Seco S.p.A. Stock

Good afternoon, everyone. Thank you very much for joining us today for SECO's first half results call. As usual, our CFO, Lorenzo Mazzini, will cover the key items of our financial results, followed by our CEO, Massimo Mauri, which will share with you a detailed update on our strategy as well as some trends on our business.

About our first half 2026 numbers, please let me highlight that this will be the sixth quarter in a row where we delivered top-line and gross margin numbers ahead of our guidance. We delivered a solid first half performance amid supply challenges. To be specific, we made in the period significant investments into working capital with strategic purchases of memories and PCBs, whatever SECO managing supply shortages of these components.

We will dive in more details in each of these KPIs in a second, but the 3 key messages we want to share are pretty clear and are here in the slide. The physical AI era is here, and the partnership that we announced -- just announced yesterday with NEURA with a new revenue stream, which will start on 2027, is a proof of it.

The second message is that our exposure to structural growth trends like Energy Grid Infrastructure, Aerospace, and Defense is growing.

And the third message is that our new PCBA plants in Italy and China are now fully operational, enhancing capacity and customer proximity.

I now hand off the mic to Lorenzo for the presentation of our financial results. Please, Lorenzo.

Thank you, Marco, and good afternoon to all. Let's start having a look at the group's financial highlights in the first half of 2026. Edge computing business recorded a plus 6% year-on-year growth despite the difficult situation on the procurement market for memories in particular. I wanted to stress that despite the shock in prices and lead times, which implied significant renegotiations with customers and suppliers, we were able to serve the market, preserving our margin and recording such growth.

Useful to report that software recurring revenues grew in the first half of 2026 compared to the first half of 2025 by 13%, growing an increased usage of our Clea software framework. A very positive result comes from gross profit margin. We were able to improve it despite the important increases recorded at the bill of materials cost level.

We successfully passed part of our cost increases to customers. The group benefit in the period also of a positive sales mix in margin terms. Adjusted EBITDA reported in the period a slight reduction explained by a discretional increase in OpEx. The group increased its indirect personnel headcount by about 20 people with respect to the first half of '25, primarily in R&D, so research and development, to support the strong project pipeline and logistic to support the opening of the new production plant near Arezzo.

Useful to point out that part of such logistic expenses will be reabsorbed from the next quarter, on which is expected a better operating leverage driven by the volume expansion we are forecasting. Passing to comment our sales breakdown in the first half of 2026, I want to highlight the good growth of EMEA from a geographical standpoint. It was mainly driven by the rebound of the German market, which is in terms of weight, the most relevant for SECO.

Regarding instead the split by vertical, SECO continues to have a great diversification with the industrial sector being for sure the most dynamic one.

Analyzing our first half 2026 profitability performance, the EBITDA margin records a reduction of about 1.5 percentage driven by other personnel costs. The driver was spending over research and development to support the future growth and over logistic for the setup of the new production hub near Arezzo. Part of such logistic indirect costs will be recovered already from the third quarter on which we expect to benefit a good operating leverage level. Passing to adjusted net financial position after extraordinary production CapEx grows by about EUR 6 million respect to year-end due to inventory expansion.

Strategic stocks of critical memories were implemented to put in [ safety ] deliveries to customers. Moreover, the expansion of material lead times drove the necessity of increasing inventory levels. The about EUR 18 million of higher inventory was counterbalanced by a solid cash generation impacting, at the end of the semester, the adjusted net financial position by EUR 6 million. I close my remarks underlining that despite this growth in net debt, our leverage position remained close to 1x EBITDA, so a level of real excellence.

I thank you for your kind attention, and I pass the floor to Max to continue our flow, our presentation. Thank you very much.

Thank you, Lorenzo, and good afternoon to everyone. Let me now walk you through what are, in my view, the key highlights of this publication. The first half was a resilient, a solid top line in a very complex supply chain environment. The momentum is now clearly accelerating. We expect an all-time high EUR 60 million revenue in the third quarter, which is a 25% progression year-on-year.

Order intake is at a record level as well, up 55% year-on-year and in absolute terms around EUR 50 million. This gives us a good visibility for the coming quarters and beyond. And the gross margin is rebounding too, back on 56% in the second quarter, up almost 4 points or 400 basis points quarter-on-quarter, addressing any concern on our ability to source key components and pass through the price impact to our client. I think what is important is the fundamental behind these numbers are solid.

The Clea recurring revenue is up 13% year-on-year, and our book-to-bill is 1.4x. We have also secured more than 50 new design wins with different new customers and new logo. And we have internal production capacity now up to EUR 350 million. In short, the business is healthy and is gaining traction. Most importantly, this performance was achieved in a particularly complex supply chain environment.

During the first half, the electronic market continued to face components allocation constraints and significant extended lead time from the key silicon vendors, driven especially by the growing AI demand for data center infrastructure. In this context, we proactively secured strategic inventory of critical components. As I really think the EUR 18 million that we increased in revenue are really good and like a gold right now to be able to fulfill and be for the customer demand. This gives even greater value to the results delivered and work done position us well to continue executing our growth strategy in the period ahead and gaining a competitive advantage.

So we discussed about physical AI already in the past, but now it's tangible, it's just started. And I really think that this end market will be a strong new end market for our company. I think physical AI means when a machine starts to perceive and interact with the reality. And this is exactly where the SECO offering and our technology is really competitive. And I think we are one of the best companies as per our positioning in the world to really succeed in this new vertical. I think all our new products are AI-powered by design. They use next-generation chips, and they have dedicated AI computing built in. It opens new markets for SECO, robotics, drones, aerospace, defense, and many others will come.

I think this will accelerate our growth path into '27 and beyond. We believe SECO is really uniquely positioned by combining our hardware together with our Clea platform to fulfill the markets demand. Our strategy is simple. We build a one scalable portfolio across different kind of silicon vendors and different kind of technology to really intercept growing end markets.

Looking better this strategy, we are splitted across many verticals, but the most important one are, for sure, Industrial Automation, Aerospace and Defense, robots and drones, energy, medical, and smart device in general. In every one of these, we offer hardware with an AI built-in, and more importantly, we are offering also our Clea platform on top to an end-to-end unique solution.

In terms of partners, Intel, Qualcomm, NXP, and others, I think it's important to mention that our strategic partnerships are starting to pay off. I think thanks to that partnership, we can serve many customers with different kinds of needs using the same strong platform. And this is how we can reduce the risk, increasing the ROI on our R&D investments and scaling our growth capacity.

So let me give you a concrete example, the autonomous factory. So this is the vision under which we will see smart cameras, AI-powered screens, robots, and mobile vehicles all work together. This is our real ecosystem and is where SECO is present in every part of it. The market is going definitely in that direction. This is one of the keys of our future strategy. And I think that it's really important to mention 70% of our customers tell us they want a technology partner, not just a supplier. Why? Because the level of innovation required is pretty high. And the growth number along this such of vertical is pretty high.

Robotic investments are expected to roughly double every year through the 2030. I think this is a very huge opportunity, and we are built to perfectly capture it. So why we are so confident? I think because we are offering something unique. So SECO is now covering the entire value chain that is critical for a client, from the powerful edge AI hardware to a dedicated software framework to deploy AI directly on the device at the edge and a unique marketplace of AI algorithms.

Together, this is a full stack from hardware to intelligence to value-added services that customers can really build along our technology. I think it's important also to underline that thanks to the strong partnership, the technology partnership that we built over the last 5 years with the main silicon vendors, this kind of ecosystem is becoming even powerful. Talking about a developer community, here is a good example how we want to grow. And how I think the partnership that we are building are really playing like an ecosystem. For example, the work that we did with Arduino and Qualcomm, Arduino, by the way, is one of the largest developer communities in the world.

And I think having this such of community behind it is very good for prototyping. But when they are ready to scale from prototyping to industrialization, from samples to mass production, this is where SECO come in, and this is where our product and the fact that we design our products pin-to-pin compatible both on the hardware and software side, meaning that the immigration is smooth. There is no need of writing any single line of code. This is where the value for the customers is huge, accelerating their time to market, reducing their investments.

So let me now show you another example on a new edge AI mission-critical controller that we are building together with Intel. This is a rugged device. It's fanless. It runs on battery and works in the field. It is the latest Intel Panther Lake technology, and it has on-device AI for situational awareness. This opened the door to high-value defense applications and very big large customers. This example, I think, represents the entire SECO strength and competitiveness that started from the design, integrating rugged systems, advanced electronic design as well as HMI display. So now we arrive at the major announcement we made last Friday.

I think SECO has signed a strong strategic partnership with NEURA Robotics, a European leader in cognitive and humanoid robotics. SECO will deliver custom Qualcomm-based solutions. Our product will be inside all the 5 NEURA robot types, humanoids, personal assistants, robot arms, mobile manipulators, and quadrupeds. In the humanoid alone, 5 SECO models are on board. So our content grows with the complexity of the robot. We are covering from the brain to the smart limbs of the robot where basically NEURA, which is a unique technology from NEURA, is really having the NEURAVERSE platform that is basically replicate the functionality of a neurologic human-centric infrastructure into the robot. Well, our computing is interacts with the AI platform and makes it happen in a daily basis life.

I think it's important to mention that mass production is planned for the first quarter 2027 already. I will give you more colors on the number in a while. We are also planning to deploy these robots inside our own facilities. And I think NEURA is one of the best robotic companies in the world, definitely #1 in Europe, but really fighting to be a leader, a worldwide leader.

