ATOSS Software Stock

Welcome to our Q2 earnings call, where we will be discussing our results for Q2 and the first half of 2026. We are pleased to have you here with us today. I am joined by our Chief Financial Officer, Christof Leiber, and we are glad to have the opportunity to walk you through our performance and outlook.

We will be referring to the earnings call Q2 2026 presentation, which was published earlier this morning and is available for download on our Investor Relations website as well as via the link provided in the webcast. The detailed Investor Relations presentation was also published this morning, which we encourage you to review for further insights, but will not discuss during this call. Please note that today's call is being recorded, and the recording will be made available on our Investor Relations website after the call.

Before we begin, I would like to start with the disclaimer. Please note that the presentation contains forward-looking statements based on the beliefs of ATOSS Software SE. These statements reflect the current views of ATOSS Software SE with respect to future events and results and are subject to risks and uncertainties. Actual results may differ materially from those projected here due to factors, including, but not limited to, changes in general economic and business conditions, the introduction of competing products, lack of market acceptance of new products, services or technologies and changes in business strategy. ATOSS Software SE does not intend or assume any obligation to update these forward-looking statements.

With that, I will now hand over to Christof Leiber, who will walk you through the key developments of the second quarter of 2026, including our business and financial performance, an update on artificial intelligence and our outlook for the year ahead. We will then conclude with a Q&A session. Christof, over to you.

Thank you, Carla, and very warm welcome to everyone out there. I'm happy to walk you through our Q2 and H1 2026 results, current developments and our outlook. So let's get started on Slide 4 with key takeaways.

Following a particularly strong second quarter, we closed H1 '26 with solid double-digit revenue growth, continued strong profitability and positive order momentum. Revenues grew by 12% year-on-year in H1 and by 13% in Q2 year-on-year, both driven by cloud business growth of 26%. EBIT margin reached 35%, above our full year guidance. Order development was very positive despite geopolitical and macroeconomic headwinds with strong ARR growth overall driven by our continued impressive momentum on the cloud and subscription side.

Overall, new ACV development significantly above our prior year level, supported by resilient demand, strong sales execution, new customers, existing customer expansion and cloud migrations. Importantly, Q2 was so strong that it lifted the entire H1 order development significantly above H1 year-on-year. And momentum was broad-based across SMB, enterprise and international, with particular strength in enterprise in the German-speaking countries, health care, manufacturing within manufacturing, some semiconductor companies and retail migration and expansion projects.

International business improved versus the prior year, driven also by a new logo from -- coming from the semiconductor sector and expansion with existing customers. Crewmeister continued in its strong trajectory. More than 2,000 net new customers were added, taking the base of customers now over and above 20,000 as of July 1. ARR increased to EUR 10 million and above at the end of June, up around 30% year-on-year and Crewmeister was profitable in H1 and every month since March, while maintaining its strong growth momentum.

Cloud migrations remain encouraging with large customers such as ROSSMANN, Bartels-Langness and the Menarini Group with Berlin-Chemie progressing their cloud transitions as well as their international expansion. This success was driven by ATOSS unparalleled moat with customers in workforce management and confidence of our customers into our innovation capabilities, including our AI road map.

Let me highlight the ATOSS mode with a customer example. HHLA one of European's leading port logistics providers at the Hamburg port, HHLA has deployed ATOSS workforce management across all their container terminals, replacing SAP HCM PT while remaining fully integrated into its broader SAP landscape. The project demonstrates ATOSS ability to support highly complex operational and regulatory environments, including hundreds of collective agreements with highly specialized workforce planning requirements. This combination, all this is based on one standard software solution in the cloud, the ATOSS Staff Efficiency suite.

Now this moat in workforce management is combined with our outstanding track record for innovation, and this creates confidence with customers, including in our AI road map, which we are successfully executing on track with the milestones we have communicated.

Now finally, let me briefly turn to our outlook for '26. For '26, we continue to expect double-digit revenue growth in line with our guidance, leading ATOSS revenue for '26 between EUR 210 million and EUR 215 million. The revenue guidance for '26 is built on very predictable and high-quality recurring revenue streams, and the bandwidth is only reflecting the lesser visibility for one-off perpetual licenses. Given the development in perpetual licenses, we currently see ourselves in the middle of the given bandwidth, as already mentioned during the previous earnings calls, so no change on this end.

Importantly, our profitability outlook remains unchanged after the uplift that we have given there in April. We continue to expect an EBIT margin of at least 34% for the full year. And I have to say this, it would not surprise me if we continue to see the current level at H1 to continue or even improve by the end of this year.

For '27, we already gave a bandwidth of -- for revenues of EUR 245 million and the possibility to come in 3% lower, again, based on effects on perpetual licenses. This we put now in numbers, meaning a bandwidth of EUR 235 million to EUR 245 million, reflecting the continued macroeconomic uncertainty, geopolitical risks, et cetera, as well as our current positive development of the order momentum. So if you ask me today, I see ATOSS revenue for '27 right in the middle of this bandwidth.

Now let's move on to the income statement on Slide 5, comparing H1 '26 with H1 '25. As I mentioned, our total revenue increased in H1 by 12% year-on-year. This growth continues to be driven by our software business, which grew by 14% year-on-year and accounted for 75% of total revenue. Within software, cloud and subscription revenue remained the key growth driver. This line of revenue increased by 26% year-on-year and now represents 54% of total revenue compared to 48% in the prior year quarter. Maintenance revenue declined by around 3%, which is fully in line with our expectation given our ongoing shift towards cloud. Cloud and subscription is the key driver of our growth. This is visible by the growth trend in revenue, and it's supported by the strong demand visible in existing customer expansion, new logo ARR and the migration movement. Against this background, the reduction for perpetual licenses needs to be reflected. With the top line growing, we achieved an EBIT margin of 35%, up 1 full percentage point compared to the prior year quarter.

Now let's take a closer look at the development of our recurring revenue and how strong order development of cloud and subscription has been on Slide 6. Total ARR, which includes cloud and subscriptions and maintenance, increased by 17% year-on-year to EUR 152.2 million at the end of the first half in '26. Looking specifically at cloud and subscription ARR, we once again saw a very strong growth. Cloud and subscription ARR increased by 25% year-on-year to EUR 113.8 million.

Turning to our order backlog, which provides extremely good visibility into the future of our recurring revenues. Total ARR backlog increased by 17% year-on-year to EUR 157.9 million. Finally, and I think actually most importantly, cloud and subscription backlog growth year-on-year as the key indicator for order development in the last period. Here, we recorded an increase of 14% year-on-year to EUR 23.8 million. This growth -- the strong growth in cloud and subscription backlog driven in particular by the development in Q2 '26 highlights the ongoing shift towards cloud, confidence in our product innovation, including the AI road map and excellent execution of our sales motion.

Now let me briefly walk you through the development of our cloud and subscription recurring revenue base over the last 12 months. Net retention rate of 111% in the first half of '26, overall, very strong with others with an NRR at an even higher level at 115%, demonstrating continued strong growth with existing customers. In addition to this, additional ARR was generated through both new customer acquisitions and cloud migrations. The breakdown illustrates that of the total of cloud ARR, the increase of roughly EUR 23 million year-on-year, about 45% came from expansion of the installed base. Just above 40% from new logo ARR and nearly 15% from migrations. Given the current order development for migrations, we expect the migration part to slightly increase in the next quarter. Together, these drivers contributed to the continued expansion of our recurring revenue base.

Let me now turn to our cash flow and liquidity on Slide 8. Operational cash flow in H1 with EUR 37.1 million came in significantly above last year. Overall cash flow amounted to minus EUR 1.5 million at the end of H1 '26. This was primarily driven by the dividend payment of approximately EUR 36 million during this period. Looking ahead, however, we anticipate a strong positive operational cash flow for the full year of '26, increasing thereby our liquidity at the end of this year.

Turning to liquidity at H1. Our overall liquidity position remained very solid. At the end of the first half in '26, liquidity stood approximately at EUR 121 million, broadly in line with the level of last year's at the end of '25 and significantly above what we have recorded as liquidity at the end of H1 2025. And that despite the dividend payment of around EUR 36 million, as I mentioned. Overall, this highlights the strength of our cash generation and balance sheet and leaves us with solid -- a very solid liquidity position.

With that, let me now turn to AI and share a few observations on the role of AI already playing in our business on Slide 9. First, AI road map execution. We continue to execute consistently our AI road map and remain on track with the initiatives we have outlined. Our first ATC agent is already live with selected customers, and we plan a broader rollout during the third quarter. In parallel, the development of additional Agentic use cases is progressing according to plan, including both our ASES expert center agents as well as our staff center agents that we will bring out by the end of this year in Q4. Second, ATOSS innovation credibility, including execution on the AI road map is proven by the strong order intake in the first half, in particular in Q2 of this year. Customers trust ATOSS to continue creating value in the age of AI and to remain the relevant long-term partner for workforce management. Last earnings call, I mentioned the excitement with prospects and customers on the Workforce Management Day. Now this has translated into action as we see by the order development in Q2.

Thirdly, monetization of Agentic AI. As you recall, our first AI features in forecasting have been embedded in our existing modules, i.e., no separate pricing for token usage, et cetera. However, only limited token usage is necessary for these functionalities. Our Agentic AI services start with the freemium packages in order to create excitement and adoption, which leads then to subscription plans with an included usage volume per month. Customers with higher usage requirements will then, going forward, be able to purchase additional user packages on a monthly basis. The concept, if you will, is comparable to well-known mobile data plans. It offers customers a transparent and predictable pricing model.

To sum up, based on our strong ATOSS mode in workforce management, we are executing our AI and innovation road map. This already positively impacts our order development, and we will stay with a transparent and fair subscription model to underpin customer centricity.

Beyond customer-facing innovation, we are also leveraging AI increasingly across ATOSS itself that is shown on Slide 10. As shown on this slide, we've started our internal AI transformation across 4 key value creation areas: build in our software development, attract in marketing, convert in sales and serve in our customer service and support area. Importantly, our focus is not on isolated use cases, but on transforming end-to-end value chain across the organization. In the end, we will enhance efficiency, productivity and velocity. Ultimately, this will show in improved customer centricity, growth opportunities and higher margins. As for margins, already in '26, we increased our initial guidance by 2 full percentage points to at least 34%. For the next year '27, we now increase the former projection equally by 2 full percentage points to at least 35%. And there is more room either for investment opportunities, investments in customer centricity or and actual margin expansion.

Before we move to Q&A, let me briefly summarize the key messages from today from my perspective. We delivered a strong first half in '26, supported particularly by a strong second quarter, double-digit revenue growth and profitability above our guidance. Strong sales execution across new customer wins, expansion with the existing customer base and cloud migrations drove a significant increase in new ACV, and this is clearly visible in our cloud and subscription growth year-on-year of 14%. This puts us in an excellent spot to keep the momentum despite the higher comparables in Q3.

As last year's Q3 was particularly strong, we believe that new ACV year-to-date at the end of Q3 should be in the range of slightly above or above. In the end, we are aiming for cloud and subscription growth year-end year-on-year to be at the end of '26 at a similar growth level as shown in the end of H1, i.e., above 10% as this builds the case for recurring revenue growth in 2027. For the full year, we have the pipeline and the capacity to close the year successful. But of course, as in Q2, execution must be on its highest level. and the macro and geopolitics, et cetera, are having an impact. Overall, we believe ATOSS is well positioned to continue benefiting from the structural shift towards cloud, recurring revenues and the AI transformation.

