Exclusive Networks SA — FY2023 Earnings Presentation
55 slides from Exclusive Networks SA's earnings presentation, Feb 29, 2024
Slide 1: Exclusive Networks FY 2023 Earnings call
#WeAreExclusive Exclusive Networks FY 2023 Earnings call
Slide 2: Disclaimer
Disclaimer #WeAreExclusive IMPORTANT: Please read the following before continuing. This document has been prepared by and is the responsibility of Exclusive Networks SA (the “Company”). It comprises information concerning the Company and its subsidiaries (together, the “Group”). What follows applies
Slide 3: Agenda
Agenda #WeAreExclusive 2023 Business Review FY-23 Financial Review Jesper Trolle, CEO Nathalie Bühnemann, CFO 9:00 am 9:20 am Q&A session Final remarks Jesper Trolle, CEO 9:35 am 9:50 am 3
Slide 4: Business Review
#WeAreExclusive Business Review Jesper Trolle CEO
Slide 5: FY-23 Highlights
FY-23 Highlights Significant increase in Value Creation #WeAreExclusive VISIBLE & DIVERSIFIED SCALE PROFITABLE GROWTH PORTFOLIO €468 m Net Margin 113% FY-23 net vendor €5.145 bn up 14% reported1 +13.9% yoy3 136% in FY-22 retention rate4 €186 m Adj. EBIT €5.267 bn up 16% at cc2 +20.6% yoy3 112% 133%
Slide 6: Investment Case
Investment Case Robust and durable fundamentals #WeAreExclusive Partner of choice for industry leaders, At the centre of a large and fast- Strong track record of profitable growth driving network effects growing cybersecurity market at scale with software-like attributes Op. leverage driving EBIT sc
Slide 7: Solid secular market dynamism
Solid secular market dynamism ExN outstripping a fast-growing cybersecurity market #WeAreExclusive 2024 TAM $87bn 2020 ExN growth >2x TAM1 $58bn SAM $60bn SAM2 $37bn EXN SAM $50bn $26bn EXN SAM3 x 1.9 Estimated market size computed at time of IPO “…global spending on cybersecurity is topping $ 188bn
Slide 8: Steady superior positioning
Steady superior positioning Constantly outpacing the largest and most innovative segments #WeAreExclusive FY-23 Top Tier Cybersecurity segments growth (%, 12 months rolling) 1 Market Growth Exclusive Networks 41% 40% 36% 37% 25% 25% 18% 11% 9% 11% 10% 9% 9% 7% 5% 2% IDENTITY ACCESS VULNERABILITY DAT
Slide 9: Continued strategic development
Continued strategic development Key growth levers #WeAreExclusive M&A Service Offerings ➢ 20 acquisitions over 10 ➢ Constantly seeking years. Vendor Evolution complementary Value- Added services in the ➢ 2 acquisitions completed most innovative in 2023 Geographic Expansion ➢ Partnering with best-in-
Slide 10: Proven ability to address growing digital demand
Proven ability to address growing digital demand Positioned to benefit from structural market growth #WeAreExclusive Cloud business mix FY-23 Gross Sales breakdown 32% Cloud-based Cloud delivery model FY-23 continues to accelerate +4pts vs Gross Sales as a preferred route to FY-22 market Category mi
Slide 11: Expanding into new geographies
Expanding into new geographies Strengthening vendor relationships APAC UK & Ireland DACH Australia UK & Ireland UK DACH APAC APAC 1st UK Distributor UK Indonesia FortiSASE Certified DACH North America EMEA META North America France France Africa Rest of EMEA ATC in Canada SASE capabilities accredite
Slide 12: Evolving our vendor portfolio
Evolving our vendor portfolio Constantly seeking the most innovative technologies #WeAreExclusive Main new vendors added organically in FY-23 Cybersecurity Risk Assessment Cybersecurity Risk Assessment Feature management platform development Pan EMEA EMEA & APAC Pan EMEA Data awareness & behavioural
Slide 13: Core differentiation lies in value-added services
Core differentiation lies in value-added services Supporting vendors and partners through the cycle Pre-sales Post-sales Market Making Financing Digitization Support & ▪ Credit lines provide ▪ Provide partners with a Maintenance partners with liquidity digital data solution to track ▪ Help with fina
Slide 14: Attractive up-sell opportunities with Services
#WeAreExclusive Attractive up-sell opportunities with Services High Value Services Offerings Major Services Milestones Launched our Cyber Risk Assessment (CRA), a transformative service that identifies technology, services, and compliance gaps within end user environments 30,000+ 12,123 students 10,
