CombinedX (CX) Q3 2024 earnings summary

Executive summary

• Revenue grew 27.5% year-over-year to 196.0 MSEK in Q3 2024, but organic growth was -2.1% due to a weak market and delayed customer projects.

• Adjusted EBIT fell to 6.0 MSEK from 9.7 MSEK, with a margin of 3.1% versus 6.3% last year, reflecting lower utilization and increased personnel costs.

• Strategic mergers and divestments, including combining Aspire with Ninetech and selling Borlänge operations, aim to improve margins and reduce exposure to weak segments.

• CombinedX now consists of six specialist subsidiaries, with plans to expand to eight leading brands by 2028.

• No clear signs of market recovery; expectations for improvement by end of 2024 are now uncertain.

Financial highlights

• Q3 2024 revenue: 196.0 MSEK (153.7 MSEK in Q3 2023), growth 27.5%; organic growth -2.1%.

• Adjusted EBIT: 6.0 MSEK (Q3 2023: 9.7 MSEK); margin 3.1% (Q3 2023: 6.3%).

• Q3 net income: 3.7 MSEK (14.4 MSEK); EPS 0.21 (0.84) before dilution.

• Cash flow from operations in Q3: 17.2 MSEK (-7.3 MSEK); cash position at period end: 92.8 MSEK.

• LTM revenue: 882.5 MSEK; LTM adjusted EBIT margin: 8.0%.

Outlook and guidance

• Market remains weak with no clear turnaround; delayed project starts and continued low utilization expected to impact profitability.

• Management expects improved EBIT margin in 2025 following recent structural changes.

• Strategic focus on consolidating specialist subsidiaries and reducing exposure to underperforming segments.

• Long-term targets: EBIT margin ≥10%, organic growth above IT consulting market, sales ≥1 billion SEK by 2025, net debt/EBITDA ≤2x.