adesso Stock

First of all, I'd like to thank you for joining our Q4 and Full Year Earnings Call regarding our Annual Report we have published today. Within our release this morning, you found adesso confirming the preliminary full year 2025 figures published in February. Adesso showed another year of extraordinary growth.

Sales reached EUR 1.47 billion and was up by 14% purely organic. EBITDA of EUR 123.6 million rose by 30% and reached the upper end of the guided range. So targets were fully met. Outlook for 2026 sees further growth in sales and earnings for the company, although macroeconomic situation remains challenging.

I'd now like to welcome as well our CFO, Michael Knopp, who will give us a deeper insight into the last year's figures, the dividend proposal and the guidance for the current year. [Operator Instructions]. Thank you so far. And Michael, please go ahead.

Thank you, Martin. Good morning, everybody. I will guide you now through our annual financials for 2025. And before I start, I need to highlight that we have restated our figures for 2024. I will explain this later to you. As always, we start with our sales. Sales last year came in with EUR 1.466 billion. That's an increase of [ 40% ] compared with our previous year, EUR 1.286 billion.

We are very, very satisfied with these figures. I mean this is a very strong growth, purely organic within a tough market environment. And if we a little bit look back at the beginning of the year, at our expectations, 2023, 2024, Germany was in a recession, and Germany is our most important market.

We generate 84% of our revenues in Germany. And therefore, the economic situation in Germany is pretty important to us. We expected for 2025 a little improvement, again, a slight growth of our gross domestic product. We knew there's the German election, which might have an impact on our revenues in the public services sector because there's always a slowdown before the election and also after the election until the new government, the new coalition is formed.

At the beginning of Q2, we became a little bit more optimistic because we hope to get a little bit a tailwind from the 2 additional budgets, which were approved at that time regarding the infrastructure and armed forces. However, during Q3 and Q4, they turned out that there are no impacts visible so far.

And therefore, it was just what we initially expected, tough market environment, but in general, a market which will support our business in the IT services. Let's have a look at our headcount. Headcount, the average figure of FTE grew by 8%. That's a little bit less what you might have seen in previous years, but that's also what we targeted for to be a little bit more cautious in adding headcount. At the end of 2025 on the 31st of December, we employed 11,298 headcounts. This is an increase of 978 compared to 10,320 at the end of 2024.

If we look at this growth, roundabout [ 60% ] of the new headcount was added in Germany, roundabout [ 40% ] abroad. And around this 390 employees, roundabout 300 were added in those countries where we do shoring in Romania, Bulgaria and especially in India. In India, we increased our headcount from around about 100 at the beginning of the year to 300 employees at the end of 2025.

That was an important goal for us to grow our activities in India, and we were pretty successful in doing that. Let's have a look at the sales split. And this slide, I think, shows you that we have very -- that we have a very diversified business, which is especially in these days, very important because it shows that adesso in terms of revenue has a very resilient business.

If we look at our different sectors, none of our sectors contributed more than 20% if we look at our top 10 customers, they contributed 22% of our revenues and our -- in terms of revenue, most important customer contributed 3.2%.

So we are not dependent on a single sector, on a single customer. This is a very nice status. And actually, if you look at the different sectors, it explains a little bit why we were able to grow our revenues by 40% because we are very strong in insurance, banking, health, public and also utilities.

I mean, yes, all these sectors also are dependent on the development of our economy, but they are probably a little bit less impacted by all these tariff hiccups by volatile energy prices. And therefore, that's a good positioning. Insurance was pretty strong last year in sales, but also in order entry. We have seen very strong order entry, especially in Q4.

Banking, a nice development as well, plus 9%. Health, again, plus 30%, driven by our bread and butter business, but also by one big project win in Q2 in the statutory health sector where we won with one of these companies, the building of a customer portal, public, I was complaining a few minutes ago about the missing tailwind from the government. However, despite that, we were able to grow it by 11%. We hoped to grow more, but I think 11% is a very strong figure.

Automotive, minus 4% tough market environment and only a decrease by 4%. That's okay for us as well. Manufacturing, nice growth of 8%. And if we look at utilities, 24%. This was again driven by our strong foothold in this business in the SAP area there.

Let's have a look at the sales split by regions. Our overall growth last year, 14%. In Germany, we even grow 15%. And it shows again, Germany is our main market. We are very strong there. Actually, last year, we became the #1 IT service provider with a purely German origin.

There are 3 other companies, Accenture, Capgemini, IBM, who have higher revenues in Germany, but they are not German origin. So we are the biggest German company now in this area. And if we look at our sales development abroad, it's plus 7%. On the first view, this is disappointing. But if you dig a little bit more in detail into this, you notice that Switzerland has shown a decrease of 3%. Switzerland contributes a little bit more than 50% to our revenues abroad of roughly EUR 240 million. If you exclude Switzerland, growth rate abroad was 21%, which is fine for us.

We have seen strong growth and also a very profitable business in Austria, same in Italy, Netherlands, also a nice growth rate. And coming back to Switzerland, we started with minus 7% at the beginning of the year. We recovered to minus 3% for the whole year. So it's already a nice turnaround during the year.

We have seen strong order entry in Switzerland in Q4, but also now in Q1. So we will return to the growth path this year. And also important to mention, to avoid any misunderstanding, Switzerland is highly profitable. Let's have a look at our EBITDA or operating earnings.

EBITDA came in with EUR 123.6 million. That's an increase of 30% compared to EUR 94.8 million. And if we look at the main contributors, #1 contributor is the capacity utilization. As hoped and expected, it was improved, especially in the first 4 to 5 months, it was significantly higher than what we have seen in 2024. For the remainder of the year, it was slightly better. But overall, we are satisfied with this development.

We have improved our capacity utilization. As expected, we have seen a recovery in our IT Solutions business with the main contributor our insurance business with the Afida and adesso insurance solutions. This was supported by nice license sales in Q2 and Q4, where we achieved a single -- high single-digit million number in terms of revenue.

That's what we, let's say, forecasted, what might be possible. And finally, we got it was waiting until mid of December to get it in, but we got the orders. So we are very happy with that. If you compare 2024, 2025, important to mention that in Q1 2024, we got EUR 2.6 million earnings from the reversal of a warranty accrual as a result of a tax audit. And we have also a disproportional increase of material costs. We will look at this in a few seconds when we look at the development of our gross profit. So some other KPIs. Let's start with the EBITDA margin. We targeted for an improvement there, 8% plus something. Finally, we arrived at 8.4%, which is what we wanted to achieve last year.

It's a nice improvement compared to 2024 and 2023, but -- and that's also important to highlight, it's not where we want to be. We are targeting having EBITDA margin in a range between 11% and 13%. So we have done some steps, but some important part of steps have to be done in the future. 11% to 13% is possible.

We have shown out it in the past, and we will work hard to get back to this level. If we look at EBIT, EBIT margin last year was 3.4% compared to 2.1% in 2024. Yes, key figures. We already have talked about the employee growth and our sales. Let's have a look at gross profit.

