Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Zalaris ASA (FRA:81Y, Financial) achieved its fifth consecutive quarter of all-time high revenues, reaching NOK340 million, a 22% year-on-year growth.
- The company reported a significant increase in EBIT, standing at NOK37 million, a 55% increase from the previous year.
- Strong market success with renewals of existing agreements and new signings, particularly in the Nordics and Germany.
- Managed services grew by 27%, reaching a new all-time high, with Germany leading the growth at 40% year-over-year.
- The company maintained a strong operating cash flow of NOK48 million, up from NOK15 million last year.
Negative Points
- Professional services revenue decreased by 1.8% year-on-year, mainly due to the partial completion of a large consulting project in the UK.
- Net profit for the period was NOK8.3 million, a decrease from NOK13.4 million last year.
- Personnel expenses increased due to a 55% year-on-year rise in the number of FTEs, impacting overall costs.
- Higher costs were incurred due to the use of external payroll partners and strategic project-related expenses.
- The strategic review process is ongoing, with no specific timeline provided for its conclusion.
Q & A Highlights
Q: Are you continuing to see good momentum in the contract pipeline?
A: Yes, we are continuing to see good momentum in the contract pipeline. The totals remain on target, with particularly strong growth in Germany. - Hans-Petter Mellerud, CEO
Q: Could you provide more detail on how you are utilizing AI to improve efficiencies and customer experience?
A: We are exploring AI across our business, including AI-supported Microsoft Copilot and enterprise versions of ChatGPT for all employees. AI is used in customer support, chatbots, and cybersecurity operations. While payroll accuracy remains a priority, AI offers significant opportunities in customer support and quality control. - Hans-Petter Mellerud, CEO
Q: Could you comment on the margin in Germany in Q3 '24 versus the full year '23?
A: While we don't provide specific numbers for regions, margins in Germany were significantly higher in the last quarter compared to last year. We see gradual improvement from the EBIT improvement program and expect further margin improvements as the program is implemented. - Gunnar Manum, CFO
Q: Could you give us an idea of how far through the strategic review you are and when we should expect a conclusion?
A: Due to the processes involved, we cannot comment in detail, but we will inform you as soon as we reach a conclusion. - Hans-Petter Mellerud, CEO
Q: What are the key elements in reaching your margin targets?
A: Key elements include improving the EBIT margin of our German operations by NOK50 million through our margin improvement program, focusing on automation, AI, and scaling to drive towards our target EBIT of 12% to 15% by 2026. - Hans-Petter Mellerud, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
