Columbus – A look at 2024 results with CEO Søren Krogh Knudsen

Yeah, it's really a quite complicated picture with many moving parts. So if we should just go through the major components: 7% organic growth, 8% all-up growth. As you say, we saw actually the first quarter was very strong in most of our business units. Then we saw a little bit of a slowdown already in Q2, that was mainly our M3 business division slowing down, whilst most of the others were still going full steam. And that M3 division actually saw a little bit of a slowdown all the way through to Q4. We started winning significant contracts in Q3 and Q4, but it takes a while for them to ramp up, so they've entered the new year at a pretty decent pace. And they're also comparing now Q1 with the last good quarter last year. Dynamics, the biggest business division, has become very big, particularly here in the Nordics. We had to make some investments in it in the second half of last year, simply because it's so big that the business development engine to keep taking on board new customers — not to sustain its size but to grow further — needs a little bit more. So those were two components. Then geographically, I think we should talk about Sweden. The Swedish market, the Swedish economy was markedly different from for instance Denmark where we're sitting now. We've just seen a lot more hesitance in the market generally, but particularly because we are strong in Commerce Tools, digital commerce tools, in the retail industry in Sweden. That's been a little bit of a very cyclical part there, that's been a tough one. We've been working a lot, I think we've taken all the right measures, now we need to see it come through to fruition. It's not completely isolated to Sweden; the other areas have seen some hesitance too, but actually we are still feeling very comfortable how they perform. The UK is a powerhouse at the moment, also Denmark throughout 24 was very, very strong. Geographically speaking, it was Sweden because it's also big for us, but also Norway to a little bit lesser extent, and it's a smaller market. Those were difficult markets to operate in. So I'm looking at Q4 as a turning point where we need to start turning. Q1 in this year will not be the fastest quarter, we need to build momentum and then gather pace for the rest of the year.

Yeah. Again, the EBITDA 15 strategy has many different components and they're actually all working. So to start with, I would say that the base contract profitability we have from working with customers has been much improved, so that contributes further down to the EBITDA margin. Our balancing of the company — how much do we deliver out of the Scandinavian markets and UK/US, how much comes from our delivery centers in Poland, Czech, Hyderabad, and Chile — better balanced, we can get a little bit more on that, it can be further optimized, but it's working. Then we have the efficiency, which is actually the one that's been difficult in the 24 market conditions. We mastered that pretty well I thought in 23, I still think we're decent, we're good at it, but it was a hard market to perfect in. So I think that's where potentially we can see a further upside in 24 by really taking that two percentage points higher or something in the efficiency ratio. So there's a little bit of an upside on that, but I think all components probably are delivering.

Yeah, well, there are some things that make us optimistic and then there are some things we have to balance out the view. As I was saying previously, I think some of the orders, the contracts we closed in Q4, give good expectations for particularly M3, which we are certain is picking up in pace. Our big Dynamics unit is a little bit earlier stage, so they're in negotiation phases, so I would say somewhat higher uncertainty, but we're seeing a lot of final stage business development activities that could lead to good results mainly Q2 and forward. Also our Commerce Division that we talked about, we need to see this materialized, but from what we can see the Swedish market is starting to turn. I can see some of the macro numbers that we monitor are starting to look better, but also our own sales pipeline. I talk to my own people when I'm up there: how does it feel, who do we talk to? Some of the investments that customers have been keeping in the drawer because they've been uncertain — we're seeing more of that. Sweden being a more cyclical industrial industry, and with what we are seeing in Europe, that might actually be a better economy. So we have some of that expectation that the Swedish economy will start to be a better market for us to operate in, but obviously there's also a geopolitical macro perspective — there's so many things, so we stay very observant at the moment. There are some areas where we can start to see growth. Another aspect that will require to drive growth is to increase our headcount again. We've been quite cautious in 24, we've been optimizing — if you're about to head into a storm you prepare. I think there are some signs that we are now actually moving to better territories, but on a daily basis you get very confusing signs. So we're ready to start investing again. It sounds a little bit bullish maybe now, but I think many of our customers are really experiencing good fiscal reports from them, and usually that means that they invest. So we will monitor closely.

Yeah, yeah definitely. If the market would return to what we normally see — the IT advisory market growth percentages of 10% plus — then everything becomes much easier, but that shouldn't stop us from improving. I think some of the sources of improvement that I mentioned before, there's plenty of headroom to keep optimizing. But there are some others: if we take our overhead costs, we've optimized them quite a lot. I don't think I want to go into a full cost-cutting game because we're building a company for the future, and the better way is diluting with more revenue of course. So I much prefer to invest to grow your way to it. Yeah, perfect. But we can certainly go part of the way just based on optimizing what we have.

Well, it's an exciting process to be a part of. Obviously, I think it's clear when you look at how we've developed over the past year that we're coming from a position of strength. A lot of our KPIs are steadily improving. But actually commenting on the process is almost impossible. We follow a very well-defined stage-gate process, and we are moving forward according to the plan. Obviously, I'm impatient by nature and I would like to complete it as quickly as possible, but you have to accept these things take time and you have to do them right. So we'll take the time that is needed but not more time than is needed. I think that's what we can say.