Itera

Earnings Release • Aug 21, 2019

High growth and profitability in core digital business

High growth and profitability in core digital business

Oslo, 21 August 2019: The core digital business revenue grew by 9% and achieved an operating margin of 12.3% in the second quarter. Itera’s total operating revenue including traditional data centre operations increased by 4% and the operating result improved by 47%.

Itera reports operating revenue of NOK 143.3 million (NOK 137.6 million) for the second quarter of 2019, which represents a growth of 4%. This growth was predominantly from Itera’s core digital business, the revenue from which increased to NOK 109.7 million from NOK 101.1 million (up 9%), while the revenue generated by Itera’s traditional data centre operations decreased by 8% from NOK 36.5 million to NOK 33.6 million. For the first six months revenue was up 6% to NOK 286.1 million, where the core digital business increased by 9% and the traditional data centre operations decreased by 1%.

Core digital business represented 77% of total revenue in the second quarter of 2019, an increase by 4 percentage points compared to the same period last year. This is in line with Itera’s transformation program where existing customers on Itera’s traditional data centers are lifted and shifted to hyperscale public cloud.

Itera’s total operating expenses in the second quarter of 2019 were 1% higher at NOK 129.4 million (NOK 128.1 million), while for the first six months they were up 4% to NOK 258.3 million.

The operating result before depreciation and amortisation (EBITDA) for the second quarter of 2019 was a profit of NOK 22.6 million (NOK 14.7 million). For the first six months EBITDA was NOK 44.9 million (NOK 29.9 million) and the EBITDA margin 15.7% (11.1%).

The operating result (EBIT) was a profit of NOK 13.9 million (NOK 9.5 million) for the second quarter and NOK 27.8 million (NOK 19.5 million) for the first six months. The EBIT margin for the second quarter of 2019 was 9.7% as compared to 6.9% in the second quarter of 2018, whereas for the first six months it was 9.7% (7.2%).

Itera’s second-quarter earnings from its core digital business were NOK 13.5 million (NOK 10.8 million), giving an EBIT margin of 12.3% (10.7%). Itera’s earnings from its traditional data centre operations were NOK 0.5 million (NOK -1.4 million), giving an EBIT margin of 1.4% (-3.8%). The transformation program to shift Itera’s data centre operations to cloud offerings is progressing in line with the plan.

Net cash flow from operating activities was NOK 26.9 million (NOK 21.6 million) in the second quarter of 2019 and NOK 21.9 million (NOK 13.3 million) for the first six months. Itera had NOK 44 million (NOK 15 million) in cash and cash equivalents at the end of June.

- The use of cloud-based technology platforms is picking up speed in both private and public organisations. I am particularly excited about the assignments won in the second quarter for ambitious and innovative organisations such as Aker Solutions’ start-up company Cognite, DNV GL, Santander, Storebrand Forsikring, KLP, Visavi Technology, Össur and Nets, says Arne Mjøs, CEO of Itera.

The revenue from Itera’s 30 largest customers grew by 1% in the second quarter of 2019 and accounted for 78% of its operating revenue, down from 80% in the second quarter of 2018.

Itera’s headcount at the end of the second quarter of 2019 was 499 as compared to 486 at the end of the second quarter of 2018. The core digital business has increased by 25 employees, while the traditional data centre business has 12 fewer employees. Itera has nearshore development centres in Slovakia and Ukraine. The proportion of Itera’s capacity that is located here (its nearshore ratio) was 48% (44%) at the end of the second quarter.

Further information:

Arne Mjøs, CEO Bent Hammer, CFO

+47 905 23 172 +47 982 15 497

arne.mjos@itera.no bent.hammer@itera.no

About Itera – specialists in creating digital business

Itera is a specialist in creating digital business, with communication, technology and innovation as its core competency tools. Itera delivers projects and services in cross-functional teams to Nordic organisations that see the instrumental contribution that innovation, efficient communication and smart utilization of technology can make to achieving their goals. Itera’s core sectors are banking and insurance, public, healthcare, the service industry, energy and utility. Itera is headquartered in Oslo, and is listed on Oslo Stock Exchange under the ticker ITE.