Good morning, everyone, and welcome to our Q2 presentation and Q&A session. My name is Morten Meier, and I will, together with our CFO, Ellen Solum, give you an update of our financial results, as well as our direction and outlook going forward. At the end of the presentation, we will open up for questions, and you can also, during the presentation, post questions in the chat. But let me start with some reflections on the first six months as the CEO here at Techstep. As I said, when I took on this role six months ago, I strongly believe we are in a great position to create history and become the market-leading mobile and circular technology company in Europe. By realizing the huge potential we represent, combining our own software, world-class expertise, and being one of the most certified mobile device players in Europe.
We stand by our ambition, and we are progressing well on this very exciting journey. Since launching our revised commercial strategy at the beginning of this year, we have had a strong tailwind, with new strategic partnerships signed and strengthened our position for driving mobile technology projects and managed mobility services within public and private enterprises. We are gradually experiencing a maturing market as partners and customers increase their focus on sustainability, and we are breaking new ground as a circular technology enabler for our partners across mobile and IT service providers. The turnaround of Techstep continues, with increased focus and resources on building a strong ecosystem for indirect business and our highly scalable solutions, as well as becoming the strategic partner for helping customers increase value and drive innovation with secure and sustainable mobile technology solutions.
I see Techstep perfectly positioned to make mobile and circular technology work and create value in this accelerating market. We continue our journey as a mobile and circular technology enabler and accelerator, serving enterprise customers and public sector in our defined home market, and entering the European and global arena through our indirect partner model. We combine our own software, our competency, and managed capabilities with the broad range of different hardware and software technologies we represent, to better enable and equip our customers and their office and frontline users to optimize their work, as well as enabling and accelerating mobile operators and IT providers within sustainability, security, and management.
We continue to transition our business models from transactional and point solutions to more recurring and holistic services, delivering more as a service and taking stronger responsibilities to operate, support, and create value for our customers and partners by leveraging best-in-class mobile and circular technology services and solutions. Let me now take you through some of the highlights from the second quarter. The profitability keeps moving in the right direction, and for the seventh consecutive quarter, we delivered a positive EBITDA adjusted, with an improvement of NOK 28 million last 12 months. We are satisfied with the progress, considering the ongoing turnaround and repositioning of resources and priorities, and we continue to deliver on our cost optimization program.
During the quarter, we saw improving market conditions in Norway and Poland, and signed several contracts with new and existing customers, and making good progress on the strategic partnership agreements announced earlier this year, which I will come back to later in this presentation. The Swedish market, however, remains challenging, and weak sales impacted revenues negatively. We see a positive and increasing pipeline of exciting projects building up related to the business takeover from Consafe Logistics last quarter. With continuing improvements of business operations and ESG performance, we are proud to have achieved ISO certification for information security management, and not least, being upgraded to Gold in EcoVadis Sustainability Performance Rating, ranking Techstep among the top 5% of all global companies evaluated. With that, I will hand it over to Ellen, who will take you through more details of our financial results for the quarter.
Thank you, Morten, and good morning, everybody. I'll take you through the financials for the quarter. On a high level, the second quarter financials is a continuance of the first quarter trends. As in the first quarter, we continue our journey to deliver on the strategic turnaround, building the new Techstep with our refocused commercial strategy and with a slimmer cost base. Although the partner channel development is progressing as planned, the commercial side has presented some challenges in the quarter. Total revenues in the quarter were NOK 266 million, up from NOK 256 million in the first quarter, but down 5% from the second quarter last year. Here, we see the difference between the markets we operate in, where Norway and Poland have showed positive growth, while the Swedish market has been particularly challenging the last months.
