Release Date: July 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Exsitec Holding AB (OSTO:EXS, Financial) reported double-digit top line growth with improved margins in Q2 2024.
- The company achieved a 13% overall growth with organic growth of over 5%, reaching SEK211 million in revenue compared to SEK186 million last year.
- Profitability improved significantly, with EBITA increasing from SEK34 million to SEK44 million, resulting in a margin improvement of almost 3%.
- Recurring revenue from software showed solid growth, with a 39% increase in Q2 compared to the previous year.
- Exsitec Holding AB (OSTO:EXS) is getting back into an M&A agenda, leveraging a finance agreement finalized last quarter, indicating a strategic focus on growth through acquisitions.
Negative Points
- The market remains passive with long sales cycles, impacting the speed of closing deals.
- Denmark's performance was underwhelming in a slower market, highlighting challenges in reaching scale with new offerings.
- The company faced one-off costs due to organizational restructuring in Norway, affecting quarterly results.
- Sales cycles are twice as long as historical averages, indicating a challenging sales environment.
- The e-commerce sector remains slow in terms of new investments, affecting potential growth in this segment.
Q & A Highlights
Q: Can you provide direction on the price tag for the Finnish acquisition?
A: We didn't disclose specifics as it was smaller than necessary for investor classification. Details will be in the notes of the next quarterly report once the deal is closed. - Johan Kallblad, CEO
Q: Can we expect Norway's margins to improve in the second half of the year after restructuring costs?
A: Yes, Norway's delivery is back to normal since May and June. We did a workforce reduction for efficiency, which increased personnel costs this quarter, but they should decrease going forward. - Johan Kallblad, CEO
Q: How is the trainee program progressing, especially in a restrained market?
A: The full trainee program for salespeople starts this August with 15-20 new hires. It's challenging in this market, but it provides a good learning environment. The focus is on building relationships rather than immediate sales. - Johan Kallblad, CEO
Q: Can you explain the dynamics when acquiring a company that resells the same software as Exsitec?
A: Acquiring a reseller can improve our software margins if we have a better partner program with the vendor. This involves taking on more customer support responsibilities. It's not a major discussion point with vendors as we provide significant value. - Johan Kallblad, CEO
Q: Have you seen a trend of e-commerce customers investing in new systems again?
A: No, the trend hasn't picked up yet. E-commerce customers are doing better than a year ago, but new investments remain slow. Success currently involves engaging with existing clients rather than new sales. - Johan Kallblad, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
