Axway 2017 Annual Results: €299.8m Revenue, OPA was 13.5% of Revenue, Net Profit 1.5% of Revenue and Cloud Operations Generated +14.4% Organic Growth

Regulatory News:

Axway (Paris:AXW) (Euronext: AXW.PA) - Axway Software's Board of Directors, convened on February 14, 2018 under the chairmanship of Pierre Pasquier, reviewed the consolidated financial statements for the year ended December 31, 2017. The year 2017 confirmed the new positioning of Axway, software developer in the transformation of its business model. The Cloud business line showed +14.4% growth.

Readers are reminded that a press release was sent out on January 29, 2018 concerning "preliminary 2017 revenue and annual results".

2017 overview

Pursuing the implementation of its medium-term transformation plan, Axway passed several milestones in 2017:

• the acquisition in February 2017 of Syncplicity, Enterprise File Synchronization and Sharing (EFSS) specialist and the integration of teams with expertise in Cloud projects enhanced the Axway offering in the field of Cloud technologies;
• adapting the company's business model through the development of the software business in Cloud marketed by subscription and having achieved 14.4% growth during the year in addition to ACV of new signatures in the year of €7.3m;
• investment in the transformation of the Axway portfolio of strategic offerings for transferring MFT data to Digital MFT and API management solutions, both major initiatives of digital transformation;
• continuation of the process of integrating the product portfolio into the AMPLIFY digital platform;
• managing costs and investment options;
• confirmation of the profit on operating activities in line with objectives;
• integration of the new American tax rules into deferred tax - introduced at the end of year and not initially anticipated.

"2017 saw the operational execution of the digital transformation of both Axway and its clients."
Jean-Marc Lazzari, Chief Executive Officer of Axway

Revenue by region (in €m)

(1) at constant exchange rates and scope of consolidation

The Americas represented €128.8m (+4.8% growth) and remains Axway's prime market. France, with €83.8m in revenue, recorded negative growth of -11%, due to a fall in licenses across the zone despite growth in Cloud operations in excess of 40%. Rest of Europe recorded 4.3% growth, in particular the Germany and Benelux Zone with characteristic digital transformation projects. Asia-Pacific posted total growth of 1.8% thanks to demand from clients in particular for API offerings and projects to speed up Digital Business Enablement.

Revenue by activity (in €m)

(1) at constant exchange rates and scope of consolidation

Licenses, with revenue of €65.3m representing organic growth of -18.7%, recovered in the 4^th quarter with +8% growth. Cloud operations recorded 14.4% organic growth for the first full year, underlining the continued successful implementation of the new Axway product strategy providing a License and private or public Cloud hybrid offering. This 2017 figure should be associated with the amount of the contracts signed during the year -ACV- which stood at €7.3m in a full year of subscription, recognizable in 2018 in particular. Maintenance revenue continued to increase significantly, generating organic growth of 2.8% in spite of the lower demand for licenses. Lastly, Services revenue fell by -9.6% across all zones, except for Asia and Germany where growth in services exceeded 10%.

Financial position

As at December 31, 2017, Axway's financial position was extremely solid with cash and cash equivalents amounting to €28.1 million, a bank debt of €47.8 million and shareholders' equity of €344.1 million.

As at December 31, 2017, net cash and cash equivalents amounted to €20.6 million, enabling the Group to achieve financial ratios that comfortably meet the values required by banking covenants.

The operating margin (13.5% for the fiscal year) exceeded the objective (13%) announced mid-year, confirming the solidity of the Axway business model and enabling the company to go ahead with the investments required for its development project.

Net profit, as at December 31, 2017, stood at €4.4 million (1.5% of revenue) and was impacted in particular by the implementation of the new tax rules in the United States, which led Axway to proceed with an adjustment of €10 million in respect of the reversal of provisioned tax deferrals.

The audit process on the annual consolidated financial statements is currently being finalized.

Workforce

As at December 31, 2017, Axway employed 1,839 persons (518 in France and 1,321 in other countries), down by 91 employees compared with December 31, 2016 (1,930).

