Slides
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Proact IT GroupQuarterly presentation Q4 202411 February 2025
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Agenda•Proact introduction•Proact’s market•Quarterly highlights•Financial results•Summary Noora JayasekaraCFOJonas HasselbergCEO and President
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9% 55%13% 23% Proact is a leading IT expert helping customers secure business critical data via world-class hybrid cloud solutionsProact introduction Revenue and EBITA development(SEKm) Revenue split, 2024 Geographical footprint SystemsSupport ServicesManaged Cloud Services (MCS)Consulting Services 20192024 3,408 4,864+43% Proact in brief Proact office + US office 134 351 20192024 +161%RevenueEBITA Hyper-scaler data centerProact data centers Customer data center Deployment models Start utilising the advantages with Hybrid cloudModern workspace Self-service and automation Any application. Anywhere. Flexible & agile scalability Faster digitalization & DevOps hostedprivate public 3.9%7.2% •Founded in 1994, Proact has secured business critical data & pushed the limits of technology while delivering business agility for 3 decades•Serving 4,000 medium and large enterprise customers across Europe•SEK ~4,860 million turnover with stable finances•Listed on Nasdaq Stockholm since 1999•~1,100 Employees with industry-leading skills & expertise across our business•We support our customers at every step of their data journey. Our flexible deployment models enable delivery anywhere
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Proact is present in Northern Europe distributed across 4 Business Units; Hybrid cloud services through our 4 main delivery HUBsProact geographical presence and business units NOBA•c. SEK 2,530m revenue•320 employees•100+ Sales employees•150 Cloud experts•1,200 customers Central•c. SEK 890m revenue•270 employees•60 Sales employees•140 Cloud experts•700 customers UK•c. SEK 710m revenue•250 employees•70+ Sales employees•100 Cloud experts•1,300 customers West•c. SEK 850m revenue•280 employees•45 Sales employees•220 Cloud experts•800 customers SE UK NL DE Delivery hub Delivery success factors •4 main delivery HUBs across Europe•Managing customer data and infrastructure, regardless deployment (on-prem, private cloud, public cloud, hybrid combinations) •Proximity to our customers with local expert skills•Wide range of standardized and highly flexible bespoke services •24/7 helpdesk, cloud and security specialists•ServiceNow customer tooling•ISO certified Europe-based delivery HUBSStandardized and local Best-in-class security, processes and tools US office+ Note: Figures are estimates; Revenue incl. internal sales; No. of employees reflect FTEs
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9%23% 13%55% We offer best-in-class services; Our broad offering enable us to support our customers wherever they are in their cloud journeyProact offering SystemsIndependent provider and value-added reseller of hardware and software, and system architectured solution Support servicesPremium support for the Systems business (high attach rate of c. 70% to system sales) Managed Cloud ServicesWide range of services, such as Infrastructure as a Service (IaaS), Platform as a Service (PaaS), Storage and Security, as well as modern platforms based on Kubernetes Consulting servicesBroad spectrum of services from strategic consulting services and solution architect design to installation (incl. Kubernetes and Public cloud transformation services) Revenue streams1Selected expert skills (non-exhaustive) Cybersecurity solutionsProact has two 24/7 Security Operations Centers (SOCs) that protect Proact and customer infrastructure all day, every day Cloud Native servicesThrough our Conoa brand, we help companies build the cloud native, container and Kubernetes infrastructure incl. Server as a Code and DevOps services Microsoft consultingStrong consulting expertise, supporting with digital transformation services based on "cloud-first" technologies from Microsoft Azure and Microsoft 365 AI infrastructureProact can support customers on their AI journey, offering modern solutions that enable automation and innovation. 1. % of revenue 2024
