AXWAY_REGISTRATION_DOCUMENT_2017

AXWAY GROUP AND ITS BUSINESS ACTIVITIES Risk factors

CORPORATE RESPONSIBILITY

CORPORATE GOVERNANCE

CONSOLIDATED FINANCIAL STATEMENTS

2017 ANNUAL FINANCIAL STATEMENTS

CAPITAL AND AXWAY SOFTWARE STOCK

INFORMATIONS ADMINISTRATIVES ETbJURIDIQUES

COMBINED GENERAL MEETING OFb6bJUNEb2018

in support of their software products, are occasionally greater than those of the Group. Although the Group intends to increase its size in the future, moves towards consolidation in the sector might favor the emergence of large competitors with stronger financial backing than its own. In addition, the Group might lose market share and report weaker financial results in the face of heightened competition in its market. Hence, the arrival of one or more major competitors, especially a multinational IT company interested in expanding into the business interaction network software market in which the Group is positioned to offer either software packages and/or services, might affect the Group’s market share in relation to its full range of solutions. The adverse impact of such a development might involve downward pressure on prices or the need for defensive actions entailing greater advertising and promotional expenditures, and thus have a material adverse impact on the Group’s operations, business results and financial position. Production The main risk lies in the ability to perform agreements that have been signed with customers in terms of quality, time frames and costs: to deliver the products and services in compliance with the specifications, within the expected time frames and within the budget assigned, particularly within the framework of major customer programs. Meeting customer requirements and ensuring product quality are crucial challenges for the Company. Any shortcoming in this respect could have a material adverse impact on the Group’s financial results and business. Controlling such risks requires a perfect knowledge of numerous constantly evolving technical and business environments, the application of a prior validation procedure covering technical, legal and financial aspects, a tried and tested project management methodology designed to integrate the use of production platforms that may be in a remote location, and a management system for monitoring and controlling technical and accounting aspects. A training program project management and implementation techniques gave rise to 20,187Ǿhours of training inǾ2017. Moreover, the Group cannot guarantee that the measures implemented will be sufficient to ensure its capacity to fulfill the commitments made. Infrastructure and data management The Group operates in a market notable for very rapid technological changes, thereby constantly exposing it to risks relating to infrastructure and data management. The control of these risks requires thorough knowledge of technical and functional environments. This control cannot be perfect, due in particular to the speed of technical changes and the number of players required for the efficient handling of infrastructure and data management processes.

data. The Group strives to limit this risk of security breach by selecting certified suppliers, implementing encryption measures for data in transmission, and auditing the cloud environment to detect any suspicious activity. It also conducts vulnerability tests to assess the integrity of the control systems. Moreover, inǾ2014, the Group was awarded the SOC1/SSAEǾ16 TypeǾ2 certification for Axway Software, Axway Inc. and Axway GmbH. This certification is renewed on an annual basis. Despite these measures, no guarantee can be given as to the prevention of any future security breaches. Innovation Technology innovation is a constant feature of the market in which the Group operates. As a result, the Group’s success depends in largemeasure on its capacity to develop new software packages (or improve existing ones) in order to better meet the needs of its customers. The Group must therefore anticipate any developments in technology likely to be desired by the market, in order to offer a range of solutions perceived by its customers as significantly different from existing software and at prices that the market will accept. The Group is continuing to invest to develop new offers. Despite the substantial resources that the Group dedicates to the development of new product offers and to the improvement of its existing software packages (and recently the AMPLIFY™ platform), with Research & Development amounting to €59Ǿmillion inǾ2017, the new software packages developed by the Group might not meet the expectations of the market, and the demand for its software packages could thus decrease and impact its operating profit and financial position. Furthermore, the Group has begun reshaping its offers in response to a strong trend, so as to enable its customers to use its software packages in the Cloud in SaaS mode instead of only in on-premise mode. This change is significant since it means that the Group can provide different technical solutions depending on the methods used. These additional offers require new sales methods and ways of implementing solutions for customers. In a more general sense, any change in the Group’s market position with respect to innovation may have a material adverse impact on the Group’s operations, financial position and revenue. Competition The target market for the Group’s software packages and services is characterized by fierce competition as well as the rapid pace of developments in technology and offerings. The Group competes with a wide range of companies of all sizes whose offers of products and services are similar to those of the Group. Some competitors have been present in the same market as the Group for longer and their financial and technology resources, as well as their development and marketing resources

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AXWAY - 2017 REGISTRATION DOCUMENT

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