Interview with the CEO Dr. Gottfried Greschner
>> 2017 was an eventful year – how was it for init?
The remarkable thing was that we managed to bring in such a high volume of orders. Order intake was the second highest in the company's history. It was also noteworthy that we continued to be so successful in the field of ID-/account-based ticketing in the US and were even able to extend our market leadership. We also invested a great deal in acquisitions. From the outset, we were well aware that these takeovers would necessitate restructuring expenditure. I believe we're making very good progress, which means that we will achieve our turnaround aims again this year and even generate a small profit.
>> How would you assess init's latest acquisition, the Finnish company Mattersoft?
In our view, acquiring Mattersoft was a great move as the software the firm has developed is a perfect fit for our product range. To date, Mattersoft has operated exclusively in Finland, but we are now opening up the entire US market for its products. We believe that it's a highly worthwhile acquisition for this reason alone. Not only that, Mattersoft is already a highly profitable business.
>> One key aspect of the acquisitions was the area of mobile / smart ticketing. What sort of growth are you expecting in this area?
We are already posting strong growth here. Our key acquisition in mobile ticketing has been HanseCom in Hamburg, which will make a substantial contribution to revenues. Its software is used to bill 60 percent of public transport ticket receipts in Germany. This puts us in a leading position in mobile ticketing in Germany, as our customers encompass a total of around 50 towns and cities. We already offer full coverage in the German federal state of North Rhine-Westphalia. This sets us apart from all our competitors.
>> What large-scale projects could init attract in this context?
I don't want to give too much away, but in the US we are participating in requests for tenders with a total volume of more than USD 100 million. We think we have a good chance of success. Of course though, experience shows that we aren't awarded all the projects for which we tender.
>> How do you see the prospects for Europe and Germany?
Our business in Europe and Germany will be able to achieve strong growth if we can better leverage the potential of our existing customer base. We found that existing customer relationships including follow-up orders generated order intake of EUR 35 million last year alone. I believe there is scope to boost this figure significantly. There are also one or two large requests for tenders in Germany and Europe in which we also think we have a good chance of success. I'm talking about tenders with a volume in excess of EUR 50 million here.
>> There are signs of another growth area in the area where init originated, which is demand- responsive bus transport. How would you assess the trend in this segment?
This is a really exciting area. What demand-responsive bus transport actually means is that buses do not need to halt at all stops – they only service those stops where there is actually demand. To make this system as efficient as possible, there is a need for optimisation algorithms, which we developed decades ago. This is how init originally started out. Unfortunately, there has not been much potential for this technology in recent years. Nevertheless, we have now equipped ten regions with a control system that features on-demand transport. We currently see strong growth in this market and have therefore established a project group dedicated solely to this issue.
>> Countries like the US impose a statutory obligation on transport operators to provide an on-demand service with door-to-door transit for people with impaired mobility. There are now corresponding initiatives in Europe. How do you assess this from init’s perspective?
We have the technologies required and experience regarding on-demand services for off-peak periods and in less frequented regions. Therefore, we are looking forward to this new challenge.
>> How long do you think it will take until similar requirements are specified in Europe and there is a corresponding increase in demand?
The demand is already there in Europe, especially as a complement to existing scheduled routes. This is a process that is already under way. It will intensify as more and more people are living in urban areas, while the population trend is generally heading in the opposite direction in rural locations. This means it's no longer worthwhile running purely scheduled routes in rural areas.
>> So are you already seeing the first large invitations to tender or this service in Europe?
The tenders that are being advertised at the moment generally ask for demand-responsive transport as an additional offering that is integrated into scheduled routes. I think this is the right approach as – in contrast to the US – we have a very good public transport network.
>> What growth priorities are you setting out for init this year?
Mobile / smart ticketing is the most promising area as it is exhibiting very strong growth. We also want to successfully position our new subsidiary Mattersoft's software on the US market. We will also be focusing on cultivating our existing customer relationships and leveraging the latent potential they offer. In addition, there is a growing need on the part of our customers to outsource entire technical services areas and to have them taken over by reliable partners such as init. init is taking over various functions from customers, including replacing
faulty hardware, servicing equipment and systems as well as cash management, and offering a 24 / 7 service. In other words, this is an all-inclusive package for transport operations.
>> What specific impact do you expect the “Industry 4.0” and electromobility trends to have on init's business?
They are driving our business. The issues of" big data" and "fast data" are also important for transport operators, as the data available have to be processed and delivered to the relevant interfaces as quickly as possible. There is a growing awareness among our customers of the opportunities offered by digitalisation. They have to offer Mobility as a Service in competition with other transport modes by providing travel options for their specific journey via specific travel offerings for their journeys via their smartphones and other channels. They need apps and other software for this that integrate all the workflows involved, from planning through to ticketing as well as swift and hassle-free processing. This is what we as a business do, which makes us the right partner. Electromobility is making new demands on operational planning, as e-vehicles entail shorter distance ranges, shorter deployment times and higher set-up times. We presented a new optimisation software for this at IT-TRANS in Karlsruhe.
>> What growth do you see init Group achieving overall in the next few years?
I think we will return to our long-term growth trend and achieve rates of 10 percent plus each year. If our growth strategy is successful, we can achieve revenues of EUR 200 to 250 million in five years' time.
>> What does this mean for shareholders?
That's an easy one – a higher share price and rising dividends. By the way, if you had invested EUR 51,000 in init shares when the company was listed in 2001, the value of this holding would by now have climbed to more than EUR 200,000. What's more, including the distribution paid in the 2017 financial year, you would have earned EUR 51,400 in dividends. This means that every shareholder who bought shares in the company at the IPO has received more in dividends than they invested at the time. And of course the shares themselves are worth much more now. So init was and will remain an attractive investment.