Welcome to today's event where we have the pleasure to present Columbus. As you can see here on the front page, it's the financial results of Q2 2025, of course, in focus today, and the expectations for the remainder of the year. As always, we are joined by CEO Søren Krogh Knudsen and CFO Brian Iversen, who will take us through the presentation and answer questions in the end. As always, there's a box down below. You're very welcome to ask questions. You are very welcome to do it in Danish also, and I will try and translate to the best of my abilities. For now, I think I will hand the call over to you, Søren.
Thank you very much, Michael, and thank you to all that have joined us for this session. We look forward to taking you through the Q2 results and the first half year combined. As Michael was just saying, I am joined by Brian Iversen here, our Group CFO. I'll be taking you through a short financial highlight, some operational highlights, and then Brian will dive into the financial results in a little bit more detail, followed by an update on the guidance, or I should say a reaffirmation of the guidance as issued, and then we'll take the questions and answers. For Q2, we had a quarter where we had a slight decline. We continue to see some headwinds, particularly in the Nordic market, whereas the U.K. and the U.S. actually both continue the positive trend.
I think there may also be some headwinds on those markets, but we are able to perform with positive growth still in those markets. It should be said that Q2 had two fewer working days compared to the same quarter last year, as Easter fell in the second quarter and not in the first quarter. That impacted the top line negatively in the comparison. Our EBITDA declined by 27% when adjusted for the extraordinary income we had in Q2 of 2024. Overall, result of the weak revenue and efficiency performance in Q2 2024. It's mainly driven by the efficiency. Our contribution margin increased by 1%, this point to 19% in the second quarter of 2025, compared to 18% in last year's Q2. This is primarily due to improved project execution. This contribution margin is how we measure the gross contribution coming from the projects that we execute on.
It's essential for us driving the EBITDA improvement. Cash flow from operations increased by 13%. The cash flow improved from DKK 16 million in Q2 last year to DKK 18 million in Q2 of 2025 this year. Again, this underpins the soundness of the business and tight contract and control of the customer payment terms and also the quality we deliver with. The efficiency for M3 and digital commerce has increased significantly compared to last year. M3 is up by 13 percentage points to 68%, and digital commerce is up by 10 percentage points to 63% in June of 2025 compared to June last year. We always measure that it makes a lot of sense to look at just the last month as the efficiency is more an expression of the velocity of the business and is likely to continue into the next month and the next month.
We see fairly slow development of efficiency due to the size of our organization. Either it's going slightly upwards and/or slightly downwards. It doesn't move with step changes. What we've seen here is a really great increase from both M3 and from digital commerce. We're really happy about that. We've been working hard on developing pipeline and organization for almost two years for these two units. We're very happy to see the results coming in. Can you give me the next slide, please? And the next. Yeah. A little bit of a focus on the shifting market landscape. We currently have a lot of focus on how to scale our organization and how to optimize our organization going forward. It's true, as with most other businesses, that we do see a geopolitical and macroeconomic headwind at the moment, but it is very fragmented.
That means we have a lot of pockets of possible growth, and we have some pockets where we need to adjust a little bit on our capacity. The most dangerous thing is actually if you give all of the business units the same medicine, because that won't work. At the moment, we are very focused on going into each business line in each geographical market and assessing exactly what is required here. We have a strategic hiring plan for each of these units, but we also, where necessary, will do the downsizing of some roles if we see a shift in either the workload or the skills needed in the future. I would particularly mention here our Dynamics organizations. As I've just said before, we've just gone through a long period of developing our M3 and digital commerce division.
