GFT Technologies SE

XETRA:GFT

Earnings Call Transcript 2021-Q4

[Operator]

Ladies

and

gentlemen,

thank

you

for

standing

by.

Welcome and

thank

you

for

joining

today's

conference

call

on

the

Primary

Figures

2021

GFT

Technologies

SE.

Throughout

today's

recorded

presentation,

all

participants

will

be

in

a

listen-only

mode.

The

presentation

will

be

followed

by a

question-and-answer

session.

[Operator Instructions]

I

would

now

like to

turn

the

conference

over

to

Marika

Lulay,

CEO;

and

Jochen Ruetz,

CFO.

Please

go

ahead.

[Marika Lulay]

Thank

you

very

much.

Good

morning,

ladies

and gentlemen.

I'm

very

pleased,

obviously,

to

perform

the

call

today.

I'm

pleased with

the

outstanding

performance

in

2021

for

our

financial

figures,

despite

the

ongoing

challenges

which

COVID

so

provided.

And

I

think

the

main

message

is

that

our

results

demonstrate

a

new

level

of

scale

and

our

ability

to

catch

market

trends

wherever

they

pop

up.

And

our

global

footprint

actually

also

allows

us

to

do

flexible

sourcing

along

our

locations.

But

let

me

go

onto

a

bit

to

the

numbers

in

our

highlights.

So,

page

number

3,

as

you

can

see,

every

number

looks

just

fantastic.

So,

we

have

27%

growth

in

revenues,

and

let

me

point

out,

this

is

organic

growth,

all

organic

growth,

and

we

grew

in

every

sector

that

we

focus.

Obviously,

we

have

disproportional

positive

growth

in

insurance

and

industries,

but

even

the

banking

sector

was

growing

two

digits.

We

see

a

very,

very

strong

demand

for

digital

transformation,

and

this

is

not

just

for

2021, we

also

see

that

for

2022.

And

this

allowed

us

to

focus

on

higher

margin

project,

which

obviously

together

with

some

economy

of

scale

effects

contributed

to

a

growth

in

EBT

of

184%.

Needless

to

say,

the

year

before

2020 was

hit

with

some

restructuring

measures

and

COVID

impacts,

although

comparison

is

a

bit,

let's

say,

a

bit

unfair,

you

could

say.

However,

you

will

see

that

the

EBITDA

numbers

and

all

the

details

that

Jochen's

going

to

provide

later

that

we

do

have

improved

our

profitability

at

all

levels.

Our employee

growth

is

clearly

keeping

pace.

We

were

able

to

digitally onboard

a

lot

of

people.

So

we

grew

net

year-end

to

year-end

by

29%

employees

all

over

the

world.

It's

a

bit

higher

than

revenues

because

they

simply

grow

in

low

cost

countries

where

the

relation

between

revenue

and

employees

is

different

than

in

high

cost

countries.

Our

cash

flow

liquidity

remains

high,

we even

improved

our

equity

ratio

to

36%.

And

if

you

look

into

where

we

were

growing,

obviously

cloud

technology

is

the

driver.

The

business

with

cloud

technology

grew

by

48%.

But

also

their

digital

transformation

services,

which

I

can

explain

on

the

next

slide.

And

at

the

very

end

to

benefit

to

also

provide

benefit

to

our

shareholders,

we

are

proposing

to

increase

the

dividend

from

20%

for

2020

to

35%

in

2021.

Now

let's

go

on

page

number

4,

and

here

we

see

a

high

level

snapshot

of

our

services

portfolio.

So

what

do

we

actually

do

for our clients.

And

you

can

clearly

see

the

big

change

we

have

implemented

in

GFT

over

the

past

five

years

to

focus

on

digital

transformation,

which

is

mainly

based

on

cloud

technology,

this

has

high

dynamic

growth;

in

2021

this

business

was

grown

by

38%.

It

even

speed

up

compared

to

a

31%

already

in

2020. And

then

we

have

the

smart

technologies

which

is

much

smaller,

these

are

more

point

solutions

that

use

the

newest

technologies

whether

it's

artificial

intelligence,

DLT,

block

chain

or

VR,

robotic

process

automation

and

for

sure

everything

is

based

on

data

engineering

using

data

for

example,

for

new

business

models.

So

this

service

is

technically

smaller

8%.

Maybe

it could

also

be

a 7%

or

10%,

so

this

is

the

newest

technologies

again

rather

point

solutions.

The

real

business

is

in

digital

transformation

where

they

have

the

big

tickets

and

the

big

programs

we

manage.

And

then

we

have

a

very

stable

business,

the

platform

services.

Here

we

grew

all

application

management

business,

but

also

still

we

do

a

project

to

support

regulatory

changes

or

complied

services

and

re-platforming

very

stable

business,

rather

long

term

oriented

in

the

range

of

24%.

And

last

but

not

least,

on

page

number

5.

And

this is

a

probably

new,

usually

had

not

shown those

slides

in

these

type

of

presentations,

but

as

you

could

see

demand

is

unbroken

and

you

will also –

you

will probably

have

read

the

press

release

already.

We

commit

for

20%

growth

in

2022.

So

demand

is

unbroken.

So

this

is

not

the

challenge.

The

challenge

is

the

focus,

the

right

prioritization

to

the

right

project

and

the

supply.

So

we

focus

a

lot

on

onboarding

our

people,

training

our

people.

We

invest

heavily

into

academies

and

learning

for

new

technologies,

for

clouds

and

we

clearly

prioritize

the

projects

we

could

actually grow

much more. But

we don't

want, we

want

to

grow

with

the

right

projects

which

enable

us

to

have

a

sustainable

growth,

not

just

let's

say

one-time

nice

numbers.

So

growing

tech

talent

globally

is

part

of

our

focus

is

also

part

of

our

CSR strategy

and

the

whole

culture

of

GFT

and

a

very

strong

team

culture

that

we

operate

as

one

team

for

the

benefit

of

clients

also

help

us

to

flexibilize

not

only

the

hiring

and

the

recruiting,

but

also

how

we

put

the

delivery teams

together

and

this

enables

us

to

catch

market

trends

wherever

they

pop

up,

put

the

teams

together,

deliver

it

to

the

client

and

then

if

this

market

trend

like

the

neo

banking

trend

goes

to

another

market,

we

can

also

catch

it

there

because

we

can

basically

sometimes

amuse

the

same

teams

or

trade

additional

teams.

So

this

globalized

approach

helps

us

to

be

very

flexible,

and

let's say

take

benefit

of

the

current

market

development.

But

now

let's

go

into

more

details;

over

to

Jochen.

[Jochen Ruetz]

Thank

you,

Marika.

So now,

let's

look

into

the

detailed

numbers

directly

going to

slide

number

7, key

figures

at

a

glance. Revenue

number

was

already

mentioned,

27%

growth.

We

ended

the

year

at

€566

million

in

revenues.

You

see

at

the

next

line,

the

order

book

in

the

table

on

the

left,

the

order

book

increased

by

62%

to

more

than

€300

million,

quite

a

steep

increase

versus

2020.

