74software · EURONEXT:74SW
74software — Axway — H1 2020 Earnings Presentation
42 slides from 74software's earnings presentation, Jul 27, 2020
Slide 1: 2020 Half-Year Results Analyst Conference
2020 Half-Year Results Analyst Conference July 27, 2020
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 hi
Slide 3: Agenda
2020 Half-Year Results Agenda 1. Operational situation & Strategic developments in times of crisis 2. Customer Success Organisation first-half achievements 3. Financial results for the first half of 2020 4. 2020 Targets & Mid-term Ambitions 5. Q&A Session axway.com 3
Slide 4: Operational situation & Strategic developments in times of crisis
Operational situation & Strategic developments in times of crisis Patrick Donovan Chief Executive Officer axway.com
Slide 5: Highlights of the first half of 2020
Highlights of the first half of 2020 €136.6m Organic growth Limited decline in revenue despite crisis -2.0% 1.9% or Stable profit on operating activities vs. H1 2019 €2.5m +58.5% or Strong growth in Subscription activity €37.2m +187.6% or Major increase in ACV* €10.2m +26.3% or Significant growth in
Slide 6: Managing a sudden crisis
Managing a sudden crisis ➢ Safety of employees and stakeholders as a top priority ➢ Business Continuity plan and strengthened customer engagement Everyone has a plan until they ➢ Rapid adaptation and agility in response to an unprecedented crisis situation get punched in the mouth. Pipeline growth i
Slide 7: 3-year transformation plan finalisation
3-year transformation plan finalisation 2018 2019 2020 HIP LEADER ✓ 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 axway.com 7
Slide 8: AMPLIFY: Offer strengthened by recent investments
AMPLIFY: Offer strengthened by recent investments R&D Investments (€m) 32.6 31.2 30.4 28.7 26.8 S1 2018 S2 2018 S1 2019 S2 2019 S1 2020 Enterprise Unified Governance Future Proof, API Platform Integration Platform and Control Open and Flexible axway.com 8
Slide 9: Constant strengthening of the teams
Constant strengthening of the teams Appointments to the Executive Committee Employee engagement → Further improvement in attrition in H1 2020 M.Fairbrother EVP Research & Development R.Bhatia EVP Product Management -13% i.e. 15.4% attrition in H1 2020 → Executive team now complete → Increase in Empl
Slide 10: Accelerated transition to virtualized customer engagement
Accelerated transition to virtualized customer engagement Webinars Brand & Catalysts 1,975 Registrations 58 Webinars in H1 2020 1,100 7,000 Attendees Attendees axway.com 10
Slide 11: Half-Year 2020 – Revenue by activity
Half-Year 2020 – Revenue by activity H1 2019 H1 2019 Total Organic [€m] H1 2020 8% Restated* Reported Growth Growth* License 13% Services 27% License 10.5 21.9 21.8 -51.9% -52.0% Subscription Subscription 37.2 23.5 23.1 +60.9% +58.5% Maintenance 70.7 72.5 72.1 -1.9% -2.5% Services 18.2 21.5 21.5 -15
Slide 12: Customer Success Organisation first-half achievements
Customer Success Organisation first-half achievements Roland Royer Chief Customer Officer axway.com 12
Slide 13: Strong growth in Signatures
Strong growth in Signatures Signatures* growth by geography [€m] H1 2020 Signature Metric up +26% France +14% Rest of Europe +18% Americas +46% Asia/Pacific -11% vs. H1 2019 Axway +26% * Alternative performance measures are defined in the glossary at the end of this document axway.com 13
Slide 14: Acceleration of the transition to Subscription
Acceleration of the transition to Subscription License bookings Subscription bookings 21% 32% Bookings Bookings H1 2019 H1 2020 68% License bookings 79% Subscription bookings Share of Subscriptions bookings up 47 points vs. H1 2019 axway.com 14
