Jón Björnsson, CEO of Origo hf:
"Origo's results in the third quarter of 2022 were characterised by good performance. Revenue grew 14.7% and the Company delivered an 9.8% EBITDA margin in the quarter, an 8% improvement from the previous year. Sales are up in all segments, with the highest increase seen in End-User Equipment at 22.8%. Origo's operating costs rose from 22% to 22.4% during the period, mainly due to higher investment in software development, which increased during the quarter by more than ISK 70 million over the previous year, but also due to the impact of acquisitions made last year. In the first nine months of the year, revenue grew 10% and the EBITDA margin came in at 8.4% versus 8.5% last year.

There continues to be good demand for solutions and products in End-User Equipment, with revenue rising by 22.8% in the third quarter after a minor decline in the second quarter. Revenue was up across the board, with enterprise sales up somewhat more than sales to consumers. The unit delivered good profitability with EBITDA coming in at 9.3% of sales. The outlook is overall quite good and the product flow is normalising.

Origo's Service Solutions, which are part of our managed services, have been undergoing a major transformation over the past 12 to 18 months, with changes in the product and service offering that have resulted in much improved operations as well as creating several good opportunities for growth. Revenue grew 6% in the third quarter and EBITDA improved by 46%. Priorities have been better defined and a stronger framework has been created around service delivery, coupled with better utilisation of opportunities represented by our customers' transformation needs.

The growth opportunities for Origo's Managed Services and Infrastructure lie in Syndis, Responsible Compute and Datalab. During the quarter, Responsible Compute, a partnership between Origo and Borealis Data Center, introduced HPC infrastructure services in Borealis' data centers that run on environmentally friendly power sources and are cooled by environmentally friendly means. Development has been taking place for almost two years and the focus is now on income generation, with the company gaining its first major customer this fall after extensive testing. Meanwhile, Syndis has continued to grow and prosper since Origo acquired it in the spring of 2021, with the number of employees now approaching fifty. The operations are fourfold; in the field of consulting, security services (SOC), research and development, and software development. This October, the company will run the first customer testing of new software that assesses how attractive organisations are to hackers; Syndis has devoted significant resources to the development of this software over the past fifteen months.

Origo's software sales continue to grow, with revenue increasing by 7.3% during the quarter It is particularly pleasing to see a 26.4% increase in revenue from own software and 17.4% growth over the first nine months of the year. There continues to be strong revenue growth in core software units such as HR solutions, quality management systems and financial management systems. It is great to see that after two difficult years in the travel industry, sales of travel solutions doubled in the third quarter. The Company has been investing in the development of travel solutions for some time and we are pleased to report that both Booking Factory and the car rental solution Caren have proven their worth in the market. We will continue to invest in these two solutions and expect both to become sustainable in the next 12 to 18 months.

Sales at Healthcare Solutions have declined somewhat since Covid, but the project status is good and Origo is focused on expanding the development of its own software products for the healthcare sector. The Smásaga app has now been adopted by all home nursing staff in Iceland. The adoption of Smásaga has exceeded expectations and the feedback from users has been very positive. Home nursing workers in Iceland have embraced the solution, both to make their work easier and increase the safety of their clients.

Other software units posted good year-on-year revenue growth and the Company has achieved a leading position when it comes to user interfaces and front-end development. Consulting and development of tailored solutions for customers has also been successful, both in terms of projects related to digital transformation as well as the development of specific, scalable products in the field of business intelligence. The Company has utilised its knowledge in the area of data science and HR and payroll systems to create added value for the users of information systems. The sales pipeline for software projects is generally looking good and the project status is sound.

In October, Origo received the Creditinfo incentive award for outstanding innovation. We are proud that a Company that traces its history back 70 years has managed to reinvent itself again and again in recent years and is currently a leading innovator in Iceland in the field of software.

Applicon performed similarly to last year. Revenue increased slightly in the third quarter, but the operating result is comparable to last year. In recent years, the company has increased its focus on hire-purchase companies as well as enterprise treasury management. Applicon is also currently working on the development of two software products that will affect the future revenue mix. Investment in new products was up about ISK 22 million in the first nine months.

On 5 October, it was announced that Origo and a company managed by the US technology investment fund Diversis Capital reached a binding agreement on Origo's sale of its entire holding in Tempo Ultimate Parent to Diversis. Origo's holding in Tempo was just below 40% and the enterprise value of Tempo in the transaction was about USD 600 million. Under the agreement, Origo was due to receive a cash payment of USD 195 million in consideration for its holding. Origo's estimated profit from the sale is about USD 156 million, taking into account the book value and transaction costs. The sale price under the agreement has now been paid in full to Origo. Origo has already hedged itself against movements in the USD and it is clear that the sales proceeds will be about 28 billion ISK. The sale of Tempo will have a substantial positive impact on Origo's balance sheet as liquidity will be strengthened and the potential for internal and external growth will be significant. Origo's board and management continue to work on a proposal for the disposal of the sale proceeds and expect that in the coming days a shareholders’ meeting will be called where the board’s proposals will be presented.

The outlook for the operations is good. We are in the implementation phase of the strategy that we developed last year and have a lot of work to do, which will further strengthen the Company going forward - for the benefit of our customers, employers and shareholders. In the short term, we are looking at the opportunities created by the transformation of the Company's Managed Services division. We want to achieve increased productization, so that we can more easily maintain the quality of our services, lower prices and create a stronger framework around the business aspects of software development, while at the same better utilising our strength in the end-user equipment market. In the long term, we operate based on clear future priorities and will leverage the trust we have earned to strive for continuous improvement when it comes to our staff and technical environment, thus developing products that improve life. The Company is operationally strong and has good control of the investments that it has embarked on and can reduce if there is a change in the favourable IT environment".