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Edited Transcript of COP.DE earnings conference call or presentation 7-Nov-19 9:00am GMT

Q3 2019 Compugroup Medical SE Earnings Call

KOBLENZ Nov 15, 2019 (Thomson StreetEvents) -- Edited Transcript of Compugroup Medical SE earnings conference call or presentation Thursday, November 7, 2019 at 9:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Claudia Thomé

CompuGroup Medical Societas Europaea - Head of IR

* Michael Rauch

CompuGroup Medical Societas Europaea - CFO & Member of Management Board

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Conference Call Participants

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* Charlotte Friedrichs

Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst

* Knut Woller

Baader-Helvea Equity Research - Analyst

* Nikolas Mauder

Kepler Cheuvreux, Research Division - Junior Equity Research Analyst

* Uwe Schupp

Deutsche Bank AG, Research Division - Small and Mid-Cap Analyst

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Presentation

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Operator [1]

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Good morning, and welcome to the CompuGroup Medical Q3 results conference call for investors and analysts. Today's conference is being recorded.

At this time, I would like to turn the conference over to Claudia Thomé. Please go ahead.

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Claudia Thomé, CompuGroup Medical Societas Europaea - Head of IR [2]

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Good morning, everyone, from Coupland. We published Q3 results this morning. I trust that you've all seen the quarterly statement and the presentation, which we published on the website. Welcome to our call. Michael Rauch, our CFO, will walk you through the financials of the quarter, and then there will be opportunity for questions and answers.

And with that, I would like to hand over to Michael.

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [3]

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Thank you, Claudia, and good morning, everybody, and a warm welcome also from my side. CompuGroup is looking back on the quarter with strong underlying performance in all relevant financial KPIs. We continue to capitalize on our expertise in connecting health care professionals. In addition, we are benefiting from a digital supportive regulatory environment in several of our markets to further drive digitization in health care. We are happy to report an excellent performance in our operating segments, catering to doctors, hospitals, pharmacies needs. In order to remain at the forefront of the technological developments, we continue to invest into software development and new product features, at the same time, maintaining a sharp eye on EBITDA and cash flow performance. So please bear with me during the following pages of this presentation, taking a closer look into our Q3 performance.

For the purpose of this presentation, I propose we take the disclaimer on Page 2 of this presentation as having been read to the note. I trust you've seen that we have implemented changes to our reporting formats. Our goal was to enable you to take in relevant information as quickly as possible. For example, moving to a format of quarterly statement instead of a fully-fledged interim report, like many companies have moved to by now. Going forward, we will publish Q1 and Q3 results as quarterly statement and Q2 results as a full interim report. You will also find this presentation in a changed format, not just from the pure look. Trying to constantly improve here, we'd be happy to collect any feedback via our Investor Relations department, so please feedback to Claudia.

Let's now dive right into the main financial KPIs for the quarter on Chart 4. We are reporting revenues of EUR 178 million, growing at 7% year-on-year. This was again driven by our growing base of recurring revenues, showing the strength of our business model. I will come back to the revenue side in a minute. EBITDA showed a strong increase of 24% to EUR 43 million. Earlier this year, we flagged significant one-offs that have impacted Q3 EBITDA. Excluding those, the development has been even better, as you will see shortly. The strong performance is translating into an increase of earnings per share by 9% and of cash net income per share by 6%. And talking about shareholder return, we also spent EUR 23 million, buying back more than 400,000 shares between the 18th of September, the 30th of October, with about 1/3 being bought in Q3. So we now hold a little over 9% or 9.03% to be precise, of total capital and treasury shares.

Looking at the overall revenue development on Slide 5, we see excellent growth across the board. Reported revenues have grown by 7% to EUR 178 million. This includes the impact from acquisitions and organic growth was 3%, which we consider to be very good, taking into account the uphill battle we are fighting against this year against a tough prior year comparison Telematics infrastructure. Excluding TI, organic growth has been strong at 11%, in line with the growth rate of the recurring revenues. There is significant value in our growing recurring revenue base now representing 66% of total revenues, up from 64% last year.

