Exasol AG — Call Transcript 2025

Good day, ladies and gentlemen, and a warm welcome to today's earnings call of Exasol AG following the publication of the first half-year figures for the fiscal year 2025. I am delighted to welcome Exasol's CEO, Joerg Tewes, and CFO, Jan-Dirk Henrich, who will speak in a moment and guide us through the presentation and the results. After the presentation, we will move on to a Q&A session in which you will be allowed to place your questions directly to the management. I would say, let's jump straight into the numbers. Mr. Tewes, the stage is yours. Yeah, hello. Good afternoon. Thanks for joining our earnings call. We are going to speak about our results in the first half of this fiscal year. Our CFO, JD Henrich, and myself will walk you through some business updates as well as more details on our numbers. Next slide, please. This is our standard disclaimer. Let's go straight to the key figures that we've accomplished in the first half of this year. We were able to grow our revenue to EUR 21.5 million. That's a year-over-year increase of 10.8%. Our ARR came at EUR 38.7 million. That's a 2.8% lower year-over-year comparison. EBITDA came in at EUR 2 million for the first half of this year, which is an increase over the EUR 700,000 last year. As a consequence, our net income also grew to EUR 1.4 million over the EUR 300,000 last year. We're continuing our journey into profitable growth for the company. If you've been following us, and remember, we ended 2024 with the first year of EBITDA growth with a total of EUR 2 million. We're basically at this line already now in the first half of 2025. We're continuing our journey on more profitability for the business. We've been seeing strong ARR growth in our focus verticals. We'll share some more details on the following slides. In general, these focus verticals and their respective share on our overall ARR increased to 69%. For those of you who remember, we talked about that we expect that to be around 70% by the end of the year. I think also we're on the path of that shifting our business towards focus verticals. We do have, or we want to call out one specific deal that we did, which is a renewal and upsell deal with Finanz Informatik, driven by their massive need for compute power, regulatory, and data compliance. We have also seen an uptick on add-on services to our core software business. We've been able to get around close to EUR 3 million revenue contribution in the first half through the delivery of hardware and services. I'm also going to cover that in more detail on a later slide. In general, our net liquidity grew up to EUR 22.2 million. I think is also a number that we've been looking at getting to EUR 20 million for the end of the year. We've been able to get over EUR 20 million this time of the year. That gives us enough operational and strategic flexibility to basically execute our strategy. Next slide. I will talk about the strategy and business updates. After that, I will hand over to JD for the financial update. Next slide, please. We have two key strategic priorities that we're in the process of executing and implementing. First is to continue to sharpen the group's profile on focus industries. In other words, go there where we are seeing traction, where we're seeing success, both with existing customers but also with potential new customers that we bring on board. We're actively working on strengthening our market presence, distribution, and awareness in those sectors. We are on our journey to position Exasol as a European analytics engine for price performance and technology leadership and data sovereignty. Data sovereignty has become a very big topic for many companies, specifically here in the German-speaking countries, but also other European countries where there is the desire to find solutions, data solutions that make companies less dependent on U.S. companies. In general, that applies both to hyperscalers that provide a cloud infrastructure as well as a specific data solution. That's a trend that's really been helping us in the last three to six months. A lot of the interest that we get from the outside market in our product, in our company, actually is driven by larger enterprises being concerned about geopolitical turbulence. The other important topic for us where we're investing and where we also make progress is positioning Exasol as a leading solution in the space of AI-driven data analytics. We have a variety of our existing customers that have been implementing AI-based solutions with our analytics engine. We're continuing our journey in that space and also investing in our product. On the next slide, you're going to see a recap. We shared that before, but I think it's important since it's a cornerstone of our strategy to be clear on our core customer, our ideal customer profile, ICP, who are we talking to and how we're going to do it. The primary drivers are the need for compliance, for performance, and optimized cost. We've been focusing now on several key industries. First and foremost, it's financial services. In financial services, there's banking and there's insurance. We see a lot of traction in the banking sector here in Germany, Austria, Switzerland, U.K. These are the regions where there, as I just said, there is this need for sovereign solutions, for solutions that run in the company's data center, on-premise solutions. This is basically where we shine, where our product works extremely well, and where we are able to grow more business. Other areas that also fit into this more regulatory requirement are healthcare, telecommunication, utilities, and public sector. The nature is always there's a requirement for on-premise or hybrid solutions, a combination of on-premise with cloud solution as well as regulatory requirements. The regions also in the order of our commercial activities, like I said, in the forefront, it's the DACH region and then U.K, Nordics, and we continue also our journey in the U.S., both with our existing customers there and attracting new customers. How do we win in these spaces? Whenever there's a cloud repatriation need from a customer, we're there to help customers on their journey. This cloud repatriation typically has two potential reasons. One is cost. A lot of customers have seen costs exploding in cloud data analytics solutions. We can help customers on reducing costs. As I just said, in the new world that we're in, data sovereignty plays an important role. Having a more independent data stack from U.S. providers plays an important role for our customers. We are refocusing or we continue to refocus. I mean, we shared this strategy update at the beginning of the year, and we're continuing to do that on our core strength as a high-performance on-premise data warehouse with prioritization of security, enterprise-grade services, and reliability. Next slide. Here you see the shift of our focus in numbers. We ended the year last in 2024 with a shift of 57% in focus verticals versus 43% in non-focus verticals. We have two effects in the first half of this year. We're growing revenue. We've been able to upsell and also sign new customers in our focus vertical. We had some churn downsell in the non-focus vertical. Those two effects basically get us to that total shift of 69% in the market. Next slide, please. Here you see the breakdown on what's happening with our new business in a focus segment. We had a total of EUR 7.4 million ARR growth. We had an adverse effect of EUR 1.5 million in our core segment. Net-net, that's basically close to EUR 6 million of increased ARR in those focus verticals. Next slide, please. I want to call out a specific deal that we were able to close with customer Finanz Informatik. Finanz Informatik is the central IT backbone and service provider of the Sparkassen-Finanzgruppe, Sparkassen-Finanzgruppe in Germany, the regional saving banks, the Sparkassen. There are 343 different financial institutions that basically all together own the Finanz Informatik company that basically serves as their overall IT backbone. We have some data here in the middle. They have 114 million bank accounts. In average, every German has 1.5 accounts with the Sparkassen Gruppe. Their overall revenue is EUR 2.5 billion with over EUR 200 billion technical transactions. I think that's monthly data. There are significant use cases. We're involved in basically helping them to prepare data analytics for all their customers. There's a massive compute power to enable large-scale concurrency, real-time analytics, and reporting. We run in their data centers. They have two large data centers in Germany, one in Münster and one in Hannover, to help them also match regulatory requirements and data security compliance. It's in its very nature an on-premise solution that has been directly operated by Finanz Informatik itself. That's a really good win for us. It's been an existing customer, but we've been able to grow this customer substantially. We doubled our overall ARR with them. It's also extremely helpful because it's a visible deal that we also use as a reference in adjacent industries. Next slide. Here's another slide that details some of the key learnings and takeaways that we are experiencing as we go through this strategic shift. You see here that on P&L revenue, in revenue, unlike in the ARR metric, we're also accounting one-time effects. You see here that the overall percentage of hardware of one-time revenue actually increased nicely in 2024. We had close to EUR 3 million of the revenue coming from hardware deals. Hardware deals, by their nature, obviously have different margins than software. The benefit of doing these larger hardware deals with customers is that we are able to really help customers to tailor their solutions to the needs, and we'll get closer to the customer. When we help customers with their hardware selection and services that go with hardware, we'll become a more integral part into the customer's overall landscape. I think it helps us to basically establish a longer-term business relationship with these customers. It obviously also has the effect that it helps us on our growing overall revenue. We've defined a model. We basically run this through our internal procurement, and then we enrich that hardware by pre-installing our software on this hardware and then basically also help customers to get them into production and to operate them. I think another important aspect here is that the increase of regulatory requirements here in Europe helps us because we are really experts now in how we can help customers on DORA compliance, on NIS2. Having this domain know-how, specifically in the financial services industry, I think is just a key element of this strategy. Next slide. As part of that strategy, we've also been able to secure additional partnerships. On the right side, you see the hardware appliances vendors. We are working closely with both HP and Dell, basically just expanding on these hardware partnerships and then reselling some of their hardware to our end customers. What's new on the left side, you see the names StackIt, Exoscale, and Noise. StackIt is a regional cloud provider hosting all their data in Germany. They're part of the Schwarz Gruppe, and they've become really popular for enterprise customers as an alternative to the traditional U.S. cloud hyperscalers like AWS, Microsoft Azure, or Google Cloud. The same applies to Exoscale. Exoscale is owned by the Austrian Telekom A1. They also operate data centers in Europe, in Central Europe, not just in Austria, but also in Germany, Switzerland, and in Eastern Europe. We also have a partnership with them now, basically helping customers to build regional cloud solutions or hybrid solutions where there's some element of on-premise and some element of cloud solutions. These players get a lot of traction, attention, and I think we are at the forefront on working together with them. Last but not least, noris network. We're on noris out of Nürnberg, where we traditionally partnered with for our ExaCloud solution. We also have now a few customers that are basically being manned by noris network on our behalf. Next slide. Let's speak about our plans and our product roadmap on AI. We've been talking about this in the past as well. We think, or we continue to think, that's not a new insight, that AI and data analytics will basically merge and that more and more enterprises will leverage AI, be that LLMs or be that the more traditional AI machine learning combined with big data combining to get better customer insights and enterprise decision-making. We are working on with actually several customers, and we're expanding our product towards workflows that seamlessly integrate with AI models so customers can do rapid development. One of our key strengths as Exasol is the high concurrency. A lot of systems that are currently being built require that the backend solutions scale and have that massive parallel processing capabilities that's inherent to our product. That's where we're strong at. That's a key element. AI you can trust. I think it's important for every company to make sure that whatever gets being put into an AI system remains secure and stays governed. With our capability to run on-premise or, as I just described, in these regional clouds, that's an important requirement. Last but not least, the right price-performance ratio to be able to run massive workloads at predictable cost. That's also a key requirement from our customers. On the next slide, you see our roadmap. We're basically somewhere in the middle of this chart here. We released a product component called Text AI earlier this year. We're in the process, actually, this quarter to add GPU support so that customers can run their AI workloads in conjunction with our database through GPU. We have some benchmarks where we can show that there is a 24 times boost over non-GPU accelerated AI workloads. We're adding more AI functions to our core backend system. Also, in Q3, we're going to release an MCP server, an MCP server, which is going to be an essential part to integrate an Exasol data engine into Agentic AI environments. That's something that we've been reacting quickly to the Agentic AI trend. This gives customers the opportunity to put all their Exasol data engines or data backends into a modern Agentic AI stack. There are three additional components that we're working on right now, which would come either by the end of this year or next year, which is vector support so that we can store AI vector data directly natively in our engine. Last but not least, on the right side, which is also very important, we're going to support ARM, hard ARM processors, which will give customers the option to switch into more cost-effective environments. Next slide. That's a strategic update for me. Happy to take any questions at the end of the call. Now I'll hand over to JD for an update on the financial results. Yeah, thank you very much, Joerg. Leading you through the usual structure on how I present the financial numbers to you, elaborating a little bit on both the ARR dynamics and P&L and balance sheet dynamics as of the middle of this year. Let's start, as usual, with looking at kind of the quarterly dynamics. I think Joerg has already pointed out in his summary that in the first half of the year, despite our very strong growth in the focus sectors, we saw a net ARR decline in the first two quarters. That's a dynamic that's not new to us. We've seen a similar pattern in the first half of last year, but it's been somewhat larger in the first half of this year, mostly driven by two larger customers in the retail space, so in one of our non-focus sectors who are moving away into a cloud setup. That happened in Q1 and Q2, and as a consequence, led to slightly higher declines. If you look at the development of the focus sectors, as you already know from Joerg's chart, it's depicted here in the bubbles at the bottom. We've actually seen a growth of EUR 2.4 million in the first half of this year compared to only EUR 400,000 in the first half of last year. We accelerated our growth in the focus sectors in H1 compared to the same period last year and also won three new logos in the banking realm, particularly in Q2. That puts us to a point where we're now at EUR 38.7 million of ARR. Glancing at our chat in the presentation at the same time, there's a question by Andrew on how does that shape our perspective for the second half of the year. Let me answer that question as we look at the next page because it also has a lot to do with the churn dynamics that we expect in the second half of the year or the significant reduction thereof. Maybe first of all, looking at the 12-month perspective of ARR since the middle of last year, you can see that on a 12-month perspective, there was a mild decline of 3% and a net ARR retention rate which was below 100%. This is mostly driven by the elevated churn in the non-focus verticals, whereas the new business of more than EUR 9 million is almost 80%-90% driven by the focus verticals, which in sum gets results in the structural shift that Joerg talked about. If you look at the churn here, roughly 40% of this lost business is due to the two major retail customers I mentioned on the previous page that made the strategic shift in the cloud. In many ways, the ARR dynamics that you see in Q2 mark the overall shift in our very good representation and mark the shift in the structure of our largest customer from the retail space to the finance and banking space. We were able to also remember the very large deal we made with a large German state bank in December. Now the Finanz Informatik deal, which really made these companies our biggest customers, whereas the kind of legacy biggest customers in the non-focus sectors are reducing business with us. While we anticipated this decrease in principle as part of our strategy, overall, it happens at a slightly higher pace than was initially anticipated in Q2. I'll comment on our perspective for the second half in a moment. Overall, churn over the past 12 months was at 26%, therefore overcompensating the growth in the focus verticals. As outlined in the initial charts of the section, the non-focus vertical share in our overall portfolio keeps declining rapidly, though. We will see the subscription fundamentals, the very healthy ones that you saw for the focus verticals, and we will see the group dynamics gradually converge to those as this portfolio shift takes place. In particular, already in the second half of the year, we expect a significantly lower absolute churn than we've seen in the first half. This churn rate that we're observing in the middle of this year now is very likely going to represent the peak of our journey as the portfolio transforms. We're now kind of then gradually returning to churn rates over the next months into next year, which are more in the churn dynamics of the focus verticals. For the second half of the year, that means to answer Andrew's question, our guidance is at kind of mid-single-digit percentage range growth, which means we would have to add