Market Overview

Axway Software – Half-Year 2018:


Revenue1 of €134.9 million and Operating
margin of 9.1%

  • Stable Group revenue at constant exchange rates, down 2.0%
  • Profit on Operating Activities of €12.3 million or 9.1% of revenue
  • Stable License and Maintenance activities, growth in Subscription2
  • Organization aligned to support acceleration of strategy execution

Regulatory News:

Axway Software's (Paris:AXW) Board of Directors, chaired by
Pierre Pasquier, today approved the financial statements for the first
half of 2018, which were subject to a limited review by the statutory

Axway Software: 2018 Half-year results
Key income statement items* Half-year 2018 Half-year 2017
  (€m)   (% Rev) (€m)   (% Rev)
Revenue 134.9   142.8  
Organic growth -2.0%
Growth at constant exchange rates 0.0%
Total growth -5.5%          
Profit on Operating Activities 12.3 9.1% 6.0 4.2%
Profit from Recurring Operations 7.8 5.7% 1.0 0.7%
Operating Profit 5.0 3.7% -0.4 -0.3%
Net Profit attributable to the Group 3.9   2.9% 2.6   1.8%
Basic earnings per share (in €) 0.18     0.12    
* Alternative performance measures are defined in the glossary at
the end of this document

Patrick Donovan, Chief Executive Officer, commented:

« As a major player in digital transformation, Axway assists
customers daily with their IT modernization efforts by opening,
integrating and moving their data. We are building the AMPLIFY™ Hybrid
Integration Platform to continue to support them on their journey. I'm
convinced of the relevance of this strategy and of our need to
accelerate its implementation. This has been my priority since the day I
was appointed. To carry out this mission successfully, several key
decisions were taken over the last 3 months. We created the Customer
Success Organization encompassing Sales and Customer Satisfaction, our
marketing strategy has been adjusted and investments, whether for our
products or our tools, will accelerate over the second half of the year.
The market has now validated our ambition to become a leader in Hybrid
Integration and we are stepping-up our efforts to adapt our model
accordingly. In the first half of the year, I am satisfied that we
successfully defended our historical License positions and although the
Subscription business has not yet achieved the expected revenue growth,
it is gradually gaining momentum and our customers are showing
increasing interest in those offerings. »

1 The application of IFRS 15 has no material or
significant impact on revenue recognition or the Axway Software
financial statements.

2 The cloud activity has
been renamed to take into account, in the future, sales of subscriptions
delivered in a hybrid mode (either in the cloud, on-premise or both).

The interim consolidated financial statements were subject to audit
procedures. The limited review report is in the process of being issued
by the auditors.

Accelerating execution of the transformation strategy

In the first half of 2018, Axway reaffirmed its strategy to become a
market leader in Hybrid Integration by the end of 2020 and its aim to
transform its offering and business model to continue adapting to new
customer demands.

On April 6, 2018, Axway's Board of Directors appointed Patrick Donovan
Group CEO, with the priority mission of accelerating execution of this

Since then, several important initiatives have been implemented,

  • Creation of a Customer Success Organisation (CSO) encompassing Sales
    and Customer Satisfaction,
  • Adjustment of commercial models and commission plans to better support
    the Subscription offering,
  • Review of the marketing strategy, now focused on digital levers,
  • Appointment of new leaders (Finance, CSO, Marketing).

These changes should enable Axway to better respond to the new economic
environment in its markets.

Comments on business and operating performance for the first half of

In the first half of 2018, Axway successfully stabilized its License and
Maintenance sales while growing its Subscription business. While growth
in Subscription was not sufficient to offset the decline in Services
activities over the first half of the year, the Group, under the
leadership of its new Chief Executive Officer, is making the necessary
adjustments to accelerate strategy execution and has launched several
initiatives, as mentioned above, that should bear fruit in the medium

Thus, between January and June 2018, Axway generated revenue of €134.9
million, down 2.0% organically and 5.5% in total. While the scope effect
was limited to the consolidation of Syncplicity's activities for the
first two months of 2018 (+€2.8m), exchange rate fluctuations had a
negative impact on Group revenue of -€7.9m. Revenue would have been
stable over the period (0.0%) at constant exchange rates. Profit on
operating activities increased significantly in the first half of 2018,
reaching €12.3m, or 9.1% of revenue, compared with 4.2% in the first
half of 2017. This outperformance is mainly due to the positive effect
of exchange rates fluctuations on the cost base and the late launch of
additional investments planned for the year.

