Akka sends mixed signals in Q2

/ August 8, 2019/ Akka, France, Unknown, US

Akka surprised investors with a CC/CS revenue growth slowdown in Q2 2019: revenues were up 5.1% yoy at CC (vs. 6.6% in Q1). Utilization declined by 50 bps yoy, and attrition (excluding PDS Tech) was up by a massive 530 bps, to 23.3%.

Germany was a clear disappointment with a 1.6% revenue decline in Q2, caused by a lesser number of working days, and the roll-out of its new organization, with the absorption of MBTech and other subsidiaries. Akka is expecting an improvement in H2 in the country, thanks to automotive OEMs and the deployment of digital offerings at its largest Germany client, Daimler. Also, the company stopped several little-profitable contracts.

The good news came from North America, with CC/CS revenue growth reached an impressive 60.1% yoy at CC/CS despite the integration of PDS Tech. Boeing, Honeywell, UTC, Daimler, and Porsche drove the performance in the country.

Also, Akka highlights the integration of PDS Tech is going well, with revenue growth of 18% in H1, and with the win of a USD 300m contract with an aerospace client, probably Boeing.

Finally, France did well, with a growth of +11.0% at CC/CS in Q2, accelerating over Q1 (+5.4%) thanks to a higher utilization rate and continued momentum among automotive, aerospace and rail clients. Akka France is accelerating on recruitments and signed a USD 100m contract with Thales.

Akka will be announcing its H1 earning early September, and we should have more visibility on how fast Akka is improving the operating margin of PDS Tech, which was 3.5% in 2018 and should reach 7% by 2020, and 10% by 2022.

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