Release Date: February 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Knowit AB (LTS:0GNK, Financial) reported a continued positive trend in its largest business area, Solutions, with improved utilization and margins for the third consecutive quarter.
- The company outperformed its peers in Finland and observed early signs of improvement in Sweden.
- The Norwegian market remains stable, providing a solid foundation for Knowit AB (LTS:0GNK).
- Investment in sales capacity has led to new clients and a broader client portfolio, enhancing overall performance.
- The company maintains a strong position as a leading digital agency in the Nordics, ready to capitalize on market improvements.
Negative Points
- Knowit AB (LTS:0GNK) experienced a 10% decrease in sales for the quarter, attributed to a negative calendar effect and currency fluctuations.
- The digital agency experience business area faced a weak market, resulting in downsizing and cost reductions, impacting profitability.
- The adjusted EBITDA margin decreased to 6.5% from 8.1% in the same quarter last year, indicating ongoing market challenges.
- The company reduced its workforce by over 400 employees, reflecting a 10% decrease, which contributed to an organic decline in sales.
- The market in Denmark and Sweden remains uncertain, posing challenges for future growth and stability.
Q & A Highlights
Q: Can you elaborate on the improvements in utilization in Sweden, particularly in the Solutions business area?
A: We see increased demand in retail and smaller customers. There are early signs of larger budgets for the public sector in 2025, and retail demand is picking up slightly. Improvements are noted in both the south of Sweden and Stockholm. (Unidentified_1, Company Representative)
Q: With the experience business area down, do you expect further cost reductions, or has it bottomed out?
A: We have implemented cost cuts and reduced personnel in Q4. We believe we are at a bottom in the experience business area. (Unidentified_1, Company Representative)
Q: How is the Finnish market performing, and is the improvement due to temporary leave employees or underlying business growth?
A: Finland is a tough market, but we are performing well in Solutions due to strong customer relationships. We are overperforming in Solutions, but the market remains challenging in other areas like Experience and Insight. (Unidentified_1, Company Representative)
Q: What are the early positive signs you mentioned? Are they from new customers or existing ones increasing their business?
A: We see early signs in our order book and increased demand in certain sectors in Sweden. There are potential budget increases for the public sector and demand in retail. (Unidentified_1, Company Representative)
Q: Have you seen any projects canceled due to AI competition, or is AI creating new opportunities?
A: Rather than cancellations, AI is opening new possibilities. We have projects using AI and virtual reality, like training judges, which were not possible before. AI will make delivery more efficient and increase demand. (Unidentified_1, Company Representative)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
