74software · EURONEXT:74SW
74software — Axway — FY2019 Earnings Presentation
40 slides from 74software's earnings presentation, Feb 20, 2020
Slide 1: 2019 Full-Year Results
2019 Full-Year Results Analysts Conference – February 20, 2020 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 its contracts, which often represent investments for customers, are historically
Slide 3: Agenda
2019 Full-Year Results Agenda 1 - Success of 2019 targets & Continuation of the transformation Patrick Donovan Chief Executive Officer 2 - Customer Success Organisation: Momentum & Impact 3 - 2019 Financial Results Roland Royer Chief Customer Officer 4 - 2020 Targets & Mid-term ambitions 5 - Q&A 3
Slide 4: Success of 2019 targets & Continuation of the transformation
Success of 2019 targets & Continuation of the transformation Patrick Donovan Chief Executive Officer
Slide 5: Success of 2019 targets
Success of 2019 targets €300m organic growth ✓ Revenue above expectations +3.3% 8.6% or ✓ Profit on Operating Activities in line with guidance €25.9m +41.7% or ✓ Strong growth in the Subscription business €59.6m +33.3% or ✓ Significant increase in ACV* €17.5m +8.3% or ✓ Growth of the Signature Metri
Slide 6: Leadership in the Hybrid Integration Platforms Market
Leadership in the Hybrid Integration Platforms Market Axway a Leader in the Gartner™ Magic Quadrant for Full Life Cycle API Management (October 2019) Axway a Strong Performer in The Forrester Wave™: Strategic iPaaS and Hybrid Integration Platforms (Q1 2019) The Forrester Wave™: Strategic iPaaS and H
Slide 7: Transformation of the Group in 2019
Transformation of the Group in 2019 innovation effort REBOOTED GO-TO-MARKET ▪ Acquisition of Streamdata.io ▪ Creation of dedicated teams ▪ Increase in R&D investments to accelerate growth ▪ AMPLIFY™ Go-Live ▪ Increase in Sales & Marketing ▪ Analysts recognition investments ▪ Significant growth in pi
Slide 8: Accelerated innovation, stabilized R&D investments
Accelerated innovation, stabilized R&D investments R&D Investments (€m) R&D Allocation (%) Strategic M&A AMPLIFY & Foundation Maintenance Others €58m €61m in 2018 in 2019 32,6 31,2 68,5 76 76 65 28,7 26,8 S1 2018 S2 2018 S1 2019 S2 2019 H1 2018 H2 2018 H1 2019 H2 2019 → R&D resource allocation refoc
Slide 9: Reinforcement of the management team
Reinforcement of the management team → Appointments to the Executive Committee C.Allmacher D.Fougerat P.French Chief Financial Officer EVP People & Culture EVP Go-to-Market 9
Slide 10: Stronger employee engagement
Stronger employee engagement Return to recruitments Improved Employee Engagement Score Lower Attrition +308 or +2% net increase in the workforce +18% or 58% in 2019 vs. 49% in 2018 -15% i.e. 17.7% yearly attrition rate → Employee engagement boosted - Launch of Axway University 2.0 - Half-yearly Empl
Slide 11: Customer Success Organisation: Momentum & Impact
Customer Success Organisation: Momentum & Impact Roland Royer Chief Customer Officer
Slide 12: Our Customer Success Journey started mid-2018
Our Customer Success Journey started mid-2018… Sequences of a perpetual license offer Cycle of a subscription offer PURCHASE SUBSCRIPTION SALE IMPLEMENT SUPPORT RENEW Try & Buy / Sales → Can lead to disconnects in handoff’s → Perception of “Hit & Run” for the customer → Can lead to customer expectat
Slide 13: Revamping our Brand & Go-to-Market Strategy
Revamping our Brand & Go-to-Market Strategy Build Brand Awareness Renewed investment in solution marketing & Axway branding Business Value Messaging Highlighting Customer Success and business value over product features Position Axway as Digital Strategists The Axway Catalyst team takes consulting t
Slide 14: Driving Excellence in Sales Execution
Driving Excellence in Sales Execution → New General Managers B.Kearney GM APAC S.Torvik GM North America → New General Managers in 3 Regions out of 4 → Accelerated recruitment of API Management experts → Regional Inside Sales teams A.Saad → Regional alignment and reinforcement of Customer Success Ma
