customer base, in terms of installed base, and we keep adding quarter-after-quarter of new customers. And we've been adding those customers as well, and that's also a good news in the new vertical that we said we would want to invest as additional base. But we still had our first new customers in those segments, in each of the 3 segments, both in UTTs and telcos and government already, which shows that the investment we are making in those vertical should naturally, after a sales cycle, which usually takes 12 months, starting to slowly pay off next year. As result, we've seen an increase in our growth, an increase in revenue for our maintenance and professional services as a result of the customers we have embarked last year, and obviously, since the beginning of the year. And from a license and subscription perspective, we have seen equities increase in the third quarter in the SaaS subscription this quarter, in particular.So what has happened in the third quarter outside of major operation is a very strong growth, high-growth in the other geographies that are reported under the Additional Operations. And to give an overview, obviously, of the Customer Experience Management at the group level, we have grown year-to-date at a double-digit growth at group level, including the geographies that are reported under the Additional Operations.Let's move to Page 10, and a little bit more time on Business Process Automation. It's another quarter of good performance at 14.4% organic growth. This is the result of the strong growth in 2 of the largest market, which are France and North America for Business Process Automation today. U.K., as well as Customer Experience Management, had a negative impact for us in this third quarter, considering the number of lower new licenses that we had in terms of deals in the third quarter, again. On the other hand, we have started this year, at the beginning of the year, some customer acquisitions campaigns where we, in particular -- and I took the example of the French market where we had divided the verticals in the French market in 12 verticals. So we have continued to make the investment in the go-to-market and those campaigns, which is showing already the result, obviously, quarter-after-quarter, of the good growth that we've seen in those markets and for Business Process Automation.One of the reason also why this growth is at the level that it is, is because we have also worked on the synergies between our go-to-market organization for our Mail Related Solutions, our Business Process Automation, which in turn is paying off with a continuing good growth for Business Process Automation both year-to-date and quarter-after-quarter.Moving to Slide 11, for Mail Related Solutions. And let me start for Mail Related Solutions with a quick reminder on our strategy that we have announced to you when we said we are going to focus on each of our formative solution, and one of them is Mail Related Solutions. We have decided to reinvest and refocus on our traditional divestitures, the Mail Related Solutions one. And when we say we wanted to reinvest in it, what does it mean, right? Was to focus in particular in the North American market. And why did we want to focus in particular on the North American market? It's because in that particular market, we have a position of a challenger, where our market share is much lower than our competition in this region, which is an opportunity for us to potentially do better, right? And it's better in terms of managing our installed base of customers on the one hand, and also in terms of customer acquisition, campaigns and being able to do better in a particular region. And it's also relevant to the fact that we want to make sure we have a product portfolio that is highly competitive, in particular, for the [indiscernible] segment that we have. So as you could see, this is, I think, a demonstration now for the third quarter that in North America we have seen a low single-digit organic growth, right? And that's really the combination of having an operation team executing well on doing a good job at maintaining the installed customer base, which in turns, is obviously stabilizing the recurring revenue. And in addition, we have seen also a strong growth in the sale of new hardware and the high level of growth that we had in the hardware sales in Q3, but this is something we've seen going on since the beginning of the year or quarter-after-quarter is in particular, the result of particular segment in our product portfolio range in what we call the production mail and the folded-in status. And obviously, focusing also in the customer acquisition campaign [ product ], right? So that's all what is making up the result progressively of that investment strategy and refocusing on our Mail Related Solutions.In Q3, we've seen some difficulties in the German, Italian and Switzerland region, which we've seen as well in the previous quarters and we see there is a continuation of those difficulties, unfortunately, in the third quarter. And as I mentioned on the Business Process Automation solution, we are also very diligently, very methodically focusing on helping cross-sell our solutions and helping the sales teams that are proposing our Mail Related Solutions to cross-sell the digitization solution to offer to their customers.So this puts us, obviously, in a good position year-to-date, with a good resilience overall of Mail Related Solutions, because now we have decline at minus 2.2%, organically. In