Atoss Software, a Munich-based company listed on the SDax index, announced its intention to increase profitability in 2024. The company aims to retain at least 35 percent of its targeted minimum profit of 170 million euros as earnings before interest and taxes (EBIT). This is an increase from the previously targeted margin of at least 33 percent.
The company’s optimism stems from a surprisingly profitable third quarter. Atoss increased its operating result (EBIT) by around 28 percent, reaching just under 16.1 million euros, partly due to cost savings. The corresponding margin improved by four percentage points year-on-year to 38 percent.
Atoss earned 11.6 million euros at the bottom line, up from 8.6 million euros a year earlier. The company exceeded analysts’ estimates for both key figures, while sales were in line with expectations, with an increase of nearly 14 percent to almost 42.1 million euros. Despite the challenging market environment, the Management Board continues to expect sales of 190 million euros for the coming year.
The operating margin (EBIT margin) is targeted at “at least 30 percent.”
Many investors prefer to focus on companies like ATOSS Software, which has not only revenues but also profits. It certainly is nice to see that ATOSS Software has managed to grow EPS by 32% per year over three years. This has no doubt fueled the optimism that sees the stock trading on a high multiple of earnings.
Atoss boosts profitability amid strong growth
The good news is that ATOSS Software is growing revenues, and EBIT margins improved by 4.5 percentage points to 35% over the last year. Ticking those two boxes is a good sign of growth.
Shareholders will be pleased by the fact that insiders own ATOSS Software shares worth a considerable sum. We note that their impressive stake in the company is worth €466 million. That equates to 22% of the company, making insiders powerful and aligned with other shareholders.
So there is an opportunity here to invest in a company whose management has tangible incentives to deliver. The shares of Atoss Software rebounded on Wednesday following the company’s latest quarterly report. Closing at 136 euros on Tradegate, the stock price rose by 3 percent, recovering from its previous day’s losses.
The shares had received support at the 21-day line at 131.50 euros. Henrik Paganetty, an analyst from US bank Jefferies, noted that the company’s raised margin target for 2024, set at a minimum of 35 percent, implies an operating result (EBIT) of 60 million euros. This forecast surpasses the consensus estimate by 5 percent.
Despite weaker order intake, the company showcased a strong cash position.
Johannah Lopez is a versatile professional who seamlessly navigates two worlds. By day, she excels as a SaaS freelance writer, crafting informative and persuasive content for tech companies. By night, she showcases her vibrant personality and customer service skills as a part-time bartender. Johannah's ability to blend her writing expertise with her social finesse makes her a well-rounded and engaging storyteller in any setting.
