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Good afternoon, ladies and gentlemen, and welcome to q.beyond's conference call regarding the third quarter results of 2022. [Operator Instructions]
Let me now give the floor to Mr. Jurgen Hermann. Please go ahead.
Thank you very much, and a warm welcome from my side as well. As said, my name is Jurgen Hermann. I'm the CEO of the company. And like always, with me and my support is Arne Thull, our Head of Investor Relations and M&A. In a certain way, ladies and gentlemen, Q3 came out similar to the last quarter. We could see a strong performance in the cloud segment and SAP business, that was influenced by the overall situation as well as the postponement of projects, especially in the S/4HANA transformation area.
Before we dive into the slides, let me highlight 2 aspects that are in a certain way different to the other quarters. First, we stopped the development of Software-as-a-Service products due to our perception that we expect a more prolonged period of recession. Our focus is now clearly on those areas that are from day 1 profitable. And secondly, our actions in the SAP business has been successful.
We can see and we can measure that the SAP business is approaching the turnaround. So let's come to the details, and we start on Page 3. You can see that revenues are up by 8%, mainly as mentioned, driven by a strong growth in the cloud business. EBITDA improved as well by 6% in a like-for-like few because last year, as you remember that the sale of colocation business had a huge impact in the nonoperating profit.
Free cash flow, you can see that was minus EUR 1.7 million and absolutely in line with the full year target. So the company was able to grow, although we face a weakening economic climate. And when we're talking about the economic climate. The impact on q.beyond is not so heavily because we do have a resistant business model. But on the other side, we see that especially our customers touched by the uncertainty among the overall situation. And not to forget, the inflammation remains high and one of the driver, and this is the impact on our company as well, the energy costs.
Coming to Page 5 and to our important KPI order entry. You can see that we achieved in the third quarter, EUR 25.1 million, which was mostly in line with the last year's number with 25.4%. And you can see as well or I tell you that 88% came from new customers or for new projects with existing customers on new business.
And only the remaining part, 12% due to extension of contracts, which are normally in the area of 3 to 5 years. So when we look at these numbers, I can tell you that we still expect a number of more than EUR 200 million for the full year concerning order entry and this would be another increase compared to last year and the highest number so far.
Coming to Page 6 on the revenue side, as said, an increase of 8%. And I think it's already and always comfortable that we have a high share of recurring revenues. In Q3, the number is 78%. And you can see the concentration on focus sectors, 60% of all revenues came from retail logistics and manufacturing. And when we take the net number, so minus Colocation business last year, and we had the new acquisitions, you can see that the organic growth, so was 6%, so 2% were -- have been delivered by M&A. And this 6%, as mentioned, despite the reduction in the SAP business. The main driver is cloud, no doubt about that. And in the last 2 years, we have systematically expanded the range of cloud-related services on offer. And our acquisitions also enabled us to make bespoke additions to our portfolio. Concerning the cost situation, it was definitely a big change that we replaced the colocation business by the acquisition of scanplus.
But let me tell you that this change is temporary because we are absolutely on track concerning the integration and development of scanplus. For this year, for scanplus, we expect positive EBITDA, and there is no doubt that the EBITDA margin of the company will be double digit for 2023. As mentioned before, SAP business is approaching the turnaround. All relevant KPIs are improving, and I'm very convinced that we will return to growth course next year. And this is not an expectation, this is our planning based on our existing customers and the new customers that already ordered are near to order new projects.
The view on the full P&L on Page 9. We can see the increase in revenues, as mentioned we can see a slight rise in operating EBITDA. And of course, when you compare the numbers on EBITDA and EBIT basis, it's fair enough to mention that there was a huge impact last year of the other operating income due to the Colo business, the sale of the Colocation business. The balance sheet -- you can see the comparison of year-end numbers 2021 to the 9 months figures this year.
And yes, I think that our asset-light strategy is paying off. For this year, we expect CapEx of roughly EUR 3 million. And to look a little bit in the future, I think that 2% to 3% of revenues is a sustainable number of CapEx for the company, driven by mainly the fact that now we are more asset light . And you can see the substance as well. And I think you know that I'm not happy with the current share price like the other companies in the market, but I think we have still a high cash position. We have no debt at all.
We have the property land in Hamburg with a market value more than EUR 20 million, and we have still attractive subsidiaries. And yes, the latest acquisition in this area was productive data. And from my point of view, it's a perfect match. This was an acquisition, and I come to that in a second, that absolutely fits in our new M&A strategy.
We are looking for companies that support our growth and our strategy. They must have marketable products. The size of the company that we are looking at should at least have a volume and concerning revenues of EUR 5 million, the target is EUR 10 million, and definitely positive earnings.
