ESI Group records Significant upturn in the growth of Licenses

Slowdown in Services due to the economic situation, Increased seasonal effect for Licences.

“First-quarter sales, traditionally relatively non-significant, reflect distinct economic influences: a fall in Services activity mirroring the trend observed throughout the sector, but a strong level of repeat business for Licence sales and a significant upturn in new business. At the current time, we are confident that we will record a good global performance this financial year”, said Alain de Rouvray, ESI Group’s Chairman and CEO

Sales for the first quarter of the current financial year totalled 15.9 million euros, down -2.9% in actual terms and down -3.7% by volume (constant exchange rates) compared to the first quarter of the previous year. The evolution of the geographical split in activity reflects the return to buoyant growth in Asia compared to Europe or the Americas, which are continuing to be affected by the economic situation. Europe thus accounted for 37% of first-quarter activity, the Americas for 20% and Asia for 43%.

Licence sales totalled 11.0 million euros, stable in actual terms and up +3.5% if we restate the first quarter of 2009/10 for a 0.4 million euros contract recorded in this quarter that was then debooked during the second quarter of 2009/10 because of the renegotiation of the perpetual licence into an annual licence. Following this restatement, the level of repeat business remains at a very satisfactory 83% of Licence sales, compared to 86% for the first quarter of 2009/10. It is worth noting that Licences saw new business jump +28.9%, thanks to the arrival of new clients and sales of new products to existing clients.

Given the difficult economic environment, and in line with trends observed throughout the sector, Services activity was down by -7.6% in actual terms and -7.7% by volume. Services were notably affected by postponed contracts due to budget deferments. This activity represented 31% of total quarterly activity, versus 32% last year. This trend is expected to stabilise over the second quarter.

Financial years to January 31
€ millions Q1 2010/11 Q1 2009/10 Δ (actual)
Licences 11.0 11.1 -0.7%
Services 4.9 5.3 -7.6%
Total 15.9 16.4 -2.9%
Unaudited data

NB:

* The period under consideration does not include any scope effect, with Mindware and Vdot’s activity consolidated within accounts from December 2008.
* As announced when FY’09/10 annual results were published, ESI Group has bolstered its presence amongst key accounts. Subsequently, like last year, the contribution of fourth-quarter, and hence annual, sales should increase and thus amplify the seasonal effect.