SNP Schneider-Neureither & Partner Stock

Welcome to the earnings call of SNP Schneider-Neureither & Partner SE following the figures of the financial year of 2025. I would like to welcome the company's CEO, Dr. Jens Amail; and the CFO, Andreas Röderer, who will guide you through the figures in a moment, followed by a Q&A session via audio line and chat.

And with that, I hand over to you, Mr. Wiskow.

Thank you, Mara. Good morning, ladies and gentlemen, and a warm welcome to our earnings call for the financial results 2025. We are pleased to have you with us today as we walk you through SNP's performance in the last year and highlight the key developments shaping our business.

Before we move into the agenda, please allow me to share a brief note. Today's call marks our final analyst and investor call on SNP's financial results. Following the termination of the profit and loss transfer agreement and the introduction of the guaranteed dividend, capital market dynamics around SNP have changed, leading to a noticeable decline in investor participation.

Against this backdrop, we will streamline our Investor Relations activities. At the same time, SNP remains, of course, committed to transparent and reliable communication. We will continue to inform the market regularly through our financial reporting and remain available for direct dialogue.

With that said, let me introduce today's speakers: Mr. Jens Amail, our CEO, who will outline our strategic progress and key achievements of the year and share his perspective on the months ahead; and Andreas Röderer, our CFO, who will then guide you through the financial results in more detail.

Following the presentations, we will open the call for your questions.

And with that said, I will hand over to Jens. Jens, the floor is yours.

Thanks, Marcel, and hello, everybody, also from my side. Thank you for joining us on this, at least for now, last earnings call. As Marcel said, we have seen less and less participation here. Hence, it is particularly important for me to thank those of you who are actually here today and who accompanied us and supported us through the last years. And as Marcel also said, we are here for you on request as you need us also going forward.

Most of you have seen our announcement with the preliminary figures on January 21. 2025 has been another good year, another good year for our customers, for our partners, for our shareholders and for all of us at SNP. This is not a matter of course, and it would have not been possible without the relentless focus of our team on the success of our customers and partners. And also here publicly, again, a massive thank you to all my colleagues, to all our clients and to our ecosystem for their continued trust.

So let's have a look at the numbers. So first, there are no surprises versus the preliminary numbers we published on January 21. Order entry, revenue and EBIT are actually slightly better than what we indicated at the beginning of the year. Revenue went up 16%. Order entry is up 11%. The book-to-bill ratio is significantly bigger than 1, i.e., we continue to build up our backlog.

EBIT is up by 66%. The EBIT margin is now at 16%, and the EBITA margin is actually around 20%, i.e., we are almost already now a Rule of 40 company. So overall, we are very pleased with the progress we have made over the last 3 years.

The one aspect which, visually at least, doesn't look good on this chart is the cash flow. But we are actually okay with it. We had a significant one-off payment in 2024, and also our receivables went up significantly. Andreas will share further details later on this call.

So when we look at the 2025 headlines, we are happy with the top line. We are very happy with the profitability. And we are pleased that our company is in a very stable financial position. We are also very pleased that there is no strategy to execution gap. All strategic growth levers continue to contribute to our success. And finally, we remain optimistic about our future.

So here, you see the summary of our key financial figures in the format you are familiar with. You see a strong overproportional growth in our partner and in our software business, leading to a software revenue of around EUR 111 million. And this is pretty much exactly twice as much as we had 3 years ago.

And here's the familiar slide with the details of our partner business development. And for the very first time ever, our ecosystem drives more than half of our business. No surprises with regard to deal sizes. We see a strong growth particularly in the bigger deal bands, which, of course, also drives sales productivity.

We could report growth in all regions with a particularly strong performance in EMEA with 36% year-over-year growth. We remain very solid in our home market, Central Europe, and we continue to see a strong S/4 business. And the 9% growth we see here are bigger than the 8% we always aim to achieve as a baseline for our top line. But the growth in S/4 is underproportional, which shows that we are, as a company, not a one-trick pony, we have significant business development in other transformation areas as well, for example, in M&A.

