Earnings Call Transcript - RACE Q4 2025

Operator, Operator

Good day, and thank you for standing by. Welcome to the Ferrari 2025 Full Year Results Conference Call and Webcast. 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.

Nicoletta Russo, Head of Investor Relations

Thank you, Nadia, and welcome to everyone who is joining us. Today, we plan to cover the group's full year 2025 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 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.

Benedetto Vigna, CEO

Thank you, Nicoletta, and good morning and afternoon to everyone. We just returned from San Francisco, where we showcased to journalists from around the world the interiors of our visionary new fully electric sports car, the Ferrari Luce, displayed against the iconic Transamerica building. This reflects Ferrari's commitment to exceeding expectations and envisioning the future. We chose this location for three reasons: it signifies the strong connection between San Francisco and Italy, as the building was the headquarters of the Italian-founded Transamerica company, and it is located in Little Italy; it is close to our partner LoveFrom; and the crown jewel atop the building, a powerful light, was illuminated for this special occasion. 2025 has been an exceptional year for us, characterized by significant achievements, including the launch of six new sports cars, showcasing our commitment to product diversification and technology neutrality. This year also marks the successful conclusion of our previous business plan, with all financial targets met ahead of schedule, while laying the groundwork for our new strategic plan. At our Capital Market Day on October 9 in Maranello, we shared our future initiatives to drive brand success into the next decade. Along with the Ferrari Luce, we have added five new models featuring internal combustion engines and hybrid powertrains, such as the elegant 8-cylinder Ferrari Amalfi, the hybrid 849 Testarossa Coupe and Spider, and the groundbreaking hybrid 296 Speciale and Speciale Aperta. Our clients are at the very center of our operations; their satisfaction stems from our product quality and the bespoke experiences we create for them globally. Our client-focused approach led us to reintroduce a physical interface in our steering wheel, enhancing the overall driving experience. This reflects our belief in the importance of balancing technology with a human touch, as evident in the Ferrari Luce interiors. Moreover, our racing division achieved a remarkable victory with the 499P hypercar, winning the 2025 FIA World Endurance Championship and both World Manufacturer's and Driver's titles, a first for us in 53 years and just three years post-return to endurance racing. This success showcases the extraordinary results we can achieve through unity and collaboration at Ferrari. In lifestyle sectors, we made significant strides in providing luxury experiences, highlighted by record attendance at our museum, drawing nearly 900,000 visitors in 2025. Our collective achievements are mirrored in our strong financial results, which include over EUR 7.1 billion in revenues and EBIT growth exceeding EUR 2.1 billion, along with industrial cash flow surpassing EUR 1.5 billion. These accomplishments are a testament to the dedication of our teams worldwide, and to recognize their efforts, we are implementing a competitive annual award of up to EUR 14,900 for our employees in Italy. Our business's strength is supported by robust demand dynamics and visibility. We have a solid order book extending into 2027, and recent auctions confirm stable residual values, providing structural support for our brand. Looking ahead to 2026, our priorities include fully integrating the Ferrari Luce into our product lineup, with the upcoming world premiere on May 25 in Rome, coinciding with the anniversary of Ferrari's first victory. Alongside completing the Ferrari Luce reveal, we will introduce four new models, continue the construction of a new paint shop, and test our sports cars on e-Vortex. In racing, we will maintain our commitment in the World Endurance Championship and approach the new F1 regulations with the lessons learned from the previous season. Additionally, our sailing adventures with Hypersail will progress, with an innovative boat expected to launch before year-end. In lifestyle, we will open two new flagship stores in London and New York, designed to enhance client activation and enrich the Ferrari experience. Our financial goals for 2026 represent a critical milestone toward 2030, aiming for continued growth in alignment with the strategies discussed at our Capital Market Day. We embrace the necessary discipline in this current landscape, while remaining confident in our long-term prospects. Now, I'll pass it over to Antonio to discuss the fiscal year 2025 results. Thank you.

