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Good afternoon, ladies and gentlemen, and welcome to QSC conference call regarding the first quarter results 2020. [Operator Instructions] Let me now give the floor to Mr. Jürgen Hermann.
Thank you very much, and good afternoon, ladies and gentlemen, and a warm welcome to our Q1 conference call as well. My name is Jürgen Hermann, I'm the CEO of QSC, and with me, like always, our Head of Investor Relations, Arne Thull. So let's start on Page 3, please. We told the market that we will grow sequentially quarter-by-quarter after the sale of our telco business. And this is, ladies and gentlemen, what we are doing. You can see the growth starting from Q2 last year up to Q1 this year, where we ended up with EUR 34.1 million. And I'm sure that we will deliver in the next quarters as well. However, we see a first negative impact on our consulting business in the current quarter, the second quarter. Therefore, no doubt, we will expect growth, but the second quarter will not be our strongest one. Yes. On Page 4, we are living -- we are all living in exceptional times. And so far, we are happy here within QSC that in a certain way, we are a little bit privileged. First of all, we have a stable and robust business model, where more of 3/4 of our revenues are recurring and platform-based. We have, you know that, a net cash position of more than EUR 60 million and equity ratio of more than 70%. And we are pretty confident that after the corona pandemic, most of our customers, it's not necessary to convince them concerning the advantage of digitalization. And therefore, we expect kind of a wave after we are back in business. And it already started in a certain way, what we can see on Page 5, especially in times where the home office is choice #1. We have a particular demand for digital workplace, and there are different instruments and tools, and we are offering them to our customers. And in few cases, we were able to create and implement hundreds of cloud-based workplaces within 20 -- 96 hours starting from kick-off.On Page 6, you see graphic from the DSAG concerning S/4HANA migration. And we have shown this graphic already, but I want to make clear that the migration plans to S/4HANA are still on the agenda of our customers. We cannot see so far that companies delay their plans due to corona. And in my opinion, it would not be a good idea. And some of the guys -- or if somebody asked me, what is the right point of time to start a migration project to S/4HANA, my answer is always the same, now is the right time. So we started and we are prepared to support our customers. On Page 7, you can see the order entry, a KPI that we started to publish Q3 last year. And you can see that we achieved an order entry in the first quarter of nearly EUR 34 million, which is a good, good number. And furthermore, I can tell you that within this nearly EUR 34 million, roughly 70% is new business, which means new customers or new services to our existing customers, and 30% is related to contract extensions or contract prolongation.On Page 8, you see our profit and loss statement. You can see the revenues, as already mentioned and you can see the EBITDA of minus EUR 1.1 million, which is, to be honest, a little bit ahead of our internal plans. And let me point out 2 things. The first one is that you can see the G&A expenses with EUR 3.8 million. Here, we can see our restructuring in the last year[Technical Difficulty]
Dear participants, Mr. Hermann has dropped out of the line. He will be with us here shortly. Please stay on line.
So I don't know really what happened. There was a interruption. So excuse that. I'm not sure where I stopped before. So to be -- to make sure that we have all the same slides, I would start again on Page 7 with the contract value. I already mentioned that we achieved the number of EUR 34 million, which is a good number compared to the other quarters. And let me point out that 70% is new business, referring to new customers or new services with existing customers. On Page 8, we can see our profit and loss statement, and it shows the different numbers, and I want to point out EBITDA with minus EUR 1.1 million, which is a little bit ahead of our plans. The G&A expenses with EUR 3.8 million shows our restructuring efforts last year. And make me -- let me point out that this number includes our, let's say, research and development or our investments in innovative and future services. And with that, we are very much in line with our plans, leading to breakeven in Q4 this year. On Page 9, our both segments, cloud and IoT as well as SAP. In cloud and IoT, to make that pretty clear, we have our cloud business, our former outsourcing business, our colocation business and our IoT business; and in SAP, we have our SAP consulting business. Both segments generate positive earnings as mentioned. Page 10, a healthy balance sheet. I already mentioned the numbers. Net cash of nearly EUR 62 million end of the first quarter, and this leads us to a free cash flow within the first 3 months of roughly minus EUR 4 million. CapEx came out with nearly EUR 1 million, EUR 0.8 million to be precise. And as already informed you in our corporate news, we confirm our 2020 guidance despite the difficult climate due to the corona pandemic. This means that we are still heading for revenues of more than 130 -- EUR 143 million, which means growth of at least 13% compared to last year without Plusnet. And we confirm as well our EBITDA up to minus EUR 5 million and our free cash flow up to minus EUR 16 million. And definitely, the positive EBITDA, starting Q4 this year, which is then be sustainable. Yes, we have this pandemic. And so far, we can definitely tell you that we have even a positive impact on our digital workplace business and increasing demand on cloud solutions. There's a slight negative impact on consulting in those cases where we cannot work remote, where we have to be at the customer premises, which is not possible, and we hope, definitely, that we will be back in business in this area soon. In our plans, we get -- we assume a nearly normalized business starting Q3. And with that, we come to our last slide. To sum it up again. This is our plan for the next 2 years, where we would like to end with a revenue of EUR 200 million in 2022. And this is based on 5 columns, which is our excellent business portfolio with our recurring revenues, highly scalable; with our expertise in technology, especially the competence to integrate the technology from sensor technology to the applications SAP into the cloud; we have an effective go-to-market approach, especially the sector focus; and we have, besides myself, an experienced management team, which is based on 6 managers in my team. If you're interested in, you can see them on our web page; and with our balance sheet, we are prepared to do investments in M&A. And with that, ladies and gentlemen, thank you very much so far for your attention, and I'm happy to take your questions.
