EQS-News: EQS Group AG continues its growth in Q3 2022

EQS Group AG continues its growth in Q3 2022
Strong new customer growth only in the 2023 financial year due to delayed legislation

• 246 new SaaS customers in the third quarter (previous year 227)
• Revenue grows by 17 percent to EUR 15.05 million
• EBITDA grows by 48 percent to EUR 1.40 million
• Number of SaaS customers rises to 4,786 (previous year 3,817)
• New ARR at EUR 5.54 million (previous year 5.91 million) in 9M
• Revenue grows by 27 percent to EUR 44.97 million in 9M
• German act on whistleblower protection is imminent
• Long-term syndicated financing agreement concluded

Munich 11 November 2022

EQS Group AG (ISIN: DE0005494165) continues to grow at double digit rates in the third quarter of 2022, although the implementation of the act on whistleblower protection in Germany has not been implemented yet and the inorganic growth effect is levelling off. In the months of July to September, the Group generated sales revenue of EUR 15.05 million (previous year EUR 12.87 million). That means an increase of 17 percent compared with the same period in the previous year. EBITDA rose to EUR 1.40 million (previous year EUR 946 thousand). The consolidated net profit for the year stood at EUR 353 thousand. Earnings per share amounted accordingly to EUR -0.03.

For the new ARR indicator, which quantifies the new contractually agreed, annual recurring business, a volume of EUR 5.54 million is calculated (EUR 5.91 million). The number of new SaaS customers is 246.

Furthermore, the picture for the first nine months is as follows: Revenues amounted to EUR 44.97 million (EUR 35.40 million), EBITDA rose to EUR 2.54 million (EUR 2.27 million), and consolidated net income was EUR -2.14 million. The earnings per share was EUR -0.22 (previous year EUR -0.33).

While the revenue growth in the first half of the year was within the forecast range, the delays in the implementation of the EU whistleblower directive slowed growth in the third quarter, which is still characterized by the significant increase in sales of compliance cloud products. So far, the legislation has only been adopted in 9 countries in the EU. The revenue contribution from the takeover of Business Keeper GmbH (July 2021) was also significantly lower, due to the expiry of the base effect. Nevertheless, the scaling in the operating business already started in the third quarter of 2022. At 48 percent, EBITDA rose significantly more than revenues (17 percent). This will continue in the coming quarters as the EU whistleblower directive is increasingly incorporated into national legislation. We expect the act on whistleblower protection to be adopted in our most important market in Germany in the near future, followed then by dynamic customer growth in the coming months.

Segment development

Revenue in the Compliance segment rose by 48 percent in the first nine months of 2022. In the Investor Relations segment, revenue fell slightly by 2 percent. The annual recurring revenue at Group level was 88% after nine months.

Long-term syndicated financing agreement concluded

EQS Group AG has restructured the Commerzbank acquisition loan, initially amounting to EUR 50 million, for the acquisition of Business Keeper GmbH under the aegis of Commerzbank. After repayments from the funds of the capital increase in spring, the acquisition loan was refinanced within a syndicated loan of EUR 30 million. This loan has a term of 5 years and is provided by a banking syndicate consisting of Commerzbank, Deutsche Bank and Kreissparkasse Biberach. The planned full repayment will begin from mid-2023 onwards at equal installments. The interest rate component consists of the EURIBOR rate plus an interest margin, which is composed on the one hand of an ESG component with performance values for diversity and savings of CO2 equivalents and on the other hand of a component dependent on the debt. Interest rate hedging ensures that the interest rate will not rise above a set level for the entire maturity.

André Marques: With the conclusion of the long-term financing on market conditions, we have planning certainty in the context of rising interest rates. We are very happy that, in addition to our long-standing financing partner Commerzbank, we have now also been able to acquire Deutsche Bank and Kreissparkasse Biberach as new banking partners.

New record attendance at the European Compliance & Ethics Conference

With 7,500 applications from 140 countries, this years European Compliance & Ethics Conference (ECEC) has notched up a new record attendance, making it the largest European industry event for compliance, ethics and ESG. The ECEC was founded by EQS Group AG three years ago and has since received a high degree of approval and recognition from the participants. The ECEC Award for outstanding compliance projects went to Switzerland for the first time. Novartis AG beat TÜV Austria in the live vote.

Achim Weick, Founder and CEO of the EQS Group AG: The European Compliance & Ethics Conference has its finger firmly on the pulse and will continue to be the platform for the European compliance industry in the future. In Germany, the implementation of the act on whistleblower protection is now on the verge of being adopted, and we anticipate this will happen still this year. As the largest European provider of whistleblower systems, we expect to see a dynamic growth in customers from when the act is passed. We are well prepared for this. Unfortunately, we have no influence on when it will be implemented.

Updated outlook for 2022

The achievement of the forecast range was based on the assumption that the EU Directive will be transposed into German legislation in the third quarter of 2022. Although it is expected to be passed soon, further delay towards the end of the year may mean that companies will not conclude the contract until the new year. Therefore, from todays perspective, the strong new customer growth is expected to shift into the 2023 financial year and the achievement of the original forecasted range for revenue growth, new ARR and new customers is no longer to be expected. As a result, the Management Board is now forecasting an increase in revenue of 25 percent to then around EUR 63 million for the 2022 financial year. Investments in sales and marketing for the acquisition of new customers in connection with the implementation of the EU Directive on the protection of whistleblowers will remain high. EBITDA is expected to be around EUR 6 million. For the key figure new ARR, which quantifies the contractually newly concluded, annual recurring business, we expect a volume of EUR 9 million. In addition, around 1,000 new customers are to be acquired, the majority of them for the whistleblower systems product area.

The Management Board will be explaining the business results in a video conference from 11.00 a.m. (CET). Login is not necessary. It will be broadcast live online at EQS Webcast 9M 2022. Questions can be asked using the Q&A feature (chat) beforehand or during the webcast.

More information:

The figures for 9M 2022 are unaudited.

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EQS Group is a leading international cloud provider in the fields of corporate compliance, investor relations and ESG.

Working with EQS Group, thousands of companies worldwide inspire trust by fulfilling complex regulatory requirements in a reliable and secure manner, minimizing risks and communicating their business success and its impact on society and the climate transparently to stakeholders.

EQS Groups products are pooled in the cloud-based software EQS COCKPIT. This platform ensures the professional handling of compliance workflows in the fields of whistleblower protection and case management, policy management, business approvals, third party management, insider list management and disclosure obligations.

Listed companies benefit from a global newswire, investor targeting and contact management, IR websites, digital reports and webcasts for efficient and secure investor communications.

In addition, EQS Group develops software for the management of ESG (environment, social,

governance) data, the fulfilment of human rights due diligence obligations along corporate

supply chains and for rule-compliant sustainability reporting.

EQS Group was founded in 2000 in Munich, Germany. Today the group employs around 600 professionals and has offices in the worlds key financial markets.

Contact:

André Marques

CFO

Tel.: +49 89-444430033

Mobile: +49 175-5250009

Email.: andre.marques@eqs.com