Jena, Germany, February 20, 2013 – Based on preliminary figures, Intershop Communications AG (ISIN: DE000A0EPUH1), a provider of integrated e-commerce solutions, generated net revenues of EUR 51.8 million in the fiscal year 2012 (2011: EUR 49.2 million). As expected, this represents an increase of 5% on the previous year. Net revenues in the fourth quarter amounted to EUR 13.1 million (2011: EUR 13.6 million). The increase in full-year revenues is attributable to the positive business trend with major strategic customers as well as to new customers and projects won in the e-commerce and online marketing segment. The company’s earnings before interest and taxes (EBIT) amounted to EUR -0.6 million, which includes one-time expenses, especially for the realignment of the sales organisation, in the amount of EUR 1.4 million. Net of these one-time effects, EBIT stood at EUR 0.8 million.
Ludwig Lutter / CFO: “Intershop confirmed its growth ambitions in 2012 despite the fact that the achieved growth was at the lower end of the expectations we had half a year ago. In order to continue our growth path in an increasingly competitive environment, we are realigning our sales organisation. These challenges have slowed our growth in 2012 and are temporarily affecting our earnings negatively. However, we are confident that these measures will pay off through faster growth and better margins mid-term.”
In 2012, the biggest contribution to revenues was again made by the Consulting segment, with sales amounting to EUR 28.3 million and accounted for about 55% of total net revenues. This represented a 5% increase on the previous year. The Licenses segment generated EUR 5.3 million (2011: EUR 5.5 million). In the current fiscal year, the extended partner network is to provide fresh stimulation for this segment. The Full-Service segment continues to gain importance; its revenues are included in Other revenues, which increased by 47% to EUR 5.1 million. The Online Marketing segment also reported a favorable 24% increase in revenues to EUR 4.3 million. Maintenance revenues declined from EUR 9.9 million in the previous year to EUR 8.8 million due to changed conditions agreed with two key accounts. Net of these effects, the maintenance business showed a positive trend, with revenues up by 8%.
At EUR 17.4 million, gross profit was down by 13% on the previous year. The decline is attributable to lower licensing income, higher depreciation and low-margin consulting revenues. Earnings before interest, taxes, depreciation and amortisation (EBITDA) dropped from EUR 4.5 million to EUR 1.8 million, which represents a margin of 3%. EBIT and the net result amounted to EUR -0.6 million each (2011: EBIT of EUR 2.6 million; net profit of EUR 3.0 million). Earnings per share declined from EUR 0.10 to EUR -0.02 (diluted and basic).
Besides the lower gross margin, the decline in earnings is due to one-time expenses, as for the realignment of the sales organisation, in the amount of EUR 1.4 million. As far as operating expenses are concerned, the reduced research and development expenses offset most of the increased administrative, marketing and selling expenses.
At EUR 2.0 million, operating cash flow was again positive in 2012. The headcount increased by 60 to 530 in the fiscal year.
Intershop’s preliminary consolidated financial statements for the period ended 31 December 2012 show a solid net worth position. The equity ratio climbed from 69% to 71%, which clearly exceeds the average equity ratio of Germany’s small and medium-sized enterprises. The company still has no financial liabilities. Liquid funds declined by 15% to EUR 14.3 million as of the end of 2012.
Expansion of the international partner network
Besides the existing cooperations, Intershop was able to win additional renowned partners in 2012. These include Javelin Group, Chapter Media, Mirabeau and Sigma. The expansion of the international partner network will play a key role in Intershop’s future sales strategy.
CEO Jochen Moll: “Strong partnerships are an important competitive advantage in the market for e-commerce solutions, which is characterised by increasingly shorter development cycles. In our opinion, the pooling of expertise and selling power represents an important step that will allow us to market our technology platform more swiftly, especially outside Europe, and to implement product innovations even faster.“
The full consolidated financial statements will be published at the end of March 2013. All figures in this press release are provisional and subject to the final audit.
What role does Managed Services play in Intershop APAC?
We service our customers in the Asia-Pacific region daily to ensure all our client sites are operational at all times and are running optimally in terms of performance. Incidents and requests may originate from the client, end-user or internally, and can range from basic tasks to high priority issues.
Managed Services is the daily client-facing team of our organization, as such, we pride ourselves on clear communication skills and putting the customer first. In addition, we also provide clients and the company with input into the future direction of the underlying IT infrastructure and assist with IT compliance.
Intershop relies heavily on Managed Services in terms of the service benefits we offer. What do you think is the key differing aspect of your team from our competitors?
Our APAC team have staggered work times as well as a 24 x 7 on-call support due to differing time zones of our customers.
One key factor is that the majority of our team are well-versed across both the Intershop Commerce Suite and the underlying infrastructure, regardless hosted on-premises, Azure, or AWS (Amazon Web Services).
Our Managed Services team also encompasses Database Administrators, DevOps Engineers and Senior Application Developers. We focus on operational efficiency so that the client can focus on their core business.
The Intershop Application has many servers and applications operating concurrently. How do you ensure it functions 24/7/365 along with client systems?
As many of our implementations are customized, we have specific monitoring setups for individual clients to ensure functions such as overnight batch jobs and order processing generate immediate alerts if any issues are encountered.
We also regularly monitor the resource usage on our client environments, and are currently in the process of moving a large proportion of these over to Microsoft Azure to improve scalability, security and high availability.
What has been the greatest moment during your time in Managed Services?
A moment would have been the adoption of cloud services to complement Intershop’s Commerce Suite. Having been at Intershop for 7 years now, I have observed that many of our client’s needs have evolved in response to the growth in consumer spending online, which has facilitated the need for a highly scalable solution in both B2C and B2B markets.
What plans do you have for the Managed Services team in the future, in terms of more technical integrations or for example, AI automated responses to tickets?
My team has been working on our internal APAC application named “Rick” which currently runs automated deployments, views the state of all servers and suggests how to resolve problems as they occur. It interfaces to a SIP (Session Initiation Protocol) trunk that actively routes support calls to ease call management and provides updates via Slack that our team uses for real time messaging. Rick is also integrated with Azure to provide a full network topology which is used for monitoring, deploying and replacing VMs (Virtual Machines).
We are also able to spin up Intershop demo environments within 10 minutes without any need of technical staff intervention.
For the future, we are looking at the better use of historical data to resolve problems where AI can be used through Rick to both advise and take preventative action where necessary.
Intershop Communications AG (founded in Germany 1992; Prime Standard: ISHA) is an independent, internationally leading provider of omnichannel commerce solutions. The latter are available as cloud-based commerce-as-a-service solutions or as licensed models and combine the expertise from over 25 years of software development for online commerce. Upon request, Intershop orchestrates the entire omnichannel commerce process chain – from the design of online channels to the implementation of software to fulfillment. Around the globe more than 300 enterprise customers run Intershop solutions. Customers include large corporations such as HP, BMW, Würth and Deutsche Telekom as well as medium-sized enterprises. Intershop operates in Europe, the USA and the Asia-Pacific region.
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.