Main

reason

is

that

clients

feel

more

safe

about

ordering

and

being

already

legally

binding

in

that

respect.

This

was different

12

months

ago.

And

with

the

COVID

insecurities,

clients

were

behaving

more

cautious

and

not

handing

out

projects

early.

It

was

more

fast

moving

into

projects

after

discussion.

Today,

we

see

a

stronger

order

backlog

and

it

is

of

course,

fully

supporting

the

revenue

guidance

we're

giving.

On

the EBITDA

side

€64.8

million,

that's

up

52%

versus

last

year.

On

the

right

side,

you

see

the

third

bullet

point

with

a

couple

of smaller

bullet

points

highlighting

some

special

cost

items,

which

mainly

hit

us

in

2020.

So

look

at

the

underutilization,

which

cost

us

more

than

€4

million

in

2020.

Of

course,

this

was

gone

in

2021.

Similar

restructure

measures

in

2020

were

quite

heavy,

only

€2.6

million

in

the

year

2021

and

from

the

FX

side

well,

we

got

hit

a

bit

harder

in

2021

with

€1.8 million;

that

was

only

minus

700k

in

2020.

So

some

effects

coming

back

from

the

COVID

year,

but

a

lot

of

positive

effects

coming

from

the

good

margin

revenue

growth

we're

experiencing,

growing

EBITDA

and

EBITDA adjusted

by

more

than

50%.

When

we

look

at

EBIT

and EBITDA

we're

up

more

than

100%

and

of

course,

the

same

explanations

apply

smaller

numbers

bigger

percentages.

Net

income

also

up

100%,

earnings

per

share

at

€1.14.

Moving

forward,

slide

number

8,

let's

look

at

our

diversification

in

the

year

2021.

How

did

that

work

out?

Looking

at

the

left

side

of

the

slide

first

in

our

client

portfolio

while

in

the

end

we've

looked

at

this

in

the

last

quarterly

calls

already.

So

all

clusters

are

pretty

much

moving

into

the

same

direction

as

in

previous

quarters

and

they

are

growing

except

for

the

first

cluster,

which

is

the

cluster

of

clients

with

more

than

€50

million. Well,

as

everybody

who

knows

GFT knows

this

is

currently

Deutsche

Bank,

they

want

to plan

about

€50

million.

They

have

been

quite

stable.

We

will

see

that

later.

But

the

percentage

of

course

declines

when

growth

so

strongly.

The

client

group

with

more

than

€10

million in

revenues

showed

a

big

push

to

37%

of

our

total

revenues.

This

is

mainly

because

we

moved

five

smaller

clients,

who were

in

categories

to

book

further

right

in

the

year

before

into

this

group

of

more

than

€10

million. So

we

see

more

client

concentration

and

as

I

always

say,

that

is

good

for

us

because

it

is

efficiency

on

the

sell

side.

The

middle

block declined

between

€5

million and

€10

million had

a

little

decline

from

19%

to

15%

of

our

total

revenue,

mainly

because

this

group

lost

five

clients

to

the

left,

which

is

good

news,

but

not

for

this

category.

And

when

we

look

further

to

the

right,

we

see

a

quite

stable,

meaning

growing

in

line

with

group

average

in

the

clients

with

more

than

€1

million

and

smaller

than

€1

million.

On

the

right

side,

we

show

our

two

sectors –

our

three

sectors,

sorry,

and

we

see

strong

growth

in

all

of

them.

Industry

growing

by

27%,

remaining

at

11%

of

our

total

revenue.

The

biggest

increase

in

our

insurance

business,

growing

by

52%,

now

stands

for

16%

of

the

group

revenues.

And

last

but

not

least,

the

banking

business

growing

by

23%

a

bit

below

the

group

average,

which

is

mainly

because

Deutsche

was

not

growing

and

it

is

still

standing

for

73%

of

the

group revenues.

Now,

let's

look

at

quarterly

numbers,

slide

number

9

and

compare

quarter-over-quarter

and

quarter-over-year

other

quarter.

Q4

versus

Q3

of

2021

shows

an

increase

in

revenue of

12%.

So

that's

quite

steep

for

the

last

quarter

of

the

year,

if

we

see

an

EBITDA

adjusted

increase

of

9%.

When

we

compare

versus

a

year

ago,

we

see

a

36%

increase.

And

of

course,

on

the

earnings

side,

again,

a

bit

of

a

hit

in

COVID

Q4

last

year,

we

are

growing

by

60%

versus

2020.

So

maybe

that

is

not

fully

comparable.

Moving

forward

slide

number

10,

revenue

by

segment.

Our

fast

growing

Americas,

UK

and

APAC

segment

was

growing

by

48%

organically

That's

a

very

small

of

exit

for

the

total

growth

is

47%.

Growth

coming

from

Canada,

Brazil,

our

Asian

markets,

UK

and

USA;

so

nearly

all

markets

that

we

serve

in

America's

UK

and

APAC.

Looking

at

Continental

Europe

we

are

up

9%.

So

one

digit,

but

on

the

high

side, that's

where

we

want

it

to

be.

Of

course

we

have

a

bit

of

trouble

in

the

Deutsche

Bank

accounts

in

Europe;

it

has

been

slightly

declining,

but

we

have

been

overcompensating

by

growth

mainly

in

Italy

and in

Germany. Let's

go

one

step

deeper,

and

hopefully

this

is

the

last

time

I

show

this

slide

because

it

highlights

the

top

two

clients

separately,

top

two

clients

you

remember

when

you

follow

GFT

that

used

to

be

Deutsche

Bank

and

Barclays.

Barclays

had

heavily

reduced.

It's outstanding

for

nearly

zero

euros

of

revenues

today,

but

in

2021

Deutsche

stood

for

€90.4

million.

That's

the

number

you

see

on

the

GFT

group

top

two

clients.

And

the

share

purchase

has reduced

to 16%,

so

down

5

points

and

this

will

continue

in

2022.

And

the

revenue

with

the

top

two

clients

was

reducing

by

5%,

which

is

far

lower

reduction

than

in

the

years

before.

We

used

to

be

at

20%

and

that

was

the

hard

time

growing

the

top

line

of

GFT.

Now

even

Deutsche

has

stabilized

and

all

other

clients,

the

next

client

have

been

growing

by

36%,

which

is

on

the

high

end

of

our

last

three

to

four

years

with

all

other

clients

36%.

After

nine

months,

this

growth

stood

at

32%;

so

we

even

did

speed

up

in

the

last

quarter.

Let's

look

at

profitability

slide

number 12.

And

as

always

we

show

EBITDA

adjusted,

EBITDA

and

EBIT,

EBITDA

adjusted

best

reflects

operational

performance.

The

difference

between

EBITDA

adjusted

and

EBITDA

is

only

earn

outs

for

M&A.

That's

the

only

adjustment

that

we

do.

So

that's

always

to

keep

in

mind.

Looking

at

the

business

segments

themselves,

America,

UK,

we

see

a

heavy

increase

on

the

EBITDA

adjusted,

be

it

nominally

but

also

in

margin,

mainly

because

of

the

strong

top

line

growth

which

is

coming

in

at

decent

margins

in

2021.

