Exasol Stock

Welcome to the earnings call of Exasol AG regarding the financial half year figures of 2026. Their CEO Joerg Tewes and CFO, Jan-Dirk Henrich, will guide you through the presentation and the figures shortly followed by a Q&A session via audio line and chat.

And with that, I'm handing over to you, Mr. Tewes.

Thank you, [ Judith ]. Good afternoon, everybody. Thank you for joining our investor call. I'm -- so we're going to today talk about the figures, the audited figures for the first half of 2026. And as usual, I will walk you through the high-level numbers, some strategic updates and my colleague, JD, our CFO, will provide more insight to the details, financial details. And then at the end, we're going to do a question-and-answer session. So we're looking forward to your questions and feedback.

So as I said, we're going to start with a business update, current trading update and outlook and summary and then questions and answers. So this is our standard disclaimer.

So let me start with the update for what's happened in the first half of 2026 for Exasol. So overall, here are the key figures. Let me speak to this, and I'll provide some, like I said, high level overview. And we will dive into more details later in the presentation.

So we have -- the year-over-year recurring revenue is slightly up, driven by substantial churn reduction. So we actually have a significant less churn in the first half of 2026 than we had last year. So the churn rate decreased to about 10%. Last year, we had 24%. So -- and we expect that ratio and to continue also for the remainder of the year. Our revenue and EBITDA year-over-year comparison is affected by nonrecurring items in FY '25. So last year, for those of you who have been with us for a longer time, we had a large onetime hardware deal with one of our largest customers in the financial services space. So that brought in EUR 2.9 million of ARR with roughly a margin of EUR 900,000. So that effect, we didn't see this year. So therefore, we have a revenue impact the aforementioned [ EUR 2.9 million ] and also an EBITDA impact because we didn't get the margin from this onetime year.

So that basically explains the difference between the -- on the revenue side. So as you see here on the top left, revenue EUR 19 million versus the EUR 21.5 million we have in 2025. It's worthwhile saying but we also had some smaller onetime revenue as well in June and July this year, but not at the size of what we had last year.

So the total ARR is close to where it was last year. And so at the end of 2025, we had EUR 38.1 million. Now we had EUR 37.9 million. In our outlook, you will see that we are projecting ARR growth to be in the range of minus 2% to plus 2%. So that's basically less than what we have guided previously. And we -- therefore, we have provided an updated ARR outlook in our press -- in our release last week and we will share some more update on where we think this is on a play out.

So on the new business performance, we were able to secure 11 new customers. I'll share a little bit more detail on the next slide on those. Leveraging our key messaging around Data Sovereignty and Agentic AI. So one of our key challenges is that we've been seeing existing customers have been postponing expected and planned expansion investments in the data infrastructure, which had a negative effect on ARR. So we actually had 2 large deals in the plan for the first half of 2026, that did not materialize. And therefore, we're basically sort of the deals that we had initially planned. We also had some positive upside. So we closed one deal with a financial services customer, and we were able to avoid a larger churn. So that's compensated to a certain degree.

But I think the key element here on growth. We were not able to bring in these 2 large deals. One particular I think, has to do with our expansion strategy for the Lakehouse Turbo product. but did not materialize, that was roughly [indiscernible] to EUR 1 million. And then there was one other customer who basically didn't expand a system because of cost factor both on Exasol or license costs, but also, as pointed out here, increasing hardware costs in the market.

So the positive effect from new customer acquisition and churn reduction didn't offset the weak investment behaviors among our existing customers. That said, we are -- when it comes to the EBITDA, net liquid funds and net income, we're on track. So as I explained, EBITDA is lower than last year, but this is just because since we didn't have this onetime revenue deal. Net liquid funds increased to EUR 21.6 million and our income for the first half was at EUR 1.2 million.

So here, you have a deeper view on the ARR development, and we've done the comparison between the first half of this year versus the first half of last year. So you basically see the starting point this year is EUR 38.4 million. We ended the first half at EUR 37.9 million, which is a decline of 1% overall. We were able to secure 11 new customers with a total of, I believe, roughly EUR 350,000 ARR, where 8 were in our focus vertical.

We had upsell of EUR 1.1 million, with 86% coming from focus verticals. And we have offsetting a downsell and churn total -- in total of EUR 2 million, which basically led to this more or less flat development from the beginning of the year to the end of the quarter.

Maybe one comment on what happened last year. I think we had some very positive upsell with existing customers. So we at the -- in June 2025, we had a very large upsell with one of our financial services customers but also we had contrasting downsell insurance, which in total at the first half 2025 was EUR 8 million. So you see here, there's some good news and some bad news on this slide that we were indeed able to reduce the downsell and churn substantially. But on the flip side, we have not been able to drive a significant upsell that we have been last year or in the first half of last year. So that's, I think, as I explained, has certain reasons.

Ultimately, here's the explanation. So again, the delta between the bars on the left and on the right, has gotten the right direction. We will talk about also later on how we predict the business to go for the remainder of 2026.

So on the next slide, let's talk about strategy update. This is a slide that I already showed in our last earnings call. As you can see here, we have been going through a significant clarification of our overall positioning and strategy. So we do have, with our core products, 4 key use cases that customers are using us and that we're promoting. So the classical use cases is data warehousing, where we are being run as the central data warehouse at our customer. We have analytics acceleration. So that's a use case where we accelerate an existing third-party data warehouse, like an Oracle, for example, Teradata at customer side. Now we've identified 2 additional use cases. Let's go through this, and I'll ask some more details on the following slide.

Sovereign AI. So sovereign, meaning that customers run AI and data analytics combined in a controlled and government environment. So that's a key positioning for us. Specifically for the German market, it means we are a German company. We can run on local cloud infrastructure like stack, for example, but we can also continue to be strong on running on-premise. So customers can and are using us to run not only data analytics, but also more and more AI workloads on-premise. So that's a key element of our strategy.

If you go to our website, our new updated website, you will see that we have changed the top level positioning. And we have also added key use cases on our website that basically underpins or illustrates what I'm describing here on this slide.

So Lakehouse Turbo, we have been talking about this in the past 1.5 years. Lakehouse Turbo basically means that customers have a modern lakehouse in place. such as a Databricks or Snowflake and that we would run Exasol on top of these data lakehouse. So we've been working on that as a separate product. We had some milestones that we gave us end of Q1 where we wanted to achieve certain adoption business numbers. We have not achieved that for a stand-alone product. However, it's an integral part of our overall product functionality.

So as you see here on this back, we're integrating the Lakehouse Turbo core capabilities into the different use case driven approach. So we have several customers that we're actually working with who have a need and the desire to run Exasol on top of existing data lakehouses. That's what we're doing. But the decision that we make is we no longer market stand-alone product outside the existing Exasol value proposition chain.

So let's dive deeper into customer benefits for Agentic AI installments. As I said, we are moving and centering our messaging around that. There are 2 key market opportunities for Exasol but we are actually very excited about. First of all, data sovereignty increases the demand for European database infrastructure solutions. So we've seen and heard that due to the overall geopolitical situation. There's a lot of concern about using U.S. hyperscalers and running U.S. software database offer on those respective hyperscalers. So we are -- actually, I cannot disclose the names here, but we are engaged now in 3 POCs with companies that have explicitly looked at us together with regional partners and building solutions that are sovereign by nature.

So that is a key element of our strategy, and we are continuing to drive that forward. The second aspect is a more horizontal aspect. Agentic AI result in exploding data requests, analytics and number of data requests. What does that mean? Today, traditionally in a BI or a stack, people would generate BI dashboard. So you will have a centralized BI team usually that creates dashboards for the different departments and all the data gets consolidated underneath these dashboards. So that's one way. The other way to access data was to use programmatic interfaces so that it can be fed into other systems.

For the past 6 to 9 months, we've been seeing the world changing around us. So more and more agent -- agentic use cases are entering the enterprise of today. We're seeing this with all our customers. We're seeing this internally in Exasol. And what that means is agents are going to access data, and they want to access heterogeneous data sources in enterprises. So it's no longer just, I built a [indiscernible] dashboard on my data warehouse is actually I built a set of agents and agent have different skills and different [ chats ] that are being designed by different departments that basically do data analytics combined with AI use cases.

So what that means is that more and more data will be needed that is stored locally in environments that the user can control. And I think this is where Exasol comes into play. Where AI agents will take over and automate a wide range of processes and analyzes within organizations.

Now think about if you have large databases in your enterprise with millions of rows, with very large data sources, our AI agent that works on these data structures need to store data somewhere. They need to put it somewhere so that they can do fast, efficient and cost-effective analysis about it. It's not just 1 agent that does this. Enterprises see a plethora of agents spawning up left and right. That's the opportunity for us. We're making it extremely easy for companies to develop and deploy those agents. And of course, we have our engine, our Exasol engine where data gets speed stored.

So that's what we are working on. So this is from a road map perspective, things we're developing. At the same time, I'm going to share this -- in a second, we already have customers where we're working on with those customers on some of these key agentic use cases.

So back to the overall position. So Exasol we are positioned with our new positioning as the sovereign agentic database, and it addresses the challenges posed by AI agent with its unmet speed, massive compute power and excellent price performance. So you see the same argument that we've been using in the past, speed, compute power and price performance absolutely also apply to the new agentic world, they even become more important than they were in the, let's say, traditional world where BI dashboards were being [ generated ].

So the 3 key pillars of this positioning is, sovereign by design. So we let the user, the customer control, where data runs how data gets accessed and how governance is informed. It is built for AI agent. So our system is designed to handle many AI agents in consecutive parallel concurrent AI agents, applications and users working on -- that's inherent to the Exasol core engine, and we are extremely well positioned to handle multiple hundreds, thousands of concurrent queries that are being run on our core engine. This is the heart and soul of what our product does.

And then over the last 6 to 9 months, we also worked on making it easier for customers to get access to our product, the faster to deployment part. So we've launched a free product Exasol Personal. The initial launch was in December last year for deployment in AWS. But the big breakthrough for us now actually was in June when we launched the Exasol Personal local which is geared towards developers who use the product on their own computer. So you don't need a cloud environment, you could basically run agents on your own machine. And only when you go into production, when you go into deploying and in your enterprise, you would then -- we would upsell those customers from the local version to the enterprise version.

So we're seeing traction there. So this traction is measured in active users. So now we have about 100 active users using the local version. This is not revenue yet, just to be very clear, we have a target for this initiative that by the end of the year, we want to substantially grow this by another factor of 10. But that is basically seeding our product into the market and making it as easy as possible for developers to build agenetic data solutions.

I can tell you, actually, I literally did it last night together with our Chief Product Officer, I used ChatGPT and I prompted it that it automatically downloads the free version that we have on our website, on our developer side and created agentic system for a certain use case where data is being generated and then retrieve. So it is easy for any developer to do that. So we overcome the burden of installing complex systems and also signing up or putting your credit card information, it were a complex system.

We strongly believe that this is going to be a major game changer for Exasol. And it addresses one of the key issues that we ultimately have in the market which is the lack of awareness and visibility in the global market. So with the faster production pillar here and the underlying Exasol product, the personal version driving awareness in the overall market.

So let's talk about a few use cases. I think it's important, of course, that we get traction, as I just described. But ultimately, we need this to also translate into revenue for our customer. And I think what we can share here is there's a large U.S. pharmaceutical life science company that we're actively working on that are basically -- have a super compelling use case, which is an agentic AI environment where they gather all unstructured data, clinical trial data and put it in a structured database with just Exasol. And then they can use agents to run analytics on this database. So that's one of the areas that over the past months, we've been actively been involved with working with these customers to see a few other names that you're probably familiar with because they've been existing customers like the T-Mobile, Piedmont Healthcare and Helsana.

But we put them on the slide because these existing customers are evolving on their existing use cases and basically adding agentic use cases to what they have already been doing with Exasol in the past.

So we will -- I know this is a lot, and it's -- the purpose of this call is to provide quickly an overview on where we stand and where the first half of the year ended. But I think it's important for investors to hear where we're going, where we see opportunities, also where we see challenges for the business. But I just wanted to share my personal excitement on actually where we're moving and what we're seeing in the market. And we are going to provide deeper insights, both from us, from a leadership team as well as some selected customers in our Capital Market Day on, I believe, October 15, [indiscernible] correct. And yes, it's there. And where we specifically do a deeper dive into our strategy. We bring our Chief Product Officer, for example, our Chief Commercial Officer, who will also be able to explain both the technology, how we do it, but also how do we implement and monetize best on a go-forward basis.

So with that, I will hand over to JD and I'm happy to take your questions at the end of this call. Thank you.

Thanks a lot, Joerg. As usual, let me give you a little bit more granularity on some of the ARR numbers but also then on our P&L numbers and liquidity and comment on the updated guidance that we provided last week.

So starting with kind of the quarter-by-quarter development, as Joerg already mentioned, we have a largely flat development since beginning of the year with a mild negative decline in Q1, which I commented in last quarter, which was driven mostly by the fact that the churn that happens, happens typically front-loaded in Q1, whereas Q2 was largely flat with a slightly positive development in our focus verticals, which grew by EUR 300,000 net whereas in total, we only grew by 100,000.

What you can see in here, and I'll comment on that a little bit further is that this diminished impact of upsell dynamics primarily hit our focus verticals, where we have been historically very strong in driving upsell and that has had a decidedly lower momentum this -- so far this year. and particularly for customers who have on-prem installations where an extension of our license with them often goes along with investment and infrastructure.

Those are impacted right now by the general higher prices in the hardware market and reduced investment behavior. And as a consequence, we see many customers focusing in the use cases that are there. And existing to kind of limit the data growth because a lot of our growth momentum in the past was about just increase of data sizes because our license model works on total amount of data under management. And in the existing use cases that we have with customers, the large ones customers are focusing on trying to diminish that in order to avoid additional hardware investments.

The AI topic is a little bit separate of that because it often comes from different investment pots. It's also smaller tickets, and that also partly explains when I talk about the ARR bridge later on, that obviously, the higher number of new customers that we're seeing come along with smaller tickets, smaller initial invests, they cannot compensate for the large upsell effect that we typically had and that we haven't been seeing in the first half of this year.

So as a consequence, we came out at 37.9%. If we look at that on a full year perspective compared to Q2 last year, it's also largely flat development. If you remember how we started the year, we ended last year with a kind of a negative ARR dynamic of minus 8% which improved to minus 3.5% last quarter on a year-on-year basis, we're now at minus 0.5%. So kind of the growth momentum that we had last year is diminishing, and that's mostly due to the fact that churn that we've seen, as you saw from Joerg's slide earlier in the presentation, the churn dynamic has been significantly lower. A more significant improvement in growth dynamic was kind of hampered by the fact that the upsell dynamic has gone down.

