Interim Management Statement Q3 YTD 2018

Release no. 20/2018

Columbus delivers 52% growth in revenue
In the first three quarters of 2018 Columbus delivers revenue growth of 52% and increases EBITDA* by 22%. The growth in revenue is primarily driven by the iStone and HiGH Software acquisitions and increase in sale of Columbus Software.

In accordance with the regulations for listed companies' submission of interim statements, Columbus A/S hereby submits the interim management statement for the period 01.01.2018-30.09.2018 (9 months).

Growth driven by acquisitions

Revenue in Q3 YTD 2018 amounted to DKK 1,382m (2017: DKK 907m), corresponding to an increase of 52% compared to the same period last year.

The revenue growth is primarily driven by the acquisitions of iStone and HiGH Software. The integration of the two companies is progressing as planned.

The sale of Columbus Software contributes with a growth of 34% compared to last year. The growth is deriving from both Columbus' existing portfolio as well as the acquired HiGH Software.

Columbus Cloud grew by 129% to DKK 10m in the first three quarters of the year. The growth is driven both by organic growth and by acquisitions.

External software licenses declined by 25%, which is due to the fact that a number of large customers buy licenses directly from the vendor where Columbus receives an agent fee. The decline is also affected by the decline in external software sales in Columbus US as previously announced.

External cloud increased by 171% due to the increasing conversion to cloud-based solutions.

Service revenue increased by 72% which is driven by the acquisitions of iStone and HiGH Software. Columbus Care continued the growth and increased sales by 49%.

EBITDA* amounted to DKK 119m (2017: DKK 97m), corresponding to an increase of 22% compared to the same period last year.

The increase in EBITDA* is driven by the previously mentioned acquisitions, cost adjustments in the US business and the increase in sale of Columbus Software.

EBITDA* is impacted by accelerated integration cost in iStone in the third quarter, which has resulted in higher cost than first anticipated, due to a faster integration of the organization than initially planned. In Q3 YTD the integration cost amounts to DKK 14m.

The result before tax increased by 8% to DKK 66m. Besides the increase in EBITDA* the result before tax is affected by a currency gain of DKK 11.5m arising from currency adjustment of the remaining purchase price related to the iStone acquisition. Futher, the result before tax is negatively affected by extraordinary depreciation of Columbus Software of DKK 15m.

Currency rate effect

Revenue and EBITDA* are negatively affected by the decline in the USD rate, which affects the revenue by DKK -20.1m and EBITDA* by DKK -1.7m. The decline in GBP and RUB rates has less effect on the results. In total, the declining currency rates affect the revenue by DKK -28.5m and EBITDA* by DKK -2.5m.

Progress in the services business

In Q3 YTD, the service revenue increased by 72%, from DKK 619m to DKK 1,063m, and chargeable hours increased from 52% to 54% compared to the same period last year.

The increase in the service revenue is primarily driven by the iStone acquisition as services constitute the largest part of iStone's revenue.

Progress in the sale of Columbus Software

The sale of Columbus Software increased by 34%. The sale of software subscriptions increased by 20% as a consequence of a satisfactory renewal rate and a positive effect of the cloud conversion. The sale of licenses increased by 37% due to increasing demand.

The sale of own cloud software products showed good progress increasing from DKK 4.4m to DKK 10m, a very satisfactory progress.

Columbus Care and cloud drive growth in recurring revenue

In Q3 YTD 2018 recurring revenue increased by 26% and constituted 22.5% of the total revenue. The progress is driven by a considerable increase in sale of Columbus Care which grew by 49%, an increase in Columbus Cloud growing by 129% as well as external cloud growing by 171%,

Columbus US improving

Columbus' US business unit is performing according to plan with an adjusted cost level. Overall revenue is behind last year, however, EBITDA increased from DKK 6.6m to DKK 16.9m in the first three quarters in 2018.

Expectations to 2018

Columbus maintains the announced expectations to 2018:

Revenue in the level of DKK 2bnEBITDA* in the level of DKK 200mColumbus Software revenue in the level of DKK 90m10% dividend on nominal share capital

Latest developments

No events or transactions with a material effect on the company's financial position have occurred since the balance sheet date.

"The first 9 months of 2018 has been an extraordinary period for Columbus. With the acquisition of iStone, we have moved into a new league in the Nordic market and have extended our offering portfolio with market leading solutions like Commerce and M3. In addition, we are growing our Columbus Software and Columbus Care businesses which are our main market differentiators and key elements in creating close customer engagements", says CEO and President in Columbus, Thomas Honoré.

* EBITDA before share-based payment

Columbus2020

Columbus' Columbus2020 strategy - towards growth

Based on Columbus' strengthened position, as a result of successful execution of the Columbus15 strategy, the company launched a growth strategy in March. The strategy is named Columbus2020 and consists of four interconnected strategic elements.

Financial income and expenses

Financial income and expenses primarily concerns exchange rate adjustments in relation to group receivables and monetary items.

In order to support decisions about allocation of resources and assessment of performance of the segments, the Group's internal reporting to the Board of Directors of the Parent Company is based on the following grouping of operating segments:

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