74software · EURONEXT:74SW
74software — Axway — FY2020 Earnings Presentation
47 slides from 74software's earnings presentation, Feb 24, 2021
Slide 1: 2020 Full-Year Results Analysts Conference
2020 Full-Year Results Analysts Conference February 24, 2021 axway.com 1
Slide 2: Disclaimer
Disclaimer Forward-looking statements This presentation contains forecasts that may be subject to various risks and uncertainties concerning the Company’s future growth and profitability. The Group highlights that signatures of its contracts, which often represent investments for customers, are hist
Slide 3: Agenda
2020 Full-Year Results Agenda 1. Success of the transformation Patrick Donovan and new business model Chief Executive Officer 2. Hyper focus on our Customers 3. 2020 Financial results Roland Royer Chief Customer Officer 4. 2021 Targets and future ambitions 5. Q&A Session axway.com 3
Slide 4: Celebrating 20 years to get to today! Revenue evolution
Celebrating 20 years to get to today! 350 2016 2019 300 2017 250 Customer Position 2012 2014 Technology / Know-how Revenue evolution (€m) 200 2008 2011 150 2006 2007 100 2002 50 Collaborative Business Interaction Digital Business Integration 1st Integration Suite Business Solutions Networks Enableme
Slide 5: Success of the transformation and new business model
Success of the transformation and new business model Patrick Donovan Chief Executive Officer axway.com 5
Slide 6: Success of the 3-year transformation plan
Success of the 3-year transformation plan 2018 2019 2020 Upgraded product portfolio Strengthened management team and employee's engagement Adapted structure, based on customer centricity Increased awareness for sustainable growth axway.com 6
Slide 7: Resilience in 2020 waves
Resilience in 2020 waves €297.2m Revenue solid performance in difficult times with +0.5% organic growth* 10.4% Profit on Operating activities or €30.8m, up 19% vs. 2019 +65.8% Subscription Growth or €97.3m vs. €58.7m in 2019 +79.7% ACV Growth or €31.9m vs. €17.5m in 2019 +15.2% Signature Growth supp
Slide 8: We closed the loop of our transformation
We closed the loop of our transformation… …right on time to be able to grow again in 2020 5-Years License vs. Subscription revenue (€m) Business mix evolution over 5-Years (%) 100 100% 90% 90 80% 80 70% 70 60% 60 50% 40% 50 30% 40 20% 30 10% 20 0% 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Li
Slide 9: Strengthened Employee Engagement
Strengthened Employee Engagement 100 2018 Employee engagement up 90 86 2019 +19% 83 2020 80 72 69 70 60 58 in 2020 vs. 2019 49 50 40 Attrition continues to decline 30 20 22% 17% 14% 10 2018 2019 2020 0 Employee survey participation rate Employee Engagement Score* axway.com * Alternative performance
Slide 10: Strengthened Offering
Strengthened Offering Technology & Innovation Research & Development Product Management axway.com 10
Slide 11: Open API Integration Platform
Open API Improve what you have Integration Platform One place for Bring control and ALL APIs independence axway.com 11
Slide 12: Strengthened Market Position
Strengthened Market Position The Forrester Wave™: API Management Solutions, Q3 2020 Gartner 2020 Magic Quadrant for Full Life Cycle API Management Gartner 2020 Magic Quadrant for Full Life Cycle API Management, Paolo Malinverno, Kimihiko Iijima, Mark O’Neill, John Santoro, Shameen Pillai, Akash The
Slide 13: The world is opening
The world is opening. Cross-pollenating new ideas, creating new possibilities across geographies, industries, and customers and partners. With every investment, old and new, opportunities for growth are blossoming. So what are you waiting for? & Axway will help turn what you already have into brilli
Slide 14: Hyper focus on Customers
Roland Royer Chief Customer Officer Hyper focus on Customers axway.com 14
Slide 15: Building Success on Customer Experience Net Promoter Score
Building Success on Customer Experience 25 Net Promoter Score* +38pts in 2020 vs. 2017 axway.com * Alternative performance measures are defined in the glossary at the end of this document. 15
Slide 16: Successful in land, expand and retain
Successful in land, expand and retain In 2020 In 2020 ~92% ~90% of signature* value with our customer base Renewal Success Rates axway.com * Alternative performance measures are defined in the glossary at the end of this document. 16
Slide 17: Accelerating the Transition to Subscription
Accelerating the Transition to Subscription License Subscription (3xACV) 21% 2019 2020 50% Signatures 50% Signatures €105.3m €121.4m License Subscription 79% (3xACV) Subscription share of signatures* up 29 points vs. 2019 axway.com * Alternative performance measures are defined in the glossary at th
