06 Nov 2018
Netcompany publishes interim report for the nine months ended 30 September 2018
Netcompany has continued its high growth and upgrades expectations to full year 2018. Netcompany realised revenue growth of 45.3% in Q3 2018, of which 20.4% was organic, in line with long-term organic growth targets of 20% to 25%.
Adjusted EBITA margin in Q3 2018 was 27.8% reflecting the improved profitability from Q2 2018 where adjusted EBITA margin was 23.7%.
During Q3 2018 Netcompany won new contracts in both the public and private segment and in addition the Group welcomed more than 308 new employees mainly in Denmark and Norway.
Revenue visibility for the remaining part of the year has continued to strengthen and the new contracts won, combined with the performance in the first 9 months of 2018 as well as the successful recruitment of 308 new employees in Q3 2018, has led the company to upgrade its expectations to the revenue growth for the full year. Revenue is now expected to be between 42% and 44% in reported currencies and adjusted EBITA margin is now expected to be between 25% and 25.5% in reported currencies.
Free cash flow remained strong and increased from DKK 152.5 million in the first 9 months of 2017 to DKK 227.7 million in the first nine months of 2018, yielding a cash conversion ratio of 59.9% compared to 54.3% in the same period last year.
For 2019 Netcompany expects revenue in all geographies to grow between 20% and 25% and Group adjusted EBITA margin of around 26% - in line with expectations in the Prospectus.
Performance highlights for the first nine months of 2018
- Revenue increased by 55.2%, hereof 29.5%, from organic growth to DKK 1,509.9 million in reported currencies and revenue increased by 55.7% in constant currencies.
- Adjusted EBITA margin was 25.4% in reported and constant currencies compared to 29.5% in reported currencies in the first nine months of 2017. The non-organic impact on adjusted EBITA margin was negative by 3.5 percentage points.
- Profit before tax increased by 17.0% to DKK 164.0 million in reported currencies and by 17.6% in constant currencies.
- Revenue visibility for 2018 increased from DKK 1,675.9 million at the beginning of July 2018 to DKK 2,025.3 million at the beginning of October 2018, of which DKK 1.509.9 million reflected realised revenue in the first nine months of 2018.
Outlook for 2018
- Revenue growth in reported currencies is now expected to be between 42% and 44% (was “top end of range of 37% to 42%”).
- Organic revenue growth in reported currencies is now expected to be between 24% and 26% (was “the top end of range of 20% to 25%”).
- Adjusted EBITA margin in reported currencies is expected to be between 25% and 25.5% (was “lower end of 24.5%-27.5%”).
- Profit before tax in reported currencies is expected to be between DKK 250 million – DKK 282 million, corresponding to a margin of between 12.5%-13.8% (was previously expected to be between DKK 213 million – DKK 282 million corresponding to a margin of between 11% and 14%).
- Netcompany expects currency fluctuations to impact reported revenue negatively with between nil and 0.5% (was previously negative with between 0.5% and 1.0%) and reported margins negatively with between nil and 0.5%.
Outlook for 2019
- Organic revenue growth in constant currencies in all geographies of between 20% to 25%.
- Adjusted EBITA margin in constant currencies of around 26%.
“During Q3 2018, we have adjusted our growth rate to a longer-term sustainable level, which requires tough prioritisation amongst business opportunities and even turning down some of these. However, our continued growth and margins are dependent on us to ensure continued quality in our deliveries to our customers. To do so, we must keep a strict focus on the ongoing education and development of our skilled employees, which we know requires a longer-term growth of between 20% and 25% to be most effective.
During Q3 2018, we welcomed 308 new employees throughout the Group and we continued to win market shares. We are confident of our ambitions to continue to develop and grow Netcompany to becoming a Northern European market leader in the future”.
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