Itera

Earnings Release • Oct 19, 2018

Award-winning and strong growth

Award-winning and strong growth

Oslo, 19th October 2018: The Group's operating revenue in the third quarter increased from NOK 108.0 million to NOK 121.3 million compared to the corresponding quarter last year. The Group's scalable hybrid model attracted significant interest, including from the Norwegian Minister of Trade and Industry, Torbjørn Røe Isaksen, who visited Itera's office in Kiev.

The Group reports operating revenue of NOK 121.3 million (NOK 108.0 million) for the third quarter of 2018, which represents a growth of 12%. Revenue from services delivered by Itera's own consultants grew by 11%, while third-party service revenue was up by 93%. Subscription-related revenue grew by 5%.

The Group's total operating expenses in the third quarter of 2018 were 13% higher at NOK 114.9 million (NOK 101.6 million).

The operating result before depreciation and amortisation (EBITDA) for the third quarter of 2018 was a profit of NOK 11.8 million (NOK 11.5 million), while the operating result (EBIT) was a profit of NOK 6.4 million (NOK 6.4 million). The EBIT margin for the third quarter of 2018 was 5.3% as compared to 5.9% in the third quarter of 2017.

Cash flow from operating activities was NOK 1.5 million (NOK 11.9 million) in the third quarter of 2018. Significant receivables fell due in the last weekend of September and were received in the first couple of days of October.

Due to the high growth of hyperscale cloud, from 50% share of all data server processing power in the market in 2018 to about 70% share in 2021, Itera will set up a new Managed Cloud Services unit and will lift and shift its own low-margin data centres to the cloud. Excluding Itera's own data centre business, year-to-date revenue shows a growth of 23% with an EBIT margin of 10.5%.

- There is a substantial lack of IT competence in the Norwegian market. We are very pleased to see that Itera's scalable delivery model and proven customer value attract significant interest both in our industry, as well as at a political level. We are proud to announce that Itera was named "Customer Experience Provider of the Year" by the international industry organization Global Sourcing Association (GSA), says Arne Mjøs, CEO of Itera.

- Furthermore, we got the opportunity to present our delivery model to the Minister of Trade and Industry, Torbjørn Røe Isaksen, who stated the following after his visit at Itera's office in Kiev: "Itera's model helps to remedy the lack of digital expertise in Norway and the Nordic region, while value and jobs are created in Ukraine and the talent remains in the home country. Itera also shows how important cultural understanding is to succeeding in cooperation with other countries. I'm sure this is one of the reasons for Itera's success in Ukraine."

The revenue from Itera's 30 largest customers grew by 13% in the third quarter of 2018 and accounted for 82% of the Group's operating revenue, up from 79% in the third quarter of 2017.

The Group's headcount at the end of the third quarter of 2018 was 493 as compared to 475 at the end of the third quarter of 2018.

The proportion of Itera's capacity that is located nearshore (its nearshore ratio) was 43% (42%) at the end of the third quarter. The Group has development centres in Slovakia and Ukraine, and is approaching its long term strategic target of achieving a nearshore ratio of more than 50%.

Further information:

Arne Mjøs, CEO Bent Hammer, CFO

+47 905 23 172 +47 982 15 497

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