On track with Growth Plan
Company Announcement no. 09/2024
On track with Growth Plan
Copenhagen, August 21, 2024
Revenue grew by +6% to DKK 139m in the first half of 2024, up
from DKK 132m in the first half of 2023. The low half-year growth
was expected due to an unusual revenue split between the first and
second half of 2023, where first-half revenue grew +39% year over
year and accounted for 55% of the total fiscal year revenue.
Danish revenue grew by +21% to DKK 87m in the first half of
2024, up from DKK 72m in the first half of 2023, showing a stable
and solid development in the Danish market.
International sales declined by -13% to DKK 52m in the first
half of 2024, down from DKK 60m in the first half of 2023. The
lower international sales are due to the unusual revenue split
between the first and second half of 2023, where a large portion of
total software licenses related to international sale was
recognized in the first half of 2023.
First half 2024 results show earnings before tax (EBT) of DKK
43m, down from DKK 47m in the first half of 2023. cBrain continues
to deliver solid earnings with earnings before tax margin (EBT
margin) of 31%. Earnings are slightly higher than expected as some
of the international investments that were planned for in the first
half of 2024 have been postponed to the second half of 2024.
cBrain (NASDAQ: CBRAIN) is satisfied with the financial
development, which is in line with expectations and slightly ahead
of the 2023-2025 growth plan.
cBrain maintains the guidance for the fiscal year 2024, with
revenue growth of 20-25% and the guided earnings before tax margin
(EBT margin) of 20-25%. This is based on continued growth in
Denmark, increased international sales, and increased investments
into the growth plan in the second half of 2024.
Growth is driven by subscriptions, strategic customers
and partnerships
Software subscriptions count for approximately 50% of total
revenue, based on customers renting the F2 software or having F2
software maintenance agreements. When existing customers extend
their use of F2 by adding more users or modules, or new customers
implement F2, this increases the subscription base. cBrain has
long-term contracts with most customers, and the F2 software
subscription base constitutes a solid and growing foundation for
the business.
The F2 platform was built in close collaboration with a group of
the Danish ministries. cBrain continues to develop new F2 versions
in close collaboration with strategic government customers and
these customers count for a majority of the revenue. Attracting and
building long-term business relations with strategic customers is
therefore core to the growth.
cBrain has a strong Danish customer base, which counts more than
75 Danish government organizations including most ministries, and
Denmark ranks number one in the global United Nations e-government
survey. With this reference position cBrain seeks to expand
internationally, using F2 climate software as a door opener and the
F2-for-Partners strategy as a key to scaling. During first half of
2024 cBrain has added several new customers to the customer base,
but most of the revenue growth comes from existing customers.
The international growth plan is based on organic growth. When
possible cBrain seeks to build the international business in
collaboration with local partners and thereby limiting the size of
the international cBrain organization. A cornerstone of the
F2-for-Partners strategy is therefore allowing partners and
customers access to the F2 configuration technology and training
them to set up the F2 standard software and configure processes
using the F2 Service Builder.
cBrain delivers COTS (commercial off-the-shelf software)
for government
Software for government digitization represents one of the largest
global markets. Today the market is dominated by large suppliers
who deliver custom-built solutions based on integration of
best-of-breed software modules and components. But many projects
fail, reporting huge delays and budget overruns due to the
complexity of delivering best-of-breed based solutions.
cBrain challenges the IT government industry by delivering
standard software, often referred to as commercial off-the-shelf
software (COTS). As an alternative to best-of-breed solutions, COTS
offers major benefits for customers with respect to quality,
delivery time, and the costs of implementation and maintenance.
For historical reasons, government organizations around the
world have been reluctant to adopt standard software as part of
their digitization strategy. This reluctance is often due to
internal IT organizations and procurement routines that are set up
to utilize custom-built best-of-breed solutions. However, several
governments organizations, including a number of leading Danish
government agencies, have begun to adopt COTS and embrace the
benefits of standard software.
cBrain anticipates that the shift towards COTS will eliminate
much IT consulting work and lead to a major change in the
government IT industry worldwide.
cBrain has invested more than 400.000 hours in developing F2, a
new generation of government software. F2 is a complete and fully
integrated digital platform, designed and built from the start
specifically for government use. Its built-in no-code/low-code
configuration tools make it easy for individuals without a
technical background to adapt F2 to meet specific customer
requirements and processes.
The quality and benefits of F2 have been proven. cBrain has
successfully delivered F2 to government organizations across five
continents, including solutions in various government domains such
as business affairs, climate and environment, education, energy,
family, immigration, labor and market regulation, science, social
affairs, and tax.
With the F2 digital platform and a continuously strengthening
reference position both in Denmark and internationally, cBrain aims
to become a leading global supplier of COTS for government.
Increased focus on public tenders in
Denmark
For the second half of 2024, cBrain expects continued growth in
Denmark. This includes expanding the list of strategic customers
who extend their use of F2 by adding more users, software modules,
and processes, as well as acquiring new customers.
