Earnings call transcript: Columbus Q3 2025 revenue beats expectations

Columbus A/S reported its Q3 2025 earnings, revealing a revenue of 392 million DKK, surpassing the forecast of 388 million DKK by 1.03%. Despite a year-over-year revenue decline of 7%, the company's stock rose by 1.89% to 9.68 DKK. The market responded positively to Columbus's focus on AI implementation and the M3 division's growth, although challenges remain with declining EBITDA and operational efficiency.

Key Takeaways

• Columbus exceeded revenue expectations with a 1.03% surprise.
• The stock price rose by 1.89% following the earnings announcement.
• AI implementation and M3 division growth are key strategic focuses.
• EBITDA and operational efficiency remain areas of concern.

Company Performance

Columbus experienced a mixed performance in Q3 2025. While the company managed to exceed revenue forecasts, it faced a 7% decline in revenue compared to the previous year. The EBITDA also saw an 18% decline, highlighting profitability challenges. Despite these setbacks, the company is investing heavily in AI and data, aiming to drive future growth.

Financial Highlights

• Revenue: 392 million DKK, down 7% year-over-year.
• EBITDA: Declined by 18%.
• Contribution margin: Stable at 23%.

Earnings vs. Forecast

Columbus reported a revenue of 392 million DKK against a forecast of 388 million DKK, resulting in a 1.03% positive surprise. This modest beat is significant given the challenging market conditions the company faces.

Market Reaction

Following the earnings announcement, Columbus's stock price increased by 1.89%, closing at 9.68 DKK. This positive movement reflects investor optimism about the company's revenue performance and strategic focus on AI, despite broader market challenges.

Outlook & Guidance

Columbus expects full-year revenue to be around 1.7 billion DKK, with an EBITDA margin projected between 7-9%. The company is focusing on AI implementation and anticipates market recovery, particularly in Sweden, while acknowledging challenges in Denmark and Norway.

Executive Commentary

CEO Søren Krogh emphasized the company's strategic direction, stating, "We do not stray all the time. We do not panic. We know what we are doing. We build for tomorrow." CFO Brian Iversen noted the adoption challenges, saying, "The main slowdown at the moment is not lack of innovation from Microsoft or others. The main slowdown is adoption."

Risks and Challenges

• Declining EBITDA and operational efficiency pose profitability risks.
• Market conditions remain challenging in Denmark and Norway.
• Adoption of AI technology is limited by implementation complexity.

Q&A

During the earnings call, analysts questioned the company's pipeline and AI adoption. Columbus highlighted promising opportunities in the pipeline but acknowledged the complexity of AI implementation as a barrier to faster adoption. The M3 division's turnaround was attributed to improved collaboration with Infor and a customer-centric approach.

Full transcript - Columbus A/S (COLUM) Q3 2025:

Mikael, Moderator/Host: You might have seen here on the front page, the financial results for your Q3 2025 is in focus. Did not look like much market recovery in the results, but I think I read between the lines a little bit of optimism about the coming quarter, so maybe we will get into that. To help us through today's presentation, we are joined by CEO and President Søren Krogh and CFO Brian Iversen. As always, very welcome to ask questions in the box down below. Do it in Danish, do it in English, and if in Danish, I will try and translate to the best of my ability, but we will take the primarily Q&A session at the end of the presentation. For now, I will hand the call over to you, Søren.

Søren Krogh, CEO and President, Columbus: Thank you very much, Mikael, and good afternoon or good morning to everybody, depending on where you're sitting. Yeah, as Mikael was just saying, I'll take you through the Q3 results and some year-to-date results for the first three quarters of 2025. I'll start with a brief run-through of the financial and some operational highlights. I've prepared a few, I would say, use case, customer case examples to explain some of the things we're, we are working on for customers. Then, Brian will take over, go into more financial details, run-through, and then we'll have the outlook presented by Brian and finally the Q&A session. Just give you a oops.

Technical Support/Unidentified: It's right at the.

Søren Krogh, CEO and President, Columbus: Yes.

Technical Support/Unidentified: Perfect.

