INTERSHOP Communications : Quarterly Statement Q1-Q3 2021

Quarterly Statement

Q1 - Q3 2021

January - September 2021

Letter to Our Stockholders

Dear stockholders and business partners,

We continued on our profitable growth path in the third quarter, even though the period from July to September was challenging, as was the case in the past. The summer break was longer this year for many companies, especially after months of corona restrictions, resulting in a slight delay in customer decisions for some projects. But at the same time, we have also noticed that the positive trends for our industry seem to consolidate further. These primarily relate to the increasing digitization efforts in the industry, spurring the demand for sustainable solutions for digital trade in the medium term.

All in all, we are very satisfied with the first nine months and have almost doubled the EBIT to about EUR 1.2 million. We are particularly pleased with the fact that for the seventh consecutive quarter we have posted a positive operating result. Overall, our cloud key figures clearly show a positive trend: Incoming orders amounts to EUR 11.3 million at the prior-year level, the share of cloud revenue in the overall revenue has increased by 9 percentage points to 31%, and the Net New ARR amounts to EUR 2.1 million compared to EUR 1.6 million in the same period last year. Our profitability in the cloud has also continued to increase. With a cloud margin of 51% in the first nine months we were well over the previous year's figure of 38%.

I am especially proud of Intershop being named a leading global technology company again in the renowned Gartner® Magic Quadrant™ for Digital Commerce 2021. Our positioning as a niche player confirms our decision to focus on the B2B commerce segment and the cloud transformation of our platform and sends a strong signal to the competition. The award encourages us to further optimize our platform and to strengthen our position as a top provider in the B2B field.

Thanks to the satisfactory first nine months of the current financial year and with a continued attractive new customer pipeline we are convinced that we will be able to reach our goals for 2021.

We thank you for your trust.

Best regards,

Markus Klahn

INTERSHOP Communications AG / Quarterly Statement Q1 - Q3 2021

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Key Figures for the Group

in EUR thousand	9-Months 2021	9-Months 2020	Change
KPIs
Cloud order entry	11,349	11,290	1%
Net New ARR	2,068	1,599	29%
Revenue	26,581	24,258	10%
EBIT	1,150	595	93%
REVENUES
Revenues	26,581	24,258	10%
Licenses and Maintenance	6,790	8,714	-22%
Cloud and Subscription	8,125	5,260	54%
Service Revenues	11,666	10,284	13%
Revenues Europe	18,503	17,251	7%
Revenues USA	4,949	3,690	34%
Revenues Asia/Pacific	3,129	3,317	-6%
EARNINGS
Cost of revenues	14,075	13,313	6%
Gross profit	12,506	10,945	14%
Gross margin	47%	45%
Operating expenses, operating income	11,356	10,350	10%
Research and development	3,947	2,657	49%
Sales and marketing	5,594	5,485	2%
General and administrative	2,464	2,233	10%
Other operating income/expenses	(649)	(25)	++
EBIT	1,150	595	93%
EBIT-Margin	4%	2%
EBITDA	3,521	3,189	10%
EBITDA margin	13%	13%
Net result	764	402	90%
Earnings per share (EUR)	0.05	0.03	++
NET ASSETS
Shareholders´equity	17,322	16,156	7%
Equity ratio	45%	56%
Balance sheet total	38,598	28,881	34%
Noncurrent assets	21,300	12,200	75%
Current assets	17,298	16,681	4%
Noncurrent liabilities	11,966	3,117	++
Current liabilities	9,310	9,608	-3%
FINANCIAL POSITION
Cash and cash equivalents	11,709	11,290	4%
Net cash operating activities	3,210	3,404	-6%
Depreciation and amortization	2,371	2,594	-9%
Net cash used in investing activities	(931)	(1,706)	-45%
Net cash provided by financing activities	(2,180)	1,917	++
EMPLOYEES	290	298	-3%

INTERSHOP Communications AG / Quarterly Statement Q1 - Q3 2021

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Business development

Business performance during the first nine months of 2021

In the reporting period, the Intershop Group generated sales revenues of EUR 26.6 million, an increase of 10% compared to the same period last year. The operating result before interest and taxes (EBIT) is again positive in the third quarter and amounts to around EUR 1.2 million for the first nine months of 2021 (prior year: EUR 0.6 million).

