Lectra’s business model relies on three fundamental aspects
- Distribution of business across various sector-based and geographical markets with different cycles, as well as a large number of customers worldwide.
- A balanced revenue mix between revenues from new systems sales and recurring revenues.
- The generation of a significant annual free cash flow and a structurally negative working capital requirement. Cash and cash equivalents will be used to finance future targeted acquisitions.
In the case of a significant acquisition, the company may take on debt up to half of its share capital.
As validation of Lectra’s strong business model, the security ratio reached 86% in 2018. This key indicator of the company’s performance measures the percentage of annual fixed overhead costs covered by gross profit on recurring revenues.
SaaS – An evolving business model for sustainable, profitable growth
In order to provide its customers with more flexibility, Lectra decided to establish a SaaS business model on a subscription or pay-as-you-go basis.
The implementation of SaaS mode for new software offers will further increase recurring revenues. The ramp-up of software sold in SaaS mode will take place gradually over the next four years.