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74software — Axway Software — Investor Presentation (October 2019)
59 slides from 74software's investor presentation, October 2019
Slide 1: Axway Software Investor Presentation October 2019
Axway Software Investor Presentation October 2019
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 license contracts, which often represent investments for clients, are historicall
Slide 3: Content
Investor Presentation – October 2019 Content 1 - Company overview 2 - Market overview 3 - Update on the transformation project 4 - H1 & Q3 2019 Highlights & Performance 5 - Targets & Ambitions 6 - Appendices 3
Slide 4: Company Overview
Company Overview
Slide 5: Axway at a glance
Axway at a glance A long-standing specialist in Middleware markets and the 5th largest software publisher in France*, Euronext Paris – Compartment B Main Indexes Axway develops, distributes, integrates and Bloomberg : AXW:FR → CAC Mid Small Reuters : AXW.PA → CAC TECHNOLOGY maintains its own infrast
Slide 6: A balanced history of organic and external growth
A balanced history of organic and external growth 300 2016 2019 2017 Acquistion’s Strategic Rationale 250 2012 2014 → Customer Position → Technology / Know-how Business 200 model 2008 transition €m 150 2006 2007 100 2002 50 Network of professional Governing Becoming a leader in 0 Incubation Collabor
Slide 7: Axway enables business to leverage change
Axway enables business to leverage change Data Integration Engagement Enterprise Integration Automating Securing file Protecting SOA and Increasing Unifying app Securing transitions broker supply chains transfer services through APIs business visibility development collaboration 2001 2002 2006 2007
Slide 8: Axway Partners
Axway Partners Cloud Providers Global System Integrators Digital Solution Providers Resellers 8
Slide 9: Axway's historical performance
Axway’s historical performance 300 Profit on Operating Activities 301.1 299.8 Revenue 284.6 283.8 250 261.6 237.5 200 217.2 224.3 €m 150 100 50 39.7 44.5 50.8 40.5 35.3 35.0 37.5 31.9 0 2011 2012 2013 2014 2015 2016 2017 2018 Total Growth +4.2% +3.3% +5.9% +10.1% +8.8% +5.8% -0.4% -5.3% Organic Grow
Slide 10: Axway's historical net profit & dividend
Axway’s historical net profit & dividend 40 0,70 Net Profit 35.6 Dividend 35 0,60 31.5 30 27.9 26.5 0,50 24.7 25 0.40 0.40 0.40 0.40 0,40 21.5 0,40 0.35 €m 20 € 0.25 0,30 15 0.20 11.0 0,20 10 4.4 0,10 5 0 0,00 2011 2012 2013 2014 2015 2016 2017 2018 Payout Ratio (Div./EPS) 21% 29% 23% 31% 30% 27% 95
Slide 11: A shareholding structure backing the corporate project
A shareholding structure backing the corporate project Pasquier Odin Sopra Treasury Sopra Steria Managers Caravelle Public Family Family GMT Shares Shares outstanding 32.57% 0.13% 1.39% 1.62% 21.22% 12.12% 30.74% 0.22% Voting rights 36.09% 0.13% 1.51% 1.63% 25.95% 14.82% 19.87% Shareholders’ agreeme
Slide 12: Axway's Corporate Social Responsibility
Axway’s Corporate Social Responsibility 2018 Initiatives & Labels Governance Human Resources Board of Directors: Axway University: → Member of the - 57% independent - 36K+ Hours of training for UN Global Compact - 43% of women more than 1,250 Axwegians - 95% attendance rate → Awarded Silver Ecovadis
Slide 13: Market Overview
Market Overview
Slide 14: Axway's market in the Software industry
Axway’s market in the Software industry [ Enterprise Software Market ] estimated at $417 billion in 2019* Application Development Application Infrastructure and Middleware Data Integration Tools and Data Quality Tools Infrastructure Software Database Management Systems Application Software Market IT
Slide 15: Axway's historical Middleware market
Axway’s historical Middleware market… A A A BPM / BAM Data Application MFT Integration Integration Integration Integration B2B Brokerage (ETL, MDM, …) (ESB, MOM, …) EFSS (VAN ), iPaaS Middleware SOA Governance / API Management A A A 15
Slide 16: … and its digital evolution!
