Original-Research: q.beyond AG (von NuWays AG): BUY

Classification of NuWays AG to q.beyond AG

Company Name:	q.beyond AG
ISIN:	DE0005137004
Reason for the research:	Update
Recommendation:	BUY
from:	08.05.2025
Target price:	EUR 1.30
Target price on sight of:	12 months
Last rating change:
Analyst:	Philipp Sennewald

Q1’25e set for further profitability improvements

Topic: Next Tuesday, q.beyond is going to release its Q1 report, which is seen to show further improvements on the bottom-line and provide confidence regarding the company’s FY25 outlook. In detail:

Q1 sales are seen to slightly decline by 1.4% to € 46.5m (eNuW). Yet, the expected decline is solely due to accounting in accordance with IFRS 15. As a result, a total of € 12.6m of FY24 sales, which are mainly related to SAP and Microsoft contracts, will no longer be accounted as revenues, as only the profits from the respective customer relationshops will be accounted for. Eliminating this effect, sales growth should be in the low to mid single-digit % range (eNuW). This should again be driven by Managed Services, but also a recovery of Consulting. Here we expect a significant improvement on the gross margin side to 12% (+3.6pp yoy). Overall gross margin is seen to come in at 19.3%, implying € 9.0m gross profit.

Q1 EBITDA is expected to improve strongly by 27.6% to € 2.5m (eNuW), implying a 5.5% margin. Main drivers behind this should be again an improved near- and off-shoring ratio, which management aims to lift to 20% by YE’25 (14% as of FY24). This alone should explain a good part of the gross margin improvement. Moreover, the anticipated recovery of Consulting is seen to be a further driver. Given an improved utilization, margins in the region of 20% should be absolutely achievable going forward.

With this, the company should be well on track to achieve the FY25 guidance. While the sales outlook looks conservative, implying 2.2-5.6% growth (excluding the aforementioned accounting effect; eNuW: +5.5%), the q.beyond should be able to achieve the upper end of the communicated EBITDA target of € 12-15m (eNuW: € 14.7m), as we expect gradual improvements as well as a seasonally strong Q4.

Putting all this aside, inorganic growth is likely to become a factor as well, as implied by CEO Rixen during the latest conference calls. In fact, with € 30m net cash (incl. leases) management has a well equipped war chest on hand to tap the M&A market. Here, we regard targets with a high public sector exposure (health-care, energy, defense) as likely, given the recent infrastructure special funds and the debt break suspension in Germany.

Reiterate BUY with an € 1.30 PT based on DCF.

You can download the research here: http://www.more-ir.de/d/32508.pdf
For additional information visit our website: https://www.nuways-ag.com/research-feed

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
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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben analysierten Unternehmen befinden sich in der vollständigen Analyse.
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