Schneider Electric Aktie

Good morning. This is the conference operator. Welcome to the Schneider Electric Half Year 2026. Results with Olivier Blum Chief Executive Officer; Nathan Fast, Chief Financial Officer; and Antoine Sage, Head of Investor Relations. [Operator Instructions]

I would like to inform all parties that today's conference is being recorded. If you have any objections, you may disconnect at this time. At this time, I will hand you over to Mr. Antoine Sage. Please go ahead, sir.

Hello, and good morning, everyone. Thank you for joining us for our 2026 half year result presentation. I'm joined today by Olivier, our CEO; and by Nathan, our CFO, here in Paris. When it comes to the agenda, so you have the slides as usual, we will walk through the presentation first, and then we'll make sure that we have ample time for your question. As always, I want to remind everyone about the disclaimer that you will find on the Page #2.

And with that, Olivier, I hand over to you.

Thank you, Antoine. Good morning to all of you, and thanks for joining us. So I will go straight into the results of H1. So we've delivered in Q2 a fairly high growth at 17%. What is very important for me is our 2 businesses are contributing to this high growth in the second quarter. You see Energy Management at 18%, but also Industrial Automation at 11%. That shows that really we are starting to be back on track and to deliver more and more to our customers by delivering really the strength of our 2 businesses. So great Q2, well on track for the rest of the year.

When it comes to the market itself, you can see on the left-hand side really as a reminder, what is the exposure of Schneider Electric. So fairly good and balanced exposure between buildings, industry, data center and network, but also infrastructure. And it's a very, very interesting time for us because indeed, and I'm sure you will ask us a question today again on data center. Data center continue to be a leading part of our exposure. But what is very, very important, it's supported also with a triple-digit growth, also, demand in semiconductor. You can see that power grid, everything which is inside infrastructure continue to be very, very solid.

So to get it short, you can see that all the segments of Schneider Electric from a demand standpoint are growing with a fairly high demand everywhere. And probably the only one which continue to be subdued is really the residential market. But all in all, that confirms that both with our strategic portfolio, but also with our exposure, we continue to be very well positioned and to be very, very resilient in terms of growth across the cycle.

So as a result of that strategy and that exposure, we are very, very, very pleased to report a very strong growth in H1. For me, it's very, very important because I came in front of you last year, and in particular, during our Capital Market Day with our revised strategy, advancing energy tech to the next level of intelligence. But we also told you that we are launching internally our company program, which is really to align everyone inside Schneider Electric against what are the priority, what are the key transformation we want to deliver strategically in the long term, but also making sure we are back to a very strong level of operational excellence. And you can start to see in H1 that we are benefiting from that very strong focus.

So the growth is at 14% organically for H1, but you see that it translates in a slight improvement of gross margin. We'll come back on that. We told you with Nathan, we will be slightly negative to neutral in our H1. So we are well in track with our plan. It translates also in an improvement of our adjusted EBITA margin by 120 bps. And what is very, very important, and that continues to be the signature of Schneider Electric, it translates into a very high level of free cash flow at EUR 1.6 billion.

And what is equally important for me is always to measure how this is done, what is the contribution of the portfolio of Schneider Electric. And you know, we are a company when we'll come back on that, that want to connect the physical and the digital world. And that's why measuring the contribution of our digital portfolio through the flywheel is extremely important, and we continue to progress at 62%, well in line with our 70% plus ambition at the end of the cycle.

So we'll come back, of course, with Nathan later on in details of -- on all those numbers. But what I wanted to give you is a quick update on where we are in delivering the next level of advancing energy tech to deliver more intelligence for our customers. As I told you, we translated that into a plan that we use, of course, to communicate with you, but which is really the vehicle internally to make sure we stay well on track. And I will go straight into the first part, which is what have been the key update in Q2 when it comes to technology leadership.

So no change. When I say we want to connect the physical and the digital world, for 190 years, Schneider Electric has been a leader in hardware in all the sectors. We have expanded our portfolio everywhere in the world. And since more than 10 years, we were convinced that the acceleration of electrification and the acceleration of digitalization will help Schneider Electric to deliver more efficiency and sustainability to our customer. And that's why we have built this unique portfolio, which is made of hardware, edge layer and with a very strong digital layer.

Now what we have learned also in the past 5 years, once you enter in the digital layer, there is something that is extremely important, which is the data. It's not only about putting software on top of hardware, it's about how you can capture data from the physical world, contextualize, federate those data and deliver more value to our customer. And we've been pursuing that goal. We refreshed that strategy with you and we are during the Capital Market Day. But that's what we do with the data cube. It's about how contextualizing, capturing all those data to be able to go to the next level of intelligence for our customer.

And there is one thing that I'd like to mention, which is very, very important. At the end of the day, our customers are choosing where they want to work with Schneider Electric. They can work with us on the hardware side, they can work with us directly on the software side, they enter in that portfolio the way we want, they want. But for us, what is very important is to be able to give the most to our customer. So in line with that strategic direction, we progressed quite a lot, I have to say, in Q2.

And I've made this announcement already a couple of weeks ago, but Cognite is coming as a very, very strategic acquisition for Schneider. When I say we connect the physical and the digital world, when I say we need to create a very, very, very strong data foundation, Cognite Data Fusion amplified by Atlas AI, which is their agentic layer, is a very, very rare asset in the market. It's a unique technology, unique capability that they have developed initially more for the industrial world, but we see a lot of opportunity for the energy world.

And of course, we are still after signing, before closing and a bit too early to say more, but we wanted to make the most of that acquisition to accelerate our data cube and to accelerate all the AI capability that will help us to deliver the next level of intelligence for our customers. So extremely excited to onboard, hopefully very, very soon, Cognite. We have great people everywhere in the world, but in particular, with a very strong tech team in Europe, in Norway.

Second update I wanted to give you today is we've made the decision also to accelerate Energy Intelligence in Power & Grid with utilities. We believe the next level of efficiency in electrification will be around the work you can do with Power & Grid. Again, here, we are present historically with all our hardware portfolio. We have also created a unique digital portfolio with our [ Smart Grid ] offering with our offer, which are also adapted for distributed energy.

And with AiDASH, basically, we go again to the next level of intelligence by onboarding a company that will give us what you need to manage climate risk, which means when you have wildfire, which is unfortunately a big topic in country like France those days, but also any kind of risk which can be related to storm and so on and so forth, vegetation management. AiDASH brings those unique capabilities that help you to capture real time to anticipate those kind of events and that we can plug inside what we have been doing with Schneider Electric in our Smart Grid portfolio to deliver even more intelligence to our customers. But of course, our customer here, again, will have the choice to build the full solution of Schneider Electric or to continue to buy directly AiDASH capability, which are growing very, very fast every year.

Third update I wanted to give you on the technology. I told you last year that a key part of our strategy will be really to accelerate through partnership. We don't need to do everything by ourselves. And we are extremely pleased, again, in the domain of infrastructure, utility, efficiency and flexibility with the partnership that we have announced with Kraken by combining our solution that will help us to unlock together grid flexibility at scale. So a very exciting time also in the field of infrastructure and in particular, grid flexibility.

The third part, which is important, which is not new for you, we told you many times that we are very excited by, of course, the growth of AI infrastructure at the CapEx stage to build. But what was equally and even more important for us at Schneider Electric was really to be able to play across the life cycle at the design stage, at the build stage, but also at the operate and maintain stage. And that's where data is very important. And if I connect to my introduction, we will continue to develop the most competitive portfolio with the best possible supply chain to deliver at the build stage, but we want to play a bigger role at the design stage.

And that's why we are very, very pleased to report that in Q2, we've made a lot of progress and in particular, with the new AVEVA DSX portfolio that help really to -- help to improve the efficiency for our customers. And I remind you, we've done a lot also in Q1 with ETAP to create unique digital twin. And we continue that journey, again, to capture data across the life cycle to deliver even more services for our customer. There is a shortage of manpower everywhere in the world. It's super important that we can deliver more and more digital services, condition-based maintenance services for our customer. And this is what we call EcoCare in the case of data center. But you can see really that, again, managing the data across the life cycle will be a unique differentiator when you want to connect the physical and the digital world.

Staying on data center, we continue to be very active in organic R&D. You asked us in the past 2 years, a lot of question about the evolution of the architecture. Indeed, we see that with the increase of the demand of the GPU, which will be more and more intense that will require more and more density, power density, power rack it's very, very obvious that we will have to be able to provide different alternative in terms of architecture.

It doesn't mean that everything will switch, first of all. It doesn't mean that it's going to happen overnight, but that will be one of the architecture that will be important in the future. And that's why we've been very, very active to build a very, very strong road map where we can really follow the demand in the market, the evolution of the market from what we started to do last year, this year and in the coming years. And of course, we've communicated a lot about what we have done with our power rack, what everyone call in the market the sidecar.

But what is very, very, very important progressively in the next 2 coming years is to come with a very, very industrialized solution with what we call the power center with new SST solution that we have developed right now that we have prototyped and testing already with a couple of customers and to make sure that we are ready with industrialized solution when the demand in the market will accelerate. So a great progress done in R&D, and we'll continue to give you an update in the future on the way we are progressing.

The second key pillar of Schneider Electric is really the way we want to deal with our customer. This slide, you've seen it, so I'll be very, very fast. But we want in a world which is more and more fragmented to build a unique model of differentiation, which is a regional model where we connect the way we innovate, we supply, we sell. And in every single region, we want to be differentiated. We want to leverage the ecosystem. We want to leverage our knowledge. We want to leverage our ecosystem of partner.

And on top of that, for sure, there are a certain number of direction that will continue to be global on technology, platforming, on the way, of course, we manage our supply chain and we connect the different element of our supply chain, but the way we sell. Just to give you an example, while a large part of the portfolio is sold through local regional customer, we have an increasing part which is done with global customer. And here, it's important that we keep a global dimension. So that continues to be really the compass for Schneider on how we drive our differentiation in front of our customer.

And just to report a couple of progress here again in Q2. We have announced in the month of June that unique partnership with SoftBank. We wanted to make a massive investment in France in the field of AI infrastructure. And I do believe that the unique knowledge and presence of Schneider Electric in France, again, our knowledge of the local ecosystem, which is both our customer, which is both government organization from the top of the country to the lowest level in the region, the connection of Schneider Electric with utility like EDF which has power available.

So we are a kind of connector of all this ecosystem and becoming in the future, a partner of SoftBank, a technology partner, but where we will also commit on our side to build a new prefab factory, which will be close to the data center as soon as the deployment will start in the coming years. So that's a very, very interesting partnership. And I think it was only possible, thanks to the very strong presence of Schneider Electric in the local ecosystem. Another update I wanted to give you, we continue to make the most of the acquisition that we have done in the past, again, with this willingness to give even more to our customers in every region.

Just the first example, as I told you already, Motivair has been growing very, very fast, in particular, in North America since we've made the acquisition. It was at the beginning of the acquisition, 95% of the sales of Motivair were done in North America. But our obsession since day 1 when we closed the acquisition was to get ready to expand. And now it's done. We are ready to manufacture our liquid cooling equipment, our CDU, both in Italy in Conselve, where we had historically chillers manufacturing, but also in India, in Bangalore, that will help us to serve the rest of the market. So it's a very, very interesting shift that we have prepared in the past 2 years to get ready now to bring those customers to the rest of the world on top of North America.

Another example, which is interesting, you know that we've doubled down last year in Lauritz Knudsen, our acquisition in India, which gives us, of course, a unique presence in India, which is now the third largest country of Schneider Electric from a sales standpoint. But equally important for me is how we leverage India to create this fourth regional hub. We call it the international hub. But from India, we are leveraging the R&D capabilities of Lauritz Knudsen. We are leveraging the manufacturing capabilities. And you know that India is a very competitive market, very cost-effective market where we can now start to export those products to the rest of the world, but we'll go again in a very selective and progressive manner, and that will start by the region which are around India and in particular, Middle East.

So that's the update that I wanted to give you when it comes to the customer differentiation. And the last one, which is very important to me, I've been extremely vocal last year in all our communication. We want to be seen as a very, very advanced company when it comes to technology. We want to be extremely close to our customers through our regional model, but also our global customer. But what is equally important for me is that we go to the next level of operational excellence, the next level of cost competitiveness across the board at Schneider.

So we built this plan that we announced to you with our Executive Committee during our Capital Market Day, where on one side, we want to go to the next level of leadership, cost effectiveness on our portfolio. So for me, what is very, very important that we continue to deliver very strong productivity, very strong industrial productivity. Nathan will go more in detail, but we are extremely pleased to report EUR 535 million of industrial productivity in H1 2026. But it's equally not to say even more important that at the design stage, when you design the next level of offering, you are extremely cost competitive.

And we are leveraging here a lot our R&D team in China, in India with a very, very strong knowledge, again, because they are living in a very cost competitive environment on how we can be more effective and we to deliver cost by design in all our new offer. And when you start to embed those concept, you build more competitiveness at the launching, but that help you also across the life cycle of those products to deliver more productivity if you have anticipated. So very, very, very important point.

Last but not the least, I said last year that we will continue to collaborate to leverage partner on technology, but also on the supplier side because we don't need to do everything by ourselves, and we are very pleased to report the partnership with Foxconn that I will explain in a minute. Last but not the least, but Nathan will go extensively on the detail. We want to be more efficient. We want to be simpler as a company to operate. We have a fantastic growth opportunity in front of us. It's important that we build a model which is simple, which is scalable, which is cost effective. That's why we have this obsession to drive an improvement year-on-year on our SFC, on our SG&A on sales ratio.

And you have seen, and that has been a question you asked us a lot last year in Q1, what are you doing in pricing? We've put a very, very strong methodology, process discipline in place. I told you we were ready January 1 to hit the market. And now you can clearly see that it comes and it flows to the P&L, and Nathan will elaborate a little bit more, but EUR 280 million of pricing on products that have been delivered in H1.

Talking about our supplier collaboration, I just wanted to share with you that Foxconn agreement for North America will help us to improve, increase our capacity to deliver prefab for the data center industry. And that's very, very, very important because that's also a way for us to mitigate potential not, I would say, decline, but slowdown at one point of time in that industry. We don't need to manufacture everything by ourselves. And that help us, of course, to increase immediately our capacity to hit the market and to supply the increasing demand that we see in data center.

So to close that first section, it's very, very important for us that we continue really to drive shareholder value with a consistent capital allocation. And we continue to be extremely focused, delivering strong investment credit rating, which is very important. We continue to be very, very, very solid on our balance sheet. As you've seen in May, we continue to have a very, very progressive policy in terms of distribution of dividend, progressive since 16 years, and we continue this year to increase our dividend for our shareholders.

We continue to be extremely active in portfolio management, which is on one side, what are those assets which are less important strategically for the future that we will continue to divest. They are not big asset, but it's a sum of small, medium-sized assets, very important for me. And we'll continue, of course, to be extremely disciplined in capital allocation. like we've done in Motivair, Lauritz Knudsen, doubling down last year, but also the recent acquisition that I just announced about Cognite and AiDASH. But all of that being extremely focused and contributing to the acceleration of our strategy.

Last but not the least, we told you end of last year that we want really to progressively increase and to be more systematic in share buyback. And in line with that strategy, we have started to develop -- to implement in H1 already EUR 250 million that have been repurchase.

To finish my presentation, I'd like to give you a quick update on what makes Schneider Electric also a very, very different company, a very strong focus on our people, on the engagement of our people, but also the fact that we are an extremely reliable, responsible company and having sustainability always on top of the agenda.

So just to give you some illustration of that focus, we just ran our employee engagement survey. We have an extremely high level of engagement, 88% of our people taking the time, 80% of employee engagement at a time where really the company is transforming, the world is extremely challenging. It's really, really good to see that level of engagement. More important is to see what are the driver of that engagement, the trust in the purpose of Schneider Electric, the North Star, the fact that we have been committed, we are reliable, very strong sense of ethic and the fact that we offer massive development opportunity in the career of our employee.

And as a result of that, just to tell you, we have every year since many, many years, a worldwide employee shareholding plan. I think the trust of our employees is well illustrated in the 62% of employees who are investing at Schneider, who are investing in the company with 3 countries, China, France and India, even above 80%. So I think that gives a strong illustration of our commitment of our employees that I want to thank today again for the great job they are doing every day at Schneider Electric. Multiple recognition outside on that commitment to people and sustainability. And of course, always pleased to see when you are rewarded as the most sustainable company in the world in '26 for the third year in a row.

As you know, we've launched our new Sustainability Impact program. This is a beginning of a new cycle. We are at the end of H1. I will not go into the detail, but we are tracking well with our target that we have fixed for year 1. And I will just finish by telling you that my priorities, the priority of the company are unchanged. It's very interesting. That's probably the first time since I've been appointed that I don't change one of my slide. This slide is exactly the slide we have used to enter in '26 with you, but also we are with our team.

Everything that I said around technology, leading in this new energy landscape, being the most innovative company in this new electrical distribution world, going to the next level of intelligence by bringing this unique data layer that we need to deliver more intelligence for our customer. It's a combination of being more software defined in everything we do on our product portfolio, but delivering more value through AI, through software to our customer. And of course, continuing to have a very strong leadership in data center and all of that with more and more technology and supply chain partnership to accelerate our strategy.

On customer differentiation, I've covered all the points. We will continue to be that unique company, which is extremely regional to be extremely close to the customer with a certain number of areas where we want to be really global when it comes to some very strategic important, strategic fundamentals. And a very strong obsession at my level on operational excellence, but I do believe that at the end of H1, we are proving to you that what we said last year start to work, start to impact our P&L with a very strong focus on price, delivering better margin and continue to be very focused on productivity and efficiency. And we are also investing in AI internally to make sure that we prepare the next level of efficiency for Schneider Electric, but we'll get back to you with more details in the future.

On that, I'd like to hand over to you, Nathan, to go more in details into our financials.

Perfect. Thanks, Olivier, and good morning, everyone. I'll start with our key financial highlights for the first half. Our H1 revenues are at EUR 21.2 billion, a record for first half. In gross margin, as Olivier already mentioned, we see net positive outcome of 10 bps organic with strong productivity and acceleration in gross pricing on products, offset by inflationary cost, tariffs and mix.

After gross margin, we see strong positive evolution in our operating leverage, driving our adjusted EBITA margin up 120 bps organic, and we retain good control on our SFCs. Our net income and adjusted net income both show strong positive evolution. Finally, as Olivier mentioned, we delivered a record free cash flow for H1 at EUR 1.6 billion.

Moving to H1 revenues. Both businesses are contributing to growth. In Energy Management, we delivered growth of 15.4% as we see continued strong demand across all of our end markets, led by data center, but with strong contributions from all. In Industrial Automation, we delivered growth of 7.7% with strong contribution from discrete as the recovery continues, and we're pleased that process turned positive in Q2 in the longer-cycle business after the demand had picked up in H2 of 2025.

Scope impacts are now immaterial with Motivair considered for only 2 months in H1 as it is now part of our organic performance. And FX translation adversely impacted our revenues by close to EUR 750 million, mainly due to the weakening of the U.S. dollar and the Indian rupee against the euro. And as you can see at the bottom of the slide, if rates remain where they are now, we would expect ForEx impacts of minus EUR 450 million to minus EUR 500 million on revenues and negligible impact on adjusted EBITA margin for the full year. In total, we were up 14% organic in sales with strong momentum going into H2.

Sticking with the H1 view for just one more slide, we'll show here our digital flywheel with the weightage in percentage of the group sales. We see the continued progression, up 2 points versus H1 last year to 62% as we execute on our strategy. And at Schneider, we really see the value in the flywheel and the strong growth in connectable products sets us up well to deliver the energy and industrial intelligence layers, which, of course, are more recurring in nature, deepening our relationships with customers throughout the ecosystem and make our revenues more predictable and resilient over time.

Now moving to Q2 and the revenues. Revenues were up 16.5% organic to EUR 11.5 billion, a record for any quarter with all regions contributing. In particular, we have North America and China East Asia, both delivering growth around or above 20%. And I note India is also growing at similar levels. So our 3 largest geographic markets are all booming. Scope impacts in Q2 were immaterial, while ForEx eased in comparison to Q1.

Turning to our mix of business models for Q2. Product growth accelerated to 13% organic. And as Olivier mentioned, price contribution increased sequentially versus Q1, represent approximately 4 points of product growth in Q2. The realization of price increases passed proactively at the start of the year now started to accelerate through the quarter. What that also means is that product volumes, therefore, also accelerated with contributions from both business units. If I go to systems, our systems business, where we primarily sell directly to end users, it continued with high demand and strong execution, translating into sales of 28% growth driven by data center, but again, with growth across all 4 end markets.

Finally, on software and services, they grew plus 6% with double-digit ARR growth in AVEVA and single-digit organic growth. It's especially important for AVEVA as they now enter the completion of their transition to subscription, a journey that our EM software assets are still progressing along. Services inside grew mid-single digit overall, and we expect an improved growth contribution in H2.

If I focus now on the geographic drivers that accelerated Energy Management to growth of 18% organic in Q2. North America, as you see at the top left, was up 25% with the U.S. driven by momentum in data centers, where we saw particularly strong growth from cooling, from prefabricated modular solutions, and 3-phase UPS, with also semicon and Energy & Chemical segments contributing to that growth.

Canada grew double digit, while Mexico remained down due to certain trade uncertainty. In Europe, we grew at 8% organic, led by performance in Power & Grid and also in buildings. Data center demand in the region did remain strong, and we see that demand coming, while the sales growth was impacted by execution on some larger projects last year. In Europe, all 5 of the major European economies were growing at mid-single digits or higher, with Italy and Germany leading the growth. In China and East Asia, we were up a strong 20%. Inside of that, China was up double digit, led by data center, semicon and renewable power. Whereas in East Asia, we also grew strong double digit, but it was primarily led by data center, which is a reflection of the broadening in geographies boosted by the AI demand.

In South Asia and International, we grew 13%, and it's a bit contrasted in performance by region. But as I mentioned earlier, India remains very strong with broad-based growth across the end markets. Australia was also very strong, benefiting from data center trends. While the growth in South America was a bit more subdued with some good traction in grid-related projects with a bit softness in the more short-cycle product exposure there. Finally, on Middle East, it remains, of course, subject to considerable uncertainty. And while we have adapted, the situation remains volatile and has impacted growth.

Turning now to the geographic drivers of Industrial Automation, which grew 11% in Q2, showing the good momentum and return to revenue growth in process. North America grew 8% with the U.S. up mid-single digits, led by growth in discrete and returning to growth in process, which we would expect to continue based on the backlog we've built and discussed in previous quarters. Canada grew double digits also in this business unit with strong contribution from the process segments, while Mexico, in fact, turned -- returned to growth, sorry, against a low baseline of comparison.

In Europe, we also grew 8% with AVEVA up strong double digits with contributions from various countries. There was good growth overall in discrete, led by strong growth in Germany and Italy, which are 2 of our largest markets there, while process also grew, although the market recovery in Europe was not quite as progressed as in North America.

Moving in the circle, China and East Asia delivered very strong growth at 20%. Across the region, we saw strong double-digit growth in discrete markets and encouraging signs in process markets in some of the countries within East Asia. China grew strong double digit, led by good traction with OEMs, while East Asia grew double digit with semicon segment as a key driver.

Finally, on South Asia and International, we grew 9% in the quarter, with India seeing strong growth in discrete and strong performance from AVEVA in Australia. Like for EM, the Middle East remains subject to considerable uncertainty. Across both businesses, we see this as a challenge in H2 2026, but in the longer term, there are clearly strong opportunities to participate in the post-conflict recovery.

Turning now to income statement and our first half income statement here. We finished H1 with adjusted EBITA of EUR 4.1 billion, a record for an H1 with organic growth of 22%, taking us to a margin of 19.3% of sales and growing 120 bps organic. This was driven by our strong top line growth. Our focus, as Olivier mentioned, on operational excellence, driving strong productivity, driving strong product price with acceleration in Q2 and significant operating leverage.

Our adjusted EBITA margin in Energy Management was up 100 bps organic, broadly reflecting those same dynamics as the group. The adjusted EBITA in Industrial Automation also improved year-over-year by 50 bps organic as we implement the margin recovery plan there to reach 18% by 2028. The last thing I'll notice at the bottom of the slide, R&D costs in the P&L remained stable at close to 6% of sales, representing our sustained commitment to innovation as we deployed around EUR 1.2 billion on R&D in H1.

Turning now to our gross margin bridge for the first year of the half. We finished H1, as I already said, with gross margin of 42.5%, up 10 bps. If I focus on a couple of levers. On net price, we see the benefit from those proactive pricing actions taken at the start of the year, which really accelerated strongly in Q2, but were still insufficient to offset the raw material inflation and tariff impacts we faced which is a good moment to remind you that the impact from RMI and tariffs in H1 last year was close to 0. Related to tariffs, we saw the benefit of around EUR 100 million coming from tariff refunds in Q2. For the full year, we are unchanged in our expectation that we will offset the impact of RMI inflations in value through our pricing actions.

Moving to the second lever. Productivity was particularly strong, as Olivier mentioned, above EUR 500 million impact in H1, showing good sequential improvement driven by several factors, including technical productivity, supplier negotiation and leveraging our capacity investment of recent years. One note of caution is that we delivered more than 70% of our full year 2025 productivity in H2, so the baseline does become a bit more challenging as we progress along the year. Mix was negative in gross margin as expected, given the very strong growth in our systems business model.

Moving on to support function costs. These grew at 8% organic compared to the top line growth of 14%, thereby, as Olivier also mentioned earlier, demonstrating considerable leverage with our SFC to sales ratio improving by 1.1 points. We continue to maintain tight control over discretionary costs and start to see the benefit of the structural actions we have taken to improve efficiency. And alongside this discipline on one side, we do continue to invest, as I already mentioned, in R&D, but not only, we also invest in our digital transformations and AI initiatives.

Turning now to net income. On a reported basis, including scope and ForEx, our adjusted EBITA was up 17% below the line, I'll pick just a few items to cover. In OOIE, we have an impairment of capitalized development costs. As you know, we have a strong emphasis on refocusing the Industrial Automation business as part of our overall operational excellence a pillar. Part of that initiative involves simplification of our AI -- sorry, IA offer ranges, and we've been making progress on this in H1.

If I move to the second line, on restructuring costs, we do see the uptick that we've previously communicated, and you see the savings of that from the previous chart. There is no change to our expectation around the total envelope of incremental charges, but we do expect those to peak in 2026 with total restructuring charges of around EUR 450 million this year.

On net financial costs, the increase there just basically represents our bond refinancing and financing undertaken in 2025. And all in at the bottom, our net income lands at EUR 2.5 billion, up 30%, while our adjusted net income, which removes those onetime charges we had last year, grows 21% or 29% at constant currency. If I move then to cash flows, our operating cash flow for H1 grew 28% year-over-year, reaching around EUR 3.8 billion, primarily due to the strong P&L performance.

Free cash flow was a record for an H1 at EUR 1.6 billion, including the usual H1 buildup in working capital, which reflects the rapidly growing nature of our business. On non-trade working capital, we see the impact of a much stronger H1 performance, both on bonus accruals plus the onetime charges we had taken last year. We expect our cash conversion ratio to be around 100% for full year, which was in line with our communicated expectations.

Finally, and Olivier mentioned the strength of the balance sheet, our debt ratios remain strong, supported by our continued strong results. And you will see in this slide that our credit ratings with S&P and Moody's have been reconfirmed following the proposed acquisition of Cognite.

With that, Olivier, maybe I'll turn it back over to you.

Thank you very much, Nathan. And as usual, look, we'd like to finish that presentation to tell you what are -- what do we see for H2, what are the trends and what are the financial target of the company.

First of all, what I'd like to say is what do we expect in terms of trend? We will continue to live in a very, very complex environment. I think we've been used to for the past years, we are living in a world which is more and more fragmented. And for us, what is very, very important is to make sure we can navigate through that level of uncertainty. So we don't believe it will reduce in the next 6 months, in the next 12 months, we have to be used to that. When you are living in this kind of environment, what makes Schneider Electric really very, very different is the fact that we have this very, very balanced exposure.

So what we expect in H2 basically is to have a strong contribution from our 4 end markets. from all our 4 business model and from our 4 regions. So the triple 4 will contribute really to that in H2. If I go a little bit more in detail from an end market standpoint, of course, data center continue to be a great opportunity. Short term, midterm, we want to be really a very, very, very strong player in that market across the life cycle. We see that the trend will continue to be positive. We see -- and it's extremely important for me that the other segment of Schneider are also contributing Industry infrastructure. You've seen that Industrial Automation is really growing fast again in Q2. So that's great to see that we'll be living in a market that will continue to contribute strongly and also with building and probably residential a little bit behind, but still a very positive outlook where our portfolio make a lot of sense.

From a geographical standpoint, as I said, all the regions will contribute with a particular contribution from U.S. and India, but we said it in Q1, we see it again today. China contributes, Europe also contribute pretty well. But here, we cannot be helped too much by the environment. It's about us to be more differentiated. And of course, as we said, we are still living in a very uncertain world when it comes to the Middle East crisis, and we'll have to continue to navigate, which impact potentially put pressure in the region from a business standpoint, but also that has impact, as you know, on the entire supply chain inflation. But we've demonstrated in H1 that we know how to navigate.

All our business model will continue to contribute to the growth, fast growth in system, fast growth in product. And of course, we want to continue to make sure that everything is translating by an increase of our digital flywheel and with an extreme focus on everything that comes from software and services. And last but not the least, I said it already several times today, it's super important that we continue to execute our company program. The priority we fixed end of last year are the right one and obsessed really focused on gross margin improvement with 2 particular drivers, pricing and industrial productivity, continue to be very disciplined in our SG&A, and we've demonstrated for more than 1 year now that we are extremely disciplined.

And as a result of that, that gives us the possibility to continue to be very ambitious when it comes really to profitability. So as a result of that, in that environment, where Schneider Electric has delivered a very, very strong H1. We are coming to you with a revised target, a target that has been upgraded where we believe we can deliver between 14% and 19% of organic improvement of adjusted EBITA, which is supported by 2 very strong drivers, as you know.

So we are revising our guidance up in terms of revenue from 7% to 10% to 10% to 13% organic, and we are revising up also our adjusted EBITA margin from 50 to 80 to 70 to 100 bps by the end of the year. As I said to my team, we are at the half time of the game. We are extremely ambitious. We have to stay humble to continue to be very focused and making sure that we can really exceed our target this year and deliver that new guidance we are presenting to all of you.

Thank you very much for your attention, and I hand over back to you for the Q&A, Antoine.

All right. Thanks a lot, Olivier. So indeed, there will be time for us to open the Q&A. I'm sure that after what Nathan and Olivier presented, we will have plenty of questions. So just to make sure that we'll be able to give you the capacity to speak each of you. We'll try to keep it to one question at a time.

So with that, operator, let's get started.

[Operator Instructions] The first question comes from Phil Buller of JPMorgan.

Congratulations on the results. There's a lot in there, but the gross margin development was not expected or what was guided to, I guess, being positive in the first half and 120 bps of adjusted EBITA margin is also better than expected. And I think that the original guide was that there was going to be an H2 weighting this year.

You're now expecting the opposite profile as implied by the guidance. So what has changed other than costs, which actually went up? And was this price realization or price increases being above plan? Or were there things like tactical cost savings that we should assume come back in H2? Or how do we reconcile that sequentially lower H2 EBIT margin progression in the second half of the year beyond conservatism?

Thank you very much for your question. I'll start. And of course, Nathan, I'll let you complete.

Look, number one, if you remember all our discussion last year, I was extremely open with you. By the way, all of you guys were pretty challenging on the capacity to Schneider to deliver a really strong operational performance. I think many of you gave us a feedback in our CMD that you liked really the strategic direction, the differentiation of the company, but we were telling us, look, you need to be back to very strong operational excellence.

I've been very transparent since I've been appointed. We put a plan last year. We've communicated to our leadership internally, and then we work hard. Now when you manage such a large company in such a level of uncertainty, it's very difficult to predict at which point of time everything is going to scale. So when I entered in 2026, I had a very high level of confidence that we were very well aligned in the team. In multiple calls, I told you we were ready this time January 1 to hit the market when it comes to pricing.

I knew we were increasing our focus on initial productivity, but it's always difficult in such large organization to predict at which -- I mean, at which speed it will scale up. And we definitely see across H1, month after month, it's getting better and better. We finished very well in Q2. Of course, everything being amplified and all the work you do on operational excellence is amplified with, of course, more volume, more growth. And as a result of that, we definitely finished H1 a bit in advance versus what was the initial plan, clearly.

And in a market where we continue also to grow fast. And if you go in the details of our numbers, you will see that on the growth, and we are always living in a competitive environment, we do pretty well. We were also challenged last year on a certain number of metrics. We say with [ net ] triple-digit growth in semicon, in data center. So all this volume also is accelerating, which demonstrate the great job of our salespeople everywhere in the world.

And managing P&L is very, very simple. At the end, if you have great volume and you do a great job on operational excellence, of course, the results are better. So always difficult to predict at which speed we will be back to business. But I think we are demonstrating that the plan is working, and that gives us the confidence to raise the guidance for H2.

Do you want to go a little bit more in detail?

Yes. Maybe the only thing I'll supplement for you, Phil, is because I don't want to repeat what Olivier said, but we view H1 performance as primarily in line with what we had guided and what we've been discussing with you over the last months and quarters, and we see the good progress in productivity, in pricing.

Now the one thing I mentioned earlier is there's still -- and Olivier said, we live in an uncertain environment, and we continue to monitor. I mentioned the tariff refund. So that element, certainly, we weren't considering back in February when we're talking about the shaping of the P&L across the H1. And otherwise, I mean, inside of our guidance, we're taking multiple scenarios. We're looking at the underlying run rate. We're looking at the operational excellence programs that we have in place, and we're pretty confident that this is the right level at the 70 to 100 bps with the growth of 10% to 13% that put us in a healthy range to be able to deliver at the full year of 2026.

The next question is from Alasdair Leslie of Bernstein.

So my question is on data centers. One of your closest peers yesterday highlighted challenges in scaling more integrated solutions. They talked about being on a learning curve. You're developing similar solutions. You kind of sort of showcased some of those in the slides.

How comfortable kind of do you feel about execution risk as these, kind of, AI deployments become larger, more complex, more modular? And how do you ensure, I suppose, that this doesn't become a constraint on growth or margins, particularly as you're kind of building momentum around execution again?

Look, that's a great question. And we've been in this data center industry for more than 20 years. As you rightly said, the past years, we've seen an acceleration. And if you remember every time what we've explained with Nathan, the way we look at the market, number one, we speak to our customer. We have the privilege to work with 200 customers in the world. Of course, a couple of them represent a large part of the opportunity, but not all because you have the hyperscaler, you have the colo, you have the neocloud in North America, everywhere in the world.

And we like to work with them and say, "Hey, give us basically what is your own forecast in terms of gigawatt to be built for the coming years." And from there, that give us a kind of idea where we could be in 2030, but more important, where we are in the next 2 to 3 years. And we cross that, of course, with our pipeline, with our backlog. And since, I would say, forever, that's the way we really predict the future, and we try to anticipate the acceleration. It doesn't mean that we are always right. But we have a possibility to increase capacity if we have visibility for 2 to 3 years, we can in less than 2 years, increase capacity. And that's what we've been doing since basically the past year and especially since 2 years where we see the acceleration.

So of course, we know that at one point of time, the market will be constrained, constrained sometimes by component, by memory. That's why also on our side, we increased our safety stock in all those components. That's why we increased our capacity with Foxconn and to make sure we can make the most of that opportunity at the right level of margin. Also, this is very important to me. The opportunity is massive, but we want to deliver strong return to our investor. So we make sure also we select those customers that wants to build a long-term partnership with Schneider with the right level of economics where we balance all those factors.

And when it comes to technology, as I said before, what is very important for us is to have all the architecture, which are important for that market. You don't need to be ready 3 years in advance. You need to be ready when the first customer wants to have the first quotation and place order. And on that part, I think we are doing extremely well and getting ready for the next wave.

So your question is absolutely valid. I'm not saying it's easy when you look at the exponential growth, but we try to be extremely disciplined from the long-term planning to the short term and the way we manage and execute and deliver great service to our customer. And at the end of the day, what you can look -- see through our H1 results is so far, it seems to be working very well, but we need to stay attentive because indeed, the world is so unpredictable that you can have always issue in that area. But so far, so good, I would say.

The next question is from Andre Kukhnin of UBS.

I'd like to come back to net price, just to clarify a few things. Could you firstly clarify the net tariff impact? Because it shows us minus EUR 104 million in the bridge. And is that net of EUR 100 million refund? And I guess more importantly, how did the net price evolve in Q2 versus Q1? You said it improved, but did it come already to breakeven or positive? And if not, do you expect it to be already in the positive in Q3?

Yes. Well, look, I'll let Nathan give you all the details of the waterfall. What you can see through H1 is basically we are doing what we said end of last year, which is hitting the market. And definitely, pricing has been extremely positive to us in H1.

But you want to go through the detail of tariff impact and pricing, Nathan?

Maybe I can go through a bit more details for you. Yes, from your mechanical read, so I answer the easy one first, your mechanical read, yes, you can add EUR 100 million to EUR 104 million. Now in a broader sense, though, we're monitoring and adapting to this net tariff world. There's still uncertainty in tariffs. You saw the announcements even last week. So we're monitoring that one on all dimensions.

Now you asked a specific question also on the ramp-up of the price. We told you in Q4 and in Q1 that price was approximately 2% of the transactional. Now at 4 points, it's basically a 2.5x price realization in Q2 versus Q1. So this is really good ramp-up that we're seeing. It's what we've been talking about this acceleration and the proactive price increase in Q1. And mechanically, that's giving us, again, 2.5x price realization in Q2 versus Q1.

And I think it would be fair to say, Nathan, that when we look at where we are at the end of H1 in June, if we are able to repeat that in H2, we'll be in a great position to compensate the impact of raw material impact and tariff impact in our P&L.

The next question is from Jonathan Mounsey of BNP.

Obviously, lots of good stuff in there. Maybe I'll talk about IA though. Obviously, revenue up strongly, double digits Q2, I think 7.7% organically to H1. I think that's about EUR 265 million of organic sales expansion. Margin is only up 30 bps. I mean we've waited a long time for this business to start growing. In the second quarter, they're double digits. And yet the organic profit expansion is still pretty anemic. I was really expecting -- if I had known sales were going to be this strong, I'd have expected a strong expansion.

Why is that? And I guess more interestingly, why and when will it get better? And what are you doing to improve IA's drop-through?

Yes. Thank you very much for the question. I'll start, and Nathan, feel free to complete. What is really important, and of course, as you know, in our Industrial Automation portfolio, we have our software business from AVEVA, and we have also our Legacy Industrial Automation business. Both are extremely important strategically for Schneider. And when you go to the IA, Industrial Automation legacy business, I have appointed, as you know, Gwen in H2 last year really to come and to have a new view on that business, how we can make it more synergistic with the rest of Schneider Electric.

And we are working on a strategic plan turnaround with 2 horizons, a long-term horizon and a short-term horizon to deliver strong return. The mandate that I give really to Gwen is let's make sure that Industrial Automation contributes strategically in the future to Schneider. So the long-term horizon is priority one, which means that we have to make a certain number of decision on where we refocus our portfolio, what we want to accelerate, double down, the place which are probably less strategic. And all of that, we try to do it with an economic equation where we accelerate the growth, and we are returning back to profitability.

Our commitment with Nathan and Gwen during the CMD was to say we'll turn around that business to be back to the profitability we used to have. Actually, on the other side, AVEVA is contributing well. They are almost at the end of their transition, and we see the positive impact on the profitability. When it comes to the IA legacy business, we are well on track with the plan, and you said it yourself, you can see it already through the growth. When it comes to the profitability, it's on track as well. But again, it's a plan that will take a couple of months, maybe 2 years really to be back to the level where we want to be.

Nathan, anything you want to add?

No, I think what we can say generally there is it's on track to our 18% by 2028, which we communicated. Gwen is working on the portfolio. As Olivier alludes, we took the write-off for some capitalized R&D projects in the past in H1, and we continue to progress. Now we don't give you the details, but we saw basically the same level of leverage on the base cost, and we continue to work on the gross margin, but we consider that we're on track with our commitments there in the medium term.

The next question is from James Moore of Rothschild & Co.

Look, I understand your fortunes are not one end market. But just on data center, there's clearly been a fade in equity markets globally around AI in recent months, concerns about end users not achieving ROI, moving from tokenmaxxing to tokenminning, the pace of Anthropic ARR fading on a sort of month-on-month basis. How do you feel about the wider debate on AI and the path for the next 5 years? I mean you talk about asking your customers the gigawatts. But it's interesting. I mean, you've talked about 10% growth in the past, but here we are delivering triple-digit growth as a kind of industry.

So did those gigawatt plans basically not give you the correct predictions 1, 2, 3 years ago? And how are you feeling about the customer pipeline today? Basically, the question is how are you feeling about the overall AI environment? And do you think the high level of orders being enjoyed this year can grow again next year or we going to normalize?

Thank you very much. I think this is a question that everyone would like to answer with a lot of precision. What I would start to tell you, if you look at, first of all, the way we are using AI at Schneider, you know that we have announced, and I told you we are very excited by the acquisition of Cognite, why? Because when you want really to connect the physical and digital world and to deliver more intelligence, we are at a unique point of time. If we are able in the industrial world, process, energy to capture those data, to structure, contextualize, leverage OSIsoft to capture those data in the industrial world, operational real-time data.

And we need to contextualize, and deliver more intelligence to our customer, I mean we deliver eventually what we wanted to deliver at Schneider Electric for more than 10 years. What does it mean as a result? It means as a company, we will consume more AI. Our customer will consume more AI because that will go really to a level of intelligence, driving efficiency, sustainability that we have never seen before.

So on the consumption of AI, if you look at what we do Schneider as a company for our customer, if I go to the efficiency part of what AI can do to make Schneider Electric simpler, we talked already about pricing today. We are starting to experiment AI in pricing. We are experimenting AI in forecasting. We are experimenting AI to amplify ourselves. I can tell you as the CEO of Schneider Electric, if you will ask me, what is your level of consumption of AI today versus what it will be in 5 years from now? I will tell you maybe 1% only.

Now I cannot predict about the world or the other company. But when you go to the infrastructure side, we need the right level of infrastructure to support that acceleration. It has been the case in the past. We see an acceleration this year in the U.S., but we see also a big acceleration in the rest of the world, which was completely disconnected because when you look at data center in the world to support cloud, it's fairly balanced by geography. When it comes to AI, Europe, rest of the world, we are really behind. So that's also a place where people are catching up. Now is it too much compared to what the people will need? I don't think it will stay at that level for the next 5, 10 years, but there is a very, very solid growth. And I do believe the demand is just increasing.

Now you raised another point that I face as a CEO. It's going to cost you more and more because token are not free. The company have -- who are selling those model have to be profitable. So on our side, we make sure, first of all, we have a good deal and we have the right partner. And on the other side, we have to get ready also for that level of efficiency, we need to invest in token. So we are, by the way, not increasing our headcount this year. We are extremely strict on our SG&A because we want to make sure step by step, we can also increase our spend of token where the return on investment will come maybe after 1 year, 2 years or 3 years.

So your question is probably the most important question we have all to address. But I think we are very strict on the way I said it already, we predict the market, talking to customers, and we try to stick as much as possible to the demand. And as long as those signals give us an indication for the next 2 to 3 years, we know how to be agile to serve the demand. And that's what we are trying to manage. And as an overall question on the AI structure.

But definitely, this is a question, probably the most important one and the one for a company like Schneider in our industry that will really create a strong differentiation in your capacity to deliver, to execute to serve the demand of your customer. So, so far, we believe it's manageable. We believe it makes sense. But of course, we'll have to be all very, very attentive of the evolution in the coming years, especially on the evolution of the model, the technology and how it could change the mix in the future.

Thank you, Olivier. Thank you, James. Look, I'm conscious of time. We are already at the top of the hour. So we may have the time for a couple of questions more.

The next question is from Daniela Costa of Goldman Sachs.

I wanted to ask you a little bit if you could give us some color on how should we think about, sort of, your capital allocation M&A strategy now? Obviously, you did Cognite and with sort of there's a lot of other rumors out there in the press. Should we be expecting sort of a period where you will accelerate M&A growth along with organic? And on Cognite specifically, maybe some color on sort of how you envisage growth and margin profile going forward to contextualize the multiple?

Look, thank you very much for the question. I'm afraid I'm going to be a bit boring and repeating what I've said already several times.

Number one, we have to keep in mind that when you look at the guidance for this year or when you look at the guidance we presented to you during the Capital Market Day, we said most of it will come organically because we do believe that when it comes really to go to the next level of intelligence, physical, digital world, we have a lot in-house to deliver most of the growth that we see in the next chapter.

As I said in multiple presentation, I'm obsessed by bringing this technology to the next level, advancing energy tech, the combination of physical and digital. And I want really to make sure we do it at speed. We do it with the best technology. And for instance, when we did Motivair a bit more than 2 years ago now, that was a good example where we know the market is going to accelerate. GPU are going to accelerate. Liquid cooling will become essential.

Two options in front of me. We develop organically 4, 5 years before you get really competitive or you do it through Motivair. We find a great company, great people. We have a good deal. We go for it. Cognite, you understood that it's the brain of the next cycle of Schneider because this is where you will create this unique data foundation for energy and process. It's a company which has developed a unique rare technology. When you speak to the customer of Cognite, you are really extremely -- I mean, they are extremely positive about the feedback of the product.

Now what do we expect from Cognite is a dual mission, keep developing Cognite for customer because some customers love to buy that data layer. They want an agnostic platform, and they will continue to sell it and develop it for the customer. At the same time, we want to leverage that technology to be inside all the offer that will deliver intelligence to our customers.

So you can imagine that we will sell more and more solution in the Schneider Electric solution that will be amplified by Cognite technology. And likewise, it will be the same on the AVEVA side. So we are very, very excited. That will be definitely a fast growth on both sides, but that's really something that will be really a foundation of the next cycle of Schneider. So very excited by that acquisition.

The next question is from Gael de-Bray of Deutsche Bank.

Can I get back quickly to the margin performance, please? I think I remember at the CMD last year, you set an industrial productivity target of between EUR 2 billion and EUR 2.5 billion cumulatively by 2030. So that's around EUR 500 million annually.

I mean in the first 6 months, you delivered more than EUR 500 million of productivity. So I'm now wondering if that performance was kind of exceptional or is rather the beginning of a new trend for you with a stronger productivity improvement run rate than previously assumed?

Yes, Gael, it's a good question. Thank you for the question. Clearly, we're -- let's not mix the 2 time lines, and I'll be precise on how we feel about it. But from a long-term perspective, we're absolutely continue to be committed that productivity will be an absolute obsession for the group.

Now getting to the short term in H1, yes, we're really -- we really like the performance in productivity. We see the attention, the detail from the organization on the different levers, whether it's cost by design, whether it's technical productivity, whether it's negotiation.

Now I reminded you in the financial section, last year, H1, we're always talking about year-over-year. So last year, H1 was a pretty low basis of compare. But absolutely, this is the type of productivity actions we're trying to drive. Now does that equate to the same linear over a 5-year period? Probably not, but we're super excited about the operational excellence and productivity into the H1 of 2026.

Thank you, Nathan. Thank you, Gael. I think that we have the time for one last question before I give back the floor to Olivier for conclusion.

The final question is from Ben Uglow of Oxcap.

Can I ask around China? It's kind of interrelated question, I guess. You're up 20% in Industrial Automation, up 20% in Energy Management. It's clearly going extremely well.

I guess my question is, when you think about it and when you think about the growth, is this kind of all related to either semiconductor and data centers? Or is it something more broad-based? And the reason I ask, even in your press release, you call out packaging, material handling and stuff like that. And what I want to know is, is this all just a giant pull-through from the AI effect? Or are you actually seeing something more granular in, let's call it, the old traditional Industrial Automation part of China?

No, that's a great question, and there is probably a lot in your question to cover.

First of all, if I just step back a little bit and I give you a global answer, we are at a very, very interesting time where electrification is accelerating everywhere, and it's even amplified with the Middle East conflict with more and more, it's a topic of sovereignty. It was a topic of sustainability. Now it's sustainability, sovereignty, and we see a truly acceleration in electrification everywhere in home, in building, in transportation, in industry, more and more electrification of process.

And of course, you combine that with the boom of digital, the boom of AI, which for a company like us give a lot of opportunity. So that gives us very, very strong fundamental of growth for us, growth opportunity, strong driver for Schneider Electric. And of course, data center is probably the most visible. You're absolutely right to say that a large part of semicon is related to data center, but not only. But we see also -- and I've given the information about AiDASH, we see that when you are, for instance, in Power & Grid, the fact that there will be a raise of electrification everywhere.

And let's make no mistake, data center represents only 1.5% of electricity consumption, even with this boom that will go to 3%, 3% plus, but 97% of the electricity consumption in the world come from the other segment, your home, my home, this building where I am today, factories, infrastructure. So this is a very strong driver of growth for the future. Data center is the fastest one, semicon is equally high. But across the value chain, you see a large number of opportunity. And we are at a unique point of time, and that's for us definitely to maximize.

Now when it goes to China, China, it's a bit more complicated because you have a very strong demand for the export market at that point of time in China. So that's why we are really doing a good job in the industrial sector. As you know, China as a country has been extremely focused on the electrification. So Power & Grid, process, industrial electrification is also very, very high demand. Semicon is growing. Data center is also growing in China. So everything which is more infra is growing. And of course, the only part of China, which continues to be very slow is the building and residential market.

But we reduced drastically our exposure. We have a much lower exposure in residential and building in China that we have in the rest of the world. So at the mix, that gives us a favorable position. So I would say this is the answer I can give you globally with some different color in China. But the good news for us, Schneider Electric, is, again, data center is an accelerator. But what we see and the change for us since 12 months is we see all segments contributing, and that's what we want to do because what is super important for me that we keep a very, very balanced exposure to make sure we are extremely resilient across the life cycle. And I think this is what we are demonstrating probably today through our H1 results.

Thank you, Olivier. Thank you, Ben. So with that, we are closing the Q&A. So obviously, we have not been able to take all of the questions. So we'll engage with you separately. But before we finish, maybe Olivier, can I give you back the floor for some conclusion words.

Thank you, Antoine. And again, thank you for all of you for being with us today. If I summarize, it's, again, I just said it, but it's a very, very interesting time where I've never seen so many uncertainty in the world. The geopolitics are not helping. There are a lot of big transformation. We put a lot of pressure on company, especially global company.

As I said, we have to live with that. We have to learn how to navigate and to be faster and more agile than the others. And at the same time, for Schneider Electric, I think if we look at the way we positioned the company for the past 10 years, electrification is accelerating. Digitalization is coming even to the next level with AI. And that's really for me, a unique opportunity for Schneider in all our segments to give more to our customer, to give more intelligence to our customers.

And that's why we are also doubling down in digital capabilities in AI, in Cognite, in AiDASH, in strategic partnership with Kraken because we really want to make sure we get ready for the next cycle. And that's very, very important. As a CEO, you have always really to deliver strong results in the short term, always get prepared for the next cycle. And that's exactly what we are doing with our new strategic plan and our company program. I think the H1 results demonstrate that our customers are confident we are doing the right solution. We are the right partner for the short term, for the long term.

The H1 results show also that our team has been extremely resilient at Schneider Electric. We know we were really challenged, but they are working hard to deliver really this company program, and I want really to thank all our employees. And as a result of that, I think we do a better job to deliver a strong return to all of you with always a very strong discipline in capital allocation.

But I would just conclude, I love sport practicing, watching. We are at half time of the game. So let's say, extremely ambitious, equally humble. We are in the right track to deliver a record year for '26. We are at half time of the game. Great job. We are happy. Thank you for your support. And let's continue to be focused to deliver a great job in the second part of the year. Thank you very much for being with us today.

Thank you. Thank you, Olivier. Thank you all, and thank you for your support, as Olivier said. Goodbye. Have a good rest of the day.

Good morning. This is the conference operator. Welcome to the Schneider Electric's call for analysts and investors with Olivier Blum, Chief Executive Officer; Nathan Fast, Chief Financial Officer; Caspar Herzberg, Chief Executive Officer of AVEVA; and Antoine Sage, Head of Investor Relations. Thank you for standing by. [Operator Instructions] I would like to inform all parties that today's conference is being recorded. If you have any objections, you may disconnect at this time.

At this time, I will hand you over to Mr. Antoine Sage.

Hello. Good morning, good afternoon, and thank you for connecting at short notice. So as an intro and as a reminder, we are currently in a quiet period. So accordingly, today's discussion will be strictly limited to the agreement reached by Schneider Electric to acquire Cognite, and we will not be commenting on our 2026 performance. Joining this call, we have Olivier Blum, Schneider Electric's CEO; we have our CFO, Nathan Fast; and we have Caspar Herzberg, the Chief Executive Officer at AVEVA. For this call, we will present to you a couple of strategic slides that you will be able to retrieve on our website after the call as well as the press release that we issued yesterday.

I'm going now to hand over the floor to Olivier and Nathan and Caspar, who will elaborate on the definitive agreement reached to acquire Cognite, after which we will open for question and answers.

Olivier, over to you.

Thank you very much, Antoine, and good morning, good afternoon to all of you, and thank you again for joining in such a short notice. We are excited to be with you today, of course, to make an important announcement, which is the acquisition of Cognite. If I just go back to what we told you last year in 2025, we've decided to refresh our strategy and to enter in the new cycle. This new cycle has one simple goal, which is really to advance energy tech to the next level. And it means really being this company in the market, which will be able to connect the physical and to the digital world by electrifying, automating and digitalizing every industry business and home with a goal to drive efficiency and sustainability everywhere.

So I told you in our Capital Market Day in December that we were entering in a new era, a new era where we believe intelligence is key, a new era where AI will require more compute, more compute will require more energy and energy and industrialization will sit at the center of everything we do at Schneider Electric, not only because it's important for Schneider Electric, but it's important really for everything we do, our customer.

