Contents
Company information ........................................................................................................................... 3
Management review .............................................................................................................................. 7
Key figures ............................................................................................................................................... 19
Management’s statement ..................................................................................................................... 25
Independent auditor’s report on the financial statements ........................................................... 26
Consolidated statement of profit and loss ....................................................................................... 31
Consolidated statement of comprehensive income ....................................................................... 32
Consolidated balance sheet ................................................................................................................ 33
Consolidated statement of changes in equity ................................................................................. 35
Consolidated cash flow statement ..................................................................................................... 36
Notes ......................................................................................................................................................... 37
Profit and loss and other comprehensive income (Parent company) ......................................... 71
Balance sheet (Parent company) ........................................................................................................ 72
Statement of changes in equity (Parent company) ......................................................................... 73
Cash flow statement (Parent company) ............................................................................................ 74
Notes (Parent company) ....................................................................................................................... 75
2
Company information
Company
CVR No. 37 62 40 71
Municipality of reg. office: Copenhagen
Phone: +45 70 23 66 60
Internet: www.sitecore.com
Board of Directors
Executive board
Auditor
KPMG P/S
3
Company profile
People buy experiences, not just products. With industry-
leading content management, digital marketing and
commerce solutions, our enterprise-level SaaS and
platform products empower brands to deliver digital
experiences that resonate.
Our Vision
Disrupt the market with innovative solutions that turn
consumers into fans.
Our Mission
Elevate leading brands through unforgettable digital
connections with their customers.
Our Purpose
Empower brands to create memorable experiences.
Our Core Values
• Customers First
• Foster Collaboration
• Cultivate Community
• Push Boundaries
• Take Ownership
4
Sitecore at a glance
More than 20 years ago, five friends envisioned a better future for digital marketers in which they were
empowered to deliver meaningful and engaging online brand experiences without leaning on
developers. To make this vision a reality, they founded Sitecore to support marketers in delivering unique
and personalized experiences in an efficient and scalable Over the years, we have continued innovating
to provide even more sophisticated tools to marketers and, today, Sitecore is a leading provider of end-
to-end digital experience software. Unifying data, content, commerce, and personalized experiences, our
SaaS-enabled, composable platform empowers leading organizations to deliver unforgettable
interactions with their customers across every touchpoint. Our solution provides the cutting-edge tools
that brands need to build stronger customer connections, while creating compelling content efficiently to
break through the clutter of the growing digital information flows that we are all experiencing today.
Since its incorporation in Denmark in 2001, Sitecore has expanded throughout the rest of Europe,
America, Asia, Australia and beyond and has continuously developed its product offering. In FY21, the
company made considerable investments - both organically and inorganically - to further accelerate
growth and capture the opportunities arising in Sitecore’s attractively growing end markets. As part of this
initiative, Sitecore’s mission and vision were updated to go along with its ambitious growth plans and
expanding solution portfolio. The company’s mission is to elevate leading brands through unforgettable
digital connections with their customers. Its guiding vision is to disrupt the market with innovative
solutions that turn consumers into fans.
As of the end of FY22, Sitecore employed 2,200 employees globally in 27 offices around the world, and
around 5,200 brands use Sitecore to power their customer experiences. The investments made in FY21
have resulted in very attractive results and growth in FY22 as highlighted below.
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Our products and services
Sitecore® further expanded its product lineup in FY22 with the acquisition of Reflektion, and subsequent
to year-end with the launch of Sitecore Experience Manager Cloud. The continued expansion of its core
product lineup now allows Sitecore to play in broader categories with highly differentiated value
propositions.
In FY22, we revised our product messaging to reflect that our Digital Experience Platform sits at the heart
of Sitecore’s offering. What makes our platform unique in the market is how many different ways a
customer can implement the platform including the delivery model and the number of modules/products
used at any given time. This last value proposition is known as ‘composability’ and it reflects a major
technology trend of our market: clients want to be able to pick best of breed products but, if they are
selecting multiple best of breed products from a single vendor, there is an expectation for a ‘better
together’ story. Therefore, Sitecore’s Digital Experience Platform is designed to be a modern
‘composable platform’.
Sitecore Digital Experience Platform includes:
• Sitecore Experience Manager® (XM), our market-leading web content management (WCM) system,
supports global, multilingual content and provides the flexibility that enterprises demand to deliver
the right content to the right person at the right time, on any channel and device, at scale. This can be
installed on-premise by a customer or is offered via a Managed Service by Sitecore.
• Sitecore Experience Manager Cloud® (XM Cloud) helps solve the globally recognized problem of
powering instantaneous, global digital experiences with the scalability and convenience of the cloud
to a brand without sacrificing the experience to their end customer. This latest product release
provides brands with unrivaled speed to market in the implementation of customer experiences,
simplifying design and deployment, and eliminating the need for upgrades, which dramatically
decreases the cost of ownership. With XM Cloud, marketers can instantly create, manage and deliver
engaging omnichannel experiences with an industry-leading, enterprise-ready, cloud-native WCM.
• Sitecore Experience Platform™ (XP) builds on the powerful content management capabilities of XM
with the addition of Sitecore Experience Database™ (xDB), Sitecore Experience Analytics, Sitecore
Cortex™ machine learning, and marketing automation capabilities. xDB is a single marketing
repository of customer intelligence that creates complete, individual customer profiles based on
historical interaction, behaviour, and transactional data. Using this profile data, Sitecore Experience
Analytics applies a sophisticated blend of web analytics, testing and optimization, and path analysis
functionality to drive personalization and reveal which campaigns, channels, and traffic sources are
performing best. In addition, the Sitecore Cortex data processing engine allows organizations to
process the data in xDB using their choice of machine learning algorithms or platforms, enabling
marketers to automate mundane tasks and surface intelligent insights — such as patterns, complex
relationships, recommendations, and outcomes based on predictive scoring and other factors — to
help marketing teams make better, more informed decisions that ultimately lead to better business
outcomes.
• Sitecore Content Hub™ is a single, software-as-a-service (SaaS)-delivered platform that supports
content strategy, planning, creation, collaboration, and management. While many customers deploy it
to support Digital Asset Management (DAM) use cases (asset storage, reuse, and delivery), Content
Hub also delivers Product Content Management (PCM), Content Marketing Platform (CMP), and
Marketing Resource Management (MRM), and Content Operations capabilities to our customers.
• Sitecore Customer Data Platform (CDP) is a real-time SaaS Customer Data Platform. It creates a unified
source of visitor and customer intelligence for your digital ecosystem. Sitecore CDP consumes and
activates behavioural data from all channels including web, mobile, app, contact centre and email.
Behavioural data is blended with enterprise customer data to surface insights and power targeting,
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segmentation and audience delivery to your marketing, commerce and customer experience tech
stack. This product is based on the Boxever acquisition.
• Sitecore Personalize is a SaaS personalization engine based on technology from the Boxever
acquisition. It is designed to provide omnichannel personalization and testing capabilities rather than
be channel-specific like most of the marketing technology it replaces. Its primary differences relative to
the Sitecore XP and xDB offering is that it 1) decouples personalization from components and allows
personalization to be experience-based as opposed to page-based, and 2) can be sold standalone to
integrate into customer martech stacks regardless of what other technologies they have and does not
require a Sitecore WCM to function. However, clients can of course use Sitecore XP with Sitecore
Personalize.
• Sitecore Send is an easy-to-use SaaS digital messaging tool that is primarily focused on email. The
unique value proposition for this product is centred around its ease of use and the ability to embed it
into our products including our Sitecore OrderCloud®, Sitecore CDP, and our WCM products
including Sitecore XM and Sitecore XP. This product is based on the Moosend acquisition.
• Sitecore Experience Commerce® (XC) enables brands to blend relevant content with data from
product catalogues as well as on pricing and promotions. With its merchandising management
capabilities, it allows delivery of content rich, experience-first commerce that goes beyond merely
managing a transaction to win customers and bring them back time and time again. By using XC,
brands can optimize by reducing cart abandonment, boosting order size, increasing re-buy
percentages, and delivering more completed online sales.
• Sitecore OrderCloud® is a SaaS headless commerce solution based on modern technology practices
and is API-first, microservices based, and cloud native which allows it to provide flexibility and
scalability to its users. Moreover, given its composable nature, OrderCloud enables organizations to
customize their own commerce platform with features and 3rd party integrations they need.
Additionally, OrderCloud’s headless, cloud-native characteristics require minimum resources for
implementations, and shorten the time to market. This product is based on the Four51 acquisition.
• Sitecore Discover is an AI-powered SaaS commerce product search and discovery solution that quickly
learns and adapts each shopper’s unique purchase intent – built as a headless solution to offer faster
innovation, less upfront investment, and shorter time to value. Sitecore Discover solves the challenge
of understanding digital shoppers’ dynamic needs with its comprehensive search and merchandising
capabilities. It identifies what each shopper is looking for in real time and displays the most relevant
search results and array of products.
Customers will continue to have a wide array of deployment options, whether using Sitecore’s
composable SaaS products or Sitecore XM, XP, and XC in our platform-as-a-service (PaaS) configuration.
PaaS customers can either self-deploy to their own Azure subscriptions or leverage a fully managed
deployment through Sitecore Managed Cloud, which is supported by Sitecore's Cloud Operations team
in a fully optimized Microsoft Azure environment. Sitecore XM, XP, and XC can also be deployed as
infrastructure-as-a-service (IaaS) on any public cloud platform including Microsoft Azure, Amazon Web
Services, and Google Cloud Platform.
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Management review
Sitecore’s strong position
It goes without saying that the past 24 months have been incredibly transformative for many brands
around the world. The first half was characterized by an urgent need to shift to digital and the latter half
was about efficiency and optimization of those gains as brands sought an optimal balance between
digital and in-person experiences.
Given Sitecore's extensive experience in the Digital Experience Platform (DXP) market and our leading
market position, many brands turned to us to improve their omnichannel experience in response to the
changing market environment. What makes us particularly unique is that we offer a composable cloud
native DXP with embedded personalization and a business user-friendly authoring experience as the core
of our platform. This allows our customers to take a modular approach to achieving their digital
experience goals, while never sacrificing the economic and business agility vision of operating
completely in the cloud.
This creative, disruptive mindset drives our vision – of enabling the brands we serve to turn their
customers into fans, which is at the core of what our customers deeply care about: providing their
customers with relevant and actionable experiences at every step of their journey. In turn, we operate with
clarity of purpose to deliver innovative technologies that enable brands to deliver experiences that
exceed the elevated expectations of their customers.
Over the last year, Sitecore has delivered significant advancements and product innovations, enhanced its
go-to-market and geographic presence, and improved its internal structures to support the growing
business:
• Sitecore continued to build out a continuous update across our cloud products with new features for
Content Hub, Personalize, Discover, and OrderCloud.
• Completed the acquisition of Reflektion, an AI-powered digital search platform with complementary
Commerce, AI and personalization capabilities that, alongside the integration of Sitecore’s FY21
acquisitions of Four51, Boxever, and Moosend, offer even more power to seamlessly deliver targeted
intelligent, personalized and real-time information across channels.
• In July of 2022, Sitecore announced the availability of Experience Manager (XM) Cloud, its flagship
product now refactored into a cloud native offering. With the successful launch of XM Cloud, Sitecore
re-oriented its go-to market around three distinct solution clouds: Sitecore Content Cloud, Sitecore
Engagement Cloud, and Sitecore Commerce Cloud.
FY22 continued our growth and transformation as an organization with strong results. We delivered
strong 21% growth in our Annual Recurring Revenue, with Cloud and SaaS offerings making up 42% of
our ARR. We added a record breaking 150 new brands to our customer base and maintained best-in-
class retention rates for our existing customers of which many chose to further grow with us.
All of these achievements were made possible by our great team of motivated and highly engaged
Sitecorians. Over the last year, we have grown this team significantly, increasing headcount by 500 year-
over-year, and Comparably has recognized Sitecore's team with multiple awards such as "Best Product &
Design Teams" and "Best Leadership".
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Industry analyst recognition
During fiscal year 2022, Sitecore received accolades and recognition from leading industry analyst
organizations, which helps to promote our brand, increase understanding of our corporate and product
strategy, and nurture demand for our offerings.
A leader in digital experience platforms
For the fifth consecutive year, Gartner positioned Sitecore in the “Leaders” Quadrant of the Magic
Quadrant for Digital Experience Platforms (Irina Guseva, Mike Lowndes, Jim Murphy, and Gene Pfifer, 23
February 2022). According to Gartner, “Leaders have ample ability to support a variety of DXP use cases
and consistently meet customers’ needs over substantial periods. Leaders have delivered significant
product innovation in pursuit of DXP requirements and have been successful in selling to new customers
across industries.” Our position validates our journey to composability and the cloud, the strength of our
broad capabilities for CX-centric scenarios, including B2C use cases, and continued investment in our
expansive global network of partners and technology alliances.
These reports also provide strong testimony towards existing and potential new customers, especially
large enterprises, that the Sitecore Digital Experience Platform provides best-in-class functionality to
support their complex and evolving use cases. Combined with its strong partner network, it makes
Sitecore a trusted partner to global leading brands to deliver unique experiences to increasingly
demanding customers.
A leader in customer data platforms and personalization
In December 2021, IDC, a leading global market research company, named Sitecore a Leader inthe IDC
MarketScape: Worldwide Customer Data Platforms Focused on Front-Office Users 2021-2022 Vendor
Assessment.
The IDC report states that their “extensive study of customer data platform (CDP) software vendors is that
when the fit is right, CDPs work exceedingly well.” Moreover, “there can be no truly effective customer
experience initiative without an enterprise customer data service supporting it” and “therefore, CDPs are
on the critical path to becoming a customer-centric, data-driven brand.”
IDC recognized Sitecore as a Leader because its “CDP product creates a unified source of visitor and
customer intelligence in real time” and it “consumes and activates behavioural data from all channels
including web, mobile, app, contact centre, and email.” As a result, “customers in large enterprises that
need global solutions, services, and support should consider Sitecore a strong choice.”
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Gartner also recognized Sitecore Personalize, CDP and Discover as a strong “Visionary”, an improvement
from Boxever’s former “Niche Player” position prior to the acquisition by Sitecore, in the Gartner Magic
Quadrant for Personalization Engines, 2022 (Jason McNellis, Ant Duffin, Joseph Enever, July 18, 2022).
The report includes recognition for our strategy, superior decision canvas, and pricing structure. The
Gartner report states that our “offering offers one of the simplest pricing models in this Magic Quadrant,
which when combined with its composable product architecture strategy makes purchasing decisions for
prospective buyers easier”.
A leader in marketplace development platforms
In November 2021, Forrester a leading global market research company, named Sitecore a Leader inThe
Forrester New Wave™: Marketplace Development Platforms, Q4 2021 report.
The Forrester report compares marketplace development platforms to help businesses take advantage of
this emerging category to increase revenue, sharing that“more businesses are capturing new revenue
from rolling out their first-generation marketplaces — and their enthusiasm is palpable.”
The report cites Sitecore’s “strong architecture and pricing and fee schedule capabilities,” and confirms
that “the architecture and fine-grained APIs offer significant flexibility.” The report also notes that
“customers like its flexibility and how it has improved its operational efficiency.”
Still a leader in web content management
Despite the discontinuation of the Gartner Magic Quadrant on Web Content Management, we continue
to feature strongly in evaluations covering this category, for instance, being named as a Leader" in the
IDC MarketScape: Worldwide Content Management Systems for Persuasive Digital Experiences (Marci
Maddox, 2022). In this year’s version, IDC wrote on Sitecore’s key differentiators:
“Sitecore offers development flexibility on a .NET platform with a large development and partner
community to extend the CMS with integrations to third-party applications and data sources that deliver
personalized digital experiences.”
Specific strengths included Sitecore’s partner ecosystem, site deployment speed, and content services
capabilities.
Content Operations continues to be a focus
For Digital Asset Management, Sitecore was recognized as a “Strong Performer” in the Forrester Wave:
Digital Asset Management for Customer Experience, Q1 2022 (Nick Barber, Feb 15,2022). The report
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notes our strengths in metadata management and digital rights management and mentions our strong
customer references and the positive feedback on our support. Furthermore, the report notes the strong
performance of Sitecore Content Hub outpacing the market.
This report further amplifies and validates the benefits of our adjacent digital experience applications
strengthening the value of Sitecore’s overall portfolio.
