All right, good. Thank you. Good morning, everyone. My name is Jonas Hasselberg. I have Linda Höljö here with me as well, our CFO. We're gonna go through the Q3 results for Proact. Before I start, two things that you need to be aware of. One, we're recording this session so we can put it up on the web, just so you know. You will all be muted throughout the session. If you do wanna ask a question, you need to unmute yourself first. Obviously, we'll also make sure there's plenty of time after the presentation for questions, but you will be muted and need to unmute when you speak. All right. Those are the instructions, here we go. We're gonna talk a little bit about, as normal.
We're gonna speak about our brief introduction to Proact. Most of you know us very well, but there may be some new ones out there, so we'll do a bit of introduction, high level view of the market, and then we're gonna go a little bit deeper into the financial results for the quarter. That's the agenda that you're getting used to by now. Proact, like I said, you know this already, we've been around for almost 30 years. Our value to our customers is that we help them get value from IT. We deliver IT infrastructure to large enterprises across Europe, between 30 countries. We're turning over a bit over SEK 4 billion now or even SEK 4.2 billion with this latest quarter, and we're about 1,200 employees across these countries.
You know this from before, one of the things that are unique about Proact is that we're very focused on providing very high skills and expertise to our customers. These 1,200 people are highly skilled. The same macro or overarching trends that are driving our business. Three or four trends have been going on for quite some time, but they're still the engine behind our business to a large degree. Number one is the business, if you will. Most or all of our customers are customers transforming their business in one way or the other, and they use IT and technology to transform it. Could be anything. We see customers automating a lot of their productions.
We see data to make smarter decisions or analyze data to deliver better user experience, sell their all sorts of different business trends behind the transformation. A couple of things in common there, definitely IT being another very important enabler. Being able to not only store, but actually use all that data in their business better. Again, whether that's making smarter decisions or just automating their processes, typically data is at the core. That's something Proact does very well, and we've been working on for the past 30 years, helping our customers get value from data. The other trend, which is also very obvious and has been going on for quite some time, is that practically all these investments are based on cloud technologies or what we call multi-cloud or hybrid cloud.
What we mean is that the actual technology architecture is cloud-based. It doesn't mean that it's what we would call a public cloud like Microsoft. It could be a Microsoft, it could be a Microsoft cloud solution, could be a Google, it could also be a Proact cloud solution, or in many cases, customers deploying technology in their own data centers using cloud architecture. Cloud here is a technology definition, not so much whether it's a Microsoft or a Proact or on-premise. The third one, which may be a little bit less positive, but still very important is of course the increase and continuously increasing threat of cyberattacks and becomes a very apparent top priority for our customers and an area where we also need to help them.
Those are the three big trends that we design our strategy around and where we deliver value to our customers. There are some more short-term dynamics that are interesting. In particular, semiconductor shortage is actually starting to normalize. You may remember almost a year ago in November, December of last year, we got hit pretty drastically by a shortage in semiconductors, and some of our deliveries were delayed. We went into this calendar year with a backlog of delivery that was significantly higher than it used to be. We thought at the time that this would continue throughout the first half of the year and then normalize during the second half. That's exactly what we're seeing now. It's coming up. We still have a bit of backlog. We'll talk about that when we get to the numbers.
We are delivering more and more of that. Deliveries are normalizing quite nicely now. No surprise, quite a bit of macro risks continue to blur our view of the future. We don't know exactly what's gonna happen in the next couple quarters. Ukraine war, inflation, recession, all make the ability of us to predict what happens next a little more difficult and the future a little bit more difficult to navigate. That's a little bit of an outlook to the market. I think you know pretty well what we do, but I'll give you a brief to refresh your memories. Again, we put our customers first and foremost, and it's something that makes us very proud.
We see it also when we do customer surveys, quite a high degree of, customer satisfaction, which is great. We deliver four different revenue streams, consulting advisory services to help our customers anything from design their architectures, work out their logistical installations, transition projects, even operational engagements, training, all sorts of advisory services. That's one revenue stream. Selling, reselling of hardware and software, so the systems we deploy in a data center of the customer. That's the second revenue stream. Third one would be technical support. We have some software and systems always up to date and working perfectly. Customer support is a third revenue stream. Last but definitely not least, our own cloud services, helping customers move away from having to operate infrastructure and let Proact do it on customer's behalf.
