Welcome, ladies and gentlemen, to the H1 Earnings Call 2026 of q.beyond AG. I would like to welcome the company's CEO, Thies Rixen, and CFO, Nora Wolters, who will guide us through the figures in a moment, followed by a Q&A session with audio line and chat. With that, I already hand over to you, Mr. Rixen.
Thank you, Mara. Welcome everybody to the Q2 call. As usual, Nora and myself will present it. I will start with a short introduction and setting the scene. Nora will give you more insights into the Q2 numbers. We called it the accelerated AI transformation, in Q2. What's the current status? We are better with AI and the AI progress as planned, but still we are, let's say, suffering weak demand from our clients, from the German or European Mittelstand. Adjusted EBITDA is as previous level, if you count the EUR 1 million or EUR 900,000 transformation costs we invested in transferring our service desk to Romania and puts AI technology in it. We have EUR 2.5 million EBITDA, EUR 43 million revenue and a net income of break-even level. For us, I would say it's disappointing.
We planned different numbers and a different performance. One part is for sure, it's the economy one part. The other part, it's ourself. I will come to that later. Good is that we have still a full order book. We did more order entry in Q2 as last year, roughly EUR 2 million, or roughly 10%. Still we are, let's say, we are impacted by last year. We see that we gain new orders, but still the signing is underway. I would say it's getting more and more complicated to get the signature under the contract. We know what is coming, and we know that we have a funnel of EUR 200 million, which we will harvest in Q3 and Q4. You know that from our business model, that we have stronger numbers, especially in Q4. This we will deliver this year also.
As we said in the press statement, the AI, let's say, impact is on the positive side, is better than we planned. If you look at operations of the managed service business, you see that, in the middle of the chart, we automate a lot of workflows, a lot of work, 6,000 hours per month. It's still growing. This is, right now it equals to 40 full-time equivalents, and it will be more and more every month. Therefore, we decided to reduce the workforce this year, but we will come to that later on. This is good. The other thing I just said is that we already invested EUR 900,000 in the enlargement of our international tech hub with Romania, and also to put our service desk, which we have for our clients in Germany. We transformed to Romania and invested in AI technology to be more efficient there.
You see that we will have end of the year, 50 employees. This, let's say, measure would save us EUR 1 million. We have said that we will save next year with all the transformation we do this year, we will save EUR 7 million in total of personal cost. We will have more efficiency, and Romania will be the, let's say, healthcare or SAP healthcare competency center. You have seen that we bought the 51% of GITG, SAP healthcare specialist, and the workbench we will establish for new clients in Romania. Having said that, this is in a nutshell, 10% in managed service already gained. We are turning the company more and more an AI-first company. Every, let's say, process should be AI-driven. We will still be a service provider where the human being is important.
On the other hand, we have to be more efficient and to be more profitable. AI will be one of our most important levers for the future. The EUR 900,000 we already invested plus the EUR 4 million-EUR 5 million which we will invest this year will lead to the EUR 5 million-EUR 6 million investment. In this year, EUR 1 million is still in the books, and this will save us for next year EUR 7 million at least in personal cost. We will do it once this year and have the EUR 7 million every year for the future, this is our business case we just announced today. Putting all that into account, Nora and myself, we decided to adjust the guidance a little bit. We are now expecting in revenue around EUR 180 million and an EBITDA, let's say, including the EUR 6 million of investment from EUR 3 million-EUR 7 million.
There's also a one-time effect. Next year we are on track. Yes, we will be on track as we have been in the last few years. Again, for us, it's a movement we have to take to be better in 2027 and 2028 onwards. With that, I'll hand over to you, Nora.
Thank you, Thies. A warm welcome from my side as well. Before I take you through the details of the quarter, let me start with what matters most. The second quarter confirms our consult-to-operate model. We are growing in consulting. We are earning significantly better margin than a year ago, and our recurring revenue gave us the ability to drive this transformation entirely from our own resources. Let me show you what that looks like in the numbers. Group revenues came in at EUR 43 million in the second quarter, after EUR 44.4 million a year ago. This decline of around 3% stems entirely from the critically sensitive managed service businesses. I will come back to that in a moment. What really matters is the structure underneath. Our consulting business grew by 5% to EUR 16 million. This is precisely the mix shift we are aiming for.
