CENIT Aktiengesellschaft ($CSH)

A warm welcome to the Q1 Earnings Call 2026 of CENIT AG. I would like to welcome the company's CEO, Martin Thiel; CFO, Johannes Fues who will guide us through the figures in a moment, followed by a Q&A session via audio line and chat. And with that, I hand over to you, Mr. Fues.

Yes. Good morning. Good morning from Stuttgart. Today, Martin and I are going to present you the Q1 figures. And yes, this means that it's not going to be only me. It's Martin and myself. And why don't you say word, Martin?

Yes. Good morning. Also a warm welcome from my side. Actually, I'm the new kid on the block here in the group now, just to be kidding, I joined CENIT 33 years ago. To introduce myself shortly, I have a background as a mechanical engineer, focus on production systems, so spend most of my business life around PLM but also during the last couple of years in the enterprise information business unit, actually the first 14 years in my CENIT career where linked to sales management tasks and then I spent 14 years heading our Dassault Systems business line, growing that business to a unit of over EUR 100 million revenue and actually more than 350 people at that time. And then the last 5 years, I spent most of my time in our M&A team. So I guess, I have a pretty good understanding of what CENIT is doing. And actually, it's a pleasure today to be here. Johannes, back to you.

Yes, the pleasure, I can only return and say, you've been a very important part of my personal onboarding last year. And yes, we're going to comment on the rest later. Let me give you the management summary before we dive deeper into each of the topics. Yes, let me start with the financials. This is a quarter that we have seen a stable top line, important to us. It's a 100% organic business development. Everything you see is just the business as we have it. There is no M&A effect. The thing that is even more important to me is, and then I think looking at the numbers you've seen that yourself, is our improvement in the profitability. We are EUR 7.5 million up. We have a very strong quarter as far as the first -- the best first quarter in the year that I found in the books. EUR 5 million, 9.6% EBITDA margin in Q1. This is really has been a very good start into the year. All indicators point in the right direction, and we're going to come into that in more detail. Obviously, this is just 1 quarter, and we have to keep on working on that, but it's a good start. On the operating business, the nice part is that we see a very fresh momentum in the customer demand. Our order backlog is up 11.5%. This is good. We are on track with our internal organizational transformation. What do we mean by the value orientation. It's focusing on the unified segment identity. It's the operational excellence, is the customer orientation in innovation and new solutions that's on track, and we like that. And last but not least, we have the U.S. acquisition stabilized, is back on track. You're aware that we don't do any country reporting at that point. But since we have commented a lot on this acquisition, it's worth noting that it is, as I said, stable. So this, all in all, brings us to the point to say we look very confident into the next quarters. There is no moves to the guidance. I've heard people saying that it's ambition guidance, I'd call it not shy if we say we tend to increase our EBITDA by 46%. This quarter shows how we're going to do this. And yes, that's why there is nothing to add here. Let me go a little deeper in the finance -- parts in the financials. On the top line, you see a quite stable development. As I said, it's 100% organic. We are close to 2% up in the revenues. We have an improvement in the gross profit close to 60% now. And if you see not only this year-by-year comparison, but if you followed CENIT for longer times, then you see that we are very much improving over the years towards 60% and better. And how do we do this? The answer is really in the business mix. And so we put up this in more detail. The business mix for one thing is the sales by the segment. You know that we report in 2 segments and we've seen a very strong start at the AEM segment with the colleagues being 6.6% up versus prior year. That's been a very good start. And we've seen that in the PLM segment, our big segment, we see a stable development with a very good pipeline and good customer leads, and Martin is going to comment on that later. So there is more to come. And really the secret, so to say, about the gross margin improvement is what we see in the business mix on the left. You see that particularly our consulting and services and the CENIT software are up, which is a very nice thing. And these are the parts that really drive the value of our business model.

