Good day and warm welcome to today's earnings call of q.beyond. For this reason, the call is about the publication of the preliminary figures for 2024, as well as an outlook on 2025. We are very pleased to welcome the CEO, Thies Rixen, and the CFO, Nora Wolters, who will guide us through the presentation and the figures in a moment. After the presentation, you will have the opportunity to put your questions to the management. With that, I would like to hand over to you, Mr. Rixen.
Thank you. Warm welcome also from our side, from Nora and myself. I'd like to start to give you a brief overview of where we are, and Nora will give you more details about the financials. When we look at the last year, from our point of view, the Strategy 2025 has really kicked in, and I'd like to show you some of the results. We start with the figures. You see the revenues, 2% growth last year. We always said that growth is important, but we will reach our profit ambition without 10% growth whatsoever. As you see, EBITDA , it's growth from over 80% concerning last year, the year before. It's over expectations, and we doubled the free cash flow. We're very happy about it, to be honest, and we're very convinced that we will keep the pace also this year.
Like that, because the strategy we laid out in 2023 is very reliable, we will do an upgrade this year. We'll show you that later. The three strategic levers are still in place. One is a focused business model. We do over 70% of the revenues in five main industries. We have an effective go-to-market. We have a direct channel with our own sales force. We go over telco partners like Deutsche Telekom or Vodafone. We invested a lot last year in the Vodafone business, which will bring us revenue profit this year. With that, we lowered the sales cost last year. I think we will keep it for this year in the same region. One q.beyond was an efficiency program, mainly based on process restructuring, lean processes, and to push nearshore to 40%.
Concerning last year, we will be at 20% this year. This will be the foundation of everything. We will do a little upgrade. I will tell you later, but we will keep it as it is. Our focused business model with the four main portfolio elements like cloud, which is two-thirds of the business, then application like SAP or Microsoft, which is one-third. Security is roughly 7%-8%, and then it is not the rest, but the AI share was last year very small. It will grow and grow and grow for sure.
We will keep it with these four elements and then with plan, build, run in the heart of it with consulting, development, operations, always with the goal to enhance or to consult our clients to have a better business model and then to run the business model in a stable and secure way. You see on the right-hand side, you see the five industries. It's very technology-driven, what we do. We like to enhance it with more industry expertise. I'll come to that later. For sure, the governance side is more and more important for some industries like bank, insurance, and the public sector. This year, we expect a rough environment, as rough as last year, but as I said, with our solid business model and the strategy already implemented, we are confident to keep the pace. To give you some numbers, why are we confident?
The basis for all of us is service leadership, to have the best services for our clients so that they can concentrate on their business, security, and for sure, trust. You see the figures like commitment. The key customers are over 10 years with us. When we do a new contract or contract prolongation, it is over four years. On average, we have a few churns. Most of the customers stay with us, and they buy like 90%, buy not only one service, they buy several services. This is also quite a big potential for the future concerning revenue growth. With that, I hand over to Nora. Nora will give you some more details about the financials.
Thank you, Thies. Yeah, a warm welcome to the financials. To put it in a nutshell, 2024 has really been a successful year. Our earning profitability significantly increased, and we are really proud in a challenging market. We reached further milestones of our strategy 2025. I heard an interesting sentence I'd like to share with you. "Revenue is work, profit is pleasure." This is in a nutshell what you will find on this slide. We increased our revenue of 2%. We increased our gross profit of incredible 25%, + 4% liquidity, and + 2.5% EBITDA margin. How did we do this? With an absolutely committed team in five countries, 1,094 employees, and a high ratio of satisfactory employees. We have less than 9% staff turnover. This satisfied team creates satisfied customers. q.beyond showed a significant increase in profitability. The EBITDA almost doubled in the last year.
