Netcompany Group (NETC) Q1 2025 earnings summary

Executive summary

• Revenue grew 9.1% year-over-year to DKK 1,744.3m in Q1 2025, with net profit up 31.6% to DKK 121.7m and gross profit up 16.1%, driven by increased activity and higher license revenue, especially in SEE & EUI.

• Adjusted EBITDA rose 24.4% to DKK 307.3m, with margin improving to 17.6% from 15.5% year-over-year.

• Major new contracts were secured in Denmark, Greece, and the EU, including large public sector IT framework agreements and significant private sector wins.

• Workforce expanded by 4.4% to 8,150 FTEs, mainly in international operations.

• The SDC transaction/merger is progressing, with regulatory approvals granted and closing expected mid-2025, followed by integration and resumption of share buybacks.

Financial highlights

• Gross profit increased 16.1% to DKK 515.1m, with group gross margin up to 29.5% from 27.8% year-over-year, supported by higher license revenue.

• Free cash flow improved to DKK 67.9m from negative DKK 4.9m; cash conversion rate rose to 47% from negative 4.3% year-over-year.

• Debt ratio reduced to 1.2x from 1.6x, expected to rise to 1.5x by year-end due to SDC transaction and share buyback.

• Days sales outstanding decreased to 57 days from 66 days.

• Diluted EPS increased 36.9% to DKK 2.56.

Outlook and guidance

• Full-year 2025 revenue growth expected between 5% and 10%, with adjusted EBITDA margin between 16% and 19%; guidance excludes SDC transaction impact.

• Share buyback program to resume post-SDC closing, targeting DKK 2bn by end-2026.

• Revenue visibility at end of Q1 2025 was DKK 5,628.9m, up 3.8% year-over-year and 15% sequentially from end of 2024.