74software · EURONEXT:74SW
74software — Axway — FY2023 Earnings Presentation
46 slides from 74software's earnings presentation, Feb 21, 2024
Slide 1: 2023 Full-Year Results Analyst Conference
2023 Full-Year Results Analyst Conference February 21, 2024
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 Company highlights that contract signatures, which represent investments for customers, are historically mor
Slide 3: Agenda
Agenda Patrick Donovan Chief Executive Officer 1. Operational Commentary on 2023 Cécile Allmacher 2. 2023 Financial Results Chief Financial Officer Roland Royer 3. Customers & Market Trends Chief Customer Officer 4. Focus & Ambition 5. Q&A Session 3
Slide 4: Operational Commentary on 2023
Operational Commentary on 2023 Patrick Donovan Chief Executive Officer
Slide 5: Solid performance for the second year running
Solid performance for the second year running UPFRONT BOOSTED REVENUE & ARR GROWTH INCREASED PROFITABILITY & FREE CASH FLOW EFFICIENT ORGANIZATION & AGILE PORTFOLIO HIGH EMPLOYEE ENGAGEMENT & CUSTOMER SATISFACTION 5
Slide 6: Translating in strong financials
Translating in strong financials 2013-17 2023 2022 Average Organic Revenue Growth (%) +5.8% +5.5% +1.6% Profit on Operating Activities (€m) 62.8 46.3 as a % of revenue 19.7% 14.7% 15.4% Basic EPS (€) 1.71 € -1.85 € excluding non-cash write-off 1.71 € 1.47 € 1.34 READY FOR Free Cash Flow (€m) 18.8 2.
Slide 7: With always the same ambitions
With always the same ambitions OUR CUSTOMERS OUR EMPLOYEES OUR SHAREHOLDERS Delivering brilliant Axway, the place to be Building a predictable, Customer experience profitable business model ▪ Record ▪ 2023 Growth and profitability Net Promoter Score ▪ Tied for highest guidance exceeded Employee Enga
Slide 8: Strengthened Product Portfolio
Strengthened Product Portfolio EXTERNAL EXPANSION INTERNAL EXPANSION Amplify Enterprise Marketplace E-Invoicing Compliance expert • Product incubated within the Amplify based in Belgium product family and fully available in 2023 • Competitive advanced offering building pipeline and closing 15 transa
Slide 9: 2023 Key Figures
2023 Key Figures € 319.0m Revenue compared to €314.0m in 2023, an organic growth of 5.8% €62.8m Profit on Operating Activities or 19.7% of revenue, up 500 bps vs. 14.7% in 2022 +27.4% Subscription Growth or €186.6m vs. €154.0m in 2022 +6.6% ARR Growth or €228.7m vs. €214.5m at the end of 2022 9
Slide 10: 2023 Financial Results
2023 Financial Results Cécile Allmacher Chief Financial Officer
Slide 11: 2023 Full-Year Results
2023 Full-Year Results KEY FIGURES INCOME STATEMENT 2023 2022 In millions of euros €m % of Rev. €m % of Rev. Organic Growth* Total Growth Revenue 319.0 314.0 +5.8% +1.6% Cost of sales 87.2 91.4 Gross Profit 231.7 72.7% 222.6 70.9% Operating expenses 168.9 176.4 of which Sales and marketing 81.6 93.2
Slide 12: 2023 Full-Year Results: Revenue by Activity
2023 Full-Year Results REVENUE BY ACTIVITY 3% 2022 2022 Total Organic [€m] 2023 License 11% Restated* Reported Growth Growth* Services License 8.8 10.2 11.6 -23.8% -13.7% 27% Subscription 186.6 146.5 154.0 +21.2% +27.4% Maintenance 59% Maintenance 87.0 107.9 111.2 -21.7% -19.4% Subscription Sub-tota
Slide 13: 2023 Full-Year Results: Subscription Activity
2023 Full-Year Results SUBSCRIPTION ACTIVITY 2022 2022 Total Organic [€m] 2023 Restated* Reported Growth Growth* Subscription 186.6 146.5 154.0 +21.2% +27.4% of which Axway Managed 47.1 40.6 46.8 +0.6% +16.0% of which Customer Managed 139.5 105.9 107.2 +30.1% +31.7% * Alternative performance measure
Slide 14: Main Balance Sheet items at 31/12/2023
2023 Full-Year Results Main Balance Sheet items at 31/12/2023 Cash & cash equivalents DSO Total assets €16.7m 182 days €594.6m vs. €18.3m at 31/12/2022 vs. 155 days at 31/12/2022 vs. €571.1m at 31/12/2022 Net debt Current deferred revenues Total equity €75.6m €49.1m €346.3m vs. €69.5m at 31/12/2022
Slide 15: Cash Flows and Covenants
2023 Full-Year Results CASH FLOWS In millions of euros 2023 2022 Net profit for the period 35.8 -40.0 Change in operating working capital requirements -32.9 -41.0 Net cash from operating activities 32.1 13.0 Free cash flow 18.8 2.2 Net cash used in investing activities -12.6 -11.1 Net cash used in f
Slide 16: Progressive normalization of free cash flow
