CEO Comment Q4 2022

A big thank you to our incredibly talented people for their extraordinary work and commitment for making 2022 a truly remarkable year for Itera.

After Russia’s invasion of Ukraine on 24th of February, no one could imagine that we would deliver organic growth of 29 % and an operating EBIT margin of 9.5% in the fourth quarter. I have never been so proud of how our great people navigate any kind of challenges the invasion represents.

The biggest social responsibility of the business community is to keep the Ukrainian economy running. Last quarter, our business in Ukraine kept running as normal despite the frequent waves of Russian missiles and drone attacks on critical infrastructure and civilians across the country. Our people in Ukraine adapt their availability according to information from authorities on planned repair and maintenance of the electric grid and power supply. Power banks, power generators and extra UPS for Internet access are installed in our offices and homes as needed. In general, our offices in Ukraine remain safe and operate with all services, including power and Internet.

“The biggest social responsibility of the business community is to keep the Ukrainian economy running.”

Our performance is really demonstrating the resilience of the company. We are very pleased with our steady, strong and profitable growth trajectory, with an annual growth rate of 21.6% and an average EBIT margin of 11.6% over the last 24 months.

We achieved this profitable growth while continuing to invest in our three new offices in Central Europe, cloud capabilities and the professional growth of our people, all in order to increase our scalability as a strong international company. We also achieved solid organic growth in our headcount, with a net 81 employees joining over the last 12 months, temporarily impacted by the invasion of Ukraine. Once the new offices are running at full speed, our growth capacity will be even larger than before the invasion and less vulnerable to any situation in Ukraine. Indeed, our long-term ambition is to grow our headcount organically by a net 200-350 FTEs annually.

We remain focused on staying close to our customers, providing the right solutions to enable sustainable digital transformation and adjusting to their changing needs. There is no more powerful input than digital technology to drive business growth. Digital technology will accelerate growth beyond what was previously possible with people and machines. When I talk to executives, the need for speed and results from digital initiatives is always one of their top priorities.

Over the last quarter, the economic forecasts for 2023 have continued to decline. While the latest technology spending forecast for 2023 continues to show robust growth of 5% or so, we will see how the market evolves as customers adjust to the new macro environment. We believe that the current macro situation is making it even clearer to customers that they need to change more, not less. At the same time, they're more and more focused on cost and resilience.

Moving to the cloud is the best way for any customer in today’s economy to mitigate demand uncertainty and energy costs, while gaining efficiencies of cloud-native development. And yet we are still in the early stages when it comes to the long-term cloud opportunities.

Because speed, cost and resilience are so important to our customers, we often do multiple things at the same time to help in their digital transformation. We continue to see a growing number of customers embrace our Digital Factory at Scale in order to digitise faster, access digital talent and reduce costs. There is also a gradual shift taking place in the nature of demand for managed services. Our sales pipeline of cloud migration and cloud modernisation opportunities is increasing steadily. Our Cloud Application Services unit is developing according to plan with gradually improving profitability in addition to increasing its recurring revenue.

Our culture is grounded in the growth mindset: Grow people, grow customers, grow company. This means everyone is on a continuous journey to learn and grow. We continue to invest in our people, providing learning opportunities and upscaling to enable us to pivot as our customer’s needs evolve. We believe our unwavering commitment to diversity and inclusion is both the right thing to do and an essential element of our business strategy and strong financial performance.

Our own progress in sustainability is important to our ability to lead in helping our customers harness this key force of change and in attracting top talent. We scored in the top 6% in our industry in the sustainability ranking by Ecovadis, the world's largest and most trusted rating company within sustainability. We will continue our pursuit of our own commitments and helping others achieve their sustainability goals, aided by technology.

As a company, we are deeply engaged in supporting Ukraine from all locations. As an example, in the fourth quarter, Itera together with the Norwegian-Ukrainian Chamber of Commerce (NUCC) and The Norwegian Public Roads Administration (Statens Vegvesen) were instrumental in providing 310 meters of temporary bridges to Ukraine. In total, Norway is shipping 32 trucks with temporary bridge structures to Ukraine that will not only connect settlements but will also ensure the delivery of humanitarian cargo, the passage of ambulances, repair teams, and the evacuation of the population.

Today, we are the strongest we have ever been in our history because of our incredible people. As we begin the new year, we believe the depth and breadth of our services in sustainable digital transformation have never been more relevant. Our consistent investment in scalability, including new offices, cloud capabilities and developing our employees, will define our growth journey going forward.

– I am constantly in awe of how our employees bring their passion to work each day - for each other, for our customers, for their communities and for Ukraine. Thank you so much.

Arne Mjøs