Datagroup SE (FRA:D6H) Q3 2024 Earnings Call Highlights: Strong Sales Growth and Strategic ...

GuruFocus News
4 min read

In This Article:

  • Q3 Sales Growth: 7.5% increase compared to Q3 of the last fiscal year.

  • Nine-Month Sales Growth: 2.9% increase over the nine-month period.

  • New Business Order Entry: EUR 23 million from new customers and EUR 18 million from cross and upselling, totaling EUR 41 million in additional annual contract volume.

  • Revenue Guidance: EUR 510 million to EUR 530 million for the full fiscal year.

  • EBITDA Guidance: EUR 77 million to EUR 81 million for the full fiscal year.

  • EBIT Guidance: EUR 43 million to EUR 46 million for the full fiscal year.

  • Personnel Expenses: Increase due to investments in AI, cloud, and cybersecurity experts.

  • Goodwill Increase: Due to acquisitions of CONPLUS, iT Total AG, and ISC.

  • Operating Cash Flow: Solid performance despite a EUR 4 million decline in factoring volume.

  • Investing Activities: EUR 27 million for acquisitions and EUR 12 million in CapEx linked to new contracts.

  • Net Financial Debt to EBITDA Ratio: 2.0.

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) 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.

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