q.beyond AG

Conference is now being recorded.

Good afternoon ladies and gentlemen and welcome to the QBeyond conference call regarding the third quarter results 2020. At this time all participants have been placed on a listen only mode. The floor will be open for your questions following the presentation. Let me now give the floor to Jürgen Hellmann.

Thank you very much. Good afternoon ladies and gentlemen and a warm welcome to our Q3 conference call. My name, as said, is Jürgen Herrmann. I'm the CEO of QBeyond. This is the first time, the first call with our new company name, and obviously it is as well the first time that we can compare the quarters like for like, because Q3 last year was the first year without Plasnet after the sale of this telco part. I'm currently in Hamburg and my colleague Arne, he is head of Investor Relations, you know him, is taking part out of Cologne. So let's come to the presentation. And I want to start with page three. New orders rise to 52.3 million in third quarter. And ladies and gentlemen, this is a record since we started to publish this important indicator. And it is the core indicator of medium-term growth. Therefore, it's obvious that we are quite satisfied with this quarter, with the last quarter. And let me tell you that 70%, so more than half, much more than half, received from new customers that were able to convince from our portfolio. In total, so far, when we look at the last three quarters, We contracted 102 million in this year, so our target for 2020, which is more than 143, is not in danger, to put it this way. Yeah, from order intake to revenues, on page four, you can see the development, and it's fifth consecutive quarter of revenue growth, and could it be more? Yes, definitely, in normal times. And from my point of view, this is a good message that we were able to increase revenues in these challenging times. And coronavirus-related restrictions on contact held back especially the consulting business on location at customers. But we are showing growth quarter by quarter, and we do confirm our guidance. If we look at the profit and loss statement on page five, I always said that the main driver of profitability at the end of the day is growth, because we do have all the resources in place, the infrastructure as well as the people. And this can be seen on the comparison of Q3 last year to this year. All figures improved in relation to Q3 last year, apart from net income. And you can see on the bottom on the left side that the reason for that is an extraordinary impact of income taxes recorded last year, which we had not this year. But all the other figures, um improved and this especially leads to a rising cost profit by 25 let's come to the two segments uh first the cloud and iot segment uh page six um and ladies and gentlemen there is no doubt uh kovit 19 has created particular strong demand for cloud solutions with a key focus on the implementation and operation of digital workplaces. And with that, the revenue increased by 11% compared to last quarter or the quarter last year. And segment contribution improved by 1.4 million by nearly half a million. Let's come to SAP. And I want to make clear that SAP segment has two major, let's say, parts or elements. The consulting part, on one hand, which is definitely impacted by COVID-19, as mentioned, due to the fact that we cannot get to the customer normally. And on the other hand, the second element is application management services, which is not so strongly hit by COVID-19, although we have A small impact as well because when the customer is not on his business working, we have lower income, lower revenue due to ticket and normal operational processes. Page eight, the company is still solid finance. We have had a free cash flow of minus 3.9 million, excluding definitely the purchase price for our latest acquisition. And with that, we can show net liquidity of 49.4 million at September 30th, with a ratio at 74%, which is a strong balance sheet, especially due to these challenging times. On page 9, you see again the revenue development per quarter. And there's no doubt when we confirm our guidance, what we did and what we do is then we have a strong Q4 that we expect. And this is mainly driven by the high volume of new orders. but especially we do expect the completion of some large migration cloud projects in the last quarter. And with that, as said and as reported, we definitely stay to our guidance of more than 143 million for this year, which you can see on page 10, which would mean a growth related to last year, of more than 13 or roughly 13%. And this is due to the fact that we are still in challenging times that we all know. And we can confirm as well our guidance to EBTA and to free cash flow as mentioned. And definitely we can confirm that we will show positive EBTA next quarter sustainably. Yeah, on page 11, QBeyond is prepared for this crisis because we're in a certain way in a privileged position. There's no doubt that we have this business, this robust business model, and that more than 75% are recurring in platform-based revenues. We have a strong balance sheet, and we are sure that the shutdown will cause a further grow pushed to our core market, cloud, IoT, and SAP. And with that, on page 12, we maintain even our growth course for the coming years. And you know that figures, especially our target for the year 2022, where we want to achieve 200 million in revenues. And to repeat that as well, We expect, in this context, in 2022, EBITDA margin of definitely north of 10%, and positive free cash flow that will be break-even in Q4 next year. And with that, yeah, I'm happy to answer your questions, ladies and gentlemen. Ladies and gentlemen, if you would like to ask a question, please press 9 and star on your telephone keypad. In case you wish to cancel your question, press 9 star again. And the first question comes from Jonas Lu from Warburg Research. Please go ahead with your question.