A slow quarter, but an optimistic future: Interim report, January - March 2024

Q1 2024

• Net sales amounted to MSEK 75.7 (89.9), rendering a net sales growth of -16% (18%)
• The FX adjusted net sales growth for the quarter was -17% (13%)
• Software revenue amounted to MSEK 42.6 (55.8). The share of total sales reached 56% (62%)
• Adjusted EBIT amounted to MSEK -16.1 (11.3)
• Adjusted EBIT margin of -21% (13%)
• Cash flow from operating activities amounted to MSEK -11.1 (-8.3)
• Net income amounted to MSEK -11.4 (7.6)
• Earnings per share before dilution amounted to SEK -0.33 (0.22) and diluted to SEK -0.33 (0.21)

A word from the CEO:

During the first quarter, the International segment continued to show continued strong growth. The Nordics segment has shown a good recovery, while the result in the North America segment is still characterized by delayed sales processes. For the first quarter, revenues decreased by 16 percent compared to the same period last year to SEK 75.7 million, while the EBIT margin was -21 percent. Going forward, the company will focus on the recovery in North America, as well as actively work to find synergies between all parts of the group to optimize the way we bring our products to market.

When we summarize the first quarter, we see that the business has a stable core business in our software sales and delivery, especially in the international defence market. The North American segment continues to be affected by delayed sales processes, which we now expect to improve because of the US defence budget being approved at the end of March.

Financial Results
During the first quarter of the year, net sales amounted to SEK 75.7 million, a decrease of 16 percent compared to the first quarter of 2023. The operating result amounted to SEK -16.1 million with a margin of -21 percent.

Nordics
The Nordics segment has recovered well during the quarter and managed to close many of the delayed deals from last year. The segment showed a growth of 8 percent compared to the same quarter last year. Revenue amounted to SEK 29.6 million.

In addition to revenues from existing contracts with both the Swedish Armed Forces and other major customers, the segment has also signed new contracts with no fewer than 15 new customers, in both the private and public sectors.

North America
The North America segment continues to be characterized by delayed sales processes, similar to the recent quarters. Revenues in the first quarter decreased by 76 percent compared to the same quarter of the previous year to SEK 9.8 million.

We have been actively working on improvements in the business for a long time, both with new management, but also appointed a new external board for our North American defence business to increase the focus on new business and management of our government customers. Regarding the defence budget, it was approved by the US government at the end of March and the work of completing the negotiations that have been on hold is now activated.

International
The International segment continues to show strong growth in all geographies. Revenue for the quarter increased by 73 percent compared to the same period last year to SEK 36.3 million. During the quarter, strategic contracts were extended and a number of new agreements were signed.

Future outlook
As the new CEO of 4C Strategies, the focus for me and the company in the near future will be on realization of our strategy, namely our global expansion and profitable product sales. With my experience from leading the International segment, I look forward to integrating successful strategies and processes from this segment into the rest of the group. We will work actively to find synergies between all parts of the group to optimize the way we bring our products to market. The extensive transformation that our software platform has undergone is now largely completed, and we now see that future investments will be about further capacity in our "go-to-market" and sales organization.

For both the remaining parts of 2024 and further ahead, the US defence market will play a significant role in our growth journey. As we have previously communicated, this can have a major quarterly impact due to the size of individual deals, at the same time we see that the interest in our business and our products within the Exonaut suite is significant in all areas.

All in all, we see that the global increase in defence appropriations is starting to have an impact also in training and exercise, combined with a more stable economic situation in Europe, which positively affects the private sector as the willingness to invest increases, leading to a large and increasing interest in 4C Strategies. Personally, I am very motivated and enthusiastic about the continued journey ahead of us and have a positive outlook, both in the short, medium and long term.

Jonas Jonsson
CEO

Invitation to webinar for the presentation of 4C Strategies’ Interim report, January - March 2024:

4C Strategies' Interim report for Q1 2024 will be published on Monday, April 29, 2024, at 07:50 CET.

The same day at 09:30 CET, a presentation will be held where analysts, investors, media and other stakeholders are invited to participate. The presentation will be a webinar where 4C Strategies’ Jonas Jonsson (CEO) and Anders Nordgren (CFO) will comment on the published report and answer questions. The presentation will be in English.

Afterwards, the presentation material will be available on 4C Strategies’ website under 'Reports and Presentations'.

For participation at the presentation:
Sign up here