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Hello everybody, and thanks for being present to this half year results presentation for WALLIX and 2024. During this presentation, we will remind the achievements of the company during the first half of the year before entering into the perspective, the outlooks. For the second semester and 2025. We will finish the presentation with a question- and- answer session with you all. Let's enter the presentation itself with introducing WALLIX again. WALLIX is a pure software editor. WALLIX today is the European leader in identity and access cybersecurity solutions. We develop our activities into an addressable market of EUR 1 billion, mainly in Europe, Middle East, Africa, North America and Asia- Pacific. We deliver our solution to 3,100 customers, contracted at the end of the first half of the year. These contracts are recurring for 72% of them.
Our revenue are more and more annual recurring revenue. We are a tech company with strong innovation investments. Our R&D teams are based in three different centers in France and Spain. We have an overall headcount of 240 people, employees based in 15 different countries in the world. We delivered EUR 30 million revenue in 2023 through a channel sales model into 90 different countries, cover 90 different countries in the world through our channel of 300 more VAR and integrators specialists of WALLIX solution. The first characteristic and the first important KPI of the company is the monthly recurring revenue and annual recurring revenue. At the end of the first half of the year, we delivered 30.2% of monthly recurring revenue growth, which is solid and important. We are still hyper-growing in term of business delivery and business growth.
We reached EUR 22.1 million revenue of annual recurring revenue at the end of this first half of the year. Which shows how we are continuing and continuously delivering more value for the company. The value of the company is still growing, which is the most important thing for us. The growth of the company is mainly driven through the commercialization of our solutions through the WALLIX One PAM portfolio. We launched this new offer in an early adopter program at the beginning of 2024, and we have officially launched our campaigns to commercialize WALLIX One PAM in September, and we have signed our first contract in September.
This solution, WALLIX One, is a zero trust platform for targeting the CISO and the CIOs of the companies who aim to develop a zero trust approach in their IT and OT architecture by managing efficiently the identity of their users, managing their right of access to digital assets in IT and OT environments. Allowing to govern this access through compliance process, which is more and more weighing on the information systems of our customers. This portfolio of WALLIX is targeting every category of companies, small, medium size, big companies, big accounts in all the sectors of industry and economy. We offer this portfolio with many advantage in term of flexibility of usage, flexibility of the pricing model. We deliver more agility to our customers to, I would say, extend the coverage of their users, internet users, external users, the providers of the company.
And we have, through a comprehensive approach of IAM and PAM solutions, we allow them to have a better return on investment through the best [total] cost of ownership of the market. Our WALLIX One solution has been recognized by the main analysts of the market as one of the most efficient PAM solution. We are now recognized as a visionary. We are named a visionary by Gartner in the last Gartner Magic Quadrant of the PAM, which has been published a few weeks ago, and with specific characteristics. First, we are the single European player of this Gartner Magic Quadrant, which has selected nine, I would say, global leaders in the world.
Our offer has been qualified as one of the most adapted, most relevant to manage the remote access in the customer's organizations, which is particularly interested to manage the complexity of OT environments, automate SCADA systems, and to manage and automate all these access into the OT security environments. We have also been awarded for the quality of our support and the efficiency and reactivity of our services, which is really something important when we talk about PAM project into the organization. After this initial introduction, I will give the mic to Amaury to talk about the figures of the first half of the year.
Thank you, Jean-Noël . About the revenue. Nearly 9% solid revenue growth despite the shift in the business model more focused on subscriptions and the temporary downturn of perpetual licenses in the public sector in France. This is due to political uncertainties and the absence of signatories in June when the business seasonality is very strong. If we have a look at the breakdown of our revenues. First, you have the recurring part of our revenue that come from the subscription, which amounts nearly to EUR 11 million, which is a 32% growth and underline the success of our subscription strategy. Second, you have the perpetual licenses, which are down by nearly 30%, and we estimate a EUR 1.4 million loss of earnings that we should recover in the second half.
If we exclude the licenses loss of earnings and Kleverware that was consolidated in May 2023, we can clearly see that the profitability trajectory continues to improve from 147% in first half 2022 to 128% in first half 2023 to end at 121% in first half 2024. Of course, and on the first half, which seasonality is not as good as the second one. I remember, of course, that we aim at achieving 100% ratio in second half 2024, which means one euro revenue for each euro spent. If we analyze the normative cost, we can see that sales and marketing departments, customer success, and innovation and products are under control if we reach the anticipated revenue. We keep a strong investment in product and R&D, which innovation is highly recognized by Gartner and other analysts.
