SimCorp reports revenue of EUR 210m and EBIT margin of 21% in H1 2020, despite the disruption caused by the Covid-19 pandemic

Company Announcement no. 37/2020

Q2 2020 Highlights:

• Reported revenue was EUR 106.7m, a decrease of 2.6% when compared with Q2 2019.
• EBIT was EUR 26.0m and EBIT margin was 24.4% compared with the strong EBIT of EUR 32.3m and EBIT margin of 29.5% in Q2 2019.
• In Q2 2020, one new SimCorp Dimension and two new SimCorp Coric orders were signed. For two of the new orders, order intake and revenue recognition have been deferred until certain conditions are met.
• Order intake was EUR 16.9m, a decrease of EUR 5.7m or 25% compared with Q2 2019.
• Free cash flow was EUR 20.4m, an increase of 8% when compared with Q2 2019.

H1 2020 Highlights:

• Reported revenue of EUR 209.7m was at the same level as in H1 2019. Measured in local currencies, and excluding M&A activities, the organic revenue declined by 3.2% when compared with H1 2019.
• EBIT was EUR 43.5m compared with EUR 58.7m in H1 2019.
• EBIT margin was 20.8% compared with the strong EBIT margin of 28.0% in H1 2019. Organic EBIT margin was 22.2%.
• Net profit was EUR 31.6m compared with EUR 43.3m in H1 2019.
• Total order intake from new and add-on licenses was EUR 36.8m compared with EUR 44.0m in H1 2019. We welcomed six new clients in H1 2020. For two of the new clients, order intake has been deferred until certain conditions are met.
• On June 30, 2020, the order book amounted to EUR 39.1m, an increase of EUR 0.9m when compared with the order book on December 31, 2019.
• Free cash flow was EUR 52.8m, an increase of 18% when compared with H1 2019.
• On May 11, 2020, SimCorp announced its entry into the South African market, with a primary focus on servicing local asset managers, state pension funds, and sovereign wealth funds.
• On June 9, 2020, SimCorp announced the merger of its European market units, Central Europe, Southern Europe, and UK/Northern Europe/Middle East, into one integrated EMEA unit. The move is designed to support SimCorp’s growth ambitions, by developing closer client relationships across borders and achieving greater scale and agility in key business functions.
• SimCorp has signed its first North American client development partner for SimCorp Coric Engage, a state-of-the-art client reporting SaaS portal built on Microsoft Azure. At a low cost of ownership for SimCorp clients, the next-generation self-service portal provides investors with digital insights and engagement analytics. It is also our first private equity client, opening up a new market segment for Coric.
• In June, SimCorp received the award for Best Buy-Side Enterprise Solution at the FTF News Technology Innovation Awards 2020, recognizing SimCorp as the market-leading, front-to-back solution, helping the global buy side to achieve operational excellence.

Covid-19:

• Most of our employees have been working remotely since the beginning of March, with some now returning to office work depending on local conditions. However, productivity and business activity across SimCorp’s markets have remained high throughout the pandemic due to innovative IT solutions and high adaptability to virtual collaboration among our clients and employees. Consequently, many clients have gone live or done upgrades with assistance from our people working 100% remotely.
• The future outlook remains more uncertain than normal as it is still difficult to predict the length and impact of local restrictions, as well as potential changes in client behavior.
• To offset potentially lower license sales and a resulting lower demand for professional services, SimCorp initiated in early March a strong focus on cost control, which included travel restrictions, a hiring freeze for non-critical positions, and postponement of planned salary increases from January 1 to July 1. These measures have resulted in significant cost savings in Q2 2020. However, SimCorp remains committed to continue the investments required to realize its long-term growth ambitions, including the ongoing cloud lift.

Financial guidance:

• SimCorp maintains its expectations for revenue growth and EBIT margin measured in local currencies for 2020 as announced in its Q1 2020 interim report. Revenue growth measured in local currencies is expected to be between -5% and 5%, and the expectation for EBIT margin measured in local currencies remains between 22.0% and 27.0%.
• Approximately 2%-points of the expected revenue growth above is related to the acquisition of AIM Software, and the acquisition is expected to impact the EBIT margin negatively by approximately 1%-point, implying an expected organic revenue growth of between -7% and 3% and an EBIT margin of between 23.0% to 28.0%.

SimCorp CEO, Klaus Holse, comments: “The solid performance delivered in Q2 was powered by strong sales to existing clients as well as adding three new clients, two in North America and one in Europe. Having achieved these results despite the disruption caused by the Covid-19 pandemic demonstrates the importance of a resilient operating model and a committed team. While people, processes, and technology have all been challenged across our industry, it has been impressive to see how SimCorp’s innovative solution delivery and business continuity have been sustained through a time of significant market volatility and with a workforce largely working from home. This is the ultimate test of resilience, and I would like to express my sincere thanks to our loyal clients and highly committed employees who have made this possible.”

Investor presentation
SimCorp’s Executive Management Board will present the report on a conference call Wednesday, August 12, 2020 at 11 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/cxna9dq4.

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)