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Proact is well-positioned in an attractive growing market, with trends such as Cybersecurity and AI driving the demand for data and IT solutionsMarket trends and developmentStrong drivers and favourable trends Large and fast-growing data volumes……complemented by a strong Cybersecurity market growing double digits…(SEKb)…and supporting market statistics 20242028 1,963 2,933+11% +40% p.a. AI and GenAI revenue growth 2022-32 Cloud as a business necessity by 2028Shift from being a technology disruptorResilient marketLimited impact by recession ~USD 14 trillonGlobal cost of cybercrime in 2028, rising from USD 9 trillion in 2024 Hybrid cloud adoption Digital transformation, AI and ML Information security Sustainability and Regulation Increased demand for Data Storage Sources: Gartner; Bloomberg; Statista; IDC WW Global DataSphere and Global StorageSphere 202120222023202420252026 84,447101,349122,819149,023181,869221,178+45% +80%Global DataSphere Data forecast 2021-26 (Exabytes)
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We act on an increasingly growing market, with strong growth driving from cloud adoption anticipated in the years ahead 2021202220232024F2025F2026F2027F Cloud Non-cloud +3% +5% CAGR2024-27CAGR2021-24 +12% -2%0% +12% Systems and services market size, SE, NL, UK, DE
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Weprovidemission-criticalservices to customersacrossall industryverticalsSelectedProact customer’smission-criticalusecases Guiding customer’s on their journey to cloud Digital Patient RecordsDelivery Route OptimizationSaaS AI Automated RedactionRapid Application DevelopmentCyber protection and Disaster Recovery
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We create value by delivering secure and flexible IT solutions that meet evolving needs Teacher Stern Dole Nordic "As part of a planned transition from our previous managed service provider, Teacher Stern conducted a rigorous bid process to identify a new partner capable of supporting and enhancing our Citrix environment. Proact’s proposal stood out for its innovative and adaptable approach, utilizing their Hybrid Cloud platform to deliver robust backup, disaster recovery, and 24/7 managed services. We selected Proact as our preferred partner due to their expertise, flexible, tailored solution, and commitment to ensuring a seamless and secure transition.“- Andy Cecil, IT Director "We needed a partner who could take full responsibility for our data center, network infrastructure, and container platform, allowing us to focus on our core business. Proact’s flexible and collaborative approach has ensured seamless operations, while their strong expertise in security and innovation has given us a robust, scalable solution that supports our future growth.’’- Sebastian Thörnqvist, CIO
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2024 Q4 HighlightsQuarterly highlights•New record in cloud services agreements, further strengthening our market position•Strong cash flow and a continued positive development in gross margin, driven by our strategic focus on efficiency and the shift towards a service-based business model•Macro-economics continue to be challenging but continued demand for digitalisation, cyber protection and AI•Service business showed solid sequential growth from Q3 2024, primarily driven by the launch of new customer projects•System business experienced negative growth due to a temporary decline, mainly within Business Units NOBA and Central•Despite a profit warning, Q4 closed with late-quarter recovery and cost savings that softened the impact•Proposal to AGM for Dividend of 2.40 SEK Revenue1,269 SEKm(-6.7%) Annualised recurring revenue 1,781 SEKm(1.9%) System sales715 SEKm(-12.0%)Service sales552 SEKm(0.8%) Cash flow from operations207 SEKm(241m) Intake of new Cloud service contracts224 SEKm(197m) Adj. EBITA80.2 SEKm(-12.0%)EBITA margin6.3%(-0.4 p.p.)
