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Edited Transcript of GFT.DE earnings conference call or presentation 8-Aug-19 8:00am GMT

Half Year 2019 GFT Technologies SE Earnings Call

STUTTGART Aug 10, 2019 (Thomson StreetEvents) -- Edited Transcript of GFT Technologies SE earnings conference call or presentation Thursday, August 8, 2019 at 8:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Jochen Ruetz

GFT Technologies SE - CFO, MD, Member of Executive Board & Member of the Administrative Board

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Conference Call Participants

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* Andreas Wolf

Warburg Research GmbH - Research Analyst

* Berenice Lacroix

Kepler Cheuvreux, Research Division - Equity Research Analyst

* Dustin Mildner

Pareto Securities, Research Division - Analyst

* Robin Brass

Hauck & Aufhäuser Privatbankiers AG, Research Division - Equity Analyst

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Presentation

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Jochen Ruetz, GFT Technologies SE - CFO, MD, Member of Executive Board & Member of the Administrative Board [1]

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Thank you very much. Ladies and gentlemen, good morning from Stuttgart, and welcome to the financial results of the first half year 2019. I hope you have the presentation available. It is on our website. We're sharing it in the webcast. So you should be able to follow.

Please immediately go to Slide 2, let's jump in highlights of the first half year. And we have seen a further expansion of client and sector diversification at GFT. We have seen 20% growth in the not top-2 client group, which was 19% in Q1. So we increased it to 20%. And the drivers are unchanged. It is around cloud, it is business development and agile methodology. It is Guidewire and other exponential technologies. The revenue share of insurance was still at 11%. And we, overall, saw revenues par with the year before.

Adjusted EBITDA is up 7%. But please remember that the IFRS 16 effects are quite big. And as expected, the earnings, the EBIT of the first half is burdened by underutilization and restructuring. We'll come back to that later.

The outlook for the year is unchanged and confirmed. Last but not least, we had a good start into the second half year. Maybe you've read that we have acquired a small company in the industrial sector in Germany with roughly 100 employees, strengthening our tech base for industrial clients. And we started our internal Guidewire competence center in Poland and in Spain to follow up on the strong demand for Guidewire implementation.

Let's jump into the numbers, Slide #3. The key figures. We see the revenue number for the first half year, EUR 211.03 million. It's kind of spot on compared to the first half of '18. V-NEO contributed EUR 10.2 million of revenues. So if you take that out, we're down 5% organically. EBITDA adjusted, heavily influenced by our IFRS 16, tongue breaker for me, 7% up compared to the year before, similar in the EBITDA.

And in EBIT, most of the IFRS 16 effects are already out of the equation. It's only EUR 500,000, which is lifted in the first half '19 compared to '18. And at the EBT level, IFRS 16 doesn't have any role at all. So that is really comparable and we're down 43% compared to the first half of '18.

Main drivers already mentioned in the first quarter, they have not heavily changed. We have restructuring charges worth nearly EUR 2.9 million in the first half of '19. First half '18, it was only EUR 300,000. So that's a strong increase. We see currency effects of minus EUR 700,000, which was exactly the same number in the first half of '18.

And then last but not least, we mentioned already last time that we see underutilization, which mainly hit us in Q1. So it is still roughly at EUR 1.4 million, not much happened or added to that in the second quarter of this year.

A topic not mentioned here but ongoing, and you know it because I mentioned it every time, a higher sales cost compared to the year before. We are compensating our top-2 revenue with new business, but the top-2 revenue is happening on a very efficient sales cost level, while the new business takes more sales effort. Roughly 4% on $25 million of compensated revenue, which costs us roughly EUR 1 million in the first half year. And this will stay for the time being. We have to grow those accounts into a more efficient size. It comes at a benefit and the benefit is a significantly improved client structure. Coming back to that in a second.

Slide #4, let's move forward and look at the quarter at hand. Q2 compared to the second quarter '18 is up slightly by EUR 1 million, although we had roughly 2% less billable days in that time period. So that's okay development. When we take the full half year billable days, we're more or less the same number in '19 and '18. Therefore, for the full half year, the billable days are quite matching.

When we look at the earnings, we have highlighted the IFRS 16 effects for you. And we do see that we are pretty much in line with the first quarter. Only IFRS is a bit lower than before. Okay. I think that's it to say about this.

In Q3, Q4, we do expect improvements over the first half, of course, because we have reiterated our guidance.

