Netcompany publishes interim report for the six months ended 30 June 2018
Netcompany has continued its strong momentum from 2017 and Q1 2018 into Q2 2018, with organic revenue growth of 36.8% well above the target of annual organic revenue growth of 20% to 25%, and 66.2% reported revenue growth when including the recently acquired business in the UK, resulting in reported growth of 60.5% for the first 6 months of 2018.
New contracts were won in both public and private segments and revenue visibility for the rest of 2018 has improved, reflecting the continued demand for Netcompany solutions in all segments and geographies. The integration of Netcompany Norway is progressing according to plan as is the integration of Netcompany UK, which has been accelerated during Q2.
The extraordinary high growth in Denmark and Norway is to a certain degree delivered using external freelancers, which in combination with the higher than expected growth in the UK, dilutes expected margins for the full year bringing the expectation to adjusted EBITA margin to be in the low end of the guided range.
On 7 June Netcompany transitioned into a publicly traded company with the completion of the IPO based on the Offering Circular of 23 May 2018. The demand for the Netcompany share was multiple times oversubscribed and the interest in the company was positive.
Performance highlights for the first six months of 2018
- Revenue increased by 60.5%, hereof 34.4%, from organic growth to DKK 1,019.6 million in reported currencies and revenue increased by 61.1% in constant currencies.
- Adjusted EBITA margin was 24.2% in reported currencies and 24.2% in constant currencies compared to 26.7% in reported currencies in 6M 2017.
- Profit before tax decreased by 17.1% to DKK 65.0 million in reported currencies and by 16.2% in constant currencies.
- Revenue visibility for the fiscal year of 2018 increased from DKK 1,170.0 million at the beginning of January 2018 to DKK 1,675.9 million at the beginning of July 2018, of which DKK 1,019.6 million reflected realised revenue in 6M 2018.
- Free cash flow remained strong and increased from DKK 93.5 million in 6M 2017 to DKK 158.6 million in 6M 2018, yielding a cash conversion ratio of 68.2% compared to 53.6% in the same period last year.
- During the Q2 2018 Netcompany won several tenders in the public sector.
Outlook for 2018
- Revenue growth in reported currencies is expected to be between in the top end of range of 37% to 42%.
- Organic revenue growth in reported currencies is expected to be between in the top end of range of 20% to 25%.
- Adjusted EBITA margin in reported currencies is expected to be between in the low end of the range of 24.5% to 27.5% (was 24.5%-27.5%).
- Profit before tax in reported currencies is expected to be between DKK 213 million – DKK 282 million, corresponding to a margin of between 11%-14%.
- Netcompany expects currency fluctuations to impact reported revenue negatively with between 0.5% and 1.0% (was previously positive with between 0.5% and 1.0%) and reported margins negatively with between zero and 0.5% (was previously positive with between 0.5% and 1.0%).
“I am proud and humble over the interest that new shareholders have shown in the company that we founded more than 18 years ago. During our numerous meetings in connection with our IPO we have been reaffirmed in our own assessment of our business model to be truly unique and we will stay committed to execute on our short and long-term targets. Our high activity level from 2017 and Q1 2018 has been maintained into Q2 2018 and we see a strong demand for our solutions in all segments and countries.
Our commitment to continued growth means that we will continue to hire talented people in all the countries in which we operate and our positive rating with students and general reputation of being a leading IT consulting company with exceptional career opportunities supports our high demand for new recruits”.
André Rogaczewski, CEO and Co-founder
For additional information, please contact:
André Rogaczewski, CEO, +45 70 13 14 40
Thomas Johansen, CFO, +45 51 19 32 24