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Exasol AG
Interim / Quarterly Report • Aug 14, 2024
710_10-q_2024-08-14_04bcb245-6116-40cb-bf90-ed496d21b3e3.pdf
Interim / Quarterly Report
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E rasol
The analytics database
202 Half-Year Report 2024 E. 2024
| Overall assessment by the Executive Board | 03 | |||||||||||
| Economic performance January to June 2024 | 04 | |||||||||||
| Changes to the opportunities and risk report | 06 | |||||||||||
| Forecast | 06 |
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Interim Group management report
for H1 2024
Overall assessment by the Executive Board
Exasol's start to the financial year was in line with the Executive Board's expectations. As Group revenues continued to grow, a positive operating result was achieved already in the first three months. This trend continued and even accelerated slightly in the second quarter, which means that the first six months of 2024 were profitable overall.
Annualized recurring revenue (ARR) increased by $11.8 \%$ year on year. Both the EMEA region and the North America region recorded noticeable growth. Looking at the first six months, new business with new and existing customers was slightly higher than in the previous year, climbing from EUR 2.2 million in H1 2023 to EUR 2.3 million. However, this new business contrasted with a higher churn rate among existing customers, which is mainly attributable to reduced business with two major customers in the EMEA region. As expected, ARR in the first half of 2024 was thus down by a total of EUR 1.1 million compared to year-end 2023 in spite of the positive new business trend. The measures already initiated in late 2023 for a more focused market positioning and an improved customer approach will have a greater effect in the second half of the year, which will result in a once more rising ARR towards the end of the year.
This trend will primarily be driven by the more customer-oriented product range, with last year's launch of Espresso, Espresso Plus and the Exasol Data Warehouse laying the basis for future growth. In the second half of the year, the effects of this will become particularly visible in business with new customers. In addition, business with existing customers, especially in the financial services sector, is expected to be expanded further. Combined with a reduced churn, growth will thus accelerate again in the second half of the year.
Moreover, the launch of Espresso AI in February 2024 means that the company has begun to tap into the huge growth potential of artificial intelligence in the field of data analytics. Espresso AI allows the company's customers to integrate AI applications directly into their analytical databases to leverage their potential. This is an important element to secure the company's long-term growth potential.
Group revenues increased by $9.3 \%$ to EUR 19.4 million in the first half of the current financial year. At $14.0 \%$, the strongest increase was achieved in the DACH region. Double-digit growth was also recorded in North America, where revenues picked up by around $12 \%$. On the expense side, the continued discipline, especially
with regard to marketing expenses, had a positive impact and resulted in an overall positive operating result (EBITDA) of EUR 0.7 million. This trend will continue in the second half of the year and lead to profitable growth for the year as a whole.
Cash flow also showed a positive trend in the first half of 2024, resulting in an increased net cash position. With cash and cash equivalents of EUR 19.7 million at the end of the first half of 2024, Exasol has solid capital resources which, together with the profitability achieved, provide a good basis for further development.
The Executive Board thus considers the general business performance as well as the net assets, financial position and results of operation to be satisfactory on balance. The profitability achieved represents a milestone in the company's history. Together with a further increase in Group revenues, a focused market approach and the introduction of artificial intelligence in the product portfolio, Exasol is well prepared for the challenges of the future.
Economic performance January to June 2024
Revenues
ARR stood at EUR 39.7 million at the half-year stage 2024. This represented an $11.8 \%$ increase on the same period of the previous year (30 June 2023: EUR 35.5 million) and a slight decline by 2.7\% compared to year-end 2023 (31 December 2023: EUR 40.8 million). A total of nine new customers were won in the first six months of 2024 (H1 2023: six new customers), while 21 customers terminated their contracts during the same period (H1 2023: 14); as a result, the total number of customers declined to 195 in the first half of 2024 (31 December 2023: 207).