Across all this, we have a number of offerings anywhere from storage solutions, networking solutions, backup disaster recovery solutions, cybersecurity protection solutions, and solution to help our customers get value out of the data, including artificial intelligence platforms. A pretty broad portfolio across our value propositions to our customers. Again, we can deliver a number of different ways. One thing that we can't stress enough is that we are very flexible. We let our customers decide how they want these solutions to be deployed. A lot of our customers still have significant amount of infrastructure in their own data centers. It could be for cost reasons, it could be for regulatory reasons. They wanna be in control of their data.
They don't want their data to be in a different country or in, more importantly, not in a different country's jurisdiction. They may have a lot of legacy applications that are difficult to move. There may be all sorts of reasons. Most of our customers wants to move to different cloud solutions. That could be, again, they could be hosted by the customers themselves. They could host them, or a public cloud provider can host them. We don't really mind. We have an offering portfolio that supports any of these variants. That's very important because we believe most large enterprise customers throughout Europe will have a mix of all these models, depending on, again, business drivers, cost drivers or legacy.
It's important for us to be able to serve our customers in all these different variants. That was a little bit of a refresher to everyone. Q3, a quite good Q3. We're very proud of the results. Good growth, 36% revenue growth and quite a bit of organic growth of 21%, which is obviously super good. This is driven by a good both in terms of the strategic value, but also quite a bit of consulting horsepower with the 85 people. Most of you know this already. We paid EUR 12 million in cash-free, debt-free compensation for sepago.
There is an earn-out structure on top of that over the two and a half years, and they bring about EUR 15 million of additional revenue into our business on a yearly basis and also positive EBITA contribution because they're running slightly higher average EBITA than Proact. Again, a good acquisition that was closed in Q3. A few other highlights in the quarter, a little bit more on the soft side, if I may use that expression. Important, but not as numbers driven, maybe. In Sweden, there is a company called Karriärföretagen, the Career Organization.
They nominate and award companies that are good in recruiting and developing young people's careers, and we've been awarded the recognition of being one of the top 10 in Sweden, which is great. They use a multi-step process to identify these companies. You need to meet certain requirements of just basic having, you know, being of a certain size, having an active HR and culture, people culture activities. Ultimately, there is a skilled jury that handpicks the final companies after they've gone through the funnels. We're one of the top 10 companies in Sweden, which makes us very proud. We also have another similar appointment in the Netherlands, more from a customer perspective.
They've been awarded or scored very, very high in a local customer satisfaction survey done by a company called Giarte. They are the authority in the Dutch market on customer experience, customer quality, and we're one of the top players in the IT industry in the Netherlands in terms of customer experience, which is also great. More on the product side. You may remember we launched a product in the second quarter of this year, which we nicknamed Container-as-a-Service. It's a product that came out of the acquisition of Conoa about a year and a half here in Stockholm. We provide a turnkey solution to customers to start doing container application development. Native cloud rapid application development. This was launched in the first half of this year.
Now we've earned a certification of the global Kubernetes organization. We are now a certified Kubernetes platform, which is important. That means that we comply to all their standards and requirements. This platform is a good starting point for our customers to get going with application development and a good complementary product in our portfolio, of course. A couple of positive things on top of the numbers in the third quarter. With that, let me hand over to you, Linda, and we'll dive deeper into the numbers.
Thank you, Jonas. Highlights, as Jonas already mentioned, strong revenue growth, 36%, where we see both systems and services growing quite nicely. Systems, slightly more at 42% and services 28%. The revenue growth then translates into nice, profit growth, adjusted EBITDA growing to SEK 78 million, growth of 31% and ending at a margin of 7.1%. Quite a nice level. Profit before tax then, for the same reasons, growing by 13% to about SEK 56 million and margin of 5.1%. If we go into some more of the details, the revenue growth, 21% was organic growth. Acquisitions, which is ahd that we bought in Germany, last year, and sepago are the two acquisitions primarily contributing here, 10% growth.
