Earnings Call: Q2 2025

Aug 12, 2025

Ole Kjølvik

CEO, Arribatec Group

Hi, and welcome to this second quarter 2025 investor presentation. My name is Ole Jakob Kjølvik, and I'm the Interim CEO of Arribatec Group ASA. The full second quarter report was published earlier this morning to the Oslo Stock Exchange. I will now use some time to share some of the highlights from that report. Some of you maybe noticed the title of this presentation, "On Our Way to the New Normal." That reflects quite well the position that we are in. We haven't reached our full potential yet, but we have made solid progress, and I will now share some of that with you. The second quarter marks another large step in the right direction. The second quarter of 2025 shows strong growth and significant margin improvements. Revenue reached NOK 142 million, a 14% increase compared to the second quarter last year. Operating expenses were down 10% compared to the second quarter in 2024. From this quarter, we have started to include EBITDA in our reporting, as we believe this over time will reflect our cash generation better. EBITDA improved to NOK 13.9 million from NOK 20 million in the second quarter last year, with an EBITDA margin of 10%. This also reflects NOK 80 million year-over-year annualized EBITDA improvement. Cash at the end of the quarter was NOK 47 million. The strong growth and improved margins came with 49 less FTEs compared to Q2 last year. We signed 456 new contracts and scope extensions for a total value of NOK 104 million, bringing the last 12 months' total to NOK 595 million. I will discuss more about both the sales performance and our cash balance later in the presentation. Total revenue for the quarter was NOK 143 million, with recurring revenue reaching NOK 67 million, now accounting for 47% of the total. EBITDA was NOK 13.9 million, with a margin of 10%. Norway contributed with NOK 98 million in revenue, a 7% increase year-over-year, representing 69% of the total revenue. Outside Norway contributed with NOK 45 million, a 33% increase, representing 31% of the total revenue. On revenues, business services had a strong performance with 24% growth year-over-year. Cloud showed continued growth with 5%, while EABPM experienced a temporary 7% year-over-year decline, mostly due to reduced resource availability caused by a high number of parental leaves, sick leaves, and some employee departures. All business areas delivered positive margins and double-digit EBITDA growth year-over-year for the first half of 2025. We continue to see revenue growth year-over-year, with recurring revenue representing 47% of the total. Compared to the second quarter last year, recurring revenue grew by 13% in absolute terms, even though its share of the total revenue remains unchanged. Outside Norway, recurring revenue represents 31% of the total and shows a growth compared to the first quarter last year of 38%. This growth is driven by continental Europe and the UK. We ended the first quarter with a cash balance of NOK 65 million. Our EBITDA for the second quarter was positive with NOK 14 million, which contributed positively to our operational cash flow. We saw a reduction of NOK 3 million due to changes in contract assets, and working capital movements had a significant impact, reducing cash by NOK 27 million, mainly due to two VAT payments in the quarter. Other adjustments amounted to a negative NOK 2 million. As a result, our cash, cash position at the end of Q2 was NOK 47 million, including NOK 6 million in restricted cash. It is important to note that our cash flow generally tracks EBITDA, but quarterly variation will appear due to timing and operational dynamics, especially related to working capital and contract assets. We continue to monitor these factors closely to ensure strong liquidity and financial flexibility. In the second quarter, we signed 456 new contracts and scope extensions, totaling NOK 104 million, compared to NOK 177 million in the second quarter last year. This variation is partly due to the large EEAS contract secured in the second quarter of 2023, as well as some natural fluctuations in the business development activity. Given the high level of activity we are experiencing and with no signs of it slowing down, we need to strengthen our sales capacity. That means adding more sales resources and increasing our efforts in the marketing and meeting bookings. Some of the key deals we secured this quarter, including both contract extensions and new logos, are highlighted on this slide. Energy and public remain core industries to us, alongside education in the UK, which continues to show strong momentum. At the same time, we are seeing a broad mix of new clients across all markets and industries where we operate. We truly appreciate the trust our clients place in us. It is a direct result of the dedication our employees show every day, working closely with clients to help them improve and succeed. In summary, the second quarter of 2025 clearly demonstrates that our efforts to become more lean and more focused around our core businesses are yielding results. We are well on our way to a new normal. The 14% increase in revenue achieved with fewer FTEs and at the same time reducing operating expenses and making sure that we have high sales momentum also clearly demonstrates that we are making meaningful progress. This is further reflected by our annualized EBITDA improvement of $80 million. That was it for now, but if you have any questions, feel free to send them in. As far as I can see, we haven't received any questions, so I would just like to take the opportunity to thank you for your.