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Q4 revenue of 1.269 SEKm, -6.7% primarily driven by NOBARevenue development, 2023 Q4 – 2024 Q4 Revenue Q4 2023Systems 7 Support Services 2 Managed Cloud Services -4 Consulting Services 2 OtherRevenue Q4 2024 1,360 1,269-97 -6.7%•Total revenue decreased -6.7% whereof -7.2% organically •System sales decreased with -97 SEKm (organically -12.3%), primarily due to a temporary decline, mainly within NOBA and Central•Revenue from service business increased with +4 SEKm (organically 0.1%) •Steady revenue growth in Business Unit UK driven by continued momentum Revenue Q4 2023 -60 Nordic & BalticsUKWestCentral -10 OtherRevenue Q4 2024 1,360 1,26910-12-19 Revenue development per revenue stream / Business Unit -7.7%-5.6%+5.9% Revenue by revenue stream (SEKm) Revenue by Business Unit (SEKm) -8.4% -12.0%+0.6%+4.4%-3.7% Note: Other incl. currency adjustments
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Growing share of recurring revenues at a 11.4% CAGR from 2020-2024, currently making up 36% of total revenueAnnualisedrecurringrevenuedevelopment, 2020-2024 03006009001,2001,5001,800SEKm 20202021202220232024 1,1571,3071,5521,7481,78111.4% ARR as % of total32%37%33%36%36% •ARR increased +1.9% in reported numbers•New cloud service agreements amounted to 224 SEKm (197) in the quarter, a new quarterly record primary driven by UK and NOBA•A significant number of existing cloud contracts were renewed during the quarter, highlighting strong customer satisfaction
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EBITA decreased by -12.0% compared to last year, mainly due to lower sales in the systems businessEBITA development, 2023 Q4 –2024 Q4 EBITA margin EBITA Q4 2023Nordic & Baltics -1.1 UK -9.0 West -10.8 Central -10.5 OtherEBITA Q4 2024 91.120.5 80.2 -12.0% Note: Other incl. currency adjustments 6.7% 6.3%
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Net cash after dividends and share buybacks increased from SEK 80 million in December 2023 to SEK 330 million by the end of 2024Net cash developmentQ4 2023 vs Q3 2024 (SEKm) 80 330 296 244 2023 Q4EBITDepreciation and other non-cash -59 Tax -44 Working Captial -27 Capex -98 Dividend & Share buy-back -151 Amortisation leasing and other -13 Interest 15 FX2024 Q4 Cash flowfrom operationsCapitalstructureadaption and shareholdervaluecreation Whereof550 SEKmcash, 220 SEKminterestbearingdebtand 250 SEKmleasing liabilities Whereof814 SEKmcash, 230 SEKminterestbearingdebtand 254 SEKmleasing liabilities
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2024 Strategic efficiencies and focus on service business drive strong cash flowCash generation, accumulatedper year, 2020-2024 (SEKm) 20202021 2022 2023 -30 149203 468 -56 191 48 304 38 16890 454 30 159 292 532 104 234317 524 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4
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•Denmark, Estonia, Finland, Latvia, Norway, Sweden and the US•~320 employees Continued strong EBITA margin in Nordic & Baltics Business Unit deep-dive: Nordic & Baltics 52% Nordic & Baltics Shareof total revenue1 0 300 600 900 0 5 10 15 5.8% Q1 6.6% Q2 6.9% Q3 6.8% Q4 7.0% Q1 6.3% Q2 6.4% Q3 6.1% Q4 5.8% Q1 6.3% Q2 6.2% Q3 6.9% Q4 7.4% Q1 7.8% Q2 8.3% Revenue(SEKm) 7.9% Q4 8.9% Q1 9.0% Q3 9.2% EBITAmargin (%) Q3 10.3% Q4Q2 •Total revenue down -7.7% and -7.6% organically•Revenue from system business declined -13.6% and -13.5% on an organic basis•Service business revenue grew +8.8% and +8.9% organically, with good growth in support- and cloud services•EBITA-margin increased to 10.1% driven by increased gross margin Financial developmentComments RevenueEBITA LTM SEKmQ4 2024Q4 2023Change (%)Revenue717777-7.7%EBITA7252+39.6%EBITA margin (%)10.1%6.7%+3.4 p.p. 20202021202220232024 1. % of revenue 2023
