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SimCorp

Interim / Quarterly Report Aug 11, 2023

3384_ir_2023-08-11_36bf8e6e-926a-4f2b-aef8-aac65cbd7872.pdf

Interim / Quarterly Report

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SimCorp Interim Report Q2 2023 Company Announcement no. 20/2023 August 11, 2023 Company reg. no: 15 50 52 81

SaaS transformation drives sustainable business growth

Key highlights

  • In Q2 2023, SimCorp generated double-digit growth across all revenue metrics for the second consecutive quarter. SimCorp signed three SaaS conversion deals and two new SimCorp Dimension clients in the quarter leading to 77.3% organic SaaS growth. The forward-looking Annual Recurring Revenue (ARR) growth continued to accelerate and was 13.6% by the end of Q2, measured in local currency.
  • Ratable revenue increased by 20.4% in Q2 2023 and 16.8% in H1 2023 compared to the same period in 2022. The development is driven by the underlying business growth of the SaaS transformation. Reported revenue grew organically by 15.1% in Q2 2023 and 16.9% in H1 2023.
  • The profitability improved in both Q2 2023 and H1 2023 compared to 2022, driven by the strong revenue growth and controlled cost development. EBIT excluding special items was EUR 18.6 million in Q2 2023 (EUR 12.9 million in Q2 2022) and EUR 46.9 million in H1 2023 (EUR 29.2 million in H1 2022). Special items amounted to EUR 8.8 million in H1 2023 (restructuring costs of EUR 7.8 million and transaction costs of EUR 1.0 million) compared to EUR 7.5 million in H1 2022.
  • SimCorp generated free cash flow of EUR 18.1 million in Q2 2023 and EUR 63.8 million in H1 2023. This represents an increase of 111% compared to the free cash flow in H1 2022. The increase is driven primarily by the strong growth in ratable revenue as well as enhanced working capital management.
  • The execution of the accelerated strategic investments is on track, including the cost efficiency program, FuEl. The cost reduction targets of EUR 25 million in 2023 and EUR 35 million run-rate effect are confirmed.
  • Based on the performance in H1 2023, SimCorp confirms the current financial guidance for 2023.
  • On 27 April, SimCorp and Deutsche Boerse entered into an agreement pursuant to which Deutsche Boerse has made a recommended takeover offer to acquire all SimCorp shares at a price of DKK 735 per share. The extended offer period will expire on 19 September 2023, and Deutsche Boerse has announced that all regulatory approvals are expected before the expiry of the offer period.

SimCorp CEO, Christian Kromann, comments:

"In Q2 2023, we saw continued solid growth. The acquisition of new platform clients as well as large SaaS migration agreements exemplify the strength of our SaaS value proposition. As our transformation accelerates, we remain focused on continually investing to enhance our offerings across segments and operating models to drive long-term and sustainable growth."

Key financial highlights

EUR million, unless otherwise stated 2023
Q2
2022
Q2
2023
H1
2022
H1
2022
FY
2023
Outlook
Organic ARR growth (%) 13.6% N/A1 13.6% N/A1 11.7% 12-17%
Organic growth of ratable revenue (%) 20.4% 4.8% 16.8% 6.3% 5.3% 6-11%
Ratable revenue 132.1 111.8 274.4 234.0 489.0
Reported revenue 131.6 116.0 267.9 230.7 561.0
EBIT-margin, excluding special items
(%)
14.1% 11.1% 17.5% 12.7% 24.2% 21-24%
(local currencies)
EBIT, excluding special items 18.6 12.9 46.9 29.2 135.8
Special items -3.4 -6.7 -8.8 -7.5 -9.9
Reported EBIT 15.2 6.2 38.1 21.7 125.9
Free cash flow 18.1 10.1 63.8 30.2 40.5

1 ARR is an alternative performance measure introduced in the Annual Report 2022.

Other financial highlights and key ratios for the SimCorp Group

EUR '000 2023
Q2
2022
Q2
2023
H1
2022
H1
2022
FY
Income Statement
Revenue
131,591 116,000 267,910 230,713 560,968
Earnings before interest, tax, depreciation, and amortization
(EBITDA) 18,951 10,054 45,635 29,206 140,739
Operating profit (EBIT) 15,196 6,218 38,115 21,745 125,856
Financial items, net -1,295 4,965 -3,567 7,135 2,292
Profit before tax 13,901 11,183 34,548 28,880 128,148
Profit for the period 10,581 9,267 26,152 22,588 99,254
Balance Sheet
Share capital 5,441 5,441 5,441 5,441 5,441
Total equity 372,794 297,047 372,794 297,047 375,557
Bank loan / credit facility - 13,442 - 13,442 6,724
Intangible assets 87,568 90,778 87,568 90,778 88,984
Property, plant, and equipment 39,480 46,026 39,480 46,026 41,459
Receivables 107,088 110,768 107,088 110,768 112,378
Contract assets 286,430 217,557 286,430 217,557 292,903
Cash and cash equivalents 47,886 31,997 47,886 31,997 40,546
Total assets 612,189 528,867 612,189 528,867 604,328
Cash Flow
Net cash from operating activities 22,098 12,135 70,425 35,307 60,340
Net cash used in investing activities -1,166 -670 -11,567 -1,369 -2,767
Net cash used in financing activities -39,428 -29,396 -51,283 -49,897 -64,822
Free cash flow 18,119 10,134 63,768 30,225 47,155
Employees
Number of employees at the end of the period 2,456 2,105 2,456 2,105 2,245
Average number of employees - FTE 2,361 2,029 2,326 2,003 2,067
Alternative Performance measures
Annual Recurring Revenue (ARR) (EUR '000) 378,673 294,426 378,673 294,426 352,224
Ratable revenue 132,087 111,792 274,383 234,043 489,065
Financial Ratios
Revenue growth (%) 13.4 -2.3 16.1 0.9 13.0
Organic revenue growth (%) 15.1 -6.1 16.9 -2.5 9.4
Organic ARR growth (%) 8.4 N/A 8.4 N/A 11.7
EBIT-margin (%) 11.5 5.4 14.2 9.4 22.4
ROIC (return on invested capital) (%) 18.2 11.1 21.6 16.3 35.6
Receivables turnover ratio 7.9 7.4 8.1 7.4 8.4
Equity ratio (%) 60.9 56.2 60.9 56.2 62.1
Return on equity (%) 11.6 12.6 13.6 13.2 26.0
Share Performance
Earnings per share - EPS (EUR) 0.27 0.24 0.66 0.57 2.52
Diluted earnings per share - EPS-D (EUR) 0.26 0.23 0.66 0.57 2.50
Cash flow per share - CFPS (EUR) 0.55 0.30 1.77 0.89 1.53
Number of Shares
Average number of shares (million) 39.4 39.3 39.4 39.4 39.3
Average number of shares - diluted (million) 40.0 39.6 39.8 39.7 39.7
EUR/DKK rate of exchange at end of period 7.4474 7.4392 7.4474 7.4392 7.4365