Now -- so overall -- sorry, wrong button. You can see that gross upsell rate has declined, and this is where the upsell -- reduced upsell dynamic comes in from113% to 106%. At the same time, ARR trend has gone down from 24% beginning of year, 20% last quarter, now 10%, so that the net ARR retention rates has somewhat improved, but it's not on the level that we've seen in past years, and it's still below [ 100% ].

Looking at the churn rate, and I've commented on that already, we've seen a continuous decline from the peak level that we've reached in Q2 last year. So what you see here is depicted the 12-month churn rate on a rolling basis depicted on quarter-by-quarter level. And you can see that we've been in an increasing churn dynamic, almost 2.5 years up until Q2 last year and since then, have been reducing that now back to the level where we were roughly end of 2023.

And that is the level that we expect to continue for the rest of the year where kind of further decline is mostly hampered by the fact, and we alluded to that in our news flow last week as well that the collaboration that we started with MariaDB last year is ramping up slower as expected. So, so far, the advance payment that we received has obviously been recognized as revenue, but we haven't seen business ramp-up because the technical [ interpretation ] of the joint product has taken much longer than we thought.

And it's only really starting to be marketed by MariaDB now since the middle of the year. There's some POCs running, but there is not a sufficient amount of commercialization yet. And as a consequence, that will reduce ARR a little bit in Q3. And that's why for the full year, we will not see a further decline of the 10% churn. But that's the level where we expect to end up towards the end of the year as well.

So these trends combined that I've outlined also mean that there hasn't been a further shift in our portfolio from the non-focus to focus verticals. If you compare the development since end of last year or beginning of this year, yes, focus verticals have slightly inclined since then -- increased since then and non-focus verticals have declined but that has -- it wasn't a major shift. And that's also where you see the impact of the reduced upsell dynamic because the focus verticals per se have been largely stagnant so far.

What does it all mean in terms of P&L development -- you have already mentioned some high-level figures to you in the beginning. On the revenue side, despite the ARR development, generally recurring revenue has been largely flat compared to last year, a mild increase but that's mostly due to the significantly reduced churn. What you can see, obviously, that total revenue is significantly lower [indiscernible]. We had a very high one-off revenue in the first half of last year. That doesn't translate fully into EBITDA because one-off business has -- and remember, those are hardware appliance sales, which bundled businesses together with license sales they come at significantly lower margin than the software product. So this revenue decline doesn't only translate to a fractional -- with a fractional impact into EBITDA.

So on gross margin level, you overall compared to last year saw a decline of $600,000. Other operating income was slightly up, mostly due to a slightly improved FX rate of U.S. dollar versus beginning of the year in terms of liquidity impact and our U.S. dollar component in liquidity and a little bit of a special effect from the solutions of provisions for long-term bonuses for our colleague, Mathias Golombek, who departed as a Board member where fractions of his LTI are no longer avoided with his exit, which influenced our operating income to a small degree.

As you can see, in terms of total cost base, we are largely -- we are basically exactly on the same level as last year with marginal shift in structure. Personnel expenses were slightly low in last year. which is in part due to a changed structure in our workforce. I think we've talked a lot about our developer site in India that we've ramped up which allows us to invest in development capacity at a lower unit cost and that kind of influences the personnel expense picture as well. This has been offset by slightly higher IT infrastructure costs mostly for internal AI usage, but also for internal replacement investment in server capacity.

So the price increase that I've talked about that have affected some of our customers' investment behavior. Obviously, we are, as a company that also offers an on-prem product, operate a fleet of on-prem service ourselves to develop the product, and those have been impacted by price increases as well. But overall, we were able to keep the total cost base constant.

And as a consequence, you can see that EBITDA was lower compared to the same time last year. But only by EUR 400,000, so the lower revenue impact doesn't fully translate to down there. Net income was also slightly lower than same time last year to the tune of EUR 200,000.

As a consequence, liquidity also compared to same quarter last year was basically on the same level. And yes, it's EUR 600,000 lower than same quarter last year, but liquidity as a point-in-time metric. It is heavily affected by timing of certain payments. Overall, this is very much in line with what we expected given the EBITDA that we're seeing. And you will see on a full year basis, ultimately, our change in liquidity being very close to the total full year EBITDA once you discount for seasonality and certain timing effects.

So overall, that still puts us in a healthy liquidity position to kind of get through this phase with lower upsell dynamic. And I'll comment in a moment a little bit on what our perspective moving forward for that is.

So if we go to the outlook and summary, as you've seen from our news flow last week, we adjusted our guidance and that is mostly due to the fact that while we expect the dynamic for new low ARR to continue to develop favorably. For example, we are -- my apologies for the slide, must be something related to my mouth here. We expect that dynamic to continue. In fact, there is one deal that we've been working on in the first half of the year, which is very close to being signed, which we had hoped it would still flow in H1 with a large pharmaceutical company in the U.S., which is also an AI use case that builds on what Joerg said.

So we expect that to be included in the Q3 numbers then -- and we expect that positive development of new logos to continue. However, in terms of magnitude of ticket sizes that will not compensate the fact that we expect a moderate dynamic in upsell to continue throughout the rest of the year.

And we would only expect kind of a recovery of that potential next year. And as a consequence, we adjusted our outlook to a corridor of plus, minus 2% with some additional churn happening in the second half of the year, which we expect to compensate with the new logo momentum that we're seeing.

On the revenue side, that means that we also slightly adjusted our guidance from mid-single-digit percentage decline to upper single-digit percentage decline, as you probably -- as you've seen in the half year numbers, revenue was on a downward [ decline ] anyway because of the decline in one-off business. And that's why we guided mid-single-digit percentage decline in the first place. with the lower ARR genomic dynamic that doesn't fully translate into revenue this year, but it also puts us rather on the upper single-digit percentage decline.

On the EBITDA side, we then also had to narrow our guidance to the lower end of our existing guidance. We are still highly confident to achieved an EBITDA above EUR 3 million, but now in the corridor between EUR 3 million and EUR 3.5 million with taking account the impact of the lower revenue that I've just talked about.

So as Joerg already pointed out, one of the important learnings from the first half of this year, and the mild pivot in terms of which additional growth fields we focus on in terms of -- on top of our traditional core business of data warehouse and accelerator in kind of sovereignty-oriented verticals with this new focus on helping customers implement agentic AI-driven use cases and adapting to those demands. We feel we already announced that we're going to do a Capital Markets Day mid-October because I think it's important to take more time to in depth about what our perspective is on how the landscape of analytics infrastructure in companies changes with the shift to AI and how that also changes the role that a software like ours can play in tech stacks of companies that are now facing more and more AI-driven analytics versus classical dashboard and physical user-driven analytics and the new attributes that are required.

And that's why we send out an invitation for a Capital Markets Day on October 15, where we are going to go in more depth in the use cases that we now today alluded to, what we're doing for customers already what we're seeing in terms of activity and pipeline development on the Exasol Personal product or a version of the product yet Joerg talked about and also what that means for our perspective on addressable market and growth perspectives for next year and beyond.

So you're cordially invited to join us there. It's a hybrid setting you have the option to either be there physically or to be dialing in to give you a maximum possibility of attending. Should you -- if you haven't had received an invitation yet from our kind of distribution list. Feel free to get in touch with us, and we will make sure that you receive an opportunity to sign up.

Beyond that, we're going to be present in the investment conference of Baader in Munich, and then also in the Equity Forum in Frankfurt in November, where I'm looking forward to meet as many of you in person.

So in summary, summing up what we said today, I would say, first half with mixed results for us. I think we are seeing good response on the conversations we have with customers on both the sovereignty topic. And Agentic AI use cases, the churn rate declined substantially as expected. But that was not able to offset the significant impact that we've seen from the lower upsell dynamic, particularly with our focus vertical customers. And that's why overall, the first half of the year, was flat or slightly declining.

New logo pipeline generation, as Joerg pointed out, out, we're happy with, although it doesn't translate yet into big ARR numbers, but the dynamic that we're seeing and the conversations that we're having and particularly also the use case that we saw implemented in the U.S. with the pharmaceutical customer, gives us confidence on the AI angle. And we hope to push that forward in the second half of the year based on that new position.

Liquidity remains very good and puts us in a good position to get through this flatter growth phase and give us strategic and operational flexibility.

So that concludes what we want to share with you today, looking forward to your questions. And in case of no questions, very much looking forward to seeing you on the Equity Forum of the Baader Conference on our Capital Markets Day.

[Operator Instructions]

Kai Kindermann, the first question coming from you.

My first question is on your partnerships. Are there technical integration work is ongoing with MariaDB or are these problems solved. And maybe you could also comment on the development from the partnerships with [indiscernible] and stacked in the pipeline?

Yes, I can take that. Yes, with MariaDB. Let's start be -- as we've said, it's going slower than we would have hoped it goes, but it goes. That's the good news. So they actually have 3 customers now in the U.S. that they are going to the POC of the product, and they expect to get that closed this quarter or next quarter. So that's basically, I would say, forward progress. There continue to be committed to working with us. And remember, they gave us also an upfront payment. So it's progressing, but it's progressing slower than we initially hoped that's why we're basically not taking the -- what we have to show a churn at this point in time, but it's not something that disappeared.

So it's, again, it's slower and 3 customers will be -- are in the process of being onboarded and to generate revenue then from MariaDB and consecutively also for us. And we are in talks with some other larger customers with that as well.

So I would rate this -- I mean so we were actually very excited last year I think the excitement has come down, but it's a thing moving in a slower but steady pace right now. That's how I would describe it.

So Second partnership with adesso, yes, we are actually evolving. So we attended their Digital Day in Düsseldorf in June. We got some lead from there. And we're particularly working with their financial banking team right now, both in Germany, leveraging on our sovereignty message and in other countries as well. So specifically, Turkey -- adesso Turkey is going really well. And we just closed a deal smaller deals, but somewhere in the EUR 40,000 to EUR 50,000 range. But I think it's a good first step. And we have a good handful of other deals with adesso Turkey in the pipeline right now. The team is very committed for what it was. I'm also going to go to Turkey in early October. So it strengthens the partnership with them.

So I think we're actually on a good path with adesso. And then last but not least, you asked about STACKIT. Yes, we're actually working on opportunities right now together with STACKIT in the German public sector.

And one other question is on the deal you're working with the U.S. pharma company, which will make close in the third quarter. Could you give us any light on the deal size?

Several hundred thousand dollars to [indiscernible]. And in addition to that, it is also a substantial 6-digit onetime revenue we get for providing -- so we're not just selling the product to them. We're also providing consulting basically to implement the use case. That can become a larger account next year. So there are more use cases for them. So it's a step-by-step evolution. I think we are on a good track right now. We have actually fully negotiated the contract. I might imagine [indiscernible] with a company that -- that's a bit of a longer game, but we've reached an agreement on all terms and condition with them.

And right now, we're actually bullish that this can come the beginning of a longer of partnership that both gives us onetime revenues to consulting, but also a recurring product revenue. I think the other thing is once we get into a point we can talk about it in public. It also gives us a tailwind from a market perception specifically centered around the agentic AI use cases that we're building here.

And we will move on to Felix Ellmann.

With regards to the cost of infrastructure, you mentioned that some clients are not willing to pay that, let's say. What's your feeling with regards to the midterm perspective on that? I personally do not see that there will be any better situation in the midterm with regards to the costs. But maybe the clients realize that they can't change this. What's your view on that?

Yes, I think I would comment on that, Joerg. I agree. I don't -- I personally don't see the price situation in the hardware market change anytime soon. On the other hand, what we're currently seeing this attempts the levers that are being pulled to postpone those investments, you can't continue those forever either because a lot of times, it comes down to data cleanup in the system, removing some old data. But once you've done that, it's not something that you can pull off again next year.

So ultimately, the investment dynamic will come back and ultimately, companies will have to invest in infrastructure because from a use case perspective, the data amounts are still growing. Yes. So the base dynamic of both compute and storage are still the same as before. If anything, they are going to be reinforced by AI. That's the reason why we're seeing this investment boom in infrastructure and why the prices are going up.

And as you can see, there's also a little bit of a -- I wouldn't call it a schizophrenic budgeting logic, but a little bit of a dual approach to how companies think about implementing their AI use cases where they do take some investments whereas how the existing kind of more classical use cases are run and being managed.

But -- so when this will come back, I think that's something that we are trying to evaluate for ourselves as well right now. but the investment dynamic cannot be postponed forever.

And next line is Lukas Spang.

I would like to start with the topic of churn and downsell. Maybe I missed it, but did you showed the split between focused and non-focused verticals in terms of churn and downsell?

No, it wasn't on the charts. [indiscernible] So did you have other questions as well because that would briefly look it up and maybe Joerg can look at that can answer your other questions in the meantime.

Yes. Okay. And the second question is also to downsell/churn. Can you explain the reasons behind the downsell and churn in the first half? Were these similar to prior years? Or has there changed anything? So -- some color on that would be helpful.

Yes. Maybe -- I think it's a mix of things. So there is not -- I mean when there is a downsell, it usually means that the customer is reducing the usage. And this can have multiple reasons. But in general, I mean, some companies are trying to compress their spending. And since our pricing is center -- usually done on volume-based pricing. Customers could reduce certain use cases or the lead on data in the system to save cost. And because not all data that is being stored in the database ultimately is equal to what the customer needs. So sometimes customers do that to optimize. So that's one reason for downsell.

The other reason is that sometimes come have different use cases. And then they decide there's certain use cases, either that enterprise and maybe move to a different system. On the churn side, it's usually more dramatic where customers do consolidation. So one of the things that we've been seeing with some customers, it's consolidation to bigger platforms, like the data warehouse for example, where we have been used for certain use cases. But then I mean, it was one of our -- we talked about this in the past with one of our large customers in that, for example, -- they've been consolidating the whole enterprise basically into a single enterprise solution, which in their respective Databrick. Which means use cases that have been run on Exasol in the part of being transferred. That typically then results in churn. And this happens with some larger enterprise customers, but let's say, also some to other customers.

So I would say those are the key reasons driver of churn.

Thank you very much, Mr. Tewes. I muted you again, yes.

Okay. Should I continue with the third question on...

So in terms of the churn of the first half of the year, -- that was actually 50-50 between focus industries and non-focus industries. So the total -- let me get back to the slides to illustrate it. If you look at the roughly EUR 2 million churn that we've seen in the first half of the year, roughly, it was half and half. The reason was that we had some churn of focus industry customers in the U.S. for whom the kind of severity argument isn't as strong as for the European customers. So what...

Just to add that there was one customer in the U.S., which was EUR 200,000, they simply went out of business. I mean just to say sometimes company is just -- it was a startup. We had that in the financial services space. we have them as a customer for 2 or 3 years, and they basically shut down their business. Therefore, when we lost the customer.

Third question, maybe third and last question, Spang.

Yes. The third question is, again, on Maria, did you just to get that right. Did you say that you have booked a certain number in the ARR. But now in Q3, you have to cancel some of this again? Or was it a misunderstanding?

