Solid Q3 performance thanks to robust subscription-related revenue growth and despite delays in parcel locker projects in the US
- Group revenue of €793 million in 9M 2022, up 5.6% on a reported basis and 0.8%1 organically compared to 9M 2021.
- Growth in subscription-related revenue reached 3.0% on an organic basis, further demonstrating the strength of the recurring business model.
- Revenue for Q3 2022 was up 8.8% on a reported basis and up 1.0%1 on an organic basis to €270 million at Group level, a small increase against the organic growth trend achieved in H1 2022.
At Major Operations level:
- Intelligent Communication Automation cloud software revenue was up 5.2% organically in the 9M 2022, supported by a strong 17.2% increase in subscription-related revenue. Annual Recurring Revenue growth stood at +22% on an annualized organic basis, at the end of the period.
- Mail-Related Solutions continues to prove its resilience with a limited organic decline of -0.6% in Q3, bringing the 9M performance to -0.4% organic change.
- Parcel Locker Solutions revenue was flat in Q3 2022, at -0.2% on an organic basis. Positive contribution from existing contract deployments offset delays in some retail deals and locker installations in the residential sector, both in the US. Revenue for the 9M 2022 was down -1.8% organically.
Strong Q4 expectations reiterated across Solutions, not fully offsetting the weak Q3 US lockers performance
- On a reported basis, Group FY 2022 revenue and current EBIT2 are expected to grow over last year level benefiting from a favourable forex contribution thanks to the Group’s significant and growing US presence.
- Organic growth in revenue for the FY 2022 is now expected at above 1%3, compared to above 2% previously4. Whilst the Group maintains its expectations for a strong Q4 performance across Solutions, a weaker Q3 from Parcel Lockers and the uncertain level of backlog reduction in Q4 (backlog level is up over +40% compared to 9M 2021) have led to a cautious approach to the full year outlook.
- FY 2022 current EBIT2 guidance4 is now expected at a low to mid-single digit year-on-year organic decline compared to a previous guidance of a low to mid-single digit organic growth. H2 2022 EBIT margin is still expected to show a significant improvement against H1 2022 level, however, lower than expected Q3 organic revenue organic growth has also led to an updated EBIT4 guidance as it carries a direct impact on the operating profitability level.
SOLID GROWTH ON A REPORTED BASIS, ORGANIC TREND IN
Group sales stood at €793 million in the 9M 2022. On a reported basis, Group sales went up 5.6% compared to 9M 2021, including a positive currency impact of +6.7% and a negative scope effect of -2.2%. In details, changes of scope are related to the acquisition of Beanworks in
Consolidated sales
In € million | 9M 2022 | 9M 2021 | Change | Organic change(1) |
Major Operations | 749 | 689 | +8.6% | +0.7% |
Intelligent Communication Automation | 166 | 147 | +12.7% | +5.2% |
Mail-Related Solutions | 518 | 481 | +7.8% | (0.4)% |
Parcel Locker Solutions | 65 | 62 | +4.8% | (1.8)% |
Additional Operations | 45 | 62 | (28.5)% | +2.0% |
Group total | 793 | 752 | +5.6% | +0.8% |
In € million | 9M 2022 | 9M 2021 | Change | Organic change(1) |
Major Operations | 749 | 689 | +8.6% | +0.7% |
442 | 378 | +17.0% | +3.0% | |
Main European countries(a) | 267 | 274 | (2.5)% | (3.2)% |
International(b) | 40 | 38 | +5.7% | +5.2% |
Additional Operations | 45 | 62 | (28.5)% | +2.0% |
Group total | 793 | 752 | +5.6% | +0.8% |
(a) Including (b) International includes the activities of Parcel Locker Solutions in |
Major Operations
Sales from Major Operations reached €749 million (94% of total sales) in the 9M 2022, an 8.6% increase on a reported basis and a 0.7% year-over-year organic growth, which represents a small improvement compared to H1 2022. Growth in subscription-related revenue remains solid, at +2.9% on an organic basis in the 9M 2022, representing 71% of the Major Operations sales compared to 70% in 9M 2021, a further confirmation of the recurring nature of Quadient’s business model.
