Good afternoon, ladies and gentlemen, and welcome to the CANCOM SE earnings call regarding the results of the third quarter of 2023. At this time, all participants have been placed on a listen-only mode. The floor will be open for your questions following the presentation. Now, I hand over to Lars Dannenberg. Thank you, and also welcome from my side. I'm heading the IR department here at Cancom, and with me are the CEO, Rüdiger Rath, and our CFO, Tom Stark. We would like to start the earnings call now with Rüdiger. Dear ladies and gentlemen, very warm welcome also from my side. My name is Rüdiger Rath, CEO of CANCOM SE, and here with me, as mentioned, Tom Stark, our CFO. Let's go straight in the presentation and start with the significant events of the third quarter. CANCOM Group grows in a difficult economic environment, however, benefited due to the contribution of KBC Group. The total revenue growth benefited from KBC Group and strong services businesses. However, the revenue trend of the first half year continued in Q3, with demand in e-commerce and workplace infrastructure was soft, which we always also see in the client businesses like laptops, desktops from the major hardware partners we work with. The group EBITDA benefited also from KBC, because they continued to deliver a strong performance in this third quarter. This is the main driver for the growth of the EBITDA, and as well, they generated an exceptional EBITDA margin. You see that our de-risking was right and that we already started generating synergies. Focus was also on the operating cash flows, which improved significantly in Q3. This is a result of our stricter approach to the invoicing to cash process and the management of our inventories. Go further? Okay. The top-line growth is mainly driven by M&A. The group revenue was up in nine months and as also benefiting from the KBC contribution. The group EBITDA were slightly down, and it was compensated, and as well, you have on the right side, in the difficult environment in Germany, and you see that we have as well, and added the EUR 10 million of special effects we had in Q2. That leads in total, we had to drop back 4.3% in the EBITDA, and the EBITDA margin shrink from 86% to 72%. If we move over to the segment. The challenging overall market environment in Germany, and we saw a soft demand in the overall workplace infrastructure, like clients, displays, and following the trend we see at our partners we work with, and in the e-commerce market, where we normally sell to small and medium customers. The total revenue shrink by 1.7%, and the EBITDA margin went down from 82% to 64% in the segment of Germany. We reached, as well, the total EBITDA in the comparison period in the nine months. You have to consider the EUR 10 million one-off effects we had in Q2. The international segment, the first nine months, was highly impacted because the Q3 was dominated by the full quarter consideration of the KBC Group, and they delivered a very, very strong earnings performance. As you can see, because we started in the comparisons from a small segment in the last year, now considering, under consideration of KBC, you saw an increase by about 100% in EBITDA and in revenue, and so we margin by 10.1% for the first nine months. As you saw this morning, here in the quarter, the group Q3 figures. Here we saw an increase of from 26% on the top line, here on the EBITDA by 21% and the EBITDA margin by 84%. That is as well dominated by the KBC Group, and we, as CANCOM Group, benefited from the strong results KBC delivered in the Q3. I'll like hand over to my colleague, Tom. Thank you, Rüdiger. My name is Thomas Stark, CFO of CANCOM, and it's a pleasure to have you in the call. And, well, as well, a pleasure is to talk about operating cash flow. I think, you can see on this slide, pretty easily that we have materialized, some of the, expectations that we have, raised, facing you as the investor community. We have improved, or we have shown, operating cash flow of about EUR 70 million in the third quarter, ending up with a nine month operating cash flow of -EUR 9.9 million, after -EUR 169.7 million, in the nine month period of 2022. So this is about half the way of the improvement that we promised to you. Where does it come from, actually? Accounts receivables have improved by EUR 55 million, and accounts payable has improved by about EUR 9 million. We still have potential in inventories, so we have a deterioration of about EUR 18 million. That's where we think we will have a significant improvement potential for the fourth quarter. And we have a contribution of about EUR 10 million of KBC to the overall operating cash flow. That means with regards to the end of the year, we still think and strongly believe that the fourth quarter will be the best contribution in the whole year for the operating cash flow. So it should be somewhere in between 70 and, well, a +100. That's what we expect as an assumption for the full year, and which would be pretty much in line with the improvement that we have seen for, that we see for the full year of 2023. Some comments on the financing cash flow. The volume that we have bought in