Ework Group AB

Good morning and welcome to today's broadcast where we focus our eyes on E-Work Group, who has published a report for the second quarter of the 2026 this morning. And standing beside me here in the studio is CEO Daniel Ahlgren as well as CFO Johanna Estra. Welcome.

Thank you.

We'll give a short presentation in a moment, but before we do, could you summarize the quarter quickly?

Yes, very quickly, in accordance to plan, I would say. This is what we expected to come out of Q2.

And Jana, any initial falls from your side?

Some positives and some trends that we have seen in the last quarters.

Then let's hear more. Go ahead.

All right, having joined eWork in November of last year, I am now a little over eight months into this journey, and this is my third quarterly report. In my first presentation roughly six months ago, Johanna and I outlined the plan for the full year 2026. For the first two quarters, we have followed this plan with business development fully in line with our expectations. The new and leaner organization that was announced and implemented in Q1 is now fully operational. Our focus has been and still is to build commercial capabilities to allow us to thrive even in softer markets. Although we are not fully there yet, we have taken clear steps in this direction through a renewed customer focus and as a result have secured important business wins in the past quarter. Perhaps not surprising, but still important, we are seeing an increased demand for AI-related competencies. In order to clarify our offering and our abilities within this field and to better serve our clients, we have launched several AI-related services during the quarter. Most prominently, our skill shift lens and our expert provider function within AI. But more about these later on. As said, financial development in the quarter has been fully in line with our expectations. We are seeing a continued decline in EBIT versus last year. Naturally, my ambition and the ambition of the whole organization is to reverse that trend as soon as possible. To that end, the fact that order intake was higher in Q2 compared to last year is encouraging. It is the first time since Q3 2024 that we have seen a year over year increase in order intake. and before then since Q1 2023. Still, I would like to see this trend continue also in Q3 before concluding that we have turned a corner. Looking at development by industry and market, a couple of trends are clear. Firstly, public sector is outperforming private sector. Secondly, within the private sector, telecom and energy are the only two sectors that are seeing increases, where all other sectors have negative development year over year. Third, Norway is the individual market which is seeing the most positive development with other markets, including Sweden, still having negative developments. Fourth, the negative developments in Denmark and Poland are driven primarily by a small number of large clients scaling back on their consulting demand. Fifth and lastly, although not visible in these aggregated numbers, we are starting to see a positive development for a few of the Swedish regions or market units as they're called in our terminology. Let's then spend some time on AI, which likely is the most important trend shaping the labor market right now. The discussion is no longer about whether AI will impact organizations and jobs, but when the shift will happen and what capabilities are needed to succeed in this transition. We see growing demand for AI-related competence across virtually all industries. New specialist roles are emerging rapidly, while AI capabilities are increasingly becoming a baseline requirement across an increasing number of existing roles. At the same time, many organizations are struggling to turn AI ambitions into practical execution. A recent survey by Statistics Sweden found that for three out of four Swedish companies, the biggest barrier to AI adoption is not the technology itself, but access to the right skills. We see the same challenge across all our markets. This is where e-work can create real value. During the quarter, we launched a comprehensive AI offering built around three complementary components. First, we provide access to one of the largest networks of AI specialists in the Nordics, covering everything from AI development and architecture to transformation and strategy. Second, we have introduced dedicated expert provider AI capabilities. These experts help clients understand market, identify the capabilities they need and secure the right expertise for both immediate needs and long-term transformation. Third, we launched SkillShift Lens, a free platform that helps organisations understand how AI is changing roles, ways of working and future skill requirements, giving them a foundation for workforce planning, transformation and a starting point for more informed strategic discussions. Together, these capabilities help clients move from insight to execution. We help organizations understand the shift, secure the right talent, and turn AI investments into tangible business value. For us, this is a natural extension of our role as an independent talent partner. We don't just connect organizations with expertise, we help them navigate one of the most significant workforce transformations of our time. And with that, I leave the word to Johanna.

