Okay? Yeah. NOK 340 million, an increase from NOK 278 million in Q3 of last year. This signifies a 22% year-on-year growth in NOK, and 19% in constant currency. We are now almost at NOK 1.4 billion in annualized revenue, well ahead of our target of becoming a NOK 1.5 billion company by 2026, as defined as an aspiration just a year ago. EBIT stood at 10.9%, amounting to NOK 37 million, which is a 55% increase from NOK 23.6 million in the same period last year. Zalaris market success persisted, with strong developments in all markets, including renewals of existing agreements and new signings. Our operating cash flow for the quarter was NOK 48 million, up from NOK 15 million last year.
Following a planning period with focus on solid preparatory work, the strategic review process announced in April is progressing well, so our market success continued, supporting and maintaining our current growth profile and targets for the next twelve to twenty-four months, with an increase in signings and a strengthened pipeline of opportunities. In the Nordics, we expanded and renewed services with existing customers, further supporting revenue growth. As mentioned in our last report, Finland was added as another country to our services for Telenor in the quarter. For SAS, we expanded an outsourced payroll service to cover their U.K. employees. A good example of how we continue to grow alongside our customers' footprints. This footprint, which we estimate to have the potential to generate five to six times our current managed services revenue, continues to be a significant growth driver. Additionally, we renewed long-term agreements with Tryg and Entercard.
In Germany, our professional services organization sustained its success in the public sector. We signed an agreement to implement a complete SuccessFactors solution for the city of Osnabrück, valued at approximately 2.5 million EUR over the next three years. We also finalized a long-term agreement with our long-standing customer, the Max Planck Institute, for a SAP HCM application maintenance services. Additionally, we concluded an agreement to provide outsourced HR and payroll services to Galeria Karstadt Kaufhof, one of Germany's largest retail operations. Under the contract, Zalaris will assume full responsibility for payroll and other administrative HR tasks for approximately 12,000 employees in Germany. Initially, the partnership will support payroll operation using Galeria's existing systems.
Over the next 16 months, we will gradually implement our own PeopleHub solution, which includes a digital personnel file, a new travel expense accounting system, a comprehensive time management tools, all tailored to the specific needs of the retail sector. In the UK, we began implementing a PeopleHub payroll SaaS solution for a 2,500-employee energy company under a letter of intent. We also continued positive developments in our professional services by supporting a large, low-cost airline in implementing a multi-country payroll solution based on SAP SuccessFactors EC Payroll. APAC maintained this positive trajectory, delivering a full quarter with positive EBIT, while securing new large combination deals for managed services and professional services with Yancoal and Goulburn Valley Water. The Yancoal project, the largest APAC project to date, involves transitioning from a legacy payroll system to our cloud-based SAP Employee Central Payroll solution.
We are excited to see that leveraging professional services as an entry point into the ANZ market is yielding a significant influx of new revenue, with a healthy balance between about 59% recurring revenue and 41% project work. Our pipeline of new projects, as well as the opportunity to expand with existing customers into new geos, continues to develop positively. Our strengthened brand and leadership position have enabled us to capture a significant larger share of relevant large enterprise multi-country opportunities originating out of Europe, then let's look at our segments. Managed services grew by 27% to NOK 254 million. This is a new all-time high for managed services on a quarterly basis and solidifies managed services, of which a majority is recurring revenue from long-term agreements as a standalone business with over NOK 1 billion in annualized revenue.
Our net revenue retention remains strong at 108% year over year, as existing customers expanded their geographic footprints and added functionalities. All our regions showed strong growth, with Germany once again leading the way with an incredible 40% year-over-year growth, reflecting the massive opportunities we see in this market. Managed services now account for 75% of our total revenue, marking an increase from previous periods. Let's look at professional services, our consulting practice. Revenue in professional services was 1.8% lower year-on-year. The revenue reduction is mainly due to the partial completion of a large consulting project in the U.K. A significant portion of the professional services capacity is being utilized to support managed services in implementing new customers or delivering change orders, particularly in Germany.
With this, I hand over to our CFO, Gunnar Manum, who will take you through the financial part of the presentation.
Thank you, Hans-Petter. The revenue for the third quarter of 340 million was an increase of 22% year-on-year as reported, and 18% when measured in constant currency. In the third quarter, 83% of total revenue was invoiced in currencies other than NOK. Revenue in managed services increased by 18.3%, while professional services was 1.8% lower. The reduction in professional services is mainly due to the partial completion of a large consultancy project in the UK, as mentioned by Hans-Petter. Significant professional services resources, particularly in Germany, are being utilized on the implementation of new customers and change orders within managed services, thus reducing the external revenue capacity within that division. Net retention within managed services was 108%.
This shows that year-on-year revenue in constant currency from customers that were fully implemented in the third quarter last year grew by 8%. New contract signing during the third quarter have an annual recurring revenue of approximately 27 million. In addition to the revenue that will come from the new signings and contract expansions in the third quarter, we have the revenue that will come from new contracts signed in earlier periods, but not implemented as of Q3. This slide shows the total future revenue impact of these contracts. The total net annual recurring revenue from these contracts is 106 million, which represents a further increase in annual revenue for managed services of 11% when compared to the revenue for the last twelve months.