And we generate a leverage on support functions since our structural costs do not increase at the pace of the revenue, we generate a normative savings. In a nutshell, the overall costs are stabilized compared to the anticipated revenue, but the loss of earnings in licenses prevented us to benefit from the forecasted savings on first half 2024. In the end, we get an operating profit which is nearly equal to first half 2023. However, the expected improvement of the trajectory for this semester. This does not question our model to get back to breakeven on second half, as we will explain later on. We end the first half with a strong cash position, close to EUR 13 million, which includes a positive impact in the change of working capital due to seasonality effect, as well as the investments linked to our capitalized R&D.
We should also mention that we reimbursed loans for EUR 673,000 and bought back WALLIX share for EUR 400,000. In the balance sheet, we have about EUR 8 million financial debts to face the EUR 13 million cash, 87% of these loans have a maturity over three years. We should also mention EUR 23.4 million in prepayments, including EUR 22.6 million on income. Then I will give the mic to Jean-Noël for the 2024 outlook.
Thank you, Amaury. Let us talk now about our outlooks for 2024 and let us project in 2025. The question we face is which are the leverage coming from a situation where we generated during the first half of the year, EUR 15 million of revenue and EUR 6 million of exploitation fees to the breakeven in the second half of the year. To answer this question, we go through four main leverage. Three pillars concern the top line, one the bottom line of the company. About the top line. First, we will continue to strengthen our subscription model through our SaaS solutions. We will develop continuously our go-to market and business into the OT and the middle market segment. We will use a substantial expansion of our pipeline creation, I will come back on that point.
And we will go through the performance of our expense control plan to have a positive operating result into the second half of the year. Let us focus on the development in the OT and the SMB segment, the middle market segment. First, during the first half of 2024, we reinforced our partnership with Cisco by integrating our OT.security offer into the Cisco Cyber Vision solution. That way, we are now able to consolidate to cartography and to protect the OT networks, the SCADA, the automate, I would say globally, the OT environment, with a mutual offer. We also signed during the semester an alliance and a contract with Telenor for the north of Europe. This agreement concerned the delivery of our solutions into a SaaS model operated by Telenor to the oversea industry.
And it's, I would say, a process where we are creating and finding different alliance in different manufacturing and industry verticals to, I would say, target different markets where OT.security is key to deliver the business and the activity. During the first half, if we now focus on the medium-sized organization and the SMB, we have signed with Docaposte in France to integrate our IDaaS solution into their SMB cyber portfolio. We also signed two new distribution agreements for compact businesses under EUR 500 million revenues. We are going to target with these new distributors these specific markets which we consider are developing with the deployment of the new NIS2 Directive and the different regulations. We sign in France with Cris Réseaux and we sign for Germany and the United Kingdom an agreement with Prianto.
Now we are more present on the channels through these distribution agreements in these important countries for WALLIX. Let's talk now about a new KPI which concerns the pipeline creation into WALLIX. I think it's important to remind that since one year and a half now, we have invested a lot into a new business sales model following the hiring of a new Chief Revenue Officer, Eric Gatrio. And we have worked together to develop new tools, new process, to create a new governance model of our sales operations. And through the integration of new tools, we have been able to act directly on our sales operations. And we have seen a very strong evolution of our sales pipeline, our commercial pipeline since the second quarter of the year now.
And we can see a growth of 64% of the third and fourth quarter of the year when compared to the five previous quarters. So it's a significant growth of the commercial pipeline, which if we consider the same conversion rate of our customer project, and we apply the same continuous conversion rate of our sales project, we'll see a positive effect on our sales at the end of the year, and of course in 2025, which is really encouraging for our activities. Let's talk about the productivity of the company. It's also another KPI which is important to illustrate the efforts we made to increase our operational efficiency and to try to control better our expense and purchase. We focus on the rate between the amount of our sales compared to our people. So it's the level of the sales per employee.