Looking at the EBIT bridge. Our profitability could have been even better without the EUR 5.5 million currency hit. One-offs are a wash basically versus 2024, and we are very happy how we managed external costs. And our OpEx are developing in line with the growth of the company, so no surprises here either.

Last but not least, the outlook. In line with the overall direction we are taking as a company, we decided to simplify our guidance, while at the same time, staying consistent with our previous midterm outlook. So for 2026, we see a book-to-bill ratio bigger than 1, which means we continue to build up our backlog also this year. We see a revenue growth in the mid- to high single-digit percentage range, and we see an EBIT increase in the low double-digit percentage range.

So that's it from my side for now. Thanks again for joining the call. I'm looking forward to our discussion at the end of this meeting.

And with that, I hand it over to our CFO, Andreas Röderer.

Thank you very much, Jens. I think Jens already elaborated on a few aspects. I just want to pick some things up.

If we look at the income statement on a high level, the story is that revenue grows faster than cost, and with that we had a pretty decent EBIT development, as Jens has already outlined. Jens touched on that, the FX effects. They had been negative for us, primarily coming out of dollar developments over the last years.

Another thing I want to highlight is the operating gains did go down, the other operating gains. I think you might remember that we, last year, had this settlement approach with the community of heirs. So this is the result why these gains did go down. But everything developed as we had expected it, and so we can say that we are very pleased with the margin development, as Jens has already elaborated.

If you go to the next slide, please, Marcel. We see a growth in all segments. As Jens has elaborated already, we are especially happy about the software segment increase, which is well above our average growth rates on the revenue side. Also EXA had, after a very strong year 2024, another very good development on the revenue side. So this is also a very good development, also making progress in North American market.

If we look at the segment margins here, I think on a 12-month basis, we see a margin improvement in all segments. If you look at the services segment margin, Q4 stands a bit out. But please keep in mind, this is rather a cost allocation topic as we allocate the overhead costs based on a revenue metric. And as we have seen, software was growing overproportionally. So actually, the software segment can also absorb more costs due to a higher revenue than they had in the past.

EXA, also here, Q4 stands a bit out. It's lower than the last year. But please keep in mind, this is due to big ticket deal linearity. And overall, the 12-month trends also with EXA goes in the very right direction. So we are also happy with this development.

If we go to the backlog. There is not much more to mention than Jens has already outlined. I think we are building up our backlog. But as we will see, Marcel, if you immediately go to the next slide, we are building up the backlog, and we bring the backlog continuously into revenue. And I'm pretty proud to say that we are able to do that without a lot of noise. Now this means we help our customers to get their projects done on a very successful way, and we are very happy and very proud on that.

If you look at the project measurements, you see roughly EUR 14 million. I think I have elaborated in the other quarterly calls already that at the very beginning of this year, we did a contract transfer to a partner, which was in the best interest of the partner and the end customer. So nearly 50% of those remeasurement is to a contract transfer of noncore business. So the key message here is we have hardly any losses out of our backlog. Our backlog book is very stable.

If you go to the balance sheet structure. The most obvious development here is the reduction in cash. I think keep in mind that we have actually paid back all our external financing last year. Jens has already elaborated on the topic. We will also see it later when we look at the operating cash flow that our AR, accounts receivables, did go up. I think this is also due to the fact that our linearity, usually Q4 is a very strong, yes, so revenues did go up in Q4. And the increase in accounts receivable, this will come into the cash then actually in this year.

There is no concern with this development. We see also on the liability side, we took a shareholder loan here. This is a change here on the liability side. But overall, the most obvious thing is that equity did go up and our equity ratio has improved as well.

If we go to the next slide. Just to reiterate what Jens already touched at the very beginning of the presentation, and I also did indicate that already at the beginning of this year that last year we had a significant one-off payment from an agreement we reached with a partner. And the receivable topic, I have already touched it. So overall, our operating cash flow has developed as we planned, and it clearly shows that the company can produce a decent operating cash flow.