No, that's correct, yes. So we received the prepayment from them for the first 12 months which we showed as ARR. That's -- basically, we expect that to kind of ramp up in terms of business volume in terms of underlying deals from them with royalties until end of August. As we've pointed out, that has not been the case. So we will have to true up -- true that up end of Q3 to whatever they have achieved up until then in terms of actual run rate.

And that influences the churn that we will show in and then obviously also influences the adjustment of our guidance.

And until end of June, that was how much of the ARR?

That was [ EUR 750,000 ].

And any expectation how you -- how much you have to cancel out of this?

That depends on how the POCs that Joerg has talked about will evolve, but I don't think those are going to be more in total than maybe up to EUR 100,000 Yes. So the value that's implicitly included in our projection because what we're facing essentially is roughly a 1-year delay almost or 3 quarters of a year delay in the ramp-up. So for the purpose of coming up with the new projection and guidance, we factor also without.

And with that, we have come to the end of today's earnings call. Thank you very much for your interest in the Exasol AG. And thank you also, Mr. Tewes and Mr. Henrich for your presentation and your time. Should you, ladies and gentlemen, have any further questions, please feel free to reach out to Investor Relations. And also, as mentioned, meet Mr. Tewes in the panel at the Capital Markets Day.

I wish you all a successful day and handing over to Mr. Henrich and Mr. Tewes for some closing remarks.

Yes. Thank you. Thanks, everybody, for joining. And as you said, I'm looking forward to continue our conversation. And I wish everybody a good rest of the summer. Thank you.

1

Same from my side. Hope to see many of you on the Capital Markets Day.

Good day, ladies and gentlemen, and a warm welcome to today's earnings call of Exasol AG regarding the financial year figures 2025 and the first quarter results of 2026. And therefore, I'm delighted to welcome CEO, Joerg Tewes; and CFO, Jan-Dirk Henrich. So, the gentlemen will guide us through the presentation and the results shortly, followed by a Q&A session. And having said this, Mr. Tewes, the stage is yours.

Yes. Thank you, Sarah, very much. Good afternoon, everybody. Thanks for joining and finding time to dial into our quarterly investor call, where we are going to speak and comment on our audited financials for the fiscal year 2025 and the results of the first quarter of 2026. So today, as usual, you have our CFO, Jan-Dirk Henrich and myself, Joerg Tewes in the call. We'll walk you through the presentation. And then at the end of the call, we're also happy to take any questions that you might have. So again, thanks for joining us.

We will start with a business update. So, I will share the high-level numbers, as well as some key business development in the first quarter of this year. And then JD is going to take you through the detailed financials before we then get to the Q&A at the end of the call. As usual, our disclaimer, so please read it and also in the aftermath, please take a look on what's written in here. So, without further ado, let's get to the business update for Q1 2026. Let's start with the key numbers that we have. And as most of you know, we're predominantly looking at ARR, but we also have revenue as a key metric. So, let's start with our ARR.

So, our ARR slightly declined year-over-year to EUR 37.8 million. So, that's a decline of minus 3.5% year-over-year. So, comparing Q1 2025 to this quarter in this year. We do have an improvement over the decline that we saw in Q4 2025, so previous quarter. So that's good. It basically, I think we have 2 effects that, to a certain degree, net itself out. So, first of all, we had a significantly better-than-expected reduction in our overall churn. So, this goes back into the territory where we think a software company like ours usually sits around in the 10% range. So, this is substantially lower than what we had in 2025, where we showed some major churn and downsell. So, that's good. And we're also above our expectation. So, we were able actually to maintain a few larger customers. So that's, I think, very positive news.

Our new business performance, the actuals that we brought in, in Q1 are still lagging behind our expectation, but we're going to comment on the pipeline and our pipeline development in a second. So overall, we think we're on the right track with our ARR plan for this year. And as you see on the bottom of the slide here, we are confirming the guidance for this year for all our financial metrics, but I think specifically on the ARR side, we're actually seeing traction on the pipeline development.

So, on the revenue side, you see a larger decline in Q1 versus 2025. What we shared in the past, we had a onetime effect last year in Q1 where we had a very large onetime deal with one of our banking customers where we sold in an appliance product for EUR 3 million. So, this basically is the delta. So, the revenue that's generated by recurring business is stable, but we didn't have that onetime effect this year in Q1 that we had last year. That was expected, anticipated, and we had also already shared that in our previous investor commentation. So, EBITDA is on track towards our guidance. So remember, we guided in the range of EUR 3 million to EUR 4 million for the full year. It is less than it was last year, but that's roughly EUR 1 million or EUR 900,000 [ pay ] that you see here is due to 2 effects that are just temporary or seasonal. It's partially that onetime deal that I just mentioned that we didn't have, which had some EBITDA contribution, as well as some higher marketing spends compared year-over-year. So we had our customer event in Berlin, the Exasol experience.

Last year, we actually had that in Q2. This year, we had it earlier in March. So, it basically impacted our EBITDA. So that's just a temporary effect and you are going to see in our Q2 EBITDA numbers that we're basically going to compensate for that. So very positive development on the liquid front. So we're EUR 24.7 million at the end of the quarter versus the EUR 18.7 million year-over-year. So that's a significant increase in cash that we've been building up over the last 12 months, and JD is also going to cover that in a bit more detail.

So overall, we are in line with what we were planning to do in Q1. So let me go to some key business development activities that we went through this quarter. So first of all, pipeline, I think we have actually done a really robust, good job on getting pipeline coverage robust. We're currently working on several larger deals. We have a Fortune 500 pharmaceutical and life science company in the U.S. that is doing a large AI use case on Exasol. So we were able to sign or get a signed POC proof of concept with that customer. That's currently undergoing, and we're also expecting that we get a license deal signed this quarter in the quarter that we're actually in. So, this is part of our pipeline. And we're also talking to a large German industrial player where we think we have a good chance on building a significant deal replacing a legacy data warehouse technology.

Beyond that, as I said, we had our customer event in Berlin, the Exasol experience with high-profile attendees. Our key partners were there, as you see at the bottom, the CEOs of all the 3 companies listed there, Adesso, MariaDB and StackIT where there they were presenting keynotes and talking about the partnership that we have with those companies Adesso, MariaDB and StackIT. And we got over 250 attendees existing customers. We have a lot of prospects there. So our commercial team actually get a really good momentum coming out of this event. So we focused the communication on basically 2 key topics, data sovereignty and AI and where and how Exasol matters in that space. So, I want to talk about this a bit more on my next slide. But that's really the sweet spot that we're currently in and where we also get a lot of inbound interest.

So the upsell pipeline is a bit slower than in previous years. Remember last year, we had some significant upsell with one of our largest customer. But we have some -- I think we've seen some investment restraints. However, I think the good news for us and for the company and our investors is that our new logo pipeline is actually shaping up really nicely. So, we're seeing a bit of a shift from upsell into new logo momentum that we have. And we hope that in Q2, Q3, this new logo momentum that we see will also then translate into actually signed deals that we're going to be able to also share with our investor community.

A few words on the partnerships. So, Adesso, we are working with and intensifying our partnership. So we have now the first joint opportunities that we're speaking to. So working on finding new customers, helping each other and getting new business going. MariaDB as shared in several calls, we have that partnership where MariaDB basically uses our product to gain analytic capabilities in their overall offering. And they are basically driving the go-to-market motion for that joint offering. They've been starting the first POCs with their existing customers. We're ramping up the collaboration. So it's going in the direction, but it's slightly delayed versus what we originally planned. So we have POCs. We haven't really gotten to a signed customer yet that is actively deploying a joint solution.

And then, StackIT, for those of you who don't know StackIT is, is a very large. I think it's the largest regional cloud provider here in Germany and Central Europe. We have established the commercial partnership and deepen that and we're now also listed on their marketplace. So where do we go? What are we doing in terms of our products and where do we see traction? AI is, I think, the area where most customers are currently thinking on how they are evolving what they're doing, how they're combining data analytics with AI.

I already shared in last quarter's call that we have between 10 to 15 active customers using Exasol for a whole variety of AI use cases. And we now have the first larger significant new logo opportunities as well on key AI use cases. So we believe that this is a -- the way to go for us forward to really become an AI platform where end users, customers will run their AI use cases, their agents on a truly scalable enterprise database solution. So, Lakehouse Turbo that we've shared with the audience, we now have 2 large German customers in pilot customer trials with our solution. So there is the large retail customer where we continue to work with them. And there's also a larger German bank where we are basically providing the acceleration there for the existing data Lakeshouse.

I think the whole -- specifically now here also in Central Europe, we probably have seen or heard about the intended acquisition that SAP announced of Dremio. Dremio is also a Lakeshouse company. I think this validate our investment in Lakehouses, Iceberg as the key interface. So we're actually excited about that development, and we see a further potential for our Lakehouse Turbo, the way how we complement Lakehouses like Databricks or Snowflake, but also potentially in the future for everyone.

So this next slide, we shared on our last call as well. Let me maybe start on the right. We decided that we will do a much deeper dive for our investors on our overall strategy in a Capital Markets Day. We're planning to have that day in October. In our calendar, you're going to see that we -- I think we have a date already. So, we'd be delighted to have all investors come to that day where we're going to go through the details of our strategy. We will have customers on that Capital Market Day. And of course, we will speak about where we are, where the market is and how we're going to develop on a going forward basis.

So in the -- on the left side, in the, let's say, ecosystem or where we're playing, we're actually seeing the Sovereign AI as the next logical evaluation of our products. So it's helping customers helping data analysts to actually build agentic systems, agents that are being created to perform data analytics tasks in a sovereign environment. That's, I would say, in a nutshell is what we're driving. And that's the -- where we're also going to put more emphasis in terms of our product development, but also our marketing and go-to-market activities.

We continue, of course, to pursue growth with core offering to our customers in focus industries. So, we are seeing the demand as explained that customers want performance and cost-effective solutions to replace existing legacy data warehouses. And as I just shared, the Lakehouse Turbo is a use case we also continue to drive with selected key customers.

So with that, I'll hand over to JD, who's going to walk you through the detailed financials. And then at the end, I'm happy to take more questions. Thank you.

Thank you very much, Joerg. So, before I go into the more detailed numbers for the past quarter, I'd like to do a brief recap on the full year 2025 numbers. Obviously, we've completed our audit. I just wanted to very briefly share the results with you and I say very briefly because there's been no changes. So I'm happy to confirm the P&L numbers that we communicated as part of our webcast in February as preliminary numbers now as final numbers. So we left the year with EUR 4.1 million in EBITDA and EUR 3 million of net income, unchanged to what we communicated in February.

Also, I'd like to briefly recap just for everybody's reference to make sure we all look at the ARR numbers of this year in the correct fashion. This was our ARR performance in 2025. And as usual, we report ARR during the year on a constant FX basis. And all of you know that last year was a very moved year with respect to particularly U.S. dollar FX rates. And we, as in previous years, adjust our ARR reporting to the beginning of year FX rates which in this case means the EUR 39.1 million that we finished last year with on a like-for-like basis are equivalent to a beginning of year value of EUR 38.4 million, and this is kind of what we build our growth guidance on and also our ARR reporting this year. Obviously, but that doesn't change anything with respect to the upsell and churn and growth dynamics that we're reporting since it's all like-for-like.

So moving on to the first quarter and as usual, dipping into ARR territory. As Joerg has already mentioned, in terms of net ARR development, we had another slight decline in the first quarter this year, which was basically what we expected. It came about structurally a little bit different than we planned. We had a significantly lower-than-expected churn, which is good, and I'll talk about the development of the rolling 12-month churn dynamic in a moment. But we also had a little bit of a sluggish new development in new business on the upsell side, although we made good progress on the new logo side, as I will show you in a moment. So these 2 effects largely canceled each other out, ending -- leading to a quarter that kind of evolved as expected in our planning.

The first quarter is typically our weakest quarter. Also in previous years, last year, we had a decline of EUR 2.5 million because typically, a lot of the churn is happening at the beginning of the year. But overall, it was in line with what we expected. Diving a little bit deeper into this quarterly performance. So this is the kind of ARR bridge from year-end to end of quarter for this year on the left side and for last year on the right side. And it illustrates a little bit on what's going on. You can see actually in terms of total new business ARR generated, it was pretty much exactly the same as last year, but we had a little bit of a slower upsell dynamic, and we were expecting or hoping for more. But on the new logo side, we had actually 0 new logos gained in last year. This quarter, we won 6 new customers, although at lower value, but still very it's important to generate new customers as a platform for future upsells. 4 of those were in focus verticals, yes?

And if you look at the upsell that has taken place, it was also dominantly in the focus verticals. What you can also see is that the lost business has gone down significantly, and this illustrates what I said earlier. So we had a decline of EUR 1.1 million in lost business last year, it was more than EUR 3 million. And that is also what materially affects the churn rates that I'm going to be talking about in a moment, yes?

So if we look then at the 12-month development, as Joerg has already pointed out, we've seen an improvement in the year-over-year growth dynamic. We ended last year with a year-over-year growth dynamic of minus 8.5%. Now in Q1, we're at minus 3.5%. So, we are progressing in terms of developing back into positive growth territory on a 12-month basis. What you can also see at the underlying fundamental statistics here is that recovery has been driven by a significant improvement in the churn rate, yes?

So plus new logo growth that we didn't have much last year in Q1, yes? So the churn rate has gone down. If you look at over the last 12 months, the new customer performance in total over the last 12 months, we've gained 15 new customers, 9 of which were in the focus verticals. If you remember from the previous page, actually, of those 15 customers, 6 were gained in Q1, which is good. So -- and this is kind of shows you the early indications of what Joerg was referring earlier that we see good progression of building a new logo pipeline and then hopefully also converting larger deals in the rest of the year that Joerg was starting to refer to.

Looking at -- and this is going to be my final comment on overall ARR development. We talked about churn a lot. I just wanted to put that a little bit into a broader perspective for you. What you see here is the development of the 12-month rolling churn rate in ARR. So that always measures the lost business of the past 12 months in relation to the total ARR at the beginning of those 12 months. And what you can see here is that we saw a steady increase in churn dynamic over the past 2 years, which peaked out in the second quarter last year. And what we've seen since the second quarter is kind of a gradual recovery.

Now taking the first bigger step in Q1, actually, in next quarter, we expect a further significant drop into the 10% to 15% region. And then for the rest of the year, a further normalization towards what Joerg indicated kind of what we are aiming for as a software company around 10% or lower, yes? So -- but we're on good track there. So that's going to obviously help us to further recover the 12 month -- the year-over-year growth dynamic.

So how does that translate into the status of focus and non-focus verticals? That has remained largely unchanged compared to last quarter. We're still roughly at 70%, that's mostly that's driven by 2 factors. Again, there was an upsell, which were -- or upsell dynamic, which we were hoping to convert, which did not yet convert, which would have helped us on the further shift into focus verticals. And then there was a preventive churn, which obviously helped preserve some of the business in the non-focus verticals as well. But still, it's kind of the shift that we're expecting.