So for us, it's extremely important that we create a company that is able to connect this physical and digital world, a company where we can capture data, structure data, contextualize data and deliver those data across the life cycle. We believe that the company which will be able to structure those data on top of physical assets will be the company that will win in the market. So we believe this acquisition strengthens our belief that Schneider is in really in the position to be able by leveraging our data cube powered by AVEVA technology to deliver that unique value to our customers.

If we go to the history of how we have built this stack industrial world, you remember, we started in 2008 by combining AVEVA and Schneider Electric Industrial software to start really to create the first industrial digital twin in our company. Later on in 2021, we have enhanced, we have amplified everything we are doing with AVEVA by adding OSIsoft, the world's leading source of industrial time series data. And now, of course, we are entering in this new era, in this new era of [ in-depth ] intelligence, where we want to build an AI industrial champion by combining the historical capability of AVEVA and everything that Cognite has been able to build. So we are building really a foundation that brings data to the next level and that can create true intelligence in the industrial world.

So if I just tell you briefly about Cognite. Cognite is a company that has been created in 2017 in Norway. It's a company which has 800 people globally, a large number of R&D tech product people being located in Norway, great people. I had the privilege during the process to meet the historical founder who are still in the company and will continue to stay with us in the future. Their vision about the industrial world and how AI is going to impact the industrial world is excellent. They are benefiting to a very, very strong pool of talent in AI and they have been able really to do a remarkable performance, to deliver remarkable performance over the past years. And beyond the performance is with every single customer that I've met in the past 2 years, I can testimony that customers love the platform and really love the value.

So let me briefly walk you through Cognite core technology stack, which is designed to transform industrial data into actionable intelligence at scale. The first layer is what we call Cognite Data Fusion, which somehow is a core foundational piece. It provides a cloud-native industrial data foundation. It ingests and contextualize if you want data across IT, OT, engineering system, creating a unified knowledge graph. So all together, this is what enables customers to unlock significantly greater value from their industrial data within a fully open ecosystem. The second layer that you see on the slide is really Atlas AI that brings an industrial AI agent layer, a unique one in its industry. And through a low-code workbench, customer can deploy AI agents on top of this data foundation to automate workflow and accelerate decision-making, which drive very tangible business impact and generate efficiency for customers.

And if you go to the upper part of the stack, you have Cognite Flow, which act as the execution layer. It allows customers, people on site to rapidly build and scale production ready, AI native workload, which empower really the frontline team, as I said, to translate expertise into enterprise-wide value. So all together, you can see that those 3 layers create already stand-alone a powerful end-to-end industrial platform that turns data into intelligence and intelligence into action, which is really, really aligned with the long-term vision and strategy we have at Schneider Electric.

So I remind you that we have started a journey at Schneider over the past year to start to create something unique in the industry, which is called CONNECT, where we combine really from design to build, to operate, to optimize, as I said, a unique set of application and analytics across the life cycle. So we are, as I said in my introduction and what we do in industry now today, we want to do it, of course, in data center. We want to do it in infrastructure. We want to do it in building, not always with the same technology, but always with this [indiscernible] that the company that we will win will be the company that can connect the physical and the digital world. Of course, Schneider Electric historically has a very strong positioning, a strong legacy in the physical world in all the segments, including in the industrial segment.

But going to the next layer of intelligence is absolutely essential. And that's why I repeat myself, we have created this unique combination first of AVEVA and Schneider Electric software, then amplify with OSI, then now we amplify with Cognite. We believe that we can create an ecosystem that can be unique in our industry. And all of that we want that ecosystem to be enabled to be amplified by developers and partners everywhere in the world. So this platform has to be extremely open to welcome any kind of technology partner that we onboard on a regular basis. So that's what we have done so far at Schneider Electric with AVEVA.

And now I would like to hand over to you, Caspar, to explain a bit more in detail how Cognite and Cognite CONNECT and Cognite are going to work together.

Thank you, Olivier. And when you look at the design, build, operate and optimize life cycle of industry and you translate this life cycle into data, then you will see on the design side, models, assets, right? And these assets are at times very, very large, millions of data points if they are big process plants. right? Then on the operational side, you have the time series data that Olivier talked to that comes from how machines fare when they produce something. So this is vibration data. This is all sort -- this is the experience of the machine, if you like. And then, of course, you have optimization data, which is what you do with all of this data, asset and operational data and other IT and enterprise data, right?

So all of this together, we brought to the market in CONNECT, right? Most of this data today still sits on-prem and is then usually copied on the cloud for analytics and for AI. We've introduced a no copy capability, meaning that only the data you need to work with in the cloud is taken. And the challenge, of course, with these enormous amounts of data is how to scale this and while then dynamically maintaining the context of that data to each other, the context of plant to machine of time series data like a certain temperature on a certain day, 10 years back, all of this, how to maintain that and how to dynamically model that in the cloud. And what Cognite does for its customers is take this fragmented complex industrial data and integrate it into a single unified data model and most critically, a knowledge graph, supported by, as Olivier said, the Agentic AI workbench where you can use algorithms to dynamically model this without a lot of coding.

And that gives us now as AVEVA, Cognite and of course, at Schneider, the ability to have the full life cycle of design, build, operate, fully working in the cloud for our customers for analytics and of course, because of the dynamic modeling as a way of feeding into what the AI models of robotics, the AI models of any type of industrial AI need. So this is at the heart of this acquisition.

In summary, it gives us the ability to ingest, to contextualize data, not just from the Schneider and AVEVA systems, but across because we are -- because we have open softwares. All of our customers broad pre-existing data ecosystems, as I said, third-party data and so on.

Let's go to the next slide. Let me talk about how AVEVA significantly accelerates Cognite because what we bring them is immediate scale across all of the large industrial segments that AVEVA is currently -- that AVEVA and Schneider are currently supporting. And of course, the global footprint on top of that, that Schneider Electric has with its countries and its strong go-to-market engine. In addition, we have an installed base of more than 23,000 customers with the comprehensive portfolio I described earlier. So that gives, in summary, Cognite a reach, a depth and a scale to accelerate adoption and to bring the innovation they have to very often our joint customers and increasingly as they move towards life sciences out of the pure process industries to new customers.

Cognite, in turn, as I described earlier, accelerates AVEVA. It accelerates by bringing a modern cloud-native SaaS architecture with the focus on industrial data and AI I described. It brings advanced capabilities in industrial data management, the data graph, et cetera, that I just mentioned, a rich library of industrial extractors that will be added to the huge library of connectors and extractors that AVEVA already has. We would then be able to do any type of industrial data extraction for our customers, more than probably anyone in this industry. And of course, together, we will form a unified platform for the next phase of industrial AI because what Cognite brings neatly fits into what CONNECT has. And lastly, to say, of course, they bring a significant level of innovation and of a dynamic go-to-market focus on growing new customers, winning new logos. And you have to imagine this is like a locomotive that pulls the larger AVEVA with it to significantly more growth.

Next slide, please. And what you see here is just a very small extract of the different segments in which AVEVA is playing today and some of the customers. Some of them, many of them, Cognite customers today, often with a small land presence. But of course, the combination of the 2 companies is going to create a scaling effect across that customer base of, as I mentioned, 23,000 customers that is going to be hugely, hugely powerful.

With that, I'd like to hand over to Nathan for the next step.

Perfect. Thank you, Caspar, and good morning, good afternoon. I guess let me take a brief moment to cover the key terms of the acquisition, which you'll see are fully aligned with our disciplined capital allocation framework and priorities. So starting first with Cognite's financial profile. In 2025, the company reported an excess of USD 170 million of revenue with strong momentum reflected in 36% growth in ARR bookings. If I turn to valuation, we have reached a definitive agreement to acquire Cognite at an enterprise value of USD 3.1 billion with the transaction to be fully funded in cash.

In terms of timing, the completion of the transaction remains, of course, subject to customary closing conditions with closing expected over the coming quarters. Once completed, Cognite will be integrated with AVEVA and will be fully consolidated and financially reported within Schneider Electric's Industrial Automation business. And to conclude, overall, of course, this transaction, again, is fully consistent with our strategy tied process-defined M&A discipline, combining a strong strategic fit first, a compelling financial profile, strong growth and gross margin and a high degree of integration readiness.

So Olivier, maybe before we go to Q&A, I'll hand over to you for any closing comments.

Thank you, Nathan, and thank you, Caspar. As we said many times from our Capital Market Day to the different conference and meeting we had together, we said we will be always really open for M&A in a very, very targeted and selective manner. And Cognite is really in this category. I mentioned as an example that in the past, we have acquired, for instance, Motivair to accelerate really our technology stack in liquid cooling to go faster in capturing the growth opportunity in data center. That's very similar when we talk about Cognite today. The goal is really to accelerate the execution of our strategy, becoming a worldwide champion in the industrial world by taking AI to the next level is part of our ambition. It's a strong element of differentiation.

And what we found in Cognite is great technology stack, great product, high-quality people. And as I said in my introduction, a leadership team, which is made of historical founder who are committed to stay with us after the transaction and also many other people on the technology, on the commercial side that really understand the industry. They understand technology. They understand AI, but more important or equally important, they really understand the industrial world, and there was a strong technology fit, but there was as well a very strong cultural fit, which is always extremely important for me. This is a capacity of not only acquiring great product, but how it will fit with our culture.

And I'm really excited. And of course, we will have a period as Nathan mentioned until closing, but preparing the next step where we will combine the force, and we will ask really Cognite to lead this AI industrial platform is super exciting for us. So you can imagine that a strong attention will be put in place on retaining the people, developing those people and make sure we do a great, great integration culture in order to retain the key talent.

So it's time for me to conclude. Cognite accelerate our AI journey, you understood. If I step back a little bit on the big picture for us, it's really executing our strategy, going to the next level of AVEVA story. But I would amplify even more that what we found in Cognite will help also to enhance all our energy management technology stack on the software side because as we said multiple times, our goal is to bring industrial intelligence to our customers, but also to bring energy intelligence. So we are extremely excited. And of course, the focus will be really on delivering strong results and be able to grow fast that business with high level, of course, of profitability.

On that, I will stop, Antoine, and hand over to you for the Q&A.

Thank you, Olivier. Thank you, Nathan. Thank you, Caspar. Look, we've covered a number of areas, and I think likely addressed some of the key questions that you may have. So we just have 10 minutes remaining, so let's move to the Q&A quite fast. [Operator Instructions] So with that, operator, can we please open the line for the first question?

The first question is from Alasdair Leslie of Bernstein.

One of your opening lines yesterday in the press release, you talked about industrial AI shifting from supporting analytics to acting on and kind of executing operations. So I guess that's really interesting and quite exciting, obviously, could unlock a lot of potential productivity and growth. So I was just wondering maybe if you could just help us understand how much Cognite might help you kind of leap forward to that point. How close might you be with Cognite to kind of AI autonomously taking command of real operations?

No, sure, that's a good question. Caspar, do you want maybe to give a concrete example because we have already some customers who are using our own AVEVA platform and Cognite. Maybe it would be good that you give one customer example or one application where we've been able already to demonstrate.

Absolutely. So we have a large customer in the Middle East that is using the combination of Cognite platform with the data from the PI system and the data from our -- both process simulation capabilities to model and autonomously make decisions for their large petrochem assets today. Maybe further than that to the question because when we look at robotics and when we look at the growth in robotics in factories, the more autonomous that is going to become, the more the core data infrastructure needs to be dynamically modeled. And this is where the combination of Knowledge Graph and Agentic AI capabilities, their AI workbench are incredibly important because you will be able to dynamically model the changing data, the changing operations data, the sometimes changing asset data for your robots basically. So I think it's going to be a key enabler of the use of the accelerated use of robotics in factories.

Back to you.

The next question is from Andre Kukhnin of UBS.

I just wanted to see if you could help us to understand better the kind of market positioning of Cognite versus its peers and who they would be? And could you help us to assess the kind of technological position of Cognite as well? And how can we track that in the future?

Caspar, please go ahead.

Yes. So in industrial software, it is the largest and probably quite unique company in that space, which is why we've been after it, frankly, for many, many years, right, because it complements us so well. If you're looking at the more analytical level, I would look at the companies like Databricks, Snowflake and some of the hyperscalers as comparative. Basically, what you do with industrial data in the cloud in an AI agentic way is a new area where a lot of people are interested, including some recent announcements by Prometheus and others. But with this type of customer base and this proven way of doing things, both the combination of AVEVA Cognite and Cognite itself is pretty much peerless, I believe, at this point in time.

The next question is Phil Buller of JPMorgan.

And perhaps Olivier and Caspar, I can see the strategic fits of Cognite. The questions I am getting today more along the lines of are there more gaps to fill? Does the deal complete the [ IA ] software portfolio? Or are there more to come that perhaps you've been looking at for several years as you had with Cognite and is this the multiple we should get used to really?

No, thank you. I will take that one. Look, as I just said and I repeat it multiple times, we are not obsessed by inorganic. We are obsessed by delivering our technology stack to our customer to integrate properly, to deliver great customer value proposition. This step is an important one, and it comes at a time where AVEVA and OSI have been digested, have been integrated. And definitely, the team now has the bandwidth, the possibility really to go to the next level. It doesn't mean that we will come back tomorrow morning with other acquisition. I think we want to do step by step and again, to continue to be very, very selective only if it makes sense. So as I said multiple times, the focus of Schneider Electric is to deliver our equity story organically mainly -- and by exception, when there are great technology, great company that help us definitely to accelerate the strategic execution, we will do it.

So my short answer is don't expect us to come back to you with many, many deals. This one is an important one. Now it's time for Caspar to integrate, to deliver the synergies, but we'll continue to monitor the market whenever there is great opportunity.

The next question, gentlemen, is from James Moore of Rothschild & Co.

I just want to come back to the primary rationale. I don't know, Olivier, if it's for you or Caspar. But is it that the white space and the thing that you really needed was the knowledge graph. And as we shift towards Agentic AI, the knowledge graph understanding without having to search through millions of second -- millions of data records in order to come up with the answer. And is that not somewhat similar to the Ontology of Palantir? And is it something that is similar to the sort of Rapidminer, Siemens software? Is that the space that we're talking about? And is that the rationale and what you were missing and why you really bought the business?

Two great questions. Caspar, do you want to take it?

Yes. So in the industrial space, it's the only one, we believe, that has the combination of Knowledge Graph that you have very well described and agentic workbench that works with the data and puts it into the Knowledge Graph. So in that respect, it's fairly unique.

Okay. Thank you, Caspar. Thank you, James. Look, all right. I think that now it's time for us to wrap up. So thanks, everyone, for your time. Thanks, Olivier. Thanks, Nathan. Thanks, Caspar, for your participation. Next time we will recollect together will be for our H1 results release. So in the meantime, let me thank you again and wish you all a very good day. Thank you. Bye.

Thank you all. Have a good day.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.

Hello, everyone. Ladies and gentlemen, shareholders, dear friends, I'm delighted to be here with you today, declare open our shareholders' meeting of May 7, 2026. This year is a special year for us. It's 190th year of Schneider Electric. Few companies can celebrate such an anniversary, especially for me because I've been 40 years with Schneider Electric. .

For me, it's rather simple, my seniority, the age of the company, minus 150, and that's the number of years I've been working for the company. And as you've seen, this company is one of the companies that has been able to transform itself during the different industrial cycles according to the needs of the countries of France to provide the cutting-edge technologies for all countries, everywhere in the world. We're in France. We're proud to be here with you today.

And we're also proud, I'm glad to be citizens of the world. I would try to draw your attention. This meeting is a public meeting that will be broadcast live and recorded on the company's website. in accordance with provisions of Article 19 of the Articles of Association, the Chairman of the Shareholders' Meeting shall be the Chairman of the Board of Directors. In that capacity, I chair this meeting. Next to me, Fred Kindle, if you know well, who is Vice Chairman and Lead Independent Director; Olivier Blum, Chief Executive Officer of Schneider Electric, 33 years with the company; Nathan Fast, Chief Financial Officer, 20 years with the company; and Ségolène Simonin-du Boullay, who is Secretary of the Board of Directors and will proceed with the constitution of the shareholders' meeting.

I call the duties of the scrutineer of Jordi Debrulle, representing Amundi Asset Management, Caroline Cassoux representing FCPE Schneider shareholding, both them shareholders presenting with the largest number of voting rights and accept the duties. I invite Ségolène to perform the duties of the Secretary. I note the President Of our statutory auditor, Séverine Scheer, Mr. [indiscernible] Benoit and Jean-Christophe who is with us for the last time at the Schneider AGM. I would like to thank you, Jean-Christophe, for having accompanying us for many years. You are coming to the end of your status as independent with Schneider. Thank for all the work you've carried out and the support you provided us.

I read the members of the Board of Directors attending Giulia Chierchia, Clotilde Delbos, Laura Ding, Rita Felix, Linda Knoll, Anna Ohlsson Leijon, Philippe Knoche, Anders Runevad, and Bruno Turchet who is sitting in the first row here. I would like to take a break here to thank from bottom of my heart Nive Bhagat and Linda Knoll have decided not to ask for renewal of that mandate and who will leave the Board at the end of this meeting. I would like to thank them for all they have contributed to the company.

And I'd like to thank Linda particularly who chaired our Human Capital and Remuneration Committee since 2016 and who was with us for 12 years, I can tell you that she's seen all the transformations the group has undergone and is one have been -- one of the main players all the years we spent together. I would also like to greet Ellyn Shook, who's joining us today. and Mr. [ Francois Jackow ], whose appointment CEO of Air Liquide as appointment as Board member will be submitted to vote.

And I look forward to working with him -- with the Board. They have experience that can contribute and going to be very beneficial for the company and whether it's consulting technologies, services and global approach to business and technology industry. I greet the members of the Shareholder Advisory Committee, and I take this opportunity to thank all the members of the committee on your behalf for the work they carry out and the advice they provide to enable us to improve our communication with the individual shareholders.

Before this Annual General Meeting, unfortunately, I have sad news to convey, and I would like to pay tribute to the memory of Mr. Jean-Pierre Belhoste de Soulanges, who is a member of the Shareholders Advisory Committee, who's passing, we learned -- took place on 3rd of May. He was to be with us today as a member of the committee. He was in charge of the individual shareholders Heritage Association. He worked tirelessly with conviction to promote individual shareholding, which is essential contribution to the common good.

His commitment yes, please give him a warm round of applause in his honor. Our most sincere thoughts on behalf of the Board of Directors and the Executive Committee and the Advisory Committee of the shareholders. Our sincere thoughts are with his family and loved ones. Headphones have been distributed to enable you to listen to some translations of our speakers who will speak in English. This is what happens in very international companies. Channel 1 for the French version, Channel 2 for English. So take -- I'll leave you a little time for you to select your channel. I hope everyone is ready. And now I'll leave -- hand the floor to the Secretary of this general assembly.

ladies and gentlemen, shareholders, good afternoon. I remind you that the shareholders meeting was convened today on first convocation. Prior meeting notice serving as the notice of meeting was published in the Bulletin des Annonces Légales Obligatoires On March 27, 2026. Well, the notice of the meeting in the Journal Spécial des Sociétés was published on April 17, 2026. The shareholders present and represented own 405,586,551 shares, the definitive number of shareholders present and represented will be announced before the vote of resolutions. So we can now validly deliberate on resolutions relating with both the ordinary shareholders' meeting and the extraordinary shareholder meeting.

The members of the bureau will please certify the attendance sheet by signing it. You can read here the shareholders' meeting and according to the usages, the documents relating to the convening of the shareholders' meeting are laid up on the table. The provisions of article R22581, R22583, and R22588 of the French Commercial Code relating to shareholder information were complied with and the documents covered by Article R22589 and 22590 of the same code were made available to shareholders on time.

We ask the assembly to allow us to not read the Board of Directors' report given that the shareholders had the opportunity to review it before the meeting. The legal formalities have been completed. Jean-Pascal over to you.

Thank you. I'm going to stand up to present a review of the year's activity. And there will be a presentation that would be more interesting than reading a docket. We're coming -- we're experiencing a really special time. And there's no need to explain further about the energy crisis, the crisis in the Middle East, clearly, energy and electricity are the heart of all transformations and transitions before Olivier Blum's presentation, I'd like to give you a strategic context in which Schneider is operating. And explain the mission and purpose of Schneider and to implement a necessary transaction.

When I talk about transition I should talk about, in fact, a revolution. So we're at that time where energy is experiencing the revolution of electrification and digital is experiencing the revolution of AI and 2 combining to accelerate events. I've never experienced in the 40 years in the industry, such change and an evolution. Now in energy, the equation. In human terms, we will have to supply reliable energy to 5 extra billion inhabitants on the planet in the 25 coming years, there 8 billion of us, 5 billion amongst us have decent access to energy, 3 billion do not have this access. 2 extra billion inhabitants will join us. So there are 5 billion with energy, we have to add 5 billion who need energy over the next 25 years. This is the challenge for our generation.

Secondly, we have to reduce by half carbon emissions to be able to maintain temperatures at an acceptable level. And the third aspect every day, with the price of energy, we have potential energy shortages, 80% of the world's population in Europe, especially France, are in areas where it's no fossil energies. So for human reasons, environmental or economic reasons, which will otherwise, stifle economies, we have to operate a transition and ensure the world in which we live.

In the last 50 years, 20% was electric, 20% of what we do is driven energized by electricity. In the next 25 years, we are going to shift to 50%. It's a huge leap because the electric world or electricity in the world [ was very stable ]. We talked a lot about data centers. But it's not only about data centers. I've often said this general assembly, energy transition isn't done through the supply of energy, nuclear, wind energy, solar, LNG, gas, oil. This sets of major political discussions, but the transition of demand, which is going to implement this revolution. That's where Schneider's positioned.

When you look at the data centers, it's only the third reason for electrification. The first is in buildings because increased temperatures demands much more air conditioning and people -- the countries that don't have fossil energies are shifting to heat pumps that are 3 to 4x more efficient. The second aspect is mobility. Vehicles are going to become electric. We've seen since the beginning of the crisis, the number of new vehicles or proportion of new electric vehicles has gone from 15% to 30%. When you're in China, if you live in China, most of the new vehicles are electric.

So new mobility is electric and electric vehicles will be much cheaper than internal combustion vehicles. Now there's industry, we compare factories today with a country without fossil energies. You have to shift to electric energy where the prices are more predictable. And all these phenomenons are leading to economic returns. So to have 500 kilometers with electric between EUR 25, EUR 50 cheaper than thermal engines, heat pumps provide 50% of savings. So the -- for economic reasons, it's justified but the future is electric because all the new technologies use electricity.

You could use gas in a data center. But in between the time you have to transform this gas into electricity and countries have understood this. So what we're experiencing today, which wasn't sufficiently clearly stated. It's a race to access to competitively priced available energy. We take something as energy is logical and accessible that would never be lacking in, but we could be subject to shortages and prices that stifle economy. So it's not just a race for energy, it's a race for electricity. And the country that's most understand this most is China.

If you back 25 years, China, multiplied its generation of electricity by 10. Today, China is generating more electricity than the United States, Europe and India combined. So that means China has a huge reserve of electricity to transition its automobile industry to electric to feed AI and also to provide energy for all the new technologies.

The United States are just now beginning to realize that this race is on, and there's a race for electric installations in the Europe. Unfortunately, Europe is the only place in the world where electricity is not growing. It's even in recession. This is [indiscernible] France. France has major excess generation of electricity, 50 kilowatts per hour. And we have enough electricity to provide the data centers. Most of us here in this room are French, when we had in the '70s to '80 a vision of the world that was going -- shifting away from fossil fuel energies to go to a much more electric world.

We have moved forward over the last 40 years. France particularly decided on an electrification plan just recently to increase consumption by 40% in the coming years. But we are way behind. We've got to catch up. Now today, Europe has 20%, France has 25% of electricity, china 35% soon, and there's a race for global electrification that Schneider benefits from in all the countries where it is. What is Schneider's mission in such an environment?

Well, Schneider's mission is to enable and to accelerate this energy transition towards a more efficient world, decarbonize and that enables intervention. And we explained over the years, there's this equation. Digital solutions for more efficiency, electricity to decarbonize the economy with AI at every level for innovation. aiming to develop industry society and the economy that will be sustainable. And the way of doing so is to make available to our customers, systems that enable them to understand what's happening in the industry and in the energy needs to give them the means of exploiting industrial and energy intelligence, smart energy.

So this equation goes from energy to digital technologies and AI. All of this is extremely intertwined and 2 sides of the same coin. AI needs energy, a lot of energy. The quantity consumed by data centers are going to double in the next 5 years with forms that are more and more different because we use data centers to train artificial intelligence.

In the coming years, there'll be data centers, no doubt smaller, but that will deploy AI in industry in factories in buildings, in cities, in your lives and we'll act physically through robotics and driverless cars and be at the heart of our cities. And this will increase. And at the same time, with this increase in energy needs, the energy system needs a lot of artificial intelligence to optimize the way it functions. So we talk about data centers and develop sustainable development being in contradiction.

But data center represent a very small amount of energy consumption in the world, 0.3%. And then even if this doubles in 2030, it will represent 0.6%. However, if you invest artificial intelligence in a smart building, we have quite a few in France, in fact, or in a smart city, you can easily free up 20% to 50% of efficiency. So when you bring all this together, for 1 watt invested in AI, you can recuperate 4 to 10 watts of energy coming from optimized efficiency.

In such a context, we at Schneider Electric, we are pragmatists. We provide solutions that have economic returns, proven solutions. We're not talking about innovation in 10 years or solutions in 10 years. 70% of carbon emissions can be eliminated with existing solutions. And what is important to set us apart is that are existing solutions, solutions provide a return on investment for a savings that can be measured and the pay back investment so it's efficiency, first and foremost, what we call sufficiency, energy sufficiency through electrification because the processes, electrified process, whether it be electric vehicles, heat pumps are more efficient in their thermal equivalents.

Their digital solutions of thermostat, programming, digital programming systems providing another 20% of optimizations using more efficient devices and electrification will make it possible to decarbonize the economy, which consists of replacing processes that were based on fossil energy, fossil fuels and replace to buy low carbon electricity. There's the equation. This enables us to have as an objective, 70% of the reduction in carbon footprint. But this requires the whole system through digitalization, electrification, for greater efficiency, networks that are smart and decentralized generation of energy, microgrids, I'm sure people have solar panels on the roofs to reduce the use of the grid flexibility that we need.

We don't have much in France for the time being, which consists of providing better conditions if you consume less electricity, peak hours. And for the first time to make available to a whole energy ecosystem, a data lake of data that make it possible to optimize from generation to the consumption of energy. And will be several amounts. Olivier will talk about it later on. The objective of Schneider over the next 25 -- of the last 25 years has been to connect everything.

So you can understand what is happening around you in an industrial world, in the world of energy. And bring together all these data, the data cube, you have a digital twin of architecture, you have the data, you have vertical expertise through applications and to develop artificial intelligence adapted to energy and industry.

So 3 slides. Before handing the floor to Olivier to describe Schneider, what we've become today. First of all, a company that's well balanced when it comes to the final markets, 30% in buildings, 30% in data centers and networks, 30% in industries and the rest in infrastructures. Revenue that's balanced per geographical with North America that continues to grow with -- driven by data centers. Asia Pacific 26%, Europe at 23%, rest of world, 12%. And employees that are close to the markets when it comes to R&D production, supply and access [indiscernible] can make it possible to be a local -- most local global company and a very important aspect for us to be the company that seeks partnerships more than any other.

We believe at Schneider that 1 plus 1 is more than 2. We like to commercialize with distributors and integrators. And in technology, we collaborate with many companies that are references in technological segments. And now we have being committed in sustainable development for a long time. And in a net zero objective defined at 2050 by SBTi. And all the objectives of Schneider are consistent with one another. And finally, since we are today, the Schneider AG, all the strategy of Schneider and all the Schneider teams are supported by the Schneider Board that represents society in its diversity.

92% are independent Board members -- Board with 46% women in the Board, which is a level of which we've been for a long time and different nationalities that represent the global presence of Schneider Electric. I thank you for your attention. I thank you for having listened to me during this presentation -- this introduction. Before handing the floor to Olivier. I'd like to give you another example of one of Schneider's contributions that we're so proud of over and beyond just the famous Paris Marathon.

[Presentation]

Thank you, Jean-Pascal. Greetings to all. I'm delighted to be with you here today. I'm going to cover 2 topics. First, our performance for 2025 and Nathan will tell you more later on. As you know, 2025 was a crucial year for us because the Executive Committee and myself as the new CEO since November 2024 was to deliver a powerful year, but also to redefine along with the Board of Directors, the next cycle for Schneider. You will have understood from Jean-Pascal's presentation that everything is speeding up around us. Schneider is a company that performed well for 90 years because it always placed innovation and impact as a priority.

But what is characteristic of the company is that readiness to challenge ourselves and be ready for the next cycle. So I'm going to tell you about our financial results, but also the new direction we have defined, and I'd like to thank Jean-Pascal and the Board. It was hard work more than usual because it was important for us to define the new cycle. So briefly, our performance for 2025. It was a record year. For the first time in our history, we have reached EUR 40 billion in revenues, placing us as one of the biggest players in our sector, almost 9% growth.

For a number of years, we have delivered that type of growth already with an acceleration between H1 and H2. And notably, our industrial automation activity was back in the green in 2025. That was very important for us. If we drill down a bit, beyond revenue growth, we delivered 50 base points of EBITDA margin expansion, a 12.3% growth of the adjusted EBITDA and our cash is one of the highest performers.

One of the priorities we have, of course, is to redistribute dividends. We have a progressive dividend policy. This is the 16th year in a row that we're going to do that, EUR 4.2, up 8% versus 2024. Our market performance is still solid today. We reached a historical high, almost [ EUR 288 ] it was today. So thank you. Thank you all for the trust you have placed in us and the employees and the executive committee and so on.

I think it's a fine symbol for this to happen on this day when we're all together. We often look at our financial results, but you would have understood, of course, from what Jean-Pascal said. We have products, but we -- what is different about us is that we continue to be a product company, but where product and digital work together, which is why with Jean-Pascal, we created the digital flywheel, which is a manner in which we can measure our performance on the digital offering, connected products, digital services, software solutions that can help us to gradually measure our operational performance and how we can reach and execute the strategy.

This accounts for a significant portion of our revenues, EUR 25 billion, which is 20%. If you just focus on services and software. And you can see that with 15% growth, it's part of our portfolio that is growing faster than the rest. Additionally, we -- with AVEVA, we have a company working specifically on intelligence and in terms of recurring annualized revenues have ever performed also very well with 12% growth.

As you know, Schneider is very keen to innovate, to perform and progress for all and the impact that has always been part of the strategy. I remember working with jean-pascal and his predecessor on the very first program that we called Corporate Social Responsibility, sustainable development, almost 20 years ago. And for the last 25 years or so, we have been launching a sustainable development program where we converge the societal targets, the corporate targets and we define a number of criteria allowing us to have an increased impact on our ecosystem, employees, shareholders, customers but society more broadly.

So the previous program has reached a conclusion, we have reached pretty much all of our targets. To give you a better idea of what that means, 2, 3 examples, perhaps. Since we started in 2018, measuring with this indicator we can be very proud because we saved 862 million tonnes of carbon emissions, thanks to Schneider Electric Solutions, and that will continue in the following program.

One other historic program since 2009 is access to energy. There are a lot of people in the world do not have access to energy. And we have managed to help 61 million people access energy and, of course, clean energy, and it's also a program that we will be continuing in the future. And over the past 5 years, we had decided to embark our suppliers with us to help them to cut their carbon emissions by 2 and we succeeded. So a very important program for us. You know that we are one of the first companies in the world to take net 0 commitments by 2050, which is why we decided to have a resolution about the say on climate. And it's the second time that the shareholders will be voting on it.

It encapsulates all of Schneider Electric's targets in terms of carbon reduction and our 2050 targets. So when we're talking about direct missions, what is known as Scope 1 and 2, we're less than 1%. We have almost reduced Schneider Electric's impact to zero. We're still working on Scope 3. Obviously, the big challenge in the coming years will be the use of products used, which still accounts for a significant proportion of our carbon emissions.

But if you look at the previous slide, where we said that we had helped save 862 million tonnes of CO2, which is around 80 to 100 a year. I know that's not how the market calculates. But to us, it's important. Schneider Electric in a sense, is a net positive company because what we generate in carbon savings through our solutions and our business is much higher than what we have as emissions. And then, of course, I'll say more about this in a moment. And then, of course, I can't finish this first part of my presentation by saying that there have been a number of accolades, Time magazine and Global 100 is the most sustainable company.

We don't work for these accolades. But it's always very nice for all of Schneider's employees who are working hard to reach these targets and to make sure that Schneider Electric has an impact. I work with many partners, technology partners, customers and actually, these accolades count. When you walk into a room and the customers see that Schneider Electric is the world's most sustainable company, it boosts our credibility. And it also makes us very attractive for young talent because we have a positive impact.

So in a nutshell, it's 2025, a fine year in terms of financial performance. And as I said in my introduction, a crucial year because we are now going to define the next cycle. And that is what I'm going to be telling you about just now. What will this next cycle be? You had a bit of an overview of that with Jean-Pascal. You remember what Jean-Pascal has been talking about over the past 10 years or so. and the Paris Accord in 2015 was a watershed moment. The world will be increasingly electrified and increasingly digital. The 10 past years proved that the world is starting to electrify to be more digital.

But what we're witnessing now is a phenomenal acceleration of both, both electricity and digital. So this is what Jean Pascal was talking about. We are entering an age of more electrification, more renewables, more decentralized power, more hybrid AC/DC power architectures, more AI, more demand for power and cooling and a world, of course, that will be increasingly fragmented. When we kicked off our strategic process last year with the management team, basically, it's looking at the world around us.

We were on the cutting edge for 190 years, what is going to allow us to continue to succeed in the next 5 or 20 years. It's an obsession for us. A lot of opportunities of course, but of course, a number of threats. I'd say the starting point for us is the very first film you saw, a lot of important things -- a lot of things are important when you're at the helm of this company. But what you need to understand is that it's a tech company. It's an innovation company. It's a company that has been standing out from the competition for 19 years, with innovations at each key moments in the industrial revolution.

We were there when electricity emerged when digital emerged. And what is happening now, which is a fundamental change, and I'm sure you're experiencing and sensing it in your everyday life. There comes a point when these trends are something you need to learn to live with. And we are convinced that over the past few years with a major acceleration in 2025 is that we're entering a new age of intelligence. It might be called the fifth industrial revolution. The revolution of intelligence.

And if you look at the world around us, where energy and the electrification is increasingly important, there will be more and more AI, a world where everything is interconnecting. We talked about data centers a lot in the past few years, but data centers need energy, energy need data centers. What's important is that we are present in both -- on both sides of the equation. We provide the infrastructure, but we can also leverage AI to make our solutions smarter for our customers, both in the world of energy and in the industrial process, which is why we reviewed our mission statement by saying that we are your energy technology partner.

Our obsession is to electrify, automate and digitalize every application to drive efficiency and impact. It's not a generic thing that we're doing. We look at each of our -- the segments in which we operate. And if you look at the expansion of our portfolio over the last 10 years, perhaps. We built a company called APC that allowed us to be entirely consistent between electrification, digitalization data centers. We bought a company that does liquid cooling called Motiva to be present in that vertical.

So the electrification, automation, digitalization strategy reflects differently in construction, in industry, in data center, in infrastructure. And it's what makes Schneider Electric different. 2025 was key for us because we really wanted to reposition Schneider Electric to reinvent the future. We know that Schneider Electric is a very big company. And importantly, there's a question of speed at which we can transform and where we can lead all of our employees to embrace that change, and we wanted to share that vision with our shareholders, with you today and when we had our Investor Day in December in London, in order to define a new corporate program, which we have called NEXT, in which we will be focusing on 3 pillars: technology, customers, operational excellence.

Why technology? Because it's the reactor core of our company. And the technology needs to be made available to customers efficiently. Otherwise, what's the point? And then, of course, we grow every year and it's very important for the scalability to be efficient. So 3 priorities: technology. It's quite simple. We've created a portfolio -- unique portfolio of solutions. And we don't want them to be scattered around different parts of the company not be properly coordinated. So product in controls, in software. What we're trying to do is to create a unique experience for our customers.

So it's a relatively simplified slide, but all of that is done for home, for buildings, office space and so on in order to offer our sales forces solutions that are integrated, consistent and really stand out from the competition. So that portfolio wasn't created overnight, of course. It took 15, 20 years to create. But we've reached a point where we can be really different. It's what I call Step 1 of transformation, a single portfolio, products, smart products, control levels, software supported by services Step 2 of the transformation we initiated make sure that all of these products can talk to each other.

If we want to generate value for our customers, these solutions need to be integrated and interconnected. What we have understood is that the mode, the best efficiency would come from data. And we created what we call the data cube allowing us to drill data from all of these solutions and structure the data to make it useful so that our customers can create value. And then step 3, once we've created the Data Cube, the data needs to be able to talk to -- the pieces of data needs to talk together, and it's what we call intelligence in energy, intelligence, in energy.

To give you a simple example for the -- in the future. You are here in this room, for this general assembly, you're not at home and you have a -- of course, at home, a switchboard, a board and electric cabinet that is probably not smart or connected. But in the future, it will be, we can automate it. And thanks to AI, we have the capacity to make your home, your building more efficient. You can control things yourself although you can use agents. And ultimately, you can cut your energy consumption by 20% to 30%.

So the world of tomorrow will be made of products, products that are connected and all of that can be amplified by intelligence. That's what Schneider does. And that's what we call Energy Intelligence, and that will allow us to stand out in the world of tomorrow. It's very important because we are a global company. We're a leader in all sorts of products. We have reached a high level of intelligence. That's our uniqueness. I won't tell you about our competitors, but there are very few of them who can boast such a portfolio across all segments. And providing such a level of intelligence.

And as we always do, what we did in the past was a great eco structure, which is the -- forms the basis of Energy Intelligence. It's not particularly new, but we're doing the same thing with AVEVA in industrial intelligence. They create energy intelligence, industrial intelligence and these 2 platforms need to talk together, working in the energy and the process. Again, all of this won't happen 10 years down the road, it's already happening.

And if you look at a data center, we're one of the very few, if not the only company that starts on the design level. We can go and see customers to help them simulate or design the behavior of their electrical installations in a data center, thanks to the software we've developed also integrating the partnership we have with NVIDIA, when building a data center, we can make it as effective, as efficient as possible.

And with the data, we can collect we can monitor things and generate services. What do I mean? We can use preventive maintenance. We can try to anticipate difficulties or replacements of equipment or chain or tweak the parameters. So having a single portfolio from products to controls to software apply to each of our segments, throughout the life cycle from design to build to operations to maintenance. The Schneider that we knew with Jean Pascal many years ago was essentially involved in the building phase, but we have expanded Schneider throughout the life cycle in buildings, in industry, in infrastructure.

And I'm sure that's what makes -- that's what makes Schneider Electric is so very different. So how is that reflected in our software offering, a few animations here. But very importantly, we will continue to be a product company, a smart product company. It's our knowledge of the physical real world and of the product brought together with digital brings more intelligence to our customers. We are acknowledged for all of that. We're doing plenty of things in R&D, but we the business analysts have already acknowledged or solutions and beyond our historical leadership in products, we are now being acknowledged as a cutting-edge company in software solutions that have an impact on energy and processes.

And as I said in my introduction our obsession is innovation and service a customer, progress for all, and that's why we continue to be committed. We're going to go up to 7% of R&D cash spend to stay on the cutting edge because if we're a company that is both product and digital, we need to continue to invest everywhere in the world. So that's the tech pillar, the most important one. The second pillar is how we work with our customers. Very briefly, what we've created for our customers is a multi-hub model.

We've kept talking about that over the past few years, but it's a model in our 4 regions we sell, we market, we research, we develop, and we ship to our customers. So we're a global company with a global strategy for a number of parameters. But we're also a company that operates in hubs to speed things up to be -- have greater proximity with our customers, take decisions quicker because in an increasingly fragmented world, it's essential for us to remain agile and close to our customers. Last year, you heard that we decided to acquire up to 100% of the shares we had in our joint venture with Temasek India. Why so? To strengthen our fourth hub, which is the international hub where we can now leverage all of the R&D resources, but also supply chain and software resources that we have in India with a company that we acquired called L&T that migrated to brands -- to the brand, LK.

4 hubs, Europe, supported by France, North America by the U.S., Asia, by China and what we call international supported by India. And that makes Schneider Electric truly unique. Final point of our plan, operational excellence, operational efficiency, product cost -- productivity, but also a focus on how we can make Schneider Electric more scalable to use a buzz word. If you add 7% to 10% additional revenue a year, tomorrow, it could be EUR 50 million, EUR 60 million, EUR 70 billion, and therefore, it's important to manage all of that carefully to manage that scalability.

And in this plan, where we've aligned all of the teams, there are 2 things that. We still have a very strong focus on the human aspect. That is what made Schneider Electric really different. But also a company with an impact. So a lot of commitment to sustainable development. So we've launched this new program. The previous program reached its conclusion there in 2025. I won't go into the details of this plan taking us to 2030, new commitments in terms of circularity, better product design, commitments for generations, how do we work with all of the generations within the company and then, of course, preserving what we call the flagships of the previous program, saving on emissions, avoiding emissions since 2018, access to energy in the world, a mix of new indicators and old indicators, which we measure on a quarterly basis.

And this is the first report published end of March 2026. Let me finish by saying that Schneider Electric employees are at the very heart of Schneider Electric success. Some of you may know that, but I work with Jean-Pascal as -- I worked with him as HR manager. But what makes the true difference, it's our people. So we need to train our people. We need to support our people. Digital is becoming very important. All of our employees need to receive training about digital, about AI. We need to support our leadership so that they can transform in a fast-moving world.

And then an indicator also that we're very, very proud of our shareholding, the top 5 employee shareholding. And one of the very few companies that has a shareholder plan for our employees, our employees have an opportunity to invest, 63% of employees who can access the plan have invested in Schneider Electric, be it through the personal savings or their corporate savings plan. And in 3 countries, it's more than 80% India, China and France in our top markets, which shows you how loyal and dedicated employees are.

France, of course, we've been around for a very long time, but even China and India more than 80% of our employees have signed up to the plan. So of course, I am not alone in setting all of this up. There's, of course, the Board of Directors and an executive committee. Great variety, huge experience. And as Jean-Pascal said earlier, more than 40% of the members of the board are women, which is also special.

So I'll stop there. 2025, a huge success. Okay, it was great, but it's behind us, a new plan now going forward, and let's continue to deliver and to be fast in everything that we do. I'll stop here. We'll tell you a bit more about the financials.

Thank you. Dear shareholders, I'm with you today for my first general assembly meeting as the Financial Director of Schneider Electric.

I'm sorry for this. Today, I'll review 3 things, right? So the 2025 performance, the start of 2026 and some trends. And then also stepping back the mid-term ambitions that would be linked to what Olivier has presented and what we declared in Capital Markets Day.

First, we closed 2025 with record revenues EUR 40.2 billion, up 9% organic, surpassing for the first time the EUR 40 billion mark. While gross margins were slightly down as we expected, we delivered a 50 bps organic increase in adjusted EBITA margin. supported by strong cost control and simplification actions that we launched during 2025. Free cash flow exceeded EUR 4 billion for the third consecutive year, driven by strong operating performance and working capital discipline. Net income was down 2%, while adjusted net income increased by 4%, and ROCE rose above 15%, reflecting the strong strength of our execution.

Overall, 2025 demonstrated the strength of our execution, as I said, and sets a solid foundation for our new chapter, as Olivier explained, on advancing energy technology. Moving now to the performance by activity and geography. Energy Management delivered another year of strong performance with revenues of EUR 33 billion and up double digits at 10%. Growth was led by data centers with strong momentum across all the regions. You can see on the chart, North America grew 17%, Western Europe 3% and Asia Pacific, 8%; and the rest of the world growing at 7% organic.

This reflects the strong structural demand and our leadership in electrification solutions. Industrial Automation returned to growth in 2025 with revenues of EUR 7 billion, up 3% organic. This performance reflects a recovery in discrete automation, particularly in the second half of the year, which was partially offset by some softness in process and hybrid. Again, by geography, North America was stable in 2025. Western Europe grew 2%, Asia Pacific, 3% and the rest of the world growing at 8% in 2025.

Now moving to the performance by business models. Products, which now represents 47% of the revenues for the group grew at 3% organic supported by both volumes and price with a continued weakness in residential buildings and the recovery I mentioned in discrete automation in the second half as anticipated.

Growth in 2025 was led by systems, which represents 34% of the revenues and was growing at 19% organic, driven primarily by energy management projects and notably in the data center space. Software and services representing 19% of the revenues, grew 9% organic. Inside of that AVEVA, ARR was up 12%, where the focus remained continued on our progress towards the subscription-based model. We also saw strong growth in field services, supported by increased installed base, notably in the data centers. That's for the first part.

Now let me briefly turn to the start of 2026. In the first quarter, both businesses contributed to our overall growth in revenues of plus 11% organic, which was reaching a first quarter record of EUR 9.8 billion. Energy Management was up strongly at close to 13%, benefiting from the strong demand across all end markets, including data centers, Industrial Automation delivered growth above 4%, reflecting the continued recovery in discrete.

Again, while process and hybrid remain impacted by weaker demand that was coming from the first half of 2025. Now 2026, of course, again, in a pretty -- an environment that was increasing uncertainty. And against that backdrop, I'd like to share our key trends that we expect for the year. First, we anticipate strong market demand to continue driving growth and led by data centers and networks with systems as the main growth engine.

However, product is also improving with continued recovery in discrete automation and software and services also having strong, led by recurring growth. All regions are expected to contribute led by the U.S. and India, while South Asia and international, we may see some temporary disruptions in Q2 linked to the Middle East uncertainty. Above all, we also aim to be net price positive in value for the year, with margin drivers aligned to those that we outlined specifically in the Capital Markets Day in December.

And in that context, we have reaffirmed our target for 2026, and we shared that during our presentation of the first quarter results last week. We expect adjusted EBITDA growth between 10% and 15% organic. And inside that, this performance is resulting from 2 things: organic revenue growth between 7% and 10% and organic increase in the adjusted EBITA margin of 50 to 80 bps. Okay? Now looking ahead a bit and the building on what Olivier shared from a strategic perspective, let me translate advancing energy tech means in terms of financial ambitions, okay?

And this is going to be consistent with what we shared in the Capital Markets Day. First energy transition is driving structural growth opportunity across our markets, okay, driven by new energy landscape, digitization in AI and a multipolar world, I think Olivier outlined this and Jean -- Pascal as well. As outlined at Capital Markets Day, we see that addressable market growing between 6% to 7% CAGR through 2030. And that would mean reaching a PAM of approximately EUR 6 billion, okay? So EUR 6 billion PAM is our playground. Against this backdrop, we have introduced strong financial ambitions through 2030. Over that period, we target organic revenue growth of 7% to 10% CAGR. Second, a cumulative 250 bps organic expansion in adjusted EBITA margin and a free cash flow conversion rate of around 100% of net income. These all reflect the structural growth in our markets, our ability to outperform those structural markets and our continued focus on execution and cash generation.

Finally, turning to the topic of capital allocation, where our priorities remain firmly anchored on disciplined value creation. We will continue to fund organic growth and maintain strong investment-grade credit ratings while delivering a progressive dividend. At the same time, we will pursue active portfolio management, selective M&A and partnerships and execute a more systematic share buyback program, all of this to support sustainable short, medium and long-term shareholder returns.

Finally, at Schneider Electric, we remain firmly committed to open, transparent and ongoing dialogue with our shareholders. Our Shareholder Advisory Committee here in the second row, I believe, today, continues to play a key role in engaging with individual shareholders and our Investor Relations team, of course, remains ready to engage. We are pleased to see this commitment to transparency is also recognized by external parties.

Thank you for your attention, for your trust and your continued support.

[Presentation]

Thank you very much. So a nice video from our [indiscernible] with whom we work not only in France but around the world. They're extremely active in a wonderful company. Before explaining how the Board works and the different committees before handing the floor to Fred Kindle, who will talk about his role as a Board member, Lead Administrator -- lead Director. I'd like to talk about the Board briefly and ask the camera if they could look at the first row where the members of the Board are seated. If the camera would kindly -- so we've seen them from the back. I can see them. They are there, I've already talked of the during the introduction.

Each member of the Board has been chosen for his/her competencies, the mindset and their qualities. The quality of an organization is based on the choice of the people and their collective behavior, their behavior as a team. And the Schneider Electric Board, you have people who have been chosen because of the following skills, knowledge of digital, knowledge of our industry and of industry in general, knowledge of a sustainable development and deep-seated skills in HR and finance for the audit committees, for remuneration committees. People who come from diverse countries, very different countries and have different -- very different backgrounds.

I welcome in Ellyn Shook and François Jackow whose appointment will be proposed later on, roughly an hour or half an hour when we will proceed with the votes. And next, if I move forward. Now during this meeting, we're going to propose a dividend of EUR 4.20, dividend that has been increasing for 16 years. Throughout the financial crisis, the major financial crisis, the COVID crisis, we have promised and we have delivered progressive dividend payout.

I talk about financial objectives that have been presented by Olivier and Nathan. Concerning the Board, it's makeup, we have 5 committees. So all the decisions are prepared by committees with specialists and then are presented to the board with recommendations, all the dossiers are available to the Board members, the Audit Committee Jill Lee; the Governance Committee. I chair; Human Capital Remuneration, Linda Knoll; and Ellyn Shook is going to replace Linda, the Remuneration Committee, the Investment Committee chaired by Anders Runevad, who knows the digital segment and engineered segments. And the Digital segment, chaired by Abhay Parasnis, who is currently in California.

So we're going to propose a vote to -- for Ellyn and Francois and the renewal and membership of the Board. And I'm going to hand the floor to Fred Kindle who's trying to talk to us in French.

Ladies and gentlemen, unfortunately, my French is not sufficiently good to make this -- give the speech in French. I don't have the vocabulary and the grammar. I'm really sorry. Dear shareholders, thank you very much for your tolerance of my English language. In the next few minutes, I would like to share a few thoughts regarding compensation and say on climate.

let's start with the first chart. Here, it's coming up. Okay. The first chart is about the compensation of our CEO, Olivier Blum. And when you look at the chart, it has actually 2 parts. There's an upper part and the lower part. And the upper part is looking backward into 2025. And it shows you the total compensation delivered to our CEO. You can read the numbers yourself. But just to quickly repeat, you received a fixed salary of EUR 1.2 million. Then he received a bonus, a short-term variable annual pay of roughly EUR 1.1 million that derives from the application of his achievement rating, which was 73%, roughly applied to the numbers.

And then on top of that, he received a number of performance shares. So these are shares that are granted to him but are restricted in the way that they're only delivered depending on the performance outcome of future years. And these shares amounted to a total of about EUR 2.7 million. And last but not least, there was a pension benefit that is tied to the fixed income and variable income and some other benefits.

I don't think there's anything special about this compensation. It's exactly according to the rules and regulations that we laid down and you said, yes, to in the previous AGM. The bottom part then talked about exactly the same thing looking forward. Is the policy applied to the compensation again looking into this year. And I'm not going to read all of that. But you see the proposal is that he will receive a fixed income of EUR 1.2 million, again, no change. That is [indiscernible] of the pay if he actually achieves the on-target performance, with the 130% of his annual pay, and you can read the criteria right below that.

There's going to be a slight change at the very end in green you see it. It's a minor change. It's basically updating certain criteria to the new year. Then in the middle, you see, again, no change. We will receive the so-called performance shares, 233% of fixed compensation, again, under the restriction of delivering a certain performance, again, with a small change, which is more technical than anything. And then a pension benefit that is in line with the previous years and last but not least, not a monetary change or statement in any way. But the clarification of the severance indemnity that led to some questions in previous years.

pSo all in all, I think nothing dramatic, hardly any change at all, and we hope that we can improve these resolutions as you did in previous years.

Let me switch to the next chart, which is about the compensation of the Chairman, Jean-Pascal Tricoire and the Board members. On the left hand, you see that compensation that was applied to the Chairman looking backward again. He receive EUR 930,000 for the full year and some ancillary benefits as well amounted to about EUR 56,000. And the resolution looking forward at the bottom of the same side, the 2026 is basically saying no change that we want to apply for you in this AGM. So same thing happened again, if you say yes, as in the last year.

On the right-hand side, you'll see the actually numbers applied for the directors. You see we paid out roughly EUR 2.6 million. This is in line with the ceiling that was approved by you in the previous AGM. Here, we want to have a couple of changes. You see there's a resolution #10 that we actually want to increase the ceiling from EUR 2.8 million to EUR 3.2 million. It's not massive increase, but it is an increase.

And the background of that simply put is that we think the directors are well paid in a French context. They're okay paid in the European context. But actually, the monetary benefits accruing to the directors that come from abroad, from overseas, especially United States are not as attractive as they could or maybe should be. That's the reason behind this small change.

And the application, you see the resolution #11, where certain payouts for, actually, traveling and take part in sessions running committees are slightly enhanced. So these are the resolutions applying to the directors. Again, thank you for approving them for saying yes to these resolutions. With that, I would conclude the discussion, short discussion on compensation and quickly switch to the next topic, which is say on climate.

You may recall in the last AGM, we talked about that. This is basically a way a means to allow you, dear shareholders to approve to say yes to our climate strategy or to disapprove if you don't like it. It's a voluntary advisory vote. So we're not bound to follow it, if you say no, but it's very clear. If you had severe problems with our climate strategy, we would take that into account, it will make necessary changes.

What you see in the chart is how the climate strategy is developed. You see the different bodies that are involved in that. It starts with the Board, certain committees and the executive committee, functional roles in the company and the countries. Then in the middle in the scope, see what kind of targets we have given ourselves that we want to deliver in the future years, I'm not going to read all of that, but you see a very prominent one in 2050, we want to be net zero value chain and a 90% reduction of greenhouse gases, so it's quite ambitious, a good goal to go for.

