Esker SA (ALESK) Earnings Call Transcript & Summary

Hello, and welcome to the Esker Annual Results 2019 Presentation. My name is Val, and I will be your coordinator for today's event. Please note this conference is being recorded. [Operator Instructions] I will now hand you over to your host, Jean-Michel Bérard, CEO, to begin today's conference. Thank you.

Good evening, everybody. My name is Jean-Michel Bérard, I am the Founder and CEO of the company. I am going to share this presentation with Emmanuel Olivier, who is our COO. And I am going to introduce the presentation by a quick overview of the company. Then I will let Emmanuel to comment the details of the results for the year 2019. Then I will be back to give you a few words regarding the strategy. Let's start with the corporate overview. Esker, basically, our positioning is to bring the digital transformation to the finance and administration in the company. And basically, we divide this world in 2 parts; one side is toward the customers, so it's everything regarding order taking and invoicing; and the other half is looking at the vendors, and it's everything related to purchasing and managing accounts payable. So in details, you can see that we split those 2 worlds into many different parts. This is what we call cycles. So we support one cycle called order-to-cash, so the O2C, this is the one toward the customers; and the P2P, procure-to-pay, which is the one regarding vendors or suppliers. We process incoming invoice, outgoing -- incoming orders, outgoing invoices and purchase requests and so on. I am not going to enter into details because this is not the main purpose of this presentation. But if you want to get the sense of the benefits we bring to companies, first and foremost, we increase significantly the productivity of the user, the people in finance. So to make it simple, we double their productivity. Somebody able to process, let's say, 3 to 4 invoices a month will be able to process 700 to 800 invoices a month. But the customer, they buy us for this reason. And -- but what really -- what they really enjoy afterward is the visibility they get on processes. They don't have any invoice lost or purchase order lost or document lost. We eliminate the paper throughout all the processes, and we give them a clear view on what's going on and where all the documents are processed. And regarding the soft benefits, we help the companies to improve the customer satisfaction. We strengthen the relationship with the supplier. And last but not least, we increased significantly the employee satisfaction by eliminating all the tedious tasks, like data entry, filing, photocopying and all these tasks from the past. We are operating on 2 markets, as I said. So these are few information regarding the market size. But basically, you can consider that the market is about EUR 3 billion in both cases as of 2018 and is supposed to grow at a pace of 10% to 11% during the coming 5 years until 2023. Those numbers are coming from the Gartner Group or for -- from different technical analysts. In few words, the key numbers for Esker is like we achieved EUR 104 million last year. It's the first time we passed the bar of EUR 100 million. Do we -- the company exists since the year 1985, so we are 35 years old. Our organic growth is -- was 18% last year. And Emmanuel is going to talk a lot about that. We are very international. We have 13 subsidiaries throughout the world. And we are #14 in France in the Great Place to Work ranking. The company is also profitable, was 11% last year, will be 10% this year. I talk about our global presence. We are basically present in all the developed countries, also from Australia to U.S.A. going through Southeast Asia and Europe. And we have -- our biggest sub is based in the U.S. in Madison, Wisconsin, precisely. And it represents almost 40% of the revenue. France represent 29% of the revenue. It's our second subsidiaries. The rest of Europe represents 31% and Asia Pac represent 5% of the whole revenue. We sell our solution to -- who are large companies, I would say. So every company that are over EUR 500 million. I put on this slide a few names, like well-known company like Omya, BMW, Bosch. Obviously, we operate mostly in companies that are sending or receiving a lot of business document, like invoices or purchase order. And we have a strong presence in health care industry, pharmaceutical and medical device, a strong presence in the luxury industry as well as in the food industry. But it's not limited to that. Basically, every company that is having a lot of documents going in and out the company are interested by our solution. I am going to let Emmanuel to speak and to comment the 2019 annual results.