This very positive recognition of Forrester was further validated by Sitecore's improvement in position
from "Niche Player" in 2021 to "Visionary" in the Gartner Magic Quadrant for Content Marketing Platforms
(Nicole Greene, David Millstein, and Jeffrey L. Cohen, March 16, 2022).
The Gartner report stated that Sitecore’s CMP strengths included “practical application of AI to support
atomic content, creative workflows and product portfolio integration.”
The various reports mentioned above validate our overall strategy and confirm our market leading
capabilities in the Content Cloud market.
Articulating a value proposition in the digital commerce market
On the heels of the successful acquisition of Four51, Sitecore was named a “Leader” in the first-time
publication of The Forrester New Wave™: Marketplace Development Platforms, Q4 2021. The purpose of
the report was stated as follows: “In Forrester’s evaluation of the emerging market for marketplace
development platforms, we identified the 14 most significant providers in the category…and evaluated
them.”
The report highlighted that Sitecore OrderCloud “offers a strong architecture and pricing and fee
schedule capabilities”. It also reported that Sitecore “customers like its flexibility and how it’s improved its
operational efficiency.”
Sitecore Commerce was further recognized by garnering our first appearance as “Strong Performers” in
the Forrester B2B Commerce Wave, Q2 2022 (Joe Cicman, Emily Pfeiffer, April 27, 2022).
Sitecore OrderCloud, Discover and Send were recognized for strengths in our search & merchandising,
order & inventory management, reporting & analytics and our overall architecture.
We believe Sitecore’s recognition in these evaluations validates our strong performance in these
categories as well as our strategy during this transformational shift in the Commerce market to deliver
seamless digital commerce experiences in a composable, cloud-native architecture that customers are
seeking out in the market.
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Environment and climate
Content of policy
Sitecore’s policy is designed to reduce waste, support reforestation, and neutralize our business travel
and data centre usage carbon footprint through various charitable organizations that offset our carbon
emissions to achieve 100% carbon neutrality. Sitecore engaged Schneider Electric to conduct a 2021
GHG Emissions baseline and develop a GHG Emissions Implementation Plan. The plan details the
methodology utilized and sources of carbon that Sitecore plans to track on an ongoing basis. The Group
has collected data for our operational building energy use and has quantified the emissions associated
with this usage to inform our policies and goal setting.
Actions
With regards to climate change and mitigating our environmental impact, Sitecore in 2022 is making
major investments to further strengthen our efforts in this area. For example, Sitecore is now offsetting
100% of all carbon impact from travel. The Group has planted 100,000 trees through The Nature
Conservancy’s Plant a Billion project, purchased reforestation verified carbon offsets from CoolEffects,
and is partnering with ReforestAction as a Gold level partner that is planting over 60,000 trees by the end
of FY23.
In addition, the Group tracks and advances energy and environmental benefiting programs in each of our
office, such as selecting LEED or other certified green building when possible, using high efficiency
lighting, switching to low water flow fixtures, providing mass transit benefits to employees in markets
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where it’s available, and working to eliminate waste, including single use plastics. Employee engagement
is also a crucial part of energy usage reduction. Employees are encouraged to switch everything off when
leaving (including low-energy equipment like monitors in standby mode, cell phone chargers, surge
protectors).
Finally, Sitecore also engaged Stok, a consulting firm with a team of interdisciplinary experts focused on
sustainable real estate development and management, to further build out the company’s environmental
strategy, policies, projects, and monitoring.
Due diligence
Our board of directors continues to monitor programs related to sustainability, including initiatives to
reduce greenhouse gases, reduce water use, and reduce waste to landfill.
The Group conducted an ESG Characteristics survey to benchmark current ESG features and programs in
place at each site. The results of this survey will be used to inform future ESG upgrades and initiatives for
each site and the program overall.
Results
Sitecore has offset 100% of all carbon impact from travel. The Group has tracked energy/carbon data for
70% of sites.
Expectations for future work
Sitecore has set the following goals to guide its future work:
• Energy reduction: 20% average per capita over the next 10 years
• Water reduction: 25% average per capita over the next 5 years
• Waste diversion rate: 50% over the next 10 years
• Cars: Convert to 100% electric vehicle fleet in 5 years
• Carbon: Offset 100% of business travel emissions. Additional carbon goals will be set as Sitecore
finalizes our carbon baselines for facility use and other emissions.
• Water: 90% of Sitecore’s global real estate portfolio will be equipped with low-flow fixtures by 2023
and 95% by 2025.
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Social and employee relations
Content of policy
Although we don’t have a Diversity and Inclusion policy, we strive to be intentionally inclusive. We believe
that everything we do and every decision we make must be done with thoughtful intention. The trust
we’ve built within and across our teams enables us to challenge both ourselves and one another to always
strive for better when it comes to inclusivity and belonging. The below information addresses both the
requirements of §99a and §99b.
Actions
In fiscal year 2022, the Group continued its programs and initiatives to increase diversity in its workforce
and to build and reinforce a culture of inclusion and belonging across the organization.
Among the initiatives, Sitecore has a focused goal of increasing its ratio of female employees. The Group
continues to build-out and enhance the Women@Sitecore initiative, a program designed to enhance the
careers and professional development of women within technology in general and Sitecore specifically.
Sitecore employees recently created two new employee resource groups (ERGs), Latinos@Sitecore and
LGBTQ+@Sitecore to further enhance and elevate diversity topics across the globe and for employees
who share a common identity to meet and support one another in building community and a strong
culture of belonging.
During the fiscal year, Sitecore created and sponsored summer internship programs with a particular
focus on hiring under-represented minorities and women to encourage greater diversity in the
technology industry. In addition, the Group continues to offer equal opportunities for men and women
throughout its global workforce and will continue to promote equal opportunities regardless of gender,
ethnicity, race, religion, or sexual orientation.
Sitecore attracts a diverse workforce and monitors its people strategy and compliance on gender
representation, with updates on any developments communicated in its annual report.
Due diligence
We consistently report our numbers in a transparent way – in both quarterly business reviews as well as in
open forums such as our 3G quarterly events - to keep ourselves honest and hold ourselves accountable.
We will continue to train our hiring managers on diversity and inclusion topics and present diverse
candidate slates for open positions.
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Results
Sitecore’s management is 28 percent women, up from 27 percent last year. The ratio of female managers
has steadily increased over the past several years. Multiple DEI programs have been implemented to
increase opportunities for diverse candidates as well as provide a safe and supportive atmosphere for
women and minorities. Sitecore also embeds within its process to review company job posting for
inclusive language and actively advertises and conducts outreach to specific minority universities and
other sites. The board of directors consists of 7 members of which one of them is female. The board of
directors gender distribution did not change within FY22 and has therefore not yet fulfilled the set gender
diversity goal of 50%.
Expectations for future work
We continue to expand on our diversity agenda. Our ERGs are continuing to form and grow and set
plans for the future which will continue to show results across the organization. We look to continue on
the positive trend of women in our workforce and lead the way in the technology sector. We have a goal
of 40% gender diversity and for the Group’s Board composition to have 50% female members by 2025.
The Group will continue its efforts to fill vacant board seats to reflect this gender distribution target. While
relevant professional qualifications remain key selection criteria for all positions within Sitecore, Sitecore’s
management will continue to focus on diversity and will continue to evaluate programs to enhance
attracting and developing diversity in its employee base.
Human rights
Content of policy
Sitecore previously adopted a Supplier Code of Conduct which contains the Group’s commitment to
human rights and sustainability, and applies to all vendors that engage with Sitecore. Through the
adoption of the Supplier Code of Conduct, together with the global Code of Business Conduct (Code),
the Group supports the protection of internationally proclaimed human rights.
Actions
As part of the Supplier Code of Conduct, Sitecore conducts periodic audits to review and manage risks in
our supplier relationships and acts on any instance of non-compliance.
Due diligence
Sitecore monitors new developments and practices relating to corporate social responsibility and
updates its internal training initiatives, with a particular focus on its obligation to act as a responsible and
ethical global corporate citizen.
Results
During fiscal year 2022, no breaches of the Supplier Code of Conduct or Sitecore’s human rights policy
were detected.
Expectations for future work
We will continue our annual materiality assessments and strive to maintain a zero breach of our Codes.
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Anti-corruption and bribery
Content of policy
The Group is committed to ensuring good business conduct with a high level of integrity and standards of
ethics. To ensure the consistent application of these goals, Sitecore adheres to its Code, which is
reviewed annually by the Board of Directors. In addition, the Board of Directors has formed a Legal
Compliance Team which is headed by a Group Compliance Counsel. The Code together with other
corporate policies, rules, standards, guidelines, and procedures, provides a strong governance structure
and enforcement mechanism for the Group.
The Code is tracked against the following eight guiding principles: (1) We promote a respectful
workplace (2) We take ethics and compliance seriously, (3) We ask questions and report concerns, (4) We
foster a safe and healthy work environment, (5) We avoid conflicts of interest, (5) We protect the Group’s
assets and reputation, (6) We are trustworthy when conducting business, (7) We follow the letter and spirit
of the law, and (8) We believe in social responsibility.
Actions
The Code is distributed to all new employees and is promoted company-wide through training
campaigns (when employees join the company and thereafter annually) and other internal programs
describing its principles. Annually, all Group employees are trained on different aspects of the Code and
certify their review and compliance with the Code. Certification of compliance with the Code occurs on a
six-monthly basis for all employees. In additions, any employee who fail to complete training will not be
eligible for their commission payments. The Board of Directors encourage a top-down approach to not
just having policies in place but living them in everything Sitecore people do. The Legal Compliance
Team encourages compliance through training and monitoring compliance with the assistance of the
wider HR team. The Legal Compliance Team maintains registers for any compliance related requests or
exceptions to policies.
Sitecore previously enhanced its commitment to encouraging ethical behaviour by adopting a separate
Anti-Bribery & Corruption (ABC) policy in combination with a reporting hotline, specifically designed to
allow for anonymous reporting of illegal, unethical or inappropriate behaviour. The hotline is available 24
hours a day and is managed by a third-party vendor.
Due diligence
The Legal Compliance Team completes reviews of the Code and ABC policies and updates them
accordingly. Registers for exceptions of the policies are maintained and any exceptions are only given
after full due diligence of the exceptional circumstances are found.
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Results
No breaches of Sitecore’s Anti-bribery or anti-corruption polices were detected and the Group is
committed to ongoing focus in this area to minimize risks.
Expectations for future work
Management will continue to encourage compliance and advertise the hotline in regular employees
Newsletter with the backing of the Chief Legal Officer & the Legal Compliance Team. In the coming fiscal
year, we will refresh our content for the annual compliance training which will include a new module on
Diversity, Equity, and Inclusion in line with the Board of Directors’, and the company’s, focus on these
topics.
We will continue to strive to maintain a zero breach of our Code and the ABC policies.
Additional information on data governance at the company can be found at sitecore.com/trust .
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Guidelines issued by the Danish Venture Capital Association
As a private-equity-owned company, Sitecore follows the recommendations of Active Owners Denmark
as described at www.aktiveejere.dk.
Status on changes in representation in leadership positions
Board of directors
Sitecore’s Board of Directors has remained the same since the appointment of Marjorie Lao to the board
in November of 2021, as communicated in the Group’s FY21 Annual Report.
Executive Management
Steve Tzikakis has been CEO of Sitecore since September of 2020. In the last fiscal year, the Group has
seen a number of changes in the Executive Leadership Team (ELT), including the departures of Tom
DeRidder (CTO), John Gardiner (CFO), Faraaz Khan (Strategy), Christine Park (CPO) and Monte Wilson
(CRO).
While the above individuals have left the business, we’ve been fortunate to welcome:
• Bertil Majer as our Chief Legal Officer to help us transform how we operate. He brings an inspiring
career with over 25 years of software industry experience. Bertil held various leadership roles at SAP,
most recently EMEA and Greater China Regional General Counsel.
• Peter David as our Chief Financial Officer. He brings over 30 years of experience in multiple global
financial leadership roles, most notably his role in supporting SAP’s global P&L, investor relations, as
well as the listing of SAP results to the markets.
• Subsequent to fiscal year end, Kim Sullivan joined Sitecore as our Chief Human Resources Officer. She
has over 20 years of business experience developing strategic solutions focused on Talent,
Leadership, Diversity, and Company Culture. She comes to us from Concentrix, where she was the
Global Chief People Officer leading HR, ESG Strategy & Reporting, and Business Transformation
projects.
We also announced the expansion of Lee Miles’ role as Chief Customer Success Officer to include
responsibility for the Sales organization.
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Key Figures – Consolidated accounts (EURm)
2021/22 2020/21 2019/20 2018/19 2017/18
Profit and Loss Accounts
Revenue from contracts with
customers
426,8 309,6 267,5 254,0 178,3
Gross profit 344,9 252,6 215,1 230,8 164,0
EBITDA 2,0 14,2 9,7 34,6 (14,6)
Operating loss (40,9) (20,4) (43,2) (12,5) (57,3)
Financial items, net (45,0) (25,2) (22,7) (22,8) (14,8)
Loss for the period (87,5) (20,1) (79,4) (35,3) (60,9)
Total assets 1.588,6 1.469,3 1.255,8 1.228,9 1.119,2
Equity 580,4 676,2 653,6 732,5 610,2
Cash flows
Operating activities (17,9) 28,0 37,1 (4,7) 9,9
Investment activities (80,1) (200,0) (10,4) (47,3) (9,3)
Investments in tangible fixed
assets
(5,9) (2,1) (4,0) (3,8) (4,6)
Financing activities 70,2 176,2 12,4 54,2 (13,5)
Employees
Average number of staff (full-
time)
1.831 1.331 1.109 1.079 907
Key ratios
Gross margin 81% 82% 80% 91% 92%
EBITDA as a % of revenue 0,5% 5% 4% 14% (8)%
EBITDA for the periods represent earnings before interest/finance costs, taxes, depreciation, and amortization.
Key ratios
The key figures and financial ratios have been prepared on a consolidated basis. The financial ratios have
been calculated in accordance with the following definitions:
• Gross margin is calculated as the gross profit divided by net revenue.
• EBITDA as a % of revenue is calculated as the EBITDA divided by net revenue.
Financial review – consolidated financial statements
In fiscal year 2022, Sitecore exceeded the revenue growth target outlined in the FY21 Annual Report.
EBITDA margin decreased, primarily as a result of increased costs related to investments in new products,
go to market initiatives, and the integration of acquired companies, and is expected to improve in future
periods.
19
Financial statements
Revenue
Revenue for the fiscal year aggregated EUR 426,8m against EUR 309,6m in the previous year, reflecting a
year-over-year growth of 37,9% primarily due to growth in new business, integration of acquisitions
completed in FY21 and FY22, and revenue per customer.
Cost of sales
Cost of sales consists of royalty costs for third-party products sold, hosting costs associated with our
subscription offering, salaries and related expenses of network operations, implementation, technical
support personnel, and allocated overhead. We enter into contracts with third parties for the use of their
data centre facilities, and our data centre costs largely consist of amounts we pay to these third parties,
power, and similar items. Cost of sales amounted to EUR 81,9m against EUR 57,0m in FY21, resulting in a
gross profit of EUR 344,9m, as against EUR 252,6m in FY21. Gross margin remained steady with a slight
decrease to 80,8%, as compared to 81,6% in fiscal year 2021.
Sales and marketing
Sales and marketing expenses include costs associated with our sales, marketing, and customer success
personnel and consist of compensation and benefits, commissions and bonuses, promotional and
advertising expenses, travel and entertainment expenses related to these personnel, and allocated
overhead. Sales and marketing expenses were EUR 220,8m against EUR 155,8m in FY21, increasing due
to growth in sales, sales personnel, and expanded marketing investments.
General and administrative
General and administrative expenses include costs for executive, finance, human resources, information
technology, legal, and administrative support functions. This includes compensation and benefits,
professional services costs, and allocated overhead. General and administrative expenses were EUR
100,9m as against EUR 69,6m in FY21, increasing in part due to increases in headcount and acquisition
related costs.
Research and development
Research and development expenses include costs associated with the development of new products,
enhancements of existing products, and quality assurance activities. This includes compensation and
benefits, consulting costs, cost of software development tools and equipment, and allocated overhead.
Research and development expenses for the year were EUR 64,1m against EUR 47,6m in FY21 due to
increased spending on the development of our software products, which was primarily compensation
costs from increased development personnel and the result of acquisitions completed in H2 FY21 and Q1
FY22.
Operating loss
Operating loss for the year was EUR 40,9m which includes EUR 42,9m for amortization and depreciation
and EUR 7,6 for share based compensation, against a loss of EUR 20,4m in FY21. The increase in
operating loss was primarily due to increased costs as described above, offset by growth in revenue.