Danish revenue is primarily based on procurement through the
Danish government procurement framework agreements (SKI). In
addition, cBrain is strengthening its bidding activities for larger
open public tenders in Denmark. One example is the public tender
for a new Danish hunting license register, which cBrain has won and
is currently working to deliver.
While it often takes a long time to win large open public
tenders, securing such contracts can significantly boost Danish
revenues. Based on early-stage success, cBrain has therefore
increased investments in bid management.
Solid position in Germany
cBrain has successfully established itself in Germany, and in the
first half of 2024, German revenue accounted for approximately
one-third of the company's total revenue.
Due to this success, cBrain was awarded the title “Danish
Company of the Year 2023” by the German-Danish Chamber of Commerce.
cBrain is now collaborating with the German-Danish Chamber of
Commerce to further develop the German market. By reusing Danish
experiences and solutions, cBrain can help accelerate the digital
transformation of the German government.
It takes a long time to attract strategic customers, but cBrain
now has a foothold in Germany and has proven that F2 can be reused
for large German government organizations. This provides cBrain
with a solid reference position for taking the next steps in
Germany to further grow revenues.
Pursuing the next international strategic
customers
Internationally, cBrain is working on several large projects,
building a pipeline for future strategic international clients.
cBrain expects that several of these projects will further mature
during the autumn and boost international sales.
As part of this effort, cBrain is establishing a local presence
in multiple countries, combining local cBrain staff and local
partners, while developing the F2-for-Partners strategy.
Scaling international sales based on an organic growth model
takes time, so cBrain is operating and initiating sales activities
across multiple geographies in parallel. During the first half of
2024, cBrain has taken important steps in several countries. This
includes:
- California: In April, cBrain announced an agreement with local
authorities in California to deliver a digital solution supporting
the GRASS-C (Growing Responsible and Socially Sustainable Cannabis)
certification program. This expands the cBrain catalog of climate
software solutions previously delivered in California and
represents the first solution delivered in the US based on the F2
Service Builder.
- India: In September 2023, cBrain announced a joint venture in
India, cBrain Kodumburar. In February 2024, cBrain announced a
Memorandum of Understanding (MoU) with the Government of Puducherry
to promote and accelerate digital solutions in the Union Territory
of Puducherry for the sustainable development of the territory.
Additionally, a MoU was signed with the state of Tamil Nadu, aiming
to establish a digital administration for the state.
- Ghana: In March, cBrain announced that its partner, Omni
Strategies, won a public tender in Ghana to deliver an F2-based
solution for the National Communication Authority (NCA) in Accra.
Using the F2 Service Builder, the F2 platform will be configured to
support facilities management within the NCA, digitizing processes
related to building and fleet management.
- Kenya: During the spring, cBrain successfully launched a
solution for the Kenya Dairy Board, a state corporation under the
Ministry of Agriculture & Livestock Development. The solution
will help support quality inspections related to milk
production.
- Nigeria: In June, cBrain signed an agreement with the Ministry
of Innovation, Science and Technology in Nigeria to deliver a Proof
of Concept (PoC) project. The purpose is to deliver an F2-based
solution that demonstrates secure and transparent government
procurement processes, from planning and approval to filing and
auditing, across multiple government agencies.
- Romania: cBrain's partner in Romania has delivered the first F2
solutions for government customers, using the F2 Service Builder to
support customer-specific process requirements.
- United Arab Emirates (UAE): cBrain has just signed a contract
to enter a new partnership, supporting an agency in the UAE with
their AI-driven digital transformation. This supports the continued
success of implementing the growth plan with a special focus on
climate software, while building partnerships.
- Washington DC: In close collaboration with the Danish
Environmental Protection Agency, cBrain has developed a unique F2
solution that end-to-end supports all functions to accelerate
environmental permitting, from self-service and process control to
Artificial Intelligence (AI). Environmental permitting is essential
to the green transition, and cBrain is working with several federal
agencies in Washington DC to validate if and how the F2 permitting
solution can be reused in the US.
The first version of F2 AI Assistant was announced in
April
During the spring, cBrain has marketed F2 version 11. F2 version 11
offers a long list of new features and extension modules, and many
customers have already upgraded successfully.
In April, cBrain introduced the first version of the F2 AI
Assistant. The F2 AI Assistant is a new extension module that
provides AI functionality seamlessly and fully integrated with the
F2 standard software.
The F2 AI Assistant was developed in collaboration with the
Danish Ministry of Digitization and the Danish Environmental
Protection Agency, aiming to create AI functionality specifically
designed for government users and government security
requirements.
The F2 AI Assistant operates on-premises, which is essential for
governments to protect data and comply with GDPR requirements.
Fully integrated with the F2 standard software, the F2 AI Assistant
is context-sensitive and built to support public administration,
offering functionality that generic AI services cannot provide.
Features in the first version of the F2 AI Assistant include
writing record summaries, speeches, notes, and news.
The introduction of the F2 AI Assistant marks the beginning of a
new product line of AI extension modules for F2. In parallel with
developing the F2 AI Assistant, cBrain has delivered a number of
specialized AI projects, which are being used to inspire the design
of future AI extension modules.