Revenues rose by $9.3 \%$ to EUR 19.4 million in the first half of 2024 (H1 2023: EUR 17.8 million). The share of recurring revenues increased to 99.8\% (H1 2023: 95.5\%). Recurring revenues are not the same as ARR, but are a subset of total revenues that have a recurring nature.
| In EUR millions | H1 2024 | H1 2023 | Change |
|---|---|---|---|
| Annual recurring revenue (ARR) | 39.7 | 35.5 | 11.8\% |
| Revenue | 19.4 | 17.8 | 9.3\% |
| Recurring revenue | 19.4 | 17.0 | 14.2\% |
| In \% of revenues | 99.8 | 95.5 | 4.3 pp |
| Other revenue | 0.0 | 0.8 | $-96.1 \%$ |
| In \% of revenues | 0.2 | 4.5 | $-4.3 \mathrm{pp}$ |
A breakdown of total revenues by the four regions - DACH (Germany, Austria, Switzerland), Great Britain, North America and Rest of World - is provided below:
| In EUR millions | H1 2024 | H1 2023 | Change |
|---|---|---|---|
| DACH | 13.1 | 11.5 | 14.0\% |
| Great Britain | 1.1 | 1.3 | $-17.3 \%$ |
| North America | 3.4 | 3.0 | 11.9\% |
| Rest of the world | 1.9 | 2.0 | $-5.2 \%$ |
| Total revenues | 19.4 | 17.8 | 9.3\% |
The share of revenues of the DACH region, which is currently the most important region for Exasol, remained high and rose by $14.0 \%$. At $11.9 \%$, North America was the region recording the second highest revenue growth. Between them, both regions account for about $84 \%$ of total Group revenues (H1 2023: 82\%).
| In \% of total revenues | H1 2024 | H1 2023 |
|---|---|---|
| DACH | 67 | 65 |
| Great Britain | 6 | 7 |
| North America | 17 | 17 |
| Rest of the world | 10 | 11 |
| Earnings | |||
|---|---|---|---|
| In EUR millions | H1 2024 | H1 2023 | Change |
| Revenue | 19.4 | 17.8 | 1.7 |
| Other operating income | 1.6 | 1.6 | 0.0 |
| Cost of materials | $-1.0$ | $-1.6$ | 0.6 |
| Personnel expenses | $-13.7$ | $-14.9$ | 1.2 |
| Other operating expenses | $-5.6$ | $-6.5$ | 0.9 |
| EBITDA | 0.7 | $-3.7$ | 4.4 |
| Depreciation/amortization | $-1.0$ | $-1.3$ | 0.3 |
| Financial result | 0.1 | 0.0 | 0.1 |
| Result from ordinary activities | $-0.2$ | $-5.1$ | 4.8 |
| Taxes | $-0.1$ | 0.1 | $-0.2$ |
| Consolidated net income | $-0.3$ | $-5.0$ | 4.7 |
Other operating income amounted to EUR 1.6 million in the first half of 2024 and thus remained at the same level as in the prior year period (H1 2023: EUR 1.6 million). The figures for both the first half of 2024 and for the prior year period include a research grant for the development of product innovations under the Research Grant Act, which amounted to EUR 1.0 million in the first half of 2024 (H1 2023: EUR 1.4 million).
The cost of materials declined to EUR 1.0 million in the first half of 2024 (H1 2023: EUR 1.6 million). The main reason for this is a changed product mix due to lower revenues from appliances (bundling of hardware and software) and reduced energy costs.
The cost of materials also comprises expenses for the ExaCloud infrastructure (leasing of servers and expenses relating to the operation of the data center), which remained essentially unchanged compared to the previous year.
At EUR 13.7 million, personnel expenses in H1 2024 were slightly lower than in the same period of the previous year (H1 2023: EUR 14.9 million). The decline is mainly attributable to a reduced headcount, which stood at 177 at the end of the first half of 2024 (30 June 2023: 190).
