Artificial Intelligence
LECTRA: 2020: strong resilience in earnings and free cash flow, despite the consequences of the health crisis
2020: strong resilience in earnings and free cash flow, despite the consequences of the health crisis
- Revenues: 236.2 million euros (-14%)*
- Income from operations before non-recurring items: 25.6 million euros (-32%)*
- Net income: 17.6 million euros (-40%)
- Free cash flow: 25.2 million euros
- Net cash: 134.6 million euros
- Dividend**: €0.24 per share
* Like-for-like
** Proposed to the Annual Shareholders’ Meeting on April 30, 2021
In millions of euros | October 1 – December 31 | January 1 – December 31 | ||
2020 | 2019 | 2020 | 2019 | |
Revenues | 65.6 | 74.2 | 236.2 | 280 |
Change like-for-like (%)(1) | -8% | -14% | ||
Income from operations before non-recurring items (2) | 10 | 11.2 | 25.6 | 40.9 |
Change like-for-like (%)(1) | +5% | -32% | ||
Operating margin before non-recurring items (in % of revenues) | 15.3% | 15% | 10.9% | 14.6% |
Net income | 6.6 | 8 | 17.6 | 29.3 |
Change at actual exchange rates (%) | -18% | -40% | ||
Free cash flow(2) | 15.2 | 18.1 | 25.2 | 36.2 |
Shareholders’ equity(3) | 192.2 | 183 | ||
Net cash(2)(3) | 134.6 | 120.6 | ||
- Like-for-like: 2020 figures restated at 2019 exchange rates
- The definition for performance indicators appears in the Management Discussion of December 31, 2020
- At December 31
Paris, February 10, 2021. Today, Lectra’s Board of Directors, chaired by Daniel Harari, reviewed the consolidated financial statements for the fiscal year 2020. Audit procedures have been performed by the Statutory Auditors. The certification report will be issued at the end of the Board of Director’s meeting of February 24, 2021.
(Comparisons between 2020 and 2019 are like-for-like, unless stated otherwise. As the impact of the acquisition of Retviews on the financial statements for the full year is not material, like-for-like changes exclude only the variations in exchange rates).
Q4 2020
The Group’s business activity and results in Q4 brought confirmation of the initial signs of improvement observed in Q3.
Indeed, after a decline of 42% in Q2, and 21% in Q3, compared to the corresponding quarters a year before, orders for perpetual software licenses, equipment and accompanying software, and non-recurring services (27.7 million euros) were 1% higher in Q4 than the fourth quarter in 2019.
The annual value of new software subscription orders amounted to 1.1 million euros, up 53%, confirming once again the success of Lectra’s new offers for Industry 4.0, sold in SaaS mode.
Revenues (65.6 million euros) decreased by 8% (-12% at actual exchange rates). They had fell by 28% in Q2, then by 15% in Q3.
Income from operations before non-recurring items (10 million euros) was up 5% (-10% at actual exchange rates) and the operating margin before non-recurring items (15.3%) increased by 2.2 percentage points (+0.3 percentage points at actual exchange rates) compared to Q4 2019.
Net income (6.6 million euros) was down 18% at actual exchange rates.
2020
The COVID-19 epidemic and its consequences had a very significant impact in 2020.
From the start of the crisis, the Group took the necessary hygiene and physical distancing measures to safeguard the health of employees, customers, suppliers and other stakeholders. These measures are still in effect.
In parallel, the Group maintained all business operations worldwide and without interruption throughout the year.
Lockdown measures implemented by most countries, at different times during the year, led to a significant reduction in activity by the Group’s customers.
While overall business activity improved in the closing months of the year, many customers were still operating below pre-crisis levels and therefore made reductions in capital expenditures or operating expenses. All three strategic market sectors—fashion, automotive and furniture—have been strongly impacted, though the furniture market experienced a rebound starting in the third quarter.
Negative impact of currency changes
With an average exchange rate of $1.14/€1 in 2020, the US dollar was down 2% compared to the same period in 2019. The slide in the dollar intensified late in the year, and the exchange rate stood at $1.23 to the euro on December 31, 2020. The yuan also declined by 2% against the euro.
Currency changes thus mechanically decreased revenues by 4.4 million euros (-2%) and income from operations before non-recurring items by 2.3 million euros (-8%) at actual exchange rates compared to
like-for-like figures.
Orders down overall, strong growth in software subscription sales
Orders for perpetual software licenses, equipment and accompanying software, and non-recurring services (82.6 million euros) were down 22%.
