All right, good. I think everybody's been able to dial in. It's one minute past, so good afternoon, and welcome, everyone. Two things before we start. Number one, we are recording this session. Just to let you know, it will be published on our website. And secondly, we will ask you to stay muted until you need to say something, and including, in particular, when we get to the Q&A session here at the end. So thank you very much. We'll present the Q2 results. I have with me our, I guess, still relatively new CFO, Noora. Welcome. The two of us will present the results. I'll start with giving you a little bit of background on Proact and the market. For those of you who have followed us for a little bit, it won't be any great news.
You know us pretty well by now, but we also have quite a few new shareholders since the last couple of months, so it'd be good just to give everybody a level set in terms of Proact. And then, of course, we'll go into the Q2 results and drill into that part in detail, and obviously leave plenty of room for questions. So again, as most of you know, Proact, not only are we turning 30 years old this year, we're quite, quite proud of being so old, in particular in this industry, in the tech industry. It's a bit of an achievement in itself. We are helping customers with technology platforms and data management solutions for their truly critical IT solutions. So we do mission-critical IT solutions and data management solutions.
We primarily serve enterprises, so large and medium-sized companies and public sector organizations across Europe. You can see our footprint here on the map. Sweden is our largest market still, followed by Germany, Netherlands, UK, but we do have operations in 12 different countries, primarily in Europe. We are listed, of course. We have about 1,200 people employed, and one of the key things when it comes to our employees is that they are incredibly skilled. It's a very important part of our success factor and our ability to serve our customers to be really good at what we do. So we put a lot of focus and a lot of pride in having great colleagues and very skilled colleagues. A little bit more on our footprint.
I won't go into all the details here, but you can see we're organized across four regions, or we call them four business units, Nordic and Baltics, as I mentioned, the largest, Central, West, and the UK. This is important, we are quite decentralized. We're meeting our customers in each of our local countries. We beat our competition in each of our local countries, and this is important to be close to our customers, really know the local market need and the local customer needs and the local competition. But at the same time, we are building a common agenda and building on some of the synergies and strengths we're getting out of being a bigger, bigger player across Europe.
In particular, our cloud service delivery is coming out of a few, what we call delivery hubs, and we are standardizing the way those delivery hubs are delivering their services, so we get scalability out of it. We can build competence centers or centers of excellence in our delivery hubs. UK, for instance, is our excellence center for security services, and they serve all our countries, whereas Germany, for instance, is our center of excellence for networking and can serve any country. We get areas of expertise, we can pool competencies, but at the same time, get scalability across our footprint. Excuse me. In terms of what we offer in a little bit of a just kind of product line concept, there are four categories: our systems business, which is a reseller business of hardware and software.
It still makes up roughly half of our revenue. Very traditional business model. We sell equipment to our customers, and they pay immediately upfront, so it's a quick turnaround, an immediate transactional type of a business. Support, so this is the technical expertise, making sure that all those systems and solutions we've sold are running at the level expected by customers. So this is a contracted service. Typically, these contracts are running for three years. The customers will pay upfront, so it's an upfront payment, but booked or deferred over the length of the contract in terms of our revenue recognition. Third, and maybe most strategically important, our own cloud services. So this is our as a service offering, storage as a service, security as a service, container platforms as a service, all of those products we have in our portfolio.
Here, of course, is also a contracted recurring revenue service. Typical contract length also here, about three years. Customer pays on an ongoing monthly basis, just like a traditional subscription service. And then last, and actually least, consulting and professional services. This is all, anything from architecture, advisory services, installation, implementation, design, training, typical consulting business model on time and material. And then we've highlighted just a few areas that are extra important. They are not all inclusive, but they are a little bit extra important, these days and these current times. Cybersecurity obviously super important to our customers and an area where we're building a lot of expertise. Cloud services, including any type of cloud services, but including them being able to develop applications on top of the cloud.
AI, maybe hotter than ever, or definitely hotter than ever, something super important and requires very, very high-performing infrastructure with their customers. And last but not least, the Microsoft skills, both on the consulting side as well as the Microsoft cloud side. So these are just four examples of competence areas where we have significant skills across our footprint. Market trends, most of you know this quite well, we believe the market pace is growing or the pace of growth is increasing, I should say, driven by what we've always seen, meaning a need for our customers to just drive innovation and leverage the power of technology and the power of data to drive their business.