Antonio Picca Piccon, CFO

Good morning or afternoon to everyone joining us today. In 2025, we achieved strong growth, improved our margins, and continued to invest in our future while dealing with the challenges of the current work environment. All our business segments made positive contributions to this growth. In the sports cars division, we saw an improved overall mix compared to last year, which helped us manage the changes in U.S. tariffs effectively. Our revenues from racing increased due to new partnerships and the extensive efforts we made on sponsorships. For our lifestyle segment, we maintained the right growth pace while investing in its development. In the fourth quarter, our lower-than-expected cost base and better product mix allowed us to exceed our 2025 guidance. This improved cost base was further enhanced by an R&D government grant received before year-end and lower racing expenses due to our fourth-place finish in the Formula 1 championship ranking. I would like to underscore that we met our 2026 financial targets outlined at the Capital Markets Day of 2022 a year ahead of schedule, alongside the completion of our EUR 2 billion share buyback program. Additionally, we provided an overview of our shipments in 2025, which were intentionally kept flat year-over-year, as well as the evolution of our product portfolio as we move into 2026. It is noteworthy that in the past year, the Dodici Cilindri family was launched and reached global distribution. The SF90 XX family reached its peak, and the Daytona SP3 concluded its limited series run in the third quarter, while we began delivering the first units of the F80 in the fourth quarter. We previously indicated that a significant model changeover would start in the second half of 2025, and this will become apparent over the upcoming quarter. This year, we introduced seven new models, a record number, that have entered production and distribution phases, shaping our deliveries and geographic allocation throughout 2026. The 296 Speciale and the 849 Testarossa families will replace the 296 and SF90 families, while the Amalfi will succeed the Roma. Additionally, the F80 has begun its ramp-up phase, and deliveries of the Ferrari Luce will commence in the fourth quarter. The net revenue bridge indicates an 8% growth compared to the previous year at constant currency, translating to a 7% growth when accounting for currency headwinds, primarily from the U.S. dollar and Japanese yen. The increase in cars and spare parts revenue was driven by product and country mix, along with higher personalizations, partially offset by lower deliveries of the Daytona SP3. Personalizations represented about 20% of total revenues from cars and spare parts and were particularly significant for the SF90 XX family and the Purosangue, driven by the adoption of carbon and special paint. Our sponsorship, commercial, and brand revenues also saw substantial growth, thanks to increased sponsorships, improved lifestyle activity performance, and higher commercial revenues linked to our better prior year Formula 1 ranking. Other revenues rose due to sports-related activities and financial services. The changes in EBIT can be attributed to various factors. The volume contribution remained nearly flat, with a slight positive change related to spare parts. The mix and price performance were notably positive, supported by our product and country mix, along with increased personalizations and higher sales of the 499P Modificata. Overall, despite a challenging comparative base and the phaseout of the Daytona SP3, our product mix remained robust, bolstered by our higher-end offerings, including the SF90 XX and Dodici Cilindri families. Industrial costs and depreciation and amortization were both lower, but this was partially offset by increased racing and sports car innovation expenses. SG&A rose due to higher brand investments and the development of our organizational and digital infrastructure. Additionally, other segments were positive, primarily from racing and lifestyle activities. Our percentage margins improved despite the dilution from increased U.S. import duties and currency headwinds, with an EBITDA margin of 38.8% and an EBIT margin of 29.5%. Our industrial free cash flow for the year exceeded EUR 1.5 billion, up by about 50% from last year, supported by rising profitability and favorable changes in working capital due to the collection of F80 advances. Capital expenditure focused on product and infrastructure development partially offset this, particularly with the construction of a new paint shop and the completion of our new Evo test track, alongside net cash interest and tax payments reflecting the Patent Box regime's evolution. This impressive industrial free cash flow generation enabled us to increase shareholder returns by approximately 30%, exceeding EUR 1.3 billion through dividends and share repurchases. Looking ahead to our 2026 targets, we expect another year of consistent growth based on specific assumptions. We plan to implement our model changeover throughout the year, contributing to a further positive product mix supported by the ramp-up of the F80 and new models, despite reduced deliveries of the SF90 XX family and the 499P Modificata. We anticipate stronger product mix changes in the second half of the year compared to 2025. Personalizations are forecasted to remain around 20% of revenues from cars and spare parts. The growth in sponsorships and lifestyle activities will continue to bolster our top line. However, increased investments in brand development and the lifestyle retail network, along with rising expenses for digital transformation, will push SG&A higher. We also expect an increase in depreciation and amortization aligned with the production start of new models. Regarding our bottom line, we estimate the effective tax rate will be around 23%, as we continue to benefit from the current Patent Box regime only. The underlying assumption for the U.S. dollar exchange rate stands at approximately 120 against the euro, leading to headwinds compared to 2025, including hedges. Our industrial free cash flow generation will be sustained by profitability, although capital expenditures will be slightly higher than in 2025. Today's strong results reflect the uniqueness of our business model and its inherent flexibility, which continue to offer us strong visibility and confidence in our future despite ongoing global challenges. Thank you for your attention, and I will now turn the call over to Nicoletta.

