Zalaris (ZAL) Q4 2024 earnings summary

Executive summary

• Achieved record Q4 2024 revenue of NOK 365 million, up 16.5% year-over-year, and all-time high adjusted EBIT of NOK 47.4 million (13.1% margin), with strong Managed Services growth and operational improvements, especially in Germany and APAC.

• Board proposes a dividend of NOK 0.90 per share for 2024; strategic review process initiated in April is ongoing and expected to conclude by end of Q2 2025.

• Operating cash flow for Q4 was NOK 57 million, up from NOK 44 million year-over-year; year-end cash balance at NOK 221.8 million.

• Major new contracts signed in Q4, including a global payroll and HR deal with a German IT company across 9 countries.

• Full-year revenue reached NOK 1,346.3 million (+18.7% YoY), with adjusted EBIT of NOK 147.5 million (11.0% margin).

Financial highlights

• Q4 2024 revenue was NOK 365 million, up 16.5% year-over-year (13.6% in constant currency); adjusted EBIT margin improved to 13.1% from 10.7% last year.

• Managed Services revenue grew 20% year-over-year to NOK 275.3 million, now 75% of total revenue; net revenue retention at 104%.

• Professional Services revenue declined 3.5% year-over-year to NOK 72.7 million, mainly due to fewer UK projects.

• Net profit for Q4 was NOK 13.4 million, down from NOK 20.9 million last year due to a one-time tax gain in 2023.

• Net interest-bearing debt reduced to NOK 247.5 million; leverage ratio at 1.2x adjusted EBITDA.

Outlook and guidance

• On track to reach NOK 1.5 billion revenue target by 2025, ahead of the original 2026 goal; annual growth target set at 10%.

• Managed Services and Professional Services growth targets are 15% and 5%, respectively.

• EBIT margin target tightened to 13%-15% for 2026, up from previous 12%-15%.

• Revenue visibility through 2025 and 2026 is strong, with projected revenue increase of over 12% compared to 2024.

• Growth driven by recurring revenue from long-term contracts, upselling, and new BPO customers.