USU published final Q2 figures which were fully in line with the preliminary results.

To recap: Q2 sales increased by 2.8% yoy to € 31.6m, thus coming in behind our previous estimate of € 33.6m. The main reason for this was drastically decreasing license sales, down 75% yoy to only € 0.8m (eNuW: € 3.0m) following prolonged sales cycles, especially in foreign markets, as well as the shift towards SaaS. SaaS revenues on the other hand increased by 25% yoy to € 4.2m (eNuW: € 4.0m), as did consulting revenues (+13.8% to € 19.7m; eNuW: €19.5m) following strong license sales in previous quarters. Q2 EBITDA decreased to € 2.1m (eNuW: € 4.2m) based on the decline in high-margin license sales as well as increased costs in connection with AI projects and the use of external workforce.

On a positive note, the company was able to maintain the record order backlog of € 89m (+13.7% yoy; -0.4% qoq) following increased SaaS, maintenance and consulting order intake.  

Based on the soft release, management put out a new guidance of € 132-139m sales and € 13-15m EBITDA. This looks reasonable with an implied lower-end sales growth of 1.3% and an EBITDA margin of 10.5% in H2. However, this also includes an improvement compared to the current situation (e.g. improving license sales). Should this not materialize, there could be downside to the new guidance and our estimates, especially on the bottom-line.

While short-term visibility remains low, the mid-term outlook was confirmed. As a reminder, until 2026e management expects 10% organic sales CAGR, +25% SaaS CAGR and an EBITDA margin in the range of 17-19%. In our view, the company should be well on track to deliver on this thanks to the ongoing high pace of the SaaS transformation. Though the shift will likely cause declining margins over the next 18-24 months, the SaaS payments are seen to equal the initial license payments (+maintenance) after c. 3 years, thus allowing for a significant margin expansion as hardly any incremental costs are incurred.

As shares were down heavily after the recent profit warning, valuation appears ever more undemanding, trading at only 19.6x PE ‘24e, a clear discount to the 2-year forward-looking average of 25.1x. BUY, unchanged PT of € 30.00 based on DCF.