Earnings call transcript: Spir Group Q1 2025 sees 20% revenue growth

Spir Group ASA, a leader in Nordic real estate data and software, reported a 20% year-over-year increase in total revenues for the first quarter of 2025. Despite a negative net income of NOK 9 million, the company demonstrated significant growth in several key financial metrics. The stock price saw a slight decline of 0.63% following the earnings announcement. According to InvestingPro analysis, the stock appears slightly overvalued at current levels, with analysts setting price targets between $11 and $18.

Key Takeaways

• Total revenues increased by 20% year-over-year to NOK 316 million.
• Gross profit rose by 21% to NOK 194 million.
• Cash EBITDA more than doubled from the previous year to NOK 30 million.
• The company reported a negative net income of NOK 9 million, compared to NOK 6 million last year.
• Spir Group reduced its net interest-bearing debt by NOK 126 million.

Company Performance

Spir Group’s performance in Q1 2025 was marked by robust revenue growth and improved profitability metrics. The company capitalized on its strong position in the Nordic real estate market, which saw a 28% increase in properties for sale in Norway. Spir Group’s strategic focus on digital transformation and cloud solutions contributed to its revenue growth, with 87% of Sikri customers now using cloud-based services. InvestingPro data shows the company maintains a strong revenue CAGR of 43% over the past five years, though its overall financial health score currently stands at "WEAK" based on comprehensive analysis of multiple factors.

Financial Highlights

• Revenue: NOK 316 million, up 20% year-over-year.
• Annual recurring revenues: NOK 439 million, up 10%.
• Gross profit: NOK 194 million, increased 21%.
• Cash EBITDA: NOK 30 million, more than doubled from the previous year.
• Adjusted EBITDA: NOK 52 million, up 51%.
• Net income: Negative NOK 9 million, compared to negative NOK 6 million last year.

Outlook & Guidance

Spir Group’s outlook for 2025 remains positive, with expectations of steady growth in subscription-based revenues. The company plans to maintain its focus on cost control and margin optimization, with projected capital investments ranging from NOK 90 to 95 million. Spir Group anticipates continued growth in its software business, supported by strong demand for digital solutions in the real estate and public sectors. Wall Street analysts maintain a bullish stance, with a consensus "Buy" recommendation. Discover more detailed analysis and 12+ additional key metrics with a InvestingPro subscription, including exclusive ProTips and comprehensive financial health scores.

Executive Commentary

Perko Lundstrom, CEO of Spir Group, emphasized the company’s ambition to become a "lighthouse for real estate data and software in the Nordics." He highlighted the evolution of Spir Group from a collection of niche companies to a unified platform serving real estate actors. Lundstrom also noted the growing demand for secure and efficient IT solutions across Spir Group’s business segments.

Risks and Challenges

• Market Conditions: Fluctuations in the real estate market could impact revenue growth.
• Economic Environment: Broader economic pressures in Europe may affect investment in digital solutions.
• Competition: The company faces competition from other technology providers in the real estate sector.
• Regulatory Changes: Changes in data privacy regulations could impact Spir Group’s operations.
• Cost Management: Maintaining cost control amidst growth initiatives remains a challenge.

The earnings call reflected Spir Group’s strong market position and strategic focus on digital transformation, setting a positive tone for the remainder of the year.

Full transcript - Spir Group ASA (SPIR) Q1 2025:

Perko Lundstrom, Chief Executive Officer, Spear Group: Good morning, and welcome to the presentation of the first quarter twenty twenty five results for Spear Group. My name is Perko Lundstrom. I am the Chief Executive Officer of Spear Group, and I’m happy to be here together with our CFO, Cecilia Heckenderby to present our results. Let’s kick off this presentation by looking at some of our key KPIs from the first quarter. Speer Group’s annual recurring revenues increased by 10% compared to last year and ended at NOK439 million at quarter end.