Gross profit came in with a plus 12% compared to plus 14% in sales. That's because material costs have increased. There are several reasons for that. One reason is we have one more bigger project where you work with third-party suppliers. We are quite often within a consortium where we are the general contractor. Therefore, the cost go through our books. And we also have other third-party supplies, for example, cloud consumption or licenses, which also increased our material cost.

If we look at our personnel costs, plus 11%, driven, first of all, by employee growth. In average, employees were 8% higher than compared to 2024. We have also the impact of salary growth from increasing salaries in line with inflation and then a little bit of change of mix of our headcount.

We hired, especially in Germany, a little bit more senior people. On the other hand, we have also added people abroad in these countries where we do shoring. So we have a little bit changed the mix also of our salary composition. Other operating expenses, plus 8%, nothing special in there. Most of these lines have increased slightly.

So let's have a look at the key profit drivers. Utilization, we have already spoken about that. Daily rates. Daily rates are also important for us. We have started an initiative at the end of 2024, beginning of 2025 to work on our daily rates. We have some -- seen some nice improvements in the first half of the year. In the second half of the year, the development was more flat.

It was -- the macroeconomic environment is tough. So it was difficult to convince customers to agree to higher daily rates. Sometimes we were successful with that, but also sometimes customers negotiated a little bit lower prices. So at the end of the day, daily rates are slightly higher than in 2024.

License sales, I already mentioned the nice license sales with adesso insurance solutions in total, EUR 13.5 million compared to EUR 3 million in 2024, so a very nice improvement. Maintenance revenue also increased. And what's also important, the level of Software-as-a-Service revenues is increasing from roundabout EUR 1 million in 2024 to EUR 3.9 million in 2025.

Yes, personnel costs, I explained this already per FTE increasing slightly. Now we will come to our restatement. Preparing our annual closing, we noticed that we needed to reclassify to fixed price projects because actually, what we are doing there, building a Software-as-a-Service platform for our customers, which means we will run certain things for them on this platform, but we are the owner of the platform, not the customers.

And therefore, we needed to reclassify that. If you have a fixed price project under IFRS, you have a percentage of completion method. You have some progress in the project, then you show additional revenues and hopefully additional margins. But as we now have been identified, these are not fixed price projects.

Instead, we are building intangible assets. We have to account the development costs and development costs, the accounting without any margin. So what's the impact on that? The impact is that in 2024, revenues had to be decreased by EUR 11 million. And as the margin disappeared, EBITDA was reduced by EUR 3.6 million.

Under German law, German accounting standards, intangible assets built by yourself cannot be put on the balance sheet. Therefore, it's an expense. And this increases, let's say, the loss. So you have more net operating -- net losses carried forward. And if you cannot put them on your balance sheet as a deferred tax asset, then the tax expenses increase.

And so the consolidated earnings had a hit of EUR 6.1 million in 2024. What are the impacts on our balance sheet, an increase of intangible assets, a decrease of our equity. And if we look at cash flow and cash flow does not have any impact. It's just a reclassification. Operating cash flow, there's an increase of EUR 7.5 million investing cash flow as we now invest in intangible assets, there's an increase there, cash out of EUR 7.5 million.

Everything is explained on Page 82 and our annual report. There is also some impact in the years of 2022, 2023. But this is everything included already in the figures starting on the 1st of January 2024.

Now let's have a look at our earnings per share. Earnings per share came in with EUR 3.83, which is a nice improvement to the previous years. If we look at some other items on our P&L, depreciation increased slightly. This is mainly driven by the right-of-use assets under IFRS lease contracts for our offices and as well as company cars are put on the balance sheet as an asset, and therefore, you have depreciation from that, that's included in there.

So if you look at the EUR 65.9 million, EUR 42.2 million from this right-of-use assets, EUR 7.1 million is depreciation of related to purchase price allocation from acquisitions we have done in the past. This figure will decrease over time until we do another M&A project. Income from investments, that's what we show at equity result and financial result is the interest rates were a little bit lower.

So therefore, there was a positive impact on that. On the other hand, the loans we needed during the year so a little bit higher. So this was a negative impact. But overall, there are little savings in to the line interest. Earnings before tax, EUR 36.4 million. Income taxes, EUR 18.9 million. So tax rate is 52% compared with 69% in the previous year. Normally, you would expect to see as a German company, a rate of roundabout 33% in this line. However, our tax rate is a little bit higher as certain items are not tax deductible.

And for example, based on the local trade tax, certain interest payments are not tax deductible. And you also have a negative impact if you have net operating losses carry forward and you cannot put them as an asset on your balance sheet. So there are 2 reasons for that, high tax rate.

Let's look at our net working capital and some other items on our balance sheet. Net working capital increased by 28% to EUR 199 million. This development actually is a little bit disappointing for us. We have targeted a different figure there. If your revenues increased by 14%, the increase in this line should be 14%, at least [ 40% ] as well.

We see an increase of 28%. So we needed EUR 20 million more in financial debt than what you normally would expect. That explains a little bit the development in the line financial debt and net debt. Cash is almost at the same. Goodwill is the same. And equity, I already explained this a little bit on the previous slide. Equity was a little bit reduced in 2024 due to the restatement.

However, we recovered that, and we are now back again at a level of slightly above EUR 190 million equity. Equity ratio is 22.7%. If we look at 2 KPIs, return on net working capital, there you put the EBIT and the net working capital into a relation. It's 25.4% compared to 17.5% in the previous year. Return on equity, it's the income, the net income in relation to the equity, it's 9.1% compared to 2.3% in 2024.

Cash development. Here, you can see the negative impact of our higher net working capital. Operating cash flow reduced to EUR 85.6 million. Then we have CapEx and also lease repayment as pointed out under IFRS 16. This payments for offices and company cars are treated as an asset. Therefore, it's shown under the interpretation according to the IFRS foundation in the cash flow statement in the line invest. And therefore, free cash flow is EUR 1.5 million in the end. Dividend, we -- in the last 13 years, we have always increased our dividend slightly. So therefore, the dividend proposal this year is EUR 0.78. This is in line with the improvement of our consolidated earnings, the development of our earnings per share.

And if you look at the total amount, it's EUR 5 million compared to EUR 4.8 million last year. Now let's have a look at our guidance. The market demand in general for IT services, IT solutions will continue to be good. Despite the weak macroeconomic environment, we will -- it is expected to see a positive development of our gross domestic product in Germany. And this is important because that's our main market.

However, there might be a negative impact due to the war in Middle East. It's very difficult to predict what the impact will be. The only thing which I think -- which is for sure, it will not be a positive one. We will see -- we already see increasing energy prices, fertilizer prices, shortages of certain products like helium.

So it's very difficult to say what the impact will be at the time we have prepared our guidance. This was not a topic at all. However, it's still expected that the German gross domestic product will grow. And therefore, at the moment, we think we can cope with that. I think what's very important is that the market development in general. And there has been a tremendous shift in the last few months.

Last year in Q4 at our last roadshow, we also talked about AI, and I explained that there is an impact, but it's difficult to foresee. We now believe the situation has changed in the last few months. We believe there is a good chance for a nice push on our business. I'll just give you one example, agent-based application modernization.

