Financial results for Q3 2024 released: A Challenging Third Quarter

** Please refer to nnit.com - Investors for the full company announcement re the financial results for Q3 2024. **

The third quarter was more challenging than anticipated. Despite positive momentum in the first half of the year, including several levers initiated in Q2 to accelerate profitability, organic growth and group operating profit margin excl. special items decreased in Q3 2024 compared with last year. A moderate slowdown in the Life Science market caused projects to be postponed or paused and resulted in lower growth than anticipated for Region US and Region Europe. In addition, recovery in the data migration business progressed at a slower pace than anticipated.

Although the performance in the third quarter was unsatisfactory, a pick-up in growth and profitability is expected in Q4 driven by a high backlog coverage, the effects of the profitability levers initiated in the second and third quarter, improvement in utilization of billable employees, and additional adjustments made to align internal capacity with market demand carried out in the beginning of Q4.

Key Highlights

• Financial performance for the third quarter was unsatisfactory. Some areas of the business did not perform as initially planned in Region US and Region Europe which negatively impacted the performance. Organic growth was negative by 1.6% and total revenue growth was negative by 1.7%. In Q3 2023, Region DK revenue was impacted by a positive technical one-off due to the carve-out of around DKK 15m as a revenue accrual was released in the quarter despite being related to previous quarters. Adjusted for this, the underlying organic growth for the Group would have been 1.7% and total growth of 1.6%.
• Group operating profit margin excl. special items was 3.9% for the quarter. The unfavorable development in the profit margin was due to lower topline performance and as a consequence of NNIT having too much capacity.
• To improve business performance, necessary actions were taken to reduce capacity in the relevant areas in Region Europe and Region US on top of the initiatives carried out in the first half of the year.

Financial overview – Selected Key Figures

Outlook

NNIT adjusted its full-year financial outlook on October 22, cf. company announcement no. 07/2024. The adjusted full-year outlook reflects organic revenue growth of around 6 to 7% (previously around 10%) and group operating profit margin excl. special items between 6 to 7% (previously between 8 to 9%). The adjustment to the financial outlook was based on the Q3 2024 performance.

Full company announcement is available at https://www.nnit.com/investors-media/investors/