• The Ailleron Group had PLN 466.8 million in consolidated revenues during the four quarters of 2023 (an increase of nearly 13% year-on-year), including about PLN 338.2 million (70% share of total revenues) in revenues from exports (an increase of nearly 8% year-on-year).
  • In the last quarter of last year, the Group generated PLN 126.2 million in revenue, a 2% increase compared to the same period in 2022.
  • Revenues for the fourth quarter of last year (as well as for all of 2023) were significantly affected by the strengthening of the zloty against foreign currencies and a reduction in customer investment spending.
  • In the FinTech segment, excluding revenue from the Pekao contract, for the full year 2023, Ailleron had PLN 73.7 million (an increase of almost 27% year-on-year). In Q4 2023, Ailleron Group reported a nearly 21% increase in revenue from PLN 19.9 million to PLN 24 million.
  • The Technology Services segment (Software Mind Group) continued struggling with signs of lower service demand. After the fourth quarters, the segment had PLN 395.5 million in sales revenue, a 13% increase over 2022.
  • Normalized EBITDA after the fourth quarters of 2023 amounted to PLN 61.7 million, compared to PLN 68.6 million in 2022 (down about 10% year-on-year).
  • Ailleron Group’s net profit (excluding one-time events) amounted to PLN 34.3 million, compared to PLN 45.5 million in 2022 (down 25% y/y).
  • The Group’s results in the reported period (quarter and full year 2023) were significantly burdened by one-time write-downs and provisions due to the declaration of termination of the agreement with Bank PEKAO SA.

In 2023, the Ailleron Group recorded nearly PLN 466.8 million in consolidated sales revenues, an increase of almost 13% compared to 2022 (PLN 413.4 million). The level of revenues expressed in Polish zloty in the fourth quarter and in the entire period of 2023 was significantly negatively affected by the strengthening of the domestic currency against foreign currencies (according to estimates, the amount is about PLN 7.6 million).

The market conjuncture caused the scenario of reducing investment expenditures at customers to materialize to a greater extent, which consequently affected the generated revenues and results of the Group – says Tomasz Król, Member of the Management Board and CFO of Ailleron SA.

The Ailleron Group’s adjusted EBITDA in January-December 2023 amounted to nearly PLN 61.7 million, about 10% lower than the result realized in the previous year (PLN 68.6 million). On the other hand, the Group’s net profit (excluding one-time events) amounted to PLN 34.3 million, a 25% decrease compared to the same period in 2022 (PLN 45.5 million).

The results of the reported period were affected by one-time event costs related to provisions and write-downs recognized in the financial statements due to the statement of termination of the agreement with Bankiemi Pekao SA. At the end of the fourth quarter, Ailleron filed a lawsuit against Pekao over the payment of approximately PLN 44.2 million. Even though a lawsuit has been filed, Ailleron maintains its will to resolve the dispute amicably.

The issue of hyperinflation in the Argentine market is not insignificant. Inflation in that country was one of the highest and exceeded 211% last year. This situation negatively affected the results of the valuation of the company’s assets, which belong to the Software Mind Group (PLN 2.3 million).

2023 was marked by numerous events generating uncertainty. This discouraged investors and companies from taking risks, and as a result, a cooling in the market was evident. The geopolitical situation was also not favorable. All this indirectly affected budgets and planned future realizations. The startup market also saw a significant slowdown. Banks, in turn, came under pressure to find ways to increase profits in the context of slower growth. According to estimates, banks’ IT spending increased by about 6% last year, and this year budgets may increase by only 4% due to pressure on margins – says Tomasz Król, Board Member and CFO of Ailleron SA.

In the FinTech segment, the reported level of realized revenues in 2023 was higher than in the 2022 period, amounting to PLN 73.7 million (up 15% y/y). During the period, revenues and assets were adjusted, including trade receivables and contract assets, which were related to the termination of the agreement with Bank Pekao SA. Comparing revenues with the exclusion, FinTech achieved a y/y increase of about PLN 15.7 million (resulting in a dynamics of 27%).

Eliminating from the results the negative impact of the executed contract in the form of project costs on the part of the implementation team (as all revenues from this contract have already been written off) and the one-time write-off of receivables, the achieved result at the level of the Finetch segment would be better by PLN 7.7 million and would reach a positive level of about PLN 0.5 million.

