Good day, and thank you for standing by. Welcome to the Planisware Full Year 2024 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Loïc Sautour, CEO. Please go ahead.
Thank you, and good morning, and thank you, everyone, for joining us today on this call. This is Loïc Sautour speaking, and I am here with Stéphanie Pardo, our CFO. I'm going to share some very exciting updates about Planisware's journey, where we continue to follow our strategic roadmap of sustainable and profitable growth, continuously paving the way toward our ambition to be the accelerator of the project economy and the number one provider of multi-specialty project and portfolio management solutions. In 2024, we've welcomed new customers, we've grown our team, and we have hit record highs in revenue. Now, none of this would have been possible without the dedication, the energy, and the passion of our 750 Planiswareans. I would like to thank every single one of those Planiswareans for delivering an outstanding, record-breaking year.
At Planisware, we have a clear goal to build strong relationships with our clients, and together, we contribute to a greener and more digitally advanced world. So, to them, I also want to express my gratitude, and more broadly, to all of our stakeholders participating in our success. Thank you. Now, let's dive into the key figures for the year. Despite significant global uncertainties and concerns in the macroeconomic and geopolitical context, our long-standing relationship with our clients, also fueled by many new clients, enabled us to achieve a robust 17.4% revenue growth in constant currency, totally in line with our 17%-18% objective. Our revenue growth was driven by the continued success of our SaaS operation. This trend drives our activity mix, with an increasing share of recurring revenue and geographical diversification, which helps maintain our growth resilience.
Our more recent pillars are also strongly contributing to this growth. In parallel, our adjusted EBITDA increased by 24%, representing 35.2% of revenue. This improvement of 180 basis points compared to the 2023 margin was mainly due to the mix effect with our most profitable operation growing the fastest. We exceeded our 2024 objective of 34% and reached the level targeted for 2026, effectively delivering our medium-term profitability ambition two years ahead of schedule. Similarly, our current operating profit increased by 21%, reaching EUR 52 million. Our adjusted free cash flow growth was particularly strong at 24.5%, resulting from improved profitability and a strong cash conversion rate of 84.5%, higher than our targeted 80%. This leaves us in a very strong financial position at year-end, with a net cash position of EUR 176 million and no financial debts. Now, let's take a look at our revenue performance by geography.
The geographical diversification of our group has proven to be a valuable asset, helping us to navigate any growth slowdown in specific regions by compensating with growth in other regions. In 2024, all key geographies contributed to Planisware revenue growth, so their contribution varied through the year. North America, representing 44% of our total revenue in 2024, played a significant role in our year-end growth, with a 19% increase in the second half of the year. This came after a slower start in the first half, where elongated customer decision-making processes impacted non-recurring activities and implementation services, resulting in a 15.6% growth. Now, overall, North America achieved a 17.3% growth for the year, thanks to substantial cross-selling, upselling with existing customers, and, of course, new customer wins. Europe, in contrast, saw a decent growth of 18.1% in the first half of 2024, driven by strong dynamics in Germany in particular.
However, revenue growth slowed to 18.4% in the second half due to macroeconomic uncertainties, political concerns, especially in France, and challenges in key verticals like automotive, primarily for new customers. As a result, Europe achieved a 14.5% growth for the year. Planisware growth in APAC and rest of the world of 44%, resulting from very strong commercial momentum across Japan, Singapore, and the Middle East. Now, let's take a look at our revenue evolution by pillars. 2024 is demonstrating again that our multi-specialist approach is really paying off, helping us to stay resilient. Our newer pillars are ramping up as efficient growth drivers, balancing out the slower performance of our historical Product Development and Innovation pillar, which was more impacted in the second half of the year by elongated customer decision-making processes, especially in the automotive industry.
Despite this, PD&I remains our principal pillar in 2024, contributing 53% of our revenue and being the main driver of our growth. The Project Control and Engineering pillar, which supports production teams in the industry with sophisticated products, plants, and infrastructure like aerospace and defense, energy and utilities, manufacturing and engineering, and life sciences, worked very nicely. Although it's still a recent addition for Planisware, it represented 20% of our 2024 revenue and posted a fantastic 35.6% growth, thanks to the successful rollout of our specialist solutions in North America. The IT Governance pillar represented 18% of our 2024 revenue. It grew by 20.1%, driven by continuous cross-selling to Planisware clients needing to accelerate their digital transformation. Project Business Automation represented nine percent of our 2024 revenue and confirmed its ramp-up with a solid 17% revenue growth.