Thank you, Jean-Michel. Good evening, everybody. My name is Emmanuel Olivier. I'm in charge of operations at Esker. I also oversee finance. And that's why I'm going to present the 2019 annual results -- financial annual results to you and give you an overview of what they've been. So on the first slide, just to summarize the 2019 performance, one thing that's very noticeable is the acceleration of growth, particularly on the cloud -- for the cloud solutions. We saw 21% growth in constant currency rate -- or rates, growth in cloud solutions, that's 24% using current rates, and this is really driving the growth for the whole company. And that results into an 18% growth in constant currency for the whole of Esker and 20% in current rates. So definitely an acceleration of revenue growth of -- for Esker in 2019. Beyond revenue, one thing that we keep an eye on, and that's really important for the future, actually and for future revenue growth, is what we call bookings. This is the value of new contracts that have been signed during 2019. So those contracts traditionally have almost no effect on the revenue of the year that they've been signed in, but do influence significantly future revenue for the company. So it's important to keep an eye on both the revenue and the situation with bookings. So the value of new contracts signed during 2019 by Esker actually increased by 47% compared to 2018. So it's significantly more than the revenue growth, as you can see. And one thing -- I'm going to come back to that, obviously. But one thing that's very noticeable as well is the very, very good performance of the Americas in 2019 in terms of bookings growth -- the increase, the growth -- they increased the value signed by 75%. Beyond revenue and bookings, we also had a lot of investment done in 2019 basically to prepare for future growth for the company. We added 98 people to the company during the year -- financial year 2019, which is 18% growth compared to the previous year, mainly in the areas of consulting, where the growth was 23%, customer experience 28% and sales and marketing 20%. Customer experience is one thing, I'll probably come back to that as well several times during the presentation. This is a new initiative for Esker. We actually formed this group for the most part in 2019, that's why it's a quite sizable investment for us during this year. Just to give you an idea, it's an additional expense of EUR 1 million for the financial year 2019. This group is really in charge of making sure that our current customers are satisfied and really get the most of their investment with Esker. Over the years, we now have a lot of experience with running cloud solutions successfully, both being able to grow with and grow their business profitably. One thing which is really important in our opinion in this business is to make sure that your customers are happy and keep being happy with the solution that they're running. To do that, we actually decided that we were -- the best thing to do was to dedicate a group of people really looking after the customer base, proactively calling them and get their feedback on the product and trigger some training, if necessary, or other projects if they feel the need. This is the key initiative for us to -- this was a key initiative for 2019, and it will continue to be in the years to come. We consider this a major success factor actually for Esker already, and we'll keep doing that in the future. With that level of investment, we still have an increase in operating income or EBIT by 7%. Generally speaking, personnel cost increases in line with revenue growth, so about 20% using current rates. As you can see, it's a little bit more than the headcount, which only grows by 18%, that means there's a little bit of a -- there has been a little bit of inflation in some countries with regards to personnel costs, but generally in line with revenue. We do have a few unusual items to note for this year for about a little bit less than EUR 1 million. Those tend to be fairly technical. For example, the average weight of cost of capital that we used to assess the liability for retirement in France has decreased because, obviously, interest rates are decreasing. Well, the fact that we used the lower rate actually had a big impact on the reserve itself, which had to be increased by approximately EUR 250,000 just due to the decrease of rate, and that actually creates an expense for us. We also had a few difficulties with customers in France and Italy, which we had to reserve for in our P&L to be conservative. And that accounts this year, which is definitely more than what we had before, that accounts for EUR 400,000 additional expense to increase the bad debt reserve for those 2 countries. Also, the situation with R&D during 2019 is that R&D has done a lot of functional developments, adding new functionalities to the solution and not doing that much true research. So we call them R&D, but they really do research and development. This time, they've done a lot of "simple developments" and not much research. And that actually caused the R&D tax credit, which we get from the French government, as well as the amount of R&D, which we capitalize on the balance sheet, to either decrease, which is the case of the tax credit or increase less than revenue and cost, which is the case for capitalized R&D. So those 2 things do have an effect as well on profitability for this year. And the combined effect of those 2 things is about EUR 300,000 for 2019 compared to 2018. Beyond that, as you probably know, we sell a lot to the U.S. market. We sell a lot of our solutions to the U.S. market. That means a lot of our revenue is expressed in U.S. dollars. And therefore, we're exposed to the rates -- to