And then further down, you see that these are not just nice quotes that you write on paper, the achievement of this is actually measured, monitored and audited, and the achievement is also very transparently declared in the annual report in the statements. So we hope that this is appealing, and it's also reflecting our attitude towards ESG and that you can say, yes to that, and we are quite curious what the outcome will be.

Last but not least, as a final chart that deals with the kind of the ordinary resolutions that we need to have passed, basically, they all deal with the issuance of shares without the subscription rights of shareholders, issuance of shares that we need to do in order to furnish our savings plans to hand out special rewards, things that are very customary and we have done in the past as well. So basically, no big change to things that you have said yes to in the past. With that, I think I can conclude my short speech. Thank you in advance for your yes votes and in general, for your support of the company. And again, for -- for your tolerance of my English language. Thank you.

Thank you, Fred. Let me now call out Jean-Christophe Georghiou who's a partnership at accountancy firm PwC and who has been a partner. In our transformation, a partner in Schneider Electric's transformation for a very long time, and I'd like to pay tribute to him because it's his last AGM with us. .

Thank you, Mr. Chairman. Ladies and gentlemen, dear shareholders, I am going to tell you on behalf of the college of auditors, [indiscernible], PricewaterhouseCoopers audit, I tell you about our conclusions. Our missions are required by law. The purpose is to provide you appropriate level of assurance about elements presented to you to allow you to make decisions during this general assembly. I will be giving you a brief overview of the documents that feature in the universal document. We certify that unreservably the annual accounts.

Our report has a technical observation, includes a technical observation about the adoption of modifications of the accounting system as of January 1, 2025. It's highly technical. And it's a case of all French companies. Our audit opinions are based on due diligence conducted by us in France and elsewhere in the world. Our work is adapted to the organization of your group, the nature of transactions and take into account our appreciation and our internal control.

Our reports focus on points which we deem the most important as part of our audit of both the annual accounts and the consolidated accounts. For each of these points, we explain within these reports our vision of the risk and the manner in which we apprehend it. For the corporate accounts, the annual accounts. The key point is the evaluation of participation and liabilities. For the consolidated accounts, the key points we examine are the evaluation of gaps of acquisition or indefinite remarks and uncertain tax positions and the recoverability of deferred tax connected to tax deficits.

In our special report about regulated agreements, we were not informed of any agreements, conventions of that type. Let us now move to the extraordinary part of this General Assembly for reports about Resolution 17, 18, 19 and 20. The resolutions directed to your vote, talk about the maximum amount of issuance. We were to verify that the reports of the Board to justify our compliance with legal obligations for the 17th and 18th resolution. It is proposed that you can delegate to the Board of Directors for a period of 18 months, the competence to decide on the issue of ordinary shares, securities giving access to the company's share capital, with cancellation of preferential subscription rights in favor of a category of beneficiaries, that's the 17th resolution or persons designated by name. That's rather the 18th resolution.

The final conditions in which the issues will be performance have not yet been determined and therefore, we don't have a clear opinion. And therefore, on the proposed cancellation of preferential subscription rights. We will draft a report in the event that the Board uses these delegations of authority. Likewise, for the 19th and 20th resolution, it is proposed that you could delegate for a given period, the confidence to you decide about the issuance of shares again with no preferential subscription right. That would be reserved to company savings plan members or certain beneficiaries described in Resolution 20.

The final conditions have not been set determined we cannot report on these conditions and again, on the proposed cancellation of preferential subscription rights. We will also be preparing an additional report in the event that the Board should use these allegations. The final report, which we have established is our certification of sustainability information. Your company has published for the second year in a row, information, sustainability information in keeping with the so-called CSRD European directive.

Our report gives limited assurance about the elements of compliance included in the report, although there is just one report. In fact, it has 3 parts. Compliance with ESRS principles, risks and opportunities of sustainability and compliance with reporting requirements of CSRD and of the taxonomy. And based on our findings, we have identified no errors or emissions or inconsistencies.

Let me add but your company for a number of years, has been publishing. Mr. Blum discussed this, too, performance indicators in addition to legal obligations. SSI, SSCs,These have been specifically verified by PricewaterhouseCoopers audit, Pages 36 and 39 of the universal document.

In conclusion, let me remind you that the conclusions and the assurance that reflected in all of our reports is essentially based on our independence vis-a-vis your company, which is why the management, the Audit Committee and myself ensure that each of the emissions that are conducted outside of that scope do not create any additional risks. And that concludes my presentation. Thank you for your attention to this matter.

Thank you very much, Jean-Christophe we're now here with Olivier Blum, Nathan Fast and Fred Kindle, and we are prepared to answer any questions. But before that, I would like to say you that we have received 4 questions in writing from the Responsible Investment Committee and one from the [indiscernible].

All of the answers of the Board have been published on Schneider Electric's website to keep the debate lively. Please make sure that you ask your question or questions in just 1 go and going to look at the Advisory Committee, and I should ask [indiscernible] to take the floor.

Mr. Chairman, Mr. CEO. My first question. But first, please allow me to say a few words about our colleague, Jean-Pierre, who, as you said, recently passed last Sunday. He was an elegant man. He was a man of fierce competence. He was always kept himself, but he was always present and always attended our advisory committee meetings. His questions were also always very sharp. His sudden passing, of course, saddens us. And on behalf of the entire Advisory Board, I wish to pay tribute to him.

This is my question. Against the background of strong growth, driven notably by investments in artificial intelligence and data centers, how does -- how can Schneider Electric ensure that the momentum is sustainable rather than the just cyclical. How does the group intend -- how can the group protect itself from a potential slowdown if these investments were to stabilize?

I'll let Olivier Blum to answer this question.

Thank you for your question. We mentioned that we organized an Investor Day in December to present our plan for 2030, where we said -- where we announced growth between 7% and 10%. There's strong growth of data centers in that plan, but all segments are experiencing growth. So data centers for Schneider Electric remain a priority. I would say that developing our sales in industry infrastructure and building is also equally important. So we are not only exposed to data centers. We need to work in all of the buoyant sectors that are driven by electrification.

I also insisted when I talked about our portfolio of technologies and data centers. I told you about design, simulation, build, operation and maintenance, meaning that our revenues are not just linked to a particular phase of the data center. It's all along the life cycle, which allows for much more stability now. If we look more specifically at data centers, we consider that between now and 2030, more than 100 gigawatts capacity will be built in the world.

The figure keeps changing, of course. But if we look at our own pipeline or backlog, I think we can be confident. So in short, a well-balanced exposure in the different segments, a portfolio of products that is less cyclical than just construction. Also, a variety of geographies, we're very well balanced between what we do in North America and Asia or Europe. I think this really allows Schneider Electric to be much more resilient. And that's why we have committed to a growth rate of 7% to 10%. We could have been much more conservative, but it shows that -- I believe that we can be resilient to all of these cycles.

And finally, we have a significant partnership with historical partners or companies such as Foxconn, meaning that we don't necessarily want to make everything ourselves, but our partners, which will give us more flexibility if growth slows down, we will be more resilient. I think this will probably make us more resilient than others in the following cycle.

Mr. Berg.

Good afternoon. In the current context, with all the tensions around the trade, what are today the main challenges for Schneider Electric. And do you identify new opportunities that would be happening for the group in this context. And thank you very much for your analysis.

Olivier?

Well, it's a great question. But often, we have the first part of the answer, not the second part. But since day one of the conflict, our priority was, of course, the personal safety of our employees. None of our employees were affected were hit. Support was available 24/7. And then there was continuity of service for our customers. Allow our customers to continue working on those sites. We have an assembly line in the Emirates, which was only shut down for 2 days. It reopened on Day 3 to support our customers.

Our logistics centers worked. I would say there was no impact on service continuity. In our quarterly results, we said with Nathan, that the impact on revenues, be it in terms of sales or margins was not material not significant. So there are no changes for our ambitions for this year. And that is our experience since the very start of the conflict. And then part 2 of your question, what opportunities are there, jean-pascal said so, maybe we've said so too much, but I'd say that the main conclusion is that governments in the 4 corners of the world have understood that they need to be more autonomous in terms of energy sources, and they need to transit towards electricity towards renewables.

And that means that increasingly, governments, including France's government, are very strongly focusing on electrification. So in terms of immediate impact on the year 2026 on revenues in the Middle East, probably, of course, there will be an impact, although very limited, but in the longer term, there will be an acceleration of electrification, more digital, more electricity, more great results for Schneider.

Of course, we're opposed to this conflict. And saddened by it, but there will be positive consequences. I'd say the difference compared to what we experienced a few years back with the conflict between Russia and Ukraine, and a renewed focus on electrification, well, this will probably be even more sustainable. I hope we can leverage that as best as we can by providing our customers with solutions.

Okay. Let's take questions in the room now. Over there, sir.

My question is about the 190th anniversary of Schneider Electric. It was in 1836 that the Schneider Brothers founded a manufacturer, which 190 years later still bears their need. It has now become a multinational operating and technology, energy with more than EUR 40 billion in revenues. After 360 years of Saint-Gobain, the 300 years of Wendel, the 200 years of the Bollore Group in 2026, we are celebrating the 190th anniversary of Schneider Electric. Why don't [ organize ] on that? Is my question. a grand celebration, a grand party bringing together individual shareholders and institutional shareholders, but also employees, customers and suppliers and which would conclude by a massive banquet because, of course, it's not every day that you turn 190. Thank you.

Well, I don't know. Are we ever going to overtake Saint-Gobain? Probably not. So well, I suppose it's an idea. I'll see what the management of the company thinks. So I took that time of decision for 20 years. It's no longer in my remit. Well, we are, of course, delighted to be the bearers of a torch that has been passed down for 190 years that experienced major crisis. You know that the company towards the end of the '70s or almost went bankrupt and it returned to the market and developed to become what it is today.

Essentially, what we are is just a name because the difference of what Schneider was things are, of course, very different. But something remains. This very strong belief that the company is based on the men and women who work for it. We select these people. And it's around these people who are engaged that we can build our projects be it in terms of the team or the Executive Committee, the Board of Director or other stakeholders, including shareholders.

I'd say that's the first point. Our second strong belief is that innovation is the key to everything and that the most significant progress comes from science and that in order to develop science, we need to educate. And we, as a corporation, need to participate in fashioning curricular and learnings. And I'd say that another strong belief that we have is that to be competitive in one's own nation, we need to be competitive globally.

Schneider is a company that is European, a French origin and that is happy elsewhere in the world. We work very hard. There's a lot of pressure, but we are part of the world and of the world's global competition. And that is a belief that persists and that remains a very strong indicator.

I have a passion for the future, most more than for the past. We will celebrate. But we will celebrate humbly. That's another Schneider value. We're always there at the service of our customers. We don't really sell to consumers. We have customers who build homes who build offices who build data centers who industrialist or who operate cities. We deliver, we provide technologies that are invisible, but which allow them to be more digital, more and more energy efficient.

And I'd say that the humbleness means that we need to be discrete. When you reach a certain age, you stop celebrating your own birthday. Do you not? Interesting question. Thank you for being so enthusiastic because we are all very proud and enthusiastic.

Questions on the other side of the room.

[indiscernible] ] individual shareholder. Thank you, Mr. Chair. Thank you, Mr. CEO, for your very clear presentation. A question for you, Mr. Chair. I don't know, perhaps you're going to pass it to Mr. Blum. You've been saying for a number of years that the future is electric. I think everyone's convinced. The production capacity in each of -- in every country is rising, sometimes there is an [ accident of ] electricity.

Look at the negative price of kilowatt here in France. That's not my concern. It's more the grid, the network. Electrification is all over the world, of course, when you look at the production capacity that is growing when you look at demand that is -- do you believe that the grids of Europe, the grids of the world in Asia, in India are sufficiently resilient to transport all of this new power that will be produced to address rising demand.

I'll answer this myself. It's a very good question. But that is not my main concern. If I look at the French side of things. My first concern is how slow we are to transition towards electricity consumption. We have a great grid. We export electricity, and we have strangled by the cost of our imports of fossil fuels. And we have been unable over the past 40 years in France to organize the transition of demand towards electricity. We were the champions of electrification in 1918. In those days, China was 5% electrified.

Now it's 30%. And the amounts of electricity are nothing in comparison, nothing in comparison to that. So if we wish to invest in production and in grids, we have lots of electricity in this country, but no energy. We are citizens in the manner in which we consume the manner in which we talk to our governments because what we want is to transition from the price of gas.

We can invest in a heat pump or an electric vehicle. And the return on investment is very fast. More generally, I'd say that you're absolutely right about the grids, but we can already draw much more from the grid that we have by making the grid smart and by organizing flexibility. The old system for energy was, okay, there's consumption. The consumption cannot change, and we produced to the maximum of a peak, meaning that a lot of the time, the grid is used 50% -- less than 50% of capacity, more than 50% of the time.

Once you've digitalized everything, you can push consumers to consume when the electricity produced is green and cheap, low carbon or abundant, you can charge batteries, you can charge your electric vehicle, you can cool your building and so on. That is really not very much the case. In France, there's a very low proportion of buildings that are digitalized. We are [ waiting ] energy in lots of buildings. That investment is very cheap, much cheaper than the physical investments and the ROI is very fast.

That is my concern. So I'd say that you're right. But there are plenty of things that we can do before we need to reinvest in our grid in Europe. We'll need probably transmission between countries because we have a lot of power. If we need to consume it, why don't we sell it to our European friends and partners. And you will see at Schneider, we're working on that on microgrids, micro networks, we can generate our own power with a PV panel to weather the consumption peaks.

We can have more electricity without an additional contract. And there are a number of clients such as data centers who are setting up micro networks or micro generators to alleviate the pressure. And then increasingly, there are a lot of extreme weather events. And we need to ensure continuity of service. Every time, there's a hurricane in the U.S. or a typhoon in Southern China, there are power cuts that are very bad for industry, for data centers. And all of that is being set up, decentralization, flexibility. All of that is something that will help us to make progress.

The priority is the transition of consumption. The excess -- the surplus of electricity we're producing. The Data giants want to invest in France. We have low carbon, cheap electricity, but to be connected to a fast node, ready to plug, it takes 5 to 7 years. It's not because of EDF or the technology because of bureaucracy. So I mean there's a lot of savings that can be generated because you have -- of course, you have the data center, then you have all of the integrators, you have the start-ups and jobs for everyone.

And bureaucracy is something that we pay for. We pay for it in terms of jobs and in economic sluggishness. France has a huge advantage. We always look at the negative aspects, but we have a capacity to use energy at a time where everyone wants electricity, and we have plenty. So that was a very interesting question. Thank you. And I had not suggested other side of the room, sir.

Mr. Chair Greetings. Greetings to you all, Christian, individual shareholder. I have 3 comments 3 congratulations on 1 question. So congratulations for recruiting Mr. François Jackow from Air Liquide, I think he's a fantastic addition to the Board. Well done for your results in data centers, AI factories. Congratulations because for the partner because NVIDIA talks a lot about you quite surprisingly.

And I had -- and my question was about AI. You talk about AI in general, but there are various types of AI. Perception AI, generative AI, agentic AI, physical AI as NVIDIA says. My question is about agentic AI? Could you tell us if you have use cases for these various types of AI.

Olivier?

Let me pick up on your first sub question, your comment about NVIDIA. If you look at this -- my slide about data centers, we are involved all along the life cycle. What was important in this partnership. NVIDIA are the people who design the GPUs, the processes that will be launched in 18, 24, 36 months. And what's important for us is to optimize data centers, not in terms of GPUs that are available today, but are those that will be emerging down the road. So what they're doing in the Omniverse with AVEVA and ETAP, we're trying to optimize the efficiency of a data center, both electrically, but also in terms of cooling and see what the next generations will be.

There's been a lot of communication about that. But each new generation, each new generation of GPUs made by NVIDIA will consume more energy. So optimization, both of the power and the cooling, that's going to be fundamental. And what we're doing with NVIDIA is we're simulating how these data centers can be optimized 2 or 3 years down the road. So when a customer comes along and talks to Schneider Electric, if we have an architecture that was predefined with an NVIDIA stamp on it, it gives us a cutting -- competitive edge.

So we're really delighted. And to answer your question around AI, there's everything that we can do in-house with AI, of course. Today, we have a Salesforce, is a global company. We have plenty of data. If we use that data properly with agents, we can give our salespeople opportunities to be much more efficient in targeting opportunities. And then even more importantly, there's everything that we told you about, how do we amplify all of Schneider Electric solutions?

If we can place an agent, we will allow our customers to optimize even more. We have a few solutions that we've launched in construction software with controls and automation. If we can add AI to that, and one of our software solutions is going to do that, it will help our customers to optimize their energy consumption. And in everything I presented here, when I talk about Energy Intelligence, the reactors core is finding more data, bringing the data together and using more agents, AI amplified and increasingly will be AI native because these solutions will be native and therefore, more effective.

So we have plenty of examples of new software launches to provide more added value. I would need more time but I'll stop here. Where we were at the Hanover Messe in Germany 2 weeks ago, and we presented a number of applications where agents define the system, program the system and commission the supervision system. It's extremely impressive. But then, of course, if you look at the applications that Schneider uses, there's no right to hallucination. Data protection is crucial, and the security operations do.

We're not just in the digital space. We work on lifts, on lighting, on machinery, that sort of thing. So there are characteristics in the AI that is -- it's a mission-critical AI. And that's why we call it energy and industrial intelligence, very different features than with a photography or video or text.

I'm going to take 2 more questions.

Hello, Mr. Jean. Congratulations. I saw that you'd reached the highest ever share price today, well done. Questions about the recurring revenues. I suppose it's more software and services. Could you tell us what the percentage is? What about patent? What is your patents? What is your IP policy? Are you -- do you have a lot of activity here or...

Olivier?

Very briefly, recurring revenue at Schneider Electric. It's -- we include in that software and services. There are 2 categories of services with all of our maintenance service contracts with visits that are planned in advance, but we're also working more towards digital service contracts. When we sell a data center contract, with all of the equipment, there's a digital contract called EcoCare for recurring services based on software solutions based on data to allow us to conduct preventive maintenance, for instance.

So these are the 2 main components and the software that we sell in the form of recurring contracts. We have set targets in our 2030 plan, multiplied by the share of recurring revenue between 2025 and 2030. So again, first part of my answer. And again, what -- yes, patents. IP. Patents are, of course, very much linked to our innovation. I don't know if we have an actual policy, but we do try to protect our innovation. And then there's incremental disruptive innovation. That's where, of course, patents are particularly important.

Sometimes there is incremental improvements, we want to provide new things, and we do it necessarily into patent everything. But we do need to protect everything that's disruptive. And there was a third question about continuity. -- continuous direct DC and hybrid architectures, DC architectures. We're also working on coalescing companies that work in that field. Of course, AC is prevalent at the moment. And we're talking a lot about data centers, but the transition to DC is due to the very high density and accelerated aspects on which we're working actively.

I think we had a question over there. It's going to be the last one.

Mr. Chair, I'm Patrick Kernen, I've been a shareholder for a year only, but I have a question about overproduction of power in Europe. The Turkish Energy Minister recently required power producers, solar, wind and geothermal, which is working well in Turkey, has asked all of these power suppliers to equip themselves with batteries to avoid waste. A shareholder asked a question about that, too. But is Schneider Electric well positioned in batteries to provide storage capacity to those who produce energy and who produce much more energy than before.

Second question I saw that you have a partnership with NVIDIA, Microsoft, Capgemini. Do they own shares in the group? And for the past 2, 3 years, we have seen CapGemini, Alton and Dassault System who use AI -- who have started using AI a long time ago. In fact, the share price is down. Well Schneider Electric's share price that does the brick-and-mortar seems to be doing better. How do you analyze this difference between -- in the variations of companies that all operate in AI?

Let me answer your -- the last part of your question. I'm not going to comment the share price of other companies, but artificial intelligence is going to revolutionize everything. That's why investors are sometimes cautious or dubious. for Schneider Electric, it has 2 consequences: a huge demand of technology solutions. That's positive. And it also pushes digitalization of everything because if you have not digitalized, you don't have data. If you don't have data, you don't have AI.

So what we're witnessing is that this emergence of AI in smart buildings, smart factories, smart cities, requires connections because in AI, in isolation, in the cloud serves no purpose. It starts to have an impact. If it's real time, real world, which is what we do, bringing products digital twin from the digital twin all the way to the product through the control stage. So all of that is very positive. And all of that strengthens our standing.

And I think we really need to make a difference between IT that is disconnected, not from the real world, from the physical world, and that where -- and then, of course, data protection, no hallucinations, privacy. So levels of security that are industrial grade. For batteries, there will be more and more batteries. And if you want, smart grids, why don't you buy an electric vehicle. That can serve as a domestic battery to smooth out the peaks. And allow you to save money on your own electricity contract.

So the systems are not quite fully operational, but the Flexi grid is emerging. And your final question, yes, we have strategic partnerships with people like Microsoft, NVIDIA or others. Your question was about. Cross shareholdership. We don't own shares in each other. It's just a contract that we have together to work on developing technologies as is the case with NVIDIA.

Jean-Patrick told you about what was presented in the Hanover Fair. In industrial automation, we use their AI. We use Microsoft AI to provide the customers with the solutions or Foxconn, which is more of a supply chain partner to develop solutions together. And in the slide I showed you, there were other examples. Companies are much smaller SV, Schneider Venture, where we have a -- we take minority stakes in technologies that we consider will be interesting in the medium or longer term, and we can do that.

But it's not the case for the big companies you mentioned, which I think concludes our Q&A session. Thank you very much for your engagement. The questions are indeed strategic for the group. And we need to get together very often because things are moving fast. We're now going to transition to the most important part of this general assembly. You are going to vote on the resolutions.

It's a crucial moment. So please make sure that you stay until the end, you will have -- you will have a lamp, a headlamp, which is -- can come in handy if you are camping or if you're a bit of a DIY person, it can always come in handy. And you will only receive your present in exchange for your voting box to make sure that we get all of those little voting boxes back. And now over to Ségolène, who will tell you everything is going to work.

Before proceeding with the vote, we note the status of the definitive quorum, the shareholders present or represented own 405,793,258 shares, which is 72.10% of the share capital. Before voting, we would invite you to watch and listen to a very short film explaining how to use the electronic box in your hand.

[Presentation]

Please do not forget to validate your vote in 10 seconds. Insofar as all shareholders have been able to read the draft resolutions and documents enabling them to cast an informed vote. And unless you request otherwise, I will not read out in full the text.

First resolution, approval of the statutory financial restatements for the 2025 fiscal year. The vote is open.

[Voting]

This resolution is adopted. Second resolution, approval of consolidated financial statements for the 2025 fiscal year. The vote is open.

[Voting]

The vote is closed. That resolution is adopted. Third resolution, appropriation of profit for the fiscal year and setting the dividend. The vote is open.

[Voting]

The vote is closed. This resolution is adopted. Fourth resolution, approval of regulated agreements governed by Article L225-38 and [indiscernible] French Commercial Code. Vote is open.

[Voting]

The vote is closed. This resolution is adopted. Fifth resolution. Approval of the information on the directors and corporate officers compensation paid or granted fiscal year ending December 31, 2025, mentioned in Article L22109 of the French Commercial Code. The vote is open.

[Voting]

The vote is closed. This resolution is adopted. Sixth resolution. Approval of the components of the total compensation and benefits of all types paid during '25 fiscal year or awarded in respect of the same fiscal year to Olivier Blum in his capacity as Chief Executive Officer. The vote is open.

[Voting]

The vote is closed. This resolution is adopted. Seventh resolution. Approval of the components of the total compensation and benefits of all types paid during '25 fiscal year or awarded in respect of the said fiscal year to Mr. Jean-Pascal Tricoire in his capacity as Chairman of the Board of Directors. The vote is open.

[Voting]

The vote is closed. This resolution is adopted. Eighth resolution, approval of the compensation policy for the Chief Executive Officer. The vote is open.

[Voting]

The vote is closed. This resolution is adopted. Ninth resolution approval of the compensation policy for the Chairman of the Board of Directors. Vote is open.

[Voting]

The vote is closed. This resolution is adopted.

Tenth resolution determination of the total annual compensation of the directors.

Vote is open.

[Voting]

The vote is closed. This resolution is adopted. 11th resolution. Approval of the directors' compensation policy. The vote is open. The vote is closed. This resolution is adopted.

12th Resolution, renewal of the term of office of Mr. Anders Runevad. Vote is open.

[Voting]

The vote is closed. This resolution is adopted. 13th resolution appointment of Mrs. Ellyn Shook as director. The vote is open.

[Voting]

The vote is closed. This resolution is adopted. 14th resolution, appointment of Mr. François Jackow as director. The vote is open.

[Voting]

The vote is closed. This resolution is adopted. 15th resolution, opinion on the company's climate strategy. The vote is open.

[Voting]

The vote is closed. This resolution is adopted. 16th Resolution, authorization granted to the Board of Directors to buy back company shares. The vote is open.

[Voting]

Vote is closed. This resolution is adopted. 17th Resolution. Delegation of authority to the Board of Directors to increase the capital by issuing ordinary shares or securities giving access to capital share of -- share capital of the company without shareholders' preferential subscription right reserved for a category of person. The vote is open.

[Voting]

The vote is closed. This resolution is adopted. 18th resolution, delegation of authority to the Board of Directors to increase the capital by issuing ordinary shares or securities, giving access to share capital of the company without shareholders' preferential subscription right reserved to one or more named person. Vote is open.

[Voting]

The vote is closed. This resolution is adopted. 19th resolution, delegation of authority to the Board of Directors to undertake capital increases reserved for participation in a company savings plan without shareholders' preferential subscription right. The vote is open.

[Voting]

The vote is closed. This resolution is adopted. 20th resolution, delegation of authority to the Board of Directors to undertake capital increases reserved for employees of certain non-French subsidiaries of the group directly or via entities acting to offer those employees benefits comparable to those of participants in a company savings plans without shareholders' preferential subscription right. The vote is open.

[Voting]

The vote is closed.

This resolution is adopted. 21st resolution, amendment to Article 19 of the company's articles of association to comply with the regulatory provisions. The vote is open.

[Voting]

This resolution is adopted 22nd resolution and last. Powers for formalities. The vote is open.

[Voting]

The vote is closed. This resolution is adopted. Jean-Pascal, the floor is yours.

Thank you for having participated in the vote. Thank you for attending this general assembly. I invite you to jot down the next AGM, which will be on the 5th of May 2027. We hope that you come many and we'll be able to have a drink after we exit this room. Thank you very much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good morning. Welcome to the Schneider Electric's First Quarter 2026 Revenues Call with Olivier Blum, Chief Executive Officer; and Nathan Fast, Chief Financial Officer. Thank you for standing by.

[Operator Instructions]

I would like to inform all parties that today's conference is being recorded. If you have any objections, you may disconnect at this time. I will now hand you over to Mr. Nathan Fast.

Thank you, operator, and hello, everyone. Good morning. Glad that you can be with us today. I'll personally kick off the call. I'm here together with Olivier Blum, our CEO. For the agenda, you already have the slides available. We'll go through them now and then make sure to have enough time for Q&A. As always, I remind everyone about the disclaimer on Page 2. And with that, Olivier, I'll hand it over to you.

Thank you very much, Nathan and good morning to all of you, and thanks for joining our Q1 results call. So I'll go straight into the presentation and share with you that we have delivered a very strong start in 2026 with a growth of 11%, EUR 10 billion revenue, which is a record. Both businesses, as you can see, Energy Management and Industrial Automation have contributed to the growth. We'll give you more details with Nathan later on, but you will see that all the regions are contributing to this growth in Q1. We have a very balanced growth across a different business model. You will notice, in particular, a strong start in product, and that gives us really a strong confidence for the rest of the year.

As usual, we like to report on our sustainability results. This time is important because it's the first time we are reporting on the new program that we shared with you during the Capital Market Day, but also during our yearly results. So it's very important to know sustainability has been part of the signature of Schneider. That does not live in a parallel universe. This is how Schneider Electric impact in the short term, but also in the long term.

And as usual, we would like to have a certain number of ambition and metrics which are very much connected to the business of Schneider Electric and how we can have a positive impact on all our ecosystem. In this new program, you will see that there is, on one side, a lot of continuity. We have retained a certain number of metrics, which are really the signature of Schneider. So for instance, save and avoided emission, we are going now and we are reaching -- we are going to the next level with 1.5 gigatons of CO2 to be saved and avoided by 2030. We continue to have a very strong focus, for instance, on giving access to electrification, clean electrification everywhere in the world and so on and so forth.

But you will notice also that we have new metrics which are related to the acceleration of electrification, how electrification help our customers to be more efficient, how we are going to commit to support the training of more electrification.

And as usual, you will see a certain number of metrics on the social side, on the people side, both in terms of gender diversity, but also how we want to help the different generation. So these are just the Q1 results. It's just the beginning of the program. So we'll probably take more time in H1 to report on the progress of every single metric, but that gives you a good indication on what is this new program and how it continues to make Schneider Electric a leader in sustainability and more important, how we continue to impact our entire ecosystem.

Going back to financial business and now looking forward, I'm not going to give you a long presentation on our strategy on the trend because we've done it in CMD and the early results. But just to give you a quick refresh on what we see across the 3 acceleration we presented to you, new energy landscape, digitalization AI, and Multi-Polar World.

Actually, there is a confirmation already in '26 that those trends are the right ones. We are entering and we have entered, I should say, since probably more than 1 year already in the new area with more electrification, renewable, decentralized energy, hybrid CDC, acceleration, of course, of AI everywhere, which means more power, more cooling. And I'm sure everyone would agree to say that the world continues to be very fragmented. So all those trends are very important because this is what we are using to position Schneider Electric strategically and even more important to differentiate Schindler Electric.

And of course, when you look at what happened in the Middle East, in the past weeks, we can all agree that it's the testimony already or an acceleration of electrification since all the countries have understood that they need to go to a next stage of more autonomy in energy, which means more electrification and to deliver more efficiency also in energy, it means more electrification and more digitalization which is really what Schneider Electric is focused on in terms of strategic differentiation.

So when we combine all of that, we believe we have entered already in what we call the fifth revolution. And I said already because it did not start in '26. I don't know if the starting point is '24, '25 exactly. But it is very, very, very obvious that AI is taking everything to the next level. Of course, it's a great opportunity for a company like Schneider in terms of AI infrastructure, but it's equally a great opportunity for us because this is what helps us to make energy more intelligent.

And as I just said, we are in a world today where energy is centered to everything. You -- there are different drivers. The driver can be cost for you in your home can be the cost for enterprise can be the availability of energy, can be security and autonomy since by government. You can take it also from a sustainability standpoint. But definitely, the acceleration of electrification and digitization is going to the next level, since this era of intelligence where Schneider Electric has a very strong intention to be a market leader on the technology front. So this is a slide that you have seen many, many times.

So I'm not going to spend too much time. But just to tell you that the strategy we have built really continue to be extremely relevant. And if I recap to all of you, the journey we have been through. There was a first step in the past 10 years where we really built this EcoStructure stack on products. Products, which are now incorporating electronics at every level. everything moving to the control layer, software-defined architecture and being able by capturing data everywhere in our stack to create more intelligence to our customers.

So if you remember all the presentation we made, the priority one was really to build this unit technology stack and we don't believe there are a lot of companies that can pretend to operate across those 3 layers in building power, IT and industrial domain. And we have moved to the Stage 2, which was to be able to capture data, field data, operational data, enterprise data, but also third-party data. This is what we do by combining everything in the data cube.

And for me, the step 3 is not only leveraging data like we've been doing so far and we amplify it by AI, but the Stage 3 is creating energy and industrial intelligence, which is based on native AI this time. And this is what we are working on with the team really to differentiate our firm. So you could ask a question which -- what does it mean exactly in practical term. And I like this slide because it's a good summary of what Energy Intelligence means.

It has the capability really to preempt and optimize energy operations because we have been using data for many years in our system. But first of all, the traditional system were really siloed. They were operating in parallel universe.

We were using those data with algorithm to monitor, to prevent based on data of the past. Most of the intervention were manual and it was taking a lot of time to respond. When we are moving to energy intelligence, you are moving to a place where everything is connected, all assets are connected. They speak to each other. That's why we have a single ontology. We are able to capture data across the life cycle. So you design, you optimize, you design, you simulate, you build, you operate, you maintain and you capture those data that you bring back to the design stage that help you to permanently improve your efficiency.

And last but not the least, you are able to capture data that helps you to act and that help you to be extremely reactive, moving from reactive to preventive which help you to move very, very fast on the way you make your decision. So the bottom line is important. Energy Intelligence means your facility does not just tell you that something went wrong. It prevents the problem before it happens in real time and give you the insight to act. If it's not a critical application, it can even intervene on your behalf, adjust the temperature of your home or if it's a critical application, of course, an operator will be given the instruction.

So you understand that it changed really the game from an outcome standpoint and it gives much more outcomes to our customers. So this is basically this -- what I call the step 3 which is beyond EcoStruxure beyond the fact that we have created the data cube to go to something which is more AI native and that is much more outcome for our customers.

So this is a slide that you have seen, but I'd like to present it because that shows how Schneider Electric is differentiated from a company a long time ago was providing which was providing hardware, we are now starting at the beginning of the life cycle, design, we design for instance, in the Omniverse, and we are launching right now when we speak a new product with the combination of AVEVA and ETAP to help to design and simulate the new data center. We are able to build efficient data center, which are data embedded in all and every single hardware, which helps to operate and to maintain. But I also this quarter to show you another example because data center is extremely important, but we are implementing the same in all other segment of Schneider Electric.

Here is a very interesting example of a customer in food and bev. The Royal Aveva Group in Netherlands, their pain point was very, very simple. They wanted to have better access to power because there was a grid congestion. It was taking 8 to 12 years to have a connection to additional power and it was very important at the same time also to be able to electrify their process.

So we've been working with them to be able to provide a unique solution combining power and process, so leveraging all the activity we have bought in energy management and industrial automation and being able to help them to electrify and they capture data points that help them at the end of the day, want to have a faster access to power. So you see that this time, the driver was not necessarily efficiency and cost saving, but faster access to power and in that case, electricity because they were moving to electrify process.

And in parallel to reduce the dependency on oil and gas, and to be able to have access to clean energy to reduce their CO2 emission. And this is a great example where we leverage the full portfolio of Schneider Electric on one side, but also AVEVA ETAP system on the other side to deliver great outcomes for our customer's.

So I'll just conclude my introduction to tell you that Q1 has been really a good start, as you can see from a top line standpoint in a market, of course, with more uncertainty related to the Middle East crisis. I confirm the priority for '26. So again, I insist, we continue to build a very strong technology leadership to deliver energy and industrial intelligence to our customers, leveraging the entire digital portfolio of Schneider, digital services and software. We continue to work on the new energy landscape on all the applications like 800-volt DC for data center and it's very, very important because this is a segment where we want to keep a very strong leadership.

Last but not least, on the technology side, we are reinforcing partnership, partnership with supply chain companies, partnership with tech companies to make sure we can execute faster our strategy. We continue to go to the next level of regionalization in a market which is very fragmented in a world, I would say, which is more and more fragmented. We do believe our operating model, which rely on 4 strong regions from sales, marketing to R&D to supply chain, make Schneider Electric different, faster to react in front of our customer. And with this evolution of our portfolio, we continue to be extremely focused on top of our historical [ partner ] business. We have an increased focus on our strategic accounts, what we call here our enterprise business because a large part of our portfolio will be decided at enterprise level in the future. And of course, very, very important, we continue to execute seamlessly our backlog.

Nathan will come back on that. But on the operational excellence, we are extremely focused on margin, gross margin improvement with a very strong focus on one side on productivity and cost efficiency of our product, but of course, an increased focus since last year on pricing excellence in order to be able to offset all the impact of raw material on one side, tariff on the other side. And as you can imagine, all the inflation that can be related to the Middle East crisis.

And in order to be very, very efficient, and we'll come back to you definitely during the course of the year, we are accelerating our investments in AI to increase our scale to be more scalable in the next cycle. 7% to 10% growth means much bigger Schneider year-on-year, and that's important that we build a model which is super cost efficient and scalable. And to do that, we are going to leverage big time AI in all our internal process. That's what I wanted to share in terms of business update, and I'm going to hand over to Nathan to give you more detail about our financial performance in Q1. Nathan, over to you.

Perfect. Thank you, Olivier. And coming back to the topic of our Q1 revenues, I'll enter into a bit more detail now. Both businesses, as Olivier said, contributed to our overall growth in revenues of plus 11% organic, reaching a Q1 record of EUR 9.8 billion. Energy Management was up strongly at close to 13% and Industrial Automation delivered growth above 4%. The positive contribution from Scope is primarily from Motivair and at the anticipated level.

We did continue to see negative impact from ForEx in Q1, primarily due to the depreciation of the U.S. dollar. Based on current rates, we would expect the negative ForEx impact in 2026 to continue with between EUR 750 million to EUR 850 million impact on the full year revenues. So slightly less negative than when we made this projection in February and still negative 10 bps impact on the adjusted EBITA margin. Now given the evolution of ForEx rates in H1 of 2025, we would expect that top line headwind to come primarily in H1; likewise, a slightly more negative impact on adjusted EBITA margin in H1 before recovering somewhat in H2.

In terms of business models, Q1 showed a better balance than in recent quarters. We were plus 9% in products with the majority coming from volume, while price was broadly in line with our expectations and broadly aligned with the rate of realization in Q4. And I'll remind you that we expect this to ramp up throughout the year. Coming back to product volumes, we will follow Q2 closely to confirm this positive inflection.

Once again, the Systems business grew double digits at plus 16%, with growth led by Data Center, while our expectation remains for Process Automation to continue -- contribute, sorry, more growth in H2. For Software and Services, we were up 9% organic growth for the quarter with high single-digit organic growth at AVEVA and in services.

Before drilling down into the sales trends by business and geography, I'll make some comments on the demand trends we're seeing in our end markets. Overall, we see strong demand environment with Data Center being the most dynamic, but now with strong demand across the other 3 end markets also in Q1. I'll start with Data Center, where the business environment remains very strong and a continuation of what we saw in Q4 of 2025 with the deal pipeline remaining strong. In terms of demand, we were up double digit here despite having a single, particularly large order in the baseline from Q1 of 2025. Sales growth was strong double digit as we executed on projects both in North America and around the world.

In Buildings, as you know, the majority of our exposure is nonresidential, where we saw strong demand in several categories such as public building, retail, health care to name a few. In Residential, we see positive demand globally even with continued weakness in North America. In Industry, where we sell together energy management and industrial automation offers, we see strong demand with positive momentum in both Discrete and Process and Hybrid. The strong Demand in discrete confirms the continuation of the broad-based recovery in that part of the market. And in Process and Hybrid, we continue to see strong demand across industries.

Finally, in Infrastructure, we see strong demand as well, led by Power and Grid and Water and Wastewater. Of course, the environment does not remain uncertain. And as expected, we will continue to monitor closely the evolution of our end markets.

Moving back to revenue and this time with the geographic lens, we are reporting for the first time under our new geographic roll-up, which was announced at the 2025 CMD and we made available with like-for-like comparables on our website earlier in the year. All 4 geographies contributed to our strong start in the year with a continuation of double-digit growth we have been driving in North America over many quarters now; a rebound in growth rates in Europe against a slow start in Q1 of 2025, but also supported by strategic initiatives in 2026; a strong performance in China and East Asia due to performance across multiple end markets; and within South Asia and International, we see continued double-digit growth in India with the region overall impacted by the performance in the Middle East.

Turning now to the 2 businesses, and I'll analyze by geography. Energy Management was up 13% for the first quarter, with North America at plus 16%, driven by growth in Data Center as well as in Power and Grid, though Residential Buildings remains quite weak. We did see pricing coming through in North America in the quarter. Canada grew double digit, while Mexico was once again down sharply.

In Europe, up 9% organic, the growth was led by data center with strong contributions from Industry and Infrastructure, while Buildings did see solid growth with Resi quite stable. China and East Asia grew a very strong plus 18%, with China up strong double digit, driven by Data Center and Semicon, while East Asia grew double digit, led by Thailand and Indonesia. In our South Asia and International region, India was up double digits with strength across the end markets and notably in home energy management offers. Australia continued to see execution on data center projects, while Middle East and Africa was down low single digit in a time of increased uncertainty.

For Industrial Automation, it was up 4% for the quarter, with North America delivering plus 3% organic growth despite the continued weakness in Mexico. It was driven by strong performance in AVEVA, growth in Discrete automation across the region, while sales in Process and Industrial remained weak. Europe was up 5% with growth led by AVEVA, both in Discrete and Process and Hybrid saw solid growth. China and East Asia were up 5%, with China up low single digit and East Asia up double digit and in both cases, led by growth in Discrete automation, which was up high single digit across the region. South Asia and International was up 4%, with varied performance across the different zones, with India performing strongly, while the Middle East was impacted in the time of increased uncertainty.

Olivier, with that, I'll hand it back to you for the trends and for the guidance.

Thank you, Nathan. So talking about the expected trends for the full year '26 in an environment which remains still uncertain, we expect to continue to have a very strong growth across the different markets. All our end markets are contributing to the growth. Of course, Data Center and Network continue to lead the growth based on the strong demand in '25 that we see being confirmed for this year and in the following cycle.

At the end, the Industry and Infrastructure are also accelerating that give great opportunity for us. I was just giving the example in food and bev, where more and more customers like this going to electrification that gives a very solid opportunity both in Industry, but also in Infrastructure, in Power Grid in particular. And we noticed this year, but probably also compared to a low basis, an improved contribution in Buildings segment, which is aligned with all the macroeconomic trends that you can see.

From a geographical standpoint, as we told you, all our regions, the 4 regions are contributing to growth; North America, Europe, China, international. And this year, we continue to see U.S. and India being really on top of the others from a growth standpoint. Southeast Asia International, as Nathan said, had a good start, but impacted still by the uncertainty of Middle East, and we still expect to have a certain number of disruption and uncertainty created by the ongoing situation in the Middle East.

From a business standpoint -- model standpoint, we see a very balanced growth and all business model contributing to growth, Systems being the leading one, but also in Products, in Software and Services, which is again another marker of Schneider I think, balanced profile -- balanced exposure in end market, balanced exposure in geography, but balanced exposure in business model. And we see for this year, an improvement of our Products business with contribution of most of our product line, but in particular, recovery in Discrete. And we continue to see for the full year an acceleration of our Software and Services business, which is really at the core of what we call Energy and Industrial Intelligence driving more recurring revenues.

From an operational excellence standpoint, we executed the plan we have announced last year. This is why we expect for this year to be net price positive in value. So price to offset raw material impact and tariff and with a ramp-up throughout the full year 2026. The group expects the other driver of adjusted EBITDA margin expansion to be aligned with what we explained to you during the last Market Day.

So just to conclude on those expected trends to 2026, it means that we reaffirm today our '26 target, so which means a '26 adjusted EBITDA growth between 10% and 15% organic for the full year, which would be based on the revenue growth between 7% and 10% organically and the ramp-up of our adjusted EBITDA margin from 50 to 80 bps for the full year. So we are confirming this target. And now it's time to hand over back to you, Nathan.

Perfect, Olivier. So operator, we'll go to the Q&A now. [Operator Instructions]. Operator, I'll hand it over to you to get started.

The first question is from Phil Buller of JPMorgan.

The Q1 results are obviously well above the midpoint of the guidance and are very broad-based. You've talked through the tough comp in Q1 for, I guess, one of the larger parts of the business, that is Data Center. So are there any other one-offs to call out in Q1, either good or bad? I'm thinking about, in addition to Data Center, China, Southeast Asia was fantastic. Europe was also strong. I just want to ensure we're not incorrectly extrapolating anything for the balance of the year. And obviously, that's being asked because of market expectations at the top end of your guidance. So is that unrealistic based on what you're seeing and accounting for comps? Or would you go as far as to say that you're perhaps being a little bit conservative there?

Perfect. So Phil, there are quite a few different questions in your one question, but I'll try to step through them as possible. I guess, first, from a one-off perspective, yes, we mentioned the comp from last year in Data Center. I can get to -- probably I'll walk through some regional dimensions after that. But from a guidance perspective, overall, I think it's usual our full year guidance is a range, right, and outcomes consistent with multiple different scenarios, which are reflecting both ends of that range, right? And we're pretty confident as what Olivier shared that the current situation, we remain well placed to deliver those results.

Now within that range, there's certainly room for the market to point to opportunities. You pointed to some of those driving us toward a higher end of the range. But equally in the environment of increased uncertainty and unknowns contained therein, I would suggest that a degree of caution is quite sensible, right? So that's to answer the broad question first.

Now maybe I'll answer a bit of detail on some of the other ones. Clearly, China and East Asia, we did see, as you described, the double-digit growth coming from China overall. It was pretty broad-based with Data Center, Semicon and also some projects in Buildings. Now we did see strong growth in Products as well in that region. And as I would mention that we look to see if the trend is going to be confirmed in Q2 or not. And specifically for China, again, I'll reiterate, we did see some project-based growth in nonresidential. I wouldn't call that onetime or something to call out specifically, but it's somewhere in the underlying trend.

The last thing that I can probably mention because I think it's somewhere what you're alluding to in your question. From a pull-in or stocking effect, we didn't see anything out of the ordinary there in terms of the channel impacting the Q1 results. Of course, we don't have a perfect view on that because it's a pretty diffused market. But the countries where we do have stronger visibility, we're pretty confident that the sell-in and sell-out is quite well balanced. So probably nothing to alert there. I think I tried to cover all your elements there, Phil.

Yes. That's exactly what I was looking for.

The next question, sir, is from Alasdair Leslie of Bernstein.

Just a quick one on Data Centers. I mean you're highlighting more and more higher attachment rates and stronger service growth. I was just wondering if you could perhaps put those attachment rates in any kind of context relative to your traditional segment. I mean is it kind of already materially higher? Should it be structurally much higher going forward in your view? And maybe if you could comment on how much further upside there still is in kind of areas like field services, digital services software in Data Centers as you kind of build out this installed base?

Sure. Look, it's a great question, and this acceleration that we see the opportunity is, of course, embedded in our strategy, in our guidance. But to answer your question a bit more precisely, the type of offer that we have built in digital services in Data Center is based on the fact definitely that we can connect assets, we can extract data, we can deliver more. It's not yet systematic. I want to be very, very clear. But on those projects, when we are in front of a customer who is interested by this offer, the digital services contract can represent approximately 10% of the total value of the CapEx. And of course, it's very interesting because it's a contract which is based on the recurring revenues. So it's a services over a period of usually around 3 years. But that gives you a rough idea of what will be the magnitude.

Now it's not yet systematic. Again, it's a step-by-step, I would say, ramp-up in the different part of the world. It has started with some of our largest customers in the U.S. first. It's something we are trying to scale across a larger number of customers and, of course, a larger number of regions. So to keep it short, that's already embedded in all our numbers, both on the guidance, 7% to 10%, but also in the flywheel when we speak about the acceleration of recurring revenue, acceleration of Software and Services as a weight of the total revenue of the company. But that's what we expect as a progressive ramp-up in the next cycle. But it's definitely a very differentiated offer that we have versus our competitors. I hope it answers your question.

The next question is from Jonathan Mounsey of BNP Paribas Exane.

Maybe just again, sorry, on Data Centers. Obviously, you're talking about a big, I think, order last year in Q1. So it's a tough comp. But obviously, a lot of the others who've already reported have talked of triple-digit growth in Q1. If you were to exclude that large order, were you up triple digits as well?

So it's a good question, John. We're not going to answer precisely that question because you know we don't report out on orders. What I can say is that it was our largest elephant order of the year last year, right? So I can say that. And what we have seen in Q1 is that the underlying market momentum remains very strong, right? And certainly at the kind of pipeline and order book and opportunity that we commented on in Q4, but we're not going to give precisely that number. But we do see the market -- the underlying market with the same momentum.

And the additional point I'd like to mention is when we look at this data center market, different players have different way to engage with customers. The cycle -- when you book an order, it can be for kind of 12 months, 18 months. Anyway, you have a very, very different way of doing that business. For us, what matters at the end of the day is are we getting market share on a yearly basis on what we do execute. And we can confirm that we gained market share in '24. We continue to gain market share overall in that market in '25, and that's the most important metric for us.

The next question, sir, is from Andre Kukhnin of UBS.

I have to apologize in advance, it's sales release, but I'll ask about the margin cadence that again, Nathan, thanks for laying out the FX impact cadence. But if we think about the underlying drivers for first half versus second half and put that in the context of relatively easy comp from 2025 when I think you had over 100 basis points delta between H2 and H1 margin delivery, how should we think about this year? Can you narrow that delta in 2026?

Yes, Andre, so good question. Thank you. And you're right, it's not an earnings call. So I'll probably be a bit limited in what I reply there. But what we can say is that from a margin perspective and broadly, what you should read today is that the organic margin guidance was reaffirmed by Olivier. What we've already kind of commented there in H1 is that we would expect gross margins at least to be flat to slightly negative, right? And that has a lot to do with the timing of price actions versus the input costs and tariffs, which a reminder that last year in H1, there was basically no tariffs, right? So from a year-over-year comps perspective, that should give you some sense of the seasonality.

But based on Q1 and where we're operating the plan, as Olivier mentioned, when he's talking about its priorities, we don't see anything different to mention there from a margin progression perspective than what we would have provided you already in February.

The next question is from James Moore of Redburn Atlantic.

Could you talk about the timing and commercial potential of your step 3, Olivier, in terms of AI and native energy intelligence? I guess the questions are really when do you think that will come through? What percentage of the group's revenues can be augmented by it? Is it new revenue streams? And how you're going to monetize this? Is it tokens or subscription or just a price premium to the existing product?

Thank you very much. There is a lot in your question, but I'll try to answer a couple of points. So it has started already, number one. Now does it mean that we have all those solutions which are AI native in all part of our portfolio for every segment? The answer is, of course, no. But it's not something which is going to happen in 1 or 2 years or 3 years from now. It has already started.

I can just give you a couple of examples. Last year, we've been able already to accelerate the sales of ETAP, thanks to the initiative we have with NVIDIA and the Omniverse, where we are able to design and simulate the electrical architecture of a data center. So -- and we see that in our number in Software already last year. We are launching, as I said before, a solution this year to be able to do a full simulation -- design and simulation in Data Center on the electrical side, there with ETAP, but also on the cooling on the mechanical side, and we are combining the capabilities that we have with AVEVA and ETAP and probably we'll give you a demo at one point of time, but that's an offer we are already launching this year, which is very, very interesting.

We are launching also some new offers like foresight, for instance, in Buildings. So we have definitely this acceleration. How does it translate in terms of number to answer your question? I would say, very simply, you look at what we said in terms of flywheel acceleration by 2030. When we say we want to double our recurring revenues, we want to increase the portion of our Digital revenue, Software and Services. So all those metrics we are using across the digital flywheel are the metrics which are capturing the acceleration of the contribution of AI and therefore, what we call Energy and Industrial Intelligence.

Now what will be very difficult to say is what will be the exact ramp-up year-on-year, but we see definitely an acceleration over the cycle, which is great. And you've understood that a large part of that will be recurring revenue, which is something that we will have. So we are happy to give you more demo maybe in the -- during the current year on what we are doing, but we have already a many offer available in the market, and that's exciting.

The next question is from Gael de-Bray of Deutsche Bank.

Olivier, could you talk about the technology road map for the Data Center market over the next 2 to 3 years? How you are positioned, especially around things like the power sidecar, the UPS transition, the solid-state technologies as part of the direct current architecture?

Yes, absolutely. So as we said in many, many calls, it's something where we are investing quite a lot in R&D because it's something we see coming. Now to be very, very clear, and you can see any kind of market study, it will be a progressive ramp-up in the coming years. While we are obsessed really to be in a leading position from a technology standpoint, we have also to be all clear that it will be progressive. We will start to see probably the first project in the second part of '27, a little bit of acceleration '28, '29, 2030, but that will be really still a limited part, I would say, of the entire data center opportunity.

Nevertheless, it's very, very important for us because here, we are combining the electrification and digitalization. And that's why we are investing a lot to develop those 800-volt DC. So sidecar, I would say, is what we call, as you know, the ready-made solution that can be put in place fairly quickly in the first project. But we are designing in parallel what will be the step 2, a much more compact and much more integrated solution regrouping the different part of the portfolio.

And the last comment I will make, and that's why I was mentioning strategic partnership. It doesn't mean to get this step 2, we need to do everything by ourselves. There is part of the portfolio where we have a core competency, core differentiation in electrification, for instance, that we will leverage. And we will also leverage some partner when needed to be able to deliver the full solution to our customers. So same happy to give you more demo during the year 2026, but it's an important part, of course, of our R&D investment. But again, I repeat that will impact and that will touch, I would say, to be very clear, the P&L of the company not before '27, but in a very, very, very limited manner, and that will go step by step from '27 to 2030.

The next question comes from Ben Uglow of Oxcap.

I really wanted to just get a qualitative sense around your pricing actions and how you were kind of approaching pricing in 2026 versus last year. I guess the reason is if we look at -- you had a bit of carryover from tariffs last year, we had raw material effects, and now we've got, I guess, underlying inflation. And my question is, are you able to be kind of tactically a bit more dynamic on pricing and offset some of those headwinds? So any color around what you're doing in the organization would be helpful?

Thank you, Ben, for your question. And I will start probably with the big picture, and I'll let Nathan compete. It's a very important question because if you remember last year in our call, we realized when we started 2025 that we were somewhere at the end of the cycle, which -- what I call the COVID cycle, where you have this COVID period, post-COVID and there was up and down in pricing, which were very, very extreme, not always very, very rational. And last year, for us, it was very important to take a pause, step back and as part of our company program to differentiate much better how should be our pricing activity.

So to keep it short and simple, what we have done last year was to say there is one part which is strategic pricing that needs to be reinforced in every single part of our portfolio. Why I say it has to be reinforced because again, the COVID cycle has made us very, very, very tactical in the market. And there is a risk always when you become too tactical that you forget the strong basic of pricing properly your product and in particular, being able to have a strong pricing power on new innovation.

