Exclusive Networks reports growth
significantly above cybersecurity market, Increased
profitability ratio and strong cash generation
OPERATING PERFORMANCE
- Record gross sales at over €4.5bn, +38% yoy
- Strong increase in Net Margin at €411m, up 29%
- Improvement in Adj. EBIT1 at €154m, up 29%
CASH PERFORMANCE
- Outstanding cash generation performance, Adj. Operating FCF
above €200m
- Deleveraging down to 1.6x leverage ratio
Regulatory News:
Exclusive Networks (Euronext Paris: EXN), a global leader in
cybersecurity, today announces its financial results for the full
year ended December 31, 2022. Management will hold a conference
call at 9:00 am (CET) today, available via webcast
(https://ir.exclusive-networks.com/). A replay will be
available.
Jesper Trolle, Chief Executive Officer, commented:
“I am pleased to announce that we had a record-breaking
performance in FY2022, with strong revenue growth, profit margins
and cash performance. Our momentum continued to build throughout
the year delivering three consecutive quarters of Gross Sales of
over €1 billion. This further demonstrates our ability to deliver
sustainable growth through our specialised approach, unique
business model and talented teams around the world.
“Cybersecurity continues to be one of the most challenging
issues of our time facing CIOs. Cyber-attacks are accelerating in
frequency and intensity with a ransomware attack estimated to occur
every two seconds by 2031. Geopolitical tensions continue to
threaten nation states and national critical infrastructure,
driving new cyber legislation and compliance. Rapid digital
transformation projects, new hybrid working practices and the
migration to cloud based architectures have created increased
threat landscapes and greater vulnerabilities. Add to this to
growing cyber skills and talent shortage and it’s clear that
investment in cybersecurity will remain resilient in 2023.
“Based on these macro tailwinds, our market leading portfolio of
cybersecurity innovative vendors and our global ecosystem of
specialist partners; combined with our ability to grow our
addressable market through geographic expansion, strategic
acquisition, and service innovation, we estimate that in 2023 our
addressable market opportunity will increase to more than $80
billion. We are confident that we are well placed to take advantage
of this growing opportunity.”
FY 2022 PERFORMANCE
Gross Sales and adjusted profitability metrics are non-GAAP
measures. Revenue and Net Margin are reported in IFRS format. Full
results as per IFRS are presented in the Appendix along with the
reconciliation detailing the differences with non-GAAP measures.
Please refer to the glossary at the end of the press release for
further explanations.
in € million
FY 2021
FY 2022*
Change
Reported
Constant Currency**
Gross sales
3,273
4,528
+38%
+36%
Revenue
2,483
3,404
+37%
+35%
Net Margin
320
411
+29%
-
% Gross Sales
9.8%
9.1%
-70bps
-
Adj. EBIT
119
154
+29%
-
% Net Margin
37.3%
37.5%
+20bps
-
Adj. Net Income
72
100
+39%
-
* At the date of issuance of this press
release, the audit procedures of the statutory auditors on
consolidated accounts were carried out. The certification report
will be issued after finalisation of the verifications relating to
group management report and the presentation in the format provided
for by the ESEF regulations of the accounts intended to be included
in the annual financial report.
** Variation at constant currency is
computed using FY-2021 rates applied to FY-2022 Gross Sales. The
USD, GBP and PLN evolved as follows: 1EUR: 1.054 USD; 1EUR: 0.853
GBP, 1EUR: 4.684PLN respectively for FY-2022 and 1EUR: 1.184 USD,
1EUR: 0.860 GBP, 1EUR: 4.564 PLN respectively for FY-2021.
Gross Sales at €4,528 million, an increase of 38% year on
year on a reported basis and up 36% at constant currency. Most of
this growth (34%) was driven by business with existing vendors in
their current geographies. The remainder of the growth was due to
vendor expansion (2%) and 2021 acquisitions (3%). Vendor expansion
is a combination of vendors entering into new geographies (1%) and
new vendor relationships (1%).