Going forward to Slide #5, revenue by segment. Let's start with the business segment, Americas and U.K. Here, we are up 5% in revenues. This comes mainly from M&A and a bit of FX effect supporting. M&A is V-NEO. In Canada, the organic development is mainly driven by our top-2 clients, where we have a decline, especially in the U.K. from Deutsche Bank.

When we look at Continental Europe, we're down 4%. Here, it is all organic because no M&A and FX effects. And here, again, it has contributed to the top-2 clients that you know.

And now let's go on to Slide 6, which is just deeper information for what we have seen on Slide #5, and it differentiates between the top-2 and all other clients. So the top-2 clients for Americas and U.K., Continental Europe combined is down 27%. That is the last block of the table. top-2 for the GFT group, minus 27%. This is in line with what we have expected. And we saw the sharpest decline in the U.K., especially Deutsche Bank investment banking saving budgets; and in Germany, where the local retail banking is saving budgets as well.

When we go into the other clients, let's do it now segment by segment. We see Americas and U.K. up 51% in other clients. Of course, V-NEO is contributing to this. If you exclude V-NEO, it's still roughly 27%, 28% organic increase of other clients. Here, we do see strong growth in all the markets: U.K., U.S., both up 20% and 15%; Brazil, up 30%; and Mexico, up nearly 100% in revenue. So we see growth across the board in all the markets. We see growth in V-NEO markets in Canada. So it is all about the top-2 clients that are only giving us a 5% growth for total Americas and U.K.

Coming to Continental Europe. Here, we are only up 2% for the other clients. And we see growth in Italy, in Germany and in the other markets in Europe, but Switzerland is below our expectations in previous year numbers. And we see Banco Sabadell, especially at their subsidiary, TSB, also saving some budgets. Therefore, it's only 2% increase in the other clients in Continental Europe. We hope to increase the number throughout the year to get closer to a 10%, which we wanted to achieve.

All in all, when you look at the GFT group. Other clients are up 20%, as already indicated on the highlighted slide.

Client concentration. The top-2 clients after 6 months of 2019, stand for 32% of our revenues. When we look into 2018, that was still 40%. So from 40%, we reduced to 32%, and it's going to continue throughout 2019. Let's see if it's going to be 30% or below the 30% line at the end of the year.

Moving forward, Slide #7, EBITDA adjusted and EBT. Let me mention again that EBITDA adjusted and EBITDA here is, again, heavily influenced by IFRS 16, where it especially improves the numbers in Continental Europe because for GFT, IFRS 16 is relevant for lease contracts, cars, but mainly office building, office rent, which is turned around by IFRS 16 into depreciation. And therefore, the impact is bigger on Continental Europe, and it is smaller on Americas and U.K., roughly 1/4, 3/4, which is in line with the employees, which are mostly sitting in Continental Europe.

So for that reason, I would do the analysis rather for the EBT number, which is comparable. No IFRS 16 there. And there we see that in Americas and U.K., we are at minus EUR 200,000. And the main drivers, well, they are repetitive, right, the decreasing revenues with the top-2 clients in that market, and therefore, missing margins and the higher sales cost. In that margin, especially, we have V-NEO inside. But V-NEO on an EBT level in the first half year was contributing a negative number of minus EUR 300,000, which is only related to M&A effects. So it is PPA adjustments and earn-out.

Throughout the year, V-NEO will have a positive impact also on EBT, but after 6 months that was negative. And of course, all this is hurting the Americas and U.K. line.

Continental Europe. Here, we do see we're only down 7%. Pretty close to last year, although we had the majority of the restructuring and underutilization in that market. In a nutshell, it is working quite well.

Rather now do the analysis for the GFT group. When we compare the first half '19 to '18, what are the main impacts? Well, first of all, in GFT, we have EUR 10 million less revenues. If you take out V-NEO, we miss margin from that, roughly EUR 500,000 negative impact. We have V-NEO, which is contributing revenue, but an EBT of minus EUR 300,000. So that's already nearly EUR 800,000 from businesses. We have higher sales cost, which I already mentioned. It's 4% on the decline with the top-2 clients, so roughly EUR 1 million. We have restructuring, which is far higher than the year before, minus EUR 2.6 million. And last but not least, we have underutilization worth minus EUR 1.4 million compared to 2018. So this adds up to roughly EUR 5.5 million, which explains the gap between '19 and '18.

Of these effects, most should go away and should be onetime: restructuring, underutilization and also the V-NEO M&A effects. But the [DB] share in higher sales cost is the one that will remain because as long as we have to compensate reducing top-2 client revenues, there will be a higher sales cost.