… and its digital evolution ! Partners A A A A Customers Digital Middleware Companies A A A End-Users Customer Experience Economy 16
Slide 17: Axway's purpose remains the same
Axway’s purpose remains the same We moved and integrated data securely for businesses… We will still move, integrate and expose data securely It is the foundation of what we do for businesses NEW WAY Axway's mission remains the same, we are merely implementing our market strategy: Become a leader in
Slide 18: 2019 Market Forecast and 2019-2022 CAGR
2019 Market Forecast and 2019-2022 CAGR Total market estimated at $18.9 billion in 2019 / Average CAGR 2019-2022 estimated at +11.2% 18
Slide 19: Competitive landscape
Competitive landscape Integration Engagement the same the same IaaS 19
Slide 20: Evolution of practices in a Subscription world
Evolution of practices in a Subscription world Sequences of a perpetual License offering PURCHASE IT Focus Business Focus SALE IMPLEMENT SUPPORT RENEW Customer Acquisition Customer Growth Upfront Revenue Lifetime Revenue Cycle of a Subscription offering Episodic engagement Continuous engagement SUBS
Slide 21: Update on the transformation project
Update on the transformation project
Slide 22: Transformation project
Transformation project 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 In Progress 22
Slide 23: AMPLIFY: 15 years of strategic evolution
AMPLIFY™: 15 years of strategic evolution 2006 SECURELY MOVING AND INTEGRATING DATA 2008 BUSINESS CONTEXT 2013 DATA OPENESS 2017 CUSTOMER CENTRICITY AMPLIFY™ 2020 23
Slide 24: Axway's solutions evolution
Axway’s solutions evolution Specialised products AMPLIFY™ Products App Dev Track & Trace B2B / EDI Accounting Integration MFT M&A Validation or Authority R&D Analytics IT Operation Management API Management MailGate Content Collaboration 24
Slide 25: AMPLIFY: Continued investments, Strengthened offer
AMPLIFY™: Continued investments, Strengthened offer Allocation of R&D resources (%) 100% AMPLIFY™ Investments 80% up + 49 % in H1 2019 vs. H2 2017 → Launch of the new AMPLIFY™ components at the end 60% of March 2019 → Integration of Streamdata.io and launch of 40% 70 69 AMPLIFY™ Streams in June 2019
Slide 26: AMPLIFY: Continued investments, Strengthened offer
AMPLIFY™: Continued investments, Strengthened offer ✓ since April 2019 Unified Catalog for multiple integration patterns 26
Slide 27: AMPLIFY: Setting the standard for HIP
AMPLIFY™: Setting the standard for HIP Endpoints AMPLIFY™ Products CRMs App Development B2B / EDI Cloud Services MFT General Ledgers Analytics Legacy Systems API Management etc. Content Collaboration 27
Slide 28: Better Together
Better Together Strengthened management team - Appointment of D. Fougerat, EVP Human Resources and C. Allmacher, Chief Financial Officer - Entry into function of 3 new business leaders in Europe, the United States and the Asia-Pacific region - Creation of a dedicated Go-to-Market team, supported by
Slide 29: Customer Success Organisation
Customer Success Organisation Objectives Customer Centric Organisation ▪ Help customers accelerate their ▪ Bring together and align all players ▪ Creation of the Customer Success transformation through rapid interacting with customers Manager function to support results customers throughout their li
Slide 30: Customer Success Organisation – H1 2019 evolution
Customer Success Organisation – H1 2019 evolution Organisation Customer Success Go-To-Market New Regional Leadership Evolve our Customer Success Strengthen Go-To-Market ▪ Asia-Pacific (January 2019) Management Team leadership, processes and focus: ▪ Accelerate our Customer ▪ API First approach ▪ USA
Slide 31: Go-To-Market – Axway Catalysts Team and Offerings
Go-To-Market – Axway Catalysts Team and Offerings Axway Catalysts A team of trusted advisors who help customers make digital strategy, design and technology decisions Thought Leadership Proactive outreach and value delivery to the API Community through keynote presentations, networks of knowledge an
