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Introduction & Market Context
Know IT AB (STO:KNOW) presented its first quarter 2025 results on April 29, revealing a continued revenue decline but highlighting signs of stabilization in key business areas. The Nordic IT consulting firm’s stock closed at 144.8 SEK, down 0.97% on the day of the presentation.
The company operates in a challenging market environment where clients remain cautious with IT spending, particularly focusing on business-critical projects that support digital transformation. Despite the overall decline in financial metrics, management expressed confidence in the company’s gradual recovery path.
Quarterly Performance Highlights
Know IT reported a 9.8% year-over-year decrease in net sales to 1,593.6 million SEK for Q1 2025, compared to 1,766.3 million SEK in the same period last year. EBITA fell to 104.5 million SEK from 136.3 million SEK, with the EBITA margin decreasing to 6.6% from 7.7% in Q1 2024.
As shown in the following quarterly financial summary:
The company’s longer-term trend shows a consistent decline in both revenue and profitability over the past two years. The rolling 12-month revenue has decreased from 7,109 million SEK in Q1 2023 to 6,243 million SEK in Q1 2025, while rolling 12-month EBITA has fallen from 612 million SEK to 363 million SEK over the same period, as illustrated in this chart:
CEO Per Wallentin emphasized during the presentation that the company is seeing "gradually improved utilization" confirming a positive trend that began at the end of last year. This aligns with his statement in the earnings call where he noted, "We see a continued positive trend and stable delivery in our largest business area solutions."
Business Area Performance
Know IT’s business portfolio showed mixed performance across its four segments, with Solutions emerging as the strongest performer despite revenue contraction.
The Solutions business area, which represents the largest segment of Know IT’s operations, reported sales of 880.2 million SEK, down from 988.9 million SEK in Q1 2024. However, its EBITA margin improved to 9.1% from 8.4%, indicating better operational efficiency. The company highlighted that utilization rates in this segment have been improving for four consecutive quarters, contributing to the margin improvement despite lower revenue.
The Experience business area, which functions as a digital agency, saw its revenue decline to 286.1 million SEK from 335.2 million SEK, with EBITA margin dropping to 6.2% from 8.4%. Management noted that the trend in utilization rate has stabilized during the quarter, which they described as "a step in the right direction."
The Connectivity segment faced significant challenges, particularly due to decreased demand in the telecom sector. Revenue fell to 208.4 million SEK from 219.4 million SEK, while EBITA margin dropped substantially to 8.3% from 13.0% a year earlier.
The Insight business area, focused on management consulting, reported revenue of 227.9 million SEK compared to 234.8 million SEK in Q1 2024, with EBITA margin declining to 5.9% from 8.4%. The company noted continued strong demand in cyber security, defense, and ERP implementation services, contrasting with weak demand for traditional management consulting.
Client Segment Analysis
Know IT’s client segment distribution shows the company maintaining a strong position in the public sector while seeing improvements in retail and industrial segments. The following chart illustrates the company’s sales distribution across various client segments:
The public sector remains Know IT’s largest client segment, accounting for 38% of sales, unchanged from Q1 2024. Retail and service companies increased their share to 18% from 16%, while the industrial sector grew to 17% from 16%. The telecommunications sector showed the most significant decline, dropping to 5% from 7% a year earlier, reflecting the challenges mentioned in the Connectivity business area.
Management highlighted that clients across sectors remain focused on business-critical projects that support digital transformation, even in the current economic environment. The company noted a "general improvement in the retail sector" and "solid development in the industry sector," where it maintains a strong market position.
Financial Position
Despite the challenging operating environment, Know IT maintained a stable financial position with a healthy balance sheet. The company reported net debt of 625 million SEK at the end of Q1 2025, virtually unchanged from 624 million SEK at the end of 2024. The net debt to EBITDA ratio remained at 1.2, well within the company’s financial target of maximum 2x EBITDA.
The following table provides a detailed breakdown of Know IT’s debt structure and its evolution over recent quarters:
The company’s workforce reduction continued across all business areas, with total employee count decreasing by 337 compared to Q1 2024. This aligns with management’s focus on cost awareness and efficiency, as highlighted in their presentation.
Forward-Looking Statements
Looking ahead, Know IT management expressed cautious optimism about the company’s trajectory. The presentation emphasized a "continued recovery" that is creating confidence, with several key focus areas for future growth.
The company highlighted its strong position in growth segments such as cyber security and defense, which continue to show good demand despite overall market challenges. Management also pointed to their maintained focus on cost awareness and efficiency, combined with sales efforts to drive organic growth.
CFO Marie Bjorklund noted during the earnings call that "Our main challenge and also opportunity for growth and improved margins is our utilization." This suggests that improving consultant utilization rates remains a key priority for the company going forward.
Know IT expects salary increases of around 4% and remains cautious about large-scale recruitment, focusing instead on selective hiring in growth areas. While the company anticipates slight market improvements in 2025, it maintains a measured approach to expansion given the current economic climate.
In summary, while Know IT continues to face revenue and profitability challenges, the company sees signs of stabilization and is focusing on operational efficiency and strategic positioning in high-demand sectors to navigate the current market environment.
Full presentation:
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