Itera Q3 2023: Organic growth of 14% and supplementary dividend

Although the overall macro environment remains somewhat uncertain, Itera's performance demonstrates its resilience. The Board has approved an additional dividend of NOK 0.40 per share.

- The most important thing is for us to stay connected to our customers and to truly understand their needs. Our customers require short-term solutions to add value, as well as support with digitally transforming their businesses. Strong revenue growth and effective cost control, combined with reduced expansion pace, enable us to increase the total dividend by 40% in 2023, says Arne Mjøs, CEO of Itera.

Itera reports operating revenue of NOK 193.9 million (NOK 170.9 million) for the third quarter of 2023, which represents organic growth of 14%. For the first nine months operating revenue was NOK 649.5 million (NOK 530.4 million), which represents organic growth of 22%.

- To reflect on how our market has developed over the last 4-5 months, we and our customers have had to navigate a tougher macroeconomic environment than we anticipated at the beginning of the year. As we soon enter 2024, we remain focused on creating value for our customers and we are going to pivot to areas of growth and optimize our business. We believe helping our customers to accelerate the digital transformation of their business will be the drivers of our growth, says Arne Mjøs, CEO of Itera.

Itera’s headcount at the end of the third quarter of 2023 was 762 as compared to 701 at the end of the third quarter of 2022. This represents an increase of 61 employees (9%) during the last 12 months and an increase of 21 employees in the third quarter, of which mostly university graduates. 

- The growth in our headcount has been slower over the last quarters to adapt to the softer market. We also continued to leverage our Digital Factory at Scale, doing more with less through automation and managed services, which means our overall headcount will not really need to grow at the same rate as our revenue, says Arne Mjøs.

Total operating expenses in the third quarter of 2023 were NOK 185.3 million (NOK 160.7 million) and NOK 589.2 (NOK 472.6 million) for the first nine months. Itera has implemented a business optimization programme that is expected to improve operating margins by 1.2-1.6% when fully implemented.

The operating result before depreciation and amortization (EBITDA) for the third quarter of 2023 was a profit of NOK 16.9 million (NOK 18.7 million), giving an EBITDA margin of 8.7% (10.9%). For the first nine months EBITDA was NOK 84.1 million (NOK 80.8 million) with an EBITDA margin of 13.0% (15.2%).

The operating result (EBIT) for the third quarter was a profit of NOK 8.7 million (NOK 10.2 million), giving an EBIT margin of 4.5% (5.9%). EBIT for the first nine months was NOK 60.3 million (NOK 57.8 million) with an EBIT margin of 9.3% (10.9%).

- We are implementing several business optimization actions to lower costs in 2023 and beyond, in order to achieve margin improvements over the next quarters. This includes increasing our demand-generation activities, increasing hourly rates in line with inflation, transforming overheads into billable value creation and reducing operating expenses and capex, says Mjøs.

The revenue from Itera's 30 largest customers accounted for 83% of its operating revenue, which is the same as in the third quarter of 2022. New customers accounted for 5% (15%) of revenue.