Earnings call transcript: Proact IT Group Q1 2026 revenue surpasses forecast

Proact IT Group AB reported its Q1 2026 earnings, revealing a revenue of SEK 1,243 million, surpassing the forecast of SEK 1,220 million. This 2.3% year-over-year increase was driven by strong system sales and new cloud contracts. The company’s stock rose by 1.92% following the announcement, reflecting investor optimism.

Proact IT Group AB’s performance in Q1 2026 was marked by a robust increase in system sales and new cloud contracts, which contributed to surpassing revenue expectations. Despite challenges in Managed Cloud Services, the company achieved significant growth in EBITDA, driven by cost efficiencies and strong demand for system sales.

The stock price of Proact IT Group AB rose by 1.92% to 116.6 following the earnings announcement. This positive movement reflects investor confidence in the company’s ability to exceed revenue expectations and improve profitability. The stock is nearing its 52-week high, indicating strong market performance. According to InvestingPro analysis, the stock appears undervalued at current levels, with a Fair Value estimate suggesting potential upside. The company maintains a P/E ratio of 24.71 and offers shareholders a dividend yield of 2.27%. InvestingPro subscribers have access to over 10 additional exclusive tips and comprehensive financial metrics for Proact IT Group, including detailed Pro Research Reports that transform complex data into actionable insights.

Executives highlighted the strong demand for system sales and the successful integration of recent acquisitions, which contributed to the company’s positive results. They acknowledged the challenges posed by currency fluctuations but expressed confidence in ongoing growth strategies.

During the earnings call, analysts inquired about the impact of currency fluctuations on future earnings and the company’s strategy to mitigate these effects. Executives emphasized their focus on expanding cloud services and enhancing operational efficiencies to drive growth.

Christopher, Investor Relations and Communications Manager, Proact: Good morning, everyone, and welcome to our Q1 2026 report presentation. My name is Christopher, and I’m Investor Relations and Communications Manager here at Proact. With me today, I have Magnus Lönn, President and CEO, and Åsa Regen Jansson, CFO, who will walk you through an introduction to Proact, followed by a quarterly update, financials, and lastly, our closing remarks. After that, we will open up for Q&A. You can either raise your hand or submit the question in the chat, and I will read them out at the end of the presentation. With that, I’ll hand over to you, Magnus.

Magnus Lönn, President and CEO, Proact: Thank you, Christopher. Let me introduce you to Proact, give you a short overview of what we are and so forth before we dig into the Q1 result here. We are a Swedish tech company, currently present in 12 different European countries, as you can see here on the map, and we are a specialist in data storage and handling modern infrastructure in all that flavor. We have been doing this in 30+ years, which means that we are really super experienced and have really high skilled around this topic. If you think about that, modern infrastructure, data storage, that is what is key for basically every company out there.

If you want to do anything with AI, you need to have a lot of data, every company out there is basically protecting their data that is generated. We, as private individuals and also companies, are generating more and more data. Even if we were founded 30 years ago, I would say that we are by far more relevant today than 30 years ago, especially with what’s happening in our surroundings and environment. We have a yearly turnover of SEK 5 billion, and have been listed on the stock exchange since 1999. Half of our revenue comes from what we call system sales, and half of it is roughly annual recurring revenue, so recurring revenue. I will walk you through our different revenue stream in a short while.

As you can see also in the graph here, we are on a growth journey. Since 2021 and up to today, we have grown roughly 30% only. Also, you can see we have by far improved our results under the way as well. When you look at Proact and when you evaluate, this is a key message that you need to understand. We have 4 distinct revenue streams, and all of them are sort of hooking into each other and also strengthen each other. I start from the left here with our system sales. That is when we provide hardware and technology to our customers. It can be a GPU, it can be data storage, and it can be also software related to that.

This is where Proact was founded 30 years ago, which we started off, and then over the years, we have sort of kept to that and then have evolved that over time. We are working with large and enterprise customer, meaning that the size of the deals that we are doing in the system business can be quite big. That means that if you evaluate on a quarterly basis, our top line can, you know, and also differs a little bit between when system sales come in, if it’s on the right side of the quarter or not. I think when you look into us, it’s important to evaluate over a longer time. When we sell system, we always, and this is the key thing with Proact, that’s our competence, and then we provide our support services.

This is a super good example of us building long-term customer relationship. Our support is a key thing for us, and this is a good example of recurring revenue. Contract length is often very long. It’s 3 to 5 years, and payment is done upfront. Everything we sell as a system, we can also provide that as a service to our customer, and that is what we call managed cloud services. When we sell it as a service, that means that we have our own staff, European local staff that are taking care of our customers’ most critical data.

I would say nothing of this could happen unless we have super skilled consultants and experts that are advising and helping our customer design solution or work in their environment building modern cloud solutions like Docker, Kubernetes, and public cloud transformations. You also, I mean, some of the trends that of course are on top of everyone’s mind is cybersecurity. How can you protect your data? Proact is by far really out there working with our customer building solid solutions. Then, of course, AI. Everything starts with data. If you don’t have access to data, it’s hard to get some value out of it. Also, something that I think is really remarkable of Proact is actually our customer base.

If you can see here in the picture. Our solution and what we are working with is basically across all sectors and region. It doesn’t really matter if our customer are on the public sector, if manufacturing or energy. Basically, as the world have developed today, everything is digital. Our solution and our competence is needed across our sectors. This also creates a good risk profile because we are not dependent on any specific sector. We have a sort of broad spectrum when it comes to our customer base. In the middle and the center of this one is, of course, the key thing.

We are building long-term customer relationship, and that is the key, what I would say, for Proact, taking care of our customer and help and guide them through the complex situations that is out there. That’s a short and quick introduction to Proact, what we do, and what we are working on on the daily basis. With that, let’s move over to the quarterly update here and the highlights of the quarter. As you probably already seen, we deliver a strong quarter, especially when it comes to our EBITDA. We grow that with over 45%, and it’s actually two big reason for this one.

For you that has followed us for a while, we have during last year really done a lot of hard work internally to sort of break the negative trend that we have had outside the business units from the Nordic, where we have sort of seen falling performance over a long time. We did a cost program last year, and with that in place, we have actually seen the sort of early result of that here in Q1. We are a little bit ahead of our cost program compared to what we planned. That in combination with the sort of exploding memory prices that also have occurred here during Q1, created this sort of strong result that we deliver in Q1.

I will get back a little bit more around the details and dynamics around the price increases in a short while. These 2 factors are by the far most contributing to the strong result that we deliver here in Q1. During the quarters, we were selected by Broadcom to be one of the few European partner that have the right to sell their solution. I think this is a sort of really great testimony to our competence, and this is for sure something that we will continue and work and see how we can even more better help our customer going forward. After a quarter, we did 2 things. Yesterday, we released a press release that we are divesting part our staffing operations in Netherlands.

This is part our plan to do the turnaround in the business units and improve the profitability and also create focus to maintain in our core services and also core offerings. That’s part of our plan, I’m really glad that we got this in place, and now we will work with a local partner to see and how we can provide this even further. Also, I already mentioned around the strong quarter and so forth. This is an area where I think it’s worth spending a few minutes to understand the dynamics what’s happening in the market. If you can see here in the graph, this is the sort of index price for DRAM and NAND, which is the sort of standard components used in everything when it comes to tech and memory.

Memory is allocated both in servers like NVIDIA and so, and GPUs. It’s reflected in data storage. It’s reflected in computers, memories everywhere. With AI and the huge sort of demand, this has created a perfect storm that for the, let’s say,