with regards to our share buyback program as of 30th of 2023 was EUR 33.7 million, and I will comment on the share buyback program on a slide to follow. Let's focus on the CapEx. Again, we are pretty well in line with the target. Target is below 2.0% for this year, with well foreseen improvement for 2024. CapEx to sales ratio is about 1.7. We've done some investments, well, that could be called preempted. EUR 1.6 million have been DC investments that are, well, usually to be done only every few years in a data center. That has contributed to the EUR 8.5 million that we see in the third quarter of 2023. For the fourth quarter, we expect a CapEx ratio or a CapEx value of between EUR 6 million and EUR 7 million. So the goal that we have, well, stated as a goal for the year 2023 will be met for the full year. That's easy to steer, and we are still well on track with what we are facing as a goal for the CapEx. PPA-based amortization EPS effects, we have commented on this slide and on this part of the financial KPIs in the last earnings call. I think you're pretty much aware that you are, that we have acquired KBC as of beginning of June 2023. We have therefore seen some kind of changes. They are all reflected in the PPA effects on amortization as well as in the PPA effects on EPS. Please take into account that the PPA is still preliminary, so it's still subject to audit, and there are changes possible. However, no matter what the results might be, there will be no cash outflow effects. This is a non-cash effect, but it's important for you and for your models. For sure, by in this fiscal year or in our annual report, we will have a final data on the PPA of KBC. The share buyback status for you as of just this Monday, we are entitled until the 30th of June 2024 to buy up to about 10% of shares. We have used or utilized a volume until last Monday, EUR 44.5 million. That represents about 4.56% of the share capital and the numbers as of 30th of September for your assessment of the cash situation of income I've already provided to you. The financial calendar shows today for sure as the date for the quarterly statement, and I am very pleased to invite you at the next potential meeting point, 28th and 29th of November. We will be at the analyst conference at the German Equity Forum in Frankfurt, and we would be pleased to meet you there in person. Please take benefit from the situation to be in touch directly. We will be there, myself and Lars Dannenberg and Florian Mangold, would be great to get in touch directly to talk about well the actual situation in more detail, if required. With that said, I would like to hand over back to Rüdiger. Many thanks, Tom. I'd like to go further, and we had it as well in the last conference call, where my colleague, Jochen, mentioned a little more in detail regarding the deal rationale of the K-Businesscom, and we like to give you more insights. There are three key facts: It's a great acquisition, the operating performance is on track, and the integration running as scheduled. There are some further details I'd like to share with you. Yeah, we will start beginning of next year with a common branding across the total group, and you will see then CANCOM overall. Also, we have a strong alignment of the sales organizations in the go-to-market. We have common customer events, where we share the good things that we have to deliver, and we can offer to our customers, and we see also that our market footprint is getting stronger in the certain market we are in. We expect also the demand in the Q4 will improve for the fourth quarter, particularly in the hardware and software businesses. Therefore, we confirm the current forecast of the CANCOM Group and to expect here the development you can see for the year as a whole. That means we keep our current forecast as we mentioned the last time. Many thanks. Yep. Thank you, Rüdiger. With that, we would like to hand back to the operator to start the Q&A session, please. Thank you very much. Ladies and gentlemen, if you would like to ask a question, please press nine and star on your telephone keypad. In case you wish to withdraw your question, please press nine and the star key again. Please press nine and star to register for a question. First up, it's Yannik Siering from Stifel. Over to you. Good afternoon. Can you hear me? Yes. Okay, great. Thank you. And thanks for taking my question. So I would have two at this point. The first one is on your guidance. If I look at it, then I think the revenue midpoint implies an organic decline of around 5%, if we assume a similar KBC contribution compared to Q3. Could you talk about the sequential improvement, and what are the main drivers here? And then, also on the bottom line, so if we talk about EBITDA, then I think the margin should be similar to what we saw in Q3, so around 8.4%. Is that a level that we should also assume going forward? And then the second one would be on cash flow. You already alluded to it. We see still some outflow on inventories, but an inflow from receivables. Could you provide some color here on working capital management and what were the main drivers? Are there still some moving