Mensch und Maschine Software : discloses Q3 report

Wessling, October 23, 2017 - Mensch und Maschine Software SE (MUM - ISIN DE0006580806), a CAD/CAM specialist company, in Q3 managed to continue its high growth of proprietary software and services in spite of a stronger Euro. The Autodesk business, for which the comparison to the previous year is distorted by pull effects in advance of the transition from license sale to rental, already showed double digit growth for subscription and maintenance.

9M sales in the Software segment increased to EUR 36.00 mln (PY: 33.45), representing 7.6% growth in Euro or 9.0% in constant currencies. Segment gross margin grew slightly faster at 8.0% or 9.3% in constant currencies to EUR 34.97 mln (PY: 32.39). VAR Business gross margin amounted to EUR 33.59 mln (PY: 35.44 / -5.2%), thereof EUR 22.23 mln (PY: 19.06 / +17%) from M+M proprietary services. All in all, gross margin from M+M's proprietary software and services grew to EUR 57.20 mln (PY: 51.45), representing 11.1% growth in Euro or 12.2% in constant currencies. Thus 83.4% is now contributed by proprietary sources, which is mirrored by a higher gross yield: 59.4% (PY: 53.8%) for 9M or 63.8% (PY: 53.4%) in Q3.

Gross margin from the Autodesk business fell by 31% to EUR 11.36 mln (Q1 -32% / Q2 -5.7% / Q3 -46%). Excluding from the previous year's EUR 16.39 mln the amount of approx. EUR 6.4 mln attributed to the pull effect, gross margin from subscription and maintenance increased by approx. 14%. This indicates that the transition from sale to subscription should lead to strong Autodesk gross margin growth from Q4 onwards.

At group level nine months sales dropped to EUR 115.47 mln (PY: 127.59 / -9.5%), while gross margin slightly grew to EUR 68.56 mln (PY: 67.83 / +1.1%). Strict cost discipline led to 5.9% increased operating profit EBITDA before depreciation, amortization, interest and taxes amounting to EUR 11.44 mln (PY: 10.80), with EUR 8.31 mln (PY: 7.03 / +18%) contribution from M+M Software and EUR 3.13 mln (PY: 3.77 / -17%) from the VAR Business. Due to lower depreciation, amortization and finance cost, net profit after minority shares soared by +22% to EUR 5.31 mln (PY: 4.34), or 33 Cents (PY: 27) per share. The net profit calculation is based on an expected 35% tax rate for 2017, while the previous year was restated to the actual 36.8% annual tax rate.

Operating cash amounting to a new record amount of EUR 13.02 mln (PY: 11.79) or 80 Cents per share (PY: 72) was nearly 2.5x higher than net profit.

M+M CEO Adi Drotleff is very optimistic for the final quarter: 'Our EBITDA target range of EUR 17.5 to 18.5 mln (PY: 15.76 / +11% to +17%), given in the annual report 2016, should be still achievable, particularly as from Q4 the Autodesk rental model should deliver its full positive impact and help the VAR segment back to double digit growth. Net profit is expected to come in between EUR 8.5 to 9.3 mln (PY: EUR 6.59 mln / +29% to +41%), EPS 52-57 Cents (PY: 40). Assuming we achieve these targets we plan to increase the dividend to 45-50 Cents (PY: 35).'