Crayon Group Holding ASA — Q1 2023 Earnings Presentation
32 slides from Crayon Group Holding ASA's earnings presentation, May 23, 2023
Slide 1: Quarterly Results Q1 2023
Quarterly Results Q1 2023 Melissa Mulholland, CEO Jon Birger Syvertsen, CFO 23 May 2023
Slide 2: Disclaimer
Q1 2023 Disclaimer The statements contained in this presentation may include forward-looking statements, such as statements of future expectations regarding the Company's results of operations, financial condition, liquidity, prospects, growth and strategies. These statements are based on the manage
Slide 3: Strong business performance
Q1 HIGHLIGHTS Strong business performance Amounts in NOK Global IT market demand Gross Profit remains robust 31% 1 258m Solid gross profit growth driven by Nordics and Europe 50% Adj. EBITDA 185m Profitability improvement in line with plan 1.9pp Adj. EBITDA margin 1 14.7% High attention to efficient
Slide 4: Strong gross profit growth across geos and businesses
Q1 HIGHLIGHTS Strong gross profit growth across geos and businesses Software and Cloud Direct 54% Nordics 26% Software and Cloud Channel United States Europe 34% 25% 53% APAC & MEA Software and Cloud Economics 21% 32% Consulting 25% YoY Gross Profit growth
Slide 5: Customers challenged by increased complexity in IT ecosystems and uncertain macro economic climate
MARKET Customers challenged by increased complexity in IT ecosystems and uncertain macro economic climate Crayon’s three-step framework to Macro economic uncertainties remain optimize customers’ IT spend Reduce or right-size spending based Digital transformation accelerating Reduce IT 1 spend on the
Slide 6: Macroeconomic environment uncertainties remain but global IT market continues to be resilient
MARKET Macroeconomic environment uncertainties remain but global IT market continues to be resilient ▪ Nordic economies still solid – strong digitalization drive ▪ Demand in DACH region remain strong Nordics ▪ Nordics frontrunners in cloud – high demand for cloud Highly competitive market situation
Slide 7: Expanding value for all stakeholders: US status
STRATEGY AND AMBITION US status Expanding value for all stakeholders 2021 - 2015 2023+ 2022 Established Crayon US Reshaping the business Accelerate growth • Acquired Angelpoint • Stabilized organization and strengthening • Great Place To Work Certified (91%) • Build organization Crayon unique cultur
Slide 8: AWS and Crayon: A renewed and expanded partnership
STRATEGY AND AMBITION AWS and Crayon: A renewed and expanded partnership Crayon signs four-year Strategic Collaboration Agreement with Amazon Web Services New agreement expands existing AWS Premier Tier Services Partnership to help accelerate cloud adoption and cloud migration for Crayon customers.
Slide 9: Our Global Data & AI Practice
DATA & AI SERVICES Our Global Data & AI Practice Mission Crayon Differentiators Center of Excellence Stats We enable our customers to become data- driven enterprises by generating value from data with scalable data platforms and AI powered solutions. Close relationship to customers 140 300+ 10 FTEs
Slide 10: Our Global Data & AI Practice
DATA & AI SERVICES Our Global Data & AI Practice Purpose-built AI Solutions Industry-specific Solutions Data & AI Platforms Decision Intelligence Cloud Data Platform Advisory Manufacturing Data-driven Visual Quality Maintenance Inspection for Production Computer Vision Cloud Data Platforms Delivery
Slide 11: Data & MLOps platform for biotech industry
CUSTOMER STORY Data & MLOps platform for biotech industry Agritech's Data-Driven Future: Enabling ML-powered gene editing with a modern Data and MLOps Platform Customer Challenge ▪ Limited governance over machine learning experiments and data assets ▪ Diverse tooling hinders maintainability of the p
Slide 12: Crayon AI & remote sensing aids conservation efforts
THE CRAYON ESG INNOVATION FUND Crayon AI & remote sensing aids conservation efforts The ESG innovation fund was launched in 2021 as an internal initiative to inspire employees to be creative and introduce ESG-related innovation to support non-governmental organizations (NGOs) in becoming more impact
Slide 13: STADA cloud journey
CUSTOMER STORY STADA cloud journey STADA is a leading manufacturer of high-quality pharmaceuticals. Worldwide Worldwide, STADA operates in 120 countries. Infrastructure is spread into HQ - Serbia more than 40 local on-prem Data Centers and 13,000 users. Client Challenges ▪ STADA wanted to consolidat
Slide 14: Financial Review
@ Crayon Financial Review
Slide 15: Continued strong growth momentum and value creation
FINANCIAL REVIEW Continued strong growth momentum and value creation Gross Profit 12 months rolling Adj. EBITDA 12 months rolling NOK million CAGR NOK million CAGR 35% 45% 901 4,794 651 3,464 488 2,490 1,929 297 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 20 20 20 2
