Plans to invest $24 million and add 110 jobs in Calgary
Just one year since the launch of its North America operations, Sidetrade has exceeded expectations with 58% of its new bookings now from the North America market. The SaaS provider has been recognized by Gartner as one of just three Leaders in the 2022 Magic Quadrant for Invoice to Cash applications.
Sidetrade is now accelerating its expansion into North America by investing $24 million in the next three years and hiring in the region.
Brad Parry, President and CEO of Calgary Economic Development, said: Sidetrade’s expansion in Calgary as its North American headquarters speaks to the city’s leading business environment and the exciting momentum in our tech and innovation ecosystem. Alberta and Calgary are centres for AI excellence with highly skilled talent, and as a global leader in AI, Sidetrade joins a growing roster of multinational companies that call Calgary home, where bright minds with big ideas are solving global challenges.
Sidetrade plans to fill 110 new positions and is recruiting at all levels (from entry level positions, up to executive leadership roles) for sales & marketing, professional services, IT support, and R&D. As part of its ongoing commitment to develop its talents, Sidetrade will also offer the Sidetrade Academy – a training program for successful onboarding experience and career development.
A business hub in Calgary to support North American operations
Calgary is the perfect location for Sidetrade thanks to the local authorities who are dedicated to making Calgary an attractive location for international tech companies. The news also coincides with the Government of Canada’s reinforced commitments to AI technology as a driver of economic growth and good jobs.
George Chahal, Member of Parliament for Calgary Skyview said: I am pleased to congratulate Sidetrade on the grand opening of their new Calgary office. It is an exciting occasion as Sidetrade — yet another world leading AI and tech company chooses to call Calgary home. It also marks a significant milestone towards Canada’s success as an emerging global IT and technological leader. Artificial Intelligence is among the greatest and most innovative technological advances of our age and has significant impact on the daily lives of Canadians. Canada’s strategy to become a world-leader in all things tech will help drive economic growth, build a resilient, modern economy and attract top talent from across the globe.
Sidetrade’s new Canadian hub will also support its growing international customer base and help to grow the business across the continent.
For their offices, Sidetrade has chosen the Ampersand building in downtown Calgary, an area which is increasingly attracting global technology companies. Currently, Calgary is ranked in the Top 50 North American Markets for Tech Talent, and was recently revealed as the third best place in the world to live according to Economist Intelligence.
Sidetrade has already hired 44 people in North America, including 20 new staff for its Calgary-based business hub, adding to its global workforce of 300 employees.
Jyoti Gondek, Mayor of Calgary said: Sidetrade choosing downtown Calgary for its North American Head Office and creating 110 new jobs adds momentum to our city’s growing tech sector.
As our reputation for innovation grows, more companies like Sidetrade are recognizing the competitive advantage Calgary offers given our deep talent pool, our infrastructure, and the low cost of doing business.
Sidetrade operates in a buoyant market, valued at $5 billion in North America according to Midcap Partners. The AI firm is already trusted by large North American corporations like Expedia, TechData, Iron Mountain, Micro Focus, Clean Harbors, Select Energy Services, and Superior Propane.
Olivier Novasque, CEO of Sidetrade, said: Calgary is the perfect location to bolster our global ambitions. Today is a major step forward for Sidetrade. Our new Calgary location is a business accelerator for the North American continent and will provide solid support to our customers worldwide. What’s more, Sidetrade is a truly multicultural organization, and we’re pleased to embark on the next stage of our journey with more Canadian teammates. We look forward to the years ahead with confidence. We have the vision and the resources to be a world leader in AI-driven Order-to-Cash applications.
Since first receiving this trust certification in 2019, continued investment in ISMS (Information Security Management System) has been a strategic business pillar for Sidetrade. All ISO 27001 chapters and controls were covered by Sidetrade across all its applications and services, including BPO, Professional Services, HR, Physical Security, and Supplier Management.
ISO 27001 is the leading international standard for information security. It enables companies to adopt best security and data management practices.
The renewal of this certification testifies the efforts made by Sidetrade to reduce the risks associated with confidentiality, availability, and integrity. Additionally, the adherence to these standards since 2019 significantly helps Sidetrade to comply with legal requirements in protecting sensitive data, information systems, personal information, and the like.