Now that concludes the presentation part of today's call. We'd now like to open the floor for questions and are happy to dive deeper into any topics you would like to discuss. Thank you.

[Operator Instructions] And the first question comes from Nicolas Herms from Deutsche Bank.

Congrats on the quarter. I've got two actually. My first one would be on the strong order momentum in Q2. I appreciate the color you gave. I was just wondering in the press release, you also mentioned that order intake for license products was particularly strong in Q2. Is there any reason for that? And maybe related to that, could you give us an update on where you are in the cloud migration and if you are seeing any acceleration there?

Yes. Nicolas, thanks for the question. Well, maybe some additional color on the strong order momentum. That was really -- if you read out of the license sentence that we put in there, and I think in the German version, in particular, of the press release that this would relate to perpetual licenses, that is actually not the case. The strong momentum that we've seen, we've seen it entirely and really absolutely entirely on the cloud and subscription side. I think 90% to 95% of all new ACV that we generated was on the cloud and subscription side on the customer expansion side as well as on the new logo side. And of course, with some additional ACV generated by -- on the migration side as well. So if that was a misinterpretation, then hopefully, I'm glad that I could was able to clarify this.

The second question, maybe you're going to repeat it again because I forgot it. The cloud migration, I was just -- yes. Okay. So cloud migration here, we actually have seen some momentum and momentum, how should I put it, not necessarily in number of customers moving, but in substantial number -- substantial customers moving. And I named a few like ROSSMANN, for example, like Bartels-Langness, the family supermarket chain in the northern part of Germany is run by them and by Berlin-Chemie, part of the Menarini Group, that's an Italian group. All 3 of those have in common that they are quite substantial. Secondly, they are not just moving to the cloud from on-prem. They also make a point of expanding international. In some cases, it's Switzerland plus Spain. In other cases, it's Poland, et cetera. Well, famila is not expanding internationally because they are only active in Germany that I have to add.

Okay. So there's good momentum. And for all 3 that I just named, it is a momentum that was driven by, on the one hand, a move to the cloud. And secondly, a move or adding functionalities with AI capabilities, partly those that we have already in the store like forecasting, like workforce intelligence. And obviously, with a view as well on getting access to the AI agents that we are about to deliver for the ATOSS Staffer suite in Q4. Hopefully, that added some color.

Yes, that's very helpful. I have another question on the strong cash position you also see by year-end, but also as of the first half. What are you planning to do with the cash? And in case you're planning capital returns, would that be a special dividend again? Or are you maybe considering share buybacks this time?

Yes. Obviously, I mean, we do have a history of high liquidity position and that's a high cash-generating business model. That to start off with, is not the worst position to be in, and we like this positioning actually. We will continue to keep our dividend policy of -- with a payout ratio of 75% on EPS on the group level. As we are looking at '27, which is the 40th anniversary of ATOSS as well, there may be an option for a special dividend, but it's nothing has been decided yet.

And on share buybacks, we stay a bit -- we are a bit reluctant in this respect because we feel that instead of share buybacks, we would rather pay special or higher dividends because this is actually contributing or the -- it's a contribution to the shareholders who are sticking with the share from our perspective. And on top of that, obviously, we are still following our buy, build and partner strategy, which we certainly see as one part for our strategy going into 2030 to make our ambition of the nearly or roughly EUR 400 million in revenue possible that would include also some M&A activities.

And the next question comes from Gustav Froberg from Berenberg.

A couple from my side also. I noted the net new ACV development, which trended very positively in Q2. And I just wanted to ask with reference to Q1 when we said that some deals had slipped into the second quarter. Is the strong Q2 a reflection of closing those slipped deals? Or was there genuine extra underlying demand as well that came new ACV development? That's my first question. Second, could you remind me again the amount of migrated customers you had or migrated revenues rather that you had in the second quarter? And then lastly, just on business climate, like you referenced macro has not been entirely favorable. Could you give us an update on what your clients are saying and what you're hearing boots on the ground in terms of macro people's willingness and ability to invest in software solutions, et cetera, that would be great.

Okay. Thank you, Gustav. And well, let's start with the first question on Q1 and whether some deals from Q1 had slipped into Q2. I think there were like 2 minor deals that -- or some 2 deals, not necessarily minor, but not substantial as well that have slipped from our perspective into Q2. But fundamentally, it really changed in terms of our ability to execute, our ability to win customers on the new logo side. I think that was particularly strong. As I mentioned in the call, we have one customers on the health care side, I think 2 larger hospitals. We have one in manufacturing semiconductors in Germany opening up branches or production facilities. We have one on the international side, one semiconductor in the Netherlands, a smaller -- not the largest one maybe, but a good one. And we have won a good portion of customers in the health care, as I said. So this is very much broad-based.

And I would like to stress as well, it's not just in one particular segment like SMB or international. It is really the main driver was enterprise, I have to say, SMB and international, however, were equally in our terminology above or significantly above and enterprise was very strong in Q2. This so far has been, yes, really a mixture of a bit of maybe easing of the highest uncertainty that customers felt in our markets after the beginning of the Middle East conflict like at the end of February or in March. And then maybe in some point in May, it kind of eased a bit, and there was confidence coming back. That's my interpretation to some extent. And that on the notion of still a good value proposition that we are holding for our customers.

Now on the migration side, we do have in total nearly a bit below 40 migrations and in the enterprise that we have signed. And as I said, the number is slightly above the last year's number in enterprise. However, the size of the migrations is substantially above, meaning the larger ones have been shifting to the cloud this year. And this is visible as well in this cloud and subscription growth year-on-year, which we formally called incremental cloud and subscription order backlog added. We changed this terminology somehow.

Color on the boots for the sentiment in the market. I would still say, yes, it has loosened or, as I said, a bit lighter and more better investment climate in the course of Q2. And I think everybody can kind of relate to this. The oil price went down, energy costs went down. This is changing right now, and we have to see how this pans out in the next quarters, obviously, or in this quarter and the next quarter.

All I can say here really is 3 things maybe. One is that we do have the pipeline and we do have the capacity for sales personnel in order to execute on this. Execution in Q2 has been super good. And this has to do with our customers, but it also has to do with our own performance.

The second thing that, from my point of view, comes to mind is that, obviously, we have to sell on value. We are very much investing in education of our people that in times like this, you do have to make the point that we actually can provide value. You have to be very clear and very knowledgeable about the processes of examples like this Hamburg Port or HHLA example that I gave and the same you can do with medical, with hospitals. There's tremendous regulatory complexity out there. And at the same time, there is structural demand for optimization of workforce scheduling in line with demand levels that are vastly changing. And this to be really explained in the details and value being created, that is, I would say, an art that is coming back and makes the decision between winning or losing a project or not winning it yet, let's say, in one particular quarter. So making ourselves knowledgeable is important.

And thirdly, I want to stress that our AI road map, the track record of innovation that we've shown to customers has been very positive. I mean our customers, they don't -- they see technology, they see this as a long-term topic and not something they are hopping on this product and that product because it simply doesn't work for a large hospital, for any hospital or for a retail chain, et cetera. So they want to be partnering with a company who has a track record of delivering what they are promising. And that is what ATOSS stands for and stood for, for a long time, and we have to make this clear and visible for our customers. Hopefully, this answered the question. Maybe some additional questions, if you want.

[Operator Instructions] And we do have another question coming from Oliver Frey from Bankhaus Metzler.

Maybe just a breakdown on ARR growth. I think you explained how existing customers and new customers are playing into it. How is pricing playing into this formula?

Yes, excellent question, obviously. Pricing is part of the NRR, of course. So the NRR expansion for us is, let's say, of the EUR 115 million that we have seen there. 2.5% to 3% would relate to pricing. The rest is really pure expansion. And obviously, with a churn starting this bridge of -- in the ballpark of 5%. So we start with 5% churn and reduction, then there's a price increase of 2.5% to 3%, let's make it 3%, then we are minus 2%. And we have then an expansion, a real expansion of 17% for the ATOSS Staff Efficiency Suite. That would be the bridge and the pricing effect in this bridge. On the new logo side and the -- we do have limited pricing expansion really and mostly made up in this macro environment by discounts, et cetera. So there's no really a price increase effect on the new logo side this year.

And maybe on EBIT, I just want to make sure that I understood correctly. You said that it could be possible that you continue to see your margin levels as of H1 also in H2. So approximately 35% is maybe optimistic scenario?

Yes. Excellent question. Lucky to point this out. This is actually what I said. And we are just really in the process of transforming into an first bionic company, meaning AI and humans really working together on all processes and then ultimately into an AI-first company eventually. And this will bring us -- will bring with it lots of opportunities on the margin side, on the velocity side, on the growth opportunities, et cetera. And this already puts us in the position to uplift this year the margins by 2 full percentage points in our always conservative projection, which we did. And for next year, we did the same thing. So we moved it up to at least 35% EBIT margin for next year. And as I said, for this year, we are more likely to operate on the -- in the ballpark of 35%, but we are not yet uplifting our guidance for this full year. For next year, we still have to find out the fine print of our planning.

Ladies and gentlemen, this was already the last question. I would now like to turn the conference back over to Christof Leiber for any closing remarks.

Well, thanks a lot for your continued interest in ATOSS. And yes, finally, let me just again point out how confident in how happy we are really with this second quarter. It was an extremely positive momentum, in particular, on the order side. We have seen impeccable sales execution across all areas. And it makes me quite proud that we don't only show this in the enterprise Germany or DACH region, but also on the SMB and on the international side. If you drill down in our presentation that has been published this morning, you will find a nice slide as well, illustrating the international growth -- revenue growth there, which we have not really focused on this time. That is showing nicely as well our international revenue share is now standing at 8%, which is at least 2 full percentage points up from the 6% that we had at the end of year 2025. So lots of things are going in the right direction. Our product road map is gearing up to hopefully a big or bigger bang for AI agents being released at the end of Q4. And then we are moving into -- yes, a very interesting and promising 2027 going forward.

Okay. With this, I'll conclude, and thanks again for your attention and your contributions to ATOSS. Thank you.

Hello, everyone. Welcome to our Q1 earnings call, where we will be discussing our results for Q1 2026. We are pleased to have you with us today. I am joined by our Chief Financial Officer, Christof Leiber, and we are glad to have the opportunity to walk you through our performance and outlook. We will be referring to the earnings call Q1 2026 presentation, which was published earlier this morning and is available for download on our Investor Relations website as well as via the link provided in the webcast. A detailed Investor Relations presentation was also published this morning, which we encourage you to review for further insights, but will not discuss during this call.

Please note that today's call is being recorded, and the recording will be made available on our Investor Relations website after the call. Before we begin, I would like to start with the disclaimer. Please note that the presentation contains forward-looking statements based on the beliefs of ATOSS Software SE. These statements reflect the current views of ATOSS Software SE with respect to future events and results and are subject to risks and uncertainties. Actual results may differ materially from those projected here due to factors, including, but not limited to, changes in general economic and business conditions, the introduction of competing products, lack of market acceptance of new products, services or technologies and changes in business strategy.

