Edenred : Third-quarter 2019 revenue

Press release

October 22, 2020

Third-quarter 2020 revenue

Edenred returns to organic growth in the third quarter, demonstrating resilience in the face of the crisis and a capacity to rebound

Rebound in business in the third quarter amid a gradual easing of lockdownmeasures worldwide

Total revenue of €357 million in the third quarter, up 0.5% like-for-like after fallingby 15.5% in the second quarter:

• Growth in operating revenue of 0.9% like-for-like in the third quarter, reflecting a return to Group growth in Europe (+7.3% like-for-like vs. -13.1% in the second quarter) and mixed improvements in the economic and health situation in Latin America (-7.6%like-for-like vs. -20.4% in the second quarter)
• Other revenue down 9.9% like-for-like due to lower interest rates than in 2019

Total revenue for the first nine months of the year of €1,053 million, down 3.0% like-for-like, demonstrating the resilience of Edenred's business model in the face of the crisis, and down 10.0% as reported due to a negative currency effect (-7.4%)

This performance was achieved thanks to a digital innovation strategy positioning Edenred well to take advantage of the growth trends that emergedor intensified at the height of the health crisis:

• an increase in mobile payments and direct payments on meal delivery platforms,
• greater use of remote working by companies,
• a desire from governments to provide targeted stimulus to the economy,
• more responsible consumption,
• growing interest in automated corporate payments.

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2020 outlook

• Business excellence and digitalization initiatives will contribute to business growth in the fourth quarter
• In line with its expectations, the Group confirms its €100 million cost savings plan for 2020
• Edenred is narrowing its full-year 2020 EBITDA target to between €550 million and €600 million1, despite new uncertainties generated by the health crisis in Europe

***

Bertrand Dumazy, Chairman and Chief Executive Officer of Edenred, said: "After proving its agility and resilience at the height of the health crisis, Edenred demonstrated its capacity to return rapidly to growth in the third quarter of the year. While much of Latin America was still in lockdown, the performances recorded in Europe attested to both Edenred's sales dynamic and the validity of our solutions in a recovering economic environment. In a world being transformed by digital technology, Edenred provides innovative, practical solutions to changing work practices, enhances the efficiency of organizations and public and private social programs, and helps people adopt more responsible behavior. Despite the uncertainties associated with ongoing developmentsin the public health situation, we're confirming our full-yeartargets for 2020."

• Calculated based on an assumption of an average Brazilian real/euro exchange rate for the second half of 2020 equal to the closing spot rate on June 30, 2020. To be compared with a previous target of between €540 million and €610 million.

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Due to the current situation in Venezuela, the like-for-like performance and the currency effect are temporarily calculated excluding the country. Changes are calculated based on 2019 pro forma figures, which reflect the change in the breakdown between operating revenue and other revenue within total revenue in Brazil, effective since fourth-quarter 2019 and with no impact on full-year 2019 total revenue. See the appendices, page 12.

(in € millions)		Third-		Third-	% change	% change
	quarter 2020		quarter 2019	(reported)	(like-for-like)
Operating revenue		346		379	-8.6%	+0.9%
Other revenue		11		14	-26.4%	-9.9%
Total revenue		357		393	-9.3%	+0.5%
(in € millions)		First nine		First nine	% change	% change
	months 2020		months 2019	(reported)	(like-for-like)
Operating revenue		1,021		1,130	-9.7%	-2.8%
Other revenue		32		40	-21.2%	-9.4%
Total revenue		1,053		1,170	-10.0%	-3.0%

• Total revenue

For the third quarter, total revenue was up 0.5% like-for-like, representing a sharp improvement over the second quarter (-15.5%). The figure was down 9.3% as reported, reflecting a negative currency effect (-10.0%) and a positive scope effect (+0.2%).

For the first nine months of the year, total revenue came to €1,053 million, down 3.0% like-for- like versus the same period last year, demonstrating the resilience of Edenred's business model. On a reported basis, total revenue was down 10.0%, reflecting unfavorable currency effects (-7.4%) and a slightly positive scope effect (+0.3%).

• Operating revenue

After a good start to the year and then a second quarter impacted by the health crisis and the introduction of strict lockdown measures in most countries around the world, Edenred returned to growth during the third quarter. The improvement was driven by the impact of Edenred's shift to digital solutions (86% of business volume), a recovery in sales activity and the gradual easing of lockdown measures. On a like-for-like basis, operating revenue for the third quarter rose by 0.9% year-on-year, representing a strong rebound versus the second quarter (-15.4%).

Resilient in the face of the crisis and able to bounce back in a less depressed health and economic environment, the Group recorded operating revenue of €1,021 million for the first nine months of 2020, down 2.8% like-for-like. On a reported basis, an unfavorable currency effect (-7.2%) and a slightly positive scope effect (+0.4%) resulted in a decrease of 9.7%.

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• Operating revenue by business line

(in € millions)		Third-quarter		Third-quarter	% change	% change
	2020		2019	(reported)	(like-for-like)
Employee Benefits		207		229	-9.5%	-1.4%
Fleet & Mobility Solutions		89		104	-14.8%	-1.5%
Complementary Solutions		51		46	+9.5%	+17.5%
Total		346		379	-8.6%	+0.9%
(in € millions)		First nine		First nine	% change	% change
	months 2020		months 2019	(reported)	(like-for-like)
Employee Benefits		619		701	-11.8%	-6.3%
Fleet & Mobility Solutions		262		298	-12.1%	-1.4%
Complementary Solutions		140		131	+7.3%	+13.3%
Total		1,021		1,130	-9.7%	-2.8%

Employee Benefits recorded a strong rebound in the third quarter, with operating revenue down just 1.4% like-for-like(-9.5% as reported) versus a decrease of 20.6% in the second quarter. The business line's operating revenue for the nine months to September 30 came to €619 million, representing 60% of the consolidated total and down 6.3% like-for-like from the prior-year period (-11.8% as reported).

During the crisis, Edenred leveraged its digital solutions and its capacity for innovation in order to meet market demand and continue developing its services for the benefit of users and merchants. Examples include the faster roll-out of both the Group's contactless mobile payment solutions, now available in 22 countries, and its app-to-app payment service on

67 partner meal delivery platforms. Thanks to these services, which make the Group's paperless offering more attractive, the portion of digital solutions in Employee Benefits business volume in Europe was up 9 points versus third-quarter 2019.

In Europe, and to a lesser extent in Latin America, the decline in short-time working measures and the reopening of stores and restaurants also contributed to the rebound in the third quarter, notably enabling employee users to restart spending their allocated funds and more particularly the funds accumulated during lockdown. Nonetheless, a large portion of these funds remained unspent at the end of September. This represents a pool of revenue for Edenred that will be realized as the funds are used in its merchant network.

In the Fleet & Mobility Solutions business line, which represents 26% of the Group's business, after a sharp decrease in the second quarter (-14.3%like-for-like), operating revenue contracted by 1.5% like-for-like(-14.8% as reported) in the third quarter. For the nine months ended September 30, 2020, the business line recorded operating revenue of €262 million, down a slight 1.4% like-for-like versus the prior-year period (-12.1% as reported).

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