cBrain Corrects EBT Margin Forecast
cBrain (NASDAQ: CBRAIN) corrects the announcement released this morning:
The Interim Report incorrectly guides an EBT margin of 20-25% for the fiscal year.
cBrain maintains the guidance for the fiscal year with an earnings before tax margin (EBT margin) of 24-30%. This outlook is supported by sustained growth in Denmark, increased international sales, and further investments into the growth plan.
Best regards
Per Tejs Knudsen, CEO
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Company Announcement no. 09/2024
On track with Growth Plan
Revenue grew by +6% to DKK 139m in the first half of the fiscal year, compared to DKK 132m during the same period last year. The moderate growth was anticipated due to an unusual revenue split between the first and second half of the previous fiscal year, where first-half revenue increased by +39% year over year, accounting for 55% of total fiscal year revenue.
Danish revenue experienced a +21% increase to DKK 87m, a rise from DKK 72m in the first half of the previous year, indicating a stable growth trajectory in the Danish market.
On the other hand, international sales showed a decline of -13% to DKK 52m. This reduction is attributed to the uneven revenue recognition linked to international sales from last year.
The first half results reflect earnings before tax (EBT) of DKK 43m, down from DKK 47m in the same period the previous year. The EBT margin stands at an impressive 31%, with earnings slightly exceeding expectations due to postponements of some planned international investments.
cBrain remains confident about the financial outlook, aligning with expectations and showing progress toward their 2023-2025 growth plan.
Guidance remains unchanged for the fiscal year, targeting revenue growth of 20-25% and maintaining the EBT margin forecast of 24-30%. This forecast is underpinned by continuing expansion efforts in Denmark and increased international sales.
Driving Growth Through Subscriptions and Partnerships
Growth is primarily fueled by software subscriptions and strategic partnerships. Software subscriptions contribute around 50% of total revenue, arising from customers engaging with the F2 software through rentals or maintenance agreements. The growth of the subscription base is facilitated by existing customers increasing their use of F2, as well as the acquisition of new clients.
The F2 platform has been developed collaboratively with various Danish ministries, leading to new versions tailored for strategic government clients that represent a significant portion of revenue.
cBrain's strong Danish presence includes over 75 government organizations, solidifying its position as a leader in the global e-government landscape and paving the way for international expansion through the F2 climate software initiative.
Focus on Public Tenders and New Markets
For the latter half of the year, cBrain anticipates sustained growth in Denmark, focusing on expanding its customer base and securing additional contracts through the Danish government procurement agreements. Success in winning larger public tenders can also drive substantial increases in revenue, prompting increased investments in bid management efforts.
In Germany, cBrain holds a solid foothold, with German revenue constituting a notable portion of total earnings. The company received recognition as the “Danish Company of the Year 2023” from the German-Danish Chamber of Commerce, further solidifying its market presence.
Pursuing Strategic International Clients
Internationally, cBrain is developing a pipeline of large projects to attract new strategic clients, anticipating that many of these initiatives will advance in the near future, stimulating international sales.
Innovative Developments with F2 AI Assistant
cBrain recently introduced F2 version 11, which incorporates a variety of new features. The first version of the F2 AI Assistant, announced in the spring, integrates AI capabilities directly within the F2 platform tailored for governmental use.
The AI Assistant prioritizes GDPR compliance by operating on-premises, offering functionality specialized for public administration. The introduction of this product signifies the beginning of a new line of AI-driven extensions for the F2 platform.
Frequently Asked Questions
What EBT margin does cBrain project for 2024?
cBrain projects an EBT margin of 24-30% for the fiscal year 2024.
What factors are driving cBrain's growth?
cBrain's growth is driven by software subscriptions, strategic partnerships, and ongoing expansion in both domestic and international markets.
How has cBrain's revenue performed in the first half of 2024?
Revenue grew by 6% to DKK 139m compared to DKK 132m in the first half of 2023.
What is the significance of the F2 AI Assistant?
The F2 AI Assistant enhances the F2 platform with AI capabilities tailored for government needs, ensuring GDPR compliance and operational support for public administration.
Who should inquiries regarding the company announcement be directed to?
Inquiries may be directed to Ejvind Jørgensen, CFO & Head of Investor Relations, via email at ir@cbrain.com or call +45 2594 4973.
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