particular, as a result of the continued growth that we've seen now this year in North America.Let's move to Slide 12, and focus a little bit a few words on our Parcel Locker Solutions, which stands for the third quarter at a 36.2% organic growth, right, and 27.1% year-to-date. I have already taken the time to explain the progress that we have made on integrating Parcel Pending, and obviously, Parcel Pending is the -- represent the vast majority of the organic growth of our third quarter, but also overall, year-to-date, in our North American market. And mostly, Parcel Pending is representing the total number of business that we do in the residential market.Now for the top line growth spend now about 30% in Q3 versus last year. So obviously, happy of the progress that we've made with Parcel Pending since the integration. As I mentioned earlier, we are continuing to look at the opportunities to reuse the platform and the product range of Parcel Pending into other segments and every region for Parcel Locker Solutions.Let's move now to Page 13, and wrap up a little bit, all those 4 major solutions for our major operation, which, as a reminder, represent 82% of our total revenue, and now, shows a organic growth at 0.4% for the third quarter. And this is driven, in particular, by the growth in each of the 4 major solutions that we have in North America, which grew at 4.6% in that third quarter alone, which obviously is a strong performance of our North American operations. We've seen a decline in our main European countries, which is normal, and it reflects different trends. In France, we had Business Process Automation and Customer Experience Management almost compensating the decline in the Mail Related Solutions business that we have, has been traditional in the past few years, but also this year. U.K. and Ireland region, there is a slight temporary improvement, I think, with the low single-digit decline, definitely, in the third quarter. And finally, for Germany -- for the German region, which comprises of Germany, Italy and Switzerland, we've seen a double-digit decrease, and that's mostly related to the decrease of the strong decline that we have in Mail Related Solutions and the underperformance in the third quarter of the Customer Experience Management Solutions.To notice, year-to-date, major operation recurring revenue, which represents 71% of the total revenue of major operation, grew at 0.7% organically. And I think this is important to appreciate because this is in spite of the overall decline of the revenue that we have, in particular in our mail-related revenue, which is mostly represented in the recurring revenue that we have.Let's move to Slide 14. Additional Operations is a key priority of the Back to Growth strategy that we shared with you. And Q3, we have enjoyed Additional Operations as a result of the focus that we have. A strong growth again at 9.7%, which now stands, for the year-to-date situation, at 8.6% organic growth. So for Additional Operations, this is a new operation that we have set up to represent our secondary market, all the activities that we do in the other countries other than the one we had a major operations, in which we take to market some of our core solutions, which I'm going to go over, but also our other solutions. And our strategy is clearly here, as you know, it's to either grow the businesses, improve them, because as you know, last year Additional Operations in a pro forma basis [indiscernible] was not contributing to the EBIT. So we definitely had a strong focus operationally to improve the losses that we have. Or to exit some of the businesses that are not core to us in which they cannot contribute to the top line or to the EBIT growth that is part of our strategy.In Q3 in particular, we've seen further growth in the major solution within Additional Operations. We're specifically positive for us in the Asia-Pacific and the rest of Europe for Customer Experience Management, which in turn is where it drives an overall good performance for Customer Experience Management at group level, as I mentioned earlier. And we see also a good performance for Customer Experience Management since the beginning of the year as well in Additional Operations for this year. And also, the key other strong element is the continued growth of our Parcel Locker Solutions in Japan, with now the installed base that have overpassed 5,000 installation in the country, well ahead of the original plan. And that in turn, the growth of installed base is also helping us continue to grow and benefit from the growth of the revenue. The other portion that explains a good performance, the strong performance of Additional Operations in the third quarter is the fact that we have sold 5 units as part of our other solutions of our activity in our automated packing solution. And it's a good opportunity for me to remind you that we are now standing at roughly 11 CVPs sold this year, which is 1 more already than last year. At the same time, Q4 last year we had a good performance in the CVPs where we had 5 CVPs sold, and so that's going to represent a high-comparison basis for the CVPs going into Q4.And obviously, we have been focusing also on improving and exiting some of the solution that were not contributing to our Back to Growth strategy. Executing as fast as we can, but orderly, the phased shutdown of Temando. And as we announced it at the beginning of September, we're making good progress and probably halfway completed now. Jean-François?

