Good morning, everyone. Welcome to the interim report for the first quarter 2025. We have the same agenda as you know from the past. We—I will start with the highlights of the quarter and deep dive into the business review section. Then we have Bent Hammer, our Chief Financial Officer, that will bring us into all kinds of details about the financial review and some comments about the outlook. It is also possible to post questions during the presentation, and we will take some of the questions as part of the summary in the Q&A session. If there are any more details that you would like to discuss, Bent Hammer and I will appreciate that we can have these kind of follow-up talks after the presentation. Okay, let's start with the highlights for the first quarter.
The main message on a high level is actually we are showing growth and margin improvement, especially if you look at the sequential improvement. It is very solid, both in terms of revenue and profitability, driven by improving utilization and also strong sales efforts and sales pipeline. We also have talked about the Enter Ukraine with Itera, which has been very—uh, we see a strong momentum on that, in that offering, new offering that we brought to the market that also gradually impacts the revenue and profitability during the year. The last but not least, also AI is a part of our industry, but also the community all over the place. We are also embracing AI across our business. We are actively looking at how we can also apply AI to increase our growth, but also not at least the productivity, both for Itera and also for our customers.
That is at a very high level, and I will go into each of these parts during the session. Let's have a brief look into the figures. We delivered in the first quarter NOK 232 million, which represents an organic growth of 1%. Let's keep a little focus on the top line because, as you see on the graph, we have also shown a year-over-year growth per quarter. We are coming from a negative growth in the previous quarter, in 2024, the fourth quarter, we have 5%. In the third quarter 2024, we also had 5% negative growth. The reason for that, as you remember, it was one of the main, largest customers that Itera, that we reduced the capacity because there was a global player that was involved in this customer. We were reducing the capacity substantially.
After, in November, we had a win back on that customer. If you look at that customer today, which was in the financial services sector, we are more or less 80% back to the run rate that we had before this change from the customer side. That, you know, change in the customer mix was the main reason for the negative growth last year. Now, in this quarter, we managed to return back to 1% growth, which I think is quite impressive, I will say, because of where we're actually coming from based on this large customer that we actually lost in the beginning last year. That's the top line. If you look at the margin, we are delivering 9.1% margin, compared to 8.4% margin the previous, the similar, quarter last year.
If you look at the sequential development coming from 3.5% in the fourth quarter, going to 9.1% in this quarter, the fourth quarter, first quarter in 2025. That is quite a large improvement we managed to do. We had also an adjusted fourth quarter on 5.6% in the fourth quarter 2024. In any way, this is really a good improvement, strong improvement from the fourth quarter into the first quarter 2025. If you look at the operational cash flow, the last 12 months, rolling 12 months, operational cash flow showing NOK 76 million in the first quarter. That is also up from NOK 24 million, the rolling 12 months, in the fourth quarter 2024. We are seeing that the operational cash flow is also improving. If you look at the number of employees, we had 707 at the end of this quarter.
That is some reduction to the first quarter last year, and 18 people since the fourth quarter of 2024. The number of employees, we really believe we will also start to increase again because we also see a lot of growth opportunity in the market. We do not believe the number of employees will be even more reduced. I think we are at the bottom, and we are also looking at opportunities to grow the number of employees going forward. That is the figures at a high level. Bent Hammer will bring us more into details for all the financial in the financial review section. Let's also have a small comment about the market review because we believe and see that the market demand remains soft, but we see some slightly improving after the slowdown in the past couple of years.
However, we see also the increased geopolitical uncertainty. For the time being, we have not seen any effects on the key industries Itera. Of course, there is increased focus on Europe, which is quite interesting because Itera has a very strong presence in Europe. The ongoing shift towards cloud and data-driven solution integrated with the AI capabilities is showing very substantial growth. I think we can look at growth rate above 10% in this area. There are also new sectors like the defense and airspace that are becoming a very fast-growing market for utilization, largely driven by the war in Ukraine. Of course, there is some softness in the market still, but there are also several growth opportunities. It is possible to also grow going forward, despite, I will say, also the uncertainty and, through the geopolitical, and not at least after the new Trump administration.
That was the highlights for this quarter. Let's go into the business review. I just want to start with, because also if you refer to the Trump administration, I just want to reconfirm that Itera is not doing any changes in the value. We have diversity as a key part of Itera, has always been, and we will just continue in the same way and actually strengthen that because diversity is really a big advantage for Itera in order to develop our solution, our innovation capability, and not at least also growing the company. Our value connected to trust, transparency, entrepreneurship, diversity, it will stay as it has been, and we will actually go further in this direction. If you look at Itera in general, as you see, we have very strong Nordic roots, but we are also a very strong European presence.
