Netcompany Group A/S

CSE:NETC

Earnings Call Analysis

Netcompany Reports Strong Revenue and Margin Growth in Q3 2024

Netcompany's Q3 2024 saw a robust revenue increase of 10.4%, propelled by strong performances in Denmark (up 12.1%), Norway (up 25%), and the Netherlands (up 29.9%). Gross profit margins rose to 31.4%, led by Denmark's 42.1%. The adjusted EBITDA margin before allocated costs improved to 20%. For the entire 2024, the company anticipates revenue growth between 7% and 10% and an adjusted EBITDA margin of 15% to 18%. Additionally, they increased their share buyback program from DKK 700 million to DKK 800 million, underscoring management's positive outlook amid sector challenges.

Strong Revenue Growth in Q3

Netcompany reported a commendable revenue growth of 10.4% for Q3 2024, echoing a continued recovery in the Danish market and buoyant performance across Norway and the Netherlands. In Denmark, revenue surged by 12.1%, driven particularly by a 13.1% increase in the public sector and a 10.4% rise in the private sector, thanks to enhanced utilization of engagement platforms. Overall, for the first nine months of 2024, revenue growth stood at 8.4%, indicating positive momentum heading into the future.

Diverse Growth Across Regions

The company's performance varied significantly across regions, with Norway exhibiting impressive revenue growth of 25%, largely fueled by a 37.9% rise in the public segment. Meanwhile, the Netherlands achieved a remarkable 29.9% growth in revenue, also led by public sector engagements. However, the U.K. faced challenges, showing a decline of 7.2%, largely due to slower project ramp-ups. This divergence highlights the need to adapt strategies in different markets while capitalizing on strengths in thriving regions.

Improving Margins and EBITDA

Netcompany showcased improved profitability, with gross profit margin rising by 3.6 percentage points year-over-year to reach 31.4% in Q3. This improvement was particularly notable in Denmark, where the gross margin increased to 42.1%. The adjusted EBITDA margin also experienced a notable increase of 4.1 percentage points to 20% for the quarter, reflecting the company’s focus on operational efficiency and better utilization of resources across the board.

Solid Cash Flow Generation

Free cash flow reached DKK 145.3 million in Q3 2024, marking a significant increase from DKK 100.4 million in the same quarter last year. This improvement resulted primarily from enhanced EBITDA, despite some challenges related to working capital changes. Importantly, leverage ratios improved to 1.5x, signaling a stronger balance sheet and financial health moving into the next fiscal periods.

Future Outlook and Guidance

For the full year 2024, Netcompany anticipates revenue growth in the range of 7% to 10%, alongside an adjusted EBITDA margin expected between 15% and 18%. Notably, the company has increased its share buyback program from at least DKK 700 million to DKK 800 million, demonstrating confidence in its financial position and a commitment to returning value to shareholders.

Employee Growth and Strategic Initiatives

Netcompany has actively increased its workforce, adding 328 full-time employees year-over-year, bringing the total to 8,088, indicating a strategic push towards fulfilling new engagements and contracts. Employee levels are particularly rising in the Netherlands and at Netcompany-Intrasoft, highlighting the company’s efforts to enhance capacity in high-growth areas. The emphasis on optimizing workforce utilization suggests a focus on efficiency and adaptability.

Positive Contract Wins Across Europe

The company secured multiple new contracts during the quarter, including key projects in Norway and Denmark, showcasing its strong position in the public sector. In Greece, Netcompany expanded its operations with additional agreements related to big data and analytics platforms. These wins are expected to support revenue growth and diversification of service offerings.

Maintaining Revenue Visibility

Netcompany reported an increase in revenue visibility by 7% to DKK 6.278 billion, with contractually committed revenue amounting to DKK 1.335 billion. This improvement underscores the firm’s ability to secure future engagements, particularly in the public sector, where visibility increased by 8.1%. The forecast suggests a commitment to maintaining strategic positions in both public and private markets, with significant room for growth.

