Carasent (CARA) Q3 2024 earnings summary

Executive summary

• Revenue increased 19% year-over-year to NOK 66.3 million in Q3 2024, with organic growth of 18% and recurring revenue growth of 17%.

• Adjusted EBITDA margin rose to 19%, and gross margin improved to 85% due to cost reductions and divestment of Confrere.

• The company is nearing completion of its relisting on Nasdaq Stockholm, with the first trading day expected in December, pending final approvals.

• Significant one-time costs were incurred due to relisting, EGM, German acquisition project, and a potential bid from EG, but these are expected to decrease going forward.

• Net loss narrowed to NOK -2.0 million from NOK -4.5 million in Q3 2023.

Financial highlights

• Total revenues reached NOK 66.3 million in Q3 2024, up 19% year-over-year, with contracted ARR base at NOK 277 million, up 23% organically.

• Gross profit margin rose to 85% from 80% YoY, driven by divestment of Confrere and renegotiated hosting costs.

• Adjusted EBITDA for the quarter was NOK 12.4 million (19% margin); reported EBITDA was NOK 6.5 million.

• Free cash flow improved year-over-year, with capex significantly reduced and cash at period end of NOK 362 million.

• Net retention rate was 113%, with net upsell at 14%, churn stable at 2%, and new customer growth at 4%.

Outlook and guidance

• No changes to 2024 or 2025 guidance; management remains confident in meeting external goals despite some headroom reduction due to project delays.

• Focus on timely implementation of large contracts, especially rolling out Metodika to Volvat clinics and launching new surgical functionality in Q1 2025.

• Multiple new contracts are expected in the coming months, particularly for the new surgery module, which has a market potential of SEK 150 million in Sweden.

• Gradual implementation of large contracts in the backlog will drive growth next year.

• Continued cost control and efficiency gains, with additional savings from shifting from consultants to employees.