Earnings call transcript: Know IT AB's Q2 2025 results show sales drop

Know IT AB reported a sales decline of 11.3% in its Q2 2025 earnings call, with total sales reaching approximately SEK 1.5 billion, continuing the trend of declining revenue (-9.43% over the last twelve months). The company's EBITA margin decreased to 3.6% from 5.6% last year, while maintaining weak gross margins of 13.71%. Despite strategic acquisitions and a focus on AI, the company's stock fell by 3.61%, closing at 127.4. According to InvestingPro subscribers can access detailed analyst forecasts and comprehensive valuation metrics to make more informed investment decisions.

Executive Commentary

Per Valentin, CAO, emphasized the importance of improving utilization rates, stating, "The main problem for us right now still is the utilization rates." CFO Marie Bjorklund highlighted the company's efforts, noting, "We believe that it is our actions and having the right competences that improved the utilization."

Risks and Challenges

• Continued demand slowdown in the private sector could impact future sales.
• Intense competition and pricing pressures may affect profitability.
• Geographic challenges, particularly in Denmark and Finland, require careful management.
• Salary inflation and cost pressures could strain margins.
• Dependence on strategic acquisitions for growth poses integration risks.

Q&A

During the earnings call, analysts raised concerns about the challenges in Denmark and Finland markets, the impact of AI on consulting services, and the company's pricing pressures. Executives addressed these issues, emphasizing strategic measures to navigate the competitive landscape and improve financial performance.

Full transcript - Know IT AB (KNOW) Q2 2025:

Matilde, Chorus Call Operator: Ladies and gentlemen, welcome to the NOET Interim Report Q2 twenty twenty five Conference Call. I am Matilde, the Chorus Call operator. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Per Volanty, CAO. Please go ahead, sir.

Per Valentin, Chief Administrative Officer (CAO), Knowit: Thank you, and warm welcome to this presentation of our report for our second quarter. My name is Per Valentin, and with me I also have our CFO, Marie Bjorklund. First, I would like to take you through some operational highlights during this quarter. The positive utilization trend continues in Solutions and for the second quarter in a row, we also have a positive utilization development in Experience. We are pleased to have announced two acquisitions this quarter.

They will support our growth in two important areas, FinTech and defense. And right now, I am at Slide number three. The development continues to differ between countries. Norway is fairly solid, and we see improvement in Sweden. Finland and Denmark are smaller markets, but we still have larger challenges that are due to weak demand and we need to further optimize our organization.

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The competition is still intense and we have challenging balancing prices against salaries. Long term, the ability to improve utilization rates have higher potential than the possible negative impact from our negative yield. But of course that's the situation right now. We remain cautious in recruitment activities, but we continue to recruit in areas of growth. And we now also see that we are ready to step up recruitment activities in areas where the demand will improve in the future.

Next slide, please. We are very pleased that we have announced two strategic acquisitions this quarter for the first time since 02/2002. Milso is a consultant who specialized in defense in the defense area with deep experience from working with clients such as FME, Swedish Defense Material Administration, etcetera. Together with Milso, we look forward to develop our position in this highly interesting and growing sector even further. We also announced the acquisition of Incykon providing provider of fintech solutions through its cloud based platform for insurance for the insurance sector.

I really think that these deals makes us better and better positioned in two areas of growth in the future. You can take the next slide, please. And we will now take a look at our business areas more in detail. Solutions, our largest business area accounting for more than 50% of our total revenue reported net sales of $8.00 3,000,000 for the quarter. EBITDA margin was 6.8%, slightly below last year, but above when we adjust for FX and calendar effects.

We are happy to see that utilization continues to improve, a key factor, of course, for further growth and increased margins. The geographical differences remains. Norway is more stable, and we now see slow but steady market improvements in Sweden. We face large challenges in Denmark and Finland. And in total, at Solutions, we have made a deliberate choice not to lower prices in order to drive volume in a tougher market.

We can take the next slide, please. Our digital agency, experience reported net sales of $267,000,000 in the quarter with an EBITDA margin of 2.4%. We have seen a continued positive trend in utilization for the second quarter in a row, but still that's the utilization is too low. Still competition is very tough and we face price pressure in almost all of our areas in experience. The demand for data and analytics is rising, allowing us to take some strategic roles and move up in the value chain.