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•United Kingdom•~250 employees Strong system sales in the UK compensate for the decline in customer support servicesBusiness Unit deep-dive: UK 15% UK Shareof total revenue1 050100150200250 024681012Revenue(SEKm) EBITAmargin (%) 6.1% Q1 6.0% Q2 5.8% Q3 6.5% Q4 6.3% Q1 6.3% Q2 6.5% Q3 5.5% Q4 4.1% Q1 4.4% Q1Q2 3.6%5.0% Q3 3.2% Q4 Q4 3.6% Q2 Q1 4.1%4.8%5.6% 3.9% Q3 Q3 3.7%5.2% Q4Q2 Financial developmentComments RevenueEBITA LTM SEKmQ4 2024Q4 2023Change (%)Revenue1751655.9%EBITA35-25.3%EBITA margin (%)1.9%2.7%-0.8 p.p. 20202021202220232024 1. % of revenue 2024 •Total revenue increased +5.9% and +1.5% organically•System business increased +12.8% and +8.0% on an organic basis•Service business increased +0.7% but decreased -3.5% organically, driven by growth in cloud- and consultancy services countered by lower support revenue•Both EBITA and EBITA margin decreased due to lower gross margin
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•The Netherlandsand Belgium•~280 employees Total revenue and EBITA decline due to lower systems and services revenueBusiness Unit deep-dive: West 17% West Shareof total revenue1 0 100 200 300 02468 Q1 4.8% Q2 4.1% Q3 3.8% Q4 1.9% Q1 1.4% Q2 1.7% Q3 3.4% Q4 5.0% Q1 6.0% Q2 6.0% Q3 5.6% Q4 4.8% Q1 3.5% Q2 Revenue(SEKm) Q3 2.8% EBITAmargin (%) Q4 4.1% Q1 2.8% Q2 5.3% Q3 4.3%4.9% Q4 4.8% Financial developmentComments RevenueEBITA LTM SEKmQ4 2024Q4 2023Change (%)Revenue198210-5.6%EBITA413-69.5%EBITA margin (%)2.0%6.2%-4.2 p.p. 20202021202220232024 1. % of revenue 2024 •Total revenue decreased -5.6% and -5.8% organically•System business decreased -11.9% and -12.2% on an organic basis•Service business decreased -3.8% and -3.9% organically•EBITA and EBITA margin decrease due to lower systems revenue and lower gross margin on service revenue
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•Germanyand Czechia•~270 employees Lower system sales impact total revenues and EBITABusiness Unit deep-dive: Central 18% Central Shareof total revenue1 0 100 200 300 024681012Revenue(SEKm) EBITAmargin (%) 0.3%Q1 3.1% Q2 5.4% Q3 7.1% Q4 7.6% Q1 8.0% Q2 8.4% Q3 8.0% Q3 5.8% Q4 5.7% Q1 4.9% Q2 4.0% Q3 4.1% Q4 Q4 3.7% Q1 Q1 4.3%6.6%5.8% 4.6% Q2 Q3 3.5%6.0% Q4Q2 Financial developmentComments RevenueEBITA LTM SEKmQ4 2024Q4 2023Change (%)Revenue210230-8.4%EBITA617-65.2%EBITA margin (%)2.8%7.2%-4.5 p.p. 20202021202220232024 •Total revenue decreased -8.4% and -8.3 organically•System business decreased -14.1% and -13.8% on an organic basis•Service business decreased -3.9% and -4.0% organically•EBITA and EBITA margin decreased mainly due to lower system sales and integration costs for previously acquired businesses 1. % of revenue 2024
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We continue to make good progress against our long-term financial targets on a full-year basisFinancialdevelopmentand long-term financialtargetsSalesEBITALeverageROCEDividends 6.6%2020-3.0%2021 34.9%2022 1.9%2023 0.3%2024 3,6333,5254,7574,8474,8648% 2171973132853516.0%2020 5.6%2021 6.6%2022 5.9%2023 7.2%2024 13% 31%2020 35%2021 27%2022 32%2023 29%2024 17.0%2020 13.4%2021 17.2%2022 16.3%2023 19.7%2024261227 20202021202220232024 -108-80 -330 Sales growth per annum10%EBITA margin8%Net debt / EBITDA<2 xReturn on capital employed20%Dividends as share of profit after tax25-35% 0.750.48-0.17-0.65-0.06 Sales Y-o-Y growthSalesEBITA marginEBITANet debtLeverage ROCE Dividends
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Summary •Demand is good, driven by digitalisation, cybersecurity and AI. Despite challenging comparables in Q1, we are positive about 2025.•Proact is well positioned for organic growth with both existing and new customers.•A strong balance sheet and stable cash flow enable complementary acquisitions in Europe when opportunities arise.
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Thank you