Ferrari N.V. (RACE) Q3 2023 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to the Ferrari Third Quarter 2023 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Nicoletta Russo, Head of Investor Relations. Please go ahead.

Thank you, Nadia, and welcome to everyone who is joining us. Today we plan to cover the group's Q3 2023 operating results and the duration of the call is expected to be around 60 minutes. Today's call will be hosted by the group CEO, Mr. Benedetto Vigna; and group's CFO, Mr. Antonio Picca Piccon. All relevant materials are available in the Investors section of the Ferrari corporate website. And at the end of the presentation, we will be available to answer your questions. Before we begin, let me remind you that any forward-looking statements we might make during today's call are subject to the risks and uncertainties mentioned in the Safe Harbor statement included on Page 2 of today's presentation. And the call will be governed by this language. With that said, I'd like to turn the call over to Benedetto.

Gracias, Nicoletta, and thank you everyone for joining us today. Before we begin, I would like to thank all the women and men of Ferrari for their outstanding work, all our clients for their continuous trust in our brands, and all our partners, suppliers, dealer and sponsors with whom we have continued to strengthen our relations. In the current macroeconomic context, we are continuing to execute our business plan in line with the trajectory outlined in the last year during our Capital Market Day. And Q3 was once again a quarter full of achievements. Three are the key messages we want you to focus on. One, record Q3 financial result sustaining our greater confidence towards year end guidance. Two, product and infrastructure development are well on-track in particular on the electrification side with the full electric Ferrari in prototype phase and the e-building proceeding as planned. Three, continued strong brand momentum forward towards by 2 new model launches, the 296 Challenge and 499P Modificata, an outstanding event attendance in Italy and in the United States. So let's start with financial results and the business performance of our company. Q3 was a record quarter. We have all key metrics showing a double-digit growth versus the previous year. For the first time, the revenues were above €1.5 billion, 24% up versus the prior year. We have a shipment 9% up. All geographic regions grew in the first 9 months. EBITDA about €600 million and EBIT over €420 million were both up about 40%, driven by product mix and personalization. And last but not least, the industrial free cash flow generation was more than €300 million. These results are further proof of the strength of our business and the increase and the visibility towards the end of the years led us to revise upward the full-year outlook. The vitality of our business is also confirmed by the current order book, which remains at the highest levels across all geographies and models, covering the entire 2025. And before you ask, I can already tell you that in the next few months we do not expect the order book to continue to grow since all models are substantially sold out, but one: the Roma Spider. Last week at the dealer annual meeting, I spend one full day with dealers from all over the world and I received a very positive comments on the market sentiment. And by this, I mean throughout, from products to client interest and to brand experiences. And again, anticipating one of your question, I would like to underline that during the dealer annual meeting of last week, I specifically spent time with our dealers in Mainland China, which confirmed that the traction of the brand continues to be very strong. We are also making progress on the future product pipeline. All projects are on track as planned. And in particular, I'm excited about the full electric Ferrari, now a prototype in testing mode. I had the pleasure to see and try it. And unfortunately, I cannot tell you more. You have to be patient. And as you know, this is part of the desirability of our brand. I'm also very proud of how the e-building is progressing towards the inauguration expected in June next year, exactly 2 years later after our Capital Market Day. After finishing the walls, we started already to install the equipment to produce the selected strategic component and by Q1 2024, we will finalize the assembly line of the electric engine and e-axles. Talking about our product offering, last week we unveiled 2 new standing models, both inspired by our racing DNA. In fact, the recent Finali Mondiali at our Mugello race track provided the ideal stage for the unveiling of the latest 2 addition to our portfolio. The first one is the 296 Challenge. It is an ICE car that makes full use of experience and expertise gained by the company in the field of International GT racing. The result is a car in several respects very close to the 296 GT3 which debuted in January 2023. And the second is the 499P Modificata. It is a strictly limited-series track cars. And the most high-performance closed-wheel car ever offered for gentlemen driver use and already fully allocated. We are the only brand offering its client the possibility to drive the newest racing car only 6 months after the debut on the racetrack in Sebring inaugurating the new Sport Prototipi Clienti program, which joins the F1 Clienti program. Once again, the Finali Mondiali, the unique reunion of the Ferrari community to celebrate the final events of our client experience on-track. So the participation of almost 30,000 motorsport enthusiasts among clients, tifosi and employees. In talking about our community, I'm also proud to mention that the Ferrari Gala, which took place in New York in mid-October, this event was an opportunity to highlight our brand's influence on sports cars, on racing, lifestyle, and beyond, celebrating also the unique bond and share the values between Ferrari in the U.S., which goes back to the earliest days of our histories in the '50s and those strong today. This event was an opportunity to share a series of the unique experiences with such a passionate community. During this 3-day exhibition, we got the opportunity to get 130,000 visitors at the New York City's Hudson Yards complex, the one that you are seeing now in your chart. And an exclusive charity auction during the Ferrari Gala dinner, which raised more than $7 million. And the funds will be devoted to projects supporting education in the community because we believe that giving back is a moral obligation. This quarter, we also had the many client experiences on-road among which the Ferrari Cavalcade Classiche is the first Ferrari legacy tours dedicated to the beautiful F40, which is saw the participation of 40 owners of F40 from all over the world. Moving to the racing world. In the World Endurance Championship, after the victory of the 24 Hours of Le Mans, the Ferrari 499P confirmed to be competitive with the podium in Italy, a fourth and fifth place in Japan, and we are looking forward to our return to action for the grand finale of the season with the 8 hours of Bahrain this coming weekend. The Formula 1, the recent volumes and improvements provide us the boost to prepare ourselves for the next season. Clearly, we need to keep improving and recover our technical gap. And thus, on one side, we are strengthening the team and the Fred. In another side, we are enlarging our racing manufacturing infrastructure, which will grant us highest development speed and quality. I saw this facility this morning. We are also pleased with the renewal of the multi-year partnership with Puma will become our Formula 1 premium partners starting from next year. We also strengthened the licensing agreement with Puma for Ferrari-branded products and they became the suppliers of our racing teams and all other racing activities. Continuing lifestyle, on top of this partnership that I just mentioned with Puma, Ferrari showcase its latest the Spring/Summer 2024 looks during the Milan Fashion Week, a powerful collection perceived from many editors as their absolute favorite so far. We also continue to strengthen our presence with successful activation in Pebble Beach and in New York brand event by creating our own pop-up for our clients to increase collection, awareness and visibility. And we registered a record level of visitors in our museum reaching over 650,000 visitors since the beginning of January, confirming the strength of the brand and the passion of our community. For your reference, in the whole 2022 we had about 620,000 visitors. So, we still have a couple of months to go till year end. And before leaving the stage to Antonio, one comment on our important sustainability journey. While many activities continue to run at factory level to address Scope 1 and Scope 2 emission, and we are looking carefully at energy efficiency and recycled material use, we are engaging our suppliers, our dealers to address Scope 3 emission. Indeed last week during our dealer annual meeting, for the first time we also awarded the most active dealers in reducing their CO2 emission with the Green Award. And we will keep this Green Award also for the years to come to keep wide attention on this topic that is so important for our company. And then now, I leave the stage to Antonio to enter into the earnings details.

