•
Annual Report
01.07.2022 - 30.06.2023
CVR No. 37 62 40 71
The Annual Report was presented and adopted at the
Annual General Meeting of the Company on 21November
2023.
Chairperson of the ordinary general meeting: Victoria Forsberg
Contents
Company information ........................................................................................................................... 3
Management review .............................................................................................................................. 6
Key figures ............................................................................................................................................... 20
Management’s statement ..................................................................................................................... 28
Independent auditor’s report on the financial statements ........................................................... 29
Consolidated statement of profit and loss ....................................................................................... 34
Consolidated statement of comprehensive income ....................................................................... 35
Consolidated balance sheet ................................................................................................................ 36
Consolidated statement of changes in equity ................................................................................. 38
Consolidated cash flow statement ..................................................................................................... 39
Notes ......................................................................................................................................................... 40
Profit and loss and other comprehensive income (Parent company) ......................................... 74
Balance sheet (Parent company) ........................................................................................................ 75
Statement of changes in equity (Parent company) ......................................................................... 76
Cash flow statement (Parent company) ............................................................................................ 77
Notes (Parent company) ....................................................................................................................... 78
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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
Jonas Persson (Chairperson)
Craig Allen Conway
Bjarne Kock Hansen
Bert Alfons Janssens
Marjorie Lao
Darren Roos
Carsten Oliver Thoma
Matteo Thun
Executive board
Steve Tzikakis
Peter David
Bertil Majer
Auditor
KPMG P/S
3
Company profile
Sitecore creates human connections between brands and
their customers with rich end-to-end content, seamless
commerce, and always-on personalization so brands can
thrive in a world where, without a digital experience, there
is no product.
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
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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 way. 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 platform software. Unifying data, content, commerce, and
personalized experiences, our composable SaaS platform empowers leading organizations to deliver
unforgettable interactions with their customers across every touchpoint. Our solutions provide 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 FY23,
Sitecore has updated its strategy to further strengthen its leadership in Content, while driving disruption
and innovation in Engagement and Commerce, recognizing that Content is central to the digital
experience. Sitecore further expanded its SaaS product lineup in FY23 with the launch of XM Cloud,
Sitecore Search, Sitecore Content Hub ONE and Sitecore Connect, bringing the SaaS product portfolio to
11 products.
Sitecore stands as the only scaled vendor offering a fully composable content-to-commerce SaaS Digital
Experience Platform (‘DXP’), delivering limitless choice and flexibility. The value proposition of
“composability” reflects a market trend where clients prefer to select best-of-breed products that are
usually being tightly integrated to create a tailored DXP to meet their unique business needs. Sitecore is
the only vendor offering multiple such products that can be tightly integrated out of the box and that
complement each other when combined within a composable DXP, providing the customer with benefits
such as flexibility, scalability, a seamless user experience and efficient time to market.
As of the end of FY23, Sitecore employed 1,784 employees globally in 30 offices around the world, and
around 5,200 brands use Sitecore to power their customer experiences. FY23 highlights below:
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Management review
A year of continued success in FY23
In FY23 we have continued to achieve remarkable milestones in a challenging macroeconomic
environment to further establish our position as a global leader in digital experience. We completed our
journey to fully composable SaaS DXP, successfully rolling out XM Cloud, and received strong industry
recognition for our products, all while laying a foundation for continued top-line growth and a strong
margin rebound after significant strategic investments over the past years.
In FY23, our strategy focused on strengthening our leadership in Content, while driving disruption and
innovation in Engagement and Commerce, recognizing that Content is central to the digital experience.
Our DXP is designed as a modern "composable platform" that seamlessly integrates with existing
marketing stacks and delivers improved performance when combining multiple Sitecore products. We
continue to be a global force driving innovation in our cloud-native composable DXP through the
expansion of our SaaS product lineup over the last year with the launch of XM Cloud, Sitecore Search,
Sitecore Content Hub ONE and Sitecore Connect.
Power instantaneous,
global digital
experiences with the
scalability and
convenience of the
cloud without
sacrificing the
experience to end
customers.
Create, manage, and
deliver content for any
touchpoint with an
agile Headless CMS.
Surface hyper-relevant
content through AI-
powered search.
Predict search intent
and display
individualized results
with a personalized
search experience.
Integrate workbench
for your composable
future. Clean and
refined integration of
Sitecore solutions with
thousands of systems
and software platforms.
These SaaS offerings newly introduced in FY23 expand our SaaS product portfolio to eleven modules.
The continued expansion of our core product lineup has allowed us to play in broader and / or new
categories with highly differentiated value propositions making products more easily accessible across
the following:
• Content Cloud: World-leading solutions to manage content from strategy to delivery.
• Engagement Cloud: Delivering connected and relevant customer experiences at every moment.
• Commerce Cloud: A commerce platform for every business model, from B2C to B2B, B2B2C, and
marketplaces.
Customers will continue to have a wide array of deployment options, whether using our 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.
Supported by the above and our exceptional team of motivated and highly engaged Sitecorians across
the globe, we delivered 12% growth in our Annual Recurring Revenue (“ARR”), with Cloud and SaaS
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making up 47% of our ARR. We added over 100 new brands to our customer base and maintained best-
in-class retention rates for our existing customers, continuing to cement our position as a leader in the
DXP market.
Industry analyst recognition
During fiscal year 2023, we 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 sixth 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, 13
March 2023). 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 customer experience-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 to 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, particularly with XM Cloud. Our strong partner network makes us a
trusted partner to global leading brands. Through the partner network, we understand the unique
experiences of our customers and keeps us up to date with the latest innovative needs, including
capabilities around low code, headless architecture, generative AI and core markets such as Content,
Commerce, CDP and Enhanced Personalization.
Market leader in headless content management systems
In Gartner’s Magic Quadrant for Content Marketing Platforms, 2023 (Nicole Greene, Jeffrey L. Cohen,
Amber Boyes and Isoke Mitchell, 14 March 2023), we were recognized for helping create quality content
based on target audiences’ differentiated needs. It was also identified as a company that “drives content
efficiency with streamlined and automated workflows” and has a suite-based strategy. These factors
positioned us as a “Visionary”, which Gartner states, Visionaries, “… reflect capabilities and roadmaps
focused on progressive content marketing approaches, such as modular and structured content.”
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Beyond this strong position, we continue to lead in evaluations covering this category, for instance, being
named as the top Leader in the IDC MarketScape: WW Hybrid Headless CMS 2023 Vendor Assessment
and a strongly positioned Leader in the IDC MarketScape: WW Full-Stack CMS 2023 Vendor Assessment.
In both reports, IDC recognized the below strengths of XM Cloud and our content management
capabilities:
• Our cloud-native SaaS architecture and headless support include API access and supporting front-end
delivery models. Static site generation and server-side rendering with site preview options make
editing friendly for marketers and developers.
• Our wide set of content authoring and publishing capabilities; such as, content models with
governance rules, site nav path analyser and especially our strategy board that displays different
channels, personas and content types to help analyse for gaps in available content.
• Strong privacy and governance with certifications in highly regulated industries such as HIPAA,
Australian iRAP and manufacturing TISAX standards.
Near perfect scores given by IDC included our customer experience delivery, interoperability, content
intelligence, generative AI plans, strong financial outlook and growth and research, development, and
innovation.
The various reports mentioned above endorse our overall strategy and confirm our market leading
capabilities in the Content Cloud market.
A leader in customer data platforms and personalization
Two years after Gartner’s initial inclusion of Sitecore Personalize, CDP and Discover, we have been
recognized as a “Leader,” which is a considerable improvement after previously being recognized as a
“Niche Player” and “Visionary”. This strong position, and significant improvement, is due to our
commitment to customer success, industry breadth and having the most advanced decisioning among all
vendors in the Gartner Magic Quadrant for Personalization Engines report, 2023 (Jason McNellis, Ant
Duffin, Joseph Enever, September 6, 2023).
The report also includes recognition for our customer experience, testing, discovery, product and content
promotion. The Gartner report further highlights that “Sitecore is evolving its roadmap, focusing on
Experience Analytics for insights and decisioning, Journal Builder for end-to-end orchestration, and further
connectivity between other Sitecore modules.”
According to Gartner, Leaders demonstrate a solid understanding of the product capabilities and
commitment to customer success that buyers demand in the current market. The report also highlights
the product’s ease of use, ease of buying at enterprise scale while delivering clear business value in a
rapidly evolving market demonstrating innovation and current execution. Sitecore is an example of a
vendor making the right long-term investments and showcasing innovative thinking for the future needs
of customer data and personalization for marketers.
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. This is still the latest iteration of this report to date.
IDC recognized Sitecore as a Leader because it creates a unified source of visitor and customer
intelligence through its CDP product in real time and it analyses data from all channels including web,
mobile, app, contact centre, and email to identify behavioural habits. As a result, IDC recommended that
“customers in large enterprises that need global solutions, services, and support should consider Sitecore
a strong choice.”
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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 our “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.”
We also have been mentioned in Gartner’s Market Guide for Marketplace Operation Applications, 2023
(Sandy Shen, Jason Daigler, 21 March 2023). Sitecore’s OrderCloud is recognized as a full-stack
Marketplace Operation Apps solution including representative clients and marketplaces.
