Bifogade filer
2024 10 25 Interim Report Nepa AB Q3 2024
Prenumeration
Beskrivning
| Land | Sverige |
|---|---|
| Lista | First North Stockholm |
| Sektor | Tjänster |
| Industri | Allmänna tjänster |
"Nepa’s underlying profitability improved in the third quarter. Adjusted EBITDA less Capex is the strongest for a third quarter since 2021, with a margin of 4.8%. This achievement comes amidst a challenging market with above-normal levels of churn and lower ad hoc sales." - Anders Dahl, CEO
Q3 in summary
- Annual Recurring Revenue (ARR) decreased by 7.6% to SEK 159.3 (172.4) million.
- Net sales decreased by 14.4%, or 14.2% organically, to SEK 60.4 (70.6) million.
- Subscription revenue decreased by 10.2% to SEK 40.2 (44.7) million. Ad hoc revenue from subscribers decreased by 30.9% to SEK 10.6 (15.3) million. Ad hoc revenue from other clients decreased by 8.0% to SEK 9.7 (10.6) million.
- Gross profit amounted to SEK 44.5 (51.9) million and the gross margin to 73.7% (73.6%).
- Adjusted EBITDA less Capex amounted to SEK 2.9 (0.0) million, or a margin of 4.8% (0.0%).
- Adjusted EBIT amounted to SEK -1.1 (0.6) million, or a margin of -1.9% (0.9%).
- Items affecting comparability amounted to SEK 0.0 (1.1) million.
- EBIT amounted to SEK -1.1 (-0.5) million or a margin of -1.9% (-0.7%).
- Net profit amounted to SEK -2.2 (-0.7) million and Earnings per share amounted to SEK -0.28 (-0.08).
YTD in summary
- Net sales decreased by 9.4%, or 9.2% organically, to SEK 198.0 (218.5) million.
- Subscription revenue decreased by 5.4% to SEK 125.1 (132.3) million. Ad hoc revenue from subscribers decreased by 29.3% to SEK 37.2 (52.6) million. Ad hoc revenue from other clients increased by 5.9% to SEK 35.6 (33.6) million.
- Gross profit amounted to SEK 149.0 (160.6) million and the gross margin to 75.3% (73.5%). Improved project profitability, data quality management, and supplier strategy have had a positive impact.
- Adjusted EBITDA less Capex amounted to SEK 9.7 (-12.4) million, or a margin of 4.9% (-5.7%).
- Adjusted EBIT amounted to SEK 0.3 (-6.1) million, or a margin of 0.2% (-2.8%).
- Items affecting comparability amounted to SEK 1.3 (8.0) million.
- EBIT amounted to SEK -1.0 (-14.1) million, or a margin of -0.5% (-6.5%).
- Net profit amounted to SEK -1.5 (-14.1) million and Earnings per share amounted to SEK -0.19 (-1.79).
Business highlights
DURING THE QUARTER
- Underlying profitability trend remains strong and intact. Adj. EBITDA less Capex margin of 4.8% (0.0%).
- Loss of a major global tracking contract, which expires in mid-Q1 2025. It is worth circa 16.5 MSEK ARR with a gross margin after data costs of circa 55%, compared to the Group YTD average of 75.3%.
AFTER THE PERIOD ENDED
- Nepa launched the new subscription product Continuous Marketing Mix Modeling (cMMM).
- Nepa appointed Jakob Kofoed as CTO.
- Notice of extra general meeting on November 19: Elementa proposes to elect Ludvig Blomqvist as board member, supported by the three largest shareholders who control 56.2% of the company.
- Sonja Thorngren steps down as CFO of Nepa.
