q.beyond AG

Good afternoon, ladies and gentlemen, and welcome to the QBeyond conference call regarding the second quarter results 2021. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now give the floor to Mr. Jürgen Herrmann. Thank you very much, and a warm welcome from my side to our Q2 conference call. Together with me, like always, is Arne Thull, our head of... investor relations and M&A. Yes, ladies and gentlemen, in a nutshell, our profitable growth is increasingly gaining momentum. And with this growth, as always mentioned from my side, our profitability is rising. Order entry is developing well and the sales pipeline is there also. And on top of that, we are on track concerning the execution of our M&A transactions. as well as on track concerning the sale of our co-location business. And with that, I would like to start with a presentation on page three, where you can see the results of this quarter compared to the Q2 last year. And you can see that revenues increased by 4.3 million, and 77% of these revenues in the second quarter are recurring. And based on the 4.3 million increase in revenues, EBITDA rose by 2 million to 1.2 million the second quarter. And like in the last quarter this year, the marginal return came to more than 40 percent. Coming to our order entry as an important KPI on the next slide. In the second quarter this year, new orders even more than doubled to 87.5 million. And for the first six months, we achieved 160 million, which is an increase of 67% compared to the first six months of last year. Of course, and you know that Röhlig Logistics, as a new customer and a new focus sector, played a big role in this order entry. And this was a driver as well for the fact that almost 90% of orders in the second quarter involve new customers on new projects, meaning new business with existing customers. This is, from my point of view, a strong foundation for ongoing strong and profitable growth. When you look at the segments on the next slide, the split in segment shows the great demand for cloud solution and digital workplaces. For this segment, the increase in revenue was 4.6 million, which means plus 19 percent. And the segment margin already rise to 14 percent and is with that on track concerning our target for next year of 18 to 19 percent segment margin in the cloud and IoT segment. SAP, next slide, was affected far more severely by restrictions on contact. But it's stable. Not more, but not less. And I'm very confident that we can increase this figure for the second half of this year. And with then, let's say, at least 43 million revenues, we would then show a growth rate compared to last year of 5% plus, which is due to the fact that we are still in a pandemic situation, a good result from my point of view. Let's have a few on the full P&L. And it demonstrates again, it shows improvement in all relevant figures. And let me highlight the increase in cross-profit by 50% and the increase in segment contribution by more than And it shows, ladies and gentlemen, that our business model is healthy and supporting our growth strategy 2020 plus. And this is as well concerning our balance sheet. It's still financed very solid. Net liquidity at the end of the second quarter was 30.7 million. And this number, you know, that does not include the sale of the first part of the collocation business to DATEV, which has been closed a few days ago. And with that strong balance sheet, we are on track concerning the execution of our growth strategy. And the five columns, you know this chart, are shown on the next slide. But the fact that you know this chart shows always also that we have a clear strategy, and this is unchanged since we published it in May 2019. And against the backdrop of corona, we consistently implement our strategy. And I will do everything to execute this until next year, and then we will show you our new targets beyond 2022. And for this new target, so the strategy beyond 2022, the focus on platform-based innovations will play a key role. Therefore, we are preparing even today this development. We are pooling our expertise in different locations, which are the basis for these new services. And when we, although these new platform-based services, as of today, are very, very small in revenues, they will be very important for our future, for the future of QBeyond. And you can see that for the first half, we expanded 4.2 million in research and development, which represents in a certain way the make part of our business. On the next slide, you can see that the buy part is part of our strategy as well. So you can see the three columns of our M&A strategy, which is still unchanged, expanding in the focus sectors, extending our product portfolio, and investing in unique technologies. And on the next slide, you can see an example for extending our product portfolio, which was the takeover of 100% of shares of DATAC, which is a modern workplace and collaboration specialist. And yeah, it is, from my point of view, very important in these times of Corona that we strongly believe in the extent of workplaces And the data is, as mentioned here, specialist with a clear focus on Microsoft, which is in our point of view, the leading technology, especially with the key solution. Yeah, on the next slide, you can see the, let's say the latest transaction concerning our M&A strategy, which is the acquisition of 25.4, of SNABL. SNABL is a specialist in self-checkout solutions for our focus sector retail. And let me say this, it's not a startup anymore. It is a proven technology with existing customers. And let me tell you, with revenues north of $1 million for this year. And this was the main reason why we already negotiated an option to take over the majority stake from 2023. So, as mentioned, we are on track concerning the execution of our M&A strategy, but we are on track as well concerning the sale of our CODO business. On the next slide, you can see, as already published, the key messages concerning the sale of the first part of CODO business, which was the existing customer data with its, let's say, isolated data center, which we gave back in a certain way to DATEV. And this is representative for roughly 10% of the whole colocation business in revenues. A very successful transaction from my point of view, which leads, as you can see on the next slide, this transaction to arrays of EBTA and free cash flow flow concerning our guidance. So we stay with our revenue guidance with 160 to 170 million, but after this transaction we expect an EBTA from 8 to 13 million, which is plus 3 million, and the free cash flow from minus 2 to 3 million, which is plus 8 million. And on top of that, we expect the positive free cash flow one quarter earlier than planned already next quarter. Yeah, this is our plan on page 16, published as mentioned in May 2019. So we are still on track to reach our guidance for this year as well as the 200 million revenues for next year, and it's always important to mention and to repeat that we have a scalable business model that leads to rising EBDA margins as targeted more and north of 10% for next year. Yeah, thank you very much so far for your patience, and I'm happy to take your questions. Thank you very much. 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. The first question comes from Jonas Bloom from Warburg Research. Please go ahead with your question.

Yeah. Good afternoon. Thanks for taking the questions. I got three, please. Firstly, with regards to the Rulic order you acquired in Q2, I'm just wondering if you could give us sort of a segment revenue split and when you expect revenues from this order to be booked. And is it also fair to assume since this is a key customer to you that they have perceived favorable margins or is it just a regular group margin contribution?

So I got two questions, Jonas, or what was the third one? I know, but that was basically one, but I will follow up. Okay, that was one. Fair enough. So let's start with Rulic. Yeah, as mentioned, signed in the second quarter. We are now in the, let's say, in the transition phase to take over the business of Rulic as customers. which will show first revenues in Q3, which is a fast transition. So far, normally it takes us at least six months to take over the business. And on top of that, we are very good on track concerning the preparation and the start of even, and this was always part of our strategy, to attract further customers in the sector logistics, which will start in Q3 as well. And concerning the margins, yeah, of course, you do not expect that we give precise numbers here on the call, but I can tell you that we are generating good margins out of that deal. Okay, great. And then just following up on the cloud and the IoT business overall, I mean, you're again mentioning investments in future growth, so I was just wondering, when do you expect those investments to kind of fade out in your P&L? Yeah, when we look at the R&D expenses, which are mainly responsible for the new platform-based innovation business, the new services environment, I expect the first revenue is definitely this year and increasing number next year. But I think that you can really have an impact on the P&L. I think it will be second half of next year.