Johannes, maybe I can add some information here. So just to repeat this, Q1 was a solid start outcomes. If you look to the consulting and service business, we see that we were able to increase that business by roughly 4% and deep insight, you also recognized, if you look to our reporting of last year, that we are doing actually more services with less people. So the reduction, we call it performance programs that we initiated last year, first quarter, led to a decrease in our staff of roughly 80 people. So we were able to push to increase the services and actually do more with less people, and that is the main contributor to our services. And you see this in both segments, Enterprise Information Management as well as PLM. So there's only a small increase in the PLM numbers. However, we are doing nearly the same or a little bit more than last year with significantly less people. Also remarkable for me is what we see in CENIT software. So if we look deeper insights CENIT software, we see now that nearly 18% of our software is now driven by our own AI-powered solutions. So that is, let's say, gaining a momentum that is significant now. We can measure it with close to 20%. That is something we are proud. And we saw a strong growth year-over-year. by nearly 50% in that AI-driven own solutions. And you know that we are talking about agentic AI on the one hand side, meaning to improve business processes, that is something where we tackle mainly in the enterprise information business area with own solution, and that is paying off now, our investments that we took that is coming along also with our engagement in our daughter company, where in the PLM segment, that is not so much what we call agentic AI but rather physics AI or industrial AI. That is a kind of, let's call it, AI augmented solution. It's not AI driven, but AI augmented and that request a deep integration into these platforms that we are actually trying to push with our strong partnerships here in that business. Third-party software, it's somehow, let's say, stable, small churn that we see here. Actually, nothing to worry about. What we see is a move from the traditional PLC ALC business towards SaaS business. Actually, so far, in a total mix, we were able to compensate the churn in the ALC basis and we will follow this very closely in the future, but we are confident here towards the outlook. Johannes, back to you.

Yes. Let me give you one more content on the improvement itself. Obviously, you know that the '25 numbers were still impeded by the restructuring effects. And although we've seen a very strong quarter, Q3, Q4, last year. I think Q1 is the one that you really see that visible without any one-offs, without any special effect, so to say. So it's a pleasure to just really guide you through that bridge and tell you how we actually came about to increase our EBITDA by EUR 7.5 million. Obviously, you know that the last year's quarter included a one-off, the EUR 3.3 million you see here, which is, for those who are following us for a longer time, part of the EUR 4 million one-off we also communicated in the past. So the majority of that was happening actually in the first quarter. that is something you can offset. And that starts the attributed the concept. You have a performance improvement in the U.S. business. As I said last time that I'm actually reporting on that, but the news to you is it's back on track. We are better than last year. And the major column that I want to have you look at it is actually the performance improvement in the core business. That's a net position, but it's mainly fueled by the reduction in optimization in the cost base. Martin just said that we are 8% down on the HR side. We are still doing more business in the same time frame. So that is a very, very good news. We like to see that. And yes, that brings us actually to the EUR 5 million more, if you put it in margin, 9.6% EBITDA margin, which I deem very, very good. That's why we're satisfied and confident as well as we go forward. Yes, going through tables is not a very sexy thing. So let me just highlight the ones that I do think are really good. We've been talking about the EBITDA. I've done that. The EBIT also is a number that is really, really strong. It's EUR 8 million up versus prior year. The net bank debt you see on the right, we're down to less than EUR 5 million. So this is -- obviously, we have a very strong operating cash flow that is up 18% versus prior year. So that gives us a very, very stable balance sheet structure. That's something that I want to put the emphasis on that is really good. You see the total equity and the equity ratio are good thing. I mean, obviously, the equity ratio is hit by longer balance sheet but only 1%. The total equity is positive as we go ahead and as we are positive with our business, we're starting from there and increase the equity still in the next quarters and years. So that is what we like. The cash flow, as I said, operating cash flow very strong in Q1 traditionally and even stronger than last year in the same time frame. We really like to see that. And yes, it brings me to the more operating part. The order backlog is up 11% to close to EUR 99 million. And that kind of leads me to hand it over to you, Martin, to go to our operational update.

