Good afternoon, ladies and gentlemen, and welcome to the q.beyond Conference Call Regarding the Second Quarter Results 2022. At this time, all participants have been placed on the listen-only mode. The floor will be open for questions following the presentation. Let me now give the floor to Mr. Jürgen Hermann.
Yeah, thank you very much and a warm welcome from my side as well to our Q2 conference call. Together with me in the room, like always, is our head of investor relations and M&A, Arne Thull. Ladies and gentlemen, before we start into the presentation, let me send you three key messages. First of all, we managed to grow even though it is still a challenging environment. Secondly, management needs to act, so we already introduced a package of measures regarding this challenging environment. Last but not least, like last year, we do expect a strong second half of 2022. We'll still be able to reach our targets. Let's come to the figures on page three. Although SAP did not confirm our expectations, we grew top line by 8%.
You can see on the slide the comparison of Q2 this year to Q2 last year. EBITDA and free cash flow just follow the revenue growth. This is a consequence of our business model. With increase in revenues, we will be able to increase profitability. It was in the past the situation and it will be the situation for the future. The overall environment remains challenging, and you know that maybe much better than I do. As said, it is important to act, and especially the high impact on the energy sector, which was much greater than in the other sectors. We took the decision not to pursue the potential acquisition in this area that we mentioned in the early days of April on our capital market day.
Concerning the increased uncertainty among companies, we took the measures to make sure that we still can reach our targets. Let's have a look on the order entry, which is still an important figure to measure the business for the future. We achieved for the first six months a number of EUR 106 million, which means legally binding contracts signed and which gives us a comfort for the future growth. Let me highlight that we still expect to exceed the EUR 200 million for the full year. 72% of these orders for the first six months came from new customers or new projects with existing customers, something what we do expect for the second half of this year as well. The revenues on page six. As mentioned, overall revenues increased by 8%.
The main drivers are cloud and IoT, the SaaS business, so the software as a service area, and the acquisitions that we made last year. Very high share of recurring revenues gives us a lot of comfort in this area. As mentioned, we no longer have a focus in the energy sector due to the underlying conditions. The cloud and IoT segment on the next slide is a very strong segment. You know that this figure does include the software as a service business. The expansion in this software as a service business is the right strategy, there is no doubt, although it burns our segment margin at a certain level.
I want to highlight that compared to last year, it is important to mention that in Q2 last year, the high margin colocation business was included in the figures. Overall, cloud business is crisis resistant and is a very, very important column of our business model. Let's have a look at SAP, the second segment. There's no doubt this was below our expectation, something that we already mentioned in the Q1 conference calls. I'm confident that we will be a much better business in the second half of the year. We took a lot of measures in this area. We have adapted our market alignment, which means at the end of the day, we are focusing on smaller projects and on those projects that are not only S/4HANA transformations.
At the end of the day, we have reduced in a further way our external resources. The full P&L on the next slide is nothing else than the result of the operating segments. Let me highlight one impact that is not operating, and you can read that in the half year report as well. The non-operating part, or the part that is not cost of revenues, was positively influenced by the legal dispute with EnBW. I'm happy that I can tell you that q.beyond was fully dismissed on May sixteenth this year. The balance sheet. Yeah, ladies and gentlemen, in uncertain times, a strong balance sheet is an important asset, and there's no doubt I'm happy that we have still no bank liabilities and that we still have a equity ratio of 75%.
Cash position end of June this year was nearly EUR 45 million. With that strong balance sheet, we can still support our M&A strategy. Fair enough, we adapted our view on the potential targets. As mentioned, we took the decision not to pursue plant acquisition in the energy sector, and I do not expect acquisitions in the energy sector at all. Secondly, when we look at our potential targets, and this is what is given by the macroeconomic uncertainty as well, we are looking much more on positive earnings of potential targets. They contribute not only in revenue growth but on EBITDA growth as well. As mentioned, debt-free net liquidity EUR 44 million, the equity ratio gives us the power and the strength to execute such M&A strategy to support our overall strategy. Yeah, strategy means future.
