Vitec Software Group Interim report January–September 2023
SUMMARY OF INTERIM PERIOD, JULY–SEPTEMBER 2023
- Net sales SEK 701 million (505), an increase of 39%
- Recurring revenues SEK 614 million (417), an increase of 47%
- EBITA SEK 240 million (161), an increase of 49%
- EBITA margin 34% (32)
- Operating profit SEK 158 million (92), an increase of 71%
- Operating margin 22% (18)
- Earnings per share before dilution SEK 2.26 (1.76)
- Cash flow from operating activities SEK 158 million (87)
- Acquisition of Neagen Oy
SUMMARY OF INTERIM PERIOD, JANUARY–SEPTEMBER 2023
- Net sales SEK 2,037 million (1,400), an increase of 46%
- Recurring revenues SEK 1,735 million (1,180), an increase of 47%
- EBITA SEK 652 million (411), an increase of 59%
- EBITA margin 32% (29)
- Operating profit SEK 444 million (250), an increase of 78%
- Operating margin 22% (18)
- Earnings per share before dilution SEK 6.94 (5.05)
- Cash flow from operating activities SEK 727 million (489)
Strong quarter demonstrates the strength of our business model once again
A strong quarter in a challenging macroeconomic environment demonstrates the strength of our business model, in which we deliver business-critical software, that is continuously developed to contribute to the success of our customers.
In the third quarter, revenues rose 39% to SEK 701 million compared with the same period last year; the corresponding figures for the first nine months are 46% and SEK 2,037 million. Revenues have now exceeded SEK 2 billion for the first time after only nine months. Our recurring revenues increased organically by 14%. We are also proud of our sustained margin growth; EBITA margin was 34% compared with 32% and EBITA rose 49% to SEK 240 million. Net profit was affected by higher interest rates and increased borrowing, but non-cash remeasurement of supplementary contingent consideration and long-term security holdings also had a negative impact of SEK 34 million for the entire period.
During the third quarter, the previously announced acquisition of Finnish Neagen was completed and we signed a contract for another Finnish acquisition, Codea. Codea develops and delivers critical software for field management of emergency vehicles. At the beginning of October, we completed our sixth acquisition this year (a new record!): Dutch Memorix, which provides software for managing archives, digital cultural heritage and collections.
Excellent vertical software companies, which we evaluate on an ongoing basis, are continuously added to our list of acquisition candidates. In our assessment, company valuations have begun to demonstrate a slight downward trend as the impact of higher interest rates becomes evident, and sellers appreciate the simple acquisition process and long-term approach Vitec offers. We have used a supplementary contingent consideration approach to address valuation concerns for many years. These only apply if the company can report a clear improvement in performance compared to the time of acquisition. These payments are therefore a good indicator that the companies are performing well within the Vitec Group.
In the past year, we have expanded our internal resources for both acquisition activities and for integration into the Group, allowing us to handle our new companies well. This strategy provides us with both the organizational and
financial resources to continue our growth journey.
Recruitment of new employees has been a challenge for us and for many other players in the technology sector. In recent months, we have begun to see an improvement as more and more qualified candidates apply for our available positions. We hope that in Vitec, they see exciting work tasks and a stable and growing company.
To further align the common interest of shareholders and employees in generating value, Vitec has had various share-based incentive programs for over 20 years. At the 2023 Annual General Meeting, shareholders resolved to implement a share savings plan for staff in nine countries. We are pleased to announce that as much as 35% of the employees chose to invest in this long-term share savings plan.
Olle Backman, CEO
Vitec Software Group