Articulating a value proposition in the digital commerce market
Sitecore Commerce was 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 & merchandizing, order &
inventory management, reporting & analytics and our overall architecture.
We received an honourable mention in the upcoming Gartner Magic Quadrant and Critical Capabilities
for Digital Commerce, 2023, which highlights our headless multi-tenant SaaS application for OrderCloud
as well as search and product discovery in our Sitecore Discover.
We believe our 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
Our 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. Schneider Electric was engaged 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 we plan to track on an ongoing basis. We have collected data for our
operational building energy use and has quantified the emissions associated with this usage to inform our
policies and goal setting.
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Actions
With regards to climate change and mitigating our environmental impact, we have made major
investments to further strengthen our efforts in this area. For example, we offset 100% of all carbon
impact from data centre usage and business travel to achieve carbon neutrality. We have planted 10,000
trees through The Nature Conservancy’s Plant a Billion project, have supported 3 verified carbon offset
projects through CoolEffects, and are partnering with ReforestAction as a Gold level partner to sponsor
offset projects, including planting 100,000 trees in forests that will have a strong environmental and
economic impact for the surrounding communities.
In addition, we track and advance energy and environmental benefiting programs in each of our offices,
such as selecting LEED or other certified green buildings when possible, using high efficiency lighting,
switching to low water flow fixtures, providing mass transit benefits to employees in markets where it’s
available, and working to eliminate waste, including single use plastics. Some office spaces are powered
by renewable energy sources including solar, wind, and water. 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, we 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 key stakeholders continue to monitor programs related to sustainability, including initiatives to
reduce greenhouse gases, reduce water use, and reduce waste to landfill.
We 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
We continue to offset 100% of all carbon impact from data centre usage and business travel. The Group
has tracked energy/carbon data for 70% of sites.
Expectations for future work
We have set the following goals to guide its future work:
• Energy: reduce by 20% per capita on average over the next 10 years
• Water: reduce by 25% per capita on average over the next 5 years
• Waste diversion rate: increase by 50% over the next 10 years
• Cars: convert to 100% electric vehicle fleet in 5 years
• Carbon: offset 100% of business travel emissions and explore opportunities for 10% reduction of
carbon footprint for facility use and other emissions over the next 5 years.
• Water: equip 90% of Sitecore’s global real estate portfolio with low-flow fixtures by 2025 and 95% by
2027.
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In the coming fiscal year, we have signed up to the UN Global Compact which is the World’s largest
corporate sustainability initiative. The UN Global Compact is a call to companies to align strategies and
operations with universal principles on human rights, labour, environment and anti-corruption, and take
actions that advance societal goals. We will be committing to the following principles under the UN
Global Compact:
• Principle 7: Businesses should support a precautionary approach to environmental challenges
• Principle 8: Businesses should undertake initiatives to promote greater environmental responsibility
• Principle 9: Businesses should encourage the development and diffusion of environmentally friendly
technologies
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2025 Goal: Increase employee participation in ERGs by 30% by 2025.
• We’re reaching out with community engagement and volunteering: we’ll expand our commitment to
diversity and inclusion by engaging our partners and the communities we serve through volunteering
and opportunities to give back.
◦ Operationalize and connect supplier diversity program to our procurement processes.
◦ Launch employee volunteer platform to provide Sitecorians opportunities to give back to
better organization.
2025 Goal: 5,000 total volunteer hours by 2025 and increase diverse spend by 5% year over year
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
The following illustrates our current data:
• Executive Leadership Level (C-suite): 25%
• Global Leadership Level: 36%
• People managers across our global operations: 41%
• All employees: 32%
Human rights
Content of policy
We previously adopted a Supplier Code of Conduct which contains the our commitment to human rights
and sustainability, and applies to all vendors that engage with us. Through the adoption of the Supplier
Code of Conduct, together with the global Code of Business Conduct (Code), we support the protection
of internationally proclaimed human rights.
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Actions
As part of the Supplier Code of Conduct, we conduct periodic audits to review and manage risks in our
supplier relationships and acts on any instance of non-compliance. Similar actions are taken on instances
of non-compliance with our human rights policy.
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 2023, 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. In
the coming fiscal year and as outlined earlier, we have signed up to the UN Global Compact which is the
World’s largest corporate sustainability initiative. From a Human Rights perspective, we will be
committing to the following principles under the UN Global Compact:
• Principle 1: Businesses should support and respect the protection of internationally
proclaimed human rights
• Principle 2: Businesses should make sure that they are not complicit in human rights abuses
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Anti-corruption and bribery
Content of policy
We are committed to ensuring good business conduct with a high level of integrity and standards of
ethics. Our Code serves as the foundation for the consistent application of these goals. In addition, the
Executive Leadership Team 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.
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 annually thereafter) and other internal programs
describing its principles. Annually, all 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 semi-
annual basis for all employees. The Legal Compliance Team encourages compliance through training
and the monitoring of compliance with the assistance of the wider HR team. The Legal Compliance Team
maintains registers for any compliance related requests or exceptions to policies.
We 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.
Results
No breaches of our Anti-bribery or anti-corruption polices were detected and we are committed to
ongoing focus in this area to minimize risks.
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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. We have achieved a
100% completion rate for all compliance training (new hires and annual for existing employees).
We will continue to strive to maintain a zero breach of our Code and the ABC policies.
In the coming fiscal year and as outlined earlier, we will be signing up to the UN Global Compact which is
the world’s largest corporate sustainability initiative. From an ABC perspective, we will be committing to
the following principle under the UN Global Compact:
• Principle 10: Businesses should work against corruption in all its forms, including extortion and
bribery
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Guidelines issued by Active Owners Denmark
As a private-equity-owned company, we follow the recommendations of Active Owners Denmark as
described at www.aktiveejere.dk.
Status on changes in representation in leadership positions
Board of Directors
Our Board of Directors has remained mostly steady since the appointment of Marjorie Lao to the board in
November of 2021, with the only change being the addition of Matteo Thun who is a partner at EQT
Partners.
Executive Management
Steve Tzikakis has been CEO of Sitecore since September of 2020. In the last fiscal year, the Executive
Leadership Team (ELT) has remained stable, save for the departure of Paige O’Neill (CMO).
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Key Figures – Consolidated accounts (EURm)
2022/23 2021/22 2020/21 2019/20 2018/19
Profit and Loss Accounts
Revenue from contracts with
customers
434,9 426,8 309,6 267,5 254,0
Gross profit 319,2 344,9 252,6 215,1 230,8
EBITDA (1) (2) (22,2) 2,0 14,2 9,7 34,6
Operating loss (2) (82,6) (40,9) (20,4) (43,2) (12,5)
Financial items, net (63,7) (45,0) (25,2) (22,7) (22,8)
Loss for the period (2) (150,5) (87,5) (20,1) (79,4) (35,3)
Total assets 1.542,9 1.588,6 1.469,3 1.255,8 1.228,9
Equity 442,0 580,4 676,2 653,6 732,5
Cash flows
Operating activities (5,4) (17,9) 28,0 37,1 (4,7)
Investment activities (14,1) (80,1) (200,0) (10,4) (47,3)
Investments in tangible fixed
assets
(1,9) (5,9) (2,1) (4,0) (3,8)
Financing activities 35,6 70,2 176,2 12,4 54,2
Employees
Average number of staff (full-
time)
1.874 1.831 1.331 1.109 1.079
Gender composition of
management
32% 28% 28% 28% 27%
Key ratios
Gross margin 73% 81% 82% 80% 91%
EBITDA as a % of revenue (5,1)% 0,5% 4,6% 3,6% 13,6%
(1) EBITDA for the periods represent earnings before interest/finance costs, income taxes, depreciation, and amortisation.
(2) Refer to Financial Review section for additional details related to specific investments and non-routine extra charges impacting FY23.
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 revenue from contracts with
customers.
Financial review – consolidated financial statements
Sitecore’s revenue earned in FY23 exceeded that of FY22, however, it did not meet the 10-20% projected
growth target outlined in the FY22 Annual Report. This was primarily the result of a faster than expected
transition to SaaS products, where revenue is recognized ratably over time (i.e., less upfront revenue),
unfavourable FX movements, and macroeconomic factors. EBITDA margin decreased, primarily as a
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result of increased costs, including costs related to the hosting of our SaaS products, and the cost of a
significant expansion of Sitecore’s strategic partnership with Accenture. The Group has taken a number of
measures to mitigate the impact of growing hosting costs resulting from its transition to a SaaS focused
business which are expected to have a positive impact on gross margin. Further, the Group successfully
executed on a number of efficiency and cost-savings initiatives in FY23 which management anticipates
will have a favourable impact on operating profit margins in future periods.
Financial statements
Revenue
Revenue for the year was EUR 434,9m against EUR 426,8m in the previous year, reflecting a year-over-
year growth of 1,9% primarily due to growth in ARR per customer, new bookings, and the
aforementioned impact of FX movements and general market conditions. As a result of the Company’s
shift from subscription to SaaS, the majority of new bookings are recognized ratably over time rather than
up front, causing a temporary drag on revenue growth, as compared to metrics such as Billings or ARR
which showed double-digit percentage growth, until revenues have fully transitioned to ratable
recognition.