The decline in total device revenues from NOK 192 million last year to NOK 185 million this quarter is mostly due to a reduction in gains from larger end-of-lease Device as a Service contract in second quarter last year. Transactional device sales in the second quarter was in line with last year. Revenues from our proprietary software are stable year-over-year at NOK 27 million, as we see that the start of several contracts were postponed until the fall. Revenues from advisory services were NOK 53 million in the quarter, a 14% decline since last year. This is caused by a decline in revenues from third-party software, which decreased by 35% year-over-year. These licenses are transactional revenues that are quite volatile from month to month.
As for a major part of the third-party licenses we resell, the revenues are recognized upfront, and the license periods can be between 12-36 months. Larger transactions like these can therefore substantially affect the year-over-year financial comparison. However, these transactions have substantially lower margins than our own services and will have less effect on the margin development. Our own advisory and services revenues were stable year- over- year, but with growth in advisory and consulting and a slight decline in aftermarket services. Net gross profit was NOK 84 million in the quarter, down 12% year- over- year. The decline can partly be explained by the decline in revenues and partly by a decline in the net gross profit margin of two percentage points.
The margin from device revenues has declined with 5 percentage points year-over-year due to changes in the customer mix, as revenues this quarter were driven by large frame agreements with lower margins on device sales, as well as reduced margins on the total Device as a Service revenues. EBITDA adjusted was NOK 2.6 million versus NOK 2.3 million last year, as we have very positive effects from the cost optimization efforts we are continuously working with. Net loss for the period was NOK 15 million versus NOK 17 million last year, but we are now in a position where the entire loss is due to non-cash items, such as amortization of assets, which was NOK 15 million in the quarter.
As we have stated in our annual report, we do not currently segregate our entire P&L on market segments, but we measure and follow up our business on revenue streams and on geographic markets on a revenue and net gross profit level. These geographical segments are Norway, Sweden, Denmark, and Poland, which at the moment includes revenues from other European countries within the Essentials MDM partner engagements as well. In Norway, device sales started off good in the second quarter with an upturn after Easter, and total revenues grew by 5%. Net gross profit, however, declined as a consequence of both the Device as a Service end of lease effects, as well as the customer mix in the period. Sweden has, as mentioned, experienced challenging market conditions with decline in device sales and third-party software.
Despite a decline in revenues from device sales of 29% year-over-year, net gross profit margin actually increased in the period due to the customer mix, so that the net gross profit is only down by 4%. In addition to weak market demand, the Swedish sales organization has been influenced by organizational changes in the period, and this naturally affects the performance over time. Although we believe that the market in Sweden might continue to be challenging in the near future, our focus is, of course, to strengthen the organization and revisit our local sales strategies to improve performance. It should also be noted that the new agreement with Consafe Logistics on rugged business should gradually take effect as we move into the second half of 2024. As Morten mentioned, we see a good pipeline with new opportunities emerging from that business area.
Our last 12 months net gross profit was NOK 339 million in the second quarter this year, marking a decrease of 9% year-over-year, and a sequential decline of 3% from the first quarter. The decline is primarily due to the declining device revenues and margins, while the profits from advisory and services, as well as our proprietary software, have been stable over the last quarters. We are certainly not pleased with the trend, but the device business as a standalone transactions is a highly competitive and low margins business, and value for the customer, as well as for Techstep, is created only when our services is added. However, the market has been immature, and our own turnaround has been taking time.
Additionally, the global device market has been challenging the last periods, but it is expected to gradually improve during 2024, which will likely have a positive impact on demand. That said, our future growth will be based on our platform and our capabilities. Based on the agreements we have secured, in particular with the mobile and IT service providers, as well as within the health sector, the increasing maturity in the market and the interest shown from our customers, we strongly believe that we have the prerequisites to grow our business profitably going forward. Although total revenues in the quarter declined, we are pleased to see that the share of recurring revenues are increasing, in line with a strategy to convert to recurring business model.