What does it mean? There are a lot of companies out there with old, big want to reach architecture legacy systems, difficult to adapt to new needs. In the past, it was difficult to get these things changed and maybe rebuild with a new architecture, but that's something which is now possible because AI provides now tools since the beginning of the year, which are that mature that you can work with that within these big projects. And adesso was very, very well positioned within this environment. I mean, since our -- the inception of the company in the late '90s, developing these systems, these solutions, it's core of our business.

We are very good in software engineering. We have all skills which are needed. We have the domain knowledge. We built a lot of these systems in the past. And we have the domain knowledge. We know what the customer needs, what he needs for his business. And we have experience with the usage of AI because we are working with that since 6 years.

So we have all the ingredients to which are needed for customer projects. And these customer projects, you can analyze certain things today with AI, you can decide do you want to retain the old platform or better pass. Maybe we will rehost it, so you make -- maybe lift and shift to the cloud. You will rearchitecture this, rebuild this.

So there are so many options, and this will be a huge market despite the general win in efficiency. We will -- we expect for 2025 stabilized utilization, so no further significant improvement there. We have still a continued reduced in hiring speed, which means bringing less people on board. We work on improved profitability and expect improved profitability, and this is supported by 2 additional working days in the second half of this year in Germany.

It's also worth to mention, we had a slow start to the year this year. Competition is very tough at the moment. However, since March, everything is on track. And therefore, we are very happy with our guidance at the moment. We expect to grow our revenues to a range between EUR 1.6 billion and EUR 1.7 billion, which is an increase of 9% up to [ 60% ] and our EBITDA to a range of EUR 130 million to EUR 150 million.

EBIT margin, we expect only a little improvement there in 2026, but we are working on that. Okay. That's all for the moment.

Thank you, Michael. That was very helpful, I think. We are now heading for the Q&A session. [Operator Instructions] And I see we have the first question from.

Probably. Can you hear me?

Yes, I think.

I'll start with 3 questions before going back into the queue. First, on working capital and cash collection, definitely not a bright spot in the 2025 filings. Michael, could you give us some idea how -- what measures you put in place to improve that during 2026? That would be my first question.

And then on IT Solutions, we still got a negative contribution here. Could you expect that we see a positive EBITDA in this segment in 2026? Or is there still a lot of restructuring work to be done before this segment turns positive?

And then probably on the order book or order intake, you only give a, let's say, qualitative statement here. But can you share some information? Is the order book up year-on-year, reflecting your sales growth ambitions? Or do you still need a lot of new projects to come in? And are there already tendering processes from the public sector that are visible for you?

Okay. Let's start with the first question regarding net working capital. Actually, that's a development which started somewhere in Q3 and accelerated a little bit in Q4. That development was pretty unfavorable. We have seen an increase -- a disproportionate increase in lines, accounts receivable and contract assets.

We have -- which -- I mean, at the end of the year, it's something which sometimes can happen. However, it turned out that this is also a little bit of structural problem because we have seen that certain customers pay a little bit later, which does not mean that we have now a lot of overdue receivables. That's definitely not the case.

But within this range, a customer is normally pays, we see a little shift to pay at the some days later. Currently, we are analyzing if this is just something which happens by accidentally in December or if this is a new structure, we will face also in the future. But it's a little bit too easy to say.

But this actually caused, we have calculated that an impact this EUR 20 million impact, which is really not lies. If we look at IT Solutions, we have made some progress there. We also had one company in 2025, which was a little bit of a burden but this company in [indiscernible]

which is our influencer business.

It was restructured also as a new Managing Director now is on a good way. So from there, we will get no headwind. As pointed out in the past, this is a long way of turnaround. For 2026, we don't expect to see a positive EBITDA contribution, but hopefully, a further improvement. This is also a little bit depending on license sales. We have seen a very nice impact in 2025. And therefore, hopefully, we will see some license sales in 2026 again.

Regarding order intake, if we look at our order intake in 2025, it has shown the growth rate, which is needed to support the assumption that we grow our business also in the future. Actually, this was also part why we have guided in this way. However, you always need order intake starting Q2, Q3, Q4 to achieve your revenues because certain order intake from the last year was already revenue last year.

And some of the orders, for example, we got one very significant order in the insurance business. This is an order entry, which will show up in revenues for the next few years. So we need additional order entry. But so far, everything is on track this year. And therefore, we are at the moment happy with our tiny business.

The next question comes from [ Mr. Ziring ] Michchmeyer Petersen Capital Markets, respectively, Warburg Research.

Great. I would have 3 at this stage. The first one is on daily rates. So maybe you could talk about your expectation for daily rate growth in 2026. Do you think that you can regain the 2% minimum target? And also on daily rates, we saw a 2% decline in fixed price daily rates. Is it rather a mix effect? So do you see more Smart shore hours in the projects? Or is it really price pressure that you see here? So that would be on the fixed rates.

And then the second one would be again on free cash flow and on cash conversion. Maybe you could talk about your expected peak investment level for the SaaS platforms and also the capitalized development costs that we have seen, maybe also here to quantify how much relates to the insurer versus other platforms, that would be very helpful. And then the last one is on the restatement. So thank you very much for the explanations. Maybe some more detail if you're able to provide it would be helpful.

Can you quantify the P&L impact on the 2025 EBITDA? And also if on the 2026 EBITDA, if this is on a like-for-like basis or if we have to expect any further reclassification that would be helpful.

Let's start with the daily rates. As actually expected, we have -- we were able to increase our daily rates in January and February because that's quite often, if you negotiate with the customer, the customer doesn't agree to change the increase the daily rate immediately.

Quite often, you agree that, yes, we can do that, but let's start on the 1st of January. So we have seen an increase in January. The question for the future is, are we able to see further increases despite the tough market environment and some price pressures. So far, everything is on track and as we have budgeted for that. But at the moment, it's really, really difficult to get higher daily rates because there's a lot of price pressure there. If you, for example, look at all the consulting companies in the automotive sector and they had in the past, they have a lot of consulting companies there providing services.

They are now looking for different work in other sectors, and this creates this pressure. Fixed price project -- fixed price project in general calculation is always a little bit complex. But you are right with your assumption that as we have roundabout 1,000 people in the shoring area in Turkey, in Bulgaria, Romania and also India that this has, let's say, also an impact on the daily rates that they are slightly reduced, which does not mean that our margins are reduced.

It's just a different level. But it's necessary to be price competitive because all the big IT companies, our competitors are able to like Accenture or Sopra Steria, Capgemini, they have lots of people in India. And so we need to compete with them. And -- but it does not mean lower daily rates does not necessarily mean if you look at shoring that you have lower margins. If you look at fixed price projects, despite the rates at fixed price projects are lower, there are different reasons for that.

One can be that [ example ] last year, there was one significant contributor to that. We have one fixed price project, and we knew already initially that we will accept here lower margins because it was strategic for us, and that's important. So you have lower margins and lower daily rates can also be impacted if you have an overspend project. So there are different reasons.

It's difficult to explain in detail and to say that's the only reason because it's a mix of all. If we look at cash conversion, I mean, yes, we are working on that to improve this back to the level we have seen in 2024. The invest in platforms in terms of cash, that's something we have done in 2024, 2023 as well.