Thank you, Benedetto. And good morning or afternoon to everyone joining us today. Starting on Page 4, we present the highlights of the third quarter results, a quarter which confirms the positive dynamic saw in the first part of the year and represents a further improvement compared to the expectations we had. Our strong business performance was sustained by a rich product and country mix and high personalizations, leading to a remarkable double-digit growth in revenues, profitability, and industrial free-cash flow generation. With shipments single-digit higher than last year, revenues were up roughly 24%. Adjusted EBITDA increased 37% with a 38.6% margin. Adjusted EBIT was up 42% with a 27.4% margin, supporting a strong industrial free cash flow generation of €300 million. On Page 5, you can see the details of the Q3 shipments. In the quarter, we continued to serve the highest order book that Benedetto commented and we are all very proud of. Backed by the above shipments in the quarter, reflected our volume and product allocation strategy for the year and by geography. Thus, EMEA and Americas were up versus the prior year. Deliveries in Mainland China, Hong Kong and Taiwan decreased by a few turns and rest of APAC was substantially flat year-over-year. All regions are up in the first 9 months with Americas, benefiting from a larger share of allocations year-over-year and visibly supporting our margins. The increase in shipments was driven by the 296 and SF90 families together with 812 Competizione A and the Purosangue, which were in their ramp-up phase. In the quarter, the F8 Spider was approaching the end of its lifecycle. And the allocations of the Daytona SP3 continued in line with planning. Lastly, in the quarter, the hybrid wave on total deliveries further improved reaching 51% and surpassing that of ICE for the first time as a result of the SF90 and the 296 families contribution. On Page 6, you can see the net revenues reached posting a strong 26% growth at constant currency. The increase in cars and spare parts was driven by higher volumes, a richer product and country mix, as well as stronger personalizations and pricing. Personalizations further increased in absolute value in the quarter and reached approximately 19% in proportion to revenues from cars and spare parts mainly driven by paint, leverage and the use of carbon. Sponsorship, commercial and brand reflected higher sponsorships including Formula 1 and World Endurance Championship racing activities and higher commercial revenues as a result of the better prior year Formula 1 ranking. Engines revenue declined in line with the reduction of supplies to Maserati. And please note that from Q1, 2024 we'll stop reporting such item in the bridge analysis as a result of the supply agreement coming to its natural end. Currency had a negative net impact this time mainly reflected the Chinese yuan and the Japanese yen, and secondarily the U.S. dollar dynamic. Moving to Page 7, the change in adjusted EBIT is explained by the following variances. Volume, positive and reflecting the increase in shipments. Mix and price strongly positive for €170 million thanks to the very favorable mix, both product mix sustained by the Daytona SP3, 812 Competizione A and the SF90 families, and country mix driven by Americas. And obviously to the increased contribution from personalizations and pricing. Industrial and R&D expenses grew €63 million, mainly due to higher depreciation and amortization, and raw materials and component cost inflation. SG&A were slightly negative for €10 million, mainly reflecting the company's additional development and digital infrastructure. Other was positive for €17 million, mainly reflecting higher commercial revenues from the better prior year Formula 1 ranking and new sponsorships. The total net impact of currency was negative for €23 million. With the positive net support of these variances, we reached remarkable EBITDA and EBITDA margins that we mentioned. Turning to Page 8, our industrial free cash flow generation for the quarter was strong at €301 million, reflecting the increased profitability partially offset by capital expenditure for €205 million, in line with our product and infrastructure development, and consistent with the full year target of approximately €850 million, an increase in net working capital, which reflect a seasonal decrease of trade payables during the past summer as a result of our decision to carry higher inventories and accelerate our capital expenditure in the previous months. To be noted that the net contribution from advances collected on our future deliveries, including the start of French models in certain countries, was positive, but very limited in the quarter. Net industrial debt at the end of September, decreased to €233 million, reflecting the solid industrial free cash flow generation in the quarter, partially offset by €194 million of share repurchases. To conclude on Page 9. We upgrade the guidance for the full year on the back of another very positive quarter. Q3 earnings were supported by an extremely favorable product and country mix enriched with personalizations. In addition, it benefited from timing on cost mainly related to racing in a more favorable U.S. dollar dynamics compared to our previous expectations. We expect this positive contributions to be visible also in Q4 despite the planned lower volumes allocation, higher D&A linked to product life cycles, continuing inflationary pressure, as well as a significant seasonal increase in rising expenses on one side for the development cost for the 2024 Formula 1 car, and on the other, the logistics expenses for the last overseas races or for the season. All of the above augurs well for 2024, and we are confident and ready in front of its challenges. As we anticipated during our Capital Market Day, next year we expect a normalized revenues growth after the very strong start of the business plan, which will be explained front loaded. That said, we are obviously conscious of the strength of our margins, which is there and in line with our plans. Many thanks for your attention and let me now turn the call over to Nicoletta.