Looking

at

Continental

Europe,

while

we

have

seen

growth

was

not

the

heavy

driver

for

Continental

Europe,

but

we

came

back

to

normal

margins

anyway.

2020

was offset

by

some

of

those

special

effects

I

was

mentioning

on

slides

before

underutilization

and

restructuring,

which

mainly

happened

in

Continental

Europe.

Now

we're

back

to

normal

and

showing

a

decent

margin

also

in

Continental

Europe.

Let

me

today

give

you

one

sentence

about

others.

Others

is minus

€7

million

is

quite

a

hefty

number.

That's

one

reason

that

drives

this,

which

is

we

are

not

allocating

part

of

our

group

charges

to

our

Brazilian

subsidiary.

Why

is

that?

Because

we

would

have

to

pay

a

heavy

import

tax

of

25%

on

those

charges.

So

we

leave

roughly

€7 million

to

€8

million

of

charges

inside

the

holding

and

not

charge

it

to

Brazil.

In

other

words,

that

should

go

to

Americas,

UK

and

APAC.

But

for

tax

reasons,

for

cost

saving

reasons,

we're

not

doing

that

right

now.

There

should

be

a reform

of

the

tax

system

in

Brazil,

and

we

can

look

into

it

later

again.

Moving

forward,

slide

number

13,

revenues

by

markets.

We're

looking

at

this

slide

now

quarter-over-quarter

and

it

looks

pretty

the

same

every

quarter,

no

relevant

changes.

Only

one,

UK

really

is

picking

up,

where

now

it

is

34%

growth

in

the

UK.

That

number

was

far

lower

at

the

beginning

of

the

year.

So,

UK

business

is

picking

up

very,

very

nicely.

And

after

nine

months,

it

stood

at

23%

growth,

now

it's 34%.

So

true

speed there.

Beside

that

our

Spanish

business

was

able

to

compensate

reductions,

mainly

in

Deutsche

Bank

nearly

completely,

only

a

small

minus.

Well,

and

the

fastest

growing

countries

have

not

changed,

it's

Canada,

it's

Brazil,

it's

Switzerland

and

it

is

our

Asian

markets.

Which

brings me

to

slide number

14,

our

30

biggest

clients

in

2021.

Here

we

have

five

new

entries.

The

one

with

the

box

around

them,

let's

just

name

them

briefly.

Beneva

is

a

Canadian

insurance

client.

Credit

Suisse

we

mainly

serve

in

Brazil

and

UK,

and

is

among

our

top

30. We

see

Google

here

which

we

mainly

serve

in

the

US

and

a

bit

in

Poland.

The

London

Stock

Exchange

had

strong

growth

in

2021,

now

among

the

top 30

clients,

well,

of

course,

that's

all

in

the

UK

and

UBS, whom

we

also

serve

in

Brazil,

UK

and

Switzerland. We

have

two

clients

not

disclosed

on

the

bottom

right.

One

is

an

insurance

client

in

Italy

and

the

other

is

an

American

private

equity

company.

To

be

among

the

top

30,

a client

has

to

deliver

€4.5

million

in

revenue,

so

that's

the

minimum

entry

number.

And

the

top 30

stand

for

73%

of

our

total

revenue.

Which brings

me

to

slide 15,

our

clients

in

2021.

You

see,

in

total,

we

have served

450

clients

as

a

B2B

company

classic

numbers,

not

so

big.

We

have

46

new

qualified

clients

within

which

are

clients

with

more

than

€100,000 in

revenues

and

we

have

not

been

serving

in just

before.

Last

year

the

same

number

stood

at

54

clients,

but

included

the

newly

acquired

in-GmbH,

so

this

year

it's

fully

organic,

so

really

comparable.

Some

more

classic

financial

slides

following, let's

start

with

the

income

statement

on

slide

16.

What

is

worth

mentioning

is

the

cost

of

purchase

services

has

increased

by

67%,

which

is, of

course,

far

faster

than

the

revenue

and

we've

been

using

and

tapping

into

the

freelancer

market

more

strongly

in

2021

because

demand

is

there.

People

are

scarce

and

therefore,

contractors

support

that.

On

top,

some

contractors

are

like

employees,

I'll

come

back

to

that

slide

later.

The

fourth

bullet

point

we

always

compare

personnel

expenses

and

purchased

services

versus

revenue

as

a

percentage,

and

this

was

stable

versus

2020

at

81%.

What

we

do

see

is

operating

– other operating

costs

are

only

up

14%,

which

of

course,

helped

a

lot

the

EBITDA improvement

of

53%.

Some

words

about

depreciation

because

in

a

growing

year,

with

27%

top

line

growth,

we

are

reducing not

only

depreciation

and

amortization.

That's

for

sure

a

trend

that

will not

go

on

forever.

But

there

are

three

main

reasons

for

this.

First,

amortization

has

been

slightly

reducing.

Amortization

of

the

M&As

of

the

past

is

€700,000 lower

in

2021

than

in 2020.

That's

a

small

one.

The

bigger

one

is

we

are

using

less

space

and

this

is

shown

under

the

IFRS-16

depreciation.

This

is

the

way

office

rent

has

to

be

shown

today,

and

we

have

reduced

that

by

€1.2

million

versus

2020,

and

we

will

continue

looking

into

office

space

very

closely

on

how

much

do

we

need.

Of

course,

top

line

growth

and

people

growth

support

not

having

to

look

into

it

too

deeply

because

for

a

growing

number

of

people,

we

will

need

more

office

space

and

will

be

more

efficient,

but

this

is

another

source

of

improved

profitability

for

years

to

come.

Last

but

not

least,

depreciation,

classic

depreciation

is

also

under

pressure,

meaning

reducing

because

we

are

moving

one

more

of our

own

internal

services

to

the

cloud,

which

means

while

we

used

to

buy

servers

years

ago years

ago

and

then

depreciate

them.

Today

we're

using

cloud

space

and

the

cost

for

cloud

space

is

in

other

operating

expenses.

So

it

moves

above

the

EBITDA

line.

Same

is

true

for

offload

for

software

licenses.

We

used

to

buy

software

licenses

and

depreciate

them.

This

is

moving

into

classic

SaaS

business,

monthly

fees

and

again,

SaaS

fees

and

other

operating

expenses.

Years

ago,

it

wasn't

depreciation.

And

last

but

not

least

when

we

reduced

our

office

space

less

investments

into

office

equipment

and

therefore,

depreciation

overall

was

the

biggest

reducer

for

the

line

of

depreciation

and

amortization

in

2021. Last

but

not

least

so

many

words

on

this

slide.

Income

taxes

25%

quite

low.

It

was

30%

in

the

year

before

and

25%,

very

efficient

tax

rate

in

2021.

We

are

able

to

use

a

lot

of

carry

forward

tax

losses

and

this

will

change

a

bit

in

2022

where

we

believe

the

tax

rate

will

be

at

28%,

just

as

the

first

number

for

2022.

Going

to

slide number

17 cash

flow

analysis. Well,

overall

the

very

first

bullet

point

and

sentence

says

its

finance

structure

still

very

solid.

