Atea (ATEA) Q2 2024 earnings summary

Executive summary

• Q2 2024 gross sales were NOK 14.7 billion and gross profit NOK 2.6 billion, both flat year-over-year.

• EBIT declined to NOK 243 million from NOK 291 million, mainly due to margin pressure and weaker performance in Sweden.

• Net profit for Q2 was NOK 139 million, down from NOK 194 million in Q2 2023; earnings per share were NOK 1.24.

• Operating cash flow improved to NOK 665 million, up NOK 350 million year-over-year.

• Atea maintained its leading IT infrastructure position in the Nordics and Baltics, with strong sustainability recognition.

Financial highlights

• Net revenue (IFRS) was NOK 8.4 billion, down 5.5% year-over-year, impacted by lower hardware shipments and currency effects.

• Gross margin improved to 31.5% from 29.9%, driven by a higher software revenue mix.

• EBIT margin decreased to 2.9% from 3.3% in Q2 2023.

• Free cash flow for Q2 was NOK 554 million, up from NOK 233 million in Q2 2023.

• Total operating expenses increased by 1.4% year-over-year; average full-time employees decreased by 0.8%.

Outlook and guidance

• Revenue growth is expected to return in H2 2024 as comparables ease and new contracts ramp up.

• Key growth drivers include defense, cybersecurity (NIS 2), Windows 11 migration, AI projects, and public sector contracts.

• EBIT for 2024 is still expected to grow versus 2023, despite being behind at mid-year.

• Atea aims to grow market share and improve operating profit through higher-margin products and cost control.