11. November 2021 | Corporate News

CANCOM SE: Improved service business and high margin in trading business drive EBITDA margin

Group revenue in the third quarter of 2021 up 5.6 percent year-on-year at EUR 302.6 million.
– EBITDA in the third quarter rises by 30.4 percent year-on-year to EUR 32.3 million. EBITDA margin thus at 10.7 percent.
– Annual Recurring Revenue (ARR) as of September 30 was up 23.6 percent year-over-year.
– Annual forecast for 2021 already raised on 27 October 2021.

Munich, Germany, 11 November 2021 – In the third quarter of 2021, the CANCOM Group achieved an EBITDA margin of 10.7 percent. This extraordinarily high level of profitability was achieved primarily due to an increase in revenue and margin in the service business, as well as a very good margin in the sale of hardware and software. Overall, the CANCOM Group’s revenue in the third quarter of 2021 increased by 5.6 percent year-on-year to EUR 302.7 million (prior year: EUR 286.6 million). Organically, i.e. without the influence of acquired companies, the growth rate was 3.0 percent. EBITDA amounted to EUR 32.3 million in the third quarter, an increase of 30.4 percent year-on-year (prior year: EUR 24.8 million). EBIT amounted to EUR 20.7 million in the same period and was thus 44.6 percent higher than in the prior year (prior year: EUR 14.3 million).

“In view of the market environment with weakening GDP forecasts and the well-known supply bottlenecks for hardware, it is once again evident that the megatrend towards digitalisation is unbroken and that a state-of-the-art IT service portfolio is the key to our success. In addition, the availability of various hardware products was noticeably limited, which, on the one hand, led to an enormously high order backlog that still has to be processed. On the other hand, we were in a very good negotiating position when it came to pricing existing products in the quarter just ended,” said Rudolf Hotter, CEO of CANCOM SE.

At the end of the third quarter, the results for the CANCOM Group for the period from 1 January to 30 September 2021 are as follows: Group revenue amounted to EUR 947.9 million, an increase of 12.9 percent year-on-year (prior year: EUR 839.3 million). The organic share of this growth was 10.9 percent. Group EBITDA amounted to EUR 84.6 million, up 39.7 percent on the prior-year figure (prior year: EUR 60.5 million). The EBITDA margin was thus 8.9 percent (prior year: 7.2 percent). Group EBIT for the nine-month period rose by 71.1 percent to EUR 52.1 million (prior year: EUR 30.5 million).

Cloud and IT Solutions show exceptionally high profitability

In the Cloud Solutions segment, in which CANCOM maps the Managed Services business and the associated recurring revenues, the third quarter of 2021 brought a 4.2 percent increase in segment revenue to EUR 63.0 million (prior year: EUR 60.4 million). Segment EBITDA increased by 18.7 percent to EUR 20.1 million in the same period (prior year: EUR 16.9 million). The EBITDA margin for the segment was 31.9 percent (prior year: 28.0 percent). Annual Recurring Revenue (ARR), which also arises entirely in the Cloud Solutions segment, totalled EUR 170.4 million as of 30 September 2021, up 23.6 percent year-on-year (30 September 2020: EUR 137.9 million).
As a result, the Cloud Solutions segment stands at revenue growth of 3.8 percent for the nine-month period, or revenue of EUR 176.9 million (prior year: EUR 170.4 million), EBITDA growth of 20.3 percent to EUR 55.4 million (prior year: EUR 46.0 million), and thus an EBITDA margin of 31.3 percent.

The Group segment IT Solutions, which is characterized by the IT project business, achieved growth in segment revenue of 6.0 percent to EUR 239.7 million in the third quarter of 2021 (prior year: EUR 226.1 million). At EUR 16.1 million, segment EBITDA was up 36.8 percent on the prior-year figure (prior year: EUR 11.8 million). The segment EBITDA margin thus amounted to 6.7 percent (prior year: 5.2 percent).
In the nine-month period, revenues in the IT Solutions segment amounted to EUR 770.8 million, 15.2 percent above the prior year (prior year: EUR 668.9 million). Segment EBITDA rose by 35.7 percent to EUR 41.8 million (prior year: EUR 30.8 million) and the EBITDA margin was 5.4 percent (prior year: 4.6 percent).

Net profit for the period and cash influenced by effects of the sale of CANCOM LTD
The CANCOM Group’s net profit for the period from 1 January to 30 September 2021 was EUR 260.9 million, primarily reflecting the high profit from the sale of business activities in the United Kingdom and Ireland (prior year: EUR 41.5 million).

Cash and cash equivalents stood at EUR 582.5 million as at 30 September 2021, also largely due to the sale of CANCOM LTD (31 December 2020: EUR 338.4 million).

Annual forecast 2021 raised

Based on the preliminary results for the first nine months of the 2021 financial year, the Executive Board of CANCOM SE had already announced on 27 October 2021 that it was raising its full-year forecast for 2021. The Executive Board now expects very significant growth in Group revenue, Group gross profit and Group EBITDA in financial year 2021 (previously: significant growth in each case). The forecast for Group EBITA, which already provided for very significant growth, remained unchanged.

For the Group segment IT Solutions, the Executive Board now expects very significant growth in revenue and EBITDA (previously: significant growth in each case).

For the Group’s Cloud Solutions segment, the Executive Board left unchanged its forecast of very significant growth in revenue, EBITDA and annual recurring revenue in the financial year 2021.

The complete interim statement CANCOM Group as at 30 September 2021 will be published at 10:00 am (CET) on the website in the Investors section.

As a Digital Transformation Partner, CANCOM accompanies companies into the digital future. We support our customers in reducing the complexity of their IT and expanding their business success through the use of state-of-the-art technology. In order to holistically map the IT needs of companies, organizations and the public sector, CANCOM offers custom-fit IT from A to Z from a single source.

The IT solutions offered by the CANCOM Group include consulting, implementation, services and the operation of IT systems. Customers benefit from our extensive expertise and a holistic and innovative portfolio that covers the IT requirements of companies needed for a successful digital transformation. As a hybrid IT integrator and service provider, we deliver a range of services and solutions that includes business solutions and managed services such as cloud computing, analytics, enterprise mobility, IT security, hosting and as-a-service offerings.

The CANCOM Group’s workforce of around 4,000 employees and an efficient partner network ensure market presence and customer proximity in countries including Germany, Austria, Switzerland, Belgium and the USA. The CANCOM Group is managed by Rudolf Hotter (CEO), Thomas Stark (CFO) and Rüdiger Rath (COO). The company is headquartered in Munich. CANCOM generated annual revenues of around EUR1.3 billion in 2020 and the Group’s parent company CANCOM SE is listed on the Frankfurt Stock Exchange in the MDAX and TecDAX (ISIN DE0005419105).