Now, I'd like to move on to more qualitative aspects of our performance in 2024. One of our proudest achievements is our breakthrough in the U.S. defense industry with Northrop Grumman Corporation, a leading global aerospace and defense technology company. They have chosen Planisware Enterprise as their enterprise-wide program management system. We are honored to partner with them as they continue to implement digital technologies across their business. Planisware is playing a key role in their digital transformation effort, streamlining portfolio management technologies across the entire product lifecycle. Planisware's reputation is also bolstered by broad recognition from third-party industry analysts, which helps us attract and retain customers. In 2024, the high quality, reliability, and usefulness of our solution were further confirmed.
Gartner ranked Planisware as a leader in its Adaptive Project Management and Reporting Magic Quadrant for the third year in a row and recognized us as the sole customer choice for Strategic Portfolio Management in its Voice of the Customer for the second year. With our new AI-powered unified platform, which I'll detail a bit later in the presentation, we are shaping the future of portfolio management. We are staying at the forefront of innovation, delivering the next-generation experience with a new version of our platform, keeping us one step ahead of the competition. In terms of sustainability and social responsibility, Planisware's efforts were recognized with a gold medal from EcoVadis, the Great Place to Work certification for all of our offices, and a satisfying B-score for our first rating by CDP. These distinctions highlight Planisware's rapid progress and ongoing commitment to building a more responsible society.
They encourage us to continue innovating while respecting the highest environmental and ethical standard. Let me zoom in on one industry that is definitely accelerating: the defense industry. It is a massive sector with around $2.5 trillion in yearly global spending, and about 40% of that in the U.S. alone. This market is not only large, but it's also growing at a mid- to high-single-digit rate, with an increasing share of software spending. However, players in this field who are our actual or potential clients have very, very specific needs. For security and sovereignty reasons, they need to run their mission-critical solutions on their own infrastructures rather than through cloud-based SaaS.
To address this, Planisware has introduced a new delivery mode that combines the best of both worlds: the security of private infrastructure and, with the support possibility, the long-term relationship and the recurring revenue similar to the one from SaaS delivery. This relies on licensing our technology annually through multi-year agreements. We are reporting this line of revenue for the first time in 2024 within our recurring revenue under Planisware SaaS model since we initially delivered such licenses in Q4 2024. Planisware anticipates that this innovative delivery mode will be particularly relevant for companies with specific security and sovereignty requirements and will drive additional growth for the group. Now, before transitioning to Stéphanie, I would like to develop a bit on our new AI-powered platform, shaping the future of strategic portfolio management.
Like many others, we do believe that in a few years, up to 80% of users will interact with applications such as Planisware by voice or by chat, and we have prepared ourselves to support that revolution. To do so, being already on a single unified platform has been fundamental. We further developed our semantic metadata model, which contains physical database objects that are abstracted and modified into in-memory logical dimensions. This makes our platform future-proof for increased AI usage with the deployment of AI agents that need the semantic model to perform. We clearly set ourselves apart with our unified platform. As you can imagine, other players in the industry who are trying to stitch together several acquired technologies can't deliver what we are delivering to our customers. This increases the barrier to entry in our business, where being a specialist is paramount. So thank you.
Now, Stéphanie, the floor is yours for the financial. Thank you.
Thank you, Loïc, and good morning to all. I will start my presentation with the revenue evolution by revenue stream for 2024. As usual, in order to reflect the underlying performance of the company independently from exchange rate fluctuations, I will focus my comments on revenue evolution in constant currencies, which means applying 2023 average exchange rates to 2024 revenue figures. Anyhow, FX effects were quite low in 2024, representing only 0.2 million EUR, almost fully related to the appreciation of the euro versus the Japanese yen, while non-intuitively, the year-end appreciation of the US dollar has no effect in the yearly average exchange rate.
As expected, the key driver of the revenue performance was our SaaS model, which represented 78% of the total revenue and grew by EUR 27.9 million or plus 24.1%, fueled by new customer wins as well as continued expansion within our large installed base. Our SaaS model is made of SaaS and hosting revenue, up by 27.1%, support activities, which grew together by 18.1%, including a healthy 26.5% in subscription support, and annual licenses or new reporting line of revenue that Loïc mentioned just before, which contributed for EUR 1.1 million in Q4 2024. Still in the recurring parts of our revenue profile, maintenance grew by 1.8% over the year. I now move to the non-recurring part of the revenue, which represented 11% of the total revenue and slightly declined by minus 1.7% in 2024, as anticipated.