That's good. Our focus on sales remains high, and we are growing our order book with several new assignments. We can take the next slide, please. Business Area Connectivity reported sales of around million for the quarter. EBITDA margin was 6.7%.

When adjusted for FX and calendar effect, the margin is in line with last year. We still face challenges from the downturn in the telco sector. Several new assignments in the second quarter provide energy and confidence also in the telco sector actually. We expect to move back into growth mode during the fall and have worked hard to optimize our organization. We can take the next slide, please.

Moving into our management consultancy, Insight reported sales of around million for the quarter. EMETA margin was close to 4%. The profitability was impacted by continued work with restructuring and optimization. The market uncertainty remains and we have experienced clients postponing investment decisions until after the summer. The demand for services in the defense sector remains strong and we look forward to collaborate with our new colleagues at Milsvot.

Together, we have really great opportunities to win new interesting assignments. The demand for ERP system implementations remains good and that's the business that we have in Norway. We can take the next slide, please. And now I would like to turn it over to you, Marie, and elaborate a little bit about financials more in detail. Next slide, please.

Over to you, Marie.

Marie Bjorklund, Chief Financial Officer (CFO), Knowit: Thank you, Par. We can take the next slide again. So back to the group as a whole. We delivered sales of approximately SEK 1,500,000,000.0, a decrease of 11.3%. Adjusted for currency effect, the decrease was 8.3%.

There is a substantial negative calendar effect with eight hours less in the quarter, and we are also in this quarter less employees than previous year. The average number of FTEs during the quarter is down by 7%, in line with the decrease in sales when adjusting for calendar and currency. The adjusted EBITA amounted to SEK 54,000,000, and the adjustment in this quarter is concerning acquisition related costs at SEK 2,900,000.0. The EBITDA decreased compared to the same quarter last year, mainly for two reasons, the weak calendar in the quarter and challenges in prices. Adjusted for currency, we do increase our prices against last year, however, not enough to cover salary increases even though we have managed salary revisions in an efficient way during the spring.

This leads to an adjusted EBITA margin of 3.6 in the quarter. Last year, it was 5.6%. So here, we have a decrease. We see that the market is still challenging. It's fragmented and competition is tough.

But we do have areas where the demand is good, as Per mentioned earlier. Defense, cybersecurity, data and analytics, for example. Solution is improving utilization since one year now, and experienced utilization is trending upwards for the second quarter in a row. All in all, the utilization is slowly getting better for the whole group, but it is in a too slow way, and we are, of course, not satisfied with that. And there is a great potential here for us, where our normal utilization is on a substantial better level.

Despite price pressures, we believe that our main challenge and also opportunity for growth and improved margins is our utilization. We have the right competences and we have done a hard focused work on our cost structure and we continue to seek improvements. Next slide, please. This slide shows the development over time and also on a rolling twelve month basis. Our adjusted EBITA for the latest twelve months is at $323,000,000 and revenues at SEK 6,100,000,000.0 at an EBITDA margin of 5.3.

Next slide, please. This is an overview of our net debt development. We have SEK 400,000,000 in used credit facility and now it has a total credit facility granted of SEK 1.5 Future considerations amount to SEK 40,000,000, and the increase in this quarter is due to the revaluation of a Norwegian start up performing well. And the agreement with the minority shareholders has extended and the expected payout upon exit is now higher. Other liabilities, mainly leasing debt amounts to $448,000,000.

And this totals a net debt of SEK $647,000,000 and divided with our EBITDA of on a rolling twelve month basis of SEK $492,000,000, we are now at a leverage of 1.3. And this means that we have a stable balance sheet and a good financial position. And also, this means that we are well within our financial targets, which is set not to exceed two. Next slide, please. We have a solid platform and a strong position as a digitalization partner in the Nordic Region.

