AROBS Transilvania Software (BVB: AROBS), the largest technology company listed on the Bucharest Stock Exchange, reports consolidated revenue of 206 million lei in the first six months of 2024, a slight 6% decrease compared to the first half of 2023, normalized EBITDA of 34 million lei, and normalized net profit of 16 million lei.
“The first half of 2024 was marked by a series of challenges as well as significant opportunities for AROBS, particularly in the cybersecurity sector, AI project implementation, and the share capital increase operation completed at the beginning of July 2024. During this difficult period, the elimination of tax benefits for the IT sector came at a completely inopportune time and significantly impacted our results, with AROBS bearing much of the fiscal burden associated with the tax increases at the beginning of this year. As a result, we took a series of strategic measures this year to optimize costs and streamline the organizational structure. All these were correlated with a decline in demand in cyclical industries such as automotive and the postponement of new project launches. In such an economic landscape marked by ongoing challenges, AROBS has maintained its stability while also demonstrating its ability to navigate uncertainties and remain relevant in an ever-changing industry. I strongly believe that the true measure of a technology company’s strength, like AROBS, lies not only in achieving profits month after month but also in its ability to resist, adapt, and continue to create value in any context for investors, clients, and employees. AROBS has been demonstrating this for over 25 years,“ stated Voicu Oprean, founder and CEO of AROBS.
Regarding the Group’s business segments, the “Software Services” segment continued to be AROBS’s main pillar, generating revenue of 166 million lei, accounting for 81% of the total revenue. Despite the global decline in demand for software services in the first part of 2024, the Group’s management is investing in growth-potential verticals such as cybersecurity and the integration of AI into the software solutions offered, believing that the organizations and companies they work with still need to implement new processes, from digitalization to complex digital transformation, cybersecurity projects, and the integration of AI into their current operations.
Revenue from the second business segment, “Software Products,” grew by 12%, reaching 38 million lei. This was supported by the market growth trend, especially in fleet management, business optimization, HR solutions, and the implementation of digital projects primarily in the private sector. The software products segment continued to grow and generate EBITDA in line with the company’s expectations, maintaining a double-digit growth rate.
The third segment, “Integrated Systems,” was affected by seasonality and the postponement of projects, including those funded by the PNRR. However, AROBS management expects these to be signed in the year’s fourth quarter. The Group’s initial expectations for this segment were different, as the project signing process took longer than initially anticipated. Nevertheless, as AROBS has gained experience in this sector, it has been observed that results for most of the projects in this segment will be visible in the last quarter of the year, thus introducing a cyclical element into the Group’s business model.
“In the first six months of 2024, our objective was to maintain financial balance in the face of economic challenges. The Group’s approach of relying on multiple growth pillars contributed to balancing revenue in the first half of 2024, demonstrating the value of the strategy to diversify industries and market segments. At the same time, considering the difficult context, during this period, we focused on taking rapid and efficient measures to ensure a solid position for the Group in the future. We successfully consolidated the business’s core operations, efficiently managed expenses, and maintained a healthy and profitable financial position, thus demonstrating the Group’s resilience and adaptability in the face of challenges,” stated Bogdan Ciungradi, CFO of AROBS.
Regarding the contribution of companies acquired by AROBS since 2021, in the first half of 2024, the Software Services segment contributed 68 million lei to the Group’s revenue, a significant increase compared to 56.4 million lei in the first half of 2023. As for the Software Products segment, the companies that joined the Group since 2021 contributed 4.2 million lei to revenue, compared to 2.4 million lei in the first six months of last year.
After the first six months of the year, the Group’s management implemented a series of strategic measures aimed at cost optimization and organizational structure efficiency. Thus, management costs were reduced by between 5% and 10% by optimizing the management team: CEO, COO, department directors, or project coordinators. These reductions were particularly in departments that recorded declines in revenue and profitability. Through these measures, both direct and general and administrative expenses will be reduced in the coming period. Additionally, considering the new market context, AROBS management focused on retaining the best people within the Group, those who add value and contribute directly to its development. Simultaneously, a rigorous human resources optimization policy was implemented by reducing costs with non-essential staff from the bench or by training key personnel within the Group in new technologies to build an agile and well-prepared team for future challenges. This approach allows the Group to focus on growth and innovation while maintaining an efficient organizational structure.
In parallel with the share capital increase operation, AROBS has also focused on streamlining the Group’s structure by continuing the integration process of entities acquired in the last three years and simplifying operations to maximize synergies and reduce costs. The acquisitions made by AROBS in the software services area have proven successful, and the integration process is progressing according to plan, with various progress being made at the operational and cultural alignment levels of the new entities with the Group’s structure. Currently, the process is in an advanced stage, with the full integration of three companies acquired into the existing structure. This process includes team and project integration, aiming to maximize synergies and create a solid foundation for future growth.
AROBS Transilvania Software is listed on the Main Market of the Bucharest Stock Exchange, Premium category, as of September 25, 2023.
About AROBS Transilvania Software
AROBS Transilvania Software provides software services and solutions in various industries, having approximately 70 partners of the Software Services business line located in Europe and America and more than 11.000 clients of the Software Products business lines from Europe and Asia. AROBS is present in 11 locations in Romania and nine abroad, and over 1.300 AROBS specialists build solutions for the future in embedded – Automotive, Aerospace, Maritime, and Medical – as well as Travel Technology, IoT, Clinical Trials, Fintech, Enterprise Solutions, Cybersecurity, and Intelligent Automation.
More about the AROBS group: www.arobs.com and www.arobsgrup.ro
Cluj-Napoca, August 30, 2024
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