Vendor retention rate2 improved in FY 2022, supported by
increasing demand for our vendors’ solutions and the continued
engagement of our channel partners. Net vendor retention
rate2 for FY 2022 was up 136% (vs 113% in FY 2021) with Net
customer retention rate2 at 133% (vs 112% in FY 2021).
Revenue as reported in the Consolidated Financial
Statements takes into account the recognition of the sales of
support and maintenance on a Net Margin basis as per IFRS as
Exclusive Networks is not the primary obligor for these solutions.
Revenue grew in line with Gross Sales.
Net Margin reached €411 million in FY 2022, an increase
of 29% year on year. This change below top line growth evolution is
explained by the mix of geography and deal size.
Operating Expenses were up 28% at €257 million, driven by
the full year effect of the 2021 acquisitions as well as post IPO
structure.
Adjusted EBIT rose to €154 million, up 29% year over
year. Adj. EBIT margin over Net Margin was up 20 bps
year on year to 37.5% as the Group benefits from operating
leverage, driven at regional level.
Adjusted Net Income reached €100 million, an increase up
39% year over year, benefitting from an increase in adj. EBIT.
GROSS SALES AT GROUP AND REGIONAL LEVELS - HIGHLIGHTS
Q4-22 GROSS SALES BY REGION
Q4 2022 Gross Sales
in € million
Q4 2021
Q4 2022
Change
Reported
Constant Currency*
EMEA
805
1,154
44%
46%
AMERICAS
122
176
44%
29%
APAC
98
123
26%
19%
GROUP
1,025
1,454
42%
41%
* Variation at constant currency is
computed using the fourth quarter of 2021 rates applied to the
fourth quarter of 2022 Gross Sales. The USD, GBP and PLN evolved as
follows: 1EUR: 1.054 USD; 1EUR: 0.853 GBP, 1EUR: 4.684PLN
respectively for 2022 and 1EUR: 1.184 USD, 1EUR: 0.860 GBP, 1EUR:
4.564 PLN respectively for 2021.
Gross Sales at €1,454 million, an increase of 42% vs
Q4-21 on a reported basis and up 41% at constant currency. Most of
this growth (38%) was driven by business with existing vendors in
their current geographies. The remainder of the growth was due to
vendor expansion (3%) and acquisitions (1%). Vendor expansion is a
combination of vendors entering into new geographies (2%) and new
vendor relationships (1%).
Vendor retention rate improved in Q4 2022, supported by
increasing demand for our vendors’ solutions and the continued
engagement of our channel partners. Net vendor retention
rate2 for Q4 2022 was up 140% (vs 110% in Q4 2021) with Net
customer retention rate2 at 135% (vs 106% in Q4 2021).
EMEA (79% of total quarterly Gross Sales): Gross Sales at
€1,154 million, up 44% vs Q4-21. The Group enjoyed a sharp increase
of the activity towards the end of the year, boosted notably by the
expansion of the Enterprise market. As a result, for the first time
EMEA crossed a record threshold of €1 billion gross sales in a
single quarter.
AMERICAS (12% of total quarterly Gross Sales): Gross
Sales at €176 million, up 44% vs Q4-21. Robust performance of
strategic vendors in the region confirmed development in place,
market is developing through larger deals, accelerating growth in
volumes sold.
APAC (8% of total quarterly Gross Sales): Gross Sales
came in at €123 million, up 26% vs Q4-21. The rebound of business
activity was mainly driven by an accelerated number of deals above
€1 million.
FY 2022 PERFORMANCE BY REGION
in € million
FY 2021
FY 2022
Change
Reported
Constant Currency*
EMEA
Gross Sales
2,532
3,539
+40%
+40%
Adj. EBIT
118
160
+36%
AMERICAS
Gross Sales
347
532
+53%
+37%
Adj. EBIT
9
14
+62%
APAC
Gross Sales
394
457
+16%
+8%
Adj. EBIT
19
20
+6%
Total
Gross Sales
3,273
4,528
+38%
+36%
Adj. EBIT
119
154
+29%
* Variation at constant currency is
computed using FY-2021 rates applied to FY-2022 Gross Sales. The
USD, GBP and PLN evolved as follows: 1EUR: 1.054 USD; 1EUR: 0.853
GBP, 1EUR: 4.684PLN respectively for FY 2022 and 1EUR: 1.184 USD,
1EUR: 0.860 GBP, 1EUR: 4.564 PLN respectively for FY 2021.
