SmartCraft (SMCRT) Q1 2025 earnings summary

Executive summary

• Annual recurring revenue (ARR) reached NOK 494 million, up 23% year-over-year, driven by acquisitions and organic growth, though organic growth was 6.3% due to high churn and downgrades.

• Q1 2025 revenue reached NOK 137 million, up 25% year-over-year, with strong operational cash flow of NOK 54 million and a 16% increase in new customers, despite higher churn and downgrades.

• SmartCraft Spark and BIM solutions launched, showing early traction and optimism for future growth, enhancing customer stickiness and upsell potential.

• CEO announced his decision to step down after seven years, with a transition plan in place and a successor to be appointed by Q4 2025.

• Company remains well positioned for future growth, with a solid financial position and continued investment in product development and sales execution.

Financial highlights

• Q1 2025 revenue was NOK 137 million, up from NOK 109.7 million in Q1 2024, with recurring revenue share at 94.7%.

• Adjusted EBITDA margin was 27.3% in Q1 2025, with adjusted EBITDA-capex margin at 27%, slightly down year-over-year but up sequentially.

• Churn rate reached 9.3%, an all-time high, mainly due to bankruptcies and downgrades.

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

• Cash and cash equivalents stood at NOK 152.5 million at quarter end, with a net cash positive balance sheet and negative net working capital.

Outlook and guidance

• Medium-term organic growth guidance reiterated at 15%-20%, with expectations for margin improvement as market conditions recover, especially in H2 2025.

• Recovery in Sweden and Finland expected in H2 2025; Norway and UK show few signs of near-term improvement.

• Continued focus on cost flexibility, sales excellence, marketing, and capitalizing on recent investments and M&A.