Slide 16: 56% of Gross Profit coming from international markets
FINANCIAL REVIEW 56% of Gross Profit coming from international markets Gross Profit 1 Adj. EBITDA 1 NOK million NOK million 43% 48% 48% 57% 56% 13% 25% 42% 51% 47% 4,794 839 901 4,496 210 183 644 430 420 3,165 103 2,548 2,707 413 269 2,345 292 105 1,809 1,546 38 1,119 535 600 628 774 335 415 1,516 1
Slide 17: Strong growth momentum across all market clusters
FINANCIAL REVIEW Strong growth momentum across all market clusters Q1 Gross Profit by market cluster Q1 Adj. EBITDA by market cluster NOK million NOK million 56 1 258 33 144 287 18 -9 185 177 -34 232 539 Nordics Europe APAC US HQ/Elim Q1 2023 Nordics Europe APAC US HQ Q1 2023 & MEA & MEA Growth 26%
Slide 18: Solid growth across all business areas
FINANCIAL REVIEW Solid growth across all business areas Q1 Gross Profit by business area Q1 Adj. EBITDA by business area 1 NOK million NOK million 397 19 1 258 22 21 156 177 263 186 185 402 -200 SW & SW & SCE Consulting HQ/ Q1 2023 SW & SW & SCE Consulting admin/ Q1 2023 Cloud Cloud Elim Cloud Cloud
Slide 19: Margin development
FINANCIAL REVIEW Margin development 12-months rolling EBITDA margin 1 40% ▪ Nordic margin stable - representing margin potential for businesses Nordics operating at scale 30% ▪ Stable development in APAC & MEA - APAC & MEA impacted by significant one-time cost 20% in Q4 22 of NOK 40m Europe 10% ▪ Sc
Slide 20: Improved working capital performance
FINANCIAL REVIEW Improved working capital performance Net working capital Q1 2023 Net working capital over time NOK million NOK million 253 Accounts receivable 6,617 -3 -218 -188 -120 -207 -280 Adjusted for -463 (-670*) Philippine public Inventory 19 sector receivables -637 Q1 21 Q2 21 Q3 21 Q4 21 Q
Slide 21: Cash flow in Q1 2023 reflecting improving working capital
FINANCIAL REVIEW Cash flow in Q1 2023 reflecting improving working capital Cash flow from operating activities NOK million 630 341 449 478 Cash flow from operations is 69 seasonal and driven mainly by changes to net working capital -401 -328 -544 -497 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22
Slide 22: Profit and loss – Q1 2023
FINANCIAL REVIEW Profit and loss – Q1 2023 NOK million Q1 2023 Q1 2022 2022 2021 ▪ Increased Depreciation & Amortization Revenue 1,416 1,071 5,200 3,650 compared to Q1 22 but as same level as Cost of sales (159) (111) (704) (494) Q4 22 when excluding impairment of NOK Gross Profit 1,258 960 4,496 3,
Slide 23: Balance sheet – Q1 2023
FINANCIAL REVIEW Balance sheet – Q1 2023 31 Mar. 31 Mar. 31 Mar. 31 Mar. Assets Equity and Liabilities 2023 2022 2023 2022 Contracts 554 581 Shareholders' equity 2,630 2,350 ▪ Other current receivables includes NOK 800m in public duty Goodwill 3,279 3,004 Lease liabilities 414 80 receivables relatin
Slide 24: 2023 outlook
2023 OUTLOOK 2023 outlook FY 2023 Medium 2022 LTM Comment Outlook term Gross Profit growth 38% 2023 outlook implies organic growth 42% ~20% ~20% (32% org.) in line with medium-term outlook Gradual Adj. EBITDA margin 1 Continuing growth while also improving cost 18.7% 18.8% 20-21% increase to efficie
Slide 25: Summary
(e/a) Summary
Slide 26: Key takeaways
KEY TAKEAWAYS Key takeaways Resilient market demand Continued customer first approach Focus on margin improvement 26
Slide 27: Q&A
CRAYON EARNINGS Q1 2023 Q&A
Slide 28: Appendix
CY) Crayon Appendix
Slide 29: Margin development
FINANCIAL REVIEW Margin development 12-months rolling adj. HQ Cost 12- EBITDA margin 1 months rolling 40% 200 ▪ Nordic margin stable - representing margin potential for businesses operating at scale 30% 150 ▪ Stable development in APAC & MEA - impacted by significant one-time 20% 100 cost in Q4 22 o
Slide 30: Inherent business seasonality impacting net working capital
FINANCIAL REVIEW Inherent business seasonality impacting net working capital Net working capital 1 Trade Working Capital NOK million 254 ▪ Receivables collection and timing for vendor payments are key drivers 280 337 414 289 74 224 427 for trade working capital 152 172 206 108 -113 167 97 28 92 30 1
Slide 31: Foreign exchange impact
APPENDIX Foreign exchange impact P&L impact – Other financial income and Equity impact – Other comprehensive FX exposure expense income ▪ Crayon Group Holding ASA uses NOK ▪ Other financial expense relates to ▪ Other comprehensive income relates to as reporting currency currency changes (foreign to
Slide 32: Foreign exchange impact - Illustrative example
APPENDIX Foreign exchange impact - Illustrative example Balance sheet 1/1 Crayon Crayon Crayon Crayon Consolidating Crayon Norway and Crayon Norway NOK France EUR France NOK Group NOK France EURNOK 10 Cash pool balance -1000 NOK +100EUR 1000 NOK 0NOK (-100EUR) • EURNOK changes from 10 to 11 during t