Dustin Group AB

STO:DUST

Earnings Call Transcript 2020-Q2

[Operator]

Thank you for standing by, ladies and gentlemen. Welcome to the Q2 report '19/'20 conference call. [Operator Instructions] Just be reminded that the call is recorded today the 1st of April 2020. I would like now to hand over the conference to your first speaker, Mr. Thomas Ekman. Thank you. Go ahead, please.

[Thomas Ekman, President & CEO]

Thank you very much, operator. Good morning, everyone, and most welcome to our second quarter presentation and conference call. Hope you have had a good morning despite the difficult time in our history right now. Here on our side of the call is myself, Thomas Ekman; and we have Johan Karlsson, CFO; and Fredrik Sätterström, Head of IR in the room here as well. So today, we present our second quarter for fiscal year '19/'20. Our market, like the world at large, is, as we all know, in a situation which is tough to navigate, and the outlook is uncertain and challenging. But before we get into possible effects from the novel coronavirus, I would like us to present our second quarter that ended in February, a quarter that overall reminds of Q1 '19/'20 where we see healthy sales growth and a stable EBITA level from last year. Our transformation toward a greater share of service sales is proceeding according to plan. And we have successfully integrated Core Services and Purity IT during the quarter. In early March also, we updated our brand position as well as our visual identity, which I will come back to later on in the presentation. So going to Slide 2, Dustin at a glance. As you can see, our share of IT services versus hardware is at 84% and 16%, and Sweden is the largest market with 44% of sales. 80% of our sales is online and remaining 20% is coming from relation sales, aiming primarily towards public and large corporates. Our focus since the beginning of time has been B2B, building from an online push model, primarily to SMBs, the small-, medium-sized businesses, which then has expanded to both large corporate and public and B2C. Average order sizes are, at the moment, at SEK 8,000 for SMBs and SEK 12,000 for LCPs. So many small orders are shipped from our central online platform and warehouses as well as directly from our distributors. Overall, we have -- believe in our long-term strong position and we are investing in pushing ourselves toward and -- forward to even further benefit from the underlying trends, such as accelerating online market, demand for mobility, managed services, security and cloud-based solution as well. Moving further then to Slide #3 for some highlights of the quarter. We continued to strengthen our market position despite the uncertainty in the market. Net sales grew with 10.2% to SEK 3.5 billion where our organic growth was at 4%. The growth was driven by positive organic growth from all 3 segments as well as completed acquisitions. Of the organic growth, SMB came in at 2.8% and LCP continued to gain share, driven by public sales and grew organically 4.1%. On B2C, we grew 12.5%, fueled by Black Friday sales from December. Even though the market has continued to be somewhat worried in the SMB segment during the quarter with overall flat or negative growth in the Nordics, it is good to see that we can continue to grow versus the market. LCP continues to benefit from large public piece as well as good growth within the corporate sales during the quarter. Gross profit increased to SEK 557 million compared to last year's SEK 524 million, giving us a gross margin of 15.7%, slightly down versus last year, 16.3%. Our adjusted EBITA came in at SEK 154 million, which is flat versus last year, giving us an adjusted EBITA margin at 4.3% for the quarter. The EBITA margin as such was affected by sales mix and our investments in expanding our offerings in services and solutions and our continued efforts we put in our service organization. EBIT was at SEK 133 million compared to last year's SEK 160 million. Items affecting comparability was positive SEK 3 million this quarter versus last year's positive SEK 23.2 million. The items come from integration in the Quarter at SEK 5 million of cost and the renegotiations of earn-outs at SEK 8 million, ending then at positive SEK 3 million. Earnings per share at SEK 1.04. Comparable net debt, excluding IFRS 16, was 3.1 versus last year's 2.9 And cash flow from operating activities came in at SEK 155 million compared to last year's SEK 144 million. And other operational highlights in the quarter is that we successfully integrated Core Services and Purity IT in Norway. We are continuing the ongoing consolidation of our Nordic data centers as well as our automation of our central warehouse outside Stockholm. Both are expected to be ready in Q4 2020, i.e., this summer. And from Netherlands, we have continued to see a steady inflow of customers in the quarter. Johan, yes, moving on to Slide 4 and go further in the segments and financials.

