• Sales -2% vs. cons, adj. EBIT -19% vs. cons
• Utilisation up due to reduction of unstaffed FTEs
• Possible demand recovery in Q4

Q2'24 report

Q2 was another challenging quarter with dropping utilisation y-o-y and negative net recruitment. B3 generated Q2'24 net sales of SEK 266m (-2% vs. FactSet cons, 0% vs. ABGSCe) and adj. EBIT SEK ~9m (-19% vs. cons, -3% vs. ABGSCe). Directionally, this is not surprising as macroeconomic data continues to be weak. The deviation in EPS is explained by higher financial expenses related to the new debt financing. We note that utilisation is up sequentially, but this is mostly a consequence of a reduction of unstaffed FTEs, which mathematically increases the utilisation rate.

Thoughts and outlook

The company foresees tough conditions in Q3, with a potential recovery starting in Q4. We agree with this given that comps have become easy and that macroeconomic data indicates a challenging but stable operating environment. That said, this is contingent on macroeconomic data showing no further deterioration of conditions for IT consultants. From a long-term point of view, we maintain our view that B3 has the necessary operating characteristics to generate margins in line with its financial targets. Moreover, the new acquisitions will reduce the group's operating leverage over time, lending it additional stability in future industry-wide demand declines.

Consensus estimate revisions

The B3 share is down ~20% YTD (including dividends reinvested) and is trading at ~7x '25e EV/EBIT on our unrevised estimates. Mechanically, the estimated negative effect on consensus EBIT estimates based on isolated Q2 numbers would be within a low single-digit range for '24e-'26e EBIT. A presentation by the company will take place at 9.00 CET (link).