Strategy update

In 2019, Simcorp launched the current strategy to evolve from a software company to a full-scale Software-as-a-Service (SaaS) company. The strategy is based on the three strategic growth levers of SaaS acceleration, Platform leadership and Ecosystem scaling.

The SaaS acceleration continued in Q2 2023 supporting SimCorp's market competitiveness and operational scaling. SimCorp migrated a customer from on-premise to SaaS in Q2 and two additional customers in early Q3. The number of SaaS go-lives in H2 2023 is projected to be historically high. Revenue generated from the SaaS platform amounted to EUR 33.8 million in Q2 2023, representing an increase of 74.2% compared with Q2 2022.

The strength of the Ecosystem scaling allows for significant innovation and flexible use of thirdparty data, analytics, and tools integrated with SimCorp Dimension. In Q2 2023, SimCorp united with Battea Class Action Services to provide intelligence and claims management services for SimCorp clients. For customers connected with the SimCorp platform, Battea provides immediate and improved class and collective action antitrust and securities litigation recovery services.

Accelerated strategic investments

In 2023, SimCorp has initiated key accelerated investments in its core transformation focused on five important initiatives to enhance the transformation speed. The significant investments led to a material increase in the number of full-time employees to 2,456 at the end of Q2 2023 compared to 2,105 at the end of Q2 2022.

The Front Office investment is focused on product, positioning as well as commercial improvements of the value proposition. The product is particularly being strengthened in the surrounding workflows, including design, user experience, OTC and Order manager. As part of the development, the new cloud-native Performance Management Module is now commercially available globally.

The continued efforts in creating development efficiency and scalability are progressing according to plan with the benefits expected to materialize from Q4 2023. As part of the general development improvements, SimCorp has also launched a new framework to further enhance the development security. The framework is labelled 'Secure Software Development Life Cycle' and effectively addresses potential security issues and creates an enhanced ability to respond to security threats.

The SaaS acceleration investments focus on the total cost of serving SaaS customers, both related to the technical infrastructure and the automation of managed services. The scale advantages for SimCorp in offering managed services to additional clients continue to be visible as more clients are migrating to SaaS. The BPaaS (Business-Processes-as-a-service) investments relate mainly to Investment Operations Services (IOS) and Investment Accounting Services (IAS). Key implementation projects are progressing as planned, including the first full IOS customer, Intech, with go-live planned in H2 2023.

Program FuEl

In early 2023, SimCorp launched a company-wide cost efficiency program (Program FuEl) aimed at funding and elevating the transformation. The business change towards a more service-based offering makes cost efficiency critical for future market competitiveness, and the program is designed to sharpen and improve the underlying operations, focusing on structural cost improvements to enhance competitiveness and the long-term potential of the company.

The program is progressing according to plan with numerous initiatives ongoing. In Q2 2023, the new Talent Location in Mexico was formally opened and became fully operational. The location will support SimCorp's existing delivery center setup attracting strong talent and offering around-theclock services to clients globally. The choice of Mexico City was based on thorough analysis of all potential locations in the Americas, focused on macro-economics, labor cost, labor availability and overall risk considerations.

Non-recurring restructuring costs to execute the program FuEl amounted to EUR 2.4 million in Q2 2023, and amounting to EUR 7.8 million in H1 2023. The total restructuring costs to execute the program are still expected to amount to up to EUR 20 million to be fully recognized in 2023.

Business update

The commercial activity in Q2 2023 resulted in SimCorp signing two new clients. Hassana Investment Company entered a strategic partnership with SimCorp to utilize SimCorp's investment management platform. The partnership agreement covers SimCorp's back- and middle office suite, utilizing SimCorp's industry-leading investment management solutions across public and private assets. Additionally, the agreement covers the risk management solution and the optionality that comes with a connected ecosystem.

Later in the quarter, SimCorp signed with a Sovereign Wealth Fund that will use SimCorp Dimension IBOR, Alternative Investments Manager, Performance Manager, Business Intelligence functionality and Accounting to feed their corporate general ledger.

In the beginning of Q3 2023, SimCorp also signed a new customer in the US, where SimCorp will be delivering SaaS-powered Client Reporting. The US customer is a leading investment manager offering private markets solutions globally.

A number of expansionary SimCorp Dimension license contracts were signed in Q2 2023, including three migrations from on-premise to SaaS solutions.

Region Client Offering SaaS Order intake Revenue recognition
EMEA Hassana Investment
Company
Dimension and Risk
Management
No Q2 2023 Revenue from sale of
license recognized upfront.
Services and Risk part of
contract recognized over
the period
EMEA Undisclosed investment
manager
Dimension No Q2 2023 Revenue from sale of
license recognized upfront.