The growing part of our business is also the higher margin part. Underneath of that sits a solid foundation. 71% of our revenues are recurring, 68% are generated in our five focus sectors, our sales organization is delivering after its realignment. New orders rose by 12% to EUR 20.6 million, and our sales funnel now exceeds EUR 2 million. This sale success is tangible. In the past three months alone, we won, for example, new customers like Dr. Beckmann and Barbarossa Bäckerei, among others. Two strong names from the German Mittelstand. These wins show that the realignment of our sales organization is working. Not a promise, but in the order intake. In short, in a market where German SMEs are barely investing, we are growing exactly where we want to grow. Just how well this mix shift is working is shown in the margin.
Gross profit in consulting rose from EUR 2.6 million- EUR 4.2 million. It almost doubled. The gross margin jumped from 15%-26%. With revenues up 5%, that means the leverage comes from working better, not just from working more. Four drivers sit behind this. First, significantly improved team utilization. Second, a rising demand for AI consulting. Third, the growing demand for S/4 transitions. A wave with a fixed deadline and mainstream maintenance for SAP ECC ends in 2027. At last, high margin one-off license revenues. Let me make the AI demand tangible for a moment. When it comes to artificial intelligence, our customers are wrestling with three problems. First, their data must not leave their premises. Second, they need to comply with the AI Act, at last, they struggle to move AI from pilot to stable productions. We already have market-ready answers to all these three.
With our Private Enterprise AI, we have been offering the sovereign data platform since 2025. Private, local, made in Germany, 100% data sovereignty, including consulting service, training, and GPU-as-a-service. With AI Act as a Service, we launched a tool this year. This is unique in the market. Companies obtain a risk classification to their AI deployment. Bookable online, usable without any integration and Managed AI Workflows. SLA-backed workflow automation operated 24/7 in our German data center are going to market now. The next steps in managed services with AI will follow in the next quarters. Our path towards to becoming the A operating partner of the German Mittelstand. Let me be transparent there. The license effect is a one-off, but even without it, the margin is well above last year's level. In the structural drivers, AI consulting and S/4, we carry as well through 2026.
From this quarter, GITG adds a further building block proprietary IP for the succession of SAP IS-H in the German market. This affects more than 500 hospitals. Now to managed services. This is where the investment reluctance of German SMEs is most visible. Revenues came in at EUR 27 million, after EUR 29.2 million a year ago. The gross margin before the one-off provision stood at 19% after 22%. Three factors weigh on the segment. Subdued new business, price adjustment for existing customers in a sluggish economy, quite deliberately, our ramping up AI investments. This is exactly where the turning point lies. The increasing use of AI is already lifting our efficiency measurably by more than 10% in managed services. That is not an announcement, this is a measurement. From the third quarter, our new site in Cluj, Romania, takes over AI-assisted 24/7 support.
This alone will generate savings of more than EUR 1 million a year from 2027, by boosting output by 25%. We are not keeping this efficiency to ourselves. We already automated 300 workflows internally with another 1,000 in development, as Thies already said, saving more than 6,000 hours every month. This is precisely these field-proven workflows that we will start marketing to third parties in the third quarter. What saves us cost today becomes revenue tomorrow. We are not hiding this weakness. We are systematically rebuilding the segment. AI is changing the cost curve of this market, and we have decided to be on the right side of that curve. What does all of this mean for the income statement? My message up front: every deviation in this table has an explanation, and none of them is operational weakness. EBITDA came in at EUR 1.6 million.
This includes a provision of EUR 0.2 million for the first stage of our AI transformation, the restructuring of our service organization. Adjusted for this, EBITDA stood at EUR 2.5 million, close to last year's level. The adjusted margin unchanged at 6%, and adjusted consolidated net income was zero, exactly in the prior year. Two lines deserve a closer look. Sales and marketing expenses rose from EUR 2.9 million- EUR 3.7 million. This is our deliberate investment in the realignment of our sales organization, and it's already paying off. You can see it in the 12% growth in new orders. In return, we reduced general and administrative expenses from EUR 3.9 million- EUR 3.4 million. This counter movement shows one thing: we are in control. The overall math of this transformation is simple.