at least EUR 4 million-EUR 4.5 million of net ARR in the second half of the year. Given what we're currently seeing in terms of upsell opportunities still in the pipeline for the second half of the year in the focus sectors, the reduced churn dynamics, the second half of the year will be significantly less impacted from churn. Plus, new logo opportunities that have been created since the inception of the new focus strategy make us optimistic to generate that kind of net growth in the second half of the year. Moving on to the next page, looking at more on the profitability side. As you can see, and Joerg mentioned, we've continued our journey of profitability in Q2. Now, while EBITDA in Q2 was only at roughly half the level of Q1, we have to keep in mind that Q1 saw significant margin impacts from add-on hardware and services that were built on a non-recurring basis, I would call it, in the sense that the hardware and service business is not recurring in the same way as software subscription sales are. Obviously, when a customer decides to procure his or her hardware setup through us as well, this hardware also has life cycles and needs renewal. The renewal cycles are obviously different than subscription revenues. I'll also comment a little bit further on that in the full P&L in a moment. Q1 was influenced by that. Q2 still saw a profitability of EUR 700,000, which, looking at the pure recurring side of the business and software side of the business, also a run rate we feel comfortable with for the second half of the year, which will put us on a good path to achieve our EBITDA guidance. Any potential additional hardware and service opportunities that we're also working on is on top potential from a revenue and margin perspective. Liquidity-wise, we finished a half year at EUR 22.2 million. That's up almost EUR 5.5 million compared to the middle of last year. That's basically driven by two things. Obviously, the underlying profitability is higher compared to last year. What we've also seen is a continued shift of contract structures to have start and end dates at the beginning of the year. Contract structures that are aligned with a calendar year. As a consequence, on these contracts, we're getting even higher cash inflows for the full year already at the beginning of the year, providing us with a very, very good cash buffer to tackle any tasks that we have throughout the year. Obviously, that puts us in a good position, both from a profitability and liquidity perspective, to handle the shift in our customer portfolio that we're currently experiencing. Let's double-click on EBITDA and net income by looking at the full P&L. What you can see here, that profitability increased by EUR 1.3 million as for profitability as expressed in EBITDA compared to the first half of last year. This was achieved despite a nominally reported lower gross profit of EUR 1.1 million, which I'd like to elaborate on a little bit. There were several dynamics at play in gross profit. Now, looking at the pure operational business, first of all, you can see that overall revenues actually rose by EUR 2.1 million. There is a decline in the annually recurring revenues, so the software license revenue, which is not surprising given the mild ARR decline on a 12-month basis that we've shown you on the previous chart. That was overcompensated by revenues from non-annually recurring transactions for hardware and services. On a margin level, these two revenue impacts pretty much cancel each other out. If we look at margin from the recurring business and the margin coming from the one-off business, these two, the negative and the positive impact here on the margin level, balance each other out. From a pure revenue and related operational margin perspective, gross profit would have remained stable given this development. The net decline observed is rather almost fully driven by effects in other operating income. The biggest is a lower booking of research grants in the first half of this year compared to the first half of last year. In the first half of last year, in other operating income, we had roughly EUR 1 million of research grants that are granted by the German government to support the type of projects in the field of AI and big data science that we're engaged in. In the first half of this year, so far, we've only booked EUR 400,000. There were some other one-time effects in OOI that then basically drove this delta of EUR 1.1 million in gross profit. Part of that gap or decline is only temporary. In the meantime, we've received approval by the Ministry of Finance for additional grants and additional projects. We will book additional research grants in the second half of the year, which we didn't do last year. This gap you will see decreasing as we start looking at the full-year numbers. This is what really ensured the profitability in H1 then, in the end, was the observed impacts in our cost base from the final organizational alignments that we executed towards the end of last year and going into the year, which led us enter into this year with a very clear and streamlined organizational setup to address our focus strategy. You can see the effects clearly here in the numbers, a significantly lower personnel cost base. Also in terms of IT infrastructure, we had a leaner spend compared to the year before. As a consequence, you saw the EBITDA improvement of EUR 1.3 million that also translated into an even higher increase in net income. That has two reasons. First of all, compared to the first half of last year, depreciation decreased further. As you will see in the balance sheet in a moment, particularly the depreciation on intangibles keeps decreasing. We also had a higher financial income from the higher cash reserves and the comparatively high interest rates compared to historical rates in the years before that we've been seeing. That puts us on a very good footing in terms of net income, which is overall EUR 1.7 million higher compared to the first half of last year. If we move over to the balance sheet on the next page, there's not really that many surprises in that picture. We have a very simple balance sheet in many forms. First of all, as mentioned before, intangible assets keep declining. We're now at only EUR 1 million of intangibles left related to the fact that we stopped capitalizing R&D expenses several years ago and now basically just depreciating down the existing assets. Total assets and liabilities obviously are at an elevated level mid-year compared to the beginning of the period due to the nature of our cash profile. A good chunk of our balance sheet consists of liquid assets and their corresponding position of deferred income on the liabilities side. This is obviously going to decrease towards year-end as we gradually recognize deferred income. That's going to convert into equity, and assets are going to decline, which also means that by the end of the year, our equity ratio, which currently stands mid-year at roughly 25%, will trend more towards 40% plus, all else equal. That is the balance sheet middle of this year. No radical surprises there. It's a gradual development over the past years. We're happy to continue that path down and be in a position to handle the strategic transition that Joerg elaborated on and also invest in important growth fields like AI and others. I've already briefly touched it before, but let's finish my part with the outlook. Next page. At this stage, as mentioned before, we're maintaining our guidance of mid-single-digit growth in both ARR and revenue. I already commented briefly on ARR growth. As said, we are expecting significantly lower churn dynamics in the second half of the year compared with a range of significant upsell opportunities in the focus sectors that we're working on and a growing pipeline of new logo opportunities, particularly in our core markets. At this stage, we're optimistic to be able to compensate the slightly elevated, compared to original expectations, churn dynamic in the non-focus sectors in the first half of the year with that strong growth momentum in the focus sectors. The same goes for revenue, whereas revenue is additionally bolstered from opportunities we are now seeing more and more from hardware and services, which give us revenue potential beyond the pure software potential. As a consequence of these two factors, we're obviously also maintaining our perspective on EBITDA, where we aim to reach a level of EUR 3 million-EUR 4 million and are on a good track to achieve that. That concludes the financial part. Let me briefly summarize what from our perspective we feel you should take away from today's call. I think first and foremost, what we can really see is that the focus vertical strategy is working. We're seeing very good growth momentum both in the context of significant upsell deals we were able to close and the types of leads that we're now in and discussions that we're now in in terms of opportunities and new logos. We are now already at 70% portfolio share, which is a shift that occurs slightly faster than we anticipated, but it also means that for the next 12 to 18 months, we're going to be converging faster to the healthy fundamentals in those sectors. We're sharpening our priorities on how we win. We clearly have good resonance on our messaging of unmatched speed, but also sovereignty and compliance. It's very much the zeitgeist of what's happening, particularly here in Europe. There's a huge amount of interest, which we clearly plan to further capitalize on. Our financial position that we've worked ourselves into puts us in a position to prepare for the future and invest in growth fields like the future of AI-driven analytics. We have the strategic flexibility to focus on these growth fields and also handle the transition of the customer base at the same time. With that, that concludes our remarks for today. Thank you for listening so far. I'm happy to take your questions. Judith, with your permission, I would immediately jump into answering Andrew's second question that he had. I think he posted the question already on page five, so he deserves the benefit of first come, first served. I'll hand it to your trusted hands for moderating or collecting the next set of questions. I hope, Andrew, I've addressed your first part of the question in terms of confidence for the second half of the year. In terms of cash balance, that's a very interesting question. I think we are right now in the process of preparing, getting into our planning for next year. Obviously, we're aiming to continue the path of profitable growth in our core Helix growth field. Helix is what we call our internal name for the on-premise or focus strategy that we've been talking about. There are several things that we can invest in in the field of AI and driving the product further. I think on a high level, the answer to your question is we will use certainly some of those funds to keep improving our product and see whether we can, what we need to do to stay competitive. If you want to jump on that and add further comments, feel free to do so. On a conceptual basis, there are other things you can do with the money as well, like buying back shares, paying dividends. I think the M&A at this stage, we don't really see because in the field where it would be interesting, like M&A, like AI, valuation multiples are so high that even with the money that we now have, it's not really meaningful, to be honest. We are currently reviewing what opportunities we have to invest in growth because from our perspective, that is what drives value creation most in our situation, also for our shareholders. How that balances out between what we see as positive ROI opportunities and how much it might make sense to maybe give back is something we're evaluating towards the end of the year. Thank you very much. Thank you for your presentation and the transparent dive into your results. Ladies and gentlemen, now it's your turn. As we enter the Q&A session, for a dynamic conversation, we kindly ask you to ask questions in person via audio line. To do so, please click on the raise your hand button. If you have dialed in by phone, please use the key combination 9 followed by 6. If you do not have the possibility to speak freely today, you can also place your questions in our chat box like Andrew. We have the first hand up from Mr. van der Horst. The stage is yours. Perfect. Thank you so much. Thanks for taking my question. I have a question basically about the pipeline in the second half of the year, especially with you mentioning that hardware sales or just let's call it like non-recurring revenues might increase. Is this also a relevant part of your pipeline for the second half of the year? In general, if you could help me out how to think about those non-recurring revenues going forward, will they be kind of the function of your gross upselling or how should I think about it? What do you think long-term would be kind of the revenue share of non-recurring versus recurring? Thanks. Maybe I answer the pipeline and kind of model the financial structure path of it. Joerg, you can jump on and elaborate a little bit on the strategic context and how we generally see it. On your first part, is it part of the second half of your pipeline? Yes, we do see several opportunities we are working on with customers dominantly in the focus sectors who are interested in getting such a broader range of services from us and that we are in the process of discussing and hopefully also closing. Depending, this will impact obviously both in one-off revenue and sometimes in part also recurring revenue. Sometimes the support contracts for these hardware services are then also in a recurring nature. Yes, they're part of the pipeline and they will influence our perspective there. It mostly happens with customers that are already with us and have built a trust with us. I'm at this stage not really aware of a new logo opportunity where we immediately jumped in with appliances, but we've just seen that as customers work with us, work with our software, and then also work with our customer service, they start seeing the benefit of having the issues related to their analytical tech stack addressed out of one hand. When it comes to expansions of their system or when their old hardware runs out in terms of life cycle and they think about what to do next, that's where usually there's an opening for us to have the discussion to either do an appliance sale or do a hosted server offering together with a partner or something like that. Apart obviously from the immediate economic potential of those deals, as Joerg already hinted at when presenting the slides, it's a nice way of intertwining us with a customer and prolonging customer life cycles, deepening the relationship, and knowing the system of the customer and their needs. There is definitely beyond the pure immediate transactional effect on the P&L, there's a customer life cycle aspect to it, which is really in tune with what we're trying to achieve in the focus strategy. Yeah. In terms of long-term share of those revenues, that's a little bit of a harder question to answer. To be honest, it wouldn't be serious. How to say that in English? Serious? Is it serious? It wouldn't be honest to give you just a prediction on that now. Obviously, that's business that's a bit more volatile. It's more opportunistic. It can vary in size quite significantly. For us, it's harder to predict. What we can do is look at, you know, we have an internal customer classification. There's diamond customers, sapphire customers. Our sales colleagues have come up with a very nice gemstone qualification of customers, and we can make assessments of how suitable they are and whether we believe they have a need. How much of these opportunities come up is harder to predict. I think if you look at our overall revenue end of last year, which was free of one-offs largely, it was roughly EUR 40 million. Looking at it maybe this and next year in the 10% range of P&L revenues is probably realistic. Maybe it grows as the customer base grows in the focus sectors. Okay, perfect. That was very helpful. Thank you. Yeah, maybe just one addition to what JD just said. I mean, these types of deals have basically four components that I think are important to understand. There's obviously the one-time hardware cost. We would, of course, always resell this to customers with a, let's say, meaningful margin for us. There's one-time revenue, plus one-time profit that we would generate out of it. There are two other elements. The other element is that we would usually not sell just the hardware. We would offer the customer a service agreement. That's recurring revenue that we get in conjunction with expanding our support offerings. We would typically include the platinum support contract for those customers. That's additional recurring revenue. Last but not least, when customers are doing that, they're usually increasing their data volume, which then also means more pure ARR, software ARR for us. In general, it's a good thing to do it. As JD described it, it's a bit hard to predict as these deals can be very large in nature because there's a lot of hardware, Dell, HP, Lenovo hardware involved. It's also a bit more complex to predict that. As we go through the remainder of the year and then look at 2026 as part of our business planning process, we'll put more thoughts behind what we think that actually is going to do on our business going forward. What we've been seeing is I think we have four or five, some larger, some smaller, of these opportunities that we've been working on, that we're working on, that may materialize in the not-so-distant future. I think it's clearly a trend. I think we at Exasol have also built up that reputation with our customer base that we're actually someone who can help customers on their journey in procuring their own hardware and putting it in their own data center. We even had one case, a final thought, where we're working on with StackIt, the company that we've been mentioning, to potentially own a hosted hardware solution for one of our large customers. Okay, perfect. Thanks. Thank you very much, Mr. van der Horst. Ladies and gentlemen, are there any questions left? Please raise your hand or post your question in our chat box. I will hold the room for another moment. That doesn't seem to be the situation. We therefore come to the end of today's earnings call. Thank you for joining and your interest in Exasol AG. Should further questions arise at a later time, please feel free to reach out to Stefanie Winkler from Investor Relations. A big thank you also to Mr. Tewes and Mr. Henrich for your presentation and the time you took to answer the questions. I wish you all a lovely remaining week. Stay healthy and safe. With this, I hand over again to Mr. Henrich for some final remarks. Yes, thanks, Judith. Nothing much else to say. Thank you also from our side for listening. If you have any additional thoughts or questions, don't hesitate to reach out to us via our IR contact details. Thanks very much. Thank you. Bye.