Loss before income tax
Loss before income tax amounts to EUR 85,9m against EUR 45,6m in FY21. In addition to the drivers
described above, there was an increase in finance costs to EUR 45,0m from EUR 25,4m in FY21, primarily
interest expense resulting from increased debt to finance Reflektion Inc. acquisition in FY22 and the full
year effect of increased debt to finance FY21 acquisitions.
20
Loss for the period
Loss for the period amounts to EUR 87,5m against EUR 20,1m in FY21. The main drivers for the increase
in loss for the period are identical to the ones included above in the section on operating loss and Loss
before income tax, plus income tax expense of EUR 1,6m against income tax benefit of EUR 25,5m in
FY21. The change in income tax expense is the result of the recognition of previously unrecognized tax
losses, deductible temporary differences in FY21 which were not recurring in FY22, the derecognition of
deferred tax assets in FY22, and an increase in current income tax expense. All loss is distributed to
retained earnings.
Balance Sheet
Intangible and tangible assets
Intangible assets amount to EUR 1.280,9m (FY21: EUR 1.213,8m). The increase is due to the Reflektion
acquisition completed during the year and the effect of movements in exchange rates, offset by
amortisation recorded in the period.
Property and equipment
Property and equipment amounted to EUR 25,6m against EUR 18,6m in FY21. The increase is primarily
due to additions during the year, offset by depreciation in the period.
Trade receivables
Trade receivables amount to EUR 104,4m against EUR 68,1m in FY21. The increase is primarily due to the
growth in sales during the current year, in particular during Q4. As at 30 June 2022, 72% of outstanding
receivables are current, compared to 75% as at 30 June 2021.
Contract assets
Total contract assets amount to EUR 70,4m against EUR 42,6m in FY21. The increase is due to increase in
over-time revenue and decrease in point in time revenue.
Non-current liabilities
Total non-current liabilities amount to EUR 740,2m against EUR 580,4m in FY21. This increase is primarily
the result of a new borrowing facility used to fund the Reflektion acquisition.
Current liabilities
Total current liabilities amount to EUR 268,0m against EUR 212,7m in FY21. The increase is primarily due
to increase of contract liabilities resulting from expanding business activity and an increase in accrued
and other payables, driven by the higher expense run rate in FY22 compared to FY21.
Cash flow
Cash flows from primary operating activities were a EUR 13,0m outflow against a EUR 49,1m inflow in
FY21. This decrease of cash inflow was primarily driven by an increase in the Group’s net loss driven by
considerable investments made in fiscal year 2022 and a decrease from changes in working capital.
Cash flows from investing activities were a EUR 80,1m outflow against a EUR 200,0m outflow in FY21. The
decrease in cash outflow was driven primarily by a decrease in acquisition activity during the period as
compared to FY21.
Cash flows from financing activities were a EUR 70,2m inflow against a EUR 176,2m inflow in FY21. This
decrease in cash inflows was driven primarily by an decrease in new bank debt financing during the
period and largely follows the development in investing activities.
21
Treasury shares
The Group acquired 3,276,869 treasury shares during the period and holds a total of 4,122,425 treasury
shares as of 30 June 2022. The Group did not sell any treasury shares during the period. The total
acquisition cost of shares held as of 30 June 2022 is EUR 7,6m. The treasury shares have been acquired
via repurchases from former employees pursuant to equity compensation arrangements.
Capital resources
At the end of the period, the Group held EUR 36,4m in cash and cash equivalents. The Group also had
undrawn credit facilities of EUR 0,1m. Subsequent to year-end, in Q1 FY23, the Group rolled this credit
facility into bank debt and opened a new EUR 40m revolving credit facility. The Group expects that
current resources and cash flows from operations will be adequate to support business operations in
FY23.
Subsequent events
Subsequent to year-end, on July 11, 2022, the Company entered into a separate EUR 40,0m Incremental Term Facility
under the Senior Facilities Agreement, on the same terms as Facility B (EUR), utilising available capacity under the
Facilities Agreement. Funds from the Incremental Term Facility were used to repay the Revolving Credit Facility,
accrued interest and fees in connection with the Incremental Term Facility, and to finance general corporate and
working capital purposes of the Group.
Parent Company
Net loss for the period
Net loss for the period amount to EUR 5,8m against net loss of EUR 0,7m in FY21. The increase is primarily
due to increases in General and Administrative expenses and Finance costs.
Recognition and measurement
In preparing the annual report, Management makes various accounting estimates and assumptions that
form the basis of presentation, recognition, and measurement of Sitecore’s assets and liabilities. The most
significant accounting estimates and judgments are made in relation to the accounting treatment of:
• Revenue recognition • Share-based payments
• Impairment testing of goodwill • Deferred tax assets
• Business combinations • Uncertain tax positions
• Development projects
There are no other significant uncertainties associated with recognition and measurement in the
preparation of the financial statements.
22
Financial outlook for 2022/23
Sitecore’s ambition is to continue to generate long-term, double-digit annual recurring revenue growth,
and to gradually improve our profitability, measured by EBITDA margin, following the significant
investments made in fiscal year 2021.
With our modern SaaS products and the release of XM Cloud, we expect to accelerate the growth in our
SaaS business, while also continuing to expand our cloud hosting and service offerings. This will lead to
growth in deferred revenue and annual recurring revenue, while also increasing the share of the business
that has ratable revenue recognition.
Sitecore also expects that this business model transition will significantly increase long-term revenue by
(1) attracting new customers due to both the expanded and composable product line, which now
provides multiple entry points for customers to purchase Sitecore products, (2) increasing add-on sales to
existing customers, thus increasing the ARR per customer, and (3) increasing ARR as customers shift from
subscription to SaaS products.
Current plans and expectations involve building a stronger position in several geographic regions,
expanding to new markets, enhancing the partner network, leveraging strategic alliances and the
continued strengthening of Sitecore’s products and services through internal development and
acquisition.
Sitecore expects revenue to continue to grow 10-20% during the next fiscal year as we see the benefit
from new product launches and other growth initiatives. Costs associated with the integration of recent
acquisitions and investment in the Group’s sales, go-to-market, and development teams contributed to a
short-term decrease in EBITDA margin in fiscal 2022, but the results of these investments are expected to
result in increasing profitability in future years.
Risk factors
Sitecore’s short- and long-term outlook is subject to risks and uncertainty that may result in the actual
performance differing considerably from expectations. Critical factors are assessed to be the following:
Industry evolution
To address the industry transition to subscription licensing and cloud computing, Sitecore has shifted its
business model toward SaaS and subscription licensing. While it is expected that total SaaS and
subscription recurring revenue, billings, and bookings, will increase over time as a result of this transition,
our ability to achieve these financial objectives is subject to risks and uncertainties. The new offerings
require a considerable investment of technical, operational, financial, legal, and sales resources. If we are
unable to successfully establish these new offerings and navigate our business model transition in light of
the foregoing risks and uncertainties, our results of operations could be negatively impacted.
Cybersecurity
The transition to cloud and the hosting of customer data creates the need for additional security
certifications and further investment in data privacy and security. Further, a security incident impacting
our service providers may compromise the confidentiality, integrity or availability of data. A compromise
of such data could damage our reputation, resulting in the loss of customers and harm to our business.
Talent retention and recruitment
The Group’s success and ability to grow at the pace we expect depend largely on our ability to attract and
retain highly skilled technical, professional, managerial, sales, and marketing personnel. Competition for
these key personnel has been intense. The loss of services of any key talent or executives, the inability to
23
retain and attract qualified personnel in the future, or delays in hiring required personnel, particularly
engineering and sales personnel, could make it difficult to meet key objectives.
Macroeconomic and geopolitical events
As Sitecore’s business has expanded globally, the Group has increasingly become subject to risks arising
from adverse changes in global economic and political situations, particularly in emerging markets. The
past several years have been characterized by pockets of weak global economic conditions, uncertain
political environments, volatile financial markets, and the war in Ukraine. The National Bank of Ukraine has
introduced a number of limits on money transfers abroad. Sitecore Ukraine primarily operates as a R&D
center generating revenue through transfer pricing agreements. The Group mitigates risk associated with
cash transfers by funding the entity on a rolling short-term basis.
Evolution of product offering
As part of our effort to accommodate customers’ needs and demands and the evolution of technology,
we continue to evolve our product and service offerings and sales initiatives. Market acceptance of any
new product or service is dependent on the ability to match customers’ needs at the right time and price.
If any assumptions about expenses, revenue, or revenue recognition principles from these initiatives
prove to be incorrect, or attempts to improve efficiency are not successful, actual results may vary
materially from those anticipated, and financial results will be negatively impacted.
Reputation and litigation
Dissatisfaction among customers with current or future offerings may impair Sitecore’s reputation and
could, at worst, lead to legal disputes and claims, which may impact the performance of the Group.
Foreign currency exposure
Because the vast majority of Sitecore’s revenue and costs are outside of Denmark and the Group makes
certain business and resource decisions based on assumptions about foreign currency, the Group faces
exposure to foreign currency exchange rates. These exposures may change over time as business
practices evolve and economic conditions change, and they could have a material adverse impact on
Sitecore’s financial results and cash flows.
24
25
26
Independent auditor's report
27
Independent auditor's report
28
Independent auditor's report
CVR no. 25 57 81 98
29
Consolidated
financial
statements
Consolidated Statement of Profit and Loss
Note
01.07.2021-
30.06.2022
01.07.2020-
30.06.2021
€M €M
Net revenue 4 426,8 309,6
Cost of sales 5,6,7 (81,9 ) (57,0 )
Gross profit 344,9 252,6
Sales and marketing costs 5,6,7 (220,8 ) (155,8 )
General and administrative expenses 5,6,7,8 (100,9 ) (69,6 )
Research and development costs 5,6,7 (64,1 ) (47,6 )
Operating loss (40,9 ) (20,4 )
Finance income — 0,2
Finance costs 9 (45,0 ) (25,4 )
Loss before income tax (85,9 ) (45,6 )
Income tax (expense)/benefit 10 (1,6 ) 25,5
Loss for the period (87,5 ) (20,1 )
31
Consolidated Statement of Comprehensive Income
Note
01.07.2021-
30.06.2022
01.07.2020-
30.06.2021
€M €M
Loss for the period 11 (87,5 ) (20,1 )
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss
Exchange differences on translation of subsidiaries (net) (11,5 ) 2,7
Other comprehensive income for the period, net of tax (11,5 ) 2,7
Total comprehensive loss for the period (99,0 ) (17,4 )
32
Consolidated Balance Sheet
Note
30.06.2022 30.06.2021
€M €M
Goodwill 12 1.004,8 935,0
Acquired technology, customer relationships, and brand portfolio 12 262,4 264,6
Patents, trademarks and product rights 12 — 0,5
Development projects 12 9,9 10,5
Development projects in progress 12 3,8 3,2
Total intangible assets 1.280,9 1.213,8
Property and equipment 13 3,4 2,0
Other operating equipment 13 4,5 3,5
Construction in progress 13 0,1 0,4
Right-of-use assets 16 17,6 12,7
Total property and equipment 25,6 18,6
Leasehold deposits 1,4 2,0
Total financial assets 1,4 2,0
Deferred tax assets 14 3,8 6,3
Deferred expenses 21,8 14,1
Contract assets 4 11,9 22,5
Total other non-current assets 37,5 42,9
Total non-current assets 1.345,4 1.277,3
Trade receivables 15 104,4 68,1
Contract assets 4 58,5 20,1
Deferred expenses 13,8 12,7
Prepayments and other receivables 18,9 15,9
Income tax receivable 9,2 12,3
Contributed capital receivable 16 2,0 —
Total receivables 206,8 129,1
Cash and cash equivalents 36,4 62,9
Total current assets 243,2 192,0
Total assets 1.588,6 1.469,3
33
Consolidated Balance Sheet (continued)
Note
30.06.2022 30.06.2021
€M €M
Share capital 17 10,5 8,5
Unpaid share capital 16 (2,0 ) —
Share premium 809,6 815,3
Exchange adjustment reserve (10,1 ) 1,4
Other reserves 13,8 —
Retained deficit (233,8 ) (149,0 )
Treasury shares (7,6 ) —
Total equity 580,4 676,2
Bank debt 18 640,9 479,1
Contract liabilities 4 12,5 7,6
Income tax payables 12,8 13,4
Deferred tax liabilities 14 53,1 66,9
Lease liabilities 16 11,6 8,8
Other payables 9,3 4,6
Total non-current liabilities 740,2 580,4
Trade payables 38,4 28,7
Income tax payables 10,2 3,4
Accrued and other payables 96,6 74,8
Contract liabilities 4 115,2 99,8
Lease liabilities 16 7,6 6,0
Total current liabilities 268,0 212,7
Total liabilities 1.008,2 793,1
Total equity and liabilities 1.588,6 1.469,3
34
Consolidated Statement of Changes in Equity
Share
capital
Reserve for
unpaid
share capital
Share
premium
Exchange
adjustment
reserve
Retained
deficit
Other
reserves
Treasury
shares
Total
€M €M €M €M €M €M €M €M
Equity at 30.06.2020 7,7 — 778,4 (1,3 ) (131,2 ) — — 653,6
Loss for the period — — — — (20,1 ) — — (20,1 )
Other comprehensive income — — — 2,7 — — — 2,7
Total comprehensive loss for the period — — — 2,7 (20,1 ) — — (17,4 )
Transactions with owners in their capacity as owners
Capital increases 0,8 — 27,3 — — — — 28,1
Purchase of treasury shares — — — — (0,5 ) — — (0,5 )
Share based payment — — 5,7 — 2,8 — — 8,5
Deferred tax impact on outstanding equity
awards
Total transactions with owners in their capacity
as owners
Equity at 30.06.2021 8,5 — 815,3 1,4 (149,0 ) — — 676,2
Loss for the period — — — — (87,5 ) — — (87,5 )
Other comprehensive income — — — (11,5 ) — — — (11,5 )
Total comprehensive loss for the period — — — (11,5 ) (87,5 ) — — (99,0 )
Accounting for reserve for unpaid share capital
and associated receivable and adjustment to
retained earnings
Reclassifications
Reclassification of treasury shares — — 0,4 — 0,7 — (1,1 ) —
Reclassfication of share based payment — — (5,7 ) — — 5,7 — —
Reclassification of tax impact on outstanding
equity awards
Transactions with owners in their capacity as owners
Capital increases — — 2,9 — — — — 2,9
Purchase of treasury shares — — — — — — (6,5 ) (6,5 )
Equity-settled share-based payment expense — — — — — 6,7 — 6,7
Equity-settled share-based payment settlements — — — — — (1,7 ) — (1,7 )
Share options exercised — — 0,6 — — (0,6 ) — —
Deferred tax impact on outstanding equity
awards
Total transactions with owners in their capacity
as owners
Equity at 30.06.2022 10,5 (2,0 ) 809,6 (10,1 ) (233,8 ) 13,8 (7,6 ) 580,4
35
Consolidated Cash Flow Statement
Note
01.07.2021-
30.06.2022
01.07.2020-
30.06.2021
€M €M
Loss for the period (87,5 ) (20,1 )
Adjustments to reconcile net loss to net cash flows
Depreciation, amortisation and impairment 7 42,9 34,6
Net finance costs 9 45,0 25,5
Share based payments, net of settlement 5,2 8,5
Income taxes 1,6 (24,2 )
Allowance for bad debt 0,4 (0,1 )
Net foreign exchange differences 2,7 2,7
Other non-cash items — (34,8 )
Changes in working capital, net of acquired assets and assumed
liabilities:
Increase in contract assets 4 (23,5 ) 7,2
Increase in accounts receivable 15 (29,0 ) 0,4
Increase in contract liabilities 4 9,3 10,7
Increase in accounts payables and accrued liabilities 24,2 47,7
Change in other net working capital (4,3 ) (9,0 )
Cash flow from primary operating activities (13,0 ) 49,1
Interests paid on debt (1,2 ) (10,4 )
Interest paid on leases 15 (0,8 ) (0,8 )
Income taxes (paid)/refunded (2,9 ) (9,9 )
Net cash flow from / (into) operating activities (17,9 ) 28,0
Business combination, net of cash acquired 21 (67,3 ) (187,3 )
Purchase of property and equipment 13 (5,9 ) (2,1 )
Development expenditure 12 (6,9 ) (10,6 )
Net cash flow into investing activities (80,1 ) (200,0 )
Repayment of borrowings 18 — (296,4 )
Proceeds from borrowings 18 83,2 477,5
Payment of lease liability (6,9 ) (5,0 )
Proceeds from the issue of share capital 0,4 0,6
Repurchase of treasury shares (6,5 ) (0,5 )
Cash flow from financing activities 70,2 176,2
Net cash flow for the year (27,8 ) 4,2
Cash and cash equivalents, beginning of the year 62,9 57,7
Effect of movements in exchange rates on cash held 1,3 1,0
Cash and cash equivalents, end of the year 36,4 62,9
36
Notes
1. Corporate Information
2. Significant accounting policies
3. Critical accounting estimates and judgements
4. Revenue
5. Staff costs
6. Share based payments
7. Amortisation, depreciation, and impairment
8. Fees to the appointed auditor
9. Finance costs
10. Income tax
11. Proposed distribution of loss
12. Intangible assets
13. Property and equipment
14. Deferred tax
15. Trade receivables
16. Leases
17. Share capital
18. Borrowings
19. Related parties
20. Commitments and contingent liabilities
21. Business combinations
22. Financial risk management
23. Events after the balance sheet date
37
Notes
Consolidated Financial Statements
1. Corporate information
Sitecore Corporation A/S was founded on 26 April 2001. To effect an investment by EQT into Sitecore, Sitecore
2016 through a wholly owned subsidiary, Sitecore Holding III A/S. The consolidated accounts include all subsidiaries
in which Sitecore Holding II A/S directly or indirectly holds more than 50% of the voting rights or otherwise has a
controlling interest.