Having a broad footprint is a strength, especially in tougher times as it is important to ensure our stability. The share from the public sector is stable compared to last year, which is a positive sign as the share in this sector has decreased during our earlier quarters. The retail sector is also stable this quarter and our second largest segment as well as industry, which is also in line. The negative development in the telecom sector, it primarily relates to one significant client, decreasing its share significantly during the past year and not yet compensated by other assignments. And for the first time this quarter, we report defense separately, an area that has shown good growth in the past year, good profitability, and it's a segment where we have a great focus.

And with that, I hand over to you again, Tara. Next slide, please.

Per Valentin, Chief Administrative Officer (CAO), Knowit: Well, to summarize thank you, Marie. To summarize, we managed to deliver continued positive utilization trend Solutions and Experience. Activity levels are high, and we have actually secured several new assignments this quarter. During the quarter, we completed two strategic acquisitions in areas central for our further growth. The Nordic market continued to show a mixed picture.

Some regions remain cautious, but the Swedish market is improving. That's a little bit of a new information, I think. This gives us reason for optimism even though uncertainty in broader environment still affects decision making as we talked about, for example, in Insight with decisions postponed until after summer. It remains a challenge to align price development with rising salary costs. We continue to recruit in the selected growth areas where we see long term potential.

At the same time, we are positioning ourselves to accelerate growth and recruitment in areas when market turns. Well, we are, of course, not satisfied with the result in this quarter, but we remain confident that our strong position and long term relevance are in place. And with that, we are now open for questions.

Matilde, Chorus Call Operator: Session. The first question comes from the line of Daniel Duaferc from Handelsbanken. Please go ahead, sir.

Daniel Duaferc, Analyst, Handelsbanken: Thank you, operator. Good morning, Marie. Have Donenjueber from Handelsbanken here.

Marie Bjorklund, Chief Financial Officer (CFO), Knowit: I

Daniel Duaferc, Analyst, Handelsbanken: have a question on starting off with experience. Obviously, a number of days, workable hours, a drag. But do you have any nonrecurring items for rightsizing or anything in experience that I've missed, given eight reports today or something?

Marie Bjorklund, Chief Financial Officer (CFO), Knowit: Yes, we do have some restructuring costs, but we don't disclose those anymore as they are lower than previous years. But I would say mainly affecting experience is the weak calendar in the quarter, and it's also challenges with prices that they've had during the quarter.

Daniel Duaferc, Analyst, Handelsbanken: Okay. And if you look at the outlook for second half, then should we expect more of these smaller rightsizing events and that these prices will, I guess, continue into second half as well. And so we should be cautious on margin recovery short term, except for the number

Per Valentin, Chief Administrative Officer (CAO), Knowit: of days, of course.

Remi Kouria, Analyst, Danske Bank: Of course,

Marie Bjorklund, Chief Financial Officer (CFO), Knowit: we have our yes, Param, you can take it.

Per Valentin, Chief Administrative Officer (CAO), Knowit: Yes. I think that we have to say

Daniel Duaferc, Analyst, Handelsbanken: that the

Per Valentin, Chief Administrative Officer (CAO), Knowit: rightsizing work that we have done in Q2 is lower than last year in Q2, and it's also lower than Q1. So we are as you can understand, we're not back to growth mode everywhere yet, but we are actually less and less rightsizing every quarter.

Daniel Duaferc, Analyst, Handelsbanken: Good. Hopefully, it will turn here in a day. But in Insight, may I ask you on the it's your management and consultancy business and the margin fell back slightly to 3.8%, obviously, with pricing and days, etcetera. But your number of employees down like nine year over year. Is this a deliberate decision in M and A that I missed that boost or keep the number at this level?

Or why do you choose not to adjust more?

Per Valentin, Chief Administrative Officer (CAO), Knowit: Sorry, I'm not following completely, Donnie. So tell me if I'm answering the wrong question here. But Insight, we have quite a shattered picture with some areas with really good growth, ERP business in Norway, defense business and our secure business, they are growing and we are recruiting and we are more people in that area in those areas. In the other areas of Insight, more traditional management consultancy, are less people. So that's the mix.

And in those areas where we are growing, we also perform really good margins in Insight.

