Good morning, everyone. Welcome to this Q3 briefing for Proact. I hope you all can hear me okay. This is Jonas Hasselberg, I'm the CEO. We will be running this over Teams, obviously. Most of you, actually all of you except myself, are muted. If you do want to ask a question, no problem. Please use that raise-your-hand feature in Teams, and we'll let you in. That should be okay, so we can all ask questions along the way here. With that, it's 11:15, so we'll get going. Thanks for joining. Just look at the agenda. We're going to go through a brief, brief, brief introduction of the company for those of you who don't know Proact. Just to give you up-to-date information on the quarter and what's been happening over the past couple of months, the financial results, and then we're going to wrap it up.
Before we do, I would love to introduce Linda, who's our new CFO and joined here only a couple of months ago in the middle of August. Welcome, Linda, and please give us a brief introduction. Who's Linda?
Thank you, Jonas, for the welcome. Yes, I have been here for two months now. Previously, I joined from a company called Quant Service, where I was the CFO, similarly sized to Proact, but privately owned. Before that, I have worked in different settings within finance, both at large tech companies like Ericsson, but also smaller startups. I also have a background in investing, financial asset management, and M&A. I am very happy to have joined Proact. It is an exciting company, and it is a fun start to the job to present this quarterly report.
Great. It's great to have you on the team, so big welcome. All right, over to today's presentation. Most of you know us pretty well, Proact. Who are we? We are 26 years old now. We are serving about 3,500 customers across Europe with IT infrastructure. That's our expertise. We are definitely a specialist in that area, and that's where we focus. We are turning over around EUR 350 million, and we are 1,000 employees. Obviously, one of the things we're announcing this morning is an acquisition in the U.K., which adds another 50 great individuals, Proactivists, as we call them, into the company, which we'll talk more about, of course, during the presentation today. A bit of a background just to why we think we are in a very, very good position, and this is nothing new.
We've talked about this before, but our customers, obviously, and most often represented by our customer's CIO, they have a complex agenda ahead of them, and I've listed a couple of things here that are key. Obviously, for a long while, the majority of our customers are putting a lot of focus on driving business value out of IT infrastructure and IT investments. More and more they need to drive flexibility and speed and make sure that the company can adapt to new market environments, create new offerings to their customers, meet customers in a new way, or just be more efficient by using IT. One of the key fundamental building blocks in this is what we call multi-cloud. By multi-cloud, we mean that the majority of our customers will run IT infrastructure in a number of different ways, all working together at the same time.
They will definitely use public cloud like Microsoft or Amazon or Google Cloud Services. They will have old legacy systems, IT infrastructure they've been running for many, many years. They would want to have data protected and stored locally where they know where to keep that data and know that it's safe and that the data meets regulatory requirements. This will result in the fact that most customers will have a mix of cloud environments. That's what we call multi-cloud: local cloud, private cloud, public cloud, all in a combination. This is very important to our opportunity forward. Cost efficiency, obviously, a lot of harmonization and modernization. Last, and definitely not least, all of this needs to be secure.
Like we mentioned already, all the data in particular, all our customers need to know that it's secure, where it's stored, and how it's compliant with regulations. That said, obviously, the world has been a little bit different over the past six months, and our CIOs have a short-term focus on managing the pandemic, frankly. It puts a lot of new strains on their teams and on their own agenda. The basic, what we all do every day and we're frankly doing right now as we speak, remote working. Not all companies were ready to have 100% of their workforce dialing in from home and working from home. They need to accelerate a lot of their digitalization to increase efficiency, speed up innovation, enable new use cases.
Security threats, definitely always, of course, been high on the agenda, but now new threats coming up with employees and partners and vendors working in different ways. Obviously, working from home also needs to make sure that the workspace is modern and can handle all these new behaviors within the end users and the employees of our customers. The big trends definitely remain, but in the short term, a lot of our customers had to refocus their efforts to solve some of these more short-term challenges and short-term needs. For Proact, what does that mean? We've said this many times before, but we do believe this is a great opportunity for us. We are what we call a data management specialist. We don't want to be a generalist. We don't want to be everything for everyone. We want to be specialists.
