Webstep

Earnings Release • Nov 7, 2019

Webstep Q3 2019: Strengthening the platform for future growth

Webstep Q3 2019: Strengthening the platform for future growth

Oslo 7 November 2019: Webstep reports third quarter revenues in line with the

same quarter last year and a weaker EBITDA margin. Capacity growth initiatives

are starting to yield results with 5.3 per cent growth in headcount in the

quarter. A revised strategy has been developed and measures to support future

growth will be implemented going forward.

Webstep ASA ("the Group" or "Webstep") recorded consolidated revenues in the

third quarter of NOK 137.2 million, down 0.6 per cent from the same quarter last

year, affected by reduced headcount year-on-year, but offset by increased hourly

rates and use of subcontractors. Year to date revenues decreased by 0.9 per cent

compared to last year and ended at NOK 483.7 million, reflecting reduced

capacity following the strong competition for IT expert consultants.

"Webstep enjoys a strong position in an attractive market with high demand. Some

of our growth initiatives have started to yield results. We saw 5 per cent

growth in headcount in the third quarter and expect further growth this

quarter", says Webstep's CEO, Arne Norheim.

EBITDA for the third quarter amounted to NOK 4.1 million, against NOK 8.9

million in the same quarter of 2018, impacted by seasonality effects (summer

holidays and annual activities related to culture and competence development),

use of subcontractors and costs of strategic measures to strengthen the growth

platform. Lower utilisation and higher onboarding costs also impacted EBITDA in

the quarter.

EBITDA year to date ended at NOK 48.4 million, down by 21 per cent from the same

period last year, mainly due to use of subcontractors, costs related to Internet

of Things (IoT) and the initiatives to increase growth capacity.

The new reporting standard IFRS 16 Leases, implemented from 1 January 2019, had

a positive EBITDA effect of NOK 1.7 million in the third quarter and NOK 4.4

million the first nine months. Adjusted EBITDA based on the former principles

for classification of leasing was NOK 2.4 million (NOK 8.9 million) for the

third quarter, and NOK 44.0 million (NOK 61.3 million) year to date.

Net profit came to NOK 0.6 million for the quarter and NOK 30.8 million year to

date.

The financial position at 30 September is strong, with total equity of NOK 362.4

million (NOK 357.3 million), corresponding to an equity ratio of 68 per cent (67

per cent)

The fundamentals for long-term market growth are supported by megatrends within

digitalisation and the fact that Webstep has won large, long term contracts and

frame agreements in 2019.

Webstep has developed a revised strategy with the purpose of strengthening the

position as the preferred IT-expert consultancy in Scandinavia towards 2022.

Webstep's three business areas Technology Expert, Tech Advisory & Management,

and Solutions will be made clearer by strengthening and making visible the

customer offerings within each area. Main focus will be on restoring growth

capacity in the Technology Expert business area and at the same time realise

untapped growth potential in the Tech Advisory & Management and the Solutions

business areas.

The strategy includes expansion of service offerings and delivery models in

response to customer demand, expansion of the recruitment base by recruiting new

types of expertise. Local presence is a key success factor and expansion of

current locations and entry into new key locations in Scandinavia will be a

priority. Sales and recruitment capacity, expertise and processes will be

strengthened, and a branding process will be important to further enhance the

Group's position as preferred employer and provider of IT expertise. Growth will

mainly be organic, with selective use of M&A as a tool to access new customer

relations or key expertise in new technologies.

The long-term ambition to exceed the market average in terms of revenue growth

and EDBITA margin remains unchanged. Measures to support future growth may

create a short-term challenge with respect to the EBITDA margin level. The

dividend policy remains unchanged.

Contact details for further information:

Liv Annike Kverneland, CFO

Cell: +47 911 51 110

Email : ir@webstep.com

Website :  (http://www.webstep.com)www.webstep.com

Webstep ASA is a provider of consultancy services to the private and public

sector, with the IT expertise necessary to deliver the most demanding

digitalisation and IT services.The Webstep Group employs approximately 400

employees in Norway and Sweden. The company offers its services to more than 200

customers annually and has been recognised for its work environment.

This information is subject to the disclosure requirements pursuant to section 5

-12 of the Norwegian Securities Trading Act.