In the top graph, we show on the left side the annual recurring revenue for managed services of NOK 907 million as of the third quarter, calculated by analyzing the recurring revenue for Q3. On top of that, we have the NOK 106 million in additional annual revenue from signed contracts and contract expansions that will go live by the first quarter, 2026. Thus, the contracted annual recurring revenue in managed services going forward is just about NOK 1 billion. The estimated timing of the additional revenue is shown in the bottom graph. On top of the estimated recurring revenue of NOK 1013 million within managed services, we currently have change orders of approximately 10% to 12% of the recurring revenue.
That is NOK 122 million, and revenue for the last four months from professional services and APAC of NOK 335 million. This gives an estimated future annual revenue for Zalaris of approximately NOK 1.47 billion, based on signed long-term managed services contract and calculating using the average exchange rates for the third quarter. This is approximately 13% higher than the total revenue for the last twelve months. The adjusted EBIT for the third quarter was NOK 37 million, an increase of 56% year-on-year. The adjusted EBIT margin was 10.9%, up from 8.5% last year. The improvements in EBIT and EBIT margin is the result of increased revenue and operational improvements in the Nordic region and particularly in Germany, such as delivering a larger share of the service from nearshore and offshore locations.
The German EBIT improvement initiatives communicated in the second quarter are gradually showing positive results. APAC had a positive EBIT for the quarter. The adjusted EBIT for managed services was NOK 45.4 million, which was NOK 16.1 million higher than last year, mainly due to the factors just mentioned. The adjusted EBIT for professional services was NOK 5.2 million, NOK 1.8 million lower than last year. EBIT in professional services was negatively impacted by the reduced revenue and lower utilization early in the quarter. However, utilization trends improved compared to Q2 and are expected to continue rising in Q4. Moving on to some of the other key P&L items. Revenue per employee in constant currency increased by approximately 10% year-on-year.
However, with the large increase in revenue and ongoing transformation projects for new customers, the number of FTEs has increased by 55 year-on-year, which largely explains the increase in personnel expenses. Lower option cost in the quarter was offset by higher bonus accruals. A majority of the new FTEs has come from nearshore and offshore locations, and personnel expenses as a percentage of revenue decreased by approximately 1.7 percentage points. Other operating expenses were 1 percentage points lower as a percentage of revenue compared to last year. However, costs were higher, mainly due to the use of external payroll, payroll partners for global payroll deliveries to countries where we are not located, external hosting, and costs related to the strategic project. The EBIT was NOK 31.1 million for the quarter, compared to NOK 15.4 million last year.
Net financial expenses were NOK 21.1 million, compared to income of NOK 1 million last year. The expenses for the quarter include an unrealized loss of NOK 8 million, mainly related to our euro-denominated bond loan. Net profit for the period was NOK 8.3 million, compared to NOK 13.4 million last year. We had a strong cash flow during the quarter. The operating cash flow was NOK 48.4 million, up from NOK 15.3 million last year, an increase of NOK 33 million. The increase is due to high earnings and a reduction in net working capital. This graph shows the bridge between the EBITDA and the cash increase of NOK 16.9 million in the quarter. The net interest-bearing debt at 30 September was 286 million, which was approximately the same as at the end of the previous quarter.
Our leverage, measured by the net interest-bearing debt divided by Adjusted EBITDA, decreased from 1.6 at the end of the second quarter to 1.4 at the end of the third quarter. And that concludes the financial section, and I'll now leave the word to Hans-Petter to present our outlook.
Thank you, Gunnar. Then we are back to the outlook, where I will use the opportunity to reiterate some of our financial targets before summing up. So looking ahead, as communicated in our Capital Markets Day last year, we have set an annual growth target of 10%, aiming for a total run rate revenue of about 1 billion by 2026. The growth targets for managed services and professional services are 15% and 5% respectively. As demonstrated in today's presentation, we are well ahead with overall growth of 22% in the quarter, with managed services growing 27%, while professional services experienced a small decline of about 2%, mainly due to professional services resources being used to implement a significant part of our managed services projects. Over the last two years, our annual growth rate has been approximately 18%.
While removing the impact of currency changes, the annual growth rate has been approximately 14% to 15%. This growth primarily stems from increased revenue from existing customers within managed services and recurring revenue from long-term contracts with new customers. These contracts typically have an initial duration of 5-10 years. Consequently, recurring revenue from long-term contracts with customers in managed services is expected to represent an increasing share of total revenue, rising from 68% in 2021 to a projected 77% in 2026. In this quarter, it was 75%. Our growth will be driven by continued focus on acquiring new customers and upselling more value to existing customers through expanded geographic coverage and enhanced functionality. We always prioritize growth that supports the utilization of our existing capacity and infrastructure, and thus have larger incremental margin.