Currently, we have a lot of focus on our Dynamics division, the biggest division that we have. Going to the second point and pertaining to artificial intelligence, which is a very, again, a very hyped and very used word, we see some particularly interesting developments at the moment. The first one is perhaps what you would be expecting from us is that we're using the technology available for us. We've given some customer cases that you can look at, which basically aid decision support or the output of certain business processes, which is very interesting on its own and definitely part of the future. Where we're seeing something new is this agentic workforce, where particularly in our collaboration with Microsoft, we've had some meetings in the U.S.
just before the summer and gained a much deeper understanding of what the rollout will look like in the coming, I would say, one to five years on a much deeper level. Perhaps these examples are not so super interesting in terms of use cases, but really centered around how to take out all the high-frequency, low-complexity tasks with a completely autonomous agent workforce that will be able to act on its own. Technology-wise, this is definitely doable, but the interesting work for us also lies in the organizational transformation, all the governance required, how humans and the agentic workforce will collaborate. We see this as a great driver of work for us in the future. It's gone from very visionary to being some much more specific points on what will be required, how will this work, how is it going to be phased in.
The final point is just to say, following the close down of the strategic review we did to assess the ownership structure, we closed it down in May. We've taken this opportunity to look at a number of strategic assumptions that are baked into our strategy, but also opportunities which have perhaps come around since we launched that strategy. We're doing a, I would say, a health check. It's not a new strategy, but we are adjusting some strategic parameters where we think it makes sense to make these slight adjustments for the remaining one and a half years that we have left at the current strategy period. I would say in terms of the operational highlights, the way to look at the financial numbers also that Brian will be presenting now is that we have the efficiency under control. We have the contribution margin as you'll see under control.
We have the overhead costs under control. What we're really looking at right now to get back to the organic growth that we've presented in the past many, many quarters is the headcount. At the moment, we are a little bit cautious in terms of adding headcount. I was hoping that we could start to more aggressively add headcount now. Given the planning horizon is not the longest at the moment, there's still a lot of geopolitical, there's still a lot of macroeconomic uncertainties. We are running a little bit conservative to protect our EBITDA. What you really need to look at going forward is when we actually start to add a lot of headcount again. We are doing that selectively now, but I think it's still too early to really go on the accelerator.
This is the main tipping point of how to drive growth in an organization like ours. Good. Over to you, Brian.
Yeah. Thank you, Søren. Let me dive a bit into the results per business lines and per market unit as usual. We start with Q2 for the business line revenue. Overall, we saw a decline of 4%. The main contributor to that was our Dynamics business line that fell 9% in the quarter compared to the same quarter last year, especially the Norwegian and the Danish market saw a hit and see some headwind there. On the other side, as Søren mentioned, we do start to see a positive uptake in M3 and digital commerce, both at a small but positive increase in revenue. This is actually the first time in, I believe, three quarters that we see that.
We are happy to see that their effort in changing and pursuing opportunities is paying off. Data and AI had a flat development in the quarter. As data and AI is a fairly small business line, few project starts or postponements or changes do impact quite a lot on them. If we move on and look on the contribution margin, our business lines' capability of making profit, we saw a small decline in Dynamics with 2 percentage points from 23% to 21% in the quarter, whereas, and we are extremely happy to see that, M3 is starting to get back in the 20s with 21% in the quarter. Digital commerce, as you might remember, last year they had a major restructuring and therefore also this minus result, but they are also starting to get back in double-digit profitability.
That is a very strong turnaround that this team has made during the past quarters. A small dip or quite a big dip in data and AI, they have invested in some new resources to support the future growth, as Søren mentioned. We are, of course, taking people in where we see future possibilities. Let's have a look at the quarterly development in our market units on the revenue sides. Sweden, for the first time in many quarters, actually, we start to see that it's bottom out. It's a flat development. We start to see some lights and some uptake over in our Swedish markets, which is the biggest, as you can see. We're happy to see. On the other hand, Denmark and also Norway, if we take these two, saw a significant dip quarter -over -quarter.
We do see definitely some postponement and hesitance in new projects and also existing projects where we have add-on sales that is postponed now and then. U.K., still positive, a bit more slow than we normally see in the double digits, but it's still good activity over there. That was all for the quarter. We also have our status for the first half year. I'll do it quick. As you mentioned before, Dynamics down with 5% also in both Q1 and Q2, whereas both M3 and digital commerce for the first half is down with 4% point. We do start to see that this is turning, as you also saw in Q2. Data and AI, they had a very strong Q1, not so a flat Q2, but overall, we see a good uptake in that business line for the first half year.
