Hello. Welcome to secunet Security Networks AG Group Quarterly Statement as at 30th September 2022 conference call. My name is Priscilla, and I'll be your coordinator for today's event. Please note this call is being recorded and your lines will be on listen only. However, you will have the opportunity to ask questions at the end during the Q&A session. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you'll be connected to an operator. I will now hand you over to your host, Mr. Axel Deininger, to begin today's conference. Thank you. Thank you. Welcome everybody to today's call on the numbers from September this year. Let me start with a couple of key takeaways, and then the CEO Thomas Pleines will take over to guide you through some financial details. Key takeaways. As we expected, this year will be a tougher year than the previous years. I think we still show a stable revenue of EUR 230 million with a solid EBIT line of close to EUR 24 million. It's below the last year's level, but I think still on a very good level considering the fact that we don't have special effects. What we've always seen, there were two effects, COVID based on high order income. I think this year we are going back to normal, which is not on that high level, but I think still on a very good and very competitive level. We still see a positive business momentum overall. We have a good order situation still in hand, where I think we can profit from the next couple of quarters. We also confirm the full year guidance, with expecting a very strong Q4 with a revenue of around EUR 320 million. We are shooting for an EBIT towards the end of the year of EUR 50 million, which would be very solid numbers considering the overall circumstances and considering the fact that the special effects are over. We still see a very, I think, good, profitable situation. With that intro and key takeaways, I would like to hand over to Thomas, who will give you more insights into the financial details. Hello, everybody from my side. We will start with the group level numbers. We reach EUR 230 million in revenues and around about EUR 24 million in EBIT. As Axel said, it's compared to the last year, related to two special effects. One in the public sector, it's a pandemic related additional sales, and one in the business sector, so higher product sales from the rollout of the secunet konnektor. As we declared last year, we did not see these effects in this year, so it's in line with our expectation that we are not running on a level from the year 2021. Furthermore, earnings are impacted by a change of product mix. We are less in license business and more in hardware business. That had an impact on the EBIT line and on the EBIT margin, as we expected. Next slide. If we see the split between our two sectors. On the one side, the public sector, the main sector who delivers the SINA architecture and the special appliances that make us a very well going business in last year. That was not again in this year happened. Therefore we have EUR 180 million in revenue and EUR 23 million in EBIT. As in the history, the public sector remains the group majors revenue contributor. One side to the business sector. No, thank you. Business sector, around EUR 33 million revenues and EUR 1 million EBIT. Of course, as I mentioned, there was a deep impact from the eHealth business, because the business is going down. We have two brilliant years in the past by delivering the eHealth Connector, and that is something that will not happen in this way the next years. We have to see that there's a reducing of this business in our business sector. The contribution of this part of secunet is 16% compared to 18% in last year. Nothing special to the slide of our share of the international business. It's around about 8% to 9%, so there's not a great difference between the year before, as you can see. Cash position, as you know, we acquired a company called SysEleven, around about EUR 50 million. This was a big impact on our cash side. Of course, we have a special dividend payment, EUR 35 million, coming out of the brilliant year 2021. We increase our working capital because we have a lot of revenue to do in the last quarter, so we have to take care that we are able to deliver our workstation, for example. Therefore, our cash position is lower than the years before, but we see a recovery of this position at the end of the year 2022. For the outlook, I will hand over to Axel. He will give some details what we can expect in the future. Thank you very much. Thank you, Thomas. Yeah. On the overall situation and also on the outlook, what I said at the beginning, the order book remains, I think, on a high level, slightly reduced versus last year. Again, this is really without special effects at the moment. We have full utilized development capacity, so we have also new stuff in the pipeline, and we also see additional growth opportunities and sales opportunities, upcoming in the fourth quarter of this year. I think overall a very stable position we'll see in the market. Focus for us, is still what we always said, sustainable, profitable growth with a focus on the most effective IT security solutions will remain in our segment with the two acquisitions we did, and we have broadened our space. I think there are two positive effects with that. We add to our organic growth, and we expand our portfolio, which means we, I think, still support our existing SINA portfolio with more offerings. Of course, we address new market segments we were not able to address. I think that gives us a better portfolio and a more solid situation on further growth. On the public sector, we still, of course, we are working very hard and are fully loaded with further developing of our SINA infrastructure and the core technologies. With the acquisition of SysEleven, now, of course, we will address the secure cloud and collaboration area, and of course, the cloud business will take time. That's not an overnight effect we'll