On top, we are currently overspending on sales in the U.S. and the U.K. because we believe those markets and you have seen the growth rates there. They offer us significant potential for further revenues via new technologies. And therefore, that's where our sales investments go. That's why the Americas and U.K. line is still below the 0 mark at the moment.

All right. Let's move forward, Slide #8, revenue breakdown by country. The negative countries, United Kingdom, Germany, U.S.A., all influenced by the top-2 clients. So that's the main driver these countries are in negative territory. If you take out top-2, all 3 countries have growth rates of at least 15% with all other clients, important to know. We do see countries with a stronger growth, which is Mexico, nearly doubling compared to 2018 first half year. We see Brazil, good improvement, more than 30% up. Italy is up 10%. And last but not least, we started operations in France with a client in the insurance business. So we come from nearly nothing and now reached EUR 4.5 million of revenues there. What stands out negatively is Switzerland, where we are down 35%. Here, local business currently is quite weak, especially at Avaloq implementation project, Aargauische.

Moving forward, Slide #9, our 30 biggest clients for the first half year of 2019. And as always, the blue box around those clients that are new to the list compared to a year ago. So here, we have 7 new entries, of which 3 are more or less V-NEO-related, and they're all in the insurance area. So Industrielle Alliance comes from V-NEO and La Capitale. MACIF is a client we, to be honest, grew together that was already under GFT owning V-NEO. So it's a half-half new client. The real GFT new clients you see in banking is Crédit Agricole in Italy, we see SulAmérica here.

We have Google inside in the industry and others. Google as an end client to GFT, nearly EUR 2 million of revenues, so strong growth there. And we see Trumpf for the first time on this list with EUR 1.3 million in the half year, so they now made it to the list as well.

One more comment for Google. We do Google and of course, also Amazon and Microsoft Azure implementations for our clients. They would be visible inside the clients. For example, HSBC implementing Google platforms would be revenues with HSBC. Only if we directly contract with Google we would show it under the name Google. So the total cloud revenue is bigger than Google alone, of course. Here, we only reflect the Google client itself. When we look at the bottom right of the slide, we see that banking stood for nearly 80% (sic) [81%] of the revenues in the first half year; insurance, 11%; and 8% comes from industry and other clients.

Let's go to the P&L on Slide #10. Again, as usual, not so much to mention. Let me maybe point out the personnel expenses increase of 9%. What are the main drivers here? Well, first of all, V-NEO is included, of course. The restructure costs are included. And when you please look at cost of purchased services, which is mainly freelancers and other external services, we have significantly reduced those and replaced by our own employees. So therefore, we internally always combine cost of purchased services and personnel expenses. And if you do that and then compare it to the revenue, that ratio has gotten worse by 2%. So we lost 2% here. Coming from 78%, now at 80%, which in the end is the higher sales cost and the underutilization we were already talking about. But 2% looks far different to the 9% that the P&L itself is showing for personnel expenses. Important to understand that.

One other thing I would like to mention, IFRS 16. I think we're slowly getting used to it. It heavily reduces other operating expenses and it heavily increases depreciation and amortization. So that's where we change P&L lines, and that's why the EBITDA is so heavily impacted.

Last but not least, tax rate. After 6 months in '19, tax rate stood at 15%. And you know we have guided and we are still expecting a tax rate for the full year of 12% to 15%. Last year, after 6 months, tax rate was very low. It was only 6% and it ended for the full year at 12%. So we are in line with previous year. Only first half last year looked exceptionally good, maybe too good and then it normalized. And this year, we already have the tax rate we are expecting for the full year.

Moving forward, Slide #11, cash flow. As you can see on a net cash basis, we started the year on the very left of the chart with minus EUR 59.7 million. And now at the end of the second quarter, we are at minus EUR 70. So we lost net cash of roughly EUR 10 million, which is mainly attributable to increasing working capital.

Therefore, operating cash flow was okay. And we saw a buildup in working capital, especially compared to the end of Q1, but that is quite normal for the summer season. So it will start improving usually after the Q3 reporting. Sorry, not the Q3 reporting, but the Q3 numbers. So from October, the number improves again. All other KPIs on this chart are in line with what we have been expecting.

