Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Columbus AS (FRA:P1F, Financial) reported an 8% revenue growth in Q3, reaching DKK 371 million, driven primarily by the dynamics business line.
- The company's EBITDA grew by 42% in Q3, resulting in an EBITDA margin of 7.9%, marking a 1.9 percentage point increase from the previous year.
- Recurring revenue increased by 15%, contributing DKK 59 million to the total revenue.
- The company has a high win rate due to its strategic focus on specific customer segments and project sizes.
- Columbus AS (FRA:P1F) continues to see strong cash flow from operating activities, ending at DKK 57 million, supported by positive developments in trade receivables.
Negative Points
- The M3 business line experienced a slowdown in Q3, with revenue growth dropping to 3% due to the transition between major projects.
- Digital commerce only achieved a 2% growth in Q3, although it marked an improvement from a 10% decline in the first half of the year.
- Efficiency rates remained flat in Q3, which is a concern despite the increase in margins.
- The Swedish market has been significantly impacted by economic challenges, leading to a slowdown in demand and affecting overall performance.
- The company faces challenges in maintaining efficiency improvements across all regions, with specific issues in Sweden impacting overall efficiency rates.
Q & A Highlights
Q: Can you elaborate on the data and AI growth? What is under this business line and what is primarily driving the growth? And do you expect it to continue?
A: The data and AI business line includes traditional business intelligence, simple automation, RPA automation, machine learning, and modern AI tools. Growth is driven by integrating these technologies into major software platforms like Dynamics and M3. We expect high growth to continue due to increasing demand and untapped potential.
Q: Is the data and AI segment primarily focused on existing clients, or does it also target new clients?
A: Initially, data and AI projects were add-ons to existing P engagements, but now they also initiate new projects. While they can target new clients, we carefully evaluate this to maintain synergy within the group and adhere to our chosen industry verticals.
Q: Efficiency rates are flat, but margins are up in Q3. What are the main drivers behind this? Any goal for the efficiency rate in Q4?
A: Besides efficiency, pricing adjustments, contract profitability, and delivery mix, including seniority and offshore functions, contribute to margin improvements. We aim for further efficiency improvements in Q4, with a focus on maintaining a balance between efficiency and pricing.
Q: Is there less competition in the Danish market compared to Sweden?
A: Competition levels are similar, but Swedish demand has been more affected due to a weaker economy. Additionally, our Swedish business unit, Digital Commerce, is heavily exposed to the retail sector, which slows down faster in economic downturns.
Q: With the headwinds in the IT sector, do you see a more positive Q4 in the Nordics or any specific markets?
A: We have a stable outlook for Q4, with improved planning and visibility into our workload. In Sweden, we see an increase in early-stage pipeline activities, indicating potential growth, though the impact on Q4 versus Q1 next year remains to be seen.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