The investing cash flow, just to reiterate once again, we are now the owner of 100% of our EXA subsidiary. And this is where we have purchased the last outstanding 15%, but also this has been explained in previous earnings calls already.

With that, Marcel, we can go to the last slide. The headcount, no surprises here. We are still investing in our service delivery capabilities to really have 100% go-live success rate. We are very proud on that, as already mentioned.

One thing I want to highlight here. Also thanks a lot to our supporting functions, I think we have managed to grow the company when I started from roughly EUR 170 million to nearly EUR 300 million without really making significant additions on the admin side. And I think this is a great achievement and it shows that we really strive for operational process here.

With that, that's it. But before I hand over to Marcel, as Jens said, let me take a second to really say thank you to everyone in the call for your continued interest in the company.

And with that, Marcel, I hand over to you.

Thank you, Andreas. Thank you, Jens. Yes. Mara, if you could be so kind and open the line for potential questions. Thank you.

[Operator Instructions] Mr. Spang, you may unmute yourself now to ask your questions.

I already wrote it in the chat, but if you want to have it on the call, I repeat in this way as well. Let's start with the first question. It's regarding your expectation in the service business for 2026. You expected low single-digit growth. So why is the expectation for the segment so low? Do you take out revenues maybe to focus more on software? Or what is behind this expectation? Then let's do it one by one.

So we want to, of course, improve our software-to-services ratio. And a key element here next to, of course, technological advancements is that we ramp up our partner business. So every serviceman day or person day delivered by a partner is something very positive for us. We invest a lot in our partner strategy.

So it's not the aim to grow services business just for the sake of a services business, but just to enable our software platform strategy. And we make a good progress in terms of the usability of our technology, and the strategic target continues to be to scale our company through partners, which means that partners also deliver data migration services.

Okay. And then on topic of one-offs you showed in the bridge for 2025. After 9 months, we saw a negative effect of EUR 5.1 million in this slide. Now it's just minus EUR 0.1 million. So what happened in Q4?

Yes. Let me pick that up this question because it's a good one, and this is related to when certain effects have happened last year and this year. So the settlement with the community of heirs that I have mentioned has already happened last year in half year 1.

And this year in half year 1, we had actually those one-offs that we have elaborated on investments in certain process efficiency excellences, investments in replacing IT infrastructure and things like that, as mentioned in Q2. And this is actually the bigger one-off bridge effects we have seen.

And then last year, towards the end of the year, we had some receivables impairments as we have elaborated in the earlier calls. And then more or less, those effects have been netted off. And this is why there is, from a full year perspective, no real difference in one-off effects from this year to last year.

So it's a complicated story, but it's a matter of timing and when the effect has happened. And the main reason is actually that things more or less net off a bit is the community of heirs settlement gains that I have elaborated on some minutes ago.

Okay. So in the previous time or it's always a 12-month view.

No, it was in the...

[Technical Difficulty]

Unfortunately, we cannot hear you anymore.

My last question would be, sorry for that background noise, in terms of AI. So it's, let's say, the big elephant for all the software companies. What is your opinion in terms of chances and risks from AI for you?

I think we will be huge beneficiaries of the AI wave. We will have massive announcement in a few areas at Transformation World. AI will help us to even more improve time to value for our customers.

It will help us to accelerate the strategy, what I already mentioned in my answer to your first question, Lukas, that we can enable our partners even more faster to work with our technology. And at the end of the day, this will also improve our software-to-services ratio.

So we are excited about what's possible these days, and we will have some very exciting announcements at Transformation World.

Yes. Okay. And maybe a small follow-up on the first question again. I think when you have started as CEO of SNP, you had a target of 50% software revenue share. Is this still valid?

Yes.

We have not received any other risen hands or questions elsewhere, as Mr. Spang put his messages in the chat before. [Operator Instructions].