In addition, the annual value of new software subscription orders amounted to 2.9 million euros, up 55% compared to 2019. This strong increase, at a time when orders for perpetual software licenses fell due to the consequences of the COVID-19 crisis, confirms the positive adoption of the Industry 4.0 offers launched in 2018-2019 and strengthens the Group’s confidence in their potential for growth. These orders increased in all geographical regions, primarily in the fashion market.
Strong resilience in earnings and free cash flow, despite the consequences of the health crisis
Revenues were 236.2 million euros, down 14% relative to 2019 (-16% at actual exchange rates).
Revenues from perpetual software licenses, equipment and accompanying software, and non-recurring services (77.7 million euros) were down 28%; and revenues from consumables and parts (59.2 million euros) fell 15% due to the severe reduction in business activity by the Group’s customers. Revenues from recurring contracts, on the other hand, rose by 3% to 99.3 million euros. This component of the revenue stream is a key pillar of the Group’s business model and constitutes a protective factor that has mitigated the impact of the COVID-19 crisis on the earnings.
Income from operations came to 24.9 million euros, after a non-recurring charge of 0.8 million euros recognized in 2020 for fees and other costs relating to the proposed acquisition of the company Gerber Technology.
Net income totaled 17.6 million euros, down 40% at actual exchange rates.
Free cash flow amounted to 25.2 million euros, compared to 36.2 million euros in 2019. Free cash flow exceeded net income by 7.6 million euros in 2020; the decline from 2019 was slightly less than the decline in net income, which again confirms the strength and resiliency of the Group’s business model, including in a challenging environment.
A particularly robust balance sheet – positive net cash position of close to 135 million euros
At December 31, 2020, consolidated shareholders’ equity amounted to 192.2 million euros and cash and cash equivalents, as well as net cash position, totaled 134.6 million euros, after payment on May 8 of the dividend of 12.8 million euros (€0.40 per share) declared in respect of FY 2019.
2020-2022 strategic roadmap: first progress report
The Lectra 4.0 strategy was launched in 2017 with the aim of positioning Lectra as a key Industry 4.0 player in its markets before 2030. It has been implemented to date through two consecutive strategic roadmaps.
The first roadmap, for 2017-2019, established the key fundamentals for the future of the Group. These included the successful integration into its new offers of the key new technologies for Industry 4.0 (cloud computing, the Internet of Things, big data and artificial intelligence), the strengthening of the Executive Committee, the reorganization of subsidiaries into four main regions, and the launch of the first software offers in SaaS mode.
The second roadmap, for 2020-2022, was published in the financial report dated February 11, 2020. It will enable Lectra to capture the full potential of its new offers for Industry 4.0, while delivering sustainable, profitable business growth.
Despite the consequences of the economic crisis caused by the COVID-19 pandemic, most of the objectives of the 2020-2022 strategic roadmap remain unchanged, particularly the acceleration towards Industry 4.0. In February 2020, the Group set four strategic priorities for the 2020-2022 period:
- Accelerate organic growth;
- Strengthen customer relations;
- Extend the offers for Industry 4.0;
- Develop new areas for growth.
These four strategic priorities guided the Group’s action in 2020.
Following the announcement of Lectra’s proposed acquisition of Gerber Technology, Lectra has added a fifth strategic priority for its 2020-2022 strategic roadmap: “to capture all synergies arising from the acquisition of Gerber Technology.”
The revised financial objectives the Group has set for itself are indicated in chapter “Outlook” of this press release.
Announcement of proposed acquisition of the company Gerber Technology
On February 8, 2021, Lectra announced having entered into a Memorandum of Understanding to acquire the entire capital and voting rights of the US-based company Gerber Technology (see press release issued on that date).
Dividend at €0.24 per share
The Board of Directors will propose to the Shareholders’ Meeting of April 30, 2021 the payment of a dividend at €0.24 per share in respect of fiscal year 2020.
Outlook
In its 2019 Financial Report, published February 11, 2020, Lectra had reported its long-term vision and its new strategic roadmap for the 2020-2022 period.
The Group already noted the uncertainties linked to the COVID-19 epidemic, which has since become a pandemic, leading to a major and rapid slowdown of the global economic activity.
Through its decisions, the Group has demonstrated its commitment to its social, environmental and societal responsibilities, and to the fundamental values that underlie these responsibilities.