Thank you, Antonio. Nadia, we are now ready to start the Q&A session. Thank you.

[Operator Instructions] Now we're going to take our first question. And the first question comes from the line of Adam Jonas from Morgan Stanley.

There was a bit cutting out there. It's Adam Jonas. Can you hear me?

Very well, Adam.

So to comment, first question on your order book you said that you don't expect the order book to grow because you're basically sold-out. So does this mean that you're only going to take new orders at a pace that replaces your deliveries? Or you -- or you're just not taking any new orders? I'm just curious if this is unprecedented or if you're aware. I know you're relatively new to Ferrari, but whether you're aware of the situation happening before?

No, no look, thanks for the question, Adam. So last year -- in the last years, we had a stronger increase of order book. We expect these order book not to grow at the same speed for a couple of reasons. Number one, we are allocating final tail of Purosangue. So it's almost gone, let's say. And we cannot take orders on the -- on Roma Spiders. Clearly, we have at the special version, but the special version, let's say, are all allocated as well as the 499P Modificata. They are all allocated, but so we remain confident about the traction of our cars. I was with -- at Finale Mondiali with many clients. There were 600 clients last weekend and they were literally in love with our track cars. But clearly the speed of growth order book will not be the same as in the past. We have many things. Let's say we have less model to offer to the clients because they eagerly took everything we offer them. So it's a good challenge for us to keep challenge -- to keep, let me say, delighting them with unique car.

