Planisware SAS (PLNW) Earnings Call Transcript & Summary

Welcome, and thank you for joining the Planisware Third Quarter 2025 Revenue Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Loic Sautour, CEO of Planisware. Please go ahead, sir.

Good morning, and thank you for attending our call on Q3 2025 revenue of Planisware. This is Loic Sautour speaking. And as usual, I will share this presentation with Stephanie Pardo, our CFO. I would like to start with the key messages of this. Q3 2025 revenue amounted to close to EUR 50 million, up by 9% year-on-year in constant currency. It leads to a 10.3% year-to-date revenue growth in constant currency. While this is in line with our revenue objective for the year, it remains below the historical levels of growth delivered by Planisware as our clients and prospects are facing several macro headwinds. The first one, which I commented in previous publication has been a challenging and unclear economic and geopolitical environment, limiting visibility for our customers and our prospects. This lack of visibility has driven longer decision-making cycles and delays in the start of projects. The second macro headwind come from the fact that IT budgets have been under pressure due to aggressive price increase applied by many SaaS vendors. And the third one comes from erratic AI investment driven by some sort of formal mindset, which further strain IT budgets and mind space. All in all, it limited our ability over the last several quarters to secure new logos and in turn to upsell, particularly in evolutive support services. Yet, we are beginning to see signs of improvement on all of these topics. On the first one, the concerns around a potential slowdown and discussion around tariffs have been less and less of a reason for delaying strategic move. On the second one, our moderated price increase policy is seen as a testimony of our positioning as a trusted long-term partner for our clients, and it creates room for replacement opportunities. And finally, the seriousness of our AI strategy based on true and unique value creation is making a competitive difference. This improving background brought a strong level of contract signature for both new logos and existing clients in the past several weeks. Now this commercial success will have a limited effect on the year-end performance, but it makes us cautiously optimistic in our ability to reaccelerate commercial momentum and continue delivering value to our customers through our AI-powered SaaS platform. On this slide, I would like to comment on our recent commercial activity, which has been particularly dynamic for both new logos and existing clients. Actually, we signed twice more new logos in Q3 2025 than in Q3 2024. The level of signature of the last 3 months was even higher than the 6 prior months, so H1 2025 and higher than Q4 2024, while, as you know, Q4 is always the highest quarter in terms of signature for Planisware. The strong level of signatures in the past weeks makes us cautiously optimistic in our ability to reaccelerate commercial momentum and continue delivering value to our customers through our AI-powered SaaS platform. I'll dive deeper with 3 examples out of this list. Take for example, Regeneron Pharmaceuticals. It's an American biotechnology company, making close to $50 billion yearly revenue. This commercial win is a typical PD&I landing in a company needing to gain visibility and flexibility in the way they manage their portfolio of R&D projects and to align it with our strategic priorities. This signature was expected quarters ago. So it is a good example of Planisware finally signing new logos after a much longer sales cycle than what we used to have in the past. Take another example with Amgen. It's a typical cross-sell where the client is standardizing on Planisware to expand its usage into project control and engineering, and they continue to harvest value leveraging our product development and innovation pillar offering. And lastly, [ tac Atex ]. It's a significant win, demonstrating the effectiveness of our geographic expansion as it has been signed by our newly opened Brussels office. Speaking of offices, I'm happy to announce our continued expansion in Asia Pacific with the opening of an office and 2 new data centers in Australia. This dual initiative marks an important step in Planisware international development strategy and consolidates our presence in the Asia Pacific region, where we already have a strong foothold in Singapore, Japan and more recently South Korea. The Australian market, which is particularly dynamic in the industrial, health care, energy and utilities sectors represent a major opportunity for Planisware. The company already has numerous references in various sectors, including Coles, one of Australia leading retailer; Cochlear, the world leader in hearing implants; Breville, an iconic brand and high-end household appliances, which is present in more than 70 countries; [ offsec water ] or Sunwater, 2 major public players in water management and distribution in Queensland. Between 2020 and 2024, Planisware recorded an average annual growth of 33% in this region, driven by growing demand for integrated project management and digital transformation solution. Now the opening of this office will strengthen our tie with our existing customer, accelerate our local business development and support Australian companies in managing their strategic projects in the context of increased innovation and digitalization. At the same time, we are opening 2 new data centers with the aim of offering our Australian customers optimal performances and total data sovereignty in accordance with the most demanding security standards applicable to Australian operation. I will now turn to Stephanie to comment in more detail the financial performance of our Q3.