Yes, for sure. Just wait one slide. Okay. Here we are. Perfect. So as Johannes mentioned, the order backlog improved from EUR 88 million to EUR 98 million. That's good. So it's significant. Again, that's solid. It's nothing to be enthusiastic about. We need to stabilize this in the upcoming quarters. how comes again here. This is a result of our focus of refocusing to our strengths. On the one hand side, to tackle bigger tickets at customer side. So we are bidding in bigger opportunities, which actually comes with a longer sales cycle. That is also part of the reality. However, we see that this now pays off and that we are able to close significant orders that are multiyear. So one example is 2-years contract that we were able to close in Q1 with a total order volume of EUR 3.2 million for services that we deliver over 2 years. that's a famous German truck and bus OEM in Bavarian that you might know without being able to name this customer or to disclose this customer. Then also a different industry where we position that's actually a leader in modular buildings. You know that with the infrastructure program of the German government, a lot of companies position in that area. So that's a total different industry. However, this industry likes process or experience and processes to copy experience from automotive and also aerospace industries, that is actually where we can bring our expertise. And this company close to 3 years contract with us. that's the SaaS model, where the company is investing in total in an amount of more than EUR 800,000 over 3 years with a ramp-up period to actually deploy more than 100 users of 3DEXPERIENCE platform. And that is also for us a good sign to diversify into different industries with our knowledge. And third example with a total different industry again. However, also based on the SaaS model and here again, with our own AI platform build simple in the segment that we call intelligent data processing. Here, we are able -- or we were able to close an order volume of EUR 600,000 roughly, or a little bit more than EUR 600,000 actually in the financial services segment. What we do here is building a new agent, an AI agent for public or for private health insurance solutions. And that is something where we clearly count on to be able to replicate this to other insurance companies as well. So that is again a significant step for us to establish our own solutions. So that is the mix. You see that with those 3 examples how we try to position clearly more towards annual recurring revenues and this requests also a different way of working. I will spend a word to that in a couple of minutes again. Johannes, please next slide. Okay. Here, some other examples, visualizing of what we do across different industries. So here on the left-hand side, we see companies that we were able to close also early Q1 in the sanitary and water segment. So that is something where we were able also to show our holistic approach because actually what we did there, if you look to this cycle plan build run, on the left-hand side, we really were able convince the customer with our consulting and with the execution of these solutions. So it's a plan, it's a build mode, where we actually deployed some pretty nice solutions for process integration between 3DEXPERIENCE and SAP platform as this customer really pushing or tackling 2 that on the one hand side, the product innovation that we push. But at the same time, the process efficiency. So that is part of our agenda. And on the right-hand side, you see automotive supply customer, it's a mechatronics customer where we actually position in the run mode. So that is an application management services contract that we close with that customer also in a long-term contract that we're able to close. And here, what we guarantee for those customers is the high availability of business-critical processes. So that holistic approach that CENIT is a partner where you actually can rely on in the early phase in the consulting phase, in the plan phase, up to the full cycle that we stay tuned with the customer also to support him during his operations that is. So that's the beauty of our business model really to be holistic at the customer side. Okay. Yes. So in a nutshell, again, a summary. for the quarter and also look forward customer, we see a fresh momentum in the customer demand. So a stable, good solid order backlog increasing by roughly 11-ish percent. That is cool. Regarding software and service portfolio, it's clearly a focus on innovation, consistency and profitability. What does this mean? With that move, what that push towards SaaS platform, we also need to change ourselves. That is what we started last year with our transformation, with our internal transformation because actually, the big difference between the traditional business model of a solution provider maybe 20 years ago was that you go to a customer and ask him, dear, Mr. customer, what can I do for you? How can I shape or customize your solutions? That time is over. So what we need today is in a customer, I call it customer-centric agility to have a solution portfolio that is really out of the box and that you have a good understanding and finally also the skills to transform a customer and to onboard the customer into a SaaS platform with standardized processes. But that means that you need to understand the industry processes of the customer and transform the customer towards the platform. And that is this platformization is actually something, if you do it right, if you have the right solutions where you can finally also increase your profitability, and that is what we are heading for. Johannes, why don't you spend a word on the financials?

Yes. Let me bring that part of the presentation to a close. I think we told you a lot about the financials. We are in a year that we really finally see a lot of improvement getting visible, becoming visible in the numbers. Let me also circle back maybe to one of my opening remarks. Martin and I, as a team and the Board are driven to really execute that strategy that we defined in the last year, execute that value-driven approach and really improved the business. And so that brings me to the last line. The news is there is no news to our guidance. This is the year we want to show you how we can get to that guidance in revenue and EBITDA. I think that first quarter has been a very good start to do just that. So this has been the parts that we have been presenting that we prepared. So I'd say we come to the Q&A, and we're happy to talk your -- to take your questions.

[Operator Instructions] We have already received 2 risen hands, one by Kai Kindermann. You may unmet yourself now.

Congrats on the quarter. My first question, maybe for you, Mr. Thiel. I want to ask, as you have also been a part of the M&A team, what your view is on future acquisitions, maybe also in the next year, the following?