the translation rate between the U.S. dollar and the euro. And the combined effect of all currencies -- all currency fluctuations this year has been EUR 600,000 or 5% of operating income for the year. Beyond that, current and net income also increased by 10%, so a little bit more than operating income. We had a positive financial result this year, which wasn't the case last year. We got a little bit more conservative on the tax rate. The average tax rate is 27% in 2019 versus 26% in 2018. We got a bit more conservative, I would say, on -- particularly on deferred taxes. We also had an increase in the share of profit that we get from the joint venture that we have with Quadient, previously known as Neopost, which is definitely our biggest and largest partner. The profit increase reflects the growth of the business and is posted at the bottom of our P&L. So in total, net income increase is 10% for the year. On the next slide, you see the detail of our revenue growth. And there's no surprise. You see the SaaS-based document automation solutions growing by, like I said, 24% in current currencies and 21% in constant currencies. The license-based document automation solutions keep decreasing, 15% and 18% in constant currencies. Essentially, we're not selling those solutions anymore. The license revenue for those solutions has declined by more than 50% during 2019. I mean, we're talking small numbers, of course, but it's still a hit to our growth. The maintenance associated with those solutions also is decreasing at definitely lower rate, but is still decreasing as well. Clearly, we're not encouraging -- we're clearly discouraging customers to go with an on-premise solution with us, and we start to definitely proactively go after those customers running our software on-premise to move to our cloud solutions, which are far better from a functional standpoint and also, clearly, is the focus of the company as opposed to the on-premise solutions. Then we have the legacy products. Actually, those have been growing in 2019. We're talking emulation software and host access software, a fax software, all the old products that the company has been selling in the past, sometimes like 3 years ago, well, those still exist, they represent a very small portion of the revenue. And this year, they've been behaving quite good, as you see, with 18% growth during 2019, talking small numbers, though. The -- what's really good with the business model of Esker is its recurring nature. I think we're going to see that when we talk about the coronavirus, and you're going to see that in our 2019-2020 performance, hopefully, is the recurring nature of our business. Our customers use our solution every day for the daily operations. And despite the fact that we might have an economic slowdown throughout the world, they will still receive invoices from the suppliers and still have to invoice their customers and receive orders from them, et cetera. And this is going to mean that our revenue will not -- shouldn't be affected too much, even if there's a slowdown in the economy. And you can see that on the chart, for 2019, 73% of our revenue consists of true SaaS revenue, which is essentially fees that our customers are paying us to use our solutions. The rest is consulting services 18%, maintenance 7% and license only 2%. I talked about license being significantly down and now represents something almost immaterial. So that is the important thing to keep in mind when you look at Esker's performance particularly in 2020. If we look at our growth by product type and sort of break down the SaaS revenue between true SaaS, which is the fees, again, paid by the customers to use the platform and the consulting services that relate to bringing those customers onboard and training them, you do see that the SaaS revenue growth was higher than the consulting services growth, 23% on the SaaS side and only, so to speak, 11% growth in consulting services. Well, that reflects a couple of things. One of the big initiatives, and we'll talk about that a little bit later, that Esker has is to start building an ecosystem around this. Essentially, Esker has come to this point or the point that we are today essentially working alone, inventing the software, writing it, marketing it, selling it, implementing it and supporting it all by ourselves mostly. We realize the limitations associated with this model. This is a successful model. I mean, it's taken us to the point that we are today, but we want to go beyond that and we want to accelerate our growth. The only way that we can do that is to start working with a set of partners that would help us market, sell and implement our solutions. And we've recruited a few of those, most notably KPMG in Holland or in the Netherlands, Fuji Xerox in Asia, Cegid now in France. Well, while all of those partners actually require attention, require resources to be signed, first to be convinced, but also to be taken to a point where they are competent to sell and implement our solutions. So when we do that, as we train those partners and as we get them onboard, we actually slow down the performance of our consulting teams either because they work alongside with the partners, and essentially it's 2 people working on the same thing, or because we have to dedicate resources, consulting resources to train those partners. And that explains why you see on the chart that the growth in the consulting services revenue is actually much lower than the SaaS revenue. Of course, this is an investment. Of course, this will pay off in future years. We have big hopes regarding this partner network. But in the short run, it's actually a little bit less revenue in consulting services. And actually more expenses on consulting services