[Jean-François Labadie]

Thank you. Thank you, Geoffrey. So let's move to Page 15 and look at where we stand at the end of Q3 2019. So at the end of Q3, we posted sales of EUR 835 million. That's 5.4% compared with the first 9 months of 2018. Scope effect is small, 0.3%, coming, as you know, from the acquisition of Parcel Pending in the U.S. and the divestment of our former data quality activity. The currency impact over the 9 first months of the year is strongly positive at 2.9%, representing a EUR 20 million increase in our top line. When we look at the organic growth performance, as Geoffrey already mentioned, for the first 3 quarters, organic growth stood at plus 2.2%, representing an increase in revenue of EUR 17 million. Focusing on major operations, organic growth stood at 0.8% or an increase in revenue of EUR 6 million. Within major operations, Customer Experience Management grew by mid-single digits at 5.8%. Our business automation solution grew by strong double-digits at 18.4%. Our Mail Related Solutions experienced a good resilience, with a limited decline at minus 2.2%. And our Parcel Locker Solutions grew by stronger double-digits at 27.1%. Altogether, Business Process Automation, Customer Experience Management and Parcel Locker Solutions grew by EUR 18 million as compared to minus EUR 12 million decline that we experienced in Mail Related Solutions for the same period. Moving to Additional Operations. We posted an organic growth of 8.6% or EUR 11 million, driven by good performance in CXM, Parcel Locker Solutions in Japan, [indiscernible] Mail Related Solutions and a good momentum for automated packing system.Let's move now to Page 16. Additionally for Q3 2019 performance, Q3 is our sixth consecutive quarter of positive organic growth, again 2%. The first 3 quarters of the year are all positive, with a year-to-date organic growth of 2.2%. And I take the opportunity to remind you that our full year 2018 organic growth stood at plus 0.2%. And from 0.2%, we are now at the end of the third quarter of this year at 2 -- 0.2%. And I remind you that we have a challenging comparison base in Q4 2018, particularly in the CXM solutions, where we closed EUR 5 million of large deals in the quarter. And we delivered significant number of machines, CVP-500, in Q4 2018. So that drives me to Page 17 for the new indication for 2019. Taking into account the good performance of the third quarter of this year. With the high comparison base of Q4 2019, we are upgrading our guidance for the organic growth for the full year to above 1% from slightly positive previously. Our current EBIT guidance is confirmed between EUR 180 million and EUR 185 million, and our free cash flow conversion guidance is confirmed as well at above 50% of current operating income.Thank you. And we are now opening the floor for questions.

[Operator]

[Operator Instructions] Our first question comes from the line of Martin Boeris of Exane.

[Martin Boeris, Analyst of French Mid Caps]

I will ask 3 questions, please. First, Additional Operations were strong in Q3. How much of the 9% organic growth was driven by Packcity in Japan, particularly? The second question is what explains the diverging performance in customer experience solutions between North America and Europe? And finally, the third question is on Parcel Pending. What were the revenues in Q3?

[Jean-François Labadie]

So first question was related to the portion of the Packcity Japan. We gained a nice growth of international -- or Additional Operations. Is that what your question?

[Martin Boeris, Analyst of French Mid Caps]

Yes, exactly.

[Jean-François Labadie]

So we are not disclosing precisely the performance of the Parcel Locker Japan. But as we said, we are continuing to have a good momentum in the rollout of the network, and we are seeing that we have reached 5,000 lockers in total deployed in Japan. So we are ahead of the plan compared to what was originally forecasted. What I can tell you, that we have double-digit organic growth from these activities, a strong double-digit organic growth in these activities for the quarter.

