Intershop AG Repositions for Profitability with Rental Software Focus
Jena, February 28, 2023
Intershop AG, a publicly traded software provider headquartered in Jena, Germany, is ramping up its rental programs for e-commerce and aims to achieve profitability within this year.
"We have restructured the company to this end," said CEO Markus Klahn during the presentation of preliminary 2024 figures. Part of this restructuring involved eliminating approximately 40 of Intershop’s roughly 300 jobs over the past year.
Intershop specializes in software programs for internet portals that facilitate business transactions between companies online. The emphasis is on rental software, which Klahn announced will be increasingly outsourced to partners for installation.
In 2024, Intershop’s revenue reached EUR 38.8 million, up from EUR 38.0 million in 2023. Rental software accounted for 53% of this revenue, underscoring the company’s strategic pivot. Significantly, Intershop improved its earnings before interest and taxes (EBIT) from a loss of EUR 2.5 million in 2023 to a gain of EUR 0.1 million in 2024.
"This is extremely important for us after the losses we experienced in recent years," Klahn emphasized. However, the company still reported a net loss of EUR 400,000, compared to a loss of EUR 3.1 million in 2023. This deviation is attributed primarily to restructuring expenses and one-time effects in the fourth quarter.
Klahn acknowledged that outsourcing services to partners is expected to result in a 5-10% decline in revenue for the current fiscal year, but anticipated a slightly positive operating result (EBIT). He cited ongoing uncertainty in global markets as a factor tempering the investment appetite of Intershop’s customers. "We need better economic conditions," Klahn stated.
Intershop intends to present its complete annual financial report in March.
Restructuring and Repositioning
Intershop’s restructuring has involved both cost-cutting measures, such as workforce reductions, and a strategic shift towards rental software and outsourcing. This realignment is designed to enhance profitability and capitalize on the growing market for cloud-based e-commerce solutions.
Rental Software Focus
By pivoting towards rental software, Intershop aims to tap into the increasing preference among businesses for flexible and scalable software solutions that eliminate upfront capital investments. This model allows customers to access Intershop’s software on a subscription basis, reducing their upfront costs and enabling them to adjust their software usage in line with their business needs.
Outsourcing and Partnerships
Intershop’s decision to outsource certain services to partners is part of its strategy to streamline operations and focus on its core competencies. By partnering with specialized providers for software installation and other services, Intershop can reduce its operating costs and improve efficiency.
Market Challenges and Outlook
Despite its restructuring efforts, Intershop continues to face challenges in the current economic environment. Global uncertainties, including geopolitical tensions and inflation, have led businesses to adopt a cautious approach to investments, impacting Intershop’s sales.
Klahn emphasized that Intershop requires more favorable economic conditions to achieve its full potential. The company remains optimistic about the long-term prospects of its rental software business and its ability to deliver value to customers. Intershop anticipates releasing its complete annual financial report in March, which will provide further insights into its financial performance and outlook.