Marie Bjorklund, Chief Financial Officer (CFO), Knowit: Yes. Daniel, it has been a deliberate decision to do it this way. It's also like we've rightsized for consultants being completely on the bench, but some of the challenges and insight have been that there has been some delays in projects and so on, and and and then the consultants will eventually get an assignment. So that that is much more difficult to to handle. So, yes, it has been a deliberate decision.

And it's also like Paris says, we have some areas where which is going great. So we're recruiting in those areas, cybersecurity, for instance, and ERP implementations and, of course, defense.

Daniel Duaferc, Analyst, Handelsbanken: Yes. And on those green shot areas, do you is it possible to at least keep the pricing level? Or do you see a massive crowding out of other competitors coming in there as well that makes it a drag on pricing or is it stable?

Per Valentin, Chief Administrative Officer (CAO), Knowit: Still we are able to keep our prices in those areas, for example, in defense area because the entry barriers are quite high We need to get people educated to go into that area. Then, of course, they need all their certificates, etcetera, etcetera. So they are still keeping up the prices. The prices in areas with high competition are, of course, more tougher to keep up.

Daniel Duaferc, Analyst, Handelsbanken: Perfect. And just a last question for me. Do you see and we obviously have this generative AI, I guess, pros and cons and perhaps opportunities and risks as well. But if you look at your different business segments, can you talk a little bit more on this topic given that, I guess, some customers would like to have more for the same or for less or some and etcetera. So is it from a business segment perspective, how to think about it?

Per Valentin, Chief Administrative Officer (CAO), Knowit: I think it's there are quite a lot of possibilities for us. There are quite a lot of possibilities for our customers as well. For example, experience is quite interesting because we have already seen that the UX part of the experience area to create more low end coding connected to graphics and user experience, it's almost all in AI now. So it's almost shifted already. And we are quite a lot less people there the last two years.

So that shift has already begun. But what we as I talked about before, what we have seen in experience that the demand for data and analytics competence is rising. It's actually allowing us to take on more strategic roles and move up in the value chain. So there is a shift where we get higher up in the value chain due to AI in quite a lot of the areas. And that is something that I think will continue the next five, six, seven years, something like that.

And that's I think that's good for us, but demand change, of course.

Daniel Duaferc, Analyst, Handelsbanken: Yes. Thank you, and good luck second half and have a great summer.

Webcast Moderator: Thank you. Thank you so much. You too.

Matilde, Chorus Call Operator: The next question comes from the line of Remi Kouria from Danske Bank. Please go ahead.

Remi Kouria, Analyst, Danske Bank: Thank you, operator. Hi, guys. Thank you for taking my questions. Maybe just first off, perhaps a clarification on the topic of like the normalization of utilization rates. Do you feel like is it a fair assumption that the organization will be rather sort of flattish moving forward and a normalization of the utilization rates will be on the back of a market recovery?

Per Valentin, Chief Administrative Officer (CAO), Knowit: I think that we are quite far from a normal utilization right now. So there is a lot of potential to be done. One part of that, of course, needs a little bit better market because what we are facing right now in this market is quite a lot of stops and stops and waiting between assignments. That's hard to address when you have a tougher market. But I think that we are proven now proven since almost or a year in solutions that we take one step at a time in utilization rates even if the market is still quite tough.

And we have been able to do that in experience as well. So I think that the utilization rates will continue up one step at a time quite slow if the market continues to be tough. If the market gets better, I think that we will have a little bit of a bigger step in utilization rates.

Marie Bjorklund, Chief Financial Officer (CFO), Knowit: Yes. And just to add to that, that we believe that it is our actions and then having the right competences now and all the work that we've done during the past two years that improved the utilization. And there's a potential for several percent units to improve it.

Remi Kouria, Analyst, Danske Bank: Okay. That's very clear. And then I'm sensing that more and more players in your field are talking about price pressure, at the very least sort of not being able to mitigate salary inflation through price hikes. When should we expect considering that you have a similar size wage increase next year in April, when should we expect like yield levels to normalize, if ever? Like when do you think that price hikes would be able to mitigate the impact from said wage increases.

