9-month data of USU Software AG: Earnings impacted by investment in the future despite good sales

            - Sales in the first nine months up by 14.6%

- Earnings impacted by trend toward SaaS solutions and investment outside Germany

- Orders on hand up by 13.3% as of September 30, 2017

- Management Board adjusts full-year and medium-term forecast

Moeglingen, November 23, 2017 - Consolidated Group sales (IFRS) of USU Software AG (ISIN DE000A0BVU28) rose by 15.4% in third quarter of 2017, to EUR 20,037 thousand (Q3 2016: EUR 17,362) thousand. This growth resulted mainly from ongoing strong business with software licenses in Germany. License income grew by 32.9% overall in the third quarter, to EUR 3,320 thousand (Q3 2016: EUR 2,499 thousand), even though numerous customers mainly outside Germany chose a software-as-a-service ("SaaS") solution in the short term rather than purchasing an individual license (on premise). As SaaS contracts generally have a term of several years, USU will benefit from this development in the medium term but registered an initial sales gap primarily outside Germany in the third quarter. Furthermore, the development of the French and English markets is taking longer than planned, resulting in an increase in investment outside Germany due partly to higher integration expenses for USU France (formerly EASYTRUST SAS).

As a result of these factors and negative currency effects related to the weak U.S. dollar, the USU Group registered a substantial year-on-year decline in earnings overall in the third quarter of 2017. The operating result before interest, taxes, depreciation and amortization (EBITDA) therefore declined by 59.7% in the third quarter of 2017 against the prior-year figure, to EUR 972 thousand (Q3 2016: EUR 2,410 thousand). At the same time, earnings before interest and taxes (EBIT) fell by 84.9%, from EUR 1,811 thousand in the third quarter of 2016 to EUR 274 thousand in the same period of this year. The USU Group's consolidated net profit (IFRS) dropped from EUR 1,661 thousand in the prior-year quarter to EUR 20 thousand in the third quarter of 2017. This corresponds to earnings per share of EUR 0.00 (Q3 2016: EUR 0.16). Adjusted for the extraordinary effects of acquisitions, USU's adjusted earnings before interest and taxes (EBIT) fell by a substantial 61.0% year on year in the third quarter of 2017, to EUR 785 thousand (Q3 2016: EUR 2,014 thousand). Adjusted consolidated earnings dropped by 73.1% to EUR 479 thousand (Q3 2016: EUR 1,778 thousand). This corresponds to a decline in adjusted earnings per share from EUR 0.13 in the third quarter of 2016 to currently EUR 0.05.

Over the first nine months of fiscal 2017, USU Software AG increased its consolidated sales (IFRS) by 14.6% year-on-year to EUR 58,908 thousand (Q1-Q3 2016: EUR 51,393 thousand). This increase was mainly attributable to strong business in Germany, where sales advanced by 15.3% to EUR 42,688 thousand (Q1-Q3 2016: EUR 37,024 thousand). Despite positive development in the first half of the year, sales outside Germany climbed by a below-average 12.9% in the first nine months to EUR 16,220 thousand (Q1-Q3 2016: EUR 14,369 thousand). Accordingly, the share of consolidated sales generated abroad decreased slightly from 28.0% in the previous year to 27.5% in the first nine months of 2017. Due to the targeted investment outside Germany and the expansion of the SaaS business, the Management Board expects the share of total sales generated abroad to surpass the 30% mark again in the medium term.

The operating cost base of the USU Group increased by 23.0% year-on-year to EUR 57,236 thousand in the first nine months of 2017 (Q1-Q3 2016: EUR 46,529 thousand). This reflects firstly the higher level of investment in marketing, sales and development outside Germany that USU is systematically pursuing to expand its international business, and secondly the first-time inclusion of the costs of unitB technology GmbH and EASYTRUST SAS - which were acquired in the period under review - in the consolidated costs of the USU Group.

The earnings development of the USU Group in the first nine months of 2017 fell short of the previous year due to these factors. Accordingly, EBITDA declined by 56.1% year on year to EUR 2,747 thousand (Q1-Q3 2016: EUR 6,305 thousand). USU generated EBIT of EUR 699 thousand in the same period (Q1-Q3 2016: EUR 4,405 thousand). Consolidated net profit declined from EUR 3,919 thousand in the first nine months of 2016 to currently EUR -33 thousand. Earnings per share therefore amounted to EUR 0.00 (Q1-Q3 2016: EUR 0.37).

