BTS Group: Q2 beat and raised FY guidance - ABG

Q2 EBITA +8% vs ABGSCe driven by 10% sales beat Guidance upgrade as expected but highlights slowdown Estimates slightly up on the Q2 beat, neutral beyond

Q2 details Sales SEK 664m (10% vs ABGSCe 605m, no cons), adj. EBITA 112m (8% vs ABGSCe 104m), adj. EBITA margin 16.8% (ABGSCe 17.2%). FX adjusted growth 24% (vs ABGSCe 17%). Beat driven by all regions on sales (3-25% vs ABGSCe) while the EBITA beat stems entirely from Europe (+81%), while North America and Other markets fell short of our expectations.

Guidance upgrade but notes some slowdown in Q2 Even though BTS experienced a strong Q2, beating expectations on sales and EBITA, as well as upgrading its FY EBITA guidance to "significantly better than 2021" vs previously "better than", it also highlights increased uncertainties. This mainly relates to software clients in the US that has taken a more profit oriented stance and therefore postponed or cancelled some planned initiatives. BTS experienced this in the North American business in the end of Q2, and we find it likely that this slowdown continues also into H2. In Other markets, BTS is delivering according to its hiring plan, while it is a bit behind in Europe and North America, according to the company. This also limits further upgrades for H2 in our view.

Estimates slightly up in 2022e, relatively neutral beyond Despite the solid Q2 beat, we expect consensus to not extrapolate it into H2 and as estimates already expected a FY guidance upgrade, we estimate that consensus will only marginally lift 2022 estimates (mainly due to the Q2 beat) and leave 2023-24e estimates relatively unchanged. Share likely to trade relatively neutral or slightly up on today's report. Conf call at CET 9.30.

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