Zalaris (ZAL) Q3 2024 earnings summary

Executive summary

• Achieved all-time high Q3 revenue of NOK 340 million, up 22.1% year-over-year, and adjusted EBIT of NOK 37 million, up 56% year-over-year, with strong growth across all markets and segments.

• Annualized revenue is approaching NOK 1.4 billion, ahead of the NOK 1.5 billion 2026 target.

• Strong sales pipeline and expanded services with existing and new customers, particularly in Managed Services.

• Strategic review process initiated in April remains ongoing.

• Major contract wins in Germany, UK, and APAC, including a German retail chain for over 11,000 employees.

Financial highlights

• Revenue increased 22.1% year-over-year to NOK 339.7 million; 18.3% growth in constant currency.

• Managed Services revenue grew 27% to NOK 254 million, now 75% of total revenue.

• Professional Services revenue declined 1.8% year-over-year to NOK 71.6 million, mainly due to project completion and fewer UK consulting projects.

• Net profit for the period was NOK 8.3 million, down from NOK 13.4 million last year due to higher financial expenses.

• Operating cash flow increased to NOK 48.4 million from NOK 15 million last year; cash balance at quarter-end was NOK 180.1 million.

Outlook and guidance

• Annual growth target of 10% maintained, with managed services and professional services targets at 15% and 5%, respectively.

• Revenue expected to increase by NOK 173 million over the next 12 months based on signed contracts.

• EBIT margin target of 12–15% by 2026, with cash conversion target of 70%.

• Several large new long-term contracts in Managed Services are expected to be operational by early 2025.

• A top 5 customer will not renew beyond 2026, but the contract pipeline remains strong.