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Introduction & Market Context
Proact IT Group AB (STO:PACT), a European data management and cloud services provider, presented its Q2 2025 interim results on July 14, 2025, revealing a 7.2% year-over-year revenue decline amid mixed regional performance. The company, which serves approximately 4,000 customers across Europe with around 1,200 employees, continues to navigate challenging market conditions while positioning itself in high-growth areas like AI infrastructure and cybersecurity.
Founded in 1994 and listed on Nasdaq Stockholm, Proact has built its business around four key service areas: Systems (56% of revenue), Support Services (23%), Managed Cloud Services (13%), and Consulting Services (8%). The company’s stock is currently trading near its 52-week low at SEK 103.40, down 3.68% on the day of the presentation.
As shown in the following overview of Proact’s business and geographical footprint:
Quarterly Performance Highlights
For Q2 2025, Proact reported revenue of SEK 1,171.8 million, representing a 7.2% decrease compared to the same period last year. Adjusted EBITA came in at SEK 76.0 million with a margin of 6.5%, while earnings per share reached SEK 0.89. The company’s recurring revenue amounted to SEK 430.3 million, now constituting 36% of total revenue.
Key highlights from the quarter included the launch of a new Swedish AI service, initiation of a group-wide action program, being named Enterprise Partner of the Year by NetApp (NASDAQ:NTAP), and the implementation of a share buy-back program with the cancellation of 300,000 shares.
The following slide summarizes these quarterly highlights:
A deeper analysis of the revenue decline reveals significant regional disparities. The 7.9% overall revenue decrease was primarily attributed to weak performance in the West and Central business units, despite solid development in Nordic & Baltics and UK regions.
The following chart breaks down the revenue decline by business unit:
Regional Performance Analysis
Proact’s regional performance showed a stark contrast between its northern and central European operations. The Nordic & Baltics business unit, which represents the company’s largest market, delivered a 3.6% revenue increase to SEK 672.4 million and a 16.3% growth in adjusted EBITA to SEK 67.2 million.
Similarly, the UK business unit demonstrated strong performance with an 18.7% revenue increase to SEK 211.6 million, driven by robust systems and services business, with positive contributions from the BlakYaks acquisition.
As illustrated in the Nordic & Baltics performance:
In contrast, the West business unit (covering Benelux countries) experienced a 14.4% revenue decrease to SEK 175.5 million, resulting in a negative adjusted EBITA of SEK -2.8 million. This decline was attributed to lower service volumes and continued customer churn in cloud services.
The Central business unit (covering Germany and Czech Republic) faced the most significant challenges, with revenue plummeting 45.2% to SEK 145.5 million and adjusted EBITA falling to SEK -3.4 million. Management attributed this decline to an exceptionally strong comparison period, lower system sales, and soft service demand.
Strategic Initiatives
Despite the challenging quarter, Proact continues to position itself in high-growth market segments. The company highlighted several attractive growth trends, particularly in cybersecurity and AI infrastructure. According to the presentation, global data is forecasted to reach 221,178 Exabytes in 2026, representing an 80% increase from 2021 levels.
The cybersecurity market is expected to reach SEK 2,933 billion by 2028, growing at 11% from 2024, while AI and GenAI revenue is projected to grow at 40% annually from 2022 to 2032.
The following chart illustrates these market growth trends:
Proact’s service portfolio spans multiple technology areas, with particular focus on data protection, backup & recovery, cybersecurity, AI infrastructure, and cloud-native services. The company offers these services through various delivery models, including on-premises, private cloud, and public cloud infrastructure.
The company’s recurring revenue has grown at an 8.3% CAGR since 2020, now representing 36% of total revenue, up from 32% in 2020. However, annualized recurring revenue (ARR) decreased by 2.8% in reported numbers during the most recent quarter.
The following chart shows the recurring revenue development:
Detailed Financial Analysis
The adjusted EBITA decline of 21.3% year-over-year was primarily attributed to lower revenue and a reduction in gross margin. The following chart breaks down the EBITA performance by business unit:
Proact’s net cash position decreased significantly from SEK 330 million in December 2024 to SEK 100 million by the end of Q2 2025. This reduction was driven by various factors including operational performance, dividend payments, and the share buy-back program.
Forward-Looking Statements
Despite current challenges, Proact maintains ambitious long-term financial targets, including:
- Sales growth per annum of 10%
- Adjusted EBITA margin of 8%
- Net debt / EBITDA ratio of less than 2X
- Return on capital employed of 20%
- Dividends as a share of profit after tax of 25-35%
These targets are illustrated in the following slide:
The company’s strategic outlook emphasizes a clear strategy focused on independent cloud and AI solutions, with plans to replicate its Nordic success model across other regions. Management highlighted the importance of focusing on business value and driving long-term growth through strategic investments.
However, there appears to be some disconnect between these ambitious targets and current performance. While the presentation maintains a 10% sales growth target, the earnings call transcript mentioned a more modest 5% organic growth target. Similarly, the current adjusted EBITA margin of 6.5% falls below the long-term target of 8%.
As Proact navigates these challenges, the company’s focus on high-growth areas like AI and cybersecurity, combined with its group-wide action program, will be critical in determining whether it can return to growth and achieve its long-term financial objectives.
Full presentation:
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