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Hi, and welcome to this presentation of the Q3 numbers for Atea. It is very dynamic times, you can say. And this quarter really proves that in the Nordics and in the IT business in general. We've never had such a rapid growth, and I'll get back to some of the numbers in a second. But before I do so, I just want to remind all of you online that you can already now start sending in questions. We will take them all in the end.
As mentioned, rapid growth on revenue in all the business lines. Hardware grew the most, but services also grew more than 10%. This adds up to NOK 10.4 billion in revenue, up 27% in constant currency or 22.5% as it says here. The EBIT came in at NOK 284 million. It's a growth in constant currency of more than 12%. And the cash flow, as we said after both Q1 and Q2, would improve as we are working down inventory, and I'll get back to the supply chain and inventory a little later. This gives us a very, very good position in the market, both from a market share point of view, but also from a financial position.
We didn't scale as good in this quarter, and I'll get back to that. Some of you might think that this is purely a cost issue, but it really isn't. You have to remember, we brought in 3 companies that we acquired during the first part of the year during this quarter. which adds to the number of people and personnel costs, of course. They also added to our ability in the market. But again, I'll get back to that.
So with that, I'll leave it to Robert to give you all the good news.
Thank you, Steinar. I'd like to start by reviewing our income statement. Atea had exceptionally strong sales growth across all lines of business in the third quarter. Gross sales were a record high NOK 10.4 billion, up 22.5% from last year. The underlying sales growth was higher than reported. Currency differences had a negative impact of 3.7% on reported growth as sales in foreign currencies were translated into a stronger Norwegian krona.
Adjusting for this currency impact and for two small acquisitions, organic sales growth in constant currency was 27.0%. Sales grew rapidly across all lines of business. Hardware sales increased by 27.9% or 33% in constant currency, based on strong demand in all product categories, including clients, data center and networking equipment. Software sales grew by 19.1% or 24% in constant currency, driven by higher sales of software for data center and networking applications. Services sales increased by 12.6% from last year or 17% in constant currency with the rapid growth across nearly all geographies.
Our gross sales were then converted into net revenue based on the principal agent criteria in IFRS 15. With this adjustment, net revenue according to IFRS was NOK 8.1 billion, up 24.1% from last year. Organic net revenue growth in constant currency was 28.4%. Total operating expenses increased by 8.6% to NOK 1.8 billion driven by higher personnel costs as the number of full-time employees grew also with acquisitions and as Atea paid higher variable compensation due to very strong sales performance.
With exceptionally strong growth in sales, Atea had a record high profit in the third quarter. Atea's EBIT grew by 8.7% to NOK 284 million. For the year-to-date 2022, EBITDA is up by 16.2% and net profit is up by 20.4%.
We'll now take a closer look at sales and profit development across the countries in which we operate. Atea reported double-digit growth in sales and higher EBIT in all geographies during the third quarter of 2022. The largest EBIT improvement was in Denmark, where Atea continued to make progress in its turnaround.
Gross sales in Denmark grew by 25.9% and EBIT grew to DKK 18 million from DKK 8 million last year. Otherwise, in Norway, sales grew by 17.6% to NOK 2.6 billion, driven by strong demand for products. EBITDA increased to NOK 88 million as high sales growth offset increased operating costs. In Sweden, sales grew by 32.4% with very high demand across all lines of business. EBIT grew by 13.6% to a record high SEK 140 million. In Finland, sales increased by 29.4% to EUR 99 million, primarily driven by exceptionally high hardware volumes. EBIT grew by 19.0% to a record high EUR 2.5 million. In the Baltics, sales grew by 19.2% to EUR 38 million, with strong growth in all areas of the business. EBIT increased to a record high EUR 1.3 million. In sum, Atea's EBIT improved by NOK 23 million or 8.7% in the third quarter with strong growth and higher operating profit across all geographies.
Now for a word on our cash flow and balance sheet. Atea's cash flow from operations was an inflow of NOK 655 million in the third quarter compared with an outflow of NOK 503 million last year. The strong cash flow is based on solid earnings and a reduction of inventory and other working capital balances. During the past year, Atea has been holding a higher-than-normal inventory balance to secure customer deliveries during a period of industry supply constraints. Atea began to actively reduce its inventory balance during Q3 2022 as industry supply constraints have eased. This has resulted in higher cash inflow during the third quarter.
