The financial statement for the first six months shows a revenue of 95 million DKK as compared to 75 million DKK in the same period last year, corresponding to a 27% increase in revenue. Earnings before tax (EBT) has increased to 24 million DKK as compared to 17 million DKK in the same period last year, corresponding to a 44% increase in earnings (EBT).
The growth is mainly driven by increased export. The export comprises 37% of the period’s revenue as compared to 17% in the same period last year, thereby consolidating cBrain’s plan of international growth. Software subscriptions comprise 46% of the total revenue of which many are based on long-running contracts.
Management is pleased with the financial statement. It consolidates both cBrain’s international ambitions and the company’s strategy, which is based on organic growth and sales of standard software to public authorities.
Public digitisation is one of the world’s largest markets, but it is characterised by large and expensive IT projects because most authorities still buy customised solutions.
cBrain’s F2 challenges the market by offering standard software to replace the customised solutions. Standard software offers significant advantages to the customers in relation to both delivery speed, cost and quality. This is what cBrain’s success is based on.
cBrain continues to gain markets shares on the Danish market and this year entered into agreements with the Danish Working Environment Authority, the Danish Climate Forest Foundation, and the Danish Agency for Education and Research on the delivery of F2 to the ministry’s group.
The continued progress in Denmark is important because the Danish reference position with more than 75 public authorities as customers is a basic element in cBrain’s international growth plan.
cBrain is also pleased that Danish customers have started expanding their use of F2. In Denmark most customers have only introduced their users to the basic version of F2, which supports the servicing of management and basic case and document handling – supporting the internal workflows in a public administration. Today a rising number of Danish customers also started using F2 to support the mission critical processes, such as grant administration, inspection, and adjudication.
Mission critical processes constitute a large part of the Danish public IT market, which is why cBrain sees a solid potential for continued growth in Denmark concurrently with F2’s expansion as a digital platform for supporting mission critical processes. The basis of F2’s international marketing is largely the support of digital processes.
In Germany cBrain has had a narrow focus so far. The objective was to establish a beachhead and gain ground as a supplier to one of the largest German authorities. In 2021 cBrain succeeded in this by winning a large framework agreement spanning a number of years, which covers the sale and maintenance of standard software for up to 250 million DKK.
The projects at the German authority are proceeding as planned, and as the authority uses F2 for still more mission critical processes, cBrain is building a reference position which now serves as the foundation for more endeavours into the German market.
It is therefore gratifying when cBrain in May won a public EU tender with Investitionsbank Schleswig-Holstein, a publicly owned bank in the state. cBrain will be delivering F2 for grant management, by reuse of a generic case process developed in collaboration with Danish authorities.
Internationally, cBrain is satisfied with having secured several new agreements related to climate, with cBrain delivering climate software based on F2 to authorities.
In November 2021 cBrain attended the global climate conference COP26 in Glasgow as part of the Danish delegation. In continuation of COP26 cBrain has won business in Kenya and Egypt, among others.
In Kenya cBrain will deliver a national platform, based on F2, to support expanded producer responsibility and circular economy.
In Egypt cBrain will deliver an F2 solution to support the issuance of loans to Egyptian companies in relation to energy efficiency.
In parallel to this, cBrain won a task in California to deliver an F2-based solution to support the authorities’ work with carbon farming and sustainable farming.
As part of cBrain’s continued growth, cBrain entered into a conditional agreement to buy the property of Kalkbrænderiløbskaj 2 in Nordhavn, drawn by the internationally acclaimed architect Jørn Utzon. In the last year the house has undergone a comprehensive renovation, and in fall cBrain will move into the house, which will serve as cBrain’s new Copenhagen HQ.
The new Jørn Utzon-drawn HQ supports cBrain’s international growth plan by e.g. being an attractive location for visits from abroad. Owning the house provides cBrain with many opportunities to develop and utilise it while supporting a financial consolidation.
Early this year cBrain reported an expected growth of 20-25% and 15-20% earnings before tax (EBT). Because of the positive results of the first six months, cBrain has now adjusted revenue expectations from earnings before tax (EBT margin) of 15-20% to 18-22% EBT margin.
cBrain’s strategy and growth plan separates the company from many other growth companies because the strategy is based on organic growth, and the growth plan does not require external funding.
With a revenue growth of 25% in 2020, 29% in 2021, and 27% in the first six months of 2022, respectively, cBrain has managed to obtain a yearly growth rate of 20-30%. The financial statements also show solid earnings, a positive cash flow and growing exports. This substantiates cBrain’s success in executing the first steps of the company’s international growth plan.
Maintaining the focus on organic growth, cBrain’s ambition is to increase growth to over 30%. cBrain is now working to expand the growth plan for 2023-2025 in order to meet this ambition.
The ambition of increased growth is expected to require a number of internal initiatives and investments, both organisationally and product-wise, but still without the need for external funding.
The basic elements in the expanded strategy for 2023-2025 are climate software and the establishment of a partner channel. cBrain has already taken the initial steps for both.
F2 Climate Software makes it possible to deliver solutions significantly faster than what authorities are accustomed to. The expedited delivery of digital solutions that support authorities’ climate action is crucial in order to meet the Paris Agreement’s goals for CO2 emissions. To cBrain, F2 Climate Software is an important new business area and a way to make a real difference in relation to climate action.
Using a partner channel, cBrain expects to widen its reach more than what is possible today. Partners will be supporting the sale of F2, both in relation to general F2 solutions and to F2 Climate Software.