So we have a non-dilutive impact on our numbers on a consolidated basis. And we look a little bit more detail on productive data. It's a company based in Hamburg, a data analytics specialist. And yes, they are not only introducing enhancing all solutions about data warehousing. They have a proven business model.
Revenues this year in the area a little bit north of EUR 10 million with positive net income, a strong team of more than 40 internal and external experts. And as we said in our press release, in the first step, we took over 51%, which fits in our strategy that taking over the majority of a company is mandatory. And of course, we have the options to complete the takeover by 2026 in 3 steps.
On Page 13, you see the summary of our , let's say, M&A strategy. And to repeat that the sale of plasnet and colocation was the right decision, and it was successfully executed. And the new acquisitions that we made in the last months and years are able to strengthen our portfolio to support our growth strategy to support our profitability and to help us to position as digitizer for the German Mittelstand.
And when we look at one part in this chart, the investment in Snabble, let me tell you that with the strategic decision to stop the development of proprietary software-based products it is consistent that we do not plan to execute the call options into naval. Although the company is developing well and is in plan and we still see a huge market potential for self-check out solutions, it is not part of our growth strategy anymore. The stop in the development of Software as a Service product is not the end of software development. The majority of these employees can be easily allocated to customer-related projects. And there's still a huge demand in customer coding and we get paid in these projects from day one. This is mainly the main change that you can see on Page 14 that it's not only SaaS as a product anymore. It's more project related, it's more just customer coding and project -- software projects for our customers. And we have on Page 15 summarize that again because I think that due to our press release, we raised some questions, what does it mean when we stop our SaaS strategy. It means what it says, that we stop development of SaaS products and will continue to develop software for customers, project for customized solutions. And the reason for that is not that we do not believe or think that SaaS products are not successful. The point here is 2 sides.
One is that -- of course, it has a huge chance and great chances in revenues in the future, but it is necessary to invest heavily in front of. And what we can see due to the market development is that the risk of to market that increased because our customers are really reluctant to buy those software products. And therefore, I think it's consequent to change that. Yes. When you look at the next slide, this is the outlook for the full year.
You know the numbers revenues of EUR 174 million to EUR 178 million. EBITDA from EUR 6 million to EUR 8 million and free cash flow unchanged at a maximum of minus EUR 10 million, which is unchanged, which is simply based on the fact that the strong fourth quarter that we expect is also based on projects and the cash impact of these projects will be recognized in the first quarter next year, therefore, there's a difference in EBITDA and free cash flow.
And yes, before we come to the questions, I would like to make 1 comment to the equity forum, which will -- as planned end of November. On April, we presented the strategy beyond 2022 for the years 2023 to 2025, including a very aggressive Software-as-a-Service strategy including potential acquisitions in the energy market. Since then, time has changed, no doubt about that. And we have talked about the alignment of our strategy, especially in the area of our Software-as-a-Service business. And of course, we are happy to give you more details on that change in strategy on the equity forum. I would like to manage your expectations concerning the midterm numbers.
We see the growth in cloud business, the turnaround in SAP and the alignment in our SaaS strategy. However, some questions are not answered yet, especially in the overall economic situation and the development of energy costs. Therefore, it is constructive to present the impact on the outlook on 2025 end of this month. We will do this in the beginning of next year when we have some answers on the questions I mentioned. In any case, let me finish with that. There's no doubt that we will grow next year and the years to come at least on a market level.
Yes. And with that, ladies and gentlemen, I'm happy to take your questions.
[Operator Instructions] And the first question comes from the line of Sebastian Weidhüner.
So the first one, in the third quarter, goodwill decreased by EUR 4.7 million. And at the same time, there is no offsetting amortization for this position. and the other intangible assets has increased. Was there a reclassification. Can you please explain this?
I have to check that, Sebastian. Actually, give me 1 minute on that. Maybe you can go on with the second question and the third question. I will come back to number one immediately. .
Okay. No problem. And the second one is in Q3, you recognized other operating income of EUR 1.7 million. And of this amount, EUR 1.3 million is attributable to the reversal of a provision, and which provision does this relate to? And where did the other EUR 400 come from?
Okay. Question number 3.
And the last one is what does it mean in concrete terms that you intend to develop customer-specific software in the SaaS area? And can you give us, please, two or three specific application examples that are possible.
Yes, there are different possibilities. First of all, you remember that we bought in cloud, the company that was meantime merged. We have a lot of software developers that we got into the company with that acquisition, and they are working on a project base for our customers. They are developing front-end applications in the IoT area. They are developing software form the transformation into the public cloud. These kind of projects we did in the past and we will do in the future as well. The second example can the software development projects in the area or in context with SAP, we see even in the area of sustainability, the opportunity yes, to develop reports for the ESG and other stuff where we can really benefit our customers can benefit from.