[Operator Instructions] And we have first question coming in. First question is from Mr. Patrick Schmidt from Warburg Research.
I will have 2. So first one would be on CapEx. In Q1, you stated that you invested EUR 0.8 million, and I think you also stated that you plan to invest EUR 8 million for the full year. So could you maybe elaborate when this is hitting in and what the conversion looks like for the free cash flow as that was minus EUR 4.1 million for quarter -- for the first quarter, and you're aiming for minus EUR 16 million for the full year? And secondly, could you maybe elaborate on your cost structure a bit further? So you already mentioned your G&A costs of EUR 3.8 million. Is that a run rate we can assume for the rest of the year, basically, per quarter? And could you also elaborate a little bit on your gross margins, on your main cost positions? Do you expect considerable scalability in that as well?
Thanks for your questions, Patrick. Let's start with the first one, concerning CapEx. Yes. It's just the rule of thumb when we look at the quarter that we said it's EUR 2 million per quarter. So we're a little bit below that in the first quarter. You can assume that this will be invested in Q3 -- Q2 or Q3. So we stay with our EUR 8 million. And with that, we stay as well with our up to minus EUR 16 million in free cash flow. So this is fine to stay within your model if you have planned it so far. Concerning the cost position, you're absolutely right. The EUR 3.8 million is a number that you can at least assume for the next quarter. Even it can decline a little bit, but it's fine if you stay with that number. And concerning the cost of revenues, this is the major driver concerning profitability. I said in previous calls that we have everything in place, so the infrastructure, the workforce and the other things. So with that, if each and every euro in revenues that we can add on top of that is creating higher margins, so at the end of the day, cost of revenues will come down and with that, gross profit will increase, and that is the driver of our profitability.
The next question comes from Mr. Wolfgang Specht from Bankhaus Lampe.
Yes. Three additional ones from my side. The first one, on order intake. Can you give us an idea how much of the growth we saw really stems from new customers? So ones you did not serve before. The second question is on the segment contribution. We saw that consulting only had a roughly 2%, which looks low to me. Is this based on problems you have had to get people on the ground on the customer side in this pandemic? Or do we have other reasons for that?
Thank you for the question. The first one concerning order intake, you can assume that roughly half of the whole order intake is based on new customers like in the previous quarters. So far, it's quite pretty same number. This is what we plan as well. So half of our order entry is based on new customers and the other half is based on our existing customers. Concerning the segment contribution, there are -- on SAP, there's one reason that, really, a lot of people that are working on the new innovative services out of this department. And secondly, there's a onetime impact. In another call, I said the -- one of the only impacts on corona was that we have one customer who was not able to pay his bills. It's one of the customers that was even in newspapers, it's out of our retail segment. And because it wasn't -- it isn't SAP customer, there's a little bit more than EUR 300,000 allowance was booked on this segment.
Okay. Maybe one additional one on the cost structure. Are we going to see changes once your service contracts with Plusnet run out? Or is this only a minor effect?
The service contracts, you mean, internally, for our services like the office rental and things like that? Or what are you referring to?
Yes. That one, and I guess you're also doing some administration services that are still given to EnBW or Plusnet.
At a certain point of time, this will go out, but this is, concerning the profitability, a minor impact.
[Operator Instructions] Mr. Hermann, there seems to be no further questions in the queue. Actually, we have one more question coming from Mr. Wolfgang Specht from Bankhaus Lampe.
Yes, if we've got some time left, I'm happy to fill it. I would be interested in IoT. Can you give us some idea how the product development and service introduction runs and if you have some requests for proposals running in this direction?
Yes, thanks for that question, Wolfgang, it's quite an interesting one. And when we are looking at IoT, I think we have to keep in mind that we have the business that is IoT itself. So where we have sensor technology and platform-based business, which is on a -- still on a small level, but in plan. And definitely, we have 2 developments that are referring to IoT as well. One is our cooperation with TeamViewer, where we did a press release end of April, where we are -- yes, let's say, working with TeamViewer on an end-to-end solution to make sure that all the different technologies, we have the edge competence and the edge gateway competence and the monitoring, and the analysts -- analysis competence comes from TeamViewer. We're working here on a smart combination to put into the market. And we have a proposal on our depth concerning integrated solution for the retail sector, where we are working on. And hopefully, we can close that. And we'll have a first market entrance in this environment. But there's still some work to do, no doubt about that.
Mr. Hermann, there are no further questions in the queue.
Yes, ladies and gentlemen. Thanks for your attention. Thanks for your questions. Many excuses for the interruption. I think we have to discuss with our telco provider what's going on here, whatever the reason was. Yes. And I hope to see and talk to you very soon in a conference on the next quarterly call. And yes, stay healthy, and bye-bye.
Bye.