parts from the KBC acquisition? I think in the last call, you talked about working on the payment terms with the vendors. Has that happened already, for example? Thanks. Sorry, here you go. Yes, Yannik, we just talked about who is going to take the questions, and well, we just came to the point that I will take it. So first of all, with regards to the forecast and what your assumption is, for sure, we have an internal forecast, and we are pretty much where we are for sure well in line with everything that we have in the forecast. A very simple calculation for the assessment of the revenue is, well, year to date, we are at a point of 1.062. The contribution of KBC per quarter is about EUR 140. The last year, we have ended with about EUR 367 standalone, so KBC not included, and then we ended up without any growth at the point of EUR 1,570. That should be pretty well in line and even taking into account some kind of decline compared with last year. You have to be aware, last year, we still had impact from the supply chain topics. We are still facing improvements. We talked about the cash flow and so on, but last year was still impacted from that point. So given the overall scenario, all those topics mentioned, I think this provides you with some more color on whether this is difficult to achieve or not. With the given situation, with a normalization of business and the fourth quarter impact, I see that this will be pretty much in line with our forecast, actually. Secondly, you talked about the cash flow and what has actually happened in the third quarter. You did directly address the topic of KBC payment terms. This is still some kind of improvement potential for next year, actually. You can't change the payment terms that quickly. You have to go into negotiations with your suppliers and so on. So this is not affecting neither the third quarter of 2023, nor will it impact the fourth quarter of 2023. This is something that we are addressing, actually, and where we think we will see some impacts in the year to come. So that provides you with some clarity on this year and the expectations. We have seen the improvement. You talked about what do we personally see as a potential improvement factor? Really, this will be the inventories. We have, well, up to date, from the date point of view, we've moved all of the inventories from our old ERP system to a new ERP system. That eases pretty much the management of the inventories. And we had some, well, major projects that were still on stock as of end of third quarter, 2023. We will deliver them in the fourth quarter, and this will impact automatically the inventories. So that's why I'm so confident in, well, having some improvement, with regards to inventories. The AR topic, first of all, is again, easier to manage in one system, that's for sure. And secondly, while minimization of the behavior of customers and our internal processes is still ongoing. So again, some kind of potential. Overall, we think, and you might have heard it, pretty clearly, for the fourth quarter, we will see from our expectation, the best cash inflow in the whole year, meaning, topping the EUR 70 and being somewhere in between last year's fourth quarter and the EUR 70. Great. That's helpful. Thanks a lot. The next question comes from Gustav Froberg, from Berenberg. Over to you. Thank you very much for taking my questions as well. I have three quick ones. First is on EBITDA. Were there any one-offs, on the profitability side in third quarter, similar to what you had in Q2, maybe any spillover effects or so? Or is this kind of a clean EBITDA quarter, if you will, with the exception of KBC? Then a question on KBC margins standalone. They seem very strong as well. Should we see this as a sustainable level of margin for KBC now, or were there any KBC specific one-offs, in the quarter? And if yes, can you quantify this? And then the final one is just on savings. I think you talked a little bit about the improvement that you want to see in Q4. Q3 was organically weaker than Q2. Can you maybe comment a little bit on the state of your end markets and give us a feeling for what is driving the sequential improvement and the uplift in Q4? Those are my questions. Thank you. Many thanks for your question, Rüdiger talking. We had in Q3 an amount of EUR 500,000 on one-off impacts regarding restructuring. To the second point of the question, KBC margin was roughly 10%, but we expect that it will weaken and that we go to midterm level between 7.5% and 8%. And we as well see, first of all, that the demand regarding in our order entries is increasing compared to the quarters we had before. Therefore, as well, we keep our forecast outlook as we expected, you know, that we had the early signs that the demand, especially in the infrastructure and software businesses, is growing, which we saw not in the Q2 or the beginning of Q3 development. Okay, super. Just a quick follow-up there, just on end markets. So it's mainly client computing, infrastructure, and software that you're saying is driving, or is there anything else? We have anywhere the strong service businesses, that is anywhere there. Yeah, but it's more or less