Gofore Plc’s Interim Report January-September 2024: Q3 adjusted EBITA 11.2%, recruiting brought capacity to the year’s highest level

24.10.2024 08:32:45 EEST | Gofore Oyj | Interim report (Q1 and Q3)

Gofore Plc Interim Report 24 October 2024 at 8.30 a.m. EET

Gofore Plc’s Interim Report January-September 2024: Q3 adjusted EBITA 11.2%, recruiting brought capacity to the year’s highest level

July-September 2024

• Net sales declined by -4.2%, were 39.1 (40.8) million euros. Organic growth -4.2%.
• Both own and subcontracted personnel capacity increased and was at the year’s highest level.
• Profitability dropped slightly compared to comparison period. Adjusted EBITA 4.4 (4.7) million euros, 11.2% (11.6%).
• Reversal of eMundo’s remaining contingent consideration improved other operating income by 0.7 million euros. This materially explains EBIT and EBITA increase. It does not affect adjusted EBITA.
• Price and salary development in balance; customer prices decline slowed down and was -0.5%, average salary -1.0%.
• Number of employees grew to a total of 1,474 (1,460) people, overall capacity standing at 1,552 (1,560).

January-September 2024

• Net sales at previous year’s level, -0.9% and were 136.3 (137.5) million euros.
• Adjusted EBITA 17.2 (18.4) million euros, 12.6% (13.4%) of net sales.
• Customer prices dropped, -0.2%, average salary development standing at +0.6%.

The interim report is attached to this release and can be found on Gofore’s IR website at https://gofore.com/en/invest/. The report includes e.g. the most significant new agreements, an extensive key figure table, profit and loss statement and balance sheet, as well as Gofore’s market outlook and near-term risks. This is an IAS34 compliant interim report. The numbers are unaudited.

Key figures

Group Key Figures Summary, MEUR	Q3/2024	Q3/2023	2023
Net sales	39.1	40.8	189.2
Organic Growth of Net Sales, %	-4.2%	19.8%	22.0%
Adjusted EBITA	4.4	4.7	26.7
Adjusted EBITA, %	11.2%	11.6%	14.1%
EBITA	4.9	4.5	27.1
Operating Profit (EBIT)	4.1	3.4	23.0
Earnings per share (EPS), undiluted	0.21	0.16	1.15
Earnings per share (EPS), diluted	0.21	0.16	1.15
Number of employees at the end of period	1,474	1,460	1,465
Overall capacity; own and subcontracted personnel (FTE), at the end of period	1,552	1,560	1,529

CEO Mikael Nylund:

“Gofore’s net sales for the third quarter was 39 million, some 4% lower than a year ago. For the full year, we are on the 2023 track, which we believe reflects the weaker 18-month economic cycle in our industry. However, our profitability remained nearly at the level of the comparison period, with adjusted EBITA at 11.2%. Regarding the utilisation rate, the period following the summer holidays was not a perfect performance, and especially among industrial and the DACH region clientele, there was caution, leaving room for improvement.

During the same 18 months, our recruitment has primarily been done directly for customer needs. Our digital platform allows for the timely identification and management of these needs. In September, we significantly increased our number of employees in this year’s comparison, adding 22 people. The amount of subcontracting also grew considerably at the same time. These are important, albeit still preliminary and weak, signals of the awakening of customer demand.

The decline in our customer prices, which began in the second quarter driven by industry overcapacity and price competition, has slightly turned. The average salary developed similarly, indicating both strategic success in recruitment and a less competitive situation in the talent market.

Highlights of the reporting period included our win in the competition for Kela’s One Application Model. This development work is part of Kela’s strategic Eepos development program. The win was particularly significant for us due to its societal impact and the challenges it poses. We specifically want to develop Gofore into a sought-after partner for large and challenging development projects.

Other wins, as well as new contracts and clients, were also achieved in the fall; read more in this report. These create a solid foundation for successful business in the coming year, as does the fact that our contract portfolio will not change significantly over the next 12 months. For next year, we have identified two contracts to be retendered, in which we will naturally participate with great enthusiasm.