We also have positive translation effects from currency of 4%. As Jonas mentioned, when it comes to our services, strong underlying demand. We closed new cloud contracts at a level of 158 million SEK. If you look at the right-hand side, we see the recurring revenues growth, which is the combination of the managed cloud services and support services, growing by 26% year-over-year, of which 6% organically. Also good organic demand to an annualized level of about 1.5 billion SEK. The services growth then 28%, 6% was organic. We do see organic growth in all of our three services streams.
Cloud revenues in particular growing 34%, and this is ahd primarily contributing when it comes to the acquired part, but we also do see organic growth. Support services growing very nicely organically, and consulting services also growing. Here sepago, of course, is contributing to that growth. The total there is at 37% growth. Systems, which those of you who follow you know is more volatile. We had a good quarter, so 42% growth, of which 34% organically. Coming off of a slightly weaker quarter last year, third quarter. We do see good underlying demand in most of our countries. We have organic growth in all business units except West here. We do see, as Jonas mentioned, that that's with supply chains delivery times normalizing.
We have reduced some of our backlog. It's still higher than normal, but it has been going down for the past two quarters, so that's contributing to the organic growth as is some of the price increases we're pushing through. But also excluding those, we do see good demand for our systems as well as our services. If we go to the next slide, profitability development. So Adjusted EBIT of SEK 78 million, margin of 7.1%. That is at a high level for us. Q3 typically with vacations is slightly higher margins. We see that the Q3 last year was actually even higher EBITA margin. Compared to last year, the gross margin did decrease a little bit, still at good levels, but decreasing then primarily in systems.
As Jonas mentioned, we had a few deals with little bit lower margins, and then last year was at a relatively high level comparatively. SG&A costs increasing by 6% for comparable units, so organically. Less than our organic growth. We did continue to keep control over our costs, in particular, given the macroeconomic outlook. We do, however, see increases in travel, entertainment, other sales related costs, commissions, those kinds of things. Finally, in this graph at the bottom right-hand side here, our EPS is increasing compared to last year as the profit per share on a rolling twelve-month basis continuing to increase, primarily due to the growth in EBITA and EBIT. Quickly, if we move to our different business units. Nordics and Baltics, strong revenue growth.
Here we see strong systems growth, with the majority of countries having a strong growth, some delivery backlog as we see here. Services growing little bit less organically, 3%. Here it's support services that's developing strongly. EBITA margin going down a little bit. EBITA going up as a result of the revenue growth, but here is one of the business units where we have slightly lower gross margins within the systems business compared to last year. But still at a high level of the margin here. Our next business unit is U.K. Here, very high systems growth, coming off of the weak third quarter last year. So organic growth of 68%. Services decreasing organically. We do see growth here in our cloud services.
We won some bigger contracts last year that we're starting to deliver. Support is the one that's developing negatively here, and that is because we've had some quarters here with weaker systems growth. When we don't sell systems, we sell less of our connected support, so that impacts a few quarters out. EBITA margin is going down. EBITA up due to increased revenues, but margin going down a little bit with the lower gross margins. Our next business unit, West. Unchanged revenues compared to last year. Actually also fairly unchanged EBITA margin, EBITA, gross margin, as you know, have changed. It is, however, quite a big shift from a continuation between systems and services.
We continue to see organic decline in systems, while good growth for all of our services, but of course, especially cloud services, which is where we see customers moving towards. That was West. Our last business unit, Central. Here, as you know, we've then acquired both sepago and ahd. We see that revenue growth increasing, of course, with those acquisitions. Really strong revenue growth, 136%, with ahd contributing SEK 78 million, sepago SEK 27 million. Organically also developing strongly, 12% growth. Systems 17%, services 7%. We see both support and consulting services increasing here. EBITA margin going down, with the EBITA going up. A little bit similar trend here. We do see positive contribution from ahd and sepago.