Axway Software: Revenue by business line
Half-year 2018 (€m)   H1 2018   H1 2017


  H1 2017




  Organic Growth
License   23.8   23.8   25.0   -4.8%   0.0%
Subscription 18.8 18.2 17.2 9.3% 3.3%
Maintenance 69.9 69.7 73.5 -4.9% 0.3%
Services   22.5   26.0   27.1   -17.0%   -13.5%
Axway Software   134.9   137.7   142.8   -5.5%   -2.0%
* Revenue at 2018 scope and exchange rates

License revenue was €23.8 million in the first half of 2018,
stable organically (0.0%) and down 4.8% in total. Despite a difficult
first quarter, marked by a further lengthening of customer decision
cycles, several important signatures punctuated the second quarter
(organic growth of 4.7%) stabilizing activity over the half-year. The
MFT (Managed File Transfer) offering, dedicated to secure file transfer
management, as well as the API Management offering, an essential
distribution channel for data governance, were the most robust. By
vertical market, Financial Services and Healthcare grew strongly.
Factoring in an exceptionally high comparison basis for the fourth
quarter of 2017, the Group forecasts an organic decline of 3 to 5% for
this activity over the full-year.

Subscription revenue increased by 9.3% in total and by 3.3%
organically to €18.8 million in the first half of 2018. Subscription
contracts signed during the period had an annual contract value (ACV) of
€4.7m up nearly 15% compared to the first half of 2017. This good
commercial performance, which enables the Group to gradually increase
the recurring portion of its revenue, was nevertheless slowed by several
temporary adverse effects on recently acquired products. It was notably
decided to change the strategy on a specific component of the
AppCelerator offering now available in Open Source4. Axway
emphasizes the major technological interest of its last acquisitions for
the construction of its AMPLIFY™ Hybrid Integration Platform offering.
The Group has made several key strategic adjustments which should
accelerate the adaptation of its business model, and in particular the
commercial processes, to the Subscription offering.

4 The source codes of several software modules and
components are now distributed under a license allowing anyone to read,
modify or redistribute them.

Maintenance activities generated revenue of €69.9 million in the
first half, with organic growth of 0.3%. This revenue stability in the
first half of the year demonstrates the resilience of the activity's
business model which only partially depends on new License signatures.

Consequently, in the first half of 2018, Axway's recurring revenue
(Maintenance + Subscription) increased to 66% of revenue compared to 64%
in the first half of 2017.

Services revenue amounted to €22.5 million, down 13.5%
organically over the period. The move to outsource non-strategic
Services and the lack of growth in License activity directly weighed on
demand. Although the Group anticipates more stable revenue in the second
half for this activity, the priority objective remains to improve

Axway Software: Revenue by geographic area
Half-year 2018 (€m)   H1 2018   H1 2017


  H1 2017




  Organic Growth
France   37.3   38.7   38.7   -3.6%   -3.6%
Rest of Europe 32.4 33.4 33.7 -3.9% -3.0%
Americas 58.4 58.4 62.7 -6.9% 0.0%
Asia/Pacific   6.8   7.2   7.8   -12.8%   -5.6%
Axway Software   134.9   137.7   142.8   -5.5%   -2.0%
* Revenue at 2018 scope and exchange rates

France generated revenue of €37.3 million in the first half of
2018 (28% of Group revenue), down 3.6% organically. License, Maintenance
and Subscription activities grew sharply in the second quarter after a
mixed first quarter. The decrease in France over the half-year is mainly
attributable to Services, which reported a 19% slump in revenue

The Rest of Europe fell 3.0% organically over the first six
months of 2018, reporting revenue of €32.4 million. In Germany and the
United Kingdom, License and Subscription activities posted very strong
organic growth, while the performance of the other European countries
was affected by a particularly high comparison basis in Benelux for the
first half of 2017.

The Americas (USA & Latin America) accounted for 43% of Group
revenue in the first half of 2018. At €58.4 million for the period,
revenue is stable compared to the first half of 2017. While License and
Maintenance activities grew similarly, Subscription activity was only
slightly up compared to the previous year.

Finally, in Asia-Pacific, revenue fell 5.6% organically to €6.8
million for the half-year. While the Subscription activity grew strongly
despite the postponement of several projects to the second half of the
year, the maturity of the Australian market weighed on the License

Comments on net profit for the first half of 2018

Profit from recurring operations amounted to €7.8 million in the first
half of 2018, representing 5.7% of Group revenue compared with 0.7% for
the prior-year period, after amortization of purchased intangible assets
of €4.1 million.

Operating profit, including €2.8 million of other operating income and
expenses, was 3.7% of first-half revenue, or €5.0 million.

Net profit was €3.9 million, or 2.9% of revenue for the first half of

Basic earnings per share reached €0.18 at June 30, 2018, compared with
€0.12 in the first half of 2017, an increase of 50%.

Financial position at June 30, 2018

At June 30, 2018, Axway's financial position remained solid with cash of
€47.6 million and bank debt of an equivalent amount.