ATOSS Software SE does not intend or assume any obligations to update these forward-looking statements. With that, I will now hand over to Christof Leiber, who will walk you through the key developments of the first quarter of 2026, including our business and financial performance, an update on artificial intelligence and our outlook for the year ahead. We will then conclude with a Q&A session. Christof, over to you.

Thank you, Carla, and a very warm welcome from my side to everyone on this call. I'm happy to walk you through our Q1 2026 results, current developments and our outlook. At the same time, I'd like to thank all of you for your continued interest in ATOSS. So let's get started with Slide 4 and key takeaways. We started 2026 with a continuation of double-digit revenue growth and margins above our guidance. Revenue grew by 11% year-on-year in Q1, driven by continued very strong momentum in our cloud business, which grew by 27%. At the same time, we achieved an EBIT margin of 35%, which is above our full year guidance. This strong margin development was supported by 2 factors: First, the efficiency progress we are making through our internal AI efficiency and productivity initiatives. And the second effect that we saw was -- a technical effect from the revaluation of our long-term incentive programs.

Turning to order development more broadly. ARR and cloud subscription order backlog year-on-year showed a continued double-digit growth. At the same time, we saw in Q1 from the beginning of March onwards, a certain level of caution in the market, driven by macroeconomic and geopolitical uncertainty. Against this backdrop, overall new ACV in Q1 came in at prior year level, which we consider a solid outcome. Positive to note, the share of new logos in our new ACV increased to around 50% this quarter, and this is compared with 30% to 40% in the previous year. One area that clearly stood out positively was health care. We saw a strong momentum in this sector. Amongst others, we have won a very renowned new customer in our health care practice, the Berlin Charite and are very proud to have this large hospital right now amongst our health care customers.

We continue to see a robust pipeline in health care. So going forward, this will hopefully help us in the next quarters. Health care is a highly regulated environment with a large operational workforce working 24/7, and it is exactly these characteristics, which are in demand for structured workforce management and increasingly for AI-based forecasting and planning support. This directly links to our broader progress in AI in Q1, where we continue to execute consistently on our AI road map on the product side, while at the same time, leveraging AI internally to improve efficiency and productivity. These internal initiatives are already contributing to higher operational leverage and more scalable cost structure.

We expect this to allow us to significantly increase output over time while keeping costs well under control. Finally, let me briefly touch on our outlook. We continue to guide for revenues of around EUR 215 million for '26, around reflecting here the possibility of a negative deviation of up to 2%, i.e., a range of approximately EUR 210 million to EUR 215 million in revenues for this year. This is in line with what we have said on our earlier conference calls in this year. Based on the efficiency gains we are seeing both from our operational execution and from AI-driven productivity improvements, we are confident in our margin trajectory. As a result, we are able to update our EBIT margin expectation for '26 to at least 34% as an EBIT margin for the full year. Now with that, let's move on to the income statement on Slide 6, comparing Q1 '26 with Q1 '25.

As mentioned, our total revenues increased in Q1 by 11% year-on-year. This growth continues to be driven by software business, which grew by 13% year-on-year and accounted for 74% of total revenues now. Within software, cloud and subscription revenues remain the key growth drivers. This line of revenue increased by 27% year-on-year and now represents 53% of total revenues compared to 46% of total revenues in the prior year first quarter. Maintenance revenues declined by around 3%, which is fully in line with our expectations given our ongoing shift towards cloud. Looking at the remaining revenue streams, consulting revenues increased by 11% year-on-year, reflecting continued solid demand. Other revenues grew by 12%, while hardware revenues declined by 24%, which constitutes, however, a very small -- only a very small fraction and share of our overall revenue base.

With the top line growing, we achieved an EBIT margin of 35%, up 1 full percentage point compared to the prior year quarter. Let's now take a closer look to the development of our recurring revenues comparing Q1 '26 with Q1 '25 on Slide 6. Starting with total ARR, which includes cloud and subscriptions as well as maintenance, total ARR increased by 17% to EUR 148.1 million in Q1 '26. Looking specifically at cloud and subscription ARR, we saw again an increase of 27% to EUR 109.8 million, nearly EUR 110 million in Q1 '26. When looking at customer value dynamics, our net retention rate came in at around 112% for Q1 '26, sitting slightly above our -- the rate that we had for the full year in '25. So a positive development overall there as well.

Now turning to our backlog, which provides good visibility into the future recurring revenues. Our total ARR backlog for the next 12 months increased by 16% to EUR 152.5 million. This reflects a solid level of contractually committed additions and continues to underpin our revenue visibility and guidance for the upcoming quarters. Looking at the incremental cloud and subscription backlog added year-on-year, we see a stable development. Again, we added EUR 21.5 million in Q1 '26 compared to Q1 '25. And given the ongoing macroeconomic and geopolitical uncertainties, maintaining this level year-on-year demonstrates the resilience of demand for our cloud offering.

Now let me turn to cash flow and liquidity on Slide 7. In the first quarter of '26, operating cash flow increased significantly compared to the prior year quarter from around EUR 20 million in Q1 '25 to around EUR 39 million in Q1 '26. The year-on-year increase in operating cash flow is largely explained by a one-off tax effect reducing the cash flow in Q1 '25, so now showing up as positive in the operating performance in Q1 '26. Turning to liquidity. At the end of Q1 '26, total liquidity stood at around EUR 162 million, up from approximately EUR 123 million at the end of the year '25. Overall, this leaves us, as always, with a very strong liquidity position. Let me now turn to outlook on Slide 8. And based on the solid start in the year, we reconfirm our revenue guidance for '26.

We continue to expect total revenues of around EUR 215 million for the full year. And as mentioned in the beginning, around reflects a prudent bandwidth and based on our current visibility, this means we expect to land within the range of approximately EUR 210 million to EUR 215 million in revenue. On profitability, reflecting the efficiency gains we see, we are raising our EBIT margin guidance. For '26, we now can expect an EBIT margin of greater than 34%. For '27, we continue to target total revenues of around EUR 245 million, i.e., around implying there is a possibility of a negative deviation of around 3%. Hence, we expect a revenue CAGR in the range of approximately 12% to 14% for '26 to '27 combined.

Naturally, the exact trajectory will depend on macroeconomic conditions and our execution, i.e., for more clarity in '27, we have to wait until later in '26 and/or the end of '26. Moving on to people and organization on Slide 9. At the end of Q1 '26, our total headcount stood at 862 employees compared to 856 at the year-end '25. This reflects a moderate and largely planned development in our organization and remains fully aligned with our strategic priorities. Regarding our go-to-market organization, we are now where we intended to be from a people perspective. As of Q1 '26, our sales and marketing headcount stood at 207 employees, which is fully within the targeted range.

Importantly, a significant share of our current account executives has joined over the course of the past quarters and is still in the ramp phase. As these colleagues progress along their ramp-up, we now increasingly expect to see productivity feeding through step by step. At the same time, improved processes and the use of digital processes and AI-supported tools are helping us to accelerate this ramp-up and further increase productivity. Overall, this means that from a go-to-market perspective, our focus is clearly shifting now from capacity and process buildup towards sustained productivity, efficiency and execution quality. Therefore, we currently do not see the need for significant headcount expansion despite ongoing growth opportunities.

Instead, our priority is balanced productivity gains from AI with operational efficiency. This may also imply that for certain areas, we allow headcount to remain stable over time without constraining our ability to deliver or innovate. In parallel, we continue to invest selectively where it creates the most leverage. This includes, for example, the buildup of our AI development hub in Bangalore. Together with capacities in Romania and Germany, this setup allows us to strengthen our AI capabilities in a focused and scalable way on the product side. And with that, let me now turn to the artificial intelligence on our road map on Slide 10.

Before we continue, I'd like to quickly share our current observation about the market demand for AI. We see a growing interest in our AI services across our customer base, although demand currently differs by industry. In health care, for example, since we announced the future AI services would be released only on cloud infrastructures for our cloud customers, all medical customers opted for cloud. And since the availability of our first AI forecasting features, all new enterprise customers have these services in health care as part of their selected product packages. Also in retail, we observed some traction. Approximately 1/3 of new customers embedded AI services in their packages. However, in other industries, demand is still at an earlier stage so that we are seeing today -- what we are seeing today is not a uniform wave across all sectors. It is a general interest and specific explained and pronounced buying interest in certain industries.

With this said, let me come back to our road map, which we believe will increase the appetite for AI services with current and future customers alike. It also makes it even more important for customers to move to our cloud offerings. Today, our AI features already help customers improve planning quality, for example, through absence rate forecasting and workforce intelligence, making risks and inefficiencies visible earlier and more reliably. What comes next is to take this one step further, not only identifying better decisions, but making complex compliance-critical tasks easier to execute in a day-to-day operation. Agent-based services do exactly that. They reduce the need for deep system expertise by taking over routine, guiding users through complex workflows and supporting that crucial steps are completed correctly and consistently.

Let me make this concrete with one practical example. The next AI feature we plan to release in Q2 already '26, so this year, is an agent for our ATC clients, starting with insight and then moving into the action part. To illustrate that, what this means in practice, consider the onboarding of new employees. Every time a new employee joins, they must be assigned to correct working time models or if nonfits, new models need to be created. Today, this is, of course, still a very complex task. Administrative staff needs to translate contract terms into working time models that combine shifts, weekends, start and end times, breaks, rounding rules and salary supplements, all of which are critical from a compliance perspective. With the new ATC agent, this process becomes much simpler. The agents ask only the relevant questions, ensures that no parameter is missed and proposes the correct working time model or helps create a new one if required.

This results in significantly less administrative efforts and enables less experienced employees to complete these steps correctly and consistently. And this is just one of the capabilities of this first ATC agent. It also supports in creating replacement suggestions if an employee is ill, et cetera. So this starts in Q2 with support on the insight side and continues in the coming periods with the action side of this agent. Let me give you another example of Agentic support with our solution, this time based on our first ATOSS staff center agent that are planned for release starting in Q4 '26. Consider a frontline worker returning from parental leave who suddenly needs time off for their child's daycare onboarding. Instead of searching policy documents, figuring out what is allowed under the contract and worrying about pay compliance and other implications, the employee can simply describe the situation even by voice, sounding like this.

I might need to leave early or take a day off. What are my options? The staff center agent then interprets this request, checks the relevant policies and contract context and proposes concrete compliant options, explaining the impact and guiding the user through the next step, such as adjusting the shift or initiating appropriate request. Let me give you yet another example of an agentic support within our solution this time based on the first version of the ATOSS Expert agent planned for release in Q4 '26 equally. Imagine a store manager starting Monday morning, 47 leave requests from her team on her desk. The challenge is not to approve them quickly and just approve all of them.

The challenge is approving them responsibly without breaking coverage, without violating rules, creating no problems on shop floor later in the week. So for example, approving request that would trigger shortfalls on Saturday. So this is the task. With the expert agent, all 47 requests have already been checked over the weekend against staffing levels, required skills, contract rules, peak demands and are preselected and grouped by risk. Requests that are safe to approve, requests that would create gaps, requests that need clarification. Crucially, every recommendation is explainable to the manager, so the manager can see why certain requests are safe and why others are not.