One-off costs of EUR 5 million- EUR 6 million stand against savings of around EUR 7 million from 2027 per year. The payback period is less than one year. 2026 is the year of transformation. 2027 is the year of harvest. We are funding this transformation entirely from our own resources. Net liquidity stood at EUR 41 million as of June 30th, just EUR 1 million below the year-end figure, even though we paid out variable remuneration of EUR 3.9 million during the quarter. Compared with the same date last year, net liquidity actually increased. This corresponds to EUR 1.65 per share, with an equity ratio of 70%. The free cash flow of minus EUR 1.6 million in the quarter is essentially a timing effect, not a structural outflow. In the third quarter, the purchase price for GITG will affect liquidity. That is planned for and fully funded from existing resources.
This balance strength gives us the freedom to do three things in parallel. First, fund the transformation. Second, grow inorganically with GITG. At least at the end of August, once the statutory waiting period has expired and subject to the decisions of the management and the Supervisory Board, buy back our own shares. We are acting from a position of strength. With that, I hand back to Thies for the road ahead and our 2028 strategy.
Thank you, Nora. What will remain unchanged is our Strategy 2028. We said three things in March. One is the sector focus. We like to enter two industries, healthcare and energy, to drive or to harvest two macro trends. With the GITG acquisition, we did the first, and we will take some time to integrate it or to find a way, and then we will target the next target for the sector focus. Enabling AI, I think we talked a lot about, to give you more details what our plans are. Internationalization, we already started our go-to-market activities in Latvia and Spain, and with Romania, the setup is done, and we are hiring people there. It's paid off. Here you see some details about GITG. I think we already stated this in our press statement. Maybe my summary is the market is there.
There's this SAP. The SAP solution will be out of the market in 2027, latest 2030. That's the number two. The market is with 2,000 hospitals in the DACH region. It's huge. 500 of them have the SAP solutions. They all need to do something. This is what we'd like to tackle. This is number three, with GITG, with their own IP, we have a foot in the door. It's like an iceberg, the revenue per hospital is one thing, is the SAP template, the healthcare SAP template. But the majority of the business is the normal S/4 transformation and cross-selling. Cross-selling we will do concerning Microsoft business or security. For us, it's more a sales machine than the business by its own. That's number one. Number two, as you just said, Nora, we have several services live.
This is not q.beyond internally, this is what we offer to the market. We launched our Private Enterprise AI, we launched the AI Act as a Service. We already have launched the Managed AI Workflows, and then we will launch in Q4 the orchestration platform for our clients. All what we learn internally will be incorporated for our clients also. As we said, we expect 10% of the revenue be AI-driven in the future. Internationalization, share of the international quote or share quote is important for us. I think we will be, end of this year, roughly at 30%. We are gaining for 40% in 2028. This is well on track. Here you see the add-on Nora just said. The capital allocation, we promised that we will do it this year, we will do it this year.
We have done all the necessary steps. We have to wait till the 17th of August. There's this waiting period, then it ends. We will take the decisions as management and Supervisory Board. Let's say it's already decided. We will start the buyback the week after. That's it. We can buy 2.5 million q.beyond shares back, which is our goal. In summary is these three elements. Organic growth. Yes, we have to do more. Pipeline is there, our funnel is there. M&A, let's say, is working. We're very glad that the GITG acquisition is done. We will find also a suitable next target for energy when the time is coming.
The AI operating partner is underway to build it. We see that we have trust in the market and trust from our clients, and we will have more of them in the near future. With that, I would say we're happy to take your questions, and thank you for your time.
Yes, thank you very much. Ladies and gentlemen, now it's your turn. We're opening up the Q&A session. If you would like to ask your questions via audio line, please click on the Raise Hand button below. If you are dialing in by phone, please press star key nine to raise your hand and star key six to unmute yourself. Additionally, you are also welcome to place your questions into our chat box, and I will read them out loud for you. We have received a risen hand by Mr. Nielsen. Mr. Nielsen, I just sent you an invite to unmute yourself.
Thank you, [I'm here now].
Yes, hello.
Hi, thanks.
Hi.
Looking at your numbers, Consulting, in that part, there's really no signs of a weak market. The numbers are strong, at least. In Managed Services, it's quite the opposite. One would expect managed services to be more stable in a soft market and consulting perhaps to take a bigger hit. It's the opposite. Could you help us understand the reasons behind?