And I think we are really proud to have -- to be a core technology partner for them and to help them to scale in a huge mass production expected for the forthcoming years. I think it's important also to give you an update on our operations and our production capacity. As you know, we have increased our footprint and production capacity in Europe as well as in China.

We have now two basically new plants up and running, giving us a total full capacity to reach up to EUR 350 million in revenue. I think now -- okay, now it's time to have a look to the numbers. I think our incoming backlog is clearly improving, up 55% year-on-year on a July year-to-date basis. And our book-to-bill ratio has been constantly above 1, which is now 1.4 to be precise, already for many months. This is not a onetime spike. This is a healthy consistent trend that will continue over the course of the forthcoming quarters.

Now our guidance for the third quarter. We confirm our revenue of about EUR 60 million, plus 25% year-on-year. This will be the highest quarterly revenue in the SECO history. I'm really proud about this. Looking ahead, I can anticipate that visibility on organic growth keeps improving. This growth is broad-based, has come from many different end markets and new logos.

By looking at the order intake and book-to-bill KPI and factoring the new partnership, I think I feel confident in stating that the market estimates for the 2027 are a bit behind the schedule. So before we will share a complete view on the 2027 later this year, as a hint on what is coming, just let me add that the NEURA agreement will count for not less than an additional EUR 25 million revenue already in 2027.

So I think you should take it into account when you make estimations on SECO now on.

Let me close here, and thank you again for your attention. We are now happy to take your questions. Thank you very much.

[Operator Instructions] The first question today comes from Marco Vitale.

It's Marco from Mediobanca. Just one from my side. You spent -- in your final remarks, you mentioned that you have a strong pipeline and the visibility is growing over the organic growth trajectory. The question is, how confident do you feel that the EUR 60 million revenues per quarter could be the new run rate over the coming quarters and whether this will support, say, operating leverage to bring the EBITDA margin consistently above 20% level over the next quarters?

I think having the EUR 60 million in revenue in mind is clearly that we will come out with an EBITDA above 20% because the operating leveraging, which is actually pretty strong considering 75% more or less of our OpEx as fixed OpEx. So therefore, our operating leverage is significant, especially when we go over EUR 50 million. I think looking ahead, as I said, the market consensus was basically expecting SECO to be in the range of EUR 245 million in 2027.

Now I am adding at least EUR 25 million in revenue coming from the NEURA partnership. So therefore, I think the magnitude by quarter will be even higher of EUR 60 million each. We will see how proportionally the growth will be deployed into the 2027.

I would say I would like to be more specific on it later during the year. But generally speaking, I think the expectation that we are having for -- as a mix in between our strong demand and strong pipe order intake book-to-bill together with the new big partnership with NEURA are now facing a target of at least EUR 270 million for the 2027.

The next question now comes from [ Adrian Giraud ].

Excellent. Really interesting and happy to see that you have new partnerships. My question regards those partnerships. From the previous meetings we had, my understanding was that your new big partner was Raspberry Pi with the Arduino board. In this presentation, seeing that it's used mainly for prototyping, I'm wondering if something didn't go quite as you hoped with this partnership and how it works with Qualcomm. I'm very happy to see that you're doing pin-to-pin compatibility, but I was wondering about this particular partnership.

Right. So first of all, I'm sorry, maybe you are making some confusion because Raspberry Pi and Arduino are both SECO partnership but are two players, actually competitors between them. All of them are referring to the developer market. The difference in between is with Raspberry Pi, we built a Pi Vision, which is entering now into the mass production phase, which is definitely good because it's adding new revenue out of this partnership with Raspberry.

The Arduino pin-to-pin compatible IQ8 design that we did based on Qualcomm chipset, it's a completely brand-new product, meaning that we are receiving a lot of demand out of it from basically all the regions.

Keep in mind that we will be in mass production with IQ8 later in 2027, starting by the end of the first half. So therefore, to see the results of the partnership we did with Arduino joining the program works with Arduino, Arduino is a Qualcomm-owned company. We will attend second half 2027. Just to complete the picture, it is normal in our sector that when you make a partnership, you will see results after more or less 2 years from the beginning of the partnership because this is typically the time to market that you need to wait until to grab fruits.

I think also looking into the past, what we announced the big partnership we did a few years ago with Qualcomm is definitely now starting in having the first big payoff, but I can tell you it's just the beginning, more to come. Thank you very much for your question.

We will now move on to the next question. The next question comes from Aleksandra Arsova.

A couple of follow-ups. The first one is again on the collaboration with NEURA. On top of your expectation on revenues for the next year, do you expect to have maybe some additional R&D or CapEx in order to develop this new partnership or you are already [ ready ] with the existing capacity innovation you carried out recently.

And the second one is maybe some color on Germany. You mentioned during your presentation that Germany showed a little bit of recovery. Just maybe some more color on what is the growth rate you are seeing in Germany and what kind of growth effects you are expecting over the coming quarters.

Right. First of all, about NEURA, I think we are well covered in terms of growth CapEx already for the entire 2027 at least. We are now working on the '27 budget under which we are evaluating eventually growth CapEx to sustain not the '27, but the '28 and forthcoming demand, not only from NEURA, but from all the new logo, which are not so few that we are now analyzing, and we will come out with a clear plan later this year.

I don't remember exactly Germany. So Germany, I think, is going well, and this is also a structural basically change, meaning that a good portion of the increase into our order intake is coming from there as well as looking at the pipeline, we are expecting to see Germany growing a different growth path in the '27, definitely better than in the near past.

Just a small follow-up again on CapEx. So currently, I assume like EUR 20 million, EUR 25 million per year of run rate CapEx over the next few years is something that is consistent with the same you are sharing right now?

That's correct as a basis.

We will now take the next question from Bharath Nagaraj.

Congrats on the results and the continuing momentum. Just a couple of questions from me, please. On the NRE revenue in Clea being lower this year versus last year, does that mean that there are lesser customers currently trialing Clea? How should we think about the pipeline of the potential recurring contracts that you could win from customers still trialing Clea? That's the first question.

The second one, if I may ask that as well. Given investments in the inventory this year -- at the start of this year, how should we think about operating cash conversion from your EBITDA for the full year?

Right. I think on the first point, we changed completely the business model. This is something that I already mentioned to you all, but I would like also to repeat this one because I think it's an important point. What we did was basically lowering, actually proxy to zero, the NRE fee that we are charging to the customer to adopt Clea and to move our offering much, much faster, much easier from a client point of view into recurring revenue.

We will announce something specific later this year on Clea, which I cannot anticipate, of course, today. So I hope that what I told right now, it's quite enough to explain how the recurring revenue part is growing and the NRE are decreasing. I would expect this trend to continue and because ultimately, our goal is to increase and produce a good stream of recurring revenue, which is all basically 100% of EBITDA conversion as well as all into our cash generation.

On the second point about EBITDA conversion, I pass the floor for a while to Lorenzo, our CFO, which could be more specific on it.

Thank you, Max, and good afternoon. Well, for this year, as you have seen, we are investing a lot in the inventory to secure our capacity to deliver to the customers. So we was pretty good in cash generation of about EUR 12 million respect to the increased inventory. So I expect to get the same in the second part of the year, so in the second half, maintaining this proportion, even if the biggest investment in the inventory has already been done. So we do not expect other significant investments in the inventory.

Okay. Okay. May I just ask one more follow-up, please. Just in terms of the modeling for gross margin, given where you are right now, the price increases and the visibility that you have in the order book, are you more comfortable guiding to a higher gross margin for the second half of the year? I know the market is already expecting that, but just thought I'll ask you. And in terms of the order book, can you remind us as to how quickly that typically converts into revenue?

Right. I think on the order backlog side, we typically have between 60 days and 6 months -- so 2 months and 6 months of conversion into revenue. I will say that due to the environment in the supply chain, I think nowadays, it's better counting 6 months between order book to revenue. Looking ahead in terms of gross profit margin, I think what we achieved in the first half is very good.

I think we hope to keep it also for the second half. It's really difficult for us to give you a color -- a specific color because there are too many things that are moving. So it's really difficult also for us to anticipate something specifically. But we think we can hold what we get -- what we got already in the first half, which actually was pretty good in terms of business model from my point of view. So thank you very much for the follow-up, Bharath.

So currently, we do not have any questions queued. So we will wait just a few moments to give everyone the opportunity to ask a question. We will still wait a few moments to give everyone the opportunity to ask a question.

I think let me now... sorry.

Sorry to interrupt. I see that we have a question from Arianna Terazzi.

I have a couple of questions, maybe clarifications. First, on the partnership revenues, the NEURA Robotics partnership. I assume that in 2027, revenues will be generated mostly you said from the first quarter, but I assume a gradual ramp-up throughout the next year. If you can confirm this?

And second, a clarification on personnel costs. If you can help us in assuming the normalized level of personnel costs over the next few quarters and years?

Right. I think on the NEURA side, what I said that I can repeat to you easily is we are expecting as a total for the '27 year not less than EUR 25 million additional new revenue. So therefore, we are expecting it to progressively into the quarters. So starting from the first quarter, but gradually increasing quarter-by-quarter because NEURA is really thinking to increase significantly as we go the demand progressively also into the '28, '29.

We signed a very long-term partnership agreement. So therefore, we will have results well over the 2030 -- on the personnel cost, I think this is a very specific question. I think Lorenzo and Marco will be glad to follow up to you on -- in a different call, a specific one because it's so specific that maybe we needed to make some deep calculations in it.