For us, it's all about helping our customers manage their data and getting value out of their data. We talk about five core propositions or value propositions from our company, helping our customers with strategy advice or consulting advice in terms of how to manage data and their overall data strategy. Storing data, clearly the root of our legacy and where we grew up is in helping our customers to store huge amounts of data. Connect to their data. More and more data is distributed across data centers or cloud solutions, and users are spread across the company. This data needs to be available with high availability, low latency, a great deal of security. Connectivity is important and a core value of ours.
Protection and security, making sure that it's stored in a safe way and again, stored where the customer knows where the data is, is becoming more and more important. Ultimately, at the end of the day, customers want to get value out of their data. That means a lot of things, and it means different things for different customers. For some customers, it's just being able to analyze the data. For some, they use it to automate processes, run AI research projects, so on and so forth. Ultimately, it's all business value coming out of data. Proact then is focusing all these five core value propositions to bring to our customers. We have a product portfolio that encompasses these five value propositions.
It consists of a pretty large number of product areas: storage, security, networking, backup, data recovery, a range of product areas that we can deliver to our customers, either as traditional infrastructure, hardware, and software that we sell to the customer, but more and more, of course, as services that we deliver in the form of cloud services. Same functional value to the customer, but delivered as a service instead and offloading the customer so they can focus on the business and we focus on their IT infrastructure. This wheel you see on the left-hand side is kind of summarizing the whole portfolio and the proposition. At the very outer ring here, you'll see that we don't really mind whether the customer wants to run their infrastructure themselves in their own data centers.
We have a lot of customers that do and continue to do, or vice versa, some that want to go very rapidly into the public cloud. In most cases, they will do all of the above. We really support our customers in however they want to run their multi-cloud environments. That is an important piece of our proposition, that we focus on the business value and the functional value of their IT infrastructure, not how it is deployed or how it is purchased. That gives you a little bit of an introduction to the company. Nothing new. With regards to the quarter, we are obviously very excited this morning because we think we have two good pieces of news that we are bringing to the market: a very strong Q3, frankly the best Q3 in the history of the company.
We are also announcing acquisition of a company called Cetus Solutions in the U.K. that we are also going to talk about in the presentation today. A couple of plus points on the slide. Definitely, revenue is up 17% in this quarter to SEK 821 million compared to SEK 700 million a year ago, seven percent of which is organic growth. EBITDA, significant growth, up 46% from last year to SEK 54 million, clearly driven partly by the volume, but also because of a lot of those cost activities and efficiencies and lower SG&A costs that we have been working with throughout the year. As a result, of course, margins also up to 6.6% in terms of EBITDA. Cloud revenues continue to grow, largely due to the acquisition of PeopleWare, which was done exactly a year ago, but also organic growth in the cloud services. Total growth also services.
As we communicated about a month ago, the board of Proact has proposed to reinstate a dividend of SEK 2.5 per share, which will be approved in an upcoming general meeting on November 5. We do have minuses or less positive news in terms of the quarter as well. We continue to see challenges in closing new cloud contracts, which we call TCV or Total Contract Value in the way we report our numbers. In this quarter, we closed another SEK 61 million in contract value. You know already that's the value of the contract throughout its commitment length. Typically, the contracts are three years, but they range from everything from a few months all the way up to five years sometimes.
We have talked about this in previous quarters as well, that it is more difficult to get our customers to sign on or commit to longer-term contracts or for new customers to engage in contracts like this during the pandemic, and that we have seen also here in Q3. We continue to see uncertainty in COVID. Obviously, over the last few days and weeks, there are signs of a second wave, which is a concern to all of us, and we are managing that concern carefully. That means that, as usual, we have a little bit of a hard time seeing what the next quarter is going to look like, similar to what the situation has been over the past two quarters. Overall, a very, very strong quarter with good revenue growth and a very strong development of our EBITDA.
A couple of things we've done in the quarter, and I'll just rush through this quickly. We spoke already about how we want to be specialists, and we worked quite hard during the quarter on reinforcing and making that position in the marketplace more crisp and more precise. We updated our website just to reflect that market position a little bit better. Hopefully, our brand and our core value proposition is coming across a little bit more clearly in that new website. Customer expansion has always been a key focus for us. We announced only a few days ago a very exciting deal with National Health Service in the U.K. in particular the Blood and Transplant, which are the authorities that are managing and administrating all blood donors and organ transplants in the U.K..