The more typical takes around an hour of manual work or even more sometimes is reduced to just a few minutes. And on top, the quality of decision increases through better consistency and transparency. And let me say, on top of that, on each of these steps of making decisions, there is the human in the loop, the manager in this case, who ultimately makes the decision. So we have good control and good guardrails in place as well. Again, also for others, these examples are just a small part of the capabilities of the first ATOSS Expert Center AI agent, meaning the AI agent can be used for lots of other use cases as well, predicting reduced coverage rates in the future and its consequences on illness rates, overtime, et cetera, proposing scheduling mitigation to predicted reduced coverage rates, et cetera.

Collectively, these agents, agent-based capabilities fundamentally change how people work with workforce management systems and our focus is to continuously evolve this and remain the best-in-class solution for our customers. Coming from our Workforce Management Day, I can say -- there's excitement. And at the same time, for a lot of customers, it means that they now understand why to move to the cloud. Finally, a brief word on how we use AI internally. Around half of our software developers use Claude Code. Since mid of March, all of our developers have access to Claude Code. And by the end of next quarter, we target to have more than 70% of our coders actively using it across the company.

Around 70% of employees already use AI tools on a regular basis and about 50% already use them on a daily basis. We invest regularly in training, adoption is strong and productivity effects are clearly visible. Hence, our margin guidance can be increased. Overall, AI is not a future topic for us. It is already becoming part of how we build products and run the company today, and that is on every level. Now this concludes the presentation part of today's call. We'd now like to open the floor for questions and are happy to dive deeper into any topics you'd like to discuss. Thank you.

[Operator Instructions] The first question is from Nicolas Herms, Deutsche Bank.

I have a couple of questions. I think it's easy so I just ask them one by one. And the first one would be on the geo and macro weakness that you've mentioned. I was just wondering if you are seeing any differences in the international versus the DACH business and if there is any sector that is particularly affected? And if there's a difference between the new customer and existing customer business.

Nicolas, thanks for putting all these questions. On the geo macro, I mean, let me say first, we started this year very strong, I have to say, on the new ACV side, and that led to a development that all the way until the end of February, we were significantly above last year. Then everybody knows, on 28th of February, I think things have changed a bit. Energy prices went up, and that has left the -- not the pipeline to change. The pipeline still is very robust, but the conversion within the pipeline and the time accuracy of customers -- potential customers following through with their decision process, and that's quite understandable, I believe. That was particularly pronounced in areas that are not public sector.

So in public sector, I mentioned health care, we saw a positive development, continuation of positive development as well. And -- but in other areas like manufacturing, in particular, we saw this development. If you -- I wanted to break this down by versus DACH versus international, I don't really see a difference here really, I have to say, although obviously, our international practice is a bit more limited. So it's for me difficult to call this out as a statistical number.

In international, we actually have seen quite a good development actually because we have been successful in winning a larger expansion of one existing customer, a French customer there in logistics with whom we have signed last year a deal for, I think, the Benelux. And they have been very pleased with the development in the Benelux region, Belgium and the Netherlands and are now expanding substantially. So this was quite a large deal that we won in Q1. It's a French logistics company, which continued their confidence in further rollout with ATOSS in the next years. In the DACH region, I would say, in terms of new logos and existing customers, we were, as I said, seeing a positive development in this for the entire quarter in new logos overall.

Obviously, we had hoped for a bit more, but it was a positive development because 50% of our -- slightly more even of our overall new ACV came from new logos, and that was on the backdrop of 30%, I think, in Q1 last year and 40% for the entire year of last year. So good continuation of the development in the new logo side. Yes, we had hoped for a bit more. And to give you an idea there, adding to this time topic that customers -- the pipeline has not changed, the conviction of customers to ATOSS or to the workforce management side has not changed. But the deciding point of doing it just now in March was probably for some customers a bit difficult. Two of those have directly signed up in April, but as we report on quarters and not on time frames that are leading up to this today, these were obviously not counted in Q1.

Then in terms of Enterprise SMB and other areas, Enterprise was actually above last year. So generally good development, which we had hoped to be even stronger, but still above last year. SMB was, from our perspective, quite a disappointment. And maybe it's showing that the uncertainty is even increasing on the level of SMB customers, in particular, there on the new logo side, quite different from the enterprise side. That's kind of the color that I can give you on top of that. If there's anything else you would be interested in, please follow with a follow-up question.

No, no, that's already very helpful. I just had another question on the new cloud ACV. I think on one of the previous calls, you mentioned that you need, I think, EUR 5 million to EUR 6 million in new ACV to get to the EUR 215 million in revenues. And in Q1, the incremental cloud order backlog added was flat. Yes, so just wondering if we should expect the lower half of your revenue guidance range for 2026 as of now?

Okay. Fair question. And yes, we -- what I said on earlier calls was that for the entirety of this year, we would need the incremental order backlog added at the end of this year to grow on top of last year and not stay flat. So growing would mean roughly 10% growth. That would imply that by the end of this year, so at the very end in Q4 this year, the incremental order backlog added for the 12 months before, so in the course of this year would need to be in the ballpark of EUR 25 million, but not really for the year '26 rather for '27. In order to do the '26 guidance, we are currently in line with our projections. So we would be still seeing us in the middle of the bandwidth that I gave, so around EUR 215 million, meaning EUR 210 million to EUR 215 million and the middle thereof would be EUR 212 million, EUR 212.5 million, something like that. That's what we see currently.

And that's mostly driven but not by the new orders for cloud and subscription that is sufficient for the -- even the upper end, but it is the perpetual licenses still that are still falling short of even the level of last year. In the first quarter, we saw a decline there of 40%, I guess. Of course, in our overall, as it just makes up 2%, 3% of our total revenue, it's not so important, but it makes the difference between this bandwidth. So currently, it's really more for this year, it's more the perpetual licenses that play a role. For '27, however, we need to step up. And let me add there, the pipeline is there. We do have still a good pipeline.

It is about the conversion rates and the conversion rates of that pipeline and the timely conversion of that pipeline has to do with 2 things. One, with the macro, this would need to light up in order to really fall through. And of course, secondly, it has to do with our own ability to execute. And here, we still are stepping up the maturity level of our sales organization. Capacity-wise, we are okay. Process-wise, we are okay. But maturity level-wise, we still have to step up, and this will happen in the course of this year.

All right. And just one final question would be, I think at the beginning, you mentioned that margins benefited from one-offs related to the reevaluation of the long-term incentive program, if I got that right. How much of a tailwind was that exactly in Q1?

That's right. And the tailwind was roughly 1 full percentage point in EBIT margin, and that's basically the revaluation of the long-term incentive, in particular of Board and others did play a role here.

The next question is from Gustav Froberg, Berenberg.

Just one follow-up from me. I wanted to ask about the cloud migration dynamics for your existing maintenance subscribers or maintenance customers. How much of your business in -- on the cloud side was driven by migrations in Q1? And how should we think about the evolution of cloud migrations as we progress through 2026?

Yes, very important point. Just allow me to expand a bit. I mean, yesterday, we had our Workforce Management Day. And I was really excited and I think a lot of our customers -- existing customers were excited as well to see live on stage what I shared with you today, but really live, it doesn't make a whole lot of difference to see this AI agent operate and actively communicate with a person and solve problems. So we had another speech there where it said, hey, cloud is really the prerequisite to move to or to get access to these AI agents. So with a lot of these customers, and we had like 700 people there, a ton of customers and resellers and lots of people.

With a lot of these on-prem customers that we have, I think it made click that in order to get to the door to AI and then you have to kind of go through the door as well to actually leverage AI, you first have to move to the cloud. And so I really hope that this kind of ignites a bit of a migration going forward. In the first -- just to make this -- to put this with clear numbers in the first quarter, in this ARR bridge that you'll find in the full deck of the presentation there, we have the new customer ARR expansion illustrated. And I think that has been EUR 12.7 million in the reporting period. And so roughly 1/3 thereof, so EUR 4 million comes from additional migration.

And as I said in my speech here, the negative revenue development of the cloud -- of the maintenance revenue, minus 3% year-on-year. That is exactly customers moving into the cloud already. So we do have prominent customers like STIHL and others in Germany who have moved last 2 quarter, but there needs to be a stronger wave going forward in order to get access to the functionalities, but also in order to kind of have a long-term positive effect for us and for the customers.

Great. And then a quick follow-up on the same topic. Do you see customers moving in conjunction with an SAP migration as well? Or are the 2 not really correlated and the customers are happy to just migrate on the ATOSS side without thinking about the rest of their tech stack?

Well, overall, we continue to have a strong SAP endorsed partnership, in particular, with new logos, I have to say, currently. With the migration trend, I would have to look into deeper myself. But on the new logo side, we are pleased with how the partnership goes. And I think there's a lot of value on both sides in it. Yesterday, in our Workforce Management Day, there was a booth from SAP SuccessFactors as well. So tremendous value on both sides, in particular in health care, but in other areas as well where we can collaborate perfectly together.

At the moment, there are no more questions registered. I would like to turn the conference back over to you for any closing remarks. Thank you.

Well, thank you, and thank you for the continued interest in ATOSS. I think we've proven once again that we started with a very solid Q1. We have a strong leverage on our margins because of our own internal efficiencies. Our business model seems to be very resilient even in these macroeconomic environments. Yet going forward, we are looking with a positive view on our pipeline and have to execute on this. in order to really show the case for even stronger growth, hopefully, in the full year and the years to come. Thanks for your interest, and I'm looking forward to the half year earnings call and all the exchanges in between with the entire investors community. Thank you.

Hello, everyone. Welcome back to our third earnings call where we will be discussing our results for Q4 and full year 2025. We are pleased to have you here with us today. I am joined by our Chief Financial Officer, Christof Leiber, and we are glad to have the opportunity to walk you through our performance and outlook.

We will be referring to the earnings call, Q4 and full year 2025 presentation, which was published earlier this morning and is available for download on our Investor Relations website as well as via the link provided in the webcast.

A detailed Investor Relations presentation was also published this morning, which we encourage you to review for further insights, but will not discuss during this call. Please note that today's call is being recorded, and the recording will be made available on our Investor Relations website after the call.

Before we begin, I would like to start with a disclaimer. Please note that the presentation contains forward-looking statements based on the beliefs of ATOSS Software SE. These statements reflect the current views of ATOSS Software SE with respect to future events and results and are subject to risks and uncertainties.

Actual results may differ materially from those projected here due to factors, including, but not limited to, changes in general economic and business conditions, the introduction of competing products, lack of market acceptance of new products, services or technologies and changes in business strategy. ATOSS Software SE does not intend or assume any obligation to update these forward-looking statements.

With that, I will now hand over to Christof Leiber, who will walk you through the key developments of the fourth quarter and full year of 2025. He will start with the general business update, then cover our financial performance, followed by our outlook for 2026 and beyond. We will then wrap up with the Q&A session. Christof, over to you.

Thank you, Carla, and a very warm welcome from my side to all of our -- to the entire audience. I'm happy to be here today and walk you through our Q4 figures as well as our full year '25 results. We appreciate your time and interest in ATOSS and look forward to sharing an update on our performance and outlook, including our AI road map well beyond 2026.

