Comments on Q3 2017 business activity
In the third quarter of 2017, Sopra Steria achieved organic revenue growth of 3.3%. Currency fluctuations had a negative impact of €11.7 million in the quarter, while changes in scope had a positive impact of €3.3 million.
Organic growth in the first nine months of the year came to 2.8%.
In France, third-quarter 2017 revenue was €369.2 million, representing organic growth of 3.4%.
- Consulting & Systems Integration, with revenue of €20.9 million, achieved solid organic growth of 3.7% (despite one less billing day than in the third quarter of 2016). Consulting (accounting for 11% of the total) maintained strong momentum, with organic growth of 13.5%. With the exception of the energy sector, all other sectors saw an upward trend.
- I2S (Infrastructure & Security Services) generated revenue of €8.4 million, representing organic growth of 1.8%. The IT infrastructure management business, now realigned towards services offering higher added value (including consulting, architecture, cloud services and robotic process automation), recorded a slight contraction of 0.6%, confirming its clear recovery in operating performance. Cybersecurity (accounting for 11% of revenue) achieved organic growth of 26.1% and has a strong project pipeline.
In the United Kingdom, revenue (€186.9 million in Q3 2017) contracted by 9.8% at constant exchange rates and scope. Continuing in line with the established plan, growth decelerated during the quarter for the SSCL joint venture. In addition, client decision-making cycles saw a lengthening trend overall, in an environment marked by a more wait-and-see attitude. Lastly, the implementation of the repositioning strategy for the private sector – which will be carried out over several six-month periods – continued during the quarter, particularly with respect to consulting.
The Other Europe reporting unit confirmed its clear recovery in performance noted over the last two years. The unit generated revenue of €195.8 million, achieving strong organic growth of 12.3%, continuing the trend observed in the first half (organic growth of 11.1%). Performance was robust in all of the region’s countries, especially in Germany, which saw double-digit growth.
In a dynamic market environment, Sopra Banking Software posted revenue of €94.1 million, representing organic growth of 17.4%. There were several highlights in the quarter from the product perspective. A crucial stage was reached for Platform at La Banque Postale, with the go-live of the Loan module. Contracts were signed with major clients for Cassiopae’s specialised lending solutions in banking and financial captives of industrial groups. The new Digital eXperience Platform offering (client experience and open banking) has attracted considerable interest in France and abroad. The first migrations to Amplitude Up were successfully completed at several banks in Africa.
In the third quarter, Other Solutions (HR and Real estate solutions) saw an upward trend similar to that observed in the first half. Revenue came to €49.1 million, representing organic growth of 2.3%. Highlights of the quarter include the signature by Sopra HR Software of the largest outsourcing contract in the French market for the year so far, in terms of the number of payslips to be managed.
At 30 September 2017, the Group’s workforce totalled 40,766 people (40,431 at 30 June 2017), with 18.7% working in X-Shore zones.
As a reminder, the Group’s targets for the 2017 financial year are as follows:
- organic revenue growth of between 2% and 3%;
- an operating margin on business activity of around 8.5%;
- free cash flow in excess of €150 million.
Change in scope
- Kentor, a Swedish company specialising in consulting and systems integration, has been consolidated since 30 August 2017 (2016 revenue: €4 million);
- Regarding the proposed acquisition of Galitt, specialising in consulting and the development of software solutions in the payment systems and transactions market (2016 revenue: €0.8 million), the company is expected to be consolidated from 1 November 2017.
Monday, 19 February 2018: Publication of 2017 annual results (before market) and management presentation.