Zalaris (ZAL) Q2 2024 earnings summary

Executive summary

• Achieved all-time high Q2 revenue of NOK 323.2 million, up 14.9%–15% year-on-year, with strong growth in Managed Services and improved EBIT margin to 8.8%.

• Adjusted EBIT rose 40.6% to NOK 28.4 million, driven by new customer wins and operational efficiencies.

• Net profit for Q2 was NOK 5.3 million, reversing a loss of NOK 11.3 million in Q2 2023.

• Strategic review process is underway, focusing on further growth and margin improvements, especially in Germany.

Financial highlights

• Revenue grew 14.9% YoY to NOK 323.2 million; Managed Services up 18.8%–19% to NOK 242 million, Professional Services down 3.6% to NOK 69.7–70 million.

• Adjusted EBIT increased 41% YoY to NOK 28.4 million (margin 8.8%, up 1.6pp); Managed Services adj. EBIT up 12% to NOK 33.4 million, Professional Services adj. EBIT down 28% to NOK 2.3 million.

• Net profit was NOK 5.3 million (Q2 2023: -NOK 11.3 million); basic EPS NOK 0.25.

• Operating cash flow increased to NOK 18.4 million from NOK 3.2–3.3 million YoY; cash balance at quarter-end NOK 163.2 million.

• Net interest-bearing debt reduced to NOK 286–286.5 million, with leverage ratio improving to 1.6x.

Outlook and guidance

• Annual growth target of 10%+ maintained, aiming for NOK 1.5 billion revenue and 12–15% EBIT margin by 2026.

• Revenue expected to increase by over 15% based on signed contracts, with most new BPO customers operational by early 2025.

• Margin improvement in German operations targeted, with EBIT expected to reach 13.9% in Germany within 12–18 months.

• Recurring revenue from long-term contracts expected to rise to 77% of total revenue by 2026.

• Focus on automation, cost optimization, and expanded use of near- and offshore delivery centers to drive profitability.