Key financials
| Numbers in SEK million if not stated | Q3 2024 | Q3 2023 | change | YTD 2024 | YTD 2023 | change | LTM | FY 2023 |
| Annual Recurring Revenue (ARR) | 159.3 | 172.4 | -7.6% | 159.3 | 172.4 | -7.6% | 159.3 | 164.0 |
| Net sales | 60.4 | 70.6 | -14.4% | 198.0 | 218.5 | -9.4% | 272.6 | 293.1 |
| Of which subscription revenue | 40.2 | 44.7 | -10.2% | 125.1 | 132.3 | -5.4% | 169.9 | 177.0 |
| Gross profit | 44.5 | 51.9 | -14.3% | 149.0 | 160.6 | -7.2% | 207.9 | 219.5 |
| Gross margin | 73.7% | 73.6% | 0.1 | 75.3% | 73.5% | 1.8 | 76.3% | 74.9% |
| Adjusted EBITDA less Capex | 2.9 | 0.0 | 2.9 | 9.7 | -12.4 | 22.1 | 13.5 | -8.7 |
| Adjusted EBITDA less Capex, margin | 4.8% | 0.0% | 4.8 | 4.9% | -5.7% | 10.6 | 4.9% | -3.0% |
| Adjusted EBIT | -1.1 | 0.6 | -1.8 | 0.3 | -6.1 | 6.5 | 5.5 | -0.9 |
| Adjusted EBIT margin | -1.9% | 0.9% | -2.8 | 0.2% | -2.8% | 3.0 | 2.0% | -0.3% |
| EBIT | -1.1 | -0.5 | -0.7 | -1.0 | -14.1 | 13.1 | -1.6 | -14.8 |
| EBIT margin | -1.9% | -0.7% | -1.2 | -0.5% | -6.5% | 6.0 | -0.6% | -5.0% |
| Net income | -2.2 | -0.7 | -1.5 | -1.5 | -14.1 | 12.6 | -1.8 | -14.4 |
| Profit margin | -3.6% | -0.9% | -2.7 | -0.7% | -6.4% | 5.7 | -0.6% | -4.9% |
| Operating cash flow | 5.0 | 6.3 | -1.3 | 3.9 | 4.3 | -0.4 | 5.7 | 6.1 |
| Net financial position | 29.8 | 41.8 | -12.0 | 29.8 | 41.8 | -12.0 | 29.8 | 38.4 |
| Earnings per share, SEK | -0.28 | -0.08 | -0.19 | -0.19 | -1.79 | 1.61 | -0.22 | -1.83 |
| Avg. number of shares outstanding | 7,863,186 | 7,863,186 | 0.0% | 7,863,186 | 7,863,186 | 0.0% | 7,863,186 | 7,863,186 |
Comments by the CEO
Nepa’s underlying profitability improved in the third quarter. Adjusted EBITDA less Capex is the strongest for a third quarter since 2021, with a margin of 4.8%. This achievement comes amidst a challenging market with above-normal levels of churn and lower ad hoc sales.
Organic growth in Q3 was -14.2%, or -12.0% when excluding the now-closed Nepa APAC. The third quarter is typically the least active due to the holiday season in July and August. This year, the restart in August was later than usual. Lower subscription revenue from the past year's churn and a weak market for new sales also negatively impacted revenues. Clients continued to exhibit cautious behavior, and sales cycles remained prolonged. On a positive note, our Sales & Marketing team kept high activity throughout the quarter. We have invested in strong sales candidates and are ramping up our marketing activities, with encouraging results so far. Long-term, we see strong potential for topline growth and have high ambitions for expansion.
INCREASED EFFICIENCY HAVE BOOSTED PROFITABILITY
Over the past year, we have significantly improved efficiency, leading to increased project margins and underlying profitability. Adjusted EBIT amounted to SEK -1.1 (0.6) million but was impacted by higher amortization of intangible assets and lower capitalized product development expenditures. We have accelerated time-to-market in our product development, reducing the need for capitalizing. Accounting for this, the adjusted EBITDA less Capex was SEK 2.9 (0.0) million corresponding to a margin of 4.8% (0.0%).
We see great potential for additional advancement by leveraging our global resources more effectively and deploying AI tools to enhance our products and streamline delivery. In September, we piloted an AI tool to automate tasks and enhance access to organizational knowledge. We already use Open-Text AI for more efficient analyses, and last year, we launched AI Trend Boost, our proprietary machine learning model, trusted by leading brands to significantly boost sample accuracy. Additionally, we use AI to dynamically evaluate respondent engagement and validity in real-time during surveys, thereby enhancing the overall quality of our data. These innovations position us at the forefront of our industry and reinforce our commitment to delivering actionable insights to clients.
LAUNCH OF CONTINUOUS MARKETING MIX MODELING
We are excited to announce the launch of our new subscription product, Continuous Marketing Mix Modeling (cMMM). This new solution enables real-time optimization of marketing efforts to maximize sales impact and improve business outcomes. cMMM complements Nepa’s existing product portfolio of strategic tools and offers marketers a unique holistic approach to ensuring long-term brand development with clear links to business performance. Our initial clients have reported leading KPI’s showing a clear return on investment and several areas where they can enhance their media effectiveness and overall marketing. Based on this positive client feedback, we are convinced that cMMM will revolutionize marketing strategies and contribute to our clients' success. cMMM is integrated into the Marketing Intelligence Suite, bringing Nepa closer to enabling brands to seamlessly track performance, optimize marketing investments, and evaluate campaigns within a single platform.
We are confident in our product-market fit and see significant opportunities to accelerate growth with new clients, where we observe more favorable contract terms and profitability compared to legacy arrangements on our tech platform. To keep Nepa ahead of competition, we have accelerated our tech efforts by appointing Jakob Kofoed as Chief Technology Officer. He brings extensive expertise from the industry, and from Marketing Mix Modeling in particular. He will be instrumental in driving our tech operations and product development forward in an efficient and scalable manner.
OUTLOOK
The market demand remains cautious, but we are starting to observe a positive trend shift in pipeline development and new bookings. Currently, we are facing short-term challenges, particularly with the announced churn of a major contract from our largest client set to expire in mid-Q1 2025. However, we remain focused on our long-term goal of driving profitable growth by delivering exceptional value to our clients in a cost-effective manner. In the short-term, we are implementing profitability-enhancing measures to offset the loss of revenue. We are making significant improvements in refining our sales and marketing strategies, enhancing operational efficiency, and developing market-leading products. I am confident that these efforts bring us closer to our objective.
Anders Dahl
CEO