Good morning, everybody. Thank you for joining our call today. On Monday, we've released our numbers relating to the first half year figures 2024 and 2025. This morning, we've released a half year report. We are very happy to welcome you here. Especially, I'm happy to have Michael Zitz here, our CEO, and Stefan Land, our CFO, who will present you, first of all, the current developments, the numbers, but as well, the perspective for the remainder of the year and for the future. As always, you can put your questions into the chat, and we will answer them right after the presentation here in the call. Thank you very much for joining, and I hand over to Michael. Thank you.
Nicole, thank you. Hello, everyone, and welcome also from my side to today's call. I will start with the first part. I will give you an overview about our company. In the second part, Stefan will continue with our financials of the last half year. Now let's start with who we are. All for One is one of the leading IT service provider in the world, especially with regard to the SAP ERP transformation into the cloud. We have more than 4,000 customers. We are very proud of our more than 2,800 employees. At the moment, we are located in 41 locations and in eight countries. Our main markets are Germany, Austria, Switzerland and Poland, and we have two nearshore locations in Egypt and Turkey.
In the right corner of the slide, you see we do the main of our revenue, about 80% in our home market in Germany, and we are focused on the six key verticals. It's automotive, manufacturing, professional service provider, consumer products, wholesale, distribution. We also cover new branches with our alliances approach, especially life science alliance, the construction alliance, and also we step into the defense industry. It's very easy for us because with our competence of the automotive and the manufacturing industry. In the last fiscal year, we have done a turnover of EUR 511 million, and we are very proud of the revenue share of 52% of recurring revenues of the total revenue.
We are the number one SAP partner in Germany, in Middle and Eastern Europe. Few days or few weeks ago, we were awarded with the SAP Pinnacle Award, and it's the highest recognition for an SAP partner in the world. That means we have sold worldwide the biggest amount of SAP subscription in 2024. Coming to our portfolio, we deliver our customers an end-to-end service portfolio, beginning with the strategic management consulting, coming to the software subscription, to the project. We also offer managed services for third party solutions in our own data centers or in a strong relationship with our hyperscaler partner, Microsoft, and also the most important thing in our cloud environment is to deliver, after they go live, the proactive services to our customers.
We are focusing on the upper mid-market, customers with revenue above EUR 500 million. We deliver our projects globally with our network, with our global network. It's called United VARs. It's a network with more than 70 SAP partners in more than 100 countries with more than 10,000 consultants worldwide. On the right side, you see our portfolio with the different solution. The most important message is we cover more than 90% of the whole and of the total SAP portfolio. That means we are in 100% SAP partner and SAP follower, but we integrate third party solutions, especially Microsoft solutions, directly integrated from the core solution ERP into the communication and collaboration solutions team, for instance. We see a lot of tailwinds in the market. On this slide, I mention the four tailwinds that are very relevant for our business.
The first one is SAP is the market leader in the ERP sphere. They step into the cloud share and to the cloud market very fast. We started our cloud business very early many years ago. We are very experienced in the cloud approach, in the cloud delivering. There is a huge opportunity for us in the market. Second, every customer or the whole market want to digitize their processes, want to use automation tools, wants to use artificial intelligence solutions. There's a big pressure in the market. Third, the technological change from on-premise to cloud. Also with the announcement of SAP that they only deliver new function, new artificial intelligence solutions with cloud solutions, the customer have one choice to step in into the cloud to use these new features to make their processes more efficient.
The third one for us as a service provider, there's a big opportunity because with every migration, with every conversion, with every new line of business solution built on the foundation of the ERP solution, there is a lot of service business in there for our business. Coming to the addressable market from our perspective, as I mentioned at the beginning, we have more than 4,000 customers, but really important to know is that more than 1,000 customers of these 4,000 customers have an active ERP maintenance or ERP subscription contract with us. We see more than 2,000 potential customers in the installed base in our four main markets, in Germany, Austria, Switzerland, and Poland. Installed base means customers from other ERP partners. There are also more than 800 net new names, potential customers with no SAP ERP solution in use.