[Johan Karlsson, CFO & Executive VP of Business Support]

Yes. Moving then to Slide 4 and the SMB segment in some more detail. Sales for the quarter in SMB ended at SEK 1.511 billion, an increase of 12.2% over last year, representing an organic growth of 2.8%. As in previous quarters, the acquisitions made during last spring continues to add volume in the SMB segment, and in Q2, 8.7% came from acquisitions. The organic growth increased somewhat from Q1, which was 0.3% to, in Q2, 2.8%. Segment result for the quarter decreased from last year's SEK 147 million to SEK 140 million or by 4.5%. The main reason for the lower result was weaker product mix with a high share of PCs and mobile phones. At the same time, we saw less high-margin projects being finished during the quarter. Added to that, we have, as Thomas was mentioning during the quarter, continued our investment in the services area and added capacity to sell and deliver our service offerings. Service and software, as share of sales, increased from 21% last year to 23% this year. And the customer base for Software-as-a-Service was up from 57,000 last year to 129,000 this year. Moving on to Slide 5 and the LCP segment. LCP had a very strong quarter, and it's good to see that the maturity of the public contract contribute to better margins and that we're able to win new contracts in priority areas. Sales in LCP was SEK 1.863 billion in the quarter, an increase of 8.4%, of which 4.1% was organic. During the quarter, we saw good growth coming from the corporate customers in Norway, Finland and Denmark. The segment result increased from last year's SEK 101 million to SEK 118 million or by 17%. The result improvement came both from growth, but also from improved margins where segment margin improved for the fourth consecutive quarter to 6.3%. The second quarter margin of 6.3% should be compared to last year's 5.9%. Main reason for the improved margins are the ability to generate higher margins on public agreements over time, but margin improvements also came from a better product mix and from higher sales to corporate customers. Moving on to Slide 6 and B2C. B2C had a strong quarter, as we heard before, with sales of SEK 169 million compared to SEK 150 million last year, representing a growth of 12.8%, of which 12.5% was organic. The main reason for the high growth number was the calendar effect of Black Friday, which this year ended up in Q2, while last year affecting Q1. Our strategic intent continues to be focused on margin rather than volume. Segment result was SEK 9.2 million compared to last year's SEK 9.4 million. Segment margin was down from 6.3% to 5.4% this year. And the main reason for this was the higher campaign activity coming from Black Friday. Then moving on to Slide 7 and net working capital. Net working capital was negative SEK 154 million compared to last year's negative SEK 62 million. If we look at the details, we can see that inventory was down by SEK 35 million compared to last year, where the main reason was better inventory planning in the local countries and some delays in deliveries on our private label products from China. Accounts receivable was up 2%, mainly as a result of higher business volumes and improved management of receivables, mainly in the dunning process. Moving on to accounts payable, which was 4% higher, mainly due to higher purchasing. The extended payment terms from some of the distributors continues to be in place. Leverage at the end of Q2 was 3.1% where our target is to stay in the range of 2% to 3%. The main reasons for the increase from 2.9% at the end of fiscal year '18/'19 was the dividend payment during the quarter and payments of earn-outs from previous acquisitions. Moving on to Slide 8 and cash flow and investments. Cash flow for the quarter was negative SEK 9 million compared to negative SEK 98 million last year. If we look at the parts, we can see that cash flow from operating activities before change in net working capital was SEK 159 million compared to last year's SEK 155 million, mainly as a result of higher business volume. Change in net working capital was negative SEK 4 million compared to last year's negative SEK 11 million, mainly coming from the lower inventory levels. Cash flow from investing activities was negative SEK 123 million compared to last year's negative SEK 14 million where the main difference was the earn-out payments during the quarter. Cash flow from financing activities was negative SEK 42 million compared to negative SEK 228 million last year. The main impact during the quarter came from the dividend payment of SEK 266 million and new loans of SEK 256 million. IFRS 16 affected the reported cash flow negative with SEK 34 million in the quarter compared to last year. The investments to support our strategic journey continues throughout the quarter. CapEx in IT was SEK 8.9 million compared to SEK 7.7 million last year. Other CapEx at SEK 17.9 million compared to SEK 11 million last year and this was a mix of investments, amongst others, the new brand and positioning platform hardware for data centers and other equipment related to production of services. The net investment in lease asset of SEK 188 million was related to the extension of the rental agreement for the warehouse in Rosersberg. Moving back to Thomas.

