Lectra : Management discussion and analysis of financial conditions and results of operations for the second quarter and first half 2023

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER AND FIRST HALF 2023

Dear Shareholders,

We report below on Lectra group's (the "Group") business activity and consolidated financial statements for the second quarter and first half of 2023, ending June 30, 2023.

Comparisons between 2023 and 2022 are based on 2022 exchange rates unless otherwise stated ("like-for-like"). As the impact of the acquisition of TextileGenesis (see press release dated December 8, 2022) on the financial statements for 2023 is not material, like-for-like changes exclude only the variations in exchange rates.

Orders for new systems are reported using two indicators: on the one hand, the value of software sold separately under perpetual software licenses, equipment and accompanying software (also sold in the form of perpetual licenses) and non-recurring services; and on the other hand, the annual value of new subscriptions for software sold in Software-as-a-Service (SaaS) mode.

The detailed tables of orders for new systems, of revenues, and of the income statements for the second quarter and first half of 2023 are provided in the additional information of this report, starting on page 7.

1. SUMMARY FOR Q2 2023

Decline in new system orders

Against the backdrop of slower global growth, the anticipation of a recession risk in certain countries, persistent inflation, and continuously rising interest rates, the activity of Q2 2023 continued to be marked by a wait-and-see attitude on the part of the Group's customers around the world with regard to their investment decisions. This situation was reflected again in a low level of new system orders.

Orders for perpetual software licenses, equipment and accompanying software, and non-recurring services (39.2 million euros) were down 27% (-29% at actual exchange rates) compared to Q2 2022, whose order volume set an all-time record, and therefore represents a very high basis for comparison.

Furthermore, the accelerating pace of sales in June brought Q2 2023 orders to 35.7 million euros, an 11% increase over Q1.

Strong growth in orders for new software subscriptions

Orders for new software subscriptions, of which the annual value came to 2.8 million euros, continued to rise, displaying a growth of 53% (+50% at actual exchange rates) compared to Q2 2022, and 7% compared to Q1 2023.

Decrease in revenues and EBITDA before non-recurring items

With an average exchange rate of $1.09/€1 in Q2, the dollar was down 2% compared to Q2 2022 and the yuan declined by 8% against the euro. Currency changes mechanically decreased revenues by 2.7 million euros (-2%) and EBITDA before non-recurring items by 1.0 million euros (-6%) at actual exchange rates, compared to like-for-like figures.

Lectra

1

First half 2023 Financial Report

The low level of orders for new systems in Q1 had a negative impact on 2023 Q2 revenues, which amounted to 115.9 million euros, and were down 8% compared to the same period of 2022. At actual exchange rates, revenues declined by 10%.

While revenues from perpetual software licenses, equipment and accompanying software, and non-recurring services decreased by 30%, recurring revenues increased by 7% thanks to a strong growth in recurring contracts (+11%). These continued to benefit from the growth in software subscription orders and the acceleration of synergies from the Gerber acquisition.

EBITDA before non-recurring items was 15.6 million euros, down 30% due to the decline in revenues and higher overhead costs. The EBITDA margin before non-recurring items came to 13.4% (down 4.4 percentage points). At actual exchange rates, EBITDA before non-recurring items declined by 34% and the EBITDA margin before non-recurring items by 5.0 points.

2. CONSOLIDATED FINANCIAL STATEMENTS FOR FIRST HALF 2023

With an average exchange rate of $1.08/€1 in H1, the dollar was up 1% compared to H1 2022 and the yuan declined by 5% against the euro. Currency changes mechanically decreased revenues by 0.9 million euros (-0.4%) and EBITDA before non-recurring items by 0.3 million euros (-1%) at actual exchange rates, compared to like-for-like figures.

Orders

In the uncertain environment that characterized the first half of the year, as many companies continued their wait-and-see attitude, H1 orders for perpetual software licenses, equipment and accompanying software, and non-recurring services (74.8 million euros) were down 30% compared to H1 2022.

Orders for perpetual software licenses (7.2 million euros), equipment and accompanying software (57.7 million euros) and for training and consulting (7.6 million euros) decreased by 26%, 33% and 4% respectively.

Geographically, orders for perpetual software licenses, equipment and accompanying software, and non-recurring services decreased by 38% in the Americas, 29% in Asia-Pacific, 25% in Europe and 19% in the rest of the world (including Northern Africa, South Africa, Turkey, and the Middle East …).

They decreased by 28% in the fashion market, 23% in the automotive market and 33% in the furniture market.

The annual value of new software subscription orders came to 5.5 million euros, up 31% compared to H1 2022.