Thank you, Loic, and good morning to all. As usual, I will comment the building blocks of our growth. The total reported revenue reached EUR 49.6 million in Q3, up by EUR 2.7 million year-on-year and represented a reported growth of plus 5.7%. This reported growth encompasses a negative FX effect for EUR 1.5 million mostly related to the depreciation of the U.S. dollar versus the euro. After the H1 performance, it leads to a year-to-date revenue of EUR 145.4 million, up by EUR 11.8 million year-on-year, representing a reported growth of plus 8.8%. This reported growth encompasses a negative FX effect for EUR 1.9 million here again mostly related to the depreciation of the euro versus the U.S. dollar in Q2. In order to [ retract ] underlying performance of the company, the value for exchange rate fluctuations, I will not focus my comments on the revenue evolution in constant currencies, which means applying 2024 average exchange rate to 2025 revenue figures. Same constant currencies, Q3 total revenue growth reached EUR 51.2 million or plus 9% over the quarter. For the first 9 months of the year, the total revenue in constant currencies reached EUR 147.4 million, up by 10.3%. The recurring part of the revenue represented 91% of total year-to-date revenue and was up by 13.9%. As expected, the key driver of this performance remains our SaaS model, which represented 81% of the total year-to-date revenue and grew by EUR 15.8 million or plus 15.2%, fueled by new customer wins as well as continued expansion with our large installed base. Our SaaS model is made of SaaS and hosting revenue up by 17.6%, and it produces support up by 11.9% together. Still in the recurring part of the revenue profile is maintenance activity of the perpetual licenses, which is the legacy from the former business model of Planisware before its SaaS started transformation 2 years ago. This activity reported a slight growth of 3.2% since the start of the year related to the strong demand for licenses in 2024 from customers with specific on-premise needs, in particular in the defense industry. I now move to the nonrecurring part of the revenue, which represented only 9% of the total year-to-date revenue, driven by a decrease by 16.7%. Despite several extensions and upgrades since the start of the year and in particular, in Q3, to customers with specific on-premise needs, the 25.5% year-to-date decrease in perpetual licenses is as already explained to a particularly strong 2024 comparison base. Finally, implementation performance structurally under pressure due to the continuous focus of Planisware to deliver short-term implementation and faster delivery to customers also suffered since the start of 2025 from the lack of new logo signatures since H2 2024. The combination of the 2 resulted in an 11.1% year-to-date revenue decrease. I now give the mic back to Loic to complete today's presentation.

Thank you, Stephanie. Well, before we move on to your questions, let me close with a reminder of our objective for the year that we confirmed today. The revenue growth is expected at circa 10% in constant currencies, our adjusted EBITDA at circa 36% of revenue and our free cash flow conversion target of around 80% of adjusted EBITDA. We remain confident in the resilience of our model and the strength of our client relationship and in our ability to resume growth momentum as market condition stabilizes. Thank you very much for your attention. we're now ready to your questions.

[Operator Instructions] The first question is from Pavan Daswani, Citi.

I've got a couple, if I may. Firstly, it's great to hear about the strong deal signings in Q3. Could you maybe talk about the trends by vertical and really where this is driven by and some of -- where some of the kind of the positive signs are and maybe some of the verticals that are a bit more laggards and kind of the recovery? And then secondly, on the guidance, could you maybe outline your assumptions for the guidance in terms of those early recovery signs at the moment?

Okay. Well, the strong deal signings by vertical, if there is one industry that is outstanding at the moment is definitely the energy sector is the one that is driving up quite nicely. On the opposite side, in the automotive sector is maybe one industry that has been more like driving down and has been impacted. And the second question, I'm sorry, Pavan?

It's on the guidance, just trying to understand the assumptions for the guidance given those kind of positive trends.

Well, so as we commented in terms of guidance, the impact of this positive trend, there won't be much impact in this fiscal year. As you know, due to our SaaS model and SaaS operation, the impact will come a bit later. There will be a little bit of an impact, but it's not going to be significant on this current year.

The next question is from Gustav Froberg, Berenberg.

I also have a few. The first one is on the strength we saw in perpetual licenses in Q3. Could you give us some color on how we should interpret that strength? Is it a sign of commercial momentum picking up again or any kind of pull-forward effects? That would be my first question. Second question is around AI. Could you share more color on your AI uptake with clients? You mentioned that you have a purposeful strategy in place. So what's going on, on that front? What are clients buying? Why are they buying it? And what are the alternatives? And last one, you also mentioned erratic AI buying by clients as a headwind to the business. Could you talk us through how you see that trending into the third and fourth quarter and maybe what your clients have been buying as opposed to buying from you.