Slide 15: Measuring Success
Measuring Success Customer Loyalty Leading indicator based on Customer feedback Signatures growth in AMPLIFY API Management API Management the “doorway” to AMPLIFY™ Subscription Revenue Growth Transition to Consumption based model 15
Slide 16: Pipeline & Signatures growth in AMPLIFY API Management
Pipeline & Signatures growth in AMPLIFY API Management APIM Pipeline Trend (€m) +65% 110 90 70 compared to 50 106 94 82 January 19 30 57 67 10 → Axway API Management solution identified as leader -10 January 2019 April 2019 July 2019 October 2019 December 2019 → Q4 impact of new Go-to-Market strateg
Slide 17: Significant increase in Subscription Revenue & New ACV
Significant increase in Subscription Revenue & New ACV Subscription Revenue Trend (€m) +42% 40 30 year-over-year 20 36,5 10 18,8 21,5 23,1 → All major offerings available in subscription mode 0 since mid-2019 H1 2018 H2 2018 H1 2019 H2 2019 → Sales enablement and incentive reviewed in H2 2019 New AC
Slide 18: 2020 Success: Direction and Priorities
2020 Success: Direction and Priorities INCREASE OUR STRATEGIC VALUE ACCELERATE SUCCESS OF & POSITIONING WITH KEY CUSTOMERS AMPLIFY & APIM SOLUTION CATALYSTS INSIDE SALES DEVELOP STRONG REGIONAL PARTNERSHIPS TO DRIVE AMPLIFY™ BUSINESS DIGITAL STRATEGY APIM SALES CONSULTING SPECIALISTS RENEWED CUSTOME
Slide 19: Taking Customer Success to the Next Level
Taking Customer Success to the Next Level + + Go-To-Market strategy Sales Customer & Brand awareness Execution Success Management FROM START TO FOREVER 19
Slide 20: 2019 Financial Results
2019 Financial Results Patrick Donovan Chief Executive Officer
Slide 21: Full-Year 2019 - Income Statement
Full-Year 2019 - Income Statement In millions of euros 2019 2018 Organic growth of Total growth of +3.3% +5.7% Revenue 300.0 283.8 Cost of sales 88.4 84.2 in revenue in revenue Gross Profit ( % of Revenue) 211.5 70.5% 199.7 70.3% Operating expenses 185.6 167.8 Increase of Stabilisation at of which S
Slide 22: Full-Year 2019 - Revenue by Activity
Full-Year 2019 - Revenue by Activity 2018 2018 Total Organic 18% 13% [€m] 2019 License Services Restated* Reported Growth Growth* License 52.8 57.6 56.5 -6.5% -8.3% Subscription 59.6 42.1 40.3 +47.8% +41.7% 20% Subscription Maintenance 146.7 145.9 142.8 +2.7% +0.6% 49% Services 40.8 44.9 44.2 -7.6%
Slide 23: Full-Year 2019 - Focus on Subscription activity
Full-Year 2019 - Focus on Subscription activity 2018 2018 Organic [€m] 2019 Restated* Reported Growth* Subscription 59.6 42.1 40.3 +41.7% of which Q4 19 23.0 10.6 10.9 +116.7% New ACV 17.5 13.1 13.1 +33.3% * Alternative performance measures are defined in the glossary at the end of this document → S
Slide 24: Full-Year 2019 - Focus on License & Maintenance activities
Full-Year 2019 - Focus on License & Maintenance activities 2018 2018 Organic [€m] 2019 Restated* Reported Growth* License 52.8 57.6 56.5 -8.3% of which Q4 19 19.6 19.4 18.9 +1.2% Maintenance 146.7 145.9 142.8 +0.6% * Alternative performance measures are defined in the glossary at the end of this doc
Slide 25: Full-Year 2019 – Signatures Metric
Full-Year 2019 – Signatures Metric New Weighting Weighted New [€m] Signatures Factor Signatures Value → New ACV up 33.3% organically License 52.8 1x 52.8 → 8.3% organic growth in the signatures metric, continuing the 7.8% growth in 2018 New 17.5 3x 52.5 Subscription (ACV*) → Equal contribution of Li
Slide 26: Full-Year 2019 - Revenue by Geography
Full-Year 2019 - Revenue by Geography 2018 2018 Total Organic [€m] 2019 Restated* Reported Growth Growth* 22% 29% Rest France of Europe France 86.4 80.9 80.9 +6.7% +6.7% Rest of Europe 67.3 65.7 65.7 +2.4% +2.4% Americas 129.8 128.7 122.3 +6.1% +0.8% 6% 43% Asia - Pacific Americas Asia / Pacific 16.
