Q2 sales grew by 9.2% yoy (-0.9% qoq) to € 45.8m (H1 +10% yoy to € 92.1m), mainly carried by Cloud & Subscriptions (+29% yoy, +6.6% qoq to € 22.8m), which compensated for a weaker Licenses business (-61% yoy, -43% qoq to € 1.6m). The latter was the result of the ongoing cloud transition but also economic headwinds. Consulting and Maintenance revenues stayed largely flat at € 9.4m and € 9.8m. The recurring revenue share rose to 69.4%, up from 64% at the end of FY24 (2030 ambition of 80%).

Both Q2 and H1 saw a decline in intake compared to last year’s strong performance. This was primarily due to longer sales cycles and cautious customer sentiment towards IT investments amidst the current macroeconomic conditions. With the arrival of the new CRO in November and new key sales hiring during the past few months, this should pick up from Q4/Q1 ‘26 again (eNuW).

In the second quarter, the EBIT margin settled at 33.6%, coming down from last year’s elevated 37.3%, which had been temporarily boosted by unspent investment funds during the sales restructuring. With the

H1 EBIT margin having come in at 33.6%

, management expressed its confidence in being able to reach 32-33% (eNuW 33%; guidance >31%), though this will ultimately depend on how revenues develop and the pace of new hiring. Q2 operating cash flow was € -5.5m, mainly due to higher tax payments of € 23.3m in H1 2025, up from € 5.2m last year.

Mid-term prospects remain promising. The European Workforce Management (WFM) market is expected to grow by 10% p.a. until 2030 carried by (1) a constantly increasing regulatory environment which is particularly relevant of enterprises operating across multiple countries, (2) resource and skilled staff scarcity and (3) the rising share of digitalization, supported by Germany‘s planned € 500bn infrastructure investments. While 2025 is likely to show slower growth for ATOSS (eNuW: 11.8%) due to postponements of IT investments as a result of macro uncertainties, growth is seen to accelerate as for next year carried by the pent-up demand and cross-selling potentials from recently launched AI services.

While ATOSS’ valuation remains high at 29x EV/EBIT 2025e, the company‘s high competitive quality grounded in deep regulatory know-how as well as top-class product suites, reflected by ROCEs of around

60%

, a strong balance sheet (€ 97m net cash) and ample mid-term growth prospects (16% sales CAGR until 2030 as reflected by its mid-term ambition) form an attractive investment case. BUY with a € 152 PT based on DCF.