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Webstep Interim / Quarterly Report 2023
3788_rns_2024-02-15_8972cfba-f952-4146-8acc-9afd42223d29.pdf
Interim / Quarterly Report
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Our agenda
Kjetil Bakke Eriksen Webstep interim CEO
- ● Kjetil B. Eriksen interim CEO from november 19th 2023 Eriksen has extensive experience with Webstep as the former chair of the Board (22-23), board member, previously CEO of Webstep (06-19) and regional leader of Webstep Oslo (04-06)
- Mr Eriksen has profound insight into Webstep and the industry. He will serve as CEO until a new leader is in place and a thorough handover has been completed.
Highlights from the quarter
Highlights
Milestone NOK 1 billion full year revenues - cost reduction program implemented - EBIT affected by 35 MNOK in one-off costs
- ● Revenue
- ○ Q4 262.1 MNOK (+6.4%)
- ○ FY 2023 1,000.0 MNOK (+12.6%)
- ● EBIT adjusted for one-off costs
- ○ Q4 8.3 MNOK (-29.6%)
- ○ FY 2023 53.5 MNOK (-2.2%)
- ● EBIT actual
- ○ Q4 26.7 MNOK (-326.9%)
- ○ FY 2023 18.5 MNOK (-66.2%)
- ● One-off costs 35 MNOK
- ○ Severance package for downsizing 11 non-billable FTEs and change of CEO, 10 MNOK
- ○ Impairment of goodwill Webstep Sweden, 25 MNOK
- ● Costs Webstep Norway
- ○ The temporary increase in employer contribution results in higher costs for Webstep Norway, 4.6 MNOK for Q4 and 9.0 MNOK for FY 2023
- Cost reduction program implemented
- ○ Estimated total cost reduction 21-25 MNOK, full year effect 2024 minimum 21 MNOK
- Dividend proposal of NOK 1.00 per share
Profitability in focus
Cost reduction program - estimated full year cost reduction at minimum 21 MNOK for 2024
- ● Downsizing non-billable FTEs
- ○ Total reduction of 11 non-billable FTEs for the Group
- The temporary increase in the Norwegian employer contribution
- ○ From 2024 50% of full year costs covered by the consultants and the rest covered by Webstep, estimated cost reduction from 2023 at 3.5 MNOK
- ○ From 2024 the costs will be accrued throughout the year in the financial statements
- ● Measures for the Group
- ○ Reorganising the sales organisation in Webstep Oslo to increase customer value, enhance scaling capacity and decrease overhead costs
- ○ Reduced consultants in areas with reduced market demand
- ○ Reduced overhead
- ○ Other cost initiatives not related to FTEs
- ○ Improvement of ratio consultants/sales
- Cost reductions of minimum 21 MNOK executed with full year effect from 2024
Project highlights
Reinforced on framework agreements, promising AI and knowledge graph initiatives
- ● Leading a consortium of partners, Webstep secured yet another framework agreement - on software development - with Norsk Helsenett
- ○ Access to assignments for a wide range of public health institutions
- ○ Related opportunities through collaboration agreements
- ● Webstep enters compliance management through AI engine
- ○ Webstep made AI engine has elevated Adept Concept's offering from compliance management to AI assisted, hugely time saving, compliance work
- ○ Webstep Adept Concept collaboration agreement signed
- ● Enabling interoperability between systems and players across the process and energy industries
- ○ POSC Caesar Association (PCA) hire Webstep team on knowledge graphs - for descriptions of physical objects through data
- ○ Webstep aim to develop PCA's library a modern, secure, scalable, and advanced data platform
Business review
Organisation and employees
The Webstep experience going forward
● Rightsizing the organisation
- Non-billable FTEs less top heavy
- Consultants in areas with reduced market demand
● Enterprise customers
- Experienced consultants are key
- Enterprise market creates employee opportunities
- Cooperation between locations cross-sale opportunities
- 570 employees at the end of Q4 2023
- Recruitment balanced against profitable growth
- Experienced consultants key to demanding markets and utilisation
