ESI Group reveals its revenue and results for the first half of 2023 (period from January 1 to June 30), approved by the Board of Directors on September 12, 2023. Audit procedures performed by the Group auditors are finalized.
“For several consecutive quarters now, ESI Group has displayed exciting momentum. ESI Group has maintained robust growth, aligning with the goals outlined in our three-year plan, “OneESI 2024 – Focus to Grow”. Our strategic focus on our core software activities continued to deliver positive outcomes for the company. The sustained growth in our revenue, driven primarily by our annual recurring revenues, not only underscores the relevance of our solutions but also reflects the trust we've cultivated with our clients. In parallel, we delivered on all the actions and strategic focus to improve the financial health of our Group. The results are now visible. Our company is in a great position to tackle its short and long-term objectives. Finally, more than everything, I’m especially grateful for the dedication and enthusiasm of our teams, whose contributions have been instrumental in achieving these results “
Cristel de Rouvray
Chief Executive Officer of ESI Group
First-Half 2023 Keys Events
On April 17, ESI Group announced the sale of SYSTUS software and related engineering services. The sale of SYSTUS software and related activities to Framatome, an international player in the nuclear energy sector, illustrates the Group's continued execution of its strategic plan to focus on its core business.
On June 29, ESI Group announced the entry into exclusive negotiations between Keysight and ESI Group’s main shareholders to acquire a controlling block to be followed by the launching of a mandatory cash tender offer.
Half-year revenue growth, in line with objectives, primarily driven by the recurring licensing activity
Half-year revenue increased by +7.0% cer (+5.0% YoY) to reach 83.3 million euros. This growth was driven by the licensing activity, which amounted to 77.0 million euros (representing approximately 92% of the half-year revenue, and a +10.8% cer growth, +8.8% YoY). Annual Recurring Revenue (licenses excluding paid-up licenses’ contracts and before deferred revenue) increased by 13.1% cer (+11.2% current rate) to 80.2 million euros. The revenue growth aligns with the company's announced objectives of +5-7%.
All geographic regions grew in the first half of 2023 at constant exchange rates: EMEA +8.3%, Asia +9.0%, and the Americas +2.7%. The variations of the Japanese Yen impacted the Asian performance when looking at the numbers at current exchange rates.
The revenue from the licensing business, in the first half of the year, was mainly driven by the core industries of the Group, especially the Automotive one.
This half-year performance relates to the first quarter as well as the second quarter. In Q2, the Group’s revenues increased by 6.4% cer to reach €22.5m (2.3% at current exchange rate – related predominantly to the impact of the Japanese Yen). The ARR grew by 12.3% cer (7.5% at current exchange rate) and the Services activity continued to decrease by -12.8% cer to €2.3m (-16.5% YoY).
Robust margins and increasing profitability in accordance with our objectives.
The adjusted EBIT stands at 25.1 million euros (+5.4% cer and +5.3% YoY). The adjusted EBIT margin remains stable at 30.1%, compared to 30.0% in the first half of 2022. The change in this indicator is primarily due to the robust increase of revenue reflected in gross margin, which is more than compensating a 2.7 million euro increase in costs, mainly related to a decrease in R&D capitalization compared to H1 FY22, resulting from phasing effects, as well as reduced subsidies for certain research projects in alignment with the "OneESI 2024: Focus to Grow" strategy.
The seasonality of the activity of ESI Group is to be considered here, as H1 captures a large part of the revenue due to historically favorable phasing of the sales, and, consequently, higher profit than the second half.
The company's results continue to align with the goals initially communicated by the Group.
A financially advantageous position
The cash and cash equivalents stand at 63.1 million euros, compared to 35.4 million euros at the end of June 2022, and gross financial debt decreased by - 7.5 million euros at 27.3 million euros compared to June 2022 (34.8 million euros).
As a result, ESI Group's net financial debt has decreased to -35.8 million euros (representing a net positive cash situation), compared to -0.6 million euros at the end of June 2022 and -7.3 million euros at the end of December 2022. This reduction was made possible by strong cash flow generation and includes part of the proceeds of SYSTUS divestiture. The gearing ratio (net financial debt/equity) continues to decline, reaching -33.0% compared to -0.7% in the first half of 2022 and -8.0% at the end of December 2022.
Upcoming event
- Third Quarter 2023 Revenue – November 10, 2023