Søren Krogh, CEO and President, Columbus: Yeah, I got it here. So, the quick disclaimer for you to run through about the forward-looking statements. And then I have a little bit of an issue with these slides. All right. I think we're there, right? Okay, our revenue in Q3 of 2025 declined by 7%. Market conditions in Denmark and Norway, primarily, remain challenging, but we're starting to see some interesting signs of recovery in the key market of Sweden, which is our largest market. Brian will show you these numbers in detail. You'll be able to see that the decline that we see for the year-to-date figures is bigger than the last quarter, and we've seen that. Basically, we're approaching a steady state, and hopefully, that will take us into the positive territory of renewed growth as we saw a couple of years ago.

Our EBITDA declined by 18% when you adjust for other operational income and expenses. Those we will get back to, but that's mainly related to a capacity adjustment we've taken in this quarter, and where we've made an accrual to offset that. Overall, these weaker results are mainly a result of a lower operational efficiency than what we're normally operating at. That's simply the bill-out rate of all our consultants is a little bit lower, and I'll show you those numbers in detail. On the other hand, our contribution margin ended at 23%, which is approximately the same level, actually, as last year. That's again when you adjust for this extra, extraordinary redundancy provision of 11 million.

This tells you something about the contracts that we engage in and we operate and that we deliver on. We have maintained our contract efficiency, the quality. We have no additional free work or guarantee work, so that is not the issue for us. We need to aim for a higher top line. That is the main story we are telling. On a positive note, the M3 business division, our second largest division, where we have developed a lot over the past few years, we continue that positive journey, 8% growth in the quarter. We can see a pretty stark pickup in the contribution margin, so we are not in an investment phase. We are actually starting to see them have a positive contribution. They are nowhere near where they will end up being.

I think they should be compared to where Dynamics is when that's running high. It's a little bit smaller, but it's still large enough to operate broadly at the same metrics, and we will follow them through next year, see efficiency go even a little bit higher and the contribution margin going up further. This arrow clicking is, I'm having a little bit of an issue here, but I hope all right. A few operational highlights. As I said, we're still seeing this caution in the market, although I will say that it's starting to ease up a bit. We simply have more to bid for than we have had for a long time, which means that we bid for very large projects for very large customers.

The selling process has always been long, but in these years, particularly 2025, but also 2024, they've been longer than ever, more than twice as long as what we're used to seeing. Currently, as you can see in my last point there, November has the largest number of contra RFPs, proposals that are reaching decision points. There's no guarantee for winning, but there's something to play for. We're very, very pleased with that. It is the first sign of recovery, basically that customers make decisions, and then it's up to us to win. As you see again in the top point there, even in this difficult time where we've had less to bid for, we have been able to maintain our win rate when we bid for new projects. We track that very meticulously.

How many things do we bid for and what is the win rate we have? We do not publicize that, but we know exactly what it is, and we track it closely. I would like to say that some people think that should be as high as possible. That is not the case. There are different philosophies, but if you basically win 100% of what you bid for, you should have bid for more. On the other hand, if you only have 10%, it is definitely too low. I am not going to say much more about my philosophy about where I want to be, you know, in terms of developing the business. Customer closeness. There are many of our competitors that try new customer segments, new industry verticals, because of this lack of demand that we are seeing.

We do not believe that. We know the customer segments. We stick to the strategy. We have our four verticals. We know the customers appreciate us. We know that they still have digital ambitions. We just need to work through this with them. Our strategy is very much to keep developing these big implementation strategies with them. Some are six months postponed, some even 12. We know that they will eventually revert to their digital ambition, and we will then develop on that. On the right side, efficiency. This shows you the problem in a nutshell. Q1, Q2, operating at 62% and 63%. We then see the last quarter of Q3 falling to 58%. There is the problem. We have shown you the actuals for October, which is the first month, obviously, of Q4.

There we've already seen 61%, so a 3 percentage point increase, which is good, but it's nowhere near enough to deliver the improvements we want to see going into next year. Then we have an additional 2.5%, which is from this capacity adjustment exercise. We don't benefit from that yet because those 89 employees that we have to exit are still on our salary books, and we maintain, we show them as part of our efficiency until they exit our salary books. That will, depending on which country and how long the run-off period is, start to benefit us in December, and then we have the true effect as of January 1. We've also made other organizational adjustments.