Nicoletta Russo, Head of Investor Relations

Thank you, Antonio. Nadia, we are now ready to take all the questions. Thank you very much.

Operator, Operator

And now we're going to take up the first question, and it comes from the line of Ed Aubin from Morgan Stanley.

Edouard Aubin, Analyst

I have two questions. The first one, please, on the margin bit in Q4. Antonio, you talked about the guidance of '26, which you expect your operating margin to be flat to up. And you gave some brief indication on the phase-in. Should we understand that your operating margin should be flat to down year-over-year in H1 and then up in the second half? Related to that, if you can come back on the growth and net impacts on the FX? My second question would be on the ramp-up of the F80. Are we right in understanding that it could kind of follow a similar pattern to the Daytona? If that's the case, I think, on my calculation, I think you implied about 200 units year 1, 360, and then 240 in year 3. If you could comment on that, that would be really helpful.

Benedetto Vigna, CEO

Thank you, Edouard. So Antonio?

Antonio Picca Piccon, CFO

Yes. As to the margins, I think what we can tell you is that, but first of all, marginal bit in Q4, I think I have explained lower cost base, and I mentioned what is driving that. Then the positive impact of the product mix that has been slightly better, driven by the number of the Dodici Cilindri family as such, that have been delivered in the last quarter. What we can tell you about 2026 is that we expect the mix to be compared to 2024 to be stronger as a variance in the second half of the year. The cycle also is clearly next year and not yet at full global distribution, but we expect to have a steady improvement over the course of the quarters.

Operator, Operator

Now we're going to take our next question. And the question comes from line of Jose Asumendi from JPMorgan.

Jose Asumendi, Analyst

Two questions, please. Can you comment on '26 on the guidance? Are you expecting mix on pricing to offset higher SG&A and high industrial costs and R&D, basically making some pricing to offset the other deal headwinds, which include SG&A industrial cost and R&D? My second question, can you comment please on CapEx and R&D expenditure in '26?

Antonio Picca Piccon, CFO

Yes, we expect the mix and pricing to more than compensate for costs. Regarding capital expenditures, we anticipate they will be slightly higher compared to 2025. As for research and development, we expect the expenses to remain fairly stable, although there may be some volatility related to expenditures in Formula 1 due to new technical regulations and grants for the teams concerning the financial regulations for 2026.

Operator, Operator

And now we're going to take our next question. And the question comes from the line of Monica Bosio from Intesa Sanpaolo.

Monica Bosio, Analyst

The first one is if you can share with us which are the models that are driving your order book the most, if you can share with us? And if you have already seen an impact in terms of new clients from the Amalfi?

Benedetto Vigna, CEO

Thank you, Monica. So the models that are driving the order book are the models that we announced, that we unveiled last year. This is true for the '26 Speciale, for the Testarossa and the Amalfi. Number two, yes, we see that for the Amalfi, we see new clients new to the brand approaching us. We have done a deep analysis, and we see that several clients are coming from some specific brands that like the performance and the elegance of our cash.

Monica Bosio, Analyst

Perfect. Is there any differences in terms of geographical distribution as for these new clients?

Benedetto Vigna, CEO

There is a difference. There's a good point. There is a difference because we are showing the Amalfi with some time delay in the different countries. So where the country has been already the car. So it has been already shown. Clearly, the people could see in reality of the car; when you see in reality the car, and this is true for all the cars we make, it is much different from when you see on the display. So it's a matter of, I would say, as the time goes and we show the car, we see more and more interest from the people.

Operator, Operator

And now we're going to take our next question. And it comes from the line of Stephen Reitman from Bernstein.

Stephen Reitman, Analyst

Could you provide more details about the level of F80 shipments in the last quarter of last year? Additionally, can you discuss the trends in residual values, the used vehicle market, and dealer attitudes? I’ve heard there has been a significant increase in used vehicle sales in the U.K. after you reduced shipments of new cars in that market by about 30% in 2025. Also, how are you monitoring your dealers' confidence in the brand?

Benedetto Vigna, CEO

Okay. I'll start with the last question. The confidence in the brand is very strong. We're seeing that this confidence is as strong as ever and has actually strengthened in the second half of the year due to a lot of innovation arriving with new products. Regarding residual value, I want to emphasize two points: it is stable and solid. We've mentioned that in the U.K., the residual value is also stabilizing because we reduced shipments. Now, concerning the F80, I want to highlight one thing: we began production as planned, and we shipped a few units in Q4, which are now with customers worldwide. However, we won’t specify the exact number of units shipped to homes. What I can share is that in Asia, the U.S., the U.K., and the Middle East, customers are enjoying our F80, and we even know that some people are enjoying it without realizing it.

