Earnings Release • Jul 26, 2022
Earnings Release
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Contacts Investor Relations: Arthur Carli – +33 (0)1 47 17 24 65 – [email protected] Press Relations: Sylvie Podetti – +33 (0)1 47 17 22 40 – [email protected]
Press release
Paris, July 26, 2022 - Axway Software's Board of Directors, chaired by Pierre Pasquier, today approved the financial statements for the first half of 2022, which were subject to a limited review by the statutory auditors1. Axway reports the following results for H1 2022:
| Half-year 2022 | Half-year 2021 | ||||
|---|---|---|---|---|---|
| Key income statement items* | (€m) | (% Rev) | (€m) | (% Rev) | |
| Revenue | 136.4 | 138.4 | |||
| Organic growth | - 5.8% | ||||
| Growth at constant exchange rates | - 5.8% | ||||
| Total growth | - 1.4% | ||||
| Profit on Operating Activities | 6.7 | 4.9% | 10.5 | 7.6% | |
| Profit from Recurring Operations | 2.5 | 1.8% | 5.0 | 3.6% | |
| Operating Profit | 1.1 0.8% |
2.3% | |||
| Net Profit attributable to the Group | 2.4 | 1.8% | 1.8 | 1.3% | |
| Basic earnings per share (in €) | 0.11 | 0.08 |
* Alternative performance measures are defined in the glossary at the end of this document
"In the first half of 2022, I have been very impressed by the momentum generated by our General Manager model. Our focus on our products and customers' needs continues to drive improvement in our NPS and the nature of the deals we sign. Over the first half, our core product-based strategy had a real impact. Thanks to our B2B offering, we were able to sign our largest deal of the period through a multi-million euros Axway Managed cloud contract with a new customer. Our MFT portfolio also continued to attract new customers and grow within its large installed base, while API Management pursued its development through the success of the Amplify Marketplace and Axway Open Finance offerings. We also strengthened our capabilities by acquiring a cloud integration start-up, DXChange.io, at the end of June. While we were anticipating a decline in H1 2022 compared to the good performance of the previous year, the number of Axway Managed subscription contracts signed during the period exceeded our expectations. This shift is disrupting our revenue even though we have achieved our sales forecasts, as evidenced by the satisfactory growth of our ARR. Should this trend continue, our 2022 organic growth target of between 1 and 3% may become difficult to achieve in favor of more stable and predictable revenues in the years to come. At this stage we are looking at a full-year landing in the low end of our guidance, but we will have a better picture of the situation at the end of Q3."
1 The interim consolidated financial statements were subject to limited review procedures. The limited review report is in the process of being issued by the auditors.
In the first half of 2022, Axway continued to adapt to its new market paradigms at a good pace. This resulted in Axway Managed subscription growth of almost 400%, which helped ARR growth of 8.6% and builds future revenue stability. Over the first six months of 2022, in an inflationary economic environment, Axway's margin and booking performance was in line with internal forecasts.
While the first half of 2021 represented a high comparison basis, Subscription revenue, which had been growing steadily between 2018 and 2021 with a compound annual growth rate (CAGR) of 41.5%, was slowed by several large new contract signatures for Axway Managed cloud offerings. These contracts, which, as evidenced by the continued increase in ARR over the period, generate more recurring revenue over time and do not result in any early revenue recognition.
On the operational side, the company continues to implement its strategy focusing on its significant product lines and markets. This approach involved several major developments:
Finally, over the first six months of the year, customer satisfaction has risen sharply breaking a new record, with a Net Promoter Score of 37 compared with 29 at the end of 2021. Axway's customers continue to be excellent external advocates of the company's offerings and value.
In the first half of the year, Axway generated revenue of €136.4 m, down 5.8% organically and 1.4% in total. While there were no changes in the scope of consolidation during the first six months of the year, currency fluctuations had a positive impact on revenue of €6.5 m, mainly due to the appreciation of the US dollar against the euro. Profit on operating activities amounted to €6.7 m for the period, or 4.9% of revenue.