When

you

look

at

the

slide

on

the

left

the

net

cash

at

the

beginning

of

the

year

was

minus

€31

million

at

the

end

of

the

year

the

net

cash

was

plus

€1.9

million.

So

we

are

net

cash

positive

again.

Cash

flows

from

operating

activities

at

€53

million

just

fueled

by

high

profitability

while

working

capital

was

picking

up

a

bit

in

line

with

revenue

growth.

In

the

year

2020,

it

would

be

other

around,

it

was

low

profitability,

but

clients

were

able

to

reduce

days

out

with

clients

in

2020,

which

pushed

operating

cash

flow.

Now

we're

back

to

a

more

normal

year

with

strong

profitability

and

somewhat

burdened

by

the

working

capital.

On

the

financing

activities

we

paid

back

some

debt

just

to

reduce

our

interest

payments

and

cash

flow

from

investing

activities

was

focused

on

classic

investments,

there

was

no

M&A

in

the

year

2021

which

brings

me

to

slide

18

and

I

don't

want

to

spend

much

time

on

this

one

it's

the

balance

sheet

and

you

will

find

more

details

in

the

appendix.

The

total

balance

sheet

has

increased

because

of

the

profits

that

are

still

in

the

company

and

the

working

capital

that

is

increasing,

main

reason

there.

Besides

that

on

the

left

side,

second

bullet

point

non-current

assets

are

a

bit

down, mainly

because

we're

using

less

office

space

and

this

is

[indiscernible]

(22:19)

which

brings

me

to

slide

number

19,

people.

Our

employee

number

has

increased

to

7,718,

which

is

29%

up,

main

growth

coming from

Brazil.

Our

utilization,

the

graph

in

the

middle was

at

90%,

slightly

below

prior

year,

which

was

mainly

because

of

the

very

strong

onboarding

that

we

have

experienced

in

the

last

quarter.

Attrition

is

at

19%

looking

back

to

12

months. In

the

quarter

it

was

probably

already

above

20%

and

roughly

20%,

21%

is

what

we

face

in

the

year

2022.

Last

but

not

least,

the

very

last

bullet

point

contractors.

We

are

working

with

1,305

contractors

at

the

end

of

the

year,

which

is

not

exactly

but

nearly

doubling

versus

2020.

Main

reason

here

is

a

capacity.

We

needed

capacity

in

some

of

our

markets

and

the

second

trend

is

in

some

countries

contracting

is

on

the

– from

social

security

cost

perspective,

more

efficient

and

people

opt

for

being

rather

freelancers,

then

employed,

and

currently,

we

have

this

trend

especially

in

Poland

and

therefore

the

contractor

number

is

going

up,

but

in

markets

like

Poland,

they

are

like

employees,

this

is

more

a

wish

because

of

personnel

cost

optimization.

And now,

I

will

hand over

back

to

you,

Marika.

[Marika Lulay]

Thank

you,

Jochen.

So

let

me

come

to

the

guidance

for

the

year

2022.

Clearly,

we

see

that

the

mega-trend

digital

transformation

is

pushing

us

further

up.

We

see

high

structural

demand,

we

anticipate

growth

in

every

of

our

three

sectors.

Highest

dynamic

clearly

is

with

cloud

technologies,

which

is

the

underlying

technology

for

digital

transformation.

We

will

also

see

that

there

is

more

and more

projects

using

AI

technologies

or

DLT

technologies.

And

clearly,

we

will

continue

to

grow

our

talent

pool

globally

and

use

sourcing

in

a

flexible

way

as

a

competitive

advantage.

And

let

me

say

this,

especially

in

these

times

our

global

footprint,

our

geopolitical

footprint

is

pretty

savvy

and

therefore,

we

see

that

we

can

grow

there.

We

have

a

solid

client

structure.

Finally,

let

me

say

this

with

a

bit

of

a

smile

on

my

face,

at

least

for

the

ones

who

listen

to

us

for

some

years.

Our

biggest

client

Deutsche

Bank

in

2022

will

be

below

12%,

therefore

we

stop

talking

about

client

concentration.

It's

now

a

solid

client

structure,

you

have

seen

in

the

numbers

Jochen

shared

that

we

are

very

good

in

landing

new

clients

and

then

expanding

them.

It's

not

about

just

collecting

logos,

it's

about

expanding

them

to

a

solid

number.

And

again,

digital

transformation

trend

supports

us

here

because

these

are

the

big

tickets.

We'll

keep

our

solid

foundation,

no

change

on

the

strategy

there.

They

will

focus

on

growth

while

improving

earnings

year-over-year.

We

keep

our

sector

focused.

The

adjusted

EBITDA

mid-term

guidance

for

the

sector

given

that

banking

is

so

strongly

growing,

we

do

not

enter

60%

but

65%,

20%

insurance,

50%

industry

which

I

think

is

also

quite

diversified,

healthy

sector

strategy.

And

we're going

to

maintain

the

solid

balance

sheet

and

cash

position.

We

continue

focusing

and

looking

into

the

market

for

M&A.

We

haven't

done –

we

haven't

closed,

let

me

be

more

precise.

We

haven't

closed

any

M&A

target

into

anyone.

Simply,

we

either

came

to

the

conclusion

that

the

company

doesn't

fit

to

us

at

all

or

the

price

was

simply

too

high.

And

we

do

want

to

make

good

acquisitions

for

the

right

reason,

but

we

keep

looking

into

and

obviously

the

current

guidance

is

therefore

given

on

a

pure

organic

outlook

and

we

keep

our

shareholder

friendly

dividend

policy

with

20%

to

50%

of

their

net

profit.

Now

let

me

come

to

the

concrete

numbers

on

page

number

22.

We

already

gave

a

guidance

in

October

last

year

that

we

guided

that

we're

going

to

grow

by

20%.

Obviously

as

we

have

closed

the

year

with

€566

million,

we

did

the

math,

we

use

the

calculator,

20%

is

€680

million.

That's

why

we

commit

for

that.

The

other

numbers

consequently

also

go

up.

We

have

committed

in

October

to

deliver

an

EBIT

of

7.5%

and

I'll

see

that

we

are

guided

8%

for

the

year

on

the

20%

growth

simply

because

we

do

see

positive

effects,

as

Jochen

explained

on

our

cost

advantage

of

specifically

below

the

EBITDA

line.

Why

do

we

see

that?

Again

we

see

an

unbroken

growth

trend

for

digital

transformation

growth

in

every

sector.

We

do

see

economies

of

scale

and

active

price

and

cost

management.

And

let

me

say,

especially

active

price

management.

We

do

have

pressure

on

the

salary

level.

Salaries

are

going

up

everywhere.

The

demand

is

not

only

for

us

unbroken

also

for

our

competitors,

so

salaries

go

up

heavily

and

therefore

we

are

already

increasing

prices

for

our

clients

and

we're going to

continue doing

this.

We

also

will

prioritize

focusing

on

the

right

margins,

hence

for

the

time

being

it

is

about

balancing

those

salary

increases

out,

the better

this works

out,

the

better

for

EBITDA. Nevertheless,

to

sum

it

all

up,

$680

million

in

revenue

and

$54.5

million

in

EBT.

