Release Date: August 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Trifork Group AG (OCSE:TRIFOR, Financial) expects a total revenue growth of approximately 5% for 2024, with a revenue target of EUR215 million to EUR220 million.
- The company has secured significant public contracts and framework agreements, which are expected to contribute positively to revenue in 2025 and beyond.
- Trifork Labs segment has shown impressive growth, with several lab companies finding strong market traction.
- The company has expanded its business development capabilities and is actively onboarding tech talent to support future growth.
- Trifork Group AG has formed strategic partnerships with major global technology companies like NVIDIA, SAP, Apple, and Microsoft, enhancing its market presence and potential for new business opportunities.
Negative Points
- The company experienced a decrease in organic revenue by nearly 7% in Q2 2024 compared to the previous year, primarily due to geopolitical tensions affecting customer engagements.
- Trifork Group AG has downgraded its guidance twice this year, indicating challenges in meeting initial expectations.
- The Cyber Protection business segment has been a negative contributor to EBITDA, prompting considerations for divestment or restructuring.
- The company has faced lower utilization rates and increased bench time, impacting profitability.
- There is uncertainty regarding the timing and realization of revenue from new contracts and framework agreements, which may affect short-term financial performance.
Q & A Highlights
Q: What makes you more certain now about the visibility into the second half of the year after downgrading guidance twice?
A: Kristian Wulf-Andersen, CFO: We have seen contracts that were previously delayed now starting to ask for delivery, leading to an uptake in revenue from framework agreements. Additionally, the latency in new customer engagements, particularly in the US, has improved, giving us more confidence in our current guidance.
Q: Do you need more new revenue to deliver the full-year guidance, or is it based on what you already see?
A: Kristian Wulf-Andersen, CFO: The guidance is based on what we already see, making it solid in that regard.
Q: How is the Cyber Protection business split between Build and Run, and when do you expect to deconsolidate it?
A: Jørn Larsen, CEO: We have considered the impact of deconsolidating Cyber Protection on our revenues and guidance. The deconsolidation is already factored into the new guidance, but we have not disclosed the exact amount.
Q: What is causing the margin decline in the Run business, and do new contracts carry lower margins?
A: Jørn Larsen, CEO: The margin decline is mainly due to the negative impact from the Cyber Protection business and the short-term negative impact of onboarding new customers. However, the expectation is that these contracts will have margins as high as the existing business in the long term.
Q: How confident are you in winning projects under the framework agreements, and are they included in the 2024 guidance?
A: Jørn Larsen, CEO: Some contracts are exclusive to us, while others require competition. The guidance for 2024 includes expected contributions from these agreements, but any faster-than-expected work could have a positive impact.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
