CREALOGIX’s successful ongoing change in business model leads to a temporary slowdown in profitability Dienstag, 17. September 2019 - 07:00

Media release

Zurich, 17 September 2019

2018/2019 Annual Results

• CREALOGIX posts record sales: For the first time, the Group exceeded the CHF 100 million revenue mark thanks to continued strong growth of 17%.
• SaaS revenue more than doubled compared to previous year.
• The share of recurring revenues increased from 38% to 42%.
• The international share of revenues amounted to 64.4% (previous year 57.4%).
• Profitability (EBITDA) was CHF 1.9 million, in particular due to a successful change in licence model.
• The Group does not expect an improved EBITDA for the 2019/20 financial year due to the ongoing change in the business model; revenues are expected to grow further.

CREALOGIX is pleased to look back on a successful year which saw the company make targeted and fundamental changes to its business model and operations. For the first time in the history of the company, the Group exceeded the CHF 100 million revenue mark thanks to continued strong growth, once again posting record sales. “Our own surveys have shown that open banking is worldwide key to creating future digital banking offers,” explains Thomas Avedik, Chief Executive Officer at CREALOGIX. “Via the Digital Banking Hub - CREALOGIX's open banking system – financial institutions improve the value of their services. They use the Digital Banking Hub in order to align their businesses quickly, prudently and cost-effectively to current and future customer requirements.” Globally-renowned analysts confirm the Group's innovative strength and positioning as a Fintech and a leading provider of digital banking software. This position is bolstered by strategic changes that the company makes in terms of licensing models, product alignment and partner network.

Full-year results mirror change in licence model

CREALOGIX continues to grow strongly. In the 2018/19 financial year, revenues increased by 17% from CHF 87.1 million to CHF 101.9 million. This corresponds to growth of 18% in local currencies. The international share of product sales amounted to 64.4% (previous year: 57.4%). Particularly of note are SaaS revenues, which doubled in the same period. Overall, recurring revenues accounted for 42% of total revenue (previous year: 38%). At CHF 1.9 million, profitability (EBITDA) was below the previous year's level (CHF 7.0 million). The EBITDA margin was 1.8% compared to 8.1% in the same period of the previous year. The main reason was the conscious decision to change the licensing model from a traditional perpetual licensing model with maintenance to a sustainable software-as-a-service (SaaS)/rental model. The SaaS model increases recurring revenues because they are generated continually and annually. Without this “SaaS effect”, revenue and EBITDA in the 2018/19 financial year would have been approximately CHF 7 million higher. In the UK, uncertainty surrounding Brexit led to banks curbing their IT investments which consequently had a negative impact on the full-year results. The Group posted a net loss of CHF 6.3 million (previous year: net profit CHF 0.7 million). This includes a goodwill amortisation of CHF 5.1 million. Adjusted loss per share was CHF -0.94 compared to earnings of CHF 2.39 in the previous year period. The equity ratio stood at 57% (previous year: 63%).

Transformation programme strengthens position

With over 550 customers worldwide, CREALOGIX has established itself as an important international player in digital banking. “In order to strengthen the company's future viability further, we continue to roll out our transformation programme so we can set ourselves up for upcoming requirements in terms of expertise and product range,” explains Richard Dratva, Chief Strategy Officer of CREALOGIX. As a result, the company’s business model will be realigned in three areas of action:

1. Change to a new sustainable licensing model

Demand for rental/SaaS models in the banking industry is on the increase. CREALOGIX is meeting this demand - especially in Switzerland and Germany - and is working with its customers to accelerate the switch to a SaaS model. The 100% takeover of ELAXY Business Solution & Services (BS&S) enabled CREALOGIX to offer SaaS services for its own products to its customers in Germany and internationally.

2. Investment in research & development for optimal scaling

CREALOGIX continues to invest in the Digital Banking Hub and its modules. The company will further increase the degree of product standardisation in order to enable an even shorter time-to-market for new or existing customers. In addition, the company is developing its modules to address topics such as open banking, user experience, APIs, artificial intelligence (AI) and security. With these measures, the Group is conscious of the fact that investments in the technology platform absorb resources. However, rolling out relevant products at the right time have a positive influence on sales development in the long term.

3. Partner network strengthens global positioning

So that CREALOGIX products can be implemented seamlessly at customers around the world, CREALOGIX is building a comprehensive partner ecosystem. It is made up of companies that have specialised, for example, in new technologies. Thanks to the work with strategic partners, CREALOGIX is able to concentrate on its core business, which is the development and sale of digital banking software products and, in particular, being able to place a greater focus on selling its solutions into specific segments.

Change influences short- and mid-term performance

Driven by the transformation process, CREALOGIX can enter new markets both efficiently and in line with specific segments. The sales order pipeline is looking very healthy. For example, in Southeast Asia a Tier 1 bank plans to roll out its entire digital wealth management business with CREALOGIX, and the European market can be capitalised on further.

Developments in the 2019/20 financial year will reflect the financial efforts made to strategically adjust the licensing models, product orientation and partner network. Revenues are to be increased further and CREALOGIX expects the transformation to have a positive impact in the mid-term in form of solid cash flows and double-digit EBITDA margins.

The Board of Directors has decided not to propose dividends from capital reserves to the shareholders at the Annual General Meeting.

The full annual report for 2018/2019 is available for download at crealogix.com/report-en.

Group Key Figures

*Non-GAAP measure. More information with respect to the use of and differences between the non-GAAP financial measures and the most directly comparable SWISS GAAP FER measures is provided on pages 42 and 43 of the financial report.

About CREALOGIX

The CREALOGIX Group is a Swiss Fintech 100 company and is among the global market leaders in digital banking. CREALOGIX develops and implements innovative fintech solutions for the financial institutions of tomorrow. Using digital solutions from CREALOGIX, banks, wealth managers, and other financial institutions can better respond to evolving customer needs in the area of digital transformation, enabling them to hold their ground in a very demanding and dynamic market and remain ahead of their competitors. The group, founded in 1996, has more than 700 employees worldwide. The shares of CREALOGIX Group (CLXN) are traded on the SIX Swiss Exchange.

The economic projections and predictions contained in this information relate to future facts. Such projections and predictions are subject to risks, uncertainties and changes which cannot be foreseen and which are beyond the control of CREALOGIX Holding AG. CREALOGIX Holding AG is therefore not in a position to make any representations as to the accuracy of economic projections and predictions or their impact on the financial situation of CREALOGIX Holding AG or the market in the securities of CREALOGIX Holding AG.

This document does not constitute an offer or invitation to subscribe for or purchase any securities. It is not being issued in countries where the public dissemination of the information contained herein may be restricted or prohibited by law. In particular, this document is not being issued in the United States of America and should not be distributed to U.S. persons or publications with a general circulation in the United States. Any non-compliance with such restrictions may result in an infringement of U.S. securities laws. Securities of CREALOGIX Holding AG (’COMPANY’) are not being publicly offered outside of Switzerland. In particular, the securities of the company have not been registered under the U.S. securities laws and may not be offered, sold or delivered within the United States or to U.S. persons absent the registration under or an applicable exemption from the registration requirements of the U.S. securities laws. This document does not constitute a prospectus according to article 652a or article 1156 of the Swiss code of obligations or article 27 et seq. of the SIX Swiss Exchange listing rules.

Contact

Investor Relations

Philippe Wirth, Chief Financial Officer

E-Mail: philippe.wirth@crealogix.com

Phone: +41 58 404 86 62

Media Relations

Jasmin Epp, Senior Group Communications Manager

E-Mail: jasmin.epp@crealogix.com

Phone: +41 58 404 86 52