Atea plans to further reduce its inventory balance during the coming months, a trend which will continue to drive higher cash flow from operations.
Moving on to our debt balance. Atea's net debt balance was NOK 700 million at the end of Q3 as defined by Atea's loan covenants. This corresponds to a net debt-to-EBITDA ratio of 0.4. Well, Atea's debt has grown from last year, the company still has a low leverage ratio and is well within its loan covenants, which require the company to maintain a net debt-to-EBITDA ratio of less than 2.5. Atea has significant additional debt capacity to pursue its growth strategy. As inventory returns to lower levels and cash is collected, we expect Atea's net debt balance to continue to fall during the coming months.
That concludes the presentation of the third quarter financials. I'll now hand the podium back over to Steinar to provide an update on market trends and how these are impacting it to.
Thank you, Robert. So there you have it from a financial point of view, a very, very good quarter. I just also want to welcome all the new employees, almost 150 people through acquisitions this year so far.
I want to address five separate questions that we are getting very often, both from shareholders but the financial community in general. So let me first start by addressing the question about the market. There is definitely trouble sometimes in many parts of the world, and that, of course, influences the financial situation or the economy of many, many countries, including the Nordics. But there has, for many years, decades been so that investments in IT has been higher than the GDP in itself. That gap is actually right now widening. And IDC expected to continue to widening. As investments in IT itself and infrastructure, specifically, is helping some of the issues that are really creating the problems in the economy itself, especially in the part of the world where we operate with such a high cost on personnel.
So automating the processes and reaching the market or your clients or users in a more automated way is for many, the only way to meet the pressure on other sides of society and the economy. IDC also expects the market we are addressing to grow between 6% and 7% in the next couple of years. It is specifically interesting to also look at the ratio or the ranking of the Nordic companies within Europe to see how we're doing when it comes to being mature in the digital world.
As many know, we used to be on the one to five spot, the Nordic, the four Nordic countries. That's no longer true. So there is actually a tech gap that has to be closed also in the Nordic, if we want to compete digitally with the rest of Europe. And so there are many reasons to think that IDC actually has a point when they say in the Nordics, the gap is widening.
Secondly, supply chain. It's been something not only the IT industry, but everybody have been fighting for the last 2 or 3 years. There is a transportation element, of course, into this because of COVID and other things, but mostly, there has been a demand which has been higher than supply. In our industry, in the business-to-business era, that is normalizing. And I've given this update now 3x. And as you can see, on most of the product areas that we work in, the market is now normalized.
On networking, it's still difficult, but it's getting better. And the prediction is that we will be normalizing during the rest of this year and be back to a normal situation starting next year. The issues have been tangible. It's not anything you can't really see and touch, and they have been fixed one by one. That is also why we can work down the inventory. There is no reason for us to have normal inventory, so we will work that down even further from where we are today and some inventory we will be left with is what we have and used to have, which is really goods that have been ordered but not yet been delivered.
Thirdly, the skills problem. So this is a curve describing how the number of employees working full time in Atea has developed over the last 3, 4 years. As you can see, during the start of 2020, we took down the number of people. This is both for furlough and in general, not to replace people that are leaving, to protect ourselves against something that we all of us thought would hit us during the pandemic. Of course, we saw very quickly that, that wasn't the case. And so we took back a lot of people that we -- or all of the people that we had on furlough.
If you look at the curve, you'll see that about 12 months ago, we were back at the same level as we were pre-pandemic. For the last 12 months, we've added about 300 people and half of those have come through acquisitions. And that is pretty normal when you work in a skills area like these people do. We don't feel that we have an issue getting people onboard. We get the people we want. And the development of number of people will not keep on increasing like this without acquisitions, and you have to remember the acquisition. The acquisitions are used, as we've said many times, as bolt-ons to attract people and to create environments where it's also easier to hire people into.
