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Solteq Plc’s Interim Report January 1 – September 30, 2023

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Stock Exchange Bulletin 
Interim Report
October 26, 2023, at 8.00 am EET

Solteq returned to a growth path, heavy cost structure burdened the Utilities segment

July–September

  • Comparable revenue totaled EUR 12.2 million (12.0) and increased by 1.9 percent. Revenue totaled EUR 12.2 million (14.4) and decreased by 14.9 percent
  • Comparable EBITDA was EUR 0.6 million (0.6) and EBITDA EUR 0.5 million (0.8). Comparable EBITDA percent was 4.6 (4.7)
  • Comparable operating result was EUR -0.7 million (-0.7) and operating result EUR -0.7 million (-5.0). Comparable operating result percent was -5.5 (-6.0)
  • Earnings per share was EUR -0.05 (-0.23)

January–September

  • Comparable revenue totaled EUR 39.9 million (43.0) and decreased by 7.1 percent. Revenue totaled EUR 43.4 million (51.5) and decreased by 15.8 percent
  • Comparable EBITDA was EUR 1.0 million (4.1) and EBITDA EUR 9.5 million (5.3). Comparable EBITDA percent was 2.4 (9.6)
  • Comparable operating result was EUR -2.9 million (0.4) and operating result EUR 5.5 million (-3.2). Comparable operating result percent was -7.2 (0.9)
  • The ERP business based on Microsoft BC and LS Retail was transferred to Azets Group as of May 2, 2023. The profit on the sale of the business transaction improved the group's EBITDA and operating result by EUR 8.3 million
  • Earnings per share was EUR 0.15 (-0.19)
  • Solteq Group’s equity ratio was 36.8 percent (31.9)
  • Net cash flow from operating activities was EUR -5.3 million (3.6)
  • Solteq’s revenue is expected to be EUR 57–59 million and operating result to be negative, excluding the one-time profit recognition of EUR 8 million on the sale of the Group’s ERP business based on Microsoft BC and LS Retail solutions

Key figures

7-9/2023 7-9/2022 Change % 1-9/2023 1-9/2022 Change % 1-12/2022 Rolling 12mos
Revenue, TEUR 12,217 14,351 -14.9 43,390 51,526 -15.8 68,426 60,290
Comparable revenue, TEUR 12,217 11,992 1.9 39,938 42,990 -7.1 57,230 54,178
EBITDA, TEUR 538 797 -32.4 9,517 5,293 79.8 5,555 9,779
Comparable EBITDA, TEUR 565 563 0.5 977 4,131 -76.4 4,469 1,314
Operating result, TEUR -697 -5,005 86.1 5,549 -3,207 273.0 -4,406 4,351
Comparable operating result, TEUR -670 -716 6.5 -2,870 373 -869.3 -613 -3,856
Result for the financial period, TEUR -975 -4,445 78.1 2,902 -3,740 177.6 -5,404 1,238
Earnings per share, EUR -0.05 -0.23 78.1 0.15 -0.19 177.6 -0.28 0.06
Operating result, % -5.7 -34.9 12.8 -6.2 -6.4 7.2
Comparable operating result, % -5.5 -6.0 -7.2 0.9 -1.1 -7.1
Equity ratio, % 36.8 31.9 30.3 34.2

CEO Aarne Aktan: Solteq returned to a growth path, heavy cost structure burdened the Utilities segment

The downturn of revenue and profitability of Solteq Plc reached a turning point in the third quarter. The Group’s comparable revenue was EUR 12.2 million, up 1.9 percent from the comparison period. The comparable EBITDA was EUR 0.6 million, and the comparable operating result was EUR -0.7 million.


The development in profitability was two-parted. The heavy cost structure continued to take a toll on the Utilities segment. On August 29, 2023, change negotiations were initiated to improve the profitability and operational efficiency of the Utilities software business. The negotiations were completed on October 10, 2023. As a result of the negotiations and the efficiency and cost savings measures taken, the company estimates to achieve annual cost savings of approximately EUR 3.8 million. The majority of cost savings are expected to be realized for 2024. In the Retail & Commerce segment, growth in comparable revenue and success in cost efficiency resulted in improved operating result. 


Despite the improved financial performance, the revenue for Retail & Commerce was estimated in September to be weakened for the remaining financial year. This and the weakened outlook for the rest of the year for the Utilities segment resulted in a profit warning in September 2023. The company lowered its guidance for the Group’s revenue and operating result.


The uncertainties in the global economic environment continue to reflect on the demand for the services and solutions offered by the Retail & Commerce segment. In the Utilities segment, persistent work on product development and quality assurance has progressed and continues. In the Nordic energy sector, demand for software solutions and expert services is driven by changes in industry regulation, the transition to renewable energy sources, and opportunities created by emerging technologies for business efficiency.


We expect the market outlook for the Retail & Commerce segment to remain moderate during the current financial year and demand to recover as the market stabilizes. We expect the long-term market outlook for the Utilities segment to remain good and provide opportunities for profitable growth.


Profit Guidance 2023 (updated on September 19, 2023)


Solteq’s revenue is expected to be EUR 57–59 million and operating result to be negative, excluding the one-time profit recognition of EUR 8 million on the sale of the Group’s ERP business based on Microsoft BC and LS Retail solutions.


Attachments


Solteq Plc’s Interim Report January 1 – September 30, 2023


Further Information

CEO Aarne Aktan
Tel: +358 40 342 4440
E-mail: aarne.aktan@solteq.com

CFO Kari Lehtosalo
Tel: +358 40 701 0338
E-mail: kari.lehtosalo@solteq.com

Distribution

Nasdaq Helsinki
Key media
www.solteq.com


Solteq in brief


Solteq is a Nordic software solution and expert service provider specializing in retail and energy sectors and needs related to e-commerce. The company employs over 550 professionals and has offices in Finland, Sweden, Norway, Denmark, Poland, and the UK.

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