Sopra Steria reaffirms its annual objectives

(AOF) – Sopra Steria’s revenue for the 1st quarter of 2022 amounted to 1.27 billion euros, up 8.8%. At constant scope and exchange rates, sales increased by 6.5%.

Cyril Malargé, CEO of Sopra Steria Group, said: “We had a good first quarter, slightly above our initial expectations. The market was dynamic, still driven by the digital transformation of our customers. Growth was particularly strong in the defense and aeronautics vertical markets which represent approximately 20% of our business”.

3,585 new employees joined the group during the first quarter of 2022, around a third of the annual objective. At the end of March 2022, the net headcount increased by 4.3% compared to the 1st quarter of 2021, including +12.2% in India. It stood at 48,114 people, compared to 47,437 people at December 31, 2021 and 45,959 people at March 31, 2021.

Sopra Steria confirmed its 2022 objectives of organic revenue growth of between 5% and 6%, an operating margin on business activity of between 8.5% and 9.0% and a net free cash flow of around 250 million euros.

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Key points

– One of the 5 European leaders in digital transformation born from the merger in 2014 of Sopra and Steria;

– Company organized into 4 businesses generating €4.3 billion in revenue: systems consulting and integration (60%), solution publishing (15%), business process services (15%) and infrastructure and cloud (10%);

– European presence, in France (48% of revenues), in the United Kingdom (18%), the other Europe division with strong positions in Germany (32%) and the rest of the world (2%);

– Business model: to be, in Europe, the strategic partner of major administrations, financial and industrial operators and strategic companies by supporting them in their digital transformation and preserving their digital independence;

– Shareholders’ agreement between the founding families Odin and Pasquier and the managers, ie 22.3% of the capital and 33.6% of the voting rights, ahead of the employees (6.3% and 8.5%); Pierre Pasquier being chairman of the 14-member board of directors and Vincent Paris managing director;

– Healthy balance sheet with debt reduced to €423m compared to €1.6bn in capital at the end of June 2021.

Challenges

– Strategy based on a strong positioning in Europe, on the development of solutions (target of 20% of revenues in the publishing and integration of solutions), on consulting (target of 15% of revenues), the integration of medium-term and aiming for medium-term annual revenue growth of between 4% and 6%, an operating margin of 10% and free cash flow of between 5% and 7% of revenue;

– Innovation strategy: monitoring of technologies and their uses ensured by the Digital Champions, innovation missions given to project teams, hackathons open to customers and partners, spaces for demonstration, ideation, codesign / targeted partnerships (startups, universities, research laboratories, major publishers such as Axway and GAFAM / entry into the capital of young shoots / establishment of 2 development platforms, one for the cloud, the other for the blockchain, artificial intelligence and machine learning;

– Environmental strategy, validated by Science Based Targets and rated A: objective of zero net GHG emissions by 2028 / 5 major projects: strengthening of the Environmental Management System (EMS), optimization of resource consumption, increase in renewable energies in the electricity consumption and waste management / offer of digital systems for achieving sustainable objectives;

– One of the best-positioned players in the promising segments of “cloud computing” (cloud computing) and big data (management of data volumes), as well as in co-transformation projects such as Ecomouv or Transactif and in the cybersecurity;

– Integration of acquisitions: EEGS Design and EVA Group after Sodifrance (making the group the French leader in digital services for insurance and social protection), Cxpartners, SAB and Fidor.

Challenges

– Increase in the recurring share of revenue through partnerships and close relationships with strategic customers such as utilities;

– 2021 objectives, raised, of a minimum increase of 6% in turnover and an operating margin between 7.7 and 8% and free self-financing of €150 to €200 million.

Software publishers: several acquisitions in healthcare

According to market research firm IDC, the healthcare industry is expected to spend more than $15 billion on software and cloud servers by 2023. After Microsoft took over the company Nuance, which mixes voice recognition and telemedicine, for 16 billion dollars, it is Oracle’s turn to carry out the largest acquisition in its history by taking over Cerner, number two in the distribution of medical software in the United States. The amount of this operation, carried out in cash, amounts to 28.3 billion dollars. Cerner, which recorded $5.5 billion in revenue in 2021, could allow Oracle to strengthen its positions in the cloud as the American group struggles to grow as much as its main rivals like Google, Microsoft or Amazon. Web Services.

The talent war has been further reinforced by the announcement of Facebook, which intends to make 10,000 hires within five years in Europe. The lack of human resources is not limited to France or Europe: it is global. Thus 1.2 million computer engineers are expected to be missing in 2026 in the United States. In France, according to Numeum, federation of the digital sector, there is a shortage of around 10,000 computer engineers out of a total of 600,000 people employed by software publishers and digital service companies (SSII). If the phenomenon is not new, it is intensifying. It is reinforced both by the hiring of certain companies, looking for developers to internalize their essential digital projects, and by the strong ambitions of certain start-ups.

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Sopra Steria reaffirms its annual objectives


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