Of course, in addition to the reasons described above, and in this case, we are dealing with the situation of the impact of the prevailing market conjuncture, which caused the scenario of reduction of investment expenditures at the Company’s customers to materialize to a greater extent. Also, with those large global players in the banking industry, orders were reduced or even suspended.

We see positive trends related to the fintech area in banking. These entities want to digitize not only banking products but also the area of leasing and customer service. For banks, digitization is an investment that reduces customer service costs and allows them to increase branch efficiency while reducing operating costs. Multichannel access and conversational banking supported by modern AI tools make it easier to access banking services without raising their costs. Looking ahead to the next few years, we see that global banking will have to bet on the digitization of processes. The foreign direction is promising for us; we are taking the next steps in the DACH market. We present our solution at key events for the fintech world. We also present the business achievements of our clients achieved through the implementation of our solutions, which is highly appreciated by financial institutions (an example is the presentation of ING’s achievements in mortgage sales thanks to the implementation of the Ailleron LiveBank platform at Finovate 2024, London). We see that our products are in the vanguard of technology. We are building new leads that should translate into contracting in 2024. Finally, we expect that the banking sector will sooner or later have to face technological transformation – said Piotr Piatosa, Vice President and COO at Ailleron SA.

Software Mind Group, responsible within the Group for the Technology Services segment cumulatively for the four quarters of 2023, reported sales of around PLN 390.5 million, up 13% from 2022 (PLN 344.4 million). As a result, operating profit amounted to nearly PLN 48.9 million. This means that Technology Services achieved a lower operating margin by 3 percentage points compared to the previous year. Despite the acquisitions, the Software Mind Group has a solid balance sheet position, with year-end cash of about PLN 110 million (and net debt of +PLN 46 million).

The digitization of various areas of our lives will only accelerate and encompass more areas of the economy. Keeping up with the galloping changes requires, and will require, the incredible skills of many software engineers, and consequently, the long-term trend associated with the Group’s business is, and will continue to be, positive for the foreseeable future. The temporary slowdown in the IT industry that we have seen in recent months is a natural cycle. We have gone through such situations many times before. It’s worth using this time to regroup, correct the course we’re following, and prepare to handle the next revolution that’s happening before our eyes – the revolution related to artificial intelligence in the broadest sense. In many industries, humans are and will remain an indispensable link, but supported by modern IT solutions, they can achieve much more than has been possible so far. Digitization and automation of traditional operations have just begun, so IT companies will continue to develop dynamically, responding to the growing needs – adds Grzegorz Mlynarczyk, President of Software Mind, Vice President of the Board at Ailleron SA.

The company recognizes that the global economic slowdown is currently decelerating the pace of digitization, the digitization of businesses, and, thus, the growth rate in demand for IT products and services. The outlook and market sentiment indicate that improvement relative to the current situation will not occur until several quarters from now. In the long term, companies will be forced to make further successive investments in the digitization of processes, which will undoubtedly affect the growth in demand for IT services and products.

Please see the attached presentation from our results conference (in Polish) if you need more information.

We also encourage you to read the quarterly report (in Polish).

Ailleron SA is a capital group listed on the Warsaw Stock Exchange. Its subsidiary Software Mind provides software development services for innovative companies from Western Europe and the United States (including from Silicon Valley) and – under the Amplitiv brand – for the telecommunications industry. Software Mind is developed jointly with Enterprise Investors – one of the largest private equity funds in Central and Eastern Europe. Ailleron focuses on comprehensive software development services for banks, leasing companies, fintechs and other financial industries, mainly in Europe and Southeast Asia. It creates innovative IT solutions based on cloud technology and artificial intelligence. Ailleron’s clients include Citibank, ING, Santander, BNP Paribas, Standard Chartered and Credit Agricole. With a global reach spanning over 40 countries, Ailleron Group serves more than 200 clients and employs a robust team of over 1,500 specialists. International markets contribute to a remarkable 75% of the group’s revenue, showcasing its truly global impact. 

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The Ailleron Innovation Forum energized top executives with new insights and vivid expertise

The Ailleron Innovation Forum, which brought together nearly 100 curious minds in Krakow, answered many questions. The event took place in the Manggha Museum of Japanese Art and Technique, where AIF attendees and our technology partners delved into five thematic streams related to the digital future of the financial industry in 2023 and beyond.

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