Stephen Reitman, Analyst

If we consider the guidance you provided, stating that supercars and Icona accounted for about 1% of your total shipments, simple calculations suggest that this could lead to a maximum of around 200 units, including approximately 177 of the Daytona SP3. Would that be an accurate interpretation?

Benedetto Vigna, CEO

Look, I don't want to comment about specific numbers. I think that the percentages are a good representation of the reality. But I think you know what is the pattern of our supercar and Icona. You can make some assumptions, but I don't want to be specific on the number of cars we shipped and where we are going to ship F80-wise exactly.

Operator, Operator

Now we are going to take our next question. And it comes from the line of Horst Schneider from Bank of America.

Horst Schneider, Analyst

First one is on foreign exchange rates. So maybe you can provide some indication of what's going to be the impact on the bottom line this year? My question would be also if you consider maybe pricing FX to customers. I know you don't do that so far. But maybe you consider doing that? The second question would be about the CO2 targets. We had this proposal from the EU Commission in December, and they maybe relax the targets. There's no ICE anymore in Europe. Does it change any of your plans, maybe on projects that you say maybe in 2, 3 years, you can have again less BEVs? Instead, you have more PHEV or more ICE vehicles even. I mean, the fact or just in Europe, there is emission regulation left in the U.S. if we don't have any CO2 regulation anymore. So I think it comes back to the ratio also you guided for the CMD.

Benedetto Vigna, CEO

Thank you, Horst. Let me clarify this. We began by discussing Bank of America, and since you are from there, we appreciate your input. We'll provide you with the answer. Antonio will handle the first question. On a serious note, during our meetings with the EU Commission, we have Elisa on our team who works with me and Antonio, and she can give us the detailed background. When we read articles or reports, they don't always capture the full picture. As of now, there are no changes to our situation regarding regulations. Additionally, we have not altered our plans and will continue with our existing strategy. Antonio will address the FX aspect.

Antonio Picca Piccon, CFO

Based on the assumptions I outlined before, meaning with the U.S. dollar at 120 against the euro and with the current spot rate for the Japanese yen, we are assuming, as of now, considering the hedges that we have in place that we built over the last 12 months on a rolling basis to have a headwind of about EUR 200 million that are already in the numbers we have been giving to you.

Horst Schneider, Analyst

Do you consider that pricing, or is that generally not something you do?

Antonio Picca Piccon, CFO

It is the flexibility that we have contractually; we haven't assumed to use it in the numbers we gave you.

Operator, Operator

And now we're going to take our next question. The question comes from the line of Thomas Besson from Kepler Cheuvreux.

Thomas Besson, Analyst

I have two questions, please. The first one, coming back to your Q4 average selling prices that were high. I understand you don't want to give the exact number of F80. Can you help us maybe with the share of XX products or the D2C that were there explaining the strengths of the ASP, given that I also know that your hybrid share was, I think, the lowest in 2 or 3 years in Q4. Typically, they tend to have higher prices than the average car. That's the first question. The second, could you please talk about the F1 related headwinds for 2026, because of both the new regulation and last year's ranking?

Benedetto Vigna, CEO

Antonio, I think you can manage both.

Antonio Picca Piccon, CFO

Certainly. In Q4, the average selling price was impacted by the performance of the XX and Dodici Cilindri models, which exceeded our expectations. We have carefully managed this during the transition. I prefer not to disclose the exact percentage of units sold, but they were indeed better than our previous forecasts. Regarding the F1 headwinds, we have factored in the current budget caps for both chassis and power units into our numbers. Traditionally, we anticipate stronger seasonality in Q1 and Q4, but due to the entirely new technical regulations this year, we are allowing for some flexibility. This reflects the volatility I previously mentioned concerning the implementation of financial regulations set for 2026.

Operator, Operator

And we are going to take our next question. And the question comes from the line of Andrea Balloni from Mediobanca.

Andrea Balloni, Analyst

Yes. A couple of questions. The first is about geographies. Even though deliveries to the U.S. declined a little bit more materially in Q4, that was a measure put in place in order to address any potential decline in residual value. But now you've mentioned to be pretty solid. Or exactly about this market? My second question is about sponsorship, which were quite supportive last year. What should we expect in 2026?

Benedetto Vigna, CEO

I think these are 2 questions that Antonio can manage.

Antonio Picca Piccon, CFO

Geographic mix, the Americas going down, has nothing to do with the strength of the demand. It's just model changeover, and you will see it further in 2026. The second one, sitting in 2026, we expect, as I mentioned before, to have further support to revenues and EBIT growth.