Slide 15: M&A remains a key lever for growth
M&A remains a key lever for growth Continued investments strengthening value proposition #WeAreExclusive Geographic expansion & scale Expand into new territories and reinforce market share where Exclusive Networks currently operates 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 & Beyon
Slide 16: Successful M&A strategy
Successful M&A strategy Zoom on Ingecom recent acquisition from Ignition Technology #WeAreExclusive Outstanding 2023 Expansion in Key Revenue Synergies performance Segments > FY-23 Gross Sales ➢ Cyber intelligence: ➢ Kick in 2024 • Gross Sales €55 m • Up +45% YoY • Strong vendor complementarity > Dr
Slide 17: Accelerating our sustainability journey
Accelerating our sustainability journey Embedded ESG targets for a sustainable & equitable future #WeAreExclusive Increase Employee Engagement S Improve Our Partner with Recycle 100% of end-of-life products Rate from 71% (2022) to 77% (2025). E Operations Supply Chain by end of 2030. Increase % of w
Slide 18: Addressing the shortage in cyber talent
Addressing the shortage in cyber talent The road to becoming a cyber-Guard #WeAreExclusive Cal Poly Associate Development Program Successful completion of 1st year Comprehensive set of courses promotion & launch of 2nd covering cybersecurity Program to prepare a “bench” Field mentorship to gain prom
Slide 19: Building our talent pool to sustain growth
Building our talent pool to sustain growth Priority given to human capital #WeAreExclusive A talented team of FTE Evolution1 2,539 2,367 2,600+ people worldwide 44% 56% 2,226 c. 25% tech profiles Average age <38 years old Average tenure 4.7 years at end December 2023 FY-21 FY-22 FY-23 Strongly engag
Slide 20: Key Takeaways
Key Takeaways CIOs cybersecurity budgets expected to increase in the years to come Strategically positioned to continue to outpace cybersecurity market growth Multiple drivers of long-term growth 20
Slide 21: Financial Review
#WeAreExclusive Financial Review Nathalie Bühnemann CFO
Slide 22: Strong delivery on FY-23 Guidance
Strong delivery on FY-23 Guidance A new milestone achieved, beating all financial targets #WeAreExclusive FY-23 outlook FY-23 achievements 2023 achievements (Feb 28, 2023) Gross sales Above €5,150 m ✓ €5,267 m at cc1 Net margin €450- €465 m ✓ €468 m Adj. EBIT €172 – €178 m ✓ €186 m Adj. operating FC
Slide 23: IFRS Accounting Treatment
IFRS 15 Accounting Treatment Impact of IFRIC and ESMA releases #WeAreExclusive IFRS 15 Revenue Former Accounting Treatment € million Constant Constant Accounting Treatment Q4-22 Q4-23 Reported FY-22 FY-23 Reported Currency Currency before IFRIC and ESMA EMEA release: 911 920 +1% +3% 2,704 3,072 +14%
Slide 24: Q4-23 Sales Update
#WeAreExclusive Q4-23 Sales Update
Slide 25: Healthy performance driven by organic growth
#WeAreExclusive Healthy performance driven by organic growth Quarterly Gross Sales growth Q4-23 Drivers of growth € million € million +12% +9% +9% +13% +29% +15% 1,585 +6% +1% +2% 1,585 +9% 1,454 1,454 +28% +12% 1,228 1,180 1,152 1,127 1,027 920 Same Vendors, Q1 Q2 Q3 Q4 Q4-22 Same Vendor M&A Q4-23
Slide 26: Solid growth powered by EMEA and NAM
#WeAreExclusive Solid growth powered by EMEA and NAM Quarterly Gross sales by Region € million +9% +29% +15% +16% +7% • Driving force of the Group with continued +27% +12% +14% sound momentum in the most mature 1,154 1,241 market 730 925 798 897 857 973 • High single-digit growth in Q4-23 adding on
Slide 27: Growth in Americas reflected in large deals evolution
#WeAreExclusive Growth in Americas reflected in large deals evolution Q4-23 Gross Sales Q4-23 Gross Sales breakdown by geography breakdown by deal size APAC (-1 Pts) Americas (+3 Pts) 7% Deals <€20k (-1 Pts) Deals >€1m 16% (+4 Pts) 22% 15% 8% 18% 17% 12% Q4-22 Q4-22 Inner pie 9% Inner pie chart Deal
Slide 28: FY-23 Financial Overview
#WeAreExclusive FY-23 Financial Overview
Slide 29: Continued strong improvement in operating leverage