Going into the P&L, several things that are to be pointed out, and Joerg had already started hinting at. First of all, obviously, you can see revenue declining by EUR 3 million. If you look at the breakdown, you can see clearly that is driven 100% out of nonrecurring revenue items that were exceptionally high in Q1 last year. Recurring revenues are actually pretty much on the same level than -- exactly on the same level as compared to last year. And that also translates into a pretty solid gross margin, although that obviously was also impacted by the onetime effects.

On the other operating income side, we're slightly better. That is related to our ongoing or continuing efforts to get research grants for our R&D activities. So that's slightly higher compared to last year and partly compensating the gross margin impact. On the cost side, if you look at the marketing line, you can see notably higher marketing expenses compared to same quarter last year. This is the phasing effect that Joerg had already talked about. This year, we've conducted our experience event in Q1. Last year, we did it in Q2. So this year, our marketing efforts are a bit more front-loaded in the year also to generate pipeline for conversion later in the year. So you will see this delta in marketing costs somewhat normalizing in the next quarter on a year-to-date basis.

On the personnel side, we are slightly leaner than last year. But otherwise, there is no notable differences in the cost base, yes? So if you would like to -- I would say, if you were to look at the marketing cost on a like-for-like phasing basis to last year, our EBITDA this quarter would have come in rather at a, let's say, EUR 700,000 level rather than the EUR 400,000. Overall, though, both on EBITDA, net income and also revenue side, this is pretty much exactly on our planning for this year and what we saw in terms of quarterly dynamic for the year. And as you will see later, that's also why we maintain our guidance and confident in the guidance.

If we look at liquid funds, you can see that on a quarter-to-quarter basis, we are at EUR 1.5 million higher compared to Q1 last year. Now you might wonder why the year-on-year dynamic from '24 to '25 was in the EUR 3 million region, why has this gone down to a EUR 1.5 million dynamic. One of the big factors here aside from typical end of month volatilities is that with the major upsell of our largest customer last year, which basically doubled our business with them, but part of that agreement was that we moved from annual upfront to quarterly installments. So the payments that we're now getting from customers, particularly from our biggest customers are slightly more evenly distributed across the year. So that's a structural change in cash flow seasonality, which loses us a little bit on the interest rate side, but it also smoothens out our cash curve over the year quite a bit. So we see a -- we're going to see a bit more steadiness there compared to last year where we had a very big front-loading effect in Q1.

So that's what I wanted to share with you on the numbers in Q1. Again, overall, what we expected, structurally slightly different in terms of better-than-expected churn dynamic, slightly worse-than-expected upsell dynamic on the established customers, although those deals remain in play.

So in sum, that leads me to confirm the guidance that we issued. So we continue to aim for a return to single-digit growth in the mid-single-digit range on the ARR side. The revenue growth will remain negative for the full year, quite simply because we do not expect to close such a large mega one-off deal again this year. On the recurring revenue side, you will see more stability there. And on EBITDA, we continue to aim EUR 3 million to EUR 4 million on a full year basis. As Joerg pointed out, we've made some additions to our corporate calendar. One important thing is that we have decided to organize a Capital Market Day for interested investors. So invitations and details will follow soon. The target date is the 15th of October. And the goal here is to do that as a hybrid meeting where we have the opportunity to participate in person in Frankfurt or via a dial-in. In addition, we've also decided to at the BARDA Investment Conference to our annual agenda. So we're happy to talk to you there.

The next opportunity to talk to us, obviously, is next week during the spring conference in Frankfurt, where I will be present and look forward to meet as many of you as possible. And so finally, so key takeaways. I think I kind of said that already. Q1 pretty much overall on spot with what we planned for the year, structurally slightly different. The materially improving churn rate compensating for the more kind of sluggisher-than-expected upsell performance, but overall, the year-on-year growth dynamics starting to recover after the 8.5% year-end. We're very happy with how the new logo pipeline is progressing, which is very important to us, given that this has been kind of our weak spot in the last couple of years and something we really wanted to improve on. And I think we're seeing early signs and good progress there that this is working, and this kind of compensate for the kind of sluggish -- more sluggish than compared to previous year's pipeline that we're currently seeing on the upsell side.

So in total, we remain on track. And obviously, the liquidity level that we've achieved gives us a lot of operational flexibility and continuing on pursuing the opportunities on growth fields in AI and otherwise that Joerg has talked to you about.

So that concludes what we wanted to share with you. Thank you very much for listening so far, and we look forward to your questions.

Thank you so much for the presentation Mr. Jan-Dirk and Mr. Tewes. So ladies and gentlemen, we're now happy to take your questions. [Operator Instructions]

In the last earnings call, you mentioned specific upsell opportunities you expect to materialize in Q1 and Q2. Do you still expect them to be in the first half of the year will be delayed in the second half?

Should I?

Yes. Go ahead.

Yes. Obviously, we're pushing to close them as fast as possible, yes? So I think the discussions with the customers are continuously ongoing. And our aim is to try to close them in the first half of the year, it's -- but it's not ultimately in our hands, yes? So again, I think what we're seeing on the upsell side, a lot of the upsell opportunities that we're discussing with customers are also then typically connected to investments in hardware on their side. And I don't know if you follow the market a little bit, but if you look at server prices and chip prices since the beginning of the year, prices have essentially doubled in the space of 4 months, which is related to the fact that all the major AI infrastructure players are basically buying the market empty on the chip side, yes?

So -- and that leads to more rigorous investment discussions and internal CapEx discussions. And this is in many instances, what are causing these delays. So we stay very close to customers. And obviously, our aim is to close them as soon as possible.

Understand. Do you see any risk that these price increases and [ across the broader ] will persist also in the second year that probably there's a risk that it can push these deals in 2027, also or?

I mean, ultimately, you can't change the fact that data volumes are growing, yes? So many of those upsell opportunities are related to volume expansions, yes? And ultimately, I think what we're seeing is that customers are trying to kind of dampen the data volume growth, but it's very hard, especially if simultaneously, you start getting into AI applications, yes? So, my answer is twofold. First of all, I do not see the increased price levels in the hardware market go away anytime soon, yes? If you look at the projections, they're basically projecting this situation or this chip tightness in the market to persist until 2027. Is that going to push all the upsell opportunities into 2027? I don't think so, yes? But it leads to tougher discussions on customer side, yes? For the new logo opportunities, it's a little bit of a different story because typically, we replace existing use cases or we go into use cases that have already been approved.

Then you have now 2 customers in the pilot phase. Maybe you can share some light how these pilots are developing and also if there's a specific time line when the pilot is going to end.

Yes. Maybe I can comment on that. So the U.S. customer actually, as I said, has signed the paid POC with us. So we would -- so, we are expecting to get at least an initial license deal in the books in Q2. So we think that has a good probability that this happens in Q2. The other large deal that I talked about is in earlier stages. So that's developing. So that would not have a direct impact in Q2 that would probably come more towards the end of the year.

Thank you so much for the questions. But now we have no further questions. So, if you would like to ask anything or if there's other topic you would like to discuss, just let us know. But it seems -- so far, there are no further questions. So with that, we would come to the end of today's investors call. So thank you, everyone, for joining and the shown interest in Exasol. And also a big thank you to you, Mr. Henrich and Mr. Tewes. So should further questions arise, maybe a later time, please feel free to contact Investor Relations or as Mr. Henrich mentioned, you can meet him next week on the spring conference. And with this, I say thank you and hand back again to Mr. Henrich for some final remarks.

Well, I can't find nicer and kinder words than you to close this. Thank you very much for listening. As I said, if you are next week in Frankfurt, feel free to approach me. I look forward to our exchanges. And if you're not in Frankfurt and have further questions, don't hesitate to get in touch with Susan and her team or myself.

Okay. Thank you. Have a nice afternoon. Bye.

Welcome to the earnings call of Exasol AG regarding the preliminary figures of the full year 2025. The CEO, Joerg Tewes; and CFO, Jan-Dirk Henrich will guide you through the presentation and the figures shortly, followed by a Q&A session via audio line and chat box. Having said this, I'm handing over to you, Mr. Tewes.

Thank you, Judith. Welcome, everybody, to this presentation from Exasol. We will share our preliminary but yet unaudited results for fiscal year 2025 with you. And we will also provide an outlook both on our key financials as well as our strategy and product road map. I will start the presentation and give you a high-level overview about 2025 and the outlook for 2026. And then my colleague, Jan-Dirk Henrich is going to take over and share more details on our financials. At the end of the call, we will be happy to take your questions either via chat or just verbally via audio. All right. So let's get started. That's us. So that's me, Joerg, and that's JD below. And let's go through our standard disclaimer.

And then let's get started on the recap for 2025 and our key priorities for 2026. So here is the summary of our financial highlights for 2025. As you can see, we have overachieved our revenue goal. So we got a 5.6% year-over-year growth. So we achieved EUR 49.9 million. Our EBITDA came out at the upper end of our guidance, even slightly above our guidance.

So we achieved EUR 4.1 million of EBITDA that was slightly more than doubled compared to our result in 2024. Therefore, our net liquid funds increased to EUR 18.7 billion. So the company is solidly funded now, and we have been able to generate this cushion for the company over the last 2 years through our focus on profitability. Our ARR declined by 8% year-over-year. So we've seen significant churn coming in earlier than we originally anticipated. So churn was the major factor on the overall ARR decline. The good news is that since this was earlier than anticipated churn, some of that we actually had only anticipated in 2026. We expect that the churn number is going to be substantially lower than it was in 2025. So the headwind that we had to achieve ARR -- overall ARR growth is going to be way less in 2026.

So therefore, as we're going to talk about in our outlook, we are very confident that we are going to achieve mid-single-digit ARR growth in 2026. Our net income is EUR 3.1 million in 2025, and the equity ratio has increased to 34.2%. So we've been talking about our strategic focus on certain key verticals. We shared that with our investors in previous calls.

We've actually seen significant growth in those key verticals. We were able to secure 2 large upsells with our existing customers in the banking sector, most notably with Finance Informatics, which we closed in June of 2025, which was a significant increase in that key segment. We had other key customers where we also had increased volume. and upsell in that segment like LBBW, for example, which is also one of our largest customer here in Germany. So that actually our strategy to focus on these key verticals worked well. As I just said, we had some of the churn from non-focus verticals coming in earlier. There are a few deals that slipped into 2026 in the focus verticals. So we do expect, as I just said, to go back to ARR growth by both minimizing the churn and closing these delayed opportunities.

We will continue our path to profitability. We've been putting the company in safe territory and maybe go to next slide here, which kind of illustrates the journey in which Exasol is starting in 2021 when our CFO, JD came on board, where we started the turnaround, where we implemented restructuring measures to get the company back out of the deep red into profitability.

We sharpened our strategy in the second half of 2024 with the articulation of our strategy to focus on key verticals, specifically in the Central European region. So we completed the successful turnaround by achieving EBITDA breakeven end of 2024, which we then continued in 2025. We had the proof of our strategy shift by growing our share in our focus verticals and by doubling overall EBITDA in 2025. For 2026, we will continue that road. So we're actually very excited and bullish about 2026 to achieve both ARR growth and continue the journey of driving and staying and driving profitability in the long run. So I think we're on a good path right now for 2026.

I'm going to share more now about some of the activities we've started in 2025, and that will then, of course, carry over into 2026 as well as some of the product innovation that we're working on as a product company. So when we look at what we're doing, this is basically a recap and this kind of gives you an idea on where we are from our use cases and also how customers are using the product. So on the left, you see 4 key use cases.

There's the traditional data warehouse use case. So we do have a lot of customers that use us as their central data warehouse. We continue to do that. We have customers that -- where we have a successful installation, where we are growing, where we are adding more customers are adding more data. So that's one of the key use case that we continue to drive. The data warehousing, specifically in these focus verticals, and I'll repeat for those who haven't heard that key focus verticals for us are financial services, so banking, insurance companies, public sector and health care. So these are the core focus verticals here in Central Europe. We're also very successful. I'll speak a little bit about this later in telecommunication in the U.S. market.

But here in our core market, it's basically those 4 verticals. They are predominantly running their data analytics stacks on-premise or in their own clouds or in a hybrid environment. Some of them also look at SaaS, use SaaS, but the predominant installation sits basically in on-prem in their own data centers. The other use case that we're traditionally strong is analytics acceleration.

So this is -- these are scenarios where we're helping customers to accelerate an existing data analytics stack to add more either for performance optimization or for cost savings. Sovereign AI, and we're using that term over the general AI term, I will speak more about this, but more and more customers are actually now moving on using AI together with their existing data analytics. And that in environments that are secured, that sovereign and basically guarded and shielded from the outside world. So that's a very important trend for us, and we are actually capitalizing on this trend. Then last but not least, the Lakehouse Turbo, we also talked in earlier calls.

This is similar to the initial analytics acceleration with the focus now on the modern data stack where we help customers reduce costs with modern data lake house infrastructure such as Databricks and Snowflake. So let me go to the next slide. In 2025, we actually secured strong partnerships amongst those partnerships, a few that I want to call out here on this slide. It is MariaDB.

We shared that in our previous earnings call already, but I just want to recap that here. MariaDB is a company headquartered in Silicon Valley. They were taken private by a private equity, a U.S. private equity firm about 1.5 years ago. And their main business is an open source transactional database management system, which perfectly complements the analytic engine that we have with Exasol. So we started the partnership last year. We also got some initial upfront revenue from them. And basically, they are reselling a product where they have their own transactional database and then data gets migrated to AL analytics engine and then customers can run analytics basically on Exasol .

That's the key use case. MariaDB has millions, hundreds of millions, even I think, 1 billion downloads of the free open source version, and they have 600 -- around 600 paying enterprise customers. So the initial target for us is together with them to get in front of these enterprise customers, paying customers, obviously, and generate incremental revenue.

But it's also an opportunity for us, I'll share that later that we get Exasol more visible in this wide world and use the installation footprint that MariaDB has to get basically more awareness for our product in the market. We also started partnerships with Stackit and Exoscale. Stackit is part or member of the Schwarz Group, Dieter Schwarz Group, who is the founder of Lidl. So Stackit is very active in positioning themselves as a German alternative to the U.S. hyperscalers, AWS, Azure and GCP. They've actually seen good traction here and specifically in Germany, but in other Central European countries as well. And so our product is now available on their marketplace and our free version that I want to speak about the personal edition is also available on the Stackit platform.

So we've started that partnership with them, and we think it's a good alternative for customers that want to run data analytics workloads in a regional cloud and in a more sovereign environment that is not dependent from U.S. hyperscales. Similar play with Exoscale. Exoscale is also a European cloud provider. It's a subsidiary of the A1 Digital Telecom Austria.

