Bifogade filer
2023 08 18 Interim Report Nepa AB Q2 2023
Kurs & Likviditet
Prenumeration
Beskrivning
| Land | Sverige |
|---|---|
| Lista | First North Stockholm |
| Sektor | Tjänster |
| Industri | Allmänna tjänster |
Q2 in summary
- Annual Recurring Revenue (ARR) increased by 7.3 percent to SEK 174.3 (162.5) million.
- Net sales decreased by 13.1 percent, or 14.5 percent in local currencies, to SEK 75.2 (86.5) million.
- The decline in net sales was driven by ad hoc revenue from non-subscribers, which declined by 54.3 percent to SEK 10.0 (22.0) million.
- Subscription revenue increased by 0.7 percent to SEK 44.8 (44.5) million, and ad hoc revenue from subscribers by 1.4 percent to SEK 20.3 (20.1) million.
- Gross profit decreased by 16.7 percent, or 18.6 percent in local currencies, to SEK 55.8 (67.0) million and the gross margin amounted to 74.2 (77.5) percent.
- EBIT decreased to SEK -9.7 (9.6) million and the EBIT margin amounted to -13.0 (11.1) percent.
- Excluding items affecting comparability of SEK 6.9 (2.2) million, adjusted EBIT amounted to SEK -2.9 (11.8) million.
- Net profit amounted to SEK -9.0 (9.0) million and Earnings per share amounted to SEK -1.14 (1.14).
H1 in summary
- Net sales decreased by 11.1 percent, or 12.6 percent in local currencies, to SEK 147.9 (166.4) million.
- The decline in net sales decline was mainly driven by ad hoc revenue from non-subscribers, which declined by 43.8 percent to SEK 23.0 (41.0) million.
- Subscription revenue increased by 0.6 percent to SEK 87.5 (87.0) million, while ad hoc revenue from subscribers decreased by 3.0 percent to SEK 37.3 (38.4) million.
- Gross profit decreased by 15.9 percent, or 17.8 percent in local currencies, to SEK 108.7 (129.1) million and the gross margin amounted to 73.5 (77.6) percent.
- EBIT decreased to SEK -13.6 (18.5) million and the EBIT margin amounted to -9.2 (11.1) percent.
- Excluding items affecting comparability of SEK 6.9 (5.2) million, adjusted EBIT amounted to SEK -6.8 (23.7) million.
- Net profit amounted to SEK -13.4 (16.9) million and Earnings per share amounted to SEK -1.71 (2.15).
Business highlights
DURING THE QUARTER
- Ferry Wolswinkel was appointed interim CEO on June 1st, 2023. During the quarter the Board activated a search process for a permanent CEO.
- The AGM 2023 elected Dan Foreman as Chairman of the Board and newly elected Adam Lytle, Carl-Fredrik Meijer, and Fredrik Beltzér.
- The AGM decided on a SEK 0.56 per share dividend.
- Additional cost savings entailed restructuring costs of SEK 6.9 million.
AFTER THE PERIOD ENDED
- Nepa will after cost savings in the quarter meet the previously communicated cost base (personnel and other external costs) of SEK 220 million by Q4 2023. The company continues to take measures, including redundancies, to ensure profitable operations.
- Anders Dahl was appointed as interim COO.
- The Q2 sales trend has continued into July, with ad hoc revenue from non-subscribers still contracting.