Continued strong improvement in operating leverage #WeAreExclusive FY-23 H2 H2 Profitability FY-23 vs FY-22 H1-22 H2-22 vs. H1 FY-22 H1-23 H2-23 vs. H1 FY-23 vs. € million FY-22 Gross sales 1,947 2,580 +33% 4,528 2,331 2,814 +21% 5,145 +14% Net margin 188 223 +19% 411 222 246 +11% 468 +14% % Gross S
Slide 30: Outstanding organic performance above target
#WeAreExclusive Outstanding organic performance above target Gross sales FY-23 vs FY-22 FY-23 Drivers of growth € million € million +16% +16% +14% Constant Currency 5,145 +1% +1% -3% 5,145 4,528 +12% +22% +9% +34% +15% +20% 2,814 2,580 2,331 4,528 1,947 +14% Reported H1 H2 FY FY-22 Organic Pricing S
Slide 31: Large deals trend mainly driven by Americas
#WeAreExclusive Large deals trend mainly driven by Americas FY-23 Gross Sales FY-23 Gross Sales breakdown by geography breakdown by deal size APAC (-2 Pts) Deals >€1m 8% (+3 Pts) Deals <€20k (-1 Pts) Americas (+1 Pts) 18% 18% 13% 10% 15% 19% 12% Deals €500k - €1m 9% 9% FY 2022 – FY 2022– Inner pie (
Slide 32: Accelerated improvement in operating leverage in FY-23
Accelerated improvement in operating leverage in FY-23 > 200 bps #WeAreExclusive Net margin growth FY-21 to FY-23 Controlled OPEX Evolution FY-23 vs FY-22 € million € million 468 411 +14% +29% 257 282 320 +10% 5% 5% 9.8% 9.1% 9.1% 24% 26% Decrease in weight of Opex by FY-21 FY-22 FY-23 170 bps in th
Slide 33: Regional operating leverage focus bearing fruits
#WeAreExclusive Regional operating leverage focus bearing fruits Gross sales, IFRS Revenue and Adj. EBIT by Region Gross sales Revenue Adj. EBIT1 • Gross Sales reaching high teens growth +16% +7% after a record year in FY-22 +5% +19% EMEA +14% 191 • Adj. EBIT growth outpacing Gross Sales 3,539 4,036
Slide 34: Adjusted net income above €100m
Adjusted net income above €100m #WeAreExclusive FY-23 FY-23 vs FY-22 Simplified P&L H1-22 H2-22 FY-22 H1-23 H2-23 FY-23 € million vs. FY-22 Gross sales 1,947 2,580 4,528 2,331 2,814 5,145 +14% Net margin 188 223 411 222 246 468 +14% % Gross sales 9.6% 8.6% 9.1% 9.5% 8.7% 9.1% Adj. EBIT 67 87 154 84
Slide 35: Healthy balance sheet with strong year-end cash position
Healthy balance sheet with a strong year-end cash position above €300 m #WeAreExclusive € million Assets € million Liabilities 31 Dec. 23 31 Dec. 22 31 Dec. 23 31 Dec. 22 3,433 3,191 3,433 3,191 Equity 961 956 Intangible Assets 1,352 1,406 Other 776 92 Non-Current Liabilities Non-Current Assets 785
Slide 36: Consistent high cash conversion ratio above 80%
Consistent high cash conversion ratio above 80% of Adj. EBITDA #WeAreExclusive Bridge Adj. Operating FCF FY-22 to FY-23 € million (3) 36
Slide 37: Strong working capital improvement
Strong working capital improvement mainly linked to inventory normalization #WeAreExclusive Trade Working Capital from FY-21 to FY-23 € million FY-21 FY-22 FY-23 Inventories 150 271 220 % of Gross Sales 5% 6% 4% Trade Receivables 893 1,074 1,304 % of Gross Sales 27% 23% 25% Trade payables (790) (1,0
Slide 38: Leverage ratio reduced to historical low of 0.8x
Leverage ratio reduced to an historical low level of 0.8x #WeAreExclusive Net debt breakdown Dec-22 Dec-23 € million Bank borrowings 462 476 Short-term loans and other financial liabilities 61 41 Financial gross debt 523 516 Cash & cash equivalent (268) (369) Bank overdraft 6 11 Net debt 260 158 Lev
Slide 39: Financial key takeaways
Financial key takeaways Strong cash position enabling financing of our double-digit organic growth Current leverage ratio allows significant room for potential M&A opportunities Further improvement expected in FY-24 39
Slide 40: FY-24 Outlook
#WeAreExclusive FY-24 Outlook FY-24 Outlook (Feb 29, 2024) Gross sales growth in a range of +10% and +12% at constant currency Net margin €500- €515 m Adj. EBIT €200 – €210 m Adj. Operating FCF 80% of Adj. EBITDA 40
Slide 41: Shareholder's return
#WeAreExclusive Shareholder’s return Shareholder’s return Strategic view Priority given to the development of the company Continue to provide flexibility to the company in M&A build Business rationale up opportunities and further strengthen Exclusive Networks’ business model and its value creation.