Let's get started on Slide 4 with key takeaways. We are proud to announce that 2025 marks our 20th consecutive record year, 20 years of continued year-on-year growth, top line and in terms of EBIT. Our CAGR for the year since 2014 has been at 15%. Overall, this is a unique success that makes everyone at ATOSS extremely proud. We also successfully completed our midterm guidance that we gave on the back of 2022 for the years '23 to '25. For this period, we projected a CAGR of approximately 19%. Now we came in at 18.5% CAGR for that period.

Also, we projected an EBIT margin by the end of 2025 above 30%. Now our EBIT margin is 2 years in a row above 35%. You've seen the numbers presumably already this morning. So ATOSS once again has demonstrated its exceptional success as a SaaS software company and our delivery ability on demanding guidances. This is a success that I'd like to dedicate to our employees, our customers and our clear commitment to our vision. At the same time, we've built a platform at ATOSS that's extremely well positioned to continue on this path in the future. But let us first focus on the results for 2025.

We've delivered solid results with full year revenues of EUR 189.3 million and an EBIT margin of 36%, well above guidance and reflecting the quality of our earnings. As for the growth within our medium-term guidance, once again, the growth has been driven by cloud and subscription revenue streams. This sort of revenue was up 28% for the full year of 2025. And we closed the year really on a high note. Q4 came in strong with 12% top line growth quarter-over-quarter, driven by once again strong momentum in cloud and subscriptions, which was equally up 28% in Q4 as for the entire year.

I mentioned last quarter that comparables in Q4 had been expected and actually were tougher. And still, the team has delivered. Many thanks to everyone at ATOSS for making this possible. On the order intake side, we've seen a substantial improvement in H2 2025 over H1 2025, and we believe that Q1 and H1 2026 should show continuation of this positive development. In particular, we are pleased with the development on the new ACV generated for cloud and subscription. Here, we saw strong growth comparing to H2 -- comparing H2 '25 to H2 '24 and still good growth comparing full year '25 to '24.

Again, cloud and subscription remain our main growth engine, supported by strong order backlog, healthy ARR momentum and a solid new ACV development.

These are the key areas to determine from our perspective, the value of ATOSS. Now building on this momentum, we enter '26 with confidence. We confirm our outlook of around EUR 215 million in revenue and an EBIT margin of greater than 32%. As always, our revenue target is realistic yet ambitious with a bandwidth of roughly 2%. Our EBIT margin target is conservatively set, meaning we have lack room to either outperform, cover the lower end of the revenue bandwidth or/and initiate additional investments.

For '26, we expect cloud and subscription revenues to grow by 25% plus and total recurring revenues by more than 15%, while on-prem licenses will continue to represent a smaller and more volatile share of the mix. Also, in -- for 2027, we stand by our projection of around EUR 245 million with a bandwidth of 3% and an EBIT margin of at least 33%.

Now on Slide 5, let's take a look back at the development of the phenomenal 20-year record history that we at ATOSS have achieved. Since 2014, ATOSS has even increased its growth momentum with an average annual rate of 15%. This was substantially driven by a strong development in recurring revenues, in particular, since 2021.

Today, our recurring revenues account for 94% of software revenues and 70% of total revenues, and this share continues to rise. Internationally, we keep -- kept expanding, averaging a 30% growth over the past 5 years. In 2025, revenue outside of the DACH region accounted for 6% of total revenues.

More importantly, we have won great new customers internationally in 2025 and in particular, in H2 2025. Two large retailers in Benelux, one retailer in the Middle East and somewhat as the icing on the cake, one international retailer headquartered in France in Q4.

Moving on to margins. Margins have been substantially increasing during our 20 record year trajectory and practically in all years, we outperformed our guidances on margins. As you know, we tend to keep our margin guidance conservative, and we will keep it this way.

Now with that, let's move to the income statement on Slide 6 for the full year 2025. We have delivered a solid year 2025, keeping the track we were on in Q4 -- Q3 2025, with revenues increasing by 11% year-on-year, driven by software revenue growth of 13%. As said, cloud and subscription business continues to be the major driver of this growth with 28% year-over-year increase in cloud and subscription revenues, which now account for nearly 50% of our total revenues, up from 42% last year.

For other revenue streams, consulting showed a continued good growth at 10% year-on-year and other revenues, including process consulting, even stronger growth of 31% year-on-year, whereas hardware revenues and perpetual licenses, as already alluded to, saw a decline in 2025.

On the margin side, we stayed strong despite the investments in our go-to-market organization and its now completed transformation. Looking at Q4 alone and on Slide 7, top line growth was again strong at 12% year-on-year. Software revenues grew at a similar rate of around 12%, keeping both metrics broadly in line with the levels of the previous year.

Overall, this was a solid quarter in terms of order development with particular strength on the cloud and subscription side in order intake, revenues and overall very strong margins once again. This provides a good support for our revenue development going into 2026.

Taking a closer look at our cloud and subscription and overall recurring revenue ARR performance on Slide 8. We continue to see a very positive development. Our total ARR grew by 18% to EUR 140 million last year. This trend is largely driven by very strong momentum in our recurring revenue streams.

Cloud and subscription ARR increased by equally 28% year-on-year to EUR 101 million by the end of Q4 2025. And looking further into the drivers of our cloud and subscription ARR, it is important to highlight that the majority of the ARR growth in 2025, again came from new business rather than migrations. Out of the EUR 22 million ARR increase year-on-year, more than 80% came from new ARR with existing and new customers -- with existing and new customers evenly split. And only 20% or roughly nearly EUR 4 million came from migrations.

This demonstrates the externally driven momentum of our cloud offering and confirms the attractiveness of our solution in the market. When looking at customer value dynamics, our net retention rate came in at around 111% for 2025. And as I mentioned already multiple times and some time ago, our long-term ambition has always been an NRR above 110. That is where we are, and that has been expected from the outset as our cloud customer base over time becomes increasingly larger and the share of newer customers with more appetite for expansions of the cohort decreases.

Now coming to our backlog, which gives us good indication of future ARR development. Our total ARR backlog increased by 18% year-on-year, reflecting the strong level of contractually committed additions for the next 12 months. In addition, the incremental cloud and subscription backlog added in 2025 increased. You see that on this slide, it can increase after 2 years of rather flattish environment. So this shows a positive change in the last year with 8% growth of that incremental cloud and subscription backlog added in '25. Both indicators further strengthen our visibility into '26 and underline our continued robustness of our recurring revenue model. Together, these developments provide a solid foundation and support a positive outlook for our ARR development in '26.

Now turning to cash flow and liquidity on Slide 9. Operating cash flow in 2025 came in lower year-on-year. This decline does not reflect a weaker underlying operating performance by no means. It is essentially driven by exceptionally high tax cash outs in 2025. Because of additional taxes set after the final tax assessment for '23 and additional prepayments for 2024, all in total tax payments in 2025 amounted to EUR 28.4 million versus EUR 9.8 million, so roughly EUR 10 million in 2024.

When normalized for the additional tax payments for '23 and additional prepayments for '24, the operating cash flow would have increased year-on-year in 2025. Now on the liquidity side, we remain very -- with a very strong position. Even after dividend payment of around EUR 34 million in Q2, we closed the year with a liquidity level of around EUR 123 million, slightly above EUR 112 million at year-end '24. This strong foundation allows us to continue investing in the business while maintaining a very healthy financial posture.

Moving on to people and organization on Slide 10. At the year-end 2025, our total headcount stood at 856 compared to 820 at year-end '24. This reflects a moderate largely planned expansion of our organization, which is overall still in line with our transformation efforts. With regard to our go-to-market organization, we are clearly on track. At the year-end, our sales and marketing headcount stood at 201 employees, which is within the range that I was giving on the last -- previous calls between 200 and 210.

The particular focus area continues to be our quota-carrying organization. At the end of Q4, 2025, when combining the staff on board and the already hired staff with entry date up to April 1, approximately 70 quota carriers and first-line managers will be on board. While this is slightly below the target of around 80, we are making steady progress and remain confident that we will close this gap very soon. And in parallel, we continue to drive efficiency improvements across our go-to-market setup through better processes, AI and digital tools, ensuring the productivity rises overall.

Overall, this gives us a significant stronger commercial engine entering into 2026 with more structure, more capabilities and greater resilience against macro fluctuations. With a strong finish in Q4, on Slide 11, we closed out 2025 as our 20th consecutive record year. For the full year, we delivered revenues of more than EUR 189 million, fully within our guided range and achieved an EBIT margin of 36%, clearly above our already raised guidance of 34% EBIT margin.

On the recurring side, we saw a continued strong momentum. Total recurring revenues grew by around 18% year-on-year and cloud and subscription revenues increased by 28%, both in line with our expectations. As mentioned earlier, the risk in the model continues to be limited mainly to the on-prem licenses and a bit on hardware, which represent a very small fraction and a very limited share of our total business.

Looking ahead to '26, we confirm our guidance. We expect revenues to come in around EUR 250 million, meaning a 2% bandwidth and in continuation of our conservative margin guidance practice, an EBIT margin of greater than 32%. This outlook is supported by strong ARR and backlog in cloud subscriptions and the progress that we've made in transforming our go-to-market organization.

Our medium-term guidance also remains unchanged. We continue to target revenues of around EUR 245 million by 2027, representing a CAGR of roughly 14% from '25 onwards. Naturally, the pace of growth will depend on macroeconomic conditions and our sales execution. But overall, the progress we made in 2025, we feel well positioned for the years ahead.

Looking towards 2030, we believe that leveraging our position and the market dynamics for workforce management, we can build an organization of around -- or with around EUR 400 million in revenue by 2030. In this direction, we continue to invest to even increase our current organic growth, and we are opening up to selective inorganic growth. But of course, it is an ambition and not a guidance.

Now moving to Slide 12. One area, amongst others, for our future growth is continued investment in our AI road map. ATOSS has started the AI journey in '22, '23 with industry specialists like University of Mainz for hospitals, Fraunhofer Institute and others, which this led to the initial set of AI services.

In 2024, '25, ATOSS has started delivery of AI services with a clear focus on forecasting as this is the base for any optimization of workforce scheduling. This has already positively impacted the development shown in our ARR order backlog, in particular for cloud and subscription in 2025.

For hospitals, there are substantial advantages in faster assuring the right forecast and thereby building planning decisions on this accurate and faster and readily available forecast. This is applicable, of course, not only for hospitals, but also for the rest of the industries as well.

The topics here are general forecasting, illness rate forecasting as well as vacation or other absence forecasting. That is what we have already delivered last year. However, the AI road map is obviously much more. And as you see on this slide here, it is key to the entire road map of ATOSS for all of our solutions.

Our focus on AI agents creating workforce efficiency, productivity and simplification is clear. We cater to end users, employees and experts and thereby covering the full breadth of the workforce. This year, in '26, we will have the first AI agents for the expert users and employees across the product lines.

Furthermore, we have a multiyear road map with focus industries touching upon every aspect of workforce management. On our road map are multiple agents for artists, configuration agents, voice agents for multiple use cases for managers, casual users, et cetera, agents for specific industries like retail, just to name a few of this list here.

