QBeyond AG

XETRA:QBY

Earnings Call Transcript

[Operator]

Good day, ladies and gentlemen, and I warmly welcome you to today's earnings call of the q.beyond AG following the publication of the Q1 figures of 2025.

With me today is CEO, Thies Rixen, and CFO, Nora Wolters. [Operator Instructions] And having said this, Mr. Rixen, I hand over to you.

[Thies Rixen, executive]

Yes. Thank you, moderator. Hello, everybody. We both are very happy to announce Q1 figures to you. Headline is growth earnings and financial strength. Overall, the Q1 is -- for us, is delivered as we planned more or less. We are quite happy with this. We are on the way to have a positive group income this year, the first one since 2018, if I'm not mistaken. We do it as always. Nora will guide you through the figures, and I will give an outlook later in the presentation. So I will hand over to Nora now.

[Nora Wolters, executive]

Thank you, Thies. A warm welcome to the financial figures. I'm very proud to announce that 2025 is an ongoing success story of q.beyond. We are very proud that we reached a further milestone. The milestone for 2025 is a positive consolidated net income. And Q1 is the next step for our goal.

To say it with the words of Robert Collier, "Success is a sum of small efforts, repeated day in and day out." And as you see in our key earning figures, we have a significant growth, significant improvement in all key earning figures. Our gross profit went to 8.5%, up to EUR 8.9 million. We increased the EBITDA by 15% and the consolidated net income nearly goes to a positive value. Our Strategy 2025 and 2025plus is very effective.

Looking at our key financial figures. First of all, we look to the revenue. Our resilient business model ensures a good start in Q1. In the last year, we concentrated on profitable solutions and services. That means, we show you an adjusted revenue, which had a growth of 2% compared to the last quarter.

To say it another word, our focus is increasing on our profitability, and this is also shown in the revenue. We have a solid order book with constant share of recurring revenues. Our order book means that we have up to 5% -- to 15% new orders. That is a great value if you look to the actual environment, the challenging geopolitical situations. And so we are very confident in going on in the next quarters.

Next, we report to you 2 segments. One is Managed Service and the second is Consulting. As you see, we have selectively disposed our low-margin contracts. We have a constant success factor with 22% and a significant contribution to our mission of being a service leader in IT.

The high-profit growth of 25% is the work of efficiency, investment, AI, automatization, and of course, our customer satisfaction. As you see, Consulting has significant increased gross profit from 8% to 14%, means 75% of difference. We have a memorable sales focus, clear successes through competence building. As you remember, we built the q.beyond Academy in the last year, which means we skill up, we get new competencies in the company, new interesting projects and of course, the needed skills, which are important for the future of q.beyond.

Additionally, we have a good increase in capacity utilization, which gets to the really good results in this segment, Consulting. How did we do this? Additionally, we reorganized the segment, so we get further efficiency, and consulting and development is a really important part of the value chain of the complete company.

Looking at our P&L. We have a clear goal for 2025. This is a positive consolidated net income. We significantly improved all key earnings figures. The EBITDA margin increased by 1% to 5%, and every development in our figures goes like we planned it. Unfortunately, we cannot plan everything, and we have a special factor. As you see on the slide, it's the individual value adjustment means that we had a customer insolvency, so we lost EUR 0.3 million EBITDA. But we are already tracking the situation. We follow our invoices and have a clear management in these. So concerning our revenue, it's really a little part that we lost in Q1 compared to the whole revenue we have.

Revenue makes you work. Profit makes us happy. So we have -- how do we get this? We have a really committed team and executive. We are really working successfully in all areas and like cogwheels together, so we get a profitable value chain in the whole company. Additionally, we have high impacts of the nearshore ratio. As we told you in former calls, 5% nearshore ratio means 2% of staff costs. So we raise the nearshore ratio up to 16%, which means we have an effect of staff cost of 1.5%.

Look to the sickness rate and the turnover ratio. It's very important that you have a committed team because we make people business, and therefore, a committed team, a healthy team is a factor of success for us. Our sickness rate is below 1.3% of the annual value of the statutory health insurance and the turnover ratio is below 2.2% of the IT benchmark of 10.9%. So we are very happy and very proud to have such a great company, such great employees and executives to go on with our service leadership mission.

A very important factor is the cash. We are continuously increasing our cash positions. To say it clear, profitability over growth and consistent management.

Another positive aspect for you to know, we are looking for EUR 5 million liquidity in Q3, which are the results of the EUR 1 million of the Plusnet deal in 2029 (sic) [ 2019]. Therefore, we waited for the notice from the tax office for the years, 2017 to 2019, so we already received them. And at the moment, we are on to get the money.

