Cloud business drives revenue growth
Quarterly results Q3 2022 7 November 2022| Jürgen Hermann, CEO
Disclaimer
This presentation contains forward-looking statements based on management estimates and reflects the current views of q.beyond AG's ("q.beyond's") Management Board with respect to future events. These forward-looking statements correspond to the situation at the time this presentation was prepared. Such statements are subject to risks and uncertainties, which q.beyond is mostly unable to influence. These risks and uncertainties are covered in detail within the risk report section in our financial reporting.
Although the forward-looking statements are made with great care, their correctness cannot be guaranteed. Actual results may therefore deviate from the expected results described here. q.beyond does not intend to adjust or update any forward-looking statements after publication of the presentation.
Q3 2022: continuing growth…
EBITDA and FCF for Q3 2021 affected by successful sale of colocation business
| In $\epsilon$ million |
Q3 2021 |
Q3 2022 |
$\Delta$ % |
| Revenues |
40.0 |
43.1 |
$+8%$ |
| EBITDA |
$1.6 (+29.4^*)$ |
1.7 |
$+6%$ |
| Free cash flow |
$3.6*$ |
(1.7) |
n/a |
…despite weakening economic climate
Germany facing recession for second time in 2 years:
- Weaker development than most other industrialised economies
- Great uncertainty among companies: ifo index persistently low
- Inflation remains high despite rising interest rates (September 2022: +10%)
Q3 2022: new orders at previous year's level
New orders are being affected by the uncertain market climate; in particular, we have witnessed reluctance in the SAP business.
Thanks to success in the cloud business, of the orders received in Q3 2022
- 88% came from new customers or from new projects with existing customers
- only 12% involved extensions of contracts with terms generally amounting to 3 to 5 years
Q3 2022: revenues rise by 8%
In this difficult economic climate, q.beyond benefited from
- a high share of recurring revenues (Q3 2022: 78%)
- • its concentration on focus sectors -- 60% of revenues came from retail, logistics and manufacturing
- targeted acquisitions (organic growth despite reduction in SAP: +6%)
Cloud business still dynamic
Growth drivers
- consistently high demand for cloud solutions
- growing interest in hybrid cloud portfolio
- success of new subsidiaries
Additional cost factors
- expansion in SaaS business
- temporary change in cost structure (especially discontinuation of colocation margin)
SAP business approaching turnaround
Sales campaign
- SAP suffering from downstream effects of pandemicrelated restrictions
- New business held back by high levels of uncertainty
- Highly targeted approach to potential customers proving effective
Success on cost side
- COGS of € 6.4 m in Q3 2022 as against € 7.1 m in Q2 2022
- Proof of greater cost discipline
- Return to growth course expected for 2023
Slight rise in operating EBITDA
| In $\epsilon$ million |
Q3 2021 |
Q3 2022 |
| Revenues |
40.0 |
43.1 |
| Cost of revenues |
(31.9) |
(35.9) |
| Gross profit |
8.1 |
7.3 |
| Sales and marketing expenses |
(3.1) |
(3.5) |
| Segment contribution |
5.0 |
3.7 |
| General and administrative expenses |
(4.9) |
(3.6) |
| Other operating income |
33.2 |
1.7 |
| Other operating expenses |
(3.8) |
(0.1) |
| EBITDA |
29.4 |
1.7 |
| Depreciation and amortisation |
(4.2) |
(4.3) |
| EBIT |
25.3 |
(2.6) |
| Financial result / taxes |
(4.6) |
(0.2) |
| Consolidated net income |
20.7 |
(2.8) |
Year-on-year comparison of quarterly earnings affected by successful sale of colocation business in Q3 2021
- Changed cost structure, also due to consolidation of scanplus
- High other operating result in previous year
- Excluding colocation sale, EBITDA in Q3 2021 stood at € 1.6 million
Rock-solid financing …
q.beyond finances its growth from its own resources:
- equity ratio of 76%
- no bank liabilities
Great substance:
- high net liquidity
- proprietary land in Hamburg (market value > € 20 m)
- Attractive subsidiaries and shareholdings (including datac, scanplus)
Low volume of capital expenditure: € ~3 million in 2022
… permits further targeted acquisitions
M&A strategy focuses on
• companies able to strengthen q.beyond's cloud-related portfolio
Potential targets must have
- marketable products
- revenues of at least € 5 million
- positive earnings
q.beyond takes over productive-data
Data analytics specialist productive-data an ideal match for q.beyond's sharpened M&A focus
- New module for cloud customers: introduction, enhancement and operation of data warehousing solutions
- Dovetailing with hybrid cloud solutions for secure data storage and processing
- Proven business model: annual revenues of more than € 10 million with positive net income
- Strong team: more than 40 internal and external experts
- 51% stake acquired/ option of complete takeover by 2026
Acquisitions are a firm component of the strategy
Strategy adapted to change in underlying conditions
SaaS: focus now on customer projects
To date:
High volume of upfront investments in SaaS products offering opportunities for attractive revenues
Challenges:
- risk of low market acceptance
- marketing new products in difficult conditions
In future:
- halt on development of SaaS products
- development resources will be used in customerspecific projects
- commercial use planned for investments to date
Revenue growth of around € 20m budgeted
2022 forecast adjusted to account for weaker economic conditions:
- Revenues to grow to € 174 ––178 million (previously: around € 180 million)
- EBITDA to rise to € 6 –– 8 million (previously: around € 8 million)
- Free cash flow at a maximum of € -10 million (unchanged)
- Strong revenues expected in Q4 2022: Organic growth + first revenues with productive-data + realisation of projects
Questions & Answers
Contact
q.beyond AG Arne Thull Head of Investor Relations/M&A
T +49 221 669-8724 M +49 163 669-8425 [email protected] www.qbeyond.de
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