A first half year marked by delays in North America: Interim report, January - June 2024

Q2 2024

• Net sales amounted to MSEK 60.5 (85.4), rendering a net sales growth of -29% (3%)
• The FX adjusted net sales growth for the quarter was -29% (-1%)
• Software revenue amounted to MSEK 37.3 (56.3). The share of total sales reached 62% (66%)
• Adjusted EBIT amounted to MSEK -32.6 (1.0)
• Adjusted EBIT margin of -54% (1%)
• Cash flow from operating activities amounted to MSEK -40.6 (-1.8)
• Net income amounted to MSEK -27.5 (1.0)
• Earnings per share before dilution amounted to SEK -0.79 (0.03) and diluted to SEK -0.79 (0.03)

A word from the CEO:

During the second quarter, our North America segment continued to be affected by delays in sales processes. However, the approved defence budget in March 2024 has improved our prospects, and we have been working intensively to advance several key deals. Although this has taken longer than expected, we are now in the final stages of negotiations for critical contracts that we anticipate signing in 2024. Given the size of these deals, they will continue to have a significant impact on our quarterly results. The International and Nordics segments are performing in line with our expectations, with notably strong comparative quarters from 2023. For the second quarter of this year, the group reports a 29 percent decline in net sales compared to the same period last year, with an EBIT margin of -54 percent.

4C Strategies has built a global software company with continuous profitability over the past 20 years. Our long-term customer relationships and focus on high customer satisfaction have allowed us to continue growing. However, the past twelve months have been marked by delays and challenges in finalising contracts. My focus, along with the new management team, is to work together 100% to regain ground from the first half of the year and finish the year strongly. I have implemented changes in management and continue to review both costs and processes to increase activity and effectively build our position within the defence segment, while also focusing on expanding our position in the corporate and governmental sectors, two verticals showing great interest in our products where we see substantial market activity.

One step in this effort is to change our operational structure to streamline the business and create better conditions for active follow-up and optimization. From the third quarter onwards, the company's operational segments will consist of: EMEA (Europe, Middle East, and Africa), APAC (Asia-Pacific), North America, and Global Expert Services (offering consultancy services not linked to software implementation or support services). I look forward to the opportunities this creates and believe that we now have a structure that will benefit our efforts to effectively bring our products to market.

Financial Results
In the second quarter of the year, net sales amounted to SEK 60.5 million, a decrease of 29 percent compared to the second quarter of 2023. The operating result amounted to SEK -32.6 million with a margin of -54 percent.

Nordics
The Nordics segment has continued with stable activity among both new and existing customers, similar to the previous quarter. Net sales amounted to 26.0 million in the second quarter, which is in line with comparative quarter. In the Nordics, we have long been working at a strategic level with several major governmental and private customers. These projects have continued to deliver and expand during the first half of the year, providing good opportunities for a strong year-end. In addition to working with these long-term customer relationships, the segment has continued to sign both software and Expert Services contracts with over 10 new customers in both the private and public sectors, further strengthening our position in the Nordic market.

North America
During the second quarter, our North America segment continued to be impacted by delays in sales processes. However, the approved defence budget in March 2024 has improved our prospects, and we have been working intensively to advance several key deals. Although this has taken longer than expected, we are now in final negotiations for critical contracts that we anticipate signing in 2024. Given the size of these deals and our strategic focus on expansion in North America, these contracts will have a significant impact on our quarterly results. Additionally, we continue the long-term effort to build a broad pipeline in both the defence and private sectors, which we look forward to sharing more about in the coming quarters. Net sales in the first quarter decreased by 96 percent compared to the same quarter last year, to SEK 0.4 million.

International
The International segment delivered a stable quarter, primarily within Australia, with positive pipeline development in Europe and NATO. The quarter's performance is mainly seen in the APAC region, where we are strengthening our position with strategic extensions and expansions of key contracts within the defence segment. Net sales for the quarter decreased by 32 percent compared to the same quarter last year, to SEK 34.2 million. The comparative quarter included larger contracts with the British defence. During the quarter, we have seen several new agreements with both the British Air Force and Navy, which aligns with our strategy to broaden our defence offering beyond the land domain in the United Kingdom.

Future
With a challenging first half of the year behind us, we now continue to look ahead and will work hard to ensure the entire organization is fully engaged in capitalizing on the opportunities available for our offerings worldwide. We are exploring new technologies to further enhance our products, and our consultants and implementation technicians work side by side with defence forces and companies and organizations that share our goal of increasing resilience and safety in society. Under my leadership, 4C is fully focused on this and on continuing to deliver long-term value and high customer satisfaction.

Jonas Jonsson
CEO

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

4C Strategies' interim report for Q2 2024 will be published on Friday, July 19, 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