So they are very strong in Austria and Switzerland actually. So it's a good alternative. It's a similar story like Stackit so that we will also provide our customers the ability to run workloads in the Exoscale environment. Beyond partners, so partners play an important role for us. We have brought on some people in our team internally on the partner management side. And we also have strengthened partnerships with other players, specifically here in Germany, most notably adesso, for example, who we have a strong business partnership now as well. So that's on partners. Then a big milestone for us, we have launched a free version of Exasol.

It's called Exasol Personal that we are going to use to generate product-led growth momentum. So we will, of course, continue our sales motion with our go-to-market organization to drive awareness of the product through standard marketing channels through event participation. But in the future, we are going to invest more resources and of course, also some financial resources to drive overall awareness of the product in the global market.

So it's very important that we will get the visibility of the product to the outside world. And so we're not just talking to, let's say, decision-makers in enterprises or we are going to the developers and data analysts in large or even small companies. And the Exasol Personal edition is basically the same product as our standard Exasol product with just one key restriction, it only allows one connection to the database. So a user can basically simulate and benchmark and test the full capabilities on Exasol with that, but they can basically not use it in a productive environment because then they would need more than just one connection, and that's where we then would potentially have an upsell.

So we make this as easy as possible for users to get access to that personal edition. So we started launching it right now on several platforms. AWS was the first one. But as I just explained, we're also going to have it available on Stackit, on Exoscale and on Microsoft Azure as well this quarter. And we continue to drive attention that we're participating in data re-ups.

So it's really, I want to call it a grassroot initiative to get more visibility and mind share in the database market. The database market itself is a hype market. So I think it's important for us to get on this hype train. So people seeing us as a modern solution. And we're using the Exasol Personal as a vehicle to basically transport that message to the outside world. So what are we doing on the product side? Where do we innovate and how do we drive the product forward. We have 2 key use cases here that I already highlighted on the overview page. The topic sovereign AI that I want to dive a little bit deeper on and the Lakehouse Turbo. We shared that with you in previous calls. Again, this is a solution that lets customers who run on cloud-native data warehouses optimize cost and performance.

So we're in a testing phase there with key reference customers. We continue to drive that to determine if and how we have a good go-to-market fit. But I think what's actually super exciting for us is the adoption of how our existing customers are using AI in conjunction with Exasol. We now have roughly 15 to 20 customers that are using our, let's say, AI enablement that we have in our product to implement AI use cases on our product and who have been able to roll these out successfully.

So we have a variety of use case reference stories. Some of them are already on our website. And we're sharing that also coming back to that product-led growth initiative to gain more awareness and to help customers understand that AI and Exasol goes together really well. Sovereign plays an important role. We think that the need for data sovereignty becomes even more important when AI comes into play. So it's not just the data that can potentially leak out of an enterprise.

It's also know-how, it's the way how prompts are being generated. So that's why for us, sovereign AI is really the key topic. So let me dive a little bit deeper into this.

We position ourselves as the fastest database for AI developers in that space. And we let developers use workflows that seamlessly integrate with AI models for rapid development. As standard Exasol we have a high currency support.

So the demands for Agentic and AI workflows for real-world use cases when there's a lot of data when there's a lot of parallel queries entering the database, that's what Exasol is made for, specifically around Agentic AI, where there is a possibility that a lot of simultaneous queries hit the data pool.

This is where we shine and this is where our solution helps our customer. As I said, the data sovereignty aspect, secure govern workloads in your own environment, so customers can run this on-premise or in their own cloud account. This is very important for a lot of customers, and we will deliver the best and optimal price performance for our customers. Here's one slide that gets even deeper.

I'm not going to go through all of this, but I want -- I thought it's helpful for our investors to understand also the innovation that we're driving and maybe you recognize some of the terms here, the technical terms. So we launched an MCP server last year, AL MCP server.

This allows customers that use Exasol to basically connect to any AI system to any -- so for example, ChatGPT enterprise version supports various MCP servers. So you can just connect Exasol as a data source into ChatGPT and then you can prompt ChatGPT and data gets automatically extracted out of Exasol. So we play in a larger environment. So the MCP server itself is a key interface and we launched that in early Q4 last year. This also helps us to do deeper and better integration into standard LLMs. And as we run in secured environment, so customers can run it in a secure stack for a regulated environment. So we continue to drive integration and full stack AI integration.

So it's no longer just one product. There's one thing. I mean there are a lot of components being stitched together. And what our product and engineering team is doing is working on is to continuously support and add interfaces to the necessary environments. Our AI query engine is scalable. We continue to improve performance scalability of our core database system.

We now have a multi-language support for all relevant languages in the AI world, Python Java, Lua, R. And we help customers to do SQL-based model training and execution at scale. The last bullet point here, value-driven AI applications. So we've been working on, I think we also shared that in the past. We now have actually customers using that, converting unstructured data into structured data. Why is that important for us? It basically increases data volume. So we are able with that to get customers to put more data into the Exasol database. And that's a good thing because typically, we price on data volume. So -- and we help customers in their infrastructure. So we've released GPU acceleration for key AI workloads. So customers get much better performance, specifically when they have invested in GPUs, and we deploy in flexible environments.

We're in the process of developing that's on the road map for 2026, even more modern infrastructure support. So for example, Kubernetes docker support is on our road map for 2026. This is a feature that has been requested by a lot of customers and prospects that we're going to bring to the product this year as well. I brought one example. You might have seen T-Mobile as one of our key customers before.

This slide goes a little bit deeper on what is T-Mobile actually doing with Exasol and how they're using AI to be successful. So T-Mobile by now has become our second largest U.S. customer. And the reason, as I just explained, T-Mobile is a good example for that. They're just adding more and more data into their Exasol database. And why are they adding more data? Because they're expanding use cases on what they're doing with us. So this slide basically describes that T-Mobile has about 120,000 cell towers all across the U.S. with multiple cells and sectors per tower.

And what they're basically doing or the business problem they're trying to solve is how do they equip these towers with additional cells and sectors and where do they put new towers in this country that, as we all know, is very large and very big.

So they're leveraging the historical traffic data over the last 52 weeks and then have defined -- we work actually together with them, our team in the U.S. to build certain key AI machine learning use cases. that creates an optimized planning based for each tower and how it will be best equipped on a going-forward basis.

And that is being done with the data pool that sits in the Exasol database and AI led as it's been described here, is basically the key interface that we're providing to our customers. So the outcome is an optimized improved network coverage. It's a really good use case that shows the value that we're bringing. And as I said earlier, we now have about 15 to 20 of our existing customers actively using and deploying sovereign AI solutions from -- so just to recap again, and then I'll hand over to JD, the journey that we're on.

We are very excited about 2026. It's an exciting time to be in tech in general. The shift to AI is going to be a game changer. We all know that. We've been seeing that for now almost 3 years. We believe in Exasol, we have the tools in our hand to capitalize on that. So that's one trend that's helping us on a going-forward basis.

And the other element, we do believe as a German company in this complicated world that we're in, in the geopolitical environment that continue to hone in on our key strategy in key verticals that customers want this more sovereignty from U.S. vendors. That's another big plus. Exasol is basically the only commercially available database technology here in Germany. So we're pushing on that. We're working with partners. We're also getting closer to politics in Berlin and in Brussels. So I think it is an additional incremental opportunity for us to capitalize. So with that, I'll hand over to JD, who's going to go deeper into the financials. And then at the end of the call, I'm more than happy to take any questions. Thank you.

Thank you, Joerg. Let me shine a little bit of more light on what Joerg elaborated to you from a quantitative perspective. I think as he already hinted to in the beginning in the executive summary from a pure results perspective, it was a bit of a mixed bag for us 2025. We had some things that went very well.

I think the development of the focus industries and the validation we got in terms of market feedback and opportunities, the financial strength of the company in terms of bottom line on the one hand, the significant headwinds that we faced in the non-focus industries, which were also faster than expected on the other hand, and let me give you some numbers around both of that. Maybe starting with one of the pluses. I think in terms of pure financial strength, we made another significant step forward in 2025. EBITDA rose to EUR 4 million, which is more than double what we had in 2024. Likewise, we had again almost a cash conversion of 1. Our liquidity increased by EUR 3.7 million to almost EUR 19 million.

One thing I might add is we achieved both of that despite not insignificant headwinds from the weakening of the U.S. dollar, which obviously made the bottom line impact of our U.S. business significantly weaker. So I think we also have to look at the development of the financial results from that perspective.

Now this financial strength, we don't look at necessarily as an end in and by itself, but as a comfortable position to handle the transition from that we've anticipated with the change in our strategy and the transition in our customer portfolio that we are observing and that we have observed in 2025. So if we look at the overall ARR development, which is the key indicator for our business, as Joerg said, we faced a total net decline of 8%, which was largely driven by the significant amount of churn that we experienced in the non-focus industries. As you can see here, this churn amounted to a total of EUR 10.2 million or almost 24% of the beginning of year ARR. Now almost 50% of that churn was basically driven by 3 large accounts in EMEA in the nonfocus industries that also reduced their business faster than expected.

So when we implemented the focus strategy, we anticipated a certain amount of churn over this and next year -- or sorry, over 2025 and 2026. And a lot of that happened or a bigger portion of that happened in 2025 than we originally anticipated. So this created a headwind on the churn side that we weren't able to make up with gross new business. We achieved gross new business in total of EUR 6.8 million.

And looking at upsell and new logo separately, overall, on the upselling side, we largely -- things largely evolved as we expected them at the beginning of the year. On the new customer side, we are not yet where we want to be. We aim for higher values there. The EUR 1.4 million is good, and we achieved that also with the revenues that also our new partner, Maria DB committed to, but it's not where we originally wanted to be. And in the sum of those factors, we then were not able to achieve our original aim to achieve growth, but face the net decline. Now that being said, with the big amount of churn impacts being kind of preponed effects that we anticipated in 2026, we -- this headwind will significantly decrease in 2026.

Overall, we are very confident that we will be able to decrease the churn by more than half in this year, which puts the churn rate back to 10% or maybe lower, which gives us a much better basis to get back to net growth in conjunction with the impact that our -- the initiatives and the partnerships and the slip deals that Joerg talked about will unfold. One additional more technical remark.

As you know that we are reporting ARR during the year at constant FX and also show you the results like-for-like and also our guidance is against a like-for-like target. And then at the beginning of each year, we adjust the ARR value to the new FX basis. We will do the same. So the EUR 39.1 million end-of-period ARR translate into 38.4% on latest FX rates. And this is mostly coming through -- or this is exclusively coming through a devaluation of our U.S. business due to the weak U.S. dollar that almost lost 20% in the course of 2025. So in the webcast and results calls moving forward, you will see the 38.4% be the starting point for the 2026 reporting.

Now this overall situation also then led to net revenue retention be below 100% for the first time with mixed pictures across regions and segments, but I'll talk about that in a moment. So looking at the quarterly performance and how that unfolded. As mentioned, the churn or the headwinds that I talked about hit us primarily in the first half of the year, whereas ARR largely stabilized in Q3 and Q4.

Now overall, Q4 was not satisfactory for us. I think Joerg mentioned some slip deals, particularly on the focus industry side, which we're now expecting in Q1, Q2. So the traditionally strong Q4 that we typically had didn't unfold as much neither on the focus industry or nonfocus industry side. But as I said, this we expect to recuperate in Q1 and Q2. That being said, overall, our focus industries continue to strengthen over the year. You can see in the bubbles on the chart that focus industry ARR rose from EUR 24.2 million to EUR 26.7 million. And that translates into then a portfolio shift that we've experienced that we are now roughly at 70% share of the focus industries in total ARR that is -- kind of represents the continued shift of the portfolio towards the focus industry.

So overall, 2025 was characterized by kind of slightly slower dynamics that we aim for on the focus vertical side, although in principle, our hypothesis that this is the strategic field to go for is definitely confirmed and faster dynamics on the non-focus vertical churn side.

And this also came about, if we look at the regional breakdown, if you look at the industry split and the regional split in the full matrix, you can see the clear growth driver and where do we take the statement from that we see the overall focus strategy validated. We can clearly see that in the core EMEA market in the focus industries, where we grew by 14%, which also was the clear growth driver. And the nonfocus industries in EMEA were overall the key headwind sector, so to say, mostly driven by the 3 big customers that I referred to earlier. And the Americas in total, largely stagnated with no clear difference in dynamics between focus and nonfocus industries.

I think what's clear here is also that the U.S. market is driven by slightly other trends than what's currently driving the market here. I think AI plays a big role on both sides of the Atlantic, but obviously, the data sovereignty discussion is dominantly a European discussion, whereas the U.S. is much more focused on AI, but then also on the compute and cloud cost topic.

And because of these factors, the product development and innovations that we're working on that Jorg elaborated on in his part are important for us also to then to reinvigorate our growth potential in the Americas moving forward, while we continue to focus on driving the growth in the focus verticals in EMEA as part of our focused strategy. So all this together, if we look at some P&L detail and how the results unfolded. I think the very bottom of the page I already talked about, we were able to increase EBITDA to EUR 4 million. Also in conjunction, our net income rose significantly even more than EBITDA, where we had an improvement of almost EUR 3 million. That came about through 2 effects. First of all, we were able to increase further our financial result that contributes below EBITDA.

But then also our depreciation decreased further. I think we've talked about many times that we stopped capitalizing R&D expenses a while ago and the amount of intangible assets in the balance sheet that's still related to old projects that were capitalized in the past is continually shrinking. And as a consequence, the net income contribution, which we generate out of our operational business is increasing.

And this then also led to the increase in equity ratio beyond 30% that Jorg already talked about originally. Now if you look at the revenue dynamics between 2024 and 2025, you kind of see what happens with the structure of the business. You see that overall, our revenue increased, but we faced a decrease in recurring revenue, which is not surprising given the 8% decline in ARR. At the same time, we were able to compensate that through one-off hardware and service business, particularly with our customers in the focus industries, where we see more and more demand also for bundled offerings, so not only the software, but basically hardware, which has the software pre-installed.

One remark I would like to make on the gross margin development. You see here that on a reported basis, gross margin declined by EUR 1 million. At the same time, I'd like to point your attention to the fact that the IT infrastructure costs have decreased significantly 1 year over the other. This is related to a change in how we report our cloud cost. In the past, in 2024, all our AWS cloud costs were reported under IT infrastructure.

Now in 2025, we saw -- we had a significant improvement in the level of detail we received from AWS in how the cloud costs break down. And as a consequence, we started allocating the appropriate amounts to the SaaS product, which is roughly EUR 750,000, which are now reported under COGS for the SaaS product. So the delta that you see in gross margin is to 80% related to that effect. If you account for that, gross margin remained largely stable year-over-year on a like-for-like basis. So you can see that the decline in gross margin that was driven by the declining recurring revenue was compensated by the additional one-off business that we were able to generate kind of compensating and buffering these transitional effects.

Then on the pure cost side, obviously, once you account for the effect I just talked about, IT infrastructure costs even still decreased a little bit on a like-for-like basis, but the main contributions to bottom line came from savings in personnel expenses based on a streamlined setup for the go-to-market and organization and some other changes we made over -- in the Q1 -- Q4 2024, Q1 2025.

