All right, thanks. The presentation today will be me and Marie. Let's go to the next slide again, please. First, I would like to take you through some operational highlights during the Q1, where we report good growth and profitability despite as we see it's a more uncertain market. We think that's a sign of strength. Although we experience shattered market picture with some inconsistencies among the clients, some increased investments in digitalization projects and some are in some sort of a wait-and-see mode and take longer time to come to decisions. As in Q4, 2022, we have a really high sales focus.
This does not mean that we stop recruitment activities, but we of course focus a little bit more on sales right now. Both business areas, Connectivity and Experience, are performing really well, despite the more challenging market that we have compared to last year. Our biggest business area Solutions are impacted by challenges, especially longer lead times and getting junior consultants out in projects. As last quarter, we still have a relatively large share of sub-consultants due to frame agreements, mainly in Norway. We can take the next slide, please. I have told you quite a few times about our sustainability goals. So you know them quite well.
The maybe the most important and challenging one of those are that we will be by 2030, 80% of our net sales shall contribute to at least one of the UN Sustainable Development Goals where we can make the largest difference. Of course, we are aiming to be climate positive and also have an inclusive workplace. One example of a project is a company called DeLaval. You probably know of them working in the agricultural industry. Together with them, we have worked with them for quite a few years.
Together with them, we are creating a solution connected to Internet of Things, connected to the cloud, where we connect the cows to information about how they eat, how they sleep, et cetera, et cetera, to hopefully get the cows feeling better but also producing more milk. We can take the next slide and go into our biggest business area Solutions, reporting net sales of 1.1 billion SEK for the quarter. That's three percent growth, including acquired entities. EBITA margin 10.5%. That's a decrease following longer sales cycles and a little bit more uncertain market among some clients.
We have a really positive development in Finland compared to last year, both revenue growth and improved margins. So we are proud about that. Although we see some challenges in growth in Sweden, and the margins in Norway are impacted by challenging in utilizing junior consultants, maybe a little bit connected to a strong recruitment period that we had in the end of last year, and a consistent but not growing public sector business. We can go into our digital agency Knowit Experience, reporting sales of 447 million SEK.
Next slide, please.
Yeah, sorry. Next slide, please. 447 million SEK for the quarter, increasing around 8% including acquired entities. The EBITA margin was strongly 13.4%. I think it's a really strong performance in light of the current market situation with intensified sales efforts that we have had for quite a while now in Experience. That pays off. Over time, we have also worked quite a lot with shifting to larger assignments. That is something that have come during the last year one step at a time. I think that is a really good strength in a little bit weaker markets. We are really happy to see a really good development both in Norway and Denmark during the quarter.
We can take the next slide, please. Knowit's Connectivity. A lot about industrial customers and e-embedded solutions, reporting sales of 304 million SEK during quarter, a growth with 17% in existing business. Really good. Margin was 11.4%, and an increase EBITA in absolute numbers compared to last year. We see high demand for our competence both in Poland and Sweden. Connectivity is only in Poland and Sweden, contributing to the overall result. We have been successful in negotiating the existing assignments, increasing prices with the good inflow connected to new clients. All that despite a more challenging market.
The quarter is strong, and I think that it shows that we are able to be agile and adapt to the market quick. We can take the next slide, please. Our management consultancy Insight side, which as you know now, 2023 is quite a lot bigger than it was a couple of years ago, due to a really good organic growth and a couple of acquisitions. We are reporting sales around 247 million SEK for this quarter, growing by 6% including acquired entities. We see a really good demand for cybersecurity and legal competence. Clients are investing in implementation projects, finance projects, et cetera.
We see a little bit more challenging and slower pace connected to some of the strategic projects. As you know, we did an acquisition in Insight in Finland after summer last year, and we see a good recovery in the Finnish market and a stable development for the quarter. With that, we can take the next slide, please. We will go into the figures a little bit more in detail and with that, I hand over to you, Marie.