[Geoffrey Godet, CEO & Director]

If I could help you also like Jean-François did, in Additional Operations, beside of Customer Experience Management, Parcel Locker and our major solutions combined, with the exemption this quarter of the CVPs, the rest of -- the other solutions have been declining, right?. So the CVP -- the 5 CVP units obviously is more a one-off because we don't see that as a trend today, and that has been historically in the past years. So the growth of Additional Operations this quarter, but also since the beginning of the year, has been, in large proportion, mostly driven, and almost sometimes exclusively for some quarters, driven by the 4 major solutions combined. In the 4 major solutions combined, quarter-over-quarter, we've seen different performance among the core solutions. This quarter, in the third quarter, the Customer Experience Management and the Parcel Locker one has been the ballpark of the strong growth that we've seen in Additional Operations.

[Martin Boeris, Analyst of French Mid Caps]

Okay. But so the underlying question was, is this a surprise to you, this strong performance? And to what extent do you have visibility on to next quarters? And that's why I was asking a question on Packcity, because we know that at some point, Packcity or in Japan, growth will slow down because of the base effect, and I was wondering if you had some visibility on what's going on in these Additional Operations, or if it's really a surprise to you, this strong performance?

[Geoffrey Godet, CEO & Director]

Sure. So it's a good opportunity to remind what we have in Additional Operations, right? We have obviously 2 things. One, we're taking to market the 4 major solutions to those secondary countries. And when I say that is we have many different countries, right? It represents all the 27 countries that are not just included in the major operations. So we have dynamic -- local dynamic in every country. In Australia, the market is different, in China than it is in Singapore or some of the rest in Asia, in Japan, in the rest of Europe, in Latin America. So it is really the combination of the different individual performance and the mix of performance that are different from 1 quarter to the other. Obviously, what we've done with Additional Operations is put a dedicated management team on top of all those countries that were second priority for us before, right, to make sure we could improve on the execution and make sure that those region were contributing to our Back to Growth strategy. So from that perspective, not so surprised to see some decent performance in those businesses. And in particular -- now to respond to your question for Parcel Locker in Japan. The Parcel Locker in Japan, we had, had different phase, right, of higher growth of installation of new lockers and different part of Japan at some point. Some slowdown, but overall, month-to-month, we're always adding the new installations. So the growth of the installed base could have various base, but it's still growing month and quarter-after-quarter. We, after an initial phase of strong acceleration, we went to a second phase of working obviously on the quality, the usage of how each installation externally or internally in the different buildings or the different customers that are having those location, which is the reason why the second phase was a little bit a slower pace in terms of the numbers of new locations we were adding. But this year, the performance we have on Parcel Locker in Japan is not a surprise because we have a relationship and good visibility with our partner, Yamato, through the joint venture that we have there. So it is according to expectation.Just a quick reminder, while we have that strong growth also in Parcel Locker in Japan, originally within the agreement, we had planned to do 5,000 installations of lockers in Japan by 2022. We are already at 5,000 this year in Q3. So this is not over. We're going to continue in the coming quarters, in coming years, to continue to expand the size of the customer base, in line with the evolution of the -- in the local market in Japan with Yamato. We are now also working with the other carriers like Sagawa in Japan, but we are also looking at different type of players as well. So it just -- we're entering different phase and different maturity. And the last thing is where the beauty of this model for us -- and as a quick reminder, every time we sell a new location, that location is installed with a 7-year agreement. So it is a location that is rented for 7 years guaranteed. So the location we have installed 2 years ago, we have 5 more years to go. But the installation that we have done in the third quarter this year has 7 more years to go, right? So we have also maturity that is evolving over time, but as always with a 7-year agreement. Did we address all your questions, Martin?