But I guess if there are no further questions anymore, we would come to the end of today's earnings call. I thank you very much for your interest in SNP Schneider-Neureither & Partner SE. A big thank you also to you, Mr. Amail and Mr. Roderer and, of course, also Mr. Wiskow, for your presentation and your time.

Should you have any further questions at a later time, please feel free to contact Investor Relations. I wish you all a successful day, and I'm going to hand over to you, Mr. Wiskow, once again for your closing remarks.

Yes. Thank you very much, Mara, for your participation. I guess these few questions underlines the decision that we will terminate these kind of calls.

This concludes today's earnings call. We appreciate your continued interest in SNP and remain available for further dialogues. Have a pleasant day, and goodbye. Bye-bye.

Ladies and gentlemen, sorry for the delay. Good day, and a warm welcome to today's earnings call of the SNP Schneider-Neureither & Partner SE. The Executive Board of SNP, CEO, Dr. Jens Amail; and CFO, Andreas Roderer, will speak in a moment and guide us through the Q3 figures of the fiscal year 2025. [Operator Instructions] We're looking forward to the results. And having said this, I hand over to SNP's Director of Investor Relations, Marcel Wiskow. Please, the stage is yours.

Yes. Thank you, Judith. Hello, everybody, ladies and gentlemen. Welcome to our Q3 earnings call. So sorry for the technical issue for the delay of, I guess, 7 minutes or 8 minutes. So we are now starting with a lot of speed. Thank you for joining us today as we share the latest development and performance highlights of our company. It's my pleasure to introduce the leadership team who will guide you through the session today. First, Jens Amail, our CEO, who will provide an overview of the strategic progress and key achievements in the third quarter. Furthermore, he will offer insights into our outlook for the coming months; accompanied by Andreas, our CFO, Andreas Roderer, who will take a deep dive into our numbers. And following their remarks, we will open the floor for your questions. We appreciate your interest and look for a lively discussion.

So now, let's begin with Jens. Jens, the floor is yours.

Thank you very much, Marcel, and hello, everybody, also from my side. Sorry for the technical hiccups. And thank you for joining us on this call here. And as always, thank you for your continued interest in SNP.

So Q3 was another good quarter for our customers, partners, employees and for our shareholders. It was a good quarter not only because we could report the best order entry, the best revenue and the best EBIT we ever had in any Q3 of our history. But for me, it was particularly a good quarter because we clearly see that we are on a good path. Our focus on the success of our customers and partners pays off. Our team is stronger than ever and our strategic and operational levers kick in, which we particularly see when we look at our Q3 EBIT. So thank you to our customers and partners. Thank you to all my colleagues worldwide. And again, thank you to everyone on this call here for your continued trust and interest in SNP. So let's have a look at the numbers.

First, there are no surprises versus the preliminary numbers we published on October 20. Order entry, revenue and EBIT are actually slightly better than what we indicated last month. Second, on the top line side, we are particularly happy with the software growth. So we show Q3 year-over-year 22% growth in software revenue. And when we look at this number versus Q3 2022, we see a 30% year-over-year growth on average.

I already mentioned the strong EBIT, and we will look at more details when we have a chance to discuss the year-over-year EBIT bridge in this deck. And we are also happy with the operating cash flow, which continues to be strong. We only see a minor year-over-year decline because we had a significant one-off payment last year from a partner in 2024 in Q3.

So when we look at the headlines of the first 9 months of the year, first, again, we are pleased with the top line. Second, the EBIT is clearly moving in the right direction with a margin of 14.3% year-to-date. And also here, when we look back to where we stood 3 years ago, we are very happy with the progress we have made. Third, we significantly improved our cash position, and Andreas will share more details on this later. Fourth, again, our strategic and operational measures kick in. And last but not least, fifth, we were able to raise our guidance for the full year 2025. We now forecast a revenue range from EUR 280 million to EUR 295 million. Previously, this was EUR 270 million to EUR 280 million, and we forecast an EBIT between EUR 34 million and EUR 46 million. Previously, this was EUR 30 million to EUR 34 million, and we maintain that the book-to-bill ratio is greater than 1.