Planisware sold perpetual licenses for EUR 7.5 million, mostly to established customers for extension of formerly sold licenses, which represented 4% of the total revenue as guided. These new licenses will generate additional recurring maintenance revenue in the future. Oppositely, implementation services faced headwinds from longer customer decision-making processes, primarily for new logos in France and in the U.S., leading to a revenue contraction by EUR 2.1 million. I would like to illustrate how this translates to the evolution of a revenue mix that was more and more recurring. Over the year, recurring revenue made up of SaaS operations and maintenance of perpetual licenses represented 89% of total revenue, 260 basis points higher than for the previous year. The SaaS itself represents 78% of total revenue, while it was 74% in 2023.
Turning to the gross profits, I'm proud of the continued disciplined approach to the expenses implemented in the group with the 150 basis points of gross margin improvement post-last year, leading to a gross margin of 72.7% of revenue. This performance was driven by business mix evolution, as I just detailed, and in particular, thanks to the combined 29% of growth of the SaaS and hosting and annual license line, the mostly profitable stream of the revenue. The next slide presents the repartition of our operating expenses, which is very much consistent with the one observed during the previous period, totaling 44% of the group revenue.
At 12% of the revenue, R&D expenses consist primarily of SaaS expenses directly associated with R&D teams, as well as amortization of capitalized development costs, and the benefits from the French tax credits, are reflecting the group's ambition for the continuous product development and leadership. The efficiency of their R&D increases benefits for the deployment of AI tools, boosting the group's ability to provide innovative products and support solutions. In 2024, capitalized development costs amounted to EUR 2.5 million compared to EUR 2 million last year in 2023, representing 14% of the revenue, stable compared to 2023. G&A expenses growth reflects the recent hiring methods to strengthen the global functions to contribute to the growth of the business and international expansion of the group. In the future, as the company continues to scale up, G&A is expected to progressively decrease as a percentage of revenue.
Finally, at 18% of the revenue, sales and marketing expenses translate the employee-related costs in the salesforce and marketing team to support Planisware expansion in its domestic and international marketing activities and correspond to a level we intend to sustain in the future to keep strengthening our leader market position. As a result of the gross margin improvement and the consistent OPEX level, the adjusted EBITDA margin, which is 35.2% of the revenue year-on-year, improved by 180 basis points. In absolute value, adjusted EBITDA reached EUR 64.6 million, up by 23.7% year-on-year. Moving to the cash generation now, which has been strong over the year with the 84.5% conversion of adjusted EBITDA to adjusted FCF. This level is slightly above our circa 80% 2024 objective that we consider to be the normative conversion rate to expect in the coming years.
Looking at the detail of the conversion of the EBITDA, change in working capital was positive by EUR 2.5 million and in line with the structural slightly positive change in working capital expected every year thanks to the growth of the subscription contract billed in advance for service vendors. The CAPEX, which amounted to EUR 5.5 million, represented 3% of the revenue, which is in line with the usual CAPEX spending and with the expected lever for the coming years. Finally, tax payment increase reflects the growth of our taxable profits. The cash generation over the year, coupled with the payment in April of a dividend on 2023 results, led to a solid cash position of EUR 176 million at the year-end, 23.5% higher than a year ago.
I remind you that except lease liabilities related to offices and data center facilities, which amounted to EUR 17 million and a small amount of bank overdraft, Planisware does not have any financial debt. Finally, in this context of strong financial performance and subject to the approval by the shareholders, the group will pay a dividend representing 50% of its profit for the period in line with the historical dividend policy. This would represent EUR 21.4 million or EUR 0.31 per share. This concludes my presentation. Thank you for your attention. I now give the mic back to Loïc to conclude.
Yeah, thank you, Stéphanie. I will conclude with our 2025 objectives.
Taking into account our strong commercial pipeline on one hand and uncertainties in the timing of contract start and the evolution of sales cycle lengths on the other hand, we have set the mid-teens to 18% range for revenue growth guidance. We also intend to maintain our profitability around 35% and to keep delivering a cash conversion rate of circa 80%. So thank you very much for your attention. We are now ready to take your question.
Thank you. As a reminder to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will take our first question. The question comes from the line of Frédéric Boulan from Bank of America. Please go ahead. Your line is open.
Hi, thank you very much.