It's just a different way how it showed in the cash flow statement, but it was -- it's still the cash out there has nothing been changed in terms of the reclassification. If we look what have we invested in these platforms at all, it's currently EUR 53 million and EUR 39 million is related to those 2 platforms in the insurance sector.

Actually, we have one platform which was reclassified. It was lot of property and casualty insurance. So let's say, all insurances, which are not health and life insurance. And we have also one platform for the insurance business, a so-called runoff platform. There's also a press release from 2022. And on this platform, which is still in the building status, we have already 400,000 customer contracts.

And these platforms will, in the future, create Software-as-a-Service revenues. And this will increase this year month by month because the more contracts you have on these platforms, the more revenues you will get. And yes, we don't have -- maybe something I need to mention there. At the moment, there is no other platform these 3 platforms described in the annual report, there's also one platform in the automotive sector, which we have since quite a long time there. And we also -- we don't expect any further restatement. I mean if we would know about the restatement, we would already have done it.

Great. One quick follow-up, if you allow. Can you quantify the P&L impact of the -- on EBITDA in 2025? So the development cost that previously was running through the P&L that is now capitalized. Do you have a number there?

Actually, it was in it's not in the way that you -- in previous years, you have seen it in the P&L and now it's capitalized. If you have a fixed price project, only it goes through the P&L, but it's not a whole difference. It's just the margin. So if you look at 2024, the impact because we are not allowed to show the margin anymore, it was last year in 2024, EUR 3.6 million, the overall impact on margins. And we have not measured this what it would have been doing it in the same way than originally in 2024. But I suppose it's probably a similar impact.

Thank you for these questions. And we have another one from Lukas Spang from Tigris Capital. Mr. Spang, can you hear us? Maybe the question was already answered. So do we have further questions at this point in time? Yes, we have one from Sebastian.

Can you hear me? Sebastian from HC Capital. One question you mentioned AI as a positive factor going forward due to new projects that can be conducted. But basically, the market sees AI more as a threat for IT service companies, at least from what we see from the share price reactions due to the fact that software development cost goes down and everything.

How do you see that midterm? And what could be negative impact from AI? So is the [ cake ] getting smaller because the productivity goes up and when you're getting charged by time and materials, so they can do more at the same time. And maybe you can give us more light on that?

Yes, that's actually a pretty difficult question because you are totally right. I mean, I described the chances what we see for this year. However, there's sure there's also a threat because the way how we work will change. Productivity will increase significantly because these tools are used. This might have impact on the project structure because projects might be done in a faster way, maybe also calculated and built in a different way because it's not time and material purely time and material anymore.

To be honest, it's very difficult to predict how it will be in the future. We spent a lot of thoughts actually on that. So we see big opportunities, big chances because we will be able to do projects which were impossible to do, at least if you to do them in a way that customer can pay for that with a reasonable budget. That's what I explained.

But if we move too slowly and don't adapt to the changing environment, then it's also a risk. And by the way, also the way how we work internally changes, the way how we do proposals, how we prepare ourselves for customer presentations, my departments in finance, controlling or also HR, everything will change how we do things because we use AI tools, we will get more efficient to say.

I believe that what we -- at the moment, what we read from all the analysts about the risk for software and IT solutions companies. Yes, yes, these risks are there, but I also believe it's too much exaggerated. They are all because the chances are disregarded.

I mean it's clear they want to raise a lot of money, so they have to sell something. But if you mentioned actually in the call that you're hiring more senior people. Is that the first effects of AI that you don't need so many juniors to help the seniors to generate revenues and they get more support from AI solutions? Is that already the first.

I mean, in theory, this probably might happen as something which is not only linked to the IT services business. You probably read some of our statements to law firms and so on. But I think that's something which is a very dangerous approach because if we just look at certain work, which more junior people have done and say AI can do it, then how we become these people more senior and can do the work in the future.

So currently, we have still our working students. And yes, we are maybe a little bit more carefully and -- but we will not change that because that's our future without young people and working students hiring now, people are missing, which get the experience to run the AI tools in the future.

And we have another try with Mr. Spang. Seems to be a technical problem. So then Mr. Specht, again.

Yes. One additional one from my end. If I read the outlook in your full year report, there are some sentences on M&A ambitions. And it rather sounds there are limited ambitions to go for at least larger scale M&A. Is this a right interpretation?

Yes.

Do you currently prefer organic growth? Or do you simply do not want to burden the organization with another, let's say, inclusion story or implementation work?

I mean we are currently growing last year with a growth rate of 14%. This year, we expect to grow between 9% and 16%. This is a very high growth rate. And therefore, we don't need that from the impact from M&A. And if you look at our EBITDA, EBITDA margin, EBIT margin, there's enough homework to do to also become more profitable to cope with the challenges we have just spoken about that of AI.

And therefore, we believe it's well spent if we put all our management capacity, all our efforts into the existing business and grow this business organically. So no M&A on the agenda at the moment.

Mr. Freedman. Mr. Freedman.

Can you hear me now?

Yes. I can hear you.

On this restatement topic also from my side, if I read through the balance sheet, I find that there have been EUR 25 million of additions to R&D assets where there were only EUR 2.5 million in amortization for that. Now this can be a one-off. -- question is, looking forward, is the run rate of EUR 25 million additions for these platforms, is that a good assumption? Or is it much less? And when is the amortization going to pick up?

Actually, it should decrease over time because the platforms are finalized. For example, the platform for the automotive industry there the development is flat. If you look at the value of the balance sheet. We have this platform for the runoff platform for the insurance industry.

There, we have gone live with some contracts having done, I think, 3 migrations so far, others will follow. And therefore, this -- the rate of adding something will reduce. If you look at the amortization of these platforms, this will start when these platforms are, let's say, finished. So far, they are in the status that they are still built. So also the amortization will increase in the future.

And are we going to see restatements in the quarterly results in 2026? So you restate the first.

Right. We will restate the '25 figures in terms of revenue and EBITDA, but this is more the way how it is shown within the quarters. The total do not change because everything for 2025 is in line and actually, these are very minor changes.

So with another try with Mr. Spang, I hope his technical problem is fixed. Mr. Spang, where you can put your questions to the chat. I will read them out loud. No, unfortunately, we can hear you. So do we have more questions? This does not seem to be the case. So Mr. Spang, can you give an update on federal spending?

Yes. Actually, we -- I think the answer I missed. -- we see more public tenders now in the first quarter this year. So the activity which we were already expecting in Q3 and Q4 is happening now. So more public tenders, more public spending. Therefore, it seems to start. However, it's fair to assume that it's probably a little bit less than what we initially expected in Q2 last year. But the impact is now visible. Yes.

There is another question from Mr. Spang, you mentioned higher margin targets for the future, but margin is still muted for 2026 despite 2 more working days. What must happen to achieve the 11% to 13% midterm?

Yes. It's -- I also pointed out that we don't expect an improvement at the utilization. That's one of the reasons. We need to improve our -- we need to see further progress in our capacity utilization. The turnaround further steps of the turnaround in our solutions sector is important, hopefully, some higher daily rates.

That -- these are probably the 3 key ingredients and all of them, we see some improvements there in some of them, but especially daily rates and capacity utilization development is more or less flat, and that's important that we are able to change that.