as well because we do have to have the people that will take care of the partners. On the next slide, I'm going to be talking about the revenue growth by region. So you can see on the pie chart that Europe is 57% of the revenue, the U.S. is 38% and Asia Pacific is 5%. From a growth perspective, one thing which is really interesting is the fact that the growth for the Americas in 2019 actually surpassed for the first time in a while the growth that we've seen in Europe. The Americas have grown 18% and Europe 17%, it's quite close, but the U.S. is actually growing faster. And I do expect this to continue in future years and to accelerate in future years due to the fact that they've signed a very, very high number, very good contracts in 2019. So we'll see this accelerate in 2020, in my opinion. The Asia Pacific region, obviously, is the smallest region, is growing a little bit faster than everyone else. It doesn't yet reflect the partnership with Fuji Xerox, which right now is really active in a small number of countries, particularly in New Zealand, where it started, a little bit in Japan as well, when we see the first deals, but not much revenue yet. We do expect to see the results from this partnership in the region in 2020, but probably more 2021 and beyond, particularly with the situation that we have right now in 2020, sorry. Bookings now. So I'll explain what this is. This is the value of the contracts that have been signed in 2019, but are not reflected or have not translated yet into revenue for Esker. A typical contract for Esker is a 3-year contract, yes, 3 to 5 years, really. And it includes both a fixed part, which we call the subscription fee, which the customer has to pay on a monthly basis or -- usually it's a monthly basis, could be an annual basis as well, but this is a fee that the customer has to pay us just to have the right to be on the platform. And this is fixed. It doesn't depend on the actual volume of documents that the customer is using on the platform. And there's a variable part, which is usually a per document fee, which we invoice every month depending on the actual usage of the customer. When I assess the booking numbers, I only look at the fixed part. Because when I sign a contract for 3 years, the only thing that I'm sure of is how much the customer is committed for, which means essentially how much subscription fee the customer is going to pay over the 3-year period. So I'm only looking at the value, which is the fixed guaranteed value to Esker, when I'm talking about bookings. So using this definition, you can see that we've signed 47% more value in 2019 compared to 2018. And most of the growth is coming from the Americas. The Americas have grown their booking numbers by 75% compared to Asia Pacific 60%, almost 59%, which is also quite good, even though the number obviously smaller. Europe outside France grew by 47%, France only by 13%. To be fair, France had a terrific 2018. So the fact that they've been able to still grow the booking numbers on 2018, which was an exceptional year, is a really good performance. But the dynamic growth that we see coming from the U.S. on the bookings side will translate in 2020 and after that in actual revenues. So that's why I was saying earlier that I expect the revenue growth in the U.S. to continue to accelerate over the next couple of years. Now talking about profitability, we do try to combine growth and profitability at Esker, which in the cloud business is not necessarily easy because most of the investment is done upfront, and the investment for a company like Esker is basically people which we have to pay. And we're not buying factories or something like that, so we don't capitalize any costs. So every time we need to invest, it actually is a hit to our bottom line, but the rewards only come sometimes 2 or 3 years later. Our sales cycles, so the time that it takes from the point that you're first in contact with the prospect to the time that you sign a contract with that prospect is something like 18 months. And then you enter an implementation cycle, which can take anywhere from 1 to sometimes 6 months. So essentially, when you try to increase your sales force you know that you're not going to get your rewards before 2 years, if not more after the cycle. So we constantly monitor our investments and our predicted revenue to make sure that we can show both a significant growth, which we have in the past, and a profit, which we shoot for 15% profitability, the reality we usually are between 13% and 14% profitability. You can see on the chart how growth actually is expensive. We had a slight drop in profitability in 2019. We are at 11.9%, 12% of EBIT versus revenue. We were at 13.4% last year, but we also see how this slight decline in profitability has been able to generate a higher growth for the company. And this is just starting because most of the growth is yet to come. So we constantly monitor those 2 parameters, so to speak, the growth on the one side, the growth on the short term, the growth midterm and the investment that we make in operating expense, which translates into profitability short term and profitability longer term. So this is the picture as of today that we wanted to share with you. We do not expect, at this point -- of course, we don't know what's going to happen with the virus, but we do not expect profitability to drop further in 2020. Actually, to be honest, since we delayed investment from a -- just to be on the conservative side for 2020, assuming the business, the revenue is going to be what we think it's going to be, which is basically growing almost at the same rate as 2019, we might actually see an increase in profitability in 2020, but that would just mean that we would have