The consolidated financial statements of Sitecore Holding II A/S and its subsidiaries (collectively the Group) for the
year ended 30June 2022 were authorized for issue in accordance with a resolution of the board of directors on
14November 2022.
2. Significant accounting policies
2.1 Basis of preparation
The consolidated financial statements for the Group have been prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by EU and additional Danish disclosure requirements applying to entities of
reporting class C (large).
The annual report is prepared according to standards and interpretations effective for financial years beginning on
1July 2021. No standards or interpretations have been adopted early.
The Financial Statements have been prepared under the historical cost method, except for the measurement of
certain financial instruments at fair value and lease liabilities, which are measured at present value.
Certain prior year amounts have been reclassified for consistency with the current year presentation. These
reclassifications had no effect on the reported results of operations.
2.2 Applying materiality
When preparing the annual report, management seeks to improve the value of the information in the report by
focusing on information that will help the understanding of Sitecore’s performance in the reporting period and the
financial position at year-end. The focus is on presenting information that is considered of material importance for our
stakeholders, rather than generic descriptions.
Disclosures that are required by IFRS are included in the annual report, unless the information is considered of
immaterial importance to users of the annual report.
Materiality is not applied for items where disclosures are required for control purposes.
2.3 Basis of consolidation
Consolidated subsidiaries are all entities over which the Group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and could affect those
returns through its power to direct the activities of the entity. The Group re-assesses whether it controls an entity if
facts and circumstances indicate that there are changes to one or more of the elements of control. Subsidiaries are
fully consolidated from the date on which control is obtained by the Group and will be deconsolidated from the date
that control ends.
On consolidation, elimination is made of intra-group income and costs, shareholdings, intra-group balances and
dividend and realized and unrealized profits or losses on transactions between the consolidated companies.
38
2.4 Summary of significant accounting policies
2.4.1 Foreign currency translation
The financial statements are presented in Euros (EUR), due to the Group’s international activities. The financial
statements have been rounded to the nearest hundred thousand unless otherwise noted.
Items in the financial statements of each subsidiary of the Group are measured in the currency of the primary
economic environment in which the entity operates (the functional currency). We translate assets and liabilities of
foreign subsidiaries with functional currencies other than Euro at exchange rates in effect at the balance sheet date.
We translate revenue and expenses at the monthly average exchange rates. Accumulated net translation adjustments
are included in stockholders’ equity as Reserve for exchange rate translation.
2.4.2 Business combinations
The acquisition method of accounting is used to account for all business combinations. The Group determines that it
has acquired a business when the acquired set of activities and assets include an input and a substantive process that
together significantly contribute to the ability to create outputs. The cost of an acquisition is measured as the
aggregate of the consideration transferred.
Identifiable assets, liabilities, and contingent liabilities of the acquired businesses are measured initially at fair values
at the acquisition date. The excess of the consideration transferred over the fair value of the net identifiable assets
acquired is recorded as goodwill.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement
from the effective date of acquisition or up to the effective date of disposal, as appropriate.
2.4.3 Revenue from Contracts with Customers
Classes of revenue
Revenue is mainly derived from fees charged for Software as a Service (SaaS), software subscriptions and licenses,
cloud hosting, software maintenance, and services (consulting, education, and other).
SaaS
SaaS is a way of delivering software applications over the internet as a service. Unlike a term license arrangement
hosted by Sitecore, customers access the software through the internet where it is owned, delivered, and managed
remotely by Sitecore. Outside of the SaaS arrangement, there is no stand-alone value to the customer as they never
control or own the software. Sitecore’s SaaS arrangements typically have minimum commitments from one to three
years.
Software subscription and license
Software license revenue represents fees earned from the license or sale of software to customers for use on the
customer’s premises. In these arrangements, the customer has the right to use and take possession of the software for
installation on the customer’s premises or on hardware of third-party hosting providers unrelated to Sitecore or
hosted in Sitecore’s managed cloud environment. Software licenses are sold as perpetual licenses or as term
subscription licenses, limiting possession of the software to a specified term, typically a period of one to three years.
For multi-element contracts, the basis for determining the transaction price for revenue recognition is an assessment
of the standalone selling prices for the identified performance obligations, including rebates, discounts, and
allowances.
Cloud hosting
Hosting services include hosting, monitoring, managing the installation of Sitecore software on Microsoft Azure’s
cloud platform. Hosting arrangements typically have minimum commitments from one to three years.
Software maintenance
Maintenance revenue represents fees earned from providing customers with technical product support and
unspecified future software updates, upgrades, and enhancements on an if-and-when available basis.
39
Services
Services revenue represents fees earned from consulting and education services.
Identify the contract:
We combine contracts entered into with the same customer within the same month if they are economically
interrelated. Significant judgment is required in determining if contracts are interrelated. Considerations include:
• Multiple contracts were negotiated as a single package with a single business objective,
• Price in one contract is tied to a price or performance of the other contract.
Identify performance obligations:
Our contracts with customers often include promises to transfer multiple software offerings and services to a
customer. Determining whether software and services are considered distinct performance obligations that should be
accounted for separately versus together may require judgement.
Contract elements discussed above in the Classes of Revenue section above generally qualify for accounting
purposes as separate performance obligations, except for promised software and services which may represent a
single performance obligation.
We frequently grant customers options to purchase additional software and services in future at a price defined in
current contracts. Significant judgment is required in determining if such options represent a material right that the
customer would not otherwise receive without entering into the current contract. Judgment includes evaluation if the
discount on an optional purchase is greater than the discount included in the current purchase as well as in relation to
a range of discounts historically provided to a similar class of customers or in a similar deal size.
Determine the transaction price:
Significant judgments are required to determine the amount of consideration to be received by Sitecore in exchange
for software and services. These include estimates of concessions based on prior history, evaluation of rights of return
and customer acceptance clauses in contracts, and assessment of variable consideration.
Our customer contracts do not have significant financing components. Customers are generally invoiced in advance
with payment due 30 days after the invoice date.
Allocate the transaction price:
Fixed term subscription and perpetual license performance obligations are sold for a broad range of amounts (that is,
selling price is highly variable) and a representative standalone selling price is not discernible from past transactions
or other observable evidence. As a result, the standalone selling price for fixed term subscriptions or perpetual
licenses included in a contract with multiple performance obligations is determined by applying a residual approach
whereby performance obligations with observable standalone selling prices are first allocated a portion of the
transaction price based on their respective standalone selling prices, with the residual amount of the transaction price
allocated to the fixed term subscription or perpetual license.
Standalone selling price for all SaaS, Cloud Hosting, Maintenance Services and other Services are determined based
on observable pricing.
Recognize Revenue:
SaaS and cloud hosting revenue are recognised evenly over time as services are provided. Our performance
obligation for SaaS arrangements is a right to access and use of our software for a certain term and with hosting
arrangements it is to host the software for a certain term. Performance for both types of obligations is measured on a
time elapsed basis. Therefore, revenue is recognised ratably over the contract term.
Software subscription and license revenue is recognised at a point in time, when the license key is delivered to the
customer enabling the customer to download the software, but not earlier than the start of the contractual license
term.
Maintenance revenue is recognised ratably over the term of the support arrangement, as the performance obligation
is satisfied over time. Maintenance services are a stand-ready performance obligation to provide technical product
40
support and unspecified updates, upgrades, and enhancements on a when-and-if- available basis. Customers
simultaneously receive and consume the benefits of these support services as Sitecore performs.
Education service revenue is recognised over time as services are delivered. Consulting services revenue is
recognised over time based on percentage of completion method measuring performance progress based on actual
time incurred compared to the estimated budgeted time required to fully deliver a service. Significant judgment is
required in estimating budgeted time. We use hour history with similar projects when estimating total budgets
required to deliver a consulting service.
Contract balances
Contract assets represent revenue recognised for contracts that have not yet been invoiced to customers, typically for
multi-year arrangements. When we have unconditional rights to consideration, except for the passage of time, a
receivable will be recorded on the consolidated balance sheets.
Contract liabilities primarily reflect invoices due or payments received in advance of the Group transferring the good
or service to the customer. Our contract balances will be reported as net contract assets or liabilities on a contract-by-
contract basis at the end of each reporting period.
Costs to obtain a contract
The Group recognizes an asset for the incremental costs of obtaining contracts with customers that are directly
associated with the contract if those costs are expected to be recoverable and records them in “Deferred Expenses”
in the consolidated balance sheet. Incremental costs of obtaining contracts are those costs that the Group incurs to
obtain a contract with a customer that would not have been incurred if the contract had not been obtained.
The costs capitalised are primarily sales commissions paid to our sales force personnel as well as third party partners.
Capitalised costs may also include portions of fringe benefits and payroll taxes associated with compensation for
incremental costs to acquire customer contracts and incentive payments to partners.
Capitalised costs to obtain a contract are amortized over the expected period of benefit, which we have determined
to be 4 years. Amortisation of capitalized costs are presented in sales and marketing expense in our consolidated
statements of profit and loss. Sales and partner commissions payable are presented in Accrued and Other Payables
and Trade Payables, respectively.
2.4.4 Operating expenses
Operating costs are allocated into cost of sales, sales and marketing, general and administrative, and research and
development expenses.
Cost of sales includes third- party royalty and cloud hosting costs associated with our subscription offerings, salaries
and related expenses of network operations, implementation, technical support personnel, and allocated overhead.
Sales and marketing expenses include costs associated with sales, marketing and product marketing personnel and
consist of compensation and benefits, partner and sales commissions and bonuses, share-based compensation costs,
depreciation and amortisation, promotional and advertising expenses, travel and entertainment expenses related to
these personnel and allocated overhead.
General and administrative expenses include costs for executive, finance, human resources, information technology,
legal and administrative support functions. This includes compensation and benefits, share-based compensation,
professional services, depreciation and amortisation costs, and allocated overhead. Expenses are recognized in the
accounting period in which they are incurred.
Research and development expenses include costs associated with the development of new products, enhancements
of existing products for which technological feasibility has not been achieved and quality assurance activities. This
includes compensation and benefits, share-based compensation costs, consulting costs, depreciation and
amortisation costs, the cost of software development tools and equipment.
41
2.4.5 Financial income and expenses
Financial income and expenses comprise interest income and expenses, realized and non-realized capital gains/
losses on transactions in foreign currency, amortisation of financial assets and liabilities, etc. Interest earned is
reported using the effective interest method.
2.4.6 Income tax and deferred tax
The Group is part of the mandatory joint taxation scheme in Denmark which covers parent company Sitecore Holding
II A/S and the Danish subsidiaries. The Danish income tax payable is allocated between the jointly taxed Danish
companies based on their proportion of taxable income (full absorption including reimbursement of tax deficits).
The jointly taxed companies are taxed under the Danish tax payment scheme. Additions, deductions, and allowances
are recognised under financial income or financial costs.
The income tax expense or credit for the period is the tax effect on the current period’s taxable income based on the
applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable
to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
balance sheet date in the countries where the parent company and its subsidiaries operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes provisions, where appropriate, on the basis of
amounts expected to be paid to the tax authorities.
Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial statements.
However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred
income tax is not accounted for if it arises from the initial recognition of an asset or liability in a transaction other than
a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the
balance sheet date and are expected to apply when the related deferred income tax asset is realised, or the deferred
income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be
available, against which the temporary differences can be utilized.
Deferred income tax assets are recognised on deductible temporary differences arising from investments in
subsidiaries, associates, and joint arrangements only to the extent that it is probable that the temporary difference will
reverse in the future and that there is sufficient taxable profit available, against which the temporary difference can be
utilized.
Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries,
except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by
the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes
levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an
intention to settle the balances on a net basis.
Our tax positions are subject to income tax audits by multiple tax jurisdictions throughout the world. An uncertain tax
position arises when there is uncertainty over whether the approach we have applied will be accepted by the tax
authority. IFRIC 23 requires consistent judgments and estimates to be applied to current and deferred taxes. The
judgments and estimates made to recognize and measure the effect of uncertain tax treatments are also reassessed
whenever circumstances change or when there is new information that affects those judgments. Although we believe
we have adequately provided for the uncertain tax positions, we can provide no assurance that the final tax outcome
of these matters will not be materially different.
42
We adjust these allowances when facts and circumstances change, such as the closing of a tax audit or the refinement
of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such
differences will affect the provision for income taxes in the period in which such determination is made and could
have a material impact on our consolidated financial statements.
2.4.7 Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the
Group’s interest in net fair value of the net identifiable assets, liabilities, and contingent liabilities of the acquiree.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of
impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units
(CGU), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of
units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored
for internal management purposes.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances
indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the
higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an
expense and is not subsequently reversed.
2.4.8 Intangible Assets
Acquired intangible assets other than goodwill comprise acquired customer contracts, technology, customer base,
and brand. At initial recognition, intangible assets acquired in a business combination are recognized at their fair
value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less accumulated
amortisation and impairment losses.
Intangibles assets with finite lives are assessed for impairment whenever there is an indication that the intangible
asset may be impaired. Intangible assets are amortized on a straight-line basis over their estimated useful lives, as
follows:
• Acquired customer relationships: 15-20 years
• Acquired technology: 3-9 years
• Acquired brand portfolio: 2-20 years
• Patents, trademarks, and product rights: 5 years
Development costs are recognized as intangible assets when they are related to clearly defined and identifiable
products and processes, for which the technical rate utilization, adequate resources and a potential future market or
development opportunity in the enterprise can be established, and where the intention is to develop, market or apply
the product or process in question. Development costs which do not meet these criteria are recognized as an
expense in the income statement as incurred.
The cost of development projects includes salaries and benefits that are directly attributable to the development
projects.
Internal development projects are amortized on a straight-line basis over their estimated useful lives, typically 3-5
years. Amortisation begins when the development project is at a stage where its commercial potentials can be
utilized in the manner intended by management.
2.4.9 Impairment of non-financial assets, other than Goodwill
Intangible assets that have an indefinite useful life and intangible assets not yet available for use are not subject to
amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value, less cost of disposal, and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows. Prior
impairment of non-financial assets (other than goodwill) is reviewed for possible reversal at each reporting date.
43
2.4.10 Tangible assets
Leasehold improvements, other systems, operating equipment, and fixtures and fittings are measured at cost less
accumulated depreciation and accumulated impairment losses. Depreciation on these assets is calculated using the
straight-line method to allocate their cost or revalued amounts to their residual values over their estimated useful
lives, as follows:
• Property and IT equipment: 1-4 years
• Other operating equipment: 2-5 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
period.
Gains and losses arising from disposal of tangible assets are calculated as the difference between the sales price less
sales costs and the carrying amount at the time of sale. Gains and losses are recognised in the profit and loss account
under the relevant category.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount. An impairment loss is recognised in the income statement when the
impairment is identified.
2.4.11 Leases
Leased assets are capitalised at the commencement date of the lease and comprise of the initial lease amount, initial
direct costs incurred when entering into the lease less any incentives received.
An impairment review is undertaken for any right-of-use lease asset that shows indicators of impairment and an
impairment loss is recognised against any right-of-use lease asset that is impaired.
