Jena, 1 August 2018 – Intershop Communications AG (ISIN: DE000A0EPUH1), a leading independent provider of innovative solutions for omni-channel commerce, generated sales revenues of EUR 16 million in the first half of 2018 (previous year: EUR 18 million). Incoming orders for cloud solutions in the first six months, which will lead to recurring revenues in the coming quarters, amounted to EUR 2.2 million (previous year: EUR 0.7 million). The Software and Cloud segment accounted for approx. EUR 7.8 million of the first-half revenues (-18%), while the Service segment accounted for approx. EUR 8.3 million (-3%). The fact that software and cloud revenues were lower than in the previous year is attributable to a drop in software revenues (licensing and maintenance revenues), whereas cloud revenues increased by 14% to EUR 2.5 million. Representing 73% of the company’s revenues, Europe remained the key output market for Intershop’s e-commerce solutions in the first half of the year. The US and Asia-Pacific markets accounted for 13% and 14%, respectively.
“The increase in cloud and subscription revenues in the first six months confirms that it was the right decision to transform our business activities towards our new cloud offering, Intershop Commerce-as-a-Service (CaaS),” says Dr. Jochen Wiechen, CEO of Intershop Communications AG. “There is no alternative to this transformation, even if it entails a temporary decline in revenues and earnings. It will now be essential, to translate the constantly growing pipeline of new customers into measurable income in the next two years in order to steer Intershop back to profitable growth based on stable cloud revenues. The partnership with Microsoft, which has recently been strengthened by the Runner-up of the Year Award, plays an important role in this context.”
At 41%, the gross margin was down by 9 percentage points on the previous year in the first half of 2018. The decline is essentially attributable to the changed revenue structure and the resulting reduction in licensing revenues. Earnings before interest and taxes (EBIT) stood at EUR -2.0 million at the six-month stage (previous year: EUR 0.2 million). Operating expenses decreased by a moderate EUR 0.1 million to EUR 8.6 million. Sales and marketing expenses increased by approx. 3% to EUR 4.3 million due to the cloud initiative, whereas R&D expenses dropped by a good 10% to EUR 2.4 million. Earnings before interest, taxes, depreciation and amortization (EBITDA) stood at EUR -1.0 million (previous year: EUR 1.4 million), while the result for the period after taxes amounted to EUR -2.2 million (previous year: kEUR 28). Because of the cloud transformation, Intershop now projects slightly lower revenues than in the previous year as well as negative earnings before interest and taxes (EBIT) in the low single-digit euro million range. As of 2019, the revenue base will stabilise as a result of the recurring cloud revenues, which will ultimately lead to growing revenues again.
In the second quarter, Intershop increased its share capital to strengthen its asset base and had cash and cash equivalents of EUR 11.3 million as at 30 June 2018, up 27% on the end of 2017. Operating cash flow after taxes stood at EUR -1.3 million at the six-month stage (previous year: EUR 2.0 million). At 64%, the equity ratio was up by 3 percentage points on the end of 2017.
Change in the composition of the Management Board
The Supervisory Board and Axel Köhler, Chief Sales Officer, yesterday agreed not to extend Axel Köhler's Management Board contract, which runs until August 31, 2019. Talks are currently underway to terminate the contract prematurely.
The interim report on the first six months is available for download at https://www.intershop.com/financial-reports.
Intershop (founded in Germany 1992; Prime Standard: ISHA) enables the world’s leading manufacturers and wholesalers to digitalize, transform, and boost their businesses. Our e-commerce platform and cloud-based technology give B2B companies the power to establish and expand their digital presence, improve customer experience, and increase online revenue. With 30 years experience and a global presence, we help our 300+ clients turn products into profits, customers into business partners, and transactions into lasting relationships.
Intershop is built to boost your business. Learn more at www.intershop.com.
This news release contains forward-looking statements regarding future events or the future financial and operational performance of Intershop. Actual events or performance may differ materially from those contained or implied in such forward-looking statements. Risks and uncertainties that could lead to such difference could include, among other things: Intershop's limited operating history, the unpredictability of future revenues and expenses and potential fluctuations in revenues and operating results, significant dependence on large single customer deals, consumer trends, the level of competition, seasonality, risks related to electronic security, possible governmental regulation, and general economic conditions.