Release Date: May 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Proact IT Group AB (FRA:PIU0, Financial) reported a revenue increase of 2% in Q1 2025, reaching SEK 1.2 billion, driven by strong performance in the Nordic and Baltic regions.
- The acquisition of Black York, a UK-based consultancy specializing in cloud transformation and Azure technology, strengthens Proact's position in the UK market.
- Proact IT Group AB was named Enterprise Partner of the Year by NetApp, highlighting its expertise in data storage solutions.
- The company achieved an EBITA margin of 11.2% in the Nordic and Baltic business unit, surpassing the group target of 8%.
- Proact IT Group AB continues to be a trusted local European partner, valued by customers for its expertise in IT infrastructure and cybersecurity solutions.
Negative Points
- Revenue from cloud services decreased by 6% due to contract terminations and higher costs, particularly in the West and Central business units.
- The UK, West, and Central business units experienced lower sales, with the UK seeing a revenue decrease of 13.7% and West decreasing by 21.3%.
- The company's annualized recurring revenue decreased by 2.8% compared to Q1 2024.
- Proact IT Group AB faces challenges in the German market due to a tough macroeconomic environment, impacting sales and customer retention.
- The company's EBITA margin of 6.5% in Q1 2025 is below the long-term target of 8%, indicating room for improvement in profitability.
Q & A Highlights
Q: What drove the strong system sales in the Nordics and Baltics during the quarter?
A: The strong system sales were driven by the market's uncertainty, prompting both public and private customers to revisit their data storage and cybersecurity measures. This led to increased investments in these areas. Additionally, Proact's long-term partnerships and trust with customers contributed to the revenue increase. (Respondent: CEO)
Q: Do you expect the strong performance in the Nordics to continue throughout 2025?
A: While Q1 was turbulent, it's challenging to predict future performance due to macroeconomic factors. The company is focusing on controllable aspects and is cautious about making specific promises for the rest of the year. (Respondent: CEO)
Q: What caused the decline in services revenue in Q1, and what should be expected for the rest of 2025?
A: The decline in services revenue was primarily due to high customer churn in the West and Central business units. However, new contracts worth SEK 120 million were signed, which will materialize in future quarters. The company is working on addressing these challenges. (Respondent: CEO)
Q: Why did cloud revenues decrease in Q1, and what are the expectations moving forward?
A: The decrease in cloud revenues was partly due to market uncertainty, especially outside the Nordics, and contract expirations. In Germany, the tough macroeconomic environment has delayed some deals. This trend may continue for at least another quarter. (Respondent: CEO)
Q: Are there structural reasons for the higher profit margins in the Nordics and Baltics compared to other segments?
A: The CEO believes that the success in the Nordics can be replicated in other regions. The goal is to spread the successful strategies and practices from the Nordics to other segments to improve their profit margins. (Respondent: CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