But we do see an increased level of investments around security and starting to invest in platforms for AI as well, although quite early still in the AI days. So I guess the message here is very clear that we are still well-positioned in a growing market, and we believe that the pace of growth is increasing, both in our systems part of the business, so the reseller business, but also in our services business, of course. So I've said this before, but I just wanna give you a little bit more color to it. Some of you've heard this before again, but what we do for our customers are non-trivial and very critical solutions. We help them with the very fundamental parts of their business.
We've highlighted, for instance, the regulatory need in the UK for all of the NHS hospital and healthcare providers, that all their patient records needs to be digitized within the next year or so. So there's a big push in the UK to make sure that all those patient records can be digitized. These are huge amounts of data, but also, of course, very sensitive data. Here, we're helping customers with cloud services, and hand-in-hand with partners, the applications that are helping them to digitize their records. Again, very critical that these platforms are running with high reliability, but also a high degree of privacy and, and data security. We talked a lot about our software as a service customers, and we mentioned Fortnox specifically.
Another great example, they are, of course, providing their service through their software as a service products, helping, in the case of Fortnox, small and medium-sized enterprises manage their finances. Their service also needs to be up and running 24/7 every day. The data is super critical. It may not be tampered with, it may not disappear. We are helping them with everything from design, running center services, selling equipment to them, consulting. It's just two examples of customers that are running infrastructure and solutions that we've delivered to them in very, very critical scenarios. So we believe we have a great portfolio, and we can help our customers across their critical use cases. Which takes us into the quarter. We're quite, quite happy with the results of the quarter. 2024 has been a good year so far. We're halfway through it.
Solid growth in the quarter, continue to improve our profitability, and continued strong cash flow. So good across the board here. We have increased our revenue by almost 6%. As you can see here, we're increasing EBITDA by almost 19%, continue to grow our annualized revenue, annualized recurring revenues. So all great from a performance perspective in the quarter. Some of you may have noted that we've also initiated yet another share buyback program just earlier today, as following a decision from the board this morning, which is good. We have such strong balance sheet. We think it's fair to continue reallocate our capital a little bit through the buyback. That does not mean, and you know this already, but it's worth repeating. It does not mean we're not also active in M&A.
Quite the opposite, we're very active, but we think we have a strong enough balance sheet to do both. I mentioned already, we see the macroeconomics improving. I think there's been a little bit of an ice age over the few past years, so we think the pace will pick up a little bit, which is good. And again, demand for digitization in general, but also those little bit more specific drivers behind cyber protection and AI. And then we've had a couple of other good things in the quarter. In particular, we launched a couple of services around cybersecurity, including handling incident responses and some recovery services. Also been highlighted, as some of you know this, as NetApp, which is an American provider of storage technology.
We're one of the largest partners in Europe, but we're the first in the world to offer some of their new security services to the customers. So we're quite happy that we are in the forefront here of helping our partners and our customers with cyber protection services. It's a good, good quarter, good first half of 2024. And with that, I'll hand over to you, Noora, and we can dive in a little bit to the details.
Thank you, Jonas. On this slide, revenue in the second quarter reached SEK 1.3 billion, an increase of 5.8%.
Of which 5.5% organically. The improvement is driven by strong system sales, which is up 8.2%, of which 7.8% organically. The services business increased with 3.1%, of which 2.8% organically, compared to Q2 2023, driven by support services and managed cloud services. Business Unit Central stands for much of the increase in this quarter due to some larger deals in the current quarter and weak comparison period. All other business units remain stable, with some changes in product mix, which we will come back to. Services revenue, revenues accounted for 43.5% of total revenues, driven by the good system sales in this quarter. As you already know, the system sales is a bit volatile, which with large deals in individual quarters impacting the mix.