Financial objectives for 2022
To provide a better gauge for measuring the results of the new business combination following the acquisition of Gerber Technology, Lectra has decided to employ EBITDA before non-recurring items to measure its operational performance.
In 2020, Lectra and Gerber Technology achieved combined revenue of 401 million euros and combined EBITDA before non-recurring items1 of 50.3 million euros, including 236 million euros in revenue and 37.5 million euros in EBITDA before non-recurring items for Lectra.
These results were impacted by the consequences of the COVID-19 crisis; the combined revenue of Lectra and Gerber Technology in 2019 came to 482 million euros.
Lectra has set itself the 2022 objective of returning to the level of combined revenues achieved by the two groups in 2019. Lectra also estimates that the acquisition will generate synergies that should have an impact of between 12 and 18 million euros on EBITDA before non-recurring items in 2022. Adding these synergies to the expected operational performance of the two groups, the EBITDA before non-recurring items margin is expected to then be between 17% and 20%.
2021 outlook
Through its business model that yet again demonstrated its strength in 2020, Lectra entered 2021 with particularly solid operating fundamentals and an even more robust balance sheet.
Uncertainty surrounding the evolution of the pandemic and its consequences on the macroeconomic environment, together with the degraded financial situation of the Group’s customers, could however weigh on customers’ investment decisions and postpone or constrain the rebound in orders for new systems.
The objectives set out below were established before taking the acquisition of Gerber Technology into account and will be adjusted at the time of the completion of the operation, which is expected to occur during the second quarter of 2021.
Impact of exchange rate fluctuations
Lectra prepared its 2021 scenarios on the basis of the closing rates on December 31, 2020, and particularly $1.23/€1 (compared to the average rate of $1.14/€1 in 2020).
In 2020, the euro appreciated against the dollar and many other currencies. If the 2020 closing rates had applied throughout the year, the Group’s 2020 results would have been negatively affected, as follows. Revenues and income from operations before non-recurring items would have been lower by 6.9 million and 4.4 million euros, respectively, at 229.3 and 21.3 million euros. The operating margin before non-recurring items would have been 1.6 points lower, at 9.3%.
Financial objectives
Taking into account the information set out above, Lectra has set the objectives of achieving 2021 revenues in the range of 250 to 263 million euros (+9% to +17% like-for-like) and income from operations before non-recurring items in the range of 27 to 34 million euros (+27% to +60% like-for-like).
Achieving these objectives, however, remains subject to the still significant uncertainties related to the evolution of the pandemic. Furthermore, based on the order backlog at December 31, 2020, revenues and income from operations before non-recurring items for the first quarter of 2021 are expected to be substantially higher than those reported for the first quarter of 2020.
Confidence in growth prospects for the medium-term
Bolstered by the strength of its business model, its roadmap fully geared to the demands of Industry 4.0, and the opportunities arising from the acquisition of Gerber Technology, the Group is confident in its prospects for the medium term.
The Management Discussion and Analysis of Financial Conditions and Results of Operations and the financial statements for Q4 and the fiscal year 2020 are available on lectra.com. First quarter earnings for 2021 will be published on April 29, 2021. The Annual Shareholders’ Meeting will take place on April 30, 2021.
For companies that breathe life into our wardrobes, car interiors, furniture and more, Lectra is crafting the premium technologies that facilitate the digital transformation of their industry. Lectra’s offer empowers brands and manufacturers from design to production, providing them with the market respect and peace of mind they deserve. Founded in 1973, today Lectra has 34 subsidiaries across the globe, serving customers in over 100 countries. With more than 1,700 employees, Lectra reported revenues of 236 million euros in 2020. Lectra is listed on Euronext Paris (LSS).
lectra.com
Lectra – World Headquarters: 16–18, rue Chalgrin • 75016 Paris • France
Tel. +33 (0)1 53 64 42 00 – www.lectra.com
A French Société Anonyme with capital of €32,511,651 • RCS Paris B 300 702 305
1 The 2020 financial statements of Gerber Technology are unaudited and were prepared according to U.S. GAAP. The EBITDA before non-recurring items has been adjusted to eliminate non-recurring expenses.
Attachment
Artificial Intelligence
Building Energy Management Systems Market Projected to Reach $67.69 billion by 2030 – Exclusive Report by 360iResearch
PUNE, India, April 24, 2024 /PRNewswire/ — The report titled “Building Energy Management Systems Market by Component (Hardware, Services, Software), Type (Integrated Building Energy Management Systems, Standalone Building Energy Management Systems), Application, Deployment Mode, End-Use – Global Forecast 2024-2030” is now available on 360iResearch.com’s offering, presents an analysis indicating that the market projected to grow from a size of $34.52 billion in 2023 to reach $67.69 billion by 2030, at a CAGR of 10.09% over the forecast period.