Earnings Call Transcript 2024-Q3

[Operator]

Hello, and welcome to Netcompany's Interim Report for the first 9 months of 2024. [Operator Instructions] This call is being recorded.

I'll now turn the call over to your speakers. Please begin.

[André Rogaczewski, executive]

Good day, and welcome to this presentation of Netcompany's results for Q3 2024. My name is Andre Rogaczewski, and I'm the CEO and Co-Founder of Netcompany, and I'm joined today by our CFO, Thomas Johansen. And before we get going, there are some important disclosures that I need you to read through. So, could we please have Slide #2, please?

I will pause for 30 seconds here and let you all have a read-through of these important disclosures.

And with that, can we please go to Slide #3, please? The topic of today's presentation is our performance for Q3 2024. I will walk you through the business highlights for the third quarter and our financial guidance for '24. Once I'm done, Thomas will go through the numbers in greater details before we open the call up for questions. And can we have the next slide, please?

In Q3, we grew revenue by 10.4%. Once again, growth was supported by the ongoing recovery in the Danish part of the group as well as continued growth in Netcompany-Intrasoft, Norway and the Netherlands.

And in the first 9 months of '24, we grew revenue by 8% in constant currencies. Gross profit in Q3 grew 24.5% in constant currencies, yielding a gross margin of 31.1%, which was an improvement of 3.4 percentage points compared to the same period last year.

Adjusted EBITDA grew 40.1% in constant currencies in Q3 2024. And the adjusted EBITDA margin increased 3.9 percentage points to 19.1% in constant currencies in the quarter. The increase in margin was a result of continued recovery in the Danish part of the group and improved performance in Netcompany-Intrasoft, Norway and in the Netherlands.

We added 328 full-time employees when comparing to the same quarter last year, bringing the total FTE number to 8,088, an increase of 4.2%. And can we have the next slide, please?

During the third quarter of '24, we have won several new contracts of which I'm mentioning a few here. In Norway, we have been chosen by the Norwegian Ministry of Foreign Affairs to deliver a new case management system.

The system will ensure efficient and secure handling of export licenses and sanctions. Furthermore, the system will simplify cooperation with other public authorities. The project will be based on our MPO platform.

In Denmark, we have been selected by [indiscernible] for the implementation of the new Danish cash benefit system. The new system is set to take effect from 1st of July 2024.

The Danish Ministry of Foreign Affairs has selected us to be the sole service provider for a new framework agreement. The agreement covers a number of services for key systems within the Ministry of Foreign Affairs. And in the UK, we've been selected by [indiscernible] to migrate applications to a secure public cloud.

Slide #6, please. In Netcompany-Intrasoft, we have also signed several new contracts in the third quarter of the year of which we have highlighted some here. In the EU, we have been awarded a 5-year framework contract with the European Union Intellectual Property Office.

The objectives of the contract are to provide the necessary services to enable successful implementation of IT-related projects and to deliver maintenance services of day-to-day operations.

In the public segment in Greece, we signed a supplementary agreement with the Technical Chamber of Greece to increase the scope of the initial contract regarding the unified digital map and the National Infrastructure Registry.

Furthermore, we have signed a 2-year maintenance agreement with Information Society. And in private sector in Greece, we signed a contract with HEDNO to develop a central unified data platform for analytics and big data applications.

Also, in private sector in Greece, the payment institution, OtroPay selected us to provide a core banking system. And can we have the next slide, please?

In Q3 2024, we have employed an average of 8,088 employees, which was an increase of 4.2% compared to the same period last year. And in Denmark, the number of employees decreased compared to Q3 last year. But during the quarter, we welcomed 191 new employees to our offices in Denmark.

Employee growth in the Netherlands and Netcompany-Intrasoft was 11.8% and 8.3%, respectively. And churn for the last 12 months was 17.5%, which was in line with the period last year. Can we have Slide 8, please?

