(News Bulletin 247) – The IT services specialist announced on Tuesday evening the sale of AAA, a recruitment company based in Scotland. This sale is part of a strategic review that will establish the integration of artificial intelligence into Sword Group’s activities.
Like many companies for several months, Sword Group has decided to rush into the breach of artificial intelligence. Like Capgemini a little earlier this year, the digital services company expressed, Tuesday evening after the market, the wish to integrate artificial intelligence into its activities.
To do this, Sword will carry out a strategic review of its activities in order to adapt its development to the changes that this new technology will generate in its ecosystem.
Thus, the company announced the sale of its Scottish subsidiary AAA specialized in recruitment, which achieved a turnover of 26 million euros. Sword had acquired it in 2015 when it generated only 7 million euros in revenue, recalls Stifel in his note devoted to the announcement of Sword.
Improved profitability
The sale of the Scottish subsidiary will aim to improve Sword’s profitability. A good point for Stifel who recalls that AAA “is not very profitable (operating margin close to 4%). The sale of this activity should have an accretive effect of around 1 percentage point from July 1, 2023, according to the management of Sword, which intends to achieve an Ebitda (current operating income) of 36 million euros over the current financial year.
For Stifel, this disposal should have a positive impact on the group’s overall operating margin and growth. “Sword is still officially targeting 15% organic growth for 2023, but posted a more than 22% increase in revenue in the first quarter and saw its order backlog drop from 20.1 months to 20.8 The group continues to gain market share with European institutions and to benefit from the growth of the luxury industry in French-speaking Switzerland,” adds the research department.
In addition to the financial aspect, the sale of AAA will allow Sword to withdraw from a company which “offers low value-added services which, according to management, could suffer in the future from the emergence of intelligence artificial,” recalls Stifel.
This sale marks the first stage of a strategic plan around artificial intelligence, which will be detailed during the second half of the year. Stifel, for its part, is advancing a presentation of this strategic plan in the month of “September”.
Sword’s management is thus adopting a proactive strategy with a view to seizing all the opportunities offered by this booming sector. Capgemini announced last week a “major” extension of its long-standing strategic partnership with Google Cloud in data analytics and artificial intelligence.
Sword has therefore in turn identified the potential that artificial intelligence represents in its activities. The services company has already set itself a number of priorities ahead of Stifel, namely “to strengthen the level of skills and the added value of its offshore platforms, as well as its consulting services”. Sword also plans to invest in cybersecurity services. Regarding this last point, the management does not rule out acquisitions to achieve this objective.
For Stifel, the proactive disposal of AAA once again demonstrates the group’s responsiveness and its ability to adapt to economic and structural changes. Certainly, the design office highlights the high valuation multiples of Sword, but according to him, they remain justified by an organic growth higher than that of the industry and by a dynamic management team creating value.
“The big winners of artificial intelligence will be those who make the best use of human intelligence”, concludes the design office which is the buyer of the file, with a target price of 60 euros.
On the Paris Stock Exchange, the market appreciates Sword’s initiative to integrate artificial intelligence into its activities. The title of the digital services company rose another 3.3%, around 3:30 p.m. Wednesday.
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