Total revenues reached NOK316 million in the quarter, up 20% from Q1 last year. Our business model has resulted in stable and high margins. Gross profit came in at NOK194 million, an increase of 21%, while cash EBITDA ended at NOK30 million in the quarter, more than doubling from Q1 last year. Overall, the first quarter has been a very positive start to the Air Force B Group, with strong progress across the portfolio. I’ll now leave the floor to Cecilia, who will give you some more details about our financial figures from the quarter.

Cecilia Heckenderby, Chief Financial Officer, Spear Group: Thank you, Perko, and good morning, everyone. I will take you through the financial results for the first quarter twenty twenty five, starting with the highlights for the quarter. We use Norwegian kroner as reporting currency. The first quarter was a strong quarter for Speed, with extraordinary high activity in the Norwegian real estate market and the Swedish real estate market in recovery, impacting Speed Group’s real estate business area, together with steady and predictable growth in the public administration business area. I am pleased to report yet another quarter of double digit revenue growth and improved profitability, as key KPIs like total revenues, gross profit, adjusted EBITDA and cash EBITDA all continued to improve.

Revenue increased by 20% to $316,000,000 in the quarter, driven by strong development in the real estate business area. The revenue increase is attributable to 16% organic growth and $10,000,000 in new revenue from EVARI, which is fully consolidated from September. We have steady growth in our SaaS revenues and annual recurring revenue had an increase of 10% to NOK439 million compared to one year earlier, including NOK16 million in annual recurring revenue from EVADI. Revenues in METRA is impacted negatively by the implementation of OpenData in Sweden from February, but has developed according to our estimates, with increased gross profit. Margins and profitability across the Group are increasing.

We had double digit EBITDA growth as adjusted EBITDA increased by 51% to $52,000,000 and the adjusted EBITDA margin increased from 13% to 17%. Cash EBITDA increased from $10,000,000 in 1Q ’twenty four to $30,000,000 in 1Q twenty twenty five. Net finance is impacted by reduced financial income. In 1Q last year, there was a gain on fair value of interest rate swaps of 7,000,000 while there was a loss of $1,000,000 in the first quarter this year. Finance expenses of $18,000,000 were at the same level as in first quarter twenty twenty four.

Operational profit of $7,000,000 is up from $1,000,000 in first quarter twenty twenty four, but net income in the quarter was minus $9,000,000 compared to minus $6,000,000 in first quarter twenty twenty four, impacted by lower financial income, higher level of depreciation and amortization, in addition to a non cash impairment loss of 4,000,000 related to the previously capitalized internal development costs that are derecognized and expensed following a reassessment by management. Let’s look into some more details in the revenue development. The 20% revenue growth in the quarter is driven by 24% growth in the real estate business area, including NOK10 million in new revenue from EVARI. Organic growth in the real estate business area is 19%. Both Ambita and Ivari are positively impacted by the extraordinary high activity in the Norwegian real estate market, with 28% more properties put out for sale than in 1Q24 and managed to take more than their share of the growth.

Bulimapa continues its steady growth, while revenue growth in METRA of 4% is negatively impacted by the implementation of our open data in Sweden from February, but with higher gross profit as data costs are lower. Within Public Administration, Sikri has steady revenue growth of 3% and growth in run rate annual recurring revenue of 8%. Total gross profit is 21% up and the gross margin is up one percentage point compared to last year to 62%. SpeedGrip delivers its offerings as subscriptions, transaction based data and software sales and consulting services. The subscription based revenues are primarily based on Software as a Service licenses to customers, characterized by long term contracts and low churn.

Subscription revenues are up 4% in the quarter, following steady development in annual recurring revenues across the companies, although negatively impacted by the implementation of Open Data in Sweden. Transaction based revenues is up 35% in the quarter, impacted by strong development in the real estate market in Norway and market recovery in Sweden. Revenue from consulting constitutes a small part of total revenue in Speedgroupe, but our consulting services is an important success factor for implementation and utilization of our data and solutions. We see increased operational profitability across the companies in the group, with all operating companies delivering solid growth in cash EBITDA. The increased focus the last year on strategy and measures to increase profitability is starting to show results and cash EBITDA is up from 10,000,000 in first quarter twenty twenty four to NOK30 million in 1Q ’twenty five.