Thank you, Per. Looking at the whole group, we delivered sales of almost 2 billion SEK compared to 1.7 billion SEK reported for the same quarter in 2022. This contributes to a growth of 16% and 6% when comparing Knowit now and including the acquired units a year ago. Adjusted for FX, the growth was 5.4%. Adjusted EBITA, adjusted for acquisition and integration costs amounted to 198 million SEK for the quarter, and this is an increase compared to the same quarter last year when we made 194 million SEK. Our adjusted EBITA margin was 10.1% in the quarter. Last year it was 11.5%, so we have a decrease.
Why, you might ask, and this is a margin decrease that is due to an increased market uncertainty, as Per mentioned before, implying longer sales cycles, and with that come some challenges in utilizing consultants and in specific, the younger ones. As Per also mentioned, this makes us to have full focus on sales on our way forward. Next slide, please. Looking at the revenue and EBITA development, we're happy to present yet another quarter with good growth and a stable profitability. This is during a period of large external uncertainty regarding future macro developments. Our adjusted EBITA for the latest 12 months is at 613 million SEK, and revenues are at over 7 billion SEK, and we have an EBITA margin of 8.6%. Next slide, please.
We continue to have a solid financial position and a strong balance sheet. Our net debt at the end of the quarter amounted to a little more than 1 billion SEK, an increase following intense acquisition activities in the last year, also following an increase of other liabilities linked to leases on new premises. This corresponds to a net debt to EBITDA ratio of around 1.4, which is well within our financial target of 2. Next slide, please. We're well-positioned to manage a possible downturn well. Our largest segment still being the public sector that tend to be stable even in worse financial times. Nearly 40% of revenues come from this segment, we've seen the share increase compared to last year. This is partly due to an increased demand from the defense sector.
We also see that projects that are business critical to the digital transition remain, and the fact that development resources are scarce speaks in favor of consultants like us. With that, I pass the word to you, Per, to give a short summary of the quarter. Next slide, please.
Thank you. Well, now we have the last slide-
Next slide.
... to summarize. Next slide. Well, we see a high demand for our services across the Nordic region, but some clients take longer time to decide. That of course impacts the utilization rate. With that said, we have been really good in increasing prices since last year and are proud of that. We think that the price increase will remain. We see more difficulties to utilize junior consultants, and we have stronger focus on sales activities, but still continue to recruit where we are able to do that. We also see that the market outlook for the coming year is uncertain and market visibility is quite low.
We are strongly positioned to continue delivering good and profitable growth even in such a market. That is reflected for among others that we have around 40% public sector that will be really stable in this market. We also see a lot of new possibilities connected to new technology development the coming years and the big mega trends connected to electrification, AI, sustainability, et cetera. With that said, I will now open for questions.
Thank you. Ladies and gentlemen, if you'd like to have questions, please press star followed by 1 on telephone keypad now. When preparing to ask your question, please ensure your phone is unmute locally. We have our first question comes from Daniel Thorson from ABG. Daniel, your line is now open.
Yes. Hi. Thank you very much, Per and Marie. My first question is, on the strategy on net recruitment ahead, given the lower utilization on junior consultants and your strong recruitment last year. Do you plan to have a lower net recruitment in the coming quarters than previous?
We will see. We had a lower pace in net recruitment in Q1. I think that that will be the case 2023 as well, focusing a little bit more on utilize our existing staff. In some areas, we also see a really strong demand still, and it might change quite quick in this market. We will see. Then we'll be able to change in addition to that. The big broad answer is, I agree, it will probably be a slower net recruitment, but we will adapt.
Yeah. I see. Then the second question is prices in relation to salaries. In the last couple of quarters, I guess that you have had a positive yield effect here in the market, at least with prices increasing more than salaries. While looking ahead here, it's reasonable to think that prices are not increasing at the same pace given the lower demand, and salaries, they will come up quite a bit here from April and onwards. How do you think that's gonna play out in the coming quarters? Should we expect a negative yield effect on your reporting numbers?
I suppose so, but you always have that. We have had that in Q2 2022 as well. It's the prices are coming in Q1 and the salaries are coming in Q2. We will see that this year. We saw that last year as well. That's right.
Yeah. For now, we don't really see an issue with prices. That is not our main concern.