Revenues

Revenues came to 239.6 million euros, down 4% compared to H1 2022, like-for-like and at actual exchange rates.

Revenues from software licenses, equipment and accompanying software, and non-recurring services

Revenues from perpetual software licenses, equipment and accompanying software, and non-recurring services (79.5 million euros) were down 21%. This item contributed 33% of revenues (40% in 2022), and included mainly:

• perpetual software licenses (7.3 million euros), which decreased by 25% and accounted for 3% of revenues (4% in 2022);
• equipment and accompanying software (60.7 million euros), which decreased by 25% and accounted for 25% of revenues (32% in 2022);
• training and consulting (9.1 million euros), which increased by 25% and accounted for 4% of revenues (3% in 2022).

Lectra

2

First half 2023 Financial Report

At June 30, 2023, the order backlog for perpetual software licenses, equipment and accompanying software, as well as training and consulting amounted to 39.8 million euros. It rose by 4.0 million euros, like-for-like, over March 31, 2023.

Revenues from recurring contracts, consumables and parts

Revenues from recurring contracts, which represented 37% of revenues (32% in 2022), amounted to

88.6 million euros, a 11% increase:

• software subscriptions (13.9 million euros), up 49%, represented 6% of revenues (4% in 2022);
• software maintenance contracts (26.7 million euros), up 4%, represented 11% of revenues (10% in 2022);
• equipment and accompanying software maintenance contracts (48.0 million euros), up 7%, represented 20% of revenues (18% in 2022).

In parallel, revenues from consumables and parts (71.4 million euros) were up 2% and represented 30% of revenues (28% in 2022).

Overall, recurring revenues (160.1 million euros) were up 7% (+6% at actual exchange rates).

Gross profit

Gross profit amounted to 165.5 million euros, stable compared to 2022.

The gross profit margin came to 69.1%, up 2.6 percentage points. This increase stems from the evolution of the product mix, with a larger share of recurring contract revenues, and from the strong improvement in the gross margin on equipment and accompanying software revenues.

Personnel expenses and other operating expenses incurred in the execution of service contracts or in training and consulting are not included in the cost of goods sold but are accounted for in overhead costs.

Overhead costs

Overhead costs were 145.2 million euros, up 7% compared to 2022. The breakdown is as follows:

• 135.7 million euros in fixed overhead costs (+9%);
• 9.6 million euros in variable costs (-15%).

Research and development costs (28.0 million euros), which are fully expensed in the period and included in fixed overhead costs, represented 11.7% of revenues (25.6 million euros and 10.2% of revenues in H1 2022). After deducting the research tax credit applicable in France and grants received, net research and development costs totaled 26.0 million euros (22.0 million euros in 2022).

EBITDA before non-recurring items, income from operations before non-recurring items and net income

EBITDA before non-recurring items was 35.3 million euros, down 21% (-22% at actual exchange rates) and the EBITDA margin before non-recurring items came to 14.7%, down 3.2 percentage points (-3.3 percentage points at actual exchange rates).

Income from operations before non-recurring items amounted to 20.3 million euros, down 33%. This included a 6.3-million-euro charge for amortization of intangible assets arising from the acquisitions carried out since 2021.

Income from operations came to 23.0 million euros. This includes a non-recurrent income item of 2.6 million euros in Q2 2023 arising from the reversal of the unused portion of a provision following the settlement of a tax dispute in the United Kingdom relating to the acquisition of Gerber.

Net financial income and expenses represented a net charge of 2.0 million euros. Foreign exchange gains and losses generated a net loss of 1.2 million euros.

Lectra

3

First half 2023 Financial Report

After an income tax expense of 5.9 million euros, net income amounted to 13.9 million euros, down 31% at actual exchange rates.

Net earnings per share were €0.38 on basic capital and on diluted capital (€0.54 on basic capital and €0.53 on diluted capital in H1 2022).

Increase in free cash flow

Free cash flow before non-recurring items totaled 16.6 million euros (14.7 million euros in H1 2022). It is higher than net income.

After disbursement of 0.3 million euros in H1 in respect of fees and other related expenses in connection with the acquisition of Gerber, free cash flow amounted to 16.3 million euros, a 4.0 million euro increase over the first half of 2022.

A particularly robust balance sheet

At June 30, 2023, the Group had a particularly robust balance sheet with a consolidated shareholders' equity of 406.4 million euros and a net financial debt of 4.6 million euros, consisting in financial debt of 99.1 million euros and cash of 94.5 million euros.

