Q.beyond AG's Q2 Performance Poised for Slight Improvement

q.beyond AG is anticipated to publish its Q2/H1 figures on August 12th, with expectations of a slight sequential improvement from the strong first quarter. The research update from NuWays AG maintains a "BUY" recommendation and sets a target price of EUR 1.10. Q2 sales are projected to increase by 2.1% year-on-year to €47.4 million, driven primarily by the Managed Service segment. Conversely, the Consulting segment is expected to see a minor quarter-on-quarter decline in sales due to reduced low-margin project sales.

The gross margin is predicted to remain stable at 8.5%, with the Consulting margin expected to improve over the mid-term through increased utilization and a higher near- and off-shoring ratio. The Q2 gross profit is forecasted at €8.3 million, representing a 17.6% margin.

Q2 EBITDA is projected to reach €2.1 million, showing a 98% year-on-year improvement. This gain is attributed to the One q.beyond strategy's implementation, which has led to cost reductions. The company’s full-year guidance includes sales of €192-198 million, EBITDA of €8-10 million, and a positive free cash flow.

Overall, the release is expected to support q.beyond's Strategy 2025, aiming for an EBITDA margin of 7-8% and sustainable positive net income. The valuation remains attractive, with shares trading at 7.1x EV/EBITDA for 2024e and 4.1x for 2025e.