That's also really important for us to cover this market with new public cloud ERP solutions. To sum up, we are focused on the upper mid-market to win bigger projects, to integrate our international workforce from Egypt and Turkey. We gain higher margins. We want to build a strong foundation with S/4HANA ERP customers to build step by step our lines of business, to integrate our lines of business, to integrate our service portfolio, and to integrate our own products. We see in the mid-market and the upper mid-markets, the biggest growth in the next years. These two journeys we offer to our customers to step into the cloud and to step into the S/4HANA, the new SAP ERP solutions. On the left side, you see the RISE journey and the right side, the GROW journey.
With the RISE journey, we cover existing customers with the old ERP in use. We help them with a process. Our approach or our process is called Conversion/4, to step into S/4HANA very quick and safe. On the right side, you see the GROW journey. With the GROW journey, we address net new names. It's a standardized process with best-in-class process templates to help the customers to come and to step in to this new cloud version very easy. On the left side, it is 80% and more in private cloud approach. On the right side, the GROW journey is 100% a public cloud scenario and to step directly into the public cloud of S/4HANA. Below, you see some customer references.
On the left side with the existing customer base, it's more and more the upper mid market, as I mentioned, customers with a revenue above EUR 500 million. For the standardized approach with the GROW journey with the S/4HANA public cloud approach, we also cover the mid market and the upper mid market. Our business starts with the Conversion/4, but grow with the Conversion/4 and the process directly we offer to the customers during the migration. That means we start very quick into S/4HANA, but we want to build this industry specific end-to-end process together with the customers. On this way, we see a lot of potential for other services, for other LOB services, for other own products from us. There we have the standardized approach. It's called Conversion/4 for the installed base. There are four step in this approach.
First, we do the technical migration with tools. Tools help us to bring the customer standardized into this new phase, into the S/4HANA database. Therefore, we use SNP tools, but also tools from SAP, or we do it with a brownfield approach. Second, we take this unique chance during this migration phase to reinvent the processes of our customers because also there is a high possibility that the business models of our customers have changed in the last years. Third step, we bring our customers directly into the cloud, into the private cloud or in the public cloud. As I mentioned before, there are two journeys offered by us with the RISE journey and the GROW journey. The fourth step, really important after the go live and also during the migration phase, we built these services on the foundation of the ERP.
On the next slide, you see a customer example of the revenue evolution. This slide makes it more tangible for you what I explained before on the other slides. You see on the timeline and the revenue growth. When the customer start or during the on-premise phase, there are a little increase in the revenue stream because there's the maintenance fee and there are licenses and the customer grow, and there is a little bit of upsell in with on-premise licenses. You see the moment with the orange curve when the migration project starts. There's a lot of consulting business in, but during this migration project, you see we build step by step on the foundation of the cloud ERP service by service.
As I explained before, there are LOB services with CX, customer experience solution, CRM, spare part shops, or marketing solution, HR solution, and analytics solutions, for instance. Also really important in the cloud sphere is that we serve our customers proactively, and that means we help our customers to become more competitive in their market. That means we know the solution, we know the updates. Every six months, the customers in the cloud get new features. We know the industry. We are the specialist. We bring both together and we go proactively to our customers and help them to become faster and faster. What that means, we see in the next part of our presentation from Stefan, a throwback to our financials in the last half-year.
Michael, thank you. Good morning to all of you. Let's just jump into the world of figures. Again, you may saw it on our press release last Monday or on the figures presented this morning, also in the quarterly report. Unfortunately, the geopolitical situation and environment led to a lot of postponements of project launches, despite we have a very strong pipeline, as you know. Revenue did not grow, and EBIT was -21% in the first half-year. Why and what will become in the next few slides. Let's start with the revenue development, and Michael did a very good base. You remember the graph you just saw. There's a time of transformation on the customer side, which is switching and there's a variance in the development of the revenue levels.
