Karnov Group (KAR) Q3 2024 earnings summary

Executive summary

• Achieved strong margin expansion in Q3 2024, with adjusted EBITA margin rising to 22.1% from 18.7% year-over-year, driven by operational leverage, cost synergies, and product mix improvements.

• Net sales reached SEK 648 million, up 5% year-over-year, with organic growth of 2.4%–2.5%, mainly driven by Region North and supported by the Schultz acquisition.

• Launched AI-supported legal information solutions and new flagship products across all markets, with high customer interest and 87% reporting significant efficiency gains.

• Completed technical carve-out in Spain, removing integration risk and enabling a new phase focused on profitable growth with new leadership.

• Divestments of Ante, Legal Cross Border, and Procurement Link impacted net profit by SEK 23 million and are expected to generate future cost savings.

Financial highlights

• Net sales grew by 4.7%–5% year-over-year to SEK 648 million in Q3 2024, with negative currency effects of -2.4%.

• Adjusted EBITA was SEK 143 million, with margin rising to 22.1% from 18.7% in Q3 2023.

• Adjusted free cash flow was SEK -32 million, an improvement from SEK -65 million in Q3 2023.

• Leverage stood at 3.1x EBITDA (LTM) at the end of September, slightly up due to currency and acquisitions.

• Online sales accounted for 85%–90% of total sales in Q3.

Outlook and guidance

• No changes expected in seasonality; strong renewal season anticipated in Q4 for Region North and Q1 for Region South.

• Ambition to generate EUR 20 million in annual run rate synergies by end of 2026, with EUR 9 million already harvested by Q3 2024.

• AI solutions expected to drive at least 30% price uplift on new packages and services.

• Ongoing focus on integration, cost efficiency, and AI-driven product innovation to drive future growth.