Recurring revenues grew by more than 26 percent in the second quarter while sales increased by just over 23 percent. We continue to prioritize growth in recurring revenue in order to further reduce dependency on non-recurring license- and volatile service-revenues. At the moment we are challenged in streamlining operations as fast as the business model changes towards an increasing share of recurring revenues. This means that profitability development for the first half of the year is weak and, in the short term, unsatisfactory. Continuous internal work on efficiency, however, has a natural longer perspective than a single quarter and that work continues with unabated strength and focus.
In the second quarter, we have completed three acquisitions. On April 9, we acquired the Swedish software company PP7 Affärssystem, with software the construction and installation market in Sweden. On April 19, we acquired the Norwegian software company Agrando, whose software is for church operations in the Nordic countries with Norway and Sweden as main markets. On May 31, we acquired the Danish company Cito IT, whose product is an industry-specific software for the pharmacy market in Denmark.
With these acquisitions, we continue to strengthen our position as the Nordic region's leading vertical software company, while adding over 85 MSEK in annual sales and 70 new employees.
The acquisition intensity in the quarter also entails significant acquisition-related costs, approximately SEK 4 million, which has an impact on earnings compared with the same period last year.
The number of active acquisition dialogues remains high, and we continuously put resources in place to maintain and further develop these dialogues. Vitec's financial position and readiness for future acquisitions is good, which provides for continued acquisition-based growth. With the acquisition of well-established companies and a high proportion of recurring revenues, Vitec continues on the path to act in several independent and specialized niches, to achieve sustainable profitable growth.
/Lars Stenlund, CEO
For more information, please contact
Patrik Fransson, Investor Relations
This information is of such a kind that Vitec Software Group AB (publ.) is legally required to disclose pursuant to the EU's Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication at 08:30 CET on Thursday, July 12, 2018.
Vitec is market leader for Vertical Market Software in the Nordic region. We develop and deliver standard niche software. Vitec grows through acquisitions of well-managed and well-established software companies. The Group's overall processes together with the employees' in-depth knowledge of the customer's local market enables continuous improvement and innovation. Our 650 employees are based in Denmark, Finland, Norway and Sweden. Vitec is listed on Nasdaq Stockholm and had net sales of SEK 855 million in 2017. Find more at www.vitecsoftware.com.
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