“Revolutionizing Energy Efficiency Globally With The Evolution of Building Energy Management Systems (BEMS)”
In an era where energy conservation and efficiency have become paramount, building energy management systems (BEMS) are at the forefront of this transformation, offering solutions that monitor, control, and optimize energy usage within buildings. These advanced systems, leveraging real-time data analytics, automate energy control, enhance energy savings, reduce costs, and contribute to a greener planet. Primarily utilized in commercial spaces, residential areas, and industrial sectors, BEMS has a broad application scope, covering HVAC, lighting, and security systems. Factors driving the expansion of the BEMS market include escalating energy expenses, heightened awareness of environmental impacts, and the increasing incorporation of Internet of Things (IoT) and cloud-based technologies, coupled with supportive government initiatives promoting energy-efficient infrastructures. Although challenges such as high initial costs and technology integration barriers exist, the advent of AI and IoT technologies within BEMS heralds a future of predictive energy management and remote operational capabilities, with a growing emphasis on integrating renewable energy sources. Regions such as the United States, Canada, the European Union, and emerging economies such as China and India are witnessing significant growth in BEMS adoption, spurred by regulatory policies and a shift towards sustainable building practices. This global movement toward BEMS signals a step toward reducing carbon footprints and highlights the collective effort to embrace technology for a sustainable future.
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“Harnessing Energy Management for Sustainability and Efficiency”
Data centers are pivotal infrastructures in the digital transformation era, consuming up to 50 times more energy than typical commercial spaces. This energy demand positions data centers as key contributors to the U.S.’s overall electricity consumption. Recognizing this, implementing building energy management systems (BEMS) is crucial in mitigating the environmental impact and operational costs associated with data centers. BEMS optimizes cooling systems to prevent equipment overheating, thereby enhancing energy efficiency by leveraging real-time data. Such systems reduce the power usage effectiveness (PUE) ratio, highlighting a move toward more sustainable consumption patterns and ensuring data centers’ operational continuity. Integrating seamlessly with existing infrastructure, BEMS offers a comprehensive approach to energy management, enabling more innovative cooling, efficient power usage, and predictive maintenance. This transition highlights a commitment to environmental responsibility and fosters operational efficiency, setting a new standard for data center operations worldwide.
“Revolutionizing Building Efficiency With Advanced Energy Management Systems Optimized Usage”
In push toward sustainability, building energy management systems (BEMS) stands at the forefront of innovation, integrating sophisticated hardware such as sensors, actuators, controllers, and more to manage and reduce energy consumption in buildings meticulously. These systems work in concert to monitor environmental conditions and adjust heating, ventilation, and air conditioning (HVAC) settings in real time, leading to significant energy savings. BEMS provides valuable data that helps identify savings opportunities, while networking tools ensure seamless communication between devices by precisely tracking energy flow through meters. Servers process vast amounts of data, enabling detailed analysis and actionable insights to refine energy use further. Additionally, comprehensive services, including customized consultations and dedicated support, ensure that each BEMS is tailored to a building’s unique needs, providing efficient operation and extended system longevity. BEMS exemplifies the strategic shift toward more sustainable and operationally excellent building management through the collaborative synergy of hardware, software, and expert services.
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“Schneider Electric SE at the Forefront of Building Energy Management Systems Market with a Strong 13.97% Market Share”
The key players in the Building Energy Management Systems Market include Schneider Electric SE, Honeywell International Inc., Azbil Corporation, Emerson Electric Co., Johnson Controls International PLC, and others. These prominent players focus on strategies such as expansions, acquisitions, joint ventures, and developing new products to strengthen their market positions.
“Introducing ThinkMi: Revolutionizing Market Intelligence with AI-Powered Insights for the Building Energy Management Systems Market”
We proudly unveil ThinkMi, a cutting-edge AI product designed to transform how businesses interact with the Building Energy Management Systems Market. ThinkMi stands out as your premier market intelligence partner, delivering unparalleled insights with the power of artificial intelligence. Whether deciphering market trends or offering actionable intelligence, ThinkMi is engineered to provide precise, relevant answers to your most critical business questions. This revolutionary tool is more than just an information source; it’s a strategic asset that empowers your decision-making with up-to-the-minute data, ensuring you stay ahead in the fiercely competitive Building Energy Management Systems Market. Embrace the future of market analysis with ThinkMi, where informed decisions lead to remarkable growth.