Let's move on to Chart 6. What are the main drivers for the strong increase in operating income, moving down the P&L. So we've just covered the revenue side, posting a EUR 12 million increase in Q3. With the main cost categories, COGS are down by EUR 4 million due to reduced volumes of card readers, connectors and reduced outsourcing of installation and training services in connection with the lower number of Telematics Infrastructure installations. In addition, the acquisition of AIS Sales and Service Partners in Germany has shifted previously outsourced support services into internal operating expenses, mainly into personnel costs. As a result, the gross margin is up by 4 percentage points. Personnel expenses are up by EUR 4 million considering the positive Q3 impact from the stock option settlement for a former Board member of EUR 7.6 million. This cost category shows the strongest underlying increase even when backing out the personnel costs of the acquired businesses. So we continue to invest into future growth here in personnel costs, especially in terms of R&D capabilities as you can also see in the capitalization of our own services.

Other expenses have increased mainly due to one-off costs for the abandoned M&A transaction, more about those in a minute. Excluding M&A one-off costs and the impact from IFRS 16, other expenses are only slightly up. On the bottom line, EBITDA has increased by EUR 8 million, and the operating margin is up by 3 percentage points.

Now on Chart 7, you'll find the main EBITDA drivers split into recurring and nonrecurring elements. In August and September, we flagged the significant one-offs impacting operating income this year and especially the third quarter. Q3 has benefited as expected from the reversing effect following the settlement of stock options for a former Board member, adding EUR 7.6 million to EBITDA. We also incurred cost of EUR 11.5 million in Q3 for the major abandoned M&A transaction, leading to a total one-off M&A transaction costs for the first 9 months of more than EUR 13 million. Excluding these one-off effects, the pro forma EBITDA stood at EUR 47 million, corresponding to a margin of 27%. The year-on-year increase of EUR 12 million was supported by the introduction of IFRS 16, as discussed already in the previous calls, and the impact for Q3 was exactly EUR 4.3 million. Also, since we are continuing to invest, as I said before, capitalized in-house services increased by EUR 2.8 million year-on-year in Q3.

Moving on to the cash flow leverage on Chart 8, you see the impact from the same one-offs. Operating cash flow, including cash outflow for the major abandoned M&A transaction and for the settlement of the stock options for a former Board member was almost EUR 7 million negative. Excluding those one-offs, the operating cash flow stood at positive EUR 18 million, falling EUR 26 million in the prior year. The main reason for the year-on-year change being an increase in trade receivables and decrease in trade payables.

Cash flow from investing activities reflect higher capitalized in-house services and investments in property and equipment, only partly offset by lower acquisition spend than in the prior year quarter. Financing cash flow increased significantly. The main drivers being increased use of loans and lower cash outflow for share buybacks compared to the prior year quarter. Now that may be surprising to you, but please remember that we also did in prior year share buyback and that was actually higher in Q3 2018 than the one in Q3 2019.

So looking at net debt, leverage has increased to 1.7x by the end of September from 1.5x at the end of 2018. Excluding the one-offs from the stock option settlement and the M&A transaction costs in EBITDA, leverage has slightly increased to 1.6x. The main reasons being the share buyback, option settlement and acquisition costs.

Let's now turn to the segment reporting, and let's start with an overview on Chart 10. This is just a quick overview of our operating segments. We will deep dive into the different segments on the following charts, but what you see already here is that all our operating segments are contributing to the strong development with solid-to-excellent revenue growth, and all segments are posting an EBITDA increase in Q3.

Let's now turn to our biggest segment, the Ambulatory Information Systems segment. Starting the segment review on Chart 12, revenues have grown by 5% to EUR 112 million. What are the moving parts here? Whilst acquisitions, namely GIS and Qualizorg have contributed to the growth, AIS from an organic perspective 2% down in revenue due to tough prior year comps from TI installations, and I will discuss the details on the next chart. Excluding Telematics Infrastructure, AIS posted a strong 11% organic growth during the quarter. Recurring revenues represent 72% of revenues now and supported by the significant growth in TI recurring revenues, they have overall grown by 12%.

Looking at the EBITDA. We see an increase of 9%, that is an overproportionate increase to revenues and a slight increase in margin. Please keep in mind the positive impact from acquisitions and IFRS 16, altogether more than offsetting increased R&D spend in the segment and a strong operative performance.

