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Techstep ASA
Quarterly Report • Nov 15, 2024
3770_rns_2024-11-15_1894aaab-9256-45f2-8063-47a54a776212.pdf
Quarterly Report
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Highlights Q3 2024
Profitability improving y/y, growth in both revenue and net gross profit for the first time in two years
- Recurring revenue annualised up 6% y/y, driven by 12% in Own Software
- Net gross profit margin remains steady at 35%, in line with the same quarter last year
- Positive cash flow from operations
- Positive EBITA adj. for the eight consecutive quarter, up 11% y/y
Commercial momentum picking up, several new signings and renewed contracts
- Frame agreement secured with the Norwegian procurement agency Tradebroker, total contract value estimated to exceed NOK 600 million
- First new Tradebroker customers already signed and onboarded
- Improving market conditions across all three markets, with strong comeback in Sweden and continued acceleration in Poland and Europe
Strategic partnerships progressing according to plan
- First devicenow customer successfully onboarded to Lifecycle platform
- Formalised commercial agreement with the Norwegian mobile operator ICE covering Lifecycle platform and managed services (Early October)
"Over the past few months, Techstep has achieved several key milestones. Our profitability keeps improving, and for the first time in two years, we are witnessing growth in both revenues and net gross profit. We are very proud of the growth in recurring revenue and particularly our own software, which is record high as we move into the fourth quarter. Momentum in our business is building, both in our partner channel and with key customers. We have several new signings and renewed contracts, and our strategic partnerships are progressing as planned. We are very satisfied with the progress, and optimistic about our development towards becoming the leading mobile and circular technology company in Europe", comments Morten Meier, CEO of Techstep.
About Techstep
Techstep is a mobile & circular technology company, enabling organisations to perform smartly, securely, and sustainably by combining devices, software and expertise to meet customers' business and ESG goals. We are a leading provider of managed mobility services in Europe, serving more than 2,100 customers in Europe with an annual revenue of NOK 1.1 billion in 2023. The company is listed on the Oslo Stock Exchange under the ticker TECH. To learn more, please visit www.techstep.io.
Key Figures
| (Amounts in NOK 1 000) | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | 2023 |
|---|---|---|---|---|---|
| Revenues 1) | 237 609 | 226 719 | 760 030 | 789 631 | 1 089 491 |
| Recurring Revenue Annualised 2) | 325 725 | 305 713 | 325 725 | 305 713 | 312 142 |
| ARR Own Software 2) | 125 045 | 111 337 | 125 045 | 111 337 | 115 348 |
| Net gross profit 3) | 81 877 | 78 717 | 252 285 | 264 261 | 353 919 |
| Net gross profit margin 4) | 34.5 % | 34.7 % | 33.2 % | 33.5 % | 32.5 % |
| EBITDA adjusted | 41 913 | 38 449 | 104 170 | 100 310 | 137 496 |
| EBITA adjusted | 14 200 | 12 824 | 18 408 | 19 228 | 29 892 |
| EBIT | (3 451) | (3 403) | (34 921) | (28 481) | (36 498) |
| Net profit (loss) for the period | (6 090) | (4 335) | (33 617) | (39 248) | (44 546) |
| EBITDA adj. margin (%) | 17.6 % | 17.0 % | 13.7 % | 12.7 % | 12.6 % |
| EBITA adj. margin (%) | 6.0 % | 5.7 % | 2.4 % | 2.4 % | 2.7 % |
| EBIT margin (%) | (1.5 %) | (1.5 %) | (4.6 %) | (3.6 %) | (3.4 %) |
| Net profit (loss) for the period (%) | (2.6 %) | (1.9 %) | (4.4 %) | (5.0 %) | (4.1 %) |
| Cash flow from operating activities | 48 157 | 53 353 | 65 159 | 80 062 | 155 560 |
| Cash flow from investment activities | (36 362) | (20 155) | (88 437) | (94 683) | (128 514) |
| Cash flow from financing activities | (11 408) | 24 388 | (38 352) | 20 299 | (12 730) |
| Cash Net interest-bearing debt |
15 660 147 391 |
67 832 136 528 |
15 660 147 391 |
67 832 136 528 |
77 459 101 218 |
| Capex | (6 242) | (6 358) | (19 494) | (25 252) | (33 920) |
| Employees | 256 | 268 | 256 | 268 | 267 |
1) Revenues for Q3 2023 have been restated due to a reclassification of kick-back and commissions from mobile device purchases from revenues to cost of goods sold.
2) Annualised recurring revenues includes revenues from Own Software, Device-as-a-service and Advisory and Services. Reported annualised recurring revenues are based on contracts for 12 or more months and calculated as invoiced contractual revenues the last month times 12.
3) Net gross profit is defined as total revenue less cost of goods sold and depreciation from Device-as-a-Service.
4) Net gross profit margin is net gross profit of revenues.
Operational review
Main developments
During the third quarter, Techstep continued to deliver on the strategic turnaround towards profitability. The focus is primarily on three elements: to transfer customers to a recurring revenue business model and high margin products and services; to develop the partner channel for own software and managed services; and to continue to optimise the organisation and reduce the cost base. Recurring revenues annualised for the quarter grew by 6% year over year, the strategic partnership agreements announced earlier this year are progressing according to plan, and the profitability is continuously improving.
On the commercial side, the sales activity picked up in all markets (Norway, Sweden, Poland and Europe) compared to previous periods, in line with the global device market1 . Total revenues increased with 5% year over year for the quarter, after several periods with declining revenues.
Both in Norway and Sweden, Device sales and Services showed positive development in the third quarter, with substantial growth for the first time in several years. In Sweden, revenues for the quarter grew by 32% compared to last year, driven by growth in Device sales and Advisory & Services.
The Polish market continued the positive trend from previous quarters with 39% growth in revenues y/y from upsell on existing partner relations and new customer agreements.
Refocused commercial strategy and sales activity
Entering 2024, Techstep launched a refocused commercial strategy and go-to-market model focusing on partner sales. Part of this includes a revised indirect business model, where partner sales is an important channel for highly scalable solutions such as Own Software and managed services. With new and stricter legislation and stakeholder pressure for sustainable and circular tech solutions, Techstep experiences a growing interest in its Device Lifecycle Management platform as IT service providers are looking for more sustainable and cost-efficient ways to manage their customers' large device estates.
Partner sales
In September 2024, Techstep successfully onboarded the first devicenow customer to the Lifecycle platform, according to plan. This milestone follows the strategic partnership agreement entered in Q1 2024 with devicenow, a global provider of subscription-based IT devices, aimed at introducing Techstep's Lifecycle management platform to a wider customer base worldwide. Devicenow, which has a global reach across 190 countries, serves several major global customers. This partnership allows Techstep to increase its global reach whilst devicenow can add further great value to their offering through the Lifecycle platform. Additionally, the partnership includes opportunities for incorporating Techstep's managed services into devicenow's portfolio. Techstep anticipates onboarding additional customers to the Lifecycle platform during Q4 2024.
In Q2, Techstep further signed a partner agreement with the Norwegian mobile operator ICE, for introducing Techstep's Own software and managed services to their B2B customers. In Q3, the two parties have worked closely on how to commercialise offerings and services. The formalisation of the strategic partnership was signed early in October 2024, and ICE will launch their device lifecycle services to the market in Q4 this year.
1 According to recent analyses from Canalys and IDC
Direct sales
Techstep's direct sales involves sales of its entire portfolio through direct sales and partnerships to private enterprises and public sector in the Scandinavian home markets.