Great. Thank you, Daniel. We will start with an overview of our financial performance in the second quarter. Revenue amounted to approximately SEK 3.1 billion, representing a 13% decline compared with SEK 3.6 billion in the corresponding quarter last year. We continue to operate in an uncertain market where the client remains cautious, postponing investment decisions and maintaining a strong focus on cost control. At the same time, as Daniel mentioned, the ongoing AI transformation is reshaping the market landscape and contributing to a more complex business environment. The decrease in revenue was broad-based across most of our markets, with Norway being the exception, where we have seen a gradual recovery over the past few quarters. Norway has faced challenges since the implementation of the new labour legislation a few years ago and it's very encouraging to see that this market is now showing signs of improvement. Denmark has remained challenging in the recent quarters, primarily to workforce reductions by one of our larger clients. Across Denmark and our other markets, we continue to invest in our sales organization to strengthen our market position, gain market share and win new business. Going forward, our focus is on stabilizing and growing our gross profit. Gross profit declined in line with revenue during the second quarter. However, I am pleased that we have maintained our gross margin despite the weaker market conditions. We continue to experience pricing pressure in certain procurement and tender processes, and that is due to the higher competition across most of our markets in the current economic environment. EBIT amounted to 28 million SEK in the quarter compared to 44.8 million in the corresponding period last year. The decrease was primarily driven by lower revenue that was partly offset by a reduction in OPEX. During the first quarter, we announced a reorganization expected to generate annual cost savings of approximately SEK 18 million. In addition, we have implemented further efficiency measures related to our facilities, which are expected to reduce annual cost by approximately SEK 5 million. Looking ahead, we do not foresee any need for significant investments in the near term. Our geographic expansion strategy can be executed in a low-cost efficient manner, with limited upfront investment required to enter new markets. We have also completed the upgrade of our digital platform, which further strengthens our operational foundation. In addition, our business model is relatively scalable, providing flexibility and resilience in weaker economic conditions while limiting risk. Order intake for the second quarter amounted to approximately SEK 4.4 billion compared with SEK 4.1 billion the corresponding period last year. We saw positive developments both in Norway and Sweden, as Daniel mentioned also, while Denmark declined due to the previously mentioned workforce reduction. Order intake from the public sector increased during the quarter, driven primarily by growth in Sweden and Norway. The private sector was somewhat weaker, with lower activities in consulting, life science, banking, finance and technology. We have seen some small signs of stabilization in number of requests during the quarter, but no clear signs of recovery in the market. Average contract lengths continue to increase, which we believe reflects the ongoing uncertainty in the market and the customers' preference for securing key competence over a longer period. Market conditions remain mixed across geographies and industry. The automotive sector continues to be characterized by caution and uncertainty, while we are seeing improvement demands in sectors such as telecom and energy. While the market environment remains challenging, the increased order intake and signs of stabilizing demand are encouraging developments. However, it is still too early to interpret these trends as evidence of a broader market recovery. Revenue remained below last year's level in the second quarter, continuing the trend we have seen in the last quarters. And as mentioned, the decline was broad-based across most markets, with Norway being the main exception. And this is of course reflecting the continued impact of the prolonged economic downturn that we have seen. Increasing business volumes remains our highest priority. To support this objective, we continue to strengthen our commercial focus and enhance our sales performance across the organization. EBIT was, as mentioned, primarily impacted by the lower revenue levels. At the same time, we're currently not planning any significant investments that would increase the cost base. And with that, I will hand over back to Daniel to summarize.

Thank you

And to do that, to summarize, our second quarter was fully in line with our plan and our expectations. The new organization is now fully implemented. Cost efficiency measures are executed with full impact from 2027. Our focus is primarily on three things. One, increase customer focus. Two, grow and enhance our sales capabilities. Three, be a leader in the AI transition. Longer term, our aim is to become less dependent on just one geographical market, Sweden. To achieve this, international expansion has been and will remain an important component in our strategy. This is progressing according to plan, with most recently placement of the first two consultants in Belgium on assignment, being a symbolic highlight of the quarter. Thank you for your interest and time so far, and handing back to you, Mikael.

Thank you very much, Daniel. I think I'll begin where you left off before we let the analysts ask their questions. You mentioned that you don't want to be geographically dependent on Sweden. Johanna, you also mentioned that you will be able to do this expansion relatively capital-light. Can you elaborate on what allows you to do geographical expansion while not doing so much investment?

