USU Software : 9-Month Financial Report 2022

	9-Month Financial Report and
-	Report on the Third Quarter
of 2022

USU Software AG

USU AT A GLANCE

9-Month Report 2022	2022		2021
in EUR thousand, except earnings per share and
JAN. 1-SEPT. 30, 2022		JAN. 1-SEPT. 30, 2021
number of employees
SALES	92,874		81,858
EBITDA	11,695		10,387
EBIT	8,155		6,851
NET RESULT	5,776		6,142
EARNINGS PER SHARE (EUR)	0.55		0.58
CASH FLOW FROM OPERATING
ACTIVITIES	5,943		7,930
NUMBER OF EMPLOYEES AS AT JUNE 30	755		750
	Sept. 30, 2022		Dec. 31, 2021
CASH AND CASH EQUIVALENTS	22,363		24,286
SHAREHOLDERS EQUITY	64,847		64,443
BALANCE SHEET	119,880		116,016
EQUITY RATIO	54.1%	55.5%

USU Software AG
Spitalhof	Investor Relations
D-71696 Möglingen	Falk Sorge & Dr. Thomas Gerick
Phone [phone]	Phone [phone] / 440
Fax [phone]	Fax [phone]
www.usu.com	[e-mail]

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LETTER TO SHAREHOLDERS

Dear Shareholders and Readers,

USU Software AG remains on a dynamic growth path and is heading for a record year thanks to a very strong reporting quarter. This is reflected in our latest figures for the third quarter of 2022. Consolidated sales increased by 16.6% year-on-year to EUR 32.7 million, while EBITDA rose by as much as 18.9% to EUR 4.4 million in the same period. One factor in this success was international business, which grew by 53.5% to EUR 8.6 million. The consistent nature of this positive development is illustrated by the figures for the first nine months, which saw new records for all relevant key figures: Consolidated sales rose by 13.5% to EUR 92.9 million, while EBITDA climbed 12.6% to EUR 11.7 million. The one-third increase in SaaS sales resulted in a higher share of recurring revenue, one of the central pillars of USU's growth and something that improves the predictability of our business.

In light of this consistently positive business performance and our sustained healthy financial position, USU made a decision to repurchase treasury shares. The public share buyback offer encompassed 523,770 treasury shares at a fixed offer price of EUR 18.75 per share.

I am delighted to report that we successfully completed the share buyback in early October 2022 and now hold 4.98% of the share capital. We can benefit our shareholders by using these shares for acquisitions or withdrawing them. We also have the option of using them as part of an employee participation program. Even after the share buyback, we have a high level of available liquidity and no liabilities to banks and are generating positive cash flows.

In the third quarter, we also received two important awards. The international LACP competition for the world's best annual reports honored USU's most recent financial report with Platinum status in the Technology/Software category. Meanwhile, a study by the F.A.Z. Institute named USU as a "highly trustworthy company" and recognized it as the leader in its industry, awarding it the maximum possible score of 100 out of 100. Trust is the best currency, not least in times of crisis - which is one of the reasons we believe we are very well positioned for the future.

I would also like to note that our "One USU" strategy project is continuing successfully. Following the concentration of our sales and marketing activities under the central "USU" brand, employees are now focusing on selling the entire USU portfolio from a single source under the umbrella brand. Corresponding activities have been initiated in the areas of consulting and research and development, and we have already received positive feedback from the market and our employees.

In light of the encouraging course of business in the first three quarters, our successful start to the final quarter of 2022 and our high level of orders on hand, we have also been able to upwardly revise our guidance slightly and specify it in greater detail. Accordingly, we now expect USU to record sales growth at the upper end of the forecast range of EUR 120-125 million and an increase in EBITDA to the upper end of the forecast range of EUR 14.5-16.0 million in full-year 2022.

