adesso SE

So, once again, good morning, everybody. This is Martin Mollmann of Adesso IR speaking. First of all, I'd like you to thank you for joining our Q2 and half-year one earnings call regarding our half-year report we have published today. Within our release this morning, you found Adesso keeping up its fast organic growth pace with 30% in sales to 794.3 million euros. The operating result was improved by 21% to €45.8 million. This is €8 million more than last year's EBTA contribution. Since the second half of the year in Germany provides a significantly larger number of working days than the first half, a larger portion of EBTA contribution is expected to be earned later in the year. And there is more good news. Utilization improved noticeably since May. I now like to welcome as well our CFO, Michael Knopp, who will give us a deeper insight into the figures of the first half of the year and, of course, the outlook for the remainder of the current year. As always, I'd like you to mute yourself during the presentation. Feel free to open up the channel for the Q&A session afterwards. Participants on phones may want to mute or unmute their microphones via the star key followed by the number six of their phones. Thank you for and Michael, please go ahead.

Good morning, everybody. I will guide you now to our 2026 half year figures. And as always, I will start with our revenues. The revenues came in with 794 million, which is an increase of 13%. And if we look a little bit more in detail into this first quarter contributed 398 million, which was a plus of 30%. and the second quarter contributed 396 million, which is a plus of 12%. So in total consolidated for both quarters, it's a plus 30%. Actually, we are very happy with this growth rate. It's in line with our expectations and with our budget. and if we look at the environment in Germany, and Germany is the most important market, contributes 83% of our revenues. Germany is still a difficult environment. If you look at the gross domestic product, gross domestic product is growing by 0.5%, but on the other hand, It's already halved compared with the expectations at the beginning of the year. And if we look back, last year was also only a growth rate slightly above the zero level. Two years before that, Germany was in recession. Despite this challenging environment, IDESO again has shown a double-digit growth rate and we are very happy and a little bit proud about that. What helped a little bit and provided some tailwind? Last year, Q3, Q4, we were pretty disappointed because we couldn't see the impact of the two additional budgets for the armed forces and the infrastructure. There was no activities, no tenders coming to the market. Actually, this has changed. Since the beginning of the year, we see this activity, we see the additional tenders, and we also were able to win some of them. I will talk a little bit later about that. Different to sales growth, also headcount growth continued, however, a little bit more slowly. If we look at the growth rate of the average number of employees in the first half of this year compared to the first half last year, it's a growth rate of 9%. If we compare with Q1, it was a growth rate of 10%. And if we look at the total number of employees as of June, 2026, it's 11,515 compared to last year. It's an increase of 721 employees or an increase of 7%. If we Look a little bit more in detail into this. Half of this growth was generated abroad, especially in those countries where we do shoring. For example, in India, we are pretty close to the 400 employee threshold. Some positive impact was also generated from those subsidiaries which were set up in the last few quarters, for example, Belgium. In Germany, We also grew our workforce with a growth rate of 4%. This was mainly a contribution from growing our SAP business. If we look On the growth rate since the beginning of the year, headcount grew by 2%. So if we look at the development in total, we still grow our headcount, but significantly less than what you have seen, what you are used to from ADESO in the past. Now have a look at our sales split and here we begin with the sales by industry. Endurance sales growth of 22%, a very, very nice development, mainly driven by strong order entry last year, especially in Q4. Banking Thank you very much. 10% growth. It's back on track. If you remember Q1, it was only a growth rate of 5%. So this is the impact of the additional tenders, the additional activity we have seen in the public sector. Automotive declined by 16%. Actually, that's not surprising. It's a very difficult environment. and a positive thing with that is it's by far our smallest sector. Manufacturing also WGT Gold State 12%, retail 15% and utilities again the strongest sector 32% growth and this is mainly driven by our strong market positioning with our SAP services for this sector. In total, It has not much changed. We are very diversified. It's a very nice situation for us. Our most important sectors contribute 15-16% to our revenues. If we dig a little bit more in detail into this, our first top 10 customers in terms of sales contribute 22.4% of our revenues, the biggest customer 2.9%. So it's very diversified. and what's very important, especially in the right sectors, insurance, banking, public utilities, all these sectors are, let's say, a little bit less dependent from the hiccups in the economy, from high energy prices, tariff increases or decreases by the US government. So it's a very good positioning here. Let's have a look at the sales split by region and here on the first view everything as always 95% of our revenues are generated in the DACH region. However, Germany grew its revenues by 12%, so a little bit less than the overall growth rate for the whole group. And this is a shift because for the last few quarters, Germany was always growing a little bit more than the total number. Why do we see this shift abroad? There is some very nice activity in Switzerland. Switzerland grew its business by 16%. And if we look a little bit back, Switzerland last year was a very difficult market environment. We started with minus seven percent, improved to minus five and ended up with minus three percent. But this year, Switzerland is back on