slowed down investment for 2020 and probably invest again in 2021. In terms of investments, speaking of investment, this essentially is where we added people because, again, I said that earlier, investing for Esker is really hiring people. And sometimes, it's actually very difficult to hire people, which you can see very quickly on the chart by looking at the R&D number. It's not that we didn't want to add R&D sources. It continues to be a challenge to attract talented developers. I mean, there's just not many of them on the market. And we are very demanding in terms of quality. So you can see that R&D did increase its headcount but only by 9% compared to the other departments. That's actually rather low. The -- most of the new hires have been, again, in consulting services, plus 23% in headcount. I explained that this is both driven by the growth in new contracts to implement and the fact that we're bringing onboard partners at the same time. Sales and marketing headcount has been increased by 20% during 2019. This is going to generate booking growth and then revenue growth for the next few years. Again, we'll probably slow down for 2020 on this one and try to get those new ones that we have already hired productive during the year of 2020. Customer experience. I spoke about that. Big initiative for Esker. This is the department that looks after the existing customer base. And you can see the combined increase of both tech support, which is really usually technical people supporting the customer technically, and customer experience, people supporting the customer from a usage standpoint. All of those 2 departments combined increased their headcount by 28%, and it does make a significant investment for Esker. So overall, sales and marketing is about 1/4 of the employees, consulting is also 1/4 of the employees, R&D is 19%. And then customer experience and tech support are 12% of employees. The company employs over 680 people at the end of 2019. Next slide is really showing -- is giving you an idea. I spoke about how our business depends on the exchange rate between the U.S. dollar and the euro. This is just a simulation of what our 2019 results would have been at different rates of conversion of USD to the euro. So the first line actually shows the average rate for the euro has no impact. Essentially, that reflects what we have published. If it had been EUR 1 to $1, then we would have had EUR 4.6 million in additional revenue or 4.5% more revenue and EUR 1.2 million additional operating income or 10% more operating income. It's interesting to see that we're almost getting to that point now with the conversion, but it's been changing quite rapidly. So who knows what it's going to be for the year. But just to give you an idea, this is what it would have been if it had been 1:1. At $1.10, you can see a smaller impact. At $1.179, this is the rate that we had last year, and you can see that the U.S. dollar rate had caused an improvement of our sales by nearly EUR 2 million for 2019 and EUR 0.5 million on the bottom line. So this is just a simulation to give you an idea of our results at different conversion rates for the dollar. The next slide shows our P&L. There's 2 ways that we present our P&L usually; one is by function, so it basically tells you by department what the costs have been; the other one is by nature of costs. And both are kind of interesting to look at. So if you look at the P&L by function, first, so the first thing that I'm pointing out or reminding you of is that the number of employees increased by 18%. So this is really driving a lot of the expense increase just by headcount, but we do have some categories of costs which increased more than the headcount and more than the revenue itself, which increased by just under 20%. So the first one is selling and consulting expenses, sorry, which increased significantly last year by 26%. The reason behind this higher increase of selling and consulting services is the headcount itself increased more than the average, 23% in consulting and 19% in sales. Also, the success that we've been having in the U.S. in terms of new contracts signature. We do compensate all the reps for the value -- for the full value of the contract that they sign immediately. And unlike some other cloud companies, we expense it immediately, we do not defer costs. So essentially, the consequence of that is the more successful we are on the commercial side, the lower our short-term profitability because we do not defer that cost. So that had an impact this year, particularly in the U.S., and this is classified as selling expenses. We also classify the customer experience department in this category, and this is a EUR 1 million investment for Esker in 2019. Also, I talked about some bad debt, which we had in France and in Italy, for EUR 400,000. That is also classified under selling and consulting expenses. So all of these things are making this line increase in costs more than the revenue. R&D expenses appear in line with revenue growth on this chart. However, there's a few things that are hidden behind it. You've seen that the headcount for R&D only increased by 9%. And why is that increasing by 18% on this P&L? Because we had a few things, which I talked about a little bit earlier. First, the tax credits for R&D in France actually decreased this year due to the fact that we've done more functional work than actual research, so it decreased a little bit. So essentially, it offsets less costs for us in 2019 than it had in 2018. Also, the capitalization of R&D did increase, but not as fast as revenue, again, for the same reason for the type -- due to the type of work that has been done. If you combine those, let's say, a negative impact from a cost perspective