UPDATED: a few thoughts about Altran and its cyber-attack
Altran provided some light on January 24, 2019, cyber attack that affected its operations in several countries in Europe. The company isolated malware and avoided its contamination and propagation to clients. Altran’s systems are now up and running.
Cyber attacks are likely to become more common in the future, and Altran communicated twice on the event, bringing light in anticipation of rumors. The communication was effective: while the cyber attack news made the headlines in the major newspaper, its impact on the Altran brand. Stock markets remained relatively calm, despite the importance of short positions on the Altran share (up to 15% of its shares). In short, Altran succeeded in its crisis management efforts, proving that its security expertise goes beyond technical capabilities.
Now comes the financial part. Altran will size the financial impact when it announces its Q1 2019 revenues. The company has already explained it will be able to “absorb” the impact on revenues throughout the year. The impact on profits should be limited as the company has insurance policies covering this risk into place.
Daily business paper Les Echos sized to EUR 20m, the cyber attack’s impact on revenues. The impact on Q1 revenue growth should of 250 bps, we estimate. This is a very significant amount, and such a cyber attack is far from being a negligible event. Food for thought for smaller ER&D service vendors.
UPDATED: during its Q1 2019 revenue announcement, Altran sized the impact on revenues of EUR 12m – EUR 14m, mostly impacting the revenues of its French operations, largely because of Altran shutting down its IT systems for protecting its client systems. As a result, Altran could not bill revenues for its staff. This is lost revenue and Altran will not be able to regain those during the course of the year.
We estimate that the lost revenues had an impact of 200 bps in its Q1 2019 revenue growth. Altran, despite this event, had an 8.1% CC/CS yoy growth during the quarter and maintained its financial objectives for full-year 2019.
Altran also incurred additional costs of EUR 16m – EUR 18m in expertise and legal fees related to the cyber incident. However, the company expects its insurance policies to make up for the profit impact, fully.
Finally, Altran had a difficult year in 2018, with the forgery in the accounts of Aricent, stock market volatility, investor concern about its net debt. Despite all this, Altran had a good operational year and reassured investors with its net debt at the end of 2018. 2019’s start was not as smooth as expected. Let’s hope it was a one-off for Altran.
UPDATED: we estimate that Altran grew by 10% at CC/CS yoy in Q1 2019. This puts the company back to a growth similar to that of Alten (+12.5%). We think Altran achieved a remarkable performance in Q1, taking into account that Aricent was still in slight revenue decline (-2% -3%).