Full year 2016: INCREASE IN SALES AND expected growth in earnings
Total sales up 9.1% at unadjusted scope, up 2.3% at constant scope SSRS sales up 13.9% at unadjusted scope, up 6.5% at constant scope SaaS sales grew 47.3% at unadjusted scope and 28% at constant scope
Expected increase in EBITDA and income from ordinary activities Stable EBITDA margin and margin from ordinary activities 2017 earnings growth objectives
Disclaimer: The figures included in this press release are unaudited, preliminary estimates and have not been verified by the Statutory Auditors.
SALES
| Consolidated sales, full year | 2015 | 2016 | Change, unadjusted scope | Change, unadjusted scope | 2016 constant | Change, constant scope |
| € M | € M | € M | % | € M | % | |
| SaaS | 62.8 | 92.5 | 29.7 | 47.3% | 80.4 | 28.0% |
| Licenses | 30.6 | 29.9 | -0.7 | -2.2% | 29.2 | -4.6% |
| Maintenance | 100.4 | 99.4 | -1.0 | -1.0% | 97.7 | -2.7% |
| Miscellaneous | 3.9 | 3.4 | -0.5 | -13.9% | 3.3 | -15.8% |
| Total Software and software-related services (SSRS) | 197.7 | 225.2 | 27.5 | 13.9% | 210.6 | 6.5% |
| Professional services | 62.6 | 64.2 | 1.5 | 2.4% | 59.9 | -4.4% |
| Total SSRS and professional services | 260.4 | 289.4 | 29.0 | 11.1% | 270.5 | 3.9% |
| Hardware distribution and other | 21.7 | 18.3 | -3.4 | -15.7% | 18.1 | -16.7% |
| Total | 282.1 | 307.7 | 25.6 | 9.1% | 288.6 | 2.3% |
| Of which recurrent | 169.8 | 197.3 | 27.5 | 16.2% | 183.5 | 8.1% |
| % recurrent / Total | 60.2% | 64.1% | 63.6% |
Fourth quarter: Sales up 5.5%
Q4 2016 revenue totaled €86.3 million (€81.9 million in Q4 2015), marking a rise of 5.5% at unadjusted scope and 2.5% at constant scope. Cloud services (SaaS/On Demand solutions) maintained their rapid growth, increasing by nearly 28% at constant scope (up nearly 40% at unadjusted scope).
In Q4 2016, SaaS revenue accounted for almost 41% of overall revenue from SaaS + Licenses + Maintenance (33% in the year-earlier period). This favorable trend led to an overall increase of 12.6% in "Software and software-related services" (SSRS) revenue (up nearly 9% at constant scope).
Full year 2016
Cegid's full-year 2016 revenue totaled €307.7 million (vs. €282.1 million in 2015), marking an increase of 9.1% at unadjusted scope and 2.3% at constant scope. At constant exchange rates, sales totaled €308.5 million, a rise of 9.4% from 2015.
Continued strong increase in SaaS/On Demand
Strategic SSRS revenue advanced by nearly 14% at unadjusted scope (6.5% at constant scope), which was higher than the forecasts for overall market growth (1) .
Sales of Cloud services (SaaS/On Demand and Portals) continued to rise to €92.5 million, an increase of more than 47% (up 28% at constant scope). The value of active SaaS contracts as of January 1, 2017 was nearly €260 million (2) , up ca. 29% from the estimated value of €201 million as of January 1, 2016.
Revenue from recurrent contracts of €197.3 million, including cloud services and maintenance (software and hardware), rose more than 16% at unadjusted scope (up 8% at constant scope, or one percentage point more than in 2015) and represented 64% of total sales, up four points compared with the previous year.
Revenue from the non-strategic "Hardware distribution and other" business of €18.3 million, or 6% of total sales, was down almost 16% overall and down 17% at constant scope from 2015 (€21.7 million). This decline resulted from the strategy the Group has been pursuing for the past several years to orient the Group's business toward SSRS and in particular toward SaaS/On Demand solutions. Internationally, Cegid saw continued expansion in the Retail and Human Capital Management (HCM) segments, with sales rising nearly 42% at unadjusted scope (up almost 17% at constant scope).
(1) 2016 growth in software sales: 2.6% (source: IDC/Syntec numérique)
(2) Value of SaaS contracts, defined as active contracts as of January 1, 2017 extrapolated over their remaining lifetime for fixed maturity contracts and over 36 months generally for automatic-renewal contracts, taking into account the churn rate as of December 31, 2016 (internal, unaudited figures). After additional analysis of all solutions available in SaaS mode, the present value (unaudited) of active SaaS contracts as of January 1, 2016 was €201 million. The previously estimated, unaudited figure published for information purposes in our financial release of January 21, 2016 was €196 million.
| Consolidated sales (€ M) Unadjusted scope | Q4 | Full-year | Of which "SSRS and professional services" | Of which "Hardware distribution and other" | |
| CPAs, small companies | 2016 | 30.3 | 111.5 | 100.9 | 10.6 |
| 2015 | 31.1 | 107.5 | 95.9 | 11.6 | |
| SMEs and large companies | 2016 | 32.7 | 118.0 | 115.4 | 2.6 |
| 2015 | 29.3 | 101.7 | 98.2 | 3.5 | |
| Retail | 2016 | 17.3 | 59.8 | 55.8 | 4.0 |
| 2015 | 16.2 | 54.4 | 49.2 | 5.2 | |
| Public sector | 2016 | 5.5 | 17.0 | 16.6 | 0.3 |
| 2015 | 5.2 | 17.1 | 16.6 | 0.5 | |
| Miscellaneous | 2016 | 0.5 | 1.3 | 0.7 | 0.8 |
| 2015 | 0.1 | 1.4 | 0.5 | 0.8 | |
| Total* | 2016 | 86.3 | 307.7 | 289.4 | 18.3 |
| 2015 | 81.9 | 282.1 | 260.4 | 21.7 | |
* Changes in the scope of consolidation take into account any alterations in the operational organization and the impact of changes in the scope of consolidation in the fourth quarter (+€2.4M) and over the full year (see above).