A very interesting deal that we've just concluded with them here in the quarter related to building a cloud infrastructure for their future IT infrastructure, all for their mission-critical business and processes. Very exciting. Obviously, we're continuing to broaden our portfolio. The acquisition today is one step in that, but we're also tying our partnerships with NVIDIA a little bit closer. We are now an elite partner with focus on their AI platforms. Some of you may know that they are the market leader in providing compute technologies for artificial intelligence and high-performance computing. This is super exciting that we have that closer partnership here in the Nordic region with NVIDIA. Customer experience, the core and center of everything we do. We have, in the quarter, upgraded our customer processes and the automation of those through a market-leading platform called ServiceNow.
This will give our customers a much better customer experience. It will also enable a much more automated and programmable interface between ourselves and our customers. Obviously, it also enables ourselves to be more efficient internally. Very important and very big milestone for us. Cost efficiency program, we've talked about a couple of times. We see positive effects of it. For all intents and purposes, it is now implemented. The only outstanding item there is closing down of two data centers that are underway and in accordance to plan. All other activities have been performed. Obviously, again, we've been working hard on our M&A agenda. We didn't close the deal in Q3. We closed it yesterday night. Obviously, most of the work was done in Q3. We're still claiming that we did good execution on our M&A agenda during Q3.
Talk then a little bit about the acquisition. This morning, we announced that we've acquired a company in the U.K. called Cetus Solutions. They're based out of Manchester in the U.K., and they also have offices in London. They are just short of 20 years in the business with very strong capabilities in cloud solutions and modern workspace solutions. This is obviously perfectly aligned with both our strategy, but also very complementary to our portfolio. They're bringing in technology and solutions and skills that are complementing what we already do, and in particular, then in the area of workspace and enabling customers to work in new and different ways. A lot of good technology partnerships that are important to us, listed here on the slide, like Citrix and Microsoft and VMware, and also NetApp and Dell, of course, which we already have established relationships with.
Out of this, I do want to highlight Citrix because they are enabling a lot of those modern workspace solutions together with Microsoft. It is an area where we will be able to use these capabilities, not only in the U.K., but across the group. Great strategic fit, of course. I mentioned already we are addressing the same types of customers and the same customer segments in the U.K. market. We are very similar as companies, which has always been very important to Proact when we make acquisitions. We want to integrate companies operationally into our business, and then it is super important that people can work together, and we have the same leadership fundamentals and cultural values and the same focus on customers. In this case, I must say it is almost scary how alike we are.
We engaged the first time here during the summer, and I met with the team and the founder of Cetus, and it looked where we were using each other's slides when we were presenting the company. We are very, very similar. Portfolio is complementing skills and competence that I mentioned already. The interesting thing and good thing here is that we rarely overlap in terms of customers. While we are addressing the same segments and we have very similar capabilities and skills, our customer bases are complementary, and this gives us great cross-selling and upselling potential between our two customer bases. This, of course, will give us additional revenue and have a positive contribution to our EBITDA margins as well, which is, of course, very good. A couple of basic facts. We purchased Cetus on a cash-free, debt-free basis of GBP 7.7 million.
They will bring into Proact a year of revenue of roughly GBP 13 million. The multiple we're paying on EBITDA is eight times based on their 2020 results. Their 2020 fiscal year ended here, end of September. Obviously, there are synergies in the business case, so that multiple will be a little bit lower going forward. They are bringing an EBITDA margin, looking at their past performance, of about seven percent, which is slightly higher than current Proact's, as you all know. This is a great acquisition in a market that's very important to us. The U.K. has been a focus in our M&A efforts, and I'm very happy that the team has been able to close this deal here during the third quarter or yesterday, I should say. Good.
That was a little bit of update on what's happened here in Q3 and a little bit of introduction to Cetus. With that, I wanted to hand over to Linda and take us through the financials.