I move forward to Slide #12, the balance sheet. A lot of tax, but overall, no fundamental change. Only the IFRS 16 effects, which make the balance sheet bigger today than it was at the end of 2018 when IFRS 16 was not yet applicable. So we do see that the noncurrent assets are increased by roughly EUR 60 million. Because of IFRS 16, it looks like we have bought our rent contracts. This is what IFRS asks us to do. And how did we finance it? Well, IFRS says, and this is on the right side, in the noncurrent liabilities, you increase your liabilities as if you have financed it somehow magically. I'm not a fan of this IFRS 16, but we have to do it, here it is. However, the overall balance sheet has not changed at all.

Moving forward, Slide #13, employees by country. We do see V-NEO inside now, just like they were in Q1, Q4 and Q3. Only Q2 of '18 V-NEO was not yet included because the acquisition was closed at the beginning of Q3. And when we look inside, what is interesting, we do see expanding FTE numbers in Mexico and Brazil, in line with the growth we currently experience. We do see declining numbers in Poland and Spain, both reflecting our top-2 nearshore purchase reductions. In Spain, we believe we will stabilize on the number of 1,800. In Poland, we are already heavily searching for new experts -- for other experts, other expertise because we see a strong growth trend coming from the U.K. going for our Polish resources. So that's why we will see the numbers change over time in the second half.

All right. Coming to Slide #14, which is the outlook for 2019. Main message, the outlook is confirmed as it was given at the beginning of March, EUR 420 million in revenues. We expect EBITDA adjusted at EUR 48 million, of which $0.13 is IFRS 16, and the EBT at EUR 18 million. This is unchanged. When we look at the revenues, while the trends will not change, the top-2 clients will decline by roughly 30%. We will compensate via the other clients. Here, the growth will be over 20%, and we will have the V-NEO numbers inside.

We will see the acquisition that we've done in Germany, AXOOM, a little company in the industry sector, contribute maybe EUR 3 million of revenues to those numbers. While we have not changed the revenue guidance for this purpose. And you know, as we have done EUR 211 million in the first half year, if you take this times 2, we are quite well on track for the EUR 420 million. So maybe on the revenue side, currently, the EUR 420 million are a bit conservative. But that is not our main driver for the year 2019. That's the earnings.

And in the earnings, while I have described the trends, restructuring will now normalize, will not be that much different to the year 2018 second half. Underutilization has stabilized. So it's more or less about the higher sales costs that we have for compensating top-2 revenues and maybe a bit of integration effects we'll have with the AXOOM business.

Therefore, earnings is our main focus. We have to balance our guidance and the growth we could achieve via more sales efforts, which is currently something we are looking into every month because we do see potential, we could add more sales. But at the same time, we want to reach the earnings numbers we have given. That's our tough part to do in the second half, combining these 2.

Okay. And there's one last slide, which is #15, which is detailing the top-2 and the other clients a bit more. However, the table has not changed compared to the Q1 reporting. Therefore, no need to really go deep into the numbers. You do see that top-2 clients will decline according to this table by 31%, that's in the lower part of the table, top-2 clients, '18 versus '19. All other clients will grow by 23%, including V-NEO, and so our organic growth will be 17, 18 percentage from the GFT business.

As initially guided, 2019 is a transition year for GFT, right, strong reductions in our top-2 clients and strong growth in all other clients. Growth drivers are our exponential technologies, e.g., cloud, data analytics, et cetera. We see Guidewire trends and continued digitalization of banks. Overall, we are seeing first top line growth since 2016, and profitability is stabilizing, which is important to us. Now growth in our other clients will bring back margins over time.

All right. That's it for the Q2 of first half year 2019 numbers. Ready to take your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question comes from the line of Berenice Lacroix from Kepler Cheuvreux.

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Berenice Lacroix, Kepler Cheuvreux, Research Division - Equity Research Analyst [2]

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I have a few questions actually. The first one is on your revenue growth from other clients in the Americas and U.K. division. It has slipped slightly by around 3% on a quarter-to-quarter basis. I would like to know the reason of such a slowdown. Maybe it's only due to lower billable days. The second question is on Banco Sabadell which cut IT budget in Q1. Have you seen the situation normalizing with this client in Q2? How do you see the business with them in H2? And the last question on the Continental Europe division. Obviously, activity with Italian retail banks is going very well. Could you tell me what are the most growing markets in Continental Europe and the main driver for H2 and the midterm?

