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COVID-19

Pentalog succeeds in growing by 9% in Q2, maintaining operational profitability! Lessons learned?

Frédéric Lasnier
Frédéric Lasnier
Chief Executive Officer

Given the current context, Pentalog’s performance is exceptional. Because whatever else you can say, this has been a severe shock – even in a sector like ours that has been spared the worst.
The first thing I owe it to myself to do is thank the Pentalog teams for their remarkable conduct over this period.

As CEO, I got everything I asked from my teams:

  • I wanted the highest quality in this period – and I got it.
  • I asked for productivity to be maintained with telecommuting … and productivity actually increased slightly.
  • I asked managers to preserve the financial balance – and they succeeded. Our margins are unscathed!

I can only salute the strength of our community.

operational profitability

In return, I think that we protected our teammates as well as possible. We went to 100% telework a good ten days on average before European lockdowns. The few whose assignments were on client premises were also withdrawn, also ahead of the curve. As a result, no one was affected by the activity of the company.

For a look at some of the details in the numbers, performance was built up as follows:

  • +20% annual growth in Q1 serving as a high base in Q2.
  • We granted commercial reductions to the most exposed sectors. I genuinely believe that we helped a number of companies get through the storm.
  • A few temporary contract suspensions – about 5% of our invoicing.
  • A handful of new sales have already resulted in invoicing this quarter – about 2% of the total.

On a closer look, Germany and France suffered the most. Austria, the UK and the US performed a little better. But no trend is really conclusive.

All the components in the Pentalog platform offering are all growing: outsourcing-tech consulting, design-growth, freelancing, and even recruiting. The strongest trends here are in product design, freelancing and tech outsourcing.
 

What could be the drivers for Q3?

As for what happens next, increasingly it will be sales made at the end of Q1 and during Q2 that will determine variations in our growth profile. Keep in mind that we will be working from a Q3-2019 that was already very high.

But according to our leads, Pentalog will be finding its new customers through two trends:

  1. Some will come to us to get help accelerating their innovation, and get ready for the probable return of the virus next winter. They can choose strong acceleration via new characteristics in their existing products or by designing completely new solutions. We’ve never worked so fast.
  2. Others foresee a long economic phase looming at around 10% below 2019 levels, and will come to us looking for excellence, our capacity for accelerating, and the costs of our nearshore and offshore teams.

So the group has a real shot at maintaining organic growth, though it will almost certainly be weaker than the previous two quarters by, say, 5 to 10%.

 
Further reading:

Pentalog: 20% growth in the first quarter… but what’s next?

IT and Digital sector…. Who will survive? And how?

Why Smart IT Investment Leads the Way to Post-Recession Growth


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