Sales in
Main European countries (36% of Major Operations) were down 3.2% organically to €267 million, mostly driven by a small organic decline in Mail-Related Solutions and, to a lesser extent, by lower revenue from Intelligent Communication Automation software license sales, as the Group continues to shift its business model to SaaS subscriptions. Parcel Locker Solutions benefited from a strong acceleration in organic growth, mostly driven by the ongoing deployment of the recently signed contracts in the region, as well as the initial contribution from the roll-out of the
Sales from the International segment (5% of Major Operations) were up 5.2% organically to €40 million, with positive contribution from both Intelligent Communication Automation and Parcel Locker Solutions.
Intelligent Communication Automation
Sales from Intelligent Communication Automation reached €166 million in the 9M 2022, up +12.7% on a reported basis and 5.2% organically. The penetration of the SMB segment accelerated in the quarter, with the Account Payable (AP) and Account Receivable (AR) offer remaining very strong, (up c. 65% compared to Q3 2021), supported by a good level of cross-selling from Mail-Related Solutions sales organization. Performance was also well oriented in the enterprise segment.
Growth in subscription-related revenue continued to be solid at +17.8% organically in Q3 2022 after +16.9% in H1 2022. (+17.2% organically in the 9M 2022). Subscription-related revenue now represents 75% of Intelligent Communication Automation sales compared to 67% in the 9M 2021, further evidence of the successful shift in business model, from license sales to SaaS. Licenses sales were consequently down 43.1% organically in the 9M 2022.
Annual recurring revenue reached €179 million at the end of 9M 2022, up from €145 million at the end of 20215 (a 22% annualized organic increase). Also illustrating the shift in revenue model, the share of SaaS customers reached 79% at the end of the 9M 2022 Lastly, professional services were slightly down organically (-2.8%) due to the evolution in product mix.
Mail-Related Solutions
Mail-Related Solutions sales stood at €518 million in the 9M 2022, up 7.8% on a reported basis and only down -0.4% organically compared to the 9M 2021 despite a relatively high comparison basis (+2.8% organic growth in 9M 2021 compared to 9M 2020). The resilient trend seen in recent quarters continues for Mail-Related Solutions supported by the positive organic contribution from
Of note, the strong performance continued in hardware sales (+3.5% organic growth in the 9M 2022) despite the very demanding comparison basis (+17.6% in the 9M 2021) and some supply chain issues which drove delays in product deliveries and led to a high level of backlog at the end of the period (over +20% compared to 9M 2021). Innovation, leading to positive product placement and continuous upgrade of the installed base, as well as the benefit from price increases were the main drivers behind this remarkable performance.
Subscription-related revenue (71% of total sales) proved resilient with a limited organic decline of -1.9% in the 9M 2022. This performance was largely explained by the resilience of the installed base and the largely indexed multi-year contracts associated with it, whilst volume-based revenue remain steady.
Parcel Locker Solutions
Parcel Locker Solutions sales stood at €65 million in the 9M 2022, a 4.8% increase on a reported basis and a -1.8% organic decline compared to the 9M 2021.
Volatility in lockers hardware sales remains high with a -14.2% organic decline in Q3 2022. This follows a strong Q2 up 25.1% on an organic basis and a very weak Q1, down -47.7% organically, due to the high comparison base linked to the final phase of the deployment of a large North American retail contract in Q1 2021. Overall, hardware sales were down -18.0% organically in the 9M 2022. The weaker Q3 performance was due to fewer installations in the period, mostly explained by longer lead-time for new constructions in the residential sector in the US impacting the delivery of the lockers. Growth was also impacted by the postponement of some US retail projects to 2023.
Subscription-related revenues were up 8.7% organically thanks to the continuous roll-out of existing contracts, especially in
Whilst some retail deals in the US are being delayed into 2023, the attractiveness of the business model (automation of the first and last mile delivery) remains unchanged both in terms of cost savings and environmental benefits, as evidenced by the continuous high level of booking leading to a significant increase of over +65% in the backlog at the end of
Q4 performance is expected to show a significant year-over-year improvement supported by the deployment of existing contracts and the contribution of recent deals signed.