Speaker 2: Good day, ladies and gentlemen, and a warm welcome to today's earnings call of Exasol AG following the publication of the first half-year figures for the fiscal year 2025. I am delighted to welcome Exasol's CEO, Joerg Tewes, and CFO, Jan-Dirk Henrich, who will speak in a moment and guide us through the presentation and the results. After the presentation, we will move on to a Q&A session in which you will be allowed to place your questions directly to the management. I would say, let's jump straight into the numbers. Mr. Tewes, the stage is yours. Good day, ladies and gentlemen, and a warm welcome to today's earnings call of Exasol AG following the publication of the first half-year figures for the fiscal year 2025. good day ladies and gentlemen and a warm welcome to today's earnings call of exasol ag following the publication of the first half-year figures for the fiscal year 2025 I am delighted to welcome Exasol's CEO, Joerg Tewes, and CFO, Jan-Dirk Henrich, who will speak in a moment and guide us through the presentation and the results. i am delighted to welcome exasol's ceo joerg tewes and cfo jan-dirk henrich who will speak in a moment and guide us through the presentation and the results After the presentation, we will move on to a Q&A session in which you will be allowed to place your questions directly to the management. after the presentation we will move on to a q&a session in which you will be allowed to place your questions directly to the management I would say, let's jump straight into the numbers. i would say let's jump straight into the numbers Mr. Tewes, the stage is yours. mr tewes the stage is yours

Speaker 4: Yeah, hello. Good afternoon. Thanks for joining our earnings call. We are going to speak about our results in the first half of this fiscal year. Our CFO, JD Henrich, and myself will walk you through some business updates as well as more details on our numbers. Next slide, please. This is our standard disclaimer. Let's go straight to the key figures that we've accomplished in the first half of this year. We were able to grow our revenue to EUR 21.5 million. That's a year-over-year increase of 10.8%. Our ARR came at EUR 38.7 million. That's a 2.8% lower year-over-year comparison. EBITDA came in at EUR 2 million for the first half of this year, which is an increase over the EUR 700,000 last year. As a consequence, our net income also grew to EUR 1.4 million over the EUR 300,000 last year. We're continuing our journey into profitable growth for the company. Yeah, hello. yeah hello Good afternoon. good afternoon Thanks for joining our earnings call. thanks for joining our earnings call We are going to speak about our results in the first half of this fiscal year. we are going to speak about our results in the first half of this fiscal year Our CFO, JD Henrich, and myself will walk you through some business updates as well as more details on our numbers. our cfo jd henrich and myself will walk you through some business updates as well as more details on our numbers Next slide, please. next slide please This is our standard disclaimer. this is our standard disclaimer Let's go straight to the key figures that we've accomplished in the first half of this year. let's go straight to the key figures that we've accomplished in the first half of this year We were able to grow our revenue to EUR 21.5 million. we were able to grow our revenue to eur 21.5 million That's a year-over-year increase of 10.8%. that's a year-over-year increase of 10.8% Our ARR came at EUR 38.7 million. our arr came at eur 38.7 million That's a 2.8% lower year-over-year comparison. that's a 2.8% lower year-over-year comparison EBITDA came in at EUR 2 million for the first half of this year, which is an increase over the EUR 700,000 last year. ebitda came in at eur 2 million for the first half of this year which is an increase over the eur 700,000 last year As a consequence, our net income also grew to EUR 1.4 million over the EUR 300,000 last year. as a consequence our net income also grew to eur 1.4 million over the eur 300,000 last year We're continuing our journey into profitable growth for the company. we're continuing our journey into profitable growth for the company If you've been following us, and remember, we ended 2024 with the first year of EBITDA growth with a total of EUR 2 million. We're basically at this line already now in the first half of 2025. We're continuing our journey on more profitability for the business. We've been seeing strong ARR growth in our focus verticals. We'll share some more details on the following slides. In general, these focus verticals and their respective share on our overall ARR increased to 69%. For those of you who remember, we talked about that we expect that to be around 70% by the end of the year. I think also we're on the path of that shifting our business towards focus verticals. If you've been following us, and remember, we ended 2024 with the first year of EBITDA growth with a total of EUR 2 million. if you've been following us and remember we ended 2024 with the first year of ebitda growth with a total of eur 2 million We're basically at this line already now in the first half of 2025. we're basically at this line already now in the first half of 2025 We're continuing our journey on more profitability for the business. we're continuing our journey on more profitability for the business We've been seeing strong ARR growth in our focus verticals. we've been seeing strong arr growth in our focus verticals We'll share some more details on the following slides. we'll share some more details on the following slides In general, these focus verticals and their respective share on our overall ARR increased to 69%. in general these focus verticals and their respective share on our overall arr increased to 69% For those of you who remember, we talked about that we expect that to be around 70% by the end of the year. for those of you who remember we talked about that we expect that to be around 70% by the end of the year I think also we're on the path of that shifting our business towards focus verticals. i think also we're on the path of that shifting our business towards focus verticals We do have, or we want to call out one specific deal that we did, which is a renewal and upsell deal with Finanz Informatik, driven by their massive need for compute power, regulatory, and data compliance. We have also seen an uptick on add-on services to our core software business. We've been able to get around close to EUR 3 million revenue contribution in the first half through the delivery of hardware and services. I'm also going to cover that in more detail on a later slide. In general, our net liquidity grew up to EUR 22.2 million. I think is also a number that we've been looking at getting to EUR 20 million for the end of the year. We've been able to get over EUR 20 million this time of the year. That gives us enough operational and strategic flexibility to basically execute our strategy. Next slide. We do have, or we want to call out one specific deal that we did, which is a renewal and upsell deal with Finanz Informatik, driven by their massive need for compute power, regulatory, and data compliance. we do have or we want to call out one specific deal that we did which is a renewal and upsell deal with finanz informatik driven by their massive need for compute power regulatory and data compliance We have also seen an uptick on add-on services to our core software business. we have also seen an uptick on add-on services to our core software business We've been able to get around close to EUR 3 million revenue contribution in the first half through the delivery of hardware and services. we've been able to get around close to eur 3 million revenue contribution in the first half through the delivery of hardware and services I'm also going to cover that in more detail on a later slide. i'm also going to cover that in more detail on a later slide In general, our net liquidity grew up to EUR 22.2 million. in general our net liquidity grew up to eur 22.2 million I think is also a number that we've been looking at getting to EUR 20 million for the end of the year. i think is also a number that we've been looking at getting to eur 20 million for the end of the year We've been able to get over EUR 20 million this time of the year. we've been able to get over eur 20 million this time of the year That gives us enough operational and strategic flexibility to basically execute our strategy. that gives us enough operational and strategic flexibility to basically execute our strategy Next slide. next slide I will talk about the strategy and business updates. After that, I will hand over to JD for the financial update. Next slide, please. We have two key strategic priorities that we're in the process of executing and implementing. First is to continue to sharpen the group's profile on focus industries. In other words, go there where we are seeing traction, where we're seeing success, both with existing customers but also with potential new customers that we bring on board. We're actively working on strengthening our market presence, distribution, and awareness in those sectors. We are on our journey to position Exasol as a European analytics engine for price performance and technology leadership and data sovereignty. I will talk about the strategy and business updates. i will talk about the strategy and business updates After that, I will hand over to JD for the financial update. after that i will hand over to jd for the financial update Next slide, please. next slide please We have two key strategic priorities that we're in the process of executing and implementing. we have two key strategic priorities that we're in the process of executing and implementing First is to continue to sharpen the group's profile on focus industries. first is to continue to sharpen the group's profile on focus industries In other words, go there where we are seeing traction, where we're seeing success, both with existing customers but also with potential new customers that we bring on board. in other words go there where we are seeing traction where we're seeing success both with existing customers but also with potential new customers that we bring on board We're actively working on strengthening our market presence, distribution, and awareness in those sectors. we're actively working on strengthening our market presence distribution and awareness in those sectors We are on our journey to position Exasol as a European analytics engine for price performance and technology leadership and data sovereignty. we are on our journey to position exasol as a european analytics engine for price performance and technology leadership and data sovereignty Data sovereignty has become a very big topic for many companies, specifically here in the German-speaking countries, but also other European countries where there is the desire to find solutions, data solutions that make companies less dependent on U.S. companies. In general, that applies both to hyperscalers that provide a cloud infrastructure as well as a specific data solution. That's a trend that's really been helping us in the last three to six months. A lot of the interest that we get from the outside market in our product, in our company, actually is driven by larger enterprises being concerned about geopolitical turbulence. The other important topic for us where we're investing and where we also make progress is positioning Exasol as a leading solution in the space of AI-driven data analytics. We have a variety of our existing customers that have been implementing AI-based solutions with our analytics engine. Data sovereignty has become a very big topic for many companies, specifically here in the German-speaking countries, but also other European countries where there is the desire to find solutions, data solutions that make companies less dependent on U.S. companies. data sovereignty has become a very big topic for many companies specifically here in the german-speaking countries but also other european countries where there is the desire to find solutions data solutions that make companies less dependent on u.s companies In general, that applies both to hyperscalers that provide a cloud infrastructure as well as a specific data solution. in general that applies both to hyperscalers that provide a cloud infrastructure as well as a specific data solution That's a trend that's really been helping us in the last three to six months. that's a trend that's really been helping us in the last three to six months A lot of the interest that we get from the outside market in our product, in our company, actually is driven by larger enterprises being concerned about geopolitical turbulence. a lot of the interest that we get from the outside market in our product in our company actually is driven by larger enterprises being concerned about geopolitical turbulence The other important topic for us where we're investing and where we also make progress is positioning Exasol as a leading solution in the space of AI-driven data analytics. the other important topic for us where we're investing and where we also make progress is positioning exasol as a leading solution in the space of ai-driven data analytics We have a variety of our existing customers that have been implementing AI-based solutions with our analytics engine. we have a variety of our existing customers that have been implementing ai-based solutions with our analytics engine We're continuing our journey in that space and also investing in our product. On the next slide, you're going to see a recap. We shared that before, but I think it's important since it's a cornerstone of our strategy to be clear on our core customer, our ideal customer profile, ICP, who are we talking to and how we're going to do it. The primary drivers are the need for compliance, for performance, and optimized cost. We've been focusing now on several key industries. First and foremost, it's financial services. In financial services, there's banking and there's insurance. We see a lot of traction in the banking sector here in Germany, Austria, Switzerland, U.K. These are the regions where there, as I just said, there is this need for sovereign solutions, for solutions that run in the company's data center, on-premise solutions. We're continuing our journey in that space and also investing in our product. we're continuing our journey in that space and also investing in our product On the next slide, you're going to see a recap. on the next slide you're going to see a recap We shared that before, but I think it's important since it's a cornerstone of our strategy to be clear on our core customer, our ideal customer profile, ICP, who are we talking to and how we're going to do it. we shared that before but i think it's important since it's a cornerstone of our strategy to be clear on our core customer our ideal customer profile icp who are we talking to and how we're going to do it The primary drivers are the need for compliance, for performance, and optimized cost. the primary drivers are the need for compliance for performance and optimized cost We've been focusing now on several key industries. we've been focusing now on several key industries First and foremost, it's financial services. first and foremost it's financial services In financial services, there's banking and there's insurance. in financial services there's banking and there's insurance We see a lot of traction in the banking sector here in Germany, Austria, Switzerland, U.K. we see a lot of traction in the banking sector here in germany austria switzerland u.k These are the regions where there, as I just said, there is this need for sovereign solutions, for solutions that run in the company's data center, on-premise solutions. these are the regions where there as i just said there is this need for sovereign solutions for solutions that run in the company's data center on-premise solutions This is basically where we shine, where our product works extremely well, and where we are able to grow more business. Other areas that also fit into this more regulatory requirement are healthcare, telecommunication, utilities, and public sector. The nature is always there's a requirement for on-premise or hybrid solutions, a combination of on-premise with cloud solution as well as regulatory requirements. The regions also in the order of our commercial activities, like I said, in the forefront, it's the DACH region and then U.K, Nordics, and we continue also our journey in the U.S., both with our existing customers there and attracting new customers. How do we win in these spaces? Whenever there's a cloud repatriation need from a customer, we're there to help customers on their journey. This cloud repatriation typically has two potential reasons. One is cost. This is basically where we shine, where our product works extremely well, and where we are able to grow more business. this is basically where we shine where our product works extremely well and where we are able to grow more business Other areas that also fit into this more regulatory requirement are healthcare, telecommunication, utilities, and public sector. other areas that also fit into this more regulatory requirement are healthcare telecommunication utilities and public sector The nature is always there's a requirement for on-premise or hybrid solutions, a combination of on-premise with cloud solution as well as regulatory requirements. the nature is always there's a requirement for on-premise or hybrid solutions a combination of on-premise with cloud solution as well as regulatory requirements The regions also in the order of our commercial activities, like I said, in the forefront, it's the DACH region and then U.K, Nordics, and we continue also our journey in the U.S., both with our existing customers there and attracting new customers. the regions also in the order of our commercial activities like i said in the forefront it's the dach region and then u.k nordics and we continue also our journey in the u.s both with our existing customers there and attracting new customers How do we win in these spaces? how do we win in these spaces Whenever there's a cloud repatriation need from a customer, we're there to help customers on their journey. whenever there's a cloud repatriation need from a customer we're there to help customers on their journey This cloud repatriation typically has two potential reasons. this cloud repatriation typically has two potential reasons One is cost. one is cost A lot of customers have seen costs exploding in cloud data analytics solutions. We can help customers on reducing costs. As I just said, in the new world that we're in, data sovereignty plays an important role. Having a more independent data stack from U.S. providers plays an important role for our customers. We are refocusing or we continue to refocus. I mean, we shared this strategy update at the beginning of the year, and