There's two things. One, we worked for the last two years for consulting. We worked, let's say, the last two years heavily to get the structure right and also the resources we needed. The profit gains are because of better It's a better mixture. We worked on the last two years. This is one part for consulting, the other one is SAP. The transformation, I would say, it's more or less independent from the market, and we have a good position there, and it will be even better with healthcare. We are gaining from that. Let's say we did the adjustments for consulting. We did during the last two years. This is now paying off. This is one. For managed service, to be quite open, there are two things.
One thing is that on the sales side, it's taking longer as expected, and there is some reluctance to take bold decisions on the customer side. On the other side, we underestimated, at least for the budget this year, that the churn and the impact of the churn for this year, the customer churn. There's always churn each year, we know that, but normally we are able to overcompensate it. Therefore, this has an impact on the managed service side. It's customer reluctance plus some things which develops in different ways as we planned.
That's clear. Thank you. Regarding the gross margin in consulting, it was very strong in this quarter. You mentioned some one-offs license revenue. Could you give some kind of quantification of how large that impact was?
I don't know. Do we have the details?
A lower EUR 1 million revenue.
Which equals more or less also profit, huh?
Yes.
Yeah.
Okay.
Profit and revenue.
Great. Lastly from my side, I assume that GITG is included in the new guidance, so the underlying cut is slightly higher. Is that how I should read the numbers here?
Yeah, it's included. It has an impact. We can only consolidate five months right now. There'll be a couple of millions of revenue and not even EUR 1 million in profit. It's included. It has an impact, but the impact is small.
Great. That's all for me. Thank you very much.
Thank you.
Thank you so much for your questions. We have another risen hand by Mr. Sennewald. I just sent you an invite to unmute yourself.
Yes. Thank you very much. I hope you can hear me. Hello, Nora. Hello.
Yeah. Hi
Follow-up on managed services. Regarding the price adjustments in the existing base, are you largely done with them now, or do you have still some renewals coming up there?
There's always some renewals every year. The major ones are done. We did Röhlig, the largest customer last year, and we did Tchibo this year. Fresenius as the third-biggest customer is end of this year, but we are in negotiations, there will nothing really happen there. There are smaller ones, but this is, I would say, under control in a good way. This is always the case, and the pressure will be there. It was always there as a price pressure. This is a normal way of doing business. What is unnormal for us, as I said, is that we have not been able to overcompensate the effects. Therefore, we are now quite sure that the funnel is big enough and that we have enough chances, and the deals are there. We have always two phases.
There's a yes from the customer, and then it's a yes, then it's a signature under the contract. We have several yes already in the books, and we are working out the last details. Then the next thing is that we are, as we said, we will adapt the related cost to the managed service business, and then the profit will be different than this year.
You expect it to turn starting next year?
Yes. As we said. We do the measures now, get the hit now. It was not an easy decision, but it is better to have it now and then be prepared next year and the year after.
All right. I do not know if you said it, but on consulting, you mentioned those one-off high margin revenues. Can you size those?
Just I already said, a lower million sum.
Okay. All right. What would you call it
What is important for the SAP license, this is SAP licenses we sell.
The transformation will last at least for the next two to three years. We expect, and we have found now the right answers to the market. We expect this will not be only this year. We see it for at least two years that we can have this kind of mixture as we have this year. Because the clients are waiting what SAP is doing, the last chance they have is 2030 now, in four years. There will be the majority of the transformation projects, and we will be one of the partners doing them for the German Mittelstand.
Yeah, okay. Looking at the [26%] now, that's of course then not the base level. What would you regard the current base level of the consulting margin, gross margin?
At least above 20%, there we will stabilize it. 21%, 22%, 23%, this area. Gross margin.
Yeah. Of course. On the process automation, you mentioned in the report that you, and you mentioned also in the presentation, that you're writing automated processes to the tune of equivalent to what 40 FTE can do. You want to improve that even further, you mentioned. How many people you plan to let go? How much percent of the workforce?
With the current measurement, we said 70%, yeah?
Yeah.
70%, [7-0].
70%, 70%-80% .
Yeah.
This is a mixture of, let's say, layoffs and then you always have some employee churn, where we will not hire new ones. We have the-
Yeah.
Retirement, retirement waves going on in Germany for the baby boomers, so not only this year, next year after. This is a basket of several measures. In total, it will be 70%- 80% headcounts this year.
