Good day, ladies and gentlemen, and I warmly welcome you to today's earnings call of q.beyond AG, following the publication of the Q2 and first half year figures of 2025. I'm delighted to welcome CEO Thies Rixen and CFO Nora Wolters, who will guide us through the presentation and the results shortly. Afterwards, we are happy to take your questions in our Q&A session. Having said this, Mr. Rixen, I hand over to you.
Oh, thank you. Yeah, warm welcome also from our side. We like to report Q2 numbers. All in all, we are, let's say, we are quite satisfied with the results. We know that we have a good chance to deliver more in the second half of the year. You will see the details Nora will present in a minute. From my side, the strategy execution is on track. We have a full funnel for the second half of the year, which will guide us through this year and also prepare next year. I will give you another outlook at the end of the presentation. Now, Nora will guide you through the numbers.
Thank you. A warm welcome again from my side, and I'm very glad to show you now the half-year financial results. In a nutshell, q.beyond is sailing strongly and is very close to the goal of 2025. It's our positive consolidated net income. To start with a quote by Franklin D. Roosevelt, "A smooth sea never made a skilled sailor." We are very proud we reached further milestones in challenging markets, or to use sailing terms, in stormy seas. As you see, our highlight, our EBITDA increased by 23%. The success of our strategy 2025 or 2025 + effectively goes on. We significantly improved in all key figures, as you see for Q2. That means gross profit by 8.5%, the EBITDA by 23%, and the consolidated net income got a break even. I want to show what q.beyond has for five strong pillars of success.
The first one is our strategy 2025 +. That means we are extending sector expertise. There's an expansion abroad, and finally, expanding AI and security expertise. The second pillar is our strong balance sheet. We have now reached an equity ratio of 68%, which is really impressive. Our third pillar is the liquidity. Now we own nearly EUR 40 million, which are the requirement for maybe M&A, for paying dividends, or making a share buyback. Our first pillar is AI. AI has rapid advancements and is the key to productivity, innovation, and competitiveness. q.beyond AG offers a platform, we call it Enterprise AI, IT, sovereignty, and data protection. Our last pillar is cybersecurity. Cybersecurity is crucial for digital transformation, for critical infrastructure, for example, and cloud. That means that all in all, with our resilient business model, we're absolutely well on our way.
q.beyond AG continues on its successful path to the consolidated net income. I want to show you some figures. The revenue increased by 2% adjusted. Our resilient business model ensures a good Q2 and the continuation of profitability over growth. We continued our focus on profitable solutions and services. That means we have a loss of revenue of about EUR 3 million - EUR 4 million every quarter. Finally, the adjusted revenue means an increase of revenue, not a loss. The most important message is our profitability continues to rise. As you see, we are growing. We have a really resistant and solid business model, about 70% recurring revenues, and a clear industry focus, and a strong sector expertise, which is our key factor for success in Managed Services. We report two segments: Managed Services and Consulting. Starting with Managed Services, we improved our margin again.
67% of our revenues took place in the segment Managed Services. It's the highest proportion of nearshore in our company, about 35%. We focus on AI use, and automation stabilizes and improves margin at 22%. Additionally, we have high customer satisfaction named on the use, for example, of the Lünendonk study, where we are named as one of the top 20 IT service companies in Germany. Our second segment, Consulting, improved really a lot. The margin doubled more than in the quarter the year before. Now we have 33% of our revenue, and a gross margin increased by 155%. It's really an impressive number, and we are absolutely proud of this development. We have a measurable sales focus, for example, in SAP, Microsoft Security, and cloud consulting. I'm very proud to tell you that last week we were named as prioritized tier for Microsoft Jumpstart Partner Program.
We are one of three partners in Germany. That means an opportunity of 5,000. A great opportunity for us to grow and to improve Consulting again. Consulting and development are essential parts of our value chain. That's what we create value at q.beyond AG. To sum it up, both segments, Managed Services and Consulting, deliver a good margin that makes q.beyond AG profitable. If you look at our numbers, I'd like to point out two positions. The first is the so-called SG&A. We started a digitalization program in 2025. It means we invest about EUR 1 million for an SAP system, for a time recording program, and a project operation, which is for projects. The second position is the other operating result. We have a partial reversal of the deferred final purchase price for q.beyond Data Solution.
