SimCorp

Earnings Release • Feb 8, 2023



SimCorp Interim Report Q4 2022

Record-high revenue in Q4 2022 – SimCorp accelerates transformation investments and initiates cost efficiency program

Q4 and FY 2022 highlights

• SimCorp generated revenue of EUR 206.1 million in Q4 2022 (Q4 2021: 160.2 million). For FY 2022, reported revenue grew by 13.0% to EUR 561.0 million driven by organic growth of 9.4% (2021: 8.7%) and FX impact of 3.6%. Organic ARR (backward-looking) growth was 12.1% in 2022.
• In Q4 2022, EBIT excluding operating model charges and Ukraine support costs (special items) was EUR 85.2 million (EUR 54.3 million in Q4 2021), corresponding to an EBIT-margin of 41.4%. For FY 2022, the EBIT-margin excluding special items was 24.2% (23.4% in local currency).
• Costs related to the support and safety of Ukrainian employees and their families and operating model restructuring amounted to EUR 1.3 million in Q4 2022 and EUR 9.9 million for FY 2022.
• SimCorp signed five new customers in Q4 (three in North America), resulting in a total of 11 new customers in 2022. The largest deal was signed in EMEA, a 7-year deal with Annual Contract Value above EUR 2 million. Revenue in Q4 included EUR 57 million from conversions, including the conversion of SimCorp’s largest customer to a 7-year subscription license agreement.

Strategy update

• The transformation of SimCorp continues, supporting the market competitiveness and expansion of the total addressable market. Revenue generated from the SaaS platform amounted to EUR 88.7 million in 2022, corresponding to annual growth of 31%.

• SimCorp today announces accelerated investments in five key initiatives to further strengthen our strategic growth levers - Platform Leadership, SaaS acceleration and Ecosystem scaling.

  - The accelerated investments in the transformation and growth of the SaaS offerings are negatively affecting profitability during the transition period, while SimCorp builds scale and efficiency in its SaaS platform. To fund these investments and ensure continued cost efficiency, SimCorp is today announcing a company-wide cost efficiency program to Fund and Elevate the transformation (Program FuEl).

• The target of the cost efficiency program is to generate annual cost savings of at least EUR 35 million from 2024. The cost saving target in 2023 is EUR 25 million. Non-recurring restructuring costs to execute the program are expected to amount to up to EUR 20 million in 2023.

SimCorp CEO, Christian Kromann, comments:

“Today’s announcement marks an important inflection point for SimCorp. With a solid 2022 concluded in line with our expectations, we are gaining confidence in our transformation journey. As such, today we are announcing accelerated investments in five key strategic initiatives that will make a real difference to the speed and execution of our transformation.

At the same time, we are launching a cost efficiency program to fund our increased investments. Cost efficiency is required to fulfil the potential of SimCorp, but we are sad to say goodbye to more than 100 employees, and we are doing our utmost to support them in their next career step.

Embarking on a strict cost journey is critical to the transformation, and we are developing our culture as an organisation with increased focus on financial performance. The significant potential of the transformation is reflected in our new mid-term financial targets – we expect to grow at double-digit average growth rates and return to record-high profitability of above 28% EBIT-margin.”

Supplementary financial disclosures and financial outlook

• As communicated at the Capital Markets Day 2022, SimCorp is introducing supplementary financial disclosures* to reflect the key value drivers of the ongoing transformation – new revenue segmentation, forward-looking ARR and ratable revenue.
• Ratable revenue* amounted to EUR 489.0 million in FY 2022, reflecting growth of 8.4% (5.3% organically). By the end of 2022, forward-looking ARR was EUR 338.5 million, corresponding to organic ARR growth of 11.7% compared to 2021.
• SimCorp’s new mid-term financial targets are to grow at double-digit average annual growth rates and return to record-high profitability (EBIT-margin above 28%). The main profitability drivers are increasing the scale and efficiency of the SaaS platform and accelerating revenue (operating leverage).
• In 2023, SimCorp expects that ARR (forward-looking) will accelerate to grow at 12-17%, and ratable revenue will grow 6-11% organically. The EBIT-margin is expected to be between 21-24%, excluding restructuring costs of up to EUR 20 million to execute Program FuEl.

Key financial highlights

EUR million, unless otherwise stated	2022 Q4	2021 Q4	2022 FY	2021 FY	2023 Outlook
Organic ARR (forward-looking) growth (%)	11.7%	NA	11.7%	NA	12-17%
Organic growth of ratable revenue (%)	3.7%	7.5%	5.3%	4.5%	6-11%
Ratable revenue	141.9	133.4	489.0	451.2
Reported revenue	206.1	160.2	561.0	496.3
EBIT-margin, excluding special items (%)	41.4%	33.9%	24.2%	26.7%	21-24% (local currencies)
EBIT, excluding special items	85.2	54.3	135.8	132.4
Special Items	-1.3	NA	-9.9	NA
Reported EBIT	83.9	54.3	125.9	132.4

* An Information Memorandum outlining the supplementary financial disclosures including the introduction and definitions of ARR (forward-looking) and ratable revenue is uploaded to our website, link. Please also refer to the Annual Report for definitions

This announcement has been published and registered as a Company Announcement with Inside Information.  It is assessed that the following elements of the SimCorp Interim Report Q4 2022 constitute inside information:

• The initiation of a company-wide cost efficiency program.
• The introduction of mid-term targets.
• The outlook for the financial year 2023 including statements related to ratable revenue and forward-looking ARR.

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2023_02_08_01 Company Announcement Q4 2022

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