Operator, Operator

Now we'll proceed with our next question. And it comes from the line of Martino De Ambroggi from Equita.

Martino De Ambroggi, Analyst

One question on the free cash flow. Clearly, I understand the CapEx is slightly higher, I suppose, below EUR 1 billion. But net working capital is expected to have a positive contribution for down payments also in '26 or not? Just to understand the strength of the free cash flow. The second is on the EBIT bridge because in '25, the block referring to other items was up 110. If you could elaborate on what your expectation for '26 on this block, although it is probably more difficult and a mix of different drivers?

Antonio Picca Piccon, CFO

Yes, regarding free cash flow, CapEx is indeed higher. We anticipate net working capital to be more neutral in comparison to 2025, as this year we experienced significant advances collected on the F80. For the EBIT bridge in 2025, I expect it to be positive again, primarily driven by sponsorship and generally increasing revenues.

Martino De Ambroggi, Analyst

Okay. So net working capital, in any case, not negative. There is not a reversal of the trend?

Antonio Picca Piccon, CFO

There is a reversal, but we would expect other components to come to compensate.

Martino De Ambroggi, Analyst

Okay. And very last Q1 and Q2, should we expect a flattish year-on-year performance? Or in any case...

Antonio Picca Piccon, CFO

The level of detail as of now. We'll see as we go.

Benedetto Vigna, CEO

We were one to give a yearly update.

Operator, Operator

Now we're going to take our next question. And it comes from the line of Tom Narayan from RBC.

Gautam Narayan, Analyst

Tom Narayan from RBC asked about the foreign exchange impact on the 2026 EBIT guidance, noting a projected EUR 200 million effect with a negative EUR 25 million impact in Q4. He pointed out that the dollar experienced significant depreciation in Q4 '25, which he estimated to annualize to EUR 100 million. He acknowledged that the yen and the reversal of hedges are also factors but questioned if EUR 200 million is too high. He requested a deeper explanation to gain better clarity. Narayan also noted that while he understands it's a floor, he wanted to know how the long-term guidance from the October Capital Markets Day should be interpreted, especially given the expectation for 7% EBIT growth for '26 despite the foreign exchange challenges, compared to the earlier guidance for 4% to 6% EBIT growth.

Benedetto Vigna, CEO

Tom, I'll take the second one, and then for the FX, Antonio will be very precise. When we gave the visibility for 2030, we did so after 60 months. If I go from October 9 until February 10, it's only 4 months. So if we change momentum because 4 months are gone after 6, in your shoes, I would be worried. We stick to what we gave you on October 9, and we feel comfortable about the number that we shared with you at that time. For FX, Antonio can comment about the EUR 200 million impact.

Antonio Picca Piccon, CFO

Tom, when we speak about the foreign exchange impact on the EBIT, we always take into account the element of hedging that obviously, you can see, but we built in terms of position over time, so on a monthly basis and having in mind a horizon of 12 months. When you look at the Q4 2025, we have the positive impact coming from the hedges put in place basically between the end of 2024 and the beginning of 2025. When we look at 2026, we do not have the benefit of hedges put in place at that rate at the time it was 105 or in that region. Now in Asia during the course of this year, we've been starting to build a position from 115 up to 120 in terms of FX. So the impact is clearly much more negative. Hope this helps.

Operator, Operator

Now we're going to take our next question. And it comes from the line of Michael Tyndall from HSBC.

Michael Tyndall, Analyst

Mike Tyndall from HSBC has two questions. First, regarding what Tom discussed about 2030, Antonio, do you believe that 2026 is the most challenging year in the plan? Considering you won't have the full allocation of F80, the numerous model changeovers, F1 cost inflation, and FX, do you think this will be the toughest year, or is there something ahead that we may not be aware of? For the second question, I suspect I'll be asked to wait for the answer, but Benedetto, have the repeat clients experienced the Luce fully? If they have, what are their thoughts or feedback? I'm curious since I assume you've maintained close communication with them, so I would love to know what their experienced customers think about that product.

Benedetto Vigna, CEO

Thank you. I want to note that the client has not yet seen the Ferrari Luce in its full form. They have only experienced the interiors so far. We’ll have to wait until May 25th to see the complete unveiling. The feedback we are receiving is very encouraging. Many attendees expressed their happiness because we are the only ones offering all the modernization. It's great to hear they view themselves as part of the community. Regarding the price, we have an idea in mind, but that will be revealed after the full unveiling process, consistent with how we've approached all our models in the past. To address the earlier question, you implied that 2026 would be the most challenging year in the plan. I want to clarify that we have consistently stated, and Antonio made it clear during the Capital Market Day, that the business plan is stable and linear. So, Mike, please don’t assume that 2026 will be the toughest year in the plan. 2026 is a year of growth. Remember this.

