Esker’s 2017 Annual Results

Derby, UK — March 23, 2018

Strong growth of cloud-based solutions
Esker’s sales revenue reached 76.1 million euros in 2017, a 15.3 per cent increase over 2016 (11 per cent based on a constant exchange rate). These results are marked by the ongoing success of the company’s cloud-based document process automation solutions, which represent close to 64 million euros (85 per cent of sales) and an annual growth of 21 per cent compared with an increase of 20 per cent recorded in 2016.

The performance of traditional licence-based products levelled off at 8.1 million euros (down 24 per cent), now representing only 10.6 per cent of company sales. Given the growth of licence-based products has not been part of Esker’s strategy for many years, the decline in licence revenue is and will be largely offset by the new cloud-based solution contracts signed during the year. Nevertheless, this decrease has a short-term impact on the company’s sales growth and results. Legacy products declined 18 per cent, representing less than 5 per cent of company sales.

Strengthened financial structure for future growth
In order to reinforce the success of its cloud-based automation solutions and accelerate growth in the short and medium term, Esker has placed a strong emphasis on recruitment in 2017. Excluding acquisitions, the company’s workforce increased 12 per cent in 2017 compared to 2016. Including the companies acquired, the number of employees reached 503 at the end of 2017 compared with 427 at the end of December 2016.

The number of employees dedicated to research and development increased by 18 per cent, now representing 22 per cent of the workforce, and the consulting teams responsible for implementing Esker’s solutions for customers increased 27 per cent, now representing 23 per cent of the workforce. Starting in 2018, Esker’s investments in its own human resources will be complemented by a policy of developing commercial partnerships designed to accelerate the overall growth of the business.

Increased success in new customer acquisitions
Beyond the strong sales and financial results in 2017, Esker experienced a record year in terms of business performance. The guaranteed minimum value on contracts signed in 2017 (bookings) rose by 45 per cent compared to 2016, which is much faster than what is reflected in the company’s financials. This performance is also significantly higher than the growth of the same indicator recorded in 2016 (+33 per cent). These multi-year contracts only marginally influence annual revenue the year of signature, whereas their marketing and sales acquisition costs are fully allocated to the financial year. The 2017 sales success, therefore, structurally penalises immediate profitability in favour of future results.

Strong profitability
After taking into account the investments made throughout the year and the cost of preparing the company’s future growth, Esker’s 2017 operating income increased 5.3 per cent to reach more than 10.2 million euros, compared with 9.7 million euros in 2016. This performance corresponds to the company’s strategic objective to combine sustainable growth and profitability. Recent monetary developments — mainly with the U.S. dollar and British Pound — slightly penalised (0.5 per cent) 2017 profitability in the 2017 fiscal year.

Consolidation of e-integration
The annual results for 2017 take into account the consolidation of Esker’s acquisition of German-based company, e-integration GmbH, as of January 1, 2017. The company contributed 3.6 million euros to Esker’s sales revenue, up 9 per cent over 2016, and an operating income of 0.65 million euros. The administrative integration of the company has been completed and joint commercial actions are being launched.

Non-recurring elements and net income
The extraordinary results in 2017 recorded significant non-recurring expenses similar to those of 2016. This is primarily due to two main factors: 1) The finalisation of valuation adjustments providing for the retirement of French employees; and 2) The closure of the costs related to the move of the company’s French headquarters and its main U.S. office.

Given the increase in operating income, the non-recurring items mentioned above and an effective tax rate approaching nominal rate (32 per cent), 2017 net income amounts to 6.8 million euros, up 7 per cent compared to 2016.

Positive outlook for 2018
Esker expects to achieve double-digit organic growth in 2018. The company’s strong recurring revenue offers excellent visibility. A record number of new contracts signed in 2017 will begin to materialise in 2018 sales and allow Esker’s organic growth to accelerate. An unfavourable change in the price of the U.S. dollar against the euro could slow the growth of the company’s profitability on a cyclical basis.

About Esker
Esker is a worldwide leader in cloud-based document process automation software. Esker solutions help organisations of all sizes to improve efficiencies, accuracy, visibility and costs associated with business processes. Esker provides on-demand and on-premises software to automate accounts payable, order processing, accounts receivable, purchasing and more.

Founded in 1985, Esker operates in North America, Latin America, Europe and Asia Pacific with global headquarters in Lyon, France and U.S. headquarters in Madison, Wisconsin. In 2017, Esker generated 76.1 million euros in total sales revenue. For more information on Esker and its solutions, visit https://www.esker.co.uk. Follow Esker on LinkedIn at Esker – Northern Europe, or on Twitter at @EskerNEurope and join the conversation on the Esker blog.