Good morning, everyone. My name is Rikard Engberg, and I'm an Equity Research Analyst here at Erik Penser Bank. With me, I have Mr. Henrik Ekelund, CEO of BTS Group, here to present the quarter. Henrik, welcome, and congratulations for another fine quarter.
Thank you, Rikard. Yes, Rikard and dear shareholders listening in, we are happy and proud to deliver another record quarter for BTS. We now have 18 consecutive record quarters in a row. From mid-2016 until today, not counting 2020, which was a year when we couldn't really run our business. Since mid-2016, quarter after quarter, 18 quarters in a row, we have delivered record revenues and record results, and we are very, very happy for that. I will present some more details for you here. Well, first of all, the market. It's a very strong demand for our services. It's driven by the rapid change among the top businesses of the world. Virtual delivery is where basically everything happens now. It is fully accepted as a replacement for physical delivery.
However, we see now with the pandemic slowing down and things becoming more safe, that the physical deliveries are coming back quite strongly. Looking at Q4, the underlying revenue growth in the actual operations is 17%. That is adjusted for currency and for the fact that there was less cost in 2021 than 2019 for travel. There was no travel in 2021. We are making basically all our comparisons with 2019 because beating 2020 is simply too easy, so we compare with 2021. The EBITDA of Q4 was 13% higher than in Q4 of 2019.
If we count it in Swedish krona, if we look at the underlying growth in the profit, it is 26%, but lower because of the change in currency rates compared to two years ago. Our EBITDA margin got to 15%, and we now have a new goal. Let me come back to that a little bit further. For the whole year of 2021, we have 18% better results and revenues more than 30% better if we count away the currency impact. We are very, very pleased with 2021 and with the fourth quarter that we have delivered. Here it gives a bit of a perspective of the record development. You can see how revenue is growing quarter by quarter. It is going in the right northeasterly direction, with an exception for 2020.
As you know, in 2020, the physical training stopped, and it was hard for us to really run our business in the normal way. If we look at the profit, you again see the upward trend, but then even stronger. The profit growth has been even stronger than revenue. Now talk about EBITDA margin. About five years ago, we were down at 10-11% in EBITDA and said, "Now we're really gonna work long term to get to 15% by using many different tools, becoming more efficient, pricing in a more optimal way, taking out unnecessary cost, moving to more profitable customers, more profitable projects." A range of devices, we've been year after year improving our EBITDA margin to the goal of 15%. We're pleased with that.
It was a five-year journey to go from 11% to 15%. Really four years. 2020 was an exceptional year. We have decided to set a new EBITDA margin goal at 17%. This is now our new long-term EBITDA margin goal. Looking a bit more at the numbers, you can see here the EBITDA growing, revenue growing 18% currency adjusted and EBITDA at 18% as well. Looking for each business unit, you can see that in 2021, we've had fantastic development in North America and also in other markets.
BTS Europe has overall done well in most of its offices, but we've had a big decline in BTS Germany due to two big projects which kind of ended mid-year, just before mid-year in 2021. Germany had a difficult year with a big loss, and that impacted BTS Europe, which in our other geographies did quite well. I should also say that overall revenue growth of 18% in 2021 compared to 2019, 12% is organic, and 6% roughly is from acquisitions we have made. Moving on here to Q4, again, you can see the numbers that I just described, and same thing on the profit side.
You can see here Europe's decline, which comes fully from what has happened in Germany, and the continued work in other markets. In North America, actually, we had to postpone some work into Q1 because of lack of resources. So North America could have grown faster, but we decided to move some projects into Q1 because of quality reasons, because of, you know, work/life balance for our people. Many of them put a lot of hard work into last year. You know, you may ask why? Why are we so successful in 2021 and over the last couple of years? It's really is two main reasons. The first reason is that the market is growing. The markets are
It is really favorable for our services because of the speed of change in the business community and also because companies want to invest more in their people. Secondly, we are taking market shares. We are, you know, through our innovative approach, our investments in digital, our investments in marketing, we are winning more and more business, taking market share. Just an overview of what you can do, you can see the seven main practice areas that we have here. So it's seven different areas and this makes it possible for us that once we come into a client, we can serve that client across many needs or for many years. As you know, we always communicated the average length of a customer in BTS is seven years.
Our revenues are coming back year after year due to this breadth and our ability to work from top to bottom to serve our clients on all their levels. This broad portfolio is a very good competitive advantage and a way to really create recurring revenue. Just a few words on the pandemic. You know, it was very dramatic for us in early 2020 because we faced a situation where basically our business stopped. What we did was physical training, and all of that was closed down and stopped in early 2020.
We decided at that point in time to see 2020 as an investment year, to not focus on profitability, to keep all our employees, and to switch everything to virtual and digital and not care about the profit in 2020, and that has really paid off that long term. We moved fast, but we thought. We acted with a long-term perspective, and that has really, you know, paid off. Look, compared to competition, we have, you know, grown our distance to them in digital, in virtual. We have our resources still at the base. We've innovated a lot. We have a stronger organization, a stronger customer base, and a much stronger offering.
