OTRS AG continues to drive forward modernization of products and structures in the first half of 2024 – market environment burdens

• Decline in revenue of 6.4% – mainly due to lower consulting revenues
• Recurring revenues stable at EUR 5,581 thousand
• Decline in revenue and cost increases burden earnings development
• Forecast for the year slightly reduced

Oberursel, 31 October 2024: OTRS AG (ISIN: DE000A0S9R37), the manufacturer and world's largest service provider for the service management suite OTRS, closed the first half of the 2024 financial year with declining revenue and earnings figures as expected in a persistently challenging market environment characterized by investment restraint. Overall, revenue decreased by 6.4% year-on-year to EUR 5,877 thousand (first half of 2023: EUR 6,278 thousand). The main reason for this development was the significant decline in revenues from consulting services to EUR 291 thousand (first half of 2023: EUR 667 thousand). As a result, other revenues (non-recurring revenues) fell by 56% from EUR 672 thousand to EUR 296 thousand. By contrast, recurring revenues, including annual contracts with access to OTRS software in various forms and security, software updates, and support, remained encouragingly stable at EUR 5,581 thousand (first half of 2023: EUR 5,606 thousand). The share of recurring revenues in total revenue thus rose to 95.0% (first half of 2023: 89.3%).

The prerequisite for this positive development in recurring revenues is constantly updating and improving software functionalities. Accordingly, OTRS AG continued to drive software development and improvement in the first half of 2024 and invested EUR 2,493 thousand (first half of 2023: EUR 2,259 thousand) in further development.

The German economy is in a structural crisis. Companies in all sectors of the economy are suffering from a persistent weakness in demand. OTRS AG's day-to-day business is also characterized by very restrained customer demand and a very long sales cycle as a result. Accordingly, the organization, product development and associated processes, personnel structures, and corporate culture must be future-oriented and at the same time remain stable. OTRS AG is therefore continuing to drive forward the modernization of its structures and products. For example, a comprehensive cost-cutting program has already been implemented without having to make redundancies.

The aim is to adapt more quickly to market requirements and achieve synergies concerning new submarkets through technological cooperation and partner models. One of these technological cooperations is already active. With the company FileWave and the integration of its device management tool into OTRS, companies receive visible added value that is not only very popular with existing customers. From the management's point of view, OTRS AG is thus moving up into the next league of competitors and should be able to benefit sustainably from this cooperation in the medium and long term. In addition, focused marketing campaigns, the success of which can be clearly measured, should also increase conversion to signed new contracts. The customer relationship management team was further expanded and the strategy for customer contact was made even more granular and professional. All of this is achieved with the help of artificial intelligence, which not only accelerates processes but also enables other perspectives for evaluation and analysis, thereby supporting and significantly expanding the company's professional portfolio.

These measures require a team of highly motivated and qualified employees. Thanks to successful, far-reaching employer branding measures, OTRS AG can continue to hold its own in the competition for highly qualified employees. During the first half of the year, despite the highly competitive market for skilled labor, the company was able to fill vacant and replacement positions with highly qualified employees as planned. This underlines the perception of OTRS AG as an attractive and promising employer but is also associated with rising costs.

Personnel costs are naturally the largest cost item for a company with a focus on services. These amounted to EUR 4,234 thousand in the reporting period (first half of 2023: EUR 3,773 thousand). The 12.2% increase is primarily due to investments in hiring employees who are actively and strategically working on improving product quality and strengthening customer relationships.

The cost-cutting measures implemented were able to counteract this increase and largely limit the impact on earnings to the loss of revenue. Earnings before interest, taxes, depreciation, and amortization (EBITDA) amounted to EUR -406 thousand in the first half of 2024 compared to EUR 83 thousand in the same period of the previous year. Earnings before interest and taxes (EBIT) amounted to EUR -960 thousand in the first half of 2024 compared to EUR -536 thousand in the same period of the previous year. Operating cash flow increased to EUR 606 thousand (first half of 2023: EUR -1,489 thousand). Optimizations in working capital, in particular the reduction in trade receivables, had a positive effect here.

OTRS AG should be able to continue to benefit from a broad and intact digitalization trend by investing in specialist technical qualifications at an early stage. In principle, the Management Board sees the possibility of growth as given, provided that the ongoing geopolitical tensions and conflicts do not extend their influence further and the burdens caused by crises across countries and regions - such as a pandemic or the energy crisis - remain within manageable limits.

The Management Board has revised its annual forecast for the current financial year slightly downwards. In the annual report for 2023, which was published on 28 June 2024, the Management Board had still assumed revenue growth of around 2% to around EUR 12.6 million and had also forecast earnings (EBITDA) at the previous year's level. In light of the business performance to date, the Management Board now expects a decline in revenue of 1% to around EUR 12.3 million. Earnings (EBITDA) for 2024 are also expected to be slightly below the previous year's level. In the 2025 financial year, the investments made in 2023 and 2024 are expected to return OTRS AG to a sustainably profitable course.

Detailed information is provided in the half-year report on the company website at https://corporate.otrs.com in the Investor Relations section.

 
About OTRS AG
OTRS AG is the manufacturer and world's largest service provider for the OTRS Enterprise Service Management Suite. It offers companies industry-independent software solutions for structured communication in customer service, IT service management and security management. In addition to the core product OTRS, the security solution STORM ensures efficient incident management and transparent documentation in accordance with standards such as ISO 27001.

OTRS AG's customers include Lufthansa, Porsche, the BSI (German Federal Office for Information Security), Helios Kliniken, Haribo, Ameropa and TUI Cruises. The company consists of OTRS AG and its five subsidiaries OTRS Inc. (USA), OTRS S.A. de C.V. (Mexico), OTRS ASIA Pte. Ltd. (Singapore), OTRS Do Brasil Soluções Ltda. (Brazil) and OTRS Magyarország Kft. (Hungary). OTRS AG is listed on the Basic Board of the Frankfurt Stock Exchange.

For more information, see www.otrs.com.

Contact:
OTRS AG
Zimmersmühlenweg 11
D-61440 Oberursel
Tel: +49 (0)6172 681988-0
Fax: +49 (0)9421 56818 18
E-Mail: ir@otrs.com
Internet: www.corporate.otrs.com

Investor Relations
CROSS ALLIANCE communication GmbH
Susan Hoffmeister
Bahnhofstr. 98
D-82166 Graefelfing/Munich
Tel: +49 (0) 89 125 09 03-30
E-Mail: sh@crossalliance.de
Internet: www.crossalliance.de