Will you be able to do that already this year on the basis of this year's salary increase? Or will we see 26% compound on top of the increase there and then you will need to catch up with price hikes for a longer period of time?

Per Valentin, Chief Administrative Officer (CAO), Knowit: Of course, we don't know. But I think we have to bear in mind that we were able to increase the yield for quite a few years before 2024, 2025. So in the beginning of 2024, we had a very much better yield than we had 2021, 2022, for example. So that it goes down a little bit right now in the middle or even in the end of recession, it's quite normal. And I think maybe it will continue down a little bit and then flattish out and maybe go up a little bit when the market comes back.

But I don't think that that's the it is still we can't cope with higher the yield is getting worse, but we are still increasing prices 24% to 25 So I think that the main problem for us right now still is the utilization rates. But and we have been quite as we talked about in Solutions as well, we've been quite cautious in it's a deliberate choice not to lower prices in order to drive volume in a tough market because that's going be a problem in the end of a recession. So we try to be quite cautious about that. But I think it will continue down a little bit end of twenty twenty five, maybe beginning of twenty twenty six. And then when the markets start to stabilize or even increase, I think that the yield will go back up a little bit again.

Remi Kouria, Analyst, Danske Bank: That's very clear. And if you compare like current yield levels to the sort of the years you were referring to as sort of well, '20 and 2021, where are we in terms of yield levels now than compared to those years?

Marie Bjorklund, Chief Financial Officer (CFO), Knowit: Ramil, I'm sorry we don't give details on the prices and the yield. Obviously, we do you want to

Per Valentin, Chief Administrative Officer (CAO), Knowit: add Let's that talk about the market and not about know it then because I think that the yield levels in the market is, of course, it's a little bit lower than 2020, 2021, 2022, but not that much lower. But of course, it's lower than twenty twenty three, twenty four because it was an improvement during those years.

Remi Kouria, Analyst, Danske Bank: Okay. That's very clear. And then just finally on the topic acquisitions, you announced two in two days. But prior to that, no acquisitions since 2022. At times, as an external observer of Knowit, it's almost it's a bit stochastic in a sense because there have been quite long periods of time that you haven't done any acquisitions, and then you do several in a very short period of time.

So I'm just trying to understand like the rationale behind I can see why you want to add defense exposure and whatnot. But just trying to understand like how you view the balance sheet capital allocation in this part of the cycle.

Per Valentin, Chief Administrative Officer (CAO), Knowit: I think we have a quite strong balance sheet. Maybe you can elaborate a little bit about that later, Marie. But when we saw the downturn in mid-twenty twenty three in the market, as you know, we did need to work a lot with layoffs 2023, 2024 and still some now in the beginning of twenty twenty five. And when you work quite a lot with that tool, it's not possible culturally to take on acquisitions. Now we see that, that is flattening out, and we see that there are growth areas, for example, fintech and defense.

And in those areas, it is culturally possible for us to take on acquisitions right now. So that's the cultural part of it. And of course, it's very important right now that these acquisitions are they are quite small, and they are in areas where we really see further growth extremely important. About the balance sheet, Marie?

Marie Bjorklund, Chief Financial Officer (CFO), Knowit: Yes. As I mentioned earlier, we have a leverage of 1.3, so it's low. So we have the capacity to do acquisitions. And as Per mentioned, they are quite small, so they will absolutely not burden our balance sheet. And they were two good opportunities for us to to find two companies that we really like.

It's they fit right with our strategy. So it was a good opportunity. And also with It's Small, we can come back to looking at acquisition, which we have done during this period as well, but we haven't closed anyone.

Remi Kouria, Analyst, Danske Bank: Okay. That's very clear.

Per Valentin, Chief Administrative Officer (CAO), Knowit: Thank you both. And I hope you get

Remi Kouria, Analyst, Danske Bank: some time to refuel the batteries. Thank you.

Daniel Duaferc, Analyst, Handelsbanken: Thank you.

Marie Bjorklund, Chief Financial Officer (CFO), Knowit: You. You too.

Matilde, Chorus Call Operator: We now have a question from the line of Raymond Keefe from Nordea. Go ahead.

