SmartCraft ASA, the leading Nordic provider of mission-critical SaaS solutions to small and mid-sized companies in the construction sector, today reported its results for the third quarter of 2023, ending the period with annual recurring revenue (ARR) of NOK 367 million, which represents a growth of 21 percent compared to the same period 2022. Organic ARR growth was 14 percent.
Reported revenue in the third quarter was NOK 99.7 million (+21 percent), of which 97 percent was recurring. Adjusted and reported EBITDA margin increased by 3 percentage points to 42 percent despite diluting effects from acquisitions. The margin increase was driven by the long-term focus to scale the business and good cost control. Operating cash flow was NOK 22 million in the third quarter, compared to NOK 15 million in the same period last year. For the first nine months of 2023 operating cash flow was 119 million, up 36 percent compared to the same period in 2022. In the third quarter, the group had a churn of 7.9 percent, up from 7.4 percent in the second quarter of 2023, but trending down in latter parts of Q3.
“Once again, we demonstrate SmartCraft’s growth capabilities and attractive, scalable and low-risk financial model, even in a challenging period for the parts of the construction industry. Our customers are predominantly small and medium-sized enterprises within electro and HWS. They experience positive market conditions supported by energy efficiency measures and renovations projects. This means that our model is highly resilient even on a challenging market backdrop,” said CEO of SmartCraft Gustav Line.
The growth outlook remains positive
“The third quarter ended with high activity levels resulting in both a strong order backlog (signed customers that have not yet been onboarded and are not included in ARR/sales) for future revenue in the coming months and an increase in booked customer meetings. Historically, we convert 55 percent of the meetings to sales, so we have a good and healthy potential revenue pipeline. Longer term, with megatrends of digitalization and increasing professionalization of SME construction companies, a strong product portfolio and well-tuned R&D and sales organization, we are confident in our medium-term financial target of 15-20 percent organic growth and increasing margins due to the scalability of the business,” said Gustav Line.
In addition, acquisitions are an important driver for SmartCraft. In the third quarter the company made its tenth acquisition, Coredination, a Swedish Software-as-a-service (SaaS) application covering workforce management, machine rental and fleet management.
“We continue to have a good pipeline of potential targets. Price expectations in the M&A market remain high but are trending downwards. We will remain disciplined regarding capital allocation and continue to ensure that potential transactions add to our strong track record of value-accretive acquisition,” said Gustav Line.
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For further queries, please contact:
Gustav Line, CEO
Phone: +47 952 67 104
Kjartan Bø, CFO
Phone: +47 410 27 000