No. As I said, the last Q4 report, we think that the price increases will equal the salary increases in 2023 as well. We will be able to hold the higher salaries with higher prices. Actually, the negotiation on the labor market in Sweden, at least, was quite reasonable. I'm quite happy with that.
Those are the points that you're making, Daniel, that the increases in salary is coming in the second quarter, if you remember.
True. Yeah. True. Then another question on the internal issues with acquisitions you made last year causing some losses in Q3 and Q4. Is that in a better shape now? Do you see profitability in? If I remember correctly.
We are performing better as I talked about in Insight in Finland. As I see it in Finland, that was Marketing Clinic, they are now integrated in our Insight business. We see a good pace there in Finland. I think that there are still things to be done and we are not completely happy with the margin, but it's far better than last quarters. It's really on the right way. I still think that we have some work to do connected to Marketing Clinic in Denmark. As I see it's on the right way as well.
Yeah. I guess, it's Miracle in Denmark-
sorry. Miracle
I totally agree with you that, the trend is going upwards, but they haven't reached, their full potential yet.
Okay, sounds good. On the margin decline here, it has been declining for 4 quarters now in a row. When I look ahead here, you will have a calendar effect that is a headwind, price, salaries we have talked about, et cetera, but you're coming from really low levels as well. Do you think we should expect the margin to stabilize in the coming quarters or to slightly increase? How do you look at the rest of 2023 as a whole to give an indication at least?
Yeah. I don't think that I will speculate too much about the margins. I think that we have seen a decrease in utilization rates for a while. I think that as we said in the report as well, we have an underlying stable market, but the lead times are longer and there are somewhat some inconsistencies in different customers. I think that that will probably be the case during 2023. I don't think that the market will slow down even further. No.
Okay, that's helpful. Then very last question. This is obviously a question for the board mainly, but how do you look at share buybacks? I mean, the share has been relatively weak versus competition in the last one year or so. The valuation is around where you have acquired companies, et cetera, with much lower risk in your own stock, obviously. Do you have any discussion on that or any view on share buybacks?
No, we haven't had that. If that comes, it comes, but there are no such plans right now.
Okay. Thank you. That's all for me.
Thank you, Daniel. As a reminder, ladies and gentlemen, if you would like to ask any further question, please press star followed by one on telephone keypad now. When preparing to ask your question, please ensure your phones are muted locally. We have another question from Daniel Djurberg from Handelsbanken. Daniel, your line is now open.
Thank you, operator. I would pronounce it Djurberg, but it's not. That's okay. Yeah, good morning. I have a question or a couple, if I may, starting off with the demand that you saw a little bit of drop in some areas. Can you talk us through a little bit if it was, you know, weaker in the end of the quarter and also how Q2 has started off here in April, especially obviously in those areas like Insight where you have perhaps the being quite early in the business cycle downturn? That would be helpful.
Yeah. I don't see any big changes during the quarter. If you look at... If I'm gonna take you through this little bit shattered situation, we see, for example, in Norway, the public sector, the market is stable, but we see that the projects are not growing, even if the prices are increasing. That means, all in all the same, that we have maybe a little bit less people into some assignments connected to that. That's all right. We see that they try to mitigate the inflation by not increasing costs connected to public sector, but demand is still there. The projects are still there. That will eventually pick up whenever the interest rate stabilizes, I suppose.
If you look at the retail, we have decreased that you see in the pie chart connected to industries decreased a little bit. There is still a demand, but it is a little bit weaker in that area as well. As you can see in some other areas connected to public sector and especially connected to the defense industry, that mainly is part of the public sector, at least in Sweden, we are actually increasing quite a lot.
Perfect. if I may raise another-
Yeah. Maybe.
Sorry.
Yeah. Maybe something connected to Insight as well. There is a shattered situation even there because we see an increase connected to security and lower consultancy and the decrease connected to strategy consultancy.
Perfect. This comment you do that it's a little bit less demand for junior consultants, it's making it a little bit tricky to use this, you know, demographic play or to secure the high margin from, you know, using lower price consultants. How much of a hurdle would you say this is? Can you use another type of, you know, knowledge ladder or value ladder that you can get around this issue? Is it fully impacting Q1 or would it be? How material is it?