It's important for me to say that whilst we've had to make this drawdown of 89, we are not in a situation where we have a hiring freeze or anything like that. We keep developing our organization. We've hired quite heavily into new data and AI areas. We have some geographies, as you will see in the U.K. and the U.S., that are still moving forward. We're not sort of in a situation where we're just reducing everywhere, but the adjustment was 89 that we had to do across those harder hit units. Final point here is a temperature check on the workforce, which is quite positive for us. We, you know, we started the year with this strategic review, which does trigger some questions amongst our employees.

We've had to do this capacity adjustment, but also, in general, very busy consultants are happy consultants, and we, we, so it has an effect on them when we work our way through a sluggish period. We're very pleased to see we've just carried out this brilliant survey, very deep, employee motivation and engagement survey, and it gives us actually still a very high score, way above the benchmark that we're up against, both for consulting and tech consulting. I think we've been able to, through communication, carefully explaining the strategy to our employees and, yeah, staying close to them. They remain highly engaged and have a big faith in what we're doing. I'll just take one of the questions that came in first.

Technical Support/Unidentified: Yeah.

Søren Krogh, CEO and President, Columbus: That said, how do you succeed with hiring these AI resources? I think this is one of them, you know, that this spreads from our employees to their colleagues in other companies where we hire from, that we, even though we go through a little bit of a difficult period, we have a strategy. We do not stray all the time. We do not panic. We know what we are doing. We build for tomorrow, and they like that message. I think the other one, and just so that we have answered that question fully, is the technology partners that we work with.

It's important to them that we have a set of partners that are considered amongst, because those are, they are the developers, the core platform developers, Microsoft, Infor, but also a range of other smaller ones that are seen as the ones that are front-runners. If you work with Columbus, you get to work on the platforms that are platforms of tomorrow. Finally, who are the customers that we serve? We have the big ones, in interesting verticals that have an interest in investing in this because we have, I think, the most interesting, but I would say that, of course, because we mainly focus on these four sectors that have a lot of physical operations that you can optimize on. Moving on to the next one, talking a little bit about this AI lifecycle.

Let me try to bring this slide alive to you. I would like to start on the far right side and actually read it right to left. As you can see, we have the typical hype cycle. On the right side, we have those areas of AI that have already transitioned through the hype cycle left to right. You will all recognize the AI personal boost, whether you use, probably most of you will use ChatGPT, but it could also be other tools, Copilot, whatever. All of us benefiting already. I do not think there is anybody left that does not recognize the boost this gives you in terms of capacity. Horizon 2, going one more to the left, is the professional boost.

The main difference here is that you give the LLM access to not just web-based resources, but the company's internal repositories, which is a huge change. We have made it. Many others have made it, but by far not all companies have worked their way through that. It actually is quite complicated in terms of governance and security. That is just about to happen. It's happening as we speak. It's a no-brainer. Nothing in particular to say about that. Then we come to Horizon 3 and 4, which are very different in nature. Here, basically, 3 and 4 are about different true functional boost and eventually agentic boost, where you, in the H3, you have sort of semi-autonomous processes. You have very complex models where you build systems together. It may not do the full execution and decision-making yet.

In H4, you have then the full autonomous process where the agent takes over. I actually think that is at the peak of disillusionment right now. My message with this slide is we see from our customers right now impatience. Two years of marketing speak has led the boards to expect more than has currently been delivered. They feel that they have made the investments financially and time-wise from their organizations. They do recognize the potential of the technology. They do recognize the 5 and 10-year vision of it, but they want to see something now. We think now it is sort of a rubber meets the road moment where it is much more beneficial for us to present smaller use cases that we can make work within two, three months, and then we can scale from there.

That's where we're standing. I've brought two sort of short examples, which I will just briefly run through with you so we don't overrun. First one here is about managing an incentive program across a company, which is in many geographies, many different business units, has a lot of different variable payment plans for the employees. Those are linked to different financial metrics. They are governed by different local law in terms of employment law, etc., etc. It's very, very time-consuming to manage these plans. The solution has been basically developing an agent in Copilot Studio, drawing on this data, continuously refining it and making it more and more automated. Eventually, perhaps it can even become fully autonomous. What's the saving?