That's

it.

Then,

we

have

slide

for

the

backup,

but

we

usually

do

not

present

them.

So

I

hand

back

to

the

operator

open

for

Q&A.

[Operator]

Ladies

and

gentlemen,

at

this

time,

we will

begin

the

question-and-answer

session.

Please

note

question

can

only

be

asked

via

telephone

and

not

via

webcast.

[Operator Instructions]



The

first

question

is

from

Andreas

Wolf

from

Warburg

Research.

Please

go

ahead.

[Andreas Wolf, Analyst, Warburg Research GmbH]

Hi.

Good

morning.

Congratulations

on

the

strong

quarter.

I

have

a

few

questions

if

I

may.

So,

the

first

one

would

be

regarding,

let's

say,

ways

to

increasing

efficiency

in

terms

of

coding.

So

it

seems

like

demand

is

growing

significantly

faster

than

there

is

the

number

of

coders

growing

also

worldwide.

Do

you

see

opportunities

to

improve

efficiency

by

using

tools

like

low-code

platforms,

et

cetera,

I

guess

you are

doing

this

already,

but

maybe

you

could

comment

on

this

topic.

And

then

the

second would be,

it's

related

to

your

fast

growth

area

cloud.

So

Gartner's

named

cloud

native

platforms

as

one

of

the

major

topics

for

this

year,

I

guess

it's

probably

because

everyone's

talking

about

it,

but

not

really

doing

anything

regarding

this.

Do you

already

see

cloud

native

platforms

positively

influencing

client

demand?

Right

now,

I

guess

you're

mainly

still

shifting

the

clients

to

the

cloud.

And

then

question

number

three

would

be

on

attrition,

is

there

a

threshold

where

–

how

shall

I

ask

it,

where

attrition

becomes

too

difficult

to

manage

because

it

seems

to

be

climbing

up?

I

guess

the

structure

is

still

intact,

but

is

there

a

certain

threshold

that

we

should

be

looking

at?

And

then

yeah,

the

obvious

topic

Russia

and

the

bank,

the

banking

industry

that

was

exposed

to

the

sanctions,

I

guess

you

don't

see

any

indirect

effects

coming

from

that.

Otherwise you

would

have

reflected

in

the

guidance,

but

maybe

you

could

reconfirm

and

then

yeah,

I

don't

want

to

narrow

Q4

results.

But

given

the

strong

top

line

in

Q4,

especially

if

I

look

at

the

sequential

development

I

think

there

was

a

little

bit

more

room

on

the

profitability

side.

I

guess

you

hired

more

people

then

towards

the

end

of

the

year.

Maybe

you

could

provide

some

insights

here

as

well.

Thank

you.

[Jochen Ruetz]

Good

morning,

Andreas

of

course,

I

take

two of the

questions.

Let

me

go

for

attrition.

Is

there

a

threshold,

well,

you

know

the

numbers

that

we

show

is

always

group

numbers.

In

some

countries,

we're

experiencing

higher

numbers

and

in other

countries

lower

numbers.

As

you

can

imagine

countries

like

Germany and

Spain

are

somewhat

lower

and

markets

like

Brazil

or

Poland, we used

to

have

very

high attrition

in

some quarters

and then

we managed

it down

again.

So

is

there

a

real threshold?

Not

really.

It

really hurts

above

30%

and

that's

when

we

do

very

heavy

countermeasures.

And

in

the

end,

a

lot

of

countermeasures

come

down

to

money

because

usually

then

this

is

in

the

market

and

then

there's

also

pricing

power

in

the

market,

if

the

demand

is

so

high.

But

there

is

no

real

threshold,

to

be

honest,

but

at

30%,

it

starts

to

truly

hurt

in

the

market.

Again,

it

would

not

happen

across

the

group.

Usually,

countries

are

in

different

speeds.

Q4

top

line

could

have

led

to

a

bit

more

profitability.

Well,

we

guided

for

$40 million,

we

delivered

$40

million,

full

stop.

[Andreas Wolf, Analyst, Warburg Research GmbH]

Thank

you.

[Jochen Ruetz]

So

that

was

the

goal

of

the

fourth

quarter.

Yes,

we

have

strong

on

boarding.

Yes,

we

had

more

recruiting

costs

than

ever

in

the

group

as

you

can

imagine.

We

never

onboarded

so

many

people

because

you

have

to

add

the

net

growth

and

the

attrition.

So

it

closed

in

on

4,000

new

heads

and

this

was, of

course,

also

costly.

Nevertheless,

in

Q4,

the

target

was

to deliver

the

[ph]

$40

million (32:44)

and

then

let's

look

into

2022.

[indiscernible]

[Marika Lulay]

(32:49)

preparing

for

the

expected

growth

in

2022.

Let

me answer

your

three

questions.

You ask

whether

we

are

– how

we

see

the

future

development

of

cloud-native

platforms

and

whether

they

are

involved.

The

answer

is

yes.

We

are

involved

and

yes,

it's

something

which

clients

need

for

the

future.

It's

sometimes

also

called

lending

platforms

and

you

might

remember

that

already,

two

or

three

years

ago.

I

think

it was

the

first

time

we

talked

about

Tranquility

Base,

which

was

our

landing

platform,

which

we

developed

to

help

our

clients.

Nevertheless,

it's

not

so

that

there

is

a

product

out

there

which

then

[indiscernible]



(33:32)

it's

more

these

are

architectures.

So

we

know

how

to

build

such

an

architecture

and

sometimes

legal

frameworks

from

other

companies

sometimes

legals

are

on

framework,

sometimes

clients

develop

their

own

lending

platform

because

they

simply

want

to

be

in

full

control

of

the

cloud

native

platform

in

order

to

not

to

not

be

too

dependent

on

one

cloud

provider.

So

yes,

it's

an

underlying

architectural

concept.

You

then

asked

logically

about

our

exposure

with

the

Russian

banks.

So

first

of

all,

we

do

not

operate

in

Russia

nor

Ukraine.

We

have

actually

so

far

only

one

client,

which

is

Deutsche

Bank

Moscow,

where

we

actually

do

not

support

Deutsche

Bank

Moscow.

But

Deutsche

Bank

Moscow

has

an

IT

captive

organization

in

Moscow

with

whom

we

sometimes

have

joint

teams

to

develop

solutions,

which

Deutsche

Bank

is

using

globally.

But

it's very

small,

to

be

honest.

So

we

are

not

very

exposed

on

that.

I

hope

this

answered your

questions

Andreas.

[Andreas Wolf, Analyst, Warburg Research GmbH]

Great.

Thank

you.

[Marika Lulay]

I'm

so

sorry,

there

was –

you

asked

the

first

one

was

you

asked

whether

there

are

ways

of

increased

efficiency

on

coding?

[Andreas Wolf, Analyst, Warburg Research GmbH]

Exactly.

[Marika Lulay]

Yeah.

So

and

you

mentioned

low code

platforms.

