Crayon arrives at acceleration station with Q3 results

The Nordic reseller continues to ride the growth train with double-digit revenues but misses stop for 2024 outlook

Crayon Group is moving full steam ahead with its Microsoft relationship as the software licensing reseller posts fired up third quarter 2024 results but dampens FY24 outlook.

Revenues were up 11 per cent in Q3 to NOK 1.6bn (£114.8m) from NOK 1.5bn (£103.4m).

EBIT exploded 113 per cent from NOK 69m (£4.9m) in Q3 2023 to NOK 147m (£10.4m) in 2024.

Gross profit grew 14 per cent in the quarter to NOK 1.4bn (£101.6m).

Growth was solid across regions driven in particular by strong performance in the Nordics and Europe, rising at 12 per cent and 23 per cent, respectively.

Crayon’s software and cloud direct business (its licence offering from software vendors) remains strong across multiple vendors with 28 per cent growth in revenues to NOK 504m (£35.7m).

Revenues in the channel business were negatively impacted by Europe, rising modestly by four per cent to NOK 305m.

Crayon defines its channel arm as its offering towards hosters, system integrators and ISVs.

“I am pleased to present a quarter characterised by strong, profitable growth, higher margins and significant improvement in working capital, despite a more cautious market than expected. With our differentiated and scalable business model, we are well positioned to take full advantage of the growth opportunities ahead,” said Crayon Group CEO Melissa Mulholland.

“Even if we experience strong demand and are ramping up to take advantage of new opportunities, the overall market has been more cautious than expected.”

Mulholland said Crayon is making “minor adjustments” to its guidance as a result.

The group now expects gross profit growth in the range of 15 per cent to 17 per cent, a downgrade from its previously predicted 18 per cent to 20 per cent increase.

“However, we still see strong growth opportunities, increased profitability and improved working capital, driven by our service-first business model focused on customer value and careful cost-control,” Mulholland added.

Microsoft incentives

In June, Mulholland credited Crayon’s relationship with Microsoft as a significant driver of growth following the group’s Q1 figures.

In these latest results the Norway-HQ reseller continues to underline the collaboration, more notably with its shift in Microsoft incentives.

“As Microsoft Partner of the Year and fifth largest global partner, we believe that the evolution of incentives will continue to support our profitable growth in line with market demand, the way they always have,” said Mulholland.

Jeffrey York, VP of global partner investments for global partner solutions at Microsoft said: “The incentives and earning opportunities as a percentage of partner revenue have increased over time as the company and partner network evolves.

“We’re now shifting more partner funding into different strategic areas and investing more than ever in our partners to drive growth in key areas like Copilot, data & AI, security, and migrations. This move is all about helping our partners innovate and grow in these crucial areas.”