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Introduction & Market Context
Exsitec Holding AB (STO:EXS) shares climbed 7.73% to 118.5 on April 23, 2025, following the company’s Q1 2025 earnings presentation, despite missing analyst expectations on both EPS and revenue. The Nordic IT solutions provider reported its "best result in a quarter" with significant improvements across key performance metrics, particularly in recurring software revenue and regional operations.
The positive market reaction came despite Exsitec posting an EPS of $0.95, well below the forecasted $1.42, and revenue of 226.81 million SEK against projections of 233.5 million SEK. Investors appeared to focus more on the company’s strong growth trajectory and operational improvements than on the earnings miss.
Quarterly Performance Highlights
Exsitec’s presentation highlighted four key achievements for Q1 2025: best quarterly result in company history, return to organic growth, improvement in Norway and other Nordic markets, and continued growth in order intake.
Net sales increased by 13% year-over-year to 240 million SEK in Q1 2025, compared to 213 million SEK in Q1 2024. This growth contributed to a Last Twelve Months (LTM) net sales figure of 839 million SEK, representing a 3% increase from 2024.
As shown in the following chart of quarterly net sales performance:
Similarly, adjusted EBITA grew by 13% year-over-year to 46 million SEK in Q1 2025, up from 40 million SEK in Q1 2024. The LTM adjusted EBITA reached 126 million SEK, a 4% increase from 2024.
The company’s profitability metrics are illustrated in this adjusted EBITA chart:
Perhaps most impressive was the 32% year-over-year growth in recurring net revenue from software, which reached 198 million SEK on an LTM basis. This steady increase in recurring revenue provides Exsitec with greater stability and predictability in its business model.
The consistent upward trend in recurring software revenue is shown here:
Business Model & Market Position
Exsitec positions itself as a provider of smart IT solutions across the Nordic region, with a business model built on three key components: software reselling, support and services, and a diverse target market of medium-sized businesses.
The company’s revenue streams are distributed across three main categories: Software (ETR:SOWGn) (23%), Services (65%), and Support/Infrastructure (12%). This breakdown illustrates Exsitec’s heavy emphasis on service delivery while building a growing base of recurring software revenue.
The revenue distribution is visualized in the following chart:
Exsitec continues to expand its workforce, reaching 839 employees in Q1 2025, up from 811 in 2024. This represents a continuation of the company’s steady growth in human resources over the past decade.
The company serves approximately 5,500 customers across various industries including healthcare, retail, public sector, technology, transportation, food industry, consultancy services, and manufacturing. This diverse customer base helps insulate Exsitec from sector-specific downturns.
The breadth of Exsitec’s client portfolio is demonstrated in this customer overview:
Regional Performance
Exsitec’s performance varied across its Nordic operations. Sweden, which accounts for the largest portion of the business with 567 million SEK in LTM net sales, delivered an adjusted EBITA of 102 million SEK. Norway showed improvement with 203 million SEK in LTM net sales and 17 million SEK in adjusted EBITA. Denmark and Finland contributed 72 million SEK in LTM net sales and 11 million SEK in adjusted EBITA.
During the earnings call, management specifically addressed margin challenges in Sweden, where utilization rates were down by 3-4%, while highlighting the improvements in Norway that aligned with the presentation’s claims.
Market Conditions & Forward Strategy
Exsitec characterized current market conditions as challenging, with customer sentiment described as "still passive" and sales cycles remaining longer than historical norms. However, the company noted a "great increase in leads" and reported that order intake was up 15% compared to Q1 last year, with strong sales at the beginning of Q2.
The market conditions assessment is summarized in this slide:
Looking ahead, Exsitec outlined three business priorities for 2025: sales execution, operational excellence, and integrating acquired companies while pursuing selective M&A opportunities.
The company’s business priorities are clearly presented here:
Exsitec maintained its long-term financial goals, which include increasing net sales by at least 15% per year, growing adjusted EBITA per share by at least 15% annually, keeping net debt below 2 times EBITDA, and distributing 20-40% of profit after tax as dividends.
Analyst Perspectives
Despite the earnings miss, analysts maintain a strong buy consensus on Exsitec, according to the earnings call transcript. InvestingPro analysis suggests the company appears undervalued at current levels, with significant upside potential projected.
The market’s positive reaction to the presentation despite the earnings miss indicates investor confidence in Exsitec’s long-term strategy and growth potential. The company’s focus on recurring revenue growth and regional expansion appears to be resonating with investors, even as it navigates challenging market conditions and longer sales cycles.
CEO Niklas Ek emphasized during the earnings call that the company remains confident in the relevance of its systems and solutions, despite the currently passive nature of existing customers. This confidence, combined with the 15% increase in order intake and strong start to Q2, suggests potential for accelerated growth in upcoming quarters.
Full presentation:
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