Slide 42: Q&A
#WeAreExclusive Q&A
Slide 43: Next events
#WeAreExclusive Next events Q1-24 April 29th, 2024 Gross Sales & IFRS Revenue Annual General Meeting June 6th, 2024 H1-24 August 1th, 2024 Financial Results Capital Market Day Autumn 2024 43
Slide 44: Appendix
Appendix
Slide 45: Reconciliation of IFRS
Reconciliation of IFRS 15 Impact of IFRIC and ESMA releases #WeAreExclusive IFRS 15 Revenue former accounting treatment Q1-22 Q2-22 Q3-22 Q4-22 FY-22 Q1-23 Q2-23 Q3-23 Q4-23 FY-23 € million EMEA 567 595 630 911 2,704 698 695 760 920 3,072 AMERICAS 70 74 89 116 348 106 115 109 137 467 APAC 76 93 89 9
Slide 46: From Gross sales to Revenue
#WeAreExclusive From Gross sales to Revenue Gross sales to revenue reconciliation (€ million) Q4-22 FY-22 Q4-23 FY-23 Gross sales 1,454 4,528 1,585 5,145 (1,015) (3,063) (1,180) (3,586) Agent vs principal – IFRS 15 Revenue 439 1,466 405 1,559 46
Slide 47: From EBIT to Adj. EBIT/Adj. EBITDA
From EBIT to Adj. EBIT/Adj. EBITDA EBIT to Adj. EBIT/Adj. EBITDA reconciliation (€ million) FY-22 FY-23 Operating profit 79 111 Amortisation of intangible assets 60 60 Non-recurring operating income and expenses - IFRS 5 3 Non-recurring operating income and expenses - Non-GAAP 9 11 EBIT adjustments
Slide 48: Non-recurring operating items– IFRS and non-GAAP
Non-recurring operating items– IFRS and non-GAAP Non-recurring operating items reconciliation (€ million) FY-22 FY-23 Amortisation of intangible assets 60 60 Acquisition costs 1 1 Integration costs 4 1 Other1 0 1 Non-recurring operating income & expenses – IFRS 5 3 Implementation costs 4 5 Share-bas
Slide 49: From Net Income to Adj. Net income
From Net Income to Adj. Net income Net income to Adj. Net income reconciliation (€ million) FY-22 FY-23 Net income 39 45 EBIT adjustments 75 75 Financial result adjustments - 2 Tax adjustments (14) (14) Net income adjustments 61 63 Adj. Net income 100 108 1. Including litigation costs, gains and los
Slide 50: From Adj. EBITDA to Adj. Operating FCF
From Adj. EBITDA to Adj. Operating FCF Adj. EBITDA to adj. operating FCF reconciliation (€ million) FY-22 FY-23 Adj. EBITDA 167 199 Adj. EBIT 154 186 Depreciation and amortization of tangible assets 13 13 Other non-cash items 1 0 Repayment of lease liabilities (9) (10) Operating capex (6) (7) Change
Slide 51: P&L IFRS from Financial Statement
P&L IFRS from Financial Statement € million 31 Dec. 2022 31 Dec. 2023 Revenue 1,466 1,559 Costs of purchases goods and services (1,048) (1,084) Freight on sales (6) (7) Net margin 411 468 Personnel costs (183) (200) Other operating costs (71) (81) Amortization of intangible assets (60) (60) Deprecia
Slide 52: Balance-sheet IFRS from Financial Statement
Balance-sheet IFRS from Financial Statement € million 31 Dec. 2022 31 Dec. 2023 ASSETS Goodwill 295 297 Other intangible assets 1,112 1,055 Property, plant and equipment 7 8 Right-of-use assets 26 26 Other non-current financial assets 40 51 Deferred tax assets 8 7 NON-CURRENT ASSETS 1,488 1,444 Inve
Slide 53: Consolidated statements of Cash Flow
Consolidated statements of Cash Flow € million 31 Dec. 2022 31 Dec. 2023 OPERATING ACTIVITIES Net income 39 45 Adjustments for: - Depreciation, amortization, impairment and change in provisions 74 73 - Financial debt costs & interest on lease liabilities 19 29 - Income tax expenses 13 11 Other adjus
Slide 54: Balanced debt maturity profile
Balanced debt maturity profile Debt maturity breakdown (€ million) #WeAreExclusive 607 607 99 460 458 138 138 369 315 62 10 5 Available 2024 2025 2026 liquidity Cash & equivalent RCF and loans undrawn Overdraft undrawn Overdrafts, loans & others Facility B1 Facility B2 54
Slide 55: Thank You
#WeAreExclusive Thank You Investors & Analysts Hacene BOUMENDJEL , Head of IR ir@exclusive-networks.com