For the first 9 months of 2024, we grew revenue by 8% and realized an adjusted EBITDA margin of 17.1%, both in constant currencies. We maintain our expectations for the financial performance for 2024 and expect revenue growth for the group between 7% and 10% and adjusted EBITDA margin between 15% and 18%.

We increased the share buyback program for 2024 from at least DKK 700 million to DKK 800 million and initiate a new share buyback program of DKK 250 million to be executed by 24th of January 2025.

Furthermore, we reiterate our midterm targets. And with that, I will pass the word to Thomas, who will give us a more detailed view on the financial performance in Q3 '24. Here you go, Thomas.

[Thomas Johansen, executive]

Thank you for that, Andre. And like already mentioned, I am the CFO of Netcompany, and I will go more in details with the financial performance for Q3 2024. So, if we move past the breaking Slide #9 and if we then go into Slide #10 in one go, please.

So, Andre has already spoken to our performance in general terms, and I will give more details for the performance in Q3.

In Q3 2024, we increased revenue by 10.4%, both in reported and in constant currencies. The growth was driven by continued recovery in the Danish entity and continued growth in Netcompany-Intrasoft, Netcompany Norway and Netcompany Netherlands. Revenue in Denmark increased 12.1%, driven by an increase of 13.1% in the public segment and an increase of 10.4% in the Private segment. The improvement in both segments was driven by increased utilization and usage of platforms.

For the first 9 months of 2024, revenue in Denmark grew 8.4%. Netcompany-Intrasoft continued its good start of the year and grew revenue 10.2% in the quarter. The growth was driven by the public and EU area that grew 13.9% despite a tough comparable.

In Norway, revenue increased 25%, driven by a 37.9% increase in the public segment, which was then slightly offset by an 8.4% increase in the private segment. In the Netherlands, we also continued the strong growth from the beginning of the year and grew revenue 29.9%, solely driven by the public segment.

In the U.K., revenue declined 7.2% compared to the same period last year, and this decline was a result of continued slower-than-anticipated ramp-up on larger engagements.

And can we move to the next slide, please? Gross profit margin increased by 3.6 percentage points to 31.4% in Q3 compared to the same period last year. The increase was driven by better margins in Denmark, Netcompany-Intrasoft, Norway and the Netherlands.

In Denmark, gross profit margin reached 42.1% in Q3, which was an increase of 1.8 percentage points compared to the same quarter last year. The improvement was driven by better utilization. Margin in Netcompany-Intrasoft increased 3.7 percentage points and reached 20.6% in Q3. In the U.K., margin was 20.7% compared to 21.9% in the same quarter last year.

The lower margin was a consequence of approximately DKK 7 million spent on severance payments and adjusting for this, gross profit margin would have been 25.6% in Q3.

The margin in Norway increased 22 percentage points in Q3 compared to the same quarter last year. The improvement was driven by better project execution, better utilization and a part of license fee income. In the Netherlands, margin increased to 36.1% in the quarter compared to 25.5% in Q3 last year. The increase in margin was a result of continued focus on joint projects and improved utilization. Can we move to the next slide, please?

Adjusted EBITDA margin before allocated costs from headquarter increased 4.1 percentage points to 20% in Q3 2024. And for the first 9 months of 2024, the margin increased 2.5 percentage points to 18%.

In Denmark, margin increased 2.3 percentage points to 28.8% in Q3 '24 compared to Q3 last year. The increase was driven by better utilization. Margin in Netcompany-Intrasoft increased 3.3 percentage points to 11.6% in Q3.

The increase was solely driven by improved performance and utilization as Netcompany-Intrasoft did not recognize any license revenue in the quarter. In the U.K., EBITDA margin reached 10.2%, and the decline compared to the same quarter last year was driven by lower gross profit margin, as already explained.

In Norway, margin improved significantly by 28.1 percentage points as a result of an improved gross profit margin.