Now what is going on in our biggest segment in terms of growth? On Chart 13, you see the expectations we set at the beginning of August for the TI rollout that have been confirmed during the quarter. We've seen roughly 1,300 digital installations. And you all know that we are facing a tough prior year comparison. Q2 2018 was a peak quarter in terms of TI installations. But Q3 and even more so Q4 this year are also fighting an uphill battle against strong prior year one-off revenues from TI. We are, therefore, pleased to report an organic revenue growth, excluding TI of 11%. We are seeing a strong dental business in Germany and Austria is continuing to benefit from the ELGA, that is the electronic health record rollout. Our U.S. business has posted stronger growth due to an excellent performance in lab business and a new and very successful introduction of software for the medical school units -- for the medical units in schools.

Coming back to TI, obviously, the 54,200 orders we've collected for our practices represent an excellent installed base to benefit from the additional features to be added during the further rollout of the regulatory road map adding to a strong underlying business in the AIS segment. To that end, CompuGroup was the first to have submitted the software upgrade for the TI connector for approval by the German Gematik Society, and this will be one of the drivers of revenue growth in 2020, where particularly Q1 2020, will need to be compared against a strong installation quarter of Q1 2019, and the same will still holds also true for Q2 2020 against Q2 2019.

Now moving on to our pharmacy information systems business on Slide 15. Revenue growth of 6% is mostly organic, and considering the exceptionally strong prior year, this is an excellent performance. Recurring revenues now represent 63% of the segment and the EBITDA margin is up by 4 percentage points. Again, this was partly supported by the introduction of IFRS 16, but the main part of the increase is attributable to operational improvements.

Some more details on the operational performance of the PCS segment on Chart 16. Organic revenue growth of 5% was largely driven by hardware sales and upselling of software packages in the German pharmacy business. Italy also saw strong hardware sales and rollout software upgrades, which is even more remarkable, considering the exceptional performance of our Italian colleagues are up against from 2018. Regarding Telematics Infrastructure, we continue to see initial interest from our pharmacy customers and received 440 initial orders for the connection packages by end of September. And as you know, delivery and installation is not going to start before next year.

On Chart 18, you find the P&L summary of the hospital information segment. Organic growth continued on an excellent growth path was 12%. Like in the first half, TI contributed initial sales, but on a small level. Excluding TI, organic revenue growth in the hospital business was strong at 11%, so you see the small level here. Recurring revenues represent 63% of the segment and have grown by 8%. On the EBITDA side, we've seen an increase of 3 percentage points, which is mainly due to the introduction of IFRS 16. From an underlying view, we are investing operational gains for additional research and development output, especially benefiting our G3 clinical platform.

Let's turn to Chart 19 for the operational highlights of our hospital information segment. I already mentioned the excellent organic growth of 12% and 11%, excluding Telematics Infrastructure that speaks for the momentum in our hospital business. We are seeing excellent growth in the rehab segment of the German clinical business. And as you can imagine, Austria is starting to benefit from the rollout of the largest order in the company's history that they closed in the second quarter, showing also a double-digit revenue growth for the Austrian hospital business. Overall, we are continuing to receive strong positive feedback on our G3 platform. Also, on the TI frontier in the hospital sector, we remain confident as we have already received 320 orders for connection packages from emergency wards until the end of September, and all of which have been delivered and installed.

Now moving on to Chart 21, with our health Connectivity Services segment. You see again, excellent revenue growth, both reported and organic of 29% and 27%. This was mainly driven by the success of our CGM Life platform. In addition, successful projects with pharma companies and strong business with private insurance companies have contributed to the increase. Recurring revenues almost doubled coming from a smaller base and representing only a minor part of segment revenues with 15% of total. The EBITDA increase is attributable, again, to the success of CGM Life. And like in all other segments, also supported it Part C by the introduction of IFRS 16.

So whilst talking about the segment, let's take a closer look at the upcoming changes on Chart 22. Looking at the broader picture, Helps Connectivity experiences the further dimension of growth by connecting not only the professional participants of the sector, which has been our core CGM business all along, but now also the consumers, customers and patients, which means basically everybody. For the sector, this represents massive growth, and we aim at being a major beneficiary in the market where we are strong.

Eckart Pech, an excellent and highly experienced expert in this field is taking the lead, heading this development going forward. The goal is to further increase connectivity within health care and to address additional customer pools, while monetizing data. As a result, the operating segments as of November for CompuGroup will comprise of as before the AIS segment, the PCS segment and the HIS segment, so this remains unchanged, plus the new Consumer and Health Management Systems segment -- the Consumer and Health Management Systems segment, where we will integrate the former Health Connectivity segment. So as I was just talking about the changes communicated in Q4, that brings me to the outlook.