Slide 18: Accelerating Amplify Share
Accelerating Amplify Share Amplify-APIM Signatures* License + (3xACV) + 30 24 % Amplify Signature Growth Amplify Signature Share % 4 Amplify signatures > 1M€ axway.com * Alternative performance measures are defined in the glossary at the end of this document. 18
Slide 19: Accelerating Success with Partners
Accelerating Success with Partners Partners leveraged signatures* grew from 13% to 22% in 3 years Share of Partners leveraged signatures Partners leveraged signatures by product Signatures of wich Partners leveraged ➢ 41% of Partners leveraged signatures made on Amplify 22% 22% ➢ Significant success
Slide 20: Moving on to 2021
Moving on to 2021 McKinsey estimates that in 2020 the COVID-19 crisis accelerated the digitization of customers’ interactions by several years Source: Laura LaBerge, Clayton O’Toole, Jeremy Schneider, Kate Smaje – October 5, 2020 https://www.mckinsey.com/business-functions/strategy-and-corporate-fin
Slide 21: The trend of multiple API management solutions is here to grow
The trend of multiple API management solutions is here to grow Number of API Management vendors 60% 54% 50% 48% 40% 40% 30% 30% 20% 17% 10% 5% 5% 1% 0% One Two Three Four+ 2020 2022 Source: IDC EMEA (2020) - API Management & Integration Survey axway.com 21
Slide 22: One game – Two plays
One game – Two plays Staying even closer to our historical Customers A dedicated team of specialists to accelerate with Key Account Managers and Customer winning market share for Amplify-APIM Platform Success Managers axway.com 22
Slide 23: Strengthened Brand & Awareness
Strengthened Brand & Awareness Website Brand & PR Imagine Summit Customer Digital Advocacy Marketing ABM Campaigns Content & Events Marketing Partner MIT Marketing One Game. Two plays. axway.com 23
Slide 24: Our path to growth
Our path to growth We continue to leverage Our Amplify offering is We are well positioned for the trust of our customers highly differentiated the next three years axway.com 24
Slide 25: Financial Results
2020 Financial Results Patrick Donovan Chief Executive Officer axway.com 25
Slide 26: Full-Year 2020 – Income statement
Full-Year 2020 – Income statement In millions of euros 2020 2019 Revenue 297.2 300.0 Cost of sales 87.6 88.4 Gross Profit ( % of Revenue) 209.7 70.5% 211.5 70.5% Organic Growth* Total Growth Operating expenses 178.8 185.6 of which Sales and marketing of which Research and development 92.9 60.4 99.1
Slide 27: Full-Year 2020 – Revenue by activity
Full-Year 2020 – Revenue by activity 2019 2019 Total Organic 9% [€m] 2020 License 12% Restated* Reported Growth Growth* Services License 25.8 52.2 52.8 -51.2% -50.6% 33% Subscription Subscription 97.3 58.7 59.6 +63.2% +65.8% Maintenance 138.2 144.7 146.7 -5.8% -4.5% Services 36.0 40.2 40.8 -11.9% -1
Slide 28: Full-Year 2020 – License & Maintenance
Full-Year 2020 – License & Maintenance 2019 2019 Organic [€m] 2020 Restated* Reported Growth* License 25.8 52.2 52.8 -50.6% of which Q1 20 3.9 9.2 9.1 -57.4% of which Q2 20 6.6 12.7 12.7 -48.2% of which Q3 20 8.3 11.1 11.4 -25.7% of which Q4 20 7.0 19.2 19.6 -63.5% Maintenance 138.2 144.7 146.7 -4.5
Slide 29: In difficulties lies opportunities
In difficulties lies opportunities New ACV* & Subscription Revenue Evolution (€m) 25 70 New ACV Subscription revenue 60 20 ➢ Our customers are more 50 consistently adopting the subscription models 15 40 ➢ We can anticipate a continuous conversion of License/Maintenance 10 30 into Subscription as we
Slide 30: Full-Year 2020 - Subscription
Full-Year 2020 - Subscription 2019 2019 Organic [€m] 2020 Restated* Reported Growth* Subscription 97.3 58.7 59.6 +65.8% of which Q1 20 15.7 11.1 10.9 +41.4% of which Q2 20 21.5 12.4 12.3 +73.7% of which Q3 20 21.9 12.9 13.4 +69.7% of which Q4 20 38.1 22.2 23.0 +71.4% * Alternative performance measur
Slide 31: Full-Year 2020 – Signature metric
Full-Year 2020 – Signature metric 2020 Weighted New [€m] Signatures Weighting Factor Signatures Value ➢ Strong ACV growth License 25.8 1x 25.8 ➢ Continuing historical customer conversion New ➢ Business model continually 31.9 3x 95.6 Subscription (ACV*) adopted by current and new customers 2020 Weigh
Slide 32: Main Balance Sheet items at 31/12/2020
Main Balance Sheet items at 31/12/2020 Cash and equivalents DSO Total assets €16.2m 95 days €559.3m vs. €21.1m at 31/12/2019 vs. 77 days at 31/12/2019 vs. €568.8m at 31/12/2019 Net debt Current deferred revenues Total equity €24.0m €54.7m €355.5m vs. €22.0m at 31/12/2019 vs. €60.6m at 31/12/2019 vs.
