Bechtle Q3 Earnings Call Highlights

Key Points

• Bechtle raised its 2026 EBT growth outlook to more than 10%, from 5% to 10%, after third-quarter business volume rose 19% and EBT increased 14%. Its order backlog hit a record EUR 3.6 billion, up 33% year over year, with fourth-quarter conversion key to the final result.
• Public-sector business grew 35% in the quarter, supported by major German contracts. Recent acquisitions are broadening Bechtle’s European capabilities in managed services, 3D printing, AI and data analytics.
• High hardware prices have delayed some workplace purchases and reduced unit volumes, while large low-margin deals pressured gross margin. Bechtle expects positive full-year operating cash flow and is maintaining a focus on productivity.

Bechtle ETR: BC8 raised its full-year earnings outlook after reporting double-digit growth in third-quarter business volume and earnings, supported by a record order backlog and strong public-sector demand.

The German IT services company now expects earnings before taxes (EBT) to grow by more than 10% in 2026, up from its previous forecast of 5% to 10%, CFO Christian Jehle said on the earnings call. He attributed the upgrade to three strong quarters and the company’s order backlog.

Third-quarter business volume rose 19% year over year, including approximately 18% organic growth, while EBT increased 14%. The EBT margin was broadly stable from a year earlier, Jehle said, despite investment in Bechtle’s own IT systems.

The order backlog reached EUR 3.6 billion, up 33% from a year earlier. How much of that backlog the company converts in the fourth quarter will be the main factor determining how far full-year EBT growth exceeds 10%, Jehle said.

Public-sector demand and European acquisitions

COO and designated CEO Konstantin Ebert said public-sector business grew 35% across the group in the third quarter. He pointed to a Bavarian judiciary framework contract worth up to EUR 250 million, covering approximately 17,500 IT workplaces, and a Saarland schools agreement worth up to EUR 80 million for Apple iPads, accessories and services.

Ebert said demand remained high across Europe in the current quarter, although Bechtle faces a particularly strong fourth-quarter comparison from 2025.

Recent acquisitions are also expanding Bechtle’s European capabilities. Ebert said Interforce strengthens managed services in the Netherlands, while ITQuotes gives Bechtle access to new customers in Ireland. The Kaut-Bullinger division adds to its 3D-printing business in Germany and Austria, and U.K.-based Bespoke XYZ brings expertise in artificial intelligence, data analytics and Microsoft Power Platform.

Jehle said Germany was the company’s strongest contributor and most profitable market. France remained challenging, although it grew 5% and showed early progress in public-sector initiatives, he said.

Pricing pressures and hardware demand

Bechtle expects hardware prices to remain high into 2027 and potentially rise further, although less sharply than this year, Ebert said. Price spikes prompted customers to redirect budgets toward data-center investments, delaying some workplace purchases and reducing unit volumes in that area.

Ebert said replacement demand and the use of AI workloads at the workplace could support unit growth next year. He cautioned, however, that layoffs in customer industries could reduce the number of devices needing replacement.

Asked about the risk of rapid price deflation, Ebert said discussions with suppliers had given him no indication that such a decline was imminent. He characterized it as a more theoretical risk at present.

Jehle also said several large, low-margin transactions across Europe were the biggest contributor to a one-percentage-point decline in gross margin. Bechtle accepted the transactions because they added to absolute EBT, he said.

Cash flow and productivity

Operating cash flow improved significantly from the second quarter, Jehle said. An analyst noted that operating cash flow stood at negative EUR 131 million after nine months. Jehle said Bechtle expected positive cash flow for the full year but did not provide a specific forecast.

Inventory buildup was a major factor in cash flow performance, and the inventory was covered by customer orders, Jehle said. Days sales outstanding fell to 36 from 38, while working capital improved as a percentage of business volume.

Headcount growth came from acquisitions, with the organic workforce declining slightly, Jehle said. He credited tight cost management for lower selling and administrative expenses and said the company would continue to focus on productivity.

Bechtle is targeting an EBT margin of 5% of business volume by 2030. Jehle said growth, a greater services contribution, acquisitions, process harmonization and investment in IT and AI would be key to reaching that goal.

About Bechtle (ETR:BC8)

Bechtle AG provides information technology (IT) services primarily in Europe. The company operates through two segments, IT System House & Managed Services, and IT E-Commerce. The IT System House & Managed Services segment offers IT strategy consulting, hardware and software, project planning and implementation, system integration, IT, and training services for IT operation. The IT E-Commerce segment provides hardware and software products, and peripherals and accessories through a web shop.

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