we're continuing to do that on our core strength as a high-performance on-premise data warehouse with prioritization of security, enterprise-grade services, and reliability. Next slide. Here you see the shift of our focus in numbers. We ended the year last in 2024 with a shift of 57% in focus verticals versus 43% in non-focus verticals. We have two effects in the first half of this year. We're growing revenue. A lot of customers have seen costs exploding in cloud data analytics solutions. a lot of customers have seen costs exploding in cloud data analytics solutions We can help customers on reducing costs. we can help customers on reducing costs As I just said, in the new world that we're in, data sovereignty plays an important role. as i just said in the new world that we're in data sovereignty plays an important role Having a more independent data stack from U.S. providers plays an important role for our customers. having a more independent data stack from u.s providers plays an important role for our customers We are refocusing or we continue to refocus. we are refocusing or we continue to refocus I mean, we shared this strategy update at the beginning of the year, and we're continuing to do that on our core strength as a high-performance on-premise data warehouse with prioritization of security, enterprise-grade services, and reliability. i mean we shared this strategy update at the beginning of the year and we're continuing to do that on our core strength as a high-performance on-premise data warehouse with prioritization of security enterprise-grade services and reliability Next slide. next slide Here you see the shift of our focus in numbers. here you see the shift of our focus in numbers We ended the year last in 2024 with a shift of 57% in focus verticals versus 43% in non-focus verticals. we ended the year last in 2024 with a shift of 57% in focus verticals versus 43% in non-focus verticals We have two effects in the first half of this year. we have two effects in the first half of this year We're growing revenue. we're growing revenue We've been able to upsell and also sign new customers in our focus vertical. We had some churn downsell in the non-focus vertical. Those two effects basically get us to that total shift of 69% in the market. Next slide, please. Here you see the breakdown on what's happening with our new business in a focus segment. We had a total of EUR 7.4 million ARR growth. We had an adverse effect of EUR 1.5 million in our core segment. Net-net, that's basically close to EUR 6 million of increased ARR in those focus verticals. Next slide, please. I want to call out a specific deal that we were able to close with customer Finanz Informatik. Finanz Informatik is the central IT backbone and service provider of the Sparkassen-Finanzgruppe, Sparkassen-Finanzgruppe in Germany, the regional saving banks, the Sparkassen. We've been able to upsell and also sign new customers in our focus vertical. we've been able to upsell and also sign new customers in our focus vertical We had some churn downsell in the non-focus vertical. we had some churn downsell in the non-focus vertical Those two effects basically get us to that total shift of 69% in the market. those two effects basically get us to that total shift of 69% in the market Next slide, please. next slide please Here you see the breakdown on what's happening with our new business in a focus segment. here you see the breakdown on what's happening with our new business in a focus segment We had a total of EUR 7.4 million ARR growth. we had a total of eur 7.4 million arr growth We had an adverse effect of EUR 1.5 million in our core segment. we had an adverse effect of eur 1.5 million in our core segment Net-net, that's basically close to EUR 6 million of increased ARR in those focus verticals. net-net that's basically close to eur 6 million of increased arr in those focus verticals Next slide, please. next slide please I want to call out a specific deal that we were able to close with customer Finanz Informatik. i want to call out a specific deal that we were able to close with customer finanz informatik Finanz Informatik is the central IT backbone and service provider of the Sparkassen-Finanzgruppe , Sparkassen-Finanzgruppe in Germany, the regional saving banks, the Sparkassen. finanz informatik is the central it backbone and service provider of the sparkassen-finanzgruppe sparkassen-finanzgruppe in germany the regional saving banks the sparkassen There are 343 different financial institutions that basically all together own the Finanz Informatik company that basically serves as their overall IT backbone. We have some data here in the middle. They have 114 million bank accounts. In average, every German has 1.5 accounts with the Sparkassen Gruppe. Their overall revenue is EUR 2.5 billion with over EUR 200 billion technical transactions. I think that's monthly data. There are significant use cases. We're involved in basically helping them to prepare data analytics for all their customers. There's a massive compute power to enable large-scale concurrency, real-time analytics, and reporting. We run in their data centers. They have two large data centers in Germany, one in Münster and one in Hannover, to help them also match regulatory requirements and data security compliance. It's in its very nature an on-premise solution that has been directly operated by Finanz Informatik itself. There are 343 different financial institutions that basically all together own the Finanz Informatik company that basically serves as their overall IT backbone. there are 343 different financial institutions that basically all together own the finanz informatik company that basically serves as their overall it backbone We have some data here in the middle. we have some data here in the middle They have 114 million bank accounts. they have 114 million bank accounts In average, every German has 1.5 accounts with the Sparkassen Gruppe. in average every german has 1.5 accounts with the sparkassen gruppe Their overall revenue is EUR 2.5 billion with over EUR 200 billion technical transactions. their overall revenue is eur 2.5 billion with over eur 200 billion technical transactions I think that's monthly data. i think that's monthly data There are significant use cases. there are significant use cases We're involved in basically helping them to prepare data analytics for all their customers. we're involved in basically helping them to prepare data analytics for all their customers There's a massive compute power to enable large-scale concurrency, real-time analytics, and reporting. there's a massive compute power to enable large-scale concurrency real-time analytics and reporting We run in their data centers. we run in their data centers They have two large data centers in Germany, one in Münster and one in Hannover, to help them also match regulatory requirements and data security compliance. they have two large data centers in germany one in münster and one in hannover to help them also match regulatory requirements and data security compliance It's in its very nature an on-premise solution that has been directly operated by Finanz Informatik itself. it's in its very nature an on-premise solution that has been directly operated by finanz informatik itself That's a really good win for us. It's been an existing customer, but we've been able to grow this customer substantially. We doubled our overall ARR with them. It's also extremely helpful because it's a visible deal that we also use as a reference in adjacent industries. Next slide. Here's another slide that details some of the key learnings and takeaways that we are experiencing as we go through this strategic shift. You see here that on P&L revenue, in revenue, unlike in the ARR metric, we're also accounting one-time effects. You see here that the overall percentage of hardware of one-time revenue actually increased nicely in 2024. We had close to EUR 3 million of the revenue coming from hardware deals. Hardware deals, by their nature, obviously have different margins than software. That's a really good win for us. that's a really good win for us It's been an existing customer, but we've been able to grow this customer substantially. it's been an existing customer but we've been able to grow this customer substantially We doubled our overall ARR with them. we doubled our overall arr with them It's also extremely helpful because it's a visible deal that we also use as a reference in adjacent industries. it's also extremely helpful because it's a visible deal that we also use as a reference in adjacent industries Next slide. next slide Here's another slide that details some of the key learnings and takeaways that we are experiencing as we go through this strategic shift. here's another slide that details some of the key learnings and takeaways that we are experiencing as we go through this strategic shift You see here that on P&L revenue, in revenue, unlike in the ARR metric, we're also accounting one-time effects. you see here that on p&l revenue in revenue unlike in the arr metric we're also accounting one-time effects You see here that the overall percentage of hardware of one-time revenue actually increased nicely in 2024. you see here that the overall percentage of hardware of one-time revenue actually increased nicely in 2024 We had close to EUR 3 million of the revenue coming from hardware deals. we had close to eur 3 million of the revenue coming from hardware deals Hardware deals, by their nature, obviously have different margins than software. hardware deals by their nature obviously have different margins than software The benefit of doing these larger hardware deals with customers is that we are able to really help customers to tailor their solutions to the needs, and we'll get closer to the customer. When we help customers with their hardware selection and services that go with hardware, we'll become a more integral part into the customer's overall landscape. I think it helps us to basically establish a longer-term business relationship with these customers. It obviously also has the effect that it helps us on our growing overall revenue. We've defined a model. We basically run this through our internal procurement, and then we enrich that hardware by pre-installing our software on this hardware and then basically also help customers to get them into production and to operate them. The benefit of doing these larger hardware deals with customers is that we are able to really help customers to tailor their solutions to the needs, and we'll get closer to the customer. the benefit of doing these larger hardware deals with customers is that we are able to really help customers to tailor their solutions to the needs and we'll get closer to the customer When we help customers with their hardware selection and services that go with hardware, we'll become a more integral part into the customer's overall landscape. when we help customers with their hardware selection and services that go with hardware we'll become a more integral part into the customer's overall landscape I think it helps us to basically establish a longer-term business relationship with these customers. i think it helps us to basically establish a longer-term business relationship with these customers It obviously also has the effect that it helps us on our growing overall revenue. it obviously also has the effect that it helps us on our growing overall revenue We've defined a model. we've defined a model We basically run this through our internal procurement, and then we enrich that hardware by pre-installing our software on this hardware and then basically also help customers to get them into production and to operate them. we basically run this through our internal procurement and then we enrich that hardware by pre-installing our software on this hardware and then basically also help customers to get them into production and to operate them I think another important aspect here is that the increase of regulatory requirements here in Europe helps us because we are really experts now in how we can help customers on DORA compliance, on NIS2. Having this domain know-how, specifically in the financial services industry, I think is just a key element of this strategy. Next slide. As part of that strategy, we've also been able to secure additional partnerships. On the right side, you see the hardware appliances vendors. We are working closely with both HP and Dell, basically just expanding on these hardware partnerships and then reselling some of their hardware to our end customers. What's new on the left side, you see the names StackIt, Exoscale, and Noise. StackIt is a regional cloud provider hosting all their data in Germany. I think another important aspect here is that the increase of regulatory requirements here in Europe helps us because we are really experts now in how we can help customers on DORA compliance, on NIS2. i think another important aspect here is that the increase of regulatory requirements here in europe helps us because we are really experts now in how we can help customers on dora compliance on nis2 Having this domain know-how, specifically in the financial services industry, I think is just a key element of this strategy. having this domain know-how specifically in the financial services industry i think is just a key element of this strategy Next slide. next slide As part of that strategy, we've also been able to secure additional partnerships. as part of that strategy we've also been able to secure additional partnerships On the right side, you see the hardware appliances vendors. on the right side you see the hardware appliances vendors We are working closely with both HP and Dell, basically just expanding on these hardware partnerships and then reselling some of their hardware to our end customers. we are working closely with both hp and dell basically just expanding on these hardware partnerships and then reselling some of their hardware to our end customers What's new on the left side, you see the names StackIt, Exoscale, and Noise. what's new on the left side you see the names stackit exoscale and noise StackIt is a regional cloud provider hosting all their data in Germany. stackit is a regional cloud provider hosting all their data in germany They're part of the Schwarz Gruppe, and they've become really popular for enterprise customers as an alternative to the traditional U.S. cloud hyperscalers like AWS, Microsoft Azure, or Google Cloud. The same applies to Exoscale. Exoscale is owned by the Austrian Telekom A1. They also operate data centers in Europe, in Central Europe, not just in Austria, but also in Germany, Switzerland, and in Eastern Europe. We also have a partnership with them now, basically helping customers to build regional cloud solutions or hybrid solutions where there's some element of on-premise and some element of cloud solutions. These players get a lot of traction, attention, and I think we are at the forefront on working together with them. Last but not least, noris network. We're on noris out of Nürnberg, where we traditionally partnered with for our ExaCloud solution. They're part of the Schwarz Gruppe, and they've become really popular for enterprise customers as an alternative to the traditional U.S. cloud hyperscalers like AWS, Microsoft Azure, or Google Cloud. they're part of the schwarz gruppe and they've become really popular for enterprise customers as an alternative to the traditional u.s cloud hyperscalers like aws microsoft azure or google cloud The same applies to Exoscale. the same applies to exoscale Exoscale is owned by the Austrian Telekom A1. exoscale is owned by the austrian telekom a1 They also operate data centers in Europe, in Central Europe, not just in Austria, but also in Germany, Switzerland, and in Eastern Europe. they also operate data centers in europe in central europe not just in austria but also in germany switzerland and in eastern europe We also have a partnership with them now, basically helping customers to build regional cloud solutions or hybrid solutions where there's some element of on-premise and some element of cloud solutions. we also have a partnership with them now basically helping customers to build regional cloud solutions or hybrid solutions where there's some element of on-premise and some element of cloud solutions These players get a lot of traction, attention, and I think we are at the forefront on working together with them. these players get a lot of traction attention and i think we are at the forefront on working together with them Last but not least, noris network . last but not least noris network We're on noris out of Nürnberg, where we traditionally partnered with for our ExaCloud solution. we're on noris out of nürnberg where we traditionally partnered with for our exacloud solution We also have now a few customers that are basically being manned by noris network on our behalf. Next slide. Let's speak about our plans and our product roadmap on AI. We've been talking about this in the past as well. We think, or we continue to think, that's not a new insight, that AI and data analytics will basically merge and that more and more enterprises will leverage AI, be that LLMs or be that the more traditional AI machine learning combined with big data combining to get better customer insights and enterprise decision-making. We are working on with actually several customers, and we're expanding our product towards workflows that seamlessly integrate with AI models so customers can do rapid development. One of our key strengths as Exasol is the high concurrency. We also have now a few customers that are basically being manned by noris n etwork on our behalf. we also have now a few customers that are basically being manned by noris n etwork on our behalf Next slide. next slide Let's speak about our plans and our product roadmap on AI. let's speak about our plans and our product roadmap on ai We've been talking about this in the past as well. we've been talking about this in the past as well We think, or we continue to think, that's not a new insight, that AI and data analytics will basically merge and that more and more enterprises will leverage AI, be that LLMs or be that the more traditional AI machine learning combined with big data combining to get better customer insights and enterprise decision-making. we think or we continue to think that's not a new insight that ai and data analytics will basically merge and that more and more enterprises will leverage ai be that llms or be that the more traditional ai machine learning combined with big data combining to get better customer insights and enterprise decision-making We are working on with actually several customers, and we're expanding our product towards workflows that seamlessly integrate with AI models so customers can do rapid development. we are working on with actually several customers and we're expanding our product towards workflows that seamlessly