[Thomas Ekman, President & CEO]

Very good. Thank you, Johan, and then continue over to Slide #9. Even though it happened just after the quarter, I just want to enlighten you all on our updated brand platform. This is a natural step to further emphasize on our focus to move us from products -- or to products and services. So in beginning of March, we launched the new brand platform with our promise to our customer, we keep things moving, where we want to help our customers to stay in the forefront by providing the right IT solution to the right customer and user at the right price at the right time. And given the increasing success with take back as a service and demand for sustainable IT, we see that we also can make a strong contribution to society by having a circular mindset in everything we do. Looking at Slide #10. As said, we do this change to demonstrate in a clear way to our customers that we will provide both products, i.e., hardware and standardized services transactionally over our online platform and through relation sales. Easy to understand, easy to set up, easy to expand services built on standardized components. And on Slide 11, our updated visual identity where we build on our own play symbol originating from R&D showing that we keep things moving. It looks good, modern and show strength to us -- or for us as a company. So moving on to Slide #12, and just let me shortly summarize the second quarter. A quarter with continued solid development despite increased uncertainty. Net sales up 10.2% with an organic growth at 4%. Gross margin at 15.7%. And adjusted EBITA at SEK 154 million, flat versus last year, giving an adjusted EBITA margin at 4.3%. EBIT at SEK 133 million and earnings per share at SEK 1.04. And we have continued our shift in investments in services with integration, consolidation and automation, everything done to increase our future profitability. So all in all, a good quarter as such, according to our expectations. And then moving on to Slide 13. A lot of things has happened due to the outbreak of the coronavirus. The rapid spread will have an impact on our business in the short and probably in the long term. The health and safety, of course, of our employees and customers have the highest priority. And the potential changes in customer behavior and disruptions of supply chain is uncertain so far. The beginning of our third quarter has been characterized by high demand for products in the form of monitors, laptops, web cameras, cables and accessories for home offices among all our B2B customers. We can also see a stable development in the public sector. The availability of products remains generally good. And we made additional product purchases already when the first signs of the spread of the coronavirus appeared in China. We have seen a more subdued demand trend for project-related services during the start of the quarter in March, given the closure actually of customer offices. We are seeing generally more cautious market situation in the Netherlands. And due to the generally uncertain situation in Europe, it's currently hard to foresee length or scope and the potential impact on Dustin. But we are carefully following official advice and the developments in our market. And as a direct consequence of this, we decided at an early stage to postpone Dustin Expo, our IT fair in the Nordics until September. And I must say I'm very proud and I feel very confident about how we, as a company and all the employees, quickly have adjusted to the new way of working with a continued high focus on our customers and how we can support them and the services and products that are now needed. So summarizing the quarter and the current state. Overall, we performed well and according to plan during the quarter -- during the second quarter. The start of the third quarter has shown a high demand, as said, while the uncertainty in the short term has increased. We have a positive view on our strategy and long-term business with an expanded service offering based on our strong e-commerce platform. The LCP segment continues to demonstrate margin improvements as its contract portfolio matures. And we are convinced that we will see improved efficiency in our service sales in the SMB segment over time as more -- as more acquired companies are integrated and business volumes increase. Our financial position remains favorable, and we are well positioned for the conditions in the prevailing business climate. We are actively following developments and are taking proactive approach in preparing for various scenarios depending on development in the market. One of this, of course, is to enable us to be able to act swiftly and have activities and tools ready from both cost and risk perspective, but of course, also to leverage the opportunity that our strong online position can offer us and our customers. And with that one, I think we are -- we conclude our presentation. We can -- are happy to take any questions you might have. Thank you. Operator?

