INTERSHOP Communications (ISHA) Q2 2024 earnings summary

Executive summary

• Cloud revenue grew 32% year-over-year to €10.3 million, with cloud order entry up 18% and net new ARR up 139%, driven by contract extensions and new customers.

• Total revenue declined 2% year-over-year to €19.0 million, mainly due to a 28% drop in service revenues from complex projects.

• EBIT improved to €-0.4 million from €-0.8 million year-over-year, impacted by €0.4 million in one-off personnel expenses; EBIT would have been break-even excluding these.

• The company is executing strict cost and efficiency measures, including staff reductions, to adapt to ongoing market caution and investment delays.

• Intershop was named a "Strong Performer" in Forrester's B2B Wave report, with AI-driven personalized search highlighted as a key strength.

Financial highlights

• Cloud and subscription revenue rose 32% to €10.3 million; share of total revenue increased to 54% from 40%.

• Service revenue fell 28% to €5.1 million; license and maintenance revenue dropped 19% to €3.7 million.

• Gross profit was stable at €8.4 million; gross margin improved to 44% from 43%.

• EBITDA increased 25% to €1.1 million; EBITDA margin rose to 6%.

• Net result improved to €-0.7 million from €-1.1 million; EPS at €-0.04 versus €-0.08 year-over-year.

Outlook and guidance

• Board confirms 2024 guidance: expects slight increase in incoming cloud orders and net new ARR, moderate revenue growth, and a balanced EBIT for the full year.

• Service business expected to recover as complex projects conclude; one-off expenses from Q2 anticipated to be offset in H2.

• Strategic focus on AI, with a new "Artificial Intelligence" division to drive transformation into an AI-supported e-commerce platform.