So again, we feel that Atea is an attractive place to work. We don't see the skills problem stopping us in any way. As you might think, well, that's because you're overpaying or something like that. Well, that is not really the case. And so on the fourth issue, on how is inflation or salary inflation impacting us. So for the -- sorry, for the first 3 months in all these 3 years, the average pay has gone from NOK 598,000 in 2020 to NOK 605,000 in this year. Of course, this is not because individuals are not getting a salary increase in Atea, but because we managed the situation pretty well by hiring younger people and not being a part of the crazy part of the market which is not necessary for a company like Atea with almost 8,000 people. In Q3, we had a little higher salaries that some people have half year bonuses. And we had an incredible sales quarter. But for the year, that's not the case.
Improvements. improvements looking a little bit backwards and looking forward. As many of you know, we have an improvement program that we call One. We call it One Atea. And I have spoken about over the last couple of years, the massive program we've had around supply chain. And luckily, we had that in place before the pandemic really helped us. And the new warehouse in southern part or central part of Sweden in Växjö have really helped us to be able to deliver through those issues and still are, of course.
The revenue through the central warehouse that opened in the summer of 2019 have doubled since we opened it and are now close to NOK 8 billion. That will keep on growing as we are taking more and more goods both on we are and when the goods are fresh, and we're selling it, but also when we take it back for recycling and reuse. We said that, that central warehouse would give us an improvement on EBITDA of NOK 200 million, NOK 100 million in efficiency and NOK 100 million in help to increase revenue and for that gross profit.
As you can see over the last year, since we opened it, EBITDA have improved by almost NOK 800 million. Of course, that's not a proof, but it's a signal to all of you that the improvements we've been speaking about on EBITDA and EBIT is really coming through. We, of course, want to improve even further on the supply chain. And so the pressure is not off to all the people who work with that around Atea.
The next big, big project that we've started, we've also just mentioned is that 6 months ago, we started to bring together all the production of managed services. So our data center and the people who do service desk services and managed services, from our data centers, that has been locally or country driven. These are now being brought back into one organization where we produce the services more efficient and for that reason, also can increase the quality and increase revenue. That project will be finished about 2 years from now and will deliver on the bottom row, EBIT about NOK 100 million to Atea. I'm just mentioning that this because we get questions, where is the improvement is going to come from. These are major projects. There are also smaller things, of course, that we are doing in all the countries, locally in cities and regions, but these are major projects that we want to make you aware of.
I just also want to close by saying that when we deliver almost 30% growth in revenue and especially in hardware, you should think that we are bringing down the backlog and that's where it comes from. We've been speaking about backlog for the last 2 years. Well, it is true for the first quarter in a long time, backlog didn't increase, but actually it didn't go down either. So the sales -- the revenue that we have in this quarter reflects almost 100% the sales that we had in the quarter. But as I said, the scaling, especially on hardware in this quarter didn't meet 100% our expectations, as the gross profit, the margin on hardware were about 0.5 percentage point lower than what we had planned.
We are definitely meeting our EBIT target, but the revenue was higher. And the reason for that gross profit of 0.5% has to do with currency and some price changes that have happened over the last 9 months until we actually now have delivered some of these orders. There is also an element in here of mix. There's been a huge PC quarter for us, which always have a little bit lower margin. We expect these things to come back. There is no market change or trend that have changed these. We've seen this many times before, but I just want to mention it specifically.
I also want to say that if you look at our numbers and think it's because of cost that we didn't scale, that's not true. Cost is exactly where we budgeted it, and it's fully in line with the revenue. It is where I just guided you to look.
We are super proud of what we've done so far this year with sales of almost NOK 33 billion and a profit of almost NOK 750 million. We have brought cash flow almost back to where we promised and where it should be.
And so that closes the quarterly presentation for Atea, and we will open for questions.
Thank you, Steinar and Robert. The first question here is hardware margins seemed to be lower this quarter. What is the reason for that?
Yes. So I just touched on that. But there's been a lot of delay in the supply chain over the last 2 years. And so we actually delivered orders in this quarter of hundreds of millions that were taken as early as November last year. Totally different currency levels, totally different pricing that has changed over the last many months. So this is a game that we are normally very good at. But when it comes to almost 9 months from orders taken to order delivery, is very, very difficult to know exactly what currency and prices will be and to hedge some of the currency that far in advance is not that easy or cheap either. So it's currency and price, but it's also mix.