EMEA (78% of total yearly Gross Sales): Gross Sales at
€3.539 million, up 40% year on year. In EMEA, the Group benefitted
from a continued positive momentum with growth in all countries.
The performance was mainly attributed to a strong increase of
average deal size while keeping a tight control on new hires.
Profitability increased, with Adjusted EBIT amounting to €160
million and growing 36% year on year.
AMERICAS (12% of total yearly Gross Sales): Gross Sales
were €532 million, up 53% year on year. The very strong performance
achieved over the year was driven by the strong activity of
historical vendors and the progressive ramp up of new vendors, in
line with the ambition to expand in the region. The operational
efficiency of the region allowed to achieve +62% growth on Adjusted
EBIT, outperforming the growth reported.
APAC (10% of total yearly Gross Sales): Gross Sales
reached €457 million, up 16% year on year. The region benefitted
from key enterprise deals and the higher level of activity toward
the end of the year, reflecting the seasonality of the
business.
Net margin growth, coupled with costs tight control, led to an
Adjusted EBIT growing 6% year over year, to €20 million.
FY 2022 CASH FLOW AND FINANCING
Changes in net working capital - trade
amounted to a positive €49 million, in line with activity growth
and benefitting from increase of factoring without recourse.
Adj. Operating Free Cash Flow reached an exceptional
level, amounting to an inflow of €201 million in FY 2022, compared
to €65 million in FY 2021.
Leverage: Exclusive Networks’ Financial Gross Debt
at December 31, 2022, was €529 million, with Cash & Cash
Equivalents standing at €268 million and Net Debt at
€260 million. This resulted in a leverage ratio of Net Debt
/ Adjusted EBITDA of 1.6x. The significant reduction in leverage
was driven by the strong cash generation in the period.
2023 OUTLOOK & SHAREHOLDER’S RETURN POLICY
Outlook: Amid the current
environment still impacted by Supply Chain disruptions and
uncertain market conditions (inflation, interest rates increase,
geopolitical uncertainties), the Group is aiming to achieve for the
full year of 2023:
- Gross Sales above €5,150 million
- Net Margin in the range of €450 million to €465
million
- Adj. EBIT in the range of €172 million to €178
million
- Adj. Operating FCF above 80% of Adj. EBITDA
Shareholder’s return: On February
27, 2023, taking into account the strategic priority given by the
Group to pursue its development, the Board of Directors, decided to
propose to the shareholders not to distribute a dividend.
Moreover, the Board has decided to launch a share buyback
program in compliance with the 12th resolution approved at the
Annual Shareholders Meeting on June 21, 2022.
As part of its share buyback Exclusive Networks will sign an
agreement with an investment service provider, for a maximum amount
of the SBB in the range of €25 million.
The shares will be acquired with a view to remitting them in the
context of management package schemes such as allotment of
Long-Term Incentives plans represented by free-shares and M&A
build-up.
The price of the shares purchased under this mandate shall not
exceed the limit of €30 set by the Shareholders‘ Meeting held on
June 21, 2022.
Further information regarding this program will be communicated
subsequently.