So

low

code

platforms

are

usually

developed

so

that

business

users

and

you'll

often

see

that

in

the

industry

business,

sometimes

also

in

data

analytics

business

that

then

the

business

side

can

use

the

so-called

low

code

platform

because

you

actually

don't

code

you

kind

of

customize,

you

kind

of

just

put

elements

together.

So

this

will

never

be

used

by

coders.

So

you

cannot

argue

okay,

this

is

efficiency

coding

because

you

don't need

coders.

Yeah.

But

you

need

coders

to

develop

the

low

code

platform.

So

this

is

not

a

concept

to

reduce

coding,

it's

more

a

concept

to

make

the

platform

easy

to

be

used

by

the

business

side,

especially

when

the

requirements

are

changing

a

lot.

All

over,

I

can

only

say

there

is

high

demand

for

coders in the growth.

And

just

to

back

to

your

point

of

attrition,

we

see

high

attrition

also

with

our

competitors.

There

is

a

new

Gartner

study,

again,

however,

they

calculated

that

but

they

came

up

with

an

average

global

attrition

of

21%.

So

our

19%

is

still

a

bit

below.

Obviously,

they're

not

far

off,

which

on

one

hand

is

right,

we

do

not

totally

overpay

our

people.

We

try

to

stay

in

line

with

market

and

it's

a

constant

battle

and

dance,

and

as

Jochen

said,

it's

different

to

countries.

We

do

have

countries

more

trending

towards

the

30%

and

then

we

take

countermeasures

and we have

countries

still at

10%.

So

this

is

usually

also

highly

coupled,

let's

say,

how

mixed

the

market

is

and

to

say

it

all

in

a

positive

way.

If

there

is

30%

attrition,

we

also

are

able

to

recruit

a

lot

of

people

because

people

are

ready

to

jump

ship

fast,

so

it

goes

in

both

directions.

[Andreas Wolf, Analyst, Warburg Research GmbH]

Great.

Thank

you

for

the

insight.

[Operator]

Next

question

-

[indiscernible]

(36:55)

[Jochen Ruetz]

There

we

go.

[Operator]

The

next

question

is

from

the

line

of

Johannes

Ries

from

Apus

Capital

GmBH.

Please

go

ahead.

[Johannes Ries]

Yes.

Good

morning.

Also

again,

congratulations

for

the

outstanding

results.

Maybe

also

some

questions

from

my

side,

if

I

may.

Maybe

starting

with

your

success

in

the

US

and

UK

and

Canada,

why

are

you

winning

so

many

[indiscernible]



(37:21)

successful.

Is

it

depend

only

on

your

Brazilian

businesses,

also

some

currency

or

maybe

a

–

supports

are

included.

Maybe

you

can

give

a

little bit

light

on

success there.

And then

on

the

margin

side

if

I

calculate,

right,

there's

still

a

huge

margin

difference

between

Americas,

UK and APAC

and

Continental

Europe,

especially

if

I

put

maybe

€5

million

or

so

others,

which

normally

should

account

in

the

result

of

Americas and

UK

sales.

It's

maybe

a

difference

of

4 percentage

points

to

5

percentage

points

in

EBITDA

margin.

What

is

the

reason

and

can

you

maybe

close

the

GAAP

going

forward?

And

another

question

regarding

the

tax

rate,

with

the

tax

rates

staying

this

year

around

25%,

because

it

depends

also

a

little

bit

where

results

are

created

[indiscernible]



(38:20)

process

going

on

strongly

faster

in

Americas

and

new

cases

have

maybe

an

impact.

And

maybe

coming

back

to

the

question

of

Andreas

before,

do

you

see

any

indirect

impact

from

the

Ukraine-Russia

crisis

on

you

regarding

maybe you

set

banks

are

hit

indirectly

on

their

business

and

[indiscernible]



(38:49)

important

sense

of

pressure

so

huge

on

the

banking

sector.

So

let's say

nevertheless

go

on

with

[indiscernible]



(38:56)

project

because

it's

not

a

question

of

short

term,

maybe

concerns,

it's

more

a question

of

long-term

survival.

[Jochen Ruetz]

All

right.

[Marika Lulay]

Thanks

Johannes.

So,

let

me

take

the

two

questions

up,

one

regarding

the

possible

indirect

effect

from

Ukraine

and

the

secrets

behind

our

growth

in

UK.

Perhaps let me first go

on –

and

I

hope

you

don't

tell

this

to

our

competitors,

[indiscernible]



(39:24)

So

let

me

first

go

on

the –

sorry...

[Johannes Ries]

Okay.

[Marika Lulay]

So

let

me

first

go

on

the

Ukraine

effect.

It's

obvious

it's

an

unclear

situation,

let

me

say

this

very

generically,

but

let

me

give

you

the

different

movements

we

have

seen

in

the

last

days

and

it's

really

about

the

last

days.

So

we've

seen

two

contradictory

movements.

We

have

seen

big

banks

and

can

imagine

these

are

the

ones

who

are

heavily

exposed

to

Russian

assets

and

Russian

business.

Those

type

of

banks

are

rather

kind

of

putting

everything

on

hold.

They

for

example

say

let's

freeze

the

change

the

bank

business

because

we

now

need

to

sort

out

our

own

business

strategy

first.

So

as

much

as

you're

right

digital

transformation

is

not

stopping

but

they

need

to

sort

out.

Do

we

continue

doing

business

in

Russia

or

not

and

what

does

it

mean?

And

therefore

they

control

their

cost

and

simply

stop

Second,

those

type

of

things

are

usually

logically

also

heavily

engaged

with

competitors

of

us who

operate

from

Ukraine,

Russia

and

Belarus,

which

also

and

these

banks

are

obviously

not

Russian

banks,

but

American

banks,

which

also

put

them

under

pressure.

So

they

rather

stop

then

we

have

banks

who

are

less

exposed

to

Russia.

But

they

were

using

competitors

from

those

countries

and

they

are

of

insurances

and

other

market

players

and

they

are

now

heavily

nervous

that

these

competitors

may

not

be

able

to

deliver

currently

because

they

are

from

Ukraine

or

maybe

they

are

not

allowed

to

buy

from

them

any

more

in

the

future,

like

Belarus

or

Russia,

because

of

sanctions.

Those

type

lines

rather

call

us

and

say,

could

you

please

jump

in

immediately

and

help

us.

Obviously

this

is

operational

risk

for

the

clients,

obviously

this

means

we

also

have

to

check

whether

we

can

do

that

and

along

with our

own

currencies

as

we

are

not

interested

in

staff

augmentation

and

show

labor

arbitrage

and

this,

for

sure,

we'll

see

how

we

can

help

the

clients,

but

let's

say

if

the

margins

are

not

attractive,

it's

not

a

long-standing

business,

we

might

only

help

them

as

much

as

needed.

And

then

there

is

a

third

situation

we

do

see

currently,

maybe

also

our

own

team

in

Poland

is

helping

refugees

come

from

the

Ukraine,

et

cetera, et

cetera

but

we

also

see

that

people

who

were

working

for

our

competitors

are

resigning

even

in

safe

countries

like

Hungary

or

Poland,

because

they

do

not

want

to

continue

working

for

a

Russian

or

a

Belarus

employer,

and

they

obviously

apply

to

us,

so

which

we

clearly

I

take

them

onboard

because

they're

looking

for

people.