And maybe as a follow-up. Can you remind us how that works for pricing, the mechanism from the time an order is placed, let's say, at the far end of your order book late 2025? Tell us how what is the expectation that one of Ferrari customer would have for the price paid prior to configuring versus your ability to work with them, including potentially higher prices? Not just because you can because obviously you want to treat the company -- you want the customer to promise of value. But just remind us in during times when there is very-very tight order book and it goes very-very long out, how -- confirm that you don't lock in pricing and kind of historically, how that could move, if you follow the logic of my question?

No, I think I follow. What I want to tell you is that it's true the order book is pretty long. I have to say that during last years, we gave a clear priority to all our dealers to engage the client. Also with on one side experiences, on the other side is with the pre-owned cars. So I have to say that and that's what also what I said to the dealer last week in Florence. I thanked them because they did what we were committing, what we were asking them to do. And in terms of pricing flexibility, like you said, it's always you have to find the right balance in increasing the price of what is already contracted versus also not upsetting the client. I think we have the bond. And let me say the link and understanding of the client is such that we can continue to manage in the same way we did so far. So I do not expect, honestly, big troubles over there, Adam.

And the next question comes from the line of Thomas Besson from Kepler Cheuvreux.

I have a couple of questions, please. I'd like to start first with the level of your revised 2023 target. When you compare it with 2026 targets you showed us at the Investor Day 18 months ago, so clearly you've done better than you are assuming for '22. You're going to do a lot better than you were assuming for '23. So the question is simply, is there a plan at one stage in February or maybe in June next year when we visit your EV plant to eventually raise the '26 targets? Or are you going to leave us with these '26 targets for longer? That's the first question. The second, you have fully sold everything you're going to make until the end of 2025. Can you talk about the impact this has on your residuals on existing vehicles on the road? And share with us the share of used vehicle sales in your cars and spare parts revenues and explain us whether this is going to increase? You plan to control a higher proportion of your used car business in the future or not?

So I take the first one. Thomas, thanks for the question. So we confirm the plan we shared with you one year ago. You have to wait still, let me say, a few quarters more than your visit maybe next June before we update our plan. So this is -- we will not review this before '25, okay, the year '25. So we keep -- we want to do what we committed in front of our shareholder to do in 2022. The second, I will start and then Antonio will add as he believes are appropriate. It's true that we are sold out. As I said, this is helping a lot on the pre-owned market. And I have to say that we see the pre-owned market pretty healthy. In some sense, yes, it can help to sell spare parts. But I would say that the thing that we see is not happening as originally we planned at the beginning of the year. I mean, it's going better than we plan. It is the personalization. The spare part, correct me Antonio, but it's pretty in line with what we saw. No?

Absolutely. And maybe I can complement on this. In terms of pre-owned vehicles that we sell, it's really limited to the cars that we use for our events, for introducing the car, per se, but in terms of commercial strategy, so in terms of volume is really limited to a small number of pieces every year. In terms of interest for controlling the market, this is not for us. It's obviously for our dealer. And we encourage our dealers, to become more and more present in the pre-owned business. That's certainly an area of further potential development for them.

Can I maybe have just a quick follow-up? Would it make sense for you, given that you've already sold almost everything you're going to make, to already start selling the BEV products you plan to show us in '25 before showing it to customers or do you want to show it first to customers?

No, we will show the BEV in Q4, '25 as planned. So everyone will see, let me say, in that quarter, apart from the people that are working here, obviously, that have to see to make it happen. So it's Q4 '25, Thomas.

And the next question comes from the line of Stephen Reitman from Societe Generale.

A question first of all on the guidance for 2023. Just with simple maths, it seems to be that after a 28% margin, adjusted operating margin in the first 9 months of the year, if we take the lower end or for the 26.5% -- at least 26.5% or more, that suggests the margin could be as low as 22% in the fourth quarter, which seems very, very low compared to the momentum you've shown. And the kind of -- maybe the sort of currency adjusted underlying margin of 29.4% that you showed in the third quarter for FX impacts and hedges. So if you could maybe talk about the headwinds that you're anticipating in the fourth quarter. Obviously, we know this is a very conservative guidance you always give. And my second question is about Formula 1. And could you update us on the status of how you are with have you fully now replaced all the sponsorship that you lost, obviously Mission Winnow and Velas? Now you have a full roster, including your main sponsor. I saw you took on Virtual Gaming World, but does that now mean now you're fully -- your car is fully livery and you have everything you need?

