SimCorp reports revenue growth of 3% and EBIT margin of 17% in Q1 2020

Company Announcement no. 25/2020

Q1 2020 highlights:

• Revenue and EBIT margin in Q1 2020 were in line with our expectations but EBIT margin was lower than the strong Q1 2019.
• Reported revenue was EUR 102.9m, an increase of 3.2% when compared with Q1 2019, and an increase of 2.5% when measured in local currencies. Measured in local currencies, and excluding M&A activities, the organic revenue was on same level as in Q1 2019.
• EBIT was EUR 17.5m compared with EUR 26.4m in Q1 2019.
• EBIT margin was 17.0% compared with 26.5% in Q1 2019. Organic EBIT margin was 18.7%.
• Net profit was EUR 13.4m compared with EUR 19.6m in Q1 2019.
• Total order intake from new and add-on licenses was EUR 19.9m compared with EUR 21.4m in the same period last year. We welcomed three new clients in Q1 2020.
• At March 31, 2020, the order book amounted to EUR 41.1m, an increase of EUR 2.9m when compared with the order book at December 31, 2019.
• Free cash flow was EUR 32.4m, an increase of 26% when compared with Q1 2019.
• In Q1 2020, we made a EUR 0.4m partnership investment in start-up Alkymi as part of a new machine learning initiative aimed at addressing the current strain and costly challenge of processing unstructured data for alternatives investments.
• SimCorp has launched an holistic managed data service, Datacare, in collaboration with Zurich Insurance Group and global buy-side institutions from the SimCorp Gain client community, providing a highly automated, multi-asset, front-to-back solution for market and reference data management.
• A Securities Financing Transaction Regulation (SFTR) cloud solution has been launched in partnership with deltaconX, three months ahead of the SFTR reporting requirement go-live in July 2020.
• SimCorp received two awards in Q1 2020, the IBM Beacon Awards for Outstanding Infrastructure Services Solution with our SCDaaS solution and the Wealth Briefing Awards for Best Client Reporting for SimCorp Coric.

Covid-19:

• As a consequence of Covid-19, most of our employees have been working from home since the beginning of March, however, productivity across SimCorp’s business has remained high due to a strong IT setup and high adaptability to virtual collaboration among our clients and employees working remotely on product development, ongoing projects, and sales cases.
• The future outlook is more uncertain than normal. It is difficult to predict the length and impact of lock-downs and restrictions, as well as how client behavior might change.
• In order to prepare for potentially lower license sales, and the resulting lower demand for professional services, in early March, SimCorp initiated several cost control measures, including a hiring freeze and postponement of planned salary increases. However, SimCorp remains committed to continue investing in its products, people and strategic priorities, including cloud lift, to realize its long-term growth ambitions.

Financial guidance:

• On March 18, 2020, SimCorp withdrew its 2020 guidance due to the escalation of, and uncertainty caused by, the global Covid-19 outbreak, the impact of which could not be estimated at the time in terms of the negative effect on SimCorp’s 2020 performance caused by changes in client behavior.
• Prior to the withdrawal of its 2020 guidance, SimCorp’s expectations for the full year were between 5% and 10% revenue growth measured in local currencies, and an EBIT margin of between 24.0% to 27.0% measured in local currencies.
• There is still a high degree of uncertainty in the market, but based on the assumption that the world returns to more normal working conditions after the holiday break in July and August, but with some expected delays in signing deals, our revised 2020 guidance is between -5% and 5% revenue growth measured in local currencies, and an EBIT margin of between 22.0% to 27.0% measured in local currencies. It is the expectation that the performance will be higher in the second half of 2020 than in the first half.

SimCorp CEO, Klaus Holse, comments: “Delivering a performance in line with our expectations despite the impact of Covid-19, and adding three new clients in Q1 2020, two in North America and one in Italy, is a strong testament to a highly competitive value proposition and business model, long-lasting client relationships, and an agile organization. I would like to express my thanks to our clients and our employees for outstanding collaboration, engagement, and adaptability during these unprecedented and challenging times, making SimCorp and its client community frontrunners in virtual collaboration. Along with timely and appropriate cost measures, this has ensured a good start to the year despite the challenges.”

Investor presentation

SimCorp’s Executive Management Board will present the report on a conference call Tuesday, May 19, 2020 at 11.00 am (CEST). Please use any of the following phone numbers to dial in to the conference call:

At the end of the presentation there will be a Q&A session. It will also be possible to follow the presentation via this link:  https://edge.media-server.com/mmc/p/2k8m9n37.

The presentation will be available prior to the conference call via SimCorp’s website http://www.simcorp.com/en/about/investor/presentations-and-events/quarterly-and-annual-investor-meetings.

Enquiries regarding this announcement should be addressed to:
Investor contacts:
Klaus Holse, Chief Executive Officer, SimCorp A/S (+45 3544 8800, +45 2326 0000)
Michael Rosenvold, Chief Financial Officer, SimCorp A/S (+45 3544 8800, +45 5235 0000)
Anders Hjort, Head of Investor Relations, SimCorp A/S (+45 3544 8822, +45 2892 8881)

Media contact:

Mette Trier, Communications Principal, SimCorp A/S (+45 4060 8296)
Mittal Shah, PR Manager – SimCorp UK, North America, Asia Pacific (+44 (0)207 397 8072)