I think that we already are quite a lot more resilient to that than a couple of years ago because we have been working a lot with the increasing the size of projects and customer relationship. We also say that, for example, in Experience and with bigger projects, we also see that it's easier to utilize younger consultants into parts of those projects. Of course, in some parts we do still have more time and material and that's the case where it's harder to utilize younger consultants. It's not that it's harder everywhere, it's just in some places. And what will we do to mitigate that?
Of course, to try to move, those consultants into all of those a little bit bigger and really good customer relationships that we have with bigger customers and bigger projects. It's been a challenge, but that's what we're gonna do and gonna continue to do that strategic work that we have been doing for quite a while now.
Perfect. If I may, last question here on, you mentioned obviously Sweden, the salary increases that is manageable, and so forth. Can you comment a little bit more of what you see in other markets such as Norway, Finland, and the mix between cost inflation and, you know, price hikes that you can do for 2023?
The situation is pretty much the same. It's a little bit different, but both salary increases and inflation, as you know, in not that much in Finland and Denmark and Norway, but especially in Poland, where both salaries and inflation is increasing a little bit more. In the Nordic countries, it's pretty much the same.
Perfect. My last question, sorry for that, would you say that Q1 did follow your own expectation or in the market development, or were certain big surprises that you could share with us on the up or downside?
Yeah, no, I was actually quite happy with the outcome of the quarter. We increased profit, we grew quite substantially. We see that the demand is there. Of course, it's a little bit more challenging connected to longer lead times. We did start to see that even in Q4, and now it's showing in Q1. I think that we will have to live in this market for a while now. I think that we adapt quite quickly to that. So I'm quite happy about that.
What we haven't talked about is that I am also happy about that there is some mega trends that are probably, compared to what we talked about in Q4, moving even faster connected to sustainability, connected to electrification, and connected to AI. That is something that we see will pick up more and more over the years to come.
Perfect. Thank you so much, and good luck in Q2 here, and yeah. Thanks.
Thank you.
Thank you.
Do we have any more questions, or otherwise we have from? Yeah, we have.
From the webcast.
The webcast.
The first question is from Tom Guinchard at Pareto Securities. Can you give some more detail in regard to the utilization rate and the effect in Q1 2023 versus Q1 2022 and Q4 2022? I suppose for Marie.
Yes. Well, we don't give out the details on the utilization rate. What I can say is that we had a very strong quarter, very strong Q1 in 2022, if you remember. The utilization was good. Then we could see that we had a big decline in the last quarter of 2022, and then this quarter, we can see that the market is not as hot as it was last year. It's decreasing in the Q1 of 2023.
Great. We also have a question from Raphaël Moreau at Amiral Gestion. Do you plan to do more M&A, and how do you see seller expectations regarding prices versus 12 months ago?
Yes. M&A activities have. We did have a lot of M&A activities last year and the year before that. I think it's good for us internally to take it a little bit slower now in Q1 and Q2. What will happen after that, I don't know. It depends on the market development. We have a stable balance sheet. We have been able to. Now we have only been talking to Marketing Clinic and Miracle, which did have some problems last year, and we are now fixing them. We have also quite a few extremely good and overperforming profitable acquisitions last year. They seems to like to be a part of Knowit.
I think that the agenda connected to or the strategy connected to acquisitions will eventually pick up again. I will tell you when it happens. Connected to salaries, I think that I shortly answered that before. We see that the salary increases will equal the price increases compared to last year. I'm quite happy about that, the outcome connected to salary increases in our industry between last year and this year.
Great. We also have a question from Raymond Ke at Nordea. Financial costs ended up at 25 million SEK. Most of this, about 16 million SEK, was interest expenses. Was there anything unusual here in the rest, about 9 million SEK, that should not be extrapolated?
No, we had interest costs, and we also had like, a recalculation of earnouts. We do that normally every quarter. Nothing really unusual.
Great. No more questions here.
All right. No more questions on the webcast. I suppose that was all for today. Thank you for listening in and have a really good day. Thanks.
Thank you.