ESI Group Updates on Its Plan – Fast Progress, Long-Term Value, and Short-Term Impacts

Regulatory News:

ESI Group, Rungis, France, (ISIN Code: FR0004110310, Symbol: ESI), will announce today during its investor conference that it maintains its long-term objectives for high single-digit growth and 20% Adjusted EBIT¹ by 2024/2025, that it has made faster than expected progress on strategic focus including several divestitures, and consequently revises short-term targets. The Group also announces the implementation of a share buyback program.

Strong execution during the first year of the plan

ESI Group operates in a vibrant market and has made fast improvements in sales execution, and in focusing its R&D to provide an increasingly valuable and simplified offering. The macro-economic context is uncertain for its customers, and they rely on ESI, more than ever, as their trusted partner.

In the last year ESI Group has made faster than expected progress on its strategic focus by:

• divesting non-core assets: including the sale of the CFD product line for €24M and the much smaller divestiture of the Scilab and Inendi products, and putting in End-of-Life non-core R&D programs.
• transitioning faster away from perpetual licenses to recurring business²; H1 22 Recurring business is 93.5% versus H1 21 92.2%
• transitioning faster away from non-core services to free up resources to drive recurring license business

These are the result of deliberate strategic decisions. Driven by its core strategic vision, and its solid financial situation (Net financial Debt -€0.6m as of the end of June 22, before the proceeds of the sale of the CFD product line in July), ESI Group has prioritized doing the right things for the long-term health of the business while managing the short term.

Long-term growth target unchanged, short-term views slightly revised

ESI Group reaffirms its commitment to improving growth and profitability year after year and continues to target high single-digit growth and 20% profitability within 2 to 3 years.

Cristel de Rouvray, Chief Executive Officer of ESI Group, comments “Our Guiding Principle is to always do what is right for the long-term health of the business and manage the short-term impact. I am very glad that we made the strategic choices we did this past year: we are in a much stronger position to navigate this amplified macroeconomic uncertainty. Namely, thanks to a bigger percentage of recurring revenue, significantly improved profitability, and a much stronger balance sheet. I have confidence that this transformation journey and its positive trajectory will gradually compound returns for all stakeholders: customers, shareholders, partners, and employees.”