[Martin Boeris, Analyst of French Mid Caps]

Thank you. And I had 2 of those on the diverging performance in your Customer Experience Management.

[Geoffrey Godet, CEO & Director]

So in particular, for Europe, so last year, just as a reminder in major operations, we had a very strong performance because we stood at 29%, I think, organically -- organic growth, just in the major operations last year. And as you know, in Q4 last year, we had some big deals in addition, so we had a high-comparison basis in Q4 coming from the Customer Experience Management business. And within that, obviously, the performance country-by-country varied. Some of those strong performance last year on the 29th came in part with some strong performance in U.K. and also Germany, right? So we had a good performance overall in all the different countries, France and the U.S. included. But some of those higher growth that we've seen already originated from those regions. So that's 1 effect. The second effect is we've definitely seen in U.K. and Germany in the third quarter, a slowdown, and it takes a little longer to be able to get some of those license deals because obviously, we've been able to continue to grow in U.K. or Germany or the maintenance of our customers and service revenue, because we have always more customers, just not at the pace that we have there last year in Q3. And then I would say that comparatively speaking, North America had a good performance in Q3, which is to expectation. But we had a slow start in North America in Q1 and Q2, so this is why we always had a variation in terms of the mix of the countries. It's just that they have the underperformance in the U.K. and Germany in the third quarter did not compensate the good performance that we had in Germany and France. And then the last question was for the revenue in Q3 of Parcel Pending, which we are not sharing specifically. But we will say that it stands above 30% in Q3 again.

[Martin Boeris, Analyst of French Mid Caps]

Okay. And no news on the French market...

[Geoffrey Godet, CEO & Director]

So the French market, so in Parcel Locker Solutions, to be frank, and this is going to be bigger and bigger. Today, the vast majority of the target is the result of Parcel Pending. We have a small footprint that is a very interesting market share on the universities. We were definitely the leader in the university segment. But it's just a small number. And in France, it's the same thing. We have the JV, the joint venture, that we have with GeoPost. But in terms of numbers of lockers, it's a small portion of the business. So when we were at the beginning, like in Q1 with Parcel Pending, even a small variation in France or the U.S. in the university segment could have had an impact on the growth rates of the entire solution. With Parcel Pending growth now, this is going to be less and less varied, and Parcel Pending will represent, if not exclusively, the vast majority of their performance, and that's what we'll see again in Q3, the performance of the U.S. segment in the Euro city, or the French performance does not impact the overall performance.

[Operator]

[Operator Instructions] We have no incoming questions. I will turn the call over to your hosts.

[Geoffrey Godet, CEO & Director]

