Release Date: February 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Vitec Software Group AB (LTS:0RDI, Financial) reported a 25% increase in sales for the quarter, with recurring revenues growing by 26%.
- The company achieved a record of seven acquisitions in 2024, including three in the last quarter, expanding its presence in Belgium as a new home market.
- Vitec Software Group AB (LTS:0RDI) maintained a strong operational margin of 21% for the full year, slightly above its target.
- The board proposed an increase in dividend to NOK3.6 per share, marking the 23rd consecutive year of dividend increases.
- The company reported a strong cash flow from operations, exceeding SEK1 billion for the year, indicating robust financial health.
Negative Points
- The EBITDA margin for the quarter was slightly lower at 29% compared to 30% last year, attributed to a mix in income.
- The M&A cash outflow in Q4 was higher than expected, raising concerns about financial headroom despite a SEK1 billion raise in September.
- There was a contingent consideration reversal in the quarter, indicating that some acquisitions did not meet ambitious targets.
- The company faces challenges in upselling and new sales, although there are signs of improvement in some sectors.
- Wage inflation and recruitment needs remain a concern, with expectations of wage increases roughly around the CPI for each market.
Q & A Highlights
Q: Could you share details on the cash outflow for M&A in Q4, specifically for Olyslager, and discuss the current financial headroom?
A: We don't disclose individual numbers, but the capital deployment was high due to acquiring high-quality companies. We maintain a financial headroom of over a billion SEK, allowing us to accumulate more debt if needed, keeping us comfortable with our leverage levels. - Olle Backman, CEO
Q: What price tailwind do you expect for the group in 2025 from CPI-linked price increases?
A: We anticipate a price increase of approximately 3% from CPI-linked adjustments across our various markets. - Olle Backman, CEO
Q: Can you elaborate on the contingent consideration reversal in the quarter? Was it due to underperformance or ambitious targets?
A: The reversal was due to ambitious targets not being fully met, but the company performed well. We maintain a prudent approach to considerations, paying based on actual performance. - Olle Backman, CEO
Q: How do you see recruitment needs and wage inflation for 2025 compared to 2024?
A: Recruitment has become slightly easier, and we don't foresee significant increases in staff numbers. Wage inflation is expected to align with CPI in each market, with some variations. - Olle Backman, CEO
Q: The recurring revenue from subscriptions seems higher than expected. Have the acquired companies performed strongly?
A: Yes, the acquired companies have performed strongly, with high levels of recurring revenue, contributing positively to our results. - Olle Backman, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