So that's why you see in our company program, a very strong focus on strategic pricing on one side, but as well and equally important, and you said it tactical pricing because last year, tariff came definitely as something which was new. End of last year, we had also an increase of raw material, for instance, in copper and silver. And this year, we see, of course, with the inflation cost of energy or indirect cost increase because of other materials which are impacted by the Middle East crisis. It means that we have to be much more reactive and much more tactical.

What I'm very pleased with this year on the tactical front, we've been able to implement our price increase at the beginning of the year. Of course, it takes a bit of time to ramp up because we are going also through channels, through distributor. You have to reprice some of our big contracts also in some cases that we have. But this time, I would say we are in a much better place to have both very strong focus on long-term strategic pricing, but also what I call more the tactical part. And that's why Nathan was saying also before that we will see a ramp-up across the full year in terms of pricing impact on our P&L. But maybe, Nathan, time to hand over to you to give more color on that.

No. So Olivier, that's a good illustration of the strategic and tactical. I think to even be a bit more zoom, right? We were quite proactive on pricing actions in Q1, and that includes list price increases across many geographies. And as you described, you expect that realization of those price actions to ramp up progressively across the year. I think one example of that, right, and it's probably the market where you get price on the market the fastest suppliers do that to Schneider as well when you talk about technical, but is in China, where after many quarters of deflation and negative price in Q1 with list price increases and with the operational excellence, we actually see pricing positive in the quarter, right? So that's an example of where that proactive pricing really realizes into our results quickly when it can flow through the channel. I think, operator, maybe one last question.

Okay. So the final question is from Martin Wilkie of Citi.

It's Martin at Citi. Just a question on Software. Obviously, a strong performance with ARR up 12% and a good performance in SaaS. But there's obviously a lot of market questions around the software model for many companies, not just for Schneider. I mean, has there been any emerging change on how customers are looking to pay for your offerings, big debates around software being paid by outcome versus by seat and obviously, some emerging AI players, not really competing in your core business, but in some perhaps peripheral areas. But just trying to understand if there are any emerging signs of change in your Software offering?

Thank you very much. That's a great question, and I'll try to keep it short because it's an important one and of course, very strategic for Schneider.

First of all, if you look at the market, and I know there is a lot of question on the Software business and how it's evolving. I mean, what is very, very important to understand is we are positioning ourselves in areas which are extremely differentiated from a technology standpoint. We are positioning ourselves in critical infrastructure, so Energy and Chemicals, Data Center, where customers don't change their engineering software, don't change their software for monitoring on a regular basis.

Once you enter with a customer, you stay for a couple of years, not to say decades because these are very, very critical applications. So -- and we try really to position ourselves only in area or mainly in areas where we can really differentiate, which means doing stuff that nobody else could do in the market. I was giving the example of Data Center, being able to design, simulate the full infrastructure of the Data Center in thermal, in electrical, in mechanical and being able to go across the life cycle by implementing the CapEx. There are not so many companies in the market that can do it. Likewise, with what we are doing with AVEVA in Energy and Chemicals. So when we screen our portfolio, we believe that the largest part of portfolio, I will not tell you 100%, but 90% probably-ish is not really impacted by the evolution of AI and impact on software.

The second part of your question is equally important, and I'll keep it short here. What we have done with AVEVA in particular, and they were one of the leading company in the market when they moved to really flex model from a monetization standpoint was to build the commercial model much more on consumption than anything else, which means that we sign contracts where our customers are buying basically on the consumption base, they are buying units and those units are really -- they are not invoiced because they are invoiced, but they are used by any type of user. So it's not individual license by the number of users in the company, it's based on the consumption at the level of the company.

So this kind of business model that we have implemented help us, if you want to be probably more competitive in that new cycle. Of course, bottom line, that's something we are following very, very closely. But we believe, again, in this new era of intelligence where AI will create more value, if we are able to develop those solutions, which will be AI native and when we combine our software portfolio and our hardware portfolio, we believe this is a place where we can really differentiate Schneider in the future. And all of that is, of course, embedded in our long-term guidance when we speak about digital flywheel and contribution of software and services.

So sorry for a long answer, but it's a very, very important point, of course, that we are following very, very closely. But we -- while we are always very attentive on the threat, I would say we are at that point of time, more excited by the opportunity, and we see it basically growing month after month. Nathan?

Thank you, Olivier, and thank you, operator, for running us through the Q&A. I think we'll stop there. To close the call, as usual, the IR team will be available for you to engage after the call. And you'll also note that Schneider has appointed a new Head of IR, that will be effective June 1. So a warm welcome to Antoine Sage in the coming months. And we'll close there. Thank you, operator.

Thank you all. Have a good day.

Thank you, gentlemen. This concludes today's conference call. Thank you for participating. You may disconnect at this time.

Welcome to the Schneider Electric's Full Year 2025 Results with Olivier Blum, Chief Executive Officer; Hilary Maxson, Chief Financial Officer; and Nathan Fast, Head of Investor Relations. [Operator Instructions].

I'd like to inform all parties that today's conference is being recorded. If you have any objections, you may disconnect at this time.

I will now hand it over to you, Mr. Nathan Fast.

Good. Good morning, everyone, and welcome to our full year 2025 results presentation and webcast. I'm joined in Paris today by our CEO, Olivier; and our CFO, Hilary. For the agenda, you already have the slides available. We'll go through them now and then make sure to have enough time for Q&A. As always, I want to remind everyone about the disclaimer on Page 2.

And with that, Olivier, I hand it over to you.

Thank you very much, Nathan. Extremely happy to be with all of you today. Look, more than 15 months in the job, the first time I'm doing really this earnings call with you for the full year '25. And I'm extremely excited to be with you to report on what happened in '25 and even more important, what we see for the future.

As you know, with the management team, we did spend a lot of time in '25 to define the next cycle. We were with many of you during our Capital Market Day. And we launched the new mission of Schneider Electric, which is to be your energy technology partner, to be the company which will be at the convergence of electrification, automation, digitalization in every single industry, to drive efficiency and sustainability for all. That's what we call at Schneider Electric, advancing energy tech to the next level. And of course, I'm going to come back on that.

The point I want to make here, it has really received a very, very good feedback. We got a very good feedback from the market, from our business analysts, from our customers, from our employees, from all our partners. So that's really exciting for us to enter '26 with this new positioning, which is giving a lot of inspiration for all our stakeholders.

So now let's turn to the most important part, of course, of this call, which are our results. I'm pleased to report a very strong Q4 revenues growth at 10.7%, EUR 11 billion. And even more important for me, it's really the acceleration of the 2 businesses, the acceleration of Energy Management, but the acceleration again in Industrial Automation in Q4 with a growth of 8%.

If you go look at the full year results, that's an important milestone for Schneider Electric. For the first time, we have exceeded EUR 40 billion in terms of revenue, with a 9% organic growth. So that's, as you can imagine, an important milestone for a company. And even more important is the acceleration that we have seen in our 2 business. I was just talking about Industrial Automation. We told you with Hilary a year ago that we will turn positive for Industrial Automation in '25. We did it, and we delivered 7% growth in H2, which as a result, has helped us to achieve 3% growth for Industrial Automation. As you know, Energy Management has been really the driving force from a growth standpoint for the past years, and it continue again to be the case in '25 with a growth slightly above 10%.

So all in all, again, a great year from a top line standpoint, both businesses driving good contribution to the growth of the company and an important milestone, EUR 40 billion.

When you go a bit deeper in all our achievements, we are pleased to report that we have achieved a margin expansion of 50 bps, which is in line with the target we set up for us at the beginning of the year, which translates in an adjusted EBITA growth of 12.3%, which is again within our guidance of 10% to 15%. Extremely important milestone also for Schneider Electric, free cash flow of EUR 4.6 billion with a conversion rate slightly above 110%, which show again the strong financial health of the company overall. We are pleased to report that we are going to distribute a dividend of EUR 4.2 per share, again, in line with our progressive dividend policy, which has been the case for the past 16 years. And our TSR has grown by 89% for the past 3 years.

So all those financials show really the solidity of Schneider Electric strategy, but even more the solidity of our execution. And as you know, it's equally important for me and the team that we always look at our digital metrics, which are translated inside the digital flywheel. It has been an important transformation for Schneider Electric in the past cycle. It will continue in the future. And the digital flywheel is giving us really the illustration of the execution of our portfolio strategy transformation.

So we reached EUR 25 billion of our turnover with digital flywheel, which represents 62% of our overall revenue. And pleased to report that it has achieved a growth of 15% last year. We continue to grow very fast on all the aspects of the digital flywheel, but very excited to see that we are now close to 20% of our total portfolio in services and software. And last but not the least, it has been an important focus for us in the past year, not only the acquisition of AVEVA, but the transformation of AVEVA, the acquisition of OSI. And last year, we have achieved an outstanding performance with 12% growth in ARR for AVEVA.

It's also important to mention that '25 was the last year of our sustainability program, the one we launched 5 years ago. You know that we have this culture at Schneider since 20 years to launch every 3 to 5 years, a new program where we set up an ambition on where we want to take the company. And we are pleased to report that we have achieved overall our goal. I'm not going to go through all the metrics, but that's very, very important, and I'll talk later about -- when we speak about '26.

The only thing I'd like to mention is when you look at all these metrics, if I just highlight some of them, extremely pleased to see that with the portfolio of Schneider, we have helped to save and avoid 862 million tonnes of CO2, which is tremendous since we created that initiative in 2018. You will see later that we'll keep going in the next chapter, but that show how the impact of the business of Schneider Electric can support all our customers everywhere in the world. And we have embarked not only our customer, but our partner, our supplier. Our supplier have also achieved their goals. So we divided by 2 the CO2 emission of our suppliers that were part of that program.

And we continue to have a very strong focus on access to clean energy to many people who don't have access energy in the world. And we have achieved this milestone, which was super important for us, 50 million plus. Actually, we have exceeded reaching 61 million. And of course, all those achievements have been recognized multiple times in the past year. It's always great to be a leader in that domain.

So if we wrap up '25 in short, as I said, a record year in terms of revenue, crossing EUR 40 billion, all-time high level in terms of backlog. We'll come back to that with Hilary. Extremely strong performance in adjusted net income and free cash flow and acceleration of the demand and profitability in H2, which is what we told you with Hilary when we were together in July.

What is very important for me, and we told you that during our Capital Market Day, we are accelerating the transformation of the company. We have a plan. We are accelerating the transformation of the portfolio, making Schneider Electric the company which will advance energy tech to the next level. We are going to the next level to -- of our digital portfolio, leveraging AI and bringing energy and industrial intelligence.

We have reinforced our multi-hub strategy in a world which is very fragmented. We do believe that our regional model brings a lot of advantage. We have reinforced in particular, in India for the international market with the acquisition of L&T last year, the completion, I should say, of the acquisition.

And last but not the least, we spent a lot of time with the team last year to simplify the operating model to make sure we can generate more efficiency and create even faster execution.

So now if I turn to '26. I'm not going to talk about the long term today. It was done during the CMD. But if I recap what we told you in London in December: We have 3 megatrends in front of us that have been the main driver of Schneider Electric growth in the past year: The evolution of the new energy landscape, electrification of usage everywhere in the world; digitalization going to next level with AI; and of course, a world which is more and more multipolar, and we don't believe it's going to stop. So for us, what is very important is to make sure we can leverage and accelerate really everything we do at Schneider Electric to make the most of those 3 trends. And of course, what we see, and I'm sure you see it as well, all those 3 trends are accelerating at the same time at a speed which is unprecedented, which impact, of course, all our end markets.

But speaking about the end market, it's fairly positive for Schneider Electric. And we like always to go back to those end market growth and to tell you how we see the market. We continue to see a double-digit opportunity plus in data center and network, solid growth on buildings and industry, and we'll say a little bit more with Hilary also on that one. And we continue to see infrastructure growing fairly fast between 5% and 7%. What you see as a result of the past cycle, we continue to be a very, very balanced company in terms of exposure. We'll talk about geography, but balanced in terms of end market, having our 3 largest market contributing all to 1/3 of the revenue of Schneider Electric and infrastructure step-by-step going also to the next level with close to 15% of our revenue.

So what's next for '26? We are basically going to execute our plan, our strategic plan, the one we present to you, which is really to advance energy tech to the next level of intelligence. We are going always to follow those 3 important transformation, which we have launched internally. We call that inside Schneider, our company program. This is a vehicle we are using to align all the entities of Schneider Electric everywhere in the world. For me, what is very important is not only to define the North Star, advancing energy tech, defining those strategic priorities but equally and even more important is how we align our teams everywhere in the world to make sure we execute faster the strategy of Schneider Electric.

So talking about Energy & Industrial Intelligence, we want to reinforce our energy, our technology leadership. We've presented in detail our strategy in December, but I want to recap what we told you. We have built a huge portfolio in the past, which is extremely differentiated, starting by our legacy product business, but going to the next level of Edge Control, starting to do more and more in digital and software and digital services everywhere in our portfolio.

What makes Schneider Electric very, very different at the end of the day? We are combining a unique expertise in different domains. Those domains are the building domain, the power and IT domain and the industrial automation domain. What we want -- we don't want those domains to innovate in parallel universe. We want to create a unified customer experience for our customer. Let's make it simple. Every time we sell solution to our customer, we want to keep it simple for our customers to commission the asset, to be able to leverage all the software, to create a unique user experience. It means that, for instance, you need to have a digital platform, which are the same, and we need to create hub, which are the same.

So for us, it's not only about creating the largest portfolio in our industry in those domains, is to make sure we make it simple, easy for our customers to use all those offers of Schneider Electric. And what we want to do even more in the next cycle is to do it through their full life cycle. Schneider was known 10, 15 years ago as a company which was more at the CapEx stage when we built. We've moved big time in the past 5 years to make sure we are also at the design level. We can help our customers to design, to simulate, to create digital twin for their asset. And of course, when we have installed our solution, what we want to do even more through digital is how we can help them to operate efficiently, how we can help them to maintain efficiently, to extract data that will help them to manage the obsolescence of their asset, for instance. So all in all, this is what you see on this slide, which is the strategy of Schneider, I think.

And what are we doing differently in the next -- in this cycle? Now we've reached a level where most of our assets are connected. Again, keep in mind the digital flywheel, going step by step to 70% of the digital flywheel. So it's about extracting all those data at all layer of our digital stack, extracting external data, federating, structuring those data in the data cube to make sure, thanks to AI, we can amplify what we give to our customer and deliver more intelligence. So it's about building the foundational model in AI, in energy and industry that will create more value for our customers in the future.

And it's not something that we are dreaming to do in 5, 10 years from now. It's something we do already. If you take just one example of the data center, which is a place where we have invested, as you know, a lot in the past years. We are, of course, in the middle, as you can see, present at the build stage historically. We have reinforced our portfolio, for instance, with the acquisition of Motivair in liquid cooling. But what is equally important is being able to work with NVIDIA, with our customer, the large hyperscaler on how you can design and simulate, how you can work in the universe of NVIDIA, on how we'll behave digital and electrical infrastructure in the future based on the next generation of GPU that NVIDIA will launch in the future. And then we can move to a stage where we are working with our customers to design their own AI factory. We can build, we can execute with them. And we can also extract data at the end of the cycle to make sure we give more to those customers.

So that's really a typical illustration of what we mean going to the next level of energy intelligence, unique customer experience, leveraging all the portfolio of Schneider and being able to do it through the portfolio of -- through the full life cycle of our customer.

Now we have multiple proof points and other example we are doing. We are launching, for instance, EcoStruxure Foresight Operation, which is basically the convergence of power and building management in one software amplify with AI that can give a lot of opportunity for our customers to improve the efficiency of our building. And I'm not going to cover all the examples, but we have also what we presented to you in November -- in December, what we are doing in Industrial Automation with EAE, EcoStruxure Automation Expert, which is taking automation to the next level.

So all in all, just as a recap, we are investing a lot in R&D. We are growing progressively to the next level of our journey in R&D with 7% approximately of our turnover. And having always in mind those end targets, which is keeping on increasing the part of our portfolio, which will be more digital, more than 70% by 2030, accelerating everything we do in software and services, so going step by step to 25% of our total revenue. And all of that helping us to multiply by 2 our recurring revenue as part of the turnover of Schneider.

The second chapter, which is very, very important for me, and I'm passionate by technology. I strongly believe in innovation. I strongly believe that what will make Schneider Electric very different. But I'm equally passionate on how we are going to differentiate in front of our customer. You know it, but we have decided to go to the next level of the regionalization of Schneider Electric. So it's basically how we structure the company in terms of innovation, in terms of supply, but also in terms of sales and making sure that we are creating 4 regional loop: in North America; Europe; China, East Asia; and Southeast Asia and International to create agility and speed.

So what does this mean in simple terms? You identify needs in one of those regions. You can speak to R&D people who are very, very close to you. You can speak to the supply chain people, and you can execute projects very, very, very fast. And you don't need always to go back to the top of the company. Now it doesn't mean that we want to cut Schneider Electric in 4 pieces. All of that is supported by a global governance where we define very clearly where we want to go in terms of R&D. For instance, what are the platform we want to develop, what are the choice we want to make in terms of electronic. Also the way we want to design our supply chain. But when this global framework has been defined, we want to empower our 4 regions to go much faster.

And what we are doing also in terms of operating model evolution is how we go to the next level of engagement with our global customer, which, as you know, will represent a growing part of our sales. When we go, for instance, to cloud and service providers to utilities in all the segments, we are going to next level also of engagement with our global customer.

So on this slide, you have a couple of, again, of proof points of what we are doing to make it happen. I'm just going to give you a few examples. We want to have 90% of our sales to be manufactured in each region. Manufactured means both what we buy from outside, but also the cost -- the labor cost that we have for manufacturing. So for us, it's important that we keep investing in all the regions. I said it, we've completed the acquisition of Lauritz Knudsen in India, which creates a very, very strong India hub to support the international market.

We continue to invest in the U.S., in North America, for North America, especially to support the growth of our data center business, both in low voltage UPS, but also in liquid cooling with the acquisition of Motivair. Talking about Motivair, we have decided to open a new factory in India. Actually, we announced last week to accelerate the expansion of Motivair outside of North America. And we continue to leverage, for instance, China as one very important hub for us in terms of power electronics but also localizing offer like GVXL to make sure we are more competitive in the Chinese market. And we continue also to invest in Europe, new factory we are launching in Macon and taking our joint venture, Schneider eStar to the next level for electrical vehicle.

So the last pillar of that transformation is operational excellence. Also extremely important for me. We've been very, very vocal with Hilary and the management team in December that we want to innovate in technology. We want to accelerate the growth of the company, but all of that has to translate in a very strong operating margin, strong return for our shareholders. And that's why we decided we need to accelerate all our plan when it comes to cost competitiveness and scalability.

Cost competitiveness on one side because I want to make sure we always stay competitive in everything we do, the design of our product, the cost of our product, the cost of our solution for our customer, how we do a better job to collaborate with our supplier to deliver innovation, cost and time to market, which is very important for me. And having a very strong machine where we deliver strong industrial productivity every year.

At the same time, I want Schneider Electric to be extremely scalable. We just said it, EUR 40 billion, huge milestone for a person like me who joined the company no more than 32 million -- 32 years, which was, I think, EUR 5 billion at that point of time. I mean it's just an impressive milestone. But if we want to go to the next level of our ambition, 7%, 10% growth every year, that's super important that we always work on the fundamental of the company, our IT system, our supply chain and so on and so forth. And I do believe we have a huge opportunity to leverage AI to keep really a strong level of scalability but also efficiency at the same time. And I said it, I will go very, very fast. We are also working a lot with the management team on how we keep simplifying Schneider Electric year after year to make it easier for our people to execute.

Here again, a certain number of proof points on how we want to collaborate more with partner, supplier, company like Infineon, for instance. I mentioned going to next level of flexibility in capacity also, working strongly with companies like Samsung and Foxconn, for instance, where we believe it will give us an opportunity to accelerate really our capacity everywhere in the world, accelerate our competitiveness and an absolute obsession on at cost by design in order to contribute really to a very strong improvement of our gross margin.

So a couple of examples that you have on that slide, but I remind you on the right-hand side of the slide, those operational metrics we've defined with Hilary during the Capital Market Day, which are absolutely essential for us. While we want to grow very fast, we want to stay very, very healthy at the gross margin level, always focus on the efficiency of the company. And last but not the least, always working also on our portfolio to make our portfolio more efficient.

So these are really the main chapter that we presented to you on which we will give you an update every year, every half year on how we are progressing. But of course, I would not be complete if I would not speak about what makes Schneider Electric extremely different in the market, a very, very, very people and sustainability-centric company. I said it, we've completed successfully the past cycle when it comes to our sustainability achievement. We've presented that to you already. So I'm not going to go one by one, but we have launched our new program when it comes to what are the next transformation we want to deliver, with a very, very strong belief that as a company, we can have a lot of impact, but we believe that advancing energy tech will bring progress to all everywhere in the world.

So there are a couple of metrics that we have kept from the past program. Again, saved and avoided emission, going to the next level. I told you 800 million tonne, plus we want to achieve 1.5 gigaton by the end of 2030. But new metrics we are building right now on how we can build, train more electrician in the world to support that big trend on electrification. And of course, always covering all the aspects of ESG and trying to impact our entire ecosystem, including supplier partner everywhere in the world.

When it comes to people, we continue to invest a lot. Super important for me that, one, we keep our employees engaged in the transformation of Schneider. We are moving very, very fast. So we want to keep our employee along with us to keep the management, and we want really to make sure they are motivated and engaged to work with Schneider Electric. And at the same time, what is super important for me, we are moving really to this tech world, which require new competencies. So training our people in digital, in AI, in those new energy landscape technology is extremely important.

And last but not the least, the second metric for us in terms of engagement is always offering the possibility of our employees to become shareholder of Schneider Electric and extremely pleased to tell you that 63% of our employees have invested in our worldwide plan last year with some country going above 80% of employee. So you imagine that's a strong demonstration of the commitment of our employees. And we've built this multiyear model, going to the next level of regionalization. We have a unique model of management where we want to have a very decentralized leadership, not only for the regional team, but also for the global people who are managing Schneider Electric. Why? Because I believe that in a world which is going to be more and more fragmented, that will make Schneider Electric much more agile and much faster to make the right decision.

So to wrap up on the priority for me as the CEO of the company in '26, definitely, first and foremost, delivering a very strong performance. We'll come back to that with Hilary in a couple of minutes. But again, accelerating everything we do on the technology leadership side, being the absolute leader in the new energy landscape. We are the worldwide leader in electrification. We know the energy landscape is changing. It's bringing even more electrification, more change in our industry. We want to keep and reinforce that leadership.

Going to the next level, leveraging AI and creating energy and industrial intelligence for our customers. And of course, with the data center market, which is growing fast, keeping an absolute leadership and making the most of this growth opportunity. Going to the next level of regionalization to satisfy even more our customers, local, regional and global. We see strong demand everywhere in the market. Most of the geography, all key geography will contribute positively in '26. So let's make the most of the growth everywhere in the world. And of course, executing seamlessly, the record high backlog that we delivered last year.

Last but not the least, I said it, huge focus on operational excellence, gross margin improvement means strong focus on cost, productivity, pricing, margin obsession. This is very high in my agenda, very high in the agenda of the management team. And of course, we want to continue to build the next level of scalability for Schneider Electric and in particular, leveraging AI.

So this is about the -- really what we plan to do in '26. But before going more in detail on how it translates in terms of financial ambition, I would like to hand over to Hilary, our Chief Financial Officer, to tell you more about our '25 financial performance. Over to you.

Thanks very much, Olivier, and good morning, everyone. Happy to be here with you all today. I'll start with our key financial highlights for the full year, some of which Olivier has already mentioned.

Starting with revenues, and Olivier mentioned a few times, we're excited to show revenues of more than EUR 40 billion for the first time, finishing the year at EUR 40.2 billion in revenues, up 9% organic. In gross margin, as expected, we finished the year slightly negative. Despite this, we did continue to see a step-up in our adjusted EBITDA margin, which improved by 50 basis points organic, supported by strong cost control and the simplification actions we started in 2025.

Our free cash flow was above EUR 4 billion for the third year in a row, a bit higher than our expectations, driven by strong operating cash flow and working capital improvements. In terms of net income, we were slightly negative at minus 2% with our adjusted net income up 4% recorded. And lastly, we did see a step-up in our ROCE to greater than 15% for the first time, reflective of our strong operating results.

To get into a bit more detail, both businesses contributed to our overall growth in revenues of plus 9% organic with Energy Management up double digit for the fifth year in a row at plus 10% and Industrial Automation back to full year growth at plus 3%. And while it's not on this slide, I'll mention that all 4 of our geographies finished with positive full year organic growth in revenues in both businesses, a reflection of our strong portfolio positioning across our hubs.

The positive contribution from scope is from Motivair and Planon, and we did finish the year with a negative impact from FX as anticipated, primarily due to the depreciation of the U.S. dollar and U.S. dollar impacted currencies. Based on current rates in 2026, we'd expect this negative FX impact to continue with minus EUR 850 million to minus EUR 950 million impact on full year revenues and minus 10 basis points impact on adjusted EBITDA margin. Of course, FX rates are not easy to predict. So to support your modeling efforts, we've updated our FX sensitivities to key currencies in the appendix of this presentation tied with the 2026 guidance we're giving today.

Olivier already mentioned the 15% growth in our digital flywheel, which we use to track the progress of our transformation towards more digital and more recurring revenues. The only additional point I'll mention here is that you can see we're now at 79% recurring revenues in our agnostic software business. This recurring revenue profile supports greater visibility and margin and cash flow resilience over time, and it remains a central pillar of our value creation strategy.

Turning now to our backlog at the end of 2025. We exit full year 2025 with a record backlog of more than EUR 25 billion and a growth of 18%. And just to note, that 18% is not in constant currency, so it reflects a similar drag from FX as we saw in our 2025 revenues. A couple of points I'll make here. First, this strong backlog will obviously support our sales in 2026 and into 2027. And more importantly, it gives us very good visibility, particularly in our data center business for the next 18 to 24 months. Second point, we did see a clear acceleration in orders in the fourth quarter, driven by data center, but not only, we also saw a good pickup in demand in infrastructure and in industry, including process and hybrid in the Q4.

Moving now to Q4 revenues, which was a record high quarter for us. All 4 geographies contributed to our strong finish to the year, driving sales to EUR 11 billion, or plus 11% organic, and both businesses also contributed strongly. The positive scope is for Motivair. The first year there was very strong, better than business plan, and we saw a negative impact in FX in Q4, tied to the depreciation of the U.S. dollar and dollar impacted currencies.

In terms of business models, we were up plus 4% in products with around half of that due to price as we ramped up our pricing to offset tariffs and inflation, particularly in North America. Our systems business grew very strongly, plus 19%, with growth led by data center with strong growth in Industrial Automation as well. Software and services was back to double-digit growth, plus 10% organic growth for the quarter, driven by double-digit growth in revenues in AVEVA and digital services.

Turning to the 2 businesses. Energy Management was up 11% for the quarter, with North America at plus 19%, driven by growth in data center as well as industry and infrastructure. We did still see negative growth in residential in the U.S. and in Canada with some early signs, maybe wishful thinking of stabilization of demand in terms of orders in the U.S. In Western Europe, up 5% organic, the growth was led by data center with solid contribution from residential buildings. Asia Pacific was up 5%, with China up low single digit, driven by continued demand in data center with the building and construction markets still subdued. India was up double digit with strong growth in both products and systems, and Rest of the World was up 9% organic, with continued double-digit growth in Middle East and Africa.

Industrial Automation was up 8% for the quarter, with North America turning to growth, up 5% organic, driven by discrete automation in the U.S., supported by the market as well as some investments we've made in the commercial organization there and with double-digit growth in both discrete and Process & Hybrid in Canada. Western Europe was up 8%, with growth led by AVEVA with solid growth in discrete and Process & Hybrid. Asia Pacific was up 7%, supported by sales at AVEVA with solid growth in discrete and Process & Hybrid. China was up low single digit and India was up double digit, both driven by continued growth in discrete. Rest of World was up 14% with strong growth across most of the region.

Turning now to our P&L. We finished the year with adjusted EBITA of EUR 7.5 billion, up 12% organic, and we continued with another year of progression in our adjusted EBITA margin, up 50 basis points organic. This was driven by our strong organic revenue growth as well as strong leverage on our operating costs as we focused on cost control and started the implementation of our simplification program. These actions translated into our SFC to sales ratio, which stepped down almost 1 point to 23.3%. At the same time, we continue to support investments for the future in technology leadership and in customer differentiation. And you can see our R&D as a percentage of sales remained flat at close to 6% for the year. Our gross margin was negatively impacted by inflation, tariffs and by mix, partly offset by a strong acceleration in productivity in H2, and I'll speak more to that in a moment.

Energy Management finished the year with adjusted EBITDA margin of 21.8%, flat to 2024, impacted by the same negative trends in gross margin as the group, offset by operating leverage. Industrial Automation finished with adjusted EBITDA margin of 14.2%, an improvement of 10 basis points organic, driven by improvements in gross margin, mostly offset by a deleverage in operating costs in the first half of 2025.

Gross margin at the group level came in at 42.1%, down 40 basis points organic. And you can see the details quite clearly in the bridge. We did see a pickup in product pricing in H2, but not yet enough to offset headwinds from tariffs and raw materials, as expected. Mix continued negative for the full year, also as expected, due to the higher growth in our systems business. And we did see a strong pickup in productivity in the H2, supporting a stronger gross margin evolution in the second half of the year.

Now Olivier will speak to more details in the trends we expect for 2026 in a few minutes, but we do expect a continued pickup in pricing throughout 2026, which, alongside the other drivers of our gross margin that we presented at our Capital Markets Day, should support a positive evolution of our gross margin in full year 2026. However, the timing of that ramp-up in price as well as the timing in RMI and tariffs will likely mean we continue with flat to negative gross margin progression in the first half of 2026 and tariffs being a bit difficult to predict at the moment.

I mentioned the strong operating leverage we drove in our operating costs, or what we call our support function costs, in 2025 through both cost control as well as the kickoff of our simplification program. You can see we drove EUR 349 million in cost savings in 2025, more than offsetting inflation and allowing for investments in R&D, in commercial initiatives and in our digital backbone, including AI.

Turning now to net income. Including scope and FX, our adjusted EBITDA is up 6%. As I mentioned in December at our Capital Markets Day, our restructuring costs did tick up to close to EUR 300 million tied to the simplification program that we kicked off this year and in support of the additional minus 1.5 to minus 2 points, we expect to drive in our SFC to sales ratio between '26 and 2030, and that excludes R&D. The only other item I would note is we did have an additional around EUR 100 million impairment in H2 tied to some equity method investments in the U.S. Alongside as anticipated increases in financing costs and PPA accounting, we did see a negative evolution of our net income of minus 2% with our adjusted net income, which excludes restructuring and impairments of EUR 4.8 billion, up 4% reported, or plus 14% organic, better reflecting our strong operating results.

Free cash flow came in at a strong EUR 4.6 billion, a bit better than we expected, with strong operating cash flows, up 7%, and strong working capital improvements in inventory and days sales outstanding, driving a free cash flow conversion ratio of 106% or 111%, including those noncash impairments. As I mentioned in our Capital Markets Day, we'd anticipate our cash conversion ratio to be around 100% over the next years despite the capital investments we're making to support our growth, bolstered by structural working capital plans.

And I'll finish with a slide on our balance sheet and ROCE. We did close the India transaction at the end of 2025, so you can see a small uptick in our net debt to adjusted EBITDA ratio. But overall, our balance sheet remains strong, well supportive of the A-level credit ratings we committed to at our Capital Markets Day. And I'm pleased to see our ROCE surpassed 15% at the end of 2025, reflecting our strong operating results.

With that, I'll hand back to Olivier to cover our 2026 expectations.

Thank you very much, Hilary. Indeed, let's close the first part of our call with what we see as a key trend in '26. It's going to be a summary because we've covered already a lot. But in short, what we see is a continued strong market demand, which will help us to drive growth and with positive contribution for all our end markets. Obviously, data center end market will lead the growth based on the growth demand -- the strong demand we've seen in '25 and we see that to continue in the future.

What is very, very important for me is while we like and we love really taking the most of that opportunity, we will continue to position Schneider Electric strongly in industry and infrastructure, and we see great opportunity to accelerate the growth, and buildings to improve its contribution progressively also aligned with the macroeconomic trends. System will continue to lead our growth, but we see also some improvement on our product business, which will have a positive contribution this year and in particular, but not only in discrete automation, which has also been a very important point of focus last year.

We'll keep growing in software and services. This is a translation of our energy intelligence story, with a very, very strong focus at the end of the day to drive more recurring revenues in all part of our business. The good news, all 4 regions will contribute to the growth, from North America, Europe, China, Southeast Asia and International, of course, led still by U.S. first and India probably second. But the good news is all markets will contribute positively.

It's very, very important. We said it several times. What makes Schneider Electric very, very different, it's a balanced exposure by end market, by business model, also by geography, and we want really in '26 to continue to have this balanced exposure and to make sure we always make the most of those market opportunity and always building strong muscle for the future in case some part of the market might be less exciting in the future. So as a result of that, we are also putting a lot of action on price. Hilary said it. We want to be net price positive in value to be able to offset raw material impact and tariffs, ramp it up throughout the year. And as Hilary said, bringing and turning our gross margin positive during the year 2026.

So the group expects the other driver of adjusted EBITDA margin expansion to be aligned with what we shared with you during the Capital Market Day. As a result of that, we have set up the following target for '26. So an adjusted EBITA growth between 10% and 15% which is supported on one side by a revenue growth of 7% to 10% organic. I insist organic is really an important point for us. We see massive opportunity in the market. And at the same time, we'll keep on increasing our adjusted EBITDA margin between 50 and 80 bps organically in '26. So all of that will translate our adjusted EBITDA in margin -- I mean, margin in a bracket of around 19.1% to 19.4% for the full year '26.

So exciting year in front of us. We are ready. We have a plan. And definitely, we plan to accelerate the overall execution of that strategy in '26.

So before we hand over to you for Q&A, today is an important also day. We made the announcement this morning that it will be your last earnings call, Hilary. Hilary has been with us for 9 years. She has been the CFO for the past 6 years. She's going to take the next assignment in the United States that will be announced later. And she will be replaced by Nathan Fast, which is actually on my left. So Nathan has been in the company for almost 20 years, have been doing a lot of different job in different part of Schneider Electric, the last one being Investor Relationship. So very pleased to have you Nathan, in this new role, and I'm sure you will build on the strong legacy that has been built by Hilary in the finance, and you will help us to execute that plan very, very fast and to drive strong shareholder return.

Hilary, I want to thank you for the partnership. It has been a great journey in the past 10 years, but in particular, in the past 15 months, the 2 of us. You have been a fantastic support for me to become the CEO of Schneider Electric. So I want to thank you on behalf of the team here at Schneider Electric and wishing you all the best in your next chapter.

Yes. Thanks, Olivier. Schneider has obviously been a huge piece of my life and my career, and I'm extremely grateful to the Board, to yourself, the CEOs and colleagues with whom I've worked over these past 9 years and for the trust and support they've given me. And in particular, you mentioned I'm excited on the work we've done together over the past 15 months, to put the company on the trajectory we described in our Capital Markets Day and reiterated today. I'm certain I'm leaving at a time when the company is on a great trajectory, and I'm really pleased we've been able to prepare a great successor with Nathan over the past few years. I'm confident that he'll hit the ground running. And then just for those curious, my next role will be announced closer to the date of my departure.

So Olivier, back to you.

All the best, Hilary, and we will work together, you, Nathan and I in the coming weeks to do a very smooth transition and starting next week, by the way, with all our investor roadshows. So we'll continue to have fun together for a couple of weeks.

Nathan, back to you for the next part.

Okay. Olivier, maybe I can say a couple of words as well. First, I'd really like to thank Hilary, right, first, for her leadership across the finance function, but also the opportunity to have learned many, many things, Hilary, over the last 9 years working extremely closely together. And then I guess, Olivier, also maybe a bit to you. Thank you for the trust. I, of course, take the position with humility and determination to succeed together with you and your leadership team. So thank you for that.

I'll make the transition then to the Q&A, of course. and thank you both for the presentation. We have around 20, 25 minutes. I'm sure there's a lot of questions, and I want to make sure we get to every analyst with the question. So if you can please just stick to one question, that would be great.

And with that, operator, let's go to you for the first question, please.

[Operator Instructions] The first question is from Phil Buller of JPMorgan.

Just to follow up on that CFO transition topic, if I can, to start. And obviously, thanks, Hilary, very best wishes for the next chapter, and congrats, Nathan, of course. The question is on timing. I've had a few investors asking about that today. It obviously sounds very smooth, but it's obviously also been announced shortly after a major CMD. So if you could just share some additional color as to the genesis of this, Olivier, perhaps, is this something that you were envisaging during the CMD buildup as you build those 2030 objectives together as a team? How involved was Nathan, in particular, in that process? And has anything changed? One of the data points offered at the CMD was in relation to the AVEVA margin expansion. And obviously, there's a question at the moment about software more broadly. So just a little bit more color about the genesis and the time line and if anything has changed in terms of the assumptions even in that relatively short period since the CMD, please?

Sure, sure, sure. Well, look, as we said, and I'm sure you can feel it today, this is a very smooth transition that we are managing with Hilary. Just want to tell you that Schneider Electric is not one man or two people show. What we've presented to all of you at the CMD, it's the work of the entire executive committee. They have been associated to the building of this next cycle. I told you many, many times in '25 that it was time for Schneider Electric to build this next cycle, inventing what advancing energy tech and with actually more executive last year that we have usually to work all together as a team. And Nathan has been associated in the later part of last year, of course, as a new IR of the company in the building of that plan. So I understand that a change of leadership always raised question.

But again, we respect, first of all, the choice of Hilary to take a new role and to have a next chapter in your career life. But what is very, very important at the same time, we are very, very solid team behind this plan. I've been now the CEO for 15 years -- 15 months. Before that, I was in Schneider again for more than 32 years. So I think what is super important and Hilary has helped me a lot to build this very strong plan for the next cycle. Whatever we presented to you in the CMD in terms of assumption, driver and how we want to accelerate the performance of Schneider Electric remain absolutely valid. And as I, Nathan has been associated through this plan from day 1, so I feel confident that we will manage this transition smoothly, and we are fully ready this year to execute our plan extremely fast.

The next question is from Alasdair Leslie of Bernstein.

So a question on pricing. I mean, obviously, if we look at that EBITA bridge, it does look like the gross pricing was still relatively muted in H2, but obviously, you're flagging an acceleration in Q4. I was just wondering if you could talk a little bit more about those kind of pricing exit trends. Any price increases you've already put through year-to-date? And then I was actually wondering if you could comment specifically on the pricing environment in China. Have you seen any stabilization or improvement in the deflationary environment there? It's a market, I think you said recently at the CMD that you were working on pricing as well. So what's the problem is for 2026 and our margins generally in China still holding up at high levels?

Yes. Absolutely. Thank you very much for the question. I'll start and hand over to you, Hilary, to complete. Look, we told you last year in H2 with Hilary that definitely, we were ramping up step-by-step more pricing everywhere in the world and in particular, in North America, we know with impact of the tariffs. Last year, as you know, was a complicated year where we had up and down on tariff. It kept changing. So it was not always easy really to plan what would happen. Last year, in Q4, we put a very solid plan to accelerate pricing.

What happened since Q4, we have seen also a huge increase of raw material. So there was, on one hand, the need to implement what we decided last year, but also to accelerate everything we plan in pricing to compensate the impact of raw material. We have a lot of silver and copper in all our products. So I think the good news this time we were ready with the initial plan of Q4, and it was just about how we accelerate to add on top of that the compensation of raw material. I'll let you complete maybe on the second part of the question on China [indiscernible].

Yes, sure. Indeed. So we did see an acceleration in 2025 in the Q4 in pricing generally, of course, in particular, in North America, that's where we have the tariff impacts in front of us. China for 2025 definitely remain deflationary. So those low single-digit numbers that we're talking about in China would be higher without that deflationary. They're higher in volume. We would expect China -- it's not always easy to call. The government is trying to combat deflation. But in general, we'd expect China to remain deflationary in 2025. That said, with the uptick of raw material prices, which impacts far more beyond just our industry and our own competitors, we did start to see pricing and price increases, including with all kinds of local competitors across industries in this Q1 in China.

So we expect there to be a bit of a turn there as well. And I'll just mention that we did update in the appendix of this presentation, a slide we gave a few years ago with the breakdown of copper and silver for us in terms of raw materials in 2025. So you can see all of the information. And like Olivier mentioned, '26, we expect that we'll continue that ramp-up that we already talked about in the second half of last year.

The next question is from Andre Kukhnin of UBS..

I'll focus on data centers, please. Historically, you gave us very helpful disclosure on how much of your backlog is from data centers and distributed IT and how much of that sort of pure data centers and hyperscalers within that. Could you please give us those details for 2025? And the bigger question really, I wanted to get your view on how you're positioned for the 800-volt direct current architecture transition and in particular, what are your state of offering at the moment in solid-state transformer and solid-state braking?

Absolutely. Well, look, it's a very important question. Maybe I can start by the second part of the question, Hilary, and hand over back to you for the first part on that backlog. Indeed, when you look at the evolution of data center, the type of AI factory you will have to build in the future to support the next generation of GPU of NVIDIA like Rubin Ultra or Feynman, that will require at one point of time, a different type of infrastructure. So that's why there is so much buzz on 800-volt DC. We see that it will be an important trend. It's very difficult to say by 2030, when you look at all the data, we say 200 gigawatts to be built in the world.

We estimate all reports in the market estimate 15%, 25% of the demand could be impacted by 2030. What is super important, you are talking about an evolution of the electrical infrastructure, which is, again, where Schneider Electric has a very strong leadership. So we are developing one, what we call, as you know, the sidecar concept, which can be available immediately, which is a minor evolution of the infrastructure. But we are developing those full definitely architecture that could be ready by '28 when the market will start to grow. And we are leveraging here a lot of competency we have in-house, in particular, in China, but also we're working with partners.

So again, that's a domain that we know very well because it's touching the core of the electrical infrastructure that creates actually also opportunity for Schneider Electric to stay extremely differentiated in the market in the future. And as I said, we have to get ready for a transition that will be slow, that will take time, but it's super important that as a worldwide leader in electrical distribution, Schneider Electric is the first one really to offer the most innovative solutions.

So again, you're absolutely right. That's an important trend. We are extremely well positioned. We have accelerated our investment in '25 to develop concept. A bit too early to say because the demand is just about to start, but we are fully ready to face this new trend, which again will impact our market step by step between probably '28 and 2030. Hilary?

Thanks, Olivier. In terms of the backlog, you're right, we didn't give a backlog breakdown by end market. And I don't think we would intend to do that. But what we are doing, and you can see we've updated the exposure in terms of our 2025 orders across our end markets. So now we're doing that annually. I think you can infer generally the orders growth that we've seen there, and you can infer from that probably some component of data center and networks. Of course, out of the energy management piece of the backlog, which we showed, a good portion of that is data center and network, but not only. So we also had good growth in the rest of the end markets.

The next question is from Jonathan Mounsey of BNP Paribas.

And may I just also say, sorry to see you go, Hilary, but welcome, Nathan. In terms of my question, will you just so -- the intake so far in Q1? I mean, obviously, there was a big step-up in DC intake in Q4, I think probably for all the players, and you've confirmed that again today. Just wondering whether that's really continued into 2026. And also, with the order intake where it is and with your comment around it really gives you visibility through for the next 18 months, are we saying now that kind of revenue growth in data centers is capped this year and what we're booking now is really for 2027?

Do you want to start, Hilary?

Sure. So in terms of intake in Q1, well, we've said quite a few times before, and we're not quite done with the Q1 yet that we don't consistently look at orders as the right way to look at data center and network. But what I would definitely say is that demand for data center accelerated in the Q4, and we don't see a different change in trend in the Q1, if that's what you mean. That's the first part of your question. Visibility, indeed, we have good visibility. We've talked about it for some time, and you can see it even in orders in the backlog now, 18 to 24 months in terms of data center. In general, those projects now are being planned probably mostly in those later two years. That's what the hyperscalers and the others are doing. So yes, we would have a decent visibility on 2026 revenues associated with data center at this time, exactly.

The next question is from Gael de-Bray of Deutsche Bank.

So just a follow-up on this. I mean, you obviously finished the year with a very strong backlog now exceeding EUR 25 billion. So can you help us understand how we should think about the timing of conversion, specifically for 2026 and '27? And what are the potential bottlenecks you may have to solve to convert that backlog into revenues?

Yes. Thank you for the question. First of all, I'd like to remind and probably rebound on what Hilary said. In the way we operate in that market and in particular, with the large hyperscaler, we work with them on the design, we freeze the design, we look at the planning they need in terms of capacity, and it help us to adjust our capacity. So the combination of this work we are doing on design agreements we are making with them is helping us really to have a good visibility, as Hilary said, 18, 24 months on what's going to happen. To answer more specifically your question, in the acceleration of Q4, a large part of what we booked in Q4 will be executed more in '27, but that will impact a little bit '26.

And the second part is definitely, we see an acceleration in demand of those AI factory everywhere in the world. We see that in North America, but I was just in India last week, for instance, for the AI Summit. We see also that India is accelerating. So that gives us the confidence that we can predict pretty well what's going to happen because we are really very well connected first with hyperscaler. We are operating in those key geography. And for a company like Schneider Electric, if we have a kind of 2 years visibility on the demand, we can react on capacity. We can do it by ourselves by building extra capacity. But we are also working more and more with different partners. I was mentioning Foxconn, the regional partner everywhere in the world to adjust capacity plus/minus if needed.

So the only change for a company like us, probably a couple of years ago, we are looking at our overall capacity every 2 to 3 years, and then we move to 1 year. Now it's a very dynamic process where every quarter, we revisit the demand for the next 3 years, and we adjust eventually the capacity we need. Keeping in mind that we want to stay very balanced. So it's not only about building capacity for North America, but also making sure we are building capacity in the other part of the world. That's why I was saying you, for instance, before that we decided last year to invest in a new factory for liquid cooling in India because we see the demand for AI factory in India also coming, and that's why we have accelerated the execution of the plan. So that's how we are managing. There will be up and down. Of course, we'll continue to adjust. But I think we are fairly confident with the visibility that we have in the pipeline, the way we are working with all those key stakeholders and adjusting permanently our capacity.

And we do give a breakdown of the backlog between less than 1 year and more than 1 year. We would intend to meet the customer commitments we have. So all that backlog you see in less than 1 year, we'd obviously expect to accomplish in 2026.

The next question is from James Moore of Redburn Atlantic.

Hilary, thank you for all your help and best of luck. And Nathan chapeau. Could I ask about software and AI and the disruption risk in sort of 3 dimensions. I think we're talking increasingly about software being made up of a kind of UI SaaS application layer that is going to be fully disrupted by agents, but under that a system of record and a database with more of a moat. And I would argue that your AEC business does have some of that top UI layer that could be disintermediated. Have you done any work on what proportion of revenue do you think that is at risk and what proportion you think is safe from AI directly substituting you?

And secondly, as customers increasingly use AI to increase their workflow productivity and presumably, if you continue to price on a seat-based monetization model, you're going to see a decline in revenue. How quickly? And are you planning to pivot to tokens or to another form of usage? And how quickly do you think you can do that? And I guess the third dimension is you're going to be trying to increase the degree of AI in your own software products to add compute and value. Are you worried that, that aspect of AI uplift can also be disintermediated by others taking that aspect of the productivity improvement work? This is sort of quite a lot bundled into that. But Olivier, I'd be very interested in your thoughts.

Thank you. No, it's an excellent question and indeed, a very complete question. Let me start. Of course, we are doing analysis permanently. And I tell you why, because when we really started to see even end of '24, the acceleration of AI, we discovered that it was a massive opportunity for Schneider. We've been quite vocal with you for the past 2 years on what we do in digital services. Digital services is basically a business where we extract data coming from all the assets that we make more connectable. We've been -- we built this offer that we call EcoCare. AI has helped us to go much faster actually in creating more value for our customer.

So obviously, when we realize that it will help us to go much faster, and to deliver more value and you don't need to go through a very complex software in the middle. Immediately, what we've done with Caspar, the CEO of AVEVA, was ready to look at our own portfolio and to check if it could be disrupted. Now I don't want to be too oversimplified, but what AI brings is when you have simple repetitive task, a lot of information that you need to capture. And when you look at the portfolio of AVEVA, I don't want to say that we have 0 risk. But the large part of what we are doing is about leveraging extremely complex data that come from industrial infrastructure, working on very complex and critical installation, where cybersecurity, by the way, on top of that is extremely important.

So I see that there is still a space for huge growth for all those complex software because we are solving complex problems for our customers. And here, as you said in one of your question, AI is also an opportunity to amplify what we have been doing with AVEVA with the AI agent to go to the next level. So at that point of time, I don't want to say we are not worried, but we believe a large part of what we are doing in our software portfolio is not impacted negatively, but more positively. I'll just give you a last example maybe before I hand over to Hilary on the pricing side.

You take what we have been doing with ETAP. ETAP is about building a software to design electrical infrastructure for the future, where you have to simulate a lot of assets, which are extremely complex assets. That's what we are doing in the Omniverse, for instance, with NVIDIA. We don't see AI at all being able to disrupt that kind of software. Now again, building AI agent on top of our software to make it even easier for our customer to use it, of course, why not? So all in all, we are -- we believe we are in a good place. We will be attentive. And at the same time, wherever we don't have a strong software business, we believe it will help us to accelerate some part of our portfolio for simple implication that we can deliver to our customer.

And in terms of your question about the seat-based model or pricing in the software business, as part of the AVEVA transition to subscription, and we did a lot there. It's not just changing contracts and things like that. But you may recall that we've talked about the flex pricing model that we've been invoking at AVEVA more and more tied with Connect, but not only with most of the services of AVEVA and into OSI. That's the pricing model that we've been moving to over the past few years. And that's effectively token-based. So we didn't do that because of foresight on AI -- agentic AI, but that is the model that we've moved -- started to move to and that I feel comfortable will be sort of the model of the future for this type of software.

Thanks, James. We probably have about 5 minutes left. So if you can make the questions pretty concise, then we can maybe fit in a couple more. Operator, next question?

So the next question is from Ben Uglow of OxCap.

I will keep it brief. It's really just on Industrial Automation and the margins. I have to be honest, I am surprised to see your margins still below 15%. And I guess it's two things. One is why aren't we seeing a little bit more operating leverage? And certainly, that's what we have seen in some of your peers. And secondly, just in absolute terms, why are we so low? Is this to do with China and country mix? How much is to do with process? How much is to do with SaaS transition? If you can just give us a sense of what part of the business is keeping the margins so low, that would be helpful?

Sure. So with Industrial Automation, indeed, we did finish below 15%. I mentioned that on the positive side, we do start to see that -- those improvements in gross margin in the business, which is exactly what we expected as we moved into the second half. So the big -- the detractor, I would say, in 2025 is that we did continue to have negative operating leverage in the first half. So what's driving -- and I'll talk to that in a second, but what's driving those lower margins, we've mentioned it a couple of times. A big component of it for us has been mix, the mix between Process and Hybrid and Discrete. We saw Discrete start to come back in the second half. That's been a big component of the mix return for us, and we'd expect that to move forward in future. Second, AVEVA and that transition to subscription, we shared in the Capital Markets Day that we're going to be moving our adjusted EBITDA margins up there now more swiftly over the next couple of years. So that's been a bit of a detractor, although it was an improver, obviously, in gross margin in the second half in terms of mix contribution.

And then we have had a real drag in terms of operating leverage at the business. We have Gwenaelle, our new leader there in Industrial Automation that spoke about the changes that she's making in not just 2026, but going forward. But we would expect all of that to be operating in the right direction on all cylinders in 2026. So we'll have some more improvement in mix, normal productivity. And AVEVA, we're almost done with that transition to subscription. So we'll start to see more and more contribution at the level of adjusted EBITDA as well. So yes, not where -- exactly where we would have liked to be in 2025, but I think all the levers are there for '26 and beyond. And we gave a little bit of an idea of that margin journey in the Capital Markets Day to 18% and perhaps even a bit better by 2028.

Thanks, Ben. Maybe one last question, and we can try to go quick on this one. Operator, next question?

The next question is from Martin Wilkie of Citi.

First, Hilary, thanks for all the debates and interactions over the years and good luck for the future. My question was just on the seasonality and the implications for the profit uplift in the second half. And I know you've not guided explicitly, but if gross margins are lower in the first half, presumably the organic EBITA margin expansion is sort of clearly less than 50 basis points. As we think about the implication for the second half and at the upper end of the range, it would have to be more than 100 basis points up in H2. Is that all driven by price cost? Or is the leverage from industrial automation coming back and the volume effect from that? Or is the AVEVA timing? What would drive that quite large uplift in profitability in the second half?

So in terms of seasonality, we have two pieces of seasonality in my mind. One, something that is completely out of our control, which is raw materials and then the pricing that we do beyond that. The pricing is obviously in our control. That can pull our seasonality one way or another. So we've seen in 2022, 2023, that seasonality going in different directions being pulled by that. And here, when I talked about that negative gross margin potential in the first half, that's a lot driven by that uptick in pricing. And for example, with tariffs, we don't have any baseline of tariffs in the first half, whereas we do in the second half. So there's timing there.

The other component of seasonality that we generally always see in our business is just associated with volumes. We have stronger volumes in the second half than the first half. That's been a seasonality for a long time across the business. So we have stronger leverage and we have stronger productivity usually in the first half. So in 2026, in particular, we would have better baseline on RMI and tariffs, the pricing plus productivity and volumes and operating leverage, which is those differences you'll see between the H1 and the H2.

And I'd just like to complete indeed, there are a couple of drivers which are very specific to what's going to happen in '26. But as we said multiple times, in the plan we built last year, we have the ambition to work on all the cylinders of the gross margin. So of course, this year, we have a very strong focus on pricing, and we'll keep on going and especially with raw material. It's pricing of product. It's also how we price our services business, how we bring the right level of selectivity in our system business. It's also working on the portfolio. We have historically some activity which are more dilutive than the others. You've seen in the CMD that we want to take out EUR 1.5 billion. So since last year, we built this very strong plan that we call gross margin obsession, making sure we work on all the drivers. But indeed, as Hilary said, there are some specific drivers for this year, but it's a short term and long term because we want really to make sure that we have an extremely solid gross margin, which is for me, the best reflection of the health of the business of Schneider Electric.

