Release Date: July 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net sales increased by 29%, with 11% being currency-adjusted organic growth.
- EBITDA increased by 47% to SEK162 million, and earnings per share improved by 64%.
- Strong cash flow from operating activities, increasing to SEK178 million compared to a SEK127 million loss in Q2 last year.
- Successful acquisitions, including Team D3, which contributed positively to net sales and earnings.
- Recurring revenue forms a stable foundation, accounting for 72% of net sales.
Negative Points
- Economic uncertainties are causing customers to postpone major investments in new products.
- Sales were slightly weaker in Germany, UK, and US due to a decline in license sales, particularly in the automotive industry.
- Organic growth in the Product Lifecycle Management (PLM) division was negative at -2%.
- Municipalities and public authorities show continued restraint in terms of investment in major projects.
- The new transaction model's impact on net sales will be minimal in Q2, with significant effects expected only in Q3 and Q4.
Q & A Highlights
Q: Do you expect the current cautious customer behavior in the PLM sector to persist throughout 2024?
A: Yes, we see similar dynamics with customers opting for rental models over perpetual licenses, affecting top-line growth but increasing recurring revenue. The trend of postponing larger deals, especially in the automotive sector, is expected to continue into the second half of the year. (Johan Andersson, CEO)
Q: Are there any additional cost initiatives planned for the PLM sector given the current market conditions?
A: No significant cost reductions are planned. We have already doubled our margin compared to last year and are more efficient in our operations. The number of employees in PLM has decreased despite acquisitions, indicating better conditions. (Johan Andersson, CEO)
Q: Why were margins in the Process Management division softer this quarter, and can we expect to return to the 19% margin seen in previous quarters?
A: There were no specific reasons for the softer margins. Variations can occur due to the mix of consulting and license sales. We expect to maintain margins around the historical trend. (Johan Andersson, CEO)
Q: Can you provide details on the expected earn-out payments for 2024 and 2025?
A: We will make smaller payments for the Microdesk acquisition in 2024, with the majority of earn-outs due in 2025 and 2026, particularly for the US acquisitions. (Kristina Mackintosh, CFO)
Q: Considering the strong organic growth in Design Management, why were margins not higher?
A: The product mix, particularly the higher portion of Autodesk products from the Team D3 acquisition, affected margins. This is not indicative of a long-term trend but rather a quarterly fluctuation. (Johan Andersson, CEO)
Q: Why is the gross margin in PLM higher than in Design Management despite proprietary software in the latter?
A: PLM has more consultancy services, which have higher gross profit margins compared to the third-party products in Design Management. This drives up the overall gross margin in PLM. (Johan Andersson, CEO)
Q: Is there an improvement in the willingness to invest in the public sector, particularly in Process Management?
A: The tender activity is not at the desired level, but we have enough work through upselling and existing customer projects. We expect stable growth around 5% for the rest of the year. (Johan Andersson, CEO)
Q: How do you see the impact of the new transaction model on sales in Q3 and Q4?
A: In Q3, we will see a mix of old and new transaction models, with a more significant impact in Q4. We expect the new model to be fully reflected in our financials by Q1 2025. (Johan Andersson, CEO)
Q: How are you balancing price increases with salary inflation in the Nordic public market?
A: We are managing well, with a good understanding of not driving inflation on salaries. There are pockets of growth, particularly in systems for hospitals and pharmacies. (Johan Andersson, CEO)
Q: Have you seen increased M&A activity among Autodesk reselling partners due to the new transaction model?
A: The consolidation of the market is ongoing, and we are part of it. There hasn't been a significant increase in inbound interest from companies looking to sell due to the new transaction model. (Johan Andersson, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