Slide 32: Our customers' success is our success
Our customers’ success is our success Mission Critical AMPLIFY™ Customer Centric Axway Solutions at the heart Flexible solutions to secure Serving our customers as a of our customers’ strategic and transform critical valued, strategic partner business outcomes business processes while “From Start to
Slide 33: H1 & Q3 2019 Highlights & Performance
H1 & Q3 2019 Highlights & Performance
Slide 34: H1 2019
H1 2019
Slide 35: 2019 Half-Year - Revenue by Activity
2019 Half-Year - Revenue by Activity H1 2018 H1 2018 Total Organic 16 % 15 % [€m] H1 2019 Restated* Reported Growth Growth* License Services License 21.8 24.3 23.8 -8.3% -10.3% Subscription 23.1 19.7 18.8 23.1% 17.2% 17 % Subscription Maintenance 72.1 71.7 69.9 3.1% 0.5% 52 % Services 21.5 23.1 22.5
Slide 36: 2019 Half-Year - Income Statement
2019 Half-Year - Income Statement In millions of euros H1 2019 H1 2018 Revenue 138.6 134.9 Cost of sales 45.9 42.8 → Stable organic* revenue, Gross Profit ( % of Revenue) 92.6 66.8% 92.1 68.3% growth of 2.7 % in total Operating expenses 90.2 79.8 of which Sales and marketing 44.3 39.0 → In line with
Slide 37: AMPLIFY: Continued investments, Strengthened offer
AMPLIFY™: Continued investments, Strengthened offer R&D Investments (€m) 32.6 31.2 Advancing our innovation → R&D investments up 22% between H1 2019 and H1 2018, 27.9 stabilization and decrease expected in the coming quarters 26.8 → Rationalization of the portfolio and strategic priorities H2 2017 H
Slide 38: 2019 Half-Year - Signatures tracking
2019 Half-Year - Signatures tracking New Weighting Weighted New [€m] Signatures Factor Signatures → New ACV down 25.5% organically Value → Signatures metric down License 21.8 1x 21.8 15.4% organically New → The interest generated by the 3.5 3x 10.6 Group’s new offers, combined Subscription (ACV*) wi
Slide 39: Market Shift to Subscription
Market Shift to Subscription → Transition to subscription accelerating across all verticals and regions Try & Buy Subscription → Significant increase in number of subscription transactions between H1 2018 and H1 2019 → Large subscription deals are taking much longer to execute as customers “learn” n
Slide 40: AMPLIFY API Management: Pipeline and Successes
AMPLIFY™ API Management : Pipeline and Successes APIM Pipeline trends (€m) Competitive win to drive a critical API implementation for a European Satellite program 82 67 58 57 PSD2 compliance and creation of new commercial channels for a major European bank October January April July 2018 2019 2019 2
Slide 41: Main Balance Sheet items at 30/06/2019
Main Balance Sheet items at 30/06/2019 Cash and equivalents DSO Total Assets €32.3m 61 days €569.5m vs. €35.8m at 31/12/2018 vs. 63 days at 30/06/2018 vs. €553.8m at 31/12/2018 Net debt Current deferred revenues Total Equity €12.3m €85.6m €356.4m vs. €10.2m at 31/12/2018 vs. €75.2m at 31/12/2018 vs.
Slide 42: Cash flows & Covenants at 30/06/2019
Cash flows & Covenants at 30/06/2019 30/06/2019 31/12/2018 30/06/2018 In millions of euros 30/06/2019 30/06/2018 Net profit for the period -6.1 3.9 45.2 EBITDA Change in operating working capital Cost of debt 45.2 101.4 3.0 16.0 (covenant > 5) requirements Net cash from operating activities 8.6 25.5
Slide 43: Q3 & 9M 2019
Q3 & 9M 2019
Slide 44: Q3 2019 Highlights
Q3 2019 Highlights Highlights of the 3rd quarter 2019 → Strong growth in Subscription revenue (+14.9%), in line with the roadmap → Maintenance resilience (-2.2%) → Significant progression in pipeline around new AMPLIFY™ offers → Recognition of Axway's leadership in API management 44
Slide 45: 9M Performance