On an annualized basis, our Q3 revenue is almost 1.4 billion NOK. In addition, as just described by Gunnar, we have 173 million NOK net of churn in annual recurring revenue, already contracted for delivery over the next twelve months. As it currently looks, we are close to our 1.5 billion NOK annualized revenue target, measured in constant currency, with churn expected to be within our historic thresholds. We are confident in staying on track with respect to growth in the foreseeable future. A key element in reaching our margin targets involves improving the EBIT margin of our German operations by approximately 50 million NOK through the delivery of our margin improvement program discussed in Q2. As we can see in this quarter, our initiatives have started to take effect, and we are confident that we will deliver on this target.
Our continued focus on automation and the use of AI, along with scaling, will drive us toward our Capital Markets Day communicated target EBIT of 12% to 15% in 2026. With a target cash conversion of 70%, we anticipate an operating cash flow before interest of between NOK 190 and 250 million. To sum up, Unstoppable doubles as the title of the 2024 Zalaris Norseman film and as the characteristic of Team Zalaris' Q3 results. Our all-time high revenue streak continued with revenues of NOK 340 million, an increase of 22% from NOK 278 million in Q3 of the previous year.
Our Adjusted EBIT grew NOK 56 million year on year to NOK 37 million, or 10.9% for the quarter, resulting in an Adjusted EBIT year to date of NOK 100 million and a corresponding margin year to date of 10.2%. We anticipate growth to continue, with annual revenue expected to increase by approximately NOK 173 million versus the last 12 months as of Q3 2024. Based on already signed contracts by the end of 2025, bringing us close to our communicated target for 2026, of becoming a NOK 1.5 billion company.
We expect to see further EBIT improvements as a result from our Germany EBIT improvement program continue to materialize towards our targeted 20% to 15%, with a corresponding cash conversion target of 70%, resulting in an annualized positive cash flow ranging from NOK 190 to 250 million. As announced on April 2nd, the board of directors has initiated a strategic review process. This decision reflects a large successful expansion of its portfolio of large agreements for global payroll and HR services to leading international enterprises in recent years. The strategic review is designed to assess structures and opportunities that could further propel the company's growth and create additional value for customers and shareholders. After an initial planning period, the review is well underway. Any further announcements will be made once the review has been concluded. Thank you for joining us today. We will open the floor for questions.
Yeah, so, we have received a few questions. First one: Are you continuing to see good momentum in the contract pipeline?
Yes, we are continuing to see good momentum in the contract pipeline. It, what I see is that the totals remain on target, but the mix between the different regions has showed particularly strong growth again in Germany.
Next one. Could you provide a bit more detail on how you are utilizing AI, both to improve efficiencies and customer experience?
That's, we have a strategic project where we utilize to explore the usage of AI across our business. So as examples, we have rolled out AI-supported Microsoft Copilot and to all employees in Zalaris, and we have access to enterprise versions of ChatGPT for all employees. We are looking at using ChatGPT functionalities to support the first line and customers in finding in solutions to problems themselves immediately through self-service, and are using AI technologies both in our chatbots but also in cybersecurity operations to also detect anomalies in our in the current traffic that we have into Zalaris. But we see it's a huge opportunity, and we con...
It's a project that myself and our CTO are very involved in on an almost day-to-day basis ourselves, and we are quite optimistic in terms of how we increasingly can deploy AI in various parts of our operations. Having said that, I think it's also important to remind all of us that delivering, particularly payroll, is also a business of delivering accuracy. So it is probably quite some time before actually payroll will be run by AI, or calculated by AI. But we see AI as a significant opportunities in both helping in customer support, making our solutions easier, probably implementing our solutions faster, and helping us to perform quality controls throughout the process. So we'll keep you updated on that topic as we move along.
Next, question: Could you comment on the margin in Germany in Q3 2024 versus the full year 2023?
So maybe I should say something about that?
Please do.
I don't think we should. We can't give you a specific numbers because we generally don't like doing that for, you know, for the regions. What we can say is that the margins in Germany in the last quarter were significantly higher than what we saw last year.
Yeah.
So we see now a gradual improvement from the EBIT improvement program in Germany, and we expect the margin to further improve as that program is being implemented.
Yeah. And as I also alluded to in our presentation, and you can take a look back in our Q2 presentation, where you see more detailing of that program, we see effects of all the aspects of the initiatives that we have also having effect now in Q3, more or less in some areas. But we see the total improvements well underway, and we strongly believe that we'll be able to deliver on that within the defined timeframe. And a final question: Could you give us an idea of how far through the strategic review you are, and when we should expect you to announce a conclusion?
It's unfortunately, due to the processes that we are in, we cannot comment on that in more detail. But we will, of course, inform you as soon as we have reached a conclusion.
I think that concludes the Q&A.
Thank you. Thank you for following us, and yes, hang on, and you hopefully will see also the continuation of this next time we meet. Have a nice day!