ESTIMATED EARNINGS: further growth expected in EBITDA, income from ordinary activities and the related margin
EBITDA, which shows the Group's results before the impact of financing, taxes, depreciation & amortization and provisions, should be approximately €83-84 million, after taking into account in 2016 the acquisitions carried out by Cegid in 2015. EBITDA before taking into account capitalized development costs should be approximately €49-50 million.
Income from ordinary activities, before taking into account depreciation on assets identified during acquisitions, should be approximately €47-48 million.
As indicated in our previous financial press release, the Group's 2016 net income may be impacted by various costs related to changes in Group ownership and totaling an estimated €1.5 million. In addition, definitive full-year earnings might include the recognition of deferred tax assets, related essentially to acquisitions carried out in 2015. This could have a positive impact on net income of an estimated €1.8 million.
(1) After taking into account the restatement of tax credits recognized essentially in Canada, which reduce the expenses related to personnel directly assigned to R&D.
Increase in cash flow and reduction in net debt
Net cash from operating activities is expected to increase in 2016 with the expected increase in underlying cash flow and the favorable trend in the working capital requirement (WCR). As a result, net financial debt is expected to decline by ca. €17 million to around €49.5 million as of December 31, 2016 (€66.4 million as of December 31, 2015).
New awards for Cegid
SaaS: The IDC institute ranked Cegid as the second-best SaaS vendor in France, sharing the top three spots with Salesforce and Microsoft. This distinction recognizes the innovation strategy of Cegid, France's first major software provider to shift to a Cloud strategy.
Retail: In 2016 Cegid captured first place in the RIS* global ranking of the world's software providers specialized in the Retail sector. The RIS Software Leaderboard, a benchmark survey for retail technology software vendors, placed Cegid first in its general ranking of retail software vendors with an almost perfect score of 49.3/50 for customer satisfaction. * Retail Info Systems News ( http://risnews.edgl.com )
HR/Talent: PeopleVision, the brand-new Talent Management solution created by Cegid & Technomedia, was the recent recipient of an award from HCM BrandonHall Awards 2016.
Outlook
In 2017, Cegid intends to pursue its growth and development in France and abroad, so as to support companies and public sector entities in their digital transformation. Based on current budget figures, which are still being finalized, and on the scope of consolidation as of January 1, 2017, the Group is targeting total sales of at least €320 million (representing growth of more than 4% from 2016), EBITDA of at least €90 million, which would represent an EBITDA margin of nearly 28%, and income from ordinary activities (before taking PPA into account) of at least €52 million, which would represent a margin on ordinary activities of around 17%. These objectives derive from the current assumptions of the members of the Group's Executive Committee with respect to the business lines they manage.
Disclaimer related to information about the Group's future outlook
This document contains information regarding objectives for fiscal year 2017, expressed as part of the Group's outlook for the future. Although the management of Cegid Group believes that these forward-looking statements are reasonable as of the publication date of this press release, investors are cautioned that these forward-looking statements are based on the current assumptions and scenarios of the Group's executives and the members of its Executive Committee, and are subject to numerous factors, risks and uncertainties, which are difficult to predict and generally outside the control of Cegid Group. Such factors include, but are not limited to, those enumerated in the section entitled "Risk Factors" of Cegid Group's Registration Document as filed with the AMF (under number D16-0340).
As a result, actual results and performance may be substantially different from the earnings and performance objectives expressed or projected in the above-mentioned forward-looking statements.
In particular, investors are reminded that achieving these objectives, which represent an acceleration compared with previous fiscal years, entail significant execution risks in a still-uncertain economic context. For the Group's activities in France, this context might be impacted by upcoming elections, which are a source of uncertainty for companies, and by the rate at which companies and public entities undergo digital transformation. Similarly, these growth objectives could be negatively impacted by exchange rate fluctuations in countries where the Group operates as well as by the rate at which the Group undertakes initiatives to increase sales growth and improve profitability, which could lead to additional non-recurring costs.
Calendar
Definitive, full-year 2016 earnings will be approved by the Board of Directors on March 2, 2017 and published on the same day, after the market close. The full calendar of publication dates and upcoming events can be found at the following address: http://investors.cegid.com/Releases/Financial-calendar
This English translation is for the convenience of English-speaking readers. However, only the French text has legal value. Consequently, the translation may not be relied upon to sustain any legal claim, nor should it be used as the basis of any legal opinion. Cegid Group expressly disclaims all liability for any inaccuracy herein.
Financial communication Cegid Group 52 quai Paul Sédallian 69279 Lyon Cedex 09 Tél : +33 (0)4 26 29 50 20 dirfin@cegid.fr /http://investors.cegid.com
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