Cost of sales
Cost of sales consists of royalty costs for third-party products sold, hosting costs associated with our
subscription offerings, salaries and related expenses of network operations, implementation, technical
support, allocated overhead and the amortisation of acquired technology intangible assets. 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
EUR115,7m against EUR 81,9m in FY22, resulting in a gross profit of EUR 319,2m against EUR 344,9m in
FY22. The decrease in gross margin to 73,4%, as compared to 80,8% in fiscal year 2022 was primarily due
to the increase in hosting costs associated with our transition to a SaaS focused product offering, partially
offset by cost savings measures referenced above.
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 230,6m against EUR 220,8m in FY22, increasing due
to significant expansion of Sitecore’s strategic partnership, growth in sales 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
EUR100,8m against EUR 100,9m in FY22. FY23 expenses include a EUR 12.4m impairment on intangible
assets where there was no similar cost incurred in FY22. This was offset by lower costs due to decreased
headcount within general and administrative departments and lower 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 72,0m against EUR 64,1m in FY22 due to
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increased investment on the development of our software products, which was primarily compensation
costs from increased development personnel.
Operating loss
Operating loss for the year was EUR 82,6m which includes EUR 60,4m for impairment, amortisation and
depreciation (FY22: EUR 42,9) and EUR 11,5m for share based compensation (FY22: EUR 7,6), against a
loss of EUR 40,9m in FY22. The increase in operating loss was primarily due to increased costs as
described above.
Loss before income tax
Loss before income tax amounts to EUR 146,3m against EUR 85,9m in FY22. In addition to the drivers
described above, there was an increase in finance costs to EUR 63,7m from EUR 45,0m in FY22, primarily
interest expense resulting from increased debt and an increase in interest rates.
Loss for the period
Loss for the period amounts to EUR 150,5m against EUR 87,5m in FY22. 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 4,2m against income tax expense of EUR 1,6m in
FY22. The change in income tax expense is the result of the recognition of deductible temporary
differences in FY22 which were not recurring in FY23, the derecognition of deferred tax assets in FY23,
and an increase in current income tax expense.
Balance Sheet
Intangible and tangible assets
Intangible assets amount to EUR 1.239,9m (FY22: EUR 1.280,9m). The decrease is due to the impairment
of assets taken during the year, the effect of movements in exchange rates, and amortisation recorded in
the period.
Property and equipment
Property and equipment amounted to EUR 21,0m against EUR 25,6m in FY22. The decrease is primarily
due to depreciation in the period.
Trade receivables
Trade receivables amount to EUR 110,8m against EUR 104,4m in FY22. The increase is primarily due to
the growth in sales during the current year, in particular during Q4. As at 30 June 2023, 71% of
outstanding receivables are current, compared to 72% as at 30June 2022.
Contract assets
Total contract assets amount to EUR 54,9m against EUR 70,4m in FY22. The decrease is due to the timing
of revenue recognition on contracts as revenue is recognized ratably over time instead of recognizing a
significant portion up front on a growing percentage of our contracts as we transition to selling more SaaS
products.
Non-current liabilities
Total non-current liabilities amount to EUR 791,0m against EUR 740,2m in FY22. This increase is primarily
the result of a new borrowing facility and the accrual of PIK interest.
Current liabilities
Total current liabilities amount to EUR 309,9m against EUR 268,0m in FY22. The increase is primarily due
to an increase of contract liabilities, due to the timing of revenue recognition on contracts as revenue is
22
recognized ratably over time instead of recognizing a significant portion up front on a growing
percentage of our contracts as we transition to selling more SaaS products.
Cash flow
Cash flows from primary operating activities were a EUR 7,8m inflow against EUR 13,0m outflow in FY22.
This increase to a cash inflow was primarily driven by the effect of an increase in the Group’s changes in
working capital, offset by an increase in net loss.
Cash flows from investing activities were EUR 14,1m outflow against EUR 80,1m outflow in FY22. The
decrease in cash outflow was driven primarily by the absence of acquisition activity during the period as
compared to FY22.
Cash flows from financing activities were EUR 35,6m inflow against EUR 70,2m inflow in FY22. This
decrease in net cash inflow was driven primarily by a EUR 38,0m repayment of borrowings during the year
as compared to no repayments in FY22.
Treasury shares
The Group acquired 124.553 treasury shares during the period and holds a total of 4.246.978 treasury
shares as of 30 June 2023. The Group did not sell any treasury shares during the period. The total
acquisition cost of shares held as of 30June 2023 is EUR 7,9m. The treasury shares have been acquired
via repurchases from former employees pursuant to the shareholder agreement.
Capital resources
At the end of the period, the Group held EUR 50,4m in cash and cash equivalents. The Group also had
undrawn credit facilities of EUR 14,7m.
Subsequent events
There have been no significant events after the Balance Sheet Date.
Parent Company
Net loss for the period
Net loss for the period amount to EUR 1,0m against net loss of EUR 5,8m in FY22. The decrease in net loss
and generation of a profit is primarily due to a decrease in General and Administrative expenses and
Finance costs in FY23 from cost savings initiatives and intercompany interest expense.
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.
23
Financial outlook for 2023/24
Our ambition is to generate long-term, double-digit annual recurring revenue growth, and to gradually
improve our profitability, measured by EBITDA margin, following the considerable strategic investments
made in the last years.
We have completed our journey from pure-CMS player to globally leading composable SaaS DXP leader
which, combined with a consistent track record of long-term growth and significant investments in our
products and partnerships, positions us exceptionally to deliver on profitable growth, while continuing to
increase the share of the business that has recurring, ratable revenue recognition.
Long-term revenue growth will be driven by (1) attracting new customers due to both the expanded and
composable product line, which now provides multiple entry points for customers to purchase our
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 our products and services through internal development and acquisition.
We expect revenue to grow 10-15% during the next fiscal year with net results on par with FY22 results. as
we see the benefit from our expanded SaaS offerings and other growth initiatives. We further anticipate
that cost-saving measures taken with respect to hosting costs and other operating expenses, combined
with the scalability of the business, will positively impact EBITDA margin in the next fiscal year.
Risk factors
Our 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, we have shifted its
business model toward SaaS and subscription licensing. While it is expected that total SaaS and
subscription recurring revenue, billings, and bookings, will continue to 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 investments of technical, operational, financial, legal, and sales resources. If we are
unable to successfully complete this transition and continue to maintain and develop new offerings that
support customer retention, 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.
Liquidity and leverage
As of 30 June 2023, we have a substantial amount of outstanding debt. Our ability to service this debt and
meet all contractual obligations is dependent on our future performance, which can be impacted by
factors outside of our control. If we are unable to generate sufficient cash flows to service the debt we
may be required to attempt to refinance or renegotiate the terms of the debt, which may not be on
favourable terms.
24
Reliance on third parties to deliver product
We depend on strategic relationships and integration with third-parties for technology, including hosting
services, to deliver our product to our customers. This reliance could result in interruptions in our services
if the demands of our customers is not matched by the capacity at third party data centres or if there are
interruptions in the services provided by these third parties. Further, if our contractual relationships with
these third parties were to terminate, or if we were unable to renew on favourable terms, our business
could be harmed. This may negatively impact our retention rates and our ability to attract new customers,
which would have an adverse effect on our revenue.
Reliance on partner ecosystem
We rely on our global partner ecosystem to support the successful execution of our growth strategy. We
continue to work with and invest in our partner ecosystem, to accelerate our reach into new markets and
industries and address the business requirements of both current and future customers. If we are unable
to scale, maintain, and enhance an effective partner ecosystem, revenue might not increase as expected
and could have an adverse effect on our reputation, business, and financial position.
Talent retention and recruitment
Our 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 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 our business has expanded globally, we have 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
centre generating revenue through transfer pricing agreements. We mitigate risk associated with cash
transfers by funding the entity on a rolling short-term basis.
Evolution of technology and 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.
In addition, we and many in the industry we participate in have increasingly incorporated Artificial
Intelligence (‘AI’) capabilities within product offerings. There are risks associated with how successfully we
are able to develop products that leverage AI and embed AI in our ways of working, including how we
govern AI utilisation within the Group.
Reputation and litigation
Dissatisfaction among customers with current or future offerings may impair our reputation and could, at
worst, lead to legal disputes and claims, which may impact our performance.
25
Foreign currency exposure
Because the vast majority of our revenue and costs are outside of Denmark and we make certain business
and resource decisions based on assumptions about foreign currency, we face minor 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 our financial results and
cash flows.