Multiple agents equally for ATC, AI assistance to speed up and automate the planning process, AI support for forecasting, et cetera. Business intelligence also for ATC. And even for Crewmeister, we have multiple agents on the road -- on the road map, AI-based crew administration as well as AI-based scheduling suggestions, et cetera. Now there's a lot to come, and we are just getting started. From our perspective, success in AI is based on 3 pillars, if you will. Domain expertise and workforce management is an area with a huge moat for ATOSS that is rooted in this domain expertise. Deep embeddedness in customer processes and understanding, for example, of the regulatory compliance and complexity. How else should an AI leverage the potential thereof?

And lastly, access and ownership of the data that is relevant to workforce management. Now ATOSS, we are bringing all of this and combine it with our AI innovations. This will further deepen our existing moat in workforce management and still has much more potential.

Now I guess this concludes the presentation part of the call. We'd now like to open the floor for questions and are happy to dive deeper into any topics that you would like to discuss. Thank you.

[Operator Instructions] The first question comes from the line of Nicolas Herms from Deutsche Bank.

Congratulations on another record year. I have a couple of questions. I would like to start with sort of the obvious question on the risk from AI. The market appears to be pricing in on application software these days. So yes, I mean, you gave some color on that already, but it would just be interesting to hear your perspective on potential risks you are seeing on your business and how these developments impact your customers? And most importantly, do you see any of your customers starting to try different tools to respond to needs that were previously addressed by ATOSS?

And then on the other hand, maybe on the opportunities from AI and the product update that you have given just a couple of minutes before. Can you maybe share some initial customer feedback from the features that you have already launched or that you have announced before? And could you maybe remind us how you're planning to monetize these features?

Thank you, Nicolas, for the question that you just raised. And obviously, AI is on everybody's agenda right now. Let me start with first an observation. I think everyone got really excited last and I think wrongfully so in some respects as last year in August or so it was, I just came back from vacation, Sam Altman put out that claim that the death of software is around.

Now first of all, ATOSS will not be beaten or eaten by this. And secondly, I think it's rather the other way around. It is AI obviously is extremely transformative. It will be helping customers to become more efficient. But efficiency is based on 3 pillars, if you will, and I try to kind of make these -- point these out. One is that you need to have domain expertise. And in our core area, that is domain expertise of workforce management. If the vendor of AI solutions or services has no clue of what workforce management is about.

And it's an extremely complex scenario or topic, then it is extremely difficult. You can code very fast with AI, but you need to code meaningful. Now so this is the domain expertise. The second thing is our solutions and workforce management solutions of ATOSS with -- based on this big moat that we have built over the years are deeply embedded with our customers.

Now you imagine a company like Deutsche Bahn, for example, or Lufthansa, Deutsche Bahn with more than 100,000 employees live, and they actually last year decided to expand very substantially into ATOSS going forward. Now you imagine these processes for multitudes of different companies in such an organization. They can leverage AI, but they can only leverage it if you can really deliver end-to-end digitization.

And that is what we are very much about, at least in our enterprise area. And this then leads me to the third pillar, which is the data access. In order to really fully make -- leverage AI, and we've learned that in our forecasting, AI service, you need to have access to meaningful data and make use of this data in order to come up with credible, reliable forecast prognosis, but just faster and more adaptable as in the old days where you did have to parameterize a lot of stuff.

Now our AI forecasting service is doing amendments, et cetera, more or less automatically. So that's why I'm not really seeing the threat. I'm rather seeing the potential that there is for companies like ATOSS with a clear moat with a deep embeddedness with customers and then bringing AI services on top of our solutions that is actually creating value.

Now you were asking about how this value is being seen and how we can probably speak a bit about, making it visual that people understand that already AI is delivering a positive impact on our numbers. Now I cannot give you a clear number, but what I can give you is the indication that last year, all of our hospitals, the university hospitals and other hospitals that we've won, and we've won quite a few of them, they have selected ATOSS for a multitude of reasons, obviously.

But one of the reasons was that we have an AI agenda that we have AI services for forecasting already readily available, and that made them choose ATOSS, that made them choose ATOSS as a cloud solution because then you get access to the AI services. And this, in particular, in a market environment where you do have -- and when speaking about workforce management, the market environment is a bit different than in other areas, you have very small vendors really. You don't have large vendors for the most part.

You have smaller vendors. This creates and entrenches really the moat that ATOSS has developed over the past years. And lastly, you asked the question about whether we encounter already customers making use of independent, let's say, large language model providers allowing or delivering AI services to these customers. That is not what we encountered so far, maybe in some areas where there's very little complexity, but I have not heard about this at this point.

And as I said, we believe that rather we can leverage the benefits of AI. Obviously, we need to stay innovative and then this will be a positive for us clearly.

That's very helpful and actually what we hear in our customer discussions as well. I have a quick follow-up, if I may, on the revenue guidance of around EUR 215 million. I recall you previously mentioned that achieving the EUR 215 million would require roughly flat order intake in 2025, which you have now delivered. So I was wondering what are the drivers or assumptions that would lead you to the upper or the lower end of that guidance range?

Yes. Very valid question. Now first, our order development last year, I would want to make this point, I really have to split the year in 2 halves. The first half 2025 was not a strong half. We had externally difficulties. I mean, the macroeconomic situation was not entirely good. It didn't really improve throughout the year in Germany, at least. We had negative sentiments by tariffs at least impacting our potential customers. So the first half was externally not good. And quite frankly, internally, we had a lot of things to do.

We had the transformation of our go-to-market organization still very much ongoing. We had to change our CRO during this time. So first half was not very good. The second half was extremely good by comparison. In the second half, we -- if you compare H1 with H2, H2 was significantly outperforming H1, more than double-digit growth there. And if you look for the full year on the cloud and subscription development, there, as I said, we had a strong performance year-on-year for cloud and subscription, so '25 versus '24. And here again, if you compare H2 '24 with H2 '25, there will be a strong uptick.

This will -- is showing slightly in the incremental order backlog for cloud growth, which is now a solid growth, I would say, or good growth, as I referred to it, in between 5% to 10%. And that's roughly what we increased in cloud order subscription. So we are actually on a good trajectory there. This leads us to the ARR backlog of EUR 146.5 million, which if we add to this EUR 43 million roughly of consulting revenues plus EUR 10 million of other and hardware and then EUR 9 million roughly of perpetual licenses, we end up with EUR 209 million. And so without any new cloud contracts being signed. So with new cloud contracts, we just barely need EUR 5 million to EUR 6 million in new ACV or new revenue next year, which should be possible.

Here, as I said, the cloud -- on the cloud side, on the recurring revenue side, we do have very good visibility. The limitations in our visibility still come from the perpetual side where we do see basically 2 ways this could go. One way would be the longer trend, a continuation of the longer trend, which ultimately I would see, which would mean a further slight decline. That would pose a risk, a slight risk on our guidance. That's why we came out with the bandwidth of 2% to the lower end.

The upper end, obviously, could be that with all this talk about sovereignty in Europe or in Germany that we do have the -- the ability at least to see some more perpetual in a short period of time while this sovereign talk will push some customers to the cloud. So broadly speaking, we are seeing the EUR 215 million as a realistic yet ambitious guidance, 2% bandwidth and the risk is with the perpetual licenses.

Next question comes from the line of Philipp Sennewald from NuWays AG.

Thank you for the presentation, and congrats also from my side. You mentioned the order momentum has caught up significantly in the second half of the year. I would be interested in your perspective, is this only a catch-up effect? Or is this genuinely stronger underlying demand in your view?

Yes. Philip, thanks for the question. And I try to make the point that we see this as from an organizational point of view, from the dynamics of the market, in particular in the public sector in our area as something which has the chance to continue and actually not just the chance. We've -- in particular, in H1 and Q1, we would envision that our order development will stay on this path for the second half of the year in these kind of environment, I cannot really project clearly, but at least for Q1 and H1, based on the development that we're seeing, some deals that could have been closed in Q4, but moved to Q1. So we have quite a good pipeline for Q1 and H1 should be on top of last year as well.

That then would hopefully tie into the further maturity of our sales organization with newly hired people, adding to positive effects in the second half of this year. So that overall, for this year, we are quite optimistic in -- starting on a quite optimistic turn.

That's very helpful. Next one would be on Crewmeister. Crewmeister showed a slightly weaker net retention this year than last year. What were the reasons here? How do you aim to stabilize it? And do you have a long-term target for Crewmeister regarding net...

First of all, on Crewmeister, I think Crewmeister has added significant customer numbers this year as well. We had hoped initially for a slightly higher number. We ended up nearly at 18,000. So I think it's 17,900 or so that we came in with. We had hoped for above 18,000, so slight decline again here a gap. It was also due to, from my perspective, H1, which came in lower. We reassessed the ways in which we reach out to customers in this area. Opened up new channels, relaunched our website and enhanced traffic there as well. So second half was quite stronger. So we actually had there as well a second half, which was pleasing.

Going forward, for this year, we envision the customers to increase to 22,000. Precisely on net retention, well, I mean, this is a different business altogether. So it's always a bit -- I think maybe not okay if we add this up in our overall net retention, which still with Crewmeister stands at 111%. We are working on churn. We have improved a bit the churn, but it still stands at 1.5, I think, roughly per month the churn there, which is our struggle, which is our kind of key point which we need to improve in order to move up the gross retention and thereby then the net retention as well. Still a very dynamic area, a lot of potential. And yes, we have to work a bit on the churn side.

Yes. Perfect. That also helps me a lot. And then one last. You have EUR 13.1 million in your cloud subscription ARR from new and migrated customers. Can you distinguish there, what of that is new and what of that is migrated customers?

Yes. I tried to do this in my presentation. But once again, there, I gave the number that 80% of the 22 in total comes from new licenses from existing and new customers. They are evenly split. But to give you the precise numbers, of the EUR 13.1 million, EUR 3.9 million are coming from migrations. The remainder, EUR 9.1 million or EUR 9.2 million or so -- EUR 9.2 million comes from new logos. So that's quite pleasing seeing that 50% basically of the ARR expansion in the cloud and subscription side is coming from new logos and 50% basically comes from the existing customer side and then added 20% from internal customers, if you will, so maintenance customers migrating into the cloud.

We now have a question from the line of Gustav Froberg from Berenberg.

Just a couple. First on uptake and success of the new products. I mean you mentioned it a little bit, but could you tell us a little bit more about the uptake you've seen with some of the new products and features you've launched in 2025 and maybe give us an indication as to which industries are particularly active on taking up new solutions?

Then a question on the Argentic AI product you're rolling out for Q2 of this year. Are there any other similar products in the market today? Or do you think that you are very early or first to market with something like this? And then lastly, just on migrations, et cetera, how should we think about the migration momentum into 2026? Do you expect migrations to accelerate? Or are you making any concerted efforts to push for more migrations? Or are you expecting the pace to be rather as it has been in the past?

Okay. Thanks, Gustav. And thanks, by the way, for the very, very deep review that you put out, I think, just a short while ago on workforce management. Maybe it's something worth looking at for others as well. Now taking your question uptake of the current services. Now the uptake of the -- of the current services, which are forecasting services has mainly been taken and the feedback that we got was in hospitals. As I said in my presentation, we initiated the launch, the innovation of our forecasting AI services with the University Hospital of Mainz. We built the prototype. So it's all geared towards this medical environment. And there, it has significantly impacted the deals that we have won since I would say, end of 2024.

