Final FY in line with prelims / Strong FCF highlights release; chg.

The latter already became visible in a strongly improved gross margin of 17.9% (+3.4pp yoy). This was further driven by a reduction of external personell. Going forward, we expect a further gross margin expansion based especially on an increasing near- and off-shoring ratio (management target of 20% in FY25 vs 14% in FY24).

Accordingly, EBITDA came in strong at € 10.5m, implying a 5.5% margin (+2.5pp yoy), beating our (€ 9.2m) and street’s (€ 9.2m) old estimates as well as the company’s guidance of € 8-10m. Besides the improved gross margin, efficiency measures in SG&A were the main drivers of the strong improvement. In fact, EBITDA increased 83% yoy even including last years positive net one-offs of € 3.3m.

The strong released was highlighted by a substantially improved FCF (excl. leasing expenses) of € 7.0m (eNuW: € 5.7m; FY23: € 3.9m). Mind you, that this figure differs from QBY’s FCF definition (€ 3.2m; total change in net liquidity (excl. M&A)).

This should bode especially well for management M&A targets. For FY25, management confirmed in the CC on the FY prelims, that the company is in an advanced stage to acquire 1-2 targets this year. Management is looking for margin accretive deals with € >10m sales. Given the recently imposed special fund for investing € 500bn on infrastructure and the suspension of the debt break for defense spending, we regard it as even more likely that QBY will look for targets with a high public sector exposure (healthcare, energy, defense). This was also confirmed during the call.

Given the strong numbers and an undemanding valuation (FY25e EV/EBITDA of 4.0x), we reiterate BUY with an unchanged € 1.30 PT based on DCF.