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“Dive into the Building Energy Management Systems Market Landscape: Explore 180 Pages of Insights, 566 Tables, and 26 Figures”
PrefaceResearch MethodologyExecutive SummaryMarket OverviewMarket InsightsBuilding Energy Management Systems Market, by ComponentBuilding Energy Management Systems Market, by TypeBuilding Energy Management Systems Market, by ApplicationBuilding Energy Management Systems Market, by Deployment ModeBuilding Energy Management Systems Market, by End-UseAmericas Building Energy Management Systems MarketAsia-Pacific Building Energy Management Systems MarketEurope, Middle East & Africa Building Energy Management Systems MarketCompetitive LandscapeCompetitive PortfolioInquire Before Buying @ https://www.360iresearch.com/library/intelligence/building-energy-management-systems
Related Reports:
Home Energy Management System Market – Global Forecast 2024-2030Energy Management System Market – Global Forecast 2024-2030Intelligent Building Automation Technologies Market – Global Forecast 2024-2030About 360iResearch
Founded in 2017, 360iResearch is a market research and business consulting company headquartered in India, with clients and focus markets spanning the globe.
We are a dynamic, nimble company that believes in carving ambitious, purposeful goals and achieving them with the backing of our greatest asset — our people.
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Our clientele encompasses about 80% of the Fortune Global 500, and leading consulting and research companies and academic institutions that rely on our expertise in compiling data in niche markets. Our meta-insights are intelligent, impactful and infinite, and translate into actionable data that support your quest for enhanced profitability, tapping into niche markets, and exploring new revenue opportunities.
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Artificial Intelligence
Terra Drone, Unifly, and Aloft Launch UTM Development for AAM Targeting Global Markets
TOKYO, April 25, 2024 /PRNewswire/ — Terra Drone Corporation, a leading drone and Advanced Air Mobility (AAM) technology provider headquartered in Japan, announced today the launch of joint development with its Group companies Unifly NV (“Unifly”) and Aloft Technologies Inc. (“Aloft”) focused on UAS Traffic Management (UTM) for AAMs targeting global markets. Terra Drone has been making strides in its pioneering UTM business via strategic investments in Unifly, a leading UTM technology provider based in Belgium, and Aloft, which has the top UTM market share in the U.S. This collaboration marks the world’s first-ever joint UTM development for AAMs by multiple companies with extensive track records in UTM implementation and operation.
The three companies pursue joint UTM development to capitalize on the rapid global progress in electric vertical take-off and landing aircrafts (eVTOLs), set to revolutionize transportation. Morgan Stanley forecasts the Urban Air Mobility (UAM) market to reach $1 trillion by 2040 and $9 trillion by 2050 (1), with eVTOLs gaining global recognition through test flights and prototype showcases.
The companies proudly announce initiatives to enhance their existing UTM platforms in anticipation of the surge in eVTOL aircraft and drone activities. The shared vision for the UTM platform is to enable safe and efficient flight operations for eVTOLs and drones in the foreseeable future.
Recognizing the evolving needs of the AAM industry, they are dedicated to extending their platform by incorporating crucial additional functions. These enhancements, designed with automation at their core, aim to streamline operational efficiencies and pave the way for the integration of their increasingly automated UTM technology into the design and operational framework of AAMs. Through these efforts, they aim to set new standards in UTM and to facilitate the seamless integration of eVTOLs and drones into the national airspace, bolstering the potential for the AAM industry.
Through this initiative, they aim to build a global UTM infrastructure that kickstarts the AAM industry worldwide, creating a cohesive ecosystem that supports AAM growth and addresses broader challenges of urban mobility, sustainability, and air traffic safety.
