74software · EURONEXT:74SW
74software — Axway — H1 2019 Earnings Presentation
35 slides from 74software's earnings presentation, Jul 25, 2019
Slide 1: 2019 Half-Year Results
2019 Half-Year Results Analyst Conference - July 25, 2019 Cloud Business Center - Paris
Slide 2: Forward-looking statements
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 license contracts, which often represent investments for customers, are historica
Slide 3: Agenda
2019 Half-Year Results Agenda 1 - 2019 Half-Year Financial results and Operating position Patrick Donovan Chief Executive Officer 2 - Update on the transformation project 3 - Customer Success Organisation Roland Royer Chief Customer Officer 4 - Targets & Ambitions 5 - Q&A Session 3
Slide 4: 2019 Half-Year Financial results and Operating position
2019 Half-Year Financial results and Operating position Patrick Donovan Chief Executive Officer
Slide 5: 2019 Half-Year - Income Statement
2019 Half-Year - Income Statement In millions of euros H1 2019 H1 2018 Revenue 138.6 134.9 Cost of sales 45.9 42.8 → Stable organic* revenue, Gross Profit ( % of Revenue) 92.6 66.8% 92.1 68.3% growth of 2.7 % in total Operating expenses 90.2 79.8 of which Sales and marketing 44.3 39.0 → In line with
Slide 6: 2019 Half-Year - Revenue by Activity
2019 Half-Year - Revenue by Activity H1 2018 H1 2018 Total Organic 16 % 15 % [€m] H1 2019 Restated* Reported Growth Growth* License Services License 21.8 24.3 23.8 -8.3% -10.3% Subscription 23.1 19.7 18.8 23.1% 17.2% 17 % Subscription Maintenance 72.1 71.7 69.9 3.1% 0.5% 52 % Services 21.5 23.1 22.5
Slide 7: Focus on License and Maintenance activities in the first half of 2019
Focus on License and Maintenance activities in the first half of 2019 H1 2018 H1 2018 Total Organic [€m] H1 2019 Restated* Reported Growth Growth* License 21.8 24.3 23.8 -8.3% -10.3% of which Q1 19 9.1 8.5 8.2 11.0% 6.7% of which Q2 19 12.7 15.8 15.5 -18.0% -19.5% Maintenance 72.1 71.7 69.9 3.1% 0.5
Slide 8: 2019 Half-Year - Signatures tracking
2019 Half-Year - Signatures tracking New Weighting Weighted New [€m] Signatures Factor Signatures → New ACV down 25.5% organically Value → Signatures metric down License 21.8 1x 21.8 15.4% organically New → The interest generated by the 3.5 3x 10.6 Group’s new offers, combined Subscription (ACV*) wi
Slide 9: Main Balance Sheet items at 30/06/2019
Main Balance Sheet items at 30/06/2019 Cash and equivalents DSO Total Assets €32.3m 61 days €569.5m vs. €35.8m at 31/12/2018 vs. 63 days at 30/06/2018 vs. €553.8m at 31/12/2018 Net debt Current deferred revenues Total Equity €12.3m €85.6m €356.4m vs. €10.2m at 31/12/2018 vs. €75.2m at 31/12/2018 vs.
Slide 10: Cash flows & Covenants at 30/06/2019
Cash flows & Covenants at 30/06/2019 30/06/2019 31/12/2018 30/06/2018 In millions of euros 30/06/2019 30/06/2018 Net profit for the period -6.1 3.9 45.2 EBITDA Change in operating working capital Cost of debt 45.2 101.4 3.0 16.0 (covenant > 5) requirements Net cash from operating activities 8.6 25.5
Slide 11: Update on the transformation project
Update on the transformation project Patrick Donovan Chief Executive Officer
Slide 12: Hybrid Integration Platforms
Corporate project Become a market leader in Hybrid Integration Platforms by the end of 2020 “By 2022, Gartner predicts at least 65% of large organizations will have implemented an HIP” (1) (1) Gartner, Innovation Insight for Hybrid Integration Platforms, Massimo Pezzini, October 15, 2018. 12
Slide 13: AMPLIFY: Roadmap to the future of integration
AMPLIFY™: Roadmap to the future of integration Endpoints AMPLIFY™ Products CRMs Application Integration B2B / EDI Cloud Services Managed File Transfer General Ledgers Mobile Integration Legacy Systems AMPLIFY™ API Management Etc. Unified Catalog Content Collaboration 13
Slide 14: Transformation project
Transformation project Upgrading the product portfolio ✓ Strengthening the management team and engaging employees ✓ Implementing a structure adapted to changes in the business model ✓ Increasing awareness and sustaining a growth dynamic In Progress 14
Slide 15: AMPLIFY: Continued investments, Strengthened offer
AMPLIFY™: Continued investments, Strengthened offer R&D Investments (€m) 32.6 31.2 Advancing our innovation → R&D investments up 22% between H1 2019 and H1 2018, 27.9 stabilization and decrease expected in the coming quarters 26.8 → Rationalization of the portfolio and strategic priorities H2 2017 H
Slide 16: AMPLIFY: Continued investments, AMPLIFY Investments
AMPLIFY™: Continued investments, Strengthened offer Allocation of R&D resources (%) 100% AMPLIFY™ Investments 80% up + 49 % vs. H2 2017 → Launch of the new AMPLIFY™ components at the end 60% of March 2019 → Integration of Streamdata.io and launch of 40% 70 69 AMPLIFY™ Streams in June 2019 61 62 63 6
Slide 17: AMPLIFY: Continued investments, Unified Catalog