see, but we need to prepare, and that's what we currently do. We prepare a lot on the R&D side that we can also address projects when they're finally upcoming in the next year or in 2024. That's what we see a little bit more effort and maybe not at the revenue, but at the moment, we do a lot of work to prepare further revenue growth, especially in the cloud area. Business sector, again, next to the eHealth Connector, we also develop further solutions for the eHealth market, which is always difficult because it's regulated. I think also here over time, we'll see or we see some promising areas we can also further grow, and our target is still to become a significant player in the industrial IT and OT security area. Here, the first projects we have, we are fully loaded here on the business sector side with our consulting team. That's where we are really good, but here also we invest in future portfolio expansion technologies to see and to support further growth in the upcoming years. International. Yeah, the share didn't change a lot, but you see here also it didn't reduce. We were able, in difficult circumstances, to expand further our international footprint. We do that on a very, let's say, sustainable way. We are not super aggressive, that's right. We see that as a further growth potential, of course. The target is definitely to have a stronger footprint out there with double-digit% range in the overall revenue. We have promising projects both in the EU and Middle East, and within NATO, we see also here future opportunities. It will take time, but you see here again, even within COVID, we're able to grow our business there on the international basis. Overall, yeah, we're expanding carefully our portfolio, and we address new market segments. Not too aggressively, but at the moment it's also a lot of R&D work we do and investing in the future infrastructures. Some selected key achievements so far with the two acquisitions. What I said before, we have expanded our portfolio to support also existing business, but also to address new business. Especially, I think for us, the key acquisition was SysEleven because we expect the first opportunities upcoming now next to the foreign ministry, where we have already installed the cloud infrastructure. We'll see also in the public space, first project upcoming next year or in 2024, and that's what we're currently preparing our cloud infrastructure so forth. That was a very key acquisition to expand our portfolio towards the cloud. We still have further developments on our core product, which is SINA Workstation S. We constantly further develop that. We have to develop also new Intel reference platforms that are upcoming. We follow standard roadmaps, expand the feature print in our solution, and we see there also further growth potential. That's ongoing work we always do, but here it's also significant effort we spend into that. Biometric border control, we see further opportunities. Of course, Switzerland was a very key project for us, which is now coming, and we will generate revenue in the next years. That was a big achievement for us in the last year, and we see further opportunities in the European and Schengen Area. secunet medical connect, we launched the first product, which is not the connector, but connecting medical devices according to standards and regulations to achieve a trustworthy communication between the devices and the data-driven services. Where we see also opportunities because that's currently not the fact in the medical area that those equipments, especially that are also remotely placed, are really securely connected to the infrastructure, and that's where we see further opportunities for us, and that's where we have the first design wins with a new customer base as well. We did a lot of work on the industrial side on having channel partners installed like Tech Data. They're taking over a distribution channel for us for the hardware. We constantly develop our software platform, which is secunet monitor for OT services. We got the first project. It's not an overnight huge business revenue stream. We see ourself very well-positioned with our core know-how, and that's what we further invest to have another footprint in the market next to the public sector. Coming to the cloud, again, it's for us the key segment. That's where we see the opportunities and growth opportunities, because most of our business, or a huge chunk of our business, will go into the cloud. We still need workstation, which is the good thing. I think we'll be the first or the only player in the market that offers both cloud but also client solutions for the cloud in one platform, which I think it's an also unique positioning of secunet versus other players that are either in the cloud or providing workplace technology. We are the only guys in the market actually offering both. That's in a proved way also with a, let's say, a stamp from the BSI. We want to transform our expertise, and that's why we hired SysEleven. We will now have 120 people on board with a long-term cloud infrastructure and software experience, but also with operational experience, which I think it's very key that we can showcase operational experience over 10 years in the cloud area, and especially for addressing public sector. I think this is a very key point when we see the first projects upcoming. We here also build ecosystem of partners to achieve a value add, and especially also address market-specific offers, which will be quite specific, especially in the public sector. That's also a segment what we are preparing for. I think we are in a excellent starting position with the ingredients I just described, and we are quite optimistic and also excited that we hopefully play a significant role also in the cloud infrastructure in the future in Germany. Coming back to the forecast on key assumptions for 2022. We have non pandemic-related market effects, we are coming back to normal. Even if you take out