Earnings call transcript: Exsitec Q3 2025 shows strong revenue growth

Exsitec has reported robust financial performance for the third quarter of 2025, with net sales growing by 16% year-over-year. The company’s stock responded positively, rising by 7.14% to trade near its 52-week high of $17.51. According to InvestingPro analysis, Exsitec currently appears slightly undervalued, with a "GOOD" Financial Health Score of 2.78. Despite a cautious investment environment, Exsitec’s focus on software and professional services continues to drive its success.

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Key Takeaways

• Net sales increased by 16% year-over-year.
• Adjusted EBITDA improved significantly to SEK 25 million, a 14% margin.
• Recurring revenue from software subscriptions grew by 25%.
• Stock price surged by 7.14%, nearing its 52-week high.

Company Performance

Exsitec demonstrated strong performance in Q3 2025, with net sales up by 16% compared to the same quarter last year. The company’s impressive 25% revenue CAGR over the past five years underscores its consistent growth trajectory. The focus on organic growth, which accounted for 6% of the increase, and diversified revenue streams have contributed to substantial financial gains. The improvement in adjusted EBITDA from SEK 6 million in Q3 2024 to SEK 25 million this quarter highlights the company’s operational efficiency, with a healthy gross profit margin of 28.9%.

Financial Highlights

• Revenue: SEK 217 million, a 25% increase year-over-year.
• Adjusted EBITDA: SEK 25 million, up from SEK 6 million in Q3 2024.
• EBITDA margin: 14%, compared to 4% last year.
• Organic growth: 6%.

Market Reaction

Exsitec’s stock rose by 7.14% following the earnings announcement, reflecting investor confidence in the company’s growth prospects. The stock is now trading close to its 52-week high of $17.51, signaling strong market performance. Analysts maintain a bullish outlook, with price targets ranging from $17.51 to $19.42. This upward movement contrasts with broader market trends, underscoring Exsitec’s favorable position within its sector. InvestingPro’s comprehensive analysis reveals the company maintains a moderate beta of 0.49, indicating lower volatility compared to the market.

Outlook & Guidance

Exsitec has set ambitious financial goals, aiming for at least 15% annual growth in net sales and EBITDA per share. The company plans to maintain its net debt at no more than twice its EBITDA and distribute 20-40% of after-tax profits. Despite a cautious customer investment environment, Exsitec is optimistic about continued lead generation and improved deal closure times.

Executive Commentary

CEO Niklas Ek emphasized the company’s commitment to integration and growth, stating, "We are Exsitec, making IT work together." CFO Carl Arnesson highlighted the strength of recurring revenue streams, noting, "Our recurring revenue from software continues to grow." Both executives remain confident in Exsitec’s strategic direction and market positioning.

Risks and Challenges

• Customer investment caution may impact future revenue growth.
• Macroeconomic pressures could affect market conditions.
• Dependence on successful integration of software components.
• Maintaining sustainable margins in competitive markets.
• Potential impact of workforce optimization on employee morale.

Q&A

During the earnings call, analysts inquired about the sustainability of margins in Norway, with management affirming the 15% margin as achievable. Questions also focused on the trainee program’s impact on EBITDA, which management described as minor. The company addressed concerns about employee turnover, noting a return to normal levels.

Full transcript - Exsitec Holding AB (EXS) Q3 2025:

Hampus Strandqvist, Moderator/Presenter, Exsitec: Hello everyone, and welcome to the Q3 presentation for Exsitec. Presenting today will be CEO Niklas Ek, CFO Carl Arnesson, and me, Hampus Strandqvist. If you have any questions, you can either use the raise hand function in Zoom or use the chat function. With that, I will leave the word to Niklas.

Niklas Ek, CEO, Exsitec: Thank you, Hampus. Hello everyone, this is Niklas Ek speaking. I am the CEO and have been that since March this year. I will start off by making a short recap about our business as a reminder of what we do. After that, we will cover Q3 financials and a short market update and also a recap of our priorities going forward. We are Exsitec, making IT work together, and we exist to deliver digital solutions that improve our customers’ businesses, and we aim to be a one-stop shop to the customer. We do this by selecting different software and develop in-house integrations that can be reused. By implementing different software and providing long-term support, we aim to be a single point of contact for our customers. The digital tools that we use can address areas like reducing financial administration through automation or use data for better decision making.

Our customer base today is around 5,500 organizations, and our target market is medium to large size companies in the Nordics. No one customer typically is more than around 1% of our revenue, so very low risk in the individual accounts. We combine the software packages we work with to fit different industries, and we have customers in many different industry sectors, as you see in the slide. These are the primary software providers and partners that we work with at this time. We are resellers of software, and the selection has grown to just over 20 software components. We combine these software with the integrations that we develop in-house, and we have revenue share partnerships with these software providers where we market and sell their software to new accounts and make customers successful in using the software over time. The business model is built on three revenue streams.