In addition to a little bit lower systems margins, we also have a little bit of impact from integration costs of these companies kicking in, especially in SG&A costs. If we move to cash flow, we have, as we typically do, positive cash flow from current operations before changing working capital. For those of you who follow us, we do tend to have quite volatile working capital. It follows our systems business, a little bit unpredictable. It's very much about the exact timing of when customers pay and when we pay our suppliers, depending on when in the months we close the different deals and invoice our different deals. This quarter, we did have quite a negative effect from working capital, primarily due to a decrease in accounts payable.
Cash flow from investing activities, minus SEK 132 million. That's primarily the acquisition of sepago that we paid them in the quarter. Which means that then in total, we ended the quarter at cash of SEK 285 million. Okay. If we move to full year, positive cash flow from current operations here as well, of course, also still negative change in working capital year to date. Year to date, it's a little bit different view compared to just the quarter. Here it's rather increased receivables. As those of you who follow us know, over time, we do typically have quite good working capital positions. It's, we don't see any sort of big underlying trend shifts here yet. It's rather timing effects.
Other than that, cash flow from investment activity is also primarily impacted by acquisition of subsidiaries, financing activities, primarily leasing liabilities. Ending the quarter at a strong cash position of SEK 285 million. If we move to the balance sheet, equity ratio of 23%. Our net debt now is increasing, given the acquisitions, so we're at SEK 483 million in net debt, including leasing liabilities, which has increased with the acquisitions of ahd and sepago that require us to increase bank loans. We still have unutilized overdrafts and unutilized portion of our revolving credit facility, so strong financial position.
Good. Thank you, Linda. That takes us to this slide, which is highlighting our financial goals. We then look at the rolling 12 months performance, and it's positive to see that we're now ahead of some of our key targets. Our sales growth is almost 20% over the rolling twelve months. We're making at least some steps in the right direction also to our EBITA target of 8%, so 6.3 over this past rolling twelve months. Net debt over EBITA quite healthy, lots better than target. As we mentioned quite a few times, our return on capital employed is still below target for the reasons we've discussed with a high acquisition pace, if nothing else. Then we paid out our dividends here right before the summer.
We're sticking to the higher end of the span that we have as our policy and paid out 35% of dividends this year. That's good. Just to summarize before we open up for questions. A good quarter. Strong revenue growth, both organically and through our acquisitions. Very happy with the acquisition of sepago, which brings both a lot of consultants into our family, but more importantly, great skills and great expertise that we will be able to leverage in many ways. We see quite good demand in the marketplace, including for our cloud services. We see good growth in our annualized recurring revenues. All that said, we touched on it a little bit, future remains a little bit more difficult for us to anticipate. There's been a good demand in the market so far.
We don't know exactly how that's gonna play out as we go into primarily the rest of this year, but more so next calendar year or 2023. That's the summary. Thank you very much for listening. We'll open up for questions. Again, you need to raise your hand or unmute yourself and we'll try to facilitate the questions here. Fredrik, you're quick and first.
Thank you, Jonas. I want to start with the TCV. It was quite high, especially for a third quarter. Was there any large orders or is this the new normal?
No, there wasn't a particular single large order. It's quite well spread, both in terms of number of customers, but also well spread across our regions, which is good. I think we're gonna see a little bit of volatility also in TCV. We've talked about this in previous calls that TCV was slow during the pandemic. Clearly there's been a good demand in the market now for many quarters. As we look forward, this is an area of growth. I'm not sure we're gonna see a steady growth every quarter. I think we may see quarters where we go up and down still. On a rolling twelve, we'll definitely plan on a positive trend. That's the whole idea of our strategy.
We believe in the cloud.
Okay. Also your organic growth in recurring revenues have picked up. It was a similar pattern in the last quarter. Could you tell us a bit about w hy is that? Are your current customers buying more or is it the system sales that now converts into more support, for example?
We see growth in both support, but we've had a number of quarters now with good cloud sales. As we onboard the cloud customers, obviously the recurring revenues are going up. On top of that, ahd, as you know already, had a pretty high degree of cloud services in the revenue mix, so that's adding non-organically on top of that.