Roughly speaking, we are talking about something less -- just less of EUR 1 million, but I would prefer my team to double check it carefully before giving you a number.

I see that Arianna does not have a follow-up question. So we wait just a few moments to give everyone the opportunity to ask. As there are no further questions, I will now give the word back to the speakers for any final comments before bringing this presentation to a close. Thank you.

Thank you very much again. We will be around on the street in the next few weeks. If there are any further questions or clarifications, our Investor Relations team is always available. Thank you again for joining us.

Good afternoon, everyone, and thank you very much for joining us today for our quarterly earnings call. As usual, our CEO, Max, will share with you a detailed update on our strategy as well as some trends on our business. And before that, Lorenzo, our CFO, will cover the key items of our financial results.

But first, let me start with the usual snapshot of our first quarter numbers. We are kicking off the year with a 3% year-on-year top line progression in line with the guidance we had given to the market. In what remains a complex market environment for memories, our P&L has shown strong resilience, both at gross and EBITDA margin level.

The quarter was also punctuated by good momentum for our hardware business with our new modular vision product line receiving strong early interest as well as for our Clea division, which is seeing a high level of conversion to long-term recurring contracts as illustrated by the Hitachi win and the 20% year-on-year revenue progression. All of this continues to support a positive outlook for the year and keeps unchanged our 2026 management objectives.

Now let me hand over to Lorenzo to go through our full year results in more detail.

Thank you, Clarence, and good afternoon to all. I want to start by pointing out that this first quarter was marked by further and significant increase of memory costs with an impact on the availability of those components. In that context, the group was able to react promptly, securing the critical materials and negotiating with the customer the measure to protect its profitability.

Therefore, a 3% growth in net sales versus Q1 '25 is for us an important result given the two very different market context. Regards gross margin, we recorded in the quarter a level of 52%, one percentage less than Q1 '25. We are really happy about this result, considering the spike in the memory prices, we were properly able to manage from a purchasing point of view.

In the quarter, we registered also a positive sales mix in profitability terms. Passing to EBITDA, we recorded a minus 1% of profitability, primarily explained by gross margin and by lower other revenues. This including mainly grants over R&D development, which will be partially recovered in the next quarters.

Having a look to the sales breakdown by geography, I want to highlight the good performance of EMEA, Germany, in particularly, driven by the important growth quarter-on-quarter of customers like Shearer and System, Coesia Group entity. By industry, I want to point out that the industrial vertical is growing pretty well, while banking decreased as expected due to the completed rollout of our Edge payment model over the tobacco sector.

Most important is the 20% growth quarter-on-quarter of Clea recurring revenues achieved thanks to the progressive penetration of the platform among customers. Analyzing our Q1 '26 EBITDA performance, we were able still considering the cost, thanks I was mentioning before to preserve a profitability close to Q1 '25 level. We recorded a stable OpEx and similar operating leverage. The 1% EBITDA margin reduction follows mainly the impact of component cost increase over gross margin.

I want to point out that from the second quarter, our price increase actions should start to take effect. Adjusted net financial position rose by about EUR 7 million respect to year-end due to inventory expansion. We reacted immediately to the memories cost spike through strategic purchasing of stocks at acceptable prices. Besides, we had to take in consideration the increase in procurement lead times and so enlarge our inventory level. Despite this growth in net debt, our leverage position remain pretty solid.

Thank you for your kind attention, and I hand over to Max for the business update section. Thank you.

Many thanks, Lorenzo, for this clear presentation, as always. Let me start with a bigger picture what underpins our strategy. We are witnessing a fundamental shift in the way how the artificial intelligence is begin -- rolled out for industrial application.

The direction of travel is clear from the cloud to the edge as an increasing begin deployed directly where decision need to be made on field device close to the action. This shift is being driven by three core factors: one, faster real-time decision-making in mission-critical environments; two, improved cost efficiencies at scale; third, and greater resilience and data protection. As a result, we are seeing the emergence of a new class of AI-driven application, and this plays directly into our core capability. This is exactly where Seco is strategically positioned. And this is where the intersection between the edge AI and all our end-to-end technology capability really play a crucial role for the customers.

So let me now show you how we translate this positioning into concrete solution. So -- here in Seco, our approach is end-to-end vertical integration. We addressed a broad set of application where Edge AI can create tangible value. This includes industrial automation through HMI, scalable embedded models and advanced robotics, including autonomous and humanoid system. And this sector, I can tell you, is starting to give us very good results, especially considering the business in the '27 because we are getting traction with a couple of very good and very large robot maker.

We are also active in the high-performance vision application, Intelligent Retail and Automatic Vending where edge analytics improve customers' experience and operational efficiencies. In addition, we support a critical infrastructure such as smart energy grid, security system and medical devices, all of which require reliable real-time data processing. And of course, we are more than ever a key partner in more specialized domain like defense, aerospace and drone. And the areas where we are facing a very strong demand from the market.

So having given this such of positioning, let me now to continue with some feedback that we are getting from the market by the launch of our modular vision, which is offering a very good beginning phase of market adoption. The core idea is simple but powerful, a standardized modular HMI platform that can be configured across different chipset and application needed. This approach brings multiple benefits. For Seco, it reduce R&D complexity and enable a more scalable business model. For customer, it's shorten their time to market and simplify the integration, thanks to our ready-to-use customizable solution.

We are seeing this translating into a grow pipeline across many verticals like Industrial automation, Medical, Smart building, Energy and Professional appliances. And we are expanding our go-to-market through distributor and strategic partnership with leading silicon vendors. These altogether are very good early signals and the sales data that we are receiving are very positive.

I think that talking about the traction that we are seeing in the modular vision is almost the same also with Clea and the customer engagement is really growing also in this specific business. And we recently secured a multiyear, multimillion agreement with a Tier 1 global leader in electrification. This is a strong validation of our end-to-end approach. Hitachi was looking for a secure and scalable way to digitalize distributed energy assets, including data collection, real-time processing and device management across a global fleet.

They also needed to unified platform capable of handling different kind of hardware, both new and installed base. Our Clea platform was selected because it's a very complete product with strong differentiation factors. It enables secure data transfer, fleet management and Edge solutions for AI models and for immediate deploy of this model into the hardware.

All of this with a very agnostic approach on the hardware side, meaning that our platform is capable to run Seco as well as no Seco hardware and therefore, can be used successfully also for the retrofitting program that Hitachi had in place. I think that this is a very good example of how our technology stack can address complex large-scale industrial needs. And this project move into the deployment, they also start to impact our revenue mix, which brings to me the next point.

So one of our strategic goal is to increase the recurring component of our revenue on the software side. As project progress from the deployment -- from development into deployment, more devices get connected to CLea platform, and this drive recurring revenue growth. In the first quarter of this year, the recurring revenue presented 60% of the total mix and showed 20% year-on-year growth.

This is an important trend and confirms that our platform-based model is gradually getting traction. Of course, you will see this growth factor continue growing over the next for coming quarters because as much as our strategy of deployment go into revenue as much as this progression will be even better.

Let's now look at the order intake, which provides a good visibility on the future performance. We are seeking the continued momentum in order intake. The pipeline is converting into confirmed orders at a healthy rate, contributing at a growing backlog and improved visibility. As you can see, we have a very good data point like the 60% of the order intake year-on-year counted from January to April. And this is encouraging, particularly in a market environment that remain somewhat volatile.

At the same time, our order book-to-bill performance remained consistent, which suggests a balanced flow between demand and delivery. Again, we view this cautious optimism as a positive trend but one that we want to continue to monitor because it's a tough year, supply chain, macroeconomic tensions, geopolitical tensions. So a lot of things are happening as we speak. And therefore, we need to continue to monitor it very closely. But I can tell you that data are growing and moving definitely in a positive direction.

So looking ahead, the second quarter of the '26, the environment remain, as I told you, complex. However, the year started with a solid pace supported by continued demand for our product and our solution. We expect our revenue for Q2 to continue along this trajectory at EUR 50 million plus revenue. We think that this growth factor will accelerate significantly in the second half of the year, and this is based on an already taken orders. And therefore, we remain positive for the rest of the year.

Overall, our priorities remain clear, executing on our pipeline, scaling our recurring revenue base and maintaining discipline in a still uncertain environment, especially on the cost control. In the summary, we see encouraging signals across multiple dimensions, technology adoption, commercial traction and order momentum, while remain focused on a consistent execution. I think that's all. I hope that this presentation has addressed all the key points, and I want to thank you again for your attention. We can now open the line up for questions. Thanks again.

[Operator Instructions] The first question today comes from Marco Vitale.

Two from my side. The first one is on the, say, 2026 outlook. On one hand, we noted that -- I mean, you provided very encouraging comments on the order backlog year-to-date and also on the, say, positive interaction you're having with your clients. On the other, we see still growth, say, in the low single digits, you're guiding for a flattish revenue trend basically in the second part of the year. When looking at consensus numbers, top line is still increasing at, say, high to high single digit to low double digits, requiring an acceleration in the second part of the year.

So the first question is on -- if you can comment on this, say, different trends and which are the key factors that should underpin the, say, a very strong acceleration in the second part of the year, whether second quarter guidance is just driven by, say, temporary factor or slow backlog execution.