So

I

would

say

it's

too

early

to

say

where

this

goes

and

I

would

say

with

all

and

obviously

with

the

supply

chain

effects

on

other

clients

like

automotive

clients

will

have

to

stop

production.

Obviously,

that

will

not

stop

digital

transformation

just

because

of

that

but

if

this

goes

on

for

long,

this

could

have

budget

effects.

So

honestly,

too

early

to

tell,

I

would

say

if

you

really

want

to

get

one

answer,

I

would

say

it's

rather

positive

for

us

the

negative,

but

again

you

don't

know.

Same

with

COVID.

First

is

a

moment

of

instability,

volatility,

uncertainty

and

then

maybe

after

a

quarter

it

stabilizes

and

people

know

what

they're

going

to

do

so

– but

we

watch

that

very

carefully

obviously.

Now,

your

question

about

the

secret

sauce

of

our

success

in

Ukraine,

APAC.

I

think

you'll

like

that

answer.

So

the

secret sauce

is

actually

not

secret.

we

always

made

it

very

public.

We,

especially

when

we

went

to

APAC

it

was

very

clear

that

we

cannot

just

go

there

and

say,

hey,

hello, we're

GFT, we do

IT

service,

how

about

doing

a

project?

But

the

clients

say

politely,

please

queue

behind

all

others.

And

obviously

then

it

would

be

a

price

war,

which

we

definitely

would not

win.

So

we

rather

went

into

APAC

with

a

strong

focus

on

our

domain

skills,

which

is

digital

banking.

The

close

partnerships

with

very,

very

advanced

core

banking

platform

providers

like

Thought

Machine

or

Mambu,

different

technologies

behind,

one

is

more

DLT

based,

one

is

more

classic,

but

both

focus

on

enabling

clients

to

either

build

a

greenfield

digital

bank

or

modernize

their

legacy

applications.

Plus,

we

walked

in

with

a

strong

focus

on

cloud

first,

so

we

positioned

us

into

that

corner,

into

that

niche

in

APAC.

Also

because

in

Hong

Kong

and

Singapore

and

also

in

Malaysia

now

they

were

issuing

new

banking

licenses

exclusively

for

greenfield

digital

banks.

And

we

simply

catch

that

trend

and

we

were

the

new

kid

on

the

block

you

could

say,

and

the

other

the

usual

suspects

were

running

around

in

these

markets

were

rather

focusing

on

the

big

projects

and

the

big

legacy

part

and

labor

arbitrage

and

we

were

the

cool

kind

of

company

with

deep

knowledge

ability

to

deliver.

Interesting

enough

our

prices

were

above

our

competitors

and

clearly

our

Europe

based

sourcing

from

Poland

and

Spain

was

none

competitive

price

wise

to

India.

But

for

the

client

it

was

much

more

important

to

get

a

partner

who

knows

how

to

do

it,

who

has

done

it,

who

was

committed

and

placed

on

[indiscernible]



(45:13) level.

And

this

is

a

trend

by

the

way

you

know

all

over

in

the

world

and

that's

also

the

reason.

And

then

obviously,

as

we

were

the

one

who

delivered

the

first

neo

banking

project

in

APAC

like

Mox

and

now

with

Al

Rajhi

Bank

in

Malaysia,

we

are

one

of

the

probably

I

would

not

say

the

only

one,

this

is

always

a

bit

too

loud,

but

it's

not

even

a

handful

of

suppliers

who

can

deliver

those

type

of

business.

And

this

has

now

helped

us

to

win

business

in

the US.

It

helped

us

to

win

business

in

Europe

and

it

will

help

us

to

continue

to

thrive.

And

that

also

helped

us

in

UK.

We

see

a

clear

trend

that

the

clients

were

in

the

past,

let's

say

the

last

five

years

ago

definitely

last

10 years.

They

were

favoring

large,

large

suppliers,

really

large

suppliers,

who

had

hundreds

of thousands

of

employees

and

predominantly

in

India,

because

it

was

about

price,

it

was

about

day

rate.

So

the

clients

favor

that.

And

we

always

had

a

hard,

let's say

a

hard

uphill

battle

to

win.

But

now

client

if

understood

with

digital

transformation

and

all

the

growth

around

agility

that

they

need

to

take

control

themselves,

that

they

have

to

develop

their

own

IP.

Hence

they

rather

prefer

partners

who

are

not

so

big

that

they

feel

they

take

control

over

them,

but

they

rather

can

deal

with

a

partner

on

a

nice

level

they

rather

need

smaller

teams

than

just

three

buses

full

of people,

which

some

of

our

competitors

simply

deploy

when

they

get

an

order.

And

clients

still

obviously

want

to

benefit

from

labor

arbitrage.

You

question

whether

it

would

be

better

supported

by

a

currency

exchange

rate

effect

positively.

Definitely

we

benefited

on

the

EBITDA

side.

But

our

clients

do

not

buy

from

us

because

of

labor

arbitrage.

If

they're

purely

focused on

labor

arbitrage,

they

go

to

the

other

suppliers,

but

we

benefit

from

labor arbitrage.

So

therefore,

the

secret

sauce is

simply

very

strong

focus

picking

the

right

niche,

our

deep

domain

skills

our

deep

tech

skills

and

our

–

I

would

say

our

unparalleled

ability

to

deliver

and

accelerate

the

delivery

for

our

clients

will

be

talk

box

back

an

18-month

life.

For

Malaysia

we

note

from

is

less

than

12

months

based

on

the

experience

and

that

is

pure

money

for

the

clients

because

every

month

client

goes

live

earlier,

they

save

money

more

than

they

ever

can

do in

any

negotiation with

any

supplier

and

that's

what

they

promise

and

we

live

up

to,

and

that

is

the

pure

secret.

[Johannes Ries]

Great

answers.

[Jochen Ruetz]

I

got

the

other

two

questions.

Margins

between

business

segments,

I

think I've

said

it

before.

Let

me

repeat, don't

compare

between

the

segments.

For

example,

we

deliver

into

the

UK,

which

is

in

the

segments

Americas,

UK

and

APAC

from

Poland.

Poland

is

In

the

segment

Continental

Europe.

Poland

receives

part

of

the

margin

because

of

transfer

price

policies,

which

are

compatible

to

the

OECD

standards,

which

means

part

of

the

profits

that

the

Americas

and

especially

the

UK

region

generates

pops up

in Poland

and

Spain

in

our

near-shore delivery

centers.

This

means

you

can't

compare

those

two

margins

against

each

other.

What

we

can

do

is

compare

Americas,

UK

over

time

and

compare

Continental

Europe

over

time,

but

don't

compare

the

two

segments,

please.

That

would

be

wrong.

And

the

second question

was

tax

rate,

25%

and

21%,

it

will

be

28%

in

2022

that's

our

guidance

for

the

tax

rate

28%.

[Johannes Ries]

Okay.

Super.

Sir,

maybe

one-shot

follow-on

or

two-shot

follow-on

smart

technologies

our

strong

assets

grown,

you

had

38%

for

digital

transformation,

you'd mentioned

also

smart

technology

at

a

strong

growth

and

what

are

the

strongest

drivers?

