Axway (Paris:AXW) (Euronext: AXW.PA) launched 2019 by bringing together
its customers and employees at several events in Europe and the Americas
to present the Group’s mid-term vision and ambitions. These events were
also an opportunity to launch several new components of the hybrid
integration platform AMPLIFY™, which should support the ramp-up of
Subscription activities over the full year.
Axway aims to become a leader in hybrid integration platforms by the end
of 2020 and the Group’s investment efforts in Research & Development in
the second half of 2018 enabled a significant new step towards this
objective. In early 2019, the AMPLIFY™ offer was listed among the best
existing offers on this market by a well-known independent research firm.
In parallel, Axway announced the acquisition of the start-up
Streamdata.io at the end of March 2019, to further enhance the
technological capabilities of the AMPLIFY™ platform. This acquisition
allows the Group to offer its customers an event-driven API management
offer, capable of handling events and data in real time, as well as a
complete digital transformation methodology built around the adoption
and maturity of APIs throughout their lifecycle.
Strengthened by these developments, Axway will continue to accelerate
the execution of its strategy throughout 2019. Technological investment
will be maintained at a high level, while Sales and Marketing efforts
will be intensified to maximize the adoption of its new offerings by
Patrick Donovan, Chief Executive Officer of Axway, said:
“As we continue to move forward with our strategy, I’m pleased with
the initial results of our recent Research & Development efforts. In the
first quarter of 2019, our innovations enabled us to establish the
foundations of our AMPLIFY™ offer. We are now able to explain to
customers not only the capabilities of our platform, but also the
roadmap we propose regarding improvements to their existing systems. In
the first three months of the year, our signatures were more strongly
supported by License activity growth than by the annual contract value
of new Subscription deals signed. However, over the full year, the
gradual acceleration of our Sales and Marketing efforts should enable us
to continue with confidence on the path towards our 2020 ambitions.”
1Alternative performance measures are defined in the
glossary at the end of this document.
Comments on Q1 2019 activity
|Axway Software: Consolidated revenue|
|1st Quarter 2019 (€m)||Q1 2019||
In Q1 2019, Axway Software revenue amounted to €67.0 million,
representing organic growth of 2.1%. Business growth at constant
exchange rates was also 2.1%, while total growth was 6.0%. Currency
fluctuations had a positive impact of €2.5 million on revenue for the
quarter, while the scope of consolidation remained unchanged.
|Axway Software: Revenue by business line|
|1st Quarter 2019 (€m)||Q1 2019||
License activity generated revenue of €9.1 million in Q1 2019
(14% of Group revenue), representing organic growth of 6.7%. Total
activity growth amounted to 11.0% in the quarter. License sales
momentum, historically weak at the beginning of the year, was offset by
the signature of one of the two deals initially scheduled for the end of
The first quarter traditionally offers little indication of annual
License revenue trends. The Group recalls that this revenue is likely to
vary significantly quarter-on-quarter, due to the progressive transition
of Axway’s business mix towards Subscription offers.
Subscription activity grew organically by 11.2% in Q1 2019,
reaching €10.9 million (16% of Group revenue). Overall, activity growth
totaled 19.1% for the period. This strong performance is due to
significant growth in the annual contract value (ACV) of new
Subscription contracts signed in the second half of 2018.
In Q1 2019, new Subscription contract ACV amounted to €1.4 million, down
18.5% compared to the high comparison base of Q1 2018 (€1.7 million).
This was mainly due to the wait and see attitude generated at the
beginning of the year by the launch of new technological components on
the hybrid integration platform AMPLIFY™ planned at the end of March.
The signature metric, which takes into account the good momentum of
License sales and the lower ACV of new Subscription contracts signed in
Q1 2019, therefore fell 2.8% compared to Q1 2018. Over the full year,
the planned intensification of commercial investment should lead to a
more positive trend and the gradual construction of a more promising
pipeline for the Group.
Maintenance revenue grew slightly to €36.2 million (54% of Group
revenue) in Q1 2019, representing organic growth of 0.8% compared to Q1
For the first three months of the year, Axway recurring revenue, which
includes multi-year Subscription and Maintenance contracts, represented
70% of Group revenue, or €47.1 million.