Thanks to the ISO 27001 certification, Sidetrade clearly demonstrates it is capable of handling each customer’s security requirements and provides proof of its compliance.
Sidetrade’s AI-powered platform processes over 593 million B2B payment transactions worth $4.6 trillion on behalf of enterprise-grade companies worldwide. Sidetrade takes a rigorous approach to upholding the highest standards of information and data security across the organization for customers, employees, and partners.
Laurent Pontier, CIO at Sidetrade commented: We are proud to be recertified and provide reassurance to our customers. At Sidetrade, we recognize the importance of addressing IT security, cybersecurity, and personal data protection issues. Achieving this gold standard certification for the second time attests our dedication to exceptional information security and data management practices.
We are a forerunner when it comes to information security; we constantly strive to demonstrate our commitment developing and monitoring procedures that ensure confidentiality, integrity, and availability of our customer’s information, as well as our own information.
Sidetrade’s recertification process in 2022 was led by EY CertifyPoint and was carried out across every function within the business including IT, Product, R&D, Sales, HR and more.
Olivier Novasque, CEO and founder of Sidetrade, commented:
This first half clearly validates our acceleration strategy kick-started in early 2021. In fact, we just achieved the best half year in our history, regarding both our bookings and our ability to deliver high profitability whilst implementing a substantial investment policy, particularly in North America. We can now confirm that the United States represents a robust growth driver for the years ahead. Buoyed by sustained commercial momentum and the recognition of Sidetrade by Gartner® as one of three global Leaders for Integrated Invoice-to-Cash applications, North America already accounts for more than half of our business successes. These initial wins with American multinational corporations, in preference over the two other Order-to-Cash leaders, serve to strengthen our ambition. Sidetrade has what it takes to become the leading player in terms of acquiring new customers in a booming market where the inflationary environment further incentivizes companies to accelerate their cash generation. Sidetrade will naturally pursue its robust growth strategy while remaining committed to its development model which is supported by a firm balance between investments, growth and profitability.
New bookings up considerably: +42%
In H1 2022, Sidetrade set a record for Order-to-Cash SaaS orders, which will generate an additional €3.04 million in Annual Recurring Revenue (“ARR”), compared with €2.14 million in H1 2021; a +42% increase. The total value of these new subscription contracts over their initial contract periods (excluding renewals and services) represents €9.95 million of Total Contract Value (“TCV”) in H1 2022 versus €6.32 million in H1 2021, a +57% increase.
To these SaaS bookings should be added €1.77 million of services on an annual basis (implementation, configuration, training, recurring services, etc.), compared with €1.37 million in H1 2021, a +29% increase. In total and considering that almost all of these services will be invoiced over the next twelve months, H1 2022 enables Sidetrade to add the equivalent of €4.81 million in Annual Contract Value (“ACV”) compared to €3.51 million in H1 2021, a +37% increase.
The initial contract period for new customers (excluding renewals) rose to 44 months, compared with 36 months in the previous fiscal year. This length of contract period further illustrates outsourcers’ trust in Sidetrade solutions and increases visibility over future revenue. It should be noted that as with all existing contracts, these new contracts include an annual automatic price re-indexation clause based on changes in price indices for the relevant country.
58% of new bookings in the United States, a new growth driver
In H1 2022, international orders represented more than 74% of all bookings.
Sidetrade outperformed its targets in North America (to achieve more than one-third of its bookings in the region by H2 2022) with 58% of bookings originating in the United States, just one year after operations were launched in this region. The Company signed significant contracts with large American corporations such as a strategic IT services giant in Q1 2022 (see press release here) and Insight Enterprises (see press release here) in Q2 2022.
Overall, in H1 2022, bookings by new customers (“New Business”) accounted for 68% of the total versus 55% on average in recent quarters. Cross-selling represented 13% of total bookings, with the remaining 19% of bookings accounted for Upselling of additional modules to existing customers.