New customer wins in Q2 2023

ARR development

SimCorp accelerated its growth momentum with ARR accelerating by 13.6% in local currency by the end of Q2 2023. In H1 2023, ARR increased by EUR 26.5 million of which the largest contributors were Indexation on current contracts and expansion of business with current clients, including the signed conversions to SaaS. Additionally, the signing of four new clients during H1 2023 supported the growth.

Order intake and order book

In Q2 2023, the total order intake was EUR 23.7 million compared with EUR 17.0 million in the same period last year, mainly driven by additional license sales. Total order book was EUR 96.0 million at June 30, 2023, which is an increase of EUR 14.2 million compared with the order book at June 30, 2022.

In H1 2023, the total order intake was EUR 46.4 million compared with EUR 43.0 million in the same period last year, mainly driven by additional license sales.

Update on the situation in Ukraine

The situation in Ukraine remained challenging in Q2 2023. Despite the extremely difficult situation, our Ukrainian colleagues are overcoming enormous challenges and continue to manage their daily work with dedication and limited disruption. SimCorp has not incurred any extraordinary costs related to the situation in Ukraine in H1 2023.

Other highlights

On April 27, 2023, SimCorp A/S and Deutsche Boerse AG announced that they entered into an agreement pursuant to which Deutsche Boerse made an all-cash voluntary recommended public takeover offer to acquire all of the issued and outstanding shares (except treasury shares) in SimCorp. The price of the Offer was DKK 735.0 in cash for each share of nominally DKK 1.0, valuing the entire share capital of SimCorp at approximately DKK 29.0 billion.

On July 28, 2023 Deutsche Boerse extended the offer for the second time, which was required to allow time to obtain the necessary regulatory approvals and clearances from regulatory authorities. Deutsche Boerse has announced that the only remaining pending approval is by the European Commission, which is scheduled to be completed in September. As such, Deutsche Boerse does not expect any further extensions and has announced that the offer is expected to be settled and completed on 29 September 2023 at the latest.

The work related to the announcement agreement and public takeover offer will entail transaction costs for SimCorp, mainly related to advisor fees. The transaction costs have been recognized as special items. In Q2 2023, these costs amounted to EUR 1.0 million.

Financial review

Revenue development

In Q2 2023, ratable revenue was EUR 132.1 million - an increase of 20.4% in local currencies and 18.2% in reported terms.

Reported revenue was EUR 131.6 million corresponding to an increase of 13.4% compared to Q2 2022. Measured in local currencies, the revenue growth was 15.1% driven by 74.2% SaaS revenue growth.

In H1 2023, ratable revenue was EUR 274.4 million - an increase of 16.8% in local currencies and 17.3% in reported currency. Reported revenue was EUR 267.9 million driven by local currency revenue growth of 16.9%.

Quarterly revenue development

Revenue development per segment

In Q2 2023, on-premise revenue decreased by 2.8% as a consequence of the continued migration of customers to SaaS. The SaaS revenue continued to develop positively with revenue of EUR 33.8 million corresponding to an increase of 74.2% compared to Q2 2022. The growth was driven both by additional license sales as well as SaaS services.

In H1 2023, on-premise revenue increased by 0.8%. The SaaS revenue was EUR 71.7 million corresponding to an increase of 79.7% compared to H1 2022.

On-premise license sales
17.2
16.0
7.5%
8.7%
37.0
31.3
18.2%
On-premise software updates
39.3
42.1
-6.7%
-5.2%
78.9
83.7
-5.7%
and support
Total on-premise revenue
56.5
58.1
-2.8%
-1.2%
115.9
115.0
0.8%
SaaS license sales
10.5
1.9
452.6%
457.9%
27.3
6.6
313.6%
SaaS services incl. software
23.3
17.5
33.1%
36.0%
44.4
33.3
33.3%
updates and support
Total SaaS revenue
33.8
19.4
74.2%
77.3%
71.7
39.9
79.7%
Professional services
41.3
38.5
7.3%
8.6%
80.3
75.8
5.9%
18.9%
-5.6%
1.0%
316.7%
34.1%
80.8%
7.1%
Growth
Local
Reported Revenue
Revenue
Revenue
Growth
currency
Revenue
Revenue
Growth
EUR million
Q2 2023
Q2 2022
Q2 2023
Q2 2023
H1 2023
H1 2022
H1 2023
Growth
Local
currency
H1 2023

The total license sales (on-premise license sales and SaaS license sales) can be split into the following:

License split Q2 2023 Q2 2022 H1 2023 H1 2022
Initial license 13% 6% 10% 11%
Additional regular license 19% 45% 21% 37%
Renewals 20% 5% 30% 17%
Conversions 33% 31% 25% 19%
Other license 15% 13% 14% 16%
Total license revenue 100% 100% 100% 100%

Operating Costs

SimCorp's total operating costs excl. special items (including depreciation and amortization) were EUR 113.4 million in Q2 2023 compared to EUR 103.5 million in Q2 2022, an increase of 9.6% in reported currency.

Headcount increased by 16.7% from 2,105 at the end of Q2 2022 to 2,456 at the end of Q2 2023, mainly reflecting investments and the development of the SaaS and BPaaS offerings. The majority of the increase came from talent-locations, predominantly Poland, India and most recently, Philippines. Furthermore, overall salaries and staff related costs excl. special items accounted for 66.7% of total costs in Q2 2023, compared with 65.4% in Q2 2022.

In Q2 2023, cost of sales, including costs for implementation consultants and hosting activities, increased by 10.2% in local currencies to EUR 60.5 million driven by larger share of revenue derived from SaaS and BPaaS.

Compared with Q2 last year, research and development costs increased by 23.2% in local currencies to EUR 31.3 million. The work of the research and development organization is focused on improving the offerings with additional applications such as Alternatives and ESG investments, enhancing the SaaS platform, including development of cloud-native applications and improving the interaction between the standard platform and the tech-enabled service offerings (BPaaS).