So these effects in total led us to the result where we are. And then maybe taking a look forward to this year, what does that mean for 2026? Obviously, in the end, we're expecting ARR growth back in the mid-single-digit percentage range based on significantly reduced churn rates and the initiatives that we're having on the new logo side and upsell side along the lines that Jorg described to you in combination. On the revenue growth side, in terms of pure recognized revenue in the P&L, we will expect -- we expect a single-digit decline. This is mostly then basically the delayed effect of 2 things.

First of all, obviously, ARR is a leading indicator. So the ARR decrease still affects us in recognized revenues in 2026. But then also, we expect the one-off revenues not to be on the same total amount that we had in 2025, which was exceptionally high. So lower one-off revenues still some after effects from the decline in ARR before then the impact of the refound ARR growth kicking in.

As a consequence, because of that, we aim to keep profitability in the range as we aim for in 2025. So we again aim for an EBITDA of EUR 3 million to EUR 4 million and also to support continued investment in the product, which we want to do despite the revenue dip that we're going through. So this is how we look at 2026. What I might add is that we, in our ARR perspective, did not yet factor in significant amounts for the new business we work on like the Lakehouse Turbo since this is in a proof-of-concept phase. So this is kind of the growth we're aiming for with our focus industry and AI products. that remain the core of our offering. And with that, I would conclude my part.

In sum, what would we like you to take away with that? Exasol continues to perform strongly in terms of profit and cash flow. We've closed important partnerships in 2025, which will help us get back to growth in conjunction with significantly reduced churn. We focus heavily on supporting the big trend of AI and analytics that we see out there in the market, and we believe we are excellently positioned to benefit from sovereign AI tendencies out there.

And overall, although we haven't made the progress that we wanted to have in 2025, we do see clear validation of the of the focus industry strategy that we took and expect to make inroads on that in 2026. So with that, I conclude. Let me also say that I'm going to be at the Hamburger Investor target tomorrow. So maybe hopefully, I can see as many of you as possible and see you. And if not, obviously, please pose your questions now in the Q&A section or get in touch with us after the call, and we'll find a way to address your concerns and questions. Thank you very much for listening so far.

Thank you, Mr. Tewes and Mr. Henrich. Ladies and gentlemen, we are now moving on to the Q&A session [Operator Instructions]. And as we have no hands up, I will jump to the questions in our chat box. The first one, could you shed some light on why contracts were postponed by -- from Q4 to 2026? And what makes you sure that these contracts are going to be closed?

Yes. Maybe I can start. Can you hear me? Yes. Okay. Maybe I can start and JD [indiscernible]. I think we're looking at 2 types of contracts. We actually have several new logos in the financial services sector that we've been working on actually for quite a while. We are confident that we will be able to bring in these logos either in Q1 or Q2. So that's specifically some banks that have started working on POCs with us.

And so that's one area. The other one is a larger customer that basically has the need to add more data to their existing installation. And we also expect that to materialize in Q1 or the latest in Q2. So I would say the confidence on these delayed deals relatively high. So that's maybe the first question. Second, from Mr. [indiscernible].

Do you expect new ARR in 2026 more at the beginning or the end of the year?

I think it's balanced. We have done significant improvements to our existing commercial organization. We're seeing initial traction of these improvements. But I think we will see increased ARR in Q1. As we also said ARR or net ARR is always gross new ARR minus churn, right? So that's basically how we look at it.

And we think -- or we know this is actually relatively easy to predict that our churn numbers will be substantially lower. So that helps us on the net new ARR side because obviously, we can -- we don't need to do as much new ARR to basically get back into the ARR growth segment. But I think we will also expect more new ARR coming in, in Q3 and Q4.

Maybe an additional remark because there was also, I think, a question on seasonality from Lukas. And you also asked about earnings. I think Joerg already gave you the ARR perspective. I think from an earnings perspective, overall, it's going to be a little bit -- I expect a little bit of a weaker start into the year simply because these delayed -- the impacts on recurring revenue, which come from the revenue decline in 2025 hit us mostly or still sitting on our books mostly at the beginning of the year now before we see net ARR growth again, which then also supports top line.

Maybe directly also answering another question that was raised when, for example, effect like the one-off government grants kick in, yes, we expect again government grants in 2026 in the mid-6-digit range.

And those typically are factored in, in the middle of the year, Q2, Q3. So obviously, we still expect profitability every quarter, but it's -- the seasonality on profitability is going to be a bit more second year -- second half of the year than first half of the year, maybe to build on -- make that additional comment on seasonality of earnings. I think on ARR side, Joerg already gave you a perspective.

And I will move further with the questions from Mr. Spang. Can you share some insights of the partnership with Stackit? Are you just available on the marketplace? Or are there also some active sales activities from their side? And can you quantify the potential project sizes in the focus verticals which slipped into 2026?

Yes. Maybe I'll take the Stackit piece and JD, you can take the other part. So with Stackit, I think we tightened our partnership. They're not actively reselling us. However, as an example, we have their CEO, Bernie Wagner as a keynote speaker attending our customer event, the experience. which takes place on March 10 in Berlin.

So I think it's a commitment from Stackit to work closer together with us. So getting visibility in the market as a local German solution, that's very important. What we do have actually where we have now an active sales partnership, adesso, which I think most people here in the room know, one of the largest German system integrators with 10,000 employees in Germany and another 2,000 outside Germany. adesso has assigned a dedicated salesperson that's selling Exasol to adesso customers. So that we have. And we have something similar, very close tie with adesso Turkey. So we have that momentum where a large partner, specifically adesso is very much aligned with our core focus verticals, they are actively asking or reselling us. So that's maybe the answer to that second question. And JD, do you want to take the third one?

Yes. On the average project size, I think there were -- as Joerg mentioned, there were a couple of new logo projects we're working on in the focus industries, which were on the low 6-digit side in terms of size. And then there was also a couple of upsell opportunities, which are in the low to mid-6-digit area.

So that's kind of in line with what we talked about earlier that we saw slightly bigger project sizes in the focus industries than in the non-focus industries. But that's kind of the order of magnitude. But there was no mega deal like the LBBW or Finance Informatic deals that we talked about last year and in 2024, that was among them. So those -- it's kind of a bigger portfolio of mid -- low to mid 6-digit deals.

Thank you for the questions. And are there extra hardware installation projects to expect in 2026 like it was in 2025?

Yes, I'll take this one. At this stage, we don't expect the same volume of hardware and service projects as in 2025. This is also kind of factored into the revenue guidance that I talked about. Why? Quite simply because we had one very, very big deal in there. with one of our financial industry customers, which we don't see being repeated in the same way in 2026. So we have an assumption in there, but it's lower, significantly lower than we had last year also because, quite frankly, this is much harder to predict than the software business. Very often customers come with us and rather kind of a last moment idea of that they also want to procure hardware as part of that. So it's much harder to anticipate. And therefore, we also don't factor it as much or only very conservatively in our financial plan for the upcoming financial year. I think...

There were 2 more questions, JD. Maybe we should try to get answers for those.

Yes. So did you lose customers in the focus industries? Yes. In EMEA, however, mostly very small ones. So tail end customers. There was one bigger customer in the U.S. in the focus industries. As I said earlier, the data sovereignty topic is not as much of a topic there. So there was one bigger hedge fund client that we lost at the beginning of the year, which contributed to the churn rate that you saw in the focus industries, which, however, overall was still with 7% in a very good range. And then I'll take the MariaDB question straight away as well.

So MariaDB revenue 2025, so as part of the agreement that was signed, MariaDB also committed to a pre-commit revenue in the 7-digit, low 7-digit dollar range, which translated into a high 6-digit euro range, which kind of is in the numbers or at least in the ARR numbers and is gradually entering the revenue numbers.

For 2026, I think we are just starting the market motions with them. Obviously, we hope and aim together develop this then also to an upsell versus that value to get that up. Their own plans for the next 3 years is clearly to drive this joint business in a double-digit million range on their ARR end of which we perceive 20% royalties. So that's kind of how the deal is set up.

Thank you very much, ladies and gentlemen, for your questions. And with no further questions, we come to the end of today's earnings call. Thank you very much for your interest in the Exasol AG. And a big thank you also to you, Mr. Tewes and Mr. Henrich for your presentation and your time. Should you have any further questions, you can always reach out to Investor Relations and also, as mentioned, meet Mr. Henrich at the Hamburger Investorentage starting tomorrow. I wish you all a successful day and handing over again to you, Mr. Henrich, for some final remarks.

Yes. Well, all that remains for me to do is thank you for your numerous participation in the call. Thank you all for joining. Thanks for listening. Thanks for your continued interest in our company and our share. And hopefully, see you all soon, either in person or in some other form of catch-up.

For, thank you all, and good afternoon.

Good day, and welcome, ladies and gentlemen. Sorry for the delay from AIRTIME side. Welcome to the Exasol's 9 Months 2025 Earnings Call. The CFO, Jan-Dirk Henrich, will guide us through the presentation. Afterwards, we will move over to a Q&A session in which you have the possibility to place your questions via chat box and audio line. Having said this, I'm handing over to you, Mr. Henrich.

Thank you very much, Judith. And again, also from my side, apologies for the delay, which was due to a technical problem we had. So I hope we didn't let you wait for too long. Welcome to today's call, which, as many of you might know, is already the second call on the 9-month numbers. Most of you will have noticed that 2 weeks ago, we corrected our guidance for this year, which I will run through again today and conducted an impromptu webcast to give you the opportunity to answer any questions you might have. I will run -- nevertheless, run through all the information again in today's call.

So for those of you who have already attended 2 weeks ago, apologies for the repetition. But then obviously, I will also go in a little bit more detail on some salient points on the business side, but also on the P&L result as of 9 months ending. I will lead you through the call alone today. Joerg Tewes, our CEO, is not attending. However, if you have questions to him or me, feel free to reach out to us via our Investor Relations contact, and we're happy to set something up outside the regular formats of our webcast calls.

I'd like to point your attention, as usual, to our disclaimer with respect to forward-looking statements. I will not run through it, but please, as you review the information, have a look at it if you look through the downloadable presentation. So what has happened in the first 9 months of this year? I think from a strategy perspective, we've continued to see strong ARR growth in our focus verticals. So as you recall, we have reworked our strategy earlier -- late last year, earlier this year to hone in our -- on some key industries for customers where we think our value proposition is biggest. And we continue to see 25% year-on-year growth in those focus verticals and as a result, the share of these -- in ARR of these focus verticals has meantime increased to roughly 70% versus around 50% at the same time last year.

That being said, this transformation and strategic refocus has led to a shift in our customer portfolio with the growth in the focus vertical on the one side, but also a significant churn in the non-focus verticals on the other, which has progressed at a higher rate than we initially expected for this year, leading to dampened growth on an aggregate level. And then also in conjunction with some key projects in the focus verticals for new business that had shifted to next year, we came to the conclusion that we will no longer be able to achieve our original guidance and have adjusted it accordingly 2 weeks ago. However, we do not see negative impact on both P&L revenue and EBITDA, which I will run you through in more detail.

What does that mean in terms of numbers? In terms of numbers, we ended 9 months with EUR 31.7 million in revenue, which is up 9%, which already gives you a sense of the healthy revenue performance. ARR, however, on a 12-month basis was down 4% to EUR 39 million caused by the accelerated churn in the non-focus verticals. On the EBITDA side, we ended 9 months with EUR 3 million compared to EUR 1 million at the same time last year, which gives you a sense of the progress in terms of profitability that we've made over the past 12 months.

Now what does it -- so while this is obviously a dip in our growth development, we remain still, however, bullish for the future. Why? As said, we see -- continue to see the strategy with focus on the focus verticals working out. In addition, our increased focus on closing meaningful partnerships, which give us reach in the market has made progress in the form of MariaDB. Now MariaDB, I will give some background on this collaboration. It's a database software provider in and by itself with a slightly different focus. And there's lots of synergies that we believe we can exploit in bringing an integrated offer to the market, which gives them increased monetization options of their large user base and us, obviously, an increased reach into the market.

So overall, with this increased churn in the non-focus verticals, this, however, also means that we have a clearer visibility to a decreased churn dynamic in the non-focus verticals moving forward in 2026. And together with the shifted projects, we believe there is now a clear visibility back to accelerated growth in 2026, which MariaDB will also contribute to. Maybe elaborating on that a little bit. So what is MariaDB? MariaDB is a database software company located in the Silicon Valley and Ireland. They originated as an open source database software with a focus on transactional data. As some of you might know, the data world is kind of divided into transactional data and analytical data, so OLTP and OLAP.

So our focus as Exasol is on the analytical data. We're an analytics company, analytics database software, whereas they manage the huge amounts of transactional data that any organization shifts. And through their origins as an open source company, they have an extremely large user base. So over 1 billion downloads of the original open source software, which over the years, they've been able to convert into 600-plus enterprise customers. So -- and they were looking for opportunities to increase the value add of the offering and further leverage the unmonetized part of their user base and give them additional monetization options.

And one of that potential options, obviously, is to give them basic capabilities to also analyze the transactional data that they're managing with the software with analytics. And that's where the idea of a joint OEM product came from. So basically, MariaDB will take our core database technology and integrate a basic version of it into their enterprise offering to a new offering called MariaDB Exa, which gives their customers the opportunity to do basic analytics on the large amount of transactional data that they're running, benefiting from the performance that is inherent in our technology and our USPs and then also doing that in a cost-efficient way. And that has several benefits for us as Exasol.

So for MariaDB, it's a win because they get an additional option to monetize their big open source user base. For us, obviously, it solves a key problem that we had in the past of gaining visibility in the market and also global visibility in the market and also gaining visibility in the tech communities out there. And this large open source user base is a very good multiplier for us to gain visibility and the OEM offering that we are making gives us visibility as a brand. So we're not like -- sorry, an invisible technology component embedded into their product, but we're going to market it as powered by Exasol, which then also gives the opportunity to interested customers who are using the MariaDB Exa product and now have an interest to upsell to a full-scale enterprise data -- analytical data warehouse solution to directly transact with us and convert that into non-OEM larger customers with upsell opportunity.

So there's basically 2 monetization paths into the MariaDB relationship. One is the royalties that we receive from MariaDB on the MariaDB Exa product plus potential upsell opportunities of customers who have then gained interest in our technology to upgrade into a full-scale analytical data warehouse. And obviously, from a go-to-market efficiency side, it gives us a wide access in the market with comparatively little invest ourselves. MariaDB is carrying the development cost for the collaboration themselves, and we're basically benefiting from their go-to-market organization and their customer relationships.