So when we look at the figures here of the first 9 months year-to-date in the view you're already familiar with, we see that across all KPIs, we are actually ahead of the curve. So order entry growth is good in the software with 12%. Services order entry growth is even slightly stronger because of one strategic customer contract we did in Q1, and a series of change requests, but with the improvements we see in our services margin, this is not a concern from our side. We are happy that we see a strong software order entry growth with 12% year-over-year.

When we look at the last pile at the bottom right, when we look at our partner business, this is growing overproportionally. So again, a massive thank you to our partners globally for their continued trust.

When we look at the Q3 figures, here's a summary in the same format. And in the interest of time, no need to read out every single figure. But literally, in this view, all KPIs are moving in the right direction.

As always, here is another view on our partner business. Good progress on the top line and good progress how we develop the collaboration with our strategic partners in terms of enablement, co-innovation and our joint global footprint.

Looking at our business by deal bands, we don't see anything earthshattering here either. We like that we continue to see overproportional growth with deals bigger than EUR 1 million order entry. Here, we see a growth of 24% for the first 9 months year-over-year.

Order entry by region. Q3 year-to-date, we see growth in all regions, which is, of course, very positive. However, in Q3, we saw a temporary setback in North America and EMEA. This is deal related, and we don't see anything systemic. We had a fantastic third quarter in LatAm, in which we were doubling the business compared to Q3 2024. And we see year-to-date a strong growth in LatAm with 33% growth.

EBIT, here, we see that when you look at the minus EUR 1.2 million, here, we see that the increase in personnel expenses is not as significant as in the first 2 quarters of the year. The main reasons is that in Q3 last year, Trigon was already in the baseline and also that we pushed our recruiting efforts predominantly in H1 this year.

We also see good progress -- good operational progress in the management of our COGS and OpEx. So slightly positive impact here. And this results then in an EBIT increase year-over-year in Q3 of 91%.

When we look at the 9 months view, we see here a minus EUR 5.1 million in one-offs. We had some positive one-offs in 2024, some negative one-offs in 2025. And again, this leads to an overall negative impact of EUR 5.1 million. And then if you add everything up, this results in an EBIT of EUR [ 30.5 ] million Q3 year-to-date, which reflects an increase of 48%.

So last but not least from my side, to close out this section here, here is again our guidance. No need to repeat it, what I said at the beginning. So Andreas, to keep it short and to catch up some time, I would wrap it up with that we are very pleased with Q3 and the first 9 months after the record results in 2023 and 2024. So thank you again for joining the call. I'm looking forward to our discussion at the end of this meeting. And with that, Andreas, over to you.

So thank you very much. Marcel, if you could go straight to the income statement, please. So as Jens has already elaborated, I'm extremely happy with the development of our COGS and OpEx. We have been able to grow the business significantly without really increasing the COGS and OpEx portion. There have been some one-offs, but it clearly shows that all the initiatives that we are steering to improve the operational efficiencies, they really kick in. So the only real increase we had in cost is on the [ PAC ] side, and this is rather to be seen as an investment. We counter new markets, and they have been very successful. As you have seen, we had a very good progress in our strategic markets that Jens has already elaborated on. We are also building up more workforce in India. And there, we are also making good progress as we can then later see when we look at the FTEs.

So besides that, there is nothing to add on this slide. Marcel, if you go to the next slide, please.

As you can see here, there is growth in all segments. We are very happy with the development we see here, especially I want to point out EXA. They had the biggest increase here. We will also be able to have significant wins also in North America. And I think this is a very good development for us here.

So Marcel, if you go on to the next slide. Also on the margin side, we are happy with the development. As Jens has already elaborated, also our services margin are going up again. There had been a bit of a dip in Q2 because there had been some one-offs in Q2. But from an operational point of view, everything works out as planned. And besides that, there is nothing to add on this slide here.