Other operating expenses amounted to EUR 5.6 million in the first half of 2024, which was below the previous year's EUR 6.5 million. The figure for the previous year includes one-time expenses of approx. EUR 0.3 million for the capital increase in late June 2023 and costs of EUR 0.5 million in connection with the application for research funding. In the first half of 2024, the expenses for the application for research funding amounted to EUR 0.2 million. Adjusted for these one-time effects, other operating expenses were more or less on a par with the prior year period.
Total earnings before interest, taxes, depreciation and amortization (EBITDA) improved to EUR 0.7 million in the first half of 2024, with the figures for both the first and the second quarter positive at EUR +0.3 million and +0.4 million, respectively. The improvement is mainly due to the increase in revenues in combination with further improved cost efficiency, especially with regard to marketing and human resources. In the prior year period, operating losses were incurred in both quarters, which added up to -3.7 million in the first six months of 2023.
Depreciation and amortization declined slightly to EUR 1.0 million in the first half of 2024 (H1 2023: EUR 1.3 million). Together with a financial result of EUR 0.1 million (H1 2023: EUR 0.0 million) and a tax result of EUR -0.1 million (H1 2023: EUR 0.1 million), earnings after taxes in the reporting period improved to EUR -0.3 million (H1 2023: EUR -5.0 million).
Net assets and financial position
Compared to the prior year reporting date, total assets increased to EUR 26.6 million as of 30 June 2024 (31 December 2023: EUR 20.0 million). This is essentially due to the increase in advance payments made by customers for term contracts, which is reflected in higher cash and cash equivalents on the assets side and in higher deferred income on the liabilities side.
| Assets | |||
|---|---|---|---|
| In EUR millions | 30 Jun. 2024 | 31 Dec. 2023 | Change |
| Intagible assets | 2.7 | 3.6 | -0.9 |
| Property, plant and equipment | 0.2 | 0.3 | 0.0 |
| Total fixed assets | 3.0 | 3.9 | -0.9 |
| Inventories | - | - | - |
| Receivables and other assets | 2.6 | 1.4 | 1.2 |
| Cash and cash equivalents | 19.7 | 13.3 | 6.4 |
| Total current assets | 22.3 | 14.7 | 7.6 |
| Prepaid expenses | 1.3 | 1.4 | -0.1 |
| TOTAL ASSETS | 26.6 | 20.0 | 6.6 |
Intangible assets declined to EUR 2.7 million in the first half of 2024 (31 December 2023: EUR 3.6 million). This trend was mainly driven by the change in the methods used to manage software development resources and the fact that own work was no longer capitalized as of 1 January 2022. Depreciation/amortization of earlier capitalizations was therefore no longer offset by additions in the reporting period, resulting in a decrease in the balance
sheet item as of 30 June 2024. Accordingly, fixed assets declined from EUR 3.9 million as of 31 December 2023 to EUR 3.0 million on the balance sheet date. As of the end of the reporting period, intangible assets represented $92.0 \%$ of total fixed assets (31 December 2023: 93.4\%).
At the same time, current assets rose sharply to EUR 22.3 million (31 December 2023: EUR 14.7 million). This is mainly due to the increase in short-term cash and cash equivalents, which stood at EUR 19.7 million at the end of the reporting period (31 December 2023: EUR 13.3 million). Optimized working capital management also had an improving effect on liquidity.
| Equity and liabilities | |||
|---|---|---|---|
| In EUR millions | 30 Jun. 2024 | 31 Dec. 2023 | Change |
| Equity | 4.1 | 4.4 | $-0.3$ |
| Provisions | 4.5 | 4.9 | $-0.4$ |
| Liabilities | 1.9 | 2.2 | $-0.3$ |
| Deferred income | 16.0 | 8.4 | 7.6 |
| Deferred tax liabilities | 0.1 | 0.1 | 0.0 |
| TOTAL EQUITY AND LIABILITIES | 26.6 | 20.0 | 6.6 |
Group equity declined to EUR 4.1 million as of the balance sheet date (31 December 2023: EUR 4.4 million). This is equivalent to a consolidated equity ratio of $15.3 \%$ (31 December 2023: 22.0\%). The change in equity is mainly attributable to the negative consolidated result for the first half of 2024 of EUR -0.3 million.
