Hey, ladies and gentlemen, and a warm welcome.
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Thanks, Caspar Coppetti.
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I am following the publication of the Q3 figures of 2025.
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We are very—
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Jürgen Hermann , the CEO, Thies Nielsen, and the CFO, Nora Wolters, who will guide us through the presentation and the results in a moment.
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With that, I would like to hand over to you, Thies Rixen .
Yeah, thank you very much. Good afternoon to all of you. Nora and myself are happy to present the Q3 numbers. Headline is "Return to Profitability: What We Aimed For," this year. Positive net income for the group. Q3 is the first milestone to reach it. All what we see is that it will be also the case in Q4. We will present you the numbers right now and give you a little bit of an outlook, what will happen till the end of the year, and how do we start, or how do we manage, next year? Nora has the most of the workload, concerning the figures, so I hand over to her, and I will present the figures of Q3.
Thank you, Thies. Welcome from my side. As you can hear, my voice is not so strong as it normally is. I apologize for that. Let's start with Q3. 2025 is a very special year for q.beyond. We focus action in a stagnant environment, and, in this situation, we return to profitability as we announced. Let's use a quote of Lao Tzu: "Those who know the destination will find the way." This is our clear message we deliver. If you look to the key figures, it shows a significant improvement. Again, the EBITDA increases. We have a positive consolidated net income and an increased free cash flow as well. We deliver, and we are on track. How do we consider the current development? You see two sides of a coin. The confirmation of our strategy is seen in the figures.
We see the increase of efficiency and resilience. Additionally, we took advantage of a tax windfall resulting from the Plusnet transaction. On the other side of the coin, we suffer from economic underperformance, and we are affected, for example, by the situation of the German small and medium-sized enterprises who delay and stop tenders. Additionally, we do not see the EUR 1 billion package from the German government in any tender. The weak economy affects us as well. You cannot always ride into the slipstream. Q.beyond has a clear focus on profitability, and that is seen in our numbers. First of all, I'd like to start with the revenue. We have a resilient business model that is stabilized in a challenging environment as well. Concerning the revenue, we waved off low-margin revenue at the end of last year.
It is not a surprise for us because we planned more profitable revenue instead of an increase. Additionally, our data center is not selling at the same speed as we hoped. There is a reluctance to make decisions among small and medium-sized enterprises as well. On the other side, we notice an increase of our order entry. In Q3, we almost had twice as high as the last quarter of 2024. Concerning the year-to-date, we have an increase of 8% concerning our order entry book. It is a great basis for the next year. On this slide, you see the former quarters and the view of 2025. As you see, we always have a very strong last quarter, and this is what we expect for 2025 as well.
We focus on consultancy and development services, and we notice a strong demand on AI solutions, picking up noticeably, and implementation of tools. For example, our Private Enterprise AI is already sold and increases in development. On the medium term, there will be use of technology as well along the entire value chain. If you look, for example, at SAP, there's a prioritization of companies in the S/4 migration for the next three years. We expect a strong Q4, which is important if you look at the guidance later. We report two segments: consulting and managed service. I would like to start at first with consulting. In this quarter, we doubled our earnings. The margin grew up, and you see a remarkable improvement in our earnings.
The memorable upskilling in the last year of the q.beyond Academy and the systematic performance management is very visible in our improvement. Additionally, we had a lot of contract extensions and won new customers. Our second segment is Managed Services. It is relatively stable of margin despite reduced revenue. As I mentioned before, we focus on high-margin business. Additionally, we invested in our Portfolio Cube and AI cases. You see a lower margin in this quarter. On the other hand, we have the same situation in Consulting, an increasing booking of contracts. We are based very well for the next year. 2024 has a clear goal for us: a positive consolidated net income. On this slide, you see the P&L with the most important positions. What is important to know?
We consistently invest in AI, especially our private AI and Private Enterprise AI, and develop our Portfolio Cube. We are proud first customers take place in the Private Enterprise AI, and so we make significant progress in AI and improvement for our customers and their benefits. Another positive effect we had is the tax windfall, which you see in the other operating result as well. Furthermore, I'd like to point out that we make at the moment many digitalization projects. As you may know, we invest in a new ERP system and in two other digitalization projects. This is an amount of more than EUR 1 billion that we invest in processes and improvement for the next years. Our last financial figure is the free cash flow. Traditionally, Q3 is a very weak quarter.
In the whole year to date, the free cash flow is about EUR 3.6 million, so, it's increasing as well. It has to be regarded that we had higher expenses for investment at digitalization this year and reduced liabilities as well. Our net liquidity is among EUR 41.3 million this year. That means a lot of possibilities for us for share buybacks, dividends, or M&A. At the moment, there's no final decision. We want to take advantage of all this possibility and will inform you of the next steps. Sustainable success comes from sticking the course in difficult times. We are very proud to confirm our guidance today. My message is very clear. As you see on the slide, all of our financial figures will be reached at the end of the year.
The revenue will be at the lower end of the guidance and the EBITDA and the consolidated net income as expected. It is a great message for you. We are on track. We deliver. We are looking very positively for Q4. With this message, I leave it to Thies.
Yeah, thank you, Nora. So what's the plan for this year and also for next year? We will, point number one is profit over growth. This is the case, will be the case also for the future. Near and offshoring, we are now at 20% or will be at 20% international delivery capacity, let's say, 30% is the near-term goal. On top of it, we will start, we hire ourselves or people for the Baltic market as well for the Spanish market. We expect the first revenues to come maybe this year, for sure next year. We expect, let's say, an impact, the first impact, Q3, Q4 concerning the top line next year. Automation is driven by AI. Nora mentioned it. We invested this year in the foundation of it.