The revised commercial strategy includes increased focus on public sector, both through upselling on existing agreements and by winning new tenders. The previously announced pilot with Sykehuspartner, a prolongment of the Sykehusinnkjøp agreement, is steadily progressing forward. The ambition is to deliver a completely managed mobility service, including devices, Lifecycle management and managed services for all office and clinical devices. Several pilots have been rolled out to hospitals and departments, and Techstep aims to finalise the full scope of deliveries to fully manage business critical devices serving their 82 000 users in the region. The comprehensive service is expected to be launched at the turn of the year, with a phased roll out over the next years.
Among key wins in the quarter, was the frame agreement with the Norwegian procurement agency Tradebroker. The contract covers the delivery of mobile devices, accessories and related mobile and circular technology services to their member organisations. Tradebroker currently represents 83 large and mediumsized Norwegian companies with close to 200,000 employees in public and private sector. Of these, 41 companies have pre-committed to procuring under the new frame agreement. The volume of procurement will vary based on the individual calls made by these members throughout the contract's duration. This new frame agreement replaces a prior frame agreement Techstep has shared with another supplier. The estimated annual contract value is NOK 120 - 150 million, representing a 20-50% increase from the previous agreement, as Techstep is the sole supplier on this new agreement. The agreement also offers good opportunities for adding additional member organisations and upselling a broader range of services and solutions from Techstep's product portfolio. The contract will initially run for three years, with an option to extend for an additional two years.
Optimising the organisation and cost base
Techstep is in the middle of a strategic transformation, and the past years have been marked by streamlining business operations and optimising the company's cost base. Since the initial NOK 90-100 million cost optimisation plan was launched in Q4 2022, Techstep has successfully reduced costs with above NOK 130 million due to reductions in full-time employees, less use of external consultants and streamlining of internal IT costs. In parallel, Techstep continues with optimising processes and streamlining workflows under a unified management system and ERP system and raise standards by integrating sustainability in policies and processes.
Revenue streams
Techstep continues to focus on upselling and converting existing customers from transactional to recurring sales. The goal is to increase customer value through own software and offer managed services to add further efficiency and security to customers.
Total revenues in the third quarter this year was NOK 238 million, an increase of 5% year over year, a significant milestone for Techstep, as this is the first quarter in two years with growth in both revenues and net gross profit y/y. Concurrently, the share of revenues from Advisory & Services and Own Software increased from 30% in Q3 2023 to 32% of total revenues in Q3 this year.
Net gross profit in Q3 2024 was NOK 82 million, vs. NOK 79 million last year, constituting a margin of 34.5% vs. 34.7% last year.
Net gross profit per revenue stream
Devices & Other
Revenue from Devices & Other, both transactional and as-a-service, grew by 2% y/y to NOK 161 million for the quarter. The growth in revenues is a result of a substantial rebound in Sweden, where device sales increased with 36% y/y. In Norway, total sales of devices increased with 5% y/y, but revenues from transactional device sales declined with 7%, as a larger share of device sales was Device-as-a-service in the quarter compared to last year. Increasing the share of Device-as-a-service will temporary decrease the device revenues recognized in the period, but will generate recurring revenues in the next 24-36 months, in line with the strategy of transitioning to an as-a-service mobile technology provider.
The net gross profit margin was 15%, down from 16% the year before, due to a decline in end-oflease gains from Device-as-a-service in the period.
Advisory & Services
Revenue from Advisory & Services was NOK 46 million for the quarter, up 12% from the corresponding quarter last year. The growth is driven by good development in both recurring services and consulting revenues, partly offset by a slight decline in 3rd party software revenues which is highly fluctuating between financial periods.
Total gross profit for the period was NOK 32 million, a growth of NOK 2 million from last year. The gross margin decreased from 73% to 68%, due to the mix between manged services and consulting, with generally high margins, and aftermarket services, with somewhat lower margins.
Own Software
Revenue from Own Software was NOK 30 million for the quarter, an increase of 13% since Q3 last year, and up 10% from the previous quarter. All four Own software has shown positive growth in the quarter, but Essentials MDM performed particularly well with a 36% growth y/y. The growth in the quarter does not include any revenues from the previously announced partner channel/ sales agreements, as it is expected that these revenues will be realised from around the turn of the year.
Recurring revenue
Total recurring revenue consists of contractually recurring revenue within the revenue segments Own Software, Advisory & Services and Device-as-a-Service.
Reported recurring revenue represents future contractual annual revenues. Recurring revenue from Device-as-a-Service is measured as contracts with a duration of 24 months or more, with monthly incurred revenue annualised. Annual recurring revenue from Advisory & Services is calculated as contractual monthly revenue from contracts with a duration of 12 months or more, annualised. Annual recurring revenue from Own Software is calculated as contractual monthly revenue annualised. Techstep includes only contracts where invoicing to customers has commenced.
In Q3, recurring revenues annualised grew by 6% year over year to NOK 326 million. Contracts for Own Software increased by 12% while Advisory & Services and contracts for Deviceas-a-service both grew with 3%.
Recurring revenue - annualised
Financial review
The interim financial information has not been subject to audit. Figures in brackets refer to the corresponding quarter in 2023 for profit and loss items, and year-end 2023 figures for balance sheet items.
Profit and loss third quarter
Techstep had total revenue of NOK 237.6 million in the third quarter of 2024, an increase of 5% from the corresponding quarter last year. The growth marks the first quarter in two years where revenues has increased quarter over quarter. All three revenue streams experienced growth in the quarter.
Net gross profit in the quarter was NOK 81.9 million, up from NOK 78.7 million last year, corresponding to a net gross margin at 34.5% which is in line with the same period last year. Total operating costs, including personnel costs, increased with 4% y/y to NOK 64.4 million. The increase is a result of the general price increases and salary adjustments in 2024, partly offset by continued cost optimisation effects and the reduction in headcount. In 2024, Techstep has initiated further investments in IT infrastructure, hereunder transition to a stateof-the art cloud ERP platform for the entire group companies, to be able to further optimise and streamline the organization. These investments are expensed on a running basis, but can yield considerable efficiency gains in the future. EBITA adjusted in the quarter was NOK 14.2 million, an increase of 11% from the corresponding period last year. Depreciation and amortisation increased by 6% to NOK 44.4 million.
Adjustment items excluded from EBITA adjusted of NOK 1.0 million in the quarter, are included in other income and expenses and consist of restructuring costs related to the cost reduction efforts.
Operating loss in the period was NOK 3.5 million, vs NOK 3.4 million in the same period in 2023.
Net financial items were negative at NOK 5.4 million (NOK -2 million) in the quarter. Financial items include interest expenses, and currency effects from the fluctuation of NOK versus EUR and SEK, in addition to changes in the fair value of the interest rate swap in the amount of NOK 1.3 million in the third quarter of 2024.
Net loss in the period was NOK 6.1 million (NOK - 4.3 million).
Financial position
At the end of the third quarter of 2024, total assets were NOK 1 135 million, compared to NOK 1 270 million as at 31 December 2023.
Intangible assets include deferred tax assets, goodwill and customer relations and technology, and accounted for NOK 790.2 million (NOK 798.3 million). The decrease from last year is due to currency translation effects on goodwill, offset by amortisation of customer relations and technology, both purchased and developed. Goodwill constitutes NOK 634.2 million of total intangible assets.
Total tangible assets were NOK 175.4 million (NOK 191.0 million) including NOK 146.2 million (NOK 159.5 million) in capitalised devices under Device-as-a-Service to customers and NOK 29.2 million (NOK 31.5 million) in other tangible assets, which include right-of-use assets such as premises and other capitalised equipment.
Total inventories and receivables were NOK 150.9 million (NOK 200.2 million) at the end of the quarter. The decrease was due to seasonality as device revenues normally increase substantially towards end of the year compared to the rest of the year.
Total equity at the end of Q3 was NOK 555.4 million (NOK 573.7 million), corresponding to an equity ratio of 49% (45%).