Okay. So we have some questions from Nicolas Tabor from MainFirst. First question is why did the Customer Experience Management slow down? Should it be worse in Q4 as a comparison basis? Will it be tougher? So I think I have responded, and Nicolas, feel free to ask us for more information if we did not answer completely that question to be answered -- to the question of Martin.Should it be worse in Q4? We have a high-comparison business in Q4. It's the highest quarter of the year for Customer Experience Management. In our old reporting segment under [ yes ] the way we had. So it's going to be a pretty tough comparison. It could be negative in Q4 definitely. The second question is from Nicolas, is the numbers of total CVP sales are today, which I believe I have given during the presentation. We stand today this year, year-to-date, at 11 units, which is 1 more compared to last year, but for the full year. Third question from Nicolas was does the Parcel Locker organic grow into Parcel Pending, and the answer is yes. Fourth question from Nicolas, what is the installation rate we can expect now at Packcity Japan? How much more do you want to install? These are not numbers we're sharing specifically because it's also information we have with Yamato as our partner. But we expect, as mentioned earlier, to continue to install our lockers going to different phase, obviously. But we have a good relationship and good joint venture, and we will continue to grow the installed base of lockers in Japan this year and next year. Do you see the partnership between Pitney Bowes and Luxer One as a threat? So Nicolas is referring to -- Luxer One is another player in the Parcel Locker Solutions in North America. It is a player that has been acquired by an emerging company called ASSA ABLOY. More or less, at the same time, we have been acquiring Parcel Pending, so we know, obviously -- we were very happy to acquire Parcel Pending at the time for specific reasons. As it relates to Pitney Bowes doing a partnership with Luxer, it is, I think, in the same light that I see today, Amazon, with some other players that now take a recent interest in the Parcel Locker Solutions. As you know, we've been investing in the Parcel Locker Solutions for quite a few years in different countries, trying to understand and fine-tune the model that could exist based on the different segments. We have the residential segment, which is one very interesting and the fastest-growing segment that we see in North America, hence why we have made a decision to acquire ahead of time Parcel Pending with the specific upfront hardware model. In Japan, I had explained the model, which is a 7-year model, of an open network, where we ran the capacity to different players for them to be able to benefit from the different locations of those lockers in the country. We have also worked in France on the retail segment, working with the different dynamic where you try to basically cross-sell or help improve the sales business, in particular, retail, by bringing customers back in store as they come back in store to pick up a package to potentially give them the opportunity to buy something else locally. So I think that we have been ahead of most of the players, right? So I see that as a comforting announcement, to see other players seeing the benefit of the Parcel Locker Solutions, which again, I believe, is going to be the main solution for the 10, next 20 years, to optimize the last mile in the big areas, in the big urban densely-populated areas. And it is the right solution. Even though other solutions, other technology could be suited for other areas within those countries. In those big cities, we think the Parcel Locker Solutions is the right one. Specifically in the U.S., PB, Pitney Bowes, is obviously, from what we read in the announcement, intending to promote as a reseller, through that agreement with Luxer, those lockers, and probably the segment that Pitney Bowes is operating, which are similar to the one we've been operating, which is right at the corporate segment mostly. And again, here in the corporate segment, we've been working on it for the last few years, and we started with 1 segment, which is the university segment, where I believe today, we're probably sitting well above our 50% market share in the -- for the universities. It's been growing steadily also in the last 2 years. So I feel we're in a good position to be able to continue, as part of our strategy, to be a leader and to be the leader in the Parcel Locker Solutions market in the U.S., in particular, and focusing on the market we have made preference, which is the residential market today. And the last question I have from Nicolas is do you see rising pressure -- pricing pressure from the growing numbers of players in the Parcel Locker? It's a good question. We will continue, and we are monitoring this, obviously, on the market. This is not something that we are seeing today because they are not -- there are many, sometimes, startup or smaller players, but in the different segments and different countries. So in a given segment or in a different country, you don't have that many player, the first thing. But then the competition is still limited, and it's a race, that's why that thing is an important element. We believe that it is important for us to be the first to market, because when you install a locker in a given location, it's not like on the software side only. We have a physical space that is being used. And as I mentioned, I believe we can have, for a given location, given city, et cetera, 2, 3 different networks or position of lockers, but not so many. So being able to do the rate first is important. And when you don't have so many players, you obviously get the benefit of being the leader. And as a result, in those segments, we don't see today in the one we're operating, particular pricing pressure in the segment we operate.

[Gaële Le Men, Corporate & Financial Communication Director]

There is no more question on the webcast. On the conference call, is there a last question?

[Operator]

[Operator Instructions] You have no incoming questions.

[Geoffrey Godet, CEO & Director]

Yes. Thank you very much for your time and for your attention. And I look forward to meeting with you at our next...

[Gaële Le Men, Corporate & Financial Communication Director]

Our next event will be the publication of our Q4 and full year 2019 results, and that one is scheduled on March 31. Thank you for your participation tonight. Bye-bye.

[Geoffrey Godet, CEO & Director]

Bye.

[Operator]

Thank you for joining today's conference. You may now disconnect your lines. Hosts, please stay connected.