ESI Group updates on its plan – fast progress, long-term value, and short-term impacts
27 September 2022
Paris, France
ESI Group, Rungis, France, (ISIN Code: FR0004110310, Symbol: ESI), will announce today during its investor conference that it maintains its long-term objectives for high single-digit growth and 20% Adjusted EBIT by 2024/2025, that it has made faster than expected progress on strategic focus including several divestitures, and consequently revises short-term targets. The Group also announces the implementation of a share buyback program.
Strong execution during the first year of the plan
ESI Group operates in a vibrant market and has made fast improvements in sales execution, and in focusing its R&D to provide an increasingly valuable and simplified offering. The macro-economic context is uncertain for its customers, and they rely on ESI, more than ever, as their trusted partner.
In the last year, ESI Group has made faster than expected progress on its strategic focus by:
- divesting non-core assets: including the sale of the CFD product line for €24M and the much smaller divestiture of the Scilab and Inendi products, and putting in End-of-Life non-core R&D programs.
- transitioning faster away from perpetual licenses to recurring business; H1 22 Recurring business is 93.5% versus H1 21 92.2%
- transitioning faster away from non-core services to free up resources to drive recurring license business
These are the result of deliberate strategic decisions. Driven by its core strategic vision, and its solid financial situation (Net financial Debt -€0.6m as of the end of June 22, before the proceeds of the sale of the CFD product line in July), ESI Group has prioritized doing the right things for the long-term health of the business while managing the short term.
Long-term growth target unchanged, short-term views slightly revised
ESI Group reaffirms its commitment to improving growth and profitability year after year and continues to target high single-digit growth and 20% profitability within 2 to 3 years.
“Our Guiding Principle is to always do what is right for the long-term health of the business and manage the short-term impact. I am very glad that we made the strategic choices we did this past year: we are in a much stronger position to navigate this amplified macroeconomic uncertainty. Namely, thanks to a bigger percentage of recurring revenue, significantly improved profitability, and a much stronger balance sheet. I have confidence that this transformation journey and its positive trajectory will gradually compound returns for all stakeholders: customers, shareholders, partners, and employees.”
Cristel de RouvrayChief Executive Officer of ESI Group
Pro-forma, and at current rate, the revenue growth plan for 2022 has been reduced by 2% to reflect the faster conversion of paid-up licenses to subscriptions and a faster decrease of non-core services. The profitability plan has decreased by only 1 point thanks to strict cost management.
This minor reduction in growth for 2023, shows the strength and resilience of the ESI business.
ESI Group continues to aim for high single-digit growth and 20% Adjusted EBIT by 2024/ 2025 and will continue to communicate transparently.
Implementation of a share buyback program
Continuing its initiatives to sustain, in the long run, its performance, ESI Group announces the entrustment of an investment services provider (ISP) with a mandate to acquire its shares as part of the share buyback program authorized by the Combined Annual General Meeting of June 28, 2022.
- Terms of the mandate
According to the agreed terms, ESI Group has given a mandate to an ISP to acquire on its own behalf a maximum volume of 30,000 ESI GROUP shares (ISIN code FR0004110310) over a period starting on September 28, 2022, and possibly lasting until March 31, 2023.
- Reminder of treasury shares held as of August 31, 2022
As of August 31, 2022, the company held 336,576 treasury shares, representing 5.5% of the share capital.
2022 Investor Conference