Notes to Editor:
Research by Morgan Stanley in a report titled “eVTOL/Urban Air Mobility TAM Update: A Slow Take-Off, But Sky’s the Limit” https://advisor.morganstanley.com/the-busot-group/documents/field/b/bu/busot-group/Electric%20Vehicles.pdf]
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Artificial Intelligence
IBM to Acquire HashiCorp, Inc. Creating a Comprehensive End-to-End Hybrid Cloud Platform
$6.4 billion acquisition adds suite of leading hybrid and multi-cloud lifecycle management products to help clients grappling with today’s AI-driven application growth and complexity
HashiCorp’s capabilities to drive significant synergies across multiple strategic growth areas for IBM, including Red Hat, watsonx, data security, IT automation and Consulting
As a part of IBM, HashiCorp is expected to accelerate innovation and enhance its go-to-market, growth and monetization initiatives
Transaction expected to be accretive to Adjusted EBITDA within the first full year, post close, and free cash flow in year two
ARMONK, N.Y. and SAN FRANCISCO, April 24, 2024 /PRNewswire/ — IBM (NYSE: IBM) and HashiCorp Inc. (NASDAQ: HCP), a leading multi-cloud infrastructure automation company, today announced they have entered into a definitive agreement under which IBM will acquire HashiCorp for $35 per share in cash, representing an enterprise value of $6.4 billion. HashiCorp’s suite of products provides enterprises with extensive Infrastructure Lifecycle Management and Security Lifecycle Management capabilities to enable organizations to automate their hybrid and multi-cloud environments. Today’s announcement is a continuation of IBM’s deep focus and investment in hybrid cloud and AI, the two most transformational technologies for clients today.
“Enterprise clients are wrestling with an unprecedented expansion in infrastructure and applications across public and private clouds, as well as on-prem environments. The global excitement surrounding generative AI has exacerbated these challenges and CIOs and developers are up against dramatic complexity in their tech strategies,” said Arvind Krishna, IBM chairman and chief executive officer. “HashiCorp has a proven track record of enabling clients to manage the complexity of today’s infrastructure and application sprawl. Combining IBM’s portfolio and expertise with HashiCorp’s capabilities and talent will create a comprehensive hybrid cloud platform designed for the AI era.”
The rise of cloud-native workloads and associated applications is driving a radical expansion in the number of cloud workloads enterprises are managing. In addition, generative AI deployment continues to grow alongside traditional workloads. As a result, developers are working with increasingly heterogeneous, dynamic, and complex infrastructure strategies. This represents a massive challenge for technology professionals.
HashiCorp’s capabilities enable enterprises to use automation to deliver lifecycle management for infrastructure and security, providing a system of record for the critical workflows needed for hybrid and multi-cloud environments. HashiCorp’s Terraform is the industry standard for infrastructure provisioning in these environments. HashiCorp’s offerings help clients take a cloud-agnostic, and highly interoperable approach to multi-cloud management, and complement IBM’s commitment to industry collaboration (including deep and expanding partnerships with hyperscale cloud service providers), developer communities, and open-source hybrid cloud and AI innovation.
“Our strategy at its core is about enabling companies to innovate in the cloud, while providing a consistent approach to managing cloud at scale. The need for effective management and automation is critical with the rise of multi-cloud and hybrid cloud, which is being accelerated by today’s AI revolution,” said Armon Dadgar, HashiCorp co-founder and chief technology officer. “I’m incredibly excited by today’s news and to be joining IBM to accelerate HashiCorp’s mission and expand access to our products to an even broader set of developers and enterprises.”
“Today is an exciting day for our dedicated teams across the world as well as the developer communities we serve,” said Dave McJannet, HashiCorp chief executive officer. “IBM’s leadership in hybrid cloud along with its rich history of innovation, make it the ideal home for HashiCorp as we enter the next phase of our growth journey. I’m proud of the work we’ve done as a standalone company, I am excited to be able to help our customers further, and I look forward to the future of HashiCorp as part of IBM.”
