Earnings call transcript: Risk Intelligence Q2 2025 sees revenue growth, stock dips

Risk Intelligence, a company known for its strategic insights in maritime, energy, insurance, and defense sectors, reported its financial results for the second quarter of 2025. While the company demonstrated a notable increase in revenue and a positive EBITDA, its stock experienced a decline of 10.9% following the report. According to InvestingPro data, the company’s last twelve months revenue reached $4.28M with a robust gross profit margin of 64%, though maintaining a challenging debt position with a debt-to-capital ratio of 0.48.

Key Takeaways

• Revenue for Q2 grew by 18%, with costs increasing by only 1%.
• Positive EBITDA reported for the second consecutive quarter.
• Stock price fell by 10.9% post-earnings, reaching a low of 0.95 DKK.
• Zero customer churn with a 9% growth in total annual recurring revenue.
• Guidance updated due to financial market uncertainty and exchange rate volatility.

Company Performance

Risk Intelligence showed strong performance in Q2 2025, with an 18% increase in recognized and invoiced revenue. The company managed to keep cost increases to a mere 1%, resulting in a positive EBITDA of 29,000 DKK, a significant improvement from the negative 900,000 DKK reported in the same quarter last year. InvestingPro analysis reveals the company maintains a 5-year revenue CAGR of 12%, though current financial health metrics indicate some challenges ahead. Get access to over 10 additional ProTips and comprehensive financial analysis with InvestingPro. Over the first six months of the year, Risk Intelligence achieved a 14% growth in recognized revenue and a 7% increase in invoiced revenue, while reducing costs by 3%.

Financial Highlights

• Revenue Growth: 18% in Q2, 14% over six months.
• EBITDA: 29,000 DKK in Q2, compared to -900,000 DKK last year.
• Six-Month EBITDA: 285,000 DKK, up from -1,900,000 DKK last year.
• Total AR Growth: 9%.

Outlook & Guidance

Risk Intelligence updated its net result guidance, expecting a negative result between 3.2 million and 4.2 million DKK. Despite the challenges posed by financial market uncertainties and exchange rate fluctuations, the company anticipates a positive cash flow. The guidance revision also reflects revenue timing adjustments and the deferment of a significant contract to Q1 2026.

Executive Commentary

• Hans, an executive at Risk Intelligence, emphasized the company’s strategic approach: "We will have different types of communication, different types of lead generation."
• Jens, another executive, highlighted the financial improvement: "We again can show a, however, small but positive EBITDA for the quarter."
• Hans also pointed out the company’s financial strategy: "We should aim for 15-20% spread between growth in revenue and growth in costs."

Risks and Challenges

• Financial Market Uncertainty: Ongoing volatility could impact future revenue and cost projections.
• Exchange Rate Volatility: Fluctuations may affect revenue recognition and profitability.
• Revenue Timing Adjustments: Delays in contract execution could impact short-term financial performance.
• Competitive Pressure: The need for specialized marketing and communication strategies to maintain market position.

Risk Intelligence’s focus on segment-specific marketing and communication strategies appears to be paying off with zero customer churn and strong revenue growth. However, the market’s reaction to the earnings call suggests that investors remain cautious amidst broader economic uncertainties. InvestingPro’s detailed analysis, including the company’s Fair Value assessment and comprehensive financial health score of 1.81 (FAIR), provides crucial insights for investors considering this stock. Access the full Pro Research Report, available for over 1,400 stocks, to make more informed investment decisions.

Full transcript - Risk Intelligence A/S (RISK) Q2 2025:

Anders, Moderator/Webcast Host: Good afternoon, and welcome to the Risk Intelligence Q2 twenty twenty five webcast. Risk Intelligence will begin with a presentation followed by a Q and A session. During the Q and A, the management team will address pre submitted questions and questions submitted live during the presentation. The Q and A is still open so that you can submit questions live during the presentation. With that, I will now hand over the call to Risk Intelligence to start the presentation.

Hans and Jens, your lines are now open.

Hans, Executive/Management, Risk Intelligence: Thank you very much, Anders, for the introduction to this presentation for our q two report, which, of course, also includes the first six months of the year. Over to you, Jens.

Jens, Executive/Management, Risk Intelligence: Yeah. Not much to add. Welcome.