One thing, we are really proud on this because this makes us very robust and gives us also confidence for the future, is the growth of recurring revenues, and we are following this route since a long time. We have already achieved 52% of our total revenues in the recurring area, so it was in the first half-year, again, a EUR 133.5 million level. There's another graph you're seeing now is what does it mean that we are changing to the cloud or moving to the cloud and changing our business model from a reselling model to a cloud subscription and commissioning model as a partner of the big vendors, mainly related to SAP, but also to Microsoft. You see that we are missing on the red line all these high levels of revenue relating to the licenses.
If customers are adding new employees, we always sold licenses. This disappeared. More or less, the level of licenses within our figures are quite this already, but we are getting commissions now, and commissions are much lower, but we don't have to purchase materials. We don't have to purchase licenses, we don't have to purchase support contracts, and I come later to the margin development. This is the reason, customer by customer, as you have seen by Michael before as well, that the level of revenues are not growing currently, because we are in the middle on the hype of the transformation. We don't selling all these old resale models anymore and are basing our figures now on the continuing movement to the cloud and the related commissions.
One-time commissions for the setup of the contract, but also the recurring ones are just commissions in the future, and building up a wonderful base with wonderful margin opportunity. What happens also relating to the consulting level, and you will see the figures, we come in a moment to this again. Why do we have some trouble to grow currently on a consulting level? This is one cycle of a typical customer. You see on the left-hand side of the slide that somewhere at one point of time, the customer changed his mind, and he said, "I will go to the cloud. There is no other opportunity. I will leave the existing IT environment and my old ERP system. I will switch the engine," I'm always saying, of a car.
At that moment, he is not investing in his old engine anymore, in his old ERP system. That's the reason why the revenue is going down. It's dropping dramatically per customer because he does not want to invest any single euro in his old system if this is not somehow legally required. Then we are coming into a very weak phase. The phase means that customer is in negotiation with SAP. Does he go the RISE or the GROW, what has been explained by Michael before? At that moment, he's signing a new contract. There is no automatic migration coming afterwards. In the past, you may remember, we always sold licenses, and support contracts followed the second later. Now we have a gap in the timing.
There is a phase afterwards of negotiating a migration project with the respective partner, mainly All for One, of course, and we have to agree about an entire path through the cloud, into the cloud of the customer. Don't forget, I just spoke to Sam again, we had a wonderful day yesterday with around 200 clients in our headquarter. They said, "I do have 35 systems as a mid-size company, so I need a strategy which one I'm migrating to the cloud at which time." This takes time. This takes time to negotiate and to find out in connection with the customer. At that time, we're also seeing weak performance of the customer. We are losing, step by step, revenues of support and not gaining additional commissions because the customer is not entering into the cloud very fastly.
At that moment, if this phase is behind us, we are coming into a nice project phase. We see a lot of development then relating to consulting. Later on, if the main part is integrated or migrated, we are adding on additional cloud services as seen before on the other slide. This is the typical way a customer is migrating from the old world in his on-premise systems to the cloud with his major ERP system. If you look on the details of the revenues and of the revenue streams, you see that cloud service is increasing by 5%. Don't forget, why is that not jumping? Because the cloud services typically do have a very high margin, but only commissions are flowing in. This means we are not getting the big volumes on top of this.
A growth of 5%, we will go for more, of course, in the future, and we will see more if customers are starting to execute further strategies in the cloud. This will take some time due to the economic situation, as mentioned before. On the other hand, we see the software and support. It is declining in the total in revenues of 4%, relating to the licenses and commissions. We do not sell any licenses, more or less. 80% of this line is already commissions, and the support contracts are going down because people moving into recurring cloud commissions. That is the growth of the future. Consulting, as mentioned before, is more or less stable. I will come in a moment also to our two segments in order to explain it a little bit more detailed. What happened with the margin? Why is the margin currently under pressure?