The sales and marketing is focused on selling software together with integrations. This is sold on a subscription model where you pay as you use. This revenue stream has grown to 24% of our net revenue. Just under two-thirds of our revenue is from professional services where we implement the software and make the customer successful in using the software over time. We also do custom development and custom integrations when needed. The third revenue stream in our business model is that we offer our customers a single point of contact support on a recurring fixed price model. In this engagement, we can also take care of infrastructure, internet access, and IT security and such things. Exsitec is a Nordic company that started out from Linköping, Sweden. Today, we are around 630 employees, with Sweden being the biggest segment.

We have been successful in the last 10 years with growth, both organic and from M&A. Our EBITDA has followed our growth nicely with an exception in 2024. Exsitec runs one of the largest trainee programs in the Nordics and has been doing that with scale since 2015. We are very proud of this, and almost 40% of the employees working at Exsitec started as trainees. Our trainee program is the main source for recruiting new people and an important addition for future growth. Here they are, the class of 2025. In the Nordics, we welcomed 60 new trainees in August. Let’s dive into specifics for Q3. I will start off with the highlights and then leave the word to Carl Arnesson, our CFO, for the financial details. Exsitec in Q3, I am really pleased with the results which demonstrate the stability of our business model.

We report an adjusted EBITDA of SEK 25 million with a margin of 14%. This is a real improvement compared to Q3 last year where we reported SEK 6 million in adjusted EBITDA and a 4% margin. The improvement comes from all segments, and we will get back to those details shortly. I am also pleased that all segments report organic growth at the same time this quarter. The main driver for our strong result is our recurring revenue from software. It continues to grow, reaching SEK 217 million on an LTM basis, which represents a 25% increase compared to the same period last year. Carl will get back to this shortly. The growth in recurring revenue comes from several areas: the acquisitions that we have completed, our strong new sales performance over the past years, and our continued focus on retaining and developing existing customers.

Q3 2025 performed better than the same quarter last year with a 10% increase in order intake. The third quarter is typically the weakest period for new sales due to the summer holiday season, and that was also the case this year. Nevertheless, the improvement compared to last year shows that our efforts to focus on sales execution are paying off. I leave the word to you, Carl. Thank you, Niklas. Hi everyone. Starting then with our net sales, we reported, as Niklas mentioned, 16% growth in Q3 versus Q3 2024, where the organic growth summarized to 6%. Following a stronger Swedish corner, we actually delivered slightly stronger locally in both Norway and Denmark. During the quarter, we saw stronger net sales performances in all our segments, both organically and through our acquired businesses that this quarter involved our businesses in Sweden and Denmark.

I will come back to the development per segment shortly. Our growth comes from all our revenue streams, where the professional services and software were the main ones. The growth in recurring revenues from software stands out also in this quarter. Still, the overall feeling is that our customers tend to push decisions for minor system updates and standard adjustments into the future, while new projects driven from our sales department are developing more positively. Also, looking at the trend the last nine months, we see a 12% growth year on year, where the majority comes from acquisitions. Moving over to our adjusted EBITDA, we report a SEK 25 million profit, which is a certain uplift versus the third quarter last year. As we mentioned earlier, Q3 2024 was a slightly weaker quarter for us, but the uplift is just not because of softer comps.

Main drivers behind the uplift in this quarter were the continuous growth in recurring revenues, relatively stronger professional services as well, but also by a solid cost control. However, as mentioned, we still feel that we can deliver even stronger performances almost across all our segments going forward. The efficiency in especially Sweden and Norway can be improved, and this is something that we continuously are working on. Year to date, we report an adjusted EBITDA that is 27% up versus last year. Let’s continue with the net recurring revenues from software that for the whole year and for a few years back has been a highlight for us. For the last 12 months, we see a growth of 25% year on year in this revenue stream that made up 24% of our total revenues last year.

The growth is driven both through M&A, new sales, and to a certain degree also from price increases. Overall, the organic growth in net recurring revenues from software summarized to approximately one-third of the growth for the LTM development, so two-thirds from acquisitions. This development is, of course, a very important contributor to our earnings, but it’s also a good indicator for us that we have a strong offering and customers are continuing to use and deploy the software that we deliver. Regarding our different segments then, starting with Sweden, Sweden delivers a 15% growth year on year in Q3, where the organic growth was 3% up. The adjusted EBITDA margin also developed positively and ended up at 12% versus 5% last year. Certainly a strong margin, also looking at if we compare to Q3 2023.

The higher margin year on year can mainly be explained by stronger recurring revenues, a higher efficiency, but also a lower cost base in general, I would say. We also have the trainee program that was slightly less extensive this year that contributed to the cost base as well. Sweden bears the majority of the cost for the trainee program. Norway reported a 4% growth in total net sales year on year, however, slightly affected by a weaker Norwegian krona. In local currency, the growth actually was 7%. It is also satisfying that we continue to increase our adjusted EBITDA and the margin in Q3 from 6% to 15% year on year, where an improvement in efficiency was the main driver behind the uplift. The margin of 15% is in fact an all-time high in Norway for a single quarter since we made the acquisition of Vitari back in 2021.

