2020 FIRST HALF RESULTS

Jean-Michel Bérard

Emmanuel Olivier

Esker Founder & CEO

Esker COO

September 10, 2020

2020 FIRST HALF RESULTS - SEPTEMBER 2020

2020 FIRST HALF SUMMARY

  • Solid Q1, resilient Q2
    • +7% organic growth (constant currency rates)
    • Q1 2020: €28.2M + 16%
    • Q2 2020: €26.1M = 0%
  • Resilience and growth of cloud business
    • +11% organic growth (constant currency rates)
    • +3% increase in order intake vs. H1 19
  • Continued investment in future growth
    • +14% headcount
    • +19% in R&D, +14% in implementation services
  • Operating expense control allow high profitability
    • Total operating expense increase 12% despite headcount investment + 14%
    • EBIT : 11.4% of revenue (-14%)
    • Was 11.9% in 2019 and 14.4% in H1 19
  • Tax burden decrease in France
    • Esker applies new 'Patent Box' regulation
    • 2019 effect €0.8M (net) booked as exceptional income
    • 2020 effective company tax rate decrease 4 points to 27%
  • Net income flat : +0%
    • Includes impact of slowdown in Quadient JV's business due to COVID-19
  • 11.5M€ government-guaranteed loans included in

balance sheet

  • To help overcome COVID situation
  • One year maturity
  • Fixed low interest rate 0.5%

2

2020 FIRST HALF RESULTS - SEPTEMBER 2020

TWO DIFFERENT QUARTERS

2020 vs 20 19 Revenue

60

+7%

50

40

+16% +0%

30

20

10

0

Q1

Q2

H1

2020 2019

3

2020 FIRST HALF RESULTS - SEPTEMBER 2020

STRONG RECURRING BUSINESS MODEL

In H1 2020 SaaS Increased 9% and represented 74% of the total

80% recurring revenue (SaaS & Maintenance) - 2020 H1

revenue (73% for FY 2019)

4

2020 FIRST HALF RESULTS - SEPTEMBER 2020

REVENUE GROWTH BY REVENUE TYPE

+9%

+15%

  • Dynamic growth of traffic shows implementation of past wins
  • Consulting revenue remains strong in H120. Implementations done remotely and important backlog keep consultants busy

Constant Currency Exchange Rates

5

2020 FIRST HALF RESULTS - SEPTEMBER 2020

REVENUE GROWTH BY REGION

+1%

+14%

+32%

Constant Currency Exchange Rates

•

All regions are growing

• Americas growth accelerated driven by cloud solutions (+23%)

•

Europe suffered more from economic slowdown

and despite sharp decrease of the legacy business (-25%)

  • Asia/Pac remained very dynamic

6

2020 FIRST HALF RESULTS - SEPTEMBER 2020

STABLE SALES PERFORMANCE (BOOKINGS)

Valaur totale garantie

14 000 000 €

12 000 000 €

10 000 000 €

8 000 000 €

6 000 000 €

4 000 000 €

2 000 000 €

0 €

Committed Value of Contracts Signed

• Bookings (order intake) include only the fixed

part of a signed contract (subscription fee).

• This represents the guaranteed revenue to Esker

for a contract

• Typical contract: 3 years

• Committed value signed in H120: +3% vs H119

• Will be recognized over the life of the contract

• Acquisition cost (sales & marketing mainly)

charged to income statement immediately

• Committed value of contract is estimated to be

H1 2018

H1 2019

H1 2020

approximately 50% of total value at contract

renewal

7

2020 FIRST HALF RESULTS - SEPTEMBER 2020

BUSINESS MODEL COMBINES PROFITABILITY AND INVESTMENTS

2020 - H1 Operating Income: 11.4%

We aim at 15% EBIT to combine profits and investments for future growth

Profitability remained stable despite COVID impact on revenue

8

2020 FIRST HALF RESULTS - SEPTEMBER 2020

DYNAMIC INVESTMENTS FOR FUTURE GROWTH

Staff @ 6/30/20: 717

H1 2020 - Staff increase:

vs. H1 2019: +86 FTE (+14%)

vs. H2 2019: +42 FTE ( +6%)

9

2020 FIRST HALF RESULTS - SEPTEMBER 2020

CURRENCY EFFECT (USD)

Rate

Effect on

Effect on

%

Operating

%

USD/EURO

Revenue

Income

1.00

€2,198K

4%

€695K

11%

1.05

€1,080K

2%

€342K

6%

1.103

€0K

0%

€0K

0%

1.1195

-€308K

-1%

-€97K

-2%

(2019)

1.1347

-€531K

-1%

-€168K

-3%

(H1 2019)

1.20

-€1,716K

-3%

-€543K

-9%

10

2020 FIRST HALF RESULTS - SEPTEMBER 2020

P&L BY FUNCTIONS - JUNE 30TH 2020

(in thousands of euros)