So this is a relationship that is ramping up, which they have a very high level of commitment to. And similarly, us, we ourselves. And I think this commitment from their side is also expressed in a relatively large pre-commitment on the first year royalties that they've made, which you will start seeing in our ARR in Q4. So they've put their money where their mouth is, so to say, and that it's an expression of the big belief they have in the relationship. And we expect kind of first customer conversions or first customer of theirs adapting the new product potentially already end of this year, early next year. But you've probably seen the joint press statement that we've released. So this is ramping up now. We are enabling their sales teams and they're starting to drive the product into the market.

Meanwhile, coming back to overall ARR development over the past quarters, you can see that Q3 has been a rather low growth dynamic quarter for us, which is not unusual. The past Q3 quarters weren't as dynamic either, but it's been slower than expected, partly because of the churn, partly because of some shift of projects. The little growth that we did see in Q3 was generated by the focus verticals again. So those have risen to a total of EUR 26.9 million in overall ARR, which, at this stage, brings us to a share of these focus verticals of to 70% versus 30% in the non-focus verticals, which is roughly the level which we would expect also towards the end of the year.

Digging into this in a little bit more detail by the 2 different segments. So if we look at the growth dynamics and subscription dynamics in the focus verticals, you can see that over the past 12 months, we were very successful in expanding our footprint with existing customers at almost EUR 6 million of upsell. And compared to the overall churn rate, relatively low churn of 6%, which is kind of a best practice kind of churn level in the software industry, where you can see where we are not. Where we want to be is in terms of new customer ARR in the focus verticals, while we do see promising pipeline opportunities, which are evolving.

I think what we've also found this year that the nature of the customers we're dealing with here in regulated industries sometimes makes the sales cycles slower than, let's say, in an e-commerce or digital environment because you have to go through the appropriate enterprise checks and enterprise software approvals in the respective organizations. However, once the customers converted, they do tend to be equipped with higher initial ARR rates and then also upsell potentials.

So overall, we did see a gross upsell rate of 130% in the past 12 months and a churn of 6%, leading to a net revenue retention of 123%. Now unsurprisingly, based on what I had already indicated in the non-focus verticals, the picture looks a little bit different. So we had significant churn there in the past 12 months to the tune of 36 -- sorry, 46% churn and a net decline of 36%. This is very much driven by 2 major retail customers that we've lost or have down sold in the past 12 months. So basically, these 2 customers already account for roughly half of what you see here, which is a hump in our customer portfolio transformation that we had to get over.

And as unpleasant it was that it happened this year, it also means that we've digested this transformation now. And as a consequence, we expect overall churn across the org to significantly decrease. And if we look at the overall picture, so if you bring these 2 pictures together, this leads to the minus 4% that I've alluded to in the executive summary with the majority or the whole growth that you see in this picture on the left-hand side in green coming from the focus verticals, whereas the downsell and lost customers are basically contributed by the non-focus verticals.

For 2026, we expect this absolute churn volume of 10% that we've been seeing this year to half. So we're going to see roughly. So we're going to see significantly reduced churn dynamics and normalizing churn rates, which makes the path back to net growth significantly easier if we continue to do our job on the focus vertical growth side and also then leveraging the opportunities that come with the collaboration with MariaDB. So that's the update on the growth side.

If we look at the bottom line and P&L. So first of all, I think bottom line has continued to evolve very much to our satisfaction. So we had EUR 1 million of EBITDA in Q3, then amounting to a total of EUR 3 million EBITDA year-to-date. This compares to EUR 1 million at the same time last year, and I'll go a little bit through the dynamics within the P&L on the next page. Liquidity-wise, we ended the quarter roughly on the same level as the same quarter last year. Now you might wonder why is that if you've made so much EBITDA or more EBITDA. And this is mostly because we had some temporary effects at quarter end on the working capital side. We will talk about our one-off revenues in a moment.

So with customers in our focus verticals, we complemented our offering by also offering appliances or pre-installed appliances. And we had some equipment in the books that is shipped now and has been shipped in October, but was in our books at the end of the quarter. So that made up EUR 1.3 million. So normalizing for that, we would have been rather at EUR 19 million liquidity and expect that to be at the level where we end the year roughly as well. So we're good on the EBITDA side. We're good on the liquidity side, especially if you compare it to the situation we went through in the past couple of years.

If we look at this a little bit more in terms of P&L dynamics. On the revenue side, I've already commented, we're up EUR 2.6 million or 9% compared to same time last year. What you can also see, if you look at the revenue on a more structural level that the recurring revenue is actually slightly down compared to same time last year, which is not a surprise if you look at the development of the ARR metric that I've presented to you. So we saw a 4% decline in ARR, and this translates in the end also into a declining recurring revenue in the P&L.

At the same time, we have significantly more nonrecurring revenue this year, which is the bundled offerings that we're making to customers in the focus verticals where we've seen an increased demand of customers asking, "Hey, could you also offer the whole hardware appliance to us with your software and database software preinstalled." So if you want, you get a ready-to-run hardware stack, which is an additional service that we can also charge for. And we've seen increased demand for that and increased opportunities, which we've leveraged. So as a consequence, that has driven up revenues a bit.

Now obviously, gross margins on the one-off business are significantly lower than on software. So this has not translated the same way into gross profit. The other thing that has led to gross profit actually being EUR 1.4 million lower this year compared to same time last year was the fact that we received -- let me start a bit more fundamentally there. So for those who haven't followed us over the past quarters. Last year, we started applying for research grants for the German government. So there's R&D funding options for projects in the data space, machine learning space and data science space. And we started applying for those last year, retroactively for the years starting 2021. So the grants that we received in 2024 were actually retrospective grants for 3 years. That's why they've been exceptionally high.

Now in 2025, we've received those grants again, but only for the year 2024, which makes the level lower. So that -- and that goes through other operating income, which goes into gross profit. And that's why you see a slightly declined gross profit. So that doesn't come from recurring business. It's basically the fact that we had a positive exceptional in 2024 in the form of retroactive grants being paid for the years 2021, 2022.

So on the cost side, we've made up for that. Personnel expense-wise, we are at EUR 2.4 million lower and are now kind of in an organizational shape, which I would consider appropriate. So there's not going to be further restructurings or personnel reductions moving forward. We'd rather see as we continue to be profitable, selective reinvestments, particularly in our R&D team to maintain competitiveness of the technology. Marketing-wise, is pretty stable. IT infrastructure has been lower, mostly because of optimized cloud spend, whereas other costs were largely stable.

So in total, this improved cost position has compensated the lower gross profit and brought us to an EBITDA, which is EUR 1.9 million higher compared to same time last year. And what you can also see that we overproportionately improved our net income as well. So we are now at EUR 2.1 million net income at the end of Q3, which is up EUR 2.6 million compared to last year. And this is mostly due to 2 factors. One is a continued decrease in depreciation. Some -- those of you who have been following us for longer already know that we've stopped capitalizing R&D expenses a while ago. And as a consequence, the depreciation on legacy capitalized R&D expenses is continuously decreasing.

The second reason is that we are seeing significantly better financial interest income from the higher liquidity reserves in combination with the higher interest rates over the past 12 months, which are now normalizing a bit, but still allow us to earn to the tune of around EUR 400,000 of interest income on a 12-month perspective. So all this together has led net income to significantly improve and to the picture that you see here on the screen.

Now adding all this together led us to a correction of the 3 guidance parameters that we've given out for this year. I've talked to you about the ARR growth, which we've corrected from the original mid-single-digit growth that we aim for to an expected single-digit decline that we are now expecting. If you see the 12-month dynamics, I think that becomes clear. And we, at this stage, do not believe that this can be compensated in the remaining time of the year. On revenue growth side, we confirm our guidance to grow in the mid-single-digit percentage range, driven by the compensation -- compensatory one-off revenue businesses that we were able to do, which help us go through this transition phase on the ARR side. And on the EBITDA side, at this stage, we feel comfortable in narrowing our guidance on the upper end and now believe that we will rather come in at EUR 3.5 million to EUR 4 million, so at the upper end of our guidance.

So in summary, in closing, what should you take away from today's call. First of all, we see our strategy with focusing on the focus verticals paying off, and we see a good pipeline opportunity there. The MariaDB partnership gives us additional reach in the market, and we are all very bullish about that and are looking to close further partnerships. And I think I already saw a question from the attendee around on the partnership with adesso, which I will comment on in a moment in the Q&A section.

Overall, what we're currently seeing is the short-term business trend of increased churn dynamics in the focus -- the non-focus verticals, which kind of gets us over the hump quicker and as a result, gives us a clearer visibility on a return to growth in the -- driven by the focus verticals in 2026 with the combined effect of lower churn, continued focus vertical growth and the MariaDB partnership adding up to a good mix. And with that, I would close my presentation remarks and open it up for Q&A. Thank you.

Thank you very much for your presentation and your transparency, Mr. Henrich. Ladies and gentlemen, it is your turn now. [Operator Instructions] And I will start with the first question. During the last call, I was surprised that you would expect first customers for the MariaDB Exa already at the end of this year. This seems to be a very short lead time starting from the announcement in October. Could you shed some light on this?

Yes, I can. And actually, in the Q&A, I think Philip, you've raised 3 questions related to MariaDB, so I'll try to address them all. You also asked what we believe is the share in the 700 MariaDB enterprise customers that could be interested in our solution and whether the partnership with MariaDB is exclusive. So let me maybe just answer that in one bundle elaborating on the MariaDB partnership a little bit.

So obviously, at this stage, it's difficult to predict on how many customers we will already see at the end of this year. However, we've been discussing the collaboration, obviously, for a couple of months already before we formally announced it in October. And as a ramp-up to that decision and signing of the agreement, they had already discussions with some of their enterprise customers on potential interest in the solution and received good feedback, which was also important kind of market diligence work for them, to gear for them how much they put into this partnership and what they invest in the partnership. So that gave them at least what they transferred to us, a high level of confidence of being able to start marketing that quick.

Obviously, it's up for us to see whether that turns out to be true. And I don't expect huge amounts of business by the end of this year. However, as I said, MariaDB has pre-commit kind of a year's worth of expected royalties, which is kind of a low 7-digit amount, which you will gradually start seeing seeping into the P&L. And in parallel, we will start ramp up the customer solutions with them. The partnership is not exclusive. So we are free to partner with other companies out there on solutions and it's mutually nonexclusive, so to say, yes. So -- and we actually do consider such kind of OEM solutions a valid thrust in go-to-market.

I mean it has obvious advantages to a company our size and with the resources that we have and it's something that our partner -- Director of Partner Management internally keeps exploring further. So building on that, you asked me about adesso. So adesso is kind of a partner in 2 sides. So first of all, we started collaborating with them in setting up a small R&D presence in India because what we've seen is that we have difficulties finding talent for our tech organization at an acceptable price point in kind of the European and also U.S. markets. So we started exploring options on how to tap into the huge talent pool in India for tech talent in a way that does not create disproportionate administrative overhead for us.

And for that, we found a partner with adesso who are basically acting as an employer of record for us. They are also setting up an office space for us and managing that. So we basically have one contractual relationship with adesso and our whole India presence is contractually run through them, which makes it easy for me from a G&A perspective. It also keeps all the tax topics and salary and payroll topics away from us. And obviously, we pay them a fee for that, which is a markup on the actual salary cost. But it's a very good kind of setup for us. And we've seen a small but impactful team come together already.

Now at the same time, we've then also started discussing with adesso options to collaborate on the go-to-market side. As you know, probably adesso has a big IT integration consulting activity. And they are similarly organized in terms of verticals. So they have also teams focusing on these focus verticals that I talked about, like financial industry, telecoms, public clients. And we are in initial stages of exploring whether we can jointly develop the market together. So there's a partnership opportunity on the go-to-market side as well, which is evolving. So I hope that answers all your questions on MariaDB and adesso in a satisfactory way.

Thank you very much. And I will move on to the people with a hand up. [ Ramon Huber ] you were the first one. We will have a look at your questions later, and I will go on to Felix Ellmann. You should be able to speak now.

Can you hear me?

Yes.

Wonderful. Yes, Felix Ellmann from Warburg Research. I have a question on the cooperation with MariaDB. With regards to the company, even though I'm in the sector for 30 years, I didn't hear about them. Well, a very simple one maybe. If I see about 1 billion open source users they have, is this company on the long run, let's say, for 2, 3 years, good for 10%, 20% of business increase? Or is it good for tripling the business? Where is the truth here with -- in terms of numbers? What do you think is it good for?

Well, I would say over the -- if you look at our current ARR of EUR 40 million, and if I now -- which is hard for me to guess right now is the upsell opportunity. So if I estimate the royalty opportunity over the next 3 years, I would say that has the potential to raise our ARR by a single-digit million amount. So based on the ramp-up that they're projecting for the Maria Exa DB product, so I think they're estimating kind of a low double-digit million amount, but then obviously, we only get a share of that in the form of royalty. So I would say, over the next 3 to 4 years, to be seen, but it's not in the kind of Exasol triples its business kind of range, if you're asking me that. So -- but it is a very healthy supporting relationship to get us from EUR 40 million to EUR 50 million and contribute to that. So -- but this is not the -- MariaDB is not the -- excuse the verbal pun, it's not the Hail Mary or the Hail Maria that lifts us to EUR 80 million.

It was difficult to estimate as I did not know the company. And the only thing I read was the 1 billion users in your press release, and that was difficult to estimate.

I think what's interesting is that in particularly their paying customer base, which is kind of 600-plus customers. They have a range of also financial institutions, which use them for transactional data, and that's obviously interesting thrust. So if you go on their website, for example, they have DBS as a big client and also as a customer success case on their website, which is a big Singaporean bank, as you might know. So -- and they have several of these, I think Deutsche Bank is also a big customer of them, which are both not yet customers of ours. So this gives you a little bit of a sense of kind of the -- also the upsell potentials and visibility potentials that has also for our focus verticals, although obviously, the MariaDB collaboration is per se sector agnostic, yes. So MariaDB is not per se specialized on our focus verticals, but they do have a big presence and paying customer base in these key industries.

Thank you very much for your questions, Mr. Ellmann. And I have one question left in the chat box. Do you see the level of growth in the focus industry to proceed during the upcoming quarters?

So in principle, yes. And I would answer that on a 12-month perspective because if you look at the dynamics, how they've played out in the -- over the past 12 months, it hasn't always been continuous quarter-to-quarter, but then we also made some larger deals, very large deals in one quarter and then followed by a calmer quarter in the next one. But the general upsell potential and growth potential and also new logo potential, we remain very bullish about.

Thank you very much. And with that, we have received no further questions so far. Mr. [ Huber ] you have muted yourself.

Wanted to say. I think [ Ramon ] raised his hand. So maybe...

You can hear me or not?

Yes, I can hear you.

On the non-focus and focus vertical, at the end, if you look at the new clients, you still have more new clients in non-focus and focus verticals. How is that to explain the new amount you got...

