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Olivier Novasque, CEO of Sidetrade, had this to say:

“Our Q1 performance was very satisfying, and for this I would like to thank all of the Sidetrade teams, 100% of whom teleworked so brilliantly to continue our business and provide flawless service to our clients. In the unprecedented context of a pandemic with uncertain economic repercussions, there are nonetheless two significant trends which could have a positive effect on Sidetrade’s business in the months ahead. Firstly, the pandemic is acting as a catalyst for digital transformation, accelerating investment in SaaS and AI to optimize business processes. Secondly, the tidal wave of unpaid invoices is focusing the attention of every CFO on cash flow security. In this new paradigm, Sidetrade solutions are ideally positioned to deal with these issues that have become more critical than ever. This is why, despite the crisis, we have every confidence in our ability to make 2020 a new year of growth. We are well-positioned to embrace the future with optimism.”

14% growth demonstrates resilience of Sidetrade’s SaaS model

SIDETRADE (MILLIONS OF EUROS)	2020 Q1	2019 Q1	VARIATION (%)
REVENUE	6.8	6.0	+ 14%

2020 information from unaudited consolidated data.

In the first quarter of 2020, Sidetrade generated €6.8m in revenue, organic growth of 14% vs. 2019 for the same period (which was already up 14 vs. Q1 2018). In fact, Q1 growth was not impacted by the covid-19 pandemic.

The recurrence of Sidetrade’s SaaS business model partially shields Sidetrade from the economic crisis. Let us recall that 89% of Sidetrade’s revenues are recurrent, based on multi-year contracts (initial period of 41.1 months, on average), and that the company has an extremely low churn rate of 3.9%.

Optimistic outlook for 2020 and beyond

As the unpaid invoices surges, Sidetrade provides invaluable data
The pandemic has resulted in an unparalleled increase in late payment. In UK, for example, unpaid invoices have risen a worrying 42% on 04/04/2020. To monitor the impact of the pandemic on overdue invoices, Sidetrade has launched an open-access tracker which anonymously shows payment behavior trends for 3.7m businesses in six European countries (France, the UK, Spain, Italy, Belgium, and the Netherlands).

Sidetrade’s exclusive technology is used to analyze over 26 million invoices, issued since 1 January 2020, totalling to €54bn in B2B transactions. The tracker is made possible by Sidetrade’s unique B2B transactions database, confirming the company’s leadership position.

Seeing small and medium enterprises through the crisis

Faced with an explosion of late payments, SMEs are hit hard by the pandemic, threatening their very survival. In response, Sidetrade decided to scale down their technology, initially designed for larger companies, and offer it free of charge to smaller businesses (sales of €10m to €500m) during the crisis. CashControl controls and secures cashflow (see press release of 31 March 2020). Backed by powerful machine-learning algorithms, the technology features unlimited digital dunning letter, as well as management of payment schedules.

The success of the special CashControl offer could be a springboard for Sidetrade to break into a new market segment.

Covid-19 quickening the pace of digital transformation

Crisis conditions have visibly pushed companies to more readily adopt new technologies and cloud-based tools, pushing the world more quickly toward a digital economy. Virtualization, robotic process automation and AI technologies are not in the pipeline; they are here and now. For SaaS editors like Sidetrade, accelerated digital transformation is an awesome growth opportunity. A further growth opportunity comes from the need of businesses squeezed by the crisis to shorten the order-to-cash process and get the revenue in. Sidetrade is extremely well positioned to help them. Let us recall that this is a high-growth market estimated at $3bn by the year 2024, according to a Research & Markets study.

With a SaaS model that has proven its resilience, Sidetrade is set to make a name for itself in the global AI market. Management is looking forward to yet another year of growth.

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Statutory auditor’s report on the consolidated financial statements

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A new year of double-digit growth, like for like:

Revenue up 17% and Operating Profit up 44%.

The solidness of Sidetrade’s SaaS model is expected to generate continued growth and profits in financial year 2020.

More than ever, cashflow is the lifeblood of business.

Olivier Novasque, CEO of Sidetrade, had this to say:

“Over the last twenty years, we have ceaselessly built our company on solid foundations. Despite the impact and uncertainty of this crisis, our robust SaaS model is expected to continue delivering high growth and profitability in 2020, which, under the circumstances, would be a victory indeed. The period we are going through is a unique opportunity to demonstrate the resilience of our business model.

What’s more, the crisis is acting as a catalyst for a change that has been underway for nearly a decade: all digital has become the new normal. In this new paradigm, finance teams are the front line in ensuring cashflow, the lifeblood of their companies. More than ever, they are realizing that the latest AI technologies are essential tools to develop digital interactions with their customers and speed up payment. Sidetrade is actively preparing the business community to bounce back, since order-to-cash management is going to be a matter of survival in coming weeks and months.”