I take the second one. Stephen, thanks for the question. And then I will ask Antonio to comment on the first one. So let me say in this way. In the last 3 years, we have been able to lower depend sponsorship wise. We have been able to lower the dependence on, let me say, on a single sponsor. Okay. So if in the past this single sponsor was accounting for more than 60% of revenues, and now if I take the biggest sponsor in our basket it's no more than 13%, 14%. So I would say that on the sponsorship wise, we have been able to enlarge the sponsor base by lowering also the dependence on a big one. So this is the answer to the Formula 1. And then Antonio.

And Stephen, I think the reasoning is the one I try and explain in words in my speech. If you look at Q4, what is different compared to the previous quarter is in terms of volumes, lower allocation to the fourth quarter. It's already design that way since the beginning of the year. Secondly, we have a specificity in terms of the overall seasonality of the spending, particularly R&D expenses to the P&L for raising. If we normalize for that, even at the EBITDA margin level, we get much more in line with the rest of the year. In addition, if you go to the EBIT margin level, then you should take into consideration that DNA are going to grow in the Q4. And this is due to 2 elements, one is the start of production of a couple of new models. And the second one is our some projects that we are going to start depreciating. That are more related to our infrastructure development of the sales. And thanks for complements on being conservative.

And the next question comes from the line of Giulio Pescatore from BNP Paribas.

And first one, I want to come back on a comment made by one of your competitors. I know you don't comment on competitors, but it was striking because they were calling out weakness in luxury cars demand, especially in North America. And what they said, it seemed very stark contrast with whatever you're saying today. So I'm not asking you to comment on competition, but just what do you think is making the difference here? Why your demand is so much healthier and resilient than some of your peers? Then second one, just a clarification. The track cars you launched, those don't count towards the 15 models expected to be launched by 2026 and the 4 models for this year? Just a clarification on that. And then very last one, the 499P. I mean, can you give us an indication on volumes and price and when do you expect deliveries to happen? And is there any reason to expect these cars to be less profitable than the limited edition ones you have launched in the past?

So I start from -- so these 2 cars, they count in the 15 models also because despite the fact that they look like something else, I mean we had to put a lot of resources in engineering, in managing this product. So they count. The 296 Challenge is only ICE, is not hybrid well, well -- but there has been a lot of work done by our colleague in the engineering in the factory to make it happen. The 499P Modificata, it's a car that comes in few 10s of it. And it is a car that, as I said, will offer our gentleman driver the possibility to drive the same experience of our, let me say, pilot that won a few months ago in Le Mans. And I would say that I want to share with you this comment that I heard for me gentlemen drivers. Last I heard in Mugello last week. No, they were very happy to have the possibility to test themselves on a racetrack with a car that, by the way, does not have even the balance of performance. So if, let's say, our drivers, when they are racing in the World Endurance Championship, there is a balance of performance. So they cannot go faster than they would like. The gentlemen drivers, since it is in its own, it can do even faster, so he can enjoy even more the speed of this car. And then the first question, why we believe we are resilient? I would like to answer the question -- the answer, sorry, in 2 parts. I think when we're talking about Ferrari car, we are talking about an ultra-luxury car that is also addressing maybe demographics that is different from other brands. But the second I have been -- in these 3 years, 2 years, I have seen and I've met many people that are touching our brand, the [indiscernible]. And they have seen an attachment, a sense of bonding that is really unique. I mean, I was in Mugello last weekend, I was in Pebble Beach. And I can tell you, Giulio, that right after the car was shown, it was fully allocated. I mean the car -- there was a client close to me that started to cry, literally. The bond we have with our customer, I think, is something unique and for which I will never -- I will always, let me say, thank them. Clearly, our people are doing their best, but our clients are giving -- they're trusting us. And I would always thank them for this kind of trust. So this is the long answer to your question. We are talking about different kind of people. We are talking about the kind of unique sense of belonging, sense of bonding of this client to our brand.

It's very clear. I hope he didn't start crying because he saw the price tag, but yes.

And the question comes from the line of Monica Bosio from Intesa Sanpaolo.

The first one is on the shipment allocation for the next year. I know that you cannot disclose it, but I just was wondering if you are still keen to keep a share towards China in the region of 10% or more. My second question is on the SF90 XX. Are you planning to get some advances in 2024 from the SF90 XX? And the very last one is an housekeeping question on the financial charges. Can you, Antonio, explain me better the impact at the financial charges side in the third quarter and an expectation -- rough expectation for the full year please?

Monica, so SF90 XX yes, we'll take advanced payment 2024. The rest is Antonio.

