Release Date: July 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Vitec Software Group AB (FRA:7VS, Financial) reported a 4% increase in total net sales for the quarter and a 12% increase for the first six months.
- The company maintains a high percentage of recurring revenue at 89%, indicating stable income streams.
- Vitec Software Group AB (FRA:7VS) has a diversified customer base with only 8% of sales coming from the 10 largest customers, reducing risk.
- The company is actively using AI to enhance product offerings, such as in real estate and energy forecasting, which could lead to increased efficiency and customer satisfaction.
- The M&A pipeline remains solid, with the company ready to pursue future acquisitions, indicating potential for growth and expansion.
Negative Points
- Operating profit and EBITA margin were down 10% in absolute terms, indicating a decline in profitability.
- The Enova business unit experienced a significant downturn, with SEK80 million less in transaction-based revenue compared to the previous year.
- There are delays and postponements in the M&A market, affecting the pace of acquisitions.
- The company faces increased competition in the market, particularly affecting pricing and volumes in the Enova unit.
- Cash EBIT deteriorated by 5%, reflecting challenges in maintaining cash flow generating profits.
Q & A Highlights
Q: Did you notice any changes in customer costs throughout the quarter, particularly in April and May?
A: No significant changes were observed. The quarter was stable without surprises on either the upside or downside. We anticipated a brighter outlook earlier, but the macro environment has been challenging. Stability is generally positive in our context. - Olle Backman, CEO
Q: Should we consider Q2 as a normal performance for Enova?
A: Yes, Q2 is typically Enova's best quarter due to seasonal factors. The performance was stable, and the previous year's Q2 was an outlier. Enova's results have been consistent over the past four quarters. - Olle Backman, CEO
Q: Can AI improve your margin profile over time, or will it be neutral?
A: AI has the potential to enhance efficiency, but it will take time. We have 46 development departments, and while larger units may see more efficiency gains, smaller ones might not. AI could lead to productivity gains, allowing us to produce more without necessarily reducing headcount. - Olle Backman, CEO
Q: Are you implementing any cost reductions due to weaker margins in the past two quarters?
A: We are cautious about rehiring and are evaluating the necessity of replacing departing employees. While some business units are progressing well and investing as planned, we are generally more prudent in our hiring practices. AI is expected to increase efficiency, allowing us to do more with the same resources. - Olle Backman, CEO
Q: What are your expectations for the M&A market after summer and into the fall?
A: We expect M&A activity to pick up as the pipeline is strong. Some deals have been postponed, but they cannot be delayed indefinitely. We anticipate decisions on postponed cases during the fall, similar to last year's pattern of increased activity in the latter half of the year. - Olle Backman, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