Hans, Executive/Management, Risk Intelligence: The agenda today, very quickly something about the main activities in q two, highlights, and then Jens will go through the the the reports, and we will talk about outlook and the the change guidance. If we look at the main activities for q two, then we have spent quite some energy and focus on implementing our new commercial strategy with, five business segments, which have been mentioned before. Commercial maritime, that is the classic, traditional shipping, ship owners associations, flag states, and similar. Energy, which is both oil and gas and renewable energy with primarily the offshore wind farms. Then we have insurance and legal, and that is marine and war risk insurance in mainly in Scandinavia and in The UK.

And then government and defense, which are all our defense clients and other government agencies, as well as organizations working for and about infrastructure and similar projects, various countries. The last one, land based logistics, that’s where we have our land risk product, and that is a cargo owners as well as logistics companies. So that’s been the main focus in q two. Within these five different segments, we will have different, types of communication, different types of, lead generation, and therefore also different types of, marketing. Some of them have already produced improved pipelines, and it should be the result when we change our narrative to a narrative that is focused on the individual segment instead of having a general narrative for all different clients.

In this way, going forward, the energy client, operating offshore wind farms can, easily, find his or her, challenges being addressed and how we can assist them instead of having a general, explanation about our products on the web page. So that is a work in progress and something which has been, quite, well received, among our clients. Over to you Jens.

Jens, Executive/Management, Risk Intelligence: Yeah. Thank you. If we boil boil the the report down to a few slides, the things we would address is the the top line growth of 18% for the second quarter, both in in recognized revenue and invoiced revenue and compare that to the, cost side that only, increases 1%. So in terms of that, we again can show a, however, small but positive EBITDA for the quarter. So that’s the second quarter in a row where we actually deliver a positive EBITDA.

The 29,000 is, however, a million higher than than the negative 900 last year. Yeah. If we look at the at the the six month period, the well, it’s the same showing that we have a top line growth of the recognized revenue of 14%, modest increase in in invoice revenue of 7%, but, again, a decrease in in the cost compared to the six months in in 2024. 3% lower actually for the same period, which again gives us a a a positive EBITDA for the for the period of 285,000, which is 2,000,000 higher than the negative DKK 1,900,000.0 last year. So again, in our terms, very positive numbers both in growth and in the bottom line of the EBITDA.

If we look at the metrics, a quarter will will zero churn. Again, I can say that will not least that would be odd if it if it does. But but, again, that’s the facts. Growth of total AR of 9% and a NR of 114%, which has been impact, we can say, of the currency rate exchange of the US dollar. So it would have been high if the it has been dollar to dollars.

At the right side, you could just say the we have the trend of of the AR quarter by quarter. We look down to the to the revenue again. The first two, the the the left side of of the of the slide shows quarter by quarter, just the growth quarter by quarter. And on the right side, it’s it’s more to if we dedicate the the revenue into into our our system and and and advisory service, just to show that that advisory is have a smaller portion both in in the second quarter and in the half year that did at the same time last year. Yeah.

Over to you again, Hans.

Hans, Executive/Management, Risk Intelligence: Yeah. Thank you. One of the important items from this q q two report, which was also the case with the q one report, is that when you do have a positive EBITDA, then, the spread between growth in revenue and, the growth in cost, is a very important indicator, because it kind of outlines, the future. Obviously, we won’t have minus 3% growth in costs, going forward. And we should aim for, this between 1520% spread between growth and in in revenue and growth in costs going forward.

And then we can look at a at a better more improved EBITDA and ultimately profit going forward. We have changed the outlook for 2025, and that is mainly because of uncertainty in the financial markets and volatility in exchange rates. We do do some currency fixing on the larger amounts, but not on the smaller amounts. And we had that development from q one, Items that were invoiced in q one but paid in q two where we got the impact of the the the dollar, the decrease in the dollar currency rate. More also important is revenue timing when we do have recognized revenue, which is, of course, the basis for the EBITDA and result, as well as timing and recognition of of one particular contract that has been moved to q one twenty twenty six.

That change in by that in mind, we have kept the ARR growth guidance. We have kept the system system ARR, which, of course, a function of the growth rate. And then we have kept EBITDA positive, but we have changed zero in the net result to a negative amount between 3.2 and 4,200,000.0 Danish kroner and with a positive cash flow. So that’s the change of the guidance for for the year. That was all we had of highlights from the report.

I don’t know if there are any questions.

Anders, Moderator/Webcast Host: Thank you, Hans and Jens. As we have not received any questions, pre submitted all live questions, then we have no questions for the Q and A. So that actually finalizes the webcast for today. But before we end, I will just hand over the word if you have any final remarks to end with.

Hans, Executive/Management, Risk Intelligence: No, not really. I think we highlighted what we wanted to to focus on, and we hope to see you back on the q three report presentation.

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