[Operator]

[Operator Instructions] We will now proceed to our first question. It comes from the line of Ramil Koria.

[Ramil Koria, Analyst]

I have a bunch of questions here, but starting off on the commentary you're making on the COVID-19 big impact. Just first off, is it possible to give any flavor on how much of your sales is coming from sort of what you call project-related services?

[Johan Karlsson, CFO & Executive VP of Business Support]

As a percentage, relatively small part, less than 10%.

[Thomas Ekman, President & CEO]

Yes.

[Ramil Koria, Analyst]

Got you. And I mean, you're saying that you're seeing a high demand in some product lines, which, to my knowledge, you have in your private label assortment. Should we expect margins to tick up from here? And so if also bearing in mind what you're saying about slightly prolonged supply chain deliveries from China, how should we sort of take those 2 components together and come up with a conclusion for the coming quarters here?

[Thomas Ekman, President & CEO]

I mean, as I said, it's of course, I mean, as for everyone, it's very hard to predict and to see how the coming, I mean, short-term period will look like, how our Q3 will look like. But what we can see is that we have -- I mean, of course, the private label product has -- we have sold a lot of private label products. We also sold a lot of other, of course, vendors' equipment during the first part of March. And it's primarily a lot of basic hardware. So I think -- I mean, at the moment, the supply chains for us is -- it's not scarce at this moment, but it depends a little bit now how the factories in China are coming up to speed, which according to latest news is that they are. However, given the fact that the rest of the world is -- have the spread now, the sort of supply chains and transport chains are somewhat out of line, so it might be longer deliveries and so forth. There are some of the vendors who actually fly their products to Europe in order to decrease transportation time. So at this moment, at this very moment, it's not a supply shortage. But of course, it can become depending on how the future looks. So do you have anything more to add there, Johan?

[Johan Karlsson, CFO & Executive VP of Business Support]

No. I think the -- if you would look at the margins, we don't see a great change in margins as such in product per product. But actually, as we state also in the report, if we have less capacity to deliver projects to our customers, that might affect margins slightly negative. On the other hand, selling a lot of accessories for home offices is relatively positive to margins. So net-net, you would see, I think, no big effect on margins as we look at the gross margin side coming from this.

[Ramil Koria, Analyst]

That's very clear. And then a very high level question, but since you guys were listed semi recently at least and we do not have a lot of numbers from the financial crisis, have you gone back to that period to look into, I guess, mainly the 3 main customer buckets, SMB, large corporates and public and how the 3 different buckets behaved during the last crisis?

[Johan Karlsson, CFO & Executive VP of Business Support]

Yes. We have.

[Thomas Ekman, President & CEO]

We have, even though I think it's important to say that probably this crisis is slightly different, less financial crisis and more maybe macro situation to handle. But if you look at the 3, you would see that public basically continues as before. No big difference in the previous crisis. Large corporates will have the most active stance on the crisis and actually reducing or delaying implementations of new data centers and new rollouts of PCs, while the SMB customers would continue to buy as they are buying because they need. So basically, they buy because their equipment breaks down and they need their equipment. So they continue to buy to a better extent. And as you might recall, in the last financial crisis, we state that the market in '08, '09 was down 15% while we, at the same time, was down 5%. So I think we have a good position in the market, even though, obviously, a negative GDP development will have impact on Dustin as well.

[Ramil Koria, Analyst]

It's very clear. Two final questions, starting off from the first one. Just, again, semi high level here, but leverage and any color on covenants would be very appreciated.

[Thomas Ekman, President & CEO]

Well, we don't comment on the individual covenant numbers. But we are -- we have the headroom at the moment and we have a very good liquidity situation at the moment. So we believe that we can continue our business for quite some time before we end up in any issues when it comes to financing.

[Ramil Koria, Analyst]

And then just one final one on the CapEx side. Sorry if I missed this earlier, but it seems like the automation investments are proceeding according to plan. However, your CapEx in this quarter looked a tab low versus at least my expectations. Are you -- has the automation investments in the main warehouse been kind of postponed? Or are they proceeding according to plan, but I was overestimating the CapEx impact? Or how has that progressed?