And the big difference to projects and products in this context of software development is that the risk from day 1 concerning the project is 0 because we get paid on a time and material basis. So these are only a few examples. And therefore, I think that, of course, there will be a few developers that we cannot use for our customer project, but this is not the majority. The majority will be continue to develop projects for our customers. Concerning the first question, this reallocation has to do with the goodwill of scanplus. And for to concerning the purchase price allocation that was done in Q3. If you want to have more detailed numbers, we can provide you later on. And the second one -- yes?
So there was a depreciation of the goodwill from cancels or...
No, the purchase price application is normally done later on after the acquisition. It's always a time lag. And it was a reallocation that was the main issue. And the reason behind the accruals of EUR 1.7 million in other nonoperating income. Yes. As mentioned, accruals for the -- yes, let's say, the building back infrastructure, that's the main reason for that. There were accruals for -- yes, if we are not able to -- or the demand that there is a certain way ability or the request to build things back in the infrastructure, and this now is solved and therefore, we can remove the accruals. .
Okay. Thank you. And the other EUR 400,000 in other operating income.
More -- very minor positions in different areas, I have to check, Sebastian, you know the...
And the next question comes from Yannik Siering.
I would also have three questions, starting with the first one about the currently weak performance in the SAP segment, which probably will also continue into Q4. We would need to see very strong growth in the cloud segment in Q4. What are the drivers here that make you feel comfortable to or confident to reach your targets, probably also a small contribution in Q4 from productive data that is, right? And then linked to that. Second question, what is needed in the SAP segments to really return to growth? Is there a good order backlog that could be handled maybe in Q2? Or what is it here? And then lastly, third question would be the your take on cost basis going into 2023. To what extent are you also able to pass on increasing costs next year?
Thanks a lot, Yannik. Let's start with question number one. Yes. In the beginning of this year, we expect that SAP would recover in the second half. This was not the case. We can see that right now. I expect not a very strong SAP business in Q4, but slightly better than Q3. What we can see is so far, that is the reason why we are still confident that we have a strong quarter is, of course, cloud business. As in the past, we have some transformation projects.
Secondly, we have some projects in the, let's say, in the software development area, that supports that. And as mentioned, a minor position is the consolidation of productive data in the first time. Concerning SAP, concerning your second question, we can see and we have very intensive talks with existing customers and new customers. And because we are already have been chosen. Now we have to sign the contracts or we are in a very good position in a certain way in a pole position in some offers. We are very convinced that we turned back growth in the first quarter next year. And what we changed is definitely apart from the fact that we expect a certain way projects will show up that so far have been postponed by our customers.
We refocused our sales approach. You remember that in the past, we had very large customers, especially Turbot and Halibut. They declined -- and now we have to replace them, and this was in the last months the case, that's given me the certainty that we will recover in SAP next year. concerning cost structure 2023, I assume you're referring to energy costs. And of course, there are 3 elements of managing energy costs. One is, of course, in a certain way, reduce energy, which is the easiest way. The secondly is renegotiation with the supplier side. And the third element is in a certain way, not in all cases, in a certain way, we can pass through energy costs to our customers. So it's a mixture of all 3 elements.
Great. Maybe a small follow-up on cost basis. I'm also referring to wage inflation potentially for your highly skilled employees. What is your take on that for next year? Is that relatively -- are you relatively able to pass on these higher costs for experts to your customers?
Let me put this way. This year, we paid overall roughly 4.5% increase in wages and salaries, which is not the level of inflation. But of course, it's not only salary that makes q.beyond as an attractive company. It's something more. It's more the team. It is definitely the responsibility and the task at our employees has and this is very attractive from my point of view, apart from the fact that Hamburg and Cologne are attractive city. Therefore, for the time being, we do not have problems to get the right people at the right place. concerning the cost structure and the salaries, we are able to pass them to new customers, not to existing customers. .
And the next question comes from Philipp Sennewald.
First of all, I would have one follow-up you just said, there was no -- would be no price increases with existing customers. So I would ask not at all. Are inflation clauses or substinct in the contracts. And secondly, I wanted to talk about M&A. I mean, you were already giving us some key data on how possible target should look like. Do you have anything in the pipeline? How far are you there? Is there something coming next year? I mean you have net liquidity of over EUR 40 million. You said that -- and yes, that's it from my side. Other questions already been asked.
