Release Date: July 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lime Technologies AB (FRA:LTX, Financial) achieved a revenue growth of 21% in Q2, with an EBITDA margin of 24%.
- The company reported a strong ARR growth of 28%, indicating robust subscription revenue.
- Lime Technologies AB (FRA:LTX) has a low customer concentration, with the top 10 customers accounting for only 7.2% of revenue.
- The company continues to expand its workforce, planning to welcome over 30 new employees in August.
- Lime Technologies AB (FRA:LTX) has a solid foundation with a strong corporate culture and a good geographical spread, contributing to its long-term profitable growth.
Negative Points
- Despite the positive growth, the EBITDA margin slightly decreased from 25.6% in the same quarter last year to 24% in Q2 2024.
- The market remains challenging with long sales processes, more decision-makers involved, and tougher competition.
- Service agreements decreased by 22%, reflecting the ongoing transition from upfront agreements to subscription models.
- The company faces a high level of competition in the market, with more vendors providing quotes and less investment from new and existing customers.
- Certain markets, such as Denmark, are underperforming compared to expectations, requiring additional staffing and strategic adjustments.
Q & A Highlights
Q: How is the acquisition strategy looking going forward? What is Lime looking for, or do you prioritize organic growth?
A: Organic growth is very important for us, and we saw an increase in organic growth in Q2 compared to Q1. However, we also have an M&A strategy. We updated our M&A strategy at the end of last year, which allows us to look for software that can support all our business units or specific acquisitions targeting one or two business units. There is more activity in the M&A market today compared to a year ago.
Q: Could you give some flavor to the different countries, how the different countries are performing in the rest of Europe?
A: In Germany, both Lime Connect and Lime CRM are performing well. We initiated changes in Lime Connect in 2022, leading to improved growth in 2023 and the first half of 2024. Lime CRM is also seeing more leads, especially in the utility sector. Denmark is showing better progress compared to last year, but there are other countries where we expect more.
Q: What are the key success factors for Lime Technologies?
A: Our key success factors include long-term profitable growth, a sticky business model with 63% recurring revenue, a low customer concentration, and a strong corporate culture. These factors have helped us achieve an average growth of 19% per year with an EBITDA margin of 25% over the past 20 years.
Q: How did Lime CRM perform in Q2?
A: Lime CRM showed better growth in expert services, driven by proactive customer engagement. We launched a new customer service offering combining Lime CRM and Lime Connect, which simplifies handling complex cases and adds value by integrating customer interactions into one platform.
Q: What is the current state of Lime Connect?
A: Lime Connect has shown solid growth and high demand for our AR offering. We have increased the volume of deals, thanks to effective lead generation. The new customer service offering strengthens our position against all-in-one solutions.
Q: How is Lime SportAdmin performing?
A: Lime SportAdmin had an intense first six months, with several large clubs joining to improve their membership offerings. We added new functionalities like a training planner and team cash management, enhancing the member experience and creating more revenue opportunities for clubs.
Q: What are the financial highlights for Q2?
A: We delivered 21% revenue growth, a 24% EBITDA margin, and a 28% ARR growth. Our subscription revenue grew by 32%, and expert services improved by 9%. We continue to focus on long-term growth and profitability.
Q: How does Lime Technologies manage its customer base?
A: We have a low customer concentration, with our top 10 customers accounting for 7.2% of revenue and the largest customer for 1%. This diversification helps us remain resilient in a tough business climate.
Q: What are Lime Technologies' financial targets?
A: Our targets include 18% growth, a 25% EBITDA margin, a net debt to EBITDA ratio of less than 2.5 (currently at 1.3), and a dividend policy of at least 50% of net profit (56% for 2023).
Q: What are the key challenges and opportunities for Lime Technologies?
A: The market remains tough with long sales processes and increased competition. However, our solid order intake, proactive customer engagement, and strong product offerings position us well for future growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