On the contribution margin, as Søren mentioned, also for Q2, but the same for the first half, overall, a 1% point increase in how we manage our business in the business lines, which is a very strong development in a period where you actually see a slight decline on top line because that do require adjustments of your capacity. As everybody knows, consulting, you don't take people in and out overnight. It's a difficult decision that you have to take now and then. As you have mentioned, both M3 and digital commerce is starting to get back on an approved level, whereas Dynamics is running flat due to the quite heavy hit on the top line for the first half year. Good. Let's have a look on my last slide, is the service revenue per market. Overall, a decline in the different markets for the first half.
We do see headwinds, but as our U.K. is still seeing a nice strong growth of 10%, our Scandinavian markets are still seeing some or experiencing some headwinds due to project delays, as mentioned in as under Q2 as well. Good. That was all for our fast walkthrough of our business lines and markets on top line and profitability. We go to the outlook slide. As already communicated back in July, we did take a serious look at how does the rest of the year go and what do we see as a forecast from our business units. After some thorough discussions and deep dives, we decided to adjust our outlook to hit a revenue of around $1.7 billion, same level as last year.
Our EBITDA margin around 7% -9% is our forecast or outlook on that one, down from the 10%- 12% that we forecasted back when we announced it in the beginning of the year. That's all for me. Let's move to questions so we have some time for that.
Perfect. Let's jump into that. Do you experience some customer loss or is it only postponements?
This is almost exclusively driven by postponements. When you have the size that we have and the number of customers we have, from time to time, there will be a customer leaving. I would almost say that number is lower than what it usually is simply because of the inactivity in the market.
The problem that the industry has, including Columbus, is that fewer big investments are initiated, and the duration to get from an investment decision by a customer to the start of a project now takes longer than in a normal business environment. If you look at that process, it goes from issuing some sort of RFQ, RFI, initial dialogue, an RFP will follow that. The tender document, we will submit our proposal. We will compete with four to six other vendors. We still have a very high win rate, so we're very good at getting down to the last two and also the last one. That process is still fairly normal. What then follows is what is exceptional in the current market, which is that going from being the last one to signature and start takes longer.
Typically, the board will become much more deeply involved than in a normal environment. This is usually decisions taken by the executive management. This now goes to the board meeting. Perhaps it can't be handled within one board meeting. The board asks some questions, and then they reconvene in three months. We're losing half a year. That's the main problem.
Does that mean that your opportunity pipeline, or actually your pipeline, is growing? I guess that kind of must follow this, that the longer it goes out, the more buildup you have in potential pipeline. I know, of course, it's more uncertain when it will get executed, but so far you're seeing the pipeline growing.
Yes. We're definitely seeing the pipeline growing. We work with a weighted pipeline, but where we're really seeing the growth is the number of entries. Given that it's a little bit unpredictable how long the decision-making process will be from some of our customers, they usually communicate actually a set time for us. Okay, this is the expected contract signature date. They say that right at the front of the process, but very often they have to postpone that. That makes it a little bit more difficult for us to resource plan. If you will, we overbook a little bit more. We work on more entries and more prospects than we normally would to ensure we have the activity level or the output, if you will, at the end.
Does your 2025 guidance include expectations of market improvement in the second half?
It does not. We don't think we, I mean, Brian was just alluding to some things. At the moment, we're seeing Sweden, and we're seeing Sweden coming back to flattish developments after quarters of negative growth, which is positive. We see some of our business units obviously performing, but we see that more as a result of our own work. Our overall assumption is that the markets will not improve significantly through the remainder of 2024. We see this business environment as at least lasting until the end of the year. Of course, we reassess. We do that quarter by quarter. We do reforecasting. We have our business reviews. For now, we are not seeing any big uptake, and we've not planned with that as such.