Slide 33: Cash flows & Covenants at 31/12/2020
Cash flows & Covenants at 31/12/2020 In millions of euros 31/12/2020 31/12/2019 31/12/2020 31/12/2019 31/12/2018 Net profit for the period 8.5 5.4 Change in operating working capital requirements -23.7 -19.3 EBITDA Net cash from operating activities 12.1 13.6 Cost of debt 60.6 43.9 45.2 (covenant >
Slide 34: 2021 Targets and future ambitions
2021 Targets and future ambitions Patrick Donovan Chief Executive Officer axway.com 34
Slide 35: Limited visibility, heterogeneous situation across geographies
v v LIMITED VISIBILITY HETEROGENEOUS SITUATION ACROSS GEOGRAPHIES v v axway.com 35
Slide 36: For 2021, Axway's targets
“ For 2021, Axway’s targets are An organic revenue growth of between 2 and 4% A profit on operating activities representing 11 to 13% of revenue axway.com 36
Slide 37: Unchanged medium-term ambition
Unchanged medium-term ambition Achieve revenue of €500 million (Organic growth + M&A) Return to operating margin on business activity rates above 15% and gradually move towards 20% Sustainably increase earnings per share to above €1 axway.com 37
Slide 38: Next Events
Next Events UPCOMING AXWAY’S 21-23 STRATEGY ▪ April 21, 2021: Publication of Q1 2021 Revenue will detail its 2021-2023 strategic plan on its first ▪ May 25, 2021: 2021 AGM CAPITAL MARKET MEETING ▪ July 27, 2021: Q2 2021 Publication of 2021 Half-Year Results axway.com 38
Slide 39: Thank you!
Thank you! Let’s answer your questions ©2021 Axway axway.com 39
Slide 40: Appendices
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Slide 41: Full-Year 2020 – Revenue by geography
Full-Year 2020 – Revenue by geography 2019 2019 Total Organic 5% [€m] 2020 Asia/Pacific Restated* Reported Growth Growth* 32% France 93.5 86.4 86.4 +8.2% +8.2% France 42% Rest of Europe 62.3 67.1 67.3 -7.3% -7.1% Americas Americas 125.3 126.2 129.8 -3.5% -0.7% Asia/Pacific 16.1 16.1 16.5 -2.3% +0.3%
Slide 42: Full-Year 2020 – Change in Revenue
Full-Year 2020 – Change in Revenue 305 €300.0m Neutral 300 No changes €+1.4m €297.2m 295 €-4.1m +0.5% USD vs. € BRL vs. € 290 285 2019 Revenue Scope effect Exchange rate effect Organic Growth 2020 Revenue axway.com 42
Slide 43: Simplified Balance Sheet at 31/12/2020
Simplified Balance Sheet at 31/12/2020 In millions of euros 31/12/2020 31/12/2019 Assets Goodwill 330.3 350.0 Non-current assets 422.9 442.7 ➢ Cash and cash equivalents Trade receivables 88.1 71.9 at €16.6 million Other current assets 32.2 33.2 Cash and cash equivalents 16.2 21.1 ➢ DSO at 95 days, C
Slide 44: Changes in equity & Earnings per share at 31/12/2020
Changes in equity & Earnings per share at 31/12/2020 In millions of euros 31/12/2020 31/12/2019 31/12/2018 Equity at Beginning of Period 362.6 362.8 344.1 Profit for the period 8.5 5.4 11.0 Dividends 0.0 -8.5 -4.2 Capital increase 0.6 0.0 0.2 First-time application of IFRS16 0.0 -0.7 0.0 Other 4.2 0
Slide 45: Full-Year 2020 – Headcount
Full-Year 2020 – Headcount 31/12/2020 31/12/2019 France 483 466 Rest of Europe 835 831 Americas 501 526 Asia/Pacific 69 62 Axway 1 888 1 885 axway.com 45
Slide 46: Shareholding structure at 31/12/2020
Shareholding structure at 31/12/2020 Pasquier Odin Treasury Public Family Family Shares Managers Shares outstanding 32.38% 21.09% 0.14% 1.39% 1.60% 43.23% 0.17% Voting rights 38.25% 24.92% 0.14% 1.46% 1.57% 33.66% Shareholders’ agreement 21,351,066 Shares outstanding 56.60% of shares outstanding / 6
Slide 47: Alternative performance measures
Alternative performance measures ▪ Restated revenue: Revenue for the prior year, adjusted for the consolidation scope and exchange rates of the current year. ▪ Organic growth: Growth in revenue between the period under review and the prior period, restated for consolidation scope and exchange rate i