Margin expansion, new AI solutions and launching next phase of the integration
Financial highlights third quarter
- The Group's net sales increased by 4.7% to SEK 648 m (619). Organic growth (constant currency) was 2.4%. Currency effect was -2.4%. Acquired growth was 4.7%.
- The Group's adjusted EBITA amounted to SEK 143 m (116) with adjusted EBITA margin of 22.1% (18.7).
- Net result amounted to SEK -12 m (21).
- Earnings per share before and after dilution amounted to SEK -0.11 (0.20).
- Adjusted free cash flow amounted to SEK -32 m (-65).
Comment from CEO Pontus Bodelsson
Karnov Group delivers strong margins expansion while continuously enhancing customer value with new innovations. The adjusted EBITA margin was 22% which is an improvement of more than three percentage points compared to previous year. We have expanded our mission-critical solutions with our AI legal research assistant, which brings significant efficiency uplift to customers. In parallel, we have completed the technical carve-out in Region South and now launch the next phase of the integration in Spain.
Margin improvement across the Group
The Group's net sales amounted to SEK 648 m in the quarter, a solid increase from the previous year driven by increased online sales in Region North. The growth in Region North is driven by both upselling to existing and recently new added customers. The carved-out legal information business from the Danish company Schultz contributed with net sales of SEK 24 m in the quarter.
Net sales in Region South are stable excluding FX effects. We deliver on our plan to reach synergies in Spain, while strengthening the value proposition in France. The technical carve-out has been completed in Spain. We are now accelerating next phase of the integration with new leadership and increased focus on profitable growth.
The Group's adjusted EBITA margin reached 22% in the third quarter, an improvement of more than 3 percentage points compared to previous year. We focus on our cost-base and deliver on the synergies from our two initiatives, reaching annual run-rate synergies of EUR 9 m by the end of the third quarter.
Leverage was 3.1x adjusted EBITDA LTM, an increase driven by the FX effects mentioned above.
200 years of expertise now merged with AI
At the end of the quarter, we launched our AI legal research assistant in Region North. The solution offers complete transparency about the sources used to reach conclusions including a reference list for validation. Sales is progressing on all markets and feedback from our customers confirms that the solution brings significant value and efficiency uplifts.
25 years ago, we transitioned our customers from books and libraries to databases. Now, we enable our customers to interact with 200 years of mission-critical knowledge through our AI legal research assistant.
The launch of the AI assistant has been prepared with a thorough due diligence where we thoroughly have tested packaging, pricing and simulated penetration. The solution is sold exclusively in a new top-tier package containing all mission-critical knowledge in Region North, while being sold as an add-on in Region South, in line with local market practices.
Our AI assistant enables us to help our customers to become significantly more efficient. Moreover, it enables us to launch a better price model and deliver solid returns from the investments for all stakeholders.
Delivering on our efficiency initiatives
We continue to progress with the Region South integration as well as harvesting synergies. Synergies are coming through as expected. By the end of the third quarter, the annual run-rate synergies from the Region South integration amounted to EUR 5 m. We reiterate our ambition to generate synergies of EUR 7.5 m on annual run-rate basis by the end of 2024 and EUR 10 m on annual run-rate basis by the end of 2026.
In parallel, our Group-wide Acceleration Initiative progresses according to plan. We have divested our holdings in Ante, LCB and Procurementlink, which has generated additional run-rate synergies, while having a negative impact on the earnings this quarter. By the end of the third quarter, the annual run-rate synergies from the Acceleration Initiative amounted to EUR 4 m. As communicated before, our ambition is to generate synergies of EUR 10 m on annual run-rate basis by the end of 2026.
In total, our progress with the two cost-efficiency initiatives has generated annual run-rate synergies of EUR 9 m by the end of the third quarter.
We invest, create new solutions and build for the future
Karnov Group delivers strong margins expansion while continuously enhancing customer value with new innovations. Our industry is transforming, with AI bringing new opportunities. We lead the way with our AI legal research assistant transforming the path to justice.
conference call on 6 November 2024
A webcasted telephone conference will be held at 09.00 a.m. CET today, where CEO Pontus Bodelsson and CFO Magnus Hansson will present the report and answer questions.
You can follow the presentation via webcast and ask questions in written form on the following page:
https://ir.financialhearings.com/karnov-group-q3-report-2024
If you wish to participate via telephone, and thereby be able to ask questions verbally, please register on the link below. After registration you will be provided phone numbers and a conference ID to access the conference. You can ask questions verbally via the teleconference.
https://conference.financialhearings.com/teleconference/?id=50048831
The presentation material and the report will be available before the conference starts at www.karnovgroup.com. An on-demand version will also be available after the presentation. The presentation will also be available on www.financialhearings.com.
For more information, please contact:
Pontus Bodelsson, President and CEO
Telephone: +46 709 957 002
Email: pontus.bodelsson@karnovgroup.com
Magnus Hansson, CFO
Telephone: +46 708 555 540
Email: magnus.hansson@karnovgroup.com
Erik Berggren, Head of Investor Relations
Telephone: +46 707 597 668
Email: erik.berggren@karnovgroup.com
This press release contains inside information that Karnov Group AB (publ) is required to make public pursuant to the EU Market Abuse Regulation (MAR). The information was submitted for publication by the contact person above on 6 November 2024 at 07:45 CET.
Karnov Group clears the path to justice, providing mission critical knowledge and workflow solutions to European professionals in the areas of legal, tax and accounting, and environmental, health and safety. With content provided by over 7,000 well-renowned authors and experts, Karnov Group delivers knowledge and insights, enabling more than 400,000 users to make better decisions, faster - every day. With offices in Sweden, Denmark, Norway, France, Spain and Portugal, Karnov Group employs around 1,200 people. The Karnov share is listed on Nasdaq Stockholm, Mid Cap segment under the ticker "KAR". For more information, please visit www.karnovgroup.com.
