Yesterday, QBY released Q3 prelims and cut its guidance for the second time this year. While Q3p sales of € 43.2m where in line with eNuW of € 43.1m, EBITDA of € -4.8m (eNuW: € -0.2m) significantly missed expectations. As part of the € 4.3m of provisions for the lay-offs under the accelerated AI transformation were already included in our forecast (€ 2.5m, rest was expected for Q4), the shortfall is largely operational. Adjusted for the one-offs, EBTIDA stood at € -0.5m, down € 3m qoq on largely unchanged sales.
Management now targets FY sales of € 174-178m (old: € 176-180m) and EBITDA of € -4 to -2m (old: € 3-7m). Importantly, the restructuring is not the reason for the cut, as stated in the H1 report, the old range already included € 5-6m one-off transformation costs, of which € 5.2m are now booked (€ 0.9m in Q2). Ex one-offs, guidance thus drops to € 2-4m from € 9-13m, i.e. some € 8m of operational deterioration at mid-point within then weeks.
The main issues are higher one-off licenses costs, additional spend on internal digitalisation incl. AI tools and customer deferred projects in the sales pipeline, especially MS. With 9m EBITDA of € -1.7m, Q4 is now implied to come in at € -2.3 to -0.3m (eNuW: € -0.7m, thereof € 0.8m one-off), hence no meaningful improvement despite GITG and improved order intake.
Speaking of which, OI in Q3 jumped to € 49.7m, almost matching the entire H1 (€ 51.9m) and implying a b-t-b of 1.15x. Together with the c. € 7m annual cost savings from FY27 (70-80 FTE reduction in Germany, service-desk relocation to Cluj & process automation), this underpins managements outlook for markedly increasing top- and bottom-line next year.
In our view, the second cut within ten weeks definitely hurts credibility, especially the magnitude of it. That said, we continue to see the potential of the business, which should be able to yield c. 10% EBITDA margins at improved utilization both in MS and Consulting. However, management needs to demonstrate that the initiatives taken generate visible improvements, with the first reality check being Q1'27.
Until then, we do not see any positive catalysts. In contrary, we regard the FY28 guidance of € 250m sales (eNuW: € 204m) and 10% EBITDA margin (eNuW: 6.5%) as at risk. That said, we confirm our BUY rating with a slightly lower PT of € 4.90 (old: € 5.10,as we only cut FY26e and leave our estimates from FY27e onwards unchanged, supported by the order intake and the savings programme, so the DCF impact remains marginal. With net cash of € 19.3m (eNuW for FY26e) and the hidden reserve of the Hamburg data centre covering c. 2/3 of the market cap (eNuW), downside protection should be clearly given.
ISIN: DE000A41YDG0