Okay. You mentioned that the economic outlook is uncertain, but if I understand you correctly, it's mostly due to the news flow that everyone can see. What indications do you get from your customers talking to them about the situation?
I think we've seen actually good activity in the market, you know, as these numbers here in the Q3 are showing. We've had in the past downturns been pretty resilient, Proact as a company and the IT industry as a business in the downturns. Clearly we see customers that are a little bit more hesitant in some markets. We see customers that may have planned for slightly bigger investments, and the actual investments they make are slightly slower, slightly lower. Excuse me. There are some anecdotal indications of hesitance, if anything.
Like I said, it's difficult 'cause we have seen in the past that quite a few customers invest their ways through downturns and do a lot of their transformation, cost savings, and IT investments to come out strong of a recession. It's quite difficult for us. Good activity in the marketplace right now. We see the same signs, just like you said, Fredrik, as when we read the news as everybody else does.
Okay. That's all from me. Thank you very much.
Thank you, Fredrik.
Any other questions?
You can either raise your team's hand or just unmute and shout out. Crystal clear. That sounds unlikely.
Hi, this is Fredrik Skoglund. I have a question.
Hey, Fred.
Hey. Hope everything is okay. Could you elaborate a little bit on the, you know, hardware supply chain situation and components? A little bit more about that, how it's looking now and looking forward, so to speak.
Right. Like I said in the beginning, we definitely see a normalizing of lead times for infrastructure components. We think it's partly driven by the fact that during the pandemic, there was a huge semiconductor shortage, and there was also huge demand for workplace solutions, so laptops effectively, to help people work remotely and change their ways of working. We see demand for laptops going down, which opens up a little bit of shift infrastructure going in, so from laptops into infrastructure equipment, which has helped. We also start frankly seeing a little bit of oversupply almost in the semiconductor business. Our business with servers and maybe primary storage is pretty good delivery times now.
They're not back to where they were before, but they're much better than they were in end of last year and beginning of this year. Networking equipment, which is a relatively smaller part of our business, is still a little bit of an extended lead times. Like I said, we think it's coming back to normal as we trail off this year and go into next year, and we don't think it's gonna bubble back up again anytime soon. We're still quite a bit higher in our backlog than we would have been a year ago, but it's better than it was when we went into this calendar year. We've been able to deliver out some of the backlog, but not all of it.
A follow-up question on that. Do you think during the pandemic when it was hard to get hold of the storage, et cetera, that clients have postponed those investments because it was scarce to get hold of it, and we might see a little bit pent-up demand looking ahead? Is that not the case?
No, I think it's realistic. There was a couple of things happened here, of course. One was during the pandemic, a lot of the focus for customers was to help the remote workforce and just manage the situation of the pandemic. Some of these infrastructure projects were pushed out in the future. We also talked about that quite a few times in this forum, a little bit less easy to make business on large contractual deals. Selling cloud services took a bit of a hit during pandemic for us because people didn't wanna sign up for three-year commitments without knowing what the future looked like. We think coming off of the pandemic, that had eased off, and there was some pent-up demand. If we look at the future, we think our market is
We've talked about this quite some time here. We think we can grow by at least 10% per year, and about half of that should be organic. When we look at our revenue across our revenue mix, I think that's roughly where the market growth is at. Clearly the 20% organic revenue growth is great, but it's not where we're gonna be forever.
Okay. Thank you.
Thank you. Any other questions? All right. You're always welcome to reach out to Linda or myself offline, if you have any other questions. If there's nothing more today, we will be back on February ten maybe, or something like that. Anyway, sometime in February.
It says in our quarterly interim.
Yeah, I'm sure it says. Apologies, I forgot. Anyway, we will do our full year report in beginning of February.
February 9.
February nine. Apologies. February 9. Feel free to reach out to me or Linda if there's anything else. Otherwise, we'll see each other again on February ninth.
Thank you.
Good. Thanks, everyone. Take care.
Bye.