cBrain Updates EBT Margin Forecast
cBrain (NASDAQ: CBRAIN) has issued a correction regarding the announcement made earlier today:
The Interim Report mistakenly indicated an EBT margin of 20-25% for the fiscal year.
cBrain reaffirms its guidance for the fiscal year, projecting an earnings before tax margin (EBT margin) of 24-30%. This forecast is supported by ongoing growth in Denmark, a rise in international sales, and further investments aligned with its growth strategy.
Best regards,
Per Tejs Knudsen, CEO
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Company Announcement no. 09/2024
Progressing with the Growth Plan
In the first half of the fiscal year, revenue increased by 6%, reaching DKK 139m, compared to DKK 132m during the same period last year. This moderate growth was expected due to an unusual revenue distribution between the first and second halves of the previous fiscal year, where first-half revenue surged by 39% year-over-year, comprising 55% of the total fiscal year revenue.
Revenue from Denmark rose by 21% to DKK 87m, up from DKK 72m in the first half of the prior year, reflecting a steady growth trend in the Danish market.
Conversely, international sales saw a decline of 13%, totaling DKK 52m. This drop is linked to the irregular revenue recognition associated with last year's international sales.
The results for the first half indicate earnings before tax (EBT) of DKK 43m, a decrease from DKK 47m in the same period last year. The EBT margin is a robust 31%, with earnings slightly surpassing expectations due to delays in some planned international investments.
cBrain remains optimistic about its financial outlook, which aligns with expectations and demonstrates progress toward its 2023-2025 growth objectives.
The guidance for the fiscal year remains unchanged, aiming for revenue growth of 20-25% while keeping the EBT margin forecast at 24-30%. This outlook is bolstered by continued expansion efforts in Denmark and an uptick in international sales.
Fueling Growth Through Subscriptions and Partnerships
The primary drivers of growth are software subscriptions and strategic partnerships. Software subscriptions account for about 50% of total revenue, stemming from customers utilizing the F2 software through rental agreements or maintenance contracts. The expansion of the subscription base is supported by existing customers increasing their engagement with F2, alongside the acquisition of new clients.
The F2 platform was developed in collaboration with various Danish ministries, resulting in new versions designed specifically for key government clients that contribute significantly to revenue.
With a strong presence in Denmark, cBrain serves over 75 government organizations, reinforcing its leadership in the global e-government sector and paving the way for international growth through the F2 climate software initiative.
Emphasizing Public Tenders and New Markets
Looking ahead to the latter half of the year, cBrain expects continued growth in Denmark, with a focus on expanding its customer base and securing additional contracts through Danish government procurement agreements. Success in winning larger public tenders could lead to significant revenue increases, prompting enhanced investments in bid management efforts.
In Germany, cBrain has established a solid market presence, with German revenue representing a significant portion of total earnings. The company was honored as the “Danish Company of the Year 2023” by the German-Danish Chamber of Commerce, further solidifying its standing in the market.
Pursuing Strategic International Clients
On the international front, cBrain is working on a pipeline of substantial projects aimed at attracting new strategic clients, with expectations that many of these initiatives will progress soon, boosting international sales.
Innovative Developments with F2 AI Assistant
cBrain has recently launched F2 version 11, which features a range of new capabilities. The first version of the F2 AI Assistant, announced in the spring, integrates AI functionalities directly into the F2 platform, specifically designed for governmental use.
The AI Assistant emphasizes GDPR compliance by operating on-premises and provides specialized functionalities for public administration. This product launch marks the start of a new series of AI-driven enhancements 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.
