Techstep (TECH) Q3 2024 earnings summary

Executive summary

• Achieved year-over-year growth in both revenue and net gross profit for the first time in over two years, with recurring revenue reaching record highs and strong commercial momentum from new and renewed contracts and strategic partnerships.

• Secured a major frame agreement with Tradebroker, estimated at over NOK 600 million, and formalized partnerships with DeviceNow and ICE, supporting global expansion and future growth.

• Strategic focus on scaling through indirect partner models, cross- and upselling, and expansion into new geographies.

• Market conditions improved across all regions, with a strong comeback in Sweden and continued acceleration in Poland and Europe.

Financial highlights

• Q3 2024 revenue was NOK 237.6 million, up 5% year-over-year, with net gross profit of NOK 81.9 million (4% growth) and a margin of 34.5%.

• Adjusted EBITA was NOK 14.2 million, up 11% year-over-year, with an adjusted EBITA margin of 6.0%.

• Net loss for the period was NOK 6.1 million, mainly due to non-cash amortization of intangible assets.

• Positive cash flow from operations of NOK 18 million, though down from last year due to working capital changes.

• Recurring revenue annualized grew 6% year-over-year to NOK 326 million, with Own Software up 12%.

Outlook and guidance

• 2024 guidance: recurring revenue annualized to grow 5–15% year-over-year, net gross profit up 0–5%, and adjusted EBITA conversion of 10–14%.

• 2025 ambitions: recurring revenue annualized to grow above 30%, net gross profit up 20–30%, and adjusted EBITA conversion above 20%.

• Major partner agreements (DeviceNow, ICE, Sykehuspartner, Tradebroker) expected to drive substantial growth, with most impact back-end loaded in 2025.

• Strategic partnerships and cost optimization to drive future growth and profitability.