There's an impact in Q2 because the contracts for the final tranche always were signed. We have a clear goal for 2025. The positive consolidated net income. We reached the break-even point even at June. The EBITDA margin further increased up to 6%, and our goal is 7%- 8% at the end of this year. Our profitability grows due to our consistent strategy implementation. The last financial figure is the free cash flow. q.beyond AG has a solid and resilient position, and again, our free cash flow growth. At the end of June, we received the payment of the escrow amount. We expect the tax payment, which will cost us liquidity until the end of this year. It depends on the tax office to get the final payment. The free cash flow will remain positive, although the escrow amount was paid in this year.
Additionally, just for information, we paid the third tranche for the data solution, and at the end of this year, we pay the final tranche with 100% shares for q.beyond AG. If you look on the balance sheet, you will see again the improvement. With the amount of the escrow account, we paid liability, especially the trade payables. That's really important for the net equity ratio that improved up to 68%. We are continuously increasing our cash position, and q.beyond AG strengthens its balance sheet structures with the payment of the liabilities. Our net liquidity is nearly EUR 40 million, means EUR 0.32 for each share. We are well prepared for the next steps. Maybe M&A, dividends, share buyback, or a mixture. We will decide soon. q.beyond AG is a profitable, solid, and healthy company. We have clear goals and a consistent management.
We are proud of our satisfied customers and the increasing satisfied shareholders and the rising of the share price more than 30% since the beginning of the year. My last and preferred slide, our guidance. Revenue makes you work, profit makes you happy. My message for you is very clear. We deliver. Every month, every quarter, every year. I'm proud, especially in this challenging market, we can confirm today the guidance for 2025. Our guidance means an increase of 5% adjusted revenue, more than 15% EBITDA, and finally, the positive consolidated net income. To put it in a nutshell, we are well on our way, and second, we deliver. Keep this in mind, and I'm glad to give it back to Thies.
Thank you, Nora. I will finish or close this session with some general remarks about our strategy. Our strategic levers are still in place. We say profit for growth as the overall direction is number one. Number two is we will push near the offshore quota to 20%. 30% is our midterm goal. Automation and AI, I put it together as three and four. What we are doing or what we have kicked off is that our portfolio, especially Managed Services, will get an upgrade. We call this the Cube project, where we put AI in every service as automation, and we put the NIS2 and DORA compliance requirements in every service. We kicked this off. We will phase rollout, I think, Q1 next year, Q2 next year. We will be finished. This will help us to have a more efficient and more effective portfolio.
Our goal is this year 7% - 8% EBITDA margin. This will get us to a positive net income, as Nora said already. Our midterm target is 10%. There we are more or less at benchmark, maybe a little bit better. We will keep on. How we will do this or deliver even further, we said it several times, repeated now. We will extend our sector expertise. We will put on top of our technology expertise, which will bring us to this 10% EBITDA. We will put more sector expertise in it or on it, as we did in logistics, mainly with acquisitions. We will use our international expertise, mainly in Eastern Europe and Southern Europe, to do business there. To do business, not only have resources, as we have now, also to do business.
We will push AI and security further and further because this will be one of the two top topics in the near future. Overall, we like to be the service leader for the German Mittelstand or European Mittelstand in the future. This is our overall goal. Having said that, I thank you for your time, and we are happy to take your questions.
Thank you so much for the presentation, Mr. Rixen and Ms. Wolters. Dear ladies and gentlemen, we're now open for your questions. If you would like to speak directly to the Management Board, just raise your virtual hand. If you've done it by phone, you can use the key combination star nine to raise your hand. Follow up by pressing star six to unmute yourself. You have the opportunity to place your questions in our chat box as well. Having said this, Mr. Nilsson raised his hand. Frederik, you'll be able to speak now.
Thank you very much. Can you hear me?
Yes, yes.
Great. I want to start with the growth within Consulting, which seems quite strong, especially considering the macroeconomic environment. What is driving that growth? Considering the guidance you give, I assume you believe to keep a quite high growth rate in that segment going forward. Is that the right interpretation?
Yes, it is. As you may know, we have struggled a lot in the near past to get the consulting business on track or to the right results. We have it now. What is it? It's a combination of sales, a good go-to-market, and the right skills in the right place. This is a combination. What the customers like is that we are able to, after the consulting piece, after the project business is planned and built, also do the run business. This combination helps us now. We don't see any reasons why this will not be the case in the future because when our customers are thinking about digitalization using AI or whatsoever to be better at security, they need both. They need a project to set it up, and they need a good operational layer or a provider which will run the whole thing.
We feel ourselves well positioned in this kind of field.