Transaction Rationale
Strong Strategic Fit – The acquisition of HashiCorp by IBM creates a comprehensive end-to-end hybrid cloud platform built for AI-driven complexity. The combination of each company’s portfolio and talent will deliver clients extensive application, infrastructure and security lifecycle management capabilitiesAccelerates growth in key focus areas – Upon close, HashiCorp is expected to drive significant synergies for IBM, including across multiple strategic growth areas like Red Hat, watsonx, data security, IT automation and Consulting. For example, the powerful combination of Red Hat’s Ansible Automation Platform’s configuration management and Terraform’s automation will simplify provisioning and configuration of applications across hybrid cloud environments. The two companies also anticipate an acceleration of HashiCorp’s growth initiatives by leveraging IBM’s world-class go-to-market strategy, scale, and reach, operating in more than 175 countries across the globeExpands Total Addressable Market (TAM) – The acquisition will create the opportunity to deliver more comprehensive hybrid and multi-cloud offerings to enterprise clients. HashiCorp’s offerings, combined with IBM and Red Hat, will give clients a platform to automate the deployment and orchestration of workloads across evolving infrastructure including hyperscale cloud service providers, private clouds and on-prem environments. This will enhance IBM’s ability to address the total cloud opportunity, which according to IDC had a TAM of $1.1 trillion in 2023, with a compound annual growth rate in the high teens through 2027.1Attractive Financial Opportunity – The transaction will accelerate IBM’s growth profile over time driven by go-to-market and product synergies. This growth combined with operating efficiencies, is expected to achieve substantial near-term margin expansion for the acquired business. It is anticipated that the transaction will be accretive to Adjusted EBITDA within the first full year, post close, and free cash flow in year two.HashiCorp boasts a roster of more than 4,400 clients, including Bloomberg, Comcast, Deutsche Bank, GitHub, J.P Morgan Chase, Starbucks and Vodafone. HashiCorp’s offerings have widescale adoption in the developer community and are used by 85% of the Fortune 500. Their community products across infrastructure and security were downloaded more than 500 million times in HashiCorp’s FY2024 and include:
Terraform – provides organizations with a single workflow to provision their cloud, private datacenter, and SaaS infrastructure and continuously manage infrastructure throughout its lifecycleVault – provides organizations with identity-based security to automatically authenticate and authorize access to secrets and other sensitive dataAdditional products – Boundary for secure remote access; Consul for service-based networking; Nomad for workload orchestration; Packer for building and managing images as code; and Waypoint internal developer platformTransaction Details
Under the terms of the agreement, IBM will acquire HashiCorp for $35 per share in cash, or $6.4 billion enterprise value, net of cash. HashiCorp will be acquired with available cash on hand.
The boards of directors of IBM and HashiCorp have both approved the transaction. The acquisition is subject to approval by HashiCorp shareholders, regulatory approvals and other customary closing conditions.
The Company’s largest shareholders and investors, who collectively hold approximately 43% of the voting power of HashiCorp’s outstanding common stock, entered into a voting agreement with IBM pursuant to which each has agreed to vote all of their common shares in favor of the transaction and against any alternative transactions.
The transaction is expected to close by the end of 2024.
____________________1 The total cloud opportunity is the sum of the cloud-directed spends across Hardware, IT services and SW for Private and Public cloud implementation, sourced from IDC’s Worldwide Black Book Live Edition, March 2024 (V1 2024)
Conference Call Details
IBM’s regular quarterly earnings conference call is scheduled to begin at 5:00 p.m. ET, today. The Webcast may be accessed here. Presentation charts will be available shortly before the Webcast.
About IBM
IBM is a leading provider of global hybrid cloud and AI, and consulting expertise. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Thousands of government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM’s breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and consulting deliver open and flexible options to our clients. All of this is backed by IBM’s legendary commitment to trust, transparency, responsibility, inclusivity and service. Visit www.ibm.com for more information.
About HashiCorp
HashiCorp is The Infrastructure Cloud™ company, helping organizations automate multi-cloud and hybrid environments with Infrastructure Lifecycle Management and Security Lifecycle Management. HashiCorp offers The Infrastructure Cloud on the HashiCorp Cloud Platform (HCP) for managed cloud services, as well as self-hosted enterprise offerings and community source-available products. The company is headquartered in San Francisco, California. For more information, visit HashiCorp.com.
