A new context for a fresh start
For nearly 30 years, SQLI has emerged as a digital expert and gained strong ground with more than 2,000 employees (almost half of them outside of France), digital services centers in four countries (France, Spain, Morocco and South Africa) and prestigious references, including three of the world’s five largest luxury groups, Airbus, Arcelor, Bridgestone, Carlsberg, Miele, Nespresso and RTE, etc.
In order to further its development and unlock the full potential of its experts, SQLI has embarked on a new strategic plan, which takes into account the digital industry’s underlying trends (the fragmentation of the French digital services companies market, the rise of e-commerce services and employees’ growing demands). The new ONE FORCE 2022 plan aims to provide a framework that fosters the Group’s emergence as a major European e-commerce player, while restoring its growth momentum and the profitability of its digital services activities in France, and drawing on Group-wide technological expertise.
Development of digital & technology and commerce & experience businesses
In light of this, SQLI has decided to develop two businesses based on two economic models that best respond to the characteristics of their respective markets:
- Digital & Technology, a digital services business boasting more than 939 employees in France deployed in five agencies and posting €137 million in turnover in 2018. Operating in a fragmented market (28,000 companies and a leader representing just 8% of the market) and with average annual growth of 3%*, this activity aims to support IT departments within large- and medium-sized companies in the context of their digital transformation. The objective is to develop user focused services by combining the best digital technologies and methods.
- Commerce & Experience, a digital solutions agency business dedicated to e-commerce, boasting more than 555 experts deployed in 11 European countries and posting €95 million in turnover in 2018. In a market enjoying double-digit growth, the Group has already made it into the Top 15 digital experience agencies in Europe**, and is positioned as a partner to leading platforms on the market (Adobe/Magento, Salesforce and SAP Customer Experience). The ambition is to become a European leader in e-commerce solutions consulting, implementation and rollout to enhance customer experience with major brands.
Digital Services Centers are available in France (Bordeaux and Nantes) and abroad (Morocco, Spain, South Africa), allowing the Group’s two businesses to pool resources and enhance synergies. These Digital Services Centers currently bring together just over 700 experts, with the capacity to accommodate at least 1,000, on a constant structure basis, in order to support the businesses’ growth trajectory.
Strong and profitable growth ambitions for each business
The development of each business should put SQLI on the path to long-term profitable growth.For the Digital & Technology business, SQLI’s objective is to achieve average organic growth in turnover of between 3% and 5% per year, thereby outperforming the trend on the French digital services companies market. The ambition is to generate, by 2022, recurring operating profit of more than 6% of turnover in this business, compared with 3% in 2018, excluding the contribution of new activities (e.g. Cloud).
Driven by the upsurge in e-commerce platforms in Europe, for the Commerce & Experience business, SQLI is targeting an annual average organic increase in turnover of between 8% and 10% until 2022. The focus on higher value-added activities and international deployment will allow the Group to target recurring operating margin of more than 10% in the long term for this business (8% in 2018), excluding the contribution of new external growth transactions.
More than €280 million in turnover and more than €22 million in recurring operating profit in 2022
SQLI’s overall target is to achieve more than €280 million in consolidated turnover by 2022 (compared with €232 million in 2018), thanks to the organic growth momentum in both of its businesses. In order to support this growth momentum of more than 20% in 4 years, SQLI has launched an ambitious recruitment plan, with the creation of more than 700 new jobs over the period, half of which at the Group’s Digital Services Centers.
SQLI’s recurring operating profit is forecast to top €22 million by 2022 versus €12 million in 2018, representing an expected increase of more than 80% in four years. The implementation of this strategic plan is expected to cost between €2 million and €3 million, primarily in 2019 and 2020, without this affecting the outlook for earnings growth this year.
Besides this organic growth momentum, SQLI intends to play a unifying role in the concentration of digital agencies in Europe and will continue to study external growth opportunities in order to achieve its ambition to become a major European player. The expected increase in results throughout the plan should lead to a rapid reduction in debt (€12.8 million in net debt at the end of 2018), in order to build up new reserves to support this targeted acquisition policy.
Organic growth of +6.3% in first-half 2019
2019 is perfectly in line with this trajectory of growth and improved results.At end-June 2019, estimated turnover stood at €123.2 million, up +6.3% in purely organic terms on the first half of 2018. At constant exchange rates, growth came in at +5.9%.
This solid sales momentum was driven by an increase in the headcount, which rose to 2,214 employees at end-June 2019, in an environment where turnover stabilized at 25%.The first-half results, which will be published on September 24, 2019, will confirm the favorable impact of this growth on our performance.
SQLI will publish its results for the first half of 2019 on September 24, 2019 after the close of trading.
* Source: Syntec Numérique trade union
** Source: Forrester // Companies posting between €125 million and €400 million in turnover