FormPipe Software (FPIP) Q2 2024 earnings summary

Executive summary

• Net sales declined by 3% year-over-year to SEK 133 million, mainly due to the Danish public sector contract, while recurring revenues grew 13% to SEK 107 million, now representing over 80% of net sales.

• Annual Recurring Revenue (ARR) reached SEK 434 million, up 7% year-over-year, demonstrating a stable contract base and consistent recurring revenue generation.

• EBIT for Q2 was SEK 8 million, down from SEK 13 million last year, with a margin of 6%; net profit rose to SEK 8 million.

• The company is executing its Pursue Potential program and One Public Business Area transition, focusing on product portfolio consolidation, R&D reallocation, and new offerings.

• Acquisition of Dictymatec SARL in May strengthened the Private segment in France and contributed to ARR.

Financial highlights

• Recurring revenue now covers more than 80% of total revenue, with a year-on-year rolling twelve-month growth of 17%.

• Net sales for Q2 2024 were SEK 132.7 million, down 3% year-over-year; recurring revenue was SEK 106.8 million, up 13%.

• Delivery revenues contracted by SEK 13 million year-over-year, primarily due to the Danish public sector contract.

• SaaS revenue in the private segment grew by SEK 6.5 million, driving a 3.5% total revenue increase in that area.

• EBITDA margin for Q2 was 18.9%, with cash flow from operating activities at SEK 26 million.

Outlook and guidance

• Management expects a slow improvement in delivery capability in Denmark and continued strong momentum in private sector profitability.

• The new Essentials product for Dynamics is set for full release in October, expected to enhance lead generation and market reach.

• Ongoing transformation measures are expected to yield clearer results by year-end, with continued focus on increasing recurring revenue and efficiency.

• Financial targets for 2021-2025 include 10% average annual revenue growth, 70% recurring revenue share by 2025, and EBIT margin above 20%.

• Dividend policy targets over 50% of net profit over time.