APPENDIX
FY 2022 CONSOLIDATED P&L
EURm
31 Dec. 2021
31 Dec. 2022
Revenue
2,483
3,404
Costs of purchases goods and services
(2,158)
(2,987)
Freight on sales
(5)
(6)
Net Margin
320
411
Personnel costs
(153)
(183)
Other operating costs
(43)
(71)
Amortisation of intangibles assets
(57)
(60)
Depreciation and amortization of tangible
assets
(12)
(13)
Recurring operating profit
55
85
Non-recurring operating income and
expenses
(4)
(5)
Operating profit
51
79
Finance debt costs
(28)
(18)
Interest on lease liabilities
(1)
(1)
Other financial income and expenses
(10)
(9)
Financial result
(39)
(27)
Income before taxes
12
52
Income taxes
(25)
(13)
Net income
(13)
39
Net income attributable:
- To the owners of the parent company
(14)
36
- To non-controlling interest
1
3
Earnings per share attributable to parent
company (in €):
- Basic earnings per share
(0.15)
0.40
- Diluted earnings per share
(0.14)
0.40
FY 2022 CONSOLIDATED BALANCE SHEET
EURm
31 Dec. 21
31 Dec. 22
ASSETS
Goodwill
314
295
Other intangible assets
1,154
1,112
Property, plant and equipment
7
7
Right-of-use assets
19
26
Non-current other financial assets
35
40
Deferred tax assets
11
8
TOTAL NON-CURRENT ASSETS
1,540
1,488
Inventories
150
271
Trade receivables and related accounts
956
1,132
Income tax receivables
4
12
Other current financial assets
10
19
Cash and cash equivalents
130
268
TOTAL CURRENT ASSETS
1,249
1,703
TOTAL ASSETS
2,789
3,191
EQUITY AND LIABILITIES
Share capital and share premium
976
976
Retained earnings and other reserves
(44)
(27)
Foreign currency translation reserve
0
4
Equity attributable to the owners of
the parent company
932
952
Non-controlling interests
2
3
TOTAL EQUITY
934
956
Other non-current financial
liabilities
485
488
Non-current lease liabilities
12
20
Non-current provisions
4
4
Other non-current liabilities
5
0
Deferred tax liabilities
294
274
TOTAL NON-CURRENT LIABILITIES
801
785
Trade payables and related accounts
950
1,304
Other current financial liabilities
90
128
Current lease liabilities
7
8
Current provisions
2
0
Current tax liabilities
6
11
TOTAL CURRENT LIABILITIES
1,054
1,450
TOTAL EQUITY AND LIABILITIES
2,789
3,191
FY 2022 CASH FLOW STATEMENT
EURm
31 Dec. 21
31 Dec. 22
OPERATING ACTIVITIES
Net income
(13)
39
Adjustments for:
- Depreciation, amortisation, impairment
and change in provisions
69
74
- Financial debt costs & interest on
lease liabilities
29
19
- Income tax expenses
25
13
Other adjustments and non-cash items
15
8
Income tax paid
(18)
(25)
Cash flows from op. activities before
change in working capital
107
129
Change in net working capital - trade
(54)
49
Change in net working capital - other
(11)
9
NET CASH FROM OPERATING ACTIVITIES
42
186
INVESTING ACTIVITIES
Additions to property, plant and equipment
and intangible assets
(5)
(6)
Changes in other financial assets
()
(2)
Impact of changes in scope of
consolidation
(22)
(2)
NET CASH FROM INVESTING ACTIVITIES
(27)
(9)
FINANCING ACTIVITIES
Proceeds from Share capital issuance
235
-
Dividends paid
()
(19)
Proceeds from issuance of bank borrowings
& from other financial liabilities
502
44
Factoring liabilities
(15)
12
Short-term financing
35
(14)
Interest Paid
(27)
(17)
Repayment of bank borrowing & of other
financial liabilities
(765)
(24)
Other cash-out flow from financing
activities
(10)
(16)
NET CASH FROM FINANCING ACTIVITIES
(44)
(33)
Effects of exchange rate fluctuations on
cash and cash equivalents
(9)
(6)
INCREASE IN NET CASH AND CASH
EQUIVALENTS
(37)
138
Net cash and cash equivalents at the
beginning of the period
162
125
Net cash and cash equivalents at the end
of the period
125
263
GLOSSARY
Gross Sales:
- Gross Sales represent revenue recognized by the Group on a
gross basis for each revenue stream.
- Net of returns, discount and rebates.
Revenue:
- IFRS revenue.