Total non-current liabilities were NOK 164.2 million at the end of the quarter, vs. NOK 183.9 million at the end of 2023. The reduction relates to repayment of debt and reduction in deferred taxes. Total borrowings per the end of Q3 was NOK 163.1 million, vs. NOK 178.7 million at the end of 2023.
Net interest-bearing debt was NOK 147.4 million, an increase of NOK 46.2 million since the end of 2023, caused by the working capital effects on cash in 2024 which relates to seasonality as device revenues normally increase substantially towards end of the year compared to the rest of the year.
Total current liabilities were NOK 415.7 million (NOK 513.2 million). The decrease was primarily caused by the movement in trade payables due to both seasonal effects in addition to the decline in device revenues in the quarter vs. fourth quarter of 2023. Current liabilities related to Device-as-a-Service of NOK 154.9 million (NOK 167.2 million) includes buy-back obligations and deferred revenues from the Device-as-a-Service revenue segment. Other current liabilities of NOK 86.9 million (NOK 98.9 million) include public duties and general cost accruals.
Cash flow third quarter 2024
Net cash flow from operating activities was NOK 48.2 million in the quarter (NOK 53.4 million). Change in net working capital was NOK 10.2 million, vs. NOK 15.8 million in 2023.
Net cash outflow from investment activities in Q3 was NOK 36.4 million (NOK 20.2 million) and consists of capital expenditures for equipment related to Device-as-a-Service of NOK 32.3 million (NOK 20.9 million) and investments in Own Software and IT of NOK 6.2 million (NOK 6.4 million).
Net cash flow from financing activities was NOK -11.4 million (NOK 24.4 million) in the quarter and consists primarily of repayment of borrowings of NOK 4.0 million, interest and lease repayments. In the third quarter last year, net proceeds and repayment of borrowings in the quarter was NOK 31.4 million in cash inflow, as the refinancing of the Group's borrowings was completed in the third quarter last year.
Cash and cash equivalents grew by NOK 0.4 million in the third quarter, up from NOK 15.4 million in the previous quarter to NOK 15.7 million. Techstep also has additional liquidity of NOK 45 million available through the bank facilities.
In October 2024, Techstep raised additional NOK 30 million in funds through a private placement share issue, further strengthening liquidity. See more information in note 8; Subsequent events.
Related parties
There were no material transactions with related parties during Q3 2024.
Risk and uncertainties
Techstep's business activities entail exposure to changes in market conditions, as well as operational and financial developments. Techstep strives to take an active approach to risk management through monitoring and mitigation initiatives of identified risks, based on the ISO principles. Below is a summary of the main risks identified for Techstep in the next three to six months.
The global economic situation has faced continually increasing challenges over the past years, with slowing growth and higher inflation in Techstep's key markets. Techstep has a large base of public sector and large corporate customers, which are less vulnerable to volatile market conditions.
Mobile devices have a complex, multifaceted supply chain with increased risk of disruptions such as component shortage, various production, logistics and transportation challenges occurring along the value chain i.e. due to political or economic instability, climate change or shortage of raw materials. In case of new supply chain disruptions, Techstep may experience delays in device deliveries which may negatively impact sales of other products and solutions. Hence, Techstep continues to maintain close cooperation with key suppliers to ensure timely deliveries.
Techstep's operations, revenues and profits are dependent on its ability to generate sales through existing and new customers and strategic partnerships. Techstep operates in a competitive market segment, and the Group's success depends on its ability to meet changing customer preferences, to anticipate and respond to market and technological changes, and develop effective and collaborative relationships with its customers and partners. Techstep continues to focus on improving and scale its product offering, reducing customer implementation time, and becoming a software and solution-driven growth business, yielding higher cash flow and profit from operations, and transforming into a recurring revenue business model. The operational risk mainly relates to the ongoing turnaround and transformation process, including commercialisation of the product portfolio and keeping key personnel and necessary competence.
Techstep's liquidity risk is related to a mismatch between cash flows from operations and financial commitments. Techstep is transforming itself from a transactional business model to a software-led recurring revenue model, which leads to postponed cash inflows, negatively affecting the liquidity of the Group. Investments in simplification and standardisation of the company's product portfolio and solutions, new organisational capabilities and acquisitions and integration, have furthermore increased the company's debt over time. The Group's liquidity is closely monitored by management and the Board of Directors. The private placement completed in October 2024 has given Techstep proceeds to fund and accelerate the scalable business and strengthened the company's liquidity buffer. If the need arises, the Group has access to multiple funding sources during the transformation process.
For more information on Techstep's risk factors and risk management, reference is made to the Board of Directors report in the Annual Report for 2023 and the investor presentation from 9 October 2024, both available from www.techstep.io/investor.
Outlook
Techstep serves more than 2 100 customers across industries in both the private and public sector in Europe, and is recognised by Gartner as the only challenger in the Magic Quadrant for Managed Mobility Services. Techstep's goal is to become the leading mobile & circular technology company in Europe for customers that want to work smarter, securely and more sustainable.
Techstep believes that the market for mobile and circular technology solutions and services will continue to increase due to digitalisation, stricter regulation and growing complexity alongside a rapidly evolving security threat landscape. The company considers itself well positioned as enterprises and public sector organisations need help to manage their mobile device portfolio in a sustainable way and keep their mobile ecosystem up to date.
Techstep signed several frame agreements with public sector organisations during 2023, with opportunities for upselling products and services. There are indications that the customers' readiness is slower than anticipated and upsell on these agreements and new public sector agreements is a focus area in 2024 together with the revised partner strategy. During 2024, Techstep has signed several strategic partnership agreements to boost sales and scalability of Techstep's own software. These agreements represent opportunities for significant growth in a steeply growing market. Moving into the end of 2024, the partnerships are developing according to plan and is expected to materialise during the next year.
Techstep has successfully delivered on the cost optimisation programme announced in late 2022, despite negative impact from the high inflation. By aligning Techstep's organisation and cost base with a more simplified portfolio and extracting synergies from acquired companies, cost reductions of more than 30% have been effectuated since Q4 2022. The focus on cost optimisation of Techstep's underlying cost base continues into 2025. At the same time, there is a continued need for investments and upgrades of the IT infrastructure to increase efficiency and further reduce costs going forward, and these investments will continue through the remainder of the year and into 2025.
Although the first half of 2024 was highly affected by the decline in device sales, third quarter saw a more positive development in device sales compared to last year. Moving into fourth quarter recurring revenue contracts is record high. Going forward, profitable growth will be driven through increased margins by upselling more value-adding products and services in the Scandinavian market, as well as expanding the European reach through new and existing partner channels. Considering the time to ramp up and accelerate the scalable business with key partners and customers, Techstep has revised its financial ambitions for 2024 and 2025. The updated ambitions for 2024 are to grow recurring revenues annualised y/y by 5-15% and growing net gross profit by 0-5% with an expected EBITA adj. conversion of 10- 14%.
For 2025, the ambition is to grow recurring revenues annualised y/y by +30%, net gross profit growth of 20-30% and an EBITA adj. conversion of above 20%.
Business overview
Note that from the Q4 2023 report, Hardware & Other and Hardware-as-a-Service has been renamed Mobile Devices & Other and Deviceas-a-Service, respectively.
Business activities and strategy
Built on a decade of telecoms and mobile technology expertise, Techstep was established in 2016. Through several acquisitions, Techstep has solidified its presence in Scandinavia and later expanded into European markets through Poland. Positioning as a mobile technology specialist and a circular tech enabler, the company's overarching business strategy centres on combining mobile devices with proprietary and/or licencing software and expertise, helping organisations to work smarter and more sustainably. The goal is to be the leading mobile & circular technology company in Europe.
