^Original-Research: q.beyond AG - from NuWays AGClassification of NuWays AG to q.beyond AGCompany Name: q.beyond AGISIN: DE0005137004Reason for the research: UpdateRecommendation: BUYfrom: 12.03.2024Target price: 1.00Target price on sight of: 12 MonatenLast rating change: Analyst: Philipp SennewaldFY prelims without surprises + bullish outlook // chg. Implied Q4 sales increased by 9% yoy to EUR 50.8m (eNuW: EUR 47.6m, eCons: EUR47.4m). Growth was predominantly driven by the continued recovery of theSAP segment (21% of sales), where revenues increased strongly by 28% yoy toEUR 10.8m (eNuW: EUR 8.9m), following several key customer wins as well as apick-up of the S/4HANA transformation. The Cloud & IoT segment (79% ofsales) showed yet another quarter with muted growth of 4.9% yoy to EUR 40.1m(eNuW: 2.7% organic growth), although exceeding our estimate of EUR 38.7m.Overall, FY '23 sales increased 9.4% yoy to EUR 189m (eNuW & eCons: EUR 186m).50% of the growth is attributable to the productive-data acquisition. Q4 EBITDA came in at EUR 5.8m (eNuW & eCons: EUR 5.2m), implying an 11.5%margin and a 358% yoy increase. However, the strong increase is mainly dueto a decision of the tax authorities in favor of q.beyond, which had apositive effect of EUR 8.6m (eNuW: EUR 3.2m net cash effect in '24). On theother hand, the company built up provisions amounting to EUR 5.3m mainlyrelated to the ongoing business transformation. Hence, while FY reportedEBITDA came in at EUR 5.7m, the operating EBITDA amounted to EUR 2.4m. Notably, the company generated FCF of EUR 1.7m (eNuW: EUR1.4m, eCons: EUR 0.2m),thus reaching breakeven one year ahead of target. With now EUR 37.6m of netcash, CEO Rixen indicated in yesterday's CC that M&A might already be onthe table for late 2024. Here, one possibility could be to partner up witha company from a respective industry in order to access new verticals (seelogineer). Mind you, future M&A is not reflected in our model, thusproviding a certain upside to our estimates. Bullish FY '24 guidance. With the release, management also provided a 2024outlook, targeting sales of EUR 192-198m (eNuW new: EUR 197m, eCons: EUR 196m)and an EBITDA of EUR 8-10m (eNuW new: EUR 8.1m, eCons: EUR 7.4m). While 3% salesgrowth at mid-point should be achievable, the EBITDA guidance appears quiteambitious, as it implies an incremental margin of 125% at mid-point withrespect to the operating EBITDA. Yet, with our new estimates we expect thecompany to achieve the lower end of the guided range due to (1) anincreased off- and near-shoring ratio, (2) an increased consulting anddevelopment ratio as well as the (3) ongoing streamlining of processes inconnection with one-q.beyond (i.e. eliminate duplicate structures, optimizeorder-to-cash). New segmentation: From 2024 onwards, q.beyond will change its segmentreporting, as the new segments "Managed Services" and "Consulting" willreplace the current segmentation ("Cloud & IoT" and "SAP"). 'ManagedServices' will comprise the q.beyond data centres in Hamburg and Ulm aswell as logineer while 'Consulting' will comprises the former SAP segmentas well as the Microsoft services, ITsecurity, software development,data-intelligence and cloud consulting. A more detailed overview isprovided below. Remains a BUY with an unchanged PT of EUR 1.00 based on DCF.You can download the research here:http://www.more-ir.de/d/29113.pdfFor additional information visit our websitewww.nuways-ag.com/research.Contact for questionsDie Analyse oder weiterführende Informationen zu dieser können Sie hier downloaden: www.nuways-ag.com/research.NuWays AG - Equity ResearchWeb: www.nuways-ag.comEmail: research@nuways-ag.comLinkedIn: https://www.linkedin.com/company/nuwaysagAdresse: Mittelweg 16-17, 20148 Hamburg, Germany++++++++++Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss bestimmter Börsengeschäfte.Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben analysierten Unternehmen befinden sich in der vollständigen Analyse.++++++++++-------------------transmitted by EQS Group AG.-------------------The issuer is solely responsible for the content of this research.The result of this research does not constitute investment adviceor an invitation to conclude certain stock exchange transactions.°