*Number of employees at the end of the year not adjusted for downsizing
Financial review
Key figures - Group
| Q4 | Q4 | Y/Y | FY | FY | Y/Y | |
|---|---|---|---|---|---|---|
| NOK million | 2023 | 2022 | change | 2023 | 2022 | change |
| Revenues | 262.1 | 246.4 | 6.4% | 1,000.0 | 888.4 | 12.6% |
| EBITDA | 4.1 | 18.5 | (77.6%) | 65.7 | 76.2 | (13.9%) |
| EBITDA margin | 1.6% | 7.5% | (5.9 pts) | 6.6% | 8.6% | (2.0 pts) |
| EBIT | (26.7) | 11.8 | (326.9%) | 18.5 | 54.6 | (66.2%) |
| EBIT margin | (10.2%) | 4.8% | (15.0 pts) | 1.8% | 6.2% | (4.3 pts) |
| Net profit | (28.1) | 7.8 | (462.5%) | 3.7 | 38.4 | (90.4%) |
| Net free cash flow | 81.8 | 35.7 | 129.0% | 71.0 | 63.3 | 12.2% |
| Earnings per share (NOK) | (1.02) | 0.28 | (460.5%) | 0.13 | 1.40 | (90.5%) |
| Earnings per share fully diluted (NOK) | (1.01) | 0.28 | (460.8%) | 0.13 | 1.39 | (90.5%) |
| Equity ratio | 50.7% | 58.0% | (7.3 pts) | 50.7% | 57.9% | (7.2 pts) |
| Cash and cash equivalents | 75.5 | 62.3 | 21.1% | 75.5 | 62.3 | 21.1% |
| Number of employees, average (FTE) | 572 | 539 | 6.1% | 561 | 512 | 9.6% |
| Number of employees, end of period* | 570 | 538 | 5.9% | 570 | 538 | 5.9% |
| Revenues per FTE (TNOK) | 459 | 457 | 0.3% | 1,784 | 1,736 | 2.7% |
| EBIT per FTE (TNOK) | (46.7) | 21.9 | (313.9%) | 32.9 | 106.8 | (69.2%) |
| EBIT adjusted | 8.3 | 11.8 | (29.6%) | 53.5 | 54.6 | (2.2%) |
| EBIT margin adjusted | 3.2% | 4.8% | (1.6 pts) | 5.3% | 6.2% | (0.8 pts) |
| EBIT adjusted per FTE (TNOK) | 14.5 | 21.9 | (33.7%) | 95.4 | 106.8 | (10.7%) |
*Number of employees at the end of the period is not adjusted for downsizing
Q4 Comments
- ● Stable revenue
- Revenue from own consultants
- Q4 235.6 MNOK (+3.4%)
- FY 2023 905.3 MNOK (+10.2%)
- Working days: QoQ -1 and YoY -2
- Revenue from own consultants
- Top 10 customers account for 44 % of total revenue ○ Strengthened focus at the enterprise market resulting in renewed trust through comprehensive and long-term contracts
- EBIT affected by
- One-off costs
- Impairment of acquisition related goodwill for Webstep Sweden, 25 MNOK
- The anticipated value of future results in a declining Swedish market necessitates impairment
- Downsizing administration and CEO transition, 10 MNOK
- Impairment of acquisition related goodwill for Webstep Sweden, 25 MNOK
- Temporary increase in employer contribution for Webstep Norway,
- One-off costs
Q4 4.6 MNOK
FY 23 9.0 MNOK
Norway Q4
Key figures - Norway
| Q4 | Q4 | Y/Y | FY | FY | Y/Y | |
|---|---|---|---|---|---|---|
| NOK million | 2023 | 2022 | change | 2023 | 2022 | change |
| Revenues | 224.3 | 210.2 | 6.7% | 857.7 | 761.6 | 12.6% |
| EBIT | (26.8) | 10.0 | (368.4%) | 17.0 | 47.7 | (64.3%) |
| EBIT margin | (12.0%) | 4.8% | (16.7 pts) | 2.0% | 6.3% | (4.3 pts) |
| Number of employees, average (FTE) | 471 | 445 | 5.8% | 459 | 425 | 8.1% |
| Number of employees, end of period* | 471 | 444 | 6.2% | 471 | 444 | 6.2% |
| Number of workdays | 63 | 64 | (1.6%) | 251 | 253 | (0.8%) |
| Revenues per FTE (NOKt) | 477 | 473 | 0.8% | 1,867 | 1,795 | 4.0% |
| EBIT per FTE (NOKt) | -57 | 22 | (353.6%) | 39 | 114 | (65.5%) |
| EBIT adjusted | 8.2 | 10.0 | (18.4%) | 52.0 | 47.7 | 9.1% |
| EBIT margin adjusted | 3.6% | 4.8% | (1.1 pts) | 6.1% | 6.3% | (0.2 pts) |
| Revenue breakdown | Q4 | Q4 | Y/Y | FY | FY | Y/Y |
| NOK million | 2023 | 2022 | change | 2023 | 2022 | change |
| Oslo | 101.1 | 92.3 | 9.5% | 372.7 | 324.7 | 14.8% |
| Regional offices | 105.3 | 105.8 | (0.5%) | 420.3 | 393.7 | 6.8% |
| Subcontractors/resale of licenses | 19.1 | 12.7 | 49.7% | 68.5 | 45.7 | 50.0% |
| Other / eliminations | (1.1) | (0.6) | 77.1% | (3.7) | (2.4) | 56.1% |
13 Change in revenues from subcontractors/resale of licenses is mainly due to internal change in accounting. Revenue from subcontractors isolated change + 3.5 MNOK Q4, + 12.2 MNOK FY 2023
Q4 Comments
- Continued, but moderate growth in Q4
- Revenue from own consultants
