CombinedX Q1 2025 presentation: Revenue grows amid challenging market conditions

Introduction & Market Context

CombinedX AB (CX) reported its first quarter 2025 results on May 7, showing revenue growth despite challenging market conditions in the IT consulting sector. The company’s stock closed at 37.5 SEK, up 1.33% on the day of the presentation, as investors responded to the company’s focus on profitability and strategic realignment.

The Swedish IT consulting firm reported revenue growth of 6.5% year-over-year, reaching 239.2 MSEK for the quarter, though organic growth remained negative at -4.9%. The company is implementing operational and strategic measures to address market challenges while maintaining a strong cash position.

Quarterly Performance Highlights

CombinedX reported Q1 2025 revenue of 239.2 MSEK, up from 224.7 MSEK in the same period last year, representing a growth of 6.5% (compared to 7.5% in Q1 2024). However, organic growth was negative at -4.9%, deteriorating from -1.4% in the previous year.

The company’s adjusted EBITA remained relatively stable at 27.3 MSEK (compared to 27.4 MSEK in Q1 2024), though the adjusted EBITA margin decreased to 11.4% from 12.2% in the same period last year.

As shown in the following chart of revenue development, the company has maintained a positive trajectory in total revenue while working toward its profitability targets:

CEO Jörgen Qwist noted that Q1 2025 started in line with expectations, highlighting customer satisfaction achievements including a ServiceNow (NYSE:NOW) average CSAT score of 4.95 and a Netgain eNPS of 83. The company’s subsidiary Netgain also won the ServiceNow Partner Award for highest customer satisfaction in 2024.

Strategic Initiatives

CombinedX is implementing a two-pronged approach to address market challenges. First, the company is taking operational measures to increase sales and occupancy while balancing costs. Second, it is focusing strategic resources on targeted submarkets with appropriate offerings and building leading brands.

The company’s strategic positioning is organized around three key segments: Digital Experience, Enterprise Solutions, and Infrastructure & Security, each with specialized brands and platform partnerships as illustrated below:

Notable achievements in the quarter included the launch of a new B2B e-commerce site (wurth.se) created in collaboration with CombinedX subsidiary Ninetech, and the development of a self-learning AI model for Sefina Pantbank by subsidiary Two, providing accurate forecasts and improved decision support.

Detailed Financial Analysis

CombinedX’s financial position remains solid despite market headwinds. The company’s Last Twelve Months (LTM) revenue reached 944.4 MSEK with a growth rate of 20.9%, though organic growth for the same period was negative at -3.2%. The LTM adjusted EBITA margin stood at 8.6%, below the company’s target of 12%.

The following chart illustrates the company’s revenue and adjusted EBITA margin trends over the last twelve months:

The company has reduced its workforce to 528 employees, down from 606 in Q1 2024. Despite this reduction, revenue per full-time equivalent (FTE) increased by 5.2% to 1,720 KSEK/year LTM. However, personnel costs per FTE also rose by 8.8% to 1,089 KSEK/year LTM, putting additional pressure on margins.

This workforce efficiency trend is visualized in the following chart showing employee numbers and costs:

CombinedX maintains a strong cash position with 124.7 MSEK at the end of Q1 2025. The company’s net debt ratio is -0.1 times EBITDA, indicating a net cash position. The cash flow for the period was -7.5 MSEK, a significant improvement compared to -36.8 MSEK in Q1 2024.

The company’s cash flow and net debt development is illustrated in the following chart:

Forward-Looking Statements

CombinedX reaffirmed its strategic targets of achieving an adjusted EBITA margin of 12% on a last-twelve-months basis (compared to the current 8.6%) and exceeding the IT consulting market’s organic growth rate. The company also maintains its goal of reaching at least 1 billion SEK in revenue by 2025.

The company’s income development trajectory toward these goals is shown in the following chart:

Management indicated that while the market remains challenging, they are focusing on profitability through operational efficiency and strategic positioning in high-value segments. The company’s strong cash position provides flexibility to navigate current market conditions while investing in growth opportunities aligned with its strategic focus areas.

Full presentation:

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