Huge amount of manpower from the salary department and other IT and finance departments that have to do this analysis. Learnings. First of all, overwhelmingly positive. It was possible. It creates this big benefit. Second one, perhaps not so positive. We talk a lot about, with the, about democratization of agentic, you know, basically saying any employee could develop an agent that could take over its work. Yeah, I can say for sure we're not there yet. It's fairly complex to develop this, so it requires, Brian, no offense, but you will not be doing this yourself anytime soon.

Technical Support/Unidentified: Okay.

Søren Krogh, CEO and President, Columbus: So, interesting learning there. Third one, hidden cost. Be careful. The agent communicates a lot. It draws a lot in the system. It triggers Azure consumption or whatever, AWS consumption, whatever. So it's data usage, and you're going to pay for that. If you set it up incorrectly, it's going to generate a lot of traffic, which we'll be paying for, and that will be offset against your use case. The final one, governance and validation. We have seen that if you set this up correctly, it will work very efficiently, providing the wrong answers. So, there's a great need for validation and security governance when you work on that. My final one, and then it's over to Brian, and a different example, very simple to understand.

A company customer still has a significant order inflow through emails, not always consistent format, which have been then manually retyped into systems, creating the order, and fairly simple to just create a Power Automate of this workflow, getting it in there. It's not autonomous yet. Could be. The fault rate is actually lower because there's no human typing interface, but we still have a human in control for the time being. The next step could then be to do it. As you'll see here also, we have a, the third point here on your right is that we set it up as multiple agents.

In terms of adjusting and revalidating, the system has some advantages, so that we do not have a too complex setup. We are developing this on a daily basis for many customers and working our way up in complexity and in scalability. I hope this gives a little bit of an example of some of these more mundane. I know that these do not knock your socks off. It is not curing cancer or anything, but this is where a lot of hours can be saved or throughput can be maximized by, I am not going to say 10x or anything like that, but you just generate a heck of a more throughput because this can work 24/7, does not take weekends and all of these things. It has some clear benefits. Over to you, Brian.

Mikael, Moderator/Host: Good. Thank you, Søren. I will just spend five, seven minutes to run through the financials as long as I'm still here and not an agent at the end of the day. Q3 business line revenue, as you can see from the page here, Dynamics, again, I tend to say, showing a decline compared to the same quarter last year. I think it's important here to stress, and that was also one of the questions. It is primarily due to hesitation and not that we are losing projects or losing pipeline, but it's simply, it's dragging and it's just taking longer time. That is what we're looking into at the moment.

Dynamics is also the business line where we had the biggest adjustment of the 89 FTEs that we unfortunately had to lay off. Secondly, I just comment on this page, M3, as Søren also mentioned, is back in a growth journey. I see strong uptake, especially in Sweden and US, mentioned some countries where they see a good uptake in new projects where they are extremely strong within bigger production corporations where the system M3, that is not known by that many, is extremely user-friendly and well-structured.

If we move to the, to the bottom line or what, how we measure the profitability of our business lines, what we call the contribution or contribution margin, Dynamics is down with 8 percentage points, and this is primarily due to, or a big chunk of that is linked to the, the dismissal and the provision for the, the people that we had to lay off. Else they would be around 25% in the quarter, still below, and it's not on the level that where we normally see it and would like it. On the other hand, M3 is moving upwards, and of course, when you have a growing turnover, you have a better efficiency and usage of your resources, and that does very fast. You'll be able to see that on the, on the bottom line. Digital commerce still on a too low level.

If you look at the percentages, but at least it's stabilizing, and we are, as we mentioned previous quarters, still turning this business line towards the level where we would like it. Data and AI, we continue to invest in this business line, and we do see a strong uptake, but that, of course, as is, it's a minor business line, it impacts the bottom line. If you have too many new people coming in that need to be trained and upskilled to be able to deliver for the future. Market units, revenue in Q3, as Søren mentioned, Sweden is starting to level out. It's not in the green yet, but roughly a flat development compared to the same quarter last year. Our two headaches are where we see the headwind is still Denmark and Norway as previous quarters.

That is something that we are working very hard on and also have some light at the end of the tunnel that I feel pretty comfortable about, but not there yet. Finally, maybe some of you would notice that the U.K. for the first time in four years has had a negative quarter, 7% adjusted for FX, which we do not use, but in the U.K. the pound did have a bit. It is around 4% down in the quarter. Not something that we expect will continue at all, but they also see some shift in major projects that sometimes can influence the quarterly revenue. Year to date, revenue on business line Dynamics down 7%, a bit less than in the quarter. They are trending a bit downwards at the moment.