Thank you, Jonas. If you go to the next slide. Some quick highlights in the quarter and a little bit similar to what Jonas already walked through. High growth revenue, 17% to SEK 821 million. Systems grew also by 14%, and services even faster by 22% in line with our strategy to increase the services share. Again, to reiterate, adjusted EBITDA growth of 46% to SEK 54 million, corresponding to a 6.6% EBITDA margin. If we look at the profit before tax, similar development, 45% growth to SEK 43.4 million and a 5.3% margin. Okay. A little bit of more details.
If we look at the key developments in terms of revenue in the quarter of the 17% growth, seven percent then was organic, and the remainder is from the PeopleWare acquisition that we closed in November last year. On a rolling 12-month basis, the growth is eight percent, of which 25% is services. As you will see in the next bullet, PeopleWare is a key driver of the services growth. They had a strong or have a strong services position. Organically, services grew by one percent, and with the PeopleWare acquisition, 22%. Systems then also strong growth of the 14% growth, 11% was organic here. Here we see a very strong growth in the U.K., which we will see in the coming slides when we look at the specific business units.
Of the services growth, cloud revenue, which is one of the key strategic priorities, grew even faster, 43%. We are happy here that organically also it is showing high growth of 10%. The main issue we have here is that the number of new cloud contracts or the size of it is declining by approximately 30%. We closed SEK 61 million worth of contracts. We think the impact from COVID-19 is challenging us here. It is more difficult to sell these types of longer-term outsourcing or services contracts with customers, especially new customers when you do not get to meet face-to-face. It is easier for them to just buy systems or regular services. We do work actively, obviously, with our customers remote to be able to change this trend going forward. Okay. Profitability then. We see here the adjusted EBITDA.
That's the highest ever we've seen in the third quarter with good development. The components there, we have the gross margin and SG&A costs. We see the gross margin in percentage is declining in the quarter. We see two main effects in the services particular. We have a dilution from the PeopleWare acquisition. On average, their gross margins were and still are lower than Proact's average. Now that we're consolidating them fully for this year, the effect is negative on the gross margin percentage in services in particular. We also see a decline in the gross margin in systems where it's specific deals that we've closed this quarter that do have lower gross margins than what we've seen historically. That means that the main reason for our increase in adjusted EBITDA, it's the strong revenue growth.
In absolute terms, gross profit is up, but also a significant reduction in SG&A costs. If we look at comparable units, so excluding effects from acquisitions, they reduced 12% compared to the same quarter last year. Of course, we have the cost-saving program we announced earlier this year where we see impact from that in the SG&A. It is also so that typically, especially our sales costs, we have quite significant costs related to travel, entertainment, cars that are significantly reduced due to COVID-19. In Q3, some seasonal effects in SG&A with vacation also impacting. Part of the reduction is clearly due to the cost-savings program, but part is more due to specific factors that benefited us in this quarter. The end result, the EPS is also improving significantly. Of course, it is primarily as a result of the EBITDA.
The other main impact here is the financial net. It is more negative than it was in Q3 2019, so having a negative effect, but it is better than it was last quarter. The main effects in the financial net here are unrealized foreign exchange effects related to our internal loans. Of course, with exchange rates fluctuating a lot in the corona crisis, this has had some effects, some different effects in the quarters. I'll quickly walk through the different business units as well and the developments. I think all of them have performed pretty well this quarter. We see Nordics' revenue growth of two percent, all organic here, services growing slightly faster than systems. Here in Sweden, that's the main growth driver. In general, when we look at our different countries, we see different effects from how COVID-19 is impacting.
In some countries, we see strong demand, and in some, it's significantly weaker. On average, then, quite a good impact. EBITDA margin increasing significantly here with the reduction of SG&A costs of eight percent, of course, contributing to a big extent to that increase. Next business unit is U.K. Here we have, with the NHS Blood and Transplant deal, significant revenue growth. Systems increasing by 91%. Services more challenging. Definitely here, we see effects from COVID-19 on that. In total then, 32% revenue growth is very high growth. EBITDA margin, on the other hand, here actually is decreasing, despite the reduced SG&A costs. That is partly due to, of course, these big deals that come at a lower than average gross margin in the quarter. Next business unit is West. Here, this is where we have the PeopleWare acquisition impacting.
