NOT FOR DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN OR ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL. OTHER RESTRICTIONS ARE APPLICABLE. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THE PRESS RELEASE.
Serviceware SE plans IPO in Q2 2018
Bad Camberg, 16 March 2018
- Serviceware SE today announced its intention to pursue an initial public offering of its ordinary shares and listing on the regulated market (Prime Standard) of the Frankfurt Stock Exchange in the second quarter of 2018
- Serviceware is a leading European provider of an integrated software platform in the field of Enterprise Service Management covering all service processes within a company
- The offering is expected to consist mainly of a primary offering of newly issued shares of Serviceware of approx. € 60 million
- IPO proceeds will be used to finance growth via M&A, internationalisation as well as a scale-up of the sales force to increase penetration of large enterprise customers
Serviceware SE (“Serviceware” or the “Company”) is a leading player in the market for software solutions for the Enterprise Service Management (”ESM”) market. Its integrated and modular software platform with the three proprietary software solutions anafee, helpLine and Careware enables customers to digitalise all service processes within a company, ranging from service management (helpLine) as well as financial management (anafee) to field service management and customer service management (Careware). Given the strong pressure arising from the digitalisation megatrend, Serviceware’s solutions enable corporates to distinguish themselves from competitors by increasing service quality and to realise significant service cost savings through an increase of transparency, efficiency and cost control.
First mover advantage in a market disrupted by digitalisation
The ESM market, which covers all internal and external services within a company, is currently still managed to a large extent by manual, mostly spreadsheet based models. Favourable market trends arising from the digitalisation megatrend, the need for cost reduction and the simplification of IT business processes will drive the ESM market and are expected to result in overall market growth of 11.8% (CAGR 2017-2021) according Gartner data. With service being a key factor for differentiation, every corporate, irrespective of size and industry, feels a strong pressure to digitalise its service organisation. Serviceware is the first software company in Europe offering an integrated ESM software platform and is well positioned in the most attractive niches of the market resulting in a significant growth potential.
One-stop-shop with an integrated software platform leading to a high lock-in effect and recurring revenues
Serviceware is offering its clients a unique integrated and modular software platform that addresses two highly attractive market segments of the ESM market, namely the automation of service processes as well as the optimisation of service costs. The Company’s ESM platform is highly integrated and allows Serviceware to cater its clients as a one-stop-shop for all aspects of service delivery. Serviceware’s software solutions are highly ranked by independent research providers: anafee is listed in Gartner’s “Market Guide for IT Financial Management” since 2016, while helpLine was awarded as best vendor of IT and ESM vendor by Research in Action in 2018 (“Vendor Selection Matrix – IT und Enterprise Service Management SaaS und Software: Die Top 20 Anbieter in Deutschland 2018”). Given its strong customer proposition and high lock-in effect, Serviceware has a strong retention rate of c. 95%1) (average over the past three years) and realises a significant degree of recurring revenues2) of 60% (fiscal year ending 30 November 2017).
Robust and well-balanced customer base
Over recent years, Serviceware has built a broad and well-balanced customer base of more than 500 SME and blue-chip clients predominantly in Germany, Austria, Switzerland and the Netherlands. The Company’s customers include 4 out of the 7 largest companies (by revenue, excluding banks and insurance companies). Most recently, Serviceware was able to gain significant momentum in particular with the highly attractive customer group of large enterprises by acquiring 3 of the 7 largest German companies for its anafee solution since the beginning of 2017.
Strong track-record in acquisitions and post-merger integration
Serviceware has demonstrated a strong track record in acquisitions and successful post-merger integration. Having initially started as a vendor of third party solutions, the Company has acquired a suite of proprietary software solutions starting with the acquisition of helpLine (2003), followed by Careware (2012) and anafee (2014). As an example, following the acquisition of anafee in 2014, Serviceware successfully managed to integrate the solution into its ESM platform, unlocking cross-selling potential combined with a comprehensive product overhaul, leading to successful new client wins in 2017 (3 out of the 7 largest German corporates).
Attractive financial profile
Since its foundation in 1998, Serviceware has grown revenues with a CAGR of >25% to €44.3m in fiscal year 2016/17 while demonstrating profitability in each year. EBIT increased by 56.6% to €5.6m in fiscal year 2016/17 leading to a strong margin increase to 12.7% (from 9.5% in fiscal year 2015/16). Due to its asset-light software business model, the Company realised a strong Free Cash Flow3) generation leading to a cash conversion4) of 96.2% (94.0% in fiscal year 2015/16).
