Netcompany publishes interim report for the three months ended 31 March 2020

Netcompany grew in line with expectations and realised 23.6% adjusted EBITA margin while increasing free cash flow by 26.4%. Netcompany maintains its expectations for 2020.

In Q1 2020, Netcompany realised reported revenue of DKK 695.6m, corresponding to 16.4% (constant currencies 16.8%) growth in reported currencies and organic revenue growth of 13.4%. Adjusting for the impact of the contingency risk in Q1 2019 revenue grew by 18.3%.

Adjusted EBITA margin, excluding the non-organic impact from the Netherlands, was 24.1%. Adjusting for the impact of the contingency risk, organic adjusted EBITA margin increased by 0.7% points.

The average number of full-time employees grew by 23.2% from 2,099 in Q1 2019 to 2,585 in Q1 2020. Part of the increase was related to the acquisition of Netcompany Netherlands, which affected the average FTEs in Q1 2020 by 89.

Free cash flow remained strong and increased by 26.4% from DKK 75.2m in Q1 2019 to DKK 95.0m in Q1 2020. Tax normalised cash conversion rate improved from 93.6% in Q1 2019 to 120.9% in Q1 2020. At 31 March Netcompany held a total of DKK 208.5m in cash and had access to committed funding of another DKK 535m within its core banking facility.

Revenue visibility for the year 2020 increased by 19.3% to DKK 2,131.8m, of which DKK 695.6m reflects realised revenue in Q1 2020, compared to DKK 1,786.3m at the end of Q1 2019.

Netcompany still expects organic revenue growth of around 18-20% in constant currencies and non-organic revenue growth of around 1% in constant currencies. Organic and reported Adjusted EBITA in constant currencies is still expected to be around 26%.

With top line growth of around 17% in Q1, we delivered as expected and planned, with satisfying margins and improved free cash flow. We have continued the transformation of our UK operation towards a change in the employment base with more permanent employees, and have continued the build-up of sales capabilities in Norway and accelerated the integration of our most recent acquisition in the Netherlands even further.

We have also delivered large and complex projects during Q1  – on time, on budget and to agreed quality.

Knowing the impact that the COVID-19 pandemic has already had – and potentially will have – on our customers in  our different markets, we strive to do our utmost to deliver solutions that will enable our customers to get through the crisis. This potentially increases the risk to Netcompany too – in particular in the second half of 2020 - but so far the Netcompany business model has shown its resilience and we believe it will continue to do so throughout the year. We have therefore maintained our guidance for 2020.

André Rogaczewski, Netcompany CEO and Co-founder

Q1 Performance highlights

  • Revenue increased by 16.4% (16.8% constant), hereof 3.0% from organic growth to DKK 695.6m in reported currencies.
  • Gross profit margin was 39.5% against 39.1% in Q1 2019.
  • Free cash flow improved by 26.4% to DKK 95.0m.
  • Cash conversion rate of 84.4%. Tax normalised cash conversion rate was 120.9%.

 
For additional information, please contact

André Rogaczewski, CEO, +45 70 13 14 40
Thomas Johansen, CFO, +45 51 19 32 24