A new year of double-digit growth, like for like: revenue up 17% and Operating Profit up 44%.

SIDETRADE (MILLION EUROS)	2019	2018	VARIATION (%)
LIKE-FOR-LIKE REVENUE	25.7	22.1	+ 17%
BTOC SERVICES	–	2.0	–
ANNUAL REVENUE	25.7	24.1	+ 7%
LIKE-FOR-LIKE OPERATING PROFIT	2.3	1.6	+44%
BTOC SERVICES	–	0.8	–
OPERATING PROFIT	2.3	2.3	-3%
NET PROFIT	2.2	2.2	+1%

The 2019 consolidated accounts have been reviewed by our statutory auditors. Their certification report has been issued after finalization of the procedures required for the Annual Report.

In 2019, the booked Annual Recurring Revenue (ARR) from new customers shot up 88%, hitting a record level of €4.8m in new annual subscriptions vs. €2.6m in 2018. These subscriptions provide visibility for Sidetrade’s revenue growth in 2020 and beyond.

Sidetrade’s annual revenue totaled €25.7m, representing remarkable organic growth of 17% vs. 2018, like for like. Let us recall that Sidetrade revenue no longer includes B2C Services, since this business line was phased out, as announced in 2018.

This phenomenal sales growth was buoyed by the core Financials AI business, which reached €21.3m in 2019, up 17%. This acceleration reflects the attractiveness of the latest release of the Financials AI platform. Sales & Marketing AI business is also growing steadily, up 17% in 2019.

Operating profit exceeded expectations (up 44%)

Operating profit reached €2.3m in 2019, up 44% vs. the previous year, like for like. This great performance can be explained by a €2m increase in gross margin, which reached 78% of sales. SaaS subscriptions contributed 94% of this gross margin, confirming the incremental profitability of Sidetrade’s pure SaaS business model.

In 2019, Sidetrade invested an additional €2m in sales and marketing resources to uphold the company’s remarkable growth. In R&D, 2019 saw the convergence of three Sidetrade technologies, further enhancing efficiency.

Earnings incorporate a research tax credit of €2.1m (vs. €1.9m in 2018), as well as activation of €0.25m in marginal R&D expenses (virtually identical to 2018).

A solid financial structure on 31/12/2019

Sidetrade maintains a solid financial structure with gross treasury of €5.3M and financial debt kept down to €0.3M. Sidetrade held 103,000 of its own shares at a value of €6.9M as of 31 December 2019.

Despite the Covid-19 crisis, the robustness of Sidetrade’s 100% SaaS model is expected to drive revenue growth in FY 2020.

In an unprecedented period of uncertainty, Sidetrade has already finalized several budget scenarios in order to test its financial solidness, faced with the impact of the Covid-19 pandemic. Given the severity and scale of the crisis to date, Sidetrade has made extremely conservative hypotheses to construct a “stress test” scenario and adjust investments accordingly. Here were Sidetrade’s current business assumptions:

Drastic reduction (67% on average) in new subscription contracts (new customers) during the first three quarters of FY2020 vs. budget targets.
Progressive return to normal, with new orders expected in 2020 Q4, which historically has had little impact on yearly revenue, given that subscription income is recognized pro rata.

Beyond this scenario, as a software vendor of 100% SaaS solutions, Sidetrade can count, more than ever, on the robustness of its subscription model to weather the crisis:

89% of revenue is recurrent, and based on multi-year contracts (41.1 months, on average).
A record number of bookings in 2019 (88%, hitting a level of €4.8m in new annual subscriptions from deals signed in 2019) will have a significant positive impact on 2020 revenue growth.
The exceptionally low churn rate in 2019 (3.9%) is expected to continue into 2020, in a setting where cash collection and credit management will be vital issues for all B2C companies.

For these reasons, Sidetrade management has every confidence in the firm’s capacity to grow revenue in 2020, despite even a worst-case scenario.

Investment adjustments to ensure a profitable year

In terms of expenses, Sidetrade is significantly scaling down investments originally planned for the present fiscal year:

All budgeted hiring frozen until June 2020.
Opening of US affiliate postponed until September 2020.
All non-essential costs slashed until 30 June 2020.

These measures, already in force, are generating savings of well over €3m against expenses initially budgeted for 2020. The measures may be extended as needed.

To date, Sidetrade has not needed to use either the exceptional cash support measures made available by governments or the short time working scheme.

Rock solid finances in 2020

As of 24 April 2020, Sidetrade maintains a rock solid financial structure with gross treasury of €7.2m (vs. €5.3m on 31 December 2019). The company’s debt level is virtually nil. Moreover, if necessary, Sidetrade would be eligible for government-backed access to bank loans.

Let us recall that, as of 24 April 2020, Sidetrade still holds 103,000 of its own shares at a value of €6.5M.

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