Techstep serves more than 2 100 enterprise customers across different industries and sectors, helping both office workers and frontline workers optimise their work. Based on Techstep's unique mix of competence and partnerships, Techstep has been recognised by Gartner as a challenger in the global quadrant for Managed Mobility Services.
While the company's primary market remains Scandinavia, where its full product portfolio is readily accessible through direct sales and partnerships with both private enterprises and the public sector, its strategic go-to-market focus extends across Europe, led from Poland. Through strategic partner programmes with mobile service providers, distributors and other complimentary channel partners, Techstep will offer standardised and scalable solutions, either as stand-alone offerings or bundled with partners' solutions, facilitating broader market penetration and customer reach.
The market opportunity
Mobile technology is one of the fastest growing technologies in the world, and digitalisation is leading this transformation, reshaping industries and work processes. Within the dynamic landscape of mobile technology, Techstep's offering answers several key challenges that organisations face, including administration and control of the mobile technology infrastructure, cost reductions, sustainability and security concerns.
Positioned at the forefront of the Managed Mobility Services (MMS) market, Techstep aligns with Gartner's definition, which characterises MMS as the integration of mobile devices, software and services into a unified offering, streamlining operational capabilities. 2 Techstep extends the traditional MMS definition to include strategic advisory and software development services, leveraging mobile technology to transform organisational operations and capabilities.
Gartners' recognition of Techstep as a global challenger in the MMS market3 underscores the company's strategic position and its combined managed mobility offering developed over the past eight years. With more than 2 200 research and advisory experts doing rigorous analysis for clients in nearly 90 countries worldwide, Gartner stands as a trusted authority within the IT sector. This acknowledgement reflects Techstep's ongoing commitment to changing the world of work and serves as a continued validation towards the European market.
Research shows strong supporting trends, and according to Gartner, the Global MMS market is
2 Gartner's full definition of MMS is "IT and process management services required to plan, procure, provision, activate, ship, manage, secure and support mobile devices,
related accessories, network services, mobile management systems and mobile applications".
Gartner's annual report on Managed Mobility Services (MMS) 3 Gartner 2022 and 2023 Magic Quadrant for MMS
expected to grow by an annual 5% and 6-7% in Norway and Sweden over the next four years4 . In addition, Gartner expects circularity to disrupt the industry due to new and stricter legislation and stakeholder pressure for sustainable business conduct.
Product offering
Techstep's product offering range from individual device needs to complete transformative solutions, encompassing software, devices and advisory services packaged into cohesive products.
Central to its offering, are strategic partnerships with top-tier device manufacturers and mobile technology software providers. Leveraging this strong foundation, Techstep adds comprehensive managed services that encompass the entire device lifecycle. This includes proactive device management and robust security services, ensuring optimal performance and safeguarding against potential threats.
By integrating its own software with managed services and expert advisory, Techstep delivers best-practice outsourced mobile technology solutions. Techstep has a big cluster of mobile and circular technology expertise in Scandinavia strategizing, planning, developing, and implementing new ways of working.
Whether bundling the entire stack together or delivering individual components based on customer requirements and maturity, everything is offered as-a-service or transactional for maximum flexibility.
The streamlined approach encompasses ready-to-go devices, lifecycle management, and security solutions, so that customers can effortlessly scale their mobile technology usage within an outsourced model, thereby improving circularity and optimising efficiency and productivity.
Revenue streams
Techstep is transforming its business model from transactional revenue to a recurring revenue model. This will enhance financial predictability for Techstep, while at the same time ensuring better value for customers by providing them with continuous service rather than one-off transactions. Today, Techstep has the following three main revenue streams:
"Mobile devices & Other"
Revenue from the sale of devices and related accessories. Sold as transactional, one-time sales or "as-a-service" with recurring revenues committed for 24 months or more. Low margin contribution, but are often the entry point for selling additional products and solutions.
"Advisory & Services"
Revenue from specialised advisory and support and maintenance services. Sold as one-time projects based on fixed hourly rates or "as-aservice" with a minimum 12-month recurring revenue commitment. Medium to high gross margin contribution. Also include revenue from sale of third-party software licences including related commission.
"Own Software"
High margin revenue (>85%) from owndeveloped software platforms sold as recurring contracts with a minimum of a 12-month commitment. The current portfolio consists of four software products; Lifecycle management platform for automated device lifecycle management; Expense, which is simplified management of mobile subscription costs; Essentials MDM which is an affordable and straightforward mobile devices management tool; and Business critical mobility which is custom apps for mobile data capture and workflows.
4 Gartner IT Services Forecast Q1 2024
Sustainability
Techstep's mission is to make positive changes to the world of work; freeing people to work more effectively, securely and sustainably. The company's sustainability agenda is an essential part of the company's mission, underscored by its commitment to UN Global Compact and Science Based Targets.
Over the past years, Techstep has strengthened its focus on environmental, social and governance (ESG), risk and compliance, with clearer priorities and a dedicated and stronger team in place. The organisation has implemented management practices based on the ISO standard, leading to ISO 9001 (quality), 14001 (environment) and 27001 (information security) certifications. Subsequently, Techstep has further improved its EcoVadis sustainability rating performance to Gold-level, placing Techstep among the top 5% of more than 130 000 companies evaluated globally.
More information on Techstep's sustainability efforts can be found in the company's Annual Report 2023, available from www.techstep.io.
| Note (Amounts in NOK 1000) |
Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | FY 2023 |
|---|---|---|---|---|---|
| Revenue 1) 2, 3 |
237 152 | 226 450 | 759 236 | 789 107 | 1 088 970 |
| Other revenue | 457 | 269 | 795 | 524 | 521 |
| Total revenues | 237 609 | 226 719 | 760 030 | 789 631 | 1 089 491 |
| Cost of goods sold 1) | (131 314) | (126 104) | (432 414) | (456 626) | (644 460) |
| Salaries and personnel costs | (43 300) | (40 151) | (156 873) | (158 322) | (207 964) |
| Other operational costs | (21 081) | (22 015) | (66 574) | (74 372) | (99 571) |
| Depreciation 5 |
(27 714) | (25 625) | (85 762) | (81 082) | (107 603) |
| Amortisation | (16 677) | (16 367) | (49 555) | (48 103) | (64 915) |
| Other income and expenses | (974) | 141 | (3 774) | 395 | (1 476) |
| Operating profit (loss) | (3 451) | (3 403) | (34 921) | (28 481) | (36 498) |
| Financial income | 1 474 | 3 459 | 3 978 | 9 694 | 10 456 |
| Financial expense | (6 918) | (5 456) | (14 752) | (24 917) | (33 509) |
| Profit before taxes | (8 895) | (5 400) | (45 696) | (43 704) | (59 552) |
| Income taxes | 2 805 | 1 065 | 12 078 | 4 456 | 15 006 |
| Net profit (loss) for the period | (6 090) | (4 335) | (33 617) | (39 248) | (44 546) |
| Net income attributable to | |||||
| Non-controlling interests | - | - | - | - | - |
| Shareholders of Techstep ASA | (6 090) | (4 335) | (33 617) | (39 248) | (44 546) |
| Earnings per share in NOK: | |||||
| Basic | (0.19) | (0.14) | (1.06) | (1.27) | (1.43) |
| Diluted | (0.19) | (0.14) | (1.06) | (1.27) | (1.43) |
Consolidated Income statement
The interim financial information has not been subject to audit or review.
1The revenues and cost of goods sold for previously reported quarters in 2023 has been restated due to a reclassification of kickbacks and commissions from partners, in the amount of NOK 9 million in Q3 2023.