In Q2 2023, sales and marketing costs increased by 6.5% in local currencies. Administrative expenses decreased by 10.3% in local currencies partly driven by the FuEl cost reduction program and partly as a result of timing of consultancy costs.

Growth local
Costs excl. Costs excl. Growth excl. currency excl.
Operating costs Reported costs Special items special items Q2 special items Q2 special items special items
EUR million Q2 2023 Q2 2023 2023 2022 Q2 2023 Q2 2023
Cost of sales 61.4 0.9 60.5 56.0 8.1% 10.2%
Research and development costs 31.3 0.0 31.3 26.0 20.4% 23.2%
Sales and marketing costs 17.0 0.9 16.1 15.3 5.4% 6.5%
Administrative expenses 7.1 1.6 5.5 6.2 -11.8% -10.3%
Total operating costs 116.8 3.4 113.4 103.5 9.6% 11.7%

Operating costs Q2 2023

In H1 2023, total operating costs excl. special items (including depreciation and amortization) were EUR 221.5 million in H1 2023 compared to EUR 202.1 million in H1 2022, an increase of 9.6% in reported currency.

Compared with H1 last year, research and development costs increased by 18.5% in local currencies to EUR 58.7 million.

Operating costs H1 2023

Operating costs
EUR million
Reported costs
H1 2023
Special items
H1 2023
Costs excl.
special items
H1 2023
Costs excl.
special items
H1 2022
Growth excl.
special items
H1 2023
Growth local
currency excl.
special items
H1 2023
Cost of sales 121.7 1.9 119.8 108.4 10.4% 11.7%
Research and development costs 60.1 1.4 58.7 50.7 15.8% 18.5%
Sales and marketing costs 31.4 2.2 29.2 29.0 0.7% 0.9%
Administrative expenses 17.1 3.3 13.8 13.9 -0.8% 0.2%
Total operating costs 230.3 8.8 221.5 202.0 9.6% 11.1%

Profitability

In Q2 2023, the Group generated EBIT of EUR 18.6 million excluding special items, compared to EUR 12.9 million in Q2 2022. The EBIT-margin was 14.1% compared to 11.1% in Q2 2022. Foreign exchange fluctuations had a small positive net impact on the EBIT-margin, primarily related to depreciation of UAH/EUR. Restructuring costs related to the execution of Program FuEl amounted to EUR 2.4 million while transaction cost related to the takeover offer from Deutsche Boerse amounted to EUR 1.0 million. Reported EBIT was EUR 15.2 million, equivalent to an EBIT-margin of 11.5%.

The EBIT-margin improvement is driven by revenue growth and operating leverage, which is positively impacting both the Gross margin and the OPEX/revenue ratio. The favorable development in cost ratios is also supported by the FuEL cost efficiency program initiated in February 2023.

In H1 2023, the Group posted an EBIT of EUR 46.9 million excluding special items. The EBIT-margin was 17.5% compared to 12.7% in H1 2022. Foreign exchange fluctuations had a positive net impact on the EBIT-margin of 0.5%-points. Special Items (restructuring costs and transactions costs) amounted to EUR 8.8 million in H1 2023 impacting reported EBIT of 38.1 million, equivalent to an EBIT-margin of 14.2%.

Quarterly EBIT development excl. special items

Financial items for Q2 2023 comprised net expenses of EUR 1.3 million compared with a net income of EUR 5.0 million in the same period last year. Financial income and expenses are primarily related to non-cash foreign exchange adjustments. The Group posted pre-tax profit of EUR 13.9 million in Q2 2023 against pre-tax profit of EUR 11.2 million in Q2 2022.

Financial items for H1 2023 comprised net expenses of EUR 3.6 million compared with a net income of EUR 7.1 million in the same period last year. The Group posted pre-tax profit of EUR 34.5 million in H1 2023 against pre-tax profit of EUR 28.9 million in H1 2022.

Cash flow

Operating activities generated a cash inflow of EUR 22.1 million in Q2 2023 compared with EUR 12.1 million in Q2 2022.

Payment of income taxes amounted to EUR 6.6 million, against EUR 3.9 million in Q2 2022. The Q2 2023 free cash flow (cash flow from operations reduced by CAPEX and by the principal element of lease payments) amounted to EUR 18.1 million representing a significant improvement compared to EUR 10.1 million in Q2 2022. The improvement was driven by stronger underlying profitability and enhanced working capital management.

In H1 2023, operating activities generated a cash inflow of EUR 70.4 million in H1 2023 compared with EUR 35.3 million in H1 2022, with net cash used in investing activities amounting to EUR 11.6 million in H1 2023 of which EUR 10 million related to the ownership investment in Artega, SimCorp's joint venture channel play partner in Australia.

In H1 2023, payment of income taxes amounted to EUR 12.2 million, against EUR 13.6 million in H1 2022. The H1 2023 free cash flow (cash flow from operations reduced by CAPEX and by the principal element of lease payments) amounted to EUR 63.8 million compared to EUR 30.2 million in H1 2022.

Balance sheet

SimCorp's total assets were EUR 612.2 million at June 30, 2023 compared with EUR 528.9 million a year earlier, an increase of EUR 83.3 million, mainly due to higher contract assets.

Cash holdings amounted to EUR 47.9 million. Draw on credit facilities was EUR 0.0 million. Consequently, net cash holdings was EUR 47.9 million compared with EUR 18.6 million a year earlier. Receivables amounted to EUR 107.1 million at June 30, 2023, representing a decrease of EUR 3.7 million compared with June 2022, due to increased focus on payment terms and overdue receivables.

