HPS maintains its annual objectives and promises growth in net income for 2025

The first half of 2025 saw a marked decline in HPS's financial indicators. This underperformance is primarily attributed to two factors: currency effects, particularly the drop in the dollar, which impacted operational margins, and the transition to the SaaS model, resulting in temporary revenue loss as contracts move into the operational phase. Consequently, EBITDA decreased, leading to a net loss that triggered a strong negative market reaction, with HPS shares reserved for decline following the announcement. Despite this setback, management expressed confidence in the company's future. "We anticipate a strong rebound in EBITDA for the second half, thanks to a more favorable on-prem mix, SaaS contracts entering the 'run' phase, and beginning to generate margins," explained Brahim Berrada, CEO of the company, who expects EBITDA to triple in the second half. He cited several factors to support this recovery: the conversion of a record order book (up 85% by the end of August), large on-prem contracts generating high-margin license revenues, the ramp-up of SaaS contracts signed in 2023-2024, the expected recovery of CR2, and cost discipline. Historically, HPS converts between 60% and 76% of its order book into revenue in the following semester (average: 68%). For the second half, management adopts a cautious assumption of 60%, equating to approximately 680 million dirhams in revenue (excluding CR2). With CR2, the goal is to achieve revenue growth exceeding 20% for the year. In conclusion, Abdeslam Aloui Smaili, CEO, summarized: "The SaaS transition is nearly behind us, large on-prem contracts provide visibility on margins, and disengagement from testing allows us to focus on payments. Our guidance is confirmed: revenue growth >20% and EBITDA growth >30%." The management emphasized the company's refocusing around its core business of payment solutions. The divestment of the testing activity, deemed unprofitable, is expected to enhance profitability. Concurrently, the SaaS model, already deployed in Canada, the United States, and Australia, is set to become a major growth driver, offering more recurrence and visibility. HPS aims for December 2025 to achieve revenue exceeding 1.5 billion dirhams (+20%) and an EBITDA of 290 to 300 million dirhams, with net income expected to grow in double digits compared to 2024. Addressing analysts' questions, HPS confirmed that the annual guidance remains unchanged. The initial range (20% to 30% revenue growth) is maintained, although the company is targeting the lower end (+20%) due to the dollar's impact on the first half (–7 to –8% revenue). Regarding the valuation of the testing divestment, HPS stated that it does not disclose this information, emphasizing that the objective is strategic, to refocus on high-margin payment activities, with a marginal impact on results. When asked why no profit warning was issued, HPS clarified that the annual guidance had not changed. They had already indicated a decline in revenue and EBITDA for the first half and adequately communicated this to the market, making a profit warning unnecessary. On the decision to sign two on-prem contracts despite a SaaS strategy, HPS explained that their strategy is bimodal. While SaaS is the future, on-prem solutions remain in demand by certain tier-1 banks. Rejecting these contracts would be a mistake, as they also help absorb the SaaS transition and improve the short-term mix. Regarding trends at the end of Q3 2025, HPS noted a record order book with cautious conversion assumptions. The mix is more favorable due to on-prem contracts, and visibility for the end of 2025 is solid. On the outlook for net income in 2025, HPS expects double-digit growth compared to 2024, with high operational leverage: fixed costs are already incurred, and order book conversion will generate significant EBITDA. Finally, on managing currency risk, HPS mentioned consulting specialists but noted that there is no "miracle" solution at this stage. They are working to diversify billing currencies (currently mostly USD/EUR), although many currencies remain correlated with the dollar. The impact also arises from cash holdings in foreign currencies (direct effect on financial results) and WIP (work in progress) revalued at the end of the period. They are seeking mechanisms to minimize these effects.