Additional Operations
Revenue from Additional Operations stood at €45 million in the 9M 2022, up 2.0% year-over-year on an organic basis but down 28.5% on a reported basis. This decline is mainly due to the divestment of Automated Packaging Systems in 2021 and the prorata temporis impact of the divestments of the Graphics activities in the Nordic countries and of the Shipping Solutions which both took place in
Q3 2022 SALES
Consolidated sales stood at €270 million in the third quarter of 2022, up 8.8% on a reported basis and 1.0% on an organic basis compared to the third quarter of 2021. Subscription-related revenue organic growth in Q3 was up +2.8%, confirming the solid trend seen year-to-date.
Major Operations sales stood at €257 million in the third quarter of 2022, up 0.9% organically compared to the third quarter of 2021.
Intelligent Communication Automation sales were up 6.3% organically to €58 million, the double-digit organic increase in subscription-related revenue more than offsetting the still sharp decline in license. Mail-Related Solutions sales remained resilient, at €176 million, only down by -0.6% on an organic basis despite supply chain issues. Parcel Locker Solutions sales stood at €22 million in the third quarter of 2022, a -0.2% organic change compared to Q3 2021, mainly due to longer lead time for new constructions in the residential sector in the US impacting lockers installations. Delays in some retail deals in the US are also having a negative impact on the Solution organic growth in the short term.
Additional Operations sales stood at €13 million in the third quarter of 2022, down by -19.4% on a reported basis due to the changes in scope, but up 2.7% on an organic basis.
STRONG Q4 EXPECTATIONS REITERATED ACROSS SOLUTIONS, NOT FULLY OFFSETTING THE WEAK Q3 US LOCKERS PERFORMANCE
On a reported basis, Group FY 2022 revenue and current EBIT are expected to grow over last year level benefiting from a favourable forex contribution thanks to the Group’s significant and growing US presence.
2022 Guidance updated4
- The Group maintains its expectations for both a strong Q4 performance across Solutions and a step up in profitability in H2 2022 compared to H1 2022. Intelligent Communication Automation delivered a solid Q3 performance in terms of subscription-related revenue growth and the positive trend is expected to continue, supported by strong Annual Recurring Revenue level. After another solid quarter for Mail-Related Solutions, innovation and new product launches continue to drive solid demand and therefore the Group expects this positive trend to continue in Q4. After a disappointing Q3 for Parcel Locker Solutions in the US, the deployment of existing contracts and the contribution of recent deals are expected to support a return to strong growth. Considering the weaker Q3 from Parcel Lockers and the uncertain level of backlog reduction in Q4, and despite unchanged expectations for a strong Q4 across Solutions, the Group now expects full-year 2022 organic sales growth at over 1% compared to 2% previously.
- H2 2022 current EBIT2 margin is still expected to show a significant improvement against H1 2022 level thanks to
i) further price increases and more favorable supply chain costs comparison basis
ii) higher profitability from the growing installed base for both the SaaS activity and parcel lockers, and
iii) still high profitability of Mail-Related Solutions.
However, lower than expected Q3 organic revenue growth and the impact from salary inflation and investments into new product launches weighing on margins as seen in H1 2022, are leading to a more cautious approach for the operating profitability of the Group.
2021-2023 outlook confirmed
- The Group confirmed the 2021-2023 outlook with both sales and current EBIT6 organic growth CAGR over the period i.e., a minimum 3% organic sales growth CAGR and a minimum mid-single digit organic growth CAGR of current EBIT before acquisition-related expenses.
Q3 BUSINESS HIGHLIGHTS
On
The 2022 Quadrant Knowledge Solutions SPARK Matrix: Accounts Receivable Applications includes a detailed analysis of global market dynamics, major trends, vendor landscape and competitive positioning. The study provides competitive analysis and ranking of the leading accounts receivable applications vendors in the form of its SPARK Matrix. It gives strategic information for users to evaluate different vendor capabilities, competitive differentiation and market position.
