Original-Research: ATOSS Software SE (von NuWays AG): BUY

Classification of NuWays AG to ATOSS Software SE

Company Name:	ATOSS Software SE
ISIN:	DE0005104400
Reason for the research:	Update
Recommendation:	BUY
Target price:	EUR 134
Target price on sight of:	12 months
Last rating change:
Analyst:	Philipp Sennewald

Margin lever pulled harder than expected; guidance upgraded; chg.

ATOSS released Q3 figures on Friday that were mixed on sales but outstanding on profitability. The EBIT margin guidance upgrade we had flagged as a real option in our preview materialised, but the step was larger than we and eCons expected. In detail:

Q3 sales grew 11.3% yoy to € 52.6m (eNuW: € 53.3m). Cloud & Subscriptions kept its strong pace, up 26% yoy to € 29.5m (eNuW: +25%). The shortfall came from the non-recurring side. Perpetual licence sales halved yoy to € 0.9m, while consulting stayed flat at € 10.2m. As a result, the recurring share rose further to c. 74%. Underlying KPIs remain solid: Cloud ARR grew 25% yoy to € 119m and net retention stood at 112% (ASES: 116%). Order momentum, however, slowed against a strong comparable base as growth in Cloud & Subscription order backlog decelerated to 8% yoy (H1: 14%). FY FY27, management eyes for new ACV growth of 3-7%.

Margin was the clear highlight. Q3 EBIT jumped 22.6% yoy to € 21.1m (eNuW: € 18.4m; eCons: € 18.6m), implying a margin of 40.0%, up 3.6pp yoy, putting the 9M margin at 36.8%. The drivers are structural with headcount flat yoy, as ATOSS uses natural attrition in R&D and G&A while rolling out AI tools across development, sales and customer service. Sales capacity is being upskilled rather than expanded. All cost ratios came in well below budget, with S&M at 18.0% of sales vs a planned 20.3%.

Guidance upgraded, as expected. As flagged in our preview, management lifted the FY26 EBIT margin target, but by 3pp to c. 37% (old: ≥34%; eNuW old: 34.9%). On sales, management sees the lower end of the € 210-215m range, solely due to weaker perpetual licences, while recurring continues to outperform, which is in our view the more important read. The implied Q4 margin of c. 37-38% compares with 40% in both Q4 25 and Q3 26, so the new target again looks beatable, in our view (eNuW new: 37.8%).

Looking ahead. For FY27, management now expects sales at the lower end of the € 235-245m range, citing lower perpetual and consulting revenues. On margin, CFO Leiber indicated 36-37% as possible, well above the formal ≥35% target, with long-term potential above 40%. Importantly, the quality of revenues keeps improving as visible in the continuously strong NRR, also supporting margins. In our view, the slightly lower top line is therefore a fair trade-off: what ATOSS loses in low-margin and one-off revenues, it more than makes up for in profitability and visibility.

Action. We lift our FY26e EBIT and raise our margin estimates for the coming years, reflecting the structural efficiency gains from flat headcount and AI-driven process optimisation, as well as the upgraded guidance. At the same time, we trim our sales estimates slightly to account for the faster decline in perpetual licences and lower consulting revenues, while our recurring revenue forecasts remain largely unchanged. Overall, the print confirms ATOSS as a structural margin story with strong cash generation.

Reiterate BUY, PT € 134 based on DCF.

You can download the research here: atoss-software-se-2026-10-29-previewreview-en-3e093
For additional information visit our website: https://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
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