26
Legal entities
Subsidiary Name Legal form Registered office location
Applicant’s
Ownership
Percentage
EMEA Entities
Sitecore Holding III A/S Corporation (A/S) Denmark 100 %
Sitecore Corporation A/S Corporation (A/S) Denmark 100 %
Sitecore Arabia for Information
Technology
Limited liability company Saudi Arabia 100 %
Sitecore Belgium NV Public limited company (NV) Belgium 100 %
Sitecore Bulgaria EOOD Limited liability company (EOOD) Bulgaria 100 %
Sitecore Danmark A/S Corporation (A/S) Denmark 100 %
Sitecore Deutschland GmbH Private limited company (GmbH) Germany 100 %
Sitecore España, S.L. Private limited company (S.L.) Spain 100 %
Sitecore France (Branch) Branch France 100 %
Sitecore France SAS Simplified joint-stock (SAS) France 100 %
Sitecore International A/S Corporation (A/S) Denmark 100 %
Sitecore Ireland Ltd. Private company limited (Ltd.) Ireland 100 %
Sitecore Italia Sr.L. Limited liability company (Srl) Italy 100 %
Sitecore Middle East DMCC Limited liability company (DMCC) United Arab Emirates 100 %
Sitecore Middle East FZ-LLC Limited liability company (LLC) United Arab Emirates 100 %
Sitecore Nederland BV Private limited company (BV) Netherlands 100 %
Sitecore Schweiz AG Corporation (AG) Switzerland 100 %
Sitecore Sverige AB Limited liability company (AB) Sweden 100 %
Sitecore Ukraine Foreign enterprise (FE) Ukraine 100 %
Sitecore UK Ltd. Private limited company (Ltd.) United Kingdom 100 %
Moosend Ltd. Private limited company (Ltd.) United Kingdom 100 %
Sitecore Greece PC (formerly
Moosend PC)
Private capital company (PC) Greece 100 %
APJ Entities
Sitecore Australia Pty. Ltd.
Proprietary limited company (Pty.
Ltd.)
Australia 100 %
Sitecore Software (Shanghai) Co. Ltd. Limited liability company (Co. Ltd.) China 100 %
Sitecore Hong Kong Branch Hong Kong 100 %
Sitecore India Private Ltd. Private limited company (Ltd.) India 99,996 %
Sitecore Indonesia Representative office N/A 100 %
Sitecore Kabushiki Kaisha (Sitecore
Japan Co. Ltd.)
Limited liability company (Co. Ltd.) Japan 100 %
Sitecore Malaysia Sdn. Bhd.
Private limited company (Sdn.
Bhd.)
Malaysia 100 %
Sitecore Singapore Pte. Ltd. Private limited company (Pte. Ltd.) Singapore 100 %
AMS Entities
Sitecore USA Holding, LLC Limited liability company (LLC)
United States of
America
100 %
Frank, Inc. Corporation (Inc.)
United States of
America
100 %
Sitecore USA, Inc. Corporation (Inc.)
United States of
America
100 %
Reflektion Media Software Private
Ltd.
Limited liability company (Ltd.) India 100 %
Sitecore Canada Ltd. Limited liability company (Ltd.) Canada 100 %
27
Management’s Statement
Executive Board
Board of Directors
28
29
Independent auditor's report
Opinion
Audited financial statements
Basis for opinion
Statement on the Management's review
30
Independent auditor's report
Management's responsibility for the financial statements
Auditor's responsibilities for the audit of the financial statements
31
Independent auditor's report
CVR no. 25 57 81 98
32
Consolidated
financial
statements
Consolidated Statement of Profit and Loss
Note
01.07.2022-
30.06.2023
01.07.2021-
30.06.2022
€M €M
Net revenue 4 434,9 426,8
Cost of sales 5,6,7 (115,7 ) (81,9 )
Gross profit 319,2 344,9
Other income 1,6 —
Sales and marketing costs 5,6,7 (230,6 ) (220,8 )
General and administrative expenses 5,6,7,8,12 (100,8 ) (100,9 )
Research and development costs 5,6,7 (72,0 ) (64,1 )
Operating loss (82,6 ) (40,9 )
Finance costs, net 9 (63,7 ) (45,0 )
Loss before income tax (146,3 ) (85,9 )
Income tax (expense) 10 (4,2 ) (1,6 )
Loss for the period (150,5 ) (87,5 )
34
Consolidated Statement of Comprehensive Income
Note
01.07.2022-
30.06.2023
01.07.2021-
30.06.2022
€M €M
Loss for the period 11 (150,5 ) (87,5 )
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss
Exchange differences on translation of subsidiaries (net) 6,1 (11,5 )
Other comprehensive income for the period, net of tax 6,1 (11,5 )
Total comprehensive loss for the period (144,4 ) (99,0 )
35
Consolidated Balance Sheet
Note
30.06.2023 30.06.2022
€M €M
Goodwill 12 999,6 1.004,8
Acquired technology, customer relationships, and brand portfolio 12 220,8 262,4
Development projects 12 18,2 9,9
Development projects in progress 12 1,3 3,8
Total intangible assets 1.239,9 1.280,9
Property and equipment 13 2,1 3,4
Other operating equipment 13 3,0 4,5
Construction in progress 13 — 0,1
Right-of-use assets 16 15,9 17,6
Total property and equipment 21,0 25,6
Leasehold deposits 0,8 1,4
Other financial assets 1,6 —
Total financial assets 2,4 1,4
Deferred tax assets 14 2,5 3,8
Deferred expenses 27,1 21,8
Contract assets 4 5,3 11,9
Total other non-current assets 34,9 37,5
Total non-current assets 1.298,2 1.345,4
Trade receivables 15 110,8 104,4
Contract assets 4 49,6 58,5
Deferred expenses 17,4 13,8
Prepayments and other receivables 13,3 18,9
Income tax receivable 1,2 9,2
Contributed capital receivable 20 2,0 2,0
Total receivables 194,3 206,8
Cash and cash equivalents 50,4 36,4
Total current assets 244,7 243,2
Total assets 1.542,9 1.588,6
36
Consolidated Balance Sheet (continued)
Note
30.06.2023 30.06.2022
€M €M
Share capital 17 10,5 10,5
Unpaid share capital 17 (2,0 ) (2,0 )
Share premium 809,6 809,6
Exchange adjustment reserve (4,0 ) (10,1 )
Other reserves 20,1 13,8
Retained deficit (384,3 ) (233,8 )
Treasury shares (7,9 ) (7,6 )
Total equity 442,0 580,4
Bank debt 18 710,6 640,9
Contract liabilities 4 7,5 12,5
Income tax payables 12,8 12,8
Deferred tax liabilities 14 38,5 53,1
Lease liabilities 16 10,5 11,6
Accrued and other payables 11,1
Total non-current liabilities 791,0 740,2
Trade payables 50,4 38,4
Income tax payables 25,6 10,2
Interest payable 4,7 —
Accrued and other payables 75,7 96,6
Contract liabilities 4 147,9 115,2
Lease liabilities 16 5,6 7,6
Total current liabilities 309,9 268,0
Total liabilities 1.100,9 1.008,2
Total equity and liabilities 1.542,9 1.588,6
37
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 30.06.2021 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 ) —
Reclassification 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 based payment — — 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
Loss for the period — — — — (150,5 ) — — (150,5 )
Other comprehensive income — — — 6,1 — — — 6,1
Total comprehensive loss for the period — — — 6,1 (150,5 ) — — (144,4 )
Transactions with owners in their capacity as owners
Purchase of treasury shares — — — — — — (0,3 ) (0,3 )
Equity-settled share-based payment expense — — — — — 9,4 — 9,4
Equity-settled share-based payment settlements — — — — — (3,1 ) — (3,1 )
Total transactions with owners in their capacity
as owners
Equity at 30.06.2023 10,5 (2,0 ) 809,6 (4,0 ) (384,3 ) 20,1 (7,9 ) 442,0
38
(2,0 ) — — 2,0 — — 2,0
Consolidated Cash Flow Statement
Note
01.07.2022-
30.06.2023
01.07.2021-
30.06.2022
€M €M
Loss for the period (150,5 ) (87,5 )
Adjustments to reconcile net loss to net cash flows
Depreciation, amortisation and impairment 7 60,4 42,9
Net finance costs 9 63,7 45,0
Share based payments, net of settlement 9,3 5,2
Income taxes 10 4,2 1,6
Allowance for bad debt 15 2,0 0,4
Net foreign exchange differences (0,5 ) 2,7
Other non-cash items (0,1 ) —
Changes in working capital, net of acquired assets and assumed
liabilities:
Decrease / (Increase) in contract assets 4 13,3 (23,5 )
Increase in accounts receivable 15 (11,6 ) (29,0 )
Increase in contract liabilities 4 32,7 9,3
(Decrease) / Increase in accounts payables and accrued liabilities (8,3 ) 24,2
Change in other net working capital (6,8 ) (4,3 )
Cash flow from/(into) primary operating activities 7,8 (13,0 )
Interest paid on debt 18 (19,5 ) (1,2 )
Interest paid on leases 15 (0,9 ) (0,8 )
Income taxes (paid) / refunded 7,2 (2,9 )
Net cash flow into operating activities (5,4 ) (17,9 )
Business combination, net of cash acquired — (67,3 )
Purchase of property and equipment 13 (1,9 ) (5,9 )
Proceeds from disposal of property and equipment 13 0,2 —
Development expenditure 12 (12,4 ) (6,9 )
Net cash flow into investing activities (14,1 ) (80,1 )
Repayment of borrowings 18 (38,0 ) —
Proceeds from borrowings, net of issuance costs 9, 18 80,0 83,2
Payment of lease liability 16 (8,4 ) (6,9 )
Proceeds from the issue of share capital — 0,4
Repurchase of treasury shares (0,3 ) (6,5 )
Proceeds from settlement of derivatives 9 2,3 —
Cash flow from financing activities 35,6 70,2
Net cash flow for the year 16,1 (27,8 )
Cash and cash equivalents, beginning of the year 36,4 62,9
Effect of movements in exchange rates on cash held (2,1 ) 1,3
Cash and cash equivalents, end of the year 50,4 36,4
39
1
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, net
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. Financial risk management
22. Events after the balance sheet date
40
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
Holding II A/S was created on 18 April 2016 and acquired a 100% interest in Sitecore Corporation A/S on 10 May
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 30 June 2023 were authorized for issue in accordance with a resolution of the board of directors on
2November 2023.