Why did it drop in the first half year? If we speak about the core segment, you see that there is just 1% growth. This is not the ambition of the company. That is not our strategy. Customers are very weak in executing new CapEx, new projects going into the cloud the past few months. You know what happens on a worldwide base. They are really taking care about their own business at first, and they are saying that the engine is still in the car, so we are driving and moving forward, but it does not matter if I am signing in March, April, or June, or August. This will not change anything or a lot in my company. They are very careful currently, and we really had problems in the Q2 to execute our pipeline.
On top of this, you see the segment lines of businesses. As mentioned before by Michael, the lines of businesses are coming afterwards on a customer perspective. The first thing he is migrating into the cloud in his core segment, and then he is adding additional processes in order to digitalize end to end. This is not an easy situation for our colleagues in that segment, of course. On top of this, SAP decided around one year ago to stop the existing SAP C/4HANA strategy, the strategy related to the customer experience portfolio. Since then, we are really getting into trouble with new customers because the pipeline was disappearing. Of course, in that environment, SAP is probably also losing a lot of opportunities. Of course, also in connection with us because customers orienting to other vendors.
We hopefully see a new portfolio element in the customer experience segment in summer. This was announced by SAP that they will ready in the new business suite and presenting a new part of the customer experience within that business suite. We do not know how successful it will be. We do not know what customers will do. That is the reason why we decided some months ago already, in December and January, that we are lowering our capacities, which will take some, of course, costs with it as well, currently and in the last quarter, and that is the reason why we are not performing finally on an EBIT level quite well. You see that we just had a margin before M&A effects of 2%, 2.5% versus 8.2% in the last year, in the last half year, and that is mainly driven by these impacts.
We don't see a trouble there. Sooner or later, we will retire. Sooner or later, we will come back, and you can be sure that customers do not have any other opportunity than digitalizing the processes end to end. This does also include the packages relating and the portfolio in the lines of businesses of our clients. Coming to some further KPIs, you see that cash position is in a good shape. Typically, we are going down in the first half year because we are losing a lot of liabilities relating to the last business year, for instance, all these bonuses, annual bonuses of our employees. This is a normal way. Cash will go up in the second half, of course, as always. Net debt increased in parallel a little bit from EUR 56 million- EUR 63 million.
Operating cash flow was quite good because customers are still very good in paying our invoices, so they are not delaying. As you know, we have a very broad and robust basis on an industry, so people know what they do. They do have a strong equity in an average, and they're paying their invoices quite as normal. Which gives us a very good working capital, push, and development also in the first half year. Equity ratio is up from 32%- 33% on 30 March . Regarding employees, as mentioned, we are roughly 2,700, 2,800 people. Retention rate is going up. In that kind of environment, employee turnover is going down, typically. We are already at 91% again.
The share of our colleagues in Poland, Turkey, and Egypt already at 25%, health index are at 96.3, is more or less or a little bit ahead of last year. Earnings and dividends, as you may know, since a long period, we just gave you here the last or past 10 years, earnings per share always went up, except relating to two transformations we did in 2018, 2019, and in 2022, 2023. We had some extraordinary one-time efforts and expenses at that point. Last year, we already achieved EUR 3.70, and we increased dividends very robustly over the past 12 years now to EUR 1.6 per share, provided or distributed in March 2025. Let's come finally to the outlook. There is nothing new for us. We try to explain to you why we still believe that we reach the guidance. On a sales level, it will be quite tricky.
If you read our announcements, so we see our growth is very slow this year due to the move to the cloud. Revenues will come in probably at EUR 525 million around this. In the lower end. However, the most important thing currently is the EBIT and the EBIT ratio before M&A effects. We strongly believe if we get execution on the right level in the next few months or in the next six months, we will also be successful achieving our range of EUR 36.5 million- EUR 40.5 million. Inorganically and organic growth. Organic growth will retire also from an outside perspective. We see it internally. If we do our own analysis, new customers arriving, roughly 30% or 40% of our RISE and GROW customers are new customers. They are coming from other vendors or other SAP resellers in the past.