| Half-year 2022 (€m) | H1 2021 | H1 2021 | Total | Organic | |
|---|---|---|---|---|---|
| H1 2022 | Restated* | Reported | Growth | Growth | |
| License | 6.3 | 9.8 | 9.3 | -31.8% | -35.5% |
| Subscription | 55.9 | 54.1 | 51.8 | 7.9% | 3.2% |
| Maintenance | 56.0 | 62.9 | 60.0 | -6.6% | -10.9% |
| Services | 18.2 | 18.1 | 17.3 | 5.1% | 1.0% |
| Axway Software | 136.4 | 144.9 | 138.4 | -1.4% | -5.8% |
* Revenue at 2022 scope and exchange rates
License activity revenue was €6.3m for the first half of the year (5% of total revenue), an organic decrease of 35.5%. All major product lines have subscription offerings which are widely adopted and preferred by customers worldwide. License revenue is now primarily limited to one of Axway's specialized products, only available on a license-based model.
In the first half of 2022, the Subscription activity generated revenue of €55.9m, representing organic growth of 3.2% and 7.9% in total. The activity represented 41% of Axway's revenue for the first six months of the year. Whereas in the first half of 2021, Subscription revenue posted organic growth of 45.0%, a year later the growth was more moderate due to the decrease in upfront revenue. During the first half of 2022, the acquisition of new logos continued and customers largely opted for Axway Managed subscription contracts. These signatures will, however, only have a real impact on revenue in the coming quarters.
Maintenance revenue amounted to €56.0m in H1 2022 (41% of total revenue), an organic decline of 10.9%, in line with expectations. Following on from previous semesters, the migration of the value of certain maintenance services to the Subscription activity has continued as clients adopt the most flexible contractual models.
At the end of June 2022, Axway's ARR (Annual Recurrent Revenue), which is a key indicator of future revenue growth potential, reached €189.8m, up 8.6% compared to H1 2021. Recurring revenue for the semester, which includes Subscription and Maintenance activities, represented 82% of total revenue or €111.9m, including upfront revenue of €18.3m recognized on the signature of Customer Managed subscription contracts.
The Services activity generated revenue of €18.2m (13% of total revenue) in H1 2022, up organically by 1.0% and by 5.1% in total. The activity's revenue is gradually stabilizing at between 12 and 15% of total revenue in line with the company's forecasts. Activity rose significantly (+6.3% organically) in Q2 2022.
| H1 2021 | H1 2021 | Total | Organic | ||
|---|---|---|---|---|---|
| Half-year 2022 (€m) | H1 2022 | Restated* | Reported | Growth | Growth |
| France | 37.7 | 39.4 | 39.4 | -4.1% | -4.1% |
| Rest of Europe | 27.2 | 34.0 | 33.9 | -19.9% | -19.9% |
| Americas | 60.8 | 63.0 | 57.1 | 6.5% | -3.5% |
| Asia/Pacific | 10.7 | 8.5 | 8.0 | 33.4% | 25.5% |
| Axway Software | 136.4 | 144.9 | 138.4 | -1.4% | -5.8% |
* Revenue at 2022 scope and exchange rates
Revenue in France amounted to €37.7m in the first half of the year, representing 28% of Axway's total revenue. Organically, activity fell 4.1% in H1 2022. The nearly 20% growth in the Subscription activity in France over the first half of the year was not enough to compensate for the anticipated drop in Maintenance.
With revenue of €27.2m (20% of total revenue), the Rest of Europe zone experienced an organic decrease of 19.9% over the half-year. In the region and particularly in Germany, the B2B Axway Managed solution met with great success with both new and existing customers, generating a good increase in ARR that will materialize into revenue in the upcoming semesters.
In the first half of the year, the Americas (USA & Latin America) generated revenue of €60.8m representing 44% of Axway's revenue with total growth of 6.5% and an organic decrease of 3.5%. As in Europe, there was a stronger than expected increase in demand for Axway Managed cloud solutions. This resulted in the signing of the largest contract of the semester in North America with a new customer, for a total value of more than €5m, while in Latin America, API management continued its dynamic trend.
Asia/Pacific generated half-year revenue of €10.7m (8% of total revenue), representing organic growth of 25.5%. Thanks to very strong growth in Subscription and Services activities through API Management and MFT offerings, Axway recorded robust half-year results in the region.
Profit from recurring operations was €2.5m in H1 2022, or 1.8% of revenue. It includes amortization of allocated intangible assets of €2.9m and a share-based payment expense of €1.3m.
Operating profit for the half-year was €1.1m, or 0.8% of revenue.