Good morning, Loïc and Stéphanie. A couple of questions, please. First of all, if you can spend a minute on the demand environment, I mean, I think you flagged some areas of strength, but still the number of uncertainties. So it would be good to have a bit more granularity in terms of any markets where you're seeing incremental pressure, I mean, in particular in autos. Do you expect Spain to recover or still to remain under pressure in the medium term? You flagged strong growth in the US, but it'd be interesting to hear a bit more about some of the geographical diversification. Second question around EBITDA. So you're already at your 2026 targets, so well done. But the question is, what's next for your guidance in 2025? There's no further improvement. So why would operating leverage not continue to work going forward?
And then maybe lastly, around GenAI, I mean, interesting comments around your unified platform. It would be interesting to understand a little bit how you think about monetizing GenAI. Is it just part of the feature, or do you think there is an opportunity to extract additional revenue from that? And anything you can share around the productivity side for yourself in terms of coding and better internal efficiency. Thank you very much.
Yeah, thank you for the question. Well, the demand environment, it still remains. I think we really have to separate the existing customers from the new customers. With the existing customers, the need to react to their own market change, the need to have projects to handle that is definitely there.
And that's why not only we have a very high recurrence in our revenue, but we are expanding because we really help our customers to do more and more with Planisware. For the new customers, that's where we see some sales cycles that we've seen that last year, and we still see that now, some sales cycles that are elongating. There are some uncertainties. There are some uncertainties politically, geopolitically, that some companies are willing to see what will happen with the tariff or not in order to take some decisions. From the geos, definitely, there is some dynamic in the U.S. There's still some. I mean, the same comment applies between existing customers and new customers. Very dynamic with existing customers, new customers, it depends. Europe, clearly, there are some concerns about the politics in France, in Germany. The economies are not thriving, and we can feel that.
The second question about our EBITDA, we have reached 35%, but clearly, we maintain our guidance at this level because we don't want to alter the long term. We're here for the long term. We want to continue to fuel the long term, and so that's why we are maintaining our guidance at this level. And about GenAI, so if you remember, our founding team, they come from AI. So it's really AI has always been top of mind. And now, more and more, with the latest things that we see around AI, we are leveraging that. So we bring a lot of capabilities with AI Agents directly in Planisware. The fact that we are already built on a single platform is key. A single data model is key. And do we monetize that? Yes, we do.
We have multiple AI features that we bring to our customers when there is this know-how where we can leverage the customer data in order to help the customer with its prediction. For example, this is something that we monetize because this is clearly a gain for our customers. And yes, it is something that we monetize. On our side, we also leverage our own solution, our own Planisware. We've seen some gain in our R&D, but also in how we support our customers because we do leverage Planisware. It's helping us to be more efficient into what we do.
Perfect. Thank you very much.
Thank you. We will take our next question. Your next question comes from the line of Gustav Froberg from Berenberg. Please go ahead. Your line is open.
Good morning, everyone. Thank you for taking mine also.
A few kind of follow-up questions and then some adjacent ones. The first question is on the demand side picture as well. Could you talk a little bit more about how you view the phasing of the year and whether or not you expect a big acceleration in the second half, or if you need a big acceleration in the second half to hit the kind of guidance that you've given for the year? And then I have a question on annual revenue, the new revenue line that you've published. Could you explain just that line again and how and why it's considered recurring and maybe how it's different to SaaS? I didn't quite get that. And then final one also on AI. We talked a lot about it.
Good to hear the qualitative color, but could you also quantify the impact that you've seen from GenAI on your business, both on the sales line and on the cost line, please? Thank you.
Okay. Maybe I'll start with the second one about the annual revenue because it will help me with the first question. So we have the demand from some customers to use the Planisware technology in their own private environment. And sometimes within their private environment, they also need for their own customer needs, they need to actually silo even the same technology. And so clearly, those customers, they cannot rely on a traditional public SaaS offering. They need to operate that in a very confined and siloed environment. And that's why in order to support that, we have worked on this annual license. So what is the difference between the annual license and the SaaS?
It's the hosting. The hosting that is done on a private infrastructure for annual license. And as opposed to SaaS, the hosting is done in our own architecture. In terms of contracts, the contracts are actually very similar in the sense that they are multi-year agreements in which there is an annual fee, either an annual license in the case of this annual license that we recorded, or typically an annual SaaS fee in terms of a SaaS delivery. So in terms of the demand side for the phasing, actually, with a little bit of understanding on this annual revenue and the recurring of this annual revenue, yes, we do expect that the second half of the year will be accelerating a bit more in terms of revenue. And AI, it's very hard to comment on the qualitative aspect of it with numbers that we can share publicly.