Maybe let me precise my answer to the pricing increase and the pass-through. This was related to consultants that we -- yes, that -- where we have consulting customers concerning energy costs, of course, we can, in a certain way, path to. And of course, in general, we are increasing our pricing in in Colocation business and even in the storage and other areas. This is definitely the case. So otherwise, we would face some problems. Everybody is increasing pricing prices. So even q.beyond is doing that. But of course, there are different customers with some is easier than with others, it's depending on the size and so on.
Concerning M&A, yes, the clear strategy and M&A is still a part of our strategy. I mentioned the terms that we are following right now. And after the acquisition of productive data, I think we will not close any further acquisitions this year. I think this is fair to say. Of course, there is a pipeline, but we are analyzing it very seriously. And not -- yes, to follow each and every offering here. It's very important that it fits to our strategy that the valuation is not too high. or these things, we are taking care. And yes, we will see what's happening next year.
All right. Fair enough. And maybe 1 more question regarding Neville. During the presentation, you mentioned you will not execute on the call next year. However, you will still keep that 25% stake? Or are you maybe also considering disposing divesting again?
The latter one. In the midterm, it makes no sense for q.beyond to hold stake in minority stake. So we are interested in majority. And if we do not follow this path, it's consequent to think about this investment, yes.
So at the moment, there seem to be no further questions. [Operator Instructions] The next question comes from Felix Ellmann. .
At least i am in. You referred more than once to the energy cost. I would like to have a number with this, if possible. So if you look at the group's energy cost compared to last year, for example, what are we talking about here for the whole group, is this million higher? Or how much will this be in numbers, the difference the energy shock, let's say, we are seeing right now? How much is it?
Yes, It's a million fire definitely. So normally, we have energy costs per year in the area of EUR 4 million to EUR 5 million. What the future looks like? Yes, that's the question. And if I know the answer, I would tell you, so far, we are -- yes, analyzing the market very, very precisely. And I think that yes, end of this year, early next year, we have a pretty clear view on that.
So -- but if we say, well, if I look at the energy prices from a private customer side, and if I said we had an improvement from, let's say, 30% to 40% on the private customer energy costs. Would this be an assumption for your case also? Or are these completely different levels we have percentage-wise here?
It's a different level because we are talking about the business area. And we are using a lot of energy for our data centers. That's the reason why we are talking about EUR 4 million to EUR 5 million. And you cannot compare that with the residential environment, definitely not.
Okay. So we will have to be waiting for what you're doing that will lead to and hope that you will know. The other question was...
I'll let -- fair enough, but let me just let just make a clear statement. It's not a totally black box, so we have, in a certain way, the range and it will not kill the company, not that there's a reason heavily threat for the company. This is not the case. .
Okay. Okay. So next question would be cloud solutions are on purchased by customers with the intention of being technology leading, doing something new. And these investors are all postponed sometimes if insecurity arises. And so let me see customers being insecure about the next year's economic development, for example. Could you imagine that people stopped buying innovative solutions in the cloud deals starting completely new things here?
What I think, and this is -- yes, it's an interesting discussion because what we see is in a certain way, and you are right that the uncertainty and the all over environment may have an impact on yes, innovative products. That's the reason why we are stopped in a certain way of our development of the Software-as-a-Service product because these are very, very innovative. . I would not say that cloud services in that context are innovative. The very large companies are all in the cloud now. The Mittelstand so our sweet spot concerning customers is really thinking about transforming into the cloud because it saves a lot of costs, definitely, and it enhanced efficiency. And the third one is that what you mentioned, it improved security. So it's really pretty clear that cloud service provided by a professional provider like q.beyond is much more secure than doing your own data center or running your own data center as a company. There's no doubt.
Okay. One final question I have, just for rhetorical reason. How much of your business is more or less connected to selling ZIMcards?
Nothing.
Nothing. Okay.
We have built up an IoT SIM platform this year. But this currently is a revenue stream of lower than EUR 1 million.
Was just interesting because we're not read about that.
And the next question comes from Lukas Spang.
Just a clarification question. Did you say that you expect a double-digit margin for the group in 2023? Or did I get it wrong?
No, that can -- [indiscernible], Look for scanplus
Okay. And then also concerning your midterm strategy. So where will be the difference in terms of future strategy on equity forum and beginning of next year?
What we see is that -- and this is what the major change is that we have to align our Software as a Service strategy. That's what we've told the market a few weeks ago. And we have, yes, some further charts and statements on the equity from. And concerning midterm numbers, we have a clear view beginning next year.
Okay. And that will be also quantitative?
Yes.
So at the moment, we have no further questions. So let me hand back over to your host for some closing remarks.
Yes. Thank you very much for the interesting questions. And thanks for attending our Q3 conference call. Tough times. But as mentioned, q.beyond is well positioned. And yes, I hope we can meet us in person on the equity forum end of this month. Thanks a lot, and take care.