Yes, so we have an organic approach to our expansion meaning we don't acquire like a target company to enter into a new market. Rather we try to build on the existing client base which often consists of companies that have activities in many more countries than the Nordics and Sweden specifically. So if we have a shared and joint interest in entering into a market, if we find a couple of those relationships, then we know we have sort of the right conditions for entering into a new market.

We will now let analysts in and it's Daphina Chehu from ABG Sundal Collier. Welcome and answer your question.

Thank you. Good morning. Daphina here from ABG. Thank you for the presentation. My first question is on order intake. So this was the first increase in several quarters. How much of this is public sector driven versus driven by other segments? And do you see this increase as early signs of stabilization?

I'll start with the second part, and then I'll let Johan answer the first part, I think. It's not a bad sign, is the sort of short answer. But as said during the presentation, I would like to see the trend continue for another quarter to be able to sort of more definitively say that we've turned a corner. We have seen an example, as said before, in Q3 of 2024, we also had an increase in order intake. and that didn't result in a material sort of trend shift in the financial results in coming quarters. So one quarter is not enough, but again, rather an increase than a decrease.

And on the public sector I would say that we have seen a shift in the trend the last quarters. Public sector has been weak during this economic downturn but now we see a trend with increased volumes so a lot of it is driven by public sector and we also have a larger client that we won some months ago that we are now ramping up volumes. So that is basically one of the key drivers.

Thank you for that. And just on the margin as well. So the cross margin has held at 4.1% for six to eight quarters despite volume declines. What is driving that resilience more specifically? Is it pricing or something else?

I would say it's a combination. We have talked a lot about our add-on services that are a margin booster that continues to be that, but also a factor that we have long framework agreements. So a shift in the margins would take some time to both increase and decrease. And that's one of the factors that we continue to see this strong margin.

Thank you for that, and just my last question. So Norway's sales continues to increase while the other markets decline. Would you say Norway is a leading indicator for the other Nordic market, or is it running on Norway's specific dynamics such as telecom and energy?

More the latter I would say. In our terminology we sort of seen Norway as one market unit whereas for example a region in Sweden would also be a market unit and again the way we present results in these types of forums we look at Sweden as an aggregate but we are sort of seeing the same type of development that we've been seeing in Norway in a couple of the Swedish market units in the regions as well. Is that a harbinger of sort of more positive times to come? Too early to say, I would say. There's nothing that says that Norway ought to be the first region to sort of increase, but there's nothing saying that they should be last either. So similar to an increase in order intake, It's a positive sign. It's too soon to say that that's sort of the leading indicator of a results uplift.

Thank you very much. That was all for me. Thank you.

Thank you, Lofina. And if you have any more questions, you need only raise your hand. And moving on then from analyst to viewer, someone writes, hi, you describe E-Work as a partner that helps clients move from AI ambition to actual change. What sets you apart from a traditional consulting firm or an HR tech platform in that offering?

Since we are an independent party in this, if you look at the consulting house, they have their fixed resources that they need to transition into new skills. Since we operate across a breadth of these consulting houses and freelancers and all that, We will encourage the market and try to inform the market about what demands and what skills are in demand. But we don't ourselves need to sort of transition an entire workforce into a new skill set. Instead, we can source that talent from whoever does it best for the time being, meaning our access to the talent is quicker than any sort of generic or average consulting house.

And moving on then to the order intake, because it is a highlight in this quarter. It increased, and Daphina asked her about that. And you've mentioned in the presentation as well as in the beginning of the Q&A here that it's too early to tell, but how many quarters do we need until you're certain?

Two.

So Q4 and Q4?

No, but again, it's definitely a better situation to have an increase in order intake than a decrease. If we see an increase also in Q3, that would likely bring us to a position where we, year to date, are on the plus side. And I would say that that would be enough for me to begin to start talking about sort of, yes, we've touched bottom and are on the way up.

And while order intake increased, the number of clients still remained flat. So what is driving that? Is it longer contracts, higher rates?

Yes. We have seen a trend for quite some time now that we see an increased contract length and it is as mentioned we believe at least that it is due to company wants to secure the competence and have these longer commitments from the consultants. over time and we have also seen the average rates increasing somewhat or at least being stable also in this market and that is kind of surprising.