Slide 27: Main Balance Sheet items at 31/12/2019
Main Balance Sheet items at 31/12/2019 Cash and equivalents DSO Total Assets €21.1m 77 days €568.8m vs. €35.8m at 31/12/2018 stable vs. 31/12/2018 vs. €553.8m at 31/12/2018 Net debt Current deferred revenues Total Equity €21.6m €60.6 €362.6m vs. €10.2m at 31/12/2018 vs. €75.2m at 31/12/2018 vs. €362
Slide 28: Cash flows & Covenants at 31/12/2019
Cash flows & Covenants at 31/12/2019 31/12/2019 31/12/2018 31/12/2017 In millions of euros 31/12/2019 31/12/2018 Net profit for the period 5.4 11.0 Change in operating working capital requirements -19.3 -3.6 EBITDA Cost of debt 43.9 45.2 40.19 (covenant > 5) Net cash from operating activities 13.6 2
Slide 29: 2020 Targets & Mid-terms ambition
2020 Targets & Mid-terms ambition Patrick Donovan Chief Executive Officer
Slide 30: Unchanged technological ambition: 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 31: 2020 Targets
2020 Targets Axway raises its revenue target and now aims Employee for revenue in excess of €310 million engagement Customer The Group anticipates a rebound in profitability, Satisfaction enabling it to achieve an operating margin on business activity >10% Growth & Profitability The Group also aspir
Slide 32: Mid-term ambitions
Mid-term ambitions Achieve revenue of €500 million through organic growth in sales and acquisitions Return to operating margin on business activity rates above 15% and gradually move towards 20% Sustainably increase earnings per share to above €1 32
Slide 33: Q&A
Q&A Microphones are at your disposal
Slide 34: Annexes
axway Annexes
Slide 35: Full-Year 2019 – Change in revenue
Full-Year 2019 – Change in revenue 305 +€9.5m €300.0m 295 +€6.7m Organic growth €283.8m +€0.0m M€ 285 of 3,3% USD vs. EUR = +6.1 % 275 265 2018 Revenue Scope effect Exchange rate Organic Growth 2019 Revenue effect 35
Slide 36: Simplified Balance Sheet at 31/12/2019
Simplified Balance Sheet at 31/12/2019 In millions of euros 31/12/2019 31/12/2018 Assets Goodwill 350.0 344.1 Non-current assets 442.7 422.7 Trade receivables 71.9 65.6 → Cash and cash equivalents of €21.1m Other current assets 33.2 29.7 Cash and cash equivalents 21.1 35.8 → DSO at 77 days, stable o
Slide 37: Changes in equity and Earnings per share at 31/12/2019
Changes in equity and Earnings per share at 31/12/2019 In millions of euros 31/12/2019 31/12/2018 31/12/2017 Equity at Beginning of Period 362.7 344.1 374.8 Profit for the period 5.4 11.0 4.4 Dividends -8.5 -4.2 -8.5 Capital increase 0.0 0.2 3.2 First-time application of IFRS16 -0.7 0.0 0.0 Other 0.
Slide 38: Full-Year 2019 - Headcount
Full-Year 2019 - Headcount 31/12/2019 31/12/2018 France 466 468 Rest of Europe 831 771 Americas 526 537 Asia - Pacific 62 72 Axway 1,885 1,848 38
Slide 39: Shareholding structure at 31/12/2019
Shareholding structure at 31/12/2019 Pasquier Odin Sopra Treasury Sopra Steria Managers Caravelle Public Family Family GMT shares Shares outstanding 32.57% 0.13% 1.39% 1.60% 21.22% 12.12% 30.75% 0.22% Voting rights 36.08% 0.13% 1.51% 1.62% 25.94% 14.80% 19.88% Shareholders’ agreement 21,225,381 Shar
Slide 40: 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