The United States has also notably impacted the average size of new contracts (excluding Upselling). Whereas in H1 2021, the average totaled €81,000 per year of subscription (ARR), it will amount to €190,000 per year of subscription in H2 2022.
Businesses must be prepared to respond to the inflationary environment and face a twofold challenge: consolidate their cash reserves, and generate productivity gains to address salary increases and recruitment difficulties. This trend is expected to continue over the next 12 to 24 months with an increased risk of future recession, notably linked to multiple hikes in interest rates. In this context, the management of operating working capital, and particularly accounts receivable, is a major challenge for businesses.
Robust increase in Order-to-Cash SaaS subscriptions by +19% and revenue by +11%
| Sidetrade (m€) |
H1 2022 | H1 2021 | VARIATION (%) |
|---|---|---|---|
| ‘Order-to-Cash’ Activities | 17.3 | 14.8 | + 17% |
|
of which SaaS Subscriptions |
14.3 | 12.1 | + 19% |
| ‘Sales & Marketing’ Activities | 0.5 | 1.3 | – 61% |
| Revenue | 17.8 | 16.1 | + 11% |
| Operating profit | 2.4 | 2.2 | + 12% |
| Net profit | 2.3 | 2.1 | + 12% |
2022 accounts have been audited and will be certified after the finalization of procedures required for the annual financial report.
‘Order-to-Cash’ Activities grew very sharply by +17% in H1 2022, driven by 19% growth in SaaS subscriptions. The growth in this recurring revenue is the result of record bookings in the 2021 fiscal year, which will continue to impact revenue growth throughout the 2022 fiscal year.
‘Order-to-Cash’ Activities, a core business within the Company’s strategy since 2019, now represent 97% of total revenue in H1 2022.
The ‘Sales & Marketing’ Activities, which have become secondary to Sidetrade’s activities, now account for only 3% of total revenue in this half year and will continue to play a less prominent role commercially, with estimated revenue of €0.9 million at end-2022.
Total revenue grew by 11% in H1 2022, to €17.8 million. This performance is supported by solid growth drivers in international markets which now represent 51% of total revenue, including 21% for North America.
Sidetrade’s economic model provides its business with significant resilience, as 91% of its revenue is recurring, representing a significant advantage in the current and future environment.
All of these multi-year contracts are indexed to inflation (the Syntec for Southern Europe, the UK CPI for Northern Europe and the US CPI for the United States), which alters the total price of SaaS subscriptions each year by reference to changes in these price indices.
Sidetrade therefore has A robust pricing power that protects the Company’s future revenue against uncertainties and inflationary pressures. At present, Sidetrade perfectly combines its sound fundamentals with a highly favorable growth outlook.
Net profit up +12% with ongoing substantial investment in the United States
In H1 2022, Sidetrade’s operating profit increased by 12% to €2.4 million, due to increased revenue and the leverage of the SaaS model.
This excellent performance is owing to growth in the gross margin of €1.5 million to €14.2 million (vs. €12.8 million for the same period last year); this amounts to 80% of revenue (vs. 79% in H1 2021) with a rate of 93% on SaaS subscriptions alone.
During this period, Sidetrade increased its investments by 20% (i.e., an additional €2.3 million), mainly in the development of commercial operations in the US (€1.8 million).
In addition, operating profit includes a French Research tax credit of €1.3 million (vs. €0.9 million in H1 2021), an innovation subsidy of €0.5 million as well as activation of R&D for €0.17 million (vs. €0.1 million in H1 2021).
As a result of this momentum, net profit reached €2.3 million, up 12%, demonstrating that investing is not incompatible with growth and profitability.
Solid financial position with enhanced liquidity
On June 30, 2022, Sidetrade’s financial structure continued to strengthen with a high cash position at €22.4 million, versus €18 million on December 31, 2021. Moreover, Sidetrade holds 85,000 of its own shares, for an estimated value of €10.8 million, as of June 30, 2022.
Sidetrade has a €13 million line of credit, subsequent to the acquisition of Amalto in April 2021 for this amount (fixed rate at 1.1%).
On the back of its H1 2022 performance, the Group’s management is confident in Sidetrade’s ability to deliver double-digit growth in the 2022 fiscal year.