Finally, Services activity revenue decreased by 5.1% organically
over the quarter to €10.9 million (16% of Group revenue). Activity was
successfully refocused on higher value-added contracts in 2018, to
enable improved profitability in 2019. However, commercial trends
remained challenging in the first quarter and confirms the expectation
of a full-year single digit decline in Services.
|Axway Software: Revenue by geographic area|
|1st Quarter 2019 (€m)||Q1 2019||
|Rest of Europe||13.7||14.5||14.5||-5.7%||-6.0%|
France generated revenue of €20.5 million in Q1 2019 (31% of
Group revenue), representing organic growth of 18.0%. This strong growth
in sales is mainly related to the high level of License sales and the
significant growth in the Subscription activity during the quarter.
Rest of Europe fell 6.0% organically over the quarter, with
revenue of €13.7 million. (20% of Group revenue). While Subscription
activity grew strongly in all countries in the region, this was not
enough to offset the decline in License and Services activities.
The Americas (USA & Latin America) generated revenue of €29.3
million (44% of Group revenue) in Q1 2019, representing an organic
decline of 3.4%. This decrease in revenue in the region is mainly
attributable to the significant decline in License activity, which was
only partially offset by growth in other activities over the quarter.
Finally, in the Asia-Pacific region, revenue amounted to €3.6
million in the quarter, representing organic growth of 4.0%.
Financial position at March 31, 2019
At March 31, 2019, Axway’s financial position remained solid with cash
of €45.9 million and bank debt of €45.3 million.
Change in the workforce
At March 31, 2019, Axway had 1,878 employees (25% in France and 75%
internationally) compared to 1,848 at December 31, 2018.
2019 Targets & 2020 Outlook
For 2019, the Group confirms that it anticipates:
A return to organic business growth, that should continue into 2020
and enable Axway to achieve a revenue of around €300 million,
An operating margin on business activity of between 8% and 10%,
representing a low point during the transformation of the business
model, before a rebound in profitability expected in 2020.
Friday, April 26, 2019: Publication of the 2018 Registration Document.
Wednesday, June 5, 2019, 2:30pm: Combined General Meeting – Étoile
Business Center, Paris.
Wednesday, July 24, 2019, after closing: Publication of 2019 Half-Year
Thursday, July 25, 2019, 9:00 am: Presentation of 2019 Half-Year Results
– Cloud Business Center, Paris.
Glossary – Alternative Performance Measures
Restated revenue: Revenue for the prior
year, adjusted for the consolidation scope and exchange rates of the
Organic growth: Growth in revenue between
the period under review and the prior period, restated for consolidated
scope and exchange rate impacts.
Growth at constant exchange rates: Growth
in revenue between the period under review and the prior period restated
for exchange rate impacts.
ACV: Annual Contract Value – Annual
contract value of the Subscription agreement.
TCV: Total Contract Value – Full
value of the Subscription agreement including both recurring revenue
over the contract term and one-time payments.
Signature metric: Amount of License sales
plus three times the annual value (3xACV) of new Subscription contracts
signed over a given period.
Profit on operating activities: Profit from
recurring operations adjusted for the share-based payment expense for
stock options and free shares, as well as the amortization of allocated
This presentation contains forward-looking statements that may be
subject to various risks and uncertainties concerning the Group’s growth
and profitability, notably in the event of future acquisitions. The
Group highlights that signatures of license contracts, which often
represent investments for clients, 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, the Group 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 2017 Registration Document filed with the
French Financial Markets Authority (Autorité des Marchés Financiers,
AMF) on April 26, 2018 under number D.18-0393. 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 (Euronext: AXW.PA), as a software company, unlocks digital
experiences by connecting individuals, systems, businesses and customer
ecosystems with digital infrastructure solutions. AMPLIFY™, Axway’s
hybrid integration platform, connects data from any device anywhere,
expands collaboration, fuels millions of apps and supplies real-time
analytics to build customer experience networks. From idea to execution,
Axway’s expertise in API management, secure file exchange and B2B/EDI
integration have solved the toughest data challenges for more than
11,000 organizations in 100 countries. To learn more, visit http://www.investors.axway.com/en
or Axway IR mobile App available on Apple Store & Android.
Axway Software: Impact on revenue of changes in scope and
|1st Quarter 2019 (€m)||Q1 2019||Q1 2018||Growth|
|Changes in exchange rates||+2.5|
|Revenue at constant exchange rates||67.0||65.7||2.1%|
|Changes in scope||+0.0|
|Revenue at constant scope and exchange rates||67.0||65.7||2.1%|
|Axway Software: Changes in exchange rates|
1st Quarter 2019
|US Dollar||1.136||1.229||+ 8.2%|