They see that we have the right portfolio, the right size, the right approach, and we have the knowledge. We are the number one, also awarded by SAP in different areas, including the Pinnacle Award, again. We are the number one in migrating mid-size companies through RISE and GROW into the cloud. Unorganically, we are working on this, as mentioned the last few quarters as well. We started in September, October last year to say we want to grow unorganically. We hopefully see successes already this year. Profitability, we stated that if the economy gets a little bit more robust, if execution comes back, we don't see a problem to achieve an EBIT margin before M&A of 8% a minimum as of next business year, which starts in 1st October . That's it from our side. Thank you for joining us today.
Michael and myself, we will be ready for your questions.
Okay. Thank you. Just a reminder, if you do have questions, you can put them into the chat, but I will start with the first questions. Relating to the guidance, does your guidance require a revival of LOB demand in the current fiscal year, or is it a solid core momentum enough to achieve the full year targets?
It's a core momentum. Core is driving the entire group. We will see a better performance on an EBIT ratio in the second half year in the line of business, which relates to a decrease of expenses because we are, let's say, optimizing our capacities since a few months, but on a turnover level, it will not come back. We can be very happy if we achieve, let's say, a zero on the growth. We don't know, finally. We are going for the EBIT. We have dedicated plans. We are lowering our cost level in order to improve margin and get more stability also in the lines of business segment in the second half year.
To add one thing, we also heard about that the announcement will come during the SAP Sapphire, that there will come a new incentive model for our customers to decide this year, do they step into the cloud with Rise or with Grow.
Okay. Thank you. Do you expect further severance payments in the second half of 2024, 2025? Are they part of your company guidance?
Yes, it is. There will be some, but we don't see a huge movement. In the first half year, in total, we already compensated EUR 2 million in EBIT, as also mentioned in our quarterly report. Finally, it will be below EUR 3 million on an annual base.
Okay. You stated in your Q1 presentation that revenue growth should accelerate in Q2, which didn't happen. What gives you confidence that growth momentum picks up in the second half?
Well, a lot of things. Yes, it didn't happen. I would clearly dedicate this to the geopolitical situation, and we all know what happened the last 100 days. The side of businesses, people are in charge. We are in Europe. We are not somewhere in the world. We are in middle Europe. We are very German-speaking area related company. C-levels are quite, let's say, confident and taking care about their business, which I can fully understand, which we can all fully understand. Why should it get better? Number one is we have a lot of order entry already in our books coming from October, November, December. Projects which are starting right away now, already closed the migration contract. We will see a good performance over the next few months. It should be better than in the past months.
In the lines of businesses, we arranged or we decreased capacities already the past few months. We have a very clear plan on that. In a total, it will be very, let's say, ambitious to grow the business this year on an outside view into our range, as mentioned before. We can be happy if we come over the EUR 525 million, EUR 527 million probably. We are fully committed to the EBIT and the EBIT range, which is the most powerful KPI for us in minimum currently. We are executing. We are delaying also CapEx. We are delaying also getting new people on board and do a very strict cost management in order to achieve this because it's very challenging times. Maybe you can add something.
Absolutely. Two things to add. Now we see and we have the biggest pipeline ever, bigger than last year with RISE and GROW deals in the upcoming months. That's the one thing. We are very confident that we will execute these opportunities into deals into the next weeks and months. The second point is that I want to add or to explain more is we are a service provider, and if we deliver projects and if we want to do our consulting business, we need the customers and we need the people on customer sides. If there are no people, it's a problem for us to implement, and it's easy for a customer to stop on Friday evening the workshop on Monday morning.
That's not easy to handle for us, and if we have this geopolitical situation, as Stefan already mentioned before, it's not so easy for us because we have a long-lasting relationship with our customer, and we cannot say, no, it was committed from your side that we start on Monday. If the project or the workshop is stopped or canceled from customer side, we cannot deliver. If we cannot deliver, we cannot show revenue on the consulting base, and that is very difficult for us. Now we see it go up. The situation is more clear in the world, and now we're absolutely positive to continue and to follow our way in the next months.