integrate with ai models so customers can do rapid development One of our key strengths as Exasol is the high concurrency. one of our key strengths as exasol is the high concurrency A lot of systems that are currently being built require that the backend solutions scale and have that massive parallel processing capabilities that's inherent to our product. That's where we're strong at. That's a key element. AI you can trust. I think it's important for every company to make sure that whatever gets being put into an AI system remains secure and stays governed. With our capability to run on-premise or, as I just described, in these regional clouds, that's an important requirement. Last but not least, the right price-performance ratio to be able to run massive workloads at predictable cost. That's also a key requirement from our customers. On the next slide, you see our roadmap. We're basically somewhere in the middle of this chart here. We released a product component called Text AI earlier this year. A lot of systems that are currently being built require that the backend solutions scale and have that massive parallel processing capabilities that's inherent to our product. a lot of systems that are currently being built require that the backend solutions scale and have that massive parallel processing capabilities that's inherent to our product That's where we're strong at. that's where we're strong at That's a key element. that's a key element AI you can trust. ai you can trust I think it's important for every company to make sure that whatever gets being put into an AI system remains secure and stays governed. i think it's important for every company to make sure that whatever gets being put into an ai system remains secure and stays governed With our capability to run on-premise or, as I just described, in these regional clouds, that's an important requirement. with our capability to run on-premise or as i just described in these regional clouds that's an important requirement Last but not least, the right price-performance ratio to be able to run massive workloads at predictable cost. last but not least the right price-performance ratio to be able to run massive workloads at predictable cost That's also a key requirement from our customers. that's also a key requirement from our customers On the next slide, you see our roadmap. on the next slide you see our roadmap We're basically somewhere in the middle of this chart here. we're basically somewhere in the middle of this chart here We released a product component called Text AI earlier this year. we released a product component called text ai earlier this year We're in the process, actually, this quarter to add GPU support so that customers can run their AI workloads in conjunction with our database through GPU. We have some benchmarks where we can show that there is a 24 times boost over non-GPU accelerated AI workloads. We're adding more AI functions to our core backend system. Also, in Q3, we're going to release an MCP server, an MCP server, which is going to be an essential part to integrate an Exasol data engine into Agentic AI environments. That's something that we've been reacting quickly to the Agentic AI trend. This gives customers the opportunity to put all their Exasol data engines or data backends into a modern Agentic AI stack. We're in the process, actually, this quarter to add GPU support so that customers can run their AI workloads in conjunction with our database through GPU. we're in the process actually this quarter to add gpu support so that customers can run their ai workloads in conjunction with our database through gpu We have some benchmarks where we can show that there is a 24 times boost over non-GPU accelerated AI workloads. we have some benchmarks where we can show that there is a 24 times boost over non-gpu accelerated ai workloads We're adding more AI functions to our core backend system. we're adding more ai functions to our core backend system Also, in Q3, we're going to release an MCP server, an MCP server, which is going to be an essential part to integrate an Exasol data e ngine into Agentic AI environments. also in q3 we're going to release an mcp server an mcp server which is going to be an essential part to integrate an exasol data e ngine into agentic ai environments That's something that we've been reacting quickly to the Agentic AI trend. that's something that we've been reacting quickly to the agentic ai trend This gives customers the opportunity to put all their Exasol data e ngines or data backends into a modern Agentic AI stack. this gives customers the opportunity to put all their exasol data e ngines or data backends into a modern agentic ai stack There are three additional components that we're working on right now, which would come either by the end of this year or next year, which is vector support so that we can store AI vector data directly natively in our engine. Last but not least, on the right side, which is also very important, we're going to support ARM, hard ARM processors, which will give customers the option to switch into more cost-effective environments. Next slide. That's a strategic update for me. Happy to take any questions at the end of the call. Now I'll hand over to JD for an update on the financial results. There are three additional components that we're working on right now, which would come either by the end of this year or next year, which is vector support so that we can store AI vector data directly natively in our engine. there are three additional components that we're working on right now which would come either by the end of this year or next year which is vector support so that we can store ai vector data directly natively in our engine Last but not least, on the right side, which is also very important, we're going to support ARM, hard ARM processors, which will give customers the option to switch into more cost-effective environments. last but not least on the right side which is also very important we're going to support arm hard arm processors which will give customers the option to switch into more cost-effective environments Next slide. next slide That's a strategic update for me. that's a strategic update for me Happy to take any questions at the end of the call. happy to take any questions at the end of the call Now I'll hand over to JD for an update on the financial results. now i'll hand over to jd for an update on the financial results

Speaker 1: Yeah, thank you very much, Joerg. Leading you through the usual structure on how I present the financial numbers to you, elaborating a little bit on both the ARR dynamics and P&L and balance sheet dynamics as of the middle of this year. Let's start, as usual, with looking at kind of the quarterly dynamics. I think Joerg has already pointed out in his summary that in the first half of the year, despite our very strong growth in the focus sectors, we saw a net ARR decline in the first two quarters. That's a dynamic that's not new to us. We've seen a similar pattern in the first half of last year, but it's been somewhat larger in the first half of this year, mostly driven by two larger customers in the retail space, so in one of our non-focus sectors who are moving away into a cloud setup. Yeah, thank you very much, Joerg. yeah thank you very much joerg Leading you through the usual structure on how I present the financial numbers to you, elaborating a little bit on both the ARR dynamics and P&L and balance sheet dynamics as of the middle of this year. leading you through the usual structure on how i present the financial numbers to you elaborating a little bit on both the arr dynamics and p&l and balance sheet dynamics as of the middle of this year Let's start, as usual, with looking at kind of the quarterly dynamics. let's start as usual with looking at kind of the quarterly dynamics I think Joerg has already pointed out in his summary that in the first half of the year, despite our very strong growth in the focus sectors, we saw a net ARR decline in the first two quarters. i think joerg has already pointed out in his summary that in the first half of the year despite our very strong growth in the focus sectors we saw a net arr decline in the first two quarters That's a dynamic that's not new to us. that's a dynamic that's not new to us We've seen a similar pattern in the first half of last year, but it's been somewhat larger in the first half of this year, mostly driven by two larger customers in the retail space, so in one of our non-focus sectors who are moving away into a cloud setup. we've seen a similar pattern in the first half of last year but it's been somewhat larger in the first half of this year mostly driven by two larger customers in the retail space so in one of our non-focus sectors who are moving away into a cloud setup That happened in Q1 and Q2, and as a consequence, led to slightly higher declines. If you look at the development of the focus sectors, as you already know from Joerg's chart, it's depicted here in the bubbles at the bottom. We've actually seen a growth of EUR 2.4 million in the first half of this year compared to only EUR 400,000 in the first half of last year. We accelerated our growth in the focus sectors in H1 compared to the same period last year and also won three new logos in the banking realm, particularly in Q2. That puts us to a point where we're now at EUR 38.7 million of ARR. Glancing at our chat in the presentation at the same time, there's a question by Andrew on how does that shape our perspective for the second half of the year. That happened in Q1 and Q2, and as a consequence, led to slightly higher declines. that happened in q1 and q2 and as a consequence led to slightly higher declines If you look at the development of the focus sectors, as you already know from Joerg's chart, it's depicted here in the bubbles at the bottom. if you look at the development of the focus sectors as you already know from joerg's chart it's depicted here in the bubbles at the bottom We've actually seen a growth of EUR 2.4 million in the first half of this year compared to only EUR 400,000 in the first half of last year. we've actually seen a growth of eur 2.4 million in the first half of this year compared to only eur 400,000 in the first half of last year We accelerated our growth in the focus sectors in H1 compared to the same period last year and also won three new logos in the banking realm, particularly in Q2. we accelerated our growth in the focus sectors in h1 compared to the same period last year and also won three new logos in the banking realm particularly in q2 That puts us to a point where we're now at EUR 38.7 million of ARR. that puts us to a point where we're now at eur 38.7 million of arr Glancing at our chat in the presentation at the same time, there's a question by Andrew on how does that shape our perspective for the second half of the year. glancing at our chat in the presentation at the same time there's a question by andrew on how does that shape our perspective for the second half of the year Let me answer that question as we look at the next page because it also has a lot to do with the churn dynamics that we expect in the second half of the year or the significant reduction thereof. Maybe first of all, looking at the 12-month perspective of ARR since the middle of last year, you can see that on a 12-month perspective, there was a mild decline of 3% and a net ARR retention rate which was below 100%. This is mostly driven by the elevated churn in the non-focus verticals, whereas the new business of more than EUR 9 million is almost 80%-90% driven by the focus verticals, which in sum gets results in the structural shift that Joerg talked about. Let me answer that question as we look at the next page because it also has a lot to do with the churn dynamics that we expect in the second half of the year or the significant reduction thereof. let me answer that question as we look at the next page because it also has a lot to do with the churn dynamics that we expect in the second half of the year or the significant reduction thereof Maybe first of all, looking at the 12-month perspective of ARR since the middle of last year, you can see that on a 12-month perspective, there was a mild decline of 3% and a net ARR retention rate which was below 100%. maybe first of all looking at the 12-month perspective of arr since the middle of last year you can see that on a 12-month perspective there was a mild decline of 3% and a net arr retention rate which was below 100% This is mostly driven by the elevated churn in the non-focus verticals, whereas the new business of more than EUR 9 million is almost 80%- 90% driven by the focus verticals, which in sum gets results in the structural shift that Joerg talked about. this is mostly driven by the elevated churn in the non-focus verticals whereas the new business of more than eur 9 million is almost 80%- 90% driven by the focus verticals which in sum gets results in the structural shift that joerg talked about If you look at the churn here, roughly 40% of this lost business is due to the two major retail customers I mentioned on the previous page that made the strategic shift in the cloud. In many ways, the ARR dynamics that you see in Q2 mark the overall shift in our very good representation and mark the shift in the structure of our largest customer from the retail space to the finance and banking space. We were able to also remember the very large deal we made with a large German state bank in December. Now the Finanz Informatik deal, which really made these companies our biggest customers, whereas the kind of legacy biggest customers in the non-focus sectors are reducing business with us. While we anticipated this decrease in principle as part of our strategy, overall, it happens at a slightly higher pace than was initially anticipated in Q2. If you look at the churn here, roughly 40% of this lost business is due to the two major retail customers I mentioned on the previous page that made the strategic shift in the cloud. if you look at the churn here roughly 40% of this lost business is due to the two major retail customers i mentioned on the previous page that made the strategic shift in the cloud In many ways, the ARR dynamics that you see in Q2 mark the overall shift in our very good representation and mark the shift in the structure of our largest customer from the retail space to the finance and banking space. in many ways the arr dynamics that you see in q2 mark the overall shift in our very good representation and mark the shift in the structure of our largest customer from the retail space to the finance and banking space We were able to also remember the very large deal we made with a large German state bank in December. we were able to also remember the very large deal we made with a large german state bank in december Now the Finanz Informatik deal, which really made these companies our biggest customers, whereas the kind of legacy biggest customers in the non-focus sectors are reducing business with us. now the finanz informatik deal which really made these companies our biggest customers whereas the kind of legacy biggest customers in the non-focus sectors are reducing business with us While we anticipated this decrease in principle as part of our strategy, overall, it happens at a slightly higher pace than was initially anticipated in Q2. while we anticipated this decrease in principle as part of our strategy overall it happens at a slightly higher pace than was initially anticipated in q2 I'll comment on our perspective for the second half in a moment. Overall, churn over the past 12 months was at 26%, therefore overcompensating the growth in the focus verticals. As outlined in the initial charts of the section, the non-focus vertical share in our overall portfolio keeps declining rapidly, though. We will see the subscription fundamentals, the very healthy ones that you saw for the focus verticals, and we will see the group dynamics gradually converge to those as this portfolio shift takes place. In particular, already in the second half of the year, we expect a significantly lower absolute churn than we've seen in the first half. This churn rate that we're observing in the middle of this year now is very likely going to represent the peak of our journey as the portfolio transforms. I'll comment on our perspective for the second half in a moment. i'll comment on our perspective for the second half in a moment Overall, churn over the past 12 months was at 26%, therefore overcompensating the growth in the focus verticals. overall churn over the past 12 months was at 26% therefore overcompensating the growth in the focus verticals As outlined in the initial charts of the section, the non-focus vertical share in our overall portfolio keeps declining rapidly, though. as outlined in the initial charts of the section the non-focus vertical share in our overall portfolio keeps declining rapidly though We will see the subscription fundamentals, the very healthy ones that you saw for the focus verticals, and we will see the group dynamics gradually converge to those as this portfolio shift takes place. we will see the subscription fundamentals the very healthy ones that you saw for the focus verticals and we will see the group dynamics gradually converge to those as this portfolio shift takes place In particular, already in the second half of the year, we expect a significantly lower absolute churn than we've seen in the first half. in particular already in the second half of the year we expect a significantly lower absolute churn than we've seen in the first half This churn rate that we're observing in the middle of this year now is very likely going to represent the peak of our journey as the portfolio transforms. this churn rate that we're observing in the middle of this year now is very likely going to represent the peak of our journey as the portfolio transforms We're now kind of then gradually returning to churn rates over the next months into next year, which are more in the churn dynamics of the focus verticals. For the second half of the year, that means to answer Andrew's question, our guidance is at kind of mid-single-digit percentage range growth, which means we would have to add at least EUR 4 million-EUR 4.5 million of net ARR in the second half of the year. Given what we're currently seeing in terms of upsell opportunities still in the pipeline for the second half of the year in the focus sectors, the reduced churn dynamics, the second half of the year will be significantly less impacted from churn. Plus, new logo opportunities that have been created since the inception of the new focus strategy make us optimistic to generate that kind of net growth in the second half of the year. We're now kind of then gradually returning to churn rates over the next months into next year, which are more in the churn dynamics of the focus verticals. we're now kind of then gradually returning to churn rates