• Revenue: NOK8 billion, up 3.1% from last year.
• EBIT: NOK307 million, up 3% from last year.
• Net Profit: NOK192 million, up 5.7% from last year.
• Gross Sales: NOK11.3 billion, up 5.4% from last year.
• Hardware Revenue Growth: 3.3% increase.
• Software Revenue Growth: 12.3% increase.
• Services Revenue Growth: 1.4% increase.
• Gross Profit: NOK2.4 billion, up 3.3%.
• Cash Flow from Operations: NOK112 million inflow, NOK413 million better than last year.
• Net Debt: NOK108 million.
• Share Repurchase Program: Maximum of 650,000 shares for NOK120 million.

• Warning! GuruFocus has detected 5 Warning Sign with ATEAY.

Release Date: October 23, 2024

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

Positive Points

• Atea ASA (ATEAY) reported a 3.1% increase in revenue, reaching NOK8 billion compared to last year.
• Net profit after tax increased by 5.7% to NOK192 million, indicating improved profitability.
• The company experienced high growth in sales of PCs, servers, and storage, contributing positively to hardware revenue.
• Software revenue saw a significant increase of 12.3%, driven by demand for productivity applications, public cloud, and data center solutions.
• Atea ASA (ATEAY) has a strong balance sheet with a net debt of NOK108 million, well below its loan covenants, allowing for a share repurchase program.

Negative Points

• Sales of networking and AV equipment declined, impacting overall hardware revenue growth.
• EBIT in Sweden and Denmark has not yet returned to profit growth, with Sweden experiencing a decline in service sales.
• Atea Finland reported lower revenue and profit due to a recessionary economic environment.
• The company plans a one-time restructuring cost of NOK40 million in Q4, primarily affecting staff in Sweden.
• Networking demand was weaker than expected, with a 12% decline in the quarter, impacting overall performance.

Q & A Highlights

Q: Can you explain the restructuring in Q4? A: We will take a one-time cost of NOK40 million to reduce the workforce by approximately 100 people, mainly in Sweden. This involves central and administrative functions, and the process varies by country due to different labor laws.

Q: How will changes in Microsoft's partner program affect Atea? A: Microsoft is shifting incentives to encourage sales of advanced technologies like security, AI, and cloud services. We have been adapting to these changes and expect minimal impact. We are confident in our ability to align with Microsoft's goals and maintain our revenue.

Q: How do you align growth expectations with planned staff reductions? A: The restructuring mainly affects Sweden, with 75 positions being reduced. These are mostly in support and admin functions. We have adjusted our workforce to match revenue expectations and anticipate efficiency gains. We may hire more if consulting revenue grows significantly.

Q: Why is the share buyback limited to NOK120 million? A: The buyback is intended to fulfill obligations under share-based compensation agreements, covering 650,000 shares. This amount is sufficient for our needs from the AGM in 2025 to the AGM in 2026.

Q: What is the impact of the Finnish contract on revenue and profit? A: The contract with Finland's Public Procurement Agency is expected to generate approximately EUR100 million in incremental annual revenue, based on estimates from the agency.

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