Still, if our biggest business line is, let's say, feeling, having some headwind, it does impact the full company. Dynamics is still around 60% of our combined revenue. M3 starting to be in a plus again. They started the year with a negative growth, but now start to show good signs, as you're showing for Q3. A flat development year to date. Digital commerce also a flat, plus minus a bit. Then our data and AI is still on a growth path, although on a minor scale, but we are definitely investing in this business line as we see strong discussion and strong pipeline within the data and AI area. Contribution margin on a year to date basis, Dynamics down with 2% doesn't seem like much or 2 percentage points.

It is big numbers that need to be managed as a business line. Good to see that M3 is starting to get above the 20%, year to date, 22%, where we would like them to be. We always said they should be on the level of as Dynamics, and I feel comfortable they will slowly get there. Digital commerce, we mentioned it before, on the right journey back in on the bottom line as well. Data and AI affect the investments. One business line or area that we normally do not talk that much about is our other local business, which basically is our AEM, business enterprise information management, which is a business line that is not that big in revenue, but a very strong profitability and also growing globally.

big part of their bottom line is linked to revenue from product fee. I think it's worthwhile mentioning that we have a strong little, and that is said with a smile because they're basically bigger in bottom line definitely than data and AI, and almost like digital commerce when we look at the bottom line. Finally, market units year to date, Sweden still down, but trending towards flattening out, and we certainly expect them to start moving upwards again. It is our biggest market. They have also been in some serious headwind over there in the past year. Denmark, Norway, tough year, and that's also where we have adjusted some of our employees, especially in these two countries. U.K. still going strong with a 4% growth year to date.

We do expect the full year also to be in positive. US, although it's small in revenue at least, they're growing again after some years with a decline, and we actually see a strong uptake over there. It's a huge country, but we are very selective in the projects and the customer we have, and I think we see good traction there. That's all for the numbers. I will just take a last slide before questions, which is the outlook. We maintain our full year outlook as we announced on the 16th of July, where we adjusted a little bit. That means that the revenue will be at the level of last year, roughly DKK 1.7 billion. Last year it was DKK 1,659 million.

That is around the level we expect we will end this year as well. And then secondly, our EBITDA margin should land within the range of 7-9%. Good.

Søren Krogh, CEO and President, Columbus: Let's jump into some questions. We started, you have already answered why you can attract the AI people. I think Brian, you also alluded to you haven't lost projects. It's postponement. I think you answered that already. Then, question, not putting a number on it, but how big is the pipeline compared to previous years? I don't know whether you want to go into those details.

Mikael, Moderator/Host: I don't.

Søren Krogh, CEO and President, Columbus: It's not a number we're after, but a feel on.

Mikael, Moderator/Host: Going into details. I'll just say a few words about why we've brought this up because we had some serious discussions, Brian and me, about whether we should say this because, you know, it is forward looking clearly to talk about a pipeline. There in Columbus, we always maintain a pipeline, as you can imagine, supported by a CRM system. We track it. It has hundreds and hundreds of opportunities that we're working on. When they have a certain size, it has an interest, direct interest for me also in terms of being part of presentations. It is this deal board, as we call it, which we see has something extra in November.

It's simply the number that reached the level where I'm interested, and then the concentration around November, which we find interesting. I cannot say, we don't disclose sort of how much our pipeline is because then we will have to prepare against that. The interesting thing here is, of course, for you to ask, are you absolutely sure that they will be decided in November? Because that's the first thing, because otherwise, you know, you can't win or lose. I can say that we can never guarantee it, but one has already been decided. Some we are quite sure that we will see some decisions. If they slip, it's going to be into early December. Some simply for technical reasons that we can't go into have to be decided now.

And, then obviously, do we win, you know, because we're not always alone. That will be interesting to follow. We will look for ways to keep you as updated as possible as this is going forward. The third thing that you should also be aware of is that when we win, it's not a binary thing where we can then switch on the electricity the next day. It's a question of, you know, we roll on an initial team, which is typically a little bit smaller than the full production team or construct team that will enter later. So there's a ramp up for the very large projects, which we need to go through. Some of them we are going through. Yes, I think that's the closest we can go.

