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Original-Research: q.beyond AG - from NuWays AG

13.08.2024 / 09:01 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS
Group AG.
The issuer is solely responsible for the content of this research. The
result of this research does not constitute investment advice or an
invitation to conclude certain stock exchange transactions.

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Classification of NuWays AG to q.beyond AG

Company Name: q.beyond AG
ISIN: DE0005137004

Reason for the research: Update
Recommendation: BUY
Target price: EUR 1.10
Last rating change:
Analyst: Philipp Sennewald

Q2 largely in line with expectations + strong order intake

Q2 sales increased by 1.8% yoy to EUR 47.3m (eNuW: EUR 47.4m; eCons: EUR 47.3m),
which was again driven by the Managed Services segment, where revenues grew
by 6.1% yoy to EUR 33.7m (eNuW: EUR 33.2m). On the other hand, the ongoing
economic weakness continued to negatively impact on the Consulting segment,
as the business is usually characterized by shorter-term contracts compared
to the Managed Services segment. Segment revenues hence decreased by 7.6%
yoy to EUR 13.5m (eNuW: EUR 14.1m), which was also driven by the optimization of
the consulting portfolio (i.e. reduction in low-margin projects) in
accordance with the company's mid-term strategy. Yet, the segment's gross
margin came in 0.9pp weaker yoy with 6.7%. The Managed Services margin also
came in weaker at 20.7% following increased license costs, especially
VMware. Overall gross profit came in at EUR 7.9m (-4.7% yoy), implying a 15.7%
margin.

A clear highlight of the release in our view was the strong order intake of
EUR 54.2m (+36% yoy, 1.15x b-tb), providing sound visibility on future growth
momentum. A recurring revenue share of 75% (Q1: 74%) should provide
investors with additional confidence.

Despite the weaker gross margin, Q2 EBITDA strongly improved by 113% yoy to
EUR 2.2m (eNuW: EUR 2.1m; eCons: EUR 2.2m), implying a 4.7% margin. The drivers
behind the improvement were significant reductions in sales & marketing
(-23% yoy) as well as G&A expenses (-22% yoy) following the successful
implementation of the One q.beyond strategy.

Against this backdrop, management confirmed the FY guidance of EUR 192-198m
sales, EUR 8-10m EBTIDA and positive FCF. As the sales (eNuW: EUR 194m; eCons: EUR
195m) and FCF (eNuW: EUR 6m; eCons: EUR 4.4m) should be clearly in reach, we
even expect the company to achieve the upper end of the EBITDA guidance
(eNuW: EUR 9.7m; eCons: EUR 9.3m). While this might look ambitious given H1
EBITDA of EUR 4.2m, we expect ongoing efficiency gains (i.e. higher
near-shoring ratio: FY target of 17% vs 12% at H1) as well as scale effects
in the Managed Services segment.

The stock remains a BUY with an unchanged PT of EUR 1.10 based on DCF.

+++ For further information on the company's "Strategy 2025", there will be
a roundtable discussion with CEO Rixen and CFO Wolters today at 3:00 p.m.
(LINK). +++

You can download the research here: http://www.more-ir.de/d/30445.pdf
For additional information visit our website: www.nuways-ag.com/research

Contact for questions:
NuWays AG - Equity Research
Web: www.nuways-ag.com
Email: research@nuways-ag.com
LinkedIn: https://www.linkedin.com/company/nuwaysag
Adresse: Mittelweg 16-17, 20148 Hamburg, Germany
++++++++++
Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss
bestimmter Börsengeschäfte.
Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben
analysierten Unternehmen befinden sich in der vollständigen Analyse.
++++++++++

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1966387 13.08.2024 CET/CEST

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