USU Software AG records jump in profits

  • Sales growth of 8.4% in Q3 2021
  • Adjusted earnings double
  • 9-month figures underline positive development
  • Liquidity and equity ratio expanded
  • Orders on hand remain high
  • Sales and earnings planning confirmed

In the third quarter of 2021, USU Software AG together with its subsidiaries (hereinafter also referred to as the “USU Group” or “USU”) again benefited from growth in recurring revenue and strong license business. USU thus increased its consolidated sales (IFRS) by 8.4% year-on-year to EUR 27.9 million in the third quarter of 2021 (Q3 2020: EUR 25.8 million). License revenue saw above-average growth of 20.5% to EUR 3.0 million (Q3 2020: EUR 2.5 million). At the same time, USU also increased its SaaS sales by an above-average 13.5% to EUR 2.8 million (Q3 2020: EUR 2.4 million). Accordingly, recurring revenue (maintenance sales including SaaS revenue) rose by 10.0% year-on-year to EUR 8.8 million in the third quarter of 2021 (Q3 2020: EUR 8.0 million). USU also increased its consulting income by 5.2% to EUR 15.8 million (Q3 2020: EUR 15.0 million).

Meanwhile, the cost base of the USU Group rose by just 4.8% to EUR 25.8 million (Q3 2020: EUR 24.6 million). This meant that earnings improved significantly. USU increased its earnings before interest, taxes, depreciation and amortization (EBITDA) by 69.8% year-on-year to EUR 3.7 million (Q3 2020: EUR 2.2 million). Earnings before interest and taxes (EBIT) amounted to EUR 2.5 million (Q3 2020: EUR 1.1 million), corresponding to an increase of 121.8%.

Net profit for the period after interest and taxes rose by 170.5% to EUR 2.3 million (Q3 2020: EUR 0.9 million). This corresponds to earnings per share of EUR 0.22 (Q2 2020: EUR 0.08).

USU’s earnings before interest and taxes adjusted for extraordinary effects due to acquisitions (adjusted EBIT) also doubled, from EUR 1.3 million in the same period of the previous year to EUR 2.7 million. Accordingly, USU’s earnings margin on adjusted EBIT increased from 5.0% in the third quarter of 2020 to 9.5%.

The USU Group also enjoyed positive operating performance in the first nine months of the year. USU’s consolidated sales increased by 5.1% year-on-year to EUR 81.9 million in the first three quarters (Q1-Q3 2020: EUR 77.9 million). This was largely due to new domestic digitalization projects. Accordingly, USU increased its sales in Germany by 10.2% to EUR 62.7 million (Q1-Q3 2020: EUR 56.9 million), while the impact of the coronavirus meant its international sales declined by 8.7% compared with the extremely positive prior-year period, amounting to EUR 19.1 million (Q1-Q3 2020: EUR 21.0 million).

Broken down by sales type, USU recorded a particularly high year-on-year increase in consulting income of 7.2% to EUR 47.8 million thanks to the new orders acquired and the existing orders on hand (Q1-Q3 2020: EUR 44.6 million). At the same time, it benefited from the sustained growth in cloud and maintenance business. Maintenance sales including sales from SaaS business increased by 6.5% year-on-year to EUR 25.4 million (Q1-Q3 2020: EUR 23.8 million), of which EUR 7.9 million (Q1-Q3 2020: EUR 7.0 million) was attributable to SaaS sales alone. This represents a 12.8% rise as against the previous year. Due to the comparatively high share of new contracts attributable to SaaS business, license sales in the first nine months of 2021 were down 6.3% on the previous year at EUR 7.8 million (Q1-Q3 2020: EUR 8.3 million).

As a result of the significant expansion in high-margin recurring revenue and the below-average increase in Group expenses of 3.2% to EUR 76.1 million (Q1-Q3 2020: EUR 73.7 million), the reporting period saw USU substantially improve its profitability compared with the previous year. EBITDA rose by 25.6% to EUR 10.4 million (Q1-Q3 2020: EUR 8.3 million), while EBIT increased by 48.7% to EUR 6.9 million (Q1-Q3 2020: EUR 4.6 million).

USU’s consolidated earnings also improved significantly by 55.2% year-on-year to EUR 6.1 million in the first nine months of 2021 (Q1-Q3 2020: EUR 4.0 million). This corresponds to earnings per share of EUR 0.58 (Q1-Q3 2020: EUR 0.38).

Furthermore, USU increased its adjusted EBIT by 39.3% year-on-year to EUR 7.2 million in the first nine months of 2021 (Q1-Q3 2020: EUR 5.2 million). Consequently, the earnings margin based on adjusted EBIT improved from 6.7% in the previous year to 8.8% in the reporting period. At the same time, adjusted consolidated earnings climbed by 44.0% to EUR 6.5 million (Q1-Q3 2020: EUR 4.5 million). Adjusted earnings per share rose accordingly from EUR 0.43 in the previous year to EUR 0.61.

With an equity ratio of 55.0% (December 31, 2020: 53.5%), extensive Group liquidity that increased by 6.4% to EUR 19.7 million (December 31, 2020: EUR 18.5 million) and no liabilities to banks, the USU Group still has extremely sound and secure financing.

For 2021 as a whole, the Management Board expects the USU Group to record slight growth in sales and an improvement in adjusted EBITDA to at least EUR 9-10 million. The main contributing factor will be strong SaaS business. One key indicator supporting this forecast is the level of Group-wide orders on hand, which rose by 6.9% to EUR 64.6 million in the reporting period (September 30, 2020: EUR 60.4 million). In addition, the Management Board anticipates positive effects and increased efficiency in connection with the implementation of the “One USU” strategy. The Management Board is also confirming the current medium-term planning, which includes average organic sales growth of 10% in the next few years and an increase in the operating margin on adjusted EBIT to between 13% and 15% by 2024.