Cologne, 9 May 2016 – Results Q1 2016
THE DIGITISER OF THE GERMAN SME SECTOR
1. Strategic Update
Q1 2016: Progress as expected
- Revenues grew where growth was (and still is) expected
- Cloud: +85%
- SAP Consulting: +10%
- TC for business customers: +3%
- Profitability grew as planned
- First positive EBIT since Q1 2014
- Reorganisation on schedule
- Smooth launch of the Pure Enterprise Cloud (PEC); Sales push according to plan
3
Growth in Cloud: PEC successfully launched
High interest in PEC from new and existing customers
- Sales push started in February 2016
- Already very positive feedback from existing and new customers
- First customers are already using the PEC portfolio of services (e.g. cloud storage)
- PEC makes QSC, according to Experton, a "Cloud Leader" in the categories of "Managed Digital Workspace Services" and "Digital Workspace Consulting"
- Experton singled out the quality of the extensive portfolio
Growth in Cloud: Increase in IoT revenues
Growth in Consulting: SAP HANA expertise is paying off
Growth in All-IP business: Early migration is paying off
2016: Focus on growth opportunities
- Pure Enteprise Cloud at the heart
- Portfolio extension
- Marketing roll-out
- Start of customer portfolio migration
- Sales push for the SOLUCON IoT platform presentation at HANNOVER MESSE 2016
- Intensified migration to SAP S/4HANA in Consulting
- Seizing opportunities in All-IP business (there are still some 3 million ISDN business lines):
-
50% of companies have yet to decide on how to migrate
-
60% of companies are looking for support in the migration to IP technology
2. Financial Update
Q1 2016: EBIT improved to € 0.6 million
11
- A good start to 2016, as expected
- Improvement in EBITDA, EBIT and net income
- EBITDA margin was up to 10%
- Cost-cutting programme ongoing
- Staff-reduction programme ahead of schedule
- Cloud expertise was strengthened
- Further increase in free cash flow
First positive EBIT since Q1 2014
Significant rise in earnings despite revenue decline
| in $\epsilon$ million |
Q1 2015 |
Q1 2016 |
Δ |
$\Delta$ in % |
| Revenues |
104.7 |
98.9 |
$-5.8$ |
$-5.5%$ |
| Cost of revenues |
77.6 |
72.9 |
-4.7 |
$-6.1%$ |
| Gross profit |
27.1 |
26.0 |
$-1.1$ |
$-4.1%$ |
| Sales and marketing expenses |
9.3 |
7.9 |
$-1.4$ |
$-15.1%$ |
| General and admin expenses |
8.4 |
8.4 |
٠ |
٠ |
| Other operating income |
(0.3) |
0.1 |
$+0.4$ |
nm |
| EBITDA |
9.1 |
9.7 |
$+0.6$ |
$+6.6%$ |
| Depreciation |
12.1 |
9.1 |
$-3.0$ |
$-24.8%$ |
| EBIT |
(3.0) |
0.6 |
$+3.6$ |
$+120.0%$ |
| Financial result |
(1.4) |
(1.5) |
$-0.1$ |
$-7.1%$ |
| Income tax |
1.1 |
0.8 |
$-0.3$ |
$-27.3%$ |
| Net income |
(3.4) |
(0.1) |
$+3.3$ |
$+97.1%$ |
Revenues
Two-track development: Growth in Cloud, Consulting and in TC for business customers; decrease in TC for resellers and in Outsourcing
Earnings
Cost-cutting programme impacting positively
Ongoing staff reduction despite targeted recruitment
Two-track development in 2016
- Socially responsible staff reduction
- Targeted recruitment of cloud experts
EBITDA margin was up to 10%
- Successes in cost-cutting contributed to the increase in EBITDA
- H2 2016 will be impacted by the completion of the reorganisation
EBITDA margin
Depreciation decreased as expected
- 2016 will see a significant decrease in depreciation for the TC infrastructure
- For FY 2016, QSC expects depreciation of approx. € 36 million
Significant improvement in EBIT
- Successful cost cutting and lower depreciation helped to improve EBIT significantly
- EBIT positive again for the first time in seven quarters
EBIT margin
Cloud: Revenues virtually doubled
- Cloud business still in its early stages
- First Pure Enterprise Cloud revenues
- Growing demand for IoT solutions
- Significantly improved segment contributions thanks to the business model's scalability
Segment margin
Consulting: Growth in revenues and earnings
- High demand for SAP consulting
- Growing demand for Cloud expertise (SAP HANA)
- High degree of capacity utilisation led to higher margin
Microsoft
Microsoft and SAP Segment margin
SAP
QSC AG
Outsourcing: Focus on existing customer base
- No new customers in 1:1 outsourcing
- Start of migration to PEC and focus on high-margin revenues will lead to a further revenue decline in the course of the year
- Increase in profitability was based on the reorganisation and the cost-cutting programme
Segment margin
Telecoms: Growing All-IP revenues
CAPEX at a moderate level
Focus
- Infrastructure
- Development of Pure Enterprise Cloud
- Customer projects
Share of CAPEX in revenues as a percentage
Significantly improved free cash flow
Higher earnings, moderate CAPEX and improved working capital enabled QSC to increase FCF as expected
3. Financial outlook 2016
QSC reinforces its guidance
- In the current year, QSC is focusing on
- Developing its Cloud business
- Marketing the Pure Enterprise Cloud
- Completing the cost-cutting programme
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- For the current year QSC is planning on
- Revenues of € 380 390 million
- EBITDA of € 34 38 million
- A positive free cash flow
QSC is recruiting further Cloud experts
Two-track development in 2016
- Recruitment of Cloud experts for sales and operation of the Pure Enterprise Cloud
- Staff cuts necessary in order to achieve the target of 1,350 employees by the end of 2016
- Staff reorganisation leads to one-off costs in the midsingle-digit million euro range
Rising Cloud and Consulting revenues in 2016
| Drivers in 2016 |
|
Revenue development in 2016 |
|
|
|
|
|
| Cloud |
Launching the Pure Enterprise Cloud |
|
|
|
|
|
|
| Consulting |
SAP HANA project |
|
|
| Outsourcing |
Starting the migration to the Pure Enterprise |
|
|
|
Cloud; no new customers in 1:1 outsourcing |
|
|
|
|
|
|
| TC for business customers |
Growing demand for All-IP solutions |
|
|
|
|
|
|
| TC for resellers |
Fierce price competition |
|
|
4. Questions & Answers
Contact
QSC AG Arne Thull Head of Investor Relations
T +49 221 669 -8724 M +49 221 669 -8009 [email protected] www.qsc.de
Twitter.com/QSCIRde Twitter.com/QSCIRen blog.qsc.de xing.com/companies/QSC AG slideshare.net/QSCAG
Disclaimer
This presentation contains forward-looking statements based on management estimates and reflects the current views of QSC AG's ("QSC") management board with respect to future events. These forwardlooking statements correspond to the situation at the time this presentation was prepared. Such statements are subject to risks and uncertainties, which often fall outside the sphere of influence of QSC. These risks and uncertainties are covered in detail within the Risk Report section in our financial statements.
Although the forward-looking statements are made with great care, their correctness cannot be guaranteed. Therefore the actual results may deviate from the expected results described herein. QSC does not intend to update or adjust any forward-looking statements after the publication of the presentation.
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