on R&D expenses, that explains why, with the 9% increase in headcount, you get an 18% increase in cost and therefore the hit on the bottom line. So income from operations as a result of all that because all the other expenses are in line, all better in terms of change than revenue, you see income from operations growing by 7%. At the operating income level, financial income is better, so that actually means that we have a 10% increase in operating income, taking into account tax rate and share in the JV with Neopost or Quadient that they're called now, you actually see an income growing by 10.2% at EUR 9.7 million. If you look at the P&L on the next slide, which is classified this time by nature of expenses, you can see how the level of capitalization of R&D increased. This is the first line below revenue. It increased from EUR 5.7 million to EUR 6.3 million, so it increased by 9% on this line, which is lower than revenue, clearly, and is explained by the chart which you have on the right-hand side of the slide. Essentially, we capitalize in 2019 just a little bit below 60% of our R&D costs compared to 61.5% of the R&D cost in 2019. So that little difference actually is causing R&D capitalized to be only 6% of revenue in 2019 versus 6.6% in 2018. And that is part of the hit that we have due to that reason on the P&L. Personnel expenses as a whole increased by 20%, which is exactly in line with revenue. Again, I said that the headcount increased by 18%, so there's a little bit of inflation on the one side. And also, it reflects the fact that we do pay in advance the variable compensation to the reps when they sign contracts. You also can see clearly on this chart on the line reserves and provisions the fact that an increase by EUR 600,000 year-over-year from EUR 300,000 to EUR 900,000. And that reflects what I was talking about earlier, which is the increase in reserves for retirement due to the increase in headcount, but also due to the decrease of the cost of capital, which we used to compute the current value of the liability, and also reflects the increase in reserve for bad debt, which we had to do for a couple of accounts in France and in Italy. The rest is similar. The rest of the chart is similar to the previous version of the P&L. On the balance sheet side, there is not much to point out, except on the cash side. If you look at the balance sheet on the assets side, you can see that cash is EUR 21 million -- EUR 21.4 million. Well, we also have in finance -- classified as financial assets, essentially cash, which we invested and intend to keep for a long period of time invested, but that we can get essentially any day if we really wanted it to. So if you try to assess whether it's the total amount of cash that Esker had, you really have to add the 2 together. So it's EUR 21.4 million, sorry, and EUR 6.2 million that you have to consider for the total amount of cash that Esker has. And we added more, as you can see to this line, because we went from EUR 3.7 million in financial assets to EUR 6.2 million in financial assets. On the liability side, we do have financial debt, which we keep paying back. So it decreased from EUR 9.3 million to EUR 6.5 million. So we use our cash to pay back our debt, mostly the bank loans because we do have some capital lease agreements, which stay current, and we finance some of our investments using capital leases. The other liabilities, which represent just under EUR 10 million, mainly consisted of deferred maintenance revenue because we do still have customers using us on-premise that we charge maintenance to and customer deposits. Looking at the cash flow statement now. So the cash level appears to be decreasing by EUR 1.4 million if you look at the chart. But as said earlier, it does include a EUR 1.8 million additional -- addition to the long-term investment. So the reality in terms of available cash beyond the accounting side of it is that the cash actually is increasing by EUR 400,000 and total cash available to the company is EUR 27.6 million. If you drill down to the detail of the statement, if you look at cash flow from operations, it's actually growing by 11% at EUR 17.3 million, just mostly driven by just the business, the recurring business that we have. Nothing much to say. It's pretty consistent year-over-year in terms of growth. The investment on the investing operations side, we do have almost EUR 11 million worth of acquisitions of tangible and intangible assets, where most of that is actually capitalized R&D, like it was also in 2018, but we also had some other investments that come with growth essentially. We have to host all of those people that we're hiring. So we have to acquire new office space and just improve the office space and just equip those people with the tools that they need to work. Well, that drive some acquisitions of tangible and intangible assets, as you can imagine. We also bought our office in Italy for EUR 400,000 to avoid moving essentially. So that also is included in that number. On the financing side, you can see that we're paying dividend to our shareholders. It went up from EUR 1.8 million to EUR 2.2 million between 2018 and 2019. We're also repaying back our debt, nearly EUR 4 million, we repaid back to banks mainly, which explains why we used a lot of cash on the financing side. So all in all, essentially cash flow from operations covers capital expenditures that are needed to support our growth and also allows us to pay a dividend to our shareholders and to pay back our debt. So this is a short -- hopefully, short presentation of our financial performance for 2019. I'm going to turn it over to Jean-Michel to talk about strategy. And of course, I'm going to be taking questions at the end. Thank you.