Søren Krogh, CEO and President, Columbus: Yeah. And then nextly, you know, capacity adjustments, potential high win rate. We are not taking it into the books. How are you balancing this, if you understand what I mean? And is that because you have a longer ramp up, that you are comfortable, even if I should achieve some wins and my efficiency are down here, that I can absorb a high win rate if that should happen? I'm not saying, you know, I'm not trying to give you any unlock, but,

Mikael, Moderator/Host: Yeah, so obviously we need to balance our belief in the future, but also, I mean, as you saw, we had 58% in Q3. That's unacceptable. You know, even with belief, we need to take action on that. On the other hand, if we have some belief, we're not going to, there was a question here, which we might as well include, you know, what's a good level, right? And Brian and I like to be operating somewhere between 65% and 70%. Then we're really having fun. You know, you could cut to that depth, but then we wouldn't have any growth potential left. Essentially then we wouldn't have any belief in improvement, right? As you could see here, we see the month of October going up to 61%.

We have 2.5% from this, already conducted capacity adjustment. That takes us somewhere. Then we're going to have to see an uptake in the market. That's the balance we're trying to strike.

Søren Krogh, CEO and President, Columbus: Check. And then the final question, is Microsoft releasing some AI solutions that could boost your growth in the coming years? I guess you know their product growth map. Is there any help from the partner side, if I may, if I could express it so that when they release it, everybody gets interested and you need to execute it or implement it. Anything there that we as investors should note a little bit about in the future, whether they come with some boost that could also help you?

Mikael, Moderator/Host: Yes. I think I can just say yes, that's very much the case. This is very much the driver of the pace of innovation. There are two things actually. Yes to this definitely, but it should also be said that there is already, without releasing any further, plenty to work on. The main slowdown at the moment is not lack of innovation from Microsoft or others. The main slowdown is adoption. It is actually companies like Columbus and the customers themselves that have to speed up the ability to absorb what's already there. We are not lacking innovation on the software platform side right now. We are lacking speed in terms of taking it on board. Of course, they go hand in hand. As always, this is not just from AI.

We've seen this in the past. You know, we focus a lot on new functionality, but then every customer has to ask themselves, how much of it are we really making use of before we ask for more functionality? I think that's a good question right now.

Søren Krogh, CEO and President, Columbus: A final question, is there some learnings to be made of M3, the turnaround there now getting back to business on the Dynamics business, or is it simply that something gets into trouble, you take action, and then you push it? Are there any learnings from the M3 division, getting better, or is that simply Swedish, US markets and so on? A broad question, any learnings that you could apply to the Dynamics division?

Mikael, Moderator/Host: I think certainly what's brought the success back for M3, and I'm not to say that our Dynamics people aren't pursuing that, so it's not directly comparable, but the success for M3 has been, I'm just going to focus shortly on three components here. First of all, we've improved the level and the depth of collaboration with the parent company Infor to a whole other level. Like, we are extremely strategic with them on all, including for myself and their CEO, product roadmaps, rollouts, what do they want from us, what can we take from them? That's been number one. Second one is extreme customer focus on quality, on just being seen as the number one safe choice. You know, when we work, we make things work.

Like you, because especially in the US, they sell a lot on referrals. We don't have the marketing engine that can allow us to become a household brand in the US. How we primarily sell there is like we do good on big projects. When we sell the next one, they ask, you, we don't know you, you're quite small here in the US, who can I talk to? We give them names of our reference customers. I think that's number two. Number three is, sort of adjacent to number two, just having a 100% customer focused organization. All the consultants out there, talking to previous customers, new customers, existing customers, networking and staying on top of everything. Not being an inward looking organization has been part of their success.

Søren Krogh, CEO and President, Columbus: Perfect. That was the last question. Thank you to you, Sean and Brian for taking us through your results and answering questions and giving a starting insight to where the AI are. I think everybody's very interested in that. I think everybody is also sitting with the feeling, not, and maybe not if you're an equity investor, but if you work in the business, that there is some despair about how far it has, how far it has already rolled out. Thank you to you both. Thank you for the listeners listening in. May everybody have a nice day and a weekend.

Mikael, Moderator/Host: Thank you. Thank you too.

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