NuWays AG: Research-Veröffentlichung zu VOQUZ

VOQUZ Labs AG

Software - Germany

Buy (Initiation)	02.05.2023
EUR 32.00 (Initiation)

Full VOQUZ on growth - Initiate with BUY

Having problems managing your SAP licenses and authorizations? There is a simple solution: VOQUZ Labs AG. As THE specialist for SAP software asset management, the company provides a comprehen­ sive product portfolio built around its core solution samQ which supports customers in efficiently man­ aging their SAP licenses and authorizations. In contrast to more generalist peers, VOQUZ is the only player in the market, that exclusively focusses on SAP, enabling a significant knowledge advan­ tage. In fact, VOQUZ developed a unique database over the past years, featuring over 100,000 SAP transactions, enabling maximum precision in the license measurement process.

Speed matters. While IT projects usually take up to one year and in certain cases even longer, VOQUZ is able to execute much faster: first results are being delivered within only a couple of days. Via the so called "Quick License Assessment", customers receive a one-time full assessment of their SAP land­ scape after just four meetings with a VOQUZ consultant.

This is a strong value proposition. With the support of VOQUZ, customers are not only relieved of the laborious process of determining the number of licenses needed and managing their authorizations. Rather, they are likely able to significantly cut their annual SAP spend thanks to VOQUZ' state-of-the-art software suite, thus creating strong ROIs. For example, JetBlue was able to cut the number of licenses in half leading to a multi-million dollar saving.

It is therefore not surprising that VOQUZ faces strong and accelerating demand (order intake +21% yoy) as companies currently take a closer look at IT budgets in the light of recessionary fears. Going for­ ward, the mandatory transition to SAP S/4HANA is seen to provide further upside. Supported by a marketing push and the roll-out of new products, we hence expect sales to grow dynamically at a 30% CAGR to € 14.2m (2021-26e) and EBIT to expand by 49% annually to € 4.6m, thanks to an increasing share of recurring revenues and scale effects. In fact, recurring revenues are set to reach >70% of total revenues and ROCE to approach 40% already by 2024e demonstrating strong business quality in the form of visibility and value creation.

Along with several growth opportunities and a highly scalable business model, the stock looks underval­ ued trading at 8.6x EV/EBITDA 2023e. We hence initiate with BUY and a € 32.00 PT based on DCF.

Y/E 31.12 (EUR m)	2019	2020	2021	2022e	2023e	2024e
Sales	1.8	3.0	3.9	4.6	6.5	8.7
Sales growth	n.a.	66.4%	31.3%	18.9%	40.0%	35.0%
EBITDA	0.1	0.7	1.0	0.6	1.4	2.3
Net debt (if net cash=0)	-0.1	-0.1	-1.0	-1.4	-1.9	-3.3
FCF	-0.2	0.4	0.6	0.4	0.7	1.4
Net Debt/EBITDA	0.0	0.0	0.0	0.0	0.0	0.0
EPS pro forma	n.a.	n.a.	0.46	0.17	0.60	1.11
EBITDA margin	7.2%	22.4%	24.7%	13.1%	21.0%	26.0%
ROCE	-6.3%	70.6%	37.0%	9.1%	29.1%	39.8%
EV/sales	-0.0	-0.0	3.3	2.7	1.8	1.2
EV/EBITDA	-0.6	-0.2	13.2	20.3	8.6	4.5
PER	n.a.	n.a.	28.3	77.9	21.5	11.7
Adjusted FCF yield	-10.0%	-266.3%	5.1%	4.3%	8.4%	15.5%

Source: Company data, NuWays, Close price as of 28.04.2023

Share Performance

15.20

14.40

13.60

12.80

12.00

11.20

10.40

9.60

8.80
07/22	09/22	11/22	01/23	03/23

High/low 52 weeks (€)	15.00 / 10.00
3m rel. performance	-18.2%
6m rel. performance	-34.4%
12m rel. performance

Market data

Share price (in €)	13.00
Market cap (in € m)	13.7
Number of shares (in m pcs)	1.1
Enterprice value (in € m)	11.7
Ø trading volume (6 months)	25

