Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cenit AG (XTER:CSH, Financial) reported a 13.6% increase in revenue year-to-date, driven by acquisitions and organic growth.
- The company achieved a 4.3% organic growth rate, despite challenges in the market.
- Annual licenses grew by 10%, indicating strong organic growth in this segment.
- Recurring sales increased by about 12%, as more customers transitioned to the SaaS model.
- The order backlog increased by 44.7%, suggesting strong future demand.
Negative Points
- Cenit AG (XTER:CSH) had to reduce its EBIT forecast due to economic challenges and customer insolvencies.
- The company faced 12 Chapter 11 bankruptcy situations in Q3, impacting revenue and license sales.
- Major customers in the aviation and automotive industries reduced their service usage, affecting EBIT by $1.6 million.
- EPS decreased by 61% due to increased bank interest and minority rights impacts.
- The company anticipates challenges in achieving its Q4 targets due to economic uncertainties and customer reluctance to make decisions.
Q & A Highlights
Q: What makes you confident that the investment environment will improve next year, and can we expect revenue growth beyond the inorganic effects of acquisitions?
A: Peter Schneck, CEO, expressed optimism about future growth, citing the backlog of orders in the aviation industry and the necessity for digitalization in the automotive sector. He acknowledged current economic challenges but emphasized that companies must invest in digitalization to remain competitive, particularly in Germany.
Q: How will internal measures to cut costs contribute to achieving the goals of Senate 2025, especially regarding the EBIT margin?
A: Schneck stated that while they might not hit the $300 million revenue target, they are implementing organizational changes to achieve the lower end of their 8% to 10% EBIT margin forecast. They are focusing on cost savings and operational efficiencies to reach these goals.
Q: What is the current market environment for Analysis Prime in the USA, and how does it compare to Europe?
A: Schneck noted that Analysis Prime is operating in a positive market in the USA, with full order books. However, project starts have been delayed due to the election period. Despite running short on revenue targets, the outlook remains positive, with significant opportunities for growth in the US market.
Q: Can you provide more details on the guidance cut and the cost savings potential without hurting the top line?
A: The guidance cut was influenced by a shortfall in Analysis Prime's revenue and EBIT contribution, as well as reduced services from major clients like Airbus. Schneck mentioned ongoing cost-saving measures, including organizational changes and improved utilization rates, which are expected to continue into next year.
Q: How do you plan to address the underperformance compared to SAP, and are there any plans for stock repurchases?
A: Schneck acknowledged the underperformance and emphasized the need to increase the software portion of their business for better margins. While acquisitions will slow down, the focus will be on improving EBIT through internal changes. There are no immediate plans for stock repurchases, but the company is working on enhancing shareholder value.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