Operator, Operator

And now we're going to take our next question. And it comes from the line of Anthony Dick from ODDO BHF.

Anthony Dick, Analyst

Yes. The first one is a quick technical one on the Q4. You mentioned two tailwinds on the R&D side, the government grants and the lower F1 ranking. Could you please give us the magnitude of those two impacts? And do you still expect to receive government grants in 2026 also? My second question is on something else you mentioned that I hadn't heard before with the spare parts business. Could you just remind me actually what that represents for you and what is driving the increase in spare parts and how relevant it is for your business? The last one I would have is on the cost side. You also mentioned lower costs here. So just trying to understand what are the drivers. And maybe actually, just a quick last one on ASP. So I know you won't provide the F80 deliveries. But I was wondering if there was anything else that drove the ASP increase in Q4 other than the SF90 XX and the 12Cilindri maybe tariffs impact? Or also, if the F80 contribution offset or was larger than the Daytona SP3 contribution last year?

Benedetto Vigna, CEO

Thank you, Anthony. I'll address the second question regarding spare parts. The increase in demand for these parts is primarily due to a growing number of people enjoying the cars. As usage increases, so does the need for spare parts, which explains the rise in their demand. Additionally, there was a price increase last year. However, a significant trend shows that our clients are utilizing their cars more frequently. For the other three questions, Antonio will provide specific details.

Antonio Picca Piccon, CFO

Yes. Regarding Q4, the R&D support mentioned is a grant linked to the development contract we announced in 2022. We expect additional grants in the coming years. Combined, R&D and ranking account for just over half of the positive change from our initial guidance. There will be lower costs in 2025 compared to what we anticipated. Overall, industrial costs improved, and there were slight improvements in SG&A as well. For Q4, tariffs were somewhat less of a concern compared to Q3, as most were based on the 15% rate effective after August 1. I believe we've addressed everything related to this question.

Anthony Dick, Analyst

Maybe just on the spare parts one. Could you give us a sense of what it represents as a part of the car and spare parts business, revenues?

Benedetto Vigna, CEO

It's a good try, Anthony, but we don't share this detail. What I can tell you is that really, the people are enjoying more and more, the Ferrari. The product portfolio is going in that direction to let them enjoy more and more. Thus, they have to buy more spare parts. I would stick to this, really.

Operator, Operator

And now we're going to take our next question. And it comes from the line of Christian Frenes from Goldman Sachs.

Christian Frenes, Analyst

Most of my questions have been asked, but I have two more. Your R&D capitalization ratio was a bit lower than I expected. Can you provide some insight into what we should expect for R&D capitalization moving forward? Is this the new norm, or should we anticipate a return to longer-term averages? My second question pertains to residual values. Could you clarify whether you have taken any additional actions outside of the U.K. regarding the softening of residual values? Is that accurate?

Benedetto Vigna, CEO

The second one, what we said, also in the past, what I said a few minutes ago is that in U.K., the residual value is stabilizing also because we reduced the number of cars we gave in that part of the world. This is the action that was put in place. It's nothing new on this front. For the capitalization ratio, Antonio?

Antonio Picca Piccon, CFO

Yes, it actually depends on the overall capital expenditure. The development of the expenses for innovation that, as you know, are mostly related to significantly our rating activity. So it very much depends on that moving part. That in turn depends on the financial regulation from the FIA. I would bet on stabilization of the ratio going forward.

Operator, Operator

And now we're going to take our next question. Just give us a moment. And the question comes from line of Henning Cosman from Barclays.

Henning Cosman, Analyst

I was hoping to come back to the shape of the plan through to 2030 again. I'm just conscious that you're guiding about 29.5 now, the guide for 2030 is above 30. I'm just wondering what you're seeing in the back half of the plan because of the top line growth keeps on coming through, I suppose, already through the operating leverage. We would expect to be above. So I think you're now seeing 20% personalization in '26. I think you might have expected that to decline a little bit sooner? Is it most debt and the high sensitivity to personalization because you still think that's going to go down closer to 19 or something like that later on in the plan? Or anything at all, because I think most of us are sort of wondering are you now on a steeper trajectory and will you perhaps decline in the latter half of the plan? Is that at all conceivable? If we could just discuss that in as much color as you can.

