Cegid Group - Q3 2016: SaaS business continues to grow

* At constant scope

 * SSRS (software and software-related services) sales: up 5.5% during Q3, and up 5.7% over the first nine months of 2016.

⁽¹⁾ Total: up 0.4% at constant scope; changes in scope: €4.0 million

⁽²⁾ Total: up 2.2% at constant scope; changes in scope: €16.7 million

Third quarter 2016

Total revenue (€70.8 million) increased by 6.4% (stable at constant scope) and SaaS revenue (€23.3 million) continued its strong growth, up 48% and 29% at constant scope. In Q3 2016, SaaS revenue accounted for 43% of overall revenue from SaaS + Licenses + Maintenance (33% in the year-earlier period), in line with the transformation of Cegid's business model toward cloud services and increasingly recurrent revenue streams.

Recurrent sales (€49.3 million), which include revenue from software and hardware maintenance contracts, portals and SaaS contracts, accounted for almost 70% of total sales, up 15.2% from the third quarter of 2015 (up 8.1% at constant scope).
Strategic "Software and software-related services (SSRS)", which also includes License revenue (€5.6 million, down by almost 12%), totaled €54.3 million, or 77% of total sales, an increase of 11.7% (5.5% at constant scope).
Sales of professional services totaled €12.7 million, down by almost 4% compared with Q3 2015 (down 11% at constant scope).

As a result, revenue from "SSRS and professional services" (€67.0 million) advanced by 8.4% at unadjusted scope from Q3 2015 (up 1.9% at constant scope).
Revenue from the non-strategic "Hardware distribution and other" business was €3.8 million, or 5% of total sales, down nearly 20% from Q3 2015.

First nine months of 2016

Cegid's sales in the first nine months of the year totaled €221.3 million, vs. €200.2 million in the year-earlier period. SSRS sales totaled €163.4 million (up 14.4% unadjusted and 5.7% at constant scope), outperforming the software market^(1).

Revenue from SaaS contracts (On Demand solutions, employment/tax filing portals) rose again, by more than 28% at constant scope, to €67.7 million (up 50.3% at unadjusted scope), confirming Cegid's position as one of France's principal players in B2B cloud solutions oriented around the MoBiClo^TM concept.

Recurrent sales (€146.4 million), which include revenue from software and hardware maintenance contracts, portals and SaaS contracts, represented 66% of total sales, up more than 17% (and up 7.7% at constant scope) from the first nine months of 2015.

The value of active SaaS contracts as of October 1, 2016 was €235 million⁽²⁾, up nearly 39% at constant scope from the estimated value as of October 1, 2015, and higher than the increase of almost 36% at constant scope reported over the first half of 2016. At constant scope, the value of SaaS contracts increased by almost 63%.
Internationally, Cegid saw continued expansion in the Retail and Talent Management segments, with sales rising more than 53% at unadjusted scope (up almost 22% at constant scope).
⁽¹⁾ 2016 growth in software sales: 2.6% (source: IDC/Syntec numérique)
⁽²⁾ Value of SaaS contracts, defined as active contracts as of October 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 October 1, 2015 was over €144 million. The previously estimated, unaudited figure published for information purposes in our financial release of October 8, 2015 was €140 million.

* Changes in the scope of consolidation take into account any alterations in the operational organization and the impact of changes in the scope of consolidation in the third quarter (+€4.0 million) and over the first nine months of the year (+€16.7 million).

The change in the gross margin (nearly 86% of sales in the first nine months of 2016, vs. 86.2% in the year-earlier period), came about primarily as a result of higher purchase volumes related to cloud services and to services outsourced to Group partners.

By maintaining good control over fixed costs, the estimated average monthly breakeven point of sales⁽¹⁾ was kept in check at €21.1 million for the first nine months of the year, vs. €18.9 million in the first nine months of 2015, after taking into account the consolidation of companies acquired in 2015. After adjusting for depreciation and amortization of identified, acquisition-related assets, the average monthly breakeven point should be close to €20.2 million (€18.8 million in 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 net financial debt to €62.1 million, vs. €65.3 million as of December 31, 2015.

⁽¹⁾ Total breakeven point of sales divided by the number of months in the period

Cegid has recently signed a partnership agreement with startup eDoc Group (eFolia/eDoc Group), a probative-value document exchange company specializing in digitization, including Electronic Document Management and SaaS-based collaborative processes.

Under the partnership agreement, Cegid acquired a stake in eDoc Group as part of a capital increase and will finance eDoc Group's innovation-related investments. The agreement includes the option to ultimately acquire all of eDoc's shares.

This agreement forms part of Cegid's strategy to build a comprehensive, integrated online SaaS platform named DocLink, designed to offer all functionalities necessary for the paperless management of incoming and outgoing documents and to create new cloud services and solutions for the public sector, private companies, and the Accounting Profession and its small-business clients.

At the most recent CPA Congress, held in Brussels on September 28-30, Cegid presented its latest innovations, including those related to the DocLink digital platform offered to CPAs to help them develop collaborative services with their small-business clients. Such services include paperless invoices via the "Box", "Pass Social"", a training course on payroll-related legislation in response to the requirements of nominative employee filing ("DSN") and other challenges, KPIs that are accessible while on the go, probative-value archiving and electronic signature.

Euronext Paris notified the AMF that as of October 6, 2016, the deadline for financial intermediaries to file orders received during the Reopened Offer initiated by Claudius France, a "simplified share company", with a view to acquiring Cegid Group shares and redeemable warrants (BAAR), it had received:

- 146,169 Cegid Group shares;
- 1,500 Cegid Group 2018 redeemable warrants (BAAR).

Accordingly, Claudius France, together with Claudius Finance, holds 8,355,974 shares in Cegid Group representing as many voting rights, i.e. 90.50% of the Company's share capital and 90.11% of voting rights ⁽¹⁾ and, taking into account the 136,807 treasury shares, 91.98% of the Company's share capital and 91.58% of voting rights.
Claudius France also holds (i) 7,435 2017 redeemable warrants (BAAR) and (ii) 19,782 2018 redeemable warrants (BAAR), representing 94.68% of the 28,745 outstanding redeemable warrants.

Euronext Paris will publish the settlement and delivery schedule of the recently closed Offer.
_______
⁽¹⁾ On the basis of a share capital composed of 9,233,057 shares representing 9,273,186 voting rights, pursuant to the 2^nd paragraph of Article 223 -11 of the General Regulation.

With a business model oriented toward a high level of recurrent revenue (66% of sales) primarily from SaaS, Cegid can use its numerous strengths to support private companies and public sector entities as they invest in digital transformation. For the full year, Cegid is maintaining its objective to step up growth and development, both in France and abroad (Retail and Talent), while improving its operating performance.

The economic environment, which failed to improve in France in 2016, has weighed on Cegid's performance to date. Cegid still hopes to achieve its targets for 2016, but this will be dependent on the level of activity in the fourth calendar quarter, traditionally a highly seasonal and volatile period. Furthermore, exceptional operating expenses related to the transactions on Cegid Group's capital and financial items related to structuring its financing will have a negative impact on full-year net income. This particular context does not affect the Group's goals for 2017 of developing its activity and increasing its income from ordinary activities.

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 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.

Financial communication

Cegid Group

52 quai Paul Sédallian 

69279 Lyon Cedex 09

Tél : +33 (0)4 26 29 50 20

dirfin@cegid.fr / www.cegid.com

Stock market: Euronext Paris Compartiment B

ISIN Code : FR0000124703

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