Yes. Thank you for the question. Well, the perpetual licenses, if you look year-to-date, still remain actually way lower than what it was in the previous year. So as you know, the perpetual licenses, depending on where they land, they may have an impact on the given quarter. But if you look at the overall full year, it remains actually quite a small line for Planisware. Year-to-date, we are at EUR 4.5 million, which is quite below. It's true that on this specific quarter, there was a very strong quarter last year in Q2. And this year, we have actually a strong quarter in Q3 compared to the previous year. For AI, what we commented about the erratic headwind is what we've seen and it's on investment and mindset, what we've seen a lot of IT organizations that wanted to do anything with AI more like at the beginning of the year. We don't necessarily see the value or having some value in mind. And what we see more and more is that AI now needs to deliver some value. It's not just some spend that they need to do. And that is quite actually serving us because, as you know, we've have had an AI strategy for a very long time. And we are continuously bringing some AI capabilities in our offering, continuously helping, assisting our user in taking decision, in being more effective. So clearly, what we see when we work with our customer, we've been focusing on value and this help that we bring to the customer. Some of that is clearly embedded in our solution and some other capabilities that we do monetize on some specific capabilities.

The next question is from Ben Castillo, BNP Paribas.

A couple for me, please. I guess, firstly, good to hear your comments around some stabilization or even improvement in recent weeks. What do you think has been the catalyst for that? And if you look into Q4, do you think there's much scope here for customers to sort of have a bit of a budget flush if there's been a budget that's not been spent earlier this year now to come through in Q4. And then secondly, could you maybe help us with how you're thinking about 2026. You said cautiously optimistic on reacceleration of momentum. Is your base case at this point that revenue growth can therefore reaccelerate next year.

Yes. Well, the catalyst, as we commented in the past, First, there have been some elongation in the decision-making processes to bring solution, the solution that we offer. But at the end of the day, the need for what we do is definitely there. The need to properly manage projects and to properly manage portfolios of projects, to have the visibility on those projects that are transforming an organization are really vital for those type of organizations. So the need didn't go away. There have been elongation of the sales cycle, maybe a little bit less of an investment because I was commenting the mind space was being used by something else and the budget, some budget as well. But the need is there, and that's why there has been some projects that were delayed that now are coming back to surface. And the reason why we are cautiously optimistic is because we've seen a very good level of signature in the last several weeks. And we do believe that this level of signature will continue in Q4, but we want to remain cautious. We want to remain cautious because there have been some uncertainties that we need to take into consideration. So that's why we are cautiously optimistic. We see the need. We see our clients have this need. We've been able to secure new logos and several expansion in the last few weeks. We do believe that it's looking promising. So to your question about 2026, then it will really depend on our exit at the end of 2026, which we -- as I commented, the level of signature. And that's why we -- I'll say that again, but we remain cautiously optimistic for 2026 as well.

The next question is from Victor Cheng Bank of America.

A couple have been asked, but maybe if I kind of double tap on the AI bit, I mean you talked about AI needing to deliver value and some erratic investment. But at the same time, it seems like a lot of the companies out there are still doubling down on it and then relocating some of the IT budget towards that. So kind of what makes you think that maybe some of the investment in AI has peaked and kind of realizing that the need to spend in other areas as well. And then maybe from your solutions, look at your solutions as well, what are you seeing in terms of how many customers are leveraging the AI solutions or the AI features that you have? And do you feel like you need to spend more as well to continue to develop your AI features.

Well, how many customers are leveraging -- we have really baked AI within our solution and our platform. So all of our customers are leveraging AI without necessarily knowing it. We have a lot of health assistance that comes to our users that come from the AI capabilities that we have when it comes to data quality or those type of things that is really helping the end user and the data quality, the data consistency that we bring. Where we've seen that -- what we see from our customers now is that when we go with some specific AI capabilities and they are things like looking into doing prediction, for example, as you know, doing a project is a lot about planning the future, doing prediction. And that is based on what you know how to do, which is quite often based on historical data that you have. So when we go specifically with that type of AI module and showcase that to our customers, now more than ever, they are largely interested in those type of features. But it needs -- we need and it needs to show the value. They don't take it just because it's spelled AI any longer. They take it because it's a true help. It's a true add into how they operate our solution. And that's what the demand now is to see the value before they spend money.

The next question is from Nicolas Thorez, ODDO BHF.

