cBrain is happy to report a good year in which the company successfully maintained a solid, organic growth and high earnings while moving to a new domicile and initiating the next steps of its international growth plan.
Revenue increased to 188 million DKK in 2022 compared to 155 million DKK in 2021 equaling a growth of 22%. Earnings before taxes (EBT) also increased, to 49 million DKK equaling a growth of 26% in earnings before taxes (EBT).
In three years’ time, cBrain has doubled its revenue. The financial reports of the last four years show an average revenue growth of 23% and earnings before taxes (EBT) of 20%. In 2022 export grew to 62 million DKK compared to 37 million DKK in 2021, which means that export now makes up 33% of total revenue.
This progress, both in Denmark and internationally, is solely based on organic growth, which both ensures a stable cash flow and helps cBrain consolidate its long-term growth plan.
Based on the positive results, cBrain initiated a number of new initiatives in the autumn of 2022 as part of the growth plan, as the goal of the strategy is to lift the annual revenue growth to 30% in the long term.
The central elements of the extended growth plan, which covers the period of 2023-2025, are an increased focus on F2 Climate Software and the establishment of a partner channel (F2 for Partners).
cBrain delivers solutions for public digitization. Public digitization is one of the world’s largest markets, but is characterized by a large number of suppliers delivering individual, customized solutions. cBrain challenges the market by instead offering standard software based on a unique technology and product architecture marketed under the name F2.
F2 offers a number of customer benefits as the process is faster and fewer hours are required to deliver solutions when they are based on standard software. This also affords cBrain a significant competitive advantage.
cBrain’s international growth plan takes as its starting point this competitive advantage combined with a strong reference position in Denmark. More than 75 Danish authorities use F2 as their digital platform, among these nearly all ministries, and cBrain keeps extending its Danish reference position. During 2022 cBrain has announced agreements with several new Danish customers.
Across the world politicians and authorities fight to accelerate the climate effort. Unfortunately, implementation of political decisions is exceedingly slow, not least because developing and delivering the required IT systems is a lengthy process.
This opens a large international market for cBrain because F2 facilitates fast delivery of IT solutions, which helps shorten the time required for implementing political decisions.
In recent years cBrain has collaborated closely with the Danish Environmental Agency and others on developing a library of F2-based solutions to support authorities’ fight against climate change.
cBrain refers to this solution type as climate software for authorities. The climate solutions support the administration of various subsidy schemes, inspection and permitting. These are crucial to the authorities’ climate effort, which includes everything from nature restauration and contingency plans to the reduction of greenhouse gas emissions.
As a supplier of climate software, cBrain can be an important factor and contribute directly to the global fight against climate change. It is also cBrain’s experience that climate software serves as an international door opener and export accelerator. In 2022 cBrain thus announced climate software agreements in both California, Egypt, Ghana and Kenya.
cBrain’s library of climate solutions keeps growing. At the beginning of 2023, cBrain announced agreements with the Danish Energy Agency to deliver a number of new solutions with an international potential.
As a part of the extended strategy plan, cBrain aims to increase growth without a corresponding increase in number of employees. Instead the aim is to have customers themselves, possibly aided by external consultants, take over a range of the consultant tasks currently handled by cBrain when setting up and putting F2 into operation.
cBrain calls this F2 for Partners and plans to continuously release F2 tools enabling customers and external consultants to take over a still greater number of cBrain’s consultant tasks. Transferring consultant tasks to customers and partners makes it possible to deliver more projects, which cBrain expects will accelerate software sales.
cBrain’s software revenue (Software) grew to 135 million DKK in 2022 compared to 96 million DKK in 2021 equaling a revenue growth of 41%. Software has grown to 72% of total revenue in 2022 compared to 62% in 2021. At the same time, the revenue of hourly based services (Services) decreased by 11%, making up 59 million DKK in 2022 compared to 53 million DKK in 2021. This drop corresponds to Services making up 28% of total revenue in 2022 compared to 38% in 2021.
cBrain regards the increased Software sales as well as the decrease in Services as positive developments in line with the extended growth plan.
The decrease in Services revenue is due to the number of employees in cBrain’s consultant group being relatively unchanged in 2022, while certain customers and partners have taken over some tasks. Additionally cBrain’s experts, especially those with climate knowledge, increasingly support the international climate focus rather than delivering traditional consultant tasks.
The extended growth plan is based on increased Software sales. Going forward cBrain plans little to no increase in sales of Services.
However, the lack of growth in Services sales may translate to a lower revenue growth in the period when the new initiatives of the growth plan are implemented, which is why cBrain in 2023 expects a revenue growth of 15-20% and earnings before taxes (EBT) of 18-22%.
Concurrent with a successful implementation of the growth plan, cBrain aims for a new and higher revenue level with a growth of 30%. This goal is based on that an increased investment in Climate Software and F2 for Partners will accelerate the growth of Software sales to a level where it will compensate for the lack of growth in Services sales.
cBrain is well equipped at the start of 2023 and observes with satisfaction the successful initiation of the next steps of its international growth plan. Management finds the development satisfactory and recommends that the dividend, in line with increased earnings, is increased by 24% to 0.21 DKK per stock.