Contract assets were EUR 286.4 million, an increase of EUR 68.9 million compared with June 30, 2022. Compared with December 31, 2022, contract assets decreased by EUR 6.5 million. New and additional subscription-based licenses added EUR 51.6 million to contract assets in H1 2023 and finance income recognized added EUR 2.4 million. Reductions stem from foreign exchange adjustments of EUR 3.5 million and invoicing of subscription-based license fees of EUR 57.2 million.

Changes in equity

The company's equity amounted to EUR 372.8 million at June 30, 2023. This was an increase of EUR 75.7 million from June 2022. Equity was reduced by the declared and paid dividends of EUR 39.7 million. The payment of dividends was approved by the shareholders at the AGM on March 23, 2023. Equity was increased by comprehensive income for H1 2023 of EUR 26.4 million as well as the effects of share-based remuneration of EUR 10.6 million, net of tax.

Outlook for the financial year 2023

SimCorp confirms its expectations for 2023 as announced in its Annual Report 2022. Measured in local currency, it is expected that ARR will grow 12-17%, ratable revenue will grow 6-11% and the EBITmargin is expected to be 21-24%, excluding special items (costs related to the execution of Programme FuEl and M&A-related transaction costs).

SimCorp's accelerated investments are still expected to increase costs corresponding to 3.5% points on the EBIT-margin. These investments will be more than offset by the cost efficiency program. The execution of the FuEl cost efficiency program is on track and the cost reduction targets of EUR 25 million in 2023 and EUR 35 million run-rate effect are confirmed. The restructuring costs amounted to EUR 7.8 million in H1 2023. The restructuring costs related to Program FuEl are still expected to amount to up to EUR 20 million to be fully recognized in 2023.

The financial outlook for 2023 reflects the ongoing SaaS transformation, with accelerated investments, and the initiation of the cost efficiency program. The investments are expected to generate solid business growth in 2023, while the profitability deterioration from investments is roughly offset by the cost efficiency program.

The work related to the announcement agreement and public takeover offer will entail transaction costs for SimCorp, mainly related to advisor fees. The transaction costs are being recognized as special items. The larger part of the advisor fees is success-based and if the transaction completes, transaction costs are expected to amount to EUR 15-17 million in 2023. In Q2 2023, the transaction costs amounted to EUR 1.0 million.

Financial outlook for 2023

All numbers in local currency, excluding special
items
2023 H1 achieved 2022 FY achieved 2023 financial
outlook
ARR growth (%) 13.6% 11.7% 12-17%
Ratable revenue growth (%) 16.8% 5.3% 6-11%
Total cost growth (incl. investments) 11.1% 14.3% 7-15%
EBIT-margin (%) 17.0% 24.2% 21-24%

Based on the exchange rates at the end of July 2023, it is estimated that the foreign exchange rate development will reduce revenue by 2-3% and have a neutral to slightly positive impact on the EBITmargin.

Confirmed mid-term financial target – returning to record-high profitability

The current transformation to a full-scale SaaS provider is materially changing the revenue, cost and profitability structure of the company. The mid-term financial target is to generate double-digit average growth rates and return to record-high profitability (above 28% EBIT-margin).

The growth potential stems from the development of the core platform combined with expansion opportunities in SaaS and BPaaS offerings. SaaS and BPaaS clients initially require higher cost to serve while building capabilities and scale. The larger share of revenue from SaaS combined with accelerated investments to build scale are drivers of the current profitability development. These negative margin drivers are targeted to be more than offset by future scale and efficiency in the SaaS and BPaaS offerings combined with an acceleration of revenue growth. Based on these drivers, SimCorp targets to return to record-high profitability at a significantly higher revenue level.

Other information

Significant risk and uncertainty factors

SimCorp operates in a dynamic and complex business environment, where performance relies heavily on the ongoing achievement of a number of success criteria. Pages 31-35 of SimCorp's Annual Report 2022 (published on 9 February 2023) describe the most important general risk factors and the risk management measures applied in everyday operations. Management believes that the description of these potential risks still pertains to the current situation.

Shareholder information

Restricted stock units

Allotment of restricted stock units

604,076 restricted stock units are outstanding on June 30, 2023. The restricted stock units will be transferred in whole or in part between 2023 and 2027 to program participants still employed when the stock units vest, some are subject to performance conditions.

Holding of treasury shares

SimCorp has not purchased treasury shares in H1 2023. In comparison, SimCorp purchased 289,795 treasury shares at an average price of DKK 514.47 per share, totaling EUR 20.0 million in 2022.

On June 30, 2023, SimCorp's holding of treasury shares amounted to 1,101,474 shares, equal to 2.7% of SimCorp's issued share capital.

Investor presentation

SimCorp's Executive Management Board will present the report on a conference call on Friday, August 11, 2023 at 11:00 am (CET). At the end of the presentation there will be a Q&A session.

The presentation will be available prior to the conference call via SimCorp's website www.simcorp.com/en/about/investor/presentations-and-events/quarterly-and-annual-investormeetings

Webcast details

It will be possible to follow the presentation via this link: https://edge.media-server.com/mmc/p/yi5racyj

Telephone conference registration

Participants are required to register in advance of the conference using the link provided below. Upon registering, each participant will be provided with Participant Dial In Numbers, and a unique Personal PIN.

Online registration: https://register.vevent.com/register/BI4604f41a752d446fa2ab2e7a6f90453d

Enquiries regarding this announcement should be addressed to

Investor contacts Christian Kromann, Chief Executive Officer, SimCorp A/S (+45 3544 8800, +45 2810 9090) Michael Bjergby, Chief Financial Officer, SimCorp A/S (+45 3544 8800, +45 3137 4171)

Media contacts

Tobias Brun-Falkencrone, Group Communications Director, SimCorp A/S (+45 2938 1284) Søren Rathlou Top, Global PR & Communications Manager, SimCorp A/S (+45 3115 8706)

Signatures

The Board of Directors and the Executive Management Board have today considered and adopted the interim report for the period January 1 – June 30, 2023.

