Interim report Q3 2022 CGit Holding AB (publ)

Financial overview, the Group
 

(TSEK)

• Revenues increased by MSEK 53.2 to MSEK 73.9 (MSEK 20.7 for the same period last year). In the previous report (Q2), we highlighted that we had made some significant deals, but due to component shortages, delivery and invoicing will be delayed until the second half of 2022 and the first half of 2023. Q3 shows delivery in line with expectations for the quarter, but we still note that the component shortage remains as problematic as in the previous quarter, and we expect it to continue into 2023.

• Annual recurring revenue (ARR) from operating activities is in line with the previous year and amounts to MSEK 6.5 (MSEK 6.5 in the same period last year).

• Gross margin for operating activities is 15.6 percent (37.5 percent).

• EBITDA amounts to MSEK 2.2 (MSEK 0.85), corresponding to a margin of 2.9 percent (4.1).

• During the period, a cost of TSEK 88 was incurred for the development of our software solution linked to AI.

• Cash and bank balance fell during the quarter from MSEK 2.5 to MSEK 1.5. CGit’s growth will positively affect our cash flow in the long term, but as accounts receivables have grown substantially in Q3, the short–term impact is negative.

• The Group’s profit per share for the third quarter of 2022 amounts to SEK 0.59 (–0.06).

Word from CEO

Strong growth with profitability!

Together with our customers, we have made several major AI infrastructure deals in Q3 with profitability. As a result, we are experiencing exceptional growth and have improved our market position in AI, further consolidating our position as the leading player in AI infrastructure and associated services in the Nordic region. It also creates favorable conditions for us to develop our other AI solutions and AI as a Service.

Together with our customers, we have made several major AI infrastructure deals in Q3 with profitability. As a result, we are experiencing exceptional growth and have improved our market position within the AI-field, further consolidating our position as the leading player in AI infrastructure and associated services in the Nordic region. It also creates favorable conditions for us to develop our other AI solutions and AI as a Service.

CGit is well-equipped to face the turbulent global context we currently find ourselves. We do this by having several revenue legs compensate each other in these times. Our targeted increase in service revenues is having an positive impact directly through our consulting payments. Also, it generates more deals and business opportunities as our experienced consultants become natural advisors to our customers, who can sometimes feel disoriented when the market is as changeable as it is. There is a start-up period when we take on new consultants, yet on service revenues alone, we see an increase in CM of 175% compared to the corresponding period last year.

Digitalization in Swedish and Nordic enterprises is taking off, and the level of maturity and awareness is constantly increasing. Companies are beginning to realize that it may be the one component that determines their survival or at least maintain their market share or ensure their competitiveness. At the same time, there is more focus on cybersecurity than there has been for a long time, partly because of the international situation. Digitalization revolves around blockchain, big data management, edge computing, digital twins linked to industry 4.0, and AI (Artificial Intelligence).

CGit has been working with AI and AI Infrastructure since 2017. To be one of the market leaders in AI, AI as a Service, and AI infrastructure solutions at this stage creates an excellent basis for us. We have been part of setting the standard for the architecture around these solutions. During these years, we have been responsible for designing, implementing, delivering, and supporting many of the largest AI installations in the Nordic region. It has generated broad and deep expertise in the field, experience, and comprehensive know-how about Swedish and Nordic businesses and how digitalization can create new conditions for their operations and future.

Today we also have our own proprietary product for AI, AiQu, an orchestrator for AI workflows. In parallel with the development of AiQu, we have built up deep and broad expertise in consulting in the field of AI and also created applicable concepts for AI as a Service.

With this product portfolio, we want to make the benefits of AI available to all companies. The most common application where CGit today contributes with knowledge in AI to various companies or organizations is through work related to language management, data/information management, and image and video management, often referred to as “vision”. In industry, the most common uses and applications of AI are quality control and various safety and maintenance prevention models. With new technology, we create new measuring points in the company’s processes, creating new values and opportunities. Using “vision”, we can create new data to complement existing data and thereby categorize/find anomalies in an entirely new way. In this way, CGit contributes to the development of companies into Industry 4.0.

AI Vision works in all applications where a human with process knowledge uses the eyes to check, assess, and decide on action visually. As a result, the use cases are extensive. By understanding its customers’ operations, CGit aims to teach and demonstrate the value of new technology through practical applications of an AI model, thus contributing to the further development of AI.

I have described parts of our AI journey within CGit. Using CGit’s existing infrastructure and processes, we can offer companies a cost-effective production of AI. With all data processing on CGit-owned systems, we keep all data handled in Sweden. Through our AiQu software, we always manage the customer’s data in complete separation from other companies’ data. We can also provide the monitoring of systems to ensure production. In summary, CGit can deliver AI from A to Z.

With these prerequisites in the AI area, an expanded consulting team of 25 percent more people in Q3, and a well-established business around Managed Services (operation, support, and hosting of advanced IT infrastructure), I look forward to the continued building of our house of knowledge. In addition, the insight of our customers into the paradigm shift around Industry 4.0 will further enable us to deliver on our plan and see continued growth in the coming years.

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Mattias Bergkvist, CEO CGit

Get in touch with the company at:

CEO Mattias Bergkvist
Phone: +46 31–762 02 40
info@cgit.se
www.cgit.se
CGit Holding AB
Taljegårdsgatan 11
431 53 Mölndal

This information is such that CGit Holding AB (publ) is obliged to make public according to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person above, on October 28, 2022.

CGit is an IT consulting company based in Mölndal, Sweden, that is part of a Group. The Company focuses on advanced Data Center solutions, including specialized solutions and consulting services related to Artificial Intelligence (AI) development and production. CGit currently has around 220 customers across various industries, and is a full-service IT support partner to 80 of these.