We in the data hub, a new ERP system so that we can use AI because now we are end of the year, we will be fully digitalized. There we invested on top of the million, we invested in the foundation, we invested again in AI for us and also for the customer, for the customer platform and in competencies. So that we have a share of the AI revenue next year. This is three and four, number three and four. Number five is we also start to invest heavily in our portfolio upgrade, mainly for managed service, which we call internal cube. This means AI in every service.
AI toolchain in every service, and on top of it, all what is security, what is security needed, and all what is needed from the regulation for banks, insurance companies, or others like this NIS or DORA, and the DORA NIS framework. With that, we will be able to drive efficiency and also to win businesses. When we look at our order entry, we see 8% more than last year compared to last year. We're aiming for, let's say, EUR 180 million order entry this year, which will be for q.beyond, a record figure. Our midterm goal remains unchanged. We will, let's see where we end up this year, 7%-8% EBITDA positive net income for the group. We aim for 10%.
The new strategy 2028, we will release Q1 next year for the next three years over 2026, 2027, 2028. In this period, we try to reach 10%. With that, we like to close this conference call and happy to get your questions. Thank you very much.
Yes, thank you very much for your presentation. We will now move on to the Q&A session. For a dynamic exchange, we recommend to ask your questions personally via the audio track. To do this, just click the raise hand button. If you do not have the opportunity to speak freely, you are also welcome to place your questions in our chat. With that said, I can already see one question in our chat box. Let me read it out loud. Is the tax windfall profit of EUR 2.8 million in the EBITDA and the EBIT number included? If so, adjusted EBITDA and EBIT is much weaker, correct?
Yes, it is.
It's included. It's included. I like to take a broader, broader picture. We had several effects out of the Plusnet transaction in 2019. You all know that, in tax questions, it's not easy to say. They are included. On the other hand, we have to cope with a weak economy and weak customer demand on a plus. We invested, as we said, in the AI foundation, in AI cases, and in the portfolio, which will help us in the future. Yes, there's a windfall. No, this is included in the numbers and will help us, it helps us in Q3, but all the investment we took will help us in Q4 and so on. In Germany we say, [Foreign languate] .
I can't translate it, but it's in business sometimes, it's on the right side of the corner, the impacts.
Yes, thank you very much for your question. We do have a raised hand as well. Mr. Nielsen, you can now unmute yourself, please.
Perhaps you can hear me now?
Yes.
Yeah.
Great. Thank you. I want to start with the future outlook here. I mean, despite having perhaps despite the softer quarter this time adjusted for that one-off, I mean, you sound quite optimistic about both next quarter and also in looking into next year with the order book and so on. I mean, do you think that is enough to show positive revenue growth despite the focus on profitability?
Yeah. We will show some growth. I mean, we will, I think the market, there was a lot of reluctance in the last quarters. We all suffered from it. There are a lot of deals postponed. They cannot be postponed forever. At some point in time, there will be investment and this will, let's say, drive our numbers. For next year, we will see growth.
It will be not double digit, for sure, but there will be growth. The market, let's see where the market is heading, 3%-5%. I think it's realistic. Let's see where we end up in the final numbers for next year. It's hard to say, to be honest, but we are not, we have done this revenue cut this year where we cut out, let's say, bad revenue. This will not happen again. On this foundation, on this basis, we will grow the business next year.
Okay. Great. Also, I mean, taking off the one-off in this quarter, I mean, you need a quite substantial improvement in Q4 in order to reach your guidance. You seem quite confident in reaching that.
Could you perhaps elaborate a bit what underlying drivers that will take you there in addition to seasonality?
Yeah.
It's every year the same structure that there will be several impacts. There are a lot of projects that will be built where the work is already done, where we get the revenue and profit. This is one effect. Then there is a higher utilization overall. Plus there are some license deals, especially in the SAP arena where we, if we close them, then this revenue equals profit. This is, let's say, every year it's the same rhythm, and this will help us as in last year or the year before to have much better numbers than in the quarters before.
Great. That's all for me. Thank you very much.
Thank you.
Yes. Thank you very much, Mr. Nielsen. We have not received any further questions in the meantime. Are there any? Please put them into our chat box or raise your hand. I think Mr. Rixen , Ms. Wolters, everybody seems perfectly happy. There are no questions so far. Oh, with that said, we just received a question. Was the investment of EUR 1 million done this quarter?
Yeah, there are two investments. There's one we did to this, which was included in the plan. This was a foundation. Then the other investments have been done in the quarter. When we sum it up, it's another, it's above EUR 1 million. So there's one, EUR 1 million, over EUR 1 million. We never disclosed this. I think the whole is in the foundation, digitalization foundation. Another has been done in the quarter.
The same person has another question concerning that topic. Was this CapEx or OpEx?
OpEx.
All right.
This is for the future. This is something where we will have the impacts, the positive impacts in the future. It's mainly OpEx because we use our own consultants, our own technology specialists to build toolchains, processes. For example, the features for the AI platform, which we released in, on, was it Q2, April, though we optimized or we put some more features in it. This will hopefully help us in the future.
Perfect. Thank you so much. There are no further questions so far. Please, ladies and gentlemen, if you have any further questions, please put them into the chat box or raise your hand via the raise your hand button. I think there are no further questions. I would say therefore we come to an end of today's earnings call. Thank you for your participation and your questions. If there are any further questions that arise at a later time, please do not hesitate to contact investor relations. A big thank you also to you, Mr. Rixen and Ms. Wolters , for your presentation and for taking the time to answer the questions. We wish you all a good remaining week. Goodbye and see you next time.
Thank you.
Goodbye.