The second one is on the -- if you could provide us an update on the ongoing, say, supply chain tensions. You mentioned that the gross profit margin is just a temporary effect and you already increased -- planning an increase in, say, prices from the second quarter of this year. If you could share with us that if you still see this as a very temporary factors, you should be, say, able to overcome the supply chain over the next quarters?

And also, if you could provide us a rough indication of the magnitude of your share price increase.

So first of all, let me start with revenue. As you said, and I can confirm based on the trend of the order intake and the book-to-build that we are observing in this slide, I can confirm that we are expecting a significant growth factor in the second half of the year. This is confirmed based on the order as well as on forecast that we have from clients. But I would say this is something that will happen based on data. And I have no doubt about it.

On the margin side, I guided personally in the market over all the interactions that I had both in a public speech like this one as well as during all my meetings in the roadshow that the memory, we cannot think that having a so big and event like this one with a magnitude of 700% of price increase on the memory side, we cannot think that we can come out with having no impact on it, clearly.

As well as I confirm that we already secured with all the customers negotiation about the price increase. So therefore, we will see our margin improving over the next quarter. I would say the normal situation will be achieved in the second half of the year, but we will see a sort of progression as we go.

As Lorenzo said, first quarter was affected negatively by the memory for over 3% in gross profit margin, which was also positively affected by the recurring revenue increase on Clea in one end and a positive sales mix by margin in the second end, that was able basically to neutralize a large portion of this impact and we was able to see just 1%. That was good and I think is a concrete proof how the Seco business model is resilient also in a very tough market condition.

On the supply chain, in general, we are seeing and facing delay into shipping, especially with the boats. And therefore, also the guidance of the second quarter take it in account because we have components that will arrive later in the quarter and therefore, are not included into this guidance. But we was able also to did a very good job increasing our level of inventories, stocking a lot of memories to cover the entire 100% of the demand of our budget '26 as well as, I would say, a portion of the 2007 (sic) [ 2027 ] demand. So thank you very much for your question.

[Operator Instructions] The next question comes from Bharath Nagaraj.

Just a quick clarification on the previous answer, Max, if I may. Did you say that the delays in receiving some of the components, et cetera, has been taken into consideration for your Q2 guidance? Did you -- can you clarify that? I kind of misheard it, please.

Yes, I can. As I said, there was an unexpected delay into all the shipping basically over the box because they run a war. That's not a secret. So therefore, when we did our own calculation about the second quarter guidance, we had carefully reviewed our shipment dates arrival of the components and therefore, production dates available. And we took everything carefully in consideration. It will shift in some way some revenue from Q2 and Q3, and we will see a very good effect later in the year.

Okay. Understood. So my questions include the first one would be around the Hitachi revenue, the contract that you won. Has that already started contributing in Q1 to your revenue? And should -- how much should we expect -- should we start expecting it to ramp up during the course of the year from Q2 onwards?

And then a related question on Clea. Given the decline in the nonrecurring engineering revenue, obviously, because it's moved to the recurring revenue, the customer has moved to recurring revenue contract. Should we be expecting decline in Clea revenue for the full year given this mix effect?

Yes. On the nonrecurring revenue, absolutely, yes, because as I already guided the market many times, we changed our business model into Clea, shifting from a big NRE in the very beginning and the time to revenue between 1 year and 2 years into something that is more ready to use with a very low barrier in terms of nonrecurring fee let me say, nonrecurring fee.

So therefore, I would see the decline into the nonrecurring portion of the business consistent for the entire year as well as a strong growth of the recurring revenue just because the multi-year multimillion agreement we just signed with Hitachi, the good news. It will be already making a positive effect on the recurring revenue side starting from the second quarter this year, but will continue to give more and more positive effect as we go. And we have a good line of additional customers that are entering into Clea as a very short time to revenue now, thanks to the new business model. I think it will contribute to a further acceleration into the recurring revenue in the second part of the year.

That's important not only because it's proving that the strategy and the business model that we designed is working well, but it's important because it contributes even better to our profitability as well as to our capability to generate free cash flow.

That's very helpful. The last question for me is around -- just a question around your peer, Advantech, who I know are more into standardized manufacturing. They have a lower gross margin than Seco, et cetera. But in the context of them growing much quicker, I just wanted to understand if there's anything to call out with regards to the demand profile from your customers, Seco's customers versus Advantech.

I think what we are seeing into the growth of Advantech, we will see it historically speaking, and this will be true also this time sic to nine months later. And this is simple because the different kind of product we are selling. Basically, they are more based on a standard solution. And therefore, they have a time to revenue, which is faster than Seco. And so the positive effect of the demand, they capture a bit earlier. We are more focused on system HMI customized. So this such of product have a longer time to revenue.

And therefore, we are able to capture the same kind of trend in terms of growth, which is confirmed by the way, by our book-to-bill as well as by our order intake. And it will come into the results in the second half of the year. And also in 2027. So we will see a very positive trend into revenue and thanks to our capability to have operating leverage profitability starting from the second half of the year, but moving into the '27 in a very consistent way.

The next question comes from Aleksandra Arsova.

I think we have some problem in connection. So I would keep this one to go ahead if we have any other questions.

The next question today comes from Pietro Nargi.

The first one is on the organic growth. We have seen a 3% growth in the first quarter. I would like to understand what could be the organic growth at constant exchange rate since more or less 20% of your revenues are outside the EMEA. So I would like to understand what is the impact from the FX. I guess it would be negative since you are exposed to the U.S. dollar. So I think the organic growth at constant exchange rate could be higher than the 3% we have seen.

And the second question is on the OpEx side. we have seen OpEx almost stable year-on-year. I would like to understand better if this trend could be, let's say, a proxy also for the coming quarters. So just to have an idea on the part of these operating expenses.

Okay. On the -- on the exchange rate, I think you should consider between 1 and 1.5 in terms of better growth factor but as a constant effects. Into the OpEx, I think we are working with the entire team, especially with Lorenzo to control the OpEx. I think this is a good proxy.

However, keep in mind that as we are expecting, as I said already many times, an important growth into the second half of the year. I will suggest also to take in account in terms of OpEx because maybe we can have some temporary workers just to execute the production in addition during the second half. But as a company structure, I think we are controlling carefully the level every quarter because that is the level where Lorenzo and I want to keep the company also to scale in terms of profitability as soon as we will see the growth of the revenue accelerating.

The next question comes from Tommaso Martinacci.

Tommaso can you hear us?

Can you hear me?

Yes.

Can you provide more color on Germany in the first quarter, including its current weight on group revenues versus the historical level of 30% and clarify whether the weakness remain purely macro driven of -- or if you are seeing early signs of stabilization in customer orders even with the last all-time high order intake.

Right. So Germany is counting roughly speaking, about 30% of our total revenue and is growing in the first quarter was above 10% year-on-year, showing a very good growth factor, not only because the revenue we recorded into the quarter, but more important, looking at the order intake as well as the pipeline, which is growing every week in the region. I can confirm that the positive sign of recovery for the German economy are really happening right now. Meaning that we will see positive impact as we go and especially in the second half of the year as well as for the '27.

Looking to the situation of the order intake as well as the pipeline, despite the -- let me say, the environment condition, which is really tough here on war. War in Ukraine that is never stopping. I think a lot of problems on the supply chain, not only for memory, but shipping longer time to market. So all these such of things -- despite all of that, I think what is really exciting in this moment is looking how many large projects we are facing right now with new logo.

So new customers that we are winning also a lot of them actually with a very strong conversion rate into design win. It looks very promising also ahead the '26. But in general, the level of discussion that we are having both with existing and new customers is very good. It's actually clients are asking for more. in terms of innovation, in terms of new generation of project and all these such of things are mainly driven by the first slide trend that I showed to you during today presentation, which is basically the physical Edge AI. Physical Edge AI is happening. It's something that Agentic AI, LLMs are starting to be used into the HMI into the machine, into all the products that we are selling.

This is driving basically the adoption and the demand of the market at a very high level, very, very high level. And this is really good for the next future.

As there are no questions queued, we will wait just a few moments to give everyone the opportunity to ask a question.

As there are no questions queued, I will now hand back to the speakers for any final comments before bringing this presentation to a close. Please go ahead.

Thank you very much to all for attending. Clarence and I will be always available, and we will be on the street already later this week and then next week having meeting with many of you. So we will see soon.

Thank you again, and have a nice day. Bye-bye.

Good afternoon, everyone, and thank you very much for joining us today for what should be another exciting earnings call. As usual, our CEO, Max, will share with you a detailed update on our strategy as well as some trends on our business. And before that, Lorenzo, our CFO, will cover the key items of our financial results. But first, let me start with a snapshot of our full year numbers. While some of these figures have already been shared with the market back in February, we want to emphasize that this is now the sixth time in a row where we delivered top line and gross margin numbers ahead of our guidance. We will deep dive in more detail in each of these KPIs in a second, but the headline message is clear.

SECO business model delivers strong top-line growth and sector-leading profitability even in what remains a complex environment. This year gone by has been pivotal for our business, and you have seen us active on many fronts, including deepening our technology partnership with some global partners like Qualcomm, Intel, Raspberry Pi, and Axelera, winning significant new business such as the contract for the U.S. military with Boeing, which Max will discuss in more details later on and obviously, a succession of new offerings, both on the hardware and Clea front, making Seco every day more relevant as a key partner in industrial Edge to AI solutions.