In the Netherlands, margin continued to improve and reached 23.6% in the quarter. The increase was driven by the improved gross profit margin and administrative costs being on level with the same period last year. Can we have the next slide, please?

Work in progress increased by 0.5 percentage point to DKK 1.25 billion in Q3 2024. As a total, the combined work in progress, prebilled invoices and trade receivables increased by 7.5% to DKK 2.258 billion, in line with revenue development for the last 12 months that increased 7.1%. And can we go to the next slide, please?

Free cash flow was DKK 145.3 million in Q3 2024 compared to DKK 100.4 million in Q3 last year. The improvement in free cash flow was driven by improved EBITDA, slightly offset by the development in working capital changes.

The development in working capital changes was mainly caused by tying up of work in progress due to payment terms, which was somewhat offset by the development in trade receivables. Leverage was 1.5x in Q3 2024 compared to 1.6x in Q3 2023. Can we have the next slide, please?

Revenue visibility improved 7% to DKK 6.278 billion, of which contractually committed revenue amounted to DKK 1.335 billion and noncontractually committed engagement amounted to DKK 80.9 million. Visibility increased by 8.1% in the public segment and 4.7% in the private segment.

In the first 9 months of 2024, we realized a lower amount of license revenue compared to the same period last year.

For the full year, we expect license revenue to account for at least 1% of the total revenue with a potential upside. This implies that license revenue in 2024 will be more back-end loaded than in 2023, which naturally also impacts revenue visibility.

We continue to see an indication that public entities and private companies are increasing their willingness to increase their IT investments. And with that, I've concluded the detailed financial walk-through, and we will now open the call for questions. So, if we move to the Q&A slide, please, and open the call for questions.

[Operator]

[Operator Instructions] And the first question is from the line of Yiwei Zhou from SEB Bank.

[Yiwei Zhou, analyst]

Congrats to the results. I have 3, and I'll do one at a time. Firstly, when looking at your U.K. and Norwegian business, now you are rightsizing these divisions ahead of delivering the large contracts. Are you confident to attract enough talent at a later stage? And when do you expect to start hiring?

[André Rogaczewski, executive]

Thank you so much for your question in regards to the U.K. and Norway. In general, in the U.K., we've seen some effect on the elections there. They are finally over, and we see a pickup, especially in the public sector.

Most of our clients, we are positioned very strategically within where our platforms and products play an important role. So, we will start hiring people continuously and do that continuously over the engagements growing in both countries, which we are very confident will happen over the next quarters.

[Yiwei Zhou, analyst]

And just your expectation for start the large contract, the contract in Norway and also large contract in the U.K. is still unchanged in terms of timing?

[Thomas Johansen, executive]

We'll continue to ramp up on those projects that we have previously discussed, which will be ongoing from now and during 2025. But detailed timing as to which quarter we expect what is a little bit premature to discuss into '25 at this point in time.

[Yiwei Zhou, analyst]

And my next question is on your FTE growth here in the quarter. I noticed that the freelancers increased by 21% year-over-year. And where are they use? Is it a change of business model? Or should we understand it's just temporary? And if it is possible, could you also quantify the margin impact?

[André Rogaczewski, executive]

So, there's no change of strategy in terms of using permanent resources as we always prefer. We've won considerable work, especially in the EU institutions where specific task needs specific competencies. And, yes, you can see some pickup in using contractors there, but there's no strategic change in how we approach markets.

[Thomas Johansen, executive]

And what you can also see is that, that means that all the freelancers are basically residing within Netcompany-Intrasoft. And as we are realizing positive development in margins in Net company-Intrasoft, there is no dilutive impact by hiring or engaging freelancers on the large EU projects that we have won.

It's still a model that we're working on to change. It's taking time, but it is in Netcompany-Intrasoft. So, no change there and no dilutive impact on margin.

