12/2023・Trifork Group - Report of the second quarter and half year ending 30 June 2023 - Seite 2

It is not the first time we navigate through a market like this, and it will not be the last either. Our playbook remains the same as in previous downturns: Invest in customer relationships and they will remember and reward it when the market recovers. We remain focused on finding new areas of profitable growth, both organic and through acquisitions. We are still seeing good interest from large enterprises in our leading capabilities within digital solutions that drive cost savings and compliance. This includes focus on data analysis, artificial intelligence, machine learning, hybrid cloud operations, and cyber protection.

Hence, in light of the slower market situation, I am cautiously optimistic about the second half of the year, but more importantly, our long-term growth opportunity remains significant.”

Financial outlook for 2023 is maintained

Guidance for the full year 2023 remains unchanged at revenue of EURm 205-215, Trifork segment adjusted EBITDA of EURm 34-37, and Trifork Group EBIT of EURm 20-23.

Main events in the second quarter of 2023

Trifork Group

Trifork delivered satisfactory organic growth of 16.3% in the second quarter of 2023 despite a continued challenging business environment. Revenue growth was driven by Build and Run across all business areas.

Our acquisition of Institut für Bildungsevaluation Zürich AG (“IBE”) is performing slightly better than expected. Revenues from IBE are allocated to the Run sub-segment. We now expect IBE to contribute with 2.5-3.0% revenue growth in 2023 (previously 2.0-2.4%).

Organizational key figures:

• The Trifork Group now counts 1,188 employees (Q2/2022: 1,021) distributed across 71 customer facing business units.
• The average age was recorded to 36.6 years compared to 36.7 at the end of Q1/2023 and indicates that the level of seniority on average has been kept at the same level also in new-hires.
• Rolling 12 months churn rate improved to 13.6% at the end of Q2/2023 (Q1/2023: 14.3% and Q4/2022: 15.4%)
• Sick leave improved to 2.4% in the first six months of 2023 (6M/2022: 2.9%).

Trifork Segment

• In the Inspire sub-segment, conference activities increased in Q2 and revenue grew month- by month through the first half of 2023. However, it did not accelerate as much as expected in Q2/2023, which ended on the same level as Q2/2022. It seems that many companies have decreased investments in sponsorships and paused their attendance to conferences in the first half of 2023, which resulted in negative earnings in the quarter. We are taking measures to improve our planning processes and expect to see better results in the second half of the year.
• In the Build sub-segment, Digital Health continued to be one of the fastest growing business areas and grew 51.9% compared to the same quarter in 2022. We are seeing a trend where a high degree of the solutions delivered in Build are followed by recurring revenue that supports the growth in the Run segment. Smart Enterprise, our largest business area accounting for 43.9% of Trifork revenue in the quarter, performed well in a difficult market environment with 16.8% revenue growth. In Denmark, we had a successful release with Energinet, started building a new enterprise-to-consumer app, launched data platform and IoT projects, and had various public deliveries. Growth was aided by our business units in Europe and US where we are getting more traction with artificial intelligence and machine learning solutions that we plan to leverage across the group. In Q2, our new US CEO Karan Yadav joined us from a senior position at Apple to accelerate our business in the US, especially with focus on Smart Enterprise.

• In the Run sub-segment, growth was once again strong, also when looking at the core business (i.e. when excluding hardware and third-party software licenses). As expected, Cyber Protection accelerated revenue growth to 48.5% following a slow Q1. Cloud Operations continued its momentum although at slightly lower growth of 8.3% than the previous quarter’s 21.9%. Run accounts for 28.6% of Trifork revenue in the quarter and increasingly provides stability to the revenue and operating earnings of the Group.

Trifork Labs