Marcel, if we could go on to the next slide. As Jens has already elaborated, the backlog is developing as planned. We have again seen a strong growth in our strategic markets, also having a look into JAPAC. Also there, we have seen a good -- a very good development, for example, in markets like Australia as well. France is growing very good, but also there is success in Mexico as well, as Jens has elaborated, LatAm was growing extremely well. So we are very happy with the developments we see here.

If we go on to the backlog page, please. Also there, there are no surprises. Again, there is project remeasurements of roughly EUR 10 million as indicated in the earnings calls Q1 and Q2. This is primarily the result of a contract transfer from a noncore business-related activity in Q1 this year. Besides that, there are no backlog remeasurement. So our backlog is stable and backlog -- order entry, we bring into backlog, we bring into revenue as planned.

Marcel, if you go on to the balance sheet structure. So we had a very strong September. That's why receivables and contract assets have been increasing. That's why we also expect a pretty good Q4 cash flow. But besides that, I'm very happy with the cash position. We have already started to restructure our external debt. There had been some repayments already done in Q3. There are further to come. That's why you also see a bigger movement on the balance sheet positions from noncurrent liabilities to current liabilities. Besides that, there are no other major changes to be pointed out here on the balance sheet side.

If we go on to the cash flow statement, I just want to reiterate a bit on the investing cash flow. As already outlined in the last quarterly call, we have acquired 100% of EXA recently. And I think this was, if you look at the development of EXA, a very good decision. I'm also very happy with the operating cash flow. As Jens has elaborated, it's slightly below last year, but we need to make sure that we compare apples with apples and seeing also the investments that we have pointed out in Q2 just to get a bit of benchmarking on some activities we are doing in finance and in IT as well. I'm very happy with the development of the cash flow. Just looking at where we're coming from in the years 2021 and 2022, the company has not been able to generate an operating cash flow. And I think, looking at that, I'm really happy with what we have achieved over the last years.

So Marcel, if you go on to the next slide. As indicated, we do careful investments in new colleagues primarily as in the past as well on the services side and also on the sales side. Besides that, nothing too spectacular here. On the admin side, I think we see that we remain stable. So we are able to grow the business with a similar resource or FTE perspective. So this just shows that we are getting really effective. Marcel, that's it.

Thank you both for these rapid insights. We will now move to the Q&A session. I would like to hand over to Judith again, who will moderate your questions. Judith...

Thank you for your presentation gentlemen and congratulations to your dynamic growth and progress.

Ladies and gentlemen, we will now move onto the Q&A session. [Operator Instructions] And we already have the first hand up, Wolfgang Specht, you should be able to speak now.

Congrats to the results. Two questions from my end. First, on the, let's say, midterm outlook. Do you see in your footprint any, let's say, world regions or countries that are, let's say, materially lagging in regards to migration to S/4HANA? Or are there any world regions where, let's say, most of the migration work is already done?

The second one is on your, let's say, investment or capital structure. Now that leverage is somewhat back in shape and free cash flows are kicking in, can you also think of additional acquisitions that could round your portfolio?

Thank you for your questions. On your first question, we do not see any specifics, right? So I think the level of S/4 and RISE conversions corresponds with the maturity of the market. So Germany is ahead of, let's say, for example, Chile here. But I would say it correlates overall rather well with the maturity of the markets. What we do see is less regional perspective. We see a big backlog of S/4 and RISE conversions in the SME space. So we will increase our focus here a little bit on the SME space. But regionally, I would say it correlates well with the maturity of the SAP markets.

Then I go on with your second question, Mr. Specht, on the M&A side. There is -- of course, we check the market, but there is nothing concrete at this point in time. And if something becomes concrete, I'm pretty confident that we will have good conditions to finance a potential M&A. But as I said, at this point in time, there is nothing concrete.

Mr. Specht, are all your questions answered by that?

Yes.

Okay. Then we will move on to Thomas Kaiser.