Okay. Thanks, Martin, for the question. Olivier, you have one word, and then we...

We are done with the question. I guess...

Yes, we're done with the Q&A.

So again, I want to thank you for spending time with us today. We are closing the chapter of '25. You can feel that we've been excited, EUR 40 billion, EUR 4.6 billion of cash flow generation. It has been the great year, but it's closed. We have a plan. Now our focus is really to make the most on '26 and make sure we can continue to drive a strong shareholder return. So we will be excited, of course, in the coming days, coming weeks to follow up with some of you and especially next week to go more in detail on that presentation. Again, thank you for the time spent with us. Thank you again, Hilary. All the best to you, Nathan, and focus on '26 now.

All right. Thanks, Olivier. I think we'll stop there. Look forward to meeting you, Olivier, mentioned earlier on some virtual road shows in the coming weeks. And additionally, of course, the IR team is available for you to engage. Thank you very much, and have a good rest of the day.

Thank you.

Ladies and gentlemen, please welcome Head of Investor Relations, Amit Bhalla.

Wow, that's a century of history, legacy and innovation. And today, we are here to talk about the future, the next 5 years and beyond. It's my great pleasure to welcome all of you to our Capital Markets Day of 2025. Fantastic to see a room which is packed. I know we had -- we couldn't accommodate everybody. So I know there's many people watching online. Welcome to each one of you as well. We're here today at this fantastic venue of the McLaren Technology Center, as you all can experience. And there's probably a couple of reasons why we chose to be here.

First and foremost, this is such an intelligent site as we will see during the course of the day, and it's fully powered by Schneider Electric. At the same time, when you think of McLaren, what do we think about. I think about pole position and since the weekend, world champion. We also think about speed. We think about quick decisions, data-driven decisions and teamwork. And these are all elements which resonate with Schneider Electric as well.

Let me talk about what we have in store for you today. Of course, it is my duty to give -- put your attention towards the disclaimer because we are talking about forward-looking statements. But what we've done is we've divided the day into really 2 parts. So the morning sessions, we'll have -- we'll talk about strategy. We'll hear from our business leaders, from our operation leaders, and we're also joined by a few special guests, including customers. And then in the second half of the day, we will talk about what we've done in this very site with McLaren, and then we'll move on to the finance section, which I know that you're all eagerly waiting for. And after that, we have the Q&A and the rest of the day, which I will explain later.

But in order to get things started and to say what we're going to do to advance energy tech, it's my great privilege and honor to welcome our CEO, Olivier Blum.

Thank you, Amit, and good morning to all of you. Welcome. Indeed, great to be in this beautiful technology center. For those who have been watching the Grand Prix, you've seen maybe sometimes there was a control room. So this is control room, its behind us somewhere in that building and it's powered by Schneider Electric devices supported by our data center. So I hope we have a little contribution, a very small contribution in the success of McLaren.

We are here today for a very, very important moment, which is our Capital Market Day. I had the privilege to be at Schneider Electric for the past 30 years. And there is one thing that defines Schneider Electric is always about challenging the status quos, always being ready for the next cycle. And we have been through a different cycle of our company, a cycle where we've gone through a huge geographic expansion, a cycle where we have created One Schneider and a cycle in the past 10 years where we created a unique technology stack, which is called EcoStruxure, with a very, very strong ambition and a very strong vision that the next century will be about electrification, digitalization to make energy more efficient and more sustainable.

And I think when we launched that program more than 10 years ago, I think it shows today that it's a reality that we are in. It's not anymore a vision. It's not anymore a dream. And what we want to share with you today is basically what we are doing to get ready for the next cycle, which is basically a cycle of intelligence of energy, of industrial intelligence. And I met with most of you for the first time as a CEO 1 year ago, it was in India for our Investor Day. And since that time, we've been working with my management team, the ExCom, really to work together on how this next cycle will be about. What does it mean for Schneider Electric? What are the trends that will impact us and how we are going to differentiate Schneider Electric?

And that's what we want to share with you. We shared actually already with the leadership team of Schneider a month ago, what is this plan because it's super important that we align all the company everywhere in the world. So very excited to be with you to talk about the future. But before talking about the future, it's important to say that we are starting on a very strong foundation. We've been delivering very strong and consistent results over the past cycle with a very strong acceleration of our growth.

You remember the time where we were kind of GDP plus minus company. We have entered in a new cycle where Schneider Electric has delivered consistent growth. And we have included on purpose the COVID period to show that even taking into consideration the COVID period, Schneider delivered great growth, very good profitability, delivering strong cash return at the end of the day and strong total shareholder return for our investors with -- as something which is very strong in our DNA, very, very strong progressive dividend policy over the cycle.

What is very important, what we have done in parallel of delivering strong financial results is to transform the portfolio of Schneider. You remember, when we launched EcoStruxure, we talked about the digital flywheel, and we are ending that cycle by having 60% of our portfolio, which is already digital. And of course, we'll tell you today what we are going to go to the next level. We've done it also with the support of very selected acquisition. As usual, a couple of acquisitions that have helped us to take software to the next level, of course, with AVEVA, with OSI but also Planon, and ETAP and RIB. Very selected acquisition also in technology. Just to mention one, Motivair, which is helping us really to go to the next level of having a full solution in data center based in the U.S., and you will have the CEO, Olivier with us today, who will tell you more about what we are doing in technology.

But last but not least, a very strong acceleration of everything we do in our multiple strategy with the completion of the acquisition of LK in India.

So that's basically about the past cycle, very consistent execution to deliver very strong shareholder return. What I would like to do today, and we are going to talk a lot about what are the acceleration we are making at Schneider Electric, what we are doing really to go to the next level. But what I think is very, very important to start with is we start with a very strong position and a couple of things that differentiate Schneider. I'm going to be very, very, very short, but I just want to make sure we are all on the same page of what are those attributes that make Schneider Electric very, very different.

So the first one is a very balanced exposure. And it has been really an obsession I remember from the different CEO before me and in particular, Jean-Pascal, to make sure that we can build a very strong balanced exposure from a geographical standpoint. That's why we put so much focus in expansion in China at one point of time, in India, in the U.S., of course. And now we are going to the next level, of course, with geography like Middle East, but also a very strong balanced exposure from an end market standpoint to make sure that creates a much more resiliency for Schneider Electric and to be able to go through a different cycle.

And what we have been doing in the past 10 years is to add one more pillar in this very balanced exposure, which is more diverse from a business standpoint, business model standpoint from pure product to more services to more digital layers, which makes Schneider Electric again more resilient. And what has been very, very important when we have gone through all this development is to make sure that we create a very strong diverse and international leadership team present in all those regions to make it really, really very, very close to each of the market.

The second thing really that make Schneider Electric different today in the market is our portfolio. And you will see a lot today through the different presentation, but also through the marketplace, a differentiated portfolio, which starts, of course, from our legacy, which is very, very strong franchise in product. All the examples that you see on the slide are more than EUR 1 billion of turnover franchise, starting by really a very strong position that we have in low voltage, for instance, with our PACTE and 9 series, leadership position everywhere in the world, enhanced in medium voltage with the launch recently of our SF6-free asset series.

And hence, also recently by the new platform we have launched with GVXL, our 3-phase UPS, which put us in a leading position in the world. And going to what we do in industry with Altivar and TeSys, all those franchise that we have created give us a unique access to many customers. But as you know, we have connected all those products to make sure we can go to the next level of intelligence. We built a very strong layer at the age level with automation solution from home to building automation, but also to industrial automation. And that's why we -- this combination of energy management and industrial automation is making Schneider Electric very, very different.

And on top of developing a lot of services, starting by field services, you know that we have told you a lot in the past 5 years on what we were doing to go to the next level of our journey with digital services with what we call the EcoCare franchise. And you will see today how it contributes already to the acceleration of our growth. And some people know, some people know a little bit less. But in this period of the past 5, 10 years, where the focus has been on energy, on sustainability, on electrification and digitalization, we have also built advisory services, which are agnostic to help out our customer at enterprise level. And all of that -- of course, as I said before, amplified by a very strong layer of software that we build.

So that unique position that we have in the market that we have built around our EcoStruxure going to AVEVA and CONNECT has been and is today a very strong foundation on which we can leverage for the future. So of course, it has been supported by a lot of investment, a lot of our investment, and we commented to you that we have accelerated our investment in R&D. And it's translated in a very strong return with a very strong vitality index.

And it's not only what I believe, what is also important is a testimony of the market, all business analysts are not only recognizing all those great platforms that we have in hardware that I don't even show on the slide, but recognizing today, Schneider Electric having already great position, being #1 in energy management software, in grid software, also same with Planon and microgrid, but also in supply chain. I don't know if you're aware, but we have been recognized for 3 years in a row by Gartner as the best global supply chain in -- actually not in our industry, in the industry in general.

The third thing that makes really Schneider different is a geographical coverage. And we'll have later on with one of our key partner, a testimony, but we have built really a unique ecosystem in every single geography with a very strong belief that to make Schneider Electric different, we will have to connect all this ecosystem to deliver more to the end user. So it's about leveraging panel builders, integrator, people who are assembling all our technology, people who are distributing the product of Schneider, I think, but who are also promoting our technology.

And just to give you the example, one illustration of what it means in India, with the combination of Schneider and now LK in India, it means that we have 140,000-plus point of sales in the geography that give us the possibility to access almost every single corner of the company. So this strategy of being with partner or saturating the market has been in really the core center of the strategy of Schneider and make us truly different today.

The fourth point, which is very, very important that I want to remind you, we've launched One Schneider more than 10 years ago, actually 14 years ago exactly, with the ambition and the vision that we will deliver more to our customer if we are one company, but we'll also deliver one more to our employees. So on the customer side, that's when we decided to have one sales force in every country to make sure we can saturate, as I said in the previous slide, by customer type. But that's also when we decided to create one digital experience.

On top of the human experience we are creating with our customer is how you create a unique digital experience for our customer. One services organization, we talked with you a lot about services in the past year. We have created more than 6, 7 years ago, one service organization to embark all the offering of Schneider Electric, one global supply chain. So that's what has helped us to deliver very strong really growth and market share gain in most of our markets.

But you have something -- there is something also that we don't speak a lot. It helps a lot on the people side because we are one company. We don't operate Schneider Electric, we know with multiple units, which are not interconnected. We are extremely integrated for our customer, but we are integrated for our employees as well. And I won't like to speak too much about myself, but I'm a pure product of that strategy because I've grown in the past 32 years in this company, doing very, very different job in multiple geography in sales, in R&D, in country management, being the head of HR for the company. But that's a unique value that we give to our employees, and that's why people join and stay at Schneider over the cycle. And of course, being One Schneider has helped us, as you know, to deliver very strong return in terms of performance, strong return for our shareholders, but has helped us to be always very efficient across the cycle.

And the last point, I already touched a little bit about it. If you have to retain what makes Schneider Electric different is a company which has an extremely focus on people, on the way we are developing people, on the way we are building very, very diverse world, diverse teams everywhere in the world. We love and we believe in differences that make us stronger, that make us more innovative.

But if there is one metric I would like to call out on that slide, the engagement of our people is translated on the last line, which is the confidence Schneider employees have every year in our global shareholding plan. We have last year, this year, actually, 63% of our employees who were eligible who have invested in Schneider who have bought shares through the shareholding plan. And you could say, look, this is true only in economies where we have been there for very long, but of course, like France.

But you have a country like China, India, where more than 80% of our employees have invested in Schneider Electric. So I could give you a lot of metrics, but I think it gives you a good illustration of the level of engagement that we have everywhere in the world. And actually, as a result of that, we are happy to report that our employees are in the top 5 shareholders of Schneider, which is, of course, very, very good.

And sustainability to finish, and I put it together with people because for me, there is a very strong between the topic of people, engagement and sustainability. For us, it has been always about being a responsible company. And it's for more than 20 years that we said we want as a company to deliver very strong shareholder return, but we want to impact very positively our ecosystem. We don't believe the 2 should be disconnected, and there will be a premium for a company who are able to integrate responsibility, sustainability into their strategy.

That's why every 3 to 5 years, we launch a new program. That's how we have been able really to help to save and avoid more than 790 million tonnes of CO2 emission in the past cycle. If you remember, and actually, I was the Head of Sustainability and strategy at that point of time, we said we would like also to embark our top supplier to help them to reduce their CO2 emission. So we have helped through our program, our top 1,000 supplier to divide by 2 their CO2 emission, plus many other initiatives where we give access to energy for every people in the world.

And of course, I'm absolutely convinced it makes us different. But again, it seems -- I'm not the only one to be convinced because we have been rewarded in the past year, 2x by corporate lines, 2x by Time's as the most sustainable company in the world. So there is probably something we are doing right at Schneider. So those 5 really elements make Schneider Electric very fine today. And it was very important for me to start my presentation to -- on those 5 key pillars, which gives you a better idea of what is the starting point of the next cycle and what are the things we want to accelerate.

So that takes me to the next part of my presentation is what do we see about the market. And look, you are involved in that market. You know very well. We -- you are making a lot of studies on how the market is evolving. But there are definitely for us 3 megatrends, which are at the center of everything that we see. First of all, the acceleration of the new energy landscape, the acceleration of everything which is happening in digital and something which is not new for Schneider. But we have been convinced for more than 10 years that we are going to operate more and more in a multiple polar world that we -- this is something that we see as a very important trend.

So if I go pretty fast on electrification, we said more than 10 years ago, the next century is going to be about electrification and digitization. It's happening. The usage in electrification has started to move everywhere in the world. Of course, we have -- a very important example that we know in our own life, which are, for instance, electrical vehicle. But we see it also in industry where more and more industry are going through an electrification of their process.

So multiple examples, but we show that electrification is growing everywhere. And if you see where we were at the end of '24 and where it's going in the next 10 years and then up to 2050, there will be a permanent acceleration of electrification everywhere in the world. And of course, this electrification makes Schneider Electric even more attractive at the end of the day. What is very important also to keep in mind is that electricity is the most efficient source of energy. We like to remind it. This is what will help, of course, to meet the energy demand everywhere in the world.

But it has also some implication. And Frederic, who lead Energy Management, will come back on that more in details. It means that those new usage that we see everywhere in the world are changing completely the traditional electrical distribution that we have been all through in the past century, which was basically an AC electrical distribution architecture to something which is more AC/DC. And for Schneider, I think as a global leader in electrification, we want to lead that transition. We want to lead that disruption because as a market leader, we believe we are the company that should give really an indication of where the market should go and how we can influence the standard to do it. So that's also something very important that you will hear more from our teams today.

What is important when we speak about energy, energy is getting more decentralized. There is a large part of the energy that will come in the coming years that will come from decentralized energy. Maybe 30%, 50%, we don't know exactly of the total generation, a lot coming from microgrid, but there is also a massive opportunity to meet the energy demand, which is to bring much more flexibility. And there are multiple studies that say that maybe we could gain 10% to 20% of the overall demand in the next decade by having more flexible solution.

I will go fast on artificial intelligence. Every single day, I'm sure you are reading about artificial intelligence. I think we are all convinced at that point of time that AI is already in our life, in our personal life. I'm not going to ask you individually how many times you are using every week generative AI compared to what we used to do 1 year ago, but it's growing very, very fast. All companies are using more and more AI. But what is very important for me is a third metric.

We see an acceleration of AI in the industrial world where a lot of investments are happening, and this is a place where Schneider Electric can deliver a lot of value. And of course, as a result of that, there will be a need for more infrastructure. And of course, today, we'll speak about data center and the unique positioning of Schneider Electric in that market. And I talked briefly about this multiple and polar world. For me, it's really something we have to look at 2 angles.

One is a great growth opportunity, reassuring basically more investment, more CapEx in many parts of the world. A lot of investment also in cloud to deliver cloud sovereignty for all those governments who want to develop their own cloud. And of course, it's another angle, which makes the life and the world probably a little bit more complicated for a global company. But again, thanks to our unique positioning in the past 10 years to create a multi-hub company, and I'll elaborate a little bit more later on, we believe that gives us an opportunity to be even more differentiated in the next cycle. So I see that more as an opportunity than a threat. But of course, we have to learn all of us how to navigate even better in this world, which is more fragmented.

So when you combine all of that, we are entering in a new era, a new era where energy was already at the center of every single probably priority of government and company, but an era where AI will require more compute, more compute will require more energy. And we believe we can be the company in the world that can deliver energy and industrial intelligence to meet the demand of the market and to demand the demand of the technology in the next cycle. So that's a unique positioning for Schneider Electric.

Maybe you have noticed in the past weeks that we have disclosed what we call our new statement, our new positioning. But that starts from a very, very, very strong belief that first of all, planet, people and business all matters. I talked about sustainability. It will continue to be high in our agenda to be a responsible company. So all matters.

But what is even more important that all will rely on energy in the next cycle. Energy will power our life. Energy will be essential to progress. And the only way to take it to the next level will be through technology. That's why we strongly believe in energy technology. And you have seen this short video today at the beginning of the meeting, which was really to show you that at every single step of big world transformation, Schneider Electric has been a leading company from a technology standpoint, always inventing the next generation of solutions. First company in the world to invent the switchgear, the contactor, the PLC with modicon and so on and so forth.

So at every important time, we want to be the company which will make the difference. And that's why we want really to be your energy technology partner. We want to be the energy technology partner of our customers. We want to be the company which will electrify, automate and digitalize every industry, business and home to drive efficiency and sustainability for all.

And of course, what I've described before, the positioning, the portfolio that we have built give us that unique opportunity to go to the next level.

So what does it mean? Now if I start to go a little bit more in details, why we believe it's important to start by electrification? Because if we want really to make the world more efficient to meet really the expectation of our customers, we strongly believe that, first of all, everything starts by electrification. We have this unique #1 position in electrification that we -- where we build solution in building data center industry and infrastructure to make sure that we bring intelligent devices for our customers really to electrify.

But as I said before, what is very important is to build a very strong layer of automation. And again, automation for home, automation for building, industrial automation, all are extremely important. That's why the portfolio that we have created between energy management, industrial automation and with our software company like AVEVA give us that opportunity not only to go from the electrification to automation, but to go to the next level of digitalization, which, of course, you understand will be very, very important in the next cycle.

So what are we going to do now in this next cycle really to accelerate the transformation of Schneider Electric. Three things for me and the team, which are extremely important. How we are advancing our technology leadership in the field of energy and industrial intelligence, how we go to the next level of regionalization of Schneider to create a unique proximity with our customer and more agility and how we create a very strong focus on operational excellence to create, deliver cost competitiveness and scalability.

So let me start by technology, and you will have many more details during the day. So I will just lay out really the foundation of what we are going to present later on. But in this world which is changing where energy and industrial intelligence is becoming more important, where you understand that the world of energy is changing, what is important for us is what could be the portfolio that we can create to deliver more value for our customer. So very simply, what we want is to help our customers to really onboard by offering intelligent devices, which are integrated, which sense, which think and which act, a strong layer at the operational level to help our customer really to simulate and automate the system. And of course, a strong value proposition at the optimized level once you have installed all those assets to help our customers really to be able to have access to multiple systems to multiple data and to create more value at the enterprise level.

What is very, very important to retain about the strategy and the portfolio of Schneider Electric is in everything we do, we want to develop dedicated solution for building, data center industry and infrastructure. You will hear us talking a lot about the full life cycle. So we want to be present from the time of the design to the time where we build, we operate and maintain. We are not only present at the CapEx time. We are present also before at the design stage, but also at the maintenance level where there is more OpEx. And of course, what makes us unique is the combination of unique capabilities with 3 strong domain expertise in building, power and IT, and I put liquid cooling together with IT and industrial automation. So that's really the starting point of how we are building technology to create more value for our customers.

The second point, which is very important for us where we accelerate, how can we convince customers to buy more for Schneider Electric? It's by making sure that we have this very strong technology stack with those 3 layers, but making sure that we have a very strong services layer. Of course, we have developed in the past 10 years plus a lot of field services. But as I said in my introduction, it was also about how we go to the next level by providing more digital services. And you will see today a lot of example because now it's not anymore an R&D, it's not anymore a direction, it's a reality. We are already delivering a lot of value for our customers together with our Schneider Advisory Services. But what we want and what is very, very important, we want to create one unified customer experience.

And it's not only through our sales force, it's the way we sell, the way we deliver quotation, the way we connect, the way we commission, we want to make sure that wherever you interact with Schneider Electric, you have one unified customer experience, and we believe it's a very strong differentiator in the market. And for that, again, you need to be one company, you need to be extremely integrated to make sure that you have a strong direction from a technology standpoint to make sure we always make the life of our customers easier.

The next part, which is very, very important, and you will see a lot today in all our presentation, we have built this very, very strong foundation with intelligent devices. We want really to go to the next level. Electronics are at every level to protect, to convert and to process. But you will hear also us talking a lot about software-defined architecture. Every platform we are launching has to be software defined by design, going to the next level of energy and industrial intelligence.

So what is different in what we are going to presenting to you today is that we have worked a lot in the past months, not to say years, to make sure we are able to capture data. And of course, it was not possible at intelligent device level when they were not intelligent before when they were pure hardware. But the fact that all our hardware are now connectable, same at the control layers, at automation layer. We can extract data, we can structure those data to make sure that they can be useful and leverage to get more value for our customers.

So that's where we combine all the data that we have coming from Schneider Electric, but coming from our ecosystem in what we call the Data Cube, which is really a place where we federate all our data. The data cube is basically powered by AVEVA technology. So we are leveraging AVEVA technology, but which is now going to next level to make sure that we can federate all the data that we have in our ecosystem, our own data, the data of our customers, the data eventually coming from other integrator and to make sure that we can leverage the unique knowledge we have by domain to make sure that we can contextualize those data, we can organize those data.

And we can also make sure we then leverage those data across the life cycle. So all the work that we have been doing by building EcoStruxure, you understand where it's going now. It's not only by -- about creating a larger portfolio from product to service to system to whatever. Of course, it's important, and it has helped us to be very successful in the past years. But we believe that the future is about intelligence and intelligence will be delivered by data, and the company will be able to capture those data to structure those data, to contextualize those data and to deliver more across the life cycle will be the winning company. And we believe Schneider Electric is in the ideal position to be that company that can deliver more to our customers.

So you will hear us talking much more about what do we do with those data, how we are going to structure those data, what do we do to pretrain to enrich to post-train to adapt those data to create really the first energy and industrial foundation model that utilize the data cube. And why we want to do it is really to deliver physical intelligence, combining the digital twin with the asset and domain experience. And every single word is important because we believe it's not only about capturing and structuring the data, it's really to be able to contextualize, to deliver the physical intelligence, and we believe there is a very strong value for our customer. And we see already the demand, we're growing a lot of very, very positive feedback for our customer. And of course, everything can be enhanced by injecting workflow on which we are working in different parts of our portfolio.

And on the next slide, I will not go in detail, but you have different use case that we see already that could be very interesting for our customer. What you can do by leveraging really AI to help the customer to save energy, to replace a pipe and to imagine what will be the impact on the production. So you can imagine that the more you capture data, the more you contextualize by domain, the more you can simulate and the more you can deliver a fringe efficiency for our customer. And you will see later on during the presentation that's something we are building that we are accelerating, but we have already a lot of solution available, and you will see both in the presentation of Caspar with AVEVA, but with [ SRED ] also in Energy Intelligence that we have already a lot in the pipe.

But of course, what we are sharing with you today is the next level where we want to take Schneider Electric. And just to help you to understand what it means for Schneider Electric, we were in front of you 10 years ago to speak, for instance, about data center. And we were telling you that we were really involved at the CapEx stage to provide the infrastructure. But what it means? It means that we are building a strategy where we are present across the entire life cycle for our customer. And just to take the example of a data center, what we are doing differently is to simulate, to create digital twin of a data center.

And of course, that's why we've been partnering with NVIDIA in the past 3 years to simulate in their own universe what will be the evolution of a data center infrastructure depending on the different GPUs of NVIDIA. What we do with ETAP, for instance, is to simulate the electrical architecture to make sure when those GPU goes to the market, we can deliver to our customer predefined architecture, and they will know that by using Schneider Electric predefined architecture, they will be able to optimize power, but also cooling efficiency in their data center. But I think there is no better person than Jensen Huang to tell you about the partnership we are building together with NVIDIA.

Thanks, Olivier. It's great to be here with Schneider Electric on your Capital Market Day. Schneider is one of the world's great technology companies. Nearly 200 years ago, Schneider helped launch the first industrial revolution. You forge steel, engines and machines that shape the modern world. Today, you build the software and systems that power our critical infrastructure, factories, cities, national grids. And now a new industrial revolution has arrived, AI. AI is the most powerful technology force of our time. It's transforming every industry and creating new ones. Like electricity or the Internet, AI is also infrastructure. Every company will use it, every nation will build it.

AI demands a new kind of factory, AI factories that produce digital intelligence from data. NVIDIA invented accelerated computing, which led to the big bang of modern AI. Today, we build AI factories, reinventing the entire computing stack from chips, systems, algorithms to applications. NVIDIA's partnership with Schneider Electric spans every layer of this transformation. We're working on so much together. Over 100 gigawatts of AI factories will be built before the end of this decade. We co-design the complex power, cooling and automation systems required to operate these new AI factories.

Together, we're helping industry build faster, smarter and more efficiently. Just this year, we deployed the world's first fully liquid cooled NVIDIA Blackwell AI factory with EcoDataCenter. We co-engineered a groundbreaking 800-volt power sidecar for high-density AI factories, delivering higher power efficiency in less space. We launched NVIDIA DSX, an NVIDIA Omniverse blueprint for designing and simulating gigawatt scale AI factories, helping our customers build digital twins with Schneider Electric's SimReady assets and we helped your customers accelerate their engineering workflows.

We're integrating NVIDIA CUDA-X and Omniverse libraries into critical industrial software like ETAP and AVEVA. Everyone will need energy. Everyone will need intelligence. And that's why this partnership matters to everyone at Schneider, engineers, operators and leaders, have a great Capital Market Day.

So that's to tell you again that what is very, very important for us in the strategy we are developing is in every segment to make sure that we can deliver solutions across the life cycle. So you've seen the example of what we are doing, for instance, with NVIDIA to create digital twin. We help our customers to build and operate and to make the data center the most optimized. Of course, we have a unique portfolio from everything that we had in the past and now amplified with what we have with Motivair.

You will have a lot of examples later on today where we'll deep dive on that. But the last one, which is very, very important on this slide, we don't stop there. We want to stay with our customer at the maintenance level. That's why we are creating those EcoCare contract, which are co-designed with our customer to make sure that we can help them to maintain in an effective manner, to do preventive maintenance and that creates, of course, great recurring revenues for Schneider. So we do that in data center. But of course, we do that in every segment. You will have later on great example, for instance, on what we do in the grid, in power grid, but also in industry because we believe that's the only way to differentiate in the future, being able to provide unique solutions across the life cycle, capturing data, amplifying by AI and delivering more to our industry.

So in order really to accelerate this technology transformation, we continue to invest. We want to take our R&D investment to the next level, progressively up to 7%, with more investment in automation, more investment in all digital solution. But we want also to do it with partnership with a lot of strong partnership. You have the example of NVIDIA today, but a lot of other partnerships that we do with our supplier with, for instance, semicon supplier to co-design for innovation, a lot of partnership also in manufacturing with Foxconn, for instance, to create capacity to create also more viability, more flexibility in our own supply chain, but also a lot of investment in Schneider Venture is early technology that will be important for the future of Schneider.

So all of that is helping us to amplify really our technology transformation, but it goes also with very strong commitment. We'll talk about at the end of my presentation about the financial commitment. But by doing all of that, we want to take our digital flywheel to the next level. More than 70% of our revenue should come from the flywheel by 2030. We want to have 25% of our group revenue being made of software and services, which is a very important ambition. And within that scope, we want to make sure we multiply by 2 the level of recurring revenues of Schneider, both in software and digital services offer.

So the next part I want to deep dive with you on top of the technologies, what do we do to differentiate. I've given already a lot of examples at the beginning of the presentation on how we manage each and every ecosystem in the different geography, and you will hear more from my colleagues from the operation. But for us, we believe we have created a unique approach in every single market by working with the different players, a different partner when we can deliver more of Schneider to every single customer.

So we have some direct access to very large end user, very important customer, but we leverage all our partner. They can be, for instance, electrician, point of sales for home. They can be panel builder, they can be system integrator in automation. And when we are able to articulate that ecosystem, we create a huge difference in the market. But I tell you, if you would speak to our customer, they will tell you that we take out the complexity because the world is getting more complex. Technology are more and more complex, and that's what we do differently.

So that has been the starting point of our strategy, being extremely integrated at the local level to create unique value for our customer. Of course, when we have global customer, for instance, the hyperscaler, we have dedicated organization to make sure that we can meet their demand. We can give them the full support everywhere in the world. But that's unique differentiation by region, create more value for our customer. But we don't stop there. We want really to go to the next level of regionalization of our supply chain.

We want to make sure that in every region, 90% of what we sell is made sourced locally. And of course, the COVID has been a great illustration on how it is important it is to have a very resilient supply chain. And in a world which is even more fragmented with the trade war, we believe strongly that the winning combination will be a regional commercial organization supported by a regional supply chain. And we don't stop there because we go to the next level, supported by regional R&D team. So we've talked with you a lot in the past year about the multi-hub, but we are really going against the next level to make sure that in every part of the world, actually the 4 key hubs that we have, which are basically North America, Europe, Asia around China and international around India, we are making sure that more and more we regionalize our R&D.

We create hub where people have more autonomy to stick to the demand of this local market. But again, like we do in supply chain, we do the same in R&D with very strong global principle to make sure that we are leveraging global platform. We have global architecture. So we are making sure that we are maintaining a certain number of global standards that makes us efficient, but to move as close as possible to every single market, the innovation. And by doing all of that, we are creating a model which is much more agile, which is much faster, more reactive because we are creating 4 regional loop from sales to R&D to supply chain, where we empower our people to make fast decision and adapt it to the local market.

And I can tell you, it makes a huge difference with our talent. It makes them much more empowered rather than waiting somebody else from a global organization to give you approval. So that's a very strong attractive and retention factor for our employees. So we have done a lot, and we continue to do a lot to accelerate that multi-hub strategy from what we are doing in Europe, investment in SF63, the joint venture we have done, for instance, with StarCharge to deliver EV charging and storage solution, continue to leverage China, which give us the scale, which give us a lot of opportunity to leverage strong R&D capability in power electronics, strong investment in North America from a supply chain standpoint, but from an R&D standpoint as well by making Motivair the global center for liquid cooling technology at Schneider.

And of course, creating now the fourth leg, which is our international hub supported by India, which is now enhanced to the next level, of course, with the acquisition of Lauritz Knudsen. And by the way, good news to share with you, if you're not already aware, we got the approval from the CCI. So we will be able to close the acquisition before the end of this year.

And I will finish by telling you that we put in this cycle a very strong focus on operational excellence. to deliver cost competitiveness, to deliver scalability. It starts from the way we are designing our product. And we have been very much inspired by our multi-hub model by having strong R&D capabilities in China, in India, which are the most competitive market in the world that help us to reinvent the way we design product to compare with best-in-class and to generate much more efficiency in the way we design our product.

Very strong focus also on how we work with our supplier and all of that help us to deliver a much stronger productivity. On all those aspects, Hilary will come at the end to tell you what are really the different metrics we are going to use to measure our progress in terms of cost efficiency and productivity. And what we have always in mind with the management team with a company which has been growing fairly fast, and we continue really to believe we have a huge growth opportunity in front of us in making sure that we believe -- we build a model which is scalable, which is always efficient, that we take out really sometimes inefficiency that a global company can create.

And that's why we put in this cycle a very strong focus on cost efficiency and scalability. And you will have many examples of what we are doing, but also, for instance, focus on very strong pricing competencies in the company. So of course, I would not be complete if I would not tell you that on top of technology leadership, customer differentiation and operational excellence, we continue to keep a very strong focus on people and sustainability, going to the next level of our people strategy, strong focus, of course, historically on career development, but making sure we equip all our employees with the skills they need to have in the technical and the digital world.

And very, very important, making sure we invent a new way to manage Schneider Electric. And we are spending a lot of time with my leadership team. We cannot manage a company like we did in the past, which are all very hierarchical. It has to be more and more mission-based. It has to be more and more performance based. And we are really evolving in the way we are managing the company to go much faster, to deliver higher performance and make it simpler for our team.

We are at the end of our -- and of course, I will finish by saying all of that is supported by our strong leadership team, which is the best illustration of what we mean by multi model by having people coming from different regions, being in different locations that help us really to be all interconnected in a world which is moving very, very fast and which is very fragmented. So as I was about to say, we are at the end of the previous cycle when it comes to sustainability.

So we are closing our previous commitment. and taking new commitments, and I think I have a problem now with the slide, now it's coming. And we will say more beginning of next year, but these are the commitments that we are taking, again, to continue to drive impact, to transform always our ecosystem. I said it before, it's very strong in the DNA of Schneider Electric, and we make sure we always connect the mission of the company. So everything we can do in electrification that can help the world to get more decarbonized, taking new commitment, for instance, to go to the next level with our supplier, but of course, taking new commitment on the way we can really unlock human potential.

So we'll share more in detail beginning of next year when we launch a new program, but we wanted to give you a heads-up already today on where we are going.

So all of that, of course, is supported by a very strong and ambitious plan to deliver strong value -- shareholder value. It's very important. I've said a lot about the way we see about the market evolution. This market evolution give us a strong confidence that we are still and we continue to be in a very strong growth cycle with a potential accessible market that will grow from 6% to 7%. That's very, very important that continually will be supported by electrification, automation and digitalization. And we see that in all our markets. Of course, there will be always a lot of attention on data center, which is growing fast, but we see equivalent opportunity in building, industry and even more in infrastructure where the demand in power grid is very, very important.

So in every single market, as I said before, and we'll share more later on today, we have a unique value proposition, things that make Schneider Electric very, very, very different. And this is all those elements that give us a strong confidence that we can deliver in the next cycle, a sustained growth of 7% to 10%, which is really, really an ambitious growth opportunity for us, but we strongly believe that with all the portfolio we have created, all the acceleration that I've explained before, we can go to that level of growth performance.

And of course, it will be supported by a strong margin expansion ambition of 250 bps in the next cycle and continue to put cash generation very, very high in our priority, close to 100%. And of course, we'll continue to have a very strong focus on capital allocation. Hilary will go much more in the detail of all those aspects, but we want to keep a very, very strong, definitely credit rating. We'll continue with a very strong progressive dividend strategy like we have done already for more than 15 years. And you will see also that we'll continue in the next cycle to put a very strong focus on portfolio management, active portfolio management.

So EUR 1 billion to EUR 1.5 billion of pruning. Don't expect any big things, but we want to make sure we have this healthy culture at Schneider with my business and operational colleagues, where every year, we revisit our portfolio and we take out those stuff which are less essential to the strategy of Schneider Electric, and we can reallocate more capital to the transformation of the company.

And last but not the least, we'll tell you more also later on with Hilary what we have in mind in terms of share buyback, which is very, very important in our strategy.

So I will close to tell you that we are -- I am extremely excited about this next cycle because when we look at the foundation we have created in the past, when we look at where the market is growing, when we look at those 3 acceleration that we have around technology, customer and operational excellence, that gives really a huge opportunity for Schneider Electric to make the difference and to drive very strong shareholder value. So we are excited to have you today. That will be a full agenda with detailed explanation on everything that I've shared with you today. But again, I want to thank you very much for being with us. Thank you very much for your interest in Schneider, and you can count on us to deliver very strong shareholder return in the next cycle. Thank you.

All right. Thanks very much for that, Olivier. We let you have a breather, but just for a few moments. Of course, when we talk about advancing energy tech, that is not possible without our customers and our partners. You mentioned around customer differentiation and the ability to have more time to discuss on that aspect. We're very happy and privileged to have Guillaume with us here today from Rexel, long-standing and important partner for Schneider. So we'll just have a short video. I think where we will set up the stage, and then I'll invite Olivier and Guillaume to join us back.

[Presentation]

So Guillaume, thank you very much for being with us. As you probably all know, Guillaume Texier is the CEO of Rexel, who have been a very long partner of Schneider Electric. I think, Guillaume, there is something maybe you don't know. I joined Schneider 32 years ago, but my first job was really to support contractor, to support distributor. And I remember my boss the first day told me, you know what, Schneider Electric is about technology and partnership. And the more you will be able to work with your partner, the more they will help you to expand the coverage in the market.

So that's how I started really my career working with your point of sales actually in the south of France. And since then, I've been always amazed about how a company like yours are helping really Schneider Electric to go to the next level. So maybe my first question to you, Guillaume, will be about the past. How do you assess really that collaboration with Schneider Electric and how it has contributed to the growth of Rexel in the past cycle?

Look, I mean, first of all, thank you for having me. It's exciting. Secondly, I mean, it's been a wonderful story over the last decades, as you mentioned, a story of partnership and a story of growth together. I mean, as you mentioned, the world has changed and our world has changed from a GDP plus or GDP basically market to something which is much more exciting and accelerating. And what is interesting for me when I reflect on this growth together is what are the main reasons for this growth together.

And the first thing which comes to mind when I think about Schneider is the power of the brand. And when I'm saying brand, I'm not only saying marketing. It's also about the ecosystem, the range of products, the geographical coverage. What strikes me is in our 17 countries where we operate today, in each one of those countries, Schneider is a driving force in the market because of the width of the brand, because of the technology, because of innovation, but this is extremely powerful.

For a distributor like us, it's much more exciting and much easier to sell a brand which is well known, which stands for innovation, which stands for quality of products. And the fact that you have a full ecosystem addressing each one of the segments of the market is something which is quite powerful. Even though not many of our customers are using all of the possibilities of Schneider, the fact that it exists is extremely powerful.

So the brand is the first thing that I would mention. The second thing when I reflect on the past is appetite for the future and for innovation in general. And when I'm saying that, I'm saying digital, and we're probably going to talk about that. I'm saying electrification technologies. I'm saying software, I'm saying sustainability also. On each one of those journeys, Rexel and Schneider have worked together to try to pioneer the industry in the direction of preparing for the future. That's very important for us.

And the third thing, I would say, would be consistency and commitment to the channel. You've explained that in the slides. You've explained that when you talk about [ Europast ]. What is important in the B2B world for us with our customers and also for us with our partners is long-term commitment, how you fix issues when they arise, how you address opportunities when they arise. It's not about the short-term ups and downs. It's about how consistent you are in progressing together. And I have to say, Schneider from this point of view has been outstanding. So you know what, great journey together. And when I look forward into the future, great opportunities to address together.

I think you almost answered my next question. But maybe there is one point where you believe Schneider is different because you are, of course, working with many partners, many suppliers in different category, lighting, cable. But when you deal with Schneider, what will be the one unique point you see in Schneider?

May I offer 2. One I would say is understanding and commitment to the channel. I think the slide that you showed is very telling from this point of view, you truly believe that there is more power in Schneider and in its partners in addressing the granularity of the market and the full range of the market through channels and through distributions. And for me, it makes a big difference for less advanced partners, the kind of relationship that we have is very commercial, very transactional, win-lose type of relationship or lose-win.

With Schneider, it's most of the times, a win-win relationship. And one good example, I mean, one simple example of what we do together is trying to co-optimize logistics. You have a logistics systems. We have a logistics systems. If you're transactional, you don't really optimize the 2 systems together. But you have your IT AI-powered tools. We have our AI-powered tools, putting them together, sharing more data, trying to optimize the way we do transportation, supply chain, reducing the common inventory that we have together is something that is an example of a win-win situation.

And the second topic, which is super important for me is helping us address the new opportunities. We are in a transforming world. The world of energy is changing every day. It's changing for us. It's changing for our customers. And for us to accompany this move, we require good partners who are able to help us address those new opportunities with technologies, with also services. And that is something where Schneider for each one of those new opportunities over the years has raised to the opportunity to help us do that. So 2 things very important, commitment to the channel and help us address new opportunities.

Very clear. Thank you. And talking about commitment, that's a good transition. I remember 10 years plus or something like that when e-commerce entered in our industry, there was a lot of big theory that maybe distribution will disappear, that supplier will go direct. And with Schneider Electric have taken a very strong stand that our job is to deliver innovation, to create demand and to make sure we can leverage our partner like Hughes to do the last mile of this new e-commerce, this new digital way of dealing with customers. So how did it transform your own company? How have you embraced e-commerce overall at Rexel?

I mean, look, I mean, you know that Rexel has been very, very instrumental in trying to push e-commerce. We've gone in 1 decade from probably 10% of e-commerce to today 32% or 33% of e-commerce. So that's been a very powerful transformation. We think it's the future. You know that among our countries, some of them are at 80% today of e-commerce. So it's going to go this direction. The important thing, and you mentioned that, is that e-commerce is never going to be pure e-commerce. We are, at the end of the day, in a physical world where contact with customers, where expertise sharing with customers, where delivery of products is still going to be there, which means that we have to go to a model which is going to be a mix of physical and e-commerce.

In this journey, we've been extremely -- we have had a very good partnership with Schneider, especially on the data side. To get into e-commerce, this effort, it's about tools, and we have the tools. It's about people, able to push e-commerce opportunities to our own customers, and it's about data. Data is particularly critical in the quality of our e-commerce. And I have to say Schneider has been among the best partners in terms of sharing data in a very complete way, data about the products, data about the sustainability features of the product. And this will become even more important in the future as we tackle the next level, which is AI opportunities.

I mean, AI for us is transformational both in our internal efficiency, but also in the way we interact with our own customers. And to be able to do that, more and more data is going to be necessary. And I have to say, Schneider, because of its commitment to this transformation is one of our best partners in terms of providing this level of data.

And I would add that I've been very impressed in the past 12 months. We've done multiple launching together, including, I remember ADAS in France, our new One devices range in France. And the type of digital marketing that we've been able to do together is really a good example on how we can enhance and create more demand in the market.

No, exactly. I mean the power of data is incredible. We are advanced on this journey, but there is still so much to do. I mean, both in terms of percentage of transactions, which go through the digital channels. but also about retail media and marketing, you're right. I mean we can do much better, and we will do much better in terms of addressing the opportunities to unlock the value of this data.

So today, I've presented really where Schneider is going and what we are doing to the next level of technology. Of course, there is a lot about connected product, about digital services. How those new business models are impacting your company, which was really more kind of a company focused on transactional product like we were Schneider a long time ago. So how do you see that opportunity going to the next level of digital offering, more services, more software for a distributor like Rexel?

That's very exciting. That's very exciting for me. We had our own Capital Market Day 2 years ago, and we also had ambitious growth goals. But one thing which is very important is we put a lot of emphasis on advanced services. We believe that for a distributor to be successful in tomorrow's world, it cannot just be a box mover. We need to provide additional value to our customers, additional value through expertise, through additional services. And those services can be advanced logistics services, but they can be also expert services, diagnosis, software. It can be all of those kind of things.

So we will do that. We are already doing a lot of that, but we will do more and more of that because our customers are requiring it in the new world and because also it's important for us to continue to add value and to progress our value-added in the supply chain. So we are very decided to do that, and we will do that with partners. It's not our ambition to produce those services. We want to be able, just like we sell products, to sell additional services.

We think it's going to be a big thing, and we are extremely excited to partner with companies like Schneider to go in this direction. For us, it's a big transformation because selling products is one thing, but transforming your sales force, your 25,000 people into people who are able to sell services, which is totally different in terms of the kind of pitch that you use, in terms of the kind of transactions, in terms of recurring revenue is a big transformation for us, but we are extremely decided and motivated to go in this direction. We think the world is going in this direction. We totally agree with what you are saying on that. It's a complex world where the electrification opportunities are going to come with a layer of additional services and software that we will be committed to selling with a partnership with Schneider for sure.

And that's great to hear. Again, Guillaume, as I was saying before, you are really helping us to extend our market coverage and to go to every single corner of every country where we operate together.

That's absolutely right.

I could not, of course, resist to ask you my last question about the market. You've heard what I've said about the way we see the market growing in the next cycle. You've heard me saying that we want really to accelerate the growth of Schneider 7% to 10% in the next cycle, which is compounded, of course, through all the business model of Schneider. You don't have exactly the same exposure than us. But in your own market, what do you see in terms of growth opportunity? How do you see the market moving in the next cycle?

Look, I mean, in terms of figures, we have figures of 5% to 8% of growth. But you're right, we are not exactly exposed to the same markets. We are less exposed to emerging countries. We are less exposed to data centers. I didn't do the math precisely while you were doing the presentation, but it seems to me that we have a consistent vision of where the market is going, which is exciting in each one of the segments that we are serving. There is data centers for sure, but there is buildings also a very important one in which we think that there are opportunities which are going to steadily progress as electrification progresses.

So overall, we are in the same -- with the same vision of an accelerated world, which, by the way, is going to come also with challenges. There are going to be supply chain challenges. There are going to be inflation challenges. And all of that is going to be challenges that we're going to address together, I think.

I know we are at the end of our slot, but you talked about your growth, which is a combination of volume and pricing. And I've seen your regular communication to the market. You've been talking about pricing also in your organization. So what is your pricing excellence strategy, I would say, at Rexel to deliver such great results?

I mean, first of all, our pricing depends very much on your pricing. But we think overall that in this world, this world is going to be a world of acceleration, which is going to create bottlenecks, which is going to create probably a more inflationary environment than the opposite. So that's one thing. The second thing is we are in a world where value added is creating pricing power. So I truly believe that you are going to see price appreciation over the next few years. And now the last piece for us is our own pricing on which, thanks to AI, we are able year after year to progress the way we price to the market. So overall, it's a supportive pricing environment. But what is also exciting is the volume opportunity that we described very well.

Guillaume, thank you very much.

Thank you very much for having me.

It has been super helpful for our investor here to understand how we partner together and the value we jointly create to our customers. Thank you again for being here, and thank you for the partnership, and let's really keep growing the business together. Thank you, Guillaume.

Some 1.5 years ago, looking at the numbers at the IEA, we look at the numbers daily basis. I tell my colleagues, data always wins. Sometimes it takes some time, but at the end of the day, data always wins. So looking at the numbers, I said the world may be entering the age of electricity. So what do I mean with that? Our economies, our societies has been fueled by always a dominant energy source. 200 years ago, when there was an industrial revolution, it was the coal, age of coal. Remember the novels of [ Imzola ], for example, coal miners bringing coal to the industries, to the factories. Coal was still there, but the age of coal has been replaced by age of oil and gas, what we have today.

And we will use oil and gas years to come. But when I look at the numbers, I see age of electricity is coming. Just numbers. In the last 10 years, global energy demand increased and global electricity demand increased 2x higher than the global energy demand. And in the next 10 years, we are seeing it, global electricity demand will increase 6x higher than the global energy demand. We are seeing a major surge of electricity demand everywhere, but everywhere. For example, in Europe or United States, almost 10 years, electricity demand was more or less stable, and now it is going up for the first time since maybe 15 years.

Ladies and gentlemen, please welcome Executive Vice President, Energy Management, Fredrik Godomel.

So the energy landscape is evolving, and it's evolving extremely fast. It's evolving because energy start to be decentralized. It's evolving because the demand is increasing, and we saw it in the recent interview. And it's evolving at a speed that in the last 30 years where I spend time with customers is something I've not witnessed. So the pace is accelerating. We understand that what people will need to keep operating in the world of tomorrow is certainly energy resilience, security, absolutely, efficiency on the energy they purchase and of course, sustainability because it will not be possible to continue doing like we were doing before.

To achieve this, they will ask products, of course, but solutions and outcomes. At Schneider Electric, we've assembled a portfolio around products, around services, around solution, and we augment this portfolio with software and Olivier said it with Energy Intelligence, which is where I'm going to bring you through in the coming part of my presentation. I want to share today the conviction that we are extremely well positioned to be answering the next cycle of energy. And indeed, the world will need more energy, and we are at Schneider Electric, the masters of the world of energy of tomorrow.

I want to start by reminding a few of our positions in the market. First, in some very important segment, data center, utilities, home. And we do that through a network of partner at large, and it was, I believe, well-illustrated before by Guillaume and Olivier. And sometimes when we work directly, especially on services and advisory and customers, we recognize for what we do. I want as well to move to our products in energy management, extremely strong product lines where we occupy in most of the domain, the #1 position in low voltage, medium voltage, UPS and you can see on this slide the details. We as well have augmented this portfolio with digital capabilities and capability to monitor the energy.

Today, I'm going to go like Olivier did on 3 parts. I'll spend most of my presentation on technology today. I want to give a bit of context to start with and then to go to the evolution of technology for the next cycle. We will look then on how we integrate those technologies by applications, by segment, going to buildings, data center and grid. And then my colleague, Gwenaelle will go into the industry segments that we support as well, of course. And we will go to the Energy intelligence layer, illustrating what we can do. I will conclude on what we do in terms of operational excellence to manage our R&D with a sense of discipline and of course, to look at productivity.

Let me start quickly by reminding the context and rewind not as long as the movies that you saw at the beginning, but a few 10 years ago, where energy electricity was largely linear and growing steadily mostly based on fossil fuel. Now let's move fast forward to the world in which we are today. I will not comment all the figures. But what we see is 2 phenomenon: More renewable at energy production, so in a way, more instability and the demand that is increasing. This is the world of today, the world in which today we operate, and we are just at the beginning of this world because AI factories are not deployed at scale, because e-mobility is not deployed at scale.

In order to keep operating in this world, I believe -- we believe at Schneider Electric that innovation is essential, and it's essential to balance demand and supply in a grid that is what it is. And the grid needs some time to keep evolving and some businesses need to keep operating in the conditions of today. I want to show here an example of an energy curve of an electricity demand curve during the day. What you see at the middle is that with production of renewable in certain days, there is abundant energy supply for a few hours.

If you want to keep operating your business in the best conditions, you need to be able to benefit from those blue period where energy is abundant, electricity is abundant. And you need to be able as well eventually to shave the peak to be able to be supplied by some grid operators that will tell you that during some period, eventually 1 hour per day, you need to shed your capacity. To do that, technologies is absolutely fundamental. And that's why we work at Schneider Electric on electrifying, automating and digitalize. This is extremely important to have those capabilities to be able to answer what electrical installation we'll need for tomorrow.

Let me now go into EcoStruxure. We built EcoStruxure over period of year, and we are augmenting now this by Energy Intelligence at all layer. And that's where I'm going to bring you into so that you understand layer by layer, so that we illustrate layer by layer how we develop technologies that goes together. We did here one illustration, and it's an analogy, of course, with what you can have with nerve termination, nerve system and the brain, and we're going to climb the ladder together.

I want to start by the intelligent product layer, the layer we call onboard on which you will see that we are preparing evolution for the future. Before doing that, I want to remind the success that we had with a few of our very important products that have been launched over the past period. We revolution Medium Voltage. We have been the company announcing that we will remove SF6 from our medium voltage offering. The ban in Europe is arriving as we speak. And we are ready and we have already taken leading position in this new domain with our RM AirSeT franchise.

We digitalize low-voltage breaker, and we have an incredible number of units digital that are already around the world and in our customer installation. And last but not least, we launched recently product augmented by AI, which is a touch screen room controller that you can see in some hotel rooms that is hitting the market with a very strong success at its first months. And there will be more things that will come, and I will detail some of those new launches in the coming part of my presentation.

Let's keep looking at the way the world of tomorrow is evolving. Olivier said it, there is more need for direct current application at all level in homes, in building and in industry. And in order to answer to this need, to this new architecture, you will see us developing technologies that are able to combine alternative current and direct current. And we will use power electronics because power electronics have evolved, and they are now able to do some functions of protection and control. So what you see illustrated at the bottom of the slide is those architecture that we call hybrid that you will have in building in which you will -- we will optimize points of conversion because today, you have a lot of points of conversion in building.

Tomorrow, we will work on architecture that optimize points of conversion. And you will have later in the marketplace example and illustration on the way we do that at Schneider Electric. I want to take another application, which is in industry, and that's something we have co-developed with the team of Industrial Automation. One application in industry is distributing power to motors. And here as well, thanks to a combination of architecture and power electronics technologies, we will launch next year a new offer that optimize the motor control center offer, and that is able to deliver up to 80% of space saving. And you know that sometimes for industry, saving space is important. We will be able to come with this offer, integrated into an electrical distribution architecture, which is our know-how.

Let's keep climbing the ladder. Olivier spoke about software defined. Our products tomorrow will come with software defined. I want to illustrate here what it means with medium voltage. Today, medium voltage offers are largely ordered in what we call engineered to order, means you design, you order critical components and you receive a panel that you commission on site. It's long because you have to design in advance and choose in advance some of the components. If you move to software-defined architecture, you have here an example. We will be able to accelerate 3x the time to order and design. We will manufacture standard components, and those components will be programmed by software, means the capability of the panel will be programmed when you are on site.

The advantage of that, you remove many steps into the fabrication process and you go much faster to commission on site. Take the example of data center, where today, there is tension on the number of people to commission product and install them. This is the solution for the future. And this is why we move to software-defined power architecture. Let's keep climbing the ladder, and let's go now to applications to illustration of what we do when we combine various part of our technologies by given application. I want to insist on 3 areas, and Gwenaelle will later insist on one area, which is industry that we support, of course, with our technology.

I want to insist on 3 segments, areas, applications that are today extremely important for us because we see those applications as developing in the next cycle. The first one is building. The second one is data center and the third one is power and grid. In those 3 applications and in building is mostly due to the need for more cooling, we see those applications developing strongly in the next cycle. So let's go into building, a space where Schneider historically has built strong position in many subsegments like hotel, hospitals, real estate and so on. We already have a very strong installed base. You know that we have add to our portfolio software companies, Planon and RIB to design and to manage the office space.

