High Organic Growth in Challenging Times
With a total revenue of EURm 45.9 in Q2 2022, Trifork has increased its growth by 14.9% compared to Q2 2021. The organic growth in the quarter was 14.1% and if adjusted for the deconsolidation of Dawn Health (Nov 2021), organic growth was 17.8%. For the first half of 2022, total revenue was EURm 91.7, equal to total growth of 15.6% compared to the same period in 2021. Adjusted for the deconsolidation of Dawn Health, organic growth was 17.8% in the first half 2022. Compared to our midterm organic revenue guidance of 10-15% growth, this is very satisfying. This great result can be attributed to the work and effort of all our colleagues, and I’m very grateful for their performance. I’m also pleased that more and more colleagues are becoming Trifork shareholders.
We are thrilled, once again, to welcome enthusiastic, happy and energizing attendees and speakers to our conferences to get inspired to make great software.
The growth in revenue is also due to an increased focus on and investment in business development and to the trust our customers have in us. We are determined to keep a high customer satisfaction score. We continue to grow our business units in quantity, quality and size to strengthen the group’s competencies. We are now 61 customer facing business units and 1,021 employees. We are thrilled, once again, to welcome enthusiastic and happy attendees and speakers to our in-person conferences to get inspired to make great software. In Q2, we held multiple events and now, we are also the main partner and sponsor of YOW! London in October. Our largest YouTube tech-channel GOTO continues its growth and has currently generated more than 36 million views.
We continue to grow our business units in quantity, quality and size to strengthen our compentencies
The Trifork segment adjusted EBITDA for Q2 was EURm 6.4 compared to EURm 7.3 in the same period 2021. The profit in Q2 was influenced by:
- Investments in business development (Cloud Operation services, Digital Health market development in Switzerland and the creation of a new Cyber Protection business unit)
- Higher sickleave than normal (2.9% compared to historical average of 2%)
- A one-off debtor write-off effect of EURm 0.5
- Utilization a little lower than normal due to a few customers shifting scope/timelines because of impact from instability/logistic challenges/financing
- Investments in the organization, i.e., accelerated social events after two years of lock-down.
This resulted in an adjusted EBITDA-margin of 13.8% in Q2 2022 compared to 18.4% in Q2 2021.
During the first half, Trifork segment adjusted EBITDA was EURm 14.4 compared to 15.0 in the same period in 2021.
In May, Trifork signed an agreement with the Swiss-based Bluespace Ventures AG, which is behind the healthcare platform Compassana. Trifork was selected as the Lead Technology Partner to provide advanced healthcare technology to the Swiss market. This was a milestone in Trifork’s effort to bring Digital Health products and services to more markets, and we look forward to the future development of this.
As shown in the case-story on page 16, Trifork in collaboration with our start-up &Money in Q2 delivered a brand-new booking solution (&BookMe) to the banks. Nykredit was the first bank to adopt the solution. Already now, the bank can report of having reduced its costs and time spent on booking meetings with its customers.
In Q2, Trifork Labs continued the active investment strategy and we had a gain of EURm 0.5 on EBT. We increased our ownership in the Digital Health startup, Visikon, and by participating in a reorganization of Programmable Infrastructure Solutions (Container Solutions Group), Trifork profitably exited part of our investment and still holds a 6.2% ownership in the succeeding holding company.
In the second quarter of 2022, we continued our focus on sustainability and ESG and completed an ESG rating with S&P. This will be updated again later in the year and we expect to do this continuously. In July, we also invested in our first forest as one of our ESG-targets. With this investment, Trifork more than balances out all our CO2 emission from scope 1 and scope 2. We want to use timber from the forest in the construction of our Smartbuildings to store as much of the captured CO2 as possible.
Our vision is for Trifork to have a positive impact on CO2 capture in the future. This can be done by measuring and improving the way by which both emission and capture are managed and reported.
The economic and political environment is still impacted by the global instability that has followed in the wake of the war in Ukraine. In Q2, we have experienced how some customers are only able to plan and act on a short-term basis and have had to delay tasks because of logistic challenges, or cancel tasks due to lack of financing. This makes it difficult for us to plan and optimize the use of our resources, and it has had a negative impact on our profit margins in the Trifork segment.
It is hard to predict exactly how this will develop in the future. Having said that, we also see an increasing demand for Cyber Protection solutions, and we believe that Trifork will be able to play an important role in helping both existing and new customers.
We still believe that there is a risk of additional inflation and that this could influence our margins and profitability to some extent in the future. But we also believe that our deliveries to our customers are valued and that our customers will be prepared to cover their part of the inflation impact.
Overall, the growth is in alignment with our guidance and we maintain the current revenue target for 2022 with EURm 180-185. Mid-term targets are maintained. Over a three-year period, Trifork Group targets annual average revenue growth of 15-25% with organic revenue growth of 10-15% on average per year during the same period.
We also maintain our guidance of an Trifork segment adjusted EBITDA of EURm 30.5-33.0 and Trifork Group EBIT of EURm 16.5-19.0.