Slide 15: A successful half-year thanks to our customer-focused strategy
A successful half-year thanks to our customer-focused strategy Customer Centricity → Focus on improving the customer experience measured by the Net Promoter Score In H1 2020 Engagement >89% → Virtual User Groups and Virtual Customer Advisory Groups → Weekly Catalysts’ webinars on digital transformat
Slide 16: A successful half-year thanks to the breadth of our portfolio
A successful half-year thanks to the breadth of our portfolio MFT APIM B2B Content Services A large financial institution A major satellite radio A well-known auto equipment A famous telecommunications in France… broadcaster in the USA … manufacturer in Germany… and mass media company… Selecting Axw
Slide 17: Great technology is not enough
Great technology is not enough Business: Human pharma, animal health & biopharma Employees: 50,000 2017 Revenue: $18.2B (Top 20 Pharma, Worldwide) Accelerate Workshop Axway catalysts guide the Axway Sales, Catalysts, Partnerships/Alliances, Catalysts → PSO strategy and execution process Presales & P
Slide 18: Axway as a critical part of today and tomorrow
Axway as a critical part of today and tomorrow Heritage Hybrid Applications, Data Integration & Systems Platform axway.com 18
Slide 19: 2nd half of 2020: In difficulty lies opportunity
2nd half of 2020: In difficulty lies opportunity Pipeline trend over the past 12 months juin-19 juil-19 août-19 sept-19 oct-19 nov-19 déc-19 janv-20 févr-20 mars-20 avr-20 mai-20 juin-20 axway.com 19
Slide 20: Successful Transformation
Successful Transformation Strategic focus on Customer Success Steady improvement of the NPS Positive business dynamique Positive Signature metric despite COVID-19 Transition to Subscription models Recurring Group revenue close to 80% axway.com 20
Slide 21: Financial results for the first half of 2020
Financial results for the first half of 2020 Patrick Donovan Chief Executive Officer axway.com
Slide 22: 2020 Half-Year Results – Income statement
2020 Half-Year Results– Income statement In millions of euros H1 2020 H1 2019 Organic growth* Total growth Revenue 136.6 138.6 Cost of sales Gross Profit ( % of Revenue) 47.3 89.3 65.4% 45.9 92.6 66.8% -2.0% -1.4% Operating expenses 86.8 90.2 of which Sales and marketing 43.5 44.3 Sales & Marketing
Slide 23: Focus on License & Maintenance
2020 Half-Year Results – Focus on License & Maintenance H1 2019 H1 2019 Organic [€m] H1 2020 Restated* Reported Growth* License 10.5 21.9 21.8 -52.0% of which Q1 20 3.9 9.2 9.1 -57.4% of which Q2 20 6.6 12.7 12.7 -48.2% Maintenance 70.7 72.5 72.1 -2.5% * Alternative performance measures are defined
Slide 24: Focus on Subscription
2020 Half-Year Results – Focus on Subscription H1 2019 H1 2019 Organic [€m] H1 2020 Restated* Reported Growth* Subscription 37.2 23.5 23.1 +58.5% of which Q1 20 15.7 11.1 10.9 +41.4% of which Q2 20 21.5 12.4 12.3 +73.7% New ACV 10.2 3.5 3.5 +187.6% * Alternative performance measures are defined in t
Slide 25: Signature metric
2020 Half-Year Results – Signature metric New Weighting Weighted New [€m] Signatures Factor Signatures Value License 10.5 1x 10.5 → Signature metric strong at +26.3% for H1 → New Subscription ACV driving Signature metric growth New 10.2 3x 30.5 Subscription (ACV*) Half-year 2020 Weighted Signatures
Slide 26: Main balance sheet items at 30/06/2020
Main balance sheet items at 30/06/2020 Cash and equivalents DSO Total assets €24.3m 70 days €564.6m vs. €21.1m at 31/12/2019 vs. 61 days at 30/06/2019 vs. €568.8m et 31/12/2019 Net debt Current deferred revenues Total equity €17.7m €76.5m €360.1m vs. €22.0m at 31/12/2019 vs. €60.6m at 31/12/2019 vs.
