President’s Statement

Strong development of cloud services and improvements in Business Unit West

This week, Proact acquired PeopleWare, a managed service provider based in the Netherlands and Belgium. With this acquisition Proact will significantly increase in size in the region, and thereby further increase our abilities to deliver highest quality services toone of our a prioritized segment, mid-market. With the acquisition of PeopleWare, we follow our ambition to broaden the portfolio and the growth rate through acquisitions.

For the company in general, revenue and profits decreased during the third quarter compared to the same period last year. While we see a continued positive trend for cloud services, our revenue decreased by 3 percent to SEK 701 (725) million, which reflects declining sales for the systems business including complementary support and consulting services.

EBITA amounted to SEK 36.9 (45.3) million, corresponding to an EBITA margin of 5.3 (6.3) percent.
Our cloud services revenue, increased by 15 percent, reaching SEK 123 million for the quarter. New contracts for cloud services signed during the quarter amounted to SEK 87 (70) million, a 24 percent increase compared to the same period last year. During the quarter, systems revenue fell by 7 percent, while systems revenue increased with 4 percent for the first nine month of the year.

Despite challenges in Business Unit West the results increased compared to the second quarter in 2019 as a result of our recovery initiatives. Yet, the third quarter was weaker compared to the same period last year. This is mainly due to lower system sales as well as related support and consulting services income. Total revenue for the quarter decreased by 25 percent to SEK 177 (235) million. Cloud services increased by 19 percent.

In the Netherlands, we see a trend where organisations are evaluating new ways of consuming IT together with Proact through hybrid deployment models, which is causing some delays in investments. With the acquisition of PeopleWare, Proact in the Netherlands and in Belgium have an even better opportunity to meet customer demands around hybrid cloud services.

For Germany, systems sales decreased compared to the same period last year, mainly due to continued challenges in the sales organisation. While the result in Germany is negative in the quarter, I am optimistic about our recovery initiatives which will improve sales performance and lower our costs.

I am not satisfied with our third quarter results, but at the same time enthusiastic about our acquisition in the Netherlands. It is gratifying to see the positive development in our cloud services, where new agreements were signed during the quarter to a value of SEK 87 (80) million, an increase with 24 percent compared to the same period last year. It is also positive to see the strong increase in Business Unit Nordic. I’m confident that Proact has great opportunities to capitalize on the ongoing market transformation and to reach our long-term financial targets.

Kista, 17 October 2019

Jonas Hasselberg
CEO

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