It's very interesting how a potential crisis for a company, if you think long term and act fast, how you can use that to level up the business and we see that in 2021, and we see that as we move into 2022. The business has been leveled up. We continue, you know, of course our share price has done phenomenally over the last five years. Why should you own shares in BTS given this growth? I think a lot of people when they look at BTS, you know, they see that BTS, our growth opportunity is really limitless. We are not confined to a Swedish or a Nordic market. We are all over the globe, and we have less than 1% market share. And we, you know, are taking market shares, so really in a growth position.
We have this long track record of growing and growing and growing both revenues and profit. Obviously, our financial goals that we have now upgraded on the profit side, I think people find that also quite attractive. For the dividend, the board has proposed a dividend of SEK 4.80, which is a 33% increase compared to 2019. We didn't grow the dividend in 2019, but this dividend is really in line with how profit has grown since 2018. We're keeping a consistent policy there, and we're keeping our strategy of being able to create both rapid growth and strong cash flow so that we can give dividends to our shareholders. For 2022, we are expecting our results to be better than in 2021.
In 2021, our EBITDA was SEK 288 million, excluding a loan that was forgiven from the U.S. government. We're not taking that into account. We will have a result which is better than the outcome in 2021. This is the same outlook we've given for the last five years, and in all of those years, we've upgraded during the year to a significantly better except 2020. That is looking into 2022. This is the stock price. As you can see, it's been since we went to the IPO, we performed clearly better than the market. I'll stop there, Rikard, looking forward to your questions.
Thank you, Henrik. My first question is, can you describe the driver behind this margin expansion that you see going forward, and how long do you think it will take? It took you five years to reach 15%. What is the timeframe here?
It's a great question, Rikard. You know, First of all, I would like to say it took us really four years to get, because 2020 is a year I think we can put to the side, and it is really a combination of many things. You know, it's looking for efficiencies everywhere. It is about optimizing our pricing, so really making sure that we charge for all the services that we provide to clients. It is also about working with the most important customer problems that are really valuable for the right customers. So a range of many things that year after year we can, you know, improve our margin 0.5%, 1% each year. We don't have a timeframe for the 17% EBITDA margin goal.
We are determined to reach it, and it's a long-term goal, and let's see how sharp we are in executing towards that goal.
My next question is looking at the mix going forward, what do you think the mix will be between physical and digital and virtual delivery, and how will that affect your sales numbers?
You know, I do believe we will see a mix. Companies and the people who come to these training sessions, they've learned that they can save money, they can save time, they can save emissions by having this virtual. On the other hand, you know, human beings were not created to be zombies. When we meet, you know, the energy, the learning, the creativity is huge. Both of these will live. We think there will be somewhere between 30/70, 70/30. We see it as a strength that we can deliver every solution any way the customer want it. Do they want it physical? Do they want it virtual? Do they want it digital? That flexibility in consumption will be super important.
In terms of margins, of course there will be challenges when you have different modalities, but we can handle those. Just like we handled the transition to virtual, we can handle this transition to a mixed situation without any problems.
Okay, good. My next question is, regarding the U.S. market. You mentioned that some projects went from Q4 to Q1, and how does the recruitment scene in the U.S. looks like right now, and how do you view the, for example, rising wages in the U.S.?
Clearly we must raise salaries to stay competitive. We've seen more people leave than in 2021 than in a normal year. We are still only at half the turnover compared to the consulting market in general. The consulting market in general, there's 20%-25% turnover, and we are about half of that. Hiring, we find, is more challenging but absolutely possible. We hired a lot of people last year. We are hiring a lot of people now. We decided to postpone some projects because we believed that you know, some of our people simply had worked too hard and we didn't want to push them harder in Q4.
Okay, good. My next question is regarding the German market. As you mentioned, there were quite a lot of projects finishing earlier this year. Can you describe this market going forward?
You know, the German market is a fantastic opportunity. It is the second-biggest market in the world. It is a difficult market to get into. I would say it's the most competitive and difficult in Europe, so it's a big opportunity. We have a small operation there that should become much bigger. We've had a nice growth the last couple of years, and then in 2021 we had this big drop because of some big client projects leveling off. You know, the good news when you have a big drop in 2021 is that the numbers are much easier to beat in 2022, so we're solid that in 2022 we should be back to growth in Germany.
Finally, before I look at other questions, can you please describe the M&A market right now? How do you see potential targets, and how do you see valuations in those targets?
Yeah. There's a good amount of potential targets in the market. We are, as always, very critical and really only buy the companies where we are sure that there will be a positive synergy and that we get the right deal. You know, one of the reasons why our acquisitions have been so successful is because we are very picky in what we bid for. There's a good amount of targets out there. Prices have been quite. It's been a tough competitive situation in 2021. That's easing actually now a bit.
