Intershop Communications Shows a Solid Start to 2025

Intershop Communications has announced its Q1 2025 financial results, revealing a 4.0% year-over-year revenue decline, yet surpassing forecasts by 1.7%. Despite a significant 18.0% drop in service revenues due to a strategic transition to PartnerFirst, the company reported growth in cloud sectors. Cloud revenues rose by 5.0% and cloud ARR saw a 14.0% increase.

The company focused on improving its gross margin and strict cost management to contain EBIT decline. The EBIT margin exceeded expectations, addressing profitability challenges. Management emphasized efficiency improvements, AI advancements, and a larger cloud mix as critical initiatives.

Despite challenges of spending restraint and increased R&D investment, Intershop upheld its revenue guidance of a –5.0% to –10.0% year-over-year decline and a slightly positive EBIT margin. The firm's strategy rests on cloud revenue growth and a partner-centric approach. The target price is set at EUR 3.20 with a Buy recommendation.