74software · EURONEXT:74SW
74software — Axway — H1 2023 Earnings Presentation
39 slides from 74software's earnings presentation, Jul 26, 2023
Slide 1: Half-Year Results Analysts Conference
2023 Half-Year Results Analysts Conference July 26, 2023
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 1. Operational Commentary on H1 2023 2. H1 2023 Financial Results 3. Customers & Market Trends 4. Looking to H2 2023 and Beyond 5. Q&A Session Patrick Donovan Chief Executive Officer Cécile Allmacher Chief Financial Officer Roland Royer Chief Customer Officer 3
Slide 4: Operational Commentary on H1 2023
Operational Commentary on H1 2023 Patrick Donovan Chief Executive Officer
Slide 5: Momentum continues!
Momentum continues! 3RD QUARTER OF PORTFOLIO RATIONALIZATION READY FOR STRONG ORGANIC GROWTH AND FOCUS PLAN NEXT STRATEGIC PHASE IMPROVED CONTINUED CUSTOMER REINVESTMENT FREE CASH FLOW IN MAIN PRODUCT LINES 5
Slide 6: H1 2023 Key Figures
H1 2023 Key Figures €145.5m Revenue compared to €136.4m in H1 2022, an organic growth of 11.0% €17.8m Profit on Operating Activities or 12.2% of revenue, up 730bps vs. 4.9% in H1 2022 +50.5% Subscription Growth or €78.7m vs. €55.9m in H1 2022 +11.2% ARR Growth or €203.1m vs. €189.8m in H1 2022 axway
Slide 7: Our stakeholders are at the heart of our strategy
Our stakeholders are at the heart of our strategy OUR CUSTOMERS OUR EMPLOYEES OUR SHAREHOLDERS Delivering brilliant Axway — The place to be Building a predictable, customer experience profitable company for the long term 7
Slide 8: Focus on strategic core product lines
Focus on strategic core product lines 4 Main product lines representing 90% of Axway’s revenue Axway Amplify API Managed File Transfer Management Platform Secure, reliable, and The only open, independent easy-to-manage solution for platform for governing APIs transferring data between across teams,
Slide 9: Product portfolio investments
Product portfolio investments EXTENSION OF CAPABILITY GROWING CUSTOMER NEEDS Amplify Enterprise Marketplace Acquisition of Unifying distributed APIs to enable more robust governance and security, ensuring compliance and consistent API lifecycle management and monetization Amplify Integration Integra
Slide 10: H1 2023 Financial Results
H1 2023 Financial Results Cécile Allmacher Chief Financial Officer
Slide 11: 2023 Half-Year Results: Income Statement
2023 Half-Year Results KEY FIGURES INCOME STATEMENT H1 2023 H1 2022 In millions of euros €m % of Rev. €m % of Rev. Revenue 145.5 136.4 Cost of sales 42.9 45.8 Gross Profit 102.6 70.5% 90.6 66.4% Operating expenses 84.8 83.9 of which Sales and marketing 42.1 42.8 of which Research and development 29.