Now I would like that we look at the operations layer. And I guess we all understand the building and the way it's managed. And you manage fundamentally 3 things: the power distribution, the HVAC and the building management system eventually with security and fire. And of course, the energy management that becomes more and more important because the energy bill in a building matters. Those systems that we had at Schneider Electric are pretty fragmented.

What we do and what we have announced in our Innovation Summit, which was a few weeks ago in Las Vegas is that we will launch one new platform where we have all our operations data into a single platform. The advantage of doing so is, of course, you facilitate the commissioning time, you facilitate the life of the operators and more important, you can augment them and you can do AI on top of what the operators are doing. We call this platform EcoStruxure for site operation. It will be deployed in the next cycle, and it's a platform that allow to have one integrated solution at site level.

I want now to go to data center, and Olivier said it, we know that in the next cycle, there will be strong investment in new compute capability that we will have to support at all level. In data center, Schneider Electric has extremely strong position. We are the leader in supplying architecture of electrical distribution, and we develop, and we will come back on that additional capability around simulation and of course, around cooling to prepare the future.

Before that, I want to remind our position in traditional data center and the level of offering that we have that allow us to cover 90% of the scope of power, cooling, software and services and services. And services, I will conclude on that are extremely important to keep those operations safe for the way they operate in the future. But we know that data center are evolving. Traditional data center will keep growing. Additionally to that, we will have the creation of AI factories, which are different architecture to compute at more data and that will use more power and that will need, of course, more cooling.

So let's dive into the way we operate. And here, I want to illustrate a few things that Olivier and Jensen said before and the way we work in partnership to be able to prepare this next evolution of AI data center. We partnered with NVIDIA, and we have worked with them to be able to design the architecture, the electrical distribution architecture of the future. I want to illustrate here the way we do it. You all know that we have ETAP system that is a software that simulate the way we do electrical installation.

We have built that on the Omniverse platform, and we are able to start to investigate architecture, simulate architecture, run various simulations so that you understand what is the best model to distribute the power at each point of time. And we work now to put on that the acquisition we have made on liquid cooling around Motivair, and we are able to simulate progressively the flow of cooling associated. So power plus cooling, that's what we do at the simulation level. It's extremely important to start by that because we can simulate and optimize the architecture. There is another point that is important is to deliver faster and together in an integrated manner, those architecture.

At Schneider Electric, we have these capabilities since some time, means we have already the experience of integrating multiple technologies since some time. And we do that to deliver on-site faster, what we call prefabricated solution, solutions that are allowing to accelerate the installation, the commissioning on site and that come pretested so that the work on site is much more easy. Of course, I want to speak about the architecture of the next 3 years with more power, 800-volt direct current.

Here as well, Schneider Electric work to optimize token per watt. So -- because we have the capability to look at that end-to-end, we work from medium voltage down to the rack level. And that's extremely important to optimize that. We are able to integrate solution. We have capabilities in direct current protection and arc flash safety, which is another important point when you design those new architecture. And we have an expertise around direct current that we have developed over the years to support data center customer.

So we work on those architecture. You will see as well in the afternoon on the marketplace with our experts the way we deliver those solutions. Of course, there's not power distributed to GPUs without cooling. And I thought it was better than me speaking about it to invite on stage Rich Whitmore, who is the CEO of the new joint company, Motivair, into Schneider Electric. Rich, welcome on stage.

Thank you, Fred. Motivair was -- oh, loud mic. Motivair was founded by my father back in 1988 and has always been focused on mission-critical process cooling. Ironically, he's from Birmingham, England, just up the road from here and the beginning of his career was in the pioneering of computer air conditioning. So when I say I've been around this for a while, it's really since I was born. So all of this critical cooling that we've been working on, cooling nuclear power plants, surgery suites, data centers, of course, high-performance computing and supercomputing, Fred touched on it a few minutes ago.

All the power that goes into these systems converts heat. And what's sometimes overlooked in these advanced compute systems is that all of that power, once it goes into the servers, comes out as heat. And so what we've been doing over the last decade is a laser focus on developing liquid-cooled hardware, liquid cooling technology for use in advanced computing. And that's what you're seeing today, AI factories, AI data centers.

And so when we look at that, this product portfolio that we've developed has been in conjunction and in partnership with the leading chip manufacturers, server manufacturers and to some degree, data centers. And that portfolio has been thought through from the chip from the silicon out, and that's unique to Motivair. So when we look at our integration with Schneider Electric, we were acquired in March this year, and we've been very busy. We are well on our way with our integration plans, and we've been working very hard to industrialize Motivair technology so we can produce it around the world.

And that was part of our strategy when we combined with Schneider Electric. We needed to be and wanted to be a global company but we wanted to be able to support our customers in region for region. And I'm proud to say we're now able to start producing liquid cooling hardware in multiple factories around the world. Our team is enthusiastic, and we're very excited about the way everything is going. So we saw Jensen talk earlier, Olivier and Fred have also talked about where heat loads are going, where power is going, but specifically in this area of supercomputing, high-performance computing, AI factories.

The rack densities are growing at an exponential rate. And these are public road maps. So these are things that you've probably seen in different industry highlights. Today, we're north of 130 kilowatts of rack, and we're moving to a gigawatt -- I'm sorry, a megawatt per server rack in the not-too-distant future. The interesting thing is that Motivair has been cooling racks of this density for years. 400-kilowatt liquid-cooled racks deployed at scale all over the world. This is nothing new for us. I think many of you are still learning about liquid cooling, but for us, we've been an innovator and a pioneer in this space for years.

So it makes us very comfortable to say that we feel we're the leader in that space. And we're cooling the world's fastest computers, ranked #1, #2 and #3 in the world. So again, this is an area that we're very excited to be in. Lastly, when we talk about being able to support our customers globally, I think in the AI era and where we're going, experience matters. Having done this before matters, having a product portfolio that's battle-hardened tested and deployed globally matters.

But you can't just have the best products, you have to be able to service them. And that's another added value that we have now that we're part of Schneider Electric. We can deploy product globally for customers, but we can service and support them as well. And that's important to us. So we get consistency for our customers globally through the life expectancy of their data centers and their AI assets.

Thank you for having me here today, and I'll turn it back over to Fred.

Thank you very much, Rich, for the testimony. And of course, I could not close this session of data center without reinsisting again on services, and I will illustrate later what we can do through technologies to better serve our installed base. But those data centers and those AI factory are extremely critical, extremely sensitive, and they need to be kept in the best possible condition with the less possible manual intervention on site so that they keep operating on the best manner. I will come back on that later on.

I told you I wanted to speak about grid. And by the way, without grid, there is no data center and no AI factory. So grid is absolutely a place that will support the transformation of the economy in the next cycle. And that's a place where as well Schneider Electric is extremely well positioned with our offer, strong presence in the top utilities, many offers around software, in GIS, in advanced distribution management system, offers on which we have been recognized externally to be leading the technology in terms of the way we address those technology.

So I will here as well illustrate what are those offers doing from grid planning to asset management. Then moving to grid operation, and this is where you find the advanced distribution management system on top of SCADA and new applications that are coming, and I illustrated that at the beginning of my presentation with flexibility, which is an important part to keep managing grids in the future. Like we have done for building with a very different application, we come here as well with one integrated platform that goes from planning to operation to flexibility management. Why does it matter? Because when grid becomes constrained, you need to simulate before operating.

Having everything on one platform, what we have launched and announced which is what we call One digital grid platform is a strong evolution demanded by our customer to be able to accelerate, do that with more efficiency. I illustrate that here with 3 use case. We can support grid operators, advising them with agents now on one data platform. And when there is events with most of the time a storm or risk of fires or things like that, when there is events, we use technology to accelerate the response time to events.

Last but not least, when the grid becomes unstable and need flexibility, we are able to simulate with One platform, the consequence of a scenario of flexibility. I was last week in India, and here as well, I think it's better to have one customer, and I was with the CEO of Tata Power, which is a very large integrated utility in India. Let's listen to Dr. Sinha.

Tata Power is one of the oldest power companies in India. It started in 1915 when it set up the first hydro power plant and also brought that power to the city of Mumbai. And for 110 years, it has been supplying power to the city of Mumbai as also to many other parts in the country as the largest integrated power company in generation, in transmission and distribution.

How do you see the partnership with Schneider Electric? Any highlights, anything you would like to mention?

Well, we have a very old partnership with Schneider, where we have tried many of the new technologies in India together. The SCADA system when it came, it not only brought the technology of how the electrons flow, but how the data also flows and how do you manage on real-time basis. The advanced distribution management system supported us in optimizing the supply of energy based on the load requirement. Similarly, some of the newer technologies, especially the SF6-free circuit breakers that came and especially in the ring main units that we have set up in the city of Delhi and Mumbai, have supported us not only in reducing our carbon footprint by 75%. But on an overall basis, the cost benefit is nearly 50%. So I think many of the technologies that we have worked with, Schneider has helped us to provide affordable power, but also reliable power to our consumers.

Thanks a lot for the feedback. Just looking forward, how do you see the evolution of technologies? What will be the most important points in value?

I think the integration of the smart technology, especially the smart grid and how do we work together, whether it is the SCADA system, the smart metering solution and also some of the technologies on the grid side, especially using the RMUs and some of the IoTs, which are there in these technologies. I think those are the things that will support us in providing efficient supply of power.

Thanks very much. Thanks for the partnership, and thanks to receive me. Thank you very much, Dr. Sinha.

Absolutely pleasure.

And of course, you understand that India, as many other countries, I could mention U.S., will be absolutely at the forefront of those grid transformation and need solution that will help them to manage better the grid in the future. Let's keep climbing the ladder, and we are at the probably enterprise level where we come on top of data, on top of installed base. And I want to illustrate here a few things we are doing that are extremely important for the next cycle.

Let me start by services. Olivier said it. It has been one of our focus points in the past cycle, and we have built extremely strong forces to support our customers with their installed base. We have the #1 installed base today in electrical assets. We have very strong in all countries, forces to support our customers with experts that are able to intervene on site. And we today estimate that we serve around 16% of our asset.

The reason being that we create at high pace installed base. So we think there is still a very strong opportunity in the next cycle to keep growing double digit this business. Additionally, we have augmented these foundations by strong forces in digital and AI with in-house AI engineers that are able to work at system level and get data from the asset to make not any more planned maintenance, but preventive maintenance.

I want to give 2 examples. One, which I think is illustrating that very well in the data center space, something we do with Compass, which is a large colocation company mostly based in U.S.A., where we have instrumented their installed base and are able to support them with a set of analytics. It allows them to operate better with less maintenance and more predictive analytics that allows them to intervene only when necessary. It has allowed them to reduce their OpEx over the cycle. You look at another company in the scope of industry, BASF, where here as well, we have helped them to reduce the downtime and especially the unplanned downtime, and we are improving the efficiency of the process by our analytics and advising them on the way they operate their installations.

Now I want to keep climbing and illustrate what we can do with Energy Intelligence. Olivier said it, we have developed over the time, practices that support our customer around domains, energy and sustainability, electrification, process optimization that will be spoke later on by Gwenaelle and asset management. So we've developed those capabilities of advising our customer.

Thanks to those capabilities, I want to illustrate what we do in the world of energy and sustainability. We are able to support our customers in their business transformation to manage risk, to manage performance. And on top of that, because we have accumulated data, we are able with our software now to replace many manual operations by our software. That's what we call Energy Intelligence. We build that on top of data that we have accumulated, data for sustainability, for example, with many customers around the world, we collect data points from our operations. We have a lot of energy invoice that are processed. You see that the numbers are extremely significant.

Now thanks to new technology, thanks to data and architecture around data, thanks to AI, we are able, and here, you have a quick illustration and you will have a real demonstration later into the marketplace about the way we are using agentic AI at scale to be able to find anomalies on this example on invoices and make recommendations as well on the way to drive your efficiency on the next steps. You will see that illustrated and demonstrated, but I want to focus here in what it brings typically into our own operation or to our customers. Something that was extremely complex. And believe it or not, when you have a lot of invoices, you end up having anomalies, 5% of anomalies.

The manual effort to deal with those anomalies were typically 12 to 15 days. Now it's done in seconds by agents and is an accuracy that is absolutely fantastic. You will have a demonstration on that, so I pass fast so that you will be able to go deeper when you are in the marketplace this afternoon. Now imagine that we are building the capability to do that in 4 domains, which is the domains that are mentioned here and try to correlate some of this domain between energy, sustainability, process, electrification or asset management, depending on the use case you want to have for your specific operation.

This is what Olivier was explaining. This is what we call Energy Intelligence at scale. I want to close my presentation by the third chapter, which is around operational excellence and around the way we manage our R&D and our competitiveness on product.

Let me first look at the R&D. Olivier said it, we are investing in R&D and keep investing to prepare our technology for the future. I show you in the past example why it's important to keep investing in digital product and on top of that, to solutions that integrate and to value that you get with the data. So we invest on intelligent product, the onboard layer, and we invest even more when we are at operate layer or at optimized layer because what you need to support those layer is more digital and more software based.

Of course, we invest a lot to support the growth in data center. I show example that you will have more on the marketplace. We invest a lot to support the grid development, which we see as something extremely important in the next cycle. And you've seen as well the way we invest to support buildings. We do all those investments with a sense of return on investment. Each of our investment is dissected and analyzed in the sense of return of investment.

The second thing is our R&D capability, the multi-hub. Olivier presented it, and I will illustrate you that you have here a set of figures that shows that today our R&D is distributed around geographies, around North America, around Europe and around Asia. And we benefit a lot from being strong in Asia to be able to look at technologies and optimize the cost of technology. I want to give here one example, which is around Medium Voltage, and I could have taken many of those examples. I took this one just to illustrate.

Medium voltage breaker today, the larger part of the market is in China. So the development initially has been made in China. Now there is market everywhere. There is market in Europe, in Africa, in U.S. for those type of breakers. The way we operate at multi-hub is that the development starts in China. And then the development, the main bricks of the development are transferred to our 2 other hubs, for example, here in Europe and in U.S., where they localize the product, they make the adaptation for the local standard. And of course, they benefit from the platforming that has been done by the biggest market.

So the advantage of doing so is that it drives you the right cost efficiency, and we benefit when it makes sense to our maximum volume. Additionally to that, we drive a strong program of cost productivity, what we have called inside the company cost leadership with 3 pillars. The first pillar is, of course, using our R&D to redesign some of our product. And each time we launch a new generation of product, we have an occasion to optimize the cost and the design. We collaborate with suppliers. Olivier show what we do, for example, with Foxconn. And we work a lot as well to benefit from the investment we did in the past cycle to support the growth now to generate productivity and maximize the productivity we get out of those investments.

It's time for me to conclude on a few key messages. Message number one, the change is indeed extremely fast in our energy management domain. I have an absolutely strong conviction that energy management at Schneider will remain the driver of the new cycle with a combination of technology and a combination of architecture and solution and data on top of it. We have this capacity to combine our architecture into segments that we have chosen carefully because they are a provider of growth in the future. And last but not least, we will manage R&D and cost with discipline. The goal, of course, is to bring growth, superior growth and shareholder return.

Thank you very much, and I look forward to see you in the marketplace this afternoon.

All right. Thank you, Fred. Thanks for keeping us on time as well. I think it's been a lot of content this morning and probably we need a well-deserved break or just a coffee. So we're going to keep it short for 20 minutes. So probably back just after around 10:55. We need to keep it not more than 20 minutes because we've got the web live going on as well. So there's some content that's flowing, but we come back at 10:55, and we start with industrial automation. Thank you.

Ladies and gentlemen, please welcome Executive Vice President, Industrial Automation, Gwenaelle Avice Huet.

Well, hello. I'm Gwenaelle. I've been leading European operations for the past years, which is basically to sell the [ walled ] business of Schneider. And since October, I'm in charge of Industrial Automation. So I will walk you through our positioning in Industrial Automation, starting with our market positioning and then going into who we are and how we want to protect ourselves, what's the strategy behind, right? And also what it means in terms of operational excellence for R&D and finally, to walk you through the financial path to make it happen.

So first, market positioning from industrial automation. So industries that are living a reality of many challenges, right? So Olivier told about numbers of megatrends, but how do they translate for industrial customers. So basically, they have to face volatility of the energy pricing. They have to face shortages like for the supply chain, they have to face difficulties to find the right workforce. So numbers of, I would say, challenges. In all the meetings I got with customers across the world, they're asking for modernization of the assets. Why? Because they invest for the long term. They have volatility in the short term, but they have to invest over the long term.

So we need to provide solution for modernization that help increase resiliency, making sure they deliver on time at cost, right, and with quality. So basically, they ask for energy intelligent operations. And this is not just PowerPoint, it translates into concrete investment pool. And that's how we position, how to capture this additional investment pool. So that's what we are seeing, and it translates also in concrete outcome. They are not just asking for systems stand-alone, they're asking for concrete outcome, resiliency, productivity, energy efficiency, concrete outcomes.

So what's our position at Schneider to capture these outcomes, these megatrends and increase growth and profitability at the same time. So first, I would like to be very clear on who we are and who we are not in Industrial Automation. We are not developing the broadest portfolio in the world. We are not going everywhere for every segment. We used to say we are a specialist. We think about differentiation, and we want to have meaningful impact for our customers. So it starts with our segments. Where do we focus in terms of segments? We want to anchor with what the company is about.

We've heard Olivier, we've heard Fred, energy leadership. We want to anchor the segment that we approach in terms of industry with this energy leadership. So that's why you're seeing infrastructure is important for us. And within infrastructure, you have power and grid. In addition to that, we have a good balance between discrete and process and all the applications that are matching power and process together, all the application matching both of them.

So this is a segment approach. Now in terms of geographies, I will just mention a few of them. First, India and China for obvious reason. Innovation cycle is very short, very rapid. Here, we're not talking -- we are talking about local for local. But China, when you look at our footprint, manufacturing and R&D footprint, the reality is that we learn lessons for the rest of the world, especially in hardware. So it's not only local for local, it should be local for global. And this is super important.

Olivier was talking about scale and volume that we're having thanks to China. It's also lessons in terms of innovation, hardware innovation to scale across the world. Another point on geographies, Europe and United States, major economies, major opportunities. Here, we're talking about deep retrofit, deep modernization, but also process electrification. This is who we are. This is what we offer to customers. So this is our key priorities geographies. And then in terms of business, what are we looking for? Who we are? Basically, we have already established leadership position, process safety, control and signaling, industrial software conductors and the areas where we are not the leaders, PLC. But it's conscious. Because the market is moving towards virtual PLC, software, automation, SDA, software-defined automation.

And we want to lead this wave, the evolution of the market to take a stead, a position ahead of this curve. So not only on PLC, but virtual PLC and software-defined automation. And I will get back to that because this is an important point because we are seeing this trend only accelerating. So this is the third pillar in terms of businesses. This is how we contribute to the global energy tech partnership. So what we have to retain in all that is that the strategy is about selectivity. I said specialist, it's about selectivity. Why is that? Because we want to have good return on investment from the R&D. We want to gain efficiency. We want to maximize our impact. And guess what? We have learning experience because we have facilities ourselves.

So we have deployed, and we are continuously deploying very innovative technologies in our own manufacturing plants. Today, we have 9 lighthouse facilities in the world, best-in-class in terms of digital development deployment, but at the same time, circular economy, at the same time, Scope 1, 2, 3 reduction of emissions. So you see, we want to be the lighthouse for our own facilities so that we can share those examples towards the rest of the world. Just to give you one example, Shanghai, our own Shanghai facility, we have been developing software-defined automation, as I was mentioning earlier, but also digital twin with one objective to increase the performance of the facility. The return on investment is 115%. And at the same time, the industrialization time reduction is times 3.

So you see it's concrete outcome that we should share, we continue to share to our customers. So one important message, selectivity, specialists. How does that translate in terms of strategy? What are the pillars for our renewed strategy for industrial automation? First, to be anchored with our leadership position on energy. I think we were very clear earlier with Fred, we have this energy-centric DNA. And this is an opportunity for industry.

Look, I will give you a few examples. You are a manufacturing plant, you need to optimize your consumption of energy or you are a grid operator and you want to manage distributed assets or you are a utility and you want to modernize. In all cases, you have at the same time, power and process combined. Why it matters? Because if this is disconnected, then it's an additional complexity for customers. So more and more, they are asking for that to be combined together as one value proposition, one team, one system.

So the first pillar is to concentrate on our energy-centric DNA, right, to leverage it to accelerate our own growth. The second pillar is about open software-defined automation. So I talked a little bit earlier, but I want to be extremely pedagogic about what we are talking about. It's not necessarily only virtual PLC. It's really a step further. So I will try to make it simple. Let's say that you are a plant manager, okay? You have to recalibrate your production line.

Historically, how we do it. We send engineers that go control panel after control panel, and they do manual adjustment. It takes days. It takes weeks. It's very long, right? With software-defined automation, it's made from their desk. It takes minutes. You see it's very powerful. It's bringing a lot of efficiency for our customers, very flexible. That's what they're requesting today. Believe it, it's not that easy. It's a big shift from physical assets towards a decoupling between hardware and software. And this is where the market is heading. So this is the second pillar of our strategy, open software-defined automation.

The third pillar, and we'll talk -- Caspar will talk more about it, is the AVEVA power, the AVEVA integration, what it brings to our story. And especially Olivier mentioned the life cycle that we have to look at, right? And this is empowered through AVEVA. So I will let Caspar telling more, but this integration is extremely fulfilling for our customers' benefit. The fourth pillar is about selectivity I was mentioning earlier. Again, we don't want to spread in many different directions. We want to have impact against selectivity in terms of segments, in terms of geographies and in terms of offering will make us stronger, more efficient. And lastly, it's end user centricity. Look, we are not there to sell a platform. We are there to respond to customers' expectation and to anticipate them.

So it's a lot about specialization, investment into specialization, investment into our network of partners. We have 4,500 of partners that we rely on. This is a huge asset. So we have to invest into our partners' network. So end user centricity. So these are the different pillars of our strategy to strengthen our positioning for industrial automation. And to do that, we need EcoStruxure. You have seen earlier with Olivier, we have evolved the EcoStruxure platform. And this is very much based on how to bring together all data from field, operational enterprise, bringing together this data cube. And this is where autonomous intelligence will come, right?

We're investing into agentic AI and all that, so it will come. So you see how EcoStruxure is helping us to scale the strategy on the 5 pillars that I've just presented. Now when I ask the customer, what do they expect. They expect open and more reliable operations. Open, I said it earlier, disconnection between hardware and software, but also more reliable operations. Hence, my commitment today is to work on the R&D to deliver a number of elements. The first element is to reduce -- to accelerate our time to market up to 15%, platforming, for example.

The second element is to reduce our complexity towards our customers. Standardization of the platforms, reduction of SKUs, things like that, reduction of complexity, the second pillar. And the last one is to become cost competitive, R&D capital efficiency. And again, there are plenty of room to work on. I will talk to you about operational excellence at the end of this presentation, but this matters. So that's why revisiting R&D and put even more discipline into the R&D system.

Let's deep dive into power and process. I said it rapidly. What does it mean? Again, let's take example. Many of our customers asking the 2 to combine and what we are offering to those customers is to have one team, one solution and think outcome-based, CapEx reduction, increased profitability, growth slowing down or reduction of downtime, it's numbers of very concrete and tangible outcome that we are putting on the table.

One example, you are a chemical plant, very complex installation, yes, very complex installation, continuous, high energy intensive. This is where we see the best return on investment of power and process combined together. It's really something that is already requested by many of our customers. So that's why in these cases, you don't see only industrial automation. It's a combination of everything that we bring at Schneider, the whole value proposition, and this is simplifying quite a bit the situation or the difficulties of our customers.

Payback. One of the solutions like that, what is the payback? Only 6 months. So you see the value for this type of segment is extremely high, bringing together power and process. We should listen to our customers, right?

[Presentation]

Well, I think it's making a good connection with open software-defined automation. So I gave you a few examples earlier. I explained a little bit how it's shaped. What does it mean for Schneider? We have developed an offer, which is called EcoStruxure Automation Expert, right? We have been launching it in 2020. It was a very bold move at the beginning. I can tell you it was a very bold move. Today, we have 550 sites deployed with EAE, 550 sites. And the adoption rate is very, very fast. Today, we have 1,500 customers actively engaged into that direction. So big evolution, hardware, virtual PLC up to software-defined automation and open software-defined automation, whereby our customers are not locked in vendors anymore, not locked in vendors anymore, which is a big transformation. Let's go now into how we do that. We are not doing that in isolation. We need to do that with partners. So we have built ecosystems of partners. I will not go through all of them.

I will give you just 3 examples. The first one is about China. China, we are very anchored in the country, manufacturing, R&D, big scale, right? But still, we need to have these ecosystems of partners to also detect the weak signals in the market in terms of technology, in terms of business model. So that's why we have built a very strong ecosystem in China beyond what we have to detect all that. Another example, completely different, technology. So here, I'm talking about Microsoft. We have developed a partnership with Microsoft in order to develop industrial AI copilots. I was mentioning agentic AI and all that. There is a path, but we need to work on that direction, and we need to build this kind of partnership. Another example, unified operations. I think this is interesting because at some point, we cannot transform the market only ourselves. We need to partner even beyond competition, even with competition to impose standards.

Universal operations, universal automation is an association that we have been working with, including with some competitors in order to impose this kind of standards in the market for open software-defined automation. Again, just an example, but working with other is absolutely critical in order to move the market. So all that is to share that not only we're talking about connected devices or intelligent devices, we're talking about energy intelligence automation, energy intelligent operations too, software-defined automation. This is who we are. But to make it happen and to translate that into value creation, we need to think, and that's also my commitment to transform the strategic pillars into high level of attention and execution. You talked about operational excellence.

This is exactly what we need to do for industry automation, too. high level of operational excellence because I'm sure that you're all asking what's the target, what the evolution, what's the vision for margin expansion. This is the first topic in my agenda. The first topic I had in my agenda since I've been appointed in October, margin expansion, how to recover, how to reposition and at the same time, continue the growth that we can capture now in the market and accelerated growth together with Caspar and together with Fréd. So that's why the margin ambition is to get back to 18% by 2028, and we have different room of maneuver for that. I will give you 3 examples.

The first one is the mix, working on the mix, the more digital, more AI, more services. The second pillar is around simplification, portfolio simplification. I shared it earlier, we need to be more efficient in terms of R&D, SKU, simplification of SKU. It will help customers. It will help our R&D efficiency. And the last pillar is about cost, design to cost, production cost across the board, including in functions. So cost focus. So just to name 3 of them, but to tell you that in reality, this is top priority. And to do that, again, it's a partnership. It's across the company working in the same direction with energy management, but with Caspar too because this connection with AVEVA is creating differentiation for our customers. Please, Caspar.

Thank you, Gwenaelle, and it is great to be here in this cool and well-cooled room here in -- at McLaren. My name is Caspar. I lead AVEVA, as you heard. And it is my pleasure to brief you in some detail on the transformation that we have done since I last presented to you, I think it's about 2 years ago. So before I go into the detail of the transformation, you all have seen this slide. the slide that shows the energy stack value proposition of the overall group. And if I want to tell you what AVEVA does, you've heard it, AVEVA provides what we call industrial intelligence that goes into the optimized layer of the stack and powers the advisers, right? The advisers that then support Schneider's customers. And the way we do that is by bringing asset information, so the information that comes from design and operational information, the data that comes from the assets and from the machines that are run by our software.

And all that together with analytics, sometimes as raw data feeds the advisers that serve Schneider's customers. This, in summary, is how we fit into the overall tech stack of the energy tech value proposition of Schneider, okay? And what I will show you more is that for our customers, the impact of this is very clear. It is greater efficiency, first and foremost. They can design faster, they can operate smarter. They can optimize continuously, reducing both cost and complexity. So -- and we also, of course, help them advance sustainability, lowering their energy use, cutting emissions, accelerating their transition to more efficient, electrified and digital operations.

And of course, in our world today, also in line with Fréd, what Olivier, what Gwen have talked about, we deliver resilience because in this very volatile world with cyber risk, with supply chain disruptions, with an increasing scarcity, a scarcity of affordable energy, our integrated approach gives customers the insight, the automation and the control that they need to stay ahead. So our technology enables customers to design, build, operate and optimize industrial assets with higher efficiency, lower energy use, like I just said, driving measurable improvements to their bottom line. What that also means is that our software is at the heart, at the heart of mission-critical operations of our customers. So that means that customers stay and expand with us and entrust us with more and more of their data. And this is why AVEVA has built a resilient, high-margin, low churn and recurring business with durable long-term growth. This is what we have done.

And as part of Schneider, we have created a combined proposition that no other player in the market, we believe, can match. Our strength is that all of our softwares, many, many softwares are today fully interconnected across the asset life cycle. in design and build our applications, such as unified engineering. This is our design software used for complex assets such as a power station, a refinery, an FPSO ship, up to 3 million data points or more, one of the most powerful design softwares out there, asset information management, simulation and learning, ETAP for electrical engineering and RIB for construction, all of this creates a unified data-centric foundation that flows seamlessly throughout operations. Under Operate, the next one, we support our customers with AVEVA's PI system and with the unified operation center. And this gives customers a complete view of their asset performance and leads to more reliable operations.

Remember that we have -- that we are actually one of the world's leading sources of industrial data from the PI system, the TIME series data, how machines perform, vibration, temperature, this type of information stored over decades is in the PI system. And this is used together with the data that comes from monitoring and control to analyze -- it feeds the analytics. It feeds also, frankly, the AI of the future because AI will not be able to perform without this information. And the vast majority in large assets of this information resides in the PI system today. Under Optimize, the third part, you see AVEVA's asset performance management with one of the critical applications being predictive analytics. One of the things to say here is that we have worked with AI, with predictive analytics for a decade plus. It's powered by the time series data that comes from the PI system.

It comes from other applications and gives you predictions on when your assets will break down, how your -- what you need to do to keep your asset going, when to schedule maintenance, et cetera. These are some of the biggest savings that you can get and one of the biggest business cases of putting AI in action in the industrial space. Now at the center of all these softwares, you see CONNECT. at the center of the software architecture. CONNECT is our open data and industrial AI platform, and it basically allows everyone, everyone in an operation, everyone in a company, everyone in a supply chain to work from the same trusted data. And we believe this is the one place where the industrial ecosystem comes together. And more to say to that is that the integration that we have done in the last couple of years of all these different capabilities is what differentiates AVEVA and drives long-term stickiness and scalable recurring value. This is an example here at Shell of CONNECT in action.

You're looking here at the energy transition campus in Amsterdam. And I think this is a powerful example of how CONNECT helps to build the future of that industry. It's a training site. Teams from all the world come together, work with each other. And it is a combination of different capabilities. It's a microgrid that brings together solar, hydrogen production, storage, batteries, EV charging, heating and cooling systems, grid systems, all that into one network, which is orchestrated through CONNECT. So every energy flow, every asset information, every operational signal can be monitored, analyzed and optimized in real time, in real time and the information can then be shared across the people working in it. This shows how AVEVA can accelerate the energy transition itself, enabling operators to integrate very diverse energy sources into one place, and it also powers a community of innovators, right? Now what is the scale of AVEVA today?

We are investing into the future of industry. We have made a sustained investment into CONNECT, the platform that I have described just now. 50 years of innovation, we have basically accumulated and infused this platform, our technologies, our softwares with this deep knowledge that the software, our customers and our people in AVEVA carry, building net new use cases and building the digital backbone of the future. And you can see here the scale of our operation. We're also investing heavily into our R&D road map. As part of this, we have recently completed the acquisition of Crosser. It's a leader in real-time analytics, integration and edge AI. Crosser's hybrid-first platform is already integrated into CONNECT, and it expands our ability to process streaming and event-driven data in real time, unify this information across silos, very important, breaking through silos and delivering industrial AI at the edge.

So these investments are important because industry is becoming more digital, more electrified and more interlocked or interconnected, you've heard it. So one of the key ways in which we ourselves have used AI is in our own development of software with a 14% efficiency gain to date. We've been at this for about 2.5 years of using it. And that created entire new ways for our customers to design, operate and optimize their assets based on the software that we have created. And you can see an optimized fairly even global picture here of how across the world following the blueprint of Schneider Electric, we deliver value to our customers, pretty much anywhere where there are complex industrial assets in the world. Now what you see here based on that, based on what we support is the scale and the importance of the industries that we support.

You see here some of the biggest name in energy, in power, in data centers, in chemicals, in food, in life sciences, in infrastructure, mining, marine and EPC from Exxon to BP to Enel, Pfizer, BASF, Starbucks, Kellogg's, Wood, Technip, the companies that keep the world running use AVEVA software, and it sits at the heart of how they operate. And I want to tell you something, and I say this very, very humbly, but the reality is simple. If you switched off AVEVA tomorrow, many of these industries would not be able to function because our technology is mission-critical. It keeps energy flowing, plants running, supply chains moving and so on. This is what we do for our customers. And you can also see some of the new wins that we've had, new logo wins through the go-to-market organization of Schneider, and I will show you the scale of that in a second, but you can see some of the logos here.

Now allow me to quickly talk you through 3 examples of our software in action. The first one is Bruce Power, one of the world's largest nuclear plants in Canada. I went there myself. You have to drive a very long time to get there. But once you get there, you are blown away by the scale of this plant. We boosted their project efficiency as they expanded this facility with the nuclear renaissance using AVEVA Asset Information Management on CONNECT, they have digitized 1.7 million documents, bringing together live data feeds, live data feeds that come from over 40,000 PI data tags. So the PI system, the data tags feed in here. And together, this enables 1,800 users to collaborate in real time on our platform, no simple fact, right? And Bruce has saved over 1,000 hours of engineering in a single year and cut operating costs by 50% up to the EPC handover throughout the entire project phase. That's not bad.

Moving on to Covestro. Covestro, you all know them, I think, a leading German chemicals manufacturer is experimenting with creating a new biological plastic-like material. And to do this, the engineering team drew on their AVEVA digital twin, so it comes from our design site from their existing petro-plastic manufacturing process, and they used process simulation, another one of our applications to model this new bioengineering process. And this simulation eliminated significant waste early on from the design stage and is enabling Covestro's team to explore how they can speed up delivery of these new circular products. This is fairly impressive leading edge sustainable science in action, and it is enabled by our, by AVEVA's industrial AI. The last example and video, one of my favorites, marine leader Yinson, you may know them, they create floating production, storage and offtake facilities. These are among the most complex marine vessels in operation anywhere in the world.

You can see it here, super large. I was in -- at a different customer last week in China. These are massive, massive vessels. So they operate in some of the world's deepest waters off the coast of Brazil, of the coast of Africa. And Yinson streamlined their digital design process using AVEVA's engineering in the cloud, enabling the global team of engineers. So in different places, hundreds of engineers working on the same design at the same time, right, in real time to share their designs on CONNECT. Usually, you just take the design, you send it to the engineer, they review it, they send it back. It takes a very long time. But by sharing analytics and tracking emissions, they have cut costs, they have cut waste and sped up significantly the project delivery. And that meant that the vessels, of which the world doesn't have enough of, can sail away from the shipyard up to 6 weeks earlier than planned.

And Yinson, as a result, also is on track for their 2050 net zero target. Now every customer we work with faces the same issue. Their most valuable knowledge is trapped within disconnected data. Think like a silo somewhere, the data is there, 3 people know that it's there, no one else, not good. The result is that industrial data has been one of the most underused assets in companies. And the real breakthrough comes when we aggregate, when we enrich and when we analyze this data across silos, across the silo within the enterprise and across the silos within the supply chain, of course. And this is what we do for our customers. We allow them to ask the questions that get the clear answers that they need to make the right decisions. So we have, as a result of having these capabilities, a powerful ecosystem around us from the hyperscalers to the data platforms to our system integrators.

And this brings me to our partnership with Databricks that I think you've probably followed. Together with Databricks, we are giving industrial companies something they have not had before, a seamless no-code, zero copy way to bring IT data and OT data together at scale, at real scale. And powered by CONNECT, customers can combine operational data, enterprise data, IT data, all sorts of data, unlocking value, powering AI and creating business intelligence or industrial intelligence without fragmented point solutions. And what we consistently hear from Databricks and other partners is how impressed they are by the quality and specifically by the structure, the context of the industrial data that they receive through CONNECT. And the impact of that is real. They use this integration to boost efficiency, to get costs down and to accelerate sustainability programs today. We have great success so far in mining, in manufacturing, in power and in oil and gas.

I'm also very pleased to share with you that we've been recognized as the winner of the 2025 Microsoft Manufacturing Partner of the Year Award, AVEVA. And all of that together means 50% faster data curation 75% lower compute costs and near real-time decision-making with 48x data refresh rates. And this is what CONNECT gives secure, scalable access to trusted intelligence, to trusted industrial data that enables this new level of industrial intelligence. And through partnerships like Databricks, like Microsoft, this is amplified for our customers and also for AVEVA. And you will see many more such partnerships coming in the next 6, 9 months as many other players in the analytics industries choose to partner with us because of the data and the quality of this data that we provide, this industrial data. Now I want to come and just give you a couple of points on CONNECT itself, on the platform itself.

What you see here is the scale of CONNECT today. You remember 2 years ago, I presented it to you, at least some of you, I believe, were there. It was new then. CONNECT is what we call the digital thread that links engineering, operations and optimization from the edge to the cloud. It's powering Schneider's electric optimized layer, like I have laid out earlier. And we now manage more than 8 petabytes of trusted industrial data. reality capture, engineering data, production data, especially. And this data flows through our installed base into CONNECT, where more than 23,000 active monthly industrial users have access today to over 50 Software-as-a-Service applications.

And this is where synergy comes to life. Schneider brings the world's largest footprint of energy management and automation systems and CONNECT transforms this footprint into intelligence that then again feeds the optimized layer of energy's tech stack. That is CONNECT. So what sets AVEVA apart also is our overall global CONNECT partner community. We have more than 25,000 strategic partners, plus 5,500 specific partners for CONNECT. We have distributors and system integrators. And all of these, as you've heard before, in the true Schneider mantra, expand our reach and allow us to go deep into local markets and bring our technology to life there. It also brings a sense of community, the AVEVA community. It's a trusted ecosystem of where partners collaborate, where they build together, build new applications that sit on top of the platform and deliver consistent value, right?

And I want to highlight again the -- in this case, very specific partnership we have with Schneider Electric's go-to-market organization. So the way that we are able to sell and access new customers through Schneider's countries, right, what Schneider calls the countries. And this is not just great because it gives us more scale. It also gives us new logos. The new logos, you saw them on the earlier slide, I showed many of them, but the sheer scale of new opportunities that this brings us is unparalleled and is a key differentiator for us. We operate in a low churn environment. Industrial software is a low churn environment. Low churn also means it's hard to displace others logically. Winning new customers, which is the hardest thing to do is super important for long-term growth. And this is what the Schneider countries, the Schneider go-to-market organization is augmenting and accelerating for us.

Now as I am about to close, I want to tell you that since 2021, we have fundamentally reaccelerated this business. AVEVA is now firmly positioned as a faster growth, higher quality recurring revenue company, operating at good margins and with a clear trajectory of continuous improvement. The subscription transition that we have done to get here meant that we had to take a deliberate dip. We invested in cloud, we invested in AI and in the transformation of our commercial model and the full transformation of our commercial model. And that transition and investment has now translated into a stronger and into a more resilient business. Over the course of the last few years, we have delivered mid-teens ARR growth, annualized recurring revenue growth in the mid-teens with consistent low churn of less than 2% and 110% retention rate, supported by more than the 1,000 new logos this year alone. So this year alone, 1,000 new logos, many of them in Asia.

Recurring revenue, this is a key point, has reached 85% of this business, enabling an approximately 80% gross margin, even with the higher cost -- the higher hosting costs of the Software-as-a-Service transition and the growth that we've had in SaaS. We have controlled operating costs effectively while increasing strategic investment in AI, in R&D and in cybersecurity. And as the subscription transition revenue recognition drag fades and our recurring revenue backlog converts, revenue and ARR growth will start to converge. And this will help margins to step up further, moving towards 30% EBITDA over the coming years. So the message that I want to leave you with is very clear. We have rebuilt the growth engine. We have protected margin quality and AVEVA is now in a much stronger structural position, strategically sharper and financially accelerating. Thank you very much.

Greetings to all of you in London and those joining virtually. I'm Noelle Walsh, President of Cloud Operations and Innovation at Microsoft. I lead a team of over 13,000 people who are responsible for building and operating our global fleet of data centers. Microsoft runs over 400 data centers across 39 countries, and I'm delighted to share my perspective on AI growth. We are already seeing that AI is a once-in-a-generation technology. AI is accelerating productivity and unlocking new economic value. We are seeing this take place across domains and industries. At Microsoft, we are committed to leading this shift responsibly and at scale. We are democratizing access to AI so that breakthroughs can address society's most pressing challenges from education to health care to energy and material science and beyond. And we are ensuring sustainability, including carbon, water, waste and biodiversity while partnering closely with local communities.

This long-term commitment to AI and cloud infrastructure is backed by significant capital investment. In our most recent fiscal year, Microsoft invested over $80 billion in capital expenditures. primarily to support our data centers. The pace continues to accelerate. In just the last quarter, we spent nearly $35 billion. As our CEO, Satya Nadella recently shared, we will increase total AI capacity by over 80% this year, and we will roughly double our total data center footprint over the next 2 years. This reflects the customer demand signals we see as our data center network rapidly grows, so do our energy needs. We have strong utility relationships, and we are investing in energy efficiency and in renewables. End-to-end energy systems from grid to edge are essential to meeting our goals around performance, reliability and sustainability.

Our global partnership with Schneider Electric is built on shared values of innovation and operational excellence. We view Schneider as a critical and strategic supplier. We turn to you for electrical equipment and for systems to monitor energy performance. We also look to you as we explore new ways to deliver capacity at a faster speed to market, such as through innovations like skidding and modularization. Together, we can accelerate deployment of infrastructure that is sustainable and resilient as we drive unprecedented growth in AI and cloud services. I want to thank you for your partnership and for joining us in shaping a future that is more sustainable, intelligent and abundant. Congratulations and best wishes on a successful Capital Markets Day.

All right. So we have one more session before we break for lunch, and we wanted to just sort of turn it around. We've heard from some customers, Microsoft right now, Tata Power earlier in the day on grids. But for this session, what we wanted to do was actually have a few interactions covering 3 angles. The first angle, we've heard from our businesses on technology, et cetera. Now we want to talk to our operations leaders who are actually bringing it on the ground with customers. So that's the first angle. The second angle is to try to deep dive a little bit into specific segments and have more details. And the third angle, as I said, is to actually hear from physical customers, not just virtually on the things. So to get this started, I'd first like to invite Aamir Paul, who is the President of our North America operations.

Good to see you again.

So Amit, of course, you're leading North America, largest zone region for us, fastest growing as well in the last cycle. Today, we talk about the next cycle. We're going to keep it going like that for us.

We're going to try. Look, you heard from the IEA Director about this is the age of electrification. In the U.S., research we've done with NREL and others says the electricity mix of final energy is going to go from 23% to 57%. So that trend of electricity becoming the predominant energy source is true very much in the U.S. Now in the near term, because of the infrastructure being old and look, the grid was having problems even before this AI boom was upon us. We were seeing that even in the last administration's investment cycles. But in the near term, we're looking at about 1,000 terawatt hours of shortage, which is, to put it in perspective, 100,000 homes without power. So what you're seeing is electricity demand is going up, electricity costs are going up.

And that context bodes well for the solutions and capabilities we bring to -- we see investments happening in infrastructure, in water, in transport, especially in Canada. We see a lot of investment happening in health care and semicon. And then, of course, with the policy conditions, MMM, especially rare earths and life sciences and pharma production, we see really positive signals coming back. And through the cycle, we've seen things shift. We had a cycle after COVID in residential that was super strong that is more challenged right now, but secular trends there are positive, and we expect that to recover at some stage. And then Mexico is softer a little bit for us right now, especially because of the USMCA negotiation. But if you put it all together, the context is super supportive. And of course, I haven't even talked about what you want to talk about, which is data centers.

Before we get there. So I think if the secular trends are all there, even though there might be some specific issues in Mexico, et cetera, at the moment, those are for everyone, right? So what differentiates in your mind, Schneider in the eyes of the customers that you're seeing all the time, every day?

Well, look, our colleagues have covered this in some detail. It's the breadth of our portfolio, but it's also our commitment to not just bring those assets, but to integrate them throughout each phase from design, build, operate and that is especially important when the complexity and speed is changing at the rate it is. One of the things that's super interesting is as the cost of energy goes up, not only is it more important to build assets that are more efficient today, but actually going back to the existing stock and investing in software that's agnostic and open that allows you to solve those problems becomes critical because the payback period is entirely different when electricity costs were here versus when they're here.

And I'll give you a few examples. JPMorgan Chase, new headquarters. A lot of people have talked about what they've done there, but the core building management system of that facility, which is one of the most advanced Class A office buildings in the United States is Schneider -- and the reason they picked us is because of the open API nature of that platform, the fact that we can take HVAC systems, electrical systems, occupancy data and bring it all together. Another example is in Tennessee, where we have a big footprint, the Nissan Stadium, which is the home of the Tennessee Titans, is a 2 million square foot facility.

And again, they wanted the facility to flex literally from sports event to a concert to other sorts of things that were going to be hosting, and they wanted to create an incredible experience. So they needed not just these point solutions to work, but then to work in an integrated fashion and service of what that facility is and we were the partner they selected. And then last one, University of California Health Systems is building in UC Irvine, UC San Francisco, UC Davis, some of the most electrified outpatient facilities and hospitals in the country because that system has a goal to have zero carbon electricity in all their setups by 2045. And again, when they hit that complexity curve, the partner of choice with Schneider. So it's the ability to take the portfolio that's been described, but take it from start to finish and to make sure that we're focused on the integrated outcome, the mission of the customer is what we're trying to deliver, and that's a big differentiation.

You know that we're always in searching for good venues for future Capital Markets Day. So Tennessee is probably now added to the list as -- anyway, let's...

Hope we can arrange for some incredible entertainment in Tennessee.

Let's move across to Data Centers and it's obviously the topic on the top of mind of the folks over here as well. The last time, we were together in the Capital Markets Day setting, we announced the Compass deal at that point of time. I know that more recently in the last few weeks, we've announced a couple of large deals. I think the large -- the question that everybody has is that there's a level of visibility and pipeline that we have. How do we feel about that as an organization and secondly, what's the general feeling with regards to how this continues in the coming times?

Well, look, you heard from Noelle. We do a lot of work with Microsoft, and we feel acceleration she was describing. The deal you were talking about a few weeks ago was with Switch, headquartered in Las Vegas. And we do this interesting thing with them where they have a patented design for an integrated modular solution. It has our UPSs, our power distribution, it has our chiller solution. And then working with them, we've optimized that design, particularly for speed of deployment. And that particular deal was $1.9 billion and the scale at which they're expanding, we expect the opportunity to do even more with them because it's co-developed to optimize time to power. So we have visibility for 12 to 18 months, but what's more exciting is the work we're doing at the design level architecturally in terms of what comes next, gives us a sense of what people are planning on. Now of course, you have to get land, you have to get power and there are other constraints. So the firm visibility on deployment is 12 to 18, but we, of course, have design visibility that goes that.

And I think it's being applied also in different settings and different sizes. In fact, later this afternoon, there's a containerized data center in this very facility, which we'll have the chance to visit. Maybe one other question on Data Centers because there's a lot of focus, of course, on the new build and the huge amounts of capital expenditure, et cetera. One of the questions that we get often is with regards to at what stage does this turn into a retrofit opportunity or at some point of time, as the scale-up happens, how is Schneider thinking around that? And on a relative basis, do you think we have an edge or a superior positioning given all of the on that?

Fréd talked about the Compass example, where in that set of facilities, we have about 3,000 assets that we're monitoring in real time. Last year alone, they created 10,000 unique events, triggers and alerts, of which we offered 2,000 mediations -- remediations in real time. And that meant that there was a 40% reduction in on-site events, and it also meant a 20% reduction in CapEx. Now that example of how do you take the software layer and connectivity and make sure an asset can have life cycle value that's more predictable and more stable is absolutely critical, and it applies especially in the retrofit environment. Because if you step back from the bright lights of AI, there's still a lot of enterprise IT that is moving to the cloud.

That migration hasn't stopped. That's still happening. And as that happens and people want to be able to, between inference and getting their data right, capture all of that the right way, we know that the existing data centers are going to get some level of density for inference. So that next phase is still to come, and the service capability is going to be a big part of that. The other thing I'll say is specifically in the U.S. market is we have a labor shortage. There are roughly about 600,000 electricians in the U.S. We need about 900,000. Every year, about 10,000 retire, 7,000 join, so there's a 3,000 deficit. Now even with all the training and support, you're going to have to build both deployment infrastructures, which are modular, but also service solutions that are software-driven because you just don't have enough people to get this part right. So lots of conversations about land and power as being barriers in terms of scale up, but actually labor is one, and that's where services, both in the new construction, but also in the optimization phase becomes so important here.

Yes. Very clear. So I think we've spoken about the large customers. We've spoken about switch from Compass who are very large as well. But also, we are lucky today that we're joined by another important customer of ours, a large customer, which is Vantage Data Centers. So I'd like to call up on stage David Howson, who's leading Europe, and I'm going to step away and I'll let you guys have a conversation.

Well, David, thank you for being here, for fulfilling our promise of a real live customer. So thank you very much.

Physical customer.

Look, first things first, our relationship has been growing rapidly, but Vantage has become a global player. We were talking our last fund raise was spectacular and you're just investing a ton of capital. Tell us a little bit about Vantage's journey and how you're differentiating in the market right now?

Yes, sure. So we are -- in terms of the scale, we're now across 5 continents. We've got 53 active data centers. We're building probably 2 of the 3 largest AI factories at this point in time. And our differentiation really starts with that focus. If I think about the number of customers, we only serve really the world's largest technology businesses. We're not trying to be and serve everyone. We have a very narrow focus from a product perspective.

Obviously, in the cloud era, that has been hyperscale cloud and go forward, that's additive AI factories and then geographies, all of the geographies we've picked are really the largest data center market. So aligning ourselves up through that focus. Access to capital has been a differentiator. The scale and the speed right now and being ahead of that, and obviously, you do that really built off really, I think, the third differentiator, which is operational excellence, right?

You got to have that operational excellence for all your stakeholders, your customers, your investors and to be able to feed the life cycle of the capital as well as for our employees as well. So those 3 really are our key building blocks.

Yes. That track record of execution matters. And I think you're almost at 9 gigawatts of managed capacity and growing, which is incredible. So let's talk a little bit about how challenging that is, right? Every market has its own issues. You and I are talking about differences between the U.S. and European markets. What is getting in the way as these hyperscalers come to you and say, more now. What is the real challenge that you're facing in the market to get time to power right?

Yes. I think there's 2 trends here, right, which is the time period to develop new power and grid capacity is way longer than our time frame to develop data center capacity. And then the secondary trend, which is driving speed to market even more is the chip technology is developing. There was a chart earlier about how NVIDIA is ramping through. So all of those are putting more focus on speed to market and really deploying capital with the right product at the right time. And so what we're trying to be -- there's 2 elements to this really. One is the land and the grid capacity and being far more proactive.

We used to bring power to the data center. We now take the data center to the power, right? We got to find where there is excess power, and that's driving that geographic piece. So that's what -- we put a lot of our capital out getting powered land and developing that so we can get the product to market. The other lever is around standardization. And this is one area where we work with you guys a lot.

You can't be designing these things on the fly when you get a demand signal or a leasing signal. You got to have your supply chain all pre-plumbed, pre-engineered and whether that capacity lands in Berlin, in my region or in Milan, we need to have the same components and the same product set, pre-engineered, preordered and work with our supply chain for that such that the actual time for us from lease to in-service is as short as possible because that's the drivers that our common customers are looking for.

Right. So that brings us to our relationship, and we're privileged. I think in the last few it's almost 10x larger than it used to be and accelerating, which is just phenomenal. But give us your perspective on Schneider and as you think about partners you want to work with, what are you looking for?

Well, we -- one, we've actually got a really long relationship here in Europe going back 15 years from a business that we acquired. What we're looking for and maybe some examples here, we leverage and partner with you guys across all 3 parts of our life cycle. So we are partnering with your design teams, our design teams. We had teams together in Novo a couple of weeks ago, leveraging that same sort of templated design that you folks have been working with NVIDIA on, we have too.

And all of that was around 800-volt DC technology. That's probably not technology that we're going to be deploying until 2028, 2029, 2030, right? But being able to think about the R&D channel and what we have to understand with that and rely on your expertise is what does that mean for our economics, what does that mean for our development cycles? And so it's not just about sort of the productization of it, it's about how does it impact our business.

So really sort of helping understand and help solve business problems. So that's in that far looking out sort of first part of the life cycle. The middle life cycle is all about we've got that product, we know what we're going to go take to market jointly and how do we make that as efficient as possible. We've entered into recently long-term supply capacity agreements with Schneider. And they give us certainty and they give you guys certainty as well in terms of how we can go make the commitments to our clients.

Because when our clients are saying, we want you to deliver this in 18 months or 24 months, we need to be able to back that off and have all of that prearranged. So that's a great example in that middle piece. Second example in that middle piece is just thinking about it, we heard it earlier, we buy a lot of that capacity directly from Schneider, but we don't buy everything ourselves directly.

Actually, our contractors and our supply chain that are building these data centers buy a whole suite of Schneider products as well. And fundamentally, when we get to that deployment and delivery phase, Schneider is fantastic at looking at this and saying, this is a Vantage Data Center. It doesn't matter whether Vantage has struck the check to buy that or whether one of our GC contracts has et cetera, and so sort of that support model through the deployment side and understanding the drivers for us, you guys have an organization that's sort of able to cut through that, which is super powerful for us.

Yes. Thank you for that. We're committed to making your mission, our mission and making sure that whichever mechanism gets into it is one that we support you with. Just -- Amit asked me the question, let me ask you the same question. What are you seeing right now, right? As you think about the order book, the backlog, the time line, what does the sentiment look like? And how does the marketplace look like from a demand standpoint as you see it?