And you mentioned in the presentation as well that there is some pricing pressure following some competition. How does that play into that?

Yeah, we can see that in some of the tenders, of course, from our peers and so on. So it hasn't yet impacted us that much. We have managed to navigate in this environment. But yeah, we can see that, of course, and that is very natural.

Another question from a viewer, the same viewer that wishes to thank you for the previous answer. Following that, you launched Skillful Lens during the quarter. What is it commercially and how do you expect it to generate revenue?

shift lens? Yes, it is a means of starting discussions for us and to raise awareness and attention to the fact that you as an employer going forward will likely need to think differently about if you prioritize roles or if you prioritize skills and what skills you need to prioritize and for that matter also if going forward it is the right model to have the same ratio of employees versus consultants going forward. so it's not a direct revenue driver but we see for example I was in Almedalen for a couple of weeks back for the Almedalsvecka and talking to people through the lens of the skillshift lens starts really interesting dialogues about situations our different clients or prospective clients are in and what they actually need help doing. So it's a sort of a proof of concept, an interest igniter for us and we've had very positive experiences from it so far.

And Johanna, with the public sector outperforming the private sector in this quarter, that sort of implies that you'll have a higher exposure to the public sector. And how does that affect your margin profile?

I would say in this has been the case with e-work during a large number of years and it's also very common that you have a large exposure to the public sector they are great consultant buyers so to say what we have discussed internally is more the exposure to automotive which we have talked about where we have seen the the effects of the geopolitical turbulence and so on. So I would say it's good to have that portfolio with the public sector being strong again.

the number of consultants this quarter dropped and dropped faster than revenue did. That sort of indicates that this quarter that there was higher revenue per consultant. Is that the correct interpretation?

Yeah, we have seen an increased utilization on the consultants. Yes, that is correct.

And is it mainly a result of higher rates, assignment mix or already seen productivity from AI implementation and the new organization?

Productivity, I would say we have seen that, but also, as I said, it's stable hourly rates that also impacts, of course.

And looking further ahead, then, should investors be able to see that e-work will be able to accelerate growth without increasing their assigned consultants?

I think we are working on like two separate things. One thing is to be very efficient internally and to have a more efficient operation in terms of delivery and so on. And then of course, it's the sales investments. We need to grow our gross profit. So yeah, those are the two mechanisms that we are working with and that will hopefully give some results going forward.

And there will likely be sort of there's a limit to growth of course with a fixed number of consultants on assignment so of course we are looking to increase the number of consultants on assignments going forward as well.

Let's talk about AI then, because it's an area that is developing very rapidly. What are the most important factors when building and maintaining talent pool within this area of expertise?

I think everyone is aware of how quickly things are changing. The terms and the hot topics from three months ago might no longer be the terms being used and the hot topics anymore. So there is a clear advantage in not assuming that what is prioritized and what is in demand right now will be in demand even three or six months from now. So of course, I'm sort of partial in this topic, but there are clear advantages given the rate of change, not to sort of being locked in with specific resources, but rather being able to shift in and out the skills that are needed any point in time, which of course favors the consultant model and our business. But that being said, I think the most important thing for a generic employer is to have your ears against the rails and really be in tune with what is cutting edge knowledge at each point in time.

And how rapidly would you say that your clients requirements are changing and how do you ensure to keep pace so to speak?

More quickly than before that is for sure. Of course there is for anyone who follows the financial markets there is also uncertainty as to sort of is this a boom or a bust eventually how quick will this transition more long term be. But I would say that the demands are shifting much more quickly than we've seen in the past. And between public and private sector, how does that demand differ? I think the demand in the private sector is a bit more cynical often focused on perhaps not explicitly but on sort of headcount reductions one way or the other whereas the public sector at least not explicitly and that's not the focus it's on service levels, it's on productivity, it's not on sort of reaching productions.

And to circle back then towards the increased order intake this quarter, how much of it was driven by AI related assignments?

We actually don't have that data, but we are looking into it. We follow on a request basis. And we do see in terms of requests over the last quarters that we have an increase in AI skills demand. So that is for sure.

Daniel and Johanna, that was all our questions. But thank you very much for being here presenting and participating in the Q&A.

Thank you very much.