Yes. I mean, as I said, we are not sending away customers in non-focus verticals. But if you look at the new customers that were gained in the non-focus verticals, they tend to be rather small and opportunistic and not necessarily the result of dedicated go-to-market efforts. I mean we still have our Community Edition, which can be upgraded. So -- and so the Community Edition is a free version that you can download from our website, which is technically limited. And if you then want to upgrade and use it in a bit more of a professional way, you can do that.

So sometimes these customers approach us and then say, I need a support package and that's then like a EUR 10,000 upsell, and that's counted as a new customer. But that doesn't really drive us forward. So where we are going for the bigger bucks is in the focus vertical side. And as I explained, the successes there are rarer, but when they come bigger. So if you -- and obviously, again, I'm not saying that the new logo dynamics in the new customer -- in the focus verticals is yet where it needs to be. We obviously want to see that grow over the next couple of quarters. But this is kind of what explains that sometimes you might see actually 2 or 3 new customers in the non-focus side, which, however, do not have a meaningful ARR contribution and the focus vertical customers evolving slower.

Okay. But the number of customers still didn't increase really?

No, it didn't. And I'm not going to diffuse that. So that's definitely something where the pipeline that we've built over the past 9 months still has to translate.

Thank you very much for your questions, Mr. Huber. And in the meantime, we have received no further questions so far. Let me have a look in our Q&A. No questions left, ladies and gentlemen. We, therefore, come to the end of today's earnings call. Thank you for joining and your interest in Exasol AG. Should further questions arise at a later time, please feel free to contact Stefanie Winkler from Investor Relations. A big thank you also to you, Mr. Henrich for your presentation and the time you took to answer the questions. Sorry again for the technical delays. And I wish you all a healthy autumn time, successful business. And with this, I hand over back again to Mr. Henrich for some final remarks.

Yes. Thank you, Judith. Again, apologies from my side as well, and thanks for showing the interest in the company and a very healthy participation in today's call. So thank you for that. I'll be at the [ Eden ] Capital Forum 2 weeks from now. So I hope to see many of you in person there. In the meantime, if you have follow-up questions and will not see me there, feel free to reach out, and I'm sure we find a way to touch base. Stay healthy. Stay interested in us. And in case we don't talk, I wish you a good ending of the year and happy season greetings with your best ones. Bye-bye.

Good day, and welcome to Exasol business update call, including the preliminary 9-month results of 2025. The CFO, Jan-Dirk Henrich, will guide us through the presentation. And afterwards, we will move over to a Q&A session for Mr. Henrich and CEO, Joerg Tewes, who will answer your questions. And having said that, Mr. Henrich, the stage is yours.

Thank you very much, Sarah, and thank you very much to all of you for joining this impromptu Q&A call, as we call it, which we decided to schedule to give you the chance to ask us any questions you might have on today's guidance correction and ad hoc message and the related publication of our preliminary 9-month figures.

This call does not replace the webcast that we will do on the full 9 months figures mid November. So that is still coming. But we thought we open up the forum for questions in case you have any.

So I will briefly guide you through a couple of slides that we've prepared to illustrate a little bit on the background on today's news, leading -- giving you a bit more structure on the numbers. And then afterwards, we will open relatively quickly to answer your questions.

So with me today is also Joerg Tewes, our CEO, who will obviously also be available for questions later. This is our usual disclaimer with respect to forward-looking statements, which you can also read in the documented version of this call afterwards.

So what has happened in 9 months and what led us to correct our guidance for this year, and what does it mean a little bit in terms of outlook. So first of all, in terms of pure numbers, how did we come out of the 9-month financials. In terms of revenue, we ended up with EUR 31.7 million revenue year-to-date. That's a 9% increase over last year's figures. This was substantially supported as well with appliance sales and one-off revenues in our focus verticals, which we talked about already in our half year call, which is part of our focus vertical strategy and which, in this particular case, as we will later talk about, also help us to get through this phase of a little bit of deprived ARR development as we transition our customer portfolio.

ARR stood at EUR 39 million. That's down 4% versus end of Q3 last year, and I'm going to elaborate more on the dynamics of that development in a moment. And EBITDA stood at a very strong EUR 3 million at the end of Q3 versus EUR 1 million at the same time last year. So on a very, very good track to achieve our guidance for this year on the upper end, as we will later elaborate.

So on the ARR side, the growth overall underlying these minus 4% still was a very strong growth performance in our focus verticals. The focus vertical ARR grew by 24% year-on-year to now EUR 26.6 million and is now representing a share of almost 70% in overall ARR. But some short-term business trends are affecting our overall expected ARR performance. One thing that we've already talked about in the past calls is a higher-than-expected churn in the non-focus verticals, and I'll give you details on that in a moment. And that overall came in at a higher rate than we initially expected at the beginning of the year.

At the same time, our sales initiatives in the focus industries and the things that we've been doing on the partnership side, as we'll talk about it a little bit more, have ramped up slower than we expected. So that the impact of these initiatives, we now believe -- we largely see in 2026. And as a consequence, contrary to our belief up to now, we will not be able to fully compensate these elevated churn rates before year-end, but it will take a couple of more months in beginning of 2026 to get through the bottom.

The important thing to note, and we've highlighted that in the news, that the elevated churn that we're seeing this year is a pull-forward effect. So we initially only expected that for 2026. And as a consequence, we're expecting a significantly lower churn next year, which will help us get back to growth then. The other thing that will help us get back to growth, which we fundamentally believe in is our new partnership with MariaDB. You've seen a separate press release on that earlier this month, which is a partnership that we've been working on for several months. And I'm sure later in the Q&A session, Joerg can elaborate a little bit more on the depth and breadth of that partnership.

The important thing for us here is that it's a true OEM partnership, and we get access to a very wide user base and gain a high amount of visibility and believe that this is a very fundamental platform for growth for us, both MariaDB and us over the next couple of years. So in sum, taking these effects together, the churn reduction in 2026, the significant churn reduction plus the impact of the projects initialized this year materializing and the ramp-up of our -- of this new partnership provides a pathway for growth in 2026.

So let me elaborate on some of these things in a little bit more detail. So looking at total growth dynamic, again, these are the minus 4% that I've elaborated on. You can see the elevated churn here. So in total, over the past 12 months, we've experienced slightly more than EUR 10 million of churn or 25% churn rate. I'll break this down into focus, non-focus in a moment. We've continued to have very strong upselling performance. But you can also see already here that our new customer initiatives have not yet unfolded their potential in full. And that's why we believe that this current negative 12-month growth momentum from -- of minus 4%, we won't be able to turn around until year-end and hence, our adjusted guidance.

So if we break this down into non-focus versus focus verticals. This is the picture for non-focus verticals. What immediately jumps into your face is the fact that almost all the churn that we've been experiencing over the past 12 months was indeed caused within the non-focus verticals. And within this effect of EUR 8.6 million here, almost half of it came from downsell or churn of 2 major retail customers here in Europe. So that was an impact that we've been expecting -- also we've been expecting to take place like spread out over this and next year. It now accumulated a bit more this year than we initially thought, but it also means that we kind of get across this hump quicker.

If you look at the picture, for the focus verticals in contrary, where we see -- continue to see 24% growth year-on-year, you see that the churn within this sector is significantly lower, more at our historical kind of normal 6% churn rate, which is kind of industry benchmark, gross revenue retention of around 95%, 94%. But you can see here that we have not yet been able to unfold the potential of the new logo initiatives. So particularly the MariaDB collaboration that we've been working on over the past couple of months. We were hoping to already sign earlier and start marketing earlier. You can see now that it has been kicked off.

So the product is now in active distribution and marketing by our colleagues at MariaDB so that we hope to start seeing some effects maybe still this year, but the dominant effects starting to kick-in in the first half of next year. And this is a very broad collaboration with significant investments on both sides being made. And just to give you a sense of how serious the colleagues over there take that collaboration as well. So actually, our colleagues are investing a low 7-digit figure in getting this product up to speed, getting it running and start marketing the product. That's the commitment from MariaDB side into this collaboration. And nevertheless, within the focus verticals, still very healthy fundamentals and low churn rates.

So in sum, where does that leave us? It leaves us at a point where we are also progressing faster in terms of the weight in our portfolio of focus versus non-focus verticals. So we are now at 70% of ARR in the focus verticals with a growing tendency. So this will certainly never go to 0 in the non-focus verticals. But this is kind of the 80-20 midterm split that we expect to happen.

Maybe also a couple of words on the profitability and liquidity side. As you saw in the news this morning, continued strong profitable path. We had EUR 1 million of EBITDA in Q3, bringing us to a total of EUR 3 million of EBITDA year-to-date. So in terms of our guidance of EUR 3 million to EUR 4 million, at this stage, we're feeling confident that we will hit this at the upper end of the spectrum. So this is a combination of continued very focused investment discipline and cost discipline with the fact that through the additional appliance sales that we've been able to make to our focus customers, we've had some additional margin that helps us get through this ARR transition from focus -- from non-focus to focus verticals that we're currently seeing.

On the liquidity side, the EUR 18 million end of Q3 are roughly on the same level as the year before, but this is only because we had roughly EUR 1.3 million of working capital effects of appliances that were ready for customers, but at the end of the quarter we're not yet shipped. So adjusted for that, we would have been roughly at EUR 19 million. And this is also the region which we expect to end the year on in the region of EUR 18 million to EUR 19 million, give and take, depending on customer payment behavior at the end of the year.

So in sum, in terms of our 3-pronged guidance for this year, we made one adjustment, we made one confirmation, and we made one specification. As mentioned before, we adjusted our ARR growth. We are now expecting a single-digit decline in ARR kind of along the dynamics that you're currently seeing in 12-month growth. However, on the revenue side, we confirm our guidance because the additional appliance and on top businesses that we were able to generate compensate there and also some of the commitment that MariaDB is making is also helping us already this year in the form of upfront commitments. And on the EBITDA side, we believe to hit our guidance at the upper end or in the upper half.

So this is what we've prepared on the basis of the preliminary numbers. I didn't want to make too long a presentation because the focus today is really answering your questions. We will follow up with significantly more detail in our webcast middle of November.

And with that, I would open it up for questions.

And I think there was already one question by Andrew in the forum. So maybe I read this out. I don't know whether that's visible to all of -- to everyone.

Thank you for the presentation [indiscernible] -- is everybody seeing this, Sarah?

No. Yes, no. I mean it's...

This is the first time we're using the new tool of our Montega colleagues. So some teething problems on my side at least.

Yes, bookings. Yes. So I mean, obviously, we're currently in our planning for next year. We are also obviously still working on deals. So the exact amount of slippage is not yet there. I think the slippage -- a big deal of the slippage refers to the delayed ramp-up that we are expecting from the MariaDB colleagues. So that will mostly hit next year, which is a 7-digit value that they have approximated for kind of the 12 -- first 12 months of business.

In terms of pipeline coverage, it's also something we are in the process of building for next year. So there's -- Q3 typically is relatively slow in terms of marketing events. with -- we brought middle of the year, a new CCO joined us, who covers both the marketing and sales area, who's now building an initiative portfolio with the teams and is making very rapid progress there.

But in terms of the 2026 revenue growth and profitability, obviously, revenue growth-wise, revenue growth will be rather muted next year because revenue growth is always a kind of delayed function of ARR growth. We are still working also with customers in the focus on industries in doing additional appliance deals as well. But on the profitability side, we are aiming to continue the level that we've achieved and not slip down on it. So because I think in terms of investment focus, we continue to be very disciplined, and I'm very happy with that.

Laurent, I think, is asking on the MariaDB side. Joerg, do you want to elaborate on that?

Yes. Thank you. So I turned on my microphone, maybe -- I don't think there's echo now. So okay, good. Yes, the MariaDB partnership, I think, in general, helps us in several ways. Laurent, specifically on your question, maybe to understand, MariaDB is a transactional database system that is actually being used by over 750 enterprise customers on a global basis, and they have over 10 million free versions out there. Amongst their enterprise customers, they actually have large financial services customers.

So in Germany, for example, they have Deutsche Bank as one of their customers. We also have actually started engaging with some clients of them in Singapore. We have a Standard Chartered Bank as one of our customers. So we actually see a lot of synergy in those financial services areas where they have a presence and we have a presence as well to find new customers and also with the combined product offering, provide more value to customers. Of course, they are also working on other verticals. So we will, at the end of the day, also work with them supporting them in other areas that we're not actively going after. But there is actually, like I said, a pretty good overlap between their markets and also what we're doing.

All right. Thank you so much. So by now, we did not receive further questions.

[Operator Instructions]

So it seems everything is clear and discussed so far. And having said that, we received the next question.

So what are the expectations for Q4 in terms of ARR, especially on churn?

In terms of churn, it's going to be significantly lower levels than what you've seen up to this year. So the kind of the reduction in churn dynamic will already be visible in Q3, Q4 this year. So there's not going to be a substantial additional amount. There's a couple of smaller churns that we're seeing, and one bigger renewal we work on with a long-term customer. But overall, you will see significantly reduced values compared to what you've seen year-to-date.

As far as where that exactly takes us in terms of Q4 outcome, I mean the new guidance gives you kind of the range, but it also very much depends on how quickly, for example, the MariaDB collaboration is ramping up. They are working on several POCs with some customers of theirs right now, whether they turn into business before the 31st of December deadline remains to be seen. But the kind of the range of outcomes that's possible, we've kind of indicated to you with the new guidance.

Yes, you probably also want to add that most of the churn we typically see in the first half of the year. And so we're not expecting, as JD said, major churn towards the end of the year. I also wanted to comment on overall churn. I think we've been going through, as we've explained, the transition from the non-focus verticals into focus verticals to major churn this year. We're expecting that number to be substantially, so about half of the volume this year, which then, of course, will make it easier for us to achieve overall ARR growth.

And Stefan has asked about U.S. business. I mean, obviously, as the part of our focused strategy where we focus our own go-to-market resources in terms of sales and marketing. That's very much EMEA focused, but this is where the Maria DB partnership helps us a lot as well and they're Silicon Valley based. They have a very large user base in the U.S. So this gives us a way of continuing to tap into U.S. market potential through the kind of multiplier effect that their visibility in the market gives us without having to invest our own resources.

So in terms of our own go-to-market and marketing resources, this allows us to continue to focus on the go-to-market activities for EMEA kind of focus verticals while leveraging a partner to also spread our products more in breadth because as Joerg pointed out, in principle, MariaDB is not a company that's focused on financial services, et cetera, only, although there is a pretty large user base in those sectors.

All right. Thank you so much. By now we have no further questions. So final reminder, ladies and gentlemen. But with this, no further questions come in. So we, therefore, come to the end of today's update call. Thank you very much for your interest. And yes, as Mr. Henrich said, we will publish the Q3 figures in the mid of November. So I hope to see you there. And from my side, have a lovely day. And yes, for the gentlemen, thank you for your time. So last sentence belongs to you.

Yes. Thank you, everybody, for joining us, and we will share further updates, as JD said, in the next, I believe, 2 to 3 weeks from now. Thank you very much.

Thank you.