In H1, the Company paid out 15.2 million euros in respect of the acquisition of the majority of the capital of TextileGenesis, and 18.1 million euros in respect of dividends for fiscal year 2022.

The working capital requirement at June 30, 2023 was a negative 6.4 million euros.

3. SHARE CAPITAL - OWNERSHIP - SHARE PRICE PERFORMANCE

Change in share capital

At June 30, 2023, the share capital came to €37,824,827, divided into 37,824,827 shares with a par value of €1.00.

Share capital increased by €35,878 (with a total share premium of €476,817) due to the creation of 35,878 shares since January 1, 2023, resulting from the exercise of stock options.

Main shareholders

No crossing of statutory thresholds has been reported to the Company since January 1, 2023.

At the date of publication of this report, and to the Company's knowledge:

• Daniel Harari holds 14.6% of the capital and 14.5% of the voting rights;
• AIPCF VI LG Funding (United States), Brown Capital Management (United States), Fidelity Management and Research (United States) and Kempen Oranje Participaties (The Netherlands) each hold more than 5% (and less than 10%) of the share capital and voting rights.

No other shareholder has reported holding more than 5% of the share capital and voting rights.

Treasury shares

At June 30, 2023, the Company held 0.10% of its own shares in treasury shares, within the framework of the liquidity agreement contracted with Natixis ODDO BHF.

Share price performance and trading volumes

The Company's share price at June 30, 2023 was €27.30, down 22% compared to December 31, 2022 (€35.20). During H1, it reached a low of €26.30 on June 1 and a high of €41.30 on January 18.

The market capitalization amounts to 1.03 billion euros at June 30, 2023 (1.33 billion euros at December 31, 2022).

Lectra

4

First half 2023 Financial Report

For the first six months of 2023, the Euronext Tech Leaders index increased by 10% and the CAC 40, CAC All-Tradable and the CAC Mid & Small indexes increased by 14%, 13% and 4% respectively.

According to Bloomberg, 9.8 million shares were traded on all platforms in H1 2023 (11.4 million in H1 2022), including 37% on Euronext.

In its press release of April 11, 2023, the Company confirmed that it is eligible for inclusion in French SME ("PEA-PME") equity savings plans. As a consequence, investment in Lectra shares can be made through PEA-PME savings accounts, a scheme specifically applicable to investments in small and mid-cap companies, benefiting from the same tax advantages as the traditional Equity Savings Plan (PEA).

The Company's shares are eligible for the Euronext Deferred Settlement Service (SRD), which allows French investors to defer settlement or delivery of shares.

4. SIGNIFICANT POST-CLOSING EVENTS SINCE JUNE 30, 2023

No significant event has occurred.

5. FINANCIAL CALENDAR

The Q3 and first nine months of 2023 financial results will be published on October 25, after the close of trading on Euronext.

6. BUSINESS TRENDS AND OUTLOOK

In its financial report on the third quarter and first nine months of 2022, published October 25, 2022, Lectra reiterated its 4.0 strategy, initiated in 2017, and presented an assessment of the 2020-2022 roadmap, specifying that the progress made during the period, as well as the acquisitions of 2021, and the Gerber acquisition in particular, had given the Group a new dimension and increased opportunities for continued growth.

Then, in its 2022 Annual Financial Report, published February 8, 2023, Lectra presented its new roadmap for 2023-2025.

The Group also specified that 2023 remained unpredictable given the degraded macroeconomic and geopolitical environment, which lead to numerous uncertainties that could continue to weigh upon the investment decisions of its customers.

The business activity and results in H1 2023 confirmed this situation.

Confirmation of the 2023 outlook revised on April 27

At the beginning of the year, the Group had set itself objectives of achieving, in 2023, revenues in the range of 522 to 576 million euros and EBITDA before non-recurring items in the range of 90 to 113 million euros.

Given the delay in orders for new systems in the first quarter, and poor visibility on new systems orders for subsequent quarters, the Group reported on April 27 that it now anticipated revenues in the range of 485 to

525 million euros (-5% to +3% at constant exchange rates relative to 2022) and EBITDA before non-recurring items in the range of 78 to 95 million euros (-15% to +3% at constant exchange rates relative to 2022). The Group also noted that despite limited visibility regarding new systems orders over the next few quarters, there is strong visibility regarding recurring revenues, which should enjoy substantial growth and account for 65% of total revenues in 2023. These revised scenarios had been prepared on the basis of the closing exchange rates on April 27, 2023, for the remaining nine months of the year, and particularly $1.10/€1.

The results of the second quarter support these revised objectives.

Lectra

5

First half 2023 Financial Report