Results first half-year 2014

Exact sharpens strategic focus 

Strategic highlights 

  • Divestment of Longview and Lohn enhances focus on core businesses
  • JobBOSS, Macola and Max to support Exact Online in US market 
  • Decision on use of proceeds of divestitures with FY 2014 results
  • Adjusted for divested businesses full year EBITDA guidance at € 41 to € 44 million
  • Exact evaluates announced expressions of preliminary interest for possible public offer

Financial highlights

  • Total revenues (including Longview and Lohn), up 3.0% to € 54.7 million in Q2; on an operational1 basis  up 5.2%
  • Total revenues H1 up 1.5% to € 106.9 million, up 3.5% on operational basis
  • EBITDA up 5.6% to € 11.0 million in Q2; EBITDA H1 down 6.7% to € 21.8 million
  • Higher operating expenses reflect the build-up of the cloud organization and product development during 2013
  • Net income H1 down 10.6% to € 13.7 million
  • Interim dividend amounts to € 0.60 per share consistent with 100% pay-out policy

 Cloud Solutions: strong growth 

  •  Cloud Solutions revenues up 47.0% to € 7.3 million in Q2 driven by strong performance in Benelux
  • Annualized recurring revenues up 43.9% to € 29.2 million at the end of Q2
  • 164,470 paying companies at June 30, up 10,281 in Q2; prior quarters adjusted 
  • International rollout in UK and Germany on track, US remains challenging 

 Business Solutions: enduring headwind

  •  Business Solutions revenues down 3.7% to € 27.4 million in Q2; on an operational basis down 3.0%
  • License revenues down 7.9% to € 4.3 million in Q2; on an operational basis down 7.1%
  • Subscription-based revenue amounted to € 0.2 million in Q2
  • Attrition in Business Solutions amounted to 8.1% in H1; increase compared to last year reflects a base change; value contract cancelations shows favorable decline of 1.7% to € 3.2 million in H1 

 Specialized Solutions: solid improvements

  •  Specialized Solutions revenues up 1.5% to € 20.1 million in Q2; on an operational basis up 6.5%
  • Longview divested for $31.8 million in cash; net book gain of € 0.4 million in Q2
  • Agreement to divest Lohn for € 16.3 million in cash; estimated net book gain of € 14.7 million in Q3

Erik van der Meijden, CEO“The software industry is changing at an ever-accelerating pace. With the divestiture of Longview and Lohn we are keeping up our high pace of executing our strategy and demonstrate our commitment to core activities. We will decide on the use of the cash proceeds of these divestitures with our full year results. As mentioned earlier, we have been approached by parties who have shown an indicative interest in our organization. It is too early to give any update on these approaches and possible outcome. Whatever the outcome of these discussions, we are confident about the merit of our strategy and the value it brings to our key stakeholders being our shareholders, our customers and our employees. 

I am pleased with the performance of the business in the first six months of the year. The enduring strong growth of Cloud Solutions continues to be a key driver of revenue growth for Exact. Our basis in the Netherlands and Belgium is strong and offers further growth prospects. Overall, the international rollout of Exact Online is progressing well. We gain invaluable experience in each of these markets and adapt our tactics to achieve success in every new market. We are on track in the UK and see positive response from the accountancy channel. HW Fisher, one of the leading accountancy firms in the UK, entered into a partnership with Exact to offer its SME customers cloud based integrated accounting and industry solutions. In the US we decided to lever the market presence of our existing business units. We believe that particularly JobBOSS is well positioned to help Exact Online gain commercial traction. In Germany we are making steady progress and see opportunities to develop our business with some large accountancy partners. 

Business Solutions license revenues continued to encounter headwinds in the second quarter this year. We did win some of the sizeable contracts which had been postponed in the first quarter. This was however not enough to offset the decline in the second quarter. Business Solution made further progress with its strategy to develop mobile functionality. In May, we launched four mobile apps related to CRM, HR self-services, expenses and a field service app. 

Macola, Max and JobBOSS are showing good progress.”

Accounting for discontinued operations
The key financials below include the revenues and OPEX for Longview and Lohn. In the interim financial report the financial results for Longview and Lohn are presented as discontinued operations in a single line item net of tax for an amount of minus € 8 thousand in H1 this year. Net Income line in the Key Financials equals Net Income in The Statement of Comprehensive Income in the Interim Financial Report.

Key financials

Total revenue for the second quarter amounted to € 54.7 million, up 3.0% (operational 5.2%) compared to Q2 last year. Total revenue for H1 amounted to € 106.9 million, up 1.5% (operational 3.5%) compared to the same period last year. 

Cloud Solutions

Cloud Solutions continued to report strong revenue growth. In Q2, online revenue increased by 44.3% compared to Q2 last year to an amount of € 7.1 million. Online revenue in H1 amounted to € 13.6 million, an increase of 44.3%. 

Total revenue, including services revenue increased by 47.0% to € 7.3 million in Q2. Total revenue increased 46.1% to € 13.9 million in H1. Annualized recurring revenue from Exact Online amounted to € 29.2 million at the end of the second quarter. 