I think that's quite interesting when we look at the geopolitical situation. We are a vibrant team of business advisors, designers, and technologists working across the border, according to one model, delivering services in a very customer-centric way in this area. We have 15 offices in Europe. We have presence in eight countries, and at least we have also been in Ukraine for 17 years. If you look at Ukraine, I think you all know a lot about the citizens in Ukraine. We have Kyiv, Lviv, and we really have a very strong footprint there. Also before the invasion, I think Kyiv and Lviv were one of the largest hubs of Itera. Of course, it has impacted Itera during, after the invasion, but we are also looking for a lot of opportunities in this area.
I will just bring your attention to Itera's going forward because we have actually two main offerings. One is actually our core business offering, as you already know, providing a comprehensive range of services to accelerate the sustainable digital transformation in our key industries, which are financial services, energy industries, and public sector, and some others, right? The other one is actually we call it responsible business, where we provide expert advisory services for businesses seeking to enter, to rebuild, to learn from, and protect Ukraine.
In this area, we have the Enter Ukraine with Itera offering that I will also bring you more attention to in this presentation, but not at least also we are going into the defense and airspace, because that is also something that is a high-growth market that we also have very, we can leverage from our position in Ukraine and also bring the knowledge from this sector into Europe because that is also an extremely important part of Europe's security going forward. Okay, let's start with the core business offering. I just show you one slide about the sector development of Itera. As you see, financial services is the largest sector for Itera. It's, in the first quarter, it was representing about 39% of total revenue. It's a little down from 2024, which represents about 47%.
One of the key reasons for that is this large customer in the financial services that we actually lost in the beginning, but we managed to have a win back with effect from November, right? The other industry which is growing is energy and industry, which is growing for 22% to approximately 24% in the first quarter. We also have public and organization as a third sector, which is more or less the same, but I think it will also increase going forward because we also focus on increasing the capacity also in this sector. The remaining 24% is quite a number of different sectors. All in all, 75% of the revenue of Itera is connected to FSI, energy and industry, and public and organization.
By having this focus, it's much easier for Itera to really build business understanding about this sector and also combine this sector. It's also easier to go across border to bring value from one customer in one sector and bring the same value to another customer in another country. These kind of sectorization is also important in order to have, to do, to develop our international growth strategy. I also would like to bring the attention to this slide. I know that you have seen several times, but it's really a strong business transformation enabled by digital transformation. It's still a lot of technology that we call legacy shown on the left side, but also a lot of customers that have moved to the cloud. About more than 50% are utilizing cloud, public cloud in some way or the other.
Most of these applications just moved from the legacy, the on-premise data center into the cloud, but hasn't been reorganized to utilize the cloud capability. There is a large opportunity in terms of applying cloud in order to really piggyback on this capacity, this innovation, whatever, and also enable the business transformation. AI is really accelerating this transformation from legacy into cloud-based solution that also enables the business transformation. Just to show you that this is also impacting our industry, this is a reference to Gartner saying that by 2027, it's 3x ahead, generative AI tools are expected to significantly reduce modernization costs by about 70%, right? It's 70%. When you're going from legacy, moving into the digital transformation, as is in the previous slide, that effort will be reduced by 70% and not at least driven by AI.
Just to show you one example of what Itera has conceptualized during this quarter is looking at what we call assessment of application. On the left side, you see how we normally do application assessment. You do this kind of app assessment because you would like to move the application from the legacy side into digital transformation or in the cloud-based environment. You need to evaluate this legacy system. You need to identify inefficiency, whatever. Always, it is a very complex environment that you need to look into. There are a lot of integration issues. It is incomplete or not updated documentation, if any. The data are in silos. There is a very resource-intensive effort in order to do this kind of work. You might be missing some skills, whatever. Not at least, a lot of the legacy is quite exposed to security risks.
That's on the left side is how we have done this and taken weeks and months to do some kind of assessment of an application. By using AI tools on the left, on the right side, you can do it much more automated, right? You will identify immediately inefficiency. You can build and do this kind of automated process to always have up-to-date architecture and looking at the dependency. You can look at the system resilience. You can identify secure cybersecurity risk and also, regulatory how your system are according to the regulatory requirements. Of course, it will have a tremendous efficiency increase and not at least also making faster innovation. We are going from, in terms of this kind of assessment, going from weeks and months for a large team to this kind of the similar assessment in minutes and hours.