06/30/20

% net

06/30/19

% net

Var

Var %

sales

sales

REVENUE

54 240

100%

50 135

100%

4 105

8%

Cost of goods sold

-16 968

-31%

-14 755

-29%

-2 213

15%

Research and development expenses

-6 005

-11%

-5 106

-10%

-899

18%

Selling expenses

-15 223

-28%

-13 787

-27%

-1 436

10%

Marketing expenses

-4 752

-9%

-4 604

-9%

-148

3%

General and administrative expenses

-5 086

-9%

-4 660

-9%

-426

9%

INCOME FROM OPERATION

6 206

11,4%

7 223

14,4%

-1 017

-14,1%

Financial income (loss)

-204

0%

116

0%

-320

-276%

OPERATING INCOME

6 002

11,1%

7 339

14,6%

-1 337

-18,2%

Exceptional Items

852

2%

139

0%

713

513%

Income tax

-1 605

-3%

-2 279

-5%

674

-30%

Share of Profit of Associates

174

0%

251

1%

-77

-31%

NET INCOME

5 423

10,0%

5 450

10,9%

-27

-0,5%

Earnings per share in Euros

0,96

1,02

-0,06

-5,9%

Diluted earnings per share in Euros

0,96

1,00

-0,04

-4,0%

  • Average number of employees for H1 20: 706 (+14% vs H1 19)
  • Cost of goods sold include cost of consulting services (€8.8M, + 20%)
  • Cost generally in line with headcount increase
  • Marketing expense stable due to COVID situation (cancellation of large trade shows and marketing events)
  • CIR (tax credit on R&D): €387K vs 380 for H1 19
  • Financial loss due to realized and unrealized exchange losses (€108K) as well as reserves for unrealized losses on financial investments of company cash
  • Exceptional income include effect of Patent Box system on 2019 income tax
  • Income tax rate decreased due to Patent Box on 2020 results
  • Share of profit in associates decreased in line with slowdown of JV with Quadient related to the pandemic

11

2020 FIRST HALF RESULTS - SEPTEMBER 2020

P&L BY EXPENSE TYPE - JUNE 30TH 2020

(in thousands of euros)

H1 2020

%

H1 2019

%

Var. €

Var. %

REVENUE

54 240

100%

50 135

100%

4 105

8%

Development costs capitalized

3 961

7%

3 192

6%

769

24%

Other income

766

1%

562

1%

204

36%

Purchase and external expenses

-14 649

-27%

-14 178

-28%

-471

3%

Personnel and related taxes

-33 372

-62%

-27 883

-56%

-5 489

20%

Other expenses

-769

-1%

-668

-1%

-101

15%

Depreciation & reserve expenses

-3 971

-7%

-3 937

-8%

-34

1%

INCOME FROM OPERATION

6 206

11,4%

7 223

14,4%

-1 017

-14,1%

Financial income (loss)

-204

0%

116

0%

-320

-276%

OPERATING INCOME

6 002

11,1%

7 339

14,6%

-1 337

-18,2%

Exceptional Items

852

2%

139

0%

713

513%

Income tax

-1 605

-3%

-2 279

-5%

674

-30%

Share of Profit of Associates

174

0%

251

1%

-77

-31%

NET INCOME

5 423

10,0%

5 450

10,9%

-27

-0,5%

Earnings per share in Euros

0,96

1,02

-0,06

-5,9%

Diluted earnings per share in Euros

0,96

1,00

-0,04

-4,0%

  • Capitalization of R&D expenses flat in percentage
  • Net effect slightly increases compared to H1 19 as R&D expenditures and headcount increase

R&D Capitalization

HY2020

HY2019

Var.

K€

K€

Dev costs capitalized

3 961

3 192

769

Amortization

-2 574

-2 272

-302

Net

1 387

920

467

R&D Expenditures

-6 276

-5 077

-1 199

% Capitalized

-63%

-63%

  • Personnel expenses increase reflect investments as described

12

2020 FIRST HALF RESULTS - SEPTEMBER 2020

CONSOLIDATED BALANCE SHEET

Solid financial structure :

Financial debt:

Cash & cash equivalents:

€33.8M

Capital lease agreements

€1.1M

Cash net of financial debt:

€17.2M

Government guaranteed Loans

€11.5M

Total Equity:

€60.4M

Bank Loans:

€4.0M

Long term investments:

€4.9M

(could be mobilized as needed)

Other liabilities

Mainly consist of deferred maintenance revenue

13

(€5.7M) and customer deposits (€3.2M)

2020 FIRST HALF RESULTS - SEPTEMBER 2020

CONSOLIDATED CASH FLOW STATEMENT

Cash flow before change in working capital increases in line with operations

Variance in working capital is consistent with Q2 revenue Positive cash flow generated by operations: +€9.5M covers

Capital expense needs (R&D capitalized mainly) Dividend paid

Repayment of financial debt

New government loans: €11.5M One year maturity

Low interest rate (0.5%)

14

2020 FIRST HALF RESULTS - SEPTEMBER 2020

TARGET 2020 AND BEYOND

  • 2020 and 2021 outlooks will be impacted by the evolution of the pandemic
  • 2020 should show around 9% organic growth (excl. currency impact)
  • 2021 should return to 2019 growth performance
  • Profitability is expected to be stable, subject to growth and sales performance
  • Continue to build partner network and make first partners successful in 2021

15

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Esker SA published this content on 14 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 September 2020 15:19:05 UTC