Here we have the organic versus total growth. In total, growing 38%. Here we have an impact of COVID-19 that's leading to declining growth organically. We have some customers related to travel, hospitality, those kinds of industries where clearly the demand has been very low. If we look at the split here, services increasing a lot more than systems, and that is to a large extent due to the PeopleWare acquisition that was very services-heavy. EBITDA margin here also increasing. For those of you who've been following the company for a while, where we had some issues last year, in particular in Germany, we see that the cost-savings programs, the turnaround programs we have implemented are clearly giving results here. The EBITDA margin is increasing.
SG&A costs are decreasing here as well significantly, not only due to the COVID and cost program, but also due to this turnaround program. In general, good development compared to where we were last year. Our last and smallest segment, East, also doing well. High growth in systems in particular of 28%, leading to revenue growth of 16% in total. Here we see also very high EBITDA margins, good development, reduction of SG&A costs of nine percent i mpacted. Those were the business units. Quickly on the cash flow, we do see, as we would expect, a positive cash flow from current operations. The operations generating SEK 97 million in the quarter and then a negative effect from the change in working capital. This is something we had the opposite effect in the last quarter.
What happens here is that we can have pretty significant fluctuations in accounts receivables and accounts payables in particular, depending on when we get certain deals in and when we pay our vendors. This is a pretty normal fluctuation. We have the cash flow from investment activities in fixed assets. That's typically our financing arm, Proact Finance, where we do some investments. Cash flow from financial activities in this quarter was primarily affected by the repayments of leasing liabilities that end up here. In total, a small change in liquid funds of SEK 7 million. We can see that we had a very, very strong development last quarter. That means that it's slightly lower this quarter. A good liquidity position of SEK 396 million at the end of the quarter.
Just for the next one, just to look at the year-to-date, similar development. We have SEK 202 million total cash flow from operations where we have a positive, well, higher contribution from operations and then a negative change in working capital as well. If we look at the 12 months rolling, the effect of changes in working capital is positive of SEK 59 million. Total, do not need to go through all of the details here, but the total change in liquid funds here was SEK 35 million. Okay. Just very quickly on the balance sheet, our equity ratio is strong, 22%, strong cash position. Net debt is SEK 92 million. If we exclude leasing liabilities, it is a net cash position of SEK 166 million.
We still have unutilized overdrafts of SEK 250 million and unutilized portion of our rolling credit facility of SEK 120 million, of which we will use part to finance or have used, actually, to finance the Cetus acquisition. Okay. The last slide for me is how we are tracking towards our long-term financial goals. We have a sales growth eight percent, slightly lower. This is a 12-month rolling then, slightly lower than our target, but still significant growth. EBITDA margin, 5.5% here, adjusted for one-time costs. Still some way to go towards our target, but clearly improving. Net debt to EBITDA, here we have 0.27, so quite a lot lower than our target level, even though we are affected here by IFRS 16 negatively. Return on capital employed, here we also still have a gap towards our target. We are at 16% versus our 25% target.
Of course, we do have some effects from IFRS 16 that affect negatively. Acquisitions typically will affect negatively since we increase the capital employed more than the return. Still something we are working on, of course, to achieve. For the dividend, we've added the proposed dividend of SEK 2.56 per share that is in line with our targets, 29% of last year's net profits, which is in the middle of the target of between 25%-35%. Okay. That was the financials.
Great. Thank you, Linda. Quick summary. Again, we're very excited about the results. Best quarter ever or best third quarter ever. Very excited about the acquisition in the U.K. with Cetus Solutions. We continue to see, of course, a strong demand for what we do, and we're very confident in our position in the marketplace. Short-term as before, we are worried how the pandemic develops here over the short term. That's obviously nothing unique to Proact. I think that's just something we share globally, a concern of the pandemic. That's a summary. Thanks for listening. We now open up for questions. As mentioned already in the beginning here, raise your hand using the Teams function, and we'll let you into the meeting here and ask your question.
[Foreign language]
Daniel, you have a question?
Do you hear me now?
We do hear you.
Excellent. Okay. I start off with a question regarding cloud orders. They are down 30% year- over- year. That's the fourth quarter in a row with declining trend. When should we expect to see a negative effect on revenue recognition, which is actually still growing?