Free cash flow for the first half was €21.8 million, compared to €19.0
million for the first half of 2017.

Shareholders' equity at June 30, 2018, amounted to €353.9 million.

Change in the workforce

At June 30, 2018, Axway had 1,780 employees (26% in France and 74%
internationally), compared to 1,839 at December 31, 2017.

2018 Targets & 2020 Outlook

Noting the moderate growth of its Subscription activity in the first
half of 2018 and a high basis of comparison for the License activity in
the second half of the year, the Group anticipates organic revenue
growth of between -3% and 0% over the full year.

In addition, during its transformation period, Axway confirms an
additional investment of approximately €15 million per year dedicated to
the construction and sale of the AMPLIFY™ platform. These investments
were launched late in the first half and will be mainly concentrated in
the second half in 2018 for an estimated cost of 3 to €5 million over
the year.

These two factors suggest an operating margin rate of between 8% and 11%
for the year.

Finally, Axway also reaffirms its ambitions for the end of 2020:

  • Become a market leader in Hybrid Integration Platforms (HIP),
  • Maintain revenue at approximately €300 million ("organically stable
    compared to 2017") while transforming the revenue mix from License to
  • Seize acquisition opportunities to support this strategy.

Financial Calendar

Thursday, July 26, 2018, 5:30 p.m.:
Presentation of 2018 Half-Year Results - Cloud Business Center, Paris.

Thursday, August 30, 2018: Publication of the 2018 Half-Year Report.

Thursday, October 25, 2018 (after closing): Publication of Q3 2018

2018 Half-Year Results Presentation Meeting

The 2018 Half-Year Results will be presented to the financial community
at a meeting to be held on July 26, 2018 at 5:30pm (CEST) at the Cloud
Business Center in Paris. The meeting will be held in English and
simultaneously translated into French.

This presentation can also be followed remotely via a dedicated
bilingual webcast:

For the choice of language please use the following PIN codes: English =
8367372 / French = 9567317

Practical information about the conference may be found on Axway's

Glossary – Alternative Performance Measures

Restated revenue: Revenue for the prior
year, adjusted for the consolidation scope and exchange rates of the
current year.

Organic growth: Growth in revenue between
the period under review and the prior period, restated for consolidated
scope and exchange rates impacts.

Growth at constant exchange rates: Growth
in revenue between the period under review and the prior period restated
for exchange rates impacts.

ACV: Annual Contract Value – Average
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.

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
intangible assets.


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.

About Axway

Axway (Euronext: AXW.PA) 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
or via the Axway IR mobile application available at Apple Store &


Axway Software: Revenue by geographic area
Q1 2018 (€m)   Q1 2018   Q1 2017


  Q1 2017




  Organic Growth
France   17.3   19.5   19.5   -11.2%   -11.2%
Rest of Europe 14.5 15.7 15.8 -8.3% -7.5%
Americas 28.0 28.0 29.5 -5.1% 0.2%
Asia/Pacific   3.4   3.3   3.6   -7.5%   1.6%
Axway Software   63.2   66.5   68.5   -7.7%   -4.9%
* Revenue at 2018 scope and exchange rates
Axway Software: Revenue by geographic area
Q2 2018 (€m)   Q2 2018   Q2 2017


  Q2 2017




  Organic Growth
France   19.9   19.1   19.1   4.2%   4.2%
Rest of Europe 18.0 17.8 17.9 0.6% 1.1%
Americas 30.3 30.5 33.2 -8.7% -0.7%
Asia/Pacific   3.5   3.9   4.1   -14.6%   -10.3%
Axway Software   71.7   71.2   74.3   -3.5%   0.7%
* Revenue at 2018 scope and exchange rates
Axway Software: Revenue by business line
Q1 2018 (€m)   Q1 2018   Q1 2017


  Q1 2017




  Organic Growth
License   8.2   9.0   9.6   -14.3%   -8.7%
Subscription 9.1 9.0 7.3 24.6% 1.5%
Maintenance 34.7 34.9 37.3 -6.8% -0.5%
Services   11.2   13.6   14.4   -22.0%   -17.8%
Axway Software   63.2   66.5   68.5   -7.7%   -4.9%
* Revenue at 2018 scope and exchange rates
Axway Software: Revenue by business line
Q2 2018 (€m)   Q2 2018   Q2 2017


