Strong momentum kept up in Q4, despite impact of change in mode of contract
Strong momentum kept up in Q4, despite impact of change in mode of contractEARNINGS/SALES RELEASES
EasyVista’s sales reached €37.5m (+30%), ahead of our expectations (€36.8m). Q4 sales were up 9%, after 41% in the first 9M, as the positive impact of the change in mode of contracts mode came to an end. However, sales were ahead of expectations, thanks to the strong marketing momentum, in both France and the USA. Group product innovation & marketing lead us to expect an organic growth trend of above +10% per annum.
FACT
FY sales up 30%, ahead of expectations
Q4 sales were up 9%, after 38% in Q1, 62% in Q2 and 25% in Q3. Since Q3 18, EasyVista has primarily been selling its solutions via a three-year renewable licence (RL) mode, as a substitute to the SaaS mode. As a result, RL sales represented 29% of 2018 sales (14% in 2017), while SaaS was down from 44% to 32% of sales. However, in absolute terms, SaaS sales were only down €0.6m, at €12m. Note that RL captures c.80% of a three-year revenue contract in year one, while the SaaS model captures a third in each year. This explains why sales are boosted in the switching period, as new clients primarily sign the renewable licences. The substitution generates an impact in sales which boosts global numbers at the beginning and reduces them at the end of the term. This explains the lower global growth in Q4 (+9%) as well as the H1 19 expected sales. Note that 1/3rd of global Q4 growth still comes from traditional licences, due to public entities (budget issues). As a result, traditional licences grew 33% in FY 2018, and still represent 10% of sales.
Previous year’s investments have proved successful
The group announced in January 2018 the full merger with Knowesia (self-help solutions), unifying the group’s offer, now streamlined, in both marketing and technology. We recall that previous years had been marked by the strong reinforcement of management and the sales force, as well as the Knowesia acquisition. Q4 was again marked by several significant new clients: in France, the Department of Human Services, Plastic Omnium, Sopra Immobilier and CFF; in Italy, Reale insurance group, Liberbank in Spain; and Continental in Portugal. In the USA, we can mention Des Moines and Carestream Dental.
Medium-term trends and the financial scenario confirmed
H1 18 showed a clear coverage of the fixed cost base, for the first time. Full-year earnings are due to be released on 2 April, and we maintain our €4.5m EBITDA expectation. As the fixed cost base should now have stabilised, the operating leverage should allow for a significant increase in margins by 2020 and we expect c. 20% EBITDA/Sales.
We confirm our €48 target price.
Easyvista SA. Easyvista SA is a France-based company that specializes in information technology (IT) management. The Company provides integrated and modular solutions to cover a range of IT management requirements, including programs for inventories, audits, and asset management for IT and telecommunication equipment, among others. In addition, it offers maintenance, training and consulting services relating to its software programs. The Company's products are primarily marketed under the EasyVista brand name, offering EasyVista Classic (the traditional license option) and EasyVista.com (Software as a Service mode). The Company is operational in six countries, including France, the United States, the United Kingdom, Spain, Portugal and Italy, and has also a network of over 60 certified partners in 16 countries in Europe, Africa, the United States, Canada and Asia. It operates through Rift Technologies and Knowesia SAS.
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