Provisions were down by $7.8 \%$ compared to 31 December 2023 and amounted to EUR 4.5 million as of 30 June 2024 (31 December 2023: EUR 4.9 million). This represents $17.0 \%$ of total assets (31 December 2023: 24.5\%). The decline is essentially attributable to the payment of the last tranche of employee entitlements under the SAR program in the amount of EUR 0.4 million, which were acquired in the context of the 2020 IPO. Liabilities were down to EUR 1.9 million as of 30 June 2024 (31 December 2023: EUR 2.2 million).
Deferred income climbed to EUR 16.0 million as of the balance sheet date (31 December 2023: EUR 8.4 million). This was mainly attributable to the increased business volume.
Change in cash and chash equivalents
| In EURmillions | H1 2024 | H1 2023 | Change |
|---|---|---|---|
| Operating cash flow | 6.3 | $-1.0$ | 7.3 |
| Cash flow from investing activities | $-2.0$ | 0.0 | $-2.0$ |
| Cash flow from financing activities | 0.0 | 0.0 | 0.0 |
| Net change in cash and cash equivalents | 4.3 | $-1.0$ | 5.4 |
Cash funds comprise the item "Cash on hand and bank balances" less a fixed-term deposit (KEUR 3,000; previous year: KEUR 1,000 ) with a remaining term of 3 months, which is shown under "Proceeds/payments due to investment of cash funds for shortterm cash management".
Operating cash flow for the first six months of 2024 stood at EUR 6.3 million, which represented a clear improvement compared to the same period of the previous year (H1 2023: EUR -1.0 million). This is mainly due to the increased business volume as well as to Exasol achieving operating profitability in the first half of the year.
Cash flow from investing activities amounted to EUR -2.0 million in the reporting period (H1 2023: EUR 0.0 million) and is attributable to short-term cash management.
As Exasol still has not raised any debt capital for financing purposes, cash flow from financing activities amounted to EUR 0.0 million in the first half of 2024 (H1 2023: EUR 0.0 million). Cash funds thus amounted to EUR 16.7 million as at the reporting date 30 June 2024 (30 June 2023: EUR 11.7 million). In addition, the company has an unused credit line of EUR 1 million with its principal bank. At the time of the preparation of this report, the Executive Board assumes that it will be able to meet in full all payment obligations known and expected to date. The Executive Board is not aware of any business developments that could lead to potential liquidity bottlenecks.
Changes to the opportunities and risk report
The assessment of the opportunities and risks of Exasol AG has not changed materially compared to the statements made in the 2023 Annual Report.
Forecast
As the 2024 half-year report is published, the forecast for the financial year 2024 remains unchanged, with Exasol expecting ARR for FY 2024 to increase by up to $10 \%$ compared to the previous year. The growth initiatives launched in late 2023 are expected to take effect in the second half of 2024 and to lead to a positive ARR trend.
Exasol projects a 10 - 15\% increase in consolidated revenues and positive EBITDA clearly above the prior year level. Cash and cash equivalents should remain stable at over EUR 10 million as of the end of 2024.