  Q2 2017




  Organic Growth
License   15.5   14.8   15.4   0.6%   4.7%
Subscription 9.5 9.2 9.8 -3.1% 3.3%
Maintenance 35.2 34.8 36.2 -2.8% 1.1%
Services   11.5   12.4   12.8   -10.2%   -7.3%
Axway Software   71.7   71.2   74.3   -3.5%   0.7%
* Revenue at 2018 scope and exchange rates
Axway Software : Consolidated Income Statement
Half-year 2018 H1 2018 H1 2017 Full-year 2017
  €m   % Rev. €m   % Rev. €m   % Rev.
Revenue 134.9   142.8   299.8  
of which License 23.8 25.0 65.3
of which Subscription 18.8 17.2 37.5
of which Maintenance 69.9 73.5 145.4
Sub-total License, Subscription & Maintenance 112.5 115.7 248.3
Services 22.5     27.1     51.6    
Cost of sales 42.8 47.3 88.2
of which License and Maintenance 11.7 13.2 23.8
of which Subscription 11.2 10.6 21.1
of which Services 19.9     23.5     43.3    
Gross profit 92.1   68.3% 95.5   66.9% 211.6   70.6%
Operating expenses 79.8 89.5 171.1
of which Sales and marketing 39.0 42.7 83.8
of which Research and development 26.8 31.5 59.4
of which General and administrative 14.0 15.2 27.9
Profit on operating activities 12.3   9.1% 6.0   4.2% 40.5   13.5%
Stock option expense -0.4 -0.5 -1.3
Amortization of intangible assets -4.1 -4.5 -8.5
Profit from recurring operations 7.8   5.7% 1.0   0.7% 30.7   10.2%
Other income and expenses -2.8 -1.3 -2.9
Operating profit 5.0   3.7% -0.4   -0.3% 27.7   9.2%
Cost of net financial debt -0.5 0.0 -1.1
Other financial revenues and expenses -0.4 0.5 1.8
Income taxes -0.2 2.5 -24.0
Net profit 3.9   2.9% 2.6   1.8% 4.4   1.5%
Basic earnings per share (in €) 0.18     0.12     0.21    
Axway Software: Simplified Balance Sheet
Half-year 2018 6/30/2018 6/30/2017 12/31/2017
  (€m) (€m) (€m)
Goodwill 339.5 339.8 333.6
Intangible assets 45.1 61.1 48.9
Property, plant and equipment 13.9 14.9 14.4
Other non-current assets 25.5 52.1 23.7
Non-current assets 424.0 467.8 420.7
Trade receivables 55.6 48.7 71.1
Other current assets 30.3 28.3 31.2
Cash and cash equivalents 47.6 27.1 28.1
Current assets 133.5 104.2 130.4
Total Assets 557.5 572.1 551.1
Equity and Liabilities
Share capital 42.4 42.4 42.4
Reserves and net profit 311.5 310.1 301.7
Total Equity 353.9 352.5 344.1
Financial debt - long-term portion 45.4 53.5 47.8
Other non-current liabilities 8.9 20.7 22.5
Non-current liabilities 54.2 74.2 70.3
Financial debt - short-term portion 5.6 5.9 4.5
Deferred Revenues 94.4 84.5 67.3
Other current liabilities 49.4 55.0 64.9
Current liabilities 149.3 145.4 136.7
Total Liabilities 203.6 219.6 207.0
Total Equity and Liabilities 557.5 572.1 551.1
Axway Software: Cash Flow Statement
Half-year 2018 H1 2018 H1 2017 Full-year 2017
  (€m) (€m) (€m)
Net profit for the period 3.9 2.6 4.4
Net charges to amortization, depreciation and provisions 6.4 6.3 12.2
Other income and expense items 1.0 0.6 1.6
Cash from operations after cost of net debt and tax 11.3 9.6 18.2
Change in operating working capital requirements (incl. employee
benefits liability)
16.0 16.5 -11.7
Cost of net financial debt 0.5 - 1.1
Income tax paid net of accrual -2.3 -4.1 22.0
Net cash from operating activities 25.5 22.0 29.6
Net cash used in investing activities -3.2 -60.4 -57.5
Proceeds on share issues 0.2 2.8 3.2
Dividends paid - -8.5 -8.5
Change in loans -2.2 19.0 13.3
Net interest paid -0.5 - -1.1
Other flows - -0.2 -
Net cash from (used in) financing activities -2.5 13.1 6.8
Effect of foreign exchange rate changes -0.4 -1.1 -2.4
Net change in cash and cash equivalents 19.4 -26.4 -23.6
Opening cash position 28.1 51.7 51.7
Closing cash position 47.5 25.3 28.1
Axway Software: Impact on revenue of changes in scope and
exchange rates
Half-year 2018 (€m)   H1 2018   H1 2017   Growth
Revenue   134.9   142.8   -5.5%
Changes in exchange rates -7.9
Revenue at constant exchange rates 134.9 134.9 0.0%
Changes in scope +2.8
Revenue at constant scope and exchange rates   134.9   137.7   -2.0%
Axway Software: Changes in exchange rates
Half-year 2018

For 1€

  Average rate

H1 2018

  Average rate

H1 2017

US Dollar   1.210   1.082   - 10.6%

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