| Revenue |
In €m - unaudited consolidated data
|2019/20||2018/19||Change||Change at constant scope1 and on a constant forex basis|
1 Metis Consulting has been consolidated since 11/01/2018 and WGroup since 08/01/2019.
+8% growth during Q4 2019/20
In Q4 of the 2019/20 fiscal year (January 1 to March 31, 2020), Wavestone's revenue stood at €114.9m – up +8%, compared with the previous fiscal year. This growth was negatively impacted by approximately 2 percentage points as a result of the Covid-19 crisis.
At constant scope and exchange rates (excluding Metis Consulting and WGroup), the company recorded organic growth of +3%.
At the end of the 2019/20 fiscal year, Wavestone recorded a consolidated revenue of €422.0m, up +8%. Foreign exchange effects contributed positively to the revenue result – to a level of €1.5m, impacting growth by 0.4 percentage points.
At constant scope and exchange rates, the company recorded an annual growth of +2%.
A reduction in consultant utilization rate but sales prices remain strong
After rising slightly in Q3, the consultant utilization rate reduced at the start of the 2020 calendar year, before suffering the effects of the lockdown measures put in place in various countries from mid-March. The result was a utilization rate of 69% in Q4, compared with 72% over the first nine months of the fiscal year.
Over the whole fiscal year, utilization rate was 71%, compared with 75% in 2018/19.
Sales prices remained strong in Q4, in line with previous quarters. The average daily rate for the whole of the 2019/20 fiscal year amounted to €878, compared with €872 in 2018/19. It benefited from the contribution of WGroup from August 2019. Excluding WGroup, sales prices fell by about -1% compared with the previous year.
At March 31, 2020, the firm's order book stood at 3.5 months of work, compared with 3.3 months at the end of December 2019, and 3.6 months at the end of the 2018/19 fiscal year.
3,498 employees at March 31, 2020
Wavestone continued its dynamic recruitment policy during the quarter, until taking the decision, in mid-March, to freeze hiring. It should be noted that the firm has chosen not to interrupt ongoing trial periods and intends to honor all contracts signed before the decision to freeze recruitment.
Over the entire fiscal year, the company achieved about 900 gross hires.
The staff turnover rate reduced throughout the 2019/20 fiscal year, reaching 14% – compared with 18% at March 31, 2019.
At March 31, 2020, Wavestone had 3,498 employees, compared with 3,094 a year earlier.
Business slowdown of between -15% and -20%
The Covid-19 epidemic and the lockdown measures in force in most countries where the company operates have caused a noticeable slowdown in Wavestone's business activity since mid-March.
In April, business activity reduced by about -15% to -20%, compared with the pre-lockdown situation. Over May, the company expects activity levels to be comparable to April.
To cope with this sudden and severe slowdown, and to partially mitigate the cost of the under-activity of its teams, Wavestone has decided to use vacation-leave measures and short-time working (or ‘furloughs') mechanisms. To date, short-time working applies to about 13% of the firm's fee-earning staff.
Deteriorated economic conditions in the coming months
Beyond the short-term impact of the public health crisis, Wavestone is preparing to face a severely degraded situation in the coming months. As a result of the uncertain economic context and the cost-cutting measures taken by many companies, the firm is expecting a marked decline in demand, renewed pressure on prices, and stiffening competition.
As it enters this difficult period, Wavestone can rely on a solid financial position. At March 31, 2020, the company had available cash and cash equivalents of about €65m, with a net financial debt of about €30m.
It should be noted that the financial situation at the end of March did not benefit from any financial support measures put in place for companies by the French Government. The firm does not refinance its trade receivables.
To lower its break-even point, Wavestone has initiated a comprehensive overheads review, with the aim of generating €10m to €15m in savings over the 2020/21 fiscal year.
Wavestone's Management and Supervisory Board have also decided to propose to the annual general shareholders' meeting, on July 28, that no dividend should be paid for the 2019/20 fiscal year.
In addition, the members of the Management Board will forgo receiving the variable part of their remuneration for the 2019/20 fiscal year.
A focus on the most resilient business sectors and service offerings
Without waiting for lockdown measures to be relaxed, the firm has vigorously revitalized its business development activity.
The company is therefore strengthening business development teams, mobilizing additional presales consultants, and intensifying the pace of prospecting.
In addition to stepping up its commercial activity, Wavestone is careful to focus its efforts on manifestly resilient business sectors, such as pharmaceuticals, utilities, financial services, and the public sector. At the same time, the firm is majoring on the service offerings most in line with the period's challenges – such as cybersecurity, IT optimization, and operational efficiency.
Throughout 2020, Wavestone intends to be agile in continuously adjusting its commercial priorities according to the shape of the new business environment.
2019/20 EBIT margin in line with the 13% target
The 2019/20 annual results, which will be published in early June, will show profitability impacted by the year-end decline in activity under the effects of Covid-19.
The EBIT margin is expected, however, to meet the 13% target set by the firm at the start of the fiscal year.
At the point of publication, the company will review its position on market developments and the priorities for the 2020/21 fiscal year.
Next event: Publication of the 2019/20 annual results, Tuesday, June 2, 2020, after Euronext market closing.
In a world where knowing how to drive transformation is the key to success, Wavestone's mission is to inform and guide large companies and organizations in their most critical transformations, with the ambition of a positive outcome for all stakeholders. That's what we call "The Positive Way.”
Wavestone draws on over 3,000 employees across 8 countries. It is a leading independent player in European consulting.
Wavestone is listed on Euronext Paris and recognized as a Great Place to Work®.
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