• Group Net Sales Growth: 3% in Q4 2024.
• EBITDA: Down 2% in Q4 2024.
• EBITDA Margin: 17% in Q4 2024, compared to 18.1% the previous year.
• BTS Europe Net Sales Growth: 22% in Q4 2024.
• BTS Europe EBITDA Growth: 35% in Q4 2024.
• BTS North America Growth: 3% in Q4 2024.
• BTS Other Markets Growth: 1% for the year 2024.
• Dividend: Issued at 6.1%, up 7%.

• Warning! GuruFocus has detected 5 Warning Signs with LTS:0KGY.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• BTS Group AB (LTS:0KGY) achieved a 6% EBITDA growth in 2024 despite challenging market conditions.
• BTS Europe experienced a significant rebound with a 22% increase in net sales and a 35% rise in EBITDA in Q4 2024.
• The company's AI tools, particularly from the Wonderway acquisition, are gaining momentum globally, with successful integration into core value propositions.
• Southeast Asia, particularly through the acquisition of SEAC, showed strong development and a robust sales pipeline.
• BTS Group AB is focused on organic growth and operational efficiencies, with initiatives to enhance consultant revenue generation and client relationship culture.

Negative Points

• BTS North America experienced only 3% growth in Q4 2024, with some projects rescheduled to 2025 and client reorganizations causing delays.
• BTS Spain and Italy struggled, dragging down performance in other markets with a near 10% organic decline.
• The company's EBITDA margin decreased from 18.1% to 17% in Q4 2024.
• Demand from government entities in the Middle East leveled off in Q4 2024 after strong growth earlier in the year.
• Two significant sales kickoff events in North America were canceled, impacting Q4 2024 revenue, with expectations for their return only in Q4 2025.

Q & A Highlights

Q: Can you provide insights on the performance of BTS's other markets, particularly in Spain and Italy, and whether you expect growth in Q1? A: Jessica Skon, CEO: Towards the end of Q4, we observed a reversal in the slowdown, with growing pipelines in both Spain and Italy. While it takes time to win new work, the general sentiment is positive, indicating a turnaround.

Q: How sustainable is the strong growth in BTS Europe, and do you expect it to continue? A: Jessica Skon, CEO: The pipeline in Europe continues to grow, and while Germany remains somewhat volatile, the overall win rates are strong. We expect the positive trend to continue.

Q: Did the uncertainties related to the U.S. elections impact Q4 results in North America? A: Jessica Skon, CEO: In Q4, two major clients canceled their usual large sales kickoffs, impacting revenue. However, the market feels stronger compared to a year ago, with less delays and quicker deal flow.

Q: Can you elaborate on the AI-driven productivity gains and their impact on personnel costs? A: Jessica Skon, CEO: Last year, AI experiments led to productivity gains ranging from 1% to 17%. We have a conservative estimate of 11.5% productivity gain for this year, with significant reductions in contractor budgets, particularly in our assessment practice.

Q: What is the revenue model for the Verity platform, and do you expect growth in subscription sales? A: Jessica Skon, CEO: Verity operates on a per-user license subscription model. We expect the adoption and usage of Verity to grow quickly, contributing to subscription sales growth.

Q: What are BTS's main focus areas for acquisitions? A: Jessica Skon, CEO: We are focusing on both expanding our geographical footprint and acquiring tech capabilities like Verity. We are also open to partnerships before acquisitions to ensure strategic alignment.

Q: Will the canceled projects in North America be rescheduled for 2025? A: Jessica Skon, CEO: The canceled sales kickoff events are expected to return in Q4 2025, with a greater than 50% chance of being reinstated.

Q: How did BTS perform in the U.S. in Q4 excluding the impact of the canceled events? A: Jessica Skon, CEO: Excluding the canceled events, the U.S. market showed resilience, and we anticipate a stronger performance moving forward.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.