Atea Q4 2025 financial report and presentation

Atea posted strong Q4 2025 results with gross sales up 7.8% to NOK 17.8bn, IFRS net revenue +6.1% to NOK 11.3bn, gross profit NOK 3,087m (+9.0%) and a gross margin of 27.4%. EBIT before restructuring rose 23.7% to NOK 488m (EBIT after restructuring NOK 480m) and Q4 net profit was NOK 333m (+35.7%); operating cash flow was NOK 2.0bn and net cash was NOK 975m at quarter-end. For full-year 2025, gross sales were NOK 60.2bn (+11.7%), net revenue NOK 37.4bn (+8.1%) and net profit NOK 878m (+14.4%); the board will propose raising the annual dividend to NOK 7.50/share (~95% payout), reflecting stronger margins, cash generation and a solid balance sheet.

Analysis

Market structure: Atea (OSE:ATEA) is a clear winner — stronger gross margins (27.4% vs 26.7% YoY) and rising software/cloud mix (software +11% in Q4) imply structural pricing power versus smaller VARs and low-margin hardware distributors which will be margin-pressured. Large hardware and cloud vendors (Microsoft MSFT, Amazon AMZN/AWS, Cisco CSCO) also benefit from increased spend, while commodity hardware resellers face inventory/price risk. The cash inflow (NOK 2.0bn Q4) and net cash ~NOK 975m reduce credit risk and should compress Atea’s credit spread; modest NOK appreciation is possible on sustained dividends/cash returns.

Risk assessment: Tail risks include a sharp Nordic public-sector spending cut or a major contract loss (single large wins were highlighted) that could reverse margins quickly; regulatory/data-residency rules could force higher-cost local solutions. Timeframes: immediate (days) — positive re-rating around results/AGM; short-term (3–6 months) — execution on software mix and contract conversion matters; long-term (12–36 months) — ability to sustain 8–12% revenue growth and keep dividend payout <100% to fund M&A. Hidden dependency: concentrated vendor partnerships and public-sector customer mix; working capital on hardware remains a second‑order liquidity risk.

Trade implications: Primary: constructive on ATEA equity and nonlinear, capped upside via call-spreads to exploit dividend + re-rating catalysts (AGM, large contract announcements). Relative value: long ATEA vs short smaller regional system integrators lacking cloud capability (rotate out of small-cap IT services). Macro cross‑assets: consider tightening duration on Nordic credit exposure and light FX NOK longs if dividend confirmed.

Contrarian angles: Consensus praises margin expansion but understates reinvestment risk — a ~95% payout (NOK 7.50) leaves little retained cash for M&A/skill build; if management maintains payout, organic growth could slow and multiple compresses. Historical parallel: IT distributors that shifted to services (e.g., global VARs in 2015–18) re-rated only if services revenue reached 40–50%; Atea must sustain software/cloud acceleration to avoid a mean reversion in margins.

Key Decisions for Investors

• Establish a 2–3% long position in Atea (OSE:ATEA) ahead of the 2026 AGM/ex-dividend (NOK 7.50 proposed). Hold 6–12 months; target total return 12–18%; set tactical stop-loss at -12% from entry or if Q1 guidance misses by >5%.
• Deploy 0.5–1.0% notional into a 6–9 month ATEA call spread (buy ~25% OTM, sell ~50% OTM) to capture upside from re-rating and dividend confirmation while capping premium paid; unwind at 2x premium or if implied vol rises >30% above recent average.
• Establish a 1–2% pair trade: long ATEA vs short equal notional exposure to small-cap Nordic IT/system-integrator basket (rotate out of names with <20% software/cloud revenue). Close the pair if Atea’s software/cloud share falls <20% or if short basket outperforms by >15%.
• Increase exposure by +1% to global cloud/software leaders (MSFT, ticker MSFT) funded by reducing 1% allocation to commodity hardware vendors (e.g., HPE/HPQ) over the next 30 days to capture structural mix shift toward software/cloud.