Topic: VOQUZ Labs released preliminary H1 results, which show significant improvements in top- as well as bottom-line. In detail:

H1 sales increased 24.9% yoy to € 2.3m (eNuW: € 2.1m), which should have been predominantly driven by a strong visoryQ business. In fact, H1 visoryQ revenues should have already reached the FY ’23 level of € 0.5m (eNuW), as the newly launched product, which is a comprehensive SAP-ERP business case builder, is meeting brisk demand at existing and new customers. Moreover, the company’s

H1 EBITDA came in at € 0.3m (eNuW: € 0.3m), up from negative € 0.5m in the previous year, implying an EBITDA margin of 12.4%. Main drivers for the improved profitability were (1) cost saving measures which were already imposed in H2’23 as well as (2) a lower share of consulting orders, that were in fact compensated for by the higher margin visoryQ offering.

Against this backdrop, management also confirmed the FY guidance of 10-20% top-line growth and an EBITDA margin of 15-20%. This implies only 9.7% sales growth and a 20.6% EBITDA margin (H2’23: 28.9%) at mid-point. 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.

Future growth drivers. While the announced partnership for the remQ solutions with PwC Germany (further info

here

) should not have had an impact in H1, we expect first orders from it to come in the second half of the year. Mind you, the TAM for the compliance software in Germany alone should be in the range of € 25-30m, targeting mid- to enterprise-size customers. Moreover, management intends to launch a new product, combining samQ (license management) and visoryQ, which should be available for clients in early 2025 the latest. Besides new customers, who are seeking to kick-off the S/4 HANA transformation, the product should be especially interesting for existing samQ clients, opening up meaningful up-selling potential.

Overall, the release fully underpins our view, that the company with its innovative product offering is on track to be one of the main beneficiaries of the pending transformation.

Reiterate BUY with an unchanged € 22 PT based on DCF.