That said, we have a positive view on the future for the system business, too. On the next slide, annualized recurring revenue increased to SEK 1.8 billion in the second quarter, an increase of 5.4% compared to Q2 2023. The slower growth pace is mainly attributed to historic development, driven by lower order intake of cloud services in mid-2023. During the quarter, we have signed for new cloud service contracts amounting to SEK 134 million, an increase from last year's SEK 116 million. Next page, please. Adjusted EBITDA amounted to SEK 97 million, an increase with 19% compared to the same period previous year, where business units West and Central stand for the majority of the increase, both with somewhat easier comparable figures.
The increase is driven by improved gross margin from last year's nearly 23% to slightly above 25% this year, coming from increased margins within system sales, as well as continued efficiencies within service delivery. As a result of the higher gross margins, EBITDA margin increased to 7.6%, compared with 6.8% last year. Further to cash flow and net cash position on the next slide. Our net cash, cash position in the end of the quarter landed at SEK 122 million, compared to SEK 80 million at year-end. Our strong financial performance has enabled both share buybacks and dividend, still leaving us in a stable financial position at quarter end. As Jonas mentioned, the board has also earlier today announced a new share buyback program that will run starting now. Some more cash flow on the next slide.
Cash flow from operating activities amounted to SEK 130 million. Total cash flow in the quarter was SEK 15 million, compared to -SEK 78 million last year. And now some details from our business units, starting with Nordic and Baltics on the next slide. Revenues remained flat at SEK 649 million in the quarter. EBITDA increased with 2.7% to SEK 58 million, resulting to an EBITDA margin of 8.9%, being above the group target of 8%. Business Unit Nordic and Baltics continues to deliver stable results in the second quarter. Further to Business Unit UK on the next slide. In the UK, revenue decreased to SEK 178 million.
The organic, organic decrease was 4.7% and stems from both systems business as well as services, to some extent due to longer sales cycles. First half of 2024 has still started good, with over 6% growth, and we are seeing good momentum in the UK market. Gladly, EBITDA increased to SEK 12 million, corresponding to an EBITDA margin of 6.9%, an improvement with 2 percentage points, mainly driven by improved gross margin. On the next slide, Business Unit West . Revenue remains flat in West at SEK 205 million. A small organic decline, though, of 0.7%. Consulting and cloud services are showing good growth in West, while systems, the systems business declined.
EBITDA increased from last year's SEK 1 million to SEK 7 million this year, a margin improvement of 3.1 percentage points, to an EBITDA margin of 3.4%. The improvement mainly driven by improved gross margin. Last but not least, Business Unit Central on the next slide. Revenue increased with 42.2% to SEK 265 million. The organic growth was 42%. The increase of it compared to somewhat weak second quarter last year, is a record quarter for Central, driven by some larger system deals in this quarter. The services business was down with 2.7%, 3.1% organically. EBITDA landed at SEK 18 million, corresponding to an EBITDA margin of 6.6%. The improvement in EBITDA is mainly attributed to the increase in revenue.
On the next slide, our financial targets. In the quarter, our organic growth reached 5.5%, slightly above the long-term financial target of 5% of organic growth... and an additional 5% growth via acquisitions. Looking at total growth, comparing last 12 months to full year 2023, we still have a way to go, but we haven't made any acquisitions during a slow M&A period in the market. EBITDA margin in the quarter was 7.6%, and last 12 months summed to 7.3%. We are definitely closing in on the long-term target of 8%. As I previously mentioned, we are actually in a net cash position, meaning that we are well below the set level of 2x EBITDA in leverage.
Return on capital employed is also well in line with the target of 20% at 20.6% for the last 12 months, driven by good performance. This concludes the financial overview of a good second quarter. Back to you, Jonas, for some final comments.
Thank you very much, Noora. I'll just summarize. A strong quarter, definitely. We're very happy with it. Good way to end and start the summer vacation. So revenue up almost 6% to just short of SEK 1.3 billion. Great improvement in the EBITDA, almost 19% better than last year, and a very strong financial position. And obviously, we are very positive about the market going forward, and we see that we are in a great position in a market that continues to grow, driven by these areas we've talked about, hybrid cloud, security, and artificial intelligence. So overall, we're quite, quite good as we now leave for summer vacations. So with that, we will open up for questions. You will have to unmute yourselves. Raise your hand if you're polite. There we go. Daniel, always eager. Daniel, go ahead.
