Release Date: October 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Knowit AB (LTS:0GNK, Financial) reported an improvement in the EBITA margin for the second consecutive quarter, driven by cost reductions and organizational changes.
- The company's largest business area, Solutions, showed a positive trend in utilization and reported net sales of SEK750 million with an increased EBITA margin of 8.1%.
- Knowit AB (LTS:0GNK) has strong client relationships in Norway, providing a stable foundation despite market uncertainties.
- The company has a solid position in the industry segment, particularly in connectivity, which helps maintain strong results despite market challenges.
- Knowit AB (LTS:0GNK) has a stable balance sheet with a leverage of 1.4, well within its financial target not to exceed two.
Negative Points
- The market remains uncertain with long sales cycles, particularly affecting the Experience and Insight segments in Norway.
- Sweden and Denmark are challenging markets for Knowit AB (LTS:0GNK), requiring cost control and efficiency improvements.
- The Digital Agency Experience segment reported negative results due to a slow start after summer, impacting utilization.
- The company's overall sales decreased by 14% to approximately SEK1.3 billion, with a reduction in employees affecting revenue.
- There is fierce competition in the market, with clients taking longer to decide on new investments, putting pressure on prices.
Q & A Highlights
Q: Is the improvement in the solutions segment a sequential or year-over-year trend?
A: Marie Björklund, CFO: The improvement started in Q2 and continued into Q3. Compared to the same quarter last year, there is also an improvement, indicating a positive trend.
Q: What measures are being taken to address the weaker segments in experience and insight, particularly in Sweden and Denmark?
A: Per Wallentin, CEO: We are focusing on sales activities and increasing efficiency. We have consolidated subsidiaries within experience in Sweden to improve cost control and efficiency.
Q: Can you provide an estimate of how much the new framework agreement in Norway might contribute to Knowit?
A: Marie Björklund, CFO: While it's not certain, a good estimate would be that 20% to 25% of the 3.5 billion NOK framework over four years could be beneficial for us.
Q: What is the outlook for net recruitment at the group level?
A: Per Wallentin, CEO: Our current focus is on optimizing margins. We see potential for recruitment in connectivity and solutions due to improving utilization rates, but no immediate plans for significant net recruitment.
Q: How is the public sector demand evolving, and what are the expectations for 2025?
A: Per Wallentin, CEO: We expect increased public sector budgets in 2025 due to lower inflation, but the impact on our business is uncertain. We anticipate a slow start in the first quarters of 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
