audius SE (3ITN.F) Earnings Call Transcript & Summary

Hello, everyone, and a warm welcome to the European IT Services Summit. It's a pleasure to have you all here, and this session is dedicated to the audius SE, and I'm delighted to welcome CFO, Wolfgang Wagner, who will share some insights with us. And I would say let's jump straight into the presentation. So Mr. Wagner, I hand over to you.

Thank you, Sarah, for the introduction. Good morning as well from my side. I'm happy to present you audius at this European IT Services Summit. Let's jump directly into what I want to present to you today. So audius in one view, audius is, yes, you already thought it, an IT service company. We are focused on services around information as well communication technologies. Our customer targets are medium-sized companies, well, there are a lot of companies in Germany, but as well, we have 9 DAX customers among our customers, 9 DAX corporations. So focusing on the DACH region, but meanwhile, growing as well business worldwide. Company is now in the 35th year of operations. So we're looking on a long-term history, already with 900 employees. Last year, we reached the threshold of more than EUR 100 million and reached a nice profit. More on this later on in my presentation. 90% of our revenue is still in Germany. So you see our locations on the left side, we are located in South and West of Germany, but as well growing into worldwide operations. So second biggest market is the U.S. meanwhile, where we want to go something in the direction of USD 7 million of revenues for this year. So -- yes, growing business worldwide, but main focus will still remain on the German market, where we see a lot of potential for the future. When I talk about we, I think most important person is Rainer Francisi, who is our Chairman of the group and who is the founder of the company 35 years ago. He is the largest shareholder of the company and has increased as well his shareholding last year via an increase in shareholding in the holding company, more on this later on. Besides him and me as Board members, there is as well Matthias and Konstantin, who are all responsible for one special business unit. Coming directly to the business units -- no, sorry, first, a short glance on our growth story. Rainer decided more than 10 years ago now that he didn't want it only to grow organically. So there were the first acquisitions done in 2015. And this is our path since 2015. So we grew on a year-on-year base average with around 20%. On the one hand side, it's an organic growth. So this is something we aim, something around 10% that we see is feasible and what we did in the last years as well. And on the other hand side, another 10% of inorganic growth should be added. And for this, yes, we do on an average, let's say, one acquisition a year. And that totaled in the past to an average on 20% growth. And to make -- to say it already at this point, this is what you can expect from us as well in the future. So we want to grow year-on-year as well of something around 20% on average in the next years. Our business units. So first of all, IT Services. So there are totally three business units that are more or less equal in size. The first is the IT Services business. We have here a very broad offering meanwhile to our customers. So we can serve, let's say, medium-sized company with its full IT infrastructure that mainly focusing on parts of the IT for bigger companies. That means we are doing, for example, the whole network implementation for one of the DAX companies on all locations worldwide. We are doing the digital workplace management for another DAX company that means all the mobile devices, laptops, smartphones, et cetera, are handled by us as a company as a service provider. And these are typical businesses that we are doing here in the [ service. ] We have an approach that we are starting with an audit at the very beginning, an audit in terms of IT security, of compliance, of data security and then doing the classical approach of consulting, building and managing or operating. So we have service desk operations. Big teams here, all in Germany. We have -- doing consulting business all around IT infrastructures. The workplace management around it, the software and hardware management and are -- as well, meanwhile, an implementation partner for ServiceNow. So IT service management topics that came with the last acquisition of the CompuSafe as well into our group and broadened our approach a lot. Second part is or second business unit is the Software/Cloud business. Here we are at the one hand side, implementation partner of Microsoft Technologies and especially the Microsoft business solution, Microsoft Dynamics 365. We are one of the leading worldwide implementation partners of Microsoft in the area of project organizations. So where a lot of resources -- people resources are working in several projects where the Microsoft solution is serving to handle those projects as called Project Operations, but as well in other areas as field services, distribution, customer service and marketing. On the other hand side, besides the pure, let's say, implementation customizing on the -- for the customer, we are doing in-house developments. We are doing software engineering. We have own add-ons on the Microsoft standard solutions, but as well completely self-engineered software that is engineered from scratch. And for this, we offer as well storage and cloud solutions for hosting for those solutions. Beside this, we are getting more and more into the licenses business. So we are selling our own IP, but we are selling as well Microsoft licenses here. On the one hand side, for the medium-sized companies, our customers buy those licenses from us, and we do the purchasing from the Microsoft side with a nice margin, but as well for bigger companies, we receive royalties from Microsoft when we succeed with Microsoft together in the sale of Microsoft licenses. So third business unit, and that is something pretty different, I think, from other companies that present today. We are in the telecommunications. That means we are supporting the mobile network providers and the fiber optic network providers. Here, we are supporting them with ramping up their networks. That means we have teams here in-house that are looking all the time outside for new potential roof locations where you can place a new antenna, for example, for the mobile phone network providers or the tower companies as well, locations for towers. We have teams that do all the documentations around them. That means they are going out and flying with drones, doing videos, doing photos of the locations and doing the documentation work around those locations. We have teams that are around construction and project management. But as well behind the pure