Your guide for flatish growth, and you had negative growth, is that the comparison base that is the reason why you don't expect any uptake? Is some of it also driving not better markets, but you have more visibility on plans getting executed in the second half?
Some of that, and then also, the way we work with this is quarter by quarter comparisons of the forecast. I think some of this is also down to the performance of Q3 and Q4 last year and the relative strength. Q1 and Q2 last year were actually very strong quarters for us. Yeah.
Perfect. Is the 2025, 20 26 goals on your EBITDA margin still achievable? You alluded to that you were looking at your strategy and maybe realigning it a little bit, but do you still believe the goals for EBITDA margin is achievable?
Our long-term goals included both the EBITDA margin of 15% and a CAGR of 10%. In isolation, as you ask only about the EBITDA margin, that would definitely be possible and would also be very doable, but it's the combination with the organic growth rate also on the top line that makes it more tricky. Otherwise, there are simply parts of the business where we're currently invested that we could just slow down or stop investing in. For now, we're sticking to our long-term guidance. I think it goes without saying that having more favorable business conditions now would be better in terms of reaching our goals. We're continuously looking at ways of developing the business positively. It is more difficult under the current business circumstances.
Has the strategy process had any negative effect on your growth? I'm thinking it will always draw some attention from you as management and maybe on the lower-level management. Do you feel there's any explanation here if the strategy process has taken some of your growth out?
I don't think it's fair to say that it's taken any of our growth out. Of course, I would say there are two very minor negative effects. One is that I've tied up some of my own time and the group management's time, M&A functions, legal in preparing and running this exercise, but I also see a lot of value coming from it. I don't think that's a significant factor to consider. The other one, which is a significant factor to consider, is the interest in this exercise from our employees. The customers are not disturbed by this exercise, but the employees, of course, have a keen eye on what they think will happen. What will it mean for them? Is there a geographical change coming? Is there another strategic angle being introduced? That does cause some, potentially, if not managed carefully, it can cause some defocusing of the organization.
I don't think we've experienced that. We've communicated very transparently and clearly with our organization, and it's not been costing us growth.
Perfect. One of your thoughts on M&A activity in the current market, you alluded to that you had also learned, you had taken some lessons out, probably from your own business, but you must also have met a lot of market pricing and so on. Any thoughts on M&A in this current market environment?
The first thought is obviously that any larger acquisition or merger is often built on a number of assumptions, planning assumptions, financial planning assumptions, and making assumptions from when we announced the strategic review to when we closed it down proved very difficult because there was such an unpredictable, so much turmoil, and that is not conducive to reaching a good outcome. Otherwise, the takeaway is there was a lot of interest, as we expected. Otherwise, we wouldn't have started it. I think I expect that at some point, there will be an element of ketchup effect in this M&A market. There are a lot of things waiting.
There are some of the private equity players that need to, they have things in their portfolio that are reaching the time span where they would like to divest them again, and they need to do some of those divestitures before they're really interested in going into something new. I think there's hesitation, I would say. There's a lot of analysis being done. There's a lot of observation. There's a lot of dialogue, but there's a little bit of hesitation. Everybody's looking for a little bit more strategic clarity before you can put pen to paper.
Is your M&A still a part of your, it was part of your 2026 strategy, is that still on the table or was that, you might say, washed out with the strategy period in your strategic process ending for your own?
I think maybe you asked about sort of some of the consequences of running a strategic review before, and I mentioned two. I could have said perhaps a third one is that during that time where we're running the strategic review, obviously, you're probably not as active as you normally would be on the acquisition side. Given that we freed up that capacity, we are looking at what the market has to offer. We still find the debt levels of Columbus as very low, cash flow from operations very strong. We do have the capacity to acquire if we want to. We have an M&A function that continuously scans the markets, and we will continue to do that. Hopefully, we'll find something which is really good.
I think the one thing that perhaps hasn't moved enough yet is the price point of the targets we look at, but we can start to see some movement in that direction as well.
