CEGID : Group Q1 sales: sharp growth in SaaS sales

  First quarter 2016 sales Sharp growth in SaaS sales (up 50%*)  

* Unadjusted scope of consolidation

Q1 consolidated sales, unadjusted scope	2016 € M	2015 € M	Change € M	Change %
SaaS	21.6	14.4	7.2	+50.2%
Licenses	6.7	6.2	0.5	+7.9%
Maintenance	24.9	24.5	0.4	+1.6%
Other	0.6	0.7	-0.1	-12.3%
Total Software and software-related services (SSRS)*	53.8	45.8	8.0	+17.5%
Professional services	16.4	15.9	0.5	+3.4%
Total SSRS and professional services	70.2	61.7	8.5	+13.8%
Hardware distribution and other	4.8	5.3	-0.5	-11.0%
Total **	75.0	67.0	8.0	+11.8%
Of which recurrent	48.0	40.7	7.3	+18.0%
% recurrent / Total	64.0%	60.7%

* up 6.2% at constant scope, according to the methodology detailed at the end of this press release

** up 1.7% at constant scope, according to the methodology detailed at the end of this press release

First-quarter 2016 sales reflected a step-up in the growth of SaaS sales, which totaled €21.6 million, rising 50% at unadjusted scope (up nearly 26% at constant scope). This very strong increase resulted from acquisitions carried out in 2015, and in particular from revenue generated by the Technomedia group (worldwide SaaS-mode talent management solutions). Alongside this very positive development, software maintenance revenue increased by 1.6% at unadjusted scope to €24.9 million (down 2.1% at constant scope as Cegid continues to transform its business model from "on premise" licenses and associated maintenance to SaaS).

Recurrent sales of €48 million, including revenue from software and hardware maintenance contracts, portals and SaaS contracts, represented 64% of total sales, an increase of 3.3 percentage points compared with Q1 2015, and 3.8 points compared with FY 2015, thereby confirming the shift in Cegid's business model towards one of increasingly recurrent revenue.

The value of active SaaS contracts as of April 1, 2016 was more than €211 million⁽¹⁾, up 67% (up 38% at constant scope) from the estimated present value of €127 million as of April 1, 2015, after taking into account the inventory of contracts of the companies acquired in 2015, especially Technomedia (Talent management) and Altaven (Taxation). The value of SaaS contracts generated during Q1 2016 amounted to €10.2 million, at constant scope, an increase of nearly 35% compared with those generated in Q1 2015 (€7.6 million).

At the same time that recurrent Software and software-related services (SSRS) revenue increased, sales of licenses (€6.7 million) advanced by nearly 8% (up 4.6% at constant scope). 

Total SSRS revenue was thus €53.8 million, up 17.5% at unadjusted scope in Q1 2016 (up 6.2% at constant scope, i.e. an increase greater than that achieved over all of 2015).

Sales of professional services totaled €16.4 million, up 3.4% compared with Q1 2015.

As a result, revenue from "SSRS and professional services" (€70.2 million) advanced by 13.8% at unadjusted scope compared to Q1 2015 (up 3% at constant scope).

Revenue from the non-strategic, lower-margin "Hardware distribution and other" business was €4.8 million, or 6.3% of total sales, down nearly 11% from Q1 2015.

Internationally, Cegid continued to expand in Retail and with Technomedia in Talent Management. The percentage of total sales exceeded 13%, double that of Q1 2015.

Overall, Q1 2016 sales totaled €75.0 million, 11.8% higher at unadjusted scope (1.7% higher at constant scope) than the Q1 2015 figure of €67.0 million, with once again an increased proportion of recurrent revenue.

⁽¹⁾ Value of SaaS contracts, defined as active contracts as of April 1, 2016 extrapolated over their remaining lifetime for fixed maturity contracts and over 36 months generally for automatic renewal contracts, taking into account the churn rate as of December 31, 2015 (internal, unaudited figures). After additional analysis of all solutions available in SaaS mode, the present value (unaudited) of active SaaS contracts as of January 1, 2016 was €201 million. The previously estimated, unaudited figure published for information purposes in our financial releases of January 21 and March 1, 2016 and at our information meeting of March 2, 2016 was €196 million.

Consolidated sales (€ M) Unadjusted scope*		Q1	of which "SSRS and professional services"	of which "Hardware distribution and other"
CPAs, small companies	2016	27.9	25.0	2.8
	2015	27.1	24.1	3.0
SMEs and large companies	2016	28.6	27.9	0.7
	2015	23.9	23.1	0.8
Retail	2016	14.0	13.0	1.0
	2015	11.4	10.4	1.1
Public sector	2016	4.0	3.9	0.1
	2015	4.2	4.0	0.2
Miscellaneous	2016	0.5	0.3	0.1
	2015	0.4	0.2	0.2
Total	2,016	75.0	70.2	4.8
	2015	67.0	61.7	5.3

* Changes in the scope of consolidation take into account any alterations in the operational organization.

Gross margin increased to 86.3% of sales in Q1 2016 from 85.7% in Q1 2015 for two reasons: 1) there was a positive cost effect in Q1 2016 vs. Q1 2015, related to training and consulting sub-contracting, in particular with regard to "DSN", and 2) the rate of cloud service purchases declined slightly, as SaaS revenue continued to rise sharply.