the special effects over the last couple of years, we see a very solid growth underneath. With reduced EBIT lines, on a very profitable basis where we can also finance our growth in the future on our own, we are not dependent on external financing measures. We still have restrictions also on the revenue for this year because of semiconductor supply, we have shortages. We are shifting. We are not losing, we have to shift revenue also from this year to next year due to supply chain restrictions. It's not necessarily significant, it will be a very tough Q4, as you can derive from the numbers. Q4 will be very intense, we are preparing to work until the last day of this year to achieve the revenue and also the EBIT target. It's a very tight schedule, probably the tightest schedule ever for fourth quarter, we are still confident that we can achieve it, assuming also that supply chain works in the current way. We see some shifts also for this next year that's already in the assumptions implemented, that we shift revenue from this year to 2023. On the overall situation on both from Ukraine and the energy crisis, there are positive and maybe also some negative things. Definitely there's a higher awareness for cybersecurity also on the customer side, especially on the business sector, where they see attacks and the attacks are increasing. That's the good thing. Their willingness to spend there. The focus at the moment for a lot of companies is the energy situation and the cost of the energy, that's a little bit the downside effect, that cyber is very important, energy might be even more important from that point of view. Assuming that energy will be solved sooner or later, cyber will remain, that's where we also see a growth potential later on. At the moment, energy is definitely dominating a lot of discussions, we are going back hopefully one day that where energy is not the key topic, cyber will remain as one of the key priorities for the companies. Overall supply of energy and raw materials to our business are not an important factor. We are not very much affected from the energy situation overall on us. Of course, especially our customers in the business sector are affected, that's what we have to take into consideration. Final slide on the forecast. That's what you can see here. Taking away the special effects in the last three years, where we had the eHealth Connector launch in 2019 with a special effect in the last two years with pandemic-related effects, with additional procurement. If you take that away and see the, let's say, the solid growth underneath, you can really derive a very solid growth line on revenue, and we hopefully can also extrapolate that in the upcoming years with a good profitability, maybe with some fluctuation profitability, because this year is definitely, next year will be some years for investment into new portfolio elements. I think overall, very positive and profitable situation overall for secunet. I think within the market, we have a unique positioning both on the portfolio, on the business model, and our core strength with over 1,000 people working dedicated on IT security. I think that gives us a very good chance for addressing upcoming opportunities in both markets, both in public and in business sector. With that statement, I would like to conclude today's presentations and Now we are open for your questions. We are happy to answer them. Thanks again for listening, We are now ready for Q&A. Thank you. Thank you, Mr. Deininger. Ladies and gentlemen, as a reminder, if you would like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. To withdraw your question, please press star two. We will pause for a moment to allow everyone an opportunity to signal for questions. We will take our first question from the first participant, Mr. Norbert Dr. Kalliwoda from Dr. Kalliwoda Research GmbH. Please go ahead. Your line is open. Hello. Thank you so much for your presentation, Mr. Deininger and Mr. Pleines. I have two questions. The first is a general one. About products for your sales, for your products in different countries, can you increase that partly because of increased energy prices? If you intrude to new areas and countries like Middle East, are you starting with lower sales prices? Can you give us a little bit of an insight in that? Okay, should I ask the second question, or? The second question would be, this eHealth Connector. You had -87% profitability or EBIT, whereas sales was one third, roughly lower. Is it because of the fixed costs, logically, or can you give us a deeper insight how you can improve that maybe? Thank you. Okay. Thanks again for the questions. Maybe let me take the first one, and Thomas can give you some insights into the second question. The first question on, if I understood that correctly, on sales prices internationally. First of all, I think we are not necessarily affected from the energy situation internationally, where we're rather negatively affected on the pandemic situation because we're not able to travel in the Corona time. That's coming back, so we now can also execute projects. Again, we didn't see a huge increase in revenue, but we had a stable, slight increase in revenue that was also due to Corona, but less due to energy. I think on the sales price level, also Middle East, we have stable prices. We don't give special prices for international partners. We're not dumping on that level. I think we got fair pricing overall also in the Middle East, and of course, they are not affected on the energy situation anyway. I think sales price internationally are on a very good level, decent level. There, it's rather the additional effort, of course, on opening up sales channels, having channel partners there, et cetera. That's the effort. The pure product sales price, I think, is on a very solid level. That's what we also don't compromise, I would say. Mm-hmm. Okay. From that point. Thomas. Thank you. The eHealth Connector. Yes. For the eHealth