Artificial intelligence is the most significant single technology trend driving the development of future customer demand. Gofore’s experts are assisting our clients in leveraging artificial intelligence, and our message is that we need more pioneers who invest and innovate boldly. We wanted to better understand the situation and expectations of our industrial clients regarding AI development, so we explored this together.

The results support everyday observations: companies consider artificial intelligence a significant competitive factor, but perhaps only in the long term, over a 10-year period. Right now, however, the focus is on familiarizing ourselves with the possibilities of AI and improving our understanding and expertise. We encourage our clients to pursue more concrete projects that create competitive advantages rather than current experiments, mainly concerning so-called support functions.

We measured the employee experience of Gofore employees again in the fall. Our fresh results show that there is belief in the future, and the eNPS, i.e. employee promoter rate, increased from the previous measurement in the spring. Our attractiveness as an employer remains very good. In a recent study conducted among IT professionals by Universum, our ranking is the best among competitors in IT consulting in Finland.

Our investment in developing workplace wellbeing will naturally continue. We have chosen mental wellbeing as a key theme for the near future. Psychological strain has increased among working-age individuals for a long time, and it is even discussed as a public health issue in Finland. As pioneers of future working life, we want to encourage broader discussions so that we can collectively address this concerning development. There is more on the subject in this report.

We are also aiming for the future with our ongoing strategic work for the end of the year. To support the implementation of our strategy, we have also initiated a redesign of our organisation. Despite the weak economic cycle and savings targeted at digitalisation investments, the fundamentals of the market have not changed. We want to ensure in every way that Gofore is ready to seize future opportunities. A more customer-oriented operating model and organisation are key factors in this.”

Monthly net sales development in 2024

The numbers are unaudited.

Month	Net sales, MEUR	Pro forma LTM Net sales	Number of employees at end of period	No. of working days in Finland	Overall capacity (own personnel), FTE	Subcontracting, FTE
January	16.9 (15.8)	193.3	1,463 (1,318)	22 (21)	1,372 (1,225)	147 (186)
February	16.3 (15.3)	193.7	1,461 (1,342)	21 (20)	1,372 (1,256)	149 (184)
March	16.0 (18.1)	191.3	1,456 (1,354)	20 (23)	1,371 (1,271)	160 (189)
April	17.0 (14.5)	193.1	1,456 (1,385)	21 (18)	1,372 (1,293)	155 (187)
May	16.8 (17.2)	192.3	1,455 (1,400)	21 (21)	1,369 (1,311)	159 (192)
June	14.2 (15.9)	189.7	1,453 (1,396)	19 (21)	1,368 (1,319)	143 (170)
June	5.9 (5.9)	189.8	1,446 (1,423)	23 (21)	1,366 (1,341)	65 (83)
August	15.8 (16.9)	188.6	1,452 (1,448)	22 (23)	1,366 (1,353)	144 (166)
September	17.4 (18.0)	188.0	1,474 (1,460)	21 (21)	1,380 (1,374)	172 (186)

Next financial disclosure

Gofore’s next financial disclosure will be the Financial Statements Release 2024 on Thursday, 20 February 2025. Gofore also publishes business reviews for the months that are not included in interim reports or the half-year report in the beginning of the month following the month reported.

Contacts

• Mikael Nylund, CEO, Gofore Oyj, +358 40 540 2280, mikael.nylund@gofore.com

About Gofore Oyj

Gofore is an international digital transformation consultancy with Finnish roots. We have over 1,400 impact-driven people in 19 locations across Finland, Germany, Austria, Spain, Estonia and Italy. With our technology and business expertise we build an equal digital society and create sustainable solutions for the intelligent industry. Our diverse group of professionals shares a pioneering ambition to create a more humane, sustainable and ethical digital world. Our values guide our business: Gofore is a great workplace that thrives on customer success. In 2023, our net sales amounted to EUR 189.2 million. Gofore Plc’s share is listed on the Nasdaq Helsinki Ltd. in Finland. Our vision is to be the most significant digital transformation consultancy in Europe. Learn to know us better at gofore.com

Attachment

• Gofore Interim Report Q3 2024.pdf