FY24 sales came in at € 193m, up 1.7% yoy. Top-line was once again driven by the Managed Services segment, where sales increased 4.9% yoy to € 135m. Notably, QBY was able to significantly increase the implementation of AI based solutions in the fields of knowledge and records management. Further, the increased focus on cyber security and integrated software development beared fruit in FY24. On the other hand, Consulting showed declining sales (-5.0% to € 57.3m), which was mainly driven by ongoing investment reluctance in the German Mittelstand. Moreover, QBY continued to give up non- and low-margin projects.
The latter already became visible in a strongly improved gross margin of 17.9% (+3.4pp yoy). This was further driven by a reduction of external personell. Going forward, we expect a further gross margin expansion based especially on an increasing near- and off-shoring ratio (management target of 20% in FY25 vs 14% in FY24).
Accordingly, EBITDA came in strong at € 10.5m, implying a 5.5% margin (+2.5pp yoy), beating our (€ 9.2m) and street's (€ 9.2m) old estimates as well as the company's guidance of € 8-10m. Besides the improved gross margin, efficiency measures in SG&A were the main drivers of the strong improvement. In fact, EBITDA increased 83% yoy even including last years positive net one-offs of € 3.3m.
The strong released was highlighted by a substantially improved FCF (excl. leasing expenses) of € 7.0m (eNuW: € 5.7m; FY23: € 3.9m). Mind you, that this figure differs from QBY's FCF definition (€ 3.2m; total change in net liquidity (excl. M&A)).
This should bode especially well for management M&A targets. For FY25, management confirmed in the CC on the FY prelims, that the company is in an advanced stage to acquire 1-2 targets this year. Management is looking for margin accretive deals with € >10m sales. Given the recently imposed special fund for investing € 500bn on infrastructure and the suspension of the debt break for defense spending, we regard it as even more likely that QBY will look for targets with a high public sector exposure (healthcare, energy, defense). This was also confirmed during the call.
Given the strong numbers and an undemanding valuation (FY25e EV/EBITDA of 4.0x), we reiterate BUY with an unchanged € 1.30 PT based on DCF.
ISIN: DE0005137004
