Karnov Group (KAR) Q3 2024 earnings summary

Executive summary

• Achieved strong margin expansion in Q3 2024, driven by integration synergies, AI solution launches, and the next phase of integration in Spain.

• Completed technical carve-out in Spain, eliminating integration risks and enabling a focus on profitable growth with new leadership.

• Appointed Alexandra Åquist as Country Manager in Spain to lead the next growth phase.

• Delivered on cost synergies and optimized the business portfolio, with divestments impacting net profit.

• Launched AI-supported legal information solutions and flagship products in all markets, with strong customer feedback.

Financial highlights

• Net sales reached SEK 648 million, up 5% year-over-year, mainly driven by new customers and the Schultz acquisition; negative currency effects of -2.4% (SEK -15m).

• Adjusted EBITA/EBITDA increased 23% to SEK 143 million, with margin rising to 22.1% from 18.7% last year.

• Adjusted free cash flow improved to EUR 32 million in Q3, a significant year-over-year improvement.

• Leverage stood at 3.1x EBITDA (LTM) at the end of September, slightly up due to currency and seasonal effects.

• Divestments of Ante, Legal Cross Border, and Procurement Link impacted net profit by SEK 23 million.

Outlook and guidance

• No changes expected in seasonality; strong renewal season anticipated in Q4 for Region North and Q1 for Region South.

• Ambition to generate EUR 20 million in annual run rate synergies by end of 2026, with EUR 9 million already realized by Q3 2024.

• AI solutions expected to drive at least 30% price uplift on new packages and services.

• Next phase of integration in Spain aims to deliver further profitable growth.

• Ongoing focus on cost-efficiency initiatives to improve profitability and leverage.