ESI sets the stage with a decent Q2
ESI reported results today for the quarter ended 30 June that were … decent. As you may know, ESI is in the middle of a transformation from a company that was somewhat random in its execution and communication with customers and investors, to one that aims to be more focused on growth, with better predictability and profitability. This means going from local-first to a company managed with a global perspective; replicating sales strategies across geo and more. None of this is easy, especially in a pandemic.
- Total revenue in Q2 was €26.3 million, up 2%
- License revenue was €20.4 million, flat with a year ago
- Services revenue was where the growth happened; it was up 7% to €5.9 million
Most of what ESI speaks about every year after the first quarter’s results is cumulative –year-to-date– so let’s look at those. For the first half of 2021,
- Total revenue was €82 million, up 1% as reported and up 4% in constant currencies (cc)
- License revenue was €70 million, up 1% (up 4% cc)
- Services revenue was €12 million, up 2% (up 6% cc)
Within that license total, New Business (meaning, new licenses to either new accounts or repeat customers in new areas) was up 18% (up 22% cc) to €6 million in H1 2021. And this seems to be accelerating: in Q2 2021, new business increased 68% cc year/year to €3 million. COO Mike Salari did say that the pandemic is still having an effect on new business, as some customers are deferring purchases — generally in new logos but not in current customers.
From a geo perspective, revenue was up 10% cc in the Americas, up 5% cc in Asia, and 2% cc in EMEA. The Americas continues to be ESI’s toughest region, accounting for only 14% of total revenue. SO?
By vertical, ESI continues to get the vast majority of revenue from its four focus industries (Automotive & Ground Transportation, Aerospace, Heavy Industry, and Energy). CFO Olfa Zorgati did say that “H1 sales were driven by the Automotive market, with a 2.3% increase [in constant currencies].” Mr. Salari said that even though automotive in H1 was good, he sees opportunity to expand even further.
In general, said CEO Cristel de Rouvray, “in the face of a global pandemic, ESI delivered on its commitments to grow new business, control cost, and improve profitability.” Even so, she indicated that this was below expectations and that she believes the company has what it needs to accomplish more ambitious goals.
For the first time, ESI offered forward-looking guidance. For H2 2021, ESI sees revenue between €51.7 million to €54.7 million, which would be growth of 0% to 6%; that means 2021 total revenue of €133.5 million to €136.5 million, up 1% to 3% as reported. Much more coming at the company’s investor event next month. Look for info on how the company plans to accelerate new revenue growth, streamline sales processes (with successes replicated across geos), among lots of operational initiatives.