F2 Service Builder is a key driver for
scaling
The F2-for-Partners strategy is a core element of our long-term
growth plan. By establishing an ecosystem of partners and customers
who manage the consulting work related to implementing and
servicing F2 solutions, cBrain can scale its business without
revenue growth being directly constrained by the burden of
organizational expansion.
As part of the F2-for-Partners strategy, cBrain is preparing the
F2 configuration toolset for external users, with the F2 Service
Builder serving as a cornerstone for this transition.
The F2 Service Builder is an innovative and highly effective
no-code/low-code configuration tool that stands out from existing
tools on the market due to its design and architecture. It is a key
technology enabler for building the F2 partner ecosystem and is
therefore a central driver of both the F2-for-Partners strategy and
long-term scaling.
The fully integrated F2
Service Builder represents a new type of no-code/low-code
tool
No-code/low-code tools are becoming popular as they allow users
to create and modify workflows and processes with minimal or no
coding required. This enables users with limited technical
expertise to build and customize solutions, thereby simplifying
application development and process automation.
Most widely used no-code/low-code tools are either designed for
general-purpose use or are specialized for IT service and
operations management. They are typically developed as stand-alone
software tools, integrated into a best-of-breed environment through
pre-built or open connectors, and many offer process design, form
building, and other functionalities based on a visual user
interface.
F2 Service Builder differentiates itself by being fully
integrated with F2 and designed specifically for government use.
Additionally, F2 Service Builder offers a user-friendly interface
that enables users with limited technical expertise to build and
customize solutions simply by filling in a spreadsheet.
The design and architecture of F2 Service Builder provide
significant benefits for government customers by eliminating
integration work, optimizing system design, and offering unique
government functionality.
While integration into best-of-breed environments often
complicates no-code/low-code projects, turning them into complex IT
deliveries, F2 Service Builder is delivered out-of-the-box, fully
integrated, and ready-to-run. This approach saves significant time
and eliminates the need for IT integration specialists.
Furthermore, F2 Service Builder offers deep integration into
specific F2 functions, providing integrated user functionality that
is often nearly impossible to achieve within a best-of-breed
environment.
In addition to these integration benefits, F2 Service Builder
simplifies and optimizes the building of workflows through its
integrated design method and user interface. Guided by F2 Service
Builder, users can create complete, ready-to-run workflows,
automated end-to-end from self-service to case management and
filing, simply by filling out pre-defined fields in a
spreadsheet.
The spreadsheet interface reduces the need for user training,
allows for efficient reuse of workflows, and the design guidance is
based on a best practices model for government work, thereby
supporting well-designed workflows.
Democratizing IT
Modernization
While governments around the world increase their investments in
digital transformation and the IT industry expands to meet the
demand, the shortage of skilled IT professionals is often cited as
a key factor in delays or failures in IT modernization
projects.
The emergence of Commercial Off-the-Shelf Software (COTS) for
government addresses the labor gap. Standard software and tools
like F2 and the F2 Service Builder enable users without a technical
background to manage much of the IT work, reducing the demand for
skilled IT resources.
This makes COTS for government an industry game-changing
technology. By democratizing IT modernization and reducing the
demand for skilled IT resources, COTS for government simultaneously
lowers costs and accelerates successful digital transformation,
becoming a key enabler for government transformation.
Enabling a new type of
partners
Democratizing IT modernization is a core element and a
significant value differentiator for the F2-for-Partners strategy.
By enabling users with limited technical backgrounds to participate
in digital transformation, F2 not only empowers customers but also
a new type of partners who focus on transformation services.
At the heart of this democratization is the F2 Service Builder.
Fully integrated with F2 and designed for government workflows, the
F2 Service Builder eliminates the heavy integration work required
when using general-purpose no-code/low-code tools and simplifies
the process of configuring solutions tailored to specific
governmental needs.
By heavily reducing reliance on skilled IT resources and
offering best practice experience as an integral part of the
configuration tools, the F2 Service Builder enables a new type of
partner who offers specialized government transformation services,
from advice to delivery, based on government domain expertise and
without the burden of IT development.
Consequently, the F2-for-Partners strategy, fueled by the F2
Service Builder, not only enhances the agility of government
agencies and speeds up transformation but also allows cBrain to
scale its operations without proportionally increasing its internal
resources.
cBrain announces F2 Service
Builder 2
Being a key technology driver and an accelerator for the
F2-for-Partners strategy, cBrain continues to invest in the F2
Service Builder.
The first version of F2 Service Builder has been well received
and has been successfully used for solution delivery in several
countries during the spring. Based on learnings from these
projects, cBrain is now developing a new and extended version,
called F2 Service Builder 2, which is planned for release in the
autumn.
Best regards
Per Tejs Knudsen, CEO
Inquiries regarding this Company Announcement may be
directed to
Ejvind Jørgensen, CFO & Head of Investor Relations, cBrain
A/S, ir@cbrain.com, +45 2594 4973
- Company Announcement no. 2024-09 (Interim Report 2024)
- cBrain - Interim Report 2024
- cBrain-2024-06-30-en
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