(News Bulletin 247) – The digital services company has announced that it wants to spin off its Sopra Banking Software business, alongside annual results that exceed its expectations. On the Paris Stock Exchange, the announcements are welcomed and Sopra Steria is trading at its all-time highs.

If Nvidia’s excellent results focus investors’ attention, the publication season is continuing in Paris. And amid these numerous results, the copy delivered this Thursday by Sopra Steria particularly stands out.

In 2023, the activity of the digital services company increased by 13.8% in published data, and by 6.6% organically, to reach 5.805 billion euros. The group exceeds its own forecasts announced in July, namely organic growth of “at least 6%”.

Operating income from activity came to 548.2 million last year, a very clear increase of 21% over one year. The operating margin of activity follows the same direction and increases by 0.5 points compared to 2022 to 9.4%. Here too, Sopra Steria is doing better than its own objective which was set at “slightly above 9%”.

Sopra Steria also did better than expected on its free cash flow generation. It came to 390.2 million euros, clearly exceeding the initial objective of “at least 300 million euros”, announced by the company.

In terms of net income, group share, this stands at 183.7 million euros compared to 247.8 million euros in 2022. It includes a non-recurring depreciation of 89 million euros relating to active Sopra Banking Software. Sopra Steria specifies that this depreciation will have no impact on cash flow and the dividend proposed for the 2023 financial year.

Restated for the depreciation relating to Sopra Banking Software, the 2023 net profit group share of the digital services company would have come to 272.7 million euros, or 10% more than in 2022.

Moreover, Sopra Steria has indicated that it is selling Sopra Steria Banking to Away Software for an enterprise value of 330 million euros. This banking software activity is now “no longer at the heart of its strategic priorities”. The company says it wants to better focus on digital services and solutions in its flagship markets such as financial services, defense & security, aeronautics, space and the public sector.

“The group’s ambition is to become, in the face of global players, a real European alternative, particularly on the issues of digital sovereignty, for major European clients in its strategic markets,” says Sopra Steria.

Pampered shareholders

Coming back to the dividend, shareholders will also reap the benefits of this excellent year. Sopra Steria will therefore propose a dividend of 4.65 euros, an increase of 8.1% compared to the 4.30 euros paid for 2022.

For 2024, the company is a little more cautious, particularly regarding the rate of growth of its activity. Even if it means raising your ambitions later. It now expects annual organic growth in turnover of between 2% and 4%. Sopra Steria’s projections include a “relatively stable” first quarter.

The operating margin rate is expected between 9.5% and 10%, including a dilutive effect linked to recent acquisitions of around 0.2 points. A net free cash flow of at least 350 million euros is also among Sopra Steria’s 2024 forecasts.

Sopra Steria also indicates that this 2024 financial year will be devoted to the development of a new strategic plan for the period 2025-2027, the content and financial objectives of which will be announced during an investor day to be held in early December 2024.

At the Paris Stock Exchange, the reaction is commensurate with the quality of the publication, particularly in terms of operating income and cash generation. The Sopra Steria share is leading the broader SBF 120 index, with an increase of 8.5% to 229.60 euros around 10:40 a.m., after reaching a historic high of 233 euros in the first minutes of trading.