USU Software AG Anticipates Positive Annual Report Driven by License Sales Recovery and SaaS Growth

USU Software AG is set to publish its annual report for the year 2023 on March 28th, with expectations of showing sequential improvements during the fourth quarter. This anticipated growth is partly attributed to a recovery in license sales and a continuous increase in SaaS (Software as a Service) sales. Analysts project a modest year-over-year increase of 4.0% in Q4 sales, reaching €34.9m, and a stronger quarterly growth of 6.3%. License revenues, while down by 30% from the previous year, are expected to contribute significantly to the yearly figures.

The recovery in license sales and expansion of SaaS offerings are seen as key drivers for the improved performance. Q4 adjusted EBITDA is expected to rise to €4.3m, reflecting an improved margin of 12.4%. However, the company is projected to meet the lower end of its annual sales and EBITDA guidance for 2023, with a slight decrease in profitability margins. Looking ahead to 2024, the company anticipates another transition year, focusing on increasing the SaaS component of its business. This strategic shift is expected to temporarily impact profitability but lead to significant margin expansion in the medium term.

Notwithstanding the transitional nature of the upcoming year, USU Software AG's current valuation is deemed attractive by analysts, leading to a reiterated "BUY" recommendation with a target price of €30 based on DCF analysis. This outlook is underpinned by the company's strategic focus on growing its SaaS business, which is expected to bolster its financial performance in the coming years.