Let's have a look at the future. We already introduced a package of measures to remedy situation with four key focuses. We highlighted that in our press release as well in the half-year report. To be very clear here, we are not talking about cost-cutting program. We are talking about operating adjustments due to the overall market situation. As mentioned, concerning SAP, we are focusing on smaller projects, and we are focusing on projects that are not only made for S/4HANA transformation, and we reduce external resources. Concerning software as a service, we are focusing on such products and services with a faster market entry. Concerning sales, pretty much the same, focusing on faster revenue recognition projects.
Concerning cost and liquidity management, it's on the table that we are looking very precisely on the energy cost development and concerning development of the maintenance contracts. With these measures and our planning for the second half of this year, we are still confident to reach the target of EUR 180 million in revenues, which would mean that we grow compared to last year by 16%, and this due to the overall market situation. EBITDA is nothing else than the consequence of revenue growth. Therefore, we expect EBITDA at the lower end of the previous forecast. Concerning free cash flow, I can tell you that we will definitely end up with a number which is better than -EUR 10 million.
The last chart on page fourteen just underlines the fact that we were able to perform in the second half of the year. When you look at the chart on the right side, you can see the numbers for last year and this year concerning revenue growth. If we just adjust the fact that colocation business was not included in Q4, you can see that we were able to grow by more than EUR 8 million last year comparing second half of the year to the first half of the year. This fact on top of that further measures like recovering SAP business, the ongoing double-digit cloud growth. We have some very remarkable software as a service project in the second half and in the pipeline, and some other measures.
As mentioned, we are quite confident to meet our targets. We are part of the overall situation, something that we cannot change at all. But we do have a solid business model, and the outlook is still positive. With that, ladies and gentlemen, I'm happy to take your questions.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press nine and star followed by the hash key. In case you wish to cancel your question, please press nine star again. The first question comes from Johannes Blum from Warburg Research. Please go ahead with your question.
Yeah. Good afternoon. It's actually Johannes Blum. Just three questions, please. Firstly, could you share with us organic growth in Q2 in your cloud and IT business? And also related to that, could you share with us software as a service revenue contribution for Q2? Secondly, I was just wondering, you know, to get a better picture concerning your SAP business and the weakness you mentioned. There were also peers quoting that their customers are actually postponing projects into the later part of the year. So I was just wondering, do you expect the business to pick up significantly just from customers that have postponed projects now in H1, or do you expect to acquire new business as well? Finally, concerning your M&A strategy, and you already mentioned that you wanna focus more on profitability.
Could you just share with us a bit more with regards to are you looking into additional sectors or you're just, you know, focusing around your current portfolio and then screening for add-on technologies or simply IT stuff? Thanks a lot.
Thank you very much, Johannes. Let's start with the first question. I think in the presentation was already mentioned, when we look at the full numbers, the organic growth, including the declining SAP business, was 3% for the second quarter. I can tell you when we just highlight the Cloud and IoT segment, we were able to grow nearly 13% organically, which is very strong number. We see really the weakness of the SAP business, and we to transition to the second question, we expect of course that this will recover.
Already in the second half due to our measures concerning S/4HANA transformations, we see really the postponements of our clients, and I see a strong recovery early next year, to be honest. You can see that with our market competitors, we're not alone in this landscape. It's just a situation that a lot of our business customers are really postponing as far as the large S/4HANA transformation projects. Concerning the M&A strategy, as mentioned, due to this uncertainty in the market, we can see that we are more looking on potential targets that shows a fit to our growth strategy, which means that we are looking for companies that are supporting our portfolio or technology or sector competence. This has not changed.
The large change is saying that we are much more prioritizing the fact that we are looking on profitability concerning our potential targets. I think that is the main change in this uncertain situation.
Thanks a lot. May I just follow up. Software as a service revenue contribution in Q2, could you also share with us this number?
Of course, I missed that. It was roughly near to EUR 5 million for the first six- months. We are quite in the situation that we will with the normal business. I'm confident to reach the EUR 10 million. As mentioned in the presentation, there is at least two projects with a higher impact for the second half of year, which would add another EUR 4 million-EUR 5 million in the second half.
Great. Thanks a lot.
The next question comes from Lukas Spang from Tigris Capital. Please go ahead with your question.
Yes. Good afternoon, gentlemen. My first question would be also on the SAP business. Can you please shed a bit more light what makes you confident to see a better-
A better second half of the year. Hello? Lukas, I think we lost you.
