Transcom Holding AB (publ): Second quarter report 2022

Second quarter 2022 highlights

• Revenue increased to 172.7M€ (143.4)
• EBITDA excluding non-recurring items increased to 19.4M€ (12.5)
• EBITDA margin excluding non-recurring items increased to 11.2% (8.7%)
• Operating cash flow amounted to 0.1M€ (7.5)
• Net debt/EBITDA amounted to 3.9 (3.7)

January-June 2022

• Revenue increased to 348.3M€ (294.3)
• EBITDA excluding non-recurring items increased to 39.9M€ (31.2)
• EBITDA margin excluding non-recurring items increased to 11.4% (10.6%)
• Operating cash flow amounted to 15.4M€ (19.2)
• Net debt/EBITDA amounted to 3.9 (3.7)

Comments by the CEO

Strong growth and increased profitability

Transcom continues on a positive trajectory with strong growth and increased profit in the second quarter. Revenue in the second quarter increased 20%, with organic growth of recurring contracts contributing 18pp. The EBITDA margin increased 2.5pp, mainly due to improvements in the Telco & Cable sector in Europe.

The organic growth in the quarter was well diversified with positive development from both new and existing clients, and from all sectors. The growth rate in eCommerce & Tech was 22% in the quarter, and the growth in Services & Utilities accelerated to 25%. The acquisitions of City Connect and TMS contributed positively to the revenue, while ramp down of temporary Covid projects had a negative contribution to growth.

We continue to win new contracts, both with new and existing clients. And we remain confident about the megatrends supporting Transcom’s business, with physical consumer interactions shifting to online channels. However, the macroeconomic situation impacts the short term growth outlook primarily in eCommerce & Tech, as consumer spending is impacted by inflation and increased interest rates.

The macroeconomic situation also brings opportunities for Transcom, as clients are looking at ways to decrease cost. Hence, we experience an increased demand from first time outsourcers and an increased share of near/offshoring and digital solutions. To meet the increasing demand, we opened a new site in Poznan, Poland, and expanded capacity in Nis, Serbia.

During the quarter, we launched a program to adjust our delivery to an increased share of permanent Work-At-Home and to further increase our internal efficiency. The program is expected to yield annualized cost savings of 10 MEUR, compared to the run rate of the first quarter 2022, with full run-rate impact from 1 Jan 2023. Related to this program, 4 MEUR of restructuring cost are recognized in the second quarter as NRIs, mainly related to site capacity reductions and redundancies.

We continue to execute on our strategy of client focus and operational excellence, through strong culture and leadership. And we’ll continue to shift our portfolio towards eCommerce & Tech, near/offshore delivery and digital solutions. We’re entering the third quarter with solid momentum and stand committed to our long term-targets of double-digit organic growth and 16% EBITDA margin.

Jonas Dahlberg, President & CEO

Q2 2022 Financial Update Webcast
Transcom will host a live webcast on Thursday, August 25 at 9:00 CET. The presentation is available on https://www.transcom.com/global/about-us/investor-relations, direct link here.

Presentation details
Date/Time: Thursday, August 25, at 9:00 am CET
Online Registration link: https://app.livestorm.co/transcom-holding/transcom-holding-ab-q2-2022-results-presentation 

Important note: Please register via the link above at least 5-10 minutes prior the webcast in order to obtain the webcast link.

For further information, please contact
Jonas Dahlberg, President & CEO Transcom
Phone: +46 (0)70 347 23 83, email: Jonas.dahlberg@transcom.com

Snejana Koleva, Chief Financial Officer
Phone: + 46 (0)70 508 3830, email: snejana.koleva@transcom.com

Helene Ruda, Head of Group communications
Phone: +46 (0)70 311 7560, email: helene.ruda@transcom.com

About Transcom

Transcom provides digitally enhanced customer experience (CX) services to some of the world's most ambitious brands. More than 300 clients globally, including disruptive e-commerce players, category redefining fintechs, and technology legends rely on us for on-, off-, and nearshoring services. Transcom’s over 30,000 employees work in over 80 contact centers and work-at-home networks across 25 countries, creating brilliant experiences in customer care, sales, content moderation and backoffice services. We help our clients drive their brands forward, customer satisfaction up and operating costs down. For more information, visit www.transcom.com.