Additionally, this means 10% of the German employees.
10%?
10%.
That's probably the EUR 4 million-EUR 5 million additional one-offs cost you planned for second half, right?
Yes.
Yes.
All right. Okay, last one. Just your guidance for this year, looking into your midterm guidance, those EUR 250 million sales target you have, that's roughly EUR 75 million, EUR 80 million you got to add inside two years. Can you give me the building blocks of this? Yeah.
Yeah. This is M&A. The building blocks are organic growth. Organic growth, well, we can put a question mark on it. We expected, as we put out the strategy, that at least the German Mittelstand will recover sooner. This is building block number one. Building block number two is inorganic growth, so acquisitions. The third one is new AI business. I'm quite sure that the plans for number one, inorganic growth, will work, and also for AI. I would put a little question mark on number two.
The organic growth.
A bit rough on the numbers here, like saying those EUR 75 million two years, starting from Q4 2026. How much of that is, you just said organic growth, you can't be too sure about that, so let's see. How much further M&A you want to add, or M&A.
Ask me next year again, please.
Yeah, you have the midterm guidance out now, right?
Yeah.
What's your feeling here?
Ask me, please, next year again.
All right. Fair enough. All right, Thies, Nora, thanks for answering my questions. I will move back to the queue.
Thank you. We have another raised hand by Mr. Preis. You may unmute yourself now. I just sent you an invite.
Hello, thanks for taking the questions. I have a few, if I may. To start with, I would like to express my congratulations. I don't want to seem arrogant by any way. The linguistic improvements you've made, Nora, since the last call are really day and night. It's a pleasure to hear that, because facts matter, of course, but communication is what is understood. Thank you very much for doing that. To the questions. Firstly, very simple one, are you employing a mix of AI models? Is that basically something like Claude, or can you give us any specifics on what you are using practically? The second one, regarding the share buyback. Maybe I'll ask that after the first quick answer.
Yeah. We are employing several ones. On a limit, we are employing several models. It is for the, let's say, office workers, they use Copilot from Microsoft to organize their work, let's say. For the process automation, we use our own model, let's say open source models, which we operate on our own. Open source models. For some special things, we are working with Anthropic, with Claude mainly. We have three models. One is from the office workers, it is Microsoft, then for the main part, we use open source models, which we train by ourselves, and we are hosting it by ourselves, and the third one is Anthropic, Claude.
Data security and data privacy are your main focus on that?
Yeah, sure. Why we are doing it, one thing is to be secure and compliant. The other one is total cost control. The third one is we like to build a portfolio for ourselves that we can offer also to our clients. This on a European scale. As we said, we will roll out all what we did, what we develop here in Germany, we will roll out all the AI services, we roll out to Latvia and Spain.
Basically you offer Copilot as it is and customize everything else?
Yes.
What is the advantage for a customer then to order Copilot via q.beyond and not directly with Microsoft?
No, okay. It's for ourselves. Ourselves, we will not offer Copilot for the market. What we offer to the market, we develop ourselves, and this is based on open source. The Copilot, it's more an introduction. We will offer what everyone can offer because it's a Microsoft product. It's more enabling workshops, train the people and all the other stuff. Normal consultancy business for Copilot.
Thanks. A quick follow-up on that easy topic, still, which just cropped up into my mind. In the last call, you said you'd expect it to enhance the usage level of your data center in Hamburg, because of that trend to be a bit more independent from U.S. companies. Did you make any progress on that front?
We sold, let's say, 20% of it. We sold 20%. We expect to sell more during the year. There is some progress, not as we like it to be, but step by step.
When do you expect it to be fully rented out?
Let's see. The pipeline, with the pipeline, we have a chance to sell 100% of the free capacity till the end of the year. Let's see if the deals are coming or not.
No, well, that's good to hear. Thanks a lot. Now to the more imminent and more prominent topic, the buyback. First question regarding that is my understanding is that you were blocked including the 17th of this month from really buying shares. It wouldn't be my understanding that you would be blocked from taking the decisions already now or earlier than the 17th, be that on C-level or be that in the Supervisory board. You just may not do it before that waiting period is over, right?
No, unfortunately not. We have to wait until this waiting period is closed on the 17th of August, the decision can be made at the end of August.
Can we understand that to be a formal timeline then?