Consolidated statement of comprehensive income
| (Amounts in NOK 1 000) | Note | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | FY 2023 |
|---|---|---|---|---|---|---|
| Net profit (loss) for the period | (6 090) | (4 335) | (33 617) | (39 248) | (44 546) | |
| Items that may be reclassified to profit and loss |
||||||
| Exchange differences on translating foreign operations |
13 510 | (13 706) | 12 618 | 16 895 | 32 899 | |
| Income tax related to these items | - | - | - | - | - | |
| Other comprehensive income | 13 510 | (13 706) | 12 618 | 16 895 | 32 899 | |
| Total comprehensive income | 7 420 | (18 041) | (21 000) | (22 353) | (11 647) | |
| Total comprehensive income attributable to |
||||||
| Non-controlling interests | - | - | - | |||
| Shareholders of Techstep ASA | 7 420 | (18 041) | (21 000) | (22 353) | (11 647) |
| ASSETS | Note | Q3 2024 | Q3 2023 | 2023 |
|---|---|---|---|---|
| Non-current assets | ||||
| Deferred tax asset | 21 564 | 5 312 | 13 092 | |
| Goodwill | 634 209 | 612 322 | 624 173 | |
| Customer relations and technology | 134 387 | 164 640 | 160 991 | |
| Sum intangible assets | 790 160 | 782 274 | 798 256 | |
| Assets related to Device-as-a-Service | 5 | 146 172 | 157 834 | 159 501 |
| Other tangible assets | 5 | 29 192 | 38 001 | 31 511 |
| Sum tangible assets | 175 364 | 195 835 | 191 012 | |
| Sum financial assets | 3 198 | 855 | 3 917 | |
| Total non-current assets | 968 723 | 978 965 | 993 185 | |
| Inventories | 3 997 | 9 403 | 10 502 | |
| Trade receivable | 108 269 | 126 715 | 159 067 | |
| Other receivables | 38 628 | 29 319 | 30 586 | |
| Total inventories and receivables | 150 895 | 165 437 | 200 155 | |
| Cash and cash equivalents | 6 | 15 660 | 67 832 | 77 459 |
| Total current assets | 166 555 | 233 269 | 277 614 | |
| Total assets | 1 135 278 | 1 212 234 | 1 270 799 | |
| EQUITY AND LIABILITIES | ||||
| Share capital | 4 | 31 629 | 31 566 | 31 629 |
| Other equity | 523 775 | 533 719 | 542 067 | |
| Total equity | 555 405 | 565 285 | 573 697 | |
| Deferred tax | 10 846 | 16 512 | 14 674 | |
| Non-current interest-bearing borrowings | 7 | 118 027 | 135 101 | 129 927 |
| Financial derivatives | 2 966 | 0 | 4 092 | |
| Non-current liabilities related to Device-as-a-Service | 17 299 | 19 362 | 19 316 | |
| Other non-current debt | 15 054 | 18 295 | 15 916 | |
| Total non-current liabilities | 164 191 | 189 270 | 183 924 | |
| Current interest-bearing borrowings | 7 | 45 024 | 69 259 | 48 750 |
| Trade payable | 128 883 | 125 163 | 198 353 | |
| Current liabilities related to Device-as-a-Service | 154 894 | 170 911 | 167 231 | |
| Other current liabilities | 86 881 | 92 346 | 98 845 | |
| Total current liabilities | 415 682 | 457 679 | 513 179 | |
| Total liabilities | 579 873 | 646 949 | 697 103 |
Total equity and liabilities 1 135 278 1 212 234 1 270 799
Consolidated statement of financial position
Consolidated statement of changes in equity
| Other paid | Reval. | Total equity | |||
|---|---|---|---|---|---|
| (Amounts in NOK 1 000) | Share capital | in capital | Other equity | Reserve | capital |
| Equity as at start of 2023 | 305 131 | 690 906 | (392 252) | (32 266) | 571 520 |
| Profit for the period | - | - | (44 546) | - | (44 546) |
| Other comprehensive income | - | - | - | 32 899 | 32 899 |
| Total comprehensive income for | |||||
| the period | - | - | (44 546) | 32 899 | (11 647) |
| Proceeds from issuance of shares net of transaction costs |
1 116 | 13 722 | - | - | 14 838 |
| Reverse share split | (274 618) | 274 618 | - | - | - |
| Share-based payments | - | - | (1 014) | - | (1 014) |
| Equity as at end of 2023 | 31 629 | 979 246 | (437 812) | 633 | 573 697 |
| Equity as at start of 2024 | 31 629 | 979 246 | (437 812) | 633 | 573 697 |
| Profit for the period | - | - | (33 617) | - | (33 617) |
| Other comprehensive income | - | - | - | 12 618 | 12 618 |
| Total comprehensive income for the period |
- | - | (33 617) | 12 618 | (21 000) |
| Transactions with owners in | |||||
| their capacity as owners: | |||||
| Share-based payments | - | - | 2 708 | - | 2 708 |
| Equity as at 30 September 2024 | 31 629 | 979 246 | (468 721) | 13 251 | 555 405 |
Consolidated statement of cash flow
| (Amounts in NOK 1000) | Note | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | FY 2023 |
|---|---|---|---|---|---|---|
| Profit before tax | (8 895) | (5 400) | (45 696) | (43 704) | (59 552) | |
| Depreciation equipment and other fixed assets |
5 | 24 926 | 22 499 | 76 879 | 70 522 | 93 498 |
| Depreciation right-of-use assets | 5 | 2 787 | 3 126 | 8 883 | 10 560 | 14 106 |
| Amortisation | 16 677 | 16 367 | 49 555 | 48 103 | 64 915 | |
| Share-based payments | 759 | (193) | 2 708 | 1 691 | (1 014) | |
| Financial Instruments and other | 1 957 | 0 | 89 | 0 | 4 204 | |
| Gain from sale of PPE reclassified to | (1 555) | (2 649) | (5 649) | (8 366) | (9 269) | |
| investment activities | ||||||
| Net exchange differences | 5 | (2 531) | (1 002) | (1 711) | 4 252 | 4 252 |
| Taxes paid | 0 | 2 288 | (961) | (1 581) | (2 386) | |
| Interest expense (revenue) reclassified to | 3 859 | 2 540 | 10 646 | 9 401 | 13 584 | |
| investing/financing activities | ||||||
| Changes in net operating working capital | 10 173 | 15 777 | (29 585) | (10 815) | 33 225 | |
| Net cash flow from operational activities | 48 157 | 53 353 | 65 159 | 80 062 | 155 560 | |
| Payment for acquisition of subsidiaries | - | - | - | - | - | |
| net of cash acquired | ||||||
| Payment for equipment and other fixed | 5 | (32 267) | (20 922) | (78 596) | (84 357) | (112 733) |
| assets | (6 242) | (6 358) | (19 494) | (25 252) | (33 920) | |
| Payment for intangible assets | ||||||
| Proceeds from sale of property, plant and equipment |
2 070 | 6 563 | 8 843 | 14 069 | 17 071 | |
| Interest received | 77 | 562 | 810 | 858 | 1 068 | |
| Net cash used on investment activities | (36 362) | (20 155) | (88 437) | (94 683) | (128 514) | |
| Changes in ownership in Subsidiary | - | - | - | - | ||
| Proceeds from issuance of shares | - | - | - | - | 230 | |
| Proceeds from borrowings | - | 140 730 | - | 178 313 | 178 313 | |
| Repayment of borrowings | (3 996) | (109 350) | (16 149) | (136 761) | (161 075) | |
| Lease repayments | (3 478) | (4 021) | (10 748) | (12 274) | (15 263) | |
| Interest paid | (3 935) | (2 971) | (11 456) | (8 979) | (14 935) | |
| Net cash flow from financing activities | (11 408) | 24 388 | (38 352) | 20 299 | (12 730) | |
| Net change in cash and cash equivalents | 386 | 57 586 | (61 631) | 5 679 | 14 316 | |
| Cash and cash equivalents at beginning of | 15 362 | 11 576 | 77 459 | 61 119 | 61 119 | |
| period | ||||||
| Effects of exchange rate changes on cash | (88) | (1 330) | (168) | 1 035 | 2 024 | |
| and cash equivalents | ||||||
| Cash and cash equivalents at end of | 6 | 15 660 | 67 832 | 15 660 | 67 832 | 77 459 |
| period |
Notes to the consolidated financial statements
Note 1. Accounting principles
Techstep (the Group) consists of Techstep ASA (the Company) and its subsidiaries. Techstep ASA is a limited liability company, incorporated in Norway. The consolidated interim financial statements consist of the Group. As a result of rounding differences, numbers or percentages may not add up to the total.