By containing fixed costs, Cegid kept a lid on the estimated average monthly breakeven point, which is expected to be €21.4 million (€19.3 million in Q1 2015), before accounting for depreciation and amortization of assets identified during acquisitions and after accounting for changes in the scope of consolidation during 2015. After taking into account such depreciation and amortization, the average monthly breakeven point should be close to €21.8 million (€19.4 million in Q1 2015).

Increased cash flow and less onerous working capital requirements should lead to an increase in operating cash flow (change in cash flow from operating activities) and a reduction in estimated net financial debt, which is expected to be around €56.3 million as of March 31, 2016, i.e. an improvement of around €9 million compared to December 31, 2015.

In Q1 2016, Cegid felt the positive effects of the acquisitions it carried out in 2015 in Retail (JDS Solutions - USA, Magelia - e-commerce, France), in large corporate taxation (Altaven - France) and in HR-Talent (Technomedia), which will enable it to step up its growth and development in France and abroad.

In this regard, Cegid launched two initiatives during the first quarter to accelerate its growth:

In the United States, where Cegid has just conducted its first user conference for Retail market professionals, called "Cegid Connections: The Americas". The event took place in San Diego and was an opportunity for Cegid North America to greet the long-standing customers of JDS Solutions, which joined the Group in May 2015, as well as those of Cegid. Cegid North America presented the key challenges of connected commerce and retail market digitization.

Cegid plans to strengthen its presence in North America and also to expand its range of solutions for human resources management, as an extension of its recent acquisition of Technomedia.
Technomedia is a Canadian company that provides solutions for recruitment and talent management, employee evaluation and training follow-up in SaaS mode for all business sectors. Well-known in the people management market and based in Montreal, Technomedia was founded in 1996 by Alain Latry.
The company designed and gradually expanded a SaaS-mode suite of services enabling large companies and public entities not only to attract and hire employees but also to motivate and evaluate them and increase their loyalty.

In Africa, where Cegid has been present for several years in Casablanca and Tunis, as well as in Dubai. To manage the growth of its activities in Africa and the Middle East, Cegid opened a subsidiary in Abidjan (Ivory Coast). With its solutions already deployed in nearly 20 African countries, this new presence reflects Cegid's new ambitions on the continent, where it provides Yourcegid Retail, Manufacturing, Trade, Services, HR/payroll, Finance and Accounting Profession solutions via its network of partners.

As a leading French provider of enterprise solutions, Cegid plans to use its new Abidjan subsidiary as a springboard for supporting French companies present on the African continent (Vinci, Bolloré, Orange, etc.) as well as local organizations, both public and private, in their digital transformation.

Cegid Group confirms that its shares, listed on Euronext Paris Segment B, are eligible for the "PEA-PME" SME equity savings plan for the next 12 months, in accordance with decree no. 2014-283 of March 4, 2014, implementing Article 70 of budget law no. T013-1278 of December 29, 2013 establishing the criteria for companies eligible for the "PEA-PME" SME equity savings plan.

The Shareholders' Meeting will take place on May 9, 2016 at 11 AM at the head office of Cegid Group, 52 quai Paul Sédallian, 69009 Lyon (France). Subject to approval by shareholders, the proposed dividend (€1.25 per share) will be paid on May 13, 2016, with the ex-dividend date set at May 11, 2016.

Second-quarter sales and first-half 2016 earnings will be announced on July 20, 2016, after the market close. The full calendar of publication dates and upcoming events can be found at the following address: http://en.cegid.com/financial-calendar

(The figures included in this press release are consolidated, unaudited, preliminary estimates).  This English translation is for the convenience of English-speaking readers. However, only the French text has legal value. Consequently, the translation may not be relied upon to sustain any legal claim, nor should it be used as the basis of any legal opinion. Cegid Group expressly disclaims all liability for any inaccuracy herein.
With regard to the constant scope calculation, we note that JDS Solutions and Altaven, consolidated from June 1 and July 1, 2015, respectively, were either merged (JDS Solutions with Cegid Corporation) or in the case of Altaven, Cegid's large account taxation business was contributed to Altaven under a lease-management agreement. As such, it is no longer possible to accurately isolate the Q1 2016 revenue of these companies that resulted from their original business. The method used to estimate the changes in scope consisted in subtracting the following amounts from Q1 2016 revenue: JDS's Q1 2015 revenue, Altaven's Q1 2016 revenue from its original products and services and Technomedia's Q1 2016 revenue.  This approach led to estimates of revenue due to changes in the scope of consolidation of €5.1 million for SSRS and €6.7 million for total sales, giving rise to estimates of constant scope increases of 6.2% and 1.7%, respectively. 

This English translation is for the convenience of English-speaking readers. However, only the French text has legal value. Consequently, the translation may not be relied upon to sustain any legal claim, nor should it be used as the basis of any legal opinion. Cegid Group expressly disclaims all liability for any inaccuracy herein.

 Financial communication
Cegid Group
52 quai Paul Sédallian 
69279 Lyon Cedex 09
Tél : 04 26 29 50 20
dirfin@cegid.fr / www.cegid.com

Stock market : Euronext Paris Compartiment B

ISIN Code : FR0000124703
Reuters : CEGI.PA
Bloomberg : CGD FP
ICB : 9537 Software
Indices : CAC ALL SHARES - CAC ALL-TRADABLE - CAC MID & SMALL -CAC SMALL
CAC SOFT. & C.S. - CAC TECHNOLOGY - NEXT 150 - EnterNext© PEA-PME 150 - CAC PME

---