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Introduction & Market Context
Proact IT Group AB (STO:PACT) presented its Q3 2025 results on October 24, revealing a 4.5% year-over-year revenue decline amid challenging market conditions in several European regions. Despite the revenue drop, investors responded positively, with the stock surging 9.71% to SEK 102.8, reflecting confidence in the company’s long-term strategy and stable margins.
The European IT services provider, which specializes in hybrid cloud solutions, data management, and cybersecurity, continues to operate in growing markets with significant tailwinds from digital transformation, AI adoption, and increasing cybersecurity concerns.
Quarterly Performance Highlights
Proact reported total revenue of SEK 1,083.5 million for Q3 2025, down 4.5% compared to the same period last year. The adjusted EBITA reached SEK 76.2 million, representing a 7.0% margin, which remained stable despite the revenue decline.
As shown in the following summary of key performance metrics:
A significant bright spot was the total contract value (TCV) for new cloud services, which amounted to SEK 248.4 million, demonstrating continued traction in Proact’s strategic focus areas. The company also highlighted its post-quarter achievements, including being awarded the Global Partner Innovation Award 2025 by NetApp and signing an agreement to acquire Danish company Consular.
The revenue decline can be attributed to specific regional challenges, as illustrated in this breakdown:
The decline was primarily driven by a tough comparison in the Nordic & Baltics region, which had a strong performance in Q3 2024, and challenging market conditions in the West and Central regions. This was partially offset by impressive 19% growth in the UK business unit.
Detailed Financial Analysis
Proact’s business model continues to evolve toward higher recurring revenue, which now represents 36% of total revenue with an 8.3% CAGR since 2020. The company’s service mix includes Systems (55%), Support Services (13%), Managed Cloud Services (23%), and Consulting Services (8%).
The following chart illustrates the development of recurring revenue:
The adjusted EBITA analysis reveals significant regional variations in performance:
While the Nordic & Baltics, West, and Central regions saw EBITA declines, the UK business unit delivered a remarkable 430% increase in adjusted EBITA to SEK 15.9 million, largely driven by the successful integration of the BlakYaks acquisition.
A deeper look at the UK performance shows the following positive trend:
In contrast, the West business unit faced significant challenges:
The company’s net cash position decreased from SEK 330 million in December 2024 to SEK -9 million by the end of Q3 2025, primarily due to M&A activities and share repurchases.
Strategic Initiatives
Proact continues to position itself as a leading European IT expert in the growing markets of hybrid cloud solutions, cybersecurity, and AI infrastructure. The company serves approximately 4,000 customers across Europe with around 1,200 employees.
The company’s comprehensive service offering addresses key market trends:
Proact’s strategy focuses on being a reliable, independent European partner with deep technical expertise and local understanding. The company offers a broad range of services to support customers throughout their cloud journey:
The acquisition strategy remains a key component of Proact’s growth plan, with the recent agreement to acquire Consular expected to strengthen its position in the Danish market. The previously acquired BlakYaks has already contributed positively to the UK business unit’s strong performance.
Forward-Looking Statements
Despite current challenges, Proact maintains ambitious long-term financial targets:
The company aims for 10% annual sales growth, an adjusted EBITA margin of 8%, and a return on capital employed of 20%. Management has implemented a cost efficiency program to strengthen profitability and is focusing on reversing negative trends in the West and Central regions.
In its outlook, Proact emphasized:
CEO Magnus Lönn highlighted that the company is operating in a time characterized by geopolitical unrest but remains confident in Proact’s model as a reliable, independent European partner. He noted the strong development in the Nordic & Baltic countries, the positive trend in the UK, and the commercial breakthrough for the AI initiative as reasons for optimism.
The company’s focus on high-growth areas like cybersecurity and AI infrastructure, combined with its stable recurring revenue base, positions it to navigate current market challenges while pursuing long-term growth opportunities. Investors appear to share this confidence, as evidenced by the stock’s strong performance following the earnings release, bringing it closer to its 52-week high of SEK 144.8.
Full presentation:
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