Slide 12: Revenue by Activity
2023 Half-Year Results REVENUE BY ACTIVITY 2% H1 2022 H1 2022 Total Organic License 13% [€m] H1 2023 Restated* Reported Growth Growth* Services License 3.0 5.5 6.3 -52.5% -44.9% 54% Subscription Subscription 78.7 52.3 55.9 +40.8% +50.5% Maintenance 44.6 55.1 56.0 -20.4% -19.1% 31% Maintenance Servic
Slide 13: License & Maintenance Activities
2023 Half-Year Results LICENSE & MAINTENANCE ACTIVITIES H1 2022 H1 2022 Total Organic [€m] H1 2023 Restated* Reported Growth Growth* License 3.0 5.5 6.3 -52.5% -44.9% of which Q1 23 2.1 3.5 3.7 -42.6% -39.5% of which Q2 23 0.9 1.9 2.6 -66.6% -54.8% Maintenance 44.6 55.1 56.0 -20.4% -19.1% of which Q
Slide 14: Subscription Activity
2023 Half-Year Results SUBSCRIPTION ACTIVITY H1 2022 H1 2022 Total Organic [€m] H1 2023 Restated* Reported Growth Growth* Subscription 78.7 52.3 55.9 +40.8% +50.5% of which Q1 23 37.8 24.7 26.4 +43.1% +53.1% of which Q2 23 40.9 27.6 29.5 +38.7% +48.2% * Alternative performance measures are defined i
Slide 15: Services Activity
2023 Half-Year Results SERVICES ACTIVITY H1 2022 H1 2022 Total Organic [€m] H1 2023 Restated* Reported Growth Growth* Services 19.2 18.2 18.2 +5.3% +5.7% of which Q1 23 9.5 9.0 9.0 +6.1% +5.4% of which Q2 23 9.7 9.1 9.3 +4.5% +6.0% * Alternative performance measures are defined in the glossary at th
Slide 16: ARR (Annual Recurrent Revenue)
2023 Half-Year Results ARR (Annual Recurrent Revenue) 210 Half-Year ARR (€m) 200 190 180 203 170 190 175 160 163 164 150 H1 2019 H1 2020 H1 2021 H1 2022 H1 2023 16
Slide 17: Main Balance Sheet items at 30/06/2023
2023 Half-Year Results Main Balance Sheet items at 30/06/2023 Cash and cash equivalents DSO Total assets €14.2m 137 days €545.4m vs. €18.3m at 31/12/2022 vs. 124 days at 30/06/2022 vs. €571.1m at 31/12/2022 Net debt Current deferred revenues Total equity €73.4m €66.5m €314.6m vs. €69.5m at 31/12/202
Slide 18: Cash Flows
2023 Half-Year Results CASH FLOWS In millions of euros H1 2023 H1 2022 Net profit for the period 3.7 2.4 Change in operating working capital requirements 4.5 2.3 Net cash from operating activities 23.1 13.1 Free cash flow 16.5 8.2 Net cash used in investing activities -8.6 -9.7 Net cash used in fina
Slide 19: Customers & Market trends
Customers & Market trends Roland Royer Chief Customer Officer
Slide 20: Customer success as a company value
Customer success as a company value Growth factors AVERAGE MIGRATION NET RETENTION RATE NEW CUSTOMERS MULTIPLIER CONTRACT VALUE MAINTENANCE MOVING OF WINS WITH RENEWED OR MOVED TO SUBSCRIPTION NEW CUSTOMERS TO SUBSCRIPTION 20
Slide 21: Reinforcing customer-focused culture
Reinforcing customer-focused culture Long-term relationships + Strong execution + Technology advancement = Successful outcomes CUSTOMER STRONG EXECUTION INNOVATION COMMUNITY SALES ORGANIZATION 3 IN-PERSON SUMMITS FOCUS INNOVATION ON EACH MAIN GATHERING 300 COMPANIES PRODUCT LINES TO SUPPORT 30 USER
Slide 22: Revenue & pipeline growth
Revenue & pipeline growth Core product lines dynamic MANAGED API CONSUMPTION INTEGRATION FILE TRANSFER & MARKETPLACE ➢ CLEAR TREND TOWARDS ➢ STRONG BOOKING SAAS AND MANAGED GROWTH IN ALL REGIONS ➢ 6 NEW CUSTOMERS SERVICES ➢ ACCELERATION OF THE ADOPTED THIS OFFER ➢ NEW INTEGRATION MOVE TO SAAS LAUNCH
Slide 23: Looking ahead
Looking ahead Continued momentum SOLID PIPELINE FOR H2 STILL GREAT POTENTIAL COVERAGE OF INITIAL CUSTOMER BASE STABLE VS. LAST YEAR STILL AVAILABLE TO MIGRATE DESPITE H1 SOLID BOOKING GROWTH 23
Slide 24: Looking to H2 2023 & beyond
Looking to H2 2023 & beyond Patrick Donovan Chief Executive Officer 24
Slide 25: H2 2023 Priorities
H2 2023 Priorities 01 02 03 Employee Engagement Continued Focus on Delivering Portfolio Management Ensure all Axway employees Operational Efficiency Execution understand and are engaged in Confidence in our strategy Add assets aligned to strategy and delivering delightful customer and guidance prope
