Pliezhausen, Tuesday, September 1, 2020. DATAGROUP shows continued strong growth and increases revenue significantly by 23.5% to EUR 264.2m in the first nine months In the third quarter, delayed start-ups in the banking sector and significantly higher expenses for the boarding of new banking customers clearly weighed down on earnings. The negative impacts of the corona pandemic only affect a small part of DATAGROUP’s business. Despite these effects, DATAGROUP sees itself excellently positioned for the future to continue to benefit from the ongoing digitalization trend going forward.
Revenue increased significantly again in the third quarter (01.10.2019 – 30.06.2020). When compared to the 9-month figures of FY 2018/2019, DATAGROUP recorded revenue growth of 23.5% from EUR 213.9m to EUR 264.2m. This increase was mainly driven by the first-time consolidation of Portavis GmbH in March 2020 and the consolidation of today’s DATAGROUP Ulm GmbH (formerly IT-Informatik, consolidated entity since August 2019). The proportion of service revenue continued to grow to 84.9% (PY 82.5%). Operating earnings before taxes, interest, depreciation and amortization (EBITDA) declined by 21.9 % to EUR 25.5m (PY EUR 32.7m) due to non-recurring special effects. Earnings before interest and taxes (EBIT) decreased by 77.4% to EUR 3.6m (PY EUR 16.1m). The EBITDA margin was down 15.2 % to 9.6 %, the EBIT margin declined to 1.4% (PY 7.5%). EBT dropped by 88.1% to EUR 1.7m (PY EUR 14.3m). Earnings per share (EPS) came in at EUR 0.24 compared to EUR 1.15 in the previous year (-79.1%).
The acquisition of Portavis has also increased the balance sheet total from EUR 320.1m to EUR 386.1m. Liquid funds rose from EUR 47.5m to EUR 66.1m. The equity ratio declined from 23.1% in the previous year to 18.2% on June 30, 2020.
The weaker development of EBIT and EBITDA in comparison to the period a year earlier is explained by various aspects. The primary reason for the decline in earnings were delays and increased costs related to the start-ups of new customers (transitions) in the financial services sector (DATAGROUP Financial IT Services GmbH). The management board has taken immediate measures to improve the situation. Based on an in-depth analysis performed by a task force set up for this purpose an extensive package of staffing and organizational measures is being implemented and will already demonstrate its effectiveness in FY 2020/2021.
Already after six months in 2019/2020, DATAGROUP recognized a provision of EUR 5.5m for reasons of precaution. The provision was increased by EUR 6.5m to EUR 12.0m on June 30, 2020. This is offset by other operating income due to a negative difference from the purchase price allocation (badwill) in the amount of EUR 11.6m, which has already been reported on March 1, 2020 as part of the first-time consolidation of Portavis.
Furthermore, DATAGROUP has also been affected by corona-related restrictions. Based on the high degree of digitization, up to 90 % of our employees were able to work from home even during the heyday of the corona crisis, and services provided to customers were implemented without any restrictions. Unfortunately, projects were delayed or canceled by customers, especially in the field of automation with Robotic Process Automation and mobilization of business applications (Almato AG). There have also been corona-related delays regarding sales activities for customer acquisition – especially the transfer of the former customers of IT Informatik GmbH (today DATAGROUP Ulm) into the DATAGROUP CORBOX world. For instance, the sales team was unable to visit our customers to convince them of the efficiency of the new organization in a personal meeting.
Encouragingly, the strategy of standardized services in the CORBOX portfolio and the related recurring revenue has proved to be a reliable source of income for the parent companies even in times of corona. Except for the earnings losses of DATAGROUP Financial IT Services GmbH and Almato AG mentioned above, all market units enjoy continued profitability as usual.
“We have proven to our customers that we are a reliable IT partner even in times of crisis”, says Max H.-H. Schaber, CEO of DATAGROUP. “We have been a good source of help in these difficult times by ensuring flawless IT operations of our customers when tackling the challenges of mobile working. Even though the transitions in the financial services sector were a challenge, and we had to deal with different corona-related effects in the current fiscal year, we are very confident that we will be able to successfully master these tasks. The quality of the CORBOX system is reflected in the sustainable profitability of our existing customers with long-term service contracts.”
“We are optimistic that we can increase our margins towards the usual level in the next fiscal year”, says Max H.-H. Schaber. “Our CORBOX suite of services covers the entire range of IT services for our customers, simple, standardized and effective. We are the engine room of digitization, and this is an essential basis for our customers with a view to the sustainability of their own company. For this reason, we are excellently positioned to benefit from the current digitization trends.”
To this end, DATAGROUP is constantly expanding its portfolio. In June 2020, the IT service provider took a stake of 24 % in Cloudeteer, a cloud-native start-up with a comprehensive multi-cloud expertise and own solutions. DATAGROUP has extensive expertise in on premise, private cloud, and public cloud, covering the entire range of possibilities, and can set up and support complex hybrid cloud models for customers.
Expertise, expert knowledge, and collaborative partnerships with customer satisfaction being the overriding principle, all of this is also reflected in the company’s numerous awards. DATAGROUP was awarded by market researcher ISG in the current “Next-Gen Private/Hybrid Cloud – Data Center Services & Solutions Report Germany 2020” as leader in Managed Services and Managed Hosting. In a study conducted by business magazine Wirtschaftswoche and market researcher Innofact, which evaluated the categories of trust, innovation, and image as an employer, DATAGROUP came in seventh among 500 companies rated. DATAGROUP ranks sixth among the Top 10 of IT service providers in the list of the leading IT service providers in Germany complied by market research institute Lünendonk & Hossenfelder, and Brand eins and Statista count the company among Germany’s best IT service providers in 2020.
Chief Executive Officer Max H.-H. Schaber will explain the figures of the first three quarters in a conference call on September 4, 2020 at 11.00 am CET. All interested investors, analysts, and journalists are cordially invited to participate.
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DATAGROUP is one of the leading German IT service companies. Over 2,700 employees at locations across Germany design, implement, and operate IT infrastructures and business applications such as SAP. With its CORBOX product, DATAGROUP is a full-service provider, supporting over 600k global IT workplaces for medium and large enterprises as well as public authorities. The company is growing organically and through acquisitions. The acquisitions strategy is particularly noted for its optimal integration of new companies. DATAGROUP is actively participating in the IT service market’s consolidation process with its “buy and turn around” and its “buy and build” strategy.
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