Nagarro (NA9) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached €243 million, with 5.6% year-on-year growth in constant currency and 5.0% organic growth, despite a slow demand environment.

• Adjusted EBITDA margin was 14.3% in Q3 2024, with strong operating cash flows and net profit of €12.8 million.

• Data and AI remained key drivers in client conversations, with continued innovation and strong client satisfaction (CSAT at 91.6%).

• Existing client loyalty remained strong, new clients were acquired, and margin pressure persisted due to slower-than-expected growth.

• Notable developments included ongoing take-private talks and the acquisition of FWD View Limited in the UK.

Financial highlights

• Q3 2024 revenue was €243 million, up 0.5% quarter-on-quarter in constant currency, with gross margin at 31.5% (current method) and 27.4% (previous method).

• Adjusted EBITDA for Q3 was €34.6 million, and net profit was €12.8 million.

• Operating cash flow for the nine months was €64.9 million, with net cash inflow of €33.1 million.

• Cash balance at quarter-end was €141 million.

• Top five clients accounted for 15% of Q3 revenues.

Outlook and guidance

• Full-year 2024 guidance is approximately €960 million in revenue (constant currency), gross margin of 30% (new method), and adjusted EBITDA margin over 14%.

• Management advises disregarding previous outlooks beyond 2024 due to market uncertainty; analyst consensus is seen as a fair estimate for future performance.

• Management expects CSAT to remain near 92% for 2024.