everything what is workplace infrastructure. Yeah. Super. Thank you. Next up is Tim Wunderlich from Hauck Aufhäuser Lampe. Over to you. Yeah, thanks for taking my question. Most have been asked and answered. One more I would like to understand is the cost savings that you expect to realize already in Q4. I mean, you've done some restructuring, and I would expect some of the benefits to already become visible this year. Maybe you can give a rough estimate. And then you just talked about, I mean, this has been discussed just now about the demand improvement that you're seeing for Q4. I mean, that is unexpected and very interesting, but I'm just wondering, when you talk about the order intake increasing currently compared to the quarters before, I mean, is that not the usual seasonality, that Q4 is stronger than Q1, Q2, and Q3, so you would necessarily see order intake increase? Or is this beyond expectations and beyond the normal seasonality, what you're seeing currently in terms of order intake improvements? Thanks. Well, and we again decided who is going to take the question. First of all, the demand and the order intake, and that you addressed that. Well, demand is still moderate, I would say, but we have seen a second quarter, 2023, with intakes on Q no, sorry, we've seen a Q3 with impacts on Q3. And as the products that we are talking about that are affected, mostly the clients, they are very, very quickly well delivered and so on. The demand that you're talking about, actually, is the usual seasonality, is reflected in last year's and this year's comparison, actually. This is what we actually do. We are comparing last year's order intake with this year's order intake, and the opportunities just respectively, to assess where are we going to end with regards to those products and those, well, good space and revenue. That's what we are doing. So when we talk about a normalization, then we talk about, well, we have a visibility on what have we seen last year, what do we see this year? And kind of come back to Yannick's question, facing the forecast and the revenue, I talked about what has been the measure of the benchmark last year? Where are we today? And that should underline why we are confident with our forecast, actually. So it's a comparison, and that, that's what we are talking about. Okay. It gives clarity. Cost saving. Just, sorry, just let me jump in there quickly. I mean, that is a like-for-like comparison, I'm sure, without KBC. And most likely, we're not talking about order intake growth year-over-year, but we're talking an improvement in the decline compared to what you've seen in Q2, Q3. Is that fair to say? We see a normalization whereas we have seen a reduction, you're right, in the third quarter. We are now pretty much in line, and there are. Well, generally speaking, we are in mid or at the beginning of November, so it's still some way to go. So please take this into account when we're talking about order intake. But you're right. It's something that should be at or above the level of the last year. Interesting. So it's fair to say that at least at this point in time, we could assume that Q3 was the trough for you guys? Well, that's very difficult, Tim, and I've already had the question several times today. We all know, I said one or talked about one example. Yesterday, we had The Butcher's Wife, that they have reduced their forecast. And, well, we have specific topics. We have a blame for, well, why are you developing differently from your peers and so on? We have a focus on some kind of goods, so this might not reflect the overall situation. However, with regards to our own situation, you're right. With regard to do we think that we are already done, this is very difficult to predict. I think no one in the market, with the different situation and the potential risks of whatever war we are talking about or recession, that might be a threat or whatever, nobody will take something for granted. And that's why it's difficult to assess, and that should be the disclaimer to what I said to you with regards to the order intake. Okay, thanks. And then regarding the incremental cost savings that you may benefit from in Q4? Yes, I think I can refer to Rüdiger. He talked about the EUR 500,000 that we have still, well, what's the right term, utilized, or spent in the third quarter, to right size, to shape, and to streamline the organization. So it's significantly less than we have seen in the second quarter. Nevertheless, we are monitoring the situation closely, and no question, I think everybody has seen that we are willing to act in case it's required, and we will do so if required. And that's for sure. So I think it's the best to say about the cost savings question. Yeah, thanks so much. Can I. Rüdiger talking, you mentioned regarding the benefits out of the efficiency program we started this year. We see the major impact we see in 2024. It's a very. Okay. It's a smaller amount in 2023. Okay, understood. Thank you so much. The next question comes from Florian Treisch from Kepler. Yes, good afternoon, everybody. Thanks for taking my question. I have basically two left. So, coming back around your