Yes. I mean, what a difference a year makes, right? I mean the -- I think it's -- the AI infrastructure has just become a reality this year, 100%, led by North America first, for large training sites, gigawatt sites. We're fortunate enough to have won a number of those. And so that's just suddenly become a reality. That is -- I describe it as sort of lapping on the shores of Europe right now and also in our other regions in APAC as well and starting to see the first inference workloads at scale, at a bigger scale actually than I think we were expecting, starting to play through into those regions.

And so from our collective perspective, it's accelerating the developability of the land. It's been hard to predict the volumes in terms of what's been needed and the timing of when they're going to land because obviously, it's such a sort of native technology right now, and it's still evolving, trying to pick the geographies, trying to pick the technologies. And therefore, that standardization and that fungibility of our designs has really paid off in terms of the work that we've done beforehand.

I think you said something there that really struck a cord, which is the fact that we have these strategic supply agreements takes one variable out of the equation because when those other complicated variables you just described get locked, collectively, we can move at an incredible speed. And I think one of the things in our model we've been trying to talk about is the core technology bricks that Fred and team are working on are worked on globally, right, like 800 volts, like the GPU architecture.

But then the most regional company means that we understand what it is to deploy that in Germany and Italy and France. And every country, every zone has different regulations, different labor laws. And we can partner with you at both levels, horizontal technology globally, but construction and deployment very, very locally.

Geographically, absolutely. And I think the next -- we're doing [indiscernible] now, you heard it referred to as skids and modularization. The scale and speed is driving the innovation that's needed. And if I think about the amount of contractors and supply chain that are involved building a traditional data center in a downtown sort of area compared to leveraging a much more integrated technology solution actually really is where we're heading in a -- actually designed to be manufactured that way and designed to be deployed in a pre-configured, pre-commissioned to avoid the labor challenges that we've got, et cetera.

It ends up solving a lot of the business problems together, speed to market, it actually drives down cost, actually improves reliability and it's an easy product to operate and maintain go forward. And that's where I think Schneider has probably an advantage just given the breadth of your portfolio and experience to bring those integrated solutions together. Yes, there's going to be a lot of shrinkage in the supply chain component.

Yes. We have to get faster and better across every step. Look, last question, and we are always inspired by our customers and the challenges they give us. So you've heard a lot about together about what we're building. What advice do you have for us? How can we be more helpful and a better partner even than we've been as we go on this exciting journey?

I think we're going to have much more step function shifts in the technology that we've got going into data centers, driven by the higher densities, and partnering around the impacts of those technologies in a more integrated way, actually with the chip manufacturers, with the systems integrators, with the end clients, et cetera, to really solve some of those challenges going forward because they've got sustainability, community challenges and opportunities that go with them.

We can't just sort of evolve this. We have to collectively think forward about that level of innovation, really designing the data center of the future together in a more integrated way. I think that's the big ask.

It's no longer about supplying components or even having a portfolio. It's actually thinking of it at every stage as an integrated system and thinking ahead. So that's what we're trying to do. David, thank you very much.

Thank you. Appreciate it.

Well, thank you again. Thanks, David, for being here. Thanks, Aamir. May I now call upon Manish. So Manish, as some of you or most of you know, is leading a very large zone for Schneider, which is -- and I'll explain in a moment, why don't you explain the zone that you lead, Manish?

Well, thank you. Thank you very much. It's great to be here. I was privileged to be watching the race over the weekend, which was in the international operations zone, and it's double whammy for me. So good to be here. I think international operations, I would say, is the most exciting place. Of course, we are also growing, and it's a place where 50% of the world is. It has a dynamism of a very young population, which is hungry for growth.

There's a lot of wealth creation and the governments are working extremely hard on infrastructure build. And that's what -- and therefore, electrification and automation is at the center of everything that is happening there. So very exciting. And therefore, the economies are growing at 1.5x higher than the global average. So very lucky to be in this part of the world and contributing with the purpose of building here.

So while there is growth in every country in the region and the growth vectors are a bit different, but I would call out India and Middle East are the 2 focus areas for us at Schneider Electric. India is the third largest country for us. It's going to be the third largest economy in the world, and Olivier just mentioned about the multi-hub and the hub that we have created there around India to serve the international markets.

I would say here that, first, in India, we are just going to close very soon our joint venture acquisition of the remaining shares. We had some great partnership with our partners there over the last 5 years. I want to thank them. But again, this gives us a great opportunity to see how we can simplify our Indian operations as well as be even more agile to capture the growth. And this is what we look to it.

Other thing about India, I think some of us were there last year as well. We talked about the brand transition with Lauritz Knudsen, that's been working quite well according to plan. And with the 2 brands that we have there between Schneider and LK in the electrical and automation space, it is giving us an unprecedented breadth. I mean, Olivier talked about the kind of presence that we with that.

So we are able to penetrate deep into the country as well as we are able to serve all the customer segments that are present. So that's the story that we are extremely excited about. So Middle East, which is also a growth area, a place where we have been present for over 40 years with very strong local teams, strong partner ecosystems that we are extremely proud of, and what we are doing here is we are investing more.

So today, we have about 10 industrial sites in Middle East. It's very well linked to the hub so that we are able to serve, we are able to bring in the local content and we are able to adapt the offers for the local markets. So extremely pleased with that. And while we work on the partnership approach, there are a lot of big investments coming in, data centers as well as some of the other mega projects. So we are building a very strong project and execution team so that we are able to capture that opportunity. So a lot going on. And at Schneider, we are really here to take the technologies and deploy there.

No, that's very exciting. I think the one question that comes to my mind is that your zone is sort of -- it is very broad, right? So you spoke about India and Middle East, both sort of emerging in their own way. But then you also have -- you have Australia and you have parts of the African continent and other areas. So in terms of the go-to-market or when you're speaking to customers, it's obviously not one size fits all. You just spoke a lot about doing some stuff which is very differentiated for that particular market. You want to speak a little bit about that because they all have very differentiated characteristics as markets, right?

Sure. So I think what we -- I would say at Schneider, we are very proud that we are the most local of the global companies, and that's what we have been building on. For us, I would say, the center is this multi-hub and the hub that we have created in India. So what it helps us do is -- I mean, we -- it is the proximity that we have with our R&D teams, the industrial teams and the marketing teams being close to the customer, we are able to be very agile. We are able to understand more the customer knowledge.

I mean you lay on top of that the frugal mindset of India, which is also helping us there to compete in the local markets. So with this, we are able to cater to every market segment. And I talked about the brand. So on one side, we have the global investment that is happening in India and Middle East where we are able to bring the technologies that are developed, Fred talked about it, Amit talked about it, prescription that is done with NVIDIA and then bought into the -- into our markets.

We are able to serve them locally. At the same time, we are able to develop offers that are able to cater to the midsized segments, talk about the rice mills, talk about the ethanol plants, small chemical plants that are coming in. So we are able to tailor offers to all of them. So we are covering the full spectrum, and I think that's very unique about us at Schneider. Helping us do all of that is our strong partner network.

We have a relationship with our partners that is built over generations. So very deep rooted. And this ecosystem is helping carry our technologies forward. Now this relationship that we have with partners in our part of the world is not just limited to the product side, not just on the transactional side, but we are also executing projects. So the data center projects that are coming up are also being executed through partners. And I think this is where we are very unique, that we are able to bring those relationships, do the technology exchange and the partners are able to deliver those solutions.

Then on top of that, I would say that we also have a very well-established service network. So we want to be with the customers throughout the life cycle. So once the systems are deployed, we are working actively to see how we are able to bring our digital services and take them on the recurring service throughout the life cycle. So I would say it is the same DNA that we have, tailoring it to the local environments, whether it's a developed market like Australia or it is the emerging economies of India and the Middle East.

Right. And Manish, if I could just pivot now to have sort of an end market focus, and that goes even beyond your zone, right? So -- and I would like to talk about the industrial end market. You already alluded to several of them in your zone. But of course, when we talk about the industrial end market, even China is a significant country for us, et cetera.

I think this is obviously one end market where we truly bring together the full portfolio of Schneider for the customers. Your -- in your specific zone as well, a lot of what Gwen presented on the software-defined automation, a large part of that growth is coming through from your region as well. So maybe just a few minutes around that from the eyes of a customer as the...

Sure. So we said that there's a lot of new build, which is happening in our part of the world with all this -- the growth of population and therefore, what companies, especially industrial companies are looking for is how they are able to have a future-proof investment that is scalable, that is modular as well on top of being future-proof. And this is where there has been a lot of interest shown in software-defined automation, which is our EcoStruxure Automation Expert.

What the customers clearly see is that it is able to help them decouple the hardware and the software. And they are able to get out of the, I would say, the lock of the legacy systems because the hardware and software is decoupled. So it gives them the flexibility. Here in this technology that we have been talking to them, intelligence resides on the edge. And therefore, when you're building an application there, when you're expecting your factories, I think things are able to go much more faster. So it's very flexible. It's very scalable.

And this is what is greatly being appreciated. Gwen talked about the 550 installations which are there, a lot of them in our part of the world as well. What we are seeing is that especially in CPG, in water, also energy and chemicals, there has been a lot of interest in deploying it. We see this scaling at great scale going forward. So very excited to take this, build the libraries, bring training to our teams so that we are able to deploy this very fast.

All right. Very interesting, Manish. I think as we've said earlier as well, nothing like a real-life customer to talk to. We're delighted to have with us Senior Executive Vice President from Nexans, Dessale. And I'd like to invite you up, but I think we have a short video while you come up.

[Presentation]

Thank you, Vincent. Welcome to our Capital Markets Day. . I think it's great to hear about Eectrify the Future. I think that's been the consistent theme of the day. Maybe we can kick it off. We heard the video, but if you can tell us a little bit more about how you are as Nexans playing a role in enabling industrial operations, especially in this space?

First of all, thank you for your invitation to this Capital Market Day. In Nexan, we are designing, engineering, manufacturing and installing cable solution, cable systems. And basically, we are doing this from the any point of generation of energy to any point of consumption of energy, which means that we are delivering the transmission infrastructure. So with high-voltage components, the grid infrastructure with again, medium voltage component up to the, I would say, the usage of energy in the different type of construction buildings from your individual house had to GA factories, data centers, hospitals, schools, and that's basically what we are doing. So basically, we transport the energy from the generation to the usage. That's our job.

Okay. Now I think it's -- we are so well interconnected because I think that our products together touch each other in that part...

Hopefully, when we do that we should be connected to some product for sure.

I think we have Fred here, and he would love to work on some co-innovation as well as Gwen on this. So maybe I'd like to get your perspective. We talked about electrification, but data, AI and I know that Nexans is also at the center of it. If you can share a little bit about that?

Yes. I think it has been said this morning, we have an increase of demand of energy. We have an increase of electricity. But on the other hand, the infrastructure is a little bit obsolete in some areas in Europe, in North America. It's on the opposite under development in the rest of the world. And somehow, we have to manage this energy in a proper way. So in order to manage it, it means that we have to monitor, we have to analyze the consumption, we have to save some energy also, which means that we need to collect all the data from the different infrastructure, different network in order to do this efficiency, to have this productivity in the usage of energy.

So by consequence, data, the way we structure the data, the way we analyze the data, the way we can optimize, simulate, do digital twins on all type of architecture will bring, of course, an added value to the ecosystem of electrification.

So it's great to hear about the transformation that you're making towards being more data-driven. I know that at -- with Schneider Electric, we have also been partnering with you on the Smart Factory program. So if you can tell us about how you're working on this transformation and Schneider's role in it?

Yes, indeed, like many companies, we have tried to take advantage of the data that we have. I mean, usually, any manager, we say he is able to use 5% of the data available. With artificial intelligence, we can probably go up to 80%, 90%, which means that you will be able to take decision faster and more accurate. So that's basically the starting point. So we have our digital factory internally, and we are working on our operating model. So here, it's more business oriented.

But we have also to work on our assets. And for this, we have signed together, I think it was in '21, a partnership agreement in order to make it simple, digitalize all our manufacturing assets all over the world, working on some use case that I've heard this morning, energy monitoring, efficiency of the line, predictive maintenance, predictive quality and also to create a kind of collaborative platform at the level of the factory, at the level of the region, and also at the level of the group in order again to increase the performance all over our activities and to share within the group the result of our different units, which, of course, allow us to be always in a continuous improvement, but in a much faster way than what we had before.

So this is what we have built. And just to say, to show how it's efficient and how the return because at the end, it's an investment, the return is nice. At the beginning in '21, we plan to have this overall deployment on all our units up to 2027. And in fact, at the end of this year, all our units over the world will be fully digitalized with the defense system that Schneider brought to us.

Thank you for that. And I think it's great to see that -- I mean, to hear from you that you see the advantage coming out of it that you have accelerated your program to actually bring it 2 years ahead. So congratulations on that. We, of course, want to do more with you. You've heard us today in terms of some of the technologies we are developing. How do you see the future? And if -- again, if I had to say, if I have to ask you about what you think Schneider could be doing more for you, what would that be?

I think we -- even if we did it faster on the deployment of this program, I think we did it faster also because we are thinking about the next step. And we see that the next step will be even more important for Nexans. The first step was, as I said, to implement the digitalization of our factories was, of course, to build the data structure, to build the data lake, to use this data lake in order to take decisions faster to support our operators on the line by some tools, helping them to take decisions faster.

But I think what is interesting is that now we have almost 4 years of data, which means that thanks to this data, when an operator in our line is facing an issue, we have 4 years of problem solving registered in this data lake. So we can, thanks to AI, when there is a problem, look back to all the histories in all our factories all over the world and propose already some solution when an operator on the line is facing a solution. So that's basically the type of support that we can do, thanks to artificial intelligence.

We think also about agent in order to be more efficient in the management of the line, anticipate the activity, anticipate the usage of raw material, the usage of overconsumption. And I think there is also another area is clearly everything which is anticipation, how we can use this data in order to be more predictive, more reliable in terms of product quality, in terms of maintenance also. So that's the area where we are going to work, and I'm sure that we are going to work with you, thanks on your experience with other players in order to go to this second step, which will be the usage of the data and the acceleration of the usage of the data by the artificial intelligence.

So thank you very much. I think that this is -- we hear you very well. And I think that with what both Gwen and Caspar have been saying, this will be -- we would like to come back and see how we'll be able to take it forward and go deeper on it. Maybe a last question in terms of looking at power and process in your factories and with what we talked about, the energy DNA, if you can tell us a bit about that, how do you see the value of it?

No. I think as I said in the first question, we are really looking everywhere to optimize the usage of energy. So we have developed with you in all our plans of energy monitoring. But this energy monitoring, this energy management to come back to the presentation of this morning is a key topic. So everything we can do to monitor the infrastructure inside a building, a factory at the grid infrastructure up to the transmission infrastructure will help the overall efficiency of the supply chain of the energy, where we know by definition that it will be more and more volatile because you bring inside this overall network, renewable energy, so ups and downs somehow, but the consumption is not always aligned with the production.

So all what you can do all over the network to monitor the energy, make this energy more flexible. And also, we think in the future to store it in order to have some buffers. That's really for me the next step in order to be ready and to continue this road on the energy on the electrification.

Thank you very much, Vincent, for your time, and thanks for the partnership. I think we are very excited about it. It's great that we are part of your digital journey, and we want to continue and come back with all the points that you've just mentioned to us.

My pleasure.

All right. Thank you, Vincent. Thank you, Manish. I'd like to now call upon Laurent Bataille, who is leading Europe.

All right, Laurent. So just a couple of quick questions from my side. Firstly, -- and I'm just passing the question I get all the time from several members of this audience. Europe has had a consistent level of growth. But when you compare it to some of the other zones, it's more muted. What does it take to unlock the growth in Europe?

No, it's a great question. And actually, what I would start by saying is Europe is not homogeneous. I mean we see lots of local specificities in the market. Some parts of Europe are growing faster than others. Currently, in the South, the southern part of Europe certainly has better traction. As you know, Europe also has a specific relatively complex governance, which means that a number of new regulations or new investment plans take some time to actually happen in the market from the directive to transition into local laws, it can take 2 years or sometimes more.

What I would say, however, in very concrete terms, where Europe has probably missed in terms of growth potential over the past 2 years is somewhat linked to AI and data centers. And just to put things into perspective, whilst Europe hosts today more or less 18% of the cloud capacity in the world, when it comes to the compute capacity of the world, we are talking about close to 4%. So it was great to hear David talk about how this AI wave is actually reaching the shores of Europe, and we are very positive on that. I think it will actually be one of the growth adders, especially because now we see data centers moving to power.

And there are places in Europe that actually have excess electricity or green electricity or fast grid connection. So I would say data centers certainly will be one of these opportunities. I think the second important realization in Europe is the importance of infrastructure. So we see more and more thinking about how, for instance, simplification of permitting can actually accelerate the deployment of projects, which I think will have a big impact in our business because infrastructure upgrades in ports or in power and grid will be important.

It was interesting yesterday to actually see the EU grid package that is really focused on investing more in the grid. And then we've heard Gwen this morning talk about buildings. The building environment has not been easier over the past few years, but it's actually picking up. And I think it also has a lot of potential for an acceleration in...

Yes. In fact, that's a good segue. If we talk about buildings and buildings of the future, incorporating energy intelligence in them, what does the building of the future, I don't know, 5 years from now, 2030, even beyond look like?

So I don't think it's going to be a huge step change. It's actually a progressive transformation. What we see are 2 underlying very powerful themes in buildings. One is the energy landscape of building is profoundly changing. It's electrifying, but it's also becoming more complex. And second, there's more and more penetration of digitalization in buildings. So when it comes to the energy side, what's happening in buildings, in the past, buildings were primarily using energy, a lot of it for heating, for instance, which is primarily fossil-based. There's still a lot of gas boilers in buildings, 2/3 in Europe of tertiary buildings are using gas, for instance.

There's a big underlying transformation here because you see an increase of loads in buildings. So the transportation market is entering into buildings through the EV infrastructure and charging infrastructure. In a typical office building, the EV infrastructure might represent between 1/3 and 1/2 of the electrical load of the building. So you see that's pretty significant. On top of that, you see new technology, typically storage, that helps by entering buildings to create more resilience, but even opportunities for arbitration or more flexibility.

You certainly also have a big push for energy efficiency. All that actually makes buildings energy assets that interact with the grid. They're more complex. They need to have smart capabilities, whether it's better metering, better controls capabilities to be managed much more closely and optimized. In that regard, I would mention [GFK] Terminal 1. It's a very interesting large building, a piece of infrastructure. That has the largest micro grid in New York State. And actually, interestingly enough, it's powering its own infrastructure.

But thanks to the micro grid, you can actually operate when you lose the grid 50% of the loads, meaning you create resilience in case anything happens to the grid. And then in -- by 2033, it will be able to actually power up the full fleet of ground vehicles supporting the airport. So you really see this change of the energy landscape in buildings, and it's happening everywhere. Second very big change is the digitalization. And it serves -- we talked about making buildings smarter, but it serves another purpose. Especially post-COVID, lots of building owners had to think about how they kind of reinvent buildings.

Let's be clear, we spend 90% of our time in buildings. And so making sure they are great places to live in, to work in, to interact with is very important. And to get there, it's essential to actually weave together, interconnect together some of the IT workflows and the IT layer of buildings with the operational management layer of building. So that it's a much more seamless experience we have in buildings.

Let me try to illustrate that with a very simple application. Room booking. It's an IT workflow in the sense that you book a room, you have a screen at the entrance of a room. And all of that is not necessarily linked to the physical reality of the building. But as you weave that into the operational system, when you now show up in the room, you can actually have ventilation adapting to the number of people in the room to make sure it's comfortable, you don't have too much CO2, et cetera. And something else is if you leave the room early, actually, it can free up for booking in the IT system.

So interconnecting OT and IT in buildings is extraordinarily important. That's what we do with both EcoStruxure and Planon, for instance. It helps us deliver fantastic buildings in terms of experience for the occupant. One of them, I would underline is the Salesforce Tower by land lease in Sydney. Not only it's extraordinarily energy efficient, it's lead platinum, but it's actually also well platinum, meaning on health and wellness, it's a great building to work in. You have sensors everywhere measuring air quality, temperature, humidity, noise level, lighting. And so these are really places where people want to go to work in and collaborate in. So again, energy transformation and electrification, particularly, but also digitalization.

Right. wonderful. And I think I'm going to use this opportunity to also introduce our guest, who's all of the attributes that you spoke about. It's exactly in the buildings that -- in the specific building we'll be talking about that we're in London, and that's Mohammad Rashid, who joins us from Sidara, which is the Dar Group. I think we have a video as well, and then Moh, you can join us.

[Presentation]

So very happy to have the opportunity to dig into the history and achievements of this very iconic building in London. I'm here on stage with Mohammad. So Mohammad, your Head of Technology for Sidara. Sidara is a very large design firm. Why don't we start by you telling us a little bit about Sidara, but also about what you're trying to achieve with 150 Holborn, of course.

Thank you, Laurent. Hello, everyone. So Sidara is one of the largest multidisciplinary design and engineering consultancy worldwide. It is privately owned. We are currently more than 22,000 employees. We are a house of brands model. We currently have more than 20 practices worldwide, working independently, but we also recognize and we know the importance of our collaboration together and our practice. For 150 Holborn. 150 Holborn is super important for Sidara. 150 Holborn is our global headquarter in Europe. And 150 Holborn was the first office to have all the brands under one roof for the first time. Actually, it was a bold ambition. And the act and what we wanted to deliver clearly was to create an innovative environment which acts as the incubator of talents, ideas and innovation while having a modern and vibrant work environment for our staff.

So a pretty strategic projects. What were concretely the objectives you were trying to achieve there?

The building was visioned back in 2016, 4 years pre-COVID. Back then in 2016, we know that data would be the golden thread. You need data to measure, to benchmark, to evolve. And we had big plans to have a building with data collection and a lot of technologies in this building. That's why we called it a living lab for us. The uniqueness of this building or opportunity was -- we are designing this building. We are bringing a lot of practices under one roof for the first time, watching the construction and then occupying the building and validating your very own design in this building. So it was a big commitment back then, especially that smart in 2016 wasn't well defined. So it was like sometimes a hype, sometimes equal any automation smart. So it wasn't clear what smart yet. So it was a big investment, if you want to call it, from ourselves to have such a thing in our building.

So we worked and focused on 3 main personas for our day 1 operations. The first and most important persona was our renowned users and visitors, then the facility manager and the owner. Speaking about staff and visitors, this was the most important part for this building. Why? This building was about collaboration. We're bringing companies under one roof for the first time. So we wanted to enable, create an exceptional experience for everyone to show for ourselves before showing anyone else that we should be together so we can make better decisions, we can open opportunities for ourselves. But the challenge was when we designed the building, we didn't design it for a COVID hit. So COVID hit mid construction for us. And this is one of the outcomes of having such a big investment back then about data that it helped us create a journey or a better experience for everyone to come back to the office. So we wanted to start with collaboration with everyone, then COVID came and we started with an empty office. What we can do? We had a different plan in here. So it helped us to -- and we will come and speak about the experience.

Next, the facility managers. So facility managers, we wanted to equip a building with a lot of technologies. So we keep energy and asset at the culture of this building. It's not something that, okay, we will watch. And we don't want to have like 200 or 100 or 50 people managing this building. We want to have a normal amount of facility managers, but equip them with technology. So we keep it as the culture of this building. And the owner himself, we are the owner of this building. We want to showcase this building. This building is under the spotlight for Sidara because we are calling this building our home, our main headquarter. So we had a lot of things to show where you have energy commitments, you have ESG commitments, you have social commitments. You have a lot to showcase. So it comes with a lot of sustainable commitments back then in 2016.

So you had these 3 personas to cut 2. And in terms of your technology decision, how have you chosen the part?

This was a bit hard back then. So the very first important thing was to define the personas. When we define the personas, you needed to move to a journey or a day in a life or what these personas will do. We need to create something for these personas out of the [indiscernible] technology. So we created -- we thought about a lot of things. We are the consultant. We will be the resident of this building. And then we looked for who can deliver this with us. So it's not easy. You have a lot of technologies in the building from the mechanical, electrical, everything in the building in addition to sensors and IT, OT systems. You just mentioned it in a bit. So the very first thing was we were looking for a real partner. We didn't want someone just to come deliver something and then disappear midway. We believe that this is a journey, especially with smart back then, data, COVID hit, work from home, new challenges.

We started hearing about AI and what's coming next, but it was also a hype back then. So we needed to do something. That's one. We wanted someone to continue this journey with us. Number two, one of the examples you just mentioned, and this is implemented in our building, the meeting rooms. We created -- we wanted a meeting room that will react to people attending in this meeting room, especially that we have a lot of meeting rooms in our building. We have one floor dedicated for meeting rooms in addition to a lot of meeting rooms and other floors. And we have multiple brands. So any brand can use any meeting room. So we asked for an experience where we needed to connect HVAC, lighting, sensors, audiovisual systems, the TVs, even the scheduling system in one place so we can take immediate actions. So when you book a room, the room will recognize that you will be coming, how many people, which company you are, will change the logo, it will warm up when you arrive, even if you leave ahead of time, it will turn off. So this required a decent platform. And we found back then that EcoStruxure IoT platform was one of the best in the market to do everything we needed, especially for the meeting rooms. And this takes me to the open architecture. We wanted something that is future-proof.

We understood in 2016 that we are on an exponential price, let's say, everything related to technology. So the most important part, we didn't know what's coming. We knew we understood that we need to put the data somewhere. We will benefit from it one day. And we wanted to make sure everything is with open architecture because if you want to use the data, do the integrations, you need open architecture. We currently have more than 60,000 data points getting every 5 minutes in our building. And all of these data points are being on the building data platform, BDP. And on top of BDP, we use this one because BDP normalized the data. It made it available for us, and we connect it to our very own cognitive digital twin, which is [indiscernible]. So we are using the data from this building to feed our digital platform that we created for asset intelligence and Energy Intelligence to continue that journey. So this is something else.

In addition to that, back then in 2018, we checked a few independent research companies like [indiscernible]. So Schneider Electric was a leader in facility optimization software, I think, back then. And also, we were 7 years in a row, the most sustainable company in the world, not to mention all the big names you have as Schneider Electric. So it was a tough exercise, but I think we had the best selection in the market.

Thank you. And so your teams moved in the building in 2023. It's been 2 years of experience. What can you tell us about the outcomes actually?

Great outcomes we had. So after the COVID hit, and was -- we were supposed to start with a number of attendees. Now we have work from home. So compared to 2023, we have 35% more people attending the office. We are getting this data also from Planon, another system that we have in this building. Also for -- if you want to think about it, we have the Schneider sensors in the building that is contributing to the occupant well-being and showing how the comfort level is in the building. So also, we are getting this from the RWMS on Planon. Moving to facility management, we are using Building Advisor from Schneider Electric, Building Advisor is helping a lot in FDD or diagnostics and condition-based maintenance.

One of the main important things back then when we designed the building was to keep energy and asset life as its core in the culture. Platform like Building Advisor is helping a lot our facility management to augment and elevate how one human being can work in this building and act as like, let's say, 10 people. Also, it helped reduce the energy out of the meeting rooms by 22%, imagine that 10 -- I think you have the slides in front of you. I can see it here. And for the owner, and it was super important why we were counting the visitors. So thanks to Planon, 18,000 visitors came to the building. We are doing live tours. We are bringing people from all over the planet to London to see this exceptional building. And people are super happy when they see how we thought about this building, how we did the investment, how we partnered with Schneider Electric to deliver this, and it was a real big thing back then. It's a no-brainer today to do such a building. But in 2016, 2018, it was some kind of big investment to do. And we are realizing new brands and new revenues and new work opportunities out of these tours and visitors.

So pretty important tool for you on the business side also. I understand you've had a number of very good certificates, thanks to the data you have in your building.

Data was super important for a lot of certifications. So I will start quickly into the certifications and the evidence is coming through the certification. One, 150 Holborn have currently the second highest BAM outstanding in operations in London, 97.2, I think, percent last year, and as you saw in the video, we got White Score and SmartScore platinum and an additional information of the video, 58% of the criteria of reaching these certifications came from Schneider technology. Not to mention additional things like [indiscernible] and a lot of additional certifications. We are looking to achieve well very soon. So evidencing the smart building through third-parties or people who certifications is super important to tell our talents, our clients and everyone that this is something real happening here.

So this is, I think -- but we are looking for additional certifications for the building, but we are getting a lot of attention. And by the way, also, we won recently an additional certification for [ Para, ] which is built on top of BDP and the big 5 as the digital innovation of the year. So it was a great one.

Congrats for that. Maybe a last point. Is it one of a kind or first of a kind, what's next for you?

What's next? Actually, we started with data. We hear now about AI. We are looking for a lot of things. But from our side, we believe that dashboards as we see it would be a bit legacy. In the upcoming future, and I saw a lot of your colleagues mentioned it, agentic AI, the AI, the adaptive dashboards, the copilots and everything, even in buildings, you will not look to the same dashboard every day as a facility manager. You will have a copilot sitting within the system, serving you, elevating you as a facility manager.

Whenever you come and open your screen, even on your phone, you will see a different dashboard presenting what's happening today, where you should look in this building. And I saw something recently presented also by Manish about the foresight, which is something similar to what we are looking for. We are looking to a different era right now. So we will have agents living within buildings and everything else, not known. Now we're speaking about buildings, but agents, AI agents will live everywhere. So even buildings are going to a new era where buildings will be able to think, learn and even protect themselves. And actually, we are just beginning.

Thank you and thank you for showing the way.

Thank you. All right. So we are running just about 5 minutes behind schedule. So hopefully, you'll forgive us for that. But we are going to break for lunch now and be back at 2:00 p.m. U.K. time, and the same goes for the live webcast. Thanks very much for the morning session. Let's be back at 2:00. The first session is with McLaren, so you don't want to miss that.

[Break]

And I can confirm it, for us, it has been great working with your organization and with your tech team because they're always pushing us to the next level from a technology standpoint to bring energy and AI together to the next level, and we love that.

And that's something that, I think, Formula 1, the type of people in Formula 1, sometimes you have something on the shelf that we can use, but where it gets really exciting is when we can work with technology partners and go, we're trying to solve for this problem. Can we do it together because then all the engineers feel like we're racing together. And that becomes culturally very powerful when people can see us win a Grand Prix and that our partners and suppliers feel like they contribute to it. So sometimes we're fortunate, we can take something off the shelf. Other times, we need to problem solve and engineer together.

So this conference, as you know, is about energy technology. We are talking a lot about electrification, digitalization and of course, our data and AI is changing everything. When I was in your tech center, I was really amazed on how that data has penetrated every single part of your Company. I mean, can you tell us how you -- how it has changed the world of Formula 1 and McLaren in particular?

Yes. We're a performance-led organization. So everything we do is focused on will this make us better, faster, more efficient, whatever the goal is on a particular project and data informs our decision-making. We still need that business instinct or what we call racer instinct because we have so much data coming in. We pull down 1.5 terabytes of data a race weekend. We have 300 sensors on the race car, but that also can be data overload. We also have times where we need to literally make split second decisions. So we're constantly having data fed to us. We run about 50 million simulations over the race weekend.

Ladies and gentlemen, please welcome Zone President, U.K. and Ireland and [indiscernible], Kelly Becker.

Hi, everybody. Hi, Dan. Thanks for joining us.

Thanks for having me.

Welcome to Schneider's Capital Markets Day, and thanks for hosting us in your amazing facilities. Thanks all for being here. I think Zak stole a bit of my thunder as well. So let's hope we don't cover the same.

Zak. What can you do, right?

So Dan, I hear, it's been sort of quiet and subdued this week.

Super subdued. Yes, no champagne, no nothing. We've just been -- had our feet up, not thinking about next year either. But no, massive weekend for us in Abu Dhabi. Obviously, we got the job done there last year. It was tight. It came down to the wire, 2 points, Zak will always say, and he loves seeing the last throw of the game and it coming down to that. That's what the fans wanted. We made it difficult for ourselves at times, but ultimately, we came out as double world champions as in back-to-back well-constructed champions, but also doing the double this year with none other than the Lando Norris.

Pretty amazing. I bet Lando would have been happy to wrap it up a few weeksearlier.

100%, yes. I think he was very focused going into Abu Dhabi. But of course, it's a boyhood dream. He's been with us 7 years. He's a very well-established driver here. He always wanted to win in [indiscernible], didn't want to jump ship, go elsewhere and sort of chase it that way. I see that we're super proud of him. He deserves it. He just got us all a bit guessing and nervous at the end.

Yes. No, amazing. So fun. So tell us a little bit about McLaren's winning formula because obviously, the driver gets a lot of glory, but it's a huge team effort. What does that actually look like?

Well, yes, there's 150 people that go to the racetrack. Only 60 of those can touch the car. But you look at us as an entire organization, there's 1,400 people in this building, delivering 2 cars to the racetrack. We design a car, we build it, we then go racing. And depending on where you are in that kind of life cycle, you're either going -- I've been given a car and I need to extract the most amount of performance out of it and deliver today on track. That's what you guys will see on TV.

Then you might have an aerodynamics that's focused on what's happening in the next 6 months, what's happening in the next years to come as well from a concept perspective. So we have a real kind of range and dynamic of roles and people and what they're doing. But we deliver an engineering change to the car for 15 minutes. We are constantly evolving. And you can imagine that an F1 car is a product, right? So we are a -- yes, for a sports team, but we're a rapid prototype organization. We are constantly going, what's going to add downforce, what's going to add performance and lap time to the car and how do we react quickly. And of course, we rely a huge amount on data, which I think Zak put out quite well in his video over Olivier of we don't want people drowning in it. We want people sort of like gracefully swimming in the data to really understand how the car is behaving and then what decisions that [indiscernible].

And so for those of us who only get to experience this by watching Netflix, what is the race weekend actually really feel like, both for the teams that are here, of which we'll show our guests later today sort of the brains of the operation for those who are here, but what happens track side? What does that actually look like?

Well, Netflix is definitely a snippet. You get all the good bits. There's a lot that goes into a race weekend. We call it traveling circus of what goes to the track. We go to 24 locations a year. Next year is actually the first time we will do the European stint in one spin. What normally happens is you have Canada in between, everyone sort of has to come back and then fly away. So we have to prepare ourselves to go into 2 types of environments. One is on the road into Europe and the other is flying to multiple locations around the world.

But if I look at it from a technology perspective, we actually turn up a week before the race. We get given an empty shell by Formula 1 and the event provider and they go, there you go, you guys get on with it. And we have 6 sets of our garages that are floating around the world in sea containers. So they turn up. We have a crew that goes and builds the garages. We run about 3.5 kilometers of cabling. We do everything to build this kind of small office. If we're in Europe, we have trucks, which kind of big transformers, they turn into engineering trucks or we're given an office space. And again, we convert that into our engineering hub for the weekend. And then there are other bits that come into the -- they are all flown. So you have your trackside infrastructure, which is our baby, which is the IT rig. And then we have the 2 cars and of course, then the team followed. What's great about it is it's kind of going to feel like the living room of the mechanics. No matter where they are in the world, they're going to feel like this is the place I work. That's where I know the wrench is. That's where I know what that...

It's all standardized.

It's all standardized. And we take all of that stress out of the people's lives. So if you go from Austin to Mexico, which is quite a short flight, but it's back-to-back races. You can fly -- you leave your desk, you can fly to Mexico and you can be at your desk again in exactly the same day. So it feels quite surreal actually, if you go from one location to the other, it was all here again. So that's the kind of logistical part of it, and there's a huge amount of that goes into that. And then we get into the race weekend. So we have free practice. We get 3 sessions, unless it's a Sprint weekend, people know that format, but you get an hour of testing and you'll be doing lots of different combinations, different tires, different fuel loads, different -- and you are doing qualifying laps, you're doing race pace. And that gives us all the indication of how do you set your car up best for the weekend.

And we get such a limited amount of time to do that now. You used to have 1.5 hours. It was very relaxed time after time to look at the data. Now it's come out of session 1, get straight into the data, session 2, are we ready to go? Are we in an optimized state to go into qualifying in the race? And we lock the car in just before qualifying. It's called Parc fermé, you can't touch the car. So the aim of the game is to make sure that you have a car that can do a very quick 1 lap on low fuel, but then a car that can go fast as well on high fuel across, let's say, 52 laps in Abu Dhabi.

And so when you guys -- so the race weekend is one thing. And then as I've gotten to spend a lot of time with your teams in the last couple of years, this idea of performing while transforming really feeds a lot into what I think we're doing at Schneider as well. So the part I've struggled to wrap my head around with McLaren is we are talking long R&D cycles while we're performing. You guys are changing 15 minutes every week, you're looking at the car, thinking about how do you use that data, how do you drive effectiveness? How do you stay at the top level week after week while trying to transform and change things every week as well?

Yes. Well, it's competition, you kind of fight in a survival mode, which is like if I don't evolve and I don't change, ultimately, you get eaten in the sport. If you win the first race in Bahrain and you do nothing to your car, you come last by 4 seconds at the end of [indiscernible]. That's how relentless the sport is. And if you look over a 5-kilometer track and you look at a visual of how close the top 10 cars are, like on an A4 piece of paper, it's like that. Everyone is so close, it's milliseconds. So we know that we've got to react [indiscernible] to the competition. And that will be -- if you look at the industry, everyone's got their competitors. How do we compete with them? How do we make sure we give the tools and the best offering to the person driving and that might be a customer. In our case, it's a Formula 1 driver. So that's the thing that drives us.

And then also, we just simplify our objective. We want to go and win. What are the things we need to do that ladder up to winning. And then what are the things we need to have in place in order to go and execute. And that's something that Zak has really -- the sport is complex, but the way we approach the sport is simple.

And so when you walk around this building, it's hard not to get distracted by the cars, right? But we like to think there's a lot of other things happening sort of behind the walls, behind the scenes alongside you guys. Schneider and McLaren have worked together for a really long time, both direct as well as, quite frankly, through partners. And Olivier earlier today was talking about how important our partner network is as well.

So when we think about what's actually in this facility that our guests are going to get to see some of later, can you give people a little bit of a view of what's the importance of the wind tunnel? What's the importance of the containerized data center, the mission control? Why do these things matter to helping you guys be successful?

Yes. So these things all contribute to the process of how you develop a Formula 1 car. You'll all get to go and see our data center, which is out in the yard, which is a phenomenal facility, something that we deployed in COVID. We tried to get really creative about how do we give the right environment to our high-performance computing data center. Now we're in an era of AI. That's actually been really useful for us because we've got the capability and the capacity to do more. We've got to grow into it because it was actually quite a huge amount of capacity. But we do something in there called CFD, computational fluid dynamics. It's a bit of a mouthful, but that is a complete digital twin of the Formula 1 car. So we're regulated by how much of this we can do by the sport because it's aerodynamic development.

But you can imagine that if you work in aerospace, you want to get lift on a plane and that makes it go up. We're doing the opposite. It's an upside down plane. We're trying to make it go down. And that's the currency we trade in is called downforce. So every time we do an iteration in CFD, we go, how much downforce is that potentially added to the car because this is all digital. This is all concepts, its conceptual. Once we seem happy with a particular concept, that could be body work, floor, brake ducts, rear wing, front wing, whatever it might be; we then rapid prototype a 60% version of the car. This is the coolest toy car you've ever seen, like big -- we call it the model.

Sort of like the LEGO car out there.

A bit of the LEGO car. Yes. Yes, definitely more sophisticated. It's got real electronics, mechanic like mechanical engineering built into it. It behaves like a Formula 1 car. And we put that in a physical wind tunnel. So we run that in its first physical condition. So we have a big fan and working bar council don't particularly like us when we turn it on because it causes a spike. But we run a very significant operation around blowing wind at the model and then doing lots of experimentation around the angle it might be entering into a corner through to all the different conditions like wind and rain and everything else that you approach on a weekend. And then, of course, we're going to go and build the Formula 1 car. So we're a manufacturing organization. We've got a state-of-the-art facility down the road, which we -- is our composites facility, and we build a lot of the car in-house and then we deploy it to the track.

In those practice sessions, we're actually testing parts that aren't relevant to that race. So we'll put parts on practice 1 that might be a front wing for the next event. So we're always collecting data about what's going on in the digital and the physical world. And the aim of the game and the real work that happens back here is correlating those reference points. If you saw something really awesome in CFD and then you went -- and it's actually good in the wind tunnel, and then it's terrible at the track, then that's a head scratcher, and you're really trying to take those 3 lines and get them as close to each other. And that's what engineers are trained to do. They're like, we know it's capable. We can get it. We can get the juice out of this car, and that's the work that we get to across. So when you look at those practice sessions, they're doing all this work and like what they've been up to. That's the problem that they're trying to solve. They got those guys at the track, but actually, they've got 30 people in mission control. Looking in, in real time, it looks like NASA. I always joke when I was sitting here because actually this sort of section here looks like Mission Control is looking out to the bank of seats.

But it's -- you feel like you have more visibility, more control about what's going on in the field at the race because it's actually quite lonely in the garage when the cars go out

You can see the guys just watching the race, Sort of...

Just watching the race and the car is around the other side of the track is actually quite lonely. Whereas if you're a mission control, you can see everything that's going on every single corner, all the onboards of your competitors. You've got your GPS, you've got your competitors' GPS. You can hear our radios, you can hear our competitors' radios. So this is the highest point of knowledge. This is where the real work happens and then we help inform good decisions of the track, whether that's strategy or whether that's coaching Will and Tom, who are Lando and Oscar's engineers to get their drivers to get the most out of the car.

There's really funny scenarios like we might see vibration in the data in the car, and we'll go, it's really obvious on corner 4, that's what's causing it. And if we continue to do that, we're going to create a reliability issue and the car might stop, yes. So the philosophy here is the car never stops on track. We then feed that back to Will. Will will just say to Lando, stay [indiscernible] due, and that's it. we don't tell Lando why we made that decision and it may have been a very scientific view upstream, but ultimately goes to his engineer and he's like, stay off the curve. If you then doesn't stay off the curve, you're here on the radar, I've told you once, stay off the curve. So he ends up talking to them like a 4-year-old. And that's the relationship you have with the drivers to really be that calm voice, but just give them super clear instructions but not our intuition, very well informed by data.

Well, and I think we've been talking in the last many months with the teams around data, right, especially around this entire facility. And I think for those who don't know, there's also a commercial production facility that occurs that you guys share the space with in addition to the F1 team. And as we've been having some of these conversations, you guys have said, look, we've got loads of data about our facilities, and we want the experience for our people in the facility to be just as good as the experience track side, right? It's an end-to-end plan for the team.

How are you thinking about a lot of that data? I mean we've talked about things like Planon because you're sharing the space, you're sharing the financials, the energy as one option. We're talking about the use of AVEVA for the sort of mission control side moving forward. So what do you think the future looks like from a facility standpoint and evolving how you make this the best space for all your employees as well?

Yes. Well, look, this building is actually 23 years old, would you believe it? It looks like a spaceship still. So over time, we have kind of underinvested in the technology. I think we sort of took it for granted like this building would always stand up here in 100 years. That's not the case. So we've continued to invest. The wind tunnel is only 3 years. We edited our old wind tunnel in 3 years old. Mission Control has had a huge amount of investment. So if you look around the building, you sort of peel back the walls, we're using some of the latest of Schneider's technology because we've invested in those tools because we know that's what we need, and we need the best in order to be super reliable, really understand how we're using our power, make sure we're using our power in the right way.

But actually, now we've got these assets, we have this great opportunity to start making them all talk to each other and run a much more intelligent campus compared to just having isolated pockets of his capability, here's how you power it. Here's the UPS that's under the ground just in case we lose power and we've got redundancy. All of that is intelligent information. And you're right, we've started to look at how do we hone that data in a way that allow us to make better business decisions. How do we control cost? We're in a cost cap. So before, very luxurious, if you could kind of spend on anything. It just be like it will look after itself. Now we have to look after the pennies. We actually have to behave. Formula 1 never really behaved like a business. It definitely does now. I don't think anyone knew the concept of a P&L back then. It was just like got a problem, throw some money at it. But now we've got to be super conscious. And also sustainability is in our purview as well. How do we get the most out of alternate technologies in order to power this organization. And a lot of that is excluded from the cap. So the more you're more incentivized to look at things like renewables, looking at PV on the roof essentially, all these things that are going to ladder up to greater energy management, but not just out of pure gut fill, again, back to racing.

We don't do stuff on gut. We use data. And I think, yes, we'll definitely look at how do we use those platforms, particularly AVEVA and how that works in our manufacturing facility, mission control because actually, in principle, they work very similarly. And if we can surface that information, we're just going to run this campus in a way that is not only going to be the home of a future world championship team, hopefully, but also a great place to work for our people and making sure we can put the tools in their hands to build a really awesome race car.

So as we mentioned, people are going to get to see some of these items in the facility tour this afternoon. So that will be very fun. You'll have to use your imagination a little bit with the containerized data center because for health and safety reasons, we cannot let you inside the active room, but we've done some cool stuff to try and give you a real vision of what we're doing there. So Dan, last words about what you expect from great partners, what you expect from Schneider and what can we expect from McLaren moving forward?

Well, on the first one, I think we summarized in the sort of the intro video, like we don't just want to consume. We want to sort of challenge not only ourselves but how we use technology, but work very closely to each other, how do we stretch your technology to make your products better as well. And that's what we do with not only our partners, but our suppliers as well. And they love working with Formula 1 teams because it's like you're using it in the most extreme scenario, which is even great [indiscernible] for our product development. We're wheeling our trackside rig around the world, 24 locations, and we're moving certain products in a way they might not traditionally be used like that.

Using our data center trackside or everything...

This is all great information. And of course, that helps with not only us to be performing, but also respective organizations. In terms of McLaren, like I feel like we won the championship -- both Championships this year, got to be used to that. Both championships this year, the McLaren way. We took to the fight with 2 drivers. It's not been seen in history. Normally they give up on one and they help the other. We did it with both. We went to the last race with 2 drivers that could have won the championship, one more in a more mathematical strong situation. And I don't think it will change, but we'll certainly look to evolve and we'll definitely come back stronger next year and hopefully put the fight to the now 10 other teams with Cadillac joining and see if we can get the business done. But no, it's a great place to work, great team, super proud of what everyone's achieved here. And yes, let's see what the results tell us on track, but watch this space.

Well, we're thrilled to work alongside you guys because you push us every day to think and to move at pace and speed, and we wish you the best, and thanks for the partnership.

Thanks so much.

Ladies and gentlemen, please welcome Chief Financial Officer, Hilary Maxson.

All right. A bit of a tough act to follow, McLaren here right at the center of McLaren and the McLaren Technology Center. So I'm the final presentation of the day. The last thing standing between you and seeing probably a few more McLaren cars, but also more importantly, Schneider technologies in action, helping McLaren to, I guess, he said win something over this past weekend. I don't know much about F1, but something happened this past weekend. And in this presentation, I'm going to just review for you the ambitions, the targets that we have over this next 5 years and some of the key drivers we plan in order to get there. And for me, this next 5 years is all about advancing performance through Energy Tech for shareholder value.

And I'll start just by actually thinking back to just about 2 years ago in London, almost to the day, I think, we introduced our Next Frontier Capital Markets Day commitments. And if you remember, we actually upticked our organic growth target quite a bit at that time to what we would consider to be a differentiated growth target of 7% to 10% CAGR, and that was between 2024 and 2027. We also outlined further progression in our adjusted EBITDA margin, and we upgraded our ROCE ambition. And I'm happy to say that we're largely on track with all of those ambitions today with some opportunity to refocus on operational excellence as Olivier and the rest of my colleagues outlined. And we start our next 5-year journey, of course, with a continuation in differentiated growth. And we talked about the megatrends all day today that we're uniquely positioned to capture, the new energy landscape, digitalization and AI, the multipolar world. And we've also talked a lot about our strategy to outperform the market through technology leadership, customer differentiation and operational excellence.

And all of that gives us the confidence to extend that differentiated growth target of 7% to 10% CAGR all the way through now to 2030. To get into a bit more detail based on economic data, but also discussions with some of our large customers that have longer line of sight than some of our other customers, we feel confident that our addressable market, and Olivier mentioned it, will grow between 6% and 7% between now and 2030. That will give us an addressable market of EUR 600 billion plus in 2030. We've updated our end market exposures for you. You can see that we're decently balanced across end markets now, and that's using a forecast of our order book at the end of 2025. Data center and networks, clearly a great growth opportunity for us, still greater than 10% growth expected there. But we also expect good growth across the rest of our end markets building and industry at 4% to 5% and infrastructure at 5% to 7%. The only other mention I'll make on this slide is in the footnote, we did also update the breakdown between data centers and networks. So at the end of this year, we expect to have exposure to pure data center of 25% with networks at 4%, and that's a percentage of our overall group revenues.

Now data center and networks, clearly an important end market for us, an end market where, as Frederic shared with us, we are clearly the market leader, and we intend to remain so. So we thought it would make sense this time to give you a bit more detail into this end market. In particular, we expect the pure data center piece of this end market to grow 12% to 14% CAGR between 2025 and 2030. That's driven by acceleration in AI data centers, of course, alongside traditional cloud data centers, more muted growth in distributed IT, there we show 3% to 4% CAGR, although eventually, that end market should also pick up tied to the growth in edge data centers. You can see based on our updated geographic coverage here, North America remains an extremely important piece of the puzzle for us in terms of data center and networks. But lots of opportunity across the rest of the regions, and we talked about that today. I think for the first time, we give you a breakdown of our portfolio. You can see Secure Power Systems at 32%. And the key offers there will be 3-phase UPS as well as prefab data center. Electrical distribution, LVMV and I'll mention that software and services, we talked a lot about the life cycle journey for our customers today at 16%, but we'd expect that to grow over time. Olivier and Frederic both mentioned that we are one of the key players in offering a full life cycle journey for our data center customers today. The last point I'll make here is that we talked a lot about technology leadership, about architectural design. We've given you a breakdown in terms of dollars per megawatt in terms of opportunity for Schneider Electric going forward, something that quite a few of you have asked me about for some time. So we have given you $1.2 million to $3.3 million per megawatt in this growth of data centers that we expect in front of us. However, through that expertise in architectural design, in particular, we're focused on optimizing the cost of token per watt for our AI data center customers. So particularly for the most complicated of the AI data centers, we wouldn't expect to trend to the top of that range over the course of this 5 years. And that's something really important for the industry, I think.

Now everything we've talked about today, and Olivier mentioned it this morning, technology leadership, that next level of energy and industrial intelligence, the life cycle journey for our customers, all of that is going to continue to accelerate our revenues toward more digital and more resilient over this cycle. The digital flywheel, we expect to be greater than 70% of our revenues by 2030. And in particular, within that, we expect software and services to increase to around 25% of our overall revenues. And as you know, that's a piece of our portfolio, those 2 business models that tend to have a lot of customer stickiness as well as resilient revenues across any sort of market cycle. And as part of that, we expect to double the weight as a percentage of our group revenues of contractual recurring revenues by 2030. And Caspar already outlined the incredible journey we've had at AVEVA. We've already driven recurring revenues there to around 85%. And we have a lot of opportunity across the rest of our software and services portfolio, particularly digital services to continue that journey of driving more and more contractual recurring revenue.

In this slide, we've given you a sense of where we expect the growth to come from across our regions, our top countries and our clusters. And you'll notice that we've actually put the forecast here, the numbers based on our new regions that we intend to start reporting on in Q1 of 2026. And that's based on our multi-hub strategy as well as the organizational update that Olivier showed earlier. But we have also put into this very long footnote exactly what this would have looked like based on the old regions so that you'll have both sets of information. I think more importantly, because you'll see these regions going forward from a forecasting standpoint, we expect the U.S. part of North America, East Asia, part of China and East Asia and then India and Middle East and Africa, part of South Asia and international, Manish talked about both of those earlier, as the key drivers for our growth, all driving high single to double-digit growth over this cycle.

Now we don't have a perfect crystal ball, but we've put the rest of our top countries in here as well, the best that we would estimate over these next 5 years. And China remains a very important country for us. We talked about it a number of times, particularly associated with our multi-hub and R&D strategy. And we'd expect China to be trending towards mid-single-digit growth over this cycle. The last point I'll make in terms of differentiated growth is about our business models. And Olivier mentioned that more and more we pay attention to our business models, and we expect to have a bit better balanced growth in our business models over this next 5 years than we've seen over the past couple of years. In particular, we expect products to grow mid-single digit to high single digit, systems, high single digit to double digit with software and services both growing double digit, again, to get to that 25% as a percentage of our portfolio.

I'll turn now to our profitability, and we're driving profitability, particularly through operational excellence over this cycle. Now you can see in this slide that we have driven a consistent improvement in adjusted EBITA over the past years. And we don't expect that, that journey is finished. Over the next 5 years, we have a commitment to drive another plus 250 basis points organic expansion in our adjusted EBITA margin. And we feel confident making that commitment across all of the growth scenarios that we show here because of the focus we have in cost consciousness in our gross margin, in our OpEx as well as Caspar and Gwenaelle both mentioned, we have a particular focus on regaining momentum in margin in our Industrial Automation business, and we expect to emerge from the transition to subscription at AVEVA with strong adjusted EBITA margins of around 30% by 2028.

To get into some detail of the group journey for driving our adjusted EBITA margin, it starts with gross margin. And you can see here on this slide that our path in terms of gross margin has not been as smooth as our path in adjusted EBITA margin. So over this next 5 years, internally, we're already driving an obsession with gross margin. And we're looking at drivers like industrial productivity, pricing excellence and mix management as the levers that we'll all think about each and every day. And I think you heard from my colleagues quite a bit about what we're thinking about here. In terms of industrial productivity, we've really prided ourselves in being a company that drives strong industrial productivity. But post-COVID, and this isn't new news, post-COVID, we lost a bit of momentum, both tied to the supply chain crisis as well as inflation.

But we've already regained a good deal of momentum there, and we intend to drive strong industrial productivity of EUR 2 billion to EUR 2.5 billion over this next cycle starting in 2026. Now part of that will be driven by volumes as well as we'll leverage our new capacity investments. But more importantly, we have programs internally, and Frederic and [ Gwen ] talked about them around design to cost, around driving technical productivity, and we have a new strategy in our procurement organization to drive supplier negotiations. Turning to price. We've been a bit slow this year in terms of pricing to offset inflation. And of course, we've had tariffs as well. So we're reinforcing a mindset of pricing excellence across the organization, focused on agility, quick reactivity as well as consistency in pricing. And part of that, of course, is more digital tools. We're also refocusing on value capture tied to innovation.

