Profoto Interim Report Q1 2023

Financial summary January – March 2023

  • Net sales totaled SEK 229m (196), an increase of 16.5 percent. Organic growth totaled 0.0 percent, the currency effect was 7.3 percent, and the effect of acquisitions was 9.1 percent.
  • EBITA totaled SEK 86m (64), and the EBITA margin was 37.4 percent (32.6).
  • EBIT totaled SEK 72m (55) and the EBIT margin was 31.3 percent (27.9).
  • Profit for the period totaled SEK 56m (40).
  • Cash flow from operating activities totaled SEK 105m (54), mainly due to the positive operating profit/loss (EBIT) and the change in working capital related to paid accounts receivable.
  • Earnings per share (basic and diluted) totaled SEK 1.40 (0.99).
Key ratios, Group
Apr 2022–
Mar 2023
Full year
Net sales, SEKm 229 196 880 848
Net sales pro forma, SEKm 220 872
Organic growth, % 0.0 28.3 -4.8 -0.8
EBITDA, SEKm 91 69 344 322
EBITA, SEKm 86 64 321 299
EBITA margin, % 37.4 32.6 36.4 35.3
EBIT, SEKm 72 55 266 249
EBIT pro forma, SEKm 55 249
EBIT margin, % 31.3 27.9 30.2 29.3
EBIT margin pro forma, % 25.2 28.6
Adjusted EBIT, SEKm 72 65 264 257
Adjusted EBIT margin, % 31.3 33.1 29.9 30.3
Profit/loss for the period, SEKm 56 40 211 194
Cash flow from operating activities, SEKm 105 54 287 236
Net debt, SEKm -75 -179 -75 4
Net debt/EBITDA LTM -0.22 -0.63 -0.22 0.01
Return on equity, % 51.4 45.5 51.4 53.8
Earnings per share, SEK 1.40 0.99 5.26 4.85

CEO comment

High profitability and investments for growth
We are pleased to report a stable and profitable first quarter for Profoto. EBIT for the quarter totaled SEK 72m, corresponding to an EBIT margin of 31 percent. The strength of our business model allows us to maintain our high profit margins. This, combined with our capital efficiency, enables a return on equity of over 50 percent.

Stable demand in the quarter
In the first quarter of 2023, our markets paced on, but we did not grow organically. Sales growth for the period was 17 percent, with the effect of acquisitions totaling 9 percent and the currency effect being 7 percent. Developments in China were positive during the quarter. In the United States, demand remained hesitant, as was also the case in parts of Europe. The market in France was good, while it was weaker in Germany and the UK. Sales for the quarter totaled SEK 229m, representing an increase of 17 percent compared to the previous year. How the demand will develop is difficult to foresee. Our business is fundamentally difficult to forecast, even more so in combination with the current macroeconomic situation.

Launch of Profoto Elevate
We maintained our focus on driving growth through innovation and continued to invest around 10 percent of our sales in product development during the quarter. This was products for professional photographers and e-commerce companies.

We are committed to both regularly launching the next version of our existing products and developing completely new products that satisfy additional customer needs. With the acquisition of StyleShoots in April 2022, our focus on customers with large studios has increased. As a result, we have developed the product “Profoto Elevate,” which we showed at Euroshop in Düsseldorf during the quarter and which we plan to start selling in the third quarter of this year. Aimed at larger studios, especially e-commerce companies with content creation studios, Elevate makes it possible to take better and more creative images and achieve high productivity. This is possible by combining Profoto’s modular products with the automation and productivity offered by our workflow software. This allows e-commerce companies to create high quality images that drive more traffic, increase conversions, and reduce returns. It also reduces the time-to-market for e-commerce companies.

A complete solution for e-commerce photography
While the need for great images in e-commerce is strong, the process itself is in real need of streamlining. The process can be divided into four different phases: planning, photography, post- production, and publication. Currently, no provider supports all four phases of the process. Profoto intends to be the first supplier to offer the market a turnkey solution. With our existing product offering of flash and accessory solutions, we are a leading provider in the field of photography. This is why we are now launching our new “Assetflow” software – a SaaS solution for which customers pay a monthly fee. Assetflow is an integrated planning tool that helps e-commerce companies plan their product photography in advance, enabling productivity improvements while maintaining creativity and image quality. To accelerate the launch, during the quarter we acquired a development project that we integrated with our existing software. With the launch of Asset- flow, we have broadened what we offer to include the planning phase for our e-commerce customers. In addition, we have just launched an integration solution for an external party in the post-processing phase, enabling our customers to easily go from shooting to post-processing. This is another step towards our vision of offering a complete solution for e-commerce photography. All the way from planning to publication.

Our business model is unique and involves continuous development to ensure that we meet our customers’ needs. I am convinced that we at Profoto have the right team and spirit to continue to achieve this. This is something I am very proud of.

Sundbyberg, May 4, 2023

Anders Hedebark
President and CEO