Leaving the second quarter, our total recurring revenues annualized grew 4% year-over-year to NOK 313 million, where the managed services improved 4% and our own software 6%. The growth is primarily driven by the Essentials MDM and European partner agreements. We have currently nearly completed preparing our platform and organization to serve our enterprise customers, the public sector, and our indirect partners in the mobile and IT service provider sectors. These agreements present significant growth opportunities for our recurring business model, and we will start gradually implementing some of these opportunities in the third quarter. A key measure for our profitability is measuring net gross profit conversion to EBITDA adjusted. In the second quarter, we increased the conversion to EBITDA to 3% from 2% in the second quarter last year, as well as the first quarter this year.
The improvement is due to lower operating costs, as we have been trimming and reorganizing the company, reducing overhead costs, such as the use of consultants and internal IT expenses, as well as the total number of FTEs. Total operating expenses, including personnel costs, have decreased with 12% year-over-year in the quarter, despite the negative effects of rising inflation the last year. Seen over time, the last two years, we have improved the LTM EBITDA conversion rate from -13% in the second quarter of 2022 to currently +8%. In the same period, our net gross profit has declined as a result of the challenging device market.
The cost reductions we initiated in 2022 has more than offset the reduction in gross profits, and we are very pleased that we have come through these last years, making a complete turnaround in a challenging market and, at the same time, generating profits from operations. We are now very well positioned to grow profitable over time as we deliver on our new agreements. Our cash position declined by NOK 4 million from the previous quarter to NOK 15 million at the end of the quarter, in addition to undrawn credit reserves. Cash flow from operations, including investments in Device as a Service, was positive with NOK 14.1 million versus NOK -10 million in the same period last year, an improvement of NOK 24 million.
It is noteworthy to point out that this is the first time Techstep produced a positive cash flow from operations in the second quarter, as the first half year is normally declining the cash position due to the seasonality of the device business. As the first quarter this year was quite straining on the working capital, year to date, we have an improvement in operating cash flow of NOK 7 million versus last year. We have reduced the level of spending in our proprietary software, as the software is fully developed and the current investments is more focused on customer and partner adjustments. Net cash spend for investments in the quarter was NOK 6 million, versus NOK 8 million last year. Year to date, we have reduced spending with NOK 6 million.
In the second quarter, we spent NOK 12 million on down payments on loans, interest, and IFRS 16 leases, versus a net NOK 5 million spending last year. But second quarter last year included a drawdown on credit facilities of NOK 10 million as well. Moving into the second half of the year, cash will be improving, and we also have sufficient credit lines secured if we should need it. Let's go over to the balance sheet. At the end of the quarter, our equity ratio was 48%, which is up 3% since 2023, and a total balance of NOK 1.1 billion, slightly down from last year. Total current assets, excluding cash, which primarily consists of trade receivables, was NOK 172 million, which is down NOK 28 million since the end of last year, caused by the seasonality in our business.
However, compared to second quarter last year, current assets are down NOK 46 million. This is both a result of the decline in revenues year-over-year, but also a much improved collection rate. Total borrowings decreased by NOK 25 million from the second quarter last year and NOK 12 million since December last year. Net interest-bearing debt is now at NOK 151 million, versus NOK 179 million in June last year, and NOK 101 million at the end of 2023. In the second quarter last year, the majority of borrowings was classified as short term, as we refinanced the bank loans in the third quarter of 2023. In our balance sheet, we have items related to Device as a Service of NOK 143 million in assets and NOK 170 million in liabilities.
These items do not have any future cash effects other than a net difference of NOK 27 million, which represents the estimates for future profits related to the end of life of the leased devices. Then I'll hand the word back to Morten, who will take us through the business update and the outlook.
Thank you, Ellen, and let's have a look at our positive progress and strong momentum with new agreements and strengthened position, especially within public sector. These new agreements are a direct result of our revised commercial strategy to become the preferred mobile and circular technology partner for all type of public sector organizations, serving both office workers and those working out in the field. Our approach is designed to empower them to derive greater value, productivity, and efficiency from their mobile ecosystems. We are also very proud to be acknowledged for our strong sustainability focus and our commitment to ESG, which influenced the selection process with Vestfold region and Nordre Follo.