Yes, absolutely. In China, I think we stick to what we said at the Capital Market Day, meaning for us, China is a market around 10% in terms of share of our annual deliveries, 2024.

For the next year?

Yes. In terms of the impact of the purchase of the bond, it creates the gain on sale, which is simply due by the difference between the pricing of the bond at the time we booked it and the pricing at the time we repurchased it. So it's €8 million financial income that we booked in Q3, and which is reducing the financial charges net for the first 9 months. As a result, for the rest of the year, we expect to be much lower compared to what we were used to in the previous years. So about half the amount that we booked.

Now I'm going take our next question. Just give us a moment. And the next question comes from the line of Susy Tibaldi from UBS.

My first one is about inflation because you once again have been mentioning how inflation has been. It remains a headwind and it's been now well 11 months since your price increase earlier in the year. So I was wondering if it's something that you are contemplating for next year, or if you prefer to adjust to the pricing of the new cars, so purely through the mix? Secondly, when we think about your medium-term guidance and what has changed since the Capital Markets Day, I guess on the positive side we have seen a very resilient demand, better personalization trends, these price increases. And while on the negative side, it's been mostly the higher inflation. Is this the right way to think about these moving parts or is there something else we should take into account? And then thirdly, a more technical question, but can you give us some color on why your gross margin was much weaker in this third quarter despite the very strong mix?

Antonio, you take the question?

Yes, sure. Inflation assumption, we are thinking of price increase next year. I think we do not have just pricing for cars. I mean, our overall revenues are much wider in principle to the extent needed and subject to the conditions that Benedetto mentioned during his first answer today. I think we remain flexible and look at how costs are proceeding in order to move pricing and eventually take a decision on that going forward. Second, I think you really named which are the main different elements compared to what we had in mind at the Capital Market Day last year. And so far I think the overall impact, particularly of personalization and pricing on new model, has more than offset the debt coming from cost inflation. Gross margin weaker, it depends really you should not look at that on a quarterly basis. Overall, the product mix and the country mix during a single quarter make a difference obviously together with the level of personalization of the cars entailed. So we're going to take a look at that, but look at that on a wider period of time and you'll see certainly an improvement 9 months-over-9 months.

And our next question comes from the line of George Galliers from Goldman Sachs.

The first question I had was just with respect to how to think about mix in 2024. Obviously, a lot of exciting product to come and you're in the process of ramping the Competizione A and the Purosangue. Is it safe to assume that mix next year should be positive relative to this year given that product cadence? And the second question I had, Benedetto, if I may, was with respect to the electric Ferrari that you mentioned earlier, obviously a very exciting product for Ferrari. However, a few other luxury premium car makers have noted that at the very top end of their product ranges, the customers, particularly in China, have a strong preference for internal combustion engines as similar to a watch. They believe the mechanical elements have a higher level of craftsmanship and value compared to electric and digital offerings. To the extent you have discussed the Ferrari EV with certain customers as a project, have you received any similar feedback? Or do you believe that whatever car Ferrari produces will have similar level of desirability irrespective of the power plants that you put in it?

So I take the second one. So let me make an introduction, George. I think that you have to look at the way you use the technology. The technology may be the same, but what is making the difference between one company and another is the way you use the technologies. Today there are many objects, I don't mention which one, beyond the cars that are all using the same technology, but at the end of the story, one is more successful than the others. It depends how close, how that product is addressing the real, in that case, needs of the final client. What I can tell you, what I can tell you and is one of the question also, I am asking the client what is their feedback when they ask some other electric cars. Well, it's clear 2 things. One, we in our company did well in 2022 during the Capital Market Day to tell that we will make the 3 kind of propulsion: the red I see, the blue, rather than the green. Why? Because we want to leave this freedom to the client. And 2, we have a client and that's what they are telling me. Some of them, they will not take the electric car. Some other will take both. Okay? Some other will get into Ferrari World, Ferrari Family I would like to say, because of electric car. I have in mind 3 clients, okay, with whom I had a dinner. They were saying I'm pushing up for sustainability. I'm pushing a lot in my family. I have a company. I created a company in this direction. For me, the way to get in this beautiful, fantastic family is through the electric Ferrari. I cannot get in without electric Ferrari. So we will have 3 kind of people. And that is the reason why the recent development on technology landscape, I think it's giving -- is a good confirmation of our strategy. And I have to say that if you want the expert I had in the other business to manage technology transition has been helping and it will help in this direction. The first one, the product mix.