[Thomas Ekman, President & CEO]

The project -- or the automation in the warehouse is progressing according to plan. So we don't see any delay coming from, let's say, the recent situation. And it's our estimate that we can continue on our plan and actually deliver the project during Q4.

[Ramil Koria, Analyst]

What's left to take on the CapEx side, sorry.

[Thomas Ekman, President & CEO]

Sorry, come again?

[Ramil Koria, Analyst]

What's left to take on the CapEx side from that specific initiative?

[Thomas Ekman, President & CEO]

Well, the -- actually, on the automation project is basically financed through lease. So from a -- you would see it in the lease commitment and with no cash impact.

[Operator]

Let's proceed to the next question. It comes from the line of Daniel Thorsson.

[Daniel Thorsson, Research Analyst]

Yes. A few of my questions already taken. But can you comment something about how the margin in SMB has trended in March? I guess volumes have started off well and a bit weaker in the end of the month. But have you seen a relatively flat margin versus Q2?

[Johan Karlsson, CFO & Executive VP of Business Support]

Yes. I think we could say that we have a slightly higher hardware share coming from the -- what Thomas was discussing before, the home office equipment, but relatively good margin in that -- on that hardware side. So it compensates for slightly less projects, let's say. So given these 2 effects, margins are relatively flat.

[Daniel Thorsson, Research Analyst]

Okay. That's fine. And in LCP, schools have been closed down in some of the Nordic countries. Have you've seen any stopgap effect during March that could boost LCP short term? Or is that the longer purchasing cycle than that?

[Johan Karlsson, CFO & Executive VP of Business Support]

I think there -- on the public side and also on the corporate side, as you say, there is -- there are longer cycles. We can see that customers have brought home to their sites what they have already ordered and what we have kept on stock for them. But we haven't yet seen any additional, let's say, rollouts from their side.

[Daniel Thorsson, Research Analyst]

Okay. That's good. And final one on that situation, have you taken any firm actions so far? Or do you have different scenarios still that you prepare for? What's the status? And in that case, can you elaborate somewhat on the different potential outcomes you're looking for?

[Thomas Ekman, President & CEO]

It is -- we have taken, of course, actions in terms of being able to deliver to our customers given the fact that it was a very speedy change this and -- so that we have prepared for and boosted up our warehouse situation and delivery situation so we can deliver to our customers. And then, of course, long given the fact that we had a boost of sales in March, we also used this time, this precious time, that some other companies don't have that had to close to elaborate a lot on different scenarios, what happens if GDP turns down and so forth and that we are only preparing for, and as I said in earlier, we are preparing for this, of course, enable to be -- to enable us to be able to act swiftly and have the activities and tools ready from both a cost and risk perspective. But of course, also I mean, long-term leverage on the strong position we have and that we can offer to our customers. So it is, of course, we have a lot of different scenarios that we work on to see where. And we listen to, as you do, I guess, we listen to all the experts on this and GDP outlooks and -- to see what can come out of this and looking, of course, their own numbers and how the outlooks look even though it's very hard to foresee. So -- but it is, as we say, it's -- at the moment, it's just we dig there with where we stand and deliver what we can now and are prepared for what the future might have. Yes.

[Daniel Thorsson, Research Analyst]

Okay. I see. I see. So should we expect to hear anything from you in that short term? Or what's your communication plan on the actions that may be taken?

[Thomas Ekman, President & CEO]

I mean if we believe that we have something that we shall communicate to, we will definitely do that. And I think right now in this time of period, it is important to be transparent and to see how things develop on both sides or both positive and if there are negative things that comes up. But that, we'll see. That depends on -- that depends on what comes up.

[Daniel Thorsson, Research Analyst]

Yes. Fair enough. Fair enough. Final one to Johan. What is the plan for upcoming earn-outs in the coming quarters here? You paid out SEK 96 million in this quarter.

[Johan Karlsson, CFO & Executive VP of Business Support]

Yes. We have -- I think you can see from balance sheet, we have one earn-out to be paid in the rest of the year, let's say, actually in Q3. Apart from that, there is nothing else to be paid.