Great, thanks. You've touched upon it a bit. I mean regarding M&A, I assume you will focus on strengthening or adding new focus verticals. Could you give us some update about the environment? I mean, are there companies to acquire and so on? What does it look like right now?
Overall, we're looking for companies above EUR 10 million turnover and above 10% EBITDA margin. These are the financial KPIs. We're looking for companies which have sector expertise. We have not enough, but sufficient technology expertise. You have never enough, but we have sufficient technology expertise. What we're looking for is to get more sector expertise to bring even more value to the customer. We're looking for energy in the energy industry and healthcare. We have a pipeline with some candidates in it. We are in different status. Each candidate has a different status. What we're aiming for, Nora and myself, is to close one candidate this year. In this kind of even healthcare or energy, maybe there's a third one. Let's see.
Great, that's interesting. Reading your report, it seems like you assume some kind of slight improvements in the German market coming from quite low levels. Is that the right interpretation of that statement?
First of all, we believe in ourselves, and we believe that we can do better in the second half of the year. When the economy kicks in, maybe there's even some more room for improvement. The first message is we believe in ourselves. If the markets, if there's a crisis or something, an external shock, then we will get also hit by that. When the economy is stable as it is now, and we do our homework, we don't see any reasons to get not to deliver our numbers.
Okay, great. One final question from me. Could you elaborate a bit on the initial feedback for the Private Enterprise AI and also something about your long-term expectations? I mean, how large share approximately of your customer base do you think is interested in this for the long term?
We look at AI as a technology, and most of technology is overrated in the beginning, and they are underestimated in the long term, underestimated in the impact long term. What happens right now is that you all know that there's a lot of marketing and sales in the AI sales and AI marketing out there. Our customers, we launched it in April, the platform. They are still in this kind of evaluating phase. We expect the first signing in Q3. We're in good talks. The main thing for us is that it will be mid or long term. It will be a mid to long term play. What we do now is we position ourselves, we try to position ourselves in the right spot, and then do two things.
One is do the right consulting, the right projects with our customers, and then get some of the recurring Managed Services business when we run the AI environment in a private, yeah, in a private manner. I hope I answered your question.
Yeah, absolutely. That's clear. That's all for me. Thank you very much.
Thank you. Bye.
Thank you so much for your questions, Frederik. By now we have no further virtual hands in the queue. Let's move to the chat box, and there we received the question. Can you give us an update on buyback and dividend plans?
Yes, we are aiming at paying a dividend or a share buyback, but we have two steps. The first is the positive net income we will reach at the end of 2025. The second is something we have to check in the balance sheet. We are proving at the moment. We are thinking of paying a dividend in 2027 for 2026. There are more options. As Thies already mentioned, there's also M&A. Instead of paying a dividend, maybe a share buyback or maybe a mixture of both three.
Thank you so much for answering. We have another virtual hand from [Olaf Koretzky. Please go ahead and ask your questions.
Hello.
Hello.
Hello. Thank you very much for having the opportunity. I had a few thoughts after the German version of the call, so I ask them now if I may. First, some clarification as low-hanging fruit. I understood due to the focus on profitability, you lose revenue. Now I understood Nora as we lose EUR 2 million every quarter in revenue. I understood before this is a one-off Q2 to the Q2 of the prior year, not recurring quarter on quarter, right?
Yes, it is.
Good. Talking Turkey, you mentioned a nearshoring personnel at a quota of 20% now and a goal of 30%. Is that on the payroll or contractors or both?
No, that's when you have the workforce, how much of the workforce is in the international hubs or nearshore centers?
Yeah, sure, I understand that. Is that your people on your payroll, so on Lohnsteuerkarte, or is that contractors?
No, that are all q.beyond companies. All q.beyond companies, and they are all on our payroll.
Okay, so contractors only serve for secured business then.
Yes.
You don't kind of secure contractors in advance in case of getting the bills.
No.
That's good to hear. You mentioned in the first call a utilization rate of the workforce of 70%- 75% with a target of 80% +. That refers to consultants on the payroll, also not including contractors. There is no unused capacity with contractors.
Yes. We are looking always at our own employees. When we look at utilization, we count this, we measure this number.
q.beyond differentiates itself from competitors by not only offering AI software, but offering services to Mittelstand clients to clean up or aggregate their data to mitigate the obnoxious garbage in, garbage out problem. Did I get that correct?
Yes.