1. ACCOUNTING PRINCIPLES
The interim consolidated financial statements are prepared under International Financial Reporting Standards (IFRS) for the periods presented. The interim financial report is presented in accordance with IAS 34 Interim Financial Reporting. The interim consolidated financial statements do not include all the information and disclosures required in the Annual Financial Statements and should be read in conjunction with the Group's Annual Financial Statements for 2023. The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the Group's Annual Financial Statements for the year ended 31 December 2023. This report has not been audited.
Note 2. Segments
Over the last years, Techstep has been through a major transition in order to unlock profitability and growth. Historically consisting of 10 acquisitions and 47 different products, the company has transformed and streamlined the organisation and its product solutions, through mergers and disposals of products or services outside the strategic roadmap.
Currently, the product offerings are streamlined into three different revenue streams. The organisation and the profitability measurement has been changed from purely legal and geographical to a functional matrix organisation, measuring performance on the product portfolio. The revenue streams are generated, and the Group's resources are utilised, across the different legal entities and geographical markets. Management reporting now consists of measuring the performance of the product portfolio on a gross contribution level across markets, while the net profitability (EBITA) is measured on the group level.
From Q4 2023, Techstep changed the segment reporting in line with management's profitability measurements. Techstep's current segment is therefore the Group results on a total level.
Note 3. Disaggregation of revenues
In the following tables, Total revenue and net gross profit is disaggregated by major revenue streams across the commercial markets.
| Sweden/ | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Norway | Denmark | Poland | Eliminations | Group | ||||||
| Q3 2024 | Revenue | NGP | Revenue | NGP | Revenue | NGP | Revenue | NGP | Revenue | NGP |
| Devices | 117 425 | 16 774 | 43 753 | 6 186 | - | 0 | (377) | 791 | 160 800 | 23 752 |
| Advisory & | 19 150 | 13 415 | 27 717 | 17 922 | 129 | 129 | (892) | 82 | 46 103 | 31 547 |
| Services* | ||||||||||
| Own Software | 11 673 | 10 868 | 7 526 | 6 234 | 11 245 | 8 663 | (195) | 391 | 30 249 | 26 156 |
| Other revenues | 2 | 2 | 191 | 148 | 278 | 278 | (14) | (6) | 457 | 422 |
| Total | 148 250 | 41 059 | 79 186 | 30 490 | 11 652 | 9 070 | (1 479) | 1 258 | 237 609 | 81 877 |
| Sweden/ Norway Denmark |
Poland Eliminations |
Group | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Q3 2023 | Revenue | NGP | Revenue | NGP | Revenue | NGP | Revenue | NGP | Revenue | NGP |
| Devices Advisory & Services* |
127 007 20 455 |
18 036 14 583 |
32 074 21 319 |
6 693 14 938 |
- 40 |
(6) 40 |
(718) (475) |
396 475 |
158 365 41 339 |
25 120 30 036 |
| Own Software | 11 990 132 |
11 446 129 |
6 569 144 |
5 268 112 |
8 371 - |
6 303 - |
(183) (10) |
308 (7) |
26 746 269 |
23 326 235 |
| Other revenues Total |
159 585 | 44 195 | 60 107 | 27 012 | 8 410 | 6 337 | (1 383) | 1 173 | 226 719 | 78 717 |
| Sweden/ | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Norway | Denmark | Poland | Eliminations | Group | ||||||
| YTD 2024 | Revenue | NGP | Revenue | NGP | Revenue | NGP | Revenue | NGP | Revenue | NGP |
| Devices | 386 305 | 48 134 | 133 929 | 22 997 | - | 0 | (1 260) | 1 890 | 518 974 | 73 021 |
| Advisory & Services* |
64 297 | 46 896 | 93 840 | 57 307 | 302 | 302 | (3 272) | 818 | 155 167 | 105 324 |
| Own Software | 34 069 | 31 456 | 21 813 | 17 708 | 29 789 | 22 929 | (577) | 1 168 | 85 094 | 73 261 |
| Other revenues | 159 | 159 | 392 | 263 | 278 | 278 | (35) | (22) | 795 | 679 |
| Total | 484 830 | 126 645 | 249 975 | 98 275 | 30 370 | 23 510 | (5 144) | 3 855 | 760 030 | 252 285 |
| Sweden/ | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Norway | Denmark | Poland | Eliminations | Group | ||||||
| YTD 2023 | Revenue | NGP | Revenue | NGP | Revenue | NGP | Revenue | NGP | Revenue | NGP |
| Devices | 402 090 | 61 478 | 157 553 | 21 432 | - | (6) | (5 010) | 5 635 | 554 633 | 88 539 |
| Advisory & | 59 247 | 42 546 | 96 482 | 61 496 | 285 | 285 | (2 244) | (215) | 153 770 | 104 113 |
| Services* | ||||||||||
| Own Software | 36 752 | 34 952 | 20 610 | 16 282 | 23 905 | 18 941 | (563) | 1 022 | 80 704 | 71 197 |
| Other revenues | 238 | 225 | 318 | 216 | - | - | (33) | (29) | 524 | 412 |
| Total | 498 326 | 139 201 | 274 964 | 99 425 | 24 190 | 19 221 | (7 849) | 6 414 | 789 631 | 264 261 |
| Sweden/ | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Norway | Denmark | Poland | Eliminations | Group | ||||||
| FY 2023 | Revenue | NGP | Revenue | NGP | Revenue | NGP | Revenue | NGP | Revenue | NGP |
| Devices | 551 078 | 79 543 | 231 880 | 35 867 | - | (6) | (7 138) | 6 200 | 775 820 | 121 604 |
| Advisory & Services* |
79 155 | 55 926 | 129 744 | 77 820 | 338 | 338 | (3 572) | 3 527 | 205 667 | 137 612 |
| Own Software | 48 251 | 45 568 | 27 168 | 21 491 | 32 819 | 25 588 | (755) | 1 536 | 107 483 | 94 182 |
| Other revenues | 388 | 388 | 868 | 868 | - | - | (735) | (735) | 521 | 521 |
| Total | 678 873 | 181 424 | 389 660 | 136 046 | 33 158 | 25 920 | (12 199) | 10 528 | 1 089 491 | 353 919 |
*Commission and third-party software are included in Advisory & Services
Note 4. Share capital and shareholders
The company's share capital as at 30 September 2024 was NOK 31 629 381, divided into 31 629 381 ordinary shares with a par value of NOK 1.00.
Each share gives the right to one vote at the company's annual general meeting. At the time of this report, Techstep holds 192 treasury shares.