We have talked about this a couple of times, that we are seeing it takes us roughly six months to onboard new customers. From order to revenue invoicing or invoicing and revenue recognition, it is on average six months. We are still closing deals, as you know. The growth is more a reduction of growth pace. The flip side of that is churn, so customers potentially leaving us, and renegotiation. Contracts that have been running for a long while where customers continue, but they prolong. The balance between those is a bit uncertain. We have spoken about this also previously, that our churn levels are low. Our renewals are successful, meaning we renew a high share of our customers. I think with the six-month guidance in terms of how long it takes, you can see that our growth rate will be lower than we otherwise would have expected.
That's reflective of the amount of time from booking to invoicing.
Okay. Even if order intake continues to decline due to the pandemic a bit, we may see growth in the revenue, but at a slower pace in the coming quarters. Could that happen?
That can happen. Again, it then depends on churn, which continues to be low, and potentially renewals where we renew at the lower level in the cases where underlying investments and equipment have been depreciated, as one example. Correct.
Okay. Good. Okay. Secondly, on service revenues, if I split out the non-cloud service revenues, they have actually been declining for seven quarters in a row now. With some pressure on new sales in cloud orders, as you mentioned, could that cause a negative development in service revenues as a whole already from Q4 when PeopleWare does not contribute that much?
We don't think so. There are a couple of things there. One is cloud services growing, as you mentioned already. Support is a bit of a volatile revenue force because it's driven by sales of systems. We think we will see a bit of a rebound in support, or we can at least hope for a rebound in support. Consulting is an area where, and we spoke about this already going into Q2, is obviously one of those areas where we were the most worried going into the pandemic situation that our customer will discontinue consulting engagement because it's a quick way for our customers to save money.
As we see still a high activity in the marketplace, as we've spoken about throughout Q2 and Q3, we expect consulting to be a very important piece of our offering as customers go into these scenarios we spoke about here. The digital transformations and rethinking how they want to work in the new environment. Consulting, we think, is an important opportunity going forward. What Q4 is going to look like, we don't communicate. You'll have to make your own conclusions on this one, Daniel. There are things here that in the past also can be better going forward, considering support and consulting.
Okay. Okay. Fair enough. Two questions on Cetus Solutions here. What has been the growth rate in that business in the last few years?
Significant, I think, is the word I'm looking at, Linda, a little bit, is the word I'd say. They made a very good 2020. Like I said, their fiscal year ended by September 2020, and they had a really good growth rate without quantifying more than that. It's strong growth.
Okay. Secondly, what is the split in terms of system, service, and cloud for sales in Cetus?
They are a little bit more software and hardware-centric than PeopleWare. This is a company that are more similar in their revenue mix to the traditional Proact.
Okay. We can expect some 60% system, 40% service, of which maybe one-third or half is cloud or the service. Is that reasonable?
I think one key thing is there's many reasons why we're excited by Ctus, but one is the opportunity to drive a services agenda also there. As part of our synergies, shifting that mix is one of the key drivers behind the acquisition and the collaboration.
Yeah. The mix today is similar to Proact a couple of quarters ago.
Correct.
Excellent. I'll stop there. Thanks.
Thanks. Other questions? Just raise your hand.
Frederick, you have a question?
I'm okay. We're going to unmute you first here. Loud and clear. Now you disappeared. Sorry, Frederick bear with us here for a second. Sorry, Frederick. Just hang on a second here. Can we?
[Foreign languge]
We will lose Frederick.
[Foreign language]
Can you hear me now?
Now we hear you.
Okay. Nice. Could you give us some rounded number regarding the proportion of cost savings coming from the cost savings program relative to temporary corona-related cost savings during the quarter?
Linda, can we?
I think it is hard to split out specifically because on top of that, we also have vacation that's coming in. We do have significant travel costs typically that we don't have. I would say both are significant contributors.
Okay. I guess it may be too early to say, but I mean, looking at Proact and many other companies, there are lots of savings being made due to less traveling. What are the possibilities going forward? Do you see a scenario with less traveling even after corona?
