Atoss forecasts around 37% EBIT margin in 2026 while guiding revenue toward lower end of EUR 210M-EUR 215M range

• "Following a solid third quarter, we continue to see strong business development across our key financial indicators." (CFO & Member of Management Board Christof Leiber) "Revenue grew by 12% year-on-year for the first 9-month period until the end of Q3 2026" and "cloud revenue growth" was "26%." (CFO & Member of Management Board Christof Leiber)

• "Order development remained solid in the first 9 months of 2026 despite the continued macroeconomic and geopolitical uncertainties" and "ARR grew by 17% year-on-year" while "cloud and subscription business" was "up plus 25%." (CFO & Member of Management Board Christof Leiber) He added: "pipeline for enterprise, SMB and international remains solid. But as always, execution will remain the key to success." (CFO & Member of Management Board Leiber)

• "Let me also briefly provide an update on the planned leadership transition." (CFO & Member of Management Board Christof Leiber) "Klaus Bauer stepped down from the Supervisory Board effective of September 30" and "the transition progress is progressing according to plan," with "Pritim Kumar Krishnamoorthy to CEO and Andreas Obereder to the Supervisory Board" described as "part of a long-term succession process." (CFO & Member of Management Board Leiber)

• "For 2026, we continue to expect double-digit revenue growth and confirm our revenue guidance range of EUR 210 million to EUR 215 million, yet we expect to come in rather at the lower end of the bandwidth." (CFO & Member of Management Board Christof Leiber) "We are again uplifting our guidance for the EBIT margin. We now expect an EBIT margin of around 37% for the full year." (CFO & Member of Management Board Leiber)

• "The road map continues to progress as planned" and "having successfully delivered the planned modules in the third quarter" ahead of "our Workforce Intelligence Agent release for ASES" planned for "the fourth quarter of 2026," described as "a new workforce intelligence layer" and "enhancing these capabilities with agentic functionality." (CFO & Member of Management Board Christof Leiber)

Outlook

• "For 2026, we continue to expect double-digit revenue growth and confirm our revenue guidance range of EUR 210 million to EUR 215 million, yet we expect to come in rather at the lower end of the bandwidth." (CFO & Member of Management Board Christof Leiber) He tied the mix shift to "recurring revenues" being "more at the upper end" while "perpetual licenses are coming -- continuing to come in lower." (CFO & Member of Management Board Leiber)

• "We are again uplifting our guidance for the EBIT margin. We now expect an EBIT margin of around 37% for the full year" and, for 2027, "we see the positive development of EBIT margins to continue well into 2027." (CFO & Member of Management Board Christof Leiber)

• "Revenue development for 2027 is likely to come in at the lower end of the previously communicated revenue range for '27" as "perpetual and consulting revenues are trending or expected to trend slightly lower," while "our confidence in the long-term double-digit growth opportunities for ATOSS remains unchanged." (CFO & Member of Management Board Christof Leiber)

Financial Results

• "Total ARR, including both cloud subscription and maintenance, increased by 17% year-on-year to EUR 157.1 million" and "cloud and subscription ARR increased by 25% year-on-year to EUR 119.4 million" at the end of Q3. (CFO & Member of Management Board Christof Leiber)

• "Total ARR backlog increased by 16% year-on-year to EUR 161.4 million" and "cloud and subscription backlog growth increased by 8% year-on-year to EUR 23.4 million," alongside a comment that "order intake can vary between individual quarters" and the company prefers "a rolling 12-month view." (CFO & Member of Management Board Christof Leiber)

• "Net retention rate reached 112% in the first 9 months of 2026" and "our ASES business" was "at 116% NRR." (CFO & Member of Management Board Christof Leiber) He also quantified the cloud ARR growth split: "approximately 48% came from expansion of our installed base and 52% from new logos and migrations." (CFO & Member of Management Board Leiber)

• "Cash flow amounted to EUR 35.9 million" and "our overall liquidity position remained very solid at EUR 159 million." (CFO & Member of Management Board Christof Leiber)

Q&A

• Jarrod Chisholm, UBS Investment Bank, Research Division: "How does your AI product road map kind of compare to theirs in your view?" and "if you could walk through the drivers of the margin improvement". CFO Leiber: "we are continuing to cooperate with and have technology layers integrating into SAP, into Workday and other HCM vendors" and "we don't really see that this will significantly impact us." He added on margins and efficiency: "we are currently building out an AI factory internally" and "reducing increase of headcount" with "37% EBIT margin for the first 9 months" and "40% EBIT margin in Q3." (CFO & Member of Management Board Leiber)