The lease liability is measured at the present value of the fixed and variable lease payments net of cash lease
incentives that are not paid at the balance sheet date. Lease payments are apportioned between the finance charges
and a reduction of the lease liability using the incremental borrowing rate implicit in the lease to achieve a constant
rate of interest on the remaining balance of the lease liability. Lease payments for buildings exclude service fees for
cleaning and other costs.
Lease modifications are accounted for as a new lease with an effective date of the modification.
Leasehold deposits are initially recognised at the value paid to the landlord. Deposits are subsequently measured at
net realizable value based on the amount the Group expect to receive at the end of the lease.
2.4.12 Receivables
Receivables are initially recognised at fair value adjusted for any transaction costs. Subsequently, receivables are
measured at amortised cost, which usually corresponds to the nominal value.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped
based on the days past due. Expected loss in the first 12 month is estimated, and the receivables are monitored on an
ongoing basis. If credit risk is significantly changed expected credit loss in the lifetime is measured. Receivable
balances are written off when there is no reasonable expectation of recovery.
2.4.13 Borrowings
Borrowings are initially recognised at fair value, net of transaction costs. Borrowings are subsequently measured at
amortized cost. Any differences between the proceeds and the redemption value are recognised in the income
statement over the period of the borrowings using the effective interest method.
2.4.14 Share-based payment
The Group operates equity-settled, share-based compensation plans, under which the entity receives services from
employees as consideration for equity instruments of the Group. The fair value of the employee services received in
44
exchange for the equity grant is recognised as an expense and credited to Other Reserves equity account. The total
amount to be expensed is determined by reference to the grant date fair value of the equity award.
When the options are exercised, the Group issues new shares. The proceeds received net of any directly attributable
transaction costs are credited to share capital (nominal value) and share premium.
The Group also operates a cash-settled, share-based compensation plan, under which the entity receives services
from employees as consideration for grants tied to the equity value of the Group that the Group intends to settle in
cash. The fair value of the Group’s obligations under this plan is calculated at the end of the period and recorded as
an expense and credited as a liability.
2.4.15 Treasury Shares
Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No
gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity
instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in the
share premium.
2.4.16 Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand and other short-term
highly liquid investments with original maturities of three months or less. As of 30June 2022, cash and cash
equivalents is composed entirely of cash accounts at banks.
2.5 New and amended standards and interpretations
There are no new IFRS or IFRIC interpretations effective as of July1, 2022 that have a material impact on the Group.
2.6 New standards and interpretations not yet effective
There are no IFRS or IFRS Interpretations Committee (“IFRIC”) interpretations that are not effective that are expected
to have a material impact.
3. Critical accounting estimates and judgements
The Group makes estimates, and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
addressed below.
The judgments, estimates, and assumptions made are based on historical experience and other factors that
management considers to be reliable, but which by their very nature are associated with uncertainty and
unpredictability. These assumptions may prove incomplete or incorrect, and unexpected events or circumstances
may arise. The most critical judgments, estimates, and assumptions for the individual items are described below.
The Group is also subject to risks and uncertainties that may lead to actual results differing from these estimates, both
positively and negatively.
3.1 Revenue recognition
Revenue recognition requires management to make judgements which are based on assumptions on historical and
forecast information, as well as on regional and industry economic conditions in which we or our clients operate. A
short description of main judgments made in relation to revenue recognition follows:
• Assessing whether it is probable that the consideration from contract with clients will be collected requires
judgement and might impact the timing and amount of revenue recognition.
• Establishing whether distinct goods or services are considered to be separate performance obligation requires
judgement and might impact the timing and amount of revenue recognition.
• Determining whether the Group is a principal or agent for a given contract.
45
• Evaluating whether a change in terms, conditions, or other aspects of the contract result in a contract modification.
• The allocation of total transaction fee of a client contract to the distinct deliverables requires judgment in
determining standalone selling price and an apportionment which reflects the fair value measurement of each
performance obligation. This may impact the timing and amount of revenue recognised.
• Determining whether different contracts with the same client are accounted for as one agreement involves the use
of judgment as it requires us to assess whether the contracts are negotiated together or linked in any other way.
The timing and amount of revenue recognition can vary depending on whether two contracts are accounted for
separately or as one single arrangement.
• Calculation of revenue based on percentage of completion method for consulting projects requires significant
judgment in estimating budgeted time. We use prior history with similar projects when estimating total budgets
required to deliver a consulting service.
• Significant judgment is required in determining if options to purchase software or services at a price defined in
current contracts represent material right that the customer would not otherwise receive without entering into the
current contract. Judgment includes evaluation if the discount on an optional purchase greater than the discount
included in the current purchase as well as in relation to a range of discounts historically provided to a similar class
of customers or in a similar deal size.
3.2 Impairment testing of intangible assets, including goodwill
The Group tests for impairment in accordance with the accounting policy stated in note 2. Significant judgments are
required in determining the number of CGU’s within the Group, the recoverable amount of the CGU (or CGU’s),
including the use of estimates over future revenue, cash flows, discount rates, and valuation multiples (note 12).
3.3 Business combinations
For acquisitions of entities, the assets, liabilities, and contingent liabilities of the acquiree are recognised using the
acquisition method. The most significant assets acquired generally comprise goodwill, trademarks, non- current
assets, receivables, and inventories.
No active market exists for the majority of the acquired assets and liabilities, in particular in respect of acquired
intangible assets. Accordingly, management makes estimates of the fair value of acquired assets, liabilities, and
contingent liabilities. Depending on the nature of the item, the determined fair value of an item may be associated
with uncertainty and possibly adjusted subsequently.
3.4 Development projects
For development projects in progress, management estimates on an ongoing basis whether each project is likely to
generate future economic benefits for the Group in order to qualify for recognition. The development projects are
evaluated on technical as well as commercial criteria. Management also uses judgment in determining which costs to
include as part of the accounting for the project.
Refer to note 12 for additional information on carrying value and amortisation of development projects.
3.5 Share-based payments
Determination of fair value of the options requires significant judgment regarding fair value of the underlying shares,
expected life, and volatility. The expected life of the options is based on the assumption that the holder will exercise
the options upon an exit event. Actual exercise patterns may differ from the assumption used herein.
The expected volatility is based on peer group data and reflects the assumption that the historical volatility over a
period similar to the life of the equity awards is indicative of future trends, which may not necessarily be the actual
outcome. The peer group consists of listed companies that management believes are similar to the Group in respect
to industry and stage of development.
Fair value of the options issued, assumptions applied regarding the valuation, and additional information on
expenses recorded are disclosed in note 5.
46
3.6 Deferred Tax Assets
A deferred tax asset is recognised for deductible temporary differences, unused tax losses and unused tax credits to
the extent that it is probable that taxable profit will be available against which the deductible temporary differences
can be utilized. Management regularly review the deferred tax assets for recoverability based on historical taxable
income, projected future taxable income, the expected timing of the reversals of existing temporary differences and
tax planning strategies. Management’s judgment regarding future profitability may change due to many factors,
including future market conditions and the ability to successfully execute our business plans and tax planning
strategies.
3.7 Uncertain Tax Positions
Our tax positions are subject to income tax audits by multiple tax jurisdictions throughout the world. An uncertain tax
position arises when there is uncertainty over whether the approach, we have applied will be accepted by the tax
authority. IFRIC 23 requires consistent judgments and estimates to be applied to current and deferred taxes. The
judgments and estimates made to recognize and measure the effect of uncertain tax treatments are also reassessed
whenever circumstances change or when there is new information that affects those judgments. Although we believe
we have adequately provided for the uncertain tax positions, we can provide no assurance that the final tax outcome
of these matters will not be materially different. We adjust these allowances when facts and circumstances change,
such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these
matters is different than the amounts recorded, such differences will affect the provision for income taxes in the
period in which such determination is made and could have a material impact on our consolidated financial
statements.
4. Revenue
Set out below is the disaggregation of the Group’s revenue from contracts with customers. The Group does not
disclose segment information because the Group operates as a single operating unit.
Classification
2021/22
Share of
Revenue
2020/21
Share of
Revenue
€M €M
License* 166,7 39% 102,3 33%
Maintenance 106,3 25% 104,3 34%
SaaS and cloud 105,2 25% 52,1 17%
Services and other 48,6 11% 50,9 16%
Total revenue 426,8 — 309,6 —
*License includes both term license and perpetual license revenues. Perpetual license revenues were EUR 1,2m and EUR 3,5m for fiscal 2022 and 2021,
respectively.
Timing of Revenue Recognition
2021/22
Share of
Revenue
2020/21
Share of
Revenue
€M €M
At a point in time 166,7 39% 102,3 33%
Ratably over the contract term 212,4 50% 160,5 52%
Over time as SaaS/cloud services are provided 47,7 11% 46,8 15%
Total revenue 426,8 — 309,6 —
47
Significant changes in the contract assets and the contract liabilities balances are as follows in the table below:
Changes in Contract Assets and Liabilities
Contract
Assets
Contract
Liabilities
€M €M
30 June 2021 42,6 107,4
Amount transferred to trade receivables from contract assets
(20,1)
—
Contract assets additions 47,9 —
Performance obligations satisfied during the period that were included in the
contract liability balance at the beginning of the period
— (99,8)
Increases due to invoicing prior to satisfaction of performance obligations — 120,1
30 June 2022 70,4 127,7
Management does not believe there to be a material valuation risk associated with credit exposure from contract
assets. After a contract asset is transferred to trade receivables, the Group records a provision in accordance with the
expected loss matrix in note 15.
Remaining performance obligations
Remaining performance obligations represent contracted revenue that has not yet been recognised, and include
contract liabilities, and amounts that will be invoiced and recognised as revenue in future periods. As of 30June
2022, the Group’s remaining performance obligations were EUR 387,3m (30June 2021: EUR 264m), approximately
54% (30June 2021: 62%) of which it expects to recognize as revenue over the next 12 months and the remaining
balance thereafter.
Deferred contract costs
During the year ended 30June 2022, the Group had a total of EUR 35,7m (30June 2021: EUR 31,9m) of contract
costs recorded as deferred expenses, of which EUR 23,9m related to open contracts as of 1July 2021 (30June 2021:
EUR 15,5m related to contracts as of 1July 2020). For the year ended 30June 2022, amortisation associated with the
assets arising from contract costs was EUR 30,5m (30June 2021: EUR 13,1m).
5. Staff costs
2021/22 2020/21
€M €M
Wages and salaries 225,6 148,6
Pensions, defined contribution plans 7,3 4,9
Share based payments (note 6) 7,6 8,5
Social costs 18,6 11,8
Other staff costs 17,4 1,9
Total staff cost 276,5 175,7
Average number of full-time employees 1.831 1.331
Staff Costs are recognised in the income statement: 2021/22 2020/21
€M €M
Cost of sales 31,1 26,0
Sales and marketing costs 155,8 94,2
General and administrative expenses 38,3 26,1
Research and development costs 51,3 29,4
Total 276,5 175,7
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Key management compensation
Key management includes Board of Directors (BoD) and Executive Management (EM). Executive Management
includes members of the Executive Board. The compensation paid to key management for employee services is
shown in the following table:
2021/22 2021/22 2020/21 2020/21
€M €M €M €M
BoD EM BoD EM
Wages and salaries 0,4 2,9 0,3 2,6
Share based payments (note 6) 0,3 0,7 0,3 4,8
Total key management compensation 0,7 3,6 0,6 7,4
6. Share-based payments
Share-based payments
Share-based payments to employees are made by the Group under a Share Option incentive plan, a Management
Incentive Program (“MIP”), and an Employee Incentive Plan (“EIP”). The Share Option plan is a performance-based
plan wherein certain employees are offered Class A share options subject to certain vesting conditions. The MIP is a
co-investment plan wherein key employees make a personal investment in the Group by purchasing restricted
ClassA or B shares which are subject to a repurchase option at a price determined based upon certain conditions.
The EIP is an incentive program where the Group, upon the event of a sale or IPO, will pay a bonus to the employee
based on the number of options help, up to a pre-defined cap. Share Option grants, MIP investments, and EIP grants
fully vest upon an IPO or Change in Control as defined in the plan documents.
Share Option Plan
Share Options are granted to employees under the 2016 Global Share Incentive Plan. Option grants are subject to
continued employment with 50% designated as Time Options that vest over five years (1/5th vest on each anniversary
of the grant date), and 50% designated as Performance Options that vest subject to the Group’s sponsor achieving a
certain rate of return on investment. Unexercised options expire 10 years from the grant date.
The grant date fair value of Time Options was determined utilizing a Black Scholes Option Pricing Model. The grant
date fair value of Performance Options was determined using an Option Price Method in 2022 and a Monte Carlo
simulation model in years before 2022.
The fair value calculation of the options requires the input of subjective assumptions such as:
• The share price based on the most recent semi-annual valuation performed by an external valuation firm.
• The expected life of options is based on Management’s expectation of future exercises
• The expected volatility is based on a peer group analysis of publicly listed companies comparable to Sitecore
• The risk-free rate is based on interpolated U.S. Treasury yields corresponding to the assumed term
• Dividend Yield: The expected dividend yield is assumed to be 0.0% as the Group does not anticipate paying
dividends in the foreseeable future
49
Share Options
2021/22 2020/21
Granted during the year 21.182.750 27.983.000
Assumptions applied
Share price EUR 2,14 - 2,45 EUR 1,72 - 1,83
Expected life of options 2 - 2,25 2
Expected volatility 52,5% - 60,5% 50% - 52,5%
Risk free interest rate (0,7%) - 3,17% (0,7%) – (0,8%)
Expected dividend 0% 0%
Each Share Option grants the holder the right to buy one share of Class A common stock at the stated exercise price,
which is equal to the Class A share price at the time of grant.
Fair value
The total grant date fair value of Time Options totals EUR 15,5m (30June 2021: EUR 5,3m) while the grant date fair
value of Performance Options totals EUR 9,4m (30June 2021: EUR 4,6m).
Share Options
Board of
Directors
Executive
Management
Weighted
Average
Exercise Price
Other
Weighted
Average
Exercise Price
Total
Outstanding as at 30 June
2020
4.530.000 16.162.504 — 16.262.776 — 36.955.280
Granted during the year 1.500.000 19.200.000 EUR1,79 7.283.000 EUR1,83 27.983.000
Exercised during the year — — — (132.514) EUR0,50 (132.514)
Forfeited during the year — (9.409.260) EUR1,08 (2.211.243) EUR1,42 (11.620.503)
Outstanding as at 30
June 2021
6.030.000 33.706.023 1,51 13.449.240 1 53.185.263
Granted during the year 390.000 3.500.000 EUR2,45 17.292.750 EUR2,32 21.182.750
Exercised during the year — — — (3.522.186) EUR0,87 (3.522.186)
Reclassification of
employees
— (6.040.000) EUR1,72 6.040.000 EUR1,72 —
Forfeited during the year — — — (10.565.504) EUR1,63 (10.565.504)
Outstanding as at 30
June 2022
6.420.000 31.166.023 2 22.694.300 2 60.280.323
Of which 17.219.876 options are currently exercisable (30June 2021: 15.074.876).
Management Incentive Plan (“MIP”)
The MIP is designed to align the performance of the Group with the remuneration of key employees. Under the MIP,
employees make a personal investment in the Group by purchasing Class A or Class B shares. Class B shares were
added to the plan in FY21 .
Under the MIP, Class A shares are subject to a repurchase option at a price equal to original cost if the employee
terminates under conditions defined as a Bad Leaver, or at current fair market value if the employee terminates under
conditions defined as a Good Leaver. The Good Leaver determination is primarily determined based on whether the
employee leaves (a) involuntarily but without cause or (b) voluntarily after an employment of five years or more (three
years if shares were issued to holder as part of the purchase consideration in an acquisition).
50
Class B shares are divided into 50% Time Vesting shares and 50% Performance Vesting shares that vest in the same
pattern as the Time Options and Performance Options described above.