So it's not much time left, but IT Solutions, you mentioned that 2026 will be still negative. What can we expect when this business will achieve black numbers on EBITDA level?

Yes. Our initial target there that we started to turnaround was to see in 2027 kind of a breakeven, and that's still the agenda.

Okay. Thank you. Hopefully, all your questions are answered. Thank you very much for your interest in our call today and your participation. I wish you all the best, and I hope to see you soon in person again. For now, goodbye.

Bye-bye.

Good morning, everybody. This is Martin Mollmann of adesso IR speaking. First of all, I'd like you to thank you for joining our Q3 and 9 months earnings call regarding our quarterly statement we have published today.

Within our release this morning, you read that adesso continued its organic growth path with 13% increase in sales comparing the third quarter as well as the 9-month figures. Hence, sales went up to more than EUR 1.1 billion after 9 months. Operating profit improved even more strongly, rising by 17% to EUR 77.9 million. Thereof, the third quarter of 2025 alone contributed EUR 40.8 million in EBITDA, underlining the guided stronger earnings contribution in the second half of the year. Outlook remains largely positive. So adesso sees itself on track to meet the full year guidance.

I'd now like to welcome as well our CFO, Michael Knop, who will give us a deeper insight into the figures of the first 9 months and the outlook for the remainder of the current year. [Operator Instructions]

Thank you. And Michael, please go ahead.

Thank you, Martin. Good morning and also from my side. And yes, as always, let's start with a look at our -- Okay. Now it works. As always, let's start with a look at our revenues.

After 9 months, we have achieved revenues of EUR 1.84 billion, which is an increase of 13%. If we look a little bit more in detail into that, we started with EUR 353 million and a growth rate of 11% in Q1, EUR 356 million, a growth rate of 13% in Q2 and now EUR 375 million growth rate, again, 13%. So growth during the year is a little bit accelerating. And Q3, EUR 375 million is our highest revenue per quarter ever.

We are pretty happy with this development. These are very exceptional figures, especially if we look at our markets and also the development of our peers.

And please keep in mind, the environment is still pretty challenging. adesso is generating 84% of its revenues in Germany. So we are highly dependent from this market. And actually, so far this year, there is not much change. In 2023, 2024, we have seen negative development of our gross domestic product. And this year, there's a slight increase, 0-point something, so not a big change.

Actually, what has changed a little bit is the view on the future of Germany. I mean, if you look back a little bit, 3 months, 6 months, we all were kind of optimistic because of our new federal government, all the announcements, what should be changed. There were the additional budgets for the armed forces and the infrastructure. So far, we don't see any impact from that or not a significant impact from that.

And if we look this week into the newspapers and read about all the parts which are already misused from this budget, I think the optimism has a little bit gun or is at least reducing day by day. So I would say the outlook, at least for Germany is a little bit more pessimistic than what we have seen a few months ago. On the other hand, I mean, we have coped with this situation so far, and we will do this in the future again.

If we look at the development of our headcount on the 30th of September, adesso employed 11,111 full-time equivalents, which is a growth of 896 employees. 44% of this growth was generated with our foreign subsidiaries, especially in those countries where we build our shoring activities.

If we look at the headcount, the average growth since the beginning of the year, this growth rate is 7% compared to last year. Actually, if we look at the beginning of this year, this growth rate was 6%. So we have a little bit accelerated our hiring efforts. We are still cautiously acting. So we still have always a view on our billable utilization, but we think it's the right step at the moment to increase a little bit our efforts.

If we look at our sales, as always, we start with a view on our different industries, our 9 different industries. And I think the most important message from this slide is adesso is highly diversified and positioned in the right way. First of all, the most important, the biggest sector just contributes 90% of our revenues, which is public. We have our biggest 10 customers contribute slightly more than 20% of our revenues, and the biggest customer this year so far, 3.2%. So a very nice diversification.

But also if we look at the sectors itself, insurance, banking, health, public, utilities, they are, let's say, dependent on our economic environment, a little bit less probably than all the other sectors, especially the manufacturing and automotive. They are not directly impacted by all the discussions, are the tariffs or what will be the percentage of the tariffs -- so I think this is a very nice positioning at the moment.

And if you look at the growth rate of these sectors, it underlines the statement. Insurance plus 20%; health plus 26%; utilities, 24%. So very, very nice growth rates.

If we look into this a little bit in more detail, insurance is driven by a nice order entry and still a very strong pipeline. Banking, also nice progress, plus 8%. Health, 26%, driven by our normal bread and butter business, but also by one big project we won in Q2 with our car.

Public, plus 7%. Actually, with public, you see a little bit our concerns. We started in Q1 with 11%. After 6 months, it was a growth rate of 9% and now it's 7%. It's still growing. And let's say, the delays, the pushouts from budgets after the German election probably the situation has normalized. However, we don't see the impact from these additional budgets for infrastructure or armed forces so far.

If we look at automotive, minus 7%, it's not nice but not really surprising. This industry at the moment is really struggling, and this also has an impact on their IT spending.

Yes. And if we look at utilities, plus 24%, we have a very strong market position with SAP in this sector, and this is the main contributor to this nice growth rate.

If we look at the regions, Germany contributes 84% of our revenues. If we add Switzerland and Austria, we arrive at 95% for the German-speaking regions. Germany itself grew revenues by 14%. So this is a little bit more than what we have seen for the whole group, where we have seen this growth rate of 13%.

Abroad, adesso has grown with a growth rate of 8%. So on the first view, this growth rate is probably not really sufficient. On the other hand, if we dig a little bit more in detail into this, Switzerland contributes around about 50% of our revenues abroad. And if you look at Switzerland revenues decreased by 5% in this region. Actually, situation already has improved. After 6 months, it was minus 7%, and we expect further improvements in Q4 as utilization has already improved.

But if you exclude Switzerland from this view, then we arrive at a growth rate for all the other foreign countries of 26%. Revenue has grown there from EUR 68 million to EUR 86 million. And this is a nice growth rate. And actually, that's what you also can see on this slide, Austria, plus 29%; Netherlands, plus 16%; Italy, a company -- a country where we have supported growth with an acquisition some years ago, 26% and also Turkey contributing 30% growth.

Yes, let's have a look at our EBITDA. After 9 months, the EBITDA is EUR 77.9 million compared to EUR 66.5 million, which is an increase of 17%. If we dig a little bit more in detail into this, we started with EUR 17.8 million in the first quarter, second quarter, EUR 19.3 million. And now in the third quarter, EUR 40.8 million, which is an increase of EUR 1.9 million compared to Q3 last year.

Actually, Q3 last year was a pretty strong quarter. Q3 is always our strongest quarter, but last year, it was exceptionally strong. And therefore, the improvement is maybe a little bit smaller as we have wished for. However, it's still a nice development.

What are the key drivers for our improved EBITDA? First of all, the capacity utilization. We started with a very strong improvement in Q2 -- Q1, a nice improvement also in Q2. Q3 was a little bit more flat, only a small improvement, not really worth to mention, but that's because utilization in Q3 last year was pretty strong as well.

