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Introduction & Market Context
SmartCraft ASA (OSE:SMCRT) presented its Q2 2025 results on August 26, 2025, highlighting the company’s continued growth despite persistent challenges in the construction industry. The digital solutions provider, which serves over 13,800 construction companies across Norway, Sweden, Finland, and the UK, reported passing a significant milestone with Annual Recurring Revenue (ARR) exceeding NOK 500 million.
The company operates in a large total addressable market of NOK 50 billion with approximately 700,000 addressable construction companies. With current market penetration of mission-critical solutions at only 10-15%, SmartCraft sees substantial growth opportunities in the ongoing digitalization of what remains a digitally immature market.
As shown in the following market opportunity visualization:
Quarterly Performance Highlights
SmartCraft reported solid financial results for Q2 2025, with ARR reaching MNOK 505, representing a 9% year-over-year increase. The company achieved 7% organic ARR growth, an improvement of 1 percentage point quarter-over-quarter. Other key metrics included adjusted EBITDA-capex of 29.4% (+0.2 p.p YoY), cash flow of MNOK 29.7 (+20% YoY), and churn of 10.0% (+2.1 p.p YoY).
The following chart summarizes these key Q2 2025 metrics:
Total revenue for the quarter reached MNOK 140.6, up from MNOK 133.0 in Q2 2024. Notably, the recurring revenue percentage increased significantly to 95.5% in Q2 2025 compared to 89.6% in the same period last year, reflecting the company’s strategic focus on building a stable revenue base.
The company’s sales funnel showed positive momentum with 8% more new customers year-over-year, 22% more sales leads, and 45% more leads in the pipeline. Web traffic also increased by 21% compared to the previous year.
Detailed Financial Analysis
SmartCraft’s focus on recurring revenue has been a cornerstone of its business strategy, particularly important in navigating the current challenging market conditions. The company passed the milestone of NOK 500 million in ARR, with Sweden being the primary driver of growth.
The following chart illustrates the ARR development and bridge:
Despite the overall growth, SmartCraft continues to face headwinds from increased customer bankruptcies and downgrades. According to the presentation, bankruptcies have increased by approximately 4-5 percentage points in recent years, while downgrades from existing customers have reduced organic ARR growth by 5-8 percentage points compared to a normalized market situation. However, Q2 2025 showed positive signs with organic growth increasing while downgrades declined.
The company maintained strong profitability with adjusted EBITDA margins showing improvement. The adjusted EBITDA margin increased to 38.2% in Q2 2025, up from 34.7% in the previous quarter and 29.2% in Q2 2024.
As shown in the revenue and profitability charts:
Regional performance varied significantly. Sweden continued to show strong growth with high sales activity, despite elevated levels of churn and downgrades. Revenue in Sweden reached MNOK 69.4 in Q2 2025, up from MNOK 67.5 in Q2 2024, while adjusted EBITDA increased to MNOK 34.5 from MNOK 31.1, representing a 3.5 percentage point improvement in margin year-over-year.
Norway faced a more challenging market with lower revenue growth, partly affected by the relocation of a sales office. Revenue in Norway was MNOK 47.3 in Q2 2025, compared to MNOK 46.2 in Q2 2024, while EBITDA decreased to MNOK 18.9 from MNOK 21.4.
Finland showed some positive signals in a challenging market, with organic growth remaining positive despite a downgrade from a large customer. Revenue in Finland reached MNOK 12.7 in Q2 2025, slightly up from MNOK 12.5 in Q2 2024, though EBITDA decreased to MNOK 2.7 from MNOK 3.6.
SmartCraft maintained a solid financial position with strong cash flow to support its growth strategy and M&A activity. The balance sheet and operating cash flow are illustrated in the following chart:
Strategic Initiatives
SmartCraft launched two significant new business initiatives in Q2 2025. SmartCraft Spark was introduced in Norway and Sweden, showing strong traction with nearly 200 new paying customers. The company plans to add new, in-demand features later in 2025 to boost Average Revenue Per Customer (ARPC) and strengthen product value.
Additionally, BIM capability was launched in May 2025, achieving rapid adoption with 60 users and 20 customers within weeks. SmartCraft plans to add features in late 2025 to drive higher usage and conversion.
The Digimeter survey, released in June with responses from over 840 construction professionals across Norway, Sweden, and Finland, confirmed strong underlying demand for digital tools. Key findings included that 87% of respondents consider digital tools essential to their business, 30% plan to increase their investments in digital tools, and 6 out of 10 have experienced business improvements through digital tools.
Forward-Looking Statements
SmartCraft outlined several key focus areas to drive continued profitable growth. Having passed the 500 MNOK ARR milestone, the company aims to increase organic ARR growth through strong sales and marketing execution. While growth is temporarily dampened by higher churn, downgrades, and softer price increases year-over-year, the company maintains its medium-term organic growth target of 15-20%.
The following slide illustrates the company’s key focus areas:
SmartCraft’s solid financial position provides stability to invest in product development, efficiency, and readiness for market recovery. The company is also evaluating a potential change in listing venue from Oslo to Stockholm.
Trading at NOK 25.6 as of the presentation date, SmartCraft’s stock has declined 1.52% from its previous close of NOK 26.0. The stock is currently trading well below its 52-week high of NOK 35.0, reflecting the challenging market conditions in the construction industry.
Despite these challenges, SmartCraft remains committed to its strategy of building a solid company with reduced operational risk and consistent strong operational cash flow, positioning itself to capitalize on the ongoing digitalization trend in the construction industry when market conditions improve.
Full presentation:
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