This slide is a 1-page summary of today's presentation key highlights, so I won't spend much time covering it. But just note that the strong performance on both top-line and gross margin was echoed further down the P&L with an adjusted EBITDA margin above 20% for the year and on our balance sheet as well, with a net-leverage ratio dropping back below 1x. It's also worth mentioning that the momentum we have enjoyed in 2025 created strong foundations for another year of profitable growth in 2026. And while we acknowledge the fact that this is a tough market out there, we have the strategy, the global footprint and the offering to continue capturing market share and delivering value to our stakeholders. So now let me hand over to Lorenzo, who will go through our full-year numbers in more details.

Thank you, Clarence, and good afternoon to all. Firstly, I would say that 2025 was a great financial year for the Group. We were able to combine growth and profitability together with cash generation and decreasing Net Working Capital. This is a significant combined achievement in a single year. Now having a look at the Key Performance Indicator of our 2025 financial. Net Sales grew close to double-digit at constant FX. Sales was about EUR 201 million, offsetting the important depreciation of U.S. dollar registered in 2025. We have an especially great result in Q4 '25 with a plus-16 percentage growth rate quarter-on-quarter.

About gross profit margin, we closed the year with a robust 53.6 percentage, a 90-basis-points increase compared to 2024. The trend was driven by a positive sales-mix as well as a good purchasing performance on electronic components. At EBITDA level, we came back in fiscal year 2025 to a level of excellence with more than EUR 40 million in absolute terms and above 20% in relative terms. This important result is driven by operating leverage on a lower OpEx base by EUR 3 million, mainly thanks to a reduction in manufacturing costs.

Good results in adjusted net income as well, at 6.6 percentage of Net Sales, driven mainly by operating profitability. Despite the strong increase of Earnings Before Taxes, the Group recorded almost stable income taxes, driven also by the use in SECO S.p.A. of the Italian tax consolidation tool and by the important activation in 2025 of Patent Box over software developments. Commenting the sales breakdown by area, the key geographic areas grew double-digit year-on-year.

The only exception is Germany featured by a difficult economics and industrial context, which registered a double-digit decrease. However, please consider that Q4 '25 versus Q4 '24 sales in the German-speaking area recorded a growth again, showing some positive sign for our future prospects. Having a look to the end-market, most of our key vertical experienced a double-digit growth, in particular, industrial and medical. The exception is vending, impacted by the destocking matter primarily on the German market.

Passing to the adjusted EBITDA performance in fiscal year 2025, we recorded a 20.3 percentage in profitability, about plus-5 percentage points compared to 2024. The main driver of this result is the operating leverage effect of a significant higher sales on a decreasing OpEx base. OpEx, excluding non-recurring items, decreased about EUR 3 million in fiscal year '25, driven primarily by the reduction in the use of external manufacturers, privileging in-house production.

As per non-recurring adjustment, they are almost all represented by stock option actuarial value. Finally, a word on our Net Financial Position. In fiscal year 2025, the Group had almost EUR 9 million of cash generation in a context of significant volume expansion. This result excludes the extraordinary CapEx on the new production sites. In particular, we were able to further decrease Inventory and generate Cash Flow in a growing business context, not easy. On financial side, the Group reached a leverage ratio below 1x EBITDA, closing our deleverage trend after the Garz & Fricke acquisition in 2021. Thank you very much for your attention.

I give the floor back to Max to continue with our presentation.

So many thanks, Lorenzo. Now let me take some time to share some update on our business activity and recent progress. As you know, we are moving through a fast-challenging environment, so in a very complex market, but we continue to see strong opportunities as demand for Edge AI and smart-embedded solution is at all-time high and still growing significantly. This obviously support a positive outlook for the next quarter, as we remain committed to deliver value to our customers and to strength our long-term business partnership and foundation.

It's important also to mention that we reached a record level of client interaction during the Embedded World, which is one of the most important exhibition in our sector. I think this year, we received more than 110 customers and generated over 260 qualified leads that we are working on after the exhibition. These number are more than double compared to the previous year. This is a confirmation of the growing interest around our product and our solution.

During the Embedded World, we presented AI-powered HMI, brand-new advanced industrial automation solution, and cutting-edge AI demonstration with some of our key partners like Intel, MediaTek, NXP and Qualcomm. I would say the feedback that we received both quantity and quality of the feedback was really amazing, and I think the market is fully recognized our technology leadership.

And I think this is very positive for the continue of this year and also beyond. When we talk about our industries and in this slide, we try to represent to you which are the key vertical and end-to-end solution that we are ready to offer to the market. As you can see, from Industrial Automation to Energy, Medical, and Defense, we provide our clients with a complete set of Edge AI capability. Customers are asking for scalable solution, high-performance vision systems, and intelligent computing for any new generation of machine and robots.

And I think our Portfolio is covering this request extremely well. In the recent month, specifically, we saw particular interest in the Aerospace & Defense sectors with a lot of new business opportunity and design-wins that will drive a strong growth starting from the '27. These types of customers are asking for 10 years or more in terms of contract durations. So, it's going to start in 2027, but the duration of this growth will be very long. This come up on top of new vertical that like Robotics, for example, or Autonomous Systems, Drone, all these types of technology are new. And this represent a new vertical where SECO is entering right now, opening a lot of doors for further increase our capability to accelerate in the future our growth-path.

I think this is very important, and we are continuing to support customers to innovation, especially launching new hardware as well as new Clea functionality to enable them. And we can see our road map in this slide where -- as you can see both on the HMI, on the modular, and on the Embedded PC, we have a lot of new products that are out right now and will be out very soon. But I think we are building them with a lot of silicon-partner and this is driving us additional demand for product and new customers that are coming asking for modular-vision, for box, board, high-complexity application in Industrial, Health Care and Automation.

This pipeline give us a solid foundation for future growth, even in a demanding market environment. It also allows customers to transition more smoothly from Edge Computing to full Edge AI system. And I think one of the most recent win illustrate the value of this capability. In fact, as you know, recently, we announced a significant win with Boeing for a control device that operate on the U.S. Navy environment. This project in cooperation with Boeing confirm our ability to deliver high-end solution in extremely challenging environment. The device meet stringent requirement, operates under harsh environment and offer a simple and safe user interface for remote control.

I think this win is very important because demonstrate our hardware and software capability and how we can combine together a very strong, mission-critical product. I think talking about this deal, for example, is a deal where we receive a contract for over 25 years of production. So you can imagine how long is the product life-cycle in the Defense & Aerospace market. So I think, now is the time to talk also more about the software because the software is becoming more relevant, and this is driven by the AI.

As you know, AI is transforming basically the Industrial Sector. And any customer is asking or will ask solution to deliver and deploy AI directly on the device. And this is where our software platform Clea is becoming from a nice-to-have, which was since now in a must to have that is now on because with Clea, customers can train models, deploy them, and run them directly on the field device. This complete integration reduce the time-to-market of the customers and creating a lot of value for them.

To deploy a model on a device with just 3 click, we have introduced and we presented it actually during the Embedded World on a very innovative solution, which is Clea Studio AI. Just to show to you how it works, this is a no-coding experience where you need to bring basically the model from our Application Hub, which is an App Store, take them and use them into the studio, it enables basically any person also without any specific technology background, to deploy the algorithm to see the workload working.

And this is easy. This is fast, this is simple. And this is make it really available to everyone. And this is transforming ideas into practical AI-driven service that run on the device at the edge or in the cloud, based on the customers' choice. It is a key part of our strategy to continue to grow our Software Business. And thanks to Clea Studio AI, we can now simplify AI deployment, accelerate customer time-to-market reducing their initial investments.

And I think these 3 pillars are what will drive Clea adoption further. So, with our Ecosystem, customers can now deploy optimize AI models in a minute across any kind of architecture. We provide a comprehensive toolkit, including advanced software containers, simple app, and details deployment guide. This reduce significantly the pre-works and accelerate experimentation in a computer vision and deep-learning models.

The SECO Application Hub is a central element of our strategy because, thanks to it, we are creating an ecosystem of third party that, together with SECO, will offer to the customers a very end-to-end solution with a lot of use cases and a lot of verticalization software made application. Now, let me shift from products to operation because it's important also to have a look how we are strengthening our industrial infrastructure. We are very close to complete our building in Arezzo. This is 10 assembly line and production line with the implementation of Siemens OpCenter.

We are exchanging traceability, efficiency, and quality. This facility is also designed to met key certification standard across Defense, Transportation, and Medical, and other regulated industries. I think thanks to these investments, we will support internally up to 50% of further growth in our revenue. And it will -- together with the investments that we did in Hamburg with a new anechoic chamber, as well as in Hangzhou in China, where we expanded significantly our production also over there is representing a very solid industrial infrastructure to support our future growth potential.

So now, as you know, we are in a world very challenged. A lot of things are happening. Specifically in our sector, we are facing something on the Memory that it never happened before. In fact, we -- driven by big demand of Data Center for AI-application, price of the Memory. The Memory are really booming in the last 6 months. Anyway, we was able to face such a problem with a very good strong [indiscernible] as well as thanks to our capability to basically negotiate with customers, we was able to secure a good compromise for the margin to protect our margin during the course of '26 and '27.

Second, we are acquiring a lot of memories -- we are now covering almost 92%, 93% of the entire demand in '26. We are already covering half of the demand also in the '27 because we really think that this market could be a market that affected by allocation soon. And so we are securing our supply-chain and the supply-chain of our customers. I think this is another point where we are creating value for the customers. I think it's important also to mention that, thanks to our job, we will protect our Gross Profit Margin along the entire year.