Progressive normalization of free cash flow 90 26% Profit on Operating Activities (€m) FCF as a % of revenue BUSINESS MODEL 80 TRANSITION 22% 70 18% Profit on Operating Activities (€m) 60 Free Cash Flow / Revenue (%) First Customer Managed Subscription Offer 50 14% 40 10% 30 6% 20 2% 10 0 -2% 2011 2
Slide 17: Customers & Market Trends
Customers & Market Trends Roland Royer Chief Customer Officer
Slide 18: Customer success as a company value
Customer success as a company value OVERALL RENEWAL AVERAGE NET PROMOTER SCORE SUCCESS RATE MIGRATION MULTIPLIER 37 94% 1 9X . COMPARED TO 35 RENEWED OR MOVED MAINTENANCE MOVING AT THE END OF 2022 TO SUBSCRIPTION TO SUBSCRIPTION 18
Slide 19: Reinforces attractiveness
Reinforces attractiveness ….and brings in new Customers! NEW CUSTOMERS NEW CUSTOMERS NEW CUSTOMERS AVERAGE TCV BOOKING SHARE >100 € 190k 15% 19
Slide 20: 2023 Success across geographies
2023 Success across geographies EMEA → Solid performance across Europe converting our historical customer AMERICAS base to subscription → Axway MFT proven security and → A second year of strong growth in APAC reliability as a strong success Germany with historical and new → Important shift toward Ax
Slide 21: Main product lines drivers
4 Main product lines drivers MFT B2B APIM AFAH ▪ Security ▪ eInvoicing & ▪ Amplify ▪ Financial ▪ Cloud leverage Modernization Marketplace for System ▪ Managed Governance Modernization Services & Monetization ▪ KPMG Partnership 21
Slide 22: Looking ahead…
Looking ahead… ORGANIZATION & FOCUS Solid, proven teams in place in all regions PRODUCT LINES New offers that resonate in the market for each of our 4 main product lines: • APIM - Amplify Marketplace • MFT - Cloud Edition • B2B - eInvoicing • AFAH - Accounting Mapping CUSTOMER BASE Continued focus o
Slide 23: Focus & Ambition
Focus & Ambition Patrick Donovan Chief Executive Officer
Slide 24: Axway's Why
Axway’s Why Our Purpose An independent technology provider that sustainably grows enduring value, based upon trust, for our customers, employees, and shareholders. axway.com 24
Slide 25: Robust building blocks as foundations for our software house
Robust building blocks as foundations for our software house VISION MISSION To be a leading, trusted technology provider Empowering customers with secure, mission-critical software and empowering customers with secure digital business interactions to services to successfully operate and simplify the
Slide 26: Sustainably growing enduring value for…
Sustainably growing enduring value for….. OUR CUSTOMERS OUR EMPLOYEES 5-Year Net Promoter Score 5-Year Employees Engagement Score 40 37 80 35 69 69 35 70 66 61 29 60 58 30 25 49 25 50 20 18 40 15 30 10 20 5 5 10 0 0 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 26
Slide 27: and our Shareholders…
and our Shareholders… 5 Year 2013-17 2024 2023 2022 2021 2020 2019 Average Average Guidance Organic Revenue Growth (%) +5.8% +5.5% -2.7% +0.5% +3.3% +2.5% +1.6% +1 to 3% Profit on Operating Activities (€m) 62.8 46.3 32.9 30.8 25.9 ≈ 20% as a % of revenue 19.7% 14.7% 11.5% 10.4% 8.6% 13.0% 15.4% Basi
Slide 28: Mid-term ambitions
Mid-term ambitions 2024 2025 2026 Return to Profit on Operating Activities above 15% Profit on Operating Activities ≈ 20% and gradually move towards 20% Normalized FCF as a % of Revenue Sustainably increase earnings per share to above €1 Achieve > €500m Annual Revenue Achieve revenue of €500m (Organ
Slide 29: It's time for a big step forward for Axway
It's time for a big step forward for Axway • Unique opportunity for AXW to expand its product portfolio and to EXPAND AXWAY’S PRODUCT continue its development by capitalizing on its recent performance PORTFOLIO BY ACQUIRING MOST OF • SBS would benefit from the scale and experience of a global softwa
Slide 30: Transaction Overview
Transaction Overview TRANSACTION • Project to acquire most of Sopra Banking Software activities from Sopra Steria CONSIDERATIONS • Acquisition for an Enterprise Value of €330m • A recognized player in banking and financing software SBS • Long-term technology partner for banks and financing instituti
Slide 31: SBS Snapshot
SBS Snapshot 650+ ≈ €340m 80+ ≈ 3,500 29 Customers FY 2023 Operating Financial Services Locations Worldwide Estimated Revenue Countries Experts Worldwide SOPRA BANKING PLATFORM SOPRA FINANCING PLATFORM Public Cloud • Auto finance • Development finance • Customer engagement • Lending lifecycle • Equi