And as I said, Q3 is a quarter where normally the revenue is lower. In this quarter, we had a huge surge of orders coming -- not coming but delivery is coming because we got the goods. And so a little bit of a mix, but mostly currency and pricing.
We'll take one more digital question, and while we have quite a few people here today, we see we've got some questions in the room here. You mentioned that salaries are under control, but in Q3, there seems to be an increase.
Yes. So I think Robert touched on that briefly. There is a salary -- or there is an increase in personnel cost. And a little bit more than half of that actually comes from the number of people we've taken in from the acquisitions. And the other is actually the new people that we have hired. But there is an element in there of variable salaries also. As most people would know, about 20% of the salary cost in Atea is a variable salary in an average quarter. In this quarter, it was a little higher just because sales were fantastic. And I'm so happy for all the people in Atea that got their bonus. It hasn't been that case in every quarter in the last many quarters. So all the power to them and it's not something that will stay there forever. In that case, we still will have 30% growth in revenue.
Congrats with the strong growth in sales. Can you say something about how this compares to peers, i.e., do you -- have you taken market shares?
Yes. So the question is if we've taken market share and what peers seems to be doing? Well, it's a little early because we are a fantastic efficient company, and so we are probably one of the first to deliver numbers. But from what we've seen so far, we're taking market share also compared to the bigger ones with some -- we haven't seen all of them. But what we hear from distributors and others is that we're massively taking market share compared to the smaller ones. So I think it's a case of what we've seen so many times before. When the world becomes a little unsecured, customers seek safe harbors, employees seek safe harbors. And I guess it's the same thing with investor, we just have to see. But I think it's fair to say that the market didn't grow 30%.
I've got one more question here. Price cases, are you seeing that with inflation? And will that impact Q4?
Yes. So what really is going or have been going on is that the biggest pricing -- pure price increases came late Q4 last year and through Q1 this year. That's the period where the biggest changes in prices from the vendors itself came in. Most of that has been dealt with [Technical Difficulty] pretty good and we've been passing that on because we can. But when there is such a lead time between when the order comes in and when it's being ordered, it might be difficult to follow thousands and thousands and thousands of orders the way we've had in this quarter.
So in general, the price increases have been done back in time, because of the slow supply chain, some of them are still kicking in, so to speak, and we will see some of that in Q4 also. And then we think [Technical Difficulty] it's kind of normalizing a year-over-year comparison. The other part is currency. Most of what we do, we buy in local currency, but there are some vendors where we buy directly from factory or from some hub somewhere else, and we buy either in euro or in dollar. And you all know what's happened to currency over the last 3 months. So that can increase or decrease the price on those certain products.
So most of the price increases have been taken. We have no indication. I'm not saying I can guarantee, no indication that vendors will increase prices dramatically in the next 3 to 6 months. But we still have orders in the backlog, which still is above NOK 5 billion, by the way, where we have to be aware of the price increases. But it just hit us really hard in this quarter, and that explains some of that 0.5 percentage point.
Last question here, digital question. In general, can you give some guidance or expectations for the rest of the year, please?
Yes. On one of my slides earlier, I gave EBITDA and EBIT for the rest of the year if using the consensus for Q4. Of course, that's not my number. And I can say that if we don't pass into NOK 1.2 billion of EBIT for this year in total, I will be very disappointed. So we still see a strong end to this year and beginning to next. We have -- we're mostly through our budget and plans for next year. And there is no one coming back and saying, the signals is negative or anything like that.
The big customers, 65% of our revenue this year will probably be government, and there is no signs that they will lower their budget. So we expect more of the same. This quarter was very special, so we can't expect 25%, 30% growth going forward. And the growth in services this quarter, remember, it was because we brought in 3 bolt-on acquisitions. So we can't grow 12% every quarter in services. We can't -- that's not how services develop. But in normal situation, we will grow between 5% and 10% and a little bit more in our own products just because of the inflation and the price increases. But the market is strong, and we're getting the people and we're handling the situation pretty well.
There are no more questions for today.
Okay. So we thank all of you that are here in the room, and we thank all that are watching from out there. I will actually travel to North America next week to see -- physically see our shareholders and possible investors next week. So I'm really looking forward to that. Thank you.