Total sales was below our forecast of SEK216m and amounted to SEK196m (154), corresponding to 28% growth y/y. The organic growth was -2.1% y/y. While not all Nordic IT Consulting firms have reported their Q3 yet, we believe -2.1% will be close to the average. However, considering the expansion of CombinedX’s workforce, we did expect higher growth. As highlighted by the partial divestment of Aspire announced a few weeks ago (see our comment for details), the market for system development remains soft, and most of the remaining companies, all having more or less strong numbers in 2023, saw lower utilizations this year as well. CombinedX believes in a somewhat stronger market in 2025 but expects no improvement for the remainder of 2024.

EBIT was SEK6.0m, corresponding to an EBIT margin of 3.1% (6.3). Our forecast was SEK12.2m and 5.6%. Thus, the outcome was weaker than anticipated, although Q3 usually is soft margin-wise due to vacations. Aspire had a negative EBIT during the quarter and the margins in most of the other companies has declined somewhat y/y due to weaker macroeconomics. However, to what degree is unknown. Until the last two quarters, CombinedX was among the best performers in the Nordic IT Consulting space. Now its R12m numbers are average.

Based on reduced forecasts, we reduced our Base Case to SEK54 (58). Despite our cuts in forecasts and Base Case, with the share trading at SEK34.20, implying 6x EBIT 2025, we sustain our positive view of CombinedX. For good reasons, investors might question the quality of CombinedX’s businesses following the two most recent quarters. However, our positive view of the six remaining subsidiaries (after the divestment/merger of Aspire) remains intact.