[Daniel Thorsson, Research Analyst]

And what's the magnitude of that? Do we know that?

[Johan Karlsson, CFO & Executive VP of Business Support]

That's a maximum of SEK 75 million.

[Operator]

Next question comes from the line of Mikael Laséen.

[Mikael Laséen]

Yes. Hope you can hear me. Two questions from my side as well. First of all, can you say something about how you're protecting and securing the warehouse and also Stockholm to be able to deliver without disruptions?

[Thomas Ekman, President & CEO]

You mean protecting and securing it in what sense you mean?

[Mikael Laséen]

Yes. From COVID-19 disruptions.

[Thomas Ekman, President & CEO]

Okay. Sure. Of course, yes, that we do. We are looking, of course, checking the health of all the employees there and are very strict who can get there in and have a higher degree of -- I mean, all our offices are more or less closed in our Nordic offices and the Dutch offices. And the warehouse, we are even more sort of higher level of security when it comes to check the health of our employees and have also teams stand by if we have -- if we were to have an outbreak in the warehouse so that we can clean it up and get the new team in. So we are very much on our toes there, I should say.

[Mikael Laséen]

Okay. Good. And when it comes to demand in March, which was a lot better, can you say something more about the magnitude of this? Was it, I mean, significantly better than the trend you have in Q1 and Q2?

[Thomas Ekman, President & CEO]

It was -- I mean, it's -- as you know, we are in the quarter right now. So it's, of course, we do not sort of state any numbers. But still, it was a high demand. And it was -- we have sold more of basic hardware products than we -- if you compare to last -- the March last year. But of course, it has been -- it has been high demand even though we don't give any specific number on it.

[Mikael Laséen]

Okay. Fair enough. All right. And when it comes to the margins per segment in Q2, SMB declined sequentially and LCP was better. But can you talk about the SMB side? What was really the reason for the decline there? And -- yes, if you start from there.

[Johan Karlsson, CFO & Executive VP of Business Support]

I think it's 2 main reasons. One is the closing of larger, let's say, services project was lower in our Q2. That happens because we are, in some cases, running larger, let's say, implementations with good margins. If we don't close any of these in a quarter, margins will be lower coming from that. That was -- that's nothing special. It happens. It goes a bit up and down, let's put it that way because we don't have so many of these projects, so it's a bit volatile, a little bit like on the LCP side but at a smaller scale, of course. And the largest actually impact was much more sales of PCs and mobile phones in the quarter. You could say that, that's usually a good sign of economy coming back. Actually, our smaller customers start to buy PCs and mobile phones again. So it's a positive sign even though that, of course, has very little value today. But during the quarter, you -- if it would have been a normal situation, we would have looked at that as something good happening. That puts a bit of pressure on margins because margins on mobiles and PCs are slightly lower than the average.

[Mikael Laséen]

The implementation projects, any impact from that?

[Johan Karlsson, CFO & Executive VP of Business Support]

Yes. The impact -- there, there is an impact. We have a very good, actually, I think pipeline on projects going forward, particularly in areas such as AV conference rooms and these kind of projects. But that is, of course, now very difficult to forecast what can be implemented and what can't in the near future.

[Operator]

Next question comes from the line of Christoffer Bjørnsen.

[Christoffer Wang Bjørnsen, Analyst]

Christoffer from DNB Markets here. I just wanted to get the clarification on your comments on March. So what you're saying is that, thus far, in the, let's say, from Q3 you're actually seeing an improvement compared to the last year for the total business in aggregate? Or is that just for the home office related part of the business?

[Thomas Ekman, President & CEO]

It's primarily for the home office part of the business that we have sold equipment and hardware, I mean, like web cameras and so and laptops and everything around that. That has been, of course, have a higher demand. Then as you all have seen to, there has been a slightly -- harder to do onboarding projects and so forth and other type of projects related, but that is a smaller part of our business. So it has been a high demand on hardware during the start of the quarter now.

