AXWAY_REGISTRATION_DOCUMENT_2017

AXWAY GROUP AND ITS BUSINESS ACTIVITIES

CORPORATE RESPONSIBILITY

CORPORATE GOVERNANCE

CONSOLIDATED FINANCIAL STATEMENTS

2017 ANNUAL FINANCIAL STATEMENTS

CAPITAL AND AXWAY SOFTWARE STOCK

INFORMATIONS ADMINISTRATIVES ETbJURIDIQUES

COMBINED GENERAL MEETING OFb6bJUNEb2018

Risk factors

Uncertainty regarding results

The Group has decided to set up technical facilities to ensure the secure operation of its IT systems, in compliance with current professional standards. Systems for backing up data, monitoring infrastructures, and controlling access to sites and IT applications are thus deployed universally. Furthermore, the Group ensures that it complies with the requirements of various national laws, such as HIPAA regulations in the United States. Lastly, a global information security management project, based on ISOǾ27001 requirements, was set up (Axway Information Security Policy) and continued to be implemented inǾ2017. Infrastructure and data management is a key challenge for the Group. However, legal changes could take place within the various national legislations and require time to be implemented by the Group. For this reason, despite the measures implemented, the Group cannot guarantee that the procedures in place are sufficient. Dependence on key personnel Given the complexity of its software packages, the Group’s continued success is contingent upon its ability to ensure the harmonious management of its Human Resources and build the loyalty of staff members who are fully familiar with its software packages and their development processes, who have a good understanding of the approaches to the use of a given product that are suitable for each customer. A significant reduction in the number of highly experienced employees, especially through their move to a competing company, could lead to a deterioration of Group standards, in particular regarding customer service and product quality. Such a reduction in the number of employees could require a significant amount of outsourcing to meet the commitments made to customers. This would have an impact on the Group’s revenue. Furthermore, the technologies employed by the Group require the presence of an experienced and motivated sales force on an ongoing basis. Any loss of key members of this team or any steep increase in their turnover rate might have a material adverse impact on the Group’s revenue. The Group has not taken out any insurance policy providing coverage for the loss of highly experienced and qualified staff members. However, to mitigate this risk, the Group has set up training and incentive programs, along with stock option and performance-based share awards, which are set out in ChapterǾ3 of this document. The Group has also developed and rolled out a global training session called “I am Axway”, as well as a retention program for employees deemed important. Lastly, the Group has diversified certain key functions and its resources in various geographical areas, in order to reduce its dependence with respect to any one particular site. (For further information see SectionǾ1.8, ChapterǾ1 of this Registration Document.)

a. Seasonality The software and services sector is characterized by high seasonal variations in business activity, generally reflected in strong performance in the last quarter of the year, and especially in the month of December. As with most other software package developers, signings of the Group’s license agreements are concentrated towards the end of the calendar year, which corresponds to the close of its accounting year. Customers delay their purchases to obtain larger discounts, to regulate the use of their budget or for other factors not related to the Group. Consequently, the cyclical nature of the Group’s business activities limits the reliability of its forecasts. The Group’s profitability in any given year or half- year period may thus be delayed to a certain extent, in particular if major contracts are involved, as the Group will need to wait for the definitive signing of the necessary contracts in order to recognize its revenue. This phenomenon, whose magnitude may vary from year to year, results in changing levels of business activity, which may have an impact either on the Group’s revenue or its annual or half year results. In particular, the Group’s revenue and profitability are weaker, as a rule, in the first half of the year compared to the second half. b. Acquisitions Through Axway Inc., (American subsidiary of the Group), the Group acquired Syncplicity, an American company specialized in enterprise file synchronization and sharing solutions (EFSS) offering users the required tools and experience for secure collaboration. Through this acquisition, Axway has enhanced its Axway AMPLIFY™ platform. However, the Group cannot guarantee that the objectives defined will be met, due to a variety of factors including the integration of Syncplicity’s teams and the retention of the customer base. These factors could make the integration of this company within the Group a difficult task. The Group’s capacity to increase its revenue and profits could partly depend on its ability to efficiently identify other potential acquisition targets and make such acquisitions at an acceptable cost to integrate them in its global offer. Should it fail to achieve these objectives, the Group might not be able to implement its acquisition strategy. Moreover, the Group cannot provide any guarantee that it will be able to successfully integrate any companies that may be acquired, deliver the anticipated synergies, build loyalty among employees of the acquired companies or ensure that these acquisitions will be profitable. Any future difficulties in these areas would be likely to have an adverse impact on the Group’s financial results, financial position and prospects.

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AXWAY - 2017 REGISTRATION DOCUMENT