cBrain reports EBT of 32% and raises payout ratio to 20%
Company Announcement no. 03/2025
cBrain reports EBT of 32% and raises payout ratio to
20%
Copenhagen, February 20, 2025
cBrain (NASDAQ: CBRAIN) reports revenue grew by +12% to DKK 268m
in 2024, up from DKK 239m in 2023, aligning with the expected
revenue growth range of 12-13%.
Software revenue is 78% of total revenue, while implementation
and support services account for 22% of total revenue. Software
subscriptions, the majority based on long-term contracts with
Danish government customers, account for more than 50 % of the
total revenue.
Earnings before tax (EBT) grew to DKK 86m in 2024, up from DKK
81m in 2023, thereby reaching an EBT margin of 32%. EBT is
therefore at the expected EBT margin of 30-32%.
Due to faster-than-expected global industry changes as well as
market uncertainties in the US and Germany, cBrain has held back
some of the planned market investments in 2024. This has resulted
in costs being lower than expected.
The results show a strong positive cash flow from operating
activities. This enables an increase in dividends and investments
in the growth of the company and at the same time reduces long-term
loans on cBrain-owned buildings.
cBrain does not have a share buyback program. However, due to
solid earnings, cBrain proposes to raise dividends to DKK 0,64 per
share (2023: DKK 0,28 per share) corresponding to a payout ratio of
approx. 20% of profit for the year.
Executing the growth plan
In 2022, cBrain announced its 2023-2025 growth plan with the goal
of consolidating the business model and preparing for long-term
growth by positioning itself as a supplier of climate software for
government and developing a partner model.
During the past two years, cBrain has executed this plan and
during 2023 and 2024, cBrain has grown, initiated partnerships, and
delivered solid results, growing revenue by +42% and growing EBT by
+76%.
The growth plan assumes that government organizations over time
will switch from relying on custom-built solutions and
best-of-breed architectures to using standard software. The
government IT industry is massive and dominated by large suppliers
who benefit from consultancy fees and billable hours. This creates
significant entry barriers as the classic vendors defend their
business, and the growth plan therefore anticipates a long and slow
transition to standard software.
The COTS for government seem to emerge faster than
anticipated
Contrary to these assumptions, cBrain now sees indications that
industry shifts toward standard software and platforms are
occurring faster than anticipated. Fueled by a lack of skilled IT
resources and a growing demand for fast delivery, cBrain sees a
rapidly emerging IT industry, referred to as Commercial
Off-The-Shelf (COTS) for government. For cBrain, this presents new
strategic opportunities.
COTS for government, leveraging new technologies and platforms
such as the F2 Digital Platform, enables digital transformation at
higher speed and lower costs that outperform traditional IT
modernization.
For example, cBrain delivered a complete end-to-end digital
platform for two new Danish ministries within just three weeks
during the autumn of 2024, and in 2025 cBrain has just announced a
third new Danish ministry, following a similar fast-track
implementation schedule. Traditionally, projects of this nature
take years and often fail. The Danish ministerial cases thereby
exemplify the power of the COTS for government approach.
cBrain has a first-mover advantage
The long-term cBrain growth strategy is founded on a vision and a
business case to provide standard software for government. Over the
past 15 years, cBrain has invested more than 450,000 hours in
developing the F2 platform. Danish ministries and a total of more
than 75 Danish authorities use F2 as their digital platform.
Internationally cBrain has delivered F2 for government
organizations across five continents.
With a solid first-mover advantage and a strong customer base,
cBrain is well-positioned to become a leading international
software provider of COTS for government solutions.
During the year 2024, the accelerated market shift and the power
of the COTS for government approaches have opened new opportunities
for cBrain. This is exemplified by the recent collaboration between
cBrain and UNDP in Africa to support the UNDP Digital Offer for
Africa strategy, and larger orders in Romania helping to modernize
traditional mainframe-type solutions.
Reiterating the international growth
strategy
The faster-than-expected market shift, with government looking
toward IT modernization and digitization based on the alternative
COTS for government approach, clearly represents an incredibly
positive development for cBrain.
cBrain wants to fully take advantage of this, and a solid
business with strong cash flow and earnings offer strategic
flexibility. Consequently, cBrain is now reiterating and
potentially adjusting its international growth strategy.
This includes evaluating organizational readiness, as well as
market and product development strategies, to leverage and maximize
the benefits of accelerated industry changes. With the goal of
being an internationally leading vendor in the emerging COTS for
government industry, cBrain will execute several changes to the
growth plan during the spring of 2025.
Driving international expansion
With the current Danish customer base, cBrain has a strong home
market position. Internationally this is an important reference
position, and cBrain intends to maintain and develop a strong
position on the Danish market.
However, to be a leader in the COTS for government industry and
fully deploy the potential of the new emerging industry, cBrain
will direct more resources into its international business.
cBrain has built its international business based on organic
growth, building the business by addressing international customers
directly or in collaboration with local partners. This strategy is
maintained, but with an increased focus on working with
international partners.
As of today, over one-third of the total revenue is export.
cBrain is currently reiterating and potentially adjusting its
international growth strategy with a goal, that within a few years,
the international revenue will be significantly larger than the
Danish revenue.
Lifting the business
During the past two years, cBrain has built a pipeline of potential
customers, which are significantly larger than the average Danish
customer. This includes projects in Germany and the US, as well as
projects in the Emirates, India, Kenya, and Romania.
For cBrain to be a leader in the COTS for government industry,
it is key to building an international business. Backed by a solid
financial position, cBrain is therefore shifting a focus to
international opportunities. This shift involves changes across the
cBrain internal organization, from marketing and sales to delivery
and R&D.
cBrain announced the growth plan in 2022 with an ambition to
reach a revenue of 350 million in the year 2025. cBrain continues
to execute its growth plan. However, reaching the revenue ambition
requires winning and delivering some of the large international
contracts cBrain is currently working on.
cBrain guides continued growth in revenue and solid
earnings for 2025
With limited visibility, cBrain forecasts expected revenue growth
in 2025 of 10-15% and earnings before tax (EBT) of 18-23%.
The earnings forecast is based on solid market development
investments into international growth, across the African region,
USA, Germany, and India, as well as investments into developing the
F2-for-Partners concept.
Best regards
Per Tejs Knudsen, CEO
Inquiries regarding this Company Announcement may be
directed to
Ejvind Jørgensen, CFO & Head of Investor Relations, cBrain
A/S, ir@cbrain.com, +45 2594 4973
- Company Announcement no. 2025-03 (årsregnskab alene)
- cBrain - Annual report 2024
- cBrain-2024-12-31-en
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