[Christoffer Wang Bjørnsen, Analyst]

Okay. So you are seeing -- you are going to see -- at least thus far in the quarter, you are seeing a year-on-year improvement. But just a bit in -- but okay, it's going to be stronger thus far in total for your business?

[Johan Karlsson, CFO & Executive VP of Business Support]

For March, yes. But remember, there are 2 months more in this quarter. So -- and no one knows what's going to happen in these 2 months. So we need to be very careful on what we think about the future, I think, at the moment.

[Christoffer Wang Bjørnsen, Analyst]

Sure. Sure. Sure. And then one last one is on the LCP segment. The organic growth of 4%, could you just talk a bit about the mix there between the different segments, what was driving down that organic growth in the quarter?

[Thomas Ekman, President & CEO]

You mean for driving down the organic growth for LCP, yes? I mean, that is, first of all, that we meet ourselves in -- from previous years. And then -- but still we see a good growth from the corporates. But the large -- as you know, the large contract we have in Denmark that boosted the percentage numbers during last year, it's, of course, where we meet ourselves and we are still growing on that. And the really good thing with those contracts is that, as you all have seen to also, is that we can see that the more the contract mature, the better margin we can achieve. And that is, of course, very good to see.

[Operator]

Next question comes from the line of Erik Elander.

[Erik Elander, Research Analyst]

All right. So a couple of questions from my side. Do you expect the corona situation to affect your different customer bases differently, so SMBs versus public sector versus large corporate versus B2C? Do you expect any of these will be more affected than others, for instance?

[Thomas Ekman, President & CEO]

I mean to elaborate a little bit on that one, I think the -- we have seen high demand in B2C. We have seen high demand in SMBs at the beginning of the quarter, as we said. And then, of course, it depends on if there are any SMBs, smaller companies at risk like restaurants and so forth, but that is -- we are not that exposed to that part of the segment. So it's hard to see. It's hard to forecast how that can come. And as you know, we have very small -- our average order size is about SEK 8,000, which -- so we have many, many small orders and many, many customers. So of course, that sort of takes down the overall risk in that sense. LCP. When it comes to public side, public is going on. And there are no sort of decrease or so in public spending. I mean, if you look at the news, it might be so that public will take more going forward. But that -- we'll see about that how that goes on. And then if you look at large corporates within LCPs, then, of course, there you can see that they react and they put a hold on stuff. Really large corporates, I mean, depending on their sector, of course, do a lot of activities. So at the moment, it is, as you all have seen also before, it is -- this is a completely different type of crisis than the other crisis we have been through like financial crisis and the other real estate crisis and so forth. This is another magnitude and macro. So we'll see how it changes. But as it looks right now, it is somewhat similar to the development of the other crisis we have been through like financial crisis and so forth. But it all depends how, of course, the overall GDP looks. Everyone will, of course, be affected if the GDP goes down. But at the moment, it is -- we can see the same thing as we've seen before even though it's very early and it's hard to predict the future.

[Erik Elander, Research Analyst]

And just regarding the positive sales bump that you have gotten from the fact that people work more remotely at the moment, have you've seen this trend gone down since it started? Or is it still on a quite high level? In other words, how many months should you expect this kind of positive sales bump to continue from more remote work?

[Johan Karlsson, CFO & Executive VP of Business Support]

I think you will see different waves of this. These people working from home or people meeting remote, this is a game-changer. This will have an impact on the market for a long time, and it has actually accelerated a trend that has been going on for some time. But obviously, when everyone has bought their video camera, their keyboards and their screens for home, there will be -- there is a reduction of that, let's say, demand, instant demand that you have in the beginning. And that will happen for sure. Then it's the question what will happen at the second wave when you are there at home and you have worked at home for some time, what will you then do? But again, that -- to predict that at this moment, I think it's impossible.