Slide 32: Building a robust enterprise software house
Building a robust enterprise software house Enterprise software house with critical scale to ensure 1 long-term independent project Addressing both banking app and integration 2 needs with market recognized product portfolio INTEGRATION BANKING APP Accelerating SBS transition to subscription 3 and C
Slide 33: Transaction Key Financials
Transaction Key Financials + 2023 REVENUE €319m ≈ €340m ≈ €650m 2023 PROFIT ON OPERATING ACTIVITIES 19.7% Mid-single digit ≈ 10 to 14% Doubling Axway’s Mid-term KEY IMPACTS current revenue Profit on Op. Activities target: 15-20% of rev. 33
Slide 34: Transaction Financing
Transaction Financing • €130m capital increase with preferential subscription rights1 TRANSACTION FINANCING • €200m new debt facilities for the balance • GMT would acquire a block of 3.6m AXW shares from SSG, representing 16.7% of AXW’s capital, as well as all of SSG’s residual preferential subscrip
Slide 35: Project timeline and considerations
Project timeline and considerations REGULATORY Q1 2024 APPROVALS CLOSING EMPLOYEE REPRESENTATIVE SPA SIGNING Targeting Q2 2024 BODIES CONSULTATION Q3 2024 at the latest • Subject to satisfactory confirmatory due diligence and valuation reports from independent experts OTHER • Subject to satisfaction
Slide 36: Q&A Session
Q&A Session Call +44 (0) 33 0551 0200 or use the chat to ask a question Financial Calendar Monday, March 25, 2024: Filing of the 2023 Universal Registration Document Thursday, April 25, 2024, before market opening: Publication of Q1 2024 Revenue Thursday, May 16, 2024, 2:30 pm (UTC+1): Annual Shareh
Slide 37: Thank you
Thank you ©2024 Axway | CONFIDENTIAL 37
Slide 38: Appendices
axway >= Appendices
Slide 39: 2023 Full-Year Results: Revenue by Geography
2023 Full-Year Results REVENUE BY GEOGRAPHY 5% Asia/Pacific 2022 2022 Total Organic [€m] 2023 Restated* Reported Growth Growth* 31% France France 99.9 90.9 91.6 +9.0% +9.9% 40% Americas Rest of Europe 76.1 67.8 68.4 +11.2% +12.1% Americas 126.4 123.1 133.3 -5.1% +2.7% Asia/Pacific 16.6 19.6 20.8 -20
Slide 40: Change in Revenue
2023 Full-Year Results Change in Revenue 325 €17.6m +5.8% €319.0m 320 315 €314.0m 310 305 €-8.2m 300 €-4.4m 295 290 2022 Scope Exchange Rate Organic 2023 Revenue Effect Effect Growth Revenue 40
Slide 41: Change in Net Debt
2023 Full-Year Results Change in Net Debt 80 €1.3m €75.6m 75 €8.4m €69.5m €-18.8m 70 €4.8m 65 €10.4m 60 55 50 45 40 Net Financial Debt Free Changes in scope Share Dividends Others Net Financial Debt at 31/12/2022 Cash Flow & Financial investments Buyback at 31/12/2023 41
Slide 42: Simplified Balance Sheet
2023 Full-Year Results SIMPLIFIED In millions of euros 31/12/2023 31/12/2022 Assets BALANCE SHEET Goodwill 302.1 297.8 Non-current assets 367.6 374.0 Trade receivables 178.0 148.1 Other current assets 32.3 30.6 Cash and cash equivalents 16.7 18.3 Current assets 227.0 197.1 • Cash and cash equivalent
Slide 43: Changes in Equity & Earnings per Share
2023 Full-Year Results CHANGES IN EQUITY & EARNINGS PER SHARE AT 31/12/2022 In millions of euros 31/12/2023 31/12/2022 31/12/2021 Equity at Beginning of Period 327.8 372.2 355.5 Profit for the period 35.8 -40.0 9.6 Dividends -8.4 -8.5 -8.6 Capital increase 0.0 0.0 2.1 Other -1.9 -10.3 -5.0 Foreign e
Slide 44: Headcount
2023 Full-Year Results HEADCOUNT 31/12/2023 31/12/2022 France 432 437 Rest of Europe 612 636 Americas 357 378 Asia/Pacific 64 74 Axway 1 465 1 525 44
Slide 45: Shareholding structure at 31/12/2023
Shareholding structure at 31/12/2023 Pasquier Odin Treasury Public Family Family Shares Managers Shares outstanding 31.96% 20.82% 0.12% 1.34% 1.44% 41.27% 3.05% Voting rights 38.48% 25.07% 0.13% 1.43% 1.44% 33.45% Shareholders’ agreement 21,633,597 Shares outstanding 55.7% of shares outstanding / 66
Slide 46: Alternative performance measures
Alternative performance measures ACV: Annual Contract Value – Annual contract value of a subscription agreement. ARR: Annual Recurrent Revenue – Expected annual billing amounts from all active maintenance and subscription agreements. Employee Engagement Score: Measurement of employee engagement thro