We know that we know and we have measured the impact, but those are not necessarily numbers that we can comment here.
Okay. Very clear. Thank you so much.
Thank you. We will take our next question. Your next question comes from the line of Inès Mah from BNP. Please go ahead. Your line is open.
Hi, can you hear me?
Yes.
Perfect. Thank you for having me. So I have two questions on the FY 25 guidance. First, what are the building blocks to give you confidence to reach it? I'm not only thinking about cross-selling your business, and are you seeing any risk to the level subscription as customers might be cutting headcounts? And my second question is about geography. So Europe has closed a lot in H2 versus North America. Are you embedding any European growth recovery in 2025 to reach your mid to high teens guidance?
Thank you.
Can you please repeat the second part of your second question, please, Ines?
Yeah, of course. So Europe has slowed a lot in H2 versus North America. I was just wondering, are you embedding any recovery for European growth in 2025 or in H2 2025 to reach your FY24 guidance?
Okay. So the first question is about our forecast. So what we need to remember is a lot of our revenue growth comes from existing customers. With a net retention rate of 121%, I mean, this is a testimonial to that. This is a testimonial that for our customers is really key, is really mission-critical for them, and they expand with Planisware.
So with the level of customers that we have, with the level of recurring revenue that we have, with the net retention rate that we have, we do have actually a very good confidence and predictability for the future. The variability will come primarily from new customers. And as I stated before, our commercial pipe is actually very strong, but the timing is everything. And depending on when new customers sign is really what it impacts. Part of your question is like, it's cool like some companies are reducing their workforce. Some of our customers are doing that. Are we afraid that it will impact us? Not necessarily. But the thing about Planisware is that we help our customers to react and adopt a changing world. And because of that, sometimes they need to reduce their employees. They need to reallocate resources.
They need to redistribute all of the work across their remaining workforce, and for that, Planisware is really helping them, so that's why very often we will see that with our existing customer, we'll be a bit countercyclical because as they need to react and adapt, react to the changing world, then they need Planisware to do that, and finally, if I got the question right, it's about the Europe slowdown at the tail end of 2024 and if we see any recovery. We have seen that on new implementation. As we had commented last year, there has been some deals that took some time to be signed, and several of those deals have been signed at the end of the year and we're implementing, so there is a bit of recovery for us on the implementation side of our deal as we implement with customers.
Okay.
Thank you.
Thank you. Once again, if you wish to ask a question, please press star one and one on your telephone. We will take our next question. The question comes from the line of Pavan Daswani from Citi. Please go ahead. Your line is open.
Thank you. Morning, Loïc, Stéphanie, and thanks for taking my questions. Firstly, could you maybe give us an update on pricing and whether you finished introducing the inflation indexation to all the customers now? And then secondly, you called out the opportunity in defense. Can you maybe help us understand your current exposure to the sector and where you are with this journey? And then lastly, I saw that churn picked up to 2.2%. Any color you can share on that?
Okay. Yeah. Pricing indexation, as you remember, we have pushed that in our contracts when especially after inflation started to kick in strongly.
Now, yeah, the vast majority of our contracts are indexed with some indexation clause depending on where they are geographically, CPI-type clause in North America. Now that has been done, then inflation is much lower than it has been in the last few years. Who knows where it will go? Concerning the defense exposure, clearly, it is a sector for us that is fast accelerating across the world. That is clear. Now, remember that we are very diverse in terms of industries. So as a result, our exposure strictly to the defense is not extremely high because of the diversity that we have in our different customer set. To point to churn rate, it remained an extremely low churn rate in the industry. It did go up a little bit, and the reason for that is, I mean, several reasons for that.
When there have been some companies that have been cautious in their spending, and it's more affecting our Orchestra line where some companies, where it's more like a departmental approach that they may have churned, and on the larger churn that we've seen, it's actually primarily for companies that have been acquired or actually that have disappeared, and that's why it did go up a little bit. It has been rough for some companies out there, and that's why it impacted our churn rate a little bit. Yet, it remains a very, very good churn rate, and we are very proud of it.
Great. Thank you.
Thank you. This concludes the question and answer session. I'll now hand back for closing remarks.
Thank you. Thank you for your interest and all of the questions. We'll be happy to see some of you in the next days.
Feel free to contact Benoît if you have any additional questions that you would like to address. Thank you.
Thank you.
This concludes today's conference call. Thank you for participating. You may now disconnect.