Yeah, that's formal. That's all the formal stuff. Nora is right, there could be. I don't know what it is in English. We have to wait, but as I said, we took already the management decision. We are aligned with the supervising board. We just have to wait. There are some formal things we have to cover, and we will cover them and then start, let's say, end of the month.
Good to hear. Second important topic is you imposed yourself regulations also for a tender, which are similar to the safe harbor provisions, not being able to pay more than 10% premium. I understood during your presentation now that it's your clear and present intention not only to make a bid for those 2.5 million shares, but to really get them. I also understood that you already checked that legally, that you can do both, buy at the market and do a tender. Is that right?
What we like to do is a tender. What we like to do is the tender. I'm not sure if we can do both. What we like to do is a tender. Yes, the assumption is right that we want to get them, the two and a half million shares, we want to get them. This is also right. Let's see where we end up.
Well, not few people have been buying in at current levels. If you really want to get the shares, the price would have to be satisfactory even for somebody who has entered on a pricier level than today. My personal understanding would be it is imperative to be able to make an offer that is acceptable. 10% from these levels from like [EUR 330] would still be a pretty suppressed level historically. A route that you could consider is buying just normally on or blocks or whatever, to have a level that with an upside of 10% from that point is an acceptable level, so you really get the shares because otherwise you only bid for them.
That's true.
You are considering that route?
I will not go into too much detail, but as I said, we are aiming for the EUR 2.5 million. For us, it's clear that we have to do the necessary steps to get them.
The price for the recent takeover wasn't made public, as I understood, until now. Can you at least give us a rough ballpark figure or even maybe a ballpark figure where you will end up in net cash after the takeover has been paid and after assuming you really get those two and a half shares, where we will end? Will we end at, right now we're standing at 60% of the market cap in cash. Do you have any range or broad, rough ballpark figure estimate? Will we then, after both is paid, stand at 15% or 20% or 10% or 30%? Can you say any rough thing about that?
Starting with the multiple of the EBITDA multiple, I would say it is a market multiple. When you say you pay for consulting business with own IP, you pay between 8x and 12x. It's more the middle of it. For the consulting, the EBITDA multiple and the cash position, I would say would be above EUR 30 million.
After the buyback?
More or less. Roughly.
Oh, glad to hear that. Thanks a lot for everything.
Thank you, Mr. Preis, for your questions. We have one more risen hand by Mr. Kindermann. You may unmute yourself now. I just sent you an invitation.
Yes. Hello. Thank you for the presentation. You just mentioned the cost control regarding the choice of models. I want to ask, as you scale internal AI usage and have already automated the 300 processes, I would expect the usage costs to partly offset the savings on the personnel side. Is this a correct assumption, is this figure already included in your expected savings of EUR 7 million?
Yeah, it's included, and it's much less. The main reason is we are using open source models, which we train by ourselves, and we are very much in control of the total cost.
Yeah.
When I get your question right. The EUR 7 million of savings for next year, the total costs are already included.
Okay. Just because it's open source model, you just have the data center costs, which you
Yeah
own yourself.
Yes.
Okay. Maybe on the timing of the layoffs and the additional one-off costs, are these more in the third or in the fourth quarter?
In both quarters.
Both. Okay.
It depends on the speed-
We get this, and most of them in the third quarter, but the rest in the fourth.
Okay. Thank you. That's it already from my side.
Thank you so much, Mr. Kindermann, for your questions. We have one more question in our chat box, by Mr. Schäfers. He's asking, "Will the current earnings trend affect the planned share buybacks program? I understand that the transformation program needs to be funded, but your liquidity seems still to be sufficient for a share repurchase.
Yeah, it will not have an impact. We will move on as planned. We are aiming to buy the full 10% we are allowed to buy back. There will be no impact on the share buyback program by the current measures.
All right. Thank you very much. We have not received any other risen hands or questions in our chat box as far as I can see right now. I would say with no further questions, we will come to the end of today's earnings call. Thank you very much for your interest in q.beyond AG. A big thank you also to you, Mr. Rixen and Mrs. Wolters, for your presentation and the time you took to answer all the questions. Should you have any further questions at a later time, please feel free to contact Investor Relations. I wish you all a successful day. Thank you and bye-bye.
Thank you. Bye.
Bye-bye