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 the financial year beginning on
1July 2022. 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.
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
dividends, and realised and unrealised profits or losses on transactions between the consolidated companies.
41
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.
42
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. Revenue for license renewals is recognised at the start of the renewal period.
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
43
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. Contract assets are transferred to receivables when the rights become unconditional,
generally this occurs when the Group issues an invoice to the customer.
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 capitalised 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.
44
2.4.5 Financial income and expenses
Financial income and expenses comprise interest income and expenses, realized and non-realized capital gains/
losses on derivatives and 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/credits.
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.
45
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: 3-20 years
• Acquired technology: 3-9 years
• Acquired brand portfolio: 2-20 years
• Patents, trademarks, and product rights: 5 years
In the course of performing the annual assessment for FY23, we concluded that the useful life of acquired brands
should be shortened to align with changes in management’s expectations of brand usage in future years. This
resulted in the acceleration of amortisation of brands over the new useful life. This change in estimate was made
prospectively in accordance with IAS 38.
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, benefits, and direct costs 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
46
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.
2.4.10 Tangible assets
Property and IT equipment, Leasehold improvements, and Other operating equipment 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
• Leasehold improvements: Shorter of 5 years or lease term
• 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 and estimate of costs expected to be
incurred by the lessee in dismantling and removing the asset.
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 and unbilled receivables. To measure the expected credit losses, trade and unbilled
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 higher credit risk is identified for specific customer(s) or credit risk
is significantly changed the expected credit loss in the lifetime is measured. Receivable balances are written off when
there is no reasonable expectation of recovery.
47
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.
If a modification in borrowings occurs, the Group will assess whether the treatment of the modification should be an
extinguishment of old borrowings and issuance of new borrowings or loan modification to existing borrowings. The
discounted present value of the remaining cash flows of the original borrowings is calculated to perform the
assessment. Gains or losses are recognized and adjustments are made to the amortized cost of the financial liabilities,
as needed.
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
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 30 June 2023, 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, 2023 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.
48
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.
• 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 Provision for expected credit losses of trade receivables and contract assets
Trade receivables and contract assets consist of sale of SaaS, subscriptions, licenses, maintenance, cloud, and
services to customers and have similar risk profiles. Provisions for bad debt are made in accordance with the
simplified expected credit loss model, considering Sitecore’s credit policy and debt collection procedures.
The provision is initially based on the Group’s historical observed default rates to determine expected loss ratios for
ageing buckets, which are reassessed at least annually. An additional specific provision is assessed, as needed, to
adjust the expected credit loss with forward-looking information. For example, if a specific customer exists where we
are aware of financial difficulties, or cases where a balance is outstanding for a significant length of time, an additional
provision amount may be captured.
The assessment of the expected loss ratios and forecasted future economic conditions are significant estimates. The
Group’s historical credit loss experience, driving the expected loss ratios may not be representative of customer’s
actual default in the future. The forecast of economic conditions may also not be representative of customer’s actual
default in the future.
Refer to note 15 for additional information on the Group’s trade receivables and contract assets.
3.3 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).
49
3.4 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.
3.5 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.
3.6 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.
3.7 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.
3.8 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.
50
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
2022/23
Share of
Revenue
2021/22
Share of
Revenue
€M €M
License* 125,6 29% 166,7 39%
Maintenance 110,4 25% 106,3 25%
SaaS and cloud 150,5 35% 105,2 25%
Services and other 48,4 11% 48,6 11%
Total revenue 434,9 426,8
*License includes both term license and perpetual license revenues. Perpetual license revenues were EUR 1,9m and EUR 1,2m for fiscal 2023 and 2022,
respectively.
Timing of Revenue Recognition
2022/23
Share of
Revenue
2021/22
Share of
Revenue
€M €M
At a point in time 125,6 29% 166,7 39%
Ratably over the contract term 282,3 65% 212,4 50%
Over time as SaaS/cloud services are provided 27,0 6% 47,7 11%
Total revenue 434,9 426,8
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 2022 70,4 127,7
Amount transferred to trade receivables from contract assets
(58,5)
—
Contract assets additions 43,0 —
Performance obligations satisfied during the period that were included in the
contract liability balance at the beginning of the period
— (115,2)
Increases due to invoicing prior to satisfaction of performance obligations — 142,9
30 June 2023 54,9 155,4
The Group records a provision for credit risk associated with contract assets 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 amounts
that will be invoiced and recognised as revenue in future periods. As of 30 June 2023, the Group’s remaining
performance obligations were EUR 437,9m (30June 2022: EUR 387,3m), approximately 56% (30June 2022: 54%) 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 2023, the Group had a total of EUR 44,5m (30June 2022: EUR 35,7m) of contract
costs recorded as deferred expenses, of which EUR 35,7m related to open contracts as of 1July 2022 (30June 2022:
EUR 23,9m related to contracts as of 1July 2021). For the year ended 30June 2023, amortisation associated with the
assets arising from contract costs was EUR 25,7m (30June 2022: EUR 30,5m).
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5. Staff costs
2022/23 2021/22
€M €M
Wages and salaries 241,3 225,6
Pensions, defined contribution plans 8,1 7,3
Share based payments (note 6) 11,5 7,6
Social costs 24,5 18,6
Other staff costs 23,0 17,4
Total staff cost 308,4 276,5
Average number of full-time employees 1.874 1.831
Staff costs recognised in the income statement: 2022/23 2021/22
€M €M
Cost of sales 32,3 31,1
Sales and marketing costs 134,8 155,8
General and administrative expenses 44,2 38,3
Research and development costs 64,4 51,3
Total 275,7 276,5
Staff costs capitalized through R&D: 2022/23 2021/22
€M
€M
Development projects 7,7 6,8
Staff costs capitalized through deferred expenses: 2022/23 2021/22
€M
€M
Costs to obtain a contract 25,0 20,3
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:
2022/23 2022/23 2021/22 2021/22
€M €M €M €M
BoD EM BoD EM
Wages and salaries 0,4 3,2 0,4 2,9
Share based payments (note 6) 0,3 1,8 0,3 0,7
Total key management compensation 0,7 5,0 0,7 3,6
52
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 held, 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 a Monte Carlo simulation model.
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
53
Share Options
2022/23 2021/22
Granted during the year 3.025.000 21.182.750
Assumptions applied
Share price EUR 2,16 EUR 2,14 - 2,45
Expected life of options 1,5 2 - 2,25
Expected volatility 67% 52,5% - 60,5%
Risk free interest rate 4,3% (0,7%) - 3,17%
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 14,8m (30June 2022: EUR 15,5m) while the grant date fair
value of Performance Options totals EUR 9,7m (30June 2022: EUR 9,4m).
Share Options
Board of
Directors
Executive
Management
Weighted
Average
Exercise Price*
Other
Weighted
Average
Exercise Price
Total
Outstanding as at 30 June
2021
6.030.000 33.706.023 1,51 13.449.240 1,44 53.185.263
Granted during the year 390.000 3.500.000 2,45 17.292.750 2,32 21.182.750
Exercised during the year — — — (3.522.186) 0,87 (3.522.186)
Reclassification of
employees
— (6.040.000) 1,72 6.040.000 1,72 —
Forfeited during the year — — — (10.565.504) 1,63 (10.565.504)
Outstanding as at 30
June 2022
6.420.000 31.166.023 1,51 22.694.300 1,44 60.280.323
Granted during the year — — — 3.025.000 2,16 3.025.000
Exercised during the year — — — (709.225) 0,97 (709.225)
Reclassification of
employees
— 200.000 2,14 (200.000) 2,14 —
Forfeited during the year — — — (3.369.141) 2,03 (3.369.141)
Outstanding as at 30
June 2023
6.420.000 31.366.023 1,77 21.440.934 1,78 59.226.957
*Calculated based on the aggregate balances of Board of Directors and Executive Management.
As of year-end, the weighted average remaining contractual life of share options outstanding is 7,13 with an exercise
price of EUR 0,35 - 2,45. 19.034.608 options are currently exercisable (30June 2022: 17.219.876).
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).