Congratulations to all of you for your big improvement in the EBIT margin. We saw the first glimpse already in Q2 and the steady [ plumbing ] work is showing off now very clearly, great achievement. And to the EBIT margin in the service area, you reached 10% in the Q3. Do you see this in the future as a stable number? Or what can we expect there?

Clearly, yes, and it should also get better. We need to keep in mind that in the services segment margin, there is this cost allocation that is also done based on the revenue size at this point in time. But as you have seen, it did go up compared to Q2. And I think from an operational point of view, we are getting more and more efficient.

Great work, Andreas. After 3 years of turning every stone in the company, I think it's now the time to get a better picture of your next journey, the next 3 years. Would you please give us some more color where you expect the strongest developments in this time? And where do you stand and go with your co-development in the software area? And what impact can we expect on the revenue side from this?

Thomas, this is Jens here. First, thanks for the positive feedback. What do you mean with co-developments?

In the beginning of the year, you said you're starting co-developments with the partners.

Yes. So we collaborate, as indicated, with some of our strategic partners, particularly in the public cloud space. We believe, for the next years, for the next 3 years for sure, and that's the time horizon you have mentioned, the private cloud space will be the bigger revenue driver for us still. Nothing to add to what I said in terms of the next steps in the strategy transformation world. So we expanded our reach, so to say, our scope with Kyano that we are now also including non-SAP to SAP migrations in our portfolio with Kyano Crossway. And also as indicated as transformation world, 80% of the enterprise data are unstructured. So strategically, we will also look at migrating unstructured data into SAP and here specifically into the business data cloud.

Do you get any tailwind from the AI area, from the trend?

Yes. I mean the key requirement -- when we now speak for SAP customers, the key requirement to realize the benefits of AI is, of course, to be on RISE. And here, we help. So there's a strong demand in the market to move to RISE as quickly as possible to improve time to value and innovation consumption. And of course, this is an area where we help a lot. So we continue to see a very positive momentum and a strong tailwind in the market. And then again, talking about AI, when we look at next generation of data migration with unstructured data, of course, this is then predominantly AI driven.

Okay. But will you develop or do some business around delivering varied numbers and, what should I say...

[Foreign Language]

[Foreign Language]

So the question is garbage in, garbage out, right? So the key success factor for AI is, of course, that you have a very clean and complete data foundation. And here, the data foundation of choice in the SAP environment is that customers are fully migrated to RISE and to the Business Data Cloud. And here we help. So it's indirect, right? So we also have some legacy products. We also feed other data lakes and other data products. But the key business driver for us is the SAP strategy to offer AI benefits in a RISE and in a B2C environment.

Last question. You reached the certification from SAP for your Kyano Outboard solution at last. We didn't hear much about that solution. What is the current situation and your hopes to get this solution broader to your customers and partners base sold and used?

So this is actually operationally, for us, a very strong up and cross-sell potential. When you also think back, Thomas, to transformation world, so we have basically 3 categories in our portfolio. We have Kyano move our entire data migration portfolio with CrystalBridge and Crossway. We have a very thin foundational layer, and then we have Kyano Manage. And this is predominantly Fridge and Outboard. Outboard is our archiving solution. And here, we indeed see a potential to much more strongly cross-sell this area of our portfolio together with a remove deal. Because when you do selective data migration, you always have to ask yourself, what do I do with the remaining data? Sometimes there are regulatory requirements. You don't want to move everything to RISE because it's also getting rather expensive then operationally. So we do see here a nice cross and upsell potential.

Good luck for Q4.

Thanks, Thomas, for the positive recognition as well.

And we will move on to our, for now, last hand up, Lukas Spang. [Operator Instructions]

Also congrats from my side to this number.

As you know, we, as an investor, have to find the hair in the soup. And I saw and you showed it in your presentation that the revenue growth in the service segment or the professional services segment and also the order entry in this segment in Q3 came down very strongly and order entry was flat versus last year in Q3. So how do you see this development? What was behind this development? And how do you see the professional services going forward into Q4 and Q1?

