FormPipe Software (FPIP) Q3 2019 earnings summary

Executive summary

• Net sales for Q3 2019 were SEK 92.4m, down 3% year-over-year; software revenues rose 2% to SEK 66.1m, with recurring revenues up 9% to SEK 61.4m, now 66% of net sales.

• EBITDA for Q3 was SEK 24.3m (26.3% margin); EBIT SEK 11.2m (12.1% margin); net income SEK 8.3m.

• For Jan–Sep 2019, net sales were SEK 290.7m (down 2%), recurring revenues up 11% to SEK 181.4m, 62% of net sales.

• SaaS growth was lower than the prior year, but demand in the private sector remains strong; public sector procurement activity increased post-election.

• Strategic contract wins in Denmark and Sweden, including framework agreements for e-archive services and cloud/on-premise software.

Financial highlights

• Q3 EBITDA margin was 26.3% (26.8% last year); EBIT margin 12.1% (14.5%).

• Jan–Sep EBITDA margin was 24.9% (24.4%); EBIT margin 11.1% (12.5%).

• Adjusted EBITDA for Q3 was SEK 14.5m (15.7% margin); for Jan–Sep SEK 44.5m (15.3% margin).

• Cash flow from operations for Jan–Sep was SEK 15.6m, down from SEK 60.8m, due to increased working capital.

• Net debt at period end was SEK 35.7m (SEK 7.5m excluding IFRS 16 effects).

Outlook and guidance

• High demand and activity in the private sector; public sector procurement rebounding after a period of low activity.

• SaaS transition continues, with recurring revenues now a larger share of total sales.