Atea (ATEA) Q3 2024 earnings summary

Executive summary

• Revenue grew 3.1% year-over-year to NOK 8.0 billion in Q3 2024, with EBIT up 3.0% to NOK 307 million and net profit up 5.7% to NOK 192 million.

• Sales and profit growth were driven by new customer agreements and improved market conditions, especially in PCs, servers/storage, and software.

• Operating cash flow improved to NOK 112 million, up NOK 413 million from Q3 2023.

• A share buyback program for up to 650,000 shares or NOK 120 million was initiated, supplementing the dividend policy.

• Recognized as one of the world's most sustainable companies in 2024 by TIME and Statista.

Financial highlights

• Gross sales were NOK 11.3 billion, up 5.4% year-over-year, with positive currency effects of 4.9%.

• Gross profit rose 3.3% to NOK 2,357 million; gross margin stable at 29.5%.

• Hardware revenue grew 3.3%, with strong sales in PCs, servers, and storage, but a double-digit decline in networking.

• Software revenue increased 12.3% year-over-year, driven by productivity and cloud solutions.

• Free cash flow was NOK 25 million, a turnaround from negative NOK 341 million in Q3 2023.

Outlook and guidance

• Sales growth is expected to accelerate in coming quarters, supported by new public sector frame agreements and improving economic environment.

• Networking demand anticipated to improve in Q4, especially from the security sector, but significant growth may not materialize until 2025.

• All countries expected to grow EBIT in Q4 compared to last year.

• The large public sector contract in Finland (Tiera) is expected to add approximately EUR 100 million in annual incremental revenue.

• Anticipated drivers include increased public defense spending, IT security investments due to NIS 2 regulation, and a PC refresh cycle from Windows 10 end-of-life.