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Jochen Ruetz, GFT Technologies SE - CFO, MD, Member of Executive Board & Member of the Administrative Board [3]

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Yes, happy to answer all those. Other clients revenue growth in the Americas. Well, the slowdown, you're right, is a bit -- but it doesn't look significant to us. So we didn't mention it. Therefore, probably it is linked to the number of billable days. Yes, as you already indicated, because, especially in Brazil and Mexico, we're working a lot time and material, which is hourly billing. And therefore, that might have been an impact. But the 3% do not make us nervous. Therefore, I was not mentioning this.

Sabadell, yes, it normalized, but not on an increasing level, as we had hoped. So it is normalizing on a slightly lower level than 2018 at the moment. And the outlook for the second half is not showing significant growth there. Therefore, maybe a bit, yes. We do have some pipeline projects. So we could hit the H2 numbers of '18 again in '19. But the slowdown in Sabadell, which is not major, it's minor, but it is mostly linked to the U.K. organization, TSB, where had -- they had all the trouble, of which they are currently not putting so much IT investments into.

Continental Europe, yes, the main markets growth coming from Germany, where we are growing by 15% in other clients and Italy 10%, which is all other clients, where, in some clients, UBI Banca and Unipol were growing by more than 30%. Very stable business with Intesa Sanpaolo, while at the same time, we saw a decline in Monte dei Paschi, which is always a bit depending on what they buy on a daily rate because Monte dei Paschi is anyway IT spending on a keep the lights on mode. Therefore, not much we can do with sales. But overall, Italy, very good performance and Guidewire potential. Same is true for Spain, Guidewire potential, which should enable us to come back to the growth rates we have been expecting for the local business.

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Operator [4]

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The next question comes from the line of Andreas Wolf with Warburg Research.

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Andreas Wolf, Warburg Research GmbH - Research Analyst [5]

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It's Andreas Wolf of Warburg Research. The first question is the obvious one. So obviously, Deutsche was in the media recently. Have you seen any changing customer behavior here, especially in the investment banking area? They are cutting quite severely. So has anything changed for you here? And with regard to the restructuring charges in H2, could you remind us what the charges were last year and what we should expect for H2 then for this year? And then with regard to the industrial sector, do you see the necessity to acquire -- or the opportunity to acquire some subsidiaries or some entities that might boost your business here?

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Jochen Ruetz, GFT Technologies SE - CFO, MD, Member of Executive Board & Member of the Administrative Board [6]

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Yes, happy to answer. Deutsche Bank in the media, well, when are they not? But besides that, we have seen name changes, which is important, right? And especially on the IT side, we will see a new head of Digital coming from the company SAP, a Board member -- former Board member of SAP. So we truly hope that on the IT side, they're spending into -- the digital trends will again restart. So -- but that is still to be awaited because Mr. Leukert is not yet even at Deutsche's Board.

Overall, you're right, investment banking probably takes the biggest hits, but we have been heavily out of the parts of investment banking that are now being hit strongly, which is the U.S. In the U.S., we've been already reducing, slowing down our own business. And therefore, no -- there's no need to change our forecasted guidance because of the Deutsche Bank news. We saw it was like 4 weeks ago, I think, right? So we still feel comfortable with what we said back then. It was in line with what -- it is in line with what we have expected. All this said, small disclaimer, Deutsche is still Deutsche and they've been performing a bit hard to predict in the last 12, 18 months. So there's always something that could happen. From today's perspective, we feel comfortable with the guidance we've given.

H2 restructuring, yes, let me give you the numbers. So we are expecting roughly EUR 1 million for the second half of '19, and it was EUR 700,000 in the year before. So you see the gap is only EUR 300,000. That's minor, that will come from further restructuring compared to 2018.

And last but not least, industry business. We took this opportunity by acquiring that little company, which was a subsidiary of our client Trumpf and took them onboard. And now we are working for Trumpf and other clients with them. Yes, we are looking into adding more, but always quite small organizations into our organization and to GFT to offer further industry -- well, offerings in the end, right, and have more tech experts with industry knowledge.

So this will happen. We're looking into that. But don't expect anything big because, anyway, there's no big IoT company in the market, right? These are all quite small plays. And that's what we're looking at. But don't expect anything to happen in 2019.

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Operator [7]

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The next question comes from the line of Robin Brass with Hauck & Aufhäuser.