And here, I move on to Chart 24. Now the main message here is that we are confirming the guidance for the full year 2019 as last updated in September. We expect revenues in the range of EUR 720 million to EUR 750 million, and an EBITDA, including costs for the abandoned major M&A transaction in the range of EUR 175 million to EUR 190 million.

Let me give you some color on that. Cost for the abandoned M&A transaction ended up slightly above EUR 13 million, with EUR 11.5 million recorded in Q3 2019 and the rest in the first half. Now this is a bit lower than the EUR 15 million we had communicated in our guidance range estimate in September, also thanks to some renegotiated lower advisory fees. At the same time, please keep in mind that I told during the Q2 call in August that we would absorb the EUR 3.9 million net negative EBITDA effect on a full year basis from the stock options, cash settlement for a former board member. Also, as already mentioned, we are up against a strong prior year in Q4, again in TI. So on the other hand, our EBITDA will benefit one more quarter from the IFRS 16 introduction. So please take this all into account. Thus, with EUR 126 million EBITDA realized for the first 9 months of this year, we see ourselves on track towards the EUR 175 million to EUR 190 million EBITDA range for the full year 2019, as communicated before.

This brings me to the final chart of this presentation on Slide 25, giving a snapshot of the upcoming events. We're going to report Q4 and our preliminary 2019 results on the 5th of February next year, with Q1 2020, following on the 7th of May.

Let me close this presentation by reiterating 3 important points. First, Q3 was a solid quarter with excellent underlying growth in our businesses across the board. With plus 3% organic growth or even plus 11% organic growth, excluding Telematics Infrastructure, CompuGroup make in Q3 significant progress towards reaching our goals, also reflected in strong organic growth figures in recurring revenues of plus 11%. Second point, profitability remains on a high level despite our increased investments in future growth for R&D and new product features and platforms, fueling the path ahead. And thirdly, we are confirming our guidance for the full year. So overall, we continue to see ourselves in an excellent position to benefit from the future developments in the health care sector.

With that, I would like to thank you for your attention, and I'm looking forward to your questions, and would like to hand back to the operator. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question today comes from Nikolas Mauder from Kepler Cheuvreux.

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Nikolas Mauder, Kepler Cheuvreux, Research Division - Junior Equity Research Analyst [2]

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Four if I may. The first one on the implied guidance ranges for Q4, which appear quite wide. In my opinion, can you remind us about the most important swing factors there for the remainder of the year? First question. Second one on Agfa. I'm pretty sure you can't say much, but can you remind us which business is actually being sold as part of the health care IP from Agfa. Third question, how do you judge the momentum for TI orders from pharmacies and hospitals, is 440 and 320, respectively, an appropriate level? Or would you have expected it to be higher? And finally, can you reconcile the ex TI organic growth in AIS for us, please? How much of it is driven by the rollout of new products to new countries? And how much of it was achieved with pre-existing customers?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [3]

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So Nicolas, many thanks. I actually start by going in sequence of the order of your questions. So let me go back to the guidance point, and I thank you for that question, because we are now in November, and obviously, you want to update your models. So when we say, we confirm the guidance, we mean we confirm the guidance. So now if you ask me, is that more towards the midpoint of the guidance or is it towards the higher or towards the lower end, I would say it is mid- to lower end of the guidance. Second part of the question, on the Agfa side. Actually, this is a question you need to pose to the Agfa management. This is a CompuGroup conference call, and I don't want to engage into any M&A speculation here. So on the third point of making a qualitative -- or qualifying statement regarding the TI order intake so far for pharmacies and also for hospitals, I would like to connect back to what I said already in an earlier call in August that we were seeing some early order taken for pharmacies, which was quite surprising to us and we see that continuing. And actually, the number is rising, so we're no longer-standing by 440, but we obviously collected more orders in October. And this is a very promising signal to us. So installation, as I said before, will happen in 2020, and we see that positively. The number of TI installations for hospital was 320, which we have actually already installed. That is also a good one. But here, probably progress will be slower over the next months to come. That is just simply -- has simply to do with the rollout of the Telematics Infrastructure, in general, for the hospital and with the time lines given there. Now the fourth question was on AIS. And you specifically asked a question if we -- sorry, I'm just looking here towards the team. So you specifically asked the question, if we can give you a bit more color on the growth rate of some of the markets, excluding TI when we look to it. And as I said before, we had a very strong growth in Austria, we had a very strong growth in the German dental business and also strong growth in the U.S., and all of that were basically double-digit growth factors. So that was very supportive here for us. I hope that covers all of the questions.