Maybe you should put out that differentiation a bit more strongly because I think it's an important point. Also, in WhatsApp groups where we use a lot of different times quite expensive AI software, you often have that problem. I think it's an important point to tell people we can mitigate that. We don't only sell you the software. I think it's a major point.
You're right, yes.
Also, you said in the first call that also the Mittelstand begins to understand the importance of remaining independent from U.S. dominance IT. Isn't that a gross understatement? Isn't it rather at least getting slightly closer to something not even being independent, but not being totally dependent on the U.S.?
No.
I would rather assume that right now it's like 95%+ is run and dominated by the U.S., and even getting a small share of that would greatly help businesses like yours. It's very far from being independent.
Yeah, that's true. It's far from independent. It's more getting more independent. What happened is with the cloud impact, the first for 10 years, 10 years from now it was only software license. Now it's software plus the run piece, and it's getting more independent. You're right. It's, yeah, point.
You would still address with these two points, kind of cleaning up the data one and being a little bit independent, at least only Mittelstand clients. You don't address enterprises at all.
No, not yet. Yeah, it depends. For the Mittelstand, let's say EUR 100 million - EUR 500 million turnover, that's our target group. We have some with billions of revenue, and we will not avoid them. You have to have a focus. This is our focus. We position ourselves as a, let's say, long-term trusted partner, whatever happens. This will be our main focus also in the future.
I mean, in terms of commercials, the company most visible, at least for people not really proficient in the sector like myself, there is United Internet basically saying we need at least a little bit of independence in Manager Magazin and so on. Are you considering working together with them on that topic?
IONOS.
is quite a strong player, actually.
IONOS. What they are offering is a kind of platform services for infrastructure like STACKIT. What they don't have is this service piece. I could imagine some scenarios in the future when we have some asset, more asset, less scenarios, then we could imagine that we work either with IONOS or with STACKIT. From the Schwarz Group, these two are possibilities.
Yeah, basically saying they provide the platform, you provide the service, especially cleaning up the data for clients.
Right. Right.
Okay. Final question. You just mentioned that one M&A target for the rest of the year is at least probable. Assuming that, would that still leave headroom for a share buyback during the rest of 2025? Or is basically that using up all three resources for the rest of the year?
It depends.
Assuming it happens.
Yeah, it depends a little bit on the price of the target, but we plan it like this, that we have some headroom to do share buyback. It always depends. We said EUR 10 million, 10% EBITDA. Maybe we get a target with EUR 20 million. It's a higher price for sure. Still, we are aiming for starting share buyback next year.
Thank you very much. I'm done.
Yeah, thank you, too.
Thank you for your questions, Olaf. We have two further questions in the chat box. How has data center utilization rate developed this far this year?
Not satisfying, to be honest. We sold some square meters, have two to three big deals in the pipeline. I hope we can announce the first deal in Q3. It's a little bit more complicated than we expected. For us, it's a mid to long-term play. What we maybe underestimated is that we have to position ourselves in this kind of arena and learn some things. This is the answer. It's a good pipeline. We have not sold so much as we expected. Still, as Nora reported, still can improve our numbers. For us, it's a booster. Every square meter in the data center is a profit booster.
All right. Further question. Is the majority of CapEx related to growth CapEx, or is maintenance CapEx small?
For the first half of the year, it's mainly maintenance CAPEX. There's some growth CAPEX in it. As I said in the beginning, our pipeline is quite high. We have a funnel of EUR 200 million right now, and we expect to harvest this in the second half of the year. When we put the service piece in our own data center, for sure we will have some CAPEX with it, some growth CAPEX with it. Also, when we sell AI services out of our own data center.
All right. I have just an understanding question. Are you aiming for share buybacks in 2026? Did I hear that correct?
Yes, this is correct.
Okay, thank you so much. In the meantime, we did not receive any further questions. At that point, a quick reminder to you, ladies and gentlemen, if there are still open topics you would like to discuss, just let us know via your virtual hand or in the chat. Let's wait a short moment. Maybe another question pops up. It seems everything is answered so far. We will come to the end of today's earnings call. Thank you so much for your participation and for your showing interest in q.beyond AG. Should further questions arise at a later time, please feel free to contact Anna Tui from Investor Relations. If you're joining the Hamburger Investor Days on August 27th, q.beyond AG and Mr. Rixen will be there as well. From our side, have a lovely remaining Monday, a good summer season, and all the best to you.
Thank you so much.
Thank you. Bye.
Goodbye.
Bye.