Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- BTS North America and BTS Other markets experienced significant growth, with North America growing by 12% and Other markets by 8%.
- Combined EBITDA increased by 23%, indicating strong operational performance in key markets.
- The acquisition of The Boda Group has strengthened BTS Group AB's leadership coaching business, contributing to faster growth in this segment.
- BTS Group AB made strategic acquisitions, including Wonderway, which enhances their AI capabilities and offers innovative products like Verity.
- The company is seeing productivity gains through AI experimentation, with a reported 6.5% FTE savings among employees utilizing AI tools.
Negative Points
- BTS Europe faced a challenging quarter with a 23% revenue decline, impacting overall group sales growth.
- Approximately 30% of BTS Europe's revenues were delayed, canceled, or disappeared, affecting financial performance.
- The European market showed signs of conservatism, with project delays and cancellations impacting revenue.
- Despite efforts, BTS Europe did not have a sufficient pipeline to offset the revenue shortfall.
- The newly acquired business in Thailand is expected to have slightly lower margins than BTS Group AB, requiring improvement efforts.
Q & A Highlights
Q: How much of the growth in North America is due to market improvement versus BTS taking market share?
A: Jessica Skon, President & CEO: It's a combination of both. We feel less conservatism than a year ago, and our win rates are up. Confidence is growing, and average deal sizes are progressing nicely.
Q: Are you seeing any signs of recession fears affecting your business in the US?
A: Jessica Skon, President & CEO: We are not seeing any signs of recession fears affecting us. The US news has been quite hyperbolic recently, but we are experiencing good success in sectors like pharma and biotech.
Q: How is BTS handling hiring in the current climate, especially with mixed performance across regions?
A: Jessica Skon, President & CEO: It's a mix. Some markets like the Middle East and Southeast Asia need talent, so we're moving people internally and hiring selectively. We also use external contractors to manage demand spikes.
Q: Regarding the recent decline in Europe, is it more of a BTS-specific issue or a market trend?
A: Jessica Skon, President & CEO: It's a mix of both. The European market was conservative in Q2, but our win rates on big change opportunities have improved. We expect to return to growth in the second half.
Q: Are there any plans for cost reductions in Europe given the recent performance?
A: Jessica Skon, President & CEO: BTS Europe has already cut costs significantly last year. We believe we are currently rightsized and need to be cautious about further cuts.
Q: How is the pricing strategy evolving, especially in a weak market?
A: Jessica Skon, President & CEO: We are pushing the limits on pricing and plan to update pricing across our system for 2025. We feel confident about increasing prices in markets like North America, Southeast Asia, and the Middle East.
Q: Can you provide details on the acquisition in Thailand and its expected margins?
A: Jessica Skon, President & CEO: The acquired business had approximately SEK 6 million in revenue last year. We expect their margins to be slightly lower than BTS's, with plans to improve them quickly.
Q: What is the status of project delays in Europe? Are they expected to resume this year?
A: Jessica Skon, President & CEO: The delays were postponed to the second half of the year. Typically, some projects come back to life while others may not, but the intention is to resume them soon.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
