Netcompany Group (NETC) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue grew 10.5% year-over-year to DKK 1,650.2m, with strong performance in Denmark, Netcompany-Intrasoft, and the Netherlands; Easter timing contributed about 3 percentage points to growth.

• Adjusted EBITDA margin improved to 16.3% in Q2 2024, up from 13.1% last year, with net profit more than doubling to DKK 118.8m.

• Free cash flow turned positive at DKK 148.2m in Q2 2024, a DKK 220.7m improvement year-over-year, driven by EBITDA and working capital improvements.

• Significant new contracts were won in Sweden, Denmark, the UK, Greece, and with the European Medicines Agency, strengthening both public and private pipelines.

• Share buyback program for 2024 increased to over DKK 700m, with a new DKK 150m tranche initiated.

Financial highlights

• Group revenue rose 10.5% year-over-year; Denmark up 14%, Netherlands up 61.2%, Norway up 7.5%, Intrasoft up 10.9%, UK declined 16%.

• Gross profit margin improved to 29.6% from 27.3% last year, mainly due to Denmark, Netherlands, and Norway.

• Adjusted EBITA increased 53.3% to DKK 221.9m; net profit more than doubled to DKK 118.8m.

• Free cash flow was DKK 148.2m, a turnaround from negative DKK 72.5m in Q2 2023.

• Days sales outstanding increased by 5 days to 73, expected to reverse next quarter.

Outlook and guidance

• 2024 revenue growth expected between 7% and 10%, with adjusted EBITDA margin between 15% and 18%.

• Midterm 2026 targets reiterated: revenue of at least DKK 8.5bn and adjusted EBITDA margin above 20%, with at least DKK 2bn cash to shareholders.

• Intrasoft expected to deliver 5%-10% average growth; Denmark 7%-12%, UK 10%-30%, Norway and Netherlands 20%-30%.

• License revenue expected to be more backend loaded in 2024, affecting revenue visibility.