Yes, of course, we do. I think we've all been positively surprised with how easy it is to work remotely and frankly what it gives in terms of positive effects. Not only positive effects. There are definitely pent-up demand for social interaction, if nothing else. We do get efficiencies and simply better working environments, work opportunities by working remotely. I don't know exactly, but it will be a significant reduction in travel costs going forward also when the pandemic is behind us.
Okay. You mentioned that.
I wouldn't promise anything, but I would guess up to half.
Okay. Interesting. You mentioned that the strategic system deals decreased the gross margin during the quarter. In what way were the deals strategic? Is it new customers or what are we talking about?
Yeah. It is obviously the deal in the U.K. that we mentioned here with NHS Blood and Transplant. Nothing else. I saw there was a typo on the slide. It is a great customer. That is a good opportunity because they are rebuilding and rethinking how to serve their purpose. We are building a new cloud architecture for them to do application development on top of. We have in the Nordic region a number of significant deals, some of which are frankly just new opportunities for customers we have not been engaged with before. That opens up longer-term collaborations and relations.
Okay. One last question for me. The cloud revenues are typically lower during the third quarter compared to the second quarter. Why is that? Are there negotiations or something else affecting the numbers?
No, I don't think so. It's more that we do see on top of the contracted value, there are usage variations. We see variation depending on capacity needs and capacity usage. It's more variance in usage than anything else.
Okay. Thanks. That's all for me.
Great. Thank you. More questions?
Daniel.
Yes. Does it work?
Hey. We hear you.
Yeah. Good. Okay. How do you plan to integrate Cetus with Proact in the U.K.? Are you going to merge offices to reduce costs, or do you find it more as a sales synergy case?
It's a combination, but it's more of a sales synergy case. There are some basic synergies as well, of course. We will integrate the team. The Cetus team and the Proact team will over time be one operating team. I mentioned here in the beginning that they are very complementary both in terms of customer base as well as offerings. We will put a lot of focus on that growth opportunity, which means both in terms of the process and obviously with the existing customer bases joined to that, as well as adding new customers and just being more competitive against other players in the market.
Okay. Makes sense. A similar question, but related to PeopleWare you acquired a year ago. How has that actually developed over the 12 months you have owned it? Has that been growing versus the year you acquired it on, or?
Yeah. It's been really good. PeopleWare has grown and are doing as per plan, which is impressive considering the circumstances here with COVID. We also in the Netherlands integrated the two teams. Now the old Proact team and the old, if I may, PeopleWare team, it's one single operating unit. Also here, we've combined portfolios. We now have one unified offering to the marketplace and are engaging with customers and closing up selling also here. It's been a good and successful integration, and the business has been maintaining well.
Okay. In terms of employee turnover post-acquisition, have you seen anything more or less than you expected in PeopleWare?
No. I wouldn't say so, no.
Okay. Finally, touching upon Germany a bit, we talked about Germany, I think 80% of the conference calls a year ago. What is the status there today? Expanding? Expanded into new offices? You lost some salespeople, etc.? Where are you now?
Like Linda mentioned, we're happy about Germany. We've done a lot of work in Germany ever since, well, this time a year ago. We have a new team in place with a new Managing Director that we recruited from externally. Sales team has been rebuilt. We're adding some sales capacity. We're adding consulting capacity into the German team. We closed down that office and team we had up in north, which was an ambition of ours to grow the footprint in the northern part of Germany where we didn't feel that we got fast enough traction. In order to refocus and regroup, we closed that down. We've reduced costs, reduced staff, and rebuilt the team a little bit locally. We've seen now definitely a strong quarter in Q3, but also good improvements already in the first half of this year.
Okay. In terms of profitability, how much below group level are they, or are they at group level now, or?
You saw the West numbers there, which is primarily Netherlands and Germany. So you can draw the conclusion from that, I think.
Okay. Fair enough.
We don't report Germany separately, as you know.
Yeah. Thanks.
Thank you. More questions? All right. Thanks, everyone, for joining. It's always a pleasure meeting, even virtually. If there's no more questions, I think we'll end here. Again, we're happy with the results. We're very happy with the acquisition, and we're looking forward to seeing you all guys after our fourth quarter, which will be in February. We'll see you then. Take care and have a good weekend.
Thank you. Bye.