q.beyond AG

Thank you very much and a warm welcome to our Q1 conference call. My name is Jürgen Herrmann. I'm the CEO of the company and with me, like always, is Arne Toll, our head of investor relations and responsible for M&A. Ladies and gentlemen, we had a good start this year. Why? First, compared to Q1 last year, we grew by 10% in revenues. Secondly, EBITDA increased to 0.7 million, and it proves the sustainability of our break-even that we achieved in Q4 last year. And thirdly, very important from my point of view, year-to-date, our order entry sums up to 96 million, which is after four months, already 60% of the order entry we recorded for the full year 2020. In detail, so on page three, you can see the increase of revenues and EBTA. And it's very important to mention again that each and every Euro in revenue growth is paying in our probability. So the 3.4 million additional revenues leads to 1.8 million additional EBTA. Not to forget that 76% of revenues is recurring actually, and 68% of revenue is coming from our main sectors, retail, manufacturing, and energy. Let's have a few on the segments. First, cloud and IoT segment. The main drivers of growth in this segment is cloud solutions and digital workplace. And yes, I'm convinced that this is only the starting point driven by the pandemic situation. I'm sure that we are always in the beginning of equipping digital workplaces for the German Mittelstand. The segment margin in this segment rises to 10%. Just to add that, last year, we achieved 7.6%. And the target for next year is 18 to 20%. So we are on track. Coming to our second segment on page five, SAP. Yes, SAP segment accrue as well, but not as much as the cloud and IoT segment. And this is mainly to do with the fact that we still have restrictions on the consulting business that takes place on the customer premises. Although important to mention that the margin in this area rises to 13%. Last year, we achieved 6.8%, and the target for next year is 14% to 15%. So main reasons for this increase in profitability is higher efficiency, in a certain way, less travel costs, and more S4HANA projects. On the next slide, you can see the sum of both segments. And segment margin, our definition includes everything apart from general and administrative expenses, which were 4 million for the first quarter this year. A number, by the way, that is representative for the full year. So in a nutshell, our business model is scalable. we in a certain way just have to go and we will reach our targets. Let's have a look at the full profit and loss statement. So we can see compared to the first quarter last year that we improved in all figures. And I want to highlight that the segment contribution in absolute figures was nearly doubled from 2.2 million to 4.1 million. And with the fact that administrative expenses are at a stable level, this is the basis for the improvement of EBITDA, EBIT, and net income at the very bottom line. So snapshot of our balance sheet on page eight. Solid equity ratio and 40.4 million net cash as of 2020. end of March. And yeah, including our plan to be free cash flow create even in Q4 this year, we have full financing flexibility, especially for M&A transactions to come. Yeah, you know, the next chart is my favorite chart, let's put it this way, to demonstrate the five cornerstones of our growth strategy. Our attractive core business with, as mentioned, 70.6% recurring revenues. Our platform-based innovations for the time being small in revenues, but the future beyond 2022. A clear sector focus with retail, manufacturing, and energy, and since a few days with a fourth sector logistics. and the management team and performance-based culture and M&A as mentioned. And let's come to this fourth focus sector. Last week, we launched this and the driver is our cooperation with Rurlik Logistics. And yeah, they are two new companies. One is a new subsidiary that will offer a service the full portfolio of services expected of an IT service provider for this segment. From consulting for the cargoized logistic solutions, the SAP modules, BI, BW, finance, and of course the full operation of global cloud infrastructures and data integration services to a global 24 seven help desk. And the second part is, the investment in the logistic software specialist. And here we are looking for, yeah, among other aspects to provide digital solutions for tracking consignments and for setting quotas, making entries and handling payments. A very innovative area. And we all know that logistics is a sector that is still not very digitized. Yeah, the partner as mentioned is, really logistics, which is an international owner operated specialist for intercontinental sea freight, air freight, and contract logistics, which has more than 2,200 employees in 150 offices in 35 countries. And yeah, this is only possible to enter the sector with the combination. So we have the IT competence, And Rolik Logistics has in a certain way the sector knowledge. And with that, we are happy that Rolik itself is our customer, as mentioned, with a 2 million order entry that we signed. A five-year contract with the elements that you can see on this page. Yeah, next page, order entry. You know that figure that is quite important for future growth. Of course, Röhlig, with its mid-double-digit million volume, was a driver for the 96 million new orders, but there were others as well. And in any case, it is an extraordinary good start in a new year and a very good basis for ongoing strong and profitable growth. With this good start, of course, we confirm our guidance. We expect revenues to rise to 160 to 170 million this year with an EBITDA in the area of 5 to 10 million and the free cash flow of minus 10 to minus 5 million, not to forget to become positive free cash flow from Q4 2021 onwards sustainably. As mentioned, M&A is a cornerstone of our growth strategy. And we still have three aspects in focus. So one is to extend and to support our existing product portfolio. The second one is to invest in unique technologies. As a third one, is to expand our markets like we did last week to expand our strong position in focus sectors.

Next page.