I want to -- also to anticipate that the Q1 as well as the Q4 '25 has been -- will be slightly affected by this impact. But I think progressively, it will be recovered significantly well, and we will see it improving during the course of the -- already the second quarter and the second half of the '26. I'm really happy to see that we started the year very well. In fact, we record an Incoming Backlog, a very strong in February. It was basically a record, all-time record in our history, over EUR 30 million of order in a single month. This has continued also in March. So the trend looks solid.

This reflects an increase in customer activity and provide a better visibility for the coming quarter, confirming that the demand for our Edge Solution is accelerating. We remain mindful and market uncertainty, yes, but the order momentum is definitely a positive sign for our top-line performance. With this trend in mind, let me share our outlook for the first quarter of '26. We think we can stay close to EUR 50 million in the first quarter of '26. I think this guidance reflects both optimism and caution.

And I think it's important also to have in mind that together with these good results, we see strong customer interest for all the new product. Our pipeline is very, very high. So a lot of opportunity in a lot of different vertical and also the KPI that we are monitoring are showing definitely a very good momentum. I hope this presentation has addressed all the key point, and I want to thank you all for the attention. And now we can open the Q&A section. Thank you very much to all.

[Operator Instructions] First question today comes from Marco Vitale.

Marco from Mediobanca. Two questions from my side. The first one is, say, a clarification on the Outlook. We noted that a progressive acceleration in organic growth throughout 2025, and you also mentioned a very strong pipeline and backlog as of February. When we're looking at the Outlook for, say, the first quarter, you are guiding for mid-single-digit revenue growth that implies a sort of deceleration compared to the pace that you recorded in the second part of 2025. So the question is whether is this, say, Quarterly Trend affected by some, say, specific factors? Or what should be the pace for the following quarters, if you see an acceleration or basically, you say want to adopt a more cautious view on your growth Outlook, also mindful of the fact that Consensus is currently projecting a 15% growth for 2026.

The second question is on profitability. We noted that in Q4, there's been, say, a couple of items in terms of OpEx and Gross Profit Margin that, say, translated to lower profitability compared to Q3. And previously, you were mentioning also some noise due to, say, Gross Profit Margin for what concern the cost of Memory, and so on and so forth. So, the question is whether you see room for improving margins in 2026 in a context of growing volumes? Last question is on Working Capital and probably on Cash Generation that was very strong and better-than-expected. What have been the drivers for such, say, efficiency in terms of especially Inventories? And do you expect this, say, Working Capital-on-sales incidence to be sustainable also for the coming quarters, or do you expect some volatility due to also the Supply Chain issues?

Thank you, Marco. So, let's start from the first question about the Revenue Growth. I think looking back in the '25, we posted in the first quarter -- quarter-on-quarter growth, proxy to zero last year in the first quarter, to arrive finally on a 16% growth in Q4 '25. So, I think this year, the trend will be similar. Luckily, we are starting with, as you said, something in between 5%, 6% of growth already in quarter-on-quarter, Q1. But based on the orders and on the pipeline, we see it progressively growing during the rest of the year. So we will have -- we are expecting to have a very good year in terms of growth. So that's the first question.

So, second question is regarding profitability. I think in Q4, we discounted already a decrease on Gross Profit Margin driven by Memory. Memory costs are increasing. We do not have a magic wand, so we cannot simultaneously increase the price to the customers. We did it, but with a couple of quarters of delay. So therefore, we will see the impact on the margin continue, as I anticipated, in Q1, but will be fully neutralized starting from Q2 -- second quarter of this year.

On the Free Cash Flow, yes, it was really good, I think, driven by 2 factors. One is decrease in Inventories. And second is we did a very good job on receivable. And that was basically Working Capital optimization, which is structural in our Business Model in a normal environment. So I would expect to see some impact about it from the Inventory, not actually too much, because we are well-balancing the extra Inventories that we are doing on Memory covered by pre-payment from customers. So, it will affect our Free Cash Flow, but not too much.

The next question today comes from Bharath Nagaraj.

I have a couple of questions. On the new Arezzo facility coming online in Q2, I think. Can you help us quantify the expected cost benefits that you could potentially see during the course of the year? Should we think about that at a Gross Profit level or further down? And then secondly, on Clea, 2026 was the year where several customers who were on trial previously were expected to go into mass production. Is that still on track? And what level of growth in Clea should we considering in 2026, and how much will be recurring?

Okay. So about the new Factory, we will see a clear benefit in terms of cost, not actually on the Gross Profit Margin, but below the gross profit margin at the OpEx level. We introduced in this factory a lot of robotization and automatization. So meaning that we can make more product with less person. This is the end of the story. Therefore, you will see in the second half of the year benefits in terms of incidence on the OpEx side. About Clea, I can confirm it. I can confirm that we are close to sign a significant -- a very significant multi-year agreement with Large Customers. It will drive a lot of recurring revenue.

Apart from that, we have several customers where we are closing discussion entering into the Production Phase. We will see it progressively during the year, and I will be more precise, of course, at the mid of the year, while we will guide to the market with an Official Guidance, as always. Generally speaking, what I can tell you to you now is the adoption of Clea is going well. Discussions with customers are increasing based, as I told you before, especially on the AI-effect. So many customers are really interested now in deploy AI at the Edge, using this new technology to bring something new on their customer table.

And therefore, we are facing a lot of inquiry and a lot of customers' interaction about these topics. It happened also during the Embedded World, where we collect a lot of demand around the Clea framework in general and Clea Studio AI specifically. So I think definitely during the '26, we will see this business growing for sure, at a different and much higher-growth rate compared with the Edge Computing one.

If I may do a quick follow-up. In terms of the new capacity that's coming online in Q2, how should we think about the utilization of that -- for this year? Is there -- is it going to be slightly at the lower-end compared to what where you normally are at? Or do you think that you have enough Demand Visibility for this year to be at like 70%, 80% that you normally are?

I think this new production capacity has been done not to cover the needs of the '26, but to cover the needs of the Company at least by the '28, '29. So therefore, we will be able to have a Production Capacity Utilization in the range of 60%, 65% -- so well below our average, which is now in the range of 80%, 85%, giving us a lot of room of improvements in terms of velocity and capability to capture the demand that, as I said before, still strong. And therefore, we did a good investment in my mind because we clearly anticipate well a strong trend that is coming this year and make ourselves ready in advance was a very good move in my mind. Thank you very much for your question.

The next question comes from Aleksandra Arsova.

Just a couple of follow-up questions. The first one is maybe on -- generally on the sentiment. You mentioned before that the very good Order Intake you had in February is also continuing into March. And so, I assume despite all the macro and geopolitical situation that is ongoing. So what do you think is the reason behind this very strong Order Intake also in March? Your clients believe that these macro and geopolitical situation is only temporary? Or maybe just a little bit of color of why do you see still this very strong sentiment on your clients' end? And the second one, again, you mentioned Order Intake more than EUR 30 million in February, but just can you give you an idea of the Total Backlog at the end of February or maybe March, just to track the evolution over time over the coming quarters?

Well, so let me cover the last one first, and maybe we can go on this slide, Clarence, thank you very much. So we are not communicating the Total Backlog, but just to give you the sense is also the Book-to-Bill. I think the Book-to-Bill is very well above 1 in, let me say, a record-high on the last 3 years. I think that could give you a clear indication about the trend. Referring back to your first question. I think what is happening is geopolitical tension in some way, opening a very good windows for SECO, which is a West-based company.

This is important for a lot of customers here in Europe, as well as in the U.S. against our -- as you know, our main competition is based on Asia. And due to the tension and the geopolitical crisis around the world, I think many customers are becoming and considering more and more important to be West based partner to be a Taiwanese or Chinese one. So that is giving us definitely with customers that we was not able to serve before.

So new customer as well as the demand is still strong from the existing customer because we are now facing a technology-transition in between, let me say, the old Embedded Technology and the new Edge AI solution, meaning that a lot of customers really need to have additional computational power at the Edge, meaning into their device. And therefore, they need to order new device instead to stay with the older one that cannot support this such of elaboration of models directly on the device. I think so the combination of those 2 driver is really making the market good for SECO, even if I cannot avoid to mention that this such of crisis into Mid East as well as Europe, Ukraine war is really something that is make our life challenge together with the Memory, it's a tough year, but we are navigating into it extremely well. Customers continue to push for New Product and for having a New Solution, which is good for our business, and let's continue it. Thank you very much.

Currently, we don't have any question in queue. So we will wait just a few moments to give everyone the opportunity to ask a question. As there are no questions in the queue, I will now hand back to the speakers for any final comments before bringing this Presentation to a close. Please go ahead.

Well, thank you very much to all for your attention. We will be around at the STAR Conference as well as with a European Roadshow in the next couple of weeks together with Clarence, so speak soon, see you soon.

So good afternoon, and many thanks for all those who have connected to this call. Today, as usual, our CEO, Max will take you through the main updates in our business. And before that, our CFO, Lorenzo will run you through a detailed analysis of our financial performance.

But let me start with the snapshot of our Q3 numbers. There are 3 messages we want to convey today. First, our top line, which recorded another acceleration in growth compared to the same period last year. Second, our continuous margin KPI progression with both gross margin and EBITDA reaching their best levels in 2 years. And third, our guidance for the end of the year, which we are in a position to reconfirm both on top line and gross profit.