MIP
2021/22 2021/22 2020/21 2020/21
Class A Class B Class A Class B
Granted during the year 1.378.098 — 14.597.268 6.200.000
Share price EUR 2,14 - 2,45 N/A EUR 1,72 - 1,83 EUR 0,43
Expected life of options 2,0 N/A 2,0 2,0 - 5,0
Expected volatility 52,5% N/A 50% - 52,5% 52,5%
Risk free interest rate (0,7)% N/A (0,7%) - (0,8%) (0,7)%
Expected dividend 0% N/A 0% 0%
MIP - Class A Shares
Board of
Directors
Executive
Management
Average
Grant Price
Other
Average
Grant Price
Total
Outstanding as at 30 June 2020 — — EUR— 12.819.759 EUR1,34 12.819.759
Granted during the year — 348.836 EUR1,72 14.248.432 EUR1,89 14.597.268
Buy-back during the year — — (423.254) EUR1,65 (423.254)
Outstanding as at 30 June 2021 — 348.836 EUR1,72 26.644.937 EUR1,58 26.993.773
Granted during the year 68.306 — EUR1,83 1.309.792 EUR2,14 1.378.098
Reclassification of employees — (58.139) EUR1,72 58.139 EUR1,72 —
Buy-back during the year — — — (3.307.925) EUR1,96 (3.307.925)
Outstanding as at 30 June 2022 68.306 290.697 EUR1,74 24.704.943 EUR1,59 25.063.946
MIP - Class B Shares
Executive
Management
Average
Grant Price
Outstanding as at 30 June 2020 — EUR—
Granted during the year 6.200.000 EUR0,43
Buy-back during the year — —
Outstanding as at 30 June 2021 6.200.000 EUR0,43
Granted during the year — —
Buy-back during the year — —
Outstanding as at 30 June 2022 6.200.000 EUR0,43
Of which 10.456.354 grants are current exercisable (30June 2021: 545.364)
Employee Incentive Plan (“EIP”)
Grants made under the EIP only vest in the event of an exit, through a sale or an IPO, meeting a specific financial
valuation and only provided that the select employee is employed with the Group at the relevant time of exit.
Provided the conditions are met, the Group will pay a cash bonus to the employee based on the number of incentive
options held, up to a pre-defined cap. In the event an employee leaves the Group prior to an exit, all incentive
options are cancelled with no compensation.
There were no EIP grants made to members of the Board of Directors or to Executive Management.
51
Share Options
2021/22
Granted during the year
36.558.157
Assumptions applied at 30 June 2022
Share price EUR 2.45
Expected life of options 2
Expected volatility 61%
Risk free interest rate 3%
Expected dividend 0%
EIP
Grants
Average
Grant Price
Outstanding as at 30 June 2020 —
Granted during the year — —
Buy-back during the year — —
Outstanding as at 30 June 2021 —
Granted during the year 36.558.157 EUR2,45
Forfeited during the year (1.847.108) EUR2,45
Outstanding as at 30 June 2022 34.711.049 EUR2,45
Share based compensation costs are recognized in the income statement as follows:
2021/22 2020/21
€M €M
Sales and marketing costs 4,1 2,3
General and administrative expenses 1,6 2,3
Cost of Sales — 0,1
Research and development costs 1,9 3,8
Total share-based compensation 7,6 8,5
52
7. Amortisation, depreciation, and impairment
2021/22 2020/21
€M €M
Amortisation of intangible assets 32,7 25,5
Depreciation on property and equipment 4,2 3,3
Depreciation on right-of-use asset 6,0 5,8
Total amortisation, depreciation, and impairment 42,9 34,6
Amortisation, depreciation and impairment are recognised in the income statement:
Cost of sales 0,1 —
Sales and marketing costs 23,7 14,5
General and administrative expenses 9,8 8,7
Research and development costs 9,3 11,4
Total amortisation, depreciation and impairment 42,9 34,6
There was no impairment recorded in the period ending 30June 2022 (30June 2021: nil).
8. Fees to the appointed auditor
2021/22 2020/21
€M €M
Statutory audit
0,5 0,8
Other assurance engagements
0,3 —
Tax assurance services
— —
Other services
— —
Total audit fees
0,8 0,8
9. Finance costs
2021/22 2020/21
€M €M
Interest expense 41,3 18,1
Amortisation of financing fees 1,6 5,3
Other finance costs, including bank fees 0,9 0,4
Interest on leases 0,8 0,8
Exchange rate adjustments, expenses 0,4 0,8
Total finance costs 45,0 25,4
53
10. Income tax
2021/22 2020/21
Current tax:
€M €M
Current tax on profits for the year 13,9 2,7
Current tax on profits for previous years (0,8) 0,6
Total current tax expense 13,1 3,3
Deferred tax:
Deferred tax benefit for the year and previous years (11,0) (28,7)
Deferred tax charge/(benefit) as a result of tax rate changes (0,5) (0,1)
Total deferred tax (11,5) (28,8)
Income tax (benefit)/expense for the period 1,6 (25,5)
Income tax benefits are specified as follows:
Calculated 22,0% tax on profit for the year before income tax (18,9) (10,0)
Tax effects of:
Higher/Lower tax rate in subsidiaries 2,3 0,1
Non-deductible finance expenses 3,6 3,1
Non-deductible expenses 0,2 1,0
Non-deductible acquisition expenses 0,6 1,2
Adjustments in respect of prior years (2,6) (0,1)
Tax losses not recognized 12,1 0,2
Establishment of unrecognized deductible temporary differences 4,4 —
Recognition of previously unrecognized tax losses — (14,7)
Recognition of previously unrecognized deductible temporary differences — (7,6)
Recognition of uncertain tax positions 0,5 0,1
Non-deductible earn out expenses 2,2 1,2
Withholding tax on deemed redemption — 0,5
Other (2,8) (0,5)
Total income tax expense/(benefit) for the period 1,6 (25,5)
Effective tax rate (1,9)% 56,2%
Non-deductible finance expenses relate to costs which are not deductible under the Danish interest ceiling rules.
Non-deductible expenses include non-deductible meals and entertainment and non-deductible legal and professional fees.
Tax losses not recognized relate to EUR 2,5m losses generated in Ireland during the current period and EUR 9.6M in the United States for which a
deferred tax asset is not recognized. Irish tax losses can be carried forward indefinitely. United States can be carried forward indefinitely if they were
incurred July 1, 2019 or later. The Group has acquired tax losses that are limited in the United States.
Management concluded the previously recognized prior year tax losses and previously recognized deductible temporary differences can not be
realized in the United States. This is due to current and forecasted income is not sufficient and it is not certain that suitable taxable profits will exist in
future years against which this deferred tax asset may be offset.
Management concluded the previously unrecognized prior year tax losses and previously unrecognized deductible temporary difference in intangible
amortization can be realized in Denmark. This is due to the forecasted income as a result of the intercompany transfer pricing arrangements in its
operating model effective on 1 July 2021 and forward.
Recognition of Uncertain Tax Positions relates to the recognition of a potential exposure pursuant to IFRC 23.
Non-deductible earn-out expenses related to non-deductible contingent consideration, related to the acquisitions are not considered to be part of the
purchase price consideration.
Withholding tax relate to a deemed redemption in connection with the acquisition of Four51, Inc.
54
11. Proposed distribution of loss
2021/22 2020/21
€M €M
Retained earnings (87,5) (20,1)
12. Intangible assets
Cost:
Goodwill
Acquired
technology
Acquired
customer
relationships
Acquired
brand
portfolio
Patents,
trademarks
& product
rights
Internal
development
projects
Internal
development
projects in
progress
Total
€M €M €M €M €M €M €M €M
At 01.07.2020 752,0 108,1 231,4 62,7 3,1 23,8 3,3 1.184,4
Additions during the
year
— — — — — — 10,8 10,8
Additions through
business combination
184,2 28,8 3,8 6,1 — — — 222,9
Transfers to completed
development projects
— — — — — 10,9 (10,9) —
Disposals — — — — — (2,3) — (2,3)
Exchange differences (1,2) — — — — — — (1,2)
At 30.06.2021 935,0 136,9 235,2 68,8 3,1 32,4 3,2 1.414,6
Amortisation
Goodwill
Acquired
technology
Acquired
customer
relationships
Acquired
brand
portfolio
Patents,
trademarks
& product
rights
Internal
development
projects
Internal
development
projects in
progress
Total
€M €M €M €M €M €M €M €M
At 01.07.2020
— 97,6 47,9 13,0 1,9 14,9 — 175,3
Amortisation charge
— 4,1 10,7 3,0 0,7 7,0 — 25,5
At 30.06.2021
— 101,7 58,6 16,0 2,6 21,9 — 200,8
Carrying amount
30.06.2021
935,0 35,2 176,6 52,8 0,5 10,5 3,2 1.213,8
55
Cost:
Goodwill
Acquired
technology
Acquired
customer
relationships
Acquired
brand
portfolio
Patents,
trademarks
& product
rights
Internal
development
projects
Internal
development
projects in
progress
Total
€M €M €M €M €M €M €M €M
At 01.07.2021 935,0 136,9 235,2 68,8 3,1 32,4 3,2 1.414,6
Additions during the
year
— — — — — — 6,9 6,9
Additions through
business combination
53,7 16,3 2,4 0,4 — — 72,8
Transfers to completed
development projects
— — — — — 6,3 (6,3) —
Disposals — — — — — — — —
Exchange differences 16,1 3,8 0,5 0,3 — — — 20,7
At 30.06.2022 1.004,8 157,0 238,1 69,5 3,1 38,7 3,8 1.515,0
Acquired technology additions through business combination includes, in addition to the acquisition of Reflektion
disclosed in note 21, EUR 0,5m resulting from the acquisition of Frank, Inc.
Amortisation:
Goodwill
Acquired
technology
Acquired
customer
relationships
Acquired
brand
portfolio
Patents,
trademarks
& product
rights
Internal
development
projects
Internal
development
projects in
progress
Total
€M €M €M €M €M €M €M €M
At 01.07.2021 — 101,7 58,6 16,0 2,6 21,9 — 200,8
Amortisation charge — 8,5 12,9 3,9 0,5 6,9 — 32,7
Exchange differences — 0,3 0,2 0,1 — — — 0,6
At 30.06.2022 — 110,5 71,7 20,0 3,1 28,8 — 234,1
Carrying amount
30.06.2022
1.004,8 46,5 166,4 49,5 — 9,9 3,8 1.280,9
Impairment test for goodwill
Goodwill is monitored by management at group level. Goodwill and acquired intangible assets relate to previous
acquisitions of the Sitecore Group, including that of Reflektion, Inc. in FY22. See note 21 for additional details on this
acquisition.
The Group tests whether goodwill has suffered any impairment on an annual basis. The Group operates and is
financially monitored as one CGU and there is no allocation of goodwill. As of 30June 2022, the carrying value of
goodwill for the Group’s single CGU was EUR 1.004,8m (30June 2021: EUR 935,0m)
For the year ended 30June 2022, an assessment was completed and management did not identify any impairment
for goodwill or intangible assets.
Impairment testing at 30.06.2022
For the year ended 30June 2022, the recoverable amount of the CGU was determined based on an average of the
Discounted Cash Flow and Guideline Public Company methods.
56
The key assumptions used in the estimation of value in use were as follows:
Discounted cash flow method
Assumptions 30.06.2022 30.06.2021
Revenue CAGR 15,5% 17,3%
Long term growth rate 3,0% 3,0%
Pre-tax discount rate 14,4% 13,3%
Average EBITDA margin 12,3% 14,2%
The discount rate used in determining the value in use is based on the rate of 20-year US Treasury bonds, adjusted
for a risk premium that reflects the increased risk associated with investing in equities generally, the countries in
which the Group operates, and factors such as size and the high-growth nature of the Group. The decrease in the
discount rate was primarily due to a 0,9% decrease in the long-term market equity risk premium and a 2,0% decrease
in the company-specific risk premium, offset by a 1,4% increase in the risk-free rate of return, a 0,5% increase in the
current market risk adjustment, and a 1.3% increase in the cost of debt.
The calculations use forecasted cash flow for a five-year period approved by management, which is then extrapolated
over an additional five years at which point a residual free cash flow value is calculated. Ten years, rather than a
shorter period, is used because management believes this timeline best reflects the growth trajectory of the Group.
The current high-growth period of the Group is gradually reverted to the long-term growth rate of the extrapolated
period. A long-term growth rate into perpetuity after the ten-year period has been determined to reflect estimated
GDP rates for the countries in which the Group operates.
Revenue and future net free cash flow growth rates are based on a forecast approved by management which takes
into account past experience, adjusted for anticipated revenue growth and changes in the Group’s cost base. The
CAGR for the forecast period has decreased compared to FY21 on account of macroeconomic developments in the
past year, including inflation and uncertainty over global economic outlook. This is partially offset by expectations that
the current business model transition, new product development, entrance into new markets, and acquisitions
completed during FY21 and FY22 will support the established trend of strong revenue growth by attracting new
customers and drive higher revenue per customer. The Group regularly updates its outlook and financial forecasts to
reflect current and changing economic conditions, such as considering impacts of macroeconomic events like the war
in Ukraine. Further, after making significant investments in FY22 which temporarily decreased the Group’s achieved
profit margins, management expects the future revenue growth and controlled cost management to drive improved
profitability over the forecasted period. The decrease in average EBITDA margin reflects the aforementioned
investments to improve profitability while also considering macroeconomic factors such as the current inflationary
environment and its impact on recurring costs.
The guideline public company method multiplies historical and anticipated financial metrics of the Group by
multiples derived from an analysis of comparable publicly traded companies. When selecting appropriate multiples,
factors such as industry, financial size, historical and projected growth, risk, and profitability are considered.
Guideline public company method
Input 30.06.2022 30.06.2021
Multiple of next fiscal year net sales 5,25x 5,5x
Multiple of next fiscal year + 1 net sales 4,25x 4,5x
57
The following table shows the amount by which assumptions would need to change individually for the estimated
recoverable amount to be equal to the carrying amount.
Sensitivity analysis
Input 30.06.2022 30.06.2021
Revenue CAGR (8,5%) (7,8%)
Long term growth rate (59,0%) (40,2%)
Pre-tax discount rate 7,6% 6,3%
Average EBITDA margin (14,1)% (12,4)%
Multiple of next fiscal year net sales (2,7x) (2,7x)
Multiple of next fiscal year + 1 net sales (2,1x) (2,2x)
Sensitivity calculations for Revenue CAGR includes derived effect on correlated costs.
The Group had no accumulated impairment losses at the beginning of the period. As a result of the analysis
performed at the end of the period, the estimated recoverable amount is greater than the carrying value and
management did not identify an impairment for the Group’s goodwill or intangible assets as of the end of the
reporting period (30June 2021: EUR 0,0m).
13. Property and equipment
Cost:
Property and IT
Equipment
Other operating
equipment
Construction in
progress
Total
At 01.07.2020 6,0 8,8 0,3 15,1
Additions during the year 1,2 0,8 0,1 2,1
Disposals during the year — (0,3) — (0,3)
Exchange differences (0,3) (0,5) — (0,8)
At 30.06.2021 6,9 8,8 0,4 16,1
Depreciation:
Property and IT
Equipment
Other operating
equipment
Construction in
progress
Total
At 01.07.2020 3,5 3,8 — 7,3
Depreciation charge 1,5 1,8 — 3,3
Reversed depreciation, disposed assets — (0,3) — (0,3)
Effect of movement in exchange rates (0,1) — — (0,1)
At 30.06.2021 4,9 5,3 — 10,2
Carrying amount 30.06.2021 2,0 3,5 0,4 5,9
58
Cost:
Property and IT
Equipment
Other operating
equipment
Construction in
progress
Total
At 01.07.2021 6,9 8,8 0,4 16,1
Additions during the year 3,3 1,8 0,8 5,9
Transfer — 1,2 (1,2) —
Disposals during the year — (0,1) — (0,1)
Effect of movement in exchange rates 0,3 1,0 0,1 1,4
At 30.06.2022 10,5 12,7 0,1 23,3
Depreciation:
Property and IT
Equipment
Other operating
equipment
Construction in
progress
Total
At 01.07.2021 4,9 5,3 — 10,2
Depreciation charge 1,8 2,4 — 4,2
Reversed depreciation, disposed assets — (0,1) — (0,1)
Effect of movement in exchange rates 0,4 0,6 — 1,0
At 30.06.2022 7,1 8,2 — 15,3
Carrying amount 30.06.2022 3,4 4,5 0,1 8,0
14. Deferred tax
2021/22 2020/21
€M €M
Deferred tax, beginning of year 60,6 90,2
Deferred taxes added as a result of benefit from uncertain tax position (0,7) (7,6)
Deferred tax as a result of purchase accounting — 3,4
Deferred tax as a result of share-based compensation 0,2 (3,9)
Deferred tax as a result of currency translation — (0,3)
Deferred tax recognized in the income statement (10,8) (21,2)
Deferred tax at end of year 49,3 60,6
Deferred tax relates to:
Intangible assets 44,7 44,4
Property and equipment (3,6) (1,4)
Contract assets and contract liabilities 13,0 43,7
Tax loss carry-forwards (28,5) (28,5)
Right-of-use assets 1,8 1,6
Lease liabilities (1,8) (2,0)
Accruals, provisions & reserves (0,5) (0,1)
Share-based compensation (9,9) (5,2)
Other temporary differences (0,6) 4,4
Gross deferred taxes before valuation allowance 14,6 56,9
Valuation allowance on deferred tax assets 34,7 3,7
Net deferred taxes 49,3 60,6
Of which presented as deferred tax assets 3,8 6,3
Of which presented as deferred tax liabilities 53,1 66,9
Total 49,3 60,6
As part of the adoption of IFRIC 23 in 2019/2020, the Group recognized a portion of deferred tax asset related to Intangible Amortization. In
2021/2022, Management concluded the previously unrecognized deferred tax asset related to Intangible Amortization in relation to IFRIC 23 can be
59
realized. This is due to the forecasted income as a result of the intercompany transfer pricing arrangements in its operating model effective on July 1
2021 and forward.