over the next months into next year which are more in the churn dynamics of the focus verticals For the second half of the year, that means to answer Andrew's question, our guidance is at kind of mid-single-digit percentage range growth, which means we would have to add at least EUR 4 million- EUR 4.5 million of net ARR in the second half of the year. for the second half of the year that means to answer andrew's question our guidance is at kind of mid-single-digit percentage range growth which means we would have to add at least eur 4 million- eur 4.5 million of net arr in the second half of the year Given what we're currently seeing in terms of upsell opportunities still in the pipeline for the second half of the year in the focus sectors, the reduced churn dynamics, the second half of the year will be significantly less impacted from churn. given what we're currently seeing in terms of upsell opportunities still in the pipeline for the second half of the year in the focus sectors the reduced churn dynamics the second half of the year will be significantly less impacted from churn Plus, new logo opportunities that have been created since the inception of the new focus strategy make us optimistic to generate that kind of net growth in the second half of the year. plus new logo opportunities that have been created since the inception of the new focus strategy make us optimistic to generate that kind of net growth in the second half of the year Moving on to the next page, looking at more on the profitability side. As you can see, and Joerg mentioned, we've continued our journey of profitability in Q2. Now, while EBITDA in Q2 was only at roughly half the level of Q1, we have to keep in mind that Q1 saw significant margin impacts from add-on hardware and services that were built on a non-recurring basis, I would call it, in the sense that the hardware and service business is not recurring in the same way as software subscription sales are. Obviously, when a customer decides to procure his or her hardware setup through us as well, this hardware also has life cycles and needs renewal. The renewal cycles are obviously different than subscription revenues. I'll also comment a little bit further on that in the full P&L in a moment. Q1 was influenced by that. Moving on to the next page, looking at more on the profitability side. moving on to the next page looking at more on the profitability side As you can see, and Joerg mentioned, we've continued our journey of profitability in Q2. as you can see and joerg mentioned we've continued our journey of profitability in q2 Now, while EBITDA in Q2 was only at roughly half the level of Q1, we have to keep in mind that Q1 saw significant margin impacts from add-on hardware and services that were built on a non-recurring basis, I would call it, in the sense that the hardware and service business is not recurring in the same way as software subscription sales are. now while ebitda in q2 was only at roughly half the level of q1 we have to keep in mind that q1 saw significant margin impacts from add-on hardware and services that were built on a non-recurring basis i would call it in the sense that the hardware and service business is not recurring in the same way as software subscription sales are Obviously, when a customer decides to procure his or her hardware setup through us as well, this hardware also has life cycles and needs renewal. obviously when a customer decides to procure his or her hardware setup through us as well this hardware also has life cycles and needs renewal The renewal cycles are obviously different than subscription revenues. the renewal cycles are obviously different than subscription revenues I'll also comment a little bit further on that in the full P&L in a moment. i'll also comment a little bit further on that in the full p&l in a moment Q1 was influenced by that. q1 was influenced by that Q2 still saw a profitability of EUR 700,000, which, looking at the pure recurring side of the business and software side of the business, also a run rate we feel comfortable with for the second half of the year, which will put us on a good path to achieve our EBITDA guidance. Any potential additional hardware and service opportunities that we're also working on is on top potential from a revenue and margin perspective. Liquidity-wise, we finished a half year at EUR 22.2 million. That's up almost EUR 5.5 million compared to the middle of last year. That's basically driven by two things. Obviously, the underlying profitability is higher compared to last year. What we've also seen is a continued shift of contract structures to have start and end dates at the beginning of the year. Contract structures that are aligned with a calendar year. Q2 still saw a profitability of EUR 700,000 , which, looking at the pure recurring side of the business and software side of the business, also a run rate we feel comfortable with for the second half of the year, which will put us on a good path to achieve our EBITDA guidance. q2 still saw a profitability of eur 700,000 which looking at the pure recurring side of the business and software side of the business also a run rate we feel comfortable with for the second half of the year which will put us on a good path to achieve our ebitda guidance Any potential additional hardware and service opportunities that we're also working on is on top potential from a revenue and margin perspective. any potential additional hardware and service opportunities that we're also working on is on top potential from a revenue and margin perspective Liquidity-wise, we finished a half year at EUR 22.2 million. liquidity-wise we finished a half year at eur 22.2 million That's up almost EUR 5.5 million compared to the middle of last year. that's up almost eur 5.5 million compared to the middle of last year That's basically driven by two things. that's basically driven by two things Obviously, the underlying profitability is higher compared to last year. obviously the underlying profitability is higher compared to last year What we've also seen is a continued shift of contract structures to have start and end dates at the beginning of the year. what we've also seen is a continued shift of contract structures to have start and end dates at the beginning of the year Contract structures that are aligned with a calendar year. contract structures that are aligned with a calendar year As a consequence, on these contracts, we're getting even higher cash inflows for the full year already at the beginning of the year, providing us with a very, very good cash buffer to tackle any tasks that we have throughout the year. Obviously, that puts us in a good position, both from a profitability and liquidity perspective, to handle the shift in our customer portfolio that we're currently experiencing. Let's double-click on EBITDA and net income by looking at the full P&L. What you can see here, that profitability increased by EUR 1.3 million as for profitability as expressed in EBITDA compared to the first half of last year. This was achieved despite a nominally reported lower gross profit of EUR 1.1 million, which I'd like to elaborate on a little bit. There were several dynamics at play in gross profit. As a consequence, on these contracts, we're getting even higher cash inflows for the full year already at the beginning of the year, providing us with a very, very good cash buffer to tackle any tasks that we have throughout the year. as a consequence on these contracts we're getting even higher cash inflows for the full year already at the beginning of the year providing us with a very very good cash buffer to tackle any tasks that we have throughout the year Obviously, that puts us in a good position, both from a profitability and liquidity perspective, to handle the shift in our customer portfolio that we're currently experiencing. obviously that puts us in a good position both from a profitability and liquidity perspective to handle the shift in our customer portfolio that we're currently experiencing Let's double-click on EBITDA and net income by looking at the full P&L. let's double-click on ebitda and net income by looking at the full p&l What you can see here, that profitability increased by EUR 1.3 million as for profitability as expressed in EBITDA compared to the first half of last year. what you can see here that profitability increased by eur 1.3 million as for profitability as expressed in ebitda compared to the first half of last year This was achieved despite a nominally reported lower gross profit of EUR 1.1 million, which I'd like to elaborate on a little bit. this was achieved despite a nominally reported lower gross profit of eur 1.1 million which i'd like to elaborate on a little bit There were several dynamics at play in gross profit. there were several dynamics at play in gross profit Now, looking at the pure operational business, first of all, you can see that overall revenues actually rose by EUR 2.1 million. There is a decline in the annually recurring revenues, so the software license revenue, which is not surprising given the mild ARR decline on a 12-month basis that we've shown you on the previous chart. That was overcompensated by revenues from non-annually recurring transactions for hardware and services. On a margin level, these two revenue impacts pretty much cancel each other out. If we look at margin from the recurring business and the margin coming from the one-off business, these two, the negative and the positive impact here on the margin level, balance each other out. From a pure revenue and related operational margin perspective, gross profit would have remained stable given this development. The net decline observed is rather almost fully driven by effects in other operating income. Now, looking at the pure operational business, first of all, you can see that overall revenues actually rose by EUR 2.1 million. now looking at the pure operational business first of all you can see that overall revenues actually rose by eur 2.1 million There is a decline in the annually recurring revenues, so the software license revenue, which is not surprising given the mild ARR decline on a 12-month basis that we've shown you on the previous chart. there is a decline in the annually recurring revenues so the software license revenue which is not surprising given the mild arr decline on a 12-month basis that we've shown you on the previous chart That was overcompensated by revenues from non-annually recurring transactions for hardware and services. that was overcompensated by revenues from non-annually recurring transactions for hardware and services On a margin level, these two revenue impacts pretty much cancel each other out. on a margin level these two revenue impacts pretty much cancel each other out If we look at margin from the recurring business and the margin coming from the one-off business, these two, the negative and the positive impact here on the margin level, balance each other out. if we look at margin from the recurring business and the margin coming from the one-off business these two the negative and the positive impact here on the margin level balance each other out From a pure revenue and related operational margin perspective, gross profit would have remained stable given this development. from a pure revenue and related operational margin perspective gross profit would have remained stable given this development The net decline observed is rather almost fully driven by effects in other operating income. the net decline observed is rather almost fully driven by effects in other operating income The biggest is a lower booking of research grants in the first half of this year compared to the first half of last year. In the first half of last year, in other operating income, we had roughly EUR 1 million of research grants that are granted by the German government to support the type of projects in the field of AI and big data science that we're engaged in. In the first half of this year, so far, we've only booked EUR 400,000. There were some other one-time effects in OOI that then basically drove this delta of EUR 1.1 million in gross profit. Part of that gap or decline is only temporary. In the meantime, we've received approval by the Ministry of Finance for additional grants and additional projects. We will book additional research grants in the second half of the year, which we didn't do last year. The biggest is a lower booking of research grants in the first half of this year compared to the first half of last year. the biggest is a lower booking of research grants in the first half of this year compared to the first half of last year In the first half of last year, in other operating income, we had roughly EUR 1 million of research grants that are granted by the German government to support the type of projects in the field of AI and big data science that we're engaged in. in the first half of last year in other operating income we had roughly eur 1 million of research grants that are granted by the german government to support the type of projects in the field of ai and big data science that we're engaged in In the first half of this year, so far, we've only booked EUR 400,000. in the first half of this year so far we've only booked eur 400,000 There were some other one-time effects in OOI that then basically drove this delta of EUR 1.1 million in gross profit. there were some other one-time effects in ooi that then basically drove this delta of eur 1.1 million in gross profit Part of that gap or decline is only temporary. part of that gap or decline is only temporary In the meantime, we've received approval by the Ministry of Finance for additional grants and additional projects. in the meantime we've received approval by the ministry of finance for additional grants and additional projects We will book additional research grants in the second half of the year, which we didn't do last year. we will book additional research grants in the second half of the year which we didn't do last year This gap you will see decreasing as we start looking at the full-year numbers. This is what really ensured the profitability in H1 then, in the end, was the observed impacts in our cost base from the final organizational alignments that we executed towards the end of last year and going into the year, which led us enter into this year with a very clear and streamlined organizational setup to address our focus strategy. You can see the effects clearly here in the numbers, a significantly lower personnel cost base. Also in terms of IT infrastructure, we had a leaner spend compared to the year before. As a consequence, you saw the EBITDA improvement of EUR 1.3 million that also translated into an even higher increase in net income. That has two reasons. First of all, compared to the first half of last year, depreciation decreased further. This gap you will see decreasing as we start looking at the full-year numbers. this gap you will see decreasing as we start looking at the full-year numbers This is what really ensured the profitability in H1 then, in the end, was the observed impacts in our cost base from the final organizational alignments that we executed towards the end of last year and going into the year, which led us enter into this year with a very clear and streamlined organizational setup to address our focus strategy. this is what really ensured the profitability in h1 then in the end was the observed impacts in our cost base from the final organizational alignments that we executed towards the end of last year and going into the year which led us enter into this year with a very clear and streamlined organizational setup to address our focus strategy You can see the effects clearly here in the numbers, a significantly lower personnel cost base. you can see the effects clearly here in the numbers a significantly lower personnel cost base Also in terms of IT infrastructure, we had a leaner spend compared to the year before. also in terms of it infrastructure we had a leaner spend compared to the year before As a consequence, you saw the EBITDA improvement of EUR 1.3 million that also translated into an even higher increase in net income. as a consequence you saw the ebitda improvement of eur 1.3 million that also translated into an even higher increase in net income That has two reasons. that has two reasons First of all, compared to the first half of last year, depreciation decreased further. first of all compared to the first half of last year depreciation decreased further As you will see in the balance sheet in a moment, particularly the depreciation on intangibles keeps decreasing. We also had a higher financial income from the higher cash reserves and the comparatively high interest rates compared to historical rates in the years before that we've been seeing. That puts us on a very good footing in terms of net income, which is overall EUR 1.7 million higher compared to the first half of last year. If we move over to the balance sheet on the next page, there's not really that many surprises in that picture. We have a very simple balance sheet in many forms. First of all, as mentioned before, intangible assets keep declining. We're now at only EUR 1 million of intangibles left related to the fact that we stopped capitalizing R&D expenses several years ago and now basically just depreciating down the existing assets. As you will see in the balance sheet in a moment, particularly the depreciation on intangibles keeps decreasing. as you will see in the balance sheet in a moment particularly the depreciation on intangibles keeps decreasing We also had a higher financial income from the higher cash reserves and the comparatively high interest rates compared to historical rates in the years before that we've been seeing. we also had a higher financial income from the higher cash reserves and the comparatively high interest rates compared to historical rates in the years before that we've been seeing That puts us on a very good footing in terms of net income, which is overall EUR 1.7 million higher compared to the first half of last year. that puts us on a very good footing in terms of net income which is overall eur 1.7 million higher compared to the first half of last year If we move over to the balance sheet on the next page, there's not really that many surprises in that picture. if we move over to the balance sheet on the next page there's not really that many surprises in that picture We have a very simple balance sheet in many forms. we have a very simple balance sheet in many forms First of all, as mentioned before, intangible assets keep declining. first of all as mentioned before intangible assets keep declining We're now at only EUR 1 million of intangibles left related to the fact that we stopped capitalizing R&D expenses several years ago and now basically just depreciating down the existing assets. we're now at only eur 1 million of intangibles left related to the fact that we stopped capitalizing