Let me also highlight the progress we have had with the previously announced contract with Sykehuspartner, with the ambition to deliver a completely managed mobile service, including devices, lifecycle management, and managed services of all office and clinical devices. We have now rolled out several pilot hospitals and departments, and we aim to finalize the full scope of deliveries to fully manage business-critical devices serving their 82,000 users in the region. The project is very comprehensive and integrates deep into the core operations of hospitals and provides doctors and nurses with the right tools and services. The service is expected to be launched beginning of next year, with a phased rollout over the next years. Within the indirect channel, we see good progress. DeviceNow is on track and will onboard our first joint customer on September 2.
This will be a large enterprise company with operations in more than 50 countries globally. The ambition is to onboard the next handful customers in close collaboration with DeviceNow during H2 as a part of our joint launch and enablement plan, thus achieving sales readiness throughout DeviceNow as we enter a very exciting 2025 with strong and promising pipeline. The previously announced opportunity with a Nordic mobile service provider is expected to be finalized and signed by the end of this month, with services available to their customers within this quarter and revenue generation from Q4. Overall, we are seeing increased interest in our device lifecycle management platform as a circular technology enabler for service providers.
This is driven by growing awareness of circular technology and the need for a software solution that connects the IT and mobile ecosystem, acting as a circular tech enabler for players in this market. With the positive momentum, we expect to sign a few more strategic partners within the year and to have a strong pipeline growth going into 2025. And with the increased focus on sustainability and circular technology as described, we are more relevant than ever to support our customers and partners on this journey. Techstep's sustainability agenda is at the core of our company's mission to make positive changes to the world of work, freeing people to work more effectively, securely, and sustainably, and our solutions can help organizations deliver on their, their ESG commitments.
We advocate for circularity and responsible use of devices throughout the life cycle, from product selection, deployment, installing, financing, maintenance, track, and disposal, which helps extend device lifetime and reduce electronic waste. Our managed services and security solutions help customers protecting company and employee data by ensuring their devices and applications are compliant, secure, and up-to-date. Equally important is responsible business practices, which is supported by our commitment to UN Global Compact and Science Based Targets, validated by relevant ISO certifications and EcoVadis sustainability rating. We are very proud to have earned EcoVadis Gold rating this year, which reflects our systematic commitment and collaborative efforts across our organization as we continue to raise standards, integrate sustainability into our policies and processes, and drive positive change through best-in-class mobile and circular technology services and solutions.
In Q2, we also renewed the ISO certifications for quality and environmental management, and we achieved the comprehensive ISO certification for information security management. So let's sum it up with our outlook and financial ambitions. Although the first half was slightly affected by the decline in device sales, the second quarter saw a positive development in Norway and Poland compared to previous months. The expectation is an acceleration in the second half and into 2025. Growth will be driven by the refocused commercial strategy through upselling more value-adding products and services, as well as increasing sales of scalable products through new and existing partner channels. In view of the challenging market conditions in Sweden and time to ramp up existing partner agreements, we have revised Techstep's outlook for 2024.
The updated ambition this year is to grow recurring revenues annualized by 20%-30% year-over-year, and growing net gross profit by 0%-5%, with an expected EBITDA adjusted conversion of 12%-16%. Techstep's outlook for next year remains unchanged, with an ambition of growing recurring revenues annualized at +30%, net gross profit growth of 30%-40%, and EBITDA adjusted conversion above 25%. That concludes today's presentation. We will now move directly over to our Q&A session, so please stand by if you have any questions. We will see if there are any questions posted so far. You can always submit your questions by using the investor relation email address or by using the chat function in this presentation. It seems that we have been crystal clear. We have not received any questions.
You can always use the investment relationship email, as you can see on the slide. So, we'd like to close here, and thank you a lot for your attention.