[Yiwei Zhou, analyst]

And they are only used for the European Commission projects?

[Thomas Johansen, executive]

3 out of the 900 that are subject matter experts that we use somewhere else. But for all practical matters, yes, it is within the EU institutions.

[Yiwei Zhou, analyst]

My last question is on the Danish operation. I can see that you still hire behind the curve here in Q3. And for how long time can you still do that?

[André Rogaczewski, executive]

Well, that's maneuvering the boat, as to say. Well, we are monitoring it very closely, and we think we are in a position where we can hire talented people pretty fast and ramp up when we need.

And with our international team and with the competencies spread over the group, we are very well positioned to ramp up in any case when we get more work to do.

[Operator]

The next question will be from the line of George Webb from Morgan Stanley.

[George Webb, analyst]

And I've got a few questions, please. Firstly, maybe one for you, Andre. I'm sure you track the broader sector. Many of your peers in different companies have been putting out profit warnings over recent weeks.

Some of them have been seeing demand conditions down ticking again. So, just as you look forward, it looks like you've got good revenue visibility for this year. But curious how comfortable you are that Netcompany can remain well insulated against that broader back drop.

Second one would be for you, Thomas, on the license expectations. You've talked in the outlook statement about still expecting at least point of revenue from licenses this year implies a pretty strong Q4. How confident are you that those will close in Q4 versus slip into next year?

And can you add any color on how many deals that license revenue would be split between?

And then just lastly, just on the Norway employee churn, that ticked up quite a bit in the last quarter. So curious what's been driving that.

[André Rogaczewski, executive]

Thank you so much, George. And, yes, of course, I've been monitoring the market and received profit warnings from other companies. I think the market is very differentiated. It depends on where you are and how strategically positioned you are within customers.

We've been investing quite substantially in our platform approach. So, when we approach customers right now, we always come with a piece of technology and a clear concept. AI is certainly driving things, but it's also modernizing existing legacy landscapes and putting in AI on the top, and bringing in technical components that not only bring down risk, but also ensures that we can get things done in time.

And I think being positioned to that kind of engagements and relevant positioning is extremely important. That's why we are quite confident. We have a great visibility, but we have the same visibility as last year. We don't see the market declining for those types of services and being positioned in exactly there in businesses.

And that goes both for public and private businesses. There's no doubt that both private and public businesses are absolutely aware of the necessity in digitizing their entire operations.

But, yes, they need to choose 1 or 2 strategic partners to do so. And I think we are very well in that game. So, you don't call up Netcompany just to come by and give a helping hand. You call us when you really want to transform your business. And I'm proud to say that I think we are positioned very well to do exactly that, not only in Denmark, but also in many of our markets.

And when it comes to the license deals at the end of this year, we are quite confident. If not this year, then next year, but I know that's really important for you guys.

In Norway, it's basically the same story as I already said. There's no doubt that in Norway, Netcompany has been discovered as a different company, again, with platforms and a different approach. And I think we see the effect of that.

But again, it takes time to get known in the market. But with the recent Avinor win, but also in the positioning of the government in Norway, we are in a better place than we've been for years. So, yes, it seems quite positive there as well.

[Thomas Johansen, executive]

Maybe just to add on the licenses, we cannot comment on the number of contracts that we have ongoing, George, but it's more than one. And like Andre said, it can materialize in Q4, it can materialize in Q1.

For the long-term value of Netcompany, it doesn't really matter whether it's in December and January. Of course, it has an impact on the results in either Q4 or Q1. But for us, it is most important that we get the contracts and that we get those associated big implementation projects associated with the product and platforms.

[Operator]

The next question will be from the line of Claus Almer Nielsen from Nordea.

[Claus Almer, analyst]

Also a few questions from my side. And I will also ask a bit about the FTE development. As already asked, both U.K. and Norway saw fewer FTEs in average in Q3 versus Q2.