E rasol
The analytics database
Consolidated balance sheet
Consolidated income statement for the period
Consolidated statement of cash flows
Consolidated balance sheet
as at 30 June 2024
Consolidated balance sheet
as at 30 June 2024
| Equity and liabilities | 30 June 2024 | 31 December 2023 | ||
|---|---|---|---|---|
| EUR | EUR | EUR | EUR | |
| A. Equity | ||||
| I. Issued capital | ||||
| 1. Subscribed capital | 26,882,757.00 | 26,882,757.00 | ||
| 2. Nominal value of own shares | $-298,397.00$ | 26,584,360.00 | $-298,397.00$ | 26,584,360.00 |
| II. Capital reserve | 113,533,933.79 | 113,533,933.79 | ||
| III. Difference in equity due to currency translation | 374,759.80 | 433,763.35 | ||
| IV. Accumulated deficit brought forward | $-136,149,237.90$ | $-127,932,531.63$ | ||
| V. Consolidated profit/loss for the year | $-262,370.19$ | $-8,216,706.27$ | ||
| 4,081,445.50 | 4,402,819.24 | |||
| B. Provisions | ||||
| 1. Provisions for taxes | 6,401.21 | 13,789.00 | ||
| 2. Other provisions | 4,518,554.47 | 4,896,290.01 | ||
| 4,524,955.68 | 4,910,079.01 | |||
| C. Liabilities | ||||
| 1. Liabilites to banks | 0.00 | 0.00 | ||
| 2. Trade payables | 1,180,545.82 | 1,144,687.47 | ||
| 3. Other liabilities | 739,790.96 | 1,063,416.02 | ||
| - thereof for taxes: EUR 365,617.52 (PY; EUR 508,595.04) - thereof for social security: EUR 31,091.79 (PY; EUR 105,125.63) |
||||
| 1,920,336.78 | 2,208,103.49 | |||
| D. Deferred income | 16,011,768.75 | 8,381,751.55 | ||
| E. Deferred tax liabilities | 72,337.97 | 101,273.14 | ||
| 26,610,844.68 | 20,004,026.43 |
Consolidated income statement
for the period from 1 January to 30 June 2024
Consolidated statement of cash flows
for the period from 1 January to 30 June
| 2024 | 2023 | |
|---|---|---|
| TEUR | TEUR | |
| Profit for the period (net income including share of profit of other shareholders) | $-262$ | $-4,979$ |
| Amortisation, depreciation and write-downs on fixed assets | 1,017 | 1,340 |
| Increase/decrease in provisions | $-3,760$ | $-2,911$ |
| Other non-cash expenses/income | 4,463 | $-503$ |
| Increase/decrease in inventories, trade receivables and other assets not related to investing or financing activities | $-1,297$ | $-457$ |
| Increase/decrease in trade payables and other liabilities not related to investing or financing activities | 7,342 | 6,083 |
| Interest expense/income | $-141$ | 20 |
| Income tax expense/income | 59 | 74 |
| Other operating income from grants | $-1,042$ | 0 |
| Income taxes paid | $-55$ | 322 |
| Cash flows from operating activities | 6,323 | $-1,011$ |
| Acquisition of property, plant and equipment | $-124$ | $-19$ |
| Cash for financial investment as part of current treasury management | $-2,000$ | 0 |
| Interest paid | 147 | 0 |
| Cash flows from investing activities | $-1,977$ | $-19$ |
| Proceeds from grants received | 1 | 0 |
| Interest paid | $-5$ | 20 |
| Cash flows from financing activities | $-4$ | 20 |
| Net increase/decrease in cash and cash equivalents | 4,342 | $-1,010$ |
| Effect of movements in exchange rates and remeasurements on cash held | 14 | 0 |
| Cash and cash equivalents at the beginning of the period | 12,325 | 12,728 |
| Cash and cash equivalents at the end of the period | 16,682 | 11,718 |
| Cash and cash equivalents consist of the following | 30 June 2024 | 30 June 2023 |
| TEUR | TEUR | |
| Cash and cash equivalents | 16,682 | 11,718 |
| Current account liabilities | 0 | 0 |
| 16,682 | 11,718 |
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Exasol AG
Neumeyerstr. 22-26
90411 Nuremberg
Germany
T: +49911239 91-0
F: +49 911239 91-24
Mail: [email protected]