r&d expenses several years ago and now basically just depreciating down the existing assets Total assets and liabilities obviously are at an elevated level mid-year compared to the beginning of the period due to the nature of our cash profile. A good chunk of our balance sheet consists of liquid assets and their corresponding position of deferred income on the liabilities side. This is obviously going to decrease towards year-end as we gradually recognize deferred income. That's going to convert into equity, and assets are going to decline, which also means that by the end of the year, our equity ratio, which currently stands mid-year at roughly 25%, will trend more towards 40% plus, all else equal. That is the balance sheet middle of this year. No radical surprises there. It's a gradual development over the past years. Total assets and liabilities obviously are at an elevated level mid-year compared to the beginning of the period due to the nature of our cash profile. total assets and liabilities obviously are at an elevated level mid-year compared to the beginning of the period due to the nature of our cash profile A good chunk of our balance sheet consists of liquid assets and their corresponding position of deferred income on the liabilities side. a good chunk of our balance sheet consists of liquid assets and their corresponding position of deferred income on the liabilities side This is obviously going to decrease towards year-end as we gradually recognize deferred income. this is obviously going to decrease towards year-end as we gradually recognize deferred income That's going to convert into equity, and assets are going to decline, which also means that by the end of the year, our equity ratio, which currently stands mid-year at roughly 25%, will trend more towards 40% plus, all else equal. that's going to convert into equity and assets are going to decline which also means that by the end of the year our equity ratio which currently stands mid-year at roughly 25% will trend more towards 40% plus all else equal That is the balance sheet middle of this year. that is the balance sheet middle of this year No radical surprises there. no radical surprises there It's a gradual development over the past years. it's a gradual development over the past years We're happy to continue that path down and be in a position to handle the strategic transition that Joerg elaborated on and also invest in important growth fields like AI and others. I've already briefly touched it before, but let's finish my part with the outlook. Next page. At this stage, as mentioned before, we're maintaining our guidance of mid-single-digit growth in both ARR and revenue. I already commented briefly on ARR growth. As said, we are expecting significantly lower churn dynamics in the second half of the year compared with a range of significant upsell opportunities in the focus sectors that we're working on and a growing pipeline of new logo opportunities, particularly in our core markets. We're happy to continue that path down and be in a position to handle the strategic transition that Joerg elaborated on and also invest in important growth fields like AI and others. we're happy to continue that path down and be in a position to handle the strategic transition that joerg elaborated on and also invest in important growth fields like ai and others I've already briefly touched it before, but let's finish my part with the outlook. i've already briefly touched it before but let's finish my part with the outlook Next page. next page At this stage, as mentioned before, we're maintaining our guidance of mid-single-digit growth in both ARR and revenue. at this stage as mentioned before we're maintaining our guidance of mid-single-digit growth in both arr and revenue I already commented briefly on ARR growth. i already commented briefly on arr growth As said, we are expecting significantly lower churn dynamics in the second half of the year compared with a range of significant upsell opportunities in the focus sectors that we're working on and a growing pipeline of new logo opportunities, particularly in our core markets. as said we are expecting significantly lower churn dynamics in the second half of the year compared with a range of significant upsell opportunities in the focus sectors that we're working on and a growing pipeline of new logo opportunities particularly in our core markets At this stage, we're optimistic to be able to compensate the slightly elevated, compared to original expectations, churn dynamic in the non-focus sectors in the first half of the year with that strong growth momentum in the focus sectors. The same goes for revenue, whereas revenue is additionally bolstered from opportunities we are now seeing more and more from hardware and services, which give us revenue potential beyond the pure software potential. As a consequence of these two factors, we're obviously also maintaining our perspective on EBITDA, where we aim to reach a level of EUR 3 million-EUR 4 million and are on a good track to achieve that. That concludes the financial part. Let me briefly summarize what from our perspective we feel you should take away from today's call. I think first and foremost, what we can really see is that the focus vertical strategy is working. At this stage, we're optimistic to be able to compensate the slightly elevated, compared to original expectations, churn dynamic in the non-focus sectors in the first half of the year with that strong growth momentum in the focus sectors. The same goes for revenue, whereas revenue is additionally bolstered from opportunities we are now seeing more and more from hardware and services, which give us revenue potential beyond the pure software potential. at this stage we're optimistic to be able to compensate the slightly elevated compared to original expectations churn dynamic in the non-focus sectors in the first half of the year with that strong growth momentum in the focus sectors. the same goes for revenue whereas revenue is additionally bolstered from opportunities we are now seeing more and more from hardware and services which give us revenue potential beyond the pure software potential As a consequence of these two factors, we're obviously also maintaining our perspective on EBITDA, where we aim to reach a level of EUR 3 million- EUR 4 million and are on a good track to achieve that. as a consequence of these two factors we're obviously also maintaining our perspective on ebitda where we aim to reach a level of eur 3 million- eur 4 million and are on a good track to achieve that That concludes the financial part. that concludes the financial part Let me briefly summarize what from our perspective we feel you should take away from today's call. let me briefly summarize what from our perspective we feel you should take away from today's call I think first and foremost, what we can really see is that the focus vertical strategy is working. i think first and foremost what we can really see is that the focus vertical strategy is working We're seeing very good growth momentum both in the context of significant upsell deals we were able to close and the types of leads that we're now in and discussions that we're now in in terms of opportunities and new logos. We are now already at 70% portfolio share, which is a shift that occurs slightly faster than we anticipated, but it also means that for the next 12 to 18 months, we're going to be converging faster to the healthy fundamentals in those sectors. We're sharpening our priorities on how we win. We clearly have good resonance on our messaging of unmatched speed, but also sovereignty and compliance. It's very much the zeitgeist of what's happening, particularly here in Europe. There's a huge amount of interest, which we clearly plan to further capitalize on. We're seeing very good growth momentum both in the context of significant upsell deals we were able to close and the types of leads that we're now in and discussions that we're now in in terms of opportunities and new logos. we're seeing very good growth momentum both in the context of significant upsell deals we were able to close and the types of leads that we're now in and discussions that we're now in in terms of opportunities and new logos We are now already at 70% portfolio share, which is a shift that occurs slightly faster than we anticipated, but it also means that for the next 12 to 18 months, we're going to be converging faster to the healthy fundamentals in those sectors. we are now already at 70% portfolio share which is a shift that occurs slightly faster than we anticipated but it also means that for the next 12 to 18 months we're going to be converging faster to the healthy fundamentals in those sectors We're sharpening our priorities on how we win. we're sharpening our priorities on how we win We clearly have good resonance on our messaging of unmatched speed, but also sovereignty and compliance. we clearly have good resonance on our messaging of unmatched speed but also sovereignty and compliance It's very much the zeitgeist of what's happening, particularly here in Europe. it's very much the zeitgeist of what's happening particularly here in europe There's a huge amount of interest, which we clearly plan to further capitalize on. there's a huge amount of interest which we clearly plan to further capitalize on Our financial position that we've worked ourselves into puts us in a position to prepare for the future and invest in growth fields like the future of AI-driven analytics. We have the strategic flexibility to focus on these growth fields and also handle the transition of the customer base at the same time. With that, that concludes our remarks for today. Thank you for listening so far. I'm happy to take your questions. Judith, with your permission, I would immediately jump into answering Andrew's second question that he had. I think he posted the question already on page five, so he deserves the benefit of first come, first served. I'll hand it to your trusted hands for moderating or collecting the next set of questions. I hope, Andrew, I've addressed your first part of the question in terms of confidence for the second half of the year. Our financial position that we've worked ourselves into puts us in a position to prepare for the future and invest in growth fields like the future of AI-driven analytics. our financial position that we've worked ourselves into puts us in a position to prepare for the future and invest in growth fields like the future of ai-driven analytics We have the strategic flexibility to focus on these growth fields and also handle the transition of the customer base at the same time. we have the strategic flexibility to focus on these growth fields and also handle the transition of the customer base at the same time With that, that concludes our remarks for today. with that that concludes our remarks for today Thank you for listening so far. thank you for listening so far I'm happy to take your questions. i'm happy to take your questions Judith, with your permission, I would immediately jump into answering Andrew's second question that he had. judith with your permission i would immediately jump into answering andrew's second question that he had I think he posted the question already on page five, so he deserves the benefit of first come, first served. i think he posted the question already on page five so he deserves the benefit of first come first served I'll hand it to your trusted hands for moderating or collecting the next set of questions. i'll hand it to your trusted hands for moderating or collecting the next set of questions I hope, Andrew, I've addressed your first part of the question in terms of confidence for the second half of the year. i hope andrew i've addressed your first part of the question in terms of confidence for the second half of the year In terms of cash balance, that's a very interesting question. I think we are right now in the process of preparing, getting into our planning for next year. Obviously, we're aiming to continue the path of profitable growth in our core Helix growth field. Helix is what we call our internal name for the on-premise or focus strategy that we've been talking about. There are several things that we can invest in in the field of AI and driving the product further. I think on a high level, the answer to your question is we will use certainly some of those funds to keep improving our product and see whether we can, what we need to do to stay competitive. If you want to jump on that and add further comments, feel free to do so. In terms of cash balance, that's a very interesting question. in terms of cash balance that's a very interesting question I think we are right now in the process of preparing, getting into our planning for next year. i think we are right now in the process of preparing getting into our planning for next year Obviously, we're aiming to continue the path of profitable growth in our core Helix growth field. obviously we're aiming to continue the path of profitable growth in our core helix growth field Helix is what we call our internal name for the on-premise or focus strategy that we've been talking about. helix is what we call our internal name for the on-premise or focus strategy that we've been talking about There are several things that we can invest in in the field of AI and driving the product further. there are several things that we can invest in in the field of ai and driving the product further I think on a high level, the answer to your question is we will use certainly some of those funds to keep improving our product and see whether we can, what we need to do to stay competitive. i think on a high level the answer to your question is we will use certainly some of those funds to keep improving our product and see whether we can what we need to do to stay competitive If you want to jump on that and add further comments, feel free to do so. if you want to jump on that and add further comments feel free to do so On a conceptual basis, there are other things you can do with the money as well, like buying back shares, paying dividends. I think the M&A at this stage, we don't really see because in the field where it would be interesting, like M&A, like AI, valuation multiples are so high that even with the money that we now have, it's not really meaningful, to be honest. We are currently reviewing what opportunities we have to invest in growth because from our perspective, that is what drives value creation most in our situation, also for our shareholders. How that balances out between what we see as positive ROI opportunities and how much it might make sense to maybe give back is something we're evaluating towards the end of the year. On a conceptual basis, there are other things you can do with the money as well, like buying back shares, paying dividends. on a conceptual basis there are other things you can do with the money as well like buying back shares paying dividends I think the M&A at this stage, we don't really see because in the field where it would be interesting, like M&A, like AI, valuation multiples are so high that even with the money that we now have, it's not really meaningful, to be honest. i think the m&a at this stage we don't really see because in the field where it would be interesting like m&a like ai valuation multiples are so high that even with the money that we now have it's not really meaningful to be honest We are currently reviewing what opportunities we have to invest in growth because from our perspective, that is what drives value creation most in our situation, also for our shareholders. we are currently reviewing what opportunities we have to invest in growth because from our perspective that is what drives value creation most in our situation also for our shareholders How that balances out between what we see as positive ROI opportunities and how much it might make sense to maybe give back is something we're evaluating towards the end of the year. how that balances out between what we see as positive roi opportunities and how much it might make sense to maybe give back is something we're evaluating towards the end of the year

Speaker 2: Thank you very much. Thank you for your presentation and the transparent dive into your results. Ladies and gentlemen, now it's your turn. As we enter the Q&A session, for a dynamic conversation, we kindly ask you to ask questions in person via audio line. To do so, please click on the raise your hand button. If you have dialed in by phone, please use the key combination 9 followed by 6. If you do not have the possibility to speak freely today, you can also place your questions in our chat box like Andrew. We have the first hand up from Mr. van der Horst. The stage is yours. Thank you very much. thank you very much Thank you for your presentation and the transparent dive into your results. thank you for your presentation and the transparent dive into your results Ladies and gentlemen, now it's your turn. ladies and gentlemen now it's your turn As we enter the Q&A session, for a dynamic conversation, we kindly ask you to ask questions in person via audio line. as we enter the q&a session for a dynamic conversation we kindly ask you to ask questions in person via audio line To do so, please click on the raise your hand button. to do so please click on the raise your hand button If you have dialed in by phone, please use the key combination 9 followed by 6. if you have dialed in by phone please use the key combination 9 followed by 6 If you do not have the possibility to speak freely today, you can also place your questions in our chat box like Andrew. if you do not have the possibility to speak freely today you can also place your questions in our chat box like andrew We have the first hand up from Mr. van der Horst. we have the first hand up from mr van der horst The stage is yours. the stage is yours Perfect. Thank you so much. Thanks for taking my question. I have a question basically about the pipeline in the second half of the year, especially with you mentioning that hardware sales or just let's call it like non-recurring revenues might increase. Is this also a relevant part of your pipeline for the second half of the year? In general, if you could help me out how to think about those non-recurring revenues going forward, will they be kind of the function of your gross upselling or how should I think about it? What do you think long-term would be kind of the revenue share of non-recurring versus recurring? Thanks. Perfect. perfect Thank you so much. thank you so much Thanks for taking my question. thanks for taking my question I have a question basically about the pipeline in the second half of the year, especially with you mentioning that hardware sales or just let's call it like non-recurring revenues might increase. i have a question basically about the pipeline in the second half of the year especially with you mentioning that hardware sales or just let's call it like non-recurring revenues might increase Is this also a relevant part of your pipeline for the second half of the year? is this also a relevant part of your pipeline for the second half of the year In general, if you could help me out how to think about those non-recurring revenues going forward, will they be kind of the function of your gross upselling or how should I think about it? in general if you could help me out how to think about those non-recurring revenues going forward will they be kind of the function of your gross upselling or how should i think about it What do you think long-term would be kind of the revenue share of non-recurring versus recurring? what do you think long-term would be kind of the revenue share of non-recurring versus recurring Thanks. thanks

