Release Date: July 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Recurring revenue grew by 17% year-on-year, covering more than 80% of total revenue.
- Strong performance in the private sector with a 7% EBIT, showcasing scalability.
- Successful cross-border deal in Sweden, indicating potential for future cross-market opportunities.
- Positive feedback from partners on the new product packaging, particularly in the Dynamics ecosystem.
- Five new banking deals through cooperation with Temenos, resulting in a 200% increase in ACV in the banking business.
Negative Points
- Net sales were weaker compared to the previous period, primarily due to the impact of the Landbrugsstyrelsen contract.
- Delivery revenues contracted by SEK13 million compared to last year's Q2.
- Profitability was impacted, with EBIT dropping to SEK8 million from SEK13 million in the previous year.
- The Danish market remains soft, with dependencies on certain products and delivery resources.
- Negative ARR effect of SEK6 million due to currency fluctuations and a small acquisition.
Q & A Highlights
Highlights of Formpipe Software AB (OSTO:FPIP, Financial) Q2 2024 Earnings Call
Q: The ACV number was quite strong this quarter compared to the last. What is driving these numbers?
A: FormPipe is doing a better job, and there are also seasonal factors. We have been very good at keeping track of our pipelines and building business over the first half of the year. We see good traction in banking and are making changes to improve performance in the Dynamics ecosystem.
Q: Can you provide examples of feedback from partners regarding the new packaging in the private sector?
A: Partners appreciate that we can now come in earlier in the sales cycle before end users start using low-end products. This helps avoid the need to replace low-end products later. Partners also appreciate that we are more present with end users, aiding in the sales process.
Q: What is happening in the Swedish market, and how are you expanding your business there?
A: In Sweden, we have transitioned to doing more deliveries ourselves, which is showing good results and is appreciated by customers and partners. We are recruiting and building our delivery capacity at a moderate pace to ensure good customer experience. We see demand in the market and are balancing our delivery capacity to meet this demand.
Q: What are you seeing in the Danish market, aside from the Landbrugsstyrelsen situation?
A: We see good demand in the Danish market, but there are dependencies on certain products and delivery resources. We need to move away from these dependencies to be more flexible in delivering services. We expect slow growth in delivery revenues from current levels.
Q: What are your expectations for cross-border deals after merging your Swedish and Danish public organizations?
A: We have high expectations for cross-border deals. There are obvious synergies and value we can bring to customers by combining our product portfolio. However, public procurement complexities and the careful handling of personal data in the public sector mean this will be a gradual process.
Q: Could you elaborate on the potential for consolidating your product portfolio in the public sector?
A: We aim to lift out certain functionalities from different products and use them across multiple products. This will allow us to shift maintenance spend to functionality spend and offer richer functionality to customers. Over time, we also aim to be more flexible in sharing resources across borders.
Q: Joakim, after 17 years, you are leaving FormPipe early next year. Can you provide some context on this decision?
A: This is a common transition when a new CEO comes in. Joakim has done a great job and will stay on to ensure a smooth transition. The new CFO will need to be properly introduced to the business, given its complexity.
Q: What are the key takeaways from this quarter?
A: The strong development of recurring revenues, the materialization of the one public initiative, and continued good momentum and profitability in the private sector. We look forward to an exciting autumn with new offerings in both public and private sectors.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