54
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
2022/23 2022/23 2021/22 2021/22
Class A Class B Class A Class B
Granted during the year — — 1.378.098 —
Assumptions applied
Share price N/A N/A EUR 2,14 - 2,45 N/A
Expected life of options N/A N/A 2,0 N/A
Expected volatility N/A N/A 52,5% N/A
Risk free interest rate N/A N/A (0,7)% N/A
Expected dividend N/A N/A 0% N/A
MIP - Class A Shares
Board of
Directors
Executive
Management
Average
Grant Price
Other
Average
Grant Price
Total
Outstanding as at 30 June 2021 — 348.836 1,72 26.644.937 1,58 26.993.773
Granted during the year 68.306 — 1,83 1.309.792 2,14 1.378.098
Reclassification of employees — (58.139) 1,72 58.139 1,72 —
Buy-back during the year — — — (3.307.925) 1,96 (3.307.925)
Outstanding as at 30 June 2022 68.306 290.697 1,74 24.704.943 1,59 25.063.946
Granted during the year — — — — — —
Reclassification of employees — — — — — —
Buy-back during the year — — — (124.553) 2,11 (124.553)
Outstanding as at 30 June 2023 68.306 290.697 1,74 24.580.390 1,58 24.939.393
MIP - Class B Shares
Executive
Management
Average
Grant Price
Outstanding as at 30 June 2021 6.200.000 0,43
Granted during the year — —
Buy-back during the year — —
Outstanding as at 30 June 2022 6.200.000 0,43
Granted during the year — —
Buy-back during the year — —
Outstanding as at 30 June 2023 6.200.000 0,43
As of year-end, the weighted average remaining contractual life of Class A and Class B shares outstanding are 6,67
and 7,45, respectively, with an exercise price of EUR 0,43 - 2,14. 1.939.802 grants are current exercisable (30June
2022: 10.456.354).
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.
55
EIP
2022/23
Granted during the year
1.152.158
Assumptions applied at: 30 June 2023 30 June 2022
Share price EUR 2,01 EUR 2.45
Expected life of options 1,0 2,0
Expected volatility 65% 61%
Risk free interest rate 5,4% 3%
Expected dividend 0% 0%
EIP
Grants
Average
Grant Price
Outstanding as at 30 June 2021 —
Granted during the year 36.558.157 2,45
Forfeited during the year (1.847.108) 2,45
Outstanding as at 30 June 2022 34.711.049
Granted during the year 1.152.158 2,07
Forfeited during the year (8.247.987) 2,45
Outstanding as at 30 June 2023 27.615.220 2,44
As of year-end, the weighted average remaining contractual life of shares outstanding is 8,83 with an exercise price of
EUR 2,01 - 2,45.
Share based compensation costs are recognized in the income statement as follows:
2022/23 2021/22
€M €M
Sales and marketing costs 6,6 4,1
General and administrative expenses 3,4 1,6
Research and development costs 1,5 1,9
Total share-based compensation 11,5 7,6
56
7. Amortisation, depreciation, and impairment
2022/23 2021/22
€M €M
Amortisation of intangible assets 34,7 32,7
Depreciation on property and equipment 4,4 4,2
Depreciation on right-of-use asset 8,9 6,0
Impairment of intangible assets 12,4 —
Total amortisation, depreciation, and impairment 60,4 42,9
Amortisation, depreciation and impairment are recognised in the income statement:
Cost of sales 6,6 0,1
Sales and marketing costs 21,3 23,7
General and administrative expenses 25,6 9,8
Research and development costs 6,9 9,3
Total amortisation, depreciation and impairment 60,4 42,9
8. Fees to the appointed auditor
2022/23 2021/22
€M €M
Statutory audit 0,9 0,5
Other assurance engagements 0,1 0,3
Total audit fees 1,0 0,8
9. Finance costs, net
2022/23 2021/22
€M €M
Interest expense 64,6 41,3
Amortisation of financing fees 2,1 1,6
Other finance costs, including bank fees 0,9 0,9
Interest on leases 0,9 0,8
Exchange rate adjustments, expenses 0,2 0,4
Fair value (gain) of interest rate swaps (3,8) —
Interest income, external (1,2) —
Total finance costs, net 63,7 45,0
57
10. Income tax
2022/23 2021/22
Current tax:
€M €M
Current tax on profits for the year 14,9 13,9
Current tax on profits for previous years 2,5 (0,8)
Total current tax expense 17,4 13,1
Deferred tax:
Deferred tax benefit for the year and previous years (14,9) (11,0)
Deferred tax charge/(benefit) as a result of tax rate changes 1,7 (0,5)
Total deferred tax (13,2) (11,5)
Income tax expense for the period 4,2 1,6
Income tax benefits are specified as follows:
Calculated 22,0% tax on profit for the year before income tax (32,2) (18,9)
Tax effects of:
Higher/Lower tax rate in subsidiaries 5,9 2,3
Non-deductible finance expenses 4,1 3,6
Non-deductible expenses 0,2 0,2
Non-deductible acquisition expenses — 0,6
Adjustments in respect of prior years 2,6 (2,6)
Tax losses not recognized 22,9 12,1
Establishment of unrecognized deductible temporary differences — 4,4
Recognition of uncertain tax positions — 0,5
Non-deductible earn out expenses 0,8 2,2
Other (0,1) (2,8)
Total income tax expense for the period 4,2 1,6
Effective tax rate (2,9)% (1,9)%
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 5.5M losses generated in Ireland and EUR 17.4M in the United States during the current period 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 1 July 2019 or later. The company has acquired losses that are limited in the United States.
Management concluded the previously recognized prior year tax losses and previously recognized deductible temporary differences cannot be
realised 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
amortisation can be realised 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 IFRIC 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.
58
11. Proposed distribution of loss
2022/23 2021/22
€M €M
Retained earnings (150,5) (87,5)
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 01.07.2021 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) —
Effect of movements in
exchange rates
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
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
Effect of movements in
exchange rates
— 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
59
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 01.07.2022 1.004,8 157,0 238,1 69,5 3,1 38,7 3,8 1.515,0
Additions during the
year
— — — — — — 12,8 12,8
Adjustments to acquired
intangible assets
— (0,4) — — — — — (0,4)
Transfers to completed
development projects
— — — — — 16,1 (16,1) —
Effect of movements in
exchange rates
(5,2) (1,5) 0,1 (0,1) — (1,0) 0,8 (6,9)
At 30.06.2023 999,6 155,1 238,2 69,4 3,1 53,8 1,3 1.520,5
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 01.07.2022 — 110,5 71,7 20,0 3,1 28,8 — 234,1
Amortisation charge — 6,7 12,3 8,9 — 6,8 — 34,7
Impairment — 12,4 — — — — — 12,4
Effect of movements in
exchange rates
— (0,2) (0,2) (0,2) — — — (0,6)
At 30.06.2023 — 129,4 83,8 28,7 3,1 35,6 — 280,6
Carrying amount
30.06.2023
999,6 25,7 154,4 40,7 — 18,2 1,3 1.239,9
Impairment test for goodwill
Goodwill is monitored by management at group level. Goodwill and acquired intangible assets relate to prior
acquisitions completed by the Group.
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 2023, the carrying value of
goodwill for the Group’s single CGU was EUR 999,6m (30June 2022: EUR 1.004,8m)
For the year ended 30June 2023, an assessment was completed and management did not identify any impairment
for goodwill, however, impairment of certain intangible assets was identified during the annual assessment.
Impairment testing at 30.06.2023
For the year ended 30June 2023, the recoverable amount of the CGU was determined based on an average of the
Discounted Cash Flow and Guideline Public Company methods.
60
The key assumptions used in the estimation of value in use were as follows:
Discounted cash flow method
Assumptions FY23 FY22
Revenue CAGR 13,7% 15,5%
Long term growth rate 3,0% 3,0%
Pre-tax discount rate 14,3% 14,4%
Average EBITDA margin 17,2% 13,4%
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 due to a 0,4% increase in the risk-free rate of return, offset by a 0,5% decrease in the company-
specific risk premium as well as an adjustment in the assumed capital structure of the Group, in line with its increase in
debt as compared to equity in FY23.
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 higher-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 CAGR decreased as compared to FY22 to reflect a slightly slower growth over the forecast period, reflecting
management’s updated assumptions given a strategic emphasis on profitable growth, expectations for the broader
DXP market, and overall macroeconomic factors. Average EBITDA margin increased from the prior year to reflect the
Group’s leverage of the previous years’ investments and various cost savings initiatives put in place in FY23. The
Group regularly updates its outlook and financial forecasts to reflect current and changing economic conditions.
Guideline public company method
Input FY23 FY22
Multiple of next fiscal year net sales 4,75x 5,25x
Multiple of next fiscal year + 1 net sales 3,75x 4,25x
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.
61
Sensitivity analysis
The following table shows the amount or percentage points by which assumptions would need to change individually
for the estimated recoverable amount to be equal to the carrying amount.
Sensitivity Input FY23 FY22
Revenue CAGR (7,8)% points (8,5)% points
Long term growth rate (20,1)% points (59,0)% points
Pre-tax discount rate 7,3% points 7,6% points
Average EBITDA margin (11,3)% points (14,1)% points
Multiple of next fiscal year net sales (2,2x) (2,7x)
Multiple of next fiscal year + 1 net sales (1,4x) (2,1x)
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 as of the end of the reporting period (30June
2022: EUR 0,0m). Management identified an impairment of certain acquired brand intangible assets totalling 12,4m
as of the end of the reporting period (30June 2022: EUR 0,0m) that have not met the original projections set forth in
calculating the initial purchase price allocation, which has been recorded to General and administrative expenses
within the Consolidated Statement of Profit and Loss.