AMPLIFY™: Continued investments, Strengthened offer ✓ since April 2019 Unified Catalog for multiple integration patterns 17
Slide 18: Better Together
Better Together Strengthened management team - Appointment of D. Fougerat, EVP Human Resources and C. Allmacher, Chief Financial Officer - Entry into function of 3 new business leaders in Europe, the United States and the Asia-Pacific region - Creation of a dedicated Go-to-Market team, supported by
Slide 19: Customer Success Organisation
Customer Success Organisation Roland Royer Chief Customer Officer
Slide 20: Customer Success Organisation
Customer Success Organisation Organisation Customer Success Go-To-Market New Regional Leadership Evolve our Customer Success Strengthen Go-To-Market ▪ Asia-Pacific (January 2019) Management Team leadership, processes and focus: ▪ Accelerate our Customer ▪ API First approach ▪ USA (April 2019) Succes
Slide 21: Go-To-Market – Axway Catalysts Team and Offerings
Go-To-Market – Axway Catalysts Team and Offerings Axway Catalysts A team of trusted advisors who help customers make digital strategy, design and technology decisions Thought Leadership Proactive outreach and value delivery to the API Community through keynote presentations, networks of knowledge an
Slide 22: AMPLIFY API Management: Pipeline and Successes
AMPLIFY™ API Management : Pipeline and Successes APIM Pipeline trends (€m) Competitive win to drive a critical API implementation for a European Satellite program 82 67 58 57 PSD2 compliance and creation of new commercial channels for a major European bank October January April July 2018 2019 2019 2
Slide 23: Market Shift to Subscription
Market Shift to Subscription → Transition to subscription accelerating across all verticals and regions Try & Buy Subscription → Significant increase in number of subscription transactions between H1 2018 and H1 2019 → Large subscription deals are taking much longer to execute as customers “learn” n
Slide 24: Our customers’ success is our success
Our customers’ success is our success Mission Critical AMPLIFY™ Customer Centric Axway Solutions at the heart Flexible solutions to secure Serving our customers as a of our customers’ strategic and transform critical valued, strategic partner business outcomes business processes while “From Start to
Slide 25: Targets & Ambitions
Targets & Ambitions Patrick Donovan Chief Executive Officer
Slide 26: Targets & Ambitions
Targets & Ambitions → 2019 Return to organic growth, continuing into 2020, enabling Axway to achieve targeted revenue of around €300m → 2019 Operating margin on business activity between 8 and 10%, the low point during the transformation period, before a rebound expected in 2020 → Become a Leader in
Slide 27: Q&A Session
Q&A Session Microphones are at your disposal
Slide 28: Appendices
axway Appendices
Slide 29: Half-Year 2019 - Change in revenue
Half-Year 2019 - Change in revenue 140 +€4.0m €138.6m €134.9m - €0.3m 0.2% organic +€0.0m decrease USD vs. EUR = +7.1% 130 €m 120 110 100 H1 2018 Scope effect Exchange rates Organic growth H1 2019 Revenue effect Revenue 29
Slide 30: Half-Year 2019 - Revenue by Geography
Half-Year 2019 - Revenue by Geography H1 2018 H1 2018 Total Organic [€m] H1 2019 Restated* Reported Growth Growth* 22% 29% Rest France of Europe France 40.8 37.2 37.3 9.3% 9.6% Rest of Europe 31.0 32.4 32.4 -4.4% -4.4% Americas 59.4 62.3 58.4 1.7% -4.7% 6% 43% Asia - Pacific Americas Asia / Pacific
Slide 31: Simplified Balance Sheet at 30/06/2019
Simplified Balance Sheet at 30/06/2019 In millions of euros 30/06/2019 30/06/2018 Assets Goodwill 347.2 339.5 Non-current assets 446.0 424.0 → High cash position of €32.3m Trade receivables 52.8 55.6 Other current assets 38.4 30.3 → DSO of 61 days, Cash and cash equivalents 32.3 47.6 compared to 63
Slide 32: Changes in equity and Earnings per share at 30/06/2019
Changes in equity and Earnings per share at 30/06/2019 In millions of euros 30/06/2019 30/06/2018 31/12/2018 Equity at Beginning of Period 362.7 344.1 344.1 Profit for the period -6.1 3.9 11.0 Dividends - - -4.2 Capital increase 0.2 0.2 0.2 Other -1.3 0.4 1.0 Foreign exchange translation adjustments
Slide 33: Half-Year 2019 - Headcount
Half-Year 2019 - Headcount 30/06/2019 31/12/2018 France 452 468 Rest of Europe 827 771 Americas 542 537 Asia - Pacific 67 72 Axway 1,888 1,848 → Additional recruitment in the first half of 2019 33
Slide 34: Shareholding structure at 30/06/2019
Shareholding structure at 30/06/2019 Pasquier Odin Sopra Treasury Sopra Steria Managers Caravelle Public Family Family GMT shares Shares outstanding 32.57% 0.13% 1.39% 1.62% 21.22% 12.12% 30.74% 0.21% Voting rights 36.08% 0.13% 1.51% 1.63% 25.94% 14.82% 19.88% Shareholders’ agreement 21,225,381 Shar
Slide 35: 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