The interim report, which is unaudited and has not been reviewed by the Company's auditors is presented in accordance with IAS 34 "Interim financial reporting" as adopted by the EU and Danish disclosure requirements for interim reports for listed companies.

In our opinion, the interim financial statements give a true and fair view of the Group's assets, liabilities and financial position as at June 30, 2023 and of the profit of the Group's operations and cash flow for the period January 1 – June 30, 2023.

Besides what has been disclosed in the interim report, there are no significant changes to the Group's risks and uncertainties, as disclosed in the Annual Report 2022 (published on 9 February 2023).

Furthermore, in our opinion the management's report gives a true and fair view of developments in the activities and financial position of the Group, the results for the period and of the Group's financial position in general, and outlines the significant risk and uncertainty factors that may affect the Group.

Copenhagen, 11 August 2023

Executive Management Board

Christian Kromann Chief Executive Officer Michael Bjergby Chief Financial Officer Georg Hetrodt Chief Operating Officer

Board of Directors

Peter Schütze Chair

Susan Standiford Adam Warby Allan Polack

Klausen

Morten Hübbe ViceChair

Charlotte Søndergaard

Neil Cook Sven Rinke

Simon Jeffreys

Consolidated income statement

EUR '000 2023
Q2
2022
Q2
2023
H1
2022
H1
2022
FY
Revenue 131,591 116,000 267,910 230,713 560,968
Cost of sales 61,432 55,981 121,765 108,486 228,588
Gross profit 70,159 60,019 146,145 122,227 332,380
Other operating income 435 370 535 549 830
Research and development costs 31,257 26,689 60,056 51,378 107,039
Sales and marketing costs 16,996 15,500 31,373 29,222 61,534
Administrative expenses 7,106 11,982 17,065 20,431 35,867
Other operating costs 39 - 71 - 2,914
Operating profit (EBIT) 15,196 6,218 38,115 21,745 125,856
Share of profit after tax in associates -368 11 -288 60 122
Financial income/expenses, net -927 4,954 -3,279 7,075 2,170
Profit before tax 13,901 11,183 34,548 28,880 128,148
Tax on the profit for the period 3,320 1,916 8,396 6,292 28,894
Profit for the period 10,581 9,267 26,152 22,588 99,254
Earnings per Share
Earnings per share - EPS (EUR) 0.27 0.24 0.66 0.57 2.52
Diluted earnings per share - EPS-D (EUR) 0.26 0.23 0.66 0.57 2.50

Statement of comprehensive income

EUR '000 2023
Q2
2022
Q2
2023
H1
2022
H1
2022
FY
Profit for the period 10,581 9,267 26,152 22,588 99,254
Other comprehensive income
Items that will not be reclassified subsequently to the
income statement:
Remeasurements of defined benefit plans - - - - 1,268
Tax, remeasurement of defined benefit plans - - - - -275
Items that may be reclassified subsequently to the income
statement, when specific conditions are met:
Foreign currency translation differences for foreign
operations
908 1,318 198 1,723 -850
Other comprehensive income after tax 908 1,318 198 1,723 143
Total comprehensive income 11,489 10,585 26,350 24,311 99,397

Consolidated balance sheet

Jun. 30
2023
Jun. 30
2022
Dec. 31
2022
EUR '000
Assets
Goodwill 61,381 61,395 61,266
Software 7,332 8,964 8,132
Client relationships 18,855 20,419 19,586
Total intangible assets 87,568 90,778 88,984
Leasehold 36,026 43,008 38,259
Technical equipment 1,386 675 851
Other equipment, fixtures, fittings and prepayments 2,068 2,343 2,349
Total property, plant, and equipment 39,480 46,026 41,459
Investments in associates 9,960 787 827
Deposits 4,136 3,378 3,517
Deferred tax 3,820 3,074 2,755
Other financial assets 4,838 4,844 4,843
Total other non-current assets 22,754 12,083 11,942
Total non-current assets 149,802 148,887 142,385
Receivables 107,088 110,768 112,378
Contract assets 286,430 217,557 292,903
Income tax receivables 5,297 4,239 5,480
Prepayments 15,686 15,419 10,636
Cash and cash equivalents 47,886 31,997 40,546
Total current assets 462,387 379,980 461,943
Total assets 612,189 528,867 604,328
Jun. 30 Jun. 30 Dec. 31
EUR '000 2023 2022 2022
Liabilities and Equity
Share capital 5,441 5,441 5,441
Exchange adjustment reserve -2,877 -502 -3,075
Retained earnings 370,230 292,108 333,459
Proposed dividend - - 39,732
Total equity 372,794 297,047 375,557
Lease liabilities 27,308 33,342 29,437
Deferred tax 45,975 34,287 46,596
Provisions 9,751 10,201 9,132
Total non-current liabilities 83,034 77,830 85,165
Bank loan / credit facility - 13,442 6,724
Lease liabilities 9,380 8,617 9,401
Prepayments from clients 61,105 57,620 35,975
Trade payables 37,082 30,704 33,351
Other payables 42,275 38,161 51,079
Income tax payables 5,685 4,443 6,065
Provisions 834 1,003 1,011
Total current liabilities 156,361 153,990 143,606
Total liabilities 239,395 231,820 228,771
Total liabilities and equity 612,189 528,867 604,328

