May 24, 2017

USU Group remains on growth path

·         Double-digit sales growth

·         Earnings impacted by investments in foreign markets

·         Liquidity position expanded further

·         Significant improvement in operating cash flow

·         Group workforce exceeds 600 for first time

·         Forecast for 2017 raised following acquisition

·         Medium-term planning to 2020 confirmed


USU Software AG (USU, ISIN DE000A0BVU28), the largest European manufacturer of IT and knowledge management solutions, today published its figures for the first quarter of the 2017 fiscal year. The Company generated IFRS sales of EUR 18,887 thousand in the first three months of 2017 (Q1 2016: EUR 16,957 thousand), a year-on-year increase of 11.4%. The main growth driver was consulting sales, which rose by almost 20% year-on-year to EUR 10,877 thousand (Q1 2016: EUR 9,103 thousand). While sales from maintenance business also increased to EUR 5,120 thousand as a result of the higher level of SaaS income (Q1 2016: EUR 4,666 thousand), license sales declined by 14.3% year-on-year to EUR 2,634 thousand (Q1 2016: EUR 3,074 thousand). USU benefited in particular from the strength of its business in Germany, where sales rose rose by 13.2% to EUR 13,861 thousand. At the same time, sales generated outside Germany rose by 6.6% year-on-year to EUR 5,026 thousand (Q1 2016: EUR 4,713 thousand).

The operating cost base of the USU Group increased by 19.0% to EUR 18,535 thousand in the period under review (Q1 2016: EUR 15,576 thousand). This was primarily due to the significantly higher level of investment in marketing and sales outside Germany, which will form the basis for the sustainable establishment and expansion of attractive foreign markets in the USA, France and the UK. This was supplemented by the costs of unitB technology, which was acquired in early 2017, and the increase in staff costs with a view to successfully achieving the medium-term growth target to 2020.

The targeted investment in further growth outside Germany had an impact on the USU Group's earnings development in the first quarter of 2017 compared with the same period of the previous year. Accordingly, earnings before interest, taxes, depreciation and amortization (EBITDA) halved year-on-year to EUR 796 thousand (Q1 2016: EUR 1,654 thousand). Adjusted for depreciation and amortization of EUR 657 thousand (Q1 2016: EUR 645 thousand), USU generated earnings before interest and taxes (EBIT) of EUR 139 thousand in the same period (Q1 2016: EUR 1,009 thousand). Taking into account the income tax expense of EUR -216 thousand (Q1 2016: EUR -60 thousand), consolidated net profit declined from EUR 882 thousand in the first quarter of 2016 to EUR -115 thousand in the period under review. In line with this, earnings per share amounted to EUR -0.01 (Q1 2016: EUR 0.08).

Earnings before interest and taxes adjusted for extraordinary effects due to acquisitions (adjusted EBIT) also fell by almost half to EUR 689 thousand in the first quarter of 2017 as a result of the future-oriented investments in foreign markets (Q1 2016: EUR 1,368 thousand). Accordingly, adjusted consolidated net profit declined by 67.2% to EUR 403 thousand (Q1 2016: EUR 1,230 thousand), while adjusted earnings per share fell from EUR 0.12 in the previous year to EUR 0.04 in the period under review.

Cash and cash equivalents including securities increased to EUR 27,297 thousand as of March 31, 2017 (December 31, 2016: EUR 23,180 thousand). The USU Group's net cash from operating activities also rose by 60.6% to EUR 6,310 thousand in the period under review (Q1 2016: EUR 3,929 thousand). The USU Group expanded its workforce by 18.4% year-on-year to 604 employees as of March 31, 2017 (March 31, 2016: 510 employees). In addition to organic growth, this development was driven by the acquisition of unitB technology, which had a total of 40 employees as of March 31, 2017. 

The Management Board is optimistic that the growth trend recorded in recent years will continue successfully in the 2017 fiscal year as a whole. Impetus from the core market of Germany will be accompanied by growth in product business outside Germany in particular. The investments in marketing and sales outside Germany that have been made since late 2016 and that are ongoing will begin to have a positive impact from the second half of the year.

In light of the current outlook, further growth in license income and the impact of the EASYTRUST acquisition, the Management Board is raising its sales forecast for the USU Group by EUR 3 million. However, planned investments in EASYTRUST products mean the company that was acquired in May will not make an earnings contribution in 2017. Accordingly, the revised forecast for the 2017 fiscal year involves an increase in consolidated sales to between EUR 86 million and EUR 91 million, accompanied by a rise in adjusted EBIT to EUR 10-11.5 million. At the same time, the Management Board is confirming its medium-term forecast for the USU Group to 2020, with forecast sales growth to EUR 140 million accompanied by an increase in adjusted EBIT to over EUR 20 million. Based on the above assumptions, the shareholders of USU Software AG can expect to participate substantially in the Company's operating success once again in 2017 in line with the shareholder-friendly dividend policy. 

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