Okay. A few words regarding the strategy before we can take questions. Regarding the road map, we are coming from very technical product like Fax Servers, and then we recognize that people who are using that to process documents and to extract data and to do a certain number of things, and then we realized that this document were part of the process -- a much larger process, such as accounts payable, accounts receivable, order processing. And then we discovered also later on during our adventure is like all this process are working in conjunction with people. And most recently, we discovered that all these process were organized in 2 cycles. That's where we are in terms of development. So we are developing those 2 cycles. The first one is order-to-cash, the second one is procure-to-pay. And we keep adding new module in order to have a full suite that is sold around an ERP to simplify and to dematerialize all the documents that are entering into the ERP or coming out from the ERP. And the next steps, we don't know yet what we are going to do, but we are thinking about processing employee documents to sell our technology and the form of the platform, and nothing has been decided yet. For the moment, we have 2 main axis for our strategy. The first one is on the technology side. We are investing -- we invested a lot into mobile application, machine learning, multi-tenant SaaS. Now our investment is mostly on robotic process automation and even more on artificial intelligence. So we are using neural networks to do a certain number of things that are very useful for the customers. One of the last developments we have made is what we call e-mail triage. It's a way to use face recognition algorithm and to apply them to documents in order to determine if this document is a purchase order, if it's an invoice, if it's a remainder, if it's a bank transfer or whatever and then to route the document on the proper direction and the processing system. So it's going to save a lot of time. Until now, all these e-mail triage things were done by -- manually done by users. So just an example. So we are investing a lot. We have a team of 10 people, 2 Ph.Ds. working on that and -- in connection with university. I do think we are quite advanced when it comes to artificial intelligence. Then the second leg of our strategy is to go with partners, as Emmanuel told you. Until now or until 1 year ago, we were doing everything, developing the product, selling the product, marketing the products, installing the product, supporting the product and so on. It's time now to build an ecosystem around us, and we are talking to big large firm, consulting firms, value-added resellers and OEM. I'm not going to talk a lot about that because Emmanuel covered this topic at large and we need to keep some time for the questions. Regarding the 2020 outlook, obviously, we, like any other company, we took all the necessary step to ensure the safety of our employees, but without disrupting the business so much. So I would say that among the 700 people working at Esker, we have like 95% of them that are working from home. Our infrastructure is solid, and it's working well now. We had a few glitch during the first day, but they are all gone. And everybody is working online from their home. We do think that the recurring nature of the Esker revenue and the cloud business model will minimize the short-term impact of the revenue. We think that we may be -- we may see a big slowdown in terms of signature during Q2 that will translate into a softer growth of the consulting during Q3. All our consultants so far are very busy. We are going to do -- to lower down our investment in -- during this period until we see things clearly. And as Emmanuel told you, we may increase the profit paradoxically. So due to the nature of our revenue, we do think that we will take a little bit of impact on the SaaS revenue, a little one also on the consulting, and then we are still confident at this moment, until the situation change dramatically, we are confident that we can have 2-digit growth for the year 2020. And we do think that we can increase the profit at the same time. That's it. And thank you for your attention, and we are ready to take questions.