Our success factors are especially the nearshore ratio in the last two years. We decreased staff cost of 3%. We streamlined processes and employed AI. We reduced operating cost of more than 10% to this great success of our EBITDA of EUR 10.5 million. What does it mean? It means we have an absolutely resilient business model. The revenue increased of 2%. This means the segment of managed services is about 70%. The segment consulting has 30% revenue. We have a solid order book, which had 13% incoming orders, which means EUR 153 million and a strong focus for the next years. Our average contract terms include 48 months. This is a basis for our recurring revenues of more than 70%. We focus on our expert knowledges in five special sectors. We are reporting two segments. The first is the managed services, and the second is consulting.
Managed services means operation. In the last year, we increased the gross margin an incredible 20% and the revenue 5%. One of the effects is also the nearshore ratio we have in the segment of about 35%. On the other hand, we are burdened by higher license fees, so we expect further cost increase in the next year regarding licenses. Looking on the second segment, consulting. Here you will find the consulting and development of our business. Consulting increased an incredible 76% gross margin. We doubled the Euros in this segment, and we are really proud to succeed in this in an absolutely challenging market. As you know, the last year was really stormy, we acted very quick, and we divested a low-margin business for a special IoT SIM. We are really on our way to improve the gross margin of consulting up to 20% in the next years.
For 2025, we have a great goal in our strategy. It means a positive consolidated net income. As you see, all key figures improved. They improved significantly. We have everything right in our balance sheet, and especially to mention is the extraordinary depreciation of our company participation cargonerds of EUR 2.4 million. Additionally, we have no special effects like we had in the last year of the tax payment of EUR 8.6 million. We expect the liquidity in 2025, but there are no effects in this year of 2024. Taking a short glance at the staff costs, why is this important? We managed to decrease the highest cost factor in our company. More than 50% staff costs are really an important figure. We have to act, and we are aiming at 47% of staff ratio. The factor nearshoring and offshoring gets more importance.
We started at the end of 2022 with a nearshore ratio of 3% and increased it to 11% in the last two years. This increase means a decrease of 2% staff costs. Where do you find q.beyond? On this roadmap, you see our locations. q.beyond is located in five countries, eight locations in Germany, and has nearly 1,100 employees. 86% of our employees work in Germany, 14% near and offshore. q.beyond is best prepared for the international requirements of our customers in the future. Normally, we report three key figures. The third one is the positive free cash flow. We are very proud that our net liquidity got up 4% to nearly EUR 40 million. EUR 40 million is really a great number for the future because we are planning a lot. Maybe we go to mergers and acquisitions.
You ask about share buybacks, and of course, we want to pay a dividend. Additionally, I'd like to point out that we bought a new tranche of our q.beyond Data Solutions in 2024 and paid EUR 1.3 million. So we own about 67% shares of Data Solutions. Giving a short glance at our balance sheets, q.beyond is a really healthy company. We have 62% equity ratio. We are absolutely solid. We are independent of any banks. We have no debts, and we are equipped with a high liquidity for the next steps of our strategy that will be shown to you by Thies later on. Now we come to the most interesting part of the financials. It's the guidance for 2025. In the past, we reported three figures, and as you see, we changed the third one to the most important figure for us, the consolidated net income.
Let me explain the three guidance figures. Looking at the revenue, you can find a difference to the reported revenue you've seen before. We have an adjusted revenue of about EUR 100 million. What is the reason for this? In the past, we booked licenses and revenue differently. We decided to change this first in 2025. We want to make the revenue comparable to the growth we expect in 2025. We don't book the revenue, but again, we book the margin. There's no difference in the margin, but an adjusted revenue. The second figure is the EBITDA. We expect an EBITDA of 7%-8% in 2025. Our aim is to get at the 8%, but regarding the challenging market at the moment, we decided to be more conservative at the moment and give you a range of EUR 12 million - EUR 15 million.
The new and third figure is the consolidated net income. In 2025, we will have a positive value for the first time since years. My message is very clear to you. We deliver what we promised, so we will be able to pay a dividend in the future. With this grace message, I'd like to change to Thies.