Development in cash EBITDA in segment Other is impacted by new costs in SPEED Data, previously unveiled, mainly related to new initiatives to consolidate data and drive synergies and innovation across the real estate business area in the Group. These are some of the drivers for the quarter’s results. I will now dive into more detail in the key segments of SPIR Group. In the first quarter, total revenues in Ambita were up 29% to $140,000,000 A major part of the revenues correlate with the development in the Norwegian real estate market and number of properties put out for sale, which was up 28% in the quarter. Following the extraordinary high activity in the real estate market, transaction based revenues was up 32% to CHF126 million.

Annual recurring revenue at the March was steady at 43,000,000. Commencement of new homes is still at a low level but was up 31% in the first quarter, positively affecting Ambita’s sale of digital maps and digital real estate information. Gross profit in the first quarter of US55 million dollars is up 28% from 1Q twenty four. Adjusted EBITDA was US20 million dollars with adjusted EBITDA margin up from 12% in 1Q twenty four to 15%. Cash EBITDA of $17,000,000 is up from $10,000,000 in 1Q ’twenty four.

In the first quarter, revenues in BohliMappa were up 24% to $17,000,000 The wholly owned subsidiary Forecast Media that delivers content marketing was merged with Buolimapa in December 24 and the comparable number on this slide is restated to include 24 results for Forecast Media. Run rate annual recurring revenue from B2B was $55,000,000 which is up 12% from first quarter last year. Transaction based revenues, primarily from B2C products introduced late twenty twenty three, sold as monthly subscription, adds 3,000,000 to total revenue. It is positive to see that the profitability in Bulimapa is increasing. Adjusted EBITDA of $4,000,000 is up from minus $3,000,000 in first quarter last year, with adjusted EBITDA margin of 21%.

Cash EBITA has improved from minus 8,000,000 in first quarter last year to minus $2,000,000 in first quarter twenty five. In the quarter, total revenues in METRA were up 4% to CHF77 million, impacted by the implementation of Open Data in Sweden in February. With Open Data, a large part of data cost within GeoData disappears, impacting revenue negatively, but Meta’s aim is to further improve the company’s gross profit during 2025 and is positive to the possibilities that Open Data may create. The first two months after the implementation of Open Data have developed according to our estimates. Although subscription revenue is down 8% and annual recurring revenue of NOK109 million is down 5% following the implementation of Open Data, total gross profit in MEETRIA has increased by 12% to NOK50 million and the gross margin has increased from 60% in first quarter last year to 65% in first quarter this year.

Transaction based revenues in METRIA is highly correlated with the volumes of properties sold and sizes of mortgages taken out within banking and finance, and transaction based revenues has increased with 14% to CHF29 million following market recovery in the Swedish real estate market. There is a solid demand for METRA’s consulting services and consulting revenues were up 7% to 20,000,000 in the quarter. We are pleased to see increased profitability in METRA with adjusted EBITDA of $12,000,000 up 6% from first quarter last year and cash EBITDA of $8,000,000 doubling from $4,000,000 1 year earlier. EVARDI is a new segment in speed from September 24. New revenue from eVari impacts the first quarter with $10,000,000 and run rate annual recurring revenue with $16,000,000 eVari owns the software EVIT, which is Norway’s most used professional software for valuation engineers.

The software offers effective process support, data driven quality assurance and a variation of different valuation reports. It allows direct interaction and sharing of information between real estate agents and value your system for increased security and efficiency. In the first quarter, EVRD revenues amounted to $10,000,000 with 82% gross margin. Subscription revenue amounted to about $2,000,000 while transaction based revenues amounted to $7,000,000 Transaction revenues are related to revenue from condition reports and other valuation reports generated by more than 700 valuation companies in Norway. There was a 23% increase in reports in the first quarter compared to same period one year earlier, following high activity in the Norwegian real estate market.