We have seen a slight recovery so far this year with our IT Solutions business, also supported by some license sales for our Insure product line in Q2. Last year benefited from a release of accrual for warranties, a release in Q1 last year as a result of the tax audit. And we also have seen some higher material costs. This is actually caused by our role as a general contractor in some of our projects as projects are growing quite -- from a size perspective, we quite often have partners with that. And if we take the role as a general contractor, then revenues goes via our P&L, but also the material cost related to that.

Let's have a look at our EBITDA margin. EBITDA margin improved to 7.2% compared to 6.9% last year and 6.4% in 2023. It's an improvement. It's still a significant way to go until we arrive at our goal, which is between 11% and 13%. So we are happy about this improvement, but actually, we are really working on that, that we will see further improvements in the future.

If we look at some other key figures, we already had a look at our employees, 10,699 in average for the first 9 months this year. Sales, close to EUR 1.1 billion.

Gross profit grew by 10%, so a little bit less than sales, which is caused by the increase in material cost.

Personnel costs increased by 11%, so a little bit less than sales.

Other operating expenses, an increase of only 3%. More or less all expense lines have slightly increased, especially expenses for hiring and travel. We have seen an opposite development with expenses for external consultancy and legal fees.

If we look at the key profit drivers, utilization, as I already pointed out, utilization has improved this year, especially in the first half of the year. Q3 was, let's say, flat and only a little bit improved.

Daily rates. As you might remember, we have started last year in Q4 internal projects to improve our daily rate. And actually, we have seen some nice improvements in Q1 and Q2. Q3 was a little bit more flat, also caused by the market environment. At the moment, we noticed that competition is really increasing. And so this makes it difficult to increase our daily rates.

License and maintenance, we have seen an improvement here as well, especially license sales in Q2 contributed to that. We are still optimistic that we will see some further license sales in Q4. However, at the end of the day, customer needs to sign the purchase order. So we are still negotiating and waiting for that. Personnel cost increase of 3%. There are some key contributors to that.

First of all, we have an increase in our salaries. Second, we have hired more senior people or the percentage of senior people has increased within our hiring efforts. And therefore, this has also an increasing impact on our personnel costs. On the other hand, we have increased our hiring efforts in our shoring countries. Our colleagues there have lower average salary, which has lowers a little bit the increase. So it's a mix of different items. At the end of the day, it's a 3% increase.

If we look at our earnings per share, EUR 0.99 after 3 quarters, which is a nice improvement compared to last year, where we have seen EUR 0.16 at that time of the year, especially Q2 contributed to that, but also Q3 had a positive impact of EUR 0.20 in addition to what we have seen last year.

If we look at the depreciation, depreciation increased. This is mainly for right-of-use items, which is based on IFRS 16 and which is our office leases and company cars. Depreciation from purchase price allocation is slightly decreasing. Income from investments at equity is also a little bit more negative here. Financial result, interest, a little bit less interest to pay due to lower interest rates. So it's minus EUR 8 million.

Earnings before taxes, a nice increase from EUR 7.3 million to EUR 12.9 million because we have a higher pretax income, we have higher income taxes. However, the tax quota has improved from 67% to 52%. It's still comparably high, but there are always certain items which are not tax deductible and at some group companies, which generate losses, we don't put tax assets on our balance sheet.

Let's have a look at our working capital and our balance sheet and especially our working capital. Cash improved slightly compared to last year.

Financial debt and net debt, we've seen an increase of close to EUR 40 million. There are 3 main drivers for that. First of all, we have increased our shareholdings in KIWI subsidiary KIWI from 70% to 100% in Q1 and same with adesso business consulting from 71% to 100%. This was a cash out of EUR 27 million. We did a share buyback last year in Q4 and also Q1 this year, which was another EUR 10 million.

And then we have seen for an earn-out payment in June and July this year, another EUR 3.4 million. So in total, around about EUR 40 million, which has increased our financial debt and therefore, also our net debt.

If we look at our operating cash flow, it's EUR 30 million worse compared to last year. This is caused by our net increase in net working capital by 15%. Revenue grew by 13%. Net working capital by 15%. So we are not overly happy with this figure. I would have hoped to see here a lower growth rate at this point in time in the year, but we expect a significant improvement as always in Q4 this year and actually in October, the development already shows that we are on the right track for that.

If we look at our equity, equity decreased by around about EUR 10 million. Therefore, our equity ratio reduced to 22.8%. There are two reasons for that. First of all, the share buyback last year, this EUR 10 million is directly deducted from the equity. And as our revenues are growing, working capital has increased. So our -- the total amount of our balance sheet has increased, and therefore, the ratio was also negatively impacted.

Operating cash flow after this line, we are below this line, we have CapEx and also lease repayments. Lease repayments are related to IFRS 16. And based on the recommendation of the IFRS Foundation, these lease repayments related to company cars and office leases are also shown as CapEx. And therefore, we have a free cash flow of minus EUR 69 million compared to minus EUR 30 million last year. Actually, this mainly reflects the increase in working capital. Yes.

Yes. Let's have a look at our guidance. I mean at the beginning of the year, our guidance was based on the assumption that IT services will -- there will be still an ongoing demand in a recessionary environment. And yes, this -- it still applies. It's still right. And the environment is tough, but different to the past where quite often IT services was the first thing which is cut. This time, it's different. There is still a demand for IT services despite the fact that competition at the moment is increasing. If we look at our guidance, we assume that we will improve our margins, especially driven by higher utilization. That's right. We have improved our utilization, and it's still on a on the right track, even if the improvement in Q3 was lower than what we have seen in the first half of the year.

For the second half of the year, we will see an additional contribution because we have just -- we have 7 additional working days compared to the first half of the year. And actually, that's what we already see in the results of the third quarter, highest revenues this year so far and also in terms of earnings, EBITDA.

And only the last one probably is a little bit different than what we expected. Initially, we thought we will see a positive impact by an increased IT spending in the public sector starting in Q3. So far, this didn't happen. But despite that, we were so far able to achieve our goals.

If we now look at our guidance a little bit more in detail. We guided for a revenue growth to EUR 1.35 billion to EUR 1.45 billion, which is an increase between 4% and 12%. So far, we are really good on track. Our achievement of this guidance is between 75% and 80%, and we are pretty optimistic that we will end at the upper end of this corridor.

If we look at the EBITDA, EUR 77.9 million after 9 months, we want to get to right to our range of EUR 105 million to EUR 125 million. So far, we achieved 62% to 74%. Also, this is on track. We -- therefore, we confirm, yes, we will achieve our guidance.

And EBITDA margin, 7.2%. Last year, for the whole year, it was 7.6%. It's our goal to get at 8% plus X and also this should be still realistic. So at the end of the day, we can confirm our guidance and Q4 will probably bring the necessary sales and EBITDA to get there. Thank you very much.

Thank you, Michael, for the helpful insights. We're now heading for the Q&A session. And I see there are already questions from Mr. Spang from Tigris Capital.

I would like to start with the margin improvement or margin decline in Q3 quarter-over-quarter. You already mentioned that Q3 2024 was a very strong quarter. But maybe you can please go a little bit more deeper into the quarter-over-quarter development. Why were you not able to improve the margin in Q3 2025 versus last year? So what were the main factors?

