Q1 2020 financial results of Devoteam Group

20. May 2020

Q1 2020 revenue grew 8.9% organically to €207 million

  • Revenue expected to decline by 5% to 7% in Q2 2020 compared to Q2 2019
  • Business activity in the second half of the year should remain severely disrupted
  •  Devoteam awarded EMEA “Reseller Partner of the Year” by Google Cloud

Q1 2020 revenue

Devoteam (Euronext Paris: DVT) reported revenue of €207 million for the first quarter of 2020, growing at 9.7% of which 8.9% organically compared to the first quarter of 2019. The working day impact over the quarter was favorable by +0.9 day, representing around 1.5 point of growth.

The first quarter of 2020 was in line with the previous quarter’s performance, with solid growth momentum in all regions of the Group except for Central Europe, due to the reorganisation of activities in Germany realised at the end of 2019.

On 31 March 2020, the Group employed 7,658 professionals, including 85.8% billable employees. This ratio was stable compared to 31 December 2019.

In the first quarter of 2020, there were 96 net recruitments, mainly in the Northern Europe & Benelux and Iberia & Latam regions, despite an attrition rate of 31.6%. The utilization of internal resources stood at 82.3%, negatively impacted by the lockdown since mid-March.

Q2 2020 revenue

The Group forecasts a 5% to 7% decrease in revenue over the second quarter of 2020 compared to the same period last year. France, Germany and the Netherlands will be the countries most impacted with a drop in revenue between 10% and 15%. At this stage, the other regions are not experiencing significant declines in their activities.

The most impacted industries are aerospace, non-financial services and the automotive.

During the second quarter of 2020, the headcount is expected to decrease by about 150 employees. The utilization rate is down by 5 to 7 points and the Group does not foresee an improvement before the fourth quarter.

Since the beginning of the health crisis, the Group has resorted to short-time work plans in several countries, mitigating the economic impacts on its activities.

The operating margin for the first half of 2020 is expected to be above 6%.

The restructuring costs should amount to circa 0.7% of the revenue in the first half of 2020.

2020 outlook

At this stage and given the context, the Group faces a significant drop in the volume of unweighted commercial opportunities in France and Germany, as well as a prolonged suspension of projects during the summer holidays. Therefore, the third quarter activity should remain severely disrupted.

In addition, the banking sector, which accounts for more than 20% of the Group’s activities, remains at risk for France, Iberia & Latam and Luxembourg. The Group’s activities in the Middle East could also be impacted by the fall in oil prices.

As a consequence, given the current low visibility, Devoteam is not in a position to disclose annual objectives and will only communicate on a quarterly basis for 2020.

Financial structure

The Group keeps a healthy financial position with a net cash of €70.6 million at the end of April, added to €105 million in undrawn credit lines.

Business

In April 2020, Google Cloud awarded Devoteam the title of EMEA “Reseller Partner of the Year 2019”

Devoteam has been rewarded for its achievements in the Google Cloud ecosystem, helping its customers drive their digital transformation towards the Cloud and make their workspaces mobile, collaborative and digital.

Certification plan

Devoteam continues to accelerate its certification plan during the lockdown period and aims to obtain more than 3,000 certifications by the end of the year on its strategic partners’ technologies (ServiceNow, Google, AWS, Microsoft, Salesforce), including around 300 on Kubernetes.

Covid-19: Devoteam’s data scientists have published a study based on the AI modeling of Covid-19 pandemic mortality in France and Germany.

Financial calendar

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