And basically, all of these deals had to a certain fraction, this element of we want the AI service for forecasting. So in that sense, it has already delivered quite a positive effect on our order development and on our ARR development, but I cannot quantify this at this point. And we will, however, and perfectly possible to use it in other industries as well.

This will be something which we probably have to educate people a bit more about and kind of go out more into the market. But generally, forecasting and AI-driven forecasting is always the better way of doing forecasting than the old way that we have done with the classical AI, as I called it for some time, but it's the classical way was algorithm-based and not machine learning like the new AI service. So -- and the classical way is basically installed in all of our retail customers, and they would tremendously benefit from moving to the AI service going forward.

Now to your question on the more imminent new service that we will bring out in Q2 for ATC, the agentic use cases there, in particular, for the SMB product, ATC. I'm always stressing this point that overall, the market for workforce management is a very fragmented market. That holds true from enterprise to the very low end to the micro company market where Crewmeister is active. But obviously, in SMB, the lower you get, the more fragmented it is.

So in this area, you have competitors that are extremely small, very small. And by bringing out an Agentic AI use case, it definitely sets ATC apart from the other vendors that are out there and the competitive products. So in that sense, we hope that this definitely will bring an uptake, a continued uptake. We had a good year in SMB in '25 as well, order intake-wise, but we hope to kind of see even more thereof in '26. amongst other things based on the Agentic use case that we have there for ATC in Q2.

Lastly, on the migration side, there, we are following a twofold strategy. I think that has not changed. I think I've discussed it in the Q3 earnings call as well, which is simply put, for the enterprise customers, we stay true to our commitment to our customers of continuously delivering on-prem, in particular, in an environment where on-prem customers, enterprise customers are looking for sovereign solutions. Amongst others, there are sovereign cloud solutions as well, but there is one angle of sovereignty that they can and will continuously get from us with our on-prem offering there. So this is the starting point.

Secondly, we are inviting and we will incentivize, and with the new AI services, we do have tools to incentivize these customers, the on-prem customers to migrate to the cloud faster than they probably would have otherwise. So we will leverage these new toolbox, if you will, that we have moving our customers that are currently on-prem and moving them into the cloud.

We will package this together with economically interesting offerings for them to limit the uplift that they would have to pay for the migration and then make continuous value, and we, of course, would hope for the share in that value that our customers are then generating.

So that's the other side, no force but incentives in moving and thereby, I would see a slight uptick in the migration there, but not a substantial one because we don't force. On the ATC side, it's slightly different. There, we do have the clear focus and clear view or at least ambition to migrate all of our customers by 2030. And we will start with a combination of incentivization, creating interest for the AI services that we now start to deliver in '26, firstly, to ATC customers.

But we will add to this some sort of economic push as well, if you will, we will start to enhance or increase maintenance costs by sometime this year or beginning of next year and announce it this year that maintenance costs for ATC will rise. So there's more economic sense in moving to the higher-value cloud solution with embedded AI use cases. So there will be value on this side as well. And at some point, there will be an end there as well for the ATC side. So that's kind of the 2-way approach.

This 2-way approach will mean that our customers -- that we hope for a slight uptick, but I wouldn't count or we don't plan for substantial changes in the dynamics that we've seen in '26 -- '25, sorry.

[Operator Instructions] The next question comes from the line of Gustav Froberg from Berenberg.

Sorry, just a follow-up question. Just on new features again and monetization of those, are you thinking about monetizing them in the form of stand-alone pricing, perhaps on a per token basis or per use basis? Or are you looking to bundle them as part of the existing solution and some kind of upsell motion? Just be curious on the pricing strategy.

Thank you for that question and very valid one, obviously, because there is different dynamics with AI services as they require some computing power as well and create costs, obviously, as well. Now with these forecasting services, currently, we embed them or sell them as a separate module. So this is more the add-on or the effect of winning more customers and enhancing the overall ticket volume for the particular customer.

Now going forward, for the Agentic use cases, we will envision of a hybrid pricing structure where we do have then on one hand, token-based computing-related price methodology and of course, in parallel, the similar subscription-based pricing for -- as we do have today. So it will be a combination of both. Currently, for the current modules, the forecasting ones, we have not implemented that. But for the new Agentic AI services, it will be implemented this way.

Great. And is there any gross margin difference between what it is that you envisage to charge for customers on a token basis versus a subscription or not really?

It's too early to tell really, but I would -- I mean, our goal is to keep our healthy gross margins stable. And I don't want to go into the details of where our gross margins stand at this point.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Christof Leiber for any closing remarks.

Well, thank you, and thank you for all the attendees and your interest, your continued interest in ATOSS. Just in a nutshell, I just want to reiterate the entire team here at ATOSS is extremely proud to have delivered 20 consecutive years. And not just because we have -- basically, we're always looking in the back mirror and we celebrate ourselves for having the 20 years.

The 20-year success is really about having built a platform that gives us comfort to look into the future. In this area of workforce management, we have the financial means, the innovation capabilities and a lot more that will put us in a position to leverage the opportunities that there are with AI for a software vendor that has deep embeddedness with our customers, good exchange and continued exchange with our customers. And that is what we hope we will leverage not just in '26, but all the way to 2030. And there are so many more things that we could talk about, but I hope we'll leave that to the next earnings calls. And with that, I'll close it, and thank you for your interest. Thank you.

Thank you, operator, and hello, everyone. Welcome back to our second earnings call, where we will be discussing our results for the first 9 months and Q3 2025. We are pleased to have you here with us today. I am joined by our Chief Financial Officer, Christof Leiber, and we are glad to have the opportunity to walk you through our performance and outlook.

We will be referring to the Q3 and first 9 months of 2025 earnings call presentation, which was published earlier this morning and is available for download on our Investor Relations website as well as via the link provided in the webcast. A detailed Investor Relations presentation was also published this morning, which we encourage you to review for further insights, but will not discuss during this call.

Please note that today's call is being recorded, and the recording will be made available on our Investor Relations website after the call. Before we begin, I would like to start with the disclaimer. Please note that the presentation contains forward-looking statements based on the beliefs of ATOSS Software SE. These statements reflect the current views of ATOSS Software SE with respect to future events and results and are subject to risks and uncertainties.

Actual results may differ materially from those projected here due to factors, including, but not limited to, changes in general economic and business conditions, the introduction of competing products, lack of market acceptance of new products, services or technologies and changes in business strategy. ATOSS Software SE does not intend or assume any obligation to update these forward-looking statements.

With that, I will now hand over to Christof Leiber, who will walk you through the key developments of the third quarter of 2025. He will start with the general business update, then cover our financial performance, followed by our outlook for 2025 and beyond. We will wrap up with a Q&A session. Christof, over to you.

Thank you, Carla, and welcome, everyone, from my side. I'm happy to be here to walk you through our Q3 and 9-month figures for 2025. We appreciate the time that you take and your interest that you continuously put on ATOSS and look forward to sharing an update on our performance and outlook.

So let's get started on Slide 4 with key takeaways. ATOSS has delivered a very strong Q3 2025 in terms of revenue growth, profitability and new order development. This strong development in Q3 not only supports the solid revenue growth of 11% in the first 9 months of 2025, but also underpins our continued growth story that is driving our transformation to a recurring revenue model.

As order development was discussed more extensively after H1, we -- where we reported a decrease in order development, yet equally indicated a robust pipeline and expectations to come in for the full year at par with last year. I'd like to expand a bit on order development. Order development for cloud and subscription is key to our business model and medium-term -- medium- to long-term growth. Therefore, we are particularly pleased with the development of Q3 in this respect and after Q3 for the development of the full 9 months in 2025.

Over the 9-month period, we have grown by approximately 14% in new ACV generation year-on-year on the cloud and subscription side. As cloud and subscription make up nearly 50% of total revenue, this is obviously more important than fluctuations on the on-premise license order intake. The combined order development, meaning cloud and subscription and on-premise license order intake combined, according to our internal sales performance metric came in at par with last year's performance by the end of September 2025, a significant improvement compared to H1 and indicating how strong Q3 really was.

Moving on to margins. Margins have been substantially higher than the forecasted at the beginning of the year. And yet, we have been transforming and investing into our go-to-market organization, have done hirings, yet also enhanced efficiency and overall stayed focused on costs. This has developed quite a strong margin development, and we expect the margin development for 2025 to continue to stay strong. Because of the growth dynamic that we see, we are sure to complete 2025 as our 20th consecutive record year in a row, top line and hopefully as well on the bottom line.

The revenue guidance stays at around EUR 190 million in revenue, meaning a range of EUR 187 million to EUR 190 million in revenue. This is purely based -- or this range is really purely based on the weakness in on-prem sales, license sales, whereas the performance on the cloud and subscription side is continuously strong, as I said earlier on, in particular, shown in Q3. Based on the strong margin development within the first 9 months of 2025, we are able to raise our guidance here for the full year to an EBIT margin of 34%.

So I would like to thank the ATOSS team overall for the performance in this environment. So far, I have to say, going forward, an important Q4 in terms of order development and new ACV development, in particular, lies ahead of us. We continue to expect an overall order development at par with 2024 and that the new ACV order development will show growth for the full year. Comparables, however, in Q4 are stronger than they were in Q3. So there is quite a lot of work still to be done. As for revenue and margins in Q4 alone, for Q4, we expect revenues to be in the range of EUR 48 million to EUR 50 million plus with an EBIT margin between 31% and 34% in Q4.

Now moving on to people and organization on Slide 5. As of September 30, our total headcount stood at 853, representing a slight increase from prior quarter and year-end levels in 2024 and obviously, the prior quarter in 2025.

With regard to our go-to-market organization, we have made continued progress. The transformation is overall on track, a good buildup on the SDR side, assuring a stronger pipeline creation in 2026. Quality of and capacity of quota carriers is a focus point for our transformation. And yet in parallel, we are using and looking at efficiency by using AI, digital tools, et cetera. So we now expect the total headcount for sales and marketing by the end of the year to be in the ballpark of 200 to 210 people in the go-to-market organization, yet with a fully transformed organization.

Headcount of quota carriers, including first-line managers will be around 80. That's at least our goal. And that is in line with what we had planned for at the beginning of this year. This will give us an increased and significantly improved organization in the go-to-market area for 2026. And at the same time, we will focus on enhancing the further digitization of this organization to create more efficiency overall. Overall, this will give us a much stronger muscle to grow next year and in our key growth markets and also be less impacted by whatever the macro will hold for us.

Now let's move on to our financial update and start with a look at our income statement on Slide 6 for the period from Q1 to Q3 2025. We've delivered a solid first 9 months of 2025 with revenues increasing by 11% year-on-year, driven by software revenue growth of 13%. As said, our cloud and subscription business continues to be a major or the major driver of this growth, with 28% year-on-year increase in cloud and subscription revenues.

This revenue stream now accounts for 48% of our total revenues, up from 42% last year. And for other revenue streams, some of them are equally contributing to our overall growth. Consulting showed a continued good growth at 10% year-on-year. Other revenues, including process consulting, improved even stronger with 31% year-on-year growth, whereas hardware revenues saw a decline in the first 9 months in 2025. On the margin side, we stayed strong despite the investment into our go-to-market organization and its transformation. As said, we will continue to balance -- through a balanced buildup of efficiency gains through new digitization and some quality in headcount and capacity buildup in the go-to-market organization. Overall, we are very pleased with this development so far.