Net profit for the period was €2.4m, representing 1.8% of revenue compared to 1.3% (€1.8m) in H1 2021.
Basic earnings per share were €0.11 for the period, up from €0.08 in H1 2021.
At June 30, 2022, Axway's financial position was solid, with cash of €19.5m and bank debt of €78.3m as existing credit lines were utilized to fund the acquisition strategy.
Free cash flow was €8.2m in 2022, compared to €16.1m a year earlier. This difference is mainly due to a delay in the financing of the French R&D tax credit (CIR) which, this year, will be effective in the second half. However, the accumulation of subscription contract signatures should lead to an improvement in net cash from operating activities over the full year.
Shareholders' equity stood at €381.1m at June 30, 2022, compared to €359.6m at the end of June 2021.
As a reminder, Axway renegotiated its bank lines until 2027, thereby securing financing of up to €125.0m.
At June 30, 2022, Axway had 1,648 employees compared to 1,712 at December 31, 2021.
Axway maintains its objective of achieving organic revenue growth of between 1% and 3% in 2022. The company also aims to improve its profitability, with a margin on operating activities of between 12% and 14% of revenue for the year.
In the medium term, Axway's ambitions remain:
Today, Tuesday, July 26, 2022, at 6.30 p.m. (UTC+2): 2022 Half-Year Results Analyst Conference
Please note that the meeting will be held in English.
Friday, August 5, 2022: Filing of the 2022 half-year financial report Thursday, October 20, 2022, before market opening: Publication of Q3 2022 Revenue
ACV: Annual Contract Value – Annual contract value of a subscription agreement.
ARR: Annual Recurring Revenue – Expected annual billing amounts from all active maintenance and subscription agreements.
Employee Engagement Score: Measurement of employee engagement through an independent annual survey.
Growth at constant exchange rates: Growth in revenue between the period under review and the prior period restated for exchange rate impacts.
NPS: Net Promoter Score – Customer satisfaction and recommendation indicator for a company.
Organic growth: Growth in revenue between the period under review and the prior period, restated for consolidation scope and exchange rate impacts.
Profit on operating activities: Profit from recurring operations adjusted for the non-cash share-based payment expense, as well as the amortization of allocated intangible assets.
Restated revenue: Revenue for the prior year, adjusted for the consolidation scope and exchange rates of the current year.
TCV: Total Contract Value – Full contracted value of a subscription agreement over the contract term.
This press release contains forward-looking statements that may be subject to various risks and uncertainties concerning the Axway's growth and profitability, notably in the event of future acquisitions. Axway highlights that signature of contracts, which represent investments for customers, are more significant in the second half of the year and may therefore have a more or less favorable impact on full-year performance. In addition, Axway notes that potential acquisition(s) could also impact this financial data. Furthermore, activity during the year and/or actual results may differ from those described in this document as a result of a number of risks and uncertainties set out in the 2021 Universal Registration Document filed with the French Financial Markets Authority (Autorité des Marchés Financiers, AMF) on March 24, 2022, under number D.22-0145. The distribution of this document in certain countries may be subject to prevailing laws and regulations. Natural persons present in these countries and in which this document is disseminated, published, or distributed, should obtain information about such restrictions, and comply with them.