the growth track. We have seen some nice order entry at the end of last year and this continued this year as well. So a very, very nice development and that's and more than 50% of our revenues abroad. Nice sales growth also in Austria and Italy. Turkey is a little bit challenging at the moment, difficult market environment, high inflation. Here we need to keep in mind that we have similar revenues what is shown here with shoring activities, but these revenues are showing up in the Netherlands and Germany, for example. Strong Salesforce also in regions other. Here we have two contributors. One contributor is that we have set up new subsidiaries abroad, which now start to generate revenues. And the other reason is that we have some activity with single customers in France and Ireland at the moment. So therefore, We have some positive impact on our sales development here. Now let's have a look at our EBITDA. EBITDA improved to 45.8 million. This is an improvement of 21%. We generated 27 million EBITDA in the First quarter, which was an improvement of 10 million compared to prior year, and we generated 18.8 million EBITDA in the second quarter, which is 2 million less than what we have seen last year in Q2. Overall, this is driven by strong organic sales growth. We have an impact from a disproportionate higher increase of material costs. and on the other hand, and this is very substantial, other operating expenses grew disproportionately lower than sales and this helped a lot to improve these figures. But let's have a look at this a little bit more in detail. Here we have some key figures. We already talked about our employees. In average, this is the sales and headcount growth of 9%. We have a sales growth of 13%, gross profit only grew by 12%, so slightly less, and this is actually caused by an increase of our material cost, which grew 18%, and this is mainly driven by We are relying more on suppliers, on third parties. We quite often act as a general contractor and therefore partners invoice via us, which increases our sales but also our material costs. In addition, we have increasing expenses in this line for cloud consumption and what's new this year, also token for the usage of AI. If we look at the personal cost, 12% increase, so slightly below sales. and we have the other operating expenses growing only by 3%. So if we look at our EBTA, we have two main contributors for this EBTA improvement. One is more sales, therefore more gross profit contribution in EBTA and the other one is a disproportionately lower increase of other operating expenses, just 3%. EBTA margin improved to 5.8% from 5.4%, so it's a little improvement. We are still not at that level what we would like to see, but the next little step here is done. Profit drivers. Utilization actually caused a lot of headache at the beginning of this year. We had a very slow start. The first four months were below prior year and also below our expectations and budget. This turned around at the end of April. May was the first month this year where utilization was above budget and prior year. This trend continued in June. And actually in July we have seen the strongest utilization since 2024. So it was a very, very nice start into the third quarter. And it's important because July has 23 working days. This will have a very nice impact. So therefore, we are, let's say, at the moment, optimistic that this trend will continue. Daily rates, we were able to increase daily rates. It's not much because competition is really tough in some areas, but at least it's in the range that it will offset the impact of inflation. License, here we always look at our business with our Injure software solution and the license sales were pretty much in line with that what we have seen last year. Last year it was 3.5 million, this year it's 3.3 million, so it's within our expectations. As always, we expect to see some more and higher license sales in the second half of the year. And if we look at the personal cost per FTE, personal cost per FTE grew by 2%. We have different contributors. On the first hand, we have a salary increase in line with inflation. On the other hand, we have hired more senior people, so personal cost per FTE is a little bit increasing due to that. On the other hand, the percentage of employees in our shoring countries is increasing. Those colleagues have lower salaries, and so it's a mix of all these three contributors. Now I have Look at some other key figures of our P&L EBITDA. We started with that depreciation as an increase. This is also caused by an extraordinary depreciation right of and many more at our group company Material One. This company offers a solution for the supply chain for the automotive industry. At the moment the underlying business case is a little bit less optimistic than what we have seen in the past. Due to the different difficult environment this company is acting in. This also caused a depreciation of Goodwill, extraordinary one of 2.1 million. So in total this impact in this section is 3.4 million. Income from investments, that's from our equity investments, it's minus 2 million and the financial result is slightly more negative due to higher interest we have to pay for leasing and also the loans we have drawn. Earnings before taxes minus 2.5 million compared to minus 3.9 million. Please keep in mind there we have included this 3.4 million extraordinary write-off for these assets related to material one. Income taxes minus 4.8 million. So the consolidated earnings are pretty much the same what we have seen last year. If we look at the tax quota, it looks terrible, minus 194%. However, if you look at the depreciation of Goodwill, 2.1 million, this has no tax impact. There is nothing you can deduct from your taxes. If you exclude this item, the tax quota is already down to minus 100%. Why is the tax quota, especially in the first half of the year, comparatively high? It's because the higher part portion of our earnings, around about 70%, is generated in the second half of the year. But you have the same number of expenses which are not tax deductible or losses which cannot be put as a deferred tax asset on the balance sheet. Therefore, the tax quota will improve in the second half of the year. So the