Benedetto Vigna, CEO

Thank you, Henning, and I appreciate your compliment to the team for our achievements. Regarding the plan's direction, I believe I grasp your concerns, which others have also raised. However, I think it's vital for a company to be consistent and to achieve results with focus and discipline. As I mentioned earlier, changing our target after just four months from the 60-month goal would undermine our consistency, even though we provided a threshold. What we've communicated is a target we are confident we can meet. We are making certain assumptions, and I don't believe it's the right time to adjust our long-term outlook after only four months. It would not be credible for me, Antonio, or anyone at the company to shift our perspective based on a temporary spike. We appreciate your confidence in us and your compliments. However, we need to stay focused and maintain our discipline. When adjustments are necessary, it won't be after just a few quarters. Let's continue working in that direction and adhere to the plan we've shared.

Henning Cosman, Analyst

And can I ask one more on the Luce?

Benedetto Vigna, CEO

Yes.

Henning Cosman, Analyst

I think I read an interview with your Director of Marketing. I believe the wording was something like you'll be quite selective, and you only give it to people who appreciate it. I believe what I read into that is you are going to be quite restrictive with the number of unit sales. I think we also remember that you deliberately said it's not going to be a special, but I was wondering if we could perhaps talk a bit about again if it could be a range model that would lead to quite low unit sales, considering what your colleague said in the sense of view?

Benedetto Vigna, CEO

I think that, okay, Ferrari Luce is the car that we unveiled the second step last week. What I can tell you, I can guarantee you is that we will not sell this car to people that do not want the car. If the people, the client, existing and new, mostly existing, have to buy this car because they love the car, because they decide to buy the car. This is a car, Ferrari Luce, that is also electric. It's not just an electric car. You know what I mean? So if the client likes, loves the cars, they want to buy it, they buy. We will never force our client that to have, let's say, an 849 Testarossa or whatever is going to be called the next car, they have to buy an electric car. This is being said loudly clear already to many clients. It has been shared also with the Board of the company, this approach. It has also been conveyed to several dealers in meetings in Japan, the U.S., and China. A key message is this: you do not have to force clients to buy something that they don't like. This would be the biggest mistake, and I think we have to learn from what we do wrong and what the market is doing wrong. That's what I can say, Henning.

Operator, Operator

Now we're going to take our next question. And the question comes from line of Nicolai Kempf from Deutsche Bank.

Nicolai Kempf, Analyst

It's Nicolai from Deutsche Bank. Also from my side, well done for a strong finish. First question would be also on revenues in Q4. Do you kind of share how many 499 Modificata you've been sold in the last quarter? Because I think there's also quite an impact on the ASP. The second one, a bit more long term. We've seen a strong rise in revenues per unit. You have stated that the residual values are under control and stable. So does it make sense to go long-term a bit more for higher volumes, given that volumes have been down last year and probably flat this year?

Benedetto Vigna, CEO

No, I was just joking with Antonio because I view this as a positive sign and an increase in confidence in us, and I want to express our gratitude. We need to focus on the client, who is our most valuable asset. It’s important that individuals who own a Ferrari feel exclusive and possess something that isn't widely available. Therefore, we won’t disclose the sales volume, not at the Capital Market Day or today. Our company approaches business with a long-term perspective rather than a short-term one. Additionally, we prioritize the quality of revenues over volume. Ferrari is a luxury brand, and we want to ensure that when a client owns a Ferrari, they know it is not something that everyone else can possess.

Antonio Picca Piccon, CFO

The 499P Modificata, a few units in Q4, very much in line with the average of the previous quarter. Just have in mind for next year that we will lower the number of 499P Modificata in 2026. This is in our numbers compared to 2025.

Operator, Operator

And now we take our next question. Just give us a moment. And the question comes from the line of Michael Binetti from Evercore ISI.

Michael Binetti, Analyst

Congratulations on a successful fourth quarter. Personalization in Formula One seems to be highlighted as key revenue drivers for 2026, differing from your previous discussions in the pre-close call. It appeared that personalization would align more closely with the long-term target of 19%, while F1's outlook seems to have increased. Can you share what has changed in your assumptions regarding these two factors recently? Additionally, regarding the order book, I may be misinterpreting it, but the description of its length seems shorter. I'm interested in how you are managing this, whether it is due to improved efficiency or shifts in customer preferences, or simply enhanced speed in personalization. On a broader note, I'm reflecting on the capacity and flexibility that the e-building has brought. Some dealers and clients have mentioned being on the waitlist for quite a while for models like Purosangue. Have there been operational improvements that may have expedited these processes?