Yes, sure. George, I think it's maybe too early to speak about 2024 in such a detail since we haven't finalized the allocations. But if you ask me gut feeling where we should be considering the product range that we have and obviously assuming same level of personalization, I should bet at least on having the same similar mix to this year. So not such a jump that we are witnessing in 2023, compared to 2022. We know that last year was mainly a volume here. The product mix this year is much richer. Next year will be too, but not at the same distance as we witnessed from last year to this one.

And the next question comes from the line of Martino De Ambroggi from Equita.

I have one short-term and one long-term question. The first is on the full year guidance because you revised upwards by more or less €100 million this year your EBITDA guidance. And considering the drivers you commented, I don't know if I'm right, but I suppose Formula 1, okay, was positive, but a small personalization is by far the most important contributor because, in my view, the mix was already predefined at the beginning of the year. So you know exactly more or less what to produce. So am I right in assuming that the personalization is the big difference between the starting guidance and the current one? And still on the margin is the Purosangue now is in ramp-up phase, probably finalized the ramp up. Should we assume is accretive in terms of margins? And if you have an update on the volumes that you expect? Last time you guided for less than 10% of total. I don't know if there is a more precise indication at this point of the year.

So, Martino, I'll take the second one and the first, Antonio. So first of all, we said 20% over the year, that's the limit of the Purosangue. Yes, we are in a ramp-up phase, but we expected that the margin are in line with the rest of the family. Okay?

And on the first one, Martino. Yes, I think you mentioned, personalization is probably the main positive surprise that we had. We it's also fair to acknowledge the fact that we had a positive support also and it is right, compared to our initial expectations. That obviously helped.

Okay. So I was referring on the volumes for the current year for the Purosangue because this year obviously is by far less than 20%.

Okay. Thank you, Martino. I misunderstood, because for the year to count the limit is 20%, yes. This year will be lower because it's a ramp-up, yes.

Okay. And the long-term question is I know you do not want to comment on your 2026 guidance, but consensus is already in the region of €2.9 billion at €3 billion EBITDA. So what are your thoughts about these projection for consensus, both second Bloomberg at both FactSet and I suppose all other providers?

Look, I think I have to reply in the same way I replied to your colleague. So we will upgrade and review the messaging, let's say, the plan in '25. I think that now we are fully -- I'd like to say, Martino, that we are 4 wheels on the ground to make it happen the plan that we shared with you. So let's keep going. We've 4 wheels on the ground.

And the next question comes from the line of Henning Cosman from Barclays.

I think both have become follow-up questions by now, but I'm going to try and ask anyway. So the first one on the personalization again. I think last time we discussed that you have about 3 months of visibility. And it's great to see that you've now even adjusted to the top end of the usual range of 17% to 19%. I believe you said 19% for the Q3. The question is how, do you see that trending into 2024? I think previously you were expecting this to perhaps even go to the bottom end or outside the bottom end of the range, but the dynamics seem to suggest this is going in a more positive direction if anything. So if you could please comment on if you have changed your view as to as to how you see that develop going forward. And the second question I guess is again on the mix, maybe I can ask you a bit more specifically because we are all, I think, scratching our head about the strength in '24 when you have the Daytona volumes. Maybe we could start there if you could say. Is it going to be a lot more Daytona? So will you perhaps continue with the run-rate of 30 or so per quarter and 24 as well, and stretch it over a longer period because now with the SF90 XXs and also the 299 Modificata, the 296 Challenges, it seems there might be a pretty big jump actually, Antonio, if you allow me, relative to your earlier comment?

Look, we have -- we confirm that for the Daytona will be around 34 per quarter. So it's exactly in line with what -- we saw what we said before. When it comes we set the percentage of personalization, we expect that this 19% of Q3 to be more in the range of 18%. But maybe you recall I mentioned at Capital Market Day that were planning around 17%, which was the usual run rate. And this is actually one of the reasons we have been positively surprised this year. We have seen a stronger penetration of personalization and of rich personalization on the current product range. It's difficult to bet as of now as to the continuation of this trend for the following month, given the reduced visibility that we have. So that will be the answer of Benedetto who reflects his view.

Yes. We can also say no that we are preparing, but we want at the end of the story is the client and we are planning for this, let's say, 18%.

And just to clarify the 30 to 40 Daytonas, that's also your target run-rate for 2024, correct?

Yes, yes that was the answer. Yes, 30, 40 per quarter also next year.

Okay. And some allocation of the Modificatas as well already next year, the 499?

Let's say we will start, but I don't want to be too much specific on the quarter, but sure I mean we are -- we will start also -- let's say, we will start also the 499P Modificata.