	Identifier
Bloomberg	VQLA AV
Reuters	VQLA.VI
ISIN	DE000A3CSTW4

Key shareholders

VOQUZ Technology GmbH	75.6%
Peter Rattey	11.4%
Free Float	13.0%

Estimates changes

	2022e	2023e	2024e
Sales	0.0	0.0	0.0
EBIT	0.0	0.0	0.0
EPS	0.0	0.0	0.0

Comment on changes

Sales (2019-24e)					EBIT margin (2019-24e)				ROCE (2019-24e)
10.0m							18.0%							60.0%
7.5m							12.0%
												40.0%
5.0m							6.0%
												20.0%
2.5m							0.0%							0.0%
0.0m							-6.0%							-20.0%
2019	2020	2021	2022e	2023e	2024e	2019	2020	2021	2022e	2023e	2024e	2019	2020	2021	2022e	2023e	2024e
Source: NuWays Research					Source: NuWays Research					Source: NuWays Research
Company description											Guidance
VOQUZ is a leading developer and provider of Software Asset Management (SAM) solutions with a
clear focus on SAP license and authorization management.
					Analyst: Philipp Sennewald · E-Mail:[e-mail]					1

VOQUZ Labs AG

Full note / Initiation - 02.05.2023

Table of Contents

VOQUZ Labs in a nutshell	3
Competitive Quality	6
Growth	10
Valuation	15
Theme	17
Company Background	18
Financials	22
Disclosures	25
Contacts	27

NuWays AG

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VOQUZ Labs AG

Full note / Initiation - 02.05.2023

VOQUZ Labs in a nutshell

• Leading provider of SAP management software
• SAP-focusedproduct portfolio generating well perceived value for customers

VOQUZ is a leading developer and provider of Software Asset Management (SAM) solutions with a sole focus on SAP license and authorization management.

As an early mover with more than a decade of experience in SAP license manage­ ment, VOQUZ is well positioned to grasp the promising opportunities that are aris­ ing in a structurally growing market in times of ever rising IT budgets.

For most medium-sized to large companies, the use and operation of SAP-soft­ware is critical. Due to the large number of different types of licenses and sys­ tems, it is a difficult task to classify every user in a corporation accordingly or even determine the correct number of licenses needed. In fact, the SAP universe offers more than 3,000 products, 24 different user license types and 100 engine met­ rics. According to company data, which is based on previous projects performed by VOQUZ, only 10% of customers have the SAP licenses they actually need, while 60% are overlicensed and 30% are at audit risk due to too few licenses, which could result in significant back payments. In fact, SAP´s contracts include the right for SAP to verify annually that the customer has an appropriate license.

To tackle this issue, VOQUZ offers a targeted software platform built around its core solution samQ to help clients to manage and analyse SAP licenses and authoriza­ tions more efficiently.

Its SAP-focused product portfolio ates VOQUZ from more generalist provider that solely focuses on SAP.

is well perceived by customers and differenti­ competitors. In fact, VOQUZ is the only SAM

Overview of VOQUZ' product and service portfolio

Source: Company data, NuWays Research

With 89% of total product order intake in 2022, samQ is the company's core so­ lution. The development of the software was initiated by Founder Peter Rattey in 2012 before it was introduced to the market in 2015. The software is programmed in ABAP (SAP programming language) and installed as an SAP add-on.samQ perma­ nently and fully automatically optimizes a customers' SAP licenses in all connected SAP systems to the most cost-efficientlevel, while at the same time considering

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VOQUZ Labs AG

Full note / Initiation - 02.05.2023

SAP compliance requirements. The software is built on a unique transaction data­ base, comprising a collection of all standard SAP transactions.

VOQUZ offers different pricing models for the software:

• Perpetual license: Upfront payment for the software, for which an additional run­ ning maintenance fee of 18% of the license amount is charged.

The average volume of a perpetual license amounts to € 35,000 with annual main­ tenance fees of € 6,300.

• Fixed term license: As a further option, licenses with a fixed term of one or three years are offered. In the license fee for 3 years is paid in advance, the customer receives an additional discount of 15%.

The average 1-year license has a volume of € 40,000. The majority (eNuW: 70%) of samQ customers choose a fixed term license.

On top, VOQUZ is also offering an ad-hoc assessment of a customer's license situ­ ation. Prices for this assessment vary between € 1,900 and € 20,000, depending on the customer's number of SAP users. The assessment usually takes only a couple of working days, which is a significant speed advantage over larger peers like Flex­ era or Snow, where projects can take over a year to be completed.

