Proact IT Group (PACT) Q2 2024 earnings summary

Executive summary

• Revenue grew 5.8% year-over-year in Q2 2024 to SEK 1,271.9 million, with 5.5% organic growth, and 1.7% for H1 2024 to SEK 2,463.2 million, driven by strong system sales and stable services performance.

• Adjusted EBITA rose 18.8% in Q2 and 38.4% in H1, with margin improvement to 7.6% in Q2, supported by higher gross margins and efficiency gains.

• Earnings per share doubled year-over-year in Q2 to SEK 2.13 and in H1 to SEK 4.37.

• Strong cash flow from operations (SEK 130 million in Q2, SEK 234 million in H1) and a robust financial position enabled a share buy-back program and continued dividend payments.

• Increased focus on cybersecurity and cloud services, with new contracts, recurring revenues, and the launch of new cyber services, including a global first partnership with NetApp.

Financial highlights

• Q2 2024 revenue: SEK 1,271.9 million (+5.8% y/y); H1 2024: SEK 2,463.2 million (+1.7% y/y).

• Adjusted EBITA Q2: SEK 96.7 million (+18.8% y/y, margin 7.6%); H1: SEK 191.2 million (+38.4% y/y, margin 7.8%).

• Gross margin Q2: 25.2% (Q2 2023: 22.6%); H1: 28.6% (H1 2023: 25.4%).

• Annualized recurring revenue grew 5.4% to SEK 1,771 million, now 36% of total revenue.

• Cash flow from operations was SEK 130 million in Q2 and SEK 234 million in H1; net cash position at SEK 122 million at Q2 end.

Outlook and guidance

• Management expects continued organic growth, supported by strong demand for digitalisation, cybersecurity, and AI solutions.

• Macro environment is improving, with new EU cybersecurity regulations and stable conditions expected to drive further growth.

• The company is positioned for complementary acquisitions in Europe, leveraging its solid financial position.