Okay, thanks. Do we have any questions from the webcast?
We have one question over the phone. Ladies and gentlemen, I would like to remind you that if you wish to ask a question by phone, please press zero one on the telephone keypad. First question is from Mr. Daniel Thorsson from ABG. Sir, please go ahead.
Yes. Thank you very much, Henrik and Rikard. My first question is a technical question here. Depreciations were up significantly in Q4 to SEK 25 million from SEK 15 million, SEK 16 million in the previous quarters, and you have said that you have higher intangible depreciations from the digital offering. Is this the new level we should expect in 2022 as well? Because I noticed that CapEx is relatively unchanged. How should we think about that?
You know, it's our depreciation is mostly a function of the acquisitions we've made. The Q4 increase is primarily because of our acquisition of Netmind. When we acquire a company, we put some of it in goodwill, and some of it in intangible assets and those we depreciate. It's mostly related to acquisitions, and with the acquisition of Netmind, yes, I think, it's inching up a bit.
Yeah, exactly. I was thinking about the depreciation on tangible assets, rather, that was up some SEK 8 million quarter-over-quarter.
You mean.
Yeah, on tangible.
Tan- tangible-
That was up quite a lot.
Tangible assets, you know, it's something where if we move to that level in Q4, I have to come back to you on that question, which is more technical, what we can expect going forward.
No problem. I just noticed that the CapEx levels were relatively unchanged.
Mm-hmm.
Just wanted to understand.
Yeah.
Okay, that's no problem. Then a question on the 2022 outlook here and the guidance, how should we think about the EBITDA drivers? I mean, you're talking about the very strong markets. We should expect sales to grow, and then if physical share of revenues is increasing, maybe the margin will be more flat or just a small increase in 2022. Is that really how we should think about the guidance drivers for EBITDA?
We don't see that physical deliveries will lead to lower margins. There are pros and cons. With the virtual delivery, yes, you don't travel, but on the other hand, it's more spread out. It's not naturally a lower productivity in physical deliveries. We see that just like all of the last four years except 2020, there are many things we can do to optimize margins, just like any company, making our deliveries more efficient, getting the right projects mix going, optimizing pricing, working with the right clients. There are many things to do, and we aim to continue this long-term drive to increase the margin, you know, 0.5%, 1% going forward. We haven't set a timeline for when we get to 17%.
Okay, that's clear. Then the question on the revenue streams here, really. In 2021, the share of revenues coming from programs were at an all-time high level of 65%.
Mm.
Licenses remain around 10%. How should we think about that mix in 2022 and onwards?
You know, it's pretty stable. It varies a bit over the years. I think what we're trying to do obviously is increase that license revenue stream. We're investing a lot more into building digital solutions. And then our goal is to when we sell those, to generate more license revenue. Really we wanna get that license share up. That's important for us, and we're making the investments needed to make that possible.
Exactly. Okay, thanks. A margin question on the regions. In both North America and other markets, we saw margin increases of 2-3 percentage points versus 2019 levels in Q4. You write in the report that that was partly driven by lower external costs in both segments.
Mm.
Is that something we should expect coming back a bit in 2022, or have you reduced external costs sustainably in those regions?
You know, the external cost is very much related to travel, which was much lower in 2021 than 2019. In 2022, that cost element will go up, not to the early levels, but it will absolutely go up. That's something that we have in our plans.
Okay, that's clear. That's all for me for now. Thanks.
Thank you, sir. We have no other questions, ladies and gentlemen. If you wish to ask one, it's zero one on your telephone keypad.
Thank you, Henrik.
We have a question from the webcast as well.
Okay.
From Jonas [ Lignell]. How much is the market growing? How much more can BTS grow? What are your net recruitment plans for 2022?
The question is really how much the market is growing, how much can we grow, and what is our net recruitment plans. It's hard to find exact statistics on our niche. The sentiment is that it's growing around 5%-6% per year over the longer term, possibly somewhat faster in 2021. At the same time, we are taking market shares. You know, our goal is to grow 20% per year. This year we grew 18% in the underlying growth. We have another 2% to go. Currencies of course impact us quite a bit, and when we compare with 2019, the krona is stronger. That could turn around in 2022.
Currently, the krona is at a lower level than it was in early 2021. We might have some currency wind in the back of our sails helping us in 2022. Really we wanna grow 20%. We did 18% last year, so 2% more to go. In terms of the recruitment plans, the exact numbers I cannot share here, but obviously we are hiring a lot of people and everywhere.
I would say thank you to all for listening, and thank you to Henrik for coming here to Erik Penser Bank.
Thank you, Rikard, and thank you everyone listening. Dear shareholders, we are happy. We're grateful for your confidence in the company, and we are happy that we continue to deliver record quarters, and this is what we aim to do again in 2022. Thank you very much.