EBIT (adjusted for SEK1.8m in an FX-related revaluation) was SEK4.0m (-9.6), corresponding to an EBIT margin of 3.7% (-8.6). While not reaching our expectations and coming in far below the very solid 9.4% EBIT margin seen in Q3, the EBIT improves significantly relative to the soft Q4 2022. Our forecast was SEK8.7m and 7.9%. While overall sales roughly matched our forecast, the in-house sales were lower and the sub-consultant's contribution was higher. In addition to a higher share of sub-consultants and a higher share of new customers hurting margins, some project deals (with fixed pricing) turned out with weak profitability. Those deals were signed earlier in 2023 when the market was even tougher and prices possibly too low in retrospect. However, while some similar projects could hurt Q1 2024, Avensia is not currently signing similar projects.

Sales fell by 3% y/y and was 2% below our expectations. Underlying sales was roughly flat because there is one working day less in Q4 2023 compared to Q4 2022. The market stabilization seen in Q3 remained, although still, at a rather low level. As seen earlier in 2023, sales to new customers was relatively solid, while the demand from current customers was low. While the most successful e-commerce players and some backed by strong owners continue to invest, the overall market remains soft.

We lower our Base Case to SEK12 (13) due to decreased forecasts, which primarily regard short/mid-term. However, our positive long-term outlook remains. Despite Q4 being a hiccup to the rebound, we believe Avensia has a business that is among the most capable among Nordic IT Consultants in terms of margins when the e-commerce market improves.