Lemonsoft’s Q3 revenue fell short of our forecast, as organic growth (Q3’24: 1.0%) has not yet picked up quite as expected in our forecast (5%). Profitability, however, exceeded our forecast, and at a quick glance, both the gross margin (87.2%) and the operating expense structure were slightly better than we expected.
According to the company, the organic growth of recurring revenue was clearly higher than the reported figure, which is the same comment as in previous quarters, and as such, this underlying development is positive. It seems that consulting and other revenue once again slowed down growth.
As noted in the preview, the guidance for the current year is achievable through acquisitions alone, without a pickup in organic growth in H2. Thus, the company reiterated its guidance as expected:
Based on the outlook comments, the challenging market situation continues, which is not exactly a surprise considering the development of the Finnish economy.
From the new CEO’s comments, it can be seen that in the future strategy, more focus will be placed on industry and wholesale, where the company holds its strongest positions.
Here are some quick initial takeaways from the report, and now I need to dive deeper into the details. Preliminarily, there will likely be no dramatic changes to the earnings forecasts, as the softness in organic growth is partly offset by better profitability.