Innofactor Q2’24 earnings preview: We expect earnings to have increased slightly

Translation: Original comment published in Finnish on 7/12/2024 at 7:30 am EEST.

Innofactor will publish its Q2 report on Thursday at 9:00 am EEST. We expect a further slight increase in revenue in Q2, despite the challenging market environment. We also expect profitability to be satisfactory and in line with the comparison period. In addition to the results, we are also interested in market commentary, new sales and order book development.  

We continued revenue growth, albeit at a slower pace than in the past

Innofactor has performed well despite the weakness in the IT services market. However, we estimate that uncertainty will gradually start to show also in Innofactor’s figures. We expect Innofactor's revenue growth in Q2 to slow down to 2%, to 20.4 MEUR (Q3’23-Q1’24 Innofactor 5-8% and IT services sector -2 to +2%). Among the business areas, we are particularly watching the development of Information and Case Management and Digital Services, as these have shown the best growth. However, the order book for digital services has fallen significantly (40-50%) in recent quarters. We also look forward to comments on the market and new sales, which were challenging in Q1.

We expect profitability to remain satisfactory and flat year-on-year

We expect EBITDA to remain flat at 1.8 MEUR. Thus, our estimates see the EBITDA margin also remaining flat at 9%. Profitability is supported by better billing rates but constrained by unfavorable net inflation and customer price developments. Profitability is weak for Innofactor's structure, with other countries clearly depressing development and Finland holding the line with a strong performance. However, in view of the challenging market, we consider the level satisfactory. By business area, Business Solutions is a particular drag on profitability. In other cost lines, we expect slightly lower costs. As a result, we expect EPS to have increased by one cent to EUR 0.02 in the second quarter.  

Further earnings growth expected in 2024

Innofactor traditionally forecasts an increase in revenue and EBITDA compared to the previous year. We forecast Innofactor's revenue to grow by 3% to 83 MEUR in 2024 and EBITDA to increase to 9.7 MEUR or 11.7% of revenue (9.1 MEUR or 11.3% in 2024). Success in sales remains critical.