In order to sell licenses, VOQUZ established global partner network in addition to company's own sales force in economically important regions (e.g. DACH, UK, Netherlands, USA, Mexico, South Africa, APAC). It is supported by globally man­ aged marketing activities, such as participation in trade fairs and congresses in the world's most important economic regions as well as the organization and implemen­ tation of international webinars in all time zones.

In 2018, VOQUZ added setQ to the product portfolio (11% of order intake in FY22), which automates role approval and assignment while making related processes ful­ ly transparent, in order to avoid any compliance or security risks. Even though SAP offers its own authorisation management tool, setQ is superior thanks to short setup times of only a few weeks compared to up to one year for the SAP tool.

The core of setQ is a solution from the company "SIVIS GmbH", which VOQUZ is selling under the setQ brand. SIVIS has vice versa integrated samQ as an OEM product into its product portfolio. setQ is hence exclusively offered as a cross- selling product to existing samQ customers. Both company's grant each other the same purchasing conditions, but which are not disclosed.

The beauty of samQ and setQ is that both, license management and authorisation management, are usually offered by the same contact persons at the client unlock­ ing significant cross-sellingpotentials.

The latest addition to VOQUZ' portfolio is the Remedyne software, which was ac­ quired in January (€ 300k purchase price; 1.5x EV/Sales). The software, which should henceforth be marketed under the name remQ, monitors business-criticaltransactions in real time, mainly in procure-to-pay and order-to-cash processes, i.e., where money is involved. With its help, errors such as duplicate transfers and fraud attempts, can be detected and avoided. In addition to the basic ver­ sion, add-ons for payroll- or sanction compliance and criminal watchlists are avail­ able offering an attractive opportunity for up-selling. Moreover, the market for compliance software is expected to grow at a double-digit CAGR, driven by technol­ ogy and software advancements, thus providing further tailwind for VOQUZ' growth prospects.

VOQUZ is seen to announce first customer wins in due course, facilitated by the cross-selling effects with the comapny's existing portfolio. In contrast to samQ, remQ will only be offered with a fixed term license, where the pricing is based on the size of the customer.

Next to its software products, VOQUZ also offers comprehensive advisory ser­ vices, supporting customers in maturing their SAP license management. Advisory services comprise initial diagnostic, contract clean-up, audit preparation, migration to S/4HANA as well as contract negotiation support.

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VOQUZ Labs AG

Full note / Initiation - 02.05.2023

As growth of advisory revenues is usually limited due to workforce constraints, VO­ QUZ decided to develop a new software called visoryQ, that largely maps advisory services. The offer is not only more favourable for the customer, as it provides con­ sistently high results, but more importantly also allows for higher scalability. Espe­ cially in light of the upcoming strong increase in S/4HANA transformations, we ex­ pect strong revenue contributions from visoryQ going forward.

The value provided by VOQUZ' software solutions is very well perceived, as VO­ QUZ' highly reputable customer base of more than 500 international compa­ nies, including several blue-chip names (e.g., jetBlue, OMV, Qiagen), speaks for its own. Moreover, samQ is currently the highest rated SAM tool according to Gartner Peer Insights, outscoring enterprise peers like Flexera or Snow Software.

With its software solutions, VOQUZ is targeting customers with 5,000-20,000 SAP users, while the company is generally able to serve customers from 100 to > 1 million users. In fact, the largest customer has 1.2 million SAP users and more than 300 SAP systems. The company's products are sold as an on-premisesolution and are hosted in the customers data centre.

VOQUZ Labs AG

Products	SAP License Management	Business Transaction Monitoring	Automated SAP license advisory	SAP Authorization Management
		and Auditing	services

12 - Amsterdam, Berlin, Cape Town, Cluj (product development), Kuala Lumpur, Lausanne, London, Mexico City, Munich, New York City,

Sites

Singapore

Headcount

c. 40

Customers

VOQUZ is the only Software Asset Management provider, that exclusively focuses on SAP software, thus creating a knowledge

Market position

Competitors

advantage over more generalist peers.

Rest of the

World; 25%

Order intake by	UK; 6%	DACH; 52%
region (2022)
	United States;
	18%
Sales FY-21 (€ m)		3.9
EBIT FY-21 (€ m)		0.6
EBIT-margin		15.9%

Source: Company data, NuWays Research

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