Press Contacts:
IBM:Tim Davidson, [email protected]
HashiCorp:Matthew Sherman / Jed Repko / Haley Salas / Joycelyn BarnettJoele Frank, Wilkinson Brimmer Katcher212-355-4449
Additional Information and Where to Find It
HashiCorp, Inc. (“HashiCorp”), the members of HashiCorp’s board of directors and certain of HashiCorp’s executive officers are participants in the solicitation of proxies from stockholders in connection with the pending acquisition of HashiCorp (the “Transaction”). HashiCorp plans to file a proxy statement (the “Transaction Proxy Statement”) with the Securities and Exchange Commission (the “SEC”) in connection with the solicitation of proxies to approve the Transaction. David McJannet, Armon Dadgar, Susan St. Ledger, Todd Ford, David Henshall, Glenn Solomon and Sigal Zarmi, all of whom are members of HashiCorp’s board of directors, and Navam Welihinda, HashiCorp’s chief financial officer, are participants in HashiCorp’s solicitation. Information regarding such participants, including their direct or indirect interests, by security holdings or otherwise, will be included in the Transaction Proxy Statement and other relevant documents to be filed with the SEC in connection with the Transaction. Additional information about such participants is available under the captions “Board of Directors and Corporate Governance,” “Executive Officers” and “Security Ownership of Certain Beneficial Owners and Management” in HashiCorp’s definitive proxy statement in connection with its 2023 Annual Meeting of Stockholders (the “2023 Proxy Statement”), which was filed with the SEC on May 17, 2023 (and is available at https://www.sec.gov/ix?doc=/Archives/edgar/data/1720671/000114036123025250/ny20008192x1_def14a.htm). To the extent that holdings of HashiCorp’s securities have changed since the amounts printed in the 2023 Proxy Statement, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC (which are available at https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001720671&type=&dateb=&owner=only&count=40&search_text=). Information regarding HashiCorp’s transactions with related persons is set forth under the caption “Related Person Transactions” in the 2023 Proxy Statement. Certain illustrative information regarding the payments to that may be owed, and the circumstances in which they may be owed, to HashiCorp’s named executive officers in a change of control of HashiCorp is set forth under the caption “Executive Compensation—Potential Payments upon Termination or Change in Control” in the 2023 Proxy Statement. With respect to Ms. St. Ledger, certain of such illustrative information is contained in the Current Report on Form 8-K filed with the SEC on June 7, 2023 (and is available at https://www.sec.gov/ix?doc=/Archives/edgar/data/1720671/000162828023021270/hcp-20230607.htm). Promptly after filing the definitive Transaction Proxy Statement with the SEC, HashiCorp will mail the definitive Transaction Proxy Statement and a WHITE proxy card to each stockholder entitled to vote at the special meeting to consider the Transaction. STOCKHOLDERS ARE URGED TO READ THE TRANSACTION PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT HASHICORP WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Stockholders may obtain, free of charge, the preliminary and definitive versions of the Transaction Proxy Statement, any amendments or supplements thereto, and any other relevant documents filed by HashiCorp with the SEC in connection with the Transaction at the SEC’s website (http://www.sec.gov). Copies of HashiCorp’s definitive Transaction Proxy Statement, any amendments or supplements thereto, and any other relevant documents filed by HashiCorp with the SEC in connection with the Transaction will also be available, free of charge, at HashiCorp’s investor relations website (https://ir.hashicorp.com/), or by emailing HashiCorp’s investor relations department ([email protected]).
Forward-Looking Statements
Certain statements contained in this communication may be characterized as forward-looking under the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially.
Statements in this communication regarding IBM and HashiCorp that are forward-looking may include statements regarding: (i) the Transaction; (ii) the expected timing of the closing of the Transaction; (iii) considerations taken into account in approving and entering into the Transaction; (iv) the anticipated benefits to, or impact of, the Transaction on IBM’s and HashiCorp’s businesses; and (v) expectations for IBM and HashiCorp following the closing of the Transaction. There can be no assurance that the Transaction will be consummated.
Risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements, in addition to those identified above, include: (i) the possibility that the conditions to the closing of the Transaction are not satisfied, including the risk that required approvals from HashiCorp’s stockholders for the Transaction or required regulatory approvals to consummate the Transaction are not obtained, on a timely basis or at all; (ii) the occurrence of any event, change or other circumstance that could give rise to a right to terminate the Transaction, including in circumstances requiring HashiCorp to pay a termination fee; (iii) possible disruption related to the Transaction to IBM’s and HashiCorp’s current plans, operations and business relationships, including through the loss of customers and employees; (iv) the amount of the costs, fees, expenses and other charges incurred by IBM and HashiCorp related to the Transaction; (v) the risk that IBM’s or HashiCorp’s stock price may fluctuate during the pendency of the Transaction and may decline if the Transaction is not completed; (vi) the diversion of IBM and HashiCorp management’s time and attention from ongoing business operations and opportunities; (vii) the response of competitors and other market participants to the Transaction; (viii) potential litigation relating to the Transaction; (ix) uncertainty as to timing of completion of the Transaction and the ability of each party to consummate the Transaction; and (x) other risks and uncertainties detailed in the periodic reports that IBM and HashiCorp filed with the SEC, including IBM’s and HashiCorp’s respective Annual Reports on Form 10-K. All forward-looking statements in this communication are based on information available to IBM and HashiCorp as of the date of this communication, and, except as required by law, IBM and HashiCorp do not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.
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