Axway enables enterprises to securely open everything by integrating and moving data across a complex world of new and old technologies. Axway's API-driven B2B integration and MFT software, refined over 20 years, complements Axway Amplify, an open API management platform that makes APIs easier to discover and reuse across multiple teams, vendors, and cloud environments. Axway has helped over 11,000 businesses unlock the full value of their existing digital ecosystems to create brilliant experiences, innovate new services, and reach new markets. Learn more at axway.com
Appendices (1/4)
| Q1 2021 | Q1 2021 | Total | Organic | ||
|---|---|---|---|---|---|
| st Quarter 2022 (€m) 1 |
Q1 2022 | Restated* | Reported | Growth | Growth |
| License | 3.7 | 4.0 | 3.8 | -3.2% | -7.4% |
| Subscription | 26.4 | 24.4 | 23.7 | 11.4% | 8.2% |
| Maintenance | 27.9 | 30.8 | 29.8 | -6.3% | -9.5% |
| Services | 9.0 | 9.3 | 9.0 | -1.0% | -4.0% |
| Axway Software | 66.9 | 68.6 | 66.3 | 0.9% | -2.4% |
| Q2 2021 | Q2 2021 | Total | Organic | ||
|---|---|---|---|---|---|
| nd Quarter 2022 (€m) 2 |
Q2 2022 | Restated* | Reported | Growth | Growth |
| License | 2.6 | 5.8 | 5.4 | -51.9% | -55.0% |
| Subscription | 29.5 | 29.7 | 28.1 | 4.9% | -0.8% |
| Maintenance | 28.1 | 32.0 | 30.2 | -7.0% | -12.2% |
| Services | 9.3 | 8.7 | 8.3 | 11.8% | 6.3% |
| Axway Software | 69.5 | 76.3 | 72.1 | -3.6% | -8.9% |
* Revenue at 2022 scope and exchange rates
| Q1 2021 | Q1 2021 | Total | Organic | ||
|---|---|---|---|---|---|
| st Quarter 2022 (€m) 1 |
Q1 2022 | Restated* | Reported | Growth | Growth |
| France | 18.1 | 18.8 | 18.8 | -3.4% | -3.4% |
| Rest of Europe | 13.2 | 16.7 | 16.7 | -20.7% | -21.0% |
| Americas | 30.3 | 28.5 | 26.5 | 14.3% | 6.2% |
| Asia/Pacific | 5.3 | 4.5 | 4.4 | 21.0% | 16.2% |
| Axway Software | 66.9 | 68.6 | 66.3 | 0.9% | -2.4% |
| Q2 2021 | Q2 2021 | Total | Organic | ||
|---|---|---|---|---|---|
| nd Quarter 2022 (€m) 2 |
Q2 2022 | Restated* | Reported | Growth | Growth |
| France | 19.6 | 20.6 | 20.6 | -4.8% | -4.8% |
| Rest of Europe | 14.0 | 17.2 | 17.3 | -19.0% | -18.8% |
| Americas | 30.5 | 34.6 | 30.6 | -0.2% | -11.6% |
| Asia/Pacific | 5.4 | 4.0 | 3.6 | 48.1% | 36.1% |
| Axway Software | 69.5 | 76.3 | 72.1 | -3.6% | -8.9% |
* Revenue at 2022 scope and exchange rates
Appendices (2/4)
| H1 2022 | H1 2021 | Full-year 2021 | |||||
|---|---|---|---|---|---|---|---|
| Half-year 2022 | €m | % Rev. | €m | % Rev. | €m | % Rev. | |
| Revenue | 136.4 | 138.4 | 285.5 | ||||
| of which License | 6.3 | 9.3 | 18.6 | ||||
| of which Subscription | 55.9 | 51.8 | 114.2 | ||||
| of which Maintenance | 56.0 | 60.0 | 119.0 | ||||
| Sub-total License, Subscription & Maintenance | 118.2 | 121.1 | 251.7 | ||||
| Services | 18.2 | 17.3 | 33.8 | ||||
| Cost of sales | 45.8 | 42.7 | 83.3 | ||||
| of which License and Maintenance | 13.4 | 12.7 | 24.6 | ||||
| of which Subscription | 14.5 | 13.5 | 27.0 | ||||
| of which Services | 17.9 | 16.5 | 31.7 | ||||
| Gross profit | 90.6 | 66.4% | 95.7 | 69.1% | 202.3 | 70.8% | |
| Operating expenses | 83.9 | 85.1 | 169.4 | ||||
| of which Sales and marketing | 42.8 | 43.3 | 89.0 | ||||
| of which Research and development | 28.2 | 29.0 | 55.3 | ||||
| of which General and administrative | 12.9 | 12.9 | 25.0 | ||||
