Crayon Group Holding ASA — Q4 2023 Earnings Presentation
25 slides from Crayon Group Holding ASA's earnings presentation, Feb 14, 2024
Slide 1: Quarterly Results Q4 2023
Quarterly Results Q4 2023 Melissa Mulholland, CEO Brede Huser, CFO 14 February 2024
Slide 2: Disclaimer
Q4 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: Q4 Highlights
Q4 HIGHLIGHTS Continued strong growth and operating cash flow Amounts in NOK Continued strong growth driven by Gross Profit Nordics and Europe 27% 1 611m Adj. EBITDA Margin 1 Adj. EBITDA underperformance driven by weaker Consulting market -5pp 15% Cash flow from operations Cash flow from operations
Slide 4: Software and Cloud demand remain strong
2023 REVIEW Software and Cloud demand remain strong Gross Profit Adjusted EBITDA Operating Cash Flow NOK 5.7bn NOK 919m NOK 1 390m +26% YOY +10% YOY +NOK 1 288m YOY 5 662 919 1 390 839 4 496 644 3 164 25 102 2021 2022 2023 2021 2022 2023 2021 2022 2023
Slide 5: Consulting negatively impacting profitability – Software business performing as expected
FINANCIAL REVIEW Consulting negatively impacting profitability – Software business performing as expected Profitability measures initiated in +274 Adjusted EBITDA* NOK millions Consulting business 1 505 1 231 Hiring slowdown Resource optimization -125 148 Strengthened leadership 23 Software & Cloud
Slide 6: Strong growth driven by Nordics and Europe
FINANCIAL REVIEW Strong growth driven by Nordics and Europe Q4 Gross Profit by market cluster Q4 Adj. EBITDA by market cluster NOK million NOK million 143 1 611 55 8 241 166 365 -11 28 160 334 603 Nordics Europe APAC US HQ/Elim Q4 2023 Nordics Europe APAC US HQ Q4 2023 & MEA & MEA Growth EBITDA 27%
Slide 7: Market demand in Consulting slower than anticipated
BUSINESS REVIEW Market demand in Consulting slower than anticipated Q4 Gross Profit by business area Q4 Adj. EBITDA by business area 1 NOK million NOK million 89 1 611 130 16 462 -22 209 295 250 241 601 -179 SW & SW & SCE Consulting HQ/ Q4 2023 SW & SW & SCE Consulting HQ/ Q4 2023 Cloud Cloud Elim C
Slide 8: Continuous strong market growth
STRATEGY AND AMBITION Continuous strong market growth • In 2023, global IT spending growth slowed down to 4.8% partly due to a cautious response to a tepid 8,7% macroenvironment. 7,0% • Growth is forecast to rebound to 7.0% in 2024 4,8% • Software 12.7% • Services 8.7% • 7.4% CAGR over 2022-27 2022
Slide 9: Significant market opportunity from strong position in AI
STRATEGY AND AMBITION Significant market opportunity from strong position in AI 140 10 Oslo Vienna Overview of AI Licensing Assessment Data mgmt. of readiness FTEs dedicated Years experience in Singapore and ML Advisory and licensing resources the field Saudi Arabia needs needs Strong partnership wi
Slide 10: Microsoft Copilot win in Asia Pacific
CUSTOMER STORY Microsoft 365 Copilot win in Asia Pacific Rajah & Tann is a prominent Singapore law firm established in 1976 that is recognized for its extensive legal expertise and employs about 1,000 lawyers. Singapore With a strong focus on innovation and client-centric solutions, they play a sign
Slide 11: Financial Review
@®) Crayon Financial Review
Slide 12: Strong working capital performance
FINANCIAL REVIEW Strong working capital performance Net working capital Q4 2023 Net working capital over time NOK million NOK million 253 905 Accounts receivable 7,847 -3 -121 -132 -671 -280 -218 -463 Impact from extended -450 payment terms Inventory 18 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 2
Slide 13: High attention to net working capital yielding results
FINANCIAL REVIEW High attention to net working capital yielding results Accounts receivable Accounts payable • High focus on net working capital • No structural change in payment term throughout the global organization from key vendors • Deal governance to maximize cash flow • Payment compliance tow
Slide 14: Profit and loss – Q4 2023
FINANCIAL REVIEW Profit and loss – Q4 2023 NOK million Q4 2023 Q4 2022 2023 2022 Gross Sales 12 472 10 141 49 077 38 761 Revenue 1 805 1 507 6 397 5 200 Cost of sales -193 -234 -735 -704 Gross profit 1 611 1 273 5 662 4 496 Operating expenses -1 482 -1 088 -4 917 -3 744 • EBITDA adjustments include
Slide 15: Balance sheet – Q4 2023
FINANCIAL REVIEW Balance sheet – Q4 2023 31 Dec 31 Dec 31 Dec 31 Dec ▪ Other current receivables includes: Assets 2023 2022 Equity and liabilities 2023 2022 • Unbilled Gross Sales of 1,297m Contracts 489 541 Shareholders' equity 2 479 2 540 mainly related to 1 month accrual Goodwill 3 262 3 147 Long
Slide 16: Strong operating cash flow driven by working capital
FINANCIAL REVIEW Strong operating cash flow driven by working capital Cash flow from operating activities NOK million 2,177 Cash flow from operations driven 341 449 478 158 69 by changes net working capital -328 -497 -955 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 LTM cash development NOK
Slide 17: Impairment related to business in Oman and Qatar
FINANCIAL REVIEW Impairment related to business in Oman and Qatar ▪ As announced in Q2 2023, Crayon initiated negotiations with the aim to acquire the business and transition from a franchise model to direct ownership. ▪ Due to the failed negotiations and uncertainty of remaining value in the curren
Slide 18: 2024 outlook
2024 OUTLOOK 2024 outlook Medium 2023 2024 Comment term 2024 outlook implies organic growth Gross Profit growth 26% 18-20% ~20% in line with medium-term outlook Gradual Continuing growth while also improving cost Adj. EBITDA margin 1 16.2% 18-20% increase to efficiency 25% -2.5% to - Expected to nor
Slide 19: Key take aways
(ea) Key take aways
Slide 20: Key take aways
KEY TAKEAWAYS Key take aways Significant growth Consulting Continuous focus opportunities profitability on working capital 20
Slide 21: Crayon Earnings Q4 2023 Q&A
(ea) CRAYON EARNINGS Q4 2023 Q&A
Slide 22: Appendix
CY) Crayon Appendix
Slide 23: Continued strong growth momentum and value creation
FINANCIAL REVIEW Continued strong growth momentum and value creation CAGR CAGR Gross Profit 12 months rolling 31% Adj. EBITDA 12 months rolling 28% NOK million NOK million 5.662 924 839 4.793 644 3.464 2.345 413 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2020 2021
Slide 24: 56% of Gross Profit coming from international markets
FINANCIAL REVIEW 56% of Gross Profit coming from international markets Gross Profit1 Adj. EBITDA1 NOK million NOK million 43% 48% 48% 57% 56% 13% 25% 42% 51% 37% 5.662 839 919 380 4.496 640 430 336 188 266 3.165 3.145 413 103 2.543 292 105 2.345 38 1.546 600 634 1.809 535 1.119 415 335 774 2.137 1.5
Slide 25: Summary of adjustment items
FINANCIAL REVIEW Summary of adjustment items Adjustment items (mnok) Q4 2023 FY 2023 ▪ Share based compensation related to Share based compensation -16 -42 accruals for options and bonus shares M&A Expense - -10 under ESPP program Contingent considerations, fair value -13 -18 ▪ Earn outs relating to