If we look at Q3, we have grown revenues by 13%, which is a strong growth rate. And if we look at EBITDA, EBITDA just grew from EUR 38.9 million to EUR 40.8 million. So obviously, less than this 13%.

What is the key factor? Actually, the billable utilization did not improve in the same way. we look a little bit more in detail into this quarter in July, actually, figures looked very nice. We were pretty well on track to get further improvements there.

August was a very challenging month, some more vacation than assumed and September was better. But also there, we have seen some more vacation than compared to last year. So there is not a specific reason. Last year, we have not seen license sales in Q3, same Q3 this year. It's really that the utilization should have been slightly higher or let's say, less vacation for the overall hours.

But you would say that this is a temporary or quarter-specific topic, not a fundamental topic.

No, so far, I would say it's a special topic for Q3. I mean the competition at the moment is tough. And what we noticed, for example, there are a lot of peers, which, let's say, had in the past, a stronger focus, for example, on automotive who have now people which are not utilized or not fully utilized. So they look for alternatives. They try to get into the market, public sector, for example. So it's a tough competition at the moment. So it's, for example, really difficult to increase our average daily rate. But I mean that's something which happened also the first half of the year, maybe it's at the moment a little bit stronger, but it's not a general problem at the moment. So it's not, let's say, kind of a change in the overall trend.

Okay. Then if I look into the IT Solutions segment in Q3, you did not really mention it in your presentation. But after the first half, you still had a growth in IT Solutions and after 9 months, the revenue did decline. So Q3 stand-alone was a very bad quarter year-over-year. What was behind that negative development in Q3 in the IT Solutions segment?

It's the same. What applies also to the IT consulting, IT services business. Utilization was there slightly lower. This part of our P&L is a little bit more project driven. This also has kind of an impact. And there's -- we have, let's say, 1 subsidiary, which also at the moment is a little bit struggling. It's not only this year, the business, the product line because for this part of the company, we have seen some improvements. There's another company at the moment, which has some problems where we also had to change in our management in Q2. And this also had a negative impact on our development in this sector.

Actually, what's key is that we get some license sales, which would also help to improve our margins there again.

At the moment, the situation for our IT solutions or especially the Insure product line is in the way that we have ongoing revenues from projects, but to get to a more, let's say, more profitable level, also license sales are needed at least at the moment.

Okay. And forwarding into the topic of insurance, insure, -- what is your pipeline currently going into -- already into Q4? Is it bigger than 1 year ago? And how big would you say that the opportunity is that you can close some -- or I don't know how many deals they are in the pipeline but that you can close deals?

This -- the pipeline with our Indra product line is much more difficult to predict than the pipeline for other areas of the companies. It's just because it's not a pipeline of, let's say, 10, 20 or 30 license deals. It's less -- let's say, less license deals, which could be closed in Q4 this year. So there are, let's say, 2 more significant ones, and we are still in negotiations there. We are kind of optimistic that we can close at least one of these deals. But it's not in a way that the pipeline looks in the way that if you don't close these 2, then there are 2 other ones you can close because this pipeline is much shorter than what we see in other areas.

Okay. Next in line is Dr. Jakubowski from SMC Research and afterwards, Marc Tonn from Warburg Research.

Can you hear me?

Yes.

Great. I have one follow-up question regarding the EBITDA margin. Is it fair to assume that you can achieve the same margin in Q4 as last year or even to improve it, taking in account what you have talked about the development in your daily rates and employee costs?

I mean to be honest, I have not calculated the percentage margin for Q4 itself. What I can tell you is that I did my math on the overall development for the year. And at the moment, we still see a good chance to improve our margins to a level 8 plus x percent for the whole year. That's what we wanted to achieve. And despite, let's say, reduced margin in Q3, we regard this as pretty realistic.

Okay. So don't have to be afraid at the moment that the development in Q3 was a reversal in the margin trend.

I mean Q3 last year was a pretty strong quarter. So it was -- if you grow revenues by 30%, it was really a challenge to exceed that. And Q4 is also last year was not that bad, especially if we look a little bit more detail this October and November were pretty strong month. We expect to grow revenues again significantly. The question is how much EBITDA growth at the end -- will we see at the end of the year. But again, we are sure that we will be better than 8%.

Okay. Okay. And maybe you could give us some details on the profit contribution from your foreign markets outside of Austria and Switzerland.

I mean Switzerland, despite the fact that revenues were a little bit shrinking, still is the main contributor from our foreign subsidiaries. This year, Austria is doing particularly well, very nice growth and also very nice growth of EBITDA. Actually, same applies to Italy. Italy, we are very happy with this company, very nice development.

If we look at other countries like the Netherlands, Spain, also the Scandinavic regions, these countries are still -- these companies are still loss-making. However, they are showing nice improvements this year. So they are all on, let's say, on the turnaround path.

Other countries like Bulgaria, Romania, India and also partially Turkey, I think you need to have a different view as these companies are strongly linked especially to Germany as they are doing shoring. So they are not focusing on the local markets. They are more focused -- they are, let's say, more dependent on wins of projects in Germany or Switzerland also.

Okay. But all in all the profit burden from your expansion, international expansion in European countries is declining, yes. That's the trend.

Yes. I mean, first of all, the total of all of them is contributing a positive EBITDA. So it's not that we are producing losses abroad. What's true is that we have certain subsidiaries in certain countries, for example, Netherlands, Spain or the Scandinavian region where we are, at the moment, generate losses. But all of them are on a good way of turnaround.

Okay. And then finally, I have one detailed question. There's an item in your income statement, which almost tripled compared to last year. And there was also a steady increase over the course of the year, it's the result from the change in impairment on financial assets. Maybe you could give some details on this item.

Yes. Do you mean the EUR 1,371,000?

Yes, yes.

Yes. That's actually related to our -- mainly related to our receivables. If you have an increase of receivables, then we have this lump sum allowance during the year. Actually, this figure should change again if receivables are reduced at the end of the year. So there is no special impact is mainly caused by what we call in Germany [indiscernible]

Thank you, Mr. Jakubowski. Now we have Mr. Tonn from Warburg Research. And after that, Mr. Specht from Berenberg Research. [Operator Instructions] Okay, Mr. Tonn.

The first one would be on the sales development in Q4, and you already said that you are targeting the upper end of your full year guidance range. Nevertheless, that would mean, let's say, at least a certain, let's say, certain amount of slower growth in the fourth quarter. Is it just a cautious assumption? Or are there any, let's say, technical effects, which should lead to Q4 growth being slower than in the previous quarter from working day effects or holidays, which may play a role here? That would be the first question.

Q4 -- normally, Q4 is in terms of revenue generation and EBITDA contribution always shows less than what you see in Q3 because if you look at the calendar this year, the 19th of December is Friday. And after this, the -- most companies are more or less going into kind of sleep mode until the third week of January. So that causes always some headache in December. As we are not -- I mean we are mainly an IT services company, not really generating license revenues. So this is in the past, something like this could have helped, but that's not something at adesso, which is, let's say, important. So therefore, we are -- we believe that we will get at the upper end of this revenue guidance, which would mean EUR 1.45 billion in revenues. And at the moment, it's fair to assume that our EBITDA in Q4 might be a little bit less than what we have seen in Q3.