Yes. Thanks for that question. We defined in our strategy, and that was maybe or not maybe -- that was also communicated by Peter and Johannes in the previous call that we will slow down a little bit on the M&A side. So M&A will be a portion of our strategy in the midterm and long term. So over the next 5 years, we will for sure look were to support our portfolio currently. But in the foreseeable time, for the next 12, 4, 18 months, we clearly would like to put more focus on the build side rather than the buy side. So we need to digest what we acquired. We need to focus in total. And going along with that, it's also that we will clearly bench also our current solution portfolio towards where is our clear focus, are we clear, do we have clarity. Third element is our portfolio consistent and actually can everybody in that portfolio, portfolio, meaning at that time, solution portfolio really contribute to the speeds that we wish. So in a nutshell, I would like to focus together with Johannes more on our core business and core activities and bench question other things that we currently have. and finally, put a focus on profitability first. That sets our agenda currently. Johannes, if you'd like to add something here?

No. Actually, nothing to add here. We, at CENIT, is buy build case, but in this phase, just as we said before, we're in the process of really bringing the group to where it can show its strengths.

Understood. Could you share on that topic, maybe the result of the Analysis Prime in the first quarter on revenue, EBITDA?

I really not -- let me answer that by that. It's a neutral result. I don't want to -- there's going to be a point that I have to stop doing the country reporting per se because going forward and as we said, to strengthen that ties between the companies, it doesn't make sense to stick to that. But let me answer that. We are at a neutral result, and we have stabilized the company and we grow it from there.

We have another question by Mr. Cosmin Filker. You may mute yourself now. I just send you an invitation.

I hope you can hear me.

Perfectly, yes.

Yes.

As said, I'm Cosmin Filker from GBC from Oxford. So I just had previously 3 questions. One question was answered. It was regarding the M&A strategy. Another question would be that you already shown in the EBITDA bridge on the slide that the performance improvement by EUR 3.7 million in the first quarter, it's quite high. Previously, you said that for the whole year, you expect the savings around EUR 5 million to EUR 5.5 million. That means that this improvement in the coming quarters won't be that high than in the first quarter because last year, there were in the second half already improvements visible.

Yes. Let me clear that up. The answer is the scope really. The number that you referred to was that one measure, that one restructuring program that was successfully executed last year. Obviously, this is not the only thing we've done. We are in a process to -- we'll bring the whole company in a more performance-oriented approach. We manage the business cases that way, we manage also the utilization that way. And so the answer to your question is that's been a different scope. That's been a different scope. And let me answer also the follow-up questions. That's something that you can extrapolate. No, please don't. Obviously, that if you look into the numbers, you see that the main effect is truly in the cost base. But obviously, I said at the beginning, this is a net position. There's also some gross margin effect in it. There is some other expense effect in it and not everything is just to be extrapolated. So I'd explicitly warned against that. But we are going to be better in the end than just that one portion and the one number that was addressed with the restructuring.

Okay. I understand. And you already said do not extrapolate for the following quarters. I have to ask, I mean, the Q1 EBITDA is not a typically strongest EBITDA of the year. And you already reached EUR 5 million in the first quarter. What is the argument against multiplying it by 4 and also adding a little bit more because the second half is normally stronger? Or do you see some risks regarding the EBITDA?

No. I mean -- let me answer that. There is no risk that we see here. But still, given the history of this company, given also the uncertainty that we have and I'm not telling you anything specific, more overall management experience as a newspaper reader that I have, and I'm looking at the papers, and I see all that, there is good reasons not to have that discussion after the first quarter I think.

So far, we have not received any risen hands nor any questions in our chat-box. So I would say if there are no further questions, we will come to the end of today's earnings call. Thank you very much for your interest in CENIT AG. A big thank you also to you, Mr. Thiel and Mr. Fues and for your presentation and your time. Should any further questions appear at a later time, please feel free to contact Investor Relations at CENIT AG. I wish you all a successful day. and I'm handing over to you, Mr. Fues once again, for your closing remarks.

Yes. Thank you. Thank you for guiding us through that session. In Germany, there's just saying one bird doesn't make a summer. That seems particularly relevant today in Stuttgart as it was in the morning 2 degrees Celsius but I tend to say at least it's a bird. So that has been a very good start. And yes, Martin and I very much look forward to you to really continue that conversation in the coming months and quarters. So there is more to come and stay with us. Thank you.

Thank you so much. Bye-bye.