During the second quarter of 2014 the number of paying companies increased 10,281 to 164,470. The increase is particularly driven by strong sales in the Netherlands. 

The number of paying companies reported at the end the first quarter was overstated by 9,398; by 4,930 at the end of 2013 and by 3,028 in the third quarter in 2013. This occurred solely in the accountancy channel in the Netherlands and did not have an impact on reported revenues. During the third quarter of 2013 Exact launched an additional modules for accountants which were mistakenly counted as paying companies. No employee benefited financially from the higher reported number of paying companies.  

Business Solutions

Total revenue for Business Solutions amounted to € 27.4 million in the second quarter, a decline of 3.7% (operational 3.0%) compared to Q2 last year. Total revenue for H1 amounted to € 54.6 million, a decline of 4.0% (operational 3.4%) compared to the same period last year. The decline is driven by lower revenue in license and maintenance, partly offset by higher services and subscription-based revenue.  

License revenues amounted to € 4.3 million in the second quarter, a decline of 7.9% (operational 7.1%) compared to Q2 in 2013. License revenue for H1 amounted to € 8.4 million, a decline of 7.4% (operational 6.6%) compared to the same period last year. We won some larger transactions in the second quarter which had been postponed in the first quarter of this year. This was not sufficient to offset the decline in the second quarter. 

Business Solutions made further progress in scaling up its target market to larger companies. The new logo sales team recorded total sales of € 364 thousand (up 48%) and an average deal size of € 33.1 thousand (up >100%) in H1. 

Maintenance & support revenue in the second quarter amounted to €20.0 million, a decline of 4.4% (operational 3.8%) compared to Q2 last year. Maintenance & support revenue for H1 amounted to € 39.7 million, a decline of 4.8% (operational 4.3%) compared to the same period last year. The decrease is driven by lower license sales, migration to Exact Online, discontinuation of DOS-based products as well as regular attrition. Attrition amounted to 8.1% in H1 compared to 7.6% reported the same period last year. The increase reflects a base change which, effective 2014 no longer includes revenue from products that have been declared end-of-life. The total value of contract cancelations amounted to € 3.2 million in H1, a favorable decline of 1.7% compared to the same period last year. 

Services revenue in the second quarter increased to € 3.0 million, an increase of 4.0% (operational 5.3%) compared to Q2 in 2013. Services revenue for H1 amounted to € 6.1 million, an increase of 2.9% (operational 4.3%) compared to the same period last year. 

Business Solutions experienced a substantial increase in subscription based sales.  In the second quarter subscription based revenues tripled to € 0.2 million.  H1 subscription based sales amounted to € 40 thousand and represents a license equivalent of € 0.4 million (or 5.1% of license revenues in H1). 

Specialized Solutions

Total revenues for Specialized Solutions increased 1.5% (operational 6.5%) to € 20.1 million in the second quarter of 2014. Total revenue for H1 amounted to € 38.4 million, a decline of 1.4% (operational an increase of 3.0%) compared to the same period last year. The weakness of the US dollar is impacting the reported revenue from the US units. 

As announced on July 1, 2014, Longview has been divested for an amount of $ 31.8 million on June 30, 2014. The sale results in a net book gain of € 0.4 million. An amount of $ 3.9 million will be held in escrow and is expected to be released at the end of 2015. 

On July 21, 2014, Exact announced an agreement to divest Lohn for an amount of € 16.3 million in cash. The transaction requires approval from the German Federal Cartel Office (Bundeskartellamt) and is expected to close in the third quarter this year. In the second quarter this year Lohn recorded total revenues of € 2.5 million. 

Operating expenses
Operating expenses (excluding depreciation and amortization) amounted to € 43.7 million, an increase of 2.3% (operational 5.1%) compared to Q2 last year. Operating expenses for H1 amounted to € 85.0 million, an increase of 3.8% (operational 6.5%) compared to the same period last year. The increase primarily reflects the development and international expansion of our Cloud organization during 2013, which resulted in a steadily increase in the level of expenses. As indicated earlier this year, quarterly increases in expenses are projected to be smaller for the remainder of 2014 thereby enabling us to meet our EBITDA guidance.

Research and development expenses amounted to € 13.3 million in H1, representing 12.5% of reported revenues, compared to 13.1% in the same period last year. The decline in R&D expenses as percentage of revenues reflects delays experienced in the recruitment for Cloud Solutions. Capitalization of R&D expenses amounted to € 3.5 million, a decrease of € 0.1 million compared to H1 last year. 

Earnings before interest, tax, depreciation and amortization (EBITDA)
EBITDA in Q2 amounted to € 11.0 million, an increase of 5.6% (operational 5.3%) compared to Q2 last year. For H1 EBITDA amounted to € 21.8 million, a decline of 6.7% (operational 6.7%) compared to the same period last year. The EBITDA increase in Q2 partly offsets the decline recorded in the first quarter this year, which is in line with management expectations. The EBITDA margin was 20.4% in H1.  

