Wavestone sees revenues drop over 15% due to Covid-19 crisis

Wavestone has seen over 15% off its revenues slashed from its turnover in the past two months as Covid-19 kicks in. As the firm prepares for a similar May, Wavestone has placed around 13% of its fee-earning staff on furlough, and undertaken a comprehensive overheads review to free up extra savings by the end of the current financial year.

International management consulting firm Wavestone provides a range of management and IT advisory offerings, serving corporates, multinationals, and public sector organisations. Following the firm’s rebranding in the summer of 2016, as part of the merger between Solucom and parts of Kurt Salmon’s business, Wavestone set out a new strategic vision in a bid to establish Wavestone as a top-tier international consulting brand by 2021.

Initially, the plan seems to have been set for success, with the company booking a steep spike revenue growth in the last two years, including 8% growth in local currency during 2019. In North America, Wavestone's business now generates revenues to the tune of €30 million, operating from offices in New York and Philadelphia, while at the end of March, Wavestone globally had 3,498 employees, compared with 3,094 a year earlier.

With Wavestone having lifted its group turnover to €422 million, the company might well have been destined for even greater things this year – but the Covid-19 seems to have scuppered much of that potential. According to a release from the firm accompanying its financial statements, the Covid-19 epidemic and the lockdown measures in force in most countries where the company operates have caused a noticeable slowdown in Wavestone's business activity since mid-March.

Wavestone confirmed that in April, business activity reduced by about -15% to -20%, compared with the pre-lockdown situation – something the company expects to be consistent through May as well. While the firm enters this difficult period in a solid financial position – with available cash and cash equivalents of about €65 million and a net financial debt of about €30 million at the end of March – Wavestone has already decided to take precautionary measures as a response to its sudden slowdown.

In order to secure the company’s long-term future, Wavestone has decided to use vacation-leave measures and the furlough measures offered by various countries’ governments. To date, furloughing (also known as short-time working) applies to about 13% of the firm's fee-earning staff. Meanwhile, Wavestone has initiated a comprehensive overheads review, with the aim of generating €10 million to €15 million in savings over the 2020/21 fiscal year, and the company is also focusing primarily on the service offerings most in line with the period's challenges – including cybersecurity, IT optimisation, and operational efficiency.

The firm’s release commented, “Without waiting for lockdown measures to be relaxed, the firm has vigorously revitalised its business development activity. The company is therefore strengthening business development teams, mobilising additional presales consultants, and intensifying the pace of prospecting... Throughout 2020, Wavestone intends to be agile in continuously adjusting its commercial priorities according to the shape of the new business environment.”