This is just an example of what Gartner is telling about this 70% reduction. We are really keen on learning from this and also conceptualizing our offerings to make sure that we are delivering even more value to our customer and not at least also increasing the productivity and our, and also the growth of Itera. Yes, I just also in terms of service offering, I just also want to put some attention on the experience department of Itera because when there is a downturn in the market, we always see in the past that it starts with these kinds of services. What we see and experience at Itera, we have a remarkable utilization rate of 80%-90%. That is not typical when there is some kind of declining market.
I just want to appreciate the work that Andre Nymoen and his leadership and the team has done because they have really looked at, okay, there's a downturn in the market and they have really managed to integrate the offices into Itera and have focused on very mission-critical design solutions. An example of customers is Kongsberg Digital and Viken Skog is two very interesting customers where we have really changed the offering and integrated into Itera. We have these kinds of services available for all the locations because we are not only working as a specific service offering, but it's really a part of the full range of the services that Itera is providing to our customer.
I'm very happy to see the growth of this unit of Itera and not at least also bring in profitability, which is not the normal way, which is quite not normal when there is a downturn in the market. That's just to show you that also despite the market, we can talk about the challenges in the market in some way or the other, but I think the improvement that Itera is showing is really because of people like Andre Nymoen and the team that really has made this change to make it very profitable as a separate, as a focus offering in Itera. Also, one comment about what we also see in terms of cloud, applying cloud technology. The biggest giants are in the U.S.
Of course, with the new Trump administration, we also need to look, and now our customers are also asking, because they feel that they might be a little too dependent on the tech giants in the U.S. We are also looking at, because of our cloud and application services, how we can reduce the dependency on very specific providers or services in the tech space also. That also makes a lot of opportunity within Europe, that the players in Europe also will have a strong advantage compared to the past. I also see that the big giants like Microsoft are also repositioning themselves. They are also building and supporting Ukraine according to, supporting Europe according to European laws.
I just want to mention that this is also, I will say, important for Europe to build, build their own digital future. I think also that might also have a big impact on the IT sector in Europe, that they also have a lot of benefits by having more data located in Europe and also make sure that the resilience of the IT solution within Europe is strong, because we are, I think we are learning a lot from the potential threats from the U.S. That also, I believe, is also a big opportunity for Itera's presence in Europe. Okay, let's turn to the other, responsible business. This is something that Itera has been working on since 2023. It's a dual track. We focus both on the business side of it, but also the humanitarian side.
We combine business and humanitarian, and look at how could we support Ukraine in their recovery. Our mission is to contribute, meaningfully to Ukraine's rebuilding process by helping Nordic-based companies to enter, rebuild, and learn from and protect Ukraine. Just to show you three directions that we have talked about during the last two years, I will say we started with the temporary bridges. This was in 2022, 2023, where we provided 370 m of temporary bridges to Ukraine. Of course, that was extremely important in the early phase of the war. We have also, as you see, the energy system has been, you know, damaged a lot from Russia. We are very happy to be able to provide through partners like Bergen Engines 160 MW with power generating gas engines to Ukraine.
We really believe we can expand that to maybe 400+ MW . Just to put that into perspective, President Zelenskyy was asking for his 1 GW during, it was in June 2024. If Itera through Bergen Engines and other players might bring in 400 MW, according to that goal, we really contribute to 40% of that target that was set by President Zelenskyy in June 2024. I think it is quite amazing how Itera is managing these kinds of capabilities to Ukraine. The last, but not the least important track in terms of housing, new homes, hospitals, military barracks, we are also heavily involved in that business, together with Moelven, because they really need to scale up their production capacities.
Moelven, with their modules, building is really one of the key players that could take a solid position and also support Ukraine in terms of their rebuilding perspective of that one. These are just to show you three very concrete examples. To mention even the last, within the energy sector, we have in this quarter established a strategic partnership with Naftogaz, the largest national energy company in Ukraine, focusing on a collaboration on both energy and digital technology. On this picture on the right side, you see the CEO of Naftogaz together with the CEO of Bergen Engines. The guy number three from the right side is Itera's Jon Erik Høgberg that has been really facilitating this process.