construction, there's as well teams doing -- supporting the operation of the backbone networks of all those locations. So a very broad approach in the ramp-up and the supporting services of telecommunications. Beside the, let's say, public networks, we are as well in the business of planning and installments of in-house mobile networks and have built up here first solutions for our customers of the industry. So a short glance on our references. There are a lot of other customers among them. We are not allowed to name all those, but I think you see that on the Telecommunication business as well on the other areas, there are really big ones. This is a very broad base of customers that makes us very happy as well for the future. So until the moment, we haven't published our full year results of 2025. Published are the 9 months figures, a short introduction here. So we grew year-on-year with slightly more than 20% in revenues. In EBITDA, we had an increase of 4% and EBIT was slightly down because of higher goodwill amortizations. But yes, that is due to our acquisitions. So as I said, still not published, but I can give you a good impression here. So our guidance is getting more than EUR 100 million of revenues and doing more than EUR 8 million of EBITDA. And I'm pretty, pretty happy to confirm those numbers at this point, so you can be sure that we have reached this. Why do we report EBITDA? Why is this the right figure in our eyes? We are working with the HGB, so the German reporting standard. And there, you have to write off the goodwill amortization. Because of our acquisitions, amortizations are now at EUR 2.5 million and that are not shown in the EBITDA. So this is the right figure in our eyes to see our real strength of profit. The gross profit on the revenue side, I think it's pretty nice. On the EBITDA side, we saw in the last 3 years kind of a margin pressure. For last year, we definitely hit new highs. So we're higher than the years before. And I'm pretty confident that this development of growing EBITDA as well will go on already in this year. So what happened last year? We saw at the very end of the year, purely organic growth of around 20%. So at the beginning, I told you we want to grow 10% by organic. So we clearly oversized this with 20%. That's pretty good in this economical circumstances. Additionally, there was a growth of -- through acquisitions, ergonomics and CompuSafe that made at the end, something like EUR 7 million of growth. IT Service was really strong. And why was it? We did -- we won new service contracts with our customers, and there were as well higher hardware sales in our revenues with lower margins, that must be said. We still look on a very great order backlog of EUR 94 million at the end of the year. That's pretty good, I think. And this order backlog is growing and growing year-by-year. So once again, we had a weak Q1, but the following quarters were really, really strong, and this is the development, I think we will see in this year as well. So we are pretty confident of a very good development this year because, let's say, briefly the problems we had at the beginning last year, they are solved. We did some investments the years before, and they are all now solved on a good way, not fantastically, let's say, like this, but the pressure we had, they are gone. We have a strong focus on profitability in all areas. That is what we started last year already, and that will pay off in this year and the following months. So for this year, the growth drivers are, on the one hand side, the full consolidation effect of the acquisitions of last year, ergonomics and CompuSafe, as consolidation started in Q4 last year, you will see this effect fully in this year. So this will add another kind of EUR 16 million this year. In 2024, when we were around EUR 80 million of revenues, we announced our midterm growth plan of more than EUR 115 million of revenues for this year 2026. And yes, here we are. So I told you that we are pretty sure that we reached or overreached the target of EUR 100 million for 2025. And only adding this growth of the acquisitions, you see that we will clearly reach the EUR 115 million. And I tell you that we will overreach that target at the end. This is what we already see. So we launched a lot of further growth initiatives in the last year in the directions of AI, a couple of [ words later, ] of IP licenses. So we are more and more selling licenses with higher margins. We are doing a nice business, meanwhile, with migration tools. Microsoft is -- so we are one of the preferred migration partners with Microsoft of some solutions from them. And we are as well going more and more into the defense segment and seeing here the first successes. Internationalization is paying off. I showed you the map. So we are growing there in the world. So we are not only dependent on the German market, and this is what we are very happy about as well. So with all this, we are pretty sure and have a clear focus on getting back on profitability on the EBITDA margin of more than 10%, what we already saw in the past. At the end, growth fields for this year and as well for the near future. So AI, we see as a growth enabler. AI leads to new demands for services. That is where we are, where we are preparing demands in terms of -- for infrastructure, for automation, but as well for consulting at our customers. There are a lot of questions that are asked, and we are having a lot of very good answers on them. We are pretty sure that the best products combined with great agents will win. That is my answer, our answer on the fierce, let's say, what -- about software companies in the future. We are pretty sure that in the enterprise segment, those huge applications can't be made by yourself even with the best AI. Internal, we can optimize things as well through AI and scale up with this. We have a lot of nice customers where we can grow with those solutions and will -- and that is as well, once again, a big pro of AI. We want to scale up more and more. So don't want to grow linear as we did in the past with the dependency of good stuff, good working resources. AI gives you another power to scale up with good products and services around it. Yes. And last but not least, there are a lot of companies that we can buy. There are thousands of companies who look for someone who is stepping in. And there, we see a lot of growth potential for the future. Share price, you can see yourself. Only thing I want to highlight is that our free float is now 36%. The guys who know us for a longer time always had the fear that our free float is very tight. It has broadened last year and in the winter as the holding sold some shares. And I think this should be more and more attractive now for investors as well. Nearly done, 22 minutes, but I'm happy for your questions.

