Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Datagroup SE (FRA:D6H, Financial) reported a 7.5% sales growth in Q3 compared to the same period last fiscal year, indicating strong business performance.
- The company achieved a record year with EUR41 million in additional business, surpassing their targets for new customer and cross-selling revenues.
- Datagroup SE's CORBOX portfolio continues to provide stable, long-term contracts, contributing to predictable and stable revenue streams.
- Investments in AI and cybersecurity are already yielding results, with significant automation in IT service production and new contracts in cybersecurity.
- The company is confident in meeting its revenue guidance for the fiscal year, projecting between EUR510 million to EUR530 million in total revenue.
Negative Points
- Personnel expenses have increased due to investments in AI, cloud, and cybersecurity, impacting the EBIT margin, which is lower than the previous year.
- Rising financing costs due to higher interest rates have affected the company's financial performance.
- The company faces EUR16 million in headwinds from transformation revenues, which are being phased out.
- Goodwill and financial liabilities have increased due to recent acquisitions, impacting the balance sheet.
- The delay in revenue realization from new contracts, due to the ramp-up period, affects immediate financial performance.
Q & A Highlights
Q: Can you provide an overview of Datagroup SE's business model and its stability in challenging economic times?
A: Andreas Baresel, CEO, explained that Datagroup SE is a leading German IT full-service provider focused on mid-sized companies. The company operates its CORBOX portfolio, a standardized IT service setup, which ensures stable and long-term business through contracts typically lasting two to five years. This model provides resilience even in challenging economic conditions.
Q: How has Datagroup SE performed financially in Q3 and the last nine months?
A: The company reported a 7.5% sales growth in Q3 compared to the previous year and a 2.9% growth over the nine-month period. This growth is attributed to a focus on organic growth and successful new business acquisitions, including EUR23 million in new customer contracts and EUR18 million in cross and upselling.
Q: What are the key strategic investments Datagroup SE is making for future growth?
A: Datagroup SE is investing EUR6 million in future technologies, particularly AI, cybersecurity, and cloud services. These investments aim to support accelerated growth and maintain competitiveness by integrating the latest technologies into their service offerings.
Q: How is Datagroup SE leveraging AI in its operations?
A: The company has implemented its own AI technology, HIRO, to automate IT service production. Since January 2024, over 7,000 tasks have been automated monthly, enhancing service delivery capacity without proportionally increasing staff.
Q: What is the outlook for Datagroup SE's financial performance for the rest of the fiscal year?
A: Datagroup SE is confident in meeting its revenue guidance of EUR510 million to EUR530 million and EBITDA guidance of EUR77 million to EUR81 million for the fiscal year. The company expects continued growth from new contracts and ongoing transitions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
