Netcompany publishes interim report for the nine months ended 30 September 2019

Netcompany grew revenue by 21.2% and realised 27.7% margin and continued to improve free cash flow in Q3 2019.

In Q3 2019, Netcompany realised reported revenue of DKK 592.1m, of which DKK 578.1m was organic, corresponding to 20.8% (constant 21.2%) growth in reported currencies and an organic revenue growth of 18%.

Adjusted EBITA margin, when not including the non-organic impact from the Netherlands reached 28.8% which was 1 percentage point higher than Q3 2018. When including the negative impact of 1.1 percentage points from the acquisition of Netcompany Netherlands adjusted EBITA margin was 27.7%.

The average number of full-time employees grew by 480 from 1,866 in Q3 2018 to 2,345 in Q3 2019. Part of the increase was related to the acquisition of Netcompany Netherlands, which affected the average FTEs in Q3 2019 by 82.

Free cash flow remained strong and increased by 156.5% from DKK 49.3m in Q3 2018 to DKK 126.5m in Q3 2019, corresponding to a cash conversion rate of 103.1%. Work in progress was reduced as planned.

By the start of October 2019, revenue visibility increased by 18% to DKK 2,387.4m compared to DKK 2,025.3m at the beginning of Q4 2018.

Based on the revenue growth realised in September and taking into account the outlook for the remaining part of 2019, Netcompany lowers its expectation to full year reported revenue growth in constant currencies from previously between 20.75% - 23.25% to around 20%. Netcompany still expects full year Group adjusted EBITA margin in constant currencies before impact from acquisitions to be around 26%. The higher than expected relative revenue growth from Netcompany Netherlands means that the impact from acquisitions on adjusted EBITA margin is now expected to be negative by 0.6 percentage point rather than negative by 0.3 percentage point as previously.

During Q3, we continued to deliver industry-leading growth and profitability with revenue growth of more than 21% in constant currencies and realised an EBITA margin above 27%. I am proud to see Netcompany being so resilient when it comes to growth and margins, even in a quarter where we realised lower than expected revenue growth. This is a clear result of ongoing high quality in our project deliveries.

As a result of the lower than expected revenue growth, we have adjusted our expectations to full year revenue growth to a total growth of around 20% however at unchanged margins from the organic part of the business reiterating the strong performance of Netcompany and the high quality in our project deliveries.

I am also proud to see that we continue to hire the most talented new employees across the Group which have brought close to 500 new employees to our family.

André Rogaczewski, Netcompany CEO and Co-founder

Q3 Performance highlights

  • Revenue increased by 20.8% (21.2% constant), hereof 18% from organic growth to DKK 592.1m in reported currencies.
  • Gross profit margin was 43.2% against 42.4% in Q3 2018.
  • Free cash flow improved by 156.5% to DKK 126.5m.
  • Cash conversion rate of 103.1%.

 
For additional information, please contact

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