Even though we are happy with the improvement year on year in Q3 and year to date as well, we still feel that we have more opportunities going forward in Norway. Finally, our third segment, Other Nordics, that covers our offerings in Denmark and Finland, reported a very strong growth of 58% in the quarter, where approximately two-thirds of the growth was acquired compared to Q3 last year, and that was related to Denmark. Especially the professional services in Denmark continued to develop strongly also during this quarter in Denmark, and also Finland contributed to the improved margin for the total segment. We have been able to serve the customers that we acquired from ECIT in Denmark last year, also during Q3, and we see further potential also in the coming quarters for this.

Regarding the margin for Other Nordics, we still believe that it certainly should be higher than last year, but it also can vary a bit from quarter to quarter. Please bear that in mind. By that, I hand over to you again, Niklas. Thank you, Carl. I will continue with a short update on the market conditions and our priorities for 2025. Our existing customers remain somewhat cautious about investing further in their current solutions. We have seen this pattern over the past 18 to 24 months, and the trend has not yet shifted. On the other hand, we do not see any signs of increased churn, which clearly indicates that our customers continue to rely on and value our solutions. M&A is an important part of Exsitec, but so far in 2025, the timing has not been right for us.

If we compare to a year ago, we do see more activity when it comes to M&A, and as always, it needs to be a good match for both Exsitec and the selling part. Leads are up by 10% in the quarter compared to last year, which is a positive sign for our sales pipeline. One KPI I closely follow is the time it takes to close a deal from a qualified lead. In recent years, that cycle has been relatively long compared to historical levels. However, during 2025, we have seen a gradual improvement with deals closing faster. This is also a good sign for us, and we will continue to monitor if the trend continues. Our business priorities in 2025: strong sales execution is important for our continued growth.

We have great confidence in our sales force, which continues to deliver solid results in Q3, where the order intake was up 10% compared to Q3 last year. When it comes to our second priority, operational excellence, we still see room for improvement. We are continuously working to balance our workforce in line with the demand for our different offerings, which, for example, means that some consultants change areas to work with other offerings where we see a bigger demand. The beginning of the third quarter traditionally represents the most challenging period of the year for our professional services, but the trend has improved week by week towards the end of the quarter. The last priority for 2025 is focused on M&A and the integration of acquired companies.

About M&A, as mentioned, we see more activity than a year ago, and as always, we are in dialogue with companies to be able to make selective acquisitions when the timing is right. BrightCom Solutions AB, our largest acquisition in 2024, added Microsoft ERP to our offering, and we believe there is potential to scale the business further around Microsoft since we see strong and growing demand for our solutions and services. This is a reminder about our financial goals. We have a goal to increase our net sales by at least 15% per year over time, and our performance target is to increase our EBITDA per share by at least 15% per year over time as well.

Our stability measure is that our net debt must not exceed two times our EBITDA, and the last one is that our policy is to distribute 20% to 40% of the profit after tax. This concludes the presentation. Are there any questions for us, Hampus?

Yes, we have received a question. How much is the effect on EBITDA from a more downsized trainee program compared to last year?

I can take that. I would say it’s definitely a material amount in a number of million SEK, but it’s definitely not the majority of our improvement when it comes to our EBITDA improvement.

We have another question. Could you elaborate a bit on Norway’s margin? Is that sustainable or driven by some special effects? If it’s sustainable, what’s the major drivers for this structural change?

Yeah, it’s not special effects. I think it’s sustainable, and I’m pleased with the improvements in margin for Norway. I think that we can continue on that path going forward. There’s a couple of things that we have done with Norway over the past years, but the efficiency in our professional services is, of course, one of them. We do see still more room for improvement. I think Norway can perform even better in the future. It’s not a one-off this quarter, I think.

Good. We have another question, which is, we return to organic growth in Q3. Is this something that is going forward as well, or where are we at with the organic growth?

Yeah, I would very much like to have organic growth in the future as well, and I’m really pleased that we have organic growth from all the segments at the same time. We have not been spoiled with that for a while. I think that we can continue with organic growth if we can continue with strong order intake, and we can continue to do everything that we can to be really close to our customers and helping them with the everyday issues that they have with their IT solutions. I think we can continue with the organic growth for sure.

It seems that we don’t have any more questions. If there’s any question, yeah, okay, we got another one here. We had a question from Rasmus, who says, are personal retention still on very high levels, as you saw in the... Is the question about the personal churn rate? I think that’s... Is the personal churn rate on high levels as in the end of 2024? How is the personal churn rate?

The turnover, that turnover.

Yeah, yeah.

It’s pretty much been stable for around nine months now. It’s not higher, it’s not lower. It’s pretty stable levels. We did see in the end of Q2 in 2024, it dropped, and it was on lower levels. Since the start of 2025, it’s been pretty much on the same levels.

Yeah, more back to normal, is that what you said?

Yeah, more back to normal, you can say.

Okay, great. Now it seems that we have exhausted all the questions, and we thank you very much for listening, Nina, on Exsitec, and wish you a good day. Thank you.

Thank you.

Thank you.

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