| Profit on operating activities | 6.7 | 4.9% | 10.5 | 7.6% | 32.9 | 11.5% | |
| Share-based payment expense | -1.3 | -2.3 | -4.4 | ||||
| Amortization of intangible assets | -2.9 | -3.2 | -8.6 | ||||
| Profit from recurring operations | 2.5 | 1.8% | 5.0 | 3.6% | 19.9 | 7.0% | |
| Other income and expenses | -1.4 | -1.9 | -2.7 | ||||
| Operating profit | 1.1 | 0.8% | 3.1 | 2.3% | 17.3 | 6.1% | |
| Cost of net financial debt | -0.7 | -0.7 | -1.3 | ||||
| Other financial revenues and expenses | 1.0 | 0.4 | 0.5 | ||||
| Income taxes | 1.1 | -1.1 | -6.9 | ||||
| Net profit | 2.4 | 1.8% | 1.8 | 1.3% | 9.6 | 3.4% | |
| Basic earnings per share (in €) | 0.11 | 0.08 | 0.45 |
| 30/06/2022 | 30/06/2021 | 31/12/2021 |
|---|---|---|
| (€m) | (€m) | (€m) |
| 383.7 | 337.3 | 348.3 |
| 13.0 | 20.3 | 15.1 |
| 13.2 | 15.2 | 14.3 |
| 21.7 | 25.6 | 23.5 |
| 26.5 | 26.2 | 23.4 |
| 458.2 | 424.6 | 424.6 |
| 106.8 | 86.0 | 105.1 |
| 36.0 | 27.0 | 27.8 |
| 19.5 | 23.7 | 25.4 |
| 162.3 | 136.7 | 158.3 |
| 620.5 | 561.3 | 582.9 |
| 43.3 | 43.1 | 43.3 |
| 337.8 | 316.4 | 328.9 |
| 381.1 | 359.6 | 372.2 |
| 76.1 | 36.8 | 60.1 |
| 25.7 | 29.3 | 27.2 |
| 11.7 | 14.1 | 13.6 |
| 113.4 | 80.2 | 100.9 |
| 2.3 | 2.1 | 1.7 |
| 5.6 | 6.1 | 6.2 |
| 78.8 | 72.3 | 55.8 |
| 39.3 | 41.0 | 46.0 |
| 126.0 | 121.5 | 109.8 |
| 239.4 | 201.7 | 210.7 |
| 620.5 | 561.3 | 582.9 |
| H1 2022 | H1 2021 | Full-year 2021 | |
|---|---|---|---|
| Half-year 2022 | (€m) | (€m) | (€m) |
| Net profit for the period | 2.4 | 1.8 | 9.6 |
| Net charges to amortization, depreciation and provisions | 8.8 | 9.2 | 20.2 |
| Other income and expense items | 1.6 | 2.9 | 3.9 |
| Cash from operations after cost of net debt and tax | 12.8 | 13.9 | 33.7 |
| Change in operating working capital requirements (incl. employee benefits liability) | 2.3 | 7.5 | -26.2 |
| Cost of net financial debt | 0.7 | 0.7 | 1.3 |
| Income tax paid net of accrual | -2.7 | 0.1 | 4.1 |
| Net cash from operating activities | 13.1 | 22.3 | 12.9 |
| Net cash used in investing activities | -9.7 | -2.6 | -2.8 |
| Proceeds on share issues | - | - | 2.0 |
| Purchases and proceeds from disposal of treasury shares | -8.6 | - | -9.5 |
| Dividends paid | -8.5 | -8.6 | -8.6 |
| Change in loans | 10.5 | -1.3 | 21.5 |
| Change in lease liabilities | -3.7 | -3.4 | -6.7 |
| Net interest paid | -0.4 | -0.3 | -0.6 |
| Other flows | 0.2 | 1.1 | 0.1 |
| Net cash from (used in) financing activities | -10.5 | -12.5 | -1.7 |
| Effect of foreign exchange rate changes | 1.0 | 0.3 | 0.7 |
| Net change in cash and cash equivalents | -6.1 | 7.6 | 9.0 |
| Opening cash position | 25.2 | 16.2 | 16.2 |
| Closing cash position | 19.1 | 23.7 | 25.2 |
| Half-year 2022 (€m) | H1 2022 | H1 2021 | Growth |
|---|---|---|---|
| Revenue | 136.4 | 138.4 | - 1.4% |
| Changes in exchange rates | +6.5 | ||
| Revenue at constant exchange rates | 136.4 | 144.9 | - 5.8% |
| Changes in scope | +0.0 | ||
| Revenue at constant scope and exchange rates | 136.4 | 144.9 | - 5.8% |
| Half-year 2022 For 1€ |
Average rate H1 2022 |
Average rate H1 2021 |
Change |
|---|---|---|---|
| US Dollar | 1.093 | 1.205 | + 10.2% |
| Brazilian Real | 5.556 | 6.490 | + 16.8% |
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