To complete this picture, we also wanted to reiterate some of the key milestones we achieved in the past 3 months. On the business side, this includes the launch of our first joint product with RaspberryPi, the Pi Vision based on the latest CM5 chip. We also launched our Clea Vend telemetry platform, consolidating our historical leadership in that vertical. And more broadly, our Application Hub continues to fill with a growing number of algorithm, on track to reach our target of over 150 dedicated solutions by early next year.

Let me now hand over to our CFO, Lorenzo, for a more in-depth look in our numbers.

Thank you, Clarence, and good afternoon to all. Let's take a look to the key financial highlights on the 9 months 2025 KPIs. We are up 5% year-on-year on sales with a plus 9% in Q3 '25 with respect to Q3 '24. Increasing from the plus 6.5% of the second quarter of '25, respect to the second quarter '24.

The growth is coming from all main markets, under recovery on 2024 overstocking context with the exception of Germany, which signs a minus 30% year-on-year.

Software business is growing for the recurring revenue part, a plus 11%, driven by the progressive increase of the connected devices to the platform.

For what concern, gross profit margin, really good performance is recorded in Q3; 25 with a 55 percentage profitability. This thanks to multiple factors: the contribution of software sales, a positive sales mix in edge computing on profitability terms and good purchasing results on electronic components.

But most important for us is the EBITDA indicator. We are plus 50%, 5-0, year-on-year with a 22 percentage EBITDA margin recorded in Q3 '25. Key driver of this result is the operating leverage over decreasing OpEx, thanks to lower manufacturing costs recorded quarter-by-quarter during this year.

Adjusted net income increased by about EUR 10 million year-on-year, primarily as a result of the EBITDA performance.

I want to point out the reduction of interest expenses in the period by EUR 600,000, thanks to the progressive deleverage and to the [ official rate ] reduction.

Passing to commenting the sales trend by area. It's important to point out that year-on-year, all key geographic areas grew at more than 20%. The only exception is Germany featured by a difficult economics and industrial context, which registered a minus 30%. Please consider that even EMEA, excluding Germany recorded a growth higher than 20%.

Having a look to the end market, our key verticals experienced a double-digit growth, Industrial and Medical, in particular. The only exception is Vending, impacting by the destocking matter over a German customer.

Let's pass to the adjusted EBITDA performance in the 9 months of 2025. We recorded that 21% in profitability terms with a really strong 22.2% in Q3 '25.

Other than sales and gross margin, the main driver of these results is the EUR 4.6 million OpEx reduction, this excluding nonrecurring items.

The other contributor to this achievement is the production efficiency consider that manufacturing costs decreased by EUR 2 million compared to the same period of 2024.

For what concern, the nonrecurring adjustments in these 9 months are almost all represented by the stock option actuarial value.

For what concern instead net financial position, in the third quarter, the group had a cash generation of EUR 2 million, adjusting the KPI, but the growth investment of the 2 new plants in Arezzo and China for a total consideration of EUR 3 million paid in Q3 '25.

On financial side, I want to point out that the good leverage ratio just above 1x EBITDA calculated on the last 12 months.

Thank you very much for your attention. I pass the talk to Max to continue with our presentation.

Thanks, Lorenzo, and good afternoon to everyone. Now let me spend some time discussing our business and its prospects going forward.

As you know, we are standing at the crossroads of technology revolution. Artificial intelligence is transforming the industrial sector, unlocking new ways to operate, optimize and scale business. Whatever is smart automation immersive human-machine interaction and real-time data monetization. All these are enabling faster, smarter decision and driving a dramatic transformation into the industrial field.

But despite this potential is a matter of fact that the adoption of the AI in the B2B nowadays remain slow. Why? Because OEM faced a fragmented tech stack, a poor interoperability in the complex stakeholder coordination, legacy system only the added to the challenge. That's why the winners in this space want to just offer powerful technology, they will radically simplify its adoption. And this is where I think Seco will mark a significant difference. And this is our mission to really become the better partner to simplify the usage of the AI at the edge.

Through the years, my vision for Seco has been to offer a fully integrated end-to-end solution. Now we are really there. Everything is ready, and I think thanks to it, we can really simplify and accelerate the adoption of edge AI for the OEM. In fact, with our Modular Vision HMI system and our own stack software framework, Clea, together we will -- all the recent launch of our dedicated AI algorithms Hub store. They will really offer an end-to-end solution, ready to be implemented into the OEM and solution and product.

So this is where our [ strategy ] in R&D will mark a significant differentiation factor between ourselves and the rest of the competition. And thanks to our decade of expertise, we bring now verticals know-how, interconnected solution, enabling new business model to accelerate further the growth of the recurrent part of our software business.

So if we go to the next slide, here, we prepared some example to make it simpler in terms of comprehension for everyone. This is divided and we will see it in 3 different kind of vertical, but you can imagine something similar, of course, for any vertical. This is where our capability to digitalize the product of the client, both on the hardware and on the software side, really make a huge difference also in terms of user experience.

So the picture is extremely clear. I don't want to say too much else. Just everything that you can see here is digital payment, tailored refilling, dynamic pricing, predictive maintenance, all this kind of value-added service unlocked [ tends ] to our software suite, Clea.

If we go to the next slide, we can see, in fact, how the vertical for the vending space Clea Vend is working. And this is an example of how our platform, which is hardware-agnostic works and really provide smart data and AI analytics ready to be used and leveraged by our customers.

Moving forward, I think this is another good example, taking it as a reference example for any kind of industrial factories. Here, you can see how we -- for Galbusera's, which is an Italian producer. We really simplify their production line, combining Modular Vision with Clea being able to directly showing on the production line, a lot of essential KPI, quality, production, so on and so forth to really help the customer to increase efficiencies as well as production numbers.

Another strong example on the energy is, of course, what we are doing with Hitachi Energy, where basically we combine, again, our strong expertise on the hardware part producing for them -- designing and producing for them an integrated grid computer to manage the distribution of the energies across the second station as well as integrating all the data [ within ] Clea. This is providing an unparallel solution to really help the customer to manage a lot of complexity and a lot of interaction between [ themselves ] and all their business partner.

So I think looking this as such an example and thinking about what we are doing into the Application Hub. You can really understand which is the potential, which is completely and expressed right now of our software offering. As we go, we are continuing adding new application made by Seco and also by partners to our Application Hub, which will be launched later in the beginning of January '26. And it will lock another piece of complexity providing the capability to the customer to really implement AI on a device very quickly and in a super simple user-friendly way.

All in all, all of these such solutions are always hardware-agnostic. And this is important to be able to cover also from a software prospective customers that are not using Seco hardware eventually.

So finally, let me introduce our launch on the RaspberryPi Modular Vision. This is an amazing new product, low cost, to cover the industrial demand. We will start to sell it during the first quarter of the next year. And of course, we are expecting to have an acceleration of our organic growth thanks to this one, this product, which is, by the way, 1 of a family of new products that we are launching right now, and we will expect to receive orders and therefore, revenue in the forthcoming quarter. This is important also to mention in this product, it's available, Clea. So the framework is already [ pre-styled ], potentially available with a few click for any customer.

So let me go into the investments that we are doing into the production side. In this picture, you can see the new facility, which is located near by Arezzo, our headquarter, at 3,500 square meter, very new building that will be up and running by the beginning of the second quarter next year and will increase our production capacity by 50%, and we'll provide those additional savings in terms of cost, reaching efficiencies at the maximum level.

I think we can go now to the KPI of the company. We have a solid KPI. I think this is kind of KPI are really helpful to understand also which could be eventually the future of our growth. Looking the backlog and the order intake, you can appreciate, but it is up by 10% year-on-year already. And our book-to-bill continue to be healthy and all this key indicators are really confirming the good trend and the -- of growth that we can keep in the near future.

Just to conclude my speech and leave space for a Q&A section. I want to reiterate and fully confirm our guidance, which is set at EUR 200 million plus in a constant currencies FX.

I think we cover all the main topics of this publication, and I'm now happy to take some questions, if any. Thank you very much to all.

[Operator Instructions] First question today comes from Mr. Marco Vitale.

The first 1 is on the outlook. We appreciate that you have confirmed your full year guidance. I was wondering if you could provide us some additional insights on the order intake trend? Also, what are the business pipeline as we are heading to 2026?

The second question concerns the profitability. Once again, you have delivered very strong operating leverage and also very healthy gross profit margin. Going forward, do you still expect, say, additional margin expansion coming from operating leverage? Also, take into account that you will ramp up the new capacity -- the new plant in Arezzo also in the first part of the year. So I was wondering if this could have some, say, headwind in terms of profitability expansion going forward?

Thank you. So about the revenue, we are expecting to -- the last quarter of this year, very strong with our revenue well above EUR 50 million. It will drive us into a lending figures which is fully confirmed, which is reflect and beat potentially the guidance.

I think all the orders are already there. It's a matter of execution. We are executing well right now. So I have no doubt that this part will be covered by the end of the year.

In terms of profitability, the good trend that we are having, I would expect it to continue because, in some ways, structure in terms of business model. As we go, we will continue to increase piece-by-piece proportionally on the revenue side that is coming from the software. And it will provide us additional headroom to improve our profitability.

As well as the new building, I would assume to see it fully working by some times in May next year, it will drive in the second half of the year, of course, efficiencies and saw a reduction in terms of our production costs.

Next question today comes from Mr. [ Filippo Mazzoleni ].

I have a couple of questions. The first 1 regarding CapEx, out of the EUR 33 million one-off plan, could you please share the split between tangible and intangible and indicate when the remaining EUR 7 million is expected to be spent? I mean, in the second quarter 2025 or the first quarter 2026 or later?