Connector, as I said, the first two years were very high regarding revenue and EBIT margins because we sell the hardware and we sell the software. Now it's a maintenance business. It's fine for us, the maintenance business. You don't see the EBIT margins because we are investing in the second part of the business sector. It's industrial. There we are pushing a lot of projects to become a player in the OTIT market for SINA-like products. That's the investment we do for people, and therefore the margins are lower than compared to the previous year. Okay. Thank you so much. Thank you. We will now take our next question from Felix Allmann from Warburg. Please go ahead, sir. Your line is open. Mr. Felix Allmann, your line is open. Hello. I was muted, unfortunately. With regards to the Bundeswehr and the EUR 100 billion, which we all read in the press, when can we expect 1% of that in your order book? Okay. I, completely surprised by that question. That famous EUR 100 million, you can subtract, I think interest rate, et cetera. No, it would be great, of course, to see even 1% out of that. I think it will take time, but if you read through the lines, especially of the famous EUR 100 million, most of that goes into, I would say, weapon infrastructure systems, I think EUR 220 billion on ammunition, where we also have shortages. I think it relaxes a little bit the budget on IT spendings, and we have, I think, good opportunities for next year and for the next two years. Dedicate me, very clearly to say, dedicate me there is not a significant budget that is in our area, I would say, of digitalization. It relaxes a little bit the pressure on budgets within the Bundeswehr that we get relaxation on projects, but I think basically the EUR 100 billion are spent into other areas, full stop. There is partly also radio frequency projects that I am also getting frequently questions, are you there? We don't do radio frequency, we do IP stacks and IP-based business, so we don't do radio business. Yes, overall, we will see chances, but by far not in that area of the one percent you mentioned. That is not the case, unfortunately. Okay. Well, the question was. It is all right. The question was about your impression, generally. Of course, this 1% was a joke. Yeah. No, it would be great. I would take it the 1%, easily. No, we have projects. We don't win everything, of course. We also have competition. I think the big chunk, of course, goes to other areas. We have, overall, I think a very positive sales opportunity pipeline, I would say, in that area. That also includes NATO. When it comes to timing, when will be the main part, if any, from this EUR 100 billion will come to you? Will this be next year, or next year before, or when do you expect them, if any- When When it will come? When you look at their planning cycles, they're rather on the long haul. We expect that rather if it comes to us, we expect rather, let's say, second half next year or it's going into 2024. Okay. On top, we could ship more, if we would have semiconductors. There, frankly speaking, also we have some downsides on the supply chain. We then would be able to generate more revenue, but that's where we are limited on the supply chain as well there, especially with some products that are going for Bundeswehr. That's what we hopefully can solve, and that, I would assume, takes second half next year, and it's going into 2024. Okay. Thank you very much. Thank you. Once again, ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. All right. We'll take our next question from Sergej Schalin from Lupus Alpha Asset Management. Please go ahead, sir. Your line is open. Hi. Thanks a lot for taking the question. Mine would be regarding the connectors. As far as I know, in public sources, you can read that there are 83,000 installed right now, and that they need to be changed until or updated starting end of 2023. Can you tell me when these revenues will come and how many of these 83,000 installed base need to have an update, and what are the costs per connector? Is it like EUR 2,500 per connector? Is it a reasonable assumption? Thanks. Thomas, you want, or should I? Thomas, I don't hear you then. I can give you some details about this. There's an ongoing discussion about this changing of the connectors. It's more or less a political discussion because we just delivered, three years ago, a piece of hardware with software installed, and now there are some security aspects that the connectors normally need to be renewed. There's an ongoing discussion if the money is worth it to renew all the things. They discuss it on the political level, if there are possibilities to lower the security and don't have to change the hardware. At the moment, we prepared to renew the connectors. We think that there will be some pieces, but we are not seeing a clear number for the future, what will be the outcome of this political discussion. They all try to get rid of the hardware. They don't have an alternative to use only software. They have to do something, and the question is: Will they lower the security aspects on the connector and then get rid of changing the connector, or will they stay on the high security level and so you have to change the connectors? It's a little bit of the problem. Our competition, CompuGroup, is changing some pieces of the connectors. We are not at this stage because our connectors were built to last longer on the security side. We have to wait. We're preparing for both scenarios. The one scenario is changing the connector. The second scenario is to prepare a software solution. That's at the moment the situation. We hopefully get a clear message from the political side, whether the one or the other scenario is in place, and then we can react and make our business. Thanks. Just as a follow-up, when do you expect this message from the political side and what would be the potential sales for each scenario? We think that this year must be a clear situation, a