Comments from the CEO

Comments from the CEO

The time has come for me to sum up and reflect on another year, which is always a pleasure as I consider myself to have the best job in the world!

Focus on innovations of the future 

One of the major events of 2016 was the signing of an agreement with Renesas for the Renesas Synergy Platform. This agreement and partnership is the result of the second phase of our strategic development, which represents a further development started in 2014 after having stabilized our profitability and exceeded our financial target with an operating margin of over 20%. Once the agreement with Renesas was finalized in 2016, I shifted my focus to planning the next phase of IAR Systems’ refinement.

A business model with licensebased revenue continues to form our solid foundation, and we also have exceptional technology as well as loyal customers. Our stable development is based on us continuing to implement our strategic planning as successfully as we have over the past few years. When we began targeting the market for the Internet of Things (IoT) several years ago, we knew that our technology and stable relationships in the market would pave the way for us to take action and achieve volume in terms of products rather than developers. This is an aspect that makes the IoT market extremely interesting to us. Ensuring we did not risk our financial stability or our independence was also important to us. It therefore represents a major milestone to be able to round off the year with an exclusive agreement with Renesas that provides us with royalty-based revenue for processors at a minimal cost and no risk on our part. This is also clear proof that we not only aim to strengthen our position in the short term, but also to safeguard it in the long term.

Before moving on to 2017, I would like to reflect on the outcome of our strategic work in 2016. The Americas faced a challenging year in terms of capturing increased demand in the market, which is something I would like to clearly state was not a result of external factors but rather of our own execution. We are working intensively to improve this. On the other hand, one region that succeeded in capturing increased market demand was EMEA, which helped to secure our sales growth during the year. APAC had a stable year with a certain level of variation between the different markets. Early in the year, we announced that we were involved in an ongoing transaction intended to expand our offering and secure a position for us in the ongoing consolidation. Unfortunately, this transaction was not completed, which led to the loss of a unique add-on product, which had been part of the plan for 2016.

During the year, we therefore focused on strengthening our existing product offering in several different areas. My promises for 2016 included interaction and relationships as well as refinement of our products. I feel confident in announcing our promises for 2017, since we have been truly focused and meticulous in our planning for the next phase of our strategic development. We enter 2017 on the back of a financial performance that has never been better in terms of sales, earnings or cash flow. We also bring with us a clear strategic plan and, ahead of 2017, have invested, recruited and organized in a way that enables us to have a clear focus moving forward.

As part of having the best job in the world, I am constantly focused on our everyday tactics, coming up with ideas about how to fulfill our ambitions and remain dedicated to our employees, customers and partners. My sights are clearly set on our future innovations as well as those of our customers.

See you soon,  Stefan

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