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Pentalog in 2020: an Open Retrospective

Frédéric Lasnier
Frédéric Lasnier
Chief Executive Officer, Pentalog

Organic growth in 12 months out of 12, for 10% in the end. Normal profitability. Revenue of 63% outside our home country of France, including 20% in the US and 20% in Germany. Quality has never been higher…

Is there anything I haven’t told you about 2020?

It’s time for me to conduct a little retrospective – a Pentalog tradition.

But this year has been so – special. Sometimes, I have the feeling that I’ve been conducting a retrospective every day. What happened that I haven’t already said? In fact, we have already said so much, explained so much. How could we be even more transparent?

It all started off on a roll.

As last year was turning, an extremely favorable wind was blowing through Pentalog’s sails, pushing us to 20% organic growth in Q1. Remarkable. Very early on, towards the end of December, we had seen this coronavirus that we talked about on the horizon. But on January 1st, it was still a long way off.

Now there are a few things you didn’t necessarily know, dear readers. We (the management team of Pentalog) knew that we had started discussions with three very prestigious investment funds. Two were American, which seemed necessary to us to continue respecting the strategic roadmap that we had drawn up for ourselves.

This truth is hard to admit, but there are almost no funds for international ambitions in France.

We had succeeded in building a global company, and in selling its services all over the planet – including in the US. To move forward, we needed professional American associates who could interact with the top tier of the global financial pyramid – in London, in New York, and around the world. Why, though – finally? Because the goal of the entrepreneur is, in the end, to create maximum value. Anyone who says anything different has not quite understood the meaning of the word. In the same way, there is no inherently better definition for a business than going global. And whether we like it or not, because the champions of capital – are in the Anglosphere…

So if you want to play in the Champions League, you have to play, and get financing, in America.

We still had to succeed in achieving our value creation targets in this affair. And at the time, that was not yet certain.

2020 retrospective

Then there came the strange path to March 16, between intense growth and doubt.

I can admit now that I saw this ordeal coming from a long way off. By studying up a little, I knew that we were heading towards a global crisis from the first days of January. But it was still a very difficult subject to share, even in my own company. In the entrepreneurial world, Cassandras and other prophets of doom are not popular.

While our forecasts fired our optimism, I must admit, however, that as early as mid-January, I gave instructions to allow people who were between contracts to go (in effect, letting them leave the company), and to refuse large salary increases. Before the end of April, Pentalog thus let 4% of its workforce go, although in ordinary times, we would have retained two out of three of them. And all this, even as our growth was incredible. This decision allowed us to remain normally profitable over Q2 and Q3, at the same time as our competitors were panicking.

I must congratulate the production management of the company, who were able to perfectly manage and accept expectations that seemed a little pessimistic at the time, and of which not even I was very sure.

But like all companies of a certain size, while we were affected here and there (over the year, around 10% of orders were cancelled), and thanks to super-intense commercial activity … we were able to maintain both (!) organic growth and double-digit profitability! It was exceptional in this context, and I salute all Pentalog executives for this achievement!

This strength was going to be useful to us to finance our commercial aggressiveness, as well as to support our customers in great difficulty. All of our customers who have come to us for support have found it. At the same time, we established a kind of pact with those who were doing well to be able to help those who were in need.

The Pentalog teams played collectively, as a community. The Pentalog platform is a pact between all its participants.

So what about sales?

We did all of Q1 on the remarkable build-up from 2019 (+ 21%), and Q1 sales pushed us through to end Q3. But we needed drivers – a lot of growth drivers – to compensate for stoppages and achieve our +10.2%. That means that we had to innovate with our marketing and sales teams.

To exceed the usual limits of our targeting, we implemented very aggressive strategies for gaining new budgets, sometimes very far from our bases. Then we placed irresistible offers for testing Pentalog services, combining steep discounts and even free long trial periods, even for full teams. We did so in all the phases of improvement that followed periods of intense deterioration in the economy – in particular, the lockdowns. We are in the middle of that kind of promotion right now.

The results exceeded our expectations. In December 2019, we planned to win 65 new outsourcing and consulting clients in 2020. In fact, we signed… 65!!

This performance is quite simply the strongest that the group has achieved for clients on structured agile projects, in marketing and in tech.

Across the entire Pentalog digital services platform (that is, combined with SkillValue’s HR activities in freelancing, technical assessment, and recruitment), we have even reached 250 new logos on the site for the year!

Amazing force in these marketing and sales teams! Acceleration in the last weeks of the year will allow us to grow in Q1 2021 – the biggest Q1 in our history!

In a few days, I’ll be back to share my economic vision for 2021.

But many of you reading this piece already know it. 2021 and 2022 will be years of profound change, where the lessons of 2020 will shake up established economic sectors. A wave of massive funding for digitization, larger than the previous one, is in preparation.

As for us, we are entering 2021 serenely, confident in our strengths.

The Pentalog community has been quite simply extraordinary. We can be extremely proud of this. In 2020, we equalled our previous quality record. Teams raised their level of play in mid-storm, realizing that it is difficult for a client to separate from their best teammates and partners.

Our order book is at its highest. Our 2021 backlog represents 86% of 2020 and 93% of 2019! Marketing is sharp, the sales teams super-responsive, delivery quality at its highest. Our 2021 backlog is 13.5% higher than our 2020 backlog, meaning that it is already stronger than our 2020 growth rate.

Finally, congratulations to our financial teams: in one year, our cash flow has increased by more than 130%!

After we add our contracts with our banking pool, then we can talk about a good deal more. Of course, we will not call on the French ‘PGE’ subsidization mechanism for compensating Covid losses, or its equivalents in the countries where we operate. Taking that money would not have made sense and would only increase the indebtedness of our chosen countries for nothing.

Pentalog is therefore perfectly set up for a big year of worldwide growth. And it starts today!

Happy New Year to you all – Vive 2021!!!

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