Yeah, recently we published our first ENK compliant sustainability report. And with that, we even mentioned a clear a target to become climate neutral by 2025. And ladies and gentlemen, for anyone wishing to halt climate change and cut emissions, there's no alternative from our point of view to digital solutions and digital digitization at all. And this digitization and sustainability are two sides of the same coin. And with that part of our Yes, our growth strategy 2020 plus is on track. And even today, we are working on the basis for growth beyond 2022, especially with platform based innovations. And you can see our targets that we now published two years ago, when we sold our telco business, and so far, as mentioned, we are on track. And with that, I'm happy to take your questions.

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 and star again.

The first question comes from . Please go ahead with your question.

Yeah, good afternoon, and thank you for taking the questions. I got three, please. Firstly, I was wondering around the logistics market that you're now also targeting with your services. Is that something that you already baked into your midterm targets? I'm sorry if you have to repeat this now because I have some technical difficulties with the call. Or should we think of it as potential upside to its current return targets hereabouts? And second, please, if you change the wording slightly around your 2021 guidance in terms of the pandemic impact from Q2 to Q3, in terms of the obstacles related to the pandemic, I was just wondering if that's something that we should consider as, well, you basically expecting to end up the year at the lower end of the guidance, or is it basically neutral? And then just finally, along to your SAP business, I mean, you were talking about the variable margin contribution, which is basically a result of two factors, one, less travel, and two, the improved cost structure. Just wondering, again, here, if you could quantify those two metrics. Thanks a lot.

Yeah, thank you very much for the questions. Concerned logistics or the new segment is pretty the same like the others that we are already targeting. We are always questioning ourselves if this is a sector that we know where we have a certain experience or we have a partner that helps us to be successful on one hand. And secondly, if this is a sector that is, let's say, with a low level of digitization and with huge challenges concerning the years to come. And definitely logistics is in that area like the other partners. Of course, we would not have entered this sector without a strong partner like Röhlig, because this would be a real greenfield approach. And with this partner, I think we are... well prepared to be successful. Concerning the mid-time targets, this is part of our numbers that we announced already. Concerning our wording, so actually I do not have the idea that we changed the wording or any obstacles. So we always said that there's a certain impact concerning SAP consulting, especially the area where we are not able to enter the customer premises, which is still the case, as mentioned. And apart from that, I think there is no impact, and therefore, there is the full commitment to our guidance this year. Concerning SAP, you are right. We mentioned more S-Hohana projects. We mentioned less travel costs, and we mentioned higher efficiency, especially by let's say, improve our mixture of internal and external employees. And that's it so far. More detailed numbers, yeah, the competitors would be happy to get them and we will not disclose them for the time being.

Very helpful. Thanks.

At the moment, there seem to be no further questions. If you would like to ask a question.

please press nine and star on your telephone keypad. We have one more question coming up from Janik.

Please go ahead with your question.

Yeah, thank you very much. I would just have one additional question, and that would be if you could provide an update on the planned sale of the co-location business, please.

Yes, thanks, Janik. I'm looking to Arne. I think we have now all things closed so far. So the entity is there. And I think, not I think, I'm sure that we will or very soon can give further information to the market that know the process has started officially and still the plans are in time to now start the process and maybe to close if this is the option that we will choose. Of course, there are other strategic options, but the sale of the business is our preferred solution. And if it will happen, I think it is most likely to be closed in the third quarter this year.

So everything's on plan, Janik. Great, thank you very much.

And we have one more question from Sebastian Weidner, Montega.

Please start with your question. Yes, thank you for taking my question. So I have two left. The first one is you say that currently the extension of your competence in the enterprise software business is an important topic. So which applications are you currently focusing on? And the second one is what were the main drivers for the order intake of 28.8 million euros? in Q1 being lower than in any quarter in 2020?

The first one concerning new enterprise solutions, the new one is maybe linked to our, we call it internally expect the next portfolio. And here we are focusing on the sale of our store butler, our solution for the retail area. which provides our customers with, let's say, a digital solution for their stores, and secondly, concerning the agizer. Yeah, at the end of the day, the 20.8 million received in the first three months is still a good number, and we are happy with that, and we are fully on track concerning our full-year target. Of course, there are always delays from one quarter to the other, but we are absolutely confident that we make our numbers, and there's no negative impact at all.

Okay, thank you. Maybe a last one. Is the new share program for your employees linked to the development of the share price?

The new share program is not linked to the development of the share price. This is only for our management team, not for the employees. I want to make sure, I think we have a different situation because let's be honest, the salaries are different and we want to really encourage our employees to make sure that each and every will take part at this. And of course, the risk structure of, let's say, a normal employee, a normal worker is different compared to the management team.

Okay, thank you.

There are no further questions from the audience. If somebody would like to ask a question, please press the nine and star on your telephone keypad.

There are no more questions, so I would like to hand back over the closing remarks to the company.

Yes, thank you very much for your time, for your questions, for taking part. Final statement, yes, as mentioned, our growth strategy is working, ladies and gentlemen. We do have an attractive core business, and we are expanding new markets. We are boosting the momentum with platform-based innovations, and we have the financial strength to support this development by targeted acquisitions. Yeah, thank you very much again. Stay healthy, and maybe we meet us on Wednesday on our podcast. Adrian, thank you very much and goodbye.