Raymond Keefe, Analyst, Nordea: Hi, good morning, Per and Mel. A couple of questions from me. Starting with something you said there earlier, you talked about needing more efforts to improve efficiency in Denmark and Finland. If we can start with Denmark, do you refer mainly to sort of restructuring? Or are there other things about, say, how you work there that you see opportunities to improve upon?

Per Valentin, Chief Administrative Officer (CAO), Knowit: Starting with Denmark. There of course, it's a quite small part of Norway. We have to bear that in mind. But we have two business areas in Denmark. It's Solutions and Experience.

Starting with Solutions. As you know, we did a divestment now in the quarter as well in Denmark, making it possible for us to work a little bit more with internal restructuring of the solutions area. We have been in part of the market with a little bit too low prices and wrong the wrong customer mix. We had some problems with some Oracle projects, etcetera, etcetera. So we have already initiated a restructuring of solutions in Denmark.

So that's what we are talking about. Of course, the market is quite tough in Denmark as well. It's very shattered with good demand in some areas and quite tough in some other areas. But now we're talking about our internal life. So there is a restructuring going on in Solutions in Denmark.

In Experience, we have as you know, we did focus quite a lot the last years on high end competence and experience in Denmark. And in that era, we have actually faced a much tougher market. Now we are I think we are on the bottom and we see some lights, but it's been a tough market. And also in experience, we have restructured our own setting with fewer subsidiaries and new manager for experience in Denmark the last year, etcetera. So we have done quite a lot to create a structure in Denmark that we think will be suitable for the future.

Going into Finland, I think that it's we have overperformed compared to the market because the market the last one point five, two years has been quite tough. We face some challenges in some customers with a tough market. But I think that we do handle that quite alright.

Raymond Keefe, Analyst, Nordea: Got it. That was really helpful for us to understand a bit what's going on there. And then a question on IncyCon that you announced as an acquisition. They have some software sales in general that's not part of your core portfolio to do SaaS sales. But is this something that you see expanding?

Is this something that you want to drive further ahead, more SaaS sales, recurring revenue?

Per Valentin, Chief Administrative Officer (CAO), Knowit: Well, software as a service is nothing that we would like to be very big at. But what we try to find is platforms or products where we see a mixed demand for the code and consultancy around that code. We have that in quite a lot of areas. Our defense area, data unit, we have that in quite a lot of I think it's five or six subsidiaries within OIT already. So that makes fifty-fifty software, 50 consultancy is the right mix for us.

And in Saicon, it's more of a company with quite a lot of consultancy as well. So we are good at scaling consultancy connected with software. We are not good at scaling software as a service.

Raymond Keefe, Analyst, Nordea: Yes. That's very clear. And maybe one final one. You're reducing the consultant headcount here Q on Q in Q2, but with Q3 already started a big recruitment quarter. Do you expect to net recruit here for this to change, maybe not throughout the whole or all segments or maybe just some?

Any flavor on that?

Per Valentin, Chief Administrative Officer (CAO), Knowit: Well, we don't do any predictions. But I don't think that we are back in a growth mode yet. We have been in a mode where we are less people year over year for almost two years now. And now I think that we are starting to flatten out. There is a lot less layoffs this Q2 than it was Q2 twenty twenty four.

And I predict that we will be more flattish for a while and not shrinking. That's the most focus for us for a while until the market gets back on track.

Raymond Keefe, Analyst, Nordea: No, I understand. That makes a lot of sense. Thank you very much for answering my questions, Per and Demer.

Matilde, Chorus Call Operator: Thank The next question comes from the line of Daniel Thorson from ABG. Please go ahead.

Daniel Thorson, Analyst, ABG: Yes. Thank you very much. I missed parts of the Q and A here due to another call. So apologize if the question was already taken. But first one, seasonally here going into Q3, EBITDA is usually somewhat lower than Q2 given the use of July and August, obviously.

Is that reasonable to expect also this year? Or are there anything else we are missing which may change that picture this year as Q2 was already quite weak with negative calendar, for example?

Per Valentin, Chief Administrative Officer (CAO), Knowit: The seasonal effects in '25 is the same as every year, nothing else.

