The reporting period for the second quarter can be likened to a camel – it has two humps. Several companies released their reports in July, while an equally large group will report in August. It is likely that vacations impact this, and the timing of the reports depends on whether they can finalize the figures before or must wait until after. To take the analogy further, the summer period can sometimes resemble a desert journey. Not necessarily related to reported results, but rather to geopolitical risk, which tends to increase during the summer period. This year is no different.

The first week of a new quarter is always a bit nervous, as it is the profit warning season. This is particularly true for software companies, which can see sales and results in real time. Traditionally, the development of the software sector is also heavily dependent on closing deals late in the quarter. Historically, the second quarter is the second largest after Q4, generating up to half of the year’s revenue. In each quarter, about half of the period’s revenue is achieved in the last week. This dependence on the last week has somewhat eased with the transition to SaaS, but it still has a significant impact.

With this in mind, the first week of July entailed a somewhat nervous wait for dogs that hopefully wouldn’t bark. Fortunately, this was the case. Instead, several software companies have started releasing regular quarterly reports. Finnish Admicom kicked off the reporting season on July 9th with a seemingly unimpressive, more or less unchanged revenue for Q2 2024. Considering that the company’s largest customer group – the construction sector in Finland – is suffering severely and is at or near the bottom, the development suddenly looks robust and strong. A lesson first learned during the financial crisis was that companies in crisis prefer to renegotiate loans rather than shut off their software. Should they do so, there is essentially no way back to a sustainable business. (Certain) software has simply become business critical. Admicom’s ERP solutions for small and medium-sized enterprises fit well into this description.

The same week, Trustpilot (trading update), Lime Technologies, Addnode, and Fortnox reported, all of which showed growth around 20 percent or better. Trustpilot increased its bookings by 20 percent, while recurring revenue (ARR) lagged slightly (+17 percent). At the same time, NRR – net revenue retention – was over 100 percent for the first time since Trustpilot went public. This means that upselling to existing customers was higher than the company’s churn. Lime combines growth over 20 percent (ARR +28 percent) with an EBITA margin of 24 percent, which comfortably keeps them within the “Rule of 40”. The company still perceives the market as challenging, with longer sales cycles, more decision-makers involved, and tougher competition. Despite this, they see solid order intake and continue to close many new contracts. Addnode’s growth of 29 percent was largely driven by acquisitions, but 11 percent organic growth must be considered good given the company’s end markets. Addnode’s largest business area, Design Management, grew 23 percent organically, while the smaller Product Lifecycle Management (-2 percent) and Process Management (+4 percent) developed more modestly.

Fortnox delivered its thirteenth consecutive quarter in line with the “Rule of Fortnox”, which means a sum of organic growth and operating margin over 60 percent (65 for Q2). The company attracted more customers in the second quarter than in the first and sticks to the goal of reaching 700,000 customers by the end of 2025. The economic climate is currently a restraining factor, but the company expects more accounting firms to include all their customers in Fortnox’s platform. Additionally, they anticipate strong growth of customers in the micro-segment (0 – 4 employees). If there was any friction point, it was that transaction-based revenues grew faster than subscription-based ones (ARR). This, however, is due to the company optimizing prices so that more customers chose to pay, for example, for payroll management, on a transaction basis. The underlying quality of the business, in our view, has not been negatively affected by this. 

The second quarter has also been positive for the biotechnology company Biotage, which reported strong growth, especially in their biological segment, Astrea, which was acquired in 2023. Sales have increased significantly, and margins have improved, despite some challenges in China. Demand for the company’s products is high, and they have launched new products that are already contributing to sales. The CEO also expressed optimism about the coming quarters and sees the market beginning to recover.

TIN New Technology A

In the past month, the fund’s unit value increased by 2.0 percent. During the same period, the broader benchmark index for Nordic small-cap companies, VINXSCN, rose by 3.8 percent. Since the fund’s inception on February 4, 2019, it has increased by 55.5 percent, while the index has grown by 91.7 percent. At the end of the month, the fund’s three largest holdings were Novo Nordisk, Evolution, and Surgical Science. For a full list of the top ten holdings, visit tinfonder.se/en-us/funds/tin-new-technology.

The holdings that contributed the most to returns during the month were Chemometec, Embracer, and Biotage. Among the holdings that negatively impacted performance during the month were Novo Nordisk, Evolution, and Addnode. The fund’s largest segment is Software, which accounts for 39 percent of assets under management, followed by Healthcare at 35 percent, and Digital Brands at 10 percent.

TIN World Tech

In the past month, the fund’s unit value decreased by 1.5 percent. During the same period, the broader benchmark index MSCI World increased by 0.7 percent. Since the fund’s inception on June 12, 2020, it has increased by 40.0 percent, while the index has grown by 99.1 percent. At the end of the month, the fund’s three largest holdings were Microsoft, Alphabet, and Novo Nordisk. For a full list of the top ten holdings, visit tinfonder.se/en-us/funds/tin-world-tech.

The holdings that contributed the most to returns during the month were Volue, Teamviewer, and Charles River Laboratories. Among the holdings that negatively impacted performance were Novo Nordisk, Cadence, and Edwards Lifesciences. The fund’s largest segment is Software, representing 56 percent of assets under management, followed by Healthcare at 19 percent, and Digital Brands at 9 percent.