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Operator [4]

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We now move on to questions from Knut Woller from Baader Bank.

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Knut Woller, Baader-Helvea Equity Research - Analyst [5]

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Yes. Michael, I'm just trying to reconcile the M&A-related charges. You mentioned in your presentation on Slide 7 that it were EUR 11.5 million. If I look at your quarterly report and look at other operating expenses, it's written that it would have been lower by EUR 3.6 million, which would bring me looking at the numbers reported to around EUR 10 million costs. So have there been any M&A cost booked in other reporting lines or what explains the delta here? And then looking at the revenue momentum. Can we also have an insight what was the currency impact in the quarter and in the first 9 months, especially also looking at the U.S. business? So what was truly the underlying growth? What is the currency tailwinds you're enjoying here year-over-year? And then lastly, on capitalization, we saw an uptick here. And if I had -- have Christian still correctly [in mind] he was guiding for flattish capitalized development costs, looking at the trend. Now it looks like there is an uptick, what should we put in our models here?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [6]

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Very good. And as usual, sharply spotted. You are right, regarding the M&A costs. They are not only in the other expense line, but they are also partly in the personnel expense line, why is that? And because, obviously, also during the period, our team has incurred internal costs, which were unusual, so travel costs and the likes. And that is included. And also, we had some advisory costs also from internal former employees that are no longer with us, which have been recorded here. So it is actually split over various lines in the P&L. But I confirm it's 11.5 taken as the EBITDA hit in the Q3 and EUR 13.1 million for the full 9 months. So then on the question of the capitalization, you're right. Actually, also here, we see an increase in in-house service capitalization that has to do with the increased efforts, which is also reflected in personnel costs, increased efforts here on the R&D side, where we are strengthening our platforms here and are actually investing, and so part of that is in line with the IFRS accounting capitalized (inaudible). So then with regards to the foreign exchange, yes, there has been a bit of tailwinds on foreign exchange, but they have been rather minimal. So across the board, when we look to the currencies, we have a Polish zloty impact, and we have the U.S. dollar impact, and we did a rough calculation, but it's basically just on a low single-digit number, very low one.

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Knut Woller, Baader-Helvea Equity Research - Analyst [7]

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Michael, thanks for the clarification on the M&A cost. I just spotted the part from the other OpEx, and hence, it was a bit below that. So that's very kind to clarify that. And just on the capitalization, just to get back to you, can you give us an idea of what the number is you're expecting for the full year, and also looking beyond 2019? If I take your comments correctly, we should also expect that to strengthen -- the strengthening of your platform likely would be something lasting also into next year. Is that a fair view?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [8]

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That is a very fair view Knut. And just to give you a bit of color here. Probably, it will be in the mid-EUR 20s amount, right? So talking about, I don't know, 23- to 26-ish kind of like what we will end up with. And also going forward, if you want to update models, I would expect that to also continue because we are going to continue investing also in 2020.

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Operator [9]

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We now move on to Uwe Schupp from Deutsche Bank for our next question.

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Uwe Schupp, Deutsche Bank AG, Research Division - Small and Mid-Cap Analyst [10]

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Two follow-ups really. Firstly, again, on the capitalized R&D in the past, you also gave us the net benefit. I didn't see it at least not by looking quickly through the report. So the net benefit would be also very interesting to get -- so the EUR 6.8 million, I understand was the gross benefit from capitalized R&D? And then secondly, and more strategically, is there any -- so regarding the slipped M&A deal in Q2. Is there any chance that this could be still on the agenda? Or basically, would you say this is off now, given the items that we detected relating to that transaction? Or is it still kind of somewhere on the agenda and might be popping up at from a future point in time.

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [11]

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Well, I'm just basically a bit positive regarding the first question, I obviously, will answer the second question, but would like to answer the first question. So could you please just clarify what you mean with regard to the net benefit so that I better get which number was maybe given in the past that is not given now? So that I better understand what to comment on.

