Smartcraft (SMCRT) Q1 2025 earnings summary

Executive summary

• Annual recurring revenue (ARR) reached NOK 494 million in Q1 2025, up 23% year-over-year, driven by acquisitions and organic growth, but with increased churn and downgrades due to customer bankruptcies and market headwinds.

• Q1 2025 revenue was NOK 137 million, up 25% year-over-year, with strong operational cash flow and a 16% increase in new customers, though conversion rates declined and uncertainty delayed buying decisions.

• Adjusted EBITDA minus CapEx margin was 27%, up 3 percentage points sequentially but down from 33% a year ago, impacted by acquisitions and investments in SmartCraft Spark.

• Product launches, including SmartCraft Spark and BIM features, are progressing and enhancing upsell opportunities and customer stickiness.

• CEO announced his decision to step down, with a successor search underway and transition expected by Q4 2025.

Financial highlights

• Recurring revenue grew 23% year-over-year, with organic ARR growth of 6% and organic revenue growth of 5.7%, both below ambitions due to macroeconomic headwinds.

• Q1 2025 revenue reached NOK 137 million, with recurring revenue share at 94.7%-97.0%.

• Adjusted EBITDA margin was 27.3%-34.7% in Q1 2025, down from 40.9% a year ago due to acquisition dilution and development investments.

• Net profit was NOK 22.1 million, down from NOK 31.8 million in Q1 2024.

• Operating cash flow remained strong and positive, with NOK 54.3 million in Q1 2025.

Outlook and guidance

• Medium-term organic growth guidance reiterated at 15%-20%, with margin improvement expected as market conditions recover and business scales.

• Recovery in Sweden and Finland expected in H2 2025, while Norway and UK remain challenging.

• Continued focus on marketing, sales excellence, cost flexibility, synergies, and prudent capital allocation.