Key financials
| Numbers in SEK million if not stated | Q2 2023 | Q2 2022 | Change | H1 2023 | H1 2022 | Change | FY 2022 |
| Annual Recurring Revenue (ARR) | 174.3 | 162.5 | 7.3% | 174.3 | 162.5 | 7.3% | 170.9 |
| Net sales | 75.2 | 86.5 | -13.1% | 147.9 | 166.4 | -11.1% | 312.1 |
| Of which subscription revenue | 44.8 | 44.5 | 0.7% | 87.5 | 87.0 | 0.6% | 169.8 |
| Gross profit | 55.8 | 67.0 | -16.7% | 108.7 | 129.1 | -15.9% | 236.2 |
| Gross margin | 74.2% | 77.5% | -3.3 | 73.5% | 77.6% | -4.1 | 75.7% |
| Adjusted EBIT | -2.9 | 11.8 | -14.7 | -6.8 | 23.7 | -30.5 | 29.4 |
| Adjusted EBIT margin | -3.8% | 13.7% | -17.5 | -4.6% | 14.2% | -18.8 | 9.4% |
| EBIT | -9.7 | 9.6 | -19.4 | -13.6 | 18.5 | -32.1 | 19.7 |
| EBIT margin | -13.0% | 11.1% | -24.1 | -9.2% | 11.1% | -20.3 | 6.3% |
| Net income | -9.0 | 9.0 | -17.9 | -13.4 | 16.9 | -30.3 | 17.5 |
| Profit margin | -11.9% | 10.4% | -22.3 | -9.1% | 10.1% | -19.2 | 5.6% |
| Operating cash flow | -7.6 | 7.4 | -15.0 | -2.0 | 18.0 | -20.0 | 15.9 |
| Net financial position | 45.1 | 79.6 | -34.5 | 45.1 | 79.6 | -34.5 | 63.8 |
| Earnings per share, SEK | -1.14 | 1.14 | -2.28 | -1.71 | 2.15 | -3.85 | 2.22 |
| Average number of shares outstanding | 7,863,186 | 7,863,186 | 0% | 7,863,186 | 7,863,186 | 0% | 7,863,186 |
Comments by the CEO
This is my first report as interim CEO, since my appointment on the 1st of June. We conclude a challenging first half of 2023, where we faced economic headwinds that impacted our clients, and subsequently, our business required a faster and more decisive response to declining sales and market conditions.
During the summer, we have put a plan in place that addresses some of our major challenges such as cost and organizational efficiency and pricing and packaging. As one of my first steps as interim CEO, I have appointed Anders Dahl as interim COO, and he will be taking a significant role in driving these initiatives forward. We are clear on what is needed to be done, and I am confident in the mid and long-term results this will have for our business. I want to thank our amazing employees, who have shown resilience and aptitude to reshape the future of Nepa.
NET SALES
In the second quarter, net sales experienced a decline of 13.1 percent. This decrease was primarily driven by a significant 54.3 percent drop in ad hoc revenue from non-subscribing clients. While subscription revenue and ad hoc revenue from subscribers showed modest growth of 0.7 percent and 1.4 percent respectively, these increases were insufficient to counterbalance the overall decline.
As a result of recent achievements, effective upselling strategies employed with our existing client base, and a consistently low churn rate, our Annual Recurring Revenue (ARR) witnessed growth of 7.3 percent, reaching SEK 174.3 million. This growth serves to reaffirm the robustness and resilience of our core tracking business. I am confident that we are offering in-demand and competitive insights and marketing advisory to globally renowned brands.
Six months following the establishment of a dedicated sales organization we have seen clear improvements; pipeline growth has accelerated, and our sales efforts have become more focused following a data-driven approach, with well-defined incentives aimed at bolstering our subscription business. I strongly believe that this shift will lead to improved lead conversion rates and sales velocity, and an overall enhancement of our sales culture. The consumer brands added to our prestigious client roster during the second quarter attest to this positive direction. Together with a strong sales leadership team in place, I am still able to dedicate a significant amount of time to revenue-generating activities while in the role of interim CEO.
PROFITABILITY
Regrettably, we have not yet achieved the necessary cost reductions to restore profitability due to lower-than-expected sales in the first half of the year. In this quarter, we implemented additional cost-saving measures that resulted in restructuring costs amounting to SEK 6.9 million, impacting our results negatively. Most of this was attributable to one-time severance payments. Following these measures, we are on track to meet the targeted annual cost base run rate for personnel and other external expenses of SEK 220 million by Q4 2023.
ONGOING ACTIVITIES AND OUTLOOK
The sales trend we experienced in the second quarter has continued into July, with ad hoc revenue from non-subscribers still contracting year-over-year.
Given our cautious stance amid prevailing market conditions and our pursuit of a leaner operation, we are currently taking further decisive actions, including personnel changes and redundancies, to restore profitability to healthy levels in the upcoming quarters. These additional measures go beyond the previously targeted run-rate of personnel and other external costs of SEK 220 million.
Meanwhile, our efforts continue towards seamlessly integrating regional functions into a global structure where possible, thereby empowering our exceptional client teams to cater to brands on a global level. For the second half of the year, our emphasis will be on optimizing our organizational structure to adapt to a leaner and more focused operation, continue to increase sales effectiveness, and strengthen our go-to-market activities. This strategic approach is intended to create internal efficiencies while improving ways of working, and at the same time ensuring consistent value creation for our esteemed clients through advisory and innovative solutions.
Ferry Wolswinkel
Interim CEO and CRO