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Robin Brass, Hauck & Aufhäuser Privatbankiers AG, Research Division - Equity Analyst [8]

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First question is also regarding the AXOOM contribution. Is the EUR 3 million already in 2019? Or is it for -- on a full year basis so basically, probably in 2020? And the second question is regarding again the guidance, especially looking at EBT. I guess I mean, the revenues level, you look maybe even a bit slightly ahead of guidance. But on EBT, of course, especially H1, with all the restructuring cost you -- be way below half of the EBT level. So how do you see the visibility here to reach EUR 80 million even if you maybe have some FX effects, for example? So -- because this is something you cannot control. If you have negative FX effects, is that a risk for your guidance on EBT level?

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Jochen Ruetz, GFT Technologies SE - CFO, MD, Member of Executive Board & Member of the Administrative Board [9]

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Okay, that's all. As you ended with a question mark in your sentence, right, let me answer the second question first. Guidance on EBT. Yes, you're absolutely right. FX, of course, is something that could influence our final outcome. And currently, we see a bit of changes, especially in the pound. So far, we've been in line with the previous year. So that is the risk. We just -- we can't give you numbers at the moment. But overall, we believe the EUR 11 million we still need on the EBT level is the number we can achieve in the second half, right, with the revenue growth we're seeing with the other clients, with the trends we have. So we feel comfortable with the number as is and at hand. But FX is a remaining risk to be seen.

Your first question, AXOOM, EUR 3 million, that is for the second half of 2019. So on a full year basis, it should be roughly double that number for a full year. But for the second half '19, EUR 3 million is what we expect.

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Operator [10]

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(Operator Instructions) The next question comes from the line of Dustin Mildner with Pareto Securities.

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Dustin Mildner, Pareto Securities, Research Division - Analyst [11]

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I've got only one left regarding V-NEO. If we have a look at Q1, Q2 revenues, I mean, Q2 -- Q1 was obviously a good quarter. Q2 was a bit slower in terms of revenues or a bit below. Nothing too serious, I guess, at this level, but maybe you could give us some flavor on how you see the developments there. Whether this is -- we just had some seasonal effects or whether -- or how V-NEO runs according to your expectations or what's the current state, so to say. Maybe you can give some additional ideas on the progress in Europe you made, especially with regard to the insurance business maybe in the background of the recent deal with MACIF you have signed.

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Jochen Ruetz, GFT Technologies SE - CFO, MD, Member of Executive Board & Member of the Administrative Board [12]

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Yes. Well, in V-NEO, we have one separation of numbers we have done because the La Macif contract we signed, we signed with GFT France, right? We started a company in France, well, a couple of months ago, right? And we're showing revenues there. The V-NEO numbers you're seeing is excluding the GFT business in France. So overall, V-NEO is doing very well. We're 25% up compared to the year before. But part of the revenue we now show under GFT, because it was won under the GFT flag and therefore, part of the La Macif business, which is shown in GTF France, should be added to the V-NEO numbers. But we say V-NEO business is the classic business coming out of Québec, the base of today, while the new one business is new people partly delivered from GFT Poland. And therefore, it is a bit hard for you to analyze the combined V-NEO contribution, right? What we show under V-NEO is the V-NEO entity. If you add France, it looks far better, and that's probably driving your question in the end. We do see a strong trend. We see La Macif project ongoing. We have more in the pipeline in Europe. That's why we started the competence centers in Poland and in Spain. But the pipeline is still a pipeline so there's to be won, but the Guidewire offering is very attractive. And what we're doing at La Macif is implementing the cloud version of Guidewire, something that so far in Europe, nobody has implemented. So that will be a litmus test. And then, obviously, a very good reference for other insurance companies in Europe because this is -- as always, right, the cloud version of a software suite is the end game. Everybody would like to get to one day, don't have it in your data center, have it outside. And therefore, this is a highly attractive project to us. Of course, as always, with its ups and downs, sometimes a bit faster, a bit slower, but we do see a lot of interest from other clients in Guidewire and especially in the Guidewire cloud suite.

So therefore, no, V-NEO is doing fine. You would have to add France, and half of the French business that you see has been done out of the GFT entity. And the other half, we show under France is delivered from Canadian resources so inside the number we call V-NEO at the moment. Sorry for making it a bit complex.

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Operator [13]

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(Operator Instructions) And there are no further questions registered at this time. I hand back to Dr. Jochen Ruetz for closing comments.

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Jochen Ruetz, GFT Technologies SE - CFO, MD, Member of Executive Board & Member of the Administrative Board [14]

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Thank you very much, everybody. Thanks for joining today. Busy day, I know. Market is busy. We will hear again in November with the Q3 numbers. Have a good holiday season, and hear you all soon. Bye-bye.