Revenue growth was significant at constant perimeter in Q1 18 (+4.9%). Prodware benefited from the strong development of SaaS revenue (+37.2%) and Business Consulting (+12.2%) while the other activities remained rather stable. Prodware demonstrates its ability to move successfully from a licence fee-based model to a SaaS model.

Q1 18 revenue

Revenue reached €45.1m (+4.1%, +4.9% at constant perimeter). The change in scope related to the acquisition of Nerea (integration in Q2 17) and the divestment of non-core Sage businesses in France (disposal in Q4 17) for a total estimated at €-0.3m (o/w €+0.9m for Nerea and €-1.2m for the non-core activities).

SaaS revenue surged by 37.2% to €5.7m and represented 13% of the total (+3pts). The Business Consulting services increased by 12.2% to €2.8m and represented 6% of the total.

Geographically, total revenue growth was driven by international (+22.3% to €24.9m), sustained by the deployment of Microsoft Dynamics 365.

Revenue growth acceleration

At constant perimeter, revenue growth accelerated in Q1 18 (+4.9% vs +2.2% in Q1 17, +2.6% in Q1 16). There may be a positive impact of the postponement of some projects from Q4 17 to H1 18. Nevertheless, it is a good achievement taking also into account some pressure in hiring people in the IT services market.

SaaS and Business Consulting for growth drivers

Prodware posted impressive SaaS revenue growth in Q1 18 (+37.2% vs +30.4% in Q1 17) and benefited from double-digit growth in its new consulting services offering (+12.2%). These fast-growing activities with a strong growth potential in the medium-term contributed to increase total revenue by €1.8m in Q1 18.

The other activities, i.e. software editing and services excluding the consulting services (a total of €36.6m), were rather stable (€+0.3m) which was a good point.

Our 2018 revenue estimate will be revised upwards. Our model includes actually total revenue growth of 1.6% in 2018 including the change of the perimeter. Total revenue growth should be higher (+2.5-3% at least) on the back of the good performance in Q1 18, a similar trend assumed at constant perimeter in Q2 18 (April 2018 in line with Q1 18, strong performance expected in June 2018) and stronger Q4 18 compared to the weak Q4 17.