USU Software AG reports positive business performance

• 13% sales growth in Q2 2020
• Adjusted earnings rise by 267% in Q2 2020
• Half-year figures attest to positive growth trend
• Liquidity increased by 84.3%
• Level of orders breaks new record
• Sales and earnings planning confirmed

In spite of the negative economic effects of the coronavirus pandemic all around the world, USU Software AG together with its subsidiaries (hereinafter also referred to as the “USU Group” or “USU”) posted a strong operating performance again in the second quarter of the current fiscal year 2020 after the positive first quarter. USU thus increased its consolidated sales (IFRS) by 13.0% year-on-year to EUR 25.9 million in the second quarter of 2020 (Q2 2019: EUR 22.9 million). Here, USU particularly benefited from very good domestic business, after it had mainly been international business driving growth in the first quarter.

The cost base of the USU Group increased only slightly by 6.6% year-on-year to EUR 24.3 million (Q2 2019: EUR 22.8 million). This meant that earnings improved considerably compared with the previous year. The USU Group thus increased its earnings before interest, taxes, depreciation and amortization (EBITDA) by almost a factor of six year-on-year to EUR 3.0 million in the reporting quarter (Q2 2019: EUR 0.5 million). Taking into account depreciation and amortization expense of EUR 1.3 million (Q2 2019: EUR 1.2 million), earnings before interest and taxes (EBIT) amounted to EUR 1.7 million (Q2 2019: EUR 0.2 million). This corresponds to a year-on-year increase in EBIT of 844.5%.

After interest and taxes, net profit for the period came to EUR 1.5 million after a quarterly loss of EUR 0.3 million in the previous year. This corresponds to earnings per share of EUR 0.14 (Q2 2019: EUR -0.03). EBIT adjusted for the extraordinary effects of acquisitions (adjusted EBIT) also improved significantly by 266.9% year-on-year to EUR 1.9 million in the second quarter of 2020 (Q2 2019: EUR 0.5 million), while the adjusted net result increased from EUR 1,000 in the previous year to EUR 1.7 million. This corresponds to adjusted earnings per share of EUR 0.16 (Q2 2019: EUR 0.00).

In the first six months of fiscal 2020, the USU Group increased its consolidated sales (IFRS) by 16.1% year-on-year to EUR 52.1 million (Q1-Q2 2019: EUR 44.9 million). This positive development was driven both by domestic business, which increased by 16.1% to EUR 37.3 million (Q1-Q2 2019: EUR 32.1 million), and also by income from international markets, which rose by 15.9% to EUR 14.8 million (Q1-Q2 2019: EUR 12.8 million).

Business with software licenses declined by 6.4% year-on-year to EUR 5.8 million (Q1-Q2 2019: EUR 6.2 million) due to customers’ growing preference for SaaS and the postponement of some individual orders. At the same time, maintenance and SaaS business increased to EUR 15.9 million (Q1-Q2 2019: EUR 14.0 million) as a result of higher SaaS revenue. This represents growth of 19.5% compared with the first half of 2019. Significantly higher than average growth was also posted by consulting business, which increased by 22.8% to EUR 29.6 million in the first half of the year (Q1-Q2 2019: EUR 24.7 million) thanks to new consulting projects and existing orders from the previous quarters.

The operating cost base of the USU Group increased by 9.0% year-on-year to EUR 49.1 million in the first six months of 2020 (Q1-Q2 2019: EUR 45.1 million). In addition to higher staff costs as a result of the previous year’s workforce expansion by 2.3% to 724 employees (June 30, 2019: 708), expenses also rose due to increased non-staff operating costs and amortization and depreciation.

USU’s EBITDA increased by 151.1% year-on-year to EUR 6.1 million in the first half of the year (Q1-Q2 2019: EUR 2.4 million). Adjusted for total depreciation and amortization of EUR -2.6 million (Q1-Q2 2019: EUR -2.4 million), USU generated EBIT of EUR 3.5 million (Q1-Q2 2019: EUR -1,000). After interest and taxes, USU’s consolidated earnings improved to EUR 3.1 million in the first six months of 2020, after a loss of EUR 1.0 million in the first half of 2019. With an average of 10,523,770 shares outstanding, this corresponds to earnings per share of EUR 0.29 (Q1-Q2 2019: EUR -0.09).

Adjusted EBIT increased by almost a factor of six to EUR 3.9 million in the first half of 2020 (Q1-Q2 2019: EUR 0.7 million). At the same time, USU improved its adjusted net result from EUR -0.3 million in the previous year to EUR 3.5 million in the first six months of fiscal 2020. Accordingly, adjusted earnings per share rose to EUR 0.33 (Q1-Q2 2019: EUR -0.03).

With an equity ratio of 57.5% (December 31, 2019: 57.6%), extensive Group liquidity of EUR 19.2 million (December 31, 2019: EUR 10.4 million) and no liabilities to banks, the USU Group still has extremely sound and secure financing, even in the coronavirus crisis.

Due to the uncertainty over the duration and development of the COVID-19 pandemic, it is not currently possible to make a reliable and realistic precise estimate of USU’s future business development. However, the Management Board anticipates sales growth and positive adjusted EBIT again in the second half of 2020 One key indicator supporting this forecast is the record level of Group-wide orders on hand, which grew to EUR 59.5 million in the reporting quarter (June 30, 2019: EUR 54.2 million). The Management Board is also confirming the USU Group’s medium-term planning, which includes average organic sales growth of 10% in the next few years and an increase in the operating margin on adjusted EBIT to between 13% and 15% by 2024.