74software · EURONEXT:74SW
74software — Axway — Investor Presentation (November 2016)
50 slides from 74software's investor presentation, November 2016
Slide 1: Axway Investors Overview
Axway Investors Overview November 2016 1
Slide 2: Forward-looking statements disclaimer
• This presentation contains forecasts in respect of which there are risks and uncertainties concerning the company’s future growth and profitability. The group highlights the fact that the signature of license contracts, which often represent investments for clients, are more significant in the sec
Slide 3: Agenda
• TOP 50 Software Editors • Software Editor Business Model • Track Record of Profitable Growth • Status on the Company Transformation • Why Invest in Axway • Annexes 3
Slide 4: Axway key facts and figures
Axway a Leader in Gartner MQ for App Digital Business Services Governance for the Second Time (April 2015). Enablement TOP 10 Syntec Numerique API leader by Ovum July 2016 Rev. €284.6million Euronext Paris listing: 2011 OPM 15.6% Market cap €M 518 FCF/Rev 15.6% Float 29% Dual nationality 1,844+ empl
Slide 5: Enabling your digital business
S axway Enabling your digital business by connecting PEOPLE, PROCESSES & THINGS while governing-data flows throughout your ecosystem
Slide 6: TOP 50 Software Editor, From Middleware Market To Digital Market
TOP 50* Software Editor, From Middleware Market To Digital Market *source: Axway
Slide 7: Software market estimated at $300 billion
Software market estimated at $300 billion* Infrastructure software estimated at $ 169 billion* • Databases Applications software • Operating systems estimated at $130 billion* • Network management • Storage management • Accounting • Application integration • ERP solutions (Middleware) • Sales manage
Slide 8: Digital Business Enablement ecosystem
Big Data Identity API Community Social Media Billing Marketplace & Analytics Management Management Management & Collaboration & & eCommerce Payments Design, adopt & monetize new digital experiences mobile Digital cloud things Business DIGITAL BUSINESS Enablement ECOSYSTEM businesses customers develo
Slide 9: Executives and digital strategy readiness
CLOUD INTERNET OF MOBILE THINGS 74% of today’s business executives say they have a digital strategy… “…only 19% of executives believe their firms have the right technology to properly execute on the digital strategy.” 1 1”The State of Digital Business 2014, Forrester Research, Inc., May 7, 2014” 9
Slide 10: Digital Business Enablement offering
DIGITAL BUSINESS ENABLEMENT INTEGRATION FOUNDATION ECOSYSTEM ENGAGEMENT Managed File Transfer Analytics B2B/EDI Integration API Management Cloud Service Community Management Integration Identity Federation XML & SOA Services Identity Validation API Integration Mobile App Development 10
Slide 11: Analyst recognition: Gartner, IDC, Info-Tech
2014 2013 On-premises MFT App Integration - Info-Tech Suite - Gartner 2015 2014 Application B2B Gateway Services - IDC Governance “APIs are at the core of enabling - Gartner application transformation for digital business, giving access to functionality and data in your current applications to the n
Slide 12: Large enterprises expect at least 28% of revenues from digital business
LARGE ENTERPRISES EXPECT AT LEAST 28% OF REVENUES WILL COME FROM DIGITAL BUSINESS THE NEXT THREE YEARS Source: Accenture – “Harnessing the Power of Entrepreneurs to 12 Open Innovation,” 2015; n=2,000
Slide 13: PWC Global CEO Survey 2015
13 PWC – 18th Annual Global CEO Survey, 2015; n=1,322
Slide 14: Competitive landscape: generalists and specialists
Generalists Digital Foundation Traditional Middleware API Management and Integration Providers Specialists Specialists Cloud Integration and Integration Brokerages Ecosystem/Digital 14 Engagement
Slide 15: Software Editor Business Model
Software Editor Business Model 15
Slide 16: Revenue streams: licences, maintenance, cloud, services
Services Licences Classic Editor • • Perpetual usage rights Associated with 6% Cloud • Tiered pricing HY 2016 the initial installation Independent of licence • Standard licensing Service agreement agreement Cloud 23% 30% 28% Software as a Service 46% Rental mode Specific agreement 24% Maintenance 49
Slide 17: Cash life cycle and software business cycle
Cash life cycle (cumulative) Software Business Cycle 100,00% 2015 Rev. (€M) 80,00% 35 30 60,00% 25 20 40,00% 15 20,00% 10 5 0,00% 0 Feb Sep Nov Dec Jan Apr Aug Mar May Jul Oct Jun Q1 Q2 Q3 Q4 • Cash flow cycle – Influenced by grouped maintenance at the beginning of the year (Feb. March) – Increased