confidence on Q4. So I got your point that maybe the first weeks of Q4 were better, but as you are implying as well, it's basically all about the end of your budget flush with, which will only come in coming weeks. Do you have any confidence in, let's say, the budget flush being in line with last year, better than last year? Just looking at the current macro picture, I think it's fair to assume that we can all end up with a weaker end of the year business. The second part is, as a question before, around cost savings. If you just look at, let's say, number of employees compared to your actual top line performance, I think it's kind of asking everybody, isn't there a need for a major readjustment, in particular on the CANCOM side, for the coming months to come? Are you really headcount reduction to realign your business, or are you really confident in, let's say, 10%+ next year? Because otherwise, I believe you can hardly keep your current number of employees. Are you planning anything here? Thank you. Many thanks, Rüdiger talking. Coming to your first point of the question, confidence regarding Q4, I just can only repeat what Tom mentioned. We have the early signs regarding the expectation. We compare with former years, and we see as well, due to the events we had with our customers and the projects we won. And they are great projects, and that will show that we have the real confidence of the Q4 numbers are and all our expectations. Regarding the employees, clearly, we have to monitoring closely the commercial or market development, and as well in relation to our operation performance. We reserve to take further actions if the development don't meet our expectations. However, bear in mind that the major benefits we will gain of our efficiency profitability program will be in 2024. And on the numbers you saw in the report, there's some reflection point as well, regarding due to the acquisition of KBC. And you have areas where we have to put, I think, some additional effort and resources in, like cybersecurity, et cetera, where the strong demand on services or AI and services and infrastructure sizing. And the other side, you have maybe a downsizing because you see a weakening of the development of the market demand. That means, not to go to more in detail, but there will be, if necessary, clearly adjustments, and that is under consideration if we see development in the budget phases for next year. Okay, thank you very much. And if I'm allowed, maybe just a quick follow, follow-up. You mentioned, or, or Tom actually mentioned, I think, that there are some labs that deal with the inventory, which will translate into revenues in Q4. Can you quantify that impact, or is it just a marginal number? Well, actually, the inventory topic, we got aware there was one big deal in which is about EUR 18 million. And that is the topic that I addressed, and that we expect to materialize in the fourth quarter. That's great. And nevertheless, it will be still tough work in order to reduce inventories and to keep on, well, delivering in the fourth quarter. I think a very substantial topic to note for you is the most and the highest part, or the biggest part of the intake will be in December and November. This is actually still ahead of us. So this is something you have to take into account. But nevertheless, with regards to inventories, cash flow management, I think we have shown there is confidence in the forecast, and we still have room for, well, even potential, well, setbacks in the revenue generation. And then, hopefully, I think after the question three times now, you have a good visibility of our understanding of our options and the potential in the fourth quarter. Okay, thank you. The next question comes from Martin Jungfleisch from BNP Paribas. Yeah, hi. Good afternoon, thanks. I've two left, please. First one is on the employees. So just coming back on that, on that topic, you've reduced the number by 150 in the quarter. Was this mainly driven by natural attrition, or was this also coming through the restructuring program? And then maybe if you can share the attrition rate for voluntary attrition over the last couple of quarters, have this increased? And then, and then also, the other question is on the performance of public and private sector. If you can disclose that and maybe what your expectations for the public sector performance are, if you want to go into Q4. Thank you. Thank you very much. The next question comes from Andreas Wolf, Warburg Research. Sorry, I think we have the question from Mr. Jungfleisch, so it's the answer. Sorry. So I'll open the line of Mr. Jungfleisch again. I'm sorry for this. No, we're about to answer, actually. Yeah, we're about to answer. Okay. Okay, I'm sorry. The line is open? Yeah. Okay. Yes. Okay, many thanks. Regarding to the development of the private and public sector, yeah, clearly, we see a weaker demand in the private sector, especially in the small and medium customer set. Yeah, the public sector is still concerned on the requirement, despite the DigitalPakt complication regarding in the K-12 market. That means for schools, yeah, how to get the money released. The government