Consolidated cash flow statement

EUR '000 2023
Q2
2022
Q2
2023
H1
2022
H1
2022
FY
Profit for the period 10,581 9,267 26,152 22,588 99,254
Depreciation/amortization 3,716 3,837 7,449 7,462 14,883
Share of profit/loss after tax in associates 368 -11 288 -60 -122
Financial income -151 -5,198 -247 -7,535 -3,191
Financial expenses 1,078 244 3,526 460 1,021
Tax on profit for the period 3,320 1,916 8,396 6,292 28,894
Other non-cash -472 5,317 -2,814 7,435 3,954
Adjustment share-based remuneration 5,154 2,566 10,029 8,862 13,527
Change in provisions 126 560 442 1,029 -32
Change in contract assets 2,203 1,442 7,529 9,421 -70,576
Change in working capital 2,730 -3,830 21,892 -6,821 -4,756
Financial income received 247 5 247 7 80
Financial expenses paid -205 -107 -295 -195 -345
Income tax paid -6,597 -3,873 -12,169 -13,638 -22,251
Net cash from operating activities 22,098 12,135 70,425 35,307 60,340
Purchase of property, plant, and equipment, net -1,371 309 -1,717 -263 -1,524
Sale and purchase of financial assets, net 82 -1,113 -9,973 -1,240 -1,377
Dividends from associates 123 134 123 134 134
Net cash used in investing activities -1,166 -670 -11,567 -1,369 -2,767
Dividends paid -9,986 -10,068 -39,669 -39,599 -39,836
Purchase of treasury shares - -10,293 - -18,921 -20,049
Repayment of lease liability -2,608 -2,310 -4,940 -4,819 -11,661
Proceeds, credit facilities / loans - - 36,962 20,167 26,891
Repayments, credit facilities / loans -26,834 -6,725 -43,636 -6,725 -20,167
Net cash used in financing activities -39,428 -29,396 -51,283 -49,897 -64,822
Change in cash and cash equivalents -18,496 -17,931 7,575 -15,959 -7,249
Cash and cash equivalents at beginning of period 66,382 49,768 40,546 47,692 47,692
Foreign exchange adjustment of cash and cash
equivalents
0 160 -235 264 103
Cash and cash equivalents end of period 47,886 31,997 47,886 31,997 40,546

Statement of changes in equity

Exchange
Share adjustment Retained Dividends
EUR '000 capital reserve earnings for the year Total
2023
Equity at January 1 5,441 -3,075 333,459 39,732 375,557
Net profit for the period - - 26,152 - 26,152
Total other comprehensive income - 198 - - 198
Total comprehensive income for the period - 198 26,152 - 26,350
Transactions with owners
Dividends paid to shareholders - - 63 -39,732 -39,669
Share-based payment - - 10,029 - 10,029
Tax, share-based payment - - 527 - 527
Equity at June 30 5,441 -2,877 370,230 - 372,794
2022
Equity at January 1 5,441 -2,225 280,003 39,888 323,107
Net profit for the period - - 22,588 - 22,588
Total other comprehensive income - 1,723 - - 1,723
Total comprehensive income for the period - 1,723 22,588 - 24,311
Transactions with owners
Dividends paid to shareholders - - 52 -39,888 -39,836
Share-based payment - - 8,862 - 8,862
Tax, share-based payment - - -476 - -476
Purchase of treasury shares - - -18,921 - -18,921
Equity at June 30 5,441 -502 292,108 - 297,047
Net profit for the period - - 76,666 - 76,666
Total other comprehensive income - -2,573 993 - -1,580
Total comprehensive income for the period - -2,573 77,659 - 75,086
Transactions with owners
Share-based payment - - 4,665 - 4,665
Tax, share-based payment - - -113 - -113
Purchase of treasury shares - - -1,128 - -1,128
Proposed dividends to shareholders - - -39,732 39,732 0
Equity at December 31 5,441 -3,075 333,459 39,732 375,557

Notes

Accounting policies

The interim report for Q2 2023 has been prepared in accordance with IAS 34 and additional Danish regulations for the presentation of quarterly interim reports by listed companies.

The interim report for the first half of 2023 follows the same accounting policies as the annual report for 2022 except for all new, amended or revised accounting standards and interpretations (IFRSs) endorsed by the EU effective for the accounting period beginning on January 1, 2023. These IFRSs have not had any impact on the Group's interim report. See the annual report 2022 for a comprehensive description of the accounting policies applied.

Judgments and estimates

The preparation of interim reports requires management to make accounting judgments and estimates that affect the use of accounting policies and recognized assets, liabilities, income and expenses. Actual results may differ from these estimates.

The most significant estimates made by management when using the Group's accounting policies and the most significant judgment uncertainties attached hereto are the same for the preparation of the interim report as for the preparation of the Annual Report 2022.

Contingent liabilities

Please refer to the annual report 2022.

Events after June 30, 2023

No other significant events have occurred after the balance sheet date that affect the interim report other than described separately in this interim report.

Segment information

The segment reporting reflects the management reporting structure where revenue is categorized into three main segments: revenue from clients operating and maintaining their SimCorp solution. on-premise, revenue from clients that are on a SaaS solution, and non-recurring professional services revenue.

Revenue disclosures are based on SimCorp's market units and development activities, while asset allocation is based on the physical location of the assets. Unallocated assets relate to headquarter assets, cash and investments in associates. "Research and development" and "Corporate functions" and "Elimination/Not allocated" are not operating segments, and the disclosure forms part of the reconciliation of segment data to the group income statement rather than being information about operating segments.