As part of the adoption of IFRS 15 in 2018/2019 the Group has recognized deferred tax liabilities related to the Contract Cost and Contract Liability
balances.
The Group has not recognized a deferred tax asset of EUR 6,2m and EUR 0,3m on its carried forward tax losses and deferred tax assets related to
temporary items in Ireland as there is no sufficient certainty that suitable taxable profits will exist in future years against which this deferred tax asset
may be offset. In Ireland, unused tax losses may be carried forward indefinitely.
The Group has not recognized a deferred tax asset of EUR 21,7m, EUR 0,5m, and EUR 5,9m on its carried forward tax losses, tax credits, and deferred
tax assets related to temporary items in the United States, respectively. There is not sufficient certainty that suitable taxable profits will exist in future
years against which this deferred tax asset may be offset. In the United States, unused tax losses may be carried forward indefinitely.
As part of the adoption of IFRS16 on 1July 2020, the Group has recognized deferred tax assets related to Lease Liabilities and deferred tax liabilities
related to Right-of-Use Assets.
As part of operating a global business there are inherent risks, one of these risks is that tax authorities may challenge the Group’s current global
operating model, Management believes that the provisions made pursuant to IAS 12 and IFRIC 23 are adequate. Any necessary reserves for uncertain
tax positions are properly assessed and reflected on the Group’s financials as of the balance sheet date.
15. Trade receivables
Trade receivables consist of sale of SaaS, subscriptions, licenses, maintenance, cloud, and services to customers and
have the same risk profile. Provisions for bad debt are made in accordance with the simplified expected credit loss
model, considering Sitecore’s credit policy and debt collection procedures. In FY22, the Group updated expected
loss ratios based on the Group’s history of collecting on balances past due. Carrying amount of trade receivables
represent a reasonable approximation of fair value.
The below tables reflect the manner in which receivable aging was reviewed by management during the period. The
presentation of FY21 figures have been updated from the FY21 Annual Report to align with FY22 presentation.
30.06.2022
Gross
receivable
balance
Expected
loss ratio
Expected loss Total
€M €M €M
Current 76,3 0,25% 0,2 76,1
0-30 days 13,6 0,50% 0,1 13,5
30-60 days 4,3 1,0% — 4,3
60-90 days 5,3 2,0% 0,1 5,2
Over 90 days 5,9 10,0% 0,6 5,3
Trade receivables net 105,4 1,0 104,4
30.06.2021
Gross
receivable
balance
Expected loss
ratio
Expected loss Total
€M €M €M
Current 51,8 0,25% 0,1 51,7
0-30 days 11,5 0,75% 0,1 11,4
30-60 days 2,1 0,8% — 2,1
60-90 days 1,8 5,0% 0,1 1,7
Over 90 days 1,5 20,0% 0,3 1,2
Trade receivables net 68,7 0,6 68,1
60
Movement on the Group provision for impairment of trade receivables are as
follows:
2021/22 2020/21
€M €M
Allowances during the year based on expected credit loss model (0,7) (0,3)
Write-offs during the year 0,1 0,3
Reversed allowances 0,2 0,1
(Increase)/Decrease of provision for impairment of trade receivables (0,4) 0,1
16. Leases
The Group leases certain properties that relate to office space. The Group also has lease contracts for vehicles used in
its operations. Leases of office space generally have lease terms between 2 and 10 years and leases of vehicles
generally have lease terms between 3 and 4 years. The Group currently does not act in the capacity of a lessor.
Right-of-use Assets:
Buildings Vehicles Total
€M €M €M
At 01.07.2020 15,5 0,2 15,7
Additions 4,4 — 4,4
Depreciation expense (5,7) (0,1) (5,8)
Disposals (1,6) — (1,6)
At 30.06.2021 12,6 0,1 12,7
Right-of-use Assets:
Buildings Vehicles Total
€M €M €M
At 01.07.2021 12,6 0,1 12,7
Additions 10,0 — 10,0
Depreciation expense (5,9) (0,1) (6,0)
Disposals — — —
Effect of movement in exchange rates 0,9 — 0,9
At 30.06.2022 17,6 — 17,6
The increase in carrying value of buildings primarily results from additions offset by depreciation expense during the
period. The Group has not generated any income from subleasing right-of-use assets during the financial year.
Lease Liabilities:
Total
Total Lease at 01.07.2020 16,6
Additions 3,2
Principal repayment (5,0)
At 30.06.2021 14,8
Non-current 8,8
Current 6,0
Lease Liabilities:
Total
Total Lease at 01.07.2021 14,8
Additions 10,1
Principal repayment (6,9)
Effect of movements in exchange rates 1,2
At 30.06.2022 19,2
Non-current 11,6
Current 7,6
61
Undiscounted lease liabilities:
FY2022 FY2021
Payable within 1 year 9,1 6,9
Payable within 2 to 5 years 9,6 9,9
Payable after 5 years 2,4 —
The interest expense on liabilities for FY22 is EUR 0,8m (FY21: EUR 0,8m). Expense related to the short-term leases
for FY22 is EUR 0,8m (FY21: EUR 0,8m).
17. Share capital
The share capital comprises 788.425.198 Class A shares of a nominal value of EUR 0,01 each and 6.200.000 Class B
shares of a nominal value of EUR 0,4258 each, authorised and issued. Unpaid share capital represents amounts due
to the Group for shares issued and, beginning in FY22, is recognized separately from Share Capital. No shares carry
any special rights.
Class A Shares Class B Shares Total
Changes in share capital:
€M
Number of
shares
€M
Number of
shares
€M
Number of
shares
Share capital at 30.06.2017 7,1 705.278.071 — — 7,1 705.278.071
Capital increases — 4.222.809 — — — 4.222.809
Share capital at 30.06.2018 7,1 709.500.880 — — 7,1 709.500.880
Capital increases 0,6 61.840.027 — — 0,6 61.840.027
Share capital at 30.06.2019 7,7 771.340.907 — — 7,7 771.340.907
Capital increases — 158.424 — — — 158.424
Share capital at 30.06.2020 7,7 771.499.331 — — 7,7 771.499.331
Capital increases 0,2 15.085.298 2,6 6.200.000 2,8 21.285.298
Share capital at 30.06.2021 7,9 786.584.629 2,6 6.200.000 10,5 792.784.629
Capital increases — 1.840.569 — 0 — 1.840.569
Share capital at 30.06.2022 7,9 788.425.198 2,6 6.200.000 10,5 794.625.198
The Group acquired 3.276.869 treasury shares with a nominal value of EUR 32.619 during the period and holds a
total of 4.122.425 treasury shares as of 30 June 2022. Shares acquired during the period and held at year end
represent 0,4% and 0,5% of total shares outstanding, respectively. The Group did not sell any treasury shares during
the period. The total acquisition cost of shares held as of 30 June 2022 is EUR 7,6m. The treasury shares have been
acquired via repurchases from former employees pursuant to equity compensation arrangements.
Capital Management
The Group’s objectives when managing capital (cash and cash equivalents, and equity) are to safeguard the Group’s
ability to continue as a going concern, to provide returns for shareholders and benefits for other stakeholders, and to
maintain an optimal capital structure to reduce cost of capital. Any surplus liquidity is used to reduce debt. The board
of directors monitors the share and capital structure to ensure that the Group’s capital resources support the strategic
goals.
18. Borrowings
The borrowings comprise of acquisition related loans as well as revolving facilities to fund the ongoing operations.
There are covenants attached to the loan facilities. Carrying amount of borrowings represent a reasonable
approximation of fair value.
62
Principal
amount,
Effective
interest
rate
Currency Maturity
Borrowing
amount,
2021/22
Borrowing
amount,
2020/21
€M €M €M
Facility B 150,0 6,90% (variable) EUR 12 March 2026 164,2 152,7
Facility B 115,8 7,40% (variable) USD 12 March 2026 127,7 103,6
Acquisition Facility 120,0 6,90% (variable) EUR 12 March 2026 131,4 122,2
Acquisition Facility 92,6 7,38% (variable) USD 12 March 2026 101,8 82,6
Incremental Acquisition Facility 79,4 8,43 % (variable) USD 12 March 2026 84,3 —
Revolving Credit Facility 38,6 5,55% (Variable) EUR 12 September 2025 38,3 25,0
Total bank borrowings 647,7 486,2
In September 2021, the Group borrowed USD 83m (Incremental Acquisition Facility) to finance the acquisition of
Reflektion. Under the Senior Facilities Agreement, the Group can elect to have interest periods of 1, 3 and 6 months.
Facility B and the Acquisition Facility are repayable in full at the maturity date. Both facilities include a Payment-in-
Kind (PIK) provision whereby the borrower can elect to add accrued interest to the principal amount for the initial 24
months of the facility. The total amount of interest added under the PIK provision in 2021/22 was EUR 39,7m
(2020/21 EUR 8,1m).
In compliance with IAS 7, the following disclosure aims to enable users of financial statements to evaluate changes in
liabilities arising from repayments and currency revaluations:
2020/21
€M
Total bank borrowings at 01.07.2020 303,2
Repayment of bank debt (296,4)
Withdrawal of bank debt 477,5
Payment-in-kind accrual 8,1
Currency revaluations of debt denominated in USD (6,2)
Total bank borrowings at 30.06.2021 486,2
Amortized loan costs (7,1)
Total Bank Debt as presented in the Balance Sheet at 30.06.2021 479,1
Non-current 479,1
Current —
2021/22
€M
Total bank borrowings at 01.07.2021 486,2
Repayment of bank debt —
Withdrawal of bank debt 83,2
Payment-in-kind principal accrual 39,7
Interest accrual 2,2
Currency revaluations of debt denominated in USD 36,4
Total bank borrowings at 30.06.2022 647,7
Amortized loan costs (6,8)
Total Bank Debt as presented in the Balance Sheet at 30.06.2022 640,9
Non-current 640,9
Current —
63
19. Related parties
For both periods ending 30June 2022 and 30June 2021, the Group was controlled by Dynamite Holding I S.á r.l.
The Group’s ultimate controlling party is EQT VII. “Key management compensation” is disclosed in note 5.
During 2021/22 revenue from other companies within the EQT AB fund structures amount to EUR 0,9m (2020/21:
EUR 0,5m). As of the reporting date, receivables from these related parties were EUR 0,3m (30June 2021: nil).
There were no specific provisions for bad debt associated with balances due from related parties as of 30June 2022
(30June 2021: nil).
Capital increase receivable (see note 17) and Unpaid capital receivable are amounts due related to an investment by
executive management under the management incentive plan (see note 5). There are no provisions associated with
these amounts.
The Group repurchased shares totalling EUR 6,4m from employees during the period (30June 2021: 0,5m). Notes
totalling EUR 5,5m have been written associated with these repurchases and is recorded within Other long term debt.
20. Commitments and contingent liabilities
Owner’s mortgage of EUR 6,0m in:
• Sitecore Corporation A/S, Sitecore Danmark A/S and Sitecore International A/S
The following companies have issued a negative pledge:
• Sitecore International A/S, Sitecore Danmark A/S, Sitecore Corporation A/S, Sitecore USA Inc., Sitecore USA
Holding Inc. and Sitecore Australia Pty Ltd.
Pledge of Intellectual properties:
• Sitecore Corporation A/S
The aggregate value of assets provided as security for credit facilities amount to EUR 1.812,1m (30June 2021: EUR
1.338,0m), including EUR 16,4m of cash (30June 2021: EUR 26,5m).
Bank Guarantees:
• The Group has issued guarantees with a total value of EUR 1,2m (30June 2021: EUR 1,2m).
Contingent liabilities
The Group's Danish entities are jointly and severally liable for tax on the Group's jointly taxed income and for certain
withholding taxes such as dividend tax and royalty tax as well as for the joint registration for VAT. Any subsequent
corrections of the taxable income subject to joint taxation or withholding taxes on dividends, etc., may entail an
increase in the entities' liability. The Group as a whole is not liable to any other parties. The Group's Danish entities
are jointly and severally liable for the joint registration concerning VAT.
64
21. Business combinations
Acquisition of Reflektion Inc.
On 22 September 2021 the Group acquired control of 100% of outstanding shares of Reflektion Inc.
Founded by pioneers in Artificial Intelligence and awarded both the Best eCommerce Solution and Best Overall
Business Technology Solution by SIIA in 2019, Reflektion combines individual shopper insights, product intelligence,
and AI to create more relevant and impactful eCommerce experiences. The total consideration of EUR 73,2m
consisted of a cash consideration of EUR 67,3, net of cash acquired and liabilities assumed, and Sitecore shares
equivalent to EUR 2,6m. Goodwill of EUR 53,7m comprises the strong employee base and value of expected
synergies arising from the acquisition. Goodwill will not be deductible for tax purposes.
Contingent consideration
As part of the purchase agreement with the previous owners of Reflektion, a contingent consideration, which are not
considered as part of the business combination, has been agreed for a total of up to EUR 1,5m.
Other acquisition related information
Transaction costs amounted to EUR 2,7m which has been recognised in “General and administrative expenses”.
Subsequent to the acquisition, Reflektion Inc. has been consolidated into the existing operating model of Sitecore
and no longer reported as a separate business. Therefore, it is impractical to determine the revenue of the acquiree
since the acquisition that is included in the Consolidated Statement of Profit and Loss. Had the acquisition happened
on 1July 2021, the estimate is that Reflektion would have contributed a revenue of EUR 7,7m.
If new information obtained within one year of the date of acquisition about facts and circumstances that existed at
the date of acquisition identifies adjustments to the below amounts, or any additional provisions that existed at the
date of acquisition, then the accounting for the acquisition will be revised.
Fair value of the assets and liabilities acquired is summarized in the following table, which discloses recognised
amounts of identifiable assets acquired and liabilities assumed. The valuation techniques used for measuring the fair
value of material assets acquired were as follows:
Assets acquired Valuation technique
Technology
Multi-period excess earnings margin method - considers the present value of net cash flows
expected to be generated by acquired technology, excluding any cash flows related to
contributory assets.
Customer base
Distributor method - considers the discounted estimated distributor payments that are
expected to be avoided as a result of the acquired customer relationships.
Brand
Relief from royalty method - considers the present value of net cash flows expected to be
generated by acquired customer relationships, using distributor based margins and
contributory asset charges consistent with a distributor.
Gross contractual amounts receivable at acquisition date were EUR 1.7m, of which EUR 0.9m were not expected to be
collected.
65
2021/22
€M
Technology, customer base and brand 18,6
Trade receivables 0,8
Prepaid and other assets 0,6
Cash 3,2
Contract liabilities (2,3)
Trade payables and accrued expenses (1,4)
Net assets 19,5
Consideration paid 73,2
Goodwill 53,7
Cash flows from operation:
2021/22
€M
Consideration paid 73,2
Hereof provided by payment in shares (2,6)
Less liabilities assumed (0,1)
Less cash received (3,2)
Net consideration paid 67,3
22. Financial risk management
Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (currency and interest risk), credit risk, and
liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and
seeks to minimize potential adverse effects on the Group’s financial performance.
The Financial risks of the Group are managed centrally. The overall risk management guidelines and policies have
been approved by the board of directors. The board provides written principles for overall risk management, as well
as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative
financial instruments and non-derivative financial instruments, and investment of excess liquidity. The CFO manages
contracts and risk exposures and reports to the board of directors on a regular basis.