Well-defined growth strategy
Serviceware intends to fully invest the IPO proceeds in its well-defined growth strategy that is based on three pillars:
- Increase penetration of large enterprise customers
Hiring of additional key account managers to increase penetration of large enterprise customers in order to capture the strong demand from this highly attractive customer group and to realise cross-sell potential
- International roll-out
Further internationalisation of the business through expansion in two waves: In a first step that is already ongoing, Serviceware targets the markets Spain, Netherlands/ Belgium as well as the Nordics followed by a second wave to UK, Italy and France
- Enhancement of product portfolio through acquisitions
Serviceware has built a strong and visible acquisition pipeline in the fields of IT solutions (process/ tool automation), Customer Service (Knowledge Management, Messaging) and Non-IT Shared Services (HR, Finance, maintenance, etc.) to execute its M&A strategy. The clear focus is to add complementary solutions to its ESM platform in order to leverage additional cross-sell potential
Dirk K. Martin, CEO and co-founder of Serviceware, said: “Serviceware has successfully grown with a revenue CAGR of >25% since its foundation under private ownership. The IPO will allow us to execute our clearly defined growth strategy that is based on the three pillars M&A, internationalisation and increased penetration of large enterprise customers. The funds from the capital increase will enable us to foster our positioning as a leader in the ESM market and leverage the strong momentum imposed by the digitalisation megatrend that corporates face nowadays”.
Harald Popp, CFO and co-founder of Serviceware, said: “The digitalisation and automation of service processes are rapidly gaining strategic and economic importance for every corporate, irrespective of industry or size. Through our unique ESM platform we are well-positioned at the forefront of this market disruption. Accordingly, the IPO marks the beginning of the next chapter our success story which began 20 years ago”.
Overview of the Offering and use of proceeds
Serviceware plans to list its shares on the regulated market of the Frankfurt Stock Exchange (Prime Standard). The offering is expect to consist mainly of newly issued shares from a capital increase in the amount of c. €60 million and an additional secondary component from existing shareholders to ensure sufficient free float. The existing shareholders plan to provide additional secondary shares for a potential overallotment in the amount of up to 15% of the base offering.
As of the date of this release, the founders Dirk K. Martin (CEO) and Harald Popp (CFO) hold 97% in Serviceware and are committed to remain long-term shareholders. Ingo Bollhöfer (Non-executive Board Member) holds 3%. The lock-up period will be 12 months for Serviceware and Management/ Shareholders, respectively.
The proceeds from the IPO will be used for Serviceware’s growth strategy including further international expansion, M&A to complement the existing ESM platform and scaling up of sales force to increase penetration of large enterprise customers.
COMMERZBANK Aktiengesellschaft and Hauck & Aufhäuser Privatbankiers Aktiengesellschaft are acting as Joint Global Coordinators and Joint Bookrunners on the Offering.
1) Retention rate = 1- churn rate; churn rate equals the sum of ending maintenance volume which is not (automatically) prolonged divided by the sum of maintenance revenues
2) Recurring revenues include (i) continuing contractual obligations with a term of more than 1 year (ii) license rental by existing customers (iii) individual services on demand ordered by existing customers. The Company qualifies customers as “Existing Customer” if from the point in time the Company generates recurring revenues with a customer more than 1 year after the initial implementation of Serviceware’s product at the customer.
3) Free Cash Flow defined as EBITDA – Capex
4) Cash conversion defined as FCF/EBITDA
About Serviceware SE
Serviceware is a leading provider of software solutions for the digitalisation and automation of service processes which allows corporates to increase their service quality and to efficiently manage their service costs. Its unique integrated and modular ESM platform comprises the proprietary software solutions helpLine (Service Management), anafee (Financial Management) and Careware (Field and Customer Service Management). Serviceware serves more than 500 customers throughout a broad range of industries which include 9 DAX companies as well as 4 out of the 7 largest German corporates. The Company is headquartered in Bad Camberg, Germany. At the end of fiscal year 2016/17, Serviceware had 285 employees.
This publication constitutes neither an offer to sell nor a solicitation to buy or subscribe to securities. Any such offer will be made solely on the basis of a securities prospectus to be published as approved by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin). The information legally required to be provided to investors is contained only in a securities prospectus. The securities prospectus of the issuer will be published after approval by BaFin and will be available free of charge on the internet at the website of the issuer www.serviceware.se and during normal business hours at the issuer.
The information contained herein is not for distribution, directly or indirectly, in or into the United States of America (including its territories and possessions of any State of the United States of America or the District of Columbia) and must not be distributed to U.S. persons (as defined in Regulation S of the U.S. Securities Act of 1933, as amended (“Securities Act”)) or publications with a general circulation in the United States of America. This publication constitutes neither an offer to sell nor a solicitation to buy or subscribe to securities in the United States of America. The securities have not been and will not be registered under the Securities Act and may not be offered or sold in the United States of America absent registration or an exemption from registration under the Securities Act. The issuer does not intend to register any portion of the offering in the United States of America or to conduct a public offering of the securities in the United States of America.
This publication is only addressed to and directed at persons in member states of the European Economic Area (other than Germany and Luxembourg) who are “qualified investors” within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC as amended) (“Qualified Investors”). In addition, in the United Kingdom, this publication is being distributed only to, and is directed only at, Qualified Investors who (i) are persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”), (ii) are high net worth entities falling within Articles 49(a) to (d) of the Order, or (iii) other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as “relevant persons”). Any investment or investment activity to which this publication relates is only available to and will only be engaged in with (i) in the United Kingdom, relevant persons, and (ii) in any member state of the European Economic Area other than the United Kingdom, Qualified Investors. Any other persons who receive this publication in the European Economic Area (other than Germany and Luxembourg) should not rely on or act upon it.
This publication is not an offer of securities for sale in Canada, Japan or Australia.