Techstep's 20 largest shareholders at 30 September 2024 were as follows:
| Shareholder | # of shares | Ownership % |
|---|---|---|
| DATUM AS | 5 835 198 | 18.4 % |
| KARBON INVEST AS1 | 4 371 619 | 13.8 % |
| Swedbank AB | 2 524 685 | 8.0 % |
| VALSET INVEST AS | 1 426 810 | 4.5 % |
| CAMIKO AS | 886 260 | 2.8 % |
| AS CLIPPER | 869 566 | 2.7 % |
| STEENCO AS | 869 566 | 2.7 % |
| SPECTER INVEST AS | 625 900 | 2.0 % |
| VERDIPAPIRFONDET DNB SMB | 604 079 | 1.9 % |
| CIPRIANO AS | 599 916 | 1.9 % |
| Saxo Bank A/S | 572 861 | 1.8 % |
| GIMLE INVEST AS | 407 096 | 1.3 % |
| Sbakkejord AS | 333 134 | 1.1 % |
| TORSTEIN INGVALD TVENGE | 300 000 | 0.9 % |
| TIGERSTADEN AS | 275 000 | 0.9 % |
| TIGERSTADEN MARINE AS | 250 000 | 0.8 % |
| NILS GABRIEL ANDRESEN | 249 890 | 0.8 % |
| NORDHOLMEN AS | 238 372 | 0.8 % |
| HINVEST AS | 225 261 | 0.7 % |
| PIKA HOLDING AS | 214 346 | 0.7 % |
| Total number owned by top 20 | 21 679 559 | 68.5 % |
| Total number of shares | 31 629 381 | 100 % |
1) Karbon Invest AS is owned by the Board member Jens Rugseth
Share option grant
On 9 April 2024, the Board of Directors of Techstep ASA resolved to grant share options in connection with the company's 2024 share option programme. A total of 1 800 000 share options were granted, of which 910 000 to primary insiders. The grant was approved by the Annual General Meeting on 29 May 2024.
The granted options vest 1/3 each year from 9 April 2024 and are fully vested on 9 April 2027. The options must be exercised within 5 years. The exercise price per share is NOK 8.75 (year 1), NOK 10.90 (year 2) and NOK 13.60 (year 3), respectively. The exercise price will be adjusted for any dividends paid or accrued before exercise. The exercise of share options can be settled in cash or with new shares.
At 30 September 2024, the total number of outstanding share options was 2 405 445.
For information on the share option programme for previous years please see the Remuneration report for 2023 which is available from the website www.techstep.io/investor.
Overview of shares and share options held by members of the management group as at 30 September 2024:
| Name | Position | Shares | Share options |
|---|---|---|---|
| Morten Meier | CEO | 50 000 | 350 000 |
| Ellen Solum | CFO | 15 402 | 350 000 |
| David Landerborn | Chief Operations Officer | 32 497 | 282 966 |
| Bartosz Leoszewski | Chief Technology Officer | 41 336 | 164 065 |
| Sheena Lim | Chief Marketing Officer | 2 134 | 164 065 |
Overview of shares held by members of the Board of Directors as at 30 September 2024:
| Name | Position | Shares (direct/indirect) |
|---|---|---|
| Michael Jacobs | Chairman | 30 000 |
| Ingrid Leisner | Board member | 60 157 |
| Harald Arnet | Board member | 63 439 |
| Jens Rugseth | Board member | 4 545 532 |
| Melissa Mulholland | Board member | 0 |
Note: On 9 October 2024, Techstep successfully completed a private placement of NOK 30 million by issuing 2,777,777 new ordinary shares at NOK 10.80 per share. See note 8 Subsequent events for further information.
Note 5. Property, plant and equipment
| Total other | ||||
|---|---|---|---|---|
| Right-of-use | Other fixed | tangible | ||
| (Amounts in NOK 1 000) | assets | assets | assets | Equipment 1) |
| Carrying amount 1 January 2023 | 29 737 | 7 620 | 37 357 | 160 706 |
| Additions | 7 890 | 4 133 | 12 023 | 108 600 |
| Depreciation | (14 106) | (2 386) | (16 492) | (91 112) |
| Disposals | (542) | (2 631) | (3 173) | (22 177) |
| Translation differences | 1 266 | 529 | 1 795 | 3 484 |
| Carrying amount 31 December 2023 | 24 245 | 7 265 | 31 511 | 159 501 |
| Carrying amount 1 January 2024 | 24 245 | 7 265 | 31 511 | 159 501 |
| Additions | 8 179 | 1 463 | 9 642 | 77 133 |
| Depreciation | (8 883) | (1 548) | (10 430) | (75 332) |
| Disposals | (319) | (1 738) | (2 057) | (16 417) |
| Translation differences | 366 | 160 | 526 | 1 286 |
| Carrying amount 30 September 2024 | 23 589 | 5 603 | 29 192 | 146 172 |
1) Equipment comprises mobile phones, tablets and other equipment where the Group is the lessor.
Note 6. Cash and cash equivalent
| (Amounts in NOK 1 000) | Q3 2024 | Q3 2023 | 2023 |
|---|---|---|---|
| Cash at bank and in hand, | 15 660 | 67 832 | 77 459 |
| Of which is restricted | 3 119 | 2 832 | 3 957 |
As at 30 September 2024 NOK 30 million of the Group's available credit facilities has been utilised.
Note 7. Borrowings
On 12 September 2023, Techstep refinanced all its outstanding loans and credit facilities with Nordea Bank.
Overview of outstanding loans and credits:
| Q3 2024 | Q3 2023 | FY 2023 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| (Amounts in NOK | Non | Non | Non | ||||||
| 1 000) | Current | current | Total | Current | current | Total | Current | current | Total |
| Seller's credit related to business combinations |
- | - | - | - | - | - | - | - | - |
| Bank loan | 45 000 | 118 027 | 163 027 | 45 000 | 135 101 | 180 101 | 48 750 | 129 927 | 178 677 |
| Bank overdraft | 24 | - | 24 | 24 259 | 24 259 | - | - | - | |
| Total | 45 024 | 118 027 | 163 051 | 69 259 | 135 101 | 204 361 | 48 750 | 129 927 | 178 677 |
The bank loan consists of a Term Loan A and Term Loan B of NOK 75 million each and a Revolving Credit Facility of NOK 30 million. The Bank overdraft is short term credit lines that consists of an overdraft facility of NOK 25 million and a seasonal facility of NOK 20 million.
The Term Loan A matures over 5 years, with quarterly straight-line amortisations, while the Term Loan B matures in 5 years.
The annual interest rates are:
| • | TLA/RCF: | NIBOR 3m + 285bps |
|---|---|---|
- TLB: NIBOR 3m + 305bps
- Overdraft/seasonal: NIBOR 3m + 250bps
In connection with the refinancing, Techstep ASA entered into an interest rate hedge agreement, where interest payments for 75% of the long-term borrowings are secured at a NIBOR base of 4.47% p.a. The duration of the agreement is for 5 years.
The Group was in compliance with the loan covenant requirements as at 30 September 2024.
Sustainability Linked Loan
In July 2024, Techstep added Sustainability features to the loan terms connected to three KPIs, which may give a discount of up to 5 bps on margin if the three KPIs are reached, or penalty of up to 5 bps if the KPIs are not reached. The KPI performance, which relates to reduction of greenhouse gas emissions (scope 1 and 2), supplier due diligence and cybersecurity training, will be evaluated on an annual basis. The two latter KPIs will be replaced by new KPIs for the last two years of the loan period.