SimCorp Interim Report Q2 2023 20

EUR '000 EMEA Asia and
Australia
North
America
SimCorp
Sofia
Research
and
develop
ment
Corporate
functions
Elimina
tion/Not
allocated
Group
April 1 - June 30, 2023
On-premise initial licenses 2,712 6 191 1 - - - 2,910
On-premise additional licenses 6,222 4,306 793 780 - - - 12,101
On-premise other licenses 1,601 472 68 - - - - 2,141
On-premise software updates and
support
30,157 2,440 4,704 1,405 82 516 - 39,304
Total on-premise revenue 40,692 7,224 5,756 2,186 82 516 - 56,456
SaaS Initial licenses 607 72 120 - - - - 799
SaaS additional licenses 7,317 273 191 - - - - 7,781
SaaS other licenses 1,451 187 326 - - - - 1,964
SaaS services incl. software updates
and support
12,701 3,093 7,222 - - 322 - 23,338
Total SaaS revenue 22,076 3,625 7,859 - - 322 - 33,882
Professional services 23,720 4,682 10,109 2,742 - - - 41,253
External revenue 86,488 15,531 23,724 4,928 82 838 - 131,591
Revenue between segments 4,786 429 854 168 51,251 47,880 -105,368 -
Total segment revenue 91,274 15,960 24,578 5,096 51,333 48,718 -105,369 131,591
EBITDA 19,686 3,447 7,725 1,664 25,658 -39,230 - 18,951
Depreciation and amortization 912 151 375 334 768 1,214 - 3,754
Segment operating profit (EBIT) 18,774 3,296 7,350 1,330 24,890 -40,444 - 15,196
Financial items, net -1,295 -1,295
Profit for the period before tax 13,901
January 1 - June 30, 2023
On-premise initial licenses 3,668 67 472 3 - - - 4,210
On-premise additional licenses 16,520 4,800 2,736 4,270 - - - 28,326
On-premise other licenses 3,338 467 616 - - - - 4,421
On-premise software updates and
support
60,437 4,919 9,559 2,791 159 1,036 - 78,901
Total on-premise revenue 83,963 10,253 13,383 7,064 159 1,036 - 115,858
SaaS Initial licenses 917 463 968 - - - - 2,348
SaaS additional licenses 14,540 545 5,145 - - - - 20,230
SaaS other licenses 3,691 271 839 - - - - 4,801
SaaS services incl. software updates
and support
24,660 5,516 13,895 - - 322 - 44,393
Total SaaS revenue 43,808 6,795 20,847 - - 322 - 71,772
Professional services 46,681 9,368 18,108 6,123 - - - 80,280
External revenue 174,452 26,416 52,338 13,187 159 1,358 - 267,910
Revenue between segments 10,471 1,318 1,971 274 97,041 58,672 -169,747 -
Total segment revenue 184,923 27,734 54,309 13,461 97,200 60,030 -169,747 267,910
EBITDA 35,278 5,716 18,933 6,785 54,276 -75,354 - 45,635
Depreciation and amortization 1,877 306 759 661 1,537 2,379 - 7,519
Segment operating profit (EBIT) 33,401 5,410 18,174 6,124 52,739 -77,733 - 38,115
Financial items, net -3,567 -3,567
Profit for the period before tax 34,549
Total assets 332,282 55,123 108,586 50,105 59,594 4,272 2,227 612,189

SimCorp Interim Report Q2 2023 21

EUR '000 EMEA Asia and
Australia
North
America
SimCorp
Sofia
Research
and
develop
ment
Corporate
functions
Elimina
tion/Not
allocated
Group
April 1 - June 30, 2022
On-premise initial licenses 107 339 116 - - - - 562
On-premise additional licenses 4,138 8,450 787 313 - - - 13,688
On-premise other licenses 1,076 79 608 - - - - 1,763
On-premise software updates and
support
32,065 2,912 5,236 1,271 413 193 - 42,090
Total on-premise revenue 37,386 11,780 6,747 1,584 413 193 - 58,103
SaaS initial licenses 354 74 67 - - - - 495
SaaS additional licenses 20 88 831 - - - - 939
SaaS other licenses 294 48 123 - - - - 465
SaaS services incl. software updates
and support
8,964 2,130 6,031 103 - 251 - 17,479
Total SaaS revenue 9,632 2,340 7,052 103 - 251 - 19,378
Professional services 23,054 3,781 8,288 3,396 - - - 38,519
External revenue 70,072 17,901 22,087 5,083 413 444 - 116,000
Revenue between segments 9,985 1,336 2,392 9 35,534 9,962 -59,218 -
Total segment revenue 80,057 19,237 24,479 5,092 35,947 10,406 -59,218 116,000
EBITDA 11,594 1,341 3,105 1,957 11,173 -19,116 - 10,054
Depreciation and amortization 935 161 402 296 956 1,086 - 3,836
Segment operating profit (EBIT) 10,659 1,180 2,703 1,661 10,217 -20,202 - 6,218
Financial items, net 4,965 4,965
Profit for the period before tax 11,183
January 1 - June 30, 2022
On-premise initial licenses 2,252 681 256 60 - - - 3,249
On-premise additional licenses 10,737 8,548 1,758 3,552 - - - 24,595
On-premise other licenses 2,458 322 660 - - - - 3,440
On-premise software updates and
support
63,879 5,893 10,197 2,568 739 422 - 83,698
Total on-premise revenue 79,326 15,444 12,871 6,180 739 422 - 114,982
SaaS initial licenses 393 234 262 - - - - 889
SaaS additional licenses 943 90 2,126 - - - - 3,159
SaaS other licenses 1,310 95 1,108 - - - - 2,513
SaaS services incl. software updates
and support
17,018 4,080 11,809 225 - 251 - 33,383
Total SaaS revenue 19,664 4,499 15,305 225 - 251 - 39,944
Professional services 44,078 8,110 16,936 6,663 - - - 75,787
External revenue 143,068 28,053 45,112 13,068 739 673 - 230,713
Revenue between segments 22,025 2,199 4,487 17 73,298 20,007 -122,033 -
Total segment revenue 165,093 30,252 49,599 13,085 74,037 20,680 -122,033 230,713
EBITDA 22,116 2,507 6,703 7,065 29,083 -38,268 - 29,206
Depreciation and amortization 2,076 352 764 592 1,650 2,027 - 7,461
Segment operating profit (EBIT) 20,040 2,155 5,939 6,473 27,433 -40,295 - 21,745
Financial items, net 7,135 7,135
Profit for the period before tax 28,880
Total assets 242,384 58,514 104,661 50,437 59,713 3,647 9,511 528,867

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