13. Property and equipment
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
62
Cost:
Property and IT
Equipment
Other operating
equipment
Construction in
progress
Total
At 01.07.2022 10,5 12,7 0,1 23,3
Additions during the year 0,5 0,5 0,9 1,9
Transfer — 1,0 (1,0) 0,0
Disposals during the year (0,1) (0,1) — (0,2)
Effect of movement in exchange rates (0,4) (0,7) — (1,1)
At 30.06.2023 10,5 13,4 — 23,9
Depreciation:
Property and IT
Equipment
Other operating
equipment
Construction in
progress
Total
At 01.07.2022 7,1 8,2 — 15,3
Depreciation charge 1,7 2,7 — 4,4
Reversed depreciation, disposed assets — (0,1) — (0,1)
Effect of movement in exchange rates (0,4) (0,4) — (0,8)
At 30.06.2023 8,4 10,4 — 18,8
Carrying amount 30.06.2023 2,1 3,0 — 5,1
14. Deferred tax
2022/23 2021/22
€M €M
Deferred tax, beginning of year 49,3 60,6
Deferred taxes added as a result of benefit from uncertain tax position (0,9) (0,7)
Deferred tax as a result of share-based compensation 4,8 0,2
Deferred tax recognized in the income statement (17,2) (10,8)
Deferred tax at end of year 36,0 49,3
Deferred tax relates to:
Intangible assets 36,4 44,7
Property and equipment 0,4 (3,6)
Contract assets and contract liabilities 2,2 13,0
Tax loss carry-forwards (34,6) (28,5)
Right-of-use assets 1,2 1,8
Lease liabilities (0,6) (1,8)
Accruals, provisions & reserves 0,8 (0,5)
Share-based compensation (5,0) (9,9)
Disallowed interest (11,1) —
R&D costs (4,7) —
R&D credit (1,8) —
Other temporary differences (1,0) (0,6)
Gross deferred taxes before valuation allowance (17,8) 14,6
Valuation allowance on deferred tax assets 53,8 34,7
Net deferred taxes 36,0 49,3
Of which presented as deferred tax assets 2,5 3,8
Of which presented as deferred tax liabilities 38,5 53,1
Total 36,0 49,3
63
As part of the adoption of IFRIC 23 in FY20, the Group recognized a portion of deferred tax asset related to Intangible Amortization. In FY22,
Management concluded the previously unrecognized deferred tax asset related to Intangible Amortization in relation to IFRIC 23 can be realized. 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. As part of the adoption of IFRS 15 in FY20 the Group has recognized deferred tax liabilities related to the Contract Cost and Contract Liability
balances. The Company has not recognized a deferred tax asset of EUR 11.3M on its carried forward tax losses 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 Company has not recognized a deferred tax asset of EUR 35.3M and EUR 7.2M on its carried forward tax losses and
deferred tax assets related to temporary items in 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 1 July 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
company’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 Company’s financials as of the balance sheet date.
15. Trade receivables
In FY23, the Group updated the expected loss model to include an expected loss ratio for contract assets. In addition,
higher risk trade receivables have been included in the model resulting in the addition of a specific reserve for high
risk receivables. There is no prior year comparative amount as the expected loss balance was previously immaterial
for the provision. As such, the table below reflects the change in estimate made in the current year. Carrying amounts
of trade receivables and contract assets represent a reasonable approximation of fair value.
The below tables reflect the manner in which receivable and contract asset ageing was reviewed by management
during the period.
30.06.2022
Gross 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 105,4 1,0 104,4
30.06.2023 Gross balance
Expected
loss ratio
Expected loss Total
€M €M €M
Current 78,8 0,3% 0,2 78,6
0-30 days 19,8 0,5% 0,1 19,7
30-60 days 3,7 1,0% — 3,7
60-90 days 2,1 2,0% 0,1 2,0
Over 90 days 7,1 10,0%
0,7 6,4
Trade receivables, excluding higher risk 111,5 1,1 110,4
Higher risk trade receivables
2,1
45,0-100%
1,7 0,4
Total trade receivables 113,6 2,8 110,8
Contract assets
55,1
0,3%
0,2 54,9
Total trade receivables and contract assets 168,7 3,0 165,7
64
Movement on the Group provision for impairment of receivables are as follows:
2022/23 2021/22
€M €M
Allowances during the year based on expected credit loss model (2,2) (0,7)
Write-offs during the year 0,2 0,1
Reversed allowances — 0,2
(Increase)/Decrease of provision for impairment of receivables (2,0) (0,4)
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 01.07.2021 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
Right-of-use Assets:
Buildings Vehicles Total
€M €M €M
At 01.07.2022 17,6 — 17,6
Additions 4,8 1,2 6,0
Modifications 4,3 — 4,3
Depreciation expense (8,5) (0,4) (8,9)
Disposals (0,8) — (0,8)
Effect of movement in exchange rates (1,9) (0,4) (2,3)
At 30.06.2023 15,5 0,4 15,9
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 01.07.2021 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
65
Lease Liabilities:
Total
Total Lease at 01.07.2022 19,2
Additions 7,2
Principal repayment (8,4)
Effect of movements in exchange rates (1,9)
At 30.06.2023 16,1
Non-current 10,5
Current 5,6
Undiscounted lease liabilities:
FY2023 FY2022
Payable within 1 year 5,8 9,1
Payable within 2 to 5 years 8,9 9,6
Payable after 5 years 2,2 2,4
The interest expense on liabilities for FY23 is EUR 0,9m (FY22: EUR 0,8m). Expense related to the short-term leases
for FY23 is EUR 0,6m (FY22: 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. 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 30.06.2019 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 — — — 1.840.569
Share capital at 30.06.2022 7,9 788.425.198 2,6 6.200.000 10,5 794.625.198
Capital increases — — — — — —
Share capital at 30.06.2023 7,9 788.425.198 2,6 6.200.000 10,5 794.625.198
The Group acquired 124.553 treasury shares with a nominal value of EUR 2,61 during the period and holds a total of
4.246.978 treasury shares as of 30 June 2023. Shares acquired during the period and held at year end represent
0,02% 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 2023 is EUR 7,9m. The treasury shares have been
acquired via repurchases from former employees pursuant to equity compensation arrangements.
Unpaid share capital represents amounts due to the Group for shares issued and, beginning in FY22, is recognized
separately from Share Capital. As of 30June 2023, the Group has EUR 2,0m of unpaid shares separately presented
on the balance sheet within equity.
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.
66
18. Borrowings
The borrowings comprise term 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.
Principal
amount,
Effective
interest
rate
Currency Maturity
Borrowing
amount,
2022/23
Borrowing
amount,
2021/22
€M €M €M
Facility B 150,0 9.14% (Variable) EUR 12 March 2026 163,8 164,2
Facility B 111,3 10.44% (Variable) USD 12 March 2026 131,9 127,7
Acquisition Facility 120,0 9.14% (Variable) EUR 12 March 2026 131,0 131,4
Acquisition Facility 89,0 10.44% (Variable) USD 12 March 2026 105,1 101,8
(Sept 2021) Incremental
Acquisition Facility
76,3 10.81% (Variable) USD 12 March 2026 87,0 84,3
(July 2022) Incremental Facility 40,0 10.23% (Variable) EUR 12 March 2026 42,1 —
GS Facility 14,9 7.97% (Variable) EUR 12 March 2026 14,9 —
2023 Incremental Facility 18,4 13.63% (Variable) USD 12 March 2026 18,4 —
Revolving Credit Facility 25,0 7.17% (Variable) EUR 12 September 2025 24,1 38,3
Total bank borrowings 718,3 647,7
Under the Senior Facilities Agreement, the Group can elect to have interest periods of 1, 3 or 6 months. In June 2023,
the Group agreed with the lenders that an interest period of 12 months could be selected for FY24. Following this
election, from June 2024, interest periods will revert to 1, 3, or 6 months. A portion of the debt will remain on 1, 3 or 6
month terms for FY24.
In June 2023, the Group entered into an incremental term facility whereby it borrowed USD 20m to finance the
portion of debt that will be subject to 1, 3 or 6 month interest periods in FY24.
All facilities are repayable in full at the maturity date. Term 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 2022/23 was EUR 42,3m (2021/22 EUR 39,7m). The PIK
provision ended in March 2023.
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:
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 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
Amortised loan costs (6,8)
Total Bank Debt as presented in the Balance Sheet at 30.06.2022 640,9
Non-current 640,9
Current —
67
2022/23
€M
Total bank borrowings at 01.07.2022 647,7
Repayment of bank debt (38,0)
Withdrawal of bank debt 83,1
Payment-in-kind principal accrual 42,3
Interest accrual 21,4
Interest paid (19,5)
Currency revaluations of debt denominated in USD (14,0)
Total bank borrowings including interest at 30.06.2023 723,0
Non-current interest payable —
Current interest payable 4,7
Amortised loan costs (7,7)
Total Bank Debt as presented in the Balance Sheet at 30.06.2023 710,6
Non-current bank debt 710,6
Current bank debt —
19. Related parties
For both periods ending 30June 2023 and 30June 2022, 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 2022/23 revenue from other companies within the EQT AB fund structures amount to EUR 1,0m (2021/22:
EUR 0,9m). As of the reporting date, receivables from these related parties were EUR 0,7m (30June 2022: 0,3m).
There were no specific provisions for bad debt associated with balances due from related parties as of 30June 2023
(30June 2022: nil).
Unpaid share capital (see note 17) and Contributed 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 0,3m from employees during the period (30June 2022: 6,4m). Notes
totalling EUR 5,3m have been written associated with these repurchases and is recorded within Other payables - non
current.
