Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Karnov Group AB (LTS:0A39, Financial) reported a strong margin improvement of more than 3% points in the third quarter, driven by synergies from their initiatives.
- The company successfully launched AI-supported legal information solutions across all markets, enhancing customer value and efficiency.
- Net sales grew to SEK 648 million in the quarter, with organic growth driven by the North region.
- The technical carveout in Spain was completed, removing technical risks and allowing focus on profitable growth with a new country manager.
- The company has harvested synergies on an annual run rate basis of EUR 9 million, with a target of EUR 20 million by the end of 2026.
Negative Points
- Leverage increased to 3.1 times EBITA due to negative currency effects and seasonal cash flow impacts.
- Region South experienced a decline in online sales by 3% compared to the previous year, mainly due to negative currency effects.
- The integration process in Spain has slightly affected sales work, although it is now moving into the next phase.
- Adjusted free cash flow was negative SEK 32 million in the third quarter, although it showed improvement compared to the previous year.
- There are concerns about maintaining performance in Region North as Alexandra Oquist takes on additional responsibilities in Region South.
Q & A Highlights
Q: Can you discuss the cash flow expectations for Q4 and Q1 of 2025, considering the seasonality?
A: Pontus Bodelsson, CEO: We don't expect any changes to the seasonality. We anticipate a strong renewal season in region North in Q4 and Q1 in region South, similar to last year.
Q: Are there any risks to Region North now that Alexandra is moving to Region South, given her historical importance there?
A: Pontus Bodelsson, CEO: Alexandra will continue overseeing Region North as CEO. We've provided her with additional support, and we have strong senior leadership in Sweden and Denmark to maintain success.
Q: What are the early indications regarding the uptake of the AI legal research assistant, and what expectations can we have for 2025?
A: Pontus Bodelsson, CEO: We see a paradigm shift with significant interest from customers across our markets. We expect at least a 30% price uplift on these packages and services.
Q: Can you provide insights into the performance of Region South, particularly in Spain and France?
A: Pontus Bodelsson, CEO: The integration in Spain has been a focus, affecting numbers. We see minor growth in France due to a greater commercial focus and new product launches. Spain is entering a new phase with a focus on growth.
Q: Is there any quantifiable organic growth in France during the quarter?
A: Pontus Bodelsson, CEO: We typically don't disclose separate figures for France and Spain, but we observed slight growth in France and a small decline in Spain. Sequentially, France is showing a pickup in numbers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