I have 2. The first one is to come back on the weakness of the support in Q3 and, let's say, the potential drivers of growth for the end of the year. It will be helpful to know if you anticipate a rebound in your support activities in the next quarter in Q4, speaking about diverse support. And do you think the year-end is going to be somewhat dependent on signing of perpetual licenses. And maybe could you give us an idea of what we can expect in terms of annual licenses as well going into Q4. And second question, it's a follow-up to the question of Ben about the growth that we could expect in 2026. I know that you're not giving guidance yet. But given what you have described in terms of recent signings and your positive developments in Q3, just curious to know if you are still comfortable with consensus expectations of double-digit growth in 2026 at this stage.

Okay. So the evolutive support in Q3, which has a slow growth that comes really from the elongation of the sales cycle previously. As you know, after an initial implementation, the evolutive support kicks in. And when there has been a lesser amount of implementation back then, then that had an impact on the evolutive support. So do we expect a rebound as we sign new logos, we implement and we will implement fast our solution in order to switch throughout evolutive support to help our customer to continue to grow and leverage the statical with the SaaS then mechanically a rebound will come with additional new logos. In terms of the annual license, so if you just look at Q3 over Q3, the annual license shows some strong growth. I'm sorry, I was commenting about perpetual license. So in terms of perpetual license, the Q3 shows a strong growth compared to Q3 last year. But year-to-date, it's not the case. As you know, the perpetual license, they land where they land and they have actually a significant impact. It still remains like a fairly small line for Planisware, a small line that we want to maintain because it's serving some specific purpose for some customers. Do we expect some additional perpetual license in Q4? Yes. There is sometimes a budget flush that happened. It was commented previously. It's much less predictable for when exactly they land. In terms of the annual licenses, so it's -- as you know, it's a new line of revenue that we introduced last year. We do expect this line of revenue to improve. But it has a little bit of the same effect that we would see on the perpetual licenses depending on where it will land as well. It may impact the quarter and just some slight delay or acceleration will move things around. As for 2026, yes, we commented, again, we're very confident in our model. We are very confident in our competitive positioning in the talent that we have in the company. And so we do expect that we will go back to the level of growth that we've seen in the recent past years. As you mentioned, it's too early to give guidance for 2026. It will be dependent on the level of signature that we will be doing in the coming weeks.

[Operator Instructions] The next question is a follow-up from Gustav, Berenberg.

Just a quick follow-up for me. You mentioned you've been quite cautious on price increases this year, perhaps not putting up prices as much as you could have done. Is this a strategy you intend to change going into next year, perhaps following some of your peers in terms of prices and price changes? Or do you intend to keep your pricing strategy flat versus '25.

Yes. Thank you for the question. Well, as you know, we bake into our price increase essentially inflation. And the reason why we do that is because we are a long-term partner to our customers. We believe it serves our purpose on the long term. We've seen many of our customers and actually some prospects as well that were taken in a bad situation where they have some very large price increase. And that's not something that we want to do. We are here for the long term. We are here for the long term with our customers. So in the foreseeable future, we are expecting to stick to our inflation-based policy in order to grow and harvest the result of this partnership that we do with our customers.

The next question is from Clement Bassat from Portzamparc.

Just 2 I have in mind that 1/3 of your SaaS revenue comes from new logo and 2/3 from your current clients. And I'm wondering what is the new ratio today. And also with little growth on the evolutive support, how will you fuel the growth of the SaaS in the upcoming quarter? Should we expect a hard landing single digit on the SaaS? Or you are confident about the recent signature that will offset this effect with the SaaS still above 15%.

Yes. Yes, we are quite confident on the growth in our SaaS. The elongation of the different cycle is impacting both new logos as well as existing logos as well. And so it's true, it's quite visible on the evolutive support line this quarter. And again, what drives some optimism here and -- but yet we remain cautious is the new logos that we're securing at the moment. And they will -- they will start with implementation and then they will drive some evolutive support as well.

The next question is Ben Castillo from BNP Paribas.

Just one quick follow-up. I just wondered on net retention rates. Can you help us out with how they're trending over the last 12 months. Obviously, in the past, it's very strong, kind of over 120%. Just wondering how that's trended in the last few quarters.

Yes. So like the overall revenue and that I commented earlier because the growth is coming from new logo and existing logos, but the growth has actually been a bit lower, the net retention rate has also gone a bit lower as well because of the same thing, the delay of the decisions are impacting the net retention rate as well. Now what is good to look at as well is the churn rate. And the churn rate remained extremely good. This is really due to the fact that our solutions are mission-critical for what our customers do. And so even in an environment that can be a bit tense, our churn rate has remained really, really well positioned.

Gentlemen, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

Well, thank you for attending. And please follow up with Benoit d'Amecourt if you have any additional questions. Thank you.

Thank you.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.