[Thomas Ekman, President & CEO]

I think also the important part, as you can see, what is happening now to elaborate on what Johan said there, I mean, what we might have thought that where we would -- from a digitalization perspective -- I mean, this is a very tragic event that is going on. And from a digitalization perspective, we thought that we might be -- where we are right now we might be in 3 years. And it has happened a lot, I mean, around in schools, in everything, how people are using Teams, how they use video conferencing, less traveling, more usage of e-commerce, more usage of standardized services, which, of course, long-term fits our position very well. And we believe that we are in a strong position in that sense. However, the road there right now is extremely bumpy and it goes fast and it's hard to predict, given all the change that is happening. I mean, I think the overall usage of Team has more or less doubled or tripled in all over the Nordics. And so it's a lot of things happening, and we'll see what the next wave will be. But yes, we are on our toes there to follow there and to be able to provide our customers with the right products and services for whatever that wave might be.

[Operator]

Next question comes from the line of Ramil Koria.

[Ramil Koria, Analyst]

Just a follow-up. I mean given social distancing measures, et cetera, being taken, are you seeing any churn on your warehouse personnel? And second follow-up question, should we expect any OpEx impact from such measures, if you will?

[Thomas Ekman, President & CEO]

I mean, in regards to social distancing in the warehouse, we are taking a lot of measures there to increase sort of -- increase the physical distance between people working there and have more shifts in the warehouse. So we have -- we can work for longer, but with fewer people at the same time. So we're taking all measures we can there to keep up the service delivery, but of course, also, first of all, protect the health and security of our employees. And then on the second question there if there will be OpEx related to this.

[Johan Karlsson, CFO & Executive VP of Business Support]

So far, very limited effects on OpEx.

[Ramil Koria, Analyst]

Yes. But are you seeing employees deliberately staying at home to not risk having to meet other people? I mean they are, by nature, forced to actually work with colleagues. They can't do it remotely. Are you seeing any churn on the employee base on the back of that? Or are you seeing people staying at home and you have to take in consultants?

[Johan Karlsson, CFO & Executive VP of Business Support]

I mean, we see people being at home, but I think being cautious, and we have actually instructed them to be very cautious. So it's more an effect of our own messages and also, of course, the general message in the society. What we are securing is that we have extra personnel lined up so that we can run our operation to the best of our customers' needs. And that's what we are focusing on. At the moment, that works quite well. We have higher absence right in the beginning of the crisis. It's now stabilized. And we have, I would say, a good situation in terms of deliveries. We are -- we have the same delivery promise as we had before the crisis at the moment.

[Thomas Ekman, President & CEO]

And we are also using, of course -- we're using other, I mean, our warehouse, I mean, just an example, our warehouse, as you know, is outside Arlanda and all the hotels and all the personnel and staff at Arlanda are not working that much at the moment. So we're using a lot of people also from other businesses that has helped out during March in our warehouse. So we can have -- as said, we have -- went up to several shifts in the warehouse. So we have less people, but overall, can still deliver as we work more hours in the warehouse.

[Operator]

Next question comes from the line of Christoffer Bjørnsen.

[Christoffer Wang Bjørnsen, Analyst]

Yes. Christoffer from DNB Markets here. Just a quick follow-up. I was just wondering if you could also comment on how you're seeing the development thus far in March across the different geographies. It seems like The Netherlands was more challenged. You look at some of your peers, they've been talking about 20% year-over-year increase in the total backlog for various geographies. So just trying to understand how the effect is split by the different countries that you're in.

[Johan Karlsson, CFO & Executive VP of Business Support]

I think we have -- yes, I don't think we comment on what others have said. But in our case, you could look at society in general, I think, and that -- the impact it has of stronger lockdown in different countries. So we would say that we have the highest impact in countries with strong lockdown compared to countries like Sweden where there is slightly more activity at the moment. Probably the most effect that you would see in our geographies would be Denmark and The Netherlands.

[Operator]

Thank you. And no further questions at this time. Please continue.

[Thomas Ekman, President & CEO]

Okay. Thank you very much, everyone. Thank you for listening in, and thanks for all your questions. And just please revert to us by e-mail or so a call if you have any more questions during the day and going on. Thank you very much. Thank you. Bye-bye.

[Operator]

Thank you. That does conclude our conference for today. You may all disconnect. Thank you all for participating.

[Johan Karlsson, CFO & Executive VP of Business Support]

Thank you.