So for us, the most important KPI is the growth of software, right? And here, we are happy with the 12% order entry growth, and we are happy with the 18% year-over-year revenue growth on the software side. So that's a little bit stronger than what we initially gave as an outlook to the market. Now we see, on the order entry side, an equally strong growth in the services business. That's based on a one-off large strategic agreement we have with a co-innovation customer where we booked a multiyear order entry in Q1 this year. So this was a significant deal, 8 digits. So this has a strong impact on our Q3 year-to-date order entry on the services side.

And second, we see a lot of change requests from clients. Both is a positive. We improved operationally our services margin by 3 percentage points. So this is contributing to our EBIT. But you're right, the more important KPI for us is the growth on the software side. And here, we are ahead of the curve, and that's all we're interested in.

Then on EXA, development -- developing really fantastic in terms of growth and also in terms of margin. Order entry was also very strong again. Do you see this trend to be continued? And also in terms of the margin, do you see this as a sustainable level going forward?

So if we look back -- that's Andreas speaking. If we look back on the EXA, there is always a very -- they usually have bigger tickets with chemical and pharmaceutical customers. And as we have seen over the last quarters, it's a bit challenging to predict when exactly such a sales cycle comes to an end. But what we can see is an increasing demand in the solutions from EXA. That's -- I cannot predict it on a -- it will now go on a linearity point of view. But the solutions, there is a demand for the solutions, and we are getting better traction in the market. But it's difficult to predict from a linearity perspective.

Okay. But on the margin side, do you think you can hold this margin? Or do you think there could be some pricing pressure?

At this point in time, there are no indication that things should look significantly different. But of course, there is -- when you get such bigger project, we need to also deliver such bigger projects. And this is something we see on the way how fast we can ramp up resources here.

Yes. Okay. And then looking into next year, I know you will not give today an outlook for 2026, but just from a qualitative perspective, book-to-bill is still well above 1. And so that is signaling further growth into next year. Where do you see areas to further invest going into next year?

So as I indicated, right, we invest, Lukas, in our strategic focus areas and no need to repeat it. And we continue to invest in globalization. So there's still a handful of very mature SAP markets where we don't have a presence there, where we don't have legal entities. So these are the 2 key areas of investment. Number one, innovation in the areas I mentioned here briefly at transformation world, and number two, in our globalization.

Okay. So personnel expenses, which were rather low in Q3 should go up again more strongly going forward?

No, no. I mean, not more strongly or less strong. We don't -- I mean we've been investing in new markets this year as well. So where we will not see a lot of investments are in supporting functions, as Andreas indicated. But we need to invest in -- as we did this year, we need to invest in service colleagues. We need to invest in sales colleagues, not so -- and in development, of course, not so much in supporting functions. So here, we hope then that we can realize, of course, some economies of scale.

And in the meantime, we have received no further questions. We, therefore, come to the end of today's earnings call. Ladies and gentlemen, thank you for your flexibility to join this call via Zoom with a few minutes of delay. We apologize for the technical difficulties at Airtime, and we are already working behind the scenes to provide you with the best user experiences. Thank you, everyone, for joining and your shown interest in the SNP Schneider-Neureither & Partner SE. Should further questions arise at a later time, please feel free to contact Mr. Wiskow from Investor Relations. You can also find the presentation and the recording afterwards on Airtime. A big thank you also to you, Dr. Amail and Mr. Roderer for the dive into the numbers and the time you took to answer the questions. Thank you for your focus and your patience. I wish you all the best and a lovely remaining autumn day. With this, I hand over to you, Marcel, for some final remarks.

Yes. Thank you, Judith. I guess there's nothing much to add on from my side as well. Sorry for the delay at the beginning of this meeting. We had a few technical hiccups. As mentioned, if you have any questions, please contact me. And so have a great day, and thank you once again for the participation on this call. Bye-bye.