I think we have been working for this more or less for two years and it's increased, the progress, especially the last 12 months. It has been a lot of efforts doing this. We are very happy that we managed to bring the first 16 engines to Ukraine. Not at least, this partnership is also turning into digitalization because there is a lot of knowledge in the Nordics in terms of well efficiency and optimizing their operation. Now we are also looking into a very interesting digitalization project, which is bringing me back to what I call the core business of Itera. This is a good example of a new customer where we started on the entry to Ukraine, Enter Ukraine with Itera, and it also happened to bring business back to our core business offering.
Another, I will say, is a new position Itera has taken is actually in the defense industry. Because as we see, security is extremely important in Ukraine and the defense is really one of the most important in order to protect the country, but also protect Europe. In this case, we are just showing different user scenarios that we see in Ukraine and we are utilizing our digital factory at scale because NATO and this industry are working on what they call a software factory in order to increase the scalability of applying digital technology into their physical value chain, I will say. Digitalization is really a key part of this industry and also not at least bringing this knowledge from Ukraine into the defense in Norway, in the Nordics, and Europe in general.
That's really some of the learnings we are bringing back from Ukraine to Europe and vice versa. Defense will be, of course, also an important part of Itera going forward. We already have some projects going there. I can't talk about them, of course, but we will take a very strong position also in this sector. As you know, we are putting a lot of focus on bringing attention to Ukraine. It is extremely important to keep the economy running, but not at least also look at how the businesses in Nordic can actually enter Ukraine and learn from Ukraine and invest in Ukraine. That's a really important part.
On the right side, you see our Group COO, Jon Erik Høgberg, is doing a tremendous job and he has been interviewed on TV2 and I have also been there. This is, I will say, also something that we contribute, but of course it also has a big impact on the visibility of Itera. To summarize this part, I just want to mention that coming from a full-scale innovation in February 2022, where we have one of the largest, you know, IT hub of Itera, delivery center of Itera in Ukraine, that was a tremendous threat for our business model, but we have turned that into a business opportunity that's really adding value to Itera. We have talked about the brand Itera has much, we have a new brand, of course, but not at least also a stronger position.
It's very easy to go to a new country and introduce Itera by showing how we contribute to Ukraine because the brand of Ukraine I think is one of the strongest in the world, right? The war in Ukraine has also triggered new offices. We have built five new offices, established five new offices. Three to four of them are really based on the situation in Ukraine. We have established a new service offering like Enter Ukraine. We are also going into new sectors like defense and airspace. We also have our strong digital factory at scale capabilities. We really, really need it in this area. Not at least, we are learning a lot from artificial intelligence because I think Ukraine in different sectors are really very advanced using AI for a long time.
These are some kind of, in order to summarize what has been a very big threat for Itera because of the situation in Ukraine, but now also looking at a lot of new opportunities going forward. Okay, before I hand over to Bent Hammer, I just want to also have some comments about the order intake. The book- to- bill in this first quarter was 1.0 and the last 12 months has been 1.0 also. It is also some kind of combination of existing customer and also a new one. I think during the last nine to 12 months, I think we have done a very strong sales effort through the whole Itera. We have changed the model. I really see a growing pipeline of very promising opportunities.
That is something you can also see already have an impact on the customer mix. The share of existing customers was 87% in the first quarter 2025, which is, yeah, in first quarter 2024, it was 95%, right? That means that the number of new customers the last 12 months represent 13%, which is really showing that Itera is also providing a lot of new customers that increase the base for growing going forward. We can't only piggyback on the top 30 customers, which has been reduced to 73%. I think that's quite healthy because now we have new customers that can also increase the growth rate of Itera. New customers represented NOK 30 million in this quarter compared to NOK 12 million in the same quarter last year. That's quite an extensive improvement.
Also in terms of number of employees, we have 707 people at the end of this quarter. That is 29 down last 12 months, 18 the last quarter. As I said in the beginning, we are really pushing for increasing the capacity because there are also a lot of growth opportunity. What has been good is actually that the reduction also has an impact on the EBIT, but we are really in the game now to also start to increase the capacity going forward. I think I'll stop there and hand over to Bent Hammer that will go through the financial review. Thank you.
Thank you, Arne, and good morning to you all.
After several quarters of a negative development there, I'm happy to see that we now have leveled out and even recorded a small growth, to NOK 232 million of revenue this quarter. We have done so with less employees so that brings a positive impact on our EBIT, which grows by 9% to NOK 21 million in this quarter. That gives an EBIT margin of 9.1%, which is 70 basis points above Q1 of 2024. We have an equity ratio which is approximately the same as the same period of last year of 20%. I'm just going to go to the development. We have had, as you can see from the graph, a couple of difficult years in a softer market, which now seems to level out and is starting to recover slowly.
