- 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. 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.”
Thomas Avedik, Chief Executive Officer at CREALOGIX
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.