- Q4 206.4 MNOK (+4.2%)
- FY 2023 792.9 MNOK (+10.4%)
- Growth driven by hourly rate and number of consultants
- Strong growth in Oslo region, up 9.5% QoQ and 14.8% YoY
- Working days: QoQ -1 and YoY -2
- Revenue from own consultants
● EBIT affected by
- ○ One-off costs
- Goodwill impairment**, 25 MNOK
- Downsizing non-billable FTEs and change in management, 10 MNOK
- Temporary increase in employer contribution, Q4 4.6 MNOK
- FY 23 9.0 MNOK
- ○ Costs related to reduced number of consultants in areas with lower market demand, 2.0 MNOK
* Number of employees at the end of the period is not adjusted for downsizing ** See note in Interim Report
Sweden Q4
Key figures - Sweden
| Q4 | Q4 | Y/Y | FY | FY | Y/Y | |
|---|---|---|---|---|---|---|
| NOK million | 2023 | 2022 | change | 2023 | 2022 | change |
| Revenues | 37.7 | 36.2 | 4.3% | 142.3 | 126.9 | 12.2% |
| EBIT | 0.1 | 1.8 | (92.9%) | 1.4 | 6.9 | (79.5%) |
| EBIT margin | 0.3% | 4.9% | (4.6 pts) | 1.0% | 5.5% | (4.5 pts) |
| Number of employees, average (FTE) | 101 | 94 | 7.5% | 101 | 86 | 17.2% |
| Number of employees, end of period* | 99 | 95 | 4.2% | 99 | 95 | 4.2% |
| Number of workdays | 63 | 64 | (1.6%) | 251 | 253 | (0.8%) |
| Revenues per FTE (TNOK) | 374 | 385 | (2.9%) | 1,404 | 1,469 | (4.4%) |
| EBIT per FTE (TNOK) | 1 | 19 | (93.4%) | 13 | 81 | (83.4%) |
| Revenue breakdown | Q4 | Q4 | Y/Y | YTD | YTD | Y/Y |
| NOK million | 2023 | 2022 | change | 2023 | 2022 | change |
| Regional offices | 29.2 | 29.7 | (1.6%) | 112.4 | 103.0 | 9.1% |
| Subcontractors | 8.5 | 6.5 | 31.3% | 29.9 | 23.9 | 25.2% |
Q4 Comments
- The deceleration in the market persists with prolonged sales cycles and reduced market demand
- ● Revenue increase through subcontractors
- Revenue from own consultants MNOK 29.2
- Working days: QoQ -1 and YoY -2
- Revenue from subcontractors increased 31.3%
- Relates to services outside of Webstep Sweden core competencies
- EBIT affected by measures initiated following market slowdown
- Salary commitments in a period of decreased utilisation
- Costs relating to downsizing of non-billable employees and consultants in areas with reduced demand. Cost of MNOK 0.3 relate to salary commitment for 2024, provisioned for in the 2023 accounts
Market update and outlook
Webstep market update
date
- Challenging markets Sweden hit harder than Norway: Long term trend of digitalisation continues
- Customer base across diversified industries and public sectors
- 44% of Webstep revenue from 10 largest Norwegian customers
- Ready to deliver on important framework agreements recently closed both prime and in collaboration with other partners
- Trimmed organisation, strengthened and well organised sales force
- AI development creates new opportunities which align well with Webstep's services
Outlook
W
- Firm focus on expert consultants going forward
- Optimizing sales and strengthening focus on enterprise market through streamlined organisation and salesforce
- Focus on large clients with significant digital challenges, has resulted in longer contract assignments
- Intensified and continued focus on cost savings to secure margin improvement - measures implemented and evaluated continuously
- Expect to be approximately 528 employees by end of first quarter 2024. Recruitment balanced against profitable growth
- Long term target for EBIT above 10%
Please contact us at [email protected]
Appendix
A diversified customer base
Top 10 customers account for 44% of total revenues
Cash flow and net debt
| NOK million | 31 Dec 2023 |
|---|---|
| Cash and cash equivalents* | (75.5) |
| Restricted cash | 1.9 |
| Debt to credit institutions | 0.0 |
| Net interest bearing debt (NIBD)** | (73.6) |
| NIBD/EBITDA (rolling 12 months) | (1.1) |
| NIBD/EBITDA (rolling 12 months) Including IFRS 16 Lease liabilities |
0.4 |
Note: *Negative indicates positive amount. **Effects related to IFRS 16 (leasing) are excluded.