Adjusted EBITDA in the quarter was $3,000,000 with 27% adjusted EBITDA margin. Cash EBITDA in the first quarter is $2,000,000 SiCRI continues its steady growth with $69,000,000 in revenues in the quarter, up 3% from first quarter twenty twenty four. Revenue from subscription sales increased by 7% to 53,000,000. Run rate annual recurring revenue increased by 8% to $215,000,000 at the end of the quarter. The growth in the annual recurring revenue is related to up selling and cross selling within existing customers, in addition to new customers.

Subscription revenue have grown at a steady pace during the last years, driven by a stable and high win rate and constitute in the first quarter ’70 ’7 percent of total revenues in About 87% of the customers in Seekri are now on cloud solution and the team works closely together with the remaining on premise customers towards a planned cloud migration. Consulting revenue is up 8% compared to first quarter twenty twenty four, mainly related to Easter effect. Following Sikle’s success with cloud migration of existing customers, there were fewer upgrade projects in the first quarter of twenty twenty five than one year earlier, and the focus is on converting on prem deliveries to annual recurring revenue. The gross margin is higher for subscription revenues than for consulting revenues, impacting gross profit positively and the gross profit increased by 9% to NOK64 million in the first quarter, with a gross margin of 93. Adjusted EBITDA in the quarter was up 25% to million, with 33% adjusted EBITDA margin and cash EBITDA was up 50% in the quarter to NOK14 million.

As an innovative software house, development of new functionality and new features on existing products to strengthen our market leading positions and expansion of the product portfolio, is vital for future growth. Total CapEx in the first quarter was $21,000,000 This is $2,000,000 lower than in first quarter twenty twenty four. We have an increased focus on return on investments and optimization of investments across the group. The planned range of CapEx for full year 2025 is 90,000,000 to $95,000,000 compared to $115,000,000 in 2024, when adjusting for full year effect of Anbalt and its subsidiaries. Free cash flow increased from $130,000,000 in first quarter twenty twenty four to $138,000,000 in first quarter twenty twenty five.

As illustrated on the left hand side, on this slide you can see that our free cash flow is impacted by seasonal fluctuations. First quarter is historically always a strong quarter in terms of free cash flow, as Sika invoices a large part of its customers in advance on a yearly basis in January. Moving on to the illustration on the right hand side, you can see that we generated million of operational cash flow in 1Q twenty five. Investment cash flow amounts to $22,000,000 in the quarter and consists mainly of capitalized development costs. Financing cash flow amounted to $92,000,000 and consisted of repayment of the credit facility and installment on borrowing, paid interest and payment for the principal element on leases.

In the first quarter twenty twenty four, there were non installments on borrowing as we changed from semi annual installments in April and November to quarterly installments from July. Speed Group’s cash balance at the March was $93,000,000 Our financial position as of March shows that assets to a large degree consist of intangible assets, whereof 1,200,000,000.0 is goodwill and the remainder is capitalized development costs, customer contracts and trademarks. Equity is close to 1,300,000,000.0, giving an equity ratio of 15%. Net interest bearing debt of $592,000,000, including lease liabilities of 69,000,000 at the March, is down 126,000,000 from the end of twenty twenty four. Reducing interest bearing debt has been and still is a priority for us.

In August 24, however, we increased debt by 80,000,000 to finance the strategic acquisition of the remaining shares in Anvault with subsidiaries and make it a fully owned company. Interest bearing debt at the March ’25 is down $29,000,000 to $6.00 $6,000,000 from one year earlier. We have two interest rate swaps at favorable terms of three point two four and three point two five, covering 67% of the interest bearing loans. The cash balance at the March was $93,000,000 In addition, Spear Group has a liquidity reserve of 100,000,000 Summing up the financial results, there are four key areas I would like to highlight. Firstly, double digit revenue growth in our real estate business area accelerate total revenue growth.

Secondly, the public administration business area continues to deliver steady and predictable growth, with increasing annual recurring revenue and long contracts. Thirdly, we have a continued focus on cost control across the group and I am pleased to see that the effects from cost initiatives have started to materialize and that profitability is increasing, evidenced by the increase in cash EBITDA across all the operating companies in the Group. Lastly, I would like to highlight that we continue to have a strategy of reducing net interest bearing debt and have strict focus on down payment on the borrowing. Now Per Hakon will comment on the business development in the quarter.