Earnings before interest and tax (EBIT), interest and tax
Depreciation and amortization amounted to € 5.4 million in H1, an increase of 12.4% (operational 17.5%) compared to the prior year. Reported EBIT decreased by 11.6% (operational 12.6%) to € 16.4 million in H1 this year. 

Total finance income and expenses amounted to an income of € 0.3 million in H1. This includes the book gain on the divestiture of Longview in the second quarter. 

The effective tax rate amounted 18.2% in H1 compared to 17.3% in the same period last year. 

Net income, earnings per share and dividend
Net income attributable to shareholders amounted to € 13.7 million in H1 compared to € 15.3 million in the same period last year. The decline primarily reflects the lower level of EBIT. The pre-tax book gain on the divestiture of Longview is mostly offset by higher income tax. 

Earnings per share (EPS) amount to € 0.60 compared to € 0.67 in 2013. Exact will pay an interim dividend of € 0.60 per share in cash. The interim dividend will be payable to holders of ordinary shares on August 8, 2014. The shares will trade ex-dividend on August 4, 2014 and the record date is August 6. 

Cash position
The cash position amounted to € 58.9 million (including cash presented as held for sale) on June 30, 2014. The decrease in cash during the first six months this year is driven by the distribution of final dividend for an amount of € 16.7 million, partly offset by cash generated through operating activities. The cash proceeds from the divestiture of Longview are recorded in the third quarter.

The average number of days sales outstanding improved to 49.0 from 54.9 in the same period last year. The reduction in account receivables and days sales outstanding is driven by a more effective credit collection process of regional credit collection teams. 

Exact continues to make significant progress on the execution of its strategy for long term profitable growth. We have a strong focus on innovation, with significant investments in R&D to play into the key trends in the market. We expect Cloud Solutions to continue to grow by 30-to-50% per year in the coming years, as our customer base expands and the international rollout gains traction. For Business Solutions and Specialized Solutions, we are aiming for a low single digit growth in more mature markets. All in all, we expect to grow total revenues over time with 4 – 7% per annum. 

Adjusted for divested businesses full year EBITDA guidance set at € 41 to € 44 million. 

Subsequent developments
On July 11, 2014 Exact Holding N.V. announced that it was approached by parties that indicated an interest in a possible takeover of all outstanding shares in Exact. Following these approaches, Exact engaged in preliminary discussions. 

Consistent with their fiduciary duties, the Board of Managing Directors and the Supervisory Board of Exact is carefully evaluating these expressions of interest and will take the interests of all stakeholders, including the shareholders, into full consideration in their decision making. 

At the date hereof there is no expression of interest which merits negotiations on an exclusive basis. The preliminary discussions are guiding towards the lower end of the earlier indicated range of € 30 to € 35. It is highly uncertain that a deal will be reached soon, if at all.

Additional segment information

Cloud Solutions

 Business Solutions

Specialized Solutions


Friday August 1, 2014

Analyst & Investor Q&A 

14.00 CET (08.00 EST)

Conference call (for analysts and investors)
Conference ID: 3529599

Dial-in numbers
United States: +1 646 254 3365
United Kingdom: +44(0)20 7136 6283
The Netherlands: +31(0)20 716 8295

Two hours after the conference call, a replay will be available on

Presentations will be available on at 7:30 a.m. CET

Interim Financial Report H1 2014
Interim Financial Report H1 2014 will be available on at 7:30 a.m. CET

Important dates
August 4, 2014 Ex-dividend
August 6, 2014 Record date
August 8, 2014Payment date interim dividend
November 5, 2014Q3 results


Operational financial figures consider the impact of foreign exchange rates by translating prior year’s results at current year’s exchange rates.


About Exact

Exact is a leading global supplier of business software. Since we began in 1984, our focus has shifted from supporting financial processes to providing a complete ERP offering for small and medium-sized businesses. Innovative solutions such as Exact Globe Next, Exact Synergy Enterprise and Exact Online support over 100,000 customers – local and international companies – in the daily management of their business.

Exact develops industry-specific on-premise and cloud solutions for manufacturing, wholesale and distribution, professional services and accountancy. Exact is headquartered in Delft, the Netherlands, and has been listed on the NYSE Euronext Amsterdam since June 1999. The company booked revenue of € 213 million in 2013.

For further information about Exact, visit


This document contains certain statements and expectations that are forward looking, and which are based on information and plans that are currently available. By their nature, such forward looking statements and expectations generate risk and uncertainty because they concern factors and events in the future and depend on circumstances which may not occur. 

Unforeseen factors that could influence the statements and expectations may for instance be changes in expenditure by companies in the markets we operate in; economic, political and foreign exchange fluctuations; possible statutory changes; changes in salary levels of employees; future take over and divestitures.


Exact can therefore not guarantee that such statements and expectations are accurate and complete, nor that such statements and expectations will be realized. Actual results may differ materially. Exact refuses to accept any obligation to update statements made in this document. 



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