A little bit about the competitive landscape. Do you see any change in Dynamics, maybe new technologies affecting this? Is some of the slower growth in the Dynamics business some kind of a change in dynamic landscapes or structural changes in the market, or is it the uncertainty driving this?
I would say it's mainly the uncertainty. There are perhaps some pockets where you could say that a lot of the work that we've been doing is taking on-premise solutions to cloud-based solutions. In some selective, particularly if you take a market like Denmark, we've reached some level of maturity. Our workload is changing slightly. In all, the majority is just driven by postponed investment decisions.
I guess there could also be some price pressure, what you might say, but your contribution margin doesn't look like that. Pricing pressure, no, yes?
Obviously, in a market with a little bit of lack of demand, there might be some pricing pressure. We stick to our strategy. We stick to the pricing strategy. We stick to the long run. I don't think there's much to, there wouldn't be a great benefit from us in protecting maybe 1 or 2 percentage points on the top line and then ruining the commercial positions in the long run. We stick to the approach that we've used in the previous 3 or 4 years.
Of course, you already touched a little bit upon it about this agentic workforce. Actually, I guess that's a translation saying you replace a worker with an autonomous AI. Any thoughts? Some kind of a timeline, I guess. Maybe you could also comment that I saw this MIT report saying 5% doesn't get, only 5% of companies get a lot out of their investments. It's not the technology. It's the implementation. It's the design and so on. A little bit about your role in the future in such a world as an IT consultant. Any thoughts and maybe a little bit on the timeline? When do you see this really being launched? I guess they are partner-dependent, but you got a little bit of view into that.
Yes. I think this is one of those classical cases where you, during this hype phase, massive expectations are built up. Then we're now approaching a point where some are starting to ask, okay, we're expecting more change by now. You reach this valley of despair. If you look in hindsight, perhaps 12 months from now, you will see that we are using this technology increasingly, but it takes longer than initially expected. When you have these initial prophecies, like in six months, you won't be able to recognize the world. It doesn't move that fast, but it does move.
Some of the things that we are seeing right now and which we are investing in is the, and what I tried to explain before is if we take this agentic workforce, which is basically autonomous entities broadly resembling the job description of a human being, sort of the span of control, the business processes they work in, perhaps even the workload, but perhaps not so much the workload because this scales kind of infinitely. The phasing in of technology like that requires a lot of organizational development work, operating model work, rules, governance, security, HR, and that is often underestimated. We tend to focus, you know, is the contextual understanding of the model good enough? Is the decision accuracy good enough? It is.
Now, I think one of the major obstacles to overcome is more like the broad scale-out, which is a very profound business change for all our customers. This is where we will have to do some of the heavy lifting with them, coming up with the designs, coming up with the governance processes, and all of that. As I said before, I think this starts now. This became very clear to us, especially how Microsoft will approach it during the first half here of this year. It became very, very clear how they want to approach this. I think now we're in sort of a mobilization phase, and then we'll see in the second half here of 2025, we'll see the initial projects coming through, and then it will be a very big workload. I said one to five years.
In reality, I don't think we'll be done in five years. There's a lot of organizational change that needs to happen.
Up in the helicopter, the IT consultancy, which is your business, is that still needed in that world, needed more or needed the same? Some thoughts about that.
It's always a good question. I mean, it's been asked many, many times before. I've just mentioned this one, the agentic workforce. I think that will be the next driver of a lot of work for companies like Columbus. One to five years, perhaps even up to 10 years, will be a major driver of work, slightly different from what we know now. I can also see other things like the convergence of some of the functional software silos. We're working a lot in ERP. We're working also with digital commerce, but we're starting to see some convergence there with transport and warehouse management systems that will start to either become a much richer functionality within ERP, or we will see some of our partners like Infor investing heavily in some separate platforms like that.
I think you can assume that the work we're doing now will probably not be there in five years from now, but I think you can also assume that there will be a lot of other things that we'll be working on, as always.
Perfect. I think we will let that be an outing of this event. Thank you to you, Brian and Søren, for taking us through your results. Thank you for the audience listening in.
Thank you.
Thank you.