Benedetto Vigna, CEO

Thank you, Mike. As I mentioned, our order book is strong and extends into late 2027. In the past, we've noted that the e-building provides us with flexibility, enabling more personalized options. You might recall that we want to avoid being caught off guard like we were with the Purosangue launch a couple of years ago, when there was significant demand for personalization that we weren't prepared for. We've made the decision to enhance our capacity to manage fluctuations in personalization demand, which can be challenging to predict. The e-building, along with our increased capacity at some suppliers for customization, will definitely be beneficial. This is proving to be quite helpful.

Antonio Picca Piccon, CFO

So, Michael, regarding your first question about the revenues from personalization and racing, you’re highlighting two areas where we have less visibility compared to cars and parts. As we’ve mentioned, personalization is typically finalized four to five months before the car is delivered, so it’s normal for us to make adjustments as needed. This is why, for example, the 20% guidance we provided may now reflect 19%, which might differ from what we previously indicated. Similarly, revenues from racing sponsorship depend on how our contracts with partners develop.

Benedetto Vigna, CEO

It's also important to add one point. Some personalization clearly, we put some capacity in place. But for some personalized items, we don't want to go beyond a limit, also because we have always in mind this story of exclusivity.

Operator, Operator

Now we'll go and take our next question. The question comes from line of Michael Filatov from Berenberg.

Michael Filatov, Analyst

I just wanted to double down on one of the questions asked earlier around some of the assumptions baked into the 2026 guidance around the Luce. Maybe you could speak more broadly about where you expect this to sit with relation to the range models in terms of volumes? A follow-up to that is, where do you see white space in terms of your geographic mix? Are there certain regions you feel like you have more room for growth, for example, as you reduce volumes to the U.K., where do you see room to shift that volume as we go forward?

Benedetto Vigna, CEO

I don’t want to specify which model it is, but it’s clear that it will be a sports car. We have mentioned it has four doors. Regarding geographic interest, we are seeing demand from various regions, but we don’t have a specific mix in mind. We will focus our attention on certain dealers since we have 200, and we don’t want to overwhelm all of them at once. There is indeed interest from clients in diverse geographies, and this car is being designed to cater to those different markets.

Operator, Operator

And now we're going to take our next question. And it comes from line of Sam Perry from BNP Paribas.

Samuel Perry, Analyst

So you've given some guidance on mix of specials over 10% cumulative to 2030. Can you give any indication of where that could get to in 2026? A clarification question on Slide 7, you show the models being phased out. Is that end of production or last sales? I guess I'm specifically talking about the 296, which is coming from quite high volumes at the moment. Could you expect shipments to continue into maybe the start of '27? Or does that mean last sales in '26?

Antonio Picca Piccon, CFO

Phaseout means phase out, meaning the stop of deliveries. With respect to guidance on mix, there is no specific difference compared to the average guidance for the plan by quarter for quarter.

Operator, Operator

And now we're going to take our next question for today. And it comes the line of Gianluca Bertuzzo from Intermonte.

Gianluca Bertuzzo, Analyst

I think I made the same question to you about the Purosangue, and you've been very kind with the answer. But when you think about the Ferrari Luce and exclusivity, where do you see it playing less than the Purosangue with 20%? Any thoughts are helpful. The second one on geographical perspective. Should we expect some positive impact from India lowering the tariffs? Do you see this as an opportunity to improve there?

Benedetto Vigna, CEO

India presents a significant opportunity for us, and we intend to increasingly concentrate our efforts there. It’s important to note that market development takes time, and the new economic agreement between Europe and India will assist in this process. However, building a market is not an overnight endeavor. As for Luce, I recall your previous inquiry about Purosangue, and at that time, I mentioned that we would pursue it at the appropriate moment. When it comes to luxury products, which we specialize in, we must handle information carefully to ensure it is released at the right time. We are also considering Luce as part of a phased unveiling strategy, which I believe is crucial. I’m sure you understand this and have made efforts to assess it, but you might have anticipated such responses.

Operator, Operator

There are no further questions for today, and I would like now to hand the conference over to Mr. Vigna for any closing remarks.

Benedetto Vigna, CEO

I would like to express my gratitude to all of you for the time we’ve spent together. We take the time to address all your questions, and I sincerely appreciate your support in following us. I want you to keep in mind that the year 2025 will be a significant year, which highlights the strength of our business model. We will continue to execute our business plan with discipline and confidence, staying true to our identity and our commitment to progress. I wish you all a good morning, good afternoon, and thank you once again for your time, questions, and support.

Operator, Operator

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.