03/11/2024
- Preliminary results for 2023: Free cash flow rises by € 11.4 million to € 1.7 million
- Revenues of € 189.3 million and EBITDA of € 5.7 million also meet targets
- For 2024, q.beyond has budgeted EBITDA growth to € 8 million to € 10 million, with revenues of € 192 million to € 198 million and sustainably positive free cash flow
Cologne, 11 March 2024 – The IT service provider q.beyond improved its free cash flow by € 11.4 million to € 1.7 million in 2023. It thus achieved a positive full-year free cash flow one year earlier than planned upon the presentation of the “2025 Strategy” in spring 2023. Based on preliminary calculations, in the past financial year revenues rose by 9% to € 189.3 million, while EBITDA improved by 6% to € 5.7 million. Both key figures are consistent with the outlook published at the beginning of 2023, with revenues forecast at between € 185 million and € 191 million, and EBITDA at between € 5 million and € 7 million.
Implementation of the 2025 Strategy involved a far-reaching restructuring of the company in the past financial year. In particular, q.beyond provided its business model with a clearer focus, increased the effectiveness of its go-to-market approach and, in the “One q.beyond” project, simplified and standardised all its processes and structures. As expected, in the short term the various measures had the benefit of boosting the financial strength of the debt-free company. Net liquidity rose to € 37.6 million in 2023. Starting in 2024, the company’s earnings strength will rise sustainably.
Double-digit revenue growth in SAP business
Both segments contributed to the company’s revenue growth during the year of restructuring in 2023. Cloud revenues increased by 9% to € 151.2 million, while SAP revenues rose by 13% to € 38.1 million. As previously announced, the EBITDA growth was partly due to an increase in other operating income by € 3.7 million to € 9.2 million following a decision by the tax authorities concerning the tax treatment of the Plusnet sale executed in 2019. This decision, which was in q.beyond’s favour, will only impact on liquidity in 2024. A second decision by the tax authorities in this respect was a key reason for the increase in taxes on income to € -5.2 million, compared with € +0.2 million in the previous year. This decision will also impact on liquidity in 2024. Based on preliminary calculations, consolidated net income for 2023 nevertheless improved to € -16.4 million, up from € -33.1 million one year earlier.
q.beyond expects its profitability to increase significantly in the current financial year, with EBITDA set to rise to between € 8 million and € 10 million. This will be accompanied by revenues of between € 192 million and € 198 million and a continued sustainably positive free cash flow. The measures q.beyond will take to boost its efficiency include raising the share of its nearshoring and offshoring activities from 11% currently, promoting the automation of processes and increasingly deploying generative artificial intelligence.
Profitability ahead of growth
In its 2025 Strategy, the company set itself the target of achieving an EBITDA margin of 7% to 8% and positive consolidated net income in 2025. Thies Rixen, q.beyond’s CEO, sees the company as being well on the way to meeting these targets. The EBITDA margin is budgeted to rise to 4% to 5% in 2024. Here, Rixen has set clear priorities: profitability ahead of growth! The core goal of the 2025 Strategy is to sustainably and significantly increase q.beyond’s earnings and financial strength.
Key figures at a glance
| € million | 2023 | 2022 | Change |
|---|
| Revenues | 189.3 | 173.0 | +9% |
|---|
| - Cloud | 151.2 | 139.2 | +9% |
|---|
| - SAP | 38.1 | 33.8 | +13% |
|---|
| EBITDA | 5.7 | 5.4 | +6% |
|---|
| EBIT | (10.9) | (32.3) | +66% |
|---|
| Consolidated net income | (16.4) | (33.1) | +50% |
|---|
| Free cash flow | 1.7 | (9.7) | n/a |
|---|
| Net liquidity at 31 December | 37.6 | 35.9 | +5% |
|---|
| Equity ratio at 31 December | 64% | 72% | n/a |
|---|
| Employees at 31 December | 1,111 | 1,112 | 0% |
|---|
Notes:
This Corporate News contains forward-looking statements that are based on current expectations and forecasts on the part of the management with regard to future events. Due to risks or erroneous assumptions, actual results may deviate materially from these forward-looking statements. The complete Quarterly Statement is available at www.qbeyond.de/en/investor-relations.
About q.beyond AG
q.beyond AG is the key to successful digitalisation. We help our customers find the best digital solutions for their business and then put them into practice. Our strong team of 1,100 people accompanies SME customers securely and reliably throughout their digital journey. We are experts in Cloud, SAP, Microsoft, data intelligence, security and software development. With locations throughout Germany, as well as in Latvia, Spain and India, and its own certified data centres, q.beyond is one of Germany’s leading IT service providers.