Okay, thank you, Nora. As I said, the 2025 strategy will get an upgrade this year. I think we will lay out the next new strategy in 2026. What is our goal? The goal is to be the service leader. What means service leader? We want to provide the best IT services for our customers so that they can do their business better. We like to enhance their business models and like to run it in a stable and secure way. When you look at the three arrows, the basis is our strategy, which we implemented and which will be executed this year as in the last two years.
What we'd like to do more is we'd like to enhance our sector expertise, so industry expertise or competencies, because we think that this will drive value for our customers and also value for us in terms of revenue profit. We are good in technology, so like SAP, security, Microsoft, managed service. We saw in our joint venture logineer , when you put on top some industry expertise, it drives even more value. This will be more or less this we will reach over, I think, over M&A. We like to be where our customers are, so second arrow. Now we have like 2% or 3% of our revenues outside Germany, and we'd like to push it to 10% in the midterm.
We will have, for example, we will do business in Spain, where we already are, and take our portfolio and do business there. We can also think about other customers. As you have seen, we are already in the U.S., and so we'd like to do that, to be broader and also have a broader portfolio in terms of countries there. The third, the red one, is boosting team competencies. It was very important because we are convinced that at the end of the day, there will be a competency play. The customer will choose the providers which have the best competencies concerning AI, concerning security, concerning cloud applications. We invest, we have invented our own academy, the q.beyond Academy, and we'll have more than 500+ skills this year for certifications to our team.
With that, we will drive especially our margin to 10%, that's the goal for us in the midterm. What we mean with midterm is 2027, 2028, somewhere there. Next year will be, as Nora said, 7%-8% concerning our margin, positive net income. With that, we can do share buyback or pay a dividend, and then for sure have another share price than right now. In a nutshell, we think we are an attractive investment. Thies Rixen already implemented, as I said, we will do an upgrade. Our goal is clear, 10%. We'd like to have earnings in this area. The efficiency levers are already in place, so this will drive efficiency as using AI, nearshore, offshore. That's already there, and we will push it. We have a very strong financial balance sheet, no debts. This will help us also in the M&A.
In the M&A chances, we will see this year, and our business model has shown great resilience last year and will show it also this year. With that, I'd like to come to an end, and we're happy to take your questions. Thank you very much.
Thank you for the presentation, and we will now move on to the Q&A session. For a dynamic exchange, we ask you to ask your questions personally via the audio track. To do this, you click on the raise your hand button. If you do not have the opportunity to speak freely, you're also welcome to place your question in our chat, and I will read it out. Okay, we have a question in our chat box. First of all, many thanks and great and clear presentation. Can you say something about buyback versus dividends? Will you aim to do a combination of those? Thank you.
That's not decided. That's not decided yet. We're thinking about both. From a timing perspective, when we get the positive net income in 2025, share buyback will be the more earlier possible because we can, because of balance sheet design, we can only pay dividends in 2027 for 2026. It's both on the table. We will talk, we'll discuss it internally and decide on it later. For us, it's now concentrate on positive net income and then see what's next.
Thank you. We have some questions in our chat box. I will go from the top to the bottom. Can you tell us about the dividend program you are planning?
Yeah, as I said, step after step, this is our goal to be quite, quite frankly. We both started to get to this, to get to positive net income and then be dividend and pay dividends. That's what we're aiming for. This is no secret, and this will be possible. The early possible dividend date will be in 2027 for 2026.
Right.
Share buyback will be maybe possible in 2026.
Yes. That was the second question about this topic. We move on to the third one. Will you buy out all minority shares in Data Solutions?
We have a contract, and we prove every year in the next month for 2024 and finally in 2026 for the actual financial year. We aim to buy 100% like it is agreed to, but we will prove every year like we agreed on it.
Thank you. The fourth question. Can you provide us with an update on the assumptions regarding your real estate, the data centers?
Yes, you can. As some of you know or not know, the data center and also the land, 8,000 sq m here in Hamburg, the heart of Hamburg, is belonging to us. We checked it last year if there is a possibility, a good possibility to sell it. We decided against it. Why? Because in the process, we discovered that there are two business opportunities. One, we have some kind of capacity left which we can sell to the market. We knew that before, but it was some kind of we discussed it in a different way. Let's put it this way. The second more important thing is that the AI services for some industries which are regulated cannot be delivered out of a hyperscaler cloud, from Amazon or Google or Microsoft. We see there a big opportunity, especially in the European or German Mittelstand.
