Exclusive Networks H1 Financial Update 2022

Exclusive Networks – First Half 2022 Financial results

• Half Year Gross Sales at €1.947.4 million up 33.8%
• Half Year Adjusted EBITA at €65 million up 39.3%
• Half Year Operating Free Cash Flow Before Tax at €166 million
• Leverage ratio of Net Debt over LTM Adjusted EBITDA after Leases of 1.8x

Jesper Trolle, Chief Executive Officer, commented: “I am really proud of the excellent results we delivered in the first half of the year. As always, our teams around the world have been instrumental to this performance and I want to warmly thank them for their hard work. Not only did we deliver record half-year Gross Sales but we also managed to grow our profitability faster than our top line, and generate cash faster than in the past. Market dynamics during the first half of the year have remained favourable and we continue seeing strong market trends given the critical importance for businesses and public entities of all sizes of an adequate cyber security infrastructure.

Our positioning as the only global pure player in cybersecurity and our unparalleled execution capabilities enable us to deliver growth above the market, with our backlog remaining as strong as it has been.

We recognize the increasingly challenging macroeconomic environment worldwide, however, our strong start to the year carrying on into the second half of the year, robust forward indicators and the growing strategic importance of cybersecurity provide us with good visibility for the rest of 2022. Therefore, and in the absence of any unforeseen events, we are confident in our capacity to deliver on the upward revision to the outlook we release today for the full year.”

^{* Variation at constant currency is computed using the second half of 2021 rates applied to the first half of 2022 Gross Sales. The USD, GBP and PLN evolved as follows; 1EUR: 1.094 USD; 1EUR: 0.842 GBP, 1EUR: 4.633PLN respectively for H1 2022 and 1EUR: 1.206 USD, 1EUR: 0.868 GBP, 1EUR: 4.537 PLN respectively for H1 2021.}

Gross Sales were €1,947.4 million, an increase of 33.8% year over year on a reported basis and up 31.2% at constant currency. The majority of this growth (72%) was driven by business with existing vendors in their current geographies.  The balance of the growth was the result of vendor expansion (14%) and acquisitions (14%).  Vendor expansion is a combination of vendors entering new geographies (c.5%) and new vendor relationships (c.9%).  The acquisitions of Ignition Technology and Networks Unlimited supported our growth through M&A.

Vendors retention rates increased in the first half of the year, supported by increasing demand for our vendors’ solutions and the continued engagement of our channel partners. Net euro retention rates[1] for the first half of 2022 were up 128% (vs 112% in the first half of 2021) with customers net euro retention rates² at 127% (vs 108% in the first half of 2021).

Revenue as reported in the Consolidated Financial Statements takes into account the recognition of the sales of support and maintenance on a Net Margin basis as per IFRS as Exclusive Networks are not the primary obligor for these solutions. Revenue grew in line with Gross Sales.

Net Margin reached €187.6 million in the first half of 2022, an increase of 29.0% year on year. This was below top line growth driven by the variation in mix of geography and deal size.

Adjusted EBITA rose significantly to €66.5 million, up 39.3% year over year, growing faster than our top line. Adj. EBITA margin over Net Margin was up 261 bps year on year to 35.4% as the Group benefits from operating leverage.

^{[1] As per new Gross Sales reporting methodology after IC eliminations}

^{[2] Defined as Gross Sales generated in year N from vendors/customers active in year N-1 divided by Gross Sales from the same vendors/customers in year N-1}