q.beyond AG

Hey, ladies and gentlemen, and a warm welcome to today's earnings call. After the video, I'll be following the publication of the Q3 figures of 2025.

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And with that, I would like to hand over to you, Mr. Nixon.

Thank you very much.

Good afternoon to all of you. Happy, Noah and myself are happy to present the Q3 numbers. Headline is Return to Profitability. What we aim for this year, so positive net income for the group. And Q3 is first milestone to reach it. And all what we see is that it will be also the case in Q4. We will present you the numbers right now and give you a little bit of an outlook. What will happen until the end of the year and how do we start or how do we manage next year? Nora has most of the workload concerning the figures, so I hand over to her and I will present the figures of Q3.

Thank you, Thies. Welcome from my side. As you can hear, my voice is not so strong as it normally is. I apologize for that. And so let's start with Q3. 2025 is a very special year for QBeyond. We focus action in a stagnant environment. And in this situation, we return to profitability as we announced. So let's use the code of LERUZE. Those who know the destination will find the way. And this is our clear message. We deliver. If you look to the key figures, it shows a significant improvement again. The EBITDA increases. We have a positive consolidated net income and an increased free cash flow as well. We deliver and we are on track. How do we consider the current development? You see two sides of a coin. The confirmation of our strategy is seen in the figures. We see the increase of efficiency and resilience. Additionally, we took advantage of a tax windfall resulting from the Plusnet transaction. On the other side of the coin, we suffer from economic underperformance and we are affected, for example, by the situation of the German small and medium-sized enterprises, who delay and stop the tenders. Additionally, we do not see the 1 billion Euro package from the German government, in any tender, so the weak economy affects us as well. You cannot always ride into the slipstream, so QBeyond has a clear focus on profitability and that is seen in our numbers. First of all, I'd like to start with the revenue. We have a resilient business model that is stabilized in a challenging environment as well. Concerning the revenue, we waved off low margin revenue at the end of last year. So it is not a surprise for us because We planned more profitable revenue instead of an increase. Additionally, our data center is not selling in the same speed as we hoped. So there's a reluctance to make decisions among small and medium-sized enterprises as well. On the other side, we notice an increase of our order entry. In Q3, we almost set twice as high as the last quarter of 2024. Concerning the year to date, we have an increase of 8% concerning our order entry book. So it's a great basis for the next year. On this slide, you see the former quarters and the view of 2025. As you see, we always have a very strong last quarter and this is what we expect for 2025 as well. We focus on consultancy and development services and we notice a strong demand on AI solutions, picking up noticeably and implementation of tools. For example, our private enterprise AI is already sold and increases in development. On the medium term, There will be use of technology as well along the entire value chain. So if you look, for example, as SAP, there's a prioritization of companies in the S4 migration for the next three years. So we expect a strong Q4, which is important if you look at the guidance later. We report two segments, consulting and managed service. I would like to start at first with consulting. In this quarter, we doubled our earnings. The margin grew up and you see a remarkable improvement in our earnings. The measurable upskilling in the last year of the Qbiont Academy and the systematic performance management is very visible in our improvement. Additionally, we had a lot of contract extension and won new customers. Our second segment is managed services. It is relatively stable of margin despite of reduced revenue. As I mentioned before, we focus on high margin business. So additionally, we invested in our portfolio cube and AI cases. So you see a lower margin in this quarter. On the other hand, we have the same situation in consulting, an increasing booking of contracts, so we are based very well for the next year. 2024 has a clear goal for us. A positive consolidated net income. On the slide you see the P&L with the most important positions. What is important to know? We consistently invest in AI, especially our private enterprise AI and develop our portfolio cube. We are proud first customers take place in the private enterprise AI and so we make significant progress in AI and improvement for our customers and their benefits. Another positive effect we had is the tax windfall, which you see in the other operating result as well. Furthermore, I'd like to point out that we make at the moment many digitalization projects. As you may know, we invest in a new ERP system and in two other digitalization projects. This is an amount of more than 1 billion euros that we invest in processes and improvement for the next years. Our last financial figure is the free cash flow. Traditionally Q3 is a very weak quarter. In the whole year to date, the free cash flow is about 3.6 million Euro, so it's increasing as well. It has to be regarded that we had higher expenses for investment and digitalization this year and reduced the liabilities as well. Our net liquidity is among 41.3 million euros this year. So that means a lot of possibilities for us for share buybacks, dividends or M&A. At the moment, there's no final decision. We want to take advantage of all this possibility and will inform you of the next steps. So, sustainable success comes from sticking the course in difficult times. We are very proud to confirm our guidance today. My message is very clear. As you see on the slide, all of our financial figures will be reached at the end of the year. The revenue will be at the lower end of the guidance. and the EBITDA and the consolidated net income as expected. So it's a great message for you. We are on track. We deliver. And, well, we are looking very positively for Q4. And with this message, I leave it to Thies.