Slide 27: Cash flows & Covenants at 30/06/2020
Cash flows & Covenants at 30/06/2020 30/06/2020 31/12/2019 30/06/2019 In millions of euros 30/06/2020 30/06/2019 Net profit for the period -6.0 -6.1 EBITDA Change in operating working capital 5.0 3.0 Cost of debt 106.8 43.9 45.2 requirements (covenant > 5) Net cash from operating activities 10.6 8.6
Slide 28: 2020 Targets & Mid-term Ambitions
2020 Targets & Mid-term Ambitions axway.com 28
Slide 29: Hybrid integration platforms
Unchanged technological ambition 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, 2
Slide 30: Caution in an uncertain environment
Caution in an uncertain environment Context of prolonged uncertainty Very limited VISIBILITY axway.com 30
Slide 31: Review of 2020 targets
Review of 2020 targets At this stage, while emphasising the 2020 ≃ 2019 historical importance of the fourth quarter in its annual performance, Axway is targeting revenue and operating profit for 2020 within the same range as 2019. axway.com 31
Slide 32: Confirmation of mid-term ambitions
Confirmation of mid-term ambitions 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 32
Slide 33: Q&A
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Slide 34: Thank You
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Slide 35: Appendices
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Slide 36: 2020 Half-Year Results – Revenue by geography
2020 Half-Year Results – Revenue by geography H1 2019 H1 2019 Total Organic 5% [€m] H1 2020 Asia/Pacific Restated* Reported Growth Growth* 30% France France 40.9 40.8 40.8 +0.3% +0.3% Rest of Europe 29.6 30.9 31.0 -4.5% -4.4% Americas 59.3 60.3 59.4 -0.2% -1.8% 43% Americas Asia/Pacific 6.9 7.4 7.5
Slide 37: 2020 Half-Year Results – Change in revenue
2020 Half-Year Results – Change in revenue 140 + €0.9m €138.6 + €0.0m USD vs. EUR = +2.5% €136.6m - €2.8m Organic decrease of 2,0% €m 130 120 H1 2019 Scope effect Exchange rate Organic H1 2020 Revenue effect growth Revenue axway.com 37
Slide 38: Simplified balance sheet at 30/06/2020
Simplified balance sheet at 30/06/2020 In millions of euros 30/06/2020 30/06/2019 Assets Goodwill 350.6 347.2 Non-current assets 437.2 446.0 Trade receivables 64.7 52.8 Other current assets 38.5 38.4 Cash and cash equivalents 24.3 32.3 Current assets 127.5 123.5 → Cash and cash equivalents of €24.3m
Slide 39: Changes in equity & EPS at 30/06/2020
Changes in equity & EPS at 30/06/2020 In millions of euros 30/06/2020 30/06/2019 31/12/2019 Equity at Beginning of Period 362.6 362.7 362.7 Profit for the period -6.0 -6.1 5.4 Dividends - - -8.5 Capital increase 0.2 0.2 0.0 First-time application of IFRS16 - 0.0 -0.7 Other 1.5 -1.3 0.8 Foreign excha
Slide 40: 2020 Half-Year Results – Headcount
2020 Half-Year Results– Headcount 30/06/2020 31/12/2019 France 471 466 Rest of Europe 838 831 Americas 512 526 Asia/Pacific 64 62 Axway 1,885 1,885 → Attrition rate for the first half of 2020 fell to 15,4% with strong employee engagement axway.com 40
Slide 41: Shareholding structure at 30/06/2020
Shareholding structure at 30/06/2020 Pasquier Odin Treasury Caravelle Public Family Family shares Managers Shares outstanding 32.44% 21.13% 0.13% 1.39% 1.61% 12.07% 30.98% 0.25% Voting rights 38.31% 24.96% 0.13% 1.46% 1.57% 14.26% 19.32% Shareholders’ agreement 21,308,766 shares outstanding 56.70% o
Slide 42: 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