And I know the ramp-up of both markets have been slower from these 2 larger contracts you have won. But does it also reflect that order intake from other parts of the market is on a slower pace? Or how should we actually think about fewer people to be invoiced going forward? That will be the first one.

[André Rogaczewski, executive]

Thank you, Claus. As you know, we are hiring behind the curve, and we are also very alert to developments in our different markets now. It does not reflect that we see a slower pace in particular area. There's no doubt that we've been changing or slowly changing in the last 2 years, our approach to become much more platform-oriented.

And, of course, people not working in those areas are less relevant than people working with platforms. So, you always see some changes in our composition of competencies in different markets, but there's no systematic slower pace in what we do.

And when we grow in markets and we get more customers and more contracts, we will also hire more FTEs. And constantly, we are monitoring our effectiveness as well and making sure that we can deliver as effective as possible.

[Thomas Johansen, executive]

Further that, that was also what we discussed on the back end of the 2023 result where we were not satisfied with the financial performance. And one of the things that we said that we would work on was to ensure that utilization will increase, which is exactly what is happening.

So, you can actually have the situation when we come from 1 year into another year where we will do the same or even more revenue on fewer people. That's not the same to say that order intake has gone down. It's more a reflection of utilization going up.

[Claus Almer, analyst]

Can you then provide a bit of color to how much more can you grow your business based on the current number of FTEs?

[Thomas Johansen, executive]

That's not something we can disclose in greater detail, Claus, and I'm sure you appreciate there, why. So, we will prefer to not give you any more specifics on that.

[Claus Almer, analyst]

It was worth to try at least. It is fun if you didn't try.

So, my second question goes to the software licenses. And I know what you just replied on the former questions. But in the past calls, you have given some indication for how much software licenses could be as a percentage of total revenue, around 1%. Is that still the best guess for this year?

[Thomas Johansen, executive]

I think what we have done, and this is where the wording becomes important. We have changed the wording around our expectation for license revenue to the total revenue.

And in the beginning of the year and all the way up until Q2, we said around 1% and now we have changed that to at least 1%, which also indicates that we are probably fairly confident on the 1%, and then there is some upside to that. So, that's how detailed we can be.

[Operator]

The next question will be from Daniel Djurberg from Handelsbanken.

[Daniel Djurberg, analyst]

I was wondering was a question asked, but I was also disconnected for a while. But on Norway, the attrition rate was quite high, I believe, at 1%. Can you comment on this and if it was temporarily or some reason that it was about 30%?

[Thomas Johansen, executive]

Yes, sure. So, it's always when the smaller units are seeing outflow of employees that then tend to fall in the same period, then the percentage or the churn ratio goes up. So, there is some timing in that in a relatively small unit. So, nothing structurally, nothing to read into that number as a proxy for how we expect to grow in Norway in the future.

It's more timing of different people leaving at the same time, Daniel.

[Daniel Djurberg, analyst]

And may I also ask you on the progress you have in Sweden, the tax authorities supplier in Gothenburg. Have you seen any more recent wins in Sweden or if you can give an update on this project?

[André Rogaczewski, executive]

We don't comment on specific engagements, but the project is that, as you know, it's a strategic win and things are going as planned. And we also see a great interest in the Swedish market for what we're able to do, especially with our products and platforms. So, we have very great dialogues with central authorities in Stockholm.

[Daniel Djurberg, analyst]

And finally, if I may, on the RRF projects in Greece. Can you give just a comment on the recent status on the fundings, if it's business as usual or how to think on the 2026 funding status?

[Thomas Johansen, executive]

Seems to be business as usual, Daniel. And that means that there's still funding in RRF this year and next year. And then we'll see what happens in '26, '27, whether the European Union finds another part of funding to use for various things. But on the short-term, there's still funding available that we're tapping into.

[Operator]

The next question will be from the line of Aditya Buddhavarapu from Bank of America.

