Bechtle Q2 Earnings Call Highlights

Bechtle (ETR:BC8) reported double-digit growth across most key metrics in the second quarter and first half of 2026, prompting the IT services provider to raise its full-year outlook despite what management described as continued challenging market conditions.

Chief Executive Officer Thomas Olemotz said the company’s operating environment had not improved, citing reduced growth forecasts for the European Union, Germany and IT markets in Germany and France. Still, he said Bechtle’s customer proximity, vendor relationships and broad geographic and customer diversification supported its performance.

Order Intake and Sales Growth

Chief Financial Officer Christian Jehle said second-quarter order intake increased 26% year over year, extending the company’s order backlog to a record level. He said the backlog reflected both high demand and longer delivery times for certain hardware products, especially servers and storage systems.

Business volume rose 18% in the quarter, including 13% organic growth, while organic revenue increased 10%. Jehle said hardware price increases were a significant contributor to growth, although software also continued to grow at a high rate.

For the first half, business volume increased 15.6%, exceeding the company’s prior expectations. All segments contributed double-digit growth, according to Jehle. The Other Europe segment grew 51%, including contributions from acquisitions in Spain, Italy and Portugal as well as 22% organic growth.

Management said price effects accounted for more than half of the company’s growth, though the impact differed widely by product category. Olemotz said certain supply-constrained product groups experienced substantial price increases, while prices declined in other areas.

Jehle said Bechtle believes it gained market share in Germany, particularly during the first quarter, based on comparisons with the reported growth of competitors.

Profitability, Costs and Cash Flow

EBT increased 20% in the second quarter and 16% in the first half, with the EBT margin remaining stable. Jehle attributed the result to a sustained high gross margin and cost-management measures.

Bechtle has maintained a measured approach to hiring, with headcount growth in the first half driven exclusively by acquisitions. Organic headcount declined 1.4%, and management said it does not expect an organic increase in full-time equivalents during the remainder of the year. Employee costs could rise if strong sales performance leads to higher variable compensation and related provisions, Olemotz said.

Operating cash flow was under pressure in the second quarter due to a strong June and reporting-date effects. Order-related inventories and contract assets increased as projects faced longer delivery times or delayed starts. Management said the inventory was tied to specific customer projects and did not represent a depreciation risk.

Despite the pressure on cash flow, Bechtle’s days sales outstanding improved to 37 days from 39 days, while working capital as a percentage of business volume improved to 6.8% from 7.3%. Jehle said the company expects a positive operating cash flow trend for the full year.

Strategic Developments

During the quarter, Bechtle announced the acquisition of Dutch managed services provider Interforce, which employs 38 people and serves small and medium-sized customers with cloud and managed service solutions. Olemotz said the acquisition expands Bechtle’s managed services portfolio, recurring revenue base and technological expertise. The company intends to consider bringing Interforce’s standardized solution to other European markets.

Bechtle also expanded its cooperation with NVIDIA, reaching the technology provider’s highest partner level for AI infrastructure. In addition, the company is opening a Dell AI Factory with Dell and NVIDIA to provide demonstrations, proof-of-concept capabilities, consulting and workshops. Its Planet AI subsidiary placed first overall and in seven of eight categories in a competition for document-based AI systems, Olemotz said.

In the public sector, Bechtle won a framework agreement with the Bavarian State Ministry of Justice for central IT services. The contract begins Jan. 1, 2027, has an initial six-year term and a maximum volume of up to €250 million. It includes managed services, consulting, projects, hardware, support for two data centers and 220 locations, and more than 17,500 IT workplaces.

Bechtle also placed a €450 million Schuldschein transaction during May and June, up from an original target volume of €250 million because of strong demand. The issuance included maturities of three, five and seven years, and management said the proceeds strengthen long-term financing and support the company’s M strategy.

Outlook and Market Conditions

For 2026, Bechtle now expects business-volume growth of more than 10%, with revenue and EBT growth in a range of 5% to 10%. The company expects its EBT margin to decline slightly, mainly due to investments in its own IT infrastructure, including the multiyear rollout of SAP S/4HANA.

Management said public-sector activity is expected to follow its normal seasonal pattern, with stronger growth anticipated in the second half and particularly the fourth quarter. Olemotz said tender volumes have not declined materially in response to hardware price increases, though customers may need to adjust vendor choices or postpone some projects.

However, executives cautioned that a high order backlog does not necessarily translate directly into current-year revenue because customers may delay projects, delivery constraints can hold up multi-component installations, and some orders may be changed or canceled. Jehle said July had started positively and the company did not see signs of a decline in order intake.

Outside the public sector, management said industrial customers improved in the second quarter, while the traditional small and medium-sized enterprise market remained difficult. Bechtle said it is currently offsetting that weakness through corporate customers and public-sector demand.

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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