Thank you, Roa. So what's the plan for this year and also for next year? So we will, point number one is profit over growth. This is the case, will be the case also for the future. We are in offshoring, we are now at 20% or will be at 20% international delivery capacity, let's say. 30% is a near time goal. On top of it, we will start, we hire sales people for the Baltic market as of for the Spanish market. So we expect the first revenues to come maybe this year for sure next year. And we expect, let's say an impact the first impact Q3, Q4 concerning the top line next year. So automation is driven by AI. Nora mentioned it. So we invested this year in the foundation of it. So we, in the data hub, a new ERP system so that we can use AI because now we are, end of the year we will be fully digitalized. There we invested on top of the million, we invested in the foundation, we invested again in AI for us and also for the customer platform and in competencies. So that we have a share of the AI revenue next year. This is three and four, number three and four. And number five is we also start to invest heavily in our portfolio upgrade, mainly for managed service, which we call internally cube. So this means AI in every service. So tool chain, AI tool chain, every service and on top of all what is security, what is security needed. and all what is needed from the regulation for banks, insurance companies, or others like this NIS or DORA framework. So with that, we will be able to drive efficiency and also to win businesses. When we look at our order entry, We see 8% more than last year compared to last year. We're aiming for, let's say, 180 million order entry this year, which will be beyond the record figure. Our midterm goal remains unchanged. We will, let's see where we end up this year, 7% to 8% EBITDA positive net income for the group. And then we will aim for 10%. The new strategy 2028, we will release Q1 next year for the next three years over 26, 37, 38. And in this period, we try to reach 10%. With that, we like to close this conference call and happy to to get your questions. Thank you very much.

Yes, thank you very much for your presentation. We will now move on to the Q&A session. So, for a dynamic exchange, we recommend to ask your questions personally via the audio track. To do this, just click the raise hand button. If you do not have the opportunity to speak freely, you are also welcome to place your questions in our chat. And with that said, I can already see one question in our chat box. Let me read it out loud. Is the tax windfall profit of 2.8 in the EBITDA and the EBIT number included? If so, adjusted EBITDA and EBIT is much weaker, correct?

Yes, it is.

So it's included. It's included. I like to take a broader, broader picture. So we had several effects out of the Plusnet transaction in 2019. And you can, you all know that it's in text questions. It's not easy to say. So they are included. On the other hand, we have to cope with a weak economy and weak customer demand on a plus we invested. We invested, as we said, in the AI foundation, in AI cases, and in the portfolio, which will help us in the future. So, yes, there's a windfall. This is included in the numbers. It helps us in Q3, but all the investment we took will help us in Q4 and so on. So in Germany we say, , I can't translate it, but it's in business sometimes. It's on the right side of the corner, the impacts.

Yes, thank you very much for your question. We do have a risen hand as well. Ms. Sam Nielsen, you can now unmute yourself, please.

Perhaps you can hear me now? Yes. Great, thank you. I want to start with the future outlook here. both next quarter and also in looking into next year with the order book and so on. I mean, do you think that is enough to show positive revenue growth despite the focus on profitability?

Yeah, we will show some growth. I mean, I think the market, there was a lot of reluctance in the last quarters. We all suffered from it. There are a lot of deals postponed. They cannot be postponed forever. So at some point in time, there will be investment and this will, let's say, drive our numbers. So, and for next year, we will see growth, will be not double digit for sure, but there will be growth and the market, let's see where the market is heading. Three to 5%, I think is realistic. Let's see where we end up in the final numbers for next year. It's hard to say, to be honest. But we have done this revenue cut this year where we cut it out, let's say, bad revenue. So this will not happen again. And on this foundation, this basis, we will grow the business next year.

Okay, great. And also, I mean, taking off the one-off in this quarter, I mean, you needed quite substantial improvement in Q4 in order to reach your guidance, and you seem quite confident in reaching that. So could you perhaps elaborate a bit what underlying drivers that will take you there in addition to seasonality?

Yeah, it's every year the same structure. We've been... Several impacts, a lot of projects which will be built where the work is already done, where we get the revenue and profit. This is one effect. Then there is a higher utilization overall. Plus there are some licensed steel, especially in the SAP arena. where we, if we close, then this revenue equals profit. So this is, let's say every year is the same rhythm. And this will help us as in last year or the year before to have much more better numbers than in the quarters before.

Great. That's all for me. Thank you very much. Thank you.

Yes, thank you very much, Mr. Nielsen. We have not received any further questions in the meantime. Are there any? Please put them into our chat box or raise your hand. I think Mr. Vixen is gorgeous. Everybody seems perfectly happy. There are no questions so far. Oh, and with that said, we just received a question. Was the investment of 1 million euros done this quarter?

Yeah, there are two investments. There's one we did which was included in the plan. This was the foundation. And then the other investments have been done in the quarter. And when we sum it up, it's another, it's above a million. So there's one million, over one million. We never disclose this, I think. The whole is in the foundation, digitalization foundation, and another has been done in the portal.

The same person has another question concerning that topic. Was this CAPEX or OPEX?

OPEX. All right. And this is for the future. This is something... where we will have the impacts, the positive impacts in the future. It's mainly OPEX because we use our own consultants, our own technology specialists to build tool chains, processes. For example, the features for the AI platform, which we released in Q2 April, So we optimized or we put some more features in it and this will hopefully help us in the future.

Perfect. Thank you so much. There are no further questions so far. Please, ladies and gentlemen, if you have any further questions, please put them into the chat box or raise your hand via the raise your hand button. But I think There are no further questions. And I would say, therefore, we come to an end of today's earnings call. Thank you for your participation and your questions. If there are any further questions that arise at a later time, please do not hesitate to contact Investor Relations. A big thank you also to you, Mr. Dixon and Mrs. Fortas, for your presentation and for taking the time to answer the questions. We wish you all a good remaining week. Goodbye and see you next time.

Thank you. Goodbye.