Okay. Thank you. Next question. How about your nearshoring capabilities or capacities? Are you using them? Will you expand them further?
Really important for us because we have to integrate our capacities from Turkey, Egypt, and also from Poland into our German-speaking projects. Therefore, we need bigger projects to integrate them. That's clear. In the small and mid-market, it's not possible to work with nearshore capacities. That we have learned in the last months and years. Therefore, we have the clear strategy. We go into the upper mid-market. We win bigger projects. Best example is Körber from Northern Germany, from Hamburg. It's a big company, more than 10,000 employees, multi-billion turnover, international projects, easy for us to integrate our colleagues outside from Germany, and that's a big lever for us to push the margin in our project. It's not the end of our each shore story, we call them internally.
We have two nearshore locations. We also are looking for new locations in the Asian region to continue with this clear strategy and to make it more international. Also important is that we bring more nearshore and offshore capacity into our services because that's more easier to integrate them into services. For instance, at 24/7, follow the sun application service concept. We already do this with our customer, HAAF. We can deliver it from an international platform approach. We have to win these customers, and then it's more easier for us to integrate our colleagues from outside the German-speaking region into our projects.
Thank you. Last question. You were talking about M&A activities. Could you give some more clearance on that?
That's true. We're looking for that, and as Stefan mentioned before, hopefully we can announce in this year, the first steps with our clear direction to strengthen the market in Europe that we have already announced in the last calls, that we want to go outside from the German-speaking region and Poland with our markets, in attractive markets in the European space. I think it's no secret, the attractive SAP markets with U.K., Nordics, and Benelux is clear. As I explained and mentioned before, we also want to strengthen our offshore capacities, and that are these two direction for us to go forward. Yes, hopefully we can announce the first win in our M&A business and ambitions in the next months and absolutely in this year.
Maybe I can add a little bit more meat about the why. This is the most interesting issue, of course, and what is the thinking behind. It's not just lowering our cost per hour. It's not just saying we are addressing a new market because our market is too small or something like this. Remember, we took quite a long effort. It was starting in October 2018, interrupted or delayed by the COVID period. It was not easy on that perspective to build up a group, a platform, and this platform is now available. We changed a lot also in the management team. We invested a lot also in the management, in the top management team. Remember all the colleagues we have on board on a C-level, very international, very experienced. The last one was now welcomed is Ulrich Faisst from Cognizant.
These are now helping us. We want to scale this platform. We have a matrix organization globally through all countries and all units or business units. Below the segments, we are working in business units internally, and we can now leverage on it. That's the reason why we are saying, let's go into new markets, attractive market, as Michael said. Let's combine it with more resources from other territories, and let's make it great. Let's make the next step. We invested so much. We are not anymore a multi-brand island story. We are an integrated All for One Group, and that's something we want to execute as soon as we can.
Good. There's just a new question. Which revenue size can potential M&A targets have?
Potentially, the ranges are limited, let's say on the upper end, probably below EUR 100 million. Because you know our valuation, you know our balance sheet. It's not doable to do it differently. On a lower end, we always try to be above EUR 10 million, EUR 15 million, maybe EUR 20 million because the other ones are too small for us. We don't want to rely or to relay on a single person or a group of person anymore. We want to integrate them into our matrix organization, so we have another approach also of post-merger integration. Ursula and the board is taking care about this currently. We have a new team on board to do this, and therefore, the sizes will somehow be in that ranges. Bigger is not doable, and we don't know what happens finally.
As you know, if you want to buy one, you need someone to sell who fits.
Okay. I think that was all in terms of questions, so thank you for all the answers. Thank you everybody online joining us, and anyway, if you've got more questions, just let us know, and I hand over to the two of you.
Yes, Nicole. Thank you. Thank you very much for joining us today, and as always, if you have any question after this call, don't hesitate to contact us, Nicole, myself, or Stefan. Thank you very much for participating, and see you next time.
Thank you.