The horizon cleared for the European software. At least for now. This is the first conclusion of the “Truffle 100 Europe” ranking of the top 100 European software companies realized by the venture capital fund Truffle Capital, the firm IDC market research and the French expertise center CXP software.
In 2014, software publishing revenues increased 5.2% to 44.4 billion euros, against only 2.7% in 2013. “ This is five times the economic growth in Europe, notes Bernard-Louis Roques, CEO and co-founder of Truffle Capital. This is remarkable for a sector that has reached full maturity. “
Breakthrough SaaS
With services, sales Truffle 100 business jumped 8.3% to 62.2 billion euros, against 2.7% in 2013. This renewed dynamism was due to the breakthrough of cloud computing or rather the software sales model as a service (SaaS Software as a service).
This model represents about 8% of revenues in 2014. “ This is still very little, but the number is growing very fast, says Bernard-Louis Roques. It should represent a third of the turnover total sales in 2020-2022. The cannibalization of the traditional model in the cloud is still low since license sales continue to grow. “
The other good news lies in the resilience of the sector to the risks of this migration. “ We feared the effect chisel with increased investment and a decline in profitability, says the boss of Truffle Capital. Our fears proved false. The industry has managed to pass without problems this critical phase, to maintain its level of investment while improving profitability. “
The sector has invested 7 billion euros in R & amp; D, up 1% compared to 2013. It continued to grow independently without mergers and acquisitions. The wave of acquisitions of European publishers by American actors who disgorge financial reserves outside the United States, did not happen as predicted.
Fewer publishers quoted on the stock exchange
But a problem remains for the European software: that of access to capital markets. In 2007, 85% of the Truffle 100 publishers were publicly traded. Today they are only 54%. A significant decrease is explained by the redemption of the outputs on, merger or LBO. “ The problem is that there is enough IPOs to compensate the outputs of the dimension, complains Bernard-Louis Roques. This is a big problem reflecting the disaffection of investors for software, unlike what is happening in America. “
European publishers are forced to appeal to investment funds as evidenced by the entry of the French publisher at Bridgepoint and Apax Partners eFront with the Dutch publisher Right. “ This is a big problem because this financing does not guarantee the independence and long-term development of the editor, said Bernard-Louis Roques. A listed company stock market can attract investors and fund its acquisitions by issuing shares. An investment fund into a company with a view to get out 5 or 6 years later. It seeks to improve its profitability to make it more attractive for the future buyer. “
Results by country
The founder of Truffle Capital proposes to channel savings towards high-growth companies. The answer is considered country by country. In France, one of the ways to remedy the problem would be to mobilize a part of life insurance for this purpose. Another way would be to expand the scope of FCPI (innovation mutual funds as investment) as proposed by the two Macron law.
Truffle Europe 2015
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