Yes, thank you very much, both. I have a question on the gross margin, which was strong already in Q1, but also here, about 25% in Q2. And you told us after Q1 to not extrapolate the stronger level, but now again, it's strong, and you don't explain it with a specific big system deal. So, should we expect a slightly higher gross margin, in the coming quarter, at least? Or how should we view that?
So gross margin is, it's good. We cannot complain. Well, it's driven by both, similar as Q1. So we are seeing improvements in our services business, which is very important and, and definitely more, let's say, both predictable and sustainable. And then we've had good margins also in the systems business. We always put a lot of focus on the margins, also in the systems business, but it is a little bit more volatile, as, as you know. But this is good. We can show two quarters in a row that we can keep gross margins, high and good in both of those areas, both systems and in services.
Yeah. Okay, that's fair enough. And then a question on cybersecurity. What type of services or products are most demanded by customers in the markets? And what you see, and how could this affect profitability?
There's a couple of things, and one of the things that have happened, maybe over the, let's say, last half year or year maybe, is that our customers are definitely realizing that there's no guarantee from being impacted or attacked and successfully attacked by hackers, or unsuccessfully, if you're the customer. So the point is, I think customers are also realizing that it's not enough to just have a protection against attacks. They also need ways to recover in the worst case, in the case they have been attacked. So what we're seeing increasingly over the past few months or quarters is disaster recovery protection.
So anything from multiple backup solutions, immutable backup storage, so backup solutions that are disconnected from the internet, from the customer network, so they can guarantee that they're not impacted, even if the customer is impacted. Disaster recovery, clean room services. So there's a number of new kind of disaster recovery-related products and services that are definitely picking up. And then, of course, still the more, let's say, protective services, so monitoring, incident response, vulnerability assessments, those types of services. But I think in our case, we definitely see the pickup in the near history around backup, disaster recovery, and those types of services.
Yeah, I see. And, regarding the cybersecurity revenues you have today, how much is kind of proprietary solutions or products or services from you, and how much are sold from third parties, just to understand your competitive advantage?
Right.
Sorry.
We don't share that number, but it's a good mix. So it's a combination, of course, of product sale, of services sale, but frankly, more importantly, the expertise of our engineers. So it's—we don't share the number, but frankly, it's also a bit hard to pinpoint that number. But it's significant portion of expertise in there.
Okay, that's good. And then a question on the consulting revenues in the services here. That growth number in service revenues, that 3%, was a bit, a bit weaker than I expected, and you blame some consulting revenues, some consulting services. What type of areas, what type of geographies were you seeing somewhat slower growth in the quarter?
We've seen slower growth in the UK. That's a result of slow system business in the end of last year. A little bit slow also in West, which is more related to recruitment. So it's in most cases, our utilization is actually pretty good, and the revenue is a lack of staffing, a lack of ability to hire people, with the exception of UK, where we also have a little bit slow system sales end of 2023.
Okay, I see.
The market is still good for the PS services, but we need to find enough staffing to cover the opportunities.
I see. I see. And then regarding products and regions or more regions, Noora went through all of the regions, obviously, here in detail, but where do you see the strongest delta in terms of improved demand? It sounds like you are quite positive across basically all end markets but which have improved during 2024?
I think Germany's picked up. UK is picking up also. If I look forward, I think maybe UK is still the weakest, which is a little bit of a change in my mind, 'cause I was always been worried about Germany, but it seems like Germany is firing up quite okay after a slow period. UK with elections and still, I guess, relatively negative effect from Brexit, although Brexit a long time ago, is hampering growth a little bit. Well, we're still quite bullish about UK. But if you look at the market, per se, maybe a little bit less growth in the UK compared to the other three regions from a market perspective.
Yeah. No, I see. That's good. That's all from me, for now, at least. Thanks.
Good, Daniel. Thank you. Anybody else? No, no other questions. Great. Thank you, everyone. The slides are available on our webpage, so will the recording. We will come back on October 24 to report our Q3 results, but until then, thank you for dialing in, and have a fantastic summer, and we'll see you in October. Thank you. Thanks, everyone, and bye-bye.