QM Performance [€m] License Subscription Maintenance Services Axway 209.8 9M 2018 Restated* 38.2 31.4 109.5 34.1 213.2 9M 2018 Reported 37.6 29.4 106.2 33.3 206.5 * Alternative performance measures are defined in the glossary at the end of this document axway Total Growth -11.7% 24.1% 2.7% -7.0% 1.6
Slide 46: Targets & Ambitions
Targets & Ambitions
Slide 47: Targets & Ambitions
Targets & Ambitions → 2019 Return to organic growth, continuing into 2020, enabling Axway to achieve targeted revenue of around €300 million → 2019 Operating margin on business activity between 8 and 10%, the low point during the transformation period, before a rebound expected in 2020 → Become a Le
Slide 48: Appendices
axway Appendices
Slide 49: FY 2018
FY 2018
Slide 50: Full-Year 2018 - Income Statement
Full-Year 2018 - Income Statement In millions of euros 2018 2017 Revenue 283.8 299.8 of which License 56.5 65.3 → Revenue down 3.6% of which Subscription 40.3 37.5 organically*, 2.7% at of which Maintenance 142.8 145.4 constant exchange rates, Subtotal License, Subscription & Maintenance 239.7 248.3
Slide 51: Full-Year 2018 - Revenue by Activity
Full-Year 2018 - Revenue by Activity 2017 2017 Total Organic 19.9% 15.6% [€m] 2018 Restated* Reported Growth Growth* License Services License 56.5 63.7 65.3 -13.4% -11.3% Subscription 40.3 38.6 37.5 7.5% 4.4% 14.2% Subscription Maintenance 142.8 141.6 145.4 -1.8% 0.9% 50.3% Services 44.2 50.5 51.6 -
Slide 52: Full-Year 2018 - Revenue by Geography
Full-Year 2018 - Revenue by Geography 2017 2017 Total Organic [€m] 2018 23% Restated* Reported Growth Growth* Rest of Europe 29% France France 80.9 83.8 83.8 -3.4% -3.4% Rest of Europe 65.7 71.4 71.7 -8.4% -7.9% Americas 122.3 124.3 128.8 -5.0% -1.6% 5% 43% Asia - Pacific Americas Asia / Pacific 14.
Slide 53: Full-Year 2018 - Advancement toward our new business model
Full-Year 2018 - Advancement toward our new business model New Weighted Weighting → Accelerate the transition [€m] Signatures New Factor Business to Subscription models Value Signatures Model → Improve the Customer life cycle License 56.5 1x 56.5 → Increase the number of New access points to Axway 1
Slide 54: Main Balance Sheet items at 31/12/2018
Main Balance Sheet items at 31/12/2018 Cash and equivalents DSO Total Assets €35.8m 77 days €553.8m vs. €28.1m at 31/12/2017 stable vs. 31/12/2017 vs. €551.1m at 31/12/2017 Net debt Current deferred revenues Total Equity €10.2m €75.2m €362.7m vs. €24.1m at 31/12/2017 vs. €67.3m at 31/12/2017 (+11.8%
Slide 55: Simplified Balance Sheet at 31/12/2018
Simplified Balance Sheet at 31/12/2018 In millions of euros 31/12/2018 31/12/2017 Assets Goodwill 344.1 333.6 Non-current assets 422.7 420.7 Trade receivables 65.6 71.1 → High cash position at €35.8 million Other current assets 29.7 31.2 Cash and cash equivalents 35.8 28.1 → 77-day DSO, stable compa
Slide 56: Cash flows & Covenants at 31/12/2018
Cash flows & Covenants at 31/12/2018 In millions of euros 31/12/2018 31/12/2017 31/12/2018 31/12/2017 Net profit for the period 11.0 4.4 Change in operating working capital requirements -3.6 -11.7 EBITDA Cost of debt 45.2 40.2 Net cash from operating activities 22.6 29.6 (covenant > 5) Free cash flo
Slide 57: Changes in equity and Earnings per share at 31/12/2018
Changes in equity and Earnings per share at 31/12/2018 In millions of euros 31/12/2018 31/12/2017 Equity at Beginning of Period 344.1 374.8 Profit for the period 11.0 4.4 → Distribution of a dividend of Dividends -4.2 -8.5 €0.40 per share submitted to the shareholders' vote at the Capital increase 0
Slide 58: Full-Year 2018 - Headcount
Full-Year 2018 - Headcount 31/12/2018 30/06/2018 31/12/2017 France 468 467 518 Rest of Europe 771 727 733 Americas 537 514 515 Asia - Pacific 72 72 74 Axway 1,848 1,780 1,839 → Recruitment stepped up significantly in the second half of 2018 58
Slide 59: 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
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