Market Risk
Foreign exchange risk
As a consequence of the Group’s structure, most net sales and expenditure in foreign currency are set off against
each other, so that the Group is not exposed to major exchange-rate risks.
The foreign exchange risk is related to the USD loans.
The Group’s revenue and expenses are mostly in the functional currency of the operating entity creating a natural
currency hedge. Consequently, the Group treasury’s risk management policy is to not to hedge foreign exchange rate
risks.
The acquisition of Reflektion USA, Inc. does not change the foreign exchange risk of the Group as its operations are
mainly carried out in USD.
66
Sensitivity analysis
The Group is primarily exposed to changes in EUR/USD exchange rate. The sensitivity of profit or loss to changes in
the exchange rates arises mainly from USD denominated financial liabilities.
As at 30.06.2021
Impact on
pre tax profit
Impact on other
components of equity
€M €M
EUR/USD exchange rate – increase 10% 16,7 —
EUR/USD exchange rate – decrease 10% (21,0) —
All other variables are held constant
As at 30.06.2022
Impact on
pre tax profit
Impact on other
components of equity
€M €M
EUR/USD exchange rate – increase 10% 29,3 —
EUR/USD exchange rate – decrease 10% (35,8) —
All other variables are held constant
Interest rate risk
The Group’s interest rate risk arises from long-term borrowings related to the acquisitions. Borrowings issued at
variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to
fair value interest rate risk. As of 30June 2022, the Group’s bank debt was comprised entirely of variable rate
instruments (see note 18).
Sensitivity analysis
Profit or loss is sensitive to higher/lower interest from borrowings as a result of changes in interest rates.
As at 30.06.2021
Impact on
pre tax profit
Impact on other
components of equity
€M €M
Interest rates – increase by 100 basis points (4,9) —
Interest rates – decrease by 100 basis points N/A* —
All other variables are held constant
As at 30.06.2022
Impact on
pre tax profit
Impact on other
components of equity
€M €M
Interest rates – increase by 100 basis points (6,5) —
Interest rates – decrease by 100 basis points 3,3 —
All other variables are held constant
*Current debt agreements include LIBOR floors. As rates are at or below these floors, the Group’s profit does not
have exposure to further decreases in market rates.
Credit risk
Credit risk is managed on group basis, except for credit risk relating to accounts receivable balances. Each local entity
is responsible for managing and analysing the credit risk for each of their new clients before standard payment and
delivery terms and conditions are offered.
Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit
exposures to customers, including outstanding receivables. For banks and financial institutions, only independently
rated parties with a minimum rating of ‘A’ are accepted.
67
For customers individual risk limits are set based on internal or external ratings in accordance with limits set by the
board and the utilization of credit limits is regularly monitored. The largest individual customer balance represents
1.8% of outstanding gross Trade Receivable and the total of the largest 10 customer balances represent 10.3% of
outstanding gross Trade Receivables. The maximum exposure corresponds to the carrying amount of receivables.
The Group has obtained external credit ratings for all significant customers to assess the risk profile of the customers
with a view to determine the risk of credit losses. As of 30June 2022, there is no significant exposure to
concentrations of risk.
Liquidity risk
Cash flow forecasting is performed on group level by management. Management monitors rolling forecasts of the
Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient
headroom on its undrawn committed borrowing facilities at all times so that the Group does not breach borrowing
limits or covenants (where applicable) or any of its borrowing facilities. Such forecasting takes into consideration the
Group’s debt financing plans and covenant compliance.
The Group has undrawn revolving credit facilities of EUR 0,1m (30June 2021: EUR 15m) that may be available for
future operating activities and to settle capital commitments.
The table below analyses the Group’s non-derivative and derivative financial liabilities into relevant maturity
groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts
disclosed in the table are the contractual undiscounted cash flows.
For floating rate borrowings, the rate at the balance sheet date has been applied.
The primary objective of Sitecore’s capital management is to ensure that the Group is able to fulfil all its obligations as
set out in the Senior Facilities Agreement. Financial covenants are calculated and reported to the syndicate banks
with a compliance certificate on a quarterly basis. The following covenants are tested on a quarterly basis:
• Net debt cover: Net Debt / Cash EBITDA
• Interest cover: Cash EBITDA / Net Finance Charges
• Where Cash EBITDA is defined as EBITDA calculated on the basis of billings instead of Revenue from contracts
with customers.
• The covenants are all met up to 30June 2022. Based on current budgets and expectations, the Group anticipates
it will continue to be compliant with all covenants throughout FY23.
Note that the Bank debts / Borrowings amounts below include both principal and interest payments due over the periods noted.
As at 30.06.2021
Less than 1 year 1-5 years >5 years Total Carrying Value
€M €M €M €M €M
Bank debt 1,0 653,5 — 654,5 479,1
Trade payables 28,7 — — 28,7 28,7
Other payables 74,8 4,6 — 79,4 79,4
Total 104,5 658,1 — 762,6 587,2
As at 30.06.2022
Less than 1 year 1-5 years >5 years Total Carrying Value
€M €M €M €M €M
Bank debt 12,3 797,5 — 809,8 640,9
Trade payables 38,4 — — 38,4 38,4
Accrued and other payables 96,6 9,3 105,9 105,9
Total 147,3 806,8 — 954,1 785,2
68
23. Events after the balance sheet date
Subsequent to year-end, on July 11, 2022, the Company entered into a separate EUR 40,0m Incremental Term Facility
under the Senior Facilities Agreement, on the same terms as Facility B (EUR), utilising available capacity under the
Facilities Agreement. Funds from the Incremental Term Facility were used to repay the Revolving Credit Facility,
accrued interest and fees in connection with the Incremental Term Facility, and to finance general corporate and
working capital purposes of the Group.
There are no other significant events after the Balance Sheet Date.
69
Financial Statements of
Sitecore Holding II A/S
01.07.2021 - 30.06.2022
70
Profit and Loss and Other Comprehensive Income (Parent company)
Note
2021/22 2020/21
€M €M
General and administrative expenses (3,9) (1,3)
Operating loss (3,9) (1,3)
Financial income 3 0,1 0,2
Finance costs 4 (2,4) —
Loss before income tax (6,2) (1,1)
Income tax benefit / (expense) 5 0,4 0,4
Loss for the period (5,8) (0,7)
Comprehensive loss for the period (5,8) (0,7)
71
Balance sheet (Parent company)
Note
2021/22 2020/21
€M €M
Assets
Investment in subsidiaries 6 806,2 807,8
Total financial assets 806,2 807,8
Contributed capital receivable 2,0 —
Total non-current assets 808,2 807,8
Receivables from related parties 13 38,7 21,5
Income tax receivable 7,4 7,0
Prepayments and other receivables 0,2 0,2
Total receivables 46,3 28,7
Cash — 1,2
Total current assets 46,3 29,9
Total assets 854,5 837,7
Equities and Liabilities
Share capital 10,5 8,5
Unpaid share capital (2,0) —
Share premium 809,6 811,3
Treasury shares (7,6) —
Other reserve 13,8 —
Retained earnings 2,7 5,6
Total equity 827,0 825,4
Payables to related parties — 9,7
Other payables 6,4 —
Total non-current payables 6,4 9,7
Accrued and other payables 2,6 1,7
Other debt — 0,9
Payables to related parties 18,5 —
Total current liabilities 21,1 2,6
Total liabilities 27,5 12,3
Total equity and liabilities 854,5 837,7
72
Statement of changes in equity (Parent company)
Share
capital
Reserve for
unpaid share
capital
Share
premium
Retained
earnings /
(deficit)
Other
reserves
Treasury
shares
Total
€M €M €M €M €M €M €M
Equity at 01.07.2020 7,7 — 778,4 3,9 — — 790,0
Loss for the period — — — (0,7) — — (0,7)
Total comprehensive income for the period — — — (0,7) — — (0,7)
Transactions with owners in their capacity as owners
Capital increase 0,8 — 27,3 — — — 28,1
Purchase of treasury shares — — — (0,5) — — (0,5)
Share based payment — — 5,7 2,8 — — 8,5
Deferred tax impact on outstanding equity awards — — — — — — —
Total transactions with owners in their capacity as
owners
0,8 — 33,0 2,3 — — 36,1
Equity at 30.06.2021 8,5 — 811,4 5,5 — — 825,4
Loss for the period — — — (5,8) — — (5,8)
Total comprehensive income for the period — — — (5,8) — — (5,8)
Accounting for reserve for unpaid share capital
and associated receivable and adjustment to
retained earnings
2,0 (2,0) — 2,0 — — 2,0
Tax impact on outstanding equity awards — — — — 3,9 — 3,9
Other adjustments — — — 0,3 — — 0,3
Reclassifications
Reclassification of treasury shares — — 0,4 0,7 — (1,1) —
Reclassification of share based payment — — (5,7) — 5,7 — —
Transactions with owners in their capacity as owners
Capital increases — — 2,9 — — — 2,9
Purchase of treasury shares — — — — — (6,5) (6,5)
Equity-settled share-based payment expense — — — — 6,7 — 6,7
Equity-settled share-based payment settlements — — — — (1,7) — (1,7)
Share options exercised — — 0,6 — (0,6) — —
Deferred tax impact on outstanding equity awards — — — — (0,2) — (0,2)
Total transactions with owners in their capacity as
owners
— — 3,5 — 4,2 (6,5) 1,2
Equity at 30.06.2022 10,5 (2,0) 809,6 2,7 13,8 (7,6) 827,0
73
Cash flow Statement (Parent company)
Note
2021/22 2020/21
€M €M
Loss for the period (5,8) (0,7)
Non-cash items 6,5 (0,4)
Changes in net working capital 5,9 —
Cash flows from primary operating activities 6,6 (1,1)
Net cash flow from investing activities — —
Proceeds from the issue of share capital 0,4 2,7
Settlement of share based options (1,7) —
Purchase of treasury shares (6,5) (0,5)
Net cash flow from financing activities (7,8) 2,2
Net cash flow for the year (1,2) 1,1
Cash and cash equivalents, beginning of the year 1,2 0,1
Cash and cash equivalents, end of the year — 1,2
74
Notes (Parent company)
1. Accounting policies
2. Critical accounting estimates and judgements
3. Financial income
4. Finance costs
5. Tax on profit for the year
6. Investment in subsidiaries
7. Related parties
8. Commitments and contingent liabilities
9. Events after the balance sheet date
10. Capital management
11. Financial instruments
12. Audit fees
13. Receivables from related parties
75
Notes (Parent company)
1. Accounting policies
The Financial Statements of Sitecore Holding II A/S (“Parent” or “Company”) have been prepared in
accordance with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB) and as adopted by the European Union as well as additional Danish
disclosure requirements applying to entities of reporting class C (large).
The annual report is prepared according to standards and interpretations effective for financial years
beginning on 1July 2021. No standards or interpretations have been adopted early.
The Parent has the same accounting policies for recognition and measurement as the Group. The Parent’s
accounting policies deviate from the Group’s accounting policies as described below. For a detailed
description of the Group’s accounting policies please refer to the consolidated financial statements,
note2.
Functional and reporting Currency
The financial statements are presented in euros (EUR) and the functional currency of the entity is in EUR,
as the Company’s most significant transactions are settled in EUR.
Share-based payment
Fair value of equity instruments granted as share-based payment to employees of subsidiaries is
recognized as an investment in the respective subsidiaries and credited to equity.
Investments in subsidiaries
Investments in subsidiaries are measured at cost.
Dividend
Dividends from investments in subsidiaries are recognized in the income statement in the financial year in
which the dividend is declared.
2. Critical accounting estimates and judgements
For a description of other significant accounting estimates, assumptions and uncertainties please refer to
the consolidated financial statements, note 3.
It is management’s judgement that all critical accounting estimates with respect to the parent company
are included in note 3 of the consolidated financial statements and that there are no critical accounting
estimates which are unique to the Parent.
76
3. Financial income
2021/22 2020/21
€M €M
Interest income, affiliates 0,1 —
Exchange rate adjustment — 0,2
Total financial income 0,1 0,2
4. Finance costs
2021/22 2020/21
€M €M
Exchange rate adjustment (0,9) —
Other finance costs (1,5) —
Total finance costs (2,4) —
5. Income tax benefit
2021/22 2020/21
Current tax:
€M €M
Income tax benefit for the year (0,4) (0,4)
Income tax benefit is specified as follows:
Calculated 22.0% tax on loss for the year before income tax (1,3) (0,3)
Tax effects of:
Non-deductible expenses 0,9 0,1
Recognition of previously unrecognized tax losses — (0,2)
Total income tax benefit (0,4) (0,4)
In FY21, management concluded the previously unrecognized prior year tax losses can be realized in Denmark. This
is due to the forecasted income as a result of the intercompany transfer pricing arrangements in its operating model
effective on 1July 2021 and forward. There was no similar recognition in FY22.
6. Investment in subsidiaries
2021/22 2020/21
Cost:
€M €M
At beginning of year 807,8 768,6
Other movements (3,1) —
Share-based compensation 7,6 8,5
Acquisition — 30,7
Disposal (6,1) —
At end of year 806,2 807,8
During the year ended June30, 2022, the acquisition of Moosend was pushed down as indirect subsidiaries of the
Parent through tax free, incremental capital contributions to Sitecore Holdings III, net of settlement in full of
intercompany loans made to effect the acquisitions. The impact on cash flows from the above movements were EUR
7m on non-cash items and EUR 6.1m on changes in working capital.
77
Owned by Sitecore Holding II A/S:
Subsidiaries
Legal
form
Registered
office
Voting
shares
& stakes
Profit / (Loss) (FY22)
€M - Unaudited
EQ (FY22)
€M - Unaudited
Profit / (Loss) (FY21) -
€M
EQ (FY21) -
€M
Sitecore Holding
III A/S
A/S
Copenhagen,
Denmark
100% (27,8) 680,6 (9,6) 698,6
Impairment of investment in subsidiary
Impairment tests are performed on investments in subsidiaries if events or changes in circumstances indicate that
their carrying amount may not be recoverable. If cost exceeds the recoverable amount, the carrying amount is written
down to the recoverable amount.
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
addressed below.
The judgments, estimates, and assumptions made are based on historical experience and other factors that
Management considers to be reliable, but which by their very nature are associated with uncertainty and
unpredictability. These assumptions may prove incomplete or incorrect, and unexpected events or circumstances
may arise. The most critical judgments, estimates, and assumptions for the individual items are described below.
The Company is also subject to risks and uncertainties that may lead to actual results differing from these estimates,
both positively and negatively.
The Group annually evaluates whether the investment in subsidiaries has suffered any impairment, in accordance with
the accounting policy stated in note2 of consolidated financial statements. There was no impairment on investment
in subsidiaries recognized during the year ending 30June 2022 (30June 2021: nil).
In addition, receivables from subsidiaries are evaluated for potential impairment and impaired if the Group concludes
that the subsidiary will not be able to repay the loan.
7. Related parties
Related party transactions include compensation paid to Board of Directors and Executive Management.
For Key Management remuneration please refer to note 5 in the consolidated financial statements.
Related party transactions consist of financing transactions carried out at market rates.
8. Commitments and contingent liabilities
Securities
As collateral for credit facilities in Sitecore Holding III A/S and Sitecore USA, Inc., the Company has provided a first
priority pledge of the entire share capital of Sitecore Holding III A/S, any future shares and other present and future
securities issued by Sitecore Holding III A/S to Wilmington Trust (London) Limited.
Other contingent liabilities
There are no pending court and arbitration cases.
78
As Management Company, the Company is jointly taxed with other Danish group entities and is jointly and severally
with other jointly taxed group entities liable for payment of income taxes as well as withholding taxes on interest,
royalties and dividends falling due for payment.
The Company has issued letters of support to subsidiaries within the Group.
9. Events after the balance sheet date
There are no significant events after the balance sheet date.
10. Capital management
For a description of capital management please refer to the consolidated financial statements, note 17.
11. Financial instruments
Sitecore Holding II A/S does not have exposure to financial instruments. Financial debt and all operations of the
Sitecore Group is carried out through subsidiaries of Sitecore Holding II A/S and affiliated companies.
12. Audit fee
Audit fees are not disclosed with reference to section 96(3) of the Danish Financial Statements Act. The fee is
specified in the consolidated financial statements, note 8.
13. Receivables from related parties
Transactions presented as Receivables/Payables from/to related parties on the Balance Sheet are those that are
receivable/payable from group companies. Group companies are entities that are members of the same group as the
Company, including all subsidiaries of the Parent.
Historically the Company has incurred no losses on receivables from subsidiaries and is not expected to going
forward.
79