Sopra Steria Group (SOP) H1 2024 earnings summary

Executive summary

• Revenue for H1 2024 reached €2,949.4 million, up 3.8% year-over-year, with organic growth of 0.3% despite a challenging market and strategic refocusing.

• Operating margin on business activity improved to 9.7%, up 0.9 points from H1 2023, reflecting transformation, cost control, and a shift to higher value-added services.

• Net profit from continuing operations attributable to the Group rose 50.5% to €169.3 million, with a net margin rate of 5.7%.

• Free cash flow was €44 million, in line with seasonal effects and impacted by delayed tax credit collection and working capital requirements.

• Sale of Sopra Banking Software is set to finalize by early September 2024, with significant proceeds expected in H2.

Financial highlights

• Consolidated revenue: €2,949.4 million (+3.8% year-over-year), organic growth 0.3%.

• Operating profit on business activity: €285.3 million (9.7% margin, +0.9 pts year-over-year).

• Net profit from continuing operations: €169.3 million (5.7% of revenue).

• Free cash flow: €44 million; would have been higher excluding delayed tax credits.

• Net financial debt: €1,057 million, gearing at 53%, net debt/EBITDA at 1.6x.

Outlook and guidance

• Full-year 2024 targets: stable organic revenue, operating margin on business activity at least 9.7%, and free cash flow around €350 million.

• Margin improvement expected to continue, aiming for close to 10% in the midterm.

• Tax rate expected to be approximately 23% for 2024.