Netcompany Group ((DK:NETC)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Netcompany’s recent earnings call painted a picture of robust growth and strategic advancements, tempered by some regional challenges and financial hurdles. The overall sentiment was positive, highlighting the company’s successful organic growth and integration of acquired services, particularly in the UK, alongside promising AI-driven product launches. However, the company acknowledged ongoing challenges in Norway’s market performance and cash flow management.
Strong Organic Revenue Growth
Netcompany reported an impressive 8.5% organic revenue growth in constant currencies compared to Q3 2024. This growth was fueled by a 6.7% increase in the public sector and an 11.7% rise in the private sector, underscoring the company’s solid market position and effective business strategies.
Successful Integration of Netcompany Banking Services
The integration of Netcompany Banking Services, formerly known as SDC, is advancing more swiftly than expected. This progress promises significant synergies and innovation for existing customers, marking a strategic win for the company.
Positive Developments in the UK Market
Netcompany’s UK operations have shown remarkable progress, with a 17.4% revenue increase compared to Q3 2024. This growth was driven by a substantial 23.8% rise in the public sector, reflecting strong engagement with both existing and new customers.
Launch of New AI-Driven Products
The company has launched several AI-driven solutions, including VERÁ and AMPLIO Estate, aiming to set new digital standards across various sectors such as defense and property management. These innovations highlight Netcompany’s commitment to leveraging technology for sectoral advancements.
Revenue Decline in Norway
Despite overall growth, Netcompany faced a 2% revenue decline in Norway due to a soft market for IT consulting, which has been on a downward trend over the past year. This remains a challenge for the company as it seeks to stabilize its performance in the region.
Cash Flow Challenges
The company experienced a decrease in organic free cash flow, dropping from DKK 145.3 million in Q3 2024 to negative DKK 11.5 million in Q3 2025. This was primarily due to working capital changes and increased tax payments, posing a financial challenge that the company needs to address.
Impact of Special Items on Financials
Special items, including significant restructuring costs related to the acquisition of SDC, totaled DKK 351.2 million year-to-date. These costs have impacted the overall financial performance, highlighting the financial complexities involved in strategic acquisitions.
Revised Guidance for 2025
Netcompany has revised its guidance for 2025, now expecting organic revenue growth between 6% and 8%, up from the previous lower range of 5% to 10%. The adjusted organic EBITDA margin is anticipated to be between 16% and 18%. Looking ahead, the company aims for an organic revenue growth of 5% to 10% annually and an adjusted EBITDA margin above 20% by 2029. The integration of SDC is expected to yield annual cost synergies of DKK 300 million to DKK 350 million by 2028, potentially boosting earnings per share by 71% relative to the 2024 baseline.
In conclusion, Netcompany’s earnings call reflected a positive outlook with strong growth and strategic advancements, particularly in the UK and through AI-driven innovations. However, challenges in Norway and cash flow management remain areas of concern. The company’s revised guidance and long-term targets suggest a confident path forward, aiming for sustained growth and profitability.