Yours,

Bernhard Oberschmidt,

CEO of USU Software AG

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INTERIM GROUP MANAGEMENT REPORT FOR THE FIRST NINE MONTHS OF 2022 (UNAUDITED)

Basic information on USU Software AG and the Group

As the parent company of the Group, USU Software AG, Möglingen, Germany, has direct or indirect holdings in the following operational companies: USU GmbH, Möglingen, Germany; USU Software s.r.o., Brno, Czech Republic; USU Austria GmbH, Vienna, Austria; Omega Software GmbH, Obersulm, Germany; USU Solutions GmbH, Leinfelden-Echterdingen, Germany; USU Technologies GmbH, Aachen, Germany; USU Solutions Inc., Boston, USA; USU SAS, Paris, France and USU GK, Tokio, Japan. In addition, USU Software AG has a shareholding in Openshop Internet Software GmbH, Möglingen, Germany, which is no longer operational.

Business model, objectives, strategies and controlling system

As a leading provider of software and service solutions for IT and customer service management, USU Software AG and its subsidiaries (hereinafter also referred to as the "USU Group" or "USU") set standards for better service quality. USU enables companies to respond to changed customer and employee needs in a digital world. Well-known companies use USU solutions to create transparency, become more agile, cut costs, and reduce their risk - by means of smarter services, simpler workflows, and better collaboration.

In addition to software asset management, IT service management, and IT service monitoring, the USU service portfolio also covers the areas of knowledge management, self-service management, digital service solutions, and AI services.

More than 1,200 USU customers from all sectors of the global economy benefit from USU solutions. They include Allianz, Atruvia, Bechtle, BITBW, BMW, Deutsche Bahn, Deutsche Telekom, Swiss Post, Jungheinrich, LinkedIn, Novartis, Otto, VW, and W&W.

USU Software AG has made it its goal to achieve growth in consolidated sales above the average level for the IT market as a whole in the years ahead while also further increasing its

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INTERIM GROUP MANAGEMENT REPORT FOR THE FIRST NINE MONTHS OF 2022 (UNAUDITED)

profitability. It will focus on organic growth through innovation and by expanding the Group's international market presence, though growth through acquisitions and equity investments is also a part of the corporate strategy.

The key performance indicators for USU Software AG and the Group are sales and EBITDA. EBITDA has served as an important planning and control parameter since 2022.

For fiscal 2022, the Management Board is forecasting sales growth at the upper end of the forecast range of EUR 120-125 million with recurring revenue (maintenance sales including SaaS revenue) accounting for 45% of new product business, resulting in an increase in EBITDA to the upper end of the forecast range of EUR 14.5-16 million.

The Management Board is also confirming the current medium-term planning, which includes average organic sales growth of 10% in the next few years and, in view of the continued growth in SaaS business, an increase in the EBITDA margin to between 16% and 18% by 2024.

Research and development

USU Software AG has invested heavily in new innovations and the enhancement of its existing product portfolio for a number of years. In addition to in-house R&D resources, close cooperation with customers, partners, universities and institutions delivers extensive impetus for new technologies and product innovations.

In the first nine months of 2022, USU invested a total of EUR 13,322 thousand (Q1-Q3 2021: EUR 12,860 thousand) or 14.3% (Q1-Q3 2021: 15.7%) of consolidated sales in research and development (R&D). The total number of employees in this segment was 225 as at September 30, 2022 (September 30, 2021: 216). The USU Group's R&D expenses do not typically meet the criteria for recognition and hence are not capitalized.

In USU Service Management, the extensive development work on the new shop module, the service platform and the service apps continued. The R&D team also implemented functional enhancements to the existing platform for the coming release. The development of shared components for USU support services also continued.

The IT Monitoring business segment focused on the implementation of customer orders and features for customer projects. It also realized additional security improvements for the current release. At the same time, the user experience was improved further, especially with regard to the simplified commissioning and maintenance of server monitoring.

R&D activities in Software Asset Management (SAM) focused on module harmonization with a view to the planned joint and integrated USU ecosystem. For example, scrollable dashboards were introduced for improved user friendliness. Users can now also use an editor to modify transformation scripts and export log files more easily. USU's systems can now deliver Oracle Java files in verified quality for Oracle Software Asset Management - making it one of the first

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