clear answer for the political side. The scenario is, as I said, one scenario is no connector will be replaced, and the other scenario is all of them will be replaced. We are not sure what scenario will come. At the moment, we are calculating about 50% because, again, it's not only changing a connector. We have to bring our customers to stay at secunet. It's a secunet connector, and it's competition with the competitor, CompuGroup and RISE. We have to wait. We, as I said, expected an answer this year, whether scenario R or P will be in place, and then we can react. If we get a renewal of the connector, we will not sell again 83,000 pieces. There will be a lower number. There maybe will be another price because the konnektor is financed for the doctors, and the doctors will only pay what they get as a finance sum. We have to wait what will happen in the future. Hopefully this year. Okay, thanks. Thank you. We'll now take our next question from Norbert, Dr. Kalliwoda from Dr. Kalliwoda Research GmbH. Please go ahead, your line is open. Hello. Yes, hello. Thank you. Thank you for taking my question. You mentioned this biometric border control, this new contract in Swiss. Was this a tough work when you pitched there? Had the Swiss alternatives, or have there other players in taking part in the round? Further on, is it possible to expand in that area, in the French-Swiss area and in France or in Italy? Would be happy to have some insight. Okay. Yeah, thank you. First of all, when you look at the, I think that our focus area there is the Schengen area in Europe. We are not necessarily in long haul areas, I would say. We focus in Europe. Second point, there's always competition, there are no tenders upcoming without any competition. We have to carefully, of course, position ourselves on both technology and price. I would say most of the projects we won is not because we are the cheapest, but we have, I consider, the best technology, and that's I think was the decision point. We have now a couple of hundred e-gates out there in Schengen in various areas. We have Germany, we have, for example, Czech Republic, we have Austria, we have Switzerland on the airport side, we have Iceland. I think you have a good footprint. The next phase will be that we also will address that market with kiosk systems, which means with automated visa data entry. That's now going to install in Schengen area as well. Next to the e-gate system. We have portfolio enhancements, where we of course have a good position in the airports now already. There are markets probably we are not necessarily targeting, which would be France, because there are strong competition. Maybe France is not the sweet spot, but Middle Europe and also Eastern European countries are definitely our target sweet spot. Of course, Switzerland gives us a nice reference, but we had references before. Again, we have, I think, now 300, 350 e-gates out there in Europe. There's still, I think, some growth opportunity, in both new projects, renewal cycles, but also now kiosk systems for visa data entry or for automating the visa data. There will be always competition. I've never seen a tender in Europe without competition. There are strong competition both from France but also from the company from Portugal. We face the competition, but I think so far we have been quite successful. We didn't win in all the projects, of course, but we won those key projects we thought we have to win, and those we also won. Thank you. [Foreign language] Thank you. Once again, ladies and gentlemen, if you have any questions, kindly press star one on your telephone keypad. It appears there is no further questions at this time. I'd like to turn the conference back to you, Mr. Axel Deininger, for any additional or closing remarks. Thank you. Thank you. Again, thanks a lot for your questions. I hope that we were able to answer them. When you see, again, on the overall situation, we are very, of course, a very intense time, I think, for all of us, not only because of the energy, because of the Ukraine situation, of budgets, also from the German government on cybersecurity, on building infrastructure in the cloud. We have a lot of question marks for the upcoming years. I promise we do the utmost at secunet to address those opportunities. I think we are well-positioned in the cyber area with the most, I think, competitive and most complete portfolio in that area. We are still and will remain the single largest IT security company in Germany. That, I think, gives us a very good head start. We don't take the projects for granted. We will fight for all the projects that are now upcoming. Of course, there will be restrictions because it's uncertain situation, both in overall economic circumstances, especially in the supply chain. We expect a better supply chain next year, but no one knows exactly, frankly speaking. Hopefully the semiconductor supply will relax a little bit in next year, but that's still not foreseeable at the moment. We see some constraints, but I think so far we managed that quite well also compared to other companies. We had a very good and stable supply situation that was also very much appreciated from our customer base. We are looking quite optimistically into the future and addressing the opportunities that are upcoming, both from the public but also from the business sector. Do we have full visibility on the connector exchange and on budget spending from the Bundeswehr? No, I think no one has that. I think we have very good customer relationship and insights, and I think we will react accordingly when it's the right time, I would say. That's our key strength as well, not only portfolio, but also our customer intimacy. That's what we also will play in the upcoming years. Again, thanks a lot for your contribution, for your questions, and for listening. See you next year, and take care until then. Thank you very much. Goodbye. Thank you for joining today's call. You may now disconnect.