FY26e: Quality and margins prevail

Entering FY26, ATOSS looks set to increasingly benefit from its strong structural positioning in the WFM market, moving beyond a year shaped by a rather cautious customer sentiment leading to elongated sales cycles and temporarily muted order intake.

Yet, FY25 has once more underlined the robustness of the business model. Despite macro headwinds, recurring revenues further expanded to 70% (Q3, +2pp yoy) while ARR grew by 17% yoy to € 134m (Cloud & Maintenance) driven by a strong net retention rate of 111% in Cloud & Subscriptions. Combined with strong cost management, this allowed for a 34.6% EBIT margin at 9m, allowing management to lift its FY25 outlook from from previously ≥31% to 34%. Importantly, while this clearly highlights sustained earnings power and upselling capabilities within the installed base, order intake also stabilized in Q3, pointing towards improving visibility as we enter FY26.

Speaking of which, FY26 is seen to show even more pronounced top-line growth (eNuW: +13.1% yoy to € 214m), driven mainly be three factors: (i) Deferred IT investments are expected to normalize with easing economic uncertainties. (ii) The cloud migration of the existing customer base continues to be a powerful growth lever, supporting both top-line expansion and margin scalability. (iii) Recently introduced AI-driven functionality and workforce analytics are likely gaining traction, enhancing ATOSS’ value proposition without materially increasing complexity for customers.

At the same time, ATOSS’ profitability profile is set to remain best-in-class. EBIT margins in the mid-30% range appear sustainable (FY26e: 34.7%) supported by the highly scalable SaaS model, strong gross margins and disciplined cost management. Hence, ongoing investments into AI, sales capacity or international expansion should be comfortably absorbed by operating leverage. With a net cash position of 116m, the company retains substantial strategic flexibility, including optional bolt-on M&A, although organic growth remains sufficient to drive value creation (eNuW: >60% ROIC by FY26e).

Taken together, ATOSS will continue to stand out as high quality software compounder, combining strong growth and earnings visibility, exceptional returns and a resilient balance sheet.

While valuation at first glance remains demanding at 34x PE FY26e, it is underpinned by the company’s outstanding business quality and long-term growth prospects (FY30 targets: € 400m sales & >35% EBIT margin)

We hence continue our BUY rating at an unchanged € 152 PT based on DCF.