- Support & Maintenance margin accounted for revenue.
- Net of returns, discount and rebates.
Net Margin:
- Revenue less costs of purchased goods and services and freight
on sales.
Adj. EBIT:
- Formerly identified as Adj. EBITA
- Recurring operating profit before amortisation of intangible
assets, adjusted for non-GAAP items.
Adj. EBITDA:
- Adj. EBIT restated from D&A
Adj. Net income:
- Net income restated for non-recurring operating IFRS and
non-GAAP items, net of taxes.
Adj. Operating FCF:
- Operating Free Cash Flow before tax and adjusted for
non-recurring items.
Non-recurring items:
- Items defined as unusual, abnormal and infrequent, of limited
number and presented separately in order not to distort the
understanding of the Group’s underlying performance.
CONFERENCE CALL Jesper Trolle, Chief Executive Officer,
and Nathalie Bühnemann, Chief Financial Officer, will present the
Full Year 2022 financial results during a conference call in
English today (February 28, 2023) at 9:00 am (CET).
You can follow the conference call live via webcast at the
following link: https://ir.exclusive-networks.com/.
A replay will also be available for a period of one year.
All documents relating to this publication will be placed online
on the Exclusive Networks Investor Relations website at
https://ir.exclusive-networks.com/.
Regulated information related to this press release and
presentation is available at
https://ir.exclusive-networks.com/.
PROVISIONAL CALENDAR
- Q1 2023 Financial update (Gross Sales and Revenue): May
4, 2023
- Annual General Meeting: June 8, 2023
About Exclusive Networks
Exclusive Networks (EXN) is a global cybersecurity specialist
that provides partners and end-customers with a wide range of
services and product portfolios via proven routes to market. With
offices in over 45 countries and the ability to serve customers in
over 170 countries, we combine a local perspective with the scale
and delivery of a single global organisation.
Our best-in-class vendor portfolio is carefully curated with all
leading industry players. Our services range from managed security
to specialist technical accreditation and training and capitalize
on rapidly evolving technologies and changing business models. For
more information visit www.exclusive-networks.com.
DISCLAIMER
This press release may contain forward-looking statements. Such
statements may include projections, estimates, assumptions,
statements regarding plans, objectives, intentions and/or
expectations with respect to future financial results, events,
operations and services and product development, as well as
statements, regarding future performance or events. Forward-looking
statements are generally identified by the words “expects”,
“anticipates”, “believes”, “intends”, “estimates”, “plans”,
“projects”, “may”, “would” “should” or the negatives of these terms
and similar expressions. Although Exclusive Network’s management
currently believes that the expectations reflected in such
forward-looking statements are reasonable, investors are cautioned
that forward-looking statements are subject to various risks and
uncertainties (including, without limitation, risks identified in
Exclusive Networks’ Registration Document available on Exclusive
Networks’ website), because they relate to future events and depend
on future circumstances that may or may not occur and may be
different from those anticipated, many of which are difficult to
predict and generally beyond the control of Exclusive Networks.
Actual results and developments may differ materially from those
expressed in, implied by or projected by forward-looking
statements. Forward-looking statements are not intended to and do
not give any assurances or comfort as to future events or results.
Other than as required by applicable law, Exclusive Networks does
not undertake any obligation to update or revise any
forward-looking statement.
This press release does not contain or constitute an offer of
securities for sale or an invitation or inducement to invest in
securities in France, the United States or any other
jurisdiction.
__________________________ 1 Formerly identified as Adj. EBITA.
Recurring operating profit before amortisation of intangible
assets, adjusted for non-GAAP items. 2 Defined as Gross Sales
generated in year N from vendors/customers active in year N-1
divided by Gross Sales from the same vendors/customers in year
N-1
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230227005885/en/
EXCLUSIVE NETWORKS Investors
& Analysts Hacene Boumendjel Head of Investor
Relations ir@exclusive-networks.com
Media FTI Consulting
Emily Oliver / Tom Blundell +33 (0)1 47 03 68 19
exclusivenetworks@fticonsulting.com
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