And the next question comes from the line of Anthony Dick from ODDO BHF.

My first question is on the residual values and the pre-owned market, which you've already alluded to. So we've seen a correction in the residual values in the past few months, still above pre COVID levels, and you describe them as healthy, but still trending down a bit. I know this is an important indicator for you. So I'd be interested in having your view on this, and how does it affect your volume strategy going into 2024? Obviously not a topic for the limited series of Purosangue, but I was wondering if you could comment, for example, on the demand and order momentum for your more accessible models like the Roma Spider. And then I have a second quick question on the decision to approve the use of crypto-currency for the purchases of Ferrari cars. So could you maybe provide some color on the extent to which you think this can enlarge your customer base? And also as a follow-up, these crypto-currency investors have not always perceived as the most stable customers. So how do you intend on managing this? Do you think it could create more volatility in your residual values?

So for the crypto-currency, we do not expect this to create any volatility because at the end of the story, there will be a conversion one-to-one real time. What I can tell you, and I was discussing with the responsible the commercial and marketing officer here, we already started to have some client and I have to say not only the people below 35 years old or the 40 that are taking their own, let's say, the present order with the crypto-currency. So it seems to what I think that I mean from the first signal, it is very well appreciated. And so I think it was a good move to allow people to be -- let's say, to enter our family or to use, let me say, the crypto-currency to pay for a Ferrari because we make easier the process. And they also appreciate the fact that we use the crypto-currency that by using stake let's say is pretty much sustainable. Okay. The proof of stake instead of proof of work, it allows to be sustainable. When it comes instead to the pre-owned. Well, what I can tell you is two things. One, we did in our history many models, 250 models, if I consider it since the beginning. For us, they are all important, the new and the previous one. We have to -- the Roma Spider is the new. The pre-owned are the previous one. Well, they are all important for us, and we need and we will take more and more care of them. We want to increase the share of the pre-owned cars that go through our official dealers. We want to make sure that the car that go through great dealers is reducing more and more. And what we are doing with the team here on the commercial side is exactly meant to reach this goal. I also have to say, and I wanted to share with you, that when I visited some dealerships in the last quarters, it's becoming more and more frequent that the dealers are having people whose [MBO], whose yearly KPI are based on the number on the pre-owned car that they keep purchasing. So I think there is even more and more attention also from our dealers and clearly also from us because we will keep always the number of car limited. So, as I said, the new car we make as well as the one that our colleague before us, they have the same dignity and they must be cared in the same way like being all children of the same family.

The last question for today comes from the line of John Murphy from Bank of America.

Benedetto, just kind of follow-up to that in sort of the follow-up to your backlog being so strong, you think about price and mix, I mean, there is opportunity to manage that sort of on an interim basis. But over time, do you think you need sort of like the "entry level product" like a Roma? I mean, it's a beautiful vehicle, but I mean would that be the kind of product that might not make it into the product portfolio in the next 3 to 5 years? And then the second question is, as you see the strength in the used market, is there a possibility to start doing personalization in the used market, maybe around wheels and interiors? Obviously, you can't do paint there or maybe you could, that could actually augment revenue and support residuals further in the secondary market.

Thank you, John, for the question. Yes. I'll start from the second one, use the market. We see this trend also to do personalization in the pre-owned. They may change the rim. They may change something in interiors, but also some client they want to add, for example, some protective layers on the paint. Last week, I was visiting the location where we apply this protecting layer. And one of this car was exactly a pre-owned cash that was where we were applying a protective layer. The second, I believe that the Roma is a good entry model. I think that we don't need to go lower. I think that the strategy for a company like us that is playing, I would say, in the ultra-luxury space is such that we needed to make our car always more and more emotional, always more and more unique in terms of performance, in terms of, let me say, astonishing the signs and always set in mind the sustainability. I think these are -- there are 3 wheels that must work in the same way at the same speed. The driving emotion, driving trails, the performance driven by engineering and the beauty of the car driven by design. These are the 3 wheels that we'll keep considering. And I think we already have an entry level with this Roma.

Thank you. Dear speakers, there are no further questions for today. I would now like to hand the conference over to Benedetto Vigna for any closing remarks.

So thank you all for your time today, and also for your very insightful question. Thanks a lot. The strong Q3 result and also the desirability of the brand that we've been debating during this one hour are basically fueling our confidence for the development of the year and also looking-forward. So thanks a lot again and I wish you a good afternoon or morning. Thank you so much.

That does conclude our conference for today. Thank you for participating. You may now all disconnect. Have a nice day.