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 UK Ltd., Sitecore USA Inc.,
Sitecore USA Holding Inc. and Sitecore Australia Pty Ltd.
Pledge of Intellectual properties:
• The Group has pledged its Intellectual properties of EUR 240,3m, net of accumulated amortisation (30 June 2022:
EUR 276,2m, net of accumulated depreciation)
The aggregate value of Intellectual properties and financial assets provided as security for credit facilities amount to
EUR 824,0m (30June 2022: EUR 573,3m), including EUR 35,8m of cash (30June 2022: EUR 16,4m).
68
Bank Guarantees:
• The Group has issued guarantees with a total value of EUR 0,8m (30June 2022: 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.
21. 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.
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 30.06.2022
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
As at 30.06.2023
Impact on
pre tax profit
Impact on other
components of equity
€M €M
EUR/USD exchange rate – increase 10% 31,6 —
EUR/USD exchange rate – decrease 10% (38,6) —
All other variables are held constant
69
Interest rate risk
The Group’s interest rate risk arises from long-term borrowings related to the acquisitions and to fund ongoing
operations. 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 2023, the Group’s bank debt was comprised
entirely of variable rate instruments (see note 18).
In February 2023, the Group entered into 2-year interest rate swap agreements with Nordea Bank Abp to hedge
against floating rate risk on its long-term borrowings. These swaps are accounted for at fair value with changes in fair
value recognized in profit and loss.
In June 2023, as a result of the amendment of most of the term debt to have a 12-month interest period, the Group
terminated all EUR interest rate swaps and a portion of the USD interest rate swaps. A gain of EUR 3,8m was
recognized in relation to the termination of the swaps.
Sensitivity analysis
Profit or loss is sensitive to higher/lower interest from borrowings as a result of changes in interest rates.
As at 30.06.2022
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
As at 30.06.2023
Impact on
pre tax profit
Impact on other
components of equity
€M €M
Interest rates – increase by 100 basis points (7,3) —
Interest rates – decrease by 100 basis points 7,3 —
All other variables are held constant
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.
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
3.5% of outstanding gross Trade Receivable and the total of the largest 10 customer balances represent 16.3% 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 30 June 2023, 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
70
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 14,7m (30June 2022: EUR 0,14m) 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:
• Recurring Revenue Leverage Ratio: Total Net Debt / Annualised Recurring Revenue
• Priority Debt Net Leverage Ratio: Net Priority Secured Debt Total / Cash EBITDA
• 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 2023. Based on current budgets and expectations, the Group anticipates
it will continue to be compliant with all covenants throughout FY24.
Note that the Bank debts / Borrowings amounts below include both principal and interest payments due over the periods noted.
As at 30.06.2022
Less than 1 year 1-5 years >5 years Total Carrying Value
€M €M €M €M €M
Bank debt and interest payable 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
As at 30.06.2023
Less than 1 year 1-5 years >5 years Total Carrying Value
€M €M €M €M €M
Bank debt and interest payable 78,6 868,6 — 947,2 715,3
Trade payables 50,4 — — 50,4 50,4
Accrued and other payables 75,7 11,1 — 86,8 86,8
Total 204,7 879,7 — 1.084,4 852,5
71
22. Events after the balance sheet date
On 1 November 2023, the Group signed a new debt agreement totalling EUR 749.9m, of which includes EUR 374.3m
and USD 398.1m. The agreement refinances borrowed amounts within three tranches disclosed in note 18: Facility B
(EUR and USD) and Acquisition Facility (USD). The new agreement includes a PIK option, for up to 50% of interest and
available for the first 24 months of the agreement and extends the maturity date of the facilities from 12 March 2026
to 12 March 2029. An estimate of its financial statement effect has not yet been made.
There are no other significant events after the Balance Sheet Date.
72
Financial Statements
of Sitecore Holding
II A/S
01.07.2022 - 30.06.2023
73
Profit and Loss and Other Comprehensive Income (Parent company)
Note
2022/23 2021/22
€M €M
General and administrative expenses (0,9) (3,9)
Operating loss (0,9) (3,9)
Financial income 3 3,0 0,1
Finance costs 4 (0,9) (2,4)
Profit / (Loss) before income tax 1,2 (6,2)
Income tax (expense) / benefit 5 (2,2) 0,4
Loss for the period (1,0) (5,8)
Comprehensive loss for the period (1,0) (5,8)
74
Balance sheet (Parent company)
Note
2022/23 2021/22
€M €M
Assets
Investment in subsidiaries 6 817,4 806,2
Total financial assets 817,4 806,2
Total non-current assets 817,4 806,2
Receivables from related parties 7 82,5 38,7
Income tax receivable — 7,4
Prepayments and other receivables 0,1 0,2
Contributed capital receivable 2,0 2,0
Total receivables 84,6 48,3
Total current assets 84,6 48,3
Total assets 902,0 854,5
Equities and Liabilities
Share capital 10,5 10,5
Unpaid share capital (2,0) (2,0)
Share premium 809,6 809,6
Treasury shares (7,9) (7,6)
Other reserve 20,1 13,8
Retained earnings 1,7 2,7
Total equity 832,0 827,0
Other payables 8,4 6,4
Total non-current payables 8,4 6,4
Accrued and other payables 0,8 2,6
Income tax payable 24,5 —
Payables to related parties 36,3 18,5
Total current liabilities 61,6 21,1
Total liabilities 70,0 27,5
Total equity and liabilities 902,0 854,5
75
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 01.07.2021 8,5 — 811,4 5,5 — — 820,3
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
Loss for the period — — — (1,0) — — (1,0)
Total comprehensive income for the period — — — (1,0) — — (1,0)
Transactions with owners in their capacity as owners
Purchase of treasury shares — — — — — (0,3) (0,3)
Equity-settled share-based payment expense — — — — 9,4 — 9,4
Equity-settled share-based payment settlements — — — — (3,1) — (3,1)
Total transactions with owners in their capacity as
owners
— — — — 6,3 (0,3) 6,0
Equity at 30.06.2023 10,5 (2,0) 809,6 1,7 20,1 (7,9) 832,0
76
Cash flow Statement (Parent company)
Note
2022/23 2021/22
€M €M
Loss for the period (1,0) (5,8)
Non-cash items (2,1) 6,5
Changes in net working capital 6,5 5,9
Cash flows from primary operating activities 3,4 6,6
Net cash flow from investing activities — —
Proceeds from the issue of share capital — 0,4
Settlement of share based options (3,1) (1,7)
Purchase of treasury shares (0,3) (6,5)
Net cash flow from financing activities (3,4) (7,8)
Net cash flow for the year — (1,2)
Cash and cash equivalents, beginning of the year — 1,2
Cash and cash equivalents, end of the year — —
77
Notes (Parent company)
1. Accounting policies
2. Critical accounting estimates and judgements
3. Financial income
4. Finance costs
5. Income tax
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
78
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 principal activities of the entity is to serve as the ultimate parent for the Group. Ownership of the
Group and issuance of share based compensation is managed through the equity of the Company.
The annual report is prepared according to standards and interpretations effective for financial years
beginning on 1July 2022. 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.
79
3. Financial income
2022/23 2021/22
€M €M
Interest income, affiliates 2,0 0,1
Interest income, external 1,0 —
Total financial income 3,0 0,1
4. Finance costs
2022/23 2021/22
€M €M
Exchange rate adjustment (0,7) (0,9)
Other finance costs (0,2) (1,5)
Total finance costs (0,9) (2,4)
5. Income tax expense/(benefit)
2022/23 2021/22
Current tax:
€M €M
Income tax expense/(benefit) for the year 0,1 (0,4)
Income tax expense/(benefit) for the previous years 2,1 —
Total current tax expense 2,2 (0,4)
Income tax benefit is specified as follows:
Calculated 22,0% tax on income/(loss) for the year before income tax (0,2) (1,3)
Tax effects of:
Non-deductible expenses/(benefits) 0,1 0,9
Adjustments in respect of prior years (2,1) —
Total income tax expense/(benefit) (2,2) (0,4)
6. Investment in subsidiaries
2022/23 2021/22
Cost:
€M €M
At beginning of year 806,2 807,8
Other movements (0,3) (3,1)
Additions 11,5 7,6
Disposal — (6,1)
At end of year 817,4 806,2
Owned by Sitecore Holding II A/S:
Subsidiaries
Legal
form
Registered
office
Voting
shares
& stakes
Profit / (Loss) (FY23)
€M - Unaudited
EQ (FY23)
€M - Unaudited
Profit / (Loss) (FY22) -
€M
EQ (FY22) -
€M
Sitecore Holding
III A/S
A/S
Copenhagen,
Denmark
100% (27.4) (667,8) (26,7) 683,6
80
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. The assessment performed utilized the
figures evaluated through the Group goodwill impairment assessment and therefore the assumptions and sensitives
are consistent. Please refer to note 12 in the consolidated financial statements for assumptions and sensitivities. There
was no impairment on investment in subsidiaries recognized during the year ending 30June 2023 (30June 2022:
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. There was no impairment on receivables from subsidiaries
recognized during the year ending 30June 2023 (30June 2022: nil).
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.
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.
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.
81
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.
82