Adjusted for the extraordinary effects of acquisitions, adjusted earnings before interest and taxes (EBIT) fell by 56.0% year on year in the first nine months of 2017, to EUR 2,350 thousand (Q1-Q3 2016: EUR 5,342 thousand). At the same time, adjusted consolidated net profit dropped by 68.6% compared with the first nine months of 2016 to EUR 1,489 thousand (Q1-Q3 2016: EUR 4,748 thousand). Adjusted earnings per share accordingly decreased from EUR 0.45 in the previous year to EUR 0.14 in the reporting period.

Group liquidity declined from EUR 23,180 thousand on December 31, 2016, to EUR 13,691 thousand on September 30, 2017, due to the payment of due purchase price components for the acquisition of unitB technology and EASYTRUST, as well as the dividend payment to to USU stockholders. At the same time, equity of the USU Group fell from EUR 63,623 thousand on December 31, 2016, to EUR 59,651 thousand on September 30, 2017, due primarily to the dividend payment of EUR 4,209 thousand to USU Software AG stockholders in the third quarter of 2017. Total assets were EUR 91,339 thousand (December 31, 2016: EUR 91,905 thousand), while the return on equity as of September 30, 2017 was 65.3% (December 31, 2016: 69.2%). USU Software AG thus has no liabilities to banks and remains very solidly financed.

Group-wide orders on hand of the USU Group at the end of the third quarter totaled EUR 46,328 thousand (September 30, 2016: EUR 40,893 thousand), up 13.3% against the prior-year period. The USU Group systematically expanded its workforce by 20.3% year-on-year to 661 employees as of September 30, 2017 (September 30, 2016: 528 employees).

The Management Board expects the positive development recorded in recent years to continue in 2017 as a whole. However, growth is slowing somewhat due to the trend toward SaaS business in the markets outside Germany. This leads to an adjustment in the forecast, among other factors. The Management Board now anticipates an increase in consolidated sales to between EUR 83 and EUR 86 million (2016: EUR 72.1 million), driven mainly by the thriving business in Germany. Due to the lower sales expectations and the necessary investment outside Germany to promote the internationalization of the business, the Management Board has also reduced the earnings target for 2017. Adjusted EBIT in 2017 is now planned to come in at between EUR 6 and EUR 8 million (2016: EUR 9.6 million).

Beginning in 2018, the Management Board expects this foreign investment to yield positive effects that however will only fully materialize over time. Due to the delayed growth phase in key investment markets, the medium-term forecast of EUR 140 million in consolidated sales and an adjusted EBIT of EUR 20 million will be pushed back by one year until 2021.

Irrespective of the necessary adjustment in the forecast, the Management Board is planning to enable the shareholders of USU Software AG to participate substantially in the company's operating success again in 2017, as in previous years, and thus to continue the shareholder-friendly dividend policy in the interests of sustained continuity.

The complete report for the first three quarters of 2017 is available for download at the homepage of USU Software AG. The company's Board of Management will present further information at the analyst and investor conference "German Equity Forum 2017," which will take place at 2:30 p.m. on November 27, 2017 in the Madrid Room of the Sheraton Frankfurt Airport Hotel and Conference Center (Hugo-Eckener-Ring 15, 60594 Frankfurt am Main).

This press release is available at: http://www.usu.de

USU Software AG

The USU Group is Europe's largest provider of digitalized knowledge-intensive services. Market leaders from every sector of the international economy create transparency with USU applications, while also increasing flexibility, reducing risks and cutting costs. USU Software AG (ISIN DE 000A0BVU28), listed in the Prime Standard of the German stock exchange, incorporates USU AG - established in 1977 - as well as Aspera GmbH, Aspera Technologies Inc., BIG Social Media GmbH, EASYTRUST SAS, LeuTek GmbH, OMEGA Software GmbH and unitB technology GmbH.

The IT Management division supports companies with extensive ITIL^(R)-compatible solutions for strategic and operational IT & enterprise service management. With USU solutions, customers gain an overall view of their IT processes and IT infrastructure and are able to transparently plan, allocate, monitor and actively manage IT services. USU is one of the world's leading providers in the software license management sector.

With intelligent solutions and expertise in digital interaction, USU is a prime mover in the digitization of business processes. Standard software and consulting services help to automate service processes and actively provide knowledge for all communication channels and customer contact points in sales, marketing, and customer service. The company's range in this field is rounded off by system integration, individual applications and solutions for industrial big data.

For further information, please go to: www.usu-software.de

Contact

USU Software AG
Corporate Communications
Dr. Thomas Gerick
Phone: +49 (0) 71 41 - 48 67 440
Fax: +49 (0) 71 41 - 48 67 108
E-mail: t.gerick@usu-software.de

USU Software AG
Investor Relations
Falk Sorge
Phone: +49 (0) 71 41 - 48 67 351
Fax: +49 (0) 71 41 - 48 67 108
E-mail: f.sorge@usu-software.de