We achieved a EUR 127,000 per people rate at the end of 2023, and it was continuously increasing since several semester. And we see a stability of this rate during the first half of the year, which is mainly due to the seasonality of the business. But we are really confident on the capacity we have to increase the amount of revenue generated per employee during the second half and 2025. And we'll see that rate growing to rise to catch the EUR 150,000 per employee, which is our breakeven, which is the level we consider important to be breakeven in the second half and next year for the company. Let's talk now about the trajectory. The trajectory of the company is, of course, something we are really focusing on and which we are planning to drive more and more precisely now.
It's important to talk about the trajectory of the company, comparing the trajectory on the second half compared to the first half of the year. First, in the second half of the year, we'll have a positive effect on our sales thanks to three main factors. First, the seasonality of our sales. As you know, we have an historical seasonality effect on our sales, and 56% of our sales are achieved during the second half of the year. Second important factor will be the growth of our subscriptions and SaaS contract, which will continue to hyper-grow. It's the second important factor and probably the main KPI, as you understood, of the company.
The third important effect on our revenue during the second half will come through our capacity to catch up the perpetual license we were not able to sign at the end of the first half with a specific commercial action to sign these contracts before the end of the year 31st of December to recover these contracts in 2024. At the same time, though, if we are able to achieve these three objectives, we should achieve a EUR 20 million revenue during the second semester. In the same time, if we still maintain the stability of our headcounts and continue to reduce continuously our buyings and our expenses, we'll be able to come back to profitability. So before entering the conclusion, let's project now for 2025. I think it's interesting to keep in mind that our subscription model will continue to hyper-grow. We are confident to continue to hyper-grow.
By signing more and more subscriptions and SaaS contracts, we'll progressively go to a model where 80%-90% of our revenue will be recurring. By driving better our sales activity using all the tools and the governance tools and the pipeline creation tools we have settled into the company, we'll be able to be more and more predictable in terms of revenue creation, revenue generation, and we'll have less and less alia to manage, like the alia of the perpetual license we faced at the end of the first half of the year. So the business will continue to grow by being more recurring and with being more and more predictable. Another important factor will fully impact WALLIX in 2025.
We have the positive effect of the market itself, which is more and more important, will continue to grow in the coming years, and particularly in 2025, with the activation of the NIS2 Directive in all the countries in Europe. We are still waiting for our BSI certification in Germany, which will make our portfolio particularly relevant for the Mittelstand in Germany, which is clearly one of the main targets of WALLIX for the end of the year and the years coming. With the tools, we'll continue to transition to a subscription and a SaaS model. As I explained, we'll drive better the alia of the perpetual license, which will become more and more marginal compared among the global revenue of WALLIX.
One of the other virtue of our investments will be our capacity to control better our marketing expense, marketing OpEx, by working better with our channel of partners and being more and more digital in term of marketing campaigns. Another important impact will come from our purchasing plan and the control of our expenses. We have made a lot of efforts during the year 2024, and we have created different potential economies which will be fully efficient in 2025, and help us to have a full profitable year in 2025. If we are able to maintain this level of growth of our revenue by keeping serious in the way we manage our expense and purchasings, we'll have a full profitable year in 2025. Before entering the question- and- answer session, I want to tell you something. We have to communicate our mea culpa for this first semester of 2024.
Yes, these first semester results are not the results we wanted to achieve for this first semester. We have different objectives. We had anticipated different objectives for the company for 2024, and we didn't anticipate every difficulties we had to face during this first half. Particularly at the end of the first half of the year, where we didn't anticipate the perpetual license, I would say, transfer and pause in the public sector, which affected our global revenue at the end of the semester. We also made a lot of efforts. I think Amaury and I tried to communicate on these efforts made on the buying and expenses, on the purchase and expenses globally since the beginning of the year.
It is true that we didn't anticipate the time to execute the strategy, which is now fully operational and will start to have a positive effect on our balance sheet. It is true that we have to communicate on a mea culpa on that. We, of course, expected better margin and better profitability during this first half of the year. Something is also important to communicate. We are still confident with our capacity to hyper-grow because we have tried to keep a strong —we have tried to preserve the deployment of our new three-tier business model, and to make a lot of efforts by keeping this business model effect in the coming months and years for the company. It was really important, and we didn't choose also to fire people and to keep our effective stable instead of firing people, reducing our headcounts.