Looking at -- on the next slide and on Slide 7, looking at Q3 alone, the year-on-year growth has been slightly stronger, 12% top line growth and 14% software revenue growth. Also, the margin development in Q3 stand-alone was even slightly higher than on a 9-month basis. Overall, as I said, a strong quarter, a very strong quarter in Q3 for order development, revenues and margins with particularly strength in the cloud and subscription side, in particular, in order development. So the new ACV generated by cloud and subscription has increased by 14% after Q3 for the first 9 months. This will support the revenue development in the next quarters.

Moving on to Slide 8 and taking a closer look at our cloud and subscription overall and overall recurring revenue -- ARR performance. We saw cloud and subscription ARR to grow by 26% by the end of Q3 2025. And total annual recurring revenue grew by 17%, so that including maintenance and cloud and subscription revenue streams until the end of Q3, a growth of 17%. That is what we had shown here.

With this ARR growth and on the back of the strong new orders for cloud subscription, the new ACV up by 14% for the first 9 months, we are envisioning the cloud revenue growth to stay around 25% throughout 2026 as well. And overall recurring should continue to grow in '26 by plus/minus 15% for the full year '26. This is underpinned by likewise strong order backlog and backlog development for cloud and subscription and for total ARR backlog.

Overall, we have, therefore, a good visibility of our recurring revenue streams for '26. And for the on-premise license side and for hardware, the visibility is naturally less clear. But bearing in mind, this makes up only the on-premise side, 4% of total revenue, hardware just 2%, whereas the recurring revenue streams are making up 70% and next year even more than 70% of total revenue. So the value of ATOSS should be seen in the development of the recurring revenue streams.

Looking at the cloud development by product and thereby looking at Slide 9, we continue to see solid figures. Our overall net retention rate remains at 111% based on the new ACV development in Q3. We expect this to stay at this level for the end of this year in 2025 as well. Overall, in medium and long term, we aim NRR rates for ASES and ATC combined to stay above 110% and for Crewmeister to be in between 91% to 93% going forward.

Let's now turn to our cash flow and liquidity on Slide 10. Over the first 9 months 2025, we recorded a continued positive operating cash flow of nearly EUR 50 million, yet below last year's numbers. This was primarily driven by high tax payments mainly corporate income tax for 2023 and additional advanced payments for 2024 and 2025. So overall -- but still with this higher tax payments, still overall, the liquidity increased despite the dividend payments of around EUR 34 million that we had to do -- that we shared with the investors in Q2 of 2025.

Given these effects, we closed at the end of Q3 with a liquidity position of nearly EUR 126 million compared to EUR 112 million at the end of 2024. With this strong cash reserve, we remain well positioned to continue investing in the business while maintaining a solid financial foundation.

Now this brings me to our outlook on Slide 11. I've already given some insight, but let me just repeat this here real quick. As we look back on the strong Q3 and solid first 9 months of 2025, our focus turns to finishing 2025 as our 20th record year in a row. For Q4, we expect revenues to be in the range of EUR 48 million to EUR 50 million plus with an EBIT margin for Q4 of -- in the ballpark of 31% to 34%. By consequence, we remain optimistic about our overall revenue outlook for the full year with expectations of coming in around EUR 190 million, as I said, in this ballpark of EUR 187 million to EUR 190 million in total revenue. The risk is limited to the on-premise and the hardware development. Our growth on recurring revenue side in total for 2025 should be approximately 18% year-on-year. And for the cloud subscription side, 27% for the full year.

So very strong growth numbers on the revenue streams that make up 70% plus of the full revenue streams. With a strong margin development until at the end of September 2025, our margin guidance is now increased to 34% for the full year. As said, this guidance will mark our 20th consecutive year of substantial top line growth, and we are on track to meet our last medium-term guidance target set in 2022 with a CAGR of 19% all the way through until 2025.

Looking ahead, our current medium-term guidance of EUR 245 million by 2027, representing a 13% growth rate remains unchanged. Of course, a lot will depend on macroeconomic conditions, our sales performance and execution of the transformed go-to-market organizations going forward and of course, a lot of other things. But we still see a very good chance to come in by 2027 with this revenue number of EUR 245 million.

Now this concludes the presentation part of today's call, and we'd like now to open the floor for questions and are happy to dive deeper into any topics you'd like to discuss.

[Operator Instructions] And the first question comes from Nicolas Herms from Deutsche Bank.

Congratulations on today's results. A couple of questions from my side. First, on the new order intake. I mean, very strong Q2, Q3, I think, on a stand-alone basis, say, at the very upper end of what was expected going into the results. So I was wondering if you could give a little more flesh on where this strong acceleration in Q3 is coming from. So have you noticed any difference in your different regions and customer segments?

And then second, did the surge in new order intake also stem from the reorganization of your sales organization and the new processes that you've implemented over the last couple of quarters? Or is it too early for this to have a significant impact?

Thanks, Nicolas, for the question and a very valid one. Let me dive in a bit deeper into the new order intake in Q3, in particular. In terms of customer segments, I mean, you know that we do have the enterprise area. We have the SMB area as 2 separate parts where we saw the development. Generally speaking, overall, SMB was continuing to be slightly above last year with roughly 50% coming from new logos and 50% coming from existing logos.

Enterprise sales were rather flat overall and roughly 30% coming from new logos, 70%, so quite a substantial part from customer expansion from the existing customer side. Both areas significantly were seeing cloud and subscription order intakes rather than on-prem. So on the prem side, we saw a decline, whereas on the cloud and subscription side, on both sides, we saw significant uptake.

Overall, as I said, the new ACV generated with the order intake was 14% for the 9 months. I cannot give you the figure right now for Q3 stand-alone, but it probably was substantially higher than the 14% as the comparable last year was relatively low.

And in terms of regions, we saw some positive contracts on the international side, one retailer from the Benelux region and one retailer in the Middle East. So 2 international deals. We also saw strength on the health care side, one university hospital in Q3, in particular, that we added to our customer list. So that is very pleasing in the health care. Also logistics on the existing customer side was meaningful in Q3, where we still continue to see some weakness is on the manufacturing side and in particular, there are obviously automotive and suppliers or -- suppliers for automotive vendors.

Lastly, your question regarding the sales organization and whether this already or the reorganization transformation of the sales organization, whether this had -- did have an impact on Q3 proper. That's too early to say. I don't -- I really -- most of the -- at least the larger deals certainly were in the making already for 6 to 12 months. So no direct impact there.

In terms of pipeline buildup, maybe we do see some development, some positive impact there, but it's really a bit too early to tell. This will probably rather pan out in H1 2026 and show effects there. Yes, hopefully, I did answer this question. If you follow up, please go ahead.

Yes. Can I just ask one quick follow-up on Q4. I think SAP tonight, they sounded quite optimistic on Q4. I think they said deal momentum is accelerating given that you target similar customers, it would be interesting to know what you are seeing in terms of demand environment and customer behavior into Q4 or in other words, I mean, you've commented on this already a bit, but I want to better understand how sustainable this very strong growth in Q3 order intake is.

Well, I mean, we do have a robust pipeline. And in terms of our visibility in terms of the pipeline in general is very good. It's basically, as I've said, after the end of H1, where I said despite the fact that in H1 proper, we were being a bit slower than the year before because of comparables, but also because of some deals that slipped. As I alluded to the fact that the pipeline as such was robust and a good visibility there. That is similarly the case right now as well.

However, as in -- as we've now seen on the positive side in Q3, deals have been slipped from Q2 into Q3 and made Q3 much -- looking much stronger, this may happen still in Q4 as well. So it's a bit difficult to say. Pipeline-wise, we are okay. Execution-wise, we have to see whether we really get everything done that we need to get done in the end of this year.

At this point, I would say, we do see -- look optimistic in Q4 in terms of making the same volume overall as in the very strong Q3. That would be bringing us at par for the overall order development that we've seen in '24. And it would -- and that's most important, it would indicate that we still will have at the end of this year, an increase in new ACV development on the cloud and subscription side. So that's what I can say to this.

Looking forward to '26 as well, we just looked at our pipeline development for '26. And from a pipeline perspective, it looks okay. So we are envisioning some order development growth for '26 compared to '25 as well there from a pipeline development, it looks okay. From a productivity development, it looks okay, but it needs to be executed as well.

Then the next question comes from Gustav Froberg from Berenberg.

I just have one. The environment for software buying or software selling, depending on which angle you look at it from has obviously changed quite a lot this year. In Q3, it seems like quite a lot of software companies are saying that order momentum has returned a little bit, picked up, changed. What is it in your opinion or in your view that has changed at customers that have made Q3 a slightly better quarter. Is there anything in particular that customers have said or anything on the customer behavior side you would like to call out to sort of shed some light on the shift?

Well, I mean, in the numbers, we've seen the shift. We've -- I'm still a bit doubtful on the macro, quite frankly. Our execution had been very focused after a bit of a disappointment in H1 that has added to the success in Q3 as well. And hopefully, we can push this forward into Q4 as well so that we get -- stay focused on the deals that we do have.

Overall, I would say, and that's what I said in H1 as well, we are delivering an efficiency tool. We are delivering an efficiency tool in a highly complex environment. There is hardly strong competition there. It's really on us to make the case for the efficiency gains that customers can leverage through our tools. And we do have a lot of good reasons going for us in the health care industry, for example, there is a ton of relatively old, I would say, legacy systems that is still in place.

Our solutions are fully cloud-based with the new cloud-native stack. They open the door to AI technologies. We have delivered already 4 AI services on the forecasting side for general forecasting, for illness rate forecasting, for vacation rate forecasting, and other forecasting elements, plus we've delivered Workforce Intelligence. So we've basically delivered a credible news flow to our customers that there is innovation to come and there's a reason to move to the cloud, whether you are a new customer or whether you are an existing customer moving to the cloud. And that has certainly helped in differentiating our offer, and this will continue to be helpful for us as we are progressing on this journey to add new services in this direction, as I said in the H1 call, in the course of the next 12 to 24 months, we are envisioning topics like agentic AI services adding on this.

And this altogether against the backdrop of markets and customers looking for efficiency tools. And in the particular field of workforce management, a vendor landscape that is different from other areas, I would say, and where we stand out in terms of innovation, in terms of investment capabilities and in terms of references, that has certainly helped us.

When it comes to the overall macro, I'm still a bit hesitant, but that's very much the reason why we believe that we had to invest and transform our sales organization to be a bit more independent on what the macro does so that we can deliver even in a tougher macro environment with good results.

[Operator Instructions] So it looks like there are no more questions at this time. So I would like to turn the conference back over to Christof Leiber for any closing remarks.

Thank you, and thanks to all of us -- to all of you who have joined this call and for your continued interest in ATOSS. Let me just say that we are very pleased with this development over the first 9 months, in particular with Q3, that pipeline looks good. We still have one quarter, an interesting quarter ahead of us, where we will aim to execute as we've done in Q3. And what is really a very positive development is that our cloud and subscription side of order development plus on the revenue side is keeping up -- or picking up pace in terms of growth. And with that, we are looking forward not just to Q4, but also to 2026 with another year of consecutive growth.

Thanks for your attention and looking forward for the next call in Jan 2026, completing our 20th record year in a row.