Q.beyond is a healthy and a solid company, which has clear goals and a consistent management. And we are very proud of our satisfied customers and our rising share price. As you may have noticed, we go up to 92% -- EUR 0.92, sorry, and we are really looking forward to go on.

And now we come to the most exciting part of the financial figures, the guidance. My message for you is very clear. We deliver. That means every month, every quarter, every year, we deliver what we promised to you. As you see it in the key figures, up to 5% adjusted revenue, an increase of 14% to 42% EBITDA.

And finally, as Thies already said in the beginning, a positive consolidated net income, which is one of the requirements for paying you a dividend. And with this perspective, I give back to Thies.

[Thies Rixen, executive]

Yes, okay. Thank you, Nora. So now a little outlook on the strategy. As we said in the beginning of the year, we will not stop. The overall goal is to have at least 10% EBITDA margin. So how do we get there? We choose that we want to be the service leader, though we have the best IT services in the industry.

And I'd like to explain the 3 main pillars to you a little bit. So one is that we concentrate on not only technology expertise. We put industry expertise on top. This will mainly be built on external growth like M&A. So if we hire new teams or buy new companies with new expertise, this will help us to boost the margin even more, then we will build the q.beyond, now we are only in Germany more or less. So yes, we have 15%, 16% of the -- of our people outside Germany, but only 1%, 2% of our business. So we will grow this to 15% in the midterm. And then q.beyond is more European company as a German company.

And the other -- the third thing is boosting team competencies. Nora elaborated a little bit on that or explained that, that we believe that skill and competence is very the, let's say, the factor for the future to beat the competition and to convince the customers to stay with us or come to us.

This is what we call our 2025plus Strategy. So this will be boosted by AI. As you may have seen, we launched our own private AI service. So out of our own data center, we have built up a platform for our customers where they can work with their data on their AI model to automate or to boost their business. There, we think in this quite decoupling world right now, when we offer our clients and sovereign services, AI services as we have in sovereign Cloud services as well.

This will help them and this will help us. So this is there. We put -- we sell this over several, several use cases. I will show 2 of them. One is for retail e-commerce, so where they can automate their service test to boost service efficiency and to be, let's say, 24/7 there with low cost.

This will help our retail clients.

The other one is logistics where often manual -- there's often manual work to do. And also in this tariff chaos, let's say, where we have a solution where we can flexible -- where we can very flexibly react on certain requirements and help the customer to automate their processes -- their data processes that we have very good feedback.

There are others already, let's say, in the sales process and more to come. And with this, we hope to boost AI, which we already use inside the company. So this we do, as you know, not only in Germany, you see the black dots in Hamburg, Frankfurt and all our data centers. And then we have already known nearshore centers in Latvia, India and Spain. And we have our first sales office for the logistics business in Charlotte, North Carolina. And we aim for the -- at least for the first market entry in Europe this year also.

So this will help us to boost the margin up to 10% in the midterm. We said 2027, 2028 will be there. Let's see how fast we are. And therefore, we are convinced that our share is a very attractive investment opportunity, as you may know already.

So strategy is clear, and we -- Nora and myself execute on this 10% margin is at least our goal. AI, nearshore/offshore will help us on the cost side. We are debt-free. End of the year, I think it's more like EUR 50 million cash instead of EUR 40 million.

And our business model, at least in the circumstances, shows a great resilience because of the, let's say, 2/3 of recurring revenue we have inside the business model. Having said that, I'd like to thank you for your attention. I'm happy to take your questions. Thank you very much.

[Operator]

Thank you so much, Mr. Rixen and Mrs. Wolters for your presentation and the dive into your first quarter. So ladies and gentlemen, now we will be happy to take your questions.

[Operator Instructions]

Having said this, let's take a quick look to the line. But by now, we have no questions. So let's wait. So maybe a question shows up or you explained everything so well that there are no open topics. But it seems everybody is happy so far.

[Thies Rixen, executive]

Even better.

[Operator]

Even better. So dear participants, maybe further questions shows up at a later time, please feel free to contact Arne Thull from Investor Relations and M&A. And yes, then this is it for today. So thank you very much for your shown interest in the q.beyond AG. And a big thank you also to you, Mr. Rixen and Mrs. Wolters for your time. And yes, from my side, I wish you all a lovely remaining week, and we say thank you, and goodbye.

[Thies Rixen, executive]

Goodbye.

[Nora Wolters, executive]

Goodbye.