overall tax quota for the whole year will look much better. If we look at the earnings per share, earnings per share minus 87 euro cents. We started in Q1 with plus 39 cents in Q2 minus 1 euro 26, mainly caused by the right of the assets at material one. However, it's still an improvement compared to last year. Now let's have a look at some balance sheet items and our net working capital. If we look at net debt increased by 12 million to 155 million, our operating cash flow improved a little bit more than 10 million to minus 28 million. However, The first few looks a little bit strange. Networking capital increased by 259 million. It's a plus of 22%. Operating cash flow is for the first half of this year. Networking capital compares to the networking capital at June last year. And therefore, this figure includes the very negative development of our networking capital in Q4. However, we are already on the way of improvement. If you look at networking capital at the end of Q1, this was where we had a plus of 28%. Now it's 22%. We expect further improvements in the second half of the year. Normally, networking capital should not grow faster than our sales growth. So normally it should be a figure there of 13, 14% in this line. Goodwill, a little bit less due to the Extraordinary right of the goodwill of material one. Equity plus 16 million and equity ratio due to the growth of the company and therefore the totals of our balance sheet. Equity ratio pretty much the same than what we have seen last year on the 30th of June. Cash development, free cash flow improved by 12 million. CAPEX is pretty much the same what we have seen last year. Lease repayments are shown as CAPEX due to the recommendation of the IFRS Foundation. Now let's have a look at the acquisition of Omnius. We have announced this two days ago and I will now talk a little bit about our thoughts and why we have done this. I will start with a look at our group company, Adesco Insurance Solution. That's the company who has the Injure product line. We just talked about the licenses we sold this year in the first half of the year. and actually we have three solutions there for the property and casualty market for life and health, different platforms and we are one of the market leaders in Germany in the DACH region actually and we are one of the technology leaders there and have an in-depth knowledge of these different domains. Our acquisition now targets the property and casualty market and this is actually a very interesting market as it is growing more than the others. What is important for our business in this area, as all other businesses we have, also the software business, our solution business there, is impacted by AI. and the claims market is a very nice entry point because here you have a high transaction volume, a high automation potential and therefore, which is important for our customers, the insurance customers, has a very nice P&L impact if you are successful in managing your claims effectively. So why did we acquire Omnius? Omnios is a company which is since 10 years in this market. Omnios already has customers despite the fact that it is, let's say, kind of a start-up and so far was BC financed. But Omnios already processed more than 1 million claims per year. They have trained their solution with 80 million cases, so it's a lot. and I think the next two items are the most important ones. Using OMNIOS solution, you can process, you can set up your processes with efficiency gains of 35% and what's even more important, your claims ratio improves by 4 percentage points, so this is a huge improvement and therefore, There are some, we cannot name all of them, but these three we are allowed to name. Allianz, Unica, for example, they are using this solution. So if we look at the claims operating model, you get a loss notification from the insurance company, gets a loss notification from the client. The claim needs to be assessed, needs to be made a decision, and then this needs to be settled. And if you can get here a high percentage of automatization, this is a very, very interesting business model here for insurance companies. And that's actually why we believe that this could be a very nice In addition to our existing portfolio at the beginning, we believe that we can short term convert the existing pipeline of Omnius with our support. It helps for sure that this is now not only in a VC business, it is now part of the Adesso group. So it has a strong background. This will help to Convert, this pipeline. We also will do cross-selling within our portfolio. We already have, prior to the acquisition, already checked with our customers if they are interested in that. And the platform will differentiate in a whole our business case for the property and as routine market. So it's a very nice value proposition there. and what we also will do is we will leverage the AI expertise of Omnius for our solution and actually for all solutions we have in this area. Now let's have a look at our guidance. As already pointed out, the market has not changed much. It's a very demanding market, but IT services and the need for IT services is growing. This has not changed. AI, the demand for AI and AI supported development processes is increasing very, very quickly. We have stabilized our utilization. and actually at the moment we are well above budget and prior year, so this helps a lot. It's also for sure a little bit supported by reduced hiring speeds and we We will see some additional improvements in the second half of the year as we have two additional working days compared to last year and in total nine additional working days compared to the first half of this year. So it's a very good chance to Thank you very much. Working Days. So we are very, very sure that we will stay within this guidance as we already have achieved half of our target here. EBTA is a little bit, let's say, not that obvious and at the moment it looks not that nice. 31 to 35 percent of our guidance after Thank you very much. Thank you very much. Thank you very much.

Yes, thank you, Michael. That was helpful. We're now heading for the Q&A session. And as far as I can see, there are some questions already. Mr. Sauer will have a start and then Mr. Spang, please.