Earnings call transcript: Knowit AB sees stock surge after Q3 2025 results

Knowit AB's Q3 2025 earnings report led to a 10.73% stock price increase, closing at 117.6 SEK, as adjusted EBITDA rose to 62.5 million SEK with an improved margin of 5.1%, despite an 8% decline in total sales to 1.2 billion SEK. This positive market response reflects investor confidence in the company's strategic focus on AI-driven innovations and operational efficiency, bolstered by 13% year-on-year growth in public sector revenue, primarily from Norwegian contracts. While the stock trades at a premium P/E of 39.46, InvestingPro suggests it may be slightly undervalued, and Knowit aims for organic growth through intensified recruitment and cost management, anticipating increased public sector digitalization budgets for 2026.

Analysis

Knowit AB's Q3 2025 earnings report spurred a 10.73% stock price increase, closing at 117.6 SEK, despite an 8% decline in total sales to 1.2 billion SEK. This positive market response was driven by an improved adjusted EBITDA of 62.5 million SEK, reflecting a margin increase to 5.1% from 4.4% last year, attributed to strategic focus on AI-driven innovations and operational efficiency.

The market's optimism is further supported by a 13% year-on-year growth in public sector revenue, primarily from Norwegian contracts, and InvestingPro's assessment that the stock may be slightly undervalued despite a premium P/E ratio of 39.46. While the company's three largest business areas (Solutions, Experience, Connectivity) show improving utilization, the Insight segment continues to face challenges with a negative 6.5% margin.

Looking ahead, Knowit aims for organic growth through intensified recruitment and anticipates increased public sector digitalization budgets for 2026, particularly in Sweden. Key risks include ongoing competitive pressures in the Nordic market, potential revenue impacts from declines in banking/finance/telecom sectors, and the challenge of aligning price development with estimated 3-4% salary increases.

Key Decisions for Investors

• Evaluate Knowit's ability to sustain EBITDA margin expansion and return to organic growth, particularly given the 8% sales decline and cautious net recruitment strategy.
• Monitor the impact of AI-driven projects and public sector digitalization budgets in 2026, especially in Norway and Sweden, as these are key growth drivers.
• Assess the company's capacity to manage competitive pressures, offset salary increases with pricing adjustments, and improve the performance of the challenged Insight segment.