How

much

also

blockchain

is

now,

which

was

also

in

the

Gartner

chart

in

the

–

[indiscernible]



(49:23)

coming

down

and

it

looks

now

it

gets

a

real

business.

How

strong

is

this

a

driver and

all

the

other

technology

like

AI

power

or

robotics?

And

so

next

to

AI

which

is

a

– maybe

is

a big

or

small?

[Marika Lulay]

So,

the

business

with

smart

technology,

smart,

if

you

compare

this

to

trend

2020

was

actually

growing

in

line

with

our

revenue

growth.

It

didn't

grow

more

wide.

These

are

rather

point

solutions.

So

it's

not

that

you

do

a

€10

million

or

$10 million

project

with

AI,

you

probably

do,

maybe,

maybe

it's

€1 million.

Maybe

it's

only

€200 million

because

it

is

an

element

of

a

larger

program.

It's

an

element

of

a

larger

solution.

So

by

definition,

the

absolute

number

in

a

certain

way

is

not

so

relevant.

What

is

more

relevant

that

we

do

that,

that

we

have

those

projects.

And

then

when

the

client

is

ready

to

go

into

the

big

transformation

projects,

they

usually

use

those

type

of

technologies

in

addition,

you're

right

that

DLT

blockchain,

there

was

quite

a

hype.

Even

I

thought

it

would

go

faster

and

then

classic

or

an

escort,

right

you

have

the

discretion

opened.

[Johannes Ries]

Right.

[Marika Lulay]

And

it's

not

definitely

coming

back

with

NFT

trading.

People

look

for

custody

solutions.

We

are

supporting

one

client

in

Switzerland

to

build

the

custody

solution

for

NFTs and

clear,

this

is

based

on

DLT

technology.

We

also

have

to

build

a

green

bond

issuance

platform

for

the

stock

exchange

in

Singapore

based

on

DLT, so

we

see

DLT

more

and

more

coming

up.

I

personally

believe

that

the

technologies

AI

and

DLT

will

rise.

But

again,

if

you

compare

this

with

cloud,

it's

a

different

league.

Yeah.

Cloud

is

all over

and

using

cloud

means

you

have

to

change

the

way

you

run

your

business.

You

have

to

change

the

way,

how

you

do

IT,

and

you

can

change

the

way,

how

you

do

your

processes.

AI

and

DLT

– and

AI

is

more

specific

solution

and

DLT

is,

let's

say,

should

only

be

used

in

processes

that

you

deal

with

unknown

participants

and

most

processes

in

clients

of

its

known

participants,

because

it's

with

the

people

in

the

company

or

within

your

clients.

So

I

do

see

growth

in

both

technologies

and

percentages

might

be

impressive.

But

again,

the

absolute

numbers

are

still

small.

[Johannes Ries]

Super

answer.

Maybe

really

last

question

regarding

so

longer

term

margins

ambitions

you

had

in

the

past,

although

longer

term

plans

is

out

of

my

head,

if

you

renew

this

and

if

there

is

a

longer

term

plan

or

how

could

maybe

some

profitability

go, with

all the

uncertain

things you have

from

today's,

you

mentioned

the

attrition

wage

increases

and

price

increases

on

the

other

side.

But

have

you

any

plan

or

any

targets

where

you

can

go

in

and

maybe

in the

next

two

or

three

or four

years?

[Jochen Ruetz]

I'll

put

away

the

question,

I'll answer it

together

with

the

next

round

of

questions,

because

looking

at

the

clock,

we

should

give

at

least

a

bit

more

opportunity

for

questions

and

I'll

come

back

to

it

Johannes, okay.

[Johannes Ries]

All right.

[Jochen Ruetz]

Are there

any

more questions?

[Operator Instructions]

[Operator]

Our

next

question is

from

the

line of

[indiscernible]

(52:48). Please

go

ahead.

Yes.

Hi,

good

morning altogether.

My

question

is

also

on

the

direction

of

the

margin

and

if

I

compare

your

outlook

in

terms

of

margin

from

October

last

year

compared

with

today's

outlook,

and

I

see

compared with

today's outlook,

and

I

see

you

are

guiding

a

higher

EBITDA

margin,

so 8.0%

compared

to

7.5%,

but

adjusted

EBITDA

margin

a

little

bit

lower

11.1

versus

11.5%.

So

what

is

behind

this

development

we

see

now

the

compared

to

October?

[Jochen Ruetz]

Here

we

go.

Yes.

First

of

all,

welcome.

Happy

to

answer

that

one.

I

was

trying

to

explain,

but

I

was

in

the

profit

and

loss

statement

that

we

do

see

relevant

cost

moving

from

the

depreciation

line

into

the

other

operating

expenses

and

this

has

been

happening

and

it

is

ongoing. Next

move

we're

going

to

do

SAP from

the

cloud.

So

far,

we

depreciate

SAP licenses

that

is

in

depreciation

line

from

the

moment

on,

we

use

SAP in

the

cloud.

It's

a

monthly

fee.

It

will

be

other

operating

cost,

which

means

we

have

a

bit

of

a

cost

move

into

the

EBITDA

and

burdening

the

EBITDA,

and

we

only

see

lower

costs

then

on

depreciation.

And

so

there

might

be

– that's

why

when

you

look

at

EBIT

and

EBT, you

do

see

the

improvement

and

only

part

of

it

comes

from

a

smaller

amortization.

It

mainly

comes

from

the

business

side.

And

so

currently

we

see

the

improvement,

at

least

for

2022

coming

on

EBIT

level

and

you

do

see

we're now

0.5%

higher

than

what

we

have

guided

four

months

ago,

three

months

ago.

And

on

the

EBITDA

side,

we're

lagging

a

bit.

I

believe

the

EBITDA

will

come

back

because

over

time,

this

move

between

depreciation

and

other

cost

will

come

to

an

end

and

the

EBITDA

margin

will

improve

again.

And so

2022

is

the

EBIT,

EBT

year

and

EBITDA

will

come

back

in

2023.

Okay.

Got

it.

Thanks.

[Operator]

So,

there

are

no more

questions

at

this

time.

I

hand

back

to

Marika

Lulay

and

Jochen

Ruetz.

[Marika Lulay]

Thank

you

very

much. Thanks

for

your

questions

and

as

usual

you

know

that

if

you

have

further

questions,

please

contact

our

Investor

Relations

colleagues

and

then

also

thanks

Jochen

for

all

the

explanations

and

looking

forward

to

seeing

you

in

the

Q1

earnings

call,

which

is

somewhere

in

May.

And

wish

you

a

nice

day

at

least

just

got

it's

sunny

outside.

I

hope

wherever

you

are

it's

sunny

as

well.

And

let's

also

hope

that

the

world

becomes

less

volatile

and

a

bit

more

stable

in

the

next

month.

[Operator]

Ladies

and

gentlemen, the

conference

is

now

concluded.

And

you

may

disconnect

your

telephone.

Thank

you

for

join

and

have

a

pleasant

day.

Goodbye.