Daniel Thorson, Analyst, ABG: And versus Q2, there shouldn't be any changes or

Marie Bjorklund, Chief Financial Officer (CFO), Knowit: No. But it is true that the second quarter is has a weak calendar. So and when you look at q three, it is more or less in line with last year. So you don't have that negative effect then. But yeah.

So no, like really bad development should be there.

Daniel Thorson, Analyst, ABG: Yes, I see. So a normal seasonality with Q3 a bit lower than Q2 is reasonable to expect, I guess?

Marie Bjorklund, Chief Financial Officer (CFO), Knowit: Yes.

Per Valentin, Chief Administrative Officer (CAO), Knowit: Okay. That's clear.

Daniel Thorson, Analyst, ABG: And then secondly, on prices here, you're talking about positive price development year over year for the whole group, up in some areas, down in some. I'm not that worried about price increases today because some of them were our results of previous contracts maybe signed half a year ago or so. But given the large layoffs we are seeing in the whole sector and negative net recruitment at the moment with large guidance cuts from several peers as late as this week. And this morning, we got more than 1,000 consultants less in assignments in e work, for example. Is it possible to avoid an acceleration in the price pressure ahead?

Per Valentin, Chief Administrative Officer (CAO), Knowit: I think that we have we are in the middle of a price pressure right now. Of course, if you look at the picture, the average 24% and average 25 I understand your point. But what we are looking at, of course, is the prices that we are assigning right now in our contracts. But we are able to hold up prices in some areas, for example, in Norway, defense area, etcetera, etcetera, as we've been talking about. And we see some price pressure in some other areas.

But we are quite cautious in not going too far in that moving to other areas. But I think that we will see a price pressure in the market. I agree about that in the end of this year as well. And then we'll see what happens twenty twenty twenty six. But you have to bear in mind that we've had increased prices for quite a few years before and increased yield as well.

So it's we have to work with it and we have to live with it. And the most important for us is to increase utilization.

Daniel Thorson, Analyst, ABG: Yes. No, I totally agree. And I guess my thesis is that we will see further price pressure during the fall rather than what we see today. But let's see. It depends on how Q3 develops here, obviously.

Sure. A final question here on the two M and A deals that you did. I heard there were some questions about them, and I heard the responses as well. But given the attractiveness of these two end markets, fintech and defense, why were they up for sale at all? And why did you win these two deals?

As I guess, the appetite for these assets would be quite good in a, all else equal, very muted M and A market for consultancy firms.

Per Valentin, Chief Administrative Officer (CAO), Knowit: It's because the people in those companies really wanted to be part of the new ecosystem and they like to work with us. So that's the easiest answer.

Marie Bjorklund, Chief Financial Officer (CFO), Knowit: Yes. It's always a match both ways, of course, when you do an acquisition, and this was a good match.

Daniel Thorson, Analyst, ABG: Should we expect more smaller acquisitions during the second half of the year?

Per Valentin, Chief Administrative Officer (CAO), Knowit: Don't predict We will see. There are possibilities, but we are quite slow in our M and A agenda still. So it depends on possibilities. Good price, the perfect match, the right area where we face organic growth ourselves, etcetera, etcetera. But I think that if we I understand that you think that we are going down a little bit more in prices, etcetera, in the second half.

But I think that we have a quite flattish feeling rather than going down right now. And in the end of a recession, I think that there will be quite a lot of opportunities and we want to be part of that.

Daniel Thorson, Analyst, ABG: I see. And then the final question on the full year margin here, EBITA margin. You are down the first half of the year, obviously, versus last year. Do you think that you have possibilities enough to work internally so that you could close to match the full year margin of 2024? Or will that be tough?

Think it's

Per Valentin, Chief Administrative Officer (CAO), Knowit: hard for us to predict that.

Marie Bjorklund, Chief Financial Officer (CFO), Knowit: We can't really predict that. But we will obviously try.

Per Valentin, Chief Administrative Officer (CAO), Knowit: Yes.

Daniel Thorson, Analyst, ABG: And that's clear. Thank you very much. Have a nice summer.