- The Group has credit facility of MNOK 110 in Norway and SEK 5m in Sweden
- Credit facility was unutilized by the end of fourth quarter
- Capex relates to office and equipment
Top 20 shareholders at 12 February 2024
| Shareholder name | Shares | 9/6 | ||
|---|---|---|---|---|
| 1 EMBRO EIENDOM AS | 8,312,727 | 30.0 % | ||
| 2 HVALER INVEST AS | 2,002,152 | 7.2 % | ||
| ന | J.P. Morgan SE | 1,970,890 | 7.1 % Nominee | |
| 4 PROTECTOR FORSIKRING ASA | 1,599,110 | 5.8 % | ||
| 5 SALT VALUE AS | 1,535,258 | 5.5 % | ||
| 6 VPF FONDSFINANS UTBYTTE | 1,200,000 | 4.3 % | ||
| 7 JAKOB HATTELAND HOLDING AS | 1,000,000 | 3.6 % | ||
| 8 J.P. Morgan SE | 900,000 | 3.3 % Nominee | ||
| 9 HOLMEN SPESIALFOND | 861,524 | 3.1 % | ||
| 10 VERDIPAPIRFONDET NORDEA NO | 664,317 | 2.4 % | ||
| 11 Danske Invest Norge Vekst | 542,000 | 2.0 % | ||
| 12 INTERTRADE SHIPPING AS | 400,000 | 1.4% | ||
| 13 ESPEDAL & CO AS | 308,980 | 1.1 % | ||
| 14 EUROVEST AS | 280,707 | 1.0 % | ||
| 15 Bank Pictet & Cie (Europe) AG | 232,675 | 0.8 % | Nominee | |
| 16 MP PENSJON PK | 224,000 | 0.8 % | ||
| 17 | LEROLI AS | 197,281 | 0.7 % | |
| 18 SKEIE ALPHA INVEST AS | 155,250 | 0.6 % | ||
| 19 Saxo Bank A/S | 155,074 | 0.6 % Nominee | ||
| 20 BUGS AS | 126,736 | 0.5 % | ||
| Top 20 shareholders | 22,668,681 | 81.9% | ||
| Other | 5,002,278 | 18.1% | ||
| Total share outstanding | 27,670,959 | 100.0% | ||
Revenue, EBIT and employee development
Revenues (LTM) EBIT (LTM)
Number of employees (EoP)
24
Number of employees EoP
| Number of employees, end of period | Q4 | Q3 | Q2 | Q1 | Q4 |
|---|---|---|---|---|---|
| Norway | 2023 | 2023 | 2023 | 2023 | 2022 |
| Norway total | 471 | 463 | 459 | 455 | 444 |
| Oslo | 223 | 221 | 211 | 205 | 194 |
| Bergen | 91 | 90 | 94 | 92 | 88 |
| Trondheim | 65 | 64 | 61 | 64 | 65 |
| Stavanger | 59 | 57 | 62 | 63 | 67 |
| Sørlandet | 24 | 22 | 22 | 21 | 20 |
| Haugalandet | 9 | 9 | 9 | 10 | 10 |
| Q4 | Q3 | Q2 | Q1 | Q4 | |
| Sweden | 2023 | 2023 | 2023 | 2023 | 2022 |
| Sweden total | 99 | 103 | 102 | 102 | 95 |
| Stockholm | 60 | 62 | 60 | 58 | 57 |
| Malmö | 18 | 19 | 20 | 22 | 18 |
| Uppsala | 21 | 22 | 22 | 22 | 20 |
Disclaimer
This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements and this Presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for Webstep ASA and Webstep ASA's (including subsidiaries and affiliates) lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for Webstep ASA. Although Webstep ASA believes that its expectations and the Presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. Webstep ASA is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither Webstep ASA nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.