Topic: On Friday, VOQUZ Labs released its final H1 ’24 report, in line with the preliminary results published in August. Here are the key takeaways.

H1 sales increased by 25% yoy to € 2.3m, which is in line with our estimate. A strong driver should have been the visoryQ business, which already gained traction in Q4 ’23. We expect H1 visoryQ revenues to have already reached the FY ’23 level of € 0.5m, as customer experience increasing time pressure regarding their SAP ERP strategy. Yet, according to management, buyers’ hesitance has not yet completely subsided, still leaving room for improvement going forward.

EBITDA in H1 came in at € 0.3m (in line with eNuW), marking a significant improvement compared to last years H1 result of € -0.5m. Alongside cost saving measures bearing fruit, which were already implemented during H2 ’23, the company also benefited from an improved sales mix, i.e. a lower share of consulting orders. Those were in fact compensated by the higher margin visoryQ offering. Notably, FCF came in positive with € 0.1m, which compares to negative € 0.7m in last years period.

On this basis, management confirmed the FY guidance of 10-20% top-line growth and an EBITDA margin of 15-20%. The mid-points only imply 9.7% sales growth and a 20.6% EBITDA margin in the second half of the year (H2 ’23: 28.9%). Hence, we regard the outlook as reasonable and are even at the upper end of the sales guidance range, while we remain conservative regarding our profitability outlook.

Going forward, the pending S4/HANA transformation should be seen as one of the main growth drivers at VOQUZ. The company is currently developing a Finops manager for its visoryQ solution to further improve its offering, with an intended go-to-market in Q4. Moreover, the sales partnership with PwC Germany concerning VOQUZ’ remQ product should start bearing fruit in H2 (click here for more detail). According to our estimates, the TAM in Germany alone for the SAP compliance solution should be in the ballpark of € 20-25m, targeting mid- to enterprise-size customers.

To conclude, the release fully underpins our positive view on the company’s prospect based on its innovative product offering. Reiterate BUY with an unchanged € 22 PT based on DCF.