[Operator Instructions] We currently have no questions coming through. [Operator Instructions] And we do have a question that is registered. It comes from the line of Nicolas Royot from BNP Paribas.

Just 2 questions for me. First, speaking of partnership, is a particular geographic area a priority? And the second one is about implementation of the software. Does it require a physical presence at the customer site? Or everything can be configured remotely? And maybe same question for consulting.

Okay. I can take the 2 questions. Regarding partnership, we don't have any specific geographies, but honestly, the focus and investment is mostly done in France and in U.S.A. as of today, but we are asking all of our country managers to talk to big consulting firm in their local region in order to participate to this big movement. But we really dedicated investment for France and U.S.A. Regarding the implementation, generally speaking, the customer, they don't really need us to be on site. And very recently, they didn't -- they even asked us to not come. That's okay when it comes to all the technical parts of the implementations, like customization of the software or integration with ERP, we can easily work by phone. And -- but it is a concern when it comes to user acceptance testing or training, the rollout in the different subsidiaries and factories of the company. I think I answered your 2 questions, Nicolas.

Okay. Maybe for consulting is the same thing or...

Consulting needs -- requires some interaction. Of course, it's always better to meet people face to face, but there are plenty of things that we can do remotely. It makes the life of our consultant quite difficult some times, but we are able to launch and to roll out the solution at the customer premise. Just last week, we had, like, for example, 2 customers live without any physical presence.

Our next question comes from the line of Nicolas Thorez from ODDO.

Jean-Michel and Emmanuel, it's Nicolas from ODDO. Hope you are well and safe. So coming back to the presentation, Emmanuel, could you repeat the amount of bonuses you paid this year to the sales team? I didn't get it. Sorry.

I didn't give the exact number that I paid to the sales reps.

And is it possible to get it? Or not?

I am sorry.

Is it possible to have it, the token amount?

It's possible to -- yes, I can probably get that to you in a minute. That's the advantage of being live on my computer. So the variable compensation for all the sales reps increased by 23% year-over-year. Again, slightly more than the revenue would -- grew by 20%. And the total number is EUR 11.4 million for the year -- I'm sorry, is EUR 7.2 million, sorry, EUR 7.2 million, increasing by 23%.

Okay. And my second question was on your monthly revenue coming from the SaaS traffic, so I had in mind that around 50% is variable. So is it fair today to say that 50% of your traffic revenue is at risk for Q2? What it is today...

No. It's not because that would mean our customers completely stop all operations altogether. And then, of course, 50% is at risk, but that -- I mean I think we would collectively have bigger problems to deal with if that was to be the case. Honestly, I mean, I checked again this morning, to this date, I mean, as of this morning, we see absolutely no decrease in actual traffic in our platforms. Actually, because of our focus on a couple of verticals like pharmaceuticals, med devices and food industry, we actually see an increase in traffic, for obvious reasons. So it really depends on what industry you focus on. Of course, if you're selling a lot to the airline industry or leisure industry in general, then probably you're at risk. That is not verticals that we focus on. I'm not saying we have no customer in this area, but clearly, that's minimal. So we don't really think that we can be significantly affected. Like Jean-Michel was saying, if we are affected at all, it will be by delayed consulting revenue because customers might not be able to work with us. And we can do a lot remotely, but we cannot work without the customer. So if the customer is not available to work with us, then it's going to delay projects. But then really, what's going to be affected is the consulting revenue, not the recurring revenue that we have from the installed base, which doesn't require any attention from our consultants.

And if it is okay, consulting revenue, could we have a catch-up in H2? Or...

Yes, we could, except you need to have the resources to cope with the catch-up. Yes, it's not like we can all of a sudden double the headcount and be able to deal with that. So there's going to be some of that, and we'll manage the resources so that we can implement as much as possible as quickly as possible because it's in essentially everybody's interest. But it's not going to be as easy as snapping your fingers to get the resources to do that.