Quadient Launches Advanced Compact Folder Inserter and Cloud-based
On
Quadient Recognized for its Corporate Social Responsibility Program with a 2022 Tech Cares Award from TrustRadius
On
Quadient’s corporate social responsibility (CSR) strategy is built around five pillars: People, Solutions, Ethics & Compliance, Environment and Philanthropy. These pillars are aligned with the
Quadient Launches SaaS Electronic Invoice Presentment and Payment Solution for Small and Medium-Sized Businesses
On
POST-CLOSING EVENTS
Relais Colis Installs 200 to 300 Quadient Parcel Lockers in Carrefour Retail Stores
On
Top 250 Ranking of French Software Companies Places Quadient Fifth in ‘Horizontal Publishers’ Category
On
Esker and
On
On
With the Banking & Payments Federation Ireland (BPFI) expecting 50,000 new homes to be built across 2022 and 2023,
To know more about Quadient’s newsflow, previous press releases are available on our website at the following address: https://invest.quadient.com/en-US/press-releases.
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CALENDAR
- 27 March 2023: FY 2022 results and Q4 2022 sales release (after close of trading on the Euronext Paris regulated market).
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About Quadient®
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Contacts
Catherine Hubert-Dorel, +33 (0)1 45 36 61 39 c.hubert-dorel@quadient.com financial-communication@quadient.com +33 (0)1 45 36 31 82 c.baude@quadient.com | OPRG Financial +33 (0)1 53 32 61 51 /+33 (0)1 53 32 61 27 isabelle.laurent@oprgfinancial.fr fabrice.baron@oprgfinancial.fr |
Appendices
Change in Q3 2022 sales
In € million | Q3 2022 | Q3 2021 | Change | Organic change(1) |
Major Operations | 257 | 232 | +10.8% | +0.9% |
Intelligent Communication Automation | 58 | 51 | +15.0% | +6.3% |
Mail-Related Solutions | 176 | 160 | +9.8% | (0.6)% |
Parcel Locker Solutions | 22 | 21 | +7.8% | (0.2)% |
Additional Operations | 13 | 16 | (19.4)% | +2.7% |
Group total | 270 | 248 | +8.8% | +1.0% |
In € million | Q3 2022 | Q3 2021 | Change | Organic change(1) |
Major Operations | 257 | 232 | +10.8% | +0.9% |
155 | 128 | +21.7% | +4.2% | |
Main European countries(a) | 88 | 91 | (3.1)% | (3.5)% |
International(b) | 13 | 13 | +0.1% | +0.5% |
Additional Operations | 13 | 16 | (19.4)% | +2.7% |
Group total | 270 | 248 | +8.8% | +1.0% |
(a) Including (b) International includes the activities of Parcel Locker Solutions in |
1 9M 2022 sales are compared to 9M 2021 sales at constant exchange rates (€53 million positive currency impact over the period) to which is added, prorata temporis, revenue from Beanworks and to which is deducted, prorata temporis, revenue from Automated Packaging Systems, Graphic business in the Nordics and the Shipping activities in
Q3 2022 sales are compared to Q3 2021 sales at constant exchange rates (€23 million positive currency impact over the period) to which is deducted, prorata temporis, revenue from Automated Packaging Systems, Graphic business in the Nordics and the Shipping activities in
2 Current operational result before acquisition-related fees.
3 Compared to FY 2021 sales at constant exchange rates to which is added, prorata temporis, revenue from Beanworks (acquired in
4 FY 2022 guidance last published in
5 9M 2022 ARR benefited from a €10.2m positive forex impact compared to FY 2021.
6 On the basis of 2020 current operating income before acquisition-related expenses excluding Parcel Pending’s earn-out reversal i.e., €145 million, with a scope effect resulting in a €140 million proforma.
Attachment
- 2022 9M -
Quadient - vUS VDEF
© OMX, source