We do anticipate that over the next 5 years, very likely we will be exposed to inflation as well as probably some more unpredictability in terms of tariffs. So we do have an ambition of flat to positive net pricing over this time frame to fully offset any impacts that we do have from either tariffs or inflation. The last impact on our gross margin is mix management and mix management really remains key over this cycle. You can see actually, we expect to continue to have negative gross margin impacts, but to primarily offset those at the adjusted EBITA level. So I've given you a little bit more information here about adjusted EBITA by business model. I'll start on the left-hand side. So the drivers of our gross margin over this cycle. Two of them here listed aren't much of a driver. We expect normalized pricing in systems. And I've also noted that we don't really have much impact from geographic mix in our mix management because in general, our regions don't have a material difference between them.

Software, we, of course, expect to contribute positively over this cycle. Software is highly accretive to the group gross margin. Caspar gave us an example with AVEVA, where we're 80% plus in terms of gross margin, but we still expect to have a headwind from systems over this time frame. Systems are fairly dilutive to our gross margin. So we'd expect in the gross margin bridge that you see that we'll still expect some headwinds from mix over the 5 years. I'm happy to say, though, that while systems, we do anticipate that systems will remain dilutive to the group gross margin over this cycle, systems are already around neutral to our adjusted EBITA margin, and we would expect that to remain over the course of this cycle. What's more dilutive today, software, as you know, we have the transition to subscription there, and we expect software to become accretive at the adjusted EBITA level over this cycle.

Products will remain accretive and services today are around neutral to the group gross margin, and we expect to drive those to close to neutral at the adjusted EBITA level over this cycle as well. I'll turn now to cost consciousness in our operating costs. We do intend to continue investing with intent across both CapEx and OpEx over this cycle. Of course, keeping in mind all the time ROI on our investments. In particular, and we've mentioned it a few times today, we do still intend to move our R&D as a percentage of sales to around 7% to drive that technology leadership, that next level in energy and industrial intelligence that we spoke about today.

We also have an internal program on digitalizing further, the One Schneider Electric that Olivier spoke about quite a bit. And in terms of CapEx, we continue to be an asset-light company. We expect to invest around 2.5% of our group revenues in CapEx over this cycle, peaking in the next couple of years due to the timing of deployment. And we tend to invest and we're investing now 18 to 24 months in advance of the demand cycle. So we have a lot of agility actually in all of this spending. Now while we do expect to continue investing over this cycle, we also have a particular focus on efficiency, on simplification and scalability across our operating model. And that's partly supported by the digitalization and AI investments that I mentioned on the prior slide.

So we are -- we talked a lot about doing it on behalf of our customers, ourselves, we're standardizing processes, making sure we understand our own data and standardizing our digital architecture, for example, implementing cloud ERPs in our hubs over this time frame. We also talked about AI at every level of EcoStruxure and every level for our customers. We're also deploying AI internally. Caspar gave an example of that in R&D. I've given a few more examples here where we're already at scale in using AI to drive productivity. So in our customer care centers, in services with our field services reps in work order planning, in quotation and tendering, and there's plenty of more opportunities there as well. So with this digitalization and AI, along with other efforts in simplification, we expect to drive our SFC to sales ratio down by 1.5 to 2 points over this cycle, and that excludes R&D.

We're also adopting this metric, this focus internally as a metric in the organization to ensure that we really are consistently focused on efficiency and effectiveness in our organization. As part of this, we do expect incremental restructuring charges of around EUR 500 million between now and 2027, starting with a restructuring of around EUR 300 million in 2025. Now that EUR 500 million is on top of the around EUR 100 million to EUR 150 million normalized level that we'd expect to then get back to from 2028 onwards. All of this progression in our P&L, we do anticipate should translate into our free cash flows and our return on capital employed. Starting with free cash flow, we do anticipate that we should continue driving a cash conversion ratio, so that's as a percentage of our net income of around 100% over this cycle. Now this is a growth cycle. So this does include targeted working capital reduction programs across the company. And I'm happy to say, again, it does translate into our ROCE.

So we've upgraded our ambition for ROCE growth to between 15% and 20% over this next 5 years. I'll turn now to capital allocation. And we don't have a lot of changes in our capital allocation priorities. Of course, we will continue to fund all of the exciting organic growth that we heard about today. And then we continue with a plan of disciplined capital allocation to drive short-, medium- and long-term shareholder returns. And I'll talk through each of these boxes in the next slides. So first, we remain committed top priority to retain a strong investment-grade credit rating. This is important for us for flexibility to drive our strategy in all sorts of market environments, but also it supports our low cost of debt. And we've had a couple of credit ratings upgrades over the last few years.

So we're further clarifying this commitment as one to retain category A credit ratings over this next 5 years. Olivier mentioned, we have paid a progressive dividend now for 15 years in a row, and we remain committed to a progressive dividend policy. With the Board, we do plan to undertake a share buyback program over this next 5 years, EUR 2.5 billion to EUR 3.5 billion in share buyback, and that should be a bit more systematic and consistent in nature than what we've done over the last couple of years. Lastly, active portfolio management remains important for us. Olivier mentioned as well, we are introducing a target for disposals, EUR 1 billion to EUR 1.5 billion revenue disposal between now and 2030, and we'll intend to complete that by our biannual portfolio reviews, really looking at the health of our portfolio biannually and challenging ourselves to consistently shed assets that are effectively distractive to us from a portfolio standpoint. We have a great portfolio.

We don't want to get distracted with anything that doesn't make sense. Nothing here to mention in terms of particular margin impacts that we would expect not to be -- really to be more neutral from a margin perspective over this cycle. In acquisitions, we remain agile in acquisitions that accelerate our strategy. And we've added a particular focus on partnerships. We'll look to leverage partnerships and alliances to drive value creation over the next 5 years. And you heard from a number of my colleagues, some of the partnerships that we have going today. Now we get a lot of questions about M&A, so I won't read through the details of this slide, but we thought it would make sense to give you a better understanding on the framework under which we operate, something we call our end-to-end inorganic process. Most importantly, what we expect from any potential M&A target. First and foremost, strategic fit. And there's a few examples in the past we've given you around what strategic fit looks like for us.

We talked, for example, with Rich in Motivair today. Financial fit, just as important, and we look for targets with strong growth and gross margin profile. And lastly, feasibility in terms of integration. Now all of the targets that we've shared with you today are organic. So they don't require -- they haven't included any particular M&A within them; however, we do think inorganic growth is a good complement to our group's organic growth strategy, whether that's through acquisitions, whether that's through partnerships, whether that's through our venture portfolio. So we do consider it as an important part of driving long-term value creation. I'll finish with a reminder of the medium-term financial targets that we put out today. First, a continuation of differentiated growth of 7% to 10% CAGR between now and 2030. Second, a continued consistent evolution in our adjusted EBITA with a target of plus 250 basis points organic expansion between 2026 and 2030.

And third, a continued strong conversion into cash with around 100% free cash conversion ratio as a percentage of our net income. And that's all tied to the strategy that we talked about today of technology leadership, customer differentiation and operational excellence.

With that, I will invite Amit and Olivier on stage with me to do the Q&A.

Well, we are bang on time. We have 29 minutes and 31 seconds for Q&A. I know we've all been waiting for that. I see some hands -- lots of hands going up. So we try to get everyone's questions. So one question per person. There are a couple of microphones. Okay. We just -- why don't we start there with Andre.

It's Andre from UBS. I'll stick to one question and maybe start with the growth target. Clearly interesting to see the extension of the time line that you're now targeting 5%, 5 years. And within that, I think the industry target was actually lowered while the broader market growth target is maintained. So could you just talk about what gives you confidence in that kind of longer visibility and in that market growth to be out there in the outer years, in particular, while you're taking a more conservative view on the industry?

Sure, I can start, and feel free Hilary. I don't want to repeat everything we've said since this morning, but there is a combination. There is a combination first on the end market. You've seen that basically the combination of the convergence of electrification, automation and digitalization give us a level of comfort that the market will continue to be very, very dynamic. And as you know, we started our transformation already a couple of years ago when we launched EcoStruxure. And in everything we presented to you this morning on how we are taking our technology stack to the next level, combined with the work that we are doing on our commercial setup and go-to-market, it gives us the confidence that on one side, we can make the most of the market growth.

And of course, data center power grid will be segment, for instance, which will be very attractive. But at the same time, as you understand, by going through the full life cycle of our customer, which help us to go from the design of the asset to the CapEx investment to the OpEx with services, that gives us also a lot of relay of growth. So it's not only about the market, it's about the work we have been doing ourselves to position ourselves in new parts of the market, full life cycle, new offer. And last point, we did not describe too much in details today. It's also the geographical expansion. As you know, we are present in different parts of the world with a very balanced exposure, but we are building also a strong relay of growth. Manish talked, for instance, this morning about what we are doing in Middle East. That's a part of our portfolio, which is fairly small today. It's still -- actually, Middle East and Africa is the fourth largest region of Schneider. It's not one country, but that's another example of growth.

So it's not only about the market, it's about all the work we are doing by ourselves in the way we position Schneider through the full life cycle, different business model and geography. And of course, in that cycle, we expect to extract a lot from digital and AI, which will come progressively, which will be another part of our growth profile. Anything you want to add, Hilary, feel free.

Yes. Just to the industry in particular. Like most companies nowadays, we have quite a sophisticated model, taking many, many, many economic data points and AI-enabled, giving us an understanding specific to Schneider actually of our addressable market based on what we have. Industry, this is -- and that's the model that would lead us to look at those numbers. Data center is the one area where we talk to our customers, more about the longer-term cycle as well. So I'm sure nothing will be perfect. And there's some opportunities in industry that may happen in this cycle or a bit beyond this cycle that are hard to predict. But I think we feel pretty good about the mid-single-digit to high single-digit to double-digit growth rates really across the end markets is a great cycle for us this next 5 years.

All right. Maybe, Jon?

It's John Mounsey from BNP Paribas. I just want to really delve into some of those slides that Hilary presented, particularly around the margin. So 250 basis points cumulatively, that's obviously one of the main targets for the margin expansion, used to be 50 bps a year. Is there anything in there? I know you're spending quite a bit on digitalizing Schneider. Are we talking 250 because maybe the margin -- the leverage is a bit more back-end loaded with that investment going in upfront. Are we likely to see lower margin expansion '26, '27? What's really meant by that slight changing of the way we communicate the margin?

So nothing to be read into it. I personally like the plus 250 a bit little better than the 50 CAGR which is very difficult to understand, because basis points CAGR is very different -- and it's difficult to understand. But I'd mentioned that we expect that consistency, that growth in our adjusted EBITA over time. Nothing back-end loaded. I think at best, you could assume somewhat linear over that time frame.

Right, Daniela?

Actually, a follow-up on the margin. But Hilary, you mentioned several times, you're refocusing the organization on margin and pricing. So a little bit more on the part that we don't see in terms of how did you change compensations, KPIs, what changes in practical on the day-to-day have you done to achieve this?

Well, look, I can say nothing that we are changing on compensation. What is very important for you to know, I mentioned that we created One Schneider already more than 10 years ago. Actually, you might not know, but if you look at the incentive system at Schneider Electric, it's one incentive system. We are one company. We have one P&L, one share price. So except our salespeople everywhere in the world, which are paid based on quota because we have different business models, specialized business model. For the rest of the organization, we are already on one Schneider compensation, which is very, very important for me because from what we do for our shareholders from the share price to the short-term incentive, everyone is aligned on one goal. And that's super important, and I was mentioning this morning very briefly that we are evolving the leadership of Schneider because when you look at the portfolio we are embracing and the speed at which we are moving, that's very important that we don't work in silo.

You have understood that we are more integrated for our customer, more integrated for our employees that we are than any other competitors in the market. There is a reason because we believe we can extract more, we can deliver more to our customer, more to our employees. And therefore, that's why we need to have one incentive system. What we could do better, like any very large multinational in the world of today, which is more fragmented, is how we accelerate the speed to execute. And that's why we are breaking the silo. We are working with management team in an evolved type of leadership where we are more mission-based oriented than a traditional Hierarchical company to make sure we deliver on the mission. But there is one mission in the company because there is one share price PI. So don't expect any change in compensation or whatever. It's more an evolution to accelerate the speed at which we are executing our strategy.

And I think, Olivier, your new company program, we have -- a number of the colleagues mentioned it. We have a key pillar in that. That's what we call it internally, and that's one of the big things Olivier has driven. We have a key pillar in that on cost competitiveness. And that's around the points that I made on gross margin and on our OpEx. So both of those are key pillars of what we're driving -- what Olivier is driving internally.

James?

Another follow-on on profitability and then how we get to 21% margins by the end of the decade. I mean, your headcount hiring has been much more than other people in the electrification space in recent years. It looks like you're now moving into a bit more of a phase where we've done some of the investment, we're getting some of the harvest. How does that really manifest internally? Is that right? Is that how you see it that you've done an investment level that's a bit above others, you can now collect on that? And how does that tie to the restructuring going up, which would imply you need to get rid of headcount? Did you hire too many people? Or is it a function of mix? I'm just trying to understand how those 3 things sit together.

Yes, sure. Look, that's a great question, and I can start here again. I think we are all exiting, first of all, as a very large company, a kind of cycle, which has started with the COVID. We all manage in a very operational manner our company. We had this COVID period, and you go back, you go after the COVID, you have a rebound and so on and so forth. So I think it's super healthy for every -- any kind of multinational that has been through this COVID, rebound of COVID, interesting growth cycle, fast growth cycle that we take stock of where is the company and we generate more efficiency.

I've been in this company for long enough to understand that in every cycle, you have a risk that we create collectively inefficiency. And especially when you are in a very favorable growth cycle. So what we wanted to do with the management team in this cycle is to make sure that we keep investing in the future, but we stay very stringent on the efficiency side, on the way we manage the company to make sure that one part can go, of course, through the margin expansion, but one part can help us to be reinvested.

To be specific to your question, yes, it means -- and we are not going through massive restructuring, but we are much more disciplined in the way we hire people, in the way we grow the company and trying just to be more efficient in the way we are managing the company. I've told you this morning a lot about the regionalization. I don't know if it means a lot to you, but every company in the past 20 years has been pushed to globalization. And then you reach a point where you have local team, you have regional team, you have global team. What we have done in the past 12 months with the management team is to take stock on where we are and how can we generate efficiency, how we can avoid overlap between people who are doing job at the local level, at the regional level and the global level.

So even at the leadership level, we are going to reduce step-by-step the number of leaders that we have because we believe that's the right time to do it and to be more efficient. So to your point, yes, it's going to be translated by efficiency plan, but don't expect anything massive that will be in the news or whatever. It's more really for me a healthy practice that in every growth cycle, you need to stay very efficient in everything you do.

Ben ?

I thought, Hilary, you were very open in the presentation about the pricing sort of gap for however you want to call it this year. But my question really is for Olivier. I mean, it's very, very rare to see Schneider sort of not price ahead of the competition and to be a price leader. If we had to pick one thing, is it one region? Is it one division? Is there something systemic? But as CEO, how do you look at this year in terms of this pricing problem? And are we confident that Schneider is going to be back to business as usual?

Yes. That's a very good question. And indeed, this morning, we have been very vocal on that point, and it's very high in our priority. First of all, when you look at the world, the world is not one today. So we are working on some areas like China, which are still very deflationary at that point of time. So even if we are a leader in the Chinese market, the capacity to deliver positive pricing is very limited because all the market is deflationary. And you have other part of the market where we have been able to deliver positive price, probably not fast enough to your point. And we have always to keep in mind that there is a pricing we can do on the product business, on the transactional part of the business.

On services, up to now, our priority #1 was growth. So we are putting a lot of strong practice also to increase our pricing, really excellence in services. And as you know, '25 has been a complicated year. We have been in this middle -- in the middle of the tariff going left, going right. And with the team, probably we took us a couple of weeks, months to really take stock of the situation and to decide where we would like to price. What I can tell you with a lot of comfort today, I think 25 years has been a bit of a year of transition. But in this new plan that we have presented to you today, there is a very strong focus on price excellence, which starts from the businesses, what are the strategic pricing that we can deliver up to the operation who are in charge of the last mile of the pricing, which is operational in every region. But you can count on us to be back to a very strong practice, which are part of the DNA of Schneider on the pricing side.

Gael, maybe?

I was wondering if the 18% margin ambition for Industrial Automation is ambitious enough because if we take the AVEVA's target for granted, if they get back to their former strengths with a margin of 30%, then we can infer that the rest of the portfolio will probably deliver a margin of not even 15% by that time, which looks a bit below what we used to have in the past and certainly below what some of your peers currently achieve. So yes.

So look, we said 18% by 2028. Let us get started. That won't be the end of the journey for industrial automation [indiscernible].

[indiscernible]. I think from at least my understanding, everyone is trying to position themselves in solid-state transformers. It's not an area that you're in. So how -- do you assume that you'll partner? Do you assume you'll use other people? Do you think you'll have to buy something? How do you plan to address that technology change?

You know what, that's a good time for me to take a break and to pass the question to our technology officer in data center, Fred. Of course, we are working on those. That's a great question.

That's a good question, and you will go in detail on the marketplace on that. So you can even go further with our technologies. But in a nutshell, when you look at the entire chain of power from medium to low voltage, it's sure that when you go to 800-volt DC, you are changing part of the components. Now the way you do it, you still have power conversion, you still have battery and you still have at the end, supply at low voltage. So all this will be distributed in a different manner. This will be explained to you on stage, but consider still that the function, the building blocks will be there. Up to 2027, we don't see at large new technology like SST and so on, but we are looking at the way we will manage our architecture after 2027.

And you have of example of what we are doing in the marketplace later. I'm sure that will address a lot of your question.

Martin?

It's Martin from Citi. Just a question on acquisitions. Even with the buyback you've announced, you will sort of build cash, and so the balance sheet will have further deployment potential later in the 5-year plan. You've obviously given new return on capital targets today. Would that target still stand even if you were to do a large deal? Or is that just based on the existing business? So how should we think about it in terms of future M&A?

Well, look, I can start, and of course, Hilary will complete. On M&A, we have been very consistent. And since I've taken over, I've been in touch with a lot of you on that topic. And my answer has been always the same. First of all, all the ambition that we are giving to you today are organic, point number one, okay? So this 7% to 10%, we believe we can do it organically. If you look at the first slide that I've presented this morning, it's a good illustration of our M&A strategy. We want to be extremely selective. So M&A will be done every time it helps us to accelerate the strategy we described this morning. That's why if you look at the past years, very selective acquisition in the software domain to create the next level of energy and industrial intelligence, very selective M&A in technology like Motivair and you understand how it contributes to our portfolio and an acquisition, of course, completion of an acquisition in India to continue to build our multiyear model.

So that will be exactly the same in the next cycle. We will be extremely selective. We don't plan any major acquisition at that point of time. Now you never know what will be the market in 1 year, 2 years, 3 years from now. If there are opportunities, we'll look at it. But first and foremost, organic plan, very selective M&A. And of course, M&A that fits strategically, and that's why we wanted to present the slide that Hilary has presented at the end that give you really the very detailed criteria we are using internally to describe if there is a good strategic fit, if there is a good return on investment. But at this point of time, organic first and very selective on M&A.

Yes, in terms of ROCE, like you know, pretty much all acquisitions cause a small -- a negative impact on ROCE. But that 15% to 20%, we feel comfortable with over the 5-year time frame.

Right. George?

It's George from Barclays. Just another one on data centers, if possible. Projects there are clearly scaling. It seems like only yesterday, we were talking about 10-megawatt data centers, and now we're talking about 1 gigawatt data centers. So I just wonder if you could give some color on how that's changing your business and perhaps how it's impacting the time lines for you in terms of conversion of orders into sales.

Well, look, first of all, on data center, what is very, very important, there are a couple of points we mentioned this morning. There is all the presentation that Fred has made on the evolution of the technology. But I think what is super important for us is we want to be present across the full life cycle of data center. What is very, very different, and I want to say it's different tomorrow than it was in the past because it did not happen overnight. But what we have done very differently in the past 12 to 18 months is making sure that we have a full set of solution that goes through the entire life cycle. That's why we have done a lot of work at the design stage. What we do with Caspar with AVEVA, with ETAP, the partnership we are doing with NVIDIA help us really to start from the design.

We can deliver and maximize our position during the build phase, and we create a lot of opportunity in digital services. So that changed really a lot the way we are partnering. Maybe I'll turn to Aamir in a minute, but when we are working with those large customers, they are looking for technology partner. It's not a one-shot relationship, a transactional relationship. So what we have changed probably in the way we operate is commercially, we have a very strong engagement at the global level with those very large customers, a very strong technology relationship with them. At one point of time, they will commit on a certain level of business they will give to us, and we'll commit on a certain number of capacity we'll give to them.

So that has changed in that sense, and I don't know if it was behind your question, it has changed a lot the way we work, compared to our historical business model, which we have more local, regional. So that's a very different model of engagement. And I don't know if it was really your detailed question. And Aamir, I don't know, [indiscernible] if you want to add anything because North America is, of course, the biggest illustration.

No, I think you covered it. And you heard it from the Vantage team, right? When we're engaging with the hyperscalers, we tend to focus on supply capacity agreements because a gigawatt data center is actually still built out in phases. But what they want is consistency and they want to be able to flex how they're going to do that. And so that order comes in as a combined order and then we execute that throughout whatever time line. And sometimes, as you saw with Microsoft last year, they'll slow things down. Other times, they want to accelerate. But it's a single structure with standard designs.

What's different from smaller data centers is the consistency from data center to data center isn't there. So those supply agreements are hard to structure. The bigger it gets, the more they tend to be in that structured supply agreement. And then the flow is really how fast they can get the other variables like power, labor, et cetera, solved.

And when Fred and Aamir are working, for instance, and you've heard Noel from Microsoft this morning, they are working on an agreement on a new design the day after, Aamir and Fred will have to make sure that Manish and Laurent in international in Europe can deliver exactly the same value proposition to those customers everywhere in the world. That's super important. So in that sense, it has changed quite a lot the way we interact with those customers in this definitely type of business model.

Eric?

Yes. Eric from CIC. You disclosed the breakdown of orders by end markets. Should we consider that the breakdown of revenue is similar to this breakdown of orders? And if not, where are the main differences? And just if I may, a follow-up on this one. The 14% orders in infrastructure, what's the figures for electrical grid? Just maybe to have an idea of your exposure to the grid upgrade thematics.

So we do give you orders actually on purpose because we think it's the best indicator of what the upcoming sales are looking like. So in general, our sales and orders won't be dramatically different. But in particular, that would give you a better view on what we expect sales to look like, let's say, in '26, '27 in the next couple of years.

In terms of the infrastructure end market for us, grid is actually a big portion of that. So in there, we have grid, we have wastewater, we have transportation are the big segments, but a big majority of that is going to be grid, probably high single digit in terms of exposure with the group.

Philip?

Yes. Just as a bit of a follow-up, I guess, to Gael's question on the IA margin topic. The way that it was communicated, it sounds like there's upside risk to the IA ex software margin. But I just want to explore from an end market standpoint, is there anything that we should be aware of in terms of your current view on the China market, let's say, the process industry outlook in the coming years? Is there any reason from a vertical or end market standpoint we should be thinking of when it comes to IA in the coming few years?

Well, look, I can start on China, and I'll let you pursue on margin again. But look, as we said, and if you remember what we said one year ago, '25 was a year of step-by-step recovery in the IA market. We were not ecstatic. We knew it will get better. And actually, we said we have turned positive really in the second part of the year. And as far as China is concerned, it's exactly in line. It has been a step-by-step recovery. And we are confident that it will stay like that this year. But back -- I think your question is a lot about margin.

There is nothing which is related to China in particular. China, we are happy with the speed, I would say, of the recovery. Of course, we would like to have a little bit more of pricing and to be a bit less in a deflationary market, but China is recovering step by step. What Gwen has explained also this morning, which is very, very important, we are doubling down in China in R&D because we do believe a lot of the future of industry automation could be built in China for us in the future, and that will make us extremely competitive really to go in other market. But I'll let you go back maybe on the margin question, but I guess you have a...

Yes. No, nothing to point to. I don't think that we're particularly concerned about -- Olivier is talking about that recovery in discrete. I think process in China had been a bit slow, but nothing we're particularly concerned about there. The government is very much focused on subsidization efforts and efforts. And I've mentioned -- we expect China overall for the group to be towards mid-single digit. Nothing particularly different in Industrial Automation.

So we expect China to be a great contributor, both in terms of R&D, like Gwenaelle spoke about as well as to the growth of the group, including in China. And we'll let [indiscernible] Gwen get started. She said she's been in the role for 3 months. So we'll let her get started on driving the margin ambition.

All right. I think just mindful of time. So maybe just a couple of other points before we wrap up. The first one we mentioned in the press release - oh, we have one over there. All right.

The last one, I guess.

Okay, we keep that one.

It's actually difficult to see everyone at the same time.

This is Lourdes Dominguez from Banco Santander. I wanted to ask you about the building segment specifically. How are you seeing progress versus what you were envisioning back in 2023? And what levers do you expect to pull into 2026 to support growth in there?

You want to start with the market view, maybe?

Sure. So you'll see that, in fact, from an end market standpoint, we have the same expectation in terms of growth over this cycle. That was obviously delayed a little bit actually over the past couple of years with issues in residential, in particular, first in Europe and Rest of World and now more recently in North America.

We do see that stabilizing, potentially back to a touch of growth outside North America. And I think Aamir had mentioned a little bit the slowness there. Who knows? Maybe with the Fed changing interest rates, there can be some upside on residential in North America, but I would -- not for us to take a bet on quite yet today. But overall buildings, with a bit of a delay, we now expect that 4% to 5% end market growth. And I think we walked through quite a bit of the reasons that we think that building is quite exciting over this next cycle.

And as Laurent has explained this morning, we have a full portfolio to create more efficiency in the building market. So while the growth of the market will be, I would say, average, we said around 5% in the next cycle. There is a lot we can do with the portfolio that we have between the historical portfolio of Schneider and Planon. Laurent has given a couple of examples later on how we can generate more efficiency. And you heard from our customer that there are plenty of opportunities still to generate growth. So that's the plan in building.

All right. I was just making the point earlier that we announced earlier today in the press release as well that we will transition the Head of Investor Relations role as well. So I just want to take this moment to firstly thank all of you for the last 9 years. Thanks for the challenge, for the support and the sort of joint conquest on value creation. So really appreciate it. I'm still in Schneider in a different role, so still available.

And I do want to officially introduce Nathan, you want to stand up. It's hard to miss. Nathan is there, and we leave you in very, very capable and dependable hands of Nathan, who will -- all of you will meet soon.

Maybe just one other point is it's more logistical. But like normally in the Capital Markets Days, we have little momentos for you, which you sometimes like or you don't. But this time, what each of you can feel good that we are -- we've made a token contribution on each of your behalf, in fact, on the behalf of the people on the web as well to specific charity linked to the SE Foundation. So please, when you have a moment, go to the website of the SE Foundation and see all of the good work that is being done.

Just to sort of -- just to set the expectation, in a few minutes, we will be closing the webcast, and then we'll have more instruction from folks at McLaren. But before we close the webcast, maybe Olivier, the final word from you.

Well, look, in one minute, first of all, I want to thank you all who are physically present here in the technology center, but all the people who are on the webcast. Thanks a lot, first of all, to spend time with us. Thank you for your interest in Schneider. I hope you've been convinced during that day that we are really going to take Schneider Electric to the next level. We are starting this new cycle on a very strong foundation, where we have delivered already a very strong return to our investor, where we have created a unique position in the market. And with this evolution of the market and the additional focus we are putting on technology to create the next level of intelligence in energy and industry, supported by a very strong regional market where we bring all those solutions to our customers with an enhanced focus really on cost competitiveness and operational excellence.

I hope you've been convinced that we are going to take really Schneider Electric to the next level. And of course, all of that is translated by the strong ambition that Hilary and I have described, both financial and nonfinancial through our digital metrics. So digital metrics are extremely important to me and the team because that gives us an indication on how fast we are transforming our portfolio. And I'm really convinced with the strong leadership team of Schneider that you have seen during the day, we have everything in our hands really to deliver and execute this plan very, very fast. So again, on behalf of the management team, big thanks for you for spending time with us. Big thanks in your interest of Schneider.

And of course, I take the opportunity before we close to thank all our [indiscernible] team, the technology team of McLaren for hosting us today. And for you, Amit, my last word, big thanks for the great work you have done in IR. I'm sure many of you have enjoyed working with Amit. But of course, we count on Nathan to take that relationship to the next level. But thank you very much to all of you.

Thank you, all.

Good morning. This is the conference operator. Welcome to the Schneider Electric's 2025 Q3 revenues with Hilary Maxson, Chief Financial Officer; and Amit Bhalla, Head of Investor Relations. Thank you for standing by.

I would like to inform all parties that today's conference is being recorded. If you have any objections, you may disconnect at this time. [Operator Instructions]

At this time, I would like to hand you over to Amit Bhalla. Please go ahead, sir.

Well, thank you, operator. Hello, everyone, and thanks for your time to be with us this morning for our Q3 results. Without further ado, I will hand over to our CFO, Hilary Maxson, and then we come back for a Q&A session as well. Hilary, over to you.

Thanks, Amit, and good morning, everyone. Happy to be here with you all today to comment on our Q3 2025 revenues, and I'll also update you on our expectations for the rest of the year.

Starting on Slide #3 with a quick summary of our results. I'm happy to report another strong quarter with sales of around EUR 10 million. Energy Management continues with strong growth, close to 10% for the quarter. And in Industrial Automation, we turned to positive growth in the quarter and for the year-to-date, up 6% and 1%, respectively. And we're quite pleased to see the positive demand we've been mentioning in Discrete automation for the past couple of quarters, translating into good growth in sales. Overall, we were up 9% for the Q3, reflecting our strong portfolio positioning tied to electrification, automation and digitalization.

Before getting into some more details on sales, I'll make some comments on the demand trends we're seeing in our end markets. First, in buildings. And as you know, the majority of our exposure in buildings is to nonresidential where we continue to see good demand, particularly in technical buildings like retail and hotels. In residential, we start to see slightly positive demand globally, but with continued weakness in the U.S. and China. In Data Center, our pipeline and order trends remain strong, particularly in North America and China, with continued high demand from hyperscalers and strong and accelerating demand from new AI-related players.

In Industry, where we sell the full portfolio of Schneider, we continue to see demand trends in Discrete improving and in Process & Hybrid, we've returned to strong demand across industries. In Infrastructure, we continue to see strong demand trends, although somewhat stabilized against a high base. So net-net, we remain in a primarily strong demand environment with good improvement in Discrete automation and Process & Hybrid and some small signs of improvement in residential in some geographies. Of course, the environment does remain uncertain, and I'll address that in our expected trends later in the call.

Turning now to the details of our Q3 revenues. We finished the quarter at EUR 9.7 billion in revenue, up 9% organic year-over-year with particularly strong contribution from our Systems business. In terms of geographies, North America was at plus 14.5% organic with particularly strong performance in U.S. and Canada, driven by Data Center and services. Asia Pacific was up 6.4%, with China up low single digit and India up double digit. Western Europe was up 5% for the quarter and returned to growth on a year-to-date basis, with good growth in both businesses and most countries. And Rest of World continued with solid growth against a strong base of comparison.

FX impacts were negative for the quarter, driven by continued weakness in the U.S. dollar, the Chinese yuan and Indian rupee. Based on today's rates, we see a slightly higher full year impact than what we showed in the H1 with an estimated full year impact on our top line of minus EUR 1.4 billion to EUR 1.5 billion, and estimated impacts on our adjusted EBITA margin of around minus 50 basis points.

In terms of business models in products, which reflects our shorter-cycle business and sales through partners, we were up plus 3% primarily driven by volume with some positive pricing in North America in response to tariff headwinds, offset by continued deflation in China. In Energy Management, product growth remained at low single digit with good demand across most product offerings, offset by weakness in residential in the U.S. And we do see the good demand trends in Discrete translating into high single-digit sales growth in Products and Industrial Automation.

Our Systems business continues with strong double-digit growth, driven by continued strong demand trends, particularly in data center, power and grid and across other segments as well. Software and Services was plus 8% for the quarter with ARR at AVEVA at plus 12% and we saw a good contribution from AVEVA in terms of revenue growth after timing and transition impacts earlier this year. In Services, we saw strong growth in our EcoCare digital services and good growth in Field Services across both businesses.

Turning now to Q3 revenues by business and geography. Energy Management was up around 10% for the quarter to EUR 8 billion. We saw continued double-digit growth in North America, up 17%, with double-digit growth in U.S. and in Canada, driven by Data Centers as well as good demand in nonresidential buildings partially offset by market weakness in residential in both geographies. Mexico was particularly weak across end markets due to macroeconomic issues tied to tariff uncertainties. Western Europe was up 5% organic with good growth in residential and data centers against a relatively low baseline. Spain, France and some smaller countries contributed to the growth with low single-digit declines in U.K., Germany and Italy.

Asia Pacific was up 5%, with China up low single digit, driven by continued demand in Data Center with the building and construction market still subdued. India was up double digit with strong growth in Energy Management products. Australia was also up double digit, driven by demand in Data Centers with continued demand in residential. Rest of World was up 6% with double-digit growth in the Middle East supported by project execution and services.

Turning now to Industrial Automation. Sales were up 6% organic to EUR 1.7 billion with the improving demand trends we've seen in previous quarters in Discrete, translating into growth in sales plus good contribution from software. North America, where we have relatively lower exposure was still negative at minus 2% with some more mature markets of U.S. and Canada together around flat with a return to some growth in Discrete and growth in software, offset by weakness in Process & Hybrid due to some delays in decision-making from tariff uncertainty earlier this year. Mexico was quite weak due to tariff uncertainty impacting the economy there.

Western Europe was up 6% with a good return to growth in Discrete automation across all key geographies against a relatively low baseline. Process & Hybrid and software also contributed to growth with some weakness still in Germany. Asia Pacific was up 11% with China up high single digits, supported by strong growth in Discrete. India was up double digit, again supported by strong growth in Discrete, and the rest of Asia Pacific was also up double digit. Process & Hybrid sales were negative due to some delayed projects earlier this year.

Rest of World was up 6%, supported by project execution in Middle East, in Process & Hybrid and by good performance in Software. Discrete sales were negative, primarily in South America, where we had a high base of comparison.

Turning now to our own sustainability performance. As you know, this is our final year of our current Schneider Sustainability Impact program, and we continue to expect to finish at close to 9 out of 10 versus some very aggressive goals we set for ourselves at the end of 2020. Of note in Q3, the Zero Carbon project has officially reached and surpassed its 2025 target ahead of schedule. Our top 1,000 suppliers have reduced by 53% their operational emissions since 2020. This is an important step forward in our Scope 3 decarbonization journey and a powerful example of how we can accelerate climate action in our value chain.

Our focus on trust is also showing good progress, with 85% of our employees reporting their confidence to speak up a 2-point increase versus last year. This is a strong foundation to secure robust ethical standard everywhere we operate. And finally, we continue to progress on our long-standing commitment to provide access to clean electricity to all, over 60 million people now benefit from green electricity through our programs.

Before sharing our expectations for the remainder of the year, I'd like to highlight 2 successful financings completed in Q3 to support the India transaction. In August, we placed EUR 3.5 billion of bonds in the European market, EUR 2.5 billion fixed rate at 3.14% and EUR 1 billion floating. Then in September, we issued EUR 750 million in convertible notes at a 1.25% coupon. We believe this financing strategy, a balanced mix of fixed and floating rate bonds complemented by a measured level of convertible debt is well aligned with our capital allocation priorities. It enables us to optimize financing costs while broadening and diversifying our investor base.

Moving now to Slide 11 with an update on our market dynamics. I mentioned the relatively strong demand trends we see across our end markets earlier in the call, with a continued good demand dynamic in Discrete automation expected in the Q4 and all 4 regions are expected to contribute to growth. The environment does continue to be one of heightened uncertainty, and I called out a few areas during the call where that's impacting us in the Q3.

The last point I would make is that in terms of tariffs, we are seeing our actions and pricing take some effect in Q3, and this will continue in Q4. However, we wouldn't expect to fully offset tariff and inflation with pricing within this calendar year. With this backdrop, we're reiterating our full year 2025 guidance of growth in our adjusted EBITA of 10% to 15% organic driven by revenue growth of between 7% and 10% and adjusted EBITA margin improvement of 50 to 80 basis points.

Based on our current estimates, we'd expect to be towards the lower half of both of those ranges as already reflected in our currently published consensus. And you might recall, we had a strong Q4 2024, driven by an unlocking of the supply chain in North America. And accordingly, we have a relatively high base of comparison in Q4.

The last point I'll make is that we unveiled a new vision for the company at a customer event in Copenhagen last week to be the energy technology partner for all of our customers, to electrify, automate and digitalize every industry business and home. And we expect to speak more about this at our upcoming Capital Markets Day in December in London. And for those of you who haven't yet signed up, we included the link here and look forward to seeing you there.

With that, I'll turn the call back to Amit for Q&A.

All right. Thanks a lot, Hilary. And we'll get into the Q&A now. I want to make sure that we are getting a question from each analyst who might want to ask a question. So keep it to one question per person, please. Operator, let's get started.

[Operator Instructions] The first question is from Alasdair Leslie of Bernstein.

Actually a question on margins and mix. So Systems margins have moved up in recent years. I think Software margins have moved down. But how much of product margins step down perhaps sort of cyclically, if you could comment on areas like residential obviously, especially Discrete automation now that we're starting to see a bit of a recovery. If you could kind of provide any color there? And also actually on services, have you been improving services margins as well over the last few years?

Yes. So in general, I think that you can see over the last few years, we give a pretty decent gross margin bridge. Of course, we don't break out at the adjusted EBITA level. But it's true that Systems margins have been improving, particularly in 2023 and 2024 associated with pricing there. This year, Systems margins more normalized, so around more stable for the year as we have pricing that's more normalized around 1-ish percent.

It's true that software margins have stepped down associated with the transition at AVEVA, and we'd expect that to reverse itself as we come out of that transition in 2027. So in our 2023 Capital Markets Day, we've called out that over this time frame from '24, '25, '26, '27, we'd expect part of the time to see negative mix associated with that dynamic.

Product margins, in general, as you can see, we've had an overall improvement in margins with good pricing over the past year. So I would say that in general, product margins have moved with the group. Services, nothing to call out there. Actually, an area that we intend to focus on in terms of pricing in the future, but nothing really would have moved dramatically in services margins over the last couple of years.

The next question is from Andre Kukhnin of UBS.

I just wanted to dig into pricing a bit more in the comment on North America pricing improving to offset tariffs, but balanced out by China. Is this continuation of the H1 trend? And hence, does that imply that China headwinds have become a bit more severe? And can you give us reassurance so we could still get that kind of 1% to 2% price on products on the bridge in the second half?

So we did see an uptick in price in the Q3, particularly in North America, like I mentioned, offset with China. So there is a little bit of a different dynamic than what we saw in the H1, where we didn't really have much dynamic in pricing, I would say, across the regions. We would expect that acceleration in pricing, particularly in North America, to continue into the Q4 and actually beyond, but we'll also have an uptick in terms of tariffs in the Q4. So net-net, we don't expect to fully offset, like I mentioned, the impacts of both inflation and tariffs in this calendar year. That said, we would expect, like in prior cycles that we would offset those impacts over the coming quarters.

The next question is from Max Yates of Morgan Stanley.

Could I just ask about the Data Center business? You've obviously mentioned kind of double-digit growth. Would you be able to sort of help quantify that any further? And maybe by either talking about the kind of pure data center ex networks -- ex the network piece, how fast is that growing? And also, maybe if you could comment on the book-to-bill this quarter. Are we still seeing sort of positive book-to-bills in both Q3 and year-to-date in the Data Center business?

So we are seeing positive book-to-bills in the Data Center business, but also beyond the Data Center business, we see generally positive book-to-bill across the business models that we have in the Q3. In terms of the Data Center dynamic, we've mentioned strong double-digit growth. I know that, that doesn't give you the exact numbers. But I would say that here, we tend to look trailing 12 months, trailing 12 months in terms of orders and in terms of sales. We certainly haven't lost market share. So there's a couple of players that report directly on data center. You can take a look at those.

The next question is from Jonathan Mounsey of BNP Paribas Exane.

Maybe just the opportunity to sort of clarify the wording in the guidance. We've had some, obviously, clients today this morning looking at the message around you saying the lower half of the guide. And I think you did touch on this, but that's just to say that we're moving really to where consensus is, yes, because obviously, at the very lower end of the guide, that would imply a Q4 sales growth of something like 4%, which would be obviously a material deceleration. But that's not the correct interpretation. And also just on the scope effect, I think the guidance was EUR 300 million previously, it's now EUR 250 million. I think I understand that's due to some disposals that you've recently done. Can you just then update us on how Motivair is going? Obviously, the main part of the scope effect, how that's performing since you acquired it?

Yes. So we mentioned on the guidance that we expect to be towards the lower half of the ranges on top line and margin. I don't think any particularly new news there. I also mentioned that we feel comfortable with market expectation. Of course, though, we wouldn't give a point estimate. But at this time in the year, it's normal that we would give you some idea probably of what's a fairly broad range, particularly on the top line. So nothing to indicate that we feel that we would be at the bottom end of the range. But in general, we expect to be towards the lower half of that range and still within the range.

In terms of scope, yes, we made a couple of small disposals that are impacting the top line piece of that scope number. Motivair is continuing quite well. Nothing new to say there. In fact, I think on the overall scope, we raised the adjusted EBITA impact for the full year by 10 basis points. That's fairly reflective of both of those disposals, but also that Motivair is on good path and above the business plan that we'd originally expected.

All right. We'll take the next question. Can you please stick to one question per analyst, please.

The next question is from Martin Wilkie of Citi.

It's martin. Just on the tough comparables you talked about both for Q3 and Q4. Could you just tell us sort of how big that was in terms of specific projects? Or was it a particular region that gave you that tough comp for Data Center in Q3 of last year. And just to clarify related to that, when you talk about tough comps in the fourth quarter, is that also a specific data center comment or a broader comment?

So in the Q3, I guess you're referring to Data Center. We really tend to look -- Data Center is always lumpy. We never get caught up in any quarter. We really think that it's best to look at something like trailing 12 months or the last few quarters combined and our pipeline. So there, like I mentioned in the call, we feel very confident in the strong demand trends that we're seeing in data center, both in hyperscaler and the new AI-related players that we see entering the market. So nothing to do with the Q4. We continue with very strong demand trends there.

And I think we've mentioned that we feel comfortable with visibility in that space in the 18 months plus range, and that continues today. So I would say that we continue to feel very confident in the strong demand dynamics we see 12, 18 months in the Data Center. The Q4 is tied to -- we've had some issues. We talked about them for a number of quarters, I think, starting in '23 and in 2024 in North America products, where we were working out some issues in the supply chain, and those particularly impacted our Q4 of last year as we flushed out some sort of late order values that we had in our backlog. So nothing to do with Data Center.

The next question is from Ben Heelan of Bank of America.

I wanted to ask on Western Europe in Energy Management. You mentioned that you've seen good data center growth in France and Spain. Are you seeing the same sort of growth in Western Europe that you're seeing in North America? And can you give us an idea about how big the Data Center business is within Western Europe today?

So Western Europe, we saw some good positive trends in France and Spain, but clearly, Western Europe has not been tracking at the same pace as North America in terms of data center. I think at the beginning of this AI wave, probably that was normal. There's usually a big growth in terms of North America, and then we see the pickup in the Rest of the World. That hasn't happened so far in Europe to any big degree because -- and we've talked about it a number of times prior, there's some hurdles here in Europe that are causing issues from an execution standpoint, whether it's access to electricity, regulatory, permitting, these types of things. Those types of constraints continue in this market.

So while we see demand opportunities that might not be dissimilar from North America, although Western Europe, the size of the market is obviously smaller than North America. The demand opportunities are similar, but that's not yet translated into execution. Some few positive signs this quarter in France and Spain, but we wouldn't really be ready to say that we would expect there would be a full unlocking of that -- of those demands over the next couple of quarters. It's hard to say with a perfect crystal ball in Europe about whether and when hurdles will be overcome.

The next question is from Gael de-Bray of Deutsche Bank.

I suspect you will be talking more about this at the upcoming Capital Market Day. But could you already give us some details and highlight for us what's different with the new vision you have for the company, this vision of becoming the energy technology partner for all customers? I mean, what's different from, I guess, the company's purpose you had before?

So certainly, we'll be talking more about that at the Capital Markets Day, but we're really excited to unveil this energy technology partner vision. I think we're the natural company that's ready to move forward, really the right one for energy technology, including embracing energy intelligence. So all of that data across the energy backbone that we have in industries and businesses and homes.

So we'll speak more about it. It's not -- certainly not a revolution, right? It's a change slightly in what we're seeing. But we continue to be focused on electrification, automation, digitalization, more and more convinced that we're the player that is the real -- has the real opportunity to be the winner in that space and define it.

The next question is from James Moore of Rothschild & Co.

I wondered if I could go back to the orders, not revenue, the order environment for Data Centers. I didn't quite catch you earlier, Hilary. I think you talked about orders on a trailing 12-month basis and revenues double digit and a good pipeline, strong AI into digital. But would it be accurate to say that orders in data center networks declined year-on-year organically in the third quarter as they did in the second? And if that's the case, could you perhaps talk a little bit about regionally or product-wise, where that is?

No, we wouldn't say that they declined in the third quarter like they did in the second. And obviously, we don't give orders directly, but no, I can confirm that we didn't see a decline in orders in the Q3. From a trailing 12-month basis, which is probably better to look at, we're in the solid double digits. Again, we don't expect that we're losing market share in that space. Nowhere to call out in terms of regions, particularly just that data center orders tend to be a bit lumpy.

The next question is from Delphine Brault of ODDO BHF.

Yes. Can you provide a bit more color on your backlog. Can you confirm that it has increased despite the FX? And can you say which segments increased the most and which ones decreased, if any?

So in general, on an organic basis across both Systems, Products, and then it's not as relevant, but services and software, we continue to see an increase in backlog. So the way we would calculate book-to-bill, which is on an organic basis, we continue to see positive book-to-bill across both Products and Systems with a good improvement actually or an uptick in demand overall in the Q3 versus the Q2, if that's what the question is.

So net-net, we feel very confident about the underlying demand trends really across end markets, the only one that we called out is still uncertain is residential, which continues to be the case in U.S. and China with some signs of turnaround in the rest of the geographies, although I would say that in many cases, that's against a relatively low base, but still some signs of turnaround. So net-net, we see a strong demand environment across the end markets.

The next question is from Phil Buller of JPMorgan.

It's a question on Data Centers. I'm wondering how the capacity expansion is progressing. I think some were perhaps hoping for slightly higher revenue growth from DC. So is that a bottleneck in any way? Perhaps you can share what your capacity utilization levels are or how lead times are evolving, please?

I think in the data center space, we would say that lead times are generally back to normal across the industry, both ourselves as well as the just less than a handful of key competitors that play in this space have done some increases in capacity over the past few years, not just for data center, but for data center and electrification. So I think we would say lead times are generally back to normal there.

That said, like I mentioned, we continue to have strong double-digit demand in this space. So we will continue to add capacity. Again, we don't think about it just for data center, but certainly, that's part of it. In electrification and data center related, they generally tend to be the same aside from a few special categories like liquid cooling at the pace that we anticipated in the past couple of years, so we continue to have good CapEx investment in capacity, again, just related to our medium-term guidance of 7% to 10% growth.

The next question is from Daniela Costa of Goldman Sachs.

I just wanted to follow on the question of the low end of the range in organic growth, again, sorry to labor on the point, if I didn't understand very well what you said before. But I guess, take your answer has comparables are tougher, which mechanically we can see. But what exactly changed between when you wrote the statement or when you reiterated the guidance at the first half and at Q3, that led you to that incrementally mentioning the lower end, specifically, I guess, for margin understood what you mentioned on pricing, but for growth specifically, can you just elaborate again?

So now we're in the Q3, I think we would normally either qualify or tighten up those guidances, which is actually the intention here. So we expect to be towards the lower end. We would never give a point estimate, obviously, for revenues for the year, but we expect to be towards the lower end of that range and not at the low end of that range, and we'll expect to finish within what we would expect to be, therefore, a slightly tightened expectation for the end of the year. And aligned, we said, comfortable with the market expectations as they are today, tied with the published consensus.

Yes. And Daniela, just to clarify, to be more precise, what we've said is towards the lower half of the range, not towards the lower end. So it's towards the lower half of the range, if that helps.

The next question is from George Featherstone of Barclays.

Similar question relative to Daniela's just then, but on the margin. Obviously, you've lowered the margin expectation on organic basis towards the kind of lower half 2. How much of that is a function of Systems versus Product mix on the headwind side? And how much of it is really a function of that price versus cost on tariffs?

So no different than what we said in the H1. What would we expect? We do expect continued negative mix for the full year, although you can see that we have an uptick in Products in the Q3 that we would expect to continue in the Q4. And then I think we've already talked about the fact on the H1 that we expect that we will continue to see an uptick in pricing, but not to fully offset the impacts of tariffs and inflation in this calendar year. We would expect to make that over the next few quarters. So not so different than what we said in the H1. And again, I think we feel comfortable with what we show in the published consensus on our website.

The next question is from Benedict Uglow of Oxcap.

I wanted to follow up on the pricing commentary. Can you just give us a little bit more color of the pricing actions that you have been taking? And I guess what I'm trying to understand is in terms of offsetting the impacts, is this simply a timing effect, i.e., that your price actions have lagged market developments or whatever -- however you want to put it? Or is this to do with regional differences? And I remember in the first half, you called out China. Is that still a pressure point? So just is this to do with timing of your increases? Or are there regional variations basically?

I think we would talk to 2 areas differently, and I think we have for actually quite some time when we talk about pricing. In China, probably not new news, and I don't think it's tied to Schneider directly nor even just the industry. There's general deflation in that economy, which we also feel. So we continue to have deflation there, not different than what we said in the H1, not necessarily different than certain cycles that the country has gone through in the past. And I think you probably saw that the government has put it back on one of the key points on their agenda, the economy.

And I think anti-involution and all these buzzwords are all around speaking through trying to deal with the deflation in that economy. So nothing particular to call out there aside from we do have some impacts of what is a deflationary economy at the moment. We tend to offset that with productivity. The Rest of the World, we look generally for pricing to offset inflation and to offset tariff increases. We mentioned in the H1 and actually after the H1 that we had some slow start to that this year. So it's more of a timing issue. I don't think any particularly new thing to say now in that, yes, we continue to have a bit of a slow start, but no concern that we would cover the impacts of tariffs and inflation over time over the coming quarters.

The next question is from William Mackie of Kepler Cheuvreux.

My question is focused on Industrial Automation, very positive flip from the earlier negative growth this year to 6% growth in Q3. To what extent do you think this is driven by a real shift in underlying demand, particularly in Western Europe or Asia Pacific rather than a normalization of what you might call distributor behavior and the normalization of stock levels, for example.

So here, we do expect that this is tied with demand. I think we can see there's a lot of signals in the world, although it's against a relatively low base that we start to see some turnaround in industrial demand worldwide. I would also mention that the demand that we see is more related to the end user than the distributor side. So in consumer packaged goods, warehouses, HVAC. So we start to see good turnaround in demand in various of the segments.

So we do feel comfortable that both in Process & Hybrid, which anyways is end user related. So in oil and gas and mining, we start to see a good turnaround in demand after some delays at the beginning of this year, probably tariff related. And in Discrete automation, we see that real demand from various segments across the end user.

Maybe another couple of questions if there are.

The next question is from Mr. Kulwinder Rajpal of AlphaValue.

So just wanted to zoom in a little bit more on the Discrete automation side in China in particular. So what were the key trends that shaped the high single-digit growth that we saw there? And also, how do you see those trends as we move into the end of the year and then a couple of quarters into '26?

Yes. So in China and Industrial Automation, and I didn't exactly hear the entirety of the question, but I believe it's about China and Industrial Automation. I mentioned that China is up high single digit in Industrial Automation overall. That's supported by strong growth in Discrete. We still don't see a big turnaround in Process & Hybrid there, but we're relatively quite a bit larger in Discrete than we are in Process & Hybrid. And we see that across various segments. So for us, again, a good signal of the end user demand that's had some pickup in the Q3.

But no one-offs, right? Is that correct? .

No, no. This is Discrete. So it doesn't really lend itself well to one-offs. This is a broad spread demand in the product side of the business in Discrete.

The next question is from Eric Lemarie of CIC Market Solutions.

A question on Data Centers. So obviously, the market is very dynamic. Do you see any new players trying to enter the market with aggressive behaviors in the U.S. or in Europe?

Well, we mentioned that we see a growing dynamic with some new AI-related players. We won't get into too much detail there, but we do see some newish, I guess, players in that market, and that's something that we might expect to continue to see a bit on a going-forward basis.

But my question was more new competitors for Schneider Electric?

No. Actually, here, I can confirm that there's just a few competitors, you can see them, NVIDIA quotes them. It's good actually to have a number of strong players across that space. There's a lot of technology plays changing. But indeed, actually, the level of players is still below a handful that tend to play in the big pieces of the data center space. So when you talk about the AI factories and all of the things that are going on there, there's only a few players that are playing in that space. We don't see more entering except maybe in some small niche products or something. But in what we do, no, we continue to see just that less than a handful of technology players that are in the space.

All right. Thank you, Eric. I think maybe we stop here. And just a reminder to everyone, I mean, we already spoke about it on the call, but we look forward to discussing further at the Capital Markets Day, which is in touching reach. So the Investor Relations team is around to clarify any further questions that you might have. But thanks for your time, and have a good rest of the day.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.