Cash dividend

Axway's Board of Directors intend, at the next General Shareholders' Meeting, to propose the distribution of a dividend of € 0.20 per share in respect of the 2017 fiscal year.

Strategy & Outlook

2017 saw Axway undertake several major initiatives of its new Digital Business Enablement Strategy including: integration of the Syncplicity human to human teams and solutions, putting in place the new Cloud operations and its method of contractual agreements by subscription, transformation of offerings, and new proximity to client business objectives. In this framework, the Company decided to implement an additional investment of €15m for the year ahead. Enriching the AMPLIFY digital integration platform also represents a major and discriminating investment for Axway in the years ahead.

While the technologies and services market as a whole experienced a major transformation impacting profitability and strategies, Axway started 2018 with the same conviction as to its positioning as a developer of digital transformation software. Axway has solid "assets": 11,000 clients located throughout the world, its widely-recognized Syncplicity MFT and B2B, API and EFSS human to human offerings, an innovative strategy toward the AMPLIFY digital integration platform which provides the flexibility and services companies have come to expect.

Buoyed by its transformation plan, cost and investment management, a fully-committed management team, good financial health and low financial debt, the company in 2018 is looking forward to growth in Cloud business of over 20% thereby securing the stability of global income.

Revenue by region and by quarter (in €m)

(1) at constant exchange rates and scope of consolidation

Revenue by activity and by quarter (in €m)

(1) at constant exchange rates and scope of consolidation

Income Statement

Simplified Balance Sheet

Cash Flow Statement

Financial Calendar 2018

• February 15: Live Analyst Conference and Webcast from Paris at the Cloud Business Center, Paris (5pm)
• April 19: Release for the 1st quarter 2018 (after stock market closure)
• April 26: Filing of 2017 Registration Document
• June 6: General Shareholders' Meeting, Hôtel Le Meurice, (2.30pm)
• July 25: Release of results for the first half-year 2018 (after stock market closure)
• July 26: Live conference and webcast

Notes on the financial tables

The main accounting methods used by the Group are described in the notes to the annual financial statements of the Registration Document.

Glossary

Restated revenue: Revenue for the prior year, expressed on the basis of the scope and exchange rates for the current year.

ACV: Annual Contract Value is the signed revenue still to come during the year.

TCV: Total Contract Value is the signed revenue still to come until the end of the contract.

Organic growth of revenue: Growth of operations between revenue for the period and the reprocessed revenue data for the same period of the preceding fiscal year.

Profit (loss) from operations: This indicator, such as defined in the Registration Document, corresponds to profit from the reprocessed counting operations data of the charge pertaining to the cost of services rendered by the beneficiaries of stock options and of restricted shares and of the provisions to amortization of the affected intangible assets.

Forward Looking Statements

The forecasts in this document are contingent upon risks and uncertainties as to the Group’s future growth and profitability, in particular in cases of acquisitions. Readers are reminded that license agreements, which often represent investments for our clients, are more significant in the second half of the year and may therefore have a more or less favorable impact on full-year performance. Readers are also reminded that potential acquisitions could have an impact on the financial data provided above.

The outcome of events or actual results may differ from those described in this document as a result of various risks and uncertainties set out in the 2016 Registration Document submitted to the Autorité des Marchés Financiers on April 24, 2017 under number D. 17-0420.

The distribution of this press release in certain countries may be subject to laws and regulations in force. Natural persons present in such countries and those in which this press release is disseminated, published, or distributed should obtain information about such restrictions and comply with them.

About Axway
Axway (Euronext: AXW.PA) unlocks digital experiences by connecting individuals, systems, businesses and customer ecosystems with digital infrastructure solutions. AMPLIFY™, Axway’s hybrid integration platform, connects data from any device anywhere, expands collaboration, fuels millions of apps and supplies real-time analytics to build customer experience networks. From idea to execution, Axway’s expertise in API management, secure file exchange and B2B/EDI integration have solved the toughest data challenges for more than 11,000 organizations in 100 countries. To learn more, visit www.axway.com/en.

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