Because it is important in this industry where the talents are rare, to be able to keep a strong ambience and a strong dynamic into the business. Now with all these efforts, we are confident either on our capacity to generate the growth in the future or to be more, I would say, serious and more rigorous with our expenses. Thank you very much for having listened this presentation. Now, we are ready, Amaury and I, to answer your questions.
Ladies and gentlemen, if you would like to ask a question, please click the "Respond" button on your screen or press star six on your phone keypad. Yes, Mr. [Andrew], you can activate your microphone. The floor is yours.
Hi. Hello. Thank you for the presentation.
Hi.
I just have a couple of questions. Firstly, the new pipeline slide, which is helpful. Thank you for sharing it. Can you tell us what is needed to qualify as a pipeline lead for the purpose of the slides? Which conditions a project or a sales process has to meet?
Okay. I understand your question. I would say that to try to qualify how our pipeline creation is going to impact our top line, we have a level of pipeline creation. We have an amount on the pipeline in term of revenue. We have a global account, and we know precisely our winning rate, winning ratio. We know precisely how many projects we convert, how many opportunities we are converting in projects directly from the marketing pipeline, from the pipeline created by marketing, from the pipeline created by our salespeople, from the pipeline created by our channel. And after that, we have a historical winning ratio, and we can apply this winning ratio to the opportunities and the pipeline generated, and it gives us the level of sales expected in the coming month and year.
This is why, by keeping our historical win rate, we know we can anticipate the level of the sales 9- 12 months later due to the historical sales cycle of the company. After I would say over that, we have two interesting concerns today and potential positive. We could have two more positive effects on this. First, we have today winning ratio, win rate, which is correct, but we are working with our Chief Revenue Officer to increase our winning ratio by creating an enterprise team to be more efficient on the big accounts, the big organizations, and to win more deals, particularly in the OT sector in the big accounts.
We have an effect on the middle market with a specific team which has been created since the beginning of the year, and a producing effect, winning deals that we weren't able to win last year or the year before. This is a first important thing. We are going to act on the win ratio.
Okay.
Those are the reason why we are confident.
Understood. The second question about NIS2. Do you see an impact of this regulation in your sales pipeline or not yet?
Not yet.
When do you expect to see it?
Not yet. We expect a positive effect during this second half of the year and the year coming with the —I would say, France is late because France has stopped during two months, I would say two and a half months after the political moves and the dissolution and the Olympic Games during the summer. Now we are coming back to the business, and we anticipate that the NIS2 Directive will impact the market in France at the end of the year. In the way our customers are going to plan their budget to organize their budget for 2025 and the years coming. In other countries, we see a small effect in Belgium, for example, Benelux. We think that the biggest part of this effect of the NIS2 Directive will come in 2025.
Okay. The last question on the license deals, because there were not many of them in the first half of the year. Do you see those delayed license sales to happen in the last quarter, or do you expect it just to happen by the end of the year? Has it happened yet, or is it yet to happen?
No, we are mobilized on these particular deals, and we expect to sign these deals before the end of the year.
All right.
During the fourth quarter.
All right. Typically, probably it all will come to if it happens in December, because typically those are signed in the last month, right? That will be the case.
Yes. The major part of business is signed in the fourth quarter, and particularly in the 14 last days of the year.
Mm-hmm. All right. Thank you.
The 14.
Mm-hmm. Thank you.
No question at this moment. We have no more question.
Okay. Perhaps we will go to the conclude. We are going to conclude. I want to thank you very much for being present and to follow WALLIX in your portfolio. As you probably understood, we are really focused on the execution plan of our operation sales, marketing operations, the transformation, the evolution of our business model. We have made a lot of efforts in term of cash and operating expense management. We are fully focused on the operations. It is key for our future development in 2024 and 2025, where we have a lot of positive effects to come from these strong investments. Another very positive thing, very positive signs are coming from the market itself. This is the reason why we are quite confident and positive for the future and on our capacity to create more and more value for our customers, for our partners, and for our shareholders.
Thank you very much. Let's meet again. I give you an appointment for the next publications, and the next publication will be the third quarter revenue before the annuals in early 2025. Since that, I wish you the best, and thank you very much. See you on October now, on November now. Thank you very much. Bye-bye. Have a great day. Bye.
Take care. Bye.