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Lectra’s Newest Acquisition Solidifies Fashion Ambitions

Lectra is further fortifying its fleet of product design, developing and manufacturing software with yet another acquisition targeting its fashion portfolio. After making a splash when it acquired Gerber Technology for $362 million earlier in 2020, the Paris-based company is bringing on another software company, Gemini CAD Systems, into its on-demand ecosystem.

On Tuesday, Lectra said it will acquire 60 percent of Gemini for 7.6 million euros ($9 million). The acquisition of the remaining capital and voting rights will take place in two steps, in September 2024 and September 2026. Lectra would acquire 100 percent of Gemini’s capital, dependent entirely on revenue growth, and should be comprised of between 13 million euros ($15.4 million) and 20 million euros ($23.7 million).

Gemini, based in Romania, specializes in ready-to-wear, digitally printed, custom made and made-to-measure apparel and works with SMB clients in more than 60 countries. Gemini’s solutions include design and development platforms PatternDesigner, FashionStudio and PhotoDigitizer; e-commerce customization platforms BespokeEditor and Apogy; nesting technologies NestExpert, CutPlanner and NestConnect; as well as cutting technologies CutCollect and VisionCut.

“We are thrilled to welcome the talented teams of Gemini who have created impressive software solutions that are relevant to the way fashion companies wish to work today. Gemini’s product portfolio complements Lectra’s software offers, which has already been strengthened by the recent acquisition of Gerber Technology,” Lectra chairman and CEO Daniel Harari said in a statement. “Together, we will create synergies between Gemini, Lectra and Gerber Technology’s current offers and bring new, disruptive innovations to the fashion industry.”

The deal comes as the on-demand manufacturing company builds out the “Lectra 4.0” strategy it launched in 2017, which aims at positioning the company as a “Industry 4.0” player before 2030. This means adapting to new fashion brands and manufacturer needs as they integrate the in-store and digital experience, as well as helping partners get more creative and sustainable models to market faster, while reducing inventories, markdowns and unsold stock.

Lectra’s fashion solution suite currently operates with its flagship ready-to-wear, personalized textile production platform Fashion On Demand by Lectra, the Kaledo design platform, and patternmaking technology Modaris Expert. With Gerber in the fold, Lectra also offers its clients Yunique PLM and AccuMark 3D modeling platforms.

The Gemini CAD deal also is part of Lectra’s larger pivot to fashion in general, with the company also working with furniture and automotive partners. In 2020, fashion clients drove 51 percent of Lectra’s revenue (approximately $48.2 million) from perpetual software licenses, equipment and accompanying software and non-recurring services. Upon combining with Gerber, this total reached an estimated 58 percent of aggregated revenues from fashion.

And the addition of a cloud-based service is big for Lectra’s goals to increase its recurring revenues by 20 percent in three years, Harari said when unveiling the Gerber acquisition.

“Recurring revenues should account for over 60 percent of revenues in 2022,” Harari said during the February presentation. “Our following objectives are: Revenue from software sold in SaaS mode to exceed 13 million euros ($14.5 million); 4 percent annual growth in revenue from CAD/CAM and PLM software maintenance contracts, and equipment and accompanying software maintenance contracts; and 5 percent annual growth in revenue from consumables and parts.”

As part of the overarching growth strategy, Lectra also scooped up another company in June in a deal that went largely under the radar and goes outside of the technology provider’s product design capabilities. Lectra acquired Nexteven, a cloud-based platform designed to enable brands to simplify and effectively monitor product distribution on large online marketplaces. The platform centralizes the product catalog and information on stock levels, sales prices and orders, to automate and facilitate distribution on online marketplaces.

Like the Gemini deal, the Neteven transactional is conditional, and based on revenue goals. Lectra acquired 80 percent of Neteven for 12.6 million euros ($14.9 million), but the completion of the full deal including capital and voting rights will take place in June 2025, for an amount between 0.6 to 0.9 times 2024 recurring revenues.

Neteven complements Lectra’s Industry 4.0 offerings such as product lifecycle management and product information management platform Kubix Link, as well as competitive intelligence and trend analysis platform Retviews. These help Lectra provide an even more comprehensive response to its fashion customers’ needs.

As of February, Lectra said 270 clients used one or several of its Industry 4.0 offerings, up nearly tenfold from 28 in 2018.

In July, Lectra revealed first-half 2021 revenues were 146.7 million euros ($173.8 million), a 29 percent jump at actual exchange rates year-over year, while net income doubled to 8.9 million euros ($10.5 million). EBITDA before non-recurring items was 23.2 million euros, or ($27.5 million), an 80 percent actual exchange rate jump over 2020.

For its first month of consolidation (June 2020), Gerber Technology contributed 13.5 million euros ($16 million) to revenues and 1.2 million euros ($1.4 million) to EBITDA before non-recurring items.

With Gerber fully integrated, Lectra set its 2021 outlook, expecting to achieve revenues of 364 million to 390 million euros ($431 million to $462 million, a 54 percent to 65 percent jump at actual exchange rates) and EBITDA before non-recurring items in the range of 54 million to 64 million euros ($64 million to $76 million, a 44 percent to 71 percent actual exchange rate boost).

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