Slide 18: Company history and acquisitions
300 Revenue in €M Appcelerator 201 2016 250 2 200 8 200 201 4 200 7 150 200 6 100 200 2 50 0 1985 - 2000 2001 - 2005 2006 - 2009 2010 - 2012 2015 2016 Incubation B2B Collaborativ Network of Governing within and e Business professional the flow of data Digital Business Sopra Integration Solutions int
Slide 19: More than 11,000 customers served through 19 locations
France Rest of Europe R&D centre €95.2million €65.8million 680 people 672 people 2,077 customers 2,908 customers Americas North America Asia Pacific €XXmillion €13.9million 440people 59 people 4,014 customers 1,530 customers South America Africa 1,387 customers 73 customers 22 people More than 11,00
Slide 20: FY2015 revenue by region and activity
FY2015 BY REGION BY ACTIVITY Services Licences France Rest of Europe Of which Cloud 23% 23% 28% 33% 5% 39% 49% Asia/Pacific Americas Maintenance 20
Slide 21: Deal numbers and average sale price
• Nb Deals ~ 2050 • Share of Tiers 1 business(>250k€) – Share of nb. of deals: 2.9% – Share of total amount: 44.5% 2015 • Share of indirect business (€): 19% versu s 2014 • Share of New business (€): 7% • Average Sale Price – ASP Tiers 1 ~566k€ – ASP Tiers 2 (< 250 k€) ~110 k€ – ASP Tiers 3 (< 50 k€
Slide 22: Revenue by customer sector
SECTORS HEALTHCARE Others vs 2014 Supply Chain SUPPLY CHAIN 19% 19% Public Sector vs 2014 12% PUBLIC SECTOR 42% 9% Healthcare 27%vs 2014 45% FSI FSI vs 2014 22
Slide 23: Maintenance contribution and renewal rate
• Total Value/ Contribution ~ 138M€/49% • Attachement rate = 20% 2015 (average weighted by volume) versu s 2014 • Renewal rate (*) = 92.5% (average weighted by volume) * This percentage represents full year revenue impact 23
Slide 24: Subscription revenue and ASR
• Subscription recognized: 9.9 M€ (+44%) 2015 versu • ASR on 12/31/15 : 13.5M€ s 2014 ASR= committed subscription revenue in next 12 months 24
Slide 25: Headcount at end of 2015
Headcount at End of 2015 a USA 440 = re) rs) > & = 4 S = Ss 3S w N
Slide 26: Strengthened Governance
• Strengthened Governance • Board of Directors comprising 12 members, of which five are independent members o Pierre Pasquier Chairman o Kathleen Clark-Bracco Vice Chairman • Jean-Marc Lazzari • Compliance with the Middlenext Code of Corporate Governance • Chief Executive Officer • French-American m
Slide 27: Track Record of Profitable Growth
Track Record of Profitable Growth 27
Slide 28: Revenue and operating margin 2008-2015
Rev. (€M) OPM (%) 300 285 25% 262 250 237 208 217 224 20% 16.3 15.6 15.8 15.2 15.6 200 171 182 14.9 15% 150 11.8 10.2 10% 100 5% 50 0 0% 20082009201020112012201320142015 28
Slide 29: Income statement FY2015 revenue and gross profit
• Total Revenue grew 8.8 % with one additional quarter of Systar and a stronger Dollar • Gross Profit as a% of Revenue stable in all periods, with an underlying shift towards the Cloud • Sales, Marketing and R&D continued to grow to support a larger product and target customer base of euros In milli
Slide 30: Profit on operating activities to net profit
• Profit on Operating Activities finished at 15.6%, stable and comparable to prior years • Restructuring charge to rationalize our activities after years of acquisitions, primarily in our R&D and Sales areas • Income tax benefit in 2015 due to the release of certain tax asset valuation reserves as w
Slide 31: Balance sheet: assets
• Goodwill increased from the currency impact on conversion of US Dollar balance sheet • Strong cash balance to end 2015 at 44,7 M€ • DSO finished at 85, versus 105 at the end of 2014 In millions of euros 31/12/2015 31/12/2014 31/12/2013 ASSETS Goodwill 251.8 236.5 189.3 Intangible assets 40.9 45.6
Slide 32: Balance sheet: equity and liabilities
• No borrowings under 125 M€ RCF at 31 Dec 2015, Financial debt from other one off sources • Other current liabilities includes 66.6 M€ of deferred income in 2015 versus 61.6 M€ in 2014 In millions of euros 31/12/2015 31/12/2014 31/12/2013 SHAREHOLDERS' EQUITY AND LIABILITIES Share capital 41.5 41.1
Slide 33: Cash flow and working capital
• Working Capital Requirements — positive improvement 2015 with the conversion of receivables from customers and due from tax agencies • Free cash for 2015 is 44.5 M€ • Systar borrowing against RCF was paid off in 2015 In millions of euros FY 2015 FY 2014 FY 2013 Net profit for the period 27.9 26.7