Slide 26: Confirming our guidance and ambitions
Confirming our guidance and ambitions 2023 FY GUIDANCE MID-TERM AMBITIONS Organic Revenue Growth Profit on Operating Activities ≈ 20% between 0% and +3% Profit on Operating Activities Opportunistic Strategy to €500m Revenue between 15% and 18% of total Revenue 26
Slide 27: Axway's historical performance
Axway’s historical performance Revenue (€m) BUSINESS MODEL TRANSITION POA (€m) 330 Revenue (€m) 60 314 Profit on Operating Activities (€m) 310 301 300 300 55 297 290 285 284 286 50 51 270 262 45 46 250 45 238 40 230 224 40 41 217 38 35 210 35 35 33 30 190 32 31 170 25 26 150 20 2011 2012 2013 2014 2
Slide 28: Progressive normalization of Free Cash Flow
Progressive normalization of Free Cash Flow 80 22% Profit on Operating Activities (€m) BUSINESS MODEL FCF as a % of revenue TRANSITION 70 18% 60 14% 50 First Customer Managed Subscription Offer FCF / Rev. (%) POA (€m) 40 10% 30 6% 20 2% 10 0 -2% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Slide 29: 2024 and beyond – Establish capital allocation program
2024 and beyond – Establish capital allocation program Path to €500 million M&A OPPORTUNITIES ▪ From 2023 onwards, FCF and POA will allow more flexibility to explore M&A options ▪ Over the last 3 years, acquisitions were limited to the addition of product functionality ▪ Built out M&A team to suppor
Slide 30: Q&A Session
Q&A Session Call +44 (0) 33 0551 0200 or use the chat to ask a question Financial Calendar Friday, August 4, 2023: Filing of the 2023 Half-Year Financial Report Thursday, October 26, 2023, before market opening: Publication of Q3 2023 Revenue 30
Slide 31: Thank you
Thank <** you =o
Slide 32: Appendices
edd iH | »)) Appendices BA AL ALA, \ t_M/ f= FN ONG LIZ N AN ANIAN \ (Vey AX KKK) W AB
Slide 33: Revenue by Geography
2023 Half-Year Results REVENUE BY GEOGRAPHY 5% H1 2022 H1 2022 Total Organic Asia/Pacific [€m] H1 2023 Restated* Reported Growth Growth* 31% France France 45.5 37.2 37.7 +20.5% +22.1% 39% Rest of Europe 35.6 26.6 27.2 +31.0% +34.2% Americas Americas 57.2 56.7 60.8 -5.9% +0.9% Asia/Pacific 7.1 10.5 1
Slide 34: Change in Revenue
2023 Half-Year Results - Change in Revenue 150 €+14.5m +11.0% €145.5m 145 €+0.4m 140 €136.4m USD vs. € 135 130 €-5.8m Portfolio Refocus + M&A 125 120 H1 2022 Exchange Rate Scope Organic H1 2023 Revenue Effect Effect Growth Revenue 34
Slide 35: Simplified Balance Sheet
2023 Half-Year Results 30/06/2023 30/06/2022 SIMPLIFIED In millions of euros Assets BALANCE SHEET Goodwill 299.3 383.7 Non-current assets 362.1 458.2 Trade receivables 135.2 106.8 Other current assets 34.0 36.0 Cash and cash equivalents 14.2 19.5 Current assets 183.4 162.3 Total Assets 545.4 620.5 →
Slide 36: Changes in Equity & Earnings per Share at 30/06/2023
2023 Half-Year Results CHANGES IN EQUITY & EARNINGS PER SHARE AT 30/06/2023 In millions of euros 30/06/2023 30/06/2022 31/12/2022 Equity at Beginning of Period 327.8 372.2 372.2 Profit for the period 3.7 2.4 -40.0 Dividends -8.4 -8.5 -8.5 Other -3.3 -6.6 -10.3 Foreign exchange translation adjustment
Slide 37: Headcount
2023 Half-Year Results HEADCOUNT 30/06/2023 31/12/2022 France 425 437 Rest of Europe 606 636 Americas 362 378 Asia/Pacific 64 74 Axway 1 457 1 525 37
Slide 38: Shareholding structure at 30/06/2023
Shareholding structure at 30/06/2023 Pasquier Odin Treasury Public Family Family Shares Managers Shares outstanding 31.96% 20.82% 0.12% 1.34% 1.47% 41.33% 2.97% Voting rights 38.47% 25.06% 0.13% 1.43% 1.45% 33.45% Shareholders’ agreement 21,633,597 Shares outstanding 55.7% of shares outstanding / 66
Slide 39: 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