We do have, irrespective of the market development, I would say a lot of potential to both grow our business and also improve our margins back to sort of the previous levels we've experienced in prior years. Arne has been talking about this Enter Ukraine with Itera service offering, which is one of those. We still have a softer utilization than we can achieve in good days, and we've also, you know, opened up a lot of new offices in the past two, three years that also have a potential to grow in what's immature markets from our side. I can mention we've had better revenue from our own consultants, so we've increased the revenue per FTE by about 6% in this quarter.
Even though we've decreased our number of employees by 4%, we've actually managed to uphold and even have a little bit more revenue per, from our own consultants. That constitutes NOK 192 million this quarter. We continue to grow our subscription revenues this quarter by 5% to NOK 20 million. Other revenue increased quite a lot this quarter. This fluctuates a bit if we do some specific sales of software, et cetera, to our customers. This quarter it was NOK 11 million, whereas we see that the revenue from third party consultants decreased by 15% to NOK 8 million. We use third party consultants in those instances where we don't have that particular capacity available to our customers or if there are some, yeah, specific skills or whatever that we typically don't offer.
Cash flow from operations is quite seasonal. Q1 is typically a season, or seasonally low in terms of generating cash from operations. This was also the case this quarter. We recorded negative NOK 5 million from operations, which is in line with what we had Q1 of last year. However, looking at the rolling 12 months, we're at NOK 76 million, which is quite stable as well for the last several quarters. Our investment activities was an outflow of NOK 3 million for the quarter and approximately NOK 9 million for the last 12 months. This is, I would say, a normal level for our business. We do not invest a lot.
Most of the investments we do is in our own product development for those SaaS type of applications that we have, and also a little bit in equipment and so forth for employees. Financing activities is also very seasonally impacted in Itera, because we do the dividend payments typically in Q2 and Q4. Rest of the quarters is generally just related to the leasing activities that we do, primarily for office space. Our cash conversion from EBITDA has been on an upward trajectory, and we now have 92% of EBITDA in Q2 converted to cash for the last 12 months, which is up 8 percentage points from a year ago. That shows that our type of business is very light on working capital requirements.
Also, as mentioned, we do not invest a lot of money into the business. That means that we generate a lot of cash that we can then redistribute to our shareholders, which is evident on this slide where we see that during almost 20 years of history in this graph now, we more or less return back all the earnings to the shareholders. The board of directors has proposed to the annual general meeting that we pay out an ordinary dividend of NOK 0.20 per share, and they will also ask for a renewed authorization to pay a supplementary dividend later in this year. Share price is impacted by the general market for IT services.
We're down 17% if we included the dividend payments of the past year. The share price was at NOK 9.24 at the end of March. I think that was more or less the same as it closed yesterday as well. We had some share purchasing going on in March at the same time as we did the employee share purchase program. This more or less canceled each other out. I think we sold a bit more shares to the employees than we recovered from the market. We now have a bit south of 500,000 owned shares in our treasury. The value of that was NOK 4.4 million at the end of the quarter. That's it for the financials.
Look, looking forward, I think this slide is unchanged from what we presented in February. We do feel that there is still a strong underlying demand for digitalization services. AI is obviously an accelerator into more digitalization. There has been some reluctancy among customers to invest because of macroeconomic uncertainty. But we, like I mentioned, we see that it's been stabilizing now and we do see signs of more activity in the marketplace. We are confident that the market will return to the higher growth in the quarters to come. Although in the very short term, it's probably stable, I would say.
Like I also mentioned, we have good growth opportunities through our new Rogaland Stavanger office, as well as the other offices we set up over the past few years. Not the least, we have a lot of opportunities related to our exposure to Ukraine and the bridge we're building with Norway in particular, but also the other Nordic countries. Focus is still on profitable growth and to generate cash, so that's unchanged. We look forward to do more of that. Okay. I'm not sure if there are any questions been posted online now.
No questions today.
We're very happy to entertain any questions you might have on a one-to-one basis, so please get in touch if you like, probably through me.
I'll bring with me Arne if needed. If not, we're happy to see you back on August 15th for our Q2 presentation. All right.
That's all. Yes.
Thanks a lot.
See you soon. Thank you.