has also the consequences that, yeah, we have some vendors, OEMs, which we work with, like, maybe you saw it in the press, Fujitsu Siemens, that they declared that they want to step out of the German market and the end computing devices. Yeah, but we see, yeah, that there is still on demand, and we have some big tenders out where we are replying, and we are strongly confident that they will support our numbers in Q4. Regarding the employees, the 150 reduction here, that is mainly driven by the restructuring and efficiency program, but as well, we have some normal attrition here, but the attrition rate, we will, I think, release in Q1 live comes. Yes. Yeah. Okay. But has that increased a bit post the merger, or is it right—is it on the same, same level for voluntary attrition? We don't see an increase due to the acquisition, and why should they? Because it's a great deal everyone can benefit on. We are a strong company, and we deliver confidence. Yeah. Therefore, there should be, shouldn't be a reason that employees leave the company due to the KBC acquisition. Well, whether we have lost any of the major players of the CANCOM Austria or KBC, then actually, the interesting thing is, I think all the employees, they see the benefits of the combined organizations. We have shown you, and might be some of you are interested in the deal rationale and the idea behind it. We've talked about it in detail at the end of the, or in the earnings call of the second quarter. So I think employees are pretty much understanding that we have created a major player in the DACH region- Yeah. - and that they all can benefit from their, well, complementary offerings in part, and of their combined offerings. So this is something that is slightly different to just ask you about the attrition. If you're focusing on this, it's a clear answer, that I think it's something everybody perceives as a good opportunity. Yeah, makes sense. Thank you very much. Now it's the turn of Andreas Wolf, Warburg Research. Your line is open now. Yeah, hi, everyone. Thank you for taking my question. I have one regarding KBC. What was their organic growth rate in the last quarter? If you could share that with us. And could you also provide some color on the type of projects that started at KBC and the duration? Are those basically do they have a duration of two years, or is it basically a new revenue level at which KBC will operate at going forward? So that's the top line related question at KBC. And then on the integration, will you also harmonize ERP systems with the existing systems at Cancom? Is it something that is on the agenda, or is it not necessary to operate going forward? Thank you. Okay, we said I will answer the KBC, the KBC growth rate question. Actually, we don't have the growth rate available right now at the moment, but I think it's pretty useful here that you see, yeah, KBC has developed, well, just perfectly. They are focusing very much on security solutions. They have services as their core element. And, if you take a look at the contribution of KBC with EUR 13.6 million of EBITDA in the third quarter, and it underlines, first of all, that we think the deal rationale is great. And, we have the consolidation point, June 2023. That means we have not right now available what the Q3 2022 standard of KBC was. However, it was the best quarter of KBC, ever. This is something that we can say, and it's a good thing to know. Coming regarding the projects that are major, major projects, and this type of security environment as well in the network environment, here, which the projects were, let's say, KBC won, in the summertime, and now going after building the architecture, starting the project program, delivering the infrastructure and going to running in the, in the normal implementation mode. Yeah, that means, there is some projects, especially in the healthcare and as well in the public market. Yeah, and so we have some, security operation centers that deals with which KBC won. Yeah, and now, if you're regarding, you have to build the use cases together with the customers, and then the lead time to start here is to make it operated with you up to running, and now we see the benefit out of it. Okay, thank you. And the integration, is it necessary to basically combine the two entities also at the ERP level, or how should we look at it? I'm just asking against the background of- Yes. - of your recent transition from Microsoft to- Yeah. Yes. Clearly, we wanted to benefit that the whole group, yeah, benefit from the great systems we put in place. But first, we will start to finish overall all entities in Germany here, and then we go up further, yeah, to CANCOM Austria or KBC, yeah, that we then have the alignment, because it's not only Austria, it's as well, yeah, Romania, yeah, and Czech, which we have to put in under consideration. Mm-hmm. Okay, great. Thank you. Thank you. We do not have any further questions. Okay. So thank you. Thank you all for participating in the call for Q3 results of Cancom here. It was a pleasure. Hopefully, we meet in Frankfurt next, otherwise, let's speak and keep in touch. Thank you, everybody. Thank you, and bye.