Could be changed if we have significant license sales. This would have an impact if we have some more license sales in the Indra product line. But I mean Q3 is our strongest quarter. And therefore, let's say, it's a little bit more cautious what we see in Q4 than what we have seen in Q3.

And secondly, also, let's say, with regard to the sales dynamics, I mean you mentioned, I think, that you have seen, let's say, the public sector with the delays there, let's say, with the growth rate coming down in the course of the year. When would you expect the trend to reverse and let's say, growth rates accelerating again for that customer group?

And secondly, do you see any signs of stabilization in the demand from the auto industry? Or do you expect that to remain weak for the time being?

I think it's fair to assume that the situation and the overall situation for the public sector will slightly improve. On the other hand, competition in this area is increasing. But I think the overall perspective is probably more positive than in the past in this year.

Automotive, yes, this is very difficult. I mean we still win some projects, but it's really a challenging environment. So it's difficult to say when there will be a change. The pipeline is -- let's say, it doesn't look like a significant change in the near future.

And perhaps lastly, more strategically and probably it's a mix of all elements. But when you look at the target, let's say, around 8% to 8% plus EBITDA margin for this year and your strategic goal of more than 11%, which would you, let's say, expect, let's say, the first initial positive driver to be in this direction would be more, let's say, utilization? Is it pricing? Is it reduction on the personnel cost side with the Smart share increasing? -- would be, let's say, the parts which you would see, let's say, as being contributing the most and probably the earliest in this process?

That's an interesting question. And actually, there is not this one contributor. It's probably a mix of all. I mean key driver is always the billable utilization. There is still some way for improvement, at least if we look at the situation in 2022 or earlier years. So if we want to get there, we need to improve our utilization. We need to continue with our turnaround in -- for the IT Solutions business, especially for our insurance product line, Indra product. That's also key. I mean, it's still loss-making. We have -- it was already highlighted in this call that the situation improved a little bit, but not that much. So we -- there's still some way to go, but this has also a significant impact if we are successful with our turnaround, improving daily rates, working continuously in our daily rates is a key ingredient for that. And yes, we also have already spoken about that today, we need to make further progress with those companies where we are loss-making abroad this will also help.

And something which is also important, we need to look at one or the other cost item on our P&L. It's probably not one of the, let's say, key strengths of adesso. We are more growth focused. On the other hand, there are also probably one or the other items where we can achieve some improvements. So it's a mix of all.

And now Mr. Specht from Berenberg.

Three additional ones from my end. First, again, on utilization, the key topic. It is obvious that you have some people sitting on the bench while you're still in need of a lot of freelancers from outside the organization. So what type of qualifications are missing in for dedicated projects that you cannot serve with your current workforce that would be interesting. I mean have you a dedicated program to fill that gap? And then on the public sector, you gave some cautious statements there. Everybody is hoping for the big budgets to come next year. But do you already see, let's say, in the last week, some more RFPs circling in the sector? Or is it still wishful thinking of the industry as a whole? And final question would be to the net working capital position. That is up strongly. Can we expect some improvements in the final quarter of the year?

Okay. Let's start with the easiest one. It's the third one. Yes, we will some improvement. Actually, this is part of our working capital. That's part of our, let's say, normal development within calendar year. We start with cash outs in Q1, Q2 and also Q3 and then Q4, everything turns around. So yes, working capital will improve. We will probably see similar improvements what we have seen last year in Q4 compared to Q3.

If we look at the public sector, I mean, my statement today was, let's say, I wanted to make sure that we are -- let's say, that we are a little bit less optimistic than what we were in the past, 3 or 6 months ago, we expected a certain impact because of additional spending from our government, also caused by these additional 2 budgets.

We still believe that this will have an impact, but it seems -- today, I would say it seems that this impact will be a little bit lower than what we initially expected. So far, we don't see a lot of requests for proposal or tenders on the market. There are some tenders out there. Also some of them are important for us in Q4 and Q1. But so far, let's say, I would probably say it's more or less a normal course of business, not a dramatic change. The last one was regarding the...

Utilization.

Utilization...

Certain qualifications missing in your...

First of all, I mean, you are right. They are sitting people on the bench. But that's a normal part of our business because we have different sectors. We have specialists for banking. And if there -- for example, if there are less banking projects, then this -- you cannot always use this skill for, let's say, automotive because we are organized in verticals to be closer to the customer and customer needs. And therefore, you cannot just switch people around. Then you have -- sometimes if you have someone who is specialized in Java, maybe you have less demand for Java. It doesn't help if you have a lot of demand for SAP. So it's always that you have people sitting on the bench.

I think the key thing is that you look at this bench that you manage your bench, that if you hire new people that you hire them in the right area. External resources, freelancers or whatever quite often have a special skill. That's why you hire these people. I mean freelancers quite often are freelancers because they are very, very good in those things they are doing, and that's why they are freelancers and don't want to get on a payroll from a company.

And please keep in mind, that's what I also mentioned today, adesso is growing. The projects we are working on are getting bigger and bigger. And so you build consortiums. Sometimes we are the general contractor. And so all the other participants of this consortium invoice us and we invoice the customer. So therefore, material costs go up. But these are, let's say, costs which you cannot replace by using your own people. So that's also -- you need to consider that as well.

It's right that utilization should be higher, but we are not talking about, let's say, 3, 4, 5 percentage points. This corridor is much smaller and already 1 percentage point or 0.5 percentage point has a tremendous impact on our EBITDA.

So the improvement in utilization would be rather below a full percentage point this year as a whole?

No, at the moment, it's higher because we have started pretty strong in the first half of the year. And last year, it was Q1 and also Q2 were much weaker. Please keep in mind, I mean, if you have 10,000 people and 1% is just 100 people. So we are talking, let's say, about 100 colleagues to improve your billable utilization by 1 percentage point. we are not talking about hundreds of people who make the difference. We are talking about maybe 100, maybe 150, 200 people, it's not more.

All questions answered. Or do we have more questions? Do we have more questions from the audience at this point in time? Mr. Spang again?

Yes. Just one follow-up on the working days. You mentioned that the last, let's say, real working day before Christmas is the 19th. And in general, Q4 this year has 1 working day more than last year Q4. So is my interpretation out of your explanation about Q4 right that you don't really expect a positive impact in Q4 this year despite a higher one way more working day? Or is this a misunderstanding?

Yes, that's a good -- really good question. Actually, this additional working day probably is in the Christmas week. So the impact is probably less than it would -- if it's just on a normal working day. If you look at last year's calendar, I think it was 15 days in the 3 weeks before the Christmas. And then in the Christmas week and the week after this is 1 day less. And this year, it's -- I think the most important days for invoicing on the 22nd and 23rd of December. And I don't think the impact is that much. Well, let's say, there is an impact, but less than what you normally would expect.

Okay. Do we have more questions? No, this doesn't seem to be the case. So I'd like to thank you very much for your interest in our call today and your participation.

I wish you all the best and hope to see you soon in person maybe on the equity forum. For now, goodbye.