Vitec Software Group AB Year-end report January - December 2023

Summary of interim period, October–December 2023

  • Net sales SEK 740 million (578), an increase of 28%
  • Recurring revenues SEK 611 million (451), an increase of 35%
  • EBITA SEK 224 million (171), an increase of 31%
  • EBITA margin 30% (30)
  • Operating profit SEK 146 million (106), an increase of 38%
  • Operating margin 20% (18)
  • Earnings per share before dilution SEK 2.13 (1.87)
  • Cash flow from operating activities SEK -11 million (74)
  • Acquisition of Memorix as well as completed acquisition of Codea

Summary of interim period, January–December 2023

  • Net sales SEK 2,778 million (1,978), an increase of 40%
  • Recurring revenues SEK 2,346 million (1,631), an increase of 44%
  • EBITA SEK 876 million (582), an increase of 51%
  • EBITA margin 32% (29)
  • Operating profit SEK 590 million (356), an increase of 66%
  • Operating margin 21% (18)
  • Earnings per share before dilution SEK 9.07 (6.92)
  • Cash flow from operating activities SEK 718 million (563)
  • The Board of Directors propose a dividend increase to SEK 3.00 per share (2.28)

Strong growth and steadily increasing margins

High inflation, high interest rates, uncertain economic development and growing turmoil around the world came to characterize 2023. For Vitec, the year concluded with unusually strong growth and steadily increasing margins – even by our standards. This growth is due to the six acquisitions made this year, one of which was larger than usual in terms of sales, as well as robust organic growth. Our organic growth is the result of both price adjustments according to index clauses in our ongoing customer contracts and additional sales to existing customers.

These additional sales show that by continuously investing in our products, we can deliver added value to our customers now and in the future, which is fully consistent with our brand promise: “to rely on – today and tomorrow.” Our standardized software is often business-critical and helps customers improve efficiency and automation. This allows customers to cost-effectively benefit from developments underway across an entire industry, which has been appreciated in both upturns and downturns, and which, paired with a high share of recurring revenues, contributes to our own steady growth.

Fourth quarter revenues rose by 28% compared with last year, and the EBITA margin was 30.3% compared with 29.5% last year. Revenues for the full year are SEK 2.78 billion, an increase of 40% with an EBITA margin of 31.5%, compared with 29.4% last year. Growth is propelled by both acquisitions and strong organic growth of 10%, and 6% adjusted for currency effects.

Our margin growth is particularly gratifying as we have simultaneously strengthened the organization with new employees, which has been challenging at times in past years, but is now happening with greater ease. An increasing number of people are applying for our job vacancies and appreciate becoming part of a growing, innovative company that demonstrates stability and security. Net profit is negatively impacted by increased borrowing costs and a higher tax rate than in previous years; non-cash remeasurement of our performance-based supplementary purchase considerations also had a negative impact of SEK 14.3 million.

Earnings per share rose to SEK 9.07 compared with SEK 6.92 last year. The Board proposes an increased dividend, for the 22nd consecutive year, to SEK 3.00 per share.

During the fourth quarter, the previously announced acquisition of Finnish Codea was completed and we acquired Dutch Memorix. A total of six acquisitions were completed in 2023. We are pleased to welcome all new employees!

2024 had an excellent start with yet another acquisition and a new vertical through the purchase of Dutch LDC. We actively seek avenues for acquisition opportunities, both with internal resources and through good contacts among our advisors. Over the years, we have refined our processes for finding, exploring and integrating new companies, which allows us to act quickly and with ease as necessary. We can also wait for the right time in consultation with a seller – an advantage we have as perpetual owners of excellent vertical software companies. From a financial standpoint, we are prepared when opportunities arise through strong earnings and available credit.

I would especially like to thank all of our customers and employees for 2023 and look forward to 2024.

Olle Backman, CEO, Vitec Software Group