We like to harvest these two opportunities. And then at some point in time, we have again the possibility to think about selling it. Now would not be, at least from our point of view, not the right time. Because there's more value in it.
Thank you very much. The fifth question. In your opinion, what is the remaining potential for improving the gross margins?
Say it again, please.
What is the remaining potential for improving the gross margin?
There are more. We would like to say we have three rooms. The first, like Thies already said, is more utilization of our data center. The second is an increase of the utilization of our consultants. The third is AI and the improvement of processes.
Plus nearshore.
Plus nearshore. It includes the efficiency program of the strategy 2025.
Great. Thank you very much. One question. Regarding extending sector expertise, why do you not have a more ambitious revenue growth plan in your guidance for 2025?
Because growth is expensive. It's expensive. Our main goal is to have a positive net income. It needs some investment. Let's put it this way. It needs some investment. We are very, very, very, what's the phrase? Cautious. Cautious. There is too much growth. We expect to grow the revenue like 5% this year. With the market, last year, the German IT service market grew like 3%, 3.5%. Our aim is to grow like 5%. If we see a chance to grow more, we will take the chance, but always securing the revenue, sorry, the profit growth. We are very cautious with it. This strategy has brought us to the EBITDA we showed last year, and we are very confident that we are able to deliver this year also the same growth rate.
Thank you. That was pretty much the answer to the next question. That was asked if the guidance for 2025 is on the conservative side because you outperformed now in 2024.
Yeah. I mean, nobody can say this because we are not able to foresee what will happen in the world and with the German economy. We laid out a plan which is doable with EUR 12 million-EUR 15 million, and then we will see what happened over the year. That is what we always did, that we always did, and we delivered, and we like to keep the pace. We are not standing here and saying, "Oh, this is not a problem. The EUR 15 million, we will exceed it." Let's see how the year develops, and then we will give an update quarter by quarter.
Thank you very much. There are no further questions in our chat box and no raised hands. Therefore, oh, there is another one in the chat box as well. I'll read it out. What is the additional EBITDA potential from commercializing own data center when we can expect this will happen? Another question was, yes. Basically that.
The goal is to sell. The goal for this year is to sell the free capacity, to sell it. It is always the question when the revenue kicks in. If we have sold it, then the revenue potential is EUR 5 million per year with a high margin, much, much higher margin than—it's always concerning on the price, but it is a higher margin as you see now in managed service. That is one part, so it is roughly EUR 5 million in revenue plus a higher margin. On top of this is the AI services. The AI services for some industry like insurance, banks, public sector. As I said, they cannot go to hyperscaler AI services. This will also push.
If we will put these services to the market in Q2, and then we will see what will happen this year with the revenues and the relating profit.
Thank you. Maybe a final question. What is your current team utilization versus industry benchmark? Is there still room for improvement, especially in consulting?
Yeah, as Nora said. We have like 70%-75% utilization. You can push it to 80%-85%-90%. There is some room for improvement. This is what we meant with free hotel rooms. There is some. This is one, and the other one is price, so price per day, per consultant day. There is still improvement. What is important to understand is, yes, we report the two segments like consulting and managed service. What is for us more important is that consulting, all what we do in consulting, in consulting business plan and build for the customers will push the managed service revenues and also the profit. We see it as two segments on the one side, on the reporting side. On the other hand, business-like is one is pushing the other.
This is for us more important that we have this kind of system in the right balance.
Thank you very much. I'll wait a few seconds because there are no more questions in our chat box. Therefore, we come to the end of today's earnings call. Thank you very much. A big thank you to you, Mr. Rixen, Ms. Wolters, for the presentation and taking the questions. I wish you all a good remaining week. Goodbye and see you next time.
Thank you very much.
Thank you for coming.