One moment please. He has dropped the call. Sorry. Maybe he will dial in again.
Let's go on with further questions if they are some.
With further question. Okay, the next question comes from Yannick Ziering from Stifel. Please go ahead with your question.
Yeah. Can you hear me?
Yep.
Okay, great. Hi, good afternoon. Thanks for taking my question. Maybe going back to the DAS business, could you provide an update here when you talked about it in April? I think you were aiming for around EUR 15 million-EUR 20 million in revenues this year. Now it looks rather like EUR 15 million maybe in this year. Just in general, is now the start of this business according to plan or is it according to expectations that you had a couple of months ago? Or how would you describe it? Maybe some more color would be helpful here.
Yeah, definitely, Yannick. As we mentioned that number in the April conference, we were still confident to close the M&A transaction in the energy sector, which is 100% part of the DAS segment or DAS business. At the moment, that project is no longer on our schedule, and it was definitely in the area of, let's say depending on the closing timing in the area of low- to high-single-digit million in revenues, and this is now not part of our planning anymore, and this was part of the EUR 20 million.
Okay. Thank you.
Once again, Mr. Spang from Tigris Capital, please go ahead with your question once again.
Yes, sorry for the interruption. It was a technical issue. I start again. Sorry. To the SAP business, can you please shed a little light, what makes you confident to see a better second half of the year?
Definitely after the weak performance in the first six months, due to the, I mean, the end of the day overall market situation. As mentioned, there are a lot of measures. Let me highlight the main measures. One is definitely the fact that we are focusing on projects, not only S/4HANA projects. Secondly, we are not, or let's just say we are more focusing on smaller projects where we even can, let's say, sell consultants on a weekly and daily basis and in smaller projects. We have some indirect channels, sales channels, that we explored as well to make sure that we have, yeah, let's say high usability in our resources.
This will end up in this guidance for the second half.
Okay. When did you implement this, these measures?
After Q1 already. Yeah, it took time, so that was the reason why we mentioned in Q1 that we see better development in the second half and not in Q2. Q2 was weak. Q2, no doubt about that, but it was in a certain way expected when we already had the Q1 call.
Okay. Related to order intake in Q2, can you remind us if there was, or probably there was, a bigger order intake in Q2 last year? To test, let's say a more comparable base, if we would, yeah, take this out.
It's like always in order entry. I call it, there's a certain amount that comes in quarter by quarter, which is in the area of, let's say, roughly EUR 30 million, sometimes EUR 35 million. In Q2 this year it was exactly EUR 30 million. I do expect always two larger projects. In Q1 this year, this was a prolongation of a large contract with an existing customer. Last year, it was the order entry of Röhlig Logistics area.
Can you remind us please of the size?
When we are talking about large projects, it's definitely two-digit million. It's definitely more than EUR 15 million, sometimes it's EUR 30 million. In this area are these large projects.
Okay. As far as concrete Röhlig project.
Röhlig was.
Did you disclose?
Yeah, we didn't disclose that. Last year this was in the area between EUR 50 million and EUR 60 million, let's say. For this year in Q1, it was in the area of EUR 35 million.
Mm-hmm. Okay. Last question, your CapEx yet now in the first two quarters was very low. Is this also a level?
A level for the future? Yeah. Because you know that, of course, we have no colocation business any longer in our balance sheet. Definitely the company is developing in a certain way in asset-light business model. Therefore, yeah, this is in a certain way the level even for the future.
Sorry, Mr. Spang dropped out of the call once again. At the moment there seem to be no further questions. Maybe Mr. Spang will dial in again. Ladies and gentlemen, if you'd like to ask more questions, please press nine and star on your telephone keypad. There are no further questions.
Yeah. Let me thank you for taking part in our conference call and your questions. As mentioned, ladies and gentlemen, we are living in a challenging environment. However, q.beyond is a solidly financed company with a clear strategy and a healthy business model. Yeah, we do have a plan, and we still know how to execute this plan. Of course, we do not know when things are changing, but when they are changing, I think it's quite normal to take measures to work against this development. Yeah, with that, looking forward maybe to see you in Hamburg on the next conference of Montega or otherwise within the Q3 conference call. Thank you very much, and stay healthy.