Note 8. Subsequent events
Private placement
On 9 October 2024, Techstep successfully completed a private placement of NOK 30 million by issuing 2,777,777 new ordinary shares at NOK 10.80 per share. The following primary insiders and close associates of primary insiders were allocated shares:
- Datum AS and Datum Vekst AS, close associates of board member Harald Arnet, were allocated 461,217 shares and 51,246 shares, respectively
- Karbon Invest AS, a close associate of board member Jens Rugseth, was allocated 383,927 shares
- Michael Jacobs, chairman of the Board, was allocated 20,000 shares
- Mia Unhjem Meier, a close associate of CEO Morten Meier, was allocated 50,000 shares
Following registration of the share capital increase pertaining to the private placement, the issued share capital of Techstep ASA is NOK 34,407,158 consisting of 34,407,158 shares, each with a nominal value of NOK 1. The new share capital was registered on 16 October 2024. For more information, see stock exchange announcements of 9 October and 16 October 2024.
Formalised commercial agreement with a Nordic mobile operator
Following the initial partner agreement disclosed on 15 May 2024, Techstep announced on 9 October 2024 the formalisation of a strategic partnership with the Norwegian mobile operator ICE. The strategic partnership will introduce Techstep's own software and managed services to Ice's B2B customer base, featuring the Device Lifecycle Management platform as well as managed services and security capabilities. ICE will launch their device lifecycle services to the market in the fourth quarter 2024. The commercial terms include a licence price per user/device model and financial effect for Techstep is expected to ramp up from the second half of 2025.
Alternative performance measures
Techstep Group's financial information is prepared in accordance with International Financial Reporting Standards (IFRS). In addition, it is management's intention to provide alternative performance measures that are regularly reviewed by management to enhance the understanding of Techstep's performance, but not instead of the financial statements prepared in accordance with IFRS. The alternative performance measures presented may be determined or calculated differently by other companies. The principles for measuring the alternative performance measures are in accordance with the principles used both for segment reporting in Note 2 and internal reporting to Group Executive Management (chief operating decision makers) and are consistent with financial information used for assessing performance and allocating resources.
Gross profit
Gross profit is defined as total revenue less cost of goods sold.
Net gross profit
Net gross profit is defined as total revenue less cost of goods sold and depreciation from Device-asa-Service.
Gross margin
Gross margin is defined as total revenue less cost of goods sold and depreciation from Device-asa-Service, divided by total revenue.
EBITDA
Earnings before interest, tax, depreciation, amortisation and impairment. The EBITDA margin presented is defined as EBITDA divided by total revenue.
EBITDA adjusted
Earnings before interest, tax, depreciation, amortisation and impairment adjusted for transactions of a non-recurring nature. Such non-recurring transactions include, but are not limited to restructuring costs, gains or losses related to the sale of subsidiaries, acquisition-related costs and other nonrecurring income and expenses. The EBITDA adjusted margin presented is defined as EBITDA adjusted divided by total revenue.
EBITA
Earnings before interest, tax, amortisation and impairment The EBITA margin presented is defined as EBITA divided by total revenue.
EBITA adjusted
Earnings before interest, tax, amortisation and impairment adjusted for transactions of a nonrecurring nature. Such non-recurring transactions include, but are not limited to restructuring costs, gains or losses related to sales of subsidiaries, acquisition-related costs and other non-recurring income and expenses. The EBITA adjusted margin presented is defined as EBITA adjusted divided by total revenue.
EBIT
Earnings before interest and tax (EBIT) is useful to users with regard to Techstep's financial information in evaluating operating profitability on a cost basis as well as the historic cost related to past business combinations and capex. The EBIT margin presented is defined as EBIT divided by Total revenue.
Device revenue
Device revenue is defined as revenue from sales of tangible goods and related discounts from suppliers and partners.
Device's share of revenue is the Device revenue divided by Total revenue.
Advisory & Services revenue
Revenue from Advisory & Services includes revenue from advisory, support and maintenance services, and sales of third-party software licenses including related commission.
Advisory & Services share of revenue is the revenue from Advisory & Services divided by Total revenue.
Own Software revenue
Revenue from Own Software includes revenue from the right to access and use software developed by Techstep (Own Software).
Own Software share of revenue is the revenue from Own Software divided by Total revenue.
Net interest-bearing debt (NIBD)
Net interest-bearing debt is non-current interest-bearing borrowings plus current interest-bearing borrowings less cash and cash equivalents.
Equity ratio
Equity ratio is defined as Total equity divided by Total equity and liabilities.
Capital expenditure (Capex)
Capital expenditure is the same as payment for property, plant and equipment and intangible assets.
Recurring Revenue Annualised
Reported Recurring revenue annualised represents future contractual annual revenue from Own Software, Advisory & Services and Device-as-a-Service. Revenues are based on contracts for 12 or more months and calculated as last months invoiced contractual revenues times 12 months. Contracts where invoicing to customers has not commenced at the reporting date, are not included in the calculation.
| APM's in the income statement | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | FY 2023 |
|---|---|---|---|---|---|
| Total revenue | 237 609 | 226 719 | 760 030 | 789 631 | 1 089 491 |
| Cost of goods sold | (131 314) | (126 104) | (432 414) | (456 626) | (644 460) |
| Gross profit | 106 295 | 100 615 | 327 617 | 333 005 | 445 031 |
| Gross margin | 44.7 % | 44.4 % | 43.1 % | 42.2 % | 40.8 % |
| Salaries and personnel costs | (43 300) | (40 151) | (156 873) | (158 322) | (207 964) |
| Other operational costs | (21 081) | (22 015) | (66 574) | (74 372) | (99 571) |
| Other income | 215 | 140 | 794 | 395 | 494 |
| Other expenses | (1 189) | 1 | (4 568) | - | (1 970) |
| EBITDA | 40 940 | 38 589 | 100 396 | 100 704 | 136 019 |
| Depreciation | (27 714) | (25 625) | (85 762) | (81 082) | (107 603) |
| EBITA | 13 226 | 12 964 | 14 634 | 19 623 | 28 416 |
| Amortisation | (16 677) | (16 367) | (49 555) | (48 103) | (64 915) |
| EBIT | (3 451) | (3 403) | (34 921) | (28 481) | (36 498) |
| Net gross profit | |||||
| Gross profit | 106 295 | 100 615 | 327 617 | 333 005 | 445 031 |
| Depr. Device-as-a-service | (24 418) | (21 898) | (75 332) | (68 744) | (91 112) |
| Net gross profit | 81 877 | 78 717 | 252 285 | 264 261 | 353 919 |
| Net gross margin | 34.5 % | 34.7 % | 33.2 % | 33.5 % | 32.5 % |
| EBITDA adjusted | |||||
| EBITDA | 40 940 | 38 589 | 100 396 | 100 704 | 136 019 |
| Other income | (215) | (140) | (794) | (395) | (494) |
| Other expense | 1 189 | (1) | 4 568 | - | 1 970 |
| Adjusted EBITDA | 41 913 | 38 449 | 104 170 | 100 310 | 137 496 |
| EBITA adjusted | |||||
| EBITA | 13 226 | 12 964 | 14 634 | 19 623 | 28 416 |
| Other income | (215) | (140) | (794) | (395) | (494) |
| Other expense | 1 189 | (1) | 4 568 | - | 1 970 |
| EBITA adjusted | 14 200 | 12 824 | 18 408 | 19 228 | 29 892 |
| APM's in the Statement of financial position | YTD 2024 | YTD 2023 | 2023 | ||
| NIBD | |||||
| Cash and cash equivalents | 15 660 | 67 832 | 77 459 | ||
| Non-current interest-bearing borrowings | 118 027 | 135 101 | 129 927 | ||
| 45 024 | 69 259 | 48 750 | |||
| Current interest-bearing borrowings | |||||
| NIBD | 147 391 | 136 528 | 101 218 | ||
| Equity ratio | |||||
| Total equity | 555 405 | 565 285 | 573 697 | ||
| Total equity and liabilities | 1 135 278 | 1 212 234 | 1 270 799 | ||
| Equity ratio | 48.9 % | 46.6 % | 45.1 % |
Interim report Q3 2024
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