Contact
q.beyond AG
Arne Thull
Head of Investor Relations/Mergers & Acquisitions
T +49 221 669 8724
invest@qbeyond.de
FAQs
Subtract your required investments in operating capital from your sales revenue, less your operating costs, including taxes, to find your free cash flow. The formula would be: Sales Revenue – (Operating Costs + Taxes) – Required Investments in Operating Capital = Free Cash Flow.
How can I increase my FCF? ›
How To Increase Free Cash Flow In Your Business
- Restructuring debt to lower interest rates and optimize repayment schedules.
- Reducing, limiting or delaying capital expenditures.
- Hiring a CFO, or fractional CFO to improve financial strategy and business operations with management accounting.
What Does Negative Free Cash Flow Mean? When there is no cash left over after meeting operating, capital, and adjusting for non-cash expenses, a company has negative free cash flow. This means that the company has no excess cash on hand in a given period, which could be a sign of poor financial health.
Why is free cash flow important for private equity investments? ›
It is an important measure of the value of a company, and investors often turn first to free cash flow when they conduct due diligence during the investment decision-making process. For example, private equity investors are fixated on the amount of cash a company generates, followed by the amount of debt it holds.
What does it mean when free cash flow is positive? ›
Positive cash flow indicates that a company's liquid assets are increasing, enabling it to cover obligations, reinvest in its business, return money to shareholders, pay expenses, and provide a buffer against future financial challenges.
What does positive free cash flow mean? ›
The upshot: Positive free cash flow means you have sufficient money to invest back into the business for growth or to distribute to shareholders. Negative free cash flow could portend that you'll need to raise money to pay the rent or there's a potential for healthier competitors to outperform you in the market.
How do you create a positive cash flow? ›
- Lease, Don't Buy.
- Offer Discounts for Early Payment.
- Conduct Customer Credit Checks.
- Form a Buying Cooperative.
- Improve Your Inventory.
- Send Invoices Out Immediately.
- Use Electronic Payments.
- Pay Suppliers Less.
Indication: Cash flow shows how much money moves in and out of your business, while profit illustrates how much money is left over after you've paid all your expenses. Statement: Cash flow is reported on the cash flow statement, and profits can be found in the income statement.
Do you want a high or low FCF? ›
As such, in general, the higher the free cash flow yield, the better. A higher value signifies that you have more cash on hand to use after taking care of your obligations to keep operations running smoothly. On the contrary, a lower FCF yield would show that your capital is limited.
Is it OK to have negative cash flow? ›
Yes, a profitable company can have negative cash flow. Negative cash flow is not necessarily a bad thing, as long as it's not chronic or long-term. A single quarter of negative cash flow may mean an unusual expense or a delay in receipts for that period. Or, it could mean an investment in the company's future growth.
Comparing Cash Flow vs. Free Cash Flow. Cash flow is seen as a straightforward measure of the net cash that came into or left the business during a given period of time. Free cash flow is a figure that tells investors how much cash your business has on hand after funding its operating and investing needs.
Does free cash flow affect dividends? ›
Free Cash Flow and Dividends
Dividends are cash payments to investors as a reward for owning the stock. If a company is generating free cash flow that exceeds dividend payments, it's likely to be seen as favorable to investors, and it could mean that the company has enough cash to increase the dividend in the future.
How much free cash flow is good? ›
Ans. Free Cash Flow Yield evaluates if the stock price of a company provides good value for the free cash flow being generated. When researching dividend stocks, usually, yields that are above 4% would be acceptable for further research. Yields that exceed 7% are considered of high rank.
Does free cash flow matter? ›
Free cash flow is an important financial metric because it represents the actual amount of cash at a company's disposal.
What companies have a consistent free cash flow? ›
Apple (APPL), Verizon (VZ), Microsoft (MFST), Walmart (WMT), and Pfizer (PFE) are five companies that could be considered free cash flow (FCF) "monsters" as a result of their history of having a huge amount of free cash flow (FCF).
What is a good FCF percentage? ›
A “good” free cash flow conversion rate would typically be consistently around or above 100%, as it indicates efficient working capital management. If the FCF conversion rate of a company is in excess of 100%, that implies operational efficiency.
What is a good FCF yield? ›
Free Cash Flow Yield determines if the stock price provides good value for the amount of free cash flow being generated. In general, especially when researching dividend stocks, yields above 4% would be acceptable for further research. Yields above 7% would be considered of high rank.
What is a good free cash flow per share ratio? ›
As a starting point, a Free Cash Flow ratio above 1 is considered favorable for any company. This implies that the business is generating enough cash to more than cover its operating expenses and investments, a key indicator of financial health.
What is a good cash flow ratio? ›
A high number, greater than one, indicates that a company has generated more cash in a period than what is needed to pay off its current liabilities. An operating cash flow ratio of less than one indicates the opposite—the firm has not generated enough cash to cover its current liabilities.