Absolutely. Thank you so much, Wolfgang, for your presentation. So ladies and gentlemen, we are now happy to take your questions if you may have. [Operator Instructions] And in the meantime, we received a question. So Wolfgang, you've spoken about your figures for 2025 and showed us your 9-month figures. When will you release the 2025 figures?

Preliminary figures, we will release at the beginning of March. And the final figures will be released at the end of April -- 28th of April, we will have -- do as well a call here at this platform. Yes, that's the time frame.

All right. And can you tell us something about your liquidity situation? What is the net cash situation at the year-end 2025?

Good question. Even in terms of investments in new companies, yes, we had a clearly positive cash flow at the end. So our net cash will be something around -- the cash at the balance will be something around EUR 10 million. And so we are clearly net cash positive at the end. So we have a lot of buying power as well still for new targets.

All right. And by now, the final question. [Operator Instructions] Last question, your development in 2025 is pretty good in comparison to other competitors. Can you give us a bit more color on what's the secret behind that?

Yes. I think we -- so one thing is we are very -- we have a very broad approach. So we are not focusing on one service. As you saw, the Telecommunications business is very independent of all the other -- of the rest. And as well, the Software business is -- has a completely own dynamic. So this is, I think, one factor for our success. The other thing is that we won big orders in the 2023, 2024 that helps us now or that helped us for this big growth jump in the last year on the organic side. And yes, we are working very steadily year-by-year and trying to think on a mid- and long-term basis. I think that helped us now for this growth.

All right. So then we received two further questions. The first one, can you elaborate a little bit more about the risk and pressures from AI regarding your IT Services business?

Yes, not that easy question for a short time, let me answer it. It will -- AI will have a big -- will lead into big changes in our business. That's for sure. What I already said, in the past, we had -- we were dependent on people, on resources. This is something that will change, that will help us on the one side. On the other side, you have to be always, let's say, on the right side with your development and what you can offer to your customers. So the risks are that others are better, let's say it like this. And the pressures is that you have to transform your own company, your own organization. And -- but we see the potential chances out of this and are investing a lot into this, be on the right side. So very brief answer because it's a huge topic, I think.

And then we have a similar question. Do you already see attempts or ambitions among your customer to deploy their own in-house developed AI solutions instead of using audius products? How is the risk being assessed?

No, we don't see. We don't see any. I can say this. I think customers are, let's say, trying things, but not about business applications and those things we are doing, not at all. So at the moment, what I said, we don't see the risk at the moment, and I can't understand all the fears now in the market out there because what I said, the great products that will win at the end, and I don't see the risk here.

Okay. And then we have a follow-up or more along a question. Could you please provide deeper insights into the integration of CompuSafe and ergonomics? What is the current progress of the integration? What challenges are currently being observed? And by when do you expect the integration to be fully completed?

It's running good. So we are fully sure that we have acquired really great companies. ergonomics in Switzerland is really a nice niche player in the payment industry. So what I saw, I was last week there in Zurich, really, really great. So the integration on the level we aimed is done. It's everything running. Now we are getting more and more into working together, collaboration and are on the way in gaining projects together. That is not easy, let's say, at the moment because you don't win a project in only saying hello, here we are. So it takes sometimes a bit longer. But we are fully confident in both cases, CompuSafe and ergonomics that we are on a very good path.

All right. Great. So with a view into the audio line and the chat box and the time, there are no more open questions. So therefore, we will come to the end of today's roundtable. So thank you for your shown interest in audius. So if there are maybe some follow-up questions, here are the contact details from Wolfgang. So please feel happy to contact him. And also a big thank you to you for your time, your presentation and for answering the questions. From my side, I wish you all a lovely remaining day. And Wolfgang, final sentence belongs to you.

Thank you so much. Sarah, thank you for the invitation to the summit as well. Thank you for your interest. And yes, looking forward to see you all at the 28th when we release our final figures. And we'll tell you then a lot more about this year and about really exciting ideas as well for the future.

Thank you, and bye-bye.