Slide 34: 2015 results summary
Total revenue 2015 growth of 8.8% to 284 M€ Growth in results from operating activities to 15.6% of total revenues in 2015 Solid ending cash of 45 M€, well above guidance due to conversion of customer and tax receivables with some small opportunistic bank borrowings 34
Slide 35: Latest news November 2016
Latest news November 2016 35
Slide 36: Q3 2016 revenue by region and activity
2015 2015 Total Organic 2015 2015 Total Organic 3rd Quarter 2016 Reported Restated Growth Growth 1 3rd Quarter 2016 Reported Restated Growth Growth 1 France 19.3 20.5 20.5 -6.1% -6.1% Licenses 16.8 14.8 14.6 13.5% 15.2% Rest of Europe 17.6 16.1 15.4 9.3% 13.8% Maintenance 35.7 34.4 34.0 3.7% 4.8% Am
Slide 37: New Axway Brand & Positioning
3d Nov. 2016: New Axway Brand & Positionning About Axway Axway (Euronext: AXW.PA) is a catalyst for transformation. With Axway AMPLIFY™, our cloud-enabled data integration and engagement platform, leading brands better anticipate, adapt and scale to meet ever changing customer expectations. Our unif
Slide 38: Axway AMPLIFY platform launch
PHOENIX – November 3, 2016 – Axway (Euronext: AXW.PA), a catalyst for transformation, today introduced Axway AMPLIFY™, a new data integration and engagement platform that empowers organizations to unlock business value from a vast array of data sources to transform the customer experience. Developer
Slide 39: Status of the Company Transformation
Status of the Company Transformation
Slide 40: Strategic objectives by 2018
• Double Axway size • Preserve margins before acquisition • Target 20% growth annually in license/cloud revenue in the United States market • Achieve average annual growth of 30% in Ecosystem Engagement revenue • Keep our historic leadership in France • Active M&A plan on both engagement and foundat
Slide 41: Open, extensible, cloud-based
OPEN, EXTENSIBLE, CLOUD-BASED OPEN, EXTENSIBLE, CLOUD-BASED 41
Slide 42: Forrester Wave: Appcelerator in mobile infrastructure services
THE FORRESTER WAVETM: MOBILE INFRASTRUCTURE SERVICES, Q3 2015 Appcelerator is one of six vendors who is “…strong across the major mobile infrastructure disciplines … [and] …well suited to act as the centerpiece of nearly all enterprise mobility solutions.”1 ¹The Forrester . Wave™: Mobile Infrastruct
Slide 43: Strengthening Axway in governing the flow of data
To strengthen Axway in governing the flow of data in DIGITAL Rev. 2014 Rev. 2015 €261.6 M €284.6 M Rev. 2001 Active €50 M role in the Strengthen Market’ Axway in Rev. 1985 Independant consoli- Digital €45 M & Axway 5 dation creation Incubation within Sopra 1985 - 2000 2001 - 2010 Since 2011 2015… 33
Slide 44: R&D investments and pipeline driven by strategic plan
R&D key investments Pipeline driven by the strategic plan GEMEA Other 20% USA 14% 41% 45% FR-BN 28% Digital 27% MFT Engagement APAC LATAM 13% 10% 2% B2B Marketing campains Internal digital transformation 44
Slide 45: Strategic objectives by 2018
… • Double Axway size • Increase margins before acquisition • Target 20% growth annually in license/cloud revenue in the United States market • Achieve average annual growth of 30% in Ecosystem Engagement revenue • Keep our historic leadership in France • Active M&A plan on both engagement and found
Slide 46: Why invest in Axway
• A technology actor, Innovative model • A significant customer base, no risky dependence to one customer. • A high renewal rate on maintenance contracts. The recurring revenue is high and rising. • A leader position and good consolidation opportunities in Digital software market • A increased busin
Slide 47: Axway key facts and figures
Axway a Leader in Gartner MQ for Digital Business App Services Governance for the Second Time (April 2015). Enablement TOP 10 Syntec Numerique API leader by Ovum July 2016 Rev. €284.6million Euronext Paris listing: 2011 OPM 15.6% Market cap €M 518 FCF/Rev 15.6% Float 29% Dual nationality 1,844+ empl
Slide 48: Thank you
Thank you presentation available on www.investors.axway.com/en Mobile App: Axway IR available on Apple store & Android Patrick Gouffran Investor Relations pgouffran@axway.com
Slide 49: Annexes
Annexes 49
Slide 50: Definitions of financial indicators
Restated: Revenue for the prior year, expressed on the basis of the scope and exchange rates for the current year. Organic growth of revenue: Growth of operations between revenue for the period and the reprocessed revenue data for the same period of the preceding fiscal year. Profit (loss) from oper