• Revenue Growth: 6% growth in the fourth quarter, reaching a record high.
• Recurring Revenue: 86 million NOK in the quarter, with an annualized run rate of 345 million NOK.
• EBITA Margin: 14% adjusted EBITA for the year, slightly above the guided range of 13-14%.
• Working Capital: Record high networking capital at 31%.
• Full-Time Employees (FTEs): Reduced from 283 in Q4 2023 to 268 in Q4 2024.
• CapEx: Development CapEx reduced from 13% to 10% of total sales compared to the previous year.
• Cash Position: Slightly better than the previous year, despite dividend payouts and share buybacks.
• Organic Growth Guidance: 5-10% long-term growth expectation.

• Warning! GuruFocus has detected 5 Warning Signs with FRA:6Q1.

Release Date: February 26, 2025

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

Positive Points

• Omda AS (FRA:6Q1) reported a record high revenue for the fourth quarter, marking a 6% growth year-over-year.
• The company achieved a 14% adjusted EBITDA margin, slightly above their guidance of 13-14% for the year.
• Omda AS successfully completed its restructuring, which is expected to enhance operational efficiency and predictability.
• The company has a strong cash position and improved networking capital, attributed to disciplined cash management and operational improvements.
• Omda AS continues to focus on acquisitions, having completed three strategic acquisitions in the fourth quarter, which are expected to add significant value.

Negative Points

• The EBITDA margin, while within guidance, is lower compared to previous years, partly due to restructuring costs.
• Organic growth was slow in 2024, particularly impacted by underperformance in the emergency business unit.
• The company faces challenges in maintaining its high networking capital percentage, acknowledging it may not be sustainable every quarter.
• There is a reliance on a few large projects, which can lead to fluctuations in revenue and growth metrics.
• Omda AS's future M&A deals may face competitive pressures from other large European acquirers, potentially impacting acquisition strategy.

Q & A Highlights

Q: Do you factor in further cost cutting or restructuring to reach the 2026 margin target, or can it be achieved through operating leverage? A: Sverre Flatby, CEO: The margin target will be achieved through ordinary budgeting and operations. The restructuring is complete, and any ongoing activities, such as phasing out external consultants, will conclude by June. The focus will be on ordinary operations without new restructuring activities.

Q: Can you explain the slow organic growth in 2024 and the expectations for 2025? A: Sverre Flatby, CEO: The slow growth in 2024 was mainly due to underperformance in the emergency sector, not related to our software business. Recurring revenue is increasing, and the growth outlook for 2025 is healthy based on current operations.

Q: Is the strong networking capital in Q4 due to structural improvements or cash flow timing? A: Einar Bonnevie, CFO: The improvement is largely due to internal discipline and structure. While there are seasonal fluctuations, the focus on cash management will continue, but 31% is not a sustainable level for all quarters.

Q: Will future M&A deals involve more cash given increased profitability? What are your biggest worries going forward? A: Einar Bonnevie, CFO: Future deals will likely use cash rather than shares, given the current share valuation. There are no significant worries; the organic business is stable, and M&A trends are favorable.

Q: How do you plan to compete with other European VMS acquirers for acquisitions outside Norway and Sweden? A: Sverre Flatby, CEO: Omda's specialized approach and synergies with complex, niche companies make it a strong contender for acquisitions. Many competitors find these targets too specialized or complex, giving Omda a competitive edge.

Q: What happened to the organic growth within the emergency business area? A: Sverre Flatby, CEO: The decline was due to a lack of implementation projects and an inability to adjust the cost base quickly. The software side is still growing, and the issue was primarily with consulting services.

Q: Is artificial intelligence an opportunity or a threat for Omda? A: Sverre Flatby, CEO: AI presents significant opportunities for Omda. It is being used to improve administrative efficiency, coding processes, and developing AI functionalities for customers, such as in emergency services and imaging.

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