Edenred keeps guidance despite mixed Q1 and weakness in key units

Investing.com -- Edenred (EPA:EDEN) held firm on its full-year guidance despite a softer-than-expected Q1, as solid Mobility growth helped offset continued weakness in other segments.

The financial services company reported total revenue of €724 million for the first quarter of 2025, up 6.7% on a like-for-like basis compared to the same period last year, but down 7% sequentially. 

The figure came in slightly below both company-compiled consensus and Jefferies estimates, with segmental variation driving the miss.

Mobility was the standout performer, with revenue rising 11.8% like-for-like to €172 million. This marked a sharp recovery from a 9% decline in Q4 and was driven by stronger performance in Europe and Latin America. 

Within the segment, fuel card revenues rose 8%, and Edenred extended its government contract in Mexico. Revenue from non-fuel services grew at a double-digit pace.

Benefits & Engagement, the group’s largest segment, grew 7.6% like-for-like to €432 million, but missed expectations by around 2%. 

The slowdown from 11% growth in the previous quarter was primarily attributed to a high comparative base, including the Belgian consumption voucher program and a mixed gift card campaign in Q4 2024. 

Excluding the Belgian effect, issued volume rose 8% like-for-like. Edenred noted that operating revenue for the Beyond Food sub-segment, excluding gift cards, increased 17% like-for-like versus 14% in the prior year.

Complementary Solutions posted a 6% decline to €63 million, missing expectations by a similar margin. The segment continued to face pressure from lower B2C activity, particularly in Banking-as-a-Service, as well as ongoing issues at Edenred Pay in North America. The end of a government program in Romania also weighed on performance.

Operating revenue overall grew 7.1% like-for-like to €667 million, in line with consensus and Jefferies forecasts. 

Other revenue rose 1.9% like-for-like to €57 million, driven by interest rate dynamics—higher in Brazil and lower in the Eurozone—and higher float.

Regionally, performance was uneven. Revenue in France grew just 0.4% like-for-like to €91 million as macroeconomic conditions dampened client activity. 

The rest of Europe posted 1.5% growth, with Southern Europe showing strength while Northern Europe remained under pressure, particularly in Germany. 

Latin America was the strongest region, up 16.3%, led by 15.5% growth in Brazil and 18% in Hispanic Latin America. 

The Rest of the World segment rose 16.7%, supported by growth in the UAE and continued momentum from Reward Gateway in Australia.

Despite the mixed start to the year, Edenred reaffirmed its full-year guidance. The company continues to target at least 10% like-for-like EBITDA growth, citing expected margin gains from its cost containment initiative, “Fit for Growth.” 

Jefferies estimates this implies an EBITDA of over €1.37 billion for 2025, factoring in scope effects of €32 million and an FX headwind of €56 million. 

The estimate sits 2% ahead of consensus (€1.34 billion) and 3% above Jefferies’ own forecast of €1.32 billion.

Free cash flow conversion guidance was also maintained at above 70%, suggesting more than €957 million in FCF for the year. That compares to consensus expectations of €897 million and Jefferies’ estimate of €831 million.

Jefferies noted that while the results were largely in line with expectations, the underlying segment trends point to ongoing challenges, particularly in Benefits & Engagement and Complementary Solutions.