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Uwe Schupp, Deutsche Bank AG, Research Division - Small and Mid-Cap Analyst [12]

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So my understanding was that you had EUR 6.8 million in-house capitalized R&D, and my -- I didn't see the amortization chart related to that, at least not in -- on first glance. In Q2, I think the gross number was EUR 5 million. And I think you had an amortization of about EUR 1 million, I think, EUR 1.7 million, actually. And if you don't find it, never mind, we can also follow-up and do it off-line?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [13]

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Okay. No, I get it. So back to that question. So you're right, the 6.8, obviously, is confirmed. It is about 4. So if you take then the capitalization effect into account, it's about 4. But that's a good remark. And that's one of the things in the sake of -- for the sake of transparency, which I stand for, which we will provide then in Q4 going forward again. So I'll take that into my notes here.

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Uwe Schupp, Deutsche Bank AG, Research Division - Small and Mid-Cap Analyst [14]

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It's only -- beg your pardon -- it's only EUR 4 million, so that would also mean that the amortization actually notched up quite a bit in Q3.

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [15]

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Yes, that is my understanding. And we will go back and come back with precise view per quarter in the next quarterly call with an update. Absolutely. And then on the M&A side, please understand we don't want to engage into any M&A speculation. So that's my usual comment here. Thank you.

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Operator [16]

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We now move on to Charlotte Friedrichs from Berenberg.

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Charlotte Friedrichs, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [17]

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Two questions from my side, please. The first one is on the Q3 organic growth ex TI, the 11% that you have there, were there any sort of special one-off effects? Or do you expect, if you look at the next quarters also to see, maybe not quite such high growth, but growth at a similar level? Or were there any particular Q3 topics here?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [18]

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So we actually had the very strong operating development in Q3. It is too early actually to come up with a precise guiding number here on the organic development for Q4. But please take into account that in Q4, we had one-time installations on TI, which obviously now in Q4 2019 will not happen in that magnitude. But the underlying performance of the operating businesses, like we have seen in the hospital business in the past continues on that trend. Please take into account that in the PCS business, we had an exceptionally strong year in 2018. So that might not be continuing in the same magnitude. But like I said, it's too early, but that gives you a bit of a color.

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Charlotte Friedrichs, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [19]

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Okay. No, I was more interested in whether there were any one-offs in the third quarter that you saw that we should keep in mind when we look at the future, any like special topics here in the third quarter?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [20]

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Like I said before, particularly in the hospital business, it is more fluctuating than it is on a pure recurring revenue base in the AIS business, so there could also be some impact here, which might not be as strong again in Q4, particularly given the strong Q4 last year.

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Charlotte Friedrichs, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [21]

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And for the TI Services revenues or maintenance revenues that you're now receiving, is it reasonable to assume that you are basically now at the normalized level? Or do you think there's going to be more uplift in maintenance revenues going forward, as sort of, you have this timing effect that feeds through?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [22]

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Over time, we will continue working on increasing our recurring revenue base also on the AIS segment. Please take also into account what we had mentioned during the Capital Market's Day that we have quite a number of new product features coming into the market over the next many quarters to come. And that -- those will bring also installation fees on a onetime basis, and then thereafter recurring revenue base.

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Charlotte Friedrichs, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [23]

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Okay. But the TI component in the AIS segment, if I look at those, maintenance revenues, those are pretty much at run rate right now, correct?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [24]

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Yes. They continue a bit rolling over because taking into account that we also kept installing now in Q3 on a lower base, but you're right.

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Charlotte Friedrichs, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [25]

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Okay, perfect. And then finally, on the EBITDA margin for the AIS segment, if we take into account the sort of special effects that you mentioned, other than that, would you say that you're now at a run rate level? Or are there any other things to keep in mind here?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [26]

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We are investing also into new products here on the AIS side, and that might have an impact. So we will come out with more specific guidance, as you know, as we usually do on the 5th of February 2020, when we give you the full year guidance for 2020.

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Claudia Thomé, CompuGroup Medical Societas Europaea - Head of IR [27]

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Since there are no more questions, we thank you for the time to listen into our call. We're happy to be available for further questions, so don't hesitate to contact us on the phone or by e-mail. And we wish you a great day from Coupland. Bye-bye.

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Operator [28]

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Thank you. This concludes today's call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.