Intershop Communications AG Reports Mixed Results for First Half of 2024

Intershop publishes figures for the first half of 2024

Jena, 24 July 2024 - Intershop Communications AG (ISIN: DE000A254211), a global provider of B2B e-commerce solutions for the manufacturing and wholesale sectors, generated revenues of EUR 19.0 million in the first half of the financial year 2024 (previous year: EUR 19.4 million). In particular, the cloud business developed very positively, while the service segment fell short of expectations due to complex major projects. Revenues from the strategically important cloud business rose by 32% to EUR 10.3 million (previous year: EUR 7.8 million). Cloud revenues accounted for 54% of total revenues, up 14 percentage points on the previous year's 40%, and the cloud margin also climbed from 58% to 66%. Incoming cloud orders increased by 18% to EUR 11.4 million (previous year: EUR 9.7 million). Cloud ARR (annual recurring revenues) were up 18% to EUR 19.0 million (previous year: EUR 16.1 million). Net new ARR also developed favorably compared to the previous year and amounted to EUR 1.7 million (previous year: EUR 0.7 million). Service revenues were below expectations with a decline of 28% to EUR 5.1 million (previous year: EUR 7.1 million). This is mainly due to the fact that the large projects started last year turned out to be more complex than planned. In addition, the partner network was increasingly used to implement new projects. As expected, license and maintenance revenues decreased by 19% to EUR 3.7 million (previous year: EUR 4.6 million) due to the strategic focus on the cloud business. Gross profit on revenues remained unchanged from the previous year at approximately EUR 8.4 million. The gross profit margin increased by one percentage point to 44%. Operating expenses and income decreased by 4% to EUR 8.9 million (previous year: EUR 9.2 million). R&D expenses fell by 10% to EUR 3.1 million (previous year: EUR 3.5 million). Sales and marketing expenses decreased by 5% to EUR 3.9 million. General and administrative expenses of EUR 1.6 million were also down 2% year-on-year. Earnings before interest, taxes, depreciation and amortization (EBITDA) improved to EUR 1.1 million in the reporting period (previous year: EUR 0.9 million). Earnings before interest and taxes (EBIT) were slightly negative in the first half of 2024 at EUR -0.4 million (previous year: EUR -0.8 million). EBIT was affected by one-time expenses of EUR 0.4 million related to personnel measures. These costs are expected to be offset accordingly in the second half of the year. Earnings after taxes amounted to EUR -0.7 million in the first half of 2024 (previous year: EUR -1.1 million). Markus Klahn, CEO of Intershop Communications AG: "The reluctance to invest due to the uncertain economic situation is still noticeable. Nevertheless, we were able to build on the positive start in the first quarter. Service and new customer business is currently not meeting our expectations, but we expect the current major projects to be completed in the coming months. We believe we are well on the way to establishing ourselves as a leading AI-based e-commerce platform in the medium term. External assessments by industry analysts, most recently by Forrester, also confirm this. In the future, we will bundle our AI activities in the new 'Artificial Intelligence' organizational unit in order to even further emphasize the strategic importance of artificial intelligence for Intershop. In this context, we will continue to expand our technology partnerships and plan to enter into new dedicated AI product partnerships with third-party vendors in the medium term." At the interim balance sheet date, equity capital amounted to EUR 10.7 million (31 December 2023: EUR 11.4 million). The equity ratio remained stable at 29% (31 December 2023: 30%). Cash flow from operating activities declined to EUR -0.7 million in the first six months from EUR 1.6 million in the same period of the previous year due to an increase in trade receivables. Cash and cash equivalents amounted to EUR 7.3 million as of the interim reporting date (31 December 2023: EUR 10.0 million). For the full year 2024, the Management Board continues to expect a slight increase in both incoming cloud orders and net new ARR. The company also projects a moderate increase in revenues and a break-even operating result (EBIT). The interim report for the first half of 2024 is available at https://www.intershop.com/financial-reports.

INTERSHOP Communications : 6 Month Report 2024

We successfully continued the positive trend in our strategically important cloud business in the second quarter. Cloud revenue increased by 32% compared to the previous year; incoming cloud orders increased significantly as well, driven by contract extensions for existing customers, while ARR and net new ARR also developed positively year-on-year. Despite these positive developments in the first half of the year, we are continuing to act with caution: The overall economic situation remains tense and the reluctance to invest is still noticeable on the market. We are still seeing significantly longer decision-making periods and the postponement of investment decisions by managers within the industry. The service business remains challenging due to complex large-scale projects. We are consistently adapting to these framework conditions and continuing the strict cost and efficiency measures we have introduced. The operating result in the first half of the year will therefore still be impacted by one-off effects from personnel measures as part of our continued Value Creation program, which we expect to be able to compensate for in the second half of the year. We are convinced that our cloud strategy, coupled with our AI enhancements, partner-based AI products and the reconfirmed excellent analyst ratings for Intershop, will continue to put us in an excellent position. This is also confirmed by the latest analysis by the market research company Forrester Research, which recently named Intershop a "Strong Performer" in its B2B Wave report and awarded top marks for our offering. The personalized, AI-supported search, which is based on SPARQUE.AI technology, was named as a particular strength. In order to emphasize the strategic importance of artificial intelligence, we will introduce the new "Artificial Intelligence" organizational unit in the next quarter. In future, we will bundle all of the division's activities there in order to achieve our medium-term corporate goal of becoming the leading AI-supportede-commerce platform. We will continue to expand our technology partnerships in this area and plan to enter into new dedicated AI product partnerships with third-party providers in the medium term. With the tailwind from the first two quarters, we are confident about the second half of the year and are sticking to our targets for 2024. Thank you very much for your trust and for continuing to accompany us on our development path.