[Aditya Buddhavarapu, analyst]

Both my questions related to the free cash flow. So firstly, on the working capital, I think you've mentioned some impact on the work in progress because of higher fixed fee projects. Could you maybe give some color on that? And if you could also talk about the delays by some of the customers you've seen in the Greece public sector?

[Thomas Johansen, executive]

So, the negative change in working capital in Q3 was driven by a higher proportion of fixed fee projects compared to the same period last year, where the payment milestones are a little more stretched than they were. And each fixed fee project has different payment milestones in it.

And the payment milestone is when we can take part of what we have done and then raise an invoice, which will then subsequently be paid. So, that's a technical impact on the different projects we do, and that will always fluctuate from quarter-to-quarter. So, that has impacted the working capital.

And then what we've also seen, in particular, in Greece is that the government of Greece have been a little slower in paying invoices, not a lot, but enough to move the needle. And since we are monitoring and collecting very tightly, then even small changes you can see in the working capital.

Now there's no need to be afraid of money not being paid. They will be paid. They're just maybe 5, 10 days or 15 days more delayed than what they were at the same period last year, but we are collecting and they are getting paid.

[Aditya Buddhavarapu, analyst]

And I guess in the context of the share buyback that you're doing for this year, I guess the overall free cash flow year-to-date would need to see a significant improvement in Q4. So, is there anything which would particularly drive that improvement in Q4? I don't know if there's maybe some phasing of these payments or anything else which should help?

[Thomas Johansen, executive]

Moving back to what I just gave for answer for why working capital was impacted negative. Then, of course, when we're building up work in progress because we are hitting payment milestones later.

And then, of course, the logic is that when we then meet those payment milestones. More payments will be released from the fixed fee projects than in the equivalent period last year, which to a large extent is what's going to happen in Q4. So, we have a number of projects that are hitting milestone payments that will be paid in Q4.

[Aditya Buddhavarapu, analyst]

And do you have a rough estimate of what would be the swing there could be in terms of, as you said, more payments released from fixed fee projects in Q4 versus last year, what the magnitude of that swing is?

[Thomas Johansen, executive]

We generally try to not comment too much on cash flow simply because we have these potential swings from one quarter to the other, and then it becomes a big technical explanation on each call. So, no further details on that, I'm sorry.

[Aditya Buddhavarapu, analyst]

And then just one final one. As you move to this platform approach over the next few years based on your strategy, how does that maybe change the free cash flow generation? Does that make it more predictable going forward?

[Thomas Johansen, executive]

The platform per se is not so interesting in terms of do they generate more free cash flow on a stand-alone basis. But, of course, what we would like to see when we do more platforms is that we accelerate our revenue simply because we can come faster to market.

We would also like to see that we are becoming more efficient, like Andre already alluded to when we do platforms, which will, of course, have a positive impact on our performance. So, when you add all of that together, then the platforms and products will accelerate Netcompany's financial performance and hence also the cash flow that we generate.

We don't do the platforms just for the sake of the cash flow. It is a pleasant benefit from the accelerated top line we expect to get from products and platforms.

[Aditya Buddhavarapu, analyst]

And maybe one follow-up actually on the UK. Your tone on the UK, even though you're saying you've seen some delays, I think it's still relatively better than what some of your other peers are seeing in terms of seeing much more significant delays in projects. So, is that because you're exposed in the public sector or anything specific to that company?

[André Rogaczewski, executive]

I think where we're positioned in the UK, and it's not only one deal, it's actually several deals. We are looking very much into replacing older systems and bringing in our platforms and also putting AI on top and that goes both the private and public sector.

And many of the things we involved in needs to be done. It's not a question of should we do it or not. It is a question of when, and we are very well positioned. So, we see positively on the UK market as a potential for growth in the future.

[Operator]

[Operator Instructions] As there are no more questions in the queue, I will hand it back to the speakers for any closing remarks.

[André Rogaczewski, executive]

Well, thank you all, and have a great day.