Daniel Duaferc, Analyst, Handelsbanken: Thank you. Thank you.

Matilde, Chorus Call Operator: Ladies and gentlemen, that was the last question from the phone. I would now like to turn the conference back over to the webcast for written questions.

Webcast Moderator: Yes. Thank you. We have a few questions from the webcast in written form as well. And the first one coming from Casper Wagner Christensen at IT Watch. And perhaps we already touched upon this, but he'd like to know what specific challenges we're facing in Denmark.

Per Valentin, Chief Administrative Officer (CAO), Knowit: Yes. I think that we did talk about that. There are a little bit different challenges in Solutions, as we have mentioned, where we have made a divestment and are now able to form a structure where we think that we are suited for the market and a little bit differently in experience with a really tough end market.

Webcast Moderator: Thank you. And then we have a few questions from Thomas Kismol. And the first question is, do

Marie Bjorklund, Chief Financial Officer (CFO), Knowit: you see organic net recruitment going forward in sorry, it disappeared. In Sweden and in Finland? Thank you. Also if we're able

Webcast Moderator: to give utilization rates like B3 Consulting?

Per Valentin, Chief Administrative Officer (CAO), Knowit: Would you like to take that, Yes.

Marie Bjorklund, Chief Financial Officer (CFO), Knowit: Can take that. On a total level, I would say that we will recruit this fall, but we expect the net recruitment in the third quarter to be more or less plusminus zero from where we are now. And maybe we will have a slightly positive net recruitment later on this year in the fourth quarter. And on the different countries, I would say that the market in Finland has been challenging. Know it in Finland has really performed strong compared to the market.

But unfortunately, now these quarters, we've seen a little turn down in the trend. So I think that we will be cautious in Finland. But in Sweden, probably we will have a little positive net recruitment during the fall. Okay. And Jan, the question about the utilization rates.

Yes, we are discussing that internally. It's nothing that we probably will disclose in the third quarter, but we will for sure consider it. We know that there are often questions about our utilization.

Webcast Moderator: Great. And we have some more questions from Thomas. The next one being, if we can comment on the market outlook in public sector versus private sector?

Per Valentin, Chief Administrative Officer (CAO), Knowit: I think that what we all have seen right now is that the private sector, especially the industry did held up a good demand quite long. But now 2025, we are seeing that, that is going down. That's quite a small part of now it, as

Remi Kouria, Analyst, Danske Bank: you all

Per Valentin, Chief Administrative Officer (CAO), Knowit: know. Already in the beginning of 2023, mid-twenty twenty three, we saw that the public sector did decrease quite a lot, and we've seen that for almost two years. But we now see some early signs of at least not continued decrease, maybe some increase, especially in Norway. So I think that we right now, we see a shift, and that's very important for us because we have, as you see, 36 public sector and much less industry sector.

Webcast Moderator: Good. And one last question. Is the business of tailored solutions behind us?

Per Valentin, Chief Administrative Officer (CAO), Knowit: The business of tailored solutions behind us, It is with the the the entrance of cloud for quite a few years ago. It was much easier to to make tailor made solutions because you could put them somewhere. And now when lower and lower costs for coding, I think that we will see more and more tailor made solutions in the future. And the mix platforms or standard solutions and tailor made, I think that's just because it's lower priced than before, it's easier to do. And there is a lot of things in public sector, in private sector that are not digitalized in the way that it should be.

Almost all of the digitalization in both private and public sector are very standardized. It's not personalized at all. And the future is rather connected to personalization as I see it. And then you need to create much more complex structures of platforms.

Webcast Moderator: Great. That was the last question from the webcast.

Marie Bjorklund, Chief Financial Officer (CFO), Knowit: Thank you so much.

Per Valentin, Chief Administrative Officer (CAO), Knowit: Thank you very much for listening in, and now hope for some really sunny summer.

Marie Bjorklund, Chief Financial Officer (CFO), Knowit: Yes. Thank you.

Daniel Duaferc, Analyst, Handelsbanken: Thank you.

Marie Bjorklund, Chief Financial Officer (CFO), Knowit: Bye.

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