• Gustav Froberg, Joh. Berenberg, Gossler & Co. KG, Research Division: "gross retention rates" and why "some ASES customers have churned" plus a request for "a more precise split" between migrations and new logos, and whether ATOSS would "reinvest" margin into growth. CFO Leiber: "there's a specific customer group" using "pure time and attendance functionality" that "is actually at risk" and the company wants to "move parts of this capacity into the customer success areas" to "reduce churn contraction rates." He provided a split: "EUR 12.5 million" of "new ARR" from "new and migrated customers" with "EUR 4 million" from "migration" and "the remainder" as "purely then new logos." On reinvestment: "we really believe that we do have the capacity in our sales" and "it is more about educating and turning all of our capacity into an expert area." (CFO & Member of Management Board Leiber)

• Nicolas Herms, Deutsche Bank AG, Research Division: asked about headcount declines and whether sales productivity gains drove it. CFO Leiber: "this is one person" in go-to-market headcount ("201" to "200") and "this is not really a significant change"; he cited "attrition" in sales of "15% to 20%" and said the company "reduced capacity slightly in G&A" and "reducing capacity" in "R&D" while "injecting" tools "like Claude" as part of an "AI-first development process approach." (CFO & Member of Management Board Leiber)

Sentiment Analysis

• Analysts: slightly negative to neutral, focusing on competitive threats, churn, sustainability of margins, and headcount capacity; the tone included pressure-testing, such as questions on "gross retention rates" and whether ATOSS would "reinvest" margin to "boost growth." (Gustav Froberg, Berenberg)

• Management: slightly positive and defensive on competition and growth capacity, emphasizing differentiation and execution; on competition, "we don't see not really a fundamental shift" and "we don't really see that this will significantly impact us." (CFO & Member of Management Board Christof Leiber) On demand visibility: "execution will remain the key to success." (CFO & Member of Management Board Leiber)

• Versus last quarter: management language shifted more cautious on the top line for 2026 and 2027, moving from Q2’s "middle of the given bandwidth" for 2026 and "right in the middle" for 2027 to Q3’s "lower end" framing for both 2026 guidance realization and 2027’s range positioning. (CFO & Member of Management Board Christof Leiber)

Quarter-over-Quarter Comparison

• Guidance stance shifted from Q2: "we currently see ourselves in the middle of the given bandwidth" for 2026 revenue guidance, to Q3: "we expect to come in rather at the lower end of the bandwidth" while still confirming the same EUR 210 million to EUR 215 million range. (CFO & Member of Management Board Christof Leiber)

• Margin outlook strengthened from Q2: "at least 34%" EBIT margin for 2026 and "at least 35%" for 2027, to Q3: "we now expect an EBIT margin of around 37% for the full year" 2026, while maintaining that margins should continue into 2027. (CFO & Member of Management Board Christof Leiber)

• AI messaging evolved from Q2’s focus on rollout and monetization approach to Q3’s product framing around "Workforce Intelligence Agent" and a "common intelligence layer" with "human in the loop" and a specific timing note: "planned for the fourth quarter of 2026" and "in early December." (CFO & Member of Management Board Christof Leiber)

• Analyst emphasis moved from Q2’s focus on order momentum and capital return options to Q3’s deeper focus on churn mechanics (GRR), competitive dynamics with SAP/Workday, and how far margins can go without reinvestment. (Jarrod Chisholm, UBS; Gustav Froberg, Berenberg)

Risks and Concerns

• "continued macroeconomic and geopolitical uncertainties" were cited as a backdrop to order development, with management repeatedly tying outcomes to "execution." (CFO & Member of Management Board Christof Leiber)

• Product-mix headwind remained explicit: "perpetual licenses are coming -- continuing to come in lower" and this was linked to expecting 2026 revenue "at the lower end" of the range despite strong recurring revenues. (CFO & Member of Management Board Christof Leiber)

• Customer retention risk was acknowledged: "some selected churn" and a legacy customer segment with "pure time and attendance functionality" that "is actually at risk here," with mitigation described as reallocating capacity into "customer success" to "reduce churn contraction rates." (CFO & Member of Management Board Christof Leiber)

Final Takeaway

Management described Q3 and the first nine months as continuing double-digit growth with accelerating profitability, while explicitly guiding 2026 revenue toward the lower end of EUR 210 million to EUR 215 million due to weaker perpetual licenses, and lifting full-year EBIT margin expectations to around 37%. The call’s stock-relevant focus centered on sustained cloud/ARR momentum, an AI “workforce intelligence” release planned for Q4 (early December) positioned as a major product milestone, and a more cautious tone on 2027 top-line trajectory tied to perpetual and consulting trends, alongside active efforts to address churn in a legacy customer cohort and maintain high-margin execution.

Read the full Earnings Call Transcript

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