The Group´s most important financial key figures (KPIs) are shown in the overview below.

in EUR thousand	9M 2021	9M 2020	Change
Cloud Order Entry	11,349	11,290	1%
Net New ARR	2,068	1,599	29%
Revenue	26,581	24,258	10%
EBIT	1,150	595	93%

The cloud business continues on its growth path

Intershop posted good development in the cloud business in the reporting period for the first nine months. Incoming cloud orders amounts to EUR 11.3 million at the prior-year level. EUR 6.5 million of this are attributable to new customers and EUR 4.8 million to existing customers. Overall, cloud and subscription revenues rose by EUR 8.1 million, representing an increase of 54%. Thanks to the strong growth, the share of cloud revenue in the overall revenue increased by 9 percentage points to 31% (prior year: 22%). The Net New ARR (new annual recurring revenue less ARR for cancellations and currency translation differences) increased by 29% to EUR 2.1 million compared to EUR 1.6 million in the previous year. Intershop was able to win over seven new customers in the first nine months. The latter contributed EUR 0.9 million to the New ARR, while a New ARR of EUR

1.2 million was achieved with existing customers. As of September 30, 2021 the ARR (annual recurring revenue) increased by 36% to EUR 11.4 million (prior year: EUR 8.4 million). With 51%, the cloud margin for the entire reporting period was well above that of the first three quarters of 2020 (prior year: 38%).

INTERSHOP Communications AG / Quarterly Statement Q1 - Q3 2021

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Earnings Position

The development of the key earnings figures of the Group is shown in the overview below:

in EUR thousand	9M 2021	9M 2020	Change
Revenues	26,581	24,258	10%
Cost of revenues	14,075	13,313	6%
Gross margin	47%	45%
Operating expenses, operating income	11,356	10,350	10%
EBIT	1,150	595	93%
EBIT margin	4%	2%
EBITDA	3,521	3,189	10%
EBITDA margin	13%	13%
Earnings after tax	764	402	90%

In the first nine months of 2021, the Intershop Group generated revenues in the amount of EUR

26.6 million, which corresponds to an increase of 10% over the same period in the prior year. For the third quarter, revenues amounted to EUR 8.3 million (prior year: EUR 7.8 million).

Revenues for the core group software and cloud rose by 7% to EUR 14.9 million, representing 56% of the total revenue. The core group includes the license and maintenance area as well as the cloud and subscription area, which developed in opposite directions in the reporting period. licenses and maintenance revenues amounted to EUR 6.8 million in the first nine months compared to EUR 8.7 million in the same period last year. In contrast, the cloud and subscription area showed a robust growth of 54% to EUR 8.1 million. Service revenues rose by 13% to EUR 11.7 million. Last year, this area experienced project delays and postponements in the course of the corona pandemic. These processes normalized in 2021, whereby recovery trends are now reflected in increasing revenues.

The following overview shows the development of revenues:

In EUR thousand	9M 2021	9M 2020	Change
Software and Cloud Revenues	14,915	13,974	7%
Licenses and Maintenance	6,790	8,714	-22%
Licenses	1,166	2,678	-56%
Maintenance	5,624	6,036	-7%
Cloud and Subscription	8,125	5,260	54%
Service Revenue	11,666	10,284	13%
Revenues total	26,581	24,258	10%

Europe is the core target region for Intershop. Here the Group grew by 7% to EUR 18.5 million in the first nine months of 2021. Thus, the share of European customers in total revenues is 70%. The U.S. region recorded a particularly strong growth. Revenues increased by 34% to EUR 4.9 million, representing a share of 18% of total revenues. In the Asia-Pacific region, revenues amounted to EUR 3.1 million (prior year: EUR 3.3 million). Thus, the region contributes 12% to the total revenues.

INTERSHOP Communications AG / Quarterly Statement Q1 - Q3 2021

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