Speaker 1: Maybe I answer the pipeline and kind of model the financial structure path of it. Joerg, you can jump on and elaborate a little bit on the strategic context and how we generally see it. On your first part, is it part of the second half of your pipeline? Yes, we do see several opportunities we are working on with customers dominantly in the focus sectors who are interested in getting such a broader range of services from us and that we are in the process of discussing and hopefully also closing. Depending, this will impact obviously both in one-off revenue and sometimes in part also recurring revenue. Sometimes the support contracts for these hardware services are then also in a recurring nature. Yes, they're part of the pipeline and they will influence our perspective there. Maybe I answer the pipeline and kind of model the financial structure path of it. maybe i answer the pipeline and kind of model the financial structure path of it Joerg, you can jump on and elaborate a little bit on the strategic context and how we generally see it. joerg you can jump on and elaborate a little bit on the strategic context and how we generally see it On your first part, is it part of the second half of your pipeline? on your first part is it part of the second half of your pipeline Yes, we do see several opportunities we are working on with customers dominantly in the focus sectors who are interested in getting such a broader range of services from us and that we are in the process of discussing and hopefully also closing. yes we do see several opportunities we are working on with customers dominantly in the focus sectors who are interested in getting such a broader range of services from us and that we are in the process of discussing and hopefully also closing Depending, this will impact obviously both in one-off revenue and sometimes in part also recurring revenue. depending this will impact obviously both in one-off revenue and sometimes in part also recurring revenue Sometimes the support contracts for these hardware services are then also in a recurring nature. sometimes the support contracts for these hardware services are then also in a recurring nature Yes, they're part of the pipeline and they will influence our perspective there. yes they're part of the pipeline and they will influence our perspective there It mostly happens with customers that are already with us and have built a trust with us. I'm at this stage not really aware of a new logo opportunity where we immediately jumped in with appliances, but we've just seen that as customers work with us, work with our software, and then also work with our customer service, they start seeing the benefit of having the issues related to their analytical tech stack addressed out of one hand. When it comes to expansions of their system or when their old hardware runs out in terms of life cycle and they think about what to do next, that's where usually there's an opening for us to have the discussion to either do an appliance sale or do a hosted server offering together with a partner or something like that. It mostly happens with customers that are already with us and have built a trust with us. it mostly happens with customers that are already with us and have built a trust with us I'm at this stage not really aware of a new logo opportunity where we immediately jumped in with appliances, but we've just seen that as customers work with us, work with our software, and then also work with our customer service, they start seeing the benefit of having the issues related to their analytical tech stack addressed out of one hand. i'm at this stage not really aware of a new logo opportunity where we immediately jumped in with appliances but we've just seen that as customers work with us work with our software and then also work with our customer service they start seeing the benefit of having the issues related to their analytical tech stack addressed out of one hand When it comes to expansions of their system or when their old hardware runs out in terms of life cycle and they think about what to do next, that's where usually there's an opening for us to have the discussion to either do an appliance sale or do a hosted server offering together with a partner or something like that. when it comes to expansions of their system or when their old hardware runs out in terms of life cycle and they think about what to do next that's where usually there's an opening for us to have the discussion to either do an appliance sale or do a hosted server offering together with a partner or something like that Apart obviously from the immediate economic potential of those deals, as Joerg already hinted at when presenting the slides, it's a nice way of intertwining us with a customer and prolonging customer life cycles, deepening the relationship, and knowing the system of the customer and their needs. There is definitely beyond the pure immediate transactional effect on the P&L, there's a customer life cycle aspect to it, which is really in tune with what we're trying to achieve in the focus strategy. Apart obviously from the immediate economic potential of those deals, as Joerg already hinted at when presenting the slides, it's a nice way of intertwining us with a customer and prolonging customer life cycles, deepening the relationship, and knowing the system of the customer and their needs. apart obviously from the immediate economic potential of those deals as joerg already hinted at when presenting the slides it's a nice way of intertwining us with a customer and prolonging customer life cycles deepening the relationship and knowing the system of the customer and their needs There is definitely beyond the pure immediate transactional effect on the P&L, there's a customer life cycle aspect to it, which is really in tune with what we're trying to achieve in the focus strategy. there is definitely beyond the pure immediate transactional effect on the p&l there's a customer life cycle aspect to it which is really in tune with what we're trying to achieve in the focus strategy Yeah. In terms of long-term share of those revenues, that's a little bit of a harder question to answer. To be honest, it wouldn't be serious. How to say that in English? Yeah. yeah In terms of long-term share of those revenues, that's a little bit of a harder question to answer. in terms of long-term share of those revenues that's a little bit of a harder question to answer To be honest, it wouldn't be serious. to be honest it wouldn't be serious How to say that in English? how to say that in english Serious? Serious? serious Is it serious? It wouldn't be honest to give you just a prediction on that now. Obviously, that's business that's a bit more volatile. It's more opportunistic. It can vary in size quite significantly. For us, it's harder to predict. What we can do is look at, you know, we have an internal customer classification. There's diamond customers, sapphire customers. Our sales colleagues have come up with a very nice gemstone qualification of customers, and we can make assessments of how suitable they are and whether we believe they have a need. How much of these opportunities come up is harder to predict. I think if you look at our overall revenue end of last year, which was free of one-offs largely, it was roughly EUR 40 million. Looking at it maybe this and next year in the 10% range of P&L revenues is probably realistic. Is it serious? is it serious It wouldn't be honest to give you just a prediction on that now. it wouldn't be honest to give you just a prediction on that now Obviously, that's business that's a bit more volatile. obviously that's business that's a bit more volatile It's more opportunistic. it's more opportunistic It can vary in size quite significantly. it can vary in size quite significantly For us, it's harder to predict. for us it's harder to predict What we can do is look at, you know, we have an internal customer classification. what we can do is look at you know we have an internal customer classification There's diamond customers, sapphire customers. there's diamond customers sapphire customers Our sales colleagues have come up with a very nice gemstone qualification of customers, and we can make assessments of how suitable they are and whether we believe they have a need. our sales colleagues have come up with a very nice gemstone qualification of customers and we can make assessments of how suitable they are and whether we believe they have a need How much of these opportunities come up is harder to predict. how much of these opportunities come up is harder to predict I think if you look at our overall revenue end of last year, which was free of one-offs largely, it was roughly EUR 40 million. i think if you look at our overall revenue end of last year which was free of one-offs largely it was roughly eur 40 million Looking at it maybe this and next year in the 10% range of P&L revenues is probably realistic. looking at it maybe this and next year in the 10% range of p&l revenues is probably realistic Maybe it grows as the customer base grows in the focus sectors. Maybe it grows as the customer base grows in the focus sectors. maybe it grows as the customer base grows in the focus sectors Okay, perfect. That was very helpful. Thank you. Okay, perfect. okay perfect That was very helpful. that was very helpful Thank you. thank you

Speaker 4: Yeah, maybe just one addition to what JD just said. I mean, these types of deals have basically four components that I think are important to understand. There's obviously the one-time hardware cost. We would, of course, always resell this to customers with a, let's say, meaningful margin for us. There's one-time revenue, plus one-time profit that we would generate out of it. There are two other elements. The other element is that we would usually not sell just the hardware. We would offer the customer a service agreement. That's recurring revenue that we get in conjunction with expanding our support offerings. We would typically include the platinum support contract for those customers. That's additional recurring revenue. Last but not least, when customers are doing that, they're usually increasing their data volume, which then also means more pure ARR, software ARR for us. Yeah, maybe just one addition to what JD just said. yeah maybe just one addition to what jd just said I mean, these types of deals have basically four components that I think are important to understand. i mean these types of deals have basically four components that i think are important to understand There's obviously the one-time hardware cost. there's obviously the one-time hardware cost We would, of course, always resell this to customers with a, let's say, meaningful margin for us. we would of course always resell this to customers with a let's say meaningful margin for us There's one-time revenue, plus one-time profit that we would generate out of it. there's one-time revenue plus one-time profit that we would generate out of it There are two other elements. there are two other elements The other element is that we would usually not sell just the hardware. the other element is that we would usually not sell just the hardware We would offer the customer a service agreement. we would offer the customer a service agreement That's recurring revenue that we get in conjunction with expanding our support offerings. that's recurring revenue that we get in conjunction with expanding our support offerings We would typically include the platinum support contract for those customers. we would typically include the platinum support contract for those customers That's additional recurring revenue. that's additional recurring revenue Last but not least, when customers are doing that, they're usually increasing their data volume, which then also means more pure ARR, software ARR for us. last but not least when customers are doing that they're usually increasing their data volume which then also means more pure arr software arr for us In general, it's a good thing to do it. As JD described it, it's a bit hard to predict as these deals can be very large in nature because there's a lot of hardware, Dell, HP, Lenovo hardware involved. It's also a bit more complex to predict that. As we go through the remainder of the year and then look at 2026 as part of our business planning process, we'll put more thoughts behind what we think that actually is going to do on our business going forward. What we've been seeing is I think we have four or five, some larger, some smaller, of these opportunities that we've been working on, that we're working on, that may materialize in the not-so-distant future. I think it's clearly a trend. In general, it's a good thing to do it. in general it's a good thing to do it As JD described it, it's a bit hard to predict as these deals can be very large in nature because there's a lot of hardware, Dell, HP, Lenovo hardware involved. as jd described it it's a bit hard to predict as these deals can be very large in nature because there's a lot of hardware dell hp lenovo hardware involved It's also a bit more complex to predict that. it's also a bit more complex to predict that As we go through the remainder of the year and then look at 2026 as part of our business planning process, we'll put more thoughts behind what we think that actually is going to do on our business going forward. as we go through the remainder of the year and then look at 2026 as part of our business planning process we'll put more thoughts behind what we think that actually is going to do on our business going forward What we've been seeing is I think we have four or five, some larger, some smaller, of these opportunities that we've been working on, that we're working on, that may materialize in the not-so-distant future. what we've been seeing is i think we have four or five some larger some smaller of these opportunities that we've been working on that we're working on that may materialize in the not-so-distant future I think it's clearly a trend. i think it's clearly a trend I think we at Exasol have also built up that reputation with our customer base that we're actually someone who can help customers on their journey in procuring their own hardware and putting it in their own data center. We even had one case, a final thought, where we're working on with StackIt, the company that we've been mentioning, to potentially own a hosted hardware solution for one of our large customers. I think we at Exasol have also built up that reputation with our customer base that we're actually someone who can help customers on their journey in procuring their own hardware and putting it in their own data center. i think we at exasol have also built up that reputation with our customer base that we're actually someone who can help customers on their journey in procuring their own hardware and putting it in their own data center We even had one case, a final thought, where we're working on with StackIt, the company that we've been mentioning, to potentially own a hosted hardware solution for one of our large customers. we even had one case a final thought where we're working on with stackit the company that we've been mentioning to potentially own a hosted hardware solution for one of our large customers Okay, perfect. Thanks. Okay, perfect. okay perfect Thanks. thanks

Speaker 2: Thank you very much, Mr. van der Horst. Ladies and gentlemen, are there any questions left? Please raise your hand or post your question in our chat box. I will hold the room for another moment. That doesn't seem to be the situation. We therefore come to the end of today's earnings call. Thank you for joining and your interest in Exasol AG. Should further questions arise at a later time, please feel free to reach out to Stefanie Winkler from Investor Relations. A big thank you also to Mr. Tewes and Mr. Henrich for your presentation and the time you took to answer the questions. I wish you all a lovely remaining week. Stay healthy and safe. With this, I hand over again to Mr. Henrich for some final remarks. Thank you very much, Mr. van der Horst. thank you very much mr van der horst Ladies and gentlemen, are there any questions left? ladies and gentlemen are there any questions left Please raise your hand or post your question in our chat box. please raise your hand or post your question in our chat box I will hold the room for another moment. i will hold the room for another moment That doesn't seem to be the situation. that doesn't seem to be the situation We therefore come to the end of today's earnings call. we therefore come to the end of today's earnings call Thank you for joining and your interest in Exasol AG. thank you for joining and your interest in exasol ag Should further questions arise at a later time, please feel free to reach out to Stefanie Winkler from Investor Relations. should further questions arise at a later time please feel free to reach out to stefanie winkler from investor relations A big thank you also to Mr. Tewes and Mr. Henrich for your presentation and the time you took to answer the questions. a big thank you also to mr tewes and mr henrich for your presentation and the time you took to answer the questions I wish you all a lovely remaining week. i wish you all a lovely remaining week Stay healthy and safe. stay healthy and safe With this, I hand over again to Mr. Henrich for some final remarks. with this i hand over again to mr henrich for some final remarks

Speaker 1: Yes, thanks, Judith. Nothing much else to say. Thank you also from our side for listening. If you have any additional thoughts or questions, don't hesitate to reach out to us via our IR contact details. Thanks very much. Yes, thanks, Judith. yes thanks judith Nothing much else to say. nothing much else to say Thank you also from our side for listening. thank you also from our side for listening If you have any additional thoughts or questions, don't hesitate to reach out to us via our IR contact details. if you have any additional thoughts or questions don't hesitate to reach out to us via our ir contact details Thanks very much. thanks very much

Speaker 4: Thank you. Bye. Thank you. thank you Bye. bye