Perko Lundstrom, Chief Executive Officer, Spear Group: Thank you, Cecilia. It’s great to see continued progress and that the growth rate certainly has accelerated during the first quarter. Our ambition is to make SP Group the lighthouse for real estate data and software in The Nordics. We deliver powerful software and data solutions to key players across the real estate value chain. To real estate agents, payers and banks, we digitize property transactions by providing seamless access to data, software and advanced digital workflows.

To banks and financial institutions, we deliver high quality property data and tools that automate and accelerate loan processes. To property owners and contractors: We offer a digital platform to track and document renovations, ensuring compliance and better property management. To land developers, utility companies and public agencies: We provide geo information and tools for planning, maintaining and protecting land assets. With these solutions, we help our customers streamline critical workflows, reduce costs and drive value creation. We are evolving from a group of strong niche companies and see our unified connected platform for real estate actors, leveraging shared data, bundled solutions and deep customer insight across the whole group.

Our goal is clear: to be the go to partner for digital transformation of the real estate industry. Our public administration offering is provided by Sikri, supporting the public sector with insight, control and legalization of law regulated processes. Looking at the real estate business, the positive signs of the past few quarters have continued during the first quarter. In the quarter, all Spirit companies within this segment delivered solid revenue growth, driven by positive development in the transaction based real estate markets in Norway and Sweden. Ambita maintains a strong market position.

And in the quarter, Ambita launched together with our tech partner Prosper AE, an automated sales assignment generator. It is also encouraging to see that the commencement of new homes increased by 31% the first quarter, positively impacted Abita’s Eynemswittlichling business. EVARDI is a key component of SP Group’s real estate portfolio, enhancing its offering in property valuation and appraisal software. With eVardy, around 90,000 condition reports are generated annually throughout the EBIT solution, providing Spear Group’s real estate data with unique insights on the conditional on Norwegian homes. In Sweden, the introduction of open data under an AI directive is an important change for Metra.

While it removes much of the data cost in Jira data, it also reduced revenues. Still, METRA aims to improve gross profit in 2025 and sees potential opportunities from open data. BOLIMAPA continues to explore new revenue streams and partnerships to leverage scale and continue to grow the usage of its service by both homeowners, craftsmans and other industry partners. Then we looked at the public sector. Is increasing sales to new customers in addition to up sales to existing customers.

Siekri has long term contracts with low churn and a steady high win rate on public tenders. Most of the growth in the ARR is related to upsell and cross sell within existing customers. Stavanger municipality, a tender won in July, went live at the end of Q1, valuing SEK 300 a strategic partner, not just a system provider. Also in the quarter, SEK 100 tender for Indiego IKS with a three year contract worth NOK 8,700,000,000.0. Sikr submits offer on nearly all public tenders that align with its products and services and won 50% of the tenders submitted in this quarter.

The winning tender Indigo accounted for 82% of the TCV for this period. Now, let’s wrap up this presentation with an update on our outlook. As we have already entered the second quarter of twenty twenty five, our outlook remains positive. The demand for secure and efficient IT solutions is growing across our business. As customers seek to reduce costs by streamlining and digitalization their operations.

We expect our subscription based revenues to continue to grow steadily with low churn as they are primarily based on long term contracts. We also plan to optimize investments to enhance margins and cash flow and prioritize ROI with a projected capital investment range of MNOC 90 to 90 5 for 2025. Cost control continues to be the key focus areas as we need to adjust to the current market situation at all time. Overall, we have a very solid building blocks in place and expect continued growth in our software business for 2025. Before we conclude, I’m pleased to introduce Lina as Cecilia Stanset, who will step into the role of Interim CFO effective May 15.

Lina brings extensive experience from her time at Spear, most recently serving as group finance manager. She’s a proven talent and I look forward to working with her in this new capacity. With that, I would like to thank you all for watching this presentation and wish you all a great day.

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