And secondly, on gross profit, could you give a bit more color on the business mix driving the margin improvement and on the savings achieved on purchasing?

Right. I will cover the 1 on the gross profit, and we'll let Lorenzo to cover the 1 on the CapEx.

On the gross profit side is splitted between a mix of 3 positive factors. One, as I said, is the software. The other 1 is because we are able now to buy components at a better price without reducing the price to the customer, and this is giving us an additional headwind. And the last [ battle locally ] is, of course, due to a mix in the sales were medical and defense are more present against, for example, industrial or vending. And those 2 verticals, of course, provide us definitely a better margin than the others. So as a mix of the 3 is due to the -- this such results in the gross profit. The bottom line, I think, a good portion of it is long-term sustainable.

Yes. So thank you, Max. So having a look to the CapEx for these first 9 months 2025 and the split between tangible and tangible, we recorded about EUR 12 million in intangible CapEx on which, as you know, the biggest part is represented by the R&D capitalized over standard product. The residual part is tangible CapEx, and on this residual part, EUR 3 million are represented by development extraordinary CapEx relating to this new plant we are developing in Arezzo and China. For sure, the plant in Arezzo is pretty much bigger respect to the 1 of China. So the bigger part is relating of this EUR 3 million to the new plant in Arezzo.

The next question comes from Ms. Arianna Terazzi.

Yes, can you hear me?

Yes, we can indeed.

Presentation, Max. First, I would ask a clarification and expansionary CapEx. The plant in Arezzo will be ready next April. But when you -- but could you recall us when this production site and the new lines in China will be at full regime. And to avoid misunderstanding, is it possible to know what revenue level can we assume when at regime?

And lastly, and second and last, a follow-up on profitability and cost. So far this year, you were able to manage well components purchase. But I was wondering if you could provide more color on this front and an update on cost dynamics?

All right. So about the production capacity, we basically -- we will close our production facility in Tregozzano, which is another place nearby Arezzo as well, and we will start in mass production, basically 100% of activities in May into this new plant, which is again nearby Arezzo. And we will add starting from January also an assembly factory in China. Thanks to these 2 adoption, we have enough production capacity to product internally around EUR 350 million in revenue. So we thought it was good for our company to make these investments now to prepare ourselves for the next 3, 5 years where we see a potential very strong growth and to make these investments right on time, it's important to be ready to capture the grow later as it will come.

In terms of gross profit margin, mainly our capability to [ strategize ] their relationship with the key silicon vendors, which are partners of Seco like Qualcomm, Intel, NXP, and many others is providing us also the capability to buy components, CPU processor at a lower price or let me say, at 1 of the best price available to the market. It is giving us a competitive advantage in terms of pricing. And of course, headroom where we are improving our gross margin on the existing customers.

I don't know if it is enough, Arianna, or do you want more?

Thanks, very clear.

The next question comes from Mr. Bharath Nagaraj.

I have a few, please. One is just a follow-up on the net new capacity. Sorry, I think you said you're shutting down, if I'm not wrong, 1 of the old factories. And this -- the new 1 that you're building will take its place and you start production from May. So in terms of the net new capacity increase, what would that be? Is that 50% still? Or is that lesser than that? That's the first question.

And second 1 is around -- could you speak about any looming supply chain risk, for example, this Nexperia export ban, which seems to have now been lifted and also higher memory prices in the industry. How diversified is Seco in terms of the supply chain?

And the last one, just a further clarification on the CapEx, should we kind of assume -- we have EUR 20 million approximately of CapEx currently for 2025, 2026 each year, should we just increase EUR 5 million for each year for the new capacity that you're trying to build? Just wanted to make sure that I get that right.

All right. So about the first question, I confirm it's 50% net-net, meaning that from where we are right now, 50% plus. It will drive our production capacity in total at EUR 350 million potentially, revenue. That's for what regard the production capacity.

In terms of risk on the supply chain and what's happening with Nexperia, yes, you are completely right. It was a problem basically during the last couple of months. We did a lot of work with our internal R&D to select [ B2B ] compatible alternatives, which we are now validated. Hopefully, we had enough stock in our warehouse to fulfill the demand of the product by the end of the year. And so for the next year, we are replacing basically the majority of this such of components with new components in [ B2B ] compatible, validating them, thanks to our internal R&D very quickly and made them available into the bill of material to enable our purchasing to acquire the goods.

I think regarding the CapEx, as always, Lorenzo is 3x better than me to cover the point. So Lorenzo the stage is yours.

Yes. Thank you. For what concern the future and you are talking about our average EUR 20 million CapEx also if we take a look to last year. This is correct that EUR 15 million is in general, represented that we can continue to have this number for what concern intangible. We have, on average, EUR 5 million on tangible. This could increase a little for what concern the next year, including this development CapEx, but I would say in a range between EUR 3 million and EUR 4 million, not more for next year. And I would say EUR 2 million, EUR 3 million in addition for this year.

So development CapEx, but that will not change in a significant term our CapEx trend, our CapEx figures.

Understood. Just a quick follow-up, if I may. In terms of the October book-to-bill ratio, have you seen any further improvement from, let's say, the slight dip that we are seeing in the graph in September?

Well, you are meaning the order intake or the book-to-bill?

The book-to-bill, sorry.

Well, the book-to-bill is always like a cardio. And the reason why it's so simple, for example, it was higher in August and July because we had also holidays. So we did less production. And this is the reason why it's higher. When it was back and we made a lot of revenue in September, it went down, but it's not in absolute term. I would suggest to you guys to see the left part of this slide where you can see the order intake month by month. And this is where you can see actually the trend of the business.

No, absolutely. That's very useful. The reason I asked the question is because you have said in the statement about the book-to-bill is consistently above 1 for the first half, hence my question.

Yes. As I said, it is looking -- the book-to-bill is still above 1.

The next question comes from Ms. Aleksandra Arsova.

Can you hear me?

Yes, we can, indeed.

Okay. Great. And then a couple of questions or follow-up on my end. If I remember correctly, during your last presentation, you said that you have roughly EUR 24 million in design wins and new contracts that will generate, let's say, new revenues next year. So maybe an update if you are on track with these projects and if you see any risk on delivering this EUR 24 million. And if you are gaining, let's say, achieving new contracts, new design wins? This is the first one.

And the second 1 is maybe some clarifications on Clea. As I can see you increase likely the proportion of recurring revenues of the total, but doing some algebra, some maths, it seems that in absolute value, the recurring revenue stays at about EUR 2.1 million, EUR 2.2 million in the quarter, the same as the last couple of quarters. So how is the conversion rate of, let's say, project to recurring revenues going on? And what is the evolution of the recurring revenue you expect in absolute terms in the coming months and quarters?

Right. So let's start with the evolution of the recurrent revenue on Clea. We are expecting to see and to continue to see progression quarter-by-quarter. On the recurring revenue side, I think it will be next year much, much better because we have a few customers, but very important that we'll run into the mass production on the software side and therefore will contribute in the recurring revenue later next year.

In terms of design win, it's all confirmed, we got this EUR 24 million that are related mainly to the 2026. I think it's important to mention, based on our business model now, we are working on new customers and new opportunity, but if we get something now, you will have an effect maybe in the last quarter of the '26 or later in the '27. So we are at the full speed now to collect important new business, but -- that will generate additional growth, additional revenue later in 2027. But what you mentioned for the '26 is fully confirmed, is on track in terms of R&D so far. So, so far, so good. Thank you very much for your questions.

The next question comes from Mr. Pietro Nargi.

Two main questions. The first 1 is on the operating expenses. So we have seen a strong improvement on OpEx in the third quarter. And in particular, if my calculations were correct. There is a decrease on labor costs, both on a quarter-on-quarter basis but also compared to the third quarter of the last year. So I was wondering if this decrease in labor cost is also due to higher R&D CapEx over the quarter? This is my first question.

The second 1 is on the current market consensus on full year '26. So assuming the confirmation of the guidance for 2025, so -- and looking at the current consensus that is more or less EUR 230 million for 2026, that means organic growth in the mid-teens. I was wondering if you have any comments on that expectation? Also considering your order backlog is growing by 10%, so what is your feeling about current consensus expectation?

So as you know, Pietro, we are not used to comment the consensus. So we will provide, as always, as we go we will guide the market across our numbers as we are now in a phase to prepare the business plan '26, '29 for our board. So I don't want and I cannot comment the consensus.

About what you said on the labor cost, what you are thinking is completely wrong. So the level of capitalization on R&D is fully stable, even both comparing it with the previous quarter and in the previous year. The benefits that you are seeing into the labor costs are mainly driven by a couple of effects we did last year, and I mentioned I did it many times, a strong working reduction, our fixed cost, and this is a portion of that work and the efficiencies, basically that we had into the production made us capable to deliver, let me say, good revenue stream with less [ manned-operate ] cost with less cost of employees related to production. So the saving in terms of cost is coming from production, it's not coming from anything else.

Currently, we do not have any questions queued. We